ANZ 2016 AGM Chairman’s Address

ANZ 2016 Annual General Meeting
Address by David Gonski, Chairman
Good morning ladies and gentlemen.
My name is David Gonski and I welcome you to ANZ’s 2016 Annual General Meeting.
Your directors are all here today, including your Chief Executive Officer Shayne Elliottand our newest director, Jane Halton.
I start by acknowledging the traditional owners of the land on which we meet – the Kulin
nations – and I pay my respects to their elders past and present.
I also extend that respect to other Aboriginal and Torres Strait Islander peoples joiningus today.
I thank you for taking the time to join us here in Melbourne. As you know, we rotate
these meetings around Australia to give as many of our 550,000 shareholders as
possible a chance to attend. I note this meeting is being webcast to enable those who
can’t be here today to watch and listen to the meeting at their convenience.
Melbourne is our home. We established our first Melbourne office in Little Collins Streetin 1838, almost 180 years ago. It involved two small rooms for customers and staff;
and two rooms used as the manager’s residence.
It took until 1976 to move our head office here from London. And today ourheadquarters is in Docklands, just across the Yarra River from this auditorium. It covers
85,000 square metres of office space and is home to over six and a half thousand staff.
I am pleased to say our progress in reshaping and repositioning ANZ is moving much
more quickly.
Shayne and his team have been making good progress in building a better bank for ourcustomers, our shareholders and our communities.
Rapid change and economic uncertainty are a hallmark of the world we live in. As one of
the region’s major banks, we have both a need and a responsibility to take bold action to
make sure ANZ is fit and ready for this future.
Today, with economic performance in China softening, volatile markets and nervous
consumers, economic growth seems to be stuck in the slow lane.
Banks are also facing challenges from regulation and technology. And there are otherchallenges for banks, partly of our own making, in relation to reputation and conduct.
This reflects a general lack of trust, and even anger, at major institutions. ManyAustralians have also become disengaged from our major political parties and areseeking a different “voice” in the political system.
While I will spend time this morning talking about our performance in 2016, and Shayne
will discuss how we are reshaping ANZ for the future, I want to start by talking about theconcerns we see many Australians have for their future and their childrens’ future.
Despite the Australian economy being healthy by global standards, many Australians areworried about their jobs and the future of the country.

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ANZ 2016 AGM Chairman’s Address

They feel that their children are now less likely to have a better life than they did. The
cost of living is a regular topic of discussion around the dinner table, and many people
describe themselves as struggling to get ahead financially.
They see a growing disparity between the reality of their lives and how political andbusiness leaders live and talk.
There is a large degree of resentment and frustration evident which is manifesting
itself in disillusionment and disdain for politicians and for us in business.
Quite obviously, the major banks are bearing the brunt of this at present. And whilecriticism of banks is not new, I believe that large institutions including big business, havebeen slower than they should have been to open the windows, to stop the jargon andspeak more plainly, to listen more to the views of the community, and – above all - totreat all of their customers fairly and responsibly.
Of course, the consumer experience at some corporations is exceptionally positive.
However, in my view, to assume that the disdain that is being expressed is the fault ofothers and not institutions and big business themselves is naive.
In accepting fault on the part of the bank, I do note that many who criticize banks andlarge businesses often forget that these organisations are made up of thousands ofpeople who come to work every day and try very hard to do their job as best they can.,When you look at the banks, there is no doubt that mistakes have and will be made.
That is the nature of large organisations operating over long periods of time.
But too often the tradition of business has been to try to keep our mistakes in-house andwhilst fixing them and ensuring they do not re-occur, we have not kept customers andthe public fully informed.
Some have said this is the arrogance of big business. Others have said it is their power.
I am not sure it is either of those but this pattern of behaviour can and must bechanged.
There has been a backlash which has evolved into a deeper problem – a growing gap intrust. Banks face many challenges but perhaps none is as fundamental as maintaining
the support of society for the functions we perform.
Let me be clear. ANZ has not been immune from this.
And let me be equally clear. We get it.
We know we need to change and we are changing.
In October, Shayne appeared before the parliamentary inquiry into banking. He
specifically addressed a number of cases where ANZ had failed some of our customers.
There were cases where we should have worked much more positively with customers,
particularly where they were already in difficulty. This was wrong, we were too slow to
fix it and we apologised. However, we have now changed our processes, increased ourresourcing, resolved a large majority of the outstanding cases and supported industry
reforms.

