11 November 2022
Market Announcements Office
ASX Limited
Level 420 Bridge Street
SYDNEY NSW 2000
Australia and New Zealand Banking Group Limited (ABN 11 005 357 522)(“ANZBGL”) - Annual Financial Report submission under the Disclosure andTransparency Rules of the United Kingdom Financial Conduct Authority (“UKDTR Submission”)
The attached UK DTR Submission will be lodged by ANZBGL with the London Stock
Exchange (“LSE”) today. This UK DTR Submission has been prepared by ANZBGL inorder to comply with the applicable periodic reporting requirements of DTR 4 of theDisclosure and Transparency Rules of the United Kingdom Financial Conduct Authority inconnection with certain debt securities issued by ANZBGL. For completeness, in addition
to lodgement with the LSE, ANZBGL is lodging this UK DTR Submission with applicableexchanges, including the Australian Securities Exchange and the New Zealand Stock
Exchange today.
Yours faithfully

Simon Pordage
Company Secretary
Australia and New Zealand Banking Group Limited
ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands Vic 3008
GPO Box 254, MELBOURNE VIC 3001 AUSTRALIA
www.anz.com
Approved for distribution by ANZ’s Board of Directors

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

11 November 2022
DISCLOSURE AND TRANSPARENCY RULES – ANNUAL FINANCIAL REPORT SUBMISSION
Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) ("ANZBGL")
together with its subsidiaries ("ANZ" or the "Group") – Annual Financial Reportsubmission under the Disclosure and Transparency Rules ("DTR") of the United Kingdom
Financial Conduct Authority
The following attached documents constitute ANZ's 2022 Annual Financial Report for the purposesof the disclosure requirements of DTR 4.1:


The Group's 2022 Annual Report for the year ended 30 September 2022;A description of the principal risks and uncertainties for the Group provided in accordancewith DTR 4.1.8 (2); andA responsibility statement of the Directors of ANZBGL provided in accordance with DTR
4.1.12 (3)(b).

ANZ 2022 ANNUAL REPORTWE’RE CONTINUING TO
SHAPE A WORLD WHERE PEOPLE
AND COMMUNITIES THRIVEANZ 2022 Annual Report

Contents
Overview
Our 2022 reporting suite

22022 performance snapshot

3

Chairman’s message

4

CEO’s message

6

How we create value
How we create value

8

What matters mostto our stakeholders

10

Our operating environment

11

About our business

12

Achieving our strategy

13

Our approach to societal challenges 14
Our approach to climate change

16

Our divisions

18

Governance26

Risk management

36

Performance overview

44

Remuneration report

62

Directors’ report

104

Financial report

107

KPMG assurance

234

Shareholder information

244

Glossary

253

Many paths.
One Purpose.
Since 1835, ANZ has beenbuilding a better bank, increasingly
enabling customers to thrive. And
more than ever, we continue todeliver our purpose creating evengreater opportunities through:Platforms that are flexible and resilient
and leverage the kind of innovativetechnology that really makes a differencein our lives

Partnerships that unlock new value
with a great foundation and network
to help our customers prosper

People that are great at what they do
and care about our customers and thevalue we create
By giving individuals and businesses alikethe tools to grow, we help them achieve
a whole new level of financial wellbeing.

ANZ 2022 ANNUAL REPORT

Propositions our customers love thatmake it easier to develop and growin a sustainable way

2

ANZ 2022 Annual Report

Our 2022
reporting suite2022 Annual Reportanz.com/annualreport

employees and the community throughthe COVID-19 pandemic and strengthening
our approach to climate change andhuman rights.

2022 Corporate
Governance Statement
anz.com/corporategovernance

Annual Report structure2022 Climate-related
Financial Disclosuresanz.com/annualreport

2022 ESG Supplement
anz.com/annualreport

Integrated reporting
This report includes information on Australia
and New Zealand Banking Group Limited’s1
financial and non-financial performance.
In preparing pages 1 to 60, we have drawn
on aspects of the International Integrated
Reporting Framework to describe how
our business model, strategy, governanceand risk management processes help us
manage risks and opportunities in ouroperating environment and deliver value
for stakeholders. We outline our response
to external social and environmental
challenges, including how we arecontinuing to support our customers,

The various elements of the Directors’
Report, including the Operating and
Financial Review, are covered on pages 1
to 60. Commentary on our performanceoverview contained on pages 44 to 60
references information reported in the
Financial Report pages 107 to 233.
The Remuneration Report on pages 62
to 103 and the Financial Report on pages
107 to 247 have been audited by KPMG.
KPMG also provides limited assurance overEnvironment, Social and Governance (ESG)
content within this Annual Report. A copyof KPMG’s limited assurance report overthe ESG content is on pages 242–243.
This report covers all ANZ operations
worldwide over which, unless otherwise
stated, we had control for the financial year
1 October 2021 to 30 September 2022.
Monetary amounts in this document
are reported in Australian dollars, unlessotherwise stated.

Additional information
We produce a suite of reports to meet theneeds and requirements of a wide rangeof stakeholders.

Our 2022 Corporate Governance Statement
discloses how we have complied with
the ASX Corporate Governance Council’s‘Corporate Governance Principles andRecommendations – 4th edition’ and isavailable at anz.com/corporategovernance.
This year is our first reporting against the
4th edition.
We will release our 2022 Climate-related
Financial Disclosures report prior to our
Annual General Meeting.
Our ESG Supplement provides stakeholders
with detailed ESG disclosures, including
performance against our ESG targets.
The following documents are available atanz.com/shareholder/centre:• News Release• Consolidated Financial Report, Dividend
Announcement & Appendix 4E• Results Presentation and Investor
Discussion Pack
• Annual Review2• Principal Risks and Uncertainties
Disclosure• APS 330 Pillar III Disclosure
We are continually seeking to improve
our reporting suite and welcome
feedback on this report. Please address
any questions, comments or suggestions
to investor.relations@anz.com.

DISCLAIMER & IMPORTANT NOTICE:
The material in the Annual Report contains general background information about the Bank’s activities current as at 26 October 2022. It is information
given in summary form and does not purport to be complete. It is not intended to be and should not be relied upon as advice to investors or potential
investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered,with or without professional advice when deciding if an investment is appropriate. The Annual Report may contain forward-looking statements or
opinions including statements regarding our intent, belief or current expectations with respect to ANZ’s business operations, market conditions, resultsof operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in the Annual Report, the words‘forecast’, ‘estimate’, ‘project’, ‘intend’, ‘anticipate’, ‘believe’, ‘expect’, ‘may’, ‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’, ‘could’, ‘should’ and similar expressions,as they relate to ANZ and its management, are intended to identify forward-looking statements or opinions. Those statements: are usually predictive incharacter; or may be affected by inaccurate assumptions or unknown risks and uncertainties; or may differ materially from results ultimately achieved. As
such, these statements should not be relied upon when making investment decisions. These statements only speak as at the date of publication and no
representation is made as to their correctness on or after this date. Forward-looking statements constitute ‘forward-looking statements’ for the purposesof the United States Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release the result of any revisions
to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.
1. Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year end and from time to time during the financial year (together, the Group).
2. The 2022 Annual Review is comprised of pages 1 to 60, 248 to 249 and 257 to 258 of this Annual Report and a Remuneration Overview.

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information3

2022
performancesnapshot146 C
Total Dividend for 2022
per share$6.5 B
Cash profit¹

84%
employee engagement

More than

58 K
participants in our financial
education programs²$20.75

12.3%
Common equity Tier 1 Capital⁴

35.9%
of women in leadership⁵

Net tangible assets per share³

10.4%

228.8 CCash return on equity¹

Earnings per share (Basic)¹$40.04 B

Supported nearly

1.5 M
customers in saving regularly⁶
Over$4.4 B
funded and facilitated todeliver more affordable,
accessible and sustainable
homes to buy and rent
since 2018⁷

funded and facilitated insustainable solutions since 2019

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers inunderstanding the result of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45 . 2. Includes
individuals who have participated in more than one program (for example, people who have participated in MoneyMinded as part of Saver Plus are counted twice as they areincluded in both the MoneyMinded and Saver Plus totals). 3. Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets divided
by the number of ordinary shares. 4. APRA Level 2. 5. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all employees regardlessof leave status but not contractors (who are included in Full Time Equivalents (FTE)). 6. On average, across Australia and New Zealand. 7. In Australia and New Zealand.

4

ANZ 2022 Annual Report

During a period of significant
global uncertainty, all our divisions
contributed to a full-year statutory
profit of $7.12 billion, up 16% on theprior year, driven by strong revenue
growth as well as disciplined costmanagement.
As a result, we were pleased to pay a Total
Dividend of 146c, which was up 4c on 2021,
and meant more than $4.2 billion was
returned to you, our shareholders.
With the bank in good shape, we are also
prepared for a period of global uncertainty.

A key measure of strength, our
Common Equity Tier 1 Ratio of 12.3%1
is well above the Australian Prudential
Regulation Authority’s “Unquestionably
Strong” benchmark of 10.5%.
Paul O’Sullivan
Chairman

Chairman’s
message
This was a year when we made significant
progress strengthening the bank forthe future while also delivering a solid
financial outcome for shareholders.

We have maintained prudent reserves tohelp weather any external shocks with acollective provision balance of $3.9 billion,
while materially improving the shape andcomposition of our lending book. An
example of this is how our investment
grade lending has increased by 50%
since 2016.
We also made good progress on thecontinued digitisation of the bank withthe launch of ANZ Plus, where we haveeffectively built a new retail banking
platform that will be the future foundationof ANZ in Australia.
Another highlight for the year was theagreement announced in July to acquire
Suncorp Bank.
While still subject to various Governmentand regulatory approvals, this will provide
ANZ with a platform for growth for the

1. Pro forma CET1 of 11.1% when accounting for the recently
announced acquisition of Suncorp Bank.

Overview

How wecreate value

Performanceoverview

coming decades, particularly in the
fast-growing Queensland market.
We believe this acquisition will help ANZ
compete more effectively in Queensland
and ultimately provide better services tocustomers across Australia.
The associated $3.5 billion capitalraising was well received despite volatile
market conditions. It was the world’s
largest equity raise this calendar year
for a Mergers and Acquisitions (M&A)
transaction, structured in a way toensure all ANZ shareholders weretreated equally, and I’d like to thankshareholders for their support.
The annual report also sets out ourapproach to climate change and we know
this is important to all our shareholders.
We want to be the leading Australia and
New Zealand-based bank in supporting
customers’ transition to net zero emissions
by 2050. We also recognise we can havethe most impact by working with ourcustomers to reduce their emissions.
Our policy is to support customers throughthe transition, backing their plans byproviding more finance for less emissions.
We have high expectations, particularly
for our customers in the energy sector.
We expect our energy customers’ plans
to be net-zero aligned, public and specific.
We acknowledge some stakeholders havesuggested that ANZ immediately cease
lending to companies in carbon-intensive
sectors like energy.
This approach may reduce ANZ’s exposuresor ‘financed emissions’. However, it does not
reduce emissions in the ‘real world’ if thecompany receives funding from an alternate
source. We are also then precluded from
actively supporting the development of
their net-zero aligned transition plans.

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

Non-Operating Holding Company

Board Renewal

Our core business is banking and that
won’t change.

I’d like to acknowledge the enormous
contribution of Graeme Liebelt who isretiring from the Board at the upcoming
Annual General Meeting.

However, to help us better compete
in the future we are introducing a newcorporate structure, known as a NonOperating Holding Company. This will be
subject to a shareholder vote in December.
Like other traditional banking businesses,
ANZ faces significant disruption, largely
from non-banking businesses competingin financial services. Understandably, thesebusinesses are not regulated in the same
way as banks like ANZ.
The proposed structure will allow ournon-banking businesses to operate
on a more level playing field with nonbanking companies, while maintaining
an appropriate regulatory environment
for the bank as a whole.
These structures are not new and arecommon for many financial institutions
around the world, including Barclays,
Lloyds Bank, DBS, Citigroup and HSBC
as well as Australian financial institutions
Macquarie and Suncorp.
This will help make our banking businessmore efficient, providing us with greater
strategic and operational flexibility and,
importantly, allowing us to better meet
our customers’ needs.
All of your Directors intend to vote all the
ANZ shares they own or control in favourof the Scheme. I would encourage you
to look at the detailed scheme booklet,
located at anz.com/schememeeting, whichsets out in more detail the benefits and thecosts of implementation of this proposal.

5

Graeme has given tireless service overthe last nine years, particularly in his roles
chairing the Human Resources and Risk
committees. I will personally miss his wise
counsel, strategic insight and experience.
It has been an honour to serve on the Board
with him and on behalf of all shareholders
I wish him well with his future endeavours.
I am also pleased to formally welcome
Jeff Smith who joined the Board in August
and will stand for election at the upcoming
AGM. Jeff is an experienced global businessand technology executive having been
Chief Information Officer at several
organisations – including IBM, Suncorp
and Telstra – and has already made asignificant contribution for shareholders.
Finally, I’d like to also thank my fellow
shareholders for their support in what
has been a transformational year andacknowledge the more than 39,000
people who work tirelessly each day
for their customers.

Paul O’Sullivan Chairman

6

ANZ 2022 Annual Report

CEO’s message
We go into the new year with solid
momentum and cash profit before
provisions excluding large/notable
items growing at 20% in the second
half, which is the fastest half-on-halfgrowth we have recorded in morethan a decade.

We’ve achieved all this while also preparing
the bank for the future.
We agreed the acquisition of Suncorp
Bank which, if approved by governmentand regulators, will provide an important
platform for growth, particularly in the
fast-growing and rapidly diversifying
Queensland economy.

We restored momentum in Australian homeloans with application approval times backin line with industry peers. This was assisted
by our decision to bring Australia Retailand Digital Transformation together as
one division.

Suncorp Bank is a well-run business thatwill see more than one million new retailcustomers join ANZ, sharing in the benefitsof a wider range of products and services.
It also means the Suncorp Group is able
to focus on its core mission of being thebest insurance company in Australia and
New Zealand.

We continued the re-platforming ofAustralia Retail onto ANZ Plus, which is our
new digital bank, with deposits growing
at a rate faster than any new digital bank inAustralia. Around a third of those customers
joined ANZ for the first time.

The ‘non-operating holding company’
structure, which shareholders will havethe opportunity to vote on in December,is another important step that will help
us further strengthen and grow ourcore business.

In New Zealand, we maintained an industry
leading position across our key segments
while also reaching the final stages of BS11.
This was one of the largest regulatory
programs implemented in New Zealandbanking history. It now means we are well
positioned to focus on the future andfurther build the franchise.

We are a safer bankInstitutional continues to benefit fromour multi-year transformation as risingrates across the globe create favourable
conditions for the business.

Combined with the exit of Financial
Planning & Advice, as well as all the
associated remediation being at thevery final stage, we are the only majorbank in Australia to have removed therisks associated with wealth management
for shareholders.

We also did what we said we would do.

The expansion of our platforms strategy,
where we lead the market in providingbanking services for other financial
institutions, resulted in the volumeof payments processed using ANZ’s
infrastructure growing by 85%. We also
continued to innovate in our approachto digital assets, executing the firstever Australian bank-issued Australian
dollar stablecoin.
Australia Commercial delivered a strong
first-up result as a stand-alone divisionand is already benefiting from increased
focus and a refreshed strategy. A highlight
was the commencement of the ANZWorldline joint venture that will allow
us to provide business customers withworld-leading point-of-sale and online
payment technology.

We continued the systematic de-riskingof the bank, highlighted by the sale of ourmargin lending business and the formal
separation of our Wealth businesses to
Insignia, formerly known as IOOF, andZurich last month.

We further strengthened our loan portfolio,
particularly in Commercial and Institutionalbanking, where we have deliberately exited
high-risk portfolios while increasing our
focus on investment grade lending.
During the year we invested significantly
to help prevent customers falling victim to
fraud as well as continually improving our
cyber defences.
A good example of this is the behaviouralbiometrics capability we implemented
which has detected approximately 3,600
fraudulent applications, preventing nearly$40 million of identity fraud.

While preventing cybercrime remains achallenge for all businesses, we take ourrole seriously and maintain a sophisticated,
24/7 internal Security Operations Centre,
analysing millions of events daily. As you
would expect, our team works closely withother banks and government agencies
around the world to protect against theever-evolving cyber security threats.

ANZ Plus
As mentioned earlier, we launched this year
our new retail banking platform in Australia,
ANZ Plus.
ANZ Plus is effectively a new retail bank; onethat is focused on improving the financial
wellbeing of our customers. This is good forcustomers and the early signs are promisingwith solid deposit growth, particularly withcustomers new to the bank.
A key feature of ANZ Plus is the ability
to easily save for multiple goals without
the need to open a new account. This isimportant because we know a savings
habit is core to financial wellbeing.
We have seen strong growth in the numberof savings goals created with 45% of ouractive customers taking advantage of thefunctionality, compared with less than 5%
on our traditional platform.
ANZ Plus also has the very high levelsof security our customers and regulators
expect with market-leading fraud
prevention technology already having
a material impact.
We will begin moving existing customers
across to ANZ Plus while also piloting
a new digital home loan in the coming
weeks. This will see the introduction of afully automated digital home loan offering,
initially focused on the re-finance market,
later in 2023.

Sustainability
ANZ has been taking important steps to
not only reduce our own emissions but
also help our customers, particularly 100of our largest emitting business customers,
reduce their emissions and enhance theirresilience to a changing climate.

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

7

During the year we formed a strategic
partnership with Pollination, a marketleading global climate change investment
and advisory firm, that will focus on thetransition needs of ANZ’s customers globallyin the areas of Sustainable Finance, Project& Export Finance, Carbon Markets andCorporate Advisory, including mergers
and acquisitions.
An example is the partnership we announcedin Australia with INPEX Corporation and
Qantas to explore a carbon farming andrenewable biofuels project in the Wheatbelt
region of Western Australia. This is an exciting
opportunity with two important customers
that has the potential to develop a domestic,
sustainable aviation fuel industry in Australia.
In New Zealand, we launched our Good
Energy Home Loan which allows customers
to borrow up to $80,000 at a 3-year fixed
rate of 1% to make their homes moreenergy efficient. We also introduced asimilar initiative for business and corporate
customers, allowing them to access up
to $3 million at a special floating interest
rate for up to five years to be used on
environmental initiatives.
There are economic risks ahead, but weare entering 2023 in great shape and withpositive momentum.
We have a balanced portfolio of businesses,
leadership in intermediating trade andcapital flows, particularly aligned tosustainability and a strong balance sheet
which means ANZ is better positioned
than most for the opportunities ahead.
Finally, I want to thank the entire teamat ANZ for their ongoing commitment
to our customers and the community.
Our culture is strong, we have industry
leading employee engagement and wehave an embedded sense of purpose –to shape a world where people andcommunities thrive.

Shayne Elliott Chief Executive Officer

Shayne Elliott
Chief Executive Officer

This has been a transformational year during
which we delivered a strong financial resultwith all our divisions making a material
contribution, demonstrating the benefits of awell-managed and diversified portfolio.

8

ANZ 2022 Annual Report

How wecreate value
Value drivers

Our strategy and business model

Products and services
Loans, transaction banking services,
deposits and other financial products
developed for our customers.

Better accessto capital andtalent, driving
greater capacity
to invest well

Finance
Access to capital through customer
deposits, debt and equity investors,
and wholesale markets to support ouroperations and execution of our strategy.

PeopleEngaged workforce with the skills
required to reinvent banking, inline with our purpose and culture.

Technology, data andrisk management
Flexible, digital-ready infrastructure
to provide a great customer experience,with systems and processes that areless complex, less prone to error andmore secure.

Better customer
propositions thatare purposeful,engaging, efficientand safe

Better financial
outcomes
for shareholders
and staff

Better acquisition
and retention
rates, and higher
share of target
customers

Our customers will haverelatively better financial
wellbeing, more sustainable
practices and generate higher
average lifetime value

Better data,
insights, risk
decisions andpricing

Better financial
wellbeing andsustainability outcomesfor customers andthe community

Better reputation
among customers
and the community,and higher workforce
engagement

Better customer
engagement,
and greater useof our products
and services

SocialTrusted relationships with ourcustomers, business partners
and the community to strengthen
our brand and reputation.

Environment
Minimising the impact of our operations,
including through:• The customers we choose to bank
• How we design and distributeour products• Collaboration with partners

To embrace the opportunities, address the risks presented by
the external environment and realise our vision, we are pursuingfour strategic imperatives to: create a simpler, better capitalised, betterbalanced bank; build a superior experience for our people and customers
in order to compete in the digital age; focus our efforts on attractive
areas where we can carve out a winning position; and drive a purposeand values-led transformation of the bank.

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information...creating value for our stakeholders1

Shareholder value

Customer value

Employee value

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

Our customers are financially betteroff over their lifetime and implement
more sustainable business practices
than others.

Our diverse teams are engaged
and optimised for success.

228.8 C$374 B84%

cash earnings per share (Basic)2

home loan portfolio, increaseof $6 billion in 2022 (Australia
and New Zealand)

employee engagement

cash return on equity2

Business lending balance

Women in leadership

Proposed final dividend
per share of(Australia and New Zealand)

10.4%

74 C
and interim dividend
per share of 72 cents

3

$93 B

35.9%
$5.3 Bin employee salaries and benefits$357B
Retail & Business customer deposit
balances (Australia & New Zealand) and$259 billion of Institutional deposits

Community value

Funded and facilitated overMore than

Our practices and services
provide more opportunity for thecommunity and we have supported
and improved positive economic
development and transition.

$4.4 B

58 K

to deliver more affordable,
accessible and sustainable homes
to buy and rent since 20184

people reached throughour financial literacy programs
MoneyMinded and Saver Plus6$3.4 B$40.04 B

in taxes paid to government

5

Funded and facilitatedin sustainable solutions
since 2019

1. All figures below relate to the period 1 October 2021 – 30 September 2022 unless otherwise stated. 2. On a cash profit (continuing operations) basis. Excludes non-core

items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result of the ongoing business activities of the Group.
For further information on adjustments between statutory and cash profit refer to page 45. 3. Includes Private Bank. 4. In Australia and New Zealand. 5. Represents statutory
income tax expense (including discontinued operations), unrecovered GST/VAT, employee related taxes, and other taxes/duties. 6. Includes individuals who have participatedin more than one program (for example, people who have participated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded
and Saver Plus totals).

910

ANZ 2022 Annual Report

What matters mostto our stakeholders
Through our materiality assessment,
we seek to identify those issues withthe most potential to impact ourability to operate successfully andcreate value for our shareholders
and other stakeholders. We
engage with internal and external
stakeholders to inform ouridentification of and responses
to ESG risks and opportunities.
We use the results to inform our strategy,
ESG targets, group remuneration scorecard
and external reporting.
This year, our materiality assessment again
highlights the importance of continuing to
act on climate change. Greenwashing was
identified as an emerging topic.
The importance of information security
has increased commensurate to the scaleand sophistication of scams targeting
individuals. This is part of a broader
theme of payments system safety.
Innovation and technology is recognised
as foundational to providing customers
with a digitally connected experience,
while also ensuring the responsible
use of emerging technologies.
Customer experience is determined by
the products we offer customers andthe value they deliver, and ensuring wehave empathetic and helpful processes
for when things go wrong, such as
managing complaints and for customers
in financial difficulty. This is of particularimportance given the emerging impact
of macroeconomic conditions on thecost of living and housing affordability.
As staff return to workplaces, employee
capability and wellbeing, including mental
health, was viewed as essential to maintainan engaged and resilient workforce.

Top 5 material issues:
Employee capability and wellbeing
Climate changeManaging the business risks andopportunities associated with climatechange. Includes the role we play insupporting our customers to transition
to a low carbon economy.

Information Security
Policies and processes in place toprotect our systems, data and customers
against scams and cyber attacks. Includes
customer access to personal data.

Innovation and technology
Keeping pace with digital innovation
to ensure we are offering our customers
reliable and convenient products andservices in a rapidly changing market.

Customer experience
Delivering value and improved customer
experience through appropriate financial
products and services for all customers,
small business and personal.

Attracting and retaining a capable andengaged workforce, that is diverse andinclusive, helping us serve our customers
better and drive strong business performanceacross the markets in which we operate.
Includes supporting the physical andmental health and wellbeing of employees.

Insights from the assessment were
presented to our executive Ethics andResponsible Business Committee and
Board Ethics, Environment, Social andGovernance Committee.

Our material ESG issues are ‘mapped’
to the bank’s Key Material Risks on
pages 40–42.

The full list of our material ESG issues
and key steps in the materiality
assessment process are discussed inour 2022 ESG Supplement available
at anz.com/annualreport
Detailed information on other ways
in which we have engaged withstakeholders is also included in the2022 ESG Supplement.

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

11

Our operating
environment
CHALLENGE

Rising inflationand interest rates,
and moderating
credit growth

OUR RESPONSE• Consumers are facing abrupt costof living adjustments through rises
in prices of energy and other items,
and more recently, interest rates• After a period of strong growth,credit growth is moderating – driven
by lower demand for housing credit

Increased public
and regulatory
scrutiny• Challenges arising from regulatory
expectations, and changing community
standards and expectations, particularly
as they relate to ESG• Effectively assessing borrowers’ resilience to rising rates• Ensuring consumers are offered financially appropriate
products and services• Dealing appropriately with customers experiencing
financial hardship or needing extra care
• Adjusting our staff salaries appropriately• Ensuring our products and services are appropriate
for customers• Building trust by ‘doing what we say’
• Working cooperatively with regulators, government
and NGOs• Strengthening our ESG policies and processes andensuring we implement them effectively – transparently
disclosing our progress

Increasedcompetition• Ongoing competitive intensity,from both ‘traditional’ and new,digitally-enabled competitors• Deploying new and improved digital services, products
and processes to help meet customer needs for
efficient and accessible banking• Investing in underlying technology and systems
to establish more flexible and responsive platforms

Cyber-security
threats• Increased cyber-attacks,
scams and attempted fraud• Ongoing investment in cyber-security and scams
detection capabilities and raising customer
awareness as to the relevant risks

Geopoliticaltension• Heightened tension in our operating
regions and other nations, affecting
the global economy and creating
significant societal disruption• Contingency plans have been developed forour medium-to-higher risk jurisdictions withtrigger events identified and monitored

Climate change andbiodiversity loss

• Increasing regulatory, political andsocietal focus on the transition risks
associated with climate change,
including financial risks associatedwith lending to customers impacted
by climate change• Providing sustainable banking and finance products andservices, such as green and sustainability-linked loans andbonds, that drive the transition to a low carbon economy• Strengthening our strategy, policies, processes, products
and services to manage the risks and opportunities
associated with climate change and biodiversity loss

12

ANZ 2022 Annual Report

About ourbusiness
Our divisions
Australia Retail – serves retail customers
across Australia through our branch
network, ATMs, digital and mobilebanking applications including ANZ Plus.
Australia Commercial – serves commercial
and private banking customers acrossAustralia through our business centres,
digital and mobile banking applications.
Institutional – serves institutional andbusiness customers across Transaction
Banking, Loans and Specialised Financeand Markets.
New Zealand – serves retail and commercial
banking customers in New Zealand and is
one of the largest New Zealand companies
based on profit and assets.

• Supporting household, businessand financial practices that improve
environmental sustainability; and• Improving the availability of suitable
and affordable housing options for
all Australians and New Zealanders.

In particular, we want tohelp customers:$

Save for, buy and own
a liveable home

Pacific – provides products and services toretail and commercial customers located in
the Pacific Islands, where our history dates
back 139 years.
Group Centre – provides support to theoperating divisions, including technology,
property, risk management, financial
management, strategy, marketing,human resources and corporate affairs.

We provide banking
and financial products
and services to around 8.5
million retail and businesscustomers, and operate
across 32 markets.

Our purpose and strategy

Our expertise, products
and services make us abank. Our people, purpose,values and culture makeus ANZ.

We bring our purpose to life through ourstrategy; to improve the financial wellbeing
and sustainability of customers throughexcellent services, tools and insights thatengage and retain them, and help positively
change their behaviour.

Our purpose is to shape a world where
people and communities thrive. It explains‘why’ we exist and drives everything we
do at ANZ, including the choices we makeeach day about those we serve and how
we operate.

Through our purpose we have elevatedareas facing significant societal challengesaligned with our strategy and our reach
which include commitments to:• Improving the financial wellbeing ofour people, customers and communities
by helping them make the most of theirmoney throughout their lives;$

Start or buy and sustainably
grow their business$Move capital and goods aroundthe region and sustainably growtheir business
Fundamental to our approach is acommitment to fair and responsiblebanking – keeping pace with the
expectations of our customers, employees
and the community, behaving fairly
and responsibly and maintaining highstandards of conduct, as well as addressing
issues identified through our annualmateriality assessment.

Overview

How wecreate value

Performanceoverview

Remuneration
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reportFinancialreportShareholder
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13

Achieving
our strategy
Integrating ESG and purpose into our strategy has created an
opportunity for us to better serve our customers and generate
long-term shareholder value.
We will achieve our strategy
through…
Propositions our customers love... witheasy-to-use services that evolve to meettheir changing needs.
Through better use of data we will be able toprovide valuable insights about our customers
and how they can improve their financial
wellbeing and sustainability over their lifetime,enabling us to create superior propositions.
Flexible and resilient digital banking
platforms... powering our customers
and made available for others to power
the industry.
Platforms underpin our own propositions
and will increasingly underpin those of
our customers, notably other banks or
institutional corporations.
Partnerships that unlock new value...
with ecosystems that help customers
further improve their financial wellbeing
and sustainability.
We recognise that no one institution can doeverything or innovate at the pace necessary
to satisfy customers’ needs – strong
relationships with partners are therefore vital.

Purpose- and values-led people... whodrive value by caring about our customers
and the outcomes we create.
Our people listen, learn, adapt anddo the right thing the first time – delivering
the outcomes that address financial andsustainability challenges.

Building the financial wellbeing
and sustainability of our customers
creates a positive cycle of benefits. It
directly benefits customers and also
grows shareholder returns; it leads toa strong and positive reputation; itultimately means it costs less to acquire
customers; and it grows loyalty, which inturn generates better returns – delivering
more capital so we can invest in building
a better bank and continue to improve
the lives of our customers.

Our values
Our values shape how we deliver
our purpose-led strategy. They are thefoundation of ‘how’ we work – living ourvalues every day enables us to deliveron our strategy and purpose, strengthen
stakeholder relationships and earn thecommunity’s trust. All employees andcontractors must comply with our Code of
Conduct, which sets down the expected
standards of professional behaviour
and guides us in applying our values.

Our values are:Integrity
Collaboration
Accountability
Respect
Excellence

Supporting sustainable
development
We are committed to the United
Nations Sustainable Development
Goals (SDGs) and believe thatbusiness has an important roleto play in their achievement.
Our 2022 ESG targets supported
12 of the 17 SDGs.
In 2019 we became a founding
signatory to the UN Principles for
Responsible Banking. Under the
Principles we are required to set
at least two targets that address
our most significant (potential)
positive and negative impacts,aligned with the SDGs and theParis Climate Agreement.

Further information on our
progress towards implementing
the Principles, including targets
we have set, is in our 2022
ESG Supplement.

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ANZ 2022 Annual Report

Our approach
to societal challenges
We’re focused on bringing our
purpose to life through helping
tackle complex issues that are core
to our business strategy and matterto society. This work is underpinnedby our commitment to fair andresponsible banking and informed
through our materiality assessment.

Performance against our Environment,
Social and Governance (ESG) targets andfurther information on our ESG approach
can be located in our ESG Supplement
available at anz.com/annualreport

Improving the availability ofaffordable and sustainablehousing, and supporting customers
through a changing economy
We remain committed to helping improve
the availability of suitable and affordable

housing options for all Australians and
New Zealanders. Our work spans many
sub-sectors of the market such as affordable
housing, specialist disability accommodation,
aged care and homelessness, as well asworking with community partners toprovide housing for people in need ofadditional support.
We have targets to:• Fund and facilitate $10 billion of
investment by 2030 to deliver more
affordable, accessible and sustainable
homes to buy and rent in Australia and
New Zealand. Since 2018 we have funded
and facilitated over $4.4 billion towards
the target.
• Support more customers into healthierhomes in New Zealand by 2025.
Since 2020 we have supported
1,446 households in New Zealand.
We strive to support our customers toachieve their home ownership goals ina way that also improves their financial
wellbeing. This includes ensuring homeloan customers are financially informed
about the details of their mortgage, haveborrowed within their means, and areresilient to potential future events.
During the pandemic, our default response
was to keep repayments at the same levelto help Australian customers get aheadon their mortgage, meaning we did not
automatically reduce minimum repayments
as interest rates decreased. This assisted
customers to build repayment buffers
ahead of rising interest rates in Australia.
With interest rates on an upwards trajectory
across many geographies and costs for both
discretionary and non-discretionary items
growing, staying on top of household
budgets and mortgage repayments has
been a key issue for our customers. We areusing real-time transaction data to adopt
a proactive approach to identifying andcontacting customers heading towards
difficulty to discuss how we can help
them before they get into trouble.

To help our customers buy andown a home, this year in Australia
we increased our home loan balance
by $6 billion to $284 billion
and our home loan balance in
New Zealand grew NZ$8 billion
this year to NZ$101 billion.
Improving the financial
wellbeing of our people,
customers and communities
Financial wellbeing is at the heart ofthe bank we’re building to create better
financial outcomes and resilience for ourcustomers. This is particularly importantas our customers navigate an economic
environment with rising interest rates andcost of living challenges.

Image: Assemble Kensington resident Sophie.

We are committed to improving thefinancial wellbeing of our people, customers
and communities by helping them makethe most of their money throughout theirlives. We continue to work closely with
our partners to ensure we are supporting
customers and the community in a
respectful, fair and appropriate way.

Overview

How wecreate value

Performanceoverview

This year we launched thefirst ANZ Plus retail banking
proposition, taking a digital-first
approach to designing banking
products which drive positive
financial wellbeing outcomesfor customers.

At the heart of ANZ Plus
are nine financial wellbeing
principles which aim to impartknowledge, provide clarity andempower customers to makebetter financial decisions:
1

Spend less than you earn2 	Put money aside

for a rainy day
3 	Save regularly

Remuneration
reportDirectors’
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Supporting employee
capability and wellbeing
ANZ’s strong and inclusive culture, built
over decades, has supported our people tomaintain a strong alignment to our strategy
and purpose while the majority of ourworkforce continued to work flexibly as theimpacts of the pandemic lingered in somegeographies. This strong culture supported
team connectivity and contributed towards
a high level of engagement despite a periodof significant change.
As employees have started to return to theoffice, we’ve evolved and simplified the
behaviours that will continue to build our
future success. Our new behaviour framework
was introduced in February 2022.

Our behaviours:
Create opportunities

towards your goals
4 	Protect what you

can’t aﬀord to lose
5

Deliver what matters

Borrow within your means

6 	Pay your mostSucceed together

expensive debt first7 	Build towards

your retirement
8

Invest in things that grow

9 	Give back to family, friends

and the community
when you can

We play a key role in thecommunity by leading
considerations into what is
influencing financial wellbeing
and applying insights fromresearch to our financial education
programs, Saver Plus andMoneyMinded. These programs
involve close collaboration withpartners from the communityand government sectors.

Peoples’ needs and expectations of when
and where they work have changed, andwe know that our employees are seeking
value from their day-to-day work.
Responding effectively to this is a key
enabler of a stable, future-fit workforce.
For many years, we have successfully
operated a workforce based across multiple
geographies and supported flexibility for all
roles. We are committed to hybrid working
and the pandemic has uplifted our flexible
working capacity and capability. Key to thisis how we support our people leaders andteams to create opportunities, deliver whatmatters and succeed together while working
in a hybrid, flexible manner. We continued
to provide psychological and ergonomic
support to our workforce, who have worked
from home for the majority of the year.
We are future proofing our workforce in theface of a turbulent external environment
and a volatile talent market by focusing on
the most important capabilities that will
drive our strategic agenda. This year wehave continued to invest in key capabilities
such as Engineering, Cloud, Data andDigital, and Customer Coaching.

15

ANZ is well positioned to attract and retain
talent, and our people tell us that they join
and stay because we offer challenging,interesting and complex work that matters.
They are empowered to work in a way thatsuits them and ANZ, and because they want
to belong to a community that celebrates
the value of diversity.
Our focus on employee wellbeing and how
we are future-proofing our workforce builds
on our long history of support for employee
diversity, underpinned by a strong culture.
We help our people thrive in an internal
environment that continues to adapt andevolve to ever-changing external demands.

Fair and responsible banking
Underpinning everything we do is acommitment to fair and responsiblebanking. Keeping pace with the
expectations of customers, employees
and the wider community, while behaving
fairly, responsibly and maintaining highstandards of conduct. We are committed
to supporting customers in times of needand ensuring our products and services
are accessible and inclusive to all.
We continue to make progress implementing
our strategy to assist customers who may
require extra care and those facing financial
difficulty in Australia. We are focused ondelivering better customer outcomes bystrengthening frontline capability andproactive external engagement, as well as
improving product design and data use toimprove accessibility and limit harm.
We have improved support for customers
by changing the way we manage and think
about customer complaints. We have been
embedding a culture where complaints arevalued as an opportunity to learn, improving
products and services, and delivering better
customer outcomes. We strive to deliver
excellent products and services to ourcustomers but if we get things wrong,we want to know, and seek to resolve
complaints with empathy and fairness.
The expanded use of digital and realtime payments has made it easier for
criminals to move funds quickly and easily
through various accounts, and ultimately
offshore, making recall and recovery
increasingly difficult. We are investingin new technology and tools to protect
our customers from scammers looking
to steal their data and money.

16

ANZ 2022 Annual Report

Our approach to climate change
We want to be the leading Australiaand New Zealand-based bank insupporting customers’ transition
to net zero emissions by 2050.
Our environmental sustainability strategy
identifies priority sectors, technologies andfinancing opportunities to help achieve ourambition. Our climate change commitment
provides the framework for our strategy andour commitment to enable the transition byaligning our lending portfolio with net zero
emissions by 2050. We joined the Net-Zero
Banking Alliance (NZBA) in 2021, reflectingthat commitment.
The most important role we can play inmeeting the Paris Agreement goals is tohelp our customers reduce emissions andenhance their resilience to a changing
climate. We support an orderly transition thatrecognises and responds to social impacts.
This aligns with our purpose to shape a worldin which people and communities thrive.
To achieve our environmental sustainability
strategy we are:
• Directing our finance into key priority
areas (as per diagram to the right);• Reducing emissions from our operations
including a target to increase renewableenergy use to 100% by 2025 and setting
updated targets for our environmental
footprint;• Implementing strategic partnerships,
for example with climate advisory andinvestment firm, Pollination;• Actively participating in recognised
industry associations to help shapepolicy development and settings toenable the development of taxonomy
and standards; and• Funding and facilitating $50 billion ofsustainable solutions by 2025, to support
customers in their efforts to achieve
improved environmental outcomes,
including the reduction of theirgreenhouse gas emissions. This year,
140 transactions worth $18.09 billion
have been completed, bringing ourprogress towards our $50 billion target
to $40.04 billion since October 2019;• Equipping our employees with a deeper
understanding of climate risks andopportunities focusing on our Institutional
bankers in key customer segments suchas resources, energy and Agribusiness;

Refer to our ESG Supplement
available at anz.com/annualreportfor an update on our ESG Targets.

Our 2022 Climate-related Financial Disclosures will be released prior to our
Annual General Meeting (AGM). This will be our sixth report using the Task Forceon Climate-related Financial Disclosures, (TCFD) recommendations and will beavailable at anz.com/annualreport. This report will provide a more detailed update
on our approach to climate change including our customer engagement program.

Supporting our customers to transition to net zeroKey priority areas and sectors we’ll pursue• Aligning our lending decisions to
the Paris Agreement goals and havedisclosed metrics and targets forour power generation portfolio andlarge-scale commercial buildings;• Progressively developing metrics andtargets for key sectors, in line with our
NZBA commitment, which is aimed atensuring the majority of our portfolio
emissions are covered by end 2024;• Engaging constructively withstakeholders on our approach throughEnvironmental, Social and Governance(ESG) market briefings, investor
roundtables, civil society engagement
and other avenues.

Supporting sustainability
in resource extraction¹,
basic materials² andnew technologies³
Banking thedecarbonisation andelectrification of
the transportation
value chain

Enabling thetransition towards
lower emissions
buildings⁴

Increasing our
support forcompanies'
transition to
low carbon

Assistingsustainable food,beverage andcommodities
practices andsupply chains

Offering solutions to,and partnering with,sustainability-focusedfinancial institutions⁵

1. Supporting sustainable resource extraction in areas such as iron ore, lithium, nickel, cobalt, rare earths, copper and bauxite. 2. Supporting basic materials production including green
steel and low-carbon aluminium production. 3. Supporting new technology projects focused on upstream hydrogen and carbon capture use and storage. 4. Initial focus on financing
high-efficiency residential buildings and retrofits. 5. Supplying green investment options for environmental sustainability-focused funds/insurers and partnering with financial institutions
to deliver alternative capital.

Overview

How wecreate value

Performanceoverview

Remuneration
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Our progress on the task force on Climate-related Financial Disclosures
Disclosures on our ESG Targets are outlined in our ESG Supplement and our detailed 2022 Climate-related Financial Disclosures
will be released prior to our AGM and will be available at anz.com/annualreport

Metrics and targets

Risk management

Strategy

Governance

OUR PROGRESS TO DATE

FOCUS AREAS – 2022/23• Board Risk Committee oversees management of climate-related risks• Enhance alignment with Australian Prudential Regulation
Authority (APRA) CPG229 guidance on Climate Change• Board Ethics, Environment, Social and Governance (EESG) Committee
Financial Risks and the New Zealand Financial Sector
approves climate-related objectives, policy and targets(Climate-related Disclosures and Other Matters)• Ethics and Responsible Business Committee (ERBC) consisting of executive
Amendment Act 2021
management oversees our approach to climate-related risks and opportunities• Climate Advisory Forum, chaired by our Group Executive Institutional,
supports execution of our climate-related policy, opportunities anddisclosures, subject to approval by ERBC and EESG
• ANZ’s Environmental Sustainability Strategy and Climate Change
Commitment (available at anz.com.au/about-us/esg/environmentalsustainability/climate-change/) confirms our support for the Paris
Agreement goals, our priority sectors, technologies and financing
opportunities via products and services to help achieve our ambition andour focus in supporting customers’ transition to net zero emissions by 2050

• Continue to engage with 100 of our largest emitting businesscustomers to support them to, by end 2024:– implement and strengthen their low carbon transition plans and– enhance their efforts to protect biodiversity.
• Continue to enhance banker capability to identify climate risks
and opportunities• Extend transition plan engagement with other large emitting
business customers into our regular customer assessments• Pilot the Taskforce on Nature-related Financial Disclosures (TNFD)• Included climate risk in our Risk Appetite Statements for Institutionalbank, and lending criteria in the Australian Retail, Commercial and
New Zealand portfolios• Enhanced credit approval process applied to new Agribusiness customers
and agricultural property purchases in regions of low average rainfall or
measured variability• Reviewed and assessed current and emerging regulatory requirements
across the jurisdictions in which we operate• Developed and piloted Climate Change Risk Assessment methodology
in our Project Finance business (Australia)• Participated in the Australia Prudential Regulation Authority’s (APRA)
climate vulnerability assessment which assessed the potential impactof transition and physical risks to parts of our portfolio• Completed analysis of physical and financial risks of flooding for homeloan customers in a major regional location of Australia and of coastal
flooding (nationwide) and inland flooding (Auckland) for the Reserve
Bank of New Zealand’s climate sensitivity analysis (New Zealand)• Prepare a set of climate risk standards, based on regulatory
obligations to be applied across all jurisdictions where ANZ operates• Extend our Climate Change Risk Assessment methodology beyond
our Project Finance business, starting with Institutional customers
in higher emitting sectors such as resources and energy• Develop a data strategy to inform our approach to sourcing andintegrating climate data into sectoral pathways, scenario analysis,
stress testing and analytics. This will include learning from the
New Zealand climate risk program• Enhance risk assessment capability for our bankers throughextending our Climate Change Risk Assessment• Extend analysis of physical climate risks of fire and flood to segmentsof Australian retail customers• Conduct scenario analysis for key New Zealand sectors• Conduct analysis of drought vulnerability for our Agricultural
portfolio (Australia and New Zealand) and the impacts of achange in carbon price (New Zealand)• Transition Risk: Continued engaging 100 of our largest emitting businesscustomers, to support them towards a ‘well developed’ or ‘advanced’ stageof transition planning; and enhance their efforts to protect biodiversity,
by end 2024
• Capital Deployment: $50 billion target to fund and facilitate sustainable
solutions by 2025, $40.04 billion achieved to date
• Greenhouse gas (GHG) emissions: Develop metrics, pathways and targets
to enable progress tracking as we reduce ‘financed emissions1’. Announced
targets for large-scale commercial property and power generation (November2021) in line with our commitment to the Net Zero Banking Alliance• GHG emissions: Target to procure 100% renewable electricity for ANZ’soperations by 20252, and reduce emissions in line with Paris Agreement goals• Management incentives for delivering our climate change strategy
are in place at the most senior levels of the organisation including ourGroup Executive Committee and senior leaders. Our Group Performance
Framework incorporates whether we have: Strengthened our position
as a leading Sustainability bank in the region, and our performanceagainst the S&P Global corporate sustainability assessment. Refer topage 79 of the Remuneration Report• Expand our metrics, pathways and targets for ‘financed
emissions’ to other key sectors• Develop financed emissions reporting across majority of the
New Zealand portfolio• Consider the use of emerging metrics to track our progressin helping to minimise biodiversity loss

1. Scope 3 emissions attributable to lending. 2. Self-generated renewable electricity, direct procurement from offsite grid-connected generators e.g. Power Purchase Agreement (PPA)
and default delivered renewable electricity from the grid, supported by credible attributes in accordance with RE100 technical guidelines.

18

ANZ 2022 Annual Report

Our divisions
Australia Retail
Financial Performance Cash continuing1
Net Loans & Advances ($b)

Cash profit ($m)
FY22
FY21

Maile Carnegie
Group Executive Australia Retail

Operating environment
Economic activity recovered in 2022,
in part due to a strong housing market
and employment growth, however highinflation and increasing cost-of-livingpressures are front of mind for our Retailcustomers. Competition for home loans
has intensified further with Retail customers
across the sector proactively engaging
with mortgage providers and third-party
originators leading to increased levelsof refinance activity in the industry.
Our Retail customers continue to display
positive financial wellbeing behaviours –offset accounts continue to grow; a large
portion of our home loan customers
remain ahead in their repayments; andsavings have increased for those without amortgage. Faced with a higher interest rateenvironment, support established through

2,316

Growth

FY22

-8%

FY21

290.3
284.0

Return on Avg. RWAs (%)

Customer Deposits ($b)

FY22

FY22

FY21

This year we’ve delivered strong
returns by growing momentum
in our home loans and deposits
business. We’ve invested in thefoundation of our future bank, ANZ
Plus and helped more customers
with simple banking needs switch
to mobile and digital channels.

2,140

1.8%
2.1%

the peak of the COVID pandemic remains inplace for our customers who are navigating
uncertainty or having difficulty managing
their loans. Comfort with and trust of digitaland mobile banking channels continues toincrease among customers.
Looking ahead to 2023, we face a moresubdued lending environment andincreased demands on customer cashflows.
We remain focused on growing revenue
responsibly and committed to our
automation and simplification initiatives
to help reshape our business, deliver easy,
personalised services to our customers
and sustainably grow returns for ourshareholders over the long-term.

Strategy and focus
Our strategy in Australia Retail is to support
our customers to achieve their financial
goals, in a way that also helps improvetheir overall financial wellbeing.
For our one million home loan customers,
this means making sure they are financiallyinformed about their mortgage, that it’s
within their means and they are resilient
to potential future events.
This year we’ve built momentum in
our home loans business by improving
turnaround times, enhancing ourprocessing capacity, and simplifying
our home loan product offering.
We’ve also invested in tools like thehome loan calculator to help our

FY21

150.0
141.4

Growth2%

Growth6%

customers understand how changes tointerest rates will impact their repayments,
and a free home loan check-in to help themfind ways to fine-tune their home loan soit continues to meet their needs.
We’ve invested in building the foundationof our future business, ANZ Plus, with 20
modern cloud-based technology platforms
now in place and working at scale. We havelaunched the first ANZ Plus transaction
and savings product with deposits growth
outpacing any new digital bank in Australia.
Efforts to migrate our current ‘transact andsave’ account customers from ANZ to ANZPlus will continue to be a focus into 2023
and beyond.
We’ve been helping customers makethe move to digital and mobile channels,
so they can bank when and where it ismost convenient for them. We launched
the Message Us feature in the ANZ App –a secure way for our customers to ask
questions regarding their personalaccounts, including Home Loans, inside
the app. Customers can now receive
comprehensive help through a messaging
experience without having to call orvisit a branch. We also introduced Broker
Chat, a real-time ‘live chat’ function via
the ANZ Broker Portal for brokers to easily
obtain an expected credit response dateon an application, check on the assessment
for applications and organise call backs
from assessors.

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.

Overview

How wecreate value

Performanceoverview

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information

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The changing faceof customer service
Ongoing customer remediation work
continues to progress well, and we remaincommitted to growing our revenue
responsibly and reinvigorating our productoffering to ensure we get things right forour customers the first time.
Looking ahead, we want to be the leading
destination for homeowners and for people
who are serious about one day owning ahome. We’ll be the bank customers trust to
better anticipate their needs and help themmake the most of their money throughout
their lives – whether they are just startingto save, ready to purchase their first homeor paying off the family home quicker thanplanned. Progressing our ANZ Plus homeloan offering will be a key factor in this andis a core priority for 2023.

Performance highlights
The Retail and Digital businesses werecombined in Australia this year, creating a
new Australia Retail Division to increase focus
on customers’ needs and better position thebusiness for future opportunities. With anemphasis on responsible growth, amidst
a challenging operating environment,
the Australia Retail Division delivered
Cash Profit of $2.1 billion.
Improvements in operational capacity
and resilience helped restore Home Loan
momentum, with volume growing $5.9
billion in the second half. This was achieved
while balancing margins and returns in
an extremely competitive environment.
Customer deposits were up $8.5 billion
in the year, representing a 6% increaseon the prior year. Many customers are still
demonstrating a cautious approach andincreasing their savings buffers. In therising-rate environment, customers arealso moving their money from at-callproducts back to term deposits.
Disciplined cost management saw a
reduction in run-the-bank expenses, while
the Division continued to invest for the future.
This saw substantial progress on ANZ Plus,as well as the modernisation of the contact
centre and physical branches to bettersupport our digital transformation journey.

Our customers continue to expect convenient, flexible andcomprehensive digital banking options, many shifting towards
higher levels of self-service, with just eight per cent of our customers
relying solely on branches for their everyday banking needs.
Over-the-counter cash and chequetransactions declined 20 per cent
YOY for the past two years and ATM
transactions declined by 18 per centin FY22, while the number of customers
using digital channels increased
steadily – 43 million transactions werecompleted in digital channels anddigital logins increased 15.4 per cent.

We’ve rolled out new branch formats
across 32 locations and are piloting two
ANZ Plus stores to meet the demand
from our customers who now often visit
a branch by appointment when theywant help with more complex needs,
like home loans or improving financial
wellbeing. It is at these times that
relationships and coaching are critical.

This increased uptake of digitalchannels and services has shifted
the expectations of customers whenit comes to face-to-face interactions
with our bankers. The role of bankers
has changed significantly and we’re
responding by adapting our bricks andmortar presence to enable staff andcustomers to focus on digital adoption
and financial wellbeing conversations,rather than just transactions.

We have also built the principle ofself-service into ANZ Plus, with acomprehensive support section housedin the app. Customers can query
suspicious transactions; lock, block,cancel or reorder their card; search
years of transaction history and change
their email address, postal address,
Tax File Number, PIN and more – all in
the app. We will continue to build-in
convenient self-service options as the
ANZ Plus product suite expands.

Image: Open layout in one of ANZ’s award-winning new branches.

Enhancing the branch experience20

ANZ 2022 Annual Report

Our divisions
Australia Commercial
Financial Performance Cash continuing1
Net Loans & Advances ($b)

Cash profit ($m)
FY22
FY21

Shayne Elliott
CEO/Interim Group Executive,
Australia Commercial

Operating environment
Australia’s small-to-medium business(SME) sector experienced moderate
growth against a backdrop of intermittent
COVID-19 related shutdowns, high inflation,
increasing input costs, supply chain issues,
and workforce shortages. Adapting to theoperating conditions, we continued to see
many customers invest, better manage
costs, and pivot their businesses towards
new market opportunities.
With the unemployment rate reachinga 50-year low, employee vacancies werean ongoing issue for many customers
particularly for businesses in regional
Australia. This downward trend is expected
to continue until early 2023 which will likely
put upward pressure on wages, further
increasing costs for some businesses.

1,107

Growth

FY22

36%

FY21

59.7
57.2

Return on Avg. RWAs (%)

Customer Deposits ($b)

FY22

FY22

FY21

This year we announced Australia
Commercial as a new division tobetter prepare it for future growth
opportunities. Improving thevisibility, focus and accountabilityof Commercial enables us to bettersupport customers striving tostart, run, or grow their businesses.

1,510

2.9%
2.1%

While inflation and interest rate rises
lowered consumer confidence, consumer
spending remained relatively strong
creating buoyancy across the sector. Higher
mortgage payments, and price increases foressential goods and services could inhibit
future spending although savings buffers,
population growth and accelerating wages
should limit any impacts.

Strategy and focus
Australia Commercial provides banking
products and services to ~630,550
Australian small and medium businesses,
as well as high net-worth, private banking
customers across Australia. Our ~2,800
Commercial employees include bankers
and specialists working across all industry
sectors who assist customers manage
working capital, optimise cash-flow andsupport growth with business loans, asset
finance, and transaction banking. Australia
Commercial also works closely with
ANZ’s Retail and Broker teams to delivercustomers’ home lending needs.
Through our direct customer relationships
and a strong broker network, ourCommercial lending increased by 4%during FY22. This result was also driven
by the introduction of several self-service
features and enhancements to bothinternet banking and the ANZ App. Ina first for a major Australian bank, eligible
customers can join ANZ and open a

FY21

112.2
111.1

Growth4%

Growth1%business transaction account in just a few
minutes via ANZ’s app using a driver’s
licence or passport, and an ABN, creating afast and simple onboarding experience.
We also expanded our suite of business
management tools and personalised digital
experiences to help our customers befinancially ready. This includes investment
in online business lending platforms such as
ANZ GoBiz which uses customer accounting
data to enable online applications for
unsecured overdrafts up to $300,000 andterm loans up to $500,000, with lending
approvals issued in less than 48-hours.
The platform assists customers with both
cash-flow and investment opportunities.
This work resulted in ANZ being awarded
Canstar’s 2022 Bank of the Year – Small
Business, which recognised our businessbanking products, services, and customer
satisfaction relative to peers.

Aligned with building our digital
capabilities, in April we commenced
ANZ Worldline Payment Solutions, ajoint venture with leading European
payments provider Worldline.
The new joint venture will provide ANZ
Commercial and Institutional customers inAustralia access to market-leading pointof-sale and online payment technology.

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.

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21

Building a gem of a businesswith help from ANZ GoBiz
Brisbane jeweller and Managing Director Ashley Portas isfunding the next growth chapter of his successful jewellery
store, Diamondport, with help from an ANZ GoBiz loan.
Founded in 2015 with an initial importfocus, the family business expanded
four years later when it established its
own workshop to enhance its design
and production services. This led to
65% year-on-year growth and opened
the door to new opportunities.
“When you grow this fast, you needmore money to grow. Suddenly,
we found ourselves needing morediamonds, new tools, more rings tomarket and sell,” said Ashley.
As customers refocused and rebuilt
following the COVID-19 pandemic, we
continued to look for ways to further
support investment. This included anincrease in our maximum loan term foreligible small business customers from
15-years to 30-years for facilities secured
by standard commercial property.
In addition, we simplified our refinanceprocess for business lending up to $1m foreligible customers, creating quicker loan
approvals and access to appropriate capital.

Performance highlights
Australia Commercial delivered a strong
first set of financial results as a standalone
division, increasing cash profit by 36%
and revenue by 18% year-on-year. This
result was driven by volume growth anddisciplined margin management, assistedby the rising rate environment. Expenses
were also tightly managed.
Net loans and advances grew 4% driven
by strong lending growth in our specialist
segments which include agribusiness,health, and property. Our larger Commercial
customers had the strongest credit appetite,while smaller business customers continued
to prioritise financial solutions to aid
cash-flow.
Customer deposit growth of 1% was moresubdued this year, following unprecedented
government support during COVID-19 in
the prior year. An improvement in our risk
adjusted returns also demonstrated thecontinued strength in the credit qualityof our Commercial loans.

To support the next growth phase Ashley
decided to apply for a $200,000 businessloan. After approaching an online lenderand his existing bank, Ashley discovered
ANZ GoBiz offered a more convenient
digital-enabled alternative.

“I found the ANZ GoBiz offer online
and really liked what I saw. It only tookme 20 minutes to apply,” said Ashley.
“I applied on a Wednesday and wasapproved by Friday,” Ashley said. “I had
no problems sharing my accounting
details and banking information with
ANZ, and I found it so refreshing to seea bank like ANZ put their trust in us.”Now, with finances in place,Diamondport is expanding its portfolioof engagement rings. Alongside
traditional designs like solitaire andhalo, the team is creating more uniqueand bespoke engagement ring designs
to appeal to a wider customer base.

Customer story

22

ANZ 2022 Annual Report

Our divisions
Institutional
Financial Performance Cash continuing1
Net Loans & Advances ($b)

Cash profit ($m)
FY22
FY21

Mark Whelan
Group Executive Institutional

Operating environment
In 2022, Institutional customers remained
resilient despite economic challenges,
market volatility and geopolitical issues.
In a clear signal that investment isstrengthening, we saw significant demand
for lending even as inflation and interest
rates rose and consumer sentimentdeclined. Our business was well positioned
for the market conditions, underpinning asolid performance in Payments and CashManagement, Trade and Corporate Finance.
A sharp climb in energy prices brought
issues such as climate change andenergy policy to the forefront of the
global economic debate, intensifying ourstrategic focus on supporting customers
in their transition to net zero. Geopolitical

1,887

Growth

FY22

-7%

FY21

196.8
158.2

Return on Avg. RWAs (%)

Customer Deposits ($b)

FY22

FY22

FY21

In the past year, some of theheadwinds facing Institutional
started to pivot to tailwinds, driving
momentum in key businesses.
Customer lending was robust,
and we made significant progressdelivering on our strategy – including
through our digital offering, platforms
and sustainability partnerships.

1,761

0.9%
1.1%

uncertainty continued, highlighting
the importance of a reliable banking
partner with a strong international trade
network and a deep understanding of
global markets.

Strategy and focus
ANZ Institutional Bank is focused on
supporting companies moving goods
and capital around the region. Our pastefforts to build a simpler, more efficient
Division positioned us well to respondquickly to our customers’ needs throughthe pandemic and provide support during
a challenging period.
In 2022, we made significant progress indelivering strategic initiatives, including
growing the Markets' customer-franchisebusiness, maximising benefits from ourinternational network, implementing
an improved customer coverage model,building on our digital self-service offering,rolling out more efficient digital credit
processes and establishing a market-leading
Digital Asset Services Team.
We also focused on extending our platforms
as a service to customers. The volume ofagency payments, processed by financial
institutions for their customers, using ANZ’s
infrastructure, grew 85% year-on-year.
Overall payments volumes grew 52%, as
we continued to invest in digital platforms.

FY21

259.4
239.6

Growth24%

Growth8%

We continued to build our position
as a regional leader in environmental
sustainability, participating in $155 billionof sustainable finance deals in FY22
while rolling out sustainability education
programs internally. Looking ahead,
we see increasing opportunities for ourcustomers as a result of the super cycleof activity that is underway.

Performance highlights
ANZ Institutional delivered a strong
performance, with a cash profit of$1.8 billion while revenues were up 1%
for the year and 10% half-on-half. The
high-quality result was achieved despite
challenging market conditions, reflecting
strong customer momentum and effective
margin management. In addition, lending
momentum remained robust, up 24%
year-on-year.
ANZ also maintained our position as theregion’s leading Institutional bank in key
markets where we operate. In Australia,
we were named #1 Lead Institutional bankfor overall market penetration for the 7thconsecutive year by Peter Lee Associates2.
In New Zealand, Peter Lee Associates
recognised ANZ as #1 for Overall Market
Penetration and Lead Bank Penetration,and #1 for Relationship Strength.3

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45. 2. Peter Lee Associates, Australia Large Corporate
Relationship Banking 2016–2022. 3. Peter Lee Associates, New Zealand Large Corporate Relationship Banking 2022.

Overview

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23

ANZ leads landmark tokenised
carbon credits transaction
In International, we held our top ranking
for overall relationship quality in Asia for
the fifth consecutive year according to the
Coalition Greenwich 2021 Asian Large
Corporate Banking Study.
Our focus on environmental sustainability
was recognised in the market, with ANZ
named market leader in Environmental,
Social and Governance (ESG)/Sustainable
Finance in Australia4 for the second
consecutive year and ESG Bank of Choicein New Zealand5, according to Peter Lee
Associates.
In addition, ANZ formed a strategic
collaboration with INPEX Corporation
and Qantas Airways Limited to enter intoa Memorandum of Understanding, for a
project bringing together carbon farming
and renewable biofuels in the Wheatbelt
region of Western Australia. We also
launched a comprehensive hydrogenguide to support customers in exploring
opportunities associated with the emerging
sector’s rapid commercialisation.

ANZ led the market in our approachto digital assets, successfully
executing the first ever Australianbank issued Australian dollar
stablecoin (A$DC) payment througha public permissionless blockchaintransaction. The team delivered thestablecoin for Victor Smorgon Group,
closely followed by the purchase of
tokenised Australian carbon credits
using the new stablecoin.

4. Peter Lee Associates, Australia Large Corporate
Relationship Banking 2021–2022. 5. Peter Lee Associates,
New Zealand Large Corporate Relationship Banking 2022.

ANZ has taken an important next step in progressing its digitalasset strategy, supporting long-standing customer Victor Smorgon
Group in successfully purchasing tokenised Australian carbon
credits (BCAU) using the ANZ-issued stablecoin A$DC.
This is an important step for ANZ as
the bank explores greater circulationof the stablecoin. In this transaction,
Victor Smorgon Group used A$DC as a
medium of exchange to purchase the
BCAU carbon tokens from Zerocap,
an Australian digital asset investment
platform. Zerocap sourced the BCAU
from BetaCarbon, which tokenises
Australian Carbon Credit Units (ACCUs)
into digital tokens, with each
representing 1kg of carbon captured.
This transaction is also significant as itprovided A$DC/BCAU liquidity, while
offering both Victor Smorgon Group andZerocap redemption rights for A$DC.
This latest A$DC transaction came after
ANZ successfully executed the firstAustralian-bank issued Australian-dollar
stablecoin payment through a public
permissionless blockchain transaction in
March. A$DC remains fully collateralisedby the Australian dollar and isredeemable at par with funds held
in an ANZ-managed reserve account.

Victor Smorgon Group CEO Peter
Edwards said: “Victor Smorgon Groupis one of Australia’s most establishedand successful family offices, operating
across multiple asset classes, including
digital assets. Through the Zerocap
platform and continuing our multigenerational working relationship with
the ANZ Bank, we are excited to now
have an Australian dollar stablecoin
giving us a safe and secure gateway
to the digital economy.”
ANZ Banking Services Lead
Nigel Dobson said: “This milestonetransaction brings together two key
focus areas for ANZ, sustainability anddigital assets. We’re seeing increasing
customer appetite to use A$DC to enter
the digital economy, and will continue
to partner with our clients to explore
how this technology can help themachieve their goals.”

A milestone transaction and partnership

24

ANZ 2022 Annual Report

Our divisions
New ZealandFinancial Performance Cash continuing1
Net Loans & Advances (NZ$b)

Cash profit (NZ$m)
FY22
FY21

With the pace and scale of change
across the world, it will be essential
to continue to adapt and help
our personal and businesscustomers stay focused onlong-term financial wellbeing.
Antonia Watson
CEO of New ZealandOperating environment
Rapidly rising interest rates, inflationand heightened commodity prices havebecome a reality at home and around theglobe. Economic disruption fuelled by
the war in Ukraine and continued supply
chain issues add to the challenges that we
knew would linger as long as COVID-19
was around.
While we successfully navigated the year
alongside our customers, there’s been a
noticeable shift in consumer sentimentand it’s clear the broader environment has
become increasingly challenging for many.
The data tells us many customers are more
resilient than many may think – making
the right moves by prioritising home loan
repayments, savings and paying down

1,607

Growth

FY22

10%

FY21

140.4
134.5

Return on Avg. RWAs (%)

Customer Deposits (NZ$b)

FY22

FY22

FY21

We are proud of our many
achievements over this year and therole we will continue to play to help
Kiwis navigate the months ahead.

1,768

2.3%
2.2%

credit card debt. We continue to workwith our business customers on sustainablefinancing solutions – where borrowing
more is often not the answer. Being wellcapitalised provides important assurance
for our customer base.

Strategy and focus
Despite the onslaught of COVID-19 andbeing required to work from home formuch of the past two years, our accelerated
strategy work has progressed well. In thattime, we’ve delivered a number of projects
beneficial to customers and staff, suchas voice-identity confirming proof of abank account in goMoney, digital multiauthorisation for payments, automatedcustomer communications, and digital
home loan rate refixing among others.
The speed of customers’ adoption of ourdigital banking tools has continued at pace,with an increase of 81,000 active users since
March 2020. The pandemic has accelerated
the decline in over-the-counter branchtransactions by 40%. Technology willcontinue to be central to how we makethings easier for staff and customers.
We’re bringing forward a major project
to install a modern banking platform thatis “cloud-based”, providing us with more
flexibility to quickly add functions for ourcustomers and staff. By moving to a modernbanking platform we will have a new coresystem which can continue to deliver
reliable, efficient and secure services forour customers.

FY21

108.0
102.3

Growth4%

Growth5%That’s why we’ve also lifted this program
above our strategic acceleration workand given it a foundational title: “NgāTapuwae o ANZ – The Footsteps of ANZ”.
Ngā Tapuwae is our statement about
ensuring quickness of feet either in thedepths of our intellectual pursuits orphysical prowess. Ngā Tapuwae calls
for us all to transform as a bank, in afleet footed manner, to serve the needsof an ever-changing customer base andAotearoa New Zealand.

We recently launched our Good
Energy Home Loan, which allows
customers to borrow up to $80,000
at a 3-year fixed rate of 1% to maketheir homes more energy efficient.
This was followed by our ANZ BusinessGreen Loan, the first product of its kind in
the market. Our Business and Corporate
customers with environmental initiatives
that meet eligibility criteria can accessfunding of up to $3 million at a special
floating interest rate for up to five years.
Customers can also re-finance existing
business loans if they meet the criteria.
Importantly, it’s the only advertisedloan in market aligned to internationallyrecognised Green Loan Principles (GLP)
for assets that demonstrate a clear
environmental benefit.

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the resultof the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.

Overview

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Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information25

Supporting a more sustainable
and self-sufficient future
ANZ’s People Agenda is critical to theperformance of our bank. This year
saw the launch of Tākiri Ā Rāngi – ANZ
New Zealand’s Te Ao Māori strategy out
to 2040. We are committed to growing
cultural competency and understandingof Te Ao Māori (the Māori world view) with
our staff and enhancing the financial
wellbeing of Māori.
This year we released a report called
Watch Women Win, which examined the
motivations for, and obstacles preventing,
women’s success. A key finding was women
are inspired by seeing other womencelebrated for doing well. We undertooka number of engagements throughout
the year meeting successful women andhearing and sharing their stories.

Changes to the social, physical and financial operating
environment mean businesses must become more sustainable
and energy-efficient.
There is a growing sense that if they
are to survive and thrive in a warmer
world, they must adapt, invest intechnology and become more
self-sufficient and resilient.
One Canterbury business demonstrates
this in spades. Hagley Windows andDoors – set up by builder Geoff Ball – hasgrown from having just two employees
in 1983 to more than 190 today.
In recent years, Hagley has invested
millions of dollars in computercontrolled robotic glass-cutting anddouble-glazing machines, giving it anedge over competitors.

In February we also launched our Equity,
Diversity and Inclusion Strategy, ‘Bringing
EDI to Life’. This supports our business tocreate an equitable and inclusive workplace
where the diversity of our workforce in its
broadest sense can be leveraged to thebenefit of our customers and Aotearoa
New Zealand.

Its high-tech double-glazed window
units are a growing part of its business,
and now help make thousands of homes
and businesses in the South Island
warmer, dryer and more energy efficient.

Performance highlights

It takes considerable power to run afactory the size of two football fields,
dozens of machines and an energyhungry glass-toughening furnace.

New Zealand delivered another strong
year with Cash Profit of NZ$1.77 billion.
Home lending continues to be a key driverfor us. We increased our share of the New
Zealand home loan market over the year,
from 30.38% in September 2021 to 30.51%
in August 2022.
Lending to Business and Institutionalcustomers also grew, increasing by NZ$900
million over the first half. Overall, Businessand Institutional customers managed wellthrough the COVID-19 disruptions in thefirst half of the financial year.
Our Contact Centre is experiencing
increasing demand. We’ve seen an increasein customer calls, particularly related to
an uptick in fraud and scam cases, thewind-up of Bonus Bonds, interest rates
and a surge in home loan rollovers.
Our Staff Foundation distributed over
NZ $1.1 million in donations to 93 charities
across New Zealand.

The company has also made substantial
investments in solar power for its own
premises.

To meet some of these electricity
demands, the company has put
its abundant roof space to work,
installing over 2900 solar panels.
It is one of the largest solar arrays in
the South Island, and now generates
over 20 per cent of the company’s
power requirements.
As the country’s largest bank, we’reseeing our customers increasingly
turning to us for support and help
as they consider how best to adapt
and invest in their future.
As with any investment, making abusiness more sustainable comes ata price, but our Business Green loan
removes some of that cost barrier.
It is currently the only advertised green
loan product in the market available
to business customers and linked to
the Green Loan Principles.
ANZ has led the way with sustainablefinance for our Institutional Businesscustomers and we’re proud to now
offer a Business Green Loan which will
support many more businesses start
down the road of becoming moresustainable, resilient and self-sufficient.

Customer story

26

ANZ 2022 Annual Report

GovernanceCorporate governance framework

SHAREHOLDERS
BOARD OF DIRECTORS
Audit Committee
Ethics, Environment, Socialand Governance Committee
Risk Committee
Human Resources Committee
Digital Business andTechnology Committee
Nomination and Board
Operations Committee
BOARD RESERVED POWERS AND
DELEGATION OF AUTHORITY

CHIEF EXECUTIVE OFFICERGROUP EXECUTIVE COMMITTEEBoard ofDirectors
ANZ’s strong governance frameworkprovides a solid structure for
effective and responsible decisionmaking within the organisation.
The Board is responsible for the oversightof ANZ and its sound and prudent
management, with specific duties
as set out in its charter available atanz.com/corporategovernance.
There are six principal Board Committees –the Audit Committee, the Ethics,
Environment, Social and GovernanceCommittee, the Risk Committee, the
Human Resources Committee, the Digital
Business and Technology Committee andthe Nomination and Board Operations
Committee.
Each Committee has its own chartersetting out its roles and responsibilities. At
management level, the Group Executive
Committee comprises ANZ’s most senior
executives. There is a delegation of
authority framework that clearly outlines
those matters delegated to the CEO andother members of senior management.
For further detail on ANZ’s governanceframework see our 2022 Corporate
Governance Statement available atanz.com/corporategovernance.

Full biography details can be foundon our website at anz.com/directors
and on pages 31-35 of this report.

Overview

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Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

27

Paul O’Sullivan

Shayne Elliott

Ilana Atlas, AO

Chairman, Independent
Non-Executive Director

Chief Executive Officer,
Executive Director

Independent
Non-Executive Director

Jane Halton, AO PSM

RT Hon Sir John Key, GNZM AC

Graeme Liebelt

Independent
Non-Executive Director

Independent
Non-Executive Director

Independent
Non-Executive Director

John Macfarlane

Christine O’Reilly

Jeff Smith

Independent
Non-Executive Director

Independent
Non-Executive Director

Independent
Non-Executive Director

28

ANZ 2022 Annual Report

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

Board

Risk
Committee

Audit
Committee

Human
Resources
Committee

Ethics,DigitalEnvironment,
Social and Business andGovernance Technology
Committee
Committee

SpecialCommitteeof the Board

Committeeof the Board1

Nominations
and Board
Operations

SharesCommittee1

A

B

A

B

A

B

A

B

A

B

A

B

A

B

A

B

A

B

A

B

Paul O’Sullivan

18

18

8

8

8

8

7

7

6

6

4

4

1

1

1

1

4

4

3

3

Ilana Atlas, AO

18

18

8

8

7

7

6

6

1

1

1

1

4

4

1

1

Paula Dwyer2

4

4

2

2

2

2

Shayne Elliott

18

18

1

1

2

2

2

2

Jane Halton, AO PSM

18

18

RT Hon Sir John Key,GNZM AC

18

17

8

8

Graeme Liebelt

18

18

8

8

8

8

John Macfarlane

18

18

8

8

8

8

Christine O’Reilly3

16

16

6

6

7

7

Jeff Smith4

1

1

2

2

7

7

7

6

6

4

4

6

6

4

4

7
4

5

4

4

4

4

4

4

1

1

1

1

2

2

4

4

1

1

1

1

4

4

1

1

2

2

4

4

1

1

Column A Indicates the number of meetings the Director was eligible to attend as a member. Column B Indicates the number of meetings attended. With respect to Committee
meetings, the table above records attendance of Committee members. 1. The meetings of the Committee of the Board and Shares Committee as referred to in the table above include
those conducted by written resolution. 2. Paula Dwyer ceased as a Non-Executive Director on 16 December 2021. 3. Christine O’Reilly commenced as a Non-Executive Director on
1 November 2021. 4. Jeff Smith commenced as a Non-Executive Director on 1 August 2022.

“The Board continues to focus on immediate and longer-term strategic
matters. The Board closely monitored the rapidly changing operating
environment, including inflation and interest rates and the continuing
impact of COVID-19, together with ANZ’s approach to dealing with thosematters in alignment with ANZ’s purpose.”
Paul O’Sullivan
ChairmanOverview

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reportFinancialreportShareholder
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29

Executive Committee

Shayne Elliott

Maile Carnegie

Kevin Corbally

Chief Executive Officer (appointed CEO
on 1 January 2016)

Group Executive Australia RetailGroup Chief Risk Officer

Joined the Executive Committee
on 27 June 2016

Joined the Executive Committee
on 19 March 2018

Farhan Faruqui

Gerard Florian

Kathryn van der Merwe

Chief Financial Officer (appointed CFO
on 11 October 2021)

Group Executive Technology

Group Executive Talent & Culture
and Service Centres

Joined the Executive Committee
on 1 June 2009

Joined the Executive Committee
on 1 February 2016

Joined the Executive Committee
on 30 January 2017

Joined the Executive Committee
on 1 May 2017

Full biography details canbe found on our website
at anz.com/exco
Antonia Watson

Mark Whelan

Chief Executive Officer New ZealandGroup Executive Institutional

Joined the Executive Committee
on 17 June 2019

Joined the Executive Committee
on 20 October 2014

30

ANZ 2022 Annual Report

Board areas of focus
The Board and its Committees
engage in key strategic, governanceand oversight activities each year.
The topics below are illustrative
to provide stakeholders with an
insight into some of the key mattersconsidered by the Board and
its Committees during the 2022
financial year and is not intended
to be a comprehensive list.
Strategy and growth
During the financial year, the Boardand its Committees continued to focus
on longer-term strategic matters.
In addition to participating in regularstrategy sessions, the Board regularly
discussed and reviewed ANZ’s strategic
and growth priorities.
At each regular Board meeting, there
continued to be unstructured discussion
with the Chief Executive Officer in relation
to the progress of Management’s key
priorities as agreed with the Board.
The Board also received regular reports
on progress (from both a strategic/
operational viewpoint and a technology
viewpoint) in the design and build andimplementation, including customer
migration strategy, relating to ANZ Plus.
Mergers & Acquisitions was a key topic
of consideration during the year withdiscussions taking place at both regularand specially convened Board meetings
in relation to key potential transactions
that have been disclosed to the market,
including the acquisition of Suncorp Bank.
At the Interim Results in May, ANZ
announced its intention to apply for
approval to implement a non-operatingholding company structure. The Board
received regular reports throughout theyear on the strategic rationale and details of
how such a revised structure would work inpractice, including in relation to governanceand operations. The Board played a key rolein the ultimate design and application of
the proposed revised structure.

Risk, regulation and reputation
The Board Risk Committee and the Board
played a key role in reviewing the Group’s
approach to managing non-financial risk
and the design and implementationof ANZ’s revised operational risk andcompliance framework.
The Board and its Committees continued
their oversight of the Group’s risk
appetite settings.
The Board continued to meet with ANZ’s
key Australian regulators during the courseof the year with the purpose of maintaining
constructive two-way dialogue.
The Board also received regular education andbriefing materials and held education sessions
on key areas such as sanctions, competition
law and cyber security, as well as participatingin Banking Executive Accountability Regime(BEAR) scenario training.

Financial/Operational
While the Board and its Committees have
had a strong focus on the long-term future of
the Group, the Board (and its Committees)
maintained an equally strong focus on thecurrent performance of the Group, including:• Reviewing and ultimately approving
ANZ’s revised structure for its Australia
Retail & Commercial businesses.
• Having regular and broad discussions
with the heads of each major businessregarding the performance of theirbusiness, key issues being focusedon and the ongoing changes in theoperating environment.
• Receiving regular reports on theperformance of the Australian home loans
business against the backdrop of therapidly changing operating environment.
• Reviewing, challenging and ultimately
endorsing ANZ’s operating and strategicplans, both annual and longer-term.
• Providing oversight of key capitalmanagement matters, including theapproval of the recent renounceable
entitlement offer.

Changing operating environment
The Board and its Committees closely
monitored the rapidly changing operating
environment, including geopolitical matters,
inflation and interest rates and the continuing
impact of COVID-19, together with ANZ’s
approach to dealing with those matters.

Overview

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Remuneration
reportDirectors’
reportFinancialreportShareholder
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Directors’ qualifications,experience and special
responsibilities
As at the date of this report, the Board comprises eight Non-Executive Directors
and one Executive Director, the Chief Executive Officer. The names of the current
Directors, together with details of their qualifications, experience and special
responsibilities are set out below. Jeff Smith joined the Board on 1 August 2022
as a Non-Executive Director and will stand for election as a Director at ANZ’s
AGM on 15 December 2022. Paula Dwyer ceased as Non-Executive Director
on 16 December 2021, after serving on the Board since 2012. Graeme Liebelt
will cease as a Non-Executive Director at the conclusion of the 2022 AGM.

Paul O’Sullivan
Chair

Audit Committee
Ethics, Environment,
Social and GovernanceCommittee
Risk Committee

MemberPosition
Chairman, Independent
Non-Executive Director

Qualifications
BA (Mod) Economics, Advanced
Management Program of Harvard

Responsibilities
Human Resources
Committee
Digital Business andTechnology Committee
Nomination and Board
Operations Committee

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

CareerPaul has experience in thetelecommunications and oil and gas
sectors, both in Australia and overseas.
He has held senior executive roles with
Singapore Telecommunications (Singtel)

and was previously the CEO of Optus. He
has also held management roles with theColonial Group and the Royal Dutch Shell
Group in Canada, the Middle East, Australia
and United Kingdom.

Relevant other directorships
Chairman: Singtel Optus Pty Limited (from2014, Director from 2004) and Western
Sydney Airport Corporation (from 2017).
Director: St Vincent’s Health Australia (from2019) and Australian Tower Network Pty Ltd(from 2021).

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

62 years

Residence Sydney, Australia

32

ANZ 2022 Annual Report

Shayne Elliott

Ilana Atlas, AO

Position

Chair

MemberChief Executive Officer
and Executive Director

Qualifications

Position

Relevant other directorships

BCom

Independent Non-Executive Director

Responsibilities

Chairman: Jawun (from 2017, Director
from 2014).

Qualifications

Director: Paul Ramsay Foundation (from2017), Scentre Group (from 2021) andOrigin Energy Limited (from 2021).

Chief Executive Officer and Executive
Director since 1 January 2016.

BJuris (Hons), LLB (Hons), LLM

CareerResponsibilities

Shayne has over 30 years’ experience inbanking in Australia and overseas, in all
aspects of the industry. Shayne joined ANZ
as CEO Institutional in June 2009, and was
appointed Chief Financial Officer in 2012.

Non-Executive Director since September
2014. Ilana is Chair of the Human Resources
Committee and is a member of the Audit
Committee, Ethics, Environment, Social andGovernance Committee and Nomination
and Board Operations Committee.

Prior to joining ANZ, Shayne held senior
executive roles at EFG Hermes, the largest
investment bank in the Middle East, which
included Chief Operating Officer. He started
his career with Citibank New Zealand andworked with Citibank/Citigroup for 20 years,
holding various senior positions across the
UK, USA, Egypt, Australia and Hong Kong.
Shayne is a Director of the Financial Markets
Foundation for Children and a member ofthe Australian Banking Association, theBusiness Council of Australia and theAustralian Customs Advisory Board.

Relevant other directorships
Director: ANZ Bank New Zealand Limited(from 2009) and the Financial Markets
Foundation for Children (from 2016).
Member: Business Council of Australia(from 2016), the Australian Banking
Association (from 2016, Chairman
2017–2019) and the Australian
Customs Advisory Board (from 2020).
Age

58 years

Residence Melbourne, Australia

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

Member: Panel of Adara Partners (from2015) and Council of the National Galleryof Australia (from 2021).

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

68 years

Residence Sydney, Australia

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

33

Jane Halton, AO PSM

RT Hon Sir John Key, GNZM AC

ChairMemberMemberPosition

Relevant other directorships

PositionIndependent Non-Executive Director

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

Independent Non-Executive Director

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

Responsibilities

Director: Clayton Utz (from 2017).

Non-Executive Director since October 2016.
Jane is Chair of the Digital Business andTechnology Committee and is a member ofthe Human Resources Committee, Ethics,
Environment, Social and GovernanceCommittee and Nomination and Board
Operations Committee.

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

CareerJane’s 33-year career in the public service
includes the positions of Secretary of theAustralian Department of Finance, Secretaryof the Australian Department of Health,
Secretary for the Department of Healthand Ageing, and Executive Co-ordinator(Deputy Secretary) of the Department of
the Prime Minister and Cabinet.
She brings to the Board extensive
experience in finance, insurance, risk
management, information technology,
human resources, health and ageing andpublic policy. She also has significant
international experience.
Jane has contributed extensively tocommunity health through local andinternational organisations including theWorld Health Organisation and as co-chairof the COVAX coordination mechanism.

Honorary Professor: Australian National
University Research School of Psychology.
Adjunct Professor: University of Sydney
and University of Canberra.
Council Member: Australian Strategic
Policy Institute (from 2016).

Relevant former directorships
held in last three years include
Former Director: Crown Resorts Limited(2018–2022) and Naval Group Australia
Pty Ltd (2021–2022).
Former Member: National COVID-19
Commission Advisory Board (2020–2021).
Age

62 years

Residence Canberra, Australia

Qualifications
BCom, DCom (Honoris Causa)

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

Career
Sir John was Prime Minister of New Zealandfrom 2008 to 2016, having commenced his
political career in 2002. Sir John had a longcareer in international finance, primarily for
Bankers Trust in New Zealand and Merrill
Lynch in Singapore, London and Sydney.
He was previously a member of the Foreign
Exchange Committee of the Federal Reserve
Bank of New York (from 1999 to 2001).
Sir John was made a Knight Grand
Companion of the New Zealand Order ofMerit in the 2017 Queen’s Birthday Honours.
In 2017 Sir John became a Companion of
the Order of Australia for advancing theAustralia–New Zealand bilateral relationship.

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

Relevant former directorships
held in last three years include
Former Director: Air New Zealand Limited(2017–2020).
Age

61 years

Residence Auckland, New Zealand34

ANZ 2022 Annual Report

Graeme Liebelt

John Macfarlane

Christine O’Reilly

Chair

MemberChair

Position

Position

PositionIndependent Non-Executive Director

Independent Non-Executive Director

Independent Non-Executive Director

Qualifications

Qualifications

Qualifications

BEc (Hons), FAICD, FTSE, FIML

BCom, MCom (Hons)

BBus

Responsibilities

Responsibilities

Responsibilities

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

Non-Executive Director since May 2014.
John is a member of the Audit Committee,
Risk Committee, Digital Business andTechnology Committee and Nomination
and Board Operations Committee.

Non-Executive Director since November
2021. Christine is Chair of the Audit
Committee and a member of the Risk
Committee, Human Resources Committee
and Nomination and Board Operations
Committee.

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

CareerRelevant other directorships

Director: The Baker Heart & Diabetes
Institute (from 2013), Stockland (from 2018)
and BHP Group Limited (from 2020).

MemberGraeme brings to the Board his experienceof a 23-year executive career with Orica
Limited (including a period as Chief
Executive Officer), a global mining services
company with operations in more than 50
countries. He has extensive international
experience and a strong record ofachievement as a senior executive,
including in strategy development andimplementation. Graeme is committed
to global trade and cooperation, as wellas community education.

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

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

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

Relevant former directorships
held in last three years include
Former Director: Craigs Investment
Partners Limited (2013–2020).
Age

Age

68 years

Residence Melbourne, Australia  

62 years

Residence Melbourne, Australia  

MemberChristine is one of Australia’s leading
non-executive directors. Christine has
held executive roles in the infrastructureand financial services industries. This
includes being CEO of GasNet Australia
and Co-Head of Unlisted Infrastructure
Investments at Colonial First State Global
Asset Management and follows an early
career including investment banking andaudit experience at Price Waterhouse.

Relevant other directorships

Relevant former directorships
held in last three years include
Former Director: Medibank Private Limited(2014–2021), CSL Limited (2011–2020)and Transurban Group (2012–2020).
Age

61 years

Residence Melbourne, Australia  

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

35

Company Secretaries’
qualifications and experience
Currently there are two people appointed as Company
Secretaries of the Company. Details of their roles arecontained in the Corporate Governance Statement.
Their qualifications and experience are as follows
Jeff Smith
MemberPositionIndependent Non-Executive Director

Qualifications
BAppSc, MBA

Responsibilities
Non-Executive Director since August 2022.
Jeff is a member of the Nomination and
Board Operations Committee.

CareerJeff is an experienced global business andtechnology executive, with over 30 years
corporate experience which includes senior
executive roles in a number of companies
including Telstra, Honeywell and Toyota.
Jeff was previously Chief Information Officer
at IBM Corporation where he was globally
responsible for IT strategy, resources,
systems and infrastructure and also led thecompany’s Agile transformation. Jeff was
also CEO of Suncorp Business Services andSuncorp Chief Information Officer. Since
2017, Jeff has been Chief Operating Officerof World Fuel Services Corporation, a role
he will step down from at the end of 2022.
Jeff also served on the Australian FulbrightCommission awarding Australian postgraduate scholarships to US universities.
He was previously a member of ANZ’s
International Technology and Digital
Business Advisory Panel until 2019.

Relevant other directorships
Director: Sonrai Security Inc (from 2021).
Advisor: Zoom Video Communications,
Inc (from 2018) and Box, Inc. (from 2018).

