Australia and New Zealand Banking Group Ltd. — Investor Presentation 2011

Mar 17, 2011

Delivering a stronger domestic franchise ANZ Australia Philip Chronican CEO Australia 18 March 2011

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Agenda

1. Coherent strategy, consistently applied, has driven above peer returns for ANZ Australia division

2. Business platform remediation, improved wealth and agribusiness positioning, restructured and strengthened management team

3. Aspirations – driving competitive advantage and value creation

• Drive further value from existing strong brand position - “Easy to Do Business With”

• Deliver greater options for our customers through leveraging the group‟s Super Regional capabilities

• Customer experience led IT investment and product innovation

• Increase share of wallet across our businesses

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1

Focus of today’s presentation – Australia Division

ANZ Australia

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Focus of today
Institutional
Australia
Wealth Retail Commercial
Segment cut-over at
>$40m turnover
Or >$15m lending
Wealth
9%
28%
Institutional
Contribution to Australia Australia Region
Region
Group NPAT NPAT Split
72% Other
28% 40% 23%
Commercial
52% Retail
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Institutional Australia and Risk included within Australia geography structure

2

Experienced business leaders

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Louis Hawke
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Managing Director
Product, Strategy &
Marketing
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Mark Hand
Managing Director
Retail Distribution
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Mark Whelan
Managing Director
Commercial Banking
(from April 2011)
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John Van Der Wielen
Managing Director
Wealth
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Mike Cutter

John Harries

GM Operations Australia

John Hogan

Chief Financial Officer Australia

Gary Sterrenberg

Chief Information Officer Australia

Suzette Corr

GM Human Resources Australia

Chief Risk Officer Australia

Nigel Williams

MD Institutional Australia

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3

Well positioned for a new game with new rules

Strong economic growth in Australia yet weaker lending system growth

Australia: credit growth likely to be around nominal GDP Business investment funding coming from equity raisings and greater level of national savings

Competition impacts from lower growth environment

Increasing political and regulatory overlay

Price focus Battleground has moved from deposits to retail lending

Cooper Review (superannuation) Ripoll Review (advice) Basel III (capital & liquidity)

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4

Coherent strategy – driving competitive advantage

Geographic opportunity

• Footprint - exposure to Asia‟s more rapid growth

• Growing financial services requirements

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Building Super Regional
capabilities
• Bench strength/international talent
Leading • Innovative product capability
Super • „Throw and catch‟ capability and
Regional
culture
Bank
• Enabling technology and
operations hubs
• Global core brand, regional reach
• Governance and risk management
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• Regional connectivity

• Strong domestic markets

• and businesses

• Bench strength/international talent

• Global core brand, regional reach

• Governance and risk management

Cross-border customer focus

• Regional customer insights

• Resources, agribusiness, infrastructure

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• Trade and investment flows

• Migration/people flows, education

5

Australia Division contributing strongly to group through more convenient banking proposition

OUTPERFORM

RESTORE RESTORE

• Leadership in customer advocacy

• Above system growth in deposits and household lending

• Business platform remediation

• Strengthen management team

• Improve wealth offer - INGA acquisition

• Improve staff engagement

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• Enhance strong domestic franchise by leveraging regional footprint

• Integrated solutions – customer focus, main bank agenda

• Build on well

established market positioning – easy to do business with

• Productivity

• Deepen successful strategy

• 1 bank for consumer and commercial satisfaction and Net Promoter Score

• 1 bank for Pan-regional flows

• 1 bank for trade and FX

• Peer leading staff engagement

• Differentiated earnings growth

• More efficient balance sheet

2009-10

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2011-2014

6

Using technology to create a leading customer experience – combinin eo le rocess data and technolo g p p , p , gy

Technology goals Near-term priorities Invest in customer facing Simplify & standardise technologies Internet & mobile platforms, e.g. online banking upgrade, sales and service platform, MySuper, goMoney and multi-lingual ATMs Secure & stable base Extend CRM platform iKnow Borrow, iKnow Commercial Enhance customer knowledge Link to group wide systems Enterprise Management Deliver the business agenda (Finance, HR, Risk) MIS Payments Be well managed Leverage investment in existing systems

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7

Clear principles - focus, alignment and discipline

• Future-proof business •

• 1 Build for the long-term architecture Investment

• 2 selection, prioritisation and • Invest in strategies, not projects governance • Combine people, process, data and

• Customer proposition and

• 3 technology to deliver „Uncomplicated experience and People-shaped‟ experience