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In the past, the conduct of a small number of staff in our Institutional Bank was also not
acceptable. We’ve acknowledged this; we have taken an uncompromising approach withstaff where breaches of our Code of Conduct have been identified; we have invested intraining and systems; and we have cooperated with the relevant authorities.
We will continue to do whatever it takes to avoid these incidents happening again.
The bottom line is, that if we make a mistake, we will own up, we will apologise and wewill work hard to put it right and to make sure it does not happen again.
We see this pact with our customers as a core element in our drive for ANZ tofundamentally change itself.
At the same time, we need to be a simpler company. A company more able to movequickly to engage with our customers whenever, wherever and however they want todeal with us; to enable innovation and new business models; to keep driving productivity
and to be highly capital efficient.
Ladies and gentlemen, today the board is more diverse than at any time in our history.
We believe this better reflects society and our commitment to engage more deeply withmodern Australia.
We have a new CEO who spent much of his first 100 days in the job personally meetingand listening to staff and customers in suburban branches, in rural towns and in callcentres and operations hubs throughout our network.
We have a new senior executive team with a diverse mix of established and new talentfrom inside and outside ANZ. This includes Maile Carnegie the former managing directorof Google Australia who’s now our Group Executive Digital Banking; and Michelle Jablko,
a former managing director of a global investment bank, who is now our Chief FinancialOfficer. Michelle is sitting here on my left.
Importantly, Shayne is changing ANZ to create a stronger sense of the bank’s purpose insociety and to shift the culture to be one that emphasizes ethics, fairness and humility.
And as I said earlier, where we find unacceptable behaviour, we have and we will takean uncompromising approach to enforcing ANZ’s code of conduct.
Let me now turn to our financial performance in 2016.
The 2016 financial year has been a year of transition for ANZ with statutory profit after
tax of $5.7 billion, down 24%.
Our core business continued to perform well. Our result was however impacted by anumber of items, primarily related to initiatives that will deliver future benefits.
These included a restructuring charge and a change to the application of accounting
policy to accelerate software amortisation which recognises the rapidly changing
technology landscape and the Group’s evolving digital strategy.
The total dividend of 160 cents per share fully franked represented a decrease of 12%.
This change reflects both our performance in 2016 and a move to gradually consolidate
ANZ’s dividend payout ratio within its historic range of 60-65% of annual cash profit.
Your Board believes this provides a more conservative and sustainable, fully franked
dividend base.

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The decision to cut the dividend was a difficult one; however it has assisted ANZ incontinuing to strengthen its capital position. Our common equity tier one capital ratio
ended the year at 9.6%, well positioned ahead of expected increases in regulatory
capital required of Australian banks.
This is not a decision that we took lightly but I would like to point out that as ofyesterday's share market close, this dividend at $1.60 per share fully franked will delivera yield of 5.3% or 7.6% gross, and remains very competitive.
At the same time, we recognize we have broader responsibilities.
For instance, the ANZ business growth program has helped small businesses learn how
to lead, manage and accelerate growth.
This partnership with the University of South Australia has helped the small businesses
that entered the program to increase revenue and profits, and to export to newcountries.
We are committed to managing the social and environmental impact of our activities.
Our aim is to make balanced and informed decisions, and to work with our customers to
help them improve their management of environmental, social and governance risks andto make the most of their opportunities.
The approach we take includes screening our customers; applying sensitive sector
policies; providing sustainability training and education; and taking account of the United
Nations principles on business and human rights.
We also understand the need to give back to the community.
Working with ANZ staff, we support the many communities where we operate throughour GIVE program, which stands for giving, investing, volunteering and emergency
relief.
During the September storms that caused serious damage across South Australia, NewSouth Wales and Victoria, we provided affected customers with a relief package.
This included suspending repayments on loans including credit cards; providing
temporary adjustments to existing lending limits to assist with unexpected costs; andassistance including emergency funds and temporary accommodation.
Let me conclude by saying that we are building a better bank. Not just better inoperational terms but a bank that is better for Australia, New Zealand and everywhere
where we have a presence.
ANZ is in a strong position due to our leadership team; our willingness to make the rightdecisions for long-term value creation; and the hard work and commitment of our staff.
In closing, I would also like to formally acknowledge one of our long serving directors,
Ian Macfarlane, who retires from the board at the conclusion of this meeting.
Ian has served as a non-executive director with great distinction since he joined theboard in February 2007. This included very ably chairing our board Risk Committee. Ian
has given significant service to our Bank and we thank him for his contribution.

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ANZ 2016 AGM Chairman’s AddressThat completes my address to the meeting and I now invite our Chief Executive Officer
Shayne Elliott to speak to the meeting. After Shayne speaks, we will turn to theBusiness of the Meeting.

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