Perth, 18 December 2007

ANZ 2007 Annual General Meeting
Chairman’s Address
18 December 2007___________________________________________________________________
Good morning. My name is Charles Goode.
Welcome to the 2007 Annual General Meeting of ANZ. Let me also welcome
shareholders joining us through our webcast on anz.com.
On behalf of all your directors, let me say how pleased we are to be in Perth again.
We first opened for business in Western Australia in 1841 … 166 years ago.
The Bank was then called the Bank of Australasia. It opened in Perth just four years
after the opening of our first branch in Australia in Melbourne.
Today, we have more than 31,000 shareholders, 1,400 staff and 84 branches spreadthroughout the state.
In the last two years, we have opened 15 new branches in Western Australia. In
February we will be opening another new branch in Wanneroo. Of our 84 branches,
15 are open for service on Saturday and we have over 300 ATMs, the largest ATM
network in the state.
Now turning to today's meeting:
As a quorum is present I now formally declare this Annual General Meeting ofshareholders open.
I propose to take the Notice of Meeting as read. If you need a copy of the Notice,please ask one of the attendants. Minutes and copies of the annual report areavailable in the registration area.
At our meeting today ANZ’s new Chief Executive Officer Michael Smith and I willreport on ANZ’s performance and the priorities for the period ahead.
I will later open the floor for questions or comments on any matter related to ourbusiness.
After the questions we will move to discussion on the formal items of business beforeus.
At the end of the Meeting, the Directors and many of our senior management would
like to meet with shareholders and talk about ANZ over a cup of tea or coffee in thefoyer.
Now let me introduce your Directors.
On your far left is Jerry Ellis. Jerry lives in Melbourne. He is a member of the Audit
Committee and the Technology Committee.
Then Ian Macfarlane. Ian joined the Board in February 2007. He lives in Sydney
and is Chairman of the Governance Committee and a member of the Risk Committee
and the Technology Committee.
1Perth, 18 December 2007

Ian is seeking election at today’s meeting in accordance with the Company’s
Constitution.
Next to me is Michael Smith, the Chief Executive Officer.
Michael became ANZ’s Chief Executive on 1 October 2007 following the retirementof John McFarlane.
He was previously President and Chief Executive Officer of The Hongkong andShanghai Banking Corporation Limited, Chairman of Hang Seng Bank and Chairmanof HSBC Bank Malaysia. He was also the Global Head of Commercial Banking for
the HSBC Group.
On my left, is Peter Marriott. Peter is the Chief Financial Officer. Peter has beenwith ANZ since 1993 and is recognized as one of Australia’s leading chief financial
officers.
Next is David Meiklejohn. David lives in Melbourne and he joined the Board in
October 2004. David is Chairman of the Audit Committee and a member of theGovernance Committee and the Risk Committee.
David is seeking re-election at today’s meeting.
Next is Dr Greg Clark. Greg lives in Sydney and New York, and is Chairman of theTechnology Committee and a member of the Governance Committee.
Greg is seeking re-election at today’s meeting.
Finally, there is John Morschel who lives in Sydney. John is Chairman of the Risk
Committee and a member of the People Committee.
John is also seeking re-election at today’s meeting.
Unfortunately Margaret Jackson is not with us today as she has been advised by her
doctor not to travel. She sends her apologies.
You can read full details of the Directors’ backgrounds and their qualifications in our
Annual Report.
Before we move on from directors, let me acknowledge the significant contribution
David Gonski made during his five years on the Board until he retired in June 2007.
We thank him and wish him well.
I also wish to pay tribute to John McFarlane who retired as Chief Executive Officer on
30 September 2007.
Over the last ten years, John made an enduring contribution to ANZ’s development
and business in Australia.
During his period ANZ has significantly improved its staff engagement, customer
satisfaction, and community recognition, as well as de-risking the Bank anddelivering on many of its promises to shareholders.

