Corporate Financial Services

1
Corporate Financial Services - Leveraging our
leadership position for specialisation and growth
Roger Davis Head of Corporate Financial
Services 18 July 2000
2
ANZ Corporate leveraging our leadership position

• Portfolio of Specialist Product and Customer
  Businesses with strong to dominant market
  positions
• Strong performance
• Customer centricity
• Product excellence
• Significant Growth Opportunities
• Capital markets
• Business eCommerce
• Leveraging the middle-market franchise

3
CFS a major contributor to the banks earnings
311m

738m
Institutional
Corporate
Transaction Services
Corporate
Asset Finance
Capital Markets
Financial Markets
Structured Finance
Customer Businesses
4
CFS financial performance
Income
Profit


m
Net Interest Margin (LHS)
Non Interest Income (RHS)
Costs
Provisioning
m


Cost to Income (LHS)
Cost to Assets (RHS)
Actual Credit Costs
Economic Credit Costs
5
CFS a leader in Corporate Banking
Share of Significant Relationships with Large
Corporates

50
40
30
20
10
0
ANZ
WBC
NAB
CBA
Source 1999 Greenwich Associates
Share of Primary Relationships with Middle-Market
Companies
30
20
10
0
ANZ
NAB
WBC
CBA
Source 1999 Roberts Research
6
CFS a balanced portfolio of service and asset
businesses
RAROC
Higher
Global FX
Global Trans
GCM
Fin. Products
Corporate
GSF
Institutional
Asset Finance
Lower
Economic Capital
7
A customer focus and product centric business
6 Product Businesses
3 Customer Segments
Financial Markets
Institutional
Corporate
Esanda
Overall Satisfaction with Bank
Capital Markets
Structured Finance
ANZ
NAB
CBA
WBC
Global Transaction Services
Business eCommerce
Asset Finance
Source Corporate Banking Roberts Research Group
8
Customer centricity Institutional Banking
Share of Corporate Profit
Customer EVA Deciles Mar-00
21

• Strategies
• Leverage industry specialisation
• Leverage strong market position to become an
  adviser
• Maintain focus on customer profitability and
  effective use of balance sheet
• Build e-Commerce capability

Market Penetration - Large Corporates

50
40
30
20
10
0
ANZ
NAB
CBA
WBC
Source Greenwich Associates
9
Customer centricity Corporate Banking
Customer EVA Deciles
Share of Corporate Profit
18
Market Penetration - Middle Market
Strategies

• Deepen share of wallet
• Build broader fee-based business - ie Wall
  Street to Main Street selling
• Build e-Commerce solutions
• Cross sell retail products

10
Customer centricity Asset Finance
Motor Vehicle Deal Volumes Australia
Share of Corporate Profit
14
Source KPMG, Financial Reports, Roy Morgan,
Esanda
b (est.)
share (est.)

• Strategy
• Improve sustainability of core franchise
• Radically transform the business
• Accelerate growth program

market share
writings
New Business Writings
Motor Cars
Comm Vehicles
Total Motor Vehicles
Other
Total Market
Source ABS, AFJ, Esanda
11
CFS market leader in customer satisfaction
Tailoring solutions to our clients' business
needs
Satisfaction with Relationship Manager
ANZ
NAB
CBA
WBC
Coordinating specialist resources to service our
clients business
Satisfying our international trade specialist
clients
Source Roberts Research Group - 1999 Customer
Satisfaction Research
12
A focused customer and product centric business
6 Product Businesses
3 Customer Segments
Financial Markets
Institutional
Corporate
Esanda
Overall Satisfaction with Bank
Capital Markets
Structured Finance
ANZ
NAB
CBA
WBC
Global Transaction Services
Business eCommerce
Asset Finance
Source Corporate Banking Roberts Research Group
13
Product centricity Global Transaction Services
Share of Corporate Profit
Customer Perception - Global Trade
ServicesAustralasia Region, January 2000

70
ANZ
60
NAB
50
WBC
40
CBA
30
Citibank
HSBC
20
10
0
Source Brendan Wood International
League Tables
Strategy
No. 1 Trade Services provider in Australasia 2000
(BWI) No. 1 in sub-Custody in Australasia 2000
(GI) Leader in major transaction banking
services Leader in AUD/NZD Correspondent Banking

• Continue to re-engineer the cost base
• Increase of STP
• Replace inefficient processing systems
• Insource where we have scale and sustainable
  competitive advantages
• Build value added solutions products
• Embrace e-Commerce in payments

14
Product centricity Asset Finance
Motor Vehicle Deal Volumes Australia
Share of Corporate Profit
14
Source KPMG, Financial Reports, Roy Morgan,
Esanda
b (est.)
share (est.)

• Strategy
• Improve sustainability of core franchise
• Radically transform the business
• Accelerate growth program

market share
writings
New Business Writings
Motor Cars
Comm Vehicles
Total Motor Vehicles
Other
Total Market
Source ABS, AFJ, Esanda
15
Product centricity Global Structured Finance
Share of Corporate Profit

• Key Activities
• Industrial Transportation
• Project Finance
• Corporate Finance
• Export Credit
• Leasing and Tax

16

• Initiatives
• Further strengthen client relationships
• Continue to maintain a diversified portfolio
  across sectors and geography with strong ECA
  support
• Increase focus on structured, high margin
  solutions
• Expand corporate finance and ECA activity in Asia
• Exploit the cooperative agreement with SCB in MESA

League Tables No 1 Arranger 1999, Asia Pacific No
1 Arranger 1999, Asia and Australia No 1
Arranger, South Asia 1997 to Date

