6 November 2017
Company Announcements
Australian Securities Exchange
Level 420 Bridge Street
SYDNEY NSW 2000

Australia and New Zealand Banking Group Limited (ABN 11 005 357 522)(“ANZBGL”) - Annual Financial Report submission under the Disclosure andTransparency Rules of the United Kingdom Financial Conduct Authority (“UKDTR Submission”)

The attached UK DTR Submission will be lodged by ANZBGL with the London Stock
Exchange (“LSE”) today, together with the Group’s Annual Report and ANZBGL’s 2017
Financial Report for the year ended 30 September 2017. This UK DTR Submission has
been prepared by ANZBGL in order to comply with the applicable periodic reporting
requirements of DTR 4 of the Disclosure and Transparency Rules of the United Kingdom
Financial Conduct Authority in connection with certain debt securities issued by ANZBGL.
For completeness, in addition to lodgement with the LSE, ANZBGL is lodging this UK DTR
Submission with the Australian Securities Exchange (“ASX”) and the New Zealand Stock
Exchange today.

Yours faithfully

Simon Pordage
Company Secretary
Australia and New Zealand Banking Group Limited
Company Secretary’s Office
ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands Vic 3008
GPO Box 254, MELBOURNE VIC 3001 AUSTRALIA
www.anz.com

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

DISCLOSURE AND TRANSPARENCY RULES – ANNUAL FINANCIAL REPORTSUBMISSION
Australia and New Zealand Banking Group Limited (“ANZBGL” or the“Company”) together with its subsidiaries (“ANZ” or the “Group”) – Annual
Financial Report submission under the Disclosure and Transparency Rules(“DTR”) of the United Kingdom Financial Conduct Authority
The following attached documents constitute ANZ’s 2017 Annual Financial Report for the
purposes of the disclosure requirements of DTR 4.1:•

The Group’s 2017 Annual Report for the year ended 30 September 2017;•

The Company’s 2017 Financial Report for the year ended 30 September 2017;•

A description of the principal risks and uncertainties for the Group provided inaccordance with DTR 4.1.8 (2); and•A responsibility statement of the Directors of ANZBGL provided in accordance withDTR 4.1.12 (3)(b).

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ANZ’s 2017 Annual Report and ANZBGL’s 2017 Financial Report
Copies of these documents were separately lodged by ANZ with the ASX today.

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Principal risks and uncertainties faced by the Group (DTR 4.1.8 (2))
PRINCIPAL RISKS AND UNCERTAINTIES
1. Introduction
The Group’s activities are subject to risks that can adversely impact its business, operations andfinancial condition. The risks and uncertainties described below are not the only ones that theGroup may face. Additional risks and uncertainties that the Group is unaware of, or that the Groupcurrently deems to be immaterial, may also become important factors that affect it. If any of thelisted or unlisted risks actually occur, the Group’s business, operations, financial condition, or
reputation could be materially and adversely affected, with the result that the trading price of theGroup’s equity or debt securities could decline, and investors could lose all or part of theirinvestment.
2. Changes in political and general business and economic conditions, including
disruption in regional or global credit and capital markets, may adversely affect theGroup’s business, operations and financial condition
The Group’s financial performance is primarily influenced by the political and economic conditions
and the level of business activity in the major countries and regions in which the Group operates
or trades, i.e., Australia, New Zealand, Asia Pacific, Europe and the United States.
The economic and business conditions that prevail in the Group’s major operating and trading
markets are affected by domestic and international economic events, political events and natural
disasters, and by movements and events that occur in global financial markets.
For example, the global financial crisis that commenced in 2007 saw a sudden and prolonged
dislocation in credit and equity capital markets, a contraction in global economic activity and theemergence of many challenges for financial services institutions worldwide.
The impact of the global financial crisis and its aftermath continue to affect regional and global
economic activity, confidence and capital markets. Prudential authorities have implemented andcontinue to implement increased regulations to mitigate the risk of such events recurring, although
there can be no assurance that such regulations will be effective. The Group believes that the
global financial crisis has also had a lasting effect on consumer and business behaviour in theadvanced economies. Consumers have generally acted more cautiously, while businesses havebeen reluctant to invest and inflation has remained low. Monetary authorities responded to theglobal financial crisis by introducing zero or near-zero interest rates across most countries, and the
major central banks took unconventional steps to support growth and raise inflation. While some
economic factors have recently improved and some monetary authorities have begun to increaseinterest rates, lasting impacts from the global financial crisis and the potential for escalation ingeopolitical risks suggest ongoing vulnerability and potential adjustment of consumer and businessbehaviour
Changes in global political conditions, such as the ‘Brexit’ referendum in the United Kingdom on
June 23, 2016 (and the related negotiations with the European Union) and the commencement ofDonald Trump’s presidency in January 2017, have the potential to lead to extended periods ofincreased political and economic uncertainty and volatility in the global financial markets. This is inpart due to the unknown consequences for global trade, the broader global economy and financial
markets. Political and economic uncertainty has in the past led to declines in market liquidity andactivity levels, volatile market conditions, a contraction of available credit, lower or negativeinterest rates, weaker economic growth and reduced business confidence, each of which could
adversely affect the Group’s business. These conditions may also adversely affect the Group’s
ability to raise medium or long-term funding in the international capital markets.
Geopolitical instability, such as threats of, potential for, or actual conflict, occurring around theworld, such as the ongoing unrest and conflicts in Ukraine, North Korea, Syria, Egypt, Afghanistan,
Iraq and elsewhere, as well as the current high threat of terrorist activities, may also adversely
affect global financial markets, general economic and business conditions and the Group’s ability tocontinue operating or trading in a country, which in turn may adversely affect the Group’sbusiness, operations, and financial condition.

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Should difficult economic conditions in the Group’s markets eventuate, asset values in the housing,commercial or rural property markets could decline, unemployment could rise and corporate andpersonal incomes could suffer. Also, deterioration in global markets, including equity, property,
currency and other asset markets, could impact the Group’s customers and the security the Groupholds against loans and other credit exposures, which may impact the Group’s ability to recoverloans and other credit exposures.
The Group’s financial performance could also be adversely affected if the Group were unable toadapt cost structures, products, pricing or activities in response to a drop in demand or lower than
expected revenues. Similarly, higher than expected costs (including credit and funding costs) could
be incurred because of adverse changes in the economy, general business conditions or theoperating environment in the countries in which the Group operates.
Other current economic conditions impacting the Group and its customers include:•

Changes in the commercial and residential real estate markets in Australia and New Zealand(see risk factor 6 "Weakening of the real estate markets in Australia, New Zealand or othermarkets where the Group does business may adversely affect the Group’s business, operations
and financial condition"); and•The demand for natural resources given that sector is a significant contributor to Australia’s
economy and that sector’s significant exposure to Asia, particularly China and China’s economic
growth (see risk factor 7 "Credit risk may adversely affect the Group’s business, operations andfinancial condition").

