Australia and New Zealand Banking Group Limited Background Briefing on New Zealand Tracking Stock

1. Australia and New Zealand Banking Group Limited Background Briefing on New Zealand Tracking Stock David Ward General Manager Office of the Chief Executive Officer

2. Presentation • Strategic Direction • Business Strategies • Current Performance • Proposed Tracking Stock Issue

3. ANZ: Financial Parameters • Assets A$149 billion • Shareholder Equity A$9.2 billion • Return on Equity 17.3% • 30,000 staff • Return on Risk Weighted Assets 1.2% • Top 100 bank globally on Assets, profits and capital • Market Capitalisation of A$16 billion (Eighth largest company in Australia)

4. ANZ Profile • $100B assets • Full service • 14% market share • 4th largest bank • 3 m customers • Leader in Business Banking, Asset Finance, Credit Cards • Bank of the Year - 1997 and 1998 • $20B assets • Full service • 18% market share • 4th largest bank • 1 m customers • Leader in Business Banking, Asset Finance • $30B assets • Niche commercial banking • Widest Represented Australian Bank • Leading foreign Bank in South Asia/Middle East (Grindlays) Australia New Zealand International

5. Span of International Operations • Americas • 4% of profit • Asia Pacific • Pacific Since 1880 • Asia Since 1970 • 5% of profit • South Asia/ • Middle East • ANZ Grindlays • Since 1854 • 7% of profit • New Zealand • Since 1840 • 14% of profit • UK & Europe • 3% of profit • Australia • Since 1835 • 67% of profit

6. Business Unit Parameters Profit Assets $m $b Personal* 288 60 Corporate* 244 64 International 115 19 Centre 69 6 ___ ___ Total 716148 March 1999 * Retail Asset Finance in Personal

7. Strategic Direction • Rebalance business mix largely organically • Focus on four strategic businesses • accelerate growth in personal • build on strong position in corporate • simplify and focus International • build leading presence in e-Commerce • Transform management process to ensure execution and delivery

8. Optimising the Business Mix Return FX International Consumer Retail FM Personal Banking Capital Markets Trade Structured Finance Risk Target Business Banking Proprietary Trading Asset Finance International Corporate Major Corporate Institutional Stockbroking Target

9. Business Strategies • Accelerate growth in personal financial services particularly in funds management by harnessing our distribution power • Build on our strength in the corporate sector, by growing services business, whilst reducing risk and improving return on assets • Simplify our international network to improve return, by focusing on Asia and the Pacific, by reducing risk and by investing in growth franchises • Swiftly build a leading e-Commercepresence, creating the banking platform of the future using internet technology

10. Gains in Market Share Total Market Share % Share of Housing Lending % NAB CBA WBC ANZ 1988 1993 1998 Share of Credit Cards Share of Business Lending % %

11. ANZ Has a High Quality Personal Customer Base Wealth Bands $(000) 20 60 100 200 500 1000 ANZ Other Industry Ave 0 10 20 30 40 50 60 70 80 90 100 Total Relationships (%) Source: Roy Morgan 1998

12. All ANZ Customers High Value to ANZ High Value to Industry but limited ANZ business True Retail Market The Opportunity with Australian Customers Customer Base 2.7m Source: Roy Morgan 98

13. Banking Makes up Roughly Half of Financial Services Estimated Value of An Australian Retail Customer (A$ Present Value) $6000 - 7000 General Insurance & Traditional Life Risk/Wealth Protection Investment Traditional Banking Non-traditional products

14. A New Dedicated Business for Premier Customers • Premier Financial Package • Dedicated Managers • Premier Suites • Dedicated Service Officers

15. Build on Leading Corporate Position to Improve Returns • Market Leader in • Business Banking • Auto Finance • Foreign Exchange • Investment Banking restructured • Need to • Diversify Revenue Sources • Reduce Risk • Improve EVA • Improve ROA

16. Business Banking Australia: Risks reduced Shareholder Value Increased Risk Profile (% of Lending Assets) EVA by customer decile -50 0 50 100 Risk Level High Customer Deciles 1997 Low 1999 1996 1999 1H

17. 350 300 250 200 150 100 50 0 1-Apr-97 1-Aug-97 1-Dec-97 1-Apr-98 1-Aug-98 1-Dec-98 1-Apr-99 Investment Banking Activities Restructured • Restructured to focus on domestic markets and core products • Withdrawn from non core activities such as London Capital Markets • Reduction in risk levels and costs FX Money Trading Revenues( $m) • No1 in FX in Australia (2nd year, BRW) • Top 5 Asian FX house (Asia Money) Only 1 negative week Cumulative

18. Simplify and Focus International UK Europe Money Centre & Private Banking • Grindlays • Leading foreign bank • 114 branches • 1-10% market share New York Money Centre • Asia • 11 “footprint” branches • Trade and corporate • negligible market share • Pacific Islands • Leading bank • 36 branches • 20-60%share Latin America Represntative Offices Closed

19. Simplify and Focus International • Re-balance business mix towards consumer • Maintain strong lending policies Continue to Reduce Risk • Target Top 2-3 foreign or Top 5 local position • Leverage strong positions and global capabilities • Deal with minor positions Target Fewer, Deeper Positions Imperatives for International Create Future Growth Platforms • Develop Asia-Pacific, e.g. Indonesia • Pursue acquisitions only where it creates a desired position, and can be managed