• • Embed stability and innovate from the

• 4 Technology development „front-end‟

• • Manage change through „bite-sized‟

• 5 Business execution initiatives to reduce delivery risk

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8

ANZ Australia Retail

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Retail – positioned for continued growth

… driving customer preference (%) Future trial intention, non-banknon-bank-bankbank customers

Award winning distribution

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(%) Future trial intention, non-banknon-bank-bankbank customers
network [1] …
814 Branches
2,528 ATMs 20
6 types of specialists across
our network 16
24/7 Contact Centre
Innovative digital and 12
mobile channels [2]
Peer 1
8
… with market leading products
Peer 3
YoY Growth 09-10
Peer 2
Market share System multiple
4
Deposits 13.2% 1.0x
Mortgages 12.3% 1.3x
0
Consumer finance 18.9% 1.1x Dec-09 09 Jan-10 10 Dec-10
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Deposits	Deposits	Deposits	Deposits	1.0x
	Deposits		13.2%	1.0x
	Mortgages 1.3x 12.3%
Consumer finance	Consumer finance		18.9%	1.1x

1. Canstar Cannex, Australia’s number one for Customer Satisfaction with distribution

2. Winner FIIA 2011 Asia Pacific Innovation Award (Mobile Innovation)

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10

3

4

Customer experience and regional networks underpin competitive advantage

Strategic priorities

Target higher-value 1 customers

• Continue to acquire more affluent customers via targeted, relevant propositions (e.g. Visa Signature; A-Z Reviews)

• Affluent market share +0.9% 12 mths to Dec 2010

Deliver a distinctive 2 Retail customer proposition

• Deliver „Uncomplicated & People-shaped‟ proposition – easy and empowering

• Continue investment in brand and delivery

• Differentiate through customer service and insight

Become the bank of choice for migrants

• Leverage Super Regional network to capture Asian migrant and student flows

• Pan-regional migrants make up ~20% of all new to market customers

Continuously manage costs and productivity

• Continue migration to lower cost online channels

• Invest in increased automation (e.g. Retail Lending Automation initiative)

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Success will deliver consistent profitable market share rowth over the lon term g g

Sustained organic share growth …

Traditional banking market share (Index, Jan 2008=100)

… through peer leading customer advocacy

Net promoter score

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120
115
110
105
100
95
90
2008 2009 2010
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2008 2009 2010
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… and above weight trial intention

(%) transactional account trial intention

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30
25
20
15
10
5
0
2008 2009 2010
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Peer 1 Peer 2 Peer 3

… with significant upside potential

(% of FUM) traditional banking share of wallet

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60
56
52
48
44
2008 2009 2010
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Case study: Exception fees and SVR response

Indicative revenue impact A balanced, customer insight-led of fee changes 2009-10 response

($) per bank customer[1]

Exception fees reduction

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Research confirmed customers’ desire for greater transparency was the key issue

• Retained flat $5 monthly fee with no additional account charges and removed 27 separate fees

Out-of-cycle mortgage rate increase Research highlighted that customers’ desire for greater control was the key issue

• “Packaged” response, including SVR increase at lower range of peers, elimination of exit fees plus fixed rate switching offer

• Over 10,000 customers (~$3bn FUM) took-up fixed rate switching offer (~30% new-to-bank)

ANZ Peer 1 Peer 2 Peer 3

1. Estimated total revenue loss per traditional banking customer due to deposit and credit card fee (2009) and mortgage fee (2010/11) changes

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13

Case study: Leveraging regional retail connectivity through ANZ Migrant Banking channel

By 2015 15% of the Australian population will be of Asian origin and represent over 22% of the acquirable pool of new to bank customers

• Significant acquisition opportunities exist in pre-arrival and new-arrival migrant segments

• ANZ‟s pan-regional network ensures we are well placed to identify and assist clients ahead of their planned migration

• A specialist Migrant Banking channel developed to ensure and seamless referral process across regions

• Offering supported by a new „Moving to Australia‟ online portal and account opening tool

• Currently have 18 specialist migrant branches and an additional 340 branches with targeted language capabilities, initiatives underway to increase the number of specialist branches during 2011.

Example

Shanghai

• ANZ Relationship Manager identifies referral opportunity for a client relocating to Australia for work.

ANZ Migrant Banking

• Referral provided to the ANZ migrant banking team.

ANZ Migrant Banking specialist:

• Determines specific language and financial needs of client

• Commences account opening and other necessary processes

Chinatown branch Haymarket, Sydney

• Asian banking manager is introduced to client pre - departure.

