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Performance and Growth

Performance and Growth. John McFarlane Chief Executive Officer 6 October 2000. 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

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Performance and Growth

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  1. Performance and Growth John McFarlane Chief Executive Officer 6 October 2000

  2. 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 • Implications • Distinct strategies for each customer and product business • Use IP technology to transform costs and service • Invest cost savings in high growth segments Specialisation e-Transformation Growth

  3. Top quartile financial companies by value focus on a narrow set of growth themes Growth expectations* % of share price Top quartile company Rationale for expectations of growth • Leading custody and trust service provider to US high-end affluent market Northern Trust 75% • Superior driver of revenue growth and cost savings in branch banking. Potential to replicate business model to acquisitions Fifth Third 71% • Strong financial performer whilst building scale through M&A Firstar 64% • Strong position in consumer banking in high-growth Asian markets Standard Chartered 60% • Scale in US asset management, servicing and custody Mellon Financial Corp 57% • Global scale in asset servicing and processing Bank of New York 57% • Global scale and scope of tangible and intangible assets Citigroup 55% • Building leading positions in US in e-commerce, mortgage servicing and business lending Wells Fargo 51% * Calculated on 4 August 2000 Source: Brokers reports; Hoovers; media

  4. Sacrifice earnings to build growth Deliver earnings but sacrifice growth ANZ historically (1995-1999) The strategy requires maintaining a good balance between EPS growth and increasing expectations PE Ratio Aspiration Improved EPS growth and higher PE ratio PE growth EPS growth EPS growth %

  5. Portfolio strategy should reflect degree of globalisation and leverage real capabilities now • FX Institutional Banking GSF • Funds Management Soon Trade B2B Capital Markets Esanda Custody Cards Impact of globalisation B2C Later Wealth Management • Mortgages General Banking Mid Corporate Not yet Small Business Less developed At par Local leader Regionally distinctive Globally distinctive ANZ’s capability

  6. Different businesses need different strategies Business size by NPAT Invest for rapidgrowth Create new businesses e-Payments FM GSF High e-Asia Wealth Cards GTS Market Growth Institutional FX Cap Mkts Corporate Small Bus Low • Defend position and return • Grow selectively Gen Banking • Optimise performance • Identify new growth products Esanda Mortgages Low High ROE

  7. Performance and growth requires outperformance on costs % Cost Income Ratio 70 • Have committed to substantial cost reduction and restructuring programs to: • Meet EPS targets • Increase growth funding 65 60 WBC 55 CBA ANZ NAB 50 40 1997 1998 1999 Mar-00 2000 2001

  8. 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 Cultural change is imperative….and happening Balancing the autonomy of our 21 businesses with strong leadership from the centre Business Unit Corporate Centre

  9. Distinctive Focused Forward looking Right for ANZ Organised for success MDs appointed Targets and plans established We are giving ourselves the best possible chance of success + + Strategy People Execution • Delivered over the last three years • Growth momentum: • Cards • Mortgages • eCommerce

  10. 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 the medium term ANZ in 1 - 3 years ANZ in 4 - 7 years

  11. Copy of presentation available on www.anz.com

  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 Gentry Head of Investor Relations ph: (613) 9273 4185 fax: (613) 9273 4091 email: gentryp@anz.com

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