Natural and biological disasters such as, but not restricted to, cyclones (for example, Cyclone
Debbie in March 2017), floods, droughts, earthquakes and pandemics, and the economic andfinancial market implications of such disasters domestically and globally, may adversely affect theGroup’s business, operations and financial condition. (see risk factor 13: “Impact of future climatechange, geological events, plant, animal and human diseases, and other extrinsic events may
adversely affect the Group’s business, operations and financial condition”).
All or any of the negative political, business or economic conditions described above could cause areduction in demand for the Group’s products and services and/or an increase in loan and othercredit defaults and bad debts, which could adversely affect the Group’s business, operations, andfinancial condition.
3. Competition in the markets in which the Group operates may adversely affect theGroup’s business, operations and financial condition
The markets in which the Group operates are highly competitive and could become even more so.
Factors that contribute to competition risk include industry regulation, mergers and acquisitions,changes in customers’ needs and preferences, entry of new participants, development of new
distribution and service methods and technologies, increased diversification of products bycompetitors, and regulatory changes in the rules governing the operations of banks and non-bankcompetitors. For example, changes in the financial services sector in Australia and New Zealandhave made it possible for non-banks to offer products and services traditionally provided by banks,
such as payments, home loans, and credit cards. In addition, existing companies from outside of
the traditional financial services sector may seek to obtain banking licenses to directly competewith the Group by offering products and services traditionally provided by banks. In addition,banks organised in jurisdictions outside Australia and New Zealand are subject to different levelsof regulation and some may have lower cost structures, which may make these banks morecompetitive in the markets where the Group operates. Increasing competition for customers could
also potentially lead to a compression in the Group’s net interest margins or increased advertisingand related expenses to attract and retain customers.
Digital technologies and business models are changing customer behaviour and the competitiveenvironment. Emerging competitors are increasingly utilising new technologies and seeking to
disrupt existing business models in the financial services sector.
The Group relies on bank deposits to fund a significant portion of its balance sheet. The Group
competes with banks and other financial services firms for such deposits. Increased competition
for deposits could increase the Group’s cost of funding. To the extent that the Group is not able tosuccessfully compete for deposits, the Group would be forced to rely more heavily on other, less

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stable or more expensive forms of funding, or to reduce lending. This could adversely affect theGroup’s business, prospects, financial performance or financial condition.
The impact on the Group of an increase in competitive market conditions or a technological changethat puts the Group’s business platforms at a competitive disadvantage, especially in the Group’s
main markets and products, would potentially lead to a material reduction in market share andmargins, which would adversely affect the Group’s business, operations and financial condition.
4. Regulatory changes or a failure to comply with regulatory standards, law or policies
may adversely affect the Group’s business, operations or financial condition
The Group is subject to detailed laws and regulations (including prudential requirements, taxation
laws and accounting standards) and industry codes of practice in each of the jurisdictions in which
it operates or obtains funding, including Australia, New Zealand, the United States, Europe andAsia Pacific.
The Group is also supervised by a number of different regulatory and supervisory authorities
which, in some cases, have broad administrative and investigative powers over the Group’sbusinesses. For example, APRA has very wide powers under the Banking Act in Australia, including
in certain circumstances to investigate the affairs of and/or issue (directions to banks (including
ANZ), such as, a direction to comply with a prudential requirement, to conduct an audit, to remove
a director, executive officer or employee or not to make payments or undertake a transaction. In
this regard, on October 19, 2017, the Financial Sector Legislation Amendment (Crisis Resolution
Powers and Other Measures) Bill 2017 (“Crisis Management Bill”) was introduced into the
Commonwealth Parliament. If passed into law, the Crisis Management Bill would amend the
Banking Act (among other statutes applicable to financial institutions in Australia) and is intended
to enhance APRA’s powers to resolve the entities it regulates (and their subsidiaries). Additional
powers which are proposed to be given to APRA under the Crisis Management Bill which could
impact the Group, include greater oversight, management and directions powers in relation to theGroup entities which are currently not regulated by APRA, increased statutory management
powers over regulated entities within the Group and changes which are designed to give statutory
recognition to the conversion or write-off of regulatory capital instruments. At this stage, theimpact of the Crisis Management Bill, if passed, is uncertain.
Failure by the Group, or an employee of the Group, to comply with applicable laws, regulations andother obligations may result in regulatory investigations, legal or regulatory sanctions, financial or
reputational loss, litigation, fines, penalties, restrictions on the Group’s ability to do business,
revocation, suspension or variation of conditions of relevant regulatory licenses or otherenforcement or administrative action or agreements (such as enforceable undertakings) which,depending on the circumstances, could have a material adverse impact on the Group’s business,
operations, reputation, prospects, financial performance or financial condition. For further
information, refer to risk factor 28 “Litigation and contingent liabilities may adversely affect theGroup’s business, operations and financial condition” and Note 33 of the Group’s 2017 Annual
Financial Statements. Further, regulatory actions may result in the Group being exposed to therisk of litigation brought by third parties (including through class action proceedings). The outcomeof such litigation (including class action proceedings) may result in the payment of compensation
to third parties and/or further remediation activities.
Regulation is becoming increasingly extensive and complex in Australia and the other markets
where the Group conducts business. As with other financial institutions, the Group faces increasing
supervision and regulation in most of the jurisdictions in which it operates or raises funds,
particularly in the areas of funding, liquidity, derivative execution, capital adequacy, provisioning,
conduct, competition, mortgage pricing, consumer credit and consumer protection (including in
the design and distribution of financial products), remuneration, privacy, data access, prudential
regulation, anti-bribery and corruption, anti-money laundering and counter-terrorism financing andeconomic and trade sanctions and a greater focus on executive accountability. A bill to establish a
new Bank Executive Accountability Regime (“BEAR”) was introduced into the CommonwealthParliament in October 2017. The BEAR is a strengthened responsibility and accountability
framework for the most senior and influential directors and executives in Australian Authorised
Deposit-taking Institution (“ADI”) groups. Risks to ANZ from the proposed BEAR include the risk ofpenalties and the risk to its ability to attract and retain high-quality directors and senior
executives.

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Additionally, in the face of increasing public scrutiny of banking culture in recent years, there areseveral on-going Australian Government inquiries (including a House of Representatives inquiry
into Australia’s four major banks (including ANZ), which resulted in two committee reports in
November 2016 and April 2017 that contained recommendations to improve the banking systemfor consumers, and a Senate inquiry focused on consumer protection and transparency in thebanking, insurance and financial sectors), and proposals for new inquiries to be established (suchas the opposition Australian Labor Party’s proposal in April 2016 for a Royal Commission toinvestigate Australian banks), which could lead to additional regulatory changes or otherregulatory measures which may adversely affect the Group’s business, operations or financial
condition.
Such scrutiny has become further increased following the commencement by the AustralianTransaction Reports and Analysis Centre (“AUSTRAC”) of civil penalty proceedings in 2017 against
another major Australian bank relating to alleged past and ongoing contraventions of the AntiMoney Laundering and Counter-Terrorism Financing Act 2006 (Cth) (see risk factor 5 "Significant
fines and sanctions in the event of breaches of law or regulation and law relating to anti-money
laundering, counter-terrorism financing and sanctions may adversely affect the Group’s business,
reputation, operations and financial condition").
Any changes to laws, regulations, fiscal and other regulatory policies (including taxation andlevies) or interpretation may adversely affect the business, prospects, operations, financial
performance or financial condition of the Group, either on a short-term or long-term basis. The
Group’s regulatory landscape is continually evolving and the nature, scope, timing and impact ofany changes can be unpredictable, are beyond the Group’s control, and may not be harmonised orotherwise consistently applied or interpreted by different governments or regulators across themultiple jurisdictions in which the Group operates. In addition, due to the increasing
interconnectedness of regulation and regulators, actions taken in one jurisdiction may prompt
similar actions to be taken in another jurisdiction.
Regulatory changes may adversely impact the operations and profitability of the Group or one ormore of its businesses in a range of ways, such as by requiring the Group to:•change its corporate structure or alter its business mix (for example by limiting the types,
amount and composition of financial services and products that the Group can offer, limiting thefees and interest that the Group may charge or increasing the ability of other banks or nonbanks to offer competing financial services or products);•

raise substantial additional capital;•

incur additional legal, compliance and tax costs increase demands on management, employees
and information technology systems;•

raise additional amounts of higher-quality capital (such as ordinary shares, Additional Tier 1
capital or Tier 2 capital instruments) or retain capital (through lower dividends);•

hold significant levels of additional liquid assets; or•undertake further lengthening of the Group’s funding base.

