Australia and New Zealand Banking Group Limited
ABN 11 005 357 522

Half Year
31 March 2021

Consolidated Financial Report
Dividend Announcement
and Appendix 4D

The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4D of the Australian Securities
Exchange (ASX) Listing Rules. It should be read in conjunction with ANZ’s 2020 Annual Report, and is lodged with the ASX under listing rule
4.2A.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Name of Company:

APPENDIX 4D

Australia and New Zealand Banking Group Limited
ABN 11 005 357 522

Report for the half year ended 31 March 2021

Operating Results1

Statutory operating income from continuing operations



-6%

to

8,367

Statutory profit attributable to shareholders



90%

to

2,943

Cash profit2



large

to

2,982

Cash profit from continuing operations2



large

to

2,990

AUD million



Dividends3

Cents

Proposed interim dividend4Frankedperamountshare

per share

70

100%

Record date for determining entitlements to the proposed 2021 interim dividend

11 May 2021

Payment date for the proposed 2021 interim dividend

1 July 2021

Dividend Reinvestment Plan and Bonus Option Plan
Australia and New Zealand Banking Group Limited (ANZ) has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate inrespect of the proposed 2021 interim dividend. For the 2021 interim dividend, ANZ intends to provide shares under the DRP through an on-market
purchase and BOP through the issue of new shares. The 'Acquisition Price' to be used in determining the number of shares to be provided under the
DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary
shares sold in the ordinary course of trading on the ASX and Chi-X during the ten trading days commencing on 14 May 2021, and then rounded to thenearest whole cent. Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election
notices from shareholders wanting to commence, cease or vary their participation in the DRP or BOP for the 2021 interim dividend must be received by
ANZ's Share Registrar by 5.00pm (Australian Eastern Standard Time) on 12 May 2021. Subject to receiving effective contrary instructions from theshareholder, dividends payable to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or
New Zealand will be converted to Pounds Sterling or New Zealand Dollars respectively at an exchange rate calculated on 14 May 2021.

1
2

3
4

Unless otherwise noted, all comparisons are to the half year ended 31 March 2020.
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the core business activities of the Group. The non-core
items are calculated consistently period on period so as not to discriminate between positive and negative adjustments, and comprise economic hedging and similar accounting items that
represent timing differences that will reverse through earnings in the future. The net after tax adjustment was an increase to statutory profit of $39 million (all attributable to continuing
operations) made up of several items. Refer pages 71 to 73 for further details.
There is no conduit foreign income attributed to the dividends.
It is proposed that the interim dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents per ordinary share.

2

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDABN 11 005 357 522

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4D
Half year ended 31 March 2021

CONTENTS

PAGE

Disclosure Summary5

Summary

7

Group Results

19

Divisional Results

47

Profit Reconciliation

71

Condensed Consolidated Financial Statements

75

Supplementary Information

121

Definitions

131

ASX Appendix 4D Cross Reference Index

134

Alphabetical Index

135

This Consolidated Financial Report, Dividend Announcement and Appendix 4D has been prepared for Australia and New Zealand Banking Group Limited(“ANZBGL”, “Company”, or “Parent Entity”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “theconsolidated entity”, “the Bank”, “us”, “we” or “our”.
All amounts are in Australian dollars unless otherwise stated. The Company has a formally constituted Audit Committee of the Board of Directors. The
Condensed Consolidated Financial Statements were approved by resolution of a Committee of the Board of Directors on 4 May 2021.
When used in this Results Announcement the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as
they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date hereof. 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 or to reflect the occurrence of unanticipated events.

3

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDABN 11 005 357 522

This page has been left blank intentionally

4

DISCLOSURE SUMMARY
SUMMARY OF 2021 HALF YEAR RESULTS AND ASSOCIATED DISCLOSURE MATERIALSThe following disclosure items were lodged separately with the ASX and NZX and can be accessed via the ANZ Shareholder Centre on the Groupwebsite https://www.anz.com/shareholder/centre/ within the disclosures for 2021 Half Year Results.

