Corporate Financial Services - Leveraging our leadership position
for specialisation and growth
Roger DavisHead of Corporate Financial Services
18 July 2000
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
CFS: a major contributor to the bank’s earnings
Corporate
0
100
Corporate
Corporate
Financial Markets
Asset Finance
Capital Markets
Institutional
Structured Finance
Transaction Services
%$738m
$311m
CustomerBusinesses
0
100
200
300
400
Mar-99 Sep-99 Mar-00
CFS: financial performanceProfit
Costs
1.001.201.401.601.802.00
Mar-99 Sep-99 Mar-00
45
50
55Income% %
Net Interest Margin (LHS)
Non Interest Income (RHS)
40
45
50
55
Mar-99 Sep-99 Mar-00
1.0
1.5
2.0% %
Cost to Income (LHS)
Cost to Assets (RHS)
$m
Provisioning$m
0
50
100
150
Mar-99 Sep-99 Mar-00
Actual Credit Costs Economic Credit Costs
Share of Primary Relationshipswith Middle-Market Companies
0%
10%
20%
30%
ANZ NAB WBC CBA
Source: 1999 Roberts Research
0
10
20
30
40
50
CFS: a leader in Corporate Banking
Share of Significant Relationshipswith Large Corporates
ANZ WBC NAB CBA
#1 Best Bank in Australia US Global Finance Magazine 1999
#1 Domestic Commercial Paper Asia Money 1999
#1 Arranger/Co-Arranger - Greater Asia Capital Data Loan 1999
#1 Arranger - Asia Pacific Project Finance International 1999
#1 Interest Risk Management BRW/KPMG Poll 1998
#1 FX House All Round Excellence Asia Money 1999
#1 AUD/USD Currency Options Bank Risk Magazine 1999
Source: 1999 Greenwich Associates
%
Asset Finance
GSF
RAROC
Economic Capital
Global FX
GlobalTrans
GCM
Lower
Higher
Institutional
Corporate
Fin.Products
CFS: a balanced portfolio of service andasset businesses
A customer focus and product centric business
Institutional Corporate
6 Product Businesses 3 Customer Segments
6
6.5
7
7.5
8
8.5
1995 1996 1997 1998 1999
Source: Corporate Banking Roberts Research Group
Overall Satisfactionwith Bank
Esanda*
ANZNABCBAWBC
Financial Markets
Capital Markets
Structured Finance
Global Transaction
Services
Business eCommerce
Asset Finance
Market Penetration - Large Corporates
Source: Greenwich Associates
Customer centricity: Institutional Banking
21%
Share of Corporate Profit
01020304050
ANZ NAB CBA WBC
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
-60 -10 40 90 140
Customer EVA DecilesMar-00
%
0%
10%
20%
30%
ANZ NAB CBA WBC
Customer centricity: Corporate Banking
• Deepen share of wallet
• Build broader fee-based business - ie “Wall Street to Main Street” selling
• Build e-Commerce solutions
• Cross sell retail products
18%
StrategiesMarket Penetration - Middle Market
Share of Corporate Profit Customer EVA Deciles*
0%
10%
20%
30%
40%
50%
0
20
40
MotorCars
CommVehicles
TotalMotorVehicles
Other TotalMarket
% share (est.)
New
Busine ss W
ri ting s
market sharewritings
Esanda
Ford Credit
CBFC
GMAC
St George
Strategy
• Improve sustainability of core franchise
• Radically transform the business
• Accelerate growth program
Source: KPMG, Financial Reports, Roy Morgan, Esanda
Customer centricity: Asset Finance
14%
Share of Corporate Profit Motor Vehicle Deal VolumesAustralia
Source: ABS, AFJ, Esanda
$b (est.)
CFS: market leader in customer satisfaction
6
6.5
7
7.5
8
8.5
1995 1996 1997 1998 1999 6 6.5 7 7.5 8 8.5
WBC
NAB
CBA
ANZ
Tailoring solutions to our clients' business needs
6 6.5 7 7.5 8 8.5
WBC
NAB
CBA
ANZ
Coordinating specialist resources to service our clients’ business
6 6.5 7 7.5 8 8.5
WBC
NAB
CBA
ANZ
Satisfying our international trade specialist clients
Source: Roberts Research Group - 1999 Customer Satisfaction Research
Satisfaction with Relationship Manager
ANZ
NABCBAWBC
A focused customer and product centric business
Institutional Corporate
6 Product Businesses 3 Customer Segments
6
6.5
7
7.5
8
8.5
1995 1996 1997 1998 1999
Source: Corporate Banking Roberts Research Group
Overall Satisfactionwith Bank
Esanda*
ANZNABCBAWBC
Financial Markets
Capital Markets
Structured Finance
Global Transaction
Services
Business eCommerce
Asset Finance
10%
Product centricity: Global Transaction Services
Customer Perception - Global Trade ServicesAustralasia Region, January 2000
010203040506070
Source : Brendan Wood International
ANZ
NABWBC
CBACitibank HSBC
Share of Corporate Profit
No. 1 Trade Services provider in Australasia 2000 (BWI)
No. 1 in sub-Custody in Australasia 2000 (GI)Leader in major transaction banking servicesLeader in AUD/NZD Correspondent Banking
League Tables• 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
Strategy
%
0%
10%
20%
30%
40%
50%
0
20
40
MotorCars
CommVehicles
TotalMotorVehicles
Other TotalMarket
% share (est.)