Any of these events could materially and adversely affect the Group’s business, operations,prospects, financial performance or financial condition.
Examples of certain current and potential regulatory changes and developments relevant to theGroup are discussed below. These examples are not exhaustive.
As part of its 2017-18 federal budget, the Australian Government imposed a levy on liabilities forcertain large banks, including the Group, with effect from 1 July 2017 (the “Major Bank Levy”).
Based on ANZ’s 31 March 2017 balance sheet, ANZ estimates that the financial impact of the
Major Bank Levy on the Group would have been approximately $345 million before tax, andapproximately $240 million after tax, per annum. There is a risk that Australian State and Territory
Governments may introduce similar levies. A bill to this effect has been introduced into the South
Australian Parliament in June 2017 but has not yet been enacted. Based on the form of the bill for
the South Australian levy that was introduced into the South Australia Parliament, the South
Australian levy would apply to all banks that operate in South Australia and are liable for the Major
Bank Levy, including the Group. The amount payable under the South Australian levy would beequal to a bank’s levy base under the Major Bank Levy multiplied by South Australia’s gross state

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product share of the Australian gross domestic product multiplied by a levy rate of 0.06%. The net
financial impact of this bank levy, and any similar levies, will also be dependent upon businessperformance and decisions ANZ makes in response to the levy. ANZ’s balance sheet is also
undergoing change due to various strategic initiatives that may impact the amount of the levy
payable. The Major Bank Levy, the South Australian levy or any similar levy could adversely affect
the Group’s business, operations or financial condition.
Implementation of the Basel Committee on Banking Supervision’s (the “BCBS”) ‘Basel 3’ capitaland liquidity reforms will continue over the coming years. The BCBS continues to refine its ‘Basel
3’ global regulatory framework and is consulting on other proposals (such as reforms to simplify
the measurement of risk-weighted assets and reduce their variability across banks andjurisdictions). Consistent with Basel 3 requirements relating to liquidity reforms, the Group will be
required to comply with the Net Stable Funding Ratio (“NSFR”) requirements, with effect from 1
January 2018. Any further changes may be implemented by APRA into its prudential standards inAustralia and by other regulators in due course. The impacts of such changes on the Group cannot
be fully determined until the final requirements, and any proposals by APRA or other regulators to
implement them, are known.
In addition to BCBS reforms, there have been a series of other regulatory releases from authorities
in various jurisdictions outside of Australia where the Group operates that have proposed
significant regulatory changes for financial institutions. These changes include, among otherthings, proposals for changes to financial regulations in the United States (including the DoddFrank Act and its Volker Rule) which are under review as a result of an executive order released in
February 2017, changes to senior executive accountability in Singapore and Hong Kong, greater
data protection regulations in Europe, the Markets in Financial Instruments Directive 2 in theEuropean Economic Area and amendments to the United Kingdom’s Criminal Finances Bill (which
has extraterritorial reach). United Kingdom and European authorities may also propose significant
regulatory changes as a result of ‘Brexit’ which, may impact the Group in the future. Regulatorychanges outside of Australia could increase our regulatory compliance costs and otherwise
adversely affect the Group’s business, operations, prospects, financial performance or financial
condition.
The Final Report of the Financial System Inquiry (“FSI”) (released on 7 December 2014) concluded
a comprehensive inquiry into Australia’s financial system, which was established by the AustralianGovernment in late 2013. The Final Report of the FSI included a wide-ranging set ofrecommendations. In Australia, APRA is responsible for implementing the final recommendations of
the Australian Government’s FSI aimed at strengthening the resilience of Australia’s financial
system including (among other things) setting capital standards to ensure that capital ratios of
ADI’s are “unquestionably strong”.
Consistent with the FSI’s recommendation that the capital ratios of ADIs should be“unquestionably strong”, effective from July 2016, APRA increased the capital requirements forAustralian residential mortgage exposures for ADIs accredited to use the IRB approach to credit
risk (including the Group). Subsequently, on 19 July 2017, APRA released an information paper
outlining APRA’s conclusions with respect to the quantum and timing of capital increases that will
be required for ADIs to achieve “unquestionably strong” capital ratios. APRA indicated that, in thecase of the four major Australian banks, it expects that the increased capital requirements willtranslate into the need for an increase in Common Equity Tier-1 (“CET1”) capital ratios, on
average, of around 100 basis points above their December 2016 levels. In broad terms, that
equates to a benchmark CET1 capital ratio, under the current capital adequacy framework, of atleast 10.5 per cent. APRA also stated that ADIs should, where necessary, initiate strategies toincrease their capital strength to be able to meet these capital benchmarks by 1 January 2020 at
the latest.
The Group expects that APRA’s implementation of the prudential standards to produce“unquestionably strong” capital ratios will result in further changes to the risk weighting framework
for certain asset classes and other risks (such as operational risks). Changes may also include
increases in APRA’s existing Common Equity Tier 1 “capital conservation buffer” requirement for
ADIs. While APRA has announced that it does not expect that the changes to the risk weights will
necessitate further increases in capital for ADIs, it is not currently clear how APRA will implement
these changes.

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APRA’s prudential standards may also be further supplemented by yet to be finalised proposals to
implement other key FSI recommendations:•to supplement the risk-adjusted capital ratio requirements with the introduction of a minimum
leverage ratio; and•to implement a minimum total loss absorption capital requirement where certain senior debt
could be “bailed in” to recapitalise a stressed financial institution to avoid government supportof that financial institution.

APRA is expected to continue to assess the impact of impending BCBS reforms and to consider
other financial resilience measures, such as liquidity, funding, asset quality, and recovery andresolution planning relating to the FSI’s key recommendations.
In addition, APRA is currently undertaking several open consultations, including those related toreporting requirements for the countercyclical capital buffer, liquidity measures and securitisation,
as well as other areas of focus. Accordingly, the final outcome of the FSI including any further
changes to APRA’s prudential standards or other impacts on the Group remain uncertain. Further
changes to APRA’s prudential standards and the final outcome of the FSI could increase the levelof regulatory capital that the Group is required to maintain, restrict the Group’s flexibility, require
it to incur substantial costs and impact the profitability of one or more business lines, which could
adversely affect the Group’s business, financial performance or financial condition.
Refer to Note 22 of the Group’s 2017 Annual Financial Statements for a further discussion andupdate on regulatory developments specifically with respect to capital management, including
BCBS and FSI reforms.
5. Significant fines and sanctions in the event of breaches of law or regulation and law
relating to anti-money laundering, counter-terrorism financing and sanctions may
adversely affect the Group’s business, reputation, operations and financial condition
Anti-money laundering, counter-terrorist financing and sanctions compliance have been thesubject of significant regulatory change and enforcement in recent years. The increasingly
complicated environment in which the Group operates has heightened these operational andcompliance risks. Furthermore, the upward trend in compliance breaches by global banks and therelated fines and settlement sums mean that these risks continue to be an area of focus for theGroup. Following the AUSTRAC civil penalty proceedings in 2017 against a major Australian bankrelating to alleged past and ongoing contraventions of the Anti-Money Laundering and CounterTerrorism Financing Act 2006 (Commonwealth), there may be increased regulatory scrutiny ofother Australian banks, including the Group, and significant changes to the anti-money laundering
regulatory framework. While the full scope of any changes, if any, is not known, the Group may
incur additional costs associated with legal compliance that may adversely affect our business andfinancial condition.
The risk of non-compliance with anti-money laundering, counter-terrorist financing and sanction
laws remains high given the scale and complexity of the Group. A failure to operate a robust
programme to combat money laundering, bribery and terrorist financing or to ensure compliancewith economic sanctions could have serious legal and reputational consequences for the Group andits employees. Consequences can include fines, criminal and civil penalties, civil claims,
reputational harm and limitations on doing business in certain jurisdictions. These consequences,individually or collectively, could have a material adverse effect on the Group’s business,
reputation, operations and financial condition. The Group’s foreign operations may place the Group
under increased scrutiny by regulatory authorities, and subject us to increased compliance costs.
6. Weakening of the real estate markets in Australia, New Zealand or other markets
where the Group does business may adversely affect the Group’s business,
operations and financial condition
Residential and commercial property lending, together with real estate development andinvestment property finance, constitute important businesses to the Group. Major sub-segments
within the Group's lending portfolio include:

