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1999 Annual Results Australia and New Zealand Banking Group Limited 3 November 1999

1999 Annual Results Australia and New Zealand Banking Group Limited 3 November 1999 . Shareholder Highlights. Earnings per ordinary share 90.6c (77.2c) up 17% Dividend 56 cents, up 8% Franking increased to 75% interim, 80% final (60%) Total shareholder return 19.6% (-15.6%)

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1999 Annual Results Australia and New Zealand Banking Group Limited 3 November 1999

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  1. 1999 Annual Results Australia and New Zealand Banking Group Limited 3 November 1999

  2. Shareholder Highlights • Earnings per ordinary share 90.6c (77.2c) up 17% • Dividend 56 cents, up 8% • Franking increased to 75% interim, 80% final (60%) • Total shareholder return 19.6% (-15.6%) • $500 million share buy-back

  3. Financial Highlights • NPAT $1,480 million versus $1,106m ($1,175 before abnormals) • Income up 6%, costs down 4%, ELP up 5% (SP down 6%) • Return on Equity 17.2% (15.5%) • Cost income ratio 55.0% (60.9%) • ROA 1.0% (0.8%) • Risks reduced. Gross non-accruals down 7%, net down 27% • Earnings quality improved. No Abnormals. No Surprises

  4. Significant Improvement Achieved Cost Income Ratio % ROE % Gross and Net Non-Accruals $m ROA % 1,662 1,543 1,225 872

  5. Business Highlights • Strategic re-positioning on track in all segments • Good earnings growth in Australia and NZ • Business mix substantially improved. High risk businesses exited • Domestic market share up notwithstanding cost focus • 105,000 internet banking customers (8,000). ANZ E*TRADE launched • Major technology projects completed on time

  6. Improving Business Mix Business Segment Profit After Tax Business Segment Proportion Other Down 20% International Other Personal International Corporate Up 17% Corporate Personal Up 33%

  7. Leveraging Technology: anz.com Registrations • Online application for all major products • ePos service for merchants • New Edify Internet Banking platform • Alliances with Excite & Yahoo • ANZ e*TRADE alliance • Esanda 10% stake in Autogroup • “Pay Anyone” open payments • eGate business payments platform • Internet Banking launched in NZ Days Required to Add 10,000 Customers

  8. Business Strategy • Achieve growth in Personal and Business Banking • Enhance focus on Premier, Small Business, Retail Funds • Improve asset mix and return in Corporate • Complete re-positioning of International, turn around sub-optimum businesses • Build anz.com market position to domestic leadership

  9. Continue to Deliver in 2000 • Increase ROE. Add RORWA to EVA as key measure • Target flat costs. Lower cost income ratio • Improve asset quality, particularly International • Achieve an optimal capital structure • Set stretch performance targets and linked incentives • Successfully manage the Y2K transition • Target highest increase in e-Commerce customers • No surprises

  10. Drivers of Performance NII/Interest Earning Assets Net Interest Assets ROA ROE Other Income Assets Cost/Income Cost Assets Provisions/NLA Leverage Provisions Assets Risk Business Mix

  11. Good Progress Across the Board $m Software Capitalisation 61 1700 Increased Tax (136) 1600 Growth in Other Income 42 Higher Provisions (23) 1500 1,480 Lending Fee Growth 87 Lower Costs 83 1400 Other Fee Growth 93 1300 Abnormal Items 69 1,175 1200 1,106 Net Interest Income Growth 98 1100 1000 900 Post Abnormals 1998 Pre Abnormals 1998 1999

  12. Margins Stable as Balance Sheet Re-positioned Australia % 4.5 80 40 $b 3 0 1998 1999 Net Interest Average Margins New Zealand 1.5 20 0 Average Interest Earning Assets 0 1998 1999 International 40 20 0 1998 1999

  13. Non Interest Income Steady Growth, Better Quality 45 44 78 62 * 91 102 96 Trading 160 80 116 180 177 Other 116 196 126 111 FX Other Fees 418 471 488 494 517 558 275 295 286 306 333 346 Lending Fees Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 * Sept 98 trading loss of 145m, Other income of 139m

  14. Cost Income Ratios % 70 WBC 60 ANZ CBA NAB 50 1993 1994 1995 1996 1997 1998 1999 *NAB & WBC first half Costs and Cost Income Ratio Lowered

  15. Improving Business Mix Geographic Profit After Tax Balance Sheet Assets A$m A$b 150 149 Overseas Overseas New Zealand Other Domestic Australia Mortgages

  16. Gains in Australian Market Share Total Market Share Share of Housing Lending % % NAB CBA WBC ANZ 1988 1993 1998 Aug-99 Share of Business Lending Share of Credit Cards % % Aug-99 Aug-99

