News Release
For Release: 4 May 2022

Transcript of bluenotes video interview with ANZ Chief
Executive Officer Shayne Elliott
ANDREW CORNELL: Morning, Shayne. Thanks very much for joining us on bluenotes on themorning of the half-year result. We're obviously entering a more uncertain environment,again. COVID is still entrenched but we've got geopolitical tensions, we've got a rising
inflation environment around the world. And a rising interest rate environment around theworld. There's a prospect of rate rises down the track. In that context, when you look at thisparticular result, is there more of a focus on stability and flexibility here or is it a growthstory?
SHAYNE ELLIOTT: So first of all, I think there's no question we are entering into a very, very
different operating environment. In fact, perhaps the most different we’ve seen in almost 30years. We've had a 30-year operating environment which has seen interest rates fall overthat period of time, so just keeping it simple. And now we’re looking at a period that it
seems likely, globally, interest rates will be on the rise for a period. That's quite new for a
lot of our customers. Many of our customers have never lived through any of that, whether
they’re a small business or they’re a homeowner. So, things are going to be different, right?
Now people are wise and what they've done through this period, they've noted that there's
more uncertainty, so they've done what they should do. They’ve shored up their own
balance sheets. So, they've saved more. In fact, savings - household savings and small
business savings - are at record levels. People have put money aside for a rainy day
because of that uncertainty. They've paid down their most expensive debt. Credit cardbalances are way down. That's a good thing in terms of people's financial security. And so,they’re getting prepared for that future, whatever it may look like. And of course, risingrates – that's going to hurt some people, that’s going to take money out of people's pockets.
But at this point, people are well prepared for it. And it is uncertain, but I think the bank’sbalance sheet in particular is in really good shape to be able to deal with it and to help
people through this next phase of transition.
ANDREW CORNELL: And when you look at the result that's reported today, what are you
seeing in that that feeds into this story? Where were the strengths and weaknesses?
SHAYNE ELLIOTT: Like everything there’s sort of two stories in here. There’s the strategic
story and then the more financial short term one. Strategically, we're really pleased with theprogress we made in the half. This is about a long-term transformation of ANZ as we knowit. Around these four really critical businesses that we have. We’ve got this great
Institutional bank, which is really well known for connecting Australia and New Zealand to
the rest of the world. And they had a really strong result. Customer revenues up quite
strongly, balance sheet growth, lending to people we know and like who are really funding
investment around the region. So, really good business, well disciplined, well-run business,
generating positive returns for shareholders. That's great. New Zealand – terrific business.
We’re the largest bank in New Zealand, we've got a great franchise, number one in almost
everything we do and that position strengthened over the period. And so again – goodgrowth, good lending growth, good financial performance, well disciplined, risk disciplined.
So Insto and New Zealand are in really good shape. And together, they’re well over half ofour capital as a bank. Australia a little bit tougher, a tougher environment for us at ANZ andfor the industry. Very, very competitive period of time. But nonetheless we strengthened
Australia and New Zealand Banking Group Limited
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our strategic position. We launched ANZ Plus our new platform for long-term growth into ourretail strategy. And we announced the separation of our Commercial bank into a newdivision to unlock its own growth potential in the future. On the headwinds side, however,
we didn't have a brilliant time in trading, in our Markets business. But that business comesand goes and there are times when it's good and times when it isn't. And our experiencewasn't the greatest over the half, but we're confident about it returning to more normal in
the future. And, of course, there was some bits and pieces we announced, Andrew. We hada few headwinds and some products that we've taken off the shelf that had some financialimpact. So, pretty good strategically, some financial headwinds. And then of course, let'stalk about cost. Whatever the environment is, businesses like ours need to be really, really
mindful of their operating cost and productivity. And ANZ has done a really good job on thatover the five or six years. And this was another half where we came in flat in terms of our
day-to-day running costs. That's pretty extraordinary in a time of inflation and that allowed
us to put even more money to work investing for growth in the future.
ANDREW CORNELL: And we'll talk to Farhan Faruqui, the CFO, about how he's balancingthat investment spend. But there's a sense that there's a bit of momentum here in thebusiness and you refer to ANZ Plus the new platform. It’s only just been launched, there's acouple of propositions on it with more to come, but how significant is that in the future ofthe Retail bank?