Relevant former directorships
held in last three years include
Former Member: ANZ International
Technology and Digital Business Advisory
Panel (2016–2019).
Age
60 years
Residence USA

Ken Adams
PositionGroup General Counsel

Qualifications
BA, LLB, LLM

Ken joined ANZ as Group GeneralCounsel in August 2019, having assisted
ANZ with major legal issues for over 10
years. Prior to ANZ, Ken was a Partnerof Freehills and later Herbert Smith
Freehills for 21 years, and for six years
was a member of the Herbert Smith

Freehills Global Board. Ken is one ofAustralia’s leading commercial lawyers
with significant experience in classactions and other complex legal issues.
He holds a Master of Laws from the
University of Melbourne and is a
co-author of Class Actions in Australia.

Simon Pordage
Position
Company Secretary

Qualifications
LLB (Hons), FGIA, FCG (CS, CGP)

Simon joined ANZ in May 2016.
He is a Chartered Secretary andChartered Governance Practitioner
and has extensive company secretarial
and corporate governance experience.
From 2009 to 2016 he was Company
Secretary for Australian Foundation
Investment Company Limited and anumber of other listed investmentcompanies. Other former roles include
being Deputy Company Secretary for
ANZ and Head of Board Support for
Barclays PLC in the United Kingdom.

He is a formal brand ambassador for,and is a former National President andChairman of, Governance Institute ofAustralia. He is also a member of theChartered Governance Institute’s
Global Thought Leadership Committee.
Simon is committed to the promotion
and practice of good corporate
governance, and regularly presents
on governance issues.

36

ANZ 2022 Annual Report

Risk management
The evolving macroeconomic
and geopolitical conditions havecontinued to challenge our operating
environment. Our Risk Management
Framework (RMF) has remainedrobust in the face of these challenges,
enabling the sound managementof our business.
Over the last year we have continued towork towards a stronger and simpler risk
and governance framework. Our ability
to respond to changes in existing risks,
and to deal with emerging risks as theyarise has been strengthened, including
those discussed below.

Macroeconomic andGeopolitical environment
The rising geopolitical tensions including
the conflict in Ukraine, trade tensions,energy security issues in the European
Union accompanied with economic
challenges relating to rising interest rates,
inflation and real cost of living pressures,are creating uncertainty for many of ourcustomers. The Board and management
continually monitor these developing
conditions, and maintain provisions andstrong capital levels for a range of potential
scenarios. In addition, we have focused on
the following to help support our customers
and their financial resilience:

Home Loans and Consumer Lending –We continue to engage with our homeloans customers to help them better
manage their home loan and personal
finances. 70 per cent of our customers
have paid additional funds to reduce
their principal debt with over half of
those more than 2 years ahead on their
repayments. Measures such as interest
rate floors and higher interest rate buffers
when assessing home loans, and higher
household expenditure measures, havecontributed to customers being better
placed to service their loans.
We have proactively communicated withour customers to provide reassurance that
where required, we have options available
to continue to support them.
Data Analytics – Data and analytics play
an important role in early identificationof customers heading towards financial
difficulty. We have invested in our retail risk
systems to provide quality data analytics to
assist our Collections and Hardship teams.
Our analytics have focused on customertransaction data and the identificationof customers that may need additional
support. We are using data analytics tolook at savings, credit, and offset accounts
to better understand customers’ financial
behaviour and potential future outcomes.
The analysis considers interest rate changes,
increases in living expenses and cashflow.
In our Wholesale portfolio, we are using

external (e.g., ASIC’s insolvency register,
ATO arrears) and internal data sources(e.g., stress sensitivities and savings levels)
to identify areas of systemic emerging
risks to proactively manage the portfolio.
Financial health and Wellbeing –We have transformed our retail platformby simplifying and rebuilding products,
systems and processes to improve thefinancial wellbeing of our customers. Our
initial ‘transact and save’ product within the
ANZ Plus App has provided functionality toenable customers to have better visibility
and control over their money.
The lessons we have learnt from COVID-19
and recent natural disasters, have been used
to develop financial hardship assistance
options that can be implemented quickly.
Portfolio management – Our new Headof Geopolitical Risk provides additional
insights to support our customer
management and understand thegeopolitical impacts to our portfolio.
The introduction of this role has provided
focused analysis of global issues whichallows us to better inform and support
our customers and the Board.

Risk Culture
Risk culture is an important component of
our organisational culture and underpins theshared values, behaviours and practices thatdrive how risk is considered in decisions.

Keeping our community safe
As part of ANZ’s ongoing focus on
keeping communities safe, membersof the ANZ financial crime teamhave security clearance to support
intelligence initiatives.
Leveraging lessons from previous
operations involving fugitives andhigh-risk law enforcement targets,the team regularly checks internaland external intelligence sources
for information.

In 2022, a member of the Financial Crime
team proactively reached out to law
enforcement and regulatory partners to
support a live child abduction case. The
alleged perpetrator was on the run andactively being sought by law enforcement
agencies. The team member checked oursystems for the main perpetrators andany known associates, which led to theidentification of accounts with activity
outside of the account holder's normal
spending behavior.

Close examination of those accounts
suggested the alleged perpetrator wasusing the account of a family member
to avoid detection. This information
was then shared with law enforcement.
Law enforcement partners were able tofollow up on ANZ’s leads and locatedthe victim unharmed.

Overview

How wecreate value

Performanceoverview

We have made progress in strengthening
risk culture through achieving greaterawareness of the approach to risk culture
and establishing strong leadership to deliveron our risk culture plans. This will allow us toachieve our defined target state.
We have defined key risk culture principles
that form the foundation of our risk culture
approach and have embedded a framework
for assessing each risk culture principle
across the organisation. This framework
incorporates desired risk behaviours
and business and risk outcomes. We
are monitoring risk culture through our
Risk Culture Dashboard which capturesrisk management and business-related
information. Our annual Risk Culture Survey
informs us on the perceived and actual
effectiveness of our risk behaviours, policies
and processes, and decision making. Our
Board Risk Committee receives half-yearly
updates from management to assist theBoard in forming a view on risk culture
and the effectiveness of plans and actions.
Risk culture is included as a performance
objective for all Group Executives and risk
is a key element of the balanced scorecard
for our people’s performance andremuneration. Behaviours supporting thetarget risk culture are reinforced through theEnterprise Accountability Group (page 90).

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

We acknowledge individuals whorole model outstanding risk behaviours
for their work to manage and mitigate
the organisation’s risks.

Financial crime
We continue to maintain an effective
financial crime risk management programthat anticipates and navigates criminal
threats supported by the right people withthe right tools. The Financial Crime teamcontinues to be responsible for the deliveryof enhanced detection, investigative and/or
intelligence capability that is focused on
identifying, mitigating and managing
financial crime risk and protecting thecommunity via:
• Partnering with AUSTRAC’s Fintel
Alliance, and similar programs globally.
• The development and maintenanceof a central data repository, intelligencesystems and tools.
• The creation and delivery of Dynamic
Algorithms to meet new threats.

Non-financial risk
We have made further inroads in our
non-financial risk management. We continue
to uplift our non-financial RMF (the I.AM –Identify, Act, Monitor framework) to provide

37

a holistic approach to risk managementwith insights that enable us to anticipate
and navigate a changing environment andprotect our customers, shareholders andthe community from harm.
We are improving how we manage
our non-financial risk by updating ourapproach to be more standardised,
integrated, dynamic and automated, sothat it is both more effective and efficient.

Conduct Risk
The interests of our customers andcommunity are fundamental to our strategy.
We continue to responsibly manage ourConduct Risk, including by identifying,
managing, and mitigating instances where
our activities, products and/or services may
result in unfair customer outcomes and/or
damage to market integrity. The articulationof Conduct Risk as a Risk Theme under the
new Compliance and Operational Risk
model will help manage Conduct Risk as
a key material risk for ANZ. To support this,we have developed a global Conduct Risk
Framework and Conduct Risk taxonomy
which facilitate a clear and consistent way
of managing and monitoring the risk, in
conjunction with the Compliance andOperational Risk Framework (I.AM).

38

ANZ 2022 Annual Report

Our 2022 Climate-related Financial
Disclosures will be released prior to our
Annual General Meeting (AGM) and will
be available at anz.com/annualreport

Emerging risks
Risks that continue to evolve and that
we are paying particular attention to are:
Cyber security risk: We take the security ofour bank, our customers and our customers’
information very seriously. Cyber security
threats continue to be significant and ourapproach to mitigating cyber security risk
involves a range of controls relying on
people, technology and process. We arecontinually testing our defences internallyand through independent third parties. We
have a very sophisticated cyber security
protection capability and have invested
heavily in a range of recognised industry
practices and technologies, processes anddefences. We maintain a 24/7 sophisticatedinternal Security Operations Centre,
analysing millions of data events daily
including unusual or infrequently seen
activities identified by our security team.
In addition, we are cooperating with ourcounterparts, governments and associatedentities around the world to protect against
cyber security threats, which have increased
since COVID-19 and the consequent shift
to digital banking and remote working.
We provide continuing staff education andrun customer focused campaigns. We havedeveloped threat intelligence newslettersand a ‘Simplifying Cyber for Business’ guide.
We have continued to sponsor theAustralian Computing Academy’s Schools
Cyber Security Challenges, contributing tocontent and co-producing cyber security
modules for students and teachers as partof the digital curriculum.
Climate change risk: The financial risks
associated with climate change remain a key
focus. Climate-related events can include
severe storms, drought, fires, cyclones,
hurricanes, floods and rising sea levels. The
impact of these events can be widespread.
The impact of these losses on the Group may
be exacerbated by a decline in the value
and liquidity of assets held as collateral,

which may impact the Group’s ability
to recover its funds when loans default.
Recent examples in Australia include severe
drought conditions, bushfires in 2019/2020,and severe flooding in 2021 and 2022. In
addition, geological event impacts haveoccurred in New Zealand in recent years.
We continue to improve our managementof climate risks through workstreams
focused on regulatory monitoring, policy
governance, risk appetite, data and analytics.
We have set a public ESG target to develop
an enhanced RMF that anticipates potential
climate-related impacts, and associatedregulatory requirements, by the end of 2022.

For details on our performanceagainst our ESG Targets refer toour ESG Supplement available
at anz.com/annualreport
Our Climate Advisory Forum, chaired by theGroup Executive, Institutional and includes
the Group Chief Risk Officer, supports
execution of our climate policy, disclosuresand related matters across the Group.
We are focusing on: aligning our lending
portfolio with the goals of the Paris Agreement
and supporting customers to expand in low
or zero emission technologies; and factoringclimate change risk into lending decisions
for large business customers, assessing theircapacity to respond to climate change andthe evolving regulatory landscape.
We participated in APRA’s Climate Vulnerability
Assessment (CVA), which aims to examine
the material exposures and financial risks thatbanks, the financial system and economy
may face due to climate risks. APRA’s CVA
comprised two stress tests, a counterparty
assessment and a data assessment. APRA
intends to disclose the outcomes of the
CVA in late 2022, which may also be used
to inform future supervisory guidance.

Biodiversity risk: Risks associated withbiodiversity loss, including as a result ofspecies extinction or decline, ecosystemdegradation and nature loss, are emerging
risks that we are seeking to understandfurther. We acknowledge biodiversity risks
are closely linked to climate-related risks. In
relation to biodiversity, risks can arise fromlending to customers that are significantly
dependent on biodiversity and ecosystemservices, or who may have negative impacts
on biodiversity. In addition to physical risks
associated with biodiversity loss, risks canalso arise from changing societal preferences
and regulatory or policy changes (including
potential reforms to halt and reverse
forest loss, species extinctions and landdegradation). These changes may impact thebank directly, but the greater impact is likely
to be through the impact of these changes
on some of the bank's customers. We
understand that failure to manage these risks
may lead to financial and non-financial risks
and adverse impacts to the Group’s Position.
Biodiversity and natural capital loss are
addressed in various ways by ANZ's risk
policies and processes. In line with ourSocial and Environmental Risk Policy, we
expect our business customers to useinternationally accepted industry practices
to manage social, environmental andeconomic impacts, including potential
results on biodiversity. This year we alsobroadened our engagement with 100 of ourlargest emitting business customers toinclude a focus on biodiversity, encouraging
and supporting them to identify andmanage their potential impacts.
We welcome the establishment of theTaskforce on Nature-related Financial
Disclosures (TNFD) and have joined the
TNFD Forum to support their work. We
recognise their important role in driving
widespread and improved disclosures of
biodiversity impacts.

Our Risk Management Framework
The Board is ultimately responsible forestablishing and overseeing the Group’s
RMF which is supported by the Group’s
underlying systems, structures, policies,
procedures, processes and people. The
Board has delegated authority to theBoard Risk Committee (BRC) to develop
and monitor compliance with the Group’s

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

risk management policies. The Committee
reports regularly to the Board on its
activities. The key pillars of the GroupRMF include:measures, evaluates, monitors, reports
and then either controls or mitigatesmaterial risks and the oversightmechanism and/or committees in place.

• The Risk Management Strategy (RMS),
which describes the approach for
managing risk arising from the Group’s
purpose and strategy. The RMS includes:
how the risk function is structured tosupport the Group’s purpose and strategy,
and the execution of the Group Chief Risk
Officer’s prescribed responsibilities as an
Accountable Person for the Group underthe Banking Executive Accountability
Regime; the values, attitudes andbehaviours required of employees
in delivering on strategic priorities; adescription of each material risk; and an
overview of how the RMF addresses eachrisk, with reference to the relevant policies,
standards and procedures. It also includes
information on how the Group identifies,• The Risk Appetite Statement (RAS),
which sets out the Board’s expectations
regarding, for each material risk, themaximum level of risk that the Groupis willing to accept in pursuing its
strategic objectives and its operatingplans considering its shareholders’,
depositors’ and customers’ interests.

39

of risks and controls and accountability for
implementation and ongoing maintenanceof the RMF.
The Group Risk (including Compliance)
teams form the second line of defence,
providing independent oversight of theGroup’s risk profile and RMF.
Internal Audit is the third line of defence,
providing independent evaluation andassurance on the appropriateness,
effectiveness and adequacy of theGroup’s RMF.

• The Risk Culture principles, which are asubset of the Group’s organisational culture
and an intrinsic part of the Group’s RMF.

The governance and oversight of risk
management, while embedded in day-to-day
activities, is also the focus of committees andregular forums across the bank (see diagram
next page). The committees and forums
discuss and monitor known and emerging
risks, review management plans andmonitor progress to address known issues.

The Group operates a Three Lines-of-Defence
Model in regard to risk management,
helping to embed a culture where risk
is everyone’s responsibility.
The business has first line of defence
responsibility for day-to-day ownership

Principal Board
Committees

BOARD OF DIRECTORS

Audit
Committee

Ethics, Environment, Risk
Social andCommittee
GovernanceCommittee

Digital Businessand Technology
Committee

Nomination
and Board
Operations
Committee

Executive Committee

Group Performance Execution Committee

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

ANZ’s key Management Committee charged with oversightof the Group’s overall operational performance and positionand execution of the operating plan.

Human
Resources
Committee

Enterprise
Accountability
GroupGroup Assetand Liability
Committee

Operational
Risk Executive
Committee

Credit Ratings
System OversightCommittee

Capital and Stress
Testing OversightCommittee

Financial Crime
OREC SubCommittee

Division

Modelling
Ratings Working
Groups andUsage Forums

Divisional
Initiatives Review
Committees/
Project Advisory
Councils

Divisional
Risk Management
Committees

Regional orCountry Risk
Management
Committees

Country Assets
and Liability
Committees

Group

Credit andMarket Risk
Committee

Country

KEY MANAGEMENT COMMITTEES
Ethics andResponsible
Business
Committee

Investment
Committee

Group Executive
PeopleCommittee

Various Divisional SpecificManagement Committees
Operational Risk
Committee

Product
Committee

Risk Governanceand OversightCommittee

Divisional/
Functional
AccountabilityGroups40

ANZ 2022 Annual Report

Key material risks
The material risks facing theGroup per the Group’s RMS, andhow these risks are managed,
are summarised below.
As part of the annual review of our RMS
we have classified Financial Crime Risk
(previously captured under Operational Risk)

Climatechangeas a key material risk to enhance its profile.
We also specified the risk management
approach for: Money Laundering risk,
Terrorism Financing risk, Sanctions risk
and Fraud risk, complying with better
practice and align with the direction of theCompliance and Operational Risk Strategy
to identify significant obligations andmaterial risks that matter to the Group.

Information
security

Innovationand technology

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

Customerexperience

Risk type

Description

Managing the risk

CapitalAdequacy
Risk

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

We pursue an active approach to CapitalManagement, which is designed to protect theinterests of depositors, creditors and shareholders
through ongoing review, and Board approval,of the level and composition of our capital baseagainst key policy objectives.

Compliance
Risk

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

Key features of how we manage Compliance Risk
as part of our Operational Risk and Compliance
Framework include:• Centralised management of key obligations via
a Global Obligations Library, enable our change
management capability in relation to new andrevised obligations,• An emphasis on the identification of changing
regulations and the business environment,
to enable proactive assessment of emerging
compliance risks.
• Recognition of incident management as aseparate element to enhance ANZ’s ability
to identify, manage and report on incidents/
breaches in a timely manner.

CreditRisk

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

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

Employee capability
and wellbeing

Material
ESG issues

Overview

How wecreate value

Performanceoverview

Remuneration
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reportFinancialreportShareholder
information

Risk type

Description

Managing the risk

Liquidity
andFunding
Risk

The risk that the Group is unable tomeet its payment obligations as theyfall due, including:

Key principles in managing our Liquidity and Funding
Risk include:• Repaying depositors or maturingwholesale debt; or• The Group having insufficient
capacity to fund increases in assets.

MarketRisk

The risk stems from our trading andbalance sheet activities and is the risk
to the Group’s earnings arising from:• Changes in any interest rates, foreignexchange rates, credit spreads,
volatility, and correlations; or• Fluctuations in bond, commodity
or equity prices.

Operational
Risk

The risk of loss and/or non-compliancewith laws resulting from inadequate or
failed internal processes, people and/or
systems, or from external events. Thisdefinition includes legal risk, and therisk of reputation loss, but excludes
strategic risk.

• ANZ’s short-term liquidity scenario modelling stresses
cash flow projections against multiple survival horizons’over which the Group is required to remain cash
flow positive;• Longer term scenarios are in place that measure
the structural liquidity position of the balance sheet.
We have a detailed market risk management and control
framework to support our trading and balance sheet
activities, which incorporates an independent risk
measurement approach to quantify the magnitudeof market risk within the trading and balance sheet
portfolios. This approach, along with related analysis,
identifies the range of possible outcomes, that can be
expected over a given period of time, and establishes thelikelihood of those outcome and allocates an appropriate
amount of capital to support these activities.
We manage Compliance and Operational Risk in thebest interests of our customers and the community andto meet expectations of the regulators. The Complianceand Operational Risk Principles (Level 1) establish thefundamental requirements at ANZ which inform policies,
processes, and procedure development of ANZ’smanagement of Compliance and Operational Risk,
through timely and appropriate identification, action
and monitoring. It is part of ANZ’s RMF and ANZ’s I.AM
(Identify, Act, Monitor) Framework (Level 2). We take arisk-based approach to the management of operationalrisk and obligations. This enables the Group to beconsistent in proactively identifying, assessing, managing,reporting and escalating operational risk-related risk
exposures, while respecting the specific obligationsof each jurisdiction in which the Group operates.
Day-to-day management of operational risk is the
responsibility of business unit line management and staff.
Risk management, supported by a strong Risk Culture, helps
to seek to ensure all staff are thinking about and managing
risk on a daily basis – “Risk is Everyone’s Responsibility”.

Strategic
Risk

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

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

41

Material
ESG issues

42

ANZ 2022 Annual Report

Material
ESG issues

Risk type

Description

Managing the risk

Technology
Risk

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

Our approach to manage Technology Risk is to
manage our operational risks caused by the use oftechnology, including risks associated with cybersecurity and third party providers, in a manner thatseeks to ensure customer information is secureand service disruption is within acceptable levels.

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

The risk of loss or damage arising from thefailure of the Group, its employees or agents
to appropriately consider the interests ofcustomers, the integrity of the financial markets
and the expectations of the community inconducting its business activities.
The Risk may arise not only from deliberateor negligent actions of individual employees
but may also be inadvertent and caused byinadequacies in the Group’s systems, processes
and procedures.

Financial
Crime
Risk

Financial Crime Risk covers the following risks
at ANZ:• Money Laundering (ML) Risk – the risk that
we may reasonably face from our products
and/or services being misused to facilitate
the processing of the proceeds of crime toconceal their illegal origins and make themappear legitimate.
• Terrorism Financing (TF) Risk – the risk that
we may reasonably face from our products
and/or services being misused to facilitate
the provision or collection of funds with theintention or knowledge that they be used
to carry out acts associated in support ofterrorists or terrorist organisations.

Approach to manage Conduct Risk is to seek toensure that risks to customers, community andmarket integrity are identified, assessed, measured,
evaluated, treated, monitored and reported withappropriate governance and oversight.
The articulation of Conduct Risk as a Level 1 Risk
Theme under the new NFR model will help manage
Conduct Risk as a key material risk for ANZ. To
support the NFR model (and our obligations underPrudential Standard CPS 220 Risk Management), ANZ
has developed a global Conduct Risk Framework
and Conduct Risk taxonomy which facilitate a clear
and consistent way of managing and monitoring therisk, and the risk is managed in conjunction with theCompliance and Operational Risk Framework (I.AM).
Financial Crime Risk at ANZ is managed using
a risk-based approach in accordance with theConduct Risk Framework, and in conjunction
with the Compliance and Operational Risk
Framework (I.AM) and a three lines of defence
model. In additional to a risk-based approach
to risk management, for Sanctions there is arules-based lens to ensure compliance with
Sanctions legislation. For the Business to identify
and manage Financial Crime Risk, it must identify
its regulatory obligations and impacted businessactivities and maintain and monitor key controls.

• Sanctions Risk – the risk of failing tocomply with laws and regulations relating
to sanctions imposed by governments
and multinational bodies as a result of our
products and services being misused tofacilitate prohibited sanctions activities.
• Fraud Risk – the risk that we may reasonably
face from our products and/or services being
misused to facilitate intentional acts by one ormore individuals, involving the use of deception
to obtain an unjust or illegal advantage
arising from internal or external sources.

ClimatechangeInformation
security

Innovationand technology

Customerexperience

Employee capability
and wellbeing

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

43

44

ANZ 2022 Annual Report

Performance overview
OUR PERFORMANCE (continued)

GROUP PERFORMANCEThe results of the Group’s operations and financial position are set out on pages 44-59. Page 13 outlines the Group’s strategy and pages
11-25 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks, is outlined on pages 36-42.

GROUP PROFIT RESULTS
2022

2021

Income Statement

Statutory
$m

Cash
$m

Statutory
$m

Cash
$m

Net interest income

14,874

14,874

14,161

14,161Other operating income

4,552

3,673

3,259

3,286

Operating income

19,426(9,579)18,547(9,579)17,420(9,051)

17,447(9,051)Credit impairment (charge)/release

9,847
232

8,968
232

8,369
567

8,396
567

Profit before income tax

10,079

9,200

8,936

8,963

Income tax expense
Non-controlling interests(2,940)(1)(2,684)(1)(2,756)(1)(2,764)(1)

Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

7,138
(19)

6,515
(19)

6,179
(17)

6,198
(17)

Profit for the year

7,119

6,496

6,162

6,181

Operating expenses
Profit before credit impairment and income tax

Statutory profit after tax for the year ended 30 September 2022 increased 16% on the prior year to $7,119 million. Statutory return on equity is
11.4% and statutory earnings per share is 250.0 cents, an increase of 16% on prior year.
The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure whichenables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents thefinancial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives andleaders through our remuneration plans. Refer to page 45 for adjustments between statutory and cash profit. The adjustments made inarriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2022
Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that
adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented.
DISCONTINUED OPERATIONS
We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited(IOOF, now known as Insignia Financial Limited), and our life insurance business to Zurich Financial Services Australia (Zurich) across the 2020
and 2019 financial years. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and partial recoveryof certain costs based on the respective Transition Service Agreements. The separation of the business sold to Zurich completed in early April
2022, and the businesses sold to IOOF completed in early October 2022. There were no material financial impacts from the discontinued
operations in each of the periods presented.
PENDING ORGANISATIONAL CHANGES WITH IMPACT TO FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicableregulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the newlisted parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to ourcustomers.
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website

regulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Overview

Performance

How weRemuneration

Directors’

Financial

Shareholder

45

create value
overview
reportreportinformation
Should the proposed
restructure
proceed, ANZreportwill establish a non-operatingholding company,
ANZ Group Holdings Limited, as the newlisted parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology
andPERFORMANCE
banking-adjacent services
to ourOUR(continued)
customers.

OUR PERFORMANCE (continued)

The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website(www.anz.com/schememeeting).
Suncorp Bank Acquisition

Suncorp
On 18 JulyBank
2022,Acquisition
the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
Treasurer
approval,
AustralianCompetition and Consumer Commission authorisation or approval and certain amendments to the State44
ANZ 2022
ANNUALREPORT
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions isand may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustmentsbillion as at June 2022). Completion is expected in the second half of calendar year 2023.
and may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
billion as at June 2022). Completion is expected in the second half of calendar year 2023.

CONTINUING OPERATIONSCONTINUINGOPERATIONS
Key measures of our
financial performance are set out below.
Key measures of our financial performance are set out below.

1.63

Operating expenses tooperating income –in)g expenses tocOapsehr1a(t%operating income –1
c2022
as h ( % )51.6

Credit impairment charge/(release) – cash1 ($m)
Credit impairment charge/2022(release) – cash1 ($(232)
m)

2021
2022

1.64
1.63

2021
2022

51.9
51.6

2021
2022 (567)

2021

1.64

2021

51.9
228.8

2021 (567)Common equityti er 1 (%)
Common equityt2022
i er 1 (%)

12.3

Dividend per share(cents)Dividend per share(2022
cents)

12.3

2021
2022

142
146

12.3

2021

142

Net interest margin –cash1 (%)
Net interest margin –c2022
ash1 (%)

Return on equity –c a s h1 ( % )Return on equity –c2022
a s h1 ( % )10.4

Earnings per share –cash1 (cents)
Earnings per share –2022
cash1 (cents)

2021
2022

9.9
10.4

2021
2022

216.5
228.8

2021
2022

2021

9.9

2021

216.5

2021

1.

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

1.

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

(232)

Cash profit1($m)
Cash profit1
(2022
$m)

6,515

2021
2022

6,198
6,515

2021

6,198
146

ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
7,138
7,138

(569)
(569)

2022 Statutory
profit continuing
2022
Statutory
operations
profit continuing
operations

Economic
hedgesEconomic
hedges

6,515
(54)

6,515

(54)

Revenue andexpense hedges
Revenue andexpense hedges

Adjustments between continuing operations statutory profit and cash profit are summarised below:

2022 Cashprofit continuing
2022
Cash
operations
profit continuing
operations

Adjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustment
Reason for the adjustment
Economic hedges
The
Group
into economic hedges to manage its interest rate and foreign exchange risk which, in
Adjustment
Reasonfor enters
the adjustment
2022: ($569) million
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
Economic hedges
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
2021: ($77) million
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
2022: ($569) million
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
transactions will reverse over time to match with the profit or loss from the economically hedged item as part of2021: ($77) million
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
Revenue andcash profit. This includes gains and losses arising from derivatives not designated in accounting hedgetransactions will reverse over time to match with the profit or loss from the economically hedged item as part ofexpense hedges
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
Revenue andcash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
2022: ($54) million
expense hedges
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
correlated), as well as ineffectiveness from certain designated accounting hedges.
2021: $96 million
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
2022: ($54) million
correlated), as well as ineffectiveness from certain designated accounting hedges.
2021: $96 million

46

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

GROUP CASH PROFIT PERFORMANCE FROM CONTINUING OPERATIONSCash profit performance and the analysis thereof has been presented on a cash profit from continuing operations basis.
CASH PROFIT FROM CONTINUING OPERATIONS ($m)

387

713
(528)

6,515

Income tax
expense &non-controllinginterests

2022 Cashprofit continuing
operations

(335)

6,198

2021 Cashprofit continuing
operations

80

Net interest
incomeOther
operatingincomeOperatingexpensesCreditimpairment

2022
$m

2021
$m

Movt

Net interest income
Other operating income

14,874
3,673

14,161
3,286

5%
12%

Operating income

18,547(9,579)17,447(9,051)

6%
6%

8,968
232

8,396
567

7%
-59%

Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax

9,200

8,963

3%

Income tax expense
Non-controlling interests(2,684)(1)(2,764)
(1)

-3%
0%

Cash profit from continuing operations

6,515

6,198

5%

Cash profit from continuing operations increased $317 million (5%) compared with the 2021 financial year.
Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by a 1
bps decrease in net interest margin. The increase in average interest earning assets was driven by higher central bank balances, higher average
net loans and advances, partially offset by lower trading assets and investment securities. The decrease of 1 bps was driven by home loan
pricing competition in the Australia Retail and New Zealand divisions, growth in lower yielding liquid assets, unfavourable asset and funding
mix, and lower average yield in Markets averages earning assets. This was partially offset by improvement in deposit margins from a risinginterest rate environment, and higher earnings on capital and replicating deposits.
Other operating income increased $387 million (12%) driven by a $326 million increase from business divestments/closures, including a $307
million gain on completion of the ANZ Worldline partnership, a $251 million loss on divestment of ANZ Share Investing business in the prioryear, and an increase in share of associates’ profit of $353 million. This was partially offset by a decrease of $270 million in Markets otheroperating income as Balance Sheet and Derivative Valuation Adjustments were impacted by high volatility and yield curve movements, and a$156 million decrease in net fee and commission income primarily driven by Breakfree package changes in the Australia Retail division.
Operating expenses increased $528 million (6%) driven by investment spend to develop digital capabilities, meet regulatory and complianceobligations and drive volume growth. The inclusion of Cashrewards Limited (Cashrewards) after obtaining control in December 2021 andwage inflation also contributed to the increase.
Credit impairment release decreased $335 million (-59%) driven by a decrease in the collectively assessed credit impairment release, partially
offset by a decrease in the individually assessed credit impairment charge.
Income tax expense decreased $80 million (-3%). The effective tax rate decreased by 160 bps to 29.2% primarily from the non-tax assessablegain on completion of the Worldline partnership.

Overview

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47

OUR PERFORMANCE (continued)

LARGE/NOTABLE ITEMS INCLUDED IN CASH PROFIT FROM CONTINUING OPERATIONS
Within continuing cash profit, the Group recognised a number of large/notable items. The impact of these items on a post-tax basis is
as follows:
Gain/(Loss) from divestments/closures

2022
$m

2021
$m

ANZ Worldline partnership

335-

ANZ Share Investing business

-

(251)

Financial planning and advice business

(60)

-

Legal entity rationalisation

(65)

-

Other divestments

(13)

13

42
4

86
6

Customer remediation

(166)

(221)

Litigation settlements
Restructuring
Withholding tax

(10)
(68)

(48)
(92)

(126)
(17)

-

(10)

-

-

(347)

Completed divestment business results
ANZ Worldline partnership
Financial planning and advice business
Other large/notable items

Lease modification
Merger and acquisition related costs
Asian associate items

48

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

Description of large/notable items:
Item

Description

Gain/(Loss) fromdivestments/closures

The 2022 financial year included a gain on completion of the ANZ Worldline partnership, a loss on disposal of thefinancial planning and advice business, and losses associated with legal entity rationalisation from release offoreign currency translation reserves, and impacts from other divestments.
The 2021 financial year included a loss on divestment of ANZ Share Investing business, and a gain on sale of alegacy insurance portfolio.

Completeddivestment businessresults

Completed divestment business results relate to the ANZ Worldline partnership and financial planning and advice
business, which completed during the 2022 financial year.

Merger andacquisition (M&A)
related costs

During the 2022 financial year, the Group incurred transaction related external legal and advisor costs of $10
million after tax associated with M&A activities during the period, including the Suncorp Bank acquisition.

Customer
remediation

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

Litigation
settlements

During the 2022 financial year, the Group entered into an agreement to settle a United States class action related
to the trading of products based on certain benchmark reference rates and recognised expenses of $10 million
after tax in relation to the proposed settlement and related costs. The settlement is without admission of liability
and remains subject to negotiation and execution of complete settlement terms as well as court approval.
During the 2021 financial year, the Group reached an agreement to settle a separate United States class action
related to other benchmark-based products and activities and recognised expenses of $48 million after tax. The
settlement is without admission of liability and remains subject to court approval.

Restructuring

In addition to the restructuring expenses of $18 million after tax included within business divestments/closures(2021: nil), the Group recognised restructuring expenses of $68 million after tax in 2022 (2021: $92 million) relating
to operational changes across multiple divisions.

Withholding tax

During the 2022 financial year, a dividend payment of $714 million (net of withholding tax) was made by ANZ
Papua New Guinea (ANZ PNG) to Australia and New Zealand Banking Group Limited (ANZBGL) in order torebalance capital positions within the Group in response to APRA’s changes in the capital requirements for
subsidiaries. ANZBGL made a capital injection into ANZ PNG equivalent to the dividend, net of withholding tax. As
a result of the dividend payment, a dividend withholding tax expense of $126 million was recognised during theperiod.

Lease modification

During the 2022 financial year, the Group early terminated the head lease on the 55 Collins Street Melbourne
building and recognised a net loss after tax of $17 million. The loss comprised a $31 million gain in Other
operating income on lease modification arising from remeasurement of the lease liability and right-of-use asset
net of a $8 million lease termination payment, a $47 million loss in Operating expenses associated with lease exit
costs including accelerated depreciation and asset write-offs, and an income tax benefit of $7 million.

Asian associate items

During the 2021 financial year, the Group recognised a $347 million reduction in equity accounted earnings aftertax, comprising $212 million reflecting its share of the settlement provision following AMMB Holdings Berhad’s(AmBank) agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its involvementwith 1Malaysia Development Berhad (1MDB), and $135 million reflecting its share of the impairment of AmBank
goodwill.

48

ANZ 2022 ANNUAL REPORTOverview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

49

OUR PERFORMANCE (continued)

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

12
164

3

(2)

164

1

163

Large/
notableitems

2022 Cashnet interest
margin

(2)

(5)
(8)

2021 Cashnet interest
margin1.

Assetpricing

Depositpricing &wholesalefunding

Asset andfunding mix

Liquidity

Capital andreplicating
portfolio

2022 Cashnet interest
marginsubtotalMarkets
Balance
Sheet
activities 1

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

2022
$m

2021
$m

Net interest income

14,874

14,161

5%

Net interest margin (%) - cash1
Average interest earning assets

1.63
910,037

1.64
863,691-1 bps5%

Average deposits and other borrowings

780,373712,540

10%

1

1.

Movt

Includes the major bank levy of -$340 million (2021: -$346 million).

Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by 1
bps decrease in net interest margin.
Net interest margin decreased 1 bps driven by home loan pricing competition in the Australia Retail and New Zealand divisions, growth inlower yielding liquid assets to replace Committed Liquidity Facility (CLF) which, consistent with APRA requirements, will reduce to $0 on 1
January 2023, unfavourable asset and funding mix primarily from customers switching from variable to fixed home loans and lower unsecured
lending, and lower average yield in Markets averages earning assets as a results of portfolio rebalancing in the prior year. This was partially
offset by improvement in deposit margins from a rising interest rate environment, favourable deposit mix with growth in at-call deposits, andhigher earnings on capital and replicating deposits.
Average interest earning assets increased $46.3 billion (5%) driven by higher central bank balances, lending growth in the Institutional andAustralia Commercial divisions, and home loan growth in the New Zealand division. This was partially offset by lower trading assets andinvestment securities, lower reverse repurchase agreements, and decline in the Australia Retail division.
Average deposits and other borrowings increased $67.8 billion (10%) driven by growth in at-call deposits across all divisions and increases incommercial paper, partially offset by lower term deposits and certificates of deposit.

50

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

Other operating income
OTHER OPERATING INCOME ($m)

3,286

460

3,673

Other 12022 Cashother
operatingincome

353
(156)
(270)

2021 Cashother
operatingincomeNet fee andcommission
income 1

MarketsotheroperatingincomeShare ofassociates’
profit/(loss)

2022
$m

2021
$m

Movt

Net fee and commission income1
Markets other operating income

1,907
860

2,063
1,130

-8%
-24%

Share of associates' profit/(loss)
Other1

177
729

(176)
269

large
large

3,673

3,286

12%

Total cash other operating income
1.

Excluding the Markets business unit.

Net fee and commission income decreased $156 million (-8%) driven by Breakfree package fee changes in the Australia Retail division, lower
divested business results, and removal or reduction of funds under management fees in the New Zealand division. This was partially offset bylower customer remediation, higher cards revenue due to recovery in consumer spending, and higher volume-related fees in the Institutional
division.
Markets other operating income decreased $270 million (-24%) as Balance Sheet and Derivative Valuation Adjustments were impacted byhigh volatility and yield curve movements, and lower income in Credit and Capital Markets was driven by less favourable credit trading
conditions and lower levels of customer issuances amid more volatile market conditions. This was partially offset by higher Foreign Exchange,
Rates and Commodities income driven by customer demand and more favourable trading conditions.
Share of associates' profit increased $353 million driven by the Group’s equity accounted share of AmBank 1MDB settlement and goodwill
impairment of $347 million in 2021 and increase in other equity accounted share of profits.
Other increased $460 million primarily driven by a gain on completion of the ANZ Worldline partnership and a loss on divestment of the ANZ
Share Investing business in 2021, partially offset by a loss on sale of the financial planning and advice business.

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OUR PERFORMANCE (continued)

Operating expenses
OPERATING EXPENSES ($m)

350

16

Personnel

Premises

155

9,579

Other

2022 Cashoperatingexpenses

33
(26)

9,051

2021 Cashoperatingexpenses

Personnel
Premises
Technology
Restructuring
Other
Total cash operating expenses
Full time equivalent staff from continuing operations1
Average full time equivalent staff from continuing operations1
1.

Technology

Restructuring

2022
$m
5,296
721
1,621
101
1,840
9,579
38,98739,546

2021
$m
4,946
705
1,588
127
1,685
9,051
39,68438,043

Movt
7%
2%
2%
-20%
9%
6%
-2%
4%

Excludes FTE of the consolidated investments managed by 1835i Group Pty Ltd.

Personnel expenses increased $350 million (7%) driven by higher average resourcing supporting investments to develop digital capabilities,
meet regulatory and compliance obligations and drive volume growth. The inclusion of Cashrewards after obtaining control in December
2021 and wage inflation also contributed to the increase. This was partially offset by benefits from customers continuing to embrace digitalchannels, productivity improvements arising from technology and back-office optimisation, higher employee leave utilisation and lower
customer remediation.
Premises expenses increased $16 million (2%) driven by the modification of a significant lease arrangement, partially offset by ongoing
optimisation of property footprint.
Technology expenses increased $33 million (2%) driven by higher software licence costs and increased spend on investment initiatives,
partially offset by lower amortisation.
Restructuring expenses decreased $26 million (-20%) primarily driven by lower charges in the Group Centre and Australia Retail divisions.
Other expenses increased $155 million (9%) driven by increased spend on investment initiatives to develop digital capabilities and meet
regulatory and compliance obligations.

52

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

Credit impairment
2022
(311)
79
(232)
1,445
359.4
4,395
37.5%
1.07%

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

2021
(823)
256
(567)
1,965
342.5
4,882
35.0%
1.22%

Movt
-62%
-69%
-59%
-26%
5%
-10%

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

96
172

(34)

(4)

(311)

Pacific

Group Centre

2022 Collectively
assessed credit
impairment
release

102
180

(823)
2021 Collectively
assessed credit
impairment
releaseAustralia
RetailAustralia
Commercial

Institutional

New Zealand

The collectively assessed impairment release of $311 million for the 2022 financial year was driven by improvements in credit risk, favourable
changes in portfolio composition, and a net release of management temporary adjustments. This was partially offset by an increase for thedownside risks associated with the economic outlook. The collectively assessed impairment release of $823 million for the 2021 financial year
was driven by improving economic outlook, lower lending volumes, favourable changes in portfolio composition, and improvements in credit
risk. This was partially offset by an increase in management temporary adjustments.
INDIVIDUALLY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)
256

(82)
(36)

16

19

79

Group Centre

2022 Individuallyassessed credit
impairment
charge7(101)2021 Individuallyassessed credit
impairment
chargeAustralia
RetailAustralia
Commercial

Institutional

New ZealandPacific

The individually assessed credit impairment charge decreased by $177 million (-69%) driven by decreases in the Institutional division with nomaterial impairments during the 2022 financial year, and the Australia Retail and Australia Commercial divisions with underlying delinquency
and impairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.

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OUR PERFORMANCE (continued)

GROSS IMPAIRED ASSETS BY DIVISION ($m)

1,965

13

(304)

(319)

2021 Gross
impaired assets

Australia
RetailAustralia
Commercial

Institutional

121

0

1,445

Pacific

Group Centre

2022 Gross
impaired assets(31)

New ZealandGross impaired assets decreased $520 million (-26%) driven by decreases in the Institutional division driven by the upgrade and repayments ofseveral single name exposures, and the Australia Commercial division due to underlying delinquency flows remaining subdued with thebenefit from previous government and bank COVID-19 support packages persisting and the upgrade and repayments of several single nameexposures. This was partially offset by the Pacific division driven by exposures rolling off local COVID-19 support packages being classified as
restructures.
TOTAL ALLOWANCE FOR EXPECTED CREDIT LOSSES ($m)

4,882

(210)

16

0

(283)
2021 Total
allowance
for expectedcredit losses

Australia
RetailAustralia
Commercial

Institutional

New Zealand

4,395
(8)

(2)

Pacific

Group Centre

2022 Total
allowance
for expectedcredit losses

The decrease in total allowance for expected credit losses was driven by a $342 million decrease in the collectively assessed expected credit
loss, and a $145 million decrease in the individually assessed allowance for expected credit losses.
The decrease in collectively assessed allowance for expected credit losses was driven by reduction of $344 million from improvements incredit risk, $258 million from changes in portfolio composition, $24 million in lower management temporary adjustments, and $31 million
from foreign currency translation and other impacts. This was partially offset by an increase of $315 million for the downside risks associatedwith the economic outlook.
The decrease in individually assessed allowance for expected credit losses was driven by decreases in the Institutional division with no material
impairments during the 2022 financial year, and the Australia Retail and Australia Commercial due to underlying delinquency and impairment
flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.

54

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

DIVISIONAL PERFORMANCE
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digitalbusinesses in the Group Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This
involved the integration of the Australian retail and digital businesses, and the separation of the Australian commercial business into a newdivision to improve productivity and accountability within the organisation. As a result of these changes there are now six divisions: Australia
Retail, Australia Commercial, Institutional, New Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within theGroup. Comparative information has been restated accordingly.
Other than those described above, there have been no other significant changes.
Australia
RetailAustralia
Commercial

Institutional

New
Zealand

Pacific

Group
CentreGroup

Net interest margin
Operating expenses to operating income

2.25%
52.2%

2.10%
41.8%

0.85%
49.6%

2.47%
36.5%

2.82%
93.3%

n/a
n/a

1.63%
51.6%

Cash profit from continuing
operations ($m)

2,140

1,510

1,761

1,633

9

(538)

6,515

Net loans and advances ($b)1
Customer deposits ($b)
Number of FTE

290.3
150.0
11,846

59.7
112.2
2,799

196.8
259.4
6,236

123.7
95.1
6,873

1.8
3.8
1,086

0.1
(0.1)
10,147672.4
620.4
38,9872021

Australia
RetailAustralia
Commercial

Institutional

New
Zealand

Pacific

Group
CentreGroup

Net interest margin
Operating expenses to operating income

2.27%
48.0%

1.98%
49.4%

0.81%
49.1%

2.33%
39.7%

2.98%
89.4%

n/a
n/a

1.64%
51.9%

Cash profit from continuing
operations ($m)

2,316

1,107

1,887

1,508

(3)

(617)

6,198

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

284.0
141.4
11,764

57.2
111.1
3,095

158.2
239.6
6,196

128.5
97.7
7,060

1.8
3.8
1,089

10,480629.7
593.6
39,6842022

1.

During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,226 million for theAustralia Retail division and $94 million for the Australia Commercial division. Comparative information has not been restated.

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OUR PERFORMANCE (continued)

DIVISIONAL PERFORMANCE
Australia Retail
Lending volumes increased driven by home loan growth, partially offset by lower unsecured lending. Net interest margindecreased driven by asset margin contraction from competitive pressure and unfavourable lending mix from stronger growth inlower margin fixed rate home loans. This was partially offset by improvement in deposit margins from rising interest rateenvironment and favourable deposit mix. Other operating income increased driven by the loss on divestment of ANZ ShareInvesting business in the prior year and higher cards revenue due to recovery in consumer spending, partially offset by Breakfree
package fee changes. Operating expenses increased driven by higher investment spend on ANZ Plus and home loans momentum,
partially offset by lower restructuring expenses. Credit impairment release decreased driven by a lower collectively assessed credit
impairment release, partially offset by lower individually assessed credit impairment charge with underlying delinquency andimpairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
Australia Commercial
Lending volumes increased driven by Specialist Business lending growth. Net interest margin increased driven by improvement indeposit margins from a rising interest rate environment and favourable deposit mix. This was partially offset by unfavourable lending
mix with stronger growth in lower margin large commercial customers, and asset margin contraction from competitive pressure.
Other operating income increased driven by the gain on sale relating to the ANZ Worldline partnership. This was partially offset by
the loss on sale of the financial planning and advice business and divested business results impact following ANZ Worldline
partnership. Operating expenses decreased driven by lower restructuring expenses and lower impact of divested business results.
Credit impairment release decreased driven by a lower collectively assessed credit impairment release, partially offset by lower
individually assessed credit impairment charge with underlying delinquency and impairment flows remaining subdued with thebenefit from previous government and bank COVID-19 support packages persisting.
Institutional
Lending volumes increased across Corporate Finance, Markets and Transaction Banking following strong core lending andcustomer flows during the period. Customer deposits increased predominantly in Transaction Banking. Net interest margin exMarkets increased primarily driven by improvement in deposit margins from a rising interest rate environment. Other operating
income decreased driven by lower Markets revenues as Balance Sheet and Derivative Valuation Adjustments were impacted by highvolatility and yield curve movements. Operating expenses increased driven by higher technology costs, partially offset by lower
litigation settlements. Credit impairment release decreased driven by collectively assessed credit impairment release in the priorperiod, partially offset by release of individually assessed credit impairment charges in Transaction Banking. Income tax expense
increased driven by the dividend withholding tax on the dividend payment from ANZ PNG to ANZBGL, partially offset by tax rate
differentials on profits earned in International, and tax refunds and write-backs.
New ZealandLending volumes increased driven by home loan growth. Net interest margin increased driven by improvement in deposit margins
from a rising interest rate environment, partially offset by lower home loan margins due to competition, and a higher mix of fixed
rate home loans. Other operating income is flat as gains on sale of government securities was offset by lower fees from the removalor reduction of funds under management fees. Operating expenses increased driven by higher investment spend and inflation
impacts, partially offset by productivity gains and other savings. Credit impairment charge increased primarily driven by collectively
assessed credit impairment charge in the current year as opposed to a release in the prior year.
Pacific
Financial performance for the Pacific division is largely consistent with the prior year.
Group Centre
The 2022 financial year included the recycling of foreign currency translation reserves from Other comprehensive income to profit orloss on dissolution of Minerva Holdings Limited and ANZ Asia Limited, and a net charge on lease modification impacts of asignification lease arrangement.
The 2021 financial year included the losses from the Group’s share of AmBank 1MDB settlement and goodwill impairment.

ANZ 2022 ANNUAL REPORT

55

56

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

FINANCIAL POSITION OF THE GROUP
Condensed balance sheet
As at
2022
$b

2021
$b

Movt

Cash / Settlement balances owed to ANZ / Collateral paid
Trading assets and investment securities

185.6
121.4

168.0
127.8

10%
-5%

Derivative financial instruments
Net loans and advances

90.2
672.4

38.7
629.7

large
7%

Other

16.0

14.7

9%

1,085.6

978.9

11%

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

30.0
797.3

23.1
743.1

30%
7%

Derivative financial instruments
Debt issuances

85.1

36.0

large

93.7
13.2

101.1
11.9

-7%
11%

Total liabilities

1,019.3

915.2

11%

Total equity

66.4

63.7

4%

AssetsTotal assets
Liabilities

Other

Cash / Settlement balances owed to ANZ / Collateral paid increased $17.6 billion (10%) driven by increases in balances with central banks.
Trading assets and investment securities decreased $6.4 billion (-5%) primarily driven by lower revaluations in Markets as a result of interest
rate increases.
Derivative financial assets and liabilities increased $51.5 billion and $49.1 billion respectively driven by the impact of market rate
movements, primarily the significant strengthening of the USD.
Net loans and advances increased $42.7 billion (7%) driven by higher lending volumes in the Institutional ($34.6 billion) and Australia
Commercial ($2.5 billion) divisions and increased home loan growth in the Australia Retail ($6.4 billion) and New Zealand ($5.2 billion)
divisions, partially offset by the impact of foreign currency translation movements.
Settlement balances owed by ANZ / Collateral received increased $6.9 billion (30%) driven by higher collateral received, partially offset bylower cash clearing account balances.
Deposits and other borrowings increased $54.2 billion (7%) driven by increases in customer deposits across the Institutional ($11.6 billion),
Australia Retail ($8.5 billion) and New Zealand ($5.0 billion) divisions, increases in deposits from banks and repurchase agreements ($14.5
billion) and commercial paper ($13.9 billion), and the impact of foreign currency translation movements. This was partially offset by decreases
in certificates of deposit ($3.9 billion).
Debt issuances decreased $7.4 billion (-7%) primarily driven by the maturity of unsubordinated debt and movement in hedge revaluations.
Total equity increased $2.7 billion (4%) primarily driven by a share entitlement offer of $3.5 billion.

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OUR PERFORMANCE (continued)

Liquidity

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

1.

Average
2022

2021

241.7
131%

225.9
137%

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

The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent
with Basel III LCR: Highest-quality liquid assets: cash, highest credit quality government, central bank or public sector securities eligible for repurchase withcentral banks to provide same-day liquidity.
 High-quality liquid assets: high credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
 Alternative liquid assets: assets qualifying as collateral for the CLF and other eligible securities listed by the RBNZ.
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory
requirements and the risk appetite set by the Board.
Committed Liquidity Facility
As part of meeting LCR requirements, the Group has a CLF with the Reserve Bank of Australia (RBA). The CLF was established to offset the
shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of contingent liquidity. The CLF iscollateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as security with the RBA. In
September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet their LCR
requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1
January 2023, ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
The LCR remained above the regulatory minimum of 100% throughout this period.

Funding

Customer liabilities (funding)
Wholesale funding
Shareholders’ equity

2022
$b

2021
$b

628.4
300.3

601.7
274.3

66.4

63.7

Total funding

995.1

939.7

Net Stable Funding Ratio

119%

124%

The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.
Net Stable Funding Ratio remained above the regulatory minimum of 100% throughout this period.
$15.7 billion of term wholesale debt funding (excluding Additional Tier 1 Capital) with a remaining term greater than one year as at 30
September 2022 was issued during the year. In addition, the Group issued $1.3 billion of Additional Tier 1 Capital during the year (excluding
ANZ Bank New Zealand Limited perpetual preference shares, which is classified as a non-controlling interest in the Group).
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support
lending to Australian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4
November 2020, and reduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.

58

ANZ 2022 Annual Report / Performance overview

OUR PERFORMANCE (continued)

RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (TLF) to promote lending to businesses. The
TLF is a five-year secured funding facility for New Zealand banks at a fixed rate of 0.25%.
In November 2020 the RBNZ announced a Funding for Lending Programme (FLP) which aimed to lower the cost of borrowing for New
Zealand businesses and households. The FLP is a three-year secured funding facility for New Zealand banks at a floating rate of the New
Zealand Official Cash Rate (OCR). New Zealand banks were able to obtain initial funding of up to 4% of their lending to New Zealand resident
households, non-financial businesses and non-profit institutions serving households as at 31 October 2020 (eligible loans). The initial allocation
closed on 6 June 2022. An additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand Limited had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.
Capital management
2022

2021

Movt

- APRA Basel III

12.3%

12.3%

Credit risk weighted assets ($b)

359.4

342.5

5%

Total risk weighted assets ($b)

454.7

416.1

9%

APRA Leverage Ratio

5.4%

5.5%

Common Equity Tier 1 (Level 2)

APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable asregulatory capital and provides methods of measuring the risks incurred by the Bank.
The Group’s Common Equity Tier 1 ratio was 12.29% based on APRA Basel III standards, exceeding APRA’s minimum requirements. It
decreased 5 bps driven by the impact of dividends paid during the year, higher underlying CRWA and non-CRWA usage and the impact of thecompleted share buy-back. This was partially offset by cash earnings and the equity raising to support the acquisition of Suncorp Bank.
At 30 September 2022, the Group’s APRA leverage ratio was 5.4% which is above the 3.5% proposed minimum for internal ratings-based
approach ADI (IRB ADI), which includes ANZ.
Dividends
Our financial performance allowed us to propose that a final dividend of 74 cents be paid on each eligible fully paid ANZ ordinary share,bringing the total dividend for the year ended 30 September 2022 to 146 cents per share. This represents a dividend payout ratio of 64.9% ofcash profit from continuing operations.
The proposed 2022 final dividend of 74 cents per share will be fully franked for Australian taxation purposes, and carry New Zealand
imputation credits of NZD 9 cents per ordinary share. It will be paid on 15 December 2022 to owners of ordinary shares at the close of businesson 8 November 2022 (record date).
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2022 final dividend.
For the 2022 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares.
Further details on dividends provided for or paid during the year ended 30 September 2022 are set out in Note 6 Dividends in the Financial
Report.
Shareholders returns
E a r n in g s p e r s h a r e –cash 1 ( c ent s)

1.

Total shareh old er
return (%)

Di v id e n d p a yo u t
r a t io 1 ( % )D i v id e n d p e r s h a r e( c ent s)

2022

228.8

2022

146

2022

64.8

2022 (14.0)

2021

216.5

2021

142

2021

64.9

2021

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

70.7

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OUR PERFORMANCE (continued)

FIVE YEAR SUMMARY
2022
$m

2021
$m

2020
$m

2019
$m

2018
$m

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

14,874
3,673(9,579)14,161
3,286(9,051)

14,0493,703(9,383)

14,3394,690(9,071)

14,514
4,853(9,401)

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

8,968
232
(2,684)
(1)

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

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

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

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

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

6,515
(19)

6,198
(17)

3,758
(98)

6,470
(309)

6,487
(682)

Cash profit1
Adjustments to arrive at statutory profit1

6,496
623

6,181
(19)

3,660
(83)

6,161
(208)

5,805
595

Profit attributable to shareholders of the Company

7,119

6,162

3,577

5,953

6,400

1,085,729
66,401
12.3%
19.2%

978,857
63,67612.3%
18.3%

1,042,286
61,29711.3%
16.7%

981,137
60,794
11.4%
16.4%

943,182
59,405
11.4%
16.8%

11.4%
0.7%
52.0%

9.9%
0.6%
52.2%

5.9%
0.3%
53.8%

10.0%
0.6%
49.5%

10.9%
0.7%
52.0%

-14.0%

70.7%-36.9%

9.2%

0.6%

68,170
146
100%
100%
$28.98$20.95$22.8079,483
142
100%
100%
$29.64$16.97$28.1548,83960
100%
100%$28.67$14.10$17.2280,842
160
100%
70%$29.30$22.98$28.5280,979
160
100%
100%
$30.80$26.08$28.18250.0
59.3%$20.75
2,990

215.3
65.3%
$21.09
2,824

125.3
47.6%
$20.04
2,840

208.2
76.2%
$19.59
2,835

219.7
72.1%
$18.472,874$25.52-$27.91$27.68$18.06$22.19$27.79$25.03$27.76$26.0339,196
541,788

40,221
534,166

38,579553,171

39,060506,847

39,924509,238

Financial position
AssetsNet assets
Common Equity Tier 1
Common Equity Tier 1 – Internationally
Comparable Basel III2
Return on average ordinary equity (statutory)3
Return on average assets (statutory)
Cost to income ratio (cash)1
Shareholder value – ordinary shares
Total return to shareholders (share price movement
plus dividends)
Market capitalisation
Dividend (cents)
Franked portion– interim– finalShare price– high (dollars)– low (dollars)– closing (dollars)
Share information(per fully paid ordinary share)
Earnings per share (cents) (statutory)4
Dividend payout ratio (statutory)
Net tangible assets per ordinary share5
No. of fully paid ordinary shares issued (millions)
Dividend reinvestment plan (DRP) issue price– interim– finalOther information
No. of employees (full time equivalents)
No. of shareholders
1.

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

2.

Internationally Comparable Methodology aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015). Basel Internationally Comparable ratios do notinclude an estimate of the Basel l capital floor requirement.

3.

Average ordinary equity excludes non-controlling interests.

4.

Earnings per share has been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.

5.

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

60

ANZ 2022 Annual Report

FIVE YEAR SUMMARY (CONTINUED)

2022

2021

2020

2019

2018

Australia Retail1

4

4

3

4

3

Australia Commercial2

4

4

4

3

3

Australia Institutional3

2

2

1

1

1

New Zealand Retail4

4

4

4

4

4

New Zealand Commercial and Agricultural5

5

5

5

5

5

New Zealand Institutional6

1

1

1

1

1

Breaches

518

573

569

784

1,114

Investigations resulting in termination

95

114

93

151

226

Whistleblower reports

142

157

157

156

137

>58,000>67,600>61,352>90,850>88,224

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

Code of Conduct

Financial wellbeing
People reached by our financial inclusion programs7
Employees
Employee Engagement (%)

84

81

86

77

73

Total Women in Leadership (%)8

35.9

35.3

33.4

32.5

32.0

Recruitment of people from under-represented groups9

320

255

185

224

260

Total community investment ($million)10

136.4

139.7

139.5

142.2

136.9

Volunteer hours

52,44454,64566,402

134,930

124,113

13.8

15.5

20.5

42.4

34.6

Environmentally sustainable solutions (AU$ billion)

16.18

9.18

7.57

7.60

4.65

Housing (AU$ billion)11

0.53

1.40

1.45

Other social (AU$ billion)12

1.37

2.29

0.06

Total scope 1 & 2 (tCO2e)

101,879

111,409

134,093

156,568

171,012

Total scope 1, 2 & 3 GHG emissions (tCO2e)140,514

153,697

203,700

250,857

266,906

Renewables (%)

90

88

87

83

76

Coal (%)

2

3

5

9

13

Gas (%)

8

9

7

8

10

1,505

1,425

1,501

1,371

1,076

Community

Employee volunteering participation rate (%)

Sustainable financeTotal funded or facilitated towards:

Environmental sustainability
Environmental footprint

Project finance portfolio13

Project finance commitment to renewable energy ($million)

1. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six-month rolling average to Sep’18, Sep’19, Sep’20, Sep’21 & Sep’22. Ranking based on the four
major Australian banks. 2. DBM Atlas (Business). Base: Commercial (<$100 million annual turnover) Main Financial Institution customers. Six-month average to Sep’18, Sep’19, Sep’20, Sep’21& Sep’22. Ranking based on the four major Australian banks. 3. Peter Lee Associates, 2018–2022 Large Corporate and Institutional Relationship Banking surveys, Australia. Ranking based on
the four major Australian banks. 4. Retail Market Monitor, Camorra Research, six month rolling average to Sep’18, Sep’19, Sep’20, Sep’21 & Sep’22. 5. Business Finance Monitor, Kantar Research.
Base: Commercial ($3 million–$150 million annual turnover) and Agricultural (>500K annual turnover) customers. Four quarter rolling average to Q3’18, Q3’19, Q3’20, Q3’21 & Q2’22. 6. Peter Lee
Associates Large Corporate Relationship Banking Survey, New Zealand 2018–2022. 7. Includes individuals who have participated in more than one program or product (for example, people
who have participated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded and Saver Plus totals. 8. Measures representation at the Senior
Manager, Executive and Senior Executive levels. Includes all employees regardless of leave status but not contractors (which are included in FTE). 9. Including Aboriginal and Torres Strait
Islander peoples, people with disability and refugees. Total may have duplicates as employees can identify with more than one under-represented group. 10. Figure includes forgone revenue,
being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and the elderly. International transfer
fees were waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19. 11. Commenced reporting in 2020. 12. Commenced reportingin 2020. Includes transactions eligible for inclusion in $50 billion target but unable to be allocated to environmentally sustainable solutions, housing or financial wellbeing. 13. Breakdowns for2020 and 2018 do not total to 100% due to rounding.

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62

ANZ 2022 Annual Report

2022 Remuneration Report – audited
Dear Shareholder,As outlined in the Chairman’s message,
ANZ delivered a strong financial outcome
for shareholders particularly in the second
half of the year.
This was achieved as we supported ourcustomers through the lingering effects of
COVID in an inflationary environment, whileat the same time investing for the future.
While the environment remains volatile,
our margin performance along with ourdisciplined focus on ‘run the bank’ costs
enabled us to invest at record levels in new
initiatives that will benefit shareholders,customers and our employees in thelong term.
A particular highlight this year was theagreement to acquire Suncorp Bank.
Suncorp Bank is a quality business andstrategically aligned to ANZ. While still
subject to government and regulatory
approvals, Suncorp Bank will add more than
one million retail customers and provide aplatform for growth in the fast-growing
Queensland market.

Ilana Atlas, AO
Chair – Human Resources Committee

Similarly, there was good progress made on
the establishment of a new Non-Operating
Holding Company (NOHC) structure. If
approved by shareholders at the upcoming
Scheme Meeting, following our 2022 Annual
General Meeting (AGM), this will create
distinct banking and non-banking groups
within the organisation, providing greater
flexibility to create value for shareholders.

Remuneration
report1. Who is covered by this report64

2. 2022 outcomes at a glance65

3. Overview of ANZ’s remuneration structure66

4. 2022 outcomes71

5. 2022 executive remuneration structure and delivery84

6. Accountability and Consequence Framework90

7. Non-Executive Director (NED) remuneration

92

8. Remuneration governance94

9. Other information

96

During the year we also made changes toimprove productivity and accountability
within the organisation. As part of thesechanges, we combined Australia Retail with
our Digital Division, while also separating
Commercial Australia as a stand-alone
business. Together with New Zealand andInstitutional, we now have four corebusiness lines with distinct strategies andopportunities.
Operational improvements within Australia
Retail have already resulted in home loan
processing times being back in-line withmarket.

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Our technology continues to bemodernised and we exceeded our targetof 9,000 systems migrated to the Cloudor decommissioned with 31% of ANZ
applications now hosted in the Cloud.

maximum opportunity). This reflects theassessment of ‘slightly below expectations’within the ANZ Group Performance
Framework and their individual andDivisional performance.

The successful launch of our new retailbanking platform in Australia, ANZ Plus, wasa key milestone for the Group. While uptake
was initially tracking slower than planned,
momentum has improved following
the commencement of marketing andbranch activity.

51.6% of the performance rights granted
in 2018 to the CEO and Disclosed Executives(excluding the Chief Risk Officer (CRO))
vested when their performance wastested in November 2021 against theirperformance hurdles. The remaining 48.4%
of rights lapsed and executives received novalue from this proportion of the awards.

From a risk perspective, there were nomaterial credit events, no major regulatory
breaches and no overdue regulatory
issues. While we are progressed on thedevelopment of our Group wide nonfinancial risk framework we are behindschedule with some elements and a$500m capital overlay remains in place.
Improvements in this area will be a key
focus for the Board and management
over the next 12-months.

2022 variable remuneration
outcomes
As a Board, we believe we have strucka balance between rewarding good
performance while also holding
management to account for areasthat did not achieve expectations.
Our Chief Executive Officer (CEO) performed
well this year. In the Board’s view he met
expectations in relation to his personal
objectives. He also has accountability
for the Group’s performance which
was slightly below expectations.
The Board determined the appropriate
2022 Short Term Variable Remuneration(STVR) outcome was 74% of his maximum
opportunity.
There was no 2022 Long Term Variable
Remuneration (LTVR) award made as
we transition to awarding LTVR at the
beginning of the year rather than theend. The CEO’s proposed 2023 LTVR of$3.375m ($3.5m in 2021) will be subject toa shareholder vote at the upcoming AGM.
For Disclosed Executives, the Board
determined their 2022 STVR outcomes at
an average outcome of 78% of maximum
opportunity (ranging from 71% to 96% of

Changes to the way weremunerate executives
The introduction of a new remuneration
Prudential Standard (CPS 511 Remuneration)by our regulator APRA has driven a review
of how we reward our executives.
While the new regulatory standard does
not come into effect until 1 January 2023,
a range of changes were implemented
in 2022.
Importantly, these changes were designed
not only to meet both the letter and spirit of
APRA’s new prudential standard, but also tomaintain our strong focus on performanceand risk management, and attract, motivate
and keep great people.
In line with CPS 511, the key structuralchanges for the CEO and Disclosed
Executives include:• Restructuring long term variable
remuneration to now provide material
weight to non-financial measuresthrough the LTVR restricted rights award.
• Longer deferral (up to 6 years forCEO) with around 80% of variable
remuneration deferred to ensure
long-term focus.
• The ability to ‘clawback’ vested cash
and equity variable remuneration
where appropriate.

for Disclosed Executives (excluding theCEO) so as to not materially disadvantage
Disclosed Executives as a result of thestructural changes. Note the Board
decided to defer the payment of thisincrease to 2023, and also decided
that the 2022 STVR opportunity would
be based on the FR had the structural
increase been effective for 2022.
As the likelihood of vesting is higher for
the LTVR restricted rights for the CEO and
Disclosed Executives, we have significantly
reduced their total remuneration opportunity.
It is important to note that the change instructure, and in particular, the change in
the award of LTVR from the end of the year
to the beginning of the year (i.e., resulting
in no 2022 LTVR), makes comparisons withprior year difficult. A summary of the new
remuneration structure for 2022 can befound in section 3.

Fixed remuneration
A market FR adjustment was provided for
the CRO, effective 1 October 2021.
There were no other changes to FR, notingthat the ~4% structural adjustment forDisclosed Executives as part of the structuralchanges will only apply from 1 October 2022.
Following a market review, the NonExecutive Director (NED) base fee remained
unchanged however fees were increased for
the Chairman and for the Chairs/membersof most Committees from 1 April 2022.
Finally, while there is more to be done, thiswas a year where we made good progress
towards our strategic ambition. Thank you
to all our employees for their commitment
and contribution this year.
On behalf of the Board, I invite you to
consider our Remuneration Report which
will be presented to shareholders at the2022 AGM.

Additionally, we:• Separated STVR and LTVR for Disclosed
Executives, bringing them in-line withthe structure for our CEO.
• Determined a fixed remuneration (FR)structural increase of approximately 4%

63

Ilana Atlas, AO
Chair – Human Resources Committee

64

ANZ 2022 Annual Report / Remuneration report

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

1. Who is covered by this report
KMP are Directors of Australia and New Zealand Banking Group Limited (ANZBGL) (whether executive directors or otherwise),and those personnel with a key responsibility for the strategic direction and management of the Group (i.e., members of theGroup Executive Committee (ExCo)) who have Banking Executive Accountability Regime (BEAR) accountability and who reportto the Chief Executive Officer (CEO) (referred to as Disclosed Executives).

1.1 Disclosed Executive
and NED changes
There were several changes to our KMP
during the 2022 year:• Christine O’Reilly commenced asa Non-Executive Director (NED) on
1 November 2021.
• Paula Dwyer retired as a NED on
16 December 2021, at the conclusion of
the 2021 Annual General Meeting (AGM).
• Jeff Smith commenced as a NED on
1 August 2022.
• Farhan Faruqui commenced as ANZ’sChief Financial Officer (CFO) in October
2021. Shane Buggle concluded acting
at this time.
• ANZ’s Digital and Australia Retailbusinesses were combined, with Maile
Carnegie commencing in the new Group
Executive, Australia Retail role on 1 March
2022, and Mark Hand concluding in theGroup Executive, Australia Retail andCommercial Banking role on 28 February
2022. As part of these changes thecommercial business in Australia is now
a separate Division. While this Division
will report into the CEO in the future, theCEO has also been acting as the Group
Executive for this business.

1.2 Key Management Personnel (KMP)The KMP whose remuneration is disclosed in this year’s report are:2022 Non-Executive Directors (NEDs) – Current
P O’Sullivan

Chairman

I AtlasDirector

J Halton

Director

J Key

Director

G Liebelt

Director

J Macfarlane

Director

C O’Reilly

Director from 1 November 2021

J SmithDirector from 1 August 2022

2022 Non-Executive Directors (NEDs) – Former
P Dwyer

Former Director – retired 16 December 2021

2022 Chief Executive Officer (CEO) and Disclosed Executives – Current
S Elliott

CEO and Executive Director

M Carnegie

Group Executive, Australia Retail from 1 March 2022 (previously Group
Executive, Digital and Australia Transformation to 28 February 2022)

K Corbally

Chief Risk Officer (CRO)F Faruqui

CFO from 11 October 2021

G FlorianGroup Executive, Technology

K van derMerwe

Group Executive, Talent & Culture and Service Centres (GE T&C)

A WatsonGroup Executive and CEO, New Zealand

M WhelanGroup Executive, Institutional

2022 Disclosed Executives – Former
S Buggle

Former acting CFO – concluded in role 10 October 2021

M HandFormer Group Executive, Australia Retail and Commercial Banking –concluded in role 28 February 2022

Changes to KMP since the end of 2022 up to the date of signing the Directors’ Report,
as announced:• Gerard Florian appointed to the expanded role of Group Executive, Technology &Group Services, and Antony Strong appointed to ExCo as Group Executive, Strategy& Transformation, effective 1 November 2022.

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2. 2022 outcomes at a glance
Chief Executive Officer(CEO) remuneration

Disclosed Executive
remuneration

FOR 2022, OUR CEO:FOR 2022:• Had no increase to fixed
remuneration (FR).

• There were no increases to FR for
Disclosed Executives effective for 2022
except for the CRO who received amarket adjustment on 1 October 2021.

• Was awarded Short Term Variable
Remuneration (STVR) of 74% of
maximum opportunity, having
met most but not all performance
expectations (see section 4).
• No Long Term Variable Remuneration(LTVR) award was made for 2022, as
we transition to awarding LTVR at the
beginning of the year rather than at theend. Instead, shareholder approval will
be sought at the 2022 AGM for a 2023
LTVR award of $3.375m.
• Received total remuneration of $6m
in 2022 (i.e., includes the value of priorequity awards which vested in 2022 as
per section 4.1).

• Disclosed Executives’ STVR outcomesaveraged 78% of maximum opportunity,with individual outcomes ranging from
71% to 96% of maximum opportunity.
• Consistent with the CEO, no 2022 LTVR
awards have been made to Disclosed
Executives, as we transition to awarding
LTVR at the start of the 2023 year
under the new executive remuneration
structure (see section 5.2).

Performance rights outcomes(CEO and Disclosed
Executives)
51.6% of the 2018 performance rights(PR) granted in late 2018 to the CEO
and Disclosed Executives (excluding
the CRO) vested and the remaining
48.4% lapsed when tested against theperformance hurdles at the end of theperformance period in November 2021
(see section 4.4.3).

Non-Executive Director (NED)
Following a market review, the NED basefee remained unchanged (see section7.1), however fees were increased for the
Chairman and for the Chairs/membersof most Committees from 1 April 2022.
The Chairman’s shareholding
requirement increased to $850,000,
100% of the Chairman fee (from$480,000, 200% of NED base fee),to better align to market.

66

ANZ 2022 Annual Report / Remuneration report

3. Overview of ANZ’s remuneration structure
3.1 Context for change
As communicated in our 2021 Remuneration Report, the introduction of a new Prudential Standard CPS 511
Remuneration by our regulator APRA drove a detailed review of how we reward our CEO and Disclosed Executives.
As a result, the Board approved changes to the executive remuneration structure in line with the following designprinciples, with those changes being effective for the 2022 financial year.
Meet the letter and spirit of the
new APRA Prudential Standard• Structure promotes effective
management of financial andnon-financial risks• APRA requires material weight tonon-financial metrics for variable
remuneration outcomes• Introduction of clawback• Longer deferral
Shareholder alignment• A significant proportion of variable
remuneration is deferred over a long
period with ~80% delivered as deferred
equity to ensure long-term focus• Total shareholder return (TSR)
performance continues to be a key
LTVR performance metric
Maintain a strong focus on performanceand risk management• All components of variable remuneration
linked to performance and sound risk
management• Focus on long-term outcomes by
ensuring consequences may be applied
for risk issues even if they emerge several
years after the event

Attract, motivate and keep great people• Balance meeting the CPS 511
requirements and having a market
competitive remuneration structure• Maintain reasonably comparable value1
so that individuals are not materiallyadvantaged or disadvantaged by the
structural changes• Simplify by having CEO and Disclosed
Executives on a more aligned structure• Remuneration outcomes continue
to be subject to Board discretion withsupporting decision-making frameworks

1. Takes into consideration the differences between the new and former remuneration structures (including aspects such as expected vesting of variable remuneration awards, and changes toreward opportunity and deferral periods).

3.2 Key changes at a glance

Significantly reduced
remuneration opportunity

Maximum remuneration opportunity down reflecting improved probability of
LTVR vesting:• CEO: -$1.375m / -14%
• Disclosed Executives: -30%1 (CRO -16%)

Simplified

Aligned CEO and Disclosed Executive structures by moving Disclosed Executives
onto separate STVR and LTVR (previously combined variable remuneration)

Modified deferral periods

More balanced vesting over short and long term:• STVR over years 2 to 3
• LTVR over years 4 to 5/6

Redesigned LTVR

To now provide material weight to non-financial measures (as per APRA requirement),
with two equally weighted LTVR components• Restricted rights (RR): Pre grant and pre vest assessments focused on risk measures• Performance rights (PR): TSR hurdles

Introduced clawback

Strengthened risk and remuneration consequences, with clawback now applicablefor two years post the payment/vesting of variable remuneration

1. Variance in CEO vs Disclosed Executives reduction due to differences in previous structure where maximum opportunity for Disclosed Executives was 150% of combined Variable
Remuneration (VR) component, compared to only the STVR component for CEO. In the new structure, maximum opportunity has reduced to 125% of target, and applies to STVR component only.
See charts in section 3.4 for individual change in remuneration opportunity.

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3.3 Overview of new remuneration structure
CEO and Disclosed Executives (DEs) (excluding CRO1)
Fixed Remuneration (FR)Short Term Variable
Remuneration (STVR)Long Term Variable Remuneration (LTVR)

Maximum mix

30%

30%

40%

Maximum
opportunity

100% of FR

100% of FR

135% of FR

Delivery

CEO No change to FR
DE ~4% structural increase

Timing/deferral

50% Cash

50% Deferredshares (DS)Awarded at end of year based onGroup and individual performance
YEAR 1
Cash 100%

YEAR 1
Cash 50%YEAR 2
DS 25%YEAR 3
DS 25%

50% Restricted
rights (RR)

50% Performancerights (PR)• Awarded at start of year subject to– RR: Pre grant assessment (risk-based measures)– RR & PR: Shareholder approval at AGM for
CEO award• Performance condition tested at end of 4-year
performance period– RR: Pre vest assessment (risk-based measures)– PR: Relative and absolute TSR hurdles
For both RR and PR:
Deferral period = 4-year Performance Period + Holding Period (HP)4-year Performance Period~1 yr HP
~2 yr HP

YEAR 4
CEO: 33% / DE: 50%
YEAR 5
CEO: 33% / DE: 50%
YEAR 6
CEO: 34%

All variable remuneration is subject to the Board’s ongoing discretion
to apply in-year adjustments, malus and clawback
1. CRO mix: 33.3% FR / 33.3% STVR / 33.3% LTVR. STVR maximum opportunity: the same as CEO/DE at 100% of FR, LTVR maximum opportunity: 100% of FR and delivered as 100% RR (consistent
with former structure) to support independence.

Key differences from FORMER structure
Mix:

CEO and Disclosed Executives now on separate STVR and LTVR (previously Disclosed Executives were on combined VR).
CEO and Disclosed Executives now have the same STVR and LTVR maximum opportunity of 100% and 135% of FR respectively.
CEO previously had STVR maximum opportunity of 150% of FR and LTVR maximum opportunity of 140% of FR/Disclosed
Executives previously had a combined VR maximum opportunity of 402% of FR.

Maximum
opportunity:

Previously, the opportunity to earn above target (up to 150% of target) applied to just the STVR for the CEO, and to the combined
VR for Disclosed Executives. Under the new structure, the maximum opportunity has been reduced to 125% of STVR target(i.e., 100% of FR) and applies to just the STVR for both the CEO and Disclosed Executives.

FR:

A ~4% structural FR adjustment (uplift) applies to Disclosed Executives (not CEO), so as to not materially disadvantage Disclosed
Executives as part of the structural changes. The Board decided to exercise its discretion and deferred the ‘structural’ FR adjustment
to 2023 rather than 2022 when the other remuneration structure changes were made, however they determined that the STVR
opportunity would be based on the FR had the structural increase been effective for 2022.

STVR:

Shares now deferred evenly over years 2 and 3 (rather than staggered vesting over years 2 to 5).

LTVR:

Now awarded at start of financial year rather than end of financial year.
Half now delivered as RR, subject to pre grant and pre vest assessments (based on risk measures) and the balance as PR (previously
100% PR).
LTVR still tested after 4-year performance period and now also subject to additional holding periods up to the 4th, 5th and 6th (for theCEO) anniversary of grant. Former LTVR equivalent deferred for four years from grant.

68

ANZ 2022 Annual Report / Remuneration report

3.4 2022 maximum remuneration opportunity
The chart below illustrates the reduction in the maximum remuneration opportunity for the CEO and Disclosed Executives.
Maximum remuneration opportunity
CEO AND DISCLOSED EXECUTIVES (EXCLUDING CRO)
New maximum opportunity
30%
FR

15%
Cash STVR

15%

20%

RR LTVR

PR LTVR

Deferred shares STVR

20%
70% is at risk variable remuneration – of thisapproximately 80% is subject to deferralCEO
The chart below illustrates that the CEO’s maximum remuneration opportunity has decreased from $9.75m to $8.375m (-$1.375m or -14%),largely due to the reduction in the STVR maximum opportunity from 150% to 100% of FR, and the reduction in the LTVR opportunity from140% to 135% of FR. These reductions (which maintain a strong weighting on LTVR), reflect the increased certainty of the LTVR RR, while
seeking to ensure the total remuneration opportunity remains market competitive.
Maximum remuneration opportunity – CEO ($m)
S ELLIOTT
New maximum opportunity
8.375

2.500

1.250

Former maximum opportunity
9.750

2.500

1.875

FR

Cash STVR

1.250

1.688
1.875

Deferred shares STVRRR LTVR

1.688
3.500

PR LTVR

Disclosed Executives
The charts below illustrate the significant reduction in maximum remuneration opportunity for Disclosed Executives, primarily due to the
reduction in their maximum variable remuneration opportunity from 402% to 235% of FR. This reduction reflects the various structuralchanges – particularly the increased certainty of the LTVR RR component and the ~4% FR structural adjustment.
While the new structure applied for 2022, the Board determined that the structural FR adjustment would not be effective until 2023, and thatthe 2022 STVR opportunity would be based on FR had the structural increase been effective for 2022. The Board will consider any market FR
adjustments (where appropriate) in due course.
FR in the ‘former maximum opportunity’ remuneration structures in the charts is as at 1 October 2021.
Maximum remuneration opportunity – Group Executive, Australia Retail ($m)
M CARNEGIE
New maximum opportunity
4.188

1.250

0.625

Former maximum opportunity
6.024

1.200

1.188

FR

Cash STVR

0.625

0.844
1.188

Deferred shares STVR

0.844
2.448

RR LTVR

PR LTVR

Maximum remuneration opportunity – CFO ($m)
F FARUQUI
New maximum opportunity
4.188

1.250

0.625

Former maximum opportunity
6.024

1.200

1.188

0.625

0.844
1.188

0.844
2.448

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Maximum remuneration opportunity – Group Executive, Technology ($m)
G FLORIAN
New maximum opportunity
3.853

1.150

0.575

Former maximum opportunity
5.522

1.100

1.089

0.575

0.776

0.776

1.089

2.244

Maximum remuneration opportunity – Group Executive, Talent & Culture and Service Centres ($m)
K VAN DER MERWE
New maximum opportunity
3.484

1.040

0.520

Former maximum opportunity
5.020

1.000

0.990

0.520

0.702

0.702

0.990

2.040

Maximum remuneration opportunity – Group Executive and CEO, New Zealand ($m)
A WATSONNew maximum opportunity
3.718

1.110

0.555

Former maximum opportunity
5.415

1.079

1.068

0.555

0.749

0.749

1.068

2.201

Maximum remuneration opportunity – Group Executive, Institutional ($m)
M WHELAN
New maximum opportunity
4.891

1.460

0.730

Former maximum opportunity
7.028

1.400

1.386

0.730

0.986

0.986

1.386

2.856

CRO
To preserve the independence of the role and to minimise any conflicts of interest in carrying out the risk control function across theorganisation, the CRO’s remuneration arrangements differ to other Disclosed Executives. While the STVR opportunity (100% of FR) is the sameas the CEO and Disclosed Executives, the LTVR opportunity is different (100% of FR instead of 135% of FR) reflecting the delivery of LTVR as
100% RR (instead of 50% RR and 50% PR). Maximum variable remuneration opportunity has reduced from 270% to 200% of FR for the CRO.
Maximum remuneration opportunityCRO
New maximum opportunity
33%

17%

17%

33%

67% is at risk variable remuneration – of this approximately 75% is subject to deferral

Maximum remuneration opportunity – CRO ($m)
K CORBALLY
New maximum opportunity
3.750

1.250

0.625

Former maximum opportunity
4.440

1.200

1.069

0.625

1.250
1.069

1.102

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3.5 Remuneration framework overview
The following overview highlights how the executive remuneration framework supports ANZ’s purpose
and strategy, reinforces ANZ’s focus on risk management, and aligns to shareholder value.
ANZ’s purpose and strategy1
Is underpinned by our Remuneration Policy which includes our Reward Principles:
Attract, motivate
and keep great
peopleFocus on how things areachieved as much as whatis achieved

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

Fair and simple to understandWith remuneration delivered to our CEO and Disclosed Executives through:See section 3.3 for overview of remuneration
Fixed remuneration (FR)

Variable remuneration
Short Term Variable Remuneration (STVR)Long Term Variable Remuneration (LTVR)

Reinforced by aligning remuneration and risk:
Assessing behaviours
based on ANZ’s values
and risk/compliancestandards (including
the BEAR)

Determining variable
remuneration
outcomes with risk
as a multiplier –impacting outcomesat both a pool andindividual level

Weightingremuneration toward
the longer-term with asignificant proportion
at riskEmphasising risk inthe determinationand vesting of LTVR RR(see section 5.2.4)

Reinforcing theimportance of risk
culture in driving
sustainable long-term
performance in the
LTVR design

Providing material
weight to non-financial
metrics (particularlyrisk) in line with APRA
requirements

Ensuring risk measures
are considered overa long time horizon(up to 5 and 6 years)

Determining
accountability andapplying consequenceswhere appropriate

Strengthening
risk consequenceswith clawback(see section 5.3)

Prohibiting the hedging
of unvested equity

While supporting the alignment of executives and shareholders through:Substantial
shareholding
requirements

Significant variable
remuneration deferral
up to 5 and 6 years in
ANZ equity

Use of relative andabsolute TSR hurdles

Consideration of cash
profit and economic
profit in determining
the ANZ Incentive
Plan (ANZIP) variable
remuneration pool

Consideration of theshareholder experience(in respect of the shareprice and dividend) in
determining ANZIP pooland individual outcomes

While governed by:
The Human Resources (HR) Committee and the Board determining FR and the variable remuneration outcomes for the CEOand each Disclosed Executive. Additionally, the CEO’s LTVR outcome is also subject to shareholder approval at the AGM.
Board discretion is applied when determining performance and remuneration outcomes (including grant of short and long-term
variable remuneration awards), before any scheduled release of previously deferred remuneration (see section 5.3), before thevesting of LTVR RR (see section 5.2.4), and in applying any required consequences (see section 6).

1. See the ‘About our business’ and ‘Achieving our strategy’ sections of the Annual Report.

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4. 2022 outcomes
Variable remuneration is ’at risk’ remuneration and can range from zero to maximum opportunity. Annual performance objectives are set at theGroup and also at the Divisional/individual level at the start of each year. They are designed to be stretching yet achievable. The HR Committee
and the Board make variable remuneration outcome decisions for the CEO and Disclosed Executives following lengthy and detailed discussions
and assessment, supported by comprehensive analysis of performance from a number of sources. Where expectations are met, STVR is likely
to be awarded around 80% of maximum opportunity. Where performance is below expectations, STVR will be less (potentially down to zero),and where above expectations, STVR will be more (potentially up to maximum opportunity). LTVR will be awarded at the beginning of the year,
based on maximum opportunity unless the LTVR RR pre grant assessment results in any reduction (and also subject to shareholder approval for
the CEO).
Remuneration outcomes have been presented in the following three ways:i.

Actual remuneration received (see section 4.1): Reflects the actual remuneration received in 2022 (i.e., cash paid and the value of priorequity awards which vested in 2022).

ii. Year-on-year STVR awarded (see section 4.2): Reflects actual cash and deferred shares components of STVR (or Annual Variable
Remuneration (AVR)/Variable Remuneration (VR) in prior years) awarded in respect of the relevant financial year. As non-cash
components are subject to future vesting outcomes, the awarded value may be higher or lower than the future realised value.
iii. Statutory remuneration (see section 9.1): Reflects remuneration in accordance with Australian Accounting Standards which includes
FR and the amortised accounting value of variable remuneration (not the actual awarded or received value in respect of the relevant
financial year).

4.1 2022 actual remuneration received
This table shows the remuneration the CEO and Disclosed Executives actually received in relation to the 2022 financial year as cash, or in thecase of prior equity awards, the value which vested in 2022. The final column also shows the value of prior equity awards which lapsed/were
forfeited in 2022 (these are the 2018 PR awards which partially met their performance hurdles when tested in November 2021).
FR was increased for the CRO on 1 October 2021 from $1.1m to $1.2m to improve alignment with the market. There were no other market
adjustments to FR for Disclosed Executives in 2022.
Actual remuneration received in 2022 – CEO and Disclosed Executives:
Received value includes the value of prior equity awards which vested in that year
Fixed
remuneration$

Cash variable
remuneration$

Deferred variable
remuneration which
Total cash vested during the year1,2$$

Actualremuneration
received3$

Deferred variable
remuneration which lapsed/
forfeited during the year1,4$

CEO and Current Disclosed Executives
S Elliott

2,500,000

930,000

3,430,000

2,570,069

6,000,069(1,476,258)

M Carnegie

1,200,000

460,000

1,660,000

1,213,496

2,873,496(557,157)

K Corbally

1,200,000

442,500

1,642,500

775,8022,418,302–

F Faruqui5

1,164,000

579,575

1,743,575

1,747,173

3,490,748(731,262)

G Florian

1,100,000

442,500

1,542,500

788,778

2,331,278(348,210)

K van der Merwe

1,000,000

400,000

1,400,000

831,518

2,231,518(383,026)

A Watson6

1,062,629

422,742

1,485,371

426,037

1,911,408(40,188)

M Whelan

1,400,000

535,000

1,935,000

1,697,449

3,632,449(757,400)

Former Disclosed Executives
S Buggle5

33,000n/a

33,000–33,000–

M Hand5

492,000

n/a

492,000

770,215

1,262,215(348,210)

1. The point in time value of previously deferred remuneration granted as deferred shares/deferred share rights and/or performance rights is based on the one day Volume Weighted Average
Price (VWAP) of the Company’s shares traded on the ASX on the date of vesting or lapsing/forfeiture multiplied by the number of deferred shares/deferred share rights and/or performance rights.
2. The vested value includes 51.6% of the performance rights awarded in November/December 2018 which vested in November/December 2021, noting that for the CEO they were settled
by delivery of shares, which remain subject to a further one-year restriction period. 3. The sum of fixed remuneration, cash variable remuneration and deferred variable remuneration which
vested during the year. 4. The lapsed/forfeited values relate to 48.4% of the performance rights awarded in November/December 2018 which lapsed in November/December 2021 due to theperformance hurdles not being fully met. 5. FR prorated for time as a Disclosed Executive. 6. Paid in NZD and converted to AUD. Year to date average exchange rate used to convert NZD to AUD
as at 30 September for the relevant year.

