ANZ
AnnualReport2001

The Bank with a human faceThis is a chronicleof 12 months in
our organisation,
the events thatmattered, theimpacts they madeand the way wedealt with them.
02

Chairman’s letter to shareholders

04

Chief Executive Officer’s overview

06

ANZ Overview

08

Chief Financial Officer’s review

12

Personal Financial Services

22

Corporate Financial Services

30

International and Subsidiaries

34

New Zealand

36

Risk Management

38

ANZ and Technology

42

Our People

44

The Community and the Environment

46

Board of Directors

48

Corporate Governance49

Concise Financial Report

The past year has been
about recognising realities
and facing them.
About technology, people,
leadership and having a go.
And if you’re an ANZ
customer, staff member orshareholder, it’s about you.

To us, “growth” no longer
means simply being abigger version of what wewere before. To truly growtoday, we must break out
from old paradigms,
be different from what wehave been in the pastand distinct from what ourcompetitors are today.

The following pages aim
to give you a clear andtransparent look at the 12months from October 2000
to September 2001.
As a shareholder, you’lllearn more about how yourinvestment grew in value.
You’ll also know more
about how ANZ grew instrength, in scope andin creativity.

And perhaps, mostimportantly, you’ll have aclearer picture of where we
intend to go in the future,
how well we’re equipped
to meet our objectives,
and what foundations arebeing laid to help ourcustomers, our staff andyou, as our shareholder,
grow with ANZ.

ANZ
AnnualReport2001

Chairman’s
Letter to
Shareholders

02
03

Prudence, performance,and momentum.
ANZ has again delivered on our promises toshareholders. In the year ended 30 September,
2001, earnings per share grew by 10% to$1.17 and the dividend per share was increasedby nine cents to 73 cents per share fully franked.
The net operating profit after tax increased by 7%
to $1,870 million, a new record for the company.
Our return on ordinary shareholders’ equity
at 20.2% passed our 20% target and our costincome ratio was 48.3%. Our tier one capital
was solid at 7.5%.
It is also pleasing to see this performancereflected in the share price, which rose by over
20% during the year and recorded all-time highs.
Management and staff are to be complimented
for these achievements, which reflect a focussed
approach to cost controls, risk management,
and business generation, combined with good
execution of a well thought out strategy.
During the year we moved to have a strategy
focussed on 16 specialist businesses.
We continued our application of eCommerce
to both our internal organisation and tocommunication with our customers. We moved
to be far more customer-oriented in our personal
businesses and sought to improve our culture
and values within the company and in our relations
with customers. We have maintained continued
attention to the control of our risk exposures.

We have sought to energise our staff to be bold
and think differently about how things are done
and to take the initiative and make a difference
for their teams and their customers with our“Breakout” program. Our attention topeople development and customer focus has
been elevated to equal importance with financial
performance. Our philosophy is to ensure that
staff excel in their own business unit and also work
collaboratively for the success of ANZ as a whole.
This approach is helping to foster a new spirit
in the organisation, and assisting us to reach out
and connect more strongly with our customers
and the community.
On 8 October 2001, Mr Gary Toomey resigned fromthe Board and I wish to express our appreciationof the contribution he made to our deliberations
since his appointment in March 1998.
In looking to the year ahead we see continued
progress in a more difficult environment.
We expect some deterioration in credit quality
in line with the weaker economic conditions.
We also see opportunities for growth in many ofour businesses and are optimistic that the Bank
has the strategy and management capability tocontinue to grow, although at a more subdued rate.
Charles Goode
ChairmanANZ
AnnualReport2001

A strong foundation
with new momentum.
Specialise, eTransform,
Perform, Grow and Breakout.
I am pleased to report another record result withthe 2001 profit up 7% on last year (18% excluding
discontinued businesses). Our good first half
performance was repeated in the second half,
despite the more subdued economy and weaker
credit environment.
All but one of our specialist businesses grew theirprofits during the year, and all but four had double
digit earnings growth. This demonstrates therobustness of our strategy, our disciplined
management and risk approach, and the strengthand depth of our management team. It emphasises
our focus on growing the top line, our caution onrisk, our rigour on capital allocation, and ourdecisiveness on costs.
The past four years has seen a major transformationof ANZ. We now have a more sustainable andbalanced business mix, improved positions ina number of growth sectors, industry leading
productivity, and considerably lower risk.
The current uncertainties in the Middle Eastand South Asia provide further affirmation of
our decision to sell Grindlays.
All of this has resulted in a record share price,
market capitalisation, and shareholder dividend.

04
05

Chief Executive
Officer’s Overview

We have made good progress with our otherstakeholders. The number of customers andmarket share across most measures has increased.
Staff satisfaction has improved substantially.
We have also taken a number of steps to earn
the trust of the community, including a new
ANZ Customer Service Charter, free transactionalbanking for those over 60, major concessions
for Centrelink and Health cardholders and ourmoratorium on regional branch closures.
Of course, not everything has worked in our favour,and there are areas where we are not doing as well.
Although we have made progress in the areas ofcustomer and community satisfaction, we have agreat deal yet to do. It is well known that banks are
not held in high regard by personal customers or by
the community. Changing this perception of ANZ
and contributing to changes in the wider industry
is a major priority of ours over the next few years.
Again, while we have made substantial progress
in Personal Financial Services, we remain
underweight strategically in this area. In particular
we need to increase the number of customers in
Metrobanking, Regionalbanking and Small to
Medium Business. We also need a stronger
position in Wealth Management.
We are also facing substantial competition fordeposit funds, constraining our ability to growassets – particularly from alternative investments.
Plans are in place to increase deposits, but thereal solution lies in diversifying our business by
growing alternative revenue streams.
This year we launched the “Breakout” program tocreate a sustainable high performance culture at
ANZ. One thousand of our top managers have now
been through the program, and we are planningto extend this to 6,000 this year. We believe thisinitiative will be the foundation for sustainable
performance differentiation in future years.
As we predicted in the first half, we have seen
deterioration in asset quality in Australia as a resultof the recent downturn. This has been evidenced
particularly through some large corporate collapses
and our specific provisions have therefore risen.
To reflect the potential risk arising from global
economic uncertainty and the events of September
11th, we increased the economic loss provision(ELP) for the year by $41 million. Our specificprovisions are now broadly in line with ELP for theyear, albeit higher for the second half. We haveprovided for all known problem exposures.

The Australian and New Zealand economies are
currently performing relatively well, but it is likely thatthe higher level of uncertainty will have a tangible
effect. We are closely monitoring the situation andare preparing contingency plans to mitigate any
adverse impact should the situation deteriorate.
This will see us in a position to take appropriate
action quickly, should this be necessary.
We will continue to invest in selected growth
segments and to improve the sustainability of ourbusiness mix. We are also paying particular attention
to customer and staff satisfaction, in building ourstrategic position in our core businesses, and in
earning the trust of the community. We have plans
for a major transformation of our branch network
domestically over the next few years. Additionally,
strategic opportunities at reasonable values arelikely to present themselves, and we believe thiswill play to our advantage. As examples, we recently
acquired a 75% shareholding in Bank of Kiribati
and signed contracts to acquire Bank of Hawaii’s
businesses in Fiji, Papua New Guinea and Vanuatu.
We expect a slowing in revenue opportunities until
such time as the economy rebounds. The credit
environment is likely to remain subdued, butbarring significant deterioration, losses will becontainable. We are accordingly taking a deliberately
cautious approach to our business, and willcontinue to manage costs toward a cost income
ratio in the mid-40’s, and constrain asset growthin economically sensitive areas.
Taking account of all factors, we remain positive
about future performance, and are leaving our2002 and 2003 financial targets unchanged.
John McFarlane
Chief Executive Officer

ANZ
AnnualReport

2001

06
07

ANZ
Overview

Group Profit after Tax – Operating Segments

The Bank with a human face
> Put our customers first

Personal 46%
Corporate 39%
Int & Subs 15%> Perform and grow to create value for our shareholders

ANZ Overview> Lead and inspire each other> Earn the trust of the community> Breakout, be bold and have the courage to be different

PersonalGroup

Personal

Corporate

International & Subsidiaries

ProfileThe Bank with a human face

ProfileRealising our unique growth opportunities

ProfileDynamic, leading and growing

ProfileLeveraging strengths for growth> 22,501 employees> $185b assets> 11,474 employees> 4 million customers (Australia)> 1 million customers (NZ)
> 775 branches (Australia)> 143 branches (NZ)
> 750,000 internet banking
customers (Australia)> 170,000 internet banking customers (NZ)

> 3,126 employees> 10,000 customers> 3,799 employees> 1 million customers

Key Businesses> Corporate Banking> Institutional Banking> Global Foreign Exchange> Global Structured Finance> Global Transaction Services> Global Capital Markets
More details about these businesses
on pages 22–27

Key Businesses> Asia> Pacific> Asset Finance> ANZ Investments
More details about these businesses
on pages 30–33

Key Businesses> Personal Financial Services> Corporate Financial Services> International & Subsidiaries
Significant Events 2001
> Implemented specialist
business model> Established a customer charter> Completed $1b buyback> Launched new Breakout
Culture program> Launched staff volunteering
program> Record share price
Performance> Profit $1,870m> Return on Equity 20.2%> Cost Income 48.3%> Asset growth 8%> Staff Satisfaction 62%
Targets
The group has committed toachieving the following targets
by 2003:> EPS growth > 10%> Return on Equity > 20%> Cost Income ratio – mid 40% range> Inner Tier 1 Capital – 6.0%
> Maintain AA category credit rating

Key Businesses> Mortgages> Metrobanking> Regionalbanking> Wealth Management> Small to Medium Business> Cards & ePayments
More details about these businesses
on pages 12–17
Significant Events 2001
> Australian Savings Institution of the Year
> Home Lender of the Year
> On-line Bank of the Year
> Best investment/financial website> Best Internet Bank in Australia and NZ> Doubled the number of internet
customers
Performance> Profit $879m> Income growth 9%> Cost Income 52.6%> Asset growth 10%> Staff Satisfaction 55%
Targets> Increase profit by 15%+ pa to 2005
> Add 1 million new customers by 2005
> Double customer and staff advocacy
by 2004

Significant Events 2001
> Best FX Bank Australia> #1 Commercial Paper Australia & NZ
> #1 Project Finance Loan Arranger
Asia Pacific> #1 Overall Customer Satisfaction(Global Transaction Services)> #1 Overall Customer Satisfaction(Corporate & Institutional Banking)Performance> Profit $737m> Income growth 14%> Cost Income 38.5%> Asset growth 5%> Staff Satisfaction 68%
Targets> Profit after tax of $1b by 2004
> Maintain our #1 position in client
satisfaction> Attain a top 3 position in each of
our core businesses> Achieve a cost income ratio in the
30% range

Significant Events 2001
> New operations in East Timor,
American Samoa and Kiribati> Announced purchase of Bank of Hawaii
operations in PNG, Vanuatu, Fiji
> Improved quality of loan portfolioin Asia> Significant efficiency improvements
in asset finance> Launched new ANZ Investments brandMortgages 12%
Metrobanking 10%
Regionalbanking 9%
Wealth Management 3%
Small Business 6%
Cards & ePayments 6%

Corporate
Corporate Banking 7%
Institutional Banking 10%
Global Foreign Exchange 5%
Global Structured Finance 7%
Global Transaction Services 7%
Global Capital Markets 3%

International & Subsidiaries
Asia 3%
Pacific 3%
Asset Finance 5%
ANZ Investments 4%

Performance> Profit $284m> Income growth 7%> Cost Income 48.2%> Asset growth 8%> Staff Satisfaction 65%
Net Profit after Tax
Targets> Grow the network business in Asia
by leveraging core Group capabilities> Continue expanding in newand existing markets in the Pacific> Strengthen leading position in
Asset Finance> Finalise joint venture with a major
global fund manager

$m
2400
2000
1600
1200
800
400
0
group
2000

personal corporate int & subs dbus & abn
2001

dbus - discontinued business
abn - abnormals

ANZ
AnnualReport

2001

08
09

Chief Financial
Officer’s Review

Another year of growth andincreased shareholder returns.

Overall Staff Satisfaction CFO’s Unit
%
100
80
60
40

The figures are in and they tell a positive story.
Earnings, dividends per share, income and profit
are all ‘up’.

We have good momentum in a moredifficult environment.

Earnings and Dividends per Share Up

Higher Return on Equity

¢

%

120

30

100

25

80

20

60

15

40

10

20

5

0

0

-20

-5

-40

-10

-60

-15

20
0
1999

2000

2001

-20

-80
91

92

93

94

95

Earnings Per Share

96

97

98

99

00

01

91

92

93

94

95

96

97

98

99

00

01

Dividends Per Share

Increased Earnings & Dividends per share growth> Earnings per share 117.4 cents; up 10%(2000 – 106.8 cents).
> Dividends per share 73 cents; up 14%(2000 – 64 cents).
> Payout Ratio 62.0% (2000 – 59.1%).
> Franking 100% interim, 100% final(2000 – 100% interim, 100% final).

We exceeded our Return on Equity target of 20%> The Group has achieved its goal of a Return on
Equity greater than 20% two years earlier thantargeted, with a Return on Equity of 20.2%.
> Increase in Return on Equity is primarily due toReturn on Assets improving from 1.05% to 1.07%.
> Profit attributable to members of the company$1,870m – up from $1,747m notwithstanding
the sale of Grindlays in 2000.
> Average ordinary shareholders’ equity $8,666m(2000 – $8,451m).

“ Another positive
performanceafter four yearsof strategic
repositioning.”
Peter Marriott Chief Financial Officer

ANZ
AnnualReport

2001

10
11

Chief Financial
Officer’s Review

Year on Year Profit Comparison

Value of $1000 invested in 1991

We are Capitalised above Regulatory Levels

Solid Income Growth*
$m
7500

$b
140

$
9,000

135

8,000

6500

%
9

2200

5500

8

2000

4500

7

1800

3500

6

1600

2500

5

125

5,000

1400

1500

4

120

4,000

1200

500

3

1000

0

2

$m
2400

7,000
130
6,000

3,000
115

NPAT DBus
2000

Rev

Exp

Pro

Tax

NPAT
2001

91

92

93

94

95

96

Net Interest
NPAT - Net Profit after Tax
DBus - Discontinued Businessand Abnormals
Rev - Revenue

Exp - Expenses
Pro - Provisions
Tax - Income Tax

97

98

99

00

01

Non Interest

110

0

105

1,000

Mar Sept Mar Sept Mar Sept
1999 1999 2000 2000 2001 2001

*Excluding Abnormals

Inner Tier 1

Profit growth of 7%> During the 2000 year, ANZ sold or discontinued
a number of businesses, including Grindlays.
In 2000, these businesses contributed a net profitof $106m.
> 2000 also included a net abnormal gain of $44m.
> Notwithstanding these factors profit grew by 7%(2000 – $1,747m; 2001 – $1,870m).
> For continuing businesses, profit increased
18%, from $1,597m to $1,882m. A 2% decreasein the Australian corporate tax rate boosted
profits by $36m.
> This was a good profit result driven byrevenue growth and cost containment, offset
by higher provisions.