residential housing loans (owner occupier and investment); andcommercial real estate loans.

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Since 2009, the world’s major central banks have embarked upon unprecedented monetary policy
stimulus. The resulting weight of funds searching for yield continues to drive underlying property
markets in the Group’s core property jurisdictions (Australia, New Zealand, Singapore and HongKong). Values for completed tenanted properties and residential house prices, particularly in metro
east coast Australian and New Zealand markets, have steadily risen.
Should the Group’s regulators impose supervisory measures impacting the Group’s residential
lending or if Australian housing price growth subsides or property valuations decline, the demand
for the Group’s home lending products may decrease which may adversely affect the Group’sbusiness, operations and financial condition. For example, in March 2017, prompted by ongoing
Australian housing price appreciation and rising Australian household debt, APRA introduced a newsupervisory measure instructing Australian banks, including the Group, to limit new residential
interest-only mortgages to 30% of total new residential mortgage lending.
Declining asset prices could impact customers and counterparties and the value of the security(including residential and commercial property) the Group holds against loans which may impair
the Group’s ability to recover amounts owing to the Group if customers or counterparties were todefault. A significant decrease in Australian and New Zealand housing valuations triggered by, forexample, an event or a series of events in the local or global economy or lack of confidence inmarket values, could adversely impact the Group’s home lending activities. This is because
borrowers with loans in excess of their property value show a higher propensity to default and, inthe event of such defaults the Group’s security values would be eroded, causing the Group to incur
higher credit losses, which could adversely affect the Group’s financial performance and condition.
The demand for the Group’s home lending products may also decline due to buyer concerns about
decreases in values or concerns about rising interest rates, which could make the Group’s lending
products less attractive to potential homeowners and investors. A material decline in residential
housing prices could also cause losses in the Group’s residential development portfolio if customers
who are pre-committed to purchase these dwellings are unable or unwilling to complete theircontracts and the Group is forced to re-sell these dwellings at a loss.
The Group's portfolio of commercial property interest only loans, may be particularly susceptible tolosses in the event of a decline in property prices as a result of refinance risk and deteriorating
security values. A significant decrease in commercial property valuations or a significant slowdown
in the commercial real estate markets where the Group does business could result in a decrease in
the amount of new lending the Group is able to write and/or increase the losses that the Groupmay experience from existing loans, which, in either case, could materially and adversely impact
the Group’s financial condition and operations.
7. Credit risk may adversely affect the Group’s business, operations and financial
condition
As a financial institution, the Group is exposed to the risks associated with extending credit toother parties, including incurring credit-related losses that can occur as a result of a counterparty
being unable or unwilling to honour its contractual obligations. Credit losses can and have resulted
in financial services organisations realising significant losses and in some cases failing altogether.
The Group is also subject to the risk that its rights against third parties may not be enforceable incertain circumstances, which could result in credit losses. Should material credit losses occur to
the Group’s credit exposures, it could have an adverse effect on the Group’s business, operations
and financial condition.
Less favourable business or economic conditions, whether generally or in a specific industry sector
or geographic region, or natural disasters, could cause customers or counterparties to fail to meettheir obligations in accordance with agreed terms.
For example, the Group’s customers and counterparties in or with exposure to:

the Australian natural resources sector which is particularly exposed to any prolonged
slowdown in the Chinese economy could be materially and adversely impacted by a decline innatural resource prices;

former government owned and now privatised assets such as electricity distribution networks,
ports, road and rail networks could be materially and adversely impacted because the Group
believes these assets are being valued at historically high levels. The value of the capital andAustralia and New Zealand Banking Group Limited

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profitability of these investments is vulnerable to interest rate and currency exchange rate
movements. Long-term interest rate and currency hedges are provided by banks, including theGroup, to manage these risks. These long-term hedge exposures have volatile mark to market
characteristics which are unsupported by collateralised security agreements for out of themoney positions. Counterparty insolvency has the potential to expose the Group to large
uncovered derivative liabilities; andthe dairy industry in Australia and New Zealand, which is particularly exposed to excess milk
production from other developed countries being sold into traditional markets, could bematerially and adversely impacted by a decline in commodity prices.

Credit risk may also arise from certain derivative, clearing and settlement contracts the Group
enters into, and from the Group’s dealings with, and holdings of, debt securities issued by otherbanks, financial institutions, companies, governments and government bodies where the financial
conditions of such entities are affected by economic conditions in global financial markets.
The risk of credit-related losses may also be increased by a number of factors, including
deterioration in the financial condition of the economy, a sustained high level of unemployment,
more expensive imports due to the reduced strength of the Australian and New Zealand dollars
relative to other currencies, a deterioration of the financial condition of the Group’s counterparties,
a reduction in the value of assets the Group holds as collateral, and a reduction in the market
value of the counterparty instruments and obligations it holds.
In addition, in assessing whether to extend credit or enter into other transactions with customers
and/or counterparties, the Group relies on information provided by or on behalf of customers
and/or counterparties, including financial statements and other financial information. The Group
may also rely on representations of customers and independent consultants as to the accuracy andcompleteness of that information. The Group’s financial performance could be negatively impacted
to the extent that it relies on information that is inaccurate or materially misleading.
The Group holds provisions for credit impairment. The amount of these provisions is determined byassessing the extent of impairment inherent within the current lending portfolio, based on current
information. This process, which is critical to the Group’s financial condition and results, requires
subjective and complex judgements, including forecasts of how current and future economic
conditions might impair the ability of borrowers to repay their loans. However, if the information
upon which the assessment is made proves to be inaccurate or if the Group fails to analyse theinformation correctly, the provisions made for credit impairment may be insufficient, which could
have a material adverse effect on the Group’s business, operations and financial condition.
8. Challenges in managing the Group’s capital base could give rise to greater volatility
in capital ratios, which may adversely affect the Group’s business operations andfinancial condition
The Group’s capital base is critical to the management of its businesses and access to funding.
Prudential regulators of the Group include, but are not limited to, APRA, RBNZ and various
regulators in the Asia Pacific, United States and United Kingdom. The Group is required by its
primary regulator, APRA, to maintain adequate regulatory capital.
Under current regulatory requirements, risk-weighted assets and expected loan losses increase asa counterparty’s risk grade worsens. These additional regulatory capital requirements compound
any reduction in capital resulting from lower profits in times of stress. As a result, greater volatility
in capital ratios may arise and may require the Group to raise additional capital. There can be no
certainty that any additional capital required would be available or could be raised on reasonable
terms.
The Group’s capital ratios may be affected by a number of factors, such as (i) lower earnings(including lower dividends from its deconsolidated subsidiaries such as those in the insurance andfunds management businesses as well as from its investment in associates), (ii) increased asset
growth, (iii) changes in the value of the Australian dollar against other currencies in which theGroup operates (particularly the New Zealand dollar and United States dollar) that impact risk
weighted assets or the foreign currency translation reserve and (iv) changes in business strategy(including acquisitions, divestments and investments or an increase in capital intensive
businesses).
APRA has now implemented Prudential Standards to accommodate Basel 3. Certain other

