Media Release
For release: 20 August 2010

ANZ Market Update - Nine Months to 30 June 2010
- business momentum continues, provisions trend lower in 3rd quarter In a market update today ANZ reported an unaudited underlying profit after tax1 for the ninemonths to 30 June 2010 of approximately $3.6 billion, 26% above the prior corresponding period(PCP) in 2009.
Momentum evident during the first half of FY2010 was maintained in the third quarter with profit
after tax of approximately $1.3 billion up 37% PCP driven by modest growth in business earnings
and reduced provisions despite lower Global Markets income and USD/AUD exchange rate impacts.
Key Performance Metrics•

Profit before provisions (PBP) up 5% PCP to $6.5 billion.

•Income grew 9% PCP to $11.6 billion. ANZ has continued to invest for growth, particularly in
Institutional and in Asia. Revenue/expense jaws were positive 2% YTD excluding acquisitions
and lower Global Markets income but negative 5% YTD including both factors.

•Global Markets income, while lower (down 14% PCP to $1.4 billion) than the exceptional levels
achieved in 2009, reflects an underlying CAGR of 25% pa since the start of 2008.

•Group margins (excluding Global Markets) have increased modestly but growth is slowing, withhigher funding costs and intense competition especially for deposits, largely offsetting theflow-through of re-pricing in prior periods in New Zealand and Institutional including product mix
impacts.

•Credit quality continues to improve. The provision charge of $1,440 million is 34% lower thanPCP.

•Group lending growth was up over 3% PCP (4% FX adjusted) reflecting the transition of assets
acquired from the Royal Bank of Scotland (RBS) and growth in Australian Retail (particularlyMortgages).

•Group deposit growth was up 8% PCP (9% FX adjusted) primarily driven by Australia Retail andAsia Pacific, Europe and America (APEA) including the impact of deposits transitioning from RBS.

•Third quarter income was up around 5% on quarter two, with PBP around 2% higher. Provisions
are tracking almost 38% lower than the average run rate for the first half.

ANZ Chief Executive Officer Mike Smith said: “Our core businesses in Australia, Asia Pacific and New
Zealand continued to perform well in the third quarter against the backdrop of Australia’s solid
economic performance, strong economic growth in Asia and the emerging recovery in New Zealand.
“While economies around the world are growing at different speeds, the improving economic cycle iscontinuing to see ANZ’s provisions trend lower.
“We are also performing well for our customers and the community. This quarter ANZ was named
Home Lender of the Year in Australia and our Institutional business named Bank of the Year in New
Zealand2. We announced a new approach to community investment to help focus our contributionand to provide more opportunities for staff to be involved with the communities we serve.
1All figures in this release are on an underlying basis. Profit has been adjusted to exclude non-cash and significant items (inline with the approach in recent periods) to arrive at underlying profit, the result for the ongoing operations of the Group.
2
Home Lender- Money magazine consumer finance Awards. NZ - Institute of Finance Professionals New Zealand.

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

2“These outcomes continue to deliver on the commitment we made to build a super regional bank.
It’s an aspiration that builds on our domestic strength in Australia and New Zealand, and leverages
the growth of Asia which is now the engine of growth for the world economy.
“The global outlook remains ‘unusually uncertain’. This uncertainty is associated with thecombination of consumer, business and public sector de-leveraging; domestic and international reregulation; and the implications of high unemployment and other protracted structural challenges in
the US and in Europe.
“Together, they mean global economic growth is not going to rebound quickly. Although Australia
and to a lesser extent New Zealand are benefiting from Asia's strong growth, it’s clear domestic
credit growth will continue to be softer than we saw pre-crisis.
“During the past two and a half years we’ve made the calls early on these trends and we want tocontinue to be ahead of the game.
“We need to accept that banks around the world are facing permanently higher costs. These include
continuing pressures on wholesale funding and rates for deposits have never been so high compared
to short-term wholesale rates. There are also going to be significant costs to comply with newinternational regulation, although the impact of Basel III is likely to be somewhat less onerous thanoriginally expected.
“In a highly competitive environment, it means successful banks are going to have to drive
productivity and innovation even harder. We need to remove cumbersome structures and do thingsin new and different ways.
“This is not just about creating medium and long-term value for shareholders, but about being
easier for our customers to deal with and providing them with a better experience.
“We have a clear strategy, a strong balance sheet and an experienced management team ofinternational bankers. This positions us well to take advantage of the opportunities for growth thatare continuing to open up for us in the region and to deliver for shareholders, customers and thecommunity,” Mr Smith said.
Business Update•Profit from the Australian business grew strongly PCP, assisted by the favourable impact of theacquisition of ING Group’s 51% interest in ING Australia and lower provisions.
Mortgage lending was around 1.7 times system in the third quarter with both customer demandand operational improvements driving higher growth. Credit standards remain robust with thedynamic loan to value ratio (LVR) for Mortgages at 46%3 and at origination LVR 63%, matchingthat of 2008.
Commercial lending assets grew around 7% PCP including the addition of Landmark (2% growththird quarter on second quarter). During the third quarter lending growth of between 1% and
2% was experienced across all categories including Business Bank, Esanda, Regional and SME.
Household deposits matched system growth in the third quarter and have grown at 2.1 times
system PCP. The deposit market remains highly competitive as evidenced by ongoing pressure
on deposit margins.