20. Building a Leading e-Commerce Position Internet Banking Registrations 70000 Strategies • To build a strong e-financial services capability with rapid growth in registered users, on-line sales and site traffic • To create a powerful set of new customer acquisition channels • To develop new e-Commerce businesses, such as the E*Trade alliance, Auto Group 60000 50000 40000 30000 20000 10000 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug 1998 1999

21. Building a Leading e-Commerce Position • Transform to new business • Personalised • Holistic • Lifestyle aggregated Customer Value “Sticky” Customer ANZ • Transact • Account Transfer • Applications • Transactions • Interact • Interactivity • Enquiry • Inform • Basic presence • Brochureware Visitor Entry Level Advanced Functional Richness

22. Execution is the Key • Difficult to differentiate strategically • Aggressive targets to stimulate innovation • Organic emphasis for the next 2/3 years • New performance management discipline • Real differentiation is through execution • Shareholder Performance • Customer Experience • Building Talent Out-delivering the competition is fundamental to success

23. Organising to Deliver CEO John McFarlane Group Functions Finance Peter Marriott Governance Activities People Elizabeth Proust Strategy Alison Watkins Business Groups International Elmer Funke Kupper Technology David Boyles Corporate Roger Davis Personal Peter Hawkins

24. Presentation • Strategic Direction • Business Strategies • Current Performance • Proposed Tracking Stock Issue

25. Momentum Evident in First Half $M 800 716 700 625 International 134 550 600 182 102 New Zealand 500 97 70 400 300 Australia 480 446 200 373 100 0 Mar-98 Sep-98 Mar-99 Profit after Tax

26. Risk and Costs Reduced Asian Exposure 11.5 US$b US$b Cost Income Ratio % 6.1 75 5.8 70 65 Sep-97 Sept-98 Mar-99 60 A$m A$m 26 Market Risk (Var) Equities 55 50 Interest 10 90 93 96 1H99 6 FX Mar-98 Sept-98 Mar-99

27. Relative Share Price Performance Index 100 - 1 October 1998 31-Aug-99

28. Second Half 1999 • Second half broadly in line with market expectations • Income up • flat net interest income • growth in non-interest income • Costs stable • Provisioning stable • Cost income ratio down

29. Analyst’s CommentsAlastair Hunter, J B Were • Post FY98 Result • Global concerns overshadow a strong domestic performance • ... The reduction in the risk profile will add value to the shareholders... • Post HY99 Result • For further share price appreciation we will need to see: • continued improvement in sentiment towards Asia, positive revisions to earnings forecasts, implementation of the strategic plan, improved confidence in management and a regeared balance sheet. • Post Strategy Seminar • ANZ has a clear vision and strategy in place. The key issue for investors now becomes confidence in management to execute the strategy. We are warming to the execution capability of ANZ….

30. Analyst’sCommentsMike Macrow, Merrill Lynch Post FY98 Result Our reduction in opinion reflects the higher asset quality risk inherent in a more commercially oriented bank Post HY99 Result The underlying result of $1.3b achieved our expectations. While ANZ has partially recovered from a chronic oversold position, some work is required to take the next step upwards. Post Strategy Seminar ANZ share price has underperformed CBA share price 30% and NAB by 15% since December 1996. Cost cutting and rationalisation of below hurdle activities suggest a price catch up is likely.

31. ANZ is a vibrant financial services company that delivers: • Superior performance and value for our shareholders • An experience which delights our customers • An environment where our people excel ANZ Vision

32. Presentation • Strategic Direction • Business Strategies • Current Performance • Proposed Tracking Stock Issue

33. ANZ Capital Management Principles Economic Capital Inner Tier 1 Equals Economic Capital Peers Capital Structure Rating Agencies Risk Adjusted Tier 1 Ratio ie, AA Status Comparable to Peers Shareholders Cycle Reduce Cost Manage Through of Capital The Cycle

34. Rationale for Tracking Stock • Align shareholder base with location of assets/profits • Increase ANZ Brand awareness • Cost Efficient form of high “Equity Credit” Capital • Diversify Shareholder Base/Reduce Cost of Capital • Opportunity for Customers and Staff to own their Bank • Increases ANZ weighting in the NZSE 40

35. ANZ New Zealand Tracking Stock Main Features • An Investment in ANZ Group • Denominated in NZ$ • Dividends in NZ$ equal to ANZ’s dividend • Imputation Credits Attached • Ability to exchange to ANZ Shares • Mandatory Exchange after 30 years • Non Voting

36. Exchange Mechanism • Both parties have the ability to trigger exchange at any time after initial period • Slight discount applies if initiated by investor • Investors can buy or sell the securities at any stage on the NZSE

37. ANZ New Zealand Tracking Stock • An Investment in ANZ Group • Key Differences Between This Security and ANZ Ordinary Shares • Is a Hybrid Security • Expect New Zealand Investors to Receive Imputation Credits • The Exchange Mechanism plus same Dividend Yield ensures price will track ANZ head shares • Increases ANZ weighting in NZSE 40

38. New Zealand Tracking Stock Timing : Q1 2000, subject to regulatory approvals Access : Via Lead Managers, Usual Broker or ANZ Network Size : Sufficient to ensure liquidity Regulatory Approvals: Proceeding well

39. Questions