Consolidated Financial Report, Dividend Announcement and Appendix 4D

Half Year Results Investor Discussion PackNews Release

APS 330 Pillar III Disclosure as at 31 March 2021

Key Financial Data Summary

United Kingdom Disclosure and Transparency Rules Submission

5

DISCLOSURE SUMMARY
This page has been left blank intentionally

6

SUMMARYCONTENTS

Page

Guide to Half Year Results

8

Statutory Profit Results

9Cash Profit Results

10

Key Balance Sheet Metrics

12

Large/Notable Items - continuing operations

13

Full Time Equivalent Staff

18

Other Non-Financial Information

18

7

SUMMARY
Guide to Half Year Results
CORONAVIRUS (COVID-19)
The COVID-19 pandemic has caused major disruptions to community health and economic activities with wide-ranging impacts across many businesssectors in Australia, New Zealand and globally over the past 12 months. From March 2020, the Group offered various forms of assistance to customers tocounteract the impact of COVID-19. These support packages were phased out during the March 2021 half. In respect of the support packages offered,
94% of home loan support packages in Australia and New Zealand and 90% of business support packages in Australia have reverted back to loan
repayments, with the remaining having been either restructured or transferred to hardship. Refer to Note 10 of the Condensed Consolidated Financial
Statements for further details on loan support packages offered to customers.
Financial Statements Impacts
The ramifications of COVID-19 continue to be uncertain and it remains difficult to predict the impact or duration of the pandemic. In preparing theCondensed Consolidated Financial Statements, the Group has made various accounting estimates for future events based on forecasts of economic
conditions which reflect expectations and assumptions as at 31 March 2021 that the Group believes are reasonable under the circumstances.
While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses (ECL) where the Group
recognised a credit impairment release of $491 million pre-tax in the March 2021 half (Sep 20 half: $1,064 million charge; Mar 20 half: $1,674 million
charge). The credit impairment release in the current period was primarily driven by the release of allowance for collectively assessed ECL largely
reflecting the impact of an improved economic outlook relative to the outlook at the September 2020 half.
Refer to Note 1 of the Condensed Consolidated Financial Statements for further details on key estimation uncertainties associated with the preparation of
the 31 March 2021 results.

NON-IFRS INFORMATION
Statutory profit is prepared in accordance with recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). The Group provides additional measures of performance in the Consolidated Financial Report &Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian
Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when presenting this information.
Cash Profit
Cash profit, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers toassess Group and Divisional performance against prior periods and against peer institutions. The adjustments made in arriving at cash profit are included
in statutory profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cashprofit is not subject to review by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been
determined on a consistent basis across each period presented.
Adjustments between statutory profit and cash profit - To calculate cash profit, the Group excludes non-core items from statutory profit. Refer topages 71 to 73 for adjustments between statutory and cash profit.



Large/notable items within cash profit - The Group’s cash profit result from continuing operations includes a number of items collectively referred
to as large/notable items. While these items form part of cash profit, given their nature and significance, they have been presented separately
together with comparative information, where relevant, to provide transparency and aid comparison. Refer to pages 13 to 17 for details oflarge/notable items.

DISCONTINUED OPERATIONS
The financial results of the divested Wealth Australia businesses are treated as discontinued operations from a financial reporting perspective. The Group
Income Statement and Statement of Comprehensive Income show discontinued operations separately from continuing operations in a separate line item
‘Profit/(Loss) from discontinued operations’.
Refer to Note 13 of the Condensed Consolidated Financial Statements for further information.

8

SUMMARY
Statutory Profit Results
Half Year

Movement

Net interest income

Mar 21$M
6,986

Sep 20$M
6,827

Mar 20$M
7,222

Mar 21
v. Sep 20
2%

Mar 21v. Mar 20-3%

Other operating income

1,381

1,917

1,671

-28%

-17%

Operating income

8,367

8,744

8,893

-4%

-6%

Operating expenses(4,482)(4,778)(4,605)-6%-3%

Profit before credit impairment and income tax

3,885

3,966

4,288

-2%

-9%

491

(1,064)(1,674)

large

large

Profit before income tax

4,376

2,902

2,614

51%

67%

Income tax expense(1,425)

(862)

(978)

65%

46%

-

-

(1)

n/a

-100%

2,951

2,040

1,635

45%

80%

(8)

(8)

(90)

0%

-91%

2,943

2,032

1,545

45%

90%

Credit impairment (charge)/releaseNon-controlling interests
Profit attributable to shareholders of the Company from continuing operations
Profit/(Loss) from discontinued operations
Profit attributable to shareholders of the Company

Earnings Per Ordinary Share (cents)

Half Year

Basic
DilutedMovement

ReferencePage
93

Mar 21
103.7

Sep 2071.8

Mar 20
54.6

Mar 21
v. Sep 20
44%

Mar 21v. Mar 20
90%

93

98.4

66.3

51.5

48%

91%

Half Year
Reference
Page
Ordinary Share Dividends (cents)
Interim1
Final1
Total
Ordinary share dividend payout ratio2

Mar 21

Sep 20Mar 20

25

92

70

-

92

-

35

-

92

70

35

25

92

67.7%

48.9%

45.9%

Profitability Ratios
Return on average ordinary shareholders' equity3

9.5%

6.6%

5.1%

Return on average assets

0.56%

0.38%

0.30%

Net interest margin

1.63%

1.57%

1.69%

Net interest income to average credit RWAs

3.99%

3.66%

3.96%

Efficiency Ratios
Operating expenses to operating income

53.8%

55.2%

53.8%

Operating expenses to average assets

0.87%

0.91%

0.92%

187

395

626

(678)

669

1,048

Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M)
Collectively assessed credit impairment charge/(release) ($M)
Total credit impairment charge ($M)

100

(491)

1,064

1,674

Individually assessed credit impairment charge as a % of average gross loans and advances4

0.06%

0.12%

0.20%

Total credit impairment charge/(release) as a % of average gross loans and advances4(0.16%)

0.33%

0.53%

1.

Fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents for the proposed 2021 interim dividend (2020 final dividend: NZD 4 cents;
2020 interim dividend: NZD 3 cents).
Dividend payout ratio for the March 2021 half is calculated using the proposed 2021 interim dividend of $1,992 million, based on the forecast number of ordinary shares on issue at thedividend record date. Dividend payout ratios for the September 2020 half and the March 2020 half were calculated using actual dividend paid of $994 million and $709 million respectively.
3. Average ordinary shareholders’ equity excludes non-controlling interests.
4. Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
2.

9

SUMMARY
Cash Profit Results1
Half Year

Movement

Net interest income

Mar 21$M
6,986

Sep 20$M
6,827

Mar 20$M
7,222

Mar 21
v. Sep 20
2%

Other operating income

1,437

2,346

1,357

-39%

6%

Operating income

8,423

9,173

8,579

-8%

-2%

Operating expenses(4,482)(4,778)(4,605)-6%-3%

Profit before credit impairment and income tax

3,941

4,395

3,974

-10%

-1%

491

(1,064)(1,674)

large

large

Profit before income tax

4,432

3,331

2,300

33%

93%

Income tax expense(1,442)

(986)

(886)

46%

63%

-

-

(1)

n/a

-100%

2,990

2,345

1,413

28%

large

(8)

(8)

(90)

0%

-91%

2,982

2,337

1,323

28%

large

Mar 21v. Mar 20
large
large

Credit impairment (charge)/releaseNon-controlling interests
Cash profit from continuing operations
Cash profit/(loss) from discontinued operations
Cash profit

Earnings Per Ordinary Share (cents)

Half Year

Basic
DilutedMar 21v. Mar 20-3%

Movement

Mar 21
105.0

Sep 2082.5

Mar 2046.7

Mar 21
v. Sep 20
27%

99.6

75.8

44.7

31%

Half Year
Reference
Page
Ordinary Share Dividends
Ordinary share dividend payout ratio2
Profitability Ratios
Return on average ordinary shareholders' equity3

Mar 21

Sep 20Mar 20

66.8%

42.5%

53.6%

9.7%

7.6%

4.4%

Return on average assets

0.57%

0.43%

0.26%

Net interest margin

1.63%

1.57%

1.68%

Net interest income to average credit RWAs

3.99%

3.66%

3.96%

Efficiency Ratios
Operating expenses to operating income

53.5%

52.6%

55.2%

Operating expenses to average assets

0.87%

0.90%

0.92%

29

187

395

626

29

(678)

669

1,048

29

(491)

1,064

1,674

0.06%

0.12%

0.20%

(0.16%)

0.33%

0.53%

Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M)
Collectively assessed credit impairment charge/(release) ($M)
Total credit impairment charge ($M)
Individually assessed credit impairment charge as a % of average gross loans and advances4

Total credit impairment charge/(release) as a % of average gross loans and advances4
Cash Profit/(Loss) By Division

Half Year

Movement

Mar 21$M
1,782

Sep 20$M
1,123

Mar 20$M
1,214

Mar 21
v. Sep 20
59%

Mar 21v. Mar 20
47%

Institutional

948

1,244

610

-24%

55%

New Zealand

771

450

567

71%

36%

7

(82)

20

large

-65%

(518)

(390)

(998)

33%

-48%

Australia Retail and Commercial

Pacific
TSO and Group Centre
Discontinued Operations
Cash profit
1.

(8)

(8)

(90)

0%

-91%

2,982

2,337

1,323

28%

large

Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the results of the core business activities of the Group. Refer to pages 71
to 73 for the reconciliation between statutory and cash profit. Refer to pages 13 to 17 for information on large/notable items included in continuing cash profit.
2. Dividend payout ratio for the March 2021 half is calculated using the proposed 2021 interim dividend of $1,992 million, based on the forecast number of ordinary shares on issue at thedividend record date. Dividend payout ratios for the September 2020 half and the March 2020 half were calculated using actual dividend paid of $994 million and $709 million respectively.
3. Average ordinary shareholders’ equity excludes non-controlling interests.
4. Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

10

SUMMARYKey Cash Profit Metrics
Discontinued Operations
The financial results of the divested Wealth Australia businesses are treated as discontinued operations from a financial reporting perspective. The Group
Income Statement and Statement of Comprehensive Income show discontinued operations separately from continuing operations in a separate line item
‘Profit/(Loss) from discontinued operations’.
Sale to IOOF Holdings Limited (IOOF) - In October 2017, the Group announced it had agreed to sell its OnePath pensions and investments(OnePath P&I) business and Aligned Dealer Groups (ADGs) businesses to IOOF. The sale of the ADG business completed on 1 October 2018 andthe OnePath P&I business completed on 31 January 2020.

Sale to Zurich Financial Services Australia (Zurich) - In December 2017, the Group announced it had agreed to sell its life insurance business to
Zurich and the transaction completed on 31 May 2019.

There were no material financial impacts from the discontinued operations in the March 2021 half.