2Perth, 18 December 2007

On behalf of shareholders and the Board, I wish to thank John for his contribution
and service.
Now let me introduce the ANZ executives on the stage. Behind me from your leftare: Bob Santamaria, our new Group General Counsel and Company Secretary;
Shane Buggle, Group General Manager Finance; and then John Priestley, Company
Secretary .
I will now turn to discuss ANZ’s performance during the year.
Our Bank had a solid result in 2007, delivering value for shareholders, customers andthe community.
Net profit after tax was a record $4.2 billion.
Dividends per share for the year increased by 9 per cent to $1.36 fully franked andthis is the fourteenth successive year in which dividends have increased.
The Final Dividend of 74 cents a share will be paid into shareholder’s bank accounts
this Friday, the 21st of December.
The increase in the dividend reflects a sound business performance driven by strong
revenue growth and a prudent approach to risk.
For the 2007 financial year we reported the highest revenue growth and growth inprofit before provisions since 2001.
However, cost growth after excluding non-core items was high at 7.6%, partly
affected by the consolidation of E*Trade Australia and Stadium Australia, and theongoing costs of investing in our businesses. Our cost to income ratio was 44.8%,
almost 1% down on 2006.
The provision charge to profit in 2007 for individual impaired loans was $484 million
or 0.17% of average net lending assets. It was higher than the abnormally low levelin 2006 which was helped by significant recoveries of past losses. However, theprovision was well below the average expected loss across the economic cycle.
Our collective provision for impaired loans is the strongest of our peer group at
0.72% of risk weighted assets.
Our asset quality is strong with the ratio of net non performing loans to net lending
assets at 0.13%, the lowest level since we started disclosing this in 1989.
Earlier this month ANZ was accredited by the Australian Prudential Regulatory
Authority as an Advanced Internal Ratings Bank which is the highest status available
under the new international Basel II capital accord.
Our accreditation means that our internal risk management systems meet thestringent requirements of the accord and allows us to use our internal risk models to
calculate capital requirements.
The impact on the level of capital required is still to be determined in conjunction with
APRA, although some reduction is anticipated. Our Tier 1 capital ratio at 30
September 2007 under the previous accord was 6.7%.

3

Perth, 18 December 2007

We decided to underwrite the Dividend Reinvestment Program to restore our capital
position to where it was at the beginning of the year prior to investments in China andMalaysia.
Now, turning to the performance of our key businesses.
Our Personal Division had another outstanding year. The Division has a clear
strategy to increase its market position in retail financial services by making ANZ’sservice to customers convenient, simple and responsible.
This strategy is producing results. Revenue was up 12% and earnings up 16%.
Most businesses delivered double digit earnings growth.
Investment and Insurance Products was up substantially within the Division. The
result in this business was assisted by the acquisition of E*Trade Australia during theyear.
This year, we were named Money Magazine’s Bank of the Year and the Customer
Service Institute of Australia awarded us both the national Large Business Category
and “Best of the Best” awards for customer service excellence.
Our Institutional Division performed below expectations with profit growth of 6%.
Geographically, Institutional had acceptable profit growth before provisions inAustralia and stronger double digit growth in Asia. Profit growth was weaker in New
Zealand, the United Kingdom and the United States.
However, the franchise is strong. The 2007 Peter Lee Associates large Corporate
and Institutional Banking Survey showed we retained our number one relationshipbank status for the second consecutive year.
Given the strength of ANZ’s franchise and the initiatives to improve performance thatare underway, we believe this Division is capable of producing better results.
In New Zealand, earnings were up 6% against the previous year which had benefited
from very low credit provisions.
ANZ National Bank was recognised as the 2007 Institute of Finance Professionals
Bank of the Year and retained its position as the Business Finance Monitor’s number
one bank for rural agri-business customers.
The wealth management joint venture with ING is now delivering very good
momentum with earnings up 27%.
Strong results are flowing through from our network business and the banking
partnerships in Asia.
During 2007 we committed approximately $1.3 billion to investments in Asia. We
acquired a 25% interest in Malaysia’s AMMB Holdings; 20% of China’s Shanghai
Rural Commercial Bank; 60% of the Vientiane Commercial Bank in Laos; 10% of
Vietnam’s Saigon Securities; and 100% of the Citizens Security Bank in Guam.
We believe these investments are important steps in our Asian growth strategy andour long term future.
The rationale for these investments is clear.
4