Operating income> On a reported basis, net interest income grew
1%, from $3,801m in 2000 to $3,833m in 2001.
For continuing businesses, net interest income
was up 10%, driven by growth in average loans
and advances of 10%, and by overall margins
increasing from 2.75% to 2.77%.
> Non-interest income was up 1%, however for thecontinuing businesses increased by 12%. This
result was driven by:– Institutional Banking – up 23%– Asia – up 25%– Pacific – up 22%– Cards – up 24%– Global Foreign Exchange – up 19%– Wealth Management – up 17%

Cost Income Ratio Lower*

Movement in General Provision

$m
3600

2,000

1

%
75

Tier 1

0
91

92

93

94

95

96

97

Balance Sheet Management> During the 2001 financial year, ANZ completed a$1b on market buyback.
> The dividend payout ratio increased from 59.1%
to 62.0%.
> Inner Tier 1 capital has remained steady at 6.4%,
which is above our target of 6.0%. However webelieve it is prudent to carry a higher level ofcapital given the current economic environment.
> Balance sheet growth in Corporate andInstitutional Banking is deliberately constrained
as ANZ re-balances its lending portfolio.
Consumer lending in Australia and New Zealandincreased to 55% of net assets (2000 – 52%).
$2.5b of mortgages were securitised during
the year.

$m
2200

1800

60

1400
Surplus

55
1000

3000
50
45

2800

600

40
200

2600
91 92 93 94 95 96 97 98 99 00 01
Expenses
Cost Income*Excluding Abnormals

Progress in meeting our Cost Income Ratio
commitment> In 2000, we made a commitment to reduce ourcost income ratio to the mid 40’s by 2003.
> Our cost income ratio has reduced to 48.3%.
> The reduction in the cost income ratio in 2001
was primarily the result of income growth
and tight cost containment as all businesses
focussed on increasing efficiency and lowering
discretionary spending.
> During the year, acquisitions and GST increased
expenses by $76m, largely accounting for theincrease in expenses on a continuing basis from
$3,024m in 2000 to $3,128m in 2001.
> On a reported basis, expenses were down 6%,
from $3,314m in 2000 to $3,131m in 2001.

Sept
2000

ELP

ELP - ELP Charge
NSP - Net SP Transfer

NSP

FXI

Sept APRA
2001

FXI - FX Impact
APRA - APRA Guideline

Asset quality> Reflecting the challenging economic environment,
net specific provisions increased from $383m in2000 to $520m in 2001.
> Economic Loss Provision (ELP) increased
moderately from $502m to $531m.
> The ELP charge was increased by $41m, based onmodelling of the estimated impact of theweakening economic environment following the
September 11 US terrorist attacks.
> Risk profiles continue to be closely monitored.
> Non-accrual loans declined from $1,391m in
2000 to $1,260m in 2001, assisted by write-offs
and debt sales.
> Our general provision of $1,386m remains well
above the APRA guideline ($1,014m).

00

01

Financial Goals
ANZ is committed to maximising returns toshareholders. To achieve this going forward, we
have set ourselves the following financial goals:> Earnings per share growth greater than 10%.
> Return on Equity above 20%.
> Cost income ratio in mid 40’s by September 2003.
> Inner Tier 1 capital of 6%.
> Maintain credit rating in AA category.

65
3200

99

RWA’s

70
3400

98

Bruce Brook Deputy Chief Financial Officer

Rick Sawers Group Treasurer

ANZ
AnnualReport

2001

12
13

Personal
Financial
Services

Overall Staff Satisfaction
Personal Financial Services
%
100
80
60

Realising our uniquegrowth opportunities.
Financial Performance. Customer advocacy.
Staff pride and fulfilment.
Our Personal portfolio is comprised of six specialist
businesses. Together they serve more than fivemillion individuals, families and small businesses.
Our customers range from young children to senior
members of the community. People of modest
means and the very wealthy. Diverse in race,
gender, occupation, education and aspiration.
For all this diversity, however, nearly all have faced
profound and numerous changes in the ways they
can access our bank and its products.
These changes produced seemingly conflicting
results. On the one hand, we increased ourcustomer base by 600,000 over the past two anda half years while delivering outstanding results –a tribute to many of our new products and services,
as well as the efforts of many people who madethem come into fruition. Conversely, a significant
number of these changes resulted in customer
confusion. As a result, we’ve seen the emergence ofa general downward trend in customer satisfaction,even while recording increases in profits and returnto shareholders.
Clearly, these conflicting trends cannot co-exist
in the long term. And just as clearly we haverecognised the need to do something about it.
The customer agenda – a renaissance.
The momentum has started to build and our goals
are already a matter of public record:> We are committed to doubling customer advocacy
in the next three years. That is, we will have twice
as many customers who are not just satisfied andloyal – but who actively recommend ANZ to theirfriends and associates.
> We have set a target of gaining 1 million new
customers by 2005.
> We aim to provide for 50% of all our customers’
financial needs (up from the current 40%)
by 2005.
Achieving the goals of the new agenda will see afundamental shift in power from head office andsupport areas to the branches. It also means thecreation of a new kind of branch with new
motivations, new mindsets and new approaches.

We have every confidence that this will deliver:> a more welcoming and team-oriented approach
to customers.
> a new path of success for all ANZ branches in thenear future.

40
20
0
PFS

MOR

1999

MET

REG

2000

CAR

WM

SMB

2001

PFS - Personal Financial Services
MOR - Mortgages
MET - Metrobanking
REG - Regionalbanking
CAR - Cards and ePayments
WM - Wealth Management
SMB - Small to Medium BusinessOverall Customer Satisfaction with Bank
(Individuals)
Personal Financial Services
Score out of 10

Award-winning products now.
While recognising we have a long road to travel
before reaching our goals, we’ve alreadyestablished some major milestones on the journey.
This past year, for example, we have won several
major banking awards:

7> Australian Savings Institution of the Year
(Personal Investor Magazine).
> Home Lender of the Year – 3 years running(Personal Investor Magazine).
> On-Line Bank of the Year
(Personal Investor Magazine).
> Best Frequent Traveller Credit or Charge Card
– International (Inside Flyer Magazine 2001).

6.2

6.8
6.6
6.4

6
0
ANZ

CBA

NAB

WBC

Source: Roberts Research

Other awards include Silver Medals:> Small Business Acceptance Facility of the Year
(Personal Investor Magazine).
> Margin Loan of the Year (1 Year Fixed) for the
fourth consecutive year
(Personal Investor Magazine).
A word about – and a message for – our branch staff.
There is no denying the changes of the past few
years have sometimes been both painful andfrustrating for our branch staff. For them, as it has
been for everyone in the organisation, it has beena trying time and each ANZ staff member should berecognised and congratulated for their hard work,
loyalty and professionalism during this period.
This report’s message for them is that plans for a
new era of pride, involvement and teamwork havealready begun. Our goal is that each individual will
have not just a job but an exciting place to workand a motivating mission to fulfil. This vision sees
our branch staff being able to exceed customer
expectations – and their own. We want to create
an environment where our staff will be enabled asnever before. And now, more than ever, our branchstaff are vital to the future of ANZ.

“A new path of success for
all ANZ branches.”

Peter Hawkins Group Managing Director
Personal Financial Services

ANZ
AnnualReport

2001

14
15

Personal
Financial
Services

Mortgages
Overall Customer Satisfaction with Mortgage
Score out of 10

8.5
8
7.5
7
6.5
6
0
ANZ

CBA

NAB

WBC

Metrobanking
Overall Customer Satisfaction with Bank
(Individuals)
Score out of 10

7
6.8
6.6
6.4

Greg Camm
Managing
Director
Mortgages

Elizabeth ProustManaging Director
Metrobanking

Alison Watkins
Managing Director
Regionalbanking

6.2
6
0

01

Mortgages

We have continued to provide our customers
with the best mortgage products and services
available and we are progressing the on-goingdevelopment of Australia and New Zealand’s
leading mortgage business.
2000–2001 Achievements> Named Personal Investor MagazineHome Lender of the Year for the third year
in a row.
> Achieved strong share of new mortgage
originations in Australia.
> Completed implementation of unified technology
platform across the business.
> Issued US$1 billion in mortgage-backed
securities into the global markets – our firstinternational issue.
> Maintained our sound risk profile.
Future Objectives> Maintenance of our product anddistribution leadership.
> Enhanced automation and web-based deliveryof services.
> Development of additional third party alliances.
> Strengthen our customer ethic to “best in class”.

02

Metrobanking

We are energising the new customer agenda whilerevitalising the metropolitan branch network withnew staff motivation and enhanced capabilities.
2000–2001 Achievements> Creation of a dedicated Metrobanking business
unit, effective from 1 March 2001 to focus
specifically on serving the needs of metropolitan
based personal customers.
> Won numerous banking industry awards
including:– Australian Savings Institution of the Year
(Personal Investor Magazine).
– On-line Bank of the Year
(Personal Investor Magazine).
– Best investment/financial site (Financial
Review Australian Internet Awards 2000).
– Best Internet Bank in Australia and
New Zealand (Global Finance Magazine).
Future Objectives> Upgrade and optimise the locations ofour branches.
> Significantly improve both customer andstaff satisfaction and advocacy.
> Implement a new sales and service technology
platform for front-line staff.
> Increase staff involvement in theirlocal communities.

03

Regionalbanking

This newly created, regionally dedicated businessis reassessing and revitalising our role in serving
the needs of regional customers, and establishing
ANZ as the standout regional bank in Australia
and New Zealand.
2000–2001 Achievements> The creation of a dedicated Regionalbanking
business unit, effective from 1 April 2001
to focus specifically on meeting the needsof regional and rural personal and small to
medium business customers.
> Completed a comprehensive review of ourregional and rural business leading to:– Clearer understanding of where potential lies.
– Development of a distinctive strategy forachieving our goal of becoming the standout
regional bank.
Future Objectives> Make the most of our strong branch network in
our local communities.
> Serve our rural customers better.
> Support our people and drive revenue growththrough the “Regional Reach” program.
– Process changes to give staff more time
to focus on customers.
– Local market planning tools and disciplines
to focus our activities.
– Conduct training and “breakout” development
progams to build staff confidence andcapabilities.

ANZ

CBA

NAB

WBC

Regionalbanking
Overall Customer Satisfaction with Bank
(Individuals)
Score out of 10

8.5
8
7.5
7
6.5
6
0
ANZ

CBA

Source: Roberts Research

NAB

WBC

ANZ
AnnualReport2001

04

Wealth Management

Wealth Management delivers comprehensive
financial advisory services, covering investment,risk lending and gearing. In addition, under the
ANZ Private Bank sub-brand, Wealth Management
provides “high touch” personalised banking
services and access to a range of third party
specialists through alliances.

Wealth Management
Overall Customer Satisfaction with Bank
Score out of 10

8.5
8
7.5
7

2000–2001 Achievements> Creation of a dedicated Wealth Managementbusiness unit which brings together
Premier Financial Services, Financial Planning,
ANZ Private Bank, Margin Lending and E*Trade(Online share trading).
> Development of a unique customer
proposition which:– is personalised but scaleable,– addresses customers’ total financial needs and,– minimises conflict by providing access tothe best solutions available in the market.
> Restructuring of staff around the customer
into multi-disciplinary professional practices.

6.5
6
0
ANZ

CBA

NAB

16
17

Personal
Financial
ServicesWBC

Small to Medium BusinessOverall Customer Satisfaction with Bank

Future Objectives> Deliver a unique customer offer and experience.
> Increase adviser numbers.
> Improve infrastructure and adviser support.
> Leverage product and service opportunities.
> Achieve 25% annual growth in net profit after
tax over the next three years.

Score out of 10

7
6.8
6.6

05

Small to Medium Business06

Cards and ePayments

The Small Business team aims to strengthen ourties with small and medium sized businesses.
Our goal is to revitalise our business with SME’s
and realise the full growth potential it holds for ANZ.

We are building the leading Cards businessin Australasia by focussing on productinnovation and providing a distinctive andsuperior customer experience.

2000–2001 Achievements> Created a dedicated business unit effective from
1 October 2000 focussed on providing relevant
products and services to small and medium
enterprise customers.
> Review of all facets of the business and strategy,
leading to the development of a distinctive newservice proposition.
> A substantial lift in staff satisfaction that will
underpin improved service levels for customers
in the year ahead.
> Simplification of previously over-engineered credit
processes.

2000–2001 Achievements> Increased market share of credit card balances
outstanding, credit card spend, and merchanttransaction volumes.
> Announced the rollout of chip-based cards, alongwith our new chip-capable MultiPOS merchantterminals, which lead the market in functionality,
speed and price.
> Launched a new platinum credit card, known as
PT100 into the Hong Kong market.
> Won recognition as the “Best Frequent
Traveller Credit or Charge Card – International”(Inside Flyer Magazine 2001).
> Launched several important customer
experience improvements, including the ability
to get instant decisions in many cases forapplications over the phone and on the Internet.
> Contained fraud losses from credit cards ataround half the industry average.
> Improved staff satisfaction, building on thestrong progress made in the past two years.

Future Objectives> Invest $10m to support growth in customer
numbers and improved service.
> Launch ANZ Impact* and runningmybusiness.com**
to enhance our customers’ experience.
> Increase geographic coverage and establish
industry sector specialists.
> Lift staff and customer satisfaction to 80%
by 2004.
* ANZ Impact is a cash flow modelling and scenario
testing tool that will be offered to customers
free on anz.com to help them better understandcash impacts of changes in their business.
**runningmybusiness is a new Small to Medium
Business “portal” which will be on anz.com andoffers a range of services other than banking
that customers may look to access.

6.4

Future Objectives> Continue to build a leading market position
through product innovation and a high quality
customer experience.
> Leverage our distinctive capabilities into new
growth areas, such as chip cards, and newmarkets such as Hong Kong.
> Roll-out a state of the art technology andoperations platform.
> Continue to drive cultural change to support
improvements for both staff and customers.

6.2
6
0
ANZ

CBA

NAB

WBC

Cards and ePayments
Overall Customer Satisfaction with Credit Card
Score out of 10

8.5
8
7.5
7
6.5
6
0
ANZ

CBA

NAB

WBC

Source: Roberts Research

Craig Coleman
Managing Director
Wealth Management

Satyendra Chelvendra
Head of Restoring Customer
Faith Program

Graham Hodges
Managing Director
Small to Medium Business

Brian Hartzer
Managing Director
Cards and ePayments

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19

Personal
Financial
Services

Anne Green from the 55 Collins Street branch in Melbourne
discusses some financial opportunities with Rebecca King.

ANZ
AnnualReport2001

Personal
Financial
Services“Being Home Lenderof the Year made thedecision to go with ANZ
an easy one for me.”

20
21

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23

Corporate
Financial
Services

Dynamic, leading and growing.
Partnering corporations for success.

ANZ is the leading Australian bank for both the large
and medium-sized corporate segments. Our
customers enjoy the benefits of a product offeringthat is both priced competitively and offers a wide
range of choice. Our service is a balanced blend of
talented professionals, state of the art technology(we are leaders in web-enabled offerings) andknowledgeable, timely consultation.