Continuing Operations
Key cash profit metrics specific to continuing operations are presented in the table below:
Half Year

Movement

Mar 21

Sep 20Mar 20Mar 21
v. Sep 20

105.3

82.8

49.9

27%

Mar 21v. Mar 20
large

Earnings Per Ordinary Share (cents) - continuing operations
Earnings per share (basic)

Half Year

Ordinary Share Dividends - continuing operations
Ordinary share dividend payout ratio
Profitability Ratios - continuing operations
Return on average ordinary shareholders' equity

Mar 21

Sep 20Mar 20

66.6%

42.4%

50.2%

9.7%

7.6%

4.7%

Return on average assets

0.57%

0.43%

0.28%

Net interest margin

1.63%

1.57%

1.69%

Net interest income to average credit RWAs

3.99%

3.66%

3.96%

Efficiency Ratios - continuing operations
Operating expenses to operating income

53.2%

52.1%

53.7%

Operating expenses to average assets

0.86%

0.88%

0.90%

11

SUMMARY
Key Balance Sheet Metrics
As at

Movement
Mar 21
v. Sep 20

Mar 21v. Mar 20

386.0

-5%

-11%

449.0

-5%

-9%

661.3

-1%

-6%

656.6

0%

-6%

1,042.3

1,150.0

-2%

-11%

561.5

552.4

566.5

2%

-1%

62.6

61.3

61.4

2%

2%

Mar 21v. Mar 20-1%
3%

Reference
Page

Mar 21

Sep 20Mar 20- APRA Basel 3

42

12.4%

11.3%

10.8%

- Internationally Comparable Basel 31

42

18.1%

16.7%

15.5%

Credit risk weighted assets ($B)

42

341.9

360.0

Total risk weighted assets ($B)

42

408.2

429.4

APRA Leverage Ratio

44

5.5%

5.4%

5.0%

Balance Sheet: Key Items
Gross loans and advances ($B)

618.6

622.1

Net loans and advances ($B)

614.4

617.1

1,018.3

Customer deposits ($B)
Total equity ($B)

Capital Management
Common Equity Tier 1 (Level 2)

Total assets ($B)

As at

Movement

Liquidity Risk
Liquidity Coverage Ratio2

Reference
Page
40

Mar 21
138%

Sep 20139%

Mar 20139%

Mar 21
v. Sep 20-1%

Net Stable Funding Ratio

41

121%

124%

118%

-3%

Mar 20Mar 21
v. Sep 20

Mar 21v. Mar 20

1%

-5%

6%

10%

-9%

-26%

-14%

-5%

As at
Reference
Page
Impaired Assets
Gross impaired assets ($M)

32

Mar 21

Sep 20Movement

2,473

2,459

2,599

0.40%

0.40%

0.39%

1,664

1,568

1,506

2.7%

2.6%

2.5%

809

891

1,093

32.7%

36.2%

42.1%

4,285

5,008

4,501

Collectively assessed provision as a % of credit risk weighted assets

1.25%

1.39%

1.17%

Net Tangible Assets
Net tangible assets attributable to ordinary shareholders ($B)3

58.5

56.9

56.4

3%

4%

Net tangible assets per ordinary share ($)

20.57

20.04

19.89

3%

3%

Gross impaired assets as a % of gross loans and advances
Net impaired assets ($M)

32

Net impaired assets as a % of shareholders' equity
Individually assessed provision ($M)

31

Individually assessed provision as a % of gross impaired assets
Collectively assessed provision ($M)

31

As at

Movement

Net Loans And Advances by division
Australia Retail and Commercial

Mar 21$B
344.3

Sep 20$B
339.4

Mar 20$B
329.8

Mar 21
v. Sep 20
1%

Mar 21v. Mar 20
4%

Institutional

147.5

157.6

199.4

-6%

-26%

New Zealand

120.5

116.6

125.2

3%

-4%

Pacific

1.7

1.9

2.2

-11%

-23%

TSO and Group Centre

0.4

1.6

-

-75%

n/a

614.4

617.1

656.6

0%

-6%

Net loans and advances by division1.

See page 43 for further details regarding the differences between APRA Basel 3 and Internationally Comparable Basel 3 standards.
2. Liquidity Coverage Ratio is calculated on a half year average basis.
3. Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets.

12

SUMMARY
Large/Notable Items - continuing operations
Large/notable items included in cash profit from continuing operations are described below.
Divestment impacts
As the divestments below did not qualify as discontinued operations under accounting standards, they form part of the continuing operations. The
financial impacts from these divestments are summarised below including the business results for those divestments that have completed.
Gain/(Loss) on sale from divestments

Divested business results

Half Year

Half Year

Cash Profit Impact
UDC

Mar 21$M-

Sep 20$M(44)

Mar 20$M-

Mar 21$M-

Sep 20$M
41

Mar 20
$M
38
-

13

-

-

-

-

ANZ Share Investing

(251)

-

-

-

-

-

Profit/(Loss) before income tax

(238)

(44)

-

-

41

38

New Zealand legacy insurance portfolio

Income tax benefit/(expense) and non-controlling interests
Cash profit/(loss) from continuing operations



-

10

-

-

(11)

(11)

(238)

(34)

-

-

30

27

UDC Finance (UDC)
The Group completed the sale of UDC to Shinsei Bank Limited (Shinsei Bank) on 1 September 2020. The Group recognised a loss after tax of $34
million in the September 2020 half comprising a loss on disposal of $29 million, a $31 million loss on the reversal of the life-to-date cash profit
adjustments on the economic hedges of assets sold, $6 million of transaction costs, partially offset by a $22 million release from the foreign currencytranslation reserve, and a $10 million tax credit.