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regulators have either implemented or are in the process of implementing regulations, including
Basel 3, which seek to strengthen, among other things, the liquidity and capital requirements ofbanks, funds management entities and insurance entities, though there can be no assurance thatthese regulations will have their intended effect. Some of these regulations, together with any
risks arising from any regulatory changes (including those arising from APRA’s response to theremaining FSI recommendations, further changes from APRA’s unquestionably strong
requirements or the requirements of the BCBS including, for example, further refinements to Basel3 requirements), are described in risk factor 4 "Regulatory changes or a failure to comply withregulatory standards, law or policies may adversely affect the Group’s business, operations or
financial condition".
9. The Group’s credit ratings could change and adversely affect the Group’s ability toraise capital and wholesale funding and constrain the volume of new lending which
may adversely affect the Group’s business operations and financial condition
The Group’s credit ratings have a significant impact on both its access to, and cost of, capital andwholesale funding. Credit ratings may be withdrawn, qualified, revised or suspended by credit
rating agencies at any time. The methodologies by which they are determined may also be revised
in response to legal or regulatory changes, market developments or for any other reason.
During 2017, Fitch, Standard & Poor’s and Moody’s affirmed or revised their respective ratings andoutlooks of the major Australian banks, including ANZ, as follows:•

Fitch (March 2017): Affirmed the ratings of the major Australian banks, including the Group,with a stable outlook;•

Standard & Poor’s (May 2017): lowered its assessment of Australia’s Banking Industry Country
Risk Assessment (“BICRA”) from 2 to 3 and subsequently lowered its assessment of thestandalone credit profiles of almost all financial institutions operating in Australia including ANZ.
This resulted in the downgrading of the ratings on hybrid and subordinated debt instruments
issued by ANZ and ANZ New Zealand by one notch. ANZ and ANZ New Zealand’s long term
rating remained at AA- with negative outlook; and•Moody’s (June 2017): Revised its outlook for Australia’s macro profile from “Very Strong
negative”, to “Strong plus” and downgraded the long-term rating of ANZ (alongside the otherthree major Australian banks) from Aa2 to Aa3. In addition, ANZ’s hybrid and subordinateddebt were downgraded by one notch. Moody’s also revised the outlook for ANZ (and the othermajor Australian banks) from negative to stable. The long-term rating of ANZ New Zealand was
also downgraded one notch to A1 from Aa3, and the hybrid and subordinated debt downgradedby one notch. The outlook for ANZ New Zealand was revised from negative to stable.

The Group’s credit ratings could be revised at any time in response to a change in the credit ratingof the Commonwealth of Australia.
In addition, the ratings of individual securities (including, but not limited to, certain Tier 1 capitaland Tier 2 capital securities and covered bonds) issued by the Group (and other banks globally)
could be impacted from time to time by changes in the regulatory requirements for those
instruments as well as the ratings methodologies used by rating agencies.
Any future downgrade or potential downgrade to the Group’s credit rating may reduce access tocapital and wholesale debt markets, which could lead to an increase in funding costs, constraining
the volume of new lending and affect the willingness of counterparties to transact with the Group,
which may adversely affect the Group’s business, operations and financial condition.
Credit ratings are not a recommendation by the relevant rating agency to invest in securities
offered by the Group.
10. Disruption of information technology systems or failure to successfully implement
new technology systems could significantly interrupt the Group’s business, which
may adversely affect the Group’s business, operations and financial condition
The Group and its service offerings (including digital banking) are highly dependent on information
systems applications and technology. Therefore, there is a risk that these information systems
applications and technology, or the services the Group uses or is dependent upon, might fail,including because of unauthorised access or use.
Most of the Group’s daily operations are computer-based and information systems applications andAustralia and New Zealand Banking Group Limited

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technology are essential to maintaining effective communications with customers. The Group isalso conscious that threats to information systems applications and technology are continuously
evolving and that cyber threats and risk of attacks are increasing. The Group may not be able toanticipate or implement effective measures to prevent or minimise disruptions that may be causedby all cyber threats because the techniques used can be highly sophisticated and those
perpetuating the attacks may be well-resourced. The exposure to systems risks includes thecomplete or partial failure of information technology systems or data centre infrastructure, theinadequacy of internal and third-party information technology systems due to, among other things,
failure to keep pace with industry developments and the inability of the existing systems toeffectively accommodate growth, prevent unauthorised access and integrate existing and futureacquisitions and alliances.
To manage these risks, the Group has disaster recovery and information technology governance inplace. However, there can be no guarantee that the steps the Group is taking in this regard will beeffective and any failure of these systems could result in business interruption, customer
dissatisfaction, legal or regulatory breaches and liability and ultimately loss of customers, financial
compensation, damage to reputation and/or a weakening of the Group’s competitive position,
which could adversely impact the Group’s business and have a material adverse effect on theGroup’s operations and financial condition.
In addition, the Group has an ongoing need to update and implement new information systems
applications and technology, in part to assist the Group in satisfying regulatory demands, ensuring
information security, enhancing digital banking services for the Group’s customers and integrating
the various segments of the Group’s business. For example, the Group is piloting the release ofvoice biometrics for customer transactions on mobile devices and working towards implementing
the industry New Payments Platform (which will be an open access infrastructure for fast payments
in Australia). The Group may not implement these projects effectively or execute them efficiently,
which could lead to increased project costs, delays in the ability to comply with regulatory
requirements, failure of the Group’s information security controls or a decrease in the Group’s
ability to service its customers. ANZ New Zealand relies on the Group to provide a number of
information technology systems, and any failure of the Group’s systems could directly affect ANZ
New Zealand.
11. Risks associated with information security including cyber-attacks, may adversely
affect the Group’s business, reputation, operations and financial condition
Information security means protecting information and information systems from unauthorised
access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction. As abank, the Group handles a considerable amount of personal and confidential information about its
customers and its own internal operations, including in Australia, New Zealand, India, USA,
Europe, Singapore and China.
The Group operates in 34 countries and the risks to its systems are inherently higher in certain
countries where, for example, political threats or targeted cyber-attacks by terrorist or criminalorganisations are greater.
The Group employs a team of information security experts who are responsible for thedevelopment and implementation of the Group’s Information Security Policy. The Group also uses
third parties to process and manage information on its behalf, and any failure by such third parties
could adversely affect the Group’s business.
The Group is conscious that threats to information systems are continuously evolving and thatcyber threats, including but not limited to, cyber compromise, advanced persistent threats,
distributed denial of service, malware and ransomware attacks, and the risk of such attacks are
increasing, and as such the Group may be unable to develop policies and procedures to adequately
address or mitigate such risks. Accordingly, information about the Group and/or its clients may be
inadvertently accessed, inappropriately distributed or illegally accessed or stolen.
The Group may not be able to anticipate or to implement effective measures to prevent or
minimise damage that may be caused by all information security threats because the techniques
used can be highly sophisticated and those perpetuating the attacks may be well resourced. Any
unauthorised access of the Group’s information systems or unauthorised use of its confidential
information could potentially result in disruption of the Group’s operations, breaches of privacy