•3

APEA Division completed the final stages of the RBS transaction in Singapore, Taiwan andIndonesia transitioning US$2.0 billion in loans and US$5.2 billion in deposits during the thirdquarter.

LVR applies to Australian mortgage portfolio only.

3With the acquisition now complete, the integration of the businesses acquired from RBS in six
countries in Asia is the key focus for the remainder of calendar 2010. Staff and customer
retention has been high, and customer acceptance of the ANZ brand has been reflected indeposit growth in the retail business.
In US Dollar terms, profit was flat PCP with Global Markets income in the region lower and cost
growth reflecting continued investment in the franchise.
•New Zealand business profitability is recovering well from the lows of the second half of 2009
and first half of 2010. While the lagged benefit of repricing the fixed rate book has seen a small
improvement in margins, head winds from higher funding costs, both for wholesale and deposits,
remain significant. Costs are being well controlled and provisions are moderating, especially inthe Retail.

•The Institutional Division’s profit is up PCP, reflecting a reduced provision charge offset by alower contribution from Global Markets. Given the longer term opportunity for the Institutional
Division across the region, ANZ has continued to invest in the franchise. This investment
coupled with lower Global Markets revenue saw PBP down relative to PCP.
In Global Markets, market conditions during much of 2010 have been less conducive to customer
hedging of both foreign exchange and interest rates, and increased competition has reducedspreads. The challenging conditions for Global Markets continued into the beginning of the fourthquarter.

Asset Quality
The outlook for credit provisions is generally improving. The rate of growth in impaired assets
slowed significantly notwithstanding the recent inclusion of loans acquired from RBS in Asia. The
RBS asset integration has produced no surprises. As expected at this point of the economic cycle,
new impaired asset growth for the Group during the quarter came largely from the middle market
and SME sectors.
The total provision coverage ratio of 2.26% and the collective provision coverage ratio of 1.46%
have both increased.4 The ratios now include the businesses acquired from RBS.
Balance Sheet and APS 330
The Tier One ratio at 30 June 2010 was 10.3% with a core Tier One ratio of 8.2%.
ANZ also released its June quarter APS 330 disclosures today. Risk Weighted Assets increased 5.3%
to $262.3 billion during the quarter largely driven by the impact of acquisitions (RBS and Landmark)and exchange rates. Credit Risk Weighted Assets increased 6.2%.
ANZ has issued around $24 billion of term funding during the 2010 financial year which completes
the $20 - $25 billion term funding task announced at the start of the period. Wholesale funding
markets remain readily accessible to ANZ as evidenced by benchmark issues in AUD, EUR, USD, JPY,
CHF and CAD transacted during the year however marginal term wholesale funding costs are
running significantly higher than the portfolio average.
For media inquiries contact:

For investor inquiries contact:

Paul Edwards
Group GM Corporate Communications
Tel: +61-3-8654 9999 or +61-434-070101
Email: paul.edwards@anz.com

Jill Craig
Group GM Investor RelationsTel: +61-3-8654 7749 or +61-412-047448
Email: jill.craig@anz.com

4Total Provision Coverage Ratio – collective provision balance plus individual provision balance as a proportion of Credit Risk
Weighted Assets. Both the total provision coverage ratio and collective provision coverage ratio are at 30 June 2010.