2021 ANNUAL REPORTT H E BAN K
WE’ R E BUI L DI N G

In 2017 we introduced our purpose...

Shape a world
where people andcommunities thrive

We’re building an ANZ that improves the financial wellbeing
and sustainability of customers, focused on:$$$

Helping people save for, buy
and own a sustainable, liveable
and affordable home.

2020
2019
2018
2017

Implemented our
Ethical Decision
Making Framework

Committed to fundand facilitate $50
billion by 2025 insustainable solutions
for our customers

Committed to fundand facilitate $10
billion of investment
by 2030 to deliver
more affordable,
accessible andsustainable homes1

2021

CONTENTS

Reached morethan 67,600
people throughour financial
wellbeing programs,
MoneyMinded
and Saver Plus2

Overview
Our 2021 reporting suite2021 performancesnapshot
Chairman’s message
CEO’s message
What matters most

Helping people start or buy
and sustainably growtheir business.

How we create value
2
3
4
6
9

About our business
Our strategy
How we create value
Our operating
environment
Our customers
Becoming a fairer andmore responsible bank

10
11
12
14
15
24

Our divisions
Our people
Our community
Improving our approachto human rights
Our approach toclimate change
GovernanceRisk management

Helping companies movegoods and capital around theregion and sustainably
grow their business.

26
29
34
37
38
40
51

Performanceoverview
Remuneration
reportDirectors’ report
Financial report
KPMG assurance
Shareholder
information
Glossary

56
74
110
113
252
254
263

Established our Ethics
and Responsible
Business Committee
1. Refers to homes to buy and rent in Australia and New Zealand. 2. Includes individuals who have participated in more than one program (for example, people who have participatedin MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded and Saver Plus totals) in the period 1 October 2020 – 30 September 2021.

ANZ 2021 Annual Report

1

OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOur 2021 reporting suite2021 performance snapshot$139.7M
in community investment2

2021 Annual Review
anz.com/annualreport

2021 ESG Supplement
anz.com/annualreport

INTEGRATED REPORTING
This report includes information on Australia and New Zealand
Banking Group Limited’s1 financial and non-financial performance.
In preparing pages 1 to 72, we have drawn on aspects of theInternational Integrated Reporting Framework to describe how
our business model, strategy, governance and risk management
processes help us manage risks and opportunities in our operating
environment and deliver value for stakeholders. We outline our
response to external social and environmental challenges, including
how we are continuing to support our customers, employees andthe community through the COVID-19 pandemic and strengthening
our approach to climate change and human rights.

ANNUAL REPORT STRUCTURE
The required elements of the Directors’ Report, including the
Operating and Financial Review, are covered on pages 1 to 70.
Commentary on our performance overview contained on pages
56 to 71 references information reported in the Financial Reportpages 113 to 251.
The Remuneration Report pages 74 to 109 and the Financial Reportpages 113 to 251 have been audited by KPMG. KPMG also provides
limited assurance over Environment, Social and Governance (ESG)
content within this Annual Report. A copy of KPMG’s limited
assurance report over ESG content is on pages 252–253.
This report covers all ANZ operations worldwide over which,unless otherwise stated, we had control for the financial year
1 October 2020 to 30 September 2021. Monetary amounts in thisdocument are reported in Australian dollars, unless otherwise stated.

ADDITIONAL INFORMATION
We produce a suite of reports to meet the needs and requirementsof a wide range of stakeholders.
Our 2021 Corporate Governance Statement discloses how we havecomplied with the ASX Corporate Governance Council’s ‘Corporate
Governance Principles and Recommendations – 4th edition’ and isavailable at anz.com/corporategovernance. This year is our firstreporting against the 4th edition.
Our ESG Supplement provides stakeholders with detailed ESG
disclosures, including performance against our ESG targets.

2021 Climate-related
Financial Disclosuresanz.com/annualreport

2021 Corporate
Governance Statement
anz.com/corporategovernance

We will release our 2021 Climate-related Financial Disclosures
report prior to our Annual General Meeting.
The following documents are available atanz.com/shareholder/centre:• News Release• Annual Review2• Consolidated Financial Report, • Principal Risks andDividend Announcement
Uncertainties Disclosure& Appendix 4E• APS 330 Pillar III Disclosure• Results Presentation and
Investor Discussion Pack
We are continually seeking to improve our reporting suite andwelcome feedback on this report. Please address any questions,comments or suggestions to investor.relations@anz.com.

DISCLAIMER & IMPORTANT NOTICE:
The material in the Annual Report contains general background information
about the Bank’s activities current as at 27 October 2021. It is information
given in summary form and does not purport to be complete. It is notintended to be and should not 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. Theseshould be considered, with or without professional advice when deciding
if an investment is appropriate. The Annual Report may contain forwardlooking statements or opinions including statements regarding our intent,
belief or current expectations with respect to ANZ’s business operations,market conditions, results of operations and financial condition, capital
adequacy, specific provisions and risk management practices. When usedin the Annual Report, the words ‘forecast’, ‘estimate’, ‘project’, ‘intend’,‘anticipate’, ‘believe’, ‘expect’, ‘may’, ‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’,‘could’, ‘should’ and similar expressions, as they relate to ANZ and its
management, are intended to identify forward-looking statements or
opinions. Those statements: are usually predictive in character; or may beaffected by inaccurate assumptions or unknown risks and uncertainties;
or may differ materially from results ultimately achieved. As such,these statements should not be relied upon when making investment
decisions. These statements only speak as at the date of publication andno representation is made as to their correctness on or after this date.
Forward-looking statements constitute ‘forward-looking statements’for the purposes of the United States Private Securities Litigation ReformAct of 1995. ANZ does not undertake any obligation to publicly release
the result of any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof to reflect the occurrence of
unanticipated events.

1. Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year end and from time to time during the financial year (together, the Group).
2. The 2021 Annual Review is comprised of pages 1 to 72, 252 to 253 and 261 to 262 of this Annual Report and a Remuneration Overview.

2

142C

$6.2B

81%

Dividend for2021 per share

Cash profit1

employeeengagement$21.0912.3%

Net tangible
assets per share3

Common equity
Tier 1 Capital4

218.3CCash earnings
per share1

$

35.3%

9.9%

of women in leadership5

Cash return on equity1

CO 2$21.95 B
funded and facilitatedin sustainable solutions
since 2019

Supported around

151,600

customers to builda savings
habit since 2020

$1.43 B
funded and facilitated to deliver more
affordable, accessible and sustainable
homes to buy and rent since 20206

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 57 . 2. Figure includes forgone revenue of $106m, thecost of providing low or fee-free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and the elderly. International transfer fees were
waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19. 3. Equals shareholders’ equity less preference share capital, goodwill,
software and other intangible assets divided by the number of ordinary shares. 4. APRA Level 2. 5. Measures representation at the Senior Manager, Executive and Senior Executive levels.
Includes all employees regardless of leave status but not contractors (who are included in Full Time Equivalents (FTE)). 6. In Australia and New Zealand.

ANZ 2021 Annual Report

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OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Chairman’s
message

The Board has exercised its discretion to reduce the variable
remuneration as a percentage of target for relevant executives
and we are confident the systematic actions being taken bymanagement will address these issues.

THE BANK WE ARE BUILDING
A joint-venture announced with European-based global payments
leader Worldline to provide the most advanced payments
technology and merchant services in Australia is the latest example
of our simplification program. While we still have some non-core
assets, namely our minority investments in Asian banks, the Boardand management team are now focused primarily on growing ourcore franchise.
Rapid change and disruption of traditional banking businessmodels are the new normal. At ANZ we are taking advantageof these changes with the ‘Bank We Are Building’ transformation.
We will continue to focus on driving simplification and efficiency
in our core business while also making significant investments inour digital platforms and advanced analytics capability so we canoffer compelling products and services to our customers.
Investments will also focus on new pivotal partnerships in theemerging digital ecosystems our customers are increasingly using.
Our Chief Executive Officer Shayne Elliott discusses this work inmore detail in his update.
We are also acutely aware of the leadership role we play in relation
to climate change. While the rapid decarbonisation of the global
economy will be a significant business opportunity, there arefinancial risks associated with lending to customers impacted byclimate change. We are committed to play our part in the path tonet zero by 2050 and will work with customers to assist them with
their transition.

The bank has navigated a year of historic health and economic challenges
while also supporting our customers and the community.
As we reflect on the events of 2021, I don’t think many of us would
have imagined enduring months of further lockdowns this year in
Melbourne, Sydney and, most recently, Auckland.
While it has been an incredibly difficult period for many, the future
does look much brighter as we adjust to the new phase of livingwith the virus. Impressive vaccination rates provide hope and if
we’ve taken anything from previous lockdowns, it has been theresilience of our people and our customers.
From a bank perspective, we delivered a solid financial outcome.
Our full-year statutory profit was up 72% to $6.16 billion. While
improving economic conditions meant we were able to releasesome of the credit reserves we put in place for expected losses,
the result also demonstrates the benefits of a diverse portfolio.
Prudent risk management over many years has resulted inmuch lower than anticipated loss rates, capital buffers remain
at an historically high-level with a CET1 of 12.3%, while earnings
have returned to near where they were pre-COVID-19 and Total
Shareholder Returns have substantially improved.

4

The overall improved performance of the business has beenreflected in our decision to restore dividends close to what they
were before the pandemic struck and to lead the industry inreturning capital to shareholders.
In fact, on a pro-forma basis we will have approximately $6 billion ofcapital above ‘unquestionably strong’ and will continue to consider
the best use of any surplus capital.
Highlights this year have included New Zealand having a strong
year and Institutional providing good returns for shareholders.
However, we did face challenges and although revenue in ourAustralia Retail & Commercial business in Australia increased,
elevated demand for home loans impacted our ability to processapplications in a timely manner which resulted in a loss ofmarket share. There was also a delay with one of our key digitaltransformation products.

SUPPORTING OUR COMMUNITIESCOVID-19 has reinforced the importance of community andI’m proud of the way ANZ has supported those in need throughthe pandemic.
The early days rightly prioritised supporting those who had been
most impacted by various lockdowns through loan deferrals. Thesedeferrals provided tens of thousands of customers with the criticaltime required to manage their cashflow through this difficult period.
There was less demand for customer deferrals this year, however
equally important has been our support of the Government loan
guarantee programs in Australia and New Zealand.

We also utilised our long experience withfinancial education to set up a program to
specifically help Pacific islanders, arrivingin Australia to fill labour shortages, better
understand how to manage their money.

ANZ of course has large operations in some of the countries
hardest hit by COVID-19. India, for example, a country inwhich we have a deep history, was devastated by its Delta
outbreak this year.
While we worked hard to support our staff in India, we also
donated $1 million to World Vision’s India COVID-19 appeal
as well as setting aside a further $1 million to match customer
and staff donations.
We have also taken action to ensure our people across our
network are supported. Despite almost two years of remote
working, our people remain highly engaged and we werepleased to be awarded the Number 1 position in the AustralianFinancial Review’s ‘Best Place to Work’ awards within our sector.

BOARD RENEWALFirstly, I’d like to acknowledge our former Chairman David Gonski.
David retired from the ANZ Board in October last year having madean enormous contribution to our bank during his seven years as
Chair. He helped build an organisation with a strong focus on
governance, accountability, culture and better customer outcomes.
There is no doubt ANZ is in much better shape as a result of his
stewardship and on behalf of all shareholders, I thank David for
his leadership.
Paula Dwyer will retire from the Board following our Annual
General Meeting (AGM) on 16 December 2021. Paula is oneof Australia’s most respected non-executive directors and wehave been incredibly fortunate to have her serve on our Boardfor the past nine years, particularly in her role as Chair of the Audit
Committee. From a personal perspective, I feel privileged to havebeen able to serve with her and on behalf of all shareholders thankPaula for her dedicated service to our company and wish her wellwith her future endeavours.
We are very fortunate to be welcoming Christine O’Reilly to theBoard. Christine is an outstanding company director and she
will make a significant contribution on behalf of all shareholders.
While Christine formally joins the Board on 1 November 2021,
she will stand for election as a Director at our AGM .
Finally, as a relatively new Chairman of ANZ, I would like tothank our shareholders for their support through the year.
I also acknowledge the hard work and dedication of the 40,000
professionals working at ANZ. The pandemic has meant it has
been another challenging year but our team has again stepped
up for our customers and shareholders.

Paul D O’Sullivan | Chairman

ANZ 2021 Annual Report

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OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

CEO’s message
It has been another significant year in the transformation of ANZ, particularly when
considering the impacts COVID-19 is having on our customers and colleagues.
As we approach the final months of the year, I’m sure we all hoped
the pandemic would be largely behind us. It isn’t but there arepositive signs of a more optimistic 2022.

It’s a growth-oriented strategy – taking the best technology andfintech mindset and applying it to our already strong brand andcustomer base.

It was five years ago we outlined our vision for the future. A futurethat would see traditional banking models under significant
pressure from a range of new competitors.

Above all, it will be a radically different approach focused on
growing the financial wellbeing of our customers and we willcontinue to update shareholders on our progress through the year.

Customers want the same experience in banking they can getfrom online shopping or travel – convenient, safe, always on.
At the same time, society expects more from us. Investors andregulators are rightly more sensitive to banks operating in an
ethical, environmentally sustainable and transparent manner.
Politicians are also holding the industry to greater account.

To help prepare for this new world we also separated our venturesand incubator business, formerly known as ANZi, into a stand-alone
entity. This small but important change will accelerate our growthand deliver new digital solutions for our customers.

The pace of change has been faster than anticipated. Fortunately,
we had already made significant progress in readying theorganisation for the next phase of our evolution.
We’re now a much simpler and lower risk bank. We focus on thecustomers for whom we can add value and we’ve delivered onwhat we said we would. We are clear on who we bank and how
we will drive value for customers and shareholders.
As the Chairman mentions in his update, we’ve delivered a solid
result this year with highlights being the strong performance in
New Zealand and Institutional.

This leads to the next chapter of thebank we are building.
It is our purpose – to shape a world
where people and communities thrive –which directly underpins our strategy
of improving the financial wellbeing
and sustainability of our customers.
For the last couple of years we have been working on a program
we’ve internally referred to as ‘ANZx’. This is not just a set of new
products, rather it’s improving the digital capability, the digital‘mindset’ if you like, of our entire organisation.
The first phase of this will be the launch soon of a new proposition
we are calling ANZ Plus. Initially focused on savings and deposits,
ANZ Plus has been in pilot for a few months and has been
specifically designed to help people manage their money better.
But ANZ Plus is just the very first step in what will be a multi-yearroll out of what will eventually become the cornerstone of how
our retail and small business customers bank with us in the future.

6

Now known as 1835i, this independent venture business will
operate more like a start-up. We will invest where we see a pathto acquire more customers, deepen relationships with existingcustomers or co-develop new propositions we couldn’t develop on
our own. ANZ will, of course, continue to fund 1835i’s investments
and oversee its governance.
An example of how digital solutions can rapidly improve ouroperations was the launch this year of ANZ GoBiz. This allows
customers to plug their accounting software straight into oursystems so we can understand their financials almost instantly
and approve working capital loans much faster. We have also
digitised processes in the back-end.
It works with all the major accounting software packages – Xero,
MYOB and QuickBooks – covering about 70% of all small businesses
in Australia and effectively reduces the time it takes to get the moneyin the hands of small businesses from 30 to 2 days.
We are also preparing for one of the mega-trends of the global
economy – the rapid transformation of how we produce, distributeand consume energy.
This is one of the most exciting opportunities for ANZ and we are
well-placed to shape and support the required economic transition.
In fact, this is a major business opportunity and one in which wealready have made significant gains.
Key areas of interest for us include supporting the electrificationof the transport supply chain, commercialisation of hydrogen,financing energy efficient buildings and assisting our customers toestablish and develop their own transition plans. As well as beinga signatory to the Net-Zero Banking Alliance, these are significant
areas of commercial opportunity that will underpin
ANZ’s business for many years to come.
As we look to our strengths, one of the highlights this year has
been the progress we have made in improving the diversityof our workforce. In fact, this year saw the fastest improvementin the representation of Women in Leadership which increased
to 35.3%. This is in addition to my executive team which has
40% women and our Board which has 38%.

We know there is more to be done which is also why
we signed up to Hesta’s 40:40 initiative and I was proud
we were the only bank among the first ten signatories.
Our progress in building a talented and diverse team has
meant some of our most senior women, in particular ourformer Deputy CEO Alexis George and former CFO Michelle
Jablko, have been selected for high-profile and challenging
roles outside of the organisation.
While this could easily be seen as a negative, I’m incredibly
proud we are seen as an organisation that provides people
with the opportunities they deserve. It also means we areable to broaden the experience of other executives on theteam and, in the case of the CFO, appoint Farhan Faruqui tothe role.
Farhan is a deeply experienced global banker who playeda crucial role in the re-shaping of ANZ’s Institutional andInternational business and he will make just as importanta contribution as our next CFO.
Finally, while this is a period of significant disruption, I’m
confident in our ability to continue to deliver for all of our
stakeholders. We have never been financially stronger, we
are investing for growth and we have the team with themindset and agility to deliver.
I would like to acknowledge our terrific team acrossthe world who have done an outstanding job for theircustomers, our shareholders and the community. It has
been a difficult year for everyone but I continue to be
impressed with their resilience and hard work.

70 yearsas ANZTENACIOUS OFPURPOSEThis is a milestone year for us asit marks a major anniversary since
the start of the ‘modern’ ANZ.
It was in October 1951, 70 years ago, The Bank ofAustralasia joined with Union Bank of Australia andbecame ANZ Bank. This was a significant incarnation ofa bank whose antecedents stretched back to Cornwall
Bank, formed in Launceston in then Van Diemen’sLand in 1828.
In 1963 the bank was the first to ‘computerise’ and in 1970
merged with the English, Scottish and Australian Bank
(ES&A) to become Australia and New Zealand Banking
Group Limited – in what was at the time the largest
merger in Australian banking history.
While much has changed during this time, we are still themost international of the Australian banks and I’m proud
we’ve retained a culture so focused on our customers,
no matter their size or where they are in the world.

Shayne Elliott | Chief Executive Officer

ANZ 2021 Annual Report

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HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

What matters mostThrough our annual materiality assessment, we engage with internal and external
stakeholders to inform our identification of ESG risks and opportunities. We seek
to identify those issues with the most potential to impact our ability to operate
successfully and create value for our shareholders and other stakeholders.
We use the assessment to inform our strategy, public ESG targets
and external reporting.

COMMUNITY STORY

50,000 peoplesaving for the futureThis year Saver Plus reached a significant milestone.
The program has now enabled more than 50,000 lower income Australians
to save around $26 million for their education costs, with ANZ providing matchingof $21 million.

50,840Program participant Daisy from Greenacre Hill in New South Wales
says: “Saver Plus showed me how to save more money. Looking at
my needs versus wants when shopping with my kids, I realised I cansave so much more by using a list and shopping fortnightly. I’m stillusing the ANZ account and making deposits every single month.”1

Total participants since 2003

86 %

14%

FemaleparticipantsMaleparticipants

75

Melinda Moore, Acting Director Community Programs at
Brotherhood of St Laurence (BSL), says the Saver Plus program
has a lasting and sometimes life-changing impact on participants.
“Research shows many participants go on to establish a lastingsavings habit that sees them achieve their financial goals andimprove their financial wellbeing,” she says.

FINANCIAL WELLBEING AFTER SAVER PLUS

2

Saving for% children’s education

17%

Saving forown education

8%

Savingfor both$26 M
Amount saved

1

$21 M

1

Amount received inmatching from ANZ

Average financial
wellbeing scorebefore Saver Plus:

Average financial
wellbeing scoreafter Saver Plus:

Australia
average financial
wellbeing score:

36

64

59

Saver Plus is the world’s largest and longest running matchedsavings and financial education program and was co-developedby BSL and ANZ.
F
 urther information on our financial wellbeing
programs is in our 2021 ESG Supplement available
at anz.com/annualreport.

This year we obtained stakeholder views on a broad range of
ESG issues.

Climate change: managing the business risks
and opportunities associated with climate change.
Includes the role we play in supporting ourcustomers to transition to a low carbon economy.

Overall, climate change emerged as the highest priority issue –with stakeholders noting both the social and environmental
impacts and the influence ANZ can have by deploying capital tofinance the transition to a net zero carbon economy. Stakeholders
highlighted the risks associated with our current exposure to highemitting sectors, but also emphasised the opportunities associatedwith the strong growth in sustainable finance.

Fairness and ethical conduct: a strong corporate
culture, known for ethics, values, fairness andtransparency. Simple and understandable products
and communications (i.e. product disclosure,including bank fees and charges) and appropriate
hardship/collections policies.

Fairness and ethical conduct continued to be seen as criticalto everything we do and key to our social license to operate.
Financial wellbeing was viewed as ‘core business’ and our efforts
in this area can improve customer experience and positively impact
the broader community. Finally, innovation and technology wereseen as essential to supporting customer experience in today’s
digital world.

INCREASING IMPORTANCE OF ESG IN
BUSINESS STRATEGY
The bank’s response to COVID-19 was well regarded byexternal stakeholders participating in the assessment,with several commenting there is a continuing rolefor banks to support customers who find themselvesin longer-term financial difficulty. COVID-19 was seen as
accelerating the importance of ESG – with a heightened
expectation that banks incorporate ESG considerationsin their business strategy.

“Every decision made now should be
integrating these ESG risks and taking
advantage of ESG-related opportunities.”
External stakeholder

Financial wellbeing: promoting and enabling
access to safe and affordable products and services,
particularly for lower-income and vulnerable
consumers. Work with cross-sector partners to help
customers, employees and the broader community
meet current financial commitments and needs,
and improve their financial resilience.

$

Customer experience: delivering value andimproved customer experience through appropriate
financial products and services for all customers,
small business and personal.
Innovation and technology: keeping pace withdigital innovation to ensure we are offering ourcustomers reliable and convenient products andservices in a rapidly changing market.

Insights from the assessment were presented to our executive
Ethics and Responsible Business Committee and Board Ethics,
Environment, Social and Governance Committee and helped
to inform the development of our public ESG targets.
Our material ESG issues are ‘mapped’ to thebank’s Key Material Risks on pages 54–55.
T he full list of our material ESG issues, as well as the
key steps in the materiality assessment process, arediscussed in our 2021 ESG Supplement available atanz.com/annualreport.
Detailed information on other ways in which we have engaged
with stakeholders is also included in the 2021 ESG Supplement.

1. As at 30 June 2021. 2.2018 Saver Plus: Pathways to Wellbeing Report.

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ANZ 2021 Annual Report

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OVERVIEW

HOW WE
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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

About our business

Our strategy

We provide banking and financial products and services to around 8.7 million retailand business customers, and operate across 32 markets.

To build a better bank we are bringing our purpose to life,
integrating our values and culture into our strategy.

Technology, Services & Operations and Group Centre –comprised of functions that support our business including Risk,
Finance, Communications and Public Affairs, Internal Audit andTalent & Culture.

Our expertise, products and services make us a bank.
Our people, purpose, values and culture make us ANZ.

OUR DIVISIONS
Australia Retail and Commercial – serves retail, commercial andprivate banking customers through our branch network, businesscentres, ATMs, and digital and mobile banking applications.
Institutional – serves institutional and business customers acrossAustralia, New Zealand, Asia, Europe and America including Papua
New Guinea and the Middle East.
New Zealand – serves retail, commercial and private banking
customers in New Zealand and is one of the largest New Zealandcompanies based on profit and assets.
Pacific – provides products and services to retail and commercial
customers located in the Pacific Islands, where our history dates
back 138 years.

OUR PURPOSE AND VALUES

Our strategy is to improve the financial wellbeing and sustainability of our customers. We will do this by providing excellent services,
tools and insights that engage and retain customers and positively change their behaviour.
In particular, we want to help customers:

Our purpose is to shape a world where
people and communities thrive.

$

$

$

Launched five years ago, our purpose explains ‘why’ we exist, guides
the decisions we make each day and drives everything we do.
Our values are the foundation of ‘how’ we work – living our values
every day enables us to deliver on our strategy and purpose,strengthen stakeholder relationships and earn the community’strust. All employees and contractors must comply with our Codeof Conduct, which sets out the expected standards of professional
behaviour and guides us in applying our values.

OUR VALUES ARE

Save for, buy and own asustainable, liveable andaffordable homeStart or buy andsustainably growtheir businessMove capital and goods aroundthe region and sustainably growtheir businessWe will achieve our strategy through…

INTEGRITYCOLLABORATIONACCOUNTABILITYOUR ENVIRONMENT, SOCIAL AND GOVERNANCE(ESG) FOCUS AREAS
We are helping to respond to complex societal issues central to ourcustomers and our business strategy. In particular, we are focusing
our efforts on:
Financial wellbeing – improving the financial wellbeingof our people, customers and the community by helping
them make the most of their money throughout their lives
Environmental sustainability – supporting household, businessand financial practices that improve environmental sustainability
Housing – improving the availability of suitable and affordable
housing options for all Australians and New Zealanders
Fundamental to our approach is a commitment to fair andresponsible banking – keeping pace with the expectations of
our customers, employees and the community, behaving fairly
and responsibly and maintaining high standards of conduct.
Integrating ESG and purpose into our strategy has created an
opportunity for us to better serve our customers and generate
long-term shareholder value.

10

RESPECTEXCELLENCE

Supporting sustainable development
We are committed to the United Nations (UN) Sustainable Development
Goals (SDGs) and believe that business has an important role to playin their achievement. Our 2022 ESG targets support 12 of the 17 SDGs.
In 2019 we became a founding signatory to the UN Principles for
Responsible Banking. Under the Principles we are required to set
at least two targets that address our most significant (potential)
positive and negative impacts, aligned with the SDGs and the Paris
Climate Agreement.
F urther information on our progress towards
implementing the Principles, including targets
we have set, is in our 2021 ESG Supplement
available at anz.com/annualreport.

Propositions ourcustomers love... with easy
to use services that evolve tomeet their changing needs.
Through better use of data
we will be able to provide
valuable insights about ourcustomers and how they
can improve their financial
wellbeing and sustainability
over their lifetime, enabling us
to create superior propositions.

Flexible and resilient digitalbanking Platforms... powering
our customers and madeavailable for others topower the industry.
Platforms underpin ourown propositions andwill increasingly underpin
those of our customers,
notably other banks or
institutional corporations.

Building the financial wellbeing and sustainability of our customers
creates a positive cycle of benefits. It directly benefits customers
and also grows shareholder returns; it leads to a strong and positive
reputation; it ultimately means it costs less to acquire customers;
and it grows loyalty, which in turn generates better returns –delivering more capital so we can invest in building a betterbank and continue to improve the lives of our customers.
We will know we have built a better bank when:• We support a higher share of customers in our target segments• Our customers have greater financial wellbeing over their
lifetimes, and implement more sustainable business practices
than others

Partnerships that
unlock new value... withecosystems that help
customers further improvetheir financial wellbeing
and sustainability.
We recognise that no one
institution can do everything or
innovate at the pace necessary
to satisfy customers’ needs –strong relationships withpartners is therefore vital.

Purpose and values-led
people... who drive value by
caring about our customers
and the outcomes we create.
Our people listen, learn
and adapt and do theright thing the first time,delivering the outcomesthat address financial andsustainability challenges.

• We serve our customers more efficiently than peers and oursystems are safer and more reliable• We attract and retain more of the people with the skills required
to reinvent banking, in line with our purpose and culture• We generate stronger long-term financial results (in termsof sustainable economic profits) than our peers• Our reputation with customers, community, potential employees
and regulators is better, both absolutely and relative to (domestic)competitors (existing and emerging)• Our practices and services provide more opportunity for thecommunity and we have supported and improved positive
economic development and transition.

• Our customers are more engaged, more loyal and avail
themselves of more of the right products and services thanthose banking with peers
ANZ 2021 Annual Report

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How we create value
VALUE DRIVERS

Our value creation model outlines how we deliver positive outcomes for our key stakeholders through our business activities,
and identifies the value drivers (or capitals) that we rely on to meet our strategic goals and build a better bank. Long-termvalue creation is dependent on our ability to successfully manage the risks and opportunities in our operating environment.

...CREATING VALUE FOR OUR STAKEHOLDERS1...ENABLE OUR BUSINESS ACTIVITIES...

SHAREHOLDER VALUE$

Loans, transaction banking services, deposits
and other financial products developed forour customers.
Pay dividends toour shareholders

Finance• 31.8% TSR over the past 5 years

Access to capital through customer deposits,
debt and equity investors and wholesalemarkets enables us to run our operations
and execute our strategy.

CUSTOMER VALUE

Flexible, digital-ready infrastructure to provide
great customer experience, with systems andprocesses that are less complex, less prone toerror and more secure.

T IE

O UR OP PO R TU NI

Collaborate withpartners to
improve financial
wellbeing andenvironmental
sustainability

OUR
PUR P OS E

SocialTrusted relationships with our customers andthe community are essential to our brandand reputation.
Provide wealthmanagement products
and advisory services

Environment
Use of natural resources and impact on theenvironment, resulting from our operations
and the products and services we provide
our customers.

12

Support customers
with trade andcapital flows• $368 billion home loan portfolio, increase of $12 billion in 2021
(Australia and New Zealand)• Business loan balance of $91 billion and customer deposits
of $105 billion (Australia and New Zealand)

Lend money toretail, businessand institutionalcustomers• $12.8 billion funded and facilitated in sustainable solutions
GOVERNA NCE

Technology, data and risk management

Shape aworld where
people andcommunities
thriveTIN G EN VIR O N M E
ERANTEngaged workforce with the skills required toreinvent banking, in line with our purpose
and culture.

GOVERNA NCE

PeopleOP

Pay taxes in
the countries
within which
we operateS

Our customers are financially better off over their lifetime andimplement more sustainable business practices than othersS&¢• 218.3 cents earnings per share2• 9.9% cash return on equity2• Proposed final dividend per share of 72 cents and interim
dividend per share of 70 cents• $21.09 net tangible assets per share3• 70.7% total shareholder return (TSR) in 2021

Provide transaction
banking services
and hold deposits

K
RI S

$

We generate stronger long-term financial results(in terms of sustainable economic profits) enabling
shareholders to meet their goals

Products and services

Help customers
mitigate andmanagefinancial risks

EMPLOYEE VALUE
Our diverse teams are engaged and optimised for success• 81% employee engagement• 35.3% Women in leadership• $4.9 billion in employee salaries and benefits• Over 1,275,000 hours of training provided

COMMUNITY VALUE
Our practices and services provide more opportunity forthe community and we have supported and improved
positive economic development and transition• Invested $1.29 billion in social and sustainable housing in Australia
and NZ$150 million in New Zealand• $2.4 billion in taxes paid to government4• More than 67,600 people reached through our financial literacy
programs MoneyMinded and Saver Plus5• Engaged with 100 of our largest emitting business customers
to support their low carbon transition
1. All figures below relate to the period 1 October 2020 - 30 September 2021 unlessotherwise stated. 2. On a cash profit (continuing operations) basis. Excludes non-core items
included in statutory profit and discontinued operations and is provided to assist readersin understanding the result of the ongoing business activities of the Group. For further
information on adjustments between statutory and cash profit refer to page 57. 3. Equals
shareholders’ equity less preference share capital, goodwill, software and other intangible
assets divided by the number of ordinary shares. 4. Total taxes borne by the Group, includes
unrecovered GST/VAT, employee-related taxes an other taxes. Inclusive of discontinued
operations. 5. Includes individuals who have participated in more than one program (forexample, people who have participated in MoneyMinded as part of Saver Plus are counted
twice as they are included in both the MoneyMinded and Saver Plus totals).

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Our operating environment

Our customers

The COVID-19 pandemic has fundamentally changed the external environment across thegeographies in which we operate. A summary of the key external challenges currently affecting
our business and our response to them is outlined below.

We are focused on developing the best propositions, across our platforms andin partnerships, to build the financial wellbeing of our customers. Whether thosecustomers are buying homes, growing small businesses or, in the case of large
businesses, trading internationally across our network, we want to help themto succeed.

CHALLENGEOUR RESPONSE

Social and economic impacts of COVID-19• Many customers continue to be financially impacted by
the pandemic, and need to adapt to a new environment• Responding to customer circumstances, by providing financial
support and information• Changed employment proposition due to continued stay-athome restrictions and employees moving to ‘blended’ models
of working where restrictions allow a return to office.

• Working cooperatively with government on policies to see
our customers through the COVID-19 pandemic and into aperiod of growth• Maintaining our focus on core banking services to improvecustomer outcomes, together with efficient allocation ofcapital and resources.

In Australia, our approach to assisting customers financially
impacted by the pandemic has been guided by our ‘Statementof Intent’ (available at anz.com), which we developed with key
stakeholders. The Statement outlines the support measuresavailable and our commitment to work with customers on asolution that is respectful, fair and appropriate. It is underpinnedby four key principles:• Challenges arising from regulatory expectations and changing
community standards and expectations• Supporting our customers, employees and the community
through the pandemic and ensuing recovery period

Protect what matters
Adapt to the changing environment
Engage with stakeholders
Prepare for the future• Failure to meet our ESG commitments and related social
expectations could lead to customer and community impacts
and reduced shareholder value.

• Building trust by ‘doing what we say’

• Providing targeted wellbeing and safety support to employees.

Limited growth• The economic contraction expected as a consequence of
prolonged lockdowns in New South Wales and Victoria will
impact households and many businesses. It could push
unemployment higher and cause more customers to deferloan repayments. Further pandemic-related disruptions are
possible over the coming year across our markets of operation.

Increased public and regulatory scrutiny• Working cooperatively with regulators, government and NGOs
• Strengthening our ESG policies and processes and ensuring
we implement effectively – transparently disclosing our progress.

Increased competition• Increased competition from digitally enabled competitors.

• Deploying new and improved digital services, products andprocesses to help meet customer needs for efficient andaccessible banking.

• Increased cyber-attacks, scams and attempted fraud.

• Potential financial risks associated with lending to businessand retail customers impacted by climate change.

• Developing new markets to leverage business opportunities
in Australia and the region as economies recover fromthe pandemic.

In New Zealand, support measures were reintroduced to help
business customers through COVID-19 disruptions in late August.
Short-term relief measures included waiving fees for contactless
debit cards, access to temporary overdrafts and removing fees forloan restructuring.

• Providing sustainable finance products and services, such as
green and sustainability-linked loans and bonds, that drive thetransition to a low carbon economy

Globalisation and geopolitical changes• The COVID-19 pandemic and changing geopoliticalenvironment has hurt global prosperity and cooperation,
threatening flows of trade, investment and people. Thismay challenge supply chains and productivity acrossour geographies.

All retail and commercial customer applications for hardshipassistance are managed by our Customer Connect team. Relief
measures have been offered after assessing each customer’s
individual needs and the suitability of hardship assistance.

• Strengthening our policies, processes, products and services
to manage the risks and opportunities associated withclimate change.

• Meeting customer needs for safe, secure and reliable banking
through investing in our cyber security capabilities.

Climate change• Increasing regulatory, political and societal focus on thetransition risks associated with climate change

Financial relief measures and ongoing hardship support has been
provided for home loan and business customers affected bycontinuing lockdowns (particularly in New South Wales andVictoria), or those still recovering from earlier lockdowns.

Since the start of the pandemic, we have significantly increased
investment in our hardship capabilities. In 2020 we mobilised
employees across our branch network and operational teams tomeet demand from customers seeking assistance. This cross-skillingof teams has resulted in greater flexibility across our workforce,
meaning we can better match capacity to demand as hardship
applications fluctuate in response to lockdowns. We have alsoestablished hardship teams in New South Wales, Western Australia
and Queensland (in addition to our existing team in Victoria) toenhance local support for our customers and bankers. In addition,
we have made it easier for customers to access support, creatinga digital hardship portal that allows customers to submit theirdetails (including financial information) online to the Customer
Connect team.

Cyber security threats

14

SUPPORTING CUSTOMERS THROUGH THE
COVID-19 PANDEMIC

WE HAVE OFFERED A RANGE OF SUPPORTMEASURES FOR CUSTOMERS IMPACTED BY
COVID-19 LOCKDOWNSHome owners• Pausing loan repayments (deferrals)• Reducing repayments to the minimum repayment amount• Accessing redraw and/or offset balance• Changing repayments to interest only
• Refinancing and consolidating any other debts• Applying for financial assistance.

Business loans• Pausing loan repayments (deferrals)• Providing access to new loans and government
support schemes• Temporary increases in overdraft facilities for 12 months• Additional support for Asset Finance, Commercial Cards,
Trade and Merchants products.

HIGHLIGHT

In partnership with a specialist wellbeing organisation,
Benestar, we have introduced a customer support programproviding free and confidential counselling to Australianbased customers experiencing distress – whether it be asa result of domestic violence, mental health difficulties,
bereavement or a range of other factors. The program
includes up to five free counselling sessions with clinicians
specialising in psychological support. If a customer requires
ongoing support they may be referred to relevant
community services.
Further information on support available tocustomers experiencing financial hardship or
vulnerability is in our 2021 ESG Supplement
available at anz.com/annualreport.

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION“I’ve banked with ANZ since the 1980s andthe method of banking has changed so much.
I now use my iPad and iPhone to check my
accounts on internet banking regularly.”
Guy “Ted” Salmond | 95 years old

DIGITAL TRANSFORMATION – THE KEY TO
BUILDING A BETTER BANK
A key element of our strategy is the delivery of a digitaltransformation that will help us build a substantially better bank –one that provides tools, support and insights customers need to
improve their financial wellbeing.
We are investing heavily in this transformation, prioritising
digital products; improved use of data and analytics; innovative
strategic partnerships; a refreshed brand proposition;and human-centred design.

Our Australian businessOur transformation goals are focused on the delivery of:

IMPROVING FINANCIAL WELLBEING
THROUGH SUPERIOR DIGITAL EXPERIENCES

As the COVID-19 pandemic continues,
customers are increasingly using digitalbanking solutions for simple transactions,saving time and reducing unnecessary visits
to a branch or calls to the contact centre.
Digital wallet payments have increased by more than 74% intransaction amounts and more than 63% in transaction volumes
in 2021, compared to 2020.
In the past 12 months, only 8% of our customers in Australia haverelied solely on branches – meaning more than 90% are alreadyusing at least one self-service channel.
Over the past two years, we have been developing features within
the ANZ App (Australia) and goMoney App (New Zealand) to help
our customers do more of their everyday banking via self-service.
In Australia, more than 3.7 million customers are now using
the ANZ App, with almost 430,000 new registrations in 2021. Morethan 2.1 million customers are actively using ANZ Internet Banking
and Internet Banking for Business. New registrations for Internet
Banking for Business are up 20% compared to last year, and business
transactions have increased by 11%, indicating our businesscustomers are also increasingly moving towards digital self-service.
We have added features to the ANZ App to enhance our customers’
financial wellbeing. For example:• New customers can now join ANZ and open their first savings
account through the App. More than 68,000 savings accounts
have been opened since the feature was launched in October
2020, representing almost 50% of all new Progress Saver
accounts opened.
• We have enhanced the ‘Save for a Goal’ feature, introducing two
new ‘nudges’ to kick start customers’ savings goals, informing
them when they’re falling behind their goal target and providing
ideas for how to get back on track. Customers have now set up
over 500,000 savings goals in the App.
• Customers can apply a gambling block to prevent gamblingtransactions on an eligible credit card.
• Customers with an ANZ Smart Choice Super account can searchand consolidate their super by using the updated Australian
Taxation Office SuperMatch service in the App.
16

In New Zealand, almost 1.6 million customers are now using ourdigital self-service channels, goMoney App and Internet Banking,with over 97,000 new registrations in 2021. This year, more than72,800 accounts have been opened using Internet Banking or
goMoney. In the past three months digital sales represented
49% of all new accounts opened.
New features added to the goMoney App include:• Eligible new customers can join ANZ via the goMoney App,with the majority also able to complete the identity and credit
check process within the App.
• The ability to decrease credit card limits, helping customers takecontrol of their spending and manage their credit card. A total of
12,287 decreases have been completed this year, for a total limit
value of NZ$39.2 million.

• A small number of purpose-led propositions thatpeople love to use• A mobile-first human supported distribution model• A simplified, high integrity, highly automateddigital platform• A customer-centric culture and leading workplace.
Retail customers in Australia will soon see change delivered throughour new and different ANZ Plus customer proposition.
One of the first things our customers will see is a new digitalbanking proposition to help people to manage their money better –by spending less, saving more and creating healthy money habits.

ANZ Plus includes, among other things, anintelligent mobile banking app, two new bankaccounts, and access to coaches – all designed
to help our customers improve their financial
wellbeing over time.
We are simplifying what we do, reducing the number of systems we
operate, cutting the length of customer terms and conditions, andusing the right tools and technology to build a quality, automated,digital experience.

Our Institutional businessIn our Institutional business, the digital transformation is focusedon making it simple and easy for our customers to do businesswith us by providing them with a digitally connected experience.
An example is the work we have done to build a business thatallows our customers to integrate their systems with ours toautomate payments and reconciliations processes. Receivables
data has increased by 37% since 2019, helping more customers
auto-reconcile their incoming payments, enabling
funds to be deployed as quickly as possible.
Another example is our platform and payments work to
help our customers provide payments to their customers andemployees. Payments through our digital channels has grownby 30% since 2019, powering transactions for our customers,
as well as customers of other banks where we process paymentson their behalf.

• Payments requiring more than one authoriser can now be created
and authorised in Internet Banking and goMoney, without
the need to visit a branch or contact us. Since the feature wasenabled, 128,485 payments have been authorised. This was a
key part of helping our customers with their banking while weremoved cheques as a payment method. We also ran customer
education campaigns, focused particularly on supporting
vulnerable customers. At the end of May 2021, ANZ became thefirst major New Zealand bank to remove cheques as apayment method.

Self-service banking sits within the context of a broader societal
shift – in the way people shop, interact with services – and eveninteract with each other.
We want to support customers of all ages and abilities to bankdigitally with confidence and will seek to ensure our apps continue
to incorporate the latest adaptive and assistive technologies of the
major smartphone platforms.
In July 2020, we established a new Retail Customer Care team inAustralia to contact all customers older than 65 years, as well as
frequent branch users impacted by branch closures. Since thenwe have contacted 105,000 customers to discuss alternative ways
to bank and the self-service options available.

The digital transformation
is focused on making it
simple and easy for ourcustomers to do businesswith us by providing themwith a digitally connected
experience.

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONNEW PLATFORMS AND PARTNERSHIPS TO HELPOUR BUSINESS CUSTOMERS GROW

Working with 300 businessowners and their accountants
and bookkeepers, we created
the ANZ GoBiz platform toenable faster lending to oursmall business customers.

As the economy recovers from the pandemic we have a role toplay in supporting businesses – both large and small – to grow,and we are developing innovative solutions to help make thishappen. Earlier this year we launched our new digital lending
platform for small businesses, ANZ GoBiz.
Using agile ways of working, we established cross-functionaldelivery ‘squads’ comprised of frontline bankers, technology
architects, experience designers, data engineers, credit risk andassurance experts. Collaborating remotely, the team devised a way
to integrate external financial data to provide the instant lending
decisions our business customers were seeking. A process that
previously took more than 30 days to complete now takes aroundtwo days, with loan applications made via a smart phone receiving
conditional approval within minutes.

CASE STUDY

Helping women start, run and grow a small business
The ANZ Business Growth Program, established in 2014,is delivered by The Australian Centre for Business Growth,
University of South Australia.
Online courses, seminars and webinars are open to all Australianbusinesses participating in the program. ANZ business banking
customers can also be selected to participate in targeted
one-day clinics and an intensive nine-month program.
Results are impressive, with companies going through theprogram reporting increased revenue, profit, expansion of
employees and some also now exporting to new markets.

This year, there was a 27% uptake of women in leadership roles
participating in the one-day Business Growth CEO Clinics.
One of these women was Maria Konecsny, who co-founded
Gewürzhaus, a specialist Australian spice retailer, with hersister Eva.

We are assisting our Institutional customers through our market-leading New Payments Platform (NPP)1 offering. The platform enables
smaller or foreign banks to participate in real time payments within Australia using our systems. Over the last few years, our Institutional
business has won 10 mandates from our Financial Institution customers. Four of these are live, with these customers now transacting on
the platform.
With respect to our entire agency and clearing offering, Institutional won 37 new mandates this year, and we expect this number to increase
as we further develop our platforms strategy.

CASE STUDY

Digitising insurance claims to be real-time, simple
and streamlined

experience, the solution improves the claims process byautomating near immediate payment once a claim is approved.

Making an insurance claim can sometimes be a difficult andslow process.

“The ability to make faster and simpler claim payments createsa much better customer experience, particularly for people inurgent or emergency situations,” said Gerard Sitaramayya, Chief
Financial Officer of Chubb Insurance Australia and New Zealand.

In partnership with global Institutional customer Chubb
Insurance, we have been working to solve this issue, developing
the first real-time Australian claims process to help make theexperience for claimants quick and simple.
Using the banking industry’s New Payments Platform (NPP)1
infrastructure and Application Program Interface (API)connectivity – the technology enabling real-time exchange of
information between Chubb Insurance’s internal and customer
facing web-based applications – ANZ has been able to develop
this innovative solution.
Developed as part of Chubb Insurance’s wider global
transformation program to streamline its claims payment“By using the NPP, it means our customers can submit a claim
and have it paid into their nominated bank account in nearreal-time, 24/7, 365 days a year,” Gerard said.
Depending on the insurance type and/or amount, customers
can use either a web-based self-service portal or raise a claim
request over the phone with a claim examiner who can approveand process the payment in real-time.
This API solution marks a further shift in the transition fromlegacy payments infrastructure, such as cheques and directentry with remittance-based payments, to real time payments,
reducing the risk of potential fraud, delays and complications.

Passionate about creating a workplace and a business thatchallenges “business as usual”, Maria uses care and creativity
to responsibly address sustainability at Gewürzhaus.
On her success, Maria says it was about doing things for theright reasons from the start – “no compromise on quality,
no compromise on deeply engaging with our customers.”

FINANCING SUSTAINABILITY THROUGHPRODUCT INNOVATION
We continue to innovate our product suite in order to support
our customers’ sustainability and transition strategies:
Green, Sustainability, Sustainability-Linked andTransition Loans – lending to deploy capital intogreen, transition and sustainability initiatives
Green and Sustainable Infrastructure Project Finance –greenfield project financing to support the development oflong-term sustainable infrastructure such as renewable energy
Green, Social, Sustainability, Sustainability-Linked and Transition
Bonds – distribution of capital into green, transition andsustainability initiatives such as energy efficient buildings
Corporate finance advisory services for renewables –provision of advice in relation to the purchase, sale andraising of capital for renewable energy projects

Green Guarantees and Sustainable Supply Chain –trade facilities supporting green and sustainability initiatives
Sustainability-Linked Derivatives – hedging of interest rateand FX risks on Sustainability-Linked Bond or Sustainability
Linked Loan transactions. The same sustainability targetsof the underlying Bond or Loan are connected to the derivative,
further supporting the customer’s sustainability strategy
ANZ/Clean Energy Finance Corporation Energy Efficiency Asset
Finance program – financing to incentivise corporate and retailcustomers to invest in energy efficient and renewable energy
technologies to help reduce their energy costs and carbon emissions

In addition, we are supporting customers
through our $50 billion target to help
fund and facilitate initiatives that improve
environmental sustainability, support disaster
resilience, increase access to affordable
housing and promote financial wellbeing.

1. The New Payments Platform is a centralised platform and open infrastructure system that facilitates fast, real-time clearing and settlements of payments between participating Australianfinancial institutions.

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FINANCIALREPORTSHAREHOLDERINFORMATIONCUSTOMER STORY

A RECORD YEAR FOR SUSTAINABLE FINANCE
The sustainable finance market represents a significant opportunity
for ANZ, as demand for sustainable finance products and services
continues to increase.
Our Sustainable Finance team is working closely with customers,
particularly our Institutional customers, to help fund their transition
to a low carbon economy.

In 2021 we saw record growth, completing 81 transactions,in comparison to 39 transactions in 2020. These transactions,comprising capital markets distribution and balance sheet lending,totalled $10.5 billion compared to $6.5 billion in 2020. This business
contributes materially to ANZ’s $50 billion sustainable
solutions target.

Sustainable investment
delivering real impact

Further information on sustainable finance is in our 2021
ESG Supplement available at anz.com/annualreport.

HIGHLIGHT

Executing on innovative sustainable finance deals
ANZ customer, Wesfarmers, issued the first Sustainability-Linked
Bond (SLB) in June 2021 into the Australian medium-term notemarket. The sustainability-linked bond commits Wesfarmers to
key sustainability targets.
As part of the transaction, Wesfarmers has committed to obtain
all of the electricity volume requirements for its Bunnings, KmartGroup and Officeworks retail businesses from renewable sourcesby the end of 2025. The company has also committed to limit the
average emissions intensity of its ammonium nitrate production
plant to 0.25 tonne of carbon dioxide equivalent (CO2e) per tonne
produced by the end of 2025.
In May 2021, ANZ Bank New Zealand partnered with Kathmandu
Holdings Limited to establish a syndicated $100 million
Sustainability-Linked Loan (SLL) facility, the largest syndicated
SLL in the New Zealand market to date.

Kathmandu’s SLL will be measured against a reduction ingreenhouse gas emissions, B Corp certification, and improving
the transparency, wellbeing and labour conditions for workers
in its supply chain.
Kathmandu Holdings Group CFO Chris Kinraid commented:“Sustainability is in our DNA and is a core foundation of theGroup, linking our financial arrangements to our sustainability
goals made perfect sense. It reinforces to our shareholders andstakeholders that we are committed to sustainability acrossall aspects of our Group”.
ANZ worked with both Wesfarmers and Kathmandu to structure
their deals in line with market best practice, ensuring targets set
were ambitious and material.

Fund manager Kilter Rural invests in theregeneration of rural farmland, water assets
and environmental protection.
As Kilter Rural CEO Cullen Gunn explains, “We focus on improving
Australian farmland and delivering returns while doing it. We workwith investors – mainly based in urban centres – and deliver
resources into under-capitalised rural regions.”

ANZ is supporting investment opportunities that achievecommercial, environmental and social outcomes and is providing
around $5 million of working capital for Kilter Rural’s Australian
Farmlands Fund (KAFF).

By 2050 it is estimated 50% more people will need to befed, globally. Cullen believes to achieve this, the world’s current
agricultural footprint must be stabilised and more food needs
to be produced through the regeneration of existing, often
degraded, farmland.

Established in 2018, the KAFF has a mandate to invest in a portfolioof irrigated farmland and water entitlements within the southern
Murray-Darling Basin.

“Australia is in a really good position to do this. We are regenerating
already highly modified, under-utilised farmland and remediating it
for agricultural and conservation purposes,” Gunn says.

20

Up to 30% of farmland will be actively reforested for biodiversity
protection and climate change mitigation outcomes. It aims to build
long-term investor value through improving the condition of natural
capital and earning payments for carbon sequestration.
To date, the fund has raised $44 million and purchased five farms
in Northern Victoria which were under-utilised and considered
unproductive in terms of financial and environmental outcomes.

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IMPROVING THE AVAILABILITY OF AFFORDABLEAND SUSTAINABLE HOUSING
Throughout 2021 we have continued to support our home loancustomers experiencing financial difficulty due to the impactsof COVID-19.
While no new COVID-19 home loan deferrals were issued after
31 January 2021, we have assisted customers experiencing ongoing
financial hardship through our existing hardship support program.
Current deferrals make up only ~1% of the total deferrals provided
up to 31 January 2021.

This year in Australia we increased
our home loan balance by $3 billion
to $278 billion to help our customers
buy and own a home.
Our home loan balance in New Zealandgrew NZ$10 billion this year to
NZ$94 billion to help our customers
buy and own a home.

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

We are committed to improving the availability of suitable andaffordable housing options for all Australians and New Zealanders,and have targets to:• Fund and facilitate $10 billion of investment by 2030 to deliver
more affordable, accessible and sustainable homes to buy andrent in Australia and New Zealand• Support more customers into healthier homes with our HealthHome Loan Package and Interest-free insulation loans in
New Zealand.
Our work spans many sub-sectors of the market, including
affordable housing, specialist disability accommodation, agedcare and homelessness. Key initiatives delivered include:• Joint arranger of all five bond issuances for the Commonwealth’s
National Housing Finance and Investment Corporation (NHFIC)
over the last three years totaling approximately $2 billion. The
capital raised allows NHFIC to provide low cost, long-term loans
to registered community housing providers to support theprovision of more social and affordable housing.
• Lead commercial financier of over $226 million in committed
facilities in the Specialist Disability Accommodation sector.
• Lead financier to the Land Lease Community sector, designed
to deliver affordable seniors housing.
• Advocating for institutional investment in long-term rental
housing through the backing of a range of ‘build-to-hold’and ‘build-to-rent’ projects.

CUSTOMER STORY

Increasing suitablehousing for people
with disability

CASE STUDY

22

Providing affordable accommodation foressential workers

commute is expensive and can also impact the ability ofthese workers to participate in family and community life.

Australia has among the highest levels of homeownership in the world, but is also ranked in the
top 10 for the highest levels of unaffordability forhome purchase and rental. The availability of suitable
and affordable housing is an issue for many in thecommunity, particularly as house prices have risen
sharply in the past 12 months.

To increase the availability of affordable rental housing for
key workers, we have supported both Aware Super andtheir community housing provider partners. This support
includes the provision of a $90 million funding facility toassist in financing Aware Super’s portfolio of key worker
affordable housing. We intend to increase our funding inthis area as the portfolio grows.

Many key workers in essential industries such as health,education, emergency services and law enforcement are
directly impacted. Due to a lack of affordable housing inAustralian metropolitan areas, many key workers areunable to pay market rents close to their place of work,
on top of their general living expenses.

The portfolio currently consists of around 235 units
across New South Wales and Victoria - a combinationof completed projects and developments still underconstruction. Once developed, these properties will berented at a 20% discount off market rent to key workers.

The difficulty of finding affordable housing close to
their workplaces means that many key workers have torelocate or travel long distances to get to work. A long

Further information about housing
is in our 2021 ESG Supplement available
at anz.com/annualreport.

Australia suffers from a chronic lack of housing
supply for people with disability.
It is estimated there is an immediate need for at least 10,000 newSpecialist Disability Accommodation (SDA) places in Australia, withan associated cost of over $10 billion. This investment is necessary
to provide suitable alternative accommodation for younger people
in aged care and others with unmet needs.
ANZ is committed to growing the pipeline of new purpose-built
housing in the SDA sector. We are the largest commercial financerof SDA, investing over $226 million in committed facilities. This
investment ensures the development of new SDA homes forapproximately 650 Australians - around 6.5% of required SDA places.
In 2021 we provided a $100 million loan to a portfolio of SDA, tosupport Macquarie Assett Management and Summer Housing.
This loan is understood to be the largest SDA deal to date, andwill allow for the expansion of homes across New South Wales,

Queensland, Victoria and Western Australia. The transaction is
structured to allow for new SDA providers to be added as thepipeline of homes increase.
To further increase the supply of housing for people withdisability, we are also working with SDA providers and ourexisting property clients to facilitate the inclusion of SDA in
future property developments.
These initiatives will go some way to easing the acute shortageof Australian purpose-built housing for people with disability
needs and will allow residents to achieve as much independence
as possible.
Our SDA financing contributes to our target to fund and facilitate$10 billion of investment in affordable, accessible and sustainablehousing by 2030.

ANZ 2021 Annual Report

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OVERVIEW

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BECOMING A FAIRER AND MORERESPONSIBLE BANKOur response to the Royal Commission
We continue to act in response to the ‘spirit and letter’ of the Royal
Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry (the Royal Commission).
We provide public updates on our progress to implement the Royal
Commission recommendations to the House of Representatives
Standing Committee on Economics. Our most recent update (asat 9 September 2021) is available at anz.com.
• 41 of the Royal Commission’s 76 recommendations are assessed
as directly applicable to ANZ. Of these, we have completed
actions relevant to 11 recommendations, including the four
directed at banks for direct implementation. Work relevant
to 13 recommendations is underway. The remaining
17 recommendations require actions by government,
regulators or the ABA before we take any further steps.
• We also made 16 commitments in February 2019, taking action to
respond to a number of Commissioner Hayne’s recommendations
and comments. These commitments were made to improve
the treatment of retail customers, small businesses and farmers
in Australia.

– We have completed 12 of our 16 commitments. This year wecompleted the requirements of the Financial Sector Reform Act
2021 in relation to ongoing fee arrangements (commitment 16).

– Of the four remaining commitments, three are dependent on
reforms to the Banking Executive Accountability Regime thatwill be effected through the Financial Accountability Regime,
and one relates to our ongoing work on culture.

Many of the recommendations in the Royal Commission’s
final report require legislative change. We continue to engage
constructively with government, regulators and industry as
they respond to these.

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOur APRA Risk Governance Self-Assessment Plan
Our Risk Governance Oversight Committee (formerly the Royal
Commission and Self-Assessment Oversight Group) monitors
progress with our Risk Governance Self-Assessment (RGSA) Plan.
The Committee is chaired by our Chief Risk Officer and provides
regular progress updates to the Executive Committee and the Board.
We have made significant progress across the five focus areasin our RGSA Plan: Culture; Governance and Accountability;
Management of Operational Risk; Remediation; and Simplification.
For example, we have:• Built a strong, purpose-led culture (see page 29)• Ensured accountabilities are clear and applied consequenceswhere there are failings, in line with our strengthened
Accountability and Consequence Framework (introduced in 2019)• Matured our approach to risk culture and risk management(see page 29)• Remediated customer accounts (see below)• Simplified our business, products and processes
Our RGSA Plan is well progressed, with clear accountability forand commitment to the remaining actions.
It is important to us that all of these actions deliver better outcomesfor our customers, our shareholders and the community, and thechanges we have made will endure.

Customer remediation
As discussed above, we are working hard to rebuild trust byidentifying our mistakes, fixing them and providing fair, consistentand timely remediation to our customers when we fail to get it right.
Across the Group we have close to 830 people focused on theexecution of customer remediation1, both within and outside
dedicated remediation teams. Since its inception in 2018, ourAustralian Retail and Commercial Responsible Banking team has
increased the number of resources committed to remediating ourcustomers from around 150 to around 390. In addition, 187 people
throughout the Australia Retail and Commercial business are also
focused on customer remediation activity.

LINKS TO 2021 GROUPPERFORMANCE FRAMEWORK
We have continued to demonstrate our commitment to improve
the financial wellbeing of our customers. Sound progress has
been made to deliver great outcomes across key segments,
however after a strong first half, we experienced material
challenges processing home loan application volumes inAustralia. This has resulted in our customers experiencing

longer than expected wait times for loan approval decisions
and increased volumes in our assessment backlog. While wewere able to tactically manage and improve the situation,
strengthening our policy and processes in this area remains
a high priority focus.
See section 4.5.3 of the Remuneration
Report for more details.

1. In addition, there are ~385 staff working on APRA remediation plans and ~504 staff working on other remediation related initiatives in Australia Retail and Commercial (as at September 2021).

24

Across our Australia Retail and Commercial business, we areresolving discrepancies such as fee or interest charges identified
with over 6.5 million customer accounts. Since April 2018 wehave remediated approximately $410 million across approximately
5.3 million customer accounts.2 This includes approximately$187 million in 2021. The team continues to focus on ways toincrease the pace of remediation.

During the year we have enhanced our complaints handlingcapabilities in Australia, delivering a new complaints recording
and management program to around 11,000 customer facing
staff who service our Retail and Commercial customers. More than
16,000 staff completed mandatory complaints awareness training,
ensuring a consistent understanding of our approach to resolving
customer complaints.

Our Responsible Banking team in New Zealand has more than
130 dedicated remediation resources. As at 30 September 2021,
they have remediated over 216,000 customer accounts and madepayments of NZ$23 million.

A Complaint Governance Forum has been established to provide
oversight of the end to end complaint management program,and complaints data and insights are regularly reported to senior
management and the Board.

Our Wealth Remediation team has completed all legacy advicerelated reviews pertaining to the ANZ Financial Planning business,
specifically inappropriate advice and fee for no service remediation.
The team has almost 125 people dedicated to remediation matters.
As at 30 September 2021, the team has remediated over 52,0003
cases for inappropriate advice and fees for no service in total andmade payments of $183.3 million. This includes the remediation
matters which are being completed for the ex-ANZ-owned aligned
dealer groups (RI Advice, Financial Services Partners, and Millennium
3) now owned by IOOF. ANZ acts as the agent for IOOF to complete
the remediation.

Further information on customer complaints
management is in our 2021 ESG Supplement,
available at anz.com/annualreport.

The Group’s customer remediation activities are regularly reviewed
by the Board. Directors are provided an overview of the status ofremediation matters; regulator engagement; repayments andprovisioning; and reviews underway to identify new matters.

Managing customer complaints
We seek to resolve complaints with empathy and fairness and arecommitted to listening to, and learning from, customer feedback sothat we can improve our products and services and deliver better
customer outcomes.

Improving customer experience
One of the ways we measure the experience of our customers isthrough our strategic Net Promoter Score (NPS). NPS enables us togauge whether we are meeting customer needs and expectations
and how we are performing relative to peers. It is measured byasking customers how likely they are to recommend ANZ (on a
0–10 scale) and is calculated by subtracting the percentage ofdetractors (those who give a score of 0–6) from the percentage
of promoters (those who give a 9 or 10).
While our NPS has improved for our retail customers in New
Zealand, it has decreased for our Retail and Commercial customers
in Australia and our commercial and agricultural customers in New
Zealand. We have failed to improve our performance relative to ourpeers. Our Institutional NPS has increased in both Australia and New
Zealand compared to prior years. We are ranked a close second inAustralia and remain number one in New Zealand.

NET PROMOTER SCORE
AUSTRALIANEW ZEALAND

Retail: scored -4.3, ranked 4th4
(down from -1.3, ranked 3rd at end of 2020)

Retail: scored 28.4, ranked 4th7
(up from 27.3, ranked 4th at end of 2020)

Commercial: scored -19.0, ranked 4th5
(down from -17.1, ranked 4th at end of 2020)

Commercial and agricultural: scored -13.1, ranked 5th8
(down from -11.1, ranked 5th at end of 2020)

Institutional: scored 36, ranked 2nd6
(up from 33, ranked 1st in 2020)

Institutional: scored 33, ranked 1st9
(up from 28, ranked 1st in 2020)

2. Inclusive of one-off adjustments relating to remediation payments made in prior reporting periods and in certain instances:• We make a community service charity payment. As at 30 September 2021 charity payments have been made for ~850k accounts totaling ~$2.6m• We pay the customer via cheque. As at 30 September 2021 cheques have been issued for ~775k accounts totaling ~$112m. A portion of the cheques remain unpresented• We offer certain customers access to payment via a payment portal. As at 30 September 2021 offers to access payment via payment portal have been issued for ~55k accounts totaling ~$2m.
A portion of the offers remains unclaimed• We transfer payments through a process for unclaimed monies (includes payments for de-registered companies). As at 30 September 2021 payments transferred via this process have been
made for ~56k accounts totaling ~$10m
3. Doesn’t include the number reviewed, only those which have been paid. 4. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six-month rolling average to
Sep’20 and Sep’21. Ranking based on the four major Australian banks. 5. DBM Atlas (Business). Base: Commercial (<$100 million annual turnover) Main Financial Institution customers. Six-monthaverage to Sep’20 and Sep’21. Ranking based on the four major Australian banks. 6. Peter Lee Associates, 2020 – 2021 Large Corporate and Institutional Relationship Banking surveys, Australia.
7. Retail Market Monitor, Camorra Research, six-month rolling average to Sep’20 and Sep’21. Ranking based on the five major New Zealand banks. 8. Business Finance Monitor, TNS Kantar
Research. Base: Commercial ($3 million – $150 million annual turnover) and Agricultural (>500K annual turnover) customers. Four-quarter rolling average to Q3’20 and Q3’21. Ranking based on thefive major New Zealand commercial/agricultural banks. 9. Peter Lee Associates Large Corporate Relationship Banking surveys, New Zealand 2020 – 2021, ranked against the Top 4 competitors.

ANZ 2021 Annual Report

25

OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR DIVISIONSOUR DIVISIONS

Australia Retail and Commercial

Institutional

As our customers navigate the current uncertainty – and their lives
in general – we’re here, ready to help with services and strategies
to improve their financial wellbeing.

This year our global banking network, insights and expertise supported companies
needing to move goods and capital around the region. We continued to deliver for bothshareholders and clients, deepening relationships with our high-quality customer baseand delivering strong returns, while building and supporting a market-leading team.

Mark Hand | Group Executive Australia Retail and Commercial Banking

Mark Whelan | Group Executive Institutional

OPERATING ENVIRONMENT
While COVID-19 lockdowns continue to impact business activity andcustomer spending, we expect economic activity will bounce backonce the vaccine rollout is complete. Until then, we remain flexible
to help our customers navigate the uncertainty.
Our Retail customers are increasing their use of digital and mobilebanking options. Home loan activity within the economy isparticularly strong. Our Retail customers are working on theirfinancial wellbeing by saving more, reducing debt and reviewing
their home loans. Our Commercial customers are tackling theuncertainty by innovating, adapting and reviewing their financial
commitments. As we head into 2022, we face considerable
challenges including a low-growth and interest rate environment
and margin pressures.

STRATEGY AND FOCUS
We are delivering on our strategy, in line with our purpose by
supporting business owners and home owners in uncertain times,
as we prepare for a digitally-enabled future. Since 2019, home loan
application volumes have doubled, particularly in the refinancemarket with customers moving to fixed rates, resulting in pressure
on our application turnaround times. We have made progress on
improving turnaround times for our customers and are increasing
our focus on opportunities to automate and simplify.
For our business owners, we have identified the need to modernise
our platforms and processes to meet customer expectations for
efficient and digital service. We have commenced building thefoundations through delivering new digital propositions, including
our Online Business Lending platform, ANZ GoBiz. We continue toexplore innovative ways to support our business owners.
In preparation for a digital-enabled future, we have been
progressively reshaping our branch network and supporting
simpler customer requests digitally. This is a key part of thebank’s transformation agenda.

Our customer remediation work is well-progressed and continues
to be well-managed and ensure our customers are treated fairly.
We have also invested in staff training and a new complaints
management system to ensure we are delivering on customer
promises and continuously improving our products and services.
Looking ahead, our vision is to be the partner of choice for homeowners and business owners and to improve their financial
wellbeing. To do this we will focus on a small number of purposeled propositions that serve our customers through a digital-first,
human-supported model. As we improve efficiency and reliability,
disciplined cost and margin management will remain a key focus.

PERFORMANCE HIGHLIGHTS
On balance, we have delivered a solid performance across a diverse
business while navigating some strong headwinds.
Cash profit increased 55% year on year, with growth in both lending
and customer deposits, a good margin performance and continued
cost discipline. While home loan revenue growth was in the low
double digits, second half volumes were impacted by a competitiverefinancing market, customers paying down their loans faster andprocessing issues. We have been working on a range of operational
and policy changes and those actions are already having a positive
impact on processing times.
Customer deposits were up ~$18billion in the year, with Retail,and Commercial and Private Bank deposits growing 6% and 10%
respectively. Many customers are moving their money from term
deposits to at-call so they have greater flexibility.
Commercial lending remained broadly flat year-on-year in anenvironment of economic uncertainty and lower levels of business
confidence. Despite the weaker demand, lending was up 1% in ourbusiness banking segment in the second half.
Applications for ANZ GoBiz have averaged 2,900 per-month sincelaunching in May 2021, providing real-time conditional approvalthrough an online platform, including new-to-bank customers.

FINANCIAL PERFORMANCE CASH CONTINUING1

Cashprofit ($m)

Return on
Avg. RWAs (%)

FY21
FY20

3,617
2,337

FY21
FY20

2.21%
1.44%

Growth (%)

55 %Growth (%)

53 %Market conditions normalised in 2021, as companies re-establishedand re-configured supply chains following periods of significant
interruption in the early stages of the COVID-19 pandemic.
Customers were initially more focused on repaying facilities,
which reduced demand for credit. As customers adapted tochanging market conditions they sought opportunities to growtheir businesses, including through mergers and acquisitions.
This led to in an increase in activity for our Corporate Financeand Corporate Advisory services across the network (particularly
in Australia), and a 4% increase in revenue.
As expected, income from our Markets businesses steadied to$2 billion in 2021 as the market volatility experienced in 2020
normalised, and liquidity increased. Record low interest rates
continued to constrict margins for our Payments and CashManagement products.

STRATEGY AND FOCUS
Over the past five years the Institutional business has transformed.
We have scaled back the number of customers we support, andsimplified our business significantly to ensure a better experiencefor both our people and our customers. These changes positioned
the business well for the challenges and opportunities created by
the COVID-19 pandemic. We have been able to respond quickly toshifts in customer demand and have proven to be more resilient
through the cycle.
We have stronger customer relationships, improved margins and risk
management, disciplined growth, focused cost management anda return on equity above the cost of capital. Our network across 32
markets continued to differentiate us from domestic competitorsand drove significant activity and volumes in our home markets. It
also provided diversification for our customers at times when supply
chains faced challenges.

Our ongoing investment in digital platforms helped drive
efficiencies and improve customer experience. Payments volumes
grew by 24% while in cyber security, we have continued to reduce
fraud for our customers, down year-on-year by 17%.

PERFORMANCE HIGHLIGHTS
A focus on execution, responsible growth and risk management saw
Institutional again deliver $1.9 billion in profit at returns above thecost of capital despite the challenging environment. The division’s
focus on productivity contributed to another year of cost reduction,with costs falling by 4% in 2021. The division has now reduced costs
for 11 consecutive half-year periods.
Net loans and advances were flat with improved momentum in thesecond half of the year (half-on-half growth 7%), while customer
deposits grew by 7%. Credit charges were negative for the year
reflecting the continued strength in the credit quality of the book.
ANZ maintained its position as the #1 Institutional bank in Australia
and New Zealand for relationship quality, as measured by a surveyof Corporate and Institutional customers by Peter Lee andAssociates, for the sixth year in a row. Customers called out ANZ’s
support for customers through the pandemic, rating the bank #1
for COVID-19 support.
Similarly, ANZ Institutional was again named #1 for Relationship
Quality in Asia, and a top five Corporate Bank for overall market
penetration in Asia by Greenwich.
Peter Lee also ranked ANZ as clear market leader in ESG and
Sustainable Finance. Globally, ANZ participated in $119 billion of
Sustainable Finance deals, up from $4 billion five years ago. Our
bankers are assisting businesses in their transition to a low carbon
economy and helping directly link their funding costs to sustainablebusiness goals.

FINANCIAL PERFORMANCE CASH CONTINUING1

Net Loans &Advances ($b)

Customer
Deposits ($b)

FY21
FY20

FY21
FY20

341,233
339,381

252,504
234,594

Growth (%)

1%

Growth (%)

8%

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 57.

26

OPERATING ENVIRONMENT

Cashprofit ($m)

Return on
Avg. RWAs (%)

FY21
FY20

FY21
FY20

1,887
1,854

2.24%
1.49%

Growth (%)

2%

Growth (%)

11 %Net Loans &Advances ($b)

Customer
Deposits ($b)

FY21
FY20

FY21
FY20

158,231
157,634

239,628
223,288

Growth (%)

0%

Growth (%)

7%

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 57.

ANZ 2021 Annual Report

27

OVERVIEW

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Our people

OUR DIVISIONSNew Zealand

COVID-19 has undoubtedly changed the way we work. In moving to our new ways
of working we have been conscious of how we can continue to build and maintain
ANZ’s culture while giving our people the opportunity to work flexibly and continue
doing their best work.

Although the landscape we operate in has changed for many in the wake of
COVID-19, I’m proud that we continue to prioritise what’s best for our customers, ourenvironment, and our people. This stems from our recognition that an organisation’s
success is dependent on the success of the communities they are part of.
Antonia Watson | Chief Executive Officer New Zealand

OPERATING ENVIRONMENTNew Zealand experienced a strong rebound in economic activity
following the 2020 COVID-19 lockdowns. Household and business
confidence surveys recovered quickly and investment had picked
up prior to the August 2021 outbreak. However, the environment
remains uncertain.
The Government’s income support measures have kept workers
employed and most businesses afloat. Provided that Aotearoa does
not see continued outbreaks, the labour market should continue totighten. Record house price inflation following the 2020 lockdown
has caused concern about affordability, especially for first homebuyers, although this inflation has now slowed. Consistent witha slowing global recovery, commodity prices may have reachedtheir cyclical peak, which could weigh on export returns.
The Reserve Bank of New Zealand has projected rate increases overthe next two years but this outlook could change. Uncertainty
will linger as long as the threat of future lockdowns remain.

STRATEGY AND FOCUS
In line with our simplification strategy we have implemented
our new customer referral model. This aims to match customers’
personal and business banking needs with the most appropriatebanking specialist to meet their needs. We reintroduced targeted
support measures to help customers through the COVID-19
lockdowns, including waiving fees for contactless debit cards
and access to temporary overdrafts.
To help bring balance to the housing market and help New
Zealanders into homes, we voluntarily increased the deposit
required from residential property investors to 40%, lowered
the deposit required for people to buy small apartments andintroduced a discount to the floating rate on new builds.

We commenced the wind up of the Bonus Bonds Scheme bycontacting customers to pay out refunds and reserves payments.
We continued to engage industry frameworks to support thetransition to net zero, including being a founding sponsor of Toitū
Tahua, the Centre for Sustainable Finance, and playing a criticalrole in developing the Sustainable Agriculture Finance Initiative.
On sustainable finance, this year we acted as a lead manager on
13 green, social or sustainable (GSS) bond transactions and one
Sustainability Linked Loan totalling over NZ$5 billion.
Our proportion of women in leadership increased to 37% and
we appointed our first Te Kaitohu Rautaki Māori (Head of Te Ao
Māori Strategy).

PERFORMANCE HIGHLIGHTS
We saw strong revenue momentum and lower credit impairment
charges driven by a credit impairment release, reflecting an
improved economic outlook. Net loans and advances grew 7%
driven by strong home lending growth of 10%, reflecting themarket’s historically low interest rates and supply constraints.
Unsurprisingly, we have seen subdued customer deposit growthof 4% in this low rate environment.
We have maintained a leading position in core banking productswith ~30% share of mortgages, ~33% share of household deposits(August 2021) and ~21% share of KiwiSaver (June 2021).
Our focus on improving customer experiences has seen strong
migration to our digital channels, with a reduction in over-thecounter transactions and contact centre calls.
Our Staff Foundation distributed over NZ$1.2 million in donations
to 103 charities across New Zealand.

FINANCIAL PERFORMANCE CASH CONTINUING1

Cash profit(NZDm)

FY21
FY20

1,607
1,079

Growth (%)

49%

Net Loans &Advances(NZDb)

FY21

Customer
Deposits(NZDb)

FY21

FY20

134,537
125,981Growth (%)

7%

We now have many flexible working modes: workplace first, where
employees perform their work from an ANZ workplace most or allof the time; blended, where employees spend some time in theweek in an ANZ workplace; and remote first, where employees
perform their work remotely, occasionally visiting an ANZ workplace.
The vast majority of our employees’ roles , now and in the future,
fit within the blended mode.
Coming together in our ANZ workplaces plays an important rolein how we learn and grow and helps employees who are new to
ANZ to build their networks and develop an understanding of ourculture. Enabling the majority of our people to work in a blended
way gives them the best of both worlds: the opportunity to
structure their working life in a way that provides greater flexibility
to work from home, and to be in the office for the critical, andoften intangible, benefits of developing our culture, building
social networks and learning from – and mentoring – colleagues.

CULTURE
We continue to develop and embed a culture focused on delivering
great customer outcomes, making things simpler and ‘always
learning’. This work is underpinned by our purpose and values.
This year, we finalised the design of a new culture and behaviour
framework. Developed with input from across the Group, theframework complements our values, building on and respecting ourpast, while orienting us towards the future. To deliver our purpose andstrategy, we need to: create opportunities by bringing in the best
ideas from inside and outside ANZ to create long-term value for ourcustomers and the bank; deliver what matters by executing well on
the things that matter most; and succeed together by engaging theright people, listening to and challenging each other. As we head into
the new financial year, we will start to see this come to life, with afocus on ensuring it is real and relevant to our people and reinforced
through our learning programs, people processes and systems.
We have made considerable progress in promoting the importance,
understanding and awareness of our risk culture. Our target risk
culture is founded on embedding those risk behaviours andpractices aligned to the five principles of: living the purpose; risk
management accountability; risk management execution; risk
management effectiveness; and proactive risk management. Plans
and actions are in place to further embed risk culture maturity. These
include the insights from our first risk culture survey. Refer to page 51
for further detail on the risk culture survey undertaken this year.

CULTURE REVIEWS AND ASSESSMENTS
Return on
Avg. RWAs (%)

FY21
FY20

2.24%
1.49%

Growth (%)

50 %

FY20

102,336
98,304Growth (%)

4%

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 57.

28

Our Talent and Culture team delivers data-led insights – qualitativeand quantitative – that are actionable and help drive sustainablecultural change. Multiple listening tools such as surveys, focus
groups and interviews enable the business to respond to employee
feedback on our culture.

Our Enterprise Steering Culture Group (ESCG), chaired by the CEO
and whose membership includes other members of the Executive
Committee, comes together twice a year to discuss key cultural
themes, strengths and areas for improvement. This year, the ESCG
has reinforced our ongoing commitment to employee wellbeing
and listening, as well as our learning strategy – prioritising the
reskilling and upskilling of employees in critical capabilities required
for a digital future, and building an ‘always learning’ culture. They
oversaw a significant jump in our speak up culture scores whichwere a key area of focus.
Our Internal Audit (IA) culture team provides independent
assessments of our current organisational culture. The assessments
are designed to: inform Board and management by providing
insights as to how organisational culture is enabling the bank’s
purpose and strategy; support the Board in meeting community
and regulatory expectations (e.g. the Australian Prudential
Regulation Authority Prudential Standard CPS 220); identify andfocus on cultural root causes of issues; and strengthen the bank’s
overall approach to strategic delivery and risk management.
Once an assessment is complete, a report on cultural themes,
including underlying issues and related impacts, is provided to thebusiness. The business then develops an action plan in response to
any identified cultural challenges. The plan is monitored and anactions effectiveness or reassessment is completed to determine
how effective it has been in shifting towards the desired culture.
In 2021, IA completed 19 culture reviews, of which nine werereassessments. The reassessments have highlighted leadershipaccountability as key to building a better bank and creating aculture that will deliver what matters for our customers, employees
and shareholders.
HIGHLIGHT

In 2018 a culture review identified a business area within thebank experiencing issues with inconsistent leadership, resulting
in a reluctance amongst team members to work effectively
together, raise issues and challenge constructively.
Following the assessment, the leadership team developed an
action plan focused on improving leadership capabilities andengagement through focusing on aligning as a leadershipteam and initiatives to embed desired leadership behaviours(e.g. using the leadership 180 survey tool that gathers feedback
on how well a leader is demonstrating our values andleadership behaviours) supported by development plans;
and implementing engagement plans to listen, provide
transparency and connect with staff.
Our reassessment of the business revealed a 25% increase instaff’s perception of leadership and a 26% increase in their
comfort to raise concerns and challenge constructively.

ANZ 2021 Annual Report

29

OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORTACCOUNTABILITY AND CONSEQUENCE
FRAMEWORK
Throughout 2021, we continued to strengthen ANZ’s Accountability
and Consequence Framework (A&CF). The Enterprise AccountabilityGroup (EAG), chaired by the CEO, supports the Board in monitoring
the implementation and ongoing effectiveness of ANZ’s A&CF,
being cognisant of its impact on the culture of ANZ. The EAG
reviews the most material risk, conduct and audit events,
accountability and the application of consequences, whereappropriate. See section 6 of the Remuneration Report for
more details.

FINANCIALREPORTSHAREHOLDERINFORMATIONEMPLOYEE ENGAGEMENT

In August, our overall engagement result was
81%. While this result is down five percentage
points from April 2020, it remains higher thanpre-pandemic levels (77% in 2019).
82% of employees said they felt supported
in managing their psychological wellbeing.

CHANGES TO REMUNERATIONWELLBEING

The introduction of a new remuneration standard by APRA
has driven a review of how we reward our executives. The new
regulatory standard does not come into effect until 1 January2023, however a range of changes are being considered for
implementation in 2022, subject to Board approval. These changes
are designed not only to meet both the letter and spirit of APRA’s
new prudential standard, but also to maintain our strong focus on
performance and risk management, and to attract, motivate andretain the best talent.

The health and wellbeing of our people remains a priority withthe management of COVID-19 and the impacts on our employees,
contractors and visitors continuing throughout the year.

We have implemented the recommendations from Stephen
Sedgwick’s ‘Retail Banking Remuneration Review’ (noting theindustry wide recommendations are ongoing). This review was
focused on strengthening the alignment of retail bank incentives,
sales practices and good customer outcomes. Mr Sedgwick
completed his final review of the implementation of therecommendations, with a report submitted to the Australian
Banking Association in June 2021. The report determined thatsignificant progress has been made across the industry to alignto the 2017 recommendations, with substantial investment in acustomer-centric culture, policies and practices evident across the
majority of banks. We continue to review our processes to ensureongoing adherence to the Sedgwick recommendations.

LINKS TO 2021 GROUPPERFORMANCE FRAMEWORKOur consistently strong management of people and culture
was again a highlight and reflects multiple years of purposefulinvestment in building the right leadership behaviours andenhancing our culture frameworks. Staff engagement survey
results remained strong, and following a global trend which
saw employer scores spike in 2020, ANZ’s 2021 results
expectedly returned to a steady positive trend. The wellbeingof our people continued to be a priority, with all staff
supported to complete mental health awareness training.
Embedding of our reward and performance framework
continued, with a focus on continuous performance
management capabilities, employee recognition, andreward arrangements for high performers in criticaltalent populations.
See section 4.5.3 of the Remuneration
Report for more details.

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DIRECTORS’REPORT

Targeted wellbeing and safety support has been provided to
employees and local leadership teams in different locations. For
example, due to the surge in COVID-19 cases in India, enhanced
support was provided to our employees including: access topersonal health insurance top-ups; unlimited free tele-consultation
medical services for employees and up to four family members;
assistance to access medical care; assistance with hospitalisation
where required; and provision of specific medical equipment athome or in hospital.
We have formalised a Chief Medical Officer arrangement, providing
access to specialist medical advice and ongoing guidance inmanaging the COVID-19 pandemic and other medical or healthchallenges as they arise. We have developed a COVID-19 vaccination
position statement, supporting the rollout of vaccines as animportant step in the global response to COVID-19. We encourage
all employees who are medically eligible for COVID-19 vaccines
to be vaccinated where it is locally available and approved byregulatory authorities. During the most recent outbreak in New
South Wales, we offered a vaccination program to employees andtheir households located in Local Government Areas with high casenumbers. This has since been extended to all of Greater Sydney and
Wollongong. We have provided a total of 315 vaccinations as partof the program, 70% of which were family members of employees.
Special paid leave has also been made available to employees who
may require time away from work due to COVID-19 impacts. This
may include recovery from COVID-19, isolation requirements andcaring responsibilities.
We recognise the impact of restricted movement and lockdowns on
mental wellbeing and are focused on empowering our employees
and leaders to support others and recognise the signs of
psychological distress in themselves. To support our employees andleaders in their understanding of and confidence in responding tomental health issues, a digital mental health awareness program has
been mandated for all employees. To date over 46,600 individuals
have completed this training. We have implemented Mental HealthFirst Aid training for our people in the United Kingdom and havecommenced the rollout of this program in New Zealand. We havealso piloted a Mental Health First Aid training course in Australia,
with planning for further rollout underway.

We continue to provide our employees with access to digital
wellbeing resources, developed in partnership with external
specialists, including psychologists and physiotherapists, to help
them develop strategies to maintain mental, social andphysical health.
With many employees working remotely more frequently, we
provided funding for ergonomic equipment to enable employees
to be set up for optimal safety and productivity. Since the onset ofthe pandemic, over 14,700 employees have accessed this funding.
Further specialist support is provided to employees requiring
tailored ergonomic assistance or other workplace adjustments
to maintain their wellbeing.

DIVERSITY AND INCLUSION

We believe our diverse workforce andinclusive culture will improve the qualityof decision making and drive innovation,
making us a better bank for our customers
and helping us to shape a world where
people and communities thrive.
The representation of Women in Leadership increased this year to35.3% (up from 33.4% as at September 2020), exceeding our targetof 34.4% by the end of 2021. Our progress is monitored monthly by
the CEO and the Group Execution and Performance Committee.
We are focused on growing female talent by providing female
employees with the critical skills and experiences required to moveinto senior roles, delivering a number of women in leadershiptraining programs throughout the year.
With the departure of Alexis George and Michelle Jablko, our Key
Management Personnel has dropped from 50% to 33.3%, below
our target to maintain at least 40% women as Key Management
Personnel. Importantly, however, women hold key line roles on our
Executive Committee and the portfolio of Kathryn van der Merwe,
our Group Executive Talent & Culture, has been expanded to include
responsibility for our Service Centres, a critical part of our networkand service offering. We are also proud to have a strong alumni of
successful executive women in significant roles outside ANZ.
Our numerous employee networks continue to play an importantrole in building a strong sense of community and belonging by
advocating for and supporting the diverse communities they
represent. Particularly as the COVID-19 pandemic has evolved,
the voice of our networks has ensured we are taking an inclusive
approach to supporting our people.
We have continued to develop capability across our recruitmentcommunities to create inclusive and accessible recruitment
processes for women, people with disability, Aboriginal and Torres
Strait Islander people, Māori and Pasifika people, people fromdifferent cultural and religious backgrounds, and people from the
LGBTIQ+ community. Our Diversity and Inclusion Policy is available
at anz.com/corporategovernance.