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laws, regulatory sanctions, legal action, and claims for compensation or erosion to the Group’s
competitive market position, which could adversely affect the Group’s financial results andreputation.
12. Disruption to electricity markets and gas markets may adversely affect the Group’sbusiness, operations and financial condition
During 2016 and 2017, there have been various events in Australia that have affected retail,commercial and industrial electricity and gas users. These events include the closure of theHazelwood coal power station in Victoria, black-outs in South Australia, export demand forQueensland LNG gas and announcements relating to energy policy and investment by theAustralian federal government and the South Australian state government.
Some of these events resulted in higher electricity and gas prices, as well as disruption toelectricity and gas markets. The cost of sustained high prices may flow through to business andconsumers. The potential inability of businesses to pass through this cost increase to customers
may lead to credit risk associated with the Group’s customers. The impact of higher electricity costfor consumers could lead to reduced consumption and indirectly impact the demand for goods andservices, contributing to lower business profitability. Higher electricity costs may also increase the
CPI and influence upward adjustments to interest rate settings.
These effects may adversely affect the Group’s customers or the Group’s collateral position in
relation to credit facilities extended to such customers, which may adversely affect the Group’sbusiness, operations and financial condition.
13. Impact of future climate change, geological events, plant, animal and humandiseases, and other extrinsic events may adversely affect the Group’s business,
operations and financial condition
The Group and its customers are exposed to climate related events, including climate change.
These events include severe storms, drought, fires, cyclones, hurricanes, floods and rising sea
levels. The Group and its customers may also be exposed to other events such as geologicalevents (including volcanic seismic activity or tsunamis), plant, animal and human diseases or apandemic.
Depending on their severity, events such as these may temporarily interrupt or restrict theprovision of some local or Group services, and may also adversely affect the Group’s financial
condition or collateral position in relation to credit facilities extended to customers, which may
adversely affect the Group’s business operations and financial condition.
14. Liquidity and funding risk events may adversely affect the Group’s business,
operations and financial condition
Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due(including repaying depositors or maturing wholesale debt) or that the Group has insufficient
capacity to fund increases in assets. Liquidity risk is inherent in all banking operations due to thetiming mismatch between cash inflows and cash outflows.
Reduced liquidity could lead to an increase in the cost of the Group’s borrowings and constrain thevolume of new lending, which could adversely affect the Group’s profitability. Deterioration in
investor confidence in the Group could materially impact the Group’s cost of borrowing, and theGroup’s ongoing operations and funding.
The Group raises funding from a variety of sources, including customer deposits and wholesalefunding in Australia and offshore markets to meet its funding obligations and to maintain or growits business generally. In times of liquidity stress, if there is damage to market confidence in theGroup or if funding inside or outside of Australia is not available or constrained, the Group’s ability
to access sources of funding and liquidity may be constrained and it will be exposed to liquidity
risk. In any such cases, the Group may be forced to seek alternative funding. The availability ofsuch alternative funding, and the terms on which it may be available, will depend on a variety offactors, including prevailing market conditions and the Group’s credit ratings (which are strongly
influenced by Australia’s sovereign credit rating). Even if available, the cost of these funding

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alternatives may be more expensive or on unfavourable terms, which could adversely affect theGroup’s financial performance, liquidity, capital resources and financial condition.
Since the advent of the global financial crisis in 2007, developments in major markets (including
the United States, Europe and China) have adversely affected the liquidity in global capital
markets and increased funding costs, for significant periods, compared with the period
immediately preceding the global financial crisis.
More recently, the provision of significant amounts of liquidity by major central banks globally has
helped mitigate near term liquidity concerns, although no assurance can be given that suchliquidity concerns will not return, particularly when this liquidity is incrementally withdrawn by
central banks. Future deterioration in market conditions may limit the Group’s ability to replacematuring liabilities and access funding in a timely and cost-effective manner necessary to fund andgrow the Group’s businesses.
15. Changes in monetary policies may adversely affect the Group’s business, operations
and financial condition
Central monetary authorities (including the RBA, the RBNZ, the United States Federal Reserve, theBank of England and the monetary authorities in the Asian jurisdictions in which the Group
operates) set official interest rates or take other measures to affect the demand for money andcredit in their relevant jurisdictions. For instance, the U.S. Federal Reserve increased interest rates
in December 2016, March 2017 and June 2017, though the Australian Reserve Bank loweredinterest rates in May 2016 and August 2016 and has since kept the interest rates on hold. In
addition, in some jurisdictions, currency policy is also used to influence general business conditions
and the demand for money and credit. These measures and policies can significantly affect theGroup’s cost of funds for lending and investing and the return that the Group will earn on thoseloans and investments. These factors impact the Group’s net interest margin and can affect thevalue of financial instruments it holds, such as debt securities and hedging instruments. The
measures and policies of the central monetary authorities can also affect the Group’s borrowers,
potentially increasing the risk that they may fail to repay loans. Changes in interest rates andmonetary policy are difficult to predict and may adversely affect the Group’s business, operations
and financial condition.
16. Acquisitions and/or divestments may adversely affect the Group’s business,
operations and financial condition
The Group regularly examines a range of corporate opportunities, including acquisitions anddivestments, with a view to determining whether those opportunities will enhance the Group’s
strategic position and financial performance.
Divestments by the Group up until the 2nd November included entering into agreements to sell:A majority of the Group’s Retail and Wealth businesses in Asia;

A 20% stake in Shanghai Rural Commercial Bank;UDC Finance;

The Group’s pensions and investments and aligned dealer group businesses in Australia; and

A 20% stake in Metrobank Card Corporation (in addition to entering into a put option to sell
its remaining 20% interest).

The sale of the Group’s Retail and Wealth businesses in China, Singapore and Hong Kong have
now completed. The other transactions listed above remain subject to regulatory approvals andother completion conditions.
The Group is also considering the sale of its life insurance business in Australia.
There can be no assurance that any acquisition (or divestment) would have the anticipatedpositive results, including results relating to the total cost of integration (or separation), the timerequired to complete the integration (or separation), the amount of longer-term cost savings, theoverall performance of the combined (or remaining) entity, or an improved price for the Group’s
securities. Additionally, there are risks relating to the completion of any particular transaction
occurring, including counterparty and settlement risk, or the non-satisfaction of any completion