New Zealand legacy insurance portfolio
During the March 2021 half, the Group sold and transferred its rights and obligations relating to servicing a legacy portfolio of insurance underwritten
by Tower Limited (Tower) in the New Zealand division to Tower and recognised a gain after tax of $13 million.



ANZ Share Investing
During the March 2021 half, the Group reclassified its ANZ Share Investing business as held for sale reflecting a continuation of the Group’s
simplification strategy. As a consequence of remeasuring the net assets at fair value less costs to sell, the Group recognised a loss after tax of $251
million relating to the write-down of goodwill attributable to the business. This had no impact to Common Equity Tier 1 (CET1) capital as it resulted inan equivalent reduction in capital deductions.

Other large/notable items


Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Half Year
Mar 21$M(74)

Cash Profit Impact
Operating income

Mar 20$M(58)

Operating expenses

(92)

(138)

(71)

Profit/(Loss) before income tax

(166)

(254)

(129)

Income tax benefit/(expense) and non-controlling interests
Cash profit/(loss) from continuing operations

Sep 20
$M
(116)

58

66

38

(108)

(188)

(91)

Litigation settlements
During the March 2021 half, the Group reached an agreement to settle a United States class action related to the Bank Bill Swap Rate (BBSW) andthe trading of BBSW-based products. The settlement is without admission of liability and remains subject to negotiation and execution of complete
settlement terms as well as court approval. In the March 2021 half, the Group recognised expenses of $48 million after tax in relation to thesettlement and related costs.



Restructuring
The Group recognised restructuring expenses of $76 million after tax in the March 2021 half (Sep 20 half: $41 million; Mar 20 half: $74 million)
largely relating to business and property changes in the Australia Retail and Commercial division and operational changes in the TSO and Group
Centre division.

13

SUMMARY

Asian associate items
Half Year
Mar 21

Sep 20Mar 20

AmBank 1MDB settlement

$M
(212)

$M
-

$M
-

AmBank goodwill impairment

(135)

-

-

PT Panin AASB 9 adjustment

-

(68)

-

Profit/(Loss) before income tax

(347)

(68)

-

-

2

-

(347)

(66)

-

Income tax benefit/(expense) and non-controlling interests
Cash profit/(loss) from continuing operations

AmBank 1MDB settlement
Following AMMB Holdings Berhad’s (AmBank) agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its
involvement with 1Malaysia Development Berhad (1MDB), the Group recognised a $212 million reduction in equity accounted earnings after tax
reflecting its share of the settlement provision during the March 2021 half. This had no impact to CET1 capital as it resulted in an equivalent reduction
in capital deductions.
AmBank goodwill impairment
During the March 2021 half, AmBank partially impaired goodwill and the Group recognised a $135 million reduction in equity accounted earnings
after tax reflecting its share of the impairment recognised by AmBank. This had no impact to CET1 capital as it resulted in an equivalent reduction incapital deductions.
PT Panin AASB 9 adjustment
When the Group adopted AASB 9 Financial Instruments on 1 October 2018, an estimate of PT Bank Pan Indonesia (PT Panin)’s transition
adjustment was recognised through opening retained earnings to align accounting policies. During the September 2020 half, PT Panin adopted
AASB 9 and recognised a transition adjustment in retained earnings. The $66 million after tax represents the Group’s equity accounted share of thetransition adjustment net of amounts adjusted by the Group on 1 October 2018. This had no impact to CET1 capital as it resulted in an equivalent
reduction in capital deductions.


Asian associate impairments
During the March 2020 half, the Group recognised an impairment of $815 million after tax in respect of two of the Group’s equity accounted
investments to adjust their carrying values in line with their value in use (VIU) calculations at 31 March 2020. AmBank was impaired by $595 million
and PT Panin was impaired by $220 million. This had no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.
The Group completed VIU assessments and assessment of carrying values as at 31 March 2021 and determined that no adjustment to carrying
values was necessary.



Accelerated software amortisation
During the September 2020 half, the Group amended the application of its software amortisation policy to reflect the shorter useful life of various
types of software, including regulatory and compliance focused assets and purchased assets. These changes reflect the Group’s rapidly changing
technology and business needs and ongoing reinvestments in purchased and internally developed software to ensure assets remain fit for purpose.
As a result of these changes, the Group recognised accelerated amortisation of $138 million after tax during the September 2020 half. This had no
impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.



Goodwill write-off
During the September 2020 half, the Group wrote off goodwill of $77 million after tax previously held in the Pacific and New Zealand divisions:

Pacific division - The impact of COVID-19 on the economies of the Pacific region had been significant and conditions were expected to takesome time to recover. Goodwill of $50 million after tax for the division was impaired in the September 2020 half. No further impairment was
required for the carrying values of other assets in the Pacific division.



