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ANZ ASIA INVESTOR TOUR 2014
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
23 JULY 2014
ANDREW GÉCZY CHIEF EXECUTIVE OFFICER
International & Institutional Banking
2
SUPER REGIONAL STRATEGY
STRONG CORE
MARKETS
PROFITABLE ASIAN
GROWTH
ENTERPRISE APPROACH
STRONG LIQUIDITY AND CAPITAL MANAGEMENT
DISCIPLINED AND EXPERIENCED MANAGEMENT
ANZ remains focused on building the best connected, most respected bank across Asia Pacific
Improving Customer Experience
Diversifying Revenue
Improving Productivity
Improving Returns
0
10
20
30
40
50
60
2000 1900s 2050
Share of world GDP1
%
Asia
Europe
US
20
6
2
1
1
2
3
12
4
1
1
0
1
5
Intra-Asia
Europe-Asia
A/NZ-Asia
LatAm-Asia
Africa-Asia
MidEast-Asia
N.America-Asia
2001
2020
Share of total world trade2
%
3
Macro fundamentals remain compelling across Asia
The economic centre of the world is shifting back to Asia
By 2020 Asia will account for 35% of world trade with the majority being Intra-Asia
1. Source: Economist Intelligence Unit, 2013 2. Source: ITC, EIU, BCG Analysis, 2013
4
ANZ’s markets are expected to deliver ~50% of growth in banking revenue pools
Forecast absolute growth in Global Banking revenues US$b, 2012-171
Key Asia Pac markets will represent ~US$800b in revenues by 2017
3,087
4,151
Rest of World
53%
Asia World 2017
2%
World 2012
Australia & NZ
46%
10% 4% 6% CAGR:
Forecast revenue pools for key Asia Pacific markets by product US$b, 20171
11%
80
86%
IN
71%
AU & NZ
4%
232
9%
18%
ID
363
11%
JP
80%
11%
CN
27%
53
69%
12% 19% 35
86% 12% 2%
19
44% 13% 43%
17
60% 13%
HK SG
Transaction Banking
Lending and structured finance
Markets
These macro fundamentals propel Asian banking revenue pool growth
1. Source: BCG Banking Pools 2013
• Operating income has almost doubled to $2,277m (FY13)
• >$500m generated in cross border activity
• Current ROE exceeds the cost of capital
• Top 4 Corporate Bank in Asia1
• Institutional Brand awareness in HK – 79%2
• Operates in 15 countries
• ~16,800 employees
• ~4,000 corporate active Asia customers, >2 million including Retail
• #20 in FX market share4
• Best Trade bank in Australasia, Vietnam5
• #1 Mandated Lead Arranger, Asia ex-Japan6
• $1,184m operating income
• <$300m revenue generated from cross-border business (FY10)
• Top 12 Corporate Bank in Asia1
• Institutional Brand awareness in HK – 20%2
5
In 2009 In 2014
• Operated in 13 countries3
• ~6,500 employees
• ~1,800 Corporate customers, ~900,000 including Retail
FINANCIAL CONTRIBUTION
FOOTPRINT
REPUTATION WITH CLIENTS
PRODUCT BREADTH
• #52 in FX market share4
• No Asian based Trade awards
• #3 Mandated Lead Arranger, Asia ex-Japan6
5
1. Greenwich Associates 2009 and 2013 Asian Large Corporate Banking Study; 2. Total ANZ Asia Institutional Brand Awareness survey; 3.Pre-RBS acquisition in 2008‟; 4.Euromoney FX Market Share League Table, 2009 & 2014; 5.Trade Finance, Award for Excellence 2012; 6.Asia, ex-Japan, Thompson Reuters 2009 & 31st March 2014
ANZ has quickly established itself in Asia
IIB NPAT by Region $m
1H14
3,592
55%
45%
FY13
6,602
56%
44%
FY12
6,427
57%
43%
FY09
5,528
60%
40%
Other operating income Net interest income IIB Revenue mix
$m
Asia now represents 36% of IIB’s NPAT, up from 28% in 2013
Non-lending income is growing steadily relative to NII
6
We have steadily diversified earnings as the Business has grown
1H14
1,372
52%
48%
FY13
2,452
59%
41%
FY12
2,111
62%
38%
FY09
1,664
57%
43%
APEA
AUS/NZ
