Media Release
For release: 18 February 2011

ANZ Market Update
Three Months to 31 December 2010

- continued business momentum, further improvements in provisions In a market update today ANZ reported an unaudited underlying profit after tax1 for the three months
to 31 December 2010 of approximately $1.4 billion, 27% above the prior corresponding period (PCP).
Key Performance Metrics•

Profit before provisions (PBP) grew 7% PCP to $2.3 billion - up 1% on the last quarter of FY2010(QOQ). Adjusting for foreign exchange (FX) and acquisitions, PBP grew 6% PCP and 2.6% QOQ.

•Continued strength in the Australian Dollar meant that income, at $4.2 billion, increased over 2%
FX adjusted QOQ with growth in all divisions except New Zealand. FX impacts produced a 2%
negative impact on underlying profit after tax both PCP and QOQ.

•ANZ has continued to invest for growth, particularly in Institutional and in Asia. Revenue/expense
jaws were neutral QOQ on an FX adjusted basis.

•Group margins (excluding Global Markets) showed a small increase across the quarter but therate of growth has slowed. Higher average funding costs and intense competition, especially fordeposits, largely offset the flow-through of re-pricing in New Zealand and product mix impacts.

•The provision charge of $294 million is 48% lower PCP and 22% lower QOQ.

•Group lending grew 2% QOQ (2% FX adjusted) driven by growth in Australia, in both Retail andInstitutional, and in Asia Pacific, Europe & America (APEA) across all business lines.

•Group deposit volumes rose 3% QOQ (4% FX adjusted) primarily driven by Australia and APEA.

ANZ Chief Executive Officer Mike Smith said: “We are continuing to achieve good underlying
momentum in our core businesses in Australia, Asia Pacific and New Zealand supported by further
reductions in provisions. Customers in Asia and in Australia are increasingly choosing to do businesswith ANZ.
“Recent natural disasters have had a devastating impact on a number of Australian communities. We
are working hard to provide as much assistance as possible and we are committed to playing our partin helping accelerate the recovery in the affected areas.
“Looking ahead, we’re optimistic about Australia’s prospects. The economy continues to perform wellalthough sector trends are mixed and the immediate impact of the recent floods, bushfires andcyclones will see growth soften in the short term.
“In New Zealand, the economy has stabilised although the return to growth is slow and in South
Canterbury the community is still recovering from last year’s earthquake.
“Asia remains the engine of global growth. As a result, connectivity in the region is continuing todeepen through growth in trade and investment flows between Asia and our key domestic markets inAustralia and New Zealand, and through growth in intra-Asia flows.

1All figures are on an underlying basis unless otherwise stated. Profit has been adjusted to exclude non-cash and significant
items to arrive at underlying profit, the result for the ongoing operations of the Group.

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

“Our super regional strategy is continuing to provide opportunities for us and we have been investingheavily to build our presence and capability in Asia and in our key domestic markets. We know that
we have to continue to deliver against this investment and it was pleasing to see the benefits
emerging through increased client penetration and increased deal flow in Asia, in Australia and inNew Zealand.
“Our organic growth and the integration of the Asian businesses we acquired from the Royal Bank of
Scotland mean we are now uniquely placed to benefit from Asia’s growth which is increasinglydifferentiating ANZ.
“At the same time we have strong customer propositions in our key domestic markets in Australia
and in New Zealand where we are also performing well financially. In Australia, we are continuing towork hard to retain our market-leading customer satisfaction in Retail and in New Zealand customer
satisfaction in both brands is strong and trending up.
“While our region in Asia Pacific is performing extremely well in a global context, we also need to berealistic about the continuing uncertainties in the world economy. The vulnerabilities that built up in
the world economy prior to the financial crisis are taking time to work through as evidenced by thesovereign crisis in Europe, and even in Australia and New Zealand businesses and consumers are
more cautious with deleveraging continuing to play out through lower credit growth.
“There are other challenges in Asia – and for us here in Australia. These include concerns overcommodity and asset price inflation, emerging protectionism and currency imbalances which are allcontributing to volatility in markets.
“Nevertheless, these issues are being managed pragmatically in China and by other governments in
Asia and we are optimistic about the outlook in 2011 and 2012.
“Our super regional strategy, strong balance sheet and management depth means we are well placed
to take advantage of the opportunities for growth in the region and to manage the uncertainties.
“In a challenging environment for banks defined by re-regulation, higher funding costs and volatility
in markets, we are also going to have to be much more efficient in the way we use capital and renew
our emphasis on driving organisational productivity and innovation.
“Our performance in the December quarter shows however, that we are positioned well and candeliver on our promises to shareholders, customers and the community during 2011,” Mr Smith said.
Business Update2•