New Zealand division - As a result of changes in the economic environment and outlook, the Group announced its intention to begin winding up
the Bonus Bonds business (“Bonus Bonds”, a managed investment product) in the New Zealand division by 31 October 2020. As a result, theGroup wrote off the associated goodwill of $27 million after tax in the September 2020 half.

This had no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.


Lease-related items
Following the adoption of the new lease accounting standard (AASB 16) on 1 October 2019 the Group recognised additional charges which were
presented as a large/notable item at the time as the 2019 comparatives were prepared under the previous lease accounting standard (AASB 117).
During the March 2021 half, the recurring AASB 16 impacts have been removed as the comparative periods are now presented on a consistent basis
to the March 2021 half. The residual lease related item relates to non-recurring items recognised in 2020.

14

SUMMARY
Large/Notable items - continuing operations
Cash Profit Results

March 2021 Half Year v March 2020 Half Year

Mar 21$M

Large/
notables$M

Mar 21
ex. Large/
notables$M

Mar 20$M

March 2021 Half Year v September 2020 Half Year

Large/
notables1$M

Mar 20ex. Large/
notables$M

Movt
ex. Large/
notables%Mar 21$M

Large/
notables$M

Mar 21
ex. Large/
notables$M

Sep 20$M

Large/
notables1$M

Sep 20ex. Large/
notables$M

Movt
ex. Large/
notables%Net interest income

6,986

(56)

7,042

7,222

53

7,169

-2%

6,986

(56)

7,042

6,827

(25)

6,852

3%

Other operating income

1,437

(603)

2,040

1,357

(850)

2,207

-8%

1,437

(603)

2,040

2,346

(137)

2,483

-18%

Operating income

8,423

(659)

9,082

8,579

(797)

9,376

-3%

8,423

(659)

9,082

9,173

(162)

9,335

-3%

Operating expenses(4,482)(266)(4,216)(4,605)(244)(4,361)-3%(4,482)(266)(4,216)(4,778)(490)(4,288)-2%

Profit before credit impairment and income tax

3,941

(925)

4,866

3,974

(1,041)

5,015

-3%

3,941

(925)

4,866

4,395

(652)

5,047

-4%

Credit impairment (charge)/release

491

-

491

(1,674)(20)(1,654)

large

491

-

491

(1,064)(3)(1,061)large

Profit/(Loss) before income tax

4,432

(925)

5,357

2,300

(1,061)

3,361

59%

4,432

(925)

5,357

3,331

(655)

3,986

34%

Income tax benefit/(expense) and non-controlling interests(1,442)108(1,550)

(887)

74

(961)

61%

(1,442)108(1,550)

(986)

141

(1,127)38%

Cash profit/(loss) from continuing operations

2,990

(817)

3,807

1,413

(987)

2,400

59%

2,990

(817)

3,807

2,345

(514)

2,859

33%

Sep 20ex. Large/
notablesMovt
ex. Large/
notablesCash Profit/(Loss) By Division

March 2021 Half Year v March 2020 Half Year

Mar 21

Large/
notablesMar 21
ex. Large/
notables

$M

$M

$M

1,782

(414)

Institutional

948

New Zealand

771

Australia Retail and Commercial

Pacific

March 2021 Half Year v September 2020 Half Year

Mar 21

Large/
notablesMar 21
ex. Large/
notables

$M

$M

$M

$M

$M

$M

%

62%

1,782

(414)

2,196

1,123

(156)

1,279

72%

618

59%

948

(34)

982

1,244

(61)

1,305

-25%

569

34%

771

6

765

450

(58)

508

51%

Mar 20Large/
notables1

Mar 20ex. Large/
notablesMovt
ex. Large/
notables

$M

$M

$M

%

2,196

1,214

(141)

1,355

(34)

982

610

(8)

6

765

567

(2)

Sep 20Large/
notables1

7

(1)

8

20

(3)

23

-65%

7

(1)

8

(82)

(64)

(18)

large

TSO and Group Centre 2

(518)

(374)

(144)

(998)

(833)

(165)

-13%

(518)

(374)

(144)

(390)

(175)

(215)

-33%

Cash profit/(loss) from continuing operations

2,990

(817)

3,807

1,413

(987)

2,400

59%

2,990

(817)

3,807

2,345

(514)

2,859

33%

1.
2.

Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted on 1 October 2019 as the comparative periods are now presented on a consistent basis to the March 2021 half.
TSO and Group Centre included the loss on sale from UDC divestment in the September 2020 half. It also included a component of the divested business results for the completed sale of UDC in the September and March 2020 halves.

15

SUMMARY
Large/Notable items - continuing operations
The Group has recognised some large/notable items within cash profit from continuing operations. These items are shown in the tables below.