Our future growth will come from continued
relationship excellence and providing increasingly
value-added solutions for our global client base.
Our targets for that growth are challenging ones –including doubling the size of our business andachieving a profit after tax of $1 billion by 2004 –all within a strategy that carefully manages andmitigates risk.

While much of our business is based on longstanding relationships in our home markets ofAustralia and New Zealand, we also leverage our
global “footprint” to attract customers who arelooking to take advantage of our presence in the
US, UK, and throughout Asia and the Pacific.
This strong combination of Australasian strengthand global perspective provide us with uniquegrowth opportunities.

While Corporate Financial Services is one of theleast public of all the faces of ANZ, we arenevertheless a relationship oriented businessbased on outstanding people. Our resourcesand expertise assist our customers to employ
thousands of people and – in the process –contribute to the financial well being of many
shareholders. Moreover, the products we offer
and the funding we provide supports every
facet of our economy – from international tradeand business financing to infrastructure projects
such as power stations, freeways, andcommunication networks.

“Our Australianstrength andglobal perspective
provide us withunique growth
opportunities.”
Roger Davis Group Managing Director
Corporate Financial Services

Overall Staff Satisfaction
Corporate Financial Services
%
100
80
60
40
20
0
CFS
1999

C&I
2000

ANZIB*
2001

GTS* Includes GSF, GCM, GFX

CFS - Corporate Financial Services
C&I - Corporate And Institutional Banking
ANZIB - ANZ Investment Bank
GTS - Global Transaction Services
GSF - Global Structured Finance
GCM - Global Capital Markets
GFX - Global Foreign Exchange

Grahame Miller
Managing Director
ANZ Investment Bank

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25

Corporate
Financial
Services

Customer Satisfaction withRelationship Manager (Corporate Banking)
Score out of 10

8.5
8
7.5
7
6.5
6
95

96

ANZ

97

CBA

Source: Roberts Research

Bob Edgar
Managing Director
Corporate andInstitutional Banking

01

Corporate Banking

Peter Hodgson
Head of Investment
Banking Services
Australasia

02

Institutional Banking

We have long-established relationships with
our middle market corporate customer base.
The experience and expertise of our people,
coupled with their affinity with our customers’
business, enables us to tailor products andservices uniquely suited to our clients’ needs.

We have banking relationships with major
Australian and international corporations.
As such this business leverages the knowledge
and experience we have gained through longestablished relationships to provide maximum
value to our institutional customer base.

2000–2001 Achievements> Maintained our leading market position incustomer satisfaction (Source: Roberts Research).
> Increased profitability by 12%.
> Launched our Corporate Banking internet portal.

2000–2001 Achievements> Received the leading industry ratings in overallcustomer satisfaction, quality of relationshipmanagement, innovation and industry knowledge.
> Capitalised on our industry expertise to
generate a 26% increase in revenue and 38%
increase in profitability.
> Achieved a substantial increase in revenue
from the provision of investment banking stylesolutions for our customers.

Future Objectives> Deliver the ‘Wall Street to Main Street’ program –the provision of investment banking style
products to the middle market.
> Increase the product cross-sell from our Personal
businesses into the Corporate customer base
(Cards, Superannuation, Insurance, Mortgages).
> Leverage the Corporate portal to lower costs
and enrich the customer experience.
> Maintain performing loans at 99% of total book.

Future Objectives> Continue to build on industry specialisation.
> Maintain #1 customer satisfaction ratings.
> Maintain focus on customer profitability, crossselling, and the effective use of balance sheet.
> Use the Corporate portal to lower cost, improve
service and enrich the customer experience.
> Maintain performing loans at 99% of total book.

Chris Cooper
Global Head of
Foreign Exchange

03

Global Foreign Exchange

ANZ is the pre-eminent Australian Foreign
Exchange bank.
2000–2001 Achievements> Performed strongly in a competitive industry
with year on year profit up 26%.
> Named Foreign Exchange Bank of the Year
(Asia Money 2001).
> Rated Australia’s Best Foreign Exchange Bank(FX Week).
> Conducted 25% of all corporate deals online
with transaction values in excess of $4billion.
Future Objectives> Capitalise on our core capabilities with adifferentiated product and service proposition
for customers.
> Focus on foreign exchange solutions for investors.
> Improve ANZ foreign exchange services for small
business segment.
> Focus on delivering commoditised FX productto our worldwide customer base.
> Deliver double digit earnings growth withlow volatility.

98

99

NAB

00

01

WBC

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Corporate
Financial
Services

04

Global Structured FinanceThis business is tasked with leveraging our global
structured finance capabilities in chosen specialist
markets both domestically and overseas.
2000–2001 Achievements> Increased focus on structured, higher-margin
product solutions.
> Reduced balance sheet intensity.
> No 1 Project Finance Loan Arranger, Asia Pacific,(Dealogic Capital Data Project Ware).
> No 1 Project Finance Loan Arranger, Asia,(Dealogic Capital Data Project Ware).
Future Objectives> Continue to build industry and productspecialisation.
> Increase geographic diversity.
> Become the pre-eminent global structured
finance house in the sectors and geographiesin which we have chosen to compete.
> Continue to exploit the intellectual capital of thebusiness to leverage our specialist advantage.
> Double digit earnings growth, with a costincome ratio in the 40% range.

Gordon Branston
Country Head UK/Europe & Executive
Director Global Structured Finance05

Global Transaction Services

06

Global Capital Markets

This growth business comprises a portfolio of
product lines that assist corporate and institutionalcustomers with working capital management,
liquidity management and transaction processing.

This business is responsible for the delivery ofcapital markets, securitisation, fixed income andinterest rate product services to our corporate,institutional and funds management clients.

2000–2001 Achievements> Launched Proponix, a global trade processing
joint venture.
> Recorded strong earnings growth with revenue up
by 11% and profit up by 29%.
> Maintained our position as the leading trade
processing bank in Australia.

2000–2001 Achievements> Recorded 22% increase in revenue and 59%
profit growth while adopting a low risk profile.
> Ranked Number One – Interest Rate productsin Australia 2001 (Asia Risk).
> Rated Number One in Commercial Paper
Australia & New Zealand (Asia Money).
> Named Lead Arranger Debt Issuer of theYear (Insto).

Future Objectives> Insource and wholesale relevant parts of corecapabilities.
> Further e-enable the business to improve
productivity and service.
> Double earnings by 2005, with a cost income
ratio comfortably in the 40% range.

Carole Anderson
Managing Director
Global Transaction
Services

Future Objectives> e-enable, sell or exit those businesses subject
to commoditisation and scale economics.
> Grow our core business at 10%–15% compound,consolidating our top three status.
> Focus on select, high growth, high intellectual
property businesses, in which we have alreadybuilt a strong pipeline such as securitisation.
> Establish global leadership in Australian and NZ
credit and derivative products.

David Hornery
Global Head of
Capital Markets

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2001

Frank Tate Managing Director of Evans & Tate Wines,
a family customer since 1925 and undertook a successful
Initial Public Offering with ANZ Investment Bank this year.

Neville Millin ANZ Relationship Manager with customers Leon Ress, owner of the Mitre Tavern anda family customer for 70 years, and Roger Mason, Sirius Telecommunications.

“At Sirius we look
for sound andinnovative financial
solutions. ANZ has
delivered for us.”

“We opened for businessin 1917. ANZ’s support
means we’ve never had
to look elsewhere.”
Hugh Bayford Bayford’s Ford Dealership.
Esanda customer.

Tupua Fred Wetzell
Apia Concrete Products Ltd, a Wetzell family-owned company
and valued customer of ANZ Samoa.

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Internationaland Subsidiaries

Leveraging strengths for growth.

“ We are not only providing a wide
range of banking services in thesecountries, but also contributing
to local development.”

Australia and New Zealand’s bank in Asiaand the Pacific.

Elmer Funke KupperGroup Managing Director
International & Subsidiaries

International
We are a corporate citizen – and a significant force
not only in our countries of origin but throughout
the Asia–Pacific region as well.

Overall Staff Satisfaction
International & Subsidiaries
%
100
80
60
40
20
0
I&S

A

PAC

1999

2000

2001

ASF

ANZI

I&S - International & Subsidiaries
A- AsiaPAC - Pacific
ASF - Asset Finance
ANZI - ANZ Investments

Asia
In Asia we specialise in serving the needs of acore group of “top end” corporate clients whose
interests extend throughout the region. To that end,
our strength in eleven different Asian markets, andacross a number of leading product capabilities,
not only makes us unique among Australian banks,
but makes us an ideal partner for companies
operating Asia-wide.
In addition, we are growing our personal banking
franchise in several of the Asian markets, withexcellent progress being made in Vietnam andIndonesia. In Indonesia, where ANZ owns a 29%
stake in Panin Bank, we will continue to help build
the consumer franchise.
The Asian region, with the possible exception ofChina, is experiencing a slowdown in immediate
growth prospects. Coming out of the 1998 Asian
economic crisis, ANZ has refocussed its strategy
on its core strengths. As a result, our risk profile
improved significantly, allowing us to better
respond to changing conditions.
2000–2001 Achievements
Asia maintained its performance momentum fromthe first half. This was achieved through:> Continued improvement in the quality of the loan
portfolio with approximately 95% of relationships
in the AAA to BB range. Other risks are essentiallytrade and product related in higher risk countries.
> Selective expansion of our product capabilities inTrade Finance, Foreign Exchange and Structured
Finance to a variety of customers.

Asia
China, Hong Kong,
Indonesia, Japan,
Korea, Malaysia,
Philippines,
Singapore,
Taiwan, Thailand
and Vietnam.
Pacific
American Samoa,
Cook Islands, East Timor,
Fiji, Papua New Guinea,
Samoa, Solomon Islands,
Tonga and Vanuatu.

Ian Richards
Head of Strategy

Future Objectives> Grow the network business by leveraging
core Group capabilities in Trade Finance,
Foreign Exchange, Structured Finance andPersonal Banking.
> Continue to re-balance resources to growth areas.
> Maintain growth momentum in Panin Bankin Indonesia.
The Pacific
ANZ in the Pacific is already a strong force incommercial and retail banking. In many Pacificnations we hold a leading market position.
Over the past few years, we have made modernbanking products and services available
throughout the South Pacific. An example of ourinvestment in the Pacific is our electronic banking
strategy. Over the past 12 months, electronicbanking volumes in the Pacific grew by 60%.
A highlight in 2001 was our entry into East Timor,
where ANZ staff are building the infrastructure forbanking from the ground up. As a result, we areproviding a wide range of banking services, and weare also contributing to local development.
ANZ in the Pacific aspires to build on its leadership
position by continuing to improve our productrange and customer service model, and by entering
new markets.
2000–2001 Achievements> Increased our coverage and presence withnew operations in East Timor, American Samoa
and a 75% shareholding in the Bank of Kiribati.
> Extended our electronic and telephone banking
channels across most countries.
> Re-engineered our business processes to fundgrowth initiatives.
> Launched ANZ Pacific region website atanz.com/pacific and introduced internet
banking in Fiji.

ANZ
AnnualReport2001> Announced the acquisition of Bank of Hawaii’s
operations in Fiji, Papua New Guinea andVanuatu. We are expecting to complete theseacquisitions by the end of 2001 and they will
strengthen our already strong franchises in
the Pacific.
Future Objectives> Continue expanding our presence in new andexisting markets throughout the Pacific.
> Develop our local staff and provide them withnew opportunities.
> Increase our electronic delivery channels to reachmore customers.
> Continue improving and refining our successful
business operations/management model.

3233Internationaland Subsidiaries

Building a platform
for growth.
Subsidiaries
Leveraging strengths to build a platform for growth.
Asset FinanceEsanda and UDC, ANZ’s Asset Finance businesses
in Australia and New Zealand, specialise in building
relationships with customers through vehicle andequipment finance, vehicle fleet management andservicing, and debenture investments. They are
predominantly ‘first choice’ providers in both
vehicle and equipment finance, and are using
this position to invest for growth.

2000–2001 Achievements> Made significant efficiency improvements
in Esanda in Australia and UDC in New Zealandthrough an ongoing program of technology
investment and process re-engineering.
> Launched a Vendor Finance business via
a strategic alliance.
> Launched insurance products via a joint
venture to offer bundled product solutions to
our customers.
> Improved the profitability and market
position of our fleet businesses in Australia and
New Zealand.
> Continued to improve the returns from thebusiness via improved margins.
Future Objectives> Continue unit-cost improvements in the servicing
and processing areas through e-transformation.
> Utilise extensive customer base for the
cross-selling of non-asset related products(such as insurance) to our customers.

A new technology platform is being activatedin the 2001 calendar year, a systematic cost-control
program is well in place and promising new growthchannels are being established.

ANZ Investments
One of the great strengths of our business lies inthe size and stability of our customer base, both
retail and corporate.

As a result, the business is positioning itself toprovide premium products and services and deliver
returns which reflect that quality.

With the establishment of our customer businesses
in Personal Financial Services, we have created thefocus that will allow us to capture this growth potential.
At the same time, we recognise that funds
management, as a product business, is anincreasingly global one. Notwithstanding the good
growth we have achieved in this business in the

ANZ Investments aspires to be a leading
manufacturer and supplier of funds management
and insurance solutions in Australia and
New Zealand.
2000–2001 Achievements> Recorded strong investment returns and good
customer service.
> Established a comprehensive new set of ANZ
Investments products.
> Launched the new ANZ Investments brandthrough the “Leave Work Early” campaign.
> Substantially increased net sales of investment
and insurance products leading to improved
market share and profitability.
Future Objectives> Develop new and distinctive product andservice propositions to meet the special needsof ANZ’s customer businesses.
> Extend the “Leave Work Early” campaign
to cement ANZ Investments as a leading
investment brand.
> Continue to profitably grow net sales, funds
under management and insurance premiumsby leveraging off the Wealth Management
customer business.
> Finalise the joint venture with a major global
fund manager.

“Esanda and UDC are
predominantly ‘first
choice’ providers...
and are using thisposition to invest
for growth.”

East Timor now has its own ANZ Branch.

John Winders
General Manager
Asia

recent past, we believe that the best way to further
accelerate the growth in this business is to join
force with a major player in the funds managementbusiness. We expect to announce details soon.

Bob Lyon
General Manager
Pacific

Peter McMahon
Managing Director
ANZ Asset Finance

Bruce Bonyhady
Managing Director
ANZ Investments

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New Zealand

Strong performance in
a competitive market.
ANZ provides the full range of financial services
in New Zealand, with the Group’s portfolio of
specialist businesses well represented in the
New Zealand market. ANZ also owns New Zealand’s
leading finance company (UDC) and leading EFTPOS
provider (EFTPOS NZ).
ANZ is the fourth largest bank in New Zealandwith total assets of A$22b, and approximately
16% share of the New Zealand lending market.