The representation of Womenin Leadership increased this year
to 35.3% (up from 33.4% as at
September 2020), exceeding ourtarget of 34.4% by the end of 2021.

NEW DIVERSITY AND INCLUSION STRATEGYThis year we finalised our new Diversity and Inclusion
Strategy. It was co-created with employees from all levels
and geographies, including representatives from ouremployee networks, and has been endorsed by ANZ’s
Executive Committee and the Human Resources Committeeof the Board.
We now have a vision for diversity and inclusion that is
unique and relevant to ANZ, aligning with our purpose andbusiness strategy, and the expectations of our customers,
suppliers and community.
We have established the following five strategic priorities:
1

Createan inclusive culture and improve the experience
of our employees who represent all dimensionsof diversity

2

Build
the confidence and capability of people leadersto lead diverse and inclusive teams

3

Improve the diversity of our leadership population

4

Strengthen and empower our employee networks

5Improve accountability and governance

There are many dimensions of diversity, and all are importantat ANZ. Therefore, the focus on creating an inclusive culture
is our most critical strategic priority.
Our strategy will assist us to make decisions about where
we will focus our effort and resources to maximise impact.

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FINANCIALREPORTSHAREHOLDERINFORMATIONCASE STUDY

Supporting mid-career and mature aged workers
This year, we had the opportunity to support mid-career andmature aged workers to reignite their career, or embark on a
new career in ANZ.
In August, we announced a collaboration with the Victoriangovernment to pilot a Digital Jobs Program in ANZ, supporting
unemployed and underemployed Victorians to transition into
new roles.
The program involves:• 12 weeks of free training in a high-quality, industry-backed
digital course• 12 weeks in a paid digital role with a Victorian business

Culture and Service Centres. “We believe that strong partnerships
like this are key to building the capability we need for the future.”“Employees who come to us from other roles bring professional
skills and experiential diversity which can help us think differently
about solutions for our customers and staff. They are also more
likely to have the skills that position them for a faster career
trajectory than people who are just starting out in their careers.”
We also launched an initiative encouraging mature aged workers
to email their resumes directly to our Chief Executive Officer,
Shayne Elliott, to be considered for roles in ANZ. We received
close to 500 applications and have placed successful candidates
in our Legal, Talent and Culture and Australia Retail andCommercial teams.

• Ongoing support from a mentor throughout the program.
The first placements for the program commenced in October,and are working with leaders and mentors over the 12-weekprogram in our Technology, Australia Business Transformation,
Finance and Institutional teams.
“The Digital Jobs Program is giving ANZ an opportunity tosupport unemployed and underemployed Victorians to moveinto new roles which we expect to be in high demand both now
and in the future”, said Kathryn van der Merwe, Head of Talent &“What we found is that a lot of people, particularly
women who were older and for whatever reason
had moved out of the workforce, somehow felt they
weren’t worthy or capable of coming back”, said
Shayne Elliott. “So we’ve got a program to bringpeople back to the workforce and it has beenenormously successful.”

CASE STUDY

Empowering Aboriginal
youth for a bright future
Juggling the final year of high school, two after-school jobs, a Certificate II in
Business, a school-based traineeship and a local Aboriginal school-to-work transition
program, young Indigenous Australian woman Talia Trimboli is seizing every
opportunity that comes her way.
Talia is one of 15 Aboriginal students participating in Ganbina’s
Youth Leadership Program in Shepparton, Victoria. ANZ is a financial
supporter and corporate partner of Ganbina.
The program, which identifies Aboriginal youth who have thepotential to be leaders within their community, helps them unlock
their full potential by keeping them engaged in education, training
and employment.

32

Talia is also undertaking a school-based traineeship with ANZ
in Shepparton. Her favourite part of the traineeship has beendeveloping her customer service and communications skills, aswell as the relationships she has formed with her colleagues atthe branch.
“Out of all the skills I’m learning, I enjoy developing my customer
service skills the most because I really enjoy talking to the people
who come into the bank,” says Tahlia.

INVESTING IN STRATEGIC CAPABILITIESWe use people analytics and modelling to understand the current
state of our workforce and identify potential skills shortages/gaps.
This analysis informs employee development and recruitment
programs, ensuring we continue to develop the capabilities aligned
to our strategy.
This year we launched our PeopleHub program, designed to replacelegacy human resources systems with ‘smarter’, more integrated
technology, supporting new functionality and improved processes
across the Group.
The program will strengthen our ability to ’future-proof’ ourworkforce, by providing greater visibility of the current state of
our workforce and identifying potential skills shortages and gaps.
Data and engineering continued to be an area of focus in 2021.
COVID-19 has exacerbated the scarcity of critical technology
talent, with job vacancies at historically high levels creating talent
competition across our major geographies.
We have refined our attraction, engagement and recruitment
strategies. For each of our key geographies, we have dedicatedteams focused on talent marketing and proactive sourcing of top
candidates in our strategic demand areas of data and engineering.
We are working harder to contact candidates via non-traditional
methods, for example approaching a candidate through their blog
or other social media. While first engagement is taking longer, ourtime to offer has only slightly increased. In 2021, we recruited over
5,100 technology candidates, a 92% increase from 2020.

In addition to hiring new talent, we continue to build theengineering capability of our existing workforce by implementing
targeted learning initiatives designed to develop both deep
technical skills and core ‘soft skills’. Our #TechLearningAcademy
and engineering career hubs enable our engineers to identify
their strengths and growth opportunities and provide self-guided
learning on priority capabilities. Sixteen hours of dedicated learning
time has now been scheduled for everyone in Technology.
We rolled out PluralSight, an online education provider, to morethan 1,620 people in Technology, providing our people with
opportunities to build valuable new technology skills such as
cloud computing, software development, cyber security andmachine learning.
In India, we have continued the rollout of our Digital Transformation
Academy, providing our people with a self-directed learning
platform to upskill in the latest digital transformation tools. The
program covers topics on emergent technologies like robotic
process automation, machine learning, artificial intelligence andblockchain. To date, over 2,100 of our people have completed
the program.

Further information on employee learning anddevelopment and our approach to diversity
and inclusion is in our 2021 ESG Supplement,
available at anz.com/annualreport.

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FINANCIALREPORTSHAREHOLDERINFORMATIONOur community
We invest significantly in the communities in which we operate and play a role insupporting their capacity, resilience and financial wellbeing. Strong relationships
with our stakeholders and the broader community is one of our key value drivers.
SUPPORTING THE COMMUNITY THROUGHTHE COVID-19 PANDEMIC
We have continued to work closely with our community
partners to support the communities in which we live andwork during the COVID-19 pandemic.
In April 2021, in response to the devastating health crisis in
India, we donated $1 million to World Vision Australia’s India
COVID-19 Appeal to provide funding for more beds, oxygen
machines and hospital medical supplies in some of the worst
hit districts.
In addition, we launched an India COVID-19 Appeal
encouraging employees and customers to donate, with ANZmatching donations dollar-for-dollar over two months – atotal of approximately $1.6 million was raised. FJ$60,000 was
also committed to grassroots organisations across Fiji tosupport communities impacted by COVID-19.

IN 2021

RECONCILIATION ACTION PLAN

15.5 %

of our employees
volunteered1 over 54,645 hours
to community organisations

We matched employee donations,collectively contributing $3.2m
through our workplace giving
programs. Investing a total of$139.7m in the community2
Around $2m was distributed tocommunities through our community
grants programs, including our Staff
Foundations in Australia, New Zealandand Fiji, and our Seeds of Renewal
grants program that provides fundingfor community groups in rural andregional Australia.

After two years of reflection, development and consultation,
we will commence our second Stretch Reconciliation Action
Plan (RAP) in October 2021, our fifth RAP as an organisation.
Through our RAP we will partner with Aboriginal andTorres Strait Islander organisations to create meaningful
opportunities for Aboriginal and Torres Strait Islander
peoples and businesses by:

Beyond providing core banking services, we can play a key role inthe community by leading thinking about the ‘drivers’ of financial
wellbeing and applying insights from our research to our financial
education programs, Saver Plus and MoneyMinded. These programs
involve close collaboration with partners from the community andgovernment sectors.
More than 841,900 people have been reached through these
programs since 20023.
Saver Plus: our matched savings and financial education program,developed in partnership with the Brotherhood of St Laurence.
Participants open an ANZ savings account, set a savings goal andmake deposits regularly over 10 months while also attending
MoneyMinded financial education sessions. On reaching their goal,savings are matched by ANZ dollar for dollar, up to $500, whichmust be spent on education.

COMMUNITY STORY

Pacific workers
picking financial
skills and fresh
produce

MoneyMinded: supports adults with low levels of financial
literacy and those on lower incomes build their financial
skills, knowledge and confidence. The program is deliveredby community organisations in Australia and New Zealand,
and a mix of community organisations and ANZ employees
in 15 markets across Asia and the Pacific region.
MoneyBusiness: developed in partnership with the AustralianGovernment in 2005, following our research which showed that
financial exclusion was a significant problem for First Nations
people, particularly those living in remote communities. Program
materials have been developed in consultation with local First
Nations communities and community workers, ensuring theinformation is culturally appropriate.
Further information about our community
investment and financial education programs
is in our 2021 ESG Supplement available atanz.com/annualreport.

Our MoneyMinded financial education
program – designed to help adults build
budgeting, saving and money skills –has been helping Pacific workers during
their mandatory two-week quarantine
period in Australia.
The Australian agriculture industry, particularly the fresh produce
sector, relies on seasonal interstate and overseas labour.

• Improving
financial wellbeing

However, the availability of workers has been heavily impacted by
COVID-19, with lockdowns and border closures making it difficult
for backpacker and overseas work programs to operate.

• Providing employment
and facilitating career
progression

Many Australian farmers have therefore been left with unharvested
crops and wasted produce.
The Australian Government’s ‘Pacific Labour Scheme’ has helped
fill regional and rural labour shortages, connecting Australianbusinesses with workers from nine Pacific Islands and Timor-Lesteto help farmers harvest crops.

• Building the capacityof Aboriginal and Torres
Strait businesses• Improving understandingof Aboriginal and Torres Strait
Islander cultures within ourorganisation.

Credit: Marcus Lee

We have set a target to achieve the 17 actions set out in our
RAP by the end of 2024, elevating accountability for delivery
to our Executive Committee. We have also implemented
an Aboriginal and Torres Strait Islander employee referencegroup we will consult with on any matters that impact themas ANZ employees to ensure we are listening to the voicesof First Nations employees.

1. Our Volunteer Leave Policy, that applies to permanent, regular and fixed-term employees, provides for at least one day of paid volunteer leave each year. 2. Figure includes forgone revenueof $106m, the cost of providing low or fee-free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and the elderly. Internationaltransfer fees were waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19.

34

OUR FINANCIAL EDUCATION PROGRAMS

Arriving from the Pacific, workers are required to complete 14 daysof mandatory quarantine when they arrive in Australia, before they
can start work assisting farmers to harvest crops.
ANZ has provided MoneyMinded training and resources toPowerpac, an approved provider of the Federal Government’s
Pacific Labour Scheme. Powerpac is delivering MoneyMinded
to arriving workers during their quarantine period.
Around 240 people have been through the first delivery of
MoneyMinded, with hundreds more expected over coming months.

3. Includes individuals who have participated in more than one program (for example, people who have participated in MoneyMinded as part of Saver Plus are counted twice as they areincluded in both the MoneyMinded and Saver Plus totals).

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FINANCIALREPORTSHAREHOLDERINFORMATION

Improving our approachto human rights
CASE STUDY

Financial education goes virtual
As schools and other educational facilities moved online becauseof the pandemic, so too did MoneyMinded.
Of the 64,011 participants estimated to have completed
MoneyMinded between 1 October 2020 – 30 September 2021,
more than 4,900 of those were part of the MoneyMinded Online
program, an increase from 1,700 the previous year.
In the 2020 MoneyMinded Impact Report, 81% of online
participants reported the program had a positive impact on theirfinancial wellbeing.
Sharon, a coach working with vulnerable families in Melbourne
as a case manager at MacKillop Family Services, completed her
MoneyMinded training with the Brotherhood of St Laurence
through virtual sessions and started using similar delivery
methods with her clients during the year. Sharon was able
to run classes in the evening which allowed her participants
to manage other commitments during the day.

CONTRIBUTION TO PUBLIC POLICY
We seek to contribute constructively to public policy formation
and understand the perspectives of our community’s elected
representatives, policymakers and regulators. We contribute topolicy formation on business, economic, social and environmental
issues affecting our customers and shareholders.
We are also a member of a number of industry associations that
contribute to public policy debate and formation.

In 2021, our key membership payments included:
Australian Banking Association $3,055,932
Business Council of Australia $93,500

While virtual program delivery has benefited many, it has also
highlighted the digital divide, with a number of people reportinga lack of internet access or access to a suitable device, or theconfidence to use a digital medium, as a barrier to participation.
We are working with our community partners and facilitators
to find ways to adapt our programs post COVID-19, without
unintentionally excluding those who cannot easily access online
modules and virtual sessions.

“I managed to pay off a number of small but
significant debts completely since starting
MoneyMinded Online. I’m able to plan for the
future and start looking at options for homeloans and how to progress to the point when
we’re ready to purchase a house.”
MoneyMinded | participant

Payment to the New Zealand Bankers’ Association includes ourannual fee as well as expenditure related to the trial of regionalbanking hubs, contribution to an industry partnership with anationwide financial capability charity, the establishment of anindustry whistle-blower scheme run by the Banking Ombudsman,and industry initiatives in response to COVID-19 andregulatory issues.
We understand our stakeholders are interested in the position wetake on issues such as banking accessibility, problem gambling andclimate change, and our membership of industry associations thatdevelop policies and undertake advocacy on these issues.
We have begun a process of periodically reviewing our membershipof key associations and will publicly disclose outcomes and any
material change to our position.

New Zealand Bankers’ Association NZ $746,796
Business New Zealand NZ $46,460

36

We committed to these two actions in the 2020 Statement of
the Parties setting out the resolution of a complaint brought
against ANZ by Inclusive Development International and Equitable
Cambodia concerning a loan made to Phnom Penh Sugar in 2014.
Agreement was reached with the assistance of the Australian
National Contact Point.
Our Statement and Mechanism have been informed by an
external multi-stakeholder working group including civil society
organisations, academics, business representatives and customers.
Their involvement did not infer endorsement of the outcomes ofthis review or other work carried out by ANZ.

The Statement outlines our respect for international
human rights standards and includes:• No tolerance for retaliation against individuals
or communities• Reference to climate change and associatedhuman rights impacts• Support for an open civic space and humanrights defenders• Scenarios where domestic laws conflictwith international human rights standards• Our process when a customer’s human rights
practices are inconsistent with our expectations.

International standards we respect include the International Labour
Organisation Declaration on Fundamental Principles and Rights at
Work, the International Bill of Human Rights and the UN Guiding
Principles on Business and Human Rights (UNGPs).
The UNGPs are the global standard for preventing and addressing
the risk of adverse human rights impacts linked to businessactivities. They incorporate three pillars, including governments’duty to protect human rights and the responsibility of businesses
to respect human rights.

LINKS TO 2021 GROUPPERFORMANCE FRAMEWORK
2021 has continued to be a challenging year for many. Our focus
on our purpose and values, combined with strong governanceand leadership, has enabled us to continue to help support thecommunities in which we live and work during the COVID-19
pandemic. ANZ ranked #1 overall amongst major domestic peers

This year we have significantly upgraded our Human Rights Statement(Statement) and developed a new Grievance Mechanism (Mechanism)
for people whose human rights may have been impacted by our large
business lending customers.

in the RepTrak™ corporate reputation survey and ANZ was again
the leading Australian bank as measured by the 2020 Dow Jones
Sustainability Index, ranked in the 97th percentile globally in thebanking sector.
See section 4.5.3 of the Remuneration
Report for more details.

Our Statement is aligned with the UNGP second pillar, including
support and respect for human rights of our employees, customers
and communities. We expect the same from everyone who works
for or with us, including business customers, suppliers and partners.
The UNGP third pillar refers to the need for victims of businessrelated abuses to have access to remedy. We support access toremedy through our new Grievance Mechanism and participationin the Organisation for Economic Co-Operation and Development(OECD) National Contact Point (NCP) remediation processes.1
Our new Mechanism will help encourage responsible businessconduct, including by our large business lending customers. In
establishing this Mechanism, we sought to provide a framework
through which:• Efforts can be made to resolve complaints by affected
communities about adverse human rights impacts associatedwith ANZ customers; and• Feedback and recommendations aimed at strengthening our due
diligence processes can be provided.
The Mechanism is designed to be informal and flexible, and we arecommitted to handling complaints in a way that builds confidence
in its effectiveness. As this is new we understand the need topromote its availability, and will use any complaints submitted
as an opportunity for learning and reflection.
Implementation of the new Statement and Mechanism willcontinue in 2022 through our governance, policies, staff training
and disclosures.
Engagement will again be sought with external stakeholders inreviews of the Mechanism in 2023 and the Statement in 2024.
We will also report on complaints submitted to the Mechanism.

The Statement and the Grievance Mechanism
are available at anz.com.
Information on our approach to modern slavery is in our
2021 ESG Supplement available at anz.com/annualreport.

1. NCP is responsible for promoting the OECD Guidelines for Multinational Enterprises (an international standard on responsible business conduct) and providing conciliation services toresolve complaints against multinational enterprises.

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FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PROGRESS ON THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURESOur progress to date

Focus areas – 2022/23

We are committed to playing our part in supporting the transition
to net zero emissions by 2050.

• Board Risk Committee oversees management ofclimate-related risks• Align with regulatory guidance on• An enhanced
climate-related risk governance, including
risk management
stress-testing of selected portfolios
framework that
anticipates potential
climate-related
impacts, andassociated regulatory
requirements

The most important role we can play in meeting the Paris
Agreement goals is to help our customers reduce emissions andenhance their resilience to a changing climate. We support anorderly transition that recognises and responds to social impacts.
This aligns with our purpose to shape a world in which people andcommunities thrive.

CUSTOMER ENGAGEMENT
We have engaged with 100 of our largest emitting businesscustomers, supporting them to establish and, where appropriate,
strengthen existing transition plans.
Customers have valued our engagement on this topic, and ourperspectives. A number of customers outside of the 100 havesought to engage with us, seeking clarity on our expectations,or requesting suggestions to improve their approach.

Within each industry our customers have different starting points.
Since this initial assessment, nine customers have sufficiently
improved their governance, strategies and targets or disclosures,
leading to an improved ranking. Many other customers have also
clearly demonstrated improvement since their initial assessment.
For example, we observed a rise in the intention to develop ‘Parisaligned’ or ‘science-based’ targets or report under the TCFD
framework, and a similar rise in interest in engaging with ANZ
on this topic.

“Coles believes that sustainable businesses are
better businesses, and our Sustainability-Linked
Loans reflect our commitment to working withall our stakeholders to make positive changes.
“The SLL incentive structure is linked to ourprogress against company-wide sustainability
goals, with delivery of those goals delivering
improved cost of capital, therefore being aneffective tool to drive sustainability throughout
our business.”• Climate change identified as a Principal Risk andUncertainty in our UK Disclosure and Transparency
Rules (DTR) Submission• Guidelines and training provided to over 1,000 of
our Institutional bankers on customers’ transition
plan discussions• Enhanced financial analysis and stronger credit approvalterms applied to agricultural property purchases inregions of low average rainfall or measured variability• New agribusiness customers assessed for financial
resilience and understanding of rainfall and climate
trends in their area, and water budgets considered
if irrigating• Support 100 of our largest emitting business customers
to establish or strengthen low carbon transition plansby 2021, with metrics developed to track progress

Metrics and targets

While we consider this to be good progress, we understand there is
still much to be done. That is why we have committed to continue
supporting these larger emitting customers to implement and,
where appropriate, strengthen their low carbon transition plans andenhance their efforts to protect biodiversity, by end 2024. As part ofthis engagement we expect that more customers will improve theirplans to a developing/intermediate, or advanced stage over the
next three years.

• Include climate risk reference in lending
guidance documents for relevant
industry sectors used by our frontline bankers• Low carbon products and services within our
Institutional business focused on climate-related
opportunities• Climate change risk added to Group and Institutional
Risk Appetite Statements

In late August 2021, ANZ worked as a Joint Sustainability
Coordinator on Coles’ $1.3bn sustainability-linked loans, thefirst within the supermarket sector in Australia and the largest
in the local market.

Commenting on the deal, Coles Chief Financial Officer,
Leah Weckert, said:• Participated in APRA’s climate vulnerability assessment(CVA) to assess portfolio transition and physical risks• Extending analysis of flood-relatedrisks to incorporate bushfire andother risks relating to retail customers
through the CVA

Beyond 2022 vision• ANZ business strategy
to grow in a way thatis more closely aligned
to a resilient andsustainable economy
that supports theParis Agreement
goals and Sustainable
Development
Goals (SDGs)• Analysis of flood-related risks for our home loan portfolio
in a major regional location of Australia and associatedtest-pilot of socio-economic indicators showing financial
resilience of home loan customers with respect toflood risk

Having banked Coles since its demerger from Wesfarmers in
2018, we are supporting the retailer’s ambition to minimise its
environmental footprint and mitigate the environmental andsocial impacts of climate change.

Coles replaced $1.3bn of its existing bank debt facilities withsustainability-linked loans to draw a direct link between its
sustainability performance and its cost of capital, providing
transparency and accountability as it works to achieve its
sustainability targets.

• Ethics and Responsible Business Committee (executive
management) oversees our approach to environment,social and governance (ESG) risks and opportunities,
and reviews climate-related risks• Managing the net zero carbon transition focuses onan orderly transition that recognises and responds tosocial impacts

Risk management

Following initial engagement, customer transition plans weregrouped into levels of maturity – advanced, developing/intermediate, underdeveloped/starting out, and no public plans.

Food, liquor and convenience retailer Coles is one ofAustralia’s most trusted brands with an average of 20 million
customer transactions each week across its network of almost
2,500 stores and its online platforms.
In March 2021, Coles launched its Together to Zerosustainability ambitions. A focus area is Together to zero
emissions underpinned by new targets to accelerate climate
action and reduce greenhouse gas emissions, as well as its
ambition to deliver net zero greenhouse gas emissions by
2050 and its target to have the entire Coles Group poweredby 100% renewable electricity by the end of FY25.

• Board Ethics, Environment, Social and Governance(EESG) Committee approves climate-related objectives,
policy and targets• ANZ’s Climate Change Statement (available at anz.com)
confirms support for the Paris Agreement goals andtransition to a net zero carbon economy

Strategy

Our climate change statement outlines our approach andcommitments in support of a global transition to net zero. We
are reviewing our position. Our updated position will be released
prior to our Annual General Meeting, together with our 2021
Climate-related Financial Disclosures (our fifth report using therecommendations of the Task Force on Climate-related Financial
Disclosures (TCFD)), available at anz.com/annualreport.

CASE STUDY

GovernanceOur approach to climate change• Metrics to enable our progress to be tracked in reducing‘financed emissions’, beginning with two key sectors:
large-scale commercial property and power generation.
Metrics are tailored to each sector (e.g. carbon emissions
per square metre of net lettable space for commercial
property) and disclosed every 12 months• $50 billion target to fund and facilitate sustainable
solutions by 2025
• Target to procure 100% renewable electricity for ANZ’soperations by 2025

• Encouraging and supporting 100 of
our largest emitting business customers
to implement and, where appropriate,
strengthen their low carbon transition
plans and enhance their efforts toprotect biodiversity, by end 2024

• Further integrateassessment ofclimate-relatedrisks into our Grouprisk management
framework• Customer engagement to identify
customer or sector-specific transitionor physical risks, focused on corporate
and Institutional customers• Standard discussions
with businesscustomers include
climate-related risks
and opportunities• Further develop an enhanced climate
risk management framework thatstrengthens our governance andanticipates potential climate-related
impacts and associated regulatory
requirements• Complete transition plan engagementwith high emitting customers andconsider how to integrate into ourregular customer assessments• Implement targets to reduce metrics
for ‘financed emissions’ in key sectors
by 2030 towards a long-term net zero
goal by 2050
• Consider expanding new metrics formeasuring impact of our progress onenvironmental sustainability to otherkey sectors• Assessment ofcustomer transition
plans part of standard
lending decisions andportfolio analysis• Continue to evolve ourreporting with leading
practices to measure
the alignment of ourlending with the Paris
Agreement goals• Reduce ANZ’soperational emissions
in line with thedecarbonisation
trajectory of the Paris
Agreement goals• Ongoing emissions reduction targets for ANZ energy
use aligned with the Paris Agreement goals
38

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Governance
CORPORATE GOVERNANCE FRAMEWORKSHAREHOLDERSPaul O’Sullivan

Shayne Elliott

Chairman, Independent
Non-Executive Director

Chief Executive Officer,
Executive Director

Ilana Atlas, AO

Paula Dwyer

Independent
Non-Executive Director

Independent
Non-Executive Director

Jane Halton, AO PSM

RT Hon Sir John Key,GNZM AC

BOARD OF DIRECTORS

Audit
Committee

Ethics, Environment,
Social and GovernanceCommittee

Risk
Committee

Human
Resources
Committee

Digital Businessand Technology
Committee

Nomination and
Board Operations
Committee

Board reserved powers and delegation of authority

CHIEF EXECUTIVE OFFICERGROUP EXECUTIVE COMMITTEE

BOARD OF DIRECTORS

ANZ’s strong governance frameworkprovides a solid structure for effective
and responsible decision-making
within the organisation.
The Board is responsible for the oversight of ANZ
and its sound and prudent management, withspecific duties as set out in its charter available
at anz.com/corporategovernance.
There are six principal Board Committees –the Audit Committee, the Ethics, Environment,

Social and Governance Committee, the Risk Committee,
the Human Resources Committee, the Digital Business andTechnology Committee and the Nomination and Board
Operations Committee.

Independent
Non-Executive Director

Independent
Non-Executive Director

Each Committee has its own charter setting out its roles
and responsibilities. At management level, the Group
Executive Committee comprises ANZ’s most senior
executives. There is a delegations of authority frameworkthat clearly outlines those matters delegated to the CEO
and other members of senior management.
For further detail on ANZ’s governance framework see
our 2021 Corporate Governance Statement available atanz.com/corporategovernance.
Graeme Liebelt

John Macfarlane

Independent
Non-Executive Director

Independent
Non-Executive Director

Full biography details can be found on our website at anz.com/directors and on pages 46-50 of this report.

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Executive Committee

Directors’ meetings
The number of Board, and Board Committee, meetings held during the year and each Directors’ attendance at those meetings are set out below:

Board

Risk
Committee

Audit
Committee

Human
Resources
Committee

Ethics,Environment,
DigitalSocial and Business andGovernance Technology
Committee
Committee

SpecialCommitteeof the Board

Nominations
Committee
and Boardof the Board1 Operations

SharesCommittee1

A

A

B

A

B

A

B

A

B

A

B

A

B

A

B

Paul O’Sullivan

15

15

9

9

8

8

5

5

4

4

6

6

4

4

Ilana Atlas, AO

15

15

9

9

5

5

5

5

Paula Dwyer

15

15

9

9

5

5

Shayne Elliott

15

15David Gonski, AC22

2Jane Halton, AO PSM

15

15

RT Hon Sir John
Key, GNZM AC

15

13

9

8

Graeme Liebelt

15

15

9

9

9

9

John Macfarlane

15

15

9

9

9

9

9

1

9

1

1

1

1

1

1

1

5

5

5

5

6

5

5

6

5

4

4

2

2

4

4

2

2

A

B

A

B

3

3

2

2

3

3

1

1

3

3
1

1

1

1

6

3

3

6

3

3

5
6

B

6

4

4

3

3

4

4

3

3

Maile Carnegie

Chief Executive Officer(appointed CEO on
1 January 2016)

Group Executive Digital andAustralia Transformation

Joined the Executive
Committee* on 1 June 2009

Joined the
Executive Committee
on 27 June 2016

Kevin Corbally

Farhan Faruqui

Group Chief Risk Officer

Chief Financial Officer(appointed CFO on
11 October 2021)
Joined the Executive Committee
on 1 February 2016

Joined the
Executive Committee
on 19 March 2018

Column A Indicates the number of meetings the Director was eligible to attend as a member. Column B Indicates the number of meetings attended. The Chairman became an ex-officio
member of the Risk, Audit, Human Resources, Ethics, Environment, Social and Governance, Digital Business and Technology and Nomination and Board Operations Committees on 28 October
2020, upon David Gonski’s retirement. With respect to Committee meetings, the table above records attendance of Committee members. Any Director is entitled to attend these meetings
and from time to time Directors attend meetings of Committees of which they are not a member.
1. The meetings of the Committee of the Board and Shares Committee as referred to in the table above include those conducted by written resolution. 2. David Gonski retired as Chairman
and as a Non-Executive Director on 28 October 2020.

“The Board has remained responsive to the continuing
disruption brought about by the COVID-19 pandemic,
allocating appropriate time throughout the year
for open and transparent discussions at Board andCommittee meetings in alignment with ANZ’s purpose,and to facilitate greater focus on the achievementof the Bank’s long-term strategy.”Paul O’Sullivan | Chairman

Shayne Elliott

Gerard Florian

Emma Gray

Group Executive
Technology

Group Executive
Data and Automation

Joined the
Executive Committee
on 30 January 2017

Joined the
Executive Committee
on 1 May 2020

Mark Hand

Kathryn van der Merwe

Group Executive Australia Retailand Commercial Banking

Group Executive Talent &Culture and Service Centres

Joined the
Executive Committee
on 15 May 2018

Joined the
Executive Committee
on 1 May 2017

Antonia Watson

Mark Whelan

Chief Executive Officer
New ZealandGroup Executive
Institutional

Joined the
Executive Committee
on 17 June 2019

Joined the
Executive Committee*
on 20 October 2014

Full biography details can be found on our website at anz.com/exco.
*previously known as Management Board.

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Board areas of focus
The Board and its Committees engage in key strategic, governanceand oversight activities each year. The topics below are illustrative
to provide stakeholders with an insight into some of the key
matters considered by the Board and its Committees during2021 and are not intended to be a comprehensive list.

Risk, regulation
and reputation
The Board and its Committees also continued to oversee
the important work carried out by management toprogress ANZ’s risk governance roadmap. Management
provided regular reports on progress, as well as ANZ’s
approach to improving and simplifying organisationaland risk culture.

Strategy and the future

COVID-19 pandemic

The Board and its Committees continued to focus on
longer-term strategic matters. During the year, Directors
participated in three specific Board strategy sessions,using internal and external experts to provide different
points of view. The sessions included assessing theexternal operating, technological, economic andcompetitive environment and challenging ANZ’slong-term response and plans.

The Board and its Committees continued to play
an active role in providing oversight of the impactof, and ANZ’s response to, the COVID-19
pandemic, including:

The Board regularly discussed and revisited ANZ’s strategic
and growth priorities, including adjusting the Board agenda toensure appropriate, distinct and continuous focus on growthmatters at each Board meeting.
As a key part of this, the Board regularly discussed andprovided oversight with respect to ANZ’s approach to thelong-term transformation of its Australian business, including
technology and digital-related matters. The Board received‘deep dives’ into the design of the technology to best meetcustomer needs, and the Board, utilising the breadth of focus
of its Committees received numerous reports overseeing
key aspects of the transformation, including testingand implementation.
An additional important focus of the Board during theyear was succession planning and development focus inrespect of ANZ’s most senior executives, and in respectof its own composition.

44• The relief measures in place to support our customers,
including customer take up, delivery andongoing communications.
• The impact of COVID-19 on the economy, domestic
and international, considering both the immediateand longer-term impacts.
• The impact of the pandemic on our people, andthe different geographic responses undertaken in
the jurisdictions in which we operate. This included
consideration of vaccination trends, the futureof the workplace and actions required to protect
and support our people operating remotely.

As part of this, the Board approved ANZ’s approach to risk culture
and what ANZ’s target risk culture is, with the Risk Committee
providing ongoing oversight of work to achieve that, with the
Human Resources Committee and Board continuing to focus on
and discuss Management’s actions to strengthen and simplify
ANZ’s broader organisational culture.
The Board also met with ANZ’s key Australian regulators during
the course of the year with the purpose of maintaining
constructive and two-way dialogue.
As a key aspect of ensuring the correct focus on ANZ’s strategy
and growth, the Board regularly discussed second and third line’s
assessment of the risks associated with the implementationof ANZ’s strategic transformation agenda.
The Board and its Committees continued to review ANZ’s
approach and performance in relation to compliance aswell as reviewing ANZ’s preparedness for regulatory change,
including in relation to breach reporting, design and distribution
obligations and responsible lending laws. It also received regulareducation and briefing materials on key areas such as anti-money
laundering and counter-terrorism financing, competition law,whistleblowing and cyber security.
The Board also discussed and reviewed the current statusof embedding ANZ’s purpose throughout the business,reflecting on progress since its introduction five years ago.
The Board considered and discussed ‘how we bank’ –with an ethical and Environment, Social and Governance(ESG) lens, including ESG focus areas, customers experiencing
vulnerability, product suitability, accessibility and diversity and
our COVID-19 Statement of Intent. The Board also considered‘who we bank’, through industry sector and country specificreviews, human rights policy and modern slavery and climatechange policy.

Financial/Operational
While the Board and its Committees have had a strong
focus on the long-term future of the Group, the Board(and its Committees) maintains an equally strong focus
on the current performance of the Group, including:• Reviewing, challenging and ultimately endorsing ANZ’soperating and strategic plans, both annual and longer-term,
including in relation to ANZ’s investment and business as
usual cost ambitions.
• Regularly discussing merger and acquisitions matters.
• Providing oversight of key capital management matters,
including the approval of the issue of Capital Notes 6 and
ANZ’s on-market share buyback.
• Developing and implementing standardised Business
Performance Templates for discussion at each Board
meeting with the Group Executives leading each of
ANZ’s major businesses.

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Directors’ qualifications, experienceand special responsibilities
As at the date of this report, the Board
comprises seven Non-Executive Directors
and one Executive Director, the Chief
Executive Officer. The names of thecurrent Directors, together with detailsof their qualifications, experience andspecial responsibilities are set out below.
It was announced in August 2021 that
one of Australia’s leading non-executive
directors, Christine O’Reilly, will join
the Board on 1 November 2021 as a
Non-Executive Director. Following her
appointment, Christine will stand forelection as a Director at ANZ’s AGM
on 16 December 2021.

Audit Committee

Paul O’Sullivan

Shayne Elliott

Chair

Chair

MemberMemberPosition

Position

Position

Chairman, Independent Non-Executive Director

Chief Executive Officer and Executive Director

Independent Non-Executive Director

Qualifications

Qualifications

Qualifications

BA (Mod) Economics, Advanced
Management Program of Harvard

BCom

BJuris (Hons), LLB (Hons), LLM

Responsibilities

Responsibilities

Responsibilities

Chief Executive Officer and Executive Director
since 1 January 2016.

Non-Executive Director since September 2014.
Ilana is Chair of the Human Resources Committee and is amember of the Audit Committee, Ethics, Environment, Socialand Governance Committee and Nomination and Board
Operations Committee.

Chairman since October 2020 and a Non-Executive
Director since November 2019.
Paul is an ex-officio member of all Board Committees
and Chair of the Ethics, Environment, Social andGovernance Committee and Nomination
and Board Operations Committee.

CareerEthics, Environment, Socialand Governance Committee

Risk Committee

Human Resources Committee

Digital Business andTechnology Committee

Nomination and Board
Operations Committee

Ilana Atlas, AO

Paul has experience in the telecommunications and oil andgas sectors, both in Australia and overseas. He has held senior
executive roles with Singapore Telecommunications (Singtel) andwas previously the CEO of Optus. He has also held management
roles with the Colonial Group and the Royal Dutch Shell Group in
Canada, the Middle East, Australia and United Kingdom.

Relevant other directorships
Chairman: Singtel Optus Pty Limited (from 2014, Director from2004) and Western Sydney Airport Corporation (from 2017).
Director: St Vincent’s Health Australia (from 2019) and Australian
Tower Network Pty Ltd (from 2021).

Relevant former directorships held in last three years include
Former Director: Telkomsel Indonesia (2010–2020), Healthscope
Limited (2016–2019), National Disability Insurance Agency(2017–2020) and Coca-Cola Amatil (2017–2021).
Age 61 years

Residence Sydney, Australia

Career
Shayne has over 30 years’ experience in banking in Australia andoverseas, in all aspects of the industry. Shayne joined ANZ as CEO
Institutional in June 2009, and was appointed Chief Financial
Officer in 2012.
Prior to joining ANZ, Shayne held senior executive roles at EFG
Hermes, the largest investment bank in the Middle East, which
included Chief Operating Officer. He started his career with
Citibank New Zealand and worked with Citibank/Citigroup for
20 years, holding various senior positions across the UK, USA,
Egypt, Australia and Hong Kong.
Shayne is a Director of the Financial Markets Foundation forChildren and a member of the Australian Banking Association,
the Business Council of Australia and the Australian Customs
Advisory Board.

Relevant other directorships

CareerIlana brings a strong financial services background and legal
experience to the Board. Ilana was a partner at law firm Mallesons
Stephen Jaques (now King & Wood Mallesons), where in addition to
her practice in corporate law, she held a number of management
roles in the firm including Executive Partner, People andInformation, and Managing Partner. She also worked at Westpac for
10 years, where her roles included Group Secretary and GeneralCounsel and Group Executive, People, where she was responsible
for human resources, corporate affairs and sustainability. Ilana has
a strong commitment to the community, in particular the artsand education.

Relevant other directorships
Chairman: Jawun (from 2017, Director from 2014).

Director: ANZ Bank New Zealand Limited (from 2009) andthe Financial Markets Foundation for Children (from 2016).

Director: Paul Ramsay Foundation (from 2017), Scentre Group(from 2021) and Origin Energy Limited (from 2021).

Member: Business Council of Australia (from 2016), the Australian
Banking Association (from 2016, Chairman 2017–2019) and theAustralian Customs Advisory Board (from 2020).

Member: Panel of Adara Partners (from 2015).

Age 57 years

Residence Melbourne, Australia

Relevant former directorships held in last three years include
Former Chairman: Coca-Cola Amatil Limited (2017–2021,
Director from 2011).
Former Director: Westfield Corporation Limited (2014–2018) and
OneMarket Limited (2018–2019).
Former Fellow: Senate of the University of Sydney (2015–2019).
Age 67 years

46

Residence Sydney, Australia

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Paula Dwyer

Jane Halton, AO PSM

Chair

Chair

MemberMemberMemberMemberPosition

Position

Position

PositionIndependent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

Qualifications

Qualifications

Qualifications

Qualifications

BCom, FCA, SF Fin, FAICD

BA (Hons) Psychology, FIPAA, Hon. FAAHMS,
Hon. FACHSE, Hon. DLitt, FAIM , FAICD

BCom, DCom (Honoris Causa)

BEc (Hons), FAICD, FTSE, FIML

Responsibilities

Responsibilities

Responsibilities

Non-Executive Director since February 2018. Sir John is amember of the Ethics, Environment, Social and GovernanceCommittee, Risk Committee, Digital Business and Technology
Committee and Nomination and Board Operations Committee.

Non-Executive Director since July 2013. Graeme is Chair of
the Risk Committee and is a member of the Audit Committee,
Human Resources Committee and Nomination and Board
Operations Committee.

Career

Career

Sir John was Prime Minister of New Zealand from 2008 to 2016,
having commenced his political career in 2002. Sir John had a longcareer in international finance, primarily for Bankers Trust in New
Zealand and Merrill Lynch in Singapore, London and Sydney. He
was previously a member of the Foreign Exchange Committeeof the Federal Reserve Bank of New York (from 1999 to 2001).

Graeme brings to the Board his experience of a 23-year executive
career with Orica Limited (including a period as Chief Executive
Officer), a global mining services company with operations in morethan 50 countries. He has extensive international experience anda strong record of achievement as a senior executive, including instrategy development and implementation. Graeme is committed
to global trade and cooperation, as well as community education.

Responsibilities
Non-Executive Director since April 2012. Paula is Chair of the
Audit Committee and is a member of the Risk Committee,
Human Resources Committee and Nomination and Board
Operations Committee.

CareerPaula has extensive experience in financial markets, corporate
finance, risk management and investments, having held senior
executive roles at Calibre Asset Management, Ord Minnett (now J P
Morgan) and at Price Waterhouse (now PricewaterhouseCoopers).
Her career as a company director spans financial services,
investment, insurance, healthcare, gambling and entertainment,
fast-moving consumer goods, property and construction andretail sectors. Paula has a strong interest in education and medical
research, having served as a member of the Geelong Grammar
School Council and the Business and Economics Faculty at the
University of Melbourne and as Deputy Chairman of Baker IDI.

RT Hon Sir John
Key, GNZM AC

Graeme Liebelt
Chair

Non-Executive Director since October 2016. Jane is Chair of theDigital Business and Technology Committee and is a member ofthe Human Resources Committee, Ethics, Environment, Socialand Governance Committee and Nomination and Board
Operations Committee.

CareerJane’s 33 year career in the public service includes the positionsof Secretary of the Australian Department of Finance, Secretary of
the Australian Department of Health, Secretary for the Department
of Health and Ageing, and Executive Co-ordinator (Deputy
Secretary) of the Department of the Prime Minister and Cabinet.
She brings to the Board extensive experience in finance, insurance,risk management, information technology, human resources,
health and ageing and public policy. She also has significant
international experience.

Sir John was made a Knight Grand Companion of the New ZealandOrder of Merit in the 2017 Queen’s Birthday Honours. In 2017 Sir
John became a Companion of the Order of Australia for advancing
the Australia-New Zealand bilateral relationship.

Jane has contributed extensively to community health throughlocal and international organisations including the World HealthOrganisation and National Aboriginal and Torres Strait Islander
Health Council.

Relevant other directorships

Relevant other directorships

Relevant former directorships held in last three years include

Relevant former directorships held in last three years include

Chairman: Vault Systems (from 2017), Coalition for Epidemic
Preparedness Innovations (Norway) (from 2018, Member
from 2016) and Council on the Ageing Australia (from 2017).

Former Chairman: The International Democratic Union(2014–2018).

Former Chairman: Tabcorp Holdings Limited (2011–2020,
Director from 2005) and Healthscope Limited (2014–2019).

Director: Clayton Utz (from 2017), Crown Resorts Limited(from 2018) and Naval Group Australia Pty Ltd (from 2021).

Age 61 years

Member: Executive Board of the Institute of Health Metrics
and Evaluation at the University of Washington (from 2007).

Relevant other directorships
Chairman: Kin Group Advisory Board (from 2014) andAllianz Australia Limited (from 2020, Director from 2019).
Director: Lion Pty Ltd (from 2012).
Member: Kirin International Advisory Board (from 2012) andAustralian Government Takeovers Panel (from 2017).

Residence Melbourne, Australia

Chairman: ANZ Bank New Zealand Limited (from 2018,
Director from 2017).
Director: Palo Alto Networks (from 2019).

Relevant other directorships
Chairman: Amcor Limited (from 2013, Director from 2012).
Director: Australian Foundation Investment Company Limited(from 2012) and Carey Baptist Grammar School (from 2012).

Relevant former directorships held in last three years include
Former Chairman: DuluxGroup Limited (2018–2019, Director
from 2016).
Age 67 years

Residence Melbourne, Australia

Former Director: Air New Zealand Limited (2017–2020).
Age 60 years

Residence Auckland, New Zealand

Adjunct Professor: University of Sydney and Universityof Canberra.
Council Member: Australian Strategic Policy Institute (from 2016).

Relevant former directorships held in last three years include
Former Member: National COVID-19 Commission Advisory Board(2020–2021).
Age 61 years

48

Residence Canberra, Australia

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John Macfarlane

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONCOMPANY SECRETARIES’QUALIFICATIONS AND EXPERIENCE
Currently there are two people appointed as Company Secretariesof the Company. Details of their roles are contained in the Corporate
Governance Statement.

Member

Their qualifications and experience are as follows

Position

Ken Adams

Independent Non-Executive Director

Qualifications
BCom, MCom (Hons)

Position

Responsibilities

Group General Counsel

Non-Executive Director since May 2014. John is a memberof the Audit Committee, Risk Committee, Digital Businessand Technology Committee and Nomination and Board
Operations Committee.

Qualifications

CareerJohn is one of Australia’s most experienced international bankers
having previously served as Executive Chairman of Deutsche Bank
Australia and New Zealand, and CEO of Deutsche Bank Australia.
John has also worked in the USA, Japan and PNG, and brings to
the Board a depth of banking experience in ANZ’s key markets inAustralia, New Zealand and the Asia Pacific. He is committed tocommunity health, and is a Director of the Aikenhead Centre of
Medical Discovery Limited (from 2016).

BA, LLB, LLM
Ken joined ANZ as Group General Counsel in August 2019, having
assisted ANZ with major legal issues for over 10 years. Prior to ANZ,
Ken was a Partner of Freehills and later Herbert Smith Freehills for
21 years, and for six years was a member of the Herbert Smith
Freehills Global Board. Ken is one of Australia’s leading commercial
lawyers with significant experience in class actions and othercomplex legal issues. He holds a Master of Laws from the Universityof Melbourne and is a co-author of Class Actions in Australia.

Relevant other directorships
Director: Colmac Group Pty Ltd (from 2014), AGInvest Holdings
Limited (MyFarm Limited) (from 2014, Chairman 2014–2016),
Balmoral Pastoral Investments (from 2017) and L1 Long Short
Fund (from 2018).

Simon Pordage

Relevant former directorships held in last three
years include

Position

Former Director: St Vincent’s Institute of Medical Research(2008–2018) and Craigs Investment Partners Limited (2013–2020).

Qualifications

Age 61 years

Residence Melbourne, Australia

The COVID-19 pandemic has
continued to impact our operating
environment. Our Risk Management
Framework has underpinned our
response during this challenging
time and has enabled us to maintainsound risk management practices.
Over the last year we have continued to invest in our Risk
Management Framework, processes and systems, strengthening ourability to respond to changes in existing risks, and to deal with newrisks as they arise in our increasingly complex external environment,
including those discussed below.

COVID-19
We have maintained a range of support measures to assist
employees and customers, and to deliver safe and secure operations
throughout the pandemic. The Risk function has helped with thetransition of staff to remote working, or conversely, their return tothe office. We are continuing to assess the implications of ‘living with
COVID’, which is still evolving. The Risk function has also partneredwith our divisions to protect the bank through the management ofcredit risk associated with customer COVID-19 support, as well as
industry deep dives and portfolio reviews.
We recognise the mental health and wellbeing risks associatedwith staff fatigue after almost two years of COVID-induced change.
We are working together with our Talent & Culture team to ensure
appropriate supports are in place. For further detail on how we havesupported our people see page 30.

RISK CULTURE

Company Secretary
LLB (Hons), FGIA, FCG (CS, CGP)
Simon joined ANZ in May 2016. He is a Chartered Secretary andChartered Governance Practitioner and has extensive company
secretarial and corporate governance experience. From 2009
to 2016 he was Company Secretary for Australian Foundation
Investment Company Limited and a number of other listed
investment companies. Other former roles include being Deputy
Company Secretary for ANZ and Head of Board Support for
Barclays PLC in the United Kingdom.
He is a formal brand ambassador for, and is a former National
President and Chairman of, Governance Institute of Australia,
and is a member and former Chairman of its National Legislation
Review Committee. Simon is committed to the promotion andpractice of good corporate governance, and regularly presents
on governance issues.

50

Risk management

We strive for a risk culture where our employees demonstrate theright risk behaviours, have clear risk roles and responsibilities and areenabled by effective policies and processes. This year we conducted
an internal Risk Culture survey for the first time. The survey gathered
the perceptions of target risk behaviours from more than 24,000
employees. We have undertaken a lot of work over the past three
years to encourage a strong ‘speak up’ and risk culture and,pleasingly, responses to the survey confirmed our people believe
they can speak up and challenge each other respectfully if they
see unethical behaviour, with over 80% of staff expressing a very
positive sentiment for ANZ’s risk culture.
Risk culture (as a critical component of our organisational culture)remains an important focus. We have refined our risk culture
principles and defined our target risk culture. A framework forassessing each risk culture principle is embedded across theorganisation and incorporates desired risk behaviours andbusiness and risk outcomes. Risk culture maturity is assessed at anorganisational level, as well as divisional and functional levels, withrisk culture plans in place to address identified gaps. Risk culture
goals have been set to monitor progress and drive sustainablechange towards our aspirational culture.
A priority this year has been transforming behaviours throughformal mechanisms (including systems, structures, policies,
procedures and processes) as we seek to ensure leadersdemonstrate accountability for managing risk within a ‘speak up’environment, with clear consequence management processes.
Guided by our purpose, our behaviours help us to bring our values
to life and to execute our strategy. To further strengthen and evolve
our risk culture, this year the Enterprise Accountability Group(see page 30) recognised over 40 individuals as role modelling
outstanding risk behaviours for their work to manage and mitigate
the organisation’s risks and their continuous improvement of our risk
culture. The recognition provided included personalised messages
from the CEO, the opportunity to meet with the Board and ExCoand having their achievements profiled on our intranet and ininternal newsletters .

CONDUCT RISK
Providing our products and services in a manner that delivers faircustomer outcomes and promotes market integrity is integral to ourstrategy. This year Conduct Risk was elevated as a key material risk
for the bank, highlighting its importance in our Risk Management
Framework. In addition to key initiatives to strengthen our Conduct
Risk management approach, our Code of Conduct was enhanced
to provide clear guidance to our people. For example, there is
guidance relating to some of the ethical considerations employees
may encounter in daily decision-making, when dealing withcustomers and/or undertaking market activities – we expect
our people to consider not only whether ‘can we’ do something,
but also 'should we'?

LINKS TO 2021 GROUPPERFORMANCE FRAMEWORKOur already strong risk management framework enabled ANZ tocontinually manage the evolving risks presented by COVID-19.
Clear progress continues to be made on risk culture maturity,evidenced in employee engagement scores including ‘Mybusiness leaders demonstrate personal accountability for
managing risk and sound risk behaviours’ (87%) and ‘I can raiseissues and concerns in ANZ without fear of reprisals or negative
consequences’ (80%), exceeding the record highsreached in 2020.

These results are the product of sustained efforts over several
years to encourage a speak up and risk culture where people feelthey can challenge each other respectfully. Sound progress has
been made in addressing the findings of the Risk GovernanceSelf-Assessment and on key regulatory/non-financial risk
projects. However, a $500 million APRA capital overlay remains inplace pending confirmation of an improvement in operationalrisk management across the bank.
See section 4.5.3 of the Remuneration
Report for more details.

ANZ 2021 Annual Report

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NON-FINANCIAL RISKWe are improving how we manage our obligations and operationalrisks by strengthening our non-financial risk, control, governanceand compliance focus in line with our Risk Management Framework.
This year, to further enhance non-financial risk management, wehave adopted a new taxonomy into our Operational and Compliance
Risk Framework. Our Compliance and Operational Risk Strategy
provides a comprehensive, proactive and well-planned approachto improving our management of non-financial risk by driving
transformation across our processes, policies, systems and people,
guided by our purpose and contributing to the bank’s strategic
priority to improve the financial wellbeing of our customers.
Last year we reviewed our Risk Appetite Statement (RAS) metrics
to ensure appropriate coverage of our non-financial risks. The
review concluded earlier this year, with the Board Risk Committee
approving a collection of over 36 metrics and indicators. This is anincrease from 12 prior to the review, and demonstrates the growing
importance of non-financial factors in helping inform decisions
within our Risk function.
We have developed and launched a new tool that streamlines how
we capture and report against the RAS metrics, reducing the time ittakes from weeks to days. In addition, we developed a purpose-built
dashboard to support the proactive management of our risk
appetite using trend analysis technology.
These changes have provided our Board Risk Committee andmanagement with greater visibility and control over our nonfinancial risk appetite.

FINANCIAL CRIME
We continue to improve our financial crime risk management
program. We have invested significantly in enhancing data analytics
capability for the bank, creating a central Financial Crime Data Hub
and Intelligence ecosystem that uses a range of analytical tools,
including:• Network and link analysis capability – using these tools we canbetter detect syndicated crimes and demonstrate a ‘big picture’view of criminal activity• Dynamic algorithms – using agile monitoring and detection
solutions, we can detect changes in customer behaviours,
which can assist AUSTRAC and police investigations.
F urther information on financial crime is available inour 2021 ESG Supplement at anz.com/annualreport.
EMERGING RISKS
Two risks that continue to evolve and that we are paying particularattention to are:
Cyber security risk: We take the security of our bank, ourcustomers and our customers’ information very seriously. Cyber
security threats continue to be significant and our approach to
mitigating cyber security risk involves a range of controls relying
on people, technology and process. We are continually testing
our defences internally and through independent third parties. We
have a very sophisticated cyber security protection capability andhave invested heavily in a range of recognised industry practices
and technologies, processes and defences. In addition, we arecooperating with our counterparts, governments and associated

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

entities around the world to protect against cyber security threats,
which have increased since COVID-19 and the consequent shift
to digital banking and remote working.
We are now blocking around 16 million malicious emails a month –compared to about four million pre-COVID-19 in October 2019.

CYBER SCAMMERS ON THE RISEOUR RISK MANAGEMENT FRAMEWORKThe Board is ultimately responsible for establishing and overseeing
the Group’s Risk Management Framework (RMF) which is supportedby the Group’s underlying systems, structures, policies, procedures,processes and people. The Board has delegated authority to theBoard Risk Committee (BRC) to develop and monitor compliancewith the Group’s risk management policies. The Committee reports
regularly to the Board on its activities. The key pillars of the Group’s
RMF include:

A publication released by the Australian Cyber Security
Centre (ACSC) shows total losses for the 2020–21 financial
year were approximately $81million, an increase of nearly
15% from the previous financial year. Average loss per
successful BEC transaction also increased by 54%.

• The Risk Management Statement (RMS), which describes theapproach for managing risks arising from the Group’s purpose andstrategy and the key elements of the RMF that give effect to thatstrategy. The RMS includes: how the risk function is structured tosupport the Group’s purpose and strategy, and the execution of
the Group Chief Risk Officer’s prescribed responsibilities as an
Accountable Person for the Group under the Banking Executive
Accountability Regime; the values, attitudes and behaviours
required of employees in delivering on strategic priorities; adescription of each material risk; and an overview of how the
RMF addresses each risk, with reference to the relevant policies,
standards and procedures. It also includes information on how
the Group identifies, measures, evaluates, monitors, reports
and then either controls or mitigates material risks.

To assist our customers to protect their businesses against
these types of scams, we encourage them to take a numberof steps including making an organisational PACT1 to protect
their virtual valuables. In addition, we are educating ourcustomers on data protection and privacy through focused
campaigns, threat intelligence newsletters and cyber security
business guide books.

BOARD OF DIRECTORS

There has been a significant increase in ‘business email
compromise’ (BEC), with cyber scammers targetingtransactions and payment systems by intercepting businesscorrespondence.
Many of these compromised emails appear to represent
existing suppliers, customers and professional advisors suchas accountants or lawyers, and request changes to accountor payment details.

Climate change risk: The financial risks associated with climatechange remain a key focus. We have set a public ESG target todevelop an enhanced risk management framework that anticipates
potential climate-related impacts, and associated regulatory
requirements, by the end of 2022. To help deliver on this target,
a number of work streams have been established, including
regulatory monitoring and carbon metrics. A new Climate Advisory
and Coordination Forum, which is Chaired by the Group Executive,
Institutional and includes the Group Chief Risk Officer, has also
overseen the development of an updated climate change
statement that will be released prior to our Annual General Meeting.
We are continuing to work with our customers to better understandhow they are transitioning to a low carbon future. We have now
engaged with 100 of our largest emitting business customers toencourage and support them to develop their low carbon transition
plans. The majority of the 100 customers recognise climate change
risk and have started their transition plan ‘journey’. Some customers
have advanced plans towards net zero by 2050. We are using
what we learn from this customer engagement to inform how
we manage the risks in higher emitting customer portfolios.
We are participating in APRA’s Climate Vulnerability Assessment(CVA), which examines the material exposures and financial risks
that banks, the financial system and economy may face due toclimate risks. APRA’s CVA comprises two stress tests, counterparty
assessment and data assessment. APRA intends to disclose theoutcomes of the CVA in 2022, which may also be used to informfuture supervisory guidance.

• The Risk Appetite Statement (RAS), which sets out the Board’s
expectations regarding, for each material risk, the maximum levelof risk that the Group is willing to accept in pursuing its strategic
objectives and its operating plans considering its stakeholders’,
depositors’ and customers’ interests.
• The Risk Culture, an important component of the Group’s
organisational culture and an intrinsic part of the Group’s RMF.
The Group operates a Three Lines-of-Defence Model in regard to risk
management, helping to embed a culture where risk is everyone’s
responsibility.
The business has first line of defence responsibility for day-to-day
ownership of risks and controls and accountability for
implementation and ongoing maintenance of the RMF.
The Group Risk (including Compliance) teams form the second lineof defence, providing independent oversight of the Group’s risk
profile and RMF.
Internal Audit is the final line of defence, providing independent
evaluation and assurance on the appropriateness, effectiveness andadequacy of the Group’s RMF.
The governance and oversight of risk management, while embeddedin day-to-day activities, is also the focus of committees and regularforums across the bank (see diagram below). The committees andforums discuss and monitor known and emerging risks, review
management plans and monitor progress to address known issues.

EXECUTIVE COMMITTEEGROUP PERFORMANCE EXECUTION COMMITTEE

ANZ’s most senior executives meet
regularly to discuss performanceand review shared initiatives.

ANZ’s key Management Committee charged withoversight of the Group’s overall operational performanceand position and execution of the operating plan.

ENTERPRISEACCOUNTABILITY
GROUP

KEY MANAGEMENT COMMITTEES
Credit andMarket Risk
Committee

Group Assetand Liability
Committee

Credit Ratings
System OversightCommittee

Capital and Stress
Testing OversightCommittee

Modelling Ratings
Working Groups
and Usage Forums

Divisional
Initiatives Review
Committees/
Project
Advisory Councils

Operational
Risk Executive
Committee

Eithics andResponsible
Business
Committee

Investment
Committee

Divisional
Risk Management
Committees

Various Divisional SpecificManagement Committees

Risk GovernanceOversight
CommitteeGroup

PERFORMANCEOVERVIEW

Division

HOW WE
CREATE VALUECountry

OVERVIEW

Regional orCountry Risk
Management
Committee

Operational
Risk Committee

Product
Committee

Divisional/
Functional
AccountabilityGroupsCountry Assetand Liability
Committees

1. PACT: Pause before sharing your personal information; Activate two layers of security; Call out suspicious messages; Turn on automatic software updates.

52

ANZ 2021 Annual Report

53

OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Key material risks
The material risks facing the Groupper the Group’s Risk Management
Strategy, and how these risks aremanaged, are summarised below.
As part of the annual review of our Risk Management
Strategy we have classified Conduct Risk as a key material
risk to enhance the profile and maturity, comply with better
practice and align with the direction of the Compliance andOperational Risk Strategy to identify significant obligations
and material risks that matter to the Group.

Fairnessand ethicalconduct

Customerexperience

Innovation
andtechnology

ClimatechangeDescription

Managing the risk

CapitalAdequacy
Risk

The risk of loss arising from the Group failingto maintain the level of capital required by
prudential regulators and other key stakeholders(shareholders, debt investors, depositors,
rating agencies, etc.) to support the Group’s
consolidated operations and risk appetite.

We pursue an active approach to Capital Management,
which is designed to protect the interests ofdepositors, creditors and shareholders throughongoing review, and Board approval, of the level
and composition of our capital base against key
policy objectives.

The risk of failure to act in accordance withlaws, regulations, industry standards and codes,
internal policies and procedures and principles
of good governance as applicable to theGroup’s businesses.

Key features of how we manage Compliance Risk
as part of our Operational Risk and Compliance
Framework include:

CreditRisk

The risk of financial loss resulting from:• A counterparty failing to fulfil its obligations• A decrease in credit quality of a counterparty
resulting in a financial loss.
Credit Risk incorporates the risks associatedwith us lending to business and retail customers
who could be impacted by climate change
or by changes to laws, regulations, or otherpolicies adopted by governments or regulatory
authorities, including carbon pricing and climatechange adaptation or mitigation policies.

Liquidity
andFunding
Risk

Description

Managing the risk

MarketRisk

The risk to the Group’s earnings arising from:We have a detailed market risk management and control
framework to support our trading and balance sheet
activities, which incorporates an independent risk
measurement approach to quantify the magnitudeof market risk within the trading and balance sheet
portfolios. This approach, along with related analysis,
identifies the range of possible outcomes, that can be
expected over a given period of time, and establishes
the likelihood of those outcomes and allocates anappropriate amount of capital to support these activities.

Operational
Risk

The risk of loss and/or non-compliance withlaws resulting from inadequate or failed internal
processes, people and/or systems, or fromexternal events. This definition includes legalrisk, and the risk of reputation loss, or damage
arising from inadequate or failed internal
processes, people and systems, but excludes
strategic risk.

The Group’s foundational operational risk policy is
the Operational Risk Approach. The Operational Risk
Approach and its supporting requirements includes
management and measurement of operational risks
and compliance with laws, regulations, industry
standards, codes and principles of good governance,
and internal policies and procedure. The Grouptakes a risk-based approach to the managementof operational risk and obligations. This enables theGroup to be consistent in proactively identifying,assessing, managing, reporting and escalating
operational risk-related risk exposures, which
respecting the specific obligations of eachjurisdiction in which the Group operates.

Risks that affect or are created by anorganisation’s business strategy and strategic
objectives. A possible source of loss might arise
from the pursuit of an unsuccessful businessplan. For example, Strategic risk might arise
from making poor strategic business decisions,from the sub-standard execution of decisions,from inadequate resource allocation, or froma failure to respond well to changes in thebusiness environment.

Strategic risks are discussed and managed throughour annual strategic planning process, managed by
the Executive Committee and approved by the Board.
Where the strategy leads to an increase in other Key
Material Risks (e.g. Credit Risk, Market Risk, Operational
Risk) the risk management strategies associated withthese risks form the primary controls.

• Changes in any interest rates, foreignexchange rates, credit spreads, volatility,
and correlations; or• Fluctuations in bond, commodity or
equity prices.

$

Risk type

Compliance
Risk

54

For further information about the principal risks
and uncertainties that the Group faces, see our“Principal Risks and Uncertainties” disclosure
available at anz.com/shareholder/centre.

• Centralised management of key obligations via
a Global Obligations Library, enable our change
management capability in relation to new andrevised obligations, and emphasis on theidentification of changing regulations and thebusiness environment, to enable proactive
assessment of emerging compliance risks.
• Recognition of incident management as a separate
element to enhance ANZ’s ability to identify,
manage and report on incidents/breaches ina timely manner.

Financial
wellbeing

Material
ESG issues

Strategic
Risk

Technology
Risk• Repaying depositors or maturing wholesale
debt; or• The Group having insufficient capacity
to fund increases in assets.

• ANZ’s short term liquidity scenario modelling
stresses cash flow projections against multiple
survival horizons’ over which the Group is required
to remain cash flow positive; and• Longer-term scenarios are in place that measure thestructural liquidity position of the balance sheet.

The risk of loss and/or non-compliancewith laws from inadequate or failed internal
processes, people or systems that deliver
Technology assets and services to customers
and staff. This risk includes Technology assets
and services delivered or managed by third
parties, and external events.

Approach to manage Technology Risk is to manage
our operational risks caused by the use of technology,
including risks associated with cyber security and third
party providers, in a manner that seeks to ensure
customer information is secure and service disruption
is within acceptable levels.

$

The risk specifically includes Information
Security and Cyber Security and how
information held by the Group needs to beprotected from inappropriate modification,
loss, disclosure and unavailability.
Conduct
Risk

Key principles in managing our Liquidity and Funding
Risk include:$$

Our Credit Risk framework is top down, being
defined by credit principles and policies. Credit
policies, requirements and procedures cover all
aspects of the credit life cycle from initial approval
and risk grading, through ongoing management
and problem debt management.

The risk that the Group is unable to meet its
payment obligations as they fall due, including:Material
ESG issues

Risk typeThe risk of loss or damage arising from thefailure of the Group, its employees or agents
to appropriately consider the interests ofcustomers, the integrity of the financial markets
and the expectations of the community inconducting its business activities.

Approach to manage Conduct Risk is to seek to ensurethat risks to customers, community and market
integrity are identified, assessed, measured, evaluated,
treated, monitored and reported in a structured
environment with appropriate governance oversight.

$

The Risk may arise not only from deliberateor negligent actions of individual employees,
but may also be inadvertent and caused byinadequacies in the Group’s systems, processes
and procedures.
ANZ 2021 Annual Report

55

OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

OUR
PERFORMANCE (continued)
OUR
OUR PERFORMANCEPERFORMANCE (continued)(continued)
OUR
OUR PERFORMANCEPERFORMANCE (continued)(continued)

Performance overview

GROUP
PERFORMANCE
GROUP
GROUP PERFORMANCEPERFORMANCEGROUPPERFORMANCE
GROUP
The
resultsPERFORMANCEof the Group’s operations and financial position are set out on pages 56-71. Page 11 outlines the Group’s strategy and pages

The
The results
results ofof thethe Group’sGroup’s operations
operations andand financial
financial position
position areare setset out
out onon pages
pages 56-71.
56-71. Page
Page 11
11 outlines
outlines thethe Group’sGroup’s strategy
strategy andand pages
pages
10-28
describeinfurther
detailtheGroup’s
prospects
in
terms
of
futurefinancial
positionandperformance.
DiscussionofourapproachThe
resultsoftheGroup’soperations
andfinancial
position
are
set
out
on
pages
56-71.
Page
11
outlinestheGroup’s
strategy
and
pages
10-28
describeinfurther
detailtheGroup’s
prospects
in
terms
of
futurefinancial
positionandperformance.
DiscussionofourapproachThe
resultsoftheGroup’soperations
andfinancial
position
are
set
out
on
pages
56-71.
Page
11
outlinestheGroup’s
strategy
pages
10-28 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our andapproachtoriskmanagement,
includingasummaryofourkeymaterial
risks,
isoutlinedon
pages
51-55.
10-28
describeinfurther
detailtheGroup’s
prospects
in
terms
of
futurefinancial
positionandperformance.
Discussionofourapproachtoriskmanagement,
includingasummaryofourkeymaterial
risks,
isoutlinedon
pages
51-55.
10-28
describeinfurther
detailtheGroup’s
prospects
in
terms
of
futurefinancial
positionandperformance.
Discussionofourapproachto risk management, including a summary of our key material risks, is outlined on pages 51-55.
toto riskrisk management,
management, including
including aa summary
summary ofof ourour keykey materialmaterial risks,
risks, isis outlined
outlined on
on pages
pages 51-55.
51-55.
CORONAVIRUS(COVID-19)
CORONAVIRUS(COVID-19)
CORONAVIRUS (COVID-19)
CORONAVIRUS(COVID-19)
The
COVID-19 pandemic
continues tocause major
disruptions tocommunity healthand economic
activities withwide-ranging impacts
CORONAVIRUS(COVID-19)
The
The COVID-19
COVID-19 pandemic
pandemic continues
continues toto causecause major
major disruptions
disruptions toto community
community healthhealth andand economic
economic activities
activities with
with wide-ranging
wide-ranging impacts
impacts
acrossmany
business
sectorsinAustralia,
New
Zealandandglobally.
The
COVID-19
pandemic
continues
to
cause
major
disruptions
tocommunity
healthandeconomic
activities
withacrossmany
business
sectorsinAustralia,
New
Zealandandglobally.
The COVID-19
pandemic
continues
to causemajor
disruptions
to community health and economic activities with wide-ranging
wide-ranging impacts
impacts
acrossmany businesssectors
in Australia,
New
Zealandand globally.
acrossbusiness
sectorsinAustralia,
New
Zealandandacross many
many
business
sectors
inthe
Australia,
New
Zealandand globally.
globally.
Duringthe2021
financialyear,
spreadoftheDeltavariant
resultedinnewandextended
lockdowns
inSydney,Melbourne
andAuckland.
DuringDuring thethe 2021
2021 financial
financial year,
year, thethe spreadspread ofof thethe Delta
Delta variant
variant resulted
resulted inin new
new andand extended
extended lockdowns
lockdowns inin Sydney,
Sydney, Melbourne
Melbourne andand Auckland.
Auckland.
The
Group
continues
tooffer
supporttoourcustomers
tocounteract
theimpactof
COVID-19,
however
loandeferrals
at30
September
2021
Duringthe2021
financialyear,
thespreadoftheDeltavariant
resultedinnewandextended
lockdowns
inSydney,Melbourne
and
The
to
to
to
impactCOVID-19,
however
loandeferrals
at2021
Duringthe continues
2021 financial
year,support
the spreadof customers
the Delta variant
resultedthein new
andof
lockdowns
Sydney,Melbourneand Auckland.
Auckland.
The GroupGroup
continues
to offer
offer
supportto ourourcustomers
to counteract
counteract
theimpactofextended
COVID-19,
however inloandeferrals
at 30
30 September
September
2021
were
less
significant
thantheprevious
financial
year.
Facilities
whichtransitioned
tointerest-only
or
took
up
term
extensions
offeredasaresultThe
Group
continues
tooffer
supporttoourcustomers
tocounteract
theimpactof
COVID-19,
however
loandeferrals
at30
September
2021
were
less
significant
thantheprevious
financial
year.
Facilities
whichtransitioned
tointerest-only
or
took
up
term
extensions
offeredasaresultThe
Group
continues
tooffer
supporttoourcustomers
tocounteract
theimpactof
COVID-19,
however
loandeferrals
at30
Septemberwere less significant than the previous financial year. Facilities which transitioned to interest-only or took up term extensions offered as a2021
resultof
COVID-19,
arenow
subsumed
withinthenormalloan
population
andaremanagedaccordingly.
were
less
significant
thantheprevious
financial
year.
Facilities
whichtransitioned
tointerest-only
or
took
up
term
extensions
offeredasaresultof
COVID-19,
arenow
subsumed
withinthenormalloan
population
andaremanagedaccordingly.
were
less
significant
thantheprevious
financial
year.
Facilities
whichtransitioned
tointerest-only
or
took
up
term
extensions
offeredasaresultof COVID-19, are now subsumed within the normal loan population and are managed accordingly.
of
COVID-19,
arenow
subsumed
withinthenormalloan
population
andaremanagedaccordingly.
of
COVID-19,
arenow
subsumed
withinthenormalloan
population
andaremanagedaccordingly.
The ramifications
ramifications of COVID-19
COVID-19 remain uncertain
uncertain and it
it is difficult
difficult to predict
predict the ongoingongoing impact oror duration ofof the pandemic
pandemic and relaxation
relaxation of
The
The ramifications ofof COVID-19 remain
remain uncertain andand it isis difficult toto predict thethe ongoing impact
impact or duration
duration of thethe pandemic andand relaxation ofof
restrictions.
In preparing
preparing
the financial
financialstatements,
weit
made
variousaccounting
estimatesimpact
for future
futureevents based
basedon
forecastsandof economic
economic
The ramifications
ramificationsof COVID-19
COVID-19
remainstatements,
uncertain andanditmadeis difficult
difficultto predict
predictthe ongoingongoing
impactor duration
durationof thetheon
pandemicandrelaxation ofof
restrictions.
In
the
we
variousaccounting
estimatesforeventsforecastsofTheofremainuncertain
is
to
the
or
of
pandemicrelaxation
restrictions. In preparing the financial statements, we made various accounting estimates for future events based on forecasts of economic
conditions
reflect
expectations
andassumptionsasat30
September
2021
that
we
believearereasonable
thecircumstances.
restrictions.which
In preparing
preparing
the financial
financial statements,
statements,
we mademadevariousaccounting
estimatesfor future
futureeventsbasedunderon forecasts
forecasts
of economic
economic
conditions
which
reflect
expectations
andassumptionsasat30
September
2021
that
we
believearereasonable
under
the
circumstances.
restrictions.
In
the
we
variousaccounting
estimatesforeventsbasedonof
conditions which reflect expectations and assumptions as at 30 September 2021 that we believe are reasonable under the circumstances.
conditions
which
reflect
expectations
andas
Septemberthatarereasonable
under thecircumstances.
conditions
whichacrossreflectthe
expectations
and assumptions
assumptions
as at
at 30
30uncertainty
Septemberis2021
2021
that we
we believe
believeareto
reasonablecircumstances.
Whilepervasive
financial statements,
the estimation
predominantly
relatedexpected undercredit thelosses(ECL) where
we
While
While pervasive
pervasive acrossacross thethe financial
financial statements,
statements, thethe estimation
estimation uncertainty
uncertainty isis predominantly
predominantly related
related to
to expected
expected credit
credit losses
losses (ECL)(ECL) where
where we
werecognisedacreditimpairment
releaseof$567
millionpre-taxinthe2021
financial
year(2020:$2,738millioncharge).
Thecreditimpairment
Whilepervasiveacrossthefinancialstatements,
theestimation
uncertainty
ispredominantly
relatedtoexpected
creditlosses(ECL)
whererecognisedacreditimpairment
releaseof$567
millionpre-taxinthe2021
financial
year(2020:$2,738millioncharge).
Thecreditimpairment
While pervasive
acrossthe financial
statements,
the estimation
uncertainty
is predominantly
relatedexpected
creditThelosses
(ECL)
where we
werecogniseda credit
impairment
releaseof $567 million
pre-tax inthe 2021 financial
year (2020:$2,738tomillion
charge).
creditimpairment
releasein thecurrent
periodwasreleaseprimarily
drivenbythepre-tax
releaseallowanceforcollectively
assessedlargely
reflectingtheimpactofanrecognised
aa credit
impairmentofmillioninofthe2021
year$2,738millioncharge).
The
impairment
releasecurrent
periodprimarily
drivenbyreleaseallowanceforassessedECL
largely
reflecting
theofrecognised
creditimpairmentof $567$567
million2021 financial
financial
year (2020:(2020:$2,738 ECL
millioncharge).
The credit
creditimpairment
release inin thethecurrent
period waswasreleaseprimarily
drivenby thethepre-tax
releaseinof
ofthe
allowance
for collectively
collectively
assessedECL
largely
reflecting
the impact
impactof ananimproved
economic
relativetothedriven
outlook30
September
2020,
togetherwithimprovements
portfoliomix.
releasecurrent
periodprimarilybythereleaseofforassessedlargely
reflecting
the impact of an
improved
economic
outlookrelativetooutlookat30
September
2020,
with
in
portfoliomix.
release inin thethecurrentoutlook
period waswas
primarily
byatof allowanceallowance
for collectively
collectively
assessed ECL
ECLin
reflecting
improved
economic
outlookrelativeto thethedriven
outlook
atthe
30release
September
2020, together
togetherwith improvements
improvements
inlargely
portfolio
mix. the impact of an
improved
improved economic
economic outlook
outlook relative
relative toto thethe outlook
outlook at
at 30
30 September
September 2020,
2020, together
together with
with improvements
improvements inin portfolio
portfolio mix.
mix.

CONTINUING OPERATIONS
Key measures of our financial position and performance are set out below.
O p e r a t in g e x p e n s e s t oo p e r a t in g i n c o m e –c a sh 1 (%)

N et in t er est m a r g in –cash1 ( % )
2021

1.64

2021

51.9

2021 (567)
(810)

2020

1.63

2020

52.9

2020

R etu r n o n eq u it y –c a sh 1 ( % )
9.9

2021
2020

1.
2.

6.2

218.3

2020

132.7

6,198

2021

2,738

2020

C o m m o n eq u it yt ier 1 ( % )E ar n in g s p e r s h a r e –c ash 1 ( c en t s)
2021

C ash p r o fit1($m)

C r e d i t i m p a i r m en t c h a r g e/(r el ease) – c ash1 ( $ m )3,758

D i v i d en d p e r s h a r e 2( c e n t s)

2021

12.3

2021

2020

11.3

2020

142
60

Information has been presented on a cash profit from continuing operations basis.
The Directors propose a final dividend of 72 cents fully franked for Australia tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents per ordinary share.

ADJUSTMENTS BEWEEN STATUTORY PROFIT AND CASH PROFIT ($m)

6,179

96

0

6,198

Revenue andexpense hedges

Structured
creditintermediation
trades2021 Cashprofit continuing
operations

GROUP
PROFIT RESULTS
GROUP
GROUP PROFITPROFIT RESULTSRESULTSGROUP
GROUP PROFITPROFIT RESULTSRESULTS

56

2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Statutory
Cash
Statutory
Cash
Statutory
Cash
Statutory
Cash
Statutory
Cash
Statutory
Cash
IncomeStatement
$m
$m
$m
$m
Statutory
Cash
Statutory
Cash
IncomeStatement
$m
$m
$m
$m
Statutory
Cash
Statutory
Cash
Income Statement
$m
$m
$m
$m
IncomeStatement
$m
$m
$m
$m
IncomeStatement
$m
$m
$m
$m
Net
interest
income14,161
14,161
14,04914,049Net
interest
income14,161
14,161
14,04914,049Net interest income
14,161
14,161
14,04914,049Net
interest
income14,161
14,161
14,04914,049Other
operatingincome
3,259
3,286
3,588
3,703
Net interest
income14,161
14,161
14,04914,049Other
operatingincome
3,259
3,286
3,588
3,703
Other
operatingincome
3,259
3,286
3,588
3,703
Other
operatingincome
3,259
3,286
3,588
3,703
Operatingincome17,637
17,752
17,42017,447
Other
operatingincome
3,259
3,286
3,588
3,703
Operating
17,637
17,752
17,42017,447
Operating income
income17,637
17,752
17,42017,447
Operatingincome17,637
17,752
17,42017,447
expenses(9,383)(9,383)(9,051)(9,051)income17,637
17,752
17,42017,447
Operating expenses
expenses(9,383)(9,383)(9,051)(9,051)(9,383)(9,383)Operating(9,051)(9,051)
Operatingexpenses(9,383)(9,383)(9,051)(9,051)
Profitbeforecreditimpairment
andincome
tax
8,254
8,369
8,369
8,396
Operatingexpenses(9,383)(9,383)(9,051)(9,051)
Profitbeforecreditimpairment
andincome
tax
8,254
8,369
8,369
8,396
Profit before credit impairment and income tax
8,254
8,369
8,369
8,396
Profitbeforecreditimpairment
andincome
tax
8,254
8,369
8,369
8,396
Creditimpairment(charge)/release(2,738)(2,738)567
567
Profit before
credit (charge)/release
impairment and income tax
8,254
8,369
8,369
8,396
Creditimpairment(2,738)(2,738)567
567(2,738)(2,738)Credit impairment (charge)/release
567
567
Creditimpairment(charge)/release(2,738)(2,738)567
567
Profitincome
tax
8,936
8,963
5,516
5,631
Creditbefore
impairment(charge)/release(2,738)(2,738)567
567
Profit
8,936
8,963
5,516
5,631
Profit before
before income
income tax
tax
8,936
8,963
5,516
5,631
Profitbeforeincome
tax
8,936
8,963
5,516
5,631
Incometax
expense(2,756)(2,764)(1,840)(1,872)
Profit before
income tax
8,936
8,963
5,516
5,631
Incometax expense
expense(2,756)(2,764)(1,840)(1,872)
Incometax(2,756)(2,764)(1,840)(1,872)
Incometax
expense(2,756)(2,764)(1,840)(1,872)
Non-controllinginterests
(1)
(1)
(1)
(1)
Income tax expense(2,756)(2,764)(1,840)(1,872)
Non-controllinginterests
(1)
(1)
(1)
(1)
Non-controlling interests
(1)
(1)
(1)
(1)
Non-controllinginterests
(1)
(1)
(1)
(1)
3,675
3,758
Profit
after
tax
from
continuing
operations
6,179
6,198
Non-controllinginterests
(1)
(1)
(1)
(1)
3,675
3,758
Profit after
after tax
tax fromfrom continuing
continuing operations
operations
6,179
6,198
3,675
3,758
Profit
6,179
6,198
3,675
3,758
Profit
after
tax
from
continuing
operations
6,179
6,198
Profit/(Loss)
after
tax
from
discontinued
operations
(98)
(98)
(17)
(17)
3,675
3,758
Profit after tax
fromoperations
6,179
6,198
Profit/(Loss)after
tax continuingfrom discontinued
discontinued
operations
(98)
(98)
(17)
(17)
(98)
(98)
Profit/(Loss)
after
tax
from
operations
(17)
(17)
Profit/(Loss)
after
tax
from
discontinued
operations
(98)
(98)
(17)
(17)
3,577
3,660
Profit
for
the
year
6,162
6,181
Profit/(Loss)
after
tax
from
discontinued
operations
(98)
(98)
(17)
(17)
3,577
3,660
Profit
for
the
year
6,162
6,181
3,577
3,660
Profit for the year
6,162
6,181
3,577
3,660
Profit
6,162
6,181
3,577
3,660
Profit forfor thethe year
year
6,162
6,181
Statutory
profit after
tax forthe year
ended 30
September 2021
increased 72%
on theprior year
to $6,162
million. Statutory
return on
equity is
Statutory
Statutory profit
profit after
after tax
tax forfor thethe yearyear ended
ended 30
30 September
September 2021
2021 increased
increased 72%
72% onon thethe prior
prior year
year toto $6,162$6,162 million.
million. Statutory
Statutory return
return on
on equity
equity is
is
9.9%
and
statutory
earnings
per
share
is
217.1
cents,
anincrease
of
72%
on
prior
year.
Statutory
profit
after
tax
for
the
year
ended
30
September
2021
increased
72%
on
the
prior
year
to
$6,162
million.
Statutory
returnon
9.9%
andstatutory
earnings
per
share
is
217.1
cents,
anincrease
of
72%
on
prior
year.
Statutory
afterearnings
tax for theended
30 cents,
September
2021 increased
the prior year to $6,162 million. Statutory return on equity
equity isis
9.9% and profit
statutory
peryearshare
is 217.1
an increaseof 72% on72%
prioronyear.
9.9%
andearnings
per share
217.1
an
of
year.
9.9%Groupand statutory
statutory
earnings
share isismeasure,217.1 cents,
cents,
an increase
increaseof 72%
72% onon prior
prior
The
uses cash
cash
profit, aaper
non-IFRS
to assessassessthe performance
performanceof itsits year.
business activities.
activities. It is
is an industry-wideindustry-wide measure which
which
The
The GroupGroup uses
uses cash profit,
profit, a non-IFRS
non-IFRS measure,measure, toto assess thethe performance ofof its businessbusiness activities. It
It is anan industry-wide measure
measure whichenablescomparison
with
our
peer
group.
We
calculatecash
profitbyadjustingstatutory
profitfor
non-core
items.
In
general,itrepresents
the
The
Group
uses
cash
profit,anon-IFRS
measure,toassesstheperformanceofitsbusiness
activities.
Itisanindustry-widemeasurewhich
enablescomparison
our
peer
We
cash
by
for
items.
itThe
Group
uses cash withprofit,a non-IFRS
measure,to assesstheprofit
performanceof itsstatutory
businessprofit
activities.
It is an industry-widemeasurewhich theenablescomparison
withourpeer group.
group.
We calculate
calculatecash
profitby adjusting
adjustingstatutory
profitfor non-core
non-core
items. In
In general,
general,it represents
represents
thefinancialperformance
of
our
core
business
activities.
We
use
cash
profitinternallytosettargetsandincentivise
ourSeniorExecutives
andenablescomparison
with
our
peer
group.
We
calculatecash
profitbyadjustingstatutory
profitfor
non-core
items.
In
general,itrepresents
thefinancialperformanceofactivities.
We
use
cash
internallytoandincentivise
ourSeniorExecutives
andenables comparison
ourcorepeerbusinessgroup. We
calculateby adjusting
statutory
profit foritems.
general,it represents
financialperformancewithof ourourcorebusiness
activities.
Wecashuse profit
cash profit
profitinternallyto set
set targets
targets
andnon-core
incentivise
our InSeniorExecutives
and theleaders throughthroughour remuneration
remunerationplans. Refer
Refer
to page
page
57use
forcashadjustments
betweenstatutory
andcash
profit. The
The
adjustments
made andin
financialperformanceofactivities.
We
profittosetandincentivise
ourSeniorleaders
ourplans.
toforadjustments
betweenprofit.
madeinfinancialperformanceof ourour corecore businessbusiness
activities.
We57
profit internallyinternallyto statutory
set targets
targetsand
andcashincentivise
ouradjustments
Senior Executives
Executives
leaders throughour remunerationplans. Referto page57use
forcashadjustments
betweenstatutory
andcash
profit. The
adjustments
made andinarriving
atcash
profitareincludedinstatutory
profitwhichissubject
toaudit
withinthecontext
oftheexternal
auditor’s
audit
of
the
2021
leaders
throughourremunerationplans.
Refer
to
page
57
for
adjustments
betweenstatutory
andcash
profit.
The
adjustments
madeinarrivingatarestatutory
whichis
to audit
audit
withinthethe
auditor’saudit
theleaders throughour remunerationplans.
Refer profit
to page
57 foradjustments
between
andof
profit. The
adjustments
madeinarriving
at cashcash profit
profitare included
included ininstatutory
profitwhich
is subject
subjecttowithin statutory
the context
context
ofcashthe external
external
auditor’s
audit ofofthe 2021
2021
Financialarriving
atReport.
cash
Financialarriving
cash profit
profit areare included
included inin statutory
statutory profit
profit which
which isis subject
subject toto audit
audit within
within thethe context
context ofof thethe external
external auditor’s
auditor’s audit
audit ofof thethe 2021
2021
FinancialatReport.
Report.
Financial
Report.
Financial
Report.
Cash profit
profit is not
not subject toto audit by
by the external
external auditor. Our
Our external auditor
auditor has informed
informed the Audit
Audit Committee thatthat adjustments between
betweenCash
Cash profit isis not subject
subject to audit
audit by thethe external auditor.
auditor. Our external
external auditor has
has informed thethe Audit Committee
Committee that adjustments
adjustments between
statutory
andcashsubject
profit have
have
been
determinedona consistentconsistentbasis acrossacrosseachofthe periods
periods
presented.
Cash profit
profitis notnot
subject
to audit
audit
bydeterminedthe external
externalon
auditor.
Our external
external
auditoreachhas ofinformed
the Audit
Audit
Committee thatthat adjustments
adjustments between
betweenstatutory
andcash
profit
been
a
basis
the
presented.
Cash
is
to
by
the
auditor.
Our
auditorhas
informedtheCommittee
statutory and cash profit have been determined on a consistent basis across each of the periods presented.
statutory
statutory andand cashcash profit
profit have
have been
been determined
determined on
on aa consistentconsistent basis
basis acrossacross each
each ofof thethe periods
periods presented.
presented.
DISCONTINUEDOPERATIONSDISCONTINUEDDISCONTINUED OPERATIONSOPERATIONSDISCONTINUEDOPERATIONS
We
completedthesale ofour aligned
dealer groups
business andour OnePathpensions andinvestment business
to IOOF
Holdings Limited,
DISCONTINUEDOPERATIONS
We
completedthe
We completed the sale
sale ofof ourour alignedaligned dealer
dealer groups
groups businessbusiness andand our
our OnePath
OnePath pensions
pensions andand investment
investment businessbusiness to
to IOOFIOOF Holdings
Holdings Limited,
Limited,
and
our
life
insurancebusinesstoZurichFinancial
Services
Australia
across
the
2020
and
2019
financial
years.
The
financialresultsoftheseWecompleted
the
sale
of
our
aligneddealergroupsbusiness
and
our
OnePathpensionsandinvestment
business
to
IOOF
Holdings
Limited,
and
our
life
insurancebusinesstoZurichFinancial
Services
Australia
across
the
2020
and
2019
financial
years.
The
financialresultsofWecompleted
the
sale
of
our
aligneddealergroupsbusiness
and
our
OnePathpensionsandinvestment
business
to
IOOF
Holdings
Limited,and our life insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. The financial resultsof thesethesebusinesses
aretreatedasdiscontinued
operations
fromafinancialreportingperspective.
The
financialresults
after
transaction
completion
and
our
life
insurancebusinesstoZurichFinancial
Services
Australia
across
the
2020
and
2019
financial
years.
The
financialresultsofthesebusinesses
aretreatedasdiscontinued
operations
fromafinancialreportingperspective.
The
financialresults
after
transaction
completion
and
our
life
insurancebusinesstoZurichFinancial
Services
Australia
across
the
2020
and
2019
financial
years.
The
financialresultsofthesebusinesses are treated as discontinued operations from a financial reporting perspective. The financial results after transaction completion
primarily
relatetoresidual
operational
costs
onseparation
andpartreporting
recoverybasedon therespective
Service
Agreements.
Therebusinessesareasoperations
fromperspective.
The
financialresultstransaction
completion
primarily
relatetooperationalonandrecoverybasedrespective
Transition
Service
Agreements.
Therebusinesses
are treatedtreatedas discontinued
discontinued
operations
from aa financial
financialfinancialTransition
results after
after
transaction
completion
primarily
relateto residual
residual
operational costs
costs
on separation
separationand part
partreporting
recovery perspective.
based onon thetheTherespective
Transition
Service
Agreements.
There
were
no
material
financial
impactsfromthediscontinued
operations
in
the
2021
or
2020
financial
years.
primarily
relatetoresidual
operational
costs
onseparation
andpart
recovery
based
on
the
respective
Transition
Service
Agreements.
werenomaterial
financial
impactsfromthediscontinued
operations
in
the
2021
or
2020
financial
years.
primarily
relate tofinancial
residual impacts
operationalon separationoperations
and part recovery
based
thefinancial
respective
Transition Service Agreements. There
There
were
no material
fromcosts
the discontinued
in the 2021
or on
2020
years.
were
were nono materialmaterial financial
financial impacts
impacts fromfrom thethe discontinued
discontinued operations
operations inin thethe 2021
2021 oror 2020
2020 financial
financial years.
years.

