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Australia and New Zealand Banking Group Ltd. — Annual Report 2011
Feb 13, 2012
10425_rns_2012-02-13_3c5dc053-1e45-4e4c-8aea-bd2739612d6c.pdf
Annual Report
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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
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February 2012
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Disclaimer
Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) ("ANZ") is the proposed issuer of the ANZ Subordinated Notes.
A public offer of ANZ Subordinated Notes will be made by ANZ pursuant to an Offer Document. The Offer Document was lodged with the ASX on or about 14 February 2012. A Replacement Offer Document with the Margin determined after the Bookbuild will be lodged on or about 21 February 2012. The Offer Document is available (and the Replacement Offer Document will be available) on ANZ’s website, http://www.subnotes.anz.com/. Applications for ANZ Subordinated Notes can only be made on the application form accompanying the Offer Document. Before making an investment decision you should read the Offer Document in full and consult with your broker or other professional adviser as to whether ANZ Subordinated Notes are a suitable investment having regard to your particular circumstances. This document is not a prospectus under Australian law and does not constitute an invitation to subscribe for or buy any securities or an offer for subscription or purchase of any securities or a solicitation to engage in or refrain from engaging in any transaction. It is also not financial product advice, and does not take into account your investment objectives, financial situation or particular needs.
By investing in ANZ Subordinated Notes, there is a risk that you may lose some or all of your principal investment, as well as any interest accrued but not yet paid. You should also be aware that ANZ Subordinated Notes do not constitute Protected Accounts or deposit liabilities under the Banking Act 1959 (Cth).
Nothing in this presentation is a promise or representation as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. None of ANZ or the JLMs make any representation or warranty as to the accuracy of such statements or assumptions. Except as required by law, and only then to the extent so required, neither ANZ, the JLMs nor any other person warrants or guarantees the future performance of ANZ Subordinated Notes or any return on any investment made in ANZ Subordinated Notes.
Diagrams used in the presentation are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this presentation.
This presentation has been prepared based on information in the Offer Document and generally available information. Investors should not rely on this presentation, but should instead read the Offer Document in full before making an investment decision.
To the maximum extent permitted by law, none of ANZ, the JLMs, their respective related bodies corporate, or their directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of ANZ, the JLMs, their respective related bodies corporate, or their directors, employees or agents.
The distribution of this presentation in jurisdictions outside Australia may be restricted by law. If you come into possession of it you should seek advice on such restrictions and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This presentation does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register or qualify ANZ Subordinated Notes or to otherwise permit a public offering of ANZ Subordinated Notes outside
ANZ Subordinated Notes – Key features
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Opportunity for investors to access a simple investment with regular quarterly interest payments
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Fixed maturity date of 14 June 2022 (~10.25 year term)
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ANZ may redeem all of the ANZ Subordinated Notes on 14 June 2017 (~5.25 years), subject to prior approval of APRA
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Interest is paid quarterly and is paid fully in cash (gross pay)
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Initial Interest Rate of between 7.00% and 7.25% p.a.[1]
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Assumes Bank Bill Rate of 4.25%
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Margin set via Bookbuild in the range of 2.75% and 3.00%
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Interest payments not deferrable so long as the Solvency Condition is met
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On a winding-up of ANZ, ANZ Subordinated Notes rank:
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Behind Unsubordinated Creditors (includes depositors, bondholders, other creditors)
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Equally with any equal ranking instruments
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Ahead of ANZ’s preference shareholders and ordinary shareholders
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No conversion into Ordinary Shares
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No mandatory conversion
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No conversion based upon a core equity capital ratio