Gain/(Loss)on sale fromdivestments$M
Cash Profit
Net interest income

March 2021 Half Year

March 2020 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Customer
Litigation
remediation settlements$M$M

Restructuring
$M

Asian
associate
items
$M

Total
$M

Divestedbusiness results$M

Customer
remediation$M

Restructuring$M

Lease-related
items1$M

Asian associate
impairments
$M

Total
$M

-

(56)

-

-

-

(56)

75

(22)

-

-

-

53

Other operating income

(238)

(18)

-

-

(347)

(603)

1

(36)

-

-

(815)

(850)

Operating income

(238)

(74)

-

-

(347)

(659)

76

(58)

-

-

(815)

(797)

Operating expenses

-

(92)

(69)

(105)

-

(266)

(18)

(71)

(105)

(50)

-

(244)

Profit before credit impairment
and income tax

(238)

(166)

(69)

(105)

(347)

(925)

58

(129)

(105)

(50)

(815)

(1,041)Credit impairment (charge)/
release

-

-

-

-

-

-

(20)

-

-

-

-

(20)

Profit before income tax

(238)

(166)

(69)

(105)

(347)

(925)

38

(129)

(105)

(50)

(815)

(1,061)

Income tax benefit/(expense)and non-controlling interests

-

58

21

29

-

108

(11)

38

31

16

-

74

Cash profit/(loss)
from continuing operations

(238)

(108)

(48)

(76)

(347)

(817)

27

(91)

(74)

(34)

(815)

(987)

Gain/(Loss)on sale fromdivestments$M
Cash Profit
Net interest income

March 2021 Half Year

September 2020 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Customer
Litigation
remediation settlements$M$M

Restructuring
$M

Asian
associate
items$M

Gain/(Loss)on sale fromdivestments
$M

Total
$M

Divestedbusiness
Customer
results remediation$M$M

Goodwill Restrucwrite-off
turing$M$M

Leaserelated
items1$M

Accelerated
softwareamortisation
$M

Asian
associate
items
$M

Total
$M

-

(56)

-

-

-

(56)

-

59

(84)

-

-

-

-

-

(25)

Other operating income

(238)

(18)

-

-

(347)

(603)

(38)

1

(32)

-

-

-

-

(68)

(137)

Operating income

(238)

(74)

-

-

(347)

(659)

(38)

60

(116)

-

-

-

-

(68)

(162)

Operating expenses

-

(92)

(69)

(105)

-

(266)

(6)

(16)

(138)

(77)

(56)

-

(197)

-

(490)

Profit before credit impairment
and income tax

(238)

(166)

(69)

(105)

(347)

(925)

(44)

44

(254)

(77)

(56)

-

(197)

(68)

(652)

Credit impairment (charge)/
release

-

-

-

-

-

-

-

(3)

-

-

-

-

-

-

(3)

Profit before income tax

(238)

(166)

(69)

(105)

(347)

(925)

(44)

41

(254)

(77)

(56)

-

(197)

(68)

(655)

Income tax benefit/(expense)and non-controlling interests

-

58

21

29

-

108

10

(11)

66

-

15

-

59

2

141

Cash profit/(loss)
from continuing operations

(238)

(108)

(48)

(76)

(347)

(817)

(34)

30

(188)

(77)

(41)

-

(138)

(66)

(514)

1.

Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted on 1 October 2019 as the comparative periods are now presented on a consistent basis to the March 2021 half.

16

SUMMARY
Large/Notable items - continuing operations
The Group has recognised some large/notable items within cash profit from continuing operations. The impact of these items on the divisional results are shown in the tables below.
March 2021 Half Year

March 2020 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Gain/(Loss)on sale fromdivestments$M

Customer
remediation$M

Litigation
settlements$M

Restructuring
$M

Asian
associate
items
$M

Total
$M

Divestedbusiness results$M

Customer
remediation$M

Restructuring$M

Lease-related
items1$M

Asian associate
impairments
$M

Total
$M

Profit before income tax
(251)

(191)

-

(40)

-

(482)

-

(101)

(85)

(15)

-

(201)

Institutional

Australia Retail and Commercial

-

25

(69)

(16)

-

(60)

-

-

(4)

(7)

-

(11)

New Zealand

13

-

-

(10)

-

3

34

(26)

(11)

-

-

(3)

-

-

-

(1)

-

(1)

-

(2)

-

(2)

-

(4)

Pacific
TSO and Group Centre2

-

-

-

(38)

(347)

(385)

4

-

(5)

(26)

(815)

(842)

Profit before income tax

(238)

(166)

(69)

(105)

(347)

(925)

38

(129)

(105)

(50)

(815)

(1,061)

Income tax benefit/(expense)and non-controlling interests

-

58

21

29

-

108

(11)

38

31

16

-

74

Cash profit/(loss)
from continuing operations

(238)

(108)

(48)

(76)

(347)

(817)

27

(91)

(74)

(34)

(815)

(987)

Gain/(Loss)on sale fromdivestments$M

March 2021 Half Year

September 2020 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Customer
Litigation
remediation settlements$M$M

