2016
FULL YEARRESULTS
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
3 November 2016

SPECIFIED ITEMS

1C A S H P R O F I T: A D J U S T E D P R O - F O R M A
FULL YEAR 2016 OPERATING PROFIT
$m
7,216

7,145

-71

FY15cash profit

6,966
45-179FY15 specified FY15 adjusteditems
pro forma

Adjusted Proforma growth

FY16 adjusted
pro forma

-522

-231

Softwarecapitalisation
changes

Asian minority
investments-810

Softwarecapitalisation
changes

Asian minority
investments

-201

5,889

-168

Restructuring Esanda DealerFinance sale

CVA
methodology
change

FY16cash profit

2H16 OPERATING PROFIT
$m717
2,782

1H16 CashProfit

3,499

3,467

-32

1H16 specified 1H16 Adjusted Adjusted Pro- 2H16 Adjusted
items
Pro-forma
forma growthPro-forma

3,107

-100

-11

Restructuring Esanda Dealer
Finance sale

-168

CVA
methodology
change2H16Cash profit‘Adjusted Pro forma’ refers to cash profit adjusted for ‘Specified items’: the impacts of software capitalisation policy changes, Asian Minority Investment impairment charge (AMMB) and gain ofcessation of equity accounting (Bank of Tianjin), restructuring expenses and sale of Esanda Dealer Finance portfolio Further detail provided in the ANZ Half Year 2016 consolidated Financial Report
page 14. Note: Adjusted pro forma has not been adjusted for FX Further detail provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

2

SPECIFIED ITEMSALL TAKEN THROUGH CASH PROFITTOTAL FY16
Specified Items
Cash Profit
impact ($m)

Capitalised
softwareRestructuring
expenses

Asian Minority
investments

Esanda DealerFinance sale

CVA change inmethodology

Costs, including
acceleratedamortisation, resulting
from software
capitalisation changes

Expenses incurredin relation toorganisational
restructures

AMMB Impairment
charge; Bank ofTianjin gain on
cessation of equity
accounting

Pro-forma adjustment
to remove theoperating results ofthat business and gainon saleRevised methodology
for CVA - greater use
of market informationand sophisticatedmodelling

45(201)

(717)

(168)

(231)

(522)

1H16
2H16(360)

2H16 (new specified item)(1,077)

CET1 impacts
P&L impacts<10bp positive outcome to CET1 across all specified items
Timing of expenses

Timing of expenses

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

One time OOI
impactNegative

One time OOI
impact3

SPECIFIED ITEMSCAPITALISED SOFTWARECAPITALISED SOFTWARE POLICY CHANGESCapitalisedsoftware

TOTAL FY16
Specified Items

o Increased the threshold for capitalisation of softwaredevelopment costs

Costs, including
accelerated
amortisation, resulting
from software
capitalisation changes

Cash Profit
impact ($m)

o Directly expensing more project related costs
RATIONALE

1H16(717)

2H16(522)(360)

o Reflects the rapidly changing technology landscape &increased pace of innovation in financial services, resulting
in increasingly shorter useful lives for smaller items ofsoftware in the “digital world”
o Driving more disciplined commercial decisions(1,077)IMPACTCAPITALISED SOFTWARE BALANCE IMPACT
($m)
2,332

Mar-142,533

Sep-14

2,689

Mar-15

2,893
2,249

Sep-15Mar-162,202

Sep-16o Accelerated amortisation of previously capitalised softwarebalances with an original costs below the revised thresholdo Increased operating expenses for software projects in thecurrent period that would otherwise have been capitalised
and amortised in future periodso Higher software expenses in the near term but lower
amortisation charges in future years
o Reduced capitalised software balance

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

4

SPECIFIED ITEMSRESTRUCTURING EXPENSES
TOTAL FY16
Specified Items

Restructuring
expenses

Cash Profit
impact ($m)

Expenses incurredin relation toorganisational
restructures

(717)
(360)

(1,077)(201)

RESTRUCTURE EXPENSES
o Reshaping the workforce to reduce complexity andduplicationo Aligning to the new organisation structure, including ourchanging emphasis on Institutional

1H16
2H16

o This includes simplification of the Institutional and Wealthbusinesses, restructure of Asia Retail & Pacific, andsimplification and digitisation in Australia and TSO andGroup Centre
BENEFITSo Streamlined divisions with improved connectivity andproductivity
o Simpler organisational structure with fewer senior
management required to run the businesso Right sized support and enablement functions to meetbusiness requirements

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

5

SPECIFIED ITEMSASIAN MINORITY INVESTMENTSTOTAL FY16
Specified Items
Cash Profitimpact ($m)

Asian Minority
investments

ASIAN MINORITY INVESTMENT ADJUSTMENTS

AMMB Impairment
charge; Bank ofTianjin gain on
cessation of equity
accountingo During the March 2016 half, the Group recognised a $260
million impairment to its equity accounted investment inAMMB Holdings Berhad (Ambank) bringing the carrying
value in line with value-in-use calculations.

(717)

1H16(231)

o On 30 March 2016, Bank of Tianjin (BoT), an equity

2H16

accounted investment, completed a capital raising. As the(360)Group did not participate in the capital raising, its(1,077)

ownership interest decreased from 14% to 12%. As aconsequence, the Group ceased equity accounting theCarrying value of Asia Minority Investments

investment in BoT and commenced accounting for theinvestment as an available for sale asset. A net gain of $29($b)
6million was recognised in relation to the remeasurement of4.2

41.2
1.02

the investment to fair value and recycling the associatedequity accounted reserves.

2.00
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Bank of Tianjin (BOT)PT Bank Pan Indonesia

AMMB Holdings Berhad

Shanghai Rural Commercial Bank

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

6

SPECIFIED ITEMSESANDA DEALER FINANCE SALETOTAL FY16
Specified Items
Cash Profit
impact ($m)

Esanda Dealer
Finance sale

ESANDA DEALER FINANCE SALEo On 1 November 2015, the Group sold the Esanda Dealer

Pro-forma adjustment
to remove theoperating results ofthat business and gainon saleFinance portfolios with the majority of the business
transferred by 31 December 2015
o Adjusted Pro-forma results have been prepared on the45(717)

1H16
2H16(360)

assumption that the sale which occurred during the March
2016 half took effect from 1 October 2014, effectively
restating the Group’s cash profit for 1H15, 2H15 and 1H16(1,077)

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

7

SPECIFIED ITEMSCVA METHODOLOGY ADJUSTMENTSTOTAL FY16
Specified Items
Cash Profitimpact ($m)

CVA change inmethodology
Revised methodology
for CVA - greater use
of market informationand sophisticatedmodelling• CVA is a valuation adjustment made in determining the fair value ofderivative instruments to incorporate the risk of default by acounterparty to a derivative transaction• Taken as a movement in the revenue line for Markets

(717)
(360)

(1,077)(168)

CVA movements in FY16$(25)mOne off adjustments for prior periods to mark to market current portfolio$(143)m

1H16
2H16
2H16 (New specified item)‘Specified items’ include the impact of software capitalisation policy changes, Asia Partnership impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring
expenses, sale of Esanda Dealer Finance business, and derivative credit valuation adjustment. Further detail provided in the ANZ Full Year 2016 consolidated Financial Report page 168

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