  17. Reducing Risk Asian Exposure Australian Lending Asset Profile US$b US$b 11.5 % $65b $90b 6.1 5.6 AAA-BBB+ BBB BB BB- <B+ Market Risk (VaR - Ave) 23 A$m 23 Equities Interest 7 FX

  18. Non-Accrual Loans $m Gross Non-Accrual Loans As at 30 September $m Gross Net Cover Australia 623 345 44% New Zealand 50 30 40% International 870 282 65% Net Non-Accrual Loans

  19. Provisioning: Personal & Corporate Offset International $m 1998 1999 1998 1999 1998 1999 Personal Financial Services Corporate Financial Services International ELP SP

  20. Specific Provisions by Region 1998 $512m 1999 $482m UK/Europe UK/Europe Australia & NZ South Asia South Asia Australia & NZ Middle East Middle East Asia Asia

  21. Provisioning: ELP > SP at Group Level $m 2100 482 510 FX Impact 1800 1395 1401 1500 ELP Charge Net SP Transfer 1200 967 900 600 300 0 Sep 98 Sep 99 APRA Guideline ELP - Economic Loss Provision SP - Specific Provision

  22. Buyback to Reduce Capital Surplus Capital Adequacy Ratio % • 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% - 6.5%) aligned to Economic Capital • $500 million buyback 12 10.7 10 8 7.9 6 4 2 0 1996 1997 1998 1999 APRA minima Tier 1 Hybrid

  23. Economic Value Added (EVA) Net Income 5,966 Operating Expenses (3,294) ELP Charge (510) Tax (676) Franking & Other Adjustments 352 Adjust Profit 1,838 Cost of Capital* @ 11% (1,004) EVA 834 $ million * Hurdle of 15% used in internal models

  24. 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 David Ward General Manager Office of the Chief Executive ph (613) 9273 4185 fax (613)9273 4091 email david.ward@anz.com

  25. Profit & Loss Sep-99 A$M Sep-97 Sep-98 3,645 Net Interest Income 3,437 3,547 1,754 Fees 1,459 1,574 340 FX 237 373 89 Trading Securities 182 <83> 138 Other 232 235 2,110 2,099 2,321 Non Interest Income 5,966 Net Income 5,547 5,646 1,732 Personnel 1,949 1,854 Expenses 314 Premises 362 347 344 Computer 330 341 813 Other 771 776 91 Restructuring Costs 90 120 3,294 Total Expenses 3,502 3,438 2,672 Profit Before Provisions 2,045 2,208 510 Doubtful Debts 400 487 676 Tax 466 537 1,480 NPAT Before Abnormal Items 1,171 1,175 - Abnormal Items <147> <69> 1,480 NPAT and Abnormal Items 1,024 1,106

  26. Profit & Loss Sep-99 A$M Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 1,834 Net Interest Income 1,718 1,719 1,773 1,774 1,811 904 Fees 693 766 774 800 850 160 FX 111 126 196 177 180 45 Trading Securities 80 102 62 <145> 44 78 Other 116 116 96 139 60 1,187 Non Interest Income 1,000 1,110 1,128 971 1,134 3,021 Net Income 2,718 2,829 2,901 2,745 2,945 872 Personnel 954 995 972 882 860 Expenses 157 Premises 184 178 172 175 157 158 Computer 173 157 168 173 186 422 Other 383 388 385 391 391 1,609 Sub Total 1,694 1,718 1,697 1,621 1,594 42 Restructuring Costs - 90 40 80 49 1,651 Total Expenses 1,694 1,808 1,737 1,701 1,643 1,370 Profit Before Provisions 1,024 1,021 1,164 1,044 1,302 252 Doubtful Debts 197 203 237 250 258 352 Tax 243 223 298 239 324 764 NPAT Before Abnormal Items 580 591 625 550 716 - Abnormal Items <31> <116> - <69> - 764 NPAT and Abnormal Items 549 475 625 481 716

  27. John McFarlane CEO Citibank, Standard Chartered David Boyles CIO AMEX, BOA Roger Davis Corporate Citibank Peter Hawkins Personal ANZ Peter Marriott CFO ANZ, KPMG Greg Camm Mortgages ANZ Larry Crawford Distribution First Bank Systems, Wells Fargo Bob Edgar Business Bank ANZ Kathryn Fagg Banking Products McKinsey & Co Brian Hartzer Cards First Manhattan Elmer Funke Kupper International McKinsey & Co Mark Lawrence Risk Soc Gen New York Peter McMahon Asset Finance ANZ, Costain Grahame Miller ANZIB ANZ Elizabeth Proust People Victoria Public Service Alison Watkins Strategy McKinsey & Co Strong Management Team

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