IIB has achieved these outcomes while maintaining a well funded and low risk balance sheet
We continue to be well funded with deposits, enabling strong lending growth…
…while maintaining superior credit quality in Asia
Regional Risk Grade Profile by Total Exposure (%)1
Regional Risk Grade Profile by Tenor (%)1
IIB Balance sheet – Deposits & Loans $b
73% 72%
85%
27% 27%
15%
1%
Asia NZ Aus
Default
Sub-Investment Grade
Investment Grade
NZ
68%
32%
Aus
67%
33%
Asia
30%
70%
Tenor >1 year
Tenor <1 year
1H14
172
92%
8%
1H13
152
93%
7%
1H12
133
93%
7%
1H11
109
93%
7%
1H14
94%
6%
1H13
95%
5%
1H12
96%
4%
1H11
97%
3%
136
114
103
87
Retail Corporate & FIG
Customer Deposits Net Loans & Advances
2
7
+16% CAGR
+16% CAGR
1.As at Mar-14 2.Sub-Investment Grade defined as exposures with a rating below BBB-
8
And we have strengthened our leadership position in home markets
Australia - Domestic Banking Relationships Market Penetration and Competitive Position1
New Zealand - Domestic Banking Relationships Market Penetration and Competitive Position1
3 3 3 4 4 3 3 4 3
39 41 39 38 38
37 42
45 44 37
40 37
30 28 34 31 31 31 22
21 21
21 20
20
60
64 61
68 70
66
2
70
2
73 72 75
2
72
‟14 ‟13 ‟12
72
3rd Tier 2nd Tier Lead
6 6 5 13 16 14 16 14 11
29 22 19
31 32 30
37 33 35
40 43
40
23
28
25
49 48 53 29
27 27
28 24
21
7 5
7
72
81 84
76 76 79
51 55
59
88 86 86
2nd Tier 3rd Tier Lead
Bank 1 Bank 2 Bank 3 Bank 1 Bank 2 Bank 3
1. Peter Lee Associates Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand 2014; 2nd tier includes „top 3‟ relationships but not lead; 3rd tier includes all relationships outside „top 3‟ relationships, up to a maximum of 8 relationships
ANZ is a market leader in Australia for both overall and lead penetration
We continue to be #1 in New Zealand with a substantial and widening gap
‟14 ‟13 ‟12 ‟14 ‟13 ‟12 ‟14 ‟13 ‟12 ‟14 ‟13 ‟12 ‟14 ‟13 ‟12 ‟14 ‟13 ‟12 ‟14 ‟13 ‟12
Number of countries with presence vs number of distinct products1
9
2009 2014
Singapore 16 32
Hong Kong 13 31
Indonesia 12 22
China 11 22
India 1 20
Greater
Mekong 10 22
Australia 36 36
Our ability to serve our clients and expand our wallet potential has grown
Product and geographic penetration of our international customers
(2009-14)
1.8
2.9 2.6
4.9
Average number of countries per customer
Average number of products per customer
2014
2009
We are now able to provide more products to more customers in more geographies
1. Based on number of 36 distinct product classifications offered
ANZ today
Solid foundations in place
• Reputation with clients established
• Footprint in key geographies and products established
• Relevant to Group performance
Macroeconomics
Remaining attractive
• Trade flows
• Capital flows
• Banking pools
• Growth rates
Customers
Simplicity & transparency
• Rise of Regional Treasury Centres
• Shrinking bank panels
Banking conditions
Increasingly challenging
• Regulatory costs
• Excess liquidity
• Margin pressures
Competitors
Tough but vulnerabilities can be
exploited
• Global‟s distracted
• Regionals expanding
ANZ in the future
Grow Share of Key Corridors
• Trade flows
• Foreign Direct Investment flows
• Wealth flows
The next 5 years will provide notably different conditions to the last 5 – we are well positioned
10
11
Leverage product positions we have built in the region to insight-driven solutions for clients
Convert clients on-boarded post GFC to increasingly profitable multi-product and multi-country relationships
Change how we think of “markets” from a traditional country basis to a corridor focus
