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Corporate Financial Services - Leveraging our leadership position for specialisation and growth

Corporate Financial Services - Leveraging our leadership position for specialisation and growth. Roger Davis Head of Corporate Financial Services 18 July 2000. ANZ Corporate: leveraging our leadership position.

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Corporate Financial Services - Leveraging our leadership position for specialisation and growth

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  1. Corporate Financial Services - Leveraging our leadership position for specialisation and growth Roger Davis Head of Corporate Financial Services 18 July 2000

  2. 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

  3. CFS: a major contributor to the bank’s earnings $311m % $738m Institutional Corporate Transaction Services Corporate Asset Finance Capital Markets Financial Markets Structured Finance Customer Businesses

  4. CFS: financial performance Income % % Profit $m Net Interest Margin (LHS) Non Interest Income (RHS) Costs Provisioning $m % % Cost to Income (LHS) Cost to Assets (RHS) Actual Credit Costs Economic Credit Costs

  5. #1 Best Bank in Australia US Global Finance Magazine 1999 #1 Arranger - Asia Pacific Project Finance International 1999 #1 Domestic Commercial Paper Asia Money 1999 #1 Arranger/Co-Arranger - Greater Asia Capital Data Loan 1999 #1 Interest Risk Management BRW/KPMG Poll 1998 #1 AUD/USD Currency Options Bank Risk Magazine 1999 #1 FX House All Round Excellence Asia Money 1999 CFS: aleader in Corporate Banking Share of Significant Relationships with Large Corporates % 50 40 30 20 10 0 ANZ WBC NAB CBA Source: 1999 Greenwich Associates Share of Primary Relationships with Middle-Market Companies 30% 20% 10% 0% ANZ NAB WBC CBA Source: 1999 Roberts Research

  6. CFS: a balanced portfolio of service and asset businesses RAROC Higher Global FX Global Trans GCM Fin. Products Corporate GSF Institutional Asset Finance Lower Economic Capital

  7. A customer focus and product centric business 6 Product Businesses 3 Customer Segments Financial Markets Institutional Corporate Esanda* Overall Satisfaction with Bank Capital Markets Structured Finance ANZ NAB CBA WBC Global Transaction Services Business eCommerce Asset Finance Source: Corporate Banking Roberts Research Group

  8. Customer centricity: Institutional Banking Share of Corporate Profit Customer EVA Deciles Mar-00 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 21% Market Penetration - Large Corporates % 50 40 30 20 10 0 ANZ NAB CBA WBC Source: Greenwich Associates

  9. Customer centricity: Corporate Banking Customer EVA Deciles* Share of Corporate Profit • 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% Market Penetration - Middle Market Strategies

  10. Customer centricity: Asset Finance Motor Vehicle Deal Volumes Australia Share of Corporate Profit Strategy • Improve sustainability of core franchise • Radically transform the business • Accelerate growth program 14% Source: KPMG, Financial Reports, Roy Morgan, Esanda $b (est.) % share (est.) market share writings New Business Writings Motor Cars Comm Vehicles Total Motor Vehicles Other Total Market Source: ABS, AFJ, Esanda

  11. ANZ CBA NAB WBC 6 6.5 7 7.5 8 8.5 ANZ ANZ CBA CBA NAB NAB WBC WBC 6 6.5 7 7.5 8 8.5 6 6.5 7 7.5 8 8.5 CFS: market leader in customer satisfaction Satisfaction with Relationship Manager Tailoring solutions to our clients' business needs ANZ NAB CBA WBC Coordinating specialist resources to service our clients’ business Satisfying our international trade specialist clients Source: Roberts Research Group - 1999 Customer Satisfaction Research

  12. A focused customer and product centric business 6 Product Businesses 3 Customer Segments Financial Markets Institutional Corporate Esanda* Overall Satisfaction with Bank Capital Markets Structured Finance ANZ NAB CBA WBC Global Transaction Services Business eCommerce Asset Finance Source: Corporate Banking Roberts Research Group

  13. Product centricity: Global Transaction Services Share of Corporate Profit Customer Perception - Global Trade ServicesAustralasia Region, January 2000 % 70 ANZ 60 NAB 50 WBC 40 CBA 30 Citibank HSBC 20 10 0 Source : Brendan Wood International League Tables Strategy No. 1 Trade Services provider in Australasia 2000 (BWI) No. 1 in sub-Custody in Australasia 2000 (GI) Leader in major transaction banking services Leader in AUD/NZD Correspondent Banking • 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

  14. Product centricity: Asset Finance Motor Vehicle Deal Volumes Australia Share of Corporate Profit Strategy • Improve sustainability of core franchise • Radically transform the business • Accelerate growth program 14% Source: KPMG, Financial Reports, Roy Morgan, Esanda $b (est.) % share (est.) market share writings New Business Writings Motor Cars Comm Vehicles Total Motor Vehicles Other Total Market Source: ABS, AFJ, Esanda

  15. Product centricity: Global Structured Finance Share of Corporate Profit Key Activities • Industrial Transportation • Project Finance • Corporate Finance • Export Credit • Leasing and Tax 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 16% League Tables No 1 Arranger 1999, Asia Pacific No 1 Arranger 1999, Asia and Australia No 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) Source: Project Finance Intl, Global Finance, Capital Data Loanware, IFR Asia, EFIC

  16. Product centricity: Financial Markets Share of Corporate Profit FX Cumulative Trading Revenues $m 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 14% 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)

  17. Product centricity: Capital Markets Share of Corporate Profit IR Derivative Cumulative Trading Revenues 5% Cumulative Daily Revenue $m League Tables No 1 Domestic Commercial Paper Derivatives/Risk Management House of the Year No 2 Lead Manager, Corporate Bonds No 3 Best Lead Manager, Securitisation, No 3 Australia/New Zealand MTNS • 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

  18. 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

  19. 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:

  20. Growth: credit derivatives • 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

  21. Growth: equity derivatives Australian Exchange Traded Options Market $b • 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 Australian Warrant Market $b

  22. Growth: private equity funding Australian Private Equity Funds Under Management • 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 $m

  23. Growth: increase product penetration in middle-market Estimated $80+ million revenue target over three years Source: FPRG, CPA, Roberts Research

  24. Capital Markets deals for the middle-market

  25. Middle market product penetration 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 Product Penetration in Middle Market $m FX Products Cap Mkts Products

  26. e-Commerce momentum B2B

  27. Growth: business e-Commerce Australian Online Total Revenue Estimates (A$b) Total Online Revenues (A$b) Business-to- business (B2B) Business-to- consumer (B2C) Corporate Banking Portal (FXOnline) eProducts (eGate, Identrus) B2B Portal (eProcurement)

  28. Growth: FX online Registered Users Key Points • Automated real time dealing • JV with Reuters • Leverage ANZ dominant FX position • First mover advantage • 35% share of the FX online market Transaction Volume

  29. 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 eGate Customers Actual Target

  30. Growth: eProcurement Key Points • 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 Supplier Marketplace Business System Integration • Inventory Maintenance, Repair, • Purchasing and Operating • Accounting Supplies and Services • Human Resources Browse Suppliers’ catalogues and perform Desktop Requisition transactions in real time Workflow Distributed Buyers Approval Routing

  31. Growth: eauto.com.au

  32. 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

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