Indian Loan House of the year, 1999
No 1 Arranger, Export Credit Business,
Australia, 1999 (EFIC) No 1 Advisor
Petrochemicals (PFBL 1999) No 1 Advisor Leisure
(PFBL 1999)
Source Project Finance Intl, Global Finance,
Capital Data Loanware, IFR Asia, EFIC
16
Product centricity Financial Markets
Share of Corporate Profit
FX Cumulative Trading Revenues
m
14

• Initiatives
• Continue to focus on sales
• Continued expansion of product range
• Continue to develop Global capability
• Centralisation of global infrastructure
• Increased penetration of FX Online in Australia
  and overseas

League Tables Best FX Bank, Australia 1999 Top
10 World FX Bank 1999 Best FX Bank of the Year
World No 1 FX Options AUD, 1999 Best of Breed
Treasury Banker Swaps and Options (Asiamoney
2000)
17
Product centricity Capital Markets
IR Derivative Cumulative Trading Revenues
Share of Corporate Profit
5
Cumulative Daily Revenue m

• Initiatives
• Credit Derivatives and Equity Derivatives
• Securitisation
• Development of new channels into Middle
• Market and Retail
• Secondary market offshore
• Partnership with Lehman Brothers
• ANZ bonds issue web site

League Tables No 1 Domestic Commercial
Paper Derivatives/Risk Management House of the
Year No 2 Lead Manager, Corporate Bonds No 3 Best
Lead Manager, Securitisation, No 3 Australia/New
Zealand MTNS
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ANZ Corporate leveraging our leadership position

• Portfolio of strong Product and Customer
  Businesses with strong to dominant market
  positions
• Strong performance
• Customer centricity
• Product excellence
• Growth Opportunities
• Capital markets
• Business e-Commerce
• Leveraging the middle-market franchise

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Growth initiatives

• Goal to double profit from 1999 to 2004
• On track after 12 months
• No silver bullets but rather a continued reliance
  on consistent double-digit growth initiatives
  across CFS
• Three key areas of activity are worth
  highlighting
• Capital markets
• B2B
• Middle market

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Growth credit derivatives

• Key Points
• The Securities Trading Business will use credit
  derivatives to achieve the following CFS
  objectives
• to enhance diversification of credit portfolios
• to trade forward expectations or inconsistencies
  of credit-risk pricing, and
• to allow new sources of investment capital to be
  committed to credit risk

Australian Credit Derivatives Market
21
Growth equity derivatives
Australian Exchange Traded Options Market
b

• Key Points
• Increasing penetration
• Growth is expected in innovative equity product
• ANZ Capital Markets has a strong and highly
  profitable track record
• ANZ captured 6 market share with its first
  series of issues

Australian Warrant Market
b
22
Growth private equity funding
Australian Private Equity Funds Under Management

• Key points
• Equity investment capability of A75m.
• Strict investment criteria
• Not well serviced by existing players
• Leverage ANZ market position
• Potential revenue of around 25-30m
• over 3 years

m
23
Growth increase product penetration in
middle-market
Estimated 80 million revenue target over three
years
Source FPRG, CPA, Roberts Research
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Capital Markets deals for the middle-market
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Middle market product penetration

• Status
• Steady increase in revenues from selling FX
  products and Capital Markets products to
  middle-market customers
• Revenue from Capital Markets products in 1H00
  grew 14.5 versus 1H99
• Revenue from FX products in 1H00 grew 28.6
  versus 1H99

Product Penetration in Middle Market
m
FX Products
Cap Mkts Products
26
e-Commerce momentum
B2B
27
Growth business e-Commerce
Australian Online Total Revenue Estimates (Ab)
Total Online Revenues (Ab)
Business-to- business (B2B)
Business-to- consumer (B2C)
Corporate Banking Portal (FXOnline)
eProducts (eGate, Identrus)
B2B Portal (eProcurement)
28
Growth FX online
Registered Users
Key Points

• Automated real time dealing
• JV with Reuters
• Leverage ANZ dominant FX position
• First mover advantage
• 35 share of the FX online market

Transaction Volume
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Growth eGate

• Key Points
• ANZ eGate is a secure internet
• payment gateway
• 500m market opportunity.
• Operational March 2000
• eGate Version 2 soft release
• September 2000 (multi currency)
• Future versions will include escrow
• and eCheques
• Major customers wins

eGate Customers

Actual
Target
30
Growth eProcurement
Key Points

• Internet marketplace
• Added value through integration of
• financial services
• Leveraging corProcure initiative
• Currently in beta test with 10-20
• clients
• JV with MR O
• Leverage customer base
• Collaborative approach

Supplier Marketplace
Business System Integration

Inventory
Maintenance, Repair,

Purchasing
and Operating

Accounting
Supplies and Services

Human Resources
Browse Suppliers
catalogues and perform
Desktop Requisition
transactions in real time
Workflow
Distributed Buyers
Approval Routing
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Growth eauto.com.au
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Summary leveraging our corporate leadership
position

• Goal To double Corporate Financial Services
  profit by 2004
• Our growth plans will be predicated on a range of
  key initiatives from across the business
• Crucial to these efforts will be our success in
• building share in the Middle Market
• expanding our Capital Markets initiatives
• building a B2B platform
• These initiatives are expected to generate 300m
  in revenue over the next 3 years

CFS - A Growth Business

• We have strong to leadership positions in
• Middle-market
• Large corporates
• Financial markets
• Capital markets
• Structured finance
• Trade banking
• Asset financing

Leverage our strong market position

• Fully exploit
• Powerful ANZ brand integrity
• Large and attractive customer base
• Transition e-commerce initiatives into vibrant
  and viable businesses
• ANZ eGate
• ANZ eProcurement (eg MRO.com, corProcure)
• ANZ B2B Portal

Nurture e-commerce franchise
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