Perth, 18 December 2007

Asian growth in GDP, led by China, is forecast to be more than 3 times higher thanthat of the 30 western countries that make up the OECD in 2008. In 1980 Asia
accounted for around 20 per cent of global GDP. Today, it accounts for nearly 40 per
cent.
Until recently, Chinese consumers only paid cash for their purchases. With greater
deregulation and with consumer credit and credit cards becoming more widely
available, there are significant opportunities for financial services providers.
As well as investing in other banks in Asia we are also investing in our own branches
in the region. This is to capitalise on the links to Australia and New Zealand throughtrade, immigration, education and capital flows.
But to really take advantage of the opportunities in our region, there is no doubt that,over time, Australian banks will need to be of a greater scale.
There are two major reasons for this. The first is to continue to be able tosuccessfully compete for investments. The second is to ensure we are of sufficientscale with the balance sheet to support our Australian and New Zealand clients whoare increasingly making the decision to participate in Asia’s growth.
It is in Australia’s long term economic interest to allow Australian banks to grow to asize where they can compete effectively in the region.
The environment that saw the development of the Six Pillars policy, which later
become the Four Pillars policy, has gone.
There is strong competition in the banking and financial services sector.
In every segment of the market where we compete there are up to 12competitors. In the institutional market there are over 14 major players, many ofwhom are much larger than the Australian trading banks.
In the personal sector there are international banks, regional banks as well as
specialist finance providers as well as the four major trading banks.
Rather than diminishing domestic competition, which is the concern ofgovernment and regulators, we believe moving on from existing policy would help
to allow the creation of a more competitive portfolio of products, and act as acompetitive catalyst that would deliver real benefits to Australian customers andthe Australian economy.
With Michael Smith’s appointment as Chief Executive, I believe we are at a newstage of ANZ’s development.
So let me take stock of where ANZ is now, and look at some of the steps we aretaking to continue to strengthen ANZ for the future.
On the screens behind me you will see some tables that chart our development overthe last ten years.

5Perth, 18 December 2007

Table 1: Staff and Customers
Employees (full time equivalents)
Staff Engagement
Retail Customer Satisfaction*•
ANZ•
Ave of other 3 major Australian Banks

30 Sept 1997
35,92630 Sept 2007
34,353Significant
Improvement

69.2
68.3

77.2
71.4

* Source: Roy Morgan Research

The major point here is the development of a culture that has increased staff
engagement and led to the highest customer satisfaction of Australia’s major banks.
The ANZ culture has seen us win a number of awards including being Money
Managers magazine’s Bank of the Year for 7 out of the last ten years; being the top
ranked bank globally in the Dow Jones Sustainability Index, and being in Fortune
Magazine’s Top Twenty Companies Globally for Leadership in 2007.
Table 2: Geographic Representation
Number of Countries Represented
Countries ANZ has left since October 1997:•
Argentina, Bahrain, Bangladesh, Brazil, Chile,
France, Greece, Guernsey, Iran, Israel, Jersey,
Jordan, Mexico, Nepal, Pakistan, Qatar, Sri
Lanka, Switzerland

30 Sept 1997
30 Sept 2007
43
30
Countries entered since October 1997:•
Cambodia, Laos, East Timor, American
Samoa, Guam, Kiribati

Over the last decade we have focused the bank on a smaller number of geographic
and product areas. Management has reshaped the bank selling non-core operations,focusing on the development of personal banking and investing in new branches inhigh growth areas.
At the same time we have lowered our risk profile and reduced our cost income ratio
from the mid-sixties to the mid-forties.
Table 3: Financial Measures
No. of Shareholders
Total Assets ($m.)
Shareholder Funds ($m)
Net Profit After Tax ($m)
Earnings per ShareDividend per ShareCost Income Ratio
•
ANZ
•
CBA
•
NAB
•
WBC
Risk Profile - Significant Improvement
Net Non Accrual Loans as a % of Net Advances
Total Shareholder Return over 10 Years
•
ANZ
•
CBA
•
NAB
•
WBC
Estimated forward Price Earnings Ratio
Ave Price Earnings Ratio of other 3 major tradingbanks