(77)

2021 Statutory
profit continuing
operations

Economic
hedgesAdjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustment
Economic hedges
2021: ($77) million
2020: $121 million
Revenue andexpense hedges
2021: $96 million
2020: ($36) million
Structured credit
intermediation
trades2021: nil
2020: ($2) million

Reason for the adjustment
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedgetransactions will reverse over time to match with the profit or loss from the economically hedged item as part ofcash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
correlated), as well as ineffectiveness from certain designated accounting hedges.
ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis involving
the selling of credit default swaps (CDSs) as protection over specific debt structures and purchasing CDS
protection over the same structures. We have subsequently exited our positions with the remaining two CDS
deals having matured during the 2021 financial year.

ANZ 2021 Annual Report
ANZ 2021 ANNUAL REPORT

57

57

OVERVIEWPERFORMANCE

HOW WE

CREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

GROUP CASH PROFIT PERFORMANCE FROM CONTINUING OPERATIONSLARGE/NOTABLE ITEMS INCLUDED IN CASH PROFIT FROM CONTINUING OPERATIONSCash profit performance and the analysis thereof has been presented on a cash profit from continuing operations basis.

Within continuing cash profit, the Group recognised a number of large/notable items. The impact of these items on a post-tax basis is
as follows:

CASH PROFIT FROM CONTINUING OPERATIONS ($m)

2021
$m

2020
$m

13

(34)
-

(251)

-

-

57

Customer remediation

(221)

(279)

Litigation settlements
Accelerated software amortisation

(48)

-

-

(138)

-

(815)

Asian associate items

(347)

(66)

Lease-related items

-

(34)

(92)

(115)

-

(77)

Gain/(Loss) on sale from divestments

3,305

UDC Finance (UDC)
New Zealand legacy insurance portfolio
ANZ Share Investing

6,198
(892)

Divested business results
112

3,758

UDC Finance (UDC)

332
(417)

2020 Cashprofit continuing
operations

Net interest
incomeOther
operatingincomeOther large/notable items

OperatingexpensesCreditimpairment

Income tax
expense &non-controllinginterests

2021 Cashprofit continuing
operations

2021
$m

2020
$m

Movt

Net interest income

14,161Other operating income

3,286

14,049
3,703

1%
-11%

Operating income

17,447

17,752-2%

Operating expenses(9,051)(9,383)-4%

Profit before credit impairment and income tax

8,396

8,369
(2,738)0%large

Credit impairment (charge)/release

567

Profit before income tax

8,963

5,631

59%

Income tax expense
Non-controlling interests(2,764)(1)(1,872)
(1)

48%
0%

Cash profit from continuing operations

6,198

3,758

65%

Asian associate impairments

Restructuring
Goodwill write-off

Cash profit from continuing operations increased $2,440 million (65%) compared with the 2020 financial year.
Net interest income increased $112 million (1%) driven by 1 bps increase in net interest margin. The increase of 1 bps was driven by deposit
margin management across all divisions, favourable wholesale funding costs, and a reduction in lower margin Markets average interest
earning assets as a result of lower reverse repurchase agreements. This was partially offset by growth in lower yielding liquid assets and theimpact of low interest rates on earnings on capital and replicating deposits. Average interest earning assets increased $0.8 billion driven byhigher central bank balances, higher liquid assets, and home lending growth across the New Zealand and Australia Retail and Commercial
divisions. This was partially offset by a decrease in Institutional lending, lower reverse repurchase agreements and the impact of foreign
currency translation movements.
Other operating income decreased $417 million (-11%) driven by a decrease of $754 million in Markets other operating income following
normalisation of financial market conditions and the impact of surplus system liquidity, a decrease in share of associates’ profit of $331 million,a loss of $251 million associated with the disposal of ANZ Share Investing, and a decrease in net fee and commission income driven by lower
volumed related fees due to the impact of COVID-19. This was partially offset by the impairment of Asian associates of $815 million in the prioryear and favourable adjustments to loans measured at fair value.
Operating expenses decreased $332 million (-4%) driven by an accelerated software amortisation charges of $197 million, goodwill
impairment of $77 million and lease-related items of $50 million all in the prior year, lower restructuring expenses of $34 million andproductivity benefits, partially offset by higher investment spend and a litigation settlement of $69 million.
Credit impairment charges decreased $3,305 million driven by a decrease in the collectively assessed credit impairment charges reflecting an
improved economic outlook together with improvements in portfolio mix, and a decrease in individually assessed credit impairment charges.

ANZ 2021 Annual Report58
58

ANZ 2021 ANNUAL REPORTANZ 2021 ANNUAL REPORT59

59

OVERVIEW

HOW WEPERFORMANCECREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Description of large/notable items:
Item

Description

Gain/(Loss) on salefrom divestments

The 2021 financial year included a loss on disposal of ANZ Share Investing, and a gain on sale of the New Zealandlegacy insurance portfolio. The 2020 financial year included a loss on sale of the UDC business.

Divested businessresults

The 2020 financial year included the divested business results of UDC.

Customer
remediation

Customer remediation includes provisions for expected refunds to customers, remediation project costs andrelated customer and regulatory claims, penalties and litigation outcomes.

Litigation
settlements

During the 2021 financial year, the Group reached an agreement to settle a United States class action related to
the Bank Bill Swap Rate (BBSW) and the trading of BBSW-based products. The settlement is without admission of
liability and remains subject to negotiation and execution of complete settlement terms as well as court approval.
The Group recognised a provision in relation to the settlement and related expenses during the year.

Accelerated softwareamortisation

During the 2020 financial year, the Group recognised an accelerated amortisation charge arising from the revised
application of the Group’s software amortisation policy in the 2020 financial year reflecting the shorter useful life ofsoftware caused by rapidly changing technology and business requirements.

Asian associate
impairments

During the 2020 financial year, the Group recognised an impairment in respect of two of the Group’s investments
to adjust their carrying values in line with their value-in-use calculations. No further impairments were recognisedin the 2021 financial year (refer to Note 26 Investments in Associates in the Financial Report for further details).

Asian associate items

The Group recognised the following adjustments to equity accounted earnings from its Asian associates:
 AmBank 1MDB settlement: following AMMB Holdings Berhad’s (AmBank) agreement with the Malaysian
Ministry of Finance to resolve potential claims relating to its involvement with 1Malaysia Development Berhad(1MDB), the Group recognised a $212 million reduction in equity accounted earnings after tax reflecting its
share of the settlement provision during the 2021 financial year.
 AmBank goodwill impairment: during the 2021 financial year, AmBank partially impaired goodwill and theGroup recognised a $135 million reduction in equity accounted earnings after tax reflecting its share of theimpairment.
 PT Panin AASB 9 adjustment: when the Group adopted AASB 9 Financial Instruments on 1 October 2018, an
estimate of PT Bank Pan Indonesia (PT Panin)’s transition adjustment was recognised through opening retained
earnings to align accounting policies. PT Panin adopted AASB 9 during the 2020 financial year recognising atransition adjustment in retained earnings. The $66 million represents the Group’s equity accounted share of
the transition adjustment net of amounts previously adjusted by the Group on 1 October 2018.

Lease-related items

Following the adoption of the new lease accounting standard (AASB 16) on 1 October 2019, the Group recognised
additional charges which were presented as a large/notable item at the time as the 2019 comparatives wereprepared under the previous lease accounting standard (AASB 117). The ongoing AASB 16 impacts for the 2020
financial year are now presented on a consistent basis to the 2021 financial year. The residual lease related item
relates to non-recurring items recognised in the 2020 financial year.

Restructuring

Restructuring charges largely related to business and property changes in Australia Retail and Commercial divisionand operational changes in Technology, Services & Operations (TSO) and Group Centre division.

Goodwill write-off

The Group recognised the following goodwill write-off during the 2020 financial year:

OUR PERFORMANCE (continued)

ANALYSIS OF CASH PROFIT PERFORMANCE
Net interest income
GROUP NET INTEREST MARGIN FROM CONTINUING OPERATIONS (bps)

7

0

1

6
163

164
(1)

(7)
159
(5)

2020 Cashnet interest
margin1.

Wholesalefunding &depositpricingAssetpricing

Asset andfunding mix

Liquidity

Impact ofrates net of
repricing2021 Cashnet interest
marginsubtotalMarkets
Balance
Sheet
activities 1

Large/
notableitems

2021 Cashnet interest
margin

2021
$m

2020
$m

Movt

14,1611%
1 bps

Markets Balance Sheet activities includes the impact of discretionary liquid assets and other Balance Sheet activities.

Net interest margin (%) - cash
Average interest earning assets

1.64

14,0491.63

863,691

862,882

0%

Average deposits and other borrowings

712,540

679,336

5%

Net interest income

1
1

1.

Includes the major bank levy of -$346 million (2020: -$406 million).

Net interest income increased $112 million (1%) driven by 1 bps increase in net interest margin.
Net interest margin increased 1 bps driven by deposit margin management across all divisions, favourable wholesale funding costs, andreduction in lower margin Markets average interest earning assets as a result of lower reverse repurchase agreements. This was partially offset
by growth in lower yielding liquid assets and the impact of low interest rate on earnings on capital and replicating deposits.
Average interest earning assets increased $0.8 billion (flat) driven by higher central bank balances, higher liquid assets, and home lending
growth across the New Zealand and Australia Retail and Commercial divisions. This was partially offset by a decrease in Institutional lending,lower reverse repurchase agreements and the impact of foreign currency translation movements.
Average deposits and other borrowings increased $33.2 billion (5%) driven by growth in at-call deposits across all divisions and increases incommercial paper and certificates of deposit, partially offset by lower term deposits and the impact of foreign currency translation
movements.

 Pacific division: the impact of COVID-19 on the economies of the Pacific region had been significant andconditions were expected to take some time to recover. Goodwill of $50 million was impaired.
 New Zealand division: as a result of changes in the economic environment and outlook, the Group announced
its intention to begin winding up the Bonus Bonds business in the New Zealand division by 31 October 2020.
As a result, the Group wrote off the associated goodwill of $27 million.

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HOW WE

CREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

Other operating income

Operating expenses

OTHER OPERATING INCOME ($m)

OPERATING EXPENSES ($m)

68

3,703
3,286

820

(152)

9,383
(84)

(754)
(331)
(236)

9,051

(34)
(46)

2020 Cashother
operatingincomeNet fee andcommission
income 1

MarketsotheroperatingincomeShare ofassociates’
profit/(loss)

Other 12021 Cashother
operatingincome2020 Cashoperatingexpenses

2021
$m

2020
$m

Movt

Net fee and commission income1

2,063

Markets other operating income
Share of associates' profit/(loss)

1,130

2,215
1,884

-7%
-40%

Other

(176)
269

155
(551)

large
large

Total cash other operating income

3,286

3,703

-11%

1

1.

Excluding the Markets business unit.

Net fee and commission income decreased $152 million (-7%) driven by lower volume related fees due to the impact of COVID-19, higher
customer remediation, reduction or removal of fees, and reduced commission income from the wind-up of the Bonus Bonds business.
Markets other operating income decreased $754 million (-40%) driven by lower income across the Rates, Credit and Capital Markets, Foreign
Exchange and Commodities businesses following normalisation of financial market conditions and the impact of surplus system liquidity, anda credit valuation adjustment gain in the prior year. This was partially offset by higher Balance Sheet income from net realised gains during theperiod and customer remediation provision releases.
Share of associates' profit decreased $331 million driven by the Group’s equity accounted share of AmBank 1MDB settlement and goodwill
impairment of $347 million, and a decrease in equity accounted share of profits of $52 million. This was partially offset by the Group’s equity
accounted share of PT Panin’s transition adjustment on its adoption of AASB 9 of $68 million in the prior year.
Other increased $820 million driven by the impairment of the Asian associates of $815 million in the prior year, higher realised gains on
economic hedges against foreign currency denominated revenue streams, favourable adjustments to loans measured at fair value in theInstitutional division, higher insurance income and a loss on sale of the UDC business in the prior year. This was partially offset by the loss
associated with the disposal of ANZ Share Investing of $251 million.

Personnel

Premises

Technology

Personnel
Premises
Technology
Restructuring
Other
Total cash operating expenses from continuing operations
Full time equivalent staff (FTE) from continuing operations
Average full time equivalent staff (FTE) from continuing operations

Restructuring

Other

2021
$m
4,946
705
1,588
127
1,685
9,051
39,68438,0432021 Cashoperatingexpenses

2020
$m
4,878
789
1,824
161
1,731
9,383
37,50637,728

Movt
1%
-11%
-13%
-21%
-3%
-4%
6%
1%

Personnel expenses increased $68 million (1%) driven by an uplift in investment in digital capabilities, cloud enabled simplification andmeeting regulatory and compliance obligations, as well as additional resourcing for COVID-19 hardship support, regulatory mandated
complaints support and Home Loans operations. This was partially offset by the continued benefits enabled by customers embracing digitalchannels, and favourable foreign currency translation movements.
Premises expenses decreased $84 million (-11%) driven by ongoing optimisation of property footprint across all geographies and lower leaserelated costs.
Technology expenses decreased $236 million (-13%) driven by accelerated amortisation of $197 million and lease-related items of $50 million
in the prior year, benefits from vendor contract negotiations, lower amortisation and favourable foreign currency translation movements. Thiswas partially offset by increased spend on investment initiatives.
Restructuring expenses decreased $34 million (-21%) driven by lower charges in the Australia Retail and Commercial and New Zealanddivisions, partially offset by operational changes in the TSO and Group Centre division.
Other expenses decreased $46 million (-3%) driven by a goodwill write-off of $77 million in the prior year, lower travel expenses and lower
freight and cartage. This was partially offset by increased spend on investment initiatives, and a litigation settlement of $69 million.

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HOW WEPERFORMANCECREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Credit impairment

OUR PERFORMANCE (continued)

GROSS IMPAIRED ASSETS BY DIVISION ($m)
2021
(823)
256
(567)
1,965
342.5
4,882
35.0%
1.22%

Collectively assessed credit impairment charge/(release) ($m)
Individually assessed credit impairment charge ($m)
Credit impairment charge/(release) ($m)
Gross impaired assets ($m)
Credit risk weighted assets ($b)
Total allowance for expected credit losses (ECL) ($m)
Individually assessed as % of gross impaired assets
Collectively assessed as % of credit risk weighted assets

2020
1,717
1,021
2,738
2,459
360.0
5,899
36.2%
1.39%

Movt
large
-75%
large
-20%
-5%
-17%

2,459

270
12

0

1,965

Pacific

TSO andGroup Centre

2021 Gross
impaired assets(183)

COLLECTIVELY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)

(593)

1,717

2020 Gross
impaired assets

Australia Retailand Commercial

Institutional

New ZealandGross impaired assets decreased $494 million (-20%). The decrease in the Australia Retail and Commercial division was driven by therepayment of a single name restructured exposure and decreases in the retail portfolio as underlying delinquency flows remained subdued
due to the impact of various COVID-19 support initiatives. The decrease in the New Zealand division was driven by upgrade of a large Agricustomer and a number of Agri asset sales. The increase in the Institutional division was driven by impairments of a small number of wellsecured single name exposures.
(1,672)TOTAL ALLOWANCE FOR EXPECTED CREDIT LOSSES ($m)(532)

2020 Collectively
assessed credit
impairment charge

Australia Retailand Commercial

Institutional

3
(309)

(30)

New ZealandPacific(823)
TSO andGroup Centre

2021 Collectively
assessed credit
impairment release

5,899

The collectively assessed credit impairment charge decreased $2,540 million. Collectively assessed credit impairment provision increased
substantially in the prior year driven by the forward-looking impacts of the COVID-19 pandemic. Improvement in the economic outlook
together with improvements in portfolio mix resulted in collectively assessed credit impairment provision releases in the current year.
(824)

INDIVIDUALLY ASSESSED CREDIT IMPAIRMENT CHARGE ($m)

(130)

17

3

4,882

Pacific

TSO andGroup Centre

2021 Total
allowance
for expectedcredit losses

(83)

1,021
2020 Total
allowance
for expectedcredit losses

(401)

(251)

0
(112)

256

(1)

Australia Retailand Commercial

Institutional

New Zealand

The collectively assessed allowance for expected credit losses decreased $813 million (-16%) driven by a reduction of $448 million from theimproving economic outlook partially offset by changes to scenario weightings and an allowance for model uncertainty due to the continuing
pandemic and reductions in government support programs, a reduction of $282 million due to lower lending volumes and changes in
portfolio composition, and a reduction of $153 million attributable to changes in credit risk. This was partially offset by an increase of $60
million in management adjustments and an increase of $10 million from foreign currency translation movements.
The individually assessed allowance for expected credit losses decreased $204 million (-23%) due to the impact of COVID-19 support
initiatives.

2020 Individuallyassessed credit
impairment charge

Australia Retailand Commercial

Institutional

New ZealandPacific

TSO andGroup Centre

2021 Individuallyassessed credit
impairment charge

The individually assessed credit impairment charge decreased by $765 million (-75%). The decrease in the Australia Retail and Commercial
division was driven by lower impairments as the underlying flows remained subdued due to the impact of various COVID-19 support
initiatives. The decrease in the Institutional division was driven by a number of impairments in the prior year. The decrease in the New Zealanddivision was driven by lower transitions to impairment and the write-back of a large Agri customer.

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HOW WEPERFORMANCECREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

DIVISIONAL PERFORMANCE
Australia
Retail andCommercial

Net interest margin
Operating expenses to operating income

DIVISIONAL PERFORMANCE

Pacific

TSO andGroup
CentreGroup

Australia Retail and Commercial

2.33%
39.7%

2.98%
89.4%

n/a
n/a

1.64%
51.9%

1,887

1,508

(3)

(811)

6,198

158.2
239.6
5,332

128.5
97.7
7,060

1.8
3.8
1,089

11,723629.7
593.6
39,684Australia
Retail andCommercial

Institutional

New
Zealand

Pacific

TSO andGroup
CentreLending volumes increased driven by home loan growth, partially offset by lower unsecured lending due to COVID-19 lockdown
impacts and a decrease in commercial lending. Net interest margin decreased driven by unfavourable lending mix from stronger
growth in lower margin fixed rate home loans, deposit margin compression and lower earnings on capital. This was mostly offset bydeposit and asset repricing benefits, favourable funding deposit mix due to strong deposit growth, and lower funding costs. Other
operating income decreased driven by the loss associated with the disposal of ANZ Share Investing and lower credit card andinternational transaction volumes due to COVID-19 impacts. Operating expenses decreased driven by productivity benefits, lower
restructuring expenses, and lease-related items and accelerated amortisation in the prior year. This was partially offset by higher
investment spend and customer remediation. Credit impairment charges decreased driven by a collectively assessed credit
impairment release reflecting an improved economic outlook, and lower individually assessed credit impairment charge as theunderlying flows remained subdued due to the impact of various COVID-19 support initiatives.

Group

Net interest margin
Operating expenses to operating income

2.59%
45.1%

0.76%
43.9%

2.26%
44.8%

3.10%
106.2%

n/a
n/a

1.63%
52.9%

Cash profit from continuing
operations ($m)

2,337

1,854

1,017

(62)

(1,388)3,758

Net loans and advances ($b)
Customer deposits ($b)
Number of FTE

339.4
234.6
14,078

157.6
223.3
5,291

116.6
91.0
6,679

1.9
3.5
1,113

1.6
10,345617.1
552.4
37,506

Institutional

New
Zealand

2.58%
45.3%

0.81%
49.1%

Cash profit from continuing
operations ($m)

3,617

Net loans and advances ($b)
Customer deposits ($b)
Number of FTE

341.2
252.5
14,4802021

2020

Institutional
Lending volumes increased in Corporate Finance and Transaction Banking, partially offset by a decrease in Markets. Customer
deposits increased in Transaction Banking and Markets. Net interest margin ex-Markets increased driven by improved lending
margins. Other operating income decreased driven by lower Markets revenue following normalisation of financial market conditions
and the impact of surplus system liquidity, partially offset by lower customer remediation. Other operating expenses decreased
driven by productivity benefits and accelerated amortisation in the prior year, partially offset by a litigation settlement and higher
restructuring expenses. Credit impairment charges decreased driven by a collectively assessed credit impairment release reflecting
an improved economic outlook, and lower individually assessed credit impairment charges in Transaction Banking.
New ZealandLending volumes increased driven by home loan growth. Net interest margin increased driven by favourable deposit mix, lower
funding costs and deposit repricing benefits, partially offset by headwinds from lower home loan margins due to competition,
unfavourable lending mix with growth weighted to fixed rate home loans, and lower income post UDC sale completion in the prioryear. Operating expenses decreased driven by lower customer remediation and restructuring expenses, lower expenses post UDC
sale completion, realisation of productivity benefits, and goodwill impairment and accelerated software amortisation in the prioryear. This was partially offset by higher personnel costs and investment spend. Credit impairment charges decreased driven bycollectively assessed credit impairment release reflecting an improved economic outlook, and lower individually assessed credit
impairment charge due lower transitions to impairment and the write-back of a large Agri customer.
Pacific
Operating income decreased driven by the full year impact of Commercial portfolio repricing and reduced card fees due to borderclosures. Operating expenses were lower largely due to a goodwill write-off in the prior year. Credit impairment charges decreased
driven by lower collectively assessed credit impairment charges.
TSO and Group Centre
The 2021 financial year included the losses from the Group’s share of AmBank 1MDB settlement and goodwill impairment. The 2020
financial year included the impairment of the Asian associates and a loss on sale of UDC.

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HOW WEPERFORMANCECREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

FINANCIAL POSITION OF THE GROUP – INCLUDING DISCONTINUED OPERATIONS

Funding

Condensed balance sheet
As at
2021
$b

2020
$b

Customer liabilities
Wholesale funding
Shareholders’ equity

Movt

AssetsCash / Settlement balances owed to ANZ / Collateral paid
Trading and investment securities
Derivative financial instruments

168.0

Net loans and advances

2021
$b

2020
$b

601.7
274.3

561.3
277.5

63.7

61.3

Total funding

939.7

900.1

Net Stable Funding Ratio

124%

124%

127.8

129.7
144.3

30%
-11%

38.7

135.3

-71%

The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.

629.7
14.7

617.1
15.9

2%
-8%

Net Stable Funding Ratio remained above the regulatory minimum of 100% throughout this period.

Other
Total assets

978.9

1,042.3-6%

Liabilities
Settlement balances owed by ANZ / Collateral received
Deposits and other borrowings

23.1

31.5

-27%

743.1

9%
-73%
-16%

Derivative financial instruments
Debt issuances
Other

36.0
101.1

682.3
134.7
119.7

11.9

12.8

-7%

Total liabilities

915.2

981.0

-7%

Total equity

63.7

61.3

4%

Cash / Settlement balances owed to ANZ / Collateral paid increased $38.3 billion (30%) driven by an increase in balances with central banks,
partially offset by decreases in reverse repurchase agreements, collateral paid and the impact of foreign currency translation movements.
Trading and investment securities decreased $16.5 billion (-11%) driven by a decrease in liquid assets in Markets.
Derivative financial assets and liabilities decreased $96.6 billion (-71%) and $98.7 billion (-73%) respectively driven by a reduction following achange in legal arrangements for the settlement of derivative transactions with a central clearing counterparty (reduction of $55.1 billion inderivative assets and $55.2 billion in derivative liabilities), and the impact of market rate movements.
Net loans and advances increased $12.6 billion (2%) driven by increases across the New Zealand ($8.2 billion) and Australia Retail andCommercial ($1.9 billion) divisions reflecting home loan growth, and the impact of foreign currency translation movements.
Settlement balances owed by ANZ / Collateral received decreased $8.4 billion (-27%) driven by decreases in collateral received and cash
clearing account balances.
Deposits and other borrowings increased $60.8 billion (9%) driven by increases in customer deposits across the Australia Retail andCommercial ($17.9 billion), Institutional ($17.6 billion) and New Zealand ($3.9 billion) divisions, increases in commercial paper ($16.5 billion)
and certificates of deposit ($5.2 billion), a further $8.1 billion drawdown of the RBA Term Funding Facility (TFF) and $1.2 billion drawdown of
the Reserve Bank of New Zealand’s (RBNZ) Funding for Lending Programme (FLP) and Term Lending Facility (TLF), and the impact of foreign
currency translation movements. This was partially offset by decreases in deposits from banks and repurchase agreements ($10.0 billion).
Debt issuances decreased $18.6 billion (-16%) driven by lower senior debt issuances which were partially replaced by the further drawdownof the TFF, classified in Deposits and other borrowings.

$10.7 billion of term wholesale debt with a remaining term greater than one year as at 30 September 2021 was issued during the year. In
addition, the Group drew down $8.1 billion of supplementary TFF funding in Australia.
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a term funding facility (TFF) for the banking system to support lending
to Australian businesses. The TFF is a three-year secured funding facility to Authorised Deposit-taking Institutions (ADIs) at a fixed rate of 0.25%.
APRA has determined that the TFF qualifies for inclusion in determining the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio(NSFR). ADIs can obtain initial funding of up to 3% of their existing credit outstanding to Australian households and businesses, and haveaccess to additional funding if they increase lending to business, especially to small and medium-sized businesses. As at 30 September 2021,
ANZ had drawn $20.1 billion under the RBA’s TFF. The TFF closed to drawdowns on 30 June 2021.
RBNZ Funding for Lending Programme and Term Lending Facility
 Between May 2020 and July 2021, the RBNZ made funds available under a term lending facility (TLF) to promote lending to businesses. The
TLF is a three to five-year secured funding facility for New Zealand banks at a fixed rate of 0.25%.
 In November 2020, the RBNZ announced a funding for lending programme (FLP) which aimed to lower the cost of borrowing for New
Zealand businesses and households. The FLP is a three-year secured funding facility for NZ banks at a floating rate of the New Zealand
Official Cash Rate (OCR). New Zealand Banks can obtain initial funding of up to 4% of their lending to New Zealand resident households,
non-financial businesses and non-profit institutions serving households as at 31 October 2020 (eligible loans). An additional allocation of up
to 2% of eligible loans is available, subject to certain conditions. The additional allocation is available until 6 December 2022, and the initial
allocation is available until 6 June 2022.
As at 30 September 2021, ANZ Bank New Zealand Limited had drawn $0.3 billion under the TLF and $0.9 billion under the FLP.
Liquidity

Total liquid assets ($b)
Liquidity Coverage Ratio (LCR) 1
1

1.

Average
2021

2020

225.9

213.9

137%

139%

Full year average, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.

The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent
with Basel 3 LCR: Highest-quality liquid assets (HQLA1): cash, highest credit quality government, central bank or public sector securities eligible for
repurchase with central banks to provide same-day liquidity.
 High-quality liquid assets (HQLA2): high credit quality government, central bank or public sector securities, high quality corporate debt
securities and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
 Alternative liquid assets (ALA): assets qualifying as collateral for the Committed Liquidity Facility (CLF) and other eligible securities listed by
the RBNZ.
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory
requirements and the risk appetite set by the Board.
COVID-19 has impacted the normal operations of financial markets including funding markets, however the actions of governments globallyand central banks including the RBA, RBNZ and the US Federal Reserve have provided significant liquidity support to the system and financial
markets generally. ANZ’s liquidity measures have remained above the regulatory minimum of 100% throughout this period.

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HOW WE

CREATE VALUEOVERVIEWOUR PERFORMANCE(continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONOUR PERFORMANCE (continued)

Five year summary

Capital management
2021

2020

Movt

Common Equity Tier 1 (Level 2)- APRA Basel 3

12.3%

11.3%

Credit risk weighted assets ($b)

342.5

360.0

-5%

Total risk weighted assets ($b)

416.1

429.4

-3%

APRA Leverage ratio

5.5%

5.4%

FIVE YEAR SUMMARY

APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable asregulatory capital and provides methods of measuring the risks incurred by the Bank.
The Group’s Common Equity Tier 1 ratio was 12.3% based on APRA Basel 3 standards, exceeding APRA’s minimum requirements. It increased
100 bps driven by cash earnings, benefits from credit impairment release, partially offset by the impact of dividends during the year.
At 30 September 2021, the Group’s APRA leverage ratio was 5.5% which is above the 3.5% proposed minimum for internal ratings-based
approach ADI (IRB ADI), which includes ANZ.
Dividends
Our financial performance allowed us to propose that a final dividend of 72 cents be paid on each eligible fully paid ANZ ordinary share,bringing the total dividend for the year ended 30 September 2021 to 142 cents per share. This represents a dividend payout ratio of 64.9% ofcash profit from continuing operations.
The proposed 2021 final dividend of 72 cents per share will be fully franked for Australian taxation purposes, and carry New Zealand
imputation credits of NZD 8 cents per ordinary share. It will be paid on 16 December 2021 to owners of ordinary shares at the close of businesson 9 November 2021 (record date).
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2021 final dividend.
For the 2021 final dividend, ANZ intends to provide shares under the DRP through an on-market purchase and BOP through the issue of newshares.
Further details on dividends provided for or paid during the year ended 30 September 2021 are set out in Note 6 Dividends in the Financial
Report.
Shareholders Returns
E a r n ings p er sh a re –cash1 ( c ent s)
2021
2020
1.

218.3
132.7

Div id end p er sh ar e
( c en t s)
142

2021
2020

60

Information has been presented on a cash profit from continuing operations basis.

To tal shar eho l d err et u r n ( % )Div iden d p a yo u t
r a t io 1 ( % )
2021
2020

64.9
45.3

70.7

2021
2020

(36.9)

2021
$m

2020
$m

2019
$m

2018
$m

2017
$m

Financial performance - cash1
Net interest income
Other operating income
Operating expenses

14,161
3,286(9,051)

14,0493,703(9,383)

14,3394,690(9,071)

14,514
4,853(9,401)

14,875
4,941(8,967)

Profit before credit impairment and income tax
Credit impairment charge
Income tax expense
Non-controlling interests

8,396
567
(2,764)(1)

8,369(2,738)(1,872)
(1)

9,958
(795)
(2,678)
(15)

9,966
(688)
(2,775)(16)

10,849(1,199)(2,826)(15)

Cash profit from continuing operations1
Cash profit/(loss) from discontinued operations

6,198
(17)

3,758
(98)

6,470
(309)

6,487
(682)

6,809
129

Cash profit
Adjustments to arrive at statutory profit1

6,181
(19)

3,660
(83)

6,161
(208)

5,805
595

6,938
(532)

Profit attributable to shareholders of the Company

6,162

3,577

5,953

6,400

6,406

978,857
63,67612.3%
18.3%

1,042,286
61,29711.3%
16.7%

981,137
60,794
11.4%
16.4%

943,182
59,405
11.4%
16.8%

897,326
59,075
10.6%
15.8%

9.9%
0.6%
52.2%

5.9%
0.3%
53.8%

10.0%
0.6%
49.5%

10.9%
0.7%
52.0%

11.0%
0.7%
46.1%

Total return to shareholders (share price movement plus
dividends)

70.7%-36.9%

9.2%

0.6%

13.1%

Market capitalisation
Dividend (cents)
Franked portion– interim– finalShare price– high (dollars)– low (dollars)– closing (dollars)

79,483
142
100%
100%
$29.64$16.97$28.1548,83960
100%
100%$28.67$14.10$17.2280,842
160
100%
70%$29.30$22.98$28.5280,979
160
100%
100%
$30.80$26.08$28.1886,948
160
100%
100%
$32.95$25.78$29.60217.1
65.3%$21.09
2,824

126.4
47.6%
$20.04
2,840

210.0
76.2%
$19.59
2,835

221.6
72.1%
$18.47
2,874

220.1
73.4%
$17.662,937$27.91-$18.06$22.19$27.79$25.03$27.76$26.03$28.80$29.0240,221
534,166

38,579553,171

39,060506,847

39,924509,238

44,896522,425

Financial position
AssetsNet assets
Common Equity Tier 1
Common Equity Tier 1 – Internationally
Comparable Basel 32
Return on average ordinary equity (statutory)3
Return on average assets (statutory)
Cost to income ratio (cash)1
Shareholder value – ordinary shares

Share information(per fully paid ordinary share)
Earnings per share (cents) (statutory)
Dividend payout ratio (statutory)
Net tangible assets per ordinary share4
No. of fully paid ordinary shares issued (millions)
Dividend reinvestment plan (DRP) issue price– interim– finalOther information
No. of employees (full time equivalents)
No. of shareholders
1.

Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. Cash profit is not
audited; however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.

2.

Internationally Comparable Methodology applied for 2017–2021 aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015). Basel Internationally
Comparable ratios do not include an estimate of the Basel l capital floor requirement.

3.

Average ordinary equity excludes non-controlling interests.
Equals shareholders’ equity less total non-controlling interests, goodwill and other intangible assets, divided by the number of ordinary shares.

4.

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OVERVIEW

HOW WE
CREATE VALUEPERFORMANCEOVERVIEW

Five year summary (continued)

REMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

2021

2020

2019

2018

2017

Australia Retail1

4

3

4

3

4

Australia Commercial2

4

4

3

3

4

Australia Institutional3

2

1

1

1

2

New Zealand Retail4

4

4

4

4

4

New Zealand Commercial and Agricultural5

5

5

5

5

5

New Zealand Institutional6

1

1

1

1

3

Breaches

573

569

784

1,114

1,443

Investigations resulting in termination

114

93

151

226

262

Whistleblower reports

157

157

156

137

121

>67,600>61,352>90,850>88,224>80,074

Employee Engagement (%)8

81

86

77

73

72

Total Women in Leadership (%)9

35.3

33.4

32.5

32.0

31.1

Recruitment of people from under-represented groups10

255

185

224

260

250

Total community investment ($million)11

139.7

139.5

142.2

136.9

131.1

Volunteer hours

54,64566,402

134,930

124,113113,127

15.5

20.5

42.4

34.6

29.4

Environmentally sustainable solutions (AU$ billion)

9.18

7.57

7.60

4.65

4.51

Housing (AU$ billion)

1.40

1.45

2.29

0.06

Total scope 1 & 2 (tCO2e)

111,409

134,093

156,568

171,012

180,993

Total scope 1, 2 & 3 GHG emissions (tCO2e)

153,697

203,700

250,857

266,906

273,216

Renewables (%)

88

87

83

76

70

Coal (%)

3

5

9

13

16

Gas (%)

9

7

8

10

13

1,425

1,501

1,371

1,076

1,141

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Fair and responsible banking
Net Promoter Score Ranking (relative to peers)

Code of Conduct

Financial Wellbeing
People reached by our financial inclusion programs7
Employees

Community

Employee volunteering participation rate (%)12
Sustainable FinanceTotal funded or facilitated towards:

13

Other social (AU$ billion)

14

Environmental Sustainability
Environmental footprint

Project finance portfolio15

Project finance commitment to renewable energy ($million)

1. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six-month rolling average to Sep’17, Sep’18, Sep’19, Sep’20 & Sep’21. Ranking based on the four
major Australian banks. 2. DBM Atlas (Business). Base: Commercial (<$100 million annual turnover) Main Financial Institution customers. Six-month average to Sep’17, Sep’18, Sep’19, Sep’20 &Sep’21. Ranking based on the four major Australian banks. 3. Peter Lee Associates, 2017–2020 Large Corporate and Institutional Relationship Banking surveys, Australia. Ranking based on thefour major Australian banks. 4. Retail Market Monitor, Camorra Research, six month rolling average to Sep’17, Sep’18, Sep’19, Sep’20 & Sep’21. Ranking based on the five major New Zealandbanks. 5. Business Finance Monitor, TNS Kantar Research. Base: Commercial ($3 million–$150 million annual turnover) and Agricultural (>500K annual turnover) customers. Four quarter rolling
average to Q3’17, Q3’18, Q3’19, Q3’20 & Q3’21. Ranking based on the five major New Zealand commercial/agricultural banks. 6. Peter Lee Associates Large Corporate Relationship Banking
surveys, New Zealand 2017–2021, ranked against the Top 4 competitors. 7. Includes individuals who have participated in more than one program or product (for example, people who haveparticipated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded and Saver Plus totals). 8. The 2017 engagement survey was run as apulse survey sent to 10% of the bank’s employees with a 57% response rate. 9. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all employees
regardless of leave status but not contractors (which are included in FTE). 10. Including Aboriginal and Torres Strait Islander peoples, people with disability and refugees. 11. Figure
includes forgone revenue, being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and theelderly. International transfer fees were waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19. 12. Commenced reporting in2017. 13. Commenced reporting in 2020. 14. Commenced reporting in 2020. Includes transactions eligible for inclusion in $50 billion target but unable to be allocated to environmentally
sustainable solutions, housing or financial wellbeing. 15. Breakdowns for 2020, 2018 and 2017 do not total to 100% due to rounding.

72

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FINANCIALREPORTSHAREHOLDERINFORMATION

Remuneration report
2021 REMUNERATION REPORT – AUDITEDThis year was perhaps even more challenging than last year,
given the sustained economic and societal impacts of COVID-19.
While we all would have preferred to have confined the effectsof the pandemic to 2020, we find ourselves at the end of 2021,
still focused on managing the impacts on our customers, ourpeople, the community and you, our shareholders.
What was pleasing, however, was the way everyone at ANZ,
led by our Chief Executive Officer (CEO) Shayne Elliott and theexecutive team, responded to the continuing crisis.
It has been a very difficult period across our network. In Australia
borders have been disrupted, while Sydney and Melbourne haveendured lengthy lockdowns. The situation is similar in New Zealand.
We have managed the impacts across our 33 geographies, including
our major operations centres in India and the Philippines.
Despite the difficult trading conditions, the bank delivereda solid result for shareholders that reflects the strength of ourdiversified portfolio.
We led the industry with our productivity and simplification
initiatives and we are now in a strong position to take advantage
of future opportunities.

We are rapidly building the capabilities we need for the digitalworld. This year alone we’ve recruited more than 3,000 engineeringand data experts, many of whom are from the world’s leading
technology companies.
From a risk perspective, our strong frameworks enabled our soundresponse to COVID-19 and business continuity was maintained
through the year with no major operational challenges associatedwith the pandemic.
We also progressed the delivery of our regulatory commitments,
including implementing recommendations arising from the Royal
Commission, our APRA self-assessment and the implementation of
BS11 in New Zealand.
Despite the 12% increase in home loan revenue, there was a lossof market share in the Australian mortgage business as a resultof home loan processing challenges, and a delivery delay with
one of our digital transformative products. These issues are being
addressed by management.
In assessing ANZ’s performance the Board determined thatmanagement had exceeded or met most objectives, while also
acknowledging that there have been challenges and performance
was below expectations in a few key areas.
All these matters have been taken into account in assessing theGroup’s performance, Shayne’s performance and the performanceof the executive team for 2021.

2021 VARIABLE REMUNERATION OUTCOMES

There were no increases to Non-Executive Director fees
for the 2021 year.

As a Board we believe we have struck the right balance in rewarding
our executives for good performance while taking account ofshortcomings; balancing this year’s results with the significant
work done to prepare the bank for long term success.

2022 REMUNERATION STRUCTURE

Shayne has role modelled ANZ’s values and is a respected leader
among staff as well as externally. The Board’s view is that these
attributes are very important to the success of ANZ and values
them highly.

The new regulatory standard does not come into effect until
1 January 2023, however a range of changes are being considered
for implementation in 2022, subject to Board approval.

While Shayne met most of his objectives, the Board determined,with Shayne’s support, that the appropriate 2021 Annual Variable
Remuneration (AVR) outcome was 53% of his maximum opportunity.
Long Term Variable Remuneration (LTVR) of $3.5 million is also
proposed. This reinforces Shayne’s focus on achieving longer
term strategic objectives and creating long-term value for all
stakeholders. This allocation remains subject to shareholder
approval at the 2021 Annual General Meeting and performance
hurdles being met.

The introduction of a new remuneration standard by our regulator
APRA has driven a review of how we reward our executives.

These changes are designed not only to meet both the letter andspirit of APRA’s new prudential standard, but also to maintain ourstrong focus on performance and risk management, and attract,
motivate and retain the best talent.
The key structural changes being considered for the CEO andGroup Executive Committee (ExCo) include:• Reduction in variable remuneration opportunity and restructuring
long term variable remuneration to deliver greater certainty andvalue for executives, while ensuring shareholder alignment.
• Longer deferral (up to 6 years) with around 80% of variable
remuneration deferred to ensure long term focus.

For Disclosed Executives, the Board determined their 2021
Variable Remuneration (VR) outcomes at an average outcomeof 60% of maximum opportunity. This reflects the assessmentof ‘meeting most but not all expectations’ within the Group
Performance Framework.

• The ability to ‘clawback’ vested cash and equity variable
remuneration.

43.3% of the performance rights granted in 2017 to the CEO and
Disclosed Executives (excluding the Chief Risk Officer) vested when
their performance was tested in November 2020 against theirperformance hurdles. The remaining 56.7% of rights lapsed andexecutives received no value from this proportion of the awards.

FIXED REMUNERATION• Separate AVR and LTVR for Disclosed Executives, bringing it in-linewith the current structure for our Chief Executive.
As part of our design process we have spoken to a range of external
stakeholders and will continue to do so. If the changes are approvedby the Board, we will ensure they are clearly communicated to ourstakeholders including disclosure in the 2022 Remuneration Report.

You may recall the Board decided last year there would be no fixed
remuneration increases for our CEO and our Disclosed Executives.

On behalf of the Board, I invite you to consider our Remuneration
Report which will be presented to shareholders at the 2021 Annual
General Meeting.

Following the resignation of the Deputy CEO, the role was not
replaced, with its BEAR accountabilities transitioned to a numberof other executives. This resulted in materially expanded roles forthree Disclosed Executives (Gerard Florian, Kathryn van der Merwe,
and Mark Whelan) and their fixed remuneration was reviewed andadjusted accordingly.

Ilana Atlas, AO | Chair – Human Resources Committee

CONTENTS

74

1. Who is covered by this report76

6. Accountability and Consequence Framework97

2. 2021 outcomes at a glance77

7. Non-Executive Director (NED) remuneration

98

3. Overview of ANZ’s remuneration framework

78

8. Remuneration governance100

4. 2021 outcomes79

9. Other information

102

5. 2021 Executive remuneration structure and delivery

93

ANZ 2021 Annual Report75

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONThe Remuneration Report for the Group outlines our remuneration
strategy and framework and the remuneration practices that apply
to Key Management Personnel (KMP). This report has been prepared,
and audited, as required by the Corporations Act 2001. It forms part of
the Directors’ Report.

2. 2021 OUTCOMES AT A GLANCE

Chief Executive Officer (CEO)remuneration

Disclosed Executive
remuneration

1. WHO IS COVERED BY THIS REPORTFor 2021, our CEO:For 2021:• Had no increase to fixed remuneration.

• There were no increases to fixed remuneration for Disclosed
Executives other than for adjustments to three executives
in May 2021 as a result of their roles expanding following
the departure of the Deputy CEO.

KMP are Directors of Australia and New Zealand Banking Group
Limited (ANZBGL) (whether executive directors or otherwise),and those personnel with a key responsibility for the strategic
direction and management of the Group (i.e. members of theGroup Executive Committee (ExCo)) who report directly to theChief Executive Officer (CEO) (referred to as Disclosed Executives).

2021 Chief Executive Officer (CEO) and Disclosed Executives –Current
S Elliott

CEO and Executive Director

S Buggle

Acting CFO – from 8 February 2021
(concluded in role 10 October 2021)

M Carnegie

Group Executive, Digital and Australia
Transformation

There were several changes to our KMP during the 2021 year:

K Corbally

Chief Risk Officer (CRO)• Paul O’Sullivan commenced as Chairman on 28 October 2020
(following the retirement of David Gonski on that date).

G FlorianGroup Executive, Technology

M HandGroup Executive, Australia Retail andCommercial Banking

K van derMerwe

• Alexis George concluded as ANZ’s Deputy CEO in May 2021 – theresponsibilities of the Deputy CEO were subsequently split acrossthree executives (Gerard Florian, Kathryn van der Merwe, andMark Whelan).

Group Executive, Talent & Culture and Service
Centres (GE T&C) (title changed effective 17 May
2021 from Group Executive, Talent & Culture)

A WatsonGroup Executive and CEO, New Zealand (NZ)

M WhelanGroup Executive, Institutional

1.2 KEY MANAGEMENT PERSONNEL (KMP)

2021 Disclosed Executives – Former

The KMP whose remuneration is disclosed in this year’s report are:

A George

Former Deputy CEO – concluded in role 16 May
2021 and ceased employment 30 July 2021

M Jablko

Former CFO – concluded in role 7 February 2021
and ceased employment 26 March 2021

1.1 DISCLOSED EXECUTIVE AND NED CHANGES• Michelle Jablko concluded as ANZ’s Chief Financial Officer (CFO)in February 2021. Shane Buggle has been acting in the role since
this time.

2021 Non-Executive Directors (NEDs) – Current
P O’Sullivan

Chairman from 28 October 2020(previously Director)

I AtlasDirector

P Dwyer

Director

J Halton

Director

J Key

Director

G Liebelt

Director

J Macfarlane

Director

Changes to KMP since the end of 2021 up to the date of signing
the Directors’ Report, in addition to the one noted above include aspreviously announced:• Was awarded Annual Variable Remuneration (AVR) of 53%
of maximum opportunity, having exceeded or met mostbut not all performance expectations (see section 4).
• Will be awarded Long Term Variable Remuneration (LTVR)
of $3.5 million subject to shareholder approval at the2021 Annual General Meeting (AGM).

• Disclosed Executives’ VR outcomes averaged 60% of
maximum opportunity, with individual outcomes ranging
from 46% to 66% of maximum opportunity.

• Received total remuneration of $5.75 million in 2021
(i.e. includes the value of prior equity awards which
vested in 2021 as per section 4.2).

Performance rights outcomes (CEO and Disclosed Executives)
43.3% of the performance rights granted in late 2017 to the CEO and Disclosed Executives (excluding the CRO) vested and the remaining
56.7% lapsed when tested against the performance hurdles at the end of the performance period in November 2020 (see section 4.4.3).

Non-Executive Director (NED) fees
No increases to NED fees (the Chairman, NED base fee, and Committee fees remained unchanged (see section 7.1)).

• Farhan Faruqui appointed as CFO from 11 October 2021.
• Christine O’Reilly’s appointment to the ANZ Board as a NonExecutive Director, effective 1 November 2021.

2021 Non-Executive Directors (NEDs) – Former
D Gonski76

Former Chairman – retired 28 October 2020

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

3. OVERVIEW OF ANZ’S REMUNERATION FRAMEWORK

4. 2021 OUTCOMES

3.1 REMUNERATION FRAMEWORK OVERVIEW
The structure of our remuneration framework is aligned with our Reward Principles and has been designed to support ANZ’s purpose and strategy.
No changes have been made to our remuneration framework in 2021.

ANZ’S PURPOSE AND STRATEGY1IS UNDERPINNED BY OUR REMUNERATION POLICY WHICH INCLUDES OUR REWARD PRINCIPLES:

Attract, motivate andkeep great people

Reward our people for doing the right thing
having regard to our customers and shareholders

Focus on how things are achieved
as much as what is achieved

Are fair and simple
to understandFixed remuneration Cash salary and superannuation contributions. The Board sets (and reviews annually) the CEO and Disclosed
Executives’ fixed remuneration based on financial services market relativities reflecting their responsibilities, performance,
qualifications, experience and location.
Variable remuneration (at risk) The CEO and Disclosed Executives are eligible to receive variable remuneration under the
ANZ Incentive Plan (ANZIP), our variable remuneration plan.

i.

Year-on-Year Remuneration Awarded (see section 4.1): Reflects actual remuneration awarded in respect of the relevant financial year.
As non-cash components are subject to future vesting outcomes, the awarded value may be higher or lower than the future realised value.

iii. Statutory Remuneration (see section 9.1): Reflects remuneration in accordance with Australian Accounting Standards which includes
fixed remuneration and the amortised accounting value of variable remuneration (not the actual awarded or received value in respectof the relevant financial year).
4.1 YEAR-ON-YEAR REMUNERATION AWARDED

CEO
Annual Variable Remuneration (AVR)DISCLOSED EXECUTIVES
Variable Remuneration (VR)• Rewards the achievement of Group, and individual outcomesover a 12-month period• Determination: ANZ Group Performance Framework,
individual strategic objectives, ANZ values2 and risk/complianceassessments, and Board discretion• Maximum opportunity: 150% of fixed remuneration• Delivery: 50% cash and 50% as ANZ shares deferred overfour years, subject to malus3• Rewarded under a single VR framework, with the appropriate
mix of short and long term rewards (including performance
hurdles) deferred over the short, medium and longer term
• Determination: ANZ Group Performance Framework, Divisional
Performance Frameworks, ANZ values and risk/complianceassessments, and Board discretion• Maximum opportunity: 402% of fixed remuneration5• Delivery: 25% cash, 25% as ANZ shares deferred over four years
subject to malus, and 50% as performance rights deferred
for four years subject to performance hurdles and malus• Performance hurdles: Relative TSR (75%), absolute TSR (25%)

4• Reinforces the CEO’s focus on achieving longer term strategic
objectives and creating long-term value for all stakeholders• Face value at full vesting: 140% of fixed remuneration• Delivery: Performance rights deferred for four years subject
to performance hurdles and malus• Performance hurdles: Relative total shareholder return(TSR) (75%), absolute TSR (25%)

Remuneration outcomes have been presented in the following three ways:

ii. Actual Remuneration Received (see section 4.2): Reflects the actual remuneration received in 2021. Received amounts include cash
and the value of prior equity awards which vested in 2021.

WITH REMUNERATION DELIVERED TO OUR CEO AND DISCLOSED EXECUTIVES THROUGH:Long Term Variable Remuneration (LTVR)

Variable remuneration at ANZ is genuinely at risk and can range from zero to maximum opportunity. Annual performance objectives are
set at the Group and also at the Divisional/individual level at the start of each year. They are designed to be stretching yet achievable. The
HR Committee and the Board make variable remuneration outcome decisions for the CEO and Disclosed Executives following lengthy anddetailed discussions and assessment, supported by comprehensive analysis of performance from a number of sources. Where expectations
are met, variable remuneration is likely to be awarded around target opportunity. Where performance is below expectations, awards will beless (potentially down to zero), and where above expectations, awards will be more (potentially up to maximum opportunity).

These tables show a year-on-year comparison of remuneration awarded to the CEO and Disclosed Executives for the 2019, 2020 and 2021
performance periods. Remuneration awarded includes any cash payments (e.g. fixed remuneration and cash variable remuneration) and thevalue of deferred shares and performance rights awarded for the year but which have not yet vested (i.e. the value was not received during
the year).
2021 remuneration outcomes reflect both the overall performance of the Group and the variability in the performance of each individual/
Division. In particular, the outcomes for the CEO, the Group Executive, Australia Retail and Commercial Banking, and Group Executive, Digitaland Australia Transformation, have been most impacted by the Australian mortgage business loan processing challenges and delivery delays
in a key area of our digital transformation agenda.
Variable remuneration outcomes for the CEO and Disclosed Executives are higher in 2021 compared to 2020. In 2020, the Board used
its discretion and applied a 50% reduction to the 2020 variable remuneration outcomes (AVR for the CEO), having regard to the impact
of COVID-19 on the business, shareholders, as well as the broader community. If we compare 2021 to 2020 without the 50% COVID-19
reduction, the CEO’s total remuneration would be lower.
CEO
The 2021 LTVR shown below has not yet been awarded to the CEO, approval will be sought from shareholders at the 2021 AGM.
YEAR-ON-YEAR REMUNERATION AWARDED IN THE RELEVANT FINANCIAL YEAR – CEO:The awarded value may be higher or lower than future realised value

Board discretion is applied when determining CEO and Disclosed Executive performance and remuneration outcomes, and also
before any scheduled release of previously deferred remuneration (see section 5.3). All deferred variable remuneration is subject
to malus adjustment.

Financial
Fixed
year remuneration$

REINFORCED BY ALIGNING REMUNERATION AND RISK:

Assessing behaviours based on ANZ’svalues and risk/compliance standards(including the Banking Executive
Accountability Regime (BEAR))

Determining variable
remuneration outcomes,
with risk as a key input at
a pool and individual level

Weighting remuneration
toward the longer-termwith a significant
proportion at risk

Determining
accountability andapplying consequenceswhere appropriate

Prohibiting
the hedging
of unvested
equityWHILE SUPPORTING THE ALIGNMENT OF EXECUTIVES AND SHAREHOLDERS THROUGH:

Substantial shareholding
requirements

Significant variable
remuneration deferralin ANZ equity

Use of relative andabsolute TSR hurdles

Consideration of cash profit
and economic profit indetermining the ANZIP
variable remuneration pool

Consideration of theshareholder experience
in respect of the shareprice and dividends

WHILE GOVERNED BY:

The Human Resources (HR) Committee and the Board determining fixed remuneration and the variable remuneration outcomes for
the CEO and each Disclosed Executive. Additionally, the CEO’s LTVR outcome is also subject to shareholder approval at the AGM.
1. See the ‘About our business’ and ‘Our strategy’ sections of the Annual Report. 2. ANZ’s values (Integrity, Collaboration, Accountability, Respect, Excellence (ICARE)) – the foundation of how wework, supported by our Code of Conduct and our Ways of Leading framework. 3. Malus relates to downward adjustment of unvested remuneration. 4. The maximum opportunity and deliveryof VR differs for the CRO to that of other Disclosed Executives. See section 5 for further details. 5. Performance rights face value at full vesting.

78

AVR
cash
$

AVR
deferredshares
$

Total
AVR
$

Threshold vesting

Full vesting

AVR as % of

Total
LTVR
performance remuneration
awardedrights
$
$

Total
LTVR
performance remuneration
awardedrights$$Target Maximum
opportopportunity
unity

CEO
S Elliott 2021

2,500,000 1,000,000 1,000,000 2,000,000

1,750,000

6,250,000

3,500,000

8,000,000

80%

53%

2020

2,500,000

625,000

625,000 1,250,000

1,750,000

5,500,000

3,500,000

7,250,000

50%

33%

2019

2,100,000

750,000

750,000 1,500,000

2,100,000

5,700,000

4,200,000

7,800,000

71%

48%

Disclosed Executives• Fixed remuneration was increased for three Disclosed Executives (Gerard Florian, Kathryn van der Merwe, and Mark Whelan). This was dueto their roles expanding in May 2021 as they took on additional BEAR accountabilities, previously held by the Deputy CEO, following theBoard’s decision to not replace that role post Alexis George’s resignation.
• The change in Antonia Watson’s fixed remuneration from 2020 to 2021 reflects the impact of exchange rate conversions, noting that her
fixed remuneration is paid in NZD and converted to AUD for disclosure purposes.
• The average VR outcome for Disclosed Executives is 90% of target (60% of maximum opportunity), reflecting the overall Group performanceassessment of ‘met most but not all expectations’ (see section 4.5.3). Outcomes as a percentage of maximum range from 46% to 66%, with thevariability at the lower end of the range largely due to the impact of the home loan processing issues in the Australian mortgage business andthe challenges and complexities experienced in progressing some aspects of the digital agenda at pace.

ANZ 2021 Annual Report

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CREATE VALUEREMUNERATIONREPORTPERFORMANCEOVERVIEWDIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION• For the 2021 Disclosed Executives who were in role for full year 2020 and 2021, year-on-year total remuneration has increased on averageby 40%. The year-on-year change primarily reflects the 50% reduction to Disclosed Executives’ VR outcomes in 2020 having regard to theimpact of COVID-19. The differential has also been impacted by the increases to fixed remuneration applied to three executives following
the transition of Deputy CEO accountabilities.
• For both Mark Hand and Antonia Watson, 2021 and 2020 remuneration awarded is not directly comparable with 2019, as they wereDisclosed Executives for only part of the 2019 financial year. Antonia Watson’s 2020 remuneration awarded reflects her permanent
appointment to the Group Executive and CEO, NZ role.

4.2 2021 ACTUAL REMUNERATION RECEIVED
Actual remuneration received
This table shows the remuneration the CEO and Disclosed Executives actually received in relation to the 2021 performance year as cash, or in
the case of prior equity awards, the value which vested in 2021. The final column also shows the value of prior equity awards which lapsed/
were forfeited in 2021. These awards reflect the 2017 performance rights which partially met their performance hurdles when tested in
November 2020, and additionally for Alexis George and Michelle Jablko the forfeiture of unvested deferred remuneration on resignation.

• Shane Buggle’s 2021 remuneration awarded reflects the period he acted as the CFO.

ACTUAL REMUNERATION RECEIVED IN 2021 – CEO AND DISCLOSED EXECUTIVES:• Variable remuneration continues to differ both year-on-year and between different executives demonstrating the at risk nature ofthis element of remuneration and the variability in Group and individual performance year-on-year. See section 4.4 for details.

Received value includes the value of prior equity awards which vested in that year

YEAR-ON-YEAR REMUNERATION AWARDED IN THE RELEVANT FINANCIAL YEAR – DISCLOSED EXECUTIVES:

Fixed
remuneration$

The awarded value may be higher or lower than future realised value
Threshold vesting
Financial
Fixed
year remuneration
$

VR
cash
$

Full vesting

Total
VR
Total
VR
VR
deferred performance remuneration performance remuneration
awardedrights2
awardedrights2
shares1$$$$$

VR as % of2021

K Corbally

G Florian
M HandA Watson3

S Elliott

2,500,000

1,000,000

2,252,821–

5,752,821(1,895,738)

S Buggle

704,000

462,000

1,166,000––

1,166,000-

M Carnegie

1,200,000

569,250

1,769,250

807,983–

2,577,233(499,918)

K Corbally

1,100,000

613,800

1,713,800

297,341–

2,011,141(39,997)

G Florian

1,084,500

676,500

1,761,000

424,282–

2,185,282(257,321)

M Hand1,200,000

544,500

1,744,500

329,920–2,074,420(59,348)

K van der Merwe

907,000

594,000

1,501,000

378,251–

1,879,251(154,402)

2,104,000

952,000

2,580,000

99%

66%

2021

1,200,000 569,250

569,250

586,500

2,925,000

1,173,000

3,511,500

72%

48%

2020

1,200,000 409,200

409,200

421,600

2,440,000

843,200

2,861,600

52%

34%

2019

1,000,000 495,000

495,000

510,000

2,500,000

1,020,000

3,010,000

75%

50%

2021

1,100,000 613,800

613,800

632,400

2,960,000

632,400

2,960,000

94%

63%

2020

1,100,000 429,000

429,000

442,000

2,400,000

442,000

2,400,000

66%

44%

2019

950,000 478,500

478,500

493,000

2,400,000

493,000

2,400,000

85%

57%

A George

2021

1,084,500 676,500

676,500

697,000

3,134,500

1,394,000

3,831,500

95%

63%

M Jablko4

2020

1,075,000 371,250

371,250

382,500

2,200,000

765,000

2,582,500

52%

35%

2021

1,200,000 544,500

544,500

561,000

2,850,000

1,122,000

3,411,000

69%

46%

2020

1,200,000 462,000

462,000

476,000

2,600,000

952,000

3,076,000

58%

39%

2019

726,000 198,000

198,000

204,000

1,326,000

408,000

1,530,000

41%

28%

2021

907,000 594,000

594,000

612,000

2,707,000

1,224,000

3,319,000

99%

66%

2020

850,000 330,000

330,000

340,000

1,850,000

680,000

2,190,000

59%

39%

2021

1,078,682 687,167

687,167

707,991

3,161,008

1,415,981

3,868,998

97%

64%

2020

1,015,599 334,681

334,681344,8222,029,783

689,645

2,374,605

50%

33%

2019

219,440 170,255

113,504–

503,199–

503,19965%

43%2021 CEO REMUNERATION AWARDED (POTENTIAL VALUE NOT REALISED VALUE) AND
ACTUAL REMUNERATIONRECEIVED ($m)
REMUNERATIONMIX – CEO

2021

1,276,000 810,150

810,150

834,700

3,731,000

1,669,400

4,565,700

96%

64%

Maximum opportunity

2020

1,200,000 363,000

363,000

374,000

2,300,000

748,000

2,674,000

46%

31%

2019

1,200,000 874,500

874,500

901,000

3,850,000

1,802,000

4,751,000

110%

74%

Remuneration awarded

n/a

n/a

n/a

913,000

n/a

913,000n/an/aActual remuneration
received

2020

1,100,000 363,000

363,000

374,000

2,200,000

748,000

2,574,000

50%

33%

2019

1,000,000 528,000

528,000

544,000

2,600,000

1,088,000

3,144,000

80%

53%

2021

528,000

n/a

n/a

n/a

528,000

n/a

528,000

n/a

n/a

2020

1,100,000 363,000

363,000

374,000

2,200,000

748,000

2,574,000

50%

33%

2019

1,000,000 544,500

544,500

561,000

2,650,000

1,122,000

3,211,000

83%

55%

Former Disclosed Executives
A George

3,500,000

Cash variable
remuneration$

476,000(3.5 months in role)

M Whelan

Deferred variable
remuneration which
lapsed/forfeitedduring the year1, 2$

462,000(9 months as
Disclosed Executive)

K van der Merwe

Actualremuneration
received$

704,000 462,000(8 months Acting in role)

M Carnegie

Other deferredremuneration
which vested
during the year1$

CEO and Current Disclosed Executives

Target Maximum
opport- opportunity
unity

Current Disclosed Executives
S Buggle

Total
cash
$

Deferred variable
remuneration
which vested
during the year1$

2021

913,000

A Watson3

1,078,682

687,167

1,765,849

309,419–

2,075,268(37,204)

M Whelan

1,276,000

810,150

2,086,150

1,561,716–

3,647,866(963,057)

913,000

n/a

913,000

582,907–

1,495,907(4,344,826)

528,000

n/a

528,000

991,724

119,239

1,638,963(5,514,701)

Former Disclosed Executives

1. The point in time value of previously deferred remuneration granted as shares/share rights and/or performance rights is based on the one day Volume Weighted Average Price (VWAP) of theCompany’s shares traded on the ASX on the date of vesting or lapsing/forfeiture multiplied by the number of shares/share rights and/or performance rights. 2. The lapsed/forfeited values relate
to 56.7% of the performance rights we awarded in November/December 2017 which lapsed in November/December 2020 due to the performance hurdles not being met, and for A George
and M Jablko forfeiture on resignation of unvested deferred remuneration. 3. Paid in NZD and converted to AUD. 4. Other deferred remuneration for M Jablko relates to previously disclosed
compensation for deferred remuneration forfeited as a result of joining ANZ.

CEO Comparison of Remuneration Awarded vs Remuneration Received in 2021
• The chart below shows that the remuneration awarded to the CEO in 2021 was less than the maximum opportunity under the current
remuneration structure. The future realised value for the CEO may be higher or lower than the awarded value based on the vesting shareprice for awarded equity (including the percentage of equity that vests or is forfeited).
• Actual remuneration received in 2021 reflects the impact of prior equity awards that vested in 2021. For example, the performance rights
awarded value in 2017 was $4.2 million, but the received value that vested to the CEO in 2021 was $1.45 million.

$9.75 million$8 million$5.75 million(10 months to term date)

M Jablko$Fixed remuneration

AVR cash$2
AVR deferred shares$4$6
LTVR performance rights

$8

$10

$12

Deferred AVR/LTVR which vested during the year

(6 months to term date)80

1. Deferred share rights for the Acting CFO. 2. Deferred share rights for the CRO. 3. Paid in NZD and converted to AUD. Year to date average exchange rate used to convert NZD to AUD as at
30 September for the relevant year.

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4.3 APPLICATION OF REWARD PRINCIPLES
In considering the 2021 outcomes the HR Committee and Board
reflected on the application of ANZ’s Reward Principles:• Reward our people for doing the right thing having regard
to our customers and shareholders: Variable remuneration
should be primarily based on ‘outcomes’ rather than ‘effort’ andproportionate relative to performance. It also needs to consider
the experience and expectations of a range of stakeholders(including shareholders, customers, employees, community
and regulators).
• Attract, motivate and keep great people: In determining
remuneration outcomes, the Board acknowledged theimportance of balancing performance with being market
competitive to ensure retention of key talent – particularly
in a tight talent market.
• Focus on how things are achieved as much as what is achieved:
The Board has ensured that appropriate consideration andweight was given to performance against a balanced scorecardof objectives (which includes a risk modifier), a risk standards
assessment (capturing financial and non-financial risks), andhow that performance was achieved (i.e. in accordance with
our values and purpose).
• Be fair and simple to understand: Variable remuneration
should be fair and consistent through the cycle and haveregard to external influences outside of management’s control.

DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATIONAt the end of the financial year, ANZ’s performance is assessed against
the Group Performance Framework, and the CEO’s performanceis assessed against his individual strategic objectives, the ANZvalues (behaviours), delivery of the BEAR obligations and ANZ’s risk
and compliance standards. In conducting the CEO’s performanceassessment, the HR Committee seeks input from the Chairman, CRO(on risk management), CFO (on financial performance), GE T&C (ontalent and culture matters) and Group General Manager Internal Audit(GGM IA) (on internal audit matters). Material risk, audit and conduct
events that have either occurred or come to light in the year are also
considered together with input from both the Audit Committee andthe Risk Committee of the Board.

BOARD ASSESSMENT OF PERFORMANCE ON INDIVIDUAL STRATEGIC OBJECTIVES:MET MOST BUT NOT ALL EXPECTATIONSThe CEO publicly outlined in 2021 thebank’s strategy to simplify and strengthen
the business through automation andprocess digitisation. One outcome being
a further reduction in run the bank costs,
with productivity initiatives allowing for ahigher level of investment spend. This wasan area of continued out-performance in
2021. Other financial highlights include
a strengthened balance sheet, strong
capital management, improved ROE, and a
declining long run credit loss rate, despite
the challenging environment.

Met most but not all
expectations(see section 4.5.3)

Individual strategic objectives=

Met most but not all
expectations (see Board
assessment below)

ANZ values=

Above expectations

Risk/compliance assessment=

Met expectations

Overall=

Met most but not all
expectations

4.4 VARIABLE REMUNERATION – DETAIL

4.4.1 CEO performance, AVR and LTVR
PerformanceWith regard to AVR, the CEO is assessed 50% on the ANZ Group
Performance Framework and 50% on achievement of individual
strategic objectives aligned to ANZ’s strategy. Both the Group
Performance Framework and individual strategic objectives
are agreed by the Board at the start of the financial year andare stretching.

The Board has considered the CEO’s performance in determining
the appropriate AVR outcome for 2021. The Board determined,with the CEO’s support, that an AVR outcome of 53% of maximum
opportunity was appropriate.

2021 CEO INDIVIDUAL STRATEGIC OBJECTIVES• Lead and role model the culture and accountability
required to transform ANZ• Enhance the reputation of ANZ

WEIGHTING OF FINANCIAL METRICS

AVR
Financial metrics have a 35% weighting in the Group
Performance Framework and therefore notionally have a
17.5% weighting in the CEO’s AVR. However, the CEO’s AVR
is not formulaic – outcomes are moderated by the Risk
element of the Group Performance Framework and theBoard’s judgement on the appropriate AVR considering all
aspects of performance.
LTVR
100% of the LTVR hurdles are based on TSR (both relative
and absolute).

• Drive the strategic direction of the organisation, focusedon building long term sustainable growth and improving
ROE relative to industry peers• Deliver our digital transformation aspiration to materiallyenhance our customer proposition and build a platform
for creating value• Focus on operational excellence and resilience, including
remediation and system stability, to ensure ANZ has arobust and reliable platform to support long-term growth• Show material progress on productivity initiatives toimprove customer and staff experience while driving
run the bank operating costs towards a materiallyreduced run rate
• Continue to build ExCo effectiveness and CEO succession• Strengthening our future as a digitalbank by progressing work around our
digital agenda• Further cementing customer financial
wellbeing at the heart of our businessHe personally role models the ANZ values– including strong support toand is a respected leader among staff
customers in need
and also externally, as evidenced by the
number of senior executives across Australia • Managing risk well with an improved
seeking to interact with the CEO on a range
control environment, driving reviews ofof matters – particularly our culture andkey risk areas and ensuring Board visibility
purpose. The CEO’s continued focus onof material risks, and strong progress
culture, building leaders, and supporting
against all regulatory obligations
leaders through change has resulted in• Improving systems and infrastructure
Despite the positive outcomes and business another year of high engagement (despite
performance, resulting in reduced system
momentum as we enter 2022, there wasthe challenging environment), and theoutages and customer errors
a loss of market share in the Australianachievement of the #1 position as employer• The finalisation of a four-year Diversity
mortgage business as a result of homeof choice (relative to peers) in Glassdoor1.
& Inclusion Strategy and action plans
loan processing challenges, and a delay in
He continues to engage deeply withto build the foundations for long-term
being ‘market ready’ in respect of one of ourregulators and government, and proactively
sustainable improvement in gendertransformative digital products (noting thatmanages our external reputation.
diversity. Women in leadership in 2021
these matters impacted both the assessment
was also a positive result, increasing 1.9%of Group Performance as well as the Board’s
The CEO continued to focus on delivering•
Continued strong overall employee
assessment of the CEO’s performance).
against strategy and our purpose,engagement of 81%
while ensuring disciplined execution
The executive team performed well in a
and appropriate risk management. Key
challenging environment, demonstrating
While the Australian home loan issue was aoutcomes include:
a coordinated and effective response to
key factor impacting the overall assessment
employees, customers and regulators in• A refreshed strategy which includesof the CEO’s 2021 performance, the banka timely manner. Executive development
Board support for building out platforms has ended the 2021 year stronger financiallycontinues with expanded portfolios
and engaging in digital ecosystems
and culturally through the CEO’s leadership,
for three executives as a result of thewith a refreshed strategy and capability• An updated climate change strategy,
resignation of Alexis George (former Deputy
ready for the challenges and opportunities
including leading the way on theCEO), and the recent appointment of Farhan
of 2022 and beyond.
importance of sustainability to the
Faruqui (Group Executive, International)banking sector
1. Glassdoor is a website where employees and former
to the position of CFO following Michelle
employees anonymously review companies and their
management.
Jablko’s (previous CFO) resignation.

The Board has assessed the CEO’s 2021 performance as follows:
Group Performance Framework =The CEO has successfully led ANZ througha challenging year, progressing our key
initiatives whilst also responding to theimpacts of the COVID-19 pandemic.

AVR and LTVRAt the end of the financial year, the HR Committee makes a recommendation to the Board for their approval in respect of the CEO’s
AVR outcome.
The CEO’s AVR will vary up or down year-on-year, it is not guaranteed, and may range from zero to a maximum opportunity.
The Board exercised their discretion and determined that an AVR outcome of $2 million (53% of maximum opportunity) was appropriate for2021 having regard to both the performance of the CEO (50% weighting) and also the overall performance of the Group (50% weighting).
The CEO’s proposed LTVR of $3.5 million (performance rights face value at full vesting) ($3.5 million in 2020) is subject to shareholder
approval at the 2021 AGM.
2021 AVR AwardedThis table shows the AVR awarded to the CEO for the year ending 30 September 2021.
2021 AVR AWARDED – CEOMaximum opportunity

CEO

S Elliott
AVR $2,000,000
1+

53% of max+=$1,000,000 cash

$1,000,000 deferred shares

LTVR $3,500,000 performance rights face value at full vesting (subject to shareholder approval at the 2021 AGM)=
Total variable remuneration $5,500,000
1. Variable remuneration for the CEO = AVR + LTVR.

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Summary of Total Remuneration
The remuneration Shayne Elliott received in 2021 (which includes prior year awards which vested), differs to the remuneration he wasawarded in relation to the 2021 performance year (which may or may not vest in future years). It also differs to his statutory remuneration
which reflects the accounting expense value for 2021. Awarded remuneration shown below includes the face value of the performancerights at both threshold (50%) and full (100%) vesting.

The degree of variance in individual VR outcomes reflect the weighting of the Group component (i.e. roles with 50% Group weighting will
generally have less differentiation), and relative performance of the different areas/individuals, ensuring appropriate alignment between
performance and reward. The outcomes demonstrate the at risk nature of VR, and that outcomes vary across the Disclosed Executives andalso from year to year. The average 2021 VR for Disclosed Executives is 60% of maximum opportunity (ranging from 46% to 66%).
2021 VR Awarded

Shayne Elliott’s 2020 remuneration outcome was impacted by the Board exercising its discretion to apply a 50% reduction to his AVR(having regard to the impact of COVID-19 on the business, shareholders and broader community), resulting in higher remuneration
outcomes (awarded, received and statutory) in 2021. The remuneration received difference between 2021 and 2020 has also been
positively impacted by the 43.3% LTVR vesting outcome in 2021 compared to 0% in 2020.

2021 VR AWARDED – DISCLOSED EXECUTIVES1

SUMMARY OF TOTAL REMUNERATION – CEO

CURRENT DISCLOSED EXECUTIVESThis table shows the combined VR awarded to Disclosed Executives for the year ending 30 September 2021.

Maximum opportunity

Total Remuneration
AwardedThreshold vesting$

Full vesting$

Received1$

Statutory2$

2021

6,250,000

8,000,000

5,752,821

5,473,399

2020

5,500,000

7,250,000

3,722,362

5,225,308

2019

5,700,000

7,800,000

4,093,464

5,181,339

S Buggle
VR $1,876,000==

M Carnegie
VR $2,311,500=

K Corbally2
VR $1,860,000=

G Florian
VR $2,747,000=

M HandVR $2,211,000=

K van der Merwe
VR $2,412,000=

A Watson
VR $2,790,316=

M Whelan
VR $3,289,700

=

+

+

$462,000$952,000$462,000$569,250++$569,250$1,173,000$613,800

66% of max
48% of max++$613,800$632,400

63% of max

1. Includes the value of previously awarded AVR deferred shares and LTVR performance rights at the date of vesting. 2. Includes the value of AVR and LTVR that has been expensed in the year.

Historical AVR and LTVR
This table shows the AVR as a % of maximum opportunity and LTVR vesting outcomes for the CEO over the last five years.
HISTORICAL AVR AND LTVR – CEO

2017

2018

2019

2020

2021

(post 50%
COVID-19 reduction)

AVR outcome (% of maximum opportunity)

63%

56%

48%

33%

53%

LTVR vesting outcome (% vested)

0%

0%

21.8%

0%

43.3%

4.4.2 Disclosed Executive performance and VR
Performance
At the start of each year, stretching performance objectives are set
in the form of Divisional Performance Frameworks for each of our
Disclosed Executives, in alignment with the Group Performance
Framework approved by the Board.
At the end of the financial year, the performance of each Disclosed
Executive1 is assessed against the Group Performance Framework(25% to 50% weighting), their Divisional Performance Framework,
ANZ’s values (behaviours), delivery of BEAR obligations and ANZ’srisk and compliance standards.
The Group Performance Framework weighting for Disclosed
Executives was introduced in 2021 to reinforce the importanceof collective accountability and contribution to Group outcomes.
The respective weighting varies based on role focus:• 50% weighting: CFO, GE T&C, and GE Technology• 25% weighting: CRO, GE Digital & Australia Transformation,
GE Australia Retail & Commercial Banking, GE & CEO NZ,GE Institutional
Similar to the Group Performance Framework, the Divisional
Performance Frameworks include the key elements of Financial
Discipline and Operational Resilience, Customer, and People andCulture, with Risk acting as a modifier2. The weighting of eachelement varies to reflect the responsibilities of each individual’srole. The Financial Discipline and Operational Resilience element
weightings range from 20% to 50%.
The HR Committee seeks input from the CEO, and independent
reports from Risk, Finance, Talent and Culture, and Internal Audit, andalso reviews material risk, audit and conduct events, and seeks input
from both the Audit Committee and the Risk Committee of the Board.

Cash$676,500$544,500++$676,500$1,394,000++$544,500$1,122,000$594,000$687,167$810,150
Deferred shares or deferred share rights

63% of max
46% of max++$594,000$1,224,000++$687,167$1,415,981++$810,150$1,669,400

66% of max
64% of max
64% of max

Performance rights face value at full vesting3

1. 2021 VR not awarded to former Disclosed Executives A George and M Jablko. 2. CRO receives deferred share rights instead of performance rights. 3. Divide by two to convert to face value atthreshold vesting for performance rights.

Historical Disclosed Executive VR
This table shows the VR as a % of maximum opportunity for the executives who were disclosed over the last five years.

The HR Committee reviews and recommends to the Board
for approval the overall performance outcomes for each
Disclosed Executive.

HISTORICAL DISCLOSED EXECUTIVE VR

VR

VR outcome (average % of maximum opportunity)

At the end of the financial year, the CEO and HR Committee determine
VR recommendations for each Disclosed Executive, which areultimately approved by the Board3. VR should and does vary yearon-year in line with performance – it is not guaranteed and may be
adjusted up or down ranging from zero to a maximum opportunity.

VR outcome (range % of maximum opportunity)

2017

2018

2019

2020

2021

(post 50%
COVID-19 reduction)

VR performance rights vesting outcome (% vested)

64%

51%

45%

36%

60%

51% – 91%

40% – 60%0% – 74%

31% – 44%

46% – 66%

0%

0%

21.8%

0%

43.3%

As highlighted in section 4, performance against objectives
impacts variable remuneration outcomes (e.g. where expectations
are met, variable remuneration is likely to be awarded aroundtarget opportunity).

1. Performance arrangements for the CRO are addressed additionally by the Risk Committee. Performance arrangements for the Group Executive and CEO, NZ are determined and approved by
the ANZ NZ HR Committee/ANZ NZ Board in consultation with and endorsed by the HR Committee/Board, consistent with their respective regulatory obligations. 2. Except for the CRO who hasa percentage weighting assigned to Risk measures. 3. Remuneration arrangements for the Group Executive and CEO, NZ are determined and approved by the ANZ NZ Board in consultation withand endorsed by the Board, consistent with their respective regulatory obligations.

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4.4.3 Performance rights outcomes (CEO and Disclosed Executives)

4.5.2 ANZ Group Performance Framework

Performance rights granted to the CEO in December 2017 and Disclosed Executives (excluding the CRO) in November 2017 reached the endof their performance period in November 2020. Based on performance against hurdles, 43.3% of these rights vested, the remaining 56.7%
lapsed and executives received no value for this portion of the award.

The ANZ Group Performance Framework is approved by the Board at the start of each year. The key objective of our Group Performance
Framework is to enable aligned focus across the organisation on delivering the critical outcomes that matter most in delivering on our
strategy. It plays a key role to:

PERFORMANCE RIGHTS OUTCOMES• message internally what matters most;HurdleGrant date1

First date
exercisable1

75% relative TSR

22-Nov-17

22-Nov-20

ANZ TSRover three years/
CAGR2 TSRMedian TSRover three years/
CAGR2 TSR target% vested(27.28)%(29.18)%57.7%
43.3% vested and56.7% lapsed

Select Financial Services (SFS)
comparator group3

25% absolute CAGR2 TSR

Overall
performancerights outcome

22-Nov-17

22-Nov-20(10.08)%

9.50%

0%

1. Grant date for the CEO was 19 December 2017, and date first exercisable was 19 December 2020. The CEO’s performance period was the same as the performance period for Disclosed
Executives. 2. Compound Annual Growth Rate (CAGR). 3. See section 5.2.3a for details of the SFS comparator group.

• reinforce the importance of sound management in addition to risk, customer, people and financial outcomes; and• inform focus of effort, prioritisation and decision-making across ANZ.
The significant economic and social impacts of the COVID-19 pandemic continues to require rapid responses and reprioritisation of
resources to ensure we are protecting our people, customers, shareholders and ANZ. In the face of these changes, we have regularly tested
our business strategy and Group Performance Framework, and resolved they remain relevant to improving the financial wellbeing of ourcustomers and creating long-term sustainable value for all of our stakeholders.

4.5.3 Assessment against the Group Performance Framework for 2021

4.5.1 ANZIP variable remuneration

RISK

The ANZ Incentive Plan (ANZIP) is the variable remuneration plan operating across ANZ. The variable remuneration award each year, foraround 80% of employees, is based on the overall performance of the Group (rather than individual performance) subject to individuals
meeting minimum standards of performance and behaviour.

CUSTOMERPEOPLE &CULTUREFINANCIALDISCIPLINE &OPERATIONALRESILIENCE

Overall
Adjustment

35%
weight30%
weight35%
weight

4.5 ANZIP VARIABLE REMUNERATION POOL AND GROUP PERFORMANCEWith the exception of the CEO, individual variable remuneration outcomes for all other employees including Disclosed Executives are
funded under ANZIP. The Board decides the CEO’s variable remuneration outcomes separately to help mitigate potential conflicts of interest.
See section 8.1.3.
At the end of each financial year, the HR Committee makes a recommendation to the Board for their approval on the size of the
ANZIP variable remuneration pool for that year. The Board exercise their judgement to determine the appropriate pool size – it is nota formulaic outcome.