ANZ’s franchise in New Zealand is strong,
represented by more than one million customers –the second largest of any NZ bank.
In a very competitive market, ANZ has substantially
increased its efficiency and profitability over the
past three years, moving from one of the poorer
performing banks to one of the best.
2000–2001 Achievements> ANZ in New Zealand contributed A$278m to theGroup’s 2001 result, an increase of 15% on theprevious year (pre-abnormals in 2000). Costs are
now less than 50% of revenues, return on assets
is 1.3%.
> The New Zealand business is now well aligned
and integrated within the Group, due to thefollowing factors:– A shift in business mix in favour of personal
financial services (now about 64% of revenues).
– Increased contribution from fee income(now 33% of total income).
– Costs have been held and credit quality
improved (specific provision charge 0.24%
of loans and advances).
– Core transactions and customer and accounttechnology have been moved onto acommon trans-Tasman platform.
– Each business unit operates on a fully
integrated trans-Tasman basis.

> The past two years have seen double digit
increases in the level of staff satisfaction. ANZ’s
overall staff satisfaction of 67% positive is now
well above the SICORE all company average forfinancial institutions (59%).
> Customer satisfaction on the corporate side of
the business remains very strong. Our focus is
now on improving personal customer
satisfaction. This year we launched ANZSat, aprogram that surveys 6500 customers every six
months, identifies business unit plans to address
issues of customer concern and links the plans to
individual rewards. We also launched the ANZ
Personal Customer Charter promising fee refunds
if minimum service standards are not met.
> We continue to develop ANZ’s historically verystrong position on the corporate side of thebusiness, with greater focus on deposits and on
non-lending fee income. The introduction of asmall ANZ Private Equity business during the year
has substantially increased our profile in the
mid-corporate market and provided some strong
growth opportunities. Our Investment Bank has
also had a very strong year, completing somehigh profile transactions.
Future Objectives> Maintain strong on-going financial performancewith further improvements in efficiency andprofitability.
> Grow the business by strengthening anddeepening relationships with both our corporate
and personal customers. On the corporate side,
we continue building capability to deliver our“Wall Street to Main Street” customer strategy.

New ZealandOverall Staff Satisfaction
%
100
80
60
40

Murray HornManaging Director
ANZ New Zealand

20
0
1999

2000

2001

On the personal side:– Further development of the ANZSat andCustomer Charter initiatives introduced
this year.
– Improving our product range to better meetcustomer needs.
– Introducing our new sales and service
technology platform.
– Strengthening our customer recognition program.
> Invest in areas of higher growth, including cards
and EFTPOS NZ, wealth and funds management,
small business and corporate finance.
> Further integrate trans-Tasman technology
through the introduction of a Common
Administration System; a common sales andservice platform and a common international
trade and payments processing platform.
> Strengthen front-line customer focus and staff
management by putting all line managers
through an individualised leadershipdevelopment program and increasing our
focus on front-line training.

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Risk Management

Minimising surprises.
Maximising preparedness.

John Conn
Head of
Wholesale
Risk Management
Examples of these changes include:

ANZ’s Risk Management Vision
Risk management at ANZ is directed toachieve strong risk control and a distinctive
risk management capability, which enables
ANZ business units to meet their performance,
growth and “breakout” objectives.

> Sale of Grindlays Bank.
> Reducing the risk profile of the remaining
international businesses.
> Exiting emerging markets bond trading and retailstockbroking activities.
> Restrictions on corporate balance sheet growth –focus on higher quality assets and fee income.
> Strong growth in the residential
mortgage portfolio.
> Increased emphasis on lower risk Personal
Financial Services businesses.
These changes have been accompanied bysignificant enhancement of the Group’s internalrisk management systems and processes andmore open, transparent disclosure of risk.

The identification and effective management ofrisk is an essential part of banking. Overall, our risk
capabilities are considered to be a strategic asset
and a source of competitive advantage. Througheffective use of technology and strong management
focus, we seek to further strengthen the Group’s
risk capabilities and culture to ensure that
ANZ remains at the forefront of risk management
capability within financial services.
Strategic Context
The overall strategy of an organisation
fundamentally impacts the level of risk that it takes.
Therefore, some of the most important decisions
influencing the underlying risk of an organisation
are those which determine the activities,businesses and regions in which the organisation
engages. The major elements of risk management
policies are approved by the Board of Directors,
with the Board Risk Management Committee
supervising implementation and adherence
to policy.

Three Key Areas of Risk:
1 Credit Risk
The potential financial loss resulting from thefailure of a counterparty to honour fully the termsof a loan or contract.
> Policy controls aimed at developing andmaintaining a well diversified credit portfolio aresupervised by the Board’s Risk Management
Committee. During the year, the Group’s peak
exposure limits to all categories of corporate
customers were reduced to support this objective.
> Major lending decisions require sign-off from an
independent credit risk function as well as thebusiness unit. The largest transactions requireapproval by the Credit and Trading Risk
Committee of management and/or the Risk
Management Committee.
> The Group has continued to rebalance its lending
portfolio towards lower risk consumer lending,particularly mortgages. This trend has been
supported by the introduction of advanced
behavioural and other credit scoring technology
in Personal Financial Services.

In recent years, ANZ has made substantial changes
to its strategy and activities in order to reduce risk
and enhance the sustainability of earnings growth.

Mark LawrenceGroup General Manager
Risk Management

Mick Green
Head of
Retail Risk
Management
2 Market Risk
Risk to earnings arising from movements ininterest and exchange rates and bond, equity
and commodity prices.
> The Group Asset and Liability Committee oversees
the Group’s balance sheet risk – trading risk ismonitored by the Credit and Trading Risk
Committee. Further oversight is provided by the
Risk Management Committee.
> There have been no significant structural changes
to the Group’s market risk exposures over the
past twelve months. Market risk continues to be
managed within conservative bounds.
3 Operating Risk
Operating risk arises from the potential breakdownof day-to-day processes.
> ANZ has spent significant time and effort during
the past two years developing advanced
operational risk measurement and management
capabilities, with the Group’s operational risk
economic capital framework acknowledged as
an example of leading practice globally.
> The Operating Risk Executive Committee is
responsible for development and oversightof operating risk policies.
> A prime responsibility of Business Units is toensure compliance with policies, regulations
and laws.
> Key focus areas over the past year have included
fraud prevention, payments risk management andremote banking security.

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ANZ and Technology> Developed enhanced project execution
and reporting capability, including project
management tools.
> Attained Capability Maturity Model level 2
certification from the Software Engineering
Institute (USA), a first for an Australian bank.
The program has delivered significant productivity
and quality improvements.
> Delivered further procurement cost savings,
including an additional $4 million savings on
telecommunications costs.
> Introduced new online global payments
technology, providing greater efficiencies
and real time capabilities.
> Substantially replaced existing proof ofdeposit equipment with a world class voucher
image processing system that uses a “one pass”
proof process.

“Breaking down thebarriers and enhancing
the ‘e’ experience.”‘Information Technology’ or ‘IT’ can have a different
meaning for different people. To some it’s merely
a necessary business tool. To others, it represents
a new way to access information and communicate
with the world. But to those unfamiliar with its
benefits, IT can provoke anxiety or fear, and may beseen as a barrier between people and business.
At ANZ, we are breaking down these barriersby embracing technology in partnership withthe business. By harnessing technologicaladvancements, we believe we can provide
our customers with superior services andgreater accessibility. We are also committed toeTransforming our internal processes andstreamlining our business by adapting smarterand faster technology-based practices.
With these goals in mind we are putting technology
to work to:> Provide our customers with a personalised,consistent experience.
> Empower our customers and our people
with real-time information access and online
applications available via web technology
anywhere and anytime.
> Ensure our technology infrastructure is robust,
flexible and cost effective.
> Aggressively reduce costs, improving
productivity, increasing “straight-through”
processing, simplifying and automating
administrative functions.
> Provide low risk, high efficiency andstate-of-the-art payment capabilities.

Jeff Pitt
Head of Payments

Technology, eTransformation and Shared Services> This ANZ business unit (known as ‘TeSS’) is
ANZ’s core support division. It is responsible for
ANZ’s global technical platforms, development
and maintenance of business applications,
the Group’s payments business and provision ofshared services including property, procurement,
Human Resources services and outsourcing.
TeSS is also responsible for ANZ’seTransformation program to leverage the valueof technology in creating better ways to workand serve our customers.
2000–2001 Achievements> Commenced rollout of new hardware andMicrosoft Windows 2000 operating system for the
branch network in Australia and New Zealand –in readiness for the rollout of the new sales
software application.
> Delivered over 20 new online straightthrough applications providing reduced
costs and turnaround times and improving
information accuracy.
> Max (ANZ’s Intranet) awarded “Bestcommunication and information service ina large organisation” by the Australian
Telecommunications Users’ Group.
> Restructured the technology organisation todeliver high quality solutions more rapidly
and efficiently.

Richard Tait
Head of Customer
Technologies

Staff Satisfaction Technology,
eTransformation & Shared Services
%
100
80
60
40
20

Future Objectives> Continue the development of Customer
Relationship Management (CRM) capability,
to provide a single view of the customer.
> Continue to develop advanced external web
security capabilities including authentication
certificates, firewalls, triple DES encryption andsmart chip technology for EFTPOS and secureInternet shopping.
> Continue to drive next wave efficiencies via
component re-use and standardisation oftechnologies.
> Continue to implement Common Administration
Systems (PeopleSoft) with self-service and“straight-through” processing.
> Rollout of new service model for all server anddesktop environments which enables a standard
operating environment and lowers the total costof ownership.
> Continue deployment of standard Microsoft
Windows 2000 based computing platform acrossthe group for new applications.
> Enhance the single IP network to support richmedia content and multi-media applications.
> Continue consolidation of ANZ call centres withthe development of a new purpose-built facility.
> Continuously upgrade data centre capability tomatch growing demand for 24 hour, 7 day a week
service availability.

0
1999

2000

2001

David Boyles
Group Managing Director
Technology and Services
ANZ is 2001 Internet bank of the year.

Recognising that our people
are the key to our success.
For Peter Savelli, Kristine McCann, Anneli Blundell,
Rosa Lucarelli, Daniel Ota, Jenny Hui Tong, Michelle Leung,Suzie Pletvarec, Dee Bertram, Danny Dinicolo and22,000 more, ANZ is a place to grow.

ANZ
AnnualReport2001

Whether serving customers over the branchcounter, advising on the best way to structure ahome loan, giving assistance over the phone,keeping our own internal systems runningsmoothly, financing the infrastructure of developing
countries or looking after any one of thousands ofessential tasks, our people – all 22,501 of them –are central to our success.
Our aspiration is to create an employment brandthat not only reflects the needs and desires of ourpeople, but also encourages them to actively
recommend ANZ to friends and associates as thebest financial institution to do business with andthe best employer (in any sector).
The recognition that our people are key to driving
our success is reflected in more than 1,000
employees recently participating in three-day“Breakout” workshops, as part of our culturaltransformation program. As the name implies,
these workshops are designed to encourage ourpeople to “breakout” from previously accepted
ways of thinking and doing things and to be boldand have the courage to be different. The resulting
changes in mindset and behaviour will enable us
to serve our customers and ourselves better andmore proactively – and further develop a worldclass performance culture which delivers value forour shareholders.
To provide greater incentives, we are sharpening
our commitment to performance-based rewards by“breaking out” from traditional annual reviews andrewards and moving to a half-yearly performance,
bonus and options cycle. Also, permanent staff
have received $1000 of shares in each year
since 1999.

42
43

Our People

We recognise that e-enabling our organisation
does not just extend to our customers andshareholders, but to our people as well. In thisarea, we are continuing our leadership in online
learning through our recognised eLearning
platform, ANZ eTrain. More than 450 courses,
ranging from compliance training to a full online
MBA, are now available to ANZ staff online.
To date, 18,200 staff in Australia and New Zealandhave used ANZ eTrain, and 24,900 online courses
have been completed. As a result we have realised
significant benefits in the cost effectiveness,quality, responsiveness and distribution of training.
The popular pcs@home offer has been rolled out
again. This program allows staff in Australia and
New Zealand to apply for a heavily subsidised PC,
complete with Internet access. The package
helps staff and families become more familiar with
PC and Internet technology, and underlines theimportance ANZ places on eTransformation.
And as part of our approach to refreshing the ANZ
workforce we have again this year been one ofAustralia and New Zealand’s leading employers
of university graduates with approximately 200
graduates in the 2002 intake.

Finally, we recognise the need for our people tohave a healthy balance of work and life away fromwork. Putting this recognition into practice not only
fosters a happier and more productive workplace,but also helps ANZ attract and retain the besttalent as an employer of choice.
To this end, ANZ has a range of family-friendly
policies covering areas such as parental leave,family leave, job sharing and telecommuting.
Our progressive stance on work-life balancehas been recognised through ANZ being named
a finalist in two categories in the AustralianChamber of Commerce and Industry National
Work and Family Awards.
All these changes, and the strengthening company
performance means that our ability to attract thebest people to ANZ has never been better.
Attracting the best people enables us to create afinancial services experience that meets the needsof our customers, shareholders, and communities,
and it makes ANZ a great place to work.

Shane Freeman Head Of People Capital

Overall Staff Satisfaction ANZ
%
100
80
60
40
20
0
1999

2000

2001

Staff believe Management will act on Issues
identified in this Survey
%
100
80
60
40
20
0
1999

2000

“We want our staff
to be bold andhave the courage
to be different.”

2001

Sonia Stojanovic
Head of Breakout andCultural Transformation

ANZ
AnnualReport

2001

44
45

The Community
and the Environment
ANZ staff in Melbourne took part in a walkathon to raise money
for the Royal Children’s Hospital and the Anti–Cancer Council

Fulfilling our Community
Responsibilities.
At ANZ we are very clear about our responsibilities
to our customers and shareholders, and to thecommunities in which we operate. We earn our
living from these communities and we should
do what we can to put something back.
Our helping hand extends beyond the fundingof projects and initiatives: we work closely withpartnered organisations to help ensure theirsuccess, by providing professional, technical andvolunteer support.
We are also placing an increasing emphasis in ourcommunity relations programs, on issues most
relevant to financial services.
50,000 Hours
ANZ is proudly supporting the communities
in which we operate through the 50,000 Hours
program. The program provides up to one fullday of paid leave for each staff member and up
to 12 months continuous leave without pay forvolunteer service in the community.
Many ANZ employees already devote significant
personal time to not-for-profit organisations,
including Youth at Risk and Foodbank Australia.
ANZ wants to recognise these employees and it
also wants to encourage a widespread commitment
to the community throughout the organisation.
This move is part of an effort by ANZ to develop
and foster a culture of good corporate citizenshipthat values the community and acknowledges
staff already volunteering in the community.
ANZ’s long term aim is to provide 50,000 hours
per annum of volunteer work to local communities.
Youth at Risk
Recognising the need to encourage thedevelopment of our youth, ANZ is now one of
the major sponsors of Youth at Risk.
Youth at Risk is a community based organisationthat develops and delivers programs for
disadvantaged youth. Most program participantscome from difficult backgrounds and have
had experiences with crime, suicide, drug abuseand prostitution.