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4.2 Year-on-year STVR awarded
These tables show a year-on-year comparison of STVR awarded to the CEO (previously referred to as AVR), and Disclosed Executives for the2021 and 2022 performance periods (noting that for Disclosed Executives the STVR equivalent in previous periods relates to the cash anddeferred shares component of variable remuneration).
2022 remuneration outcomes reflect both the overall performance of the Group and the performance of each individual/Division.
CEO
Year-on-year comparisons of maximum opportunity on a percentage basis (as shown in the below table) are not comparable – as the maximum
opportunity has been reduced from 150% to 125% of STVR target in 2022. However when comparing outcomes as a percentage of target, thetable highlights that despite the CEO’s 2022 STVR outcome being higher as a % of target than 2021 (reflecting his better performance in 2022),
his actual 2022 STVR dollar outcome is lower due to the reduced STVR opportunity in the new remuneration structure.
Year-on-year STVR awarded in the relevant financial year – CEO
Actual STVR

STVR as % of

Financial
year

STVR
maximum
opportunity$

Total STVR$

STVR cash$

STVR deferredshares$Targetopportunity

Maximum
opportunity

2022

2,500,000

1,860,000

930,000

930,000

93%

74%

2021

3,750,000

2,000,000

1,000,000

1,000,000

80%

53%

CEO
S Elliott

Disclosed Executives• The average STVR outcome for current Disclosed Executives is 78% of maximum opportunity, reflecting the overall ANZ Group
performance assessment of ‘slightly below expectations’ (see section 4.5.3). Outcomes as a percentage of maximum opportunity range
from 71% to 96%, with the variability at the lower end of the range largely due to being behind schedule on building a Group wide nonfinancial risk framework (currently more Divisionally focused), weaker than expected revenue performance in Markets and some below
target customer outcomes (in particular delays in the delivery of our digital innovation product ANZ Plus and home loan performanceacross the full year), and at the higher end, recognition of the successful execution of the Suncorp Bank purchase agreement and theprogress made on the establishment of the new Non-Operating Holding Company (NOHC) structure.
• For the 2022 Disclosed Executives who were in role for full year 2021 and 2022, the year-on-year STVR dollar outcome has reduced on
average by 31%, primarily due to the lower STVR opportunity in the new structure. For example as shown below, even where performance
as a percentage of target is similar year-on-year, Disclosed Executives are receiving substantially reduced dollar outcomes. However, theoutcomes as a percentage of maximum opportunity appear higher year-on-year because the maximum opportunity has been reduced
from 150% to 125% of target in the new structure.
• Variable remuneration continues to differ both year-on-year and between different executives demonstrating the at risk nature ofthis element of remuneration and the variability in Group and individual performance year-on-year. See section 4.4 for details.
Year-on-year comparisons of maximum opportunity on a percentage basis (as shown in the below table) are not comparable – as the maximum
opportunity has been reduced from 150% of the combined variable remuneration target under the previous structure, to 125% of just the STVR
target under the new structure. The 2022 STVR opportunity is significantly lower in 2022 due to the changes in the remuneration structure.

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Year-on-year STVR awarded in the relevant financial year – Disclosed Executives
Actual STVR

STVR as % of

(STVR equivalent for 2021)

Financial
year

STVR
maximum
opportunity1$

Total STVR$

STVR cash$

STVR deferredshares$Targetopportunity

Maximum
opportunity

2022

1,250,000

920,000

460,000

460,000

92%

74%

2021

2,376,000

1,138,500

569,250569,250

72%

48%

2022

1,250,000

885,000

442,500

442,500

89%

71%

2021

1,960,200

1,227,600

613,800

613,800

94%

63%

F Faruqui2

2022

1,212,500

1,159,150

579,575

579,575

120%

96%

G Florian2022

1,150,000

885,000

442,500

442,500

96%

77%

2021

2,147,310

1,353,000

676,500

676,500

95%

63%

K van der Merwe

2022

1,040,000

800,000

400,000

400,000

96%

77%

2021

1,795,860

1,188,000

594,000

594,000

99%

66%

A Watson3

2022

1,108,830

845,483

422,742422,742

95%

76%

2021

2,135,790

1,374,335

687,167

687,167

97%

64%

2022

1,460,000

1,070,000

535,000

535,000

92%

73%

2021

2,526,480

1,620,300

810,150

810,150

96%

64%

2022

41,250

n/a

n/a

n/a

n/a

n/a

2021

1,393,920

924,000

462,000

462,000

99%

66%

2022

615,000

n/a

n/a

n/a

n/a

n/a

2021

2,376,000

1,089,000

544,500

544,500

69%

46%

Current Disclosed Executives
M Carnegie
K Corbally

M Whelan
Former Disclosed Executives
S Buggle2,4
M Hand2

1. The 2022 maximum STVR opportunity is based on the Disclosed Executive's new FR (as shown in charts in section 3.4). 2. STVR prorated for time as a Disclosed Executive. 3. Paid in NZD andconverted to AUD. Year to date average exchange rate used to convert NZD to AUD as at 30 September for the relevant year. 4. S Buggle's 2021 and 2022 STVR reflects the period he acted as CFO.

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4.3 Application of Reward
Principles

4.4 Variable remuneration –detailIn considering variable remuneration
outcomes the HR Committee and
Board reflect on the application of ANZ’s
Reward Principles:

4.4.1 CEO PERFORMANCE,STVR AND LTVR

• Reward our people for doing the rightthing having regard to our customers
and shareholders: Variable remuneration
should be primarily based on ‘outcomes’
rather than ‘effort’ and proportionate
relative to performance. It also needs toconsider the experience and expectationsof a range of stakeholders (including
shareholders, customers, employees,
community and regulators).
• Attract, motivate and keep great
people: In determining remuneration
outcomes, the Board acknowledge theimportance of balancing performancewith being market competitive to ensure
retention of key talent – particularly in acompetitive talent landscape.
• Focus on how things are achieved asmuch as what is achieved: The Board
ensures that appropriate consideration
and weight is given to performanceagainst objectives (which includes a risk
modifier), a risk standards assessment(capturing financial and non-financial
risks), and how that performance wasachieved (i.e., in accordance with ourvalues and purpose).
• Fair and simple to understand:
Variable remuneration should be fairand consistent through the cycle andhave regard to external influences
outside of management’s control.

PerformanceWith regard to STVR, the CEO is assessed 50%
on the ANZ Group Performance Framework
and 50% on achievement of individual
strategic objectives aligned to ANZ’s
strategy. Both the ANZ Group Performance
Framework and individual strategic
objectives are agreed by the Board at thestart of the financial year and are stretching.
WEIGHTING OF
FINANCIAL METRICSSTVR
The CEO’s STVR is not formulaic –outcomes are moderated by the Risk
element of the ANZ Group Performance
Framework and the Board’s judgementon the appropriate STVR considering all
aspects of performance.
LTVR
TSR (both relative and absolute) continue
to determine the outcome of LTVR PR(50% LTVR weighting). However, LTVR now
also includes a 50% weighted RR award
that is primarily focused on risk-based
measures (as part of the pre grant andpre vest assessments – see section 5.2.4).
This ensures LTVR has a material weight
to non-financial measures as required
under the new APRA Prudential Standard
CPS 511 Remuneration.
At the end of the financial year, ANZ’s
performance is assessed against the ANZGroup Performance Framework, and theCEO’s performance is also assessed against
this, along with his individual strategic
objectives, the ANZ values (behaviours),delivery of the BEAR obligations and ANZ’srisk and compliance standards. In conducting
the CEO’s performance assessment, the HR
Committee seeks input from the Chairman,
CRO (on risk management), CFO (on financial
performance), GE T&C (on talent and culture
matters) and Group General Manager
Internal Audit (GGM IA) (on internal audit
matters). Material risk, audit and conduct
events that have either occurred or come tolight in the year are also considered together
with input from both the Audit Committee
and the Risk Committee of the Board.
The Board has assessed the CEO’s 2022
performance as follows:
ANZ Group
Performance =Framework

Slightly below
expectations (seesection 4.5.3)

Individual
strategic
objectives=

Met expectations(see Board
assessment below)

ANZ values=

Above expectations

Individual
risk/
complianceassessment=

Met expectations

Overall=

Met most but not
all expectations

The Board has considered the CEO’s
performance in determining theappropriate STVR outcome for 2022.
The Board determined that an STVR
outcome of 74% of maximum
opportunity was appropriate.

2022 CEO individual strategic objectives• Lead and role model the culture
and accountability required totransform ANZ• Enhance the reputation of ANZ
across all stakeholder groups• Drive the strategic direction of
the organisation with a particularfocus on growth, restore Home

Lending momentum in Australia andembed our digital transformation,
Sustainability, Platforms and Ecosystems• Focus on sound risk management,
operational excellence and resilience
including system stability, to ensure
ANZ has robust and reliable platforms
to support long-term growth• Materially progress the productivity
initiatives to improve customer andstaff experience while driving thebank operating costs towards amaterially reduced run rate
• Continue to build ExCo effectivenessand succession pipelines for
ExCo and CEO

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Board assessment of performance on individual strategic objectives:
The CEO, supported by his executive team,performed well in a challenging
environment. In particular, the CEO led theteam in the achievement of a number ofimportant outcomes which will transformand position ANZ for long-term sustainable
performance and growth. These include:• Successful execution of an agreement
to purchase Suncorp Bank (which is now
subject to regulatory approval), with awell-supported adjacent capital raising
designed to provide the fairest possible
outcome for all shareholders• Taking a lead role in developing a newAustralia Commercial strategy – while
also driving operational improvementsin the business• Launching and consistently
demonstrating the new cultural
behaviours (aligned to our strategy)• Launching ANZ Plus – a significant step
forward in ANZ’s digital transformation,laying the foundations for the future of
the retail bank
• Achieving meaningful progress onenvironmental sustainability strategies• De-risking of the business – exiting
non-core customers and products,
improving the quality of our processes
and tightening risk appetite, a majorachievement which sets us up well forthe uncertain future• Progressing the implementation of a
NOHC structure – including the relevant
regulatory approvals and ensuring ANZ
is ready for implementation early inthe new year (subject to shareholder
approval at the Scheme Meeting
following the 2022 AGM)

STVR and LTVRAt the end of the financial year, the HR
Committee makes a recommendation to
the Board for their approval in respect of
the CEO’s STVR outcome.
The CEO’s STVR will vary up or down yearon-year, it is not guaranteed, and may range
from zero to a maximum opportunity.
The Board determined that an STVR
outcome of $1.86m (74% of maximum
opportunity) was appropriate for 2022
having regard to both the overall
performance of the CEO and also theoverall performance of the Group.

While there were some challenges
impacting what was an overall strong
performance year, the CEO ensured thenecessary steps were taken to position
ANZ well for 2023, as evidenced by:• Driving a reset of our delivery approach
for a new Group wide non-financial risk
framework designed to drive a more
integrated approach across the Group• Further improvements to home loan
processing capability and capacity, which
contributed to quality growth with afocus on risk adjusted returns
The CEO role models ANZ’s values. His
focus on reshaping ANZ, leading by
example, contributed to another strong
year of employee engagement at 84%(compared to the Finance & Insurance
Benchmark of 79%).
He has communicated clearly andwith authenticity, maintained strong
and positive relationships with regulatorsand government, and been proactive inmanaging our external reputation. As partof the broader focus on our Group purpose
he has engaged regularly with non-profit
partners, and environmental and othercommunity groups.
The CEO has a key role in the managementof risk, including active engagement in arange of risk forums and committees to set
a clear tone in driving a strong risk culture.
There have been ongoing strong outcomesfrom risk metrics including the long run loss
rate, however, there were some delivery
challenges which slowed down theimplementation of a Group wide nonfinancial risk framework.

No LTVR award was made for 2022 for theCEO, as we transition to awarding LTVR
at the beginning of the year rather thanthe end. The CEO’s proposed 2023 LTVR
of $3.375m ($3.5m in 2021) is subject toshareholder approval at the 2022 AGM.
Summary of total remuneration
Awarded remuneration shown below issignificantly lower than 2021 due to nil LTVR
award in 2022 year as we transitioned to the
new remuneration structure and also thelower STVR award.

The CEO’s risk focus encompasses ensuring
ANZ has stable systems, and robust andreliable platforms. ANZ’s performance in thisarea in 2022 has been solid, with no major
regulatory breaches, positioning us well for
long-term growth (see section 4.5.3
for details).
His continued focus on strong costmanagement discipline (i.e., ‘run the bank’costs were broadly flat), along withproductivity initiatives, has enabled ANZ
to invest at record levels and improve thecustomer experience (e.g., simpler homeloan offering in Australia, simpler process
for refinancing loans for small businesses),
and the employee experience (e.g., newtechnology platform to enable more
effective and efficient workforce execution).
Executive development continued with the
movement of Farhan Faruqui into the CFO
role in October 2021, and Maile Carnegie tothe position of Group Executive, Australia
Retail in March 2022, following theseparation of the Australia Retail andAustralia Commercial businesses.
Financial performance included strong
revenue momentum across all Divisions andstrong performance on net interest marginand cost management.
While not all initiatives progressed as
quickly as we would have liked, there weremany positive achievements, and from along-term strategy perspective, the CEO hassignificantly moved the dial in support ofour future performance and growth.

Received remuneration is higher in 2022
due to the increased value at vesting ofpreviously awarded deferred shares which
vested in 2022 and the 51.6% LTVR vestingoutcome in 2022 compared to 43.3% in
2021, noting that the PR which vested in
2022 were settled by delivery of shares
which remain subject to a further one-year
restriction period.
Statutory remuneration reflects theaccounting expense value for 2022 and isthus different to the remuneration received
in 2022 (which includes prior year awards
which vested).

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Summary of total remuneration – CEOAwarded

Received1

Statutory2

Fixed
remuneration
$

STVR
$

LTVR
(full face value)$

Total
remuneration$

Total
remuneration$

Total
remuneration$2022

2,500,000

1,860,000

n/a3

4,360,000

6,000,069

5,489,133

2021

2,500,000

2,000,000

3,500,000

8,000,000

5,752,821

5,473,399

1. Includes the value of previously awarded STVR deferred shares and LTVR performance rights at the date of vesting. 2. Includes the value of STVR and LTVR that has been expensed in the year.
3. No 2022 LTVR award due to change of awarding LTVR at the start (rather than end) of the year. 2023 LTVR proposal is $3.375m.

Historical STVR and LTVR
This table shows the STVR as a % of maximum opportunity and LTVR vesting outcomes for the CEO over the last five years.
In prior years the maximum STVR opportunity for the CEO was 150% of target, however under the new 2022 structure this has been
reduced to 125% of target, therefore the 2022 STVR % of maximum opportunity shown below of 74% is not comparable with prior years.
If the maximum opportunity had remained at 150% of target, then the 2022 STVR outcome for the CEO (on a like for like basis) would
have equated to 62% of maximum opportunity.
Historical STVR and LTVR – CEO
2018

2019

2020

2021

2022

(post 50%
COVID-19 reduction)

STVR1 outcome (% of maximum opportunity)

56%

48%

33%

53%

74%

LTVR vesting outcome (% vested)

0%

21.8%

0%

43.3%

51.6%

1. Previously referred to as AVR pre-2022.

4.4.2 DISCLOSED EXECUTIVEPERFORMANCE
Performance
At the start of each year, stretching
performance objectives are set in the formof Divisional Performance Frameworks
for each of our Disclosed Executives, inalignment with the ANZ Group Performance
Framework approved by the Board.
At the end of the financial year, theperformance of each Disclosed Executive1
is assessed against the ANZ Group
Performance Framework (25% to 50%
weighting), their Divisional Performance
Framework, ANZ’s values (behaviours),delivery of BEAR obligations and ANZ’srisk and compliance standards.

Similar to the ANZ Group Performance
Framework, the Divisional Performance
Frameworks include the key elementsof Financial Discipline and Operational
Resilience, Customer, and People andCulture, with Risk acting as a modifier.2
The weighting of each element varies
to reflect the responsibilities of eachindividual’s role. The Financial Discipline
and Operational Resilience element
weightings range from 20% to 35%.
The HR Committee seeks input from theCEO, and independent reports from Risk,
Finance, Talent and Culture, and Internal
Audit, and also reviews material risk, audit
and conduct events, and seeks input fromboth the Audit Committee and the Risk
Committee of the Board.

The ANZ Group Performance Framework
weighting for Disclosed Executives
reinforces the importance of collective
accountability and contribution to Groupoutcomes. The respective 2022 weighting
varies based on role focus:

The HR Committee reviews andrecommends to the Board for approval
the overall performance outcomes foreach Disclosed Executive.

• 50% Group performance weighting:
CFO, GE T&C, and GE Technology

At the end of the financial year, the CEO
and HR Committee determine STVR
recommendations for each Disclosed
Executive, which are ultimately approvedby the Board3. STVR varies year-on-year in• 25% Group performance weighting:CRO, GE Australia Retail, GE & CEO
New Zealand, GE Institutional

STVR and LTVR

line with performance – it is not guaranteed
and may be adjusted up or down ranging
from zero to a maximum opportunity.
As highlighted in section 4, performanceagainst objectives impacts STVR outcomes(e.g., where expectations are met, STVR islikely to be awarded around target which
equates to 80% of maximum opportunity).
The degree of variance in individual STVR
outcomes reflect the weighting of theGroup component (i.e., roles with 50%
Group weighting will generally have lessdifferentiation), and relative performanceof the different areas/individuals,
ensuring appropriate alignment between
performance and reward. The outcomesdemonstrate the at risk nature of STVR, andthat outcomes vary across the Disclosed
Executives and also from year to year. The
average 2022 STVR for Disclosed Executives
is 78% of maximum opportunity (ranging
from 71% to 96%).
Consistent with the CEO, no 2022 LTVR
awards have been made to Disclosed
Executives, as we transition to awarding
LTVR at the start of the 2023 year under the
new executive remuneration structure.

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

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Historical Disclosed Executive VR
This table shows the VR as a % of maximum opportunity for the executives who were disclosed over the last five years.
In prior years the maximum VR opportunity for Disclosed Executives was 150% of combined VR target, however under the new 2022
structure this has been reduced to 125% of STVR target component only, therefore the 2022 STVR % of maximum opportunity shown
below of 78% is not comparable with prior years.
If the maximum opportunity had remained at 150% of target, then the average 2022 STVR outcome for Disclosed Executives (on a likefor like basis) would have equated to 65% of maximum opportunity (and a range of 59% to 80%).
Historical Disclosed Executive VR
2018

2019

2020

2021

2022

(post 50%
COVID-19 reduction)

STVR1 outcome (average % of maximum opportunity2)
STVR1 outcome (range % of maximum opportunity2)

51%

45%

36%

60%

78%

40% – 60%0% – 74%

31% – 44%

46% – 66%

71% – 96%

0%

21.8%

0%

43.3%

51.6%

VR PR vesting outcome (% vested)

1. Previously referred to as VR pre-2022. 2. Pre 2022, % of maximum opportunity applied to the full VR due to the combined VR structure for Disclosed Executives in those years.

4.4.3 PR OUTCOMES (CEO AND DISCLOSED EXECUTIVES)
PR granted to the CEO in December 2018 and Disclosed Executives (excluding the CRO) in November 2018 reached the end of theirperformance period in November 2021. Based on performance against hurdles, 51.6% of these rights vested (noting that for the CEO they remainsubject to a further one-year restriction period), the remaining 48.4% lapsed and executives received no value for this portion of the award.
PR outcomesOver three years
ANZ TSR/CAGR2 TSRMedian TSR/CAGR2 TSR
threshold target

Upper quartile
TSR/CAGR2 TSR
maximum target% vested

HurdleGrant date1

First date
exercisable1

75% relative TSR

22-Nov-18

22-Nov-21

17.49%

5.60%

41.02%

68.85%

22-Nov-18

22-Nov-21

5.52%

10%

15%

0%

Select Financial Services (SFS)
comparator group3

25% absolute CAGR2 TSR

OverallPR outcome

51.6% vested4
and 48.4%
lapsed

1. Grant date for the CEO was 19 December 2018, and date first exerciseable was 19 December 2021. The CEO’s performance period was the same as the performance period for Disclosed
Executives. 2. Compound Annual Growth Rate (CAGR). 3. See section 5.2.5 for details of the SFS comparator group. 4. For the CEO, remain subject to a further one-year restriction period.

4.5 ANZIP variable remuneration pool and Group performance
4.5.1 ANZIP VARIABLE
REMUNERATIONThe ANZ Incentive Plan (ANZIP) is thevariable remuneration plan operating
across ANZ.
With the exception of the CEO’s STVR,
individual variable remuneration outcomesfor all other employees including STVR for
Disclosed Executives are funded under
ANZIP. The Board decides the CEO’s variable
remuneration outcomes separately to help
mitigate potential conflicts of interest.
See section 8.1.3.

At the end of each financial year the Board
exercise their judgement to determine a fairand reasonable ANZIP pool. An assessmentof financial performance guides the pool
range but it is not a formulaic outcome. The
Board considers a range of factors including:• The ANZ Group Performance Frameworkassessment (see section 4.5.3).
• The quality of earnings and operating
environment.
• The shareholder experience during 2022
(e.g., shareholder returns and dividend
comparison with prior periods).
• Our Reward Principles (e.g., attract,
motivate and keep great people).

4.5.2 ANZ GROUP PERFORMANCE
FRAMEWORKThe ANZ Group Performance Framework
is approved by the Board at the start ofeach year. The key objective of our Group
Performance Framework is to enablealigned focus across the organisation ondelivering the critical outcomes that mattermost in delivering on our strategy. It plays a
key role to:• message internally what matters most;• reinforce the importance of soundmanagement in addition to risk, customer,
people and financial outcomes; and• inform focus of effort, prioritisationand decision-making across ANZ.

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ANZ 2022 Annual Report / Remuneration report

4.5.3 ASSESSMENT AGAINST THE ANZ GROUPPERFORMANCE FRAMEWORK FOR 2022

As managing risk appropriately is fundamental to the way ANZ
operates, risk forms an integral part of the assessment, directly
impacting the overall ANZ Group Performance Frameworkoutcome (a modifier ranging from 0% to 110% of the ANZ Group
Performance assessment).

RISK

modifier 0 to 110%
Overall assessment
Slightly below

CUSTOMERPEOPLE &CULTUREFINANCIALDISCIPLINE &OPERATIONALRESILIENCE

35%
weight30%
weight35%
weightOverallassessment
Below

Overallassessment
Met

Overallassessment
Slightly above

OVERALL

Group Performance
Assessment
Slightly below expectations – but many objectives met or above target

Overall, this was another volatile yearwith a lot of economic uncertainty.
COVID continued to provide challenges
operationally and for our customers. The
hard work de-risking and simplifying the
Bank over the previous 5 years and thelessons from COVID in 2020 and 2021
meant ANZ was well positioned to manage
through a fast-changing environment.
Despite these challenging circumstances,
the achievement of many important
initiatives position us well for 2023 andbeyond (e.g., the agreement to acquire
Suncorp Bank which will add more than
one million retail customers and provide
a platform for growth in the fast-growing
Queensland market, the progress madeon establishing the NOHC structure
which if approved by shareholders will
provide greater flexibility to grow value forshareholders, the new Australia Commercial
strategy, sustainability investments),
Australia home lending has also beenreturned to quality growth.
Despite many achievements, we assessour 2022 performance as slightly below
expectations primarily due to theslower than expected progress on thebuild of a Group wide non-financial risk
framework (the current framework is more
Divisionally focused), and the later than
expected launch of our digital innovation
product ANZ Plus.
The below table outlines ANZ’s
performance objectives in 2022 andprovides a summary of outcomes for eachof the key performance categories to informthe overall assessment for 2022.

Performance against expectations isevaluated for each category using aholistic assessment of progress andoutcomes delivered in line with ourGroup strategic priorities and annual
focus areas.
A range of objective indicators andsubjective factors are considered including
management input on work undertaken,
evidence of outcomes realised and lessons
learned, and with consideration given to
the operating, regulatory and competitiveenvironment.

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Risk

79

(modifier 0% to 110%)

Risk overall assessment:
Slightly below

Performance commentary

Performance against
objectives

GROUP STRATEGIC PRIORITY:

Maintain risk discipline focused on good customer and regulatory outcomes.

Below

Met

Above

With a constantly evolving economic, health, regulatory and political environment, our continued focus on strong risk
discipline has become even more important, as evidenced by:• the integration of Geo-Political Risk Capability into ANZ to inform of emerging risks, including development of contingency
plans for medium to higher risk jurisdictions with trigger events;• the strengthening of our climate risk management capabilities (e.g., improving our credit counterparty climate risk assessments
to fulfil APRA’s Climate Vulnerability Assessment);• solid progress on implementing the Royal Commission recommendations (on track) and the Group wide capital efficiency program.
There were no major regulatory, credit, audit or market breaches. The de-risking of the business continued with further
strengthening of the balance sheet and exiting non-core businesses. We continued to improve our risk infrastructure andprocesses, although did not make the progress we had hoped with regards to a new Group wide non-financial risk framework
which we consider to be an important foundation for the future. The APRA imposed operational risk overlay of $500m remained.
We rightly hold ourselves to a very high standard with respect to risk in particular, and therefore as we didn’t achieve all
expectations we have evaluated our Risk performance as slightly below target.
ANZ was measured by S&P’s 2022 Corporate Sustainability Assessment1, and was ranked in the 96th percentile globally inthe banking sector (as at 23 September 2022) and commended in areas including financial wellbeing and social andenvironmental reporting.

2022 focus areas

Performance commentary

Performance against
objectives
Below

Deliver major
regulatorycommitments

Met

Above

• Strong progress has been made against major compliance regulatory commitments(e.g., APRA Risk Governance, Culture and Accountability Self-Assessment Attestation, ongoingenhancement of our Anti-Money Laundering program, APRA Capital Reforms Program, Reserve
Bank of New Zealand standard BS11), however the complexity and magnitude of change with
programs such as BS11 has impacted meeting some of our stretch delivery timeframes.
• While each Division manages its operational risks and there has been investment in de-risking thebusinesses, we did not make the progress we had hoped with regards to building and embedding
a new Group wide non-financial risk framework which we consider to be an important foundation
for the future.

Strengthen risk
culture and progress
towards target state• There were a number of positive actions influencing risk culture including embedding the
ANZ behaviours and raising awareness of risk culture through various channels and longer-term
strategic activities. While we have advanced with the delivery of our Group wide non-financial
risk framework this is not yet complete and so the target risk culture was not met in 2022.

Deliver more
effective controls
to better protect
the confidentiality,
integrity andavailabilityof systems• The technology risk rating has improved through an enhanced control environment anduplifting capability. This has improved availability of systems and prevention, detection andmitigation of internal and external security threats.

Continue tostrengthen our
reputation withthe community
and regulators• Our regulatory and community reputation remains strong.

• A significant level of training support on how to manage technology risk was provided to>1,000 employees across all Divisions.
• Cloud initiatives have supported the migration of ANZ applications to Cloud technologies ina safe and compliant manner, and the strengthening of ANZ’s Cloud policy and framework.

• ANZ – particularly the CEO – engages regularly with non-profit partners, environmental groups
and other community groups/leaders in line with our purpose to ‘shape a world where people
and communities thrive’.
• Released fifth Reconciliation Action Plan focused on improving economic participation,
supporting organisations to build capacity and individuals to achieve financial wellbeing.
• ANZ’s ‘Speak Up’ index from the August 2022 Engagement Survey continued to be high at 83%,reflecting sustained efforts over several years to encourage a speak up and risk culture where
people feel they can challenge each other respectfully.

1. Evaluates the sustainability performance of thousands of companies trading publicly, operated under a strategic partnership between S&P Dow Jones Indices and RobecoSAM (Sustainable
Asset Management).

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ANZ 2022 Annual Report / Remuneration report

Customer(35% weight)

Customer overall
assessment:
Below

Performance commentary

Performance against
objectives

GROUP STRATEGIC PRIORITY:

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

Below

Met

Above

We continued to demonstrate our commitment to improve the financial wellbeing (FWB) of our customers(a core component of our business strategy), as evidenced by:• greater than 850,000 FWB hub visits in Australia and New Zealand in 2022;• a number of major campaigns to drive FWB (e.g., 2022 Australian Open campaign, the launch of a new brandplatform ‘For Financial Wellbeings’, and new KiwiSaver ‘Long term plans’ campaign to get people thinking about
their long term FWB), and the launch of ANZ Plus which has been designed around FWB.
Underlying performance in New Zealand and Institutional continued to be strong as we further embedded leading
market positions (e.g., New Zealand Brand Consideration at all-time highs at >53%, and Australia Institutional
continued to achieve various #1 customer ratings). Our Australia Commercial strategy detailing how ANZ is going
to be the best bank for those who want to start and run a small business in Australia, was endorsed by the Board.
Following a reduction in market share in the first half of the financial year, Australian home loan capability and capacity
was rebuilt during the year while retaining a focus on risk and return. Performance was solid and we exit 2022 withdecent momentum. Our launch of a new retail banking platform ANZ Plus has attracted ~50,000 customers since theformal marketing launch in July 2022. We are on track to launch our ANZ Plus Home Loan in 2023. Despite this success,it is later than we had hoped as we grappled with resourcing challenges due to COVID. We therefore evaluate ouroverall performance with respect to Customer as below target.
While not included in the 2022 objectives, there were a number of important initiatives in 2022 designed to deliver
great customer outcomes in the future (e.g., agreement to acquire Suncorp Bank).

2022 focus areas

Performance commentary

Performance against
objectives
Below

Improve time to firstdecision for homeloans in Australia• Progress made on our home loan processing challenges in Australia – with median time
to first decision for Broker and Mobile Lending applications reduced from 7.4 days in 2021
to 3.4 days in 2022.
• However, we recognise more needs to be done in 2023 to deliver faster and more consistent
application response times for our customers.

Embed customer
digital innovation
propositions• Manage My Money: ANZ Plus was launched in July 2022 and is now available in the Apple
and Android app stores. Post a low key start, momentum improved towards the end of 2022
as marketing and Branch activity commenced.
• Buy and Own a Home: Good progress made in delivering the supporting software.

Strengthen andsustain complaints
management
practices• AU: All actions arising from ASIC’s 2019 review and 2021 regulatory changes completed, witha continuous improvement approach from 2023 (focusing on complaint capture at frontline,
quality and fairness of complaint management, and the use of complaint data).

Accelerate platforms,
markets andsustainability
strategies within
Institutional• Platforms: Strong progress on Platforms as a service including digital assets: AUD/NZD
clearing services is a key pillar with continued customer onboarding and implementationof SWIFT Global Payments Invitation (GPI). Our Platform propositions (Agency, Clearing andCash Management) continued to deliver high returns. Successful proof of concepts with
our A$DC Stablecoin, including tokenised carbon trading in the digital assets space.

• NZ: Complaint numbers consistent over 2022, however problem resolution satisfaction
declined. Service complaints due to wait times (in both the Fraud and Online Store teams)
increased, as volumes elevated in a challenging resourcing environment.

• Markets: Commencement of in-house US Private Placements resulting in delivery ofadditional revenue.
• Sustainability: Strong progress on delivering multi-billion dollar sustainable financing, with
continued customer recognition for delivering sustainability solutions: Established a strategic
partnership with Pollination, while commencing Project Wheatbelt (carbon farming andcommunity regeneration).
Strengthen position
as a leading
Sustainability bank

• Peter Lee2 #1 Lead Sustainability Provider for Australia and New Zealand and Kanga News
Global Coverage House of the Year – Sustainability and Australian Sustainability Debt
House of Year.

2. Peter Lee Associates 2022 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand.

Met

Above

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People & Culture

81(30% weight)

People & Culture
overall assessment:
Met

Performance commentary

Performance against
objectives

GROUP STRATEGIC PRIORITY:

Build a culture where our diverse teams are engaged and optimised for success.

Below

Met

Above

Our purposeful and continued focus on leadership and culture in one of the most challenging labour market
environments in many years, is evidenced by our engaged workforce and recognition as a great place to work:• 84% engagement index3 outcome (compared to Global Finance & Insurance average of 79%).
• Awarded most popular graduate program in Australia at AFR’s “Top 100 Graduate Employers” awards and #1 globallyin SWOOP Analytics’ 2021 Yammer Benchmarking for large firms.
• Equal #1 position amongst major bank peers in Glassdoor4 ratings.
2022 was another successful year, and our focus on purpose and values delivered strong outcomes with regards totalent retention and further building key skills required for the future. Gender diversity continued to improve although
not at the same strong pace we experienced in previous years. Overall, we delivered People & Culture on target.
Strategic initiative highlights include:• Launching and embedding our simplified culture behaviours.
• Piloting a new leadership program to improve leadership capability.
• Supporting employees to build new learning habits, with ~9,600 employees using our key digital learning platform
each month.
• Strong progress on our Talent & Culture (T&C) technology uplift program to improve and simplify how our peopleinteract with T&C services and systems.

2022 focus areas

Performance commentary

Performance against
objectives
Below

Drive a culture of
performanceMet

Our focus was on simplifying expectations, and supporting our teams, whilst refining where
and how we work through the:• launch of a simplified set of culture behaviours to help us achieve our purpose and strategy –with support for our people to understand them in practice.
• provision of ongoing COVID support, including delivery of programs to facilitate a safeand effective return to office, and targeted webinars and content aligned to wellbeing andmental health.

Attract, retain anddevelop people
with the criticalskills we need toreinvent banking

Developing• Executive Leadership Series launched to upskill leaders on critical topics linked to the Bank
we’re Building.
• Customer Coaching program pilot commenced with 300 participants across Australia and
New Zealand.
• A more holistic Career Programs strategy developed.
Attracting• Recruitment of >750 permanent engineers critical to delivering our strategy and active
management of plans to strengthen data, digital and delivery expertise.
• Leveraging campaigns, talent market places and other strategic sourcing techniques toattract in demand talent.
Retaining• Retention hotspots identified. A range of interventions implemented to address attrition
rates driven by an extremely tight labour market.

Build the foundations
for long-term,
sustainableimprovement ingender diversity• Overall women in leadership (WIL) was at 35.9%, up slightly (0.6%) on last year (with intensecompetition for talent and tight discipline over FTE impacting the degree of uplift). Positively,
WIL in revenue generating roles increased from 28% to 30%.
• Good progress was made in 2022 in building the foundations to improve gender diversity
outcomes over the long-term, including:– Progress against Gender Action Plan and roll out of the Diversity & Inclusion playbook.
– Recruitment of 57% females into the Australian graduate program.
– Update of executive promotion process to improve gender diversity.
– Achievement of Family Inclusive Workplace certification.
3. Based on a new research-based engagement index. 4. Glassdoor is a website where employees and former employees anonymously review companies and their management.

Above

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ANZ 2022 Annual Report / Remuneration report(35% weight)

Financial Discipline &Operational Resilience
overall assessment:
Slightly above

Performance commentary

Performance against
objectives

Financial Discipline & Operational Resilience

GROUP STRATEGIC PRIORITY:

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

Below

Met

Above

Despite the ongoing challenges in the environment, ANZ delivered strong financial outcomes which reflect theexecution of our long-term strategy and the benefits of our diversified portfolio of businesses.
Strong margin and lending momentum was evident across all Divisions, with a disciplined focus on quality growth andrisk-adjusted returns. Within the Australian Home Loans business, further improvements to operational capacity andprocess resilience helped deliver consistently faster turnaround times and led to strong volume growth momentum
in the second half of the financial year.
Costs were again well managed. Despite the emergence of inflationary pressures, ‘run the bank’ costs were broadly flat as
we continued to reduce operational complexity and simplify the business. This enabled continued high levels of investmentin the business, allowing for progress on growth and productivity initiatives, such as ANZ Plus and Cloud migration.
We continued to prudently manage risk. The low level of individual provisions is a function of ongoing portfolio credit
quality improvements, while the collective provision balance appropriately factors in the uncertain domestic andglobal economic outlook. Our capital position remains strong, enabling us to profitably grow the balance sheet andfund the acquisition of Suncorp Bank.
Overall, the performance on Financial Discipline & Operational Resilience was slightly above target.

2022 focus areas

Performance commentary

Performance against
objectives
Below

Deliver Group
Economic Profit toplan or better in ahigh-quality manner

Met

Above

• On a cash continuing basis, Economic Profit5 of $1,080m was generated in 2022, up 81% on prioryear. Additionally, cash profit from continuing operations increased 5%, profit before provisions
increased 7% and ROE increased 47 bps reflecting a strong outcome for shareholders.
• Excluding large/notable items6, revenue grew 2% for the financial year benefiting fromdisciplined volume growth and margin management across all our businesses. While ourMarkets customer franchise performed strongly, lower balance sheet trading income caused
by volatile market conditions saw total Markets revenue fall. For second half, revenue grew
10% with strong exit rate momentum.
• Cost management remained disciplined despite inflationary pressures, with ‘run the bank’costs broadly flat year-on-year. Overall costs increased, a factor of continued high levels ofinvestment to grow and simplify the business and meet our regulatory and complianceobligations, and a higher proportion of investment spend being directly expensed.
• The credit quality of our lending portfolio remains strong, with long-run loss rates continuing
to decline and low levels of individual provisions in 2022.
• Capital and liquidity continued to be well managed. CET1 (level 2) of 12.3% remains above
regulatory minimums, while enabling profitable balance sheet growth and completing a$3.5bn capital raise to partially fund the acquisition of Suncorp Bank.

Drive BAU
productivity
improvements• Incremental ‘run the bank’ cost savings of $250m were delivered in 2022 via the Accelerated
Strategy program, enabling ‘run the bank’ costs to remain broadly flat.

Restore Australia
home lending
momentum• Australia home lending volumes +4.9bn (or +1.8%) in 2022. Additional operational capacityand process resilience has seen home loan application volumes improve over the course of
the year, with the majority of FUM growth delivered in the second half of the year, and thestrongest FUM growth in the month of September.

Progress further on
Cloud migration
journey• Our technology continues to be modernised and we have exceeded targets with morethan 12,000 systems migrated to Cloud or decommissioned (target 9,000), with 31% of
applications now on Cloud.

Demonstrate progress
towards improving
our legal structure• Well progressed on the NOHC legal restructure with preparation activities on track toimplement in 2023, subject to receipt of all regulatory and shareholder approvals.

• The savings were achieved via a series of initiatives focusing on the continued move to amodern Cloud-based technology architecture, greater digital adoption for customers andemployees and more streamlined business processes.

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

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83

ANZ Group Performanceassessment:
Slightly below expectations

Overall

Below

Met

Above

Despite a strong outcome in Financial Discipline & Operational Resilience, and on target performance for People &Culture, some areas for improvement in Customer and slower than expected progress in regards to building a Groupwide non-financial risk framework in line with our high expectations, resulted in an overall Board assessment of slightly
below target. However, the Board recognised that many objectives were met or exceeded in difficult circumstances,and several important achievements (e.g., Suncorp Bank purchase agreement, NOHC, Cloud) have positioned us wellfor the long-term.

4.5.4 ANZ PERFORMANCE OUTCOMES
ANZ’s financial performance 2018–2022
As highlighted in section 4.5.1, when determining variable remuneration outcomes for the CEO, Disclosed Executives and employees a rangeof different financial indicators are considered. The Group uses cash profit1 as a measure of performance for the Group’s ongoing businessactivities, as this provides a basis to assess Group and Divisional performance against earlier periods and against peer institutions. The
adjustments made in arriving at cash profit are included in statutory profit which is subject to audit. Although cash profit is not audited, theexternal auditor has informed the Audit Committee that the cash profit adjustments have been determined on a consistent basis across eachperiod presented.
Statutory profit has increased 16% compared to the prior financial year, while cash profit from continuing operations has increased 5%. Partof the improvement has been driven by fewer one-off charges and divestment losses in the prior financial year. Underlying performancereflects stronger revenue, a focus on investing for growth.
During 2022 the Group completed a $1.5bn share buy-back to return surplus capital to its shareholders and announced the proposed
acquisition of Suncorp Bank to accelerate the growth of our Australia Retail and Australia Commercial businesses, anticipated to completein calendar year 2023 (subject to regulatory approval). The expected acquisition will be partly funded by the $3.5bn equity raise in 2022.
See ‘Note 24 Shareholders’ Equity’ of the Annual Report.
The table below provides ANZ’s financial performance, including cash profit, over the last five years.
2018

2019

2020

2021

2022

Statutory profit attributable to ordinary shareholders ($m)

6,400

5,953

3,577

6,162

7,119

Cash profit1 ($m, unaudited)

5,805

6,161

3,660

6,181

6,496

Cash profit – Continuing operations ($m, unaudited)

6,487

6,470

3,758

6,198

6,515

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

9,966

9,958

8,369

8,396

8,968

Cash ROE (%) – Continuing operations (unaudited)

11.0

10.9

6.2

9.9

10.4

Cash EPS – Continuing operations (unaudited)2

243.5

220.2

128.7

216.5

228.8

Share price at 30 September ($)

28.18

28.52

17.22

28.15

22.80

Total dividend (cents per share)

160

160

60

142

146

Total shareholder return (12 month %)

0.6

9.2

(36.9)

70.7(14.0)(On 1 October 2017, opening share price was $29.60)

1. Cash profit excludes non-core items included in statutory profit with the net after tax adjustment a reduction to statutory profit of $623m for 2022, made up of several items. It is provided toassist readers understand the results of the core business activities of the Group. 2. Cash earnings per share has been restated to reflect the bonus element of the share entitlement issue in 2022,
in accordance with AASB 133 Earnings per Share.

ANZ TSR performance (1 to 10 years)
The table below compares ANZ’s TSR performance against the median TSR and upper quartile TSR of the PR Select Financial Services (SFS)
comparator group1 over one to ten years, noting that for this table TSR is measured over a different timeframe (i.e., to 30 September 2022)
to the performance period for our PR.
• ANZ’s TSR performance was above the median TSR of the SFS comparator group1 when comparing over three and five years; and• below the median over one year and ten years.
Years to 30 September 2022
1

32

5

10

ANZ (%)(14.0)

(7.3)

0.2

59.5

Median TSR SFS (%)(12.6)(14.1)

(2.0)

88.4

8.4

25.5

51.2

166.6

Upper quartile TSR SFS (%)

1. See section 5.2.5 for details of the SFS comparator group. 2. The outcomes for PR granted in November/December 2018 and tested in November 2021 are detailed in section 4.4.3.

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ANZ 2022 Annual Report / Remuneration report

5. 2022 executive remuneration structure and delivery
There are two core componentsof remuneration at ANZ – FR andat risk variable remuneration.
In structuring remuneration, the Board
aims to find the right balance between
fixed and variable remuneration (at risk),
the way it is delivered (cash versus deferredremuneration) and appropriate deferral
time frames (the short, medium andlong-term).
The Board sets (and reviews annually) theCEO and Disclosed Executives’ FR basedon financial services market relativities andreflecting their responsibilities, performance,
qualifications and experience. The annual

market review of FR initially scheduled
for September 2022 has been deferred
until early 2023 to ensure the Board hasa clearer picture of the impact of any
remuneration changes in the market as aresult of APRA’s new Prudential Standard
CPS 511 Remuneration.
The CEO and Disclosed Executives’variable remuneration is comprised of
STVR and LTVR consistent with externalmarket practice.
Variable remuneration is designed tofocus our CEO and Disclosed Executives
on stretching performance objectives
supporting our business strategy, risk
management and the delivery of longterm stakeholder value.

Variable remuneration outcomes are basedon a range of measures (as illustrated
below), with material weight provided to
non-financial measures in accordance withPrudential Standard CPS 511 Remuneration.
Our variable remuneration approach
has a strong focus on driving long-termsustainable outcomes for shareholders. For
example, STVR outcomes include a numberof objectives that are considered key driversof shareholder value, and the significant
weighting to the LTVR component (>60%
of VR) as well as 50% of STVR delivered as
ANZ shares, aligns a large proportion of
executive remuneration to the shareholder
experience (in respect of the share priceand dividend).

LTVR RR
Mostly non-financial

STVR
Mix of financial and non-financial measures

LTVR PR
Financial

Key Individual Assessment Inputs
ANZ values
Behaviours

ANZ Group
Performance
Framework
25%-50% weighting

Risk/compliance
Including material events

Individual strategic
objectives/Divisional
Performance Framework
50%-75% weighting

BEAR obligations

Controlfunction input
Risk, Finance,
T&C, Audit

FY22 ANZ Group Performance Framework
Objectives below are examples of key drivers of shareholder value• Deliver major regulatory
Maintain risk discipline focused on good commitments• Strengthen risk culture
customer and regulatory outcomes
RISK (MODIFIER)CUSTOMER (35%)
Deliver great customer outcomes,
focused on improving financial
wellbeing and experience ofpriority segments

PEOPLE & CULTURE (30%)
Build a culture where our diverse
teams are engaged and optimised
for success

FINANCIAL DISCIPLINE& OPERATIONALRESILIENCE (35%)
Run core businesses well,delivering sustainable growthand operational improvements

Additional financial andnon-financial overlays
considered by the Boardin determining Group andindividual performanceand the size of the ANZIP
pool include:• Broader financial
performance (beyond
scorecard measures)• The quality of earnings
and operating
environment• The shareholder
experience (e.g.,share price growthand dividend
comparison withprior periods)

ALIGNED TO SHAREHOLDER EXPERIENCE
Prudential Soundness

TSR• Capital ratio and liquidity
prudential minimums• 75% relative TSR
Rewards for performance
relative to that of SFS
comparator group

Risk Measures• Material risk outcomes
Considers all risk types
including capital adequacy
risk, compliance risk,
credit risk, liquidity andfunding risk, market risk,
operational risk, strategic
risk, technology risk andconduct risk
• APRA active supervision• Risk culture• Improve time to first decision forAustralia home loans• Embed digital value propositions• Accelerate platforms, markets andsustainability strategies within
Institutional• Drive a culture of performance• Attract, retain and develop
people with critical skills to
reinvent banking• Deliver economic profit to plan or
better in a high-quality mannerwith sustainable returns• Restore Australia home lending
momentum and sustainably growmarket share in target segments

STVR and LTVR provide material weight to non-financial measures as per CPS 511• 25% absolute TSR
Ensures there is acontinued focus onproviding positive
growth – even whenmarket is declining
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By deferring a significant portion of variable remuneration (79% of maximum opportunity for the CEO and Disclosed Executives and 75%
for the CRO), we seek to ensure alignment with shareholder interests, to deliver on ANZ’s strategic objectives, and to ensure a focus on
long-term value creation. Deferred variable remuneration has significant retention elements, and most importantly, can be adjusted
downwards, including to zero, allowing the Board to hold executives accountable, individually or collectively, for the longer-term impactsof their decisions and actions.
Board discretion is applied when determining all CEO and Disclosed Executive variable remuneration outcomes including:• STVR and LTVR outcomes for each financial year;• LTVR vesting outcomes (pre vest assessment);• Consideration of malus or further deferral before any scheduled release of previously deferred remuneration;• Consideration of clawback for up to two years post payment or vesting of variable remuneration from 2022 onwards. See section 5.3.

5.1 Remuneration mix
As highlighted in section 3, the CEO and Disclosed Executives now have an aligned remuneration mix (30% FR, 30% STVR and 40% LTVR
at maximum opportunity), and structure (with the exception of longer deferral for the CEO in line with APRA’s deferral requirements).
CEO
This chart below highlights that despite the reduction in total remuneration opportunity, the LTVR component has only reduced slightly
to reinforce the long-term focus and alignment to the shareholder experience.
Remuneration
mix
– CEO
($m)
Remuneration
mix
– CEO
($m)
Minimum opportunity
2.500
New maximum opportunity
8.375 (45% cash, 55% equity)
Former maximum opportunity
9.750 (45% cash, 55% equity)

2.500

2.500
30%

1.250
30%

2.500
26%

1.875
38%

FR

Cash STVR

1.250

1.688
40%

1.688

1.875

Deferred shares STVRRR LTVR

3.500
36%
PR LTVR

Disclosed Executives
The chart below highlights the significant (~30%) reduction in maximum opportunity for Disclosed Executives (i.e., -$1.837m in thisexample). Under the former combined VR structure the maximum opportunity of 150% was applied to the combined VR, while under
the new structure the maximum opportunity has been reduced to 125% and is applied to the STVR only.
Remuneration
mix
– CEO
($m)
Remunerationmix– Disclosed
Executives1 ($m)
Minimum opportunity
1.250
New maximum opportunity
4.188 (45% cash, 55% equity)
Former maximum opportunity
6.024 (40% cash, 60% equity)

1.250

1.250
30%

0.625
30%

1.200
20%

1.188
39%

FR
1. Excluding CRO.

Cash STVR/VR

0.625

0.844
40%
1.188

Deferred shares STVR/VR

0.844

2.448
41%
RR LTVR

PR LTVR/VR

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To preserve the independence of the roleand to minimise any conflicts of interest in
carrying out the risk control function acrossthe organisation, the CRO’s remuneration
arrangements differ to other Disclosed
Executives.
While the STVR opportunity (100% of FR)
is the same as the CEO and Disclosed
Executives, the LTVR opportunity isdifferent (100% of FR instead of 135% of FR)
reflecting the delivery of LTVR as 100% RR(instead of 50% RR and 50% PR). Maximum
variable remuneration opportunity has
reduced from 270% to 200% of FR for
the CRO. The remuneration mix is 33.3%
FR/33.3% STVR/33.3% LTVR.
Note for both Disclosed Executives andthe CRO, as the Board decided to defer
payment of the ~4% FR structural increasefor Disclosed Executives to 2023, excluding
the FR increase, the 2022 actual maximum
opportunity remuneration mix for Disclosed
Executives is 29% FR/30% STVR/41%
LTVR (and for the CRO 32% FR/34%
STVR/34% LTVR).

5.2 Variable remunerationdelivery
Variable remuneration for the CEO and theDisclosed Executives (excluding the CRO)is delivered as follows:• STVR as 50% cash and 50% sharesdeferred equally over years 2 and 3; and• LTVR as RR and PR deferred over:– year 4 (33%), year 5 (33%) and year 6(34%) for the CEO; and– year 4 (50%) and year 5 (50%) for
Disclosed Executives.

Both RR and PR are tested against therelevant performance condition (seesection 5) at the end of the four-year

performance period and are thensubject to additional holding period(s)until the completion of the respective
deferral periods.
At target performance, 63% of variable
remuneration for the CEO and Disclosed
Executives, and 56% of variable
remuneration for the CRO will be deferred
for at least four years (from the date theBoard approved the variable remunerationin October (and the date shareholders
approve the CEO’s LTVR)), noting that thiscomplies with the BEAR minimum deferral
requirement of 60% for the CEO and 40%
for Disclosed Executives. If the CEO receives
above target STVR, the amount above
target will be delivered as 40% cash and
60% deferred shares (20% year 4, 20% year
5, 20% year 6) to ensure compliance withthe minimum deferral requirements withrespect to BEAR and APRA’s Prudential
Standard CPS 511 Remuneration.
Before any scheduled release of deferredremuneration, the Board considers whether
malus should be applied to previously
deferred remuneration (or further deferralof vesting) for the CEO and Disclosed
Executives. The Board will also consider
whether clawback should be applied tovariable remuneration granted for the 2022
financial year and beyond. See section 5.3.
5.2.1 STVR CASH – CEO ANDDISCLOSED EXECUTIVES
The cash component of STVR is paid
to executives at the end of the annual
Performance and Remuneration Review(December 2022), and from 2022 is subject
to clawback for two years post payment.
5.2.2 STVR DEFERRED SHARES –CEO AND DISCLOSED EXECUTIVES

three (and it remaining subject to malus
and clawback), we enable a substantial
amount of their STVR to be directly linked
to delivering shareholder value. We grant
deferred shares in respect of performancefor the 1 October to 30 September financial
year in late November each year.
For deferred variable remuneration for the
CEO and Disclosed Executives, we calculate
the number of deferred shares to be
granted based on the VWAP of the shares
traded on the ASX in the five trading days
leading up to and including 1 October (i.e.,
in line with the beginning of the financialyear). Allocations prior to the 2022 financial
year are based on the VWAP in the five
trading days leading up to and including
the date of grant. The VWAP used forallocation varies from the fair value VWAP
used for disclosure and expensing purposes(i.e., one-day VWAP at the date of grant).
In some cases, we may grant deferred sharerights to executives instead of deferredshares. Each deferred share right entitles
the holder to one ordinary share.
5.2.3 LTVR – CEO ANDDISCLOSED EXECUTIVESLTVR reinforces the focus on achieving
longer term strategic objectives, driving
outperformance relative to peers, andcreating long-term sustained value for all
stakeholders. The following table details
design features common to both LTVR
RR and PR.
As part of the transition to the new
remuneration structure there is no 2022 LTVR
grant, however this section details the LTVR
approach that will apply to the 2023 LTVR
award to be granted around November/
December 2022.

By deferring 50% of an executives’ STVR
as deferred shares over years two andElement

DetailDescription

RR and PR provide a right to acquire one ordinary ANZ share at nil cost – as long as applicable time and performance
conditions are met. Their future value may range from zero to an indeterminate value. The value depends on
performance against the applicable performance condition and on the share price at the time of exercise.

Performance
periodBoth RR and PR have a four-year performance period commencing from 1 October and ending four years lateron 30 September (e.g., 1 October 2022 to 30 September 2026 for the 2023 grant), noting that LTVR will now beawarded at the start of the financial year (rather than the end).
A four-year performance period provides sufficient time for longer term performance to be reflected.

Deferral periods

The deferral period is the sum of the four-year performance period and the applicable holding period.
The holding period commences the day after the end of the four-year performance period (e.g., 1 October 2026
in the case of the 2023 LTVR award), and finishes on the 4th, 5th or 6th anniversary of grants.

Exercise period

Rights can only be exercised at the end of the relevant deferral period (4, 5 or 6 years) when the rights vest andbecome exercisable.
There is a two-year exercise period which commences at the end of the relevant deferral period for RR and PR.

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Element

DetailExpensing

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

Dividends

A dividend equivalent payment (DEP) is paid in cash at the end of the relevant deferral period, but is only madeto the extent that all or part of the underlying rights meet the relevant performance condition and vest to theindividual. Dividend equivalents accrue over the full deferral period for RR, and only during the holding period for PR.

Allocation
basis

The value the Board uses to determine the number of RR and PR to be allocated to the CEO and Disclosed
Executives is the face value of the Company’s shares traded on the ASX in the five trading days leading up to andincluding 1 October (beginning of the financial year and LTVR performance period).
LTVR will be awarded around the start of the financial year in late November/early December for Disclosed
Executives and December for the CEO (subject to shareholder approval).

5.2.4 LTVR RESTRICTED RIGHTS – CEO AND DISCLOSED EXECUTIVES
The introduction of RR ensures that LTVR provides material weight to non-financial measures (as required under APRA’s Prudential Standard
CPS 511 Remuneration), as well as supporting long-term alignment with shareholders.
The Board was very considered in working through the appropriate measures for RR. A holistic assessment of measures across STVR and
LTVR components was considered to reduce the risk of a ‘double impact’ to remuneration outcomes. Having a risk-based focus reflects theintent of the new Prudential Standard CPS 511 Remuneration in ensuring remuneration arrangements appropriately incentivise individuals toprudently manage risks. The performance conditions have been designed to ensure there is focus on both material risk events and building
a strong risk culture over the longer term.
Element

Performance condition detail

RR pre grantand pre vest
assessments

Pre grant assessment purpose: Determines whether any reduction should be made to RR award value and is primarily
based on outcomes in the prior financial year.
Pre vest assessment purpose: Determines whether the RR amount awarded should vest in full and is based on
outcomes over the four-year performance period.
The pre grant and pre vest assessments also take into consideration any adjustments already applied for the same event/outcomes in either the current or prior years (i.e., adjustments to STVR and LTVR, malus and clawback), to ensure theoverall impact is fair and proportionate to the severity of the outcome. Therefore, given other remuneration adjustments
are likely to be considered first, and as the award of RR is future focused, it is anticipated that RR will be allocated at
maximum value in most years – unless the outcome of the following three assessment steps determines otherwise.
STEP 1

STEP 2

STEP 3

Assess Prudential soundness

Assess risk measures

Apply Board discretion• Nil award if ANZ does
not meet capital ratio
and liquidity prudential
minimums.

• Consideration of any Material
Risk Outcomes from executive
actions or inactions which is
expected to/or has resulted insignificant impacts.

• Board to determine whether any
reduction should be made to LTVR RR
outcome based on consideration of arange of factors, including:• Consideration of any significant
adverse change in APRA’s Active
Supervision level.
• Consideration of Risk Culture(additional measure for pre vest)that examines whether or not
ANZ has maintained (or madeprogress towards) a soundrisk culture, considering both
executive actions or inactions.

– the outcomes from steps 1 and 2;– the impact, if any, of the issue/s on ANZ’sreputation/standing in the market;– whether the issue was specific to
ANZ, the banking industry or thebroader market;– any impacts already applied (e.g., redownward adjustment mechanisms, pregrant assessment impact to LTVR RR);

– whether any impact should be madeon an individual or collective basis.

The assessments are not intended to be formulaic given the circumstances requiring the application of Board
discretion will typically be different or unique, however a Board decision making framework is in place to guidethe Board in applying discretion.

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Element

Performance condition detail

Material risk
outcomes process

The consideration of material risk outcomes is a key process that forms part of our broader Accountability andConsequence Framework (A&CF) (see section 6), and is a comprehensive bottom-up process designed to ensurethat all relevant events are surfaced and considered appropriately. Key steps include:• Risk, conduct and audit events are reported in ANZ’s Compliance & Operational Risk System.
• Divisional Accountability Groups review serious audit events, and conduct themes and trends, and provide
recommendations regarding accountability and consequences.
• Enterprise Accountability Group (EAG) reviews recommendations of the Divisional Accountability Groups andmake final determination.
• HR Committee reviews most serious risk, conduct and audit events (as part of independent report from CRO)and determines impacts at the Group, Division and individual level for the CEO and ExCo.

5.2.5 LTVR PERFORMANCE RIGHTS – CEO AND DISCLOSED EXECUTIVES EXCLUDING THE CRO
Element

Performance condition detail

Performancerights hurdles

The PR have TSR performance hurdles reflecting the importance of focusing on achieving longer term strategic
objectives and aligning executives’ and shareholders’ interests. We will apply two TSR performance hurdles for the2023 grants of PR:• 75% will be measured against a relative TSR hurdle, tranche 1.
• 25% will be measured against an absolute TSR hurdle, tranche 2.
TSR represents the change in value of a share plus the value of reinvested dividends paid. We regard it as the mostappropriate long-term measure – it focuses on the delivery of shareholder value and is a well understood and tested
mechanism to measure performance. The combination of relative and absolute TSR hurdles provides balance tothe plan by:• Relative: rewarding executives for performance that exceeds that of comparator companies; and• Absolute: ensuring there is a continued focus on providing positive growth – even when the market is declining.
The two hurdles measure separate aspects of performance:• the relative TSR hurdle measures our TSR compared to that of the Select Financial Services (SFS) comparatorgroup, made up of core local and global competitors. This comparator group is chosen to broadly reflect thegeographies and business segments in which ANZ competes for revenue; and• the absolute CAGR TSR hurdle provides executives with a more direct line of sight to the level of shareholder
return to be achieved. It also provides a tighter correlation between the executives’ rewards and the shareholders’financial outcomes.
We will measure ANZ’s TSR against each hurdle at the end of the four-year performance period to determine
whether each tranche of PR becomes exercisable. We measure each tranche independently from the other –for example one tranche may vest fully or partially but the other tranche may not vest.

Relative TSR
hurdle for PR

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

is less than the 50th percentile

is nilreaches at least the 50th percentile, but is lessthan the 75th percentile

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

reaches or exceeds the 75th percentile

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Element

Performance condition detailAbsolute TSR
hurdle for PR

The absolute CAGR TSR hurdle is an internal hurdle as to whether ANZ achieves or exceeds a threshold level ofgrowth the Board sets at the start of the performance period. The Board reviews and approves the absolute TSR
targets each year for the PR award. When reviewing the targets, the Board references ANZ’s assessed Cost of Capital.
The Cost of Capital is determined using methodologies including the Capital Asset Pricing Model (CAPM). The Costof Capital is regularly reviewed and updated to reflect current market conditions. Due to the prospective nature of
the 2023 PR and given the increased volatility in the 10-year bond rate, the Board determined it was appropriate touse the 2H average Cost of Capital as the CAGR TSR target for the 2023 PR.

Calculating
TSR performance

If the absolute CAGR of our TSR

then the percentage of PR that vest

is less than 9.125%

is nilis 9.125%is 50%

reaches at least 9.125%, but is less than 13.688%

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

reaches or exceeds 13.688%

is 100%

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

5.3 Downward adjustment – Board discretion
The Board can exercise its discretion to apply a number of downward adjustment options as part of consequence management (inaccordance with applicable law and any terms and conditions provided). The Board may choose to exercise the following options or a
combination of these at any time, but will always consider their use if any of the circumstances specified by Prudential Standard CPS 511
Remuneration occur. The downward adjustment options specified in #1 to #3 below are applicable to all employees, while clawback (#4) in
2022 is currently limited to select employees (primarily the CEO, Disclosed Executives and some senior employees in jurisdictions where
clawback regulations apply):
1. In year adjustment, the most common type of downward adjustment, which reduces the amount of variable remuneration an employee
may have otherwise been awarded for that year.
2. Further deferral/freezing delays the decision to pay/allocate variable remuneration, or further defers the vesting of deferred remuneration
or freezes vested/unexercised shares and rights. This would typically only be considered where an investigation is pending/underway.
3. Malus is an adjustment to reduce the value of all or part of deferred remuneration before it has vested. Malus is used in cases of more
serious performance or behaviour issues. Any and all variable remuneration we award or grant to an employee is subject to ANZ’s on-going
and absolute discretion to apply malus and adjust variable remuneration downward (including to zero) at any time before the relevant
variable remuneration vests.
4. Clawback is the recovery of variable remuneration that has already vested or been paid. This would typically only be considered if theother types of downward adjustment/other consequences are considered inadequate given the severity of the situation.
Before any scheduled vesting of deferred remuneration, the Board (for the CEO, Disclosed Executives and other specified roles) and/or
the EAG (for other employees) considers whether any further deferral, malus, or clawback should be applied. See section 6 for details.

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6. Accountability and Consequence Framework
Throughout 2022 we continued tostrengthen and evolve ANZ’s Accountability
and Consequence Framework (A&CF). The
Enterprise Accountability Group (EAG) is
the primary governance mechanism forthe operation of the A&CF.

6.1 Role of the EAG
The EAG is chaired by the CEO andmembers include the CRO, CFO and GE T&C.
It operates under the delegated authorityof the HR Committee and is responsible for:• supporting the Board in monitoring
the implementation and ongoing
effectiveness of ANZ’s A&CF;• reviewing the most material risk, conduct
and audit events, accountability andthe application of consequences, whereappropriate;• providing guidance to the Divisions andconsidering initiatives across the Divisions
to strengthen risk behaviours;• acknowledging material positive risk
events (new in 2022) and recognising riskrole models, whose achievements are
profiled across the organisation; and• approving the release or applicationof downward adjustment for deferredvariable remuneration (noting that for
the CEO and Disclosed Executives thisis approved by the Board).

6.2 Material positive risk events
In 2022, the EAG broadened its scope toinclude the review of material positive
risk decisions and events – times when
our proactive approach to identifying andmitigating risk have had a material positive
outcome. Reviewing these examples
provides an opportunity to acknowledge
the importance of these events and sharelearnings across the enterprise.

6.3 Risk role models
In 2022, 59 individuals were recognised by
the EAG for role modelling outstanding
risk behaviours through their efforts tomanage and mitigate the organisation’srisks and contribute to our strong risk
culture. The recognition provided included
a personalised e-mail from the CEO, andhaving their achievement profiled on
our intranet and in internal newsletters.

6.4 Implementation of Prudential
Standard CPS 511 Remuneration
As part of the implementation of
APRA’s new Prudential Standard CPS
511 Remuneration, we conducted acomprehensive review of our A&CF andrelated processes to ensure alignment with
the new Standard. Whilst it was assessedthat the enterprise already complies withmost of the new requirements, we havetaken the opportunity to enhance ourexisting A&CF and processes.
We introduced clawback provisions for the
CEO and our Disclosed Executives effective
2022, in addition to existing adjustment
tools such as in year adjustment, further
deferral and malus, which continue to apply.
Other enhancements included further
raising employee awareness with respect toaccountability and consequences throughmore explicit references to the A&CF
(including remuneration consequences)in employee training and communications,and simplification of our performanceand remuneration policy documents.

6.5 Consideration ofconsequences for material risk,
audit and conduct eventsThe EAG has processes in place toensure that we mitigate the risk of
conflicts of interest in reviewing eventsand determining accountability andconsequences. For example, when
undertaking accountability reviews, arecommendation regarding the review
leader and scope must be sent to the
CRO or (in the case of an event involving
Group Risk) the CEO, for review andapproval to ensure the individual iscapable of undertaking an impartial
and unbiased review.
Considerations regarding accountability
and consequences for our most senior
executives are considered and determinedby the HR Committee and Board.
Reports on the most material risk, audit
and conduct issues were presented to
the HR, Risk and Audit Committees at aconcurrent meeting. This information was
taken into consideration by the Board when
considering the performance of the Groupand the 2022 ANZIP variable remuneration
pool for all employees and determining theperformance and remuneration outcomesof the CEO and Disclosed Executives.
The HR Committee and Board consider
accountability and consequences for the
CEO and Disclosed Executives, including theapplication of malus to previously deferredremuneration. No malus was applied to thepreviously deferred remuneration of the
CEO and Disclosed Executives during 2022.
When determining consequences,consideration is given to the level ofaccountability, and the severity of the issue,
including customer impacts. Consequences
may include, for example, one or more of
the following: counselling, formal warnings,
impacts to in year performance andremuneration outcomes or application ofmalus to previously deferred remuneration
and ultimately termination of employment
or clawback for the most serious issues.

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6.6 Evolving the A&CF

6.8 Application of consequences

Our ongoing focus on accountability,
consequences and driving a strong risk
culture supports our customer commitmentthat when things go wrong, we fix themquickly and hold executives, current(and former where we can), to accountwhere appropriate. We are also focusedon ensuring that we learn from the causeof the event, mitigate the risk of future
recurrences and continuously seek tostrengthen our risk culture. We review
the effectiveness of the A&CF every year
and implement enhancements to further
strengthen the A&CF based on regulatory
and internal stakeholder input.

In 2022, there were 1,133 employee
relations cases involving alleged breachesof our Code of Conduct, with 518 resulting
in a formal consequence or the employee
leaving ANZ, down from 573 in 2021.
Breaches ranged from compliance/
procedure breaches (23%), through togeneral unacceptable behaviour (36%),
email/systems misuse (17%), attendanceissues (14%), fraud/theft (4%), conflict ofinterest (2%) and breaches of our Equal
Opportunity, Bullying and Harassment
Policy (3%). Outcomes following
investigations of breaches this year included
95 terminations, 322 warnings and 101
employees leaving ANZ.2

6.7 Speak up culture
We continue to raise employee awarenessof, and promote the various ways
employees can speak up and raise issues
and ideas for improvement including
through initiatives such as:• Whistleblower awareness training sessions;• digital communications designed to build
confidence and trust in the Whistleblower
Program and process; andthrough monitoring responses in our
employee engagement surveys.
In addition, key risk and speak-up
scores, including ‘Leaders demonstrateaccountability for risk’ (86%), ‘I can raiseissues without fear of reprisals’ (80%) and‘When I speak up, my ideas, opinions andconcerns are heard’ (83%) remained strong
and consistent with 2021 and 2020 results.1

In relation to the application ofconsequences to our senior leadership
population (senior executives, executives
and senior managers), 21 current andformer employees (16 in 2021) had aconsequence applied as a result of theapplication of our Code of Conduct Policy
and/or findings of accountability for a
relevant event. Consequences included
warnings, impacts on performance andremuneration outcomes and, for former
employees, malus of previously deferredremuneration where relevant.
All employees and contractors acrossthe enterprise are required to complete
mandatory learning modules. Permanent
employees who fail to complete theirmandatory learning requirements within
30 days of the due date are (in the absenceof genuinely exceptional circumstances)ineligible for any FR or variable remunerationas part of our annual Performance andRemuneration Review. In 2022, themandatory learning course compliance
rate across the enterprise was 99.9%.

1. Results reported are taken from the Q2 and/or Q4 employee engagement surveys. 2. Employees are listed in all categories which are relevant, meaning one employee may be listed
in multiple categories.

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7. Non-Executive Director (NED) remuneration
7.1 Remuneration structure
NEDs receive a fee for being a Director of the Board, and additional fees for either chairing, or being a member of a Board Committee.
The Chairman of the Board does not receive additional fees for serving on a Board Committee.
The HR Committee and Board reviewed NED fees for 2022 and determined that the NED member fee and Committee fees for the Audit
Committee chair and members would remain unchanged (noting that the Chairman, NED and Committee fees have remained unchanged
since 2016 with the exception of the Digital Business & Technology Committee Chair fee which has remained unchanged since 2020). From
1 April 2022 fees increased for the Chairman, and for the chairs and members of the Risk Committee, HR Committee, Digital Business &Technology Committee, and Ethics, Environment, Social & Governance Committee.
In setting Board and Committee fees, the Board considers: general industry practice, ASX Corporate Governance Principles andRecommendations, the responsibilities and risks attached to the NED role, the time commitment expected of NEDs on Group andCompany matters, and fees paid to NEDs of comparable companies.
ANZ compares NED fees to a comparator group of Australian listed companies with a similar market capitalisation, with particular focus on
the major financial services institutions. This is considered an appropriate group, given similarity in size and complexity, nature of work andtime commitment by NEDs.
To maintain NED independence and impartiality:• NED fees are not linked to the performance of the Group; and• NEDs are not eligible to participate in any of the Group’s variable remuneration arrangements.
The current aggregate fee pool for NEDs of $4m was approved by shareholders at the 2012 AGM. The annual total of NEDs’ fees, including
superannuation contributions, is within this agreed limit.
This table shows the NED fee policy structure for 2022.
2022 NED fee policy structure
1H22

2H22

Chair fee

Member fee

Chair fee

Member fee

Board1,2$825,000$240,000$850,000$240,000

Audit Committee$65,000$32,500$65,000$32,500

Risk Committee$62,000$31,000$65,000$32,500

HR Committee$57,000$29,000$65,000$32,500

Digital Business & Technology Committee$45,000$15,000$55,000$27,500

Ethics, Environment, Social & Governance Committee$35,000$15,000$55,000$27,500

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

NED shareholding guidelines
The HR Committee reviewed the shareholding guideline for the Chairman and determined that from 1 October 2021 it be increased from200% of the NED member fee to 100% of the Chairman fee (i.e., from $480,000 to $850,000).
We expect our NEDs to hold ANZ shares. NEDs are required:• to accumulate shares – over a five-year period from their appointment to the value of:– 100% of the NED member fee for Directors;– 100% of the Chairman fee for the Chairman; and• to maintain this shareholding while they are a Director of ANZ.
Based on the ANZ share price as at 30 September 2022, all NEDs but one who have served five years met the holding guideline. The value ofthe ANZ securities held by one NED who has served for more than 5 years as at 30 September dropped slightly below the guideline due tofluctuations in the ANZ share price.

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7.2 2022 statutory remuneration – NEDS
The following table outlines the statutory remuneration of NEDs disclosed in accordance with Australian Accounting Standards.
In addition to the fee shown below, Sir John Key received NZD 422,050 in 2022 and NZD 391,000 in 2021 for his role as Chairman of ANZ
Bank New Zealand Limited.
2022 statutory remuneration – NEDS
Short-term NED benefits

Post-employment

Financial
year

Fees1
$

Non monetary
benefits2$

Super
contributions1$

Total
remuneration3$

P O’Sullivan

2022

813,501

6,128

23,999843,6282021

764,033

19,931

22,163806,127

I Atlas2022

330,751–

23,999354,7502021

322,337–

22,163

344,500

2022

318,001–

23,999342,000

2021

306,837–

22,163

329,000

J Key

2022

290,251–

23,999314,2502021

278,837–

22,163301,000

G Liebelt

2022

360,427–

6,323

366,7502021

341,337–

22,163

363,500

2022

301,501–

23,999325,500

2021

296,337–

22,163

318,500

C O’Reilly4

2022

302,863–

22,579325,442

J Smith5

2022

36,003–

3,780

39,7832022

76,372

4,944–

81,3162021

365,000––

365,000

2022

2,829,670

11,072

152,677

2,993,419

2021

2,674,718

19,931

132,9782,827,627

Current Non-Executive Directors

J Halton

J Macfarlane

Former Non-Executive Directors
P Dwyer6
Total of all Non-Executive Directors

1. Year-on-year differences in fees relate to changes to the NED fee and also to the superannuation Maximum Contribution Base. From 1 October 2021 to 30 June 2022, G Liebelt, and from
1 October 2020 to the date of retirement P Dwyer, elected to receive all payments in fees and therefore did not receive superannuation contributions during this period. 2. Non monetary benefits
generally consist of company-funded benefits (and the associated Fringe Benefits Tax) such as car parking and gifts provided upon retirement. 3. Long-term benefits and share-based payments
do not apply for the NEDs. 4. C O’Reilly’s 2022 remuneration reflects a partial service year as she commenced as a NED on 1 November 2021. 5. J Smith’s 2022 remuneration reflects a partial
service year as he commenced as a NED on 1 August 2022. 6. P Dwyer's 2022 remuneration reflects a partial service year as she retired as a NED on 16 December 2021.

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ANZ 2022 Annual Report / Remuneration report

8. Remuneration governance
8.1 The Human Resources (HR)Committee
8.1.1 ROLE OF THE HR COMMITTEE
The HR Committee supports the Boardon remuneration and other HR matters.
It reviews the remuneration policies andpractices of the Group, and monitors market
practice and regulatory and compliancerequirements in Australia and overseas.
During the year the HR Committee met
on seven occasions1 and reviewed andapproved, or made recommendations to
the Board on matters including:• remuneration for the CEO and other key
executives (broader than those disclosed
in the Remuneration Report) covered by
the ANZBGL Remuneration Policy, andfees for the NEDs;• matters related to the implementationof APRA’s Prudential Standard CPS 511
Remuneration, and updates on the BEAR,
and Treasury’s Financial Accountability
Regime (FAR);• changes to the executive remuneration
structure in light of CPS 511
Remuneration1;• the ANZ Group Performance
Framework (annual objectives setting
and assessment) and annual variable
remuneration spend;• performance and reward outcomesfor key senior executives, including theconsideration of material events thathave either occurred or came to lightin the year;• the release, further deferral or applicationof malus of deferred remuneration;• key senior executive appointments
and terminations;• the effectiveness of the ANZBGLRemuneration Policy and the
Accountability & Consequence
Framework;• ANZ’s response to the industry-wide
Retail Remuneration Review by Stephen
Sedgwick AO;• building capabilities required to deliveron our strategy;• succession plans for key senior
executives; and• culture, diversity and inclusion, employee
engagement, and how we work in a post
COVID environment.

Whilst we completed our implementationof the recommendations from Stephen
Sedgwick AO’s Retail Remuneration
Review in 2021 (noting the industry
wide recommendations were ongoingat the time), we continue to review ourprocesses to ensure ongoing adherence
to the Sedgwick recommendations, with
updates provided to the HR Committee.
This review was focused on strengthening
the alignment of retail bank incentives, sales
practices and good customer outcomes.

More details about the role of the HR
Committee, including its Charter, can befound on our website. Go to anz.com >Our company > Strong governanceframework > ANZ Human Resources
Committee Charter.
8.1.2 LINK BETWEENREMUNERATION AND RISKThe HR Committee has a strong focus
on the relationship between businessperformance, risk management andremuneration, aligned with our businessstrategy. The chairs of the Risk andAudit Committees are members of the
HR Committee and the full Board is inattendance for specific HR Committee
meetings. A concurrent meeting of theHR, Risk and Audit Committees was held
to review:• material risk, conduct and audit
events that either occurred or cameto light in 2022;• 2022 performance and variable
remuneration recommendations at
both the Group, CEO and Disclosed
Executive level.
To further reflect the importance of thelink between remuneration and risk:• the Board had two NEDs (in addition to
the Chairman) in 2022 who served on
both the HR Committee and the Risk
Committee;• the HR Committee has free andunfettered access to risk and financial
control personnel (the CRO and CFO
attend HR Committee meetings for
specific agenda items);• the CRO (together with GE T&C and GGMIA) provides an independent report to

the HR Committee on the most material
risk, conduct and audit events (asrelevant) to help inform considerationsof performance and remuneration, andaccountability and consequences at theGroup, Divisional and individual level;• the CRO also provides an independent
report to assist the Board in theirassessment of performance andremuneration outcomes for the
CEO and Disclosed Executives;• the chairs of the Risk and Audit
Committees are asked to provide input
to ensure appropriate consideration of
all relevant risk and internal audit issues;• the ANZ Group Performance Frameworkand Divisional Performance Frameworks
include Risk as a key element acting as amodifier, and it forms an integral part ofeach framework’s assessment and directly
impacts the overall outcomes; and• the LTVR RR pre grant and pre vest
assessments undertaken by the Board
are primarily based on non-financial
risk outcomes.
8.1.3 CONFLICT OF INTEREST
To help mitigate potential conflictsof interest:• management are not in attendance
when their own performance or
remuneration is being discussed
by the HR Committee or Board;• the CEO’s STVR is funded and determined
separately from the ANZIP variable
remuneration pool;• the CRO’s remuneration arrangements
differ to other Disclosed Executives topreserve the independence of the role;• the EAG also has processes in place tohelp mitigate conflicts of interest as
outlined in section 6; and• the HR Committee seeks input froma number of sources to inform theirconsideration of performance andremuneration outcomes for the CEO
and Disclosed Executives including:– independent reports from Risk, Finance,
Talent and Culture, and Internal Audit;– material risk, conduct and audit event
data provided by the CRO;– input from both the Audit Committee
and the Risk Committee of the Board.

1. Subsets of the HR Committee also met on a number of occasions during the year to discuss regulatory developments, the executive remuneration structure and 2022 outcomes.

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8.1.4 EXTERNAL ADVISORSPROVIDED INFORMATION BUTNOT RECOMMENDATIONSThe HR Committee can engage
independent external advisors as needed.
Throughout the year, the HR Committee
and management received informationfrom the following external providers: Aon,
Ashurst, EY, Mercer Consulting (Australia)
Pty Ltd and PricewaterhouseCoopers. This
information related to market data, market
practices, analysis and modelling, legislativerequirements and the interpretation of
governance and regulatory requirements.
During the year, ANZ did not receive
any remuneration recommendations
from external consultants about the
remuneration of KMP.
ANZ employs in-house remuneration
professionals who provide recommendations
to the HR Committee and the Board. The
Board made its decisions independently,

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

using the information provided and withcareful regard to ANZ’s strategic objectives,
purpose and values, risk appetite and the
ANZBGL Remuneration Policy and Principles.

8.2 Internal governance8.2.1 HEDGING PROHIBITION
All deferred equity must remain at risk until
it has fully vested. Accordingly, executives
and their associated persons must not enter
into any schemes that specifically protect
the unvested value of equity allocated.
If they do so, then they would forfeit therelevant equity.
8.2.2 CEO AND DISCLOSEDEXECUTIVES’ SHAREHOLDINGGUIDELINES
We expect the CEO and each Disclosed
Executive to, over a five-year period:95• maintain this shareholding level
while they are an executive of ANZ.
Executives are permitted to sell ANZ
securities to meet taxation obligations on
employee equity even if below the 200%
guideline. However, tax obligations for the
purpose of these guidelines is limited tothat arising from the initial taxing point
event (i.e., when the deferred shares vestor rights are exercised).
Shareholdings include all vested andunvested equity (excluding PR). Based onequity holdings as at 30 September 2022,
and the STVR deferred shares to be granted
on 22 November 2022 as a result of the2022 Performance and Remuneration
Review outcomes, the CEO and all Disclosed
Executives meet or, if less than five years’
tenure, are on track to meet their minimum
shareholding guidelines requirements.

• accumulate ANZ shares to the valueof 200% of their FR; and8.2.3 CEO AND DISCLOSED EXECUTIVES’ CONTRACT TERMS AND EQUITY TREATMENT
The details of the contract terms and also the equity treatment on termination (in accordance with the Conditions of Grant) relating to the
CEO and Disclosed Executives are below. Although they are similar, they vary in some cases to suit different circumstances.
Type of contract

Permanent ongoing employment contract.

Notice on resignation• 12 months by CEO;• 6 months by Disclosed Executives.1

Notice on termination
by ANZ2• 12 months by ANZ for CEO and Disclosed Executives.3
However, ANZ may immediately terminate an individual’s employment at any time in the case of serious
misconduct. In that case, the individual will be entitled only to payment of FR up to the date of theirtermination and their statutory entitlements.

How unvested equity istreated on leaving ANZ

Executives who resign or are terminated will forfeit all their unvested deferred equity – unless the Board
determines otherwise.
If an executive is terminated due to redundancy or they are classified as a ‘good leaver’, unless the Board
determines otherwise, then:• their STVR (deferred shares/share rights) remain on foot and are released at the original vesting date;• their LTVR (RR/PR) (for grants awarded from 31 December 2020) remain on foot and are released at theoriginal vesting date4 (to the extent that the performance hurdles are met); and• their PR5 (for grants awarded pre 31 December 2020) are prorated for service to the full notice termination
date and released at the original vesting date (to the extent that the performance hurdles are met).
On an executive’s death or total and permanent disablement, their deferred equity vests.
Unvested equity remains subject to malus post termination.

Change of control(applies to the CEO only)

If a change of control or other similar event occurs, then we will test the performance conditions applying
to the CEO’s PR. They will vest to the extent that the performance conditions are satisfied.
A transitional agreement between ANZBGL and the CEO has been implemented that documents that if
the proposed change in legal structure proceeds (to create distinct banking and non-banking groups,
see ‘Note 35 Pending Organisational Changes Impacting Future Reporting Periods’ of the Annual Report),
then it will not give rise to a ‘Change of Control’ under the conditions of grant relating to unvested variable
remuneration equity awards.

1. 3 months by the former acting CFO. 2. For M Carnegie, K Corbally, F Faruqui, G Florian, K van der Merwe, M Whelan and M Hand, their contracts state that in particular circumstances they may
be eligible for a retrenchment benefit in accordance with the relevant ANZ policy, as varied from time to time, and M Hand was also eligible to receive a Retirement Allowance on retirement,
retrenchment, death, or resignation for illness, incapacity or domestic reasons (see footnote 5 of section 9.1). For A Watson, notice on retrenchment is 6 weeks and compensation on retrenchment
is calculated on a scale up to a maximum of 79 weeks after 25 years’ service. 3. 6 months by ANZ for the former acting CFO. 4. This approach is more aligned to industry practice. 5. Or deferredshare rights granted to the CRO instead of PR.

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ANZ 2022 Annual Report / Remuneration report

9. Other information
9.1 2022 statutory remuneration – CEO and Disclosed Executives
The following table outlines the statutory remuneration disclosed in accordance with Australian Accounting Standards. While it shows the
FR awarded (cash and superannuation contributions) and also the cash component of the 2022 variable remuneration award, it does notshow the actual variable remuneration awarded or received in 2022 (see sections 4.2 and 4.1), but instead shows the amortised accounting
value for this financial year of deferred remuneration (including prior year awards).
2022 statutory remuneration – CEO and Disclosed Executives
Short–term employee benefits

Post–employment

Total cash
incentive3$

Retirement
Super benefit accrued
during year5
contributions4$$

Financial year

Cash salary1$

Non monetary
benefits2$2022

2,476,001

15,384930,000

23,999–2021

2,478,132

15,0251,000,000

21,868–2022

1,176,001

31,041

460,000

24,499–2021

1,178,047

22,621

569,250

22,453–2022

1,176,001

9,884

442,500

23,999–2021

1,078,030

9,525

613,800

21,970–F Faruqui92022

1,159,194

174,222579,575

4,806–

G Florian2022

1,072,169

18,569442,500

23,999–2021

1,062,530

21,431

676,500

21,970–2022

976,001

16,034400,000

24,499–2021

885,012

15,620594,000

22,488–2022

1,019,021

22,049422,742

70,686–2021

1,040,213

9,786

687,167

56,131–2022

1,376,001

9,884

535,000

23,999–2021

1,254,082

12,275810,150

21,918–2022

28,785

–

–

4,215

–

2021

689,935–

462,000

14,065–2022

480,216

4,053–

11,784

4,443

2021

1,178,047

9,525

544,500

21,953

5,218

CEO and Current Disclosed Executives
S Elliott
M Carnegie
K Corbally

K van der Merwe
A Watson10

M Whelan
Former Disclosed Executives
S Buggle11
M Hand12

1. Cash salary includes any adjustments required to reflect the use of ANZ's Lifestyle Leave Policy for the period in the KMP role. 2. Non monetary benefits generally consist of company-funded
benefits (and the associated Fringe Benefits Tax) such as car parking, taxation services and costs met by the Company in relation to relocation. 3. The total cash incentive relates to the cash
component only. The relevant amortisation of the STVR deferred components is included in share-based payments and has been amortised over the vesting period. The total STVR was approved by
the ANZBGL Board on 19 October 2022, and in addition for A Watson by the ANZ NZ Board on 18 October 2022. 100% of the cash component of the VR/STVR awarded for the 2021 and 2022 years
vested to the executive in the applicable financial year. 4. For Australian based executives, the 2021 and 2022 superannuation contributions reflect the Superannuation Guarantee Contribution basedon the Maximum Contribution Base. F Faruqui's 2022 amount reflects a part year superannuation contribution. A Watson participates in KiwiSaver where ANZ provides an employer superannuation
contribution matching member contributions up to 4% of total gross pay. KiwiSaver employer superannuation contributions are also contributed on top of cash STVR at the time of payment.
5. Accrual relates to Retirement Allowance. As a result of being employed with ANZ before November 1992, M Hand was eligible to receive a Retirement Allowance on retirement, retrenchment,
death, or resignation for illness, incapacity or domestic reasons. The Retirement Allowance is calculated as three months of preserved notional salary (which is 65% of fixed remuneration) plus anadditional 3% of notional salary for each year of full-time service above 10 years less the total accrual value of long service leave (including taken and untaken). 6. For Australian based executives,long service leave accrued takes into consideration the impact of changes to the Superannuation Guarantee percentage. Long service leave accrued during the year increased year-on-year for
K Corbally as a result of his 2022 fixed remuneration increase, and decreased year-on-year for G Florian, K van der Merwe and M Whelan as a result of their 2021 fixed remuneration increases.