• Meeting is arranged to occur upon arrival to finalise banking arrangements and address any other needs.

• Identifies appropriate branch to be primary relationship point for client.

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ANZ Australia Wealth

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Wealth – Inte ratin the ortfolio g g p

Over 2.5m customers

Over 2,200 Financial Planners nationwide, through owned and aligned dealer group network

10 Private Banking suites

Market share position 2010

Individual Risk Insurance		#3
Superannuation & Investments		#5
Private Bank		#3
Investment Lending		#5
Online/Direct Broking		#2

Strategy is to combine all existing wealth businesses to deliver

differentiated, tiered offerings to key customer segments

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Insurance
Superannuation & Investments
Private Bank
Aligned
Dealer
Groups
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Large upside and diversified income streams

ANZ has the second largest adviser footprint …

Financial Planner Footprint (% share of Planners)

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30
25
25
20
16 16
15 13
11
10
10 9
5
0
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Peer 1 ANZ Peer 2 Peer 3 Peer 4 Peer 5 Others

… with strong momentum in key business lines

Individual Risk Inflows

(%; New Annual Premiums / Inforce Premiums)

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30
28 ANZ
26
Peer 4
24
Peer 5
Peer 3
22
Peer 6
Peer 1
20
Dec-09 Mar-10 Jun-10 Sep-10
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Jun-10 Sep-10
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Superannuation and Managed Investments to provide growth …

Super & Investments Inflows (%; Inflow / FUM)

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12
Peer 3
10
8
Peer 5
6 Peer 4
Peer 1
4
Peer 6
ANZ
2
Dec-09 Mar-10 Jun-10 Sep-10
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… with ANZ penetration a key opportunity

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Wealth
89%
89 % Opportunity
11% ANZ customers with an ANZ Wealth product
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Setting the foundations for future growth

Strategic priorities

• Step change in ANZ

• 1 customer base penetration

• Embed wealth offerings into ANZ customer propositions and channels

• Develop simple superannuation and insurance products

• Capitalise on opportunities presented

• 2 by regulatory and market changes

• Continue to capture Superannuation Guarantee (SG) flows (with potential increase from 9% - 12% for SG)

• Enhance limited scope advice offering

• Leverage our aligned dealer group distribution network

• Leverage combined wealth business to

• 3 enhance revenue and decrease costs

• Deliver a fully integrated wealth business to realise revenue and cost synergies between business units

• Invest in increasing automation and online self-service capabilities to improve efficiency and cost-to-serve

• Deliver future wealth platform solution

• Enhance core

• 4 capabilities for future growth

• Deliver tiered offerings to customer segments

• Build our capabilities to support possible extension into Asia

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Case study: ING Australia transition

The transition from ING ownership to a fully integrated ANZ Wealth business …

… has demonstrated Wealth’s ability to deliver despite complexity and a challenging timeframe

Nov 09: 100% acquisition of ING Australia‟s 51% share of the INGA/ANZ joint ventures in Australia and New Zealand

• New brand created and implemented within 8 months - successful launch of OnePath brand in October 2010

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ING Wealth Mgmt
ANZ
51% 49% Private
ETrade Financial
INGA ANZ Bank
Planning
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• Alignment to ANZ operations, risk / compliance, technology and finance frameworks with 2,067 FTEs transitioned to ANZ employment in November 2010

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ANZ Wealth Australia
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• OnePath has maintained strong business momentum despite transition with NPAT of $314m, up $164m on the previous result and above deal assumptions

Dec 10: ANZ Wealth operates as a fully integrated business

• Significant revenue and cost synergies are in progress (both with the broader bank and within Wealth)

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ANZ Australia Commercial

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A differentiated Commercial Banking proposition

Customer segments range from transactional to high-touch …

… regional presence enables ‘easy’ connection for customers

Pan-Asian countries with an ANZ Commercial presence

Customer segments

Turnover $0 $5m $40m Small Business Business Banking

Specialist business

Agribusiness

Auto Finance

Commercial Australia is the cornerstone of an integrated regional offering, providing customers with access to expert advice and solutions in 15 markets across Asia and NZ

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Consistent customer growth and advocacy

Customer Satisfaction[1]

Trial Intention

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(%)
7.5
Peer 3
7 ANZ
Peer 1
Peer 2
6.5
Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
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(„000s; Main Bank consideration)
32
30
Peer 1
28
ANZ
26
Peer 2
Peer 3
24
22
Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
FY11 momentum
Commercial Bank
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Customer Acquistion[1]

