Performance and Growth
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Transcript of Performance and Growth
Page 1 of 12
Performance and Growth
John McFarlaneChief Executive Officer
6 October 2000
Page 2 of 12
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
Growth
e-Transformation
Specialisation
Implications
• Distinct strategies for each customer and product business
• Use IP technology to transform costs and service
• Invest cost savings in high growth segments
Page 3 of 12
Top quartile financial companies by value focus on a narrow set of growth themes
Top quartile company
Growth expectations* % of share price Rationale for expectations of growth
* Calculated on 4 August 2000Source: Brokers reports; Hoovers; media
Northern Trust • Leading custody and trust service provider to US high-end affluent market
75%
Fifth Third • Superior driver of revenue growth and cost savings in branch banking. Potential to replicate business model to acquisitions
71%
Standard Chartered • Strong position in consumer banking in high-growth Asian markets
60%
Firstar • Strong financial performer whilst building scale through M&A
64%
Citigroup • Global scale and scope of tangible and intangible assets55%
Mellon Financial Corp • Scale in US asset management, servicing and custody57%
Bank of New York • Global scale in asset servicing and processing57%
Wells Fargo • Building leading positions in US in e-commerce, mortgage servicing and business lending
51%
Page 4 of 12
0
5
10
15
20
25
30
0 2 4 6 8 10 12 14 16 18 20EPS growth %
Sacrifice earnings to build growth
Deliver earnings but sacrifice growth
AspirationImproved EPS growth and higher PE ratio
PE Ratio
ANZ historically (1995-1999)
EPS growth
The strategy requires maintaining a good balance between EPS growth and increasing expectations
PE growth
Page 5 of 12
Portfolio strategy should reflect degree of globalisation and leverage real capabilities
Impa
ct o
f glo
balis
atio
n
ANZ’s capability
FX
Institutional Banking
Mid Corporate
GSF
Custody
Capital MarketsTrade
Esanda
B2B
General Banking
Small Business
Mortgages
CardsB2C
now
Late
rN
ot y
et
Less developed At par Local leader Regionally distinctive
Globally distinctive
Soon
Wealth Management
Funds Management
Page 6 of 12
e-Payments
Gen Banking
Corporate
FM
Mortgages
GSF
Esanda
Wealth
FXInstitutional
Different businesses need different strategies
Low
Low
High
High
Invest for rapid growth
• Defend position and return
• Grow selectively
Create new businesses
• Optimise performance• Identify new growth products
ROE
MarketGrowth
Business size by NPAT
Small BusCap Mkts
Cardse-Asia
GTS
Page 7 of 12
• Have committed to substantial cost reduction and restructuring programs to:
Meet EPS targets
Increase growth funding
50
55
60
65
70
1997 1998 1999 Mar-00
Cost Income Ratio
WBC
CBAANZ
NAB
%
200040
Performance and growth requires outperformance on costs
2001
Page 8 of 12
Cultural change is imperative….and happening
• 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
Balancing the autonomy of our 21 businesses with strong leadership from the centre
Balancing the autonomy of our 21 businesses with strong leadership from the centre
Business Unit Corporate Centre
Page 9 of 12
We are giving ourselves the best possible chance of success
• Distinctive
• Focused
• Forward looking
• Right for ANZ
• Organised for success
• MDs appointed
• Targets and plans established
• Delivered over the last three years
• Growth momentum:– Cards– Mortgages– eCommerce
Strategy People Execution+ +
Page 10 of 12
ANZ in the medium term
• 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 1 - 3 years ANZ in 4 - 7 years
Page 11 of 12
Copy of presentation available on
www.anz.com
Page 12 of 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 GentryHead of Investor Relations
ph: (613) 9273 4185 fax: (613) 9273 4091 email: [email protected]