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June 30, 2008updated 04 Apr 2017 1:14pm

Banking on Asia

ANZ has revealed ambitious plans to grow its own-branded Asian branch network from 29 units to more than 200 outlets by 2012, and has restated its target of deriving 20 percent of group net profit from the region over the next four years compared with the current 7 percent ANZ, the most internationally-focused of Australias Big Four banks, has said it is aiming to increase its Asian annual net profit to A$1.5 billion ($1.43 billion) by 2012 and increase customer numbers in the region from 131,000 to 1.5 million

By Douglas Blakey

ANZ has revealed ambitious plans to grow its own-branded Asian branch network from 29 units to more than 200 outlets by 2012, and has restated its target of deriving 20 percent of group net profit from the region over the next four years compared with the current 7 percent. Douglas Blakey reports.

ANZ, the most internationally-focused of Australia’s Big Four banks, has said it is aiming to increase its Asian annual net profit to A$1.5 billion ($1.43 billion) by 2012 and increase customer numbers in the region from 131,000 to 1.5 million.

It is also planning to boost its ATM network in the region from 155 to 1,000 units, increase credit cards in issue from 1 million to 10 million and replace diverse IT systems with one core banking network as it looks to derive 20 percent of group net profit from Asia-Pacific by 2012.

ANZ’s group managing director, Alex Thursby, told analysts at the bank’s five day Asian roadshow in mid June: “Our strategy in Asia is primarily organic, but we will consider acquisitions.”

The group’s aggressive Asian ambitions will remain a key factor in its mission to differentiate itself from its Australian rivals. In its first half results for fiscal 2008, published at the end of April, the group reported “very strong growth” in Asia-Pacific – profit shot up 47 percent (58 percent foreign exchange adjusted) compared to an overall group profit decrease of 7 percent.

At the heart of the bank’s international strategy is its aim to rank as one of the four largest international banks in China and India as well as growing its presence in Indonesia, Malaysia and Vietnam. According to Thursby, the bank will grow on a “city by city” basis and ANZ’s growth strategy will vary from country to country. “Our strategy is based on the view that one size does not fit all.”

Quick to move into China

Like HSBC, Standard Chartered, Citi and a slew of other foreign banks – research from consultant PwC says there are now 42 in the country, a figure that will grow to nearer 100 by 2010 (see news Digest) – ANZ has been quick to move into China, with a 19.9 percent stake in Shanghai Rural Commercial Bank in addition to its 19.9 percent stake in Tianjin City Commercial Bank.

ANZ – Business Plan Asia Pacific 2008-2012In a rare set-back, in May the bank failed to acquire Hong Kong’s Wing Lung Bank, losing out to China Merchants Bank (see RBI 593). ANZ had sought to snap up Wing Lung to further its push into Asia. Asked about his bank’s failure to acquire the Hong Kong lender, ANZ’s CEO Mike Smith said at the time he was of the view that CMB had overpaid. “Why would you pay three times book for an institution like that?”

Speculation is now likely to turn to other potential takeover targets in Hong Kong, including Wing Hang Bank, Chong Hing Bank and Dah Sing Bank.

In China, Taiwan and Hong Kong, ANZ believes that scale and scope will become increasingly important.

ANZ is keen to target the affluent high-net worth sector in the region; in Hong Kong, in particular, ANZ will look to target increased market share of the expatriate market, extend its wealth offering into advisory services and remain vigilant on possible merger and acquisition opportunities.

In Indonesia, a country of 235 million people offering potential loans and deposit growth of 10 to 15 percent per annum over the next four years, ANZ estimates there are already 4.6 million affluent and emerging affluent retail customers.

Its plan is to become a full service bank targeting the affluent consumer market and aims to increase branch numbers from two to 42. It also owns a 30 percent stake in Panin Bank, the country’s sixth-largest bank by assets.

A bankable population

Targets for the buoyant Vietnamese market, in which ANZ has a 10 percent stake in the 215-branch-strong Sacombank, include an increase in ANZ branch numbers from two to more than 50 outlets and an increase in credit cards in issue from 20,500 to around one million.

ANZ will concentrate its focus on Hanoi and Ho Chi Minh City, two cities with a combined bankable population of seven million including an affluent/emerging affluent segment of 820,000 people, which ANZ estimates is growing at around 30 percent per year.

Perhaps the Australian bank’s most exciting market, however, is the one just west of Vietnam, Cambodia. ANZ’s launch of ANZ Royal in Cambodia in 2005 is already being heralded as a major success far exceeding the bank’s original expectations, with deposit account numbers growing at 38 percent per annum, boosted by the only online internet banking service in the country, the largest ATM and the second largest branch network.

ANZ’s CEO in Cambodia, Stephen Higgins, said the rapid success in the country – key metrics are three times higher than the original 2005 plan stated – was “proof that we can rapidly build a leading retail bank”.

ANZ – net profit after tax growth

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