1. The Australia & New Zealand Banking Group Limited (ANZ) GBMP 528 01 (Instructor: Cesar Polvorosa) Final Group Presentation Group #8 (South East Asia/ANZ) - Arcadians Inc. Chandra Vijay Dubey, Jitin Sharma, Kamal Krishan, Kamran Mahboob, Mohammad Wamique Siddiqui, Sher Hassan Mazari, Subhasis Pal, & Surinder Singh

2. Table of Contents Region Profile Introduction The Role of Geography and the Firm The Role of Culture and the Firm Firm Strategies Opportunities & Challenges Conclusion Slide: 2/21

3. Region Profile: South East Asia Sources: Wikipedia, CIA Factbook, Atlapedia & World Bank Population: 610,000,000 & Population Growth Rate: 35% Population Density: 135.6 /km2 & Life Expectancy: 72.2 years Major Languages: Kadai, Austronesian, Austroasiatic, HmongMien, Sino-Tibetan Major Religions: Hinduism, Buddhism, Islam & Christianity Gross Domestic Product (GDP): $2.158 trillion Sectorial Share in GDP: Agriculture, Industry, Services Slide: 3/21

4. Introduction Banking is a key industry, critical to the survival of the economy and the health of a society. ANZ Bank history dates back over 175 years. ANZ is one of the five largest and most successful listed companies in Australia, and we are the number one bank in New Zealand. ANZ offers full range of banking options, including Personal, Rural, Corporate, Commercial, Institutional and Private Banking. Nearly one in every two New Zealanders have a banking relationship with one of ANZ brands. Slide: 4/21

5. Introduction Contd. Australia has enjoyed 21 years of consecutive economic growth the best performance of any developed country, and a trend that is forecast to continue. ANZ Bank aims to become a super-regional bank. ANZ National is in effect regulated by both the Reserve Bank of New Zealand (RBNZ) and Australian Prudential Regulation Authority (APRA). It has an exciting ambition to become a super-regional bank providing the scale and quality of a global business to customers in our core markets of Australia, New Zealand, Asia and the Pacific. Slide: 5/21

6. Introduction Contd. Credits: http://www.YouTube.com/watch?v=9Pg_6rpHSZ0 Slide: 6/21

7. The Role of Geography and the Firm Slide: 7/21

8. The Role of Geography and the Firm Contd. In the beginning when the business plans are creating or making decisions, its very important to scan the external environment. This can be achieved through a PEST analysis, i.e. an investigation of the Political, Economic, Social and Technological influences on a business: Political Influence Economic Influence Social Influence Technological Influence Slide: 8/21

9. The Role of Culture and the Firm Cultural Setting & Performance Population: Australia: 23 million New Zealand: 4.5 million Diversity: Operates in 32 countries, which speaks 91 languages, 84 religions and a workforce of 123 cultural backgrounds. Employees: 48000 in which 55% are women. Profits: September, 2013 A$ 6.5 billion (Source: Bloomberg, 2013) Slide: 9/21

10. The Role of Culture and the Firm Contd. Opportunities: Customers General Customers: Everyday banking account, savings account, insurance products and internet banking. Agribusiness: Banking advice, investment and finance facilities. Corporations: Dedicated banking facilities like anz@work program. Opportunities: Employees Commitment towards the Aboriginals, Torres Strait and Islander people of Australia and New Zealand. Overseas operations provide employment opportunities to local people and also promotes cross-cultural working in the bank. Slide: 10/21

11. The Role of Culture and the Firm Contd. Challenges Contradictions with government policies of various countries Serving the community with best and up-to date facilities Tough competition posed by the competitors Political conditions and government policies in home country Slide: 11/21

12. Firm Strategies Super Regional Strategy: Strengthening Pre-existing Business in Australia, New Zealand, and The Pacific. Establishing a significant presence in key APEC & ASEAN markets. Building connectivity to support clients operating within and across the whole Region. Providing Customers with the Best Financial Products & Monetary Solutions to help them Grow. Slide: 12/21