This relationship began in 1998 and ANZ’s
involvement has evolved beyond a financial
contribution. Staff regularly participate in the key
program, Interviewing Your Future, which aims
to prepare youth for future employment and aid
in personal development.
Through the 50,000 Hours program ANZ staff
conduct interview technique sessions and,in the months following the seminar, mentor
the program’s participants.
Youth at Risk has had great success and
ANZ’s support has allowed the program to beextended from metropolitan Victoria to ruraland regional Victoria, as well as into NSW.
Plans are also underway to move to othercentres around the country.
Credit Helpline
Credit Helpline is a non-profit company thatprovides free, independent advice to Victorianconsumers with credit or debt problems.
Credit Helpline was established in 1994
and relies on funding from several sources,
including ANZ.
ANZ’s support for Credit Helpline is not only
financial – staff volunteers are involved insetting up new networks, an email system anda new website.
Through this affiliation with Credit Helpline, ANZ
underscores its commitment to assist individuals
with their financial needs, and to support
the development of the communities in which
ANZ operates.
Foodbank
ANZ has committed $1m to support Foodbank
nationally for 5 years. ANZ gives Foodbank theopportunity to help welfare agencies around
Australia meet the most basic need of people –food. The partnership with Foodbank gives ANZ
staff the opportunity to volunteer to assist
Foodbank in its work.

Wet ‘n’ Wise
Wet ‘n’ Wise is a community partnership between
Royal Lifesaving Society Australia and ANZ.
The aim of the program is to reduce the numberof water-related deaths that occur each year.
Using an interactive resource kit and website,
Wet ‘n’ Wise focusses on encouraging schools
to teach children the rules of common sense andsafety in and around water.
Launched in November 2000, the Wet ‘n’ Wise
program is being utilised by swimming centres,
local councils, schools and education departments
throughout Australia.
Intensive Care Appeal
The Intensive Care Appeal aims to increase
the survival rate of intensive care patients.
Its financial goal is to raise $10m over three years.
It is estimated these funds could help save anadditional 2,000 lives a year. ANZ is a major partnerin this endeavour and has already contributed$750,000 to the appeal.
ANZ and the Environment
ANZ realises that it cannot separate its financial
operations from the environmental impact and has
appreciated the need to incorporate environmental
considerations into its decision-making process.
To this end, the group appointed an Environmental
Initiatives Manager during the year, who was given
the role of assessing ways that ANZ could reduce
its overall environmental impact. The Environmental
Initiatives Manager meets regularly with a group ofsenior management representatives, to formulate
the best way forward for ANZ. These are early daysfor us and ANZ is still assessing the best way it canaddress the issue of sustainability. However we feelthat each of the initiatives undertaken so far will
help keep the Bank firmly on the right path.

2000–2001 Achievements> Joining the Australian Greenhouse Office’s
Greenhouse Challenge.
> Joining the Victorian Government’s
Wastewise program.
> Joining the Sustainable Energy Authorityof Victoria as an Energy Smart Partner.
> Liaising with City West Water to assessways of reducing our water consumption.
> The start of a trial of best practice waste
diversion strategies in 100 Queen Street,with the intention that these will be replicatedacross all sites over the next two years.
> Undertaking a green building rating of
100 Queen Street.
> Participation in the Property Council ofAustralia’s Energy Smart Leader’s Program.
> Having been assessed as being in the top 10%of the leading sustainability organisations in thebanking sector globally, ANZ shares will form acomponent part of the Dow Jones Sustainability
World Index from October 2001.
Political Donations
In Australia in the year to September 2001, ANZ
donated $75,000 to the Liberal Party, $50,000 to
the Labor Party and $10,000 to the National Party.

ANZ
AnnualReport

2001

46
47

Board ofDirectors

Board of Directors.
Mr C B Goode AC

Mr J McFarlane OBE

Dr B W Scott AO

Mr J K Ellis

Ms M A Jackson

Dr R S Deane

Mr J C Dahlsen

Mr G K Toomey

B Com (Hons) (Melb), MBA(Columbia University, New York)Hon LLD (Melb)

MA, MBA

B Ec, MBA, DBA

B Econ, MBA, FCA

PhD, B Com (Hons), FCA, FCIS, FNZIMLLB, MBA (Melb)B Com, FCPA, FCA, FCISManaging Director andChief Executive Officer.

Company Director.

MA (Oxon), FAICD, Hon FIE Aust,
FAusIMM, FTSE

Company Director.

Company Director.

Company Director.

Director since March 1994.
Chairman of Qantas Airways
Limited, Chairperson of
Methodist Ladies’ College
and Deputy Chairman of
People Telecom Ltd. Directorof The Brain ResearchInstitute and Billabong
International Ltd.
Board Member ofthe Howard Florey Instituteof Experimental Physiology
and Medicine.

Director since September
1994. Chairman of Telecom
New Zealand Limited, Fletcher
Building Limited and Te Papa
Tongarewa (Museum of New
Zealand). He has a numberof directorships including
TransAlta Corporation(Canada) and Woolworths
Limited. Former Chief
Executive and Managing
Director, Telecom New Zealand
Limited, Chief Executive,
Electricity Corporation of New
Zealand Ltd, Chairman of
Fletcher Challenge Limited,
State Services Commission,
Alternate Executive Director,
International Monetary
Fund and Deputy Governor,
Reserve Bank of New Zealand.

Solicitor and Company
Director.

Chairman.
Company Director.
Director since July 1991,
appointed Chairman
August 1995.
Chairman of Woodside
Petroleum Ltd, Australian
United Investment Co. Ltd,
Diversified United
Investment Ltd,The Ian Potter Foundation,and the Howard Florey
Institute of Experimental
Physiology and Medicine.
Director of Singapore
Airlines Ltd.
Lives in Melbourne.
Age 63

Appointed Managing
Director and Chief Executive
Officer in October 1997.
Director of Australian
Graduate School ofManagement and The
Financial Markets
Foundation for Children.
Former Group Executive
Director, Standard Charteredplc (1993–1997), Head of
Citibank, United Kingdom(1990–1993), Managing
Director, Citicorp Investment
Bank Ltd (1987–1990),
Director London Stock
Exchange (1989–1991).

Director since August 1985.
Chairman of Management
Frontiers Pty Ltd, and The
Foundation for Development
Co-operation Ltd. Directorof Air Liquide Australia Ltd
and the James N. Kirby
Foundation Ltd. Australian
member of the Boardof Governors of the Asian
Institute of Management.
Former Chairman of theAustralian Government’s
Trade Development Council(1984–1990), andFederal President, Instituteof Directors in Australia(1982–1986).

Lives in Melbourne.
Age 54

Lives in Sydney.
Age 66Company Director.
Director since October 1995.
Chairman of Sandvik
Australia Pty Ltd,
Australia–Japan Foundation,
Australian Minerals & Energy
Environment Foundation
and Black Range Minerals
Limited. Director of Aurora
Gold Limited, GroPep
Limited and Pacifica Group
Limited. Chancellor ofMonash University, and aCouncil Member of theVictorian College of the Arts.
Former Chairman, BHP
Limited, International
Copper Association Ltd,and Board Member of theMuseum of Contemporary Art.
Lives in Melbourne.
Age 64

Lives in Melbourne.
Age 48Lives in Wellington.
Age 60

Director since May 1985.
Consultant to and former
Partner of the legal firmCorrs Chambers Westgarth.
Director of Southern Cross
Broadcasting (Australia) Ltd,
Mining Project Investors Pty
Ltd, The Smith Family and
J. C. Dahlsen Pty Ltd Group.
Former Chairman of
Woolworths Ltd, Melbourne
Business School Ltd, The
Herald and Weekly Times Ltd
and Deputy Chairman Myer
Emporium Ltd.
Lives in Melbourne.
Age 66

Director since March 1998.
Former President andChief Executive Officer of Air
New Zealand Group (January
2001 to October 2001),
Deputy Chief Executive
Officer and Executive
Director of Qantas Airways
Limited (December 1993 to
September 2000),
Non-Executive Director of
Air Pacific Limited (May1998 to September 2000).
Lives in Auckland.
Age 46
Resigned October 2001

ANZ
AnnualReport

2001

48
49

Corporate
GovernanceAccountability.
Responsibility. Prudence.
This corporate governance statement is a reflectionof our respect for the responsibilities we holdand our firm intent to serve all those associatedwith ANZ in an honest and ethical manner.
Board of Directors
Role and responsibility
The Board is responsible for:> charting the direction, strategies and financial
objectives for the Group and monitoring theimplementation of those policies, strategies andfinancial objectives;> ensuring regulatory requirements are observed
and ethical standards are met; and> appointing, and reviewing performance of
the Chief Executive Officer.
The Board of Directors, working with the CEO andsenior management, is responsible for the Group’s
performance.
Composition, independence and meetings
The Board currently comprises the CEO andindependent non-executive directors, who areneither a substantial supplier or customer, nor apast ANZ executive. The Company’s policy is for the
Chairman to be an independent non-executive
director and the Board comprise a majority of
non-executive directors.
Board size (five minimum) and composition
are regularly reviewed. The performance of each
non-executive director is reviewed by the Chairman.
The Chairman’s performance is reviewed by thefull Board. Details of the experience of directors are
set out on pages 46–47.
The Board meets at least 8 times a year. Board
agendas ensure that each of the Board’s significant
responsibilities (strategy, financial performanceand risk), are addressed. In addition, directors
hold regular meetings with senior staff to increase
their knowledge of the business.
Board nominations
When a Board vacancy exists, candidates are
identified with a mix of experience, skills,
knowledge and perspective the Board considers
necessary to enable it to carry out its
responsibilities. The Board engages external
consultants to assist in identifying candidates.
Directors appointed to fill a vacancy stand forelection at the Company’s next AGM.
Share qualification
Each director must hold at least 2,000 shares.
Retirement policy
One-third of directors stand for re-election byrotation at each AGM. Directors appointed after
1993 retire after 15 years of service.

Independent advice and access to information
Each director has the right, with the prior approvalof the Chairman, to seek independent professional
advice regarding their responsibilities, at theCompany’s expense.

Concise Financial Report.

Each director has the benefit of a deed thatclarifies the circumstances in which he or she isentitled to obtain access to company documents
and information.
Committees
There are three main Board committees, eachwith their own charter, which assist the Board toreview audit, risk, and human resources.
All committees meet regularly and are chaired by anon-executive director. Details of committee
memberships and the primary responsibilities of
those committees are set out on page 55.

The 2001 Concise Financial Report has been
derived from the Group’s 2001 Financial Report.
This Concise Financial Report cannot be expected
to provide as full an understanding of the Group’s
financial performance, financial position andfinancing and investing activities as the Group’s
2001 Financial Report.

Policies and other matters

The Chief Financial Officer’s review on pages 8 to 11
provides a discussion and analysis of the concise
financial statements.

EthicsThe Company has developed a code of conduct
which sets high standards for ethical behaviour andbusiness practice, beyond complying with the law,
in relation to:Contents
10 Year Summary

50

Directors’ Report51> ensuring confidentiality and privacy are
respected;> acting with honesty and integrity at all times;> requiring personal transactions remain separate;> not accepting material personal benefits; and> avoiding conflicts of interest.
The code also covers conflict of interest procedures.

Directors’ Meetings

55

Major Committees

55

Directors’ Shareholdings

55

Continuous disclosure
The Company has written policies and proceduresfor information disclosure that ensures it meets its
obligations under the ASX continuous disclosure
regime, including prior disclosure of material given
to analysts. All material information disclosed to
ASX is posted on the Group’s website.
Share Trading
The Company has a policy that prohibits directors
and employees from acquiring, selling or otherwise
trading in the Company’s shares if they possessmaterial price-sensitive information which is not
yet public.
Remuneration
The Group’s policy is to ensure that remuneration
packages properly reflect the responsibilities ofthe senior executives and are adequate to attract,
retain and motivate quality personnel. Detailsof the broad remuneration policy for directors
and senior executives are set out on pages 52–53.

Statement of Financial Performance

56

Statement of Financial Position

57

Statement of Cash Flows58

Notes to the Concise Financial Statements

59

Directors’ Declaration

62

Auditors’ Report

63

Financial Highlights in Key Currencies

63

Exchange Rates

63

Shareholder Information

64

2001 Financial Report
A copy of the Group’s 2001 Financial Report,
including the independent Auditors’ Report, isavailable to all shareholders, and will be sent
to shareholders without charge upon request.
The Financial Report can be requested by
telephone (Australia: 1800 11 33 99,
Overseas: (61 3) 9205 4892) and by internet
at investor.relations@anz.com

ANZ
AnnualReport

2001

2001
$m

2000
$m

1999
$m

1998
$m

1997
$m

1996
$m

1995
$m

1994
$m

1993
$m

1992
$m

Statement of Financial Performance
Net interest income
Other operating income
Operating expenses

3,833 3,801 3,655 3,547 3,437 3,327 3,084 2,794 2,539 2,427
2,612 2,583 2,377 2,142 2,110 1,839 1,754 1,793 1,730 1,990(3,131) (3,314) (3,300) (3,442) (3,502) (3,397) (3,116) (3,001) (2,975) (3,199)

Profit before tax, debt
provision and prior period abnormals
Debt provision2
Income tax (expense) benefit
Outside equity interests

3,314
(531)
(911)
(2)

3,070
(502)
(863)
(2)

2,732
(510)
(736)
(6)

2,247
(487)
(576)
(9)

2,045
(400)
(466)
(8)

1,769
(175)
(469)
(9)

1,722
(237)
(442)
(10)

1,586
(388)
(388)
(7)

Profit (loss) after tax
before prior period abnormals
Net prior period abnormal profit (loss)

1,870
–

1,703
44

1,480
–

1,175
(69)

1,171
(147)

1,116
–

1,033
19

803
19

460
(213)

(578)
(1)

Profit (loss) after tax

1,870

1,747

1,480

1,106

1,024

1,116

1,052

822

247

(579)

1,294 1,218(637) (2,127)
(190)
336
(7)
(5)

Statement of Financial Position
Assets

185,493 172,467 152,801 153,215 138,241 127,604 112,587 103,874 103,045 101,138

Net Assets

10,551

9,807

9,429

8,391

6,993

6,336

5,747

5,504

5,133

Tier 1 capital ratio
Return on average ordinary equity3,4
Return on average assets3
Cost income ratio5

7.5%
20.2%
1.1%
48.3%

7.4%
19.3%
1.1%
51.7%

7.9%
17.6%
1.0%
54.5%

7.2%
15.9%
0.7%
60.9%

6.6%
17.2%
0.7%
63.1%

6.7%
18.3%
0.9%
65.8%

6.6%
17.9%
0.9%
64.4%

6.8%
15.6%
0.8%
65.4%

5.9%
4.8%
5.0% -11.4%
0.2% -0.6%
69.7% 72.4%

Shareholder value – ordinary shares
Total return to shareholders(share price movement plus dividends)
Market capitalisation
Dividend
Franked portion– interim– finalClosing share price– high– low– 30 Sep