SHAYNE ELLIOTT: Well, it is the future of the retail bank so it’s extremely important. And
part of our job is to really communicate that more broadly to our customers andstakeholders. It's easy to look at ANZ Plus as a new shiny app. Well, it is that and that's nicebut it's much more than that. It's a completely new bank, essentially built on entirely newinfrastructure. A more contemporary service model that allows us to deploy features andfunctions at pace, at low cost, really, really safely. And so that really positions us for thefuture, all built around this idea of financial wellbeing. Now, it’s really early days. We've
taken a leaf out of the playbook of tech firms, right? We’ve started simple – minimum viable
product, they call it. You just get something to market that works, that's really basic andthen you iterate and build from there based on customer feedback. So, we've got a reallybasic product out in market now. It’s in soft launch, we haven’t even advertised it. It's doing
well, testing, learning, hearing from our customers and we're rapidly deploying the things
that they want, like PayID and bits and pieces like that, which are literally coming in thecoming weeks.
ANDREW CORNELL: And you touched on capital. Again, the capital generation story was asolid story, but not a lot of things, well you haven't said anything greatly about what you'regoing to do with the capital. How are you thinking about the capital at the moment?
SHAYNE ELLIOTT: Capital management, I think, has been really part of the DNA of ANZ overthe last five or six years. We've been really mindful that we are the custodian of ourshareholders’ capital and I think we've been extraordinarily prudent with that. We justcompleted our most recent – we led the market actually in capital management as a theme– and just completed our $A1.5 billion buyback. That brings the total buyback to $A5.5
billion over the last five years. We've bought back 200 million shares of ANZ because thatwas the right thing to do for then. As we sit today, just where we started the conversation –the whole world is changing, everything is flipping around, it’s really uncertain. And we sortof sat back and said, ‘we've got capital, we've got a lot, we could continue on the buyback,but let's just take time out here and just think about the future, think about what's going on
and not be bound by the tyranny of an announcement day – we just happened to have ourfinancial results today – let's be thoughtful like we have been over the last five or six years
and consider what the opportunities are going to be’. Because in that new world is also
going to be a whole bunch of new opportunities. So, we are just taking a bit of a pause andAustralia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522

that doesn't mean we can't change our mind tomorrow or next week or in three months orsix months. But it's just not something we are going to talk about today.
ANDREW CORNELL: And one other thing that's been announced today is a new legal
structure for the bank, a proposition for that. Essentially separating the bank into traditionalbanking businesses that get regulated by APRA in Australia, for example. And then nonbanking businesses that perhaps don't need that same degree of regulation from a banking
supervisor. So why are we doing that?
SHAYNE ELLIOTT: Yes. So, colloquially known as a NOHC structure – a non-operatingholding company. What's interesting about this is that it's very normal actually in global
banking. Australia is a bit of an outlier in that this is not the typical structure, so it's not
something entirely revolutionary. What does it allow? Well, essentially, banking services –taking deposits and lending money – should be extremely well regulated. That's good for us,
it's good for the community, it's good for the taxpayer and that's entirely appropriate. But
as we think about the future and the services that we provide to customers to help themown their home faster or run their businesses better. Increasingly, the way we do that isproviding non-banking services around the edges. Ancillary, related, but not really banking.
A good example is the business we bought recently called Cashrewards. Cashrewards
actually just helps people save money when they're going about their daily purchases. It's agreat thing for customers, improves their financial wellbeing but it’s not banking. And sohaving a business like that sit within a banking group and subject to the same regulation as,
say for example, our home loan business doesn't really make a lot of sense. And what it
does is it slows you down. And it imposes a level of structure and infrastructure andcompliance on a business that really isn't helpful. And so basically what we're going to do is,
if we're approved, we'll have a holding company – ANZ Group – and it'll have a couple ofsubsidiaries under it; it will have a banking group that looks like ANZ today and will go
about doing what it is and it will continue to be regulated just the same way it is today. And
there'll be this non-banking group and that's really in a vehicle that – certainly in the earlydays – will be relatively small and modest. But allows us things like Cashrewards, it will givethem an appropriate home and a way to run those. It's also worth noting that it's notentirely new here in Australia. Macquarie actually operate a very, very similar structure. So,
it's exciting for us and it's actually the next step in the evolution of building an agile,contemporary organisation that's better able to serve its customers.
ANDREW CORNELL: Well thanks very much for your time today.
SHAYNE ELLIOTT: Thank you.
For media enquiries contact:
Stephen Ries
Head of Corporate Communications
Tel: +61 409 655 551
Nick Higginbottom,Senior Manager Media Relations
Tel: +61 403 936 262
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Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522