Asia Investor Roadshow - ANZ · Asia Investor Roadshow Australia and New Zealand Banking Group...

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Asia Investor Roadshow Australia and New Zealand Banking Group Limited ANZ Royal Bank Stephen Higgins CEO, Cambodia 20 June 2008

Transcript of Asia Investor Roadshow - ANZ · Asia Investor Roadshow Australia and New Zealand Banking Group...

Page 1: Asia Investor Roadshow - ANZ · Asia Investor Roadshow Australia and New Zealand Banking Group Limited ANZ Royal Bank Stephen Higgins. CEO, Cambodia. 20 June 2008. 2 ... Credit Card

Asia Investor Roadshow Australia and New Zealand Banking Group Limited

ANZ Royal BankStephen HigginsCEO, Cambodia

20 June 2008

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ANZ Royal –

“next wave”

developing into “franchise significant”

Launched Sept 2005, already a top 4 bank

Now has biggest retail network in ANZ outside of Aust & NZ*

Key metrics for 2008 expected to be 3x higher than original 2005 “3 year”

plan

Proof that we can rapidly build a leading retail bank

* Excludes non-ANZ branded partnerships

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Strong GDP growth and multiplier effect for financial services

Scope for “high quality”

banking proposition across sectors

Rapid roll out of representation

Full product suite

Dominate quality end of market

Infrastructure build program well established –

continue to extend reach

Building staff capability a key focus

Opportunity

Strategy

Infrastructure

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Cambodia China IndonesiaMalaysia Thailand Vietnam

Source: IMF

Credit/Deposits as a % of GDP

Source: IMF

GDP growth %%

%Deposit a/c

numbers growing 38% pa!

Very high GDP growth Low banking penetration with significant upside

“Rapid increases in broad money and credit to the private sector are not only to be expected at this

stage in Cambodia’s development but are essential for the modernization of the economy”

(IMF)

Forecast

The “double benefit”

in action, leading to rapid financial system growth

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bodia

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Deposits Credit

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Market is dominated by 4 banks, increasingly difficult for new entrants

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adia

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ABA

Deposit volumes as of Dec-07USDm

Top 4: 70%

of market

Currently 24 commercial banks in Cambodia, top 4 with ~70% market share

Larger banks are winning share, placing pressure on smaller banks

Opportunities for entry have become significantly more limited since ANZ Royal entered in 2005

“With the entrance to the market of ANZ Royal

(in late-2005), competitive pressure began to build as

more modern banking services became available”

(IMF)

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Service

Trust

Our success in retail based on differentiating on trust, service, and access

Market research shows ANZ Royal already dominates on trust

Mystery shopping demonstrates clear lead on service

High quality branches equivalent to developed market branches

Leading ATM network (~ twice nearest competitor)

2nd largest branch network

Dominate POS

Only bank with Internet Banking

Access

Widespread bank failures in the past led to lack of trust in banks

Opportunity for highly rated, international quality bank

Poor service levels in Banks prior to ANZ Royal

Basic branches

Almost no ATMs in country prior to ANZ Royal

Limited branches

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Unlike developed markets, ANZ Royal only bank in market with full product suite

eg only bank with Markets capability –

provides very significant opportunity

Leveraging ANZ trade relationships globally

Have appointed Deposits specialist to service deposit rich customers

Implementing tracking tools to improve management of cross sell

Issued first syndications term sheet in Cambodian market

Successfully attracting business customers, opportunity to deepen relationships

Cross sell - a significant opportunity

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ANZ Pacific* ANZ Royal

Lending Non-Lending

However we are underweight “non-lending” income

* ANZ Pacific businesses are most comparable to ANZ Royal business model

At time of entry, we targeted a list of ~100 corporate customers

We now bank over ¾

of them, in addition to large SME portfolio

Initially focused on lending & deposits

Customer acquisition has been very successful

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Investing in the skills of our people is our most important infrastructure initiative

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Rapid FTE Growth# FTE

Experience

Almost 75% of staff have <12 months banking experience

Rapid business expansion requires a large recruitment agenda –

we have proven we have the capability to do that

ANZ Royal already established a reputation as employer of choice

Limited experienced bankers in Cambodia; focus on employing enthusiastic, smart local graduates

Offering training and development-

minimum 50,000 hours of training this year

Building an accreditation framework relevant across ANZ Asia

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ANZ Royal has far surpassed expectations*

050

100150200250300350400

2005 2006 2007

Deposits Loans

USDm Significant balance sheet growth

02468

1012141618

2005 2006 2007Revenue Expenses

USDm Helping drive higher than expected revenue growth

Bank of the YearANZ Royal, Cambodia2006, The BankerFinancial Insights Innovation AwardANZ Royal, Cambodia2007, Financial Insights

* Compared to initial 3 year business plan

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Summary

Cambodia is achieving high economic growth, and significantly higher penetration of financial services

ANZ Royal has filled the market gap for a high quality foreign bank, with a strong local partner

In just three years, ANZ Royal has:

Become one of the leading companies in Cambodia

Built the biggest retail network in ANZ outside of Australia and

New Zealand

Far exceeded original expectations

The outlook is positive

We will continue to heavily invest in brand, distribution, and our people

Significant opportunities to acquire new customers, and deepen existing relationships

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Appendix

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Market Scan –

Economic Outlook

Economic base remains narrow with GDP contribution largely coming from agriculture (34%), garment and gemstone mining industry (29%) and services/tourism (37%)

Exports expected as % of GDP for 2008 47.9% and 47% in 2009. Imports as % of GDP for 2008 70.1%.

Investment opportunities abound for Cambodia, despite the slower pace, given stable macroeconomic settings and it’s need for physical capital accumulation.

Short term and medium term economic growth projections are strong due to export growth, increasing foreign investment, oil and gas production and rising private consumption

As Cambodia moves towards sustainable growth patterns inflationary pressures are likely to ease.

Recent NBC changes to Deposit Reserve Requirements in an effort to control inflation and curtail the sharply rising property prices, will have an impact on growth rates.

The 5 yearly national election in occurring in July 2008 and the impacts of the election and the NBC changes is difficult to predict.

* Statistic is ANZR’s

estimation based on market feedback. Revised CPI data expected in Q3 2008, post elections.Sources: Mekong Times, April 9th, 2008, CIA Fact Book, World Bank website, Index of Economic Freedom, Transparency International, Ministry of Economy RGC.

CPI inflation 2000 - 2008(Annual %)

Cambodia has been the regional economic star over the last 5 years. Evidence suggests that the country faces economic challenges to maintain the pace. The economic state of play is;

GDP growth 2000 - 2008(Annual % growth)

0.0% 0.0%

3.7%

0.5%

5.6%5.8%

4.7%

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2000 2001 2002 2003 2004 2005 2006 2007F

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Banking Industry

Competitive pressures are increasing with consolidation in industry likely to occur, as well as;

More players in the market (international & full service)–

Current competition more aggressive and fight on price/ products/ policy–

War for talent will continue to increase and put pressure on personnel costs–

Increased marketing across the industry–

Microfinance likely to secure deposit taking rights–

Increased distribution will be the main game–

Asset finance will be a targeted area for growth for banks/ non banks

Market Scan –

Banking Industry

Major Competitor Analysis ANZR Peer 1 Peer 2 Peer 3

Branches 16* 11 15 211

ATMs 112 11 25 28

Credit Cards Issuance √ √ √ X

Credit Card Acquiring √ √ √ √

Internet Banking √ X X X

Loans to Deposits Ratio

(most recent available figures)

0.50:1 1.37:1 0.79:1 0.99:1

*20 by end of 2008