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Remuneration
reportLong–term employee
benefits

Directors’
reportFinancialreportShareholder
information

97

Share–based payments7
Total amortisation value of
Variable
remuneration

Other equity
allocations8Long service leaveaccrued during
the year6$

Deferred shares$

Deferredshare rights$

Performancerights$Deferred shares$

Termination
benefits$

Total
remuneration$

33,306

933,786–

1,076,657––

5,489,133

37,880880,970–

1,039,524––

5,473,399

17,151

522,450–

129,603––2,360,745

18,182534,990–

267,586––

2,613,129

34,577

513,883

238,579–––

2,439,423

16,667472,538

357,462

1,984

–

–

2,571,976

17,524

465,805

178,143

302,636––

2,881,905

15,812

512,134–

171,181––2,256,364

18,058478,255–

312,520––

2,591,264

14,409472,124–

177,072––

2,080,139

22,929457,267–

298,076––

2,295,392

4,068

505,698

2,132

119,057

312–

2,165,765

4,130

439,710

22,321200,921564–

2,460,943

17,779666,495–

181,892––

2,811,050

69,359730,123–

355,857––

3,253,764

412

2,600

3,157

71

–

–

39,24052,757112,974

159,61371,423––

1,562,767

5,151

127,875–

64,765––698,287

18,182451,897–266,258––

2,495,580

7. As required by AASB 2 Share-based payments, the amortisation value includes a proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet
fully vested as at the commencement of the financial year. The fair value is determined at grant date and is allocated on a straight-line basis over the relevant vesting period. The amount included
as remuneration neither relates to, nor indicates, the benefit (if any) that the executive may ultimately realise if the equity becomes exercisable. No terms of share-based payments have beenaltered or modified during the financial year. There were no cash settled share-based payments or any other form of share-based payment compensation during the financial year for the CEO or
Disclosed Executives. 8. Other equity allocations relate to shares received in relation to the historical Employee Share Offer. 9. F Farhan's 2022 remuneration reflects a partial service year as hecommenced in a Disclosed Executive role on 11 October 2021. 10. A Watson's fixed remuneration is paid in NZD and converted to AUD. 2021 cash salary, superannuation contribution and total
remuneration restated to include gross value of KiwiSaver employer superannuation contributions relating to fixed remuneration and cash VR, and this represents a total change of AUD 17,622. In
2019 and 2020 A Watson was eligible to receive shares under the historical Employee Share Offer. That offer provided a grant of ANZ shares in each financial year to eligible employees subject toBoard approval. 11. S Buggle's 2022 remuneration reflects a partial service year up to the date he ceased in a Disclosed Executive role on 10 October 2021 (noting his annual fixed remunerationfor 2022 remained unchanged at $1.1m). 12. M Hand's 2022 remuneration reflects a partial service year up to the date he ceased in a Disclosed Executive role on 28 February 2022 (noting hisannual fixed remuneration for 2022 remained unchanged at $1.2m).

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ANZ 2022 Annual Report / Remuneration report

9.2 Equity holdings
For the equity granted to the CEO and Disclosed Executives in November/December 2021, all deferred shares were purchased on the market.
For deferred share rights and PR, which vested to the CEO and Disclosed Executives in November/December 2021, where the rights were notable to be satisfied through the reallocation of previously forfeited shares they were satisfied through the on market purchase of shares.
9.2.1 CEO AND DISCLOSED EXECUTIVES’ EQUITY GRANTED, VESTED, EXERCISED/SOLD AND
LAPSED/FORFEITED
The table below sets out details of deferred shares and rights that we granted to the CEO and Disclosed Executives:• during the 2022 year, relating to 2021 Performance and Remuneration Review outcomes; or• in prior years and that then vested, were exercised/sold or which lapsed/were forfeited during the 2022 year.
Equity granted, vested, exercised/sold and lapsed/forfeited – CEO and Disclosed Executives

Name

Type of equity

Equity fairvalue at
grant
(for 2022
grantsNumberonly)
granted1$

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number%

Value2$

Number%8,529 100

229,122––

Vestedand Unexerexercis- cisable
able as as at 30
Value2 at 30 Sep
Sep
20223 20224$

Exercised/Sold
Value2$ Number%CEO and Current Disclosed Executives
S Elliott

M
Carnegie

K
Corbally

Deferred shares

8,529

22-Nov-17 22-Nov-21––(8,529) 100

232,154––

Deferred shares

8,622

22-Nov-18 22-Nov-21–

8,622 100

231,621–––(8,622) 100

234,686––

Deferred shares

9,003

22-Nov-19 22-Nov-21–

9,003 100

241,856–––(9,003) 100

245,056

–

–

–

–

– (10,843) 100

295,140

–

–

–

–

–

–

14,441

Deferred shares

10,84307-Dec-20 22-Nov-21–

10,843 100

291,285

Deferred shares

14,44126.86 22-Nov-21 22-Nov-22

–

–

–

–

Deferred shares

10,83026.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

10,830

Deferred shares

7,220

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

7,220

Deferred shares

3,610

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

3,610

Performance rights

107,471––– (62,010)

58 1,687,875––

69 1,576,185(25,785)31(713,154) (56,989)

69 1,576,185

–

–

–

(27,591) 100(763,104)

–

–

–

–

–

–

–

19-Dec-17 19-Dec-20 19-Dec-22

–

–

–

Performance rights5

82,77419-Dec-18 19-Dec-21 26-Dec-21

56,989Performance rights

27,591

19-Dec-18 19-Dec-21 26-Dec-21

–

–

–

–

–

–

Performance rights

94,765

11.91 16-Dec-21 16-Dec-25 16-Dec-27

–

–

–

–

–

–

–

–

–

–

94,765

Performance rights

31,5886.30 16-Dec-21 16-Dec-25 16-Dec-27

–

–

–

–

–

–

–

–

–

–

31,588Deferred shares

4,785

4,785 100

128,544

–

–

–

–

–

–

4,785

–

22-Nov-17 22-Nov-21–

Deferred shares

5,202

22-Nov-18 22-Nov-21–

5,202 100

139,746

–

–

–

–

–

–

5,202

–

Deferred shares

5,942

22-Nov-19 22-Nov-21–

5,942 100

159,625

–

–

–

–

–

–

5,942

–

Deferred shares

7,099

07-Dec-20 22-Nov-21–

7,099 100

190,707

–

–

–

–

–

–

7,099

–

Deferred shares

8,220

26.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

8,220

Deferred shares

6,165

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

6,165

Deferred shares

4,110

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

4,110

Deferred shares

2,055

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

2,055

Performance rights

29,58022-Nov-17 22-Nov-20 22-Nov-22

–

–

–

–

–

– (17,067)

58

453,818––

Performance rights

32,16322-Nov-18 22-Nov-21 22-Nov-23

22,144

69

594,874(10,019)31(269,149) (22,144)

69

611,679––

Performance rights

10,72122-Nov-18 22-Nov-21 22-Nov-23

–

–

–

(10,721) 100(288,008)

–

–

–

–

–

Performance rights

31,75911.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

31,759Performance rights

10,5866.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

10,586

Deferred shares

3,007

22-Nov-18 22-Nov-21–

3,007 100

80,780–––(3,007) 100

83,167––

Deferred shares

5,744

22-Nov-19 22-Nov-21–

5,744 100

154,306–––(5,744) 100

158,866

–

–

–

–

–

(5,582) 100

154,385

–

–

–

–

–

–

–

–

6,649

Deferred shares

5,582

07-Dec-20 22-Nov-21–

5,582 100

149,954

Deferred shares

6,649

26.86 22-Nov-21 22-Nov-22

–

–

–

–

Deferred shares

6,647

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

6,647

Deferred shares

4,431

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

4,431

26.86 22-Nov-21 22-Nov-25

–

–

–

Deferred shares

4,431

Deferred share rights

14,54622-Nov-18 22-Nov-21 29-Nov-21

Deferred share rights

22,83021.60 22-Nov-21 22-Nov-25 29-Nov-25

–

–

–

–

–

–

–

–

4,431

14,546 100

390,762––– (14,546) 100

390,762

–

–

–

–

–

–

–

–

–

22,830–––Overview

Name

How wecreate value

Type of equity

Performanceoverview

Equity fairvalue at
grant
(for 2022
grantsNumberonly)
granted1$

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number

99%

Value2$

Number

%

–

–

–

–

Vestedand Unexerexercis- cisable
able as as at 30
Value2 at 30 Sep
Sep
20223 20224$

Exercised/Sold
Value2$ Number%CEO and Current Disclosed Executives
F Faruqui6 Deferred shares

G Florian

K van derMerwe

10,48626.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

10,486

Deferred shares

7,862

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

7,862

Deferred shares

5,241

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

5,241

Deferred shares

2,620

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

2,620

Deferred share rights

10,138

10,138 100

272,346––– (10,138) 100

272,346––

22-Nov-17 22-Nov-21 29-Nov-21

Deferred share rights

8,013

22-Nov-18 22-Nov-21 29-Nov-21

8,013 100

215,260–––(8,013) 100

215,260––

Deferred share rights

11,36322-Nov-19 22-Nov-21 29-Nov-21

11,363 100

305,254––– (11,363) 100

305,254––

Deferred share rights

6,459

07-Dec-20 22-Nov-21 29-Nov-21

6,459 100

173,514–––(6,459) 100

173,514––

Performance rights

28,84522-Nov-17 22-Nov-20 22-Nov-22

–

–

–

–

–

– (28,845) 100

795,107––(13,150)

31

Performance rights

42,21522-Nov-18 22-Nov-21 22-Nov-23

29,065

69

780,799

Performance rights

14,07122-Nov-18 22-Nov-21 22-Nov-23

–

–

–

Performance rights

40,505

11.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

40,505

Performance rights

13,501

6.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

13,501(14,071) 100(353,260) (29,065)

69

801,171––(378,002)

–

–

–

–

–

Deferred shares

2,462

22-Nov-17 22-Nov-20

–

–

–

–

–

–

–

(2,462) 100

55,371––

Deferred shares

2,462

22-Nov-17 22-Nov-21–

2,462 100

66,139–––(2,462) 100

55,371––

Deferred shares

3,251

22-Nov-18 22-Nov-20

–

–

–

–

–

–

–

(3,251) 100

73,116––

Deferred shares

3,251

22-Nov-18 22-Nov-21–

3,251 100

87,335–––(1,642)51

36,929

1,609–

Deferred shares

3,367

22-Nov-19 22-Nov-21–

3,367 100

90,451

–

–

–

–

–

–

3,367

–

Deferred shares

6,442

07-Dec-20 22-Nov-21–

6,442 100

173,057

–

–

–

–

–

–

6,442

–

Deferred shares

9,770

26.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

9,770

Deferred shares

7,326

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

7,326

Deferred shares

4,884

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

4,884

26.86 22-Nov-21 22-Nov-25

Deferred shares

2,442

Performance rights

15,225

–

–

–

–

–

–

–

–

–

–

–

2,442

22-Nov-17 22-Nov-20 22-Nov-22

–

–

–

–

–

–

(8,784)

58

197,555––

Performance rights
Performance rights

20,10222-Nov-18 22-Nov-21 22-Nov-23

13,84069

371,796(6,262)

31(168,222) (13,840)

69

311,266

–

–

6,700

22-Nov-18 22-Nov-21 22-Nov-23

–

–

–

(179,988)

–

–

–

–

(6,700) 100–

Performance rights

37,743

11.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

37,743

Performance rights

12,581

6.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

12,581

Deferred shares

679

–

–

–

–

–

–

(679) 100

19,244––22-Nov-17 22-Nov-18–

Deferred shares

1,477

22-Nov-17 22-Nov-19

–

–

–

–

–

–

–

(1,477) 100

41,860––

Deferred shares

1,477

22-Nov-17 22-Nov-20

–

–

–

–

–

–

–

(1,477) 100

41,860––

Deferred shares

1,477

22-Nov-17 22-Nov-21–

1,477 100

39,678–––(1,477) 100

41,860––

Deferred shares

3,577

22-Nov-18 22-Nov-19

–

–

–

–

–

–

–

(3,053)85

86,525

524–

Deferred shares

3,577

22-Nov-18 22-Nov-21–

3,577 100

96,092

–

–

–

–

–

–

3,577

–

Deferred shares

4,951

22-Nov-19 22-Nov-21–

4,951 100133,003

–

–

–

–

–

–

4,951

–

Deferred shares

5,724

07-Dec-20 22-Nov-21–

5,724 100

153,769

–

–

–

–

–

–

5,724

–

Deferred shares

8,579

26.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

8,579

Deferred shares

6,433

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

6,433

Deferred shares

4,288

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

4,288

Deferred shares

2,144

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

2,144

Performance rights

9,135

22-Nov-17 22-Nov-20 22-Nov-22

–

–

–

–

–

–

(5,270)

58

119,265––

Performance rights

22,11222-Nov-18 22-Nov-21 22-Nov-23

15,224

69

408,976(6,888)31(185,039) (15,224)

69

344,534––

Performance rights

7,370

22-Nov-18 22-Nov-21 22-Nov-23

–

–

–

(7,370) 100(197,987)

–

–

–

–

–

Performance rights

33,14011.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

33,140

Performance rights

11,0466.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

11,046

100

Name

ANZ 2022 Annual Report / Remuneration report

Type of equity

Equity fairvalue at
grant
(for 2022
grantsNumberonly)
granted1$

Lapsed/Forfeited

Vested
First
Grant
date
date exercisable

Dateofexpiry Number%

Value2$

Number%

Vestedand Unexerexercis- cisable
able as as at 30
Value2 at 30 Sep
Sep
20223 20224$

Exercised/Sold
Value2$ Number%CEO and Current Disclosed Executives
A WatsonDeferred shares

3,904

22-Nov-19 22-Nov-20

–

–

–

–

–

–

–

(3,904) 100

107,533––

Deferred shares

3,901

22-Nov-19 22-Nov-21–

3,901 100

104,796–––(3,901) 100

107,451––

Deferred shares

5,806

07-Dec-20 22-Nov-21–

5,806 100

155,972–––(5,806) 100

159,923––

Deferred shares

9,924

26.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

9,924

Deferred shares

7,442

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

7,442

Deferred shares

4,961

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

4,961

Deferred shares

2,480

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

2,480

29

03-Dec-18 03-Dec-21–

29 100

781

–

–

–

–

–

–

29

–

22-Nov-18 22-Nov-21 22-Nov-23

2,817 100

75,676–––(2,817) 100

77,912––

Employee
Share Offer
Deferred share rights

2,817

Performance rights

4,802

22-Nov-18 22-Nov-21 22-Nov-23

3,306

69

88,812(1,496)31(40,188)(3,306)

69

91,436––

Performance rights

38,338

11.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

38,338Performance rights

12,7796.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

12,7799,218 100

247,631–––(9,218) 100

250,823––

M Whelan Deferred shares

9,218

22-Nov-17 22-Nov-21–

Deferred shares

7,072

22-Nov-18 22-Nov-21–

7,072 100

189,982–––(7,072) 100

192,430––

Deferred shares

10,49822-Nov-19 22-Nov-21–

10,498 100

282,017––– (10,498) 100

285,652––

Deferred shares

6,297

07-Dec-20 22-Nov-21–

6,297 100

169,162–––

171,342––

Deferred shares

11,70026.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

11,700

Deferred shares

8,774

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

8,774

(6,297) 100

Deferred shares

5,849

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

5,849

Deferred shares

2,924

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

2,924

(13,620)31(365,886) (30,102)

69

829,142––(391,514)

–

–

–

–

Performance rights

43,72222-Nov-18 22-Nov-21 22-Nov-23

30,102

69

808,657

Performance rights

14,57422-Nov-18 22-Nov-21 22-Nov-23

–

–

–

Performance rights

45,20011.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

45,200

Performance rights

15,0666.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

15,0663,251 100

87,335–––(2,160)66

59,665

1,091–(14,574) 100–

Former Disclosed Executives
S Buggle7
M Hand73,25122-Nov-18 22-Nov-21

Deferred shares

3,565

22-Nov-19 22-Nov-21–

3,565 100

95,770

–

–

–

–

–

–

3,565

–

Deferred shares

8,015

07-Dec-20 22-Nov-21–

8,015 100

215,314

–

–

–

–

–

–

8,015

–

Deferred shares–

Deferred shares

7,864

26.86 22-Nov-21 22-Nov-22

–

–

–

–

–

–

–

–

–

–

–

7,864

Deferred shares

5,897

26.86 22-Nov-21 22-Nov-23

–

–

–

–

–

–

–

–

–

–

–

5,897

Deferred shares

3,931

26.86 22-Nov-21 22-Nov-24

–

–

–

–

–

–

–

–

–

–

–

3,931

Deferred shares

1,965

26.86 22-Nov-21 22-Nov-25

–

–

–

–

–

–

–

–

–

–

–

1,965

Performance rights

20,10222-Nov-18 22-Nov-21 22-Nov-23

13,84069

371,796(6,262)

31(168,222) (13,840)

69

382,300––

Performance rights

6,700

22-Nov-18 22-Nov-21 22-Nov-23

–

–

–

(6,700) 100(179,988)

–

–

–

–

–

Performance rights

30,37911.66 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

30,379Performance rights

10,1266.37 22-Nov-21 22-Nov-25 22-Nov-27

–

–

–

–

–

–

–

–

–

–

10,126

1. For the purpose of the five highest paid executive disclosures, Executives are defined as Disclosed Executives or other members of the ExCo. For the 2022 financial year the five highest paid executives include
five Disclosed Executives. Rights granted to Disclosed Executives as remuneration in 2022 are included in the table. No rights have been granted to the CEO, Disclosed Executives or the five highest paid executives
since the end of 2022 up to the Directors’ Report sign-off date. 2. The point in time value of deferred shares/deferred share rights and/or performance rights is based on the one day VWAP of the Company’s shares
traded on the ASX on the date of vesting, lapsing/forfeiture or exercising/sale/transfer out of trust, multiplied by the number of deferred shares/deferred share rights and/or performance rights. The exercise price forall deferred share rights/performance rights is $0.00. No terms or conditions of grant of the share-based payment transactions have been altered or modified during the reporting period. 3. The number vested andexercisable is the number of shares, options and rights that remain vested at the end of the reporting period. No shares, options and rights were vested and unexercisable.

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportShareholder
information

101

4. Performance rights granted in prior years (by grant date) that remained unexerciseable at 30 September 2022 or date ceased in a Disclosed Executive role include:
S Elliott
M Carnegie
K Corbally
F Faruqui
G Florian
K van der Merwe
A Watson
M Whelan
S Buggle
M Hand

Nov-186,464-

Nov-19168,066
40,816
69,11823,12834,013
72,10824,489

Nov-20159,308
38,37834,04534,82030,95031,38934,04543,330Nov-21
126,353
42,34554,00650,324
44,186
51,11760,26640,505

Performance rights granted to S Elliott in 2022 were approved by shareholders at the 2021 AGM in accordance with ASX Listing Rule 10.14. 5. The vested value for S Elliott’s performance rights
includes the value of 51.6% of performance rights we awarded in December 2018 which vested in December 2021 due to performance hurdles being met and were settled by delivery of shares,
which remain subject to a further one-year restriction period. 6. Equity transactions disclosed from date commenced as a Disclosed Executive. 7. Equity transactions disclosed up to date ceased
in a Disclosed Executive role. There were no disclosable transactions up to the date S Buggle concluded as a Disclosed Executive.

102

ANZ 2022 Annual Report / Remuneration report

9.2.2 NED, CEO AND DISCLOSED EXECUTIVES’ EQUITY HOLDINGSThe table below sets out details of equity held directly, indirectly or beneficially by each NED, the CEO and each Disclosed Executive,
including their related parties.
Equity holdings – NED, CEO and Disclosed Executives

Name

Type of equity

Current Non–Executive Directors
Ordinary shares
P O’Sullivan

I AtlasJ Halton
J Key
G Liebelt

J Macfarlane

Capital notes 2
Capital notes 7
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Capital notes 2
Capital notes 6
Capital notes 7
Ordinary shares
Capital notes 2
Capital notes 3
Capital notes 6
Capital notes 7
Ordinary shares
Ordinary shares

C O’Reilly5
J Smith5
Former Non–Executive Directors
Ordinary shares
P Dwyer6
CEO and Current Disclosed Executives
Deferred shares
S Elliott

M Carnegie

K Corbally

F Faruqui5

G Florian

K van der Merwe

A Watson

M Whelan

Ordinary shares
Vested shares 1yr restriction
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Capital notes 6
Deferred share rights
Deferred shares
Ordinary shares
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Employee Share Offer
Ordinary shares
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights

Former Disclosed Executives
Deferred shares
S Buggle6

M Hand6

Ordinary shares
Capital notes 2
Capital notes 6
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights

Openingbalance at
1 Oct 2021

Granted during
the year as
remuneration1

Received during
the year on
exercise of
options or rights

Resulting fromany otherchanges during
the year2

Closingbalance at
30 Sep 20223, 4

4,078
9,250
–
14,3609,049
3,000
20,315
2,500
2,500
–
17,851
2,000
5,000
2,140
–
6,000
2,605

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

272
(9,250)
9,250
958
604
7,500
1,356
(2,500)
–
2,500
1,191
(2,000)
–
–
2,000
400
174

4,350
–
9,250
15,318
9,653
10,50021,671
–
2,500
2,500
19,042
–
5,000
2,140
2,000
6,400
2,779

17,500–––17,50070,882
290,675–
499,749
92,284
8,670
139,145
38,0191,431
1,400
54,391
1,797
3,890
67,440188,294
42,283
11,977
93,53450,404
1,282
99,71530,76061
23,7472,817
36,19160,09834,387
164,449

36,101––
126,353
20,550–42,345
22,158––22,83026,209––54,00624,422–50,324
21,444–
44,18624,807–––
51,117
29,247–60,266–62,01056,989(118,999)–
39,211(39,211)–
14,546–(14,546)–
93,883(35,973)(57,910)–
22,624(22,624)–
20,494(20,494)––
6,123(2,817)(3,306)–30,102(30,102)(36,997)
42,423–(53,376)–(13,783)(20,740)(14,333)(14,596)
–
–
–
2,607
–
(27,221)(10,100)
2,982(12,962)(8,333)
7,631(14,258)(13,611)–
7,711–(1,496)(33,085)(17,526)(28,194)

69,986395,108
56,989453,727
112,834
34,098
121,539
45,844
1,381
1,400
62,67528,006
100,380
31,467
157,169
56,60537,583
108,272
63,51529,407
109,149
41,956
61
37,581–
82,50656,26046,963
166,419

86,664
21,174490
590
24,624
6,464
33,665
1,235
94,621––––––
19,657–40,505

–
–
–
–
–
–
–
13,840(13,840)

–
–
–
–
–
–
(2,160)(12,964)(12,962)

86,664
21,174490
590
24,624
6,464
51,162
2,111
108,324

1. Details of options/rights granted as remuneration during 2022 are provided in the previous table. 2. Shares resulting from any other changes during the year include the net result of any sharespurchased (including under the ANZ Share Purchase Plan), forfeited, sold or acquired under the Dividend Reinvestment Plan. 3. The following shares (included in the holdings above) were held
on behalf of the NEDs, CEO and Disclosed Executives (i.e., indirect beneficially held shares) as at 30 September 2022 (or the date ceased as a KMP): P O’Sullivan – 0, I Atlas – 15,318, J Halton – 0,
J Key – 10,500, G Liebelt – 8,436, J Macfarlane – 28,182, C O’Reilly – 0, J Smith – 0, P Dwyer – 17,500, S Elliott – 518,500, M Carnegie – 112,834, K Corbally – 47,244, F Faruqui – 28,006, G Florian– 66,504, K van der Merwe – 63,515, A Watson – 42,017, M Whelan – 100,073, S Buggle – 87,744 and M Hand – 51,162. 4. Zero rights were vested and exercisable, and zero options/rights werevested and unexerciseable as at 30 September 2022. There was no change in the balance as at the Directors’ Report sign-off date. 5. Commencing balance is based on holdings as at the date ofcommencement as a KMP. 6. Concluding balance is based on holdings as at the date ceased as a KMP.

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103

9.3 Loans
9.3.1 OVERVIEWWhen we lend to NEDs, the CEO or Disclosed Executives, we do so in the ordinary course of business and on normal commercial terms andconditions that are no more favourable than those given to other employees or customers – this includes the term of the loan, the security
required and the interest rate. Details of the terms and conditions of lending products can be found on anz.com. No amounts have been
written off during the period, or individual assessed allowance for expected credit losses raised in respect of these balances.
Total loans to NEDs, the CEO and Disclosed Executives, including their related parties at 30 September 2022 (including those with balancesless than $100,000) was $24,339,919 (2021: $25,444,692) with interest paid of $790,118 (2021: $776,791) during the period.
9.3.2 NED, CEO AND DISCLOSED EXECUTIVES’ LOAN TRANSACTIONS
The table below sets out details of loans outstanding to NEDs, the CEO and Disclosed Executives including their related parties, if – at any
time during the year – the individual’s aggregate loan balance exceeded $100,000.
Loan transactions – NED, CEO and Disclosed Executives

Name

Opening balance at
1 Oct 20211$

Closing balance at Interest paid and payable
30 Sep 2022
in the reporting period2$$

Highest balance inthe reporting period$

Current Non–Executive Directors
P O’Sullivan

792,259

731,495

65

810,049–

3,703,009

73,835

3,704,351

12,913,111

9,364,205

423,076

14,104,140

S Elliott

2,616,885

2,521,407

54,5792,641,851

G Florian

4,483,293

4,250,856

140,327

8,072,732

K van der Merwe

2,464,654

1,655,942

47,4802,479,909

M Whelan

1,628,540

1,550,938

50,625

1,681,066

504,008

499,193–504,061

25,402,750

24,277,045

789,987

33,998,158

J Key
J Macfarlane
CEO and Current Disclosed Executives

Former Disclosed Executives
S Buggle3
Total

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

9.4 Other transactions
Other transactions with NEDs, the CEO and Disclosed Executives, and their related parties included deposits.
Other transactions – NED, CEO and Disclosed Executives

Total KMP deposits

Opening balance at
1 Oct 20211$

Closing balance at
30 Sep 20222,3$

27,513,114

30,208,600

1. Opening balance is at 1 October 2021 or the date of commencement as a KMP if part way through the year and it has been adjusted to take into account timing variances. 2. Closing balance is
at 30 September 2022 or at the date ceased in a KMP role if part way through the year. 3. Interest received on deposits for 2022 was $140,355 (2021: $88,209).

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

104

ANZ 2022 Annual Report

Directors’ report
The Directors’ Report for the financial
year ended 30 September 2022 hasbeen prepared in accordance with therequirements of the Corporations Act 2001.
The information below forms part of thisDirectors’ Report:

In Australia, ANZ meets the requirementsof the National Greenhouse and Energy
Reporting Act 2007 (Cth), which imposes
reporting obligations where energy
production, usage or greenhouse gas
emissions trigger specified thresholds.

• Principal activities on page 12;

The Group does not believe that its
operations are subject to any other particularand significant environmental regulation
under a law of the Commonwealth ofAustralia or of an Australian State or Territory.
It may become subject to environmental
regulation as a result of its lending activities
in the ordinary course of business and has
developed policies, which are reviewed ona regular basis to help identify and manage
such environmental matters.

• Operating and financial review on
pages 44 to 60;• Dividends on page 58;• Information on the Directors, Company
Secretaries and Directors’ meetings on
pages 26 to 35;• Remuneration report on pages 62 to 103.

Significant changes in stateof affairs
There have been no significant changes
in the Group’s state of affairs.

Events since the end of thefinancial year
There have been no significant events from30 September 2022 to the date of signing
this report.

Participation in political-related
activities
ANZ aims to assist the democratic process
in Australia by attending and participatingin paid events hosted by the major federal
political parties. For the year ended 30
September 2022, ANZ contributed $90,000
to participate in political activities hosted by
the Australian Labor Party and the Liberal
Party of Australia. These activities included
speeches, political functions and policy
dialogue forums. ANZ discloses thesecontributions to the Australian Electoral
Commission (AEC), noting the AEC’s
reporting year is a different period to
ANZ’s financial year.

Environmental regulation
ANZ recognises the expectations of its
stakeholders – customers, shareholders, staff
and the community – to operate in a waythat mitigates its environmental impact.

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

Corporate Governance Statement
ANZ is committed to maintaining a highstandard in its governance framework.
ANZ confirms it has followed the
ASX Corporate Governance Council’s
Corporate Governance Principles andRecommendations (4th edition) during
the 2022 financial year. ANZ’s Corporate
Governance Statement, together with
the ASX Appendix 4G which relates to the
Corporate Governance Statement, can beviewed at anz.com/corporategovernanceand has been lodged with the ASX.

Pillar III information
ANZ provides information required by
APS 330: Public Disclosure in the Regulatory
Disclosures section at anz.com/shareholder/
centre/reporting/regulatory-disclosure/.

External auditor
The Group’s external auditor is KPMG. The
Group appointed Peat, Marwick, Mitchell& Co (predecessor to KPMG) in 1969.
The Board Audit Committee conducts aformal annual performance assessmentof the external auditor, including whether
to commence an external tender for theaudit. After considering relevant factors
including tenure, audit quality, local andinternational capability and experience, andindependence, the Board Audit Committee
resolved to reappoint KPMG for the 30
September 2023 financial year audit.
KPMG regularly rotates Group Lead Audit
Engagement Partner and the Engagement
Quality Control Review Partner withthe most recent rotation being for thefinancial year ended 30 September 2021
and 30 September 2020 respectively.

Non-audit services
The Group’s Stakeholder Engagement Modelfor Relationship with the External Auditor(the Policy), which incorporates requirementsof the Corporations Act 2001 and industry
best practice, prevents the external auditor
from providing services that are perceived
to be in conflict with the role of the external
auditor or breach independence
requirements. This includes consulting
advice and sub-contracting of operational
activities normally undertaken bymanagement, and engagements where theexternal auditor may ultimately be required
to express an opinion on its own work.
Specifically the Policy:• Limits the scope of non-audit services
that may be provided;• Requires that audit, audit-related
and permitted non-audit services be
considered in light of independence
requirements and for any potential
conflicts of interest before they areapproved by the Audit Committee,
or approved by the Chair of the Audit
Committee (or delegate) and notified
to the Audit Committee; and• Requires pre-approval before the external
auditor can commence any engagement
for the Group.

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reportFurther details about the Policy can be foundin the Corporate Governance Statement.
The external auditor has confirmed to the
Audit Committee that it has:
• Implemented procedures to ensure
it complies with independence rules
in applicable jurisdictions; and• Complied with applicable policies
and regulations in those jurisdictions
regarding the provision of non-audit
services, and the Policy.

FinancialreportShareholder
information

services by the external auditor during
the year ended 30 September 2022 iscompatible with the general standardof independence for external auditors
imposed by the Corporations Act 2001
and did not compromise the auditor
independence requirements of the
Corporations Act 2001.

Directors’ and officers’ indemnity
The Company’s Constitution (Rule 11.1)
permits the Company to:

The Audit Committee has reviewed the
non-audit services provided by the external
auditor during the 2022 financial year,
and has confirmed that the provision ofthese services is consistent with the Policy,
compatible with the general standard of
independence for auditors imposed by
the Corporations Act 2001 and did notcompromise the auditor independence
requirements of the Corporations Act 2001.
This has been formally advised by the
Audit Committee to the Board of Directors.
The categories of non-audit services
supplied to the Group during the year
ended 30 September 2022 by the external
auditor, KPMG, or by another person or firm
on KPMG’s behalf, and the amounts paidor payable (including GST) by the Groupare as follows:
Amount paid/payable$’000’s

Non-audit services

Directors’
report2022

2021

Training andrelated services––

Controls related
assessments–

90

Methodology andprocedural reviews

8

101

Total

8

191

Further details on the compensation paid to
KPMG is provided in Note 34 Auditor Fees tothe financial statements including details ofaudit-related services provided during theyear of $7.50 million (2021: $4.43 million).
For the reasons set out above, the Directors
are satisfied that the provision of non-audit• Indemnify any officer or employee of
the Company, or its auditor, against
liabilities (so far as may be permitted
under applicable law) incurred as suchby an officer, employee or auditor,
including liabilities incurred as a resultof appointment or nomination by theCompany as a trustee or as an officer or
employee of another corporation; and• Make payments in respect of legal
costs incurred by an officer, employee
or auditor in defending an action for aliability incurred as such by an officer,
employee or auditor, or in resistingor responding to actions taken by agovernment agency, a duly constituted
Royal Commission or other official
inquiry, a liquidator, administrator, trustee
in bankruptcy or other authorised official.
It is the Company’s policy that its employees
should be protected from any liability they
incur as a result of acting in the course of
their employment, subject to appropriate
conditions.
Under the policy, the Company will
indemnify employees and former employees
against any liability they incur to any third
party as a result of acting in good faith in
the course of their employment with theCompany or a subsidiary of the Company
and this extends to liability incurred as aresult of their appointment/nomination by
or at the request of the Group as an officer
or employee of another corporation or
body or as a trustee.
The indemnity is subject to applicablelaw and certain exceptions. In accordancewith the employee indemnity policy, theCompany has during or since the year ended

105

30 September 2022 paid legal expenses
totalling $328,250.32 incurred by Mr Richard
Moscati in relation to legal proceedingsthat had been brought against him andthe Company by the CommonwealthDirector of Public Prosecutions.
The Company has entered into Indemnity
Deeds with each of its Directors, withcertain secretaries and former Directors of
the Company, and with certain employees
and other individuals who act as directors
or officers of related bodies corporate orof another company, to indemnify themagainst liabilities and legal costs of the kind
mentioned in the Company’s Constitution.
During the financial year, the Company
has paid premiums for insurance for the
benefit of the Directors and employeesof the Company and related bodies
corporate of the Company. In accordancewith common commercial practice, theinsurance prohibits disclosure of the natureof the liability insured against and theamount of the premium.

Key management personnel andemployee share and option plans
The Remuneration Report contains details
of Non-Executive Directors, Chief Executive
Officer and Disclosed Executives’ equity
holdings and options/rights issued during
the 2022 financial year and as at the dateof this report.
Note 31 Employee Share and Option Plans
to the 2022 Financial Report contains detailsof the 2022 financial year and as at the dateof this report:• Options/rights issued over shares granted
to employees;• Shares issued as a result of the exercise of
options/rights granted to employees; and• Other details about share options/rights
issued, including any rights to participate
in any share issues of the Company.
The names of all persons who currently holdoptions/rights are entered in the register
kept by the Company pursuant to section
170 of the Corporations Act 2001. This register
may be inspected free of charge.

106

ANZ 2022 Annual Report

Rounding of amounts
The Company is a company of the kind referred to in Australian Securities and Investments
Commission Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated
24 March 2016 and, in accordance with that Instrument, amounts in the consolidated
financial statements and this Directors’ Report have been rounded to the nearest million
dollars unless specifically stated otherwise.
This report is made in accordance with a resolution of the Board of Directors and is signed
for and on behalf of the Directors.

Paul D O’Sullivan
ChairmanShayne C ElliottManaging Director

26 October 2022

26 October 2022

Lead Auditor’s Independence Declaration
The Lead Auditors Independence Declaration given under Section 307C of the Corporations
Act 2001 is set out below and forms part of the Directors’ Report for the year ended
30 September 2022.
To: the Directors of Australia and New Zealand Banking Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Australia
and New Zealand Banking Group Limited for the financial year ended 30 September 2022,
there have been:• No contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and• No contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

Martin McGrath
Partner
26 October 2022

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliatedwith KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name andlogo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited
by a scheme approved under Professional Standards Legislation.

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FinancialreportFinancial Statements
Income Statements

108

Statements of Comprehensive Income 109

20.	Assets Charged as Security
for Liabilities and CollateralAccepted as Security for Assets

198

21. Offsetting

199

Balance Sheets

110

Cash Flow Statements

111

Non-Financial Assets

Statements of Changes in Equity

112

22.	Goodwill and Other
Intangible Assets

Notes to the Financial Statements

Non-Financial Liabilities

Basis of Preparation

23. Other Provisions

1. About Our Financial Statements

114

Financial Performance

201

205

Equity24. Shareholders’ Equity

207
210

2. Net Interest Income

118

25. Capital Management

3. Non-Interest Income

119

Consolidation and Presentation

4. Operating Expenses

122

26. Controlled Entities

212

5. Income Tax

124

27. Investments in Associates

214

6. Dividends

126

28. Structured Entities

216

7. Earnings per Ordinary Share

128

29. Transfers of Financial Assets

218

8. Segment Reporting

129

Financial Assets and Other Trading Assets

Employee and Related Party Transactions

9. Cash and Cash Equivalents

133

30.	Superannuation and Post
Employment Benefit Obligations

220

10. Trading Assets

134

31. Employee Share and Option Plans

222

11. Derivative Financial Instruments

135

32. Related Party Disclosures226

12. Investment Securities

147

13. Net Loans and Advances

149

14.	Allowance for Expected
Credit Losses

150

Financial Liabilities
15. Deposits and Other Borrowings

161

16. Payables and Other Liabilities

162

17. Debt Issuances

163

Financial Instrument Disclosures
18. Financial Risk Management

169

19.	Fair Value of Financial Assets
and Financial Liabilities

191

Other Disclosures33.	Commitments, Contingent
Liabilities and Contingent Assets

228

34. Auditor Fees

231

35.	Pending Organisational
Changes Impacting Future
Reporting Periods

232

36.	Events Since the Endof the Financial Year232

Directors’ Declaration

233

Independent Auditor’s Report

234

107

108

ANZ 2022 Annual Report / Financial Report

FINANCIAL REPORTINCOME STATEMENTS
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Interest income1

23,60919,52918,40815,347

Interest expense(8,735)(5,368)(7,433)(4,822)

2

14,874

14,161

10,975

10,525

Other operating income

3

4,235

3,325

6,424

4,854

Net income from insurance business

3

140

110

-

-

Share of associates’ profit/(loss)

3

177

(176)

(12)

(1)

19,426

17,42017,387

15,378(9,579)(9,051)(8,123)(7,594)

9,847

8,369

9,264

7,784

For the year ended 30 September

Net interest income

Note

Operating income
Operating expenses

4

Profit before credit impairment and income tax
Credit impairment (charge)/release

14

Profit before income tax
Income tax expense

5

Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year

232

567

265

469

10,079

8,936

9,529

8,253

(2,940)(2,756)(1,933)(1,922)

7,139

6,180

7,596

6,331

(19)

(17)

-

-

7,120

6,163

7,596

6,331

7,119

6,162

7,596

6,331

1

1

-

-

Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests

Consolidated
2022

2021

7

250.0

215.3

DilutedEarnings per ordinary share (cents) fromcontinuing operations2
Basic

7

233.2

203.2

7

250.7

215.9

Diluted

7

233.8

203.7

Dividend per ordinary share (cents)

6

146

142

For the year ended 30 September
Earnings per ordinary share (cents) including
discontinued operations2
Basic

Note

1.

Includes interest income calculated using the effective interest method on financial assets measured at amortised cost or fair value through other comprehensive income of $22,844 million(2021: $19,054 million) in the Group and $17,123 million (2021: $14,363 million) in the Company.

2.

Earnings per share in 2021 has been restated to reflect the bonus element of the share entitlement offer made in 2022 in accordance with AASB 133 Earnings per Share.

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

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109
FINANCIAL REPORTSTATEMENTS OF COMPREHENSIVE INCOME
Consolidated

The Company

For the year ended 30 September

2022
$m

2021
$m

2022
$m

2021
$m

Profit for the year from continuing operations

7,139

6,180

7,596

6,331

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Investment securities - equity securities at FVOCI

(55)

80

(119)

67

Other reserve movements1

127

(41)

132

(95)

(759)

456

139

(14)

(4,180)(1,052)(4,132)(1,003)

1,172

301

1,186

303

(40)

(48)

(3,735)(304)(2,794)

(742)

(19)

(17)

-

-

3,385

5,859

4,802

5,589

3,399

5,858

4,802

5,589

(14)

1

-

-

Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Other reserve movements
Income tax attributable to the above items
Share of associates’ other comprehensive income

2

Other comprehensive income after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Total comprehensive income for the year
Comprising total comprehensive income attributable to:Shareholders of the Company
Non-controlling interests1
1.

The Group includes -$15 million (2021: nil) relating to foreign currency retranslation of the non-controlling interest in ANZ Bank New Zealand Limited.

2.

The Group’s share of associates’ other comprehensive income, that may be reclassified subsequently to profit or loss in the Group, includes:
2022
$m

2021
$m

FVOCI reserve gain/(loss)

(56)

(42)

Defined benefits gain/(loss)

15

(5)

Cash flow hedge reserve gain/(loss)-

1

Foreign currency translation reserve gain/(loss)

1

(2)

(40)

(48)

Total

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

110

ANZ 2022 Annual Report / Financial Report

FINANCIAL REPORT (continued)
BALANCE SHEETS
Consolidated
As at 30 September

The Company

Note

2022
$m

2021
$m

2022
$m

2021
$m

9

168,132

151,260

155,483

141,436

AssetsCash and cash equivalents1
Settlement balances owed to ANZ

4,762

7,530

4,024

7,183

Collateral paid

12,7009,166

11,3688,343

1035,23744,68828,07334,752Derivative financial instruments

11

90,17438,73688,05638,292

Investment securities

12

86,153

83,126

72,39967,940Net loans and advances

13

672,407629,719537,345

488,487

632

671

249

213

-

-

22,86023,530

Trading assets

Regulatory deposits
Due from controlled entities
Shares in controlled entities

26

-

-

17,63015,693

Investments in associates

27

2,181

1,972

53

20

Current tax assets

46

57

43

55

Deferred tax assets

3,384

2,339

2,992

1,887

3,877

4,124

935

1,017

Premises and equipment

2,431

2,734

2,171

2,415

Other assets

3,613

2,735

2,402

1,909

Total assets

1,085,729

978,857

946,083

833,172

Settlement balances owed by ANZ

13,766

17,427

10,224

14,922

Collateral received

16,2305,657

14,425

5,148

Goodwill and other intangible assets

22

Liabilities

Deposits and other borrowings

15797,281743,056

665,607606,723

Derivative financial instruments

11

85,14936,03584,50037,005--25,30523,079Current tax liabilities

829

419

488

193

Deferred tax liabilities

83

70

54

70

9,835

8,647

8,562

7,244

549

602

409

447

1,872

2,214

1,648

1,873

Due to controlled entities

Payables and other liabilities

16

Employee entitlements
Other provisions

23

Debt issuances

17

Total liabilities
Net assets

93,734

101,054

75,82881,0881,019,328

915,181

887,050

777,792

66,401

63,67659,03355,380Shareholders' equity
Ordinary share capital

24

28,79725,98428,72025,907

Reserves

24(2,606)

1,228(2,546)341

Retained earnings
Share capital and reserves attributable to shareholders of theCompany
Non-controlling interests

24

39,71636,45332,85929,132

24

65,907

63,66559,03355,380

24

494

11

-

-

Total shareholders' equity

24

66,401

63,67659,03355,3801.

Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

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111
FINANCIAL REPORTCASH FLOW STATEMENTS
For the year ended 30 September

Consolidated
2022
$m

2021
$m

The Company
2022
$m

2021
$m

Profit after income tax

7,120

6,163

7,596

6,331

Adjustments to reconcile to net cash provided by/(used in) operating activities:
Allowance for expected credit losses
Depreciation and amortisation(Profit)/Loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment(Gain)/Loss on sale from divestments
Other non-cash movements

(232)
1,008
(8)
(4,434)
(252)
(909)

(567)
1,087
(11)
(6,350)
238
(237)

(265)
867
(1)
(4,687)
(246)
(488)

(469)
959
(11)
(4,374)(12)(456)(2,638)8,020(46,378)
685

4,995
10
(8,259)143(2,054)
6,355(42,003)
978
655

4,484
(2,778)(300)(1,212)89

48,879(3,486)
9,468
3,333
13,056
20,17648,896(4,928)(3,466)
6,108
37,65943,82245,058(4,769)8,074
3,426
10,90018,496

41,908(4,671)(2,728)5,579
36,00842,339(34,292)
32,797
394
(65)
(651)
(1,817)(52,639)
63,44513(561)
10,258(30,065)
28,201
(5)
(133)
(667)
(2,669)(23,040)
35,493(175)(650)
11,628

1,226

9,310

-

8,091

23,422(26,017)(3,784)
(117)
(218)
(846)
492
3,497
(2,345)16,014
151,260
858

12,624(27,709)(2,834)
(79)
(330)
(654)
(9,672)44,408
107,923(1,071)

20,145(21,985)(3,782)
(117)
(226)
(846)
3,497
(3,314)
12,513
141,436
1,534

9,517
(23,104)(2,834)
(79)
(288)
(654)
(9,351)
44,61698,083(1,263)

168,132

151,260

155,483

141,436

Net (increase)/decrease in operating assets:
Collateral paid
Trading assets
Net loans and advances
Net intra-group loans and advances
Other assets

Net increase/(decrease) in operating liabilities:
Deposits and other borrowings
Settlement balances owed by ANZ
Collateral received
Other liabilities
Total adjustments
Net cash (used in)/provided by operating activities1
Cash flows from investing activities
Investment securities assets:
Purchases
Proceeds from sale or maturity
Proceeds from divestments, net of cash disposed
Net movement in shares in controlled entities
Net investments in other assets
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Deposits and other borrowings drawn down
Debt issuances:2
Issue proceeds
Redemptions
Dividends paid3
On market purchase of treasury shares
Repayment of lease liabilities
Share buyback
ANZ Bank New Zealand Perpetual Preference Shares
Share entitlement issue
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year1.

Net cash (used in)/provided by operating activities for the Group includes interest received of $22,748 million (2021: $19,649 million), interest paid of $7,857 million (2021: $5,793 million) and income taxes
paid of $2,171 million (2021: $2,427 million). Net cash (used in)/provided by operating activities for the Company includes interest received of $17,672 million (2021: $15,435 million), interest paid of $6,692
million (2021: $5,117 million) and income taxes paid of $1,443 million (2021: $1,541 million).

2.

Non-cash movements on Debt issuances include a gain of $4,725 million (2021: $3,476 million gain) from unrealised movements primarily due to fair value hedging adjustments partially offset by foreignexchange losses for the Group, and include a gain of $3,420 million (2021: $2,322 million gain) from unrealised movements primarily due to fair value hedging partially offset by foreign exchange losses for
the Company.

3.

Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

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ANZ 2022 Annual Report / Financial Report

STATEMENT OF CHANGES IN EQUITY

Reserves$m

Retainedearnings$m

Share capitaland reserves
attributable toshareholdersof the Company$m26,531

1,501

33,25561,287

10

61,297

Profit or loss from continuing operations
Profit or loss from discontinued operations

-

-

6,179
(17)

6,179
(17)

1
-

6,180
(17)

Other comprehensive income for the year fromcontinuing operations

-

(264)

(40)

(304)

-

(304)

-

(264)

6,122

5,858

1

5,859

94
(654)

-

(2,928)-(2,928)
94
(654)

-

(2,928)
94
(654)

13
-

(9)

4

13
(5)

-

13
(5)

Consolidated
As at 1 October 2020

Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2021

Ordinaryshare capital$m

NonTotal
controlling shareholders’interests
equity$m$m

25,984

1,228

36,453

63,665

11

63,676

Profit or loss from continuing operations
Profit or loss from discontinued operations

-

-

7,138
(19)

7,138
(19)

1
-

7,139
(19)

Other comprehensive income for the year fromcontinuing operations-(3,835)115(3,720)(15)(3,735)-(3,835)

7,234

3,399

(14)

3,385

Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid--

(3,965)(3,965)(2)(3,967)

183

-

-

183

-

183

Group share buy-back

(846)

-

-

(846)

-

(846)

Share entitlement issue3
Other equity movements:
Group employee share acquisition scheme
Preference shares issued
Other items

3,497

-

-

3,497

-

3,497

(21)
-

1

(7)
1

(21)
(7)
2

499
-

(21)
492
2

As at 30 September 2022

28,797(2,606)

39,71665,907494

66,401Dividend Reinvestment Plan1
2

1.

7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases forthe DRP in 2022 were $204 million (2021: $199 million).

2.

The Group completed its $1.5 billion on-market share buy-back of ANZ ordinary shares on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.

3.

The Group issued 187.1 million new ordinary shares under the share entitlement offer in 2022.

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

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STATEMENT OF CHANGES IN EQUITY

Reserves$m

Retainedearnings$m

Total
shareholders’equity$m

26,454

1,018

25,80053,272

Profit for the year
Other comprehensive income for the year

-

(668)

6,331
(74)

6,331
(742)

Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Group employee share acquisition scheme
Other items

-

(668)

6,257

5,589

94
(654)

-

(2,928)-(2,928)
94
(654)

13
-

(9)

3

13
(6)

25,907341

29,132

55,380

Profit for the year
Other comprehensive income for the year-

(2,888)

7,596
94

7,596
(2,794)

Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid-

(2,888)

7,690

4,802

The Company

Ordinaryshare capital$m

As at 1 October 2020

As at 30 September 2021--

(3,965)(3,965)

Dividend Reinvestment Plan1

183

-

-

183

Group share buy-back

(846)

-

-

(846)

3,497

-

-

3,497

(21)
-

1

2

(21)
3

28,720(2,546)32,85959,033

2

Share entitlement issue

3

Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2022
1.

7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases forthe DRP in 2022 were $204 million (2021: $199 million).

2.

The Company completed its $1.5 billion on-market share buy-back on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.

3.

The Company issued 187.1 million new ordinary shares under the share entitlement offer in 2022.

The notes appearing on pages 114 to 232 form an integral part of these financial statements.

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ANZ 2022 Annual Report / Financial Report

Notes
financialstatements
NOTES TO to
THE theFINANCIALSTATEMENTS(continued)

NOTES TO THE FINANCIAL STATEMENTS

1. ABOUT OUR FINANCIAL STATEMENTS
These are the financial statements for Australia and New Zealand Banking Group Limited (the Company) and its controlled entities (together, theGroup or ANZ) for the year ended 30 September 2022. The Company is a publicly listed company incorporated and domiciled in Australia. The addressof the Company’s registered office and its principal place of business is ANZ Centre, 833 Collins Street, Docklands, Victoria, Australia 3008. The Group
provides banking and financial services to individuals and business customers and operates in and across 32 markets.
On 26 October 2022, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:
 the amount is significant in size (quantitative factor); the information is significant by nature (qualitative factor); the user cannot understand the Group’s results without the specific disclosure (qualitative factor); the information is critical to a user’s understanding of the impact of significant changes in the Group’s business during the period - for example,
business acquisitions or disposals (qualitative factor); the information relates to an aspect of the Group’s operations that is important to its future performance (qualitative factor); and the information is required under legislative requirements of the Corporations Act 2001, the Banking Act 1959 (Cth) or by the Group’s principal
regulators, including the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
This section of the financial statements:
 outlines the basis upon which the Group’s financial statements have been prepared; and discusses any new accounting standards or regulations that directly impact the financial statements.

BASIS OF PREPARATIONThis financial report is a general purpose (Tier 1) financial report prepared by a ‘for profit’ entity, in accordance with Australian Accounting Standards(AASs) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), the Corporations Act 2001, and International
Financial Reporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB).
We present the financial statements of the Group in Australian dollars, which is the Company’s functional and presentation currency. We haverounded values to the nearest million dollars ($m), unless otherwise stated, as allowed under the ASIC Corporations (Rounding in Financial/Directors
Report) Instrument 2016/191. We measure the financial statements of each entity in the Group using the currency of the primary economic
environment in which that entity operates (the functional currency).

BASIS OF MEASUREMENT AND PRESENTATION
We have prepared the financial information in accordance with the historical cost basis - except the following assets and liabilities which we havestated at their fair value: derivative financial instruments and in the case of fair value hedging, a fair value adjustment made to the underlying hedged item; financial instruments held for trading; financial assets and financial liabilities designated at fair value through profit or loss; financial assets at fair value through other comprehensive income; and assets and liabilities classified as held for sale (except those required to be at carrying value).
In accordance with AASB 119 Employee Benefits (AASB 119) we have measured defined benefit obligations using the Projected Unit
Credit Method.
During the 2022 financial year, the Group revised its treatment of ongoing trail commission payable to mortgage brokers and now recognises aliability within Payables and other liabilities equal to the present value of expected future trail commission payments and a corresponding increase incapitalised brokerage costs in Net loans and advances. Comparatives have not been restated.
The sale of Wealth Australia business to IOOF Holdings Limited (IOOF, now known as Insignia Financial Limited) and Zurich Financial Services Australia(Zurich) completed across 2020 and 2019. The separation of the business sold to Zurich completed in early April 2022, and the business sold to IOOF
completed in early October 2022. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective.

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1. ABOUT OUR FINANCIAL STATEMENTS (continued)
BASIS OF CONSOLIDATIONThe consolidated financial statements of the Group comprise the financial statements of the Company and all its subsidiaries. An entity, including a
structured entity, is considered a subsidiary of the Group when we determine that the Company has control over the entity. Control exists when theGroup is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. We assess power by examining existing rights that give the Company the current ability to direct the relevant activities of theentity. We have eliminated, on consolidation, the effect of all transactions between entities in the Group.

FOREIGN CURRENCY TRANSLATION
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At thereporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.
We measure translation differences on non-monetary items at fair value through profit or loss and report them as part of the fair value gain or loss onthese items. For non-monetary items classified as investment securities measured at fair value through other comprehensive income, translationdifferences are included in Other comprehensive income.
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS THAT HAVE A FUNCTIONAL CURRENCY THAT IS NOT AUSTRALIAN DOLLARS
The financial statements of our foreign operations are translated into Australian dollars for consolidation into the Group Financial Statements using thefollowing method:
Foreign currency item

Exchange rate used

Assets and liabilities

The reporting date rate

EquityThe initial investment date rate

Income and expenses

The average rate for the period – but if for a significant transaction we believe the average rate is notreasonable, then we use the rate at the date of the transaction

Exchange differences arising from the translation of financial statements of foreign operations are recognised in the foreign currency translation
reserve in equity. When we dispose of a foreign operation, the cumulative exchange differences are transferred to profit or loss.

FIDUCIARY ACTIVITIESThe Group provides fiduciary services to third parties including custody, nominee and trustee services. This involves the Group holding assets onbehalf of third parties and making decisions regarding the purchase and sale of financial instruments. If ANZ is not the beneficial owner or does notcontrol the assets, then we do not recognise these transactions in these financial statements, except when required by accounting standards oranother legislative requirement.

KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates andassumptions about past and future events. Further information on the key judgements and estimates that we consider material to thefinancial statements are contained within each relevant note to the financial statements.
Whilst the course of the COVID-19 pandemic is moderating and the management of its impact on the populace, businesses and economic
activity is better understood, the responses of consumers, business and governments remain uncertain. Compounding the effects of thepandemic are mounting geopolitical tensions, global supply chain disruptions, the conflict in Ukraine, commodity price pressures andincreasing inflation and interest rates impacting the economy. Thus, there remains an elevated level of estimation uncertainty involved in
the preparation of these financial statements.
The Group has made various accounting estimates in this Financial Report based on forecasts of economic conditions which reflect
expectations and assumptions at 30 September 2022 about future events considered reasonable in the circumstances. There is aconsiderable degree of judgement involved in preparing these estimates. Actual economic conditions are likely to be different from those
forecast since anticipated events frequently do not occur as expected, and the effect of these differences may significantly impact
accounting estimates included in these financial statements. The significant accounting estimates impacted by these forecasts andassociated uncertainties are predominantly related to expected credit losses and recoverable amounts of non-financial assets.
The impact of these uncertainties on each of these accounting estimates is discussed further below and/or in the relevant notes in thisFinancial Report. Readers should consider these disclosures in light of the inherent uncertainties described above.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
INTEREST RATE BENCHMARK REFORM
Interbank offered rates (IBORs) have played a critical role in global financial markets, serving as reference rates for derivatives, loans and securities, andin the valuation of financial instruments. The IBOR reforms have a wide-ranging impact for the Group and our customers given the fundamental
differences between IBORs and risk-free rates (RFRs). The key difference between IBORs and RFRs is that IBOR rates include a term and bank credit risk
premium, whereas RFRs do not. As a result of these differences, adjustments are required to an RFR to ensure contracts referencing an IBOR ratetransition on an economically comparable basis.
Update on the Group’s approach to interest rate benchmark reform
In line with the regulatory announcements made in 2021, the majority of IBOR rates, including Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF),
Japanese Yen (JPY), and the US Dollar (USD) 1-week and 2-month LIBOR rate settings ceased on 31 December 2021 and have been replaced byalternative RFRs. This transition had an immaterial impact to the Group’s profit and loss. Through its loan and derivative transactions with customers,
issuance of debt and its asset and liability management activities the Group continues to have exposure to the remaining USD LIBOR settings andother IBOR-related benchmarks that are due to largely cease by 30 June 2023.
The Group continues to manage the transition from the remaining USD LIBOR tenors and other remaining IBOR settings to RFR’s through its
enterprise-wide Benchmark Transition Program (the Program). The program is responsible for managing the risks associated with the transition
including operational, market, legal, conduct and financial reporting risks that may arise.
Exposures subject to benchmark reform as at 30 September 2022
The table below shows the Group’s exposure to interest rate benchmarks subject to IBOR reform. These are financial instruments that contractuallyreference an IBOR benchmark planned to transition to an RFR and have a contractual maturity date beyond the planned IBOR cessation date.
USD Libor$m
13,349154669
571,393553,754
16,312As at 30 September 2022
Loan and advances1
Non-derivative financial assets1
Non-derivative financial liabilities2
Derivative asset (notional value)3
Derivative liability (notional value)3
Loan commitments1,4

Others$m
126
36
14,40014,540222

1.

Excludes Expected Credit Losses (ECL).

2.

Comprises floating rate debt issuances by the Group.

3.

For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, the Group discloses the Australian dollar-equivalent notional amounts for both. Where one leg of a swap issubject to reform, the Group discloses the notional amount of the receive leg.

4.

For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the pricing currency of the facility or where there are multiple pricing currencies impacted by cessation, the most
likely currency of drawdown.

Hedge accounting exposures subject to IBOR reform
The Group has hedge-accounted relationships referencing USD LIBOR, primarily due to fixed rate investment securities and the Group’s fixed rate debt
issuances denominated in USD that are designated in fair value hedge accounting relationships. The table below details the carrying values of theGroup's USD exposures designated in hedge accounting relationships referencing LIBOR that will be impacted by reform. The nominal value of theassociated hedging instruments is also included:
As at 30 September 2022
$m
8,457
216
163
19,861Hedged items
Investment securities at FVOCINet loans and advances
Deposits and other borrowings
Debt issuances

Hedging instruments
Fair value hedges
Cash flow hedges

116

Notional designated up to
30 June 2023
$m
8,523
-

Notional designatedbeyond 30 June 2023
$m
21,795286

Total notional amount$m
30,318286

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NOTES TO THE FINANCIAL STATEMENTS

1. ABOUT OUR FINANCIAL STATEMENTS (continued)
ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
There were no new accounting standards or interpretations adopted in 2022 that had a significant effect on the Group.
Accounting policies have been consistently applied, unless otherwise noted.

ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2022 and have not been applied by the Group in preparing these financial statements. Further details of these areset out below.
GENERAL HEDGE ACCOUNTINGAASB 9 Financial Instruments (AASB 9) introduces new hedge accounting requirements which more closely align accounting with risk management
activities undertaken when hedging both financial and non-financial risks. AASB 9 provides the Group with an accounting policy choice to continue toapply the AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) hedge accounting requirements until the International
Accounting Standards Board’s ongoing project on macro hedge accounting is completed. The Group continues to apply the hedge accounting
requirements of AASB 139.
AASB 17 INSURANCE CONTRACTS (AASB 17)
The final version of AASB 17 was issued in July 2017 and is not effective for the Group until 1 October 2023. It will replace AASB 4 Insurance Contracts,
AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 17 establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts.
The measurement, presentation and disclosure requirements under AASB 17 are significantly different from current accounting standards. Although
the overall profit recognised in respect of insurance contracts will not change, it is expected that the timing of profit recognition will change.
AASB 17 is not expected to have a material impact on the Group.
DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTIONAASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transactionamends AASB 112 Income Taxes and clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and aliability and that give rise to equal taxable and deductible temporary differences. This may include transactions such as leases and decommissioningor restoration obligations. This amendment is effective for the Group from 1 October 2023 and is not expected to have a significant impact.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
2. NET INTEREST INCOME
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Financial assets at amortised cost

21,73718,18816,28913,767

Investment securities at FVOCI

1,107

866

834

596

Trading assets

700

446

547

325

Financial assets at FV through profit or loss

65

29

177

124

23,60919,52917,847

14,812

Net interest income
Interest income by type of financial asset

External interest income
Controlled entities' income
Interest income

-

-

561

535

23,60919,52918,40815,347(8,019)(4,830)(6,170)(3,681)

(214)

(91)

(191)

(82)

Interest expense by type of financial liability
Financial liabilities at amortised cost
Securities sold short

(162)

(101)

(151)

(158)

External interest expense(8,395)(5,022)(6,512)(3,921)

Controlled entities expense

-

-

(581)

(555)

Interest expense(8,395)(5,022)(7,093)(4,476)

Major bank levy

(340)

(346)

(340)

(346)

14,874

14,161

10,975

10,525

Financial liabilities designated at FV through profit or loss

Net interest income

11.

Includes charges associated with customer remediation of nil (2021: -$86 million) for the Group and -$5 million (2021: -$82 million) for the Company.

RECOGNITION AND MEASUREMENTNET INTEREST INCOME
Interest Income and Expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for trading,assets measured at fair value through other comprehensive income and at fair value through profit or loss. We use the effective interest
rate method to calculate the amortised cost of assets held at amortised cost and to recognise interest income on financial assets measured
at fair value through other comprehensive income. The effective interest rate is the rate that discounts the stream of estimated future cash
receipts or payments over the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amountof the financial asset or liability. For assets subject to prepayment, we determine their expected life on the basis of historical behaviour ofthe particular asset portfolio - taking into account contractual obligations and prepayment experience.
We recognise fees and costs, which form an integral part of the financial instrument (for example loan origination fees and costs), using theeffective interest rate method. These are presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
Major Bank Levy

The Major Bank Levy Act 2017 (levy or major bank levy) applies a rate of 0.06% to certain liabilities of the Company. The Group hasdetermined that the levy represents a finance cost for the Group and the Company and it is presented as interest expense in the Income
Statement.

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NOTES TO THE FINANCIAL STATEMENTS

3. NON-INTEREST INCOME
Consolidated
2022$m

The Company
2021
$m

2022
$m

2021
$m

Non-interest income
Fee and commission income
Lending fees1
Non-lending fees

374

474

340

436

2,394

2,552

1,744

1,961

Commissions

103

97

74

65

Funds management income

261

287

27

5

3,132

3,410

2,185

2,467

External fee and commission income

-

-

244

235

Fee and commission income

3,132

3,410

2,429

2,702

Fee and commission expense(1,160)(1,267)

(695)

(836)

Net fee and commission income

1,972

2,143

1,734

1,866

1,993

1,371

1,296

1,064

307

-

307

-

-

-

(180)

-

Loss on disposal of ANZ Share Investing business

-

(251)

-

12

Release of foreign currency translation reserve

(65)

-

-

-

Loss on disposal of financial planning and advice business

(62)

-

(22)

-

-

-

3,181

1,845

Controlled entities' income

Other income
Net foreign exchange earnings and other financial instruments income2
Gain on completion of ANZ Worldline partnership
Impairment of interest in controlled entities

Dividends received from controlled entities

90

62

108

67

Other income

2,263

1,182

4,690

2,988

Other operating income

4,235

3,325

6,424

4,854

Other

Net income from insurance business

140

110

-

-

Share of associates' profit/(loss)3

177

(176)

(12)

(1)

4,552

3,259

6,412

4,853

Non-interest income4
1.

Lending fees exclude fees treated as part of the effective yield calculation in Interest income.

2.

Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk, ineffective
portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.

3.

Includes -$347 million of the Group’s share of AMMB Holdings Berhad’s 1Malaysia Development Berhad settlement and goodwill write-off in 2021.

4.

Includes charges associated with customer remediation of -$34 million (2021: -$56 million) for the Group and -$20 million (2021: -$84 million) for the Company.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENTOTHER OPERATING INCOME
Fee and Commission Revenue
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation issatisfied across more than one reporting period, or (b) at a point in time when the performance obligation is satisfied immediately or issatisfied within one reporting period.
 lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee andcommitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct
good or service that are recognised separately from the underlying lending product.
 non-lending fees include fees associated with deposit and credit card accounts, interchange fees and fees charged for specific customertransactions such as international money transfers. Where the Group provides multiple goods or services to a customer under the same
contract, the Group allocates the transaction price of the contract to distinct performance obligations based on the relative stand-alone
selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.
 commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to
provide goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service
to the customer. If the Group collects funds on behalf of a third party when acting as an agent, we only recognise the net commission it
retains as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
 funds management income represents fees earned from customers for providing financial advice and fees for asset management
services and advice provided to investment funds. Revenue is recognised either at the point the financial advice is provided or over theperiod in which the asset management services are delivered. Performance fees associated with funds management activities are only
recognised when it becomes highly probable the performance hurdle will be achieved.
Net Foreign Exchange Earnings and Other Financial Instruments Income
We recognise the following as net foreign exchange earnings and other financial instruments income: exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised or included in a previous financial report;
 fair value movements (excluding realised and accrued interest) on derivatives that we use to manage interest rate and foreign exchange
risk on funding instruments not designated as accounting hedges;
 the ineffective portions of fair value hedges, cash flow hedges and net investment hedges;
 immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments to items designated as fair value hedges
and amounts accumulated in equity related to designated cash flow hedges;
 fair value movements on financial assets and financial liabilities designated at fair value through profit or loss or held for trading; amounts released from the fair value through other comprehensive income (FVOCI) reserve when a debt instrument classified as FVOCI
is sold; and the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
Gain or Loss on Disposal of Non-Financial Assets
The gain or loss on the disposal of assets is the difference between the carrying value of the asset and the proceeds of disposal net of costs.
This is recognised in Other income in the year in which the significant risks and rewards from the asset transfer to the buyer.
When a non-financial asset or group of assets is classified as held for sale, the difference between the carrying value immediately prior toreclassification and the fair value less costs to sell is recognised in Other operating income to align with the classification of gain or loss onsale that would have applied if the sale had completed during the year.

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NOTES TO THE FINANCIAL STATEMENTS

3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENTNET INCOME FROM INSURANCE BUSINESSWe recognise: premiums received (net of reinsurance premiums paid) based on an assessment of the likely pattern in which risk will emerge over theterm of the policies written. This assessment is undertaken periodically and updated in accordance with the latest pattern of risk
emergence; and claims incurred net of reinsurance, on an accruals basis once the liability to the policy owner has been established under the terms ofthe contract and through actuarial assumptions of future claims.
SHARE OF ASSOCIATES’ PROFIT/(LOSS)The equity method is applied to accounting for associates. Under the equity method, our share of the after tax results of associates is
included in the Income Statement and the Statement of Comprehensive Income.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
4. OPERATING EXPENSES
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Personnel
Salaries and related costs

4,754

4,425

3,494

3,241

Superannuation costs

375

337

317

281

Other

167

184

127

110

5,296

4,946

3,938

3,632

Personnel
Premises
Rent

88

85

67

62

Depreciation

419

446

344

371

Other

214

174

168

131

Premises

721

705

579

564

Depreciation and amortisation

578

638

521

585

Subscription licences and outsourced services

899

786

648

587

Other

144

164

162

170

Technology

1,621

1,588

1,331

1,342

Restructuring

101

127

78

77

Advertising and public relations

165

178

128

134

Professional fees

935

769

864

714

Freight, stationery, postage and communication

172

185

128

141

Other

568

553

1,077

990

1,840

1,685

2,197

1,979

9,579

9,051

8,123

7,594

Technology

Other

Other
Operating expenses

1

1.

Includes customer remediation expenses of $190 million (2021: $185 million) for the Group and $189 million (2021: $148 million) for the Company, litigation settlement expenses of $10 million (2021: $69
million) for the Group and $9 million (2021: $69 million) for the Company, and merger and acquisition related costs of $12 million (2021: nil) for the Group and the Company.

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NOTES TO THE FINANCIAL STATEMENTS

4. OPERATING EXPENSES (continued)
RECOGNITION AND MEASUREMENTOPERATING EXPENSES
Operating expenses are recognised as services are provided to the Group, over the period in which an asset is consumed, or once a liability
is created.
SALARIES AND RELATED COSTS - ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS
Wages and salaries, annual leave and other employee entitlements expected to be paid or settled within twelve months of employees
rendering service are measured at their nominal amounts using remuneration rates that the Group expects to pay when the liabilities aresettled.
We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff
departures, leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market
yields are determined from a blended rate of high quality corporate bonds with terms to maturity that closely match the estimated future
cash outflows.
If we expect to pay short term cash bonuses, then a liability is recognised when the Group has a present legal or constructive obligation to
pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.
Personnel expenses also include share-based payments which may be cash or equity settled. We calculate the fair value of equity settled
remuneration at grant date, which is then amortised over the vesting period, with a corresponding increase in share capital or the shareoption reserve as applicable. When we estimate the fair value, we take into account market vesting conditions, such as share priceperformance conditions. We take non-market vesting conditions, such as service conditions, into account by adjusting the number of
equity instruments included in the expense.
After the grant of an equity-based award, the amount we recognise as an expense is reversed when non-market vesting conditions are notmet, for example an employee fails to satisfy the minimum service period specified in the award on resignation, termination or notice ofdismissal for serious misconduct. However, we do not reverse the expense if the award does not vest due to the failure to meet a marketbased performance condition.
Further information on share-based payment schemes operated by the Group during the current and prior year is included in Note 31
Employee Share and Option Plans.

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ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
5. INCOME TAX
INCOME TAX EXPENSE
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Profit before income tax from continuing operations

10,079

8,936

9,529

8,253

Prima facie income tax expense at 30%

3,024

2,681

2,859

2,476

Net (gain)/loss from divestments/closures

(83)

71

(113)

(4)

Share of associates' (profit)/loss

(53)

53

4

-

Interest on convertible instruments

49

44

49

44

Overseas tax rate differential

(128)

(88)

(70)

(33)

Provision for foreign tax on dividend repatriation

155

37

150

33

-

-

(954)

(554)

Tax effect of permanent differences:

Rebatable and non-assessable dividends
Impairment of interest in controlled entities

-

-

54

-

Other

4

(26)

(21)

(23)

Subtotal

2,968

2,772

1,958

1,939

Income tax (over)/under provided in previous years

(28)

(16)

(25)

(17)

Income tax expense

2,940

2,756

1,933

1,922

Current tax expense
Adjustments recognised in the current year in relation to the current
tax of prior years
Deferred tax expense/(income) relating to the origination and reversalof temporary differences
Income tax expense

2,694

2,616

1,725

1,743

(28)

(16)

(25)

(17)

274

156

233

196

2,940

2,756

1,933

1,922

Australia

1,844

1,897

1,755

1,806

Overseas

1,096

859

178

116

29.2%

30.8%

20.3%

23.3%

Effective tax rate

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NOTES TO THE FINANCIAL STATEMENTS

5. INCOME TAX (continued)
TAX CONSOLIDATIONThe Company and all its wholly owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. The Company is
the head entity in the tax-consolidated group. We recognise each of the following in the separate financial statements of members of the tax
consolidated group on a ‘group allocation’ basis: tax expense/income, and deferred tax liabilities/assets that arise from temporary differences formembers of the tax-consolidated group. The Company (as head entity in the tax-consolidated group) recognises current tax liabilities and assets ofthe tax-consolidated group.
Under a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by theCompany and each member of the tax-consolidated group in relation to the tax contribution amounts paid or payable between the Company andthe other members of the tax-consolidated group.
Members of the tax-consolidated group have also entered into a tax sharing agreement that provides for the allocation of income tax liabilities
between the entities were the head entity to default on its income tax payment obligations.

UNRECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Unrecognised deferred tax assets related to unused realised tax losses (on revenue account) total $1 million (2021: $6 million) for the Group and nil(2021: $2 million) for the Company.
Unrecognised deferred tax liabilities related to additional potential foreign tax costs (assuming all retained earnings in offshore branches andsubsidiaries are repatriated) total $250 million (2021: $344 million) for the Group and $18 million (2021: $15 million) for the Company.

RECOGNITION AND MEASUREMENT
INCOME TAX EXPENSE
Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in theaccounting and tax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when
the tax relates to items recognised directly in equity and other comprehensive income, in which case we recognise the tax directly inequity or other comprehensive income respectively.
CURRENT TAX EXPENSE
Current tax is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting
date. We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX ASSETS AND LIABILITIESWe account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as
the taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax
asset, or liability, on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset
is realised, or the liability settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.
We offset current and deferred tax assets and liabilities only to the extent that: they relate to income taxes imposed by the same taxation authority;
 there is a legal right and intention to settle on a net basis; and it is allowed under the tax law of the relevant jurisdiction.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required in determining provisions held in respect of uncertain tax positions. The Group estimates its tax liabilities based onits understanding of the relevant law in each of the countries in which it operates and seeks independent advice where appropriate.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
6. DIVIDENDS
ORDINARY SHARE DIVIDENDSDividends are provided for in the financial statements once determined, accordingly, the final dividend announced for the current financial year isprovided for and paid in the following financial year.
AmountTotal dividend
Dividends% of total
per share$mFinancial Year 2021
2020 final dividend paid1,2

35 cents

994

2021 interim dividend paid1,2

70 cents

1,992

Bonus option plan adjustment(58)

Dividends paid during the year ended 30 September 2021

2,928

Cash

90.0%

Dividend reinvestment plan

3

2,635

10.0%

293

Dividends paid during the year ended 30 September 2021

2,928

Financial Year 2022
2021 final dividend paid1,2

72 cents

2,030

2022 interim dividend paid1,2

72 cents

2,012

Bonus option plan adjustment(77)

Dividends paid during the year ended 30 September 2022

3,965
90.2%

Cash
Dividend reinvestment plan

3

3,577

9.8%

388

Dividends paid during the year ended 30 September 2022

Dividends announced and to be paid after year-end
2022 final dividend (fully franked for Australian tax, New Zealand imputationcredit NZD 9 cents per share)

3,965

Payment dateAmountper share

Total
dividend$m

15 December 2022

74 cents

2,213

1.

Carries New Zealand imputation credits of NZD 9 cents for the 2022 interim dividend, NZD 8 cents for the 2021 final dividend and 2021 interim dividend, and NZD 4 cents for the 2020 final dividend.

2.

Fully franked for Australian tax purposes (30% tax rate).

3.

Includes on-market share purchases for the DRP of $204 million (2021: $199 million).

DIVIDEND REINVESTMENT PLAN AND BONUS OPTION PLAN
Eligible shareholders can elect to reinvest their dividend entitlement into ANZ ordinary shares under the Company’s Dividend Reinvestment Plan
(DRP). Eligible shareholders can elect to forgo their dividend entitlement and instead receive ANZ ordinary shares under the Company’s Bonus Option
Plan (BOP). For the 2022 final dividend, DRP and BOP participation will be satisfied by an issue of new ANZ ordinary shares. There will be no discountapplied to the DRP and BOP price.
Refer to Note 24 Shareholders’ Equity for details of shares the Company purchased or issued in respect of the DRP and BOP.

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NOTES TO THE FINANCIAL STATEMENTS

6. DIVIDENDS (continued)
DIVIDEND FRANKING ACCOUNT
Currency

2022
$m

2021
$m

Australian franking credits available at 30% tax rate

AUD

396

772

New Zealand imputation credits available (which can be attached to our Australian
dividends but may only be used by New Zealand resident shareholders)

NZD

5,000

5,020

The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:
 franking credits that will arise from the payment of income tax payable as at the end of the financial year; and franking credits/debits from the receipt/payment of dividends that have been recognised as tax receivables/payables as at the end of the financialyear.
The proposed 2022 final dividend will utilise the entire balance of $396 million franking credits available at 30 September 2022. Instalment tax
payments on account of the 2022 financial year, which will be made after 30 September 2022, will generate sufficient franking credits to enable the2022 final dividend to be fully franked. The extent to which future dividends will be franked will depend on a number of factors, including the level ofprofits generated by the Group that will be subject to tax in Australia.

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS
APRA’s written approval is required before paying dividends on ANZ ordinary shares if: the aggregate dividends exceed the Company’s after tax earnings (in calculating those after tax earnings, we take into account any payments wemade on senior capital instruments) in the financial year to which they relate; or the Group’s Common Equity Tier 1 capital ratio falls within capital range buffers specified by APRA.
If the Company fails to pay a dividend or distribution on its ANZ Capital Notes or ANZ Capital Securities on the scheduled payment date, it may(subject to a number of exceptions) be restricted from resolving to pay or paying any dividend on the ANZ ordinary shares.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
7. EARNINGS PER ORDINARY SHARE
Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number ofordinary shares (WANOS) outstanding during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is
calculated by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic
EPS calculation for the effect of dilutive potential ordinary shares.
Earnings per ordinary share - Basic1

2022
cents

2021
cents

Earnings Per Share

250.0

215.3

Earnings Per Share from continuing operations

250.7

215.9

Earnings Per Share from discontinued operations

(0.7)

(0.6)

Earnings per ordinary share - Diluted1

2022
cents

2021
cents

Earnings Per Share

233.2

203.2

Earnings Per Share from continuing operations

233.8

203.7

Earnings Per Share from discontinued operations

(0.6)

(0.5)

Reconciliation of earnings used in earnings per share calculations

2022
$m

2021
$m

7,120

6,163

1

1

7,119

6,162

Basic:
Profit for the year
Less: Profit attributable to non-controlling interests
Earnings used in calculating basic earnings per share
Less: Profit/(Loss) after tax from discontinued operations

(19)

(17)

Earnings used in calculating basic earnings per share from continuing operations

7,138

6,179

7,119

6,162

199

187

Earnings used in calculating diluted earnings per share

7,318

6,349

Less: Profit/(Loss) after tax from discontinued operations

(19)

(17)

Earnings used in calculating diluted earnings per share from continuing operations

7,337

6,366

Reconciliation of WANOS used in earnings per share calculations1,2

2022
millions

2021
millions

WANOS used in calculating basic earnings per share

2,847.5

2,862.6

282.9

252.5

7.7

10.0

3,138.1

3,125.1

Diluted:Earnings used in calculating basic earnings per share
Add: Interest on convertible subordinated debt

Add: Weighted average dilutive potential ordinary shares
Convertible subordinated debt
Share based payments (options, rights and deferred shares)
WANOS used in calculating diluted earnings per share
1.

WANOS and EPS have been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.

2.

WANOS excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 4.4 million (2021: 4.6 million).

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NOTES TO THE FINANCIAL STATEMENTS

8. SEGMENT REPORTINGDESCRIPTION OF SEGMENTS
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digital businesses in theGroup Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This involved the integration of theAustralian retail and digital businesses, and the separation of the Australian commercial business into a new division to improve productivity andaccountability within the organisation. As a result of these changes there are now six divisions: Australia Retail, Australia Commercial, Institutional, New
Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within the Group. Comparative information has been restatedaccordingly.
The Group’s six operating segments are presented on a basis that is consistent with the information provided internally to the Chief Executive Officer,
who is the chief operating decision maker. This reflects the way the Group’s businesses are managed, rather than the legal structure of the Group.
We measure the performance of these segments on a cash profit basis. To calculate cash profit, we remove certain non-core items from statutory
profit. Details of these items are included in the ‘Other items’ section of this note. Transactions between business units across segments within ANZ
are conducted on an arm’s length basis and disclosed as part of the income and expenses of these segments.
The reportable segments are divisions engaged in providing either different products or services or similar products and services in different
geographical areas. They are as follows:
Australia Retail
The Australia Retail division provides a full range of banking services to Australian consumers. This includes Home Loans, Deposits, Credit Cards andPersonal Loans. Products and services are provided via the branch network, home loan specialists, contact centres, a variety of self-service channels(digital and internet banking, website, ATMs and phone banking) and third-party brokers. It also includes the costs related to the development andoperation of the ANZ Plus proposition for retail customers.
Australia Commercial
The Australia Commercial division provides a full range of banking products and financial services, including asset financing, across the following
customer segments: small business owners and medium commercial customers (SME Banking) and large commercial customers, high net worth
individuals and family groups (Specialist Business).
Institutional
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International via thefollowing business units:
 Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing,commodity financing as well as cash management solutions, deposits, payments and clearing.
 Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance and corporate advisory services.
 Markets provides customers with risk management services in foreign exchange, interest rates, credit, commodities, and debt capital markets inaddition to managing the Group's interest rate exposure and liquidity position.
New Zealand
The New Zealand division comprises the following business units: Personal provides a full range of banking and wealth management services to consumer and private banking customers. We deliver our services
via our internet and app-based digital solutions and a network of branches, mortgage specialists, relationship managers and contact centres.
 Business provides a full range of banking services including small business banking, through our digital, branch and contact centre channels, andtraditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium
and large enterprises, the agricultural business segment, government and government-related entities.
Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticatedfinancial solutions provided to business customers through dedicated managers.
Group Centre
The Group Centre division provides support to the operating divisions, including technology, property, risk management, financial management,
strategy, marketing, human resources and corporate affairs. It also includes residual components of Group divestments, Group Treasury, Shareholder
Functions, minority investments in Asia, and digital businesses.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS

Year ended 30 September 2022
Net interest income
Net fee and commission income- Lending fees
- Non-lending fees
- Commissions- Funds management income- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders

Australia
Australia
Retail Commercial Institutional
$m
$m
$m

New
Zealand$m

Pacific$m

Group
Centre$m

Otheritems1
$m

Group
Total
$m

5,527

2,568

3,401

3,168

96

114

-

14,874

8
849
52
(432)
140
5
622
6,149
(3,210)
2,939
129
3,068
(928)
2,140

90
384
22
26
(118)
258
(10)
652
3,220
(1,346)
1,874
133
2,007
(497)
1,510

262
524
1
1
(140)
1,002
(2)
1,648
5,049
(2,503)
2,546
18
2,564
(803)
1,761

8
622
28
234
(464)
33
461
3,629
(1,324)
2,305
(36)
2,269
(636)
1,633

6
26
(6)
42
68
164
(153)
11
6
17
(8)
9

(11)
44
189
222
336
(1,043)
(707)
(18)
(725)
187
(538)

879
879
879
879
879
(256)
623

374
2,394
103
261
(1,160)
140
2,263
177
4,552
19,426(9,579)9,847
232
10,079(2,941)
7,138
(19)
7,119

(61)
(5)
129

(10)
(12)
(1)
133

(2)
(158)
(72)
18

(116)
(4)
(36)

(10)
(1)
6

189
(652)
(19)
(18)

-

177
(1,009)(102)
232

Australia
Australia
Retail Commercial Institutional
$m
$m
$m

New
Zealand$m

Pacific$m

Group
Centre
$m

Group
Total
$m

178
292,825
153,491

1,706
126,919
118,371

3,707
4,065

2,129
68,797
155,032

2,906
2,181
1,085,729
1,019,328

Includes non-cash items:
Share of associates’ profit/(loss)
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release

Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities

47
60,031
118,3631,022
5
533,450
470,006

1.

Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.

2.

The Group recognised $78 million of goodwill in relation to the acquisition of the Cashrewards business in the Australia Retail division, and wrote off $40 million of goodwill in relation to the exit of thefinancial planning and advice business servicing the affluent customer segment in the Australia Commercial division.

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NOTES TO THE FINANCIAL STATEMENTS

8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS (continued)

Year ended 30 September 2021
Net interest income
Net fee and commission income- Lending fees
- Non-lending fees
- Commissions- Funds management income- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders

Australia
Australia
Retail Commercial Institutional
$m
$m
$m
5,708
2,281
3,105

New
Zealand$m
2,870

Pacific
$m
96

Group
Centre
$m
101

Other
items1
$m
-

Group
Total
$m
14,161

136
738
40
(358)
110
(234)
1
433
6,141
(2,948)
3,193
227
3,420
(1,104)
2,316

80
530
24
32
(202)
(8)
456
2,737
(1,353)
1,384
199
1,583
(476)
1,107

241
683
1
1
(274)
1,227
(1)
1,878
4,983
(2,447)
2,536
89
2,625
(738)
1,887

10
585
32
254
(430)
18
469
3,339
(1,325)
2,014
76
2,090
(582)
1,508

7
20
(2)
40
65
161
(144)
17
(21)
(4)
1
(3)

(4)
(1)
166
(176)
(15)
86
(834)
(748)
(3)
(751)
134
(617)

(27)
(27)
(27)
(27)
(27)
8
(19)

474
2,552
97
287
(1,267)
110
1,182
(176)
3,259
17,420(9,051)
8,369
567
8,936
(2,757)
6,179
(17)
6,162

1
(251)
(84)
(3)
227

(24)
(1)
199

(1)
(115)
(63)
89

(117)
(6)
76

(11)
(1)
(21)

(176)
(739)
(17)
(3)

-

(176)
(251)
(1,090)(91)
567

Australia
Australia
Retail Commercial Institutional
$m
$m
$m
100
40
1,100
17
4
286,566
57,481
429,362
143,709117,739
384,106

New
Zealand$m
1,849
132,232
121,999

Pacific
$m
3,755
3,898

Group
Centre$m
1,951
69,461
143,730

Includes non-cash items:
Share of associates’ profit/(loss)
Goodwill write-off2
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release

Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities

Group
Total
$m
3,089
1,972
978,857
915,1811.

Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.

2.

The Group wrote off $251 million of goodwill upon the reclassification of ANZ Share Investing business to held for sale with the remaining $13 million derecognised on completion of the disposal in theAustralia Retail division.

131

132

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OTHER ITEMSThe table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Profit after tax
Item

Related segment

2022
$m

Economic hedges

Institutional, New Zealand, Group Centre

569

77

Revenue and expense hedges

Group Centre

54

(96)

623

(19)

Total other items from continuing operations

2021
$m

SEGMENT INCOME BY PRODUCTS AND SERVICES
The primary sources of our external income across all divisions are Interest income and Other operating income, which includes net fee andcommission income, net foreign exchange earnings and other financial instruments income. The Australia Retail, Australia Commercial, New Zealand,and Pacific divisions derive income from products and services from retail and commercial banking. The Institutional division derives its income frominstitutional products and market services. No single customer amounts to greater than 10% of the Group’s income.

GEOGRAPHICAL INFORMATIONThe reportable segments operate across three geographical regions as follows: Australia Retail division - Australia
 Australia Commercial division - Australia
 Institutional division - all three geographical regions
 New Zealand division - New Zealand Pacific division - International Group Centre division - all three geographical regions
Discontinued operations results are included in the Australia geography. The International region includes Asia, Pacific, Europe and Americas.
The following table sets out total operating income earned including discontinued operations and assets to be recovered in more than one year
based on the geographical regions in which the Group operates.

Australia
2022$mInternational
2021
$m

2022
$m

New Zealand
2021
$m

2022
$m

Total
2021
$m

2022
$m

2021
$m

Total operating income1

12,462

11,822

2,547

1,778

4,501

3,892

19,51017,492

Assets to be recovered in more than one year2

384,724

362,588

32,35028,213

109,191

112,966

526,265

503,767

1.

Includes Operating income earned from discontinued operations of $84 million (2021: $72 million).

2.

Represents Net loans and advances based on the contractual maturity.

132

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133

NOTES TO THE FINANCIAL STATEMENTS

FINANCIAL ASSETS
Outlined below is a description of how we classify and measure financial assets as they apply to subsequent note disclosures.

CLASSIFICATION AND MEASUREMENT
Financial assets - general
There are three measurement classifications for financial assets under AASB 9: amortised cost, fair value through profit or loss (FVTPL) andfair value through other comprehensive income (FVOCI). Financial assets are classified into these measurement classifications on the basisof two criteria:
 the business model within which the financial asset is managed; and the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments
of principal and interest).
The resultant financial asset classifications are as follows: Amortised cost: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held
in a business model whose objective is to collect their cash flows;
 FVOCI: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in abusiness model whose objective is to collect their cash flows or to sell the assets; and FVTPL: Any other financial assets not falling into the categories above are measured at FVTPL.
Fair value option for financial assets
A financial asset may be irrevocably designated on initial recognition:
 at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognisedby an acquirer in a business combination.