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While APRA is yet to confirm the capital treatment of ANZ Subordinated Notes, we expect that will
Differences from Term Deposits and CPS3
| Term Deposits | ANZ Subordinated Notes | CPS3 | |
|---|---|---|---|
| Protection under the Australian Government Financial Claims Scheme1 |
Yes | No | No |
| Term | One month to five years | Approx. 10.25 years2 | Perpetual, subject to mandatory conversion into Ordinary Shares |
| Issuer early redemption option |
Yes, subject to conditions | Yes, on 14 June 2017, subject to APRA’s prior written approval4 |
Yes, on 1 September 2017, subject to APRA’s prior written approval |
| Interest rate/dividend rate |
Fixed | Floating | Floating |
| Interest/dividend payment |
Gross pay | Gross pay | Franked |
| Payment deferral | No, subject to applicable law (which includes without limitation, laws applicable to the insolvency of ANZ) |
No, unless ANZ is not Solvent at the time the payment is due or will not be Solvent immediately after making the payment |
Dividends are subject to absolute director discretion and APRA tests including a distributable profits test |
| Interest/dividend payment dates |
Various. Interest may be paid at maturity or periodically as agreed |
Quarterly | Semi-annual |
| Transferable | No | Yes – quoted on ASX | Yes – quoted on ASX |
| Ability to withdraw | Subject to conditions | No | No |
| Conversion to Ordinary Shares |
No | No | Mandatory conversion and core capital trigger event |
Ranking of ANZ Subordinated Notes
| Illustrative examples of existing ANZ obligations and securities1 |
|||
|---|---|---|---|
| Higher ranking | |||
| Senior Obligations | Preferred and secured debt Liabilities in Australia in relation to Protected Accounts (generally, savings accounts and term deposits), other liabilities preferred by law including employee entitlements and secured creditors |
||
| Unsubordinated unsecured debt Bonds and notes, trade and general creditors. This includes covered bonds which are an unsecured claim on ANZ, though they are secured over assets that form part of the Group |
|||
| Equal ranking obligations |
Subordinated debt ANZ Subordinated Notesand other equal ranking subordinated unsecured debt obligations |
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| Junior obligations | Perpetual subordinated debt Perpetual Capital Floating Rate Notes issued in 1986 |
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| Preference shares CPS1, CPS2 and CPS3, the preference shares comprised in the 2003 Trust Securities, the 2004 Trust Securities and 2007 Stapled Securities |
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| Ordinary Shares Ordinary Shares |
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| Lower ranking |
ANZ Subordinated Notes – Offer summary
| Offer | • Offer by Australia and New Zealand Banking Group Limited (“ANZ”) of ANZ Subordinated Notes |
|---|---|
| Offer size | • $500 million with the ability to raise more or less |
| Purpose | • ANZ will use the net proceeds for general corporate purposes • The ANZ Subordinated Notes are intended to constitute Tier 2 Capital of ANZ |
| Offer structure | • The Offer is being made to: •clients of syndicate brokers; •institutional investors; and •members of the general public who are Australian residents • Minimum application of 50 ANZ Subordinated Notes ($5,000) and thereafter in multiples of 10 ANZ Subordinated Notes ($1,000) |
ANZ Subordinated Notes – Summary terms
| Issue Price | • $100 per ANZ Subordinated Note |
|---|---|
| Listing | • ANZ has applied for quotation of ANZ Subordinated Notes on ASX, and the notes are expected to trade under code “ANZHA” |
| Term & Maturity | • ANZ Subordinated Notes have a term of ~10.25 years unless redeemed earlier by ANZ • Assuming the Issue Date is 20 March 2012, the Maturity Date will be 14 June 2022 • Subject to APRA’s prior written approval, ANZ may redeem ANZ Subordinated Notes on: • 14 June 2017; and • any Interest Payment Date for certain tax reasons |
| Ranking | • On a winding-up of ANZ, ANZ Subordinated Notes rank for payment: •behind all Unsubordinated Creditors; •equally with any other equal ranking instruments; •ahead of all preference shares currently on issue (including CPS1, CPS2 and CPS3, the preference shares comprised in the 2003 Trust Securities, the 2004 Trust Securities and 2007 Stapled Securities); and •ahead of Ordinary Shares |
ANZ Subordinated Notes – Summary terms (cont.)
| Interest Payment |
• Floating interest rate • Gross pay basis • Interest will be paid quarterly in arrears on 14 March, 14 June, 14 September and 14 December, as well as on the Maturity Date or any earlier redemption date, so long as the Solvency Condition is met |
|---|---|
| Interest Rate | • Interest Rate = 90 day BBSW + Margin • Margin expected to be in the range of 2.75% and 3.00% per annum and will be determined under a bookbuild process |
| Payment Deferral |
• No, unless ANZ is not Solvent at the time the payment is due or will not be Solvent immediately after making the payment |
| Repayment of Face Value |
• So long as the Solvency Condition is met, on the Maturity Date, Holders will receive: • the Face Value; plus • any accrued and unpaid interest on the ANZ Subordinated Note on the Maturity Date |
| Holder Redemption Rights |
• Holders cannot request ANZ Subordinated Notes be redeemed, however ANZ Subordinated Notes can be sold on the ASX at the prevailing market price subject to the liquidity of that market on the ASX |