ANZIP variable remuneration pool
recommended to the Board for approval
based on performance and affordability

Board review andapprove the ANZIP variable
remuneration poolBusiness and individual
allocations from ANZIP
variable remuneration pool

An assessment of financial performance, in particular cash profit and economic profit informed the pool range. The Board then considereda range of factors in determining a fair and reasonable ANZIP pool. These included:• The Group Performance Framework assessment (see 4.5.3).

xAssessment
Met most but not
all expectations+
Assessment
Below
expectations+
Assessment
Above
expectations

OVERALLGroup
Performance=
Assessment
Met
expectations

Assessment
Met most but not
all expectations

As managing risk appropriately is fundamental to the way ANZ operates, Risk forms an integral part of the assessment, directly impacting
the overall Group Performance Framework outcome (a modifier ranging from 0% to 110% of the Group Performance assessment).
Overall, ANZ’s performance met or exceeded most expectations when considering the objectives we set ourselves, but missed in a few key
areas. In an uncertain and volatile environment, the bank performed well, delivering with purpose against the vast majority of our objectives,
while recognising there are areas where continued focus is required to improve. These areas primarily relate to home lending momentum inAustralia, the pace of delivery for one of our more complex projects focused on digital innovation, and non-financial risk outcomes.
The below table outlines ANZ’s performance objectives in 2021 and provides a summary of outcomes for each of the key performance
categories to inform the overall assessment for 2021. Performance against expectations is evaluated for each category using a holistic
assessment of progress and outcomes delivered in line with our Group strategic priorities and annual focus areas. A range of objective
indicators and subjective factors are considered including management input on work undertaken, evidence of outcomes realised andlessons learned, and with consideration given to the operating, regulatory and competitive environment.

• The quality of earnings and operating environment.
• The shareholder experience during 2021 (e.g. share price growth and dividend comparison with prior periods).
• Our Reward Principles (e.g. attracting, motivating and keeping great people).

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FINANCIALREPORTRISK (MODIFIER 0% TO 110%)

Performance commentary
GROUP STRATEGIC PRIORITY:

Maintain risk discipline focused on good customer and regulatory outcomes.

SHAREHOLDERINFORMATION

Risk overall:
Met most but not all
expectations
Performance against
expectations
Below

Met

Above

Our already strong risk management framework enabled ANZ to continually manage the evolving risks presented
by COVID-19 and support our customers and the community. Business continuity was maintained and improved
throughout 2021 with no major operational challenges associated with the pandemic.
No material unexpected credit events were recorded during the year. No material risk appetite statement breaches
or overdue regulatory issues were recorded, and significant enhancements were made to streamline data capture
and reporting to support the proactive management of the bank’s risk appetite using trend analysis technology.

Below

Met

Above

We have continued to demonstrate our commitment to improve the financial wellbeing of our customers, which remains
central to our business strategy. Sound progress has been made to deliver great outcomes across key segments, howeverafter a strong first half, we experienced material challenges processing home loan application volumes in Australia. This has
resulted in our customers experiencing longer than expected wait times for loan approval decisions and increased volumes
in our assessment backlog. While we were able to tactically manage and improve the situation, strengthening our policy
and processes in this area remains a high priority focus. Given the Australian Home Portfolio is a significant proportion of thegroup balance sheet, under performance in this area has significantly impacted the performance assessment.

Our GoBiz product was launched for business owners, creating the ability for customers to apply for loans in 20 minutes,
while a new joint venture was established with Worldline for merchant services.

ANZ was again the leading Australian bank as measured by the 2020 Dow Jones Sustainability Index1, ranked in the
97th percentile globally in the banking sector and commended in areas including climate strategy and social andenvironmental reporting.

In New Zealand, we launched a new Financial Wellbeing platform ‘We Do How’. Key brand attributes have lifted as aresult, including ‘A bank that helps you improve your financial wellbeing’ and ‘A bank that helps you pay off your homeloan faster’. In addition, we maintained our #1 ranking for Brand Consideration.

ANZ ranked #1 overall amongst major domestic peers in the RepTrak™ 2 corporate reputation survey, while
we are also leading peers in key Reputation Driver scores for Governance, Leadership, Products/Services,
Citizenship and Workplace.

Our Institutional business retained #1 rankings in Peter Lee3 surveys, and continued to support customer-focusedsustainability outcomes. We were awarded Sustainability Debt House of the Year and Sustainability Issuer of the Year by
KangaNews, Australian Sustainability Issuer of the year by FinanceAsia, and maintained our position as the #1 provider
in AUD and NZD Sustainable Bonds.

Sound progress has been made in addressing the findings of the Risk Governance Self-Assessment and on key
regulatory/non-financial risk projects. However, we are not as advanced with some Non-Financial Risk projects as
we would have liked to be and a $500 million APRA capital overlay remains in place pending confirmation of an
improvement in operational risk management across the bank. As a result of not meeting all of the high standards
we hold ourselves to, the overall Risk assessment rating is ‘met most but not all expectations’.

2021 focus areas

Performance commentary

Performance against
expectations
Below

Performance against
expectations
Below

Deliver major
regulatorycommitments

GROUP STRATEGIC PRIORITY:

Deliver great customer outcomes, focused on improving the financial wellbeing and experience of priority segments

Performance against
expectations

Saver Plus, established in partnership with The Brotherhood of St Laurence in 2003, remains Australia’s largest andlongest-running financial education and matched savings program. During 2021, program participants were supported
to save $1.9 million, with a further $1.45 million matched by ANZ.

Timeframes to report risk events once discovered has reduced year-on-year reflecting the significant work
undertaken to uncover historical events and get on top of new issues quickly.

Performance commentary

Performance commentary

Customer overall:
Below expectations

In Australia, our Financial Wellbeing activities achieved 1.34 million visits to our Financial Wellbeing Hub on anz.com.au
since launch and a 7% uplift in consideration during the major ‘Financial Wellbeing Challenge’ campaign over the 2021
Australian Open. We also launched a ‘gambling block’ on the ANZ mobile app, a new Cashrewards program for customers
to earn cashback payments on everyday spending and additional support for customers with persistent credit card debt.

Clear progress continues to be made on risk culture maturity, evidenced in employee engagement scores including‘My business leaders demonstrate personal accountability for managing risk and sound risk behaviours’ (87%) and ‘I
can raise issues and concerns in ANZ without fear of reprisals or negative consequences’ (80%), exceeding the record
highs reached in 2020. These results are the product of sustained efforts over several years to encourage a speak up
and risk culture where people feel they can challenge each other respectfully.

2021 focus areas

CUSTOMER (35% WEIGHT)

Met

Above

• Strong progress was made against regulatory obligations and commitments,
including clear plans and accountability for fixing issues in a sustainable manner.
However, these plans could be more advanced.
• Royal Commission: Implementation of December 2020 legislative reforms areunderway. 11 of the 41 applicable recommendations are complete, 13 are underway
and 17 require external action in order to progress.
• APRA Self-Assessment: Execution is underway and on track, with comprehensive
plans and actions monitored by an internal Oversight Committee and assessed bya third party and ANZ’s internal audit function. To date, the vast majority of actions
have been completed and those remaining are tracking well.
• Implementation of BS11 in New Zealand continues to move forward against ourchallenging, internally imposed delivery timeframes.

Improve time to firstdecision for homeloans in Australia• Restoring momentum in Australian home lending remains a priority to add scale,efficiency and capacity to deliver faster and more consistent application response times
for our customers.

Remediate past
mistakes in Australia
and NZ• Our Responsible Banking teams in Australia and New Zealand refunded approximately$209 million to around 2.6 million customer accounts during 2021.

Treat our customers
fairly, particularly
as COVID-19
loan deferrals arereassessed andmanaged• We have proactively ensured that customers undergoing financial stress, including
due to the impacts of COVID-19, have access to support options.

Met

Above

• Median time to first decision for Broker and Mobile Lending applications reduced from35 days in mid-2020 to 7.4 days and application backlogs have also continued to reduce,
however there is still work ahead to meet customer expectations and our own high standards.

• 13 major remediation streams have been completed in Australia, while in New Zealand,
45 remediation events have been closed.

• Over the last 12 months, approximately 143k loan deferrals were provided to Australia
Retail and Commercial customers. At the completion of deferrals in March 2021, 96% of
our home lending customers, and 90% of our commercial and private bank customers had
either returned or advised their intention to return to payments. Remaining loans havebeen either restructured or are in Hardship or Lending Services, with around 1%
not suitable for either form of assistance.
• Additional support packages were announced in early July and ANZ has since provided
assistance to Home Loan and Commercial customers.
• In New Zealand, communications were sent to 250,000 customers who had not taken
assistance during COVID-19 who ANZ felt might need support, with 7,000 customers
taking assistance as a result. Home loan deferrals resulted in very few defaults and/or referrals to our financial wellbeing team, with strong oversight and assistanceremaining in place.

Deliver new customer
service propositions
1. Dow Jones Sustainability Indices (DJSI): Evaluates the sustainability performance of thousands of companies trading publicly, operated under a strategic partnership between S&P Dow Jones
Indices and RobecoSAM (Sustainable Asset Management). 2. RepTrak™ measures the reputation of the 60 largest companies operating nationally every quarter, as determined by the revenue
classification of the IBISWorld Top 2000 list.

88• Several digital innovation projects are underway to deliver new customer propositions,with early customer satisfaction testing results exceeding expectations. The complexity
and scale of this work has resulted in unexpected delays however robust tracking andsupport remains in place.

3. Peter Lee Associates 2021 Large Corporate and Institutional Relationship Banking surveys, Australia and NZ.

ANZ 2021 Annual Report

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DIRECTORS’REPORT

FINANCIALREPORTPEOPLE & CULTURE (30% WEIGHT)

SHAREHOLDERINFORMATION

People & Culture overall:Above expectations
Performance against
expectations

Performance commentary
GROUP STRATEGIC PRIORITY:

Build a diverse team who listen, learn and adapt

Below

Met

Above

Run core businesses well, focused on delivering sustainable growth and operational improvements

The wellbeing of our people continued to be a priority, with all staff supported to complete mental healthawareness training. We also have been reshaping how we work by mobilising our employees into three flexible
working modes across all geographies where regulatory requirements have permitted.

2021 focus areas

We made the strongest improvement in gender diversity in several years, with female representation inleadership roles increasing by 1.9% to 35.3%. A new Diversity & Inclusion Strategy was also endorsed to drive
further long-term sustainable improvements.

Deliver Group
Economic Profit ina high quality andsustainable manner
Performance against
expectations
Below

Met

Met

Above

Performance commentary

Performance against
expectations
Met

Above

• On a cash continuing basis, Economic Profit5 of $769 million was generated.
This was on target, notwithstanding that NPAT was impacted by $946 million(post-tax) of large/notable items6.
• Excluding large/notable items, revenue was down 3% as the performance of
our Markets business normalised reflecting lower market volatility and customer
hedging activity. Elsewhere, strong risk-adjusted margin discipline was evident
despite environmental and structural headwinds.

• The credit quality of our lending portfolio remains strong, with long-run loss
rates continuing to decline.

introduced into key phases of the employee lifecycle.

• Capital continued to be well managed. CET1 of 12.3% has enabled increased
dividends to be paid to our shareholders and a $1.5 billion share buyback to
be commenced, while retaining flexibility to use our balance sheet to support
customers as required.

• In New Zealand, additional workshops have been delivered to over 80% of people
leaders to further educate them on our leadership frameworks and tools.

• We continued to build priority engineering skills, with approximately 7,000 hours
of content consumed on our leading edge learning platforms relating to Cloud,DevOps, Coding and Scripting and Data Modelling.

Below• Cost management remained disciplined. Run the bank costs reduced 4% whichenabled high levels of investment to grow and simplify the business, and meet
our regulatory and compliance obligations.

Above

Roll out enterprise wide • We successfully rolled out an enterprise wide program to support all of ourpeople leaders to lead their teams through disruption and change.
change leadershipprograms• Activities to embed these key leadership behaviours have been developed and• To enhance our critical strategic capabilities, we have placed over 3,700 externalhires and 700 internal transfers into engineering roles, while more than 400 externalhires and over 200 internal moves were completed into data roles.

Performance against
expectations

Below

Embedding of our reward and performance framework continued, with a focus on continuous performance
management capabilities, employee recognition, and reward arrangements for high performers in criticaltalent populations.

Strengthen strategic
priority capabilities

Financial Discipline& Operational
Resilience overall:
Met expectations

In an uncertain and volatile environment, ANZ delivered solid underlying earnings. This reflects the continued
execution of our long-term strategy to maintain a strong balance sheet, prudently manage risk and remain
focused on cost management. We remained disciplined in our focus on margins and returns, although lending
volumes in our Australian home loan business were impacted by challenges in processing application volumes.
Costs were again well managed, enabling record levels of investment in both growth initiatives and reducing
operational complexity. Our capital strength was again evident enabling us to increase dividends and commence
returning capital to shareholders.

Staff engagement survey results remained strong, and following a global trend which saw employer scores
spike in 2020, ANZ’s 2021 results expectedly returned to a steady positive trend. Key scores remained withintarget thresholds and above 2019 levels, with overall engagement at 81% (86% in 2020; 77% in 2019).

Performance commentary

Performance commentary
GROUP STRATEGIC PRIORITY:

Our consistently strong management of people and culture was again a highlight and reflects multiple yearsof purposeful investment in building the right leadership behaviours and enhancing our culture frameworks.
ANZ was awarded the #1 position in the Australian Financial Review’s Best Place to Work Awards (Banking,Superannuation & Financial Services) and we achieved the outright #1 position amongst major bank peers
in Glassdoor4 ratings.

2021 focus areas

FINANCIAL DISCIPLINE & OPERATIONAL RESILIENCE (35% WEIGHT)

Deliver our
Acceleration to Cloudwith a focus on our
Windows Server Fleet• We are ahead of schedule in the migration of the Windows Server Fleet to Cloud.

• Critical pipelines for engineering capability were also increased through various
programs to improve workforce diversity and participation.

OVERALL

Group Performanceassessment:
Met most but not all
expectations

On balance, the Board considered an overall assessment of ‘Met most but not all expectations’ a fair andappropriate rating, reflecting that overall Group performance was slightly below expectations.
The bank performed well, delivering with purpose against the vast majority of our objectives, while recognising
there are areas where continued focus is required to improve. These areas primarily relate to home lending
momentum in Australia, and the pace at which we are delivering complex projects to achieve digital innovationand non-financial risk outcomes.

4. Glassdoor is a website where employees and former employees anonymously review companies and their management.

90

5. Economic profit is a risk adjusted profit measure used to evaluate business unit performance and is not subject to audit by the external auditor. Economic profit is calculated via a seriesof adjustments to cash profit with the economic credit cost adjustment replacing the accounting credit loss charge; the inclusion of the benefit of imputation credits (measured at 70% ofAustralian tax) and an adjustment to reflect the cost of capital. 6. Large/notable items include the impact of divestments, customer remediation, litigation settlements, restructuring and Asian
Associate items.

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FINANCIALREPORTSHAREHOLDERINFORMATION

4.5.4 ANZ performance outcomes

5. 2021 EXECUTIVE REMUNERATION STRUCTURE AND DELIVERY

ANZ’s financial performance 2017–2021
As discussed in section 4.5.1, when determining variable remuneration outcomes for Disclosed Executives and employees more broadly
cash profit and economic profit are considered. The Group uses cash profit1 as a measure of performance for the Group’s ongoing businessactivities, as this provides a basis to assess Group and Divisional performance against earlier periods and against peer institutions. Althoughcash profit is not audited, the external auditor has informed the Audit Committee that recurring adjustments have been determined ona consistent basis across each period presented.
Statutory profit has increased 72% compared to the prior financial year, while cash profit from continuing operations has increased 65%.
This improvement was driven primarily by a credit provision release of $567 million (compared to a $2.7 billion pre-tax charge in the priorfinancial year) as a result of an improved economic outlook.

There are two core components of remuneration at ANZ – fixed remuneration and at risk variable remuneration.
In structuring remuneration, the Board aims to find the right balance between fixed and variable remuneration (at risk), the way it is delivered(cash versus deferred remuneration) and appropriate time frames (the short, medium and long-term).
The Board sets (and reviews annually) the CEO and Disclosed Executives’ fixed remuneration based on financial services market relativities
and reflecting their responsibilities, performance, qualifications and experience.
The way variable remuneration operates differs somewhat between the CEO and Disclosed Executives. Namely:• The CEO’s variable remuneration is comprised of AVR and LTVR (subject to shareholder approval), which provides consistency with externalmarket practice, and LTVR reinforces his focus on achieving longer term strategic objectives and long-term stakeholder value creation.

During 2021 the Group commenced a $1.5 billion share buy-back to return surplus capital to its shareholders, which up to 30 September
2021 has resulted in the Group returning $654 million of capital to shareholders via the acquisition of 23 million shares on market.
See ‘Note 23 Shareholders’ Equity’ of the Annual Report.

• Disclosed Executives are subject to one combined VR plan (i.e. a mix of short and also long term rewards with performance hurdles)
deferred over the short, medium and longer term.
Variable remuneration seeks to differentiate for performance and is designed to focus our CEO and Disclosed Executives on stretching
performance objectives supporting our business strategy, risk management and the delivery of long-term stakeholder value.

The table below provides ANZ’s financial performance, including cash profit, over the last five years.

By deferring a significant portion of variable remuneration (74% of maximum opportunity for the CEO, 75% for Disclosed Executives and
67% for the CRO), we seek to ensure alignment with shareholder interests to deliver on ANZ’s strategic objectives and ensure a focus
on long-term value creation. Deferred variable remuneration has significant retention elements, and most importantly, can be adjusted
downwards, including to zero, allowing the Board to hold executives accountable, individually or collectively, for the longer term impactsof their decisions and actions.

2017

2018

2019

2020

2021

Statutory profit ($m)

6,406

6,400

5,953

3,577

6,162

Cash profit ($m, unaudited)

6,938

5,805

6,161

3,660

6,181

Cash profit – Continuing operations ($m, unaudited)

6,809

6,487

6,470

3,758

6,198

Cash profit before provisions – Continuing operations ($m, unaudited)

10,849

9,966

9,958

8,369

8,396

Cash ROE (%) – Continuing operations (unaudited)

11.7

11.0

10.9

6.2

9.9

Cash EPS – Continuing operations (unaudited)

232.7

223.4

227.6

132.7

218.3

5.1 REMUNERATION MIX (PERFORMANCE RIGHTS AT FULL VESTING)

Share price at 30 September ($)

29.60

28.18

28.52

17.22

28.15

We structure the CEO and Disclosed Executives’ remuneration as follows:

Total dividend (cents per share)

160

160

160

60

142

Total shareholder return (12 month %)

13.1

0.6

9.2

(36.9)

70.7(On 1 October 2016, opening share price was $27.63)

Board discretion is applied when determining all CEO and Disclosed Executive variable remuneration outcomes, and also before anyscheduled release of previously deferred remuneration (i.e. consider malus or further deferral). See section 5.3.

REMUNERATION MIX – CEO

Minimum opportunity$2.5 million
100%

1. Cash profit excludes non-core items included in statutory profit and is provided to assist readers understand the results of the core business activities of the Group.

Target opportunity

ANZ TSR performance (1 to 10 years)$8.5 million
29%

The table below compares ANZ’s TSR performance against the median TSR and upper quartile TSR of the performance rights SelectFinancial Services (SFS) comparator group1 over one to ten years, noting that for this table TSR is measured over a different timeframe(i.e. to 30 September 2021) to the performance period for our performance rights.

14.5%

14.5%

42%

Maximum opportunity$9.75 million
26%• ANZ’s TSR performance was above the median TSR of the SFS comparator group1 when comparing over one and three years; andFixed remuneration• slightly below the median over five years and ten years.
Years to 30 September 2021
1

32

5

10

ANZ (%)

70.7

15.8

31.8

151.0

Median TSR SFS (%)

60.6

7.0

33.8

152.8

Upper quartile TSR SFS (%)

65.0

32.1

83.2

279.0

1. See section 5.2.3a for details of the SFS comparator group. 2. The outcomes for performance rights granted in November/December 2017 and tested in November 2020 are detailed in
section 4.4.3.

AVR cash

19%

19%

36%

AVR deferred shares

LTVR performance rights

Minimum = Fixed remuneration ($2.5 million)
Target= Fixed remuneration + target AVR (100% of fixed remuneration) + LTVR (140% of fixed remuneration)
Maximum = Fixed remuneration + maximum AVR (150% of fixed remuneration) + LTVR (140% of fixed remuneration)

REMUNERATION MIX – DISCLOSED EXECUTIVES1

Minimum opportunity
100%

Target opportunity

27%

18%

18%

37%

Maximum opportunity
20%
Fixed remuneration

VR cash20%
VR deferred shares

20%

40%
VR performance rights

Minimum = Fixed remuneration
Target= Fixed remuneration + target VR (268% of fixed remuneration)
Maximum = Fixed remuneration + maximum VR (402% of fixed remuneration (150% of target VR))
1. Excluding CRO.

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CRO

5.2.3a Performance rights – CEO (LTVR) and Disclosed Executives (VR) excluding the CRO

To preserve the independence of the role and to minimise any conflicts of interest in carrying out the risk control function acrossthe organisation, the CRO’s remuneration arrangements differ to other Disclosed Executives.

A performance right is a right to acquire one ordinary ANZ share at nil cost – as long as time and performance hurdles are met. The future
value of performance rights may range from zero to an indeterminate value. The value depends on our performance against the hurdles andon the share price at the time of exercise.

The remuneration mix is 27% fixed remuneration and 73% VR at maximum opportunity. The VR target opportunity is 180% of fixed
remuneration and VR maximum opportunity is 270% of fixed remuneration. VR is delivered as 33% cash, 33% deferred shares and
34% deferred share rights (instead of performance rights).

The performance rights have a four-year performance period (and remain subject to malus up to the vesting date). For the 2021 grant, theperformance period is from 22 November 2021 to 21 November 2025. A four-year performance period provides sufficient time for longer
term performance to be reflected.

5.2 VARIABLE REMUNERATION DELIVERYMore detail relating to the 2021 performance rights is provided below.

Variable remuneration for the CEO and the Disclosed Executives (excluding the CRO) is delivered partly in cash, shares deferred over four
years, and performance rights deferred for four years. The performance rights are also subject to performance hurdles which determine
whether they vest in four years’ time.

Element

DetailPerformancerights hurdles

The performance rights have TSR performance hurdles reflecting the importance of focusing on achieving longer term
strategic objectives and aligning executives’ and shareholders’ interests. We will apply two TSR performance hurdles forthe 2021 grants of performance rights:

60% of variable remuneration (AVR plus LTVR) for the CEO, 53% of VR for Disclosed Executives (other than the CRO), and 41% of VR for
the CRO will be deferred for at least four years (from the date the Board approved the variable remuneration in October (and the dateshareholders approve the CEO’s LTVR)), noting that this complies with the BEAR minimum deferral requirement of 60% for the CEO and
40% for Disclosed Executives.

• 75% will be measured against a relative TSR hurdle, tranche 1.
• 25% will be measured against an absolute TSR hurdle, tranche 2.

Before any scheduled release of deferred shares/deferred share rights/performance rights, the Board considers whether any malus/
downward adjustment of previously deferred remuneration (or further deferral of vesting) should be made for the CEO and Disclosed
Executives. See section 5.3.

TSR represents the change in value of a share plus the value of reinvested dividends paid. We regard it as the mostappropriate long-term measure – it focuses on the delivery of shareholder value and is a well understood and tested
mechanism to measure performance. The combination of relative and absolute TSR hurdles provides balance to the plan by:• Absolute: ensuring there is a continued focus on providing positive growth – even when the market is declining.

Nov 2025

Nov 2024

Nov 2023

Nov 2022

Nov 20211

40% vesting at
the end of year 1

DEFERREDSHARES2(AVR/VR)

CASH(AVR/VR)• Relative: rewarding executives for performance that exceeds that of comparator companies; andThe two hurdles measure separate aspects of performance:• the relative TSR hurdle measures our TSR compared to that of the Select Financial Services (SFS) comparator group,
made up of core local and global competitors. This comparator group is chosen to broadly reflect the geographies andbusiness segments in which ANZ competes for revenue; and• the absolute Compound Annual Growth Rate (CAGR) TSR hurdle provides executives with a more direct line of sightto the level of shareholder return to be achieved. It also provides a tighter correlation between the executives’ rewards
and the shareholders’ financial outcomes.

30% vesting at
the end of year 2

PERFORMANCERIGHTS3(LTVR/VR)

ANZ
financial year

Variable remuneration paid/allocatedFixed remuneration

30 Sep 2021

1 Oct
2020

VARIABLE REMUNERATION DELIVERY – CEO AND DISCLOSED EXECUTIVES

20% vesting at
the end of year 3

We will measure ANZ’s TSR against each hurdle at the end of the four-year performance period to determine whether
each tranche of performance rights become exercisable. We measure each tranche independently from the other – forexample one tranche may vest fully or partially but the other tranche may not vest.

10% vesting at
the end of year 4

Vesting is subject tomeeting TSR performance
hurdles at the end of year 4

Relative TSR
hurdle for theNovember/
December
2021 grant

1. Variable remuneration outcomes were approved by the ANZBGL Board on 15 October 2021, and in addition for A Watson by the ANZ NZ Board on 19 October 2021. The CEO’s performancerights are subject to shareholder approval at the 2021 AGM. 2. Deferred shares for the CRO vest as follows: 30% at the end of years 1 and 2, and 20% at the end of years 3 and 4. 3. Deferred sharerights for the CRO.

5.2.1 Cash – CEO (AVR) and Disclosed Executives (VR)The cash component of variable remuneration is paid to executives at the end of the annual Performance and Remuneration Review(December 2021).

5.2.2 Deferred shares – CEO (AVR) and Disclosed Executives (VR)Deferred shares are ordinary shares, deferred over one to four years. By deferring part of an executives’ remuneration over time (and it
remaining subject to malus), we enable a substantial amount of their remuneration to be directly linked to delivering long-term shareholder
value. We grant deferred shares in respect of performance for the 1 October to 30 September financial year in late November each year.
We calculate the number of deferred shares to be granted based on the VWAP of the shares traded on the ASX in the five trading days
leading up to and including the date of grant. For disclosure and expensing purposes, we use the one day VWAP at the date of grant todetermine the fair value.
In some cases, we may grant deferred share rights to executives instead of deferred shares. Each deferred share right entitles the holder
to one ordinary share.

94

Absolute TSR
hurdle for theNovember/
December
2021 grant

The relative TSR hurdle is an external hurdle that measures our TSR against that of the SFS comparator group over four years.
The SFS comparator group (unchanged from prior years) is made up of: Bank of Queensland Limited; Bendigo and Adelaide
Bank Limited; Commonwealth Bank of Australia Limited; DBS Bank Limited; Macquarie Group Limited; National Australia
Bank Limited; Standard Chartered PLC; Suncorp Group Limited; and Westpac Banking Corporation.
If our TSR when compared to the TSR of the comparator groupthen the percentage of performance rights that vest

is less than the 50th percentile
reaches at least the 50th percentile, but is less than the75th percentile

is nilis 50% plus 2% for every one percentile increase
above the 50th percentile

reaches or exceeds the 75th percentile

is 100%

The absolute CAGR TSR hurdle is an internal hurdle as to whether ANZ achieves or exceeds a threshold level of growth
the Board sets at the start of the performance period. The Board reviews and approves the absolute TSR targets each year
for that year’s award. When reviewing the targets, the Board references ANZ’s assessed Cost of Capital. The Cost of Capitalis determined using methodologies including the Capital Asset Pricing Model (CAPM). The Cost of Capital is regularly
reviewed and updated to reflect current market conditions. During 2021, a number of inputs in the calculation were
updated, such that the Cost of Capital was revised for the second half of 2021. As a result, the Board determined the
CAGR TSR targets for 2021 by averaging the Cost of Capital for 1H21 and 2H21.
If the absolute CAGR of our TSR

then the percentage of performance rights that vest

is less than 8.1%

is nilis 8.1%is 50%

reaches at least 8.1%, but is less than 12.2%

is progressively increased on a pro-rata, straight-line,
basis from 50% to 100%

reaches or exceeds 12.2%

is 100%

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When calculating performance against TSR, we:• reduce the impact of share price volatility – by using an averaging calculation over a 90-trading day period forstart and end values;• ensure an independent measurement – by engaging the services of an external organisation, Mercer Consulting(Australia) Pty Ltd, to calculate ANZ’s performance against the TSR hurdles; and• test the performance against the relevant hurdle once only at the end of the four-year performance period –the rights lapse if the performance hurdle is not met – there is no retesting.

Calculating
the number of
performancerightsExpensing
performancerightsThe number of performance rights we grant is calculated using a face value basis – i.e. the full share price. Face value
at full vesting is split into two tranches. Each tranche value is then divided by the market price (five trading day VWAP
of ANZ shares at the start of the performance period) to determine the number of performance rights we award ineach tranche.

6. ACCOUNTABILITY AND CONSEQUENCE FRAMEWORK
Throughout 2021 we continued to strengthen and evolve
ANZ’s Accountability and Consequence Framework (A&CF).
The Enterprise Accountability Group (EAG) operates under thedelegated authority of the Board HR Committee and:• supports the Board in monitoring the implementation andongoing effectiveness of ANZ’s A&CF, being cognisant of its
impact on the culture of ANZ.
• is chaired by the CEO and members include the CRO, CFO
and GE T&C.

Performance rights are allocated in late November/early December for Disclosed Executives and December for theCEO (subject to shareholder approval).

• reviews the most material risk, conduct and audit events (asrelevant), accountability and the application of consequences,where appropriate.

ANZ engages PricewaterhouseCoopers to independently determine the fair value of performance rights, which is onlyused for expensing purposes. They consider factors including: the market performance conditions, share price volatility,
life of the instrument, dividend yield, and share price at grant date.

• provides guidance to the Divisions and considers initiatives acrossthe Divisions to strengthen risk behaviours and recognise risk rolemodels, whose achievements are profiled across the organisation.

5.2.3b Deferred share rights – CRO (VR)The CRO receives deferred share rights instead of performance rights to preserve the independence of the role and to minimise any conflictsof interest in carrying out the risk control function across the organisation.
The CRO’s deferred share rights are subject to a time-based vesting hurdle of four years. The value the Board uses to determine the numberof deferred share rights to be allocated to the CRO is the face value of the Company’s shares traded on the ASX at the time of grant (fivetrading day VWAP).
5.3 MALUS (DOWNWARD ADJUSTMENT OF PREVIOUSLY DEFERRED REMUNERATION) – BOARD DISCRETION
All deferred remuneration we award to an employee is subject to ANZ’s on-going and absolute discretion to adjust this downward (malus)(including to zero) at any time.
ANZ may exercise this discretion, for example, where:• there is a need to protect the financial soundness of ANZ or to meet regulatory requirements or there has been a material failure of risk
management or controls within ANZ;
• the employee has acted fraudulently or dishonestly, failed to act with due care, skill and diligence, or failed to comply with ANZ policies(including the Code of Conduct), processes or directions;• the employee is responsible or accountable, directly or indirectly, by virtue of their role or seniority for an occurrence/event which has had
an adverse impact on ANZ;
• there has been misconduct and the employee was involved directly or indirectly, failed to take adequate steps, could be considered
responsible due to their seniority, or the decision to award or grant the deferred remuneration was made on the basis of misinformation.
Further, where the CEO and/or Disclosed Executives of ANZ have failed to comply with their accountability obligations under the BEAR,
their deferred remuneration will be reduced by an amount that is proportionate to the failure, as required by the BEAR.
An employee’s deferred remuneration is also subject to ANZ’s on-going and absolute discretion to further defer the vesting. Where ANZ
exercises this discretion, the vesting date is postponed and will not vest unless and until ANZ determines it should vest.
Before any scheduled vesting of deferred remuneration, the Board (for the CEO, Disclosed Executives and other specified roles) and/or theEnterprise Accountability Group (EAG) (for other employees) considers whether malus/downward adjustment or further deferral should beapplied. See section 6 for details.

In 2021, 43 individuals were recognised as role modelling
outstanding risk behaviours for their work to manage and mitigate
the organisation’s risks and their continuous improvement of our risk
culture. The recognition provided included personalised messages
from the CEO, the opportunity to meet with the Board and ExCo,and having their achievements profiled on our intranet and ininternal newsletters.
The EAG has processes in place to ensure that we mitigate therisk of conflicts of interest in reviewing events and determining
accountability and consequences. For example, when undertaking
accountability reviews, a recommendation regarding the review
leader must be sent to the CRO or (in the case of an event
involving Group Risk) the CEO, for review and approval to ensure
the individual is capable of undertaking an impartial and unbiased
review. Further, considerations regarding accountability andconsequences for our most senior executives are considered anddetermined by the HR Committee and Board.
Reports on the most material risk, audit and conduct issues were
presented to the HR, Risk and Audit Committees at a concurrent
meeting. This information was taken into consideration by the
Board when considering the performance of the Group and the2021 ANZIP variable remuneration pool for all employees, anddetermining the performance and remuneration outcomes of
the CEO and Disclosed Executives.
The HR Committee and Board consider accountability andconsequences for the CEO and Disclosed Executives, including
the application of malus to previously deferred remuneration.
No malus was applied to the previously deferred remunerationof the CEO and Disclosed Executives during 2021.

When determining consequences,consideration is given to the level ofaccountability, and the severity of the issue, including
customer impacts. Consequences may include, for example, one
or more of the following: counselling, formal warnings, impacts toin year performance and remuneration outcomes or applicationof malus to previously deferred remuneration and ultimately
termination of employment for the most serious issues.
Our ongoing focus on accountability, consequences and driving astrong risk culture supports our customer commitment that whenthings go wrong, we fix them quickly and hold executives, current(and former where we can), to account where appropriate. We arealso focused on ensuring that we learn from the cause of the event,and mitigate the risk of future recurrences and continuously seek tostrengthen our risk culture. We review the effectiveness of the A&CF
every year and implement enhancements to further strengthen theframework based on regulatory and internal stakeholder input.
We also continue to raise employee awareness of, and promote
the various ways that employees can speak up and raise issues andideas for improvement including through initiatives such as theWhistleblower Awareness Day, and through monitoring responses
in our employee engagement surveys. Key risk and speak-up scores,
including ‘Leaders demonstrate accountability for risk’ (87%), ‘I canraise issues without fear of reprisals’ (80%) and ‘When I speak up, myideas, opinions and concerns are heard’ (81%) held firm at or nearthe 2020 highs.
In 2021, there were 1,435 matters involving alleged breaches of
our Code of Conduct with 573 resulting in a formal consequenceor the employee leaving ANZ, marginally up from 569 in 2020.
Breaches ranged from compliance/procedural breaches (44%),
general unacceptable behaviour (31%) through to email/systems
misuse (11%), attendance issues (5%), fraud/theft (4%), conflictof interest (3%) and breaches of our Equal Opportunity, Bullying
and Harassment Policy (2%). Outcomes following investigationsof breaches this year included 114 terminations, 381 warnings and78 employees leaving ANZ1. There was no evidence of broader
systemic conduct issues.
In relation to the application of consequences to our seniorleadership population (senior executives, executives and senior
managers), 16 current and former employees (34 in 2020) had aconsequence applied as a result of the application of our Codeof Conduct policy and/or findings of accountability for a relevant
event. Consequences included warnings, impacts on performanceand remuneration outcomes and, for former employees, downward
adjustment of previously deferred remuneration where relevant.
The 16 current and former employees represent 0.6% of our seniorleadership population.

1. Employees are listed in all categories which are relevant, meaning one employee may be listed in multiple categories.

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7. NON-EXECUTIVE DIRECTOR (NED) REMUNERATION

7.2 2021 STATUTORY REMUNERATION – NEDS
The following table outlines the statutory remuneration disclosed in accordance with Australian Accounting Standards for the NEDs.

7.1 REMUNERATION STRUCTURE
The HR Committee reviewed NED fees for 2021 and determined not to increase their fees.

In addition to the fees shown below, Sir John Key also received NZD 391,000 in each of 2020 and 2021 for his role as Chairman of ANZ BankNew Zealand Limited.

NEDs receive a base fee for being a Director of the Board, and additional fees for either chairing, or being a member of a Board Committee.
The Chairman of the Board does not receive additional fees for serving on a Board Committee.

2021 STATUTORY REMUNERATION – NEDS

Short-term NED benefits

In setting Board and Committee fees, the Board considers: general industry practice, ASX Corporate Governance Principles andRecommendations, the responsibilities and risks attached to the NED role, the time commitment expected of NEDs on Group and Company
matters, and fees paid to NEDs of comparable companies.
ANZ compares NED fees to a comparator group of Australian listed companies with a similar market capitalisation, with particular focus on
the major financial services institutions. This is considered an appropriate group, given similarity in size and complexity, nature of work andtime commitment by NEDs.

Fees1
$

Super
contributions1$

Total
remuneration3$

2021

764,033

19,931

22,163806,1272020

243,331–

19,207

262,5382021

322,337–

22,163

344,500

2020

323,324–

21,176

344,500

2021

365,000––

365,000

2020

354,326–

10,674

365,000

2021

306,837–

22,163

329,000

2020

307,824–

21,176

329,000

2021

278,837–

22,163301,000

2020

279,824–

21,176

301,000

G Liebelt

2021

341,337–

22,163

363,500

2020

342,324–

21,176

363,500

J Macfarlane

2021

296,337–

22,163

318,500

2020

297,324–

21,176

318,500

2021

57,348

3,363

5,424

66,135

2020

803,824–

21,176825,000

2021

2,732,066

23,294

138,4022,893,762

2020

2,952,101–

156,937

3,109,038

Current Non-Executive Directors
P O'Sullivan4

To maintain NED independence and impartiality:
I Atlas• NED fees are not linked to the performance of the Group; and• NEDs are not eligible to participate in any of the Group’s variable remuneration arrangements.
The current aggregate fee pool for NEDs of $4 million was approved by shareholders at the 2012 AGM. The annual total of NEDs’ fees,
including superannuation contributions, is within this agreed limit.

P DwyerThis table shows the NED fee policy structure for 2021.

J Halton

2021 NED FEE POLICY STRUCTURE
Ethics, Environment,
Digital Business &Social &Technology
Committee Governance Committee

Board1, 2

Audit
Committee

Risk
Committee

HR
Committee

Chair fee

$825,000$65,000$62,000$57,000$45,000$35,000

Member fee$240,000$32,500$31,000$29,000$15,000$15,000

J Key

1. Including superannuation. 2. The Chairman of the Board does not receive additional fees for serving on a Board Committee. The Chairman of the Board and NEDs do not receive a fee forserving on the Nomination and Board Operations Committee.

NED shareholding guidelines
We expect our NEDs to hold ANZ shares. NEDs are required:• to accumulate shares – over a five-year period from their appointment – to the value of 100% (200% for the Chairman) of the NED
member fee; and• to maintain this shareholding while they are a Director of ANZ.
As at 30 September 2021, based on the ANZ share price at that time, all NEDs who have served five years met the holding requirement.

98

Post-employment

Non monetary
benefits2$

Financial
year

Former Non-Executive Directors
D Gonski5
Total of all Non-Executive Directors

1. Year-on-year differences in fees relate to changes in Committee memberships and changes to the superannuation Maximum Contribution Base. From 1 January 2020 to 30 September 2021,
P Dwyer elected to receive all payments in fees and therefore did not receive superannuation contributions during this period. 2. Non monetary benefits generally consist of company-funded
benefits (and the associated Fringe Benefits Tax) such as car parking and gifts provided upon retirement. 3. Long-term benefits and share-based payments do not apply for the NEDs.
4. P O’Sullivan commenced as a NED on 4 November 2019 and as Chairman from 28 October 2020, so 2020 remuneration reflects a partial service year. 5. D Gonski retired as Chairman on
28 October 2020, so 2021 remuneration reflects a partial service year.

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8.1.4 External advisors provided information but not recommendations

8. REMUNERATION GOVERNANCE

The HR Committee can engage independent external advisors as needed.

8.1 THE HUMAN RESOURCES (HR) COMMITTEE

8.1.1 Role of the HR Committee
The HR Committee supports the Board on remuneration and otherHR matters. It reviews the remuneration policies and practicesof the Group, and monitors market practice and regulatory andcompliance requirements in Australia and overseas.

To further reflect the importance of the link
between remuneration and risk:

During the year the HR Committee met on five occasions1 andreviewed and approved, or made recommendations to the Board on
matters including:• the HR Committee has free and unfettered access to risk
and financial control personnel (the CRO and CFO attend HR
Committee meetings for specific agenda items);• remuneration for the CEO and other key executives(broader than those disclosed in the Remuneration Report)
covered by the ANZBGL Remuneration Policy, and fees
for the NEDs;• the CRO provides an independent report to the HR Committee
on the most material risk, conduct and audit events (as relevant)to help inform considerations of performance and remuneration,
and accountability and consequences at the Group, Divisional
and individual level;• ANZ’s response to the industry-wide Retail Remuneration
Review by Stephen Sedgwick AO;• updates on APRA’s draft Prudential Standard CPS 511
Remuneration, the BEAR Thematic Review, and Treasury’s
Financial Accountability Regime (FAR);• potential changes to the executive reward structure in lightof CPS 5112;• the ANZ Group Performance Framework (annual objectives
setting and assessment) and annual variable remuneration spend;• performance and reward outcomes for key senior executives,
including the consideration of material events that have either
occurred or came to light in the year;• the release, further deferral or application of malus/downward
adjustment of deferred remuneration;• key senior executive appointments and terminations;• the effectiveness of the ANZBGL Remuneration Policy;• building capabilities required to deliver on our strategy;• succession plans for key senior executives;• culture and governance including updates on the strengthened
Accountability and Consequence Framework (A&CF); and• diversity, inclusion, and employee engagement.
More details about the role of the HR Committee, including
its Charter, can be found on our website. Go to anz.com > Our
company > Strong governance framework > ANZ Human
Resources Committee Charter.
1. A subset of the HR Committee also met on a number of occasions during the year to discuss
regulatory developments and 2021 outcomes. 2. A HR Committee sub-group was established
to review in detail the executive reward structure.

8.1.2 Link between remuneration and risk
The HR Committee has a strong focus on the relationship between
business performance, risk management and remuneration,aligned with our business strategy. The chairs of the Risk and Audit
Committees are members of the HR Committee and the full Board
is in attendance for specific HR Committee meetings. A concurrent
meeting of the HR, Risk and Audit Committees was held to review:• material risk, conduct and audit events that either occurred orcame to light in 2021;• 2021 performance and variable remuneration recommendations
at both the Group and Disclosed Executive level.

100• the Board had two NEDs (in addition to the Chairman) in 2021
who served on both the HR Committee and the Risk Committee;• the CRO also provides an independent report to assist the Boardin their assessment of performance and remuneration outcomes
for the CEO and Disclosed Executives;• the chairs of the Audit and Risk Committees are asked to provide
input to ensure appropriate consideration of all relevant risk andinternal audit issues; and• the Group Performance Framework and Divisional Performance
Frameworks include Risk as a key element acting as a modifier,and it forms an integral part of each framework’s assessment anddirectly impacts the overall outcomes.

8.1.3 Conflict of interest
To help mitigate potential conflicts of interest:• management are not in attendance when their own
performance or remuneration is being discussed by the HR
Committee or Board;• the CEO’s AVR is funded and determined separately from the
ANZIP pool;• the CRO’s remuneration arrangements differ to other Disclosed
Executives to preserve the independence of the role;• the EAG also has processes in place to help mitigate conflicts ofinterest as outlined in section 6; and• the HR Committee seeks input from a number of sources toinform their consideration of performance and remuneration
outcomes for the CEO and Disclosed Executives including:Throughout the year, the HR Committee and management received information from the following external providers: Aon, Ashurst, EY,
Mercer Consulting (Australia) Pty Ltd and PricewaterhouseCoopers. This information related to market data, market practices, analysis andmodelling, legislative requirements and the interpretation of governance and regulatory requirements.
During the year, ANZ did not receive any remuneration recommendations from external consultants about the remuneration of KMP.
ANZ employs in-house remuneration professionals who provide recommendations to the HR Committee and the Board. The Board madeits decisions independently, using the information provided and with careful regard to ANZ’s strategic objectives, purpose and values, risk
appetite and the ANZBGL Remuneration Policy and Principles.
8.2 INTERNAL GOVERNANCE

8.2.1 Hedging prohibition
All deferred equity must remain at risk until it has fully vested. Accordingly, executives and their associated persons must not enter into
any schemes that specifically protect the unvested value of equity allocated. If they do so, then they would forfeit the relevant equity.

8.2.2 CEO and Disclosed Executives’ shareholding guidelines
We expect the CEO and each Disclosed Executive to, over a five-year period:• accumulate ANZ shares to the value of 200% of their fixed remuneration; and• maintain this shareholding level while they are an executive of ANZ.
For this purpose, shareholdings include all vested and unvested equity that is not subject to performance hurdles. Based on equity holdings
as at 30 September 2021, and the equity to be granted on 22 November 2021 as a result of the 2021 Performance and Remuneration Review
outcomes, the CEO and all Disclosed Executives meet or, if less than five years’ tenure, are on track to meet their minimum shareholding
guidelines requirements.

8.2.3 CEO and Disclosed Executives’ contract terms and equity treatment
The details of the contract terms and also the equity treatment on termination (in accordance with the Conditions of Grant) relating
to the CEO and Disclosed Executives are below. Although they are similar, they vary in some cases to suit different circumstances.
Type of contract

Permanent ongoing employment contract.

Notice on resignation• 12 months by CEO;• 6 months by Disclosed Executives1.

Notice on termination
by ANZ2• 12 months by ANZ for CEO and Disclosed Executives3.

How unvested
equity is treated onleaving ANZ

Executives who resign or are terminated will forfeit all their unvested deferred equity – unless the Board
determines otherwise.

– independent reports from Risk, Finance, Talent and Culture, andInternal Audit;

However, ANZ may immediately terminate an individual’s employment at any time in the case of serious
misconduct. In that case, the individual will be entitled only to payment of fixed remuneration up to the dateof their termination and their statutory entitlements.

If an executive is terminated due to redundancy or they are classified as a ‘good leaver’, unless the Board
determines otherwise, then:• their deferred shares/share rights are released at the original vesting date;– material risk, conduct and audit event data provided by the CRO;– input from both the Audit Committee and the Risk Committee• their performance rights4 remain on foot and are released at the original vesting date (to the extent
that the performance hurdles are met); andof the Board.

• their performance rights4 (for grants awarded pre 31 December 2020) are prorated for service to the fullnotice termination date and released at the original vesting date (to the extent that the performance
hurdles are met).
On an executive’s death or total and permanent disablement, their deferred equity vests.
Unvested equity remains subject to malus post termination.
Change of control(applies to the CEO only)

If a change of control or other similar event occurs, then we will test the performance conditions applying to
the CEO’s performance rights. They will vest to the extent that the performance conditions are satisfied.

1. 3 months by the Acting CFO. 2. For K Corbally and M Hand, their contracts state that in particular circumstances they may be eligible for a retrenchment benefit in accordance with the relevant
ANZ policy, as varied from time to time, and M Hand is also eligible to receive a Retirement Allowance on retirement, retrenchment, death, or resignation for illness, incapacity or domestic reasons(see footnote 5 of section 9.1). For A Watson, notice on retrenchment is 6 weeks and compensation on retrenchment is calculated on a scale up to a maximum of 79 weeks after 25 years’ service.
3. 6 months by ANZ for the Acting CFO. 4. Or deferred share rights granted to the CRO instead of performance rights.

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9. OTHER INFORMATION
9.1 2021 STATUTORY REMUNERATION – CEO AND DISCLOSED EXECUTIVES
The following table outlines the statutory remuneration disclosed in accordance with Australian Accounting Standards. While it shows
the fixed remuneration awarded (cash and superannuation contributions) and also the cash component of the 2021 variable remuneration
award, it does not show the actual variable remuneration awarded or received in 2021 (see sections 4.1 and 4.2), but instead shows theamortised accounting value for this financial year of deferred remuneration (including prior year awards).
2021 STATUTORY REMUNERATION – CEO AND DISCLOSED EXECUTIVES

Short–term employee benefits

Long–term employee
benefits

Post–employment

Share–based payments7
Total amortisation value of
Variable
remuneration

Total cash
incentive3$

Retirement
Super benefit accrued
during year5
contributions4$$

Other equity
allocations8Long service leaveaccrued during
the year6$

Shares$Share rights$

Performancerights$Shares$Termination
benefits9$

Total
remuneration$

Financial year

Cash salary1$

Non monetary
benefits2$

2021

2,478,132

15,0251,000,000

21,868–37,880880,970–

1,039,524––

5,473,399

2020

2,478,824

15,089625,000

21,176–100,651

828,507–

1,156,061––

5,225,308

S Buggle10

2021

689,935–

462,000

14,065–52,757112,974

159,61371,423––

1,562,767

M Carnegie

2021

1,178,047

22,621

569,250

22,453–18,182534,990–

267,586––

2,613,129

2020

1,178,824

20,646409,200

21,676–28,120502,572–

196,150––

2,357,1882021

1,078,030

9,525

613,800

21,970–16,667472,538

357,462

1,984

–

–

2,571,976

2020

1,078,824

9,589

429,000

21,176–32,255

378,884

258,090

16,398––2,224,216

2021

1,062,530

21,431

676,500

21,970–18,058478,255–

312,520––

2,591,264

2020

1,053,824

20,646371,250

21,176–

24,403

333,927–

238,329––

2,063,555

2021

1,178,047

9,525

544,500

21,953

5,218

18,182451,897–266,258––

2,495,580

2020

1,178,824

9,589

462,000

21,17625,177

112,623

367,507–203,224––

2,380,120

2021

885,012

15,620594,000

22,488–22,929457,267–

298,076––

2,295,392

2020

828,824

15,089330,000

21,676–

16,580358,605–

229,707––1,800,481

2021

1,042,346

9,786

687,167

36,336–4,130

439,710

22,321200,921564–

2,443,281

2020

975,974

11,176334,681

39,625–

17,383

237,50282,84593,742711–

1,793,639

2021

1,254,082

12,275810,150

21,918–69,359730,123–

355,857––

3,253,764

2020

1,178,824

9,589

363,000

21,176–

18,232754,535–

417,161––

2,762,517

2021

891,030

18,837–22,470––(465,856)–(701,309)–

174,828(60,000)

2020

1,078,824

26,146

363,000

21,676–25,551

430,514–219,525––

2,165,236

2021

516,787

7,552–

11,713––(609,753)–(1,081,003)

10,95074,947(1,068,807)

2020

1,078,824

9,589

363,000

21,676–

21,570535,573–

307,22850,316–

2,387,776

CEO and Current Disclosed Executives
S Elliott

K Corbally
G Florian
M HandK van der Merwe
A Watson11
M Whelan
Former Disclosed Executives
A George12
M Jablko13

1. Cash salary includes any adjustments required to reflect the use of ANZ’s Lifestyle Leave Policy for the period in the KMP role. 2. Non monetary benefits generally consist of company-funded
benefits (and the associated Fringe Benefits Tax) such as car parking, taxation services, costs met by the Company in relation to in-country benefits, and gifts received on leaving ANZ for former
Disclosed Executives. 3. The total cash incentive relates to the cash component only. The relevant amortisation of the AVR/VR deferred components is included in share-based payments and has
been amortised over the vesting period. The total AVR/VR was approved by the ANZBGL Board on 15 October 2021, and in addition for A Watson by the ANZ NZ Board on 19 October 2021. 100%of the cash component of the AVR/VR awarded for the 2020 and 2021 years vested to the executive in the applicable financial year. 4. For all Australian based executives, the 2020 and 2021
superannuation contributions reflect the Superannuation Guarantee Contribution based on the Maximum Contribution Base. A Watson participates in KiwiSaver where ANZ provides an employer
superannuation contribution matching member contributions up to 4% of total gross pay (less employer superannuation contribution tax). 5. Accrual relates to Retirement Allowance. As a resultof being employed with ANZ before November 1992, M Hand is eligible to receive a Retirement Allowance on retirement, retrenchment, death, or resignation for illness, incapacity or domestic
reasons. The Retirement Allowance is calculated as three months of preserved notional salary (which is 65% of fixed remuneration) plus an additional 3% of notional salary for each year of fulltime service above 10 years less the total accrual value of long service leave (including taken and untaken). 6. Long service leave accrued during the year increased year-on-year for K van der
Merwe and M Whelan as a result of their fixed remuneration increases. 7. As required by AASB 2 Share-based payments, the amortisation value includes a proportion of the fair value (taking into
account market-related vesting conditions) of all equity that had not yet fully vested as at the commencement of the financial year. The fair value is determined at grant date and is allocated on astraight-line basis over the relevant vesting period. The amount included as remuneration neither relates to, nor indicates, the benefit (if any) that the executive may ultimately realise if the equity

102

becomes exercisable. No terms of share-based payments have been altered or modified during the financial year. There were no cash settled share-based payments or any other form of sharebased payment compensation during the financial year for the CEO or Disclosed Executives. 8. Other equity allocations relate to employment arrangements such as compensation for deferredremuneration forfeited, and shares received in relation to the historical Employee Share Offer. 9. Termination benefits reflect payment of accrued annual leave and long service leave in accordancewith contract, payable on cessation. 10. S Buggle’s 2021 remuneration reflects a partial service year as he commenced in a Disclosed Executive role on 8 February 2021. 11. A Watson’s fixed
remuneration is paid in NZD and converted to AUD. In 2018, 2019 and 2020 A Watson was eligible to receive shares under the historical Employee Share Offer. That offer provided a grant of ANZshares in each financial year to eligible employees subject to Board approval. See Note 31 Employee Share and Option Plans for further details on the historical Employee Share Offer. 12. A George
ceased employment 30 July 2021. Remuneration reflects up to her date of resignation (noting her annual fixed remuneration for 2021 remained unchanged at $1.1 million). Share-based payments
include the expensing treatment on resignation for unvested deferred remuneration (including reversals for forfeiture on resignation). Termination benefits reflect payment for accrued annual
leave and long service leave in accordance with contract, payable on resignation. 13. M Jablko ceased employment 7 February 2021. Remuneration reflects up to her date of resignation (noting
her annual fixed remuneration for 2021 remained unchanged at $1.1 million). Share-based payments include the expensing treatment on resignation for unvested deferred remuneration(including reversals for forfeiture on resignation). Other equity allocations for M Jablko relate to previously disclosed compensation for deferred remuneration forfeited. Termination benefits reflect
payment for accrued annual leave in accordance with contract, payable on resignation.

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9.2 EQUITY HOLDINGSFor the equity granted to the CEO and Disclosed Executives in November/December 2020, all deferred shares were purchased on the market.
For deferred share rights and performance rights, we will determine our approach to satisfying awards closer to the time of vesting.

Equity fairvalue at
grant
(for 2021
grantsNumberonly)
granted1
$

First
Grant
date
date exercisable

Value2$

Number%–2,115 100

47,259–––(2,115) 100

48,721–––

3,007 100

67,191–––(3,007) 100

69,268––

22–Nov–19 22–Nov–20–

5,745 100

128,370–––(5,745) 100 132,340––

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

5,582

Name

The table below sets out details of deferred shares and rights that we granted to the CEO and Disclosed Executives:

CEO and Current Disclosed Executives• during the 2021 year; or

K Corbally Deferred shares

2,115

22–Nov–17 22–Nov–20• in prior years and that then vested, were exercised/sold or which lapsed/were forfeited during the 2021 year.

Deferred shares

3,007

22–Nov–18 22–Nov–20

Deferred shares

5,745

EQUITY GRANTED VESTED, EXERCISED/SOLD AND LAPSED/FORFEITED – CEO AND DISCLOSED EXECUTIVES

Deferred shares

5,582

Name

Type of equity

Equity fairvalue at
grant
(for 2021
grantsNumberonly)
granted1$

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number%

Value2$

Number%

Vestedand Unexer–
Exercised/Sold
exercis– cisable
able as as at 30
Value2
Value2 at 30 Sep
Sep
20213 20214$ Number%$CEO and Current Disclosed Executives
S Elliott

G Florian

Deferred shares

6,941

22–Nov–16 22–Nov–20–

6,941 100

155,095–––(6,941) 100 161,895––

Deferred shares

8,529

22–Nov–17 22–Nov–20–

8,529 100

190,578–––(8,529) 100 198,935––

Deferred shares

8,622

22–Nov–18 22–Nov–20–

8,622 100

192,656–––(8,622) 100 201,104––

Deferred shares

12,00622–Nov–19 22–Nov–20–

12,006 100

268,270––– (12,006) 100 280,034––

Deferred shares

10,84323.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

10,843

Deferred shares

8,130

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

8,130

Deferred shares

5,420

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

5,420

Deferred shares

2,710

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

2,710

Performance rights

53,191

17–Dec–15 17–Dec–18 17–Dec–20

–

–

–

–

65 800,099––

Performance rights

107,471

19–Dec–17 19–Dec–20 19–Dec–22

62,01058 1,446,222(45,461)

Performance rights

35,823

19–Dec–17 19–Dec–20 19–Dec–22

–

–

–

(35,823) 100

Performance rights

119,48110.55 16–Dec–20 16–Dec–24 16–Dec–26

–

–

–

–

Performance rights

39,827

6.67 16–Dec–20 16–Dec–24 16–Dec–26

–

–

–

Deferred shares

4,703

21–Nov–14 21–Nov–17

–

–

–

Deferred shares

2,938

22–Nov–16 22–Nov–19––

Deferred shares

6,277

22–Nov–17 22–Nov–19–

Deferred shares

6,464

22–Nov–18 22–Nov–19

M Carnegie Deferred shares

1,182

Deferred shares

S Buggle5104–– (34,733)

42 (1,060,260)

–

–

–

62,010–(835,478)

–

–

–

–

–

–

–

–

–

–

– 119,481

–

–

–

–

–

–

–

39,827––––(3,800)81 100,845

903

–

–

–

–

–

–

(2,938) 100

83,214

–

–

–

–

–

–

–

–

(1,562)25

44,241

4,715

–

–

–

–

–

–

–

–

(3,700)57 100,212

2,764

–

22–Nov–16 22–Nov–20–

1,182 100

26,411

–

–

–

–

–

–

1,182

–

4,785

22–Nov–17 22–Nov–20–

4,785 100

106,919

–

–

–

–

–

–

4,785

–

Deferred shares

5,202

22–Nov–18 22–Nov–20–

5,202 100

116,237

–

–

–

–

–

–

5,202

–

Deferred shares

7,924

22–Nov–19 22–Nov–20–

7,924 100

177,059

–

–

–

–

–

–

7,924

–

Deferred shares

7,099

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

7,099

Deferred shares

5,323

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

5,323

Deferred shares

3,549

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

3,549

Deferred shares

1,774

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

1,774

Performance rights

29,58022–Nov–17 22–Nov–20 22–Nov–22

17,06758

381,357(12,513)42(279,599)–––

17,067–

Performance rights

9,860

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(9,860) 100(220,319)

–

–

–

–

–

Performance rights

28,78410.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

28,784

Performance rights

9,594

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

9,594

M HandK van der
Merwe

Date
of
expiry Number

Vestedand Unexer–
exercis– cisable
able as as at 30
Value2 at 30 Sep
Sep
20213 20214%$

Exercised/Sold%

9.2.1 CEO and Disclosed Executives equity granted, vested, exercised/sold and lapsed/forfeited

Type of equity

Lapsed/Forfeited

VestedValue2$ Number––

Deferred shares

5,581

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

5,581

Deferred shares

3,720

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

3,720

Deferred shares

3,720

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

3,720

Deferred share rights

20,11819.06 07–Dec–20 22–Nov–24 29–Nov–24

–

–

–

–

–

–

–

–

–

–

20,118Performance rights

4,230

22–Nov–17 22–Nov–20 22–Nov–22

2,440

58

54,521(1,790)42(39,997)(2,440)58

56,207––

Deferred shares

2,465

22–Nov–17 22–Nov–18

–

–

–

–

–

–

(2,465) 100

69,696–––

Deferred shares

2,462

22–Nov–17 22–Nov–19

–

–

–

–

–

–

–

(2,462) 100

69,611––

Deferred shares

2,462

22–Nov–17 22–Nov–20–

2,462 100

55,013

–

–

–

–

–

–

2,462

–

Deferred shares

3,254

22–Nov–18 22–Nov–19

–

–

–

–

–

–

–

(3,254) 100

92,004––

Deferred shares

3,251

22–Nov–18 22–Nov–20–

3,251 100

72,643

–

–

–

–

–

–

3,251

–

Deferred shares

4,491

22–Nov–19 22–Nov–20–

4,491 100

100,350

–

–

–

–

–

–

4,491

–

Deferred shares

6,442

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

6,442

Deferred shares

4,829

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

4,829

Deferred shares

3,219

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

3,219

Deferred shares

1,609

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

1,609

Performance rights

15,225

22–Nov–17 22–Nov–20 22–Nov–22

8,784

58

196,276(6,441)42(143,922)

–

–

–

8,784

–

Performance rights

5,075

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(5,075) 100(113,399)

–

–

–

–

–

Performance rights

26,11510.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

26,115

Performance rights

8,705

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

8,705

Deferred shares

3,138

3,138 100

70,118–––(3,138) 100

71,641––

22–Nov–17 22–Nov–20–

Deferred shares

3,251

22–Nov–18 22–Nov–20–

3,251 100

72,643–––(3,251) 100

74,220––

Deferred shares

4,755

22–Nov–19 22–Nov–20–

4,755 100

106,249–––(4,755) 100 108,557––

Deferred shares

8,015

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

8,015

Deferred shares

6,010

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

6,010

Deferred shares

4,006

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

4,006

Deferred shares

2,003

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

2,003

Performance rights

6,277

22–Nov–17 22–Nov–20 22–Nov–22

3,621

58

80,910(2,656)42(59,348)(3,621)

58

82,667––

Performance rights

32,49810.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

32,498Performance rights

10,832

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

10,832

Deferred shares

1,479

22–Nov–17 22–Nov–18

–

–

–

–

–

–

–

(800)

54

21,011

679–

Deferred shares

1,477

22–Nov–17 22–Nov–20–

1,477 100

33,003

–

–

–

–

–

–

1,477

–

Deferred shares

3,577

22–Nov–18 22–Nov–20–

3,577 100

79,927

–

–

–

–

–

–

3,577

–

Deferred shares

6,604

22–Nov–19 22–Nov–20–

6,604 100

147,564

–

–

–

–

–

–

6,604

–

Deferred shares

5,724

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

5,724

Deferred shares

4,293

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

4,293

Deferred shares

2,862

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

2,862

Deferred shares

1,431

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

1,431

(3,865)

Performance rights

9,135

22–Nov–17 22–Nov–20 22–Nov–22

5,270

58

117,757

42(86,362)

–

–

–

5,270

–

Performance rights

3,045

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(3,045) 100(68,040)

–

–

–

–

–

Performance rights

23,213

10.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

23,213

Performance rights

7,737

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

7,737

ANZ 2021 Annual Report

105

OVERVIEWName

HOW WE
CREATE VALUE

Type of equity

PERFORMANCEOVERVIEW

Equity fairvalue at
grant
(for 2021
grantsNumberonly)
granted1$

REMUNERATIONREPORT

DIRECTORS’REPORT

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number

FINANCIALREPORT%

Value2$

Number%3,904 100

87,234––SHAREHOLDERINFORMATION

Vestedand Unexer–
Exercised/Sold
exercis– cisable
able as as at 30
Value2
Value2 at 30 Sep
Sep
20213 20214$ Number%$CEO and Current Disclosed Executives
A Watson

M Whelan

Deferred shares

3,904

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number%

Value2$

Number%

Vestedand Unexer–
exercis– cisable
able as as at 30
Value2 at 30 Sep
Sep
20213 20214%$

Exercised/Sold
Value2$ NumberFormer Disclosed Executives
22–Nov–19 22–Nov–20

–

–

–

–

–

3,904

–

M Jablko6

Deferred shares

11,444

20–Aug–16 27–Feb–19

–

–

–

–

–

–

– (11,444) 100 304,489––

Deferred shares

7,617

20–Aug–16 27–Feb–20

–

–

–

–

–

–

–

–

–

Deferred shares

5,806

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

5,806

Deferred shares

4,354

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

4,354

Deferred shares

4,540

20–Aug–16 27–Feb–21–

4,540 100

119,239

–

–

–

–

–

–

4,540

–

Deferred shares

2,902

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

2,902

Deferred shares

1,182

22–Nov–16 22–Nov–19

–

–

–

–

–

–

–

(1,182) 100

31,449––Deferred shares

1,451

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

1,451

Deferred shares

1,182

22–Nov–16 22–Nov–20–

1,182 100

26,411–––(1,182) 100

31,449––

Employee Share Offer

23

04–Dec–14 04–Dec–17

–

–

–

–

–

–

–

(23) 100

612

–

–

Deferred shares

6,305

22–Nov–17 22–Nov–19

–

–

–

–

–

–

–

(6,305) 100 167,757––

Employee Share Offer

26

03–Dec–15 03–Dec–18

–

–

–

–

–

–

–

(26) 100

692

–

–

Deferred shares

6,305

22–Nov–17 22–Nov–20–

6,305 100

140,883–––(6,305) 100 167,757––

Employee Share Offer

24

01–Dec–17 01–Dec–20–

24 100

548

–

–

–

(24) 100

639

–

–

Deferred shares

6,305

22–Nov–17 22–Nov–21

–

–

–

–

(6,305) 100(177,651)–––

Deferred share rights

2,332

22–Nov–17 22–Nov–20 22–Nov–22

2,332 100

52,108–––(2,332) 100

53,013––

Deferred shares

5,693

22–Nov–18 22–Nov–19

–

–

–

–

–

–

–

(5,693) 100 151,473––

Deferred share rights

5,318

22–Nov–18 22–Nov–20 22–Nov–22

5,318 100

118,829–––(5,318) 100 120,894––

Deferred shares

5,690

22–Nov–18 22–Nov–20–

5,690 100

127,141–––(5,690) 100 151,393––

Performance rights

3,934

22–Nov–17 22–Nov–20 22–Nov–22

2,269

58

50,700(1,665)42(37,204)(2,269)58

51,581––

Deferred shares

5,690

22–Nov–18 22–Nov–21

–

–

–

–

(5,690) 100(160,323)

–

–

–

–

–

Performance rights

23,542

10.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

23,542

Deferred shares

5,690

22–Nov–18 22–Nov–22

–

–

–

–

(5,690) 100(160,323)

–

–

–

–

–

Performance rights

7,847

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

7,847

Deferred shares

8,717

22–Nov–19 22–Nov–20–

8,717 100

194,779(8,717) 100 231,932––

Deferred shares

6,724

22–Nov–16 22–Nov–20-

6,724 100

150,246–––(6,724) 100 158,473––

Deferred shares

9,218

22–Nov–17 22–Nov–20–

9,218 100

205,973–––(9,218) 100 217,252––

Deferred shares

7,072

22–Nov–18 22–Nov–20–

7,072 100

158,022–––(7,072) 100 166,674––

Deferred shares

13,998

22–Nov–19 22–Nov–20–

13,998 100

312,781––– (13,998) 100 329,908––

Deferred shares

6,297

23.30 07–Dec–20 22–Nov–21

–

–

–

–

–

–

–

–

–

–

–

6,297

Deferred shares

4,722

23.30 07–Dec–20 22–Nov–22

–

–

–

–

–

–

–

–

–

–

–

4,722

Deferred shares

3,148

23.30 07–Dec–20 22–Nov–23

–

–

–

–

–

–

–

–

–

–

–

3,148

Deferred shares

1,574

23.30 07–Dec–20 22–Nov–24

–

–

–

–

–

–

–

–

–

–

–

1,574

Performance rights

56,985

22–Nov–17 22–Nov–20 22–Nov–22

32,88058

734,694(24,105)42(538,619) (32,880)

58 774,922––

Performance rights

18,995

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(18,995) 100(424,438)

–

–

–

–

–

Performance rights

25,53410.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

25,534

Performance rights

8,511

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

–

–

–

–

–

–

–

8,511

Former Disclosed Executives
A George6 Deferred shares

3,096

22–Nov–17 22–Nov–20–

3,096 100

69,179Deferred shares

3,096

22–Nov–17 22–Nov–21

–

–

–

–

Deferred shares

3,495

22–Nov–18 22–Nov–20–

3,495 100

78,095106

Type of equity

Name

Equity fairvalue at
grant
(for 2021
grantsNumberonly)
granted1
$

–

–

–

–

–

–

3,096

–

(3,096) 100(85,924)

–

–

–

–

–

–

–

–

–

3,495

–

–

–

Deferred shares

3,495

22–Nov–18 22–Nov–21

–

–

–

–

(3,495) 100(96,997)

–

–

–

–

–

Deferred shares

3,495

22–Nov–18 22–Nov–22

–

–

–

–

(3,495) 100(96,997)

–

–

–

–

–

Deferred shares

8,453

22–Nov–19 22–Nov–20–

8,453 100

188,880

–

–

–

–

–

8,453

–

Deferred shares

6,338

22–Nov–19 22–Nov–21

–

–

–

–

(6,338) 100–(175,899)

–

–

–

–

–

Deferred shares

4,225

22–Nov–19 22–Nov–22

–

–

–

–

(4,225) 100(117,257)

–

–

–

–

–

Deferred shares

2,112

22–Nov–19 22–Nov–23

–

–

–

–

(2,112) 100(58,615)

–

–

–

–

–

Deferred shares

6,297

23.30 07–Dec–20 22–Nov–21

–

–

–

–

(6,297) 100(174,761)

–

–

–

–

–

Deferred shares

4,722

23.30 07–Dec–20 22–Nov–22

–

–

–

–

(4,722) 100(131,050)

–

–

–

–

–

Deferred shares

3,148

23.30 07–Dec–20 22–Nov–23

–

–

–

–

(3,148) 100(87,367)

–

–

–

–

–

Deferred shares

1,574

23.30 07–Dec–20 22–Nov–24

–

–

–

–

(1,574) 100(43,683)

–

–

–

–

–

Performance rights

19,14022–Nov–17 22–Nov–20 22–Nov–22

11,043

58

246,753(8,097)(180,925) (11,043)

58 252,112

–

–

42

Performance rights

6,380

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(6,380) 100(142,559)

–

–

–

–

–

Performance rights

21,61022–Nov–18 22–Nov–21 22–Nov–23

–

–

–

(21,610) 100(599,744)

–

–

–

–

–

Performance rights

7,203

22–Nov–18 22–Nov–21 22–Nov–23

–

–

–

(7,203) 100(199,906)

–

–

–

–

–

Performance rights

32,653

22–Nov–19 22–Nov–23 22–Nov–25

–

–

–

(32,653) 100(906,222)

–

–

–

–

–

Performance rights

10,88422–Nov–19 22–Nov–23 22–Nov–25

–

–

–

(10,884) 100(302,065)

–

–

–

–

–

Performance rights

25,53410.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

(25,534) 100(708,648)

–

–

–

–

–

Performance rights

8,511

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

(8,511) 100(236,207)

–

–

–

–

–

–

–

–

(7,617) 100 202,665––

Deferred shares

6,536

22–Nov–19 22–Nov–21

–

–

–

–

(6,536) 100(184,160)

–

–

–

–

–

Deferred shares

4,357

22–Nov–19 22–Nov–22

–

–

–

–

(4,357) 100(122,764)

–

–

–

–

–

Deferred shares

2,178

22–Nov–19 22–Nov–23

–

–

–

–

(2,178) 100(61,368)

–

–

–

–

–

Deferred shares

6,297

23.30 07–Dec–20 22–Nov–21

–

–

–

–

(6,297) 100(177,426)

–

–

–

–

–

Deferred shares

4,722

23.30 07–Dec–20 22–Nov–22

–

–

–

–

(4,722) 100(133,048)

–

–

–

–

–

Deferred shares

3,148

23.30 07–Dec–20 22–Nov–23

–

–

–

–

(3,148) 100(88,699)

–

–

–

–

–

Deferred shares

1,574

23.30 07–Dec–20 22–Nov–24

–

–

–

–

(1,574) 100(44,349)

–

–

–

–

–

Performance rights

38,97622–Nov–17 22–Nov–20 22–Nov–22

22,48958

502,510(16,487)(368,397) (22,489)

58 518,050

–

–

42

Performance rights

12,992

22–Nov–17 22–Nov–20 22–Nov–22

–

–

–

(12,992) 100(290,302)

–

–

–

–

–

Performance rights

35,17922–Nov–18 22–Nov–21 22–Nov–23

–

–

–

(35,179) 100(991,211)

–

–

–

–

–

Performance rights

11,72622–Nov–18 22–Nov–21 22–Nov–23

–

–

–

(11,726) 100(330,394)

–

–

–

–

–

Performance rights

33,673

22–Nov–19 22–Nov–23 22–Nov–25

–

–

–

(33,673) 100(948,777)

–

–

–

–

–

Performance rights

11,22422–Nov–19 22–Nov–23 22–Nov–25

–

–

–

(11,224) 100(316,250)

–

–

–

–

–

Performance rights

25,53410.59 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

(25,534) 100(719,451)

–

–

–

–

–

Performance rights

8,511

6.46 07–Dec–20 22–Nov–24 22–Nov–26

–

–

–

(8,511) 100(239,808)

–

–

–

–

–

1. For the purpose of the five highest paid executive disclosures, Executives are defined as
Disclosed Executives or other members of the ExCo. For the 2021 financial year the five highest
paid executives include four Disclosed Executives and the Group Executive, International(F Faruqui). Rights granted to Disclosed Executives as remuneration in 2021 are includedin the table. Rights granted to F Faruqui as remuneration in 2021 include four tranches ofdeferred share rights and two tranches of performance rights granted on 07 Dec 2020. (6,459(tranche 1) deferred share rights first exercisable 22 Nov 2021, expiring 29 Nov 2021; 5,158(tranche 2) deferred share rights first exercisable 22 Nov 2022, expiring 29 Nov 2022; 3,619(tranche 3) deferred share rights first exercisable 22 Nov 2023, expiring 29 Nov 2023; 1,904(tranche 4) deferred share rights first exercisable 22 Nov 2024, expiring 29 Nov 2024; 25,534(tranche 1) and 8,511 (tranche 2) performance rights first exercisable 22 Nov 2024 subject
to meeting performance hurdles, expiring 22 Nov 2026). No rights have been granted to
the CEO, Disclosed Executives or the five highest paid executives since the end of 2021 up
to the Directors’ Report sign-off date. 2. The point in time value of shares/share rights and/or performance rights is based on the one day VWAP of the Company’s shares traded on the
ASX on the date of vesting, lapsing/forfeiture or exercising/sale/transfer out of trust, multipliedby the number of shares/share rights and/or performance rights. The exercise price for all
share rights/performance rights is $0.00. No terms or conditions of grant of the share-based
payment transactions have been altered or modified during the reporting period. 3. The
number vested and exercisable is the number of shares, options and rights that remain
vested at the end of the reporting period. No shares, options and rights were vested andunexercisable.

4. Performance rights granted in prior years (by grant date) that remained unexerciseable at 30
Sep 2021 include:
S Elliott
S Buggle
M Carnegie
K Corbally
G Florian
M HandK van der Merwe
A Watson
M Whelan
A George
M Jablko

Nov-18110,365
6,464
42,884–26,80226,802
29,482
4,802
58,296––

Nov-19168,066–
40,816–23,12824,48934,013–
72,108––

Nov-20159,308–
38,378–34,82043,33030,95031,38934,045––

Performance rights granted to S Elliott in 2021 were approved by shareholders at the 2020
AGM in accordance with ASX Listing Rule 10.14.
5. Equity transactions disclosed from date commenced as a KMP. 6. Equity transactions
disclosed up to date ceased employment.

ANZ 2021 Annual Report107

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

9.2.2 NED, CEO and Disclosed Executives equity holdings

9.3 LOANS

The table below sets out details of equity held directly, indirectly or beneficially by each NED, the CEO and each Disclosed Executive,
including their related parties.

9.3.1 Overview

EQUITY HOLDINGS – NED, CEO AND DISCLOSED EXECUTIVESNameType of equity

Current Non–Executive Directors
Ordinary shares
P O’Sullivan
I AtlasP Dwyer
J Halton
J Key
G Liebelt

J Macfarlane

Capital notes 2
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Capital notes 1
Capital notes 2
Capital notes 6
Ordinary shares
Capital notes 2
Capital notes 3
Capital notes 6

Former Non–Executive Directors
Ordinary shares
D Gonski6
CEO and Current Disclosed Executives
Deferred shares
S Elliott

S Buggle5

M Carnegie

K Corbally

G Florian

M HandK van der Merwe

A Watson

M Whelan

Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Capital notes 2
Capital notes 6
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Capital notes 6
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Employee Share Offer
Ordinary shares
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights

Former Disclosed Executives
Deferred shares
A George6

M Jablko6

108

Ordinary shares
Capital notes 1
Performance rights
Deferred shares
Ordinary shares
Performance rights

Openingbalance at
1 Oct 2020

Granted during
the year as
remuneration1

Received during
the year on
exercise of
options or rights

Resulting fromany otherchanges during
the year2

Closingbalance at
30 Sep 20213, 4

4,078
9,250
14,36017,5009,049
3,000
20,315
1,500
2,500
–
17,851
2,000
5,000
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
(1,500)
–
2,500
–
–
–
2,140

4,078
9,250
14,36017,5009,049
3,000
20,315
–
2,500
2,500
17,851
2,000
5,000
2,140

31,488–––31,48879,877
216,821456,458
98,66419,759730–
24,624
6,464
74,5395,491
123,140
30,283
1,095–
34,273
4,230
34,365
2,194
70,23024,775
1,189
57,56836,894
1,936
75,675
16,247134
12,048
10,467
8,736
81,3691,126
206,384

27,103–
159,308––––––
17,745–38,37818,603––
20,118–16,099–34,82020,034–43,33014,310–30,95014,513–––31,38915,741–
34,045–34,733(34,733)
–
–
–
–
–
–
–
–
–
–
2,440
–
–
(2,440)
–
–
–
–
3,621
(3,621)
–
–
–
–
–
9,919
(7,650)(2,269)–32,880(32,880)(36,098)
39,121(81,284)(12,000)
1,415
(240)
590
–
–
–
3,179
(22,373)(10,867)(2,104)
1,400–(1,790)(8,181)
9,783(11,516)(11,144)(3,575)(2,656)(800)(654)(6,910)
–
(73)
1,780
–
(1,665)(37,012)381(43,100)

70,882
290,675
499,749
86,664
21,174490
590
24,624
6,464
92,284
8,670
139,145
38,0191,431
1,400
54,391–42,283
11,977
93,53433,665
1,235
94,62150,404
1,282
99,71530,76061
23,7472,817
36,19160,09834,387
164,449

80,09010,289802
97,87089,431
5,244
143,770

15,741––
34,045
15,741–
34,045–
11,043–(11,043)–
22,489(22,489)(38,502)
3,567–(120,872)(100,632)(27,733)(155,326)

57,32924,899
802
–
4,540
–
–

1. Details of options/rights granted as remuneration during 2021 are provided in the previous table. 2. Shares resulting from any other changes during the year include the net result of any
shares purchased (including under the ANZ Share Purchase Plan), forfeited, sold or acquired under the Dividend Reinvestment Plan. 3. The following shares (included in the holdings above) were
held on behalf of the NEDs, CEO and Disclosed Executives (i.e. indirect beneficially held shares) as at 30 September 2021 (or the date ceased as a KMP): P O’Sullivan - 0, I Atlas - 14,360, P Dwyer 17,500, J Halton - 0, J Key - 3,000, G Liebelt - 8,158, J Macfarlane - 26,991, D Gonski - 31,488, S Elliott - 358,519, S Buggle - 87,744, M Carnegie - 92,284, K Corbally - 39,419, G Florian - 52,182, M Hand
- 33,665, K van der Merwe - 50,404, A Watson - 30,821, M Whelan - 94,485, A George - 60,809 and M Jablko - 4,540. 4. 93,131 rights were vested and exercisable, and zero options/rights werevested and unexerciseable as at 30 September 2021. There was no change in the balance as at the Directors’ Report sign-off date. 5. Commencing balance is based on holdings as at the date ofcommencement as a KMP. 6. Concluding balance is based on holdings as at the date ceased as a KMP.

When we lend to NEDs, the CEO or Disclosed Executives, we do so in the ordinary course of business and on normal commercial terms andconditions that are no more favourable than those given to other employees or customers – this includes the term of the loan, the security
required and the interest rate. Details of the terms and conditions of lending products can be found on anz.com. No amounts have been
written off during the period, or individual assessed allowance for expected credit losses raised in respect of these balances.
Total loans to NEDs, the CEO and Disclosed Executives, including their related parties at 30 September 2021 (including those with balancesless than $100,000) was $26,866,853 (2020: $32,451,547) with interest paid of $776,791 (2020: $888,019) during the period.

9.3.2 NED, CEO and Disclosed Executives loan transactions
The table below sets out details of loans outstanding to NEDs, the CEO and Disclosed Executives including their related parties, if – at any
time during the year – the individual’s aggregate loan balance exceeded $100,000.
LOAN TRANSACTIONS – NED, CEO AND DISCLOSED EXECUTIVESInterest paid and payable Highest balance in thereporting period
in the reporting period2$$

Opening balance at
1 October 20201$

Closing balance at
30 September 2021$

P O'Sullivan

891,715

789,338

110

900,809

I Atlas1,608,028–

23,057

1,627,610

J Macfarlane

13,281,199

12,858,040

343,014

15,041,667

Name

Current Non–Executive Directors

CEO and Current Disclosed Executives
S Elliott

2,787,423

2,616,885

54,8452,820,507

3

S Buggle

632,287

504,008

14,147760,461

G Florian

2,304,601

4,483,293

64,5304,636,219

M Hand4,226,595

24,631

123,011

4,942,880

K van der Merwe

3,587,416

2,464,654

83,7183,745,883

M Whelan

1,575,953

1,628,540

46,073

1,690,773

Former Disclosed Executives
A George4

1,535,414

1,480,152

24,216

1,564,179

Total

32,430,631

26,849,541

776,72137,730,988

1. Opening balances have been adjusted to take account of minor timing variances. 2. Actual interest paid after considering offset accounts. The loan balance is shown gross, however the interest
paid takes into account the impact of offset amounts. 3. Opening balance is as at the date of commencement as a KMP. 4. Closing balance is as at the date ceased in a KMP role.

9.4 OTHER TRANSACTIONSOther transactions with NEDs, the CEO and Disclosed Executives, and their related parties included deposits.
OTHER TRANSACTIONS – NED, CEO AND DISCLOSED EXECUTIVES

Total KMP deposits

Opening balance at
1 October 20201$

Closing balance at
30 September 20212, 3$

48,482,790

45,703,445

1. Opening balance is at 1 October 2020 or the date of commencement as a KMP if part way through the year. 2. Closing balance is at 30 September 2021 or at the date ceased in a KMP role ifpart way through the year. 3. Interest paid on deposits for 2021 was $88,209 (2020: $498,931).

Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service
fees, brokerage, bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associatedwith the performance of their duties. These transactions are conducted on normal commercial terms and conditions are no more favourable
than those given to other employees or customers. Gifts in the form of charitable donations amounting to $500 were provided on behalf ofthe related parties of KMP during the year.

ANZ 2021 Annual Report 109

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Directors’ report
The Directors’ Report for the financial year ended 30 September
2021 has been prepared in accordance with the requirementsof the Corporations Act 2001. The information below forms partof this Directors’ Report:

Specifically the Policy:

DIRECTORS’ AND OFFICERS’ INDEMNITY• Limits the scope of non-audit services that may be provided;

The Company’s Constitution (Rule 11.1) permits the Company to:• Dividends on page 70

Having made due enquiry, and to the best of ANZ’s knowledge,
no entity of the Group has incurred any material environmental
liability during the year. Further details of ANZ’s environmental
performance, including progress against its targets andmanagement of material issues aligned with its commitment
to fair and responsible banking and priority areas of financial
wellbeing, environmental sustainability and housing, areavailable in ANZ’s ESG Supplement, at anz.com/annualreport.

• Information on the Directors, Company Secretaries and Directors’
meetings on pages 40 to 50• Requires that audit, audit-related and permitted non-audit
services be considered in light of independence requirements
and for any potential conflicts of interest before they areapproved by the Audit Committee, or approved by the Chairof the Audit Committee (or delegate) and notified to the Audit
Committee; and• Indemnify any officer or employee of the Company, or its auditor,
against liabilities (so far as may be permitted under applicablelaw) incurred as such by an officer, employee or auditor, including
liabilities incurred as a result of appointment or nomination by
the Company as a trustee or as an officer or employee of anothercorporation; andCORPORATE GOVERNANCE STATEMENT• Requires pre-approval before the external auditor can commence
any engagement for the Group.

• Make payments in respect of legal costs incurred by an officer,
employee or auditor in defending an action for a liability incurredas such by an officer, employee or auditor, or in resisting or
responding to actions taken by a government agency, aduly constituted Royal Commission or other official inquiry,a liquidator, administrator, trustee in bankruptcy or otherauthorised official.

• Principal activities on page 10• Operating and financial review on pages 56 to 70• Remuneration report on pages 74 to 109.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS
There have been no significant changes in the Group’s stateof affairs.

EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 22 October 2021, a Group fund that owns 19% of the sharesin Cashrewards Limited announced it would make an off-market
takeover offer to acquire the remaining 81% of the shares, for~$80 million. The offer is subject to a number of conditions andcompletion remains uncertain.