25.5% 35.3% 19.6% -15.6% 62.4% 33.9%
23,783 20,002 16,045 13,885 17,017 10,687
73.0c
64.0c
56.0c
52.0c
48.0c
42.0c
100% 100%75%
60% 100%
50%
100% 100%80%
60% 100% 100%$17.39 $13.46 $12.45 $11.88 $11.58 $7.28$13.44 $9.60 $8.58 $8.45 $7.10 $5.41$15.98 $13.28 $10.25 $9.02 $11.28 $7.23

52.4%
8,199
33.0c
0%
33%
$5.75
$3.55
$5.67

2.0%
5,293
25.0c
0%
0%
$5.68
$3.78
$3.91

4,591

47.2% -19.6%
5,285 3,037
20.0c
20.0c
0% 100%0%0%$4.40 $4.88$2.53 $2.87$4.04 $2.88

117.4c62.0%$5.96

No. of fully paid
ordinary shares issued (millions)
DRP issue price– interim– final1,488.3 1,506.2 1,565.4 1,539.4 1,508.6 1,478.1 1,446.0 1,353.6 1,308.2 1,054.5$15.05 $11.62 $10.95 $10.64 $9.77 $5.59 $4.40 $3.78 $3.42 $3.58– $14.45 $11.50 $10.78 $9.92 $7.60 $6.27 $3.73 $4.44 $2.51

Other information
Points of representation
No. of employees(full time equivalents)6
No. of shareholders7

1,056

1,087

90.6c
62.1%
$5.21

1,147

72.6c
67.8%
$4.98

1,205

68.6c
61.6%
$4.59

1,473

76.3c
55.5%
$4.24

1,744

69.9c
49.1%
$3.94

1,881

55.9c
46.4%
$3.58

2,026

13.5c
65.6%
$3.43

2,136

-60.2c
n/a
$3.40

2,302

22,501 23,134 30,171 32,072 36,830 39,721 39,240 39,642 40,277 43,977
181,035 179,244 214,151 151,564 132,450 121,847 114,829 121,070 115,000 112,036

1 Data for 1998, 1999, 2000 and 2001 includes the consolidation of assets in the statutory funds of ANZ Life as required by an accounting standard applicablefrom 1 October 1999
2 From 1997, the annual debt provision charge has been calculated based on economic loss provisioning; prior year data has not been restated for this change
in measurement approach
3 After abnormals
4 From 2001, the return on average ordinary equity calculation accrues the dividend over the year; prior year data from 1997 has been restated for this change in calculation
5 Before goodwill amortisation and abnormals
6 Prior to 1997 excludes temporary staff
7 For 2000 and 2001 the number of shareholders does not include the number of employees whose shares are held by ANZEST Pty Ltd as the trustee for shares issued under theterms of any employee incentive plan

The directors present their report together with the concise
financial report of the consolidated entity (the Group),
being Australia and New Zealand Banking Group Limited(the Company) and its controlled entities, for the year ended
30 September 2001 and the auditors’ report thereon.
The information is provided in conformity with the
Corporations Act 2001.
Principal Activities
The principal activities of the Group during the year weregeneral banking, mortgage lending, life insurance, leasing,hire purchase and general finance, international andinvestment banking, investment and portfolio management
and advisory services, nominee and custodian services andexecutor and trustee services.
There has been no significant change in the nature of theprincipal activities of the Group during the financial year.
At 30 September 2001, the Group had 1,056 points ofrepresentation.

State of Affairs
In the directors’ opinion, there have been no significant
changes in the state of affairs of the Group during thefinancial year, other than:> Net loans and advances increased by 6.3% from$116,315 million to $123,657 million, primarily fromgrowth in mortgage lending and commercial lending
in Australia and New Zealand.
> Deposits and other borrowings increased by 4.2%
from $100,602 million to $104,874 million.
> The charge for doubtful debts has been determined using
economic loss provisioning and is based on the Group’s
risk management models.
> The economic loss provision charge increased from$502 million to $531 million reflecting a down grade in
the overall risk profile due to the slowing world economy.
> Net specific provisions were $520 million, up from$383 million.

ResultConsolidated net profit after income tax attributable
to shareholders of the Company was $1,870 million.
Further details are contained in the Chief Executive Officer’s
Overview and the Chief Financial Officer’s Review
commencing on pages 4 and 8 respectively of the2001 Annual Report.

> On 27 April 2000 the Group announced an on-market
buyback of ordinary shares. This was completed on 8 May
2001 and 75.4 million ordinary shares were bought backat a total cost of $1 billion.

Dividends
The directors propose that a final fully franked dividendof 40 cents per fully paid ordinary share be declared on
19 November 2001 and be paid on 14 December 2001.
The proposed payment amounts to $595 million.

While the above matters are those considered to besignificant changes, reviews of matters affecting the Group’s
state of affairs are also contained in the Chairman’s Letter toShareholders, the Chief Executive Officer’s Overview and theChief Financial Officer’s Review.

During the financial year, the following fully franked
dividends were paid on fully paid ordinary shares:

Events since the End of the Financial Year
Other than the proposed purchase of banking operations inFiji, Papua New Guinea and Vanuatu (subject to regulatory
approval), no matter or circumstance has arisen between
30 September 2001 and the date of this report that has
significantly affected or may significantly affect theoperations of the Group in future financial years, the resultsof those operations or the state of affairs of the Group in
future years.

Type
Final
Interim

Share information(per fully paid ordinary share)
Earnings per share– basic
Dividend payout ratio
Net tangible assets

106.8c
59.1%
$5.49

50
51

Directors’ Report

Ten Year
Summary1

Cents per
share
35
33

Amount before
bonus options$m

Date ofpayment

528 15 December 2000
491
2 July 2001

The final dividend for the year ended 30 September 2000
was paid on 15 December 2000 and is detailed in the
Directors’ Report dated 6 November 2000.
Review of Operations
A review of the operations of the Group during the financial
year and the results of those operations are contained in the
Chairman’s Letter to Shareholders, the Chief Executive
Officer’s Overview and the Chief Financial Officer’s Review.

> Gross non-accrual loans decreased to $1,260 million,
or 1.0% of net loans and advances.

Future Developments
Details of likely developments in the operations of the Group
in future financial years are contained in the Chairman’s
Letter to Shareholders and the Chief Executive Officer’s
Overview. In the opinion of the directors, disclosure of any
further information would be likely to result in unreasonableprejudice to the Group.
Rounding of Amounts
The Company is a company of the kind referred to in theAustralian Securities and Investments Commission classorder 98/100 dated 10 July 1998 pursuant to section 341(1)of the Corporations Act 2001. As a result, amounts in thisreport and the accompanying financial statements havebeen rounded to the nearest million dollars except whereotherwise indicated.
Shareholdings
The directors’ shareholdings, both beneficial andnon-beneficial, in the shares of the Company are detailedon page 55 of the 2001 Annual Report.

ANZ
AnnualReport2001

Directors’ Report

Share Options
Details of share options issued over un-issued shares
granted to directors, senior executives and officers, areshown under Directors’ and Executive Officers’ Emolumentsin this report, and in note 49 of the Financial Report.
No person entitled to exercise any option has or had, by
virtue of an option, a right to participate in any share issueof any other body corporate.
The names of all persons who currently hold options granted
under the schemes are entered in the register kept by theCompany pursuant to section 170 of the Corporations Act
2001. This register may be inspected free of charge.
Directors’ Qualifications and Experience
The Board includes six non-executive directors who havea diversity of business and community experience and one
executive director who has extensive banking experience.
The names, qualifications and experience of the directors
who are in office at the date of this report are contained on
pages 46 and 47 of the 2001 Annual Report and thosepages are incorporated in and form part of this report.
G K Toomey resigned as a director on 8 October 2001,
having held office since before the commencement of
the financial year.
Special responsibilities and attendance at meetings bydirectors, are shown on page 55.
Directors’ and Executive Officers’ Emoluments
The Human Resources Committee (the Committee) of theBoard assists the Board in its oversight of major policies andguidelines relating to the management of human resources.
The Committee consists of the executive andnon-executive directors shown in the table on page 55.
The Committee’s responsibilities include the review of
proposed remuneration and profit sharing programs.
The Committee recommends these programs to the Board
for approval and monitors their ongoing operation. It also
reviews and approves all remuneration entitlements forsenior executives, approving the same or, in the case of
Board appointees, makes recommendations to the Board.
The Managing Director does not participate in discussions
and decisions relating to his own remuneration.

The Committee does not set fees for the Chairman or othernon-executive directors. These are based on advice received
from external advisors and approved by the Board. Nonexecutive directors’ fees are within the limit set byshareholders at the Annual General Meeting held on
21 January 1998, and are set at levels which fairly represent
the responsibilities of, and time spent by, the non-executive
directors on Group matters. Regard is also had to thelevel of fees payable to non-executive directors incomparable companies.
The Group’s remuneration policy is to ensure that
remuneration packages properly reflect the duties andresponsibilities of the senior executives and are sufficient to
attract, retain and motivate personnel of the requisite quality.
Remuneration packages are structured in such a way thata significant part of the individual’s reward depends upon
the achievement of business objectives and the profitabilityof the Group as measured by the Economic Value
AddedTM methodology.
All senior executives have performance objectives, including
the achievement of key strategic milestones and operating
performance targets. These objectives are agreed at the
beginning of the performance period. Performance bonus
payments are contingent on the achievement of agreed
performance goals, assessed through the semi-annual
performance management process.
Two thirds of the performance related bonus of senior
executives, other than the Managing Director, is paid asdeferred shares in the Company, with half of these sharesdeferred a minimum of twelve months and half deferred fora minimum of three years. The issue price of deferred sharesis based on the average closing price of the Company’s
shares during the five trading days prior to the relevant
Board or Shares Committee meeting which approves theissue of the shares.
Deferred shares are held in trust by ANZEST Pty Ltd(the trustee of employee incentive plans) and may vest withthe senior executive after a minimum relevant period. If thesenior executive resigns or is dismissed during a deferral
period, the shares are forfeited.
Long term incentives in the form of options and sharesare also provided to eligible executives in considerationof future performance.
Details of the emoluments of each director and of the five
most highly paid executives for the Group and the Company
are shown on page 53.

52
53

Directors’ Report

Director Emoluments

Fees Paid
Cash

Value ofdeferred shares1

Subsidiary
Board

Committee
Chairman’s fee

Superannuation
contributions

Total

76,00095,00095,00074,00095,00068,75092,418239,000––
21,000–26,250–––90,196–
10,000–––10,000–10,000–10,000
–

8,416
8,400
7,600
8,400
8,400
8,400
7,393

323,416
113,400
192,796
113,400
113,400
113,400
99,811

596,168

286,250

100,196

30,00057,0091,069,623

Total cash
and otherbenefits

1,500,000
900,333
898,000
900,333
969,333
905,000

Amounts in $Non-executive directors
C B Goode (Chairman)J C Dahlsen
R S Deane
J K Ellis
M A Jackson
B W Scott
G K Toomey2

1 Participation in Directors’ Share Plan. Value of shares at the date they were purchased on market
2 Commenced leave of absence from 20 September 2001, resigned 8 October 2001

Executive Emoluments
Cash and benefits

Amounts in $Executive Management Committee
J McFarlane (Managing Director)
D L Boyles
R A Davis
E Funke Kupper
P J O Hawkins
P R Marriott

Salaryor fees

Performance
relatedbonus (cashcomponent)

Benefits

Superannuation
contributions

1,422,000
628,372
644,049
660,100
707,500
660,100–
200,333
198,000
200,333
219,333
205,000–
35,22819,551
3,500
3,500
3,500

78,00036,40036,40036,40039,00036,4001

1 Benefits include the provision of housing, cars and parking, private health insurance, subsidised loans and certain other expenses

Deferred shares and options

Deferred Shares1
NumberType I

Value $J McFarlane (Managing Director)

100,922 1,593,686

D L Boyles

13,231R A Davis

Options granted2, 3, 4

Type II
NumberValue $

Number Issued

Date

Exercise Price$––

750,000

31/12/00

14.78

200,330

25,131

381,785

170,000
80,00070,00021/11/00
24/04/01
24/10/01

14.34
13.70
17.05

13,118

197,996

25,018379,451

170,000
80,00070,00021/11/00
24/04/01
24/10/01

14.34
13.70
17.05

E Funke Kupper

13,031

200,335

26,731

408,125

270,000
95,00077,00021/11/00
24/04/01
24/10/01

14.34
13.70
17.05

P J O Hawkins

14,370219,334

26,770409,314170,000
80,00077,00021/11/00
24/04/01
24/10/01

14.34
13.70
17.05

P R Marriott

13,505205,001

25,605389,866

170,000
80,00073,00021/11/00
24/04/01
24/10/01

14.34
13.70
17.05

1 Deferred shares are held in trust for up to 10 years and are restricted for periods of one year (Type I) or three years (Type II). Subject to the Board determining otherwise
the shares are forfeited if the recipient leaves the Group within the restricted period for reasons other than retirement, retrenchment, death or disablement or commits
gross misconduct. For J McFarlane, deferred shares are purchased under the Directors’ Share Plan. For the other senior executives deferred shares are issued in lieu of
bonus, or as part of long term incentive arrangements. The number of shares issued under long term incentive arrangements is predicated on a market competitive
assessment of long term compensation benchmarks. These shares have an additional restriction, and entitlement will only vest in the event of individual performance
conditions being met. In the event of retrenchment or retirement the release of long term incentive shares will be pro-rated.
2 All options expire seven years from the date of grant except for J McFarlane’s which expire four years from the date of grant. These options are exercisable between threeand seven years of the date of grant if certain performance conditions are met. Each option entitles the holder to purchase one ordinary fully paid share in the company.
The estimated value is calculated using a modified Black Scholes model. Estimated values, per option, at the dates of issue, were: $2.21 (21 November 2000),$2.24 (31 December 2000), $2.21 (24 April 2001), $2.68 (24 October 2001).
3 All options issued except for J McFarlane’s may be exercised only if the ANZ Accumulation Index over the period from the date of grant to the last trading day of any
month occurring during the relevant measurement period equals or exceeds (for 50% of the options issued) the ASX 100 Accumulation Index and(for the remaining 50% of the options issued) the Accumulated Banking and Finance Index, both calculated over the same period.
4 J McFarlane’s options may be exercised only if the ANZ Accumulation Index over the period from the date on which the options are granted to the last trading day of any
month occurring during the relevant exercise period equals or exceeds the ASX 100 Accumulation Index calculated over the same period. Subject to the performance
conditions being met, J McFarlane’s options are exercisable from 31 December 2003 to 31 December 2004, both dates inclusive.