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conditions (for example, relevant regulatory or third party approvals). The Group’s operating
performance, risk profile and capital structure may be affected by these corporate opportunities
and there is a risk that the Group’s credit ratings may be placed on credit watch or downgraded if
these opportunities are pursued.
Integration (or separation) of an acquired (or divested) business can be complex and costly,
sometimes including combining (or separating) relevant accounting and data processing systems,
and management controls, as well as managing relevant relationships with employees, customers,
regulators, counterparties, suppliers and other business partners. Integration (or separation)
efforts could create inconsistencies in standards, controls, procedures and policies, as well as
diverting management attention and resources. This could adversely affect the Group’s ability to
conduct its business successfully and impact the Group’s operations or results. Additionally, there
can be no assurance that employees, customers, counterparties, suppliers and other business
partners of newly acquired (or retained) businesses will remain post-acquisition (or postdivestment), and the loss of employees, customers, counterparties, suppliers and other business
partners could adversely affect the Group’s operations or results. Further, there is a risk thatcompletion of an agreed transaction may not occur, including due to failure of the counterparty tosatisfy its completion conditions or because other completion conditions such as obtaining relevant
regulatory approvals are not satisfied.
17. Sovereign risk events may destabilise global financial markets and may adversely
affect the Group’s, business, operations and financial condition
Sovereign risk is the risk that foreign governments will default on their debt obligations, be unable
to refinance their debts as and when they fall due or nationalise parts of their economy. Sovereignrisk remains in many economies, including the United States, United Kingdom, China, Europe andAustralia. Should one sovereign default, there could be a cascading effect to other markets andcountries, the consequences of which, while difficult to predict, may be similar to or worse thanthose experienced during the global financial crisis and subsequent sovereign debt crises. Such
events could destabilise global financial markets and adversely affect the Group’s liquidity,
financial performance or financial condition.
18. Market risk events may adversely affect the Group’s business, operations andfinancial condition
Market risk is the risk of loss arising from adverse changes in interest rates, currency exchange
rates, credit spreads, or from fluctuations in bond, commodity or equity prices. For purposes offinancial risk management, the Group differentiates between traded and non-traded market risks.
Traded market risks principally arise from the Group’s trading operations in interest rates, foreignexchange, commodities and securities. The non-traded market risk is predominantly interest raterisk in the banking book. Other non-traded markets risks include transactional and structuralforeign exchange risk arising from capital investments in offshore operations, market risk arisingfrom the insurance business, non-traded equity risk and lease residual value risk. For a further
discussion of market and related risks, see Note 16 to the Group’s 2017 Annual Financial
Statements.
19. Changes in exchange rates may adversely affect the Group’s business, operations
and financial condition
As the Group conducts business in several different currencies, its businesses may be affected by achange in currency exchange rates. Additionally, as the Group’s annual and interim reports areprepared and stated in Australian dollars, any appreciation in the Australian dollar against othercurrencies in which the Group earns revenues (particularly to the New Zealand dollar and UnitedStates dollar) may adversely affect the Group’s reported earnings.
The Group has put in place hedges to partially mitigate the impact of currency changes, but there
can be no assurance that the Group’s hedges will be sufficient or effective, and any further
appreciation could have an adverse impact upon the Group’s earnings.

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20. Operational risk may adversely affect the Group’s business, operations and financial
condition
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people
and systems or from external events. This definition includes legal risk, and the risk of reputationalloss or damage arising from inadequate or failed internal processes, people and systems, but
excludes strategic risk.
Operational risk is typically classified into risk event type categories to measure and compare risks
on a consistent basis. Examples of operational risk events according to category are as follows:Internal Fraud: associated with the Group’s employees acting outside their normal employment
conditions/procedures to create a financial advantage for themselves or others;External Fraud: fraudulent acts or attempts which originate from outside the Group, morecommonly associated with digital banking, lending, and cards products. Specific threats include
ATM skimming, malware and phishing attacks and fraudulent applications and transactions,where financial advantage is obtained;

Employment Practices and Workplace Safety: employee relations, diversity and discrimination,
loss of key staff or inadequate management of human resources including the Chief Executive
Officer (CEO) and the management team of the CEO, and health and safety risks to the Group’s
employees;



Clients, Products and Business Practices: risk of market manipulation, product defects, incorrect
advice, money laundering and misuse or unauthorised disclosure of customer information;

Business Disruption (including systems failures): risk that the Group’s banking operating
systems are disrupted or fail;Damage to Physical Assets: risk that a natural disaster or terrorist or vandalism attack
damages the Group’s buildings or property; and

Execution, Delivery and Process Management: is associated with losses resulting from, among
other things, process errors made by the Group’s employees caused by inadequate or poorly
designed internal processes, or the poor execution of standard processes, vendor, supplier oroutsource provider errors or failed mandatory reporting errors.

Loss from operational risk events could adversely affect the Group’s financial results. Such losses
can include fines, penalties, loss or theft of funds or assets, legal costs, customer compensation,
loss of shareholder value, reputation loss, loss of life or injury to people, and loss of property
and/or information.
21. Reputational risk events may adversely affect the Group’s business, operations andfinancial condition
Reputational risk may arise as a result of an external event or the Group’s own actions, andadversely affect perceptions about the Group held by the public (including the Group’s customers),
shareholders, investors, regulators or rating agencies. The impact of a risk event on the Group’s
reputation may exceed any direct cost of the risk event itself and may adversely impact theGroup’s business, operations and financial condition.
The Group may incur reputational damage where one of its practices fails to meet evolving
community expectations. As these expectations may exceed the standard required in order tocomply with applicable law, the Group may incur reputational damage even where it has met its
legal obligations. A divergence between community expectations and the Group’s practices could
arise in a number of ways, including in relation to our product and services disclosure practices,pricing policies and use of data.
Damage to the Group’s reputation may also have wide-ranging impacts, including adverse effects
on the Group’s profitability, capacity and cost of sourcing funding, increased regulatory scrutiny
and availability of new business opportunities. The Group’s ability to attract and retain customers
could also be adversely affected if the Group’s reputation is damaged, which could adversely affect
the Group’s business, operations and financial condition.

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22. Conduct-related risk events or behaviours that do not appropriately consider theinterests of consumers, the integrity of financial markets and the expectations of thecommunity may adversely affect the Group’s business, reputation, operations andfinancial condition
Conduct-related risks can result from:

the provision of unsuitable or inappropriate advice (for example, advice that is notcommensurate with a customer’s needs and objectives or appetite for risk);

the representation of, or disclosure about, a product or service which is inaccurate, or does
not provide adequate information about risks and benefits to customers;

a failure to deliver product features and benefits in accordance with terms, disclosures,
recommendations and/or advice;a failure to appropriately avoid or manage conflicts of interest;sales and/or promotion processes (including incentives and remuneration for staff engaged inpromotion, sales and/or the provision of advice);the provision of credit, outside of the Group’s policies and standards; and

trading activities in financial markets, outside of the Group’s policies and standards.

The Group is regulated under various legislative regimes in the countries in which it operates thatprovide for customer protection in relation to advisory, marketing and sales practices. These may
include, but are not limited to, appropriate management of conflicts of interest, appropriate
accreditation standards for staff authorised to provide advice about financial products and services,disclosure standards, standards for ensuring adequate assessment of client/product suitability,
quality assurance activities, adequate record keeping, and procedures for the management ofcomplaints and disputes.
Since September 2014, the Australian Senate Economics References Committee has been
conducting an inquiry into aspects of the financial advice industry, including unethical or
misleading financial advice and compensation processes for consumers impacted by that advice. In
June 2017 the final report from the Australian Senate Economic References Committee on the
Scrutiny of Financial Advice was released and stated that the culture and practises of the financial
advice industry “fall well short of the public’s expectations”. Inappropriate advice about financial
products and services may result in material litigation (and associated financial costs) and together
with the failure to avoid or manage conflicts of interest and/or inadequate improvement to culture
and practises, may expose the Group to regulatory actions, restrictions or conditions on banking
licenses and/or reputational consequences which could adversely affect the Group's business,
operations and financial condition.
23. Unexpected changes to the Group’s license to operate in any jurisdiction may
adversely affect the Group’s business, operations and financial condition
The Group is licensed to operate in various countries, states and territories. Unexpected changes
in the conditions of the licenses to operate by governments, administrations or regulatory agencies
which prohibit or restrict the Group from trading in a manner that was previously permitted may
adversely impact the Group’s business, operations and financial condition.
24. Insurance risk events may adversely affect the Group’s business, operations andfinancial condition
The Group is exposed to insurance risk events, predominantly in the Group’s life insurance
business. Insurance risk is the risk of loss due to unexpected changes in current and future
insurance claim rates. In the Group’s life insurance business, insurance risk arises primarily
through mortality (death) and morbidity (illness and injury) risks being greater than expected and,in the case of annuity business, should annuitants live longer than expected. If the Group incurs
losses due to insurance risk events, such losses may adversely affect the Group’s business,
operations and financial condition.

