BASEL III PILLAR 3DISCLOSURE
AS AT 31 DECEMBER 2017
DECEMBER 2017 PILLAR 3 /2018 FIRST QUARTER CHART PACKAUSTRALIA AND NEW Z EAL AND BANKINGGROUP LIMITED
20 FEBRUARY 2018
To be read in conjunction with ANZ 2017 Basel III Pillar 3
disclosure as at 31 December 2017

SU MMA RY•

Capital, Funding& Liquidity

•••

•
•
Portfolio movement•
Credit Quality•••

Australia Housing
update••Common Equity Tier 1 (CET1) ratio of 10.82% at Dec-17, 25bp increase from Sep-17. Dec-17 CET1 ratio
includes the proceeds of the sale of Shanghai Rural Commercial Bank stake and a small benefit from the sale of
the Asian retail and wealth businesses (Taiwan & Vietnam settlements in the December quarter).
APRA’s ‘unquestionably strong’ requirements achieved well ahead of 2020 implementation.
Shares allocated under 2017 Final Dividend Re-investment Plan (DRP) neutralised by acquiring equivalent
number of shares on market.
Funding and liquidity position remains strong with LCR 131% (Dec-17 quarter avg) and NSFR 114% (as at 31Dec-17).
Total Risk Weighted Assets (RWA) increased $2.4b, including a $2.3b increase in Credit RWA, with growth inResidential Mortgages, Corporate and Bank Pillar 3 categories
Credit RWA increases comprised:• $0.6b lending growth (underlying growth of $2.6b offset by $2.0b divestments in Retail Asia portfolio)• $2.1b methodology/data changes (Inclusive of a $1.5b interim RWA overlay on the NZ Residential
Mortgage portfolio pending approval of updated Mortgage capital model)• $0.4b reduction from improvement in the portfolio risk profile
Gross impaired assets reduced by 9.3% to $2.2b, including 6% reduction in Australia Division, 7% reduction in
Institutional and 11% reduction in New Zealand Division.
Total provision charge of $202m in 1Q18 with individual provision charge of $220m.
Residential Mortgage 90+ day past due loans (as a % of Residential Mortgage EAD) increased by 1bp.
Home lending portfolio grew at 1.2 times system in the December quarter, with Owner Occupied growth of 10%
annualised (1.4 times system), Investor growth of 2% annualised1.
Interest only new business in the December quarter (1Q18) represented 14.3% of total new business flows.
$5.7b of interest only loans switched to principal and interest in 1Q18, compared with $9.5b in 4Q17 and $4.3b
per quarter on average across 1Q17 to 3Q17.

Growth refers to December 2017 vs September 2017 unless otherwise stated1.

Source: ANZ analysis of Home Loans Market Share – APRA Banking statistics. December 2017 report. The current classification of Investor vs Owner Occupier, as reported to regulatorsand the market, is based on the classification at origination (as advised by the customer) and the ongoing precision relies on the customers obligation to advise ANZ, and ANZ targeted
activity to identify, any change in circumstances.

2C A P I TA L , L I Q U I D I T Y & F U N D I N GAPRA CET1 CAPITAL MOVEMENTAPRA COMMON EQUITY TIER 1 (CET1)%%
Equivalent to ~11.3% on a pro forma basis
taking into consideration announced asset
divestments yet to settle and $1.5b share buyback announced in December 2017 andcommenced January 2018

0.3
10.6

9.6

9.4

9.8

9.7

9.6

9.5

10.1

9.8

10.6

10.8

10.80.5
Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17-0.6

LEVERAGE RATIO%
5.1

Sep-17Dividends

AssetSalesOtherDec-17

4.9

5.1

5.1

5.3

5.1

5.3

5.1

5.4

5.5

Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Leverage Ratio

APRA Proposed Minimum 4%.