PILLAR 3 INFORMATIONANZ provides information required by APS 330: Public Disclosure in
the Regulatory Disclosures section at anz.com/shareholder/centre/
reporting/regulatory-disclosure/.

Other than the matter above, there have been no significant
events from 30 September 2021 to the date of signing this report.

EXTERNAL AUDITORPOLITICAL DONATIONSThe Group’s external auditor is KPMG. The Group appointed Peat,
Marwick, Mitchell & Co (predecessor to KPMG) in 1969.

For the year ending 30 September 2021, our Public Policy Advocacy,
Political Donations and Foreign Influence Policy included an annual
donation to the two major federal political parties to support
Australia’s democratic process. In October 2020, ANZ donated$100,000 to the Liberal Party of Australia and $100,000 to theAustralian Labor Party. ANZ also attended paid events including
business forums hosted by the major Australian Federal politicalparties, totalling $47,600. ANZ discloses associated costs anddonations through the Australian Electoral Commission’s (AEC)
donors annual return process, noting the AEC’s reporting year
is a different period to ANZ’s financial year.
ANZ updated its policy on 1 October 2021. It prohibits political
donations, but allows attendance at paid events hosted by the
major Australian Federal political parties.

ENVIRONMENTAL REGULATIONANZ recognises the expectations of its stakeholders – customers,
shareholders, staff and the community – to operate in a way thatmitigates its environmental impact.
In Australia, ANZ meets the requirements of the National Greenhouseand Energy Reporting Act 2007 (Cth), which imposes reporting
obligations where energy production, usage or greenhouse gas
emissions trigger specified thresholds.
The Group does not believe that its operations are subject to any
other particular and significant environmental regulation under alaw of the Commonwealth of Australia or of an Australian State or
Territory. It may become subject to environmental regulation as aresult of its lending activities in the ordinary course of business andhas developed policies, which are reviewed on a regular basis tohelp identify and manage such environmental matters.

110

ANZ is committed to maintaining a high standard in its governanceframework. ANZ confirms it has followed the ASX Corporate
Governance Council’s Corporate Governance Principles andRecommendations (4th edition) during the 2021 financial year.
ANZ’s Corporate Governance Statement, together with the
ASX Appendix 4G which relates to the Corporate GovernanceStatement, can be viewed at anz.com/corporategovernanceand has been lodged with the ASX.

The Board Audit Committee conducts a formal annual performanceassessment of the external auditor, including whether to commence
an external tender for the audit. After considering relevant factors
including tenure, audit quality, local and international capability
and experience, and independence, the Board Audit Committee
resolved to reappoint KPMG for the 30 September 2022 financial
year audit.
The KPMG Lead Audit Engagement Partner for the Group was
appointed for the financial year ended 30 September 2021 replacing
the previous Lead Audit Engagement partner who had been in therole since the 30 September 2017 financial year. In addition, KPMG
regularly rotates the Engagement Quality Control Review Partnerwith the most recent rotation being for the financial year ended
30 September 2020.

NON-AUDIT SERVICESThe Group’s Stakeholder Engagement Model for Relationship with
the External Auditor (the Policy), which incorporates requirementsof the Corporations Act 2001 and industry best practice, prevents
the external auditor from providing services that are perceived
to be in conflict with the role of the external auditor or breachindependence requirements. This includes consulting advice andsub-contracting of operational activities normally undertaken bymanagement, and engagements where the external auditor may
ultimately be required to express an opinion on its own work.

Further details about the Policy can be found in the Corporate
Governance Statement.
The external auditor has confirmed to the Audit Committeethat it has:
• Implemented procedures to ensure it complies withindependence rules in applicable jurisdictions; andIt is the Company’s policy that its employees should be protectedfrom any liability they incur as a result of acting in the course of
their employment, subject to appropriate conditions.

• Complied with applicable policies and regulations in thosejurisdictions regarding the provision of non-audit services,and the Policy.
The Audit Committee has reviewed the non-audit services provided
by the external auditor during the 2021 financial year, and has
confirmed that the provision of these services is consistent with
the Policy, compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001 and did notcompromise the auditor independence requirements of the
Corporations Act 2001. This has been formally advised by the
Audit Committee to the Board of Directors.
The categories of non-audit services supplied to the Group during
the year ended 30 September 2021 by the external auditor, KPMG,
or by another person or firm on KPMG’s behalf, and the amounts
paid or payable (including GST) by the Group are as follows:
Amount paid/payable$’000’s

Non-audit services

2021

2020

Training and related services–

16

Controls related assessments

90–

Methodology and procedural reviews

101

107

Total

191

123

Further details on the compensation paid to KPMG is provided in
Note 34 Auditor Fees to the financial statements including detailsof audit-related services provided during the year of $4.43 million(2020: $5.37 million).

Under the policy, the Company will indemnify employees andformer employees against any liability they incur to any third party
as a result of acting in the course of their employment with theCompany or a subsidiary of the Company and this extends toliability incurred as a result of their appointment/nomination
by or at the request of the Group as an officer or employee ofanother corporation or body or as trustee.
The indemnity is subject to applicable law and certain exceptions.
In accordance with the employee indemnity policy, the Company
has during or since the year ended 30 September 2021 paid legal
expenses totalling $1,815,847.35 incurred by Mr Richard Moscati inrelation to legal proceedings brought against him and the Company
by a third party.
The Company has entered into Indemnity Deeds with each of
its Directors, with certain secretaries and former Directors of theCompany, and with certain employees and other individuals who
act as directors or officers of related bodies corporate or of anothercompany, to indemnify them against liabilities and legal costs of
the kind mentioned in the Company’s Constitution.
During the financial year, the Company has paid premiums for
insurance for the benefit of the Directors and employees of theCompany and related bodies corporate of the Company. In
accordance with common commercial practice, the insurance
prohibits disclosure of the nature of the liability insured against
and the amount of the premium.

For the reasons set out above, the Directors are satisfied that theprovision of non-audit services by the external auditor during theyear ended 30 September 2021 is compatible with the generalstandard of independence for external auditors imposed by
the Corporations Act 2001 and did not compromise the auditor
independence requirements of the Corporations Act 2001.

ANZ 2021 Annual Report111

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DIRECTORS’REPORT

FINANCIALREPORTSHAREHOLDERINFORMATION

Financial Report
KEY MANAGEMENT PERSONNEL AND EMPLOYEESHARE AND OPTION PLANS
The Remuneration Report contains details of Non-Executive
Directors, Chief Executive Officer and Disclosed Executives’ equity
holdings and options/rights issued during the 2021 financial year
and as at the date of this report.
Note 31 Employee Share and Option Plans to the 2021 Financial
Report contains details of the 2021 financial year and as at thedate of this report:• Options/rights issued over shares granted to employees;• Shares issued as a result of the exercise of options/rights
granted to employees; and• Other details about share options/rights issued, including
any rights to participate in any share issues of the Company.
The names of all persons who currently hold options/rights areentered in the register kept by the Company pursuant to section
170 of the Corporations Act 2001. This register may be inspected
free of charge.

ROUNDING OF AMOUNTS

LEAD AUDITOR’S INDEPENDENCE DECLARATIONThe Lead Auditors Independence Declaration given under Section
307C of the Corporations Act 2001 is set out below and forms partof the Directors’ Report for the year ended 30 September 2021.
To: the Directors of Australia and New Zealand Banking
Group Limited
I declare that, to the best of my knowledge and belief, in relation
to the audit of Australia and New Zealand Banking Group Limited
for the financial year ended 30 September 2021, there have been:• No contraventions of the auditor independence requirements as
set out in the Corporations Act 2001 in relation to the audit; andFINANCIAL STATEMENTS
Income Statements
Statements of Comprehensive Income
Balance Sheets
Cash Flow Statements
Statements of Changes in Equity

114
115
116
117
118

• No contraventions of any applicable code of professional conduct
in relation to the audit.

NOTES TO THE FINANCIAL STATEMENTS
Basis of Preparation
1.
KPMG

Martin McGrath | Partner
27 October 2021

The Company is a company of the kind referred to in Australian
Securities and Investments Commission Corporations (Rounding in
Financial/Directors’ Reports) Instrument 2016/191 dated 24 March
2016 and, in accordance with that Instrument, amounts in the
consolidated financial statements and this Directors’ Report havebeen rounded to the nearest million dollars unless specificallystated otherwise.
This report is made in accordance with a resolution of the Boardof Directors and is signed for and on behalf of the Directors.

Paul D O’Sullivan |Chairman

CONTENTS

Shayne C Elliott |Managing Director

27 October 2021

About Our Financial Statements

Non-Financial Liabilities
120

Financial Performance
2.
3.
4.
5.
6.
7.
8.

Net Interest Income
Non-Interest Income
Operating Expenses
Income Tax
Dividends
Earnings per Ordinary Share
Segment Reporting

126
127
130
132
134
136
137

141
142
143
156
158
159

Financial Liabilities
15. Deposits and Other Borrowings
16. Debt Issuances

170
171

Financial Instrument Disclosures
17. Financial Risk Management
18. Fair Value of Financial Assets
and Financial Liabilities
19. Assets Charged as Security for Liabilities
and Collateral Accepted as Security for Assets
20. Offsetting

214

EquityFinancial Assets
9. Cash and Cash Equivalents
10. Trading Securities
11. Derivative Financial Instruments
12. Investment Securities
13. Net Loans and Advances
14. Allowance for Expected Credit Losses

22. Other Provisions

177
200
207
208

23. Shareholders’ Equity
24. Capital Management

216
218

Consolidation and Presentation
25. Controlled Entities
26. Investments in Associates
27. Structured Entities
28. Transfers of Financial Assets
29. Discontinued Operations and Assets
and Liabilities Held for Sale

220
222
224
226
228

Employee and Related Party Transactions
30. Superannuation and Post Employment
Benefit Obligations
31. Employee Share and Option Plans
32. Related Party Disclosures

229
231
237

Other Disclosures
33. Commitments, Contingent Liabilities
and Contingent Assets
34. Auditor Fees
35. Impact of Adoption of New Standards
and Other Changes
36. Events Since the End of the Financial Year

239
242
243
243

Directors’ Declaration

244

Independent Auditor’s Report245

Non-Financial Assets
21. Goodwill and Other Intangible Assets

210

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by ascheme approved under Professional Standards Legislation.

112

ANZ 2021 Annual Report

113

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FINANCIALREPORT

FINANCIAL REPORTSHAREHOLDERINFORMATIONFINANCIAL REPORTINCOME STATEMENTS

STATEMENTS OF COMPREHENSIVE INCOME
Consolidated

Consolidated

The Company
For the year ended 30 September

2021
$m

2020
$m

2021
$m

2020
$m

Profit for the year from continuing operations

6,180

3,676

6,331

2,806

Investment securities - equity securities at FVOCI

80

(157)

67

(151)

Other reserve movements

(41)

13

(95)

23

456

(550)

(14)

(109)

(1,052)712(1,003)

587

301

(180)

303

(149)

(48)

51

Other comprehensive income after tax from continuing operations

(304)

(111)

(742)

201

Profit/(Loss) after tax from discontinued operations

(17)

(98)

-

-

-

-

-

-

5,859

3,467

5,589

3,007

5,858

3,467

5,589

3,007

1

-

-

-

2021
$m

2020
$m

2021
$m

2020
$m

Interest income1

19,52924,426

15,347

19,362

Interest expense(5,368)(10,377)(4,822)(8,926)2

14,161

14,04910,525

10,436

Other operating income

3

3,325

3,355

4,854

3,652

Net income from insurance business

3

110

78

-

-

Share of associates’ profit/(loss)

3

(176)

155

(1)

(1)

17,42017,637

15,37814,087(9,051)(9,383)(7,594)(7,788)Items that may be reclassified subsequently to profit or loss

8,369

8,254

7,784

6,299

Foreign currency translation reserve1

567(2,738)469(2,337)

Other reserve movements

8,936

5,516

8,253

3,962

(2,756)(1,840)(1,922)(1,156)

Income tax attributable to the above items
Share of associates’ other comprehensive income

For the year ended 30 September

Net interest income

Note

Operating income
Operating expenses

4

Profit before credit impairment and income tax
Credit impairment (charge)/release

14

Profit before income tax
Income tax expense

5

Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

29

Profit for the year

6,180

3,676

6,331

2,806

(17)

(98)

-

-

6,163

3,578

6,331

2,806

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss

2

Other comprehensive income after tax from discontinued operations

Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests

6,162

3,577

6,331

2,806

1

1

-

-

Total comprehensive income for the year
Comprising total comprehensive income attributable to:Shareholders of the Company
Non-controlling interests

Consolidated
2021

2020

7

217.1

126.4

DilutedEarnings per ordinary share (cents) fromcontinuing operations
Basic

7

204.9

118.0

7

217.7

129.8

Diluted

7

205.4

121.1

Dividend per ordinary share (cents)

6

142

60

For the year ended 30 September
Earnings per ordinary share (cents) including
discontinued operations
Basic

1.

Note

The Company

1.

Includes foreign currency translation differences attributable to non-controlling interests of nil (2020: $1 million loss) in the Group.
2.
Share of associates’ other comprehensive income includes a FVOCI reserve loss of $42 million (2020: $48 million gain), defined benefits loss of $5 million (2020: $3 million gain), cash flow hedge reserve gainof $1 million (2020: $1 million loss) and a foreign currency translation reserve loss of $2 million (2020: $1 million gain) that may be reclassified subsequently to profit or loss in the Group.
The notes appearing on pages 120 to 243 form an integral part of these financial statements.

Includes interest income calculated using the effective interest method on financial assets measured at amortised cost or fair value through other comprehensive income of $19,054 million(2020: $23,787 million) in the Group and $14,363 million (2020: $18,073 million) in the Company.

The notes appearing on pages 120 to 243 form an integral part of these financial statements.

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FINANCIALREPORT

FINANCIAL REPORTSHAREHOLDERINFORMATIONFINANCIAL REPORT (continued)
BALANCE SHEETSCASH FLOW STATEMENTS
Consolidated

As at 30 September

The Company

Note

2021
$m

2020
$m

2021
$m

2020
$m

9

151,260

107,923

141,436

98,083For the year ended 30 September

Trading securities

10

44,68850,91334,752

38,423

Derivative financial instruments1

11

38,736135,331

38,292

130,552

Investment securities

12

83,126

93,391

67,94080,284

Profit after income tax
Adjustments to reconcile to net cash provided by/(used in) operating activities:
Allowance for expected credit losses
Impairment of investment in associates
Depreciation and amortisation1
Goodwill impairment(Profit)/Loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment2(Gain)/Loss on sale from divestments
Other non-cash movements

Net loans and advances

13

629,719

617,093

488,487

488,002

Net (increase)/decrease in operating assets:

671

801

213

199

-

-

23,53024,017

AssetsCash and cash equivalents
Settlement balances owed to ANZ

7,530

7,541

7,183

7,116

Collateral paid1

9,166

14,308

8,343

13,012

Regulatory deposits
Due from controlled entities
Shares in controlled entities

25

-

-

15,69315,022

Investments in associates

26

1,972

2,164

20

20

Current tax assets

57

161

55

155

Deferred tax assets

2,339

2,124

1,887

1,744

4,124

4,379

1,017

1,097

Premises and equipment

2,734

3,013

2,415

2,643

Other assets

2,735

3,144

1,909

2,072

Total assets

978,857

1,042,286

833,172

902,441

Settlement balances owed by ANZ

17,42722,241

14,922

19,556

Collateral received

5,657

9,304

5,148

8,074

Goodwill and other intangible assets

21

Liabilities
1

Deposits and other borrowings

15743,056

682,333

606,723

558,136

Derivative financial instruments1

11

36,035

134,71137,005

131,230--

23,07924,295Current tax liabilities

419

349

193

81

Deferred tax liabilities

70

80

70

79

8,647

9,128

7,244

8,070

602

596

447

441

1,873

2,157

Due to controlled entities

Payables and other liabilities
Employee entitlements
Other provisions

22

2,214

2,579

Debt issuances

16

101,054

119,668

81,08897,050Total liabilities

915,181980,989

777,792

849,169

Net assets

63,676

61,29755,38053,272

Shareholders' equity

Collateral paid
Trading securities
Net loans and advances
Net intra-group loans and advances
Other assets
Deposits and other borrowings3
Settlement balances owed by ANZ
Collateral received
Other liabilities2
Total adjustments
Net cash (used in)/provided by operating activities4
Cash flows from investing activities
Investment securities assets:
Purchases
Proceeds from sale or maturity
Proceeds from divestments, net of cash disposed
Repayment of IOOF secured notes
Net movement in shares in controlled entities
Net investments in other assets
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Deposits and other borrowings drawn down3
Debt issuances:5
Issue proceeds
Redemptions
Dividends paid6
On market purchase of treasury shares
Repayment of lease liabilities
Share buyback
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year23

25,984

26,531

25,90726,454

Reserves

23

1,228

1,501

341

1,018

Retained earnings
Share capital and reserves attributable to shareholders of theCompany
Non-controlling interests

23

36,45333,255

29,13225,80023

63,66561,28755,38053,272

2.

23

11

10

-

-

3.

Total shareholders' equity

1.

23

63,676

61,29755,380During 2021, a change was made to the legal arrangements for the settlement of derivative transactions with a central clearing counterparty which resulted in the reduction of derivative financial
instrument assets by $55.1 billion, derivative financial instrument liabilities by $55.2 billion and net collateral paid by $0.1 billion.

The notes appearing on pages 120 to 243 form an integral part of these financial statements.

53,272

2020$m

The Company
2021
$m

2020
$m

6,163

3,578

6,331

2,806

(567)
1,087
(11)
(6,350)
238
(237)

2,738
815
1,391
77
(8)
(2,678)
25
(80)

(469)
959
(11)
(4,374)
(12)
(456)

2,337
1,214
10
(1,807)
11
64

4,995
10
(8,259)143

283(1,803)(7,119)(76)

4,484(2,778)(300)(1,212)
89

33
1,908
(7,526)(393)(26)

48,896(4,928)(3,466)
6,108
37,65943,82239,873
11,476
1,739(9,949)36,70440,282

41,908(4,671)(2,728)5,579
36,00842,33928,66010,286
1,426(9,489)26,70829,514(52,639)
63,44513(561)
10,258(40,029)
28,642
1,309
(800)
(587)
(11,465)(23,040)
35,493(175)(650)
11,628(33,731)
25,346
688
(800)
(75)
(567)
(9,139)9,310

12,002

8,091

12,002

12,624(27,709)(2,834)
(79)
(330)
(654)
(9,672)44,408
107,923(1,071)
151,260

12,260(21,430)(2,861)
(122)
(281)
(432)
28,385
81,621(2,083)
107,923

9,517(23,104)(2,834)
(79)
(288)
(654)
(9,351)
44,61698,083(1,263)
141,436

10,064(17,179)(2,861)
(122)
(267)
1,637
22,012
77,949(1,878)98,083

Net increase/(decrease) in operating liabilities:

Ordinary share capital

1.

Consolidated
2021
$m

4.

2020 includes accelerated amortisation of $197 million for the Group and $184 million for the Company following the Group’s change in the application of its software amortisation policy in 2020.
Certain non-cash adjustments were reclassified from Other liabilities to Net derivatives/foreign exchange adjustment within Net cash (used in)/ provided by operating activities to better reflect the nature of
the item. Comparatives have been restated (2020 Group and Company reduction to net derivative foreign exchange adjustment: $368 million).
Funding in relation to TFF has been reclassified from operating activities to financing activities. Comparatives have been restated (2020 Group: $12,002 million; 2020 Company: $12,002 million).
Net cash (used in)/provided by operating activities for the Group includes interest received of $19,649 million (2020: $24,791 million), interest paid of $5,793 million (2020: $11,156 million) and income taxes
paid of $2,427 million (2020: $2,348 million). Net cash (used in)/provided by operating activities for the Company includes interest received of $15,435 million (2020: $19,657 million), interest paid of $5,117
million (2020: $9,577 million) and income taxes paid of $1,541 million (2020: $1,596 million).

5.

Non-cash changes in debt issuances includes fair value hedging gain of $1,488 million (2020: $1,127 million loss) and foreign exchange gains of $1,525 million (2020: $1,623 million gain) for the Group, and fairvalue hedging gain of $1,114 million (2020: $532 million loss) and foreign exchange gains of $1,262 million (2020: $858 million loss) for the Company.

6.

Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.

The notes appearing on pages 120 to 243 form an integral part of these financial statements.

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FINANCIALREPORTSHAREHOLDERINFORMATIONSTATEMENT OF CHANGES IN EQUITYSTATEMENT OF CHANGES IN EQUITY

Reserves$m

Retainedearnings$m

Share capitaland reserves
attributable toshareholdersof the Company$m26,4901,629

32,66460,783

11

60,794

Impact on transition to AASB 16

-

-

(88)

(88)

-

(88)

Profit or loss from continuing operations

-

-

3,675

3,675

1

3,676

Profit or loss from discontinued operations

-

-

(98)

(98)

-

(98)

Other comprehensive income for the year fromcontinuing operations

-

(124)

14

(110)

(1)

(111)

Other comprehensive income for the year fromdiscontinued operations

-

-

-

-

-

-

-

(124)

3,591

3,467

-

3,467

Consolidated
As at 1 October 2019

Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2020

Ordinaryshare capital$m

61

As at 30 September 2021

(2,922)
61

(20)
6

(1)

(20)
5

26,531

1,501

33,25561,287

10

61,297

-

-

6,179
(17)

6,179
(17)

1
-

6,180
(17)

-

(264)

(40)

(304)

-

(304)

-

-

-

-

-

-

-

(264)

6,122

5,858

1

5,859

-

-

(2,928)(2,928)-(2,928)

94

-

-

94

-

94

(654)

-

-

(654)

-

(654)

Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid

Other equity movements:
Group employee share acquisition scheme
Other items-

10

Other comprehensive income for the year fromdiscontinued operations

Dividend Reinvestment Plan

(2,922)
61(4)

Other comprehensive income for the year fromcontinuing operations

Group share buy-back2(2,922)-(20)-

Profit or loss from continuing operations
Profit or loss from discontinued operations

1-

NonTotal
controlling shareholders’interests
equity$m$m

The Company
As at 1 October 2019
Impact on transition to AASB 16

Reserves$m

Retainedearnings$m

Total
shareholders’equity$m

26,413840

25,961

53,214

-

-

(72)

(72)

Ordinaryshare capital$m

Profit for the year

-

-

2,806

2,806

Other comprehensive income for the year

-

183

18

201

Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid

-

183

2,824

3,007

Dividend Reinvestment Plan1

61-(2,922)-Other equity movements:
Group employee share acquisition scheme
Other items(2,922)
61
-

(20)
-

(5)

9

(20)
4

As at 30 September 2020

26,454

1,018

25,80053,272

Profit for the year

-

-

6,331

6,331

Other comprehensive income for the year

-

(668)

(74)

(742)

Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid

-

(668)

6,257

5,589

-

-

(2,928)(2,928)

94

-

-

94

(654)

-

-

(654)

13
-

(9)

3

13
(6)

25,907341

29,132

55,380

Dividend Reinvestment Plan

1

Group share buy-back2

Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2021
1.

4.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2020 final dividend (3.4 million shares for the 2020 interim dividend); Nil for 2021 interim dividend and 2019 final dividend
as the shares were purchased on-market and provided directly to shareholders participating in the DRP. On-market share purchases for the DRP in 2021 were $199 million (2020: $185 million).

2.

The Company commenced a $1.5 billion on-market share buy-back on 4 August 2021. This resulted in 23 million shares ($654 million) being cancelled in the September 2021 half and a further 2 million
shares ($55 million) being cancelled after 30 September 2021 in respect of purchase orders placed but not settled at 30 September 2021.

The notes appearing on pages 120 to 243 form an integral part of these financial statements.

13

-

-

13

-

13

-

(9)

4

(5)

-

(5)

25,984

1,228

36,453

63,665

11

63,6761

4.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2020 final dividend (3.4 million shares for the 2020 interim dividend); Nil for 2021 interim dividend and 2019 final dividend
as the shares were purchased on-market and provided directly to shareholders participating in the DRP. On-market share purchases for the DRP in 2021 were $199 million (2020: $185 million).

2

The Company commenced a $1.5 billion on-market share buy-back on 4 August 2021. This resulted in 23 million shares ($654 million) being cancelled in the September 2021 half and a further 2 million
shares ($55 million) being cancelled after 30 September 2021 in respect of purchase orders placed but not settled at 30 September 2021.

The notes appearing on pages 120 to 243 form an integral part of these financial statements.

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FINANCIALREPORTSHAREHOLDERINFORMATIONANZ 2021 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
NOTES TO THE FINANCIAL STATEMENTSNOTES TOFINANCIALSTATEMENTS(continued)
Notes
toTHEthefinancialstatements

1. ABOUT OUR FINANCIAL STATEMENTS (continued)

1. ABOUT OUR FINANCIAL STATEMENTS

TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At thereporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.

These are the financial statements for Australia and New Zealand Banking Group Limited (‘the Company’) and its controlled entities (together, ‘theGroup’ or ‘ANZ’) for the year ended 30 September 2021. The Company is incorporated and domiciled in Australia. The address of the Company’s
registered office and its principal place of business is ANZ Centre, 833 Collins Street, Docklands, Victoria, Australia 3008. The Group provides banking
and financial services to individuals and business customers and operates in and across 32 markets.
On 27 October 2021, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:
 the amount is significant in size (quantitative factor); the information is significant by nature (qualitative factor); the user cannot understand the Group’s results without the specific disclosure (qualitative factor); the information is critical to a user’s understanding of the impact of significant changes in the Group’s business during the period - for example,
business acquisitions or disposals (qualitative factor); the information relates to an aspect of the Group’s operations that is important to its future performance (qualitative factor); and the information is required under legislative requirements of the Corporations Act 2001, the Banking Act 1959 (Cth) or by the Group’s principal
regulators, including the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
This section of the financial statements:
 outlines the basis upon which the Group’s financial statements have been prepared; and discusses any new accounting standards or regulations that directly impact the financial statements.

BASIS OF PREPARATIONThis financial report is a general purpose (Tier 1) financial report prepared by a ‘for profit’ entity, in accordance with Australian Accounting Standards(AASs) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), the Corporations Act 2001, and International
Financial Reporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB).
We present the financial statements of the Group in Australian dollars, which is the Company’s functional and presentation currency. We haverounded values to the nearest million dollars ($m), unless otherwise stated, as allowed under the ASIC Corporations (Rounding in Financial/Directors
Report) Instrument 2016/191. We measure the financial statements of each entity in the Group using the currency of the primary economic
environment in which that entity operates (the functional currency).

BASIS OF MEASUREMENT
We have prepared the financial information in accordance with the historical cost basis - except the following assets and liabilities which we havestated at their fair value: derivative financial instruments and in the case of fair value hedging, a fair value adjustment made to the underlying hedged item; financial instruments held for trading; financial assets and financial liabilities designated at fair value through profit or loss; financial assets at fair value through other comprehensive income; and assets and liabilities classified as held for sale (except those at carrying value).
In accordance with AASB 119 Employee Benefits (AASB 119) we have measured defined benefit obligations using the Projected Unit
Credit Method.

DISCONTINUED OPERATIONSThe sale of Wealth Australia business to IOOF Holdings Limited (IOOF) and Zurich Financial Services Australia (Zurich) completed across 2020 and2019. The financial results of these divested businesses are treated as discontinued operations from a financial reporting perspective.

BASIS OF CONSOLIDATIONThe consolidated financial statements of the Group comprise the financial statements of the Company and all its subsidiaries. An entity, including a
structured entity, is considered a subsidiary of the Group when we determine that the Company has control over the entity. Control exists when theGroup is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. We assess power by examining existing rights that give the Company the current ability to direct the relevant activities of theentity. We have eliminated, on consolidation, the effect of all transactions between entities in the Group.
120

FOREIGN CURRENCY TRANSLATION

We measure translation differences on non-monetary items at fair value through profit or loss and report them as part of the fair value gain or loss onthese items. For non-monetary items classified as investment securities measured at fair value through other comprehensive income, translationdifferences are included in other comprehensive income.
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS THAT HAVE A FUNCTIONAL CURRENCY THAT IS NOT AUSTRALIAN DOLLARS
The financial statements of our foreign operations are translated into Australian dollars for consolidation into the Group Financial Statements using thefollowing method:
Foreign currency item

Exchange rate used

Assets and liabilities

The reporting date rate

EquityThe initial investment date rate

Income and expenses

The average rate for the period – but if for a significant transaction we believe the average rate is notreasonable, then we use the rate at the date of the transaction

Exchange differences arising from the translation of financial statements of foreign operations are recognised in the foreign currency translation
reserve in equity. When we dispose of a foreign operation, the cumulative exchange differences are transferred to profit or loss.

FIDUCIARY ACTIVITIESThe Group provides fiduciary services to third parties including custody, nominee and trustee services. This involves the Group holding assets onbehalf of third parties and making decisions regarding the purchase and sale of financial instruments. If ANZ is not the beneficial owner or does notcontrol the assets, then we do not recognise these transactions in these financial statements, except when required by accounting standards oranother legislative requirement.

KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates andassumptions about past and future events. Further information on the key judgements and estimates that we consider material to thefinancial statements are contained within each relevant note to the financial statements.
Coronavirus (COVID-19) pandemic
The COVID-19 pandemic and its ongoing effects on the global economy has continued to impact our customers, operations and Group
performance. Governments have responded at unprecedented levels to protect the health of the population, local economies andlivelihoods. The course of the pandemic and vaccination levels has varied across the globe and government responses have differed intheir extent and timing. Economies are reopening at different rates whilst the risk of subsequent waves of infection remain. Thus there
remains an elevated level of estimation uncertainty involved in the preparation of these financial statements including: the extent and duration of the disruption to business arising from the actions of governments, businesses and consumers in theongoing management of the virus; the impact and expected response of the economy (and forecasts of key economic factors including GDP, employment and house
prices). This includes the response of capital markets, and the impacts on credit quality, liquidity, unemployment, consumer spending,as well as specific sector impacts; and the efficacy of vaccines against variants of the virus, and the effectiveness of government and central bank measures to support
businesses and consumers through this disruption.
The Group has made various accounting estimates in this Financial Report based on forecasts of economic conditions which reflect
expectations and assumptions as at 30 September 2021 about future events that the Directors believe are reasonable in the circumstances.
There is a considerable degree of judgement involved in preparing these estimates. The underlying assumptions are also subject touncertainties which are outside the control of the Group. Accordingly, actual economic conditions are likely to be different from those
forecast since anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact
accounting estimates included in these financial statements.
The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expectedcredit losses and recoverable amounts of non-financial assets.
The impact of the COVID-19 pandemic on each of these estimates is discussed further in the relevant note of these financial statements.
Readers should carefully consider these disclosures in light of the inherent uncertainty described above.

ANZ 2021 Annual Report

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FINANCIALREPORTSHAREHOLDERINFORMATIONANZ 2021 ANNUAL REPORT

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)

1. ABOUT OUR FINANCIAL STATEMENTS (continued)

1. ABOUT OUR FINANCIAL STATEMENTS (continued)

ACCOUNTING STANDARDS ADOPTED IN THE PERIODACCOUNTING STANDARDS ADOPTED IN THE PERIOD (continued)

INTEREST RATE BENCHMARK REFORM
Interbank offered rates (IBORs), such as the London Interbank Offered Rate (LIBOR) have played a critical role in global financial markets, serving as
reference rates for derivatives, loans and securities, and in the valuation of financial instruments. Uncertainty surrounding the integrity of IBOR rates
has led to regulators and industry to transition away from IBOR to alternative risk-free benchmark reference rates (RFRs).

iii)
Hedgetoaccounting
Changes
accountingexposures
standardssubject to IBOR reform
In 2018,
given thewith regards
to the longer
term viabilityof IBORs,
the International
AccountingStandards
Board
commenceda
The Group
hasuncertainty
hedge-accounted
relationships
referencing
IBORs, withthe most
significant being
USD LIBOR,
primarilydue(IASB)
to fixed
rate
reviewof the financial
reportingof ratethe reforms,
given thesignificant potential
consequences
for infinancial
instrument
accounting.
investment
securities
and theimplications
Group’s fixeddebt issuances
denominatedin USD thatare designatedfair value
hedge accounting
relationships.
In October 2019, the Australian Accounting Standards Board (AASB) issued AASB 2019-3 Amendments to Australian Accounting Standards – Interest
table below
details
the carryingof thecertain
Group's
USD exposuresdesignatedin hedge accounting
referencing
LIBOR
that
RateTheBenchmarkReform– Phase1, whichvalues
amendedexisting
hedge accounting
requirements
to providerelationships
relief from potential
effectsof thewillbeimpactedbyreform.
The
nominal
value
of
the
associatedhedging
instruments
isalso
included:
uncertainty caused by the interest rate benchmark reform. The Group elected to early adopt the amendments from 1 October 2019, which have not
had a significant impact on the Group.
As at 30 September 2021

As had been anticipated, in March 2021 the UK Financial Conduct Authority (FCA) announced the dates on which IBORs will cease, after which
representative IBOR rates will no longer be available. The cessation of the majority of IBOR rates will occur on 31 December 2021, notably for the
Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF) and Japanese Yen (JPY) settings in their entirety, and the US Dollar (USD) 1-week and 2-month
LIBOR settings. The Group has ceased issuing new products referencing these rates. Other USD LIBOR settings will cease by 30 June 2023.
The Group has exposure to IBORs through its loan and derivative transactions with customers, issuance of debt and its asset and liability management
activities.
Other significant interest rate benchmarks applicable to the Group’s banking activities with customers and our own risk management activities
include the Euro Interbank Offered Rate (Euribor), the AUD Bank Bill Swap Rate (BBSW) and the NZ Bank Bill Market (BKBM). These are not impacted by
IBOR reform and these benchmark rates are expected to remain for the foreseeable future.
Group approach to interest rate benchmark reform
The development of new RFR products and the migration of the Group’s existing contracts that reference IBORs to RFRs exposes the Group tofinancial, compliance, legal and operational risks. The Group is managing the transition to RFRs and these risks through an enterprise-wide Benchmark
Transition Program (the Program), which is overseen by a formal Steering Committee of senior executives. The Program provides regular updates to
the Group Executive and Board Audit & Board Risk committees.
The IBOR reforms have a wide-ranging impact for the Group and our customers given the fundamental differences between IBORs and RFRs. RFRs areavailable both as backward-looking in arrears rates and, for some currencies, as forward-looking term rates. The key difference between IBORs andRFRs is that IBOR rates include a term and bank credit risk premium, whereas RFRs do not. As a result of these differences, adjustments are required toan RFR to ensure contracts referencing an IBOR rate, transition on an economically comparable basis.
The Program includes the identification of impacted IBOR contracts across the Group, actions necessary to develop product capability and transition
existing contracts to RFRs. This includes the assessment and mitigation of financial, legal and conduct risks arising from changes to pricing andvaluation (largely interest rate risk), compliance risks arising from any potential non-compliance with relevant regulatory requirements, legal risks
arising from changes to customer contracts, and operational risks including changes to IT systems, controls and reporting infrastructure. In
undertaking these changes, the Group is actively engaging with various regulatory bodies across a number of countries in which the Group operates
in respect of our IBOR transition readiness. From an industry perspective, the Group is also actively participating in, and contributing to, different RFR
Working Groups, industry associations and business forums focusing on different aspects of interest rate benchmark reform.
To date, the Group has successfully transitioned a significant number of loan transactions that previously referenced an IBOR benchmark, toreferencing an RFR benchmark rate. The Group has also commenced transitioning existing IBOR derivative trades to reference RFR benchmark rates.
The Group continues to extend and deliver its RFR product suite and pricing options to be able support our customers in line with regulatory bestpractice guidelines.
The Program also includes the management of the impact on customers. The Group is well-progressed in ensuring all customer transition plans are
finalised ahead of IBOR cessation dates, with the significant majority of our derivative counterparties with exposures referencing IBORs agreeing toamend existing contracts by adhering to the industry developed ISDA 2020 IBOR Fallbacks Protocol (ISDA Protocol) to facilitate a standardised andorderly transition to RFRs. The Group has also adhered to the ISDA Protocol.
In relation to our loan and transaction banking customers, the Group has commenced a proactive outreach program to ensure an orderly and wellmanaged migration to RFRs. Given that USD LIBOR will continue to be published for the most widely used settings until 30 June 2023, the Program is
focussing on customer engagement with those customers whose arrangements reference IBORs ceasing on 31 December 2021.

NOTES TO THE FINANCIAL STATEMENTS

Hedged items$m

In September 2020, the AASB issued AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 (theInvestment securities at FVOCI
13,096
Standard), which the Group early adopted from 1 April 2021. This Standard addresses issues that may affect the Group at the point of transition fromNet loans and advances
236
an existing
IBOR
a RFR, including the effects of changes to contractual cash flows or hedging relationships. The Standard includes amendments
Deposits
andrateothertoborrowings
577
in respectof:
Debt issuances
24,249
 Modification of a financial asset or a financial liability measured
at amortised
reform isdesignatedexpectedbeyond
to result in a change to the basis for
Notional
designatedcost:
up toIBORNotional
determining contractual cash flows of impacted assets and liabilities of30theGroup.
a practical
expedientaccount
for aJune
2023 The Standard provides
30 June2023
TotaltonotionalamountHedging
instruments$m no immediate gain or loss is$mchangein thebasis for determining the contractual cash flows by updating the$meffective interest rate. As a result,
Fair value hedges
13,33523,043
recognised.
This applies only when the change is a direct consequence of IBOR
reform, and the new basis fordetermining the contractual 36,379
cash
Cash
flow
hedges458
258
716
flows is economically comparable to the previous basis; Additionalrelief for hedging
relationships:
the GBP,
Standard
also JPY
amendsa numberof existinghedgeaccounting
accountingrelationships
requirements
that
the Group
As at 30 September
2021, theGroup also has
CHF andexposuresdesignatedin hedge
ofsuch$1,510
million,will
nothave todiscontinue
any respectively
hedge accounting
solely because of changes made because of the reform if all other hedge$940
millionand$1,853 million
subjectrelationships
to IBOR reform.
accounting criteria are met; andOther hedge accounting relationships referencing the Euro Interbank Offered Rate (Euribor), the AUD Bank Bill Swap Rate (BBSW) and the NZ Bank
 Additional disclosure requirements: the Standard amended AASB 7 Financial Instruments: Disclosures which requires additional qualitative andBill Market (BKBM) are not impacted by IBOR reform as these benchmark rates are expected to remain for the foreseeable future.
quantitative disclosures in relation to the impact of IBOR reforms on the Group. These disclosures are contained within this note.
iv) Future Developments
Financial Impacts of IBOR reformthe most
widelyreferenced
LIBOR
benchmarktenors willcontinue
to bepublished
up to 30
June 2023, the Group’s transition program
TheAs
followingsets
out theGroup’s USD
impactassessment
in relation
to IBORreforms
as at
30 September
2021:
supporting our customers and the Group’s own risk management activities will continue beyond 2021.
i) Impact for the year ended 30 September 2021
REVISED
CONCEPTUAL
For theyear ended 30FRAMEWORK
September 2021, the net impact of the IBOR reforms recognised in the Group’s net profit after tax is not material. The
On 1impacts
October
2020, the Group
adoptedyear
theinclude:
revised Conceptual Framework for Financial Reporting. The new Framework includes updated definitions
recognisedin the current
anda)
criteria
for therecognition
derecognitionof assets
andliabilities. Additionally,
it introduces
new concepts
on measurement,changesin thefair valuesandof certain
derivative
financial
instruments
for which it is
known at balance
sheet date– as a result of including
regulatoryfactors
to consider
when selecting
a measurement
basis. The
adoption
the revisednothavematerial
impactpronouncements
confirming
IBOR cessation– thatthe fairofvaluation
willconceptualincorporateframeworka change did
to an
RFR
at aafuturedate;
and on the Group.
b) revenue from a small number of customers in the Institutional division who have transitioned to loan and derivative contracts referencing an

ACCOUNTINGSTANDARDS NOT EARLY ADOPTED
RFR by 30 September.

A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statementsii) theExposuressubject
to benchmark
as at
30beenSeptemberforyear ended
30 September
2021,reformand havenotapplied2021
by the Group in preparing these financial statements. Further details of these are
Thebelow.
table below shows the Group’s exposure to interest rate benchmarks subject to IBOR reform. These are financial instruments that contractually
set out
reference an IBOR benchmark planned to transition to an RFR, and have a contractual maturity date beyond the planned IBOR cessation date.
GENERAL HEDGE ACCOUNTING
Instruments yet to transition to RFRs
more closelyalign accounting with risk management
AASB 9 Financial Instruments (AASB 9) introduces new hedge accounting requirements whichFinancial
USD Libor
JPY Libor
GBP Libor
Others1
activities undertaken when hedging both financial and non-financial risks. AASB 9 provides the Group with an accounting policy choice to continue to
As at 30 September 2021
$m
$m
$m
$m
Instruments: Recognition and Measurement (AASB 139) hedge accounting requirements until the International
apply the AASB 139 Financial
12,744635
508
465
Loan and advances2
AccountingStandards Board’s ongoing project on macro hedge accounting is completed. The
Group continues to apply
the hedge
accounting 78
Non-derivative financial assets2
3,115
1,655
requirements
of
AASB
139.
3
Non-derivative financial liabilities
614
55
Derivative asset (notional value)4

515,816

58,264

21,916

16,096AASBDerivative
17 INSURANCECONTRACTS (AASB 17)
486,716
83,03921,524
14,855liability (notional value)42,5 17 was issued in July 2017 and is not effective for the Group until 1 October 2023. It will replace AASB 4 Insurance Contracts,
The final
versionof
AASB
26,982
4762
3,695
Loan commitments
AASB1. 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 17 establishes principles for the recognition, measurement,
Comprises financial instruments referencing other significant benchmark rates subject to cessation yet to transition to alternative benchmarks.
presentation
disclosureof (ECL).
insurance contracts.
2.
Excludesand
Expected
Credit Losses
3.

Comprises floating rate debt issuances by the Group.

5.

For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the base currency of the facility. In the event the base currency interest rate is not subject to cessation,

The measurement,
presentation and disclosure requirements under AASB 17 are significantly different from current accounting standards. Although4.
For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, the Group discloses the Australian dollar-equivalent notional amounts for both. Where one leg
the overallprofitrecognisedof insurance
willnotleg.
change, it is expected that the timing of profit recognition will change.
of a swap
is subject
to reform, in
therespect
Group discloses
the notionalcontracts
amount of thereceive
AASB 17notto havea material
impacton theGroup.
butiscanbe expecteddrawn in a currency
subject
to cessation,
the allocation
is basedon most likely currency of drawdown.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)

1. ABOUT OUR FINANCIAL STATEMENTS (continued)

ACCOUNTING STANDARDS ADOPTED IN THE PERIOD (continued)

ACCOUNTING STANDARDS NOT EARLY ADOPTED (continued)iii) Hedge accounting exposures subject to IBOR reform
The Group has hedge-accounted relationships referencing IBORs, with the most significant being USD LIBOR, primarily due to fixed rate
investment securities and the Group’s fixed rate debt issuances denominated in USD that are designated in fair value hedge accounting
relationships.
The table below details the carrying values of the Group's USD exposures designated in hedge accounting relationships referencing LIBOR thatwill be impacted by reform. The nominal value of the associated hedging instruments is also included:
As at 30 September 2021
Hedged items
Investment securities at FVOCINet loans and advances
Deposits and other borrowings
Debt issuances

Hedging instruments
Fair value hedges
Cash flow hedges$m13,096236
577
24,249
Notional designated up to
30 June 2023$m
13,335458

Notional designated beyond
30 June 2023$m
23,043258

Total notional amount$m
36,379716

DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTIONAASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transactionamends AASB 112 Income Taxes and clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and aliability and that give rise to equal taxable and deductible temporary differences. This may include transactions such as leases and decommissioningor restoration obligations. This amendment is effective for the Group from 1 October 2023 and is not expected to have a significant impact.

CHANGE IN ACCOUNTING POLICYINTRAGROUP TRANSACTIONS WITH CONSOLIDATED SECURITISATION ENTITIES
During the year, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities(SEs) in which it holds all the instruments issued by the SE. The Company will no longer separately record a liability to pass the cash flows from theunderlying loans to the SE and an asset in the form of notes issued by the SE which entitle the Company to those same cash flows. Rather thetransactions will be considered together with the Company recording a net nil position with the SE in order to better reflect the economic substanceof the intragroup transactions that are fully offsetting. Comparatives have been restated in the financial statements of the Company. There has been
no change to the Group because the relevant securitisation SEs are fully consolidated and the intra-group transactions eliminated. Refer to Note 35
Impact of Adoption of New Standards and Other Changes for further details of this change.

As at 30 September 2021, the Group also has GBP, CHF and JPY exposures designated in hedge accounting relationships of $1,510 million,$940 million and $1,853 million respectively subject to IBOR reform.
Other hedge accounting relationships referencing the Euro Interbank Offered Rate (Euribor), the AUD Bank Bill Swap Rate (BBSW) and the NZ BankBill Market (BKBM) are not impacted by IBOR reform as these benchmark rates are expected to remain for the foreseeable future.
iv) Future Developments
As the most widely referenced USD LIBOR benchmark tenors will continue to be published up to 30 June 2023, the Group’s transition programsupporting our customers and the Group’s own risk management activities will continue beyond 2021.
REVISED CONCEPTUAL FRAMEWORKOn 1 October 2020, the Group adopted the revised Conceptual Framework for Financial Reporting. The new Framework includes updated definitions
and criteria for the recognition and derecognition of assets and liabilities. Additionally, it introduces new concepts on measurement, including factors
to consider when selecting a measurement basis. The adoption of the revised conceptual framework did not have a material impact on the Group.

ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2021, and have not been applied by the Group in preparing these financial statements. Further details of these areset out below.
GENERAL HEDGE ACCOUNTINGAASB 9 Financial Instruments (AASB 9) introduces new hedge accounting requirements which more closely align accounting with risk management
activities undertaken when hedging both financial and non-financial risks. AASB 9 provides the Group with an accounting policy choice to continue toapply the AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) hedge accounting requirements until the International
Accounting Standards Board’s ongoing project on macro hedge accounting is completed. The Group continues to apply the hedge accounting
requirements of AASB 139.
AASB 17 INSURANCE CONTRACTS (AASB 17)
The final version of AASB 17 was issued in July 2017 and is not effective for the Group until 1 October 2023. It will replace AASB 4 Insurance Contracts,
AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 17 establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts.
The measurement, presentation and disclosure requirements under AASB 17 are significantly different from current accounting standards. Although
the overall profit recognised in respect of insurance contracts will not change, it is expected that the timing of profit recognition will change.
AASB 17 is not expected to have a material impact on the Group.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
2. NET INTEREST INCOME

3. NON-INTEREST INCOME
Consolidated
2021$m

The Company
2020
$m

2021
$m

Consolidated
2020$m

Net interest income

2021
$m

The Company
2020
$m

2021
$m

2020
$m

474

579

436

532

2,552

2,687

1,961

2,087

97

121

65

67

Non-interest income

Interest income by type of financial asset

Fee and commission income

Financial assets at amortised cost

18,18822,625

13,767

17,190Investment securities at FVOCI

866

1,162

596

883

Non-lending fees

Trading securities

446

584

325

429

Commissions

1

Financial assets designated at FV through profit or loss

1

External interest income
Controlled entities income2
Interest income

29

55

124

159

19,52924,426

14,812

18,661

-

-

535

701

19,52924,426

15,347

19,362

Interest expense by type of financial liability

Lending fees1

Funds management income
External fee and commission income
Controlled entities2

287

275

5

34

3,410

3,662

2,467

2,720

-

-

235

303

Fee and commission income

3,410

3,662

2,702

3,023

Fee and commission expense(1,267)(1,337)

(836)

(999)

Net fee and commission income

2,143

2,325

1,866

2,024

1,371

1,809

1,064

1,443

(4,830)(9,751)(3,681)(7,477)

Securities sold short

(91)

(95)

(82)

(91)

Other income

Financial liabilities designated at FV through profit or loss1

(101)

(125)

(158)

(190)

Net foreign exchange earnings and other financial instruments income3(5,022)(9,971)(3,921)(7,758)

Impairment of AmBank

-

(595)

-

-

-

-

(555)

(762)

Impairment of PT Panin

-

(220)

-

-

Interest expense(5,022)(9,971)(4,476)(8,520)

Disposal of ANZ Share Investing

(251)

-

12

-

Major bank levy

(346)

(406)

(346)

(406)

Sale of New Zealand legacy insurance portfolio

13

-

-

-

14,161

14,04910,525

10,436

Financial liabilities at amortised cost1

External interest expense
Controlled entities expense2

Net interest income

3

1.

2.

3.

4

Sale of UDC

-

(7)

-

-

Dividend income on equity securities

1

26

1

26

Dividends received from controlled entities

-

-

1,845

195

Prior year comparative balances have been restated to align with the classification of the underlying financial asset or liability. The reclassification does not change the reported total interest income orinterest expense in the prior year. Prior period comparatives were restated to reclassify interest income from Financial assets at amortised cost to Financial assets at FV through profit and loss (2020: $50
million for the Group and $159 million for the Company) and interest expense from Financial liabilities at amortised cost to Financial liabilities at FV through profit and loss (2020: $32 million for the Groupand $125 million for the Company).
From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Interest income from Controlled Entities by $2,377 million and Interest expense fromControlled Entities by $2,929 million at 30 September 2020. Refer to Note 35 Impact of Adoption of New Standards and Other Changes for further details.

48

17

66

(36)

Other income

1,182

1,030

2,988

1,628

Other operating income

3,325

3,355

4,854

3,652

Net income from insurance business

110

78

-

-

Share of associates' profit/(loss)

(176)

155

(1)

(1)

Non-interest income

3,259

3,588

4,853

3,651

Includes charges for customer remediation of $86 million (2020: $106 million) for the Group and $82 million (2020: $97 million) for the Company.

Other

5

RECOGNITION AND MEASUREMENT

61.

NET INTEREST INCOME
Interest Income and Expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for trading,assets measured at fair value through other comprehensive income or designated at fair value through profit or loss. We use the effective
interest rate method to calculate the amortised cost of assets held at amortised cost and to recognise interest income on financial assets
measured at fair value through other comprehensive income. The effective interest rate is the rate that discounts the stream of estimatedfuture cash receipts or payments over the expected life of the financial instrument or, when appropriate, a shorter period, to the net
carrying amount of the financial asset or liability. For assets subject to prepayment, we determine their expected life on the basis ofhistorical behaviour of the particular asset portfolio - taking into account contractual obligations and prepayment experience.

Lending fees exclude fees treated as part of the effective yield calculation in interest income.
2.
From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Other operating income from Controlled Entities by $552 million at 30 September 2020.
Refer to Note 35 Impact of Adoption of New Standards and Other Changes for further details.
3.

Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk on funding
instruments, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.

4.

CMC Markets has provided a share trading solution under the ANZ Share Investing brand since 2018. During the year ANZ reached agreement to transition customers from the ANZ Share Investing branded
platform to a CMC Markets-branded platform.

5.

Includes ANZ’s share of litigation settlement provisions ($212 million) and goodwill impairment ($135 million) recorded by the Group in 2021.
Includes charges for customer remediation of $56 million (2020: $68 million) for the Group and $84 million (2020: $189 million) for the Company.

6.

We recognise fees and costs, which form an integral part of the financial instrument (for example loan origination fees and costs), using theeffective interest rate method. These are presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
Major Bank Levy

The Major Bank Levy Act 2017 (‘Levy’ or ‘Major bank levy’) applies a rate of 0.06% to certain liabilities of the Company. The Group hasdetermined that the levy represents a finance cost for the Group and the Company and it is presented as interest expense in the Income
Statement.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENT

3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENTOTHER OPERATING INCOME

NET INCOME FROM INSURANCE BUSINESS

Fee and Commission Revenue
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation issatisfied across more than one reporting period or (b) at a point in time when the performance obligation is satisfied immediately or issatisfied within one reporting period.

We recognise: premiums received (net of reinsurance premiums paid) based on an assessment of the likely pattern in which risk will emerge over theterm of the policies written. This assessment is undertaken periodically and updated in accordance with the latest pattern of risk
emergence; and lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee andcommitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct
good or service that are recognised separately from the underlying lending product (including annual package fees that provide
benefits on other ANZ products).

 claims incurred net of reinsurance, on an accruals basis once the liability to the policy owner has been established under the terms ofthe contract and through actuarial assumptions of future claims.

 non-lending fees includes fees associated with deposit and credit card accounts, interchange fees and fees charged for specificcustomer transactions such as international money transfers. Where the Group provides multiple goods or services to a customer under
the same contract, the Group allocates the transaction price of the contract to distinct performance obligations based on the relative
stand-alone selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.

The equity method is applied to accounting for associates. Under the equity method, our share of the after tax results of associates is
included in the Income Statement and the Statement of Comprehensive Income.

SHARE OF ASSOCIATES’ PROFIT/(LOSS)

 commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to
provide goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service
to the customer. If the Group collects funds on behalf of a third party when acting as an agent, we only recognise the net commission it
retains as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
 funds management income represents fees earned from customers for providing financial advice and fees for asset management
services and advice provided to investment funds. Revenue is recognised either at the point the financial advice is provided or over theperiod in which the asset management services are delivered. Performance fees associated with funds management activities are only
recognised when it becomes highly probable the performance hurdle will be achieved.
Net Foreign Exchange Earnings and Other Financial Instruments Income
We recognise the following as net foreign exchange earnings and other financial instruments income: exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised or included in a previous financial report;
 fair value movements (excluding realised and accrued interest) on derivatives that we use to manage interest rate and foreign exchange
risk on funding instruments not designated as accounting hedges;
 the ineffective portions of fair value hedges, cash flow hedges and net investment hedges;
 immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments in items designated as fair value hedges
and amounts accumulated in equity related to designated cash flow hedges;
 fair value movements on financial assets and financial liabilities designated at fair value through profit or loss or held for trading; amounts released from the fair value through other comprehensive income (FVOCI) reserve when a debt instrument classified as FVOCI
is sold; and the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
Gain or Loss on Disposal of Non-Financial Assets
The gain or loss on the disposal of assets is the difference between the carrying value of the asset and the proceeds of disposal net of costs.
This is recognised in Other income in the year in which the significant risks and rewards from the asset transfer to the buyer.
When a non-financial asset or group of assets is classified as held for sale, the difference between the carrying value immediately prior toreclassification and the fair value less costs to sell is recognised in Other operating income to align with the classification of gain or loss onsale that would have applied if the sale had completed during the year.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
4. OPERATING EXPENSES (continued)

4. OPERATING EXPENSES
Consolidated
2021$m

The Company
2020
$m

2021
$m

2020
$m

RECOGNITION AND MEASUREMENTOPERATING EXPENSES

Personnel
Salaries and related costs

4,425

4,310

3,241

3,147

Superannuation costs

337

329

281

277

Other

184

239

110

142

SALARIES AND RELATED COSTS - ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS

4,946

4,878

3,632

3,566

Wages and salaries, annual leave and other employee entitlements expected to be paid or settled within twelve months of employees
rendering service are measured at their nominal amounts using remuneration rates that the Group expects to pay when the liabilities aresettled.

Personnel

1

Premises
Rent

85

84

62

58

Depreciation

446

517

371

427

Other

174

188

131

139

Premises

705

789

564

624

Depreciation and amortisation2,3

638

858

585

786

Subscription licences and outsourced services

786

780

587

586

Other

164

186

170

189

Technology1

1,588

1,824

1,342

1,561

Restructuring

127

161

77

127

Advertising and public relations

178

177

134

136

Professional fees

769

667

714

614

Freight, stationery, postage and communication

185

205

141

166

Other3

553

682

990

994

Other

1,685

1,731

1,979

1,910

9,051

9,383

7,594

7,788

Technology

Other

1

Operating expenses1
1.

Includes customer remediation expenses of $185 million (2020: $209 million) for the Group and $148 million (2020: $146 million) for the Company allocated across Personnel, Technology and Other
expenses.

2.

2020 includes accelerated amortisation of $197 million for the Group and $184 million for the Company following the Group’s change in the application of its software amortisation policy in 2020.
Includes litigation settlement expenses of $69 million in 2021 for the Group and $69 million for the Company in 2021 and goodwill write-off of $77 million for the Group and $10 million for the Company in
2020.

3.

130

130

Operating expenses are recognised as services are provided to the Group, over the period in which an asset is consumed, or once a liability
is created.

We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff
departures, leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market
yields are determined from a blended rate of high quality corporate bonds with terms to maturity that closely match the estimated future
cash outflows.
If we expect to pay short term cash bonuses, then a liability is recognised when the Group has a present legal or constructive obligation to
pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.
Personnel expenses also include share-based payments which may be cash or equity settled. We calculate the fair value of equity settled
remuneration at grant date, which is then amortised over the vesting period, with a corresponding increase in share capital or the shareoption reserve as applicable. When we estimate the fair value, we take into account market vesting conditions, such as share priceperformance conditions. We take non-market vesting conditions, such as service conditions, into account by adjusting the number of
equity instruments included in the expense.
After the grant of an equity-based award, the amount we recognise as an expense is reversed when non-market vesting conditions are notmet, for example an employee fails to satisfy the minimum service period specified in the award on resignation, termination or notice ofdismissal for serious misconduct. However, we do not reverse the expense if the award does not vest due to the failure to meet a marketbased performance condition.
Further information on share-based payment schemes operated by the Group during the current and prior year is included in Note 31
Employee Share and Option Plans.

ANZ 2021 Annual Report

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
5. INCOME TAX

5. INCOME TAX (continued)

INCOME TAX EXPENSETAX CONSOLIDATION

Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:

The Company and all its wholly owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. The Company is
the head entity in the tax-consolidated group. We recognise each of the following in the separate financial statements of members of the tax
consolidated group on a ‘group allocation’ basis: tax expense/income, and deferred tax liabilities/assets that arise from temporary differences of themembers of the tax-consolidated group. The Company (as head entity in the tax-consolidated group) recognises current tax liabilities and assets ofthe tax-consolidated group.

Consolidated

The Company

2021
$m

2020
$m

2021
$m

2020
$m

Profit before income tax from continuing operations

8,936

5,516

8,253

3,962

Prima facie income tax expense at 30%

2,681

1,655

2,476

1,189

(4)

2

-

-

-

245

-

-

Share of associates' (profit)/loss

53

(47)

-

-

Disposal of ANZ Share Investing

75

-

(4)

-

Interest on convertible instruments

44

52

44

52

Overseas tax rate differential

(88)

(86)

(33)

(31)

Provision for foreign tax on dividend repatriation

37

20

33

18

-

-

(554)

(58)

Tax effect of permanent differences:
Gains or losses on sale from divestments
Impairment of investment in AmBank and PT Panin

Rebatable and non-assessable dividends

Under a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by theCompany and each member of the tax-consolidated group in relation to the tax contribution amounts paid or payable between the Company andthe other members of the tax-consolidated group.
Members of the tax-consolidated group have also entered into a tax sharing agreement that provides for the allocation of income tax liabilities
between the entities were the head entity to default on its income tax payment obligations.

UNRECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Unrecognised deferred tax assets related to unused realised tax losses (on revenue account) total $6 million (2020: $10 million) for the Group and$2 million (2020: $5 million) for the Company.
Unrecognised deferred tax liabilities related to additional potential foreign tax costs (assuming all retained earnings in offshore branches andsubsidiaries are repatriated) total $344 million (2020: $329 million) for the Group and $15 million (2020: $14 million) for the Company.

-

-

-

8

Other

(26)

25

(23)

(2)

Subtotal

2,772

1,866

1,939

1,176

Income tax (over)/under provided in previous years

(16)

(26)

(17)

(20)

INCOME TAX EXPENSE

Income tax expense

2,756

1,840

1,922

1,156

Current tax expense
Adjustments recognised in the current year in relation to the current
tax of prior years
Deferred tax expense/(income) relating to the origination and reversalof temporary differences
Income tax expense

2,616

2,637

1,743

1,689

(16)

(26)

(17)

(20)

Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in theaccounting and tax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when
the tax relates to items recognised directly in equity and other comprehensive income, in which case we recognise the tax directly inequity or other comprehensive income respectively.

156

(771)

196

(513)

CURRENT TAX EXPENSE
Current tax is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting
date. We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).

Wealth Australia divestment adjustments

2,756

1,840

1,922

1,156

Australia

1,897

1,115

1,806

1,028

Overseas

859

725

116

128

30.8%

33.4%

23.3%

29.2%

Effective tax rate

RECOGNITION AND MEASUREMENTDEFERRED TAX ASSETS AND LIABILITIESWe account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as
the taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax
asset, or liability, on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset
is realised, or the liability settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.
We offset current and deferred tax assets and liabilities only to the extent that: they relate to income taxes imposed by the same taxation authority;
 there is a legal right and intention to settle on a net basis; and it is allowed under the tax law of the relevant jurisdiction.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required in determining provisions held in respect of uncertain tax positions. The Group estimates its tax liabilities based onits understanding of the relevant law in each of the countries in which it operates and seeks independent advice where appropriate.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
6. DIVIDENDS

6. DIVIDENDS (continued)

ORDINARY SHARE DIVIDENDS

DIVIDEND FRANKING ACCOUNT

Dividends are provided for in the financial statements once determined, accordingly, the final dividend announced for the current financial year isprovided for and paid in the following financial year.
AmountTotal dividend% of total
per share$m
Dividends
Financial Year 20202019 final dividend paid

80 cents

2,2682020 interim dividend paid1,3

25 cents709

1,2

Bonus option plan adjustment(55)

Dividends paid during the year ended 30 September 2020

2,922

Cash

91.6%

2,676

Dividend reinvestment plan4

8.4%

246

Dividends paid during the year ended 30 September 2020

2,922

Financial Year 2021
2020 final dividend paid1,3

35 cents

994

2021 interim dividend paid1,3

70 cents

1,992

Currency

2021
$m

2020
$m

Australian franking credits available at 30% tax rate

AUD

772

477

New Zealand imputation credits available (which can be attached to our Australian
dividends but may only be used by New Zealand resident shareholders)

NZD

5,020

4,583

The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:
 franking credits that will arise from the payment of income tax payable as at the end of the financial year; and franking credits/debits from the receipt/payment of dividends that have been recognised as tax receivables/payables as at the end of the financialyear.
The proposed final 2021 dividend will utilise the entire balance of $772 million franking credits available at 30 September 2021. Instalment tax
payments on account of the 2021 financial year, which will be made after 30 September 2021, will generate sufficient franking credits to enable thefinal 2021 dividend to be fully franked. The extent to which future dividends will be franked will depend on a number of factors, including the level ofprofits generated by the Group that will be subject to tax in Australia.

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS
APRA’s written approval is required before paying dividends on ANZ ordinary shares if:

Bonus option plan adjustment(58)

Dividends paid during the year ended 30 September 2021

2,928

 the aggregate dividends exceed the Company’s after tax earnings (in calculating those after tax earnings, we take into account any payments wemade on senior capital instruments) in the financial year to which they relate; or

90.0%

2,635

 the Group’s Common Equity Tier 1 capital ratio falls within capital range buffers specified by APRA.

10.0%

293

Cash
Dividend reinvestment plan

4

Dividends paid during the year ended 30 September 2021

Dividends announced and to be paid after year-end
2021 final dividend (fully franked for Australian tax, New Zealand imputationcredit NZD 8 cents per share)
1.

2,928

Payment dateAmountper share

Total
dividend$m

16 December 2021

72 cents

2,030

Carries New Zealand imputation credits of NZD 8 cents for the 2021 interim dividend, NZD 4 cents for the 2020 final dividend, NZD 3 cents for the 2020 interim dividend, and NZD 9 cents for the 2019 final
dividend.

2.

Partially franked at 70% for Australian tax purposes (30% tax rate).
Fully franked for Australian tax purposes (30% tax rate).
4.
Includes on-market share purchases for the Dividend Reinvestment Plan of $199 million (2020: $185 million).
3.

If the Company fails to pay a dividend or distribution on its ANZ Capital Notes or ANZ Capital Securities on the scheduled payment date, it may(subject to a number of exceptions) be restricted from resolving to pay or paying any dividend on the ANZ ordinary shares.
In response to the uncertain impacts of COVID-19, in July 2020 APRA provided guidance on capital management, including its expectations in relation
to limits on the amount of dividends to be paid out of that year’s earnings. The Company’s 2020 interim dividend of 25 cents per share (paid toshareholders on 30 September 2020) and 2020 final dividend of 35 cents per share (paid to shareholders on 16 December 2020) took into account thisguidance.
Following an improvement in the economic outlook and stability in financial markets, APRA updated their guidance in December 2020, whereby fromthe 2021 calendar year, APRA will no longer hold ADIs to a minimum level of earnings retention but emphasised the requirement for ADIs to maintainvigilance and careful planning in capital management, including conducting regular stress testing and assurance on the capacity to continue to lend.
APRA also stated that the onus will be on Boards to consider carefully the sustainable rate for dividends, taking into account the outlook forprofitability, capital and economic environment.

DIVIDEND REINVESTMENT PLAN AND BONUS OPTION PLAN
Eligible shareholders can elect to reinvest their dividend entitlement into ANZ ordinary shares under the Company’s Dividend Reinvestment Plan
(DRP). Eligible shareholders can elect to forgo their dividend entitlement and instead receive ANZ ordinary shares under the Company’s Bonus Option
Plan (BOP). For the 2021 final dividend, DRP participation will be satisfied by an on-market purchase, and BOP participation will be satisfied by an issue,of new ANZ ordinary shares. There will be no discount applied to the DRP and BOP price.
See Note 23 Shareholders’ Equity for details of shares the Company purchased or issued in respect of the DRP and BOP.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
7. EARNINGS PER ORDINARY SHARE

8. SEGMENT REPORTING

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is calculated by adjusting
the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic EPS calculation for theeffect of dilutive potential ordinary shares.

DESCRIPTION OF SEGMENTS
The Group’s five continuing operating segments are presented on a basis that is consistent with the information provided internally to the Chief
Executive Officer, who is the chief operating decision maker. This reflects the way the Group’s businesses are managed, rather than the legal structureof the Group.

Earnings per ordinary share (EPS) - Basic

2021
cents

2020
cents

Earnings Per Share

217.1

126.4

Earnings Per Share from continuing operations

217.7

129.8

Earnings Per Share from discontinued operations

(0.6)

(3.4)

We measure the performance of these segments on a cash profit basis. To calculate cash profit, we remove certain non-core items from statutory
profit. Details of these items are included in the ‘Other Items’ section of this note. Transactions between business units across segments within ANZ
are conducted on an arm’s-length basis and disclosed as part of the income and expenses of these segments.
The reportable segments are divisions engaged in providing either different products or services or similar products and services in different
geographical areas. They are as follows:
Australia Retail and Commercial
The Australia Retail and Commercial division comprises the following business units:

Earnings per ordinary share (EPS) - Diluted

2021
cents

2020
cents

Earnings Per Share

204.9

118.0

Earnings Per Share from continuing operations

205.4

121.1

Earnings Per Share from discontinued operations

(0.5)

(3.1)

Reconciliation of earnings used in earnings per share calculations

2021
$m

2020
$m

Institutional
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International via thefollowing business units:

6,163

3,578

1

1

 Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing,commodity financing as well as cash management solutions, deposits, payments and clearing.

Earnings used in calculating basic earnings per share

6,162

3,577

Less: Profit/(Loss) after tax from discontinued operations

(17)

(98)

Earnings used in calculating basic earnings per share from continuing operations

6,179

3,675

Basic:
Profit for the year
Less: Profit attributable to non-controlling interests

Diluted:Earnings used in calculating basic earnings per share

6,162

3,577

187

201

Earnings used in calculating diluted earnings per share

6,349

3,778

Less: Profit/(Loss) after tax from discontinued operations

(17)

(98)

Earnings used in calculating diluted earnings per share from continuing operations

6,366

3,876

2021
millions

2020
millions

2,838.6

2,830.9

250.3

362.2

9.9

8.0

3,098.8

3,201.1

Add: Interest on convertible subordinated debt

Reconciliation of weighted average number of ordinary shares (WANOS) used in earnings per
share calculations1
WANOS used in calculating basic earnings per share
Add: Weighted average dilutive potential ordinary shares
Convertible subordinated debt
Share based payments (options, rights and deferred shares)
WANOS used in calculating diluted earnings per share
1.

Weighted average number of ordinary shares excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 4.6 million (2020: 5.0 million).

 Retail provides products and services to consumer customers in Australia via the branch network, mortgage specialists, contact centres, a variety ofself-service channels (digital and internet banking, website, ATMs and phone banking) and third party brokers.
 Commercial and Private Bank provides a full range of banking products and financial services, including asset financing, across the following
customer segments: medium to large commercial customers, small business owners and high net worth individuals and family groups, in addition
to financial planning services provided by salaried financial planners and investment lending secured by approved securities.

 Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance and corporate advisory services.
 Markets provides customers with risk management services in foreign exchange, interest rates, credit, commodities, and debt capital markets inaddition to managing the Group's interest rate exposure and liquidity position.
New Zealand
The New Zealand division comprises the following business units: Personal (previously Retail) provides a full range of banking and wealth management services to consumer and private banking customers. We
deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers andcontact centres.
 Business (previously Commercial) provides a full range of banking services including small business banking, through our digital, branch andcontact centre channels, and traditional relationship banking and sophisticated financial solutions through dedicated managers. These coverprivately owned small, medium and large enterprises, the agricultural business segment, government and government related entities.
Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticatedfinancial solutions provided to business customers through dedicated managers.
Technology, Services & Operations (TSO) and Group Centre
TSO and Group Centre division provides support to the operating divisions, including technology, group operations, shared services, property, risk
management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre includes residual components ofGroup divestments, Group Treasury, Shareholder Functions and minority investments in Asia.
Refer to Note 29 Discontinued Operations and Assets and Liabilities Held for Sale for further details.

OPERATING SEGMENTS
There have been no material structural changes during the year which have impacted the presentation of the Group’s operating segments in 2021. As
such, the presentation of the divisional results remains consistent with the prior period.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)

8. SEGMENT REPORTING (continued)

OPERATING SEGMENTS (continued)

OPERATING SEGMENTS (continued)

Year ended 30 September 2021
Net interest income
Net fee and commission income- Lending fees
- Non-lending fees
- Commissions- Funds management income- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders

Australia
Retail andCommercial Institutional
$m
$m

New
Zealand$m

Pacific$m

TSO andGroup
Centre$m

Otheritems1
$m

Group
Total
$m

7,989

3,105

2,870

96

101

-

14,161

216
1,268
64
32
(560)
110
(242)
1
889
8,878
(4,024)
4,854
426
5,280
(1,663)
3,617

241
683
1
1
(274)
1,227
(1)
1,878
4,983
(2,447)
2,536
89
2,625
(738)
1,887

10
585
32
254
(430)
18
469
3,339
(1,325)
2,014
76
2,090
(582)
1,508

7
20
(2)
40
65
161
(144)
17
(21)
(4)
1
(3)

(4)
(1)
166
(176)
(15)
86
(1,111)(1,025)(3)(1,028)
217
(811)

(27)
(27)
(27)
(27)
(27)
8
(19)

474
2,552
97
287
(1,267)
110
1,182
(176)
3,259
17,420(9,051)
8,369
567
8,936
(2,757)
6,179
(17)
6,162

1
(251)
(108)
(4)
426

(1)
(115)
(63)
89

(117)
(6)
76

(11)
(1)
(21)

(176)
(739)
(17)
(3)

-

(176)
(251)
(1,090)(91)
567

Goodwill write-off
Impairment of associates
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release2

Financial position
Goodwill2
Investments in associates

Australia
Retail andCommercial Institutional
$m
$m
140
17

1,100
4

New
Zealand$m

Pacific
$m

1,849
-

-

TSO andGroup Discontinued
Centreoperations
$m
$m
1,951

-

Group
Total
$m
3,089
1,972

1.

Cash profit represents our preferred measure of the result of the segments. We remove certain items from the segments as discussed on page 140 if we consider them not integral to the ongoing
performance of the segment.

2.

During 2021, the Group wrote off $251 million of goodwill upon the reclassification of ANZ Share Investing to held for sale with the remaining $13 million derecognised on completion of the disposal.

138

138

Year ended 30 September 2020
Net interest income
Net fee and commission income- Lending fees
- Non-lending fees
- Commissions- Funds management income- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders

New
Zealand

Pacific

TSO andGroup
CentreOther
items1

Group
Total

$m
7,916

$m
3,182

$m
2,731

$m
109

$m
111

$m
-

$m
14,049

267
1,310
67
30
(588)
77
(1)
(1)
1,161
9,077
(4,091)
4,986(1,647)3,339(1,002)
2,337

288
776
2
(308)
1,891
2,649
5,831
(2,558)
3,273
(694)
2,579
(725)
1,854

14
586
54
243
(436)
12
473
3,204
(1,435)
1,769
(345)
1,424
(407)
1,017

10
29
(5)
50
84
193
(205)
(12)
(52)
(64)
2
(62)

(14)
1
(807)
156
(664)
(553)
(1,094)(1,647)(1,647)259(1,388)

(115)
(115)
(115)
(115)
(115)
32
(83)

579
2,687
121
275
(1,337)
78
1,030
155
3,588
17,637(9,383)8,254(2,738)5,516(1,841)
3,675
(98)
3,577

(1)
(197)
(7)
(1,647)

(188)
(70)
(694)

(27)
(103)
(7)
(345)

(50)
(11)
(1)
(52)

156
(815)
(892)
(25)
-

-

155
(77)
(815)
(1,391)(110)(2,738)Australia
Retail andCommercial Institutional
$m
$m
403
1,068
17
4

New
Zealand$m
1,793-

TSO andGroup Discontinued
Centreoperations
$m
$m
2,143
-

Group
Total
$m
3,264
2,164

Includes non-cash items:

Includes non-cash items:
Share of associates’ profit/(loss)

Australia
Retail andCommercial Institutional

Share of associates’ profit/(loss)
Goodwill impairment
Impairment of associates2
Depreciation and amortisation3
Equity-settled share based payment expenses
Credit impairment (charge)/release

Financial position
Goodwill
Investments in associates2

Pacific$m-

1.

Cash profit represents our preferred measure of the result of the segments. We remove certain items from the segments as discussed on page 140 if we consider them not integral to the ongoing
performance of the segment.

2.

Includes $815 million impairment after tax in respect of two of the Group’s equity accounted investments. AmBank was impaired by $595 million and PT Panin was impaired by $220 million. Refer to Note 26
Investments in Associates for further details.

3.

Includes accelerated amortisation of $197 million following the Group’s change in the application of its software amortisation policy in 2020 (Australia Retail and Commercial $31 million, Institutional $38
million, New Zealand $2 million, TSO and Group Centre $126 million). Refer to Note 21 Goodwill and Other Intangible Assets for further details.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)

FINANCIAL ASSETSOTHER ITEMS

Outlined below is a description of how we classify and measure financial assets as they apply to subsequent note disclosures.

The table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Profit after tax
2021
$m

2020
$m

Item

Related segment

Economic hedges

Institutional, New Zealand, TSO and Group Centre

77

(121)

Revenue and expense hedges

TSO and Group Centre

(96)

36

Structured credit intermediation trades

Institutional

-

2

(19)

(83)

Total from continuing operations

SEGMENT INCOME BY PRODUCTS AND SERVICES
The primary sources of our external income across all divisions are interest income and other operating income. The Australia Retail and Commercial,
New Zealand, and Pacific divisions derive income from products and services from retail and commercial banking. The Institutional division derives its
income from institutional products and market services. No single customer amounts to greater than 10% of the Group’s income.

CLASSIFICATION AND MEASUREMENT
Financial assets - general
There are three measurement classifications for financial assets under AASB 9: amortised cost, fair value through profit or loss (FVTPL) andfair value through other comprehensive income (FVOCI). Financial assets are classified into these measurement classifications on the basisof two criteria:
 the business model within which the financial asset is managed; and the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments
of principal and interest).
The resultant financial asset classifications are as follows: Amortised cost: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held
in a business model whose objective is to collect their cash flows;

GEOGRAPHICAL INFORMATION FVOCI: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in abusiness model whose objective is to collect their cash flows or to sell the assets; andThe following table sets out total operating income earned including discontinued operations and assets to be recovered in more than one year
based on the geographical regions in which the Group operates.

 FVTPL: Any other financial assets not falling into the categories above are measured at FVTPL.

The reportable segments operate across three geographical regions as follows:

Fair value option for financial assets

 Australia Retail and Commercial division - Australia
 Institutional division - all three geographical regions

A financial asset may be irrevocably designated on initial recognition:

 New Zealand division - New Zealand Pacific division - International

 at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognisedby an acquirer in a business combination.

 at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or TSO and Group Centre division - all three geographical regions
 Discontinued operations - Australia
The International region includes Asia, Pacific, Europe and Americas.

9. CASH AND CASH EQUIVALENTS
Australia

Total operating income1
Assets to be recovered in more than one year

2

1.
2.

140

International

Consolidated

Total

2021
$m

The Company
2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

11,822

11,838

1,778

1,975

3,892

3,773

17,492

17,586

Coins, notes and cash at bank

1,127

1,514

721

1,084

490,855

Securities purchased under agreements to resell in less than 3 months

17,57135,603

16,46534,501

Balances with central banks

107,915

46,091

101,400

39,362

Settlement balances owed to ANZ within 3 months

24,647

24,71522,85023,136

Cash and cash equivalents

151,260

107,923

141,436

98,083362,588362,846

Includes operating income earned from Discontinued operations of $72 million (2020: -$51 million).
Based on the contractual maturity of net loans and advances.

140

New Zealand

28,213

27,632112,966

100,377

503,767

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
10. TRADING SECURITIES

11. DERIVATIVE FINANCIAL INSTRUMENTS

Fair Value

Assets2021$mLiabilities
2021$m

Assets2020$m

Liabilities
2020$m

Derivative financial instruments - held for trading

38,080(35,833)

130,097(130,227)

656

(202)

5,234

(4,484)

Derivative financial instruments

38,736(36,035)

135,331(134,711)

The Company
Fair Value

Assets2021$mLiabilities
2021$m

Assets2020$m

Liabilities
2020$m

Derivative financial instruments - held for trading

37,700(36,847)

126,561(128,028)

592

(158)

3,991

(3,202)

38,292(37,005)

130,552(131,230)

Consolidated
183

168

4,995

5,699

5,630

6,574

2021

33,880Government debt
securities and notes

2020

Corporate and financial
institutional securities

38,472Derivative financial instruments - designated in hedging relationships

Commodities
Equity and other securities

Consolidated

Derivative financial instruments - designated in hedging relationships

The Company

2021
$m

2020
$m

2021
$m

2020
$m

Government debt securities and notes

33,88038,472

26,11927,917

Corporate and financial institution securities

5,630

6,574

3,493

4,873

Commodities

4,995

5,699

4,957

5,464

Equity and other securities
Total

183

168

183

169

44,68850,91334,752

38,423

Derivative financial instruments

FEATURES
Derivative financial instruments are contracts:
 whose value is derived from an underlying price index (or other variable) defined in the contract - sometimes the value is derived from more than
one variable; that require little or no initial net investment; and that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.

RECOGNITION AND MEASUREMENTPURPOSE

Trading securities are financial instruments we either:

The Group’s derivative financial instruments have been categorised as following:

 acquire principally for the purpose of selling in the short-term; or

Trading meet customer needs for managing their own risks.
 manage risks in the Group that are not in a designated hedge accounting relationship (some elements of balance
sheet management).

 hold as part of a portfolio we manage for short-term profit making.
We recognise purchases and sales of trading securities on trade date: initially, we measure them at fair value; and undertake market making and positioning activities to generate profits from short-term fluctuations in prices
or margins.

 subsequently, we measure them in the balance sheet at their fair value with any change in fair value recognised in the profit and loss.
Designated in Hedging
Relationships

142

142

Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
movements in underlying positions relating to: hedges of the Group’s exposures to interest rate risk and currency risk.
 hedges of other exposures relating to non-trading positions.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when applying the valuation techniques used to determine the fair value of trading securities not valued using
quoted market prices. Refer to Note 18 Fair Value of Financial Assets and Financial Liabilities for further details.

Derivatives held in order to:

TYPES
The Group offers or uses four different types of derivative financial instruments:
Forwards

A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.

Futures

An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on thetransaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.

Swaps

A contract in which two parties exchange one series of cash flows for another.

Options

A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has thecorresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises
the option.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

RISKS MANAGEDDERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADINGThe Group offers and uses the instruments described above to manage fluctuations in the following market factors:

The majority of the Group’s derivative financial instruments are held for trading. The fair values of derivative financial instruments held for trading are:Foreign Exchange

Currencies at current or determined rates of exchange.

Consolidated

Interest Rate

Fixed or variable interest rates applying to money lent, deposited or borrowed.

Commodity

Soft commodities (that is, agricultural products such as wheat, coffee, cocoa and sugar) and hard commodities (thatis, mined products such as gold, oil and gas).

CreditRisk of default by customers or third parties.

Fair Value other transactions, are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative instruments
by the amount paid or received.
In August 2021, the Group amended the terms of its legal agreements with one of its central clearing counterparties giving effect to this form of legal
settlement. As a result of this change, collateral paid and received by the Group under these agreements is no longer separately recognised, instead
settling the Group’s outstanding derivative exposures and reducing the associated carrying values of the derivative asset and liability balances. The
impact of this change as at 30 September 2021 is a reduction in derivative assets of $55.1 billion, derivative liabilities of $55.2 billion, and a reduction in
net collateral paid of $0.1 billion.

Liabilities
2021$m

Assets2020$m

Liabilities
2020
$m

2

(23)

86

(86)

Interest rate contracts
Forward rate agreements
Futures contracts

105

(24)

31

(128)

Swap agreements

10,267(8,065)

104,814(101,277)

Options purchased

971

-

1,676

-

-

(1,207)-(2,609)11,345(9,319)106,607(104,100)

Spot and forward contracts

13,869(11,462)

11,815(11,435)

Swap agreements

11,109(12,425)

8,703(12,334)

Options purchased

277

-

372

-

-

(577)

-

(502)

Total

25,255(24,464)

20,890(24,271)

Commodity and other contracts

1,445(2,017)

2,577(1,834)The Group uses a number of central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting ofcollateral exist with these exchanges:
 some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.

Assets2021$m

Options sold
Total
Foreign exchange contracts

Options sold

Credit default swaps
Structured credit derivatives purchased

-

-

18

-

Other credit derivatives purchased

-

(33)

4

(3)

Credit derivatives purchased

-

(33)

22

(3)

-

-

-

(18)

Other credit derivatives sold

35

-

1

(1)

Credit derivatives sold

35

-

1

(19)

Total

35

(33)

23

(22)

38,080(35,833)

130,097(130,227)

Structured credit derivatives sold

Derivative financial instruments - held for trading
1.

144

144

1

Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The Company

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Assets2021$m

Fair Value

Liabilities
2021$m

Assets2020$m

Liabilities
2020$m

DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS
There are three types of hedge accounting relationships the Group utilises:
Fair value hedge

Cash flow hedge

Net investment hedge

Objective of thishedgingarrangement

To hedge our exposure to changes tothe fair value of a recognised asset or
liability or unrecognised firm
commitment caused by interest rateor foreign currency movements.

To hedge our exposure to variability incash flows of a recognised asset or
liability, a firm commitment or a highly
probable forecast transaction caused
by interest rate, foreign currency andother price movements.

To hedge our exposure to exchange
rate differences arising from thetranslation of our foreign operations
from their functional currency toAustralian dollars.

Recognition ofeffective hedge
portionThe following are recognised in profit
or loss at the same time:

We recognise the effective portion ofchanges in the fair value of derivatives
designated as a cash flow hedge inthe cash flow hedge reserve.

We recognise the effective portion ofchanges in the fair value of thehedging instrument in the foreign
currency translation reserve (FCTR).

Interest rate contracts
Forward rate agreements

3

(24)

92

(91)

Futures contracts

87

(19)

23

(124)

Swap agreements

11,598(10,538)

102,260(100,765)

Options purchased

969

-

1,673

-

-

(1,206)-(2,609)12,657(11,787)

104,048(103,589)

Options sold
Total
Foreign exchange contracts
Spot and forward contracts

11,840(9,658)

10,525(10,105)

Swap agreements

11,463(12,940)

9,008(12,002)

Options purchased

267

-

378

-

-

(408)

-

(476)

Total

23,570(23,006)

19,911(22,583)

Commodity and other contracts

1,422(2,015)2,571(1,834)Structured credit derivatives purchased

-

-

18

-

Other credit derivatives purchased

-

(39)

4

(3)

Credit derivatives purchased

-

(39)

22

(3)

Structured credit derivatives sold

-

-

-

(18)

Other credit derivatives sold

51

-

9

(1)

Credit derivatives sold

51

-

9

(19)

Total

51

(39)

31

(22)

37,700(36,847)

126,561(128,028)

Options sold

Credit default swaps

Derivative financial instruments - held for trading
1.

146

1

Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.

146

 all changes in the fair value of theunderlying item relating to thehedged risk; and the change in the fair value of thederivatives.

Recognition of
ineffective hedge
portionRecognised immediately in Other operating income.

If a hedging
instrument expires,or is sold, terminated,or exercised; or nolonger qualifies forhedge accounting

When we recognise the hedged itemin profit or loss, we recognise therelated unamortised fair value
adjustment in profit or loss. This may
occur over time if the hedged item isamortised to profit or loss as part ofthe effective yield over the period
to maturity.

