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Chairman`s & CEO`s Addresses to Shareholders at AGM

Document date:  Wed 21 Jan 1998
Published:  Wed 21 Jan 1998 00:00:00
Document No:  134200
Document part:  D
Market Flag:  N

HOMEX - Melbourne                                                     


Thank you Mr Chairman and good morning ladies and gentlemen.

ANZ is a great institution.  It is a privilege for me to be your 
Chief Executive Officer and to address you today.

The financial world is undergoing massive change.  This is 
particularly affecting the banking industry.  As your Chief 
Executive, it is my responsibility, not only to take advantage of 
today's opportunities, and to steer a clear course through current 
uncertainties, but also to direct the bank into the 21st century.

To this end, I recently launched a programme called ANZ 2000, which 
sets out the priorities for ANZ, for the next 3 years.  I would like 
to tell you more about this today.  ANZ 2000 has five major themes.  
I will cover each in turn:

Firstly, we aim to build ANZ into a truly unique financial company.

In many ways we are already unique.  ANZ is a major bank in 
Australia and New Zealand.  However, what differentiates us from the 
other local competitors, is that we are also Australia's 
international bank, and the leading foreign banker in many of our 

Therefore we have the potential of developing our excellent 
franchise here, and also to consolidate and expand our presence 
internationally.  How we are planning to go about this:

Firstly, whilst we are a major force in our domestic markets, we aim 
to be bigger, to be better and to be different.  In achieving this 
we would aim to increase market share, not only organically, but 
also by acquisition.

Secondly we must diversify into newer, growing segments, which offer 
higher growth and return than our traditional business.  Our 
partnership with Telstra and with Qantas on credit cards is an 
excellent example.

Additionally, funds management and private banking offer 
particularly attractive opportunities to leverage our strong branch, 
telephone and electronic distribution channels, and to expand our 
fee income.  We have yet untapped opportunities to develop strategic 
partnerships in the emerging areas of "new banking" particularly 
electronic retailing.

Next, we must capitalise on our very strong foundation in emerging 
markets, such as India, and to consolidate our position as the 
leading foreign bank.  These franchises have taken us one hundred 
years to build, and our position there is the envy of others.  We 
are on the brink of realising our as yet unrealised potential in 
these markets.

And finally, whilst the current crisis in East Asia poses 
uncertainties, this is a natural market for Australian companies.  
To date, the countries have now been both restrictive and expensive 
to enter.  We now have a unique opportunity to take advantage of the 
opening of these markets to expand our presence in the region, 
principally through acquisition and joint venture.  Given the close 
relationship of Australia with these countries and our natural 
affinity to such markets, ANZ has already had informal approaches as 
the preferred partner, but such opportunities are still in the 
formative stage.

The second theme of ANZ 2000 is to make dealing with ANZ an enjoyable 
experience for our customers.

As a career banker, I am under no illusion as to the perception of 
bankers.  However I was somewhat taken aback at the strength of 
feeling that appears to exist in Australia.

We all know how it feels in a restaurant, when we are missing a fork, 
unable to attract the waiter's attention whilst he sets tables for the
next day.  People are more important than things.

Turning to banking, we have all experienced the thrill of standing in 
a queue, of being shuttled from counter to counter, of receiving 
impersonal unsigned letters from a bank manager you have never met, of
having mistakes on our bank statements, of having a credit card 
transaction rejected at the till (when everyone is looking, and the 
cashier knows now with certainty that you are a doubtful character), 
of hearing that the 24 hour telephone service is not available at 
present, or of having a modest loan request declined by the new bank 
manager, despite a twenty year relationship with the bank.  Of course 
it couldn't happen at ANZ.

It is very simple, customers are not liabilities, they are assets.  In
fact, customers are the greatest asset that any bank has.  Customers 
feel bad when they are treated badly.  In particular, they don't like 
paying fees, particularly when they do not believe they are getting 
value for money.

