Australia and New Zealand Banking Group (
Full-Year 2010 (Year End 09/30/10) Earnings Call Transcript
October 27, 2010 7:30 PM ET
Jill Craig – Group GM, IR
Mike Smith – CEO
Peter Marriott – CFO
Shayne Elliott – CEO, Institutional
Alex Thursby – CEO, Asia Pacific, Europe & America
Philip Chronican – CEO, Australia
Craig Williams – Citi
Matt Davison – Merrill Lynch
James Freeman – Deutsche Bank
John Wall (ph) – UBS
Jarrod Martin – Credit Suisse
Ben Koo – Goldman Sachs
Richard Wiles – Morgan Stanley
TS Lim – Southern Cross
Scott Manning – JPMorgan
Brett Le Mesurier – Axiome Equities
Victor German – Nomura
Brian Johnson – CLSA
Johan Vanderlugt – Daiwa Capital Markets
Australia and New Zealand Banking Group Limited F2Q10 (Qtr End 03/31/10) Earnings Call Transcript
» Flagstar Bancorp CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Sterling Bancshares CEO Discusses Q3 2010 Results - Earnings Call Transcript
Good morning everybody, welcome. Welcome to the 2010 ANZ Full Year Results announcement. We’re presenting today from the ANZ Center which is at 833, Collins Street in Melbourne. There are people joining us at our Martin Place offices in Sydney as well as, of course, on the web and by phone. And special welcome we’ll say to our retail shareholders who will be joining us over the web. Our CEO, Mike Smith, and CFO, Peter Marriott will present to us this morning for about 25 minutes or so. And we’ll then move to questions. I’ll take you through the housekeeping for that at that point. Mike.
Many thanks Jill and good morning to all of you. Today as you know we released our full year results for 2010 which I might add also that marks our 175th anniversary. So it’s our birthday as well. Peter Marriott, who is here with me today, assures me actually he wasn’t with the bank in 1835 but I know he’ll answer the questions as though he was.
I’ve also got a number of the Management Board here as well who may wish to answer some questions from you later. What our 2010 results demonstrate is that ANZ has made real momentum in every area of our business. It also demonstrates that we have made momentum in our strategic ambitions to be a super-regional bank in Asia Pacific. And I think our strategy now makes even more sense in post GFC world and we expect Asia Ex-Japan to grow to around 8% in 2011, compared to about 2.5% in the US and the Europe.
Australia was expected to continue to perform well. And in New Zealand the recovery is also gathering momentum. We remain the only Australian bank to give shareholders a material exposure to Asia’s growth and one of only a few banks in the world to give investors a pure play to Asia Pacific. And I think we’re actually unique when you consider the significance of our domestic businesses here in Australia and in New Zealand.
Turning to the full year numbers, while the focus is mainly on the financial results, the reality is that over the long-term these results are our reflection on how we are serving our customers and how we are contributing to the communities in which we operate. As we go through the results, you’ll hear me highlight the continued strong performance in customer satisfaction, particularly in Australian retail but also in institutional and corporate banking here in Australia and in New Zealand.
We were also named the leading sustainable bank globally by the Dow Jones Sustainability Index for the fourth year in a row. Let me now give you a brief overview of the results. We reported an underlying net profit after-tax of $5 billion which is up 33% on last year. Our statutory profit for the full year was $4.5 billion which was up 53%. While these are good headline numbers, we need to remember that we had record provisions last year as a result of the GFC and the economic downturn that followed. And this year provisions have improved, quite significantly. They are down 40%.
Importantly though we have had good growth in profit before provisions which was up 6%. The increase in underlying EPS was smaller. It was up by 18% but you also have to bear in mind that we had a 14% increase in the weighted average number of shares on issue. Group margins were up 16 basis points although margins in the Australian division and the retail division were down reflecting deposit competition and higher wholesale funding costs.
Importantly, for our shareholders, the proposed final dividend of $0.74 is 32% higher than 2009, bringing a total dividend to a $1.26 per share which is up 24%. If I’ll now turn to the regions, in Australia while income and expenses were impacted by acquisitions in particular INGA, Phil Chronican and his team delivered a 42% lift in profit with profit before provision up 14%.
Lending growth or retail profits grow 8% despite margin pressures in the second half which was driven by higher funding costs and the drag of the mortgage book. Market share growth was a feature. Lending growth of 12% was driven primarily by 1.4 times systems growth in mortgages, while household customer deposits grew 11% or about 1.2 times system. We have achieved this while maintaining our number one ranking on overall customer satisfaction in retail.
Commercial banking’s contribution was strong with profits up 30%. Asset growth of 3%, excluding the Landmark acquisition was encouraging against a backdrop of negative system growth. And there were large decrease here in provision charge. In Asia, as you can see earnings from partnerships and institutional were the main drivers over 21% lift in profit to $620 million. We told you last year that 2010 would be a year of consolidation for the Asia Pacific and Europe and Americas region. Following the acquisition of businesses from Royal Bank of Scotland, and the six integrations that we have actually completed this year.
Alex Thursby and his team have built what was a presence in Asia into a real business. Customer deposits were up 72% with lending up 45%. Retail deposits double to almost $10 billion. Deposit acquisition from the new businesses has been stronger than we expected with new customers being attracted by ANZ strength and by our regional offering. During the year, we also achieved a number of other milestones in our regional expansion plans.