ANZ Shareholder Strategy Update

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ANZ Shareholder Strategy Update Specialisation,
eTransformation and Growth
John McFarlane Chief Executive Officer Brisbane 1
8 August 2000
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ANZ has now built a solid foundation

• Competitive cost structure cost to income ratio
  at low 50s
• Demonstrated ability to make bold portfolio moves
  (Grindlays sold, ANZIB reconfigured, retail
  stockbroking sold)
• Demonstrated ability to execute fast against
  important imperatives (cost risk positions
  transformed over 2 years)
• Most businesses displaying strong underlying
  momentum
• High calibre, committed, dynamic management team

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Group strategic direction built on
specialisation, eTransformation and growth

• Proposition
• Integrated financial services firms will lose to
  specialists over time
• The rise of specialists and new technologies will
  deliver superior customer value and erode margins
• For ANZ more value will be created through focus
  and leverage of intangible assets than
  traditional concentration plays

• Strategy
• Reconceive and develop ANZ as a portfolio of
  specialist businesses
• Become an eBank with a human face
• Create a portfolio of high growth businesses
  which leverage capabilities and brands

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We are experiencing very profound change
Globalisation
Globalneweconomy
Oldeconomy
Internet
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Technology is driving costs down
Elapsed time for 100kb transfer
Cost of a 3-minute telephone call from New York
to London
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A disaggregated approach is required
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Many Australian institutions focused on
consolidation stage
USA
EUROPE
AUSTRALIA
ASIA
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Strategy 1 Reconceive ANZ as portfolio of
specialist businesses

• Make each of our 21 businesses a specialist in
  its own right
• Establish three new stand alone customer
  businesses - Wealth
• Management, Small Business and General Banking
• Accelerate the growth of our strong product
  monoline businesses
• Move towards open architecture, selectively over
  time
• Manage the portfolio and brands actively from the
  centre

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Contribution balanced between personal and
corporate, and product and customer
738m
368m
311m


Other
Small Business
Institutional
General Banking
Corporate
Corporate
Personal
Wealth Mgmt
Transaction Services
Asset Finance
Mortgages
Capital Markets
International
Foreign Exchange
Funds Mgmt
Structured Finance
Cards
37m
Customer Businesses Shaded
Asia
Pacific
Excluding Grindlays
International
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ANZ a leader in Corporate Banking
Share of Primary Relationships with Middle-Market
Companies
Overall Satisfaction with Bank
30
ANZ
20
NAB
CBA
WBC
10
0
ANZ
NAB
WBC
CBA
Source Corporate Banking Roberts Research Group
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Momentum in Personal Financial Services
Mortgage Market Share


Apr-00
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Distribution model
Make what we sell and sell what we make
ANZ Manufacture ie Mortgages
ANZ Distribution ie Branches
Customers
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Distribution models
Make what we sell and sell what we make
Open Architecture
ANZ Manufacture ie Mortgages
ANZ Manufacture ie Mortgages
Other Manufactures
ANZ Distribution ie Branches
ANZ Distribution ie Branches
Other Distribution ie Mortgage Brokers
Customers
Customers
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Group strategic direction built on
specialisation, eTransformation and growth

• Proposition
• Integrated financial services firms will lose to
  specialists over time
• The rise of specialists and new technologies will
  offer superior customer value and will erode
  margins
• For ANZ more value will be created through focus
  and leverage of intangible assets than
  traditional concentration plays

• Strategy
• Reconceive and develop ANZ as a portfolio of
  specialist businesses
• Become an eBank with a human face
• Create a portfolio of high growth business which
  leverage capabilities and brands

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Technology transforms what customers expect
Time required to find a high rate certificate of
deposit
Minutes
Telephone
25
10
WWW
-60
WWW agent
1
-90
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Strategy 2 the eBank with a human face
Web enabled Channels
Standard Platforms
Customers
17
anz.com
Internet Banking Signups
Internet Banking Users of Total Relationships
Internet Banking Customers
Online Applications - Credit Cards
Lending Balance
Deposit Balance
Number of Products
Profit
Attrition
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myanz.com
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Group strategic direction built on
specialisation, eTransformation and growth

• Proposition
• Integrated financial services firms will lose to
  specialists over time
• The rise of specialists and new technologies will
  offer superior customer value and will erode
  margins
• For ANZ more value will be created through focus
  and leverage of intangible assets than
  traditional concentration plays

• Strategy
• Reconceive and develop ANZ as a portfolio of
  specialist businesses
• Become an eBank with a human face
• Create a portfolio of high growth business which
  leverage capabilities and brands

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Strategy 3 Create growth businesses

• Build from our strong corporate franchise by
  creating new businesses in corporate ePayments
  and eProcurement
• Strengthen our consumer proposition through
  building on our early eCommerce momentum,
  creating strong core offers and new businesses
• Extend our leadership in the Pacific by
  replicating our model in new countries
• Leverage our consumer and corporate eCommerce and
  Cards capabilities by partnering to build new
  businesses in Asia
• Build a small number of regional and/or global
  niches which leverage our capabilities
• Be very selective about acquisitions, considering
  only those which add strategically to individual
  businesses or enhance capabilities and create
  value

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Web-enabling ANZ
B2C
AST Real Time Loan Approvals
B2B
Internal
ERP
VIPS
Directors on line
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ANZ in 3-5 years

• Leading positions in a number of specialist
  businesses in Australia, New Zealand and Asia
• Portfolio of businesses likely to be narrower and
  more focused
• A performance orientated driver of individual
  businesses
• Portfolio actively re-shaped by the corporate
  centre
• Multiple strategic alliances
• A range of growth businesses and options
• A leader in eCommerce
• Higher market to book ratio

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Financial goals

• Earnings per share growth above peer average
• ROE above 20
• Cost income ratio comfortably below 50
• Inner Tier 1 capital approaching 6
• Maintaining rating in AA category

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For more information visit anz.com