Only when we recognise the hedged
item in profit or loss is the amountpreviously deferred in the cash flow
hedge reserve transferred to profit
or loss.

The amount we defer in the foreign
currency translation reserve remains inequity and is transferred to profit orloss only when we dispose of, orpartially dispose of, the foreign
operation.

Hedged item sold or
repaidWe recognise the unamortised fairvalue adjustment immediately in
profit or loss.

Amounts accumulated in equity aretransferred immediately to profit
or loss.

The gain or loss, or applicableproportion, we have recognised inequity is transferred to profit or loss on
disposal or partial disposal of a foreign
operation.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Under the policy choice provided by AASB 9 Financial Instruments, the Group has continued to apply the hedge accounting requirements of AASB
139 Financial Instruments: Recognition and Measurement.

The maturity profile of the nominal amounts of our hedging instruments held is:

The fair value of derivative financial instruments designated in hedging relationships are:Nominal AmountAs at 30 September 2021

2020

2021
Nominalamount$m

Assets$m

548

Interest rate swap agreements
Interest rate futures contracts

Assets$m

Liabilities
$m

-

(13)

558

-

(9)

95,384370(121)

105,249

2,871(3,532)

8,704

191

(2)

9,380

-

(103)

105,41627(20)

97,170

2,233

(769)

Foreign exchange swap agreements

642

22

-

2,943

63

(54)

Foreign exchange spot and forward contracts

153

-

(1)

153

-

-

Fair value hedges
Foreign exchange spot and forward contracts

Cash flow hedges
Interest rate swap agreements

Foreign exchange spot and forward contracts

1,097

46

(45)

1,269

67

(17)

Derivative financial instruments - designated in
hedging relationships

211,944

656

(202)

216,7225,234(4,484)3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

Interest rate

Interest Rate

Foreign exchange

HKD/AUD FX Rate

1.26%

2,597

14,32858,65828,505104,088

5.74

548

-

-

-

548

1.17%

4,593

14,18084,924

1,719

105,416

38

115

-

642

795

456

641

-

-

1,097

Cash flow hedges
Interest rate

Interest Rate
AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.81

THB/AUD FX Rate

24.18

Interest rate

Interest Rate

1.47%

3,548

12,736

69,83628,509114,629

Foreign exchange

HKD/AUD FX Rate

5.59

558

-

-

-

558

1.72%

9,062

30,36455,5492,195

97,170

38

613

1,157

1,288

3,096

591

678

-

-

1,269

Foreign exchange1
Net investment hedges
Foreign exchange

Nominalamount$m

Assets$m

548

Interest rate swap agreements
Interest rate futures contracts

Fair value hedges

Cash flow hedges

2020

2021

Interest rate

Liabilities$mNominalamount$m

Assets$m

Liabilities$m

Foreign exchange1

-

(13)

558

-

(9)

Foreign exchange

68,708358(116)

79,416

2,272(2,773)

8,704

191

(2)

9,380

-

(103)

Fair value hedges
Foreign exchange spot and forward contracts

Less than 3months$m

As at 30 September 2020

Net investment hedges

The Company

Average
Rate

Fair value hedges

Liabilities$mNominalamount$m

Consolidated

Consolidated

Interest Rate
AUD/USD FX Rate

0.72

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.29

THB/AUD FX Rate

21.63

Net investment hedges

1.

Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.

Cash flow hedges
78,85219(16)

59,037

1,643

(261)

Foreign exchange swap agreements

642

22

-

2,943

63

(54)

Foreign exchange spot and forward contracts

153

-

(1)

153

-

-

299

2

(10)

404

13

(2)

157,906

592

(158)

151,891

3,991(3,202)

Interest rate swap agreements

Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships

148

148

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The Company
Average
Rate

Nominal AmountAs at 30 September 2021

Less than 3months$m

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
3 to 12months$m

1 to 5
years
$m

After
5 years$m

The impacts of ineffectiveness from our designated hedge relationships by type of hedge relationship and type of risk being hedged are:Total$m
Consolidated

Fair value hedges
Interest rate

Interest Rate

Foreign exchange

HKD/AUD FX Rate

1.37%

2,445

10,88443,06321,02077,412

5.74

548

-

-

-

548

Cash flow hedges
Interest rate
Foreign exchange1

Interest Rate

1.06%

AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.81

2,125

7,233

67,7991,695

78,852

38

115

-

642

795

150

149

-

-

299

Net investment hedges
Foreign exchange
As at 30 September 2020
Fair value hedges
Interest rate

Interest Rate

Foreign exchange

HKD/AUD FX Rate

1.57%

3,475

7,852

53,25024,21988,796

5.59

558

-

-

-

558

1.65%

4,253

12,69240,013

2,079

59,037

38

613

1,157

1,288

3,096

Cash flow hedges
Interest rate
Foreign exchange1

Interest Rate
AUD/USD FX Rate

0.72

USD/EUR FX Rate

0.91

Net investment hedges
Foreign exchange
1.

Ineffectiveness

TWD/AUD FX Rate

20.29

258

146

-

-

404

As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange

Hedge ineffectivenessChange in value
recognised in profitof hedging Change in value
and loss
instrument2 of hedged item
$m
$m
$m
1,005
9

(1,006)
(9)

(1)
-

-

(934)
(10)

909
10

(25)
-

4
(1)

61

(61)

-

-

372
23

(358)
(23)

14
-

-

451
(15)

(449)
15

2
-

10
(2)

94

(94)

-

(15)

Hedge ineffectivenessChange in value
recognised in profitof hedging Change in value
and loss
instrument2 of hedged item
$m
$m
$m

Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit and loss$m

As at 30 September 2020
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
1.
2.

Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit and loss$m

All hedging instruments are classified as derivative financial instruments.
Changes in value of hedging instruments is before any adjustments for Settle to Market.

IneffectivenessHedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.

The Company
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2020
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange

731
9

(734)
(9)

(3)
-

-

(797)
(10)

772
10

(25)
-

(6)
(1)

(6)

6

-

-

166
23

(154)
(23)

12
-

-

352
(15)

(351)
15

1
-

(5)
(2)

16

(16)

-

(15)

1.

All hedging instruments are classified as derivative financial instruments.
2.
Changes in value of hedging instruments is before any adjustments for Settle to Market.

Hedge ineffectiveness recognised is classified within Other operating income. Reclassification adjustments to the Statement of Comprehensive
Income are recognised within Net interest income and Other operating income.

150

150

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The hedged items in relation to the Group’s cash flow and net investment hedges are:

The hedged items in relation to the Group’s fair value hedges are:Balance sheet
presentation

Consolidated
As at 30 September 2021
Fixed rate loans and advances

Hedged risk

Net loans and advances Interest rate

Carrying amount
AssetsLiabilities$m$m

Accumulated fair value
hedge adjustments on
the hedged item
AssetsLiabilities
$m
$m

3,416

-

9

-

Debt issuancesInterest rate-

(53,885)-(999)

Fixed rate investment securities (FVOCI)

Investment securities

Interest rate

53,321

-

(209)

-

Equity securities at FVOCI1

Investment securities

Foreign exchange

548

-

20

-

57,285(53,885)

(180)

(999)

7,375

-

52

-

Fixed rate debt issuance1

Total
As at 30 September 2020
Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuancesInterest rate-

(61,355)-(2,518)Fixed rate investment securities (FVOCI)1 Investment securities

Interest rate

55,233

-

2,256

-

Equity securities at FVOCI1

Foreign exchange

558

-

29

-

63,166(61,355)

2,337(2,518)Investment securities

Total
1.

The carrying amount of debt and equity instruments at fair value through other comprehensive income does not include the fair value hedge adjustment since accounting for the hedge relationship resultsin the transfer of the hedge adjustment out of other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.

The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is $2 million (2020:
nil).
The hedged items in relation to the Company’s fair value hedges are:Balance sheet
presentation

The Company
As at 30 September 2021
Fixed rate loans and advances

Hedged risk

Net loans and advances Interest rate

Carrying amount
AssetsLiabilities
$m
$m
-

7

-

Debt issuancesInterest rate-

(38,222)-(769)

Fixed rate investment securities (FVOCI)

Investment securities

Interest rate

41,944-129-

Equity securities at FVOCI

Investment securities

Foreign exchange

548

-

20

-

45,908(38,222)

156

(769)

Fixed rate debt issuance
1

1

Total
As at 30 September 2020
Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuances

Fixed rate investment securities (FVOCI)1 Investment securities
Equity securities at FVOCI

1

Total
1.

Investment securities

5,946

-

43

-

Interest rate-

(44,159)-(1,923)

Interest rate

46,747

-

1,958

-

558

-

29

-

53,251(44,159)

2,030(1,923)Foreign exchange

The carrying amount of debt and equity instruments at fair value through other comprehensive income does not include the fair value hedge adjustment since accounting for the hedge relationship resultsin the transfer of the hedge adjustment out of other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.

The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is nil (2020: nil).

152

152

Foreign currencytranslation reserve
Continuing Discontinued
hedgeshedges$m$m

Consolidated

Hedged risk

As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuance
Foreign currency investment securities
Highly probable forecast transactions
Net investment hedges
Foreign operations

Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange

546
4
(4)
(1)

20
(6)
(1)
-

-

-

Foreign exchange

-

-

(19)

(149)

As at 30 September 2020
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuance
Foreign currency investment securities
Highly probable forecast transactions
Net investment hedges
Foreign operations

Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange

2,013
(562)
(2)
10
(1)

38
(18)
-

-

-

Foreign exchange

-

-

(80)

(149)

Accumulated fair value
hedge adjustments on
the hedged item
AssetsLiabilities
$m
$m

3,416

Cash flow
hedge reserve
Continuing Discontinued
hedgeshedges$m$m

The Company
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuance
Foreign currency investment securities
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2020
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuance
Foreign currency investment securities
Highly probable forecast transactions
Net investment hedges
Foreign operations

Hedged risk

Cash flow
hedge reserve
Continuing Discontinued
hedgeshedges$m$m

Foreign currencytranslation reserve
Continuing Discontinued
hedgeshedges$m$m

Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange

541
8
(4)
(1)

11
(6)
(1)
-

-

-

Foreign exchange

-

-

30

(149)

Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange

1,508
(193)
(2)
10
(1)

30
(15)
-

-

-

Foreign exchange

-

-

36

(149)

ANZ 2021 Annual Report

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DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

The table below details the reconciliation of the Group’s cash flow hedge reserve by risk type:Interest rate$m

Foreigncurrency
$m

Total
$m

Balance at 1 October 2019

716

15

731

Fair value gains/(losses)

449

(15)

434

Transferred to income statement

10

(2)

8

Income taxes and others

(141)

6

(135)

Balance at 30 September 2020

1,034

4

1,038

Fair value gains/(losses)

(909)

(10)

(919)

4

(1)

3

Income taxes and others

269

2

271

Balance at 30 September 2021

398

(5)

393

Consolidated

Transferred to income statement

RECOGNITION AND MEASUREMENT
Recognition

Valuation adjustments are integral in determining the fair value of derivatives. This includes:
 a credit valuation adjustment (CVA) to reflect the counterparty risk and/or event of default; and a funding valuation adjustment (FVA) to account for funding costs and benefits in the derivatives
portfolio.
Derecognition ofassets and liabilities

Hedges of net investments in a foreign operation resulted in a $61 million increase in FCTR during the year (2020: $94 million). Of that, nil (2020: $15
million) was reclassified from FCTR to the income statement during the year.
The table below details the reconciliation of the Company’s cash flow hedge reserve by risk type:Interest rate$m

Foreigncurrency
$m

Total
$m

Balance at 1 October 2019

690

17

707

Fair value gains/(losses)

351

(15)

336

(5)

(2)

(7)

The Company

Transferred to income statement
Income taxes and others

(105)

4

(101)

Balance at 30 September 2020

931

4

935

Fair value gains/(losses)

(772)

(10)

(782)

(6)

(1)

(7)

Income taxes and others

236

2

238

Balance at 30 September 2021

389

(5)

384

Transferred to income statement

Hedges of net investments in a foreign operation resulted in a $6 million decrease in FCTR during the year (2020: $16 million increase). Of that, nil(2020: $15 million) was reclassified from FCTR to the income statement during the year.

Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a
derivative is positive, then we carry it as an asset, but if its value is negative, then we carry it as aliability.

We remove derivative assets from our balance sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our balance
sheet when the Group’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative
assets or liabilities may be derecognised in accordance with the principle above when collateral issettled, depending on the legal arrangements in place for each instrument.

Impact on the
Income Statement

The recognition of gains or losses on derivative financial instruments depends on whether thederivative is held for trading or is designated in a hedging relationship. For derivative financial
instruments held for trading, gains or losses from changes in the fair value are recognised in profit orloss.
For an instrument designated in a hedging relationship, the recognition of gains or losses depends on
the nature of the item being hedged. Refer to the table on page 147 for profit or loss treatment foreach hedge type.
Sources of hedge ineffectiveness may arise from differences in the interest rate reference rate, margins,or rate set differences and differences in discounting between the hedged items and the hedging
instruments. The hedging instruments are discounted using Overnight Index Swaps discount curves
which are not applied to the hedged items.

Hedge effectivenessTo qualify for hedge accounting, a hedge is expected to be highly effective. A hedge is highly effective
only if the following conditions are met: the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash
flows attributable to the hedged risk during the period for which the hedge is designated(prospective effectiveness); and the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
The Group monitors hedge effectiveness on a regular basis but at a minimum at least at eachreporting date.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select the valuation techniques used to determine the fair value of derivatives, particularly the selection ofvaluation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 18 Fair
Value of Financial Assets and Financial Liabilities for further details.

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155

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ANZ 2021 ANNUAL REPORTOVERVIEWHOW WE
CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
12. INVESTMENT SECURITIES

3,600

1,310

7,275

12. INVESTMENT SECURITIES (continued)

2,762

1,062

11,6172021

70,941

77,9502020

The Company

Government securities
Corporate and financial
institutional securities

2021 Investment securities

Other securities
Equity securities

2020
$m

2021
$m

2020
$m

Investment securities measured at fair value through othercomprehensive income
Debt securities

74,74385,46061,62373,936Equity securities

1,310

1,062

1,054

994

Investment securities measured at amortised cost
Debt securities1

7,031

6,816

5,263

5,354

42

53

-

-

24,39016,350-57,839Corporate and financial institution securities

175

830

4,371

71

-

5,447

Other securities

129

295

553

2,623

-

3,600

Equity securities1

-

-

-

-

1,054

1,054

5,757

12,771

29,314

19,044

1,054

67,940Government securities

5,770

12,76330,887

17,600-67,020

Corporate and financial institution securities

633

1,700

7,104

71

-

9,508

-

-

532

2,230

-

2,762

-

-

-

-

994

994

6,403

14,46338,523

19,901

994

80,284

83,126

93,391

67,94080,284

Includes allowance for expected credit losses of $31 million (2020: $20 million) for the Group and $1 million (2020: $1 million) for the Company.

2021 Investment securities

Less than 3months$m

3 to 12months 1 to 5 years After 5 years
$m
$m
$m

No
maturity
$m

Total
$m

19,382-

70,941

6,396

12,98432,179Corporate and financial institution securities

285

1,179

5,701

110

-

7,275

Other securities

129

295

553

2,623

-

3,600

Government securities

-

-

-

-

1,310

1,310

6,810

14,45838,433

22,115

1,310

83,126

Government securities

7,175

14,43637,656

18,683-

77,950

Corporate and financial institution securities

701

2,698

8,128

90

-

11,617

-

-

532

2,230

-

2,762

-

-

-

-

1,062

1,062

7,876

17,13446,31621,003

1,062

93,391Equity securities1
Total
2020 Investment securities

Other securities
Equity securities

1

Total
1.

Total
1.

The carrying value of equity securities classified as FVOCI securities includes the Company’s $991 million (2020: $934 million) investment in the Bank of Tianjin (BoT).

During the year, the Company recognised a net gain (before tax) in Other operating income from the recycling of gains/losses previously deferred inother comprehensive income of $301 million (2020: $21 million) in respect of investment securities.

RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate the Group’s
customer lending activities are classified as Loans and advances (rather than Investment securities) to better reflect the substance of thearrangement.

The maturity profile of investment securities is as follows:
Consolidated

Other securities
Equity securities

Total
1.

Total
$m

11,6461

Investment Securities measured at fair value through profit or loss
Debt securities

No
maturity$m2020 Investment securities

The Company

2021
$m

3 to 12months 1 to 5 years After 5 years
$m
$m
$m

5,453

Government securities

Total

Consolidated

Less than 3months$m

The carrying value of equity securities classified as FVOCI securities includes the Group’s $991 million (2020: $934 million) investment in the Bank of Tianjin (BoT).

Non-traded equity investments may be designated at FVOCI on an instrument by instrument basis. If this election is made, gains or losses
are not reclassified from other comprehensive income to profit or loss on disposal of the investment. However, gains or losses may bereclassified within equity.
Assets disclosed as Investment securities are subject to the general classification and measurement policy for Financial Assets outlined at
the commencement of the Group’s financial asset disclosures on page 141. Additionally, expected credit losses associated with ‘Investment
securities - debt securities at amortised cost’ and ‘Investment securities - debt securities at fair value through other comprehensive income’are recognised and measured in accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses. For‘Investment securities - debt securities at fair value through other comprehensive income’ the allowance for Expected Credit Loss (ECL) is
recognised in the FVOCI reserve in equity with a corresponding charge to profit or loss.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select valuation techniques used to determine the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 18 Fair Value of Financial Assets andFinancial Liabilities for further details.

During the year, the Group recognised a net gain (before tax) in Other operating income from the recycling of gains/losses previously deferred inother comprehensive income of $303 million (2020: $23 million) in respect of investment securities.

156

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CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES

13. NET LOANS AND ADVANCES
The following table provides details of net loans and advances for the Group:

2021
Consolidated
2021$m

Overdrafts
Credit cards
Commercial bills
Term loans – housing
Term loans – non-housing
Other
Subtotal
Unearned income1
Capitalised brokerage and other origination costs1
Gross loans and advances
Allowance for expected credit losses (refer to Note 14)
Net loans and advances

2020
$m

The Company
2021
$m

2020
$m

5,360
6,570
6,000
372,572
239,277
2,985
632,764(434)
1,434
633,764(4,045)
629,719

5,214
7,194
6,383
358,350
241,7252,406
621,272(460)
1,262
622,074(4,981)
617,093

4,465
5,494
6,000
278,372
194,1502,733
491,214(390)
1,050
491,874(3,387)
488,487

4,466
5,990
6,383
275,579
197,1172,133
491,668(406)
959
492,221(4,219)488,002125,952
503,767
629,719

126,238
490,855
617,093

98,214
390,273
488,487

98,736389,266
488,002626,099
3,620
629,719

613,155
3,938
617,093

485,015
3,472
488,487

483,986
4,016
488,002

Residual contractual maturity:
Within one year
More than one year
Net loans and advances

Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Net loans and advances1.

During 2021, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of the balances.
Comparatives have been restated accordingly (2020: $394 million for the Group; $387 million for the Company).

Consolidated
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1
1.

2020

Collectively Individuallyassessedassessed
$m
$m
3,379
666
785
21
31
4,195
687
11

-

Total
$m
4,045
806
31
4,882

Collectively Individuallyassessedassessed
$m
$m
4,130
851
858
40
20
5,008
891

11

10

-

10

For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other Comprehensive Income (OCI) with acorresponding charge to profit or loss.

2021

The Company
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1
1.

Total
$m
4,981
898
20
5,899

2020

Collectively Individuallyassessedassessed
$m
$m
2,824
563
667
7
1
3,492
570
7

-

Total
$m
3,387
674
1
4,062

Collectively Individuallyassessedassessed
$m
$m
3,515
704
711
20
1
4,227
724

7

7

Total
$m
4,219
731
1
4,951

-

7

For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other Comprehensive Income (OCI) with acorresponding charge to profit or loss.

The following tables present the movement in the allowance for ECL for the year.
Net loans and advances - at amortised cost
Allowance for ECL is included in Net loans and advances.

RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market andare facilities the Group provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance,
which are primarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we thenmeasure loans and advances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses, orat fair value when they are specifically designated on initial recognition as fair value through profit or loss or when held for trading.
We classify contracts to lease assets and hire purchase agreements as finance leases if they transfer substantially all the risks and rewards ofownership of the asset to the customer or an unrelated third party. We include these facilities in ‘Other’ in the table above.
The Group enters into transactions in which it transfers financial assets that are recognised on its balance sheet. When the Group retains
substantially all of the risks and rewards of the transferred assets, the transferred assets remain on the Group’s balance sheet, however ifsubstantially all the risks and rewards are transferred, the Group derecognises the asset. If the risks and rewards are partially retained andcontrol over the asset is lost, the Group derecognises the asset. If control over the asset is not lost, the Group continues to recognise theasset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer of assets and liabilities as appropriate.
Assets disclosed as net loans and advances are subject to the general classification and measurement policy for financial assets outlined on
page 141. Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured inaccordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses.

158

158

Stage 31

Consolidated
As at 1 October 2019
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2020

Stage 1
$m
927
200
110
(33)
1,204

Stage 2
$m
1,378
(308)
1,428
(33)
2,465

Collectively
assessed
$m
413
(112)
162
(2)
461

Individuallyassessed
$m
791
220
1,324
(321)
(1,109)
(54)
851

Total
$m
3,509
3,024
(321)
(1,109)
(122)
4,981

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021

399
(639)
4
968

(421)
(53)
3
1,994

(137)
90
3
417

159
663
(365)
(626)
(16)
666

61
(365)
(626)
(6)
4,045

1.
2.

The Group’s credit exposures that are purchased or originated credit-impaired financial assets are insignificant.
Other movements include the impacts of discount unwind on individually assessed allowance for ECL or the impact of divestments completed during the year.

ANZ 2021 Annual Report

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ANZ 2021 ANNUAL REPORTOVERVIEWHOW WE
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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
Stage 31

Stage 31

The Company
As at 1 October 2019
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2020

Stage 1
$m
746
168
122
(8)
1,028

Stage 2
$m
1,181
(258)
1,198
(7)
2,114

Collectively
assessed
$m
361
(122)
135
(1)
373

Individuallyassessed
$m
633
212
1,171
(286)
(1,003)
(23)
704

Total
$m
2,921
2,626
(286)
(1,003)(39)
4,219

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021

392
(620)
(3)
797

(382)
(49)
(4)
1,679

(130)
106
(1)
348

120
619
(308)
(556)
(16)
563

56
(308)
(556)
(24)
3,387

1.
2.

The Company
As at 1 October 2019
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2020

Stage 1
$m
405
15
100
(7)
513

Stage 2
$m
126
(20)
78
(1)
183

Collectively
assessed
$m
14
(2)
3
15

Individuallyassessed
$m
12
7
13
(12)
20

Total
$m
557
194
(12)
(8)
731

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021

45
(72)
(2)
484

(41)
28
1
171

(5)
2
12

1
1
(15)
7

(41)
(15)
(1)
674

Individuallyassessed
$m
-

Total
$m
20
31

1.

The Group’s credit exposures that are purchased or originated credit-impaired financial assets are insignificant.

Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.

The Group’s credit exposures that are purchased or originated credit-impaired financial assets are insignificant.
Other movements include the impact of discount unwind on individually assessed allowance for ECL.

Stage 3Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Stage 31

Consolidated
As at 1 October 2019
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2020

Stage 1
$m
473
18
115
(10)
596

Stage 2
$m
151
(24)
115
(3)
239

Collectively
assessed
$m
21
(1)
3
23

Individuallyassessed
$m
23
7
24
(14)
40

Total
$m
668
257
(14)
(13)
898

51
(92)
555

(49)
19
2
211

(3)
(1)
19

1
1
(21)
21

(72)
(21)
1
806

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021
1.
2.

Consolidated
As at 30 September 2020
As at 30 September 2021

Stage 1$m
20
31

Stage 2$m-

Collectively
assessed$m-

Stage 3

The Company
As at 30 September 2020
As at 30 September 2021

Stage 1$m
1
1Stage 2$m-

Collectively
assessed$m-

Individuallyassessed
$m
-

Total
$m
1
1

Investment securities - debt securities at FVOCIAs FVOCI assets are measured at fair value, there is no separate allowance for ECL. Instead, the allowance for ECL is recognised in Other
Comprehensive Income (OCI) with a corresponding charge to profit or loss.
Stage 3

The Group’s credit exposures that are purchased or originated credit-impaired financial assets are insignificant.
Other movements include the impacts of divestments completed during the year.

Consolidated
As at 30 September 2020
As at 30 September 2021

Stage 1$m
10
11Stage 2$m-

Collectively
assessed$m-

Stage 2$m-

Collectively
assessed$m-

Individuallyassessed
$m
-

Total
$m
10
11

Stage 3

The Company
As at 30 September 2020
As at 30 September 2021

160

160

Stage 1$m
7
7

Individuallyassessed
$m
-

Total
$m
7
7

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

CREDIT IMPAIRMENT CHARGE - INCOME STATEMENTRECOGNITION AND MEASUREMENT

Credit impairment charge/(release) analysis
Consolidated
2021
$m

2020
$m

The Company
2021
$m

2020
$m

EXPECTED CREDIT LOSS MODEL- Collectively assessed

(823)

1,717

(726)

1,420

- Individually assessed

824

1,575

741

1,403

Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit
deterioration since origination, according to the following three-stage approach:

Write-backs3

(386)

(335)

(323)

(298)

Recoveries of amounts previously written-off

(182)

(219)

(161)

(188)

Total credit impairment charge

(567)

2,738

(469)

2,337

New and increased provisions (net of releases)1,2

1.
2.

Includes the impact of transfers between collectively assessed and individually assessed.
New and increased provisions (net of releases) includes:
Consolidated

The Company

2021

2021

2020

Collectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$m

Net loans and advances at amortised cost

(761)

822

1,479

1,544

(683)

739

1,243

1,383

Off-balance sheet commitments

(74)

2

226

31

(43)

2

174

20

Investment securities - debt securities at amortised cost

11

-

9

-

-

-

1

-

Investment securities - debt securities at FVOCI

1

-

3

-

-

-

2

-

(823)

824

1,717

1,575

(726)

741

1,420

1,403

Total
3.

2020

Consists of write-backs in Net loans and advances at amortised cost of $365 million (2020: $321 million) for the Group and $308 million (2020: $286 million) for the Company, and Off-balance sheet
commitments of $21 million (2020: $14 million) for the Group and $15 million (2020: $12 million) for the Company.

The contractual amount outstanding on financial assets that were written off during the year and that are still subject to enforcement activity is$168 million (2020: $340 million) for the Group, and $138 million (2020: $321 million) for the Company.

The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios andtakes into account the time value of money, past events, current conditions and forecasts of future economic conditions.

 Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,an allowance equivalent to 12 months ECL is recognised reflecting the expected credit losses resulting from default events that are
possible within the next 12 months from the reporting date. For instruments with a remaining maturity of less than 12 months,
expected credit losses are estimated based on default events that are possible over the remaining time to maturity.
 Stage 2: Where there has been a SICR since origination, an allowance equivalent to lifetime ECL is recognised reflecting expected credit
losses resulting from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a
subsequent period such that the increase in credit risk since origination is no longer considered significant, the exposure returns to a
Stage 1 classification and a 12 month ECL applies.
 Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSSECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:
 Probability of default (PD) - the estimate of the likelihood that a borrower will default over a given period;
 Exposure at default (EAD) - the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; and Loss given default (LGD) - the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility's EAD,
taking into account direct and indirect recovery costs.
These credit risk factors are adjusted for current and forward-looking information through the use of macro-economic variables.
EXPECTED LIFE
When estimating ECL for exposures in Stage 2 and 3, the Group considers the expected lifetime over which it is exposed to credit risk.
For non-retail portfolios, the Group uses the maximum contractual period as the expected lifetime for non-revolving credit facilities. For
non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects the Group’s contractual right to withdraw afacility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For retail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviourand substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring expected credit losses is aligned to the definition used for internal credit risk management
purposes across all portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicatorsthat a debtor is unlikely to fully satisfy contractual credit obligations to the Group, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of theGroup’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries ofamounts previously written-off are credited to credit impairment charge in the income statement.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT (continued)

MODIFIED FINANCIAL ASSETSFORWARD-LOOKING INFORMATION (continued)

If the terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit or commercial reasons,an assessment is made to determine if the changes to the terms of the existing financial asset are considered substantial. This assessment
considers both changes in cash flows arising from the modified terms as well as changes in the overall instrument risk profile; for example,
changes in the principal (credit limit), term, or type of underlying collateral. Where a modification is considered non-substantial, theexisting financial asset is not derecognised and its date of origination continues to be used to determine SICR. Where a modification isconsidered substantial, the existing financial asset is derecognised and a new financial asset is recognised at its fair value on themodification date, which also becomes the date of origination used to determine SICR for this new asset.

The four scenarios are described in terms of macro-economic variables used in the PD, LGD and EAD models (collectively the ECL models)depending on the lending portfolio and country of the borrower. Examples of the variables include unemployment rates, GDP growth
rates, house price indices, commercial property price indices and consumer price indices.

SIGNIFICANT INCREASE IN CREDIT RISK (SICR)

Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not beenadequately addressed in the modelling process. CMRC is responsible for approving such adjustments.

Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, the Group considers both
qualitative and quantitative information:i.

Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.

KEY JUDGEMENTS AND ESTIMATES

For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting dateto the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the probability of default of the borrower
and incorporates both borrower and non-borrower specific information, including forward-looking information. CCRs are subject toreview at least annually or more frequently when an event occurs which could affect the credit risk of the customer.

In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to:

For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime
probability of default at the reporting date to that at origination, or by reference to customer behavioural score thresholds. The
scenario weighted lifetime probability of default may increase significantly if:

The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between
those inputs, and highlights significant changes during the current period.

 there has been a deterioration in the economic outlook, or an increase in economic uncertainty; or there has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.
ii. Backstop criteria
The Group uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios only,
facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.
iii. COVID-19 initiatives
Facilities previously subject to the COVID-19 repayment deferral arrangements have been subsumed into the normal loan portfolios
and SICR applied accordingly.
FORWARD-LOOKING INFORMATION
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since its initialrecognition and in our estimate of ECL. In applying forward-looking information for estimating ECL, the Group considers four probabilityweighted forecast economic scenarios as follows:i.

Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario, as well as specific portfolio considerations where required. The Group Asset and Liability Committee (GALCO) is
responsible for reviewing and approving the base case economic scenario and the Credit and Market Risk Committee (CMRC) approves theprobability weights applied to each scenario.

Base case scenario
The base case scenario is ANZ’s view of future macro-economic conditions. It reflects management’s assumptions used for strategicplanning and budgeting, and also informs the Group Internal Capital Adequacy Assessment Process (ICAAP) which is the process theGroup applies in strategic and capital planning over a 3-year time horizon;

ii. Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on theeconomic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) andpessimistic (in the case of the downside) economic events and uncertainty over long term horizons; and the selection of an estimation technique or modelling methodology; and the selection of inputs for those models, and the interdependencies between those inputs.

The judgements and associated assumptions have been made within the context of the impact of COVID-19, and reflect historicalexperience and other factors that are considered to be relevant, including expectations of future events that are believed to be reasonable
under the circumstances. The Group’s ECL estimates are inherently uncertain and, as a result, actual results may differ from these estimates.
Judgement/Assumption

Description

Considerations for the year ended 30 September 2021

Determining when a
Significant Increase in
Credit Risk (SICR) has
occurredIn the measurement of ECL, judgement isinvolved in setting the rules and trigger points
to determine whether there has been a SICR
since initial recognition of a loan, which would
result in the financial asset moving from Stage 1
to Stage 2. This is a key area of judgement sincetransition from Stage 1 to Stage 2 increases the
ECL from an allowance based on the probabilityof default in the next 12 months, to anallowance for lifetime expected credit losses.
Subsequent decreases in credit risk resulting intransition from Stage 2 to Stage 1 may similarly
result in significant changes in the ECL
allowance.

The support packages offered to customers in response
to COVID-19 in 2020 and 2021 have ceased with the
majority of customers who took up the support
packages having reverted back to their normal loan
repayments. Given the recency of cessation of thesepackages, the Group has provided a component of ECL
for expected delinquencies that may have been
obscured by the support measures.

The setting of precise trigger points requires
judgement which may have a material impact
upon the size of the ECL allowance. The Group
monitors the effectiveness of SICR criteria on an
ongoing basis.

iv. Severe downside scenario
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe
impact of less likely extremely adverse economic conditions. It reflects macro-economic conditions of a downturn economic eventwith a probability of occurrence once every 25 years.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
Judgement/Assumption

Description

Considerations for the year ended 30 September 2021

Judgement/Assumption

Description

Considerations for the year ended 30 September 2021

The probability of default (PD), loss given default(LGD) and exposure at default (EAD) credit risk
parameters used in determining ECL are point-intime measures reflecting the relevant forwardlooking information determined by management.
Judgement is involved in determining which
forward-looking information variables are relevant
for particular lending portfolios and for
determining each portfolio’s point-in-time
sensitivity.

The PD, EAD and LGD models are subject to the Group’smodel risk policy that stipulates periodic model monitoring,
periodic re-validation and defines approval procedures andauthorities according to model materiality.

Management
temporary adjustments

Management have applied a number of adjustments
to the modelled ECL primarily due to the uncertainty
associated with continuing COVID-19 impacts.

In addition, judgement is required where
behavioural characteristics are applied inestimating the lifetime of a facility to be used inmeasuring ECL.

There were no material changes to the policies during theyear ended 30 September 2021.

Management temporary adjustments to the ECL
allowance are used in circumstances where it isjudged that our existing inputs, assumptions andmodel techniques do not capture all the risk
factors relevant to our lending portfolios.
Emerging local or global macroeconomic,
microeconomic or political events, and natural
disasters that are not incorporated into our current
parameters, risk ratings, or forward-looking
information are examples of such circumstances.
The use of management temporary adjustments
may impact the amount of ECL recognised.

The Group derives a forward-looking ‘base case’economic scenario which reflects ANZ Research Economics’ (ANZ Economics) view of future
macro-economic conditions.

There have been no changes to the types of forward-looking
variables (key economic drivers) used as model inputs in thecurrent year.

In the 2021 year, an adjustment was made to the modelled
outcome to account for increased model uncertainties as aresult of COVID-19.

As at 30 September 2021, the base case assumptions havebeen updated to reflect the evolving situation with respect
to COVID-19, including emergence from lockdowns,
government stimulus measures and roll-out of vaccines. In
determining the expected path of the economy,
assessments of the impact of central bank policies,
governments’ actions, the response of business, andinstitution specific responses (such as repayment deferrals)
were considered.
The expected outcomes of key economic drivers for the basecase scenario as at 30 September 2021 are described below
under the heading ‘Base case economic forecast
assumptions’.

Probability weighting ofeach economic scenario(base case, upside,
downside and severe
downside scenarios)1,2

Probability weighting of each economic scenario is
determined by management considering the risks
and uncertainties surrounding the base caseeconomic scenario at each measurement date.

The key consideration for probability weightings in thecurrent period is the continued uncertain economic impactsof COVID-19.
The Group considers these weightings in each geography toprovide estimates of the possible loss outcomes taking into
account short and long term inter-relationships within theGroup’s credit portfolios.
As at 30 September 2021, a base case weighting of 41.3%
has been applied and more weight has been applied to thedownside scenario given the Group’s assessment ofdownside risks.
The assigned probability weightings in Australia, New
Zealand and Rest of world are subject to a high degree of
inherent uncertainty and therefore the actual outcomes may
be significantly different to those projected.

166

KEY JUDGEMENTS AND ESTIMATES (continued)

Measuring both 12month and lifetime
credit losses

Base case economic
forecast

166

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

1.

The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.

2.

The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse economic
conditions.

Management overlays (including COVID-19 overlays)
which add to the modelled ECL provision have been
made for risks particular to retail including home loans,small business and commercial banking in Australia,
for personal and business banking in New Zealand,
and for tourism in the Pacific.

The uncertainty associated with the COVID-19
pandemic, including the roll-out of vaccines andtheir efficacy, and the extent to which the actionsof governments, businesses and consumers
mitigate against potentially adverse credit
outcomes are not fully incorporated into existing
ECL models which are based on historical
underlying data. Accordingly, management
overlays have been applied to ensure credit
provisions are appropriate.
Base case economic forecast assumptions
The uncertain evolution of the COVID-19 pandemic and associated government, business and consumer responses, increases the risk ofthe economic forecast resulting in an understatement or overstatement of the ECL balance due to uncertainties around: the extent and duration of measures, including the roll-out of vaccines and the relaxation of containment measures, impacting the
spread of COVID-19;
 the expected impact on the economy, including the timing and speed of the economic response and differences between sectors; and the effects of progressive reductions in government stimulus measures, in particular their impact on the extent and duration of
economic recovery.
The economic drivers of the base case economic forecasts at 30 September 2021 are set out below. These reflect ANZ Economics’ view of
future macro-economic conditions at 30 September 2021. For years beyond the near term forecasts below, the ECL models project futureyear economic conditions including an assumption to eventual reversion to mid-cycle economic conditions.
Forecast calendar year
2021
2022
2023
Australia
GDP (annual % change)
Unemployment rate
Residential property prices (annual % change)
Consumer price index
New Zealand
GDP (annual % change)
Unemployment rate
Residential property prices (annual % change)
Consumer price index
Rest of world
GDP (annual % change)
Consumer price index

3.4%
5.3%
20.5%
2.4

3.8%
4.3%
6.7%
1.9

3.4%
4.1%
3.5%
2.2

4.3%
4.1%
22.4%
3.3

4.3%
3.9%
0.4%
2.9

2.9%
3.9%
5.2%
1.9

6.2%
3.9

4.2%
2.5

2.5%
2.2

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

FINANCIAL LIABILITIESOutlined below is a description of how we classify and measure financial liabilities relevant to the subsequent note disclosures.

KEY JUDGEMENTS AND ESTIMATES (continued)
CLASSIFICATION AND MEASUREMENT

The base case economic forecasts as at 30 September 2021 indicate a significant improvement in current and expected economic
conditions from the forecasts as at 30 September 2020 reflecting the ongoing progress and actions in responding to the COVID-19
pandemic.

Financial liabilities

Probability weightings

Financial liabilities are measured at amortised cost, or fair value through profit or loss (FVTPL) when they are held for trading. Additionally,financial liabilities can be designated at FVTPL where:

Probability weightings for each scenario is determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario. The key consideration for probability weightings in the current period is the effectiveness of actions taken in response
to COVID-19 relaxation of containment measures by governments, and the take-up of vaccines limiting the impact of the virus.
The base case scenario represents a significant improvement in the forecasts since September 2020. Given the uncertainties associatedwith a potential ongoing recovery in the economy, the average base case weighting across geographies has been reduced to 41.3% (Sep
20: 50.0%) and the downside scenario increased to 47.7% (Sep 20: 33.3%).
The assigned probability weightings in Australia, New Zealand and Rest of world are subject to a high degree of inherent uncertainty andtherefore the actual outcomes may be significantly different to those projected. The Group considers these weightings in each geography
to provide estimates of the possible loss outcomes and taking into account short and long term inter-relationships within the Group’s
credit portfolios. The average weightings applied across the Group are set out below:
Consolidated
2021
2020
Base
UpsideDownside
Severe Downside

41.3%
5.2%
47.7%
5.8%

 the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; a group of financial liabilities are managed and their performance is evaluated on a fair value basis, in accordance with a documented
risk management strategy; or the financial liability contains one or more embedded derivatives unless:a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; orb) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk areincluded in other comprehensive income, except where doing so would create or enlarge an accounting mismatch in profit or loss.

The Company
2021
2020
40.0%
50.0%
5.4%
10.9%
48.8%
33.4%
5.8%
5.7%

50.0%
10.4%
33.3%
6.3%

ECL - Sensitivity analysis
Given current economic uncertainties and the judgment applied to factors used in determining the expected default of borrowers infuture periods, expected credit losses reported by the Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2021:

168

168

Consolidated
ECL
Impact$m$m

The Company
ECL
Impact$m$m

If 1% of Stage 1 facilities were included in Stage 2

4,250

55

3,541

49

If 1% of Stage 2 facilities were included in Stage 1

4,188

(7)

3,486

(6)

100% upside scenario

1,774(2,421)

1,469(2,024)

100% base scenario

2,337(1,858)

1,946(1,547)

100% downside scenario

4,337

142

3,668

175

100% severe downside scenario

5,358

1,163

4,476

983

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
16. DEBT ISSUANCES

15. DEPOSITS AND OTHER BORROWINGSThe Group uses a variety of funding programmes to issue senior debt (including covered bonds and securitisations) and subordinated debt. The
difference between senior debt and subordinated debt is that holders of senior debt take priority over holders of subordinated debt owed by therelevant issuer. In the winding up of the relevant issuer, the subordinated debt will be repaid by the relevant issuer only after the repayment of claimsof depositors, other creditors and the senior debt holders.

Certificates of deposit
37,70825,68486,082

88,33749,74639,8742021

177,081366,755

32,491

9,142

Term deposits
On demand and shortterm deposits

197,2732020

Deposits from banks &securities sold under
repurchase agreements

315,216

Commercial paper andother borrowings

Certificates of deposit
Term deposits
On demand and short term deposits
Deposits not bearing interest
Deposits from banks & securities sold under repurchase agreements1
Commercial paper and other borrowings
Deposits and other borrowings

Consolidated
2021
2020
$m
$m
32,49137,708
197,273
177,081315,216
366,755
39,87449,74688,33786,082
9,142
25,684682,333
743,056

The Company
2021
2020
$m
$m
30,57435,696
148,839
136,067
262,236
303,381
22,016
26,83686,947
83,294
7,524
21,449558,136
606,723

717,889
25,167743,056

665,151
17,182
682,333

584,816
21,907606,723544,324
13,812
558,136

738,772
4,284
743,056

679,255
3,078
682,333

606,67350
606,723556,676
1,460
558,136

Residual contractual maturity:
Within one year
More than one year
Deposits and other borrowings

Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Deposits and other borrowings
1.

Includes $20.1 billion (2020: $12.0 billion) of funds drawn under the RBA’s Term Funding Facility (TFF) for the Group and the Company, and $1.2 billion (2020: nil) under the Reserve Bank of New Zealand’s(RBNZ) Funding for Lending Programme (FLP) and Term Lending Facility (TLF) for the Group.

RECOGNITION AND MEASUREMENT
For deposits and other borrowings that: are not designated at fair value through profit or loss on initial recognition, we measure them at amortised cost and recognise theirinterest expense using the effective interest rate method; and are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate themas measured at fair value through profit or loss.
Refer to Note 18 Fair Value of Financial Assets and Financial Liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in
the Group’s own credit risk in other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss werecognise directly in profit and loss. Once we have recognised an amount in other comprehensive income, we do not later reclassify it toprofit and loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since
the risks and rewards of ownership remain with the Group. Over the life of the repurchase agreement, we recognise the difference
between the sale price and the repurchase price and charge it to interest expense in the profit and loss.

170

170

Consolidated
2021$m

Deposits not bearing interest

2020
$m

The Company
2021
$m

2020
$m

Senior debt
Covered bonds
Securitisation

58,952
15,3991,424

80,835
15,9481,824

45,348
11,342-64,591
11,761-

Total unsubordinated debt
Subordinated debt
- Additional Tier 1 capital- Tier 2 capital- Other subordinated debt securities

75,77598,60756,69076,352

8,506
16,207566
25,279101,0548,196
12,86521,061
119,668

8,191
16,207
24,39881,088

7,833
12,865
20,69897,050Within one year
More than one year
No maturity date (instruments in perpetuity)

22,621
76,594
1,839

25,68892,0591,921

18,51260,605
1,971

20,937
74,122
1,991

Total debt issued

101,054

119,668

81,08897,050Total subordinated debt
Total debt issued

Residual contractual maturity1:1.

Based on the final maturity date or, in the case of Additional Tier 1 capital securities, the mandatory conversion date (if any).

TOTAL DEBT ISSUED BY CURRENCY
The table below shows the Group’s issued debt by currency of issue, which broadly represents the debt holders’ base location.

USD
EUR
AUD
NZD
JPY
CHF
GBP
HKD

United States dollars
Euro
Australian dollars
New Zealand dollars
Japanese yen
Swiss francs
Pounds sterling
Hong Kong dollars
Chinese yuan, Norwegian kroner, Singapore dollars and Canadian
Other
dollars
Total debt issued

Consolidated
2021
$m

2020
$m

The Company
2021
$m

2020
$m

29,78822,98435,709
3,276
1,854
940
4,286
727

41,10023,03843,697
3,682
2,131
975
2,387
1,088

22,354
15,29434,299
839
1,853
4,287
727

31,83615,32541,857
923
2,131
2,387
1,088

1,490

1,570

1,435

1,503

101,054

119,668

81,08897,050SUBORDINATED DEBTAt 30 September 2021, all subordinated debt issued by the Company and certain other subordinated debt issued by its subsidiary ANZ Bank New
Zealand Limited (ANZ NZ) qualify as regulatory capital for the Group. They are classified as either Additional Tier 1 (AT1) capital, in the case of the ANZ
Capital Notes (ANZ CN), ANZ Capital Securities (ANZ CS) or ANZ NZ Capital Notes (ANZ NZ CN), or Tier 2 capital, in the case of perpetual or term
subordinated notes, for APRA’s capital adequacy purposes depending on the terms and conditions of the instruments.
Tier 2 capital instruments rank ahead of AT1 capital instruments, and AT1 capital instruments only rank ahead of ordinary shares, in any liquidation
event impacting the issuer of the instruments.

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SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
16. DEBT ISSUANCES (continued)

16. DEBT ISSUANCES (continued)

AT1 CAPITALANZ Capital Notes (ANZ CN)

All outstanding AT1 capital instruments are Basel III fully compliant instruments (refer to Note 24 Capital Management for further information about
Basel III). Each of the ANZ CN and ANZ CS rank equally with each other.

Issuer

CN1
ANZ

CN2
ANZ

Issue date

7 August 2013

31 March 2014

CN3
ANZ, acting through its New
Zealand branch
5 March 2015

Issue amount$1,120 million$1,610 million$970 million

Face value

$100

$100

$100

Distribution frequency

Semi-annually in arrears

Semi-annually in arrears

Semi-annually in arrears

Distribution rate

Floating rate: (180 day BankBill rate +3.4%)x(1-Australian
corporate tax rate)

Floating rate: (180 day BankBill rate +3.25%)x(1Australian corporate tax rate)

Floating rate: (180 day BankBill rate +3.6%)x(1-Australian
corporate tax rate)

Issuer’s early redemption or conversion option

1 September 20211

24 March 2022

24 March 2023

Mandatory conversion date

1 September 2023

24 March 2024

24 March 2025

Common equity capital trigger event

Yes

Yes

Yes

Non-viability trigger event
Carrying value (net of issue costs)

Yes
$nil
(2020: $1,119 million)

Yes$1,609 million(2020: $1,608 million)

Yes$968 million(2020: $967 million)

Distributions on the AT1 capital instruments are non-cumulative and subject to the issuer’s absolute discretion and certain payment conditions(including regulatory requirements). Distributions on ANZ CNs are franked in line with the franking applied to ANZ ordinary shares.
Where specified, the AT1 capital instruments provide the issuer with an early redemption or conversion option on a specified date and in certain othercircumstances (such as a tax or regulatory event). This redemption option is subject to APRA’s and, in respect of the ANZ NZ CN, the Reserve Bank of
New Zealand’s (RBNZ) prior written approval.
Each of the AT1 capital instruments will immediately convert into a variable number of ANZ ordinary shares (based on the average market price of theshares immediately prior to conversion less a 1% discount, subject to a maximum conversion number of ANZ ordinary shares) if: ANZ’s or, in the case of the ANZ NZ CN, ANZ Bank New Zealand Limited’s (ANZ NZ) Common Equity Tier 1 capital ratio is equal to or less than
5.125% - known as a Common Equity Capital Trigger Event; or APRA notifies the Company that, without the conversion or write-off of certain securities or a public sector injection of capital (or equivalent
support), it considers that the Company would become non-viable or, in the case of the ANZ NZ CN, the RBNZ directs ANZ NZ to convert or writeoff the notes, or a statutory manager is appointed to ANZ NZ and decides that ANZ NZ must convert or write-off the notes – known as a NonViability Trigger Event.
Where specified, AT1 capital instruments mandatorily convert into a variable number of ANZ ordinary shares (based on the average market price ofthe shares immediately prior to conversion less a 1% discount):2

 on a specified mandatory conversion date; or on an earlier date under certain circumstances as set out in the terms.

CN4

CN5

CN6

Issuer

ANZ

ANZ

ANZ

However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.

Issue date

27 September 2016

28 September 2017

8 July 2021

Issue amount$1,622 million$931 million$1,500 million

Face value

$100

$100

$100

Distribution frequency

Quarterly in arrears

Quarterly in arrears

Quarterly in arrears

Distribution rate

Floating rate: (90 day Bank Billrate +4.7%)x(1-Australian
corporate tax rate)

Floating rate: (90 day BankBill rate +3.8%)x(1-Australian
corporate tax rate)

Floating rate: (90 day BankBill rate +3.0%)x(1-Australian
corporate tax rate)

Issuer’s early redemption or conversion option

20 March 2024

20 March 2025

20 March 2028

Mandatory conversion date

20 March 2026

20 March 2027

20 September 2030

Common equity capital trigger event

Yes

Yes

Yes

Non-viability trigger event
Carrying value (net of issue costs)

Yes$1,617 million(2020: $1,614 million)

Yes$927 million(2020: $926 million)

Yes$1,486 million(2020: $nil)

The tables below show the key details of the Group’s AT1 capital instruments on issue at 30 September in both the current and prior years:

Additional Tier 1 capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)
AUD
1,120mANZ CN12AUD
1,610mANZ CN2
AUD
970m
ANZ CN3
AUD
1,622mANZ CN4
AUD
931m
ANZ CN5
AUD
1,500mANZ CN6ANZ Capital Securities (ANZ CS)
USD
1,000mANZ Capital Securities
ANZ NZ Capital Notes (ANZ NZ CN)
NZD500m
ANZ NZ Capital Notes
Total Additional Tier 1 capital3

Consolidated
2021
$m

1,609
968
1,617
927
1,486

2020
$m

The Company
2021
$m

2020
$m

1,119
1,608
967
1,614
926
-

1,609
998
1,617
927
1,486

1,119
1,608
997
1,614
926
-

1,422

1,499

1,554

1,569

477

463

-

-

8,506

8,196

8,191

7,833

1.

Approximately $750 million of ANZ Capital Notes 1 were reinvested into ANZ Capital Notes 6 on 8 July 2021 with the remaining $370m being redeemed on 1 September 2021.

2.

The mandatory conversion date is no longer applicable as all of CN1 has been redeemed.

1.

Carrying values are net of issuance costs, and where appropriate include fair value hedge accounting adjustments.
Approximately $750 million of ANZ Capital Notes 1 were reinvested into ANZ Capital Notes 6 on 8 July 2021 with the remaining $370m being redeemed on 1 September 2021.
3.
This forms part of qualifying Additional Tier 1 capital. Refer to Note 24 Capital Management for further details.
2.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
16. DEBT ISSUANCES (continued)

16. DEBT ISSUANCES (continued)

ANZ Capital Securities (ANZ CS)

TIER 2 CAPITAL

Issuer

ANZ, acting through its London branch

Issue date

15 June 2016

Issue amountUSD 1,000 million

Face value

Minimum denomination of USD 200,000 and an integral multiple of USD 1,000 above that

Interest frequency
Interest rate
Issuer’s early redemption option

Semi-annually in arrears
Fixed at 6.75% p.a. until 15 June 2026. Reset on 15 June 2026 and each 5 year anniversary
to a floating rate: 5 year USD mid-market swap rate + 5.168%
15 June 2026 and each 5 year anniversary

Common equity capital trigger event

Yes

Non-viability trigger event

Yes

Carrying value (net of issue costs)$1,422 million (2020: $1,499 million)

ANZ NZ Capital Notes (ANZ NZ CN)

Convertible term subordinated notes issued by the Company are Basel III fully compliant instruments. If a Non-Viability Trigger Event occurs, each of
the convertible term subordinated notes will immediately convert into ANZ ordinary shares (based on the average market price of the shares
immediately prior to conversion less a 1% discount, subject to a maximum conversion number).
APRA has granted transitional Basel III capital treatment for the USD 300 million perpetual subordinated notes until the end of the transitional
period (December 2021). These subordinated notes do not contain a Non-Viability Trigger Event.
The table below shows the Tier 2 capital subordinated notes the Group holds at 30 September in both the current and prior year:
Consolidated

The Company

Interest
rate

2021
$m

2020
$m

2021
$m

2020
$m

Basel III transitional subordinated notes (perpetual)
Each semi-annual interest payment
USD
300m
Perpetual
Floating
date
Total Basel III transitional subordinated notes

417

422

417

422

417

422

417

422

Currency

Face value

Maturity

Next optional call date –subject to APRA’s prior approvalBasel III fully compliant convertible subordinated notes (term)

IssuerANZ Bank New Zealand Limited (ANZ NZ)

USD

800m

2024

N/A

Fixed

1,173

1,225

1,173

1,225

Issue date

31 March 2015

SGD

500m

2027

2022

Fixed

515

529

515

529

Issue amountNZD 500 million

AUD

200m

2027

2022

Fixed

200

200

200

200

Face value

NZD 1

JPY

20,000m

2026

N/A

Fixed

250

270

250

270

Interest frequency

Quarterly in arrears

AUD

700m

2026

2021

Floating

Interest rate

Fixed at 7.2% p.a. until 25 May 2020. The rate reset in May 2020 to a floating rate: New Zealand 3
month bank bill rate + 3.5%
Interest payments are subject to ANZ NZ’s absolute discretion and certain payment conditions(including APRA and RBNZ requirements)

USD

1,500m

2026

N/A

Fixed

JPY

10,000m

2026

2021

Fixed

-

133

-

133

JPY

10,000m

2028

2023

Fixed

124

133

124

133

Issuer’s early redemption option

The option was not exercised on 25 May 2020 and has expired

Mandatory conversion date

25 May 2022

Common equity capital trigger event

Yes

Non-viability trigger event

Yes

Carrying value (net of issue costs)$477 million (2020: $463 million)

In April 2020, the RBNZ informed New Zealand-incorporated registered banks (including ANZ NZ) that they should not redeem capital instruments. In
March 2021, the RBNZ announced that it would remove these restrictions on the redemption of non-CET1 capital instruments. However, as the
restriction was in place in May 2020, ANZ NZ was not able to redeem its ANZ NZ CNs and decided not to exercise its option to convert at the optional
exchange date in May 2020. As ANZ NZ did not exercise its option to convert in May 2020, the terms of the ANZ NZ CNs provide for their conversion
into a variable number of shares of the Company in May 2022 subject to certain conditions.
The RBNZ has released new capital adequacy requirements for New Zealand banks, which are being implemented from October 2021 to July 2028.
Under these changes, from 1 January 2022, the ANZ NZ CNs are subject to a reduction in their regulatory capital recognition, and as a result, ANZ NZ
has determined that a Regulatory Event (as defined in the ANZ NZ CN Deed Poll) has occurred in respect of these notes. The occurrence of aRegulatory Event means that ANZ NZ may choose to redeem the ANZ NZ CNs at its discretion. A redemption of the ANZ NZ CNs is subject to certain
conditions, including approval from the RBNZ and APRA. At the date of this financial report, no decision had been made on whether ANZ NZ willredeem the ANZ NZ CNs (subject to regulatory approvals).

-

700

-

700

2,137

2,253

2,137

2,253

AUD

225m

2032

2027

Fixed

225

225

225

225

AUD

1,750m2029

2024

Floating

1,740

1,750

1,740

1,750

EUR

1,000m

2029

2024

Fixed

1,608

1,657

1,608

1,657

AUD

265m

2039

N/A

Fixed

253

265

253

265

USD

1,250m

2030

2025

Fixed

1,782

1,859

1,782

1,859

AUD

1,250m2031

2026

Floating

1,235

1,244

1,235

1,244

USD

1,500m

2035

2030

Fixed

1,955

-

1,955

-

AUD

330m

2040

N/A

Fixed

304

-

304

-

AUD

195m

2040

N/A

Fixed

178

-

178

-

EUR

750m

2031

2026

Fixed

1,193

-

1,193

-

GBP

500m

2031

2026

Fixed

918

-

918

-

Total Basel III fully compliant subordinated notes

15,79012,443

15,79012,443

Total Tier 2 capital1,2

16,207

12,865

16,207

12,865

1.

Carrying value are net of issuance costs, and where applicable include fair value hedge accounting adjustments.

2.

This forms part of qualifying Tier 2 capital. Refer to Note 24 Capital Management for further details.

OTHER SUBORDINATED DEBT SECURITIESA subsidiary of the Group, ANZ Bank New Zealand Limited, issued NZ$600 million of unsecured subordinated notes in September 2021. Whilst thesenotes constitute Tier 2 capital under RBNZ requirements, the notes do not contain a Non-Viability Trigger Event and therefore do not meet APRA’s
requirements for Tier 2 capital instruments in order to qualify as regulatory capital for the Group.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
16. DEBT ISSUANCES (continued)

17. FINANCIAL RISK MANAGEMENTRISK MANAGEMENT FRAMEWORK AND MODEL

RECOGNITION AND MEASUREMENT
Debt issuances are measured at amortised cost, except where designated at fair value through profit or loss. Where the Group enters into afair value hedge accounting relationship, the fair value attributable to the hedge risk is reflected in adjustments to the carrying value of thedebt. Interest expense is recognised using the effective interest rate method.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Events or Non-Viability Trigger Events) areconsidered to contain embedded derivatives that we account for separately at fair value through profit and loss. The embedded
derivatives arise because the amount of shares issued on conversion following any of those trigger events is subject to the maximum
conversion number, however they have no significant value as of the reporting date given the remote nature of those trigger events.

INTRODUCTION
The use of financial instruments is fundamental to the Group’s businesses of providing banking and other financial services to our customers. The
associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of the Group’s key material risks.
We disclose details of all key material risks impacting the Group, and further information on the Group’s risk management activities, in the Governanceand Risk Management sections of this Annual Report.
This note details the Group’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks.
Key material financial risks
Credit risk

Key sections applicable to this risk
 Credit risk overview, management and control responsibilities

The risk of financial loss resulting from: Maximum exposure to credit risk

 a counterparty failing to fulfil its obligations; or a decrease in credit quality of a counterparty resulting in afinancial loss.

 Credit quality

Credit risk incorporates the risks associated with us lending tocustomers who could be impacted by climate change or bychanges to laws, regulations, or other policies adopted bygovernments or regulatory authorities, including carbon pricing
and climate change adaptation or mitigation policies.

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176

 Concentrations of credit risk
 Collateral management

Market risk

 Market risk overview, management and control responsibilities

The risk to the Group’s earnings arising from: Measurement of market risk

 changes in interest rates, foreign exchange rates, credit spreads,
volatility and correlations; or Traded and non-traded market risk

 fluctuations in bond, commodity or equity prices.

 Foreign currency risk – structural exposure

Liquidity and funding risk

 Liquidity risk overview, management and control responsibilities

The risk that the Group is unable to meet payment obligations as
they fall due, including: Key areas of measurement for liquidity risk repaying depositors or maturing wholesale debt; or the Group having insufficient capacity to fund increases in
assets.

 Residual contractual maturity analysis of the Group’s liabilities



Equity securities designated at FVOCI

 Liquidity risk outcomes

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

OVERVIEWCREDIT RISKAN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORKThis overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under AASB 7
Financial Instruments: Disclosures (AASB 7). It should be read in conjunction with the Governance and Risk Management sections of this Annual
Report.

CREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of the Group’s major sources of income. As this activity is also a principal risk, the Group dedicatesconsiderable resources to its management. The Group assumes credit risk in a wide range of lending and other activities in diverse markets and inmany jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade finance and capital markets
activities around the world.

The Board is responsible for establishing and overseeing the Group’s Risk Management Framework (RMF). The Board has delegated authority to theBoard Risk Committee (BRC) to develop and monitor compliance with the Group’s risk management policies. The BRC reports regularly to the Boardon its activities.
The Board approves the strategic objectives of the Group including: the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZ is prepared to accept in pursuit of
its strategic objectives and business plan; and the Risk Management Strategy (RMS), which describes ANZ’s strategy for managing risks and the key elements of the RMF that give effect to thisstrategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference to the relevant
policies, standards and procedures. It also includes information on how ANZ identifies, measures, evaluates, monitors, reports and controls or
mitigates material risks.
The Group, through its training and management standards and procedures, aims to maintain a disciplined and robust control environment in which
all employees understand their roles and obligations. At ANZ, risk is everyone’s responsibility.

Our credit risk management framework ensures we apply a consistent approach across the Group when we measure, monitor and manage the credit
risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC: sets the credit risk appetite and credit strategies; and approves credit transactions beyond the discretion of executive management.
We quantify credit risk through an internal credit rating system (masterscales) to ensure consistency across exposure types and to provide a consistentframework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
Probability of Default (PD)Expressed by a Customer Credit Rating (CCR), reflecting the Group’s assessment of a customer’s ability
to service and repay debt.

Exposure at Default (EAD)

The expected balance sheet exposure at default taking into account repayments of principal andinterest, expected additional drawdowns and accrued interest at the time of default.

Loss Given Default (LGD)

Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to thepercentage of loan covered by security which the Group can realise if a customer defaults. The A-G
scale is supplemented by a range of other SIs which cover factors such as cash cover and sovereign
backing. For retail and some small business lending, we group exposures into large homogenous pools– and the LGD is assigned at the pool level.

The Group has an independent risk management function, headed by the Chief Risk Officer who:
 is responsible for overseeing the risk profile and the risk management framework; can effectively challenge activities and decisions that materially affect ANZ’s risk profile; and has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.
The Internal Audit Function reports directly to the Board Audit Committee (BAC). Internal Audit provides:
 an independent evaluation of the Group’s RMF annually that seeks to ensure compliance with, and the effectiveness of, the risk management
framework;

Our specialist credit risk teams develop and validate the Group’s PD and LGD rating models. The outputs from these models drive our day-to-day
credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, economic capital allocation, andcredit provisioning.

 facilitation of a comprehensive review every three years that seeks to ensure the appropriateness, effectiveness and adequacy of the risk
management framework; andAll customers with whom ANZ has a credit relationship are assigned a CCR at origination via either of the following assessment approaches:
Large and more complex lending

Retail and some small business lending

 recommendations to improve the framework and/or work practices to strengthen the effectiveness of day to day operations.

Rating models provide a consistent and structured assessment, withjudgement required around the use of out-of-model factors. We
handle credit approval on a dual approval basis, jointly with thebusiness writer and an independent credit officer.

Automated assessment of credit applications using a combination ofscoring (application and behavioural), policy rules and external credit
reporting information. If the application does not meet the automatedassessment criteria, then it is subject to manual assessment.

We use the Group’s internal CCRs to manage the credit quality of financial assets. To enable wider comparisons, the Group’s CCRs are mapped toexternal rating agency scales as follows:

178

178

Credit Quality
Description

Internal CCR

ANZ Customer Requirements

Moody’s
RatingStandard & Poor’s
RatingStrong

CCR 0+ to 4-

Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity
is not significantly vulnerable to foreseeable events.

Aaa – Baa3

AAA – BBB-

Satisfactory

CCR 5+ to 6-

Demonstrated sound operational and financial stability overthe medium to long-term, even though some may besusceptible to cyclical trends or variability in earnings.

Ba1 – B1

BB+ – B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, withvariability and uncertainty in profitability and liquidity
projected to continue over the short and possibly mediumterm.

B2 - Caa

B - CCC

Defaulted

CCR 8- to 10

When doubt arises as to the collectability of a credit facility, thefinancial instrument (or ‘the facility’) is classified as defaulted.

N/A

N/A

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

MAXIMUM EXPOSURE TO CREDIT RISKFor financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, thesedifferences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject tomarket risk, or bank notes and coins.

The Company
Net loans and advances

Consolidated

2020$m617,093

-

2020
$m

Cash and cash equivalents
Settlement balances owed to ANZ

Maximum exposure
to credit risk
2021
2020
$m
$m

On-balance sheet positions
Net loans and advances

488,487

488,002--488,487

488,002141,436

98,083721

1,084

140,715

96,999

7,183

7,116

7,183

7,116

-

-

2020
$m

Collateral paid

8,343

13,012

-

-

8,343

13,012

Trading securities

34,752

38,423

4,957

5,465

29,79532,958Derivative financial instruments

38,292

130,552--

38,292

130,552- debt securities at amortised cost

5,263

5,354

-

-

5,263

5,354

Investment securities
629,719-629,719

617,093- debt securities at FVOCI

61,62373,936--

61,62373,936- equity securities at FVOCI

1,054

994

1,054

994

-

-

- debt securities at FVTPL

-

-

-

-

-

-

Regulatory deposits
Due from controlled entities2
Other financial assets3

213
23,5301,371

199
24,017
1,460

-

-

213
23,5301,371

199
24,017
1,460

Total other financial assets

323,060

393,146

13,915

14,659309,145

378,487

Subtotal

811,547

881,148

13,915

14,659797,632

866,489

220,445

226,714--

220,445

226,714

1,031,992

1,107,862

13,915

14,6591,018,077

1,093,203

Other financial assets:
151,260

107,923

1,127

1,514

150,133

106,409

Settlement balances owed to ANZ

7,530

7,541

7,530

7,541

-

-

Collateral paid

9,166

14,308

-

-

9,166

14,308

Trading securities

44,68850,913

4,996

5,698

39,69245,215Derivative financial instruments

38,736135,331--

38,736135,331- debt securities at amortised cost

7,031

6,816

-

-

7,031

6,816

- debt securities at FVOCI

74,74385,460--74,74385,460- equity securities at FVOCI

1,310

1,062

1,310

1,062

-

-

- debt securities at FVTPL

42

53

-

-

42

53

Regulatory deposits

671

801

-

-

671

801

Other financial assets2

2,054

2,407

-

-

2,054

2,407

Total other financial assets

337,231412,615

14,963

15,815322,268

396,800

Subtotal

966,950

1,029,708

14,963

15,815

951,987

1,013,893

259,789

266,716--

259,789

266,716

1,226,739

1,296,424

14,963

15,815

1,211,776

1,280,609

Cash and cash equivalents

2020
$m

Other financial assets:

The table below shows our maximum exposure to credit risk of on-balance sheet and off-balance sheet positions before taking account of any
collateral held or other credit enhancements.
Excluded1
2021$m

Maximum exposure
to credit risk
2021
2020
$m
$m

Excluded1
2021$m

On-balance sheet positions

For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the Group would have to pay if the instrument is called upon.

Reported
2021$m

Reported
2021$m

Investment securities

Off-balance sheet positions
Undrawn and contingent facilities4
Total
1.

Bank notes and coins and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities and precious metal exposures within Trading
securities; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.

2.

From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Due from controlled entities by $76,637 million at 30 September 2020. Refer to Note 35
Impact of Adoption of New Standards and Other Changes for further details.

3.

Other financial assets mainly comprise accrued interest and acceptances.

4.

Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.

Off-balance sheet positions
Undrawn and contingent facilities3
Total
1.

Bank notes and coins and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities and precious metal exposures within Trading
securities; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.

2.

Other financial assets mainly comprise accrued interest and acceptances.
Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.

3.

180

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

CREDIT QUALITY
An analysis of the Group’s credit risk exposure is presented in the following tables based on the Group’s internal credit quality rating by stage without
taking account of the effects of any collateral or other credit enhancements:

Net loans and advances

Net loans and advances

The Company

Stage 3
Collectively Individuallyassessedassessed$m$m

Stage 1$m

Stage 2$m

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

As at 30 September 2021
Strong297,511

9,329

-

-

306,840

Satisfactory

131,979

25,538--

157,517

7,913

11,038--18,951

Stage 1$m

Stage 2$m

Strong412,821

12,596--425,417

Defaulted

Satisfactory

146,368

31,228--

177,596

Gross loans and advances at amortised cost

7,921

12,907--

20,828

Allowance for ECL

-

-

3,754

1,549

5,303

Net loans and advances at amortised cost

567,11056,731

3,754

1,549

629,144

Coverage ratio(968)(1,994)

(417)

(666)

(4,045)Loans and advances at fair value through profit or loss

3,472

566,142

54,7373,337

883

625,099

Unearned income1

(390)

0.17%

3.51%

11.11%

43.00%

0.64%

Capitalised brokerage and other origination costs

3,620

Net carrying amount

Consolidated

Total
$m

As at 30 September 2021

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

Weak

Loans and advances at fair value through profit or loss
Unearned income1(434)

Capitalised brokerage and other origination costs1

1,434

Net carrying amount

629,719

As at 30 September 2020
395,608

Satisfactory

133,558

37,577

8,461

16,850

Weak
Defaulted

18,262

-

-

3,089

1,345

4,434

45,905

3,089

1,345

487,742(797)(1,679)

(348)

(563)

(3,387)436,606

44,2262,741

782

484,355

0.18%

3.66%

11.27%

41.86%

0.69%

1,050

1

488,487

As at 30 September 2020
Strong300,174

12,692--

312,866

Satisfactory

115,745

30,200--145,945

8,348

14,740--23,088

-

-

3,936

1,817

5,753

Weak

Strong437,403-413,870

Defaulted--

171,135

Gross loans and advances at amortised cost

424,267

57,632

3,936

1,817

487,652--

25,311

Allowance for ECL(1,028)(2,114)

(373)

(704)

(4,219)Net loans and advances at amortised cost

423,239

55,518

3,563

1,113

483,433

0.24%

3.67%

9.48%

38.75%

0.87%

-

-

4,762

2,256

7,018

Gross loans and advances at amortised cost

537,627

72,689

4,762

2,256

617,334

Coverage ratio

Allowance for ECL(1,204)(2,465)

(461)

(851)

(4,981)Loans and advances at fair value through profit or loss

4,016

Net loans and advances at amortised cost

536,423

70,224

4,301

1,405

612,353

Unearned income

(406)

0.22%

3.39%

9.68%

37.72%

0.81%

Capitalised brokerage and other origination costs1

959

Coverage ratio

1

Loans and advances at fair value through profit or loss

3,938

Net carrying amount

Unearned income1

(460)

1.

Capitalised brokerage and other origination costs1

1,262

Net carrying amount1.

182

488,002

During 2021, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of the balances.
Comparatives have been restated accordingly (2020: $387 million).

617,093

During 2021, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of the balances.
Comparatives have been restated accordingly (2020: $394 million).

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CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

Off-balance sheet commitments - undrawn and contingent facilities

Off-balance sheet commitments - undrawn and contingent facilities

Stage 1$m

Consolidated

Stage 2$m

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

As at 30 September 2021

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

Strong162,232

1,745

-

-

163,977

The Company
As at 30 September 2021

Strong174,808

1,754

-

-

176,562

Satisfactory

23,799

3,564

-

-

27,363

Satisfactory

19,790

2,662

-

-

22,452

Weak

1,030

1,185

-

-

2,215

Weak

1,005

966

-

-

1,971

-

-

138

50

188

-

-

91

28

119

199,637

6,503

138

50

206,328

183,027

5,373

91

28

188,519

(555)

(211)

(19)

(21)

(806)

(484)

(171)

(12)

(7)

(674)

199,082

6,292

119

29

205,522

182,543

5,202

79

21

187,845

0.28%

3.24%

13.77%

42.00%

0.26%

3.18%

13.19%

25.00%

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 22)
Net undrawn and contingent facilities subject to ECL
Coverage ratio

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 22)
Net undrawn and contingent facilities subject to ECL

0.39%

Coverage ratio

Undrawn and contingent facilities not subject to ECL1

54,267

Undrawn and contingent facilities not subject to ECL1

32,600Net undrawn and contingent facilities

259,789

Net undrawn and contingent facilities

220,445

As at 30 September 2020

0.36%

As at 30 September 2020

Strong171,979

3,045

-

-

175,024

Strong159,158

2,984

-

-

162,142

Satisfactory

22,983

3,972

-

-

26,955

Satisfactory

18,874

2,944

-

-

21,818

Weak

1,123

1,132

-

-

2,255

Weak

1,107

915

-

-

2,022

-

-

144

203

347

Defaulted

-

-

102

165

267

196,085

8,149

144

203

204,581

179,139

6,843

102

165

186,249

(596)

(239)

(23)

(40)

(898)

(513)

(183)

(15)

(20)

(731)

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 22)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL

1

Net undrawn and contingent facilities
1.

184

Commitments that can be unconditionally cancelled at any time without notice.

184

Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 22)
Net undrawn and contingent facilities subject to ECL

195,489

7,910

121

163

203,683

0.30%

2.93%

15.97%

19.70%

0.44%

Coverage ratio

63,033

Undrawn and contingent facilities not subject to ECL

266,716

Net undrawn and contingent facilities
1.

1

178,626

6,660

87

145

185,518

0.29%

2.67%

14.71%

12.12%

0.39%
41,196
226,714

Commitments that can be unconditionally cancelled at any time without notice.

ANZ 2021 Annual Report

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CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

Investment securities - debt securities at amortised cost

Investment securities - debt securities at FVOCI

Consolidated

Stage 1$m

Stage 2$m

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

5,574

-

-

-

5,574

StrongSatisfactory

121

-

-

-

121

Weak

1,367

-

-

-

1,367

Gross investment securities - debt securities at amortised cost

7,062

-

-

-

7,062

Allowance for ECL recognised in other comprehensive income
Coverage ratio

Satisfactory

Allowance for ECL

(31)

-

-

-

(31)

Net investment securities - debt securities at amortised cost

7,031

-

-

-

7,031

Coverage ratio

0.44%

-

-

-

0.44%

Investment securities - debt securities at FVOCISatisfactory

As at 30 September 2020
5,594

-

-

-

5,594

Investment securities - debt securities at FVOCISatisfactory

1,067

175

-

-

1,242

Allowance for ECL recognised in other comprehensive income

Gross investment securities - debt securities at amortised cost

6,661

175

-

-

6,836

Coverage ratio

Allowance for ECL

(20)

-

-

-

(20)

Net investment securities - debt securities at amortised cost

6,641

175

-

-

6,816

Coverage ratio

0.30%

0.00%

-

-

0.29%

Stage 1$m

Stage 2$m

Stage 3
Collectively Individuallyassessedassessed$m$m

The Company
As at 30 September 2021
StrongTotal$mSatisfactory

As at 30 September 2021

Investment securities - debt securities at FVOCIStrongAllowance for ECL recognised in other comprehensive income

The Company

5,162

-

-

-

5,162

102

-

-

-

102

5,264

-

-

-

5,264

(1)

-

-

-

(1)

Net investment securities - debt securities at amortised cost

5,263

-

-

-

5,263

Coverage ratio

0.02%

-

-

-

0.02%

Satisfactory
Gross investment securities - debt securities at amortised cost
Allowance for ECL

Coverage ratio

StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in other comprehensive income

StrongCoverage ratio

Gross investment securities - debt securities at amortised cost
Allowance for ECL

5,271

-

-

-

5,271

84

-

-

-

84

5,355

-

-

-

5,355

(1)

-

-

-

(1)

Net investment securities - debt securities at amortised cost

5,354

-

-

-

5,354

Coverage ratio

0.02%

-

-

-

0.02%

186

186

74,541

-

-

202

-

-

74,743

-

-

-

Total
$m

-

74,541
202
74,743

(11)

-

-

-

(11)

0.01%

-

-

-

0.01%

85,287---85,287

173

-

-

-

173

85,460---85,460

(10)

-

-

-

(10)

0.01%

-

-

-

0.01%

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

61,623---

61,623

-

-

-

-

-

61,623---

61,623

(7)

-

-

-

(7)

0.01%

-

-

-

0.01%

73,936---73,936

-

-

-

-

-

73,936---73,936As at 30 September 2020

As at 30 September 2020
Satisfactory

Stage 2$m

As at 30 September 2020
StrongStrongStage 1$m

As at 30 September 2021

As at 30 September 2021
Strong

Consolidated

Stage 3
Collectively Individuallyassessedassessed
$m
$m

(7)

-

-

-

(7)

0.01%

-

-

-

0.01%

ANZ 2021 Annual Report

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

Investment securities - debt securities at FVTPL
Stage 3
Collectively Individuallyassessedassessed$m$m

Stage 1$m

Stage 2$m

Strong

42

-

-

-

42

Investment securities - debt securities at FVTPL

42

-

-

-

42

-

-

-

-

-

Consolidated

Total
$m

As at 30 September 2021

Allowance for ECL
Coverage ratio

-

-

-

-

53

-

-

-

Composition of financial instruments that give rise to credit risk by industry group are presented below:
Loans
and advances
2021
2020
$m
$m

Other financial
assets
2021
2020
$m
$m

Off-balance sheet
credit related
commitments
2021
2020
$m
$m

Total
2021
$m

2020
$m

Consolidated
Agriculture, forestry, fishing and mining

34,86236,458335

1,092

16,034

17,18851,231

54,738Business services

9,161

8,642

119

172

6,429

6,506

15,70915,32053

Construction

5,886

5,807

46

44

6,458

6,679

12,39012,530

6,513

5,881

807

2,386

9,053

8,663

16,373

16,930-As at 30 September 2020
Strong

CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. The Group
monitors its credit portfolio to manage risk concentration and rebalance the portfolio. The Group also applies single customer counterparty limits toprotect against unacceptably large exposures to one single customer.

Investment securities - debt securities at FVTPL

53

-

-

-

53

Electricity, gas and water supply

Allowance for ECL

-

-

-

-

-

Entertainment, leisure and tourism

12,71013,179

157

600

3,862

4,114

16,72917,893-Financial, investment and insurance

56,10751,857229,273

279,468

50,56848,537335,948

379,862

Coverage ratio

-

-

-

-

Other financial assets
Consolidated
2021
2020
$m
$m

The Company
2021
2020
$m
$m

235,847

293,171

238,452

365,532

Satisfactory

3,471

10,671

3,026

9,724

Weak

1,122

628

769

577

12

1

12

1

240,452

304,471242,259

375,834

StrongDefaulted
Total carrying amountGovernment and official institutions

4,651

4,645

83,741

98,017

1,798

1,968

90,190104,630

Manufacturing

23,752

25,163741

2,306

37,696

41,11462,18968,583

Personal lending

361,814

361,459

664

1,170

57,41050,433419,888

413,062

Property services

50,39650,406489

2,044

16,67327,992

67,55880,442Retail trade

9,967

10,739

104

231

8,444

9,602

18,515

20,572

Transport and storage

11,71012,657

437

1,280

8,257

8,587

20,404

22,524Wholesale trade

12,434

11,816583

2,649

20,89919,49433,91633,959Other

32,801

22,563

4,803

5,361

17,014

16,73754,61844,661Gross total

632,764

621,272

322,299

396,820

260,595

267,614 1,215,658 1,285,706

Allowance for ECL(4,045)(4,981)

(31)

(20)

(806)

628,719616,291

322,268

396,800

259,789

(434)

(460)

-

-

-

-

(434)

(460)

1,434

1,262

-

-

-

-

1,434

1,262

629,719

617,093322,268

396,800

259,789

Subtotal
Unearned income
Capitalised brokerage and other origination
costs1
Maximum exposure to credit risk
1

1.

188

188

(898)

(4,882)(5,899)266,716 1,210,776 1,279,807

266,716 1,211,776 1,280,609

During 2021, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of the balances.
Comparatives have been restated accordingly (2020: $394 million).

ANZ 2021 Annual Report

189

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CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

CREDIT RISK (continued)

CREDIT RISK (continued)

Composition of financial instruments that give rise to credit risk by industry group are presented below:

The nature of collateral or security held for the relevant classes of financial assets is as follows:

Loans
and advances
2021
2020
$m
$m

Other financial
assets
2021
2020
$m
$m

Off-balance sheet
credit related
commitments
2021
2020
$m
$m

Net loans and advances
Total
2021
$m

The Company
Agriculture, forestry, fishing and mining

18,283

19,555297

946

14,305

15,83732,88536,338Business services

8,096

7,544

73

105

5,618

5,747

13,787

13,396

Construction

4,710

4,649

30

19

5,241

5,331

9,981

9,999

Electricity, gas and water supply

5,523

4,842

580

1,843

7,356

6,841

13,45913,526Entertainment, leisure and tourism

10,934

11,477

138

560

3,404

3,522

14,476

15,559Financial, investment and insurance

52,23049,254

236,430

364,478

46,971

44,678335,631458,410Government and official institutions

4,621

3,347

65,42975,554

1,113

1,224

71,16380,125

Manufacturing

20,143

21,452369

1,661

30,79433,71651,30656,829Personal lending

278,526

279,899

638

697

45,88649,421

325,050

330,017

Property services

37,58037,605379

1,024

14,424

14,52652,38353,155Retail trade

8,273

9,023

82

164

7,298

7,279

15,653

16,466

Transport and storage

10,564

11,599

339

1,016

7,229

7,412

18,132

20,027Wholesale trade

10,345

9,973

380

2,237

17,462

17,151

28,18729,361

39,38641,030Other

21,386

21,449

3,982

4,821

14,01814,760Gross total

491,214491,668

309,146455,125

221,119

227,445 1,021,479 1,174,238

Allowance for ECL(3,387)(4,219)

(1)

(1)

(674)

Subtotal

487,827

487,449

309,145455,124

220,445

(390)

(406)

-

-

-

-

(390)

(406)

1,050

959

-

-

-

-

1,050

959

488,487

488,002309,145455,124

220,445

Unearned income1
Capitalised brokerage and other origination
costs1
Maximum exposure to credit risk
1.

(731)

(4,062)Loans - housing andpersonal

2020$m

Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we take security, thenit is restricted to eligible vehicles, motor homes and other assets.
Loans - business

Other financial assets
Trading securities,
Investment securities,
Derivatives and Other
financial assets

Undrawn and contingent
facilities

226,714 1,018,077 1,169,840

Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
performance bonds or guarantees. Undrawn facilities that are secured include housing loans secured by
mortgages over residential property and business lending secured by commercial real estate and/or charges
over business assets.

The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:Consolidated
Net loans and advances

629,719

617,093515,866

510,995

113,853

106,098

Other financial assets

322,268

396,800

24,41045,246

297,858

351,554

Off-balance sheet positions

259,789

266,716

52,51251,361

207,277

215,355

1,211,776

1,280,609

592,788607,602618,988

673,007

Total

The Company

Credit exposure
2021
$m

2020
$m

2020
$m

Total value of collateral
2021
2020
$m
$m

Unsecured portion of credit
exposure
2021
2020
$m
$m

Credit exposure2021$m

Total value of collateral
2021
2020
$m
$m

Unsecured portion of credit
exposure
2021
2020
$m
$m

Net loans and advances

488,487

488,002387,273393,548

101,21494,454

Other financial assets1

309,145

378,487

22,02742,000287,118

336,487

Off-balance sheet positions

220,445

226,71436,67636,372

183,769

190,342

1,018,077

1,093,203

445,976

471,920572,101

621,283

Total

190

For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis at market
levels current at the time of a counterparty default under International Swaps and Derivatives Association(ISDA) Master Agreements.

Off-balance sheet positions

1.

190

For trading securities, we do not seek collateral directly from the issuer or counterparty. However, thecollateral may be implicit in the terms of the instrument (for example, with an asset-backed security). The
terms of debt securities may include collateralisation.

Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative positions
with the counterparty are aggregated and cash collateral (or other forms of eligible collateral) is exchanged
daily. The collateral is provided by the counterparty when their position is out of the money (or provided tothe counterparty by ANZ when our position is out of the money).

226,714 1,017,417 1,169,287

COLLATERAL MANAGEMENT
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there issufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products that are secured by corresponding
investment for which the margin loans are utilised and for reverse repurchase agreements. For some products, the collateral provided by customers isfundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables istypically repaid by the collection of those receivables. During the period there was no change in our collateral policies.

Business loans may be secured, partially secured or unsecured. Typically, we take security by way of amortgage over property and/or a charge over the business or other assets.
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby letters ofcredit or derivative protection.

(4,951)

During 2021, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of the balances.
Comparatives have been restated accordingly (2020: $387 million).

Housing loans are secured by mortgage(s) over property and additional security may take the form ofguarantees and deposits.

From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Other financial assets by $76,637 million at 30 September 2020. Refer to Note 35 Impact of
Adoption of New Standards and Other Changes for further details.

ANZ 2021 Annual Report

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DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

MARKET RISKMARKET RISK (continued)

MARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIESMarket risk stems from the Group’s trading and balance sheet management activities and the impact of changes and correlations between interest
rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.

TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:

The BRC delegates responsibility for day-to-day management of both market risks and compliance with market risk policies to the Credit & Market Risk
Committee (CMRC) and the Group Asset & Liability Committee (GALCO).
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the Group level. The Market Risk team (a specialist risk management unit independent of the business) allocates market risk limits at various
levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control exposures using risk factors
and profit and loss limits.

Risk of loss from changes in the value of financial instruments due
to movements in price factors for both physical and derivative
trading positions. Principal risk categories monitored are:
1. Currency risk – potential loss arising from changes in foreignexchange rates or their implied volatilities.
2. Interest rate risk – potential loss from changes in market interest
rates or their implied volatilities.