Achieve more productive use of our RWAs as a Division
Continuously reduce unit cost and increase STP rates
Against this backdrop, our overarching objective is to deliver growth while also improving returns
Strategic Imperatives
Connecting more Customers by Providing Seamless Value
Delivering Leading Products through Insights
Intensifying Balance Sheet Discipline
Scaling & Optimising Infrastructure
IIB STRATEGIC PRIORITIES
ORGANISATION
Global Markets and
Loans
Global Transaction
Banking
Global Products
4
5
Business Performance Management
Credit & Capital
Management
Business Execution & Performance
6
7
Finance
Risk
HR
Operations
Enablement
8
9
10
11
Customer Segments
Global Banking
Retail Banking Asia Pacific
1
3
International Banking
2
MANAGEMENT PROCESSES
Customer Planning
Processes
People Development
Customer Portfolio Analysis
Strategic Working Group
We have focused on four strategic priorities to address these imperatives and taken steps to sharpen our delivery
12
ROE
(Income/ Equity)
Revenues
Asset
Velocity (Rev/Assets)
Costs
Delivering Leading Products through Insights
Intensifying Balance Sheet Discipline
Scaling & Optimising Infrastructure
IIB PRIORITIES
Connecting More Customers by Providing Seamless Value
Impact to Shareholders
Leverage (Equity/ Assets)
f
• Better pricing and service levels
• Higher STP & Lower Unit Cost
• Reduced Operational Risk
Outcomes for the business
13
Our priorities should drive improved Divisional ROE and allow IIB to contribute to Group commitments
• More effective RWA deployment
• Increased relationship returns
• More customers with deep cross-border wallets
• Serving Customers in lucrative corridors more effectively
• Superior slate of products to form into solutions for clients
• Increasing higher margin, non-lending product mix
Our fundamental competitive strength: connecting newly built Asia with historically strong Australia/NZ
2009 – 2010 2011 - 2013 Today Use Home Market Heritage
Leverage Newly Built Asia
Grow Share of Key
Corridors
• #1 Institutional Player
• Deep Industry Expertise
• Asia-Australia
• Intra-Asia
• Investors-Issuers
• Maturing Client Relationships
• Established Country Franchises
• Competitive Product Footprint
14
IIB Organisation Structure
16
Customer Segments Global Products Enablement
Head of International Banking
Farhan Faruqui (HK, starting in August)
Head of Global Relationship Banking
Sameer Sawhney (Singapore)
Head of Retail Banking Asia Pacific Sanjoy Sen
(Singapore)
Head of Institutional New Zealand David Green (Auckland)
Head of Global Markets and Loans
Steve Bellotti (Sydney)
Head of Global Transaction
Banking Alan Huse (Acting)
(Melbourne)
Deputy CEO & Business Performance Management
Gilles Planté (HK)
Head of Credit and Capital Management
Kevin Corbally (Melbourne)
CFO Mary MacLeod
(Melbourne, starting in October)
Chief Risk Officer Doug Stolberg
(HK)
Chief Operating Officer Sreeram Iyer (Singapore)
Human Resources Anouk De Blieck
(HK)
Senior Managing Director IIB Cath Carver
Senior Managing Director IIB Warwick Smith
CEO IIB Andrew Géczy (Melbourne)
Chief of Staff
Peter Chan (Melbourne)
Business Execution & Performance
1. As defined by Total Relationships Market Penetration In Asia 2. The Greenwich Quality Index score is based upon a normalized composite of all qualitative evaluations transformed to a scale of 0 to
1,000 with the difference from the average shown. Note: Cross-hairs are calculated by the average of the banks shown in graph.