3

PORTFOLIO MOVEMENTRISK WEIGHTED ASSETS & EXPOSURE AT DEFAULT (EAD)

TOTAL RISK WEIGHTED ASSETS (RWA)

CREDIT RWA MOVEMENT DRIVERS$b(Note: Corporate Banking included in Institutional2)
402
381438838164093918397
3917

180

162

152

170

172

Sep-15Mar-16CRWA (ex. Insto)

143

391
3717133

393
3717
137

200

199

204

203

Sep-16

Mar-17

Sep-17

Dec-17CRWA (Insto)

Growth largely
driven byseasonality inthe TradebusinessMkt. & IRRBB RWA

894

899

903

Inclusive of a $1.5b interim RWA
overlay on the NZ Residential
Mortgage portfolio pending approvalof updated Mortgage capital model

FX

920

$b45

37.6

39.4

2.0

38.0

37.3

36.9

35

CRWA/EAD %EAD

Mar-17

Sep-17

Dec-17339.1-2.6

Inclusive of a $1.5b interim RWA
overlay on the NZ Residential
Mortgage portfolio pending approvalof updated Mortgage capital model20
Sep-160.9

336.8

25Mar-16

Lending Asia Retail Data /Dec-17
Mvmt.
Divest. Methodology
changes

2.030

Sep-15

Risk

Asia Retail divestment of $2.0b Credit RWAs impacted Residential
Mortgage, Corporate & Other categories

40
38.7

-2.0-0.4

CREDIT RWA MOVEMENT BY SEGMENT%

889

339.1

0.0

Op-RWA

$b903

336.8

Sep-17EXPOSURE AT DEFAULT (EAD) & CRWA/EAD1

1.
2.

2.1

2.6$b

Sep-17

Residential
Mortgage

CorporateSovereign& Banks

OtherDec-17

EAD excludes Securitisation and Other assets whereas CRWA is inclusive as per APS 330
Institutional RWAs are inclusive of Corporate Banking, transferred from Australia Division to Institutional in October 2017 and backdated to September 2015 for the purposes of chart timeseries4

PORTFOLIO MOVEMENTMOVEMENT BY SEGMENTS

CRWA & EAD MOVEMENT BY SEGMENT$b (Dec 17 vs Sep 17)

14.0

Inclusive of a $1.5b interim RWA
overlay on the NZ Residential
Mortgage portfolio pending approvalof updated Mortgage capital model

2.0

3.3

2.0

INSTITUTIONAL DIVISIONAL RWA

Growth in assets
held with central
banks, in partreflects seasonality

2.1

Credit RWA

Corporate

210
30

Sovereign & BankOther

HOUSING CREDIT RWA & EAD

152

133

137

Sep-15

Sep-16

Sep-17

Dec-17

372

369

361

$b60

Sep-15Mar-16

CRWA
EAD
1.
2.

3.

87

89

97

Sep-16

Mar-17

Sep-17CRWA increase
includes impacts fromregulatory changes2

Other RWA

572

292
58

163
26

NON HOUSING CREDIT RWA & EAD1$b355

159
26180

CRWA

344

Growth largely
driven byseasonality in theTrade business-2.6

EAD

331

179
270.9-2.6
ResidentialMortgage (Housing)(Includes Corporate Banking)3$b

CRWA increaseincludes impacts fromnew models299

Dec-17

545

539

538

548

534

274

265

253

240

240

Sep-15Mar-16

Sep-16

Mar-17

Sep-17

Dec-17CRWAEADNon Housing based on APS330 Pillar 3, all Credit RWA categories excluding Residential Mortgage category
Housing based on APS330 Pillar 3 Residential Mortgage category. Change in CRWA from Mar-16 to Sep-16 includes impacts from regulatory changes to Australia housing risk weights introduced 1 July 2016. Change in
CRWA from Mar-17 to Sep-17 includes impacts from further increases to Australia housing risk weights following APRA having completed its review of ANZ’s mortgage capital model and approved the new model forAustralia residential mortgages effective from June 2017
Note: Institutional RWAs are inclusive of Corporate Banking, transferred from Australia Division to Institutional in October 2017 and backdated to September 2015 for the purposes of chart time series

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CREDIT QUALITY

IP CHARGE COMPOSITION BY QUARTERS

PROVISION CHARGE
Total Provision charge ($m)
1,2051,956

1,19925%

202

Individual provision (IP) charge ($m)