9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and other balances, as outlined below, that are convertible into cash with an insignificant risk ofchanges in value and with remaining maturities of three months or less, including reverse repurchase agreements.
Consolidated
2022$m

The Company
2021
$m

2022
$m

2021
$m

Coins, notes and cash at bank

1,147

1,127

787

721

Securities purchased under agreements to resell in less than 3 months

15,996

17,571

14,372

16,465

Balances with central banks

127,790

107,915

118,928

101,400

Settlement balances owed to ANZ within 3 months

23,19924,647

21,39622,850Cash and cash equivalents

168,132

151,260

155,483

141,436

133

134

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
10. TRADING ASSETS

145

183

3,860

4,995

3,941

2022

27,291Government debt
securities and notes

5,630

2021

Corporate and financial
institution securities

33,880Commodities
Other securities

Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Government debt securities and notes

27,29133,88021,881

26,119Corporate and financial institution securities

3,941

5,630

2,700

3,493

Commodities

3,860

4,995

3,348

4,957

Other securities

145

183

144

183

35,23744,68828,07334,752

Total

RECOGNITION AND MEASUREMENT
Trading assets are financial instruments or other assets we either: acquire principally for the purpose of selling in the short-term; or hold as part of a portfolio we manage for short-term profit making.
Trading assets include commodity inventories measured at fair value less cost to sell in accordance with the broker trader exemption under
AASB 102 Inventories.
We recognise purchases and sales of trading assets on trade date: initially, we measure them at fair value; and subsequently, we measure them in the balance sheet at their fair value with any change in fair value recognised in profit or loss.
Assets disclosed as Trading assets are subject to the general classification and measurement policy for Financial Assets outlined at thecommencement of the Group’s financial assets disclosures on page 133.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when applying the valuation techniques used to determine the fair value of trading assets not valued using quoted
market prices. Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.

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NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS

Fair Value

Assets2022$mLiabilities
2022$m

Assets2021$mLiabilities
2021$m

Derivative financial instruments - held for trading

89,716(84,793)

38,080(35,833)

458

(356)

656

(202)

Derivative financial instruments

90,174(85,149)

38,736(36,035)

The Company
Fair Value

Assets2022$mLiabilities
2022$m

Assets2021$mLiabilities
2021$m

Derivative financial instruments - held for trading

87,650(84,200)

37,700(36,847)

406

(300)

592

(158)

88,056(84,500)

38,292(37,005)

Consolidated

Derivative financial instruments - designated in hedging relationships

Derivative financial instruments - designated in hedging relationships
Derivative financial instruments

FEATURES
Derivative financial instruments are contracts:
 whose value is derived from an underlying price index (or other variable) defined in the contract - sometimes the value is derived from more than
one variable; that require little or no initial net investment; and that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.

PURPOSEThe Group’s derivative financial instruments have been categorised as following:
Trading

Derivatives held in order to: meet customer needs for managing their own risks.
 manage risks in the Group that are not in a designated hedge accounting relationship (some elements of balance
sheet management).
 undertake market making and positioning activities to generate profits from short-term fluctuations in prices
or margins.

Designated in Hedging
Relationships

Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
movements in underlying positions relating to: hedges of the Group’s exposures to interest rate risk and currency risk.
 hedges of other exposures relating to non-trading positions.

TYPES
The Group offers or uses four different types of derivative financial instruments:
Forwards

A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.

Futures

An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on thetransaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.

Swaps

A contract in which two parties exchange one series of cash flows for another.

Options

A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has thecorresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises
the option.

135

136

ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
RISKS MANAGED
The Group offers and uses the instruments described above to manage fluctuations in the following market factors:
Foreign Exchange

Currencies at current or determined rates of exchange.

Interest Rate

Fixed or variable interest rates applying to money lent, deposited or borrowed.

Commodity

Soft commodities (that is, agricultural products such as wheat, coffee, cocoa and sugar) and hard commodities (thatis, mined products such as gold, oil and gas).

CreditRisk of default by customers or third parties.

The Group uses a number of central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting ofcollateral exist with these exchanges:
 some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.
 other transactions, are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative instruments
by the amount paid or received.

DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADINGThe majority of the Group’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:
Consolidated

Assets2022$mLiabilities
2022$m

Assets2021$mLiabilities
2021
$m

-

(1)

2

(23)

Futures contracts

336

(123)

105

(24)

Swap agreements

10,421(15,031)

10,267(8,065)

Options purchased

1,698

-

971

-

Fair Value
Interest rate contracts
Forward rate agreements-(1,954)-(1,207)

12,455(17,109)

11,345(9,319)Options sold
Total
Foreign exchange contracts
Spot and forward contracts

42,221(37,426)

13,869(11,462)

Swap agreements

32,169(27,548)

11,109(12,425)

Options purchased

926

-

277

-

-

(1,343)

-

(577)

Total

75,316(66,317)25,255(24,464)

Commodity and other contracts

1,927(1,353)

1,445(2,017)

16

(2)

-

(33)

Credit derivatives sold

2

(12)

35

-

Total

18

(14)

35

(33)

89,716(84,793)

38,080(35,833)

Options sold

Credit default swaps
Credit derivatives purchased

Derivative financial instruments - held for trading1
1.

Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.

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137

NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING (continued)
The majority of the Company’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:

The Company
Fair Value

Assets2022$mLiabilities
2022$m

Assets2021$mLiabilities
2021
$m

2

(7)

3

(24)

Interest rate contracts
Forward rate agreements
Futures contracts

240

(116)

87

(19)

Swap agreements

10,778(15,098)

11,598(10,538)

Options purchased

1,684

-

969

-

-

(1,947)-(1,206)

12,704(17,168)

12,657(11,787)

Spot and forward contracts

36,576(33,376)

11,840(9,658)

Swap agreements

35,526(30,949)

11,463(12,940)

Options purchased

895

-

267

-

-

(1,331)

-

(408)

Total

72,997(65,656)

23,570(23,006)

Commodity and other contracts

1,923(1,352)

1,422(2,015)

Options sold
Total
Foreign exchange contracts

Options sold

Credit default swaps
Credit derivatives purchased

24

(2)

-

(39)

Credit derivatives sold

2

(22)

51

-

Total
Derivative financial instruments - held for trading1
1.

26

(24)

51

(39)

87,650(84,200)

37,700(36,847)

Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.

137

138

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS
There are three types of hedge accounting relationships the Group utilises:
Fair value hedge

Cash flow hedge

Net investment hedge

Objective of thishedgingarrangement

To hedge our exposure to changes tothe fair value of a recognised asset or
liability or unrecognised firm
commitment caused by interest rateor foreign currency movements.

To hedge our exposure to variability incash flows of a recognised asset or
liability, a firm commitment or a highly
probable forecast transaction caused
by interest rate, foreign currency andother price movements.

To hedge our exposure to exchange
rate differences arising from thetranslation of our foreign operations
from their functional currency toAustralian dollars.

Recognition ofeffective hedge
portionThe following are recognised in profit
or loss at the same time:

We recognise the effective portion ofchanges in the fair value of derivatives
designated as a cash flow hedge inthe cash flow hedge reserve.

We recognise the effective portion ofchanges in the fair value of thehedging instrument in the foreign
currency translation reserve (FCTR).

 all changes in the fair value of theunderlying item relating to thehedged risk; and the change in the fair value of thederivatives.

Recognition of
ineffective hedge
portionRecognised immediately in Other operating income.

If a hedging
instrument expires,or is sold, terminated,or exercised; or nolonger qualifies forhedge accounting

When we recognise the hedged itemin profit or loss, we recognise therelated unamortised fair value
adjustment in profit or loss. This may
occur over time if the hedged item isamortised to profit or loss as part ofthe effective yield over the period
to maturity.

Only when we recognise the hedged
item in profit or loss is the amountpreviously deferred in the cash flow
hedge reserve transferred to profit
or loss.

The amount we defer in the foreign
currency translation reserve remains inequity and is transferred to profit orloss only when we dispose of, orpartially dispose of, the foreign
operation.

Hedged item sold or
repaidWe recognise the unamortised fairvalue adjustment immediately in
profit or loss.

Amounts accumulated in equity aretransferred immediately to profit
or loss.

The gain or loss, or applicableproportion, we have recognised inequity is transferred to profit or loss on
disposal or partial disposal of a foreign
operation.

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139

NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
Under the policy choice provided by AASB 9, the Group has continued to apply the hedge accounting requirements of AASB 139.
The fair value of derivative financial instruments designated in hedging relationships is:
2021

2022
Nominalamount$m

Assets$m

Liabilities$mNominalamount$m

Assets$m

Liabilities
$m

604

-

(37)

548

-

(13)

Interest rate swap agreements

106,366

79(168)

95,384370(121)Interest rate futures contracts

17,361

264

(3)

8,704

191

(2)

Consolidated
Fair value hedges
Foreign exchange spot and forward contracts

Cash flow hedges
125,06333(53)

105,41627(20)

Foreign exchange swap agreements

656

48

(44)

642

22

-

Foreign exchange spot and forward contracts

161

-

(4)

153

-

(1)

940

34

(47)

1,097

46

(45)

251,151

458

(356)

211,944

656

(202)

Interest rate swap agreements

Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships

2021

2022
Nominalamount$m

Assets$m

Liabilities$mNominalamount$m

Assets$m

Liabilities
$m

604

-

(37)

548

-

(13)

Interest rate swap agreements

80,18565(163)

68,708358(116)Interest rate futures contracts

17,361

264

(3)

8,704

191

(2)

The Company
Fair value hedges
Foreign exchange spot and forward contracts

Cash flow hedges
94,92828(49)

78,85219(16)

Foreign exchange swap agreements

656

48

(44)

642

22

-

Foreign exchange spot and forward contracts

161

-

(4)

153

-

(1)

146

1

-

299

2

(10)

194,041

406

(300)

157,906

592

(158)

Interest rate swap agreements

Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships

139

140

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The maturity profile of the nominal amounts of our hedging instruments held is:
Consolidated
Nominal AmountAs at 30 September 2022

Average
Rate

Less than 3months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

1.65%

10,931

17,322

65,25930,215

123,727

5.43

604

-

-

-

604

1.59%

3,317

32,14588,461

1,140

125,063

40

121

-

656

817

794

146

-

-

940

Fair value hedges
Interest rate

Interest Rate

Foreign exchange

HKD/AUD FX Rate

Cash flow hedges
Interest rate

Interest Rate
AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.68

THB/AUD FX Rate

25.05

Interest rate

Interest Rate

1.26%

2,597

14,32858,65828,505104,088

Foreign exchange

HKD/AUD FX Rate

5.74

548

-

-

-

548

1.17%

4,593

14,18084,924

1,719

105,416

38

115

-

642

795

456

641

-

-

1,097

Foreign exchange1
Net investment hedges
Foreign exchange
As at 30 September 2021
Fair value hedges

Cash flow hedges
Interest rate
Foreign exchange1

Interest Rate
AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.81

THB/AUD FX Rate

24.18

Net investment hedges
Foreign exchange
1.

Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.

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141

NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The Company
Nominal AmountAs at 30 September 2022

Average
Rate

Less than 3months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

1.75%

10,931

13,46648,011

25,13897,546

5.43

604

-

-

-

604

1.37%

1,708

22,611

69,6001,009

94,928

40

121

-

656

817

Fair value hedges
Interest rate

Interest Rate

Foreign exchange

HKD/AUD FX Rate

Cash flow hedges
Interest rate

Interest Rate
AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.68

-

146

-

-

146

Interest rate

Interest Rate

1.37%

2,445

10,88443,06321,02077,412Foreign exchange

HKD/AUD FX Rate

5.74

548

-

-

-

548

1.06%

2,125

7,233

67,7991,695

78,852

38

115

-

642

795

150

149

-

-

299

Foreign exchange1
Net investment hedges
Foreign exchange
As at 30 September 2021
Fair value hedges

Cash flow hedges
Interest rate
Foreign exchange1

Interest Rate
AUD/USD FX Rate

0.74

USD/EUR FX Rate

0.91

TWD/AUD FX Rate

20.81

Net investment hedges
Foreign exchange
1.

Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.

141

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The impacts of ineffectiveness from our designated hedge relationships by type of hedge relationship and type of risk being hedged are:IneffectivenessConsolidated
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange

Change in value
Hedge ineffectivenessof hedging Change in value recognised in profit or
instrument2 of hedged item
loss3
$m
$m
$m
697
(55)

(719)
55

(22)
-

-

(3,619)
(4)

3,453
4

(166)
-

(13)
1

62

(62)

-

-

1,005
9

(1,006)
(9)

(1)
-

-

(934)
(10)

909
10

(25)
-

4
(1)

61

(61)

-

-

Change in value
Hedge ineffectivenessof hedging Change in value recognised in profit or
instrument2 of hedged item
loss3
$m
$m
$m

Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit or loss4$m

Ineffectiveness
The Company
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange

1,570
(55)

(1,586)
55

(16)
-

-

(3,643)
(4)

3,477
4

(166)
-

(13)
1

58

(58)

-

-

731
9

(734)
(9)

(3)
-

-

(797)
(10)

772
10

(25)
-

(6)
(1)

(6)

6

-

-

1.

All hedging instruments are classified as derivative financial instruments.

2.

Changes in value of hedging instruments is before any adjustments for Settle to Market clearing arrangements.

3.

Recognised in Other operating income.

4.

Recognised in Net interest income and Other operating income.

142

Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit or loss4$mOverview

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143

NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The hedged items in relation to the Group’s fair value hedges are:Consolidated
As at 30 September 2022

Balance sheet
presentation

Hedged risk

10,252

-

(369)

-

Interest rate-

(51,531)-3,721

Interest rate

53,915-(5,349)

-

604

-

75

-

64,771(51,531)(5,643)

3,721

3,416

-

9

-

Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuances

Fixed rate investment securities at FVOCI1 Investment securities
Equity securities at FVOCI1

Investment securities

Carrying amount
AssetsLiabilities$m$m

Accumulated fair value
hedge adjustments on
the hedged item
AssetsLiabilities$m$m

Foreign exchange

Total
As at 30 September 2021
Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuancesInterest rate-

(53,885)-(999)

Fixed rate investment securities at FVOCI1 Investment securities

Interest rate

53,321

-

(209)

-

Equity securities at FVOCI

Foreign exchange

548

-

20

-

57,285(53,885)

(180)

(999)

1

Investment securities

Total
1.

The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.

The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million(2021: $2 million).
The hedged items in relation to the Company’s fair value hedges are:

The Company
As at 30 September 2022

Balance sheet
presentation

Hedged risk

Carrying amount
AssetsLiabilities$m$m

Accumulated fair value
hedge adjustments on
the hedged item
AssetsLiabilities$m$m

10,252

-

(369)

-

Interest rate-

(37,141)-

2,572

Fixed rate investment securities at FVOCI1 Investment securities

Interest rate

44,038-(4,489)-Equity securities at FVOCI1

Foreign exchange

604

-

75

-

54,894(37,141)(4,783)

2,572

3,416

-

7

-

Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuances
Investment securities

Total
As at 30 September 2021
Fixed rate loans and advances

Net loans and advances Interest rate

Fixed rate debt issuance

Debt issuancesInterest rate-

(38,222)-(769)

Fixed rate investment securities at FVOCI1 Investment securities

Interest rate

41,944-129-

Equity securities at FVOCI

Foreign exchange

548

-

20

-

45,908(38,222)

156

(769)

1

Total
1.

Investment securities

The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.

The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million(2021: nil).

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The hedged items in relation to the Group’s and the Company’s cash flow and net investment hedges are:Consolidated
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations

The Company
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations

144

Hedged risk

Cash flow
hedge reserve
Continuing Discontinued
hedgeshedges$m$m

Foreign currencytranslation reserve
Continuing Discontinued
hedgeshedges$m$m

Interest rate
Interest rate
Foreign exchange
Foreign exchange(4,286)
1,357
(1)
(7)

19
5
(1)
-

-

-

Foreign exchange

-

-

43

(149)

Interest rate
Interest rate
Foreign exchange
Foreign exchange

546
4
(4)
(1)

20
(6)
(1)
-

-

-

Foreign exchange

-

-

(19)

(149)

Hedged risk

Cash flow
hedge reserve
Continuing Discontinued
hedgeshedges$m$m

Foreign currencytranslation reserve
Continuing Discontinued
hedgeshedges$m$m

Interest rate
Interest rate
Foreign exchange
Foreign exchange(4,005)
1,053
(1)
(7)

11
6
(1)
-

-

-

Foreign exchange

-

-

88

(149)

Interest rate
Interest rate
Foreign exchange
Foreign exchange

541
8
(4)
(1)

11
(6)
(1)
-

-

-

Foreign exchange

-

-

30

(149)

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NOTES TO THE FINANCIAL STATEMENTS

11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The table below details the reconciliation of the Group’s cash flow hedge reserve by risk type:Interest rate$m

Foreigncurrency
$m

Total
$m

Balance at 1 October 2020

1,034

4

1,038

Fair value gains/(losses)

(909)

(10)

(919)

Transferred to profit or loss

4

(1)

3

Consolidated

Income taxes and others

269

2

271

Balance at 30 September 2021

398

(5)

393

Fair value gains/(losses)(3,453)(4)(3,457)

Transferred to profit or loss

(13)

1

(12)

Income taxes and others

1,040

-

1,040

Balance at 30 September 2022

(2,028)(8)(2,036)

Hedges of net investments in a foreign operation resulted in a $62 million increase in FCTR during the year (2021: $61 million increase).
The table below details the reconciliation of the Company’s cash flow hedge reserve by risk type:Interest rate$m

Foreigncurrency
$m

Total
$m

Balance at 1 October 2020

931

4

935

Fair value gains/(losses)

(772)

(10)

(782)

Transferred to profit or loss

(6)

(1)

(7)

The Company

Income taxes and others

236

2

238

Balance at 30 September 2021

389

(5)

384

Fair value gains/(losses)(3,477)(4)(3,481)

Transferred to profit or loss

(13)

1

(12)

Income taxes and others

1,048

-

1,048

Balance at 30 September 2022

(2,053)(8)(2,061)Hedges of net investments in a foreign operation resulted in a $58 million increase in FCTR during the year (2021: $6 million decrease).

145

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
RECOGNITION AND MEASUREMENT
Recognition

Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a
derivative is positive, then we carry it as an asset, but if its value is negative, then we carry it as aliability.
Valuation adjustments are integral in determining the fair value of derivatives. This includes:
 a credit valuation adjustment to reflect the counterparty risk and/or event of default; and a funding valuation adjustment to account for funding costs and benefits in the derivatives
portfolio.

Derecognition ofassets and liabilities

We remove derivative assets from our Balance Sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our Balance
Sheet when the Group’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative
assets or liabilities may be derecognised in accordance with the principle above when collateral issettled, depending on the legal arrangements in place for each instrument.

Impact on the
Income Statement

The recognition of gains or losses on derivative financial instruments depends on whether thederivative is held for trading or is designated in a hedging relationship. For derivative financial
instruments held for trading, gains or losses from changes in the fair value are recognised in profit orloss.
For an instrument designated in a hedging relationship, the recognition of gains or losses depends on
the nature of the item being hedged. Refer to the table on page 138 for details of the recognition
approach applied for each type of hedge accounting relationship.
Sources of hedge ineffectiveness may arise from differences in the interest rate reference rate, margins,or rate set differences and differences in discounting between the hedged items and the hedging
instruments.

Hedge effectivenessTo qualify for hedge accounting under AASB 139, a hedge relationship is expected to be highly
effective. A hedge relationship is highly effective only if the following conditions are met: the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash
flows attributable to the hedged risk during the period for which the hedge is designated(prospective effectiveness); and the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
The Group monitors hedge effectiveness on a regular basis but at a minimum at each reporting date.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select the valuation techniques used to determine the fair value of derivatives, particularly the selection ofvaluation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 19 Fair
Value of Financial Assets and Financial Liabilities for further details.

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NOTES TO THE FINANCIAL STATEMENTS

12. INVESTMENT SECURITIES

1,353

4,758

1,310

3,600

Government securities

7,275

7,791

2022

Corporate and financial
institution securities

72,251

70,941

2021

Other securities
Equity securities

Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Investment securities measured at fair value through othercomprehensive income
Debt securities

76,81774,74365,257

61,623Equity securities

1,353

1,310

1,027

1,054

Investment securities measured at amortised cost
Debt securities1

7,943

7,031

6,115

5,263

Investment Securities measured at fair value through profit or loss
Debt securities
Total
1.

40

42

-

-

86,153

83,126

72,39967,940No
maturity
$m

Total
$m

Includes allowance for expected credit losses of $38 million (2021: $31 million) for the Group and $1 million (2021: $1 million) for the Company.

The maturity profile of investment securities is as follows:
Consolidated
As at 30 September 2022

Less than 3months$m

3 to 12months 1 to 5 years After 5 years
$m
$m
$m

6,544

14,04529,806

21,856-72,251

Corporate and financial institution securities

324

2,462

4,906

97

2

7,791

Other securities

429

423

543

3,363

-

4,758

Equity securities

-

-

-

-

1,353

1,353

7,297

16,93035,25525,316

1,355

86,153Government securities

6,396

12,98432,17919,382-

70,941

Corporate and financial institution securities

285

1,179

5,701

110

-

7,275

Other securities

129

295

553

2,623

-

3,600

Equity securities

-

-

-

-

1,310

1,310

6,810

14,45838,433

22,115

1,310

83,126

Government securities

Total
As at 30 September 2021

Total

During the year, the Group recognised a net gain (before tax) of $28 million (2021: $303 million) in Other operating income from the recycling ofgains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
12. INVESTMENT SECURITIES (continued)

The Company
As at 30 September 2022
Government securities

Less than 3months$m

3 to 12months 1 to 5 years After 5 years
$m
$m
$m

5,715

11,647

23,100No
maturity
$m

Total
$m

19,853-60,315

Corporate and financial institution securities

276

1,972

3,993

58

-

6,299

Other securities

429

423

543

3,363

-

4,758

Equity securities

-

-

-

-

1,027

1,027

6,420

14,042

27,63623,274

1,027

72,3995,453

11,646

24,39016,350-57,839Corporate and financial institution securities

175

830

4,371

71

-

5,447

Other securities

129

295

553

2,623

-

3,600

Total
As at 30 September 2021
Government securities

-

-

-

-

1,054

1,054

5,757

12,771

29,314

19,044

1,054

67,940Equity securities
Total

During the year, the Company recognised a net gain (before tax) of $1 million (2021: $301 million) in Other operating income from the recycling ofgains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.

RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate the Group’s
customer lending activities are classified as Loans and advances (rather than Investment securities) to better reflect the substance of thearrangement.
Equity investments not held for trading purposes may be designated at FVOCI on an instrument by instrument basis. If this election is
made, gains or losses are not reclassified from Other comprehensive income to profit or loss on disposal of the investment. However, gains
or losses may be reclassified within equity.
Assets disclosed as Investment securities are subject to the general classification and measurement policy for Financial Assets outlined at
the commencement of the Group’s financial asset disclosures on page 133. Additionally, expected credit losses associated with ‘Investment
securities - debt securities at amortised cost’ and ‘Investment securities - debt securities at fair value through other comprehensive income’are recognised and measured in accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses. For‘Investment securities - debt securities at fair value through other comprehensive income’, the allowance for Expected Credit Loss (ECL) is
recognised in the FVOCI reserve in equity with a corresponding charge to profit or loss.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select valuation techniques used to determine the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 19 Fair Value of Financial Assets andFinancial Liabilities for further details.

148

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NOTES TO THE FINANCIAL STATEMENTS

13. NET LOANS AND ADVANCES
The following table provides details of Net loans and advances for the Group and the Company:
Consolidated
2022$mOverdrafts
Credit cards
Commercial bills
Term loans – housing
Term loans – non-housing
Other
Subtotal
Unearned income1
Capitalised brokerage and other origination costs1,2
Gross loans and advances
Allowance for expected credit losses (refer to Note 14)
Net loans and advances

2021
$m

The Company
2022
$m

2021
$m

5,266
6,755
5,214
374,625
279,730
2,035
673,625(518)
2,882
675,989(3,582)
672,407

5,360
6,570
6,000
372,572
239,277
2,985
632,764(434)
1,434
633,764(4,045)
629,719

4,262
5,664
5,214
282,965
238,215
1,929
538,249(480)
2,501
540,270(2,925)537,345

4,465
5,494
6,000
278,372
194,1502,733
491,214(390)
1,050
491,874(3,387)
488,487

146,142526,265
672,407

125,952
503,767
629,719

121,513415,832
537,345

98,214
390,273
488,487

667,732
4,675
672,407626,099
3,620
629,719533,082
4,263
537,345

485,015
3,472
488,487

Residual contractual maturity:
Within one year
More than one year
Net loans and advances

Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Net loans and advances3
1.

Amortised over the expected life of the loan.

2.

During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group andthe Company. Comparatives have not been restated.

3.

Net loans and advances of the Group and the Company include a balance of $667 million relating to the Share Investing lending portfolio that is in the process of being sold with completion anticipated in
2023.

RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market andare facilities the Group provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance,
which are primarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we thenmeasure loans and advances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses, orat fair value when they are specifically designated on initial recognition as fair value through profit or loss, are classified as held for sale orwhen held for trading.
We classify contracts to lease assets and hire purchase agreements as finance leases if they transfer substantially all the risks and rewards ofownership of the asset to the customer or an unrelated third party. We include these facilities in ‘Other’ in the table above.
The Group enters into transactions in which it transfers financial assets that are recognised on its Balance Sheet. When the Group retains
substantially all of the risks and rewards of the transferred assets, the transferred assets remain on the Group’s Balance Sheet, however ifsubstantially all the risks and rewards are transferred, the Group derecognises the asset. If the risks and rewards are partially retained andcontrol over the asset is lost, the Group derecognises the asset. If control over the asset is not lost, the Group continues to recognise theasset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer of assets as appropriate.
Assets disclosed as Net loans and advances are subject to the general classification and measurement policy for financial assets outlined on
page 133. Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured inaccordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses.

149

150

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES
2022

Consolidated
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1The Company
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total

10

-

2022
Collectively Individuallyassessedassessed
$m
$m
2,500
425
668
5
1
3,169
430

Other comprehensive income
Investment securities - debt securities at FVOCI1
1.

2021

Collectively Individuallyassessedassessed
$m
$m
3,049
533
766
9
38
3,853
542

7

-

Total
$m
3,582
775
38
4,395

Collectively Individuallyassessedassessed
$m
$m
3,379
666
785
21
31
4,195
687

10

Total
$m
2,925
673
1
3,599

11

Total
$m
4,045
806
31
4,882

-

11

2021
Collectively Individuallyassessedassessed
$m
$m
2,824
563
667
7
1
3,492
570

Total
$m
3,387
674
1
4,062

7

7

-

7

For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other comprehensive income with a corresponding
charge to profit or loss.

The following tables present the movement in the allowance for ECL for the year.
Net loans and advances - at amortised cost
Allowance for ECL is included in Net loans and advances.
Stage 31

Consolidated
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021

Stage 1
$m
1,204
399
(639)
4
968

Stage 2
$m
2,465
(421)
(53)
3
1,994

Collectively
assessed
$m
461
(137)
90
3
417

Individuallyassessed
$m
851
159
663
(365)
(626)
(16)
666

Total
$m
4,981
61
(365)
(626)
(6)
4,045

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022

219
(48)
2
1,141

(224)
(202)
(20)
1,548

(95)
42
(4)
360

100
420
(222)
(428)
(3)
533

212
(222)
(428)
(25)
3,582

1.

The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.

2.

Other movements include the impacts of discount unwind on individually assessed allowance for ECL or the impact of divestments completed during the year.

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NOTES TO THE FINANCIAL STATEMENTS

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
Stage 31

The Company
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021

Stage 1
$m
1,028
392
(620)
(3)
797

Stage 2
$m
2,114
(382)
(49)
(4)
1,679

Collectively
assessed
$m
373
(130)
106
(1)
348

Individuallyassessed
$m
704
120
619
(308)
(556)
(16)
563

Total
$m
4,219
56
(308)
(556)
(24)
3,387

Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022

192
(59)
16
946

(201)
(220)
1
1,259

(84)
31
295

93
354
(193)
(386)
(6)
425

106
(193)
(386)
11
2,925

1.

The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.

2.

Other movements include the impact of discount unwind on individually assessed allowance for ECL.

Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Stage 31

Consolidated
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1.

The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.

2.

Other movements include impact of divestments completed during the year.

Stage 1
$m
596
51
(92)
555

Stage 2
$m
239
(49)
19
2
211

Collectively
assessed
$m
23
(3)
(1)
19

Individuallyassessed
$m
40
1
1
(21)
21

Total
$m
898
(72)
(21)
1
806

40
7
(9)
593

(34)
(28)
(5)
144

(8)
18
29

2
(2)
(11)
(1)
9

(5)
(11)
(15)
775

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
Stage 31

The Company
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1.

The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.

2.

Other movements include the impact of divestments completed during the year.

Stage 1
$m
513
45
(72)
(2)
484

Stage 2
$m
183
(41)
28
1
171

Collectively
assessed
$m
15
(5)
2
12

Individuallyassessed
$m
20
1
1
(15)
7

Total
$m
731
(41)
(15)
(1)
674

33
17
(4)
530

(27)
(29)
(3)
112

(6)
20
26

(2)
5

8
(2)
(7)
673

Stage 2$m-

Collectively
assessed$m-

Individuallyassessed
$m
-

Total
$m
31
38

Stage 2$m-

Collectively
assessed$m-

Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.
Stage 3

Consolidated
As at 30 September 2021
As at 30 September 2022

Stage 1$m
31
38

Stage 3

The Company
As at 30 September 2021
As at 30 September 2022

Stage 1$m
1
1

Individuallyassessed
$m
-

Total
$m
1
1

Investment securities - debt securities at FVOCIAs FVOCI assets are measured at fair value, there is no separate allowance for ECL. Instead, the allowance for ECL is recognised in Other
comprehensive income with a corresponding charge to profit or loss.
Stage 3

Consolidated
As at 30 September 2021
As at 30 September 2022

Stage 1$m
11
10Stage 2$m-

Collectively
assessed$m-

Stage 2$m-

Collectively
assessed$m-

Individuallyassessed
$m
-

Total
$m
11
10

Stage 3

The Company
As at 30 September 2021
As at 30 September 2022

152

Stage 1$m
7
7

Individuallyassessed
$m
-

Total
$m
7
7

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NOTES TO THE FINANCIAL STATEMENTS

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
CREDIT IMPAIRMENT CHARGE - INCOME STATEMENT
Credit impairment charge/(release) analysis
Consolidated
2022
$m

2021
$m

The Company
2022
$m

2021
$m

(311)

(823)

(333)

(726)

New and increased provisions (net of releases)1,2- Collectively assessed- Individually assessed

520

824

447

741

Write-backs3

(233)

(386)

(195)

(323)

Recoveries of amounts previously written-off

(208)

(182)

(184)

(161)

Total credit impairment charge

(232)

(567)

(265)

(469)

1.

Includes the impact of transfers between collectively assessed and individually assessed.

2.

New and increased provisions (net of releases) includes:
Consolidated

The Company

2022

3.

2021

2022

2021

Collectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$mCollectively
assessed$m

Individuallyassessed$m

Net loans and advances at amortised cost

(308)

520

(761)

822

(341)

447

(683)

739

Off-balance sheet commitments

(5)

-

(74)

2

8

-

(43)

2

Investment securities - debt securities at amortised cost

3

-

11

-

-

-

-

-

Investment securities - debt securities at FVOCI

(1)

-

1

-

-

-

-

-

Total

(311)

520

(823)

824

(333)

447

(726)

741

Consists of write-backs in Net loans and advances at amortised cost of $222 million (2021: $365 million) for the Group and $193 million (2021: $308 million) for the Company, and Off-balance sheet
commitments of $11 million (2021: $21 million) for the Group and $2 million (2021: $15 million) for the Company.

The contractual amount outstanding on financial assets that were written off during the year and that are still subject to enforcement activity is$143 million (2021: $168 million) for the Group, and $128 million (2021: $138 million) for the Company.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENTEXPECTED CREDIT LOSS MODEL
The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios andtakes into account the time value of money, past events, current conditions and forecasts of future economic conditions.
Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit
deterioration since origination, according to the following three-stage approach: Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,an allowance equivalent to 12 months ECL is recognised reflecting the expected credit losses resulting from default events that are
possible within the next 12 months from the reporting date. For instruments with a remaining maturity of less than 12 months,
expected credit losses are estimated based on default events that are possible over the remaining time to maturity.
 Stage 2: Where there has been a SICR since origination, an allowance equivalent to lifetime ECL is recognised reflecting expected credit
losses resulting from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a
subsequent period such that the increase in credit risk since origination is no longer considered significant, the exposure returns to a
Stage 1 classification with ECL measured accordingly.
 Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSSECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:
 Probability of default (PD) - the estimate of the likelihood that a borrower will default over a given period;
 Exposure at default (EAD) - the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; and Loss given default (LGD) - the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility's EAD,
taking into account direct and indirect recovery costs.
These credit risk factors are adjusted for current and forward-looking information through the use of macroeconomic variables.
EXPECTED LIFE
When estimating ECL for exposures in Stage 2 and 3, the Group considers the expected lifetime over which it is exposed to credit risk.
For non-retail portfolios, the Group uses the maximum contractual period as the expected lifetime for non-revolving credit facilities. For
non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects the Group’s contractual right to withdraw afacility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For retail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviour
and events that give rise to substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring ECL is aligned to the definition used for internal credit risk management purposes across all
portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicators that a debtor isunlikely to fully satisfy contractual credit obligations to the Group, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of theGroup’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries ofamounts previously written-off are recorded as a release to the credit impairment charge in the income statement.

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NOTES TO THE FINANCIAL STATEMENTS

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT (continued)
MODIFIED FINANCIAL ASSETS
If the contractual terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit orcommercial reasons, an assessment is made to determine if the changes to the terms of the existing financial asset are considered
substantial. This assessment considers both changes in cash flows arising from the modified terms as well as changes in the overall
instrument risk profile; for example, changes in the principal (credit limit), term, or type of underlying collateral. Where a modification isconsidered non-substantial, the existing financial asset is not derecognised and its date of origination continues to be used to determine
SICR. Where a modification is considered substantial, the existing financial asset is derecognised and a new financial asset is recognised at
its fair value on the modification date, which also becomes the date of origination used to determine SICR for this new asset.
SIGNIFICANT INCREASE IN CREDIT RISK (SICR)
Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, the Group considers both
qualitative and quantitative information:i.

Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.
For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting dateto the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the PD of the borrower and incorporates
both borrower and non-borrower specific information, including forward-looking information. CCRs are subject to review at least
annually or more frequently when an event occurs which could affect the credit risk of the customer.
For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime PD at
the reporting date to that at origination, or by reference to customer behavioural score thresholds. The scenario weighted lifetime
probability of default may increase significantly if: there has been a deterioration in the economic outlook, or an increase in economic uncertainty; or there has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.

ii. Backstop criteria
The Group uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios only,
facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.
FORWARD-LOOKING INFORMATION
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since originationand in our estimate of ECL. In applying forward-looking information for estimating ECL, the Group considers four probability-weighted
forecast economic scenarios as follows:i.

Base case scenario
The base case scenario is ANZ’s view of future macroeconomic conditions. It reflects management’s assumptions used for strategicplanning and budgeting, and also informs the Group Internal Capital Adequacy Assessment Process (ICAAP) which is the process theGroup applies in strategic and capital planning over a 3-year time horizon;

ii. Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on theeconomic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) andpessimistic (in the case of the downside) economic events and uncertainty over long term horizons; andiv. Severe downside scenario
To better reflect the current economic conditions and geopolitical environment, the Group has altered the severe downside scenario in
2022 from a scenario fixed by reference to average economic cycle conditions to one which aligns with the scenario used for Groupwide stress testing.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT (continued)
FORWARD-LOOKING INFORMATION (continued)
The four scenarios are described in terms of macroeconomic variables used in the PD, LGD and EAD models (collectively the ECL models)depending on the lending portfolio and country of the borrower. Examples of the macroeconomic variables include unemployment rates,
GDP growth rates, house price indices, commercial property price indices and consumer price indices.
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario, as well as specific portfolio considerations where required. The Group Asset and Liability Committee (GALCO) is
responsible for reviewing and approving the base case economic scenario and the Credit and Market Risk Committee (CMRC) approves theprobability weights applied to each scenario.
Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not been adequately
addressed in the modelling process. CMRC is responsible for approving such adjustments.

KEY JUDGEMENTS AND ESTIMATES
Collectively assessed allowance for expected credit losses
In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to: the selection of an estimation technique or modelling methodology; and the selection of inputs for those models, and the interdependencies between those inputs.
The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between
those inputs, and highlights significant changes during the current period.
The judgements and associated assumptions have been made within the context of the uncertainty of how various factors might impact
the global economy and reflect historical experience and other factors that are considered to be relevant, including expectations of future
events that are believed to be reasonable under the circumstances. The Group’s ECL estimates are inherently uncertain and, as a result,actual results may differ from these estimates.
Judgement/Assumption

Description

Considerations for the year ended 30 September 2022

Determining when a
Significant Increase in
Credit Risk has occurred

In the measurement of ECL, judgement isinvolved in setting the rules and trigger points
to determine whether there has been a SICR
since initial recognition of a loan, which would
result in the financial asset moving from Stage 1
to Stage 2. This is a key area of judgement sincetransition from Stage 1 to Stage 2 increases the
ECL from an allowance based on the probabilityof default in the next 12 months, to anallowance for lifetime expected credit losses.
Subsequent decreases in credit risk resulting intransition from Stage 2 to Stage 1 may similarly
result in significant changes in the ECL
allowance.

The Group has adjusted the ECL this period to accountfor expected deterioration in credit-worthiness of certain
customer segments which are considered particularly
vulnerable to economic pressures such as higher interest
rates, increasing inflation and low wage growth.

The setting of precise trigger points requires
judgement which may have a material impact
upon the size of the ECL allowance. The Group
monitors the effectiveness of SICR criteria on an
ongoing basis.

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NOTES TO THE FINANCIAL STATEMENTS

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
Judgement/Assumption

Description

Considerations for the year ended 30 September 2022

Measuring both 12month and lifetime
credit losses

The probability of default (PD), loss given default(LGD) and exposure at default (EAD) credit risk
parameters used in determining ECL are point-intime measures reflecting the relevant forwardlooking information determined by management.
Judgement is involved in determining which
forward-looking information variables are relevant
for particular lending portfolios and for
determining each portfolio’s point-in-time
sensitivity.

The modelled outcome as at 30 September 2021 included amodel adjustment to recognise increased model
uncertainties as a result of COVID-19. With these
uncertainties largely being appropriately reflected in theunderlying models, the COVID-19 model adjustments havebeen removed.

In addition, judgement is required where
behavioural characteristics are applied inestimating the lifetime of a facility to be used inmeasuring ECL.

There were no material changes to the policies.

The Group derives a forward-looking ‘base case’economic scenario which reflects ANZ Research Economics’ (ANZ Economics) view of future
macroeconomic conditions.

There have been no changes to the types of forward-looking
variables (key economic drivers) used as model inputs.

Base case economic
forecast

As at 30 September 2022, the base case assumptions havebeen updated to reflect the relaxation of COVID-19 related
restrictions, continuing supply chain and labour market
pressures, and rapidly increasing global inflation and interest
rate rises, as well as lower growth in key economies.
The expected outcomes of key economic drivers for the basecase scenario at 30 September 2022 are described below
under the heading ‘Base case economic forecast
assumptions’.

Probability weighting ofeach economic scenario(base case, upside,
downside and severe
downside scenarios)1

Probability weighting of each economic scenario is
determined by management considering the risks
and uncertainties surrounding the base caseeconomic scenario at each measurement date.
The assigned probability weightings in Australia,
New Zealand and Rest of world are subject to ahigh degree of inherent uncertainty and therefore
the actual outcomes may be significantly different
to those projected.

To better reflect the current economic conditions andgeopolitical environment, the Group has altered the severe
downside scenario from a scenario fixed by reference toaverage economic cycle conditions to one which aligns withthe scenario used for Group-wide stress testing.
The key considerations for probability weightings in thecurrent period include the emergence from COVID-19
restrictions, how customers will respond to interest rate rises
and higher inflation, and potential impacts of lower growthprospects globally.
Weightings for current and prior periods are as detailed in
the section on ‘Probability weightings’ below.

1.

The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
Judgement/Assumption

Description

Considerations for the year ended 30 September 2022

Management
temporary adjustments

Management temporary adjustments to the ECL
allowance are used in circumstances where it isjudged that our existing inputs, assumptions andmodel techniques do not capture all the risk
factors relevant to our lending portfolios.
Emerging local or global macroeconomic,
microeconomic or political events, and natural
disasters that are not incorporated into our current
parameters, risk ratings, or forward-looking
information are examples of such circumstances.
The use of management temporary adjustments
may impact the amount of ECL recognised.

As at 30 September 2022, Management no longer
consider that a separate management temporary
adjustment is necessary for the uncertainty associatedwith COVID-19. Management have however included
adjustments to accommodate uncertainty associatedwith rising inflation, rapidly increasing interest rates,and ongoing supply chain and labour market
pressures.
In addition, management overlays have been made forrisks particular to retail, including home loans andsmall business in Australia and NZ, for personal, and for
tourism in the Pacific.

Base case economic forecast assumptions
Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of
the ECL balance.
The economic drivers of the base case economic forecasts, reflective of ANZ Economics’ view of future macroeconomic conditions used at
30 September 2022 are set out below. For the years following the near term forecasts below, the ECL models project future year economic
conditions which include an assumption of eventual reversion to mid-cycle economic conditions.
Forecast calendar year
2022
2023
2024
Australia
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
New Zealand
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
Rest of world
GDP (annual % change)
Consumer price index (annual average % change)

158

4.0%
3.5%
-2.6%
6.4%

2.4%
3.1%
-8.9%
3.8%

1.4%
3.6%
5.2%
2.8%

1.9%
3.3%
-11.3%
6.8%

1.8%
3.9%
-3.1%
3.6%

1.7%
4.9%
2.6%
1.9%

1.7%
8.3%

0.9%
3.1%

1.2%
2.0%

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NOTES TO THE FINANCIAL STATEMENTS

14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
The base case economic forecasts for Australia, New Zealand and Rest of World reflect the expected slow down in economic activity
globally from higher interest rates and increasing inflation, along with declining residential property prices until 2024. Tight labour markets
are expected to persist until central banks’ monetary policies have the intended impact of reducing demand and bringing inflation down.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the basecase economic scenario, including the uncertainties described above.
The base case scenario represents an overall deterioration in the forecasts since September 2021 for all three geographical segments.
Given uncertainties associated with how the economy may respond to rapidly moving factors including inflation and lower economic
growth globally, the average upside case weighting across geographies has been reduced to 0% (Sep 21: 5%), the base case weighting has
been increased to 45% (Sep 21: 41%), and the severe downside scenario increased to 15% (Sep 21: 6%).
The assigned probability weightings in Australia, New Zealand and Rest of World are subject to a high degree of inherent uncertainty andtherefore the actual outcomes may be significantly different to those projected. The Group considers these weightings in each geography
to provide estimates of the possible loss outcomes and taking into account short and long term inter-relationships within the Group’s
credit portfolios. The average weightings applied across the Group are set out below:

Base
UpsideDownside
Severe downside

Consolidated
2022
2021

The Company
2022
2021

45.0%
0.0%
40.0%
15.0%

45.0%
0.0%
40.0%
15.0%

41.3%
5.2%
47.7%
5.8%

40.0%
5.4%
48.8%
5.8%

ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers infuture periods, expected credit losses reported by the Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2022:
Consolidated
ECL
Impact$m$m

The Company
ECL
Impact$m$m

If 1% of Stage 1 facilities were included in Stage 2

3,936

83

3,242

73

If 1% of Stage 2 facilities were included in Stage 1

3,848

(5)

3,165

(4)

100% upside scenario

1,423(2,430)

1,190(1,979)100% base scenario

1,750(2,103)

1,454(1,715)

100% downside scenario

3,239

(614)

2,699

(470)

100% severe downside scenario

6,951

3,098

5,725

2,556

Individually assessed allowance for expected credit losses
In estimating individually assessed ECL, the Group makes judgements and assumptions in relation to expected repayments, the realisablevalue of collateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process.
Judgements and assumptions in respect of these matters have been updated to reflect amongst other things, the uncertainties describedabove.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
FINANCIAL LIABILITIESOutlined below is a description of how we classify and measure financial liabilities relevant to the subsequent note disclosures.

CLASSIFICATION AND MEASUREMENT
Financial liabilities
Financial liabilities are measured at amortised cost, or fair value through profit or loss (FVTPL) when they are held for trading. Additionally,financial liabilities can be designated at FVTPL where: the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise; a group of financial liabilities are managed and their performance is evaluated on a fair value basis, in accordance with a documented
risk management strategy; or the financial liability contains one or more embedded derivatives unless:a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; orb) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk areincluded in Other comprehensive income, except where doing so would create or enlarge an accounting mismatch in profit or loss.

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NOTES TO THE FINANCIAL STATEMENTS

15. DEPOSITS AND OTHER BORROWINGS
Certificates of deposit
34,04939,22237,70825,684

Term deposits

86,082

103,580
200,064

50,9062022

On demand and shortterm deposits

177,081

49,746

Deposits not bearing interest

2021

Deposits from banks &securities sold under
repurchase agreements

366,755

369,460

Commercial paper andother borrowings

Certificates of deposit
Term deposits
On demand and short term deposits
Deposits not bearing interest
Deposits from banks & securities sold under repurchase agreements
Commercial paper and other borrowings
Deposits and other borrowings

Consolidated
2022
2021
$m
$m
34,04937,708200,064
177,081369,460
366,755
50,90649,746
103,580
86,082
39,222
25,684
797,281743,056

The Company
2022
2021
$m
$m
32,41135,696
157,479
136,067
310,857
303,381
29,416
26,836
98,82583,29436,61921,449665,607606,723

781,573
15,708797,281

717,889
25,167743,056

654,997
10,610665,607584,816
21,907606,723

794,6212,660
797,281738,772
4,284
743,056

665,56740
665,607606,67350
606,723

Residual contractual maturity:
Within one year
More than one year
Deposits and other borrowings

Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Deposits and other borrowings

RECOGNITION AND MEASUREMENT
For deposits and other borrowings that: are not designated at FVTPL on initial recognition, we measure them at amortised cost and recognise their interest expense using theeffective interest rate method; and are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate themas measured at fair value through profit or loss.
Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in
the Group’s own credit risk in Other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss werecognise directly in profit or loss. Once we have recognised an amount in Other comprehensive income, we do not later reclassify it toprofit or loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since
the risks and rewards of ownership remain with the Group. Over the life of the repurchase agreement, we recognise the difference
between the sale price and the repurchase price and charge it to interest expense in profit or loss.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
16. PAYABLES AND OTHER LIABILITIESPayables and accruals
Liabilities at fair value
Lease liabilities
Trail commission liabilities1
Other liabilities
Payables and other liabilities
1.

Consolidated
2022
$m
2,896
3,239
1,040
1,320
1,340
9,835

2021
$m
2,062
3,913
1,245
1,427
8,647

The Company
2022
$m
2,189
2,857
1,628
1,320
568
8,562

2021
$m
1,526
3,245
1,831
642
7,244

During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of expected
future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and theCompany. Comparatives have not been restated.

RECOGNITION AND MEASUREMENTThe Group recognises liabilities when there is a present obligation to transfer economic resources as a result of past events.
Below is the measurement basis for each item classified as other liabilities:
 Payables, accruals and other liabilities are measured at the contractual amount payable or the best estimate of consideration required tosettle the payable.
 Liabilities at fair value are trading liabilities measured based on quoted prices in active markets.
 Lease liabilities are initially measured at the present value of the future lease payments using the Group’s incremental borrowing rate at
the lease commencement date. The carrying amount is then subsequently adjusted to reflect the interest on the lease liability, lease
payments that have been made and any lease reassessments or modifications.
 Trail commission liabilities are measured based on the present value of expected future trail commission payments taking into
consideration average behavioural loan life and outstanding balances of broker originated loans.

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NOTES TO THE FINANCIAL STATEMENTS

17. DEBT ISSUANCESThe Group uses a variety of funding programmes to issue senior debt (including covered bonds and securitisations) and subordinated debt. The
difference between senior debt and subordinated debt is that holders of senior debt take priority over holders of subordinated debt owed by therelevant issuer. In the winding up of the relevant issuer, the subordinated debt will be repaid by the relevant issuer only after the repayment of claimsof its depositors, other creditors and the senior debt holders.
Consolidated
2022
$m

2021
$m

The Company
2022
$m

2021
$m

52,324
12,967
1,115
66,406

58,952
15,3991,424
75,77540,325
9,371
49,69645,348
11,342
56,6907,705
17,907
1,716
27,32893,734

8,506
16,207566
25,279101,054

7,763
17,907462
26,13275,828

8,191
16,207
24,39881,088Within one year
More than one year
No maturity date (instruments in perpetuity)

25,20866,6601,866

22,621
76,594
1,839

21,99051,9291,909

18,51260,605
1,971

Total debt issued

93,734

101,054

75,82881,088

Senior debt
Covered bonds
Securitisation
Total unsubordinated debt
Subordinated debt
- Additional Tier 1 capital- Tier 2 capital- Other subordinated debt securities1
Total subordinated debt
Total debt issued

Residual contractual maturity2:

1.

This includes the Company’s USD 300 million perpetual subordinated debt and the subordinated debt issued by ANZ Bank New Zealand. The Company’s USD 300 million perpetual subordinated notes
were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements which ended in December 2021.

2.

Based on the final maturity date or, in the case of Additional Tier 1 capital securities, the mandatory conversion date (if any).

TOTAL DEBT ISSUED BY CURRENCY
The table below shows the Group’s issued debt by currency of issue, which broadly represents the debt holders’ base location.

USD
EUR
AUD
NZD
JPY
CHF
GBP
HKD

United States dollars
Euro
Australian dollars
New Zealand dollars
Japanese yen
Swiss francs
Pounds sterling
Hong Kong dollars
Chinese yuan, Norwegian kroner, Singapore dollars and Canadian
Other
dollars
Total debt issued

Consolidated
2022
$m

2021
$m

The Company
2022
$m

2021
$m

25,527
19,92336,398
1,628
2,159
954
5,261
771

29,78822,98435,709
3,276
1,854
940
4,286
727

17,206
14,04935,259
46
2,159
5,261
771

22,354
15,29434,299
839
1,853
4,287
727

1,113

1,490

1,077

1,435

93,734

101,054

75,82881,088SUBORDINATED DEBTAt 30 September 2022, all subordinated debt issued by the Company qualifies as regulatory capital for the Group (other than the Company’s USD 300
million perpetual subordinated notes – refer to commentary below). Depending on their terms and conditions, the Company’s subordinated debt
instruments are classified as either Additional Tier 1 (AT1) capital for the Group (in the case of the ANZ Capital Notes (ANZ CN) and ANZ Capital
Securities (ANZ CS)), or Tier 2 capital (in the case of the Company’s term subordinated notes) for APRA’s capital adequacy purposes.
Subordinated debt issued externally by ANZ Bank New Zealand Limited (ANZ Bank New Zealand) will constitute subordinated debt of both ANZ BankNew Zealand and the Group. Whilst it will constitute tier 2 capital for ANZ Bank New Zealand for the purposes of the Reserve Bank of New Zealand’s(RBNZ) capital requirements, it will not constitute Tier 2 capital for the Group as the terms of the subordinated debt does not satisfy APRA’s capitalrequirements.
Tier 2 capital instruments rank ahead of AT1 capital instruments, and AT1 capital instruments rank only ahead of ordinary shares, in any liquidation
event impacting the issuer of the instruments.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
AT1 Capital
All outstanding AT1 capital instruments of the Company are Basel III fully compliant instruments (refer to Note 25 Capital Management for further
information about Basel III). Each of the ANZ CN and ANZ CS rank equally with each other.
Distributions on the AT1 capital instruments are non-cumulative and subject to the issuer’s absolute discretion and certain payment conditions(including regulatory requirements). Distributions on ANZ CNs are franked in line with the franking applied to ANZ ordinary shares.
Where specified, the AT1 capital instruments provide the issuer with an early redemption or conversion option on a specified date and in certain othercircumstances (such as a tax or regulatory event). This redemption option is subject to APRA’s prior written approval.
Each of the AT1 capital instruments will immediately convert into a variable number of ANZ ordinary shares (based on the average market price of theshares immediately prior to conversion less a 1% discount, subject to a maximum conversion number of ANZ ordinary shares) if: The Group’s or the Company’s Common Equity Tier 1 capital ratio is equal to or less than 5.125% - known as a Common Equity Capital Trigger
Event; or APRA notifies the Company that, without the conversion or write-off of certain securities or a public sector injection of capital (or equivalent
support), it considers that the Company would become non-viable – known as a Non-Viability Trigger Event.
Where specified, AT1 capital instruments mandatorily convert into a variable number of ANZ ordinary shares (based on the average market price ofthe shares immediately prior to conversion less a 1% discount): on a specified mandatory conversion date; or on an earlier date under certain circumstances as set out in the terms.
However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.
Preference shares issued externally by ANZ Bank New Zealand will constitute additional tier 1 capital for ANZ Bank New Zealand for the purposes of
the RBNZ’s capital requirements, however they will not constitute Additional Tier 1 capital for the Group as the terms of the preference shares do notsatisfy APRA’s capital requirements. The preference shares are included within non-controlling interests in Note 24 Shareholders’ Equity.
The tables below show the key details of the Group’s AT1 capital instruments on issue at 30 September in both the current and prior years:

Additional Tier 1 capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)
AUD
1,610mANZ CN22
AUD
970m
ANZ CN3
AUD
1,622mANZ CN4
AUD
931m
ANZ CN5
AUD
1,500mANZ CN6
AUD
1,310mANZ CN7ANZ Capital Securities (ANZ CS)
USD
1,000mANZ Capital Securities
ANZ NZ Capital Notes (ANZ NZ CN)
NZD500m
ANZ NZ Capital Notes3
Total Additional Tier 1 capital4

Consolidated
2022
$m

2021
$m

The Company
2022
$m

2021
$m

970
1,619
928
1,487
1,297

1,609
968
1,617
927
1,486
-

985
1,619
928
1,487
1,297

1,609
998
1,617
927
1,486
-

1,404

1,422

1,447

1,554

-

477

-

-

7,705

8,506

7,763

8,191

1.

Carrying values are net of issuance costs.

2.

All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.

3.

All of the ANZ NZ Capital Notes were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.

4.

This forms part of qualifying Additional Tier 1 capital. Refer to Note 25 Capital Management for further details.

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17. DEBT ISSUANCES (continued)
ANZ Capital Notes (ANZ CN)
CN2

Issue date

31 March 2014

CN3
ANZ, acting through its New
Zealand branch
5 March 2015

Issue amount$1,610 million$970 million$1,622 million

Face value

$100

$100

$100

Distribution frequency

Semi-annually in arrears

Semi-annually in arrears

Quarterly in arrears

Distribution rate

Floating rate: (180 day BankBill rate +3.25%)x(1Australian corporate tax rate)

Floating rate: (180 day BankBill rate +3.6%)x(1-Australian
corporate tax rate)

Floating rate: (90 day BankBill rate +4.7%)x(1-Australian
corporate tax rate)

Issuer’s early redemption or conversion option

24 March 20221

24 March 2023

20 March 2024

Mandatory conversion date

24 March 2024

24 March 2025

20 March 2026

Common equity capital trigger event

Yes

Yes

Yes

Non-viability trigger event

Yes
$nil

Yes
$970 million

Yes$1,619 million(2021: $1,609 million)(2021: $968 million)(2021: $1,617 million)

IssuerCarrying value (net of issue costs)

ANZ

2

CN4
ANZ
27 September 2016

CN5

CN6

CN7

Issuer

ANZ

ANZ

ANZ

Issue date

28 September 2017

8 July 2021

24 March 2022

Issue amount$931 million$1,500 million$1,310 million

Face value

$100

$100

$100

Distribution frequency

Quarterly in arrears

Quarterly in arrears

Quarterly in arrears

Distribution rate

Floating rate: (90 day Bank Billrate +3.8%)x(1-Australian
corporate tax rate)

Floating rate: (90 day BankBill rate +3.0%)x(1-Australian
corporate tax rate)

Floating rate: (90 day BankBill rate +2.7%)x(1-Australian
corporate tax rate)

Issuer’s early redemption or conversion option

20 March 2025

20 March 2028

20 March 2029

Mandatory conversion date

20 March 2027

20 September 2030

20 September 2031

Common equity capital trigger event

Yes

Yes

Yes

Non-viability trigger event

Yes$928 million(2021: $927 million)

Yes$1,487 million(2021: $1,486 million)

Yes$1,297 million(2021: $nil)

Carrying value (net of issue costs)
1.

All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.

2.

The mandatory conversion date is no longer applicable as all of CN2 has been redeemed.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
ANZ Capital Securities (ANZ CS)
Issuer

ANZ, acting through its London branch

Issue date

15 June 2016

Issue amountUSD 1,000 million

Face value

Minimum denomination of USD 200,000 and an integral multiple of USD 1,000 above that

Interest frequency
Interest rate
Issuer’s early redemption option

Semi-annually in arrears
Fixed at 6.75% p.a. until 15 June 2026. Reset on 15 June 2026 and each 5 year anniversary
to a floating rate: 5 year USD mid-market swap rate + 5.168%
15 June 2026 and each 5 year anniversary

Common equity capital trigger event

Yes

Non-viability trigger event

Yes

Carrying value (net of issue costs)$1,404 million (2021: $1,422 million)

ANZ NZ Capital Notes (ANZ NZ CN)1
IssuerANZ Bank New Zealand Limited

Issue date

31 March 2015

Issue amountNZD 500 million

Face value

NZD 1

Interest frequency

Quarterly in arrears

Interest rate

Fixed at 7.2% p.a. until 25 May 2020. The rate reset in May 2020 to a floating rate: New Zealand 3
month bank bill rate + 3.5%
Interest payments are subject to ANZ Bank New Zealand’s absolute discretion and certain payment
conditions (including APRA and RBNZ requirements)

Issuer’s early redemption option

The option was not exercised on 25 May 2020 and has expired

Mandatory conversion date

25 May 2022

Common equity capital trigger event

Yes

Non-viability trigger event

Yes

Carrying value (net of issue costs)$nil (2021: $477 million)1.

All of the ANZ NZ CNs were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.

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NOTES TO THE FINANCIAL STATEMENTS

17. DEBT ISSUANCES (continued)
TIER 2 CAPITAL
Convertible term subordinated notes issued by the Company are Basel III fully compliant instruments. If a Non-Viability Trigger Event occurs, each of
the convertible term subordinated notes will immediately convert into ANZ ordinary shares (based on the average market price of the shares
immediately prior to conversion less a 1% discount, subject to a maximum conversion number).
The table below shows the Tier 2 capital subordinated debt the Group holds at 30 September in both the current and prior year:
Consolidated
Currency

Face value Maturity

Next optional call date –subject to APRA’s prior approval

The Company

Interest
rate

2022
$m

2021
$m

2022
$m

2021
$m

Floating

-

417

-

417

-

417

-

417

Fixed

1,189

1,173

1,189

1,173

Basel III transitional subordinated notes (perpetual)1
USD

300m

Perpetual

Each semi-annual interest payment date

Total Basel III transitional subordinated notes
Tier 2 capital (term subordinated notes)
USD

800m

2024

N/A

SGD

500m

2027

2022

Fixed

-

515

-

515

AUD

200m

2027

2022

Fixed

-

200

-

200

JPY

20,000m

2026

N/A

Fixed

213

250

213

250

USD

1,500m

2026

N/A

Fixed

2,113

2,137

2,113

2,137

JPY

10,000m

2028

2023

Fixed

106

124

106

124

AUD

225m

2032

2027

Fixed

225

225

225

225

AUD

1,750m2029

2024

Floating

1,750

1,740

1,750

1,740

EUR

1,000m

2029

2024

Fixed

1,410

1,608

1,410

1,608

AUD

265m

2039

N/A

Fixed

179

253

179

253

USD

1,250m

2030

2025

Fixed

1,785

1,782

1,785

1,782

AUD

1,250m2031

2026

Floating

1,250

1,235

1,250

1,235

USD

1,500m

2035

2030

Fixed

1,830

1,955

1,830

1,955

AUD

330m

2040

N/A

Fixed

214

304

214

304

AUD

195m

2040

N/A

Fixed

124

178

124

178

EUR

750m

2031

2026

Fixed

1,003

1,193

1,003

1,193

GBP

500m

2031

2026

Fixed

714

918

714

918

AUD

1,450m

2032

2027

Fixed

1,390

-

1,390

-

AUD

300m

2032

2027

Floating

300

-

300

-

JPY

59,400m

2032

2027

Fixed

627

-

627

-

SGD

600m

2032

2027

Fixed

618

-

618

-

AUD

900m

2034

2029

Fixed

867

-

867

-

Total Basel III fully compliant subordinated notes

17,907

15,79017,907

15,790Total Tier 2 capital

17,907

16,207

17,907

16,207

2,3

1.

The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021. In
2022 this has been included in Other subordinated debt securities.

2.

Carrying values are net of issuance costs, and, where applicable, include fair value hedge accounting adjustments.

3.

This forms part of qualifying Tier 2 capital. Refer to Note 25 Capital Management for further details.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
OTHER SUBORDINATED DEBT SECURITIESThe Company’s USD 300 million perpetual subordinated notes no longer form a component part of regulatory capital for the Group (as APRA’stransitional Basel III capital treatment ceased to apply from January 2022). These subordinated notes do not contain a Non-Viability Trigger Event.
A subsidiary of the Group, ANZ Bank New Zealand, issued NZD 600 million of unsecured subordinated notes in September 2021 and USD 500 millionof unsecured subordinated notes in August 2022. Whilst these subordinated notes constitute tier 2 capital under RBNZ requirements, thesubordinated notes do not (among other things) contain a Non-Viability Trigger Event and therefore do not meet APRA’s requirements for Tier 2
capital instruments in order to qualify as regulatory capital for the Group.
Consolidated

The Company

Interest
rate

2022
$m

2021
$m

2022
$m

2021
$m

Non-Basel III compliant perpetual subordinated notes issued by the Company2
Each semi-annual interest payment
USD
300m
Perpetual
Floating
date
Term subordinated notes issued by ANZ Bank New Zealand Limited

462

-

462

-

NZD

600m

2031

2026

Fixed

524

566

-

-

USD

500m

2032

2027

Fixed

730

-

-

-

1,716

566

462

-

Currency

Face value

Maturity

Next optional call date1

Other subordinated debt
1.

Subject to APRA’s or RBNZ’s prior approval (as applicable).

2.

The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021.

RECOGNITION AND MEASUREMENT
Debt issuances are initially recognised at fair value and are subsequently measured at amortised cost, except where designated at fair value
through profit or loss. Interest expense on debt issuances is recognised using the effective interest rate method. Where the Group enters
into a fair value hedge accounting relationship, the fair value attributable to the hedge risk is reflected in adjustments to the carrying valueof the debt.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Events or Non-Viability Trigger Events) areconsidered to contain embedded derivatives that we account for separately at fair value through profit or loss. The embedded derivatives
arise because the amount of shares issued on conversion following any of those trigger events is subject to the maximum conversion
number, however they have no significant value as of the reporting date given the remote nature of those trigger events.

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENTRISK MANAGEMENT FRAMEWORK AND MODELINTRODUCTION
The use of financial instruments is fundamental to the Group’s businesses of providing banking and other financial services to our customers. The
associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of the Group’s key material risks.
We disclose details of all key material risks impacting the Group, and further information on the Group’s risk management activities, in the Governanceand Risk Management sections of this Annual Report.
This note details the Group’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks.
Key material financial risks
Credit risk

Key sections applicable to this risk
 Credit risk overview, management and control responsibilities

The risk of financial loss resulting from: Maximum exposure to credit risk

 a counterparty failing to fulfil its obligations; or Credit quality

 a decrease in credit quality of a counterparty resulting in afinancial loss.

 Concentrations of credit risk

Credit risk incorporates the risks associated with us lending tocustomers who could be impacted by climate change or bychanges to laws, regulations, or other policies adopted bygovernments or regulatory authorities, including carbon pricing
and climate change adaptation or mitigation policies.

 Collateral management

Market risk

 Market risk overview, management and control responsibilities

The risk to the Group’s earnings arising from: Measurement of market risk

 changes in interest rates, foreign exchange rates, credit spreads,
volatility and correlations; or Traded and non-traded market risk

 fluctuations in bond, commodity or equity prices.

 Foreign currency risk – structural exposure Equity securities designated at FVOCI

Liquidity and funding risk

 Liquidity risk overview, management and control responsibilities

The risk that the Group is unable to meet payment obligations as
they fall due, including: Key areas of measurement for liquidity risk repaying depositors or maturing wholesale debt; or Residual contractual maturity analysis of the Group’s liabilities

 the Group having insufficient capacity to fund increases in
assets.

 Liquidity risk outcomes

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
OVERVIEWAN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORKThis overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under AASB 7
Financial Instruments: Disclosures. It should be read in conjunction with the Governance and Risk Management sections of this Annual Report.
The Board is responsible for establishing and overseeing the Group’s Risk Management Framework (RMF). The Board has delegated authority to theBoard Risk Committee (BRC) to develop and monitor compliance with the Group’s risk management policies. The BRC reports regularly to the Boardon its activities.
The Board approves the strategic objectives of the Group including: the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZ is prepared to accept in pursuit of
its strategic objectives and business plan; and the Risk Management Strategy (RMS), which describes ANZ’s strategy for managing risks and the key elements of the RMF that give effect to thisstrategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference to the relevant
policies, standards and procedures. It also includes information on how ANZ identifies, measures, evaluates, monitors, reports and controls or
mitigates material risks.
The Group, through its training and management standards and procedures, aims to maintain a disciplined and robust control environment in which
all employees understand their roles and obligations. At ANZ, risk is everyone’s responsibility.
The Group has an independent risk management function, headed by the Chief Risk Officer who:
 is responsible for overseeing the risk profile and the risk management framework; can effectively challenge activities and decisions that materially affect ANZ’s risk profile; and has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.
The Internal Audit Function reports directly to the Board Audit Committee (BAC). Internal Audit provides:
 an independent evaluation of the Group’s RMF annually that seeks to ensure compliance with, and the effectiveness of, the risk management
framework; facilitation of a comprehensive review every three years that seeks to ensure the appropriateness, effectiveness and adequacy of the risk
management framework; and recommendations to improve the framework and/or work practices to strengthen the effectiveness of day to day operations.

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18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISKCREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of the Group’s major sources of income. As this activity is also a principal risk, the Group dedicatesconsiderable resources to its management. The Group assumes credit risk in a wide range of lending and other activities in diverse markets and inmany jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade finance and capital markets
activities around the world.
Our credit risk management framework ensures we apply a consistent approach across the Group when we measure, monitor and manage the credit
risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC: sets the credit risk appetite and credit strategies; and approves credit transactions beyond the discretion of executive management.
We quantify credit risk through an internal credit rating system (masterscales) to ensure consistency across exposure types and to provide a consistentframework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
Probability of Default (PD)Expressed by a Customer Credit Rating (CCR), reflecting the Group’s assessment of a customer’s ability
to service and repay debt.

Exposure at Default (EAD)

The expected balance sheet exposure at default taking into account repayments of principal andinterest, expected additional drawdowns and accrued interest at the time of default.

Loss Given Default (LGD)

Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to thepercentage of loan covered by security which the Group can realise if a customer defaults. The A-G
scale is supplemented by a range of other SIs which cover factors such as cash cover and sovereign
backing. For retail and some small business lending, we group exposures into large homogenous pools– and the LGD is assigned at the pool level.

Our specialist credit risk teams develop and validate the Group’s PD and LGD rating models. The outputs from these models drive our day-to-day
credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, economic capital allocation, andcredit provisioning.
All customers with whom ANZ has a credit relationship are assigned a CCR at origination via either of the following assessment approaches:
Large and more complex lending

Retail and some small business lending

Rating models provide a consistent and structured assessment, withjudgement required around the use of out-of-model factors. We
handle credit approval on a dual approval basis, jointly with thebusiness writer and an independent credit officer.

Automated assessment of credit applications using a combination ofscoring (application and behavioural), policy rules and external credit
reporting information. If the application does not meet the automatedassessment criteria, then it is subject to manual assessment.

We use the Group’s internal CCRs to manage the credit quality of financial assets. To enable wider comparisons, the Group’s CCRs are mapped toexternal rating agency scales as follows:
Credit Quality
Description

Internal CCR

ANZ Customer Requirements

Moody’s
RatingS&P Global
Ratings

Strong

CCR 0+ to 4-

Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity
is not significantly vulnerable to foreseeable events.

Aaa – Baa3

AAA – BBB-

Satisfactory

CCR 5+ to 6-

Demonstrated sound operational and financial stability overthe medium to long-term, even though some may besusceptible to cyclical trends or variability in earnings.

Ba1 – B1

BB+ – B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, withvariability and uncertainty in profitability and liquidity
projected to continue over the short and possibly mediumterm.

B2 - Caa

B - CCC

Defaulted

CCR 8- to 10

When doubt arises as to the collectability of a credit facility, thefinancial instrument (or ‘the facility’) is classified as defaulted.

N/A

N/A

171

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
MAXIMUM EXPOSURE TO CREDIT RISKFor financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, thesedifferences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject tomarket risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the Group would have to pay if the instrument is called upon.
The table below shows our maximum exposure to credit risk of on-balance sheet and off-balance sheet positions before taking account of any
collateral held or other credit enhancements.

Consolidated

Reported
2022$m

Maximum exposure
to credit risk
2022
2021
$m
$m

2021
$m

Excluded1
2022$m672,407629,719--

672,407629,7192021$m

On-balance sheet positions
Net loans and advances
Other financial assets:
168,132

151,260

1,147

1,127

166,985

150,133

Settlement balances owed to ANZ

4,762

7,530

4,762

7,530

-

-

Collateral paid

12,700

9,166

-

-

12,7009,166

Trading assets

35,23744,688

3,860

4,996

31,377

39,692Derivative financial instruments

90,17438,736--90,17438,736- debt securities at amortised cost

7,943

7,031

-

-

7,943

7,031

- debt securities at FVOCI

76,81774,743--76,81774,743- equity securities at FVOCI

1,353

1,310

1,353

1,310

-

-

- debt securities at FVTPL

40

42

-

-

40

42

Cash and cash equivalents

Investment securities

Regulatory deposits

632

671

-

-

632

671

Other financial assets2

2,943

2,054

-

-

2,943

2,054

Total other financial assets

400,733

337,231

11,122

14,963

389,611322,268

1,073,140

966,950

11,122

14,963

1,062,018

951,987

285,041

259,789--

285,041

259,789

1,358,181

1,226,739

11,122

14,963

1,347,059

1,211,776

Subtotal
Off-balance sheet positions
Undrawn and contingent facilities3
Total
1.

Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.

2.

Other financial assets mainly comprise accrued interest and acceptances.

3.

Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.

172

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)

The Company

Reported
2022$m

Maximum exposure
to credit risk
2022
2021
$m
$m

2021
$m

Excluded1
2022$m537,345

488,487--

537,345

488,487

155,483

141,436787

721

154,696

140,7152021$m

On-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances owed to ANZ

4,024

7,183

4,024

7,183

-

-

Collateral paid

11,368

8,343

-

-

11,368

8,343

Trading assets

28,07334,752

3,348

4,957

24,72529,795Derivative financial instruments

88,05638,292--

88,05638,292- debt securities at amortised cost

6,115

5,263

-

-

6,115

5,263

- debt securities at FVOCI

65,257

61,623--65,257

61,623- equity securities at FVOCI

1,027

1,054

1,027

1,054

-

-

Investment securities- debt securities at FVTPL

-

-

-

-

-

-

Regulatory deposits
Due from controlled entities
Other financial assets2

249
22,8601,882

213
23,530
1,371

-

-

249
22,8601,882

213
23,5301,371

Total other financial assets

384,394

323,060

9,186

13,915375,208

309,145

Subtotal

921,739

811,547

9,186

13,915912,553

797,632

246,722

220,445--

246,722

220,445

1,168,461

1,031,992

9,186

13,915

1,159,275

1,018,077

Off-balance sheet positions
Undrawn and contingent facilities3
Total
1.

Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures, and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.

2.

Other financial assets mainly comprise accrued interest and acceptances.

3.

Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.

173

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
CREDIT QUALITY
An analysis of the Group’s credit risk exposure is presented in the following tables based on the Group’s internal credit quality rating by stage without
taking account of the effects of any collateral or other credit enhancements:
Net loans and advances
Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

Strong443,571

15,880--459,451

Satisfactory

154,823

31,864--

186,687

9,197

9,244

-

-

18,441

Consolidated
As at 30 September 2022

Weak

-

-

3,328

1,043

4,371

Gross loans and advances at amortised cost

607,591

56,988

3,328

1,043

668,950

Allowance for ECL(1,141)(1,548)

(360)

(533)

(3,582)Net loans and advances at amortised cost

606,450

55,4402,968

510

665,368

0.19%

2.72%

10.82%

51.10%

0.54%

Defaulted

Coverage ratio

4,675

Loans and advances at fair value through profit or loss
Unearned income(518)

Capitalised brokerage and other origination costs

2,882
672,407

Net carrying amountAs at 30 September 2021
Strong412,821

Satisfactory

146,368

31,228

7,921

12,907

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

12,596--425,417--

177,596--

20,828

-

-

3,754

1,549

5,303

567,11056,731

3,754

1,549

629,144(968)(1,994)

(417)

(666)

(4,045)566,142

54,7373,337

883

625,099

0.17%

3.51%

11.11%

43.00%

0.64%

Loans and advances at fair value through profit or loss

3,620

Unearned income(434)

Capitalised brokerage and other origination costs

1,434

Net carrying amount174

629,719

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175

NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Net loans and advances

The Company

Stage 1$m

Stage 2$m

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

As at 30 September 2022
Strong334,850

9,641

-

-

344,491

Satisfactory

142,772

26,186--

168,958

9,181

7,759

-

-

16,940

-

-

2,744

853

3,597

486,803

43,5862,744

853

533,986

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio(946)(1,259)

(295)

(425)

(2,925)

485,857

42,3272,449

428

531,061

0.19%

2.89%

10.75%

49.82%

0.55%

Loans and advances at fair value through profit or loss

4,263

Unearned income

(480)
2,501

Capitalised brokerage and other origination costs

537,345

Net carrying amountAs at 30 September 2021
Strong297,511

9,329

-

-

306,840

Satisfactory

131,979

25,538--

157,517

7,913

11,038--18,951

-

-

3,089

1,345

4,434

437,40345,905

3,089

1,345

487,742(797)(1,679)

(348)

(563)

(3,387)436,606

44,2262,741

782

484,355

0.18%

3.66%

11.27%

41.86%

0.69%

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss

3,472

Unearned income(390)

Capitalised brokerage and other origination costs
Net carrying amount

1,050
488,487

175

176

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Off-balance sheet commitments - undrawn and contingent facilities
Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

Strong

191,363

1,703

-

-

193,066

Satisfactory

18,583

3,078

-

-

21,661

774

706

-

-

1,480

Consolidated
As at 30 September 2022

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL

-

-

113

19

132

210,720

5,487

113

19

216,339

(593)

(144)

(29)

(9)

(775)

210,127

5,343

84

10

215,564

0.28%

2.62%

25.66%

47.37%

0.36%
69,4771

Net undrawn and contingent facilities

285,041

As at 30 September 2021
Strong174,808

1,754

-

-

176,562

Satisfactory

23,799

3,564

-

-

27,363

Weak

1,030

1,185

-

-

2,215

-

-

138

50

188

199,637

6,503

138

50

206,328

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL

1

Net undrawn and contingent facilities
1.

Commitments that can be unconditionally cancelled at any time without notice.

176

(555)

(211)

(19)

(21)

(806)

199,082

6,292

119

29

205,522

0.28%

3.24%

13.77%

42.00%

0.39%
54,267259,789

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Off-balance sheet commitments - undrawn and contingent facilities
Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

Strong185,979

1,725

-

-

187,704

Satisfactory

15,496

2,306

-

-

17,802

711

463

-

-

1,174

The Company
As at 30 September 2022

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL

-

-

97

13

110

202,186

4,494

97

13

206,790

(530)

(112)

(26)

(5)

(673)

201,656

4,382

71

8

206,117

0.26%

2.49%

26.80%

38.46%

0.33%
40,605

1

Net undrawn and contingent facilities

246,722

As at 30 September 2021
Strong162,232

1,745

-

-

163,977

Satisfactory

19,790

2,662

-

-

22,452

Weak

1,005

966

-

-

1,971

-

-

91

28

119

183,027

5,373

91

28

188,519

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL

1

Net undrawn and contingent facilities
1.

(484)

(171)

(12)

(7)

(674)

182,543

5,202

79

21

187,845

0.26%

3.18%

13.19%

25.00%

0.36%
32,600220,445

Commitments that can be unconditionally cancelled at any time without notice.

177

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Investment securities - debt securities at amortised cost

Consolidated
As at 30 September 2022
StrongStage 3
Collectively Individuallyassessedassessed$m$m

Stage 1$m

Stage 2
$m

6,279

-

-

-

Total
$m
6,279

113

-

-

-

113

Weak

1,589

-

-

-

1,589

Satisfactory
Gross investment securities - debt securities at amortised cost

7,981

-

-

-

7,981

Allowance for ECL

(38)

-

-

-

(38)

Net investment securities - debt securities at amortised cost

7,943

-

-

-

7,943

Coverage ratio

0.48%

-

-

-

0.48%

Strong

5,574

-

-

-

5,574

Satisfactory

121

-

-

-

121

Weak

1,367

-

-

-

1367

Gross investment securities - debt securities at amortised cost

7,062

-

-

-

7,062

Allowance for ECL

(31)

-

-

-

(31)

Net investment securities - debt securities at amortised cost

7,031

-

-

-

7,031

Coverage ratio

0.44%

-

-

-

0.44%

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

As at 30 September 2021

The Company

Stage 1$m

Stage 2
$m

6,032

-

-

-

6,032

84

-

-

-

84

6,116

-

-

-

6,116

As at 30 September 2022
StrongSatisfactory
Gross investment securities - debt securities at amortised cost

(1)

-

-

-

(1)

Net investment securities - debt securities at amortised cost

6,115

-

-

-

6,115

Coverage ratio

0.02%

-

-

-

0.02%

5,162

-

-

-

5,162

Allowance for ECL

As at 30 September 2021
StrongSatisfactory

102

-

-

-

102

Gross investment securities - debt securities at amortised cost

5,264

-

-

-

5,264

(1)

-

-

-

(1)

Net investment securities - debt securities at amortised cost

5,263

-

-

-

5,263

Coverage ratio

0.02%

-

-

-

0.02%

Allowance for ECL

178

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Investment securities - debt securities at FVOCI

Consolidated
As at 30 September 2022
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

76,668

-

-

149

-

-

76,817---76,817

(10)

-

-

-

(10)

0.01%

-

-

-

0.01%

74,541---

74,541-

76,668149

As at 30 September 2021
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

The Company
As at 30 September 2022
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

202

-

-

-

202

74,743---74,743

(11)

-

-

-

(11)

0.01%

-

-

-

0.01%

Stage 3
Collectively Individuallyassessedassessed
$m
$m

Total
$m

Stage 1$m

Stage 2$m

65,257---65,257

-

-

-

-

-

65,257---65,257

(7)

-

-

-

(7)

0.01%

-

-

-

0.01%

61,623---

61,623

-

-

-

-

-

61,623---

61,623

(7)

-

-

-

(7)

0.01%

-

-

-

0.01%

As at 30 September 2021
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

179

180

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Other financial assets
Consolidated
2022
2021
$m
$m
301,735

StrongSatisfactory

1

Weak

235,847

301,771

238,452

2,164

3,513

1,707

3,026

945

1,122

351

769

7

12

7

12

304,851

240,494

303,836

242,259

Defaulted
Total carrying amount1.

The Company
2022
2021
$m
$m

Includes Investment Securities - debt securities at FVTPL of $40 million (2021: $42 million) for the Group and nil (2021: nil) for the Company.

CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. The Group
monitors its credit portfolio to manage risk concentration and rebalance the portfolio. The Group also applies single customer counterparty limits toprotect against unacceptably large exposures to one single customer.
Composition of financial instruments that give rise to credit risk by industry group are presented below:
Loans
and advances
2022
2021
$m
$m

Other financial
assets
2022
2021
$m
$m

Off-balance sheet
credit related
commitments
2022
2021
$m
$m

Total
2022
$m

2021
$m

Consolidated
Agriculture, forestry, fishing and mining

33,66834,862781

335

17,694

16,034

52,143

51,231Business services

9,252

9,161

242

119

6,245

6,429

15,73915,709Construction

6,155

5,886

48

46

6,594

6,458

12,797

12,390Electricity, gas and water supply

9,650

6,513

790

807

9,865

9,053

20,305

16,373Entertainment, leisure and tourism

12,886

12,710

89

157

3,691

3,862

16,666

16,729Financial, investment and insurance

75,11856,107305,148229,273

58,07550,568438,341

335,948

Government and official institutions

7,280

4,651

71,13983,741

1,592

1,798

80,011

90,190

Manufacturing

28,072

23,752

1,279

741

46,701

37,69676,052

62,189Personal lending

363,539

361,814955

664

57,98957,410422,483

419,888

Property services

55,20350,396606

489

17,862

16,67373,671

67,558Retail trade

11,648

9,967

98

104

7,076

8,444

18,822

18,515

Transport and storage

12,311

11,710

327

437

8,423

8,257

21,061

20,404Wholesale trade

15,215

12,434

1,235

583

28,042

20,89944,492

33,91656,50754,618

Other

33,62832,801

6,912

4,803

15,967

17,014Gross total

673,625

632,764

389,649

322,299285,816

260,595 1,349,090 1,215,658

Allowance for ECL(3,582)(4,045)

(38)

(31)

(775)

Subtotal

670,043628,719

389,611322,268

285,041

(518)

(434)

-

-

-

Unearned income
Capitalised brokerage and other origination costs
Maximum exposure to credit risk

180

2,882

1,434

-

-

-

672,407629,719

389,611322,268

285,041(806)(4,395)(4,882)259,789 1,344,695 1,210,776
-

(518)

(434)

-

2,882

1,434

259,789 1,347,059 1,211,776

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181

NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Composition of financial instruments that give rise to credit risk by industry group are presented below:
Loans
and advances
2022
2021
$m
$m

Other financial
assets
2022
2021
$m
$m

Off-balance sheet
credit related
commitments
2022
2021
$m
$m

Total
2022
$m

2021
$m

The Company
Agriculture, forestry, fishing and mining

19,06518,283751

297

16,30414,30536,12032,885Business services

8,382

8,096

202

73

5,517

5,618

14,101

13,787

Construction

5,004

4,710

42

30

5,376

5,241

10,422

9,981

Electricity, gas and water supply

8,820

5,523

533

580

8,526

7,356

17,87913,459Entertainment, leisure and tourism

11,267

10,934

58

138

3,192

3,404

14,517

14,476

Financial, investment and insurance

71,88952,230306,318

236,430

53,97046,971

432,177

335,631

Government and official institutions

7,272

4,621

58,34265,429910

1,113

66,524

71,163

Manufacturing

24,645

20,143664

369

39,27930,79464,58851,306

Personal lending

282,095

278,526

912

638

47,59645,886

330,603

325,050

Property services

42,59237,580531

379

15,64014,42458,76352,383Retail trade

10,048

8,273

74

82

6,279

7,298

16,401

15,653

Transport and storage

11,231

10,564

270

339

7,252

7,229

18,753

18,132Wholesale trade

13,055

10,345791

380

24,185

17,462

38,031

28,187

Other

22,884

21,386

5,721

3,982

13,36914,01841,97439,386Gross total

538,249

491,214375,209309,146

247,395

221,119 1,160,853 1,021,479

Allowance for ECL(2,925)(3,387)

(1)

(1)

(673)

Subtotal

535,324

487,827

375,208

309,145

246,722

(480)

(390)

-

-

-

Unearned income
Capitalised brokerage and other origination costs
Maximum exposure to credit risk

2,501

1,050

-

-

-

537,345

488,487375,208

309,145

246,722(674)(3,599)(4,062)

220,445 1,157,254 1,017,417
-

(480)

(390)

-

2,501

1,050

220,445 1,159,275 1,018,077

COLLATERAL MANAGEMENT
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there issufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products, such as margin loans and reverse
repurchase agreements that are secured by the securities purchased using the lending. For some products, the collateral provided by customers isfundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables istypically repaid by the collection of those receivables. During the period there was no change in our collateral policies.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
The nature of collateral or security held for the relevant classes of financial assets is as follows:
Net loans and advances
Loans - housing andpersonal

Housing loans are secured by mortgage(s) over property and additional security may take the form ofguarantees and deposits.
Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we take security, thenit is restricted to eligible vehicles, motor homes and other assets.

Loans - businessBusiness loans may be secured, partially secured or unsecured. Typically, we take security by way of amortgage over property and/or a charge over the business or other assets.
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby letters ofcredit or derivative protection.

Other financial assets
Trading assets, Investment
securities, Derivatives andOther financial assets

For trading assets, we do not seek collateral directly from the issuer or counterparty. However, the collateral
may be implicit in the terms of the instrument (for example, with an asset-backed security). The terms ofdebt securities may include collateralisation.
For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis at market
levels current at the time of a counterparty default under International Swaps and Derivatives Association(ISDA) Master Agreements.
Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative positions
with the counterparty are aggregated and cash collateral (or other forms of eligible collateral) is exchanged
daily. The collateral is provided by the counterparty when their position is out of the money (or provided tothe counterparty by ANZ when our position is out of the money).

Off-balance sheet positions
Undrawn and contingent
facilities

Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
performance bonds or guarantees. Undrawn facilities that are secured include housing loans secured by
mortgages over residential property and business lending secured by commercial real estate and/or charges
over business assets.

The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:Consolidated

Maximum exposure to credit risk
2022
2021
$m
$m

Total value of collateral
2022
2021
$m
$m

Unsecured portion of
credit exposure
2022
2021
$m
$m

Net loans and advances

672,407629,719531,815515,866

140,592

113,853

Other financial assets

389,611322,268

24,75824,410364,853

297,858

Off-balance sheet positions

285,041

259,789

60,54452,512

224,497

207,277

1,347,059

1,211,776

617,117592,788729,942

618,988

Total

The Company

Maximum exposure to credit risk
2022
2021
$m
$m

Total value of collateral
2022
2021
$m
$m

Unsecured portion of
credit exposure
2022
2021
$m
$m

Net loans and advances

537,345

488,487

407,610387,273

129,735

101,214

Other financial assets

375,208

309,145

19,492

22,027355,716

287,118

Off-balance sheet positions

246,722

220,445

38,61836,676208,104

183,769

1,159,275

1,018,077

465,720445,976

693,555

572,101

Total

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183

NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISKMARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIESMarket risk stems from the Group’s trading and balance sheet management activities and the impact of changes and correlations between interest
rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
The BRC delegates responsibility for day-to-day management of both market risks and compliance with market risk policies to the Credit & Market Risk
Committee (CMRC) and the Group Asset & Liability Committee (GALCO).
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the Group level. The Market Risk team (a specialist risk management unit independent of the business) allocates market risk limits at various
levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control exposures using risk factors
and profit and loss limits.
Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded Market Risk

Non-Traded Market Risk

Risk of loss from changes in the value of financial instruments due
to movements in price factors for both physical and derivative
trading positions. Principal risk categories monitored are:Risk of loss associated with the management of non-traded interest rate risk,
liquidity risk and foreign exchange exposures. This includes interest rate riskin the banking book. This risk of loss arises from adverse changes in theoverall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bankproducts.

