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Performance and Growth - delivering on our commitments

ANZ, one of Australia's 'Big Four' banks, provides a full range of financial services, with strong positions in Corporate Banking, Credit Cards, Mortgages, and e-Commerce. We have achieved superior financial performance, delivering double-digit earnings growth and improving return on equity. Our commitments to shareholders include re-balancing our portfolio, enhancing our leadership position in Corporate, and reducing risk. We are accelerating our transformation program to drive efficiency and growth. Join us as we specialize, transform, and perform for a successful future.

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Performance and Growth - delivering on our commitments

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  1. Performance and Growth - delivering on our commitments Australia and New Zealand Banking Group Limited November 2000 John McFarlane Chief Executive Officer

  2. ANZ One of the ‘Big Four” Australian banks. Provider of full range of financial services in Australia (since 1835) and New Zealand (since 1840) with leadership in Corporate Banking, Credit Cards and Mortgages, an emerging strong e-Commerce position and an offshore network in Asia and Pacific. • Assets A$172b • Market Cap A$21b • Profit (pre abnormals) A$1,703m • Staff 23,134 • Credit Ratings AA-/Aa3 ANZ Headquarters 100 Queen Street Melbourne

  3. Highlights • Earnings growth of 15% (13.3% compound) • Return on equity 18.3% (17.2%) • Cost income ratio 51.7% (54.5%) • Grindlays sold, realising net profit after tax of $404m after related provisions • Income up 6%, costs flat, ELP down 4bp’s to 39bp’s • $2bn returned to shareholders in the form of dividends and share buyback • Dividends returned to 100% franking • Restructuring charge to accelerate transformation program

  4. Our commitments to shareholders three years ago: • Achieve superior financial performance • Deliver double-digit earnings growth • Improve return on equity • Bring down our cost income ratio to 53% • Re-balance our portfolio • Increase proportion of Personal business • Enhance leadership position of Corporate • Simplify and focus our International business • Build momentum in eCommerce • Reduce risk

  5. We have delivered superior financial performance % ROE $m NPAT CAGR 13.3% Total Shareholder Return Cost Income Ratio

  6. We have re-balanced our portfolio Loans & Advances NPAT 10% 5% 8% 39% 41% 23% 49% 50% 56% 49% 43% 27% PFS CFS International • Includes Grindlays • Excludes Group

  7. We continue to reduce risk ELP Factors Market Risk (Av. VaR) bp’s A$m 23 23 5.4 4.4 • Beta reducing towards 1.0, in line with peer average

  8. Overall book continues to improve Australian Loans & Advances Australian Lending Asset Profile $b AAA to BBB+ BBB to BBB- BB + to BB BB- > B • Mortgages now represent 46% of book, up from 40% in March 1999 • Investment grade 66% of book • Diversified portfolio • Minimal exposure to media/telco’s

  9. Asian credit quality improves significantly despite two large specific provisions Asian Specific Provisions Risk Grade Profile $2.9b $4.3b $m AAA to BBB+ A single ‘B’ exit account BBB to BBB- BB+ to BB BB- Daewoo B to CCC Non-accrual • ‘B’ exposures now only $130m • Investment grade 68% of book • Expected losses declined significantly from 1.4% to 0.5% • Specific Provisions relate to two unusual losses

  10. Provisioning levels strengthen General Provision ELP charge* $m Times (383) 502 FX impact (51) (90) 1373 1395 Net SP transfer Sale of Grindlays ELP charge Surplus406 967 2000 1999 APRA Guidelines ELP - Economic Loss Provision SP - Specific Provision * ex Grindlays for 2000

  11. Accelerating our transformation program 35 Initiatives across our portfolio of businesses including: • Standardisation and rationalisation of IT and processing platforms • Rationalisation and upgrading of EFTPOS network • Transformation of Branch Network • Improving efficiency in Asia/Pacific by rationalising IT platforms and centralising back office processing • Establishing new business platform for Esanda Expected cost reduction $300m

  12. Building for the future - recap on our strategy • Proposition • Specialists will win over conglomerates • Corporations need to embrace new technologies • Value depends on performance and growth • Strategy • Reconfigure ANZ as a portfolio of 21 specialist businesses • An e-Bank with a human face • Drive results whilst investing in growth businesses • Implications • Specialist approach to customer and product businesses • Transform the way we do business by using IP technology • Meet expectations, fund growth by cost reduction Specialise e-Transform Perform and Grow

  13. Portfolio breakdown - indicative $772m $647m $1,703m* % % 100 Small Business Other Institutional Corporate Corporate General Banking Personal Transaction Services Asset Finance Wealth Mgmt Capital Markets International Mortgages Foreign Exchange Funds Mgmt ANZIB Financial Services Cards 40m* 0 Personal Corporate Pacific Asia * Excluding Grindlays ($127m) International Customer Businesses