13. Firm Strategies Contd. Corporate Responsibility Framework: Improving governance structure & Risk management. Building more Financial capabilities for low income clients. Creating Education & Employment opportunities for the communities. Bridging the Urban & Rural Divides through extending banking access. Supporting urban sustainability to reduce environmental footprints. Slide: 13/21

14. Firm Strategies Contd. Community Oriented Focus: Deep understanding of customer needs and requirements. Providing customers with the right financial solutions and insights to help them progress. Supporting customers facing financial hardship through flexible Micro-Financing & Re-financing. Reach out to small and medium scale businesses, such as Agriculture, industries, services, and infrastructure/construction companies. Launching branch transformation and greater focus on new consumer technologies and channels all aimed at fostering an improved customer experience. Fluent investment flows to community based organizations. Slide: 14/21

15. Opportunities & Challenges: SWOT Analysis Strengths Weaknesses Opportunities Threats ANZ strong market position sustained through increasing footprint Deteriorating expense management impacting adjusted profits Expansion into China could provide long term growth avenues Regulatory hurdles in strategy implementation Diversified product portfolio reduces the business risk of ANZ High reliance on wholesale funding Turnaround in Australian economy Competition likely to intensify between banks and NBIs Strong financial position providing resilience to adverse market developments Lack of scale in Asia limiting its ability to implement superregional strategy Regulatory changes regarding covered bonds could make refinance easy and less costly Increasing incidence and severity of frauds Slide: 15/21

16. Opportunities & Challenges: SWOT Analysis Contd. Strengths: ANZ strong market position sustained through increasing footprint. It is one of the Big 4 (ANZ, CBA, NAB, and WBC) banking groups in Australia. The group's increasing footprint enables it to sustain strong market position which in turn enables it sustain recurring profitable business. Diversified product portfolio reduces the business risk of ANZ. It essentially follows a bancassurance model with a presence across the value chain in retail to corporate to wealth management businesses. This business model has allowed it to diversify its revenue streams. Slide: 16/21

17. Opportunities & Challenges: SWOT Analysis Contd. Weaknesses: The groups operating costs increased at a higher compounded annual growth rate (CAGR) of 12.8% when compared to revenue expansion rate of 7.7%. Moreover, the groups cost to income ratio deteriorated from 42.2% to 45.9% indicating weakness in expense management. Slide: 17/21

18. Opportunities & Challenges: SWOT Analysis Contd. Opportunities: Australian economy is expected to show a substantial turnaround. In 2011, the economy grew at a modest annual growth rate of 0.2% when compared to 1.1% growth in 2010. However, the economy, as of now, remains fundamentally solid because of low unemployment and healthy wage growth. Economy directly effects banking sector including ANZ. Australian government proposed a bill to amend the Banking Act of 1959, which planed to allow financial institutions in Australia to issue covered bonds. Following the regulatory amendment, it is widely believed that Australia's four major banks including ANZ could now be able tap the market for an additional $154 billion. Slide: 18/21

19. Opportunities & Challenges: SWOT Analysis Contd. Threats: ANZ is likely to face hurdles from Australian Prudential Regulation Authority (APRA), a prudential regulator of banks; in implementing its strategy. Politicians have been increasing their criticism of the banks, particularly over the pricing of mortgages. Moreover, in February 2012 when ANZ announced decision to push through an interest rate rise independently of the Reserve Bank, and revealed plans to cut 1000 staff by September 2012, it received negative press and warnings from APRA. Slide: 19/21

20. Conclusion Communicating its successes will not only help generate the recognition its programs deserve, it will also help to provide valuable lessons for the industry and other financial sectors around the world. For now, the imperative should be to continue and extend its existing range of programs and to build upon the achievements it has made to-date. Stability, commitment, and a successful track record of addressing an issue over time will ultimately demonstrate and determine its corporate leadership. Slide: 20/21

21. Questions? Thank You! Slide: 21/21