1. Currency risk – potential loss arising from changes in foreignexchange rates or their implied volatilities.
2. Interest rate risk – potential loss from changes in market interest
rates or their implied volatilities.
3. Credit spread risk – potential loss arising from a movement inmargin or spread relative to a benchmark.
4. Commodity risk – potential loss arising from changes incommodity prices or their implied volatilities.
5. Equity risk – potential loss arising from changes in equity prices.

MEASUREMENT OF MARKET RISKWe primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.
VaR measures the Group’s possible daily loss based on historical market movements.
The Group’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices andvolatilities over: the previous 500 business days, to calculate standard VaR; and a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using one-day and ten-day holding periods. For stressed VaR, we use a ten-day period. Back testing is used toensure our VaR models remain accurate.
ANZ measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the relevant holding period.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:

Consolidated
Traded value at risk 99% confidence

As at
$m

2022
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2021
High for Low for
year
year
$m
$m

Averagefor year$m

Foreign exchange

1.8

4.8

1.1

2.4

3.8

10.0

1.3

3.9

Interest rate

7.9

22.7

5.0

9.5

9.6

19.6

4.3

8.8

Credit

2.6

11.8

1.6

4.9

6.3

22.2

5.3

13.7

Commodity

4.3

7.0

1.4

2.9

3.1

5.0

1.3

2.8

-

-

-

-

-

-

-

-

EquityDiversification benefit

(7.2)

n/a

n/a

(7.1)

(9.4)

n/a

n/a

(9.7)

Total VaR

9.4

26.9

5.6

12.6

13.4

30.0

8.7

19.5

2022
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2021
High for Low for
year
year
$m
$m

Averagefor year$m

1

The Company
Traded value at risk 99% confidence

As at
$m

Foreign exchange

2.0

5.1

0.9

2.4

3.4

7.6

1.5

3.5

Interest rate

6.7

18.6

4.9

8.8

9.0

16.4

4.1

7.5

Credit

2.0

11.9

1.3

4.7

5.8

22.1

5.3

13.3

Commodity

1.4

7.2

0.9

2.8

2.3

5.4

1.4

2.7

-

-

-

-

-

-

-

-

EquityDiversification benefit

(4.2)

n/a

n/a

(7.4)

(6.0)

n/a

n/a

(10.1)

Total VaR

7.9

23.4

5.4

11.3

14.5

26.0

9.6

16.9

1

1.

The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for theGroup as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
Non-traded market risk
Balance sheet risk management
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of the Group’s banking book, while ensuring the Group maintains sufficientliquidity to meet its obligations as they fall due.
Interest rate risk management
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on the Group’s future Net interest income. Thisrisk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and the investment of
capital and other non-interest bearing liabilities and assets. Interest rate risk is reported using VaR and scenario analysis (based on the impact of a 1%
rate shock). The table below shows VaR figures for non-traded interest rate risk for the combined Group as well as Australia, New Zealand and Asia
Pacific, Europe and Americas (APEA) geographies which are calculated separately.

Consolidated
Non-traded value at risk 99% confidence

As at
$m

2022
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2021
High for Low for
year
year
$m
$m

Averagefor year$mAustralia

78.5

93.4

63.0

76.1

67.0

81.8

61.9

69.8

New Zealand

25.4

27.1

20.2

23.9

21.6

32.8

21.6

26.7

Asia Pacific, Europe & America

21.7

38.0

16.8

25.8

31.5

34.9

29.0

32.0

Diversification benefit(38.1)

n/a

n/a(33.7)(32.9)

n/a

n/a(53.7)

Total VaR

87.5

104.9

66.8

92.1

87.2

87.2

59.3

74.8

2022
High for Low for
year
year
$m
$m

Averagefor year
$m

As at
$m

2021
High for Low for
year
year
$m
$m

Averagefor year
$m

76.1

67.0

1

The Company
Non-traded value at risk 99% confidence
Australia

As at
$m
78.5

93.4

63.0

81.8

61.9

69.8

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

Asia Pacific, Europe & America

22.1

37.7

16.7

25.6

30.8

35.2

27.5

31.2

Diversification benefit1(17.1)

n/an/a(20.2)(31.9)

n/an/a(36.2)

Total VaR

83.5

94.5

62.9

81.5

65.9

69.9

55.0

64.8

New Zealand

1.

The diversification benefit reflects the historical correlation between the regions. The high and low VaR figures reported for the region did not necessarily occur on the same day as the high and low VaRreported for the Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
We undertake scenario analysis to stress test the impact of extreme events on the Group’s market risk exposures. We model a 1% overnight parallel
positive shift in the yield curve to determine the potential impact on our Net interest income over the next 12 months. This is a standard risk measure
which assumes the parallel shift is reflected in all wholesale and customer rates.
The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported Net
interest income.
Consolidated

The Company

2022

2021

2022

2021

As at period end

1.29%

2.43%

0.90%

2.02%

Maximum exposure

2.08%

2.43%

1.65%

2.02%

Minimum exposure

1.15%

0.98%

0.71%

0.54%

Average exposure (in absolute terms)

1.56%

1.55%

1.11%

1.08%

Impact of 1% rate shock on 12 months of net interest income

EQUITY SECURITIES DESIGNATED AT FVOCI
Our investment securities contain equity investment holdings which predominantly comprise Bank of Tianjin and equity holding in 1835i Ventures
Trust business unit. The market risk impact on these equity investments is not captured by the Group’s VaR processes for traded and non-tradedmarket risks. Therefore, the Group regularly reviews the valuations of the investments within the portfolio and assesses whether the investments areappropriately measured based on the recognition and measurement policies set out in Note 12 Investment Securities.
FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Our investment of capital in foreign operations - for example, branches, subsidiaries or associates with functional currencies other than the Australian
Dollar - exposes the Group to the risk of changes in foreign exchange rates. Variations in the value of these foreign operations arising as a result of
exchange differences are reflected in the foreign currency translation reserve in equity.
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily
New Zealand Dollar, US Dollar and US Dollar correlated). The primary objective of hedging is to ensure that, if practical, the effect of changes in foreignexchange rates on the consolidated capital ratios are minimised.

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISKLIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that the Group is either: unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; or does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.
Management of liquidity and funding risks are overseen by GALCO. The Group’s liquidity and funding risks are governed by a set of principles
approved by the BRC and include: maintaining the ability to meet all payment obligations in the immediate term;
 ensuring that the Group has the ability to meet ‘survival horizons’ under a range of ANZ specific, and general market, liquidity stress scenarios, atthe site and Group-wide level, to meet cash flow obligations over the short to medium term; maintaining strength in the Group’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile; ensuring the liquidity management framework is compatible with local regulatory requirements;
 preparing daily liquidity reports and scenario analysis to quantify the Group’s positions;
 targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency; holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and establishing detailed contingency plans to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY RISKScenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by a range of regulatory and internal liquidity metrics mandated by the Board. The metrics cover a range of
scenarios of varying duration and level of severity.
A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, the Group has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia(RBA). The CLF was established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form ofcontingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as
security with the RBA. In September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meettheir LCR requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1 January 2023,
ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
Liquid assets
The Group holds a portfolio of high quality (unencumbered) liquid assets to protect the Group’s liquidity position in a severely stressed environment
and to meet regulatory requirements. HQLA comprise three categories consistent with Basel III LCR requirements:
 HQLA1- Cash and highest credit quality government, central bank or public sector securities eligible for repurchase with central banks to provide
same-day liquidity.
 HQLA2 - High credit quality government, central bank or public sector securities, high quality corporate debt securities and high quality coveredbonds eligible for repurchase with central banks to provide same-day liquidity.
 Alternative liquid assets (ALA) - Assets qualifying as collateral for the CLF and eligible securities that the Reserve Bank of New Zealand (RBNZ) will
accept in its domestic market operations.
LIQUIDITY RISK OUTCOMES1
Liquidity Coverage Ratio - ANZ’s Liquidity Coverage Ratio (LCR) averaged 131% for 2022, a decrease from the 2021 average of 137%, and above theregulatory minimum of 100%.
Net Stable Funding Ratio - ANZ’s Net Stable Funding Ratio (NSFR) as at 30 September 2022 was 119% (2021: 124%), above the regulatory minimumof 100%.
1.

This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The Liquidity Coverage Ratio and Net Stable Funding Ratio are non-IFRS
disclosures and are disclosed as part of the Group's APS 330 Public Disclosure which is subject to specific review procedures in accordance with the Australian Standard on Related Services (ASRS) 4400

Agreed upon Procedures Engagements to Report Factual Findings.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
Liquidity crisis contingency planning
The Group maintains APRA-endorsed liquidity crisis contingency plans for analysing and responding to a liquidity threatening event at a country andGroup-wide level. Key liquidity contingency crisis planning requirements and guidelines include:
Ongoing business management

Early signs/ mild stress

Severe stress establish crisis/severity levels

 monitoring and review

 activate contingency funding plans

 liquidity limits

 management actions not requiring
business rationalisation

 management actions for altering asset and liability
behaviour early warning indicators

Assigned responsibility for internal and external communications and the appropriate timing to communicate
Since the precise nature of any stress event cannot be known in advance, we design the plans to be flexible to the nature and severity of the stressevent with multiple variables able to be accommodated in any plan.
Group funding
The Group monitors the composition and stability of its funding so that it remains within the Group’s funding risk appetite. This approach ensures thatan appropriate proportion of the Group’s assets are funded by stable funding sources, including customer deposits; longer-dated wholesale funding(with a remaining term exceeding one year); and equity.
Funding plans prepared

Considerations in preparing funding plans

 3 year strategic plan prepared annually customer balance sheet growth annual funding plan as part of the Group’s planning
process

 changes in wholesale funding including: targeted funding volumes; markets;
investors; tenors; and currencies for senior, secured, subordinated, hybridtransactions and market conditions

 forecasting in light of actual results as a calibration to theannual plan

RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support lending toAustralian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4 November 2020, andreduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June 2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.
RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (TLF) to promote lending to businesses. The TLF is afive-year secured funding facility for New Zealand banks at a fixed rate of 0.25%.
In November 2020 the RBNZ announced a Funding for Lending Programme (FLP) which aimed to lower the cost of borrowing for New Zealandbusinesses and households. The FLP is a three-year secured funding facility for New Zealand banks at a floating rate of the New Zealand Official Cash
Rate (OCR). New Zealand banks were able to obtain initial funding of up to 4% of their lending to New Zealand resident households, non-financial
businesses and non-profit institutions serving households as at 31 October 2020 (eligible loans). The initial allocation closed on 6 June 2022. An
additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.

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NOTES TO THE FINANCIAL STATEMENTS

18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF GROUP’S LIABILITIESThe tables below provide residual contractual maturity analysis of financial liabilities at 30 September within relevant maturity groupings. All
outstanding debt issuance and subordinated debt is profiled on the earliest date on which the Group may be required to pay. All at-call liabilities arereported in the ‘Less than 3 months’ category unless there is a longer minimum notice period. The amounts represent principal and interest cash flows- so they may differ from equivalent amounts reported on balance sheet.
It should be noted that this is not how the Group manages its liquidity risk. The management of this risk is detailed on page 187.

Consolidated
As at 30 September 2022
Settlement balances owed by ANZ

Less than
3 months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m
13,766

13,766---

Collateral received

16,230---

16,230

Deposits and other borrowings

667,568

117,166

15,960160

800,854

352

-

-

-

352

Debt issuances1,2

7,591

22,31560,716

13,667104,289

Derivative liabilities (excluding those held for balance sheet management)3

71,073---71,073

81

210

654

168

1,113

Receive leg(33,155)(49,030)(66,661)(12,851)(161,697)

Pay leg

30,84549,191

68,211

12,913

161,160

Receive leg(125,122)(44,835)(29,188)(10,063)(209,208)

Pay leg

120,959

44,12631,02615,170211,281

As at 30 September 2021
Settlement balances owed by ANZ

17,427---

17,427

Collateral received

5,657

-

-

-

5,657

634,145

84,35725,247

227

743,976

392

-

-

-

392

Liability for acceptances

Lease liabilities
Derivative assets and liabilities (balance sheet management)4- Funding:- Other balance sheet management:

Deposits and other borrowings
Liability for acceptances

4,218

24,92865,198

14,588108,932

30,474---30,474

86

224

755

301

1,366

Receive leg(29,186)(36,462)(62,061)(14,334)(142,043)

Pay leg

28,53835,082

61,867

14,473

139,960

Receive leg(104,036)(37,275)(14,982)(8,029)(164,322)

Pay leg

103,586

36,804

15,457

9,974

165,821

Debt issuances1

Derivative liabilities (excluding those held for balance sheet management)3
Lease liabilities
Derivative assets and liabilities (balance sheet management)

4- Funding:- Other balance sheet management:

1.

Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Group andsubordinated debt issued by ANZ New Zealand which constitutes Tier 2 capital under RBNZ requirements but does not qualify as the APRA Tier 2 requirements.

2.

Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the‘After 5 years’ category in 2021.

3.

The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.

4.

Includes derivatives designated into hedging relationships of $356 million (2021: $202 million) and $13,720 million (2021: $5,359 million) categorised as held for trading but form part of the Group’s balance
sheet managed activities.

At 30 September 2022, $236,051 million (2021: $212,265 million) of the Group’s undrawn facilities and $49,765 million (2021: $48,330 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Group may be required to pay.

189

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)

The Company
As at 30 September 2022
Settlement balances owed by ANZ

Less than
3 months$m

3 to 12months$m

1 to 5
years
$m

After
5 years
$m

Total
$m

10,224---

10,224

Collateral received

14,425---

14,425

Deposits and other borrowings

564,147

93,197

10,639157

668,140

144

-

-

-

144

Debt issuances

7,648

18,951

48,323

9,970

84,892Derivative liabilities (excluding those held for balance sheet management)375,810---75,810

76

202

744

826

1,848

Receive leg(29,397)(39,350)(46,997)(8,857)(124,601)

Pay leg

27,41340,23748,281

9,064

124,995

Receive leg(121,112)(40,061)(21,417)(9,498)(192,088)

Pay leg

Liability for acceptances
1,2

Lease liabilities
Derivative assets and liabilities (balance sheet management)4- Funding:- Other balance sheet management:
116,992

39,921

24,081

14,666

195,660

As at 30 September 2021
Settlement balances owed by ANZ

14,922---

14,922

Collateral received

5,148

-

-

-

5,148

524,654

60,427

21,844

227

607,152

Deposits and other borrowings
Liability for acceptances

223

-

-

-

223

Debt issuances1

4,108

20,24454,465

8,965

87,782Derivative liabilities (excluding those held for balance sheet management)3

34,240---34,240

81

208

814

989

2,092

Receive leg(25,170)(26,362)(48,026)(7,364)(106,922)

Pay leg

24,52325,34447,467

7,318

104,652

Receive leg(102,921)(35,426)(11,063)(7,633)(157,043)

Pay leg

102,346

34,908

11,501

9,587

158,342

Lease liabilities
Derivative assets and liabilities (balance sheet management)

4- Funding:- Other balance sheet management:

1.

Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Company.

2.

Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the‘After 5 years’ category in 2021.

3.

The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.

4.

Includes derivatives designated into hedging relationships of $300 million (2021: $158 million) and $8,390 million (2021: $2,607 million) categorised as held for trading but form part of the Company’sbalance sheet managed activities.

At 30 September 2022, $201,204 million (2021: $176,077 million) of the Company’s undrawn facilities and $46,191 million (2021: $45,042 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Company may be required to pay.

190

Overview

How wecreate value

Performanceoverview

Directors’
Financial
Shareholder STATEMENTS (CONTINUED)NOTES TOTHE FINANCIAL
reportreportinformation

Remuneration
report191

NOTES TO THE FINANCIAL STATEMENTS

19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESCLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESThe Group recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial instruments on
the balance sheet at fair value.
Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date.
The following tables set out the classification of financial asset and liabilities according to their measurement bases together with their carrying
amounts as recognised on the balance sheet.
2022

2021

Total
$m

At
amortised
cost
$m

At
fair
value
$m

Total
$m

168,132

151,260-

151,260

Note

At
amortised
cost
$m

At
fair
value
$m

9

168,132-

Settlement balances owed to ANZ

4,762

-

4,762

7,530

-

7,530

Collateral paid

12,700-12,700

9,166

-

9,166

Consolidated
Financial assets
Cash and cash equivalents

Trading assets

10-

35,23735,237-44,68844,688Derivative financial instruments

11-

90,17490,174-38,736

38,736

Investment securities

12

7,943

78,21086,153

7,031

76,095

83,126Net loans and advances

13

667,732

4,675

672,407626,099

3,620

629,719

632

-

632

671

-

671

Regulatory deposits
Other financial assets
Total

2,943

-

2,943

2,054

-

2,054

864,844

208,296

1,073,140

803,811

163,139

966,950

13,766-

13,766

17,427-

17,427

Financial liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings

15

Derivative financial instruments

11

Payables and other liabilities
Debt issuances
Total

17

16,230-

16,230

5,657

-

5,657

794,6212,660

797,281738,772

4,284

743,056-

85,14985,149-36,03536,035

6,596

3,239

9,835

4,734

3,913

8,647

92,623

1,111

93,73499,092

1,962

101,054923,836

92,1591,015,995

865,682

46,194

911,876

191

192

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
2022

2021

Note

At
amortised
cost
$m

At
fair
value
$m

9

155,483-

Settlement balances owed to ANZ

4,024

-

4,024

7,183

-

7,183

Collateral paid

11,368-11,368

8,343

-

8,343

The Company
Financial assets
Cash and cash equivalents

Total
$m

At
amortised
cost
$m

At
fair
value
$m

Total
$m

155,483

141,436-

141,436

Trading assets

10-

28,07328,073-34,752

34,752Derivative financial instruments

11-

88,05688,056-38,292

38,292

Investment securities

12

6,115

66,284

72,3995,263

62,677

67,940Net loans and advances

13

533,082

4,263

537,345

485,015

3,472

488,487

249

-

249

213

-

213

Due from controlled entities

20,3602,500

22,86021,4892,041

23,530

Other financial assets

1,882

-

1,882

1,371

-

1,371

732,563

189,176

921,739

670,313141,234

811,547

Settlement balances owed by ANZ

10,224-

10,224

14,922-

14,922

Collateral received

14,425-

14,425

5,148

-

5,148

665,56740

665,607606,67350

606,723

Regulatory deposits

Total
Financial liabilities

Deposits and other borrowings

15

Derivative financial instruments

11

Due to controlled entities
Payables and other liabilities
Debt issuances
Total

192

17

-

84,50084,500-37,00537,00525,305-25,30523,079-23,079

5,705

2,857

8,562

3,999

3,245

7,244

72,757

3,071

75,82877,053

4,035

81,088793,983

90,468884,451

730,874

44,335775,209

Overview

How wecreate value

Performanceoverview

Remuneration
reportDirectors’
Financial
Shareholder STATEMENTS (CONTINUED)NOTES TOTHE FINANCIAL
reportreportinformation

193

NOTES TO THE FINANCIAL STATEMENTS

19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
The fair valuation of financial assets and financial liabilities is generally determined at the individual instrument level.
If the Group holds offsetting risk positions, then we use the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure the fair valueof such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net longposition (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
Fair value designation
We designate certain loans and advances and certain deposits and other borrowings and debt issuances as fair value through profit or loss:
 where they contain a separable embedded derivative which significantly modifies the instruments’ cash flow ensuring we recognise the fair value
movements on the assets or liabilities in profit or loss in the same period as the movement on the associated hedging instruments; or in order to eliminate an accounting mismatch which would arise if the asset or liabilities were otherwise carried at amortised cost. This mismatcharises due to measuring the derivative financial instruments (which we use to mitigate interest rate risk of these assets or liabilities) at fair value
through profit or loss.
Our approach ensures that we recognise the fair value movements on the assets or liabilities in profit or loss in the same period as the movement on
the associated derivatives.
We may also designate certain loans and advances, certain deposits and other borrowings and debt issuances as fair value through profit or loss
where they are managed on a fair value basis to align the measurement with how the instruments are managed.
FAIR VALUE APPROACH AND VALUATION TECHNIQUESWe use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
Asset or Liability

Fair Value Approach

Financial instruments held for trading:

Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics.

- Securities sold short- Derivative financial assets and financial liabilities- Debt and equity securities
Financial instruments classified as:- Derivative financial assets and financial liabilities(not held for trading)- Net loans and advances

Equity securities where an active market does not exist are measured using
comparable company valuation multiples (such as price-to-book ratios).
Discounted cash flow techniques are used whereby contractual future cash flows of
the instrument are discounted using wholesale market interest rates, or market
borrowing rates for debt or loans with similar maturities or yield curve appropriate forthe remaining term to maturity.

- Deposits and other borrowings
Financial instruments classified as:- Investment securities – debt or equity

Valuation techniques use comparable multiples (such as price-to-book ratios) or
discounted cashflow (DCF) techniques incorporating, to the extent possible,
observable inputs from instruments with similar characteristics.

193

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE HIERARCHYThe Group categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with AASB 13 based on the observability of
inputs used to measure the fair value:
 Level 1 - valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
 Level 2 - valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or
indirectly; and Level 3 - valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:
Fair value measurements

Consolidated
AssetsTrading assets1
Derivative financial instruments

Quoted price in
active markets(Level 1)
2022
2021
$m
$m

Using observable Using unobservable
inputs (Level 2)
inputs (Level 3)
2022
2021
2022
2021
$m
$m
$m
$m

Total
2022
$m

2021
$m

28,45536,025

6,782

8,663

-

-

35,23744,688Investment securities1
Net loans and advances2

944
68,211-494
68,007-89,185
8,614
4,272

38,187
6,756
3,510

45
1,385
403

55
1,332
110

90,174
78,2104,675

38,73676,095
3,620

Total

97,610104,526

108,853

57,116

1,833

1,497

208,296

163,139

Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)

309
2,842
-

1,131
3,690
-

2,660
84,809
397
1,111

4,284
34,874
223
1,962

31
-

30
-

2,660
85,149
3,239
1,111

4,284
36,035
3,913
1,962

Total

3,151

4,821

88,977

41,34331

30

92,15946,194

Fair value measurements

The Company

Quoted price in
active markets(Level 1)
2022
2021
$m
$m

Using observable Using unobservable
inputs (Level 2)
inputs (Level 3)
2022
2021
2022
2021
$m
$m
$m
$m

AssetsTrading assets1
Derivative financial instruments
Investment securities1
Net loans and advances2
Due from controlled entities

23,037848
58,259-27,764
470
56,277-

5,036
87,181
7,006
3,860
2,500

6,988
37,788
5,354
3,362
2,041

27
1,019
403
-

34
1,046
110
-

28,07388,056
66,2844,263
2,500

34,752
38,292
62,677
3,472
2,041

Total

82,14484,511

105,583

55,533

1,449

1,190

189,176

141,234

Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)

301
2,510
985

1,121
3,040
998

40
84,179
347
2,086

50
35,854
205
3,037

20
-

30
-

40
84,500
2,857
3,071

50
37,005
3,245
4,035

Total

3,796

5,159

86,652

39,14620

30

90,46844,335

Total
2022
$m

2021
$m

1.

During 2022, $1,043 million of assets were transferred from Level 1 to Level 2 (2021: $3,845 million transferred from Level 1 to Level 2), as well as $ 1,677 million of assets were transferred from Level 2 toLevel 1 (2021: nil transferred from Level 2 to Level 1) for the Group and the Company due to a change of the observability of valuation inputs. There were no other material transfers during the year. Transfers
into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.

2.

During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group andthe Company. Comparatives have not been restated.

3.

Payables and other liabilities relate to securities sold short, which we classify as held for trading and measured at fair value through profit or loss.

194

Overview

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Performanceoverview

Remuneration
reportDirectors’
Financial
Shareholder STATEMENTS (CONTINUED)NOTES TOTHE FINANCIAL
reportreportinformation

195

NOTES TO THE FINANCIAL STATEMENTS

19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE MEASUREMENT INCORPORATING UNOBSERVABLE MARKET DATA
Level 3 fair value measurements
Level 3 financial instruments are a net asset of $1,802 million (2021: $1,467 million) for the Group and $1,429 million (2021: $1,160 million) for theCompany.
The assets and liabilities which incorporate significant unobservable inputs are:
 equity securities for which there is no active market or traded prices cannot be observed;
 loans and advances measured at fair value for which there is no observable market data; and derivatives referencing market rates that cannot be observed primarily due to lack of market activity.

Level 3 Transfers
During the year, the Group and the Company transferred $312 million of Loan and advances measured at fair value from Level 2 to Level 3, as a resultof valuation parameters becoming unobservable during the year. There were no other transfers into or out of Level 3 in the current or prior year.
The material Level 3 financial instruments as at 30 September 2022 are listed as below:i) Investment Securities - equity holdings classified as FVOCIBank of Tianjin (BoT)The Group holds an investment in the Bank of Tianjin. The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is
the ratio of the market value of equity to the book value of equity). The extent of judgement applied in determining the appropriate multiple andcomparator group from which the multiple is derived resulted in the Level 3 classification. As at September 2022, the BoT equity holding balance was$854 million (2021: $991 million). A decrease in the BoT fair valuation in the financial year was mainly due to a decrease in the P/B multiple used in thevaluation.

1835i Ventures Trust
The Group holds $324 million (2021: $241 million) of unlisted equities in its 1835i Ventures Trust business unit classified as FVOCI, for which there areno active markets or traded price observed resulting in Level 3 classification. The increase in the 1835i equity holding balance in the financial year weremainly due to new equity investments as well as revaluation increases.

Institutional division - Equity Holdings
The Group holds $137 million (2021: $4 million) of unlisted equities in the Institutional division classified as FVOCI, for which there are no active
markets or traded prices available, resulting in Level 3 classification. The increase in the Institutional division equity holdings balance was mainly due
to new equity purchases during the financial year.

ii) Net loans and advances - classified as FVTPL
Syndication Loans
The Group holds $403 million (2021: $110 million) of syndication loans for sale which are measured at FVTPL. These loans are classified as Level 3 when
there is no observable market data available for the valuation. During the financial year the Group transferred $312 million of syndication loans
measured at fair value from Level 2 to Level 3, due to valuation parameters for these financial instruments becoming unobservable.
Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs to a valuation not being directly observable (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameters used to derive the fair valuation.

Investment Securities - equity holdings
The valuation of the equity investments are sensitive to variations in select unobservable inputs, with valuation techniques used including P/B
multiples and discounted cashflow techniques. If for example, a 10% increase or decrease to the primary input into the valuations were to occur (suchas the P/B multiple), it would result in a $135 million increase or decrease in the fair value of the portfolio, which would be recognised in shareholders’equity in the Group ($102m for the Company), with no impact to net profit or loss.

Net Loans and Advances
Syndicated loan valuations are sensitive to credit spreads and discount curves in determining their fair valuation. However as these are primarily
investment-grade loans, an increase or decrease in credit spreads and / or interest yield would have an immaterial impact on net profit or net assets of
the Group.

Other
The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.
Deferred fair value gains and losses
Where fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount we determine based on the valuation technique (day one gain or loss) in
profit or loss. After initial recognition, we recognise the deferred amount in profit or loss on a straight-line basis over the life of the transaction or until
all inputs become observable. Day one gains and losses which have been deferred are not material.

195

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
The financial assets and financial liabilities listed below are carried at amortised cost on the Group’s Balance Sheet. While this is the value at which we
expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of the financial assets and financial liabilities
at balance date in the tables below.

Consolidated
Financial assets

At amortised cost
2022
2021
$m
$m

Categorised into fair value hierarchy
Quoted priceWith significant nonactive markets
observable inputs
Using observable(Level 1)
inputs (Level 2)(Level 3)
2022
2021
2022
2021
2022
2021
$m
$m
$m
$m
$m
$m

Total fair value
2022
2021
$m
$m

Investment securities

7,943

7,031

-

-

7,918

7,043

-

-

7,918

7,043

Net loans and advances

667,732

626,099--

29,46016,906634,272

609,541

663,732

626,447

Total

675,675

633,130--

37,37823,949634,272

609,541

671,650

633,490

Deposits and other borrowings

794,621738,772--

794,124

738,840--

794,124

738,840

Debt issuances

92,62399,092

22,982

27,78569,02873,332--

92,010101,117

Total

887,244

837,864

22,982

27,785

863,152

812,172--

886,134

839,957

Financial liabilities

Categorised into fair value hierarchy

The Company
Financial assets

At amortised cost
2022
2021
$m
$m

Quoted priceactive markets(Level 1)
2022
2021
$m
$m

Using observable
inputs (Level 2)
2022
2021
$m
$m

With significant nonobservable inputs(Level 3)
2022
2021
$m
$m

Total fair value
2022
2021
$m
$m

Investment securities

6,115

5,263

-

-

6,092

5,275

-

-

6,092

5,275

Net loans and advances

533,082

485,015--

28,70816,050501,795

469,363530,503

485,413

Due from controlled entities

20,36021,489----20,36021,48920,36021,489

Total

559,557

511,767--

34,80021,325522,155

490,852

556,955

512,177

Deposits and other borrowings

665,567

606,673--665,242606,723--

665,242606,723

Due to controlled entities

25,30523,079----25,30523,07925,30523,079Financial liabilities

Debt issuances

72,75777,053

19,741

24,28052,45354,421--

72,19478,701

Total

763,629

706,805

19,741

24,280717,695

661,144

25,30523,079762,741

708,503196

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197

NOTES TO THE FINANCIAL STATEMENTS

19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE (continued)
The following table sets out the Group’s basis of estimating the fair values of financial assets and liabilities carried at amortised cost where the carrying
value is not typically a reasonable approximation of fair value.
The carrying values of certain on-balance sheet financial instruments approximate fair values. These financial instruments are short term in nature or
are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.
Financial Asset and Liability

Fair Value Approach

Investment securities - debt securities at amortised cost

Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using ayield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable for that instrument.

Net loans and advances to banks

Discounted cash flows using prevailing market rates for loans with similar
credit quality.

Net loans and advances to customers

Present value of future cash flows, discounted using a curve that incorporates
changes in wholesale market rates, the Group’s cost of wholesale funding and thecustomer margin, as appropriate.

Deposit liability without a specified maturity or at call

The amount payable on demand at the reporting date. We do not adjust the fairvalue for any value we expect the Group to derive from retaining the deposit for a
future period.

Interest bearing fixed maturity deposits and otherborrowings and acceptances with quoted market rates

Market borrowing rates of interest for debt with a similar maturity are used to
discount contractual cash flows to derive the fair value.

Debt issuances

Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using ayield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable to ANZ for that
instrument.

KEY JUDGEMENTS AND ESTIMATES
A significant portion of financial instruments are carried on the Group and the Company balance sheets at fair value. The Group therefore
regularly evaluates the key valuation assumptions used in the determination of the fair valuation of financial instruments incorporated
within the financial statements, as this can involve a high degree of judgement and estimation in determining the carrying values at thebalance sheet date.
In determining the fair valuation of financial instruments, the Group has considered the impact of related economic and market conditions
on fair value measurement assumptions and the appropriateness of valuation inputs in these estimates, notably valuation adjustments, aswell as the impact of these matters on the classification of financial instruments in the fair value hierarchy.
Most of the valuation models the Group uses employ only observable market data as inputs. For certain financial instruments, we may use
data that is not readily observable in current markets. If we use unobservable market data, then we need to exercise more judgement todetermine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available. When establishing the fair valueof a financial instrument using a valuation technique, the Group also considers any required valuation adjustments in determining the fairvalue. We may apply adjustments (such as credit valuation adjustments and funding valuation adjustments – refer to Note 11 Derivative
Financial Instruments) to reflect the Group’s assessment of factors that market participants would consider in determining fair value of aparticular financial instrument.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
20. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
SECURITY FOR ASSETS
The following disclosure excludes the amounts presented as collateral paid and received in the Balance Sheet that relate to derivative liabilities andderivative assets respectively. The terms and conditions of those collateral agreements are included in the standard Credit Support Annex that forms
part of the International Swaps and Derivatives Association Master Agreement under which most of our derivatives are executed.
ASSETS CHARGED AS SECURITY FOR LIABILITIESAssets charged as security for liabilities include the following types of instruments:
 securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;
 specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZ’s covered bond programs;
 collateral provided to central banks; and collateral provided to clearing houses.
The carrying amount of assets pledged as security are as follows:
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Securities sold under arrangements to repurchase1

52,757

51,20847,846

48,663

Residential mortgages provided as security for covered bonds

27,57528,816

17,953

17,925

Other

5,601

4,039

5,527

3,963

1.

The amounts disclosed as securities sold under arrangements to repurchase include both:
assets pledged as security which continue to be recognised on the Group's balance sheet; and assets repledged, which are included in the disclosure below.


COLLATERAL ACCEPTED AS SECURITY FOR ASSETSANZ has received collateral associated with various financial transactions. Under certain arrangements ANZ has the right to sell, or to repledge, thecollateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that which we have sold or repledged is as follows:
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Fair value of assets which can be sold or repledged

32,38926,81430,64725,679Fair value of assets sold or repledged

21,26918,741

20,35918,189198

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NOTES TO THE FINANCIAL STATEMENTS

21. OFFSETTING
We offset financial assets and financial liabilities on the balance sheet (in accordance with AASB 132 Financial Instruments: Presentation) when there is: a current legally enforceable right to set off the recognised amounts in all circumstances; and an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.
The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master netting
agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of overcollateralisation.
Amount subject to master netting agreement or similar

Consolidated

Amounts not
Total amounts
subject torecognised master nettingin the agreement orBalance Sheetsimilar
$m
$m

Total
$m

Financial
instruments$mFinancialcollateral(received)/pledged$m

Net amount$m

As at 30 September 2022
Derivative financial assets

90,174(6,983)

83,191(56,491)(16,951)

9,749

Reverse repurchase, securities borrowing andsimilar agreements1

29,776(6,697)

23,079(1,985)(21,094)-

Total financial assets

119,950(13,680)

106,270(58,476)(38,045)

9,749

Derivative financial liabilities(85,149)

9,936(75,213)56,491

9,964(8,758)

Repurchase, securities lending and similar
agreements2(47,229)

12,497(34,732)

1,985

32,747-

Total financial liabilities(132,378)

22,433(109,945)

58,47642,711(8,758)Derivative financial assets

38,736(3,078)35,658(24,186)(5,750)

5,722

Reverse repurchase, securities borrowing andsimilar agreements1

26,082(3,166)

22,916(1,052)(21,864)-

Total financial assets

64,818(6,244)58,574(25,238)(27,614)

5,722

Derivative financial liabilities(36,035)

2,822(33,213)

24,186

5,530(3,497)

Repurchase, securities lending and similar
agreements2(46,147)

11,461(34,686)

1,052

33,634-

Total financial liabilities(82,182)

14,283(67,899)

25,23839,164(3,497)As at 30 September 2021

1.

Reverse repurchase agreements:
 with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.

2.

Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
21. OFFSETTING (continued)
Amount subject to master netting agreement or similar

The Company

Amounts not
Total amounts
subject torecognised master nettingin the agreement orBalance Sheetsimilar
$m
$m

Total
$m

Financial
instruments$mFinancialcollateral(received)/pledged$m

Net amount$m

As at 30 September 2022
Derivative financial assets

88,056(4,242)

83,814(61,038)(14,876)

7,900

Reverse repurchase, securities borrowing andsimilar agreements1

28,045(5,323)22,722(1,629)(21,093)-

Total financial assets

116,101(9,565)

106,536(62,667)(35,969)

7,900

Derivative financial liabilities(84,500)

6,839(77,661)

61,0388,548(8,075)

Repurchase, securities lending and similar
agreements2(42,940)

11,021(31,919)

1,629

30,290-Total financial liabilities(127,440)

17,860(109,580)

62,667

38,838(8,075)Derivative financial assets

38,292(1,539)36,753(27,288)(5,189)4,276

Reverse repurchase, securities borrowing andsimilar agreements1

24,958(2,042)

22,916(1,052)(21,864)-

Total financial assets

63,250(3,581)

59,669(28,340)(27,053)

4,276

Derivative financial liabilities(37,005)

1,343(35,662)

27,2885,425(2,949)Repurchase, securities lending and similar
agreements2(43,925)

10,480(33,445)

1,052

32,393-

Total financial liabilities(80,930)

11,823(69,107)

28,34037,818(2,949)As at 30 September 2021

1.

Reverse repurchase agreements:
 with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.

2.

Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.

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NOTES TO THE FINANCIAL STATEMENTS

22. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill1
Consolidated
Balance at start of year

Software

Other Intangibles

Total

2022

2021

2022

2021

2022

2021

2022

2021

$m

$m

$m

$m

$m

$m

$m

$m

960

1,039

75

76

4,124

4,379

3,089

3,264

2

78

-

315

356

10

-

403

356

Amortisation expense

-

-

(375)

(434)

(4)

(2)

(379)

(436)

Additions

Impairment expense3

-

(251)

(3)

(1)

-

-

(3)

(252)

Written-off on disposal/exit3,4

(40)

(13)

-

-

-

-

(40)

(13)

Foreign currency exchange difference

(221)

89

(1)

-

(6)

1

(228)

90

Balance at end of year

2,906

3,089

896

960

75

75

3,877

4,124

Cost5

2,906

3,089

7,843

7,639

83

78

10,832

10,806n/an/a(6,947)(6,679)(8)(3)(6,955)(6,682)

2,906

3,089

896

960

75

75

3,877

4,124

Accumulated amortisation
Carrying amount

Goodwill1

Software

2022

2021

$m

$m

62

62

Additions--

Amortisation expense-

Impairment expense-

The Company
Balance at start of year

2022

Other Intangibles

Total

2021

2022

2021

2022

2021

$m

$m

$m

$m

$m

$m

952

1,030

3

5

1,017

1,097

287

345

-

-

287

345

-

(363)

(422)

(3)

(2)

(366)

(424)

-

(3)

(1)

-

-

(3)

(1)

-

-

(1)

-

1

-

-

-

Balance at end of year

62

62

872

952

1

3

935

1,017

Cost5

62

62

7,544

7,342

7

6

7,613

7,410

Accumulated amortisation

n/a

n/a

(6,672)(6,390)(6)(3)(6,678)(6,393)Carrying amount

62

62

872

952

1

3

935

1,017

Foreign currency exchange difference

1.
2.
3.

4.
5.

Goodwill excludes notional goodwill in equity accounted investments.
2022 goodwill addition relates to acquisition of Cashrewards.
2021 goodwill impairment expense relates to the write-off on reclassification of ANZ Share Investing business to held for sale with a remaining $13 million derecognised on sale of the business. This
impairment was recognised in Other income to align with the classification on completion of the disposal in 2021.
2022 goodwill written-off on disposal/exit relates to the exit of the financial planning and advice business.
Includes impact of foreign currency translation differences.

IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL
Goodwill acquired in a business combination is tested for impairment annually and whenever there are indicators of potential impairment. Goodwill isallocated at the date of acquisition to the cash generating unit (CGU) or group of CGUs that are expected to benefit from the synergies of the related
business combination.
Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount. We estimate the recoverable
amount of each CGU to which goodwill is allocated using a fair value less costs of disposal (FVLCOD) approach, with a value-in-use (VIU) assessment
performed where the FVLCOD is less than the carrying amount.
During the year ended 30 September 2022, the Group restructured its business to establish separate Australia Retail and Australia Commercial
divisions. For the purpose of goodwill impairment testing, these changes led to the creation of new CGUs which reflect the new divisional structure.
Goodwill is allocated to the following CGUs based on the lowest level at which goodwill is monitored.
Cash generating units:
Australia Retail
Australia Commercial
New ZealandInstitutional

2022
$m
178
1,706
1,022

2021
$m
100
40
1,849
1,100

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
We estimate the FVLCOD of each CGU to which goodwill is allocated by applying observable price earnings multiples of comparable companies tothe estimated future maintainable earnings of each CGU. A deduction is then made for estimated costs of disposal. The valuation is considered to belevel 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
Management’s approach and the key assumptions used in determining FVLCOD are as follows:
Key assumption
Future maintainable earnings

Approach to determining the value (or values) for each key assumption
Future maintainable earnings for each CGU is estimated as the sum of: The Group’s 2023 financial plan for each CGU; and An allocation of the central costs recorded outside of the CGUs to which goodwill is allocated.
Where relevant, adjustments are made to the Group’s financial plan to reflect the long-term expectations foritems such as expected credit losses and investment spend.

Price/Earnings (P/E) multiple

P/E multiples applicable to each CGU have been derived from a comparator group of publicly traded
companies, and include a 30% control premium, discussed below.
In the case of the New Zealand and Institutional CGUs, management has made downwards adjustments to
P/E multiples to address specific factors relevant to those CGUs.
A control premium has been applied which recognises the increased consideration a potential acquirer
would be willing to pay in order to gain sufficient ownership to achieve control over the relevant activities of
the CGU. For each CGU, the control premium has been estimated as 30% of the comparator group P/E
multiple based on historical transactions.

Costs of disposal

Costs of disposal have been estimated as 2% of the fair value of the CGU based on those observed from
historical and recent transactions.

As noted above, our impairment testing did not result in any material impairment of goodwill being identified as at 30 September 2022.
The FVLCOD estimates for each CGU are sensitive to assumptions about P/E multiples, future maintainable earnings and control premium (30%).
However, each CGU would continue to show a surplus in recoverable amount over carrying amount even where other reasonably possible alternative
estimates were used.

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NOTES TO THE FINANCIAL STATEMENTS

22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
RECOGNITION AND MEASUREMENT
The table below details how we recognise and measure different intangible assets:

Definition

Carrying value

Goodwill

Software

Other Intangibles

Excess amount the Group has paidin acquiring a business over the fairvalue of the identifiable assets andliabilities acquired.

Purchased software owned by the Group
is capitalised.

Management fee rights arisingfrom acquisition of funds
management business andother intangible assets arisingfrom contractual rights.

Cost less any accumulated
impairment losses.

Initially, measured at cost.

Allocated to the cash generating
unit to which theacquisition relates.

Useful life

Indefinite.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.

Internal and external costs incurred inbuilding software and computer systems
costing greater than $20 million are
capitalised as assets. Those less than $20
million are expensed in the year in which
the costs are incurred.

Subsequently, carried at cost lessaccumulated amortisation andimpairment losses.
Costs incurred in planning or evaluating
software proposals or in maintaining
systems after implementation are
not capitalised.
Except for major core infrastructure,amortised over periods between
2-5 years; however major core
infrastructure may be amortised up to 7
years subject to approval by the Audit
Committee.
Purchased software is amortised over 2
years unless it is considered integral toother assets with a longer useful life.

Depreciation
methodNot applicable.

Straight-line method.

Initially, measured at fair value atacquisition.
Subsequently, carried at costless accumulated amortisationand impairment losses.

Management fee rights with anindefinite life are reviewed for
impairment at least annually or
when there is an indication of
impairment. Other intangible
assets are amortised over 3
years.

Not applicable to indefinite life
intangible assets. Straight-line
method for assets with a finite
life.

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

KEY JUDGEMENTS AND ESTIMATESManagement judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life of anasset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including: the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Group’s revenue
generating segments that benefit from relevant historical business combinations generating goodwill.
 determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis, of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
 assessment of the recoverable amount of each CGU including:o selection of the model used to determine the fair value – the Group has used the market multiple approach to estimate the fairvalue; ando selection of the key assumptions in respect of future maintainable earnings, the P/E multiple applied, including selection of an
appropriate comparator group and determination of an appropriate control premium, and costs of disposal as described above.
Software and other intangible assets
At each reporting date, software and other intangible assets are assessed for indicators of impairment and, where such indicators are
identified, an impairment assessment is performed. In the event that an asset’s carrying amount is determined to be greater than its
recoverable amount, the carrying amount of the asset is written down immediately. Those assets not yet ready for use are tested for
impairment annually.
In addition, the expected useful lives of intangible assets are assessed at each reporting date. The assessment requires management
judgement, and in relation to our software assets, a number of factors can influence the expected useful lives. These factors include
changes to business strategy, significant divestments and the pace of technological change.

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NOTES TO THE FINANCIAL STATEMENTS

23. OTHER PROVISIONS
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

ECL allowance on undrawn and contingent facilities1

775

806

673

674

Customer remediation

662

886

600

791

68

99

47

44

Non-lending losses, frauds and forgeries

105

133

93

115

Other2

262

290

235

249

1,872

2,214

1,648

1,873

Restructuring costs
2

Total other provisions

Consolidated
Balance at 1 October 2021

Customer
remediation$m

Restructuring
costs
$m

Non-lending
losses, frauds
and forgeries2$m

Other2
$m

886

99

133

290

New and increased provisions made during the year

231

64

122

191

Provisions used during the year

(404)

(67)

(148)

(202)

Unused amounts reversed during the year

(51)

(28)

(2)

(17)

Balance at 30 September 2022

662

68

105

262

Customer
remediation$m

Restructuring
costs
$m

Non-lending
losses, frauds
and forgeries2$m

Other2
$m

791

44

115

249

The Company
Balance at 1 October 2021
New and increased provisions made during the year

228

54

13

170

Provisions used during the year

(375)

(27)

(35)

(181)

Unused amounts reversed during the year

(44)

(24)

-

(3)

Balance at 30 September 2022

600

47

93

235

1.

Refer to Note 14 Allowance for Expected Credit Losses for movement analysis.

2.

Certain provisions have been reclassified during 2022 from Other to Non-lending losses, frauds and forgeries to better reflect their nature. Comparatives have been restated accordingly, with areclassification impact of $72 million to the Group and $61 million to the Company.

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
23. OTHER PROVISIONS (continued)
Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation costs and outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner inwhich that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are
expensed as incurred.
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advancesand losses arising from forgeries, frauds and the correction of operational issues. The amounts recognised are the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties that surround the events andcircumstances that affect the provision.
Other
Other provisions comprise various other provisions including workers compensation, make-good provisions associated with leased premises,
warranties and indemnities provided in connection with various disposals of businesses and assets, and contingent liabilities recognised as part of abusiness combination.

RECOGNITION AND MEASUREMENTThe Group recognises provisions when there is a present obligation arising from a past event, an outflow of economic resources isprobable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using theestimated cash flows required to settle the present obligation, its carrying amount is the present value of those cash flows.

KEY JUDGEMENTS AND ESTIMATESThe Group holds provisions for various obligations including customer remediation, restructuring costs, non-lending losses, fraud andforgeries and litigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including
estimates of expenditure required to satisfy such obligations. Where relevant, expert legal advice has been obtained and, in light of suchadvice, provisions and/or disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the costof settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number ofdifferent assumptions, including, the number of impacted customers, the average refund per customer, the associated remediation project
costs, and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances. There is aheightened level of estimation uncertainty where the customer remediation provision relates to a legal proceeding or matter. The
appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence
including expert legal advice, and adjustments are made to the provisions where appropriate.

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NOTES TO THE FINANCIAL STATEMENTS

24. SHAREHOLDERS’ EQUITYSHAREHOLDERS' EQUITY
Consolidated

Ordinary share capital

The Company

2022
$m

2021
$m

2022
$m

2021
$m

28,79725,98428,72025,907

(148)

611

(6)

(145)

Reserves
Foreign currency translation reserve1

78

76

78

76

(478)

170

(557)

26

(2,036)393(2,061)

384

Share option reserve
FVOCI reserve
Cash flow hedge reserve

(22)

(22)

-

-

Total reserves(2,606)

1,228(2,546)341

Retained earnings

39,71636,45332,85929,132

Share capital and reserves attributable to shareholders of the Company

65,907

63,66559,03355,380Transactions with non-controlling interests reserve

Non-controlling interests

494

11

-

-

Total shareholders’ equity

66,401

63,67659,03355,380

2

1.

As a result of the dissolution of Minerva Holdings Limited in the United Kingdom and ANZ Asia Limited in Hong Kong, $65 million of the associated foreign currency translation reserve was recycled from
Other comprehensive income to profit or loss in 2022.

2.

ANZ Bank New Zealand has issued $484 million of perpetual preference shares in 2022 that are considered non-controlling interests to the Group.

ORDINARY SHARE CAPITAL
The table below details the movement in ordinary shares and share capital for the period.
2022
Number ofshares2,823,563,652

Dividend reinvestment plan issuances

7,195,108

Bonus option plan

Consolidated
Balance at start of the year

Group employee share acquisition scheme$m25,9842021
Number ofshares2,840,370,225$m
26,531

183

4,242,368

94

2,890,268-

2,259,507

-

-

(21)

-

13

Share buy-back1(30,831,227)(846)(23,308,448)(654)

Share entitlement issue2

187,105,950

3,497

-

-

28,7972,823,563,652

25,984(4,401,593)-

28,7972,819,162,059

25,984$m
26,454

Balance at end of year

2,989,923,751

Less: Treasury Shares(4,209,150)

Balance at end of year

2,985,714,601

The Company
Balance at start of the year

2022
Number ofshares2,823,563,652$m
25,9072021
Number ofshares2,840,370,225

Dividend reinvestment plan issuances

7,195,108

183

4,242,368

94

Bonus option plan

2,890,268-

2,259,507

-

-

(21)

-

13

Share buy-back1(30,831,227)(846)(23,308,448)(654)

Share entitlement issue2

187,105,950

3,497

-

-

Balance at end of year

2,989,923,751

28,7202,823,563,652

25,907

Group employee share acquisition scheme

1.

The Company completed its $1.5 billion on-market share buy-back of ANZ ordinary shares in 2022, purchasing $846 million (2021: $654 million) worth of shares resulting in 31 million (2021: 23 million)
shares being cancelled in 2022.

2.

On 18 July 2022, the Group announced a fully underwritten pro rata accelerated renounceable entitlement offer of new ANZ ordinary shares to help fund the Group’s anticipated acquisition of Suncorp
Bank. All eligible shareholders were invited to purchase one new ordinary share for every 15 existing ordinary shares held on 21 July 2022 at an issue price of $18.90 per share. The Company issued a total of
187.1 million ordinary shares under the offer, raising $3,497 million of new share capital (net of issue costs).

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ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
24. SHAREHOLDERS’ EQUITY (continued)
NON-CONTROLLING INTERESTSProfit attributable to nonEquity attributable tocontrolling interests
non-controlling interests
Consolidated

2022

2021

Dividend paid to noncontrolling interests

2022

2021

2022

2021

$m

$m

$m

$m

$m

$m

ANZ Bank New Zealand PPS

-

-

484

-

-

-

Other

1

1

10

11

2

-

Total

1

1

494

11

2

-

ANZ Bank New Zealand Preference Shares
ANZ Bank New Zealand Limited (ANZ Bank New Zealand), a wholly owned subsidiary of the Group, has perpetual preference shares (PPS) on issue thatare considered non-controlling interests to the Group.
The key terms of the PPS are summarised below:

PPS dividends
PPS dividends are payable at the discretion of the Directors of ANZ Bank New Zealand and are non-cumulative. ANZ Bank New Zealand must not
resolve to pay any dividend or make any other distribution on its ordinary shares until the next PPS dividend payment date if a PPS is not paid.
Should ANZ Bank New Zealand elect to pay a PPS dividend, the PPS dividend is 6.95% per annum up until 18 July 2028 and thereafter a floating rateequal to the aggregate of the New Zealand 3 month bank bill rate plus 3.25%, multiplied by one minus the New Zealand company tax rate (where the
PPS dividend is fully imputed), with PPS dividend payments due on 18 January, 18 April, 18 July and 18 October each year.

Redemption features
Holders of PPS have no right to require that the PPS be redeemed. ANZ Bank New Zealand may at its option redeem all of the PPS on an optional
redemption date (each PPS dividend date from 18 July 2028), or at any time following the occurrence of a tax event or regulatory event , subject toprior written approval of RBNZ and meeting of other conditions.

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24. SHAREHOLDERS’ EQUITY (continued)

RECOGNITION AND MEASUREMENT
Ordinary shares

Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds
available on winding up of the Company, in proportion to the number of fully paid ordinary
shares held. They are recognised at the amount paid per ordinary share net of directly
attributable costs. Every holder of fully paid ordinary shares present at a meeting in person, orby proxy, is entitled to: on a show of hands, one vote; and on a poll, one vote, for each share held.

Treasury shares

Treasury shares are shares in the Company which: the ANZ Employee Share Acquisition Plan purchases on market and have not yet
distributed, or the Company issues to the ANZ Employee Share Acquisition Plan and have not yet been
distributed.
Treasury shares are deducted from share capital and excluded from the weighted average
number of ordinary shares used in the earnings per share calculations.

Reserves:
Foreign currency translation reserve

Includes differences arising on translation of assets and liabilities into Australian dollars when
the functional currency of a foreign operation (including subsidiaries and branches) is not
Australian dollars. In this reserve, we reflect any offsetting gains or losses on hedging these
exposures, together with any tax effect.

Cash flow hedge reserve

Includes fair value gains and losses associated with the effective portion of designated cash
flow hedging instruments together with any tax effect.

FVOCI reserve

Includes changes in the fair value of certain debt securities and equity securities included
within Investment Securities together with any tax effect.
In respect of debt securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition, except for thoserelating to allowance for expected credit losses, interest income and foreign currency
exchange gains and losses which are recognised in profit or loss. As debt securities at FVOCI
are recorded at fair value, the balance of the FVOCI reserve is net of the ECL allowanceassociated with such assets. When a debt security measured at FVOCI is derecognised, thecumulative gain or loss recognised in the FVOCI reserve in respect of that security is
reclassified to profit or loss and presented in Other operating income.
In respect of the equity securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition (including any
related foreign exchange gains or losses). When an equity security measured at FVOCI is
derecognised, the cumulative gain or loss recognised in the FVOCI reserve in respect of that
security is not recycled to profit or loss.

Share option reserve

Includes amounts which arise on the recognition of share-based compensation expense.

Transactions with non-controllinginterests reserve

Includes the impact of transactions with non-controlling shareholders in their capacity asshareholders.

Non-controlling interests

Share in the net assets of controlled entities attributable to equity interests which theCompany does not own directly or indirectly.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
25. CAPITAL MANAGEMENTCAPITAL MANAGEMENT STRATEGY
ANZ’s capital management strategy aims to protect the interests of depositors, creditors and shareholders. We achieve this through an Internal
Capital Adequacy Assessment Process (ICAAP) whereby ANZ conducts detailed strategic and capital planning over a 3 year time horizon.
The process involves:
 forecasting economic variables, financial performance of ANZ’s divisions and the financial impact of new strategic initiatives to be implemented
during the planning period;
 performing stress tests under different economic scenarios to determine the level of additional capital (stress capital buffer) needed to absorb
losses that may be experienced under an economic downturn; reviewing capital ratios and targets across various classes of capital against ANZ’s risk profile; and developing a capital plan, taking into account capital ratio targets, current and future capital issuances requirements and options around capital
products, timing and markets to execute the capital plan under differing market and economic conditions.
The capital plan is approved by the Board and updated as required. The Board and senior management are provided with regular updates of ANZ’scapital position. Any material actions required to ensure ongoing prudent capital management are submitted to the Board for approval. Throughout
the year, the Group maintained compliance with all the regulatory requirements related to Capital Adequacy in the jurisdictions in which it operates.

REGULATORY ENVIRONMENT
Australia
As ANZ is an Authorised Deposit-taking Institution (ADI) in Australia, it is primarily regulated by APRA under the Banking Act 1959 (Cth). ANZ mustcomply with the minimum regulatory capital requirements, prudential capital ratios and specific reporting levels that APRA sets and which areconsistent with the global Basel III capital framework. This is the common framework for determining the appropriate level of bank regulatory capitalas set by the Basel Committee on Banking Supervision (BCBS). APRA requirements are summarised below:
Regulatory Capital Definition
Common Equity Tier 1 (CET1) Capital

Tier 1 Capital

Tier 2 Capital

Total Capital

Shareholders’ equity adjusted forspecific items.

CET1 Capital plus certain
securities with complying loss
absorbing characteristics known
as Additional Tier 1 Capital.

Subordinated debt instruments
which have a minimum term of 5
years at issue date.

Tier 1 plus Tier 2 Capital.

CET1 Ratio

Tier 1 Ratio

Total Capital Ratio

CET1 Capital divided by total risk
weighted assets must be at least 4.5%.

Tier 1 Capital divided by total risk
weighted assets must be at least
6.0%.

Total Capital divided by total risk weighted
assets must be at least 8.0%.

Level 1

Level 2

Level 3The ADI on a stand-alone basis (that is
the Company and specified subsidiaries
which are consolidated to form the
ADI’s Extended Licensed Entity).

The consolidated Group lesscertain subsidiaries and associatesthat are excluded underprudential standards.

A conglomerate Group at the widest level.

Minimum Prudential Capital Ratios (PCRs)

Reporting Levels

APRA also requires the ADI to hold additional CET1 buffers as follows: a capital conservation buffer (CCB) of 3.5% which is inclusive of the additional 1% surcharge for domestically systemically important banks (D-SIBs).
APRA has determined that ANZ is a D-SIB.
 a countercyclical capital buffer which is set on a jurisdictional basis. The requirement is currently set to zero for Australia.
ANZ reports to APRA on a Level 1 and Level 2 basis, and measures capital adequacy monthly on a Level 1 and Level 2 basis, and is not yet required tomaintain capital on a Level 3 basis (APRA have yet to conclude required timing for Level 3 reporting).

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25. CAPITAL MANAGEMENT (continued)
Life Insurance and Funds Management
As required by APRA’s Prudential Standards, insurance and funds management activities are:
 de-consolidated for the purposes of calculating capital adequacy; and excluded from the risk-based capital adequacy framework.
We deduct the investment in these controlled entities 100% from CET1 capital, and if we include any profits from these activities in the Group’s results,then we exclude them from the determination of CET1 capital to the extent they have not been remitted to the Company.
Outside Australia
In addition to APRA, the Company’s branch operations and major banking subsidiary operations are also overseen by local regulators such as theReserve Bank of New Zealand, the US Federal Reserve, the UK Prudential Regulation Authority, the Monetary Authority of Singapore, the Hong Kong
Monetary Authority and the China Banking and Insurance Regulatory Commission. They may impose minimum capital levels on operations in theirindividual jurisdictions.

CAPITAL ADEQUACY1
The following table provides details of the Group’s capital adequacy ratios at 30 September:
Consolidated
2022
$m

2021
$m

66,401

63,676

Qualifying capital
Tier 1
Shareholders' equity and non-controlling interests
Prudential adjustments to shareholders' equity

(175)

3

Gross Common Equity Tier 1 capital

66,226

63,679Deductions(10,354)(12,320)

Common Equity Tier 1 capital

55,872

51,359Additional Tier 1 capital

7,686

8,114

Tier 1 capital

63,55859,473Tier 2 capital3

19,277

17,125

Total qualifying capital

82,83576,598

Common Equity Tier 1

12.3%

12.3%

Tier 1

14.0%

14.3%

2

Capital adequacy ratios (Level 2)

Tier 2

4.2%

4.1%

Total capital ratio

18.2%

18.4%

454,718

416,086

Risk weighted assets
1.

This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The information presented in this table is a regulatory requirement
disclosed in Part A of the APRA Reporting Form (ARF) 110 Capital Adequacy which will be subject to audit in accordance with Prudential Standard APS 310 Audit and Related Matters.

2.

This includes Additional Tier 1 capital of $7,705 million (2021: $8,506 million) (refer to Note 17 Debt Issuances), regulatory adjustments and deductions of -$19 million (2021: -$392 million).

3.

This includes Tier 2 capital of $17,907 million (2021: $16,207 million) (refer to Note 17 Debt Issuances), general reserve for impairment of financial assets of $1,233 million (2021: $1,412 million) and regulatory
adjustments and deductions of $137 million (2021: -$494 million).

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ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
26. CONTROLLED ENTITIES
Incorporated inAustralia

The ultimate parent of the Group is Australia and New Zealand Banking Group Limited

Nature of BusinessBanking

The Group holds 100% of the voting interests in all controlled entities, unless noted otherwise.
The material controlled entities of the Group are:
ANZ Bank (Vietnam) Limited1

VietnamBanking

ANZ Funds Pty. Ltd.

Australia

Holding Company

Kiribati

Banking

ANZ Bank (Samoa) Limited

Samoa

Banking

ANZ Bank (Thai) Public Company Limited1

ThailandBanking

New ZealandHolding Company

ANZ Bank (Kiribati) Limited1 (75% ownership)1

ANZ Holdings (New Zealand) Limited1
ANZ Bank New Zealand Limited1
ANZ Investment Services (New Zealand) Limited1
ANZ New Zealand (Int’l) Limited1
ANZ New Zealand Investments Holdings Limited (formerly ANZ Wealth New Zealand Limited)

New Zealand

Banking

New ZealandFunds Management

New ZealandFinance

New ZealandHolding Company

New ZealandFunds Management

ANZNZ Covered Bond Trust1,4

New ZealandFinance

ANZ International Private Limited

Singapore

Holding Company

1

ANZ New Zealand Investments Limited1
1

ANZ Singapore Limited1
ANZ International (Hong Kong) Limited1

Singapore

Merchant Banking

Hong Kong

Holding Company

ANZ Bank (Vanuatu) Limited2

VanuatuBanking

ANZcover Insurance Private Ltd1

Singapore

Captive-Insurance

ANZ Lenders Mortgage Insurance Pty. Limited

Australia

Mortgage Insurance

ANZ Residential Covered Bond Trust

4

Australia

Finance

Australia and New Zealand Bank (China) Company Limited1

China

Banking

Australia and New Zealand Banking Group (PNG) Limited1

Papua New Guinea

Banking

Chongqing Liangping ANZ Rural Bank Company Limited

China

Banking

Citizens Bancorp3

Guam

Holding Company

ANZ Guam Inc3

Guam

Banking

Institutional Securitisation Services Limited (formerly ANZ Capel Court Limited)

Australia

Securitisation Manager

PT Bank ANZ Indonesia1 (99% ownership)

Indonesia

Banking1

1.

Audited by overseas KPMG firms — either as part of the Group audit, or for standalone financial statements as required.

2.

Audited by Law Partners.

3.

Audited by Deloitte Guam.

4.

Not owned by the Group. Control exists as the Group retains substantially all the risks and rewards of the operations.

CHANGES TO MATERIAL CONTROLLED ENTITIESANZ Asia Limited was deregistered in July 2022.

SIGNIFICANT RESTRICTIONSControlled entities that are subject to prudential regulation may be required to maintain minimum capital or other regulatory requirements whichmay, from time to time, limit the entity’s ability to transfer assets, pay dividends or make other capital distributions to the parent entity or to otherentities in the Group. The Group manages such restrictions within our risk management framework, as outlined in Note 18 Financial Risk Management
and our capital management strategy, as outlined in Note 25 Capital Management.
As at 30 September 2022, there were no significant restrictions on the ability of an entity within the Group to transfer assets, pay dividends or makeother capital distributions to other entities in the Group.

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26. CONTROLLED ENTITIES (continued)
RECOGNITION AND MEASUREMENTThe Group’s subsidiaries are those entities it controls through: being exposed to, or having rights to, variable returns from the entity; and being able to affect those returns through its power over the entity.
The Group assesses whether it has power over those entities by examining the Group’s existing rights to direct the relevant activities of theentity.
If the Group sells or acquires subsidiaries during the year, it includes their operating results in the Group results to the date of disposal orfrom the date of acquisition. When the Group’s control ceases, it derecognises the assets and liabilities of the subsidiary, any related noncontrolling interest and other components of equity.
If the Group’s ownership interest in a subsidiary changes in a way that does not result in a loss of control, then the Group accounts for thatas a transaction with equity holders in their capacity as equity holders.
All transactions between Group entities are eliminated on consolidation.

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ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
27. INVESTMENTS IN ASSOCIATES
Significant associates of the Group are:Ordinary shareinterest

Carrying amount $m

Name of entity

Principal activity

2022

2021

AMMB Holdings Berhad (AmBank)

Banking and insurance

22%

22%

790

719

PT Bank Pan Indonesia (PT Panin)

Consumer and business bank

39%

39%

1,318

1,210

Worldline Australia Pty Ltd (Worldline)

Payment and transactional services

49%

-

47

-

n/a

n/a

26

43

2,181

1,972

Aggregate other individually immaterial associates
Total carrying value of associates1
1.

2022

2021

Includes the impact of foreign currency translation recognised in the foreign currency translation reserve.

FINANCIAL INFORMATION ON SIGNIFICANT ASSOCIATES
Set out below is the summarised financial information of each associate that is significant to the Group. The summarised financial information is basedon the associates’ IFRS financial information and may require the use of unaudited financial information as each associate has a different financial year
to the Group (PT Panin 31 December, AmBank 31 March, Worldline 31 December).

Principal place of business and country of incorporation

AMMB Holdings Berhad
Malaysia2022$mWorldline
Australia
Pty Ltd1
Australia

PT Bank Pan Indonesia
Indonesia

2021
$m

2022
$m

2021
$m

2022
$m

Summarised results
1,511

1,560

1,206

1,222

57

Profit/(Loss) for the year529

(1,192)

198

298

(21)

Other comprehensive income/(loss)

(128)

(39)

6

(56)

-

Total comprehensive income/(loss)

401(1,231)

204

242

(21)

(18)

(25)

25

1

-

383

(1,256)

229

243

(21)

57,22055,711

20,53718,323203

53,234

49,773

17,234

15,37790

Total net assets
Less: Non-controlling interests of associate

3,986

5,938

3,303

2,946

113

(402)

(327)

(315)

(304)

-

Net assets attributable to owners of associate

3,584

5,611

2,988

2,642

113

719

1,056

1,210

1,084

-

-

-

-

-

57

Group's share of total comprehensive income/(loss)

81

(313)

71

90

(10)

Dividends received from associate
Foreign currency translation reserve adjustments
Carrying amount at the end of the year

(12)
2
790

(24)
719

(18)
55
1,318

36
1,210

47

Market value of Group's investment in associate

929

756

2,016

675

n/a

Operating income2

Less: Total comprehensive (income)/loss attributable to non–controllinginterests
Total comprehensive income/(loss) attributable to owners of
associate
Summarised financial position
Total assets3
Total liabilities

3
3

Reconciliation to carrying amount of Group's interest in associate
Carrying amount at the beginning of the year
Acquired1.

During 2022, the Group entered into a partnership with Worldline SA. This included the creation of a new entity, Worldline Australia Pty Ltd, which commenced operations on 8 March 2022.

2.

2021 operating income was restated for AmBank to align with the change in presentation in AmBank’s financial statements.

3.

Includes market value adjustments (including goodwill) the Group made at the time of acquisition (and adjustments for any differences in accounting policies).

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27. INVESTMENTS IN ASSOCIATES (continued)

RECOGNITION AND MEASUREMENT
An associate is an entity over which the Group has significant influence over its operating and financial policies but does not control. The
Group accounts for associates using the equity method. Its investments in associates are carried at cost plus the post-acquisition share ofchanges in the associate’s net assets less accumulated impairments. Dividends the Group receives from associates are recognised as a
reduction in the carrying amount of the investment. The Group includes goodwill recognised by the associate in the carrying amount of
the investment. It does not individually test the goodwill incorporated in the associates carrying amount for impairment.
At least at each reporting date, the Group reviews investments in associates for any indication of impairment. If an indication of impairment
exists, then the Group determines the recoverable amount of the associate using the higher of: the associate’s fair value less cost of disposal; and its value-in-use.
We use a discounted cash flow methodology, and when applicable, other methodologies (such as capitalisation of earnings methodology),
to determine the recoverable amount.

KEY JUDGEMENTS AND ESTIMATES
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indicationthat the investment may be impaired. In addition, the Group is required to assess at each reporting date whether the recoverable amountof the Group’s investment has increased to such a level as to support the reversal of prior period impairments.
During the year ended 30 September 2022, the fair value less costs of disposal of the Group’s investment in PT Bank Pan Indonesia (PTPanin) as determined by reference to the quoted share price increased significantly and as at 30 September 2022 was greater than its
carrying value. The increase in fair value is a significant reversal of the position at 30 September 2021 when the fair value less cost of
disposal determined by reference to share price was lower than the carrying value of the investment.
In considering whether a full or partial reversal of previous periods’ impairments of PT Panin is appropriate, the Group has assessed
particular features of the PT Panin stock. Given the recent rapid increase and ongoing elevated volatility in the share price, the Group hasdetermined that none of the prior period impairment will be reversed.
If management had assessed these factors differently, then the amount of impairment reversed could be anywhere between nil and$220 million.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
28. STRUCTURED ENTITIESA Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in determining who controls
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.
SEs are classified as subsidiaries and consolidated when control exists. If the Group does not control a SE, then it is not consolidated. This note
provides information on both consolidated and unconsolidated SEs.
The Group’s involvement with SEs is as follows:Type

Details

Securitisation

The Group establishes SEs to securitise customer loans and advances that it has originated, in order to diversify
sources of funding for liquidity management. Securitisation programs include customer loans and advances
assigned to bankruptcy remote SEs to provide either security for obligations payable on notes issued by the SEs
to external investors or create assets held by the Group eligible for repurchase agreements with applicablecentral banks.
The Group retains control over these SEs and therefore they are consolidated. Refer to Note 29 Transfers ofFinancial Assets for further details.
The Group also establishes SEs on behalf of customers to securitise their loans or receivables. The Group may
manage these securitisation vehicles or provide liquidity or other support. Additionally, the Group may acquireinterests in securitisation vehicles set up by third parties through holding securities issued by such entities. In
limited circumstances where control exists, the Group consolidates the SE.

Covered bond issuances

Certain loans and advances have been assigned to bankruptcy remote SEs to provide security for issuances ofdebt securities by the Group. The Group retains control over these SEs and therefore they are consolidated. Refer
to Note 29 Transfers of Financial Assets for further details.

Structured financearrangements

The Group is involved with SEs established: in connection with structured lending transactions to facilitate debt syndication and/or to ring-fencecollateral; and to own assets that are leased to customers in structured leasing transactions.
The Group may manage the SE, hold minor amounts of the SE’s capital, or provide risk management products(derivatives) to the SE. In most instances, the Group does not control these SEs. In limited circumstances wherecontrol exists, the Group consolidates the SE.

Funds management activities

The Group is the scheme manager for a number of Managed Investment Schemes (MIS) in New Zealand. TheseMIS are financed through the issue of units to investors and the Group considers them to be SEs. The Group’s
interests in these MIS are limited to receiving fees for services or providing risk management products(derivatives). These interests do not create significant exposures that would allow the Group to control the funds.
Therefore, these MIS are not consolidated.

CONSOLIDATED STRUCTURED ENTITIESFINANCIAL OR OTHER SUPPORT PROVIDED TO CONSOLIDATED STRUCTURED ENTITIESThe Group provides financial support to consolidated SEs as outlined below.
Securitisation and coveredbond issuances

The Group provides lending facilities, derivatives and commitments to these SEs and/or holds debt instrumentsthat they have issued.

Structured financearrangements

The assets held by these SEs are normally pledged as collateral for financing provided. Certain consolidated SEs
are financed entirely by the Group while others are financed by syndicated loan facilities in which the Group is aparticipant. The financing provided by the Group includes lending facilities where the Group’s exposure is limited
to the amount of the loan and any undrawn amount. Additionally, the Group has provided Letters of Support tothese consolidated SEs confirming that the Group will not demand repayment of the financing provided for theensuing 12 month period.

The Group did not provide any non-contractual support to consolidated SEs during the year (2021: nil). Other than as disclosed above, the Group does
not have any current intention to provide financial or other support to consolidated SEs.

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28. STRUCTURED ENTITIES (continued)
UNCONSOLIDATED STRUCTURED ENTITIESGROUP’S INTEREST IN UNCONSOLIDATED STRUCTURED ENTITIESAn ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes the Group to variability of
returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives that pass-on
risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
 no disclosure is made if the Group’s involvement is not more than a passive interest - for example: when the Group’s involvement constitutes atypical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading and investing activities are
not considered disclosable interests - unless the design of the structured entity allows the Group to participate in decisions about the relevant
activities (being those that significantly affect the entity’s returns).
 ‘interests’ do not include derivatives intended to expose the Group to market-risk (rather than performance risk specific to the SE) or derivatives
through which the Group creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit protection under a credit
default swap).
The table below sets out the Group’s interests in unconsolidated SEs together with the maximum exposure to loss that could arise fromthose interests:
Securitisation

Structured finance

Total

2022
$m

2021
$m

2022
$m

2021
$m

2022
$m

2021
$m

3,352

2,624

-

-

3,352

2,624

On-balance sheet interests
Investment securities
Gross loans and advances

9,433

7,697

43

53

9,476

7,750

Total on-balance sheet

12,785

10,32143

53

12,828

10,374

2,078

2,034

-

-

2,078

2,034

Off-balance sheet interests
Commitments (facilities undrawn)

50

50

-

-

50

50

Total off-balance sheet

2,128

2,084

-

-

2,128

2,084

Maximum exposure to loss

14,913

12,4054353

14,956

12,458

Guarantees

In addition to the interests above, the Group earned funds management fees from unconsolidated investment funds of $181 million (2021: $192
million) during the year.
The Group’s maximum exposure to loss represents the maximum amount of loss that the Group could incur as a result of its involvement withunconsolidated SEs if loss events were to take place - regardless of the probability of occurrence. This does not in any way represent the actual losses
expected to be incurred. Furthermore, the maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements enteredinto to mitigate ANZ’s exposure to loss.
The maximum exposure to loss has been determined as: the carrying amount of Investment securities measured at amortised cost; and the carrying amount plus the undrawn amount of any committed loans and advances.
The size of unconsolidated SEs is indicated by total assets which vary by SE with the largest single SE having a value of approximately $5.2 billion.
The Group did not provide any non-contractual support to unconsolidated SEs during the year (2021: nil) nor does it have any current intention toprovide financial or other support to unconsolidated SEs.

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
28. STRUCTURED ENTITIES (continued)
SPONSORED UNCONSOLIDATED STRUCTURED ENTITIESThe Group may also sponsor unconsolidated SEs in which it has no disclosable interest.
For the purposes of this disclosure, the Group considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in the design andestablishment of that SE and:
 the Group is the major user of that SE; or the Group’s name appears in the name of that SE, or on its products; or the Group provides implicit or explicit guarantees of that SE’s performance.
The Group has sponsored the ANZ PIE Fund in New Zealand, which invests only in deposits with ANZ Bank New Zealand. The Group does not provide
any implicit or explicit guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received from, nor
assets transferred to, this entity during the year.

KEY JUDGEMENTS AND ESTIMATES
Significant judgement is required in assessing whether the Group has control over Structured Entities. Judgement is required to determine
the existence of: power over the relevant activities (being those that significantly affect the entity’s returns); and exposure to variable returns of the entity.

29. TRANSFERS OF FINANCIAL ASSETSIn the normal course of business the Group enters into transactions where it transfers financial assets directly to third parties or to SEs. These transfers
may give rise to the Group fully, or partially, derecognising those financial assets - depending on the Group’s exposure to the risks and rewards orcontrol over the transferred assets. If the Group retains substantially all of the risk and rewards of a transferred asset, the transfer does not qualify for
derecognition and the asset remains on the Group’s balance sheet in its entirety.

SECURITISATIONSNet loans and advances include residential mortgages securitised under the Group’s securitisation programs which are assigned to bankruptcy
remote SEs to provide security for obligations payable on the notes issued by the SEs. The holders of the issued notes have full recourse to the pool ofresidential mortgages which have been securitised and the Group cannot otherwise pledge or dispose of the transferred assets.
In some instances, the Group is also the holder of the securitised notes issued by the SEs. In addition, the Group is entitled to any residual income of
the SEs and sometimes enters into derivatives with the SEs. The Group retains the risks and rewards of the residential mortgages and continues torecognise the mortgages as financial assets.
The Group is exposed to variable returns from its involvement with these securitisation SEs and has the ability to affect those returns through its
power over the SEs activities. The SEs are therefore consolidated by the Group.

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NOTES TO THE FINANCIAL STATEMENTS

29. TRANSFERS OF FINANCIAL ASSETS (continued)
COVERED BONDS
The Group operates various global covered bond programs to raise funding in its primary markets. Net loans and advances include residential
mortgages assigned to bankruptcy remote SEs associated with these covered bond programs. The mortgages provide security for the obligations
payable on the issued covered bonds.
The covered bond holders have dual recourse to the issuer and the cover pool of assets. The issuer cannot otherwise pledge or dispose of thetransferred assets, however, subject to legal arrangements it may repurchase and substitute assets as long as the required cover is maintained.
The Company is required to maintain the cover pool at a level sufficient to cover the bond obligations. In addition, the Company is entitled to any
residual income of the covered bond SEs and enters into derivatives with the SEs. The Company retains the majority of the risks and rewards of theresidential mortgages and continues to recognise the mortgages as financial assets. The obligation to pay this amount to the SEs is recognised as afinancial liability of the Company.
The Group is exposed to variable returns from its involvement with the covered bond SEs and has the ability to affect those returns through its powerover the SEs activities. The SEs are therefore consolidated by the Group. The covered bonds issued externally are included within debt issuances.

REPURCHASE AGREEMENTS
When the Group sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards of ownership, thenthose assets do not qualify for derecognition. An associated liability is recognised for the consideration received from the counterparty.

STRUCTURED FINANCE ARRANGEMENTS
The Group arranges funding for certain customer transactions through structured leasing. These transactions are recognised on Group’s balance sheet
as lease receivables or loans. At times, other financial institutions participate in the funding of these arrangements. This participation involves a
proportionate transfer of the rights to the assets recognised by the Group. The participating banks have limited recourse to the leased assets andrelated proceeds. Where the Group continues to be exposed to some of the risks of the transferred assets through a derivative or other continuing
involvement, the Group does not derecognise the lease receivable or loan. Instead, the Group recognises an associated liability representing its
obligations to the participating financial institutions.
The tables below set out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities.
Securitisations1,2
2022
2021

Covered bonds
2022
2021

Repurchaseagreements
2022
2021

Structured financearrangements
2022
2021

$m

$m

$m

$m

$m

$m

$m

$m

Current carrying amount of assets transferred

1,121

1,430

27,57528,81652,757

51,20836

55

Carrying amount of associated liabilities

1,115

1,424

12,967

15,39947,22946,14736

55

Consolidated

Securitisations1,2
2022
2021

Covered bonds
2022
2021

Repurchaseagreements
2022
2021

Structured financearrangements
2022
2021

$m

$m

$m

$m

$m

$m

$m

$m

Current carrying amount of assets transferred

1,121

1,430

17,953

17,92547,846

48,663--Carrying amount of associated liabilities

1,121

1,430

17,953

17,92542,94043,925--The Company

1.

Does not include transfers to internal structured entities where there are no external investors.

2.

The securitisation noteholders have recourse only to the pool of residential mortgages which have been securitised. The carrying value of securitised assets and the associated liabilities approximates theirfair value.

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS
Set out below is a summary of amounts recognised in the Balance Sheet in respect of the defined benefit superannuation schemes:
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Present value of funded defined benefit obligation(930)(1,477)(809)(1,319)Defined benefit obligation and scheme assets
Fair value of scheme assets

1,123

1,679

988

1,514

Net defined benefit asset

193

202

179

195

As represented in the Balance Sheet
Net liabilities arising from defined benefit obligations included in payables
and other liabilities
Net assets arising from defined benefit obligations included in other assets

(6)

(11)

(6)

(11)

199

213

185

206

193

202

179

195

14.8

14.9

14.9

14.9

Net defined benefit asset
Weighted average duration of the benefit payments reflected in the defined
benefit obligation (years)

As at the most recent reporting dates of the schemes, the aggregate surplus of net market value of assets over the value of accrued benefits on afunding basis was $69 million (2021: $109 million surplus). In 2022, the Group made defined benefit contributions totalling $2 million (2021:$3 million). It expects to make contributions of approximately $2 million next financial year.

GOVERNANCE OF THE SCHEMES AND FUNDING OF THE DEFINED BENEFIT SECTIONS
The main defined benefit superannuation schemes in which the Group participates operate under trust law and are managed and administered onbehalf of the members in accordance with the terms of the relevant trust deed and rules and all relevant legislation. These schemes have corporate
trustees, which are wholly owned subsidiaries of the Group. The trustees are the legal owners of the assets, which are held separately from the assetsof the Group, and are responsible for setting investment policy and agreeing funding requirements with the employer through the triennial actuarial
valuation process.
The Group has defined benefit arrangements in Australia, Japan, New Zealand, Philippines, Taiwan and United Kingdom. The defined benefit sectionof the ANZ Australian Staff Superannuation Scheme, the ANZ UK Staff Pension Scheme and the ANZ National Retirement Scheme in New Zealand are
the three largest plans. They have been closed to new members since 1987, 2004 and 1991 respectively. None of the schemes had a material deficit,
or surplus, at the last funding valuation. The Group has no present liability under any of the schemes’ trust deeds to fund a deficit (measured on afunding basis). A contingent liability of the Group may arise if any of the schemes were wound up.

RECOGNITION AND MEASUREMENT
Defined benefit superannuation schemes
The Group operates a small number of defined benefit schemes. Independent actuaries calculate the liability and expenses related toproviding benefits to employees under each defined benefit scheme. They use the Projected Unit Credit Method to value the liabilities. Thebalance sheet includes:
 a defined benefit liability if the obligation is greater than the fair value of the schemes assets; and an asset (capped to its recoverable amount) if the fair value of the assets is greater than the obligation.
In each reporting period, the movements in the net defined benefit liability are recognised as follows: the net movement relating to the current period’s service cost, net interest on the defined benefit liability, past service costs and othercosts (such as the effects of any curtailments and settlements) as operating expenses;
 remeasurements of the net defined benefit liability (which comprise actuarial gains and losses and return on scheme assets, excludinginterest income included in net interest) directly in retained earnings through other comprehensive income; and contributions of the Group directly against the net defined benefit position.
Defined contribution superannuation schemes
The Group operates a number of defined contribution schemes. It also contributes (according to local law, in the various countries in which
it operates) to Government and other plans that have the characteristics of defined contribution plans. The Group’s contributions to theseschemes are recognised as personnel expenses when they are incurred.

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NOTES TO THE FINANCIAL STATEMENTS

30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS (continued)
KEY JUDGEMENTS AND ESTIMATES
The main assumptions we use in valuing defined benefit obligations are listed in the table below. A change to any assumptions, orapplying different assumptions, could have an effect on the Statement of Other Comprehensive Income and Balance Sheet.

Consolidated
Discount rate (% p.a.)2022
1.35-5.452021
0.4-2.15

1.5-3.8

1.9-3.5

3.1-3.5/3.0

1.05-3.35/2.7– Males (years)

26.2-28.3

26.1-28.8– Females (years)

29.1-30.2

29.0-30.5

Future salary increases (% p.a.)

Sensitivity analysis
change in significant
assumptions
0.5% increase

Increase/(decrease) in
defined benefit
obligation
2022
$m
(49)

2021
$m
(103)

0.5% increase

32

84

1 year increase

40

74

Future pension indexation
In payment (% p.a.)/In deferment (% p.a.)Life expectancy at age 60 for current pensioners

The Company
Discount rate (% p.a.)2022
5.1-5.452021
1.95-2.15

3.8

3.5

In payment (% p.a.)/In deferment (% p.a.)Life expectancy at age 60 for current pensioners– Males (years)

3.1-3.5/3.0

2.0-3.35/2.7

26.2-28.3

26.1-28.8– Females (years)

29.1-30.2

29.0-30.5

Future salary increases (% p.a.)

Sensitivity analysis
change in significant
assumptions
0.5% increase

Increase/(decrease) in
defined benefit
obligation
2022
$m
(43)

2021
$m
(94)

26
35

75
67

Future pension indexation
0.5% increase
1 year increase

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ANZ 2022 Annual Report / Financial Report

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANSANZ operates a number of employee share and option schemes under the ANZ Employee Share Acquisition Plan and the ANZ Share Option Plan.

ANZ EMPLOYEE SHARE ACQUISITION PLAN
The Deferred Share Plan was the only ANZ Employee Share Acquisition Plan scheme that operated during 2022 and 2021.
Deferred Share Plani) ANZ Incentive Plan (ANZIP) - Chief Executive Officer (CEO), Group Executive Committee (ExCo) and other Banking Executive Accountability
Regime (BEAR) Accountable Executives: Based on the 2021 and 2020 Performance and Remuneration Review (granted in the 2022 and 2021
financial years)
Eligibility

CEO, ExCo and Group General Manager Internal Audit (GGM IA).

Grant

50% of the CEO’s Short Term Variable Remuneration (STVR), 25% of ExCo’s Variable Remuneration (VR) (except for the
Chief Risk Officer (CRO)), and 33% of the CRO and GGM IA’s VR, was received as deferred shares.

Conditions

Deferred over at least one to four years from the date the Board approved the variable remuneration award.

ii) ANZIP: Based on the 2021 and 2020 Performance and Remuneration Reviews (granted in the 2022 and 2021 financial years)
Eligibility

All employees excluding the CEO, ExCo and GGM IA (i.e., other BEAR Accountable Executive), and select roles in the
United Kingdom (UK)/China1.

Grant

If VR is at or exceeds AUD 100,000, then 60% of total VR amount is deferred as shares.

Conditions

Deferred over three years from grant date.

iii) Exceptional circumstances
Remuneration
foregone

In exceptional circumstances, we grant deferred shares to certain employees when they start with ANZ tocompensate them for remuneration they have foregone from their previous employer. The vesting period generallyaligns with the remaining vesting period of the remuneration they have foregone, and therefore varies between
grants.

Retention

We may grant deferred shares to high performing employees who are regarded as a significant retention risk to ANZ.

iv) Further information
Cessation

Unless the Board decides otherwise, employees forfeit their unvested deferred shares if they resign, are terminatedon notice, or are dismissed for serious misconduct. The deferred shares may be held in trust beyond the deferral
period.

Dividends

Dividends are reinvested in the Dividend Reinvestment Plan.

Instrument

Deferred share rights may be granted instead of deferred shares in some countries as locally appropriate (seedeferred share rights section).

Allocation value

All deferred shares are issued based on the VWAP of ANZ shares traded on the ASX in the week leading up to andincluding the date of grant.

Expensing value (fairvalue)We expense the fair value of deferred shares on a straight-line basis over the relevant vesting period and we
recognise the expense as a share-based compensation expense with a corresponding increase in equity.

2022 and 2021 grants

During the 2022 year, we granted 1,971,715 deferred shares (2021: 1,653,585) with a weighted average grant price of$27.52 (2021: $23.31).

Malus (downward
adjustment)

Deferred shares remain at risk and the Board has the discretion to adjust the number of deferred shares downwards,
including to zero at any time before the vesting date. ANZ’s malus (downward adjustment) provisions are detailed in
section 5.3 of the 2022 Remuneration Report.
Board discretion was not exercised to adjust downward any deferred shares in 2022 (2021: nil).

1.

Specific deferral arrangements also exist under ANZIP for roles defined as UK Material Risk Takers and China Material Risk Takers, in line with local regulatory requirements.

Expensing of the ANZ Employee Share Acquisition Plan
Expensing value(fair value)

222

The fair value of shares we granted during 2022 under the Deferred Share Plan, measured as at the date of grant of
the shares, is $52.6 million (2021: $38.9 million) based on 1,971,715 shares (2021: 1,653,585) at VWAP of $26.69(2021: $23.53).

