31 OCTOBER 2018

NEWS RELEASEANZ FULL YEAR 2018 RESULTANZ today announced a Statutory Profit after tax for the Full Year ended 30 September 2018 of$6.40 billion, flat on the comparable period and a Cash Profit 1 on a continuing basis of $6.49 billion,
down 5%. ANZ’s Common Equity Tier 1 Capital Ratio was 11.4% up 87 basis points (bps). Return onEquity decreased 67 bps to 11.0% with Cash Earnings per Share down 4% to 223.4 cents (continuing).
Actions taken since 2016 to simplify the business and reduce cost, position ANZ well to meet theimmediate challenges facing the industry.
The Final Dividend is 80 cents per share, fully franked, bringing the Full Year Dividend to 160 cents.
Group Financial Information
Earnings ($m)

FY18

FY17Movement

Statutory Profit After Tax

6,400

6,406

0%

Cash Profit (including discontinued operations)

5,805

6,938

-16%

Cash Profit (continuing basis)

6,487

6,809

-5%

Profit before credit impairment & tax

9,966

10,849-8%

Earnings per share (cents)

223.4

232.7-4%

Return on equity

11.0%

11.7%

-67bpsReturn on average assets

0.72%

0.78%-6bps

Fully Franked Dividend per share (cents)

160

160

-Credit Quality

FY18FY17

Movement

Total credit impairment charge as a % of average GLAs

0.12%

0.21%-9bps

New impaired assets

2,108

3,212-34%

Balance Sheet ($b)

FY18

FY17

Movement

Gross Loans and Advances (GLAs)

608.4

584.1

+4%

Total Risk Weighted Assets (RWAs)

390.8

391.1

0%

Customer Deposits

487.3

467.6

+4%

Common Equity Tier 1 Ratio (CET1)

11.4%

10.6%+87bps

CET1 Ratio Internationally Comparable Basel 3 2

16.8%

15.8%+100bps

Other

FY18FY17Movement

39,92444,896-11%

Full time equivalent staff (including discontinued)

12All financials on a Cash Profit Continuing Basis with Growth Rates compared to Full Year 2017 unless otherwise stated
CET1 Internationally Comparable Basel 3 aligns with APRA’s Information Paper: International Capital Comparison Study, 13 July 2015

CEO COMMENTARYANZ Chief Executive Officer Shayne Elliott said: “The actions taken in recent years to simplify ourbusiness have allowed us to reduce cost, rebalance capital and better remediate issues. This places
ANZ in a stronger position to meet the challenges facing the industry.
“Retail banking in Australia faced strong headwinds with housing growth slowing and borrowing
capacity reducing. We continued our disciplined approach to home loan growth by focusing on
customers who want to buy and own their own home.
“While this meant we sacrificed short-term revenue growth and higher margins in Australia,
particularly in the investor and interest-only segments, it was the right thing to do for shareholders.
“New Zealand again delivered a strong performance, while the composition of our Institutional
results provided improved and diversified earnings. Both of these businesses have undergone
significant transformations in recent years with our diversification becoming even more importantas housing credit slows in Australia.
“The simplification of our business is continuing to benefit shareholders through our announced $3
billion share buy-back and the neutralisation of the Full Year Dividend Reinvestment Plan (DRP),
while we also maintained a capital position well above our regulatory target.
“Expenses were up slightly for the year due primarily to increased customer compensation andremediation costs in Australia. Excluding large notable items, expenses were down 1.5% for theyear, positioning us to better manage the headwinds impacting the sector.
“The lowest credit losses in a generation have been driven by our decision to change thecomposition of our loan book, the sale of our Retail business in Asia, together with the run-down of
our mid-market commercial business in Asia and a relatively benign credit environment.
“We are engaging constructively with the Royal Commission and taking action to fast-trackchanges. We will make the investments required to earn the trust and respect of our customers andthe community.
“We continue to support our customers facing difficult circumstances. During the half ANZ
implemented a significant package to help our customers impacted by the recent drought. This
included reducing rates on business loans for farmers by 1% in all drought declared areas and setting
aside $130 million for discounted loans to help farmers re-stock and re-plant next season. We also
excluded all home owners in drought declared regional Australia from a recent interest rateincrease.
“While there was much to be pleased about this year, we accept the significant community concern
as a result of our failures highlighted by the Royal Commission has impacted our standing in thecommunity.
“This was a factor in the decision to reduce variable remuneration paid to staff this year across thebank by $124 million 3. We are also undertaking the urgent work required to fix the failures that havebeen highlighted by the Commission and further increased our focus on conduct issues,” Mr Elliottsaid.
3