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25. Increasing compliance costs, the risk of heightened penalties and ongoing regulatory
scrutiny with respect to the significant obligations imposed by global tax reporting
regimes (which are still evolving), may adversely affect the Group’s business,
operations and financial condition
The U.S. Foreign Account Tax Compliance Act (“FATCA”) requires non U.S. financial institutions toundertake ongoing customer due diligence and provide information on account holders who are
U.S. citizens or tax residents to the United States Internal Revenue Service (“IRS”) either directlyor via local tax authorities. If the ongoing obligations are not completed in the manner and form
meeting the applicable requirements, the Group and/or customers owning assets in accounts withGroup members may be subjected to a 30 percent withholding tax on certain amounts. While
such withholding tax may currently apply only to certain payments derived from sources within the
United States (and, beginning on 1 January 2019, certain gross proceeds from the disposition ofassets that can give rise to such U.S. source payments), no such withholding tax will be imposedon any payments derived from sources outside the United States that are made prior to 1 January
2019, at the earliest. In the event that any country in which ANZ operates does not finalise andenforce an Intergovernmental Agreement (“IGA”) with the United States, and that country has
local law impediments preventing compliance with FATCA, the Group may also be subject tobroader compliance issues, significant withholding exposure and other operational impacts.
In addition to FATCA, the U.S. may require the Group to provide certain information to U.S. payers(withholding agents, custodians, etc.) and the Group may face adverse consequences where it
does not comply with the applicable rules and regulations.
The OECD’s Common Reporting Standard (‘CRS’) provides for the Automatic Exchange of (financial
account) Information (‘AEOI’) in tax matters. Over 100 jurisdictions have committed to implement
the CRS. The CRS has commenced in a number of countries in which the Group has operations forexample, Australia, New Zealand, Hong Kong, Singapore and the United Kingdom. CRS
requirements, though generally similar to FATCA, have significant country by country variations
and require a higher standard of compliance in many aspects, with significant penalties for noncollection/reporting of prescribed customer information. Ongoing OECD peer review and otherregulatory review activities are likely to result in further obligations and an increased focus oncompliance with the CRS and each country of adoption ensuring that its penalty regime issufficiently adequate to deter non-compliance.
In line with other global financial institutions, the Group has made and is expected to makesignificant investments in order to continue to comply with the extensive requirements of FATCA,
the CRS and the various other in-country tax reporting initiatives in all the countries that it
operates in.
26. Changes in the valuation of some of the Group’s assets and liabilities may have amaterial adverse effect on the Group’s earnings and/or equity
The Group applies accounting standards which require that various financial instruments, including
certain derivative instruments and assets and liabilities held for sale (as per the Notes to theGroup’s 2017 Annual Financial Statements are recognised at fair value with changes in fair value
recognised in earnings or equity.
Generally, in order to establish the fair value of these instruments, the Group relies on quoted
market prices or, where the market for a financial instrument is not sufficiently active, fair values
are based on present value estimates or other accepted valuation techniques which incorporate
the impact of factors that would influence the fair value as determined by a market participant.
The fair value of these instruments is impacted by changes in market prices or valuation inputs
which could have a material adverse effect on the Group’s earnings.
In addition, the Group may be exposed to a reduction in the value of non-lending related assets asa result of impairments which are recognised in earnings. The Group is required to assess therecoverability of goodwill balances at least annually and other non-financial assets including
premises and equipment, investment in associates, capitalised software and other intangible
assets (including acquired portfolio of insurance and investment business and deferred acquisition
costs) where there are indicators of impairment.
For the purpose of assessing the recoverability of the goodwill balances, the Group uses either aAustralia and New Zealand Banking Group Limited

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discounted cash flow or a multiple of earnings calculation. Changes in the assumptions upon which
the calculation is based, together with expected changes in future cash flows, could materially
impact this assessment, resulting in the potential write-off of a part or all of the goodwill balances.
In respect of other non-financial assets, in the event that an asset is no longer in use, or that the
cash flows generated by the asset do not support the carrying value, impairment may be recorded.
27. Changes to accounting policies may adversely affect the Group’s financial position or
performance
The accounting policies and methods that the Group applies are fundamental to how it records andreports its financial position and results of operations. Management must exercise judgement inselecting and applying many of these accounting policies and methods so that they not only
comply with generally accepted accounting principles but that they also reflect the mostappropriate manner in which to record and report on the Group’s financial position and results ofoperations. However, these accounting policies may be applied inaccurately, resulting in a
misstatement of the Group’s financial position and results of operations. In addition, theapplication of new or revised generally accepted accounting principles could have a material
adverse effect on the Group’s financial position and results of operations.
In some cases, management must select an accounting policy or method from two or morealternatives, any of which might comply with the generally accepted accounting principles
applicable to the Group and be reasonable under the circumstances, yet might result in reporting
materially different outcomes than would have been reported under another alternative.
28. Litigation and contingent liabilities may adversely affect the Group’s business,
operations and financial condition
From time to time, the Group may be subject to material litigation, regulatory actions, legal or
arbitration proceedings and other contingent liabilities which may adversely affect the Group’sbusiness, operations and financial condition.
The Group had contingent liabilities as at September 30, 2017 in respect of the matters outlined in
Note 33 to the Group’s 2017 Annual Financial Statements.
Note 33 includes, among other things, descriptions of:bank fees litigation;benchmark/rate actions;regulatory reviews and customer exposures; and

security recovery actions.

In recent years there have been significant increases in the nature and scale of regulatory
investigations and reviews, enforcement actions (whether by court action or otherwise) and thequantum of fines issued by regulators, particularly against financial institutions both in Australia
and globally. The nature of these investigations and reviews can be wide ranging and, for example,
currently include a range of matters including responsible lending practices, product suitability,
wealth advice, pricing and competition, conduct in financial markets and capital market
transactions. During the year, the Group has received various notices and requests for informationfrom its regulators as part of both industry-wide and Group-specific reviews. There may be
exposures to customers which are additional to any regulatory exposures. These could include
class actions, individual claims or customer remediation or compensation activities. The outcomes
and total costs associated with such reviews and possible exposures remain uncertain.
There is a risk that contingent liabilities may be larger than anticipated or that additional litigation,
regulatory actions, legal or arbitration proceedings or other contingent liabilities may arise.

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ABN 11 005 357 522

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Responsibility statement of the Directors of ANZBGL in accordance with Rule 4.1.12(3)(b) of the Disclosure and Transparency Rules of the United Kingdom Financial
Conduct Authority
The Directors of Australia and New Zealand Banking Group Limited confirm to the best of theirknowledge that:
ANZ’s 2017 Annual Financial Report (as defined on page 1 of this DTR Annual Financial Reportsubmission) includes:(i)a fair review of the development and performance of the business and the position of theGroup and the undertakings included in the consolidation taken as a whole; together with(ii)

a description of the principal risks and uncertainties faced by the Group.

Signed in accordance with a resolution of the Directors.

David M Gonski, AC
ChairmanShayne C Elliott
Director

2 November 2017

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

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