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(000s; Main Bank Relationships)
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• Customer numbers up 6%[2]

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30
25
20
ANZ
15
Peer 1
Peer 2
10
Peer 3
5
Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
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• Lending growth of 2.5% vs. system of 1.0%[3]

Small Business Segment

• Number of new applications approved up 29%[4]

Business Banking Segment

• New Lending FUM approvals up 34%[4]

• Trade finance sales calls up 30%[4]

Agribusiness Segment

• Increased the number of accounts opened by acquired Landmark customers by 16%[5]

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1. Source: DBM; 2. 12 months to Dec-10; 3. Source: APRA Monthly Banking Statistics, Bank Lending to Non-Financial Institutions, Sep-10 to Dec-10; 4. Sep-09 to Dec-09 vs. Sep-10 to Dec-10; 5. Feb-10 to Dec-10

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Clear targets and priorities

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By 2014…
NPAT Market Share Satisfaction
35% #2 #1
of Australia profit [1]
Target Markets & Priorities
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• Focus on net customer acquisition; represents the bulk of

• 1 Small Business Segment Commercial customers, with strong deposits

• Acquire new, larger customers and expand share of wallet;

• 2 Business Banking Segment expand cross-border referrals and increase markets and trade sales

• Net customer acquisition and cross-sell into the Landmark

• 3 Agribusiness Segment business

• Opportunity to increase conversion of Auto Finance customers

• 4 Auto Finance Business to main bank customers

• 5 Cross-Commercial

• Continue to focus on simpler processes and reduced cost

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1. Australia division underlying NPAT

23

Case stud : Buildin re ional connectivit y g g y

ANZ’s regional capability connects customers and creates revenue opportunities. The following is one example out of the 169 referrals made in the first quarter:

ANZ Indonesia refers connects client with a Relationship Manager in ANZ Business Banking Australia.

An Indonesian customer contacts Manager in ANZ Business their ANZ Indonesia Commercial Banking Australia. Relationship Manager to talk about additional banking requirements they A suite of banking facilities have in Australia. including $1.2m in term debt are established.

Business Banking Relationship Manager also identifies trade requirements and connects client with a Trade Finance Specialist who arranges a further $5.5m in facilities.

Customer

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Indonesia RM

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Australia RM

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Trade Finance Specialist

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ANZ Commercial Asia Presence

ANZ Commercial Australia

ANZ Institutional Expertise

ANZ Commercial presence in 14 Access to 1.5k frontline staff across: Asian markets with access to 281 Commercial frontline staff • 814 branches • 202 business centres • China • Indonesia • Vietnam • Hong Kong • Malaysia • Taiwan Specialists in: • South Korea • Thailand • Philippines • Agribusiness • Japan • India • Laos • Property • Singapore • Cambodia • Asset Finance

Leverage ANZ Institutional’s Asian Trade Finance and Markets expertise

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Best Trade Bank in Trade Finance House of Australia & the the Year (‟08, ‟09, ‟10) Pacific (2009)

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24

Case study: Shanghai World Expo

The Shanghai World Expo 2010

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• Largest ever World Expo attracting over 70 million visitors

• ANZ was a Platinum Sponsor of the Australia pavilion and sponsor partner of the New Zealand pavilion

Events and Activity

• ANZ hosted a series of events with a range of key clients and industry figures

• 10 VIP events at the Australian pavilion inviting 900 guests

• Facilitated 58 VIP tours to the Australian pavilion

Takeaways

• Highly valuable investment for ANZ in its long-term client relationships, demonstrating ANZ‟s sector and regional insight

• The event demonstrated ANZ‟s super regional connectivity and emphasised that ANZ is Australia‟s leading

Commercial/Institutional bank in connecting clients across the region.

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25

ANZ Australia Summary

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ANZ Australia is well positioned for growth

Strategic priorities

• Growth in target segments

  • Service led delivery and innovation

  • Acquire high-quality customers and increase SOW

• 1 Drive value

• Drive value from brand equity and customer advocacy

• Integrate and grow Wealth

• Grow Commercial

• Bank of choice for pan-regional migrants

Leverage Super Bank of choice for pan-regional migrants 2 Regional strategy • Maximise cross-regional commercial opportunities

• Productivity agenda

• Improve staff engagement

Invest in Improve staff engagement 3 • sustainability IT investment focused on enhancing customer experience

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27

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 e-mail: jill.craig@anz.com

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