1. Personal Financial Services - Achieving growth Peter Hawkins Head of Personal Financial Services 18 July 2000

2. Today’s agenda: Specialisation and growth 1)Product businesses 2)New customer businesses 3)Tomorrow’s growth

3. – Cards – Mortgages – Funds Management and Insurance – anz.com 1) Specialist product businesses

4. In November 1997 we separated product from distribution: It has delivered: – Higher profits/ lower costs – Strong individual product businesses – Doubled sales – 200,000 more customers – Increased share of wallet More recently, customer segmentation was overlaid on distribution

5. Financial performance Profit Costs Income % Net Interest Margin (LHS) Non Interest Income (RHS) % Cost to Income (LHS) Cost to Assets (RHS) $m Provisioning $m Actual Credit Costs Economic Credit Costs

6. Cards Growth AUSNZ Cardholders (m)2.00.3 Cards Issued (plastics)2.90.4 Outstandings ($b)2.40.3 (Growth)35%12% Cards Share of Personal Profit % Continue to improve and leverage QTV programs Build leadership in e-commerce acquiring and other high growth merchant acquiring segments Implement common operating platform (Vision Plus) in Australia and New Zealand Acquisition through cross-sell to other Personal customers Leverage acquisition of EFTPOS New Zealand Key Initiatives and Strategy

7. Mortgages Share of Personal Profit New Sales by Origination Source 1H 2000 Origin 14% Third Party Introducers 23% ANZ Network 63% Leading products Broad distribution Active database marketing campaigns Cost management – 4 account processing systems into 1 – 4 processing centres into 2 – 24% reduction in cost/asset ratio (1st half) – 28% annual increase in Auto Approval rate Funding flexibility Key Initiatives and Strategy ANZ Branded Market Share % Apr-00

8. Cross sell of third party mortgages has been effective: 86% customers have an ANZ deposit account 51% have an ANZ credit card Mortgages Channel ComparisonNew Lending Mortgage Margins Average Loan Life EVA ANZ Network TPMI Origin Index 100 Drawdowns (#) Drawdowns ($) $ % %

9. Funds Management 0 5000 10000 15000 Mar-99Sep-99Mar-00 Total Retail FUM inc Gateway Total Retail & Wholesale FUM Ranking Assirt Retail FUM#7 Assirt Retail Inflow#10 New experienced management team in place Strategy Leverage bank distribution strengths/customers Optimise products and features Reposition Asset Management Leverage off universal a/c and targeted marketing to grow IFA channel Funds under Management $m Share of Personal Profit

10. Internet Transactions (% of Total) Source: Ord Minnett and Roy Morgan Research anz.com Internet Banking Signups Internet Banking Phone Banking Active Users Internet Banking Users % of Total Relationships

11. Number of Products anz.com myanz.com ANZ E*Trade Online Applications - Credit Cards Lending Balance Deposit Balance ProfitAttrition Internet Banking Customers Their ANZ account balances Australian and overseas news Stock prices, market wrap and watchlist Horoscopes Entertainment news ANZ products and financial tools Their share portfolio via ANZ’s My Portfolio service Sport news Search engine Weather Favourite links Travel information

12. myanz.com

13. The separation of product from distribution has driven strong performance across products while increasing the network effectiveness Index

14. – Wealth Management – Small Business – General Banking 2) New customer businesses

15. We are now moving from a product/ distribution focus to product and customer focus Creation of three customer businesses – wealth management – small business – general banking Keeping strong product monolines – operational efficiency – functional expertise – third party distribution Drive to market leadership for anz.com CardsMortgages Wealth Management Small Business General Banking 3 Product Businesses3 Customer Businesses Funds Management anz.com Personal eCommerce General Banking Wealth Management Small Business

16. Develop a Wealth Management offer that will truly differentiate us Strategy Schwab-like offer, but with higher level of lending extensive third party offering for FM & I, in addition to proprietary FM product heavily bricks-and-clicks underpinned by Universal Account CMA offers customers choice from a menu of options – advice – product – value Share of Personal Profit CBA Westpac ANZ NAB St George Share of High Net Worth Customers Source: Roy Morgan Research

17. Recapture Small Business market share Strategy Make separate Business Unit for focus: end-to-end product and service delivery with control over all levers of business full relationship-based offer with segment- specific products develop third-party originator channel coalesce small business e-Commerce integrated seamless offering across relationship, branches, call centres, internet 50,000 customers already online (20%) % Small Business Share of Debt Share of Personal Profit Source: Greenwich Associates

18. A General Banking business focused on continuing to improve productivity and the customer experience Strategy optimise sales and service delivery for general banking customers formation of unit with accountability for infrastructure supporting majority of customers control over both distribution and transaction products creates single responsibility for customer experience and migration to self- serviced channels leverage information analytics capabilities for sales efficiency Branch Activity Share of Personal Profit No. A/cs (m) Branch Withdrawals (m) Transactions per A/C Share of Mass Customers NAB WBC CBA St George ANZ

19. – Building capabilities 3) Tomorrow’s growth

20. The CRM capabilities we are building deliver a comprehensive, end-to-end revolution of the customer experience and relationship Create a seamless customer experience across channels, products, service and sales Recreate relationship management by providing insightful customer information at all touch points Change the selling paradigm: “when they’re in your space, be ready to sell” Focus proactive selling through rich profiling Align credit and pricing decisions to the risk, behavioural, and value profile of the customer Deliver straight through processing to both improve service levels and reduce costs Our Objectives

21. The customer database provides a mature data warehouse environment established 1996 group-wide coverage comprehensive customer and product data customer profitability Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels

22. Campaign management provides comprehensive data analysis and modelling continuous marketing capability Valex campaign management tool multiple daily targeted campaigns trigger events Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels

23. The customer decisioning engine provides central customer management capability Strata software decision engine sophisticated models to: – profile customers – predict behaviour – create actionable decisions Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels

24. Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels Examples of customer initiatives: propensity of buy models to target offers to best prospects attrition risk predictors to get in early if good customers look shaky target offers of better sales and service to qualifying customers Customer value drives how the customer base is segmented and managed

25. Enterprise “factory” operations support differentiated selling and servicing by customer segment Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels Examples of operational decisions: make better credit assessments, for a new card, or transaction authorisation replace a “one size fits all” approach to collections with a segmented approach

26. Customers are afforded multiple access channels and managed to maximise relationship value Sales and Service Platform – browser based – Getronics – multi-channel Processing efficiencies and enhanced customer experience Campaign Management Customer Decision Strategies Front Office Customers Customer Database Operations Channels

27. This is a substantial program which will deliver end-to-end transformation reengineering and automating servicing and credit fulfilment processes total capital investment in excess of $200 million deployment of over $100 million in improved infrastructure to deliver a paperless environment – communications bandwidth to branches – specialist peripherals such as scanners – high performance workstations at all touchpoints – windows 2000 – middleware payback of about 2 years sales uplift of 5% in business case – other organisations have experienced up to 25% uplift implementation begins November 2000, completed by end 2001

28. Summary: Personal Financial Services Specialist Product Businesses well established Customer Businesses being elevated Capabilities being built to drive tomorrow’s growth