ANZ Incentive Plan (ANZIP)STRATEGIC PRIORITIESCreating a simpler, better balanced bank
Aim - Reduce operating costs and risks by removing complexity and exiting low return and noncore businesses.
 Maintained strong capital position with CET1 ratio of 11.4% at 30 September 2018, driven byorganic generation 28 bps higher than historical average and proceeds of asset sales.
 Only major bank in Australia currently reducing shares on issue. Shares on issue reduced by
67 million (equivalent to $1.9 billion) from an announced $3 billion share buyback program.
Neutralised DRP for fourth consecutive half.
 Continued simplification of the business with announced sale of ANZ New Zealand’s life
insurance business to Cigna Corporation for NZ$700 million, as well as the announced sale ofANZ’s retail and commercial business in PNG and ANZ’s Joint-Venture in Cambodia.
 Improved the balance of capital allocation with Institutional reducing from 48% to 38% since2015. The Retail and Commercial businesses in Australia and New Zealand now represents~60% of total capital allocation.
 Rolled out New Ways of Working to Australia and Technology divisions, with more than
9,000 people now working in Agile teams 4.

Focusing on areas where we can win
Aim - Make buying and owning a home or starting, running and growing a small business inAustralia and New Zealand easy. Be the best bank in the world for customers driven by themovement of goods and capital in our region.
 Grew owner-occupied home loans in Australia by 6%; maintained #1 position in home loans

across New Zealand.
 Improved loss rates in Small Business in Australia with 10% reduction in IP charge.
 Maintained Number 1 ranking for Institutional Bank for Relationship Strength in Australiaand New Zealand 5 and were again named a top-four corporate bank in Asia 6, driven by ourstrength in managing trade and capital flows.
 Lead bank for trade services in Australia and New Zealand 7. Approval of a securities licencefrom Japan’s Financial Services Agency, making ANZ the only Australian bank with a licence
to sell securities products to Japanese investors.

Driving a purpose and values led transformation
Aim - Create a stronger sense of core purpose, ethics and fairness, investing in leaders who canhelp sense and navigate a rapidly changing environment.
 Provided significant support package for Australian farmers impacted by drought including

reducing business rates by 1%pa, donating $1 million and offering $130 million in discounted
loans to support impacted farmers.
 Funded and facilitated $11.5 billion in low carbon and sustainable solutions of original $15
billion commitment by 2020; and arranged 18 green bonds valued at $1.9 billion on behalf ofcustomers.
4Includes both internal and managed services resources
5 Peter Lee Associates 2018 Large Corporate and Institutional Relationship Banking surveys, Australia & New Zealand. In New Zealand ranked against top-fourcompetitors (issued in June and August 2018 respectively)
6
Greenwich Associates 2017 Asian Large Corporate Banking Study (issued in March 2018)
7
Peter Lee Associates Large Corporate and Institutional Transactional Banking surveys, Australia and New Zealand 2004-2018

 Named top-three most inclusive workplace in Australia and Number 1 in private sector atAustralian Workplace Equality Index award.
 Strongest improvement on record in Women in Leadership with group-wide representation
increasing to 32.0%, up from 31.1% year-on-year.
 Introduced interest free loans to help New Zealanders insulate their homes, with almost 560
loans approved at the end of September.

Building a superior everyday experience for customers and our people tocompete in the digital age
Aim - Build more convenient, engaging banking solutions to simplify the lives of customers andour people.
 Rolled out New Payments Platform to 3 million small, medium and institutional customers.

