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International - Move to Growth Phase. Elmer Funke Kupper Head of International Division 18 July 2000. International - Move to growth phase. Last year, we presented a three year agenda to “Simplify and Focus” International. The first phase is nearing completion: - PowerPoint PPT Presentation
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International- Move to Growth Phase
Elmer Funke KupperHead of International Division
18 July 2000
International - Move to growth phase• Last year, we presented a three year agenda to “Simplify and Focus”
International. The first phase is nearing completion: Implemented risk reduction program Simplified positions and extracted value in one move Freed up capital and management for growth agenda
• With the focus shifting to growth, new positions will be built in the Pacific and Asia:
In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement
In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce
• Implementation of the growth agenda will take two years, and a deal pipeline has been established
Risk reduction program largely completed
* H2000
Impact Grindlays Sale on Risk Profile Specific Provisions International
Assets in countries rated below ‘Single A’
ELP (%) 1.58 1.38 1.13
48%
82%
ANZ Post Completion
Grindlays
One Name
$247m$299m
1998 1999 1H2000
$75m
Simplification completed in one move
D
D
D
DD
DD
D
D
M
N
N
N
N
M
N
N
D
D DD
D
DD D
D
N
MM
M
P
M
R
R
R
Grindlays transaction:• $10.2b assets, $79m 1H earnings• Simplifies network in one move• Extracts immediate value at 2.3
times NAV and 14.6 times earnings
• Completion on track for 3rd quarter 2000
Asia - Selective InvestmentJapan, Korea• Trade, money centreThree Chinas• 4 branchesSouth East Asia• Singapore, Indonesia,
Philippines, Vietnam, Malaysia, Thailand
Pacific – Extend leading position• South Pacific well covered• 41 branches• 20-60%share
International - Move to growth phase• Last year, we presented a three year agenda to “Simplify and Focus”
International. The first phase is nearing completion: Implemented risk reduction program Simplified positions and extracted value in one move Freed up capital and management for growth agenda
• With the focus shifting to growth, new positions will be built in the Pacific and Asia:
In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement
In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce
• Implementation of the growth agenda will take two years, and a deal pipeline has been established
Build existing positions- Re-energise network points- Build Panin into top 5 retail bank
Invest in new growth- Target mass affluent as they get
online- Partner to complement ANZ’s
strengths in e-commerce and monoline businesses (eg cards)
Two growth agendas
Markets Large in number, individually small Modest growth Highly concentrated – few players Similar market/management modelsANZ Leading position in eight markets Strong track record NPAT 1H2000: $22m
Pacific
Asia
Starting Position
Markets Individually large, more fragmented Recovery under way Emerging “mass affluent” Rapid growth in online economyANZ Network positions in 11 countries Early investment in Panin Bank NPAT 1H2000: $15m
Strategic Response Replicate leading market positions
- Organic growth or acquisition in new geographies
- Rapid deployment of successful management model
Continue to drive operational improvement
Fiji
Vanuatu
Samoa
Solomon Islands
American Samoa
Tonga
Cook Islands
PNG
1
1
1
2
2
2
1
3
Leadership Positions
Pacific: Consolidate existing leadership
* First half annualised
Customer segmentation - Prime Banking in Fiji, PNG
Products - funds mgmt, insurance, asset finance
Electronic channels: ATMs, EFTPOS
Fee income automation
Going forward Continue to invest in new
channels and products Review opportunities to
regionalise operations
Continuous Improvement Results (NPAT)
1999 2000*
$37m$44m
% Consumer• Assets 81%• Liabilities 80%• NPAT 85%
Impact of recent events in pacific
Real GDP Growth NPAT contribution
-10
-5
0
5
10
'90 '92 '94 '96 '98 f00
Fiji
Solomons
Other Islands
Fiji/Solomon
Lending Assets 2000
Profit After Tax
H2000
5432
4668
100% = $766m $22m
Extending leadership to new markets
Size of the pacific opportunity
5
10
15
20
25
10k 100k 1m 10mPopulation
GDP/
Capi
ta (U
SD 0
00's)
Guam
French Polynesia
New Caledonia
PNGFiji
Northern MarianasPalau
American Samoa
Micronesia
Marshalls
Cooks
Solomons
Samoa
Vanuatu
US Territories, 24% GDP
French Territories, 36% GDP
South Pacific, 40% GDP
Pacific Population and Wealth, Bubble Size proportional to GDP
Asia: Dealt with the credit crisis as predictedNew Non Accrual Loans Net Specific Provisions
1998 1999 H2000
$277m$270m
$101m
Coverage (%) 86.0 67.2 70.0
One name
1998 1999 H2000
$228m
$118m
$51m
Re-energise AsiaEconomic Recovery in Region Grow the Business in Selected Areas
Build Strategic Assets Trade finance Network customers Relationship banks Key project sectors
Maintain Policy on Non-Strategic Assets USD wholesale banking Interbank lending Participations
ANZ represented in: Japan South Korea China Hong Kong Taiwan Singapore
Indonesia Philippines Thailand Malaysia Vietnam
Profile Assets $2.6bn (Dec 1999 full year) Pre provisions NPAT $107m 29% shareholding by ANZ Currently number 8 Non-State Bank
- 106 branches mainly in Jakarta/Java
New ATMs Phone banking/National Call Centre Refurbish branches New branches in Jakarta
Currency/Stock Market Remains Weak
Indonesia: Patience in building positionPanin Bank
Going forward AUD20m investment in retail banking
-200
20406080
100120140
Jan-97 Jan-98 Jan-99 Jan-00
All Items
Consumer Prices
annual % change
Food
Inflation Improved
2002200420062008200
10200122001420016200
1996 1997 1998 1999 20000100200300400500600700800
Jakarta SE CompositePrice Increase (RHS)
Rupiah per USDInserted Scale (LHS)
Rupiah Index
Key to new Asia growth are mass affluent
• There is a largely untapped opportunity to provide financial services to the emerging mass affluent consumers
• eCommerce provides a more cost efficient and low risk way of targeting this potential – ANZ is a leader in eCommerce
• The need for speed, access to markets and risk sharing means that we need to combine the strengths of ANZ with those of others in the region
• We have joined forces with OCBC from Singapore to develop the regional business, which we expect to launch early 2001
• The business model recognises the weaknesses of existing pure online propositions and includes specific responses to these
0.10.26
2000 2005
14
24.24
1.3
3.5
1.24
2.98Taiwan
1.34
2.61
2000 2005
0.1 0.23
2000 2005
0.5
0.89
2000 2005
0.45
1.11
2000 2005
Mass affluent market is emerging
Adults in urban areas:• Annual income over approx.