30 Sept 1997
132,450$138,241$6,993$1,02478.4 cents48 cents

30 Sept 2007
327,703$392,613$22,048$4,180224.1 cents
136 cents

64.9%
61.1%
55.9%
60.7%

44.8%
48.3%
51.0%
45.0%

0.40%

0.13%
345%
454%
203%
407%

12.8
11.8

6

12.9
14.2

Perth, 18 December 2007

The focus on Personal has seen this Division become a consistently strong
performer over the past four years, typically outperforming its peers.
In contrast, the underperformance of Institutional has been a common theme acrossthe 10 years. This started with the Asian crisis, Russian bond trading losses, credit
losses from “Fallen Angels” like Enron and Marconi, the loss of income associatedwith de-risking including the run off of deals involving tax risk; and more recently,
falling market share in Australian lending.
In New Zealand, we have grown both organically and through acquisitions giving us
leading positions in all market segments in personal and institutional banking.
However, while our overall shareholder returns over the ten years have been
consistently good, they were not as good as some of our peers.
There are areas of significant opportunity for us in the next stage of our growth.
These include wealth management, our share of corporate and business banking,some areas of technology and generating returns from our strategic investments inEast Asia.
We are committed to rebuilding the momentum at ANZ. Our strategy will include:•

Extending our planning focus from the short-to-medium term to the mediumto-long term.

•

Realising the full value from our culture and high levels of staff engagement.

•

Undertaking substantial staged investment in technology to significantly
improve productivity and allow process and customer service innovation.

•

Reducing complexity across the Group and moving our emphasis fromproducts to customers and from Divisions to the Group as a whole.

•

More actively exploring opportunities to expand in wealth management; and,•

Bringing focus to our Asian strategy by structuring our Asian branches andinvestments into a single Asia Pacific Division.

While focusing on our business strategy, all of our stakeholders, employees,
customers, and shareholders have higher expectations of our environmental
performance.
Our approach to the environment means that we seek to operate in a way thatminimises the social and environmental impacts associated with our business and webring these values to discussions with our customers.
This includes ensuring social, ethical and environmental considerations are taken
into account in our business activities and financing decisions.

7Perth, 18 December 2007

Some stakeholders call for banks, including ANZ, to exclude particular clients or
sectors. Our approach and preference is to work with our clients to help minimise or
mitigate social and environmental impacts and, where appropriate, provide financial
support to help them improve their performance.
An example of our commitment to reducing our own environmental impact is ourdevelopment of Australia’s largest office building in the docklands precinct in
Melbourne. The new building will be completed in two years and will be home toaround 6,000 ANZ staff.
It will be one of the most environmentally sustainable commercial business offices inAustralia, with a 6-star green rating for the building and a 5-star green rating for theinterior.
The new building will feature rainwater collection; greater use of fresh air and naturallight; landscaped roof; and improved energy efficiency to reduce greenhouseemissions.
In Adelaide, ANZ has already relocated its office to the city’s new 5-star green
building, City Central. The most energy-efficient building in Adelaide, City Central
will set the benchmark for environmentally sustainable commercial developments.
ANZ’s office fit-out will have a 5-star green rating.
But to continue to be able to create sustainable value for all our stakeholders wehave to generate superior financial performance.
We have been operating in a very prosperous period for some time for Australia andin particular for banking.
In each of the last three years we have reported solid to good growth in earnings per
share having been slightly above the average of the other three major trading banks
in 2005 and below them in the last two years.
Table 4: Cash EPS Growth 2005-2007
2007
8.1%
13.6%

ANZ
Ave of other 3 major trading banks

2006
13.2%
14.7%

2005
8.8%
8.1%

Our current strategy and policies may have our earnings growth coming in below ourpeers for the year ahead, but that is not certain, and we expect the medium andlonger term performance to be above that of our peers.
In addition to the appointment of Michael Smith as Chief Executive, we have made anumber of other senior appointments to address the opportunities we have before us.
Peter Hodgson was appointed Group Managing Director Institutional. Peter waspreviously Chief Risk Officer at ANZ and prior to that he held leadership roles in theInstitutional Division.
David Stephen was promoted to Chief Risk Officer.
We established an Asia Pacific Division and appointed Alex Thursby as GroupManaging Director. Alex joined ANZ from Standard Chartered Bank.

