2000 Annual Results Presentation to Fixed Interest Investors

1
2000 Annual ResultsPresentation to Fixed
Interest Investors

• Australia and New Zealand Banking Group Limited
  1 November 2000
• John McFarlane
• Chief Executive Officer

2
2000 Annual Result

• Strong result better than expectations
• 1,703m up 15
• 885m second half up 8.2 on first half
• We delivered on all our commitments
• Financial performance
• Rebalancing the portfolio
• Reducing risk
• Restructuring program accelerates strategy
• Sensible application of surplus capital
• EPS accretive
• Superior to buyback alternative

3
Our three year commitments to shareholders

• 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

4
Financial Parameters

• Assets 172 billion
• Shareholders equity 9.8 billion
• Return on average ordinary shareholders equity
  (excl. abnormals) 18.3
• Credit ratings AA - (stable) SPs
• Aa3 (stable) Moodys

Includes 1.4b preference shares
5
Financial Highlights

• NPAT before abnormals 1,703 million versus
  1,480 million
• Income up 6, cost flat
• Cost income ratio 51.7 (54.5)
• ROA 1.03 (1.0)
• 361m restructuring charge to accelerate new
  strategy

6
We have delivered superior financial performance

ROE
m
NPAT
CAGR 13.3
Total Shareholder Return
Cost Income Ratio
7
Good progress across the board
Other income 47
Costs (14)
Tax outside interests (123)
Other fee 111
Net profit after abnormals 1747
Debt provisioning 8
Lending fee 48
Profit before abnormals 1703
Net interest income 146
Abnormals 44
1480
2000
2000
1999
8
Cost-income ratio continues to decline
63.1


51.7
Target - comfortably in the 40s
estimate of market expectations for 2000
9
We didnt get everything right firm action taken

• Personal loan portfolio
• International provisioning from historical book
• Panin writedown to market
• Took action to put historical Grindlays issues
  behind us

10
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

11
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
Asia
Pacific
Excluding Grindlays (127m)
International
Customer Businesses
12
We continue to reduce risk
ELP Factors
Market Risk (Av. VaR)
bps
Am
23
23
5.4
4.4

• Beta reducing towards 1.0, in line with peer
  average

13
Overall book continues to improve
Australian Loans Advances
Australian Lending Asset Profile
b
AAA to BBB
BBB to BBB-
BB to BB
BB-
gt B

• Investment grade 66 of book
• Diversified portfolio
• Minimal exposure to media/telcos

• Mortgages now represent 46 of book, up from 40
  in March 1999

14
Non-accrual loans stable despite asset growth
Historic
m
Gross Non-Accrual Loans (LHS)
Non-Accrual Loans/ Loans advances (RHS)
Net Non-Accrual Loans (LHS)
15
Provisioning levels strengthen
General Provision ELP charge
m
Times
502
(383)
FX impact
(51)
(90)
1373
1395
Net SP transfer
Sale of Grindlays
ELP charge
Surplus406
967
1999
2000
APRA Guidelines
ELP - Economic Loss Provision SP - Specific
Provision
ex Grindlays for 2000
16
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
17
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
18
ANZ in the medium term
ANZ in 1 - 2 years
ANZ in 3 - 7 years

• 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

19
Capital management will continue

• Capital Management
• Philosophy
• Capital scarce resource to be managed effectively
  and efficiently
• Maintain capital consistent with ANZs 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

20
Goals going forward

• EPS growth above peer average (target 10)
• ROE over 20
• Cost-income ratio comfortably in the 40s
• Inner Tier 1 6
• Maintain AA category credit rating

21
Domestic Corporate Bond Investor Presentation

• 1 November 2000
• Rick Sawers
• Group Treasurer

22
Wholesale Term Funding - Anticipated

• 1999/2000 Term Funding Objectives
• Forecast term wholesale funding requirement
• A5/6 billion
• To be sourced
• 30 Domestic markets
• 60 Euro markets
• 10 US market
• Extend ANZ domestic yield curve
• Build liquid lines A500 million.
• Constraints envisaged
• S128F
• Issue Size
• Inconsistent pricing between AA rated banks

23
Wholesale Term Funding - In Retrospect

• Scorecard 1999/2000 Financial Year
• Issued A5.9 billion term wholesale debt
• Sourced
• 11 Domestic market (v 30)
• 80 Euro markets (v 60)
• 9 US markets (v 10)
• Domestic Market
• Increased 10/2002 series by an 300 million
• Added new series - 500 million 9/2004
• Extended yield curve
• Outstandings now A1.75 billion
• MTBs trading within 1bp
• S128F still unresolved

24
Term Debt Issued 1999/2000
25
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

26
Wholesale Term Funding

• Issues to Resolve
• S128F
• Transparency of issuance
• no standardised practice established
• Consider US style Pot System

27
The material in this presentation is general
background information about the Banks
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 [phone] email
gentryp_at_anz.com