Key dates for the Offer
| Date1 | |
|---|---|
| ASX announcement and ANZ Subordinated Notes Offer Document released | 14 February 2012 |
| Bookbuild | 20 February 2012 |
| Opening Date and ASX announcement of the Margin and Replacement ANZ Subordinated Notes Offer Document released |
21 February 2012 |
| Closing Date for the General Offer | 13 March 2012 |
| Closing Date for the Broker Firm Offer and the Institutional Offer | 19 March 2012 |
| Issue Date | 20 March 2012 |
| Commencement of deferred settlement trading | 21 March 2012 |
| Despatch of Holding Statements | 26 March 2012 |
| Commencement of trading on normal settlement basis | 29 March 2012 |
| Record Date for first Interest payment | 6 June 2012 |
| First Interest Payment Date | 14 June 2012 |
| First Redemption Date | 14 June 2017 |
| Maturity Date | 14 June 2022 |
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FY11
Results summary
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Overview of financial performance
| 2011 | |||
|---|---|---|---|
| $m | % | ||
| Underlying Profit | 5,652 | +12% | |
| Operating Income | 16,812 | +7% | |
| Expenses | 7,718 | +11% | |
| Provisions | 1,211 | -33% | |
| Statutory Net Profit After Tax | 5,355 | +19% | |
| EPS (cents) | 218.4 | +10% | |
| Dividend per Share (cents) | 140 | +11% | |
| Net Interest Margin | 2.46% | -1bps | |
| Customer deposits | 296,753 | 16% |
Credit quality is improving
Total Provision Charge
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1,621
1,435
1,098
722
660
551
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New Impaired Assets
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3,600
3,126
3,035
2,319 [2,437]
1,842
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Balance Sheet
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Group loans and deposits
Group customer deposits
| Growth Rates | Growth Rates | Growth Rates | Growth Rates |
|---|---|---|---|
| FY08 12% |
FY09 16% |
FY10 14% |
FY11 15% |
Group net loans and advances (including acceptances)
| Growth Rates | Growth Rates | |||
|---|---|---|---|---|
| FY08 | FY09 | FY10 | FY11 | |
| 16% | 0% | 9% | 7% |
ANZ has a well diversified funding profile with an increasing weighting to customer funding
Strong Funding Composition
Maintained low levels of shortterm wholesale funding
Short Term Wholesale Customer Funding Funding Shareholders equity & Term Debt < 1 year Hybrid debt Residual Maturity Term Debt > 1 year Residual Maturity
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12% Equity/ Hybrids 8% Well diversified term wholesale funding portfolio
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18%
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Stable term debt issuance, portfolio costs increasing
Stable term funding profile
A$B Issuance Maturities
Portfolio term funding costs expected to increase further due to current market volatility
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Forecast Portfolio
funding costs based on
current market levels
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Forecast Portfolio
funding costs based on
market levels as at 1H11
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ANZ well capitalised and positioned to transition to Basel III
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Basel II Basel III – Common Equity Tier 1 Basel II
7% minimum Proposed Basel III
including buffer APRA fully
applicable from Basel harmonised
Jan-16 III [#]
4.5%
minimum
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Total liquid assets exceed TOTAL offshore wholesale debt portfolio
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Strong liquidity position ($b) ANZ Total
Offshore
Wholesale Debt
securities
Prime Liquidity Other Eligible & Highly Liquid Long-term Short-term
Portfolio Securities
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Composition of prime liquid asset portfolio ($71.4b)
Class 3 $30.7
KEY CONTACTS
ANZ GROUP TREASURY
Rick Moscati
Group Treasurer Phone: +61 (3) 8654 5404 Mobile: +61 (0) 412 809 814 E-mail: [email protected]
Luke Davidson
Head of Group Funding Phone: +61 (3) 8654 5140 Mobile: +61 (0) 413 019 349 E-mail: [email protected]
John Needham
Head of Structured Funding Phone: +61 (3) 8654 5373 Mobile: +61 (0) 411 149 158 E-mail: [email protected]
David Goode
Head of Debt Investor Relations Phone: +61 (3) 8654 5357 Mobile: +61 (0) 410 495 399 Email: [email protected]
Steven Craig
Head of Group Capital Phone: +61 (3) 8654 5213 Mobile: +61 (0) 434 073 953 E-mail: [email protected]
ECM SYNDICATE
Adam Vise
Head of Equity Capital Markets Phone: +61 (3) 9273 3880 Mobile:+61 (0) 404 873 894 E-mail: [email protected]
INSTITUTIONAL
Tariq Holdich
Director Equity Capital Markets Phone: +61 (2) 92266946 Mobile: +61 (0) 403 445 535 Email: [email protected]
INSTITUTIONAL SYNDICATE ASIA
SYNDICATE
Paul White
Global Head of Syndicate Phone: +61 (2) 9227 1296 Mobile:+61 (0) 466 009 360 E-mail: [email protected]
Apoorva Tandon
Director Syndicate Phone: +61 (2) 9227 1296 Mobile:+61 (0) 411 325 045 E-mail: [email protected]
Winston Tay
Larry Temlock
Director, Syndicate Singapore Director, Syndicate Hong Kong Phone: +65 6681 8966 Phone: +852 3918 7681 Mobile: +65 9665 3241 Mobile: +852 6390 5584 E-mail: [email protected] E-mail: [email protected]