2008 Shareholder Review
CEO’s Report - Video Script
Thank you for joining me for ANZ’s 2008 Shareholder Review video.
My name is Mike Smith.
When I joined ANZ as Chief Executive Officer in October 2007 just over a year ago, it was clear things needed to change.
It was apparent there was a new reality emerging in financial markets and we needed to put the bank on a new footing.
Because we saw it coming early, we were able to take action to prepare ourselves for that new reality.
We increased capital, strengthened the balance sheet and improved liquidity.
We also set a bold, clear direction for ANZ.
That involved setting a new strategy for ANZ to become a super regional bank, focussed on Australia, New Zealand and Asia Pacific.
This aspiration has become even more compelling over the last 12 months, because we are at one of those points in history where the game has changed and the paradigm has shifted.
The new game in financial services is the emergence of mega-regional banks in the US, in the UK, in Europe and in Asia.
With the significance of the financial problems in the US and Europe, the importance of China, India and Asia to the future of the world economy is now completely obvious.
While we expect the developed economies of the world will only grow by around 0.7% in 2009, our region – Asia – is likely to grow by almost 7 per cent next year, with Australia expected to grow at about 2% - almost three times the average of developed economies.
And so it is now very clear that our super regional strategy focussed on Asia will stand us in good stead.
Nevertheless, 2008 has been a difficult year in banking around the world.
I am sure you have seen our annual results which were released in October.
For me, they demonstrated a high level of resilience given the international turmoil and show we have the right foundation with solid underlying momentum in our business.
At the same time of course, I want to be realistic and acknowledge there are areas of the business which haven’t performed as well as they should have and we need to take steps to ensure we make the necessary changes to manage through the challenging economic conditions ahead.
We have identified four areas that we will focus on to deliver on our aspiration and we have made good progress in bringing them alive.
First, customer focus. By that I mean our business should be designed around our customers’ needs rather than product lines. This means removing silos and boundaries in our business and bringing us closer together as what I describe as ‘One ANZ’.
Second, marketing and sales. We need to shift our thinking from selling commodity products to looking at differentiating the way we market ourselves; the way we segment our offering; and the way we serve our customers.
The third is technology. I believe we need a different philosophy to bring us up to the levels of technology used by banks globally, not just in Australia or New Zealand.
And finally, performance. We need outperformance at every level – financial outperformance; outperformance in customer service; and in our work ethic.
The size of this task is all too clear in aspects of our financial results and the reputational issues we have managed this year, particularly in our Institutional Division.
Although we expected credit costs to increase in 2008, provisions were high.
In the wake of these losses, we have undertaken a comprehensive review of our business to ensure that everything we do is core to our clients’ needs and our risk appetite is managed well.
In September, we also announced a new structure for our business to accelerate progress with our strategy and to improve financial performance.
The actions we have taken will ensure ANZ will be a stronger, more effective business in the future.
That includes delivering better outcomes for shareholders in the longer term.
We will do this by focusing our resources on our best businesses, on our growth businesses and reshaping our underperforming businesses.
We are a strong bank – one of only 14 banks in the world left with a AA credit rating - in a region of the world that is continuing to grow, at a time many banks and many economies in the world are experiencing great difficulty.
Although there is still much to do, and this will take some time, I believe we have a clear direction and the capacity to make ANZ a great regional company.
We are in the right place in the Asia Pacific region, at the right time with the right experience to deliver value to our shareholders over the longer term.
Many thanks.