• ANZ‟s upwards momentum over a short period of time has been significant
• The bank has grown to now occupy its current position of Top 4 Corporate Bank in Asia, based on market penetration
• In addition, the bank has deepened its relationship with its client base into „core‟ and „lead‟ status, which leads to product diversification and higher cross-sell
• Our on-going growth and success will continue to be driven by clients seeing ANZ as a strategic partner to its business
Greenwich Associates Large Corporate Banking Study, Asia
A top 4 Corporate Bank in Asia1
by Market Penetration
6% 12%
11%
11%
17%
24%
17%
0%
10%
20%
30%
40%
50%
60%
Import
ant Rela
tionship
s
2013
Bank A
Bank B
Bank C
Bank F
Bank E Bank D
Bank H
Bank G
Bank I
Greenwich Quality Index2 - Overall Relationship Quality (Difference from the Average)
2010
Greenwich Associates Large Corporate Study Asian Large Corporate Banking Market Penetration
Represents the momentum of growth and quality improvement achieved by ANZ Bank over the past 4 years
17
Foreign direct investment inflows
0
10
20
30
40
50
60
06 07 08 09 10 11 12 13
AU
D b
n
Total
Source: NAB, ANZ Research
Foreign direct investment inflows to Australia recovered following the GFC due to investment in the mining sector
18
Foreign direct investment inflows by industry
0
10
20
30
40
50
60
07 08 09 10 11 12 13
AU
D b
n
Mining Non-mining
Source: NAB, ANZ Research
Foreign direct investment in the Australian mining sector has become much more important in recent years
19
Foreign direct investment inflows by major countries
-20
-10
0
10
20
30
40
50
60
06 07 08 09 10 11 12 13
AU
D b
n
Canada China Japan Singapore UK US
Source: NAB, ANZ Research
The US, Japan and the UK remain the most important sources for foreign direct investment, although investment from China has grown in importance
20
Capital flows
Trade flows
Wealth flows
Converting physical flow to
cash (e.g. Exports, Imports)
Source of opportunity
Foreign Direct Investment flows
(e.g. Infrastructure)
Financial Institutions managing
financial assets
•We aspire to be a leading regional Trade Bank across Asia Pacific
•Our home markets (Australia & NZ) are the key drivers for trade across Asia Pacific
How we are relevant to clients
•We have established strong relationships with FDI sources (e.g. infrastructure assets)
•Ongoing investments into our home markets where our strengths lie
•Our focus on originate-to-distribute directly aligns to the investor clients
•We now have track record in key products (e.g. Debt Capital Markets, Syndicated Loans)
•Only regional bank with Australia as its anchor market
• Flow product cross-sell (e.g. FX) driving higher ROEs
Positive for ANZ and shareholders
•Only regional bank with Australia as its anchor market
•Complements our focus on our FIG business
•Complements our focus on our FIG business
• Less capital intensive products driving higher ROEs
Key market corridors
Australia China Japan Korea
Australia EMEA Japan Korea
Australia Hong Kong Singapore
Japan Korea
We are devoting management attention to key corridors particularly those to and from our home markets
22
Source: NAB, ANZ Research
Australian merchandise exports by country
0
20
40
60
80
100
120
90 92 94 96 98 00 02 04 06 08 10 12 14
Export
s, ro
llin
g 1
2m
sum
, AU
D b
n
China Japan Korea India United States
Over 35% of Australia’s merchandise exports now go to China, reflecting a sharp increase in bulk commodity exports
23
Short-term Chinese arrivals
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
80
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Share
of to
tal s
hort-te
rm a
rrivals
, %N
um
ber
per
month
(000s)
Share of total short-term arrivals (RHS) Short-term arrivals from China (LHS)
Source: ABS, ANZ Research
The rise in short-term Chinese tourist arrivals has been driven by higher incomes and the emergence of a large middle class
24