Averagefor year
$m

As at
$m

3.9

2.0

2020
High for Low for
year
year
$m
$m

Averagefor year$m

Foreign exchange

3.8

10.0

1.3

Interest rate

9.6

19.6

4.3

8.8

9.6

13.8

3.3

7.2

Credit

6.3

22.2

5.3

13.7

13.9

17.1

1.8

8.6

Non-Traded Market Risk

Commodity

3.1

5.0

1.3

2.8

3.0

4.7

1.3

2.6

Risk of loss associated with the management of non-traded interest rate risk,
liquidity risk and foreign exchange exposures. This includes interest rate riskin the banking book. This risk of loss arises from adverse changes in theoverall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bankproducts.

Equity

-

-

-

-

-

-

-

-

Diversification benefit

(9.4)

n/a

n/a

(9.7)

(10.9)

n/a

n/a

(8.0)

Total VaR

13.4

30.0

8.7

19.5

17.6

31.9

5.7

13.5

2021
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2020
High for Low for
year
year
$m
$m

Averagefor year
$m

3.5

2.0

Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded Market Risk

Consolidated
Traded value at risk 99% confidence

As at
$m

2021
High for Low for
year
year
$m
$m

1

As at
$m

6.1

1.2

3.1

3. Credit spread risk – potential loss arising from a movement inmargin or spread relative to a benchmark.

The Company
Traded value at risk 99% confidence

4. Commodity risk – potential loss arising from changes incommodity prices or their implied volatilities.

Foreign exchange

3.4

7.6

1.5

Interest rate

9.0

16.4

4.1

7.5

7.2

10.6

2.9

5.8

5. Equity risk – potential loss arising from changes in equity prices.

Credit

5.8

22.1

5.3

13.3

13.6

16.9

1.6

8.2

Commodity

2.3

5.4

1.4

2.7

2.7

4.3

1.3

2.2

MEASUREMENT OF MARKET RISKWe primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.

Equity

-

-

-

-

-

-

-

-

Diversification benefit

(6.0)

n/a

n/a

(10.1)(10.5)

n/a

n/a

(7.9)

VaR measures the Group’s possible daily loss based on historical market movements.

Total VaR

14.5

26.0

9.6

16.9

15.0

24.5

5.3

11.1

The Group’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices andvolatilities over:

1.

1

5.6

1.0

2.8

The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for theGroup as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

 the previous 500 business days, to calculate standard VaR; and a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using one-day and ten-day holding periods. For stressed VaR, we use a ten-day period. Back testing is used toensure our VaR models remain accurate.
ANZ measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the relevant holding period.

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DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

MARKET RISK (continued)

MARKET RISK (continued)

Non-traded market risk
Balance sheet risk management
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of the Group’s banking book, while ensuring the Group maintains sufficientliquidity to meet its obligations as they fall due.

We undertake scenario analysis to stress test the impact of extreme events on the Group’s market risk exposures. We model a 1% overnight parallel
positive shift in the yield curve to determine the potential impact on our net interest income over the next 12 months. This is a standard risk measure
which assumes the parallel shift is reflected in all wholesale and customer rates.

Interest rate risk management
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on the Group’s future net interest income. Thisrisk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and the investment of
capital and other non-interest bearing liabilities and assets. Interest rate risk is reported using VaR and scenario analysis (based on the impact of a 1%
rate shock). The table below shows VaR figures for non-traded interest rate risk for the combined Group as well as Australia, New Zealand and Asia
Pacific, Europe and Americas (APEA) geographies which are calculated separately.

Consolidated
Non-traded value at risk 99% confidence

As at
$m

2021
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2020
High for Low for
year
year
$m
$m

Australia

67.0

81.8

61.9

69.8

60.8

60.8

New Zealand

21.6

32.8

21.6

26.7

26.3

Asia Pacific, Europe & America

31.5

34.9

29.0

32.0

29.4

Diversification benefit(32.9)

n/a

n/a(53.7)

Total VaR

87.2

87.2

59.3

74.8

1

The Company
Non-traded value at risk 99% confidence
Australia

As at
$m
67.0

2021
High for Low for
year
year
$m
$m
81.8

61.9

Averagefor year$m

The Company

2021

2020

2021

2020

Impact of 1% rate shock
As at period end

2.43%

1.25%

2.02%

0.78%

Maximum exposure

2.43%

1.61%

2.02%

1.78%

Minimum exposure

0.98%

0.52%

0.54%

0.06%

Average exposure (in absolute terms)

1.55%

1.01%

1.08%

0.78%

EQUITY SECURITIES DESIGNATED AT FVOCI
Our investment securities contain equity investment holdings which predominantly comprise investments we hold for longer-term strategic reasons.
The market risk impact on these equity investments is not captured by the Group’s VaR processes for traded and non-traded market risks. Therefore,
the Group regularly reviews the valuations of the investments within the portfolio and assesses whether the investments are appropriately measured
based on the recognition and measurement policies set out in Note 12 Investment Securities.

33.4

26.3

9.4

15.2

30.2

17.8

24.2

(61.4)

n/an/a(29.5)

55.1

58.3

31.5

43.3

2020
High for Low for
year
year
$m
$m

FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Our investment of capital in foreign operations - for example, branches, subsidiaries or associates with functional currencies other than the Australian
Dollar - exposes the Group to the risk of changes in foreign exchange rates. Variations in the value of these foreign operations arising as a result of
exchange differences are reflected in the foreign currency translation reserve in equity.

Averagefor year$m

Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily
New Zealand Dollar, US Dollar and US Dollar correlated). The primary objective of hedging is to ensure that, if practical, the effect of changes in foreignexchange rates on the consolidated capital ratios are minimised.

Averagefor year
$m

As at
$m

69.8

60.8

60.8

18.8

33.4

New Zealand

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.0

30.8

35.2

27.5

31.2

28.5

30.9

17.7

24.1

Diversification benefit1(31.9)

n/an/a(36.2)(43.3)

n/an/a(21.4)

Total VaR

65.9

69.9

55.0

64.8

46.0

47.6

25.5

36.1

194

Consolidated

18.8

Asia Pacific, Europe & America

1.

The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported net
interest income.

The diversification benefit reflects the historical correlation between the regions. The high and low VaR figures reported for the region did not necessarily occur on the same day as the high and low VaRreported for the Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

194

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CREATE VALUEPERFORMANCEOVERVIEWREMUNERATIONREPORT

DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

LIQUIDITY AND FUNDING RISKLIQUIDITY AND FUNDING RISK (continued)

LIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that the Group is either: unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; orLiquidity crisis contingency planning
The Group maintains APRA-endorsed liquidity crisis contingency plans for analysing and responding to a liquidity threatening event at a country andGroup-wide level. Key liquidity contingency crisis planning requirements and guidelines include: does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.

Ongoing business management

Early signs/ mild stress

Severe stress

Management of liquidity and funding risks are overseen by GALCO. The Group’s liquidity and funding risks are governed by a set of principles
approved by the BRC and include: establish crisis/severity levels

 monitoring and review

 activate contingency funding plans

 liquidity limits maintaining the ability to meet all payment obligations in the immediate term; early warning indicators

 management actions not requiring
business rationalisation

 management actions for altering asset and liability
behaviour ensuring that the Group has the ability to meet ‘survival horizons’ under a range of ANZ specific, and general market, liquidity stress scenarios, atthe site and Group-wide level, to meet cash flow obligations over the short to medium term;

Assigned responsibility for internal and external communications and the appropriate timing to communicate

 maintaining strength in the Group’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile;

Since the precise nature of any stress event cannot be known in advance, we design the plans to be flexible to the nature and severity of the stressevent with multiple variables able to be accommodated in any plan.

 ensuring the liquidity management framework is compatible with local regulatory requirements;
 preparing daily liquidity reports and scenario analysis to quantify the Group’s positions;
 targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency; holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and establishing detailed contingency plans to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY RISKScenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by a range of regulatory and internal liquidity metrics mandated by the Board. The metrics cover a range of
scenarios of varying duration and level of severity.
A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, the Group has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia(RBA). The CLF was established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form ofcontingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as
security with the RBA. The total amount of the CLF available to a qualifying Authorised Deposit-taking Institution (ADI) is set annually by APRA. The
total amount of the CLF available to a qualifying Australian Deposit-taking Institution is set annually by APRA. In September 2021, APRA wrote to ADI’s
to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet their LCR requirements, and therefore the use of the CLF
should no longer be required beyond 2022.
From 1 January 2021, ANZ’s CLF is $10.7 billion (2020 calendar year end: $35.7 billion). Consistent with APRA’s requirement, ANZ’s CLF will decrease tozero through equal reductions on 1 January, 30 April, 31 August and 31 December 2022. This reduction will be managed as part of ANZ’s fundingplans over this period.
Liquid assets
The Group holds a portfolio of high quality (unencumbered) liquid assets to protect the Group’s liquidity position in a severely stressed environment
and to meet regulatory requirements. HQLA comprise three categories consistent with Basel III LCR requirements:
 HQLA1- Cash and highest credit quality government, central bank or public sector securities eligible for repurchase with central banks to provide
same-day liquidity.
 HQLA2 - High credit quality government, central bank or public sector securities, high quality corporate debt securities and high quality coveredbonds eligible for repurchase with central banks to provide same-day liquidity.
 Alternative liquid assets (ALA) - Assets qualifying as collateral for the CLF and eligible securities that the Reserve Bank of New Zealand (RBNZ) will
accept in its domestic market operations.

Group funding
The Group monitors the composition and stability of its funding so that it remains within the Group’s funding risk appetite. This approach ensures thatan appropriate proportion of the Group’s assets are funded by stable funding sources, including customer deposits; longer-dated wholesale funding(with a remaining term exceeding one year); and equity.
Funding plans prepared

Considerations in preparing funding plans

 3 year strategic plan prepared annually customer balance sheet growth annual funding plan as part of budgeting process changes in wholesale funding including: targeted funding volumes; markets;
investors; tenors; and currencies for senior, secured, subordinated, hybridtransactions and market conditions

 forecasting in light of actual results as a calibration to theannual plan

RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a term funding facility (TFF) for the banking system to support lending toAustralian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25%. APRA has determined that the TFF qualifies forinclusion in determining the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR). ADIs can obtain initial funding of up to 3% of their
existing credit outstanding to Australian households and businesses, and have access to additional funding if they increase lending to business,
especially to small and medium-sized businesses. The TFF closed to drawdowns on 30 June 2021.
As at 30 September 2021, ANZ had drawn $20.1 billion under the RBA’s TFF.
RBNZ Funding for Lending Programme and Term Lending Facility
 Between May 2020 and July 2021, the RBNZ made funds available under a term lending facility (TLF) to promote lending to businesses. The TLF is athree to five-year secured funding facility for New Zealand banks at a fixed rate of 0.25%.
 In November 2020, the RBNZ announced a funding for lending programme (FLP) which aimed to lower the cost of borrowing for New Zealandbusinesses and households. The FLP is a three-year secured funding facility for New Zealand banks at a floating rate of the New Zealand Official
Cash Rate (OCR). New Zealand banks can obtain initial funding of up to 4% of their lending to New Zealand resident households, non-financial
businesses and non-profit institutions serving households as at 31 October 2020 (eligible loans). An additional allocation of up to 2% of eligibleloans is available, subject to certain conditions. The additional allocation is available until 6 December 2022, and the initial allocation is available
until 6 June 2022.
As at 30 September 2021, ANZ NZ had drawn $0.3 billion under the TLF and $0.9 billion under the FLP.

LIQUIDITY RISK OUTCOMES1
Liquidity Coverage Ratio
ANZ’s Liquidity Coverage Ratio (LCR) averaged 136% for 2021, a decrease from the 2020 average of 139%, and above the regulatory minimum of100%.
Net Stable Funding Ratio
ANZ’s Net Stable Funding Ratio (NSFR) as at 30 September 2021 was 124% (2020: 124%), above the regulatory minimum of 100%.
1.

This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The Liquidity Coverage Ratio and Net Stable Funding Ratio are non-IFRS
disclosures and are disclosed as part of the Group's APS 330 Public Disclosure which is subject to specific review procedures in accordance with the Australian Standard on Related Services (ASRS) 4400

Agreed upon Procedures Engagements to Report Factual Findings.

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
17. FINANCIAL RISK MANAGEMENT (continued)

17. FINANCIAL RISK MANAGEMENT (continued)

LIQUIDITY AND FUNDING RISK (continued)

LIQUIDITY AND FUNDING RISK (continued)

RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF GROUP’S LIABILITIESThe tables below provide residual contractual maturity analysis of financial liabilities, including financial liabilities reclassified to held for sale, at 30
September within relevant maturity groupings. All outstanding debt issuance and subordinated debt is profiled on the earliest date on which theGroup may be required to pay. All at-call liabilities are reported in the ‘Less than 3 months’ category. Any other items without a specified maturity dateare included in the ‘After 5 years’ category. The amounts represent principal and interest cash flows - so they may differ from equivalent amounts
reported on balance sheet. For the purpose of this note, liabilities presented as liabilities held for sale in the Balance Sheet have been reallocated totheir respective Balance Sheet categories.
It should be noted that this is not how the Group manages its liquidity risk. The management of this risk is detailed on page 196.

Consolidated
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1
Derivative liabilities (excluding those held for balance sheet management)

2

Lease liabilities

The Company
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings

Less than
3 months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

14,922---

14,922

5,148

-

-

-

5,148

524,654

60,427

21,844

227

607,152

223

-

-

-

223

Debt issuances1

4,108

20,24454,465

8,965

87,782Derivative liabilities (excluding those held for balance sheet management)2

34,240---34,240

81

208

814

989

2,092

Liability for acceptances

Less than
3 months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

17,427---

17,427- Funding

5,657

-

-

-

5,657

Receive leg(25,170)(26,362)(48,026)(7,364)(106,922)

634,145

84,35725,247

227

743,976

Pay leg

24,52325,34447,467

7,318

104,652

Lease liabilities
Derivative assets and liabilities (balance sheet management)3- Other balance sheet management

392

-

-

-

392

4,218

24,92865,198

14,588108,932

Receive leg(102,921)(35,426)(11,063)(7,633)(157,043)

Pay leg

102,346

34,908

11,501

9,587

158,342

19,55630,474---30,474

86

224

755

301

1,366
As at 30 September 2020

Derivative assets and liabilities (balance sheet management)3

Settlement balances owed by ANZ

19,556---(142,043)

Collateral received

8,074

-

-

-

8,074

139,960

Deposits and other borrowings

479,498

65,77914,419158

559,854- Funding(29,186)

Receive leg

28,538

Pay leg(36,462)35,082(62,061)
61,867(14,334)
14,473- Other balance sheet management

Liability for acceptances

224

-

-

-

224

Receive leg(104,036)(37,275)(14,982)(8,029)(164,322)

Debt issuances1

4,627

21,48364,102

12,775102,987

Pay leg

103,586

36,804

15,457

9,974

165,821

Derivative liabilities (excluding those held for balance sheet management)2
Lease liabilities

124,027---

124,027

66

234

855

1,114

2,269

Derivative assets and liabilities (balance sheet management)

3

As at 30 September 2020
Settlement balances owed by ANZ

22,241---

22,241- FundingCollateral received

9,304

-

-

-

9,304

Receive leg(8,430)(14,025)(51,487)(13,620)(87,562)

576,506

90,241

18,025

159

684,931

Pay leg

8,038

12,93049,365

12,942

83,275

Deposits and other borrowings- Other balance sheet management

Liability for acceptances

449

-

-

-

449

Debt issuances1

5,174

26,642

78,181

16,948

126,945

Receive leg(74,219)(40,186)(8,321)(8,343)(131,069)

Pay leg

74,09739,327

8,048

7,029

128,501

Derivative liabilities (excluding those held for balance sheet management)

2

Lease liabilities

123,865---

123,865

72

248

809

390

1,519

Derivative assets and liabilities (balance sheet management)

3- FundingReceive leg(11,170)(21,569)(69,594)(18,243)(120,576)

Pay leg

10,856

20,20666,455

17,403

114,920

Receive leg(75,098)(40,956)(9,738)(8,512)(134,304)

Pay leg

75,22640,401

10,031

7,271

132,929- Other balance sheet management1.

Any callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Group, andperpetual debt instruments after 5 years.

2.

The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘less than 3 months’ category.
Include derivatives designated into hedging relationships of $202 million (2020: $4,484 million) and $5,359 million (2020: $6,362 million) categorised as held for trading but form part of Group’s balance
sheet activities.

3.

1.

Any callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Company,
and perpetual debt instruments after 5 years.

2.

The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘less than 3 months’ category.

3.

Include derivatives designated into hedging relationships of $158 million (2020: $3,202 million) and $2,607 million (2020: $4,001 million) categorised as held for trading but form part of Company’s balance
sheet activities.

At 30 September 2021, $176,077 million (2020: $191,300 million) of the Company’s undrawn facilities and $45,042 million (2020: $36,146 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Company may be required to pay.

At 30 September 2021, $212,265 million (2020: $227,819 million) of the Group’s undrawn facilities and $48,330 million (2020: $39,795 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Group may be required to pay.

198

198

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DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

The Group carries a significant number of financial instruments on the balance sheet at fair value. The fair value is the best estimate of the pricethat would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement
date.

CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESThe following tables set out the classification of financial asset and liability categories according to measurement bases together with their carrying
amounts as recognised on the balance sheet.

VALUATION
The Group has an established control framework, including appropriate segregation of duties, to ensure that fair values are accurately determined,
reported and controlled. The framework includes the following features: products are approved for transacting with external customers and counterparties only where fair values can be appropriately determined; quoted market prices used to value financial instruments are independently verified with information from external pricing providers; fair value methodologies and inputs are evaluated and approved by a function independent of the party that undertakes the transaction;
 movements in fair values are independently monitored and explained by reference to underlying factors relevant to the fair value; and2021

Consolidated
Financial assets
Cash and cash equivalents

2020

Note

At
amortised
cost
$m

At
fair
value
$m

Total
$m

At
amortised
cost
$m

At
fair
value
$m

Total
$m

9

151,260-

151,260

7,530

-

7,530

107,923-

107,923

7,541

-

7,541

 valuation adjustments (such as funding valuation adjustments, credit valuation adjustments and bid-offer adjustments) are independently
validated and monitored.

Settlement balances owed to ANZ

If the Group holds offsetting risk positions, then the Group uses the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure thefair value of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net
long position (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.

9,166

-

9,166

14,308-14,308

Trading securities

10-

44,68844,688-50,91350,913

Derivative financial instruments

11-

38,736

38,736-135,331

135,331

Fair value designation
We designate certain loans and advances and certain deposits and other borrowings and debt issuances as fair value through profit or loss:

Collateral paid

Investment securities

12

7,031

76,095

83,126

6,816

86,57593,391

Net loans and advances

13

626,099

3,620

629,719

613,155

3,938

617,093 where they contain a separable embedded derivative which significantly modifies the instruments’ cash flow; or in order to eliminate an accounting mismatch which would arise if the asset or liabilities were otherwise carried at amortised cost. This mismatcharises due to measuring the derivative financial instruments (which we acquired to mitigate interest rate risk of these assets or liabilities) at fair value
through profit or loss.

Regulatory deposits

671

-

671

801

-

801

Other financial assets

2,054

-

2,054

2,407

-

2,407

803,811

163,139

966,950

752,951

276,757

1,029,708

Our approach ensures that we recognise the fair value movements on the assets or liabilities in profit or loss in the same period as the movement on
the associated derivatives.

Settlement balances owed by ANZ

17,427-

17,42722,241-

22,241

Collateral received

5,657

-

5,657

9,304

-

9,304

We may also designate certain loans and advances, certain deposits and other borrowings and debt issuances as fair value through profit or loss
where they are managed on a fair value basis to align the measurement with how the instruments are managed.

Deposits and other borrowings

15

738,772

4,284

743,056

679,255

3,078

682,333

Derivative financial instruments

11-

36,03536,035-

134,711

134,711

4,734

3,913

8,647

5,285

3,843

9,128

99,092

1,962

101,054

117,509

2,159

119,668

865,682

46,194

911,876

833,594

143,791

977,385

FAIR VALUE APPROACH AND VALUATION TECHNIQUESWe use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
Asset or Liability

Fair Value Approach

Financial instruments classified as:

Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics. Equity
instruments that are not traded in active markets may be measured using comparable
company valuation multiples.

Trading securities- Securities sold short- Derivative financial assets and financial liabilities

Total
Financial liabilities

Payables and other liabilities
Debt issuances
Total

16

- Investment securities
Financial instruments classified as:- Net loans and advances- Deposits and other borrowings- Debt issuances

200

200

Discounted cash flow techniques are used whereby contractual future cash flows of
the instrument are discounted using wholesale market interest rates, or market
borrowing rates for debt with similar maturities or yield curve appropriate for theremaining term to maturity.

ANZ 2021 Annual Report

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

FAIR VALUE HIERARCHY

2021
Total
$m

At
amortised
cost
$m

At
fair
value
$m

Total
$m

-

141,436

98,083-98,083

7,183

-

7,183

7,116

-

7,116

8,343

-

8,343

13,012-13,012Note

At
amortised
cost
$m

At
fair
value
$m

9

141,436

Settlement balances owed to ANZCollateral paid

The Company
Financial assets
Cash and cash equivalents

The Group categorises assets and liabilities carried at fair value into a fair value hierarchy as required by AASB 13 Fair Value Measurement based on theobservability of inputs used to measure the fair value:2020

 Level 1 - valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Trading securities

10-

34,752

34,752-

38,42338,423

Derivative financial instruments

11-

38,292

38,292-

130,552

130,552

Investment securities

12

5,262

62,67867,9405,354

74,93080,284

 Level 2 - valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or
indirectly; and Level 3 - valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:
Fair value measurements
Quoted price in
active markets(Level 1)
Consolidated

485,015

3,472

488,487

483,986

4,016

488,002

213

-

213

199

-

199

Due from controlled entities

21,4892,041

23,53022,0891,928

24,017

Trading securities1

Other financial assets

1,371

-

1,371

1,460

-

1,460

Derivative financial instruments

Net loans and advances

13

Regulatory deposits
1

Total

670,312141,235

811,547

631,299

249,849

881,148

14,922

Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments

15
11

Due to controlled entities1
Payables and other liabilities
Debt issuances
Total
1.

16

-

14,922

19,556-Using unobservable
inputs (Level 3)

Total

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

36,02544,004

8,663

6,909

-

-

44,68850,913

AssetsInvestment securities1
Net loans and advances

Financial liabilities

Using observable
inputs (Level 2)

19,556

Total
Liabilities

494

681

38,187

134,5885562

38,736135,331

68,007

85,330

6,756

137

1,332

1,108

76,09586,575

-

-

3,510

3,925

110

13

3,620

3,938

104,526

130,015

57,116

145,559

1,497

1,183

163,139

276,757

5,148

-

5,148

8,074

-

8,074

606,67350

606,723556,676

1,460

558,136

Deposits and other borrowings

-

-

4,284

3,078

-

-

4,284

3,078

1,131

1,120

34,874

133,53630

55

36,035

134,711

3,690

3,830

223

13

-

-

3,913

3,843

-

-

1,962

2,159

-

-

1,962

2,159

4,821

4,950

41,343

138,78630

55

46,194

143,791-

37,00537,005-

131,230

131,230

Derivative financial instruments

23,079-23,07924,295-24,295

Payables and other liabilities2

3,999

3,245

7,244

4,377

3,693

8,070

Debt issuances (designated at fair value)

77,053

4,035

81,08892,832

4,218

97,050Total

730,874

44,335775,209705,810140,601

846,411
Fair value measurements

From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Due from controlled entities and Due to controlled entities by $76,637 million at 30
September 2020. Refer to Note 35 Impact of Adoption of New Standards and Other Changes for further details.

Quoted price in
active markets(Level 1)
The Company

Using observable
inputs (Level 2)

Using unobservable
inputs (Level 3)

Total

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

2021
$m

2020
$m

27,76435,170

6,988

3,253

-

-

34,752

38,423

AssetsTrading securities1

470

662

37,788129,832

34

58

38,292

130,552

56,277

73,838

5,354

105

1,046

987

62,67774,930Net loans and advances

-

-

3,362

4,016

110

-

3,472

4,016

Due from controlled entities

-

-

2,041

1,928

-

-

2,041

1,928

84,511

109,670

55,533

139,134

1,190

1,045

141,234

249,849

Deposits and other borrowings

-

-

50

1,460

-

-

50

1,460

Derivative financial instruments

1,121

1,109

35,854130,06630

55

37,005

131,230

Payables and other liabilities2

3,040

3,680

205

13

-

-

3,245

3,693

Derivative financial instruments
Investment securities1

Total
Liabilities

Debt issuances (designated at fair value)
Total

202

202

998

996

3,037

3,222

-

-

4,035

4,218

5,159

5,785

39,146

134,76130

55

44,335

140,6011.

During the year, $3,845 million of assets were transferred from Level 1 to Level 2 (2020: $127 million transferred from Level 2 to Level 1) for the Group and the Company due to a change of the observabilityof inputs. There were no other material transfers during the year. Transfers into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.

2.

Payables and other liabilities relates to securities sold short, which we classify as held for trading and measured at fair value through profit or loss.

ANZ 2021 Annual Report 203

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DIRECTORS’REPORT

FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

FAIR VALUE MEASUREMENT INCORPORATING UNOBSERVABLE MARKET DATAFINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE

Level 3 fair value measurements
The net balance of Level 3 financial instruments is an asset of $1,467 million (2020: $1,128 million) for the Group and $1,160 million (2020: $1,003
million) for the Company.

The following table sets out the Group’s basis of estimating the fair values of financial assets and liabilities carried at amortised cost where the carrying
value is not typically a reasonable approximation of fair value.
Financial Asset and Liability

Fair Value Approach

Investment securities - debt securities at amortised cost

Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using ayield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable for that instrument.

The increase in the net balance of Level 3 financial instruments is Investment Securities, due to the revaluation of the investment in Bank of Tianjin(Group and Company), and an increase in unlisted equity investments (Group).

Net loans and advances to banks

Discounted cash flows using prevailing market rates for loans with similar
credit quality.

During the year, the Group and Company transferred $5 million of derivative liabilities from Level 3 to Level 2, where valuation parameters for thesefinancial instruments became observable during the year, and $105 million of Loan and advances measured at fair value from Level 2 to Level 3, where
valuation parameters for these loans became unobservable during the year. There were no other transfers in or out of Level 3 in the current or prioryear.

Net loans and advances to customers

Present value of future cash flows, discounted using a curve that incorporates
changes in wholesale market rates, the Group’s cost of wholesale funding and thecustomer margin, as appropriate.

Deposit liability without a specified maturity or at call

The amount payable on demand at the reporting date. We do not adjust the fairvalue for any value we expect the Group to derive from retaining the deposit for a
future period.

Interest bearing fixed maturity deposits and otherborrowings and acceptances with quoted market rates

Market borrowing rates of interest for debt with a similar maturity are used to
discount contractual cash flows to derive the fair value.

Debt issuances

Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using ayield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable to ANZ for that
instrument.

The assets and liabilities which incorporate significant unobservable inputs primarily include: equities for which there is no active market or traded prices cannot be observed;
 net loans and advances that are required to be measured at fair value for which there is no observable market data; and derivatives referencing market rates that cannot be observed primarily due to lack of market activity.

Bank of Tianjin (BoT)The investment is valued based on comparator bank price-to-book (P/B) multiples (a P/B multiple is the ratio of the market value of equity to the bookvalue of equity). The extent of judgement applied in determining the appropriate multiple and comparator group from which the multiple is derived
are non-observable inputs which have resulted in the Level 3 classification.
Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs not being directly observable in the market place (Level 3 inputs), then changing theseassumptions changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the
primary unobservable parameter used to derive the valuation.

Bank of Tianjin (BoT)The valuation of the BoT investment is sensitive to the selected unobservable input, being the P/B multiple. If the P/B multiple was increased or
decreased by 10% it would result in a $99 million (2020: $93 million) increase or decrease to the fair value of the investment, which would berecognised in shareholders’ equity.

Other

The financial assets and financial liabilities listed in the table below are carried at amortised cost on the Group’s Balance Sheet. While this is the value atwhich we expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of the financial assets andfinancial liabilities at balance date in the table below.

The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.
Deferred fair value gains and losses
Where fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount we determine based on the valuation technique (day one gain or loss) in
profit or loss. After initial recognition, we recognise the deferred amount in profit or loss on a straight line basis over the life of the transaction or until
all inputs become observable.
Day one gains and losses which have been deferred are not material.

Consolidated
Financial assets

At amortised cost
2021
2020
$m
$m

Categorised into fair value hierarchy
Quoted priceWith significant nonactive markets
observable inputs
Using observable(Level 1)
inputs (Level 2)(Level 3)
2021
2020
2021
2020
2021
2020
$m
$m
$m
$m
$m
$m

Total fair value
2021
2020
$m
$m

Net loans and advances

626,099

613,155--

16,90622,862609,541591,296626,447

614,158

Investment securities

7,031

6,816

-

-

7,043

6,816

-

-

7,043

6,816

633,130

619,971--

23,94929,678609,541591,296

633,490

620,974

738,772

679,255--

738,840

679,544--738,840

679,544

Total
Financial liabilities
Deposits and other borrowings

204

204

Debt issuances

99,092

117,50927,785

26,10773,332

93,187--101,117

119,294

Total

837,864

796,764

27,785

26,107812,172

772,731--

839,957

798,838

ANZ 2021 Annual Report 205

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FINANCIALREPORT

DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)

19. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
SECURITY FOR ASSETSFINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE (continued)

The following disclosure excludes the amounts presented as collateral paid and received in the Balance Sheet that relate to derivative liabilities andderivative assets respectively. The terms and conditions of those collateral agreements are included in the standard Credit Support Annex that forms
part of the International Swaps and Derivatives Association Master Agreement under which most of our derivatives are executed.

Categorised into fair value hierarchy

At amortised cost
2021
2020
$m
$m

The Company
Financial assets

485,015

Net loans and advances

Quoted priceactive markets(Level 1)
2021
2020
$m
$m

Using observable
inputs (Level 2)
2021
2020
$m
$m

483,986--

16,05022,350With significant nonobservable inputs(Level 3)
2021
2020
$m
$m
469,363

462,073

Total fair value
2021
2020
$m
$m
485,413484,423

Investment securities

5,263

5,354

-

-

5,275

5,352

-

-

5,275

5,352

Due from controlled entities1

21,48922,089----21,48922,08921,48922,089

Total

511,767

511,429--

21,32527,702490,852

484,162

512,177

511,864

Deposits and other borrowings

606,673556,676--

606,723556,805--

606,723556,805

Debt issuances

77,053

92,832

24,28023,21454,421

71,133--78,701

94,347

Due to controlled entities

23,07924,295----23,07924,29523,07924,295

Total

706,805

673,803

24,28023,214

661,144627,938

23,07924,295708,503

675,447ASSETS CHARGED AS SECURITY FOR LIABILITIESAssets charged as security for liabilities include the following types of instruments:
 securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;
 specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZ’s covered bond programs;
 collateral provided to central banks; and collateral provided to clearing houses.
The carrying amount of assets pledged as security are as follows:
Consolidated

Financial liabilities

1

1.

From 1 April 2021, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation structured entities (SEs) in which it holds all of the issued securities of theSE. Transactions with an SE are no longer recorded on a gross basis. Comparatives have been restated, reducing Due from controlled entities and Due to controlled entities by $76,637 million at 30
September 2020. Refer to Note 35 Impact of Adoption of New Standards and Other Changes for further details.

KEY JUDGEMENTS AND ESTIMATESThe Group evaluates the material accuracy of the valuations incorporated in the financial statements as they can involve a high degree ofjudgement and estimation in determining the carrying values of financial assets and financial liabilities at the balance sheet date.

2021
$m

2020
$m

2021
$m

2020
$m

Securities sold under arrangements to repurchase1

51,20861,41548,66360,612

Residential mortgages provided as security for covered bonds

28,81628,55917,925

17,937

Other

4,039

4,990

3,963

4,921

1.

The amounts disclosed as securities sold under arrangements to repurchase include both:
assets pledged as security which continue to be recognised on the Group's balance sheet; and assets repledged, which are included in the disclosure below.


COLLATERAL ACCEPTED AS SECURITY FOR ASSETSANZ has received collateral associated with various financial transactions. Under certain arrangements ANZ has the right to sell, or to repledge, thecollateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that which we have sold or repledged is as follows:

The majority of valuation models the Group uses employ only observable market data as inputs. This has not changed as a result of COVID19, however the Group has considered the impact of related economic and market disruptions on fair value measurement assumptions
and the appropriateness of valuation inputs, notably valuation adjustments, as well as the impact of COVID-19 on the classification of
exposures in the fair value hierarchy.
For certain financial instruments, we may use data that is not readily observable in current markets. If we use unobservable market data,then we need to exercise more judgement to determine fair value depending on the significance of the unobservable input to the overall
valuation. Generally, we derive unobservable inputs from other relevant market data and compare them to observed transaction prices
where available.

The Company

Consolidated

The Company

2021
$m

2020
$m

2021
$m

2020
$m

Fair value of assets which can be sold or repledged

26,81454,242

25,67953,118Fair value of assets sold or repledged

18,741

32,57818,18932,308When establishing the fair value of a financial instrument using a valuation technique, the Group considers valuation adjustments indetermining the fair value. We may apply adjustments (such as bid/offer spreads, credit valuation adjustments and funding valuation
adjustments – refer Note 11 Derivative Financial Instruments) to reflect the Group’s assessment of factors that market participants would
consider in determining fair value.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
20. OFFSETTING

20. OFFSETTING (continued)

We offset financial assets and financial liabilities on the balance sheet (in accordance with AASB 132 Financial Instruments: Presentation) when there is:Amount subject to master netting agreement or similar a current legally enforceable right to set off the recognised amounts in all circumstances; and an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.

Amounts not
Total amounts
subject torecognised master nettingin the agreement orBalance Sheetsimilar$m$m

The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master netting
agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of overcollateralisation.
The Company

Amount subject to master netting agreement or similar
Amounts not
Total amounts
subject torecognised master nettingin the agreement orBalance Sheetsimilar$m$m

Consolidated

Total
$m

Financial
instruments$mFinancialcollateral(received)/pledged
$m

Total
$m

Financial
instruments$mFinancialcollateral(received)/pledged$m

Net amount$m

As at 30 September 2021

Net amount$m

As at 30 September 2021

Derivative financial assets1

38,292(1,539)36,753(27,288)(5,189)4,276

Reverse repurchase, securities borrowing andsimilar agreements2

24,958(2,042)

22,916(1,052)(21,864)-

Total financial assets

63,250(3,581)

59,669(28,340)(27,053)

4,276(37,005)

1,343(35,662)

27,2885,425(2,949)Repurchase, securities lending and similar
agreements3(43,925)

10,480(33,445)

1,052

32,393-

Total financial liabilities(80,930)

11,823(69,107)

28,34037,818(2,949)Derivative financial liabilities

1

38,736(3,078)35,658(24,186)(5,750)

5,722

Reverse repurchase, securities borrowing andsimilar agreements2

26,082(3,166)

22,916(1,052)(21,864)-

Total financial assets

64,818(6,244)58,574(25,238)(27,614)

5,722

As at 30 September 2020

Derivative financial liabilities1(36,035)

2,822(33,213)

24,186

5,530(3,497)

Derivative financial assets

130,552(2,531)

128,021(117,039)(5,625)

5,357

Repurchase, securities lending and similar
agreements3(46,147)

11,461(34,686)

1,052

33,634-

Reverse repurchase, securities borrowing andsimilar agreements2

52,322(4,810)47,512(1,566)(45,946)-

Total financial liabilities(82,182)

14,283(67,899)

25,23839,164(3,497)

Total financial assets

182,874(7,341)

175,533(118,605)(51,571)

5,357

Derivative financial liabilities(131,230)

1,567(129,663)

117,0399,402(3,222)

Repurchase, securities lending and similar
agreements3(54,951)

13,589(41,362)

1,566

39,796-

Total financial liabilities(186,181)

15,156(171,025)

118,605

49,198(3,222)Derivative financial assets

1

As at 30 September 2020
Derivative financial assets

135,331(3,862)

131,469(117,982)(6,397)

7,090

Reverse repurchase, securities borrowing andsimilar agreements2

53,434(5,922)47,512(1,566)(45,946)-

Total financial assets

188,765(9,784)

178,981(119,548)(52,343)

7,090

Derivative financial liabilities(134,711)

2,824(131,887)

117,982

10,059(3,846)

Repurchase, securities lending and similar
agreements3(55,716)

14,354(41,362)

1,566

39,796-

Total financial liabilities(190,427)

17,178(173,249)

119,548

49,855(3,846)

1.

1.

In August 2021, the Company amended the terms of its legal agreements with one of its central clearing counterparties whereby the payment or receipt of collateral results in a legal settlement ofassociated derivative assets and liabilities, and an associated reduction in the carrying values of the related derivative instruments. These derivative remain subject to a master netting agreement. The impactof this change as at 30 September 2021 is a decrease in the derivative assets of $51.4 billion and a decrease in derivative liabilities of $51.3 billion and reduction in net collateral paid of $0.1 billion. Refer toNote 11 Derivative Financial Instruments for further information.

2.

Reverse repurchase agreements:
with less than 90 days to maturity are presented in the Balance Sheet within cash and cash equivalents; or with 90 days or more to maturity are presented in the Balance Sheet within net loans and advances.
3.
Repurchase agreements are presented on the Balance Sheet within deposits and other borrowings.


In August 2021, the Group amended the terms of its legal agreements with one of its central clearing counterparties whereby the payment or receipt of collateral results in a legal settlement of associatedderivative assets and liabilities, and an associated reduction in the carrying values of the related derivative instruments. These derivative remain subject to a master netting agreement. The impact of thischange as at 30 September 2021 is a decrease in the derivative assets of $55.1 billion and a decrease in derivative liabilities of $55.2 billion and reduction in net collateral paid of $0.1 billion. Refer toNote 11 Derivative Financial Instruments for further information.

2.

Reverse repurchase agreements:
with less than 90 days to maturity are presented in the Balance Sheet within cash and cash equivalents; or with 90 days or more to maturity are presented in the Balance Sheet within net loans and advances.
3.
Repurchase agreements are presented on the Balance Sheet within deposits and other borrowings.


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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
21. GOODWILL AND OTHER INTANGIBLE ASSETS
Software

Goodwill1
2021
Consolidated
Balance at start of year

21. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

2020

2021

Other Intangibles

Total

2020

2021

2020

2021

2020

$m

$m

$m

$m

$m

$m

$m

$m

3,264

3,467

1,039

1,323

76

71

4,379

4,861

Additions

-

-

356

375

-

6

356

381

Amortisation expense2

-

-

(434)

(657)

(2)

(1)

(436)

(658)

Impairment expense3

(251)

(77)

(1)

(2)

-

-

(252)

(79)

Written off on disposal

(13)

(124)

-

-

-

-

(13)

(124)

Foreign currency exchange difference

89

(2)

-

-

1

-

90

(2)

3,089

3,264

960

1,039

75

76

4,124

4,379

3,089

3,264

7,639

7,300

78

77

10,806

10,641n/an/a(6,679)(6,261)(3)(1)(6,682)(6,262)

3,089

3,264

960

1,039

75

76

4,124

4,379

Balance at end of year
4

Cost

Accumulated amortisation
Carrying amount

Software

Goodwill1
The Company
Balance at start of year

Other Intangibles

Total

2021

2020

2021

2020

2021

2020

2021

2020

$m

$m

$m

$m

$m

$m

$m

$m

62

82

1,030

1,285

5

-

1,097

1,367

Additions

-

-

345

372

-

6

345

378

Amortisation expense2

-

-

(422)

(625)

(2)

(1)

(424)

(626)

Impairment expense

-

(10)

(1)

(2)

-

-

(1)

(12)

Written off on disposal

-

(10)

-

-

-

-

-

(10)

Foreign currency exchange difference

-

-

-

-

-

-

-

-

62

62

952

1,030

3

5

1,017

1,097

Balance at end of year
Cost

62

62

7,342

7,006

6

6

7,410

7,074

Accumulated amortisation

n/a

n/a

(6,390)(5,976)(3)(1)(6,393)(5,977)

Carrying amount

62

62

952

1,030

3

5

1,017

1,097

4

1.
2.
3.

4.

Goodwill excludes notional goodwill in equity accounted investments.
During 2020, the Group amended the application of its software amortisation policy and recognised an accelerated amortisation of $197 million for the Group and $184 million for the Company in 2020.
2021 goodwill impairment expense relates to the write-off on reclassification of ANZ Share Investing to held for sale. This is recognised in Other income to align with the classification on completion of thedisposal in 2021.
Includes impact of foreign currency translation differences.

IMPAIRMENT TESTING FOR CASH GENERATING UNITS (CGUs) CONTAINING GOODWILL
An assessment as to whether the current carrying value of goodwill is impaired is undertaken annually or where there are indicators of potential
impairment. For the purpose of impairment testing, goodwill acquired in a business combination is allocated at the date of acquisition to the cash
generating units (CGUs) that are expected to benefit from the synergies of the related business combination. These CGUs are ANZ’s reportablesegments. Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount.
We estimate the recoverable amount of each CGU to which goodwill is allocated using a fair value less costs of disposal (FVLCOD) approach, with avalue-in-use (VIU) assessment performed where the FVLCOD is less than the carrying amount.
During the year ended 30 September 2021, $251 million of goodwill was written off upon reclassification of ANZ Share Investing to held for sale in theGroup (Company: nil) with a remaining $13 million of goodwill derecognised upon completion of the disposal.
During the year ended 30 September 2020, the Group wrote off $124 million of goodwill in relation to completed divestments (Company: $10 million).
In addition, the Group announced its intention to begin winding up the Bonus Bonds business, a managed investment product in New Zealand andthe Group wrote off the associated goodwill of $27 million (Company: nil). The Group wrote off $50 million of goodwill in the Pacific division(Company: $10 million) as a result of changes in economic outlook.

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210

Fair Value Less Cost of Disposal
The recoverable amount of each CGU to which goodwill is allocated is estimated on a FVLCOD basis, calculated using a market multiple approach.
Under this approach, we determine the estimated fair value of each CGU by applying observable price earnings multiples of appropriate comparator
companies to the estimated future maintainable earnings of each CGU. A deduction is then made for estimated costs of disposal. The valuation isconsidered to be level 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
Management’s approach and the key assumptions used to determine FVLCOD, for those CGUs where recoverable amount was determined on thebasis of FVLCOD were as follows:
Key assumption
Future maintainable earnings

Approach to determining the value (or values) for each key assumption
Future maintainable earnings for each CGU have been estimated as the sum of: The Group’s 2022 financial plan for each CGU; plus
 An allocation of the central costs recorded outside of the CGU’s to which goodwill is allocated.
Where relevant, adjustments are made to the Group’s financial plan to reflect the long term expectations foritems such as expected credit losses and investment spend.

Price/Earnings (P/E) multiple
appliedThe P/E multiples used have been derived from valuations of comparable publicly traded companies
relevant to the respective CGU.
In the case of the New Zealand and Institutional CGUs, management has made downwards adjustments tocomparator group multiples to address specific factors relevant to those CGUs.
The median P/E multiples applied (including a 30% control premium discussed below) were as follows:
Division
Australia Retail and Commercial
New ZealandInstitutional

2021
18.9
16.4
15.5

2020
16.0
12.7
13.4

Control premium:
A control premium has been applied which recognises the increased consideration a potential acquirer
would be willing to pay in order to gain sufficient ownership to achieve control over the relevant activities of
the CGU. For each CGU, the control premium has been estimated as 30% of the comparator group P/E
multiple based on historical transactions.
Costs of disposal

Costs of disposal have been estimated as 2% of the fair value of the CGU based on input from historical andrecent transactions.

As noted above, our impairment testing did not result in any material impairment of goodwill being identified as at 30 September 2021.
FVLCOD assessment outcomes
For each CGU, the surplus of the recoverable amount over the carrying amount determined on the basis of FVLCOD was as follows:

Cash generating unit:
Australia Retail and Commercial
New ZealandInstitutional

Surplus2021$m
12,168
6,332
4,249

Sensitivity analysis
The surpluses disclosed above are sensitive to judgements and estimates however the FVLCOD estimates for the respective CGUs would continue toshow a surplus in recoverable amount over carrying amount even where reasonably possible alternative estimates were used.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
21. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

21. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

KEY JUDGEMENTS AND ESTIMATESRECOGNITION AND MEASUREMENT
The table below details how we recognise and measure different intangible assets:

Definition

Carrying value

Goodwill

Software

Other Intangible Assets

Excess amount the Group has paidin acquiring a business over the fairvalue of the identifiable assets andliabilities acquired.

Purchased software owned by the Group
is capitalised.

Management fee rights arisingfrom acquisition of funds
management business and an
intangible asset arising fromcontractual rights.

Cost less any accumulated
impairment losses.
Allocated to the cash generating
unit to which theacquisition relates.

Useful life

Indefinite.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.

Internal and external costs incurred inbuilding software and computer systems
costing greater than $20 million are
capitalised as assets. Those less than $20
million are expensed in the year in which
the costs are incurred.
Initially, measured at cost.
Subsequently, carried at cost lessaccumulated amortisation andimpairment losses.
Costs incurred in planning or evaluating
software proposals or in maintaining
systems after implementation are
not capitalised.
Except for major core infrastructure,amortised over periods between
2-5 years; however major core
infrastructure may be amortised up to 7
years subject to approval by the Audit
Committee.
Purchased software is amortised over 2
years unless it is considered integral toother assets with a longer useful life.

Depreciation
method212

212

Not applicable.

Straight-line method.

Management judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life of anasset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including: the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Group’s revenue
generating segments that benefit from relevant historical business combinations generating goodwill.
 determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis, of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
 assessment of the recoverable amount of each CGU including:

Initially, measured at fair value atacquisition.
Subsequently, carried at costless amortisation andimpairment losses.

o selection of the model used to determine the fair value – the Group has used the market multiple approach to estimate the fairvalue; ando selection of the key assumptions in respect of future maintainable earnings, the P/E multiple applied, including selection of an
appropriate comparator group and determination of an appropriate control premium, and costs of disposal as described above.
Software and other intangible assets
At each reporting date, software and other intangible assets are assessed for indicators of impairment and, where such indicators are
identified, an impairment assessment is performed. In the event that an asset’s carrying amount is determined to be greater than its
recoverable amount, the carrying amount of the asset is written down immediately. Those assets not yet ready for use are tested for
impairment annually.

Management fee rights with anindefinite life are reviewed for
impairment at least annually or
when there is an indication of
impairment. The contractual
rights intangible asset isamortised over 3 years.

In addition, the expected useful lives of intangible assets are assessed at each reporting date. The assessment requires management
judgement, and in relation to our software assets, a number of factors can influence the expected useful lives. These factors include
changes to business strategy, significant divestments and the increasing pace of technological change.

Not applicable to indefinite life
intangible assets. Straight line
for those with a limited life.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
22. OTHER PROVISIONS

22. OTHER PROVISIONS (continued)
Consolidated

The Company

2021
$m

2020
$m

2021
$m

2020
$m

ECL allowance on undrawn and contingent facilities1

806

898

674

731

Customer remediation

886

1,109

791

969

Restructuring costs

99

105

44

70

Non-lending losses, frauds and forgeries

61

79

54

57

Other

362

388

310

330

2,214

2,579

1,873

2,157

Total other provisions
1.

Refer to Note 14 Allowance for Expected Credit Losses for movement analysis.

Customer
remediation$m

Restructuring
costs
$m

Non-lending
losses, frauds
and forgeries
$m

Other
$m

1,109

105

79

388

New and increased provisions made during the year

379

89

41

121

Consolidated
Balance at 1 October 2020
Provisions used during the year

(449)

(84)

(56)

(127)

Unused amounts reversed during the year1

(153)

(11)

(3)

(20)

Balance at 30 September 2021

886

99

61

362

1.

Customer remediation includes a $52 million transfer to the purchaser on completion of divestment of part of Wealth Australia discontinued operations.

Customer
remediation$m

Restructuring
costs
$m

Non-lending
losses, frauds
and forgeries$mBalance at 1 October 2020

969

70

57

330

New and increased provisions made during the year

360

37

-

116

The Company

Other
$m

Provisions used during the year

(390)

(55)

(1)

(118)

Unused amounts reversed during the year1

(148)

(8)

(2)

(18)

Balance at 30 September 2021

791

44

54

310

1.

Customer remediation includes a $52 million transfer to the purchaser on completion of divestment of part of Wealth Australia discontinued operations.

Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner inwhich that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are
expensed as incurred.
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advancesand losses arising from forgeries, frauds and the correction of operational issues. The amounts recognised are the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties that surround the events andcircumstances that affect the provision.
Other
Other provisions comprise various other provisions including workers compensation, make-good provisions associated with leased premises,
warranties and indemnities provided in connection with various disposals of businesses and assets, and contingent liabilities recognised as part of abusiness combination.

RECOGNITION AND MEASUREMENTThe Group recognises provisions when there is a present obligation arising from a past event, an outflow of economic resources isprobable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using theestimated cash flows required to settle the present obligation, its carrying amount is the present value of those cash flows.

KEY JUDGEMENTS AND ESTIMATESThe Group holds provisions for various obligations including customer remediation, restructuring costs, non-lending losses, fraud andforgeries and litigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including
estimates of expenditure required to satisfy such obligations. Where relevant, expert legal advice has been obtained and, in light of suchadvice, provisions and/or disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the costof settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number ofdifferent assumptions, including, the number of impacted customers, the average refund per customer, the associated remediation project
costs, and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances.
Consequently, the appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and otherrelevant evidence including expert legal advices and adjustments are made to the provisions where appropriate.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
23. SHAREHOLDERS’ EQUITY

23. SHAREHOLDERS’ EQUITY (continued)

SHAREHOLDERS' EQUITY
Consolidated

The Company

2021
$m

2020
$m

2021
$m

2020
$m

25,984

26,531

25,90726,454Foreign currency translation reserve

611

155

(145)

(131)

Share option reserve

76

85

76

85

FVOCI reserve

170

245

26

129

Cash flow hedge reserve

393

1,038

384

935

Transactions with non-controlling interests reserve

(22)

(22)

-

-

Total reserves

1,228

1,501

341

1,018

Retained earnings

36,45333,255

29,13225,800Share capital and reserves attributable to shareholders of the Company

63,66561,28755,38053,272

11

10

-

-

63,676

61,29755,38053,272

Ordinary share capital

RECOGNITION AND MEASUREMENT
Ordinary shares

Reserves

Non-controlling interests
Total shareholders’ equity

Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds
available on winding up of the Company, in proportion to the number of fully paid ordinary
shares held. They are recognised at the amount paid per ordinary share net of directly
attributable costs. Every holder of fully paid ordinary shares present at a meeting in person, orby proxy, is entitled to: on a show of hands, one vote; and on a poll, one vote, for each share held.

Treasury shares

Treasury shares are shares in the Company which: the ANZ Employee Share Acquisition Plan purchases on market and have not yet
distributed, or the Company issues to the ANZ Employee Share Acquisition Plan and have not yet been
distributed.
Treasury shares are deducted from share capital and excluded from the weighted average
number of ordinary shares used in the earnings per share calculations.

Reserves:
ORDINARY SHARE CAPITAL

Foreign currency translation reserve

Includes differences arising on translation of assets and liabilities into Australian dollars when
the functional currency of a foreign operation (including subsidiaries and branches) is not
Australian dollars. In this reserve, we reflect any offsetting gains or losses on hedging these
exposures, together with any tax effect.

Cash flow hedge reserve

Includes fair value gains and losses associated with the effective portion of designated cash
flow hedging instruments together with any tax effect.

FVOCI reserve

Includes changes in the fair value of certain debt securities and equity securities included
within Investment Securities together with any tax effect.

The table below details the movement in ordinary shares and share capital for the period.
2021
Number ofshares2,840,370,225

Dividend reinvestment plan ('DRP') Issuances1
Bonus option plan

Consolidated
Balance at start of the year2$m
26,531

2020
Number ofshares2,834,584,923$m
26,4904,242,368

94

3,373,022

61

2,259,507-

2,412,280

-

-

13

-

(20)

Share buy-back3(23,308,448)

(654)

-

-

Balance at end of year

2,823,563,652

25,984(4,401,593)-

2,840,370,225(4,927,878)

26,531

Less: Treasury Shares
Balance at end of year

2,819,162,059

25,984

2,835,442,347

26,531The Company
Balance at start of the year

2021
Number ofshares2,840,370,225$m
26,4542020
Number ofshares2,834,584,923$m
26,413

Dividend reinvestment plan ('DRP') Issuances1

4,242,368

94

3,373,022

61

Bonus option plan

2,259,507-

2,412,280

-

-

13

-

(20)

Share buy-back3(23,308,448)

(654)

-

-

Balance at end of year

2,823,563,652

25,9072,840,370,225

26,454

Group employee share acquisition scheme

2Group employee share acquisition scheme-

1.

The Company issued 4.2 million shares under the Dividend Reinvestment Plan (DRP) for the 2020 final dividend (3.4 million shares for the 2020 interim dividend). No shares were issued for the 2021 interim
dividend and 2019 final dividend as the shares were purchased on-market and provided directly to shareholders participating in the DRP.

2.

The Company issued 1.3 million shares under the Bonus Option Plan (BOP) for the 2021 interim dividend and 0.9 million shares for the 2020 final dividend (0.8 million shares for the 2020 interim dividendand 1.6 million shares for the 2019 final dividend).

3.

The Company commenced a $1.5 billion on-market share buy-back on 4 August 2021. This resulted in 23 million shares ($654 million) being cancelled in the September 2021 half and a further 2 million
shares ($55 million) being cancelled after 30 September 2021 in respect of purchase orders placed but not settled at 30 September 2021.

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216

In respect of debt securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition, except for thoserelating to allowance for expected credit losses, interest income and foreign currency
exchange gains and losses which are recognised in profit or loss. As debt securities at FVOCI
are recorded at fair value, the balance of the FVOCI reserve is net of the ECL allowanceassociated with such assets. When a debt security measured at FVOCI is derecognised, thecumulative gain or loss recognised in the FVOCI reserve in respect of that security is
reclassified to profit or loss and presented in Other operating income.
In respect of the equity securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition (including any
related foreign exchange gains or losses). When an equity security measured at FVOCI is
derecognised, the cumulative gain or loss recognised in the FVOCI reserve in respect of that
security is not recycled to profit or loss.
Share option reserve

Includes amounts which arise on the recognition of share-based compensation expense.

Transactions with non-controllinginterests reserve

Includes the impact of transactions with non-controlling shareholders in their capacity asshareholders.

Non-controlling interests

Share in the net assets of controlled entities attributable to equity interests which theCompany does not own directly or indirectly.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
24. CAPITAL MANAGEMENT

24. CAPITAL MANAGEMENT (continued)

CAPITAL MANAGEMENT STRATEGYLife Insurance and Funds Management
As required by APRA’s Prudential Standards, insurance and funds management activities are:

ANZ’s capital management strategy aims to protect the interests of depositors, creditors and shareholders. We achieve this through an Internal
Capital Adequacy Assessment Process (ICAAP) whereby ANZ conducts detailed strategic and capital planning over a 3 year time horizon.
The process involves:
 forecasting economic variables, financial performance of ANZ’s divisions and the financial impact of new strategic initiatives to be implemented
during the planning period;
 performing stress tests under different economic scenarios to determine the level of additional capital (‘stress capital buffer’) needed to absorb
losses that may be experienced under an economic downturn; reviewing capital ratios and targets across various classes of capital against ANZ’s risk profile; and developing a capital plan, taking into account capital ratio targets, current and future capital issuances requirements and options around capital
products, timing and markets to execute the capital plan under differing market and economic conditions.
The capital plan is approved by the Board and updated as required. The Board and senior management are provided with regular updates of ANZ’scapital position. Any material actions required to ensure ongoing prudent capital management are submitted to the Board for approval. Throughout
the year, the Group maintained compliance with all the regulatory requirements related to Capital Adequacy in the jurisdictions in which it operates.

 de-consolidated for the purposes of calculating capital adequacy; and excluded from the risk based capital adequacy framework.
We deduct the investment in these controlled entities 100% from CET1 capital, and if we include any profits from these activities in the Group’s results,then we exclude them from the determination of CET1 capital to the extent they have not been remitted to the Company.
Outside Australia
In addition to APRA, the Company’s branch operations and major banking subsidiary operations are also overseen by local regulators such as theReserve Bank of New Zealand, the US Federal Reserve, the UK Prudential Regulation Authority, the Monetary Authority of Singapore, the Hong Kong
Monetary Authority and the China Banking and Insurance Regulatory Commission. They may impose minimum capital levels on operations in theirindividual jurisdictions.

CAPITAL ADEQUACY1
The following table provides details of the Group’s capital adequacy ratios at 30 September:

REGULATORY ENVIRONMENT
Australia
As ANZ is an Authorised Deposit-taking Institution (ADI) in Australia, it is primarily regulated by APRA under the Banking Act 1959 (Cth). ANZ mustcomply with the minimum regulatory capital requirements, prudential capital ratios and specific reporting levels that APRA sets and which areconsistent with the global Basel III capital framework. This is the common framework for determining the appropriate level of bank regulatory capitalas set by the Basel Committee on Banking Supervision (‘BCBS’). APRA requirements are summarised below:

Consolidated

Common Equity Tier 1 (CET1) Capital

Tier 1 Capital

Tier 2 Capital

Total Capital

Shareholders’ equity adjusted forspecific items.

CET1 Capital plus certain
securities with complying loss
absorbing characteristics known
as Additional Tier 1 Capital.

Subordinated debt instruments
which have a minimum term of 5
years at issue date.

Tier 1 plus Tier 2 Capital.

Minimum Prudential Capital Ratios (PCRs)

3

189

63,67961,486

Deductions2(12,320)(12,784)

Prudential adjustments to shareholders' equity

2

Common Equity Tier 1 capital

51,35948,702

Additional Tier 1 capital3

8,114

7,779

Tier 1 capital

59,47356,481

Tier 2 capital4

17,125

13,95776,59870,438

Total Capital Ratio

Total qualifying capital

CET1 Capital divided by total risk
weighted assets must be at least 4.5%.

Tier 1 Capital divided by total risk
weighted assets must be at least
6.0%.

Total Capital divided by total risk weighted
assets must be at least 8.0%.

Capital adequacy ratios (Level 2)
Common Equity Tier 1

12.3%

11.3%

Tier 1

14.3%

13.2%

Tier 2

4.1%

3.3%

Level 1

Level 2

Level 3

Total capital ratio

The ADI on a stand-alone basis (that is
the Company and specified subsidiaries
which are consolidated to form the
ADI’s Extended Licensed Entity).

The consolidated Group lesscertain subsidiaries and associatesthat are excluded underprudential standards.

A conglomerate Group at the widest level.

Risk weighted assets

 a capital conservation buffer (CCB) of 3.5% which is inclusive of the additional 1% surcharge for domestically systemically important banks (D-SIBs).
APRA has determined that ANZ is a D-SIB.

61,297Gross Common Equity Tier 1 capital

Tier 1 Ratio

APRA also requires the ADI to hold additional CET1 buffers as follows:

63,676Tier 1

CET1 Ratio

Reporting Levels

2020
$m

Qualifying capital
Shareholders' equity and non-controlling interests

Regulatory Capital Definition

2021
$m

18.4%

16.4%

416,086

429,384

1.

This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The information presented in this table is a regulatory requirement
disclosed in Part A of the APRA Reporting Form (ARF) 110 Capital Adequacy which will be subject to audit in accordance with Prudential Standard APS 310 Audit and Related Matters.

2.

During 2021, deferred expenses previously netted within Prudential adjustments to shareholders’ equity were reclassified to Deductions to better align with the nature of the balances. Comparatives havebeen restated accordingly (2020: $394 million).

3.

This includes Additional Tier 1 capital of $8,506 million (2020: $8,196 million) (refer to Note 16 Debt Issuances), reduced for regulatory adjustments and deductions of $392 million (2020: $417 million).
This includes Tier 2 capital of $16,207 million (2020: $12,865 million) (refer to Note 16 Debt Issuances), general reserve for impairment of financial assets of $1,412 million (2020: $1,813 million) anddeductions for regulatory adjustments of $494 million (2020: $721 million).

4.

 a countercyclical capital buffer which is set on a jurisdictional basis. The requirement is currently set to zero for Australia.
ANZ reports to APRA on a Level 1 and Level 2 basis, and measures capital adequacy monthly on a Level 1 and Level 2 basis, and is not yet required tomaintain capital on a Level 3 basis (APRA have yet to conclude required timing for Level 3 reporting).

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SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
25. CONTROLLED ENTITIES

25. CONTROLLED ENTITIES (continued)

The ultimate parent of the Group is Australia and New Zealand Banking Group Limited

Incorporated inAustralia

Nature of BusinessBanking

The Group’s subsidiaries are those entities it controls through:All controlled entities are 100% owned, unless otherwise noted.

 being exposed to, or having rights to, variable returns from the entity; andThe material controlled entities of the Group are:
ANZ Bank (Vietnam) Limited1

VietnamBanking

ANZ Capel Court Limited

Australia

Securitisation Manager

Australia

Holding Company

ANZ Bank (Kiribati) Limited (75% ownership)

Kiribati

Banking

ANZ Bank (Samoa) Limited1

Samoa

Banking

ANZ Funds Pty. Ltd.
1

ThailandBanking

ANZ Holdings (New Zealand) Limited1

New ZealandHolding Company

ANZ Bank New Zealand Limited1

New Zealand

Banking

ANZ Investment Services (New Zealand) Limited1

New ZealandFunds Management

ANZ New Zealand (Int’l) Limited

New ZealandFinance

New ZealandHolding Company

New ZealandFunds Management

ANZNZ Covered Bond Trust1,4

New ZealandFinance

ANZ International Private Limited

Singapore

Holding Company

Singapore

Merchant Banking

Hong Kong

Holding Company

Hong Kong

Banking

ANZ Bank (Thai) Public Company Limited

1

1

ANZ Wealth New Zealand Limited1
ANZ New Zealand Investments Limited

1

1

ANZ Singapore Limited1
ANZ International (Hong Kong) Limited
ANZ Asia Limited1

12

VanuatuBanking

ANZcover Insurance Private Ltd1

Singapore

Captive-Insurance

Australia

Mortgage Insurance

Australia

Finance

ANZ Bank (Vanuatu) Limited

ANZ Lenders Mortgage Insurance Pty. Limited
ANZ Residential Covered Bond Trust

4

Australia and New Zealand Bank (China) Company Limited

China

Banking

Australia and New Zealand Banking Group (PNG) Limited1

Papua New Guinea

Banking

Chongqing Liangping ANZ Rural Bank Company Limited1

China

Banking

Citizens Bancorp

Guam

Holding Company

Guam

BankingIndonesia

Banking

1

3

ANZ Guam Inc

3

PT Bank ANZ Indonesia1 (99% ownership)

RECOGNITION AND MEASUREMENT being able to affect those returns through its power over the entity.
The Group assesses whether it has power over those entities by examining the Group’s existing rights to direct the relevant activities of theentity.
If the Group sells or acquires subsidiaries during the year, it includes their operating results in the Group results to the date of disposal orfrom the date of acquisition. When the Group’s control ceases, it derecognises the assets and liabilities of the subsidiary, any related noncontrolling interest and other components of equity.
When the Group ceases to control a subsidiary, it: measures any retained interest in the entity at fair value; and recognises any resulting gain or loss in profit or loss.
If the Group’s ownership interest in a subsidiary changes in a way that does not result in a loss of control, then the Group accounts for thatas a transaction with equity holders in their capacity as equity holders.
All transactions between Group entities are eliminated on consolidation.

1.

Audited by overseas KPMG firms — either as part of the Group audit, or for standalone financial statements as required.
Audited by Law Partners.
3.
Audited by Deloitte Guam.
4.
Not owned by the Group. Control exists as the Group retains substantially all the risks and rewards of the operations.
2.

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DIRECTORS’REPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. INVESTMENTS IN ASSOCIATES

26. INVESTMENTS IN ASSOCIATES (continued)

Significant associates of the Group are:

IMPAIRMENT ASSESSMENT
Ordinary shareinterest

The Group assesses the carrying value of its associate investments for impairment indicators.

Carrying amount$m

Name of entity

Principal activity

2021

2020

AMMB Holdings Berhad ('AmBank')

Banking and insurance

22%

24%

719

1,056

PT Bank Pan Indonesia ('PT Panin')

Consumer and business bank

39%

39%

1,210

1,084

n/a

n/a

43

24

1,972

2,164

Aggregate other individually immaterial associates
Total carrying value of associates
1.

1

2021

2020

Includes the impact of foreign currency translation recognised in the foreign currency translation reserve.

FINANCIAL INFORMATION ON SIGNIFICANT ASSOCIATES
Set out below is the summarised financial information of each associate that is significant to the Group. The summarised financial information is basedon the associates’ IFRS financial information and may require the use of unaudited financial information as both associates have different financial
years to the Group (PT Panin 31 December, AmBank 31 March).
Principal place of business and country of incorporation

AMMB Holdings Berhad
Malaysia

PT Bank Pan Indonesia
Indonesia

2021
$m

2020
$m

2021
$m

2020
$m

Operating income

2,663

3,156

1,222

1,105

Profit/(Loss) for the year

Summarised results

At 30 September 2021, the impairment assessment of non-lending assets identified that two of the Group’s associate investments AmBank andPT Panin had indicators of impairment. No impairment was recognised as their carrying values are supported by their value-in-use (VIU)
calculations.

RECOGNITION AND MEASUREMENT
An associate is an entity over which the Group has significant influence over its operating and financial policies but does not control. The
Group accounts for associates using the equity method. Its investments in associates are carried at cost plus the post-acquisition share ofchanges in the associate’s net assets less accumulated impairments. Dividends the Group receives from associates are recognised as a
reduction in the carrying amount of the investment. The Group includes goodwill recognised by the associate in the carrying amount of
the investment. It does not individually test the goodwill incorporated in the associates carrying amount for impairment.
At least at each reporting date, the Group reviews investments in associates for any indication of impairment. If an indication of impairment
exists, then the Group determines the recoverable amount of the associate using the higher of: the associate’s fair value less cost of disposal; and its value-in-use.
We use a discounted cash flow methodology, and when applicable, other methodologies (such as capitalisation of earnings methodology),
to determine the recoverable amount.

(1,192)

456

298

319

Other comprehensive income/(loss)

(39)

105

(56)

72

Total comprehensive income/(loss)(1,231)

561

242

391

(25)

(26)

1

(11)

(1,256)

535

243

380

55,71153,301

18,323

19,669The ongoing impact of COVID-19 on the valuation of AmBank and PT Panin remains uncertain. Significant management judgment isrequired in determining the key assumptions underpinning the VIU calculations. Factors may change in subsequent periods and lead topotential future impairments or reversals of prior period impairments. These include forecast earnings levels in the near term and/orchanges in the long term growth forecasts, required levels of regulatory capital and post-tax discount rate.

49,77348,53015,377

16,599The key assumptions used in the value-in-use calculations are outlined below:

Total net assets
Less: Non–controlling interests of associate

5,938

4,771

2,946

3,070

(327)

(343)

(304)

(294)

Net assets attributable to owners of associate

5,611

4,428

2,642

2,776

Reconciliation to carrying amount of Group's interest in associate
Carrying amount at the beginning of the year

1,056

1,586

1,084

1,350

Group's share of total comprehensive income/(loss)2

(313)

126

90

150

-

(32)

-

-

(24)

(29)

36

(128)

-

(595)

-

(68)
(220)

Carrying amount at the end of the year

719

1,056

1,210

1,084

Market value of Group's investment in associate

756

727

675

653

Less: Total comprehensive (income)/loss attributable to non–controlling interests
Total comprehensive income/(loss) attributable to owners of associate
Summarised financial position
Total assets1
Total liabilities

1
1

Dividends received from associateGroup's share of other reserve movements of associate and foreign currency translation
reserve adjustments
Group's equity accounted share of AASB 9 transition adjustment3
Impairment charges4

1.
2.

Includes market value adjustments (including goodwill) the Group made at the time of acquisition (and adjustments for any differences in accounting policies).
Includes the Group’s share of settlement provision expenses ($212 million) recorded by AmBank in relation to an agreement with the Malaysian Ministry of Finance to resolve potential claims to its
involvement with 1Malaysia Development Berhad and the Group’s share of impairments ($135 million) recognised by AmBank during 2021.

3.

In 2020, the Group recognised an adjustment of $68 million to the equity accounted earnings of PT Panin. When the Group adopted AASB 9 Financial Instruments on 1 October 2018, an estimate of PT
Panin’s transition adjustment was recognised through opening retained earnings to align accounting policies. PT Panin adopted AASB 9 during the current financial year recognising a transition adjustment
in retained earnings.

4.

The Group recorded an impairment charge of $815 million in other operating income based on impairment assessments performed in 2020 with AmBank impaired by $595 million and PT Panin impaired by$220 million. No impairment charges were recorded in 2021.

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KEY JUDGEMENTS AND ESTIMATES

As at 30 September 2021

AmBankPT Panin

Post-tax discount rate

10.6%

14.4%

Terminal growth rate

5.0%

5.1%

Expected earnings growth (compound annual growth rate – 5 years)

4.2%

6.4%

Common Equity Tier 1 ratio (5 year average)

13.4%

12.8%

The VIU calculations are sensitive to changes in the underlying assumptions with reasonably possible changes in key assumptions having a
positive or negative impact on the VIU outcome, and as such the recoverable amount of the investment.
 A change in the September 2021 post-tax discount rate by +/- 50 bps would impact the VIU outcome for PT Panin by ($55 million)/$60 million, and ($84 million)/$106 million for AmBank.
 A change in the September 2021 terminal growth rate by +/- 25 bps would impact the VIU outcome for PT Panin by $9 million/($10 million), and $49 million/($45 million) for AmBank.
Neither investment would be impaired if the discount rate were increased or the terminal growth rate reduced by the reasonably possible
changes above.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
27. STRUCTURED ENTITIES

27. STRUCTURED ENTITIES (continued)

A Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in determining who controls
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.

UNCONSOLIDATED STRUCTURED ENTITIES

SEs are classified as subsidiaries and consolidated when control exists. If the Group does not control a SE, then it is not consolidated. This note
provides information on both consolidated and unconsolidated SEs.
The Group’s involvement with SEs is as follows:Type

Details

Securitisation

The Group establishes SEs to securitise customer loans and advances that it has originated, in order to diversify
sources of funding for liquidity management. Securitisation programs include customer loans and advances
assigned to bankruptcy remote SEs to provide either security for obligations payable on notes issued by the SEs
to external investors or create assets held by the Group eligible for repurchase agreements with applicablecentral banks.
The Group retains control over these SEs and therefore they are consolidated. Refer to Note 28 Transfers ofFinancial Assets for further details.
The Group also establishes SEs on behalf of customers to securitise their loans or receivables. The Group may
manage these securitisation vehicles or provide liquidity or other support. Additionally, the Group may acquireinterests in securitisation vehicles set up by third parties through holding securities issued by such entities. In
limited circumstances where control exists, the Group consolidates the SE.

Covered bond issuances

Structured financearrangements

Certain loans and advances have been assigned to bankruptcy remote SEs to provide security for issuances ofdebt securities by the Group. The Group retains control over these SEs and therefore they are consolidated. Refer
to Note 28 Transfers of Financial Assets for further details.
The Group is involved with SEs established: in connection with structured lending transactions to facilitate debt syndication and/or to ring-fencecollateral; and to own assets that are leased to customers in structured leasing transactions.
The Group may manage the SE, hold minor amounts of the SE’s capital, or provide risk management products(derivatives) to the SE. In most instances, the Group does not control these SEs. In limited circumstances wherecontrol exists, the Group consolidates the SE.

Funds management activities

The Group is the scheme manager for a number of Managed Investment Schemes (MIS) in New Zealand. TheseMIS are financed through the issue of units to investors and the Group considers them to be SEs. The Group’s
interests in these MIS are limited to receiving fees for services or providing risk management products(derivatives). These interests do not create significant exposures that would allow the Group to control the funds.
Therefore, these MIS are not consolidated.

GROUP’S INTEREST IN UNCONSOLIDATED STRUCTURED ENTITIESAn ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes the Group to variability of
returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives that pass-on
risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
 no disclosure is made if the Group’s involvement is not more than a passive interest - for example: when the Group’s involvement constitutes atypical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading and investing activities are
not considered disclosable interests - unless the design of the structured entity allows the Group to participate in decisions about the relevant
activities (being those that significantly affect the entity’s returns).
 ‘interests’ do not include derivatives intended to expose the Group to market-risk (rather than performance risk specific to the SE) or derivatives
through which the Group creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit protection under a credit
default swap).
The table below sets out the Group’s interests in unconsolidated SEs together with the maximum exposure to loss that could arise fromthose interests:
Securitisation

Structured finance

2021
$m

2020
$m

Investment securities

2,624

2,280

Gross loans and advances

7,697

8,479

Total on-balance sheet

10,321

10,759

2,034

2021
$m

Total
2020
$m

2021
$m

2020
$m

-

-

2,624

2,280

53

74

7,750

8,553

53

74

10,374

10,833

2,072

-

22

2,034

2,094

On-balance sheet interests

Off-balance sheet interests
Commitments (facilities undrawn)

50

40

-

-

50

40

Total off-balance sheet

2,084

2,112

-

22

2,084

2,134

Maximum exposure to loss

12,405

12,87153

96

12,458

12,967

Guarantees

In addition to the interests above, the Group earned funds management fees from unconsolidated investment funds of $192 million (2020: $285
million) during the year.
The Group’s maximum exposure to loss represents the maximum amount of loss that the Group could incur as a result of its involvement withunconsolidated SEs if loss events were to take place - regardless of the probability of occurrence. This does not in any way represent the actual losses
expected to be incurred. Furthermore, the maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements enteredinto to mitigate ANZ’s exposure to loss.
The maximum exposure to loss has been determined as:

CONSOLIDATED STRUCTURED ENTITIES the carrying amount of Investment securities measured at amortised cost; andFINANCIAL OR OTHER SUPPORT PROVIDED TO CONSOLIDATED STRUCTURED ENTITIESThe Group provides financial support to consolidated SEs as outlined below.

 the carrying amount plus the undrawn amount of any committed loans and advances.

Securitisation and coveredbond issuances

The Group provides lending facilities, derivatives and commitments to these SEs and/or holds debt instrumentsthat they have issued.

Structured financearrangements

The assets held by these SEs are normally pledged as collateral for financing provided. Certain consolidated SEs
are financed entirely by the Group while others are financed by syndicated loan facilities in which the Group is aparticipant. The financing provided by the Group includes lending facilities where the Group’s exposure is limited
to the amount of the loan and any undrawn amount. Additionally, the Group has provided Letters of Support tothese consolidated SEs confirming that the Group will not demand repayment of the financing provided for theensuing 12 month period.

The size of unconsolidated SEs is indicated by total assets which vary by SE with a maximum value of approximately $4.3 billion.
The Group did not provide any non-contractual support to unconsolidated SEs during the year (2020: nil) nor does it have any current intention toprovide financial or other support to unconsolidated SEs.

The Group did not provide any non-contractual support to consolidated SEs during the year (2020: nil). Other than as disclosed above, the Group does
not have any current intention to provide financial or other support to consolidated SEs.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
27. STRUCTURED ENTITIES (continued)

28. TRANSFERS OF FINANCIAL ASSETS (continued)

SPONSORED UNCONSOLIDATED STRUCTURED ENTITIESCOVERED BONDS

The Group may also sponsor unconsolidated SEs in which it has no disclosable interest.

The Group operates various global covered bond programs to raise funding in its primary markets. Net loans and advances include residential
mortgages assigned to bankruptcy remote SEs associated with these covered bond programs. The mortgages provide security for the obligations
payable on the issued covered bonds.

For the purposes of this disclosure, the Group considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in the design andestablishment of that SE and:
 the Group is the major user of that SE; or the Group’s name appears in the name of that SE, or on its products; or the Group provides implicit or explicit guarantees of that SE’s performance.
The Group has sponsored the ANZ PIE Fund in New Zealand, which invests only in deposits with ANZ Bank New Zealand Limited. The Group does notprovide any implicit or explicit guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received
from, nor assets transferred to, this entity during the year.

KEY JUDGEMENTS AND ESTIMATES
Significant judgement is required in assessing whether the Group has control over Structured Entities. Judgement is required to determine
the existence of: power over the relevant activities (being those that significantly affect the entity’s returns);
 exposure to variable returns of the entity; and the ability to use its power over the entity to affect the Group’s returns.

28. TRANSFERS OF FINANCIAL ASSETSIn the normal course of business the Group enters into transactions where it transfers financial assets directly to third parties or to SEs. These transfers
may give rise to the Group fully, or partially, derecognising those financial assets - depending on the Group’s exposure to the risks and rewards orcontrol over the transferred assets. If the Group retains substantially all of the risk and rewards of a transferred asset, the transfer does not qualify for
derecognition and the asset remains on the Group’s balance sheet in its entirety.

SECURITISATIONSNet loans and advances include residential mortgages securitised under the Group’s securitisation programs which are assigned to bankruptcy
remote SEs to provide security for obligations payable on the notes issued by the SEs. The holders of the issued notes have full recourse to the pool ofresidential mortgages which have been securitised and the Group cannot otherwise pledge or dispose of the transferred assets.
In some instances, the Group is also the holder of the securitised notes issued by the SEs. In addition, the Group is entitled to any residual income of
the SEs and sometimes enters into derivatives with the SEs. The Group retains the risks and rewards of the residential mortgages and continues torecognise the mortgages as financial assets.
The Group is exposed to variable returns from its involvement with these securitisation SEs and has the ability to affect those returns through its
power over the SEs activities. The SEs are therefore consolidated by the Group.
During the 2021 financial year, the Company changed its accounting policy regarding intragroup positions with consolidated securitisation SEs inwhich it holds all of the issued securities of the SE. The Company records a net nil position with the securitisation SE to reflect the economic substanceof these fully offsetting intercompany transactions. Refer to Note 35 Impacts of Adoption of New Standards and Other Changes for further details of
the change in accounting policy.

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The covered bond holders have dual recourse to the issuer and the cover pool of assets. The issuer cannot otherwise pledge or dispose of thetransferred assets, however, subject to legal arrangements it may repurchase and substitute assets as long as the required cover is maintained.
The Group is required to maintain the cover pool at a level sufficient to cover the bond obligations. In addition, the Group is entitled to any residual
income of the covered bond SEs and enters into derivatives with the SEs. The Group retains the majority of the risks and rewards of the residential
mortgages and continues to recognise the mortgages as financial assets. The obligation to pay this amount to the SEs is recognised as a financial
liability of the Group.
The Group is exposed to variable returns from its involvement with the covered bond SEs and has the ability to affect those returns through its powerover the SEs activities. The SEs are therefore consolidated by the Group. The covered bonds issued externally are included within debt issuances.

REPURCHASE AGREEMENTS
When the Group sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards of ownership, thenthose assets do not qualify for derecognition. An associated liability is recognised for the consideration received from the counterparty.

STRUCTURED FINANCE ARRANGEMENTS
The Group arranges funding for certain customer transactions through structured leasing and commodity prepayment arrangements. Thesetransactions are recognised on Group’s balance sheet as lease receivables or loans. At times, other financial institutions participate in the funding ofthese arrangements. This participation involves a proportionate transfer of the rights to the assets recognised by the Group. The participating banks
have limited recourse to the leased assets or financed commodity and related proceeds. Where the Group continues to be exposed to some of therisks of the transferred assets through a derivative or other continuing involvement, the Group does not derecognise the lease receivable or loan.
Instead, the Group recognises an associated liability representing its obligations to the participating financial institutions.
The tables below set out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities.
Securitisations1,2
2021
2020
Consolidated

Covered bonds
2021
2020

Repurchaseagreements
2021
2020

Structured financearrangements
2021
2020

$m

$m

$m

$m

$m

$m

$m

$m

Current carrying amount of assets transferred

1,430

1,831

28,81628,55951,20861,41555

67

Carrying amount of associated liabilities

1,424

1,824

15,39915,94846,14755,71655

67

Securitisations1,2
2021
2020

Covered bonds
2021
2020

Repurchaseagreements
2021
2020

Structured financearrangements
2021
2020

$m

$m

$m

$m

$m

$m

$m

$m

Current carrying amount of assets transferred

1,430

1,831

17,925

17,937

48,66360,612--Carrying amount of associated liabilities

1,430

1,831

17,925

17,93743,92554,951--The Company

1.
2.

Does not include transfers to internal structured entities where there are no external investors.
The securitisation noteholders have recourse only to the pool of residential mortgages which have been securitised. The carrying value of securitised assets and the associated liabilities approximates theirfair value.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
29. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONSDISCONTINUED OPERATIONS

Set out below is a summary of amounts recognised in the Balance Sheet in respect of the defined benefit superannuation schemes:

The Group completed the sale of its Aligned Dealer Groups business to IOOF Holdings Limited (IOOF) on 1 October 2018, its life insurance business to
Zurich Financial Services Australia (Zurich) on 31 May 2019 and its OnePath pensions and investments business to IOOF on 31 January 2020.
The financial results of these divested businesses are treated as discontinued operations from a financial reporting perspective. The financial results
after transaction completion primarily relate to residual operational costs on separation and part recovery based on the respective Transition Service
Agreements. The loss after tax from discontinued operations for the year was $17 million (2020: $98 million loss).
INCOME STATEMENT IMPACT RELATING TO DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELDFOR SALE
During the 2021 financial year, the Group recognised the following impacts in relation to discontinued operations: $17 million loss after tax attributable to customer remediation charges of $3 million and an associated $1 million tax benefit, and ongoing salecompletion costs net of recoveries.
During the 2020 financial year, the Group recognised the following impacts in relation to discontinued operations: $13 million loss after tax recorded in operating income attributable to sale completion costs.
 $126 million of customer remediation charges and an associated $30 million tax benefit.
 $101 million charge recognised in operating income offset by a $101 million tax benefit within income tax expense relating to the finalisation of
the policyholder tax position associated with the sale of the life insurance business to Zurich.

KEY JUDGEMENTS AND ESTIMATES
A significant level of judgement is used by the Group to determine: whether an asset or group of assets is classified and presented as held for sale or as a discontinued operation; and the fair value of the assets and liabilities classified as being held for sale.
Management is required to exercise significant judgement when assessing the fair value less costs to sell for assets and liabilities held forsale. The judgemental factors include determining: costs to sell, allocation of goodwill, indemnities provided under the sale contract andconsideration received - particularly where elements of consideration are contingent in nature. Any impairment we record is based on thebest available evidence of fair value compared to the carrying value before the impairment. The final sale price may be different to the fairvalue we estimate when recording the impairment. Management regularly assess the appropriateness of the underlying assumptions
against actual outcomes and other relevant evidence and adjustments are made to fair value where appropriate. We expect that sales willcomplete within 12 months after balance date, subject to the relevant regulatory approvals and customary terms of sale for such assets.

Consolidated

The Company

2021
$m

2020
$m

2021
$m

2020
$m

Present value of funded defined benefit obligation(1,477)(1,478)(1,319)(1,282)

Fair value of scheme assets

1,679

1,693

1,514

1,541

Net defined benefit asset

202

215

195

259

As represented in the Balance Sheet
Net liabilities arising from defined benefit obligations included in payables
and other liabilities
Net assets arising from defined benefit obligations included in other assets

(11)

(59)

(11)

(15)

213

274

206

274

202

215

195

259

14.9

14.9

14.9

14.9

Defined benefit obligation and scheme assets

Net defined benefit asset
Weighted average duration of the benefit payments reflected in the defined
benefit obligation (years)

As at the most recent reporting dates of the schemes, the aggregate surplus of net market value of assets over the value of accrued benefits on afunding basis was $109 million (2020 surplus of $104 million). In 2021, the Group made defined benefit contributions totaling $3 million (2020: $4
million). It expects to make contributions of around $2 million next financial year.

GOVERNANCE OF THE SCHEMES AND FUNDING OF THE DEFINED BENEFIT SECTIONS
The main defined benefit superannuation schemes in which the Group participates operate under trust law and are managed and administered onbehalf of the members in accordance with the terms of the relevant trust deed and rules and all relevant legislation. These schemes have corporate
trustees, which are wholly owned subsidiaries of the Group. The trustees are the legal owners of the assets, which are held separately from the assetsof the Group, and are responsible for setting investment policy and agreeing funding requirements with the employer through the triennial actuarial
valuation process.
The Group has defined benefit arrangements in Australia, Japan, New Zealand, Philippines, Taiwan and United Kingdom. The defined benefit sectionof the ANZ Australian Staff Superannuation Scheme, the ANZ UK Staff Pension Scheme and the ANZ National Retirement Scheme in New Zealand are
the three largest plans. They have been closed to new members since 1987, 2004 and 1991 respectively. None of the schemes had a material deficit,
or surplus, at the last funding valuation. The Group has no present liability under any of the schemes’ trust deeds to fund a deficit (measured on afunding basis). A contingent liability of the Group may arise if any of the schemes were wound up.