New
Busine ss W
ri ti ng s
market sharewritings
Esanda
Ford Credit
CBFC
GMAC
St George
Strategy
• Improve sustainability of core franchise
• Radically transform the business
• Accelerate growth program
Source: KPMG, Financial Reports, Roy Morgan, Esanda
Product centricity: Asset Finance
14%
Share of Corporate Profit Motor Vehicle Deal VolumesAustralia
Source: ABS, AFJ, Esanda
$b (est.)
Initiatives• Further strengthen client relationships• Continue to maintain a diversified portfolio across
sectors and geography with strong ECA support• Increase focus on structured, high margin
solutions • Expand corporate finance and ECA activity in Asia
• Exploit the cooperative agreement with SCB in MESA
Product centricity: Global Structured Finance
League Tables
No 1 Arranger 1999, Asia PacificNo 1 Arranger 1999, Asia and AustraliaNo 1 Arranger, South Asia 1997 to Date
Indian Loan House of the year, 1999 No 1 Arranger, Export Credit Business,
Australia, 1999 (EFIC)No 1 Advisor Petrochemicals (PFBL 1999)No 1 Advisor Leisure (PFBL 1999)
16%
Share of Corporate Profit
Source: Project Finance Intl, Global Finance, Capital Data Loanware, IFR Asia, EFIC
Key Activities
• Industrial Transportation• Project Finance• Corporate Finance• Export Credit• Leasing and Tax
Initiatives• Continue to focus on sales • Continued expansion of product range• Continue to develop Global capability• Centralisation of global infrastructure• Increased penetration of FX Online in Australia
and overseas
Product centricity: Financial Markets
League Tables
Best FX Bank, Australia 1999 Top 10 World FX Bank 1999 Best FX Bank of the Year World No 1 FX Options AUD, 1999 Best of Breed Treasury Banker Swaps and Options (Asiamoney 2000)
0
50
100
150
200
250
Oct-98 Apr-99 Oct-99 Apr-00
14%
Share of Corporate Profit FX Cumulative Trading Revenues$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
Product centricity: Capital Markets
League Tables
No 1 Domestic Commercial PaperDerivatives/Risk Management House of the YearNo 2 Lead Manager, Corporate BondsNo 3 Best Lead Manager, Securitisation, No 3 Australia/New Zealand MTNS
020
406080
100120
Oct-98 Apr-99 Oct-99 Apr-00
5%
IR Derivative Cumulative Trading RevenuesShare of Corporate Profit
Cumulative Daily Revenue $m
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
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:
Growth: credit derivatives
0
5
10
15
1999 2000 2001 2002
$b
Key Points
• The Securities Trading Business will use credit derivatives to achieve the following CFS objectives:
– to enhance diversification of credit portfolios
– to trade forward expectations or inconsistencies of credit-risk pricing, and
– to allow new sources of investment capital to be committed to credit risk
Australian Credit Derivatives Market
Growth: equity derivatives
0
2
4
6
8
1995 1996 1997 1998 1999
Key Points
• Increasing penetration • Growth is expected in innovative equity
product • ANZ Capital Markets has a strong and
highly profitable track record • ANZ captured 6% market share with its
first series of issues
0
2
4
6
8
1995 1996 1997 1998 1999
Australian Exchange Traded Options Market$b
Australian Warrant Market$b
0
500
1000
1500
2000
2500
1995 1996 1997 1998 1999 2000
Growth: private equity funding
Key points
• Equity investment capability of A$75m. • Strict investment criteria• Not well serviced by existing players • Leverage ANZ market position • Potential revenue of around $25-30m over 3 years
Australian Private EquityFunds Under Management
$m
Growth: increase product penetration in middle-market
Initiative Average Customer& Associated
Wallet ($k Revenue)
CurrentCapture
(%)
TargetedCapture
(%)
Lending $81 80 81
Traditional CorpBanking
$61 56 70
InvestmentBanking/Corp Fin
$15 21 60
FM/Personal $19 20 60
Total $176 60 72
Total Avail Wallet $990mm 49 60
Mid Market Wallet $2.25bn 22 26
Estimated $80+ million revenue target over three years
Source: FPRG, CPA, Roberts Research
Capital Markets deals for the middle-market
Middle market product penetration
10.5 11.4 13.5
6.9 7.77.9
05
10152025
1H99 2H99 1H00
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
$m
Product Penetrationin Middle Market
FX Products Cap Mkts Products
e-Commerce momentum
B2B
Corporate Banking Portal
(FXOnline)
eProducts(eGate, Identrus)
B2B Portal(eProcurement)
Growth: business e-Commerce
Australian OnlineTotal Revenue Estimates (A$b)
0
50
100
150
200
250
300
98 99 00 01 02 03 04 05 06 07 08 09 10
Total Online Revenues (A$b) Business-to-
business(B2B)
Business-to-consumer(B2C)
Growth: FX online
440750
2500
5000
Jun-00 Sep 00(Proj)
Sep 01(Proj)
Sep 02(Proj)
Registered Users
29000 35000
70000
140000
Jun-00 Sep 00(Proj)
Sep 01(Proj)
Sep 02(Proj)
Transaction Volume
• Automated real time dealing• JV with Reuters
• Leverage ANZ dominant FX position• First mover advantage• 35% share of the FX online market
Key Points
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
05
1015202530
Feb-00 Apr-00 Jun-00
eGate Customers
Actual Target
Growth: eProcurement
• 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
Browse Suppliers’catalogues and performtransactions in real time
Workflow Approval Routing
Desktop Requisition
Maintenance, Repair,and OperatingSupplies and Services
Distributed Buyers
Supplier MarketplaceBusiness System Integration• Inventory• Purchasing• Accounting•Human Resources
Key Points
Growth: eauto.com.au
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