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Meeting the New Economy Head on

Analyzing Australia and New Zealand Banking Group, ANZ, as they navigate the evolving financial landscape with eTransformation, focusing on growth through specialization and leveraging technology for superior customer value.

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Meeting the New Economy Head on

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  1. Meeting the New Economy Head on Elmer Funke Kupper Australia and New Zealand Banking Group Ltd Wednesday, 30 August 2000

  2. ANZ One of the ‘Big Four’ Australian banks: • Provider of fullrange of financial services • Leadership in Corporate Banking, Credit Cards and Trade Finance • Emerging strong eCommerce position • Offshore network in Asia and Pacific (following sale of ANZ Grindlays to Standard Chartered) • Assets A$167b • Market Cap A$20b • Credit Rating AA-/Aa3 • Profit (first half 00) A$817m ANZ Headquarters 100 Queen Street, Melbourne

  3. Significant momentum in financial performance EPS ¢ % ROE Lending Mix % Cost Income Ratio % Mortgages Emerging Markets WBC CBA NAB ANZ

  4. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will deliver superior customer value and erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth businesses which leverage capabilities and brands

  5. Technology transforms what customers expect Cost of a 3-minute telephone call from New York to London Time required to find a high rate certificate of deposit 1996, $ 25 min Telephone 10 min www www with agent 1 min

  6. EDS IBM Yodlee Quicken Product Manufacturing Distribution Channels & Processing Sales & Marketing Customer Need House Purchase Countrywide AHL Credit Card MBNA NextCard Cash Deposit Egg ING Wealth Mgmt Fidelity Schwab A disaggregated approach is required

  7. Increase focus on specialist positions Competitive Weaker Leader (#1) B2C eCommerce Wealth Management Mortgages General Banking Small Business Funds Management Cards Personal Corporate Capital Markets Institutional Transaction Services Corporate Structured Finance Foreign Exchange Asset Finance B2B eCommerce International/ eCommerce Asia Pacific

  8. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will offer superior customer value and will erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth business which leverage capabilities and brands

  9. We have no choice but to transform our economics Operating Costs Ratio Schwab to ANZ Retail %FUM 2 1.8 6 1.2 4 1 0.6 2 0 0 Customers Sales Branches Staff Traditional Retail Bank Internet Bank Internet Bank (at scale)

  10. Automated, seamless Straight-through Processing Single IP Network Customer Management Better Service Lower Costs Technology vision Customers Web enabled Channels Standard Platforms

  11. Straight through processing Personal Banking Loan Origination System Internet Middleware Application Servers Customers Backend Web Servers Internet Service Provider ANZ’s Core A/C Processing System Mortgage Managers Credit Bureau ANZ Network ANZ Branch Network Intranet MIS packaged solution packaged solution IBM M/frame Back-office Operations First implementation for Mortgage products scheduled 2000

  12. Group strategic direction built on specialisation, eTransformation and growth Proposition • Integrated financial services firms will lose to specialists over time • The rise of specialists and new technologies will offer superior customer value and will erode margins • For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy • Reconceive and develop ANZ as a portfolio of specialist businesses • Become an “eBank with a human face” • Create a portfolio of high growth business which leverage capabilities and brands

  13. The Web is at the heart of our growth and future Sales & Service Platform B2C AST Real Time Loan Approvals B2B Internal ERP VIPS Directors on line

  14. 300 Index: 100 = average retail customer 200 100 0 Lending Balance Deposit Balance Profit Attrition anz.com is now leading the way in B2C Internet Banking Signups Internet Banking Users % of Total Relationships 300,000 250,000 Australia 200,000 10.2 8.9 8.9 7.9 150,000 5.1 100,000 New Zealand 50,000 0 ANZ WBC NAB St G CBA Oct-99 Feb-00 Jun-00 Internet Banking Customers Online Applications - Credit Cards Number of Products

  15. myanz.com is the latest new offer

  16. Business in Own Right - Model 1 Direct Product Delivery Direct Delivery Financial Institution BusinessCustomer Facilitation of Other Businesses - Model 2 Trading Enablement Business Customer Supplier Buyer E-Products Financial Institution Two views of financial services in B2B

  17. Existing online services • 20,000 base stations, 80,000+ users • 5M payments per month • 75%+ business customer penetration • $2.5bn turnover • 250 users • Largest auto finance provider • Over 300 dealers connected ANZ OnLine • Domestic, global payments • Global reporting • Trade FX Online 1999 • Real-time pricing, deal execution reporting • Spot, forward Esanda Auto Finance • Assessment & approval of carfinance • Established support infrastructure provides: • High volume capacity • High reliability time critical processing

  18. B2B example: eGate Key Features • Multi-payment, multi-channel, multi-currency • Secure gateway • Covers B2B, B2C, C2C,e-procurement, e-tailing • Supports traditional payment channels

  19. Card ANZ On Account eGate Other B2B example: eProcurement Key Features • Transparent internet marketplace for both buyer and supplier • Full range items including maintenance and repair supplies, stationery, computing equipment • Click and go approach, pay for as you go • Integration with financial services • Currently in beta test • Leveraging corProcure alliance of 14 leading Australian companies Clearing • Merchant • Issuing • Other Internet MRO MRO Marketplace Buyer Workflow Catalogues Supplier Punchout Author- Interfaces isation Messaging Internet Internet Buyer Supplier

  20. Japan 24.24 Mass affluent market is emerging 14 Korea China 3 3.23 0.39 1.5 Hong Kong 0.12 3.5 2000 2005 2000 2005 1.3 Taiwan 2.98 1.24 Thailand 1.11 Philippines 0.45 Malaysia Singapore 2.61 Indonesia 2000 2005 1.34 0.89 0.23 0.1 0.5 0.26 2000 2005 0.1 2000 2005 2000 2005 2000 2005

  21. The challenges have little to do with banking • Dramatically reduce the cost of customer acquisition away from- Advertising only- High deposit rates • Improve monetisation- Deposit and asset products- Non banking products • Create loyalty UK Interest Margins The Challenges %NIM Egg Launched Halifax Lloyds/TSB Headline Net Interest Margin Supermarkets Egg • Regulatory hurdles 95 96 97 98 99

  22. OCBC – ANZ Joint Venture Leading Financial Portal Online Stockbroking Internet Service Provider • Regional e-based financial institution + Retail Alliances B2B and B2C Enabling Banking front end

  23. ANZ in 3-5 years • Leading positions in a number of specialist businesses in Australia, New Zealand and Asia • Portfolio of businesses likely to be narrower and more focused • A performance orientated driver of individual businesses • Portfolio actively re-shaped by the corporate centre • Multiple strategic alliances • A range of growth businesses and options • A leader in eCommerce • Higher market to book ratio

  24. Copies of ANZ strategy presentations available on www.anz.com

  25. Contribution balanced between personal and corporate, and product and customer 738m* 368m 311m % % Other Small Business Institutional General Banking Corporate Corporate Personal Wealth Mgmt Transaction Services Asset Finance Mortgages Capital Markets International Foreign Exchange Funds Mgmt Structured Finance Cards 37m* Customer Businesses Shaded Pacific Asia * Excluding Grindlays International

  26. 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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