Successfully secured 90% of competitive agency bank mandates, enabling other financial
institutions to provide NPP payments to their customers via ANZ’s infrastructure.
 Improved digital channels with the launch of 33 digital branches and Australian-first
introduction of cash withdrawals from ANZ ATMs using any mobile device. Maintained
mobile payment leadership with more than 64 million transactions completed during theyear, with total spend up 128% in September 2018 compared to last year.
 Introduced Artificial Intelligence (AI) to improve customer engagement and operational
efficiency, including a new ‘digital assistant’ in New Zealand. Introduced machine learningand robotics in Institutional with ~30% of trade transaction processing now handled using
these new technologies, improving customer turnaround time by ~40%.
 Continued to simplify our technology architecture with the decommissioning of 264
applications, a 35% increase on 2017. Decreased capitalised software balance from $2.9
billion in 2015 to $1.4 billion today, currently the lowest of the major banks.
ROYAL COMMISSION
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services
Industry was established in December 2017, with Commissioner Hayne expected to submit a final
report by 1 February 2019. ANZ acknowledges the significant community concern as a result of ourfailures highlighted by the Royal Commission. As mentioned earlier, ANZ has taken action to fasttrack fundamental changes. ANZ’s external legal costs for the Royal Commission were $55 million(pre-tax) for the 2018 financial year.
LARGE / NOTABLE ITEMS 8
ANZ announced earlier this month charges of $377 million after tax 9 have been recognised in 2H18
for refunds to customers and related remediation costs. ANZ also recorded accelerated amortisation
expense of $206 million in 2H18, predominantly relating to its International business. A restructuringcharge of $104 million, largely relating to the previously announced move of the Australia andTechnology Divisions to agile ways of working, was also recorded in 2H18.

89All items are on an after tax basis
Includes $127 million relating to discontinued operations

CAPITAL AND DIVIDENDThe APRA CET1 capital ratio at 30 September 2018 was 11.4% (16.8% on an Internationally
Comparable basis). This places ANZ well above the APRA prescribed ‘unquestionably strong’threshold, comfortably ahead of the 2020 deadline. Completed assets sales during the year
increased the CET1 position by ~84bps. This provided the capacity to commence an on market sharebuyback in January 2018 and was increased to $3 billion in June 2018. As at 30 September $1.9bn of
this had been completed, representing ~2% of ANZ shares outstanding. We expect the remaining~$1.1bn to be completed during 1H19. We also intend to neutralise the impact of shares allocatedunder the DRP for the fourth consecutive half. The Group’s funding and liquidity position remained
strong with the Liquidity Coverage Ratio at 138% and Net Stable Funding Ratio at 115%. Other asset
sales already announced will provide further flexibility.
CREDIT QUALITY
The total provision charge for the year was $688 million down 43%. The Group Loss rate reduced to12 bps with the second half loss rate 9 bps. New Impaired assets declined just over $1.1 billion or
34% with Gross Impaired Assets down 16%. The significant decline in the Group loss rate reflects
portfolio credit quality improvement driven by strategic changes to the composition of the asset
book, such as the sale of retail and commercial in Asia, together with tighter lending standards and a
relatively benign credit environment.
OUTLOOK
Commenting on the outlook Mr Elliott said: “We expect the tough revenue growth environment inretail banking in Australia to continue for the foreseeable future, however we are well positioned totake advantage of growth opportunities in Institutional, Asia and New Zealand.
“The work we began in 2016 to simplify our business, better focus on customers, improve our costbase and significantly improve our capital position, along with our exposure to international trade,puts us in a good position to manage any challenges ahead,” Mr Elliott said.
Video interviews with Chief Executive Officer Shayne Elliott and Chief Financial Officer Michelle
Jablko are available at www.bluenotes.anz.com
For media enquiries contact:

For investor enquiries contact:

Stephen Ries, +61 409 655 551
Nick Higginbottom, +61 403 936 262

Jill Campbell, +61 412 047 448
Cameron Davis, +61 421 613 819