Institutional report, a message from Steve Targett ANZ Institutional MD Steve Targett

Steve Targett on creating a different Institutional bank

"Every bank talks about understanding its clients. What we are trying to do differently in Institutional is to become active partners with our clients, understanding and catering to their business in ways they might not normally expect of their bank. In taking this approach, we believe we can also create a whole new dimension of job satisfaction and personal challenge for our staff.

There are three main differentiators for us: our Asian network, the CEO Agenda, and our strategic partnership with the World Wildlife Fund.

Through the CEO Agenda, we strive to be active partners to our clients in their strategic thinking, offering innovative approaches to their issues, and committing our multi-skilled team to join forces with their senior team.

Supporting this approach is our CEO Journal, produced in partnership with the Australian Graduate School of Management, covering the big issues facing top executives today.

Our staff enjoy the difference that ANZ is now making with Institutional clients. Our clients responded by voting us Number 1 Lead Bank in the Peter Lee survey, with ANZ winning an unprecedented 16 of 22 categories."

We also bring to our clients the fruits of our collaboration with World Wildlife Foundation, our partner in building sustainable finance. The policies and initiatives we are developing with WWF will inform corporate decisions about how to achieve optimal business performance while understanding the impact on our fragile planet.

As the seventh largest network bank in Asia, we offer our clients the vision and scope of Australiaís leading bank in Asia, with a local knowledge that no Australian competitor can match.

Our financial performance

($m) 2005 2006 %
Income 3,077 3,329 8%
Operating Expenses (1,154) (1,283) 11%
Profit before Provisions 1,923 2,046 6%
Provison1 (136) (58) (57%)
Tax & OEI (529) (592) 12%
Profit after Tax 1,258 1,396 11%
Cost to Income(CTI) 37.5% 38.5% -
Staff 5,318 5,675 7%

1 Provision for Credit Impairment

Institutional delivered a good result this year, with earnings up 11%. Each of our businesses delivered growth above 10%, with the exception of our Debt Product Group, which has been impacted by highly competitive lending margins.

Revenue growth of 8% was within the Groupís target range. Driving this growth was a 14% increase in average lending assets and a 15% increase in average deposits.

We have continued to invest in our business, particularly in our people and product capability, which resulted in expenses increasing 11%. During the year we added more than 350 staff, and the competitive market for quality staff resulted in a significant increase in staff costs.

Credit quality remains very good, and as a result the provision for credit impairment fell from $136 million to $58 million.