Australian merchandise imports by country
0
5
10
15
20
25
30
35
40
45
50
90 92 94 96 98 00 02 04 06 08 10 12 14
Export
s, ro
llin
g 1
2m
sum
, AU
D b
n
China Japan Germany Singapore United States
Source: NAB, ANZ Research
There has also been a sharp increase in imports from China
25
• Over the coming decade, Asian production is expected to migrate south, away from the mature-aged expensive labour markets of Japan, China and South Korea to the demographically young and low labour cost economies of the ASEAN
• The launch of the ASEAN Economic Community (AEC) will usher in a period of higher intraregional trade growth as powerful synergies across the region unlocked, facilitating more mobile movement in goods and services across the region
• Specifically, the AEC will draw upon the abundant and cheap labour of Myanmar, Laos and Cambodia and combine it with the production sophistication of economies such as Singapore and Malaysia
• Hence ANZ forecasts intra-regional trade growth to be structural faster in the coming decade
Source: ASEAN Regional Information Exchange Database System, ANZ Research
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2000 2005 2010 2015 2020
USD b
n
CAGR (2011-2020):12.9%
CAGR (2000-2010): 12.6%
forecasts
ASEAN intra-regional trade to expand with the commencement of ASEAN Economic Community in 2015
27
Source: WITS, CEIC, ANZ Research
0
200
400
600
800
1000
1200
1400
1990 1994 1998 2002 2006 2010
USD bn
CAGR (1990-2000):16.4%
CAGR (2001-2012):16.8%
• The creation of the ASEAN economic community is likely to be a positive supply side shock similar to China‟s WTO ascension in 2000. As production platforms migrate south to the ASEAN, trade should pick up significantly
Similar to the surge in intra-regional trade following China’s WTO ascension
28
15171366
16501739
1822 1902
413
364
477
535562
643
169
129
174
193
180
207
118
105
127
146144
160
123
84
127
153126
153
96
37
76
10185
114
78
61
82
9991
101
71
58
83
9489
95
44
42
50
5865
73
24
19
24
3032
38
149
138
154
166173
197
0
500
1000
1500
2000
2500
3000
3500
4000
2007 2008 2009 2010 2011 2012
Num
ber
of
HN
WI
Japan China Australia South Korea India Hong Kong Singapore Taiwan Thailand Indonesia Other Markets
Asia-Pacific HNWI Population, 2007-2012 (by Market)
Source: Capgemini Global Wealth Report 2013, ANZ Research
Asian high net worth individuals growing strongly
30
3815
3179
38924135 4231 4452
2109
1672
2347
26572706
3128540
380
519
582542
625
437
310
477
582 477
589
523
181
379
511 408
560
386
272
369
453 439
489
319
276
340
396381
426
225
190
232
272 298
355
234
176
264
302 279
298
85
61
80
100106
125
807
671
749
829 840
969
0
2,000
4,000
6,000
8,000
10,000
12,000
2007 2008 2009 2010 2011 2012
USD
billion
Japan China Australia South Korea India Hong Kong Singapore Taiwan Thailand Indonesia Other Markets
Asia-Pacific HNWI Wealth, 2007-2012 (by Market)
Source: Capgemini Global Wealth Report 2013, ANZ Research
High Net Worth Individual Wealth continues to grow strongly, led by China and Japan
31
The material in this presentation is general background information about the Bank‟s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential
investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when
deciding if an investment is appropriate
This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to ANZ‟s business and operations, market
conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in this presentation, the words “estimate”, “project”,
“intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such statements constitute “forward-looking statements” for the purposes of the United
States Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof to reflect the occurrence of unanticipated events.
For further information visit
www.anz.com
or contact
Jill Craig Group General Manager Investor Relations
ph: (613) 8654 7749 fax: (613) 8654 9977 e-mail: [email protected]