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:
B
Market Flag:
N
Classification:
HOMEX - Melbourne +++++++++++++++++++++++++ REVIEW OF 1997 1997 was another good year for ANZ. A comprehensive review of our activities for the year is contained in the Annual Report which has been sent to shareholders. I would like to highlight certain key aspects: I am particularly pleased that the annual dividend was able to be increased by 14% to 48 and was fully franked. The underlying profit grew by 17% and this increase was well spread across Australia and out international operations. We achieved asset growth of 8% and maintained excellent asset quality with the level of non accrual loans and specific provisions both falling. Nevertheless, we decided to move to an approach to provisioning for doubtful debts that recognises that loan losses would normally be higher than current levels across the economic cycle. The total doubtful debt charge of $287 million after tax was based on the average charge implied in our portfolio risk management models. We believe that time will show the wisdom of this approach. We also took a $417 million restructuring charge to cover current and future redundancy and related restructuring costs. This reflects the level of change underway in the organisation. Some $142 million of this was spent last year and the remainder is a provision related to identified costs under the ANZ Global program which is aimed at achieving further cost reductions. With the level of change taking place it has not been an easy year for staff. That they have been able to handle this while continuing to build the business and also win awards such as "Bank of the Year" and "Best Provider of Foreign Exchange" is a tribute to their professionalism and dedication. I would like to comment on four important matters; namely, changes in senior management, technology, our international operations and the increasing competitive environment in banking. SENIOR MANAGEMENT CHANGES Firstly to management. All aspects of banking and financial services are undergoing rapid and very considerable change. At ANZ, we intend to be at the forefront, which means having the right people and strong, effective leadership. We have strengthened the management team with the appointment of senior executives from outside the bank who have a broad range of experience. Mr John McFarlane, the new Chief executive Officer, comes to ANZ with some 22 years experience in banking and a strong international banking experience with two leading international banks. He had been an Executive Director at Standard Chartered Bank where his responsibilities included oversight of its operations in emerging markets as well as investment banking strategy. Prior to that John had spent 18 years with Citibank where he became the first UK born head of its United Kingdom operations. In 1995 he was awarded the OBE for services to the finance industry. Other senior management appointments include: Dr Peter Jonson who heads up ANZ Funds Management having previously been CEO of Norwich Australia. Mr David Alrey who has been running our New Zealand operations, and will now head the global Private Bank, was previously CEO of the Bank of Melbourne. Dr Murray Horn who joined us last September having previously been the the Permanent Secretary of the New Zealand Treasury will be the country head in New Zealand. Ms Elizabeth Proust who heads up the Human Resources function had been Secretary of the Victorian Department of Premier and Cabinet. Mr Davis Boyles will take up the new position as head of our global technology and operations functions. He comes to ANZ from American Express and Bank of America and Mr Larry Crawford who will head up the branch distribution network comes from First Bank Systems of the United States. These people join other top executives such as John Ries, who is an executive director; Peter Hawkins, who has been promoted to Global Head of Personal Banking; and Peter Marriott, who has been promoted to Chief Financial Officer to make what we believe is a first rate management team to work with John McFarlane. TECHNOLOGY Developments in banking and technology cannot be separated. It is an area that is receiving great attention and apart from the on-going improvements required to our technology there is the special problem of the Year 2000. The potential disruption to the business that may eventuate with the date change from 1999 to 2000 is a problem which ANZ faces, along with all other users of computer systems. It is particularly important for financial organisations and no company can be completely certain that it is on top of this issue. We do know that all our systems have been analysed and work is underway to develop, implement, and test the required changes. Full systems testing of our internal applications is scheduled to be completed by December 1998. The potential risk to the Group from vendors and customers not adequately managing this issue, is also receiving detailed attention. The Board has required management to report on the Year 2000 issue at each Board meeting. It involves a major programme and the capital and recurrent cost to this bank is likely to be of the order of $200 million. MORE TO FOLLOW 1