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NOTES TO THE FINANCIAL STATEMENTS

31. EMPLOYEE SHARE AND OPTION PLANS (continued)
ANZ SHARE OPTION PLAN
Allocation

We may grant selected employees options/rights which entitle them to acquire fully paid ordinary ANZ shares at a
fixed price at the time the options/rights vest. Voting and dividend rights will be attached to the ordinary shares
allocated on exercise of the options/rights.
Each option/right entitles the holder to one ordinary share subject to the terms and conditions imposed on grant.
Exercise price of options, determined in accordance with the rules of the plan, is generally based on the VWAP of theshares traded on the ASX in the week leading up to and including the date of grant. For rights, the exercise price is nil.

Rules

Prior to the exercise of the option/right if ANZ changes its share capital due to a bonus share issue, pro-rata new shareissue or reorganisation the following adjustments are required: Issue of bonus shares - When the holder exercises their option, they are also entitled to be issued the number ofbonus shares they would have been entitled to had they held the underlying shares at the time of the bonus issue;
 Pro-rata share offer - We will adjust the exercise price of the option in the manner set out in the ASX Listing Rules;
and Reorganisation - In respect of rights, if there is a bonus issue or reorganisation of ANZ’s share capital, then the
Board may adjust the number of rights or the number of underlying shares so that there is no advantage ordisadvantage to the holder.
Holders otherwise have no other entitlements to participate: in any new issue of ANZ securities before they exercise their options/rights; or in a share issue of a body corporate other than ANZ (such as a subsidiary).
Any portion of the award which vests may, at the Board’s discretion, be satisfied by a cash equivalent payment rather
than shares.

Expensing

We expense the fair value of options/rights on a straight-line basis over the relevant vesting period and we recognise
the expense as a share-based compensation expense with a corresponding increase in equity.

Cessation

The provisions that apply if the employee’s employment ends are in section 8.2.3 of the 2022 Remuneration Report.

Malus (downward
adjustment)

ANZ’s malus (downward adjustment) provisions are detailed in section 5.3 of the 2022 Remuneration Report.

Option Plans that operated during 2022 and 2021
i) Performance Rights
Allocation

We grant performance rights to the CEO and ExCo as part of ANZ’s variable remuneration plans. Performancerights provide the holder with the right to acquire ANZ shares at nil cost, subject to a four-year vesting period
and Total Shareholder Return (TSR) performance hurdles. Further details on the performance hurdles are in
section 5.2.5 of the 2022 Remuneration Report.

Satisfying vesting

Any portion of the award of performance rights (that have met the performance hurdles) may be satisfied by acash equivalent payment rather than shares at the Board’s discretion. In 2022 (and 2021), the performance rightsthat vested (previously granted in November/December 2018 (and in November/December 2017)) weresatisfied through a share allocation, other than 24,011 performance rights for which a cash payment was made(2021: 36,103).

2022 and 2021 grants

During 2022, we granted 542,747 performance rights (2021: 485,032).

Malus (downward adjustment)

Board discretion was not exercised to adjust downward any performance rights in 2022 (2021: nil).

ii) Deferred Share Rights (no performance hurdles)
Allocation

Deferred share rights provide the holder with the right to acquire ANZ shares at nil cost after a specified vesting
period. We adjust the fair value of rights for the absence of dividends during the restriction period.

Satisfying vesting

Any portion of the award of share rights may be satisfied by a cash equivalent payment rather than shares at theBoard’s discretion. All share rights were satisfied through a share allocation, other than 55,977 deferred sharerights (2021: 89,296) for which a cash payment was made.

2022 and 2021 grants

During the 2022 year, 2,576,907 deferred share rights (no performance hurdles) were granted (2021: 2,258,774).

Malus (downward adjustment)

Board discretion was not exercised to adjust downward any deferred share rights in 2022 (2021: 8,414).

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
Options, Deferred Share Rights and Performance Rights on Issue
As at 26 October 2022, there were 457 holders of 4,804,445 deferred share rights on issue and 22 holders of 1,402,847 performance rights on issue.
Options/Rights Movements
This table shows the options/rights over unissued ANZ shares and their related weighted average (WA) exercise prices as at the beginning and end of2022 and the movements during 2022:

Number of options/rights
WA exercise priceOpeningbalance
1 Oct 2021

Options/rightsgrantedOptions/rightsforfeited1

Options/rightsexpiredOptions/rightsexercised

Closingbalance
30 Sep 2022

6,307,778

3,119,654

$0.00

$0.00

(747,744)0(2,470,648)

6,209,040

$0.00

$0.00

$0.00

$0.00

WA closing share price$25.56WA remaining contractual life

1.9 years

WA exercise price of all exercisable
options/rights outstanding$0.00

Outstanding exercisable options/rights

141,633

This table shows the options/rights over unissued ANZ shares and their related weighted average exercise prices as at the beginning and end of 2021
and the movements during 2021:
Options/
Options/
Closing
Opening
Options/
Options/rightsrightsbalancebalancerightsrightsexpiredexercised
30 Sep 2021
1 Oct 2020
grantedforfeited1
Number of options/rights
WA exercise price

6,724,557

2,743,806(918,589)

0(2,241,996)

6,307,778

$0.00

$0.00

$0.00

$0.00

$0.00

$0.00

WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
1.

Refers to any circumstance where equity can be forfeited (for example on cessation, downward adjustment or performance conditions not met).

All of the shares issued as a result of the exercise of options/rights during 2022 and 2021, were issued at a nil exercise price.
As at the date of the signing of the Directors’ Report on 26 October 2022:
 no options/rights over ordinary shares have been granted since the end of 2022; and no shares issued as a result of the exercise of options/rights since the end of 2022.

224$25.34
1.8 years$0.00
227,412

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NOTES TO THE FINANCIAL STATEMENTS

31. EMPLOYEE SHARE AND OPTION PLANS (continued)
Fair Value Assumptions
When determining the fair value, we apply the standard market techniques for valuation, including Monte Carlo and/or Black Scholes pricing models.
We do so in accordance with the requirements of AASB 2 Share-based Payments. The models take into account early exercise of vested equity, nontransferability and internal/external performance hurdles (if any).
The table below shows the significant assumptions we used as inputs into our fair value calculation of instruments granted during the period. We
present the values as weighted averages, but the specific values we use for each allocation are the ones we use for the fair value calculation.
2022

Exercise price ($)
Share closing price at grant date ($)

PerformancerightsPerformancerights

0.00

0.00

0.00

0.00

26.62

26.92

23.37

23.32

20.0

20.0

26.5

25.0

Equity term (years)

2.2

6.0

2.3

6.0

Vesting period (years)

2.1

4.0

2.0

4.0

Expected life (years)

2.1

4.0

2.0

4.0

Expected dividend yield (%)

5.50

5.50

4.85

5.25

Risk free interest rate (%)

0.80

1.25

0.10

0.21

Fair value ($)

23.71

10.38

21.15

9.56

Expected volatility of ANZ share price (%)

1.

2021
Deferred
share
rightsDeferred
share
rights1

Expected volatility represents a measure of the amount by which ANZ’s share price is expected to fluctuate over the life of the rights. The measure of volatility used in the model is the annualised standard
deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility is then used toestimate a reasonable expected volatility over the expected life of the rights.

SATISFYING EQUITY AWARDS
All shares underpinning equity awards may be purchased on market, reallocated or be newly issued shares, or a combination.
The equity we purchased on market during the 2022 financial year (either under the ANZ Employee Share Acquisition Plan and the ANZ Share Option
Plan, or to satisfy options or rights) for all employees amounted to 4,230,962 shares at an average price of $27.57 per share (2021: 3,593,574 shares at
an average price of $22.03 per share).

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
32. RELATED PARTY DISCLOSURESKEY MANAGEMENT PERSONNEL COMPENSATIONKey Management Personnel (KMP) are Directors of Australia and New Zealand Banking Group Limited (whether executive directors or otherwise), andthose personnel with a key responsibility for the strategic direction and management of the Group (i.e., members of the Group Executive Committee(ExCo)) who have Banking Executive Accountability Regime (BEAR) accountability and who report to the Chief Executive Officer (CEO). KMP
compensation included within total personnel expenses in Note 4 Operating Expenses is as follows:
Consolidated
20221
$'000

2021
$'000

18,294

21,107

Post-employment benefits

394

403

Other long-term benefits

160

258

-

250

Share-based payments

7,368

5,066

Total

26,21627,084

Short-term benefits

Termination benefits

1.

Includes former disclosed KMP until the end of their employment.

KEY MANAGEMENT PERSONNEL LOAN TRANSACTIONS
Loans made to KMP are made in the ordinary course of business and on normal commercial terms and conditions that are no more favourable thanthose given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts have been written
off during the period, or individual provisions raised in respect of these balances. Details of the terms and conditions of lending products can befound on anz.com. The aggregate of loans (including credit card balances) made, guaranteed or secured, and undrawn facilities to KMP including theirrelated parties, were as follows:
Consolidated

The Company

2022
$'000

2021
$'000

2022
$'000

2021
$'000

Loans advanced1

24,34025,445

11,27012,534

Undrawn facilities1

489

531

277

277

Interest charged

790

777

293

434

2

1.

Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date ofcommencement) for new KMP in the current period.

2.

Interest charged is for all KMP’s during the period.

KEY MANAGEMENT PERSONNEL HOLDINGS OF ANZ SECURITIESKMP, including their related parties, held subordinated debt, shares, share rights and options over shares in the Company directly, indirectly or
beneficially as shown below:
Consolidated

Shares, options and rights1
Subordinated debt

1

1.

2022
Number

2021
Number2,911,138

2,471,577

29,94825,870

Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date ofcommencement) for new KMP in the current period.

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NOTES TO THE FINANCIAL STATEMENTS

32. RELATED PARTY DISCLOSURES (continued)
OTHER TRANSACTIONS OF KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIESThe aggregate of deposits of KMP and their related parties with the Group were $30 million (2021: $28 million) and with the Company were
$21 million (2021: $20 million).
During the year, KMP participated in the ANZ Retail Entitlement Offer in their capacity as shareholders on the same terms and conditions as othershareholders of the Group. Refer to Note 24 Shareholders’ Equity for additional details regarding the ANZ Retail Entitlement Offer.
Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service fees,
brokerage and bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associated with theperformance of their duties. These transactions are conducted on normal commercial terms and conditions no more favourable than those given toother employees or customers. Gifts were provided to KMP on retirement amounting to $4,944 during the year.

ASSOCIATES
We disclose significant associates in Note 27 Investments in Associates. During the course of the financial year, transactions conducted with all
associates were on terms equivalent to those made on an arm’s length basis.
Consolidated
2022
$'000

The Company
2021
$'000

2022
$'000

2021
$'000

Amounts receivable from associates

86,4697

18,572-

Amounts payable to associates

102,042

1,739

101,198716

Interest revenue from associates

5,570

-

4,477

-

Interest expense to associates

34

2

26

-

Other revenue from associates

14,296-

14,296-

Other expenses paid to associates

11,159

9,988

8,592

8,063

72

28

72

28

Guarantees given to associates
Dividend income from associates

38,692---

Undrawn facilities

94,097-

94,097-

There have been no material guarantees given or received. No amounts receivable from the associates have been written-off during the period, or
individual provisions raised in respect of these balances.

SUBSIDIARIESWe disclose material controlled entities in Note 26 Controlled Entities. During the financial year, subsidiaries conducted transactions with each otherand with associates on terms equivalent to those on an arm’s length basis. As of 30 September 2022, we consider all outstanding amounts on thesetransactions to be fully collectible.
Transactions between the Company and its subsidiaries include providing a wide range of banking and other financial facilities. Details of amounts
paid to, or received from, related parties, in the form of dividends or interest, are set out in Note 2 Net Interest Income and Note 3 Non-Interest
Income.
Other intragroup transactions include providing management and administrative services, staff training, data processing facilities, transfer of tax losses,
and the leasing of Premises and equipment. The Company also issued letters of comfort and guarantees in respect of certain subsidiaries in thenormal course of business.

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ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETSCREDIT RELATED COMMITMENTS AND CONTINGENCIES
Consolidated

The Company

2022
$m

2021
$m

2022
$m

2021
$m

Undrawn facilities

236,051

212,265

201,204

176,077

Guarantees and letters of credit

23,72930,027

21,557

27,957

Contract amount of:

Performance related contingencies

26,03618,303

24,63417,085

Total

285,816

260,595

247,395

221,119

UNDRAWN FACILITIESThe majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which the Group or the Company may be required topay, the full amount of undrawn facilities for the Group and the Company mature within 12 months.
GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that the Group has entered into as principal – including
guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve the Group issuing letters of credit guaranteeing payment in favour of an exporter. They are secured against anunderlying shipment of goods or backed by a confirmatory letter of credit from another bank.
Performance related contingencies are liabilities that oblige the Group to make payments to a third party if the customer fails to fulfil its non-monetary
obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that weapply to loans. The contract amount represents the maximum potential amount that we could lose if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements. Basedon the earliest date on which the Group or the Company may be required to pay, the full amount of guarantees and letters of credit and performance
related contingencies for the Group and the Company mature within 12 months.

OTHER CONTINGENT LIABILITIESAs at 30 September 2022, the Group had contingent liabilities in respect of the matters outlined below. Where relevant, expert legal advice has beenobtained and, in the light of such advice, provisions (refer to Note 23 Other Provisions) and/or disclosures as deemed appropriate have been made. In
some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or becausesuch disclosure may prejudice the interests of the Group.
REGULATORY AND CUSTOMER EXPOSURESThe Group regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities in Australia andglobally. The Group has received various notices and requests for information from its regulators as part of both industry-wide and Group-specificreviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions can be wide ranging and, for example,
include or have included in recent years a range of matters including responsible lending practices, regulated lending requirements, productsuitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice, insurance distribution, pricing,competition, conduct in financial markets and financial transactions, capital market transactions, anti-money laundering and counter-terrorism
financing obligations, privacy obligations and information security, business continuity management, reporting and disclosure obligations andproduct disclosure documentation. There may be exposures to customers which are additional to any regulatory exposures. These could include classactions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such reviews andpossible exposures remain uncertain.

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NOTES TO THE FINANCIAL STATEMENTS

33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
OTHER CONTINGENT LIABILITIES (continued)
BENCHMARK/RATE ACTIONSIn July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including theCompany. The class actions are expressed to apply to persons and entities that engaged in US-based transactions in financial instruments that werepriced, benchmarked, and/or settled based on certain benchmark rates. The claimants sought damages or compensation in amounts not specified,and alleged that the defendant banks, including the Company, violated US anti-trust laws, antiracketeering laws, and (in one case only), theCommodity Exchange Act and unjust enrichment principles. As at 30 September 2022, ANZ has reached agreements to settle each of these matters.
The financial impact is not material. The settlements are without admission of liability and remain subject to finalisation and court approval.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.
CAPITAL RAISING ACTION
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company alleging
failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity placement.
ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary shares of theplacement. The Company is defending the allegations.
CONSUMER CREDIT INSURANCE LITIGATIONIn February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations.
ESANDA DEALER CAR LOAN LITIGATIONIn August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake inrelation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.
ONEPATH SUPERANNUATION LITIGATIONIn December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodiansbreached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim also
alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.
NEW ZEALAND LOAN INFORMATION LITIGATIONIn September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending theallegations.
CREDIT CARDS LITIGATIONIn November 2021, a class action was brought against the Company alleging that certain interest terms in credit card contracts were unfair contract
terms and that it was unconscionable for the Company to rely on them. The Company is defending the allegations.
UNLICENSED THIRD PARTIES ACTION
In November 2021, ASIC commenced civil penalty proceedings against the Company alleging that three unlicensed third parties provided home loan
application documents to the Company’s lenders, including in connection with the Company’s home loan introducer program. ASIC alleges that theCompany contravened its obligations under credit legislation.
AVAILABLE FUNDS ACTION
In May 2022, ASIC commenced civil penalty proceedings against the Company in relation to fees charged to customers in some circumstances for
credit card cash advance transactions made using recently deposited unprocessed funds. ASIC alleges that the Company made false or misleading
representations, engaged in misleading or deceptive conduct and breached certain statutory obligations as a credit licensee. The Company isdefending the allegations.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
OTHER CONTINGENT LIABILITIES (continued)
ROYAL COMMISSION
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated withfurther regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
The outcomes and total costs associated with these possible exposures remain uncertain.
SECURITY RECOVERY ACTIONS
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will bedefended.
WARRANTIES, INDEMNITIES AND PERFORMANCE MANAGEMENT FEESThe Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.
The Group has entered an arrangement to pay performance management fees to external fund managers in the event predetermined performance
criteria are satisfied in relation to certain Group investments. The satisfaction of the performance criteria and associated performance management fee
remains uncertain.
CLEARING AND SETTLEMENT OBLIGATIONS
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising fromthese arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear and
RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These memberships
allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common to all of thesememberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by another member,the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable in advance.
PARENT ENTITY GUARANTEESThe Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these letters andguarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity of the Company.
SALE OF GRINDLAYS BUSINESSOn 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain otherbusinesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act, 1973. Civil
penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.

CONTINGENT ASSETSNATIONAL HOUSING BANKThe Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer inthe early 1990s.
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceeds ofthe cheques were resolved in early 2002.
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to beshared between the Company and NHB.

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NOTES TO THE FINANCIAL STATEMENTS

34. AUDITOR FEES
Consolidated

The Company

2022
$’000

2021
$’000

2022
$’000

2021
$’000

Audit or review of financial reports

8,217

7,434

7,726

7,021

Audit-related services1

6,037

2,772

5,956

2,696

8

8

14,262

106
10,312

13,690106
9,823

Audit or review of financial reports

5,808

5,511

2,033

1,965

Audit-related services

1,459

1,657

831

917

-

85

-

85

Total

7,267

7,253

2,864

2,967

Total auditor fees

21,52917,565

16,554

12,790KPMG Australia

Non-audit services2
Total3
Overseas related practices of KPMG Australia
1

Non-audit services2

1.

Group audit-related services comprise prudential and regulatory services of $6.26 million (2021: $3.27 million), comfort letters $0.52 million (2021: $0.49 million) and other services $0.71 million (2021:$0.67 million). Company audit-related services comprise prudential and regulatory services of $5.90million (2021: $2.78 million), comfort letters $0.48 million (2021: $0.45 million) and other services $0.41
million (2021: $0.38 million).

2.

The nature of non-audit services for the Group and the Company include controls related assessments and methodology and procedural reviews. Further details are provided in the Directors’ Report.

3.

Inclusive of goods and services tax.

The Group and the Company’s Policy allows KPMG Australia or any of its related practices to provide assurance and other audit-related services that,while outside the scope of the statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews
requested by regulators such as APRA. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain
non-audit services to be provided where the service would not contravene auditor independence requirements. KPMG Australia or any of its related
practices may not provide services that are perceived to be in conflict with the role of the external auditor or breach auditor independence. These
include consulting advice and subcontracting of operational activities normally undertaken by management, and engagements where the external
auditor may ultimately be required to express an opinion on its own work.

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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

ANZ 2022 ANNUAL REPORTNOTES TO THE FINANCIAL STATEMENTS (continued)
35. PENDING ORGANISATIONAL CHANGES IMPACTING FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable regulators toestablish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ to better deliver its
strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new listedparent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking businesses into the
ANZ Bank Group and ANZ Non-Bank Group. The ‘ANZ Bank Group’ would comprise the current Australia and New Zealand Banking Group Limited andthe majority of its present-day subsidiaries. The ‘ANZ Non-Bank Group’ would house banking-adjacent businesses developed or acquired by the ANZGroup, as we continue to seek ways to bring the best new technology and banking-adjacent services to our customers.
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be asked tovote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website(www.anz.com/schememeeting).
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State Financial
Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is 24 months after
signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments and may be more orless than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6 billion as at June 2022).
Completion is expected in the second half of calendar year 2023.

36. EVENTS SINCE THE END OF THE FINANCIAL YEAR
There have been no significant events from 30 September 2022 to the date of signing this report.

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CONSOLIDATED GROUP DIRECTORS’ DECLARATION
Directors’ Declaration
The Directors of Australia and New Zealand Banking Group Limited declare that:a) in the Directors’ opinion, the financial statements and notes of the Company and the Consolidated Entity are in accordance with the Corporations
Act 2001, including:i)

section 296, that they comply with the Australian Accounting Standards and any further requirements of the Corporations Regulations 2001;
andii) section 297, that they give a true and fair view of the financial position of the Company and the Consolidated Entity as at 30 September 2022
and of their performance for the year ended on that date; andb) the notes to the financial statements of the Company and the Consolidated Entity include a statement that the financial statements and notes of
the Company and the Consolidated Entity comply with International Financial Reporting Standards; andc) the Directors have been given the declarations required by section 295A of the Corporations Act 2001; andd) in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become dueand payable.
Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
Chairman26 October 2022

Shayne C ElliottManaging Director

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CONSOLIDATED GROUP DIRECTORS’ DECLARATION

TO THE SHAREHOLDERS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDREPORT ON THE AUDITS OF THE FINANCIAL REPORTS
OPINIONS
We have audited the consolidated Financial Report of Australia and New Zealand Banking Group Limited (the Group Financial Report). We have also
audited the Financial Report of Australia and New Zealand Banking Group Limited (the Company Financial Report).
In our opinion, each of the accompanying Group Financial Report and Company Financial Report are in accordance with the Corporations Act 2001,
including: giving a true and fair view of the Group’s and of the Company’s financial position as at 30 September 2022 and of its financial performance for theyear ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001.
The respective Financial Reports of the Group and the Company comprise: balance sheets as at 30 September 2022
 income statements, statements of comprehensive income, statements of changes in equity, and cash flow statements for the year then ended
 notes 1 to 36 including a summary of significant accounting policies
 Directors’ Declaration.
The Group consists of Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year-end or from time totime during the financial year.

BASIS FOR OPINIONS
We conducted our audits in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinions.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audits of the Financial Reports section of ourreport.
We are independent of the Group and Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants ((including Independence Standards) (the Code) thatare relevant to our audits of the Financial Reports in Australia. We have fulfilled our other ethical responsibilities in accordance with theserequirements.

KEY AUDIT MATTERS
The Key Audit Matters we identified for the Group and Company are:
 Allowance for expected credit losses;
 Subjective and complex valuation of financial instruments held at fair value; Provisions for customer remediation; and IT systems and controls.
The additional Key Audit Matter we identified for the Group (only) is: Carrying value of investment in PT Bank Pan Indonesia (PT Panin).
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our respective audits of the Financial Reports ofthe current period.
These matters were addressed in the context of our audits of each of the Financial Reports as a whole, and in forming our opinions thereon, and we
do not provide a separate opinion on these matters.

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, aprivate English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

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NOTES TO THE FINANCIAL STATEMENTS

KEY AUDIT MATTERS (continued)
ALLOWANCE FOR EXPECTED CREDIT LOSSES (Group $4,395m; Company $3,599m)

Refer to the critical accounting estimates and judgements disclosures in relation to the allowance for expected credit losses in Note 14 to the Groupand Company Financial Reports.
The Key Audit Matter
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balances to the financial statements andthe inherent complexity of the Company and Group’s Expected Credit Loss models (ECL models) used to measure ECL allowances. These models arereliant on data and a number of estimates including the impact of multiple economic scenarios and other assumptions such as defining a significant
increase in credit risk (SICR).
AASB 9 Financial Instruments requires the Company and Group to measure ECLs on a forward-looking basis reflecting a range of economic conditions.
Post-model adjustments are made by the Company and Group to address known ECL model limitations or emerging trends in the loan portfolios. We
exercise significant judgement in challenging the economic scenarios used and the judgmental post-model adjustments the Company and Groupapplies to the ECL results.
Additional subjectivity and judgement has been introduced into the Group and Company’s measurement of ECL due to the heightened uncertainty
associated with the impact of the economic outlook to the Group and Company’s customers, increasing our audit effort thereon.
The Company and Group’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within the
Company and Group’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
Additionally, allowances for individually assessed wholesale loans exceeding specific thresholds are assessed by the Company and Group. We exercise
significant judgement in challenging the assessment of specific allowances based on the expected future cash repayments and estimated proceedsfrom the value of the collateral held by the Company and Group in respect of the loans.
How the matter was addressed in our audits
Our audit procedures for the allowance for ECL included assessing the Company and Group’s significant accounting policies against the requirementsof the accounting standard. Additionally, our procedures included:
Testing key controls of the Company and Group in relation to: The ECL model governance and validation processes which involved assessment of model performance; The assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings through challenge applied by theCompany and Group’s internal governance processes;
 Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;
 Customer credit rating (CCR) for wholesale loans (larger customer exposures are monitored individually). This covered elements such as: approvalof new lending facilities against the Company and Group’s lending policies, monitoring of counterparty credit quality against the Company andGroup’s exposure criteria for internal factors specific to the counterparty or external macroeconomic factors, and accuracy and timeliness of CCR
and security indicator (SI) assessments against the requirements of the Company and Group’s lending policies and regulatory requirements;
 IT system controls which record retail loans lending arrears, group exposures into delinquency buckets, and re-calculate individual allowances. We
tested automated calculation and change management controls and evaluated the Company and Group’s oversight of the portfolios, with a focus
on controls over delinquency monitoring.
We tested relevant General Information Technology Controls (GITCs) in relation to the key IT applications used by the Company and Group inmeasuring ECL allowances as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:
 Re-performing credit assessments of a sample of wholesale loans controlled by the Company and Group’s specialist workout and recovery teamassessed as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by the Company and Group as showing
signs of deterioration, or in areas of emerging risk. For each loan sampled, we challenged the Company and Group’s assessment of CCR and SI
using the customer’s financial position, the valuation of security, and, where relevant, the risk of stranded assets, to inform our overall assessment ofloan recoverability and the impact on the credit allowance. To do this, we used the information on the Company’s and Group’s loan file anddiscussed the facts and circumstances of the case with the loan officer. Exercising our judgement, our procedures included using ourunderstanding of relevant industries and the macro-economic environment and comparing data and assumptions used by the Company andGroup in recoverability assessments to externally sourced evidence, such as commodity prices, publicly available audited financial statements andcomparable external valuations of collateral held. Where relevant we assessed the forecast timing of future cash flows in the context of underlying
valuations and approved business plans and challenged key assumptions in the valuations; Obtaining an understanding of the Company and Group’s processes to determine ECL allowances, evaluating the Company and Group’s ECL
model methodologies against established market practices and criteria in the accounting standards;

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INDEPENDENT AUDITOR'S REPORT (CONTINUED)

ANZ 2022 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
 Working with our Credit risk specialists, we assessed the accuracy of the Company and Group’s ECL model estimates by re-performing, for a sample
of loans, the ECL allowance using our independently derived calculation tools and comparing this to the amount recorded by the Company andGroup;
 Working with our economic specialists, we challenged the Company and Group’s forward-looking macro-economic assumptions and scenarios
incorporated in the Company and Group’s ECL models. We compared the Company and Group’s forecast GDP, unemployment rates, CPI andproperty price indices to relevant publicly available macro-economic information, and considered other known variables and information obtained
through our other audit procedures to identify contradictory indicators;
 Testing the implementation of the Company and Group’s SICR methodology by re-performing the staging calculation for a sample of loans taking
into consideration movements in the CCR from loan origination and comparing our result to actual staging applied on an individual account levelin the Company and Group’s ECL model; Assessing the accuracy of the data used in the ECL models by checking a sample of data fields such as account balance and CCR to relevant source
systems.
We challenged key assumptions in the components of the Company and Group’s post-model adjustments to the ECL allowance balance. This
included: Assessing post-model adjustments against the Company and Group’s ECL model and data deficiencies identified by the Company and Group’s ECL
model validation processes, particularly in light of the significant volatility in economic scenarios; Comparing underlying data used in concentration risk and economic cycle allowances to underlying loan portfolio characteristics of recent loss
experience, current market conditions and specific risks in the Company and Group’s loan portfolios; Assessing certain post-model adjustments identified by the Group and Company against internal and external information;
 Assessing the completeness of post-model adjustments by checking the consistency of risks we identified in the loan portfolios against theCompany and Group’s assessment.
Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
SUBJECTIVE AND COMPLEX VALUATION OF FINANCIAL INSTRUMENTS HELD AT FAIR VALUE:
GROUP- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,833m- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $108,853m- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $31m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $88,977m
COMPANY- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,449m- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $105,583m- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $20m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $86,652m

Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 19 to the Group and Company Financial Reports.
The Key Audit Matter
The fair value of the Company and Group’s Level 3 and 2 financial instruments is determined by the Company and Group’s application of valuation
techniques which often involve the exercise of judgement and the use of assumptions and estimates.
In assessing this Key Audit Matter, we involved our valuation specialists to supplement our senior team members who understand the Company andGroup’s methods, assumptions and data relevant to their valuation of Financial Instruments.
The Company and Group’s valuation of Level 3 and Level 2 financial instruments held at fair value is a Key Audit Matter due to: The high degree of estimation uncertainty and potentially significant range of reasonable outcomes associated with the valuation of financial
instruments classified as Level 3 where significant pricing inputs used in the valuation methodology and models are not observable.
 The complexity associated with the Company and Group’s valuation methodology and models of certain more complex Level 2 financial
instruments leading to an increase in subjectivity and estimation uncertainty.
These factors increased the level of judgement applied by us and our audit effort thereon.

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NOTES TO THE FINANCIAL STATEMENTS

KEY AUDIT MATTERS (continued)
How the matter was addressed in our audits
Our audit procedures in relation to the valuation of financial instruments held at fair value included: Performing an assessment of the population of financial instruments held at fair value by the Company and Group to identify portfolios with ahigher risk of misstatement arising from significant judgements over valuation either due to unobservable inputs or complex models.
 Testing the design and operating effectiveness of key controls relating specifically to these financial instruments, including those in relation to: Independent Price Verification (IPV), including completeness of portfolios and valuation inputs subject to IPV; model validation at inception and periodically, including assessment of model limitation and assumptions; review, approval and challenge of daily profit and loss by a control function;
 collateral management process, including review and approval of margin reconciliations with clearing houses; and review and approval of fair value adjustments (FVAs), including exit price and portfolio level adjustments.
 In relation to the subjective valuation of complex Level 2 and Level 3 financial instruments, with our valuation specialists:
 Assessing the reasonableness of key inputs and assumptions using comparable data in the market and available alternatives; Comparing the Company and Group’s valuation methodology to industry practice and the criteria in the accounting standards.
 With the assistance of our valuation specialists, independently re-valuing a selection of financial instruments and FVAs of the Company and Group.
This involved sourcing independent inputs from comparable data in the market and available alternatives. We challenged the Company and Group
where our revaluations significantly differed from the Company and Group’s valuations.
 Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
CARRYING VALUE OF INVESTMENT IN PT BANK PAN INDONESIA (PT PANIN) (Group $1,318m)

Refer to the critical accounting estimates, judgements and disclosures in Note 27 to the Group Financial Report.
The Key Audit Matter
The carrying value of the Group’s investment in associate, PT Panin, is a key audit matter as:
 The investment is equity accounted as an associate and where indicators of impairment are identified the recoverable amount must be assessed.
This involves judgement and consideration of valuation models given historical volatility in the market price of the shares and limited liquidity inthe market for the shares. Impairment has been recognised in prior periods.
 The Group’s impairment assessment identified that the Group’s investment in associate, PT Panin, experienced a significant increase in the quoted
share price during the period. At 30 September 2022, this indicated a value greater than its carrying value, indicating a possible reversal of previous
impairment under accounting standard requirements.
 We critically evaluated the Group’s conclusion not to reverse the impairment losses recorded against the investment in PT Panin in prior periods.
This required analysis of the market and comparison against the Group’s value in use modelled outcome and other fair value approaches.
 We focused on critically evaluating the Group’s judgement in relation to key assumptions for assessing the recoverable amount, including: The nature of alternative valuation methodologies;
 Forecast earnings, forecast growth rates and terminal growth rates – the Group’s model is highly sensitive to small changes in theseassumptions; Discount rates – these are complicated in nature and vary according to the conditions and environment the associate investment operates in.
 We involved our valuation specialists to supplement our senior team members in assessing this key audit matter.
How the matter was addressed in our audit
Working with our valuation specialists, our procedures included:
 Considering the appropriateness of the recoverable amount assessment used by the Group to conclude the carrying value of the Group’s
investment in associate, PT Panin, is supportable;
 Understanding the features of the PT Panin stock and the drivers of the recent significant increase in fair value indicated by reference to the quoted
share price. This included analysis of the volatility of movements, the nature and size of the Group’s shareholdings and the volumes of trading of
the limited free float of shares;
 Critically evaluating other fair valuation approaches and comparing this to the quoted share price value, and the Group’s value in use outcome; Considering the appropriateness of the value in use valuation method applied by the Group against the requirements of the accounting standards.
This included:
 Assessing the integrity of the model used, including the accuracy of the underlying calculation formulas; Assessing the Group’s key assumptions used in the model, such as, discount rates, forecast earnings, forecast growth rates and terminal growthrate by comparing to external observable metrics, historical experience, our knowledge of the markets and current market practice;238

ANZ 2022 Annual Report / Financial Report

INDEPENDENT AUDITOR'S REPORT (CONTINUED)

ANZ 2022 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
 Independently developing a discount rate estimate or range considered comparable using publicly available market data for comparable
entities, adjusted for factors specific to the investment and the market and industry it operates in; Comparing the forecast earnings contained in the model to broker consensus reports, and released financial results; Assessing the accuracy of previous forecasts to inform our evaluation of current forecasts incorporated in the model;
 Considering the sensitivity of the model by varying key assumptions, such as, discount rates and terminal growth rates, within a reasonable
possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further
procedures.
 Assessing the recoverable amount at the reporting date against the recoverable amount of the investment when it was last impaired to criticallyassess reversal of previous impairment losses;
 Assessing the disclosures in the financial report using our understanding obtained from our testing and against the requirements of theaccounting standards.
PROVISIONS FOR CUSTOMER REMEDIATION (Group $662m; Company $600m)

Refer to the critical accounting estimates, judgements and disclosures in Notes 23 and 33 to the Group and Company Financial Reports.
The Key Audit Matter
The Company and Group have recognised provisions in relation to certain customer remediation activities arising from both internal and external
investigations and reviews.
Provisions for customer remediation activities is a key audit matter due to the judgements required by us in assessing the Company and Group’s
determination of: The completeness of the population of matters requiring remediation; The existence of a present legal or constructive obligation arising from a past event, considering the conditions of the event against the criteria in
the accounting standards;
 Reliable estimates of the remediation amounts which may be paid arising from investigations and legal actions, including estimates of related
costs; and The potential for legal proceedings, further investigations, and reviews from their regulators leading to a wider range of estimation outcomes for us
to consider.
How the matter was addressed in our audits
Our audit procedures for customer remediation provisions included:
 Obtaining an understanding of the Company and Group’s processes and controls for identifying and assessing the impact of the investigations into
customer remediation activities;
 Enquiring with the Company and Group regarding ongoing legal, regulatory and other investigations into past activities which may require
remediation;
 Conducting independent discussions on significant matters with external legal counsel;
 Reading the minutes and other relevant documentation of the Company’s Board of Directors, Board Committees, various management
committees, and attending the Company’s Audit and Risk Committee meetings, for consistency to the basis used to estimate the provision;
 Inspecting correspondence with relevant regulatory bodies and comparing the status and positioning with the basis for estimation used by theCompany and Group; For a sample of individual customer remediation matters, evaluating the basis for recognition of a provision and associated costs against therequirements of the accounting standards and for consistency with the Group and Company’s policies. We did this by obtaining an understandingof the matter and its status and independently assessing this against the recognition requirements of the accounting standards;
 For a sample of individual customer remediation matters: Assessing and challenging the methods, data and assumptions used by the Company and Group to provide for customer remediation matters; Sample checking data accuracy to underlying systems;
 Performing model integrity checks;
 Testing the accuracy of historical remediation provisions by comparing to actual payments. We used this knowledge to challenge the Group’sand Company’s current estimates and to inform our further procedures.
 Testing completeness by evaluating where exposures may have arisen based upon our knowledge and experience of broader industry matters, theCompany and Group's documentation and the current regulatory environment. We also checked the features of these exposures against thecriteria defining a provision or a contingency in the accounting standards;

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AUDITOR'S REPORT (CONTINUED)
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239

NOTES TO THE FINANCIAL STATEMENTS

KEY AUDIT MATTERS (continued)
 Assessing the appropriateness of the Company and Group’s conclusions against the requirements of Australian Accounting Standards where
estimates were unable to be reliably made for a provision to be recognised; Evaluating the related disclosures using our understanding obtained from our testing and against the requirements of Australian AccountingStandards.
IT SYSTEMS AND CONTROLSThe Key Audit Matter
As a major Australian bank, the Company and Group’s businesses utilise many complex, interdependent Information Technology (IT) systems toprocess and record a high volume of transactions. The controls over access, changes to and operation of IT systems are key to the recording offinancial information and the preparation of financial reports which provide a true and fair view of the Company and Group’s financial positions andperformance.
The IT systems and controls, as they impact the financial recording and reporting of the Company and Group’s transactions, is a key audit matter as
our audit approaches could significantly differ depending on the effective operation of the Company and Group’s IT controls. We work with our IT
specialists as a core part of our audit team.
How the matter was addressed in our audits
Our testing focused on the technology control environments for key IT applications (systems) used in processing significant transactions andrecording balances in the general ledgers, and the automated controls embedded within these systems which link the technology-enabled businessprocesses. Working with our IT specialists, our audit procedures included:
 Assessing the governance and higher-level controls across the IT environments, including those regarding policy design, policy review andawareness, and IT Risk and cyber security management practices; Design and operating effectiveness testing of key controls across the user access management lifecycle, including how users are on-boarded,
reviewed for access levels assigned, and removed on a timely basis from key IT applications and supporting infrastructure. We also examined the
management of privileged roles and functions across relevant IT application and the supporting infrastructure; Design and operating effectiveness testing of key controls for IT change management including authorisation of changes prior to development,
testing performed and approvals prior to migration into the production environment of key IT applications. We assessed user access to releasechanges to IT application production environments across the Company and Group and whether access was commensurate with their job
responsibilities; Design and operating effectiveness testing of key controls used by the Company and Group’s technology teams to restrict access to and monitor
system batch job schedules;
 Design and operating effectiveness testing of key automated business process controls including those relating to enforcing segregation of duties
to avoid conflicts from inappropriate role combinations within IT applications. Our testing included:
 Configurations to perform calculations, mappings and flagging of financial transactions, and automated reconciliation controls (both between
systems and intra-system); and Data integrity of key system reporting used by us in our audit to select samples and analyse data used by the Company and Group to generate
financial reporting.

OTHER INFORMATIONOther Information is financial and non-financial information in Australia and New Zealand Banking Group Limited’s annual reporting which is provided
in addition to the Financial Reports and the Auditor's Report. The Directors are responsible for the Other Information.
Our opinions on the Financial Reports do not cover the Other Information and, accordingly, we do not express an audit opinion or any form ofassurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audits of the Financial Reports, our responsibility is to read the Other Information. In doing so, we consider whether the Other
Information is materially inconsistent with the Financial Reports or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performedon the Other Information that we obtained prior to the date of this Auditor’s Report, we have nothing to report.

239

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ANZ 2022 Annual Report / Financial Report

ANZ 2022 ANNUAL REPORTINDEPENDENT AUDITOR’S REPORT (continued)
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORTS
The Directors are responsible for:
 preparing the Financial Reports that give a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
 implementing necessary internal controls to enable the preparation of a Financial Report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error
 assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting isappropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless theyeither intend to liquidate the Group and Company or to cease operations or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDITS OF THE FINANCIAL REPORTS
Our objective is: to obtain reasonable assurance about whether each of the Financial Reports as a whole are free from material misstatement, whether due to fraud
or error; and to issue an Auditor’s Report that includes our opinions.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Reports.
A further description of our responsibilities for the audits of the Financial Reports is located at the Auditing and Assurance Standards Board website at:https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.

REPORT ON THE REMUNERATION REPORT
In our opinion, the Remuneration Report of Australia and New Zealand Banking Group Limited for the year ended 30 September 2022 complies with
Section 300A of the Corporations Act 2001.

DIRECTORS’ RESPONSIBILITIESThe Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of
the Corporations Act 2001.

OUR RESPONSIBILITIESWe have audited the Remuneration Report included in pages 62 to 103 of the Directors’ report for the year ended 30 September 2022.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian AuditingStandards.

KPMG

Martin McGrath

Partner
Melbourne
26 October 2022

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ANZ 2022 Annual Report

Independent Limited Assurance Reportto the Directors of Australia and
New Zealand Banking Group Limited
Conclusion
Based on the evidence we obtained
from the procedures performed,
we are not aware of any material
misstatements in the specified ESG
Information in the ANZ 2022 Annual
Report and ANZ 2022 Annual Review
which has been prepared by ANZ in
accordance with the Criteria for theyear ended 30 September 2022.
Information Subject to Assurance
Australia and New Zealand Banking Group
Limited (ANZ) engaged KPMG to perform
a limited assurance engagement in relation
to the ESG Information in the ANZ 2022
Annual Report and ANZ 2022 Annual
Review. The scope of work comprised
limited assurance over the material text anddata claims as specified in the table below:
ESG Information

Page

2022 Performance Snapshot

3

What matters mostto our stakeholders

10

Our approach to societal
challenges

14-15

Our approach toclimate change

16-17

Performance overview(Five year summary)60

The ANZ 2022 Annual Report andANZ 2022 Annual Review covers ANZ’s
global operations for the year ended
30 September 2022 unless otherwise
indicated.

Criteria
The ESG Information has been extracted
from and prepared by ANZ on a consistentbasis with the information in the ANZ 2022
ESG Supplement and accompanying ANZ

2022 ESG Supplement Data Pack, copies ofwhich are available at anz.com/annualreport(the criteria). The ANZ 2022 ESG Supplement
and ANZ 2022 ESG Supplement Data Packhas been prepared in accordance with
the GRI Standards published by the Global
Reporting Initiative, version dated 2016
and management’s basis of reporting,a summary of which is included in the
Explanatory Notes section in the ANZ
2022 ESG Supplement.

Basis of our Conclusion
We conducted our work in accordancewith International Standard on Assurance
Engagements ISAE 3000 (Standard). In
accordance with the Standard we have:• Used our professional judgement toplan and perform the engagement toobtain limited assurance that we are
not aware of any material misstatementsin the ESG Information, whether due tofraud or error;• Considered relevant internal controls
when designing our assurance
procedures, however we do not express
a conclusion on their effectiveness; and• Ensured that the engagement teampossess the appropriate knowledge,
skills and professional competencies.

Summary of Procedures Performed
Our limited assurance conclusion is basedon the evidence obtained from performing
the following procedures:• Interviews with relevant employees
responsible for developing the content(text and data) within the ESG
Information to understand the approachfor monitoring, collation and reportingof such information and the accuracy,completeness and existence of reported
text and data;• Undertaking analytical review
procedures to support thereasonableness of the data;• Identifying and testing assumptions
supporting the calculations;• Comparing text and data (on a sample
basis) presented to underlying
sources; and• Reviewing the ANZ 2022 Annual Report,
ANZ 2022 Annual Review and ANZ 2022
ESG Supplement and ANZ 2022 ESG
Supplement Data Pack in their entirety
for consistency with the ESG Informationand our knowledge obtained throughour assurance engagement.

How the Standard Defines
Limited Assurance andMaterial Misstatement
A limited assurance engagement is restrictedprimarily to enquiries and analyticalprocedures. The procedures performed
in a limited assurance engagement varyin nature and timing from, and are less inextent than for a reasonable assurance
engagement. Consequently the level ofassurance obtained in a limited assurance
engagement is substantially lower than theassurance that would have been obtained
had a reasonable assurance engagement
been performed. The Standard requires ourreport to be worded around what we havenot found, rather than what we have found.
Misstatements, including omissions, areconsidered material if, individually or in
the aggregate, they could reasonably be
expected to influence relevant decisionsof the Directors of ANZ.

Use of this Assurance Report
This report has been prepared for the
Directors of ANZ Banking Group Limited
for the purpose of providing an assurance
conclusion on the ESG Information within
the ANZ 2022 Annual Report and ANZ 2022
Annual Review and may not be suitable
for another purpose. We disclaim any
assumption of responsibility for any relianceon this report, to any person other than the
Directors of ANZ, or for any other purpose
than that for which it was prepared.

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Performanceoverview

Remuneration
reportDirectors’
reportFinancialreportANZ’s responsibility

Our responsibility• Determining that the criteria isappropriate to meet their needs;

Our responsibility is to perform a limited
assurance engagement in relation
to the ESG Information for the year
ended 30 September 2022, and toissue an assurance report that includes
our conclusion.

• Preparing and presenting the ESG
Information in accordance with thecriteria; and• Establishing internal controls that enable
the preparation and presentation of
the ESG Information that is free frommaterial misstatement, whether due
to fraud or error.

KPMG

Shareholder
information

Our Independence and Quality
Control
We have complied with our independence
and other relevant ethical requirementsof the Code of Ethics for Professional
Accountants (including IndependenceStandards) issued by the AustralianProfessional and Ethical Standards Board, andcomplied with the applicable requirementsof Australian Standard on Quality Control
1 to maintain a comprehensive system of
quality control. We have also complied with
ANZ’s Stakeholder Engagement Model for
Relationship with External Auditor (available
on anz.com).

Adrian King
Partner
KPMG Melbourne
26 October 2022

©2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.

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ANZ 2022 Annual Report

Shareholder information – unaudited
Ordinary shares
At 3 October 2022, the 20 largest holders of ANZ ordinary shares held 1,759,194,451 ordinary shares, equal to 58.84% of the total issued
ordinary capital. At 3 October 2022 the issued ordinary capital was 2,989,923,751 ordinary shares.
Name

Number of shares% of shares

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

808,413,840

27.04

2

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

431,466,278

14.43

3

CITICORP NOMINEES PTY LIMITED

252,524,808

8.45

4

NATIONAL NOMINEES LIMITED

83,083,608

2.78

5

BNP PARIBAS NOMS PTY LTD <DRP>

64,392,488

2.15

6

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

20,227,003

0.68

7

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED <NT-COMNWLTH SUPER CORP A/C>

16,628,966

0.56

8

NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

13,875,105

0.46

9

CITICORP NOMINEES PTY LIMITED <COLONIAL FIRST STATE INV A/C>

11,271,404

0.38

10 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

8,676,983

0.29

11 AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED

8,487,710

0.28

12 ARGO INVESTMENTS LIMITED

8,265,275

0.28

13 CUSTODIAL SERVICES LIMITED <BENEFICIARIES HOLDING A/C>

5,137,333

0.17

14 ANZEST PTY LTD <DEA CONTROL A/C>

5,069,233

0.17

15 BNP PARIBAS NOMS (NZ) LTD <DRP>

4,292,644

0.14

16 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS IOOF EMPLOYER SUPER A/C>

3,790,040

0.13

17 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

3,595,926

0.12

18 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

3,345,745

0.11

19 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

3,329,987

0.11

20 NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED

3,320,075

0.11

1,759,194,451

58.84

Number of shares% of shares

Total

Distribution of shareholdings
Number of holders% of holders

1 to 1,000

307,45456.75

107,410,298

3.59

1,001 to 5,000

183,466

33.87

416,441,341

13.93

At 3 October 2022 – Range of securities

5,001 to 10,000

32,166

5.94

222,420,822

7.44

10,001 to 100,000

18,203

3.36

361,607,658

12.09

455

0.08

1,882,043,632

62.95

541,744

100.002,989,923,751

100.00Over 100,000
Total
At 3 October 2022:• The average size of holdings of ordinary
shares was 5,519 (2021: 5,287) shares; and• There were 22,486 holdings (2021: 19,915
holdings) of less than a marketable parcel(less than $500 in value or 22 shares basedon the market price of $22.77 per share).
On 12 May 2017 ANZ was notified byBlackRock Group that it held a substantial
shareholding of 148,984,864 ordinary sharesin ANZ (5.07%) and on 2 December 2019,BlackRock Group’s interest increased to172,225,527 ordinary shares in ANZ (6.07%).

As at 3 October 2022 ANZ has received
no further update in relation to thissubstantial holding.
On 22 April 2022 ANZ was notified by
Vanguard Group that it held a substantial
shareholding of 139,745,231 ordinary sharesin ANZ (5.001%). As at 3 October 2022 ANZ
has received no further update in relation
to this substantial shareholding.
On 20 July 2022 ANZ was notified by State
Street Corporation that it held a substantial
shareholding of 142,312,309 ordinary sharesin ANZ (5.08%). As at 3 October 2022 ANZ

has received no further update in relation
to this substantial shareholding.

Voting rights of ordinary shares
The Constitution provides for votes to be
cast as follows:i)	on show of hands, one vote for eachshareholder; andii)	on a poll, one vote for every fully paid
ordinary share.
A register of holders of ordinary shares is held
at: 452 Johnston Street Abbotsford Victoria,
Australia (Telephone: +61 3 9415 4010)

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Financialreport245

ANZ capital notes
ANZ CN3
On 5 March 2015 the Company acting through its New Zealand branch, issued convertible subordinated perpetual notes (ANZ CN3)
which were offered pursuant to a prospectus dated 5 February 2015.
At 3 October 2022 the 20 largest holders of ANZ CN3 held 2,638,744 securities, equal to 27.21% of the total issued securities.
At 3 October 2022 the total number of ANZ CN3 on issue was 9,701,791.
Name

Number of securities% of securities

588,619

6.07

1

CITICORP NOMINEES PTY LIMITED

2

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

426,311

4.39

3

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

248,376

2.56

4NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

168,482

1.74

5J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

156,689

1.62

6

BERNE NO 132 NOMINEES PTY LTD <684168 A/C>

129,191

1.33

7

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

112,770

1.16

8

NATIONAL NOMINEES LIMITED

110,039

1.13

9

LONGHURST MANAGEMENT SERVICES PTY LTD

96,8681.00

10 BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

85,242

0.88

11 MUTUAL TRUST PTY LTD

82,031

0.85

12 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

76,8550.79

13 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

54,2380.56

14 INVIA CUSTODIAN PTY LIMITED <INCOME POOL A/C>

50,8500.52

15 JDB SERVICES PTY LTD <RAC & JD BRICE INVEST A/C>

45,154

0.47

16 HAWAII INVESTMENTS PTY LTD

44,2500.46

17 NAVIGATOR AUSTRALIA LTD <JB WERE LIST FIX INT SMA A/C>

44,2030.46

18 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

42,104

0.43

19	
MR PAUL WILLIAM BROTCHIE + MR KENNETH FRANCIS WALLACE <STAFFORD FOX
FOUNDATION A/C>

40,0000.41

20 MR RONI G SIKH
Total

36,4720.38

2,638,744

27.21

Distribution of ANZ CN3 holdings
Number of holders% of holders

Number of securities% of securities

1 to 1,000

10,61489.88

3,526,189

36.35

1,001 to 5,000

1,057

8.95

2,221,629

22.90

5,001 to 10,000

76

0.64

599,672

6.18

10,001 to 100,000

54

0.46

1,413,824

14.57

Over 100,000

8

0.07

1,940,477

20.00

11,809100.009,701,791

100.00

At 3 October 2022 – Range of securities

Total
At 3 October 2022 there were 3 holdings(2021: 3 holdings) of less than a marketableparcel (less than $500 in value or 5 securities
based on the market price of $101.90 per
security).

Voting rights of ANZ CN3

A register of holders of ANZ CN3 is held at:

ANZ CN3 do not confer on holders aright to vote at any meeting of membersof the Company.

452 Johnston Street,
Abbotsford, Victoria, Australia(Telephone: +61 3 9415 4010)

246

ANZ 2022 Annual Report

SHAREHOLDER INFORMATION – UNAUDITED (CONTINUED)ANZ CN4
On 27 September 2016 the Company issued convertible subordinated perpetual notes (ANZ CN4) which were offered pursuant
to a prospectus dated 24 August 2016.
At 3 October 2022 the 20 largest holders of ANZ CN4 held 5,168,713 securities, equal to 31.87% of the total issued securities.
At 3 October 2022 the total number of ANZ CN4 on issue was 16,220,000.
Name

1

Number of securities% of securities

CITICORP NOMINEES PTY LIMITED

1,351,688

8.33

2

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

1,273,673

7.85

3

NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

346,315

2.14

4

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

317,240

1.96

5

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

235,006

1.45

6

NATIONAL NOMINEES LIMITED

199,778

1.23

7

J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

187,363

1.16

8

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

151,882

0.94

9

MUTUAL TRUST PTY LTD

151,333

0.93

10 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS IOOF EMPLOYER SUPER A/C>

150,589

0.93

11 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

147,870

0.91

12 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

114,2210.70

13 PAMDALE INVESTMENTS PTY LTD

96,4980.59

14 MARROSAN INVESTMENTS PTY LTD

78,5000.48

15 NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

72,3560.45

16 TAVERNERS NO 11 PTY LTD <BRENCORP NO 11 UNIT A/C>

66,9300.41

17 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

65,8500.41

18 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <NO 1 ACCOUNT>61,021

0.38

19 JMB PTY LTD

50,3000.31

20 RETFORD PTY LTD

50,3000.31

5,168,713

31.87

Total

Distribution of ANZ CN4 holdings
Number of holders% of holders

Number of securities% of securities

1 to 1,000

15,81088.87

5,323,813

32.82

1,001 to 5,000

1,760

9.89

3,617,715

22.30

5,001 to 10,000

140

0.79

1,032,247

6.37

10,001 to 100,000

68

0.38

1,619,267

9.98

Over 100,000

12

0.07

4,626,958

28.53

17,790100.0016,220,000

100.00

At 3 October 2022 – Range of securities

Total
At 3 October 2022 there were 7 holdings(2021: 8 holdings) of less than a marketableparcel (less than $500 in value or 5 securities
based on the market price of $105.42 per
security).

Voting rights of ANZ CN4

A register of holders of ANZ CN4 is held at:

ANZ CN4 do not confer on holders aright to vote at any meeting of membersof the Company.

452 Johnston Street,
Abbotsford, Victoria, Australia(Telephone: +61 3 9415 4010)

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247

ANZ CN5
On 28 September 2017 the Company issued convertible subordinated perpetual notes (ANZ CN5) which were offered pursuant
to a prospectus dated 24 August 2017.
At 3 October 2022 the 20 largest holders of ANZ CN5 held 2,715,522 securities, equal to 29.17% of the total issued securities.
At 3 October 2022 the total number of ANZ CN5 on issue was 9,310,782.
Name

Number of securities% of securities

804,925

8.65

1

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED2

CITICORP NOMINEES PTY LIMITED

541,6295.82

3NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

166,252

1.79

4

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

124,861

1.34

5

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

116,540

1.25

6

NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

95,952

1.03

7

AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS IOOF EMPLOYER SUPER A/C>

95,212

1.02

8

DIMBULU PTY LTD

85,0000.91

9LONGHURST MANAGEMENT SERVICES PTY LTD

78,2460.84

10 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

70,0960.75

11 BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

69,9970.75

12 NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

65,3960.70

13 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

65,0620.70

14 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

58,502

0.63

15 EASTCOTE PTY LTD <VAN LIESHOUT FAMILY A/C>

50,0000.54

16 FEDERATION UNIVERSITY AUSTRALIA

50,0000.54

17 MARROSAN INVESTMENTS PTY LTD

50,0000.54

18 G C F INVESTMENTS PTY LTD

44,8110.48

19 NATIONAL NOMINEES LIMITED

43,041

0.46

20 MR RONALD MAURICE BUNKER

40,0000.43

2,715,522

29.17

Total

Distribution of ANZ CN5 holdings
At 3 October 2022 – Range of securities

1 to 1,000

Number of holders% of holders

Number of securities% of securities

10,20890.83

3,529,543

37.91

1,001 to 5,000

917

8.16

1,942,051

20.85

5,001 to 10,000

60

0.53

474,591

5.10

10,001 to 100,000

49

0.44

1,610,390

17.30

Over 100,000

5

0.04

1,754,207

18.84

11,239100.009,310,782

100.00Total
At 3 October 2022 there were 6 holdings(2021: 6 holdings) of less than a marketableparcel (less than $500 in value or 5 securities
based on the market price of $105.00 per
security).

Voting rights of ANZ CN5

A register of holders of ANZ CN5 is held at:

ANZ CN5 do not confer on holders aright to vote at any meeting of membersof the Company.

452 Johnston Street,
Abbotsford, Victoria, Australia(Telephone: +61 3 9415 4010)

248

ANZ 2022 Annual Report

SHAREHOLDER INFORMATION – UNAUDITED (CONTINUED)ANZ CN6
On 8 July 2021 the Company issued convertible subordinated perpetual notes (ANZ CN6) which were offered pursuant
to a prospectus dated 9 June 2021.
At 3 October 2022 the 20 largest holders of ANZ CN6 held 4,803,233 securities, equal to 32.03% of the total issued securities.
At 3 October 2022 the total number of ANZ CN6 on issue was 15,000,000.
Name

1

Number of securities% of securities

CITICORP NOMINEES PTY LIMITED

1,242,190

8.28

2

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

1,148,243

7.65

3NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

327,403

2.18

4

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

303,827

2.03

5

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

274,387

1.83

6

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

235,739

1.57

7

NATIONAL NOMINEES LIMITED

212,805

1.42

8

DIMBULU PTY LTD

140,000

0.93

9NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

132,273

0.88

10 J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

125,992

0.84

11 MUTUAL TRUST PTY LTD

102,518

0.68

12 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

92,4090.62

13 DIOCESE DEVELOPMENT FUND – CATHOLIC DIOCESE OF PARRAMATTA

84,8200.57

14 AUSTRALIAN EXECUTOR TRUSTEES LIMITED <IPS IOOF EMPLOYER SUPER A/C>

66,5930.44

15 LEDA HOLDINGS PTY LTD

57,7600.39

16 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

55,1230.37

17 SMART SUPER INVESTMENTS P/L <SMART FAMILY SUPER FUND A/C>

53,285

0.36

18 NULIS NOMINEES (AUSTRALIA) LIMITED <NAVIGATOR MAST PLAN SETT A/C>

53,2660.36

19 MARROSAN INVESTMENTS PTY LTD

50,0000.33

20 ALWOOD PTY LTD

44,6000.30

4,803,233

32.03

Total

Distribution of ANZ CN6 holdings
Number of holders% of holders

Number of securities% of securities

1 to 1,000

15,27689.05

5,340,489

35.60

1,001 to 5,000

1,722

10.04

3,423,835

22.83

5,001 to 10,000

101

0.59

740,132

4.94

10,001 to 100,000

44

0.26

1,250,167

8.33

Over 100,000

11

0.06

4,245,377

28.30

17,154100.0015,000,000

100.00

At 3 October 2022 – Range of securities

Total
At 3 October 2022 there were 5 holdings(2021: 4 holdings) of less than a marketableparcel (less than $500 in value or 5 securities
based on the market price of $101.42 per
security).

Voting rights of ANZ CN6

A register of holders of ANZ CN6 is held at:

ANZ CN6 do not confer on holders aright to vote at any meeting of membersof the Company.

452 Johnston Street,
Abbotsford, Victoria, Australia(Telephone: +61 3 9415 4010)

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249

ANZ CN7
On 24 March 2022 the Company issued convertible subordinated perpetual notes (ANZ CN7) which were offered pursuant
to a prospectus dated 23 February 2022.
At 3 October 2022 the 20 largest holders of ANZ CN7 held 5,436,074 securities, equal to 41.51% of the total issued securities.
At 3 October 2022 the total number of ANZ CN7 on issue was 13,100,000.
Name

Number of securities% of securities

1,310,868

10.01

1

BNP PARIBAS NOMINEES PTY LTD <AGENCY LENDING DRP A/C>

2

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

955,676

7.30

3

CITICORP NOMINEES PTY LIMITED

947,665

7.23

4

BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD <DRP A/C>

315,124

2.41

5NETWEALTH INVESTMENTS LIMITED <WRAP SERVICES A/C>

279,065

2.13

6

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2

229,4031.75

7NETWEALTH INVESTMENTS LIMITED <SUPER SERVICES A/C>

217,871

1.66

8

JOHN E GILL TRADING PTY LTD

200,035

1.53

9J P MORGAN NOMINEES AUSTRALIA PTY LIMITED

162,251

1.24

10 BNP PARIBAS NOMINEES PTY LTD <PITCHER PARTNERS DRP>

132,285

1.01

11 MUTUAL TRUST PTY LTD

106,3820.81
0.77

12 NATIONAL NOMINEES LIMITED

100,302

13 DIMBULU PTY LTD

100,000

0.76

14 NAVIGATOR AUSTRALIA LTD <JB WERE LIST FIX INT SMA A/C>

90,6200.69

15 KOLL PTY LTD <NO 1 ACCOUNT>

50,0000.38

16 ROYAL FREEMASONS' BENEVOLENT INSTITUTION

49,5800.38

17 NAVIGATOR AUSTRALIA LTD <MLC INVESTMENT SETT A/C>

49,2390.38

18 TAVERNERS NO 11 PTY LTD <BRENCORP NO 11 UNIT A/C>

48,1180.37

19 CITICORP NOMINEES PTY LIMITED <DPSL>

47,5900.36

20 H WENAS PTY LTD <H WENAS SUPER FUND ACCOUNT>

44,0000.34

5,436,074

41.51

Total

Distribution of ANZ CN7 holdings
Number of holders% of holders

Number of securities% of securities

1 to 1,000

11,46889.14

3,752,697

28.65

1,001 to 5,000

1,260

9.79

2,538,208

19.37

5,001 to 10,000

73

0.57

531,456

4.06

10,001 to 100,000

52

0.41

1,320,712

10.08

Over 100,000

12

0.09

4,956,927

37.84

12,865100.0013,100,000

100.00

At 3 October 2022 – Range of securities

Total
At 3 October 2022 there were 4 holdingsof less than a marketable parcel (less than$500 in value or 6 securities based on
the market price of $99.90 per security).

Voting rights of ANZ CN7

A register of holders of ANZ CN7 is held at:

ANZ CN7 do not confer on holders aright to vote at any meeting of membersof the Company.

452 Johnston Street,
Abbotsford, Victoria, Australia(Telephone: +61 3 9415 4010)

250

ANZ 2022 Annual Report

SHAREHOLDER INFORMATION – UNAUDITED (CONTINUED)

Employee Shareholder Information
In order to comply with the requirements of
the ANZ Employee Share Acquisition Plan
Rules and the ANZ Share Option Plan Rules,
shares or options must not be issued underthese plans if the aggregate number ofshares and options that remain subject tothe rules of either plan exceed 5% of thetotal number of ANZ shares of all classes
on issue (including preference shares). At
30 September 2022, participants under thefollowing plans/schemes held 0.58% (2021:
0.65%) of the total number of ANZ sharesof all classes on issue:• ANZ Employee Share Acquisition Plan;• ANZ Employee Share Save Scheme; and• ANZ Share Option Plan.

Stock Exchange Listings
Australia and New Zealand Banking Group
Limited’s (ANZBGL) ordinary shares are listedon the Australian Securities Exchange (ASX)
and New Zealand’s Exchange (NZX).
The Group’s other stock exchange listings
include:• ASX– ANZ Capital Notes (CN3, CN4, CN5, CN6
and CN7), senior debt and subordinateddebt issued by ANZBGL;– residential mortgage backed securities;• London Stock Exchange– senior debt (including covered bonds)
and subordinated debt issued by
ANZBGL;– subordinated debt issued by
ANZ Bank New Zealand Limited;– senior debt (including coveredbonds) issued by ANZ New Zealand(Int’l) Limited;• NZX– perpetual preference shares, seniordebt and subordinated debt issued by
ANZ Bank New Zealand Limited; and• SIX Swiss Exchange– senior debt issued by ANZ New Zealand(Int’l) Limited.

For more information on the ANZ Capital
Notes and ANZ Capital Securities refer
to Note 17 to the Financial Report.

American Depositary Receipts
The Company has American Depositary
Receipts (ADRs) representing American
Depositary Shares (ADSs) that are tradedon the over-the-counter securities market‘OTC Pink’ electronic platform operated
by OTC Markets Group Inc. in the UnitedStates under the ticker symbol: ANZBY
and the CUSIP number: 052528304.
With effect from 23 July 2008, the ADR
ratio changed from one ADS representing
five ANZ ordinary shares to one ADS
representing one ANZ ordinary share.
The Bank of New York Mellon (BNY Mellon)
is the Depositary for the Company’s ADR
program in the United States. For further
information about ADRs, please call BNY
Mellon at 1-888-269-2377 if you are callingfrom within the United States. If you arecalling from outside the United States,
please call 1-201-680-6825. You may
also visit BNY Mellon’s website atwww.adrbnymellon.com.

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Financialreport251

Important dates
for shareholders
1

MAY 2023

JULY 2023

NOVEMBER 2023

4 May	Half Year Results Announcement

3 July Interim Dividend Payment Date

TBC Final Dividend Ex-Date

9 May Interim Dividend Ex-Date
10 May Interim Dividend Record Date
11 May	DRP/BOP/Foreign
Currency Election Date

TBC Final Dividend Record Date

OCTOBER 2023

TBC	DRP/BOP/Foreign
Currency Election Date

TBC	Closing date for receipt
of Director Nominations
TBC	Annual Results Announcement

DECEMBER 2023
TBC Final Dividend Payment Date
TBC Annual General Meeting

Our international presence and earning composition by geography2

International$779 million

Australia$3,829 million

New Zealand$1,907 million

International
Asia
China
Hong Kong
India
Indonesia
Japan
Laos
Malaysia

Pacific
Myanmar
The Philippines
Singapore
South Korea
TaiwanThailand
VietnamAmerican Samoa
Cook Islands
Fiji
Guam
Kiribati
Papua New Guinea

Samoa
Solomon Islands
Timor-Leste
Tonga
Vanuatu

EuropeMiddle East

FranceGermany
United Kingdom

United ArabEmirates (Dubai)

United Statesof America

1. If there are any changes to these dates, the Australian Securities Exchange will be notified accordingly. 2. On a Cash profit (continuing operations) basis. Excludes non-core items
included in statutory profit and discontinued operations included in cash profit. It is provided to assist readers in understanding the result of the ongoing business activities of theGroup. For further information on adjustments between statutory and cash profit refer to page 45.

252

ANZ 2022 Annual Report

Contacts
Registered office
ANZ Centre Melbourne
Level 9, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 3 9273 5555
Facsimile: +61 3 8542 5252
Company Secretary: Simon Pordage

Investor relations
Level 10, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 3 8654 7682
Facsimile: +61 3 8654 8886
Email: investor.relations@anz.com
Web: shareholder.anz.com
Group General Manager Investor
Relations: Jill Campbell

Communications
and public affairs
Level 10, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 2 6198 5001
Email: Tony.Warren@anz.com
Group General Manager Communications
and Public Affairs: Tony Warren

Share and securities
registrar Australia
Australia
Computershare Investor
Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001 Australia

Japan
Japan Securities Depository
Center, Incorporated
1-1, Nihombashi Kayabacho 2-chome,
Chuo-ku, Tokyo 103-0025 Japan

Telephone: +49 69 910 00

Telephone: +81 3 3661 0295
Luxembourg
Deutsche Bank Luxembourg S.A.
2, Boulevard Konrad Adenauer
L-1115 Luxembourg, Luxembourg

MORE INFORMATIONNew ZealandComputershare Investor
Services Limited
Private Bag 92119
Auckland 1142 New Zealand

General information on ANZ can beobtained from our website at anz.com.
Shareholders can visit our Shareholder
Centre at anz.com/shareholder/centre.
ANZ Corporate Governance: for information
about ANZ’s approach to Corporate Governanceand to obtain copies of ANZ’s Constitution,
Board/Board Committee Charters, Code of
Conduct and summaries of other ANZ policies
of interest to shareholders and stakeholders,
visit anz.com/corporategovernance.

Telephone: 0800 174 007
Facsimile: +64 9 488 8787

Australia and New Zealand Banking Group
Limited ABN 11 005 357 522.

Telephone: +352 4 21 22 1

United Kingdom
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ UK
Telephone: +44 870 702 0000
Facsimile: +44 870 703 6101

This Annual Report has been prepared forAustralia and New Zealand Banking Group
Limited (the Company) together with its
subsidiaries which are variously described
as: “ANZ”, “Group”, “ANZ Group”, “the Bank”,“us”, “we” or ”our”.

United States
The Bank of New York Mellon
240 Greenwich St, Floor 7E
New York, NY 10286 USA
Telephone: +1 212 495 1784
BNY Mellon Shareowner Services
P.O. Box 43006
Providence RI 02940-3078 USA

Telephone within Australia: 1800 11 33 99
International Callers: +61 3 9415 4010
Facsimile: +61 3 9473 2500
Email:
anzshareregistry@computershare.com.au

USA Toll Free Telephone: 1888 269 2377
Telephone for International
Callers: 1201 680 6825
Web: www-us.computershare.com/investor
Email: shrrelations@bnymellon.com

Austraclear Services Limited
20 Bridge Street
Sydney NSW 2000 Australia

Deutsche Bank Trust
Company Americas
1 Columbus Circle
New York, NY 10019-8735 USA

Telephone: 1300 362 257

Germany
Deutsche Bank AG
Taunusanlage 1260262 Frankfurt am Main Germany

Telephone: +1 212 250 2500

Founding Signatory of:

DISCLOSURE INSIGHT ACTION

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253

Glossary
AASs Australian Accounting Standards.
AASB Australian Accounting Standards
Board. The term ‘AASB’ is commonly used
when identifying AASs issued by the AASB.
In doing so, the term is used together with
the AAS number.
ADI Authorised Deposit-taking Institution
as defined by APRA.
ANZEST ANZ Employee Share Trust.
ANZ Research – Economics, a business
unit within ANZ, which conducts analysis
of key economic inputs and developments
and assessment of the potential impacts on
the local, regional and global economies.
APRA Australian Prudential Regulation
Authority.
APS ADI Prudential Standard.
AT1 Additional Tier 1 capital.
ASX Australian Securities Exchange.
BCBS Basel Committee on Banking
Supervision.
Cash and cash equivalents comprisecoins, notes, money at call, balancesheld with central banks, liquid settlementbalances (readily convertible to known
amounts of cash which are subject toinsignificant risk of changes in value) andsecurities purchased under agreements
to resell (reverse repurchase agreements)
in less than three months.
Cash profit is an additional measure of
profit which is prepared on a basis otherthan in accordance with accounting
standards. Cash profit represents ANZ’s
preferred measure of the result of the corebusiness activities of the Group, enabling
readers to assess Group and Divisional
performance against prior periods andagainst peer institutions. To calculate cash
profit, the Group excludes non-core items
from statutory profit as noted below. These
items are calculated consistently period on
period so as not to discriminate between
positive and negative adjustments.
Gains and losses are adjusted where they
are significant, or have the potential to besignificant in any one period, and fall into
one of three categories:
1. gains or losses included in earnings
arising from changes in tax, legal
or accounting legislation or othernon-core items not associated withthe core operations of the Group;

2. economic hedging impacts and similaraccounting items that represent timing
differences that will reverse throughearnings in the future; andCredit risk is the risk of financial loss
resulting from the failure of ANZ’s customers
and counterparties to honour or performfully the terms of a loan or contract.

3. accounting reclassifications between
individual line items that do not impact
reported results, such as credit risk on
impaired derivatives.

Credit risk weighted assets (CRWA)
represent assets which are weighted for
credit risk according to a set formula asprescribed in APS 112/113.

Cash profit is not a measure of cash
flow or profit determined on a cash
accounting basis.

Customer deposits represent term
deposits, other deposits bearing interest,
deposits not bearing interest andborrowing corporations’ debt excluding
securitisation deposits.

Collectively assessed allowancefor expected credit loss represents
the Expected Credit Loss (ECL), which
incorporates forward-looking informationand does not require an actual loss eventto have occurred for a credit loss provision
to be recognised.
Committed Liquidity Facility (CLF) is a
facility with the RBA that was established tooffset the shortage of available High Quality
Liquid Assets (HQLA) in Australia andprovides an alternative form of contingent
liquidity. The CLF is collateralised by assets,
including internal residential mortgagebacked securities, that are eligible to bepledged as security with the RBA. The total
amount of the CLF available to a qualifying
ADI is set annually by APRA. In September
2021, APRA wrote to ADIs to advise that APRA
and the RBA consider there to be sufficient
HQLA for ADIs to meet their Liquidity
Coverage Ratio (LCR) requirements, andtherefore the use of the CLF should no longer
be required beyond 2022 calendar year.
Coronavirus (COVID-19) is a respiratory
illness which was declared a Public Health
Emergency of International Concern.
COVID-19 was characterised as a pandemic
by the World Health Organisation on
11 March 2020.
Covered bonds are bonds issued by an ADI
to external investors secured against a poolof the ADI’s assets (the cover pool) assigned
to a bankruptcy remote special purpose
entity. The primary assets forming the coverpool are mortgage loans. The mortgages
remain on the issuer’s balance sheet. The
covered bond holders have dual recourse
to the issuer and the cover pool assets.
The mortgages included in the cover poolcannot be otherwise pledged or disposedof but may be repurchased and substituted
in order to maintain the credit quality ofthe pool. The Group issues covered bonds
as part of its funding activities.

Customer remediation includes
provisions for expected refunds tocustomers, remediation project costs
and related customer and regulatory
claims, penalties and litigation outcomes.
Derivative credit valuation adjustment(CVA) Over the life of a derivative
instrument, ANZ uses a model to adjust
fair value to take into account the
impact of counterparty credit quality.
The methodology calculates the present
value of expected losses over the life of
the financial instrument as a function ofprobability of default, loss given default,
expected credit risk exposure and an asset
correlation factor. Impaired derivatives arealso subject to a CVA.
Dividend payout ratio is the total
ordinary dividend payment divided
by profit attributable to shareholdersof the Company.
Embedded losses In relation to interest
rate risk in the banking book, APRA
requires ADIs to give consideration toembedded gains or losses in banking
book items that are not accounted for on amarked-to-market basis when determining
regulatory capital. The embedded loss
or gain measures the difference between
the book value and the economic value ofbanking book activities at a point in time.
Fair value is an amount at which an asset
or liability could be exchanged between
knowledgeable and willing parties in anarm’s length transaction.
Funding for Lending Programme (FLP)
refers to three-year funding announced
by the RBNZ in November 2020 andoffered to New Zealand banks, which
aimed to lower the cost of borrowing for
New Zealand businesses and households.

254

ANZ 2022 Annual Report

Gross loans and advances (GLA)
is made up of loans and advances,
capitalised brokerage and otherorigination costs less unearned income.
Group is Australia and New Zealand
Banking Group Limited (the Company)
and the entities it controlled at the year
end and from time to time during thefinancial year (together, the Group).
IFRS International Financial ReportingStandards.
Impaired assets are those financial assets
where doubt exists as to whether the fullcontractual amount will be received ina timely manner, or where concessionalterms have been provided because of
the financial difficulties of the customer.
Impaired loans comprise drawn facilities
where the customer’s status is defined
as impaired.
Individually assessed allowance for
expected credit losses is assessed ona case-by-case basis for all individually
managed impaired assets taking into
consideration factors such as the realisablevalue of security (or other credit mitigants),
the likely return available upon liquidation
or bankruptcy, legal uncertainties, estimatedcosts involved in recovery, the market priceof the exposure in secondary markets andthe amount and timing of expected receipts
and recoveries.
Interest rate risk in the banking book
(IRRBB) relates to the potential adverse
impact of changes in market interest rates
on ANZ’s future net interest income. The risk
generally arises from:
1. Repricing and yield curve risk – the risk
to earnings or market value as a resultof changes in the overall level of interest
rates and/or the relativity of these rates
across the yield curve;
2. Basis risk – the risk to earnings or market
value arising from volatility in the interest
margin applicable to banking bookitems; and3. Optionality risk – the risk to earnings ormarket value arising from the existenceof stand-alone or embedded options inbanking book items.

Internationally comparable ratios are
ANZ’s interpretation of the regulations
documented in the Basel Committee
publications; ‘Basel III: A global regulatory
framework for more resilient banks
and banking systems’ (June 2011) and‘International Convergence of Capital
Measurement and Capital Standards’(June 2006). They also include differences
identified in APRA’s information paper
entitled International Capital Comparison
Study (13 July 2015).
Level 1 in the context of APRA supervision,
Australia and New Zealand Banking Group
Limited consolidated with certain approved
subsidiaries.
Level 2 in the context of APRA
supervision, the consolidated ANZGroup excluding associates, insurance
and funds management entities,
commercial non-financial entities
and certain securitisation vehicles.
Level 3 in the context of APRA supervision,
the consolidated ANZ Group.
Net interest margin is net interest
income as a percentage of averageinterest earning assets.
Net loans and advances represent
gross loans and advances lessallowance for expected credit losses.
Net Stable Funding Ratio (NSFR) is theratio of the amount of available stable
funding (ASF) to the amount of required
stable funding (RSF) defined by APRA.
The amount of ASF is the portion of an
ADI capital and liabilities expected to
be a reliable source of funds over a one
year time horizon. The amount of RSF isa function of the liquidity characteristics
and residual maturities of an ADI’s assets
and off-balance sheet activities. ADIs must
maintain an NSFR of at least 100%.
Net tangible assets equal share capitaland reserves attributable to shareholders of
the Company less unamortised intangible
assets (including goodwill and software).
NZX New Zealand’s Exchange.
RBA Reserve Bank of Australia,
Australia’s central bank.

RBNZ Reserve Bank of New Zealand,
New Zealand’s central bank.
Regulatory deposits are mandatory
reserve deposits lodged with local
central banks in accordance withstatutory requirements.
Restructured items comprise facilities
in which the original contractual terms
have been modified for reasons related
to the financial difficulties of the customer.
Restructuring may consist of reduction ofinterest, principal or other payments legallydue, or an extension in maturity materiallybeyond those typically offered to new
facilities with similar risk.
Return on average assets is the profit
attributable to shareholders of theCompany, divided by average total assets.
Return on average ordinary
shareholders’ equity is the profit
attributable to shareholders of theCompany, divided by average ordinary
shareholders’ equity.
Risk weighted assets (RWA) are risk
weighted according to each asset’s inherent
potential for default and what the likely
losses would be in the case of default.
In the case of non-asset backed risks(i.e. market and operational risk), RWA isdetermined by multiplying the capitalrequirements for those risks by 12.5.
Settlement balances owed to/by ANZ
represent financial assets and/or liabilities
which are in the course of being settled.
These may include trade dated assets andliabilities, vostro accounts and securities
settlement accounts.
Term Funding Facility (TFF) refers
to three-year funding announced by
the Reserve Bank of Australia (RBA) on
19 March 2020 and offered to ADIs in
order to support lending to Australianbusinesses at low cost.
Term Lending Facility (TLF) refers
to three to five-year funding offeredby the RBNZ between May 2020and July 2021 to promote lending
to New Zealand businesses.

Overview

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shareholder.anz.com

Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.
ANZ’s colour blue is a trade mark of ANZ.

Dated: 26 October 2022

Principal risks and uncertainties faced by Australia and New Zealand Banking Group
Limited ABN 11 005 357 522 (“ANZBGL”) and its subsidiaries ((ANZBGL together
with its subsidiaries, the “Group”) (DTR 4.1.8 R (2)) (“Principal Risk andUncertainties”)
Introduction
The Group’s activities are subject to risks that can adversely impact its business,
operations, results of operations, reputation, prospects, liquidity, capital resources,financial performance and financial condition (together, the “Group’s Position”).
The risks and uncertainties described below are not the only ones that the Group may
face. Additional risks and uncertainties that the Group is unaware of, or that the Groupcurrently deems to be immaterial, may also become important factors that affect it.
If any of the specified or unspecified risks actually occur, the Group’s Position may bematerially and adversely affected, with the result that the trading price of the Group's
equity or debt securities could decline, and investors could lose all or part of theirinvestment.
Risks related to the Group's business activities and industry
1.

Changes in political and general business and economic conditions, including
disruption in regional or global credit and capital markets, may adversely affect
the Group’s Position
The Group’s financial performance is primarily influenced by the political and economic
conditions and the level of business activity in the major countries and regions in which
the Group or its customers or counterparties operate, trade or raise funding including,
without limitation, Australia, New Zealand, the Asia Pacific region, the United Kingdom(“UK”), Europe and the United States (the “Relevant Jurisdictions”).
The political, economic and business conditions that prevail in the Group’s operating andtrading markets are affected by, among other things, domestic and international
economic events, developments in global financial markets, resilience of global supply
chains, political perspectives, opinions and related events and natural disasters.
Global political conditions that impact the global economy have led to, and may continue
to result in extended periods of increased political and economic uncertainty andvolatility in the global financial markets, which could adversely affect the Group’s
Position. Examples of events that have affected (and may continue to affect) global
political conditions include the ongoing conflict in Ukraine, the UK ceasing to be amember of the European Union (“EU”) and the European Economic Area on 31 January
2020 (commonly referred to as “Brexit”), UK political developments and financial market
challenges, and global trade developments relating to, among other things, theimposition or threatened imposition of trade tariffs and levies by major countries,
including the United States, China and other countries that are Australia’s and New
Zealand’s significant trading partners and allies. There are a number of remaining
uncertainties regarding, among other things, post-Brexit protocols and arrangements
among the parties involved.
The conflict in Ukraine is ongoing and fluid, it has had, and is expected to continue tohave, significant ramifications on the geopolitical and economic landscape, particularly inEurope. Commodity prices, in particular energy, food and metals, have already been
impacted and the future impacts of the conflict remain uncertain. As a result of theconflict, the United States, the UK and EU announced broadly coordinated actions thatcollectively impose significant and wide-reaching economic sanctions and export controls
relating to Russia – including the freezing of some of the Central Bank of Russia’s foreignexchange reserves. Other jurisdictions, including Australia, New Zealand and Japan,
have announced sanctions, export controls and similar restrictions focusing on some ofthe same targets and sectors. These sanctions are materially impacting the Russian andother economies and the international financial system. The extent and duration of the1conflict and any corresponding economic sanctions, export controls and similar
restrictions and resulting market disruptions are difficult to predict. Though the Group
does not operate in and does not currently have any direct exposure to Russia or
Ukraine, the conflict has the potential to adversely impact the markets in which theGroup does operate, and any prolonged market volatility or economic uncertainty could
adversely impact the Group’s Position.
Inflationary pressures are at high levels in many economies, including in Australia, New
Zealand, the United States, Canada, Europe and the UK. Geopolitical tensions, risinginterest rates, central bank tightening, and persistent COVID-19 challenges to the global
economy, such as global shipping capacity constraints, higher costs for freight, supply
chain issues, higher energy prices, higher food prices, and tightened labour markets, are
all contributing to rising inflationary pressures on the global economy. This may lead tocounterparties defaulting on their debt obligations, countries re-denominating theircurrencies and/or introducing capital controls and/or one or more major economies
collapsing. While difficult to predict, such events could destabilise global financial
markets, adversely affecting all participants, including adversely affecting the Group’s
Position. Food price and supply, already affected by the war in Ukraine, is also being
impacted by extreme weather conditions in key agricultural regions. These factors may
impact financial market or economic and social stability and could adversely affect theGroup’s Position.
Trade and broader geopolitical relationships between the United States and some of its
trading partners, such as China, remain volatile. The implementation of trading policies
or divergent regulatory frameworks by Australia’s and New Zealand’s key trading
partners and allies may adversely impact the demand for Australian and New Zealandexports and may lead to declines in global economic growth. In particular, China is oneof Australia’s and New Zealand’s major trading partners and a significant driver ofcommodity demand and prices in many of the markets in which the Group and its
customers operate. Any heightening of geopolitical tensions and the occurrence of
events that adversely affect China’s economic growth and Australia’s and New Zealand’s
economic relationship with China, including the implementation of additional tariffs andother protectionist trade policies, could adversely affect Australian or New Zealandeconomic activity, and, as a result, could adversely affect the Group’s Position.
Instability in global political conditions, including as a result of the conflict in Ukraine,
has contributed to economic uncertainty and declines in market liquidity and could
increase volatility in the global financial markets and negatively impact consumer andbusiness activity within the markets in which the Group or its customers or
counterparties operate, or result in the introduction of new and/or divergent regulatory
frameworks that the Group will be required to adhere to.
Should economic conditions deteriorate in markets in which the Group or its customers
or counterparties operate, asset values in the housing, commercial or rural property
markets could decline, unemployment could rise and corporate and personal incomes
could suffer. Deterioration in global markets, including equity, property, currency andother asset markets, may impact the Group’s customers and the security the Groupholds against loans and other credit exposures, which may impact the Group’s ability torecover loans and other credit exposures. Should any of these occur, the Group's
Position could be materially adversely affected. Refer to risk factor 11 “Credit risk may
adversely affect the Group’s Position”.
The Group’s financial performance may also be adversely affected if the Group is unable
to adapt its cost structures, products, pricing or activities in response to a drop in
demand or lower than expected revenues. Similarly, higher than expected costs(including credit and funding costs and increases in costs resulting from inflationary
conditions) could be incurred because of adverse changes in the economy, generalbusiness conditions or the operating environment in the countries or regions in which theGroup or its customers or counterparties operate. Should any of these occur, the Group's
Position could be materially adversely affected.
2.

The COVID-19 pandemic and future outbreaks of other communicable diseases
or pandemics may materially and adversely affect the Group’s Position

2

The COVID-19 pandemic continues to impact the Group’s Position, and the domestic andglobal economy. Increasing vaccination rates have led to the easing of restrictions onregional and international travel, events, meetings and other more normal activities.
Governments across Australia (including at the state level), and New Zealand haveindicated that they may in the foreseeable future reintroduce prior restrictions orimplement and introduce further measures to contain the spread of future COVID-19
outbreaks. Further variants may develop that require different government responses
and greater restrictions to those that have been adopted to date. The ongoing impacts of
COVID-19 combined with other risks, e.g. geopolitical risk, could exacerbate impacts andmaterially increase economic disruption.
Disruptions to community health and economic activity continue to impact most businesssectors in Australia, New Zealand and globally. Ongoing COVID-19 related supply chain
disruption and labour mobility constraints could result in a decline in profit margins, andcould impact customer’s cash flows, capital, liquidity and financing needs. This in turnhas impacted demand for the Group’s products and services and may result in further
short and long-term deteriorations of the quality of the Group’s credit portfolio. Many of
the Group’s borrowers may continue to be negatively impacted by the COVID-19
pandemic, resulting in an increased risk of credit loss, particularly in the following
sectors: transportation; tourism and travel; entertainment; education; discretionary
retail; and property segments. See Notes 14 of the consolidated financial statements forthe financial year ended 30 September 2022 as set forth in the Group’s 2022 Annual
Report (“2022 Financial Statements”)
COVID-19 has notably impacted the property construction industry through increased
contractor risk and a potential contagion effect impacting stability of the property
development sectors. Disrupted supply chains and resultant cost increases remain a risk
to project feasibility where underlying property prices may not increase in line with cost
increases, causing projects to be delayed or cancelled. Substantially reduced global
economic activity has caused substantial volatility in the financial markets and suchvolatility is expected to continue to have a significant impact on the global economy andglobal markets, as well as on the economies of Australia and New Zealand. Travel
restrictions, border controls, social distancing measures, quarantine protocols and othercontainment measures (including ongoing lockdown measures in China) havecontributed, and may continue to contribute, to reduced economic activity in Australia,
New Zealand and elsewhere around the world and suppress demand for commodities,
interrupt the supply chain for industries, dampen consumer confidence and suppress
business earnings and growth prospects, all of which could contribute to ongoing
volatility in global financial markets.
Conduct risk may be heightened because of the blended/hybrid working model throughits impact on employees’ behaviour and/or the Group’s systems and processes. The riskof customer harm will continue to be shaped by the economic and social impact of thepandemic. As the economy recovers, individual customers still enduring hardship may
suffer detriment if the Group cannot provide tailored support and sustainable
arrangements based on individual circumstances.
The ongoing ramifications of the COVID-19 pandemic remain uncertain and, as of thedate of this document, it is difficult to predict to what extent vaccines, boosters or othermedical treatments will be effective in curtailing the effects of the COVID-19 pandemic.
All or any of the negative conditions related to the COVID-19 pandemic described above
may cause a further reduction in demand for the Group’s products and services and/or
an increase in loan and other credit defaults, bad debts, and impairments and/or an
increase in the cost of the Group’s operations. Should any of these occur, the Group’s
Position could be materially adversely affected.
The effectiveness of government and central bank responses to the pandemic, also
remain subject to significant uncertainties. To the extent the COVID-19 pandemic
continues to adversely affect the Group’s Position, it may also have the effect ofheightening many of the other risks described in these Principal Risks and Uncertainties.
3.