ANZ
AnnualReport2001

Directors’ Report

Directors’ and Officers’ Indemnity
The Company’s Constitution (Rule 11.1) permits theCompany to indemnify each officer or employee of theCompany against liabilities (so far as may be permitted
under the Corporations Act 2001) incurred in the execution
and discharge of the officer’s or employee’s duties.
It is the Company’s policy that its employees should notincur any liability for acting in the course of their employment.
Under the policy, the Company will indemnify employees
against any liability they incur in carrying out their role.
The indemnity protects employees and former employees
who incur a liability when acting as an employee, trustee orofficer of the Company, or a subsidiary of the Company at
the request of the Company.
The indemnity is subject to the Corporations Act 2001 andwill not apply in respect of any liability arising from:> a claim by the Company;> a claim by a related body corporate;> a lack of good faith;> illegal or dishonest conduct; or> non compliance with the Company’s policies
or discretions.
The Company has entered into Deeds of Access, Insurance
and Indemnity with each of its directors and secretaries andwith certain employees and certain other individuals who act
as directors of related body corporates or of anothercompany.
To the extent permitted by law, the Company indemnifies
the individual for all liabilities, including costs, damages
and expenses incurred in their capacity as an officer ofthe company to which they have been appointed.

54
55

Directors’ Meetings
Major Committees
Directors’ Shareholdings

The Company has indemnified the trustees and former
trustees of certain of the Company’s superannuation funds
and directors, former directors, officers and former officersof trustees of various Company sponsored superannuation
schemes in Australia. Under the relevant Deeds ofIndemnity, the Company must indemnify each indemnified
person if the assets of the relevant fund are insufficient tocover any loss, damage, liability or cost incurred by theindemnified person in connection with the fund, being loss,
damage, liability or costs for which the indemnified person
would have been entitled to be indemnified out of theassets of the fund in accordance with the trust deed andthe Superannuation Industry (Supervision) Act 1993.
This indemnity survives the termination of the fund.
Some of the indemnified persons are or were directors
or executive officers of the Company.
The Company has also indemnified certain employees of theCompany, being trustees and administrators of a trust which
is a subsidiary entity, from and against any loss, damage,liability, tax, penalty, expense or claim of any kind or naturearising out of or in connection with the creation, operation
or dissolution of the trust, where they are acting in goodfaith and in a manner that they reasonably believed to bewithin the scope of the authority conferred by the trust.
Except for the above, no person has been indemnified
nor has the Company or a related body corporate of theCompany made an agreement to indemnify any person who
is or has been an officer or auditor of the Company or of a
related body corporate.
During the financial year, and again since the end of thefinancial year, the Company has paid a premium for an
insurance policy for the benefit of the directors, secretaries,and executive officers of the Company, and directors,
secretaries and executive officers of related bodies corporateof the Company. In accordance with common commercial
practice, the insurance policy prohibits disclosure of the natureof the liability insured against and the amount of the premium.
Signed in accordance with a resolution of the directors.

Directors’ Meetings
The number of Board meetings and Committee meetings held during the year, and attended by each director are set out in thefollowing table:C B GoodeJ C Dahlsen
R S Deane1
J K Ellis
M A Jackson
J McFarlane
B W Scott
G K Toomey2

Board
A
B

Risk
Management
A
B

A

9
9
9
9
9
9
9
8

11
–
11
11
–
11
–
10

8
8
–
–
8
–
8
–

9
9
8
9
8
9
9
6

9
–
8
10
–
8
–
5

Audit

B

Human
Resources
A
B

Executive
Committee
A
B

SharesCommittee
A
B

Committeeof the
Board
A
B

7
8
–
–
6
–
8
–

7
–
–
6
–
6
7
6

2
1
–
–
1
2
–
–

7
5
–
3
–
1
8
2

1
–
–
1
2
4
–
–

7
–
–
5
–
5
7
4

2
1
–
–
1
2
–
–

7
5
–
3
–
1
8
2

1
–
–
1
2
4
–
–

Column A - The number of meetings the director was eligible to attend
Column B - The number of meetings attended. The Chairman is an ex-officio member of all Board Committees
1 New Zealand resident
2 New Zealand resident from January 2001; on leave of absence from 20 September 2001; resigned 8 October 2001

Major Committees
Audit (Chairman - J C Dahlsen) reviews the Group’s accounting policies and practices; reviews financial statements,
due diligence processes in relation to capital raisings and compliance with the Group’s statutory responsibilities;
monitors compliance with approved policies and controls; and approves audit plans and the audit fee of the external auditor.
Risk Management (Chairman - J K Ellis) oversees all aspects of risk management; and approves the delegation policies,
standards and reporting mechanisms for credit risk, market risk, balance sheet risk and operating risk.
Human Resources (Chairman - B W Scott) oversees human resources policies and guidelines including remuneration schemes,
industrial relations strategies, staff development programs, and assessment of the performance of senior executives.

Directors’ Shareholdings

Options

Non-beneficially held
Shares214,782
83,40075,00056,37070,803631,039
65,609
2,364

–
–
–
–
–
2,500,000 2––

142,093
12,000––––––1,199,367

2,500,000

154,093

Shares1C B GoodeJ C Dahlsen
R S Deane
J K Ellis
M A Jackson
J McFarlane
B W Scott
G K Toomey
Total

Beneficially held

1 Shares include deferred shares
2 500,000 options exercisable at $12.12 after 1 February 2000; 500,000 options exercisable at $11.40 after 1 June 2001; 750,000 options exercisable at $11.49 after
31 December 2002 and 750,000 options exercisable at $14.78 after 31 December 2003 with the latter two subject to a performance hurdle that the ANZ accumulationindex exceeds the ASX 100 accumulation index calculated over a stated period.

Charles Goode
Chairman
5 November 2001

John McFarlane
Chief Executive Officer

ANZ
AnnualReport2001

Australia and New Zealand Banking Group Limited and Controlled Entities
Consolidated Statement of Financial Performancefor the year ended 30 September 2001

Note

2001
$m

Consolidated
2000
$m

1999
$m

Total income

12,863

14,031

11,061

Interest income
Interest expense

10,251(6,418)

10,241(6,440)8,684(5,029)Net interest income
Other operating income
Prior period abnormal income

2

3,833
2,612
–

3,801
2,583
1,207

3,655
2,377
–

2

6,445
(3,131)–

7,591(3,314)
(986)

6,032
(3,300)–

Profit before debt provision
Provision for doubtful debts

3,314
(531)

3,291
(502)

2,732
(510)

Profit before income tax

2,783

2,789

2,222

(911)
–

(863)
(177)

(736)
–

Total income tax expense(911)(1,040)(736)

Profit after income tax
Net profit attributable to outside equity interests

1,872
(2)

1,749
(2)

1,486
(6)

Net profit attributable to shareholders of the Company

1,870

1,747

1,480

Currency translation adjustments, net of hedges after tax
Revaluation of properties

197
–

170
31

(215)
–

Total adjustments attributable to shareholdersof the Company recognised directly into equity

197

201

(215)

Total changes in equity other than those resulting
from transactions with shareholders as owners

2,067

1,948

1,265

Operating income
Operating expenses
Prior period abnormal expenses

Income tax expense
Prior period abnormal tax

2

Earnings per ordinary share (cents)
Basic
Diluted

117.4
116.3

106.8
106.3

90.6
90.3

Dividend per ordinary share (cents)

73

64

56

5.96

5.49

5.21

Net tangible assets per ordinary share ($)

56
57

Australia and New Zealand Banking Group Limited and Controlled Entities
Consolidated Statement of Financial Position
as at 30 September 2001

Note

2001
$m

Consolidated

2000
$m

AssetsLiquid assets
Due from other financial institutions
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Life insurance investment assets
Regulatory deposits
Shares in associates
Income tax assets
Goodwill
Other assets
Premises and equipment

7,794
4,829
4,827
3,487
123,657
14,324
4,774
133
64
1,200
137
18,906
1,361

5,648
5,822
4,126
3,006
116,315
15,482
4,739
103
29
1,227
145
14,566
1,259

Total assets

185,493

172,467

Liabilities
Due to other financial institutions
Deposits and other borrowings
Liability for acceptances
Income tax liabilities
Creditors and other liabilities
Provisions
Life insurance policy liabilities
Bonds and notes
Loan capital

12,690104,874
14,324
1,335
15,9482,142
4,458
15,340
3,831

12,247
100,602
15,482
1,303
13,371
2,089
4,360
9,519
3,687

Total liabilities

174,942

162,660

Net assets

10,551

9,807

3,733
1,526
717
4,562

4,028
1,374
786
3,607

10,538
13

9,795
12

10,551

9,807

Shareholders’ equity
Ordinary share capitalPreference share capital
Reserves
Retained profits

4

Share capital and reserves attributable to shareholders of the Company
Outside equity interests
Total shareholders’ equity
Contingent liabilities

5

ANZ
AnnualReport2001

Australia and New Zealand Banking Group Limited and Controlled Entities
Statement of Cash Flows for the year ended 30 September 2001

2001
$m

Consolidated
2000
$m

1999
$m

Inflows (Outflows)

Cash flows from operating activities
Interest received
Dividends received
Fees and other income received
Interest paid
Personnel expenses paid
Premises expenses paid
Other operating expenses paid
Income taxes paid
Goods and services tax received (paid)
Net (increase) decrease in trading securities

11,05475
2,783(6,703)(1,827)(253)(1,775)
(823)
(53)
(629)

9,916
192
2,460
(6,108)(1,735)(283)(1,199)
(754)
4
(25)

8,679
157
2,089
(5,039)(1,840)
(282)
(977)
(535)
–
1,442

Net cash provided by operating activities

1,849

2,468

3,694

909
(27)
(4,829)
(36)

(792)
(90)
(17,633)
(50)

616
828
(12,936)–(4,005)
3,630(8,109)8,553(5,527)
4,670

(36)
–
–

(43)
1,510
–

(2)
–
(94)

(452)
127
529

(275)
249
(3,160)

(177)
142
(610)

(4,190)(19,840)(13,090)

(826)
890
581

3,111
12,763
(843)

(779)
5,202
743

7,542
(2,878)

5,555(1,341)

4,330
(479)

–
(244)
(1)
(1,028)
114
(495)

152
(147)
(19)
(749)
36
(1,014)

–
(256)
(1)
(671)
591
–

Net cash provided by financing activities

3,655

17,5048,680

Net cash provided by operating activities
Net cash (used in) investing activities
Net cash provided by financing activities

1,849(4,190)
3,655

2,468
(19,840)
17,504

3,694(13,090)
8,680

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign currency translation on opening balances

1,314
6,462
1,295

132
6,634
(304)

(716)
8,981
(1,631)

Cash and cash equivalents at end of year

9,071

6,462

6,634

Cash flows from investing activities
Net decrease (increase)
Due from other financial institutions
Regulatory deposits
Loans and advances
Shares in controlled entities and associates
Investment securities
Purchases
Proceeds from sale or maturity
Controlled entities and associates
Purchased (net of cash acquired)Proceeds from sale (net of cash disposed)
Transferred from controlled entities to associates (net of cash)
Premises and equipment
Purchases
Proceeds from sale
Other
Net cash (used in) investing activities
Cash flows from financing activities
Net (decrease) increase
Due to other financial institutions
Deposits and other borrowings
Creditors and other liabilities
Bonds and notes
Issue proceeds
Redemptions
Loan capital
Issue proceeds
Redemptions
Decrease in outside equity interests
Dividends paid
Share capital issues
Share buyback

58
59

Notes to the Concise Financial Statements

1: Accounting Policies

Change in Accounting Policy

This concise financial report has been derived from theGroup’s 2001 Financial Report which complies with the
Corporations Act 2001, Australian Accounting Standards,
Urgent Issues Group Consensus Views and other authoritative
pronouncements of the Australian Accounting Standards
Board. A full description of the accounting policies adopted
by the Group is provided in the 2001 Financial Report.
The accounting policies are consistent with those of theprevious financial year except for the change disclosed.

On applying AASB 1041 ‘Revaluation of Non-Current Assets’with effect from 1 October 2000, the Group has elected torevert to the cost basis for measuring the class of assets
land and buildings. Previously, this class of assets wasrevalued periodically.

The directors have elected to adopt early the revised
Accounting Standard AASB 1005 ‘Segment Reporting’.

In changing from a revaluation to a cost policy, the carrying
amount of the class of assets land and buildings at the dateof first applying the standard is deemed to be their cost.
Writedowns of previously revalued assets may no longer bemade through the asset revaluation reserve. This change inaccounting policy had no impact for the year ended
30 September 2001.

2: Items Reported as Abnormal in Prior Periods
2001$mConsolidated
2000
$m

1999
$m

–
–
–

30
33
1,225

–
–
–

–
–
–
–

(575)
(361)
(50)
(81)

–
–
–
–

Total prior period abnormal profit before tax

–

221

–

Income tax (expense) benefit applicable toRestatement of deferred tax balances
Sale of Grindlays and associated businesses and provisions raised
Restructuring provision
Provision for litigation

–
–
–
–

(64)
(246)
116
17

–
–
–
–

Total prior period abnormal income tax expense

–

(177)

–

Total prior period abnormal profit after tax

–

44

–

Profit before tax
Revaluation of properties
Gain on sale of investment in Colonial Limited
Income from sale of Grindlays and associated businesses(Loss) before tax
Provisions raised on sale of Grindlays and associated businesses
Restructuring provision
Provision for litigation
Writedown of investment in Panin Bank

ANZ
AnnualReport2001

Notes to the Concise Financial Statements

60
61

Notes to the Concise Financial Statements

3: Dividends

6: Segment Analysis

Ordinary Dividends
Interim dividend
Final dividend
Bonus option plan adjustment
Dividends on ordinary shares

2001
$m

2000
$m

1999
$m

491
595
(24)

445
528
(32)

404
470
(60)

1,062

941

814

During the year ended 30 September 2001, the Group managed its activities along the following lines of business:
Personal, Corporate and International and Subsidiaries. Corporate Centre, Technology and Finance combines the central supportand shared service units of the Group, including the results of asset and liability management and earnings on central capital.
A description of each of the operating business segments, including the types of products and services the segments provide
to customers, is detailed in the 2001 Financial Report.
Business Segment Analysis1, 2

Corporate
Centre,Technology& Finance$m

A fully franked final dividend of 40 cents, is proposed to be paid on each fully paid ordinary share on 14 December 2001 (2000:
final dividend of 35 cents, paid 15 December 2000, fully franked; 1999: final dividend of 30 cents, paid 20 December 1999,
partially franked to 80%). The 2001 interim dividend of 33 cents, paid 2 July 2001, was fully franked (2000: interim dividendof 29 cents, paid 3 July 2000, fully franked; 1999: interim dividend of 26 cents, paid 5 July 1999, partially franked to 75% ).

Consolidated
30 September 2001

Personal$m

Corporate$m

International& Subsidiaries$m

Total income

6,306

4,524

1,977

The tax rate applicable to the franking credits attached to the interim dividend and to be attached to the proposed final
dividend is 30% (2000: 34%, 1999: 36%).

