ANZ develops Asian risk framework

ANZ provided some extra glimpses of financial data on its Asian business on Friday, releasing the second instalment of a presentation provided to investment analysts while on a regional tour last week.

The highlights included:

-- ANZ Indonesia earned a net profit of US$24 million on revenues of US$166 million in the March 2012 half year. This compares with annual 2011 revenues of US$294 million. Two thirds of this revenue is from retail banking. ANZ says its revenues from retail banking in Indonesia now exceed those of Standard Chartered Bank.

-- The bank asserts that it "has the potential to be the number one international bank in Indonesia."
 
-- ANZ's natural resources' business earned revenues (from all sources including Asia) of A$559 million in 2011 and revenues of A$350 million in the first half of 2012.

-- The bank generates 69 per cent of resources' revenue from metals and mining at present, and 31 per cent from oil and gas. The bank is seeking a revenue mix of 55 per cent from metals and mining, and 45 per cent from oil and gas.

-- ANZ wants to reduce the proportion of its revenue from natural resources lending from 25 per cent to 15 per cent, with revenue from "value added" capital markets transactions being targeted from growth.

-- Based mainly on research by consultants McKinsey, ANZ projects the commercial banking revenue pool in Asia in 2012 to be US$158 billion. ANZ is targeting $141 billion of this revenue, with a focus on trade finance, cash management and capital markets-linked financing. The bank is giving little emphasis (at least in the "commercial" segment) to lending.

-- One presentation, by Ivy Au Yeung, the bank's managing director for commercial banking in Asia, mapped out a "three phase" plan through to 2017. Yeung said the bank was in the first phase of the plan.

-- One task in this three-phase plan is to develop "an early alert framework".  Phase two will include embedding this risk management practice into a "forward looking framework". Phase three will include "rigorously enforc[ing] this early alert framework."

-- The business model for ANZ in the Pacific remains little changed from the 1990s with too many routine transactions still being conducted in branches and too many expatriates running the business. Efforts are underway to steer middle-market customers towards electronic banking (the mass market remains unbanked).

-- The Pacific business earns two thirds of its revenue from institutional banking, with this business targeting revenues arising from trade flows tied to demand for natural resources.