US$10,000• Connected to the Internet
Wired Emerging Affluent
Thailand
Malaysia Singapore
China 3 Korea
Indonesia
Philippines
Japan
Hong Kong0.12
0.39
2000 2005
1.5
3.23
2000 2005
Online use is taking off
Internet Penetration of
Households (%)
GDP / Capita(USD '000)
Singapore
JapanHong KongTaiwanMalaysiaKorea
Internet Take-up Zone
Based on US experience, B2C financial services takes off when internet penetration hits 10-20%
Broking and Net Banking are the early ‘Killer Apps‘
Indonesia
Vietnam
ThailandPhilippines
China
0
5
10
15
20
25
0 10 20 30 40
Australia
Implication: e-Commerce opportunities are starting to emerge in each country
Online customers are attractive
100116
259
169185
AverageDepositBalance
AverageLoan
Balance
Number of products
AverageProfitability
Offline (= 100)Online
Online customers cheaper to acquire (index)Online customer more attractive
Source: ANZ customer base
Offline Online
500
100
Pipeline under development
Regional e-based financial institution
+
Internet Service Provider
B2B and B2C Enabling
Online Stockbroking
Retail Alliances
Leading Financial Portal
Banking front end
OCBC/ANZ partnership makes sense
June 2000 USDmTotal Assets 33,562Market Capitalisation 7,751NPAT, Dec 1999 full year 415Market Share (Spore) 17.9%
OCBC Profile
Complementary licences, strategic fit
Both banks embrace the e-space at home
Shared vision of opportunity across Asia
Partnership Benefits
Country OCBC ANZ
China 5 2
Hong Kong 3 1
Indonesia JV Panin
Malaysia 25 1 Rep.Office
Philippines 1 1
Singapore 44 1
Taiwan 1 1
Thailand 1 1 Rep.Office
Vietnam 1 Rep.Office 2
Korea 1 1
Japan 1 2
Leveraging ANZ’s strengths
Credit Cards
ConsumereCommerce
Corporate eCommerce
• No. 1 in Australia• Domestic partnership through Qantas Telstra Visa Card• International partnership with Star TV
• Highest penetration of customers banking with anz.com• Continuously expanding product suite, eg. eauto, pay anyone, my
ANZ• Key alliances - E*Trade, Freenet, MultiEmedia, Medweb
• Leader in electronic banking to corporates, ANZ Online, FX Online• B2B solutions - eGate, eProcurement with MRO.com, corProcure• Development of FX Online web based platform
International - Move to growth phase
• Last year, we presented a three year agenda to “Simplify and Focus” International. The first phase is nearing completion:
– Implemented risk reduction program– Simplified positions and extracted value in one move– Freed up capital and management for growth agenda
• With the focus shifting to growth, new positions will be built in the Pacific and Asia:
– In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement
– In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce
• Implementation of the growth agenda will take two years, and a deal pipeline has been established
International program phasing
Indian Mgmt Strengthened
Strategic Review
Completed/ Elmer Funke Appointed
6/99
Profit Decline Halted – Growth
Visible
Grindlays Transaction Announced
Completion Grindlays
Transaction
9/99 3/00 9/00 1/01
Profit Improvement
Program Launched
Complete “Simplify and Focus”
Target
Drive Growth Agenda: Pacific new
markets Asia
eGrowth
eAsia Team Established
Acquisition Amerika Samoa
Bank Announced
BOOM.COM Investment
eCommerce Joint Venture
with OCBC Announced
Customer Launch OCBC Joint Venture
Panin Bank Rights Issue
Launch Internet Banking
Indonesia
• JV Alliances• Pacific new
markets strategy
Complete ‘Simplify and Focus’ Extend Pacific Leadership
• Re-energise existing positions
Network points Panin Bank
• Invest in eGrowth Target mass affluent Partner to complement
strengths
• Joint Venture announced
Invest in Asian eGrowth
• Replicate leading market positions
Organic or acquisition Deploy successful
management model
• Continue to drive operational improvement
• Agenda defined and under way
• Implemented risk reduction program
• Simplified International positions in one move with Grindlays sale – completion on track
• Freed up capital and management
Summary
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