2,000
1,500

39%

1,000
500

220

14%

0FY16

1st quarter IP charge

FY172014

1Q18

3Q
2Q

34%

1,341

FY15

4Q

24%

23%

26%

1,110

27%

23%

22%

1,939

18%

31%

33%

1Q

31%

21%

30%

20%

16%

24%

19%

2015

2016

2017

Avg 20142017

Last 3 quarters IP charge

PAST DUE LOANS > 90 DAYS AS A % OF EADGROSS IMPAIRED ASSETS2
$m%
-9.3%

4,000

0.53

3,173
2,719

3,000

2,384

2,162

0.48
0.43

Dec-17

Sep 150.42

2,000

0.60

0.590.56

0.55
0.50

0.50

Sep-17

Dec-170.44
0.39

1,0000
Sep-15Australia

Sep-16

New ZealandSep-17
Institutional

Other1Mar-16

Sep-16

Mar-17

Residential Mortgage
Retail (Pillar 3 QRR & Other Retail categories)

1.
2.

Other includes Retail Asia & Pacific and Australia WealthExcluding unsecured 90 days past due

6

AUSTRALIA HOUSINGSWITCHING: INTEREST ONLY TO PRINCIPAL &INTEREST

HOUSING LENDING GROWTH1
ANZ growth x System (System = 1)

$m
1.4
6,178

1.3
1.2965

1.1
1.0
0.9
0.8

2,267

1,857

1,189
3,177

2,6383,114

3,336

3,439

1Q17

2Q17

3Q17

4Q17

1Q18

Early conversions ($m)

Contractual ($m)

0.7
0.6

ANZ AUSTRALIA HOME LOAN DELINQUENCIES2,3

0.5%

0.4

2.0

0.3

1.5

0.2

1.0

0.1

0.5

0.0
Sep 15
Half Yr
ANZ
1.
2.
3.

Mar 16
Half Yr

Sep 16
Half Yr

SystemMar 17
Half Yr

Sep 17
Half Yr

Dec 17 Qtr

0.0
Sep15

Dec15

Mar1630+ DPD %

Jun16

Sep16

Dec1690+ Owner Occupied

Mar17

Jun17

Sep17

Dec1790+ Investor

ANZ analysis of APRA monthly banking statistics. December 2017
Excludes Non Performing Loans
The current classification of Investor vs Owner Occupier, as reported to regulators and the market, is based on the classification at origination (as advised by the customer) and theongoing precision relies on the customers obligation to advise ANZ, and ANZ targeted activity to identify, any change in circumstances.

7

F U R T H E R I N F O R M AT I O NDISCLAIMER & IMPORTANT NOTICE: The material in this presentation is general background information
about the Bank’s activities current at the date of the presentation. It is information given in summary form anddoes not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors
and does not take into account the investment objectives, financial situation or needs of any particular investor.
These should be considered, with or without professional advice when deciding if an investment is appropriate

Our Shareholder information

This presentation may contain forward-looking statements including statements regarding our intent, belief orcurrent expectations with respect to ANZ’s business and operations, market conditions, results of operations
and financial condition, capital adequacy, specific provisions and risk management practices. When used in thispresentation, the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar
expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as ofthe date hereof. Such statements constitute “forward-looking statements” for the purposes of the United States
Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release theresult of any revisions to these forward-looking statements to reflect events or circumstances after the datehereof to reflect the occurrence of unanticipated events.

shareholder.anz.com

Equity Investors

Jill Campbell

Cameron Davis

Katherine Hird

Group General Manager Investor Relations+61 3 8654 7749
+61 412 047 448
jill.campbell@anz.com

Executive Manager Investor Relations+61 3 8654 7716
+61 421 613 819
cameron.davis@anz.com

Senior Manager Investor Relations+61 3 8655 3261
+61 435 965 899
katherine.hird@anz.com

Retail Investors

Debt Investors

Michelle Weerakoon

Scott Gifford

Mary Karavias

Manager Shareholder Services & Events+61 3 8654 7682
+61 411 143 090
michelle.weerakoon@anz.com

Head of Debt Investor Relations+61 3 8655 5683
+61 434 076 876
scott.gifford@anz.com

Associate Director, Debt Investor Relations+61 3 8655 4318
+61 421 865 953
mary.karavias@anz.com

8