Net interest income
Other external operating income
Net intersegment income

2,196
951
118

819
1,140
(36)

615
508
(91)

Operating income

3,265

1,923

1,032

214

11

6,445

Other external expenses
Net intersegment expenses(1,372)
(359)

(594)
(146)

(417)
(83)

(750)
593

2
(5)

(3,131)–

Operating expenses(1,731)

(740)

(500)

(157)

(3)

(3,131)

Profit before debt provision
Doubtful debt provision
Income tax and outside equity interests

1,534
(205)
(450)

1,183
(178)
(268)

532
(91)
(157)

57
(42)
(33)

8
(15)
(5)

3,314
(531)
(913)

Preference Dividends
Dividends on preference shares

2001
$m

2000
$m

1999
$m

119

102

72

In 1998 the Company issued 124,032,000 preference shares, raising USD 775 million via Trust Securities issues. The Trust
Securities carry an entitlement to a distribution of 8.00% (on USD 400 million) and 8.08% (on USD 375 million). The amounts
are payable quarterly in arrears. Shown above are amounts paid for the year to 30 September 2001 (2000: full year to
30 September 2000; 1999: from their dates of issue, 23 September 1998 and 19 November 1998, to 30 September 1999).
Payment dates are the fifteenth days of January, April, July and October in each year.
Dividend Franking Account
The amount of franking credits available for the subsequent financial year is nil (2000 and 1999: nil), after adjusting for franking
credits that will arise from the payment of tax on Australian profits for the 2001 financial year less franking credits which will beutilised in franking the proposed final dividend and franking credits that may not be accessible by the Company at present.

4: Share Buybacks
The Company conducted the following on-market buybacks during the year to 30 September 2001:
Date ofAnnouncement1

Date
Buyback
Completed

No. ofordinary sharesbought back% ofordinary sharesbought backAverageprice
per share

Total
Consideration 2$m

27 April 2000

8 May 2001

34.6 million

2.3%$14.30495

1 Date of the directors’ resolution approving the buyback
2 Consideration is allocated to Share Capital

5: Contingent Liabilities
There are outstanding court proceedings, claims and possible claims against the Group, the aggregate amount of which cannot
readily be quantified. Where appropriate, legal advice has been obtained and, in the light of such advice, provisions have been
made as deemed necessary.
Details covering indemnities and other matters arising from the Grindlays sale on 31 July 2000 are contained in the 2001
Financial Report.

Profit after income tax
Total assets
Total liabilities

Discontinued
Businesses$mConsolidated
Total
$m

48

8

12,863

174
31
9

29
(18)
–

3,833
2,612
–

879

737

284

(18)

(12)

1,870

73,52840,22868,191
58,81826,416
26,978

16,27047,9501,088
968

185,493
174,942

Corporate
Centre,Technology& Finance$m

Business Segment Analysis1, 2

Discontinued
Businesses& Abnormals 3,4$m

Consolidated
30 September 2000

Personal$m

Corporate$m

International& Subsidiaries$m

Total income

5,517

4,041

1,789

1,743

941

14,031

Net interest income
Other external operating income
Net intersegment income

1,985
869
146

723
1,004
(45)

613
446
(92)

143
27
(9)

337
1,444
–

3,801
3,790
–

Operating income

3,000

1,682

967

161

1,781

7,591

Other external expenses
Net intersegment expenses(1,332)
(374)

(574)
(141)

(450)
(40)

(709)
596

(1,235)(41)(4,300)–Operating expenses(1,706)

(715)

(490)

(113)

(1,276)(4,300)

Profit before debt provision
Doubtful debt provision
Income tax and outside equity interests

1,294
(192)
(391)

967
(153)
(212)

477
(87)
(170)

48
(8)
24

505
(62)
(293)

3,291
(502)
(1,042)

Profit after income tax
Total assets
Total liabilities

Consolidated
Total
$m

711

602

220

64

150

1,747

66,89636,004

65,16150,70524,372
25,325

15,12948,442909
2,184

172,467
162,660

1 Results are equity standardised
2 Intersegment transfers are accounted for and determined on an arms length basis
3 Results of Grindlays and associated businesses sold on 31 July 2000 to Standard Chartered Bank are included here
4 Includes abnormal items in year ended 30 September 2000

ANZ
AnnualReport2001

Notes to the Concise Financial Statements
Directors’ Declaration

6: Segment Analysis (continued)
The Group operates in Australia, New Zealand and Overseas markets. Overseas operations are conducted in UK and Europe,Asia, Pacific and Americas. As a result of the sale of the Grindlays operations, the Group no longer has material operations inSouth Asia and the Middle East.
Geographic Segment Analysis
Income$m

2001

Assets$m

Income$m

2000

Assets$mAustralia
New ZealandOverseas markets

9,046
2,024
1,793

133,035
22,33730,121

7,991
1,843
4,197

127,306
20,35424,807

Total

12,863

185,493

14,031

172,467

7: Events Since the End of the Financial YearOn 8 October 2001, ANZ announced, subject to regulatory approval, the acquisition of operations in Papua New Guinea, Fiji and
Vanuatu, for approximately USD 50 million. The acquisitions comprise the operations of the Bank of Hawaii in those countries.

Directors’ Declaration
The directors of Australia and New Zealand Banking Group
Limited declare that the accompanying concise financial
report of the consolidated Group is fairly presented as anabbreviation of the Group’s 30 September 2001 Financial
Report and complies with Australian Accounting Standard
AASB 1039 ‘Concise Financial Reports’.

To the members of Australia and New Zealand
Banking Group Limited
Scope
We have audited the concise financial report of Australia
and New Zealand Banking Group Limited and its controlled
entities for the financial year ended 30 September 2001
consisting of the statement of financial performance,statement of financial position, statement of cash flows,
accompanying notes as set out on pages 56 to 62, and theaccompanying discussion and analysis on pages 8 to 11 inorder to express an opinion on it to the members of theCompany. The Company’s directors are responsible for the
concise financial report.
Our audit has been conducted in accordance with Australian
Auditing Standards to provide reasonable assurance
whether the concise financial report is free of material
misstatement. We have also performed an independent
audit of the full financial report of Australia and New Zealand
Banking Group Limited and its controlled entities for the year
ended 30 September 2001. Our audit report on the full
financial report was signed on 5 November 2001, and was
not subject to any qualification.

In our report on the Group’s 2001 Financial Report we
declared that:

Financial Highlights in Key Currencies(a) the financial statements and notes comply with the
Corporations Act 2001, including:(i) complying with applicable Australian AccountingStandards and other mandatory professional
reporting requirements; and(ii) giving a true and fair view of the financial position of
the Company and of the consolidated Group and of
their performance as represented by the results of
their operations and their cash flows; and(b) in the directors’ opinion at the date of this declaration
there are reasonable grounds to believe that theCompany and consolidated Group will be able to pay its
debts as and when they become due and payable.
Signed in accordance with a resolution of the directors

62
63

Auditors’ Report
Financial Highlights in Key Currencies
Exchange Rates

Our procedures in respect of the audit of the concise
financial report included testing that the information in the
concise financial report is consistent with the full financial
report and examination, on a test basis, of evidence
supporting the amounts, discussion and analysis, and otherdisclosures which were not directly derived from the full
financial report. These procedures have been undertaken
to form an opinion whether, in all material respects, theconcise financial report is presented fairly in accordancewith Accounting Standard AASB 1039 ‘Concise Financial
Reports’ issued in Australia.
The audit opinion in this report has been formed on theabove basis.
Audit Opinion
In our opinion, the concise financial report of Australia
and New Zealand Banking Group Limited and its controlled
entities for the year ended 30 September 2001 complies
with AASB 1039 ‘Concise Financial Reports’.

KPMG
Chartered Accountants
Melbourne
5 November 2001

P S NashPartner

2001
AUD

2001
USD1

2001
GBP1

2001
NZD1

Profit and loss
Net income
Operating expenses

6,445(3,131)

3,371(1,638)2,338(1,136)

8,039(3,905)

Profit before tax and debt provision
Provision for doubtful debts

3,314
(531)

1,733
(278)

1,202
(193)

4,134
(662)

Profit before tax
Income tax expense
Outside equity interests

2,783
(911)
(2)

1,455
(476)
(1)

1,009
(330)
(1)

3,472
(1,136)(2)

Profit after tax

1,870

978

678

2,334

185,493
174,942
10,551

90,94785,774
5,173

61,78858,273
3,515

224,947
212,152
12,795

117.4
73
$5.96

61.4
38
$2.92

42.6
26
$1.99

146.4
91
$7.23

Millions

Balance Sheet
AssetsLiabilities
Shareholders’ equity2
Ratios – per ordinary share
Earnings per share – basic
Dividends per share – declared rate
Net tangible assets per share

1 USD, GBP and NZD amounts – profit and loss converted at average rates for financial year 30 September 2001 and balance sheet items at closing rates at

Charles Goode
Chairman
5 November 2001

John McFarlane
Chief Executive Officer

30 September 2001
2 Includes outside equity interests

Exchange Rates
The exchange rates used in the translation of the results and the assets and liabilities of major overseas branches andcontrolled entities are:
Closing

Great British pound
United States dollar
New Zealand dollar

0.33310.49031.2127

2001

Average

Closing

0.36270.52301.24730.37200.5444
1.3324

2000

Average

Closing

0.39030.61011.26470.39720.6533
1.2598

1999

Average

0.39320.64031.2014ANZ
AnnualReport2001

Shareholder Information

Shareholder Information
Ordinary shares
At 9 October 2001 the twenty largest holders of ordinary shares held 879,019,333 ordinary shares, equal to 59.1 per cent of
the total issued ordinary capital.
Name

Number of shares%

Chase Manhattan Nominees Ltd
259,425,473
National Nominees Ltd
164,911,251
Westpac Custodian Nominees Ltd 129,970,745
Citicorp Nominees Pty Ltd
62,257,042
ANZ Nominees Ltd
40,797,225
AMP Life Ltd
29,485,998
RBC Global Services Australia
Nominees Pty Ltd
28,281,407
Commonwealth Custodial
Services Ltd
26,635,838
Queensland Investment Corporation 22,661,039
MLC Ltd
19,845,873

17.43
11.08
8.73
4.18
2.74
1.98
1.90
1.79
1.52
1.33

Name

Cogent Nominees Pty Ltd
ING Life Ltd
HSBC Custody Nominees Ltd
ANZEST Pty Ltd
Perpetual Trustees Nominees Ltd
NRMA Nominees Pty Ltd
The National Mutual Life Associationof Australasia
Government Superannuation Office
Perpetual Trustees Victoria Ltd
Australian Foundation Investment
Company Ltd

Number of Shares%

17,186,097
14,923,462
13,803,993
10,628,264
8,754,900
7,332,734

1.15
1.00
0.93
0.71
0.59
0.49

6,486,755 0.44
6,020,779 0.40
4,933,409 0.33
4,677,049 0.31
879,019,333 59.06

Distribution of shareholdings
At 9 October 2001
Range

Number ofholders% ofholders

Number ofshares% ofshares1 to 1,000 shares
1,001 to 5,000 shares
5,001 to 10,000 shares
10,001 to 100,000 sharesOver 100,001 shares

93,01568,479
11,693
7,436
412

51.4
37.8
6.5
4.1
0.2

44,184,391
155,789,882
83,198,231
161,086,569
1,044,017,447

3.0
10.5
5.6
10.8
70.1

Total

181,035100

1,488,276,520

100

At 9 October 2001:> there was one entry in the Register of Substantial Shareholdings. Franklin Resources Inc. and its affiliates held
97,535,676 shares equal to 6.55 percent of the total issued ordinary capital; and> the average size of holdings of ordinary shares was 8,221 (2000: 8,403) shares; and> there were 1,772 holdings of less than a marketable parcel (less than $500 in value (or 30 shares based on a market priceof $16.45)), (2000: 1,762 holdings), which is less than 1% of the total holdings of ordinary shares.
Voting rights of ordinary shares
The Constitution provides for votes to be cast:(i) on show of hands, 1 vote for each shareholder; and(ii) on a poll, 1 vote for each fully paid ordinary share.
Preference shares
At 9 October 2001 Hare and Co was the only holder of preference shares and held 124,032,000 preference shares, being 100
per cent of the total issued preference capital.
Voting rights of preference shares
A preference shareholder may not vote in normal circumstances, but may vote:(i) when a preference share dividend (or equivalent) is not paid by the prescribed quarterly payment date. This entitlement tovote ceases after full payment of four consecutive quarterly preference share dividends; and(ii) on proposals or resolutions that affect the rights attached to the preference shares including proposals to restructure orwind up ANZ.
Employee shareholder information
At the Annual General Meeting in January 1994, shareholders approved an aggregate limit of 7% of all classes of shares andoptions, which remain subject to the rules of a relevant incentive plan, being held by employees and directors.
At 30 September 2001 participants held 2.27% of the issued shares and options of ANZ under the following incentive plans:> ANZ Employee Share Acquisition Plan; and> ANZ Share Option Plan.

Dividends
The final dividend of 40 cents per share will be paid on 14 December 2001, 100% franked. Dividends may
be paid directly to a bank account in Australia, New Zealand or the United Kingdom. Shareholders whowant their dividends paid this way should contact ANZ Share Registry at the addresses shown below.
Dividend Reinvestment and Bonus Option plans are available to shareholders. The plans are detailed in abooklet called ‘Shareholder Alternatives’, copies of which are available from ANZ Share Registry at theaddresses shown below.
Stock Exchange Listings
The Group’s ordinary shares are listed on the Australian Stock Exchange and the New Zealand Stock
Exchange. The Capital Securities offered in 1993 and the Preference Shares issued in 1998 are listedon the New York Stock Exchange.
American Depositary Receipts
The Bank of New York sponsors an American Depositary Receipt (ADR) program in the United Statesof America and ADRs are listed on the New York Stock Exchange. ADR holders should deal directly with
the Bank of New York, New York, telephone (212) 462 6618, fax (212) 462 6211 on all matters relating
to their ADR holdings.
Credit Ratings
Short Term
Moody’s Investors Service
Standard & Poor’s Rating Group

P-1
A1+

Long Term
Moody’s Investors Service
Standard & Poor’s Rating GroupAa3 (outlook stable)AA- (outlook stable)

ANZ
Registered Office
Level 6, 100 Queen Street
Melbourne, Victoria 3000
Australia
Tel: (61 3) 9273 6141
Fax: (61 3) 9273 6142
Secretary: J. Slatter

ANZ Share Registry
Australia
Level 12, 565 Bourke Street
Melbourne, Victoria 3000
Australia
Tel: 1800 11 33 99
Fax: (61 3) 9611 5710
anzshareregistry@computershare.com.au

Investor Relations
Level 20, 100 Queen Street
Melbourne, Victoria 3000
Australia
Tel: (61 3) 9273 6466
Fax: (61 3) 9273 4899
investor.relations@anz.com

New Zealand
Private Bag 92119
Auckland 1020
New ZealandTel: 0800 174 007
Fax: (64 9) 488 8787
United Kingdom
Tel: (44 870) 702 0000

2001 Financial Report
A copy of the Group’s 2001 Financial Report, including the independent Auditors’ Report, is available
to all shareholders, and will be sent to shareholders without charge upon request. The Financial Report
can be requested by telephone (Australia 1800 11 33 99, Overseas 61 3 9615 5989) by email atinvestor.relations@anz.com or viewed directly on the internet at www.anz.com.
Annual General Meeting
The Annual General Meeting will be held on 14 December 2001, at The Westin, No. 1 Martin Place, Sydneycommencing at 10:00am.

www.anz.com