Our first and greatest task is to instill a belief in every one of our
staff that we are here to serve our customers.  If we care about our 
customers and help them, they will be ours for life.  If our customer 
believes they are getting value, they will be happy to pay, and we 
will profit.  Everyone wins.  If we do this consistently, the 
perception of our bank, and of banks in general, will improve.

Now I am not sufficiently naive to assume that fixing this is easy.  
However, fixing it is precisely our intention, however long this might
take us.

Our third theme of ANZ 2000 is to create an environment at ANZ where 
people excel.

In addition to customers, the other major asset of a bank is its 
people.  We have many talented people today but not enough.  We are 
therefore increasing substantially the recruitment of graduates and 
MBAs as an investment in our future. 

We have many highly motivated and effective people, but there are 
others who are not.  We now ensure that every manager has challenging 
objectives, is assessed against these, and not other criteria.  Those 
that succeed get rewarded and are given opportunity.  For those who 
fail, we help them to improve.

This way, our best people get the best jobs and are paid the most.

To monitor this, we have implemented a special programme for the group
management to oversee the appointment, development and reward of 
carefully selected, high potential young officers.

We have also set ourselves the challenge to ensure that we have equal 
opportunity.  The majority of staff in the bank are women, yet women 
occupy just under 10% of senior management positions.  WE are in 43 
countries and again, our management is not representative of the 
nationalities involved.  This is not acceptable in today's world.  It 
will take time, but we will address this.

Leadership starts at the top.  The Chairman has mentioned to you that 
we have made a significant number of internal and external senior 
management appointments, and I believe that we now have a world-class 
management team in place, which is a match for anyone, anywhere.

The fourth theme of ANZ 2000, is to transform the way we do business 
at ANZ.

What is banking and what is a bank ?  In the world of today, insurance
companies have banking licenses.  Corporations have access to 
interbank payment systems.  Retailers have credit cards and in-store 
branches.  Virgin is in the personal investment business.  Auto 
companies finance cars.  Retailers finance white goods and 
electronics.  One of the biggest card issuers in the world and in 
Australia, is General Electric.

Given this, who will be the banks of the future ?  We certainly aim to
be one of them.  We do know that we cannot do this alone.  We will 
need to work in partnership with others with complementary skills. I 
am announcing to you today the establishment of a new business 
division, reporting to me called "New Banking".  This division will 
oversee the creation of these businesses of the future.

We are also developing new ways of reaching our customers. Telephone
banking and ATMs are now established ways of meeting customers'
banking needs, such that you rarely need to enter a bank. Inside ANZ
our staff have been issued smart-cards as a pilot for the Mondex
system, which will eventually allow us to have multi-purpose cards,
not restricted to banking. We are also piloting internet banking, so
that in this computer age, information and sophisticated products can
be accessed directly.

To ensure that we provide more effective marketing and service in our 
branches, we are developing a new branch customer system, which will 
give immediate access to all the information needed to meet customers 
needs on the spot.  This will be implemented later as a second phase 
of our bank of the future programme.

We have already made good progress in this direction.  Almost 1 
million customers have now registered to use our Phone banking service
which provides 24 hours per day, seven days a week ability to get 
account balances, transfer money between accounts, order statements 
and now through BillPay pay utility and other bills.  Enquiries can be
answered in several different languages.  Use of EFTPOS and ATMs 
continues to increase.  As a consequence of the adoption of new 
delivery channels use of existing facilities is declining.  Last year 
the level of cash withdrawals from branches fell by 30%.

ANZ's largest businesses are in Australia and New Zealand.  
Traditionally we have run these as separate operations, at higher 
cost, and at lower effectiveness.  We have already integrated our 
front-office businesses and under the Tasman project, we will also 
implement a common system for both countries, which will be run from 
a central location.

Extending this concept, ANZ operates in 41 countries outside Australia
and New Zealand through some 170 branches.

