performance and growth

of 12

Performance and Growth

John McFarlaneChief Executive Officer

6 October 2000

of 12

Overview of strategy

Proposition

• Specialists will win over conglomerates

• The internet will add value and erode margins

• Value creation needs both performance and growth

Strategy

• Reconfigure ANZ as a portfolio of specialist businesses

• An e-Bank with a human face

• Build portfolio of growth businesses which leverage real capabilities

Growth

e-Transformation

Specialisation

Implications

• Distinct strategies for each customer and product business

• Use IP technology to transform costs and service

• Invest cost savings in high growth segments

of 12

Top quartile financial companies by value focus on a narrow set of growth themes

Top quartile company

Growth expectations* % of share price Rationale for expectations of growth

* Calculated on 4 August 2000Source: Brokers reports; Hoovers; media

Northern Trust • Leading custody and trust service provider to US high-end affluent market

75%

Fifth Third • Superior driver of revenue growth and cost savings in branch banking. Potential to replicate business model to acquisitions

71%

Standard Chartered • Strong position in consumer banking in high-growth Asian markets

60%

Firstar • Strong financial performer whilst building scale through M&A

64%

Citigroup • Global scale and scope of tangible and intangible assets55%

Mellon Financial Corp • Scale in US asset management, servicing and custody57%

Bank of New York • Global scale in asset servicing and processing57%

Wells Fargo • Building leading positions in US in e-commerce, mortgage servicing and business lending

51%

of 12

0

5

10

15

20

25

30

0 2 4 6 8 10 12 14 16 18 20EPS growth %

Sacrifice earnings to build growth

Deliver earnings but sacrifice growth

AspirationImproved EPS growth and higher PE ratio

PE Ratio

ANZ historically (1995-1999)

EPS growth

The strategy requires maintaining a good balance between EPS growth and increasing expectations

PE growth

of 12

Portfolio strategy should reflect degree of globalisation and leverage real capabilities

Impa

ct o

f glo

balis

atio

n

ANZ’s capability

FX

Institutional Banking

Mid Corporate

GSF

Custody

Capital MarketsTrade

Esanda

B2B

General Banking

Small Business

Mortgages

CardsB2C

now

Late

rN

ot y

et

Less developed At par Local leader Regionally distinctive

Globally distinctive

Soon

Wealth Management

Funds Management

of 12

e-Payments

Gen Banking

Corporate

FM

Mortgages

GSF

Esanda

Wealth

FXInstitutional

Different businesses need different strategies

Low

Low

High

High

Invest for rapid growth

• Defend position and return

• Grow selectively

Create new businesses

• Optimise performance• Identify new growth products

ROE

MarketGrowth

Business size by NPAT

Small BusCap Mkts

Cardse-Asia

GTS

of 12

• Have committed to substantial cost reduction and restructuring programs to:

Meet EPS targets

Increase growth funding

50

55

60

65

70

1997 1998 1999 Mar-00

Cost Income Ratio

WBC

CBAANZ

NAB

%

200040

Performance and growth requires outperformance on costs

2001

of 12

Cultural change is imperative….and happening

• Prime accountability for profit and value

• Freedom to pursue opportunities within agreed boundaries

• Operate using agreed set of platforms, systems and shared services

• Transfer pricing based on market

• Drive group strategic direction and set policy

• Portfolio management and resource allocation

• Cross-Business Unit synergies

• Control and oversight of risk, brands and technology

Balancing the autonomy of our 21 businesses with strong leadership from the centre

Balancing the autonomy of our 21 businesses with strong leadership from the centre

Business Unit Corporate Centre

of 12

We are giving ourselves the best possible chance of success

• Distinctive

• Focused

• Forward looking

• Right for ANZ

• Organised for success

• MDs appointed

• Targets and plans established

• Delivered over the last three years

• Growth momentum:– Cards– Mortgages– eCommerce

Strategy People Execution+ +

of 12

ANZ in the medium term

• Change of emphasis in portfolio

• Substantial e-transformation reducing costs and focused service

• Performance optimised– Eps, ROE, investment– capital management

• Transformational cultural change

• Substantial portfolio shifts

• Narrower, more focused portfolio with leading positions

• Increased investment in high growth business

• Modern performance culture

• Higher stock rating

ANZ in 1 - 3 years ANZ in 4 - 7 years

of 12

Copy of presentation available on

www.anz.com

of 12

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.

For further information visit

www.anz.com

or contact

Philip GentryHead of Investor Relations

ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]

performance and growth

Documents