Competition in the markets in which the Group operates may adversely affect
the Group’s Position
3

The markets in which the Group operates are highly competitive and could become morecompetitive in the future. Competition has increased and is expected to continue toincrease, including from non-Australian financial service providers who continue toexpand in Australia and from new non-bank entrants or smaller providers in thosemarkets.
Examples of factors that may affect competition and negatively impact the Group’s
Position include:•

entities that the Group competes with, including those outside of Australia and
New Zealand, could be subject to lower levels of regulation and regulatory activity.
This could allow them to offer more competitive products and services, because
those lower levels of regulation may give them a lower cost base and/or the ability
to attract employees that the Group would otherwise seek to employ;•

digital technologies and business models are changing customer behaviour and thecompetitive environment and emerging competitors are increasingly utilising newtechnologies and seeking to disrupt existing business models in the financial
services sector;•

existing companies from outside of the traditional financial services sector are
directly competing with the Group by offering products and services traditionallyprovided by banks, including by obtaining banking licenses and/or by partneringwith existing providers;•consumers and businesses may choose to transact using, or to invest or store
value in, new forms of currency (such as cryptocurrencies or central bank digitalcurrencies) in relation to which the Group may choose not, or may notcompetitively be able, to provide financial services. For example, each of theReserve Bank of Australia and the Reserve Bank of New Zealand (“RBNZ”) has
announced that it is actively researching central bank digital currency, the effect ofwhich, if adopted, on the Group’s Position is uncertain. Any new form of currency
could change how financial intermediation and markets operate and, with that, thecompetitive and commercial position of the Group; and•Open Banking (as described below) may lead to increased competition (see risk
factor 17 “Regulatory changes or a failure to comply with laws, regulations or
policies may adversely affect the Group’s Position”).

The impact on the Group of an increase in competitive market conditions or atechnological change that puts the Group’s business platforms at a competitive
disadvantage, especially in the Group’s main markets and products, could lead to amaterial reduction in the Group’s market share, customers and margins and adversely
affect the Group’s Position.
Increased competition for deposits may increase the Group’s cost of funding. If theGroup is not able to successfully compete for deposits, the Group would be forced to rely
more heavily on other, less stable or more expensive forms of funding, or to reduce
lending. This may adversely affect the Group’s Position.
Geopolitical and economic disruptions could have a significant impact on competition andprofitability in the financial services sector over the medium term due to funding costand provision increases, changes in interest rates, insufficient liquidity, implementationof business continuity plans, changes to business strategies and temporary regulatory
safe harbours. The low-growth environment will likely lead to heightened competitive
intensity and margin compression.
4.

The proposed restructure of the Group to establish a non-operating holding
company may adversely affect the Group’s Position
ANZ is proposing to establish a non-operating holding company, ANZ Group Holdings
Limited (“ANZ NOHC”), as the new listed parent company of the Group, and to separate
ANZ’s banking and certain non-banking businesses. (the “restructure”).
APRA has not yet finalised its prudential framework for Australian Non-Operating Holding
4Companies (“NOHCs”) of ADIs. There is a risk that APRA’s final regulatory framework forAustralian NOHCs of ADIs and the regulation of the ANZ NOHC over time will differ fromthe existing regulatory framework. This may have negative consequences for the Group
and/or may require further changes to its structure.
If implemented, the restructure will result in certain changes to ANZ’s existing operating
model. ANZ considers that these changes can be implemented and managed
appropriately following the restructure. However, it is possible that unexpected business,market and/or regulatory factors may result in these operating model changes not
functioning as expected and further changes may be required.
Implementation of the restructure will involve a number of steps, and unexpecteddevelopments may arise which can affect the implementation and/or the timing, formand scope of the restructure. Similarly, unexpected liabilities may be caused by any
delays in non-material regulatory approvals or by regulatory relief not being granted.
The failure to successfully implement all of the transition and other items associated withthe restructure, or the restructure itself, could have an adverse impact on the Group’s
Position.
If for any reason the restructure is not completed, the Group’s ongoing business may be
adversely impacted and the Group may be subject to various risks, including financial
markets reacting negatively, and the Group may experience negative reactions from its
customers, vendors, and employees. The Group will have incurred additional expenses
and will be required to pay certain costs relating to the restructure. Matters relating to
the restructure also required substantial commitments of time and resources by theGroup’s management, which could otherwise have been devoted to other opportunities
that may have benefited the Group.
5.

Changes in the real estate markets in Australia, New Zealand or other markets
where the Group does business may adversely affect the Group’s Position
Residential and commercial property lending, together with real estate development andinvestment property finance, constitute important businesses of the Group. Major subsegments within the Group's lending portfolio include:•

residential housing loans (owner occupier and investment); and•commercial real estate loans (investment and development).

Since 2009, the world’s major central banks have embarked upon unprecedented
monetary policy stimulus. The resulting weight of funds searching for yield has been asignificant driver underlying property markets in the Group’s core property jurisdictions(Australia, New Zealand, Singapore and Hong Kong) since that time. While property
markets generally remained strong throughout the COVID-19 pandemic, since interest
rates have increased we have seen property prices in Australia and New Zealand fall.
Investors are taking a cautious approach and the extent of property price falls will
ultimately depend on the speed and magnitude of interest rate rises and impact on the
broader economic outlook.
In June 2022 APRA introduced credit-based macroprudential measures in Australia,
which require ADIs to ensure they have the ability to limit growth in particular forms oflending (including commercial and residential property); moderate higher risk lending
during periods of heightened systemic risk or meet particular lending standards, at levels
determined by APRA; and ensure adequate reporting against limits is established. Also,
APRA have indicated that commercial property definitions will be more broadly aligned
across the prudential framework. These changes to APRA’s policy framework and theformalisation of the credit-based macroprudential policy measures prudential standard,
effective from September 2022, may adversely affect the Group’s Position. These
proposals are described in risk factor 17 "Regulatory changes or a failure to comply withlaws, regulations or policies may adversely affect the Group’s Position".
In New Zealand, median prices for residential property increased in prior years, peaking
in November 2021, prior to declining in the 2022 calendar year. The RBNZ has
acknowledged that higher interest rates and rising costs of living are putting pressure on
5households that may affect home prices and that house prices are expected to keep
falling in the coming year and are expected to continue to do so for at least the next 12months.
Increases in interest rates may affect debt serviceability, increase loan defaults
experienced by the Group’s borrowers, reduce demand for commercial and residential
property and the Group’s associated lending products in both Australia and New Zealand.
New Zealand is already seeing a material reduction in demand for residential property.
Following a prolonged period of asset price inflation and record low interest rates,interest rates commenced increasing from May 2022 in Australia and from June 2021 in
New Zealand. Interest rates are increasing sharply in both jurisdictions, for example theaverage 1-year fixed mortgage rate in New Zealand has increased from 2.162% in June
2021 to 4.958% in June 2022. Interest rate increases may continue through the rest of2022 and into 2023.
The Group’s portfolio of commercial property loans may be susceptible to a sudden
increase in interest rates. This coupled with recent asset price inflation and yieldcompression could cause a decline in interest coverage ratios and asset values, increaserefinance risk and necessitate equity contributions towards debt reduction. Secondary
grade assets may be more susceptible to a decline in prices if investors have overlooked
weaker fundamentals in a highly liquid market (debt and equity), a more favourable
interest rate environment and stable economy.
Separately, construction risk, including contractor stability, the impact of supply chain
constraints on cost of materials together with increasing labour costs may impact
commercial property development feasibility and land values in the short to medium
term. Each of the factors outlined above may adversely affect the Group’s Position.
6.

Sovereign risk events may destabilise global financial markets and may
adversely affect the Group’s Position
Sovereign risk is the risk that governments will default on their debt obligations, beunable to refinance their debts as and when they fall due or nationalise parts of theireconomy. Sovereign defaults may adversely impact the Group directly, throughadversely impacting the value of the Group’s assets, or indirectly through destabilising
global financial markets, thereby adversely impacting the Group’s Position.
Sovereign risk exists in many economies, including economies in which the Group
operates or has direct exposures, such as the United States, the UK, China, Europe,
Australia and New Zealand. Should one sovereign default, there could be a cascading
effect to other markets and countries, the consequences of which, while difficult topredict, may be similar to or worse than those experienced during the global financial
crisis and subsequent sovereign debt crises.

7.

Market risk events may adversely affect the Group’s Position
Market risk is the risk of loss arising from adverse changes in interest rates, currency
exchange rates, credit spreads, or from fluctuations in bond, commodity or equity prices.
For purposes of financial risk management, the Group differentiates between traded andnon-traded market risks. Traded market risks principally arise from the Group’s trading
operations in interest rates, foreign exchange, commodities and securities. The nontraded market risk is predominantly interest rate risk in the banking book. Other nontraded market risks include transactional and structural foreign exchange risk arisingfrom capital investments in offshore operations and non-traded equity risk. Losses
arising from the occurrence of such market risk events may adversely affect the Group's
Position.

8.

Changes in exchange rates may adversely affect the Group’s Position
As the Group conducts business in several different currencies, its businesses may beaffected by movements in currency exchange rates. Additionally, as the Group’s annual
and interim reports are prepared and stated in Australian dollars, any change in thevalue of the Australian dollar against other currencies in which the Group earns revenues
6

(particularly the New Zealand dollar and the U.S. dollar) or holds capital, may adversely
affect the Group’s reported earnings and/or capital ratios.
While the Group has put in place hedges to partially mitigate the impact of currencychanges, there can be no assurance that the Group’s hedges will be sufficient oreffective, and any change in the value of the Australian dollar against other currencies inwhich the Group earns its revenue, or holds capital, may have an adverse impact upon
the Group’s Position.
9.

The ongoing discontinuation of LIBOR and developments affecting otherbenchmark rates could have adverse consequences on the Group’s securities
issuances and its capital markets and investment activities
As of 31 December 2021, one week and two month U.S. dollar LIBOR (“USD LIBOR”)
settings (and certain LIBOR settings for other currencies) were discontinued, while theremaining non-USD LIBOR settings ceased to be representative and are now being
published only on a temporary “synthetic” basis. In addition, the UK Financial Conduct
Authority (the “FCA”), which is the regulator of the LIBOR administrator, has announced
that the principal USD LIBOR settings (overnight and one, three, six and 12 months) willcease to be published by any administrator, or will no longer be representative, as of 30
June 2023 (although the FCA is considering requiring their continued publication afterthat date, on a “synthetic” basis). Despite the expected publication of the principal USD
LIBOR settings on the current basis until 30 June 2023, the FCA has prohibited the firms
it regulates from using such settings in new contracts after 31 December 2021 (subject
to limited exceptions), and certain U.S. (and other) regulators have stated that no newcontracts using USD LIBOR should be entered into after that date.
Accordingly, many LIBOR obligations have transitioned, and many other LIBOR
obligations will be transitioned, to another benchmark; and different types of financial
product have transitioned, or are expected to transition, to different alternative
benchmarks. However, there are many loans, mortgages, securities, derivatives andother financial instruments which remain linked to LIBOR, including USD LIBOR (andrates which incorporate USD LIBOR in their construction such as the benchmark rates
used in Singapore, Thailand, the Philippines and India). Any failure to execute effective
transitional arrangements to address LIBOR discontinuation could result in disruption in
the financial markets, suppress capital markets activities and give rise to litigation
claims. In addition, financial markets, particularly the trading market for floating rate
obligations, may in general be adversely affected in 2023 by the discontinuation of theremaining LIBOR settings and the transition to alternative reference rates. There is no
assurance that any alternative reference rate will be the economic equivalent of the
LIBOR setting it is intended to replace. Any or all of these matters could have a negative
impact on the Group’s Position and on the value of LIBOR-linked securities or other
instruments which are issued, funded or held by the Group.
The Group is party to loans, securities, derivatives and other financial instruments thatcurrently use USD LIBOR as a benchmark rate or are otherwise linked to USD LIBOR. In
some cases, those instruments include terms providing for the relevant interest or
payment calculations to be made by reference to an alternative benchmark rate or onsome other basis in the event of USD LIBOR’s discontinuation; and such instruments
should transition away from USD LIBOR in accordance with those terms. In cases where
an instrument’s terms do not include robust fallback provisions or the fallback provisions
are considered to be inadequate, the instrument, may need to be amended to add or
amend such provisions in line with emerging market standards (or, where applicable,
amendments may be made by operation of law), or other arrangements may have to bemade with regard to such instrument when USD LIBOR is discontinued. Progress is being
made by the Group on the amendment of these types of instruments. In some cases, it
may not be possible to amend the relevant terms of USD LIBOR-linked instruments. The
potential legal, regulatory and other consequences if this occurs are uncertain. In any
event, implementation of existing fallback provisions or changes made on any otherbasis may, for example, alter the amounts payable under the relevant instrument, itsvalue and its liquidity, and may result in a mismatch between such instrument and any
related contract (such as a hedging agreement). In addition, the process of taking thenecessary action with regard to this large volume of contracts prior to the end of June
2023 involves operational risks for the Group.
7

Other benchmark rates have been, or may be, reformed (for example, the EuroInterbank Offered Rate (“EURIBOR”)). Any such reforms may cause the relevantbenchmarks to perform differently than in the past, or the reforms made to the rate may
have other consequences which cannot be fully anticipated.
If a benchmark rate is discontinued, there may or may not be a suitable, similaralternative reference rate and there may be adverse consequences in transitioning to analternative rate. Any of these developments, and any future initiatives with regard to theregulation of benchmarks, could result in adverse consequences to the return on, valueof and market for loans, mortgages, securities, derivatives and other financial
instruments whose returns are linked to any such benchmark rate, including thoseissued, funded or held by the Group; and could result in widespread dislocation in thefinancial markets, engender volatility in the pricing of securities, derivatives and other
instruments, and suppress capital markets activities, all of which could have adverse
effects on the Group’s Position.
10.

Acquisitions and/or divestments may adversely affect the Group’s Position
The Group regularly examines a range of corporate opportunities, including acquisitions
and divestments, with a view to determining whether those opportunities will enhance
the Group’s strategic position and financial performance.
Integration (or separation) of an acquired (or divested) business can be complex andcostly, sometimes including combining (or separating) relevant accounting and dataprocessing systems, technology platforms and management controls, as well as
managing relevant relationships and contracts with employees, customers, regulators,
counterparties, suppliers and other business partners. The loss of key relationships
and/or personnel from an acquisition or divestment could have an adverse effect on theGroup’s Position.
There can also be no assurance that any acquisition (or divestment) would have theanticipated positive results around synergies, cost or cost savings, time to integrate (orseparate) and overall performance; as the underlying assumptions for the acquisition (ordivestment) may not ultimately prove to be accurate or achievable. Any acquisition (ordivestment) may also impact the Group’s credit ratings, cost of funds and access tofurther funding, which could in turn adversely affect the Group’s funding and liquidity
positions.
Integration (or separation) efforts could create inconsistencies in standards, controls,
procedures and policies, as well as diverting management attention and resources. Thereis also the risk of counterparties making claims in respect of completed or uncompleted
transactions against the Group that could adversely affect the Group’s Position. All or
any of these factors could adversely affect the Group’s ability to conduct its businesssuccessfully and impact the Group’s operations or results. Additionally, there can be noassurance that employees, customers, counterparties, suppliers and other business
partners of newly acquired (or retained) businesses will remain post-acquisition (or postdivestment). Further, there is a risk that completion of an agreed transaction may notoccur whether in the form originally agreed between the parties or at all, including due
to failure of the Group or the counterparty to satisfy its completion conditions or because
other completion conditions such as obtaining relevant regulatory, shareholder or otherapprovals are not satisfied. Should any of these integration or separation risks occur,
this could adversely affect the Group’s Position.
Transactions that the Group has previously announced but not yet completed include thefollowing:••

The acquisition of Suncorp Bank from Suncorp Group Limited, which remains subject
to satisfaction of certain conditions and is expected to occur in the second half ofcalendar year 2023; andThe sale of ANZ’s Share Investment Lending portfolio to Leveraged Equities Limited,which is expected to occur in the first half of calendar year 2023.

If for any reason any announced acquisition, including the acquisition of Suncorp Bank, is

8

not completed, the Group’s ongoing business may be adversely impacted and the Groupmay be subject to a number of risks, including: the financial markets may react
negatively, resulting in negative impacts on the Group’s securities and other adverse
impacts; the Group may experience negative reactions from its customers, vendors, andemployees; the Group will have incurred expenses and will be required to pay certain
costs relating to the acquisition, whether or not the acquisition is completed, such aslegal, accounting, investment banking, and other professional and administrative fees;and matters relating to the acquisition may require substantial commitments of time andresources by the Group’s management, which could otherwise have been devoted toother opportunities that may have benefited the GroupThe acquisition of Suncorp Bank from Suncorp Group Limited is subject to satisfaction ofcertain conditions. These include Federal Treasurer approval, Australian Competition andConsumer Commission authorisation or approval and certain amendments to the State
Financial Institutions and Metway Merger Act 1996 (Qld). The terms and conditions of theapprovals that are granted may impose conditions, limitations, obligations or costs, orplace restrictions on the conduct of the Group or its business following the acquisition, or
require changes to the terms of the transaction. There can be no assurance that theregulators will not impose any such conditions, obligations or restrictions, and that suchconditions, limitations, obligations or restrictions will not have the effect of delaying or
preventing completion of the transaction, imposing additional material costs on ormaterially limiting the revenues of the Group following the acquisition or otherwise
reducing the anticipated benefits of the acquisition to the Group, any of which might
have an adverse effect on the Group following the acquisition.
ANZ undertook a due diligence process in relation to the proposed acquisition of Suncorp
Bank which relied in part on a review of financial, technology, legal and other information
provided in respect of Suncorp Bank or was otherwise provided at meetings with Suncorp
Bank management. Despite making reasonable efforts as part of the due diligence
investigations, ANZ has not been able to verify the accuracy, reliability or completenessof all the information provided to it. If any information provided or relied upon by ANZ in
its due diligence proves to be incorrect, incomplete or misleading, there is a risk that theactual financial position and performance of Suncorp Bank may be different to the
expectations. There is also no assurance that the due diligence conducted wasconclusive, and that all material issues and risks in respect of the proposed acquisition
have been identified and avoided or managed, and therefore, there is a risk that issues
or risks may arise that may adversely impact on the ANZ Group. Suncorp Group Limited
has provided ANZ with indemnities relating to certain pre-completion matters as well as
representations and warranties in favour of ANZ. There is a risk that these protections
may be insufficient to fully cover liabilities relating to these matters, which may have an
adverse impact on the Group's financial performance and position. As is usual, thewarranties and indemnities are also subject to certain financial claims thresholds andother limitations.
Risks related to the Group's financial situation
11.

Credit risk may adversely affect the Group’s Position
As a financial institution, the Group is exposed to the risks associated with extending
credit to other parties, including incurring credit-related losses that can occur as a resultof a counterparty being unable or unwilling to honour its contractual obligations. Credit
losses can and have resulted in financial services organisations realising significant
losses and, in some cases, failing altogether.
Whilst the risk of credit-related losses has increased as a result of the impact of the
COVID-19 pandemic and heightened political tensions, particularly those referred to inrisk factor 1 “Changes in political and general business and economic conditions,
including disruption in regional or global credit and capital markets, may adversely affect
the Group’s Position”, the risk of credit-related losses may further increase as a result of
a number of factors, including a deterioration in the financial condition of the economies
in which the Group or its customers or counterparties operate, a sustained high level of
unemployment and/or further changes in interest rates and inflationary conditions in themarkets in which the Group or its customers or counterparties operate, material
disruptions to supply chains, a deterioration of the financial condition of the Group’s
9

customers or counterparties, a reduction in the value of assets the Group holds as
collateral, and a reduction in the market value of the counterparty instruments andobligations it holds.
Less favourable business or economic conditions, whether generally or in a specificindustry sector or geographic region, as well as the occurrence of events such as natural
disasters or pandemics, could cause customers or counterparties to fail to meet their
obligations in accordance with agreed terms.
Some of the Group’s customers and counterparties in or with exposures to the below
mentioned sectors are increasingly vulnerable:•industries impacted by the COVID-19 pandemic particularly those referred to in therisk factor 2 “The COVID-19 pandemic and future outbreaks of othercommunicable diseases or pandemics may materially and adversely affect theGroup’s Position”;•

industries exposed to the unwinding of government stimulus packages andincreasing interest rates, as well as industries reliant on consumer discretionary
spending;•

industries that are heavily exposed to fuel supply shortages and associated risingcosts including aviation, road transport & shipping and agriculture, particularly given
the conflict between Russia and Ukraine and the associated impact on oil and gas
prices, production and supply;•

participants in energy or commodity markets that are exposed to rising margin
payment requirements under hedge or futures contracts that arise due to underlying
price volatility;•

industries at risk of sanctions, geopolitical tensions or trade disputes (e.g.
technology, agriculture, communications, and financial institutions) and/or declining
global growth and disruption to global supply chains which include but are notlimited to retail, wholesale, automotive, manufacturing and packaging industries;•

the commercial property sector (including construction and contractors) which is
exposed to rising interest rates, a decline in investor demand for large scale innercity apartment buildings and a material decline in net migration. In some markets,
commercial contractors and sub-contractors may face cash flow/liquidity issues
over the next 12 to 24 months as current projects run off and their forward books
are diminished. The residential development sector is experiencing supply chain
issues, increased costs and labour mobility issues. Earnings for hotel
accommodation and certain retail sectors are still being impacted by reduced
mobility and the extent of longer-term implications for some offices remains
uncertain due to the shift to remote working arrangements;•

industries facing labour supply shortages and/or who are reliant on access to bothskilled and unskilled migrant workers, including tourism and hospitality, technology,
agriculture, retail, health, construction and services;•

customers and industries exposed to disruption from physical climate risk (e.g.
bushfires, floods, storms and drought), and transition risk (e.g. industry exposed
to carbon reduction requirements and resulting changes in demand for goods andservices or liquidity). For more information on climate-related risks, see risk factor
31 “Impact of future climate events, biodiversity loss, human rights, geologicalevents, plant, animal and human diseases, and other extrinsic events may
adversely affect the Group’s Position”; and•industries exposed to the volatility in exchange rates and foreign exchange
markets generally.

The Group is also subject to the risk that its rights against third parties may not be
enforceable in certain circumstances, which may result in credit losses. Should material
credit losses occur to the Group’s credit exposures, this may adversely affect the Group’s
Position.

10Credit risk may also arise from certain derivative, clearing and settlement contracts that
the Group enters into, and from the Group’s dealings with, and holdings of, debt
securities issued by other banks, financial institutions, companies, governments andgovernment bodies where the financial conditions of such entities are affected byeconomic conditions in global financial markets.
In addition, in assessing whether to extend credit or enter into other transactions withcustomers and/or counterparties, the Group relies on information provided by or on
behalf of customers and/or counterparties, including financial statements and otherfinancial information. The Group may also rely on representations of customers andindependent consultants as to the accuracy and completeness of that information. The
Group’s financial performance could be negatively impacted to the extent that it relies on
information that is incomplete, inaccurate or materially misleading.
The Group holds provisions for credit impairment that are determined based on current
information and subjective and complex judgements of the impairment within theGroup’s lending portfolio. If the information upon which the assessment is made proves
to be inaccurate or if the Group fails to analyse the information correctly, the provisions
made for credit impairment may be insufficient, which may adversely affect the Group’s
Position.
12.

Challenges in managing the Group’s capital base could give rise to greater
volatility in capital ratios, which may adversely affect the Group’s Position
The Group’s capital base is critical to the management of its businesses and access tofunding. Prudential regulators of the Group include, but are not limited to, APRA, the
RBNZ and various regulators in the United States, the UK and the countries in the Asia
Pacific region. The Group is required by its primary regulator, APRA and the RBNZ for the
ANZ Bank New Zealand Limited (“ANZ New Zealand”, and, together with its subsidiaries,
the “ANZ New Zealand Group”) to maintain adequate regulatory capital.
Under current regulatory requirements, risk-weighted assets and expected loan losses
increase as a counterparty’s risk grade worsens. These regulatory capital requirements
are likely to compound the impact of any reduction in capital resulting from lower profits
in times of stress. As a result, greater volatility in capital ratios may arise and may
require the Group to raise additional capital. There can be no certainty that any additional
capital required would be available or could be raised on reasonable terms.
The Group’s capital ratios may be affected by a number of factors, such as (i) lower
earnings (including lower dividends from its deconsolidated subsidiaries such as those in
the insurance business as well as from its investment in associates), (ii) increased asset
growth, (iii) changes in the value of the Australian dollar against other currencies inwhich the Group operates (particularly the New Zealand dollar and U.S. dollar) that
impact risk weighted assets or the foreign currency translation reserve, (iv) changes inbusiness strategy (including acquisitions, divestments and investments or an increase incapital intensive businesses), and (v) changes in regulatory requirements.
APRA and the RBNZ have implemented prudential standards to accommodate Basel III.
Certain other regulators have either implemented or are in the process of implementing
regulations, including Basel III, that seek to strengthen, among other things, theliquidity and capital requirements of banks, funds management entities and insurance
entities, though there can be no assurance that these regulations have had or will havetheir intended effect. These regulations, together with risks arising from any regulatorychanges such as from APRA’s ‘unquestionably strong’ requirements, the requirements of
the Basel Committee on Banking Supervision and the RBNZ’s reform of capitalrequirements are described in risk factor 17 "Regulatory changes or a failure to comply
with laws, regulations or policies may adversely affect the Group’s Position". Any inabilityof the Group to maintain its regulatory capital may have a material adverse effect on theGroup's Position.

13.

The Group’s credit ratings could change and adversely affect the Group’s ability
to raise capital and wholesale funding and constrain the volume of new lending,which may adversely affect the Group’s Position
11

The Group’s credit ratings have a significant impact on both its access to, and cost of,capital and wholesale funding. They may also be important to customers or
counterparties when evaluating the Group’s products and services. Credit ratings andrating outlooks may be withdrawn, qualified, revised or suspended by credit rating
agencies at any time. The methodologies used by ratings agencies to determine credit
ratings and rating outlooks may be revised in response to legal or regulatory changes,
market developments or for any other reason.
The Group’s credit ratings or rating outlooks could be negatively affected by a change inthe credit ratings or rating outlooks of the Commonwealth of Australia or New Zealand,
the occurrence of one or more of the other risks identified in this document, a change inratings methodologies or by other events. As a result, downgrades in the Group’s credit
ratings or rating outlooks could occur that do not reflect changes in the general
economic conditions or the Group's financial condition. In addition, the ratings ofindividual securities (including, but not limited to, certain Tier 1 capital and Tier 2 capitalsecurities and covered bonds) issued by the Group (and other banks globally) could be
impacted from time to time by changes in the regulatory requirements for those
instruments as well as the ratings methodologies used by rating agencies.
Any future downgrade or potential downgrade to the Group’s credit ratings or rating
outlooks may reduce access to capital and wholesale debt markets and could lead to anincrease in funding costs, which could constrain the volume of new lending and affect thewillingness of counterparties to transact with the Group which may adversely affect theGroup’s Position.
Credit ratings are not a recommendation by the relevant rating agency to invest in
securities offered by the Group.
14.

Liquidity and funding risk events may adversely affect the Group’s Position
Liquidity and funding risk is the risk that the Group is unable to meet its payment
obligations as they fall due (including repaying depositors or maturing wholesale debt)
or that the Group has insufficient capacity to fund increases in assets. Liquidity andfunding risk is inherent in all banking operations due to the timing mismatch between
cash inflows and cash outflows.
Reduced liquidity could lead to an increase in the cost of the Group’s borrowings andconstrain the volume of new lending which may adversely affect the Group’s Position.
Deterioration and volatility in market conditions and/or declines in investor confidence in
the Group may materially impact the Group’s ability to replace maturing liabilities andaccess funding (in a timely and cost effective manner), which may adversely impact theGroup’s Position.
The Group raises funding from a variety of sources, including customer deposits andwholesale funding in domestic and in offshore markets to meet its funding requirements
and to maintain or grow its business generally. Developments in major markets canadversely affect liquidity in global capital markets. For example, in times of liquidity
stress, if there is damage to market confidence in the Group or if funding inside oroutside of domestic markets is not available or constrained, the Group’s ability to accesssources of funding and liquidity may be constrained and the Group will be exposed toliquidity and funding risk.

15.

Changes in the valuation of some of the Group’s assets and liabilities may
adversely affect the Group’s earnings and/or equity, and therefore the Group’s
Position
The Group applies accounting standards, which require that various financial
instruments, including derivative instruments, assets and liabilities classified as fair value
through other comprehensive income, and certain other assets and liabilities (as per
Note 19 of the 2022 Financial Statements) are measured at fair value with changes infair value recognised in earnings or equity.

12

Generally, in order to measure the fair value of these instruments, the Group relies onquoted market prices or present value estimates or other valuation techniques thatincorporate the impact of factors that a market participant would take into account when
pricing the asset or liability. The fair value of these instruments is impacted by changes
in market prices or valuation inputs that may have a material adverse effect on theGroup’s earnings and/or equity.
In addition, the Group may be exposed to a reduction in the value of non-lending related
assets as a result of impairments that are recognised in earnings. The Group is required
to test the recoverability of goodwill balances and intangible assets with indefinite useful
lives or not yet available for use at least annually and other non-lending related assets
including premises and equipment (including right-of-use assets arising from leases),
investment in associates, capitalised software and other intangible assets where there
are indicators of impairment.
For the purpose of assessing the recoverability of the goodwill balances, the Group uses
a multiple of earnings calculation. Changes in the assumptions upon which thecalculation is based, together with changes in earnings, may materially impact thisassessment, resulting in the potential write-off of a part or all of the goodwill balances.
In respect of other non-lending related assets, in the event that an asset is no longer inuse, or that the cash flows generated by the asset do not support the carrying value,
impairment charges may be recorded. This, in conjunction with the other potentialchanges above, could impact the Group’s Position.
16.

Changes to accounting policies may adversely affect the Group’s Position
The accounting policies that the Group applies are fundamental to how it records andreports its financial position and results of operations. Management exercises judgement
in selecting and applying many of these accounting policies so that they comply with theapplicable accounting standards or interpretations and reflect the most appropriatemanner in which to record and report on the Group’s financial position and results ofoperations. However, these accounting policies may be applied inaccurately, resulting ina misstatement of the Group’s financial position. In addition, the application of new orrevised accounting standards or interpretations may adversely affect the Group’s
Position.
The impact of new accounting standards effective for the first time in the Group’s 2022
fiscal year is outlined in Note 1 of the 2022 Financial Statements.
In some cases, management must select an accounting policy from two or morealternatives, any of which would comply with the relevant accounting standard orinterpretation and be reasonable under the circumstances, yet might result in reporting
materially different outcomes than would have been reported under the alternative.
Legal and regulatory risk

17.

Regulatory changes or a failure to comply with laws, regulations or policies may
adversely affect the Group’s Position
The Group’s businesses and operations are highly regulated. The pace of regulatorychange has accelerated in recent years. The Group is subject to a substantial andincreasing number of laws, regulations and policies, including industry self-regulation, in
the Relevant Jurisdictions in which it carries on business or obtains funding and issupervised by a number of different authorities in each of these jurisdictions. The volumeof changes, and resources allocated to the regulation and supervision of financial
services groups, such as the Group, and the enforcement of laws against them, including
through litigation, has increased substantially in recent years, including in response tocommunity concern regarding the conduct of financial services groups in Australia and
New Zealand. As a result, the regulation and supervision of, and enforcement against,
financial services groups, including the Group has become increasingly extensive,
complex and costly across the Relevant Jurisdictions. Such regulation, supervision andenforcement continue to evolve.
The COVID-19 pandemic has had, and may continue to have an impact on the regulation
13

and supervision of, and enforcement against, financial services groups such as theGroup. Any future ramifications of the COVID-19 pandemic remain uncertain and, as ofthe date of this document, difficult to predict. There have been delays and deferrals to
the implementation of regulatory reforms in Australia and New Zealand and a re-rankingof priorities, including enforcement priorities.
Such delays and deferrals could impact the Group’s ability to manage regulatory change
and increase the risk of the Group not complying with new regulations when they comeinto effect.
The ongoing COVID-19 pandemic also has the potential to complicate the Group’s
dealings with its regulators in a number of ways. In particular, disruptions to the Group’sbusiness, operations, third party contractors and suppliers resulting from the COVID-19
pandemic may increase the risk that the Group will not be able to satisfy its regulatory
obligations or processes and/or address outstanding issues, potentially increasing theprospect of a regulator taking adverse action against the Group. For more information onrisks relating to the COVID-19 pandemic see risk factor 2 “The COVID-19 pandemic andfuture outbreaks of other communicable diseases or pandemics may materially andadversely affect the Group’s Position”.
Developments in prudential regulation continue to impact the Group in a material way.
At any given time, there are a number of items that are open for consultation with APRA
and the RBNZ and therefore the potential impact of regulatory developments on theGroup is inherently uncertain. Further changes to APRA’s or the RBNZ’s prudential
standards could increase the level of regulatory capital that the Group is required tomaintain, restrict the Group’s flexibility, require it to incur substantial costs and/or
impact the profitability of one or more business lines any of which may adversely affect
the Group’s Position. Particular points include the following.
Prudential Developments•

In November 2021, APRA released their final requirements in relation to capital
adequacy and credit risk capital requirements for ADIs with an implementation
date of 1 January 2023. This follows the consultation process that began in
December 2020 when APRA released a consultation paper regarding proposedchanges to the capital framework for ADIs aimed at having ADI’s achieve‘unquestionably strong’ capital holding levels, improving the flexibility of thecapital adequacy framework, and improving the transparency of ADI capitalstrength. Key aspects of ARPA's final requirements are:oIncreased alignment with internationally agreed Basel standards for nonresidential mortgages exposures;oImplementing more risk-sensitive risk weightings for residential mortgage
lending;oIntroduction of the Basel II capital floor that limits the risk weighted asset(“RWA”) outcome for Internal Ratings-Based (“IRB”) ADIs to no less than
72.5% of the RWA outcome under the standardised approach;oImproving the flexibility of the capital framework through the introduction ofa default level of the countercyclical capital buffer (“CCyB”) and increasing
the capital conservation buffer (“CCB”) for IRB ADIs;o

Improving the transparency and comparability of ADIs’ capital ratios,
including by requiring IRB ADIs to also publish their capital ratios under the
standardised approach; andoImplementing a Minimum Leverage Ratio for IRB ADIs at 3.5%.

APRA has indicated that the above changes will likely result in a decrease in RWA, but
this would be offset by the increased capital allocation to regulatory buffers. APRA has
also indicated that, as ADIs are currently meeting the ‘unquestionably strong’benchmarks, it is not APRA’s intention to require ADIs to raise additional capital.
Accordingly, APRA has therefore sought to calibrate the proposed capital requirements
for ADIs, measured in dollar terms, to be consistent at an industry level with theexisting ‘unquestionably strong’ capital benchmarks for ADIs under the current capital
14

framework. The impact of these proposed changes on individual ADIs (including
ANZBGL), however, will vary depending on the final form of requirements
implemented by APRA.
Additionally, APRA is consulting on revisions to a number of prudential standards
relating to market risk, being Interest Rate Risk in the Banking Book (“IRRBB”), Market
Risk and Counterparty Credit Risk. Given the number of items that are yet to be
finalised by APRA, the aggregate final outcome from all changes to APRA's prudential
standards relating to their review of ADIs ‘unquestionably strong’ capital framework
remains uncertain.
•

In June 2022, APRA finalised its macroprudential policy framework. To support theimplementation of the framework, APRA also formalised and embedded credit-based
macroprudential policy measures within its prudential standards, within a new
attachment to Prudential Standard APS 220 Credit Risk Management (“APS 220”).
APRA’s objective is to strengthen the transparency, implementation and enforceabilityof macroprudential policy. The updates to APS 220 include a set of credit-based
macroprudential measures to be used to address systemic risks if needed. The
proposed updates to APS 220 include two main types of credit-based macroprudential
measures: lending limits (the purpose of temporary lending limits would be tomoderate any excessive growth in higher-risk lending during periods of heightenedsystemic risks); and lending standards, whereby APRA may also set minimum
requirements for lending standards, including measures such as the serviceability
buffer for residential mortgages. APRA have also indicated that commercial property
definitions will be more broadly aligned across the prudential framework. The
implementation of such changes could restrict the Group’s flexibility and/or impact the
profitability of one or more business lines. For further information, see risk factor 5“Changes in the real estate markets in Australia, New Zealand or other markets where
the Group does business may adversely affect the Group’s Position”.

•

In August 2022, APRA commenced consultation on a new prudential standard CPS 230
Operational Risk Management (“CPS 230”) which will set out minimum standards for
managing operational risk, including updated requirements for business continuity andservice provider management. The new standard will incorporate updated
requirements for service provider management (currently outsourcing) and business
continuity management that are currently contained in prudential standards CPS 231
Outsourcing and CPS 232 Business Continuity Management. Those standards will be
replaced by the new CPS 230. After reviewing industry feedback in response to theconsultation, APRA expects to release the final CPS 230 in early 2023, before the newstandard comes into force from 1 January 2024. The CPS 230 proposal in its current
form will pose significant regulatory burden and challenges to regulated entities,
including ANZ, including potentially causing disruption to the banking industry. Given
the complexity and size of the implementation process, which will require changes tosystems, operations and contractual arrangements with third parties, it may not be
possible for ANZ to meet the currently proposed implementation timeline.

•

In July 2019, APRA announced its decision on loss-absorbing capacity pursuant towhich it will require Australian D-SIBs, including ANZBGL, to increase their total capital
by 3% of RWA by January 2024. On 2 December 2021, APRA announced that it has
finalised its loss-absorbing capacity requirements and stated that it will require
Australian D-SIBs to increase their total capital by a further 1.5% of RWA by January
2026. Inclusive of the previously announced interim increase of 3%, this will result ina total increase to the minimum total capital requirement of 4.5% of RWA. APRA
expects the requirement to be satisfied predominantly with additional Tier 2 capitalwith an equivalent decrease in other senior funding. The amount of the additional total
capital requirement will be based on ANZ’s actual RWA as at January 2026, including
the final impact of the revisions to APRA’s capital framework announced on 29
November 2021. APRA noted “Given changes to RWA from the ADI capital reforms,
the lower end of the range in dollar terms broadly equates to a requirement of 4.5
percentage points of RWA under the new capital framework, in place from 2023”.

•

The RBNZ has released new capital adequacy requirements for New Zealandbanks, which are set out in the Banking Prudential Requirements (“BPR”)
documents, and are being implemented in stages during a transition period from
October 2021 to July 2028. The net impact on ANZ’s Level 1 CET1 capital isapproximately A$1.0 to A$1.5 billion between 30 September 2022 and the end of
the transition period in 2028 (based on the Group’s 30 September 2022 balance15

sheet). However, the net impact on the overall Group capital position may belower post implementation of the APRA capital reforms from January 2023, given
the expected narrowing of the Level 1 and Level 2 CET1 ratios as a result of thesereforms. The amount could also vary over time subject to changes to the capital
position in ANZ New Zealand (e.g. from RWA growth, management buffer
requirements, potential dividend payments).
•

Additionally, under changes outlined in the BPR documents, from 1 January 2022
there will be an annual 12.5% reduction in the maximum regulatory capital
recognition of ANZ New Zealand’s total Additional Tier 1 capital instruments thatwere outstanding at 30 September 2021.

ASIC’s Regulatory Priorities
In August 2022, the Australian Securities and Investments Commission (“ASIC”)
released its Corporate Plan for 2022 through 2026, which outlines ASIC’s priorities toreduce the risk of harm to consumers caused by poor product design and governance, as
well as enhancing cyber and operational resilience. ASIC will also broaden their focus toother digitally enabled misconduct as emerging technologies and products change thefinancial ecosystem. ASIC’s focus will include scams and crypto-assets. ASIC’s four
external strategic priorities are: (i) Product design and distribution; (ii) Sustainablefinance; (iii) Retirement decision making; and (iv) Technology risks. Supporting thesepriorities are core strategic projects, focused on sustainable finance practices, cryptoassets, scams, cyber and operational resilience, breach reporting, design and distribution
obligations and the Financial Accountability Regime.
A failure by the Group to comply with applicable law may have a negative impact on theGroup’s reputation and financial performance and may give rise to litigation andregulatory enforcement proceedings, which may in turn, have an adverse impact on theGroup’s Position.
Competition Laws, Regulations and Inquiries
There is a strong focus on the regulation of competition in the Australian and New
Zealand financial services sectors. In March 2022, the Australian Competition andConsumer Commission (“ACCC”) announced its compliance and enforcement priorities
for the year. The ACCC announced that it will continue to focus on competition issues in
the financial services sector, particularly with payment services and noted its focus onpromoting healthy competition in the financial services sector and investigating anticompetitive conduct. Increased scrutiny by ACCC may result in an associated increase incosts for the Group in addition to adversely impacting the Group's ability to grow throughthe implementation of potential acquisitions which may in turn, have a negative impact
on the Group's Position
Product Laws, Regulations and Inquiries
There remains a strong focus on the suitability of products offered by financial services
providers, including the Group. Regulatory policy development and monitoring of
responsible consumer lending has increased significantly, and continues to drive thereview of, and changes to, business practices. If any additional changes in law,regulation or policy are implemented, as a result of the development and monitoring of
responsible consumer lending, such changes may impact the manner in which the Group
provides consumer lending services in the future that may in some respects adversely
affect the Group’s operations in this area and consequently, the Group’s Position. ASIC
published updated regulatory guidance on responsible lending laws in December 2019.
Laws for stricter anti-hawking prohibitions in relation to financial products and a deferredsales model for add on insurance have been passed. The design and distribution
obligation legislation, which came into effect in Australia on 5 October 2021, require
product issuers and distributors to, among other things, identify appropriate target
markets for financial and credit products and distribute those products so that they likely
reach the relevant target market. There are significant penalties for non-compliance andsuch legislation could impact the Group’s ability to issue and market financial products inthe future. Increased compliance costs resulting from financial product distribution
requirements may adversely impact the Group’s Position.
16

Increasing Regulatory Powers, Corporate Penalties and Funding for Regulators
There are increased penalties for breaches of laws in Australia, including the Australianconsumer law, as well as increased powers to regulators and funding for regulators to
enforce breaches. Increasing regulatory powers include ASIC’s product intervention
power and proposed expansions of ASIC directions powers. The Treasury Laws
Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019significantly increased the sanctions applicable to the contravention of a range ofcorporate and financial sector obligations. The Australian Government is consulting ondraft legislation relating to increased maximum fines and civil penalties for breaches of
the Competition and Consumer Act (including the Australian consumer law). This
includes increasing the maximum pecuniary penalty for corporations where relevant from
10 per cent of a corporation’s annual turnover to 30 per cent of turnover over the period
the breach occurred. The imposition of such penalties on the Group may adversely affect
the Group’s Position.
Senior Executive Accountability Laws and Regulations
There are increasing penalties and specialised rules applicable to senior executives in thebanking sector. The Banking Executive Accountability Regime (“BEAR”) was introduced in2018 as a new responsibility and accountability framework for the directors and mostsenior executives in ADI groups. The Australian Government announced in January 2020
that BEAR will be replaced by the Financial Accountability Regime (“FAR”), extending theregime to other APRA-regulated entities. It was proposed that the FAR be jointly
administered by APRA and ASIC and could impose larger civil penalties for any breaches.
In October 2021, the Australian Government introduced the Financial Accountability
Regime Bill 2021 (“FAR Bill”). In April 2022, the FAR Bill lapsed following theannouncement of an election. The FAR Bill was re-introduced to Parliament in September
2022 and did not include civil penalties for accountable persons as part of the FAR Bill.
The FAR Bill will come into effect for ADIs six months after its passage into
legislation. Potential risks to the Group from the BEAR legislation and the FAR include therisk of penalties and the risk to the Group’s ability to attract and retain high-quality
directors and senior executives.
Royal Commission’s compensation scheme of last resort
The Royal Commission made various recommendations concerning law reform and selfregulatory standards, a number of which have been addressed. There will be additionalcosts and further exposures associated with the proposed establishment of theGovernment’s Compensation Scheme of Last Resort (“CSLR”) scheme. The purpose of
the CSLR is to support ongoing confidence in the financial system’s dispute resolution
framework by facilitating compensation payments to eligible consumers who havereceived a determination for compensation from the Australian Financial Complaints
Authority (“AFCA”). In September 2022, the Australian Government introduced a bill
implementing the CSLR and is consulting on draft supporting regulations. The newAustralian Government re-introduced a bill implementing the CSLR to Parliament in
September 2022 with a consultation period open until 7 October 2022. The outcomes andtotal costs associated with these possible exposures and the legislative change remain
uncertain and the impact may adversely affect the Group’s Position.
Other government or regulatory interventions in the financial sector
There are various Australian Government, Parliamentary and regulator led inquiries andinterventions into Australia’s financial sector. These inquiries are wide ranging and could
lead to legislative or regulatory changes or measures that may adversely affect theGroup’s Position, including through taxes and levies. Scrutiny of banks continues
following the commencement by the Australian Transaction Reports and Analysis Centre(“AUSTRAC”) (the Australian Government financial intelligence agency set up to monitor
financial transactions to identify money laundering, organised crime, tax evasion, andterrorism financing) of civil penalty proceedings in 2017 and 2019 against two major
Australian banks relating to alleged past and ongoing contraventions of the Anti-Money
Laundering and Counter-Terrorism Financing Act 2006 (Commonwealth). The Australian
Senate Select Committee (“ASSC”) on Australia as a Technology and Financial Centre
has released its final report from an inquiry into a range of issues concerning technology
and Australian financial services, including the ‘debanking’ of fintechs by Australian17

banks. The Australian Government has also released a policy paper concerning‘Transforming Australia’s Payment System’ that responds, in part, to the ASSC’s report(see “Payments Policy” below). The Australian Government has also established aregional banking taskforce to assess the impact of bank branch closures on regional
communities. The impact of these areas of work on ANZBGL, if any, is not yet clear. See
also risk factor 19 “Significant fines and sanctions in the event of breaches of law or
regulation relating to anti-money laundering, counter-terrorism financing and sanctions
may adversely affect the Group’s Position”.
Industry self-regulation
There is continued focus on industry best practice guidance and standards impacting
retail and small business banking. An independent review of the Australian Banking Code(“Code”) concluded in December 2021 with a report that made 116 recommendations,
including for a new enforceable provision requiring banks to have systems andmechanisms to ensure that all provisions in the Code are implemented. The Australian
Banking Association (“ABA”) and member banks have been working on developing
industry positions on the recommendations. Separately, the ABA and members havebeen considering approaches to simplifying the Code. The timeline for the
implementation of recommendations from the 2021 review and/or the simplification of
the Code is not yet clear.
A failure to comply with the Code may have a negative impact on the Group’s reputationand may result in litigation or regulatory enforcement actions, which may in turn,adversely impact the Group’s Position.
Open Banking Laws
Open Banking is part of a new consumer data right (“CDR”) in Australia that came into effectin August 2019. The CDR gives customers access to and control over their data andestablishes and seeks to improve consumers’ ability to compare and switch between
products and services. It is expected to reduce the barriers to new entrants into the banking
industry in Australia.
The CDR regime is still evolving. In December 2020, the Australian Government released
the report of the Inquiry into Future Directions of the Consumer Data Right. The reportcontains 100 recommendations for the expansion of the CDR.
In December 2021, the Australian Government agreed to the vast majority of the report’s
100 recommendations. In September 2022, consultation commenced on draft legislation to
enable third parties to initiate actions, including payments, on behalf of customers. Whilethe implications for the Group of an expansion of CDR are not yet clear and will depend on
the new Australian Government’s policy, Open Banking may lead to increased competition
that may adversely affect the Group’s Position.
Cyber Security and Critical Infrastructure
In December 2021, the Security Legislation Amendment (Critical Infrastructure) Act 2021
came into effect. The Act extends the application of the Security of Critical Infrastructure
Act 2008 to other sectors including the financial services and markets sector. It also
introduces ‘last resort’ powers for the Australian Government to direct an entity to take aparticular action and to authorise the Australian Signals Directorate to intervene against
cyber-attacks and registration and reporting requirements for critical infrastructure
assets and cyber incidents. The Security Legislation Amendment (Critical Infrastructure
Protection) Act 2022 came into effect in April 2022 introducing further reforms including
positive security obligations for critical infrastructure assets to be delivered throughsector-specific requirements, and enhanced cyber security obligations for systems ofnational significance. The Group is considering the impact of the changes as more detailis released. Implementation of the legislation could increase costs, and may give rise toregulatory enforcement proceedings, which may in turn, have an adverse impact on theGroup’s Position.

18

Payments Policy
In December 2021 the Australian Government simultaneously responded to threeinquiries and reviews relating to payments: a review into the Australian payments
system; an inquiry into mobile payments and digital wallets; and an inquiry into
Australia as a technology and financial centre (which addressed de-banking of fintech
and cryptocurrency exchanges). The Australian Government agreed to many of therecommendations and the Australian Treasury is consulting on the implementation of therecommendations in 2022. On de-banking, the Australian Government is considering
advice from the Council of Financial Regulators on the underlying causes and possible
policy responses. The impact of this work on the Group, if any, is not yet clear. Potential
policy responses include new regulatory requirements and broader access to payment
systems which could increase competition, which may adversely impact the Group’s
position.
Privacy Act Review
The Australian Government is consulting on a draft bill to increase penalties andenforcement measures and to introduce a binding online privacy code to enhance privacy
protections. As currently drafted the code would likely apply to online banking platforms.
The Australian Government is also consulting on an expansive set of potential reforms to
the Privacy Act which would have a significant impact on how an entity can use individuals’
information. It is not yet clear how or whether the new Australian Government will
progress the draft bill. However implementing additional regulatory obligations may
adversely affect the Group’s Position.
Quality of Advice Review
In September 2022 the Australian Government’s Quality of Advice Review (led by anindependent reviewer) consulted on a series of proposals to reform the regulatory
framework for the provision of financial advice. These proposals included broadening thescope of ‘personal advice’ and replacing the duty of financial advisers to act in a client’s
best interests with a duty to provide ‘good advice’. It is unclear whether the AustralianGovernment will implement the proposals. If implemented, the new framework could place
additional regulatory obligations on banks and may adversely affect the Group’s position.
Outside of Australia:
New Zealand Developments
The New Zealand Government and regulatory authorities have proposed, or have
implemented, significant legislative and regulatory changes for New Zealand financial
institutions. These changes include, among other things: the RBNZ’s reform of capitalrequirements and revised outsourcing policy (BS11), proposed changes to RBNZ’s
mortgage lending standards, proposed conduct regulations for financial institutions under
the Financial Markets (Conduct of Institutions) Amendment Act 2022, a climate related
financial disclosure regime, the replacement of the Reserve Bank of New Zealand Act
1989 with a deposit takers regime, including a depositor compensation scheme andchanges to the Credit Contracts and Consumer Finance Act 2003. Such changes may
adversely affect the ANZ New Zealand Group, potentially impacting its corporate
structures, businesses, strategies, capital, liquidity, funding and profitability, cost
structures, and the cost and access to credit for its customers and the wider economy.
This in turn may adversely affect the Group's Position.
Other Offshore Developments
Other offshore regulatory developments include the discontinuation of LIBOR, the reformof certain other benchmark rates and the transition to alternative benchmark rates (as towhich see risk factor 9 “The ongoing discontinuation of LIBOR and developments
affecting other benchmark rates could have adverse consequences on the Group’s
securities issuances and its capital markets and investment activities” above).
A failure by the Group to comply with laws, regulations or policies in any of the Relevant
Jurisdictions could result in regulatory investigations, legal or regulatory sanctions,19financial or reputational loss, litigation, fines, penalties, restrictions on the Group’s ability
to do business, revocation, suspension or variation of conditions of relevant regulatory
licences or other enforcement or administrative action or agreements (such as
enforceable undertakings) that may adversely affect the Group’s Position.
The impact of the COVID-19 pandemic on the Group’s operations may result in delays tothe implementation of regulatory changes or steps required to address commitments
made to regulators or publicly. Any delays will be dependent on how regulators choose toadjust the prioritisation, timing and deployment of their supervisory mandate orlegislative change.
Such failures may also result in the Group being exposed to the risk of litigation broughtby third parties (including through class action proceedings). The outcome of any
litigation (including class action proceedings) may result in the payment of compensation
to third parties and/or further remediation activities. For information in relation to theGroup’s litigation and contingent liabilities, see risk factor 18 “Litigation and contingent
liabilities may adversely affect the Group’s Position” and Note 33 of the 2022 Financial
Statements.
18.

Litigation and contingent liabilities may adversely affect the Group’s Position
From time to time, the Group may be subject to material litigation, regulatory actions,
legal or arbitration proceedings and other contingent liabilities that may adversely affect
the Group’s Position.
The Group had contingent liabilities as at 30 September 2022 in respect of the matters
outlined in Note 33 of the 2022 Financial Statements.
Note 33 includes, among other things, descriptions of:•regulatory and customer exposures;•

benchmark/rate actions;•capital raising action;•

consumer credit insurance litigation;•

Esanda dealer car loan litigation;•

OnePath superannuation litigation;•

New Zealand loan information litigation;•

Credit cards litigation;•

Unlicensed third parties action;•

Available Funds action;•

the Royal Commission;•

security recovery actions; and•warranties, indemnities and performance management fees.

The Group regularly engages with its regulators in relation to regulatory investigations,surveillance and reviews, reportable situations, civil enforcement actions (whether bycourt action or otherwise), formal and informal inquiries and regulatory supervisory
activities in Australia and globally. The Group has received various notices and requests
for information from its regulators as part of both industry-wide and Group-specificreviews and has also made disclosures to its regulators at its own instigation. The natureof these interactions can be wide ranging and, for example, include or have included inrecent years a range of matters including responsible lending practices, regulated
lending requirements, product suitability and distribution, interest and fees and theentitlement to charge them, customer remediation, wealth advice, insurance distribution,
pricing, competition, conduct in financial markets and financial transactions, capital
market transactions, anti-money laundering and counter-terrorism financing obligations,privacy obligations and information security, business continuity management, reportingand disclosure obligations and product disclosure documentation. There may be
20

exposures to customers which are additional to any regulatory exposures. These could
include class actions, individual claims or customer remediation or compensation
activities. The outcomes and total costs associated with such reviews and possible
exposures remain uncertain.
There is a risk that contingent liabilities may be larger than anticipated or that additional
litigation, regulatory actions, legal or arbitration proceedings or other contingent
liabilities may arise.
19.

Significant fines and sanctions in the event of breaches of law or regulation
relating to anti-money laundering, counter-terrorism financing and sanctions
may adversely affect the Group’s Position
Anti-money laundering (“AML”), counter-terrorism financing (“CTF”) and sanctions
compliance have been the subject of significant regulatory change and enforcement inrecent years. The increasingly complicated environment in which the Group operates hasheightened these operational and compliance risks. Furthermore, the increasedtransparency of the outcomes of compliance issues at financial institutions both
domestically and globally and the related fines and settlement sums mean that theserisks continue to be an area of focus for the Group.
As a result of the current conflict in Ukraine, there is an unprecedented volume of
sanctions being applied to Russia, and potentially other governments, by regulators
around the globe. Whilst many governments across the United States, Europe andAustralia are largely united as regards to the intended sanctions targets, the nuancesand specific restrictions are not fully aligned. Furthermore, many corporate institutions
around the world are assessing their risk appetite regarding ongoing business activity
with or in Russia or with Russian owned entities. This has heightened the operational andcompliance risks in navigating those transactions and dealings that are consideredlawful, or within other counterparties’ risk appetite. This situation is expected to continue
for the medium term, and to increase as the conflict in the region persists.
In recent years, there has been an increase in action taken by key AML/CTF regulators
against ‘Reporting Entities’ (in Australia, a ‘Reporting Entity’ constitutes a legal entitythat provides at least one ‘designated service’ to a customer, such as opening a bankaccount or providing a loan). AUSTRAC continues to publish material to inform Reporting
Entities of AUSTRAC’s expectations in areas such as investment in systems and controls
required to identify, mitigate and manage their AML/CTF risks, and involvement of senior
management and boards in managing the risks.
In late 2019, AUSTRAC commenced civil penalty proceedings against a major Australianbank relating to alleged past reporting contraventions of the Australian Anti-Money
Laundering and Counter-Terrorism Financing Act 2006. In September 2020, an agreed
statement of facts was filed in Federal Court resulting in a civil penalty of A$1.3 billion
being imposed against the bank. This is the largest financial penalty imposed on afinancial institution in Australia’s history (almost twice the amount of the previous
largest AUSTRAC financial penalty) confirming AUSTRAC’s continued efforts to penalisesignificant non-compliance with the AML/CTF regime.
AUSTRAC has continued to use its regulatory powers toward Reporting Entities across its
regulated populations with further civil action and other orders in place that the Group
closely monitors.
AUSTRAC also announced in May 2022 that it has accepted an Enforceable Undertaking(EU) from another of the major Australian Banks, this being the third public enforcement
outcome AUSTRAC has achieved against a major bank in 5 years. The EU in this caserequires the bank to undertake to implement a comprehensive remedial action plan,
which will see improvements to its systems, controls and record-keeping. Similarly, the
RBNZ has stated that its appetite for taking formal enforcement action for breaches of
the New Zealand Anti-Money Laundering and Countering Financing of Terrorism Act 2009
has increased, and the propensity for other regulators (including in Asia and the Pacific)
to take action for non-compliance with their local AML/CTF laws has increased.
In 2021, ANZ New Zealand self-identified and notified three prescribed transaction
reporting ("PTR") matters to the RBNZ, where transaction reports had not been filed
21

within the prescribed timeframe. The RBNZ informed ANZ New Zealand that it considers
one of these matters (related to 6,409 transaction reports of a certain SWIFT messagetype) to be a material breach, and the other two to be minor breaches, of New Zealand’s
Anti-Money Laundering and Countering Financing of Terrorism Act 2009 relating to PTR.
ANZ New Zealand is expecting requests for further information from RBNZ on this during
the second half of 2022. These matters have been referred to the RBNZ's enforcement
team for review. The potential outcome of these matters remains uncertain at this time.
While the COVID-19 pandemic continues to evolve at different paces in many of thejurisdictions in which the Group operates, close monitoring of the levels and types offinancial crimes continues across the Group. To date, the most notable impact has been
the changing types of scams with criminals targeting vulnerable customers using the
COVID-19 pandemic as a cover, identity theft and false applications for Government
support and a significant increase in scams occurring concurrently with the RussiaUkraine crisis. There is a continuing risk that the management of alerts for potential
money laundering or terrorism financing activities may be slowed due to both resource
availability and/or changed working arrangements.
The risk of non-compliance with AML/CTF and sanction laws remains high given the scaleand complexity of the Group and the lack of clarity around some mandatory reporting
requirements. Emerging technologies, such as those provided by virtual asset service
providers (e.g. digital currency exchanges and wallet providers) as well as increasingly
complex remittance arrangements via fintechs and other disruptors, may limit theGroup’s ability to track the movement of funds, develop relevant transaction monitoring,and meet reporting obligations. Additionally, the complexity of the Group’s technology,
and the increasing frequency of changes to systems that play a role in AML/CTF andsanctions compliance puts the Group at risk of inadvertently failing to identify an impact
on the systems and controls in place. A failure to operate a robust program to report the
movement of funds, combat money laundering, terrorism financing, and other serious
crimes may have serious financial, legal and reputational consequences for the Groupand its employees.
Consequences can include fines, criminal and civil penalties, civil claims, reputationalharm and limitations on doing business in certain jurisdictions. These consequencesindividually or collectively may adversely affect the Group’s Position. The Group’s foreign
operations may place the Group under increased scrutiny by regulatory authorities, andsubject the Group to increased compliance costs.
20.

Changes in monetary policies may adversely affect the Group’s Position
Central monetary authorities (including the RBA, the RBNZ, the United States Federal
Reserve, the Bank of England and the monetary authorities in the Asian jurisdictions inwhich the Group operates) set official interest rates or take other measures to affect thedemand for money and credit in their relevant jurisdictions. In addition, in somejurisdictions, currency policy is used to influence general business conditions and thedemand for money and credit. These measures and policies can significantly affect theGroup’s cost of funds for lending and investing and the return that the Group will earn on
those loans and investments. These factors impact the Group’s net interest margin andcan affect the value of financial instruments it holds, such as debt securities and hedging
instruments. The measures and policies of the central monetary authorities can also
affect the Group’s borrowers, potentially increasing the risk that they may fail to repay
loans.
Changes in interest rates and monetary policy are difficult to predict and may adversely
affect the Group’s Position.

21.

Ongoing significant compliance costs with respect to the evolving and extensive
Automatic Exchange of Information (“AEoI”) obligations imposed by global
customer tax transparency regimes may adversely affect the Group’s Position
There continues to be mandatory and substantial changes to, and increasing regulatory
focus on, compliance by all global Financial Institutions (“FIs”), including the Group, with
global customer tax transparency regimes, under the Foreign Account Tax Compliance22

Act (“FATCA”), the Organisation for Economic Co-operation and Development’s(“OECD’s”) Common Reporting Standard (“CRS”) and similar anti-tax avoidance regimes.
This includes global regulatory movement to enforcement and penalty activities andincreasing regulatory implementation of additional compliance framework requirements,
compliance assessment requirements/questionnaires, onsite financial institution
audits/evidentiary requirements and detailed rules and frameworks to close down
circumventions and deter, detect and penalise non-compliance. The ongoing OECDgovernment level peer reviews and IRS/regulatory FI compliance review/audit
requirements increase scrutiny and therefore unplanned workload of FIs globally. Eachcountry of CRS adoption is being pushed by the OECD to ensure its penalty regime issufficient to deter and penalise non-compliance.
Consequently, as an in scope FI, operating in a globally interlinked operating
environment, the highly complex and rigid nature of the obligations under each countries
varied implementation of these regimes present heightened operational and compliancerisks for the Group. As regulators around the world continue to mature their complianceframework requirements and shift focus to enforcement, including financial penalties andother more general tax risk framework implications, this may result in significant penalty
provision requirements and reputational damage in the event of failures. Accordingly,
compliance with global customer tax transparency regimes continues to be a key area of
focus and major cost for the Group.
In addition, under FATCA and other relevant U.S. Treasury Regulations, the Group could
be subject to:•a 30% withholding tax on certain amounts (including amounts payable tocustomers), and be required to provide certain information to upstream payers, aswell as other adverse consequences, if the ongoing detailed obligations are notadequately met; and•broader compliance issues, significant withholding exposure, competitive
disadvantage and other operational impacts if the FATCA Intergovernmental
Agreements between the United States and the applicable jurisdictions in which
the Group operates cease to be in effect.

Under the CRS, the Group:•

faces challenges in developing countries where the Group has operations, such as
the Pacific region. The local regulators in these countries are generally assisted bya ‘partner’ country; this is leading to the introduction of standards and evidentiary
requirements that continue to be challenging to implement and adhere to;•must deal with substantial ongoing country specific variations in local law andregulatory implementation, with significant broader ‘justified trust’ ramifications
and penalties for non-collection or failed reporting in respect of prescribedcustomer information;•

along with other FIs, is under increasingly stringent regulatory scrutiny andmeasures as regulators have turned their focus from the initial establishment of
the CRS to the effectiveness of FI implementation. This tightening of the regulatory
focus (along with the potential FI ramifications outlined above) can lead tosignificant negative experience for affected customers (including unilateral accountblocking and closure, underlying client issues resulting from same and potential
direct customer penalties), which may adversely affect the Group’s Position and if
not similarly implemented by other FIs, may present a significant competitive
disadvantage and loss of business;•

faces poor customer outcomes with customers who may feel aggrieved as a resultof blocking and closure impacts including increased potential exposure tolegal/third party liability, particularly where ANZ has not communicated theregulatory issue clearly to a customer or has blocked or closed the accountincorrectly (for example, due to a data or process error); and•continues to deal with the substantive implementation challenges associated withthe complex requirements across the intermediary space, which may also increase
the risk of regulatory ramifications.
23

The scale and complexity of the Group, like other FIs, means that the risk of inadvertent
non-compliance with the FATCA, CRS and other tax reporting regimes is high. In
addition, the ongoing loss of key resources and critical subject matter expertise,combined with the ongoing subsequent challenges of finding sufficiently qualified
replacements increases the risk of inadvertent non-compliance with the breadth anddetail of the obligations. A failure to successfully operate the implemented processes or
to identify and implement all obligations could lead to legal, financial and reputational
consequences for the Group and its employees. Consequences include fines, criminal andcivil penalties, civil claims, reputational harm, competitive disadvantage, loss of businessand constraints on doing business.
On a global scale, natural disasters and the COVID-19 pandemic have resulted inchallenges for staff including unplanned staff absences, access to systems, tools andinformation, and have impacted the delivery of the Group’s regulatory obligations onrequisite timeframes, including mandatory FATCA and CRS regulatory reporting,customer follow-up strategies, resolution and action of regulatory recommendations, aswell as continuous improvement activities required to achieve the zero rate of error
expected by regulators. The Group’s global taxation obligations in relation to theenterprise’s own tax lodgements and payments may similarly be impacted. Initialleniency from global regulators continue to be tightened or withdrawn due to the
expectation for FIs to adapt to the ongoing challenges presented by external factors suchas the COVID-19 pandemic, further heightening the risk of additional regulatory scrutiny,
associated penalties and reputational ramifications resulting from any deficiencies ordelays in meeting regulatory obligations to the level of quality and within the timeframes
required.
These consequences, individually or collectively, may adversely affect the Group’s
Position.
22.

Unexpected changes to the Group’s licence to operate in any jurisdiction may
adversely affect the Group’s Position
The Group is licensed to operate in various countries, states and territories. Unexpectedchanges in the conditions of the licenses to operate by governments, administrations or
regulatory agencies that prohibit or restrict the Group from trading in a manner that waspreviously permitted may adversely impact the Group’s Position.
Internal control, operations and reputational risk

23.

Operational risk events may adversely affect the Group’s Position
Operational risk is the risk of loss and/or non-compliance with laws resulting frominadequate or failed internal processes, people and systems or from external events.
This definition includes legal risk, and the risk of reputational loss or damage arisingfrom inadequate or failed internal processes, people, and/or systems, but excludes
strategic risk.
Operational risk categories under ANZ’s risk taxonomy include:•

Financial Crime (the risk of money laundering, sanctions violations, bribery andcorruption, and “Know-Your-Customer” failure). See risk factor 19 “Significant fines
and sanctions in the event of breaches of law or regulation relating to anti-money
laundering, counter-terrorism financing and sanctions may adversely affect theGroup’s Position”;•

Internal fraud (fraud attempted of perpetrated by an internal party (or parties)
against the organisation);•

External fraud (fraud attempted or perpetrated against the organisation by an
external party (i.e. a party without a direct relationship to ANZ (excluding
customers)) without involvement of an employee);•

Physical Security & Safety (the risk of damage to ANZ’s physical assets, client
assets, or public assets for which ANZ is liable, and (criminal) injury to ANZ’s

24employees or affiliates);•

People (the risk of breaching employment legislation, mismanaging employee
relations and failing to ensure a safe working environment);•

Transaction Processing & Execution (failure to process, manage and executetransactions and/or other processes correctly and/ or appropriately);•

Technology (the risk associated with the failure or outage of systems, including
hardware, software and networks). See risk factor 27 “Disruption of information
technology systems or failure to successfully implement new technology systems
could significantly interrupt the Group’s business, which may adversely affect theGroup’s Position”;•

Conduct (the risk of loss or damage arising from the failure of ANZ, its employees
or agents to appropriately consider the interests of consumers, the integrity of thefinancial markets and the expectations of the community, in conducting ANZ
business activities). See risk factor 26 “Conduct risk events may adversely affect
the Group’s Position”;•

Legal (the risk of execution errors in legal procedures and processes);•Regulatory Compliance (failure to comply with any legal or regulatory obligations
that are not captured through other mentioned risks). See risk factor 17 “Regulatorychanges or a failure to comply with laws, regulations or policies may adversely affect
the Group’s Position”;•

Third Party (the risk of failing to manage third party relationship and risks
appropriately, for example, not taking reasonable steps to identify and mitigate
additional operational risks resulting from the outsourcing of services orfunctions);•

Information Security including Cyber and Privacy (the risk of information security
incidents, including the loss, theft or misuse of data/information — this covers all
types of data, and can include the failure to comply with rules concerning
information security). See risk factor 28 “Risks associated with information security
including cyber-attacks, may adversely affect the Group’s Position”;•

Data Management (the risk of failing to appropriately manage and maintain data,
including all types of data, for example, client data, employee data and ANZ’s
proprietary data). See risk factor 29 “Data management risks may adversely affect
the Group’s Position”;•

Model (the risk of incorrect model design, improper implementation of a correctmodel, or inappropriate application of a correct model). See risk factor 30 “Modellingrisks may adversely affect the Group’s Position”; and•Statutory Reporting and Tax (the risk of failing to meet statutory reporting and tax
payments/filing requirements). Statutory reporting includes all external reportingthat ANZ is obliged to perform (e.g. regulatory reporting, financial reporting).

Loss from operational risk events may adversely affect the Group’s Position. Such losses
can include fines, penalties, imposts (including capital imposts), loss or theft of funds or
assets, legal costs, customer compensation, loss of shareholder value, reputation loss,
loss of life or injury to people, and loss of property and/or information.
Operational Risk can arise from a number of causes, such as change risk events (forexample, a failure to deliver a change or risks resulting from change initiatives), andhave a number of different impacts, including reputational impacts (see risk factor 25“Reputational risk events as well as operational failures and regulatory compliance
failures may give rise to reputational risk, which may undermine the trust of
stakeholders, erode the Group’s brand and adversely affect the Group’s Position”).
Pursuant to APRA and RBNZ requirements, the Group and ANZ New Zealand Group mustalso maintain “operational risk capital” reserves in the event future operational eventsoccur.
COVID-19 related challenges have resulted in a number of changes to how the Group25

undertakes its operations including adapting to remote working arrangements. Whilst
most major offices have returned to a blended/hybrid working environment, the Groupendeavours to follow the relevant government directions in terms of place of work, andany occupancy restrictions. Reliance on digital channels continues to remain high, which
in turn heightens the risks associated with cyber-attacks and any disruption tosystem/service availability.
Whilst business continuity plans have been well tested and refined during the pandemic,
impact to system/service availability still has the ability to impact the Group’s position
from a reputational, financial and compliance perspective.
24.

Human Capital Risk, which relates to the inability to attract, develop, motivate
and retain the Group’s people to meet current and future business needs, could
result in poor financial and customer outcomes and reduce the ability of theGroup to deliver against customer and other stakeholders’ expectations
Key executives, employees and directors play an integral role in the operation of theGroup's business and its pursuit of its strategic objectives. The unexpected departure of
an individual in a key role, or the Group's failure given the challenges in the current
environment to recruit, develop and retain an appropriately skilled and qualified person
into these roles particularly in areas such as digital, technology, risk or compliance, could
have an adverse effect on the Group’s Position. These risks may be further exacerbatedby the ongoing impacts of the COVID-19 pandemic, including on employee well-being,social and employment choices.

25.

Reputational risk events as well as operational failures and regulatorycompliance failures may give rise to reputational risk, which may undermine
the trust of stakeholders, erode the Group’s brand and adversely affect theGroup’s Position
The Group’s reputation is a valuable asset and a key contributor to the support that it
receives from the community in respect of its business initiatives and its ability to raisefunding or capital.
Reputational risk may arise as a result of an external event or the Group’s actual or
perceived actions and practices, which include operational and regulatory compliance
failures. The occurrence of such events may adversely affect perceptions about theGroup held by the public (including the Group’s customers), shareholders, investors,
regulators or rating agencies. The impact of a risk event on the Group’s reputation may
exceed any direct cost of the risk event itself and may adversely impact the Group’s
Position.
The Group may incur reputational damage where one of its practices fails to meet
community expectations which are continually changing and evolving. As these
expectations may exceed the standard required in order to comply with applicable law,
the Group may incur reputational damage even where it has met its legal obligations. A
divergence between community expectations and the Group’s practices could arise in a
number of ways, including in relation to its product and services disclosure practices,pricing policies and use of data. Further, the Group’s reputation may also be adversely
affected by community perception of the broader financial services industry, particularly
in an environment of rising interest rates. Additionally, reputational damage may also
arise from the Group’s failure to effectively manage risks, enforcement or supervisory
action by regulators, adverse findings from regulatory reviews and failure or perceived
failure to adequately respond to community, environmental and ethical issues.
While impacts of the COVID-19 pandemic are ongoing, and the longer-term financial andnon-financial effects are yet to be fully realised, it is possible there may be unintended
consequences from the Group’s actions which may give rise to negative perceptions
about the Group.
Additionally, certain operational and regulatory compliance failures or perceived failures,may give rise to reputational risk. Such operational and regulatory compliance failures
include, but are not limited to:26

•failures related to fulfilment of identification obligations;•failures related to new product development;•

failures related to ongoing product monitoring activities;•

failures related to suitability requirements when products are sold outside of thetarget market;•

failure to comply with disclosure obligations;•market manipulation or anti-competitive behaviour;•

inappropriate crisis management/response to a crisis event;•

inappropriate handling of customer complaints;•

inappropriate third party arrangements;•

privacy breaches; and•unexpected risks (e.g. credit, market, operational or compliance).

Damage to the Group’s reputation may have wide-ranging impacts, including adverse
effects on the Group’s profitability, capacity and cost of funding, increased regulatory
scrutiny, regulatory enforcement actions, additional legal risks and availability of new
business opportunities. The Group’s ability to attract and retain customers could also be
adversely affected if the Group’s reputation is damaged, which may adversely affect theGroup’s Position.
26.

Conduct risk events may adversely affect the Group’s Position
The Group defines conduct risk as the risk of loss or damage arising from the failure of
the Group, its employees or agents to appropriately consider the interests of consumers,
the integrity of the financial markets, and the expectations of the community inconducting the Group’s business activities.
Conduct risks include:•

the provision of unsuitable or inappropriate advice to customers;•

the representation of, or disclosure about, a product or service which is inaccurate,or does not provide adequate information about risks and benefits to customers;•a failure to deliver product features and benefits in accordance with terms,
disclosures, recommendations and/or advice;•a failure to appropriately avoid or manage conflicts of interest;•

inadequate management of complaints or remediation processes;•a failure to respect and comply with duties to customers in financial hardship; and•unauthorised trading activities in financial markets, in breach of the Group’s
policies and standards.

There has been an increasing regulatory and community focus on conduct risk, includingin Australia and New Zealand. Continued cost of living increases are creating pressure on
affordability which may impact both the ability to lend to customers, and also the extent
to which forbearance may need to be offered to those already struggling. Furthermore, it
is expected to increase the number of customers that may fall into financial difficulty.
This is an evolving and fluid situation, and the Group will need to continue to adapt andrespond to mitigate the risk of customer harm because of this ongoing pressure on
affordability.
The Group has a centralised and dedicated team tasked with undertaking a variety ofcustomer remediation programs, including to address specific conduct issues identified inGroup reviews. Conduct risk events may expose the Group to regulatory actions,
restrictions or conditions on banking licenses and/or reputational consequences that may
adversely affect the Group's Position. It is possible that remediation programs may not
be implemented appropriately or may lead to further remediation work being required,resulting in litigation, regulatory action and/or increasing cost to the Group, all of which
may adversely affect the Group’s Position.
27

For further discussion of the increasing regulatory focus on conduct risk, see risk factor
17 “Regulatory changes or a failure to comply with laws, regulations or policies may
adversely affect the Group’s Position” and risk factor 18 “Litigation and contingent
liabilities may adversely affect the Group’s Position”.
27.

Disruption of information technology systems or failure to successfully
implement new technology systems could significantly interrupt the Group’sbusiness, which may adversely affect the Group’s Position
The Group’s day-to-day activities and its service offerings (including digital banking) arehighly dependent on information technology (“IT”) systems. Disruption of IT systems, orthe services the Group uses or is dependent upon, may result in the Group failing tomeet its compliance obligations and/or customers’ banking needs. In a digital world,
customer’s expectations of always on (24/7) banking services necessitates highly
available and resilient IT systems.
The Group has an ongoing obligation to maintain its IT systems and to identify, assess
and respond to risk exposures associated with these systems, including IT asset
lifecycle, IT asset project delivery, technology resilience, technology security, use ofthird parties, data retention/restoration and business rules and automation. Inadequate
responses to these risk exposures could lead to unstable or insecure systems adversely
impacting customers, increased costs, and non-compliance with regulatory
requirements, which may adversely affect the Group’s Position.
The Group has incident response, disaster recovery and business continuity measures inplace designed to ensure that critical IT systems will continue to operate during both
short-term and prolonged disruption events for all businesses across the Group’s
network, including ANZ New Zealand and international branches, which rely on the Groupto provide a number of IT systems. A failure of the Group’s systems may affect theGroup’s network, which may in turn, adversely affect the Group’s Position. The COVID-19
pandemic has highlighted that these arrangements must cater for vast and improbable
events, and ensure critical IT systems can be supported and accessed remotely by alarge number of technologists and business users for extended periods. If such measures
cannot be effectively implemented, this may adversely affect the Group’s Position.
In addition, the Group must implement and integrate new IT systems, most notably
Cloud, Data and Automation technologies, into the existing technology landscape toensure that the Group’s technology environment is cost-effective and can support
evolving customer requirements. Inadequate implementation and integration of thesesystems, or improper operation and management, including of their vendors and the
supply chain, may adversely affect the Group’s Position.
This risk factor should be read in conjunction with risk factor 28 “Risks associated withinformation security including cyber-attacks, may adversely affect the Group’s Position”
as information security breaches and cyber-attacks have the potential to result in the
disruption of IT systems.

28.

Risks associated with information security including cyber-attacks, may
adversely affect the Group’s Position
The primary focus of information security is to protect information and technology
systems from disruptions to confidentiality, integrity or availability. As a bank, the Grouphandles a considerable amount of personal and confidential information about its
customers and its own internal operations, from the multiple geographies in which theGroup operates. This information is processed and stored on both internal and third
party hosted environments. Any failure of security controls operated by the Group or its
third parties could adversely affect the Group’s business.
The risks to systems and information are inherently higher in certain countries where, forexample, political threats or targeted cyber-attacks by terrorist or criminal organisations
are greater.

28

The Group is conscious that cyber threats, such as advanced persistent threats,
distributed denial of service, malware and ransomware, are continuously evolving,
becoming more sophisticated and increasing in volume. The COVID-19 pandemic has
increased the number of staff working offsite for an extended period, which may increase
information security risks to the Group. Cyber criminals may attempt to take advantage
through pursuing exploits in end point security, spreading malware, and increasingphishing attempts. Furthermore, these risks may be further exacerbated by geopoliticalrisks.
Additionally, failures in the Group’s cybersecurity policies, procedures or controls, could
result in loss of data or other sensitive information (including as a result of an outage)
and may cause associated reputational damage. Any of these events could result insignificant financial losses (including costs relating to notification of, or compensation forcustomers), regulatory investigations or sanctions or may affect the Group’s ability toretain and attract customers, and thus may adversely affect the Group’s Position.
29.

Data management risks may adversely affect the Group’s Position
Data management processes include capturing, processing, distributing, accessing,retaining and disposing of large quantities of data, including sensitive data. Data
management is reliant on the Group’s systems and technology. Data quality
management is a key area of focus, as data is relied on to assess various issues and risk
exposures. Any deficiencies in data quality, or the effectiveness of data gathering,
analysis and validation processes, or failure to appropriately manage and maintain theGroup’s data, systems and technology, could result in ineffective risk management
practices and, inaccurate risk reporting which may adversely impact the Group’s
Position. Furthermore, failure to comply with data management obligations, including
regulatory obligations may cause the Group to incur losses, or result in regulatory
action.

30.

Modelling risks may adversely affect the Group’s Position
As a large financial institution, the Group relies on a number of models for material
business decision making including but not limited to lending decisions, calculating
capital requirements, provision levels, customer compensation payments and stressing
exposures. If the models used prove to be inadequately designed, implemented or
maintained or based on incorrect assumptions or inputs this may adversely impact theGroup’s Position.
Environmental, social and governance risks

31.

Impact of future climate events, biodiversity loss, human rights, geologicalevents, plant, animal and human diseases, and other extrinsic events may
adversely affect the Group’s Position
The Group and its customers are exposed to environmental, social and governance risks,
including climate-related events, geological events (including volcanic seismic activity or
tsunamis), biodiversity loss, plant, animal and human diseases or a pandemic such as
COVID-19 and human rights risks. Each of these can cause significant impacts on theGroup’s operations and its customers.
Climate-related events can include severe storms, drought, fires, cyclones, hurricanes,
floods and rising sea levels. The impact of these events can be widespread, extending
beyond primary producers to customers of the Group who are suppliers to theagricultural sector, and to those who reside in, and operate businesses within, impacted
communities. The impact of these losses on the Group may be exacerbated by a decline
in the value and liquidity of assets held as collateral, which may impact the Group’s
ability to recover its funds when loans default.
Recent examples in Australia include severe drought conditions, bushfires in 2019/2020,and severe flooding in 2021 and 2022. In addition, geological event impacts haveoccurred in New Zealand in recent years and the COVID-19 pandemic continues to
impact the Group’s operations and customers.
29

The risk of biodiversity loss, as a result of species extinction or decline, ecosystemdegradation and nature loss, is an emerging risk that we are seeking to understandfurther. In relation to biodiversity, risks can arise from lending to customers that are
significantly dependent on biodiversity and ecosystem services, or who may havenegative impacts on biodiversity. We acknowledge the need to protect and restore
ecosystems and mitigate biodiversity loss, including working to halt and reverse forest
loss and land degradation. We understand that failure to manage these risks may lead tofinancial and non-financial risks and adverse impacts to the Group’s Position.
Human rights risks can relate to the safety and security of our people, labour rights,
modern slavery, privacy and consumer protection, corruption and bribery and land
rights. The Group uses risk-based due diligence to identify human rights risks andimpacts associated with our business relationships. Failure to manage these risks may
result in adverse impacts to the Group’s Position.
New regulations or guidance relating to climate change, biodiversity, human rights, orother environmental, social or governance risks, as well as the perspectives ofshareholders, employees and other stakeholders, may affect whether and on what terms
and conditions the Group engages in certain activities or offer certain products.
Depending on their frequency and severity, these extrinsic events may continue tointerrupt or restrict the provision of some local services such as the Group branch or
business centres or Group services, and may also adversely affect the Group’s financial
condition or collateral position in relation to credit facilities extended to customers, which
in turn may adversely affect the Group’s Position.
32.

The Group’s risk management framework may fail to manage all existing risks
appropriately or detect new and emerging risks fast enough, which could
adversely affect the Group’s Position
Risk management is an integral part of the Group’s activities and includes theidentification, measurement, reporting, monitoring and mitigation of the Group’s risk
appetite and reporting on the Group’s risk profile and effectiveness of identified controls.
However, there can be no assurance that the Group’s risk management framework will
be effective in all instances including in respect of existing risks, or new and emerging
risks that the Group may not anticipate or identify in a timely manner and/or for which
its controls may not be effective. Failure to manage risks effectively could adversely
impact the Group’s reputation or compliance with regulatory obligations.
The effectiveness of the Group’s risk management framework is also connected to theestablishment and maintenance of a sound risk management culture, which is supported
by appropriate remuneration structures. A failure in designing or effectively
implementing appropriate remuneration structures, could have an adverse impact on theGroup’s risk culture and effectiveness of the Group’s risk management frameworks.
The Group seeks to continuously improve its risk management frameworks. It has
implemented, and regularly reviews, its risk management policies and allocates
additional resources across the Group to manage and mitigate risks. However, such
efforts may not insulate the Group from future instances of misconduct and no assurance
can be given that the Group’s risk management framework will be effective. A failure in
the Group’s risk management processes or governance could result in the Groupsuffering unexpected losses and reputational damage, and failing to comply withregulatory obligations, which could adversely affect the Group’s Position.
While these principles continue to underpin the Group’s risk management framework,
the ongoing COVID-19 pandemic requires the Group to continue to maintain goodpractices and a robust risk management framework as its operational activities continue
to evolve, so as to manage the impacts of the pandemic both to its workforce andcustomers. In these circumstances, a failure in the Group’s risk management framework,
processes or governance could adversely affect the Group’s Position.

33.

Risks associated with lending to customers that could be directly or indirectly30impacted by climate risk may adversely affect the Group’s Position
The risks associated with climate change are subject to increasing regulatory, politicaland societal focus, including in Australia and New Zealand. APRA has released a
prudential practice guide CPG 229 that is designed to assist regulated entities (including
the Group) in managing climate-related risks and opportunities as part of their existingrisk management and governance frameworks. APRA is also conducting its first climate
vulnerability assessment in calendar year 2021 and 2022 to (i) assess banks’ potential
financial exposure to climate risk; (ii) understand how banks may adjust businessmodels and implement management actions in response to different scenarios; and (iii)
foster improvement in climate risk management capabilities. Similarly, the RBNZ is
increasing its focus on climate change and in October 2021 released its Climate Change
Report 2021. The Climate Change Report 2021 outlines the RBNZ’s approach to climatechange, including future actions to further incorporate climate change into stress testingand embed climate change into supervisory frameworks, data collection and internal
planning. The Financial Sector (Climate-related Disclosures and Other Matters)
Amendment Act 2021 will require ANZBGL and ANZ New Zealand, as ‘climate reporting
entities’, to annually prepare, seek independent assurance for and make public
disclosures on the management of, and effects of climate change to their business, inaccordance with climate-related disclosure standards, to be issued by the New ZealandExternal Reporting Board. The first disclosures will be due for the financial year ending
30 September 2024. Embedding climate change risk into the Group’s risk management
framework in line with APRA’s and other stakeholders’ expectations, and adapting theGroup’s operation and business strategy to address both the risks and opportunities
posed by climate change and the transition to a low carbon economy, could have asignificant impact on the Group.
The Group’s most material climate-related risks result from its lending to business andretail customers, including credit-related losses incurred as a result of a customer being
unable or unwilling to repay debt, or events impacting the value and liquidity ofcollateral, which may adversely affect the Group’s Position. The risk to the Group fromcredit-related issues with the Group’s customers could result directly from climate-related
events, and indirectly from changes to laws, regulations, or other policies such as carbon
pricing and climate risk adaptation or mitigation policies, which may impact thecustomer’s supply chain.

31

Responsibility statement of the Directors of ANZBGL in accordance with Rule4.1.12 (3)(b) of the Disclosure and Transparency Rules of the United Kingdom
Financial Conduct Authority
The Directors of Australia and New Zealand Banking Group Limited confirm to the best of
their knowledge that:
ANZ’s 2022 Annual Financial Report (as defined in this DTR Annual Financial Report)
includes:(i)a fair review of the development and performance of the business and the positionof the Group and the undertakings included in the consolidation taken as a whole;
together with(ii)

a description of the principal risks and uncertainties faced by the Group.

Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
Chairman26 October 2022

Shayne C ElliottManaging Director