However, as a result of history, we have numerous different banking 
systems and procedures are characteristically labour intensive.  We ar
installing a new core banking system across most of this network to 
replace the existing computer and paper based processing, accounting 
and management information systems.  Commercial Banking System, or
CBS, is Year 2000 compliant, so its installation in each country 
resolves that issue in addition to having a state of the art banking 

In ANZIB, our investment bank, a second's delay can mean the 
difference between profit and loss.  The Delta project, which is being
developed in conjunction with outside vendors, will provide a 
competitive advantage to our traders, in this fast moving global 

All of these projects will be in place by the year 1999.

Finally, the fifth theme of ANZ 2000 which is highly pertinent to 
everyone in this room is that we aim to deliver superior earnings per 
share growth and financial performance for our shareholders.
Achieving this will require the achievement of four concurrent 
objectives - achieving superior revenue growth, reducing cost, 
management risk, and allocating capital for the best return on risk.

On the revenue side, the outlook for our domestic economy implies a 
nominal growth rate of at least 5%.  Whilst the East Asian countries 
will remain soft, they account for a relatively small share of our 
portfolio.  Our traditional international markets are growing faster 
on average than Australia.  Therefore, provided we can grow our market
share, we should be able to deliver higher than nominal growth in 

Our relatively high cost/income ratio provides us with an additional 
opportunity to improve productivity by containing  cost, and we have 
made good progress already this year.  Linking this with our revenue 
potential, we therefore have the capacity for higher than normal 
earnings growth.

On provisioning, as the Chairman has said, we have changed our 
provisioning policy, and are actively managing our exposures in East 
asia.  We are nevertheless taking a constructive and long-term view 
about the region, and are co-operating with governments, in their 
stabilisation programmes.

We are also aiming to improve the consistency of our profits.  In our 
business portfolio, we have certain business streams which have higher
than normal volatility.  Whilst we remain comfortable with the level 
of risk today, we will control their future growth in order to 
maintain our overall level of group risk at current levels.

Ladies and gentlemen, we live in a world of change, a world of intense
competition, and in a world which has the capacity to surprise.  
Nevertheless it remains a world of opportunity, and we are uniquely 
positioned to take advantage of this.

Over the next three years, in the absence of unforseen external 
events, I have set myself the task of ANZ achieving above-average per
annum earning per share growth, of maintaining a high return on 
equity above 15% and of bringing down our cost/income ration from the 
current 64.9% by some ten points.  We aim to achieve all of this at an
acceptable level of risk.

Barring surprises, I believe that this is deliverable.  If so, for ANZ
and for our shareholders, the best is yet to come.

Thank you.

(Meeting handed back to ANZ Chairman, Mr Charles Goode)


In concluding I would like to comment on the outlook for the current 
year.  We expect that Australia, despite the problems in East Asia, 
will enjoy annual real growth of around 3% for the next few years and 
for New Zealand it will be a little lower.  Although competition 
will maintain pressure on margins, we expect our bank will share in 
this growth and our major businesses are currently trading well.

Our international operations, apart from the East Asian region which 
I have mentioned, are also performing well.

Overall, for the first quarter of the current year our revenue was 
ahead of the same period of the previous year and costs have been 
held.  We are budgeting for an increase in profit for the year and 
for the first quarter we are in line with that budget.

On dividend franking, we said last year that there would be some 
limit on our franking capacity going forward as the proportion of 
Group profits earned offshore increases.  Higher dividends and the 
costs associated with the restructuring underway to position ANZ for 
the future, also impact on our franking capacity.  As a result 
dividends are not expected to be fully franked in 1998.

Finally, there are many challenges ahead of us in our domestic 
markets and overseas, but there are also many opportunities.  ANZ 
has strengthened its management, is improving its technology, is 
becoming more efficient and is growing the business.  We are 
focusing on effectively managing our risks and also seeking to 
identify opportunities to expand over the medium term.  Our 
strategies are directed to sustained growth over the longer term.  
We remain confident of our ability to improve our financial 
performance and add to shareholder value.