RECOGNITION AND MEASUREMENT
Defined benefit superannuation schemes
The Group operates a small number of defined benefit schemes. Independent actuaries calculate the liability and expenses related toproviding benefits to employees under each defined benefit scheme. They use the Projected Unit Credit Method to value the liabilities. Thebalance sheet includes:
 a defined benefit liability if the obligation is greater than the fair value of the schemes assets; and an asset (capped to its recoverable amount) if the fair value of the assets is greater than the obligation.
In each reporting period, the movements in the net defined benefit liability are recognised as follows: the net movement relating to the current period’s service cost, net interest on the defined benefit liability, past service costs and othercosts (such as the effects of any curtailments and settlements) as operating expenses;
 remeasurements of the net defined benefit liability (which comprise actuarial gains and losses and return on scheme assets, excludinginterest income included in net interest) directly in retained earnings through other comprehensive income; and contributions of the Group directly against the net defined benefit position.
Defined contribution superannuation schemes
The Group operates a number of defined contribution schemes. It also contributes (according to local law, in the various countries in which
it operates) to Government and other plans that have the characteristics of defined contribution plans. The Group’s contributions to theseschemes are recognised as personnel expenses when they are incurred.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS (continued)

31. EMPLOYEE SHARE AND OPTION PLANSANZ operates a number of employee share and option schemes under the ANZ Employee Share Acquisition Plan and the ANZ Share Option Plan.

KEY JUDGEMENTS AND ESTIMATESANZ EMPLOYEE SHARE ACQUISITION PLAN
ANZ Employee Share Acquisition Plan schemes that operated during the 2021 and 2020 years were the Employee Share Offer (2020 only) and theDeferred Share Plan.

The main assumptions we use in valuing defined benefit obligations are listed in the table below. A change to any assumptions, orapplying different assumptions, could have an effect on the Statement of Other Comprehensive Income and Balance Sheet.

Consolidated
Discount rate (% p.a.)

2021
0.4 - 2.15

2020
0.5 - 1.7

Future salary increases (% p.a.)

1.9 - 3.5

1.6 - 3.0

1.05 - 3.35/2.7

1.1 - 2.8/2.2– Males (years)

26.1 - 28.8

26.0 - 28.7

– Females (years)

29.0 - 30.5

28.9 - 30.4

Sensitivity analysis
change in significant
assumptions
0.5% increase

Employee Share Offer
The details below relate to the grant of the Employee Share Offer in December 2019.

Increase/(decrease) in
defined benefit
obligation
2021
$m

2020
$m

(103)

(103)

Future pension indexation
In payment (% p.a.)/In deferment (% p.a.)Life expectancy at age 60 for current pensioners

The Company
Discount rate (% p.a.)
Future salary increases (% p.a.)2021
1.95 - 2.15

2020
1.55 - 1.7

3.5

2.95

0.5% increase

84

85

1 year increase

74

73

Sensitivity analysis
change in significant
assumptions
0.5% increase

Increase/(decrease) in
defined benefit
obligation
2021
$m
(94)

– Females (years)

2.0 - 3.35/2.7 1.5 - 2.8/2.15
26.1 - 28.8

26.0 - 28.7

29.0 - 30.5

28.9 - 30.4

Most permanent employees employed in either Australia or New Zealand with three years continuous service.

Grant

The Board approved AUD 1,000 in Australia (and AUD 800 in New Zealand) of ANZ shares.

Allocation value

One week Volume Weighted Average Price (VWAP) of ANZ shares traded on the ASX in the week leading up to andincluding the date of grant.

Australia

ANZ ordinary shares were granted to eligible employees for nil consideration. The shares vested on grant and are being
held in trust for three years from grant date, after which time they may remain in trust, be transferred to the employee’s
name or sold. Dividends are automatically reinvested in the Dividend Reinvestment Plan.

New ZealandShares were granted to eligible employees on payment of NZD one cent per share. Shares vest subject to satisfactionof a three-year service period, after which they may remain in trust, be transferred to the employee’s name or sold.
Unvested shares are forfeited if the employee resigns or is dismissed for serious misconduct. Dividends are either paidin cash or reinvested into the Dividend Reinvestment Plan.

Expensing value(fair value)

In Australia, the fair value of the shares is expensed in the year shares are granted, as they are not subject to forfeiture.
In New Zealand, the fair value is expensed on a straight-line basis over the three year vesting period.
The expense is recognised as a share-based compensation expense with a corresponding increase in equity.

2020
$m
(91)

2020 grants

698,862 shares were granted on 2 December 2019 at an issue price of $24.96.

Deferred Share Plan

Future pension indexation
In payment (% p.a.)/In deferment (% p.a.)Life expectancy at age 60 for current pensioners– Males (years)

Eligibility

0.5% increase
1 year increase7567i) ANZ Incentive Plan (ANZIP) - Chief Executive Officer (CEO), Group Executive Committee (ExCo) and other Banking Executive Accountability
Regime (BEAR) Accountable Executives

73
65

EligibilityGroup CEO, ExCo and Group General Manager Internal Audit (GGM IA).

Grant

50% of the CEO’s Annual Variable Remuneration (AVR), 25% of ExCo’s Variable Remuneration (VR) (except for the Chief
Risk Officer (CRO)), and 33% of the CRO and GGM IA’s VR, is received as deferred shares.

Conditions

Deferred over at least one to four years from the date the Board approved the variable remuneration award.

ii) ANZIP: Based on the 2020 Performance and Remuneration Review
Eligibility

All employees excluding the CEO, ExCo and GGM IA (i.e. other BEAR Accountable Executive), and select roles in the
United Kingdom (UK)/China1.

Grant

If VR is at or exceeds AUD 100,000, then 60% of total VR amount is deferred as shares.

Conditions

Deferred over three years from grant date.

iii) ANZIP: Based on the 2019 Performance and Remuneration Review (granted in the 2020 financial year)
Eligibility

All employees excluding the CEO, ExCo and GGM IA (i.e. other BEAR Accountable Executive), and select roles in the
UK/China1.

Grant

If VR is at or exceeds AUD 150,000, then 60% of VR amounts exceeding AUD 80,000 (subject to a minimum deferral
amount of AUD 42,000) is deferred as shares.

Conditions

Deferred over three years from grant date.

iv) Long Term Incentives (LTIs): Based on the 2019 Performance and Remuneration Review (granted in the 2020 financial year)

1.

230

230

Eligibility

Selected employees (excludes the CEO, ExCo and GGM IA (i.e. other BEAR Accountable Executive)).

Grant

100% deferred shares.

Conditions

Vest three years from grant date.

Specific deferral arrangements also exist under ANZIP for roles defined as United Kingdom Material Risk Takers and China Material Risk Takers, in line with local regulatory requirements.

ANZ 2021 Annual Report

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)

31. EMPLOYEE SHARE AND OPTION PLANS (continued)v) Exceptional circumstances

ANZ SHARE OPTION PLAN

Remuneration
foregone

In exceptional circumstances, we grant deferred shares to certain employees when they start with ANZ tocompensate them for remuneration they have foregone from their previous employer. The vesting period generallyaligns with the remaining vesting period of the remuneration they have foregone, and therefore varies between
grants.

Retention

We may grant deferred shares to high performing employees who are regarded as a significant retention risk to ANZ.

vi) Further information
Cessation

Unless the Board decides otherwise, employees forfeit their unvested deferred shares if they resign, are terminatedon notice, or are dismissed for serious misconduct. The deferred shares may be held in trust beyond the deferral
period.

Allocation

We may grant selected employees options/rights which entitle them to acquire fully paid ordinary ANZ shares at a
fixed price at the time the options/rights vest. Voting and dividend rights will be attached to the ordinary shares
allocated on exercise of the options/rights.
Each option/right entitles the holder to one ordinary share subject to the terms and conditions imposed on grant.
Exercise price of options, determined in accordance with the rules of the plan, is generally based on the VWAP of theshares traded on the ASX in the week leading up to and including the date of grant. For rights, the exercise price is nil.

Rules

Prior to the exercise of the option/right if ANZ changes its share capital due to a bonus share issue, pro-rata new shareissue or reorganisation the following adjustments are required:

Dividends

Dividends are reinvested in the Dividend Reinvestment Plan.

 Issue of bonus shares - When the holder exercises their option, they are also entitled to be issued the number ofbonus shares they would have been entitled to had they held the underlying shares at the time of thebonus issue;

Instrument

Deferred share rights may be granted instead of deferred shares in some countries as locally appropriate (seedeferred share rights section).

 Pro-rata share offer - We will adjust the exercise price of the option in the manner set out in the ASX Listing
Rules; andAllocation value

All deferred shares are issued based on the VWAP of ANZ shares traded on the ASX in the week leading up to andincluding the date of grant.

Expensing value (fairvalue)We expense the fair value of deferred shares on a straight-line basis over the relevant vesting period and we
recognise the expense as a share-based compensation expense with a corresponding increase in equity.

 Reorganisation - In respect of rights, if there is a bonus issue or reorganisation of ANZ’s share capital, then the
Board may adjust the number of rights or the number of underlying shares so that there is no advantage ordisadvantage to the holder.

2021 and 2020 grants

During the 2021 year, we granted 1,653,585 deferred shares (2020: 2,259,897) with a weighted average grant price of$23.31 (2020: $24.94).

 in any new issue of ANZ securities before they exercise their options/rights; orMalus (downward
adjustment)

Deferred shares remain at risk and the Board has the discretion to adjust the number of deferred shares downwards,
including to zero at any time before the vesting date. ANZ’s malus (downward adjustment) provisions are detailed in
section 5.3 of the 2021 Remuneration Report.
Board discretion was not exercised to adjust downward any deferred shares in 2021 (2020: nil).

Any portion of the award which vests may, at the Board’s discretion, be satisfied by a cash equivalent payment rather
than shares.

Expensing of the ANZ Employee Share Acquisition Plan
Expensing value(fair value)

232

232

The fair value of shares we granted during 2021 under the Deferred Share Plan (in 2020 under the Employee Share
Offer and the Deferred Share Plan), measured as at the date of grant of the shares, is $38.9 million (2020: $73.4 million)
based on 1,653,585 shares (2020: 2,958,759) at VWAP of $23.53 (2020: $24.81).

Holders otherwise have no other entitlements to participate: in a share issue of a body corporate other than ANZ (such as a subsidiary).

Expensing

We expense the fair value of options/rights on a straight-line basis over the relevant vesting period and we recognise
the expense as a share-based compensation expense with a corresponding increase in equity.

Cessation

The provisions that apply if the employee’s employment ends are in section 8.2.3 of the 2021 Remuneration Report.

Malus (downward
adjustment)

ANZ’s malus (downward adjustment) provisions are detailed in section 5.3 of the 2021 Remuneration Report.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)

31. EMPLOYEE SHARE AND OPTION PLANS (continued)

Option Plans that operated during 2021 and 2020

Options, Deferred Share Rights and Performance Rights on Issuei) Performance Rights

As at 27 October 2021, there were 442 holders of 4,537,088 deferred share rights on issue and 97 holders of 1,709,028 performance rights on issue.

Allocation

Satisfying vesting

We grant performance rights to the CEO and ExCo as part of ANZ’s variable remuneration plans. Performancerights provide the holder with the right to acquire ANZ shares at nil cost, subject to a four-year vesting period
and Total Shareholder Return (TSR) performance hurdles. Further details on the performance hurdles are in
section 5.2.3a of the 2021 Remuneration Report.

Options/Rights Movements
This table shows the options/rights over unissued ANZ shares and their related weighted average (WA) exercise prices as at the beginning and end of2021 and the movements during 2021:

Any portion of the award of performance rights (that have met the performance hurdles) may be satisfied by acash equivalent payment rather than shares at the Board’s discretion. In 2021, the performance rights thatvested (previously granted in November/December 2017) were satisfied through a share allocation, other than
36,103 performance rights for which a cash payment was made. In 2020, all performance rights (previously
granted in November/December 2016) lapsed due to not meeting the performance hurdles.

Number of options/rights

2021 and 2020 grants

During the 2021 year, we granted 485,032 performance rights (2020: 520,172).

WA exercise price

Malus (downward adjustment)

Board discretion was not exercised to adjust downward any performance rights in 2021 (2020: nil).

Deferred share rights provide the holder with the right to acquire ANZ shares at nil cost after a specified vesting
period. We adjust the fair value of rights for the absence of dividends during the restriction period. Also, seesection 5.2.3b of the 2021 Remuneration Report.

Satisfying vesting

Any portion of the award of share rights may be satisfied by a cash equivalent payment rather than shares at theBoard’s discretion. All share rights were satisfied through a share allocation, other than 89,296 deferred sharerights (2020: 99,891) for which a cash payment was made.

2021 and 2020 grants

During the 2021 year, 2,258,774 deferred share rights (no performance hurdles) were granted (2020: 2,393,424).

Malus (downward adjustment)

Board discretion was exercised to adjust downward 8,414 deferred share rights to zero in 2021 (2020: nil).

Options/rightsexercised

Closingbalance
30 Sep 2021

(918,589)

0(2,241,996)

6,307,778

$0.00

$0.00

$0.00

$0.00

Options/rightsgrantedOptions/rightsforfeited1

6,724,557

2,743,806

$0.00

$0.00

WA closing share price$25.34WA remaining contractual life

1.8 years

WA exercise price of all exercisable
options/rights outstandingii) Deferred Share Rights (no performance hurdles)
Allocation

Options/rightsexpiredOpeningbalance
1 Oct 2020

$0.00

Outstanding exercisable options/rights

227,412This table shows the options/rights over unissued ANZ shares and their related weighted average exercise prices as at the beginning and end of 2020
and the movements during 2020:
Options/
Options/
Closing
Opening
Options/
Options/rightsrightsbalancebalancerightsrightsexpiredexercised
30 Sep 2020
1 Oct 2019
grantedforfeited1
Number of options/rights
WA exercise price

6,688,538

2,913,596(976,468)

0(1,901,109)

6,724,557

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
1.

$19.94
1.9 years$0.00
151,829

Refers to any circumstance where equity can be forfeited (for example on cessation, downward adjustment or performance conditions not met).

All of the shares issued as a result of the exercise of options/rights during 2021 and 2020, were issued at a nil exercise price.
As at the date of the signing of the Directors’ Report on 27 October 2021:
 no options/rights over ordinary shares have been granted since the end of 2021; and no shares issued as a result of the exercise of options/rights since the end of 2021.

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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)

32. RELATED PARTY DISCLOSURES

Fair Value Assumptions

KEY MANAGEMENT PERSONNEL COMPENSATION

When determining the fair value, we apply the standard market techniques for valuation, including Monte Carlo and/or Black Scholes pricing models.
We do so in accordance with the requirements of AASB 2 Share-based Payments. The models take into account early exercise of vested equity, nontransferability and internal/external performance hurdles (if any).

Key Management Personnel (KMP) are defined as all directors of the Group and those personnel with a key responsibility for the strategic direction
and management of the Group and report directly to the CEO. KMP compensation included within total personnel expenses in Note 4 Operating
Expenses is as follows:

The table below shows the significant assumptions we used as inputs into our fair value calculation of instruments granted during the period. We
present the values as weighted averages, but the specific values we use for each allocation are the ones we use for the fair value calculation.
2021

1.
2.

Consolidated

2020

2021
$'0001

2020$'000

21,10919,260Post-employment benefits

383

414

Other long-term benefits

258

397

Short-term benefits

PerformancerightsDeferred
share
rightsPerformancerights1

0.00

0.00

0.00

0.00

Share closing price at grant date ($)

23.37

23.32

24.78

24.93

Expected volatility of ANZ share price (%)2

26.5

25.0

20.0

20.0

Equity term (years)

2.3

6.0

2.5

6.0

Vesting period (years)

2.0

4.0

2.1

4.0

Expected life (years)

2.0

4.0

2.1

4.0

KEY MANAGEMENT PERSONNEL LOAN TRANSACTIONSExpected dividend yield (%)

4.85

5.25

6.0

6.0

Risk free interest rate (%)

0.10

0.21

0.77

0.74

Fair value ($)

21.15

9.56

21.95

9.07

Loans made to KMP are made in the ordinary course of business and on normal commercial terms and conditions that are no more favourable thanthose given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts have been written
off during the period, or individual provisions raised in respect of these balances. Details of the terms and conditions of lending products can befound on ANZ.com. The aggregate of loans (including credit card balances) made, guaranteed or secured, and undrawn facilities to KMP including
their related parties, were as follows:

Deferred
share
rightsExercise price ($)

Relates to grants made in November 2019.
Expected volatility represents a measure of the amount by which ANZ’s share price is expected to fluctuate over the life of the rights. The measure of volatility used in the model is the annualised standard
deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility is then used toestimate a reasonable expected volatility over the expected life of the rights.

Termination benefits

250-

Share-based payments

5,066

8,198

Total

27,06628,2691.

Includes former disclosed KMP until the end of their employment.

Consolidated

SATISFYING EQUITY AWARDSThe Company

2021
$'000

2020
$'000

2021
$'000

2020
$'000

All shares underpinning equity awards may be purchased on market, reallocated or be newly issued shares, or a combination.

Loans advanced1,2

26,86732,452

14,012

19,166The equity we purchased on market during the 2021 financial year (either under the ANZ Employee Share Acquisition Plan and the ANZ Share Option
Plan, or to satisfy options or rights) for all employees amounted to 3,593,574 shares at an average price of $22.03 per share (2020: 4,882,936 shares at
an average price of $25.06 per share).

Undrawn facilities2

531

1,353

277

1,111

Interest charged

777

888

434

518

3

1.

Prior period balance has been restated to reflect minor timing variances.
2.
Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date ofcommencement) for new KMP in the current period.
3.

Interest charged is for all KMP’s during the period.

KEY MANAGEMENT PERSONNEL HOLDINGS OF ANZ SECURITIESKMP, including their related parties, held subordinated debt, shares, share rights and options over shares in the Company directly, indirectly or
beneficially as shown below:
Consolidated

Shares, options and rights
Subordinated debt
1.

236

236

2021
Number1

2020
Number2,319,807

2,211,879

26,672

21,052

Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP.

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SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
32. RELATED PARTY DISCLOSURES (continued)

33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETSOTHER TRANSACTIONS OF KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIESCREDIT RELATED COMMITMENTS AND CONTINGENCIESThe aggregate of deposits of KMP and their related parties with the Group were $46 million (2020: $48 million) and with the Company were $38
million (2020: $37 million).

Consolidated

During the year, in recognition of the contribution of David Gonski as Group Chairman over the period from 2014-2020 the Group donated a painting(valued at approximately $325,000) from its collection to the Art Gallery of New South Wales, where he is the president on the Board of Trustees. ANZ
has enjoyed an association with the Art Gallery of NSW since 2010, through its sponsorship of various annually awarded art prizes and it has been a
Leadership Partner since 2017. The transaction between the Group and the Art Gallery New South Wales is not a related party transaction foraccounting purposes.
Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service fees,
brokerage and bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associated with theperformance of their duties. These transactions are conducted on normal commercial terms and conditions no more favourable than those given toother employees or customers. Gifts in the form of charitable donation amounting to $500 were provided on behalf of the related parties of KMP
during the year.

We disclose significant associates in Note 26 Investments in Associates. During the course of the financial year, transactions conducted with all
associates were on terms equivalent to those made on an arm’s length basis.
The Company

2021
$'000

2020
$'000

2021
$'000

2020
$'000

7

354

-

-

Amounts payable to associates

1,739

1,354

716

746

Interest expense to associates

2

10

-

-

Other revenue from associates

-

500

-

-

Amounts receivable from associates

2020
$m

2021
$m

2020
$m

Undrawn facilities

212,265

227,819

176,077

191,300

Guarantees and letters of credit

30,027

22,77827,957

20,640

Performance related contingencies

18,30317,017

17,085

15,505

Total

260,595

267,614221,119

227,445

Contract amount of:

UNDRAWN FACILITIESThe majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which the Group or the Company may be required topay, the full amount of undrawn facilities for the Group and the Company mature within 12 months.

ASSOCIATES

Consolidated

The Company

2021
$m

Other expenses paid to associates

9,988

9,018

8,063

7,706

Guarantees given to associates

28

-

28

-

Dividend income from associates-

32,465--GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that the Group has entered into as principal – including
guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve the Group issuing letters of credit guaranteeing payment in favour of an exporter. They are secured against anunderlying shipment of goods or backed by a confirmatory letter of credit from another bank.
Performance related contingencies are liabilities that oblige the Group to make payments to a third party if the customer fails to fulfil its non-monetary
obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that weapply to loans. The contract amount represents the maximum potential amount that we could lose if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements. Basedon the earliest date on which the Group or the Company may be required to pay, the full amount of guarantees and letters of credit and performance
related contingencies for the Group and the Company mature within 12 months.

There have been no material guarantees given or received. No amounts receivable from the associates have been written-off during the period, or
individual provisions raised in respect of these balances.

SUBSIDIARIESWe disclose material controlled entities in Note 25 Controlled Entities. During the financial year, subsidiaries conducted transactions with each otherand with associates on terms equivalent to those on an arm’s length basis. As of 30 September 2021, we consider all outstanding amounts on thesetransactions to be fully collectible.
Transactions between the Company and its subsidiaries include providing a wide range of banking and other financial facilities. Details of amounts
paid to, or received from, related parties, in the form of dividends or interest, are set out in Note 2 Net Interest Income and Note 3 Non-Interest
Income.
Other intragroup transactions include providing management and administrative services, staff training, data processing facilities, transfer of tax losses,
and the leasing of Premises and equipment.

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SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)

33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)

OTHER CONTINGENT LIABILITIESOTHER CONTINGENT LIABILITIES (continued)

As at 30 September 2021, the Group had contingent liabilities in respect of the matters outlined below. Where relevant, expert legal advice has beenobtained and, in the light of such advice, provisions (refer to Note 22 Other Provisions) and/or disclosures as deemed appropriate have been made. In
some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or becausesuch disclosure may prejudice the interests of the Group.

NEW ZEALAND LOAN INFORMATION LITIGATIONIn September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending theallegations.

REGULATORY AND CUSTOMER EXPOSURESIn recent years there has been an increase in the number of matters on which the Group engages with its regulators. There have also been significant
increases in the nature and scale of regulatory investigations, surveillance and reviews, civil and criminal enforcement actions (whether by court action
or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly against
financial institutions both in Australia and globally. The Group has received various notices and requests for information from its regulators as part ofboth industry-wide and Group-specific reviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions
can be wide ranging and, for example, include or have included a range of matters including responsible lending practices, regulated lending
requirements, product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice,
insurance distribution, pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-money launderingand counter-terrorism financing obligations, reporting and disclosure obligations and product disclosure documentation. There may be exposures tocustomers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation orcompensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.
BENCHMARK/RATE ACTIONSIn July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including theCompany – one action relating to the bank bill swap rate (BBSW), and one action relating to the Singapore Interbank Offered Rate (SIBOR) and theSingapore Swap Offer Rate (SOR). The class actions are expressed to apply to persons and entities that engaged in US-based transactions in financial
instruments that were priced, benchmarked, and/or settled based on BBSW or SIBOR. The claimants seek damages or compensation in amounts not
specified, and allege that the defendant banks, including the Company, violated US anti-trust laws and (in the BBSW case only) antiracketeering laws,
the Commodity Exchange Act, and unjust enrichment principles. In March 2021, the Company reached an agreement to settle the BBSW class action.
The settlement is without admission of liability and remains subject to negotiation and execution of complete settlement terms as well as court
approval. The financial impact of the settlement is not material and has been fully provided at 31 March 2021. The separate class action in relation to
SIBOR is ongoing and is being defended.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.
CAPITAL RAISING ACTIONSIn June 2018, the Commonwealth Director of Public Prosecutions commenced criminal proceedings against a number of companies and individuals,
including the Company and a senior employee. It is alleged that the joint lead managers of the Company’s August 2015 underwritten institutional
equity placement engaged in cartel conduct and that the Company and its senior employee were involved in one of those joint lead managers giving
effect to a cartel. The Company and its senior employee are defending the allegations. The trial is currently scheduled to start in April 2022.
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company alleging
failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity placement.
ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary shares of theplacement. The Company is defending the allegations.
CONSUMER CREDIT INSURANCE LITIGATIONIn February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations.
ESANDA DEALER CAR LOAN LITIGATIONIn August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake inrelation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.
ONEPATH SUPERANNUATION LITIGATIONIn December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodiansbreached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim also
alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.

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ROYAL COMMISSION
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated withfurther regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
The outcomes and total costs associated with these possible exposures remain uncertain.
SECURITY RECOVERY ACTIONS
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will bedefended.
WARRANTIES AND INDEMNITIESThe Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments.
CLEARING AND SETTLEMENT OBLIGATIONS
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising fromthese arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear and
RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These memberships
allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common to all of thesememberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by another member,the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable in advance.
PARENT ENTITY GUARANTEESThe Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these letters andguarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity of the Company.
SALE OF GRINDLAYS BUSINESSESOn 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain otherbusinesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act, 1973.
Civil penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.

CONTINGENT ASSETSNATIONAL HOUSING BANKThe Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer inthe early 1990s.
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceeds ofthe cheques were resolved in early 2002.
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to beshared between the Company and NHB.

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SHAREHOLDERINFORMATION

Notes to the financial statements (continued)

NOTES TO THE FINANCIAL STATEMENTS (continued)
35. IMPACT OF ADOPTION OF NEW STANDARDS AND OTHER CHANGES

34. AUDITOR FEES
Consolidated

The Company

INTEREST RATE BENCHMARK REFORM

2021
$’000

2020
$’000

2021
$’000

2020
$’000

Audit or review of financial reports

7,434

8,059

7,021

7,262

Audit-related services1

2,772

3,693

2,696

3,540

Non-audit services2

106

25

106

10,312

11,777

9,823

25
10,827

Audit or review of financial reports

5,511

6,049

1,965

2,107

Audit-related services

1,657

1,677

917

1,008

85

98

85

44

Total

7,253

7,824

2,967

3,159

Total auditor fees

17,565

19,601

12,79013,986

KPMG Australia

Total

3

Overseas related practices of KPMG Australia
1

Non-audit services

2

1.

Group audit-related services comprise prudential and regulatory services of $3.27 million (2020: $3.61 million), comfort letters $0.49 million (2020: $0.75 million) and other services $0.67 million (2020: $1.01
million). Company audit-related services comprise prudential and regulatory services of $2.78 million (2020: $3.07 million), comfort letters $0.45 million (2020: $0.72 million) and other services $0.38 million(2020: $0.76 million).

There was no material impact from the early adoption of AASB 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark
Reform – Phase 2. Refer to Note 1 About Our Financial Statements for further details.
INTRAGROUP TRANSACTIONS WITH CONSOLIDATED SECURITISATION STRUCTURED ENTITIES
During the 2021 financial year, the Company changed its accounting policy relating to intragroup transactions with consolidated securitisation SEs inwhich it holds all of the issued securities of the SE. These internal securitisation transactions provide an additional source of liquidity for the Group by
creating residential mortgage-backed securities (RMBS) which can be sold under repurchase agreements with relevant central banks. A distinguishingfeature of these transactions is that all of the RMBS issued by the SE are held by the Company, rather than purchased by third parties. By holding all of
the RMBS issued by the SE, the Company retains all of the risk and rewards of the mortgages transferred to the SE which cannot be derecognised foraccounting purposes. Furthermore, because the intragroup transactions with the SE fully offset each other, they do not alter the cash position, assets
or future cash flows of the Company. Accordingly, under this policy change, these transactions will no longer be recorded on a gross basis. Rather, theCompany will recognise a net nil position with the SE in order to better reflect the economic substance of the intragroup transactions.
This accounting policy change has no impact on the Group’s consolidated financial statements given the previously recorded intercompany balanceswere eliminated in consolidation. Comparatives have been restated in the financial statements of the Company as follows:
2020$m

The Company
Income Statement

2.

The nature of non-audit services for Group and Company include controls related assessments and methodology and procedural reviews. Further details are provided in the Directors’ Report.

Interest income(2,377)3.

Inclusive of goods and services tax.

Interest expense

2,929

Net interest income

552

Other operating income(552)

The Group and Company’s Policy allows KPMG Australia or any of its related practices to provide assurance and other audit-related services that, while
outside the scope of the statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews requested
by regulators such as APRA. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain non-audit
services to be provided where the service would not contravene auditor independence requirements. KPMG Australia or any of its related practices
may not provide services that are perceived to be in conflict with the role of the external auditor or breach auditor independence. These include
consulting advice and subcontracting of operational activities normally undertaken by management, and engagements where the external auditor
may ultimately be required to express an opinion on its own work.

Net profit after tax-

Balance Sheet
Due from controlled entities(76,637)

Total assets(76,637)

Due to controlled entities(76,637)

Total liabilities(76,637)

Net assets-

36. EVENTS SINCE THE END OF THE FINANCIAL YEAR
On 22 October 2021, a Group fund that owns 19% of the shares in Cashrewards Limited announced it would make an off-market takeover offer toacquire the remaining 81% of the shares, for ~$80 million. The offer is subject to a number of conditions and completion remains uncertain.
Other than the matter above, there have been no significant events from 30 September 2021 to the date of signing this report.

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OVERVIEW

HOW WE
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FINANCIALREPORTNOTES TO THE FINANCIAL STATEMENTS

SHAREHOLDERINFORMATIONCONSOLIDATED GROUP DIRECTORS’ DECLARATIONINDEPENDENT AUDITOR’S REPORT

Directors’ Declaration
The Directors of Australia and New Zealand Banking Group Limited declare that:a) in the Directors’ opinion, the financial statements and notes of the Company and the Consolidated Entity are in accordance with the Corporations
Act 2001, including:i)

section 296, that they comply with the Australian Accounting Standards and any further requirements of the Corporations Regulations 2001;
andii) section 297, that they give a true and fair view of the financial position of the Company and the Consolidated Entity as at 30 September 2021
and of their performance for the year ended on that date; andTO THE SHAREHOLDERS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDREPORT ON THE AUDIT OF THE FINANCIAL REPORTOPINIONb) the notes to the financial statements of the Company and the Consolidated Entity include a statement that the financial statements and notes of
the Company and the Consolidated Entity comply with International Financial Reporting Standards; andWe have audited the Financial Report of Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year
end and from time to time during the financial year (together, the Group).

c) the Directors have been given the declarations required by section 295A of the Corporations Act 2001; andIn our opinion, the accompanying Financial Report is in accordance with the Corporations Act 2001, including:d) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become dueand payable.
Signed in accordance with a resolution of the Directors.

 giving a true and fair view of the Company and Group’s financial positions as at 30 September 2021 and of their financial performance for the year
ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001.
The Financial Report comprises the: balance sheets as at 30 September 2021;
 income statements, statements of comprehensive income, statements of changes in equity, and cash flow statements for the year then ended; notes 1 to 36 including a summary of significant accounting policies; and Directors’ Declaration.

BASIS FOR OPINION
Paul D O’Sullivan
Chairman27 October 2021

Shayne C ElliottManaging Director

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of
our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional andEthical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report inAustralia. We have fulfilled our other ethical responsibilities in accordance with the Code.

KEY AUDIT MATTERS
The Key Audit Matters we identified are:
 Allowance for expected credit losses;
 Subjective and complex valuation of financial instruments held at fair value; Carrying value of investment in Asian associates; Provisions for customer remediation; and IT systems and controls.
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Report of thecurrent period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, aprivate English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

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SHAREHOLDERINFORMATION

Independent auditor's report (continued)

INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)

KEY AUDIT MATTERS (continued)

ALLOWANCE FOR EXPECTED CREDIT LOSSES (Group $4,882m; Company $4,062m)

 Working with our risk consulting specialists, we assessed the accuracy of the Company and Group’s ECL model estimates by re-performing, for asample of loans, the ECL allowance using our independently derived calculation tools and comparing this to the amount recorded by theCompany and Group;

Refer to the critical accounting estimates and judgements disclosures in relation to the allowance for expected credit losses in Note 14 to the Financial
Report.
The Key Audit Matter
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balance to the financial statements andthe inherent complexity of the Company and Group’s Expected Credit Loss models (ECL models) used to measure ECL allowances. These models arereliant on data and a number of estimates including the impact of multiple economic scenarios and other assumptions such as defining a significant
increase in credit risk (SICR).
AASB 9 Financial Instruments requires the Company and Group to measure ECLs on a forward-looking basis reflecting a range of economic conditions,of which gross domestic product (GDP) and unemployment levels are considered key assumptions. Post-model adjustments are made by theCompany and Group to address known ECL model limitations or emerging trends in the loan portfolios. We exercise significant judgement inchallenging the economic scenarios used and the judgmental post model adjustments the Company and Group applies to the ECL results.
The Company and Group’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within the
Company and Group’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
The COVID-19 pandemic has meant that assumptions regarding the economic outlook are more uncertain which, combined with varying
government responses, increases the level of judgement required by the Company and Group in calculating the ECL, and the associated audit risk.
Additionally, allowances for individually assessed wholesale loans exceeding specific thresholds are individually assessed by the Company and Group.
We exercise significant judgement in challenging the assessment of specific allowances based on the expected future cash repayments and estimatedproceeds from the value of the collateral held by the Company and Group in respect of the loans.
How the matter was addressed in our audit
Our audit procedures for the allowance for ECL and disclosures included assessing the Company and Group’s significant accounting policies against
the requirements of the accounting standard. Additionally, our procedures included:
Testing key controls of the Company and Group in relation to: Working with our economic specialists, we challenged the Company and Group’s forward-looking macroeconomic assumptions and scenarios
incorporated in the Company and Group’s ECL models. We compared the Company and Group’s forecast GDP, unemployment rates, CPI andproperty price indices to relevant publicly available macro-economic information, and considered other known variables and information obtained
through our other audit procedures to identify contradictory indicators;
 Testing the implementation of the Company and Group’s SICR methodology by re-performing the staging calculation for a sample of loans taking
into consideration movements in the CCR from loan origination CCR and comparing our expectation to actual staging applied on an individual
account level in the Company and Group’s ECL model; and Assessing the accuracy of the data used in the ECL models by confirming a sample of data fields such as account balance and CCR to relevant
source systems.
We challenged key assumptions in the components of the Company and Group’s post-model adjustments to the ECL allowance balance. This
included: Assessing the requirement for additional allowances considering the Company and Group’s ECL model and data deficiencies identified by theCompany and Group’s ECL model validation processes, particularly in light of the extreme volatility in economic scenarios caused by the current
COVID-19 pandemic and government responses;
 Evaluating underlying data used in concentration risk and economic cycle allowances by comparing underlying loan portfolio characteristics torecent loss experience, current market conditions and specific risks in the Group’s loan portfolios; Assessing the impacts on the modelled ECL and the requirement for out of model adjustments to account for the expected increase indelinquencies. We also assessed assumptions used to determine whether a SICR event has occurred; and Assessing the completeness of additional allowance overlays by checking the consistency of risks we identified in the loan portfolios against theCompany and Group’s assessment.
SUBJECTIVE AND COMPLEX VALUATION OF FINANCIAL INSTRUMENTS HELD AT FAIR VALUE: The ECL model governance and validation processes which involved assessment of model performance; The assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings through challenge applied by theCompany and Group’s internal governance processes;

GROUP- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,497m- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $57,116m

 Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;
 Customer credit rating (CCR) for wholesale loans (larger customer exposures are monitored individually). This covered elements such as: approvalof new lending facilities against the Company and Group’s lending policies, monitoring of counterparty credit quality against the Company andGroup’s exposure criteria for internal factors specific to the counterparty or external macroeconomic factors, and accuracy and timeliness of CCR
and security indicator (SI) assessments against the requirements of the Company and Group’s lending policies and regulatory requirements; and- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $30m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $41,343m

 IT system controls which record retail loans lending arrears, group exposures into delinquency buckets, and re-calculate individual allowances. We
tested automated calculation and change management controls and evaluated the Company and Group’s oversight of the portfolios, with a focus
on controls over delinquency monitoring.
We tested relevant General Information Technology Controls (GITCs) in relation to the key IT applications used by the Company and Group inmeasuring ECL allowances as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:
 Re-performing credit assessments of a sample of wholesale loans controlled by the Company and Group’s specialist workout and recovery teamassessed as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by the Company and Group as showing
signs of deterioration, or in areas of emerging risk (assessed against external market conditions and in particular considering the impacts of COVID19 and climate change). For each loan sampled, we challenged management’s assessment of CCR and SI, taking into account our assessment of
the customer’s financial position and, where relevant, the risk of stranded assets, and our overall assessment of loan recoverability, the valuation of
security, and the impact on the credit allowance. To do this, we used the information on the Company’s and Group’s loan file, discussed the facts
and circumstances of the case with the loan officer, and performed our own assessment of recoverability. Exercising our judgement, ourprocedures included using our understanding of relevant industries and the macroeconomic environment and comparing data and assumptions
used by the Company and Group in recoverability assessments to externally sourced evidence, such as commodity prices, publicly available
audited financial statements and comparable external valuations of collateral held. Where relevant we assessed the forecast timing of future cash
flows in the context of underlying valuations and approved business plans and challenged key assumptions in the valuations;

COMPANY- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,190m- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $55,533m- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $30m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $39,146m

Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 18 to the Financial Report.
The Key Audit Matter
The fair value of the Company and Group’s Level 3 and 2 financial instruments is determined by the application of valuation techniques which often
involve the exercise of judgement and the use of assumptions and estimates.
The valuation of Level 3 and level 2 financial instruments held at fair value is considered a Key Audit Matter due to: The high degree of estimation uncertainty and potentially significant range of reasonable outcomes associated with the valuation of financial
instruments classified as Level 3 where significant pricing inputs used in the valuation methodology and models are not observable. Level 3
financial instruments represented 0.8% and 0.9% respectively of the Company and Group’s financial assets and 0.07% and 0.06% of the Company
and Group’s financial liabilities carried at fair value; and The complexity associated with the valuation methodology and models of certain more complex Level 2 financial instruments leading to anincrease in subjectivity and estimation uncertainty. Level 2 financial instruments represented 39% and 35% respectively of the Company andGroup’s financial assets and 88% and 89% of the Company and Group’s financial liabilities carried at fair value.

 Obtaining an understanding of the Company and Group’s processes to determine ECL allowances, evaluating the Company and Group’s ECL
model methodologies against established market practices and criteria in the accounting standards;

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SHAREHOLDERINFORMATION

Independent auditor's report (continued)

INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)

KEY AUDIT MATTERS (continued)

How the matter was addressed in our audit
Our audit procedures for the valuation of financial instruments held at fair value included:

 Assessing the recoverable amount at the reporting date against the recoverable amount of each investment when it was last impaired to assess if
any reversal of previous impairment loss was required; and Performing an assessment of the population of financial instruments held at fair value to identify portfolios that have a higher risk of misstatement
arising from significant judgements over valuation either due to unobservable inputs or complex models.

 Assessing the disclosures in the financial report using our understanding obtained from our testing and against the requirements of theaccounting standards.

 Testing the design and operating effectiveness of key controls relating specifically to these financial instruments, including: Controls in relation to Independent Price Verification (IPV), including completeness of portfolios and valuation inputs subject to IPV;PROVISIONS FOR CUSTOMER REMEDIATION (Group $886m; Company $791m)

 Controls in relation to model validation at inception and periodically, including assessment of model limitation and assumptions; Controls in relation to the review and challenge of daily profit and loss by a control function;
 Controls over the collateral management process, including review of margin reconciliations with clearing houses; and Controls over fair value adjustments (FVAs), including exit price and portfolio level adjustments.
 With the assistance of our valuation specialists, independently re-valuing a selection of financial instruments and FVAs. This involved sourcing
independent inputs from market data providers or external sources and using our own valuation models.
 In relation to the subjective valuation of Level 3 financial instruments, where appropriate, with our valuation specialists:
 Assessing the reasonableness of key inputs and assumptions using comparable data in the market and available alternatives; and Comparing the Company and Group’s valuation methodology to industry practice and the criteria in the accounting standards.
 Assessing the financial statements disclosures, including key judgements and assumptions using our understanding obtained from our testing andagainst the relevant accounting standard requirements.
CARRYING VALUE OF INVESTMENT IN ASIAN ASSOCIATES (Group $1,929m; Company $Nil)

Refer to the critical accounting estimates, judgements and disclosures in Notes 22 and 33 to the Financial Report.
The Key Audit Matter
The Company and Group have assessed the need to recognise provisions in relation to certain customer remediation activities arising from bothinternal and external investigations and reviews.
The provision for customer remediation activities is a key audit matter due to the judgements required by us in assessing the Company and Group’s
determination of: The completeness of the population of matters requiring remediation; The existence of a present legal or constructive obligation arising from a past event using the conditions of the event against the criteria in theaccounting standards;
 Reliable estimates of the amounts which may be paid arising from investigations, including estimates of related costs; and The potential for legal proceedings, further investigations, and reviews from its regulators leading to a wider range of estimation outcomes for us toconsider.

Refer to the critical accounting estimates, judgements and disclosures in Notes 26 to the Financial Report.

How the matter was addressed in our audit
Our audit procedures for customer remediation provisions included:

The Key Audit Matter
Carrying value of investment in Asian associates (PT Panin and AmBank) is a key audit matter as: Obtaining an understanding of the Company and Group’s processes and controls for identifying and assessing the potential impact of theinvestigations into customer remediation activities;

 The Group’s impairment assessment of non-lending assets identified that two of the Group’s associate investments (PT Panin and AmBank) had
indicators of impairment.

 Enquiring with the Company and Group regarding ongoing legal, regulatory and other investigation into remediation activities;
 Conducting independent discussions on significant matters with external legal counsel;

 Significant judgement was required by the Group as a result of the business disruption and economic impacts of the COVID-19 pandemic, raisingestimation uncertainty. These conditions and the uncertainty of their continuation increases the possibility of the investments in the associates
being impaired, and the risk of inaccurate forecasts or a significantly wider range of possible outcomes in the cash flow models.

 Reading the minutes and other relevant documentation of the Company’s Board of Directors, Board Committees, various management
committees, and attending the Company’s Audit and Risk Committee meetings;

 Our evaluation of potential impairment involves critically evaluating the Group’s judgement in relation to key forward-looking assumptions for theGroup’s Asian associates. Instances where the Group’s judgement is evaluated include: Forecast earnings and terminal growth rates – The Group’s models are highly sensitive to small changes in these assumptions, reducing
available headroom or indicating possible impairment. This drives additional audit effort specific to their feasibility and consistency of
application; and Discount rates – These are complicated in nature and vary according to the conditions and environment the specific associate investments
operate in.
 We involved our valuation specialists to supplement our senior team members in assessing this key audit matter.

 Inspecting correspondence with relevant regulatory bodies; For a sample of individual customer remediation matters, we evaluate the basis for recognition of a provision and associated costs against therequirements of the accounting standards. We did this by obtaining an understanding of the matter, its status and independently assessing theseagainst the recognition requirements of the accounting standard; For a sample of individual customer remediation matters, testing the valuation and accuracy of the provision by:
 Assessing and challenging the method, data and assumptions; Sample checking data accuracy to underlying systems; and Performing model integrity checks

How the matter was addressed in our audit
Working with our valuation specialists, our procedures included: Testing completeness by evaluating where exposures may have arisen based upon our knowledge and experience of broader industry matters, theGroup's documentation and the current regulatory environment. We also checked the features of these exposures against the criteria defining aprovision or a contingency in the accounting standards;

 Considering the appropriateness of the value in use valuation method applied by the Group to perform their annual test for impairment against
the requirements of the accounting standards;

 Assessing the appropriateness of the Company and Group’s conclusions against the requirements of Australian Accounting Standards where
estimates were unable to be reliably made for a provision to be recognised; and Assessing the integrity of the models used, including the accuracy of the underlying calculation formulas; Assessing the Group’s key assumptions used in the discounted cash flow model, such as, discount rates, growth rates, forecast earnings andterminal growth rate by comparing to external observable metrics, historical experience, our knowledge of the markets and current market
practice; Evaluating the related disclosures using our understanding obtained from our testing and against the requirements of Australian AccountingStandards.

 Independently developing a discount rate estimate or range considered comparable using publicly available market data for comparable entities,
adjusted for factors specific to the Asian associates and the market and industry they operate in; Comparing the forecast cash flows contained in the models to recent broker consensus reports, reflecting the COVID-19 impacts;
 Considering and challenging the Group’s assessment of the impact of COVID-19 on cash flows and assumptions as well as its assessment of thelikely recovery period; Considering the sensitivity of the models by varying key assumptions, such as, forecast growth rates, terminal growth rates and discount rates,
within a reasonable possible range, including specific analysis of reasonable possible impacts of COVID-19;

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SHAREHOLDERINFORMATION

Independent auditor's report (continued)

INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)

KEY AUDIT MATTERS (continued)

IT SYSTEMS AND CONTROLSAUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL REPORTThe Key Audit Matter
As a major Australian bank, the Company and Group’s businesses utilise many complex, interdependent Information Technology (IT) systems toprocess and record a high volume of transactions. Controls over access and changes to IT systems are critical to the recording of financial informationand the preparation of a financial report which provides a true and fair view of the Company and Group’s financial position and performance.

Our objective is:

The IT systems and controls, as they impact the financial recording and reporting of transactions, is a key audit matter as our audit approach could
significantly differ depending on the effective operation of the Company and Group’s IT controls. We work with our IT specialists as a core part of ouraudit team.

 to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error;and to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.

How the matter was addressed in our audit
Testing the technology control environment for key IT applications (systems) used in processing significant transactions and recording balances in thegeneral ledger, and testing the automated controls embedded within these systems which link the technology-enabled business processes. Our audit
procedures included:

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at:https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.

 Assessing the governance and higher-level controls across the IT Environment, including those regarding policy design, review and awareness, andIT Risk Management practices;

REPORT ON THE REMUNERATION REPORT Design and operating effectiveness testing of controls across the User Access Management Lifecycle, including how users are on-boarded,
reviewed, and removed on a timely basis from critical IT applications and supporting infrastructure. We also examined how privileged roles andfunctions are managed across each IT Application and the supporting infrastructure;

In our opinion, the Remuneration Report of Australia and New Zealand Banking Group Limited for the year ended 30 September 2021, complies with
Section 300A of the Corporations Act 2001.

DIRECTORS’ RESPONSIBILITIES Design and operating effectiveness testing of controls to enable Change Management including how changes are initiated, documented,
approved, tested and authorised prior to migration into the production environment of critical IT Applications. We assessed the appropriateness ofusers with access to release changes to IT application production environments across the Company and Group;

The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of
the Corporations Act 2001.

 Design and operating effectiveness testing of controls used by the Company and Group’s technology teams to schedule system jobs and monitor
system integrity;

OUR RESPONSIBILITIES Design and operating effectiveness testing of controls related to significant IT application programs delivered per the ANZ Delivery Framework; Design and operating effectiveness testing of automated business process controls including those relating to enforcing segregation of duties toavoid conflicts from inappropriate role combinations within IT applications. Testing:Configurations in place to perform calculations, mappings and flagging of financial transactions, and automated reconciliation controls (bothbetween systems and intra-system); and

Data integrity of critical system reporting used by us in our audit to select samples and analyse data used by management to generate
financial reporting.

We have audited the Remuneration Report included in the Directors’ report for the year ended 30 September 2021.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian AuditingStandards.

OTHER INFORMATIONOther Information is both financial and non-financial information in Australia and New Zealand Banking Group Limited’s annual reporting which isprovided in addition to the Financial Report and the Auditor's Report. The Directors are responsible for the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form ofassurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other
Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.

KPMG

Martin McGrath

Partner
Melbourne
27 October 2021

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performedon the Other Information that we obtained prior to the date of this Auditor’s Report, we have nothing to report.

RESPONSIBILITIES OF DIRECTORS FOR THE FINANCIAL REPORTThe Directors are responsible for:
 preparing a Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
 implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error
 assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting isappropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theyeither intend to liquidate the Group and Company or to cease operations or have no realistic alternative but to do so.

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Independent Limited Assurance Report to
the Directors of Australia and New Zealand
Banking Group Limited
CONCLUSION

Based on the evidence we obtained from the procedures
performed, we are not aware of any material misstatementsof the specified ESG Information in the ANZ 2021 Annual
Report and ANZ 2021 Annual Review which has been
prepared by ANZ in accordance with ANZ’s Basis ofReporting for the year ended 30 September 2021.

WHAT DID KPMG’S WORK INVOLVE – SCOPE
OF WORK
Australia and New Zealand Banking Group Limited (ANZ) engaged
KPMG to perform a limited assurance engagement in relation to
the ESG Information in the ANZ 2021 Annual Report and ANZ 2021
Annual Review. The scope of work comprised limited assurance overthe material text and data claims as specified in the table below.
ESG information

Page

WHAT WAS THE BASIS FOR KPMG’S
CONCLUSION?

WHAT IS LIMITED ASSURANCE AND MATERIALMISSTATEMENT?

We conducted our work in accordance with International Standard
on Assurance Engagements ISAE 3000 (Standard). In accordance with
the Standard we have:

A limited assurance engagement is restricted primarily to enquiries
and analytical procedures. The procedures performed in a limited
assurance engagement vary in nature and timing from, and areless in extent than for, a reasonable assurance engagement.
Consequently, the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been
performed. The Standard requires our report to be worded aroundwhat we have not found, rather than what we have found.

• Used our professional judgement to plan and perform theengagement to obtain limited assurance that we are not awareof any material misstatements in the ESG Information, whether
due to fraud or error;• Considered relevant internal controls when designing our
assurance procedures, however we do not express a conclusionon their effectiveness; and• Ensured that the engagement team possess the appropriate
knowledge, skills and professional competencies.

Our limited assurance conclusion is based on the evidence obtained
from performing the following procedures:• Enquiries of relevant management to understand ANZ’s process
for determining material ESG issues;

3

What matters most9

Our customers

15 - 23

Becoming a fairer and more responsible bank24 - 25

Our people

29 - 33

Our community

8, 34 - 36

Improving our approach to Human Rights

37

Our approach to climate change

38 - 39• Undertaking analytical review procedures to support thereasonableness of the data;

Five year summary72• Identifying and testing assumptions supporting the calculations;

WHAT WAS THE REPORTING CRITERIA USED?
The ESG Information was prepared in accordance with theManagement’s Basis of Reporting, which draws upon the Integrated
Reporting Framework published by the International Integrated
Reporting Council (“the criteria”).

This report has been prepared for the Directors of ANZ for
the purpose of providing an assurance conclusion on the ESG
Information within the ANZ 2021 Annual Report and ANZ 2021
Annual Review and may not be suitable for another purpose. We
disclaim any assumption of responsibility for any reliance on thisreport, to any person other than the Directors of ANZ, or for any
other purpose than that for which it was prepared.

Misstatements, including omissions, are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence relevant decisions of the Directors of ANZ.

WHAT DID KPMG DO TO SUPPORT THE SCOPE
OF WORK – OUR PROCEDURES

2021 performance snapshot

The ANZ 2021 Annual Report and ANZ 2021 Annual Review covers
ANZ’s global operations for the year ended 30 September 2021
unless otherwise indicated.

USE OF THIS ASSURANCE REPORT• Interviews with relevant management concerning ANZ’s
ESG framework and policies for material ESG issues, and theimplementation of these across the business;• Interviews with relevant staff responsible for developing thecontent (text and data) within the ESG Information to understandthe approach for management, monitoring, collation andreporting of such information and the accuracy, completenessand existence of reported text and data;

ANZ is responsible for:

KPMG is responsible for:• Determining that the criteria is appropriate to meet their needs;

Our responsibility is to perform a limited assurance engagement inrelation to the ESG Information for the year ended 30 September
2021, and to issue an assurance report that includes our conclusion.

• Preparing and presenting the ESG Information in accordancewith the criteria; and• Establishing internal controls that enable the preparation andpresentation of the ESG Information that is free from material
misstatement, whether due to fraud or error.

KPMG Independence and Quality Control
We have complied with our independence and other relevant
ethical requirements of the Code of Ethics for Professional Accountants
issued by the Australian Professional and Ethical Standards Boardand complied with the applicable requirements of AustralianStandard on Quality Control 1 to maintain a comprehensive systemof quality control. We have also complied with ANZ’s Stakeholder
Engagement Model for Relationship with External Auditor (available
at anz.com).

• Comparing text and data (on a sample basis) presented tounderlying sources;• Reviewing the ANZ 2021 Annual Report and ANZ 2021
Annual Review in their entirety for consistency with the
ESG Information; and• Reviewing other ANZ reporting including the ESG Supplement
in its entirety to ensure it is consistent with our knowledge
obtained through our assurance engagement.

KPMG

Adrian King | Partner

27 October 2021

Melbourne
27 October 2021

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private
English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG globalorganisation. Liability limited by a scheme approved under Professional Standards Legislation.

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FINANCIALREPORTSHAREHOLDERINFORMATION

Shareholder information – unaudited
ORDINARY SHARESANZ CAPITAL NOTESAt 1 October 2021, the 20 largest holders of ANZ ordinary shares held 1,643,583,398 ordinary shares, equal to 58.23% of the total issued
ordinary capital. At 1 October 2021 the issued ordinary capital was 2,822,579,294 ordinary shares.
Name
Number of shares% of shares

ANZ CN2

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

732,183,388

25.94

2

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

437,803,033

15.51

At 1 October 2021 the 20 largest holders of ANZ CN2 held 5,246,090 securities, equal to 32.58% of the total issued securities. At 1 October
2021 the total number of ANZ CN2 on issue was 16,100,000.

3

CITICORP NOMINEES PTY LIMITED

210,892,503

7.47

Name

4

NATIONAL NOMINEES LIMITED

85,004,301

3.01

1

5

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

42,765,637

1.51

6

BNP PARIBAS NOMS PTY LTD <DRP>

33,504,153

7

CITICORP NOMINEES PTY LIMITED <COLONIAL FIRST STATE INV A/C>

18,827,855

8

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED <NT-COMNWLTH SUPER CORP A/C>

9

Number of securities% of securities

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

1,067,710

6.63

2

CITICORP NOMINEES PTY LIMITED

895,442

5.56

1.19

3

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

683,695

4.25

0.67

4

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

441,906

2.74

16,161,125

0.57

5

NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

293,661

1.82

NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

8,715,336

0.31

6

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

256,590

1.59

10 AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED

8,487,710

0.30

7BNP PARIBAS NOMS PTY LTD <DRP>

228,142

1.42

11 ARGO INVESTMENTS LIMITED

8,265,275

0.29

8NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

221,774

1.38

12 BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD <DRP A/C>

6,999,902

0.25

9JOHN E GILL TRADING PTY LTD

165,026

1.03

13 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

6,915,514

0.24

10

NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

141,288

0.88

14 ANZEST PTY LTD <DEA CONTROL A/C>

5,056,931

0.18

11 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

123,046

0.76

15 CUSTODIAL SERVICES LIMITED <BENEFICIARIES HOLDING A/C>

4,171,866

0.15

12 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS SUPER A/C>

117,6200.73

16 BNP PARIBAS NOMS PTY LTD BP2S PROPLEND ASSETS <DRP A/C>

3,999,898

0.14

13 MUTUAL TRUST PTY LTD

113,588

0.71

17 AMP LIFE LIMITED

3,831,603

0.14

14 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

111,257

0.69

18 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

3,428,865

0.12

15 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

91,933

0.57

19 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

3,291,064

0.12

16 NAVIGATOR AUSTRALIA LTD <JB WERE LIST FIX INT SMA A/C>

88,591

0.55

20 BNP PARIBAS NOMS (NZ) LTD <DRP>

3,277,439

0.12

17

CITICORP NOMINEES PTY LIMITED <DPSL>

56,9310.35

1,643,583,398

58.23

18 BERNE NO 132 NOMINEES PTY LTD <684168 A/C>

53,115

0.33

19 KOLL PTY LTD <NO 1 ACCOUNT>

50,000

0.31

Total

DISTRIBUTION OF SHAREHOLDINGSAt 1 October 2021 – Range of shares

20 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <NO 1 ACCOUNT>
Number of holders% of holders

Number of shares% of shares

Total

1 to 1,000

311,856

58.42

113,411,704

4.02

1,001 to 5,000

175,901

32.95

403,960,874

14.31

DISTRIBUTION OF ANZ CN2 HOLDINGS

5,001 to 10,000

29,6485.55

207,021,342

7.33

At 1 October 2021 – Range of securities

10,001 to 100,000

16,013

3.00

320,381,359

11.35

420

0.08

1,777,804,015

533,838

100.002,822,579,294

Over 100,000
Total
At 1 October 2021:• the average size of holdings of ordinary shares was 5,287 (2020:
5,134) shares; and• there were 19,915 holdings (2020: 27,189 holdings) of less than amarketable parcel (less than $500 in value or 19 shares based on
the market price of $27.44 per share), which is less than 3.73% of
the total holdings of ordinary shares.
On 12 May 2017 ANZ was notified by BlackRock Group that it helda substantial shareholding of 148,984,864 ordinary shares in ANZ(5.07%) and on 2 December 2019, BlackRock Group’s interest
increased to 172,225,527 ordinary shares in ANZ (6.07%). As at
1 October 2021 ANZ has received no further update in relation
to this substantial holding.
254

On 31 March 2014 the Company issued convertible subordinated perpetual notes (ANZ CN2) which were offered pursuant to a prospectus
dated 19 February 2014.

The Constitution provides for votes to be cast as follows:i) on show of hands, one vote for each shareholder; andii) on a poll, one vote for every fully paid ordinary share.
A register of holders of ordinary shares is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

0.28
32.58

Number of holders% of holders

Number of securities% of securities

1 to 1,000

16,72689.98

5,536,677

34.39

62.99

1,001 to 5,000

1,670

8.98

3,324,343

20.65

100.005,001 to 10,000

109

0.59

789,223

4.90

10,001 to 100,000

69

0.37

1,589,012

9.87

On 3 July 2018 ANZ was notified by The Vanguard Group, Inc that itheld a substantial shareholding of 144,730,016 ordinary shares in ANZ(5.001%) and on 17 March 2020 The Vanguard Group, Inc’s interest
increased to 170,502,797 ordinary shares in ANZ (6.012%). As at
1 October 2021 ANZ has received no further update in relation tothis substantial shareholding. As announced on 19 July 2021, there iscurrently an on-market buy-back in relation to ANZ’s ordinary shares.

Voting rights of ordinary shares

44,7755,246,090

Over 100,000
Total
At 1 October 2021 there were 10 holdings (2020: 6 holdings) of lessthan a marketable parcel (less than $500 in value or 5 securities
based on the market price of $100.76 per security), which is lessthan 0.05% of the total holdings of ANZ CN2.

14

0.08

4,860,745

30.19

18,588100.00

16,100,000

100.00

Voting rights of ANZ CN2
ANZ CN2 do not confer on holders a right to vote at any meetingof members of the Company.
A register of holders of ANZ CN2 is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

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Shareholder information – unaudited (continued)

ANZ CN3

ANZ CN4

On 5 March 2015 the Company acting through its New Zealand branch, issued convertible subordinated perpetual notes (ANZ CN3) whichwere offered pursuant to a prospectus dated 5 February 2015.

On 27 September 2016 the Company issued convertible subordinated perpetual notes (ANZ CN4) which were offered pursuant to aprospectus dated 24 August 2016.

At 1 October 2021 the 20 largest holders of ANZ CN3 held 2,651,116 securities, equal to 27.33% of the total issued securities. At 1 October
2021 the total number of ANZ CN3 on issue was 9,701,791.

At 1 October 2021 the 20 largest holders of ANZ CN4 held 5,266,551 securities, equal to 32.47% of the total issued securities. At 1 October
2021 the total number of ANZ CN4 on issue was 16,220,000.

Name

Name

Number of securities% of securities% of securities

1

CITICORP NOMINEES PTY LIMITED

525,415

5.41

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

1,269,718

7.83

2

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

444,249

4.58

2

CITICORP NOMINEES PTY LIMITED

993,896

6.13

3

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

388,729

4.01

3

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

744,741

4.59

4

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

187,063

1.93

4NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

267,251

1.65

5NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

145,693

1.50

5NATIONAL NOMINEES LIMITED

207,985

1.28

6NATIONAL NOMINEES LIMITED

101,278

1.04

6

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

198,938

1.23

7

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2

97,2381.00

7

BNP PARIBAS NOMS PTY LTD <DRP>

192,777

1.19

8

LONGHURST MANAGEMENT SERVICES PTY LTD

96,8681.00

8

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

176,178

1.09

9

JDB SERVICES PTY LTD <RAC & JD BRICE INVEST A/C>

88,034

0.91

9

MUTUAL TRUST PTY LTD

158,380

0.98

10 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

72,3830.75

10 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS SUPER A/C>

152,963

0.94

11 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

70,7840.73

11 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

145,2310.90

12 BNP PARIBAS NOMS PTY LTD <DRP>

58,246

0.60

12 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

144,641

0.89

13 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

56,2130.58

13 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

125,672

0.77

14 MUTUAL TRUST PTY LTD

52,803

0.54

14 PAMDALE INVESTMENTS PTY LTD

96,4980.59

15 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

51,055

0.53

15 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <NO 1 ACCOUNT>81,2260.50

16 INVIA CUSTODIAN PTY LIMITED <INCOME POOL A/C>

50,8500.52

16 MARROSAN INVESTMENTS PTY LTD

78,5000.48

17 HAWAII INVESTMENTS PTY LTD

44,2500.46

17 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

71,2270.44

18 NAVIGATOR AUSTRALIA LTD <JB WERE LIST FIX INT SMA A/C>

43,4930.45

18 NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

60,1290.37

19	
MR PAUL WILLIAM BROTCHIE + MR KENNETH FRANCIS WALLACE<STAFFORD FOX FOUNDATION A/C>

40,0000.41

19 JMB PTY LIMITED

50,3000.31

20 RETFORD PTY LTD

50,3000.31

20 MR RONI G SIKH

36,4720.38

5,266,551

32.47

2,651,116

27.33

Total

DISTRIBUTION OF ANZ CN3 HOLDINGSAt 1 October 2021 – Range of securities

Total

DISTRIBUTION OF ANZ CN4 HOLDINGS
Number of holders% of holders

Number of securities% of securities

1 to 1,000

10,77790.09

3,577,749

36.88

1,001 to 5,000

1,051

8.78

2,201,456

22.69

5,001 to 10,000

78

0.65

619,839

10,001 to 100,000

51

0.43

Over 100,000

6
11,963Total
At 1 October 2021 there were 3 holdings (2020: 3 holdings) of lessthan a marketable parcel (less than $500 in value or 5 securities
based on the market price of $102.89 per security), which is lessthan 0.03% of the total holdings of ANZ CN3.

256

Number of securities

Number of holders% of holders

Number of securities% of securities

1 to 1,000

16,40389.60

5,423,896

33.44

1,001 to 5,000

1,694

9.25

3,522,968

21.72

6.39

5,001 to 10,000

131

0.72

978,4826.03

1,510,320

15.57

10,001 to 100,000

66

0.36

1,516,283

9.35

0.05

1,792,427

18.47

Over 100,000

13

0.07

4,778,371

29.46

100.009,701,791

100.00Total

18,307100.0016,220,000

100.00

Voting rights of ANZ CN3
ANZ CN3 do not confer on holders a right to vote at any meetingof members of the Company.
A register of holders of ANZ CN3 is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

At 1 October 2021 – Range of securities

At 1 October 2021 there were 8 holdings (2020: 5 holdings) of lessthan a marketable parcel (less than $500 in value or 5 securities
based on the market price of $107.25 per security), which is lessthan 0.04% of the total holdings of ANZ CN4.

Voting rights of ANZ CN4
ANZ CN4 do not confer on holders a right to vote at any meetingof members of the Company.
A register of holders of ANZ CN4 is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

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Shareholder information – unaudited (continued)

ANZ CN5

ANZ CN6

On 28 September 2017 the Company issued convertible subordinated perpetual notes (ANZ CN5) which were offered pursuant to aprospectus dated 24 August 2017.

On 8 July 2021 the Company issued convertible subordinated perpetual notes (ANZ CN6) which were offered pursuant to a prospectus
dated 9 June 2021.

At 1 October 2021 the 20 largest holders of ANZ CN5 held 2,580,897 securities, equal to 27.72% of the total issued securities. At 1 October
2021 the total number of ANZ CN5 on issue was 9,310,782.

At 1 October 2021 the 20 largest holders of ANZ CN6 held 4,669,313 securities, equal to 31.13% of the total issued securities. At 1 October
2021 the total number of ANZ CN6 on issue was 15,000,000.

Name

Name

Number of securities% of securities% of securities

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

806,651

8.66

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

1,220,439

8.14

2

CITICORP NOMINEES PTY LIMITED373,501

4.01

2

CITICORP NOMINEES PTY LIMITED

728,439

4.86

3

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

151,189

1.62

3

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

383,985

2.56

4NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

126,556

1.36

4

BNP PARIBAS NOMS PTY LTD <DRP>

335,422

2.24

5

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

116,452

1.25

5NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

310,970

2.07

6HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

100,303

1.08

6

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

257,641

1.72

7

AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS SUPER A/C>

85,7250.92

7NATIONAL NOMINEES LIMITED

231,079

1.54

8

NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

85,4220.92

8HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

221,643

1.48

9

DIMBULU PTY LTD

85,0000.91

9

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

174,451

1.16

10 LONGHURST MANAGEMENT SERVICES PTY LTD

78,246

0.84

10 DIMBULU PTY LTD

140,000

0.93

11 NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

76,5470.82

11 NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

121,970

0.81

12 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

71,0900.76

12 MUTUAL TRUST PTY LTD

91,6980.61

13 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

70,612

0.76

13 DIOCESE DEVELOPMENT FUND -CATHOLIC DIOCESE OF PARRAMATTA

88,4400.59

14 BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

68,1130.73

14 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

73,3330.49

15 BNP PARIBAS NOMS PTY LTD <DRP>

50,6790.55

15 LEDA HOLDINGS PTY LTD

57,7600.38

16 EASTCOTE PTY LTD <VAN LIESHOUT FAMILY A/C>

50,0000.54

16 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

51,8790.35

50,0000.33

17 FEDERATION UNIVERSITY AUSTRALIA

50,0000.54

17 MARROSAN INVESTMENTS PTY LTD

18 MARROSAN INVESTMENTS PTY LTD

50,0000.54

18 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

47,7040.32

19 G C F INVESTMENTS PTY LTD

44,811

0.48

19 ALWOOD PTY LTD

44,6000.30

20 MR RONALD MAURICE BUNKER

40,0000.43

20 MCCUSKER FOUNDATION LTD <THE MCCUSKER CHARITABLE A/C>

37,8600.25

2,580,897

27.72

Total

4,669,313

31.13

Total

DISTRIBUTION OF ANZ CN5 HOLDINGSAt 1 October 2021 – Range of securities

DISTRIBUTION OF ANZ CN6 HOLDINGS
Number of holders% of holders

Number of securities% of securities

1 to 1,000

At 1 October 2021 – Range of securities

Number of holders% of holders

Number of securities% of securities

10,04590.51

3,542,687

38.05

1 to 1,000

17,62890.42

5,441,194

36.27

1,001 to 5,000

934

8.42

2,013,604

21.63

1,001 to 5,000

1,699

8.71

3,374,125

22.49

5,001 to 10,000

64

0.58

506,604

5.44

5,001 to 10,000

107

0.55

774,890

5.17

10,001 to 100,000

49

0.44

1,573,235

16.90

10,001 to 100,000

50

0.26

1,283,752

8.56

Over 100,000

6

0.05

1,674,652

17.98

Over 100,000

11

0.06

4,126,039

27.51

11,098100.009,310,782

100.00Total

19,495100.0015,000,000

100.00Total
At 1 October 2021 there were 6 holdings (2020: 4 holdings) of lessthan a marketable parcel (less than $500 in value or 5 securities
based on the market price of $105.79 per security), which is lessthan 0.05% of the total holdings of ANZ CN5.

258

Number of securities

Voting rights of ANZ CN5
ANZ CN5 do not confer on holders a right to vote at any meetingof members of the Company.
A register of holders of ANZ CN5 is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

At 1 October 2021 there were 4 holdings of less than a marketableparcel (less than $500 in value or 5 securities based on the market
price of $102.60 per security), which is less than 0.02% of the total
holdings of ANZ CN6.

Voting rights of ANZ CN6
ANZ CN6 do not confer on holders a right to vote at any meetingof members of the Company.
A register of holders of ANZ CN6 is held at:
452 Johnston Street, Abbotsford, Victoria, Australia
Telephone: +61 3 9415 4010

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Important dates for shareholders1

Shareholder information – unaudited (continued)

EMPLOYEE SHAREHOLDER INFORMATIONAMERICAN DEPOSITARY RECEIPTS

In order to comply with the requirements of the ANZ Employee
Share Acquisition Plan Rules and the ANZ Share Option Plan Rules,
shares or options must not be issued under these plans if theaggregate number of shares and options that remain subject
to the rules of either plan exceed 7% of the total number of
ANZ shares of all classes on issue (including preference shares).
At 30 September 2021 participants under the following plans/
schemes held 0.65% (2020: 0.71%) of the total number of ANZshares of all classes on issue:

The Company has American Depositary Receipts (ADRs)
representing American Depositary Shares (ADSs) that aretraded on the over-the-counter securities market ‘OTC Pink’electronic platform operated by OTC Markets Group Inc.
in the United States under the ticker symbol: ANZBY
and the CUSIP number: 052528304.

• ANZ Employee Share Acquisition Plan;• ANZ Employee Share Save Scheme;• ANZ Share Option Plan; and• ANZ Directors’ Share Plan

STOCK EXCHANGE LISTINGS
Australia and New Zealand Banking Group Limited’s ordinary sharesare listed on the Australian Securities Exchange and New Zealand’s
Exchange (NZX).
The Group’s other stock exchange listings include:

With effect from 23 July 2008, the ADR ratio changed
from one ADS representing five ANZ ordinary sharesto one ADS representing one ANZ ordinary share.
The Bank of New York Mellon (BNY Mellon) is the Depositary
for the Company’s ADR program in the United States. For
further information about ADRs, please call BNY Mellon at
1-888-269-2377 if you are calling from within the United States.
If you are calling from outside the United States, please call
1-201-680-6825. You may also visit BNY Mellon’s website atwww.adrbnymellon.com.

MAY 2022

NOVEMBER 2022

4 May

Half Year Results Announcement

7 November

Final Dividend Ex-Date

9 May

Interim Dividend Ex-Date

8 November

Final Dividend Record Date

10 MayInterim Dividend Record Date

9 November

DRP/BOP/Foreign Currency Election Date

11 MayDRP/BOP/Foreign Currency Election DateJULY 2022

1 JulyDECEMBER 2022

Interim Dividend Payment Date

15 December

Final Dividend Payment Date

15 December

Annual General Meeting

OCTOBER 2022

13 OctoberClosing date for receipt of Director Nominations

27 October

Annual Results Announcement

OUR INTERNATIONAL PRESENCE AND EARNING COMPOSITION BY GEOGRAPHY2• Australian Securities Exchange – ANZ Capital Notes (CN2, CN3,
CN4, CN5 and CN6), ANZ Capital Securities, senior debt andsubordinated debt [Australia and New Zealand Banking Group
Limited], and residential mortgage backed securities;• London Stock Exchange – Senior (including covered bonds)
debt and subordinated debt [Australia and New Zealand Banking
Group Limited] and senior (including covered bonds) debt [ANZ
New Zealand (Int’l) Limited];• NZX – ANZ NZ Capital Notes, senior debt and subordinated debt
[ANZ Bank New Zealand Limited];• SIX Swiss Exchange – Senior debt [ANZ New Zealand (Int’l)Limited]; and• Taipei Exchange – Senior debt [Australia and New Zealand
Banking Group Limited].

International$209 million
Australia$4,184 million

For more information on the ANZ Capital Notes,
ANZ Capital Securities and ANZ NZ Capital Notes
please refer to Note 16 to the Financial Report.

New Zealand$1,788 million

INTERNATIONAL
Asia
China
Hong Kong
India
Indonesia
Japan
Laos
Malaysia

Myanmar
The Philippines
Singapore
South Korea
TaiwanThailand
Vietnam

Pacific
American Samoa
Cook Islands
Fiji
Guam
Kiribati
Papua New Guinea

Samoa
Solomon Islands
Timor-Leste
Tonga
Vanuatu

EuropeFranceGermany
United Kingdom

Middle East
United ArabEmirates (Dubai)

United Statesof America

1. If there are any changes to these dates, the Australian Securities Exchange will be notified accordingly. 2. On a Cash profit (continuing operations) basis. Excludes non-core items included
in statutory profit and discontinued operations included in cash profit. It is provided to assist readers in understanding the result of the ongoing business activitives of the Group. For further
information on adjustments between statutory and cash profit refer to page 57.

260

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Contacts

Glossary

REGISTERED OFFICE

Luxembourg

AASs Australian Accounting Standards.

ANZ Centre Melbourne
Level 9, 833 Collins Street
Docklands VIC 3008 Australia

Deutsche Bank Luxembourg S.A.
2, Boulevard Konrad Adenauer
L-1115 Luxembourg, Luxembourg

AASB Australian Accounting Standards Board. The term ‘AASB’is commonly used when identifying AASs issued by the AASB.
In doing so, the term is used together with the AAS number.

Telephone: +61 3 9273 5555
Facsimile: +61 3 8542 5252

Telephone: +352 4 21 22 1

Company Secretary: Simon Pordage

Computershare Investor Services Limited
Private Bag 92119
Auckland 1142 New Zealand

INVESTOR RELATIONS
Level 10, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 3 8654 7682
Facsimile: +61 3 8654 8886
Email: investor.relations@anz.com
Web: shareholder.anz.com

New Zealand

Telephone: 0800 174 007
Facsimile: +64 9 488 8787

United Kingdom

Group General Manager Investor Relations: Jill Campbell

Computershare Investor Services PLC
The Pavilions Bridgwater Road
Bristol BS99 6ZZ UKCOMMUNICATIONS AND PUBLIC AFFAIRS

Telephone: +44 870 702 0000
Facsimile: +44 870 703 6101

Level 10, 833 Collins Street
Docklands VIC 3008 Australia

United States

Telephone: +61 2 6198 5001
Email: Tony.Warren@anz.com
Group General Manager Communications
and Public Affairs: Tony Warren

SHARE AND SECURITIES REGISTRAR AUSTRALIA
Australia
Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001Australia
Telephone within Australia: 1800 11 33 99
International Callers: +61 3 9415 4010
Facsimile: +61 3 9473 2500
Email: anzshareregistry@computershare.com.au
Austraclear Services Limited
20 Bridge Street
Sydney NSW 2000 Australia
Telephone:1300 362 257

Japan
Japan Securities Depository Center, Incorporated
1-1, Nihombashi Kayabacho 2-chome,
Chuo-ku, Tokyo 103-0025 JapanThe Bank of New York Mellon
240 Greenwich St, Floor 7E
New York, NY 10286 USA
Telephone: +1 212 495 1784
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000 USA
USA Toll Free Telephone: 1888 269 2377
Telephone for International Callers: 1201 680 6825
Web: www-us.computershare.com/investor
Email: shrrelations@bnymellon.com
Deutsche Bank Trust Company Americas
60 Wall Street
New York, NY 10005 USA
Telephone: +1 212 250 2500

Germany
Deutsche Bank AG
Taunusanlage 1260262 Frankfurt am Main Germany
Telephone: +49 69 910 00

Telephone: +81-3-3661-0139

APRA Australian Prudential Regulation Authority.
APS ADI Prudential Standard.
BCBS Basel Committee on Banking Supervision.
Cash and cash equivalents comprise coins, notes, money atcall, balances held with central banks, liquid settlement balances(readily convertible to known amounts of cash which are subject
to insignificant risk of changes in value) and securities purchased
under agreements to resell (reverse repurchase agreements) in lessthan three months.
Cash profit is an additional measure of profit which is prepared ona basis other than in accordance with accounting standards. Cashprofit represents ANZ’s preferred measure of the result of the corebusiness activities of the Group, enabling readers to assess Groupand Divisional performance against prior periods and against peer
institutions. To calculate cash profit, the Group excludes noncore items from statutory profit as noted below. These items arecalculated consistently period on period so as not to discriminate
between positive and negative adjustments.
Gains and losses are adjusted where they are significant, or havethe potential to be significant in any one period, and fall into oneof three categories:
1. gains or losses included in earnings arising from changes intax, legal or accounting legislation or other non-core items not
associated with the core operations of the Group;
2. economic hedging impacts and similar accounting items that
represent timing differences that will reverse through earnings
in the future; and3. accounting reclassifications between individual line items
that do not impact reported results, such as credit risk on
impaired derivatives.
Cash profit is not a measure of cash flow or profit determined ona cash accounting basis.
Collectively assessed allowance for expected credit loss
represents the Expected Credit Loss (ECL), which incorporates
forward-looking information and does not require an actual loss
event to have occurred for a credit loss provision to be recognised.
Coronavirus (COVID-19) is a respiratory illness which was declareda Public Health Emergency of International Concern. COVID-19 wascharacterised as a pandemic by the World Health Organisation on
11 March 2020.

MORE INFORMATION
General Information on ANZ can be obtained from our website at anz.com.
Shareholders can visit our Shareholder Centre at anz.com/shareholder/centre.
ANZ Corporate Governance: For information about ANZ’s approach to Corporate
Governance and to obtain copies of ANZ’s Constitution, Board/Board Committee
Charters, Code of Conduct and summaries of other ANZ policies of interest to
shareholders and stakeholders, visit anz.com/corporategovernance.

ADI Authorised Deposit-taking Institution.

Covered bonds are bonds issued by an ADI to external investors
secured against a pool of the ADI’s assets (the cover pool) assigned
to a bankruptcy remote special purpose entity. The primary assets
forming the cover pool are mortgage loans. The mortgages remainFounding Signatory of:on the issuer’s balance sheet. The covered bond holders have dual
recourse to the issuer and the cover pool assets. The mortgages
included in the cover pool cannot be otherwise pledged or
disposed of but may be repurchased and substituted in order tomaintain the credit quality of the pool. The Group issues coveredbonds as part of its funding activities.
Credit risk is the risk of financial loss resulting from the failure of
ANZ’s customers and counterparties to honour or perform fully theterms of a loan or contract.
Credit risk weighted assets (CRWA) represent assets which areweighted for credit risk according to a set formula as prescribed in
APS 112/113.
Customer deposits represent term deposits, other deposits bearing
interest, deposits not bearing interest and borrowing corporations’debt excluding securitisation deposits.
Customer remediation includes provisions for expected refunds
to customers, remediation project costs and related customer andregulatory claims, penalties and litigation outcomes.
Derivative credit valuation adjustment (CVA) Over the life ofa derivative instrument, ANZ uses a model to adjust fair value totake into account the impact of counterparty credit quality. The
methodology calculates the present value of expected losses
over the life of the financial instrument as a function of probabilityof default, loss given default, expected credit risk exposureand an asset correlation factor. Impaired derivatives are also
subject to a CVA.
Dividend payout ratio is the total ordinary dividend payment
divided by profit attributable to shareholders of the Company.
Fair value is an amount at which an asset or liability could beexchanged between knowledgeable and willing parties in anarm’s length transaction.
Funding for Lending Programme (FLP) refers to three-year
funding announced by the RBNZ in November 2020 and offered to
New Zealand banks, which aimed to lower the cost of borrowing
for New Zealand businesses and households.
Gross loans and advances (GLA) is made up of loans andadvances, capitalised brokerage and other origination costs lessunearned income.
Group is Australia and New Zealand Banking Group Limited (theCompany) and the entities it controlled at the year end and fromtime to time during the financial year (together, the Group).
IFRS International Financial Reporting Standards.
Impaired assets are those financial assets where doubt exists as
to whether the full contractual amount will be received in a timely
manner, or where concessional terms have been provided becauseof the financial difficulties of the customer. Financial assets are
impaired if there is objective evidence of impairment as a resultof a loss event that occurred prior to the reporting date, and thatloss event has had an impact, which can be reliably estimated, on
the expected future cash flows of the individual asset or portfolioof assets.

Australia and New Zealand Banking Group Limited ABN 11 005 357 522.
This Annual Report has been prepared for Australia and New Zealand Banking
Group Limited (“the Company”) together with its subsidiaries which are variously
described as: “ANZ”, “Group”, “ANZ Group”, “the Bank”, “us”, “we” or“our”.

262

DISCLOSURE INSIGHT ACTION

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186 years old and70 years as ANZ
Impaired loans comprise drawn facilities where the customer’s
status is defined as impaired.
Individually assessed allowance for expected credit losses
is assessed on a case-by-case basis for all individually managed
impaired assets taking into consideration factors such as therealisable value of security (or other credit mitigants), the likely
return available upon liquidation or bankruptcy, legal uncertainties,
estimated costs involved in recovery, the market price of the
exposure in secondary markets and the amount and timingof expected receipts and recoveries.
Interest rate risk in the banking book (IRRBB) relates to thepotential adverse impact of changes in market interest rates on
ANZ’s future net interest income. The risk generally arises from:
1. Repricing and yield curve risk – the risk to earnings or market
value as a result of changes in the overall level of interest rates
and/or the relativity of these rates across the yield curve;

Regulatory deposits are mandatory reserve deposits lodged withlocal central banks in accordance with statutory requirements.
Restructured items comprise facilities in which the originalcontractual terms have been modified for reasons related to thefinancial difficulties of the customer. Restructuring may consist of
reduction of interest, principal or other payments legally due, or an
extension in maturity materially beyond those typically offered to
new facilities with similar risk.

Net loans and advances represent gross loans and advancesless allowance for expected credit losses.
Net Stable Funding Ratio (NSFR) is the ratio of the amount ofavailable stable funding (ASF) to the amount of required stable
funding (RSF) defined by APRA. The amount of ASF is the portionof an ADI capital and liabilities expected to be a reliable source offunds over a one year time horizon. The amount of RSF is a functionof the liquidity characteristics and residual maturities of an ADI’s
assets and off-balance sheet activities. ADIs must maintain an NSFR
of at least 100%.

70 years of ANZ
TENACIOUS OFPURPOSE

Shayne Elliott | Chief Executive Officer

1951
The Union Bank of Australia
merged with the Bank ofAustralasia to form the Australia
and New Zealand Bank Ltd (ANZ).

1961

Settlement balances owed to/by ANZ represent financial assets
and/or liabilities which are in the course of being settled. Thesemay include trade dated assets and liabilities, vostro accounts andsecurities settlement accounts.

Mobile branches in vansvisited factories and workplaces
bringing banking to staff.

Term Funding Facility (TFF) refers to three-year funding
announced by the Reserve Bank of Australia (RBA) on 19 March
2020 and offered to ADIs in order to support lending to Australianbusinesses at low cost.

1970

Term Lending Facility (TLF) refers to three to five-year funding
offered by the RBNZ between May 2020 and July 2021 to promotelending to New Zealand businesses.

In what was then the largest merger
in Australian banking history, ANZ Ltd mergedwith the English, Scottish and Australian Bank
Limited to form Australia and New Zealand
Banking Group Limited – the modern ANZ.

1982
ANZ launches Nightand Day Bank (ATM).

1997
Asian language phone banking
launched, a first among major
Australian banks.

2010
ANZ launched a free mobile banking application
for the iPhone called ANZ goMoney. ANZ wasthe first bank in Australia to offer customers amobile-to mobile payment application.
264“The values forged in this merger
70 years ago are still part of the fabricof who we are today. We are stilla bank that wants to back people
with a vision for a better life.”

Return on average assets is the profit attributable to shareholdersof the Company, divided by average total assets.

Risk weighted assets (RWA) are risk weighted according to each
asset’s inherent potential for default and what the likely losses
would be in the case of default. In the case of non-asset backed
risks (i.e. market and operational risk), RWA is determined bymultiplying the capital requirements for those risks by 12.5.

Net interest margin is net interest income as a percentageof average interest earning assets.

The Union Bank of Australia was an Australian
Bank in operation from 1837-1951. Was
established in London in October 1837.

RBNZ Reserve Bank of New Zealand, New Zealand’s central bank.

3. Optionality risk – the risk to earnings or market value arising fromthe existence of stand-alone or embedded options in banking
book items.

Level 2 in the context of APRA supervision, the consolidated ANZGroup excluding associates, insurance and funds management
entities, commercial non-financial entities and certain
securitisation vehicles.

1837

RBA Reserve Bank of Australia, Australia’s central bank.

Return on average ordinary shareholders’ equity is the profit
attributable to shareholders of the Company, divided by averageordinary shareholders’ equity.

Level 1 in the context of APRA supervision, Australia and New
Zealand Banking Group Limited consolidated with certain approved
subsidiaries.

Bank of Australasia was an Australian Bank in operationfrom 1835-1951. Headquartered in London andincorporated by Royal Charter in March 1834.

Net tangible assets equal share capital and reserves attributable
to shareholders of the Company less unamortised intangible assets(including goodwill and software).

2. Basis risk – the risk to earnings or market value arising fromvolatility in the interest margin applicable to banking bookitems; andInternationally comparable ratios are ANZ’s interpretation of
the regulations documented in the Basel Committee publications;‘Basel III: A global regulatory framework for more resilient banks andbanking systems’ (June 2011) and ‘International Convergence ofCapital Measurement and Capital Standards’ (June 2006). They also
include differences identified in APRA’s information paper entitledInternational Capital Comparison Study (13 July 2015).

1835

1958
ANZ adopted a new electronic
bookkeeping machine thatrevolutionised ledger-postingprocedures.

1965
ANZ’s first computer – EMANZA(Electronic Method of ANZ
Accounting) – was installed at
177 Toorak Road, South Yarra.

1973
Miss Enid O’Toole appointed
at Rockhampton North branchas the first female ANZ branchaccountant.

1983
ANZ appoints Australia’s firstfemale bank Director –Dame Leonie Kramer DBE.

2007
ANZ Reconciliation
Action Plan launched –Australian-first.

shareholder.anz.com

Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.
ANZ’s colour blue is a trade mark of ANZ.