8Perth, 18 December 2007

David Cartwright was appointed Group Managing Director Operations Technology
and Shared Services. David joined ANZ from Intelligent Processing Solutions, a joint
venture created in the UK by Unisys, Lloyds TSB, Barclays and HSBC.
Susan Babani will join ANZ as Group General Manager Human Resources fromHSBC Insurance. Shane Freeman has been appointed Managing Director
Operations, Technology and Shared Services in India to lead ANZ’s growing
presence in Bangalore where we now have over 2,000 staff.
Bob Santamaria joined ANZ from Allens Arthur Robinson as our new Group GeneralCounsel and Company Secretary, following the appointment of Tim L’Estrange asManaging Director and Regional Head for Europe and America.
Now let me turn to the outlook for the bank.
The major current issue is the effect of the sub-prime lending crisis in the UnitedStates.
So far banks in the US and Europe have provided around $100 billion for the impactof the US sub-prime crisis. ANZ has no direct exposure to this market. Naturally, asa major international bank, a few of our customers have exposure to the current
turmoil but we have not needed, to date, to raise any credit provision for thesecustomers.
However the repercussions of the current turmoil can not easily be determined. We
do know it has introduced considerable uncertainty and liquidity issues into thefinancial markets.
ANZ has sound liquidity policies and well diversified funding sources, and has beenable to operate effectively during the current disruptions to debt markets. However,
one of the issues we are monitoring closely is the extent and the period over which
the liquidity issues associated with the sub-prime crisis are likely to affect financial
markets.
ANZ has around 40% of its assets funded from the wholesale market. This funding is
coming at a higher cost.
Funding costs have moved up sharply and continue to be very volatile. It is very
difficult to anticipate when market conditions will improve. Conditions have been
exacerbated by year-end funding pressures in the United States.
There has been a further deterioration in global credit markets in recent weeks. In
Australia, the 90 day bank bill rate for short term funds is trading well above the usual
margin of between 5 to15 basis points. Most recently this spread has been as wide
as 75 basis points.
Similarly, spreads for medium term wholesale funding have also deteriorated further.
Medium term wholesale funding was able to be sourced at a modest premium ofaround 15 basis points relative to cost of short term wholesale funding. However, asa consequence of the global credit crisis, term funding of between two and five years
is now being sourced at a premium of between 30 and 70 basis points.
While we have so far absorbed much of this additional funding cost, if this marginsqueeze is sustained there will be a need to pass these higher funding costs on tomore of our customers.
9Perth, 18 December 2007

In terms of the world economy, despite the significance of a slow down in the US, we
think 2008 will still be a good growth year – in Australia, we are expecting economic
growth of around 3 and a ½ percent, and 1 and a ½ percent in New Zealand where
tighter financial conditions are beginning to bite.
The business environment is favorable for 2008 and we expect higher earnings forthe year. We have fully hedged our expected 2008 New Zealand earnings at a rateof NZ$1.15 to $A1.00. This means our 2008 result will not be materially impacted bychanges in the value of the New Zealand Dollar.
There may also be some positives that emerge from the sub-prime crisis. One is that
we are seeing more rational pricing for risk, particularly on the corporate side, andstrong corporate lending volumes. We are also seeing higher application volumes inour mortgage business, as customers look to the financial strength of ANZ.
However there will be headwinds from the reverberations of the US sub-prime crisis,
higher funding costs, a likely stronger Australian Dollar than the average experienced
in 2007 of around 81 cents, higher credit provisions, and expenditure related tostrengthening our franchise for the medium and longer term.
The Board believes we have established the right direction and leadership for ANZ
and we are optimistic and confident about our medium term outlook and returns forshareholders.
I invite our Chief Executive, Michael Smith, to share with us his initial impressions
and to expand on the strategy and policies of the Bank for the future.
Michael Smith joined us after twenty nine years with HSBC during which time heworked in most continents and had experience in both retail and corporate banking.
He rose to be the head of HSBC’s Asian operations and the Global Head ofCommercial Banking as well as Chairman of the Hang Seng Bank. The Asiandivision of HSBC has 60,000 employees in 27 countries with total assets of $520
billion and profit before tax of almost $11 billion.
Michael Smith is an outstanding all-round banker with a wealth of experience on theinternational banking scene.
Michael.

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