  14. Different businesses need different strategies Business size by NPAT Invest for rapidgrowth Create new businesses e-Payments FM GSF High e-Asia Wealth Cards GTS Market Growth Institutional FX Cap Mkts Corporate Small Bus Low • Defend position and return • Grow selectively Gen Banking • Optimise performance • Identify new growth products Esanda Mortgages Low High ROE

  15. Portfolio strategy should reflect degree of globalisation and leverage real capabilities now • FX Institutional Banking GSF • Funds Management Soon Trade B2B Capital Markets Esanda Custody Cards Impact of globalisation B2C Later Wealth Management • Mortgages General Banking Mid Corporate Not yet Small Business Less developed At par Local leader Regionally distinctive Globally distinctive ANZ’s capability

  16. We are delivering consistent growth $m Australian market share - assets % NPAT * • Growth has been strong, particularly in mortgages and cards • Consistently increased market share, without material acquisitions • Declining profits in International offset by substantial growth in PFS • Profits in PFS less volatile, giving us a strong base * Excludes Grindlays for 2000

  17. Prime accountability for profit and value Freedom to pursue opportunities within agreed boundaries Operate using agreed set of platforms, systems and shared services Transfer pricing based on market - no cross subsidisation Drive group strategic direction and set policy Portfolio management and resource allocation Cross-Business Unit synergies Control and oversight of risk, brands and technology Balancingthe autonomy of each business with strong leadership from the centre Business Unit Corporate Centre

  18. Personal Financial Services Peter Hawkins Accountabilities PFS 50% Group 50% General Banking Wealth Management Small Business Mortgages Cards Funds Management Drive sales and efficiency Invest to grow Aggressively rebuild Maintain profitable growth Accelerate growth Reinvigorate and grow Theme • Advanced marketing/ segmentation • Straight through processing • Lower cost to serve • Expert advice • Open architecture • “Wrap” facility • Seamless access • Build profitable market share • Relationship based proposition • Redesign end to end process • Maintain distribution strength • Straight through processing • “Best of breed” delivery platform • Data mining • Exploit growth opportunities • Leverage distribution channels • Optimise products/ capabilities • Double FUM by 2003 Priorities • Make the numbers • Achieve on-line targets • Deliver new value to other Bus • Strengthen ANZ e.commerce leadership Systems CRM SSP Brand Risk Management

  19. The Group has delivered compound EVA growth of 20% pa EVA* Growth (1995-2000) EVA Management Philosophy • The Group is being managed to outperform peers in terms of EVA growth over time • Internal stretch EVA performance targets are established for businesses based on peer and market expectations • Business units develop strategies that are expected to deliver against mid-term EVA targets • Business unit performance managed against stretch EVA targets • Compensation tied to performance against EVA targets EVA ($m) 1,200 1,000 800 600 CAGR ~ 20%pa 400 200 0 1995 1996 1997 1998 1999 2000 * EVA = PAT adjusted for economic credit costs, the value of imputation credits, the cost of equity (at 11%) and one off items

  20. Material reallocation of resources Substantial e-transformation reducing costs and focused service Performance optimised EPS, ROE, investment capital management Transformational cultural change Substantial portfolio shifts Narrower, more focused portfolio with leading positions Increased investment in high growth business Modern performance culture Higher stock rating ANZ in the medium term ANZ in 1 - 2 years ANZ in 3 - 7 years

  21. Goals going forward • EPS growth above peer average (target 10+%) • ROE over 20% • Cost-income ratio comfortably in the 40’s • Maintain AA category credit rating • Inner Tier 1: 6%

  22. Active capital management a priority • Capital Management • Philosophy: • Capital scarce resource to be managed effectively and efficiently • Maintain capital consistent with ANZ’s AA status and peer group ratings • Tier 1 (6.5 - 7.0%) • Inner Tier 1 (6.0%) $b % 7.9 7.7 7.5 7.4 6.9 6.5 6.7 6.4 • Progress • $1014m of buyback • Capping of DRP/BOP to reduce dilution • Remaining $500m buyback in progress • Restructure more EPS accretive than buyback

  23. Wholesale term funding – 1999/2000 achievements • Issued A$5.9 billion term wholesale debt • Sourced 11% Domestic market 80% Euro markets 9% US markets • Domestic Market: Increased 10/2002 series by $300 million Added new series - $500 million 9/2004 Extended yield curve Outstandings now A$1.75 billion Major Banks trading within 1bp

  24. Wholesale term funding - strategy for 2000/2001 • Pursue diversification - by investors and markets • Maintain prudent approach to liability maturity management • spread of maturities from 1 to 5 years with an objective to achieve a weighted average term of 3 years • maintain yield curve out to a maximum of 5 years in both domestic and euro markets • Funding requirement $6 billion subject to amount of securitisation undertaken • Sourced 20% domestically 80% offshore

  25. The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. For further information visit www.anz.com or contact Philip Gentry Head of Investor Relations ph: (613) 9273 4185 fax: (613) 9273 4091 email: gentryp@anz.com

  26. Copy of presentation available on www.anz.com

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