Media Information
For Release: 17 February 2016

Transcript of ANZ Chief Executive Officer Shayne Elliottcommenting on Q1 Trading Update
The following is a transcript of a video interview with ANZ Chief Executive Officer Shayne
Elliott discussing ANZ’s first quarter 2016 trading update which was released today.
The interview was conducted by Andrew Cornell Managing Editor of BlueNotes, ANZ’s digitalpublication for news, opinion and insight and can be viewed at www.bluenotes.anz.com.
Andrew Cornell:

Morning Shayne and welcome again to BlueNotes. Thanks very muchfor joining us.
You’ve just released the December quarter Trading Update. It was asolid result, there were some good performances from across thebusiness but what struck you as some of the highlights?

Shayne Elliott:

Well again what’s really showing at our business is the strength of ourretail franchise both here in Australia and in New Zealand, and also thesmall business franchise. Those are terrific businesses and they justcontinue to go from strength to strength, really pleased with that. The
second thing that I was pleased with was the ongoing restructuringthat we’re seeing going on in our Institutional business, which is reallyabout capital efficiency and making sure we’re allocating our resources
where we get the best returns both from a customer’s perspective but
also from a shareholder perspective.

Andrew Cornell:

Because you have made the comments that it’s not so much on
geographies where you’re looking to get an earnings proportion, what
you’re looking for is value creation. So you’re starting to see someresults from that work now?

Shayne Elliott:

Absolutely and we talked about that at the end of the last financial
year when we started to see some of our trade assets coming off, andagain that was really about disciplined allocation of our capital and thatis absolutely starting to have an impact. In fact, we talked about in ourrelease that our margins and that interest margin in our Institutional
business actually rose. That’s the first time that we’ve seen that in a
number of years and that’s really as a result of the actions we’retaking.

Andrew Cornell:

So that underlying driver, and it’s a better result compared with theprevious corresponding period and the average of the previous twoquarters, is that something that you’re confident can keep on going?

Shayne Elliott:

I think so. I think the underlying businesses that we have as I said willcontinue to do well – retail and commercial here, our trade and capitalflow intermediation businesses. There’s undoubtedly going to be somechallenges as a result of the slowing global economy and in particular
the slowing Asian economy.
1Andrew Cornell:

And presumably, given that climate is one where revenue growth isvery hard to come by, there’s a focus on costs. Are you happy withhow costs are being managed?

Shayne Elliott:

Yeah, we’re taking a view that the environment that we’re working incontinues to be volatile and a little uncertain and the best thing that
we can do to be prepared for that and to mitigate some of that is bereally, really tightly managed in terms of our resourcing and so there’s
a big item here in terms of cost management and we saw first quarter
absolutely some great outcomes in terms of that and that will continue
to be a focus but equally it’s also about capital efficiency and making
sure that every dollar of our capital is wisely allocated.

Andrew Cornell:

To an extent, that’s the December quarter. And if you look at global
markets, not just in Australia, the anxiety has been since the start of
the New Year and indeed in this update you flag some credit quality
issues, particularly in South-East Asia. Has the world changed
enormously then since the start of the year?

Shayne Elliott:Look, I don’t think it’s any surprise that the Asian region in particular
has been slowing for a period. We’ve been talking about, as haveothers. I think what we saw though, at the beginning of this calendar
year is that it’s been a little bit more volatile than we were certainly
expecting and some of those conditions have been a little bit moredifficult. And so where does that hit? It tends to hit in the
manufacturing base across Asia-Pacific which today is in South-East
Asia, most predominantly Indonesia. And that absolutely is having animpact in terms of our credit books. And we’ve started to see that in
the recent weeks and we’ve flagged that in our result update.

Andrew Cornell:

So when you look across those credit quality issues are you seeing any
particular themes, trends? Or is it across the book?

Shayne Elliott:

At the present, as I said, it’s around South-East Asia, it’s broadly
based; it’s not one customer group in particular or anything like that.
But it does tend to be concentrated around manufacturing, kind ofindustrial companies and those exposed to trade.

Andrew Cornell:

Leaving the idea of asset quality, the other thing that investors
obviously have a strong interest in are your funding costs and theoutlook for dividends. Can you expand on that at all?

Shayne Elliott:

Well we have certainly seen, and as I said, it’s been pretty widelyreported that funding costs for banks and corporates that borrow in thecapital markets have risen, and risen in a fairly material way. And
you’ve seen that some of that has meant that there has been a repricing in certain parts of the economy. So that’s absolutely real andwe’ll see where that plays out. In terms of dividend, banks have anumber of levers that they’re controlling and obviously we need tomaintain our revenue momentum and that really generates lots oforganic capital, we have the ability to manage our costs really tightly
and of course be really efficient with the allocation of our capital.
So in an environment which is a little bit slower, in an environment
where we start to see that credit cycle turn, we have to be reallyvigilant around that capital and around our credit management but
also be really tightly managed on costs and that’s exactly what we’redoing.

2Andrew Cornell:You’ve also flagged a couple of key appointments to look forward to –the Chief Financial Officer, your old role, and a Head of Digital whichpeople are particularly interested in. How far away are those?

Shayne Elliott:

Well we’re really excited to be able to have this new role of a new
Digital Banking Head, I believe we’ll be able to announce that in the
coming weeks. And obviously the search for a CFO continues andwe’ve got some terrific internal candidates which is great to see, but
obviously we’re also benchmarking that externally. That’s also likely tobe announced in the coming weeks. So I’m really excited about bothappointments, they’re really important to the team. But the team
that’s already here is totally focussed on execution and that’s what
we’re going to be continuing to do for the balance of this year.

Andrew Cornell:

Well thanks very much again Shayne for talking with BlueNotes.

Shayne Elliott:Thank you.

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