In Australia, Retail deposits grew above system (up 3% versus system growth of 2.3%). This
continues a run of strong performance in Retail deposits over the past two years. ANZ is leadingon trial intention for day-to-day savings accounts and has the highest customer satisfaction ratingof the major banks.
Lending growth was dominated by Retail (up 2.5%) and Institutional (up 3.5%) with Commercial
lending flat. Mortgage lending grew at around 1.5 times system during the period. Margins aretracking broadly in line with the average for 2010.

•In APEA, the Retail and Wealth businesses are beginning to build momentum post the integrationof the RBS businesses during 2010 and the Institutional business build-out is also progressing
well. The balance sheet has continued to expand with lending up over 11% to US$27 billion andcustomer deposits up 6.5% to US$49 billion.

•In New Zealand, with the economy slowly recovering, lending was flat while deposits grew 4.2%3.
Pricing benefits from the roll-off of fixed rate loans and switching to variable rate loans continues
to flow through, however the margin benefit from that repricing has been largely offset by strong
deposit competition. Variable loans comprised 49% of the mortgage portfolio at the end ofDecember 2010 compared to 26% at the end of 2009.

2
3All comparisons are QOQ unless otherwise noted.
In NZD.

ANZ New Zealand has begun to put in place plans to improve operational efficiency across thebusiness and better leverage the Group’s super regional strategy. The changes, including a moveto one IT platform and a new regional management structure, aim to significantly improve service
levels and business outcomes over the medium term. Customer satisfaction in both the ANZ andThe National Bank brands are trending upwards.
It is expected that a one-off charge of approximately $120 million will be incurred in the first half2011 to fund the integration of IT systems and related costs which will be excluded fromUnderlying Profit.
•In Institutional, lending increased around 6% (FX adjusted) with over half of the growth from Asiaand the remainder largely in Australia. Deposits increased 3% (FX adjusted). Underlying margins
were marginally lower excluding Global Markets.
Global Markets revenue grew around 7% QOQ. The business is driving greater diversification
across revenue streams; consequently, there was an uplift in the proportion of revenues fromboth the FX and Commodities businesses during the quarter. The Capital Markets businessexperienced increased deal flow particularly from Asia.

Asset Quality
Total gross impaired assets declined by $209 million QOQ reflecting a decrease in new impaired loans
and NPCCDs4 and the sale of $720 million of Centro debt. The inclusion of Oswal in restructured items
led to an increase in new impaired assets; however ANZ continues to expect a full recovery in relationto this exposure.
Provision coverage remains high with the total provision coverage ratio at 2.11% and the collective
provision coverage ratio at 1.35%.5
An economic overlay of $35 million was added at the end of the first quarter covering the flooding inDecember. The Group is still assessing the impact of the more recent severe weather events;
however the total provision charge for FY11 is expected to still be broadly in line with the average ofconsensus estimates.
Balance Sheet and APS 330
The Tier One ratio at 31 December 2010 was 10.3%.
ANZ also released its December quarter APS 330 disclosures today. Risk Weighted Assets (RWA)
decreased 0.8% to $262 billion largely driven by a decrease in Market Risk RWA. Credit RWA weresteady at $233 billion with portfolio growth in Institutional and Australian mortgages offset byexchange rate impacts, improvements in credit quality and asset reduction in AIRB corporate.
ANZ remains well positioned from a funding perspective, loan growth has been fully funded from
deposit growth and approximately half of the $25 billion FY2011 term funding requirement has
already been completed. This positioning afforded ANZ the flexibility to buy back some government
guaranteed debt maturing in 2011.
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 Relations
Tel: +61-3-8654 7749 or +61-412-047448
Email: jill.craig@anz.com

4NPCCDs – non performing commitments, contingencies and derivatives.
Total 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 31 December 2010.
5