News Release
For release: 9 August 2016

ANZ Trading Update - 9 Months to 30 June 2016
Performance Highlights
Basis of comparison: Comparisons are based on the 9 months to 30 June 2016 with the same 9month period for the previous financial year unless otherwise stated. The results are unaudited.

Group

Retail &Commercial

Institutional

CreditQuality
Including June
Quarter APS
330

Capital Statutory net profit $4.3 billion. Cash Profit (“Adjusted Proforma”1)$5.2 billion, down 3%.
 Profit before Provisions was up 5%2, with income increasing at a fasterrate than expenses. Increased technology, D&A and project costs wereoffset by productivity savings including lower employee (FTE) numbers.
FTE reduction continued at a steady rate through the period.
 Group Net Interest Margin (NIM)3 was stable assisted by portfolio
rebalancing in Institutional offset by increased funding costs and asset
pricing competition.
 The Retail businesses in both Australia and New Zealand performed
well. Retail experienced modest asset growth and margin pressure in acompetitive market for mortgages and deposits. Small BusinessBanking remains an area of good growth in both markets, whileconditions in Corporate and Business Banking remained highlycompetitive.
 The rebalancing of the Institutional business continued with further
reductions in lower yielding assets supported by business restructuring.
 The ongoing focus on reducing and improving the quality of Risk
Weighted Assets (RWA) has delivered a $15 billion decrease in Credit
Risk Weighted Assets (CRWA) on a constant currency basis. Momentum
has been consistent throughout the year to date with approximately athird of that total reduction in CRWA occurring in the third quarter.
 Divisional revenue decreased by a lower percentage than the reduction
in RWAs. At period end cost growth was in the low single digits
benefitting from prior period productivity initiatives.4
 The rebalancing of the business had a positive impact on the Division’s
margins of approximately 5 bps (excl Global Markets). Including Global
Markets margins declined 5 bps.
 Global Markets income was $1.5 billion, 90% of which came from
Customer Sales flows.
 The total provision charge was $1.4 billion comprised of individual
provisions of $1.34 billion and collective provisions of $60 million.
 The third quarter individual provision charge was in line with theaverage of the First Half.
 APRA Level 2 Common Equity Tier 1 (CET1) ratio was 9.7% at 30 June.
 Excluding the payment of the 2016 interim dividend (net of thedividend reinvestment plan), CET1 increased 44 bps in the thirdquarter, primarily driven by cash earnings generation and capital
benefits from the continued reduction of lower return assets inInstitutional.
 As announced yesterday, further changes are expected to the average
credit risk weighting of the Group’s Australian residential mortgage
lending book, resulting in a likely increase above those previously
announced. The possible impact of this is set out in an ASX
announcement made yesterday by ANZ. 5

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

Specified Items – Capitalised Software
The ANZ 1H16 results outlined the impact of a number of items referred to as “SpecifiedItems” which included changes to the application of the Group’s software capitalisation
policy effective from 1 October 2015. These Specified Items are excluded from AdjustedProforma.
As outlined, the higher capitalisation threshold and direct expensing of more project costs
will result in higher software expense in the second half (Year to Date FY16 $126 million
pre-tax which includes 1H16 $73 million pre-tax).
CEO Commentary
ANZ Chief Executive Officer Shayne Elliott said: “ANZ has now established a consistent focus
on delivering the strategic outcomes outlined to shareholders in our First Half 2016 result.
“This includes a steady pattern of strong cost management outcomes and initiatives torebalance our portfolio to improve capital efficiency and returns.
“There continue to be opportunities for growth in Retail and Commercial in Australia andNew Zealand, and in Institutional Banking including business supporting trade and capital
flows in Asia. For example, our leadership in launching Apple Pay and Android Pay inAustralia has seen us attract significant numbers of new to bank retail customers and helped
deepen relationships with our existing customers.
“The revenue environment for banking, however, is more constrained and this means aconsistently strong focus on productivity and capital efficiency disciplines is now
fundamental to the way we are running the business.
“Further good progress was also made on our broader strategic priorities: creating asimpler, better capitalised, better balanced bank; investing in attractive, winning market
positions; leading a purpose and values led transformation to benefit our customers, staff
and the community; and building capability to successfully compete in the digital age,” Mr
Elliott said.
An interview with ANZ CEO Shayne Elliott discussing the trading update isavailable at bluenotes.anz.com.
For media enquiries contact:

For investor/analyst enquiries contact:

Paul Edwards, +61-434-070101
Stephen Ries, +61-409-655551

Jill Campbell,+61-412-047448
Cameron Davis, +61-421-613819

Footnotes:
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Adjusted Proforma refers to Cash Profit adjusted to remove the impact of Specified Items (please refer to 1H16
Results disclosures including Page 16 of the Consolidated Financial Report & Dividend Announcement). In thenine months to 30 June 2016 there have been approximately $780 million of Specified Items impacts. Cashprofit excludes non-core items included in Statutory Profit. These non-core adjustments mainly relate toaccounting timing differences that will reverse through earnings in future periods. In the nine months to 30
June 2016 there have been approximately $100 million of after tax non-core adjustments.
On an Adjusted Proforma basis.
All NIM commentary is 30 June 2016 compared to 31 March 2016. Group NIM at 31 March was 201 bps.
On an Adjusted Proforma basis. Page 60 of the Consolidated Financial Report & Dividend Announcement for
1H16 for Half Year outlines the impact of Specified Items on the Institutional Division.
ASX announcement 8 August, 2016 “ANZ comments on APRA revised mortgage risk weight target”.