Restructuring
$M

Asian
associate
items
$M

Total
$M

Gain/(Loss)on sale fromdivestments$M-

Divestedbusiness
Customer
results remediation$M$M

Goodwill Restrucwrite-off
turing$M$M

Leaserelated
items1$M

Accelerated
softwareamorisation
$M

Asian
associate
items
$M

Total
$M
(223)

Profit before income tax
Australia Retail and Commercial

(251)

(191)

-

(40)

-

(482)

Institutional

-

25

(69)

(16)

-

(60)

New Zealand

13

-

-

(10)

-

3

Pacific

-

-

-

(1)

-

(1)

TSO and Group Centre2

-

-

-

(38)

(347)

(385)

Profit before income tax

-

(169)

-

(4)

(19)

(31)

-

-

-

-

39

(20)

-

(13)

(7)

(38)

-

(78)

(50)

(27)

(20)

-

(11)

-

(69)

(44)

-

(15)

(50)

-

(1)

-

-

(66)

2

-

-

(19)

27

(117)

(68)

(219)

(238)

(166)

(69)

(105)

(347)

(925)

(44)

41

(254)

(77)

(56)

-

(197)

(68)

(655)

Income tax benefit/(expense)and non-controlling interests

-

58

21

29

-

108

10

(11)

66

-

15

-

59

2

141

Cash profit/(loss)
from continuing operations

(238)

(108)

(48)

(76)

(347)

(817)

(34)

30

(188)

(77)

(41)

-

(138)

(66)

(514)

1.
2.

Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted on 1 October 2019 as the comparative periods are now presented on a consistent basis to the March 2021 half.
TSO and Group Centre included the loss on sale from UDC divestment in the September 2020 half. It also included a component of the divested business results for the completed sale of UDC for the September and March 2020 halves.

17

SUMMARY
Full Time Equivalent Staff
As at 31 March 2021, ANZ employed 38,555 staff (Sep 20: 38,579; Mar 20: 38,939) on a full-time equivalent (FTE) basis.
As at

Division

Movement
Mar 2014,061Mar 21
v. Sep 20
0%

5,291

5,350

-1%

-3%

6,679

7,009

0%

-5%

Australia Retail and Commercial

Mar 21
14,118

Sep 2014,078Institutional

5,215

New Zealand1

6,691

Mar 21v. Mar 20
0%

Pacific

1,101

1,113

1,108

-1%

-1%

TSO and Group Centre1

10,71910,345

10,306

4%

4%

Total FTE from continuing operations

37,84437,506

37,834

1%

0%

711

1,073

1,105

-34%

-36%

Total FTE

38,55538,57938,9390%-1%

Average FTE

38,532

38,79839,154-1%-2%

Discontinued operations2

As atGeography

Movement
Mar 21
v. Sep 20
0%

Mar 21v. Mar 20-1%

Australia

Mar 21
18,664

Sep 2018,689Mar 2018,823Asia, Pacific, Europe & America

12,678

12,68012,584

0%

1%

New Zealand

7,213

7,210

7,532

0%

-4%

Total FTE

38,55538,57938,939

0%

-1%

1.
2.

FTE has been restated to reflect the transfer of New Zealand Technology operations from the TSO and Group Centre division to the New Zealand division (Sep 20: 918; Mar 20: 906).
The discontinued operations FTE is based on an estimate of the staff working in the divested businesses based on an allocation methodology and includes staff retained in the Groupworking on transitioning the sold businesses to the purchasers in the March 2020 half.

Other Non-Financial Information
Half Year

Movement
Mar 21
v. Sep 20

Sep 20- high

29.55

21.22

28.67

39%

3%

- low

16.97

15.07

14.10

13%

20%

- closing

28.18

17.22

16.96

64%

66%

Closing market capitalisation of ordinary shares ($B)
Total shareholder returns (TSR)

Mar 20Mar 21v. Mar 20

Mar 21

Shareholder value - ordinary shares
Share price ($)

80.2

48.8

48.1

64%

67%

66.6%

2.9%

-38.7%

large

large

As at Mar 21
Credit ratings
Moody's Investor Services
Standard & Poor's
1

Fitch Ratings
1.

On 12 April 2021 Fitch Ratings revised its outlook from Negative to Stable. The long-term and short-term ratings remain unchanged.

18

ShortTerm
P-1

LongTerm
Aa3

Outlook
StableA-1+

AA-

Negative

F1

A+

Negative

GROUP RESULTSCONTENTS

Page

Cash Profit

20

Net Interest Income - continuing operations

21

Other Operating Income - continuing operations

23

Operating Expenses - continuing operations

26

Investment Spend - continuing operations

28

Software Capitalisation - continuing operations

28

Credit Risk - continuing operations

29

Income Tax Expense - continuing operations

34

Impact of Foreign Currency Translation - continuing operations

35

Earnings Related Hedges - continuing operations

37

Earnings Per Share - continuing operations

37

Dividends - continuing operations

38

Economic Profit - continuing operations

38

Condensed Balance Sheet - including discontinued operations

39

Liquidity Risk - including discontinued operations

40

Funding - including discontinued operations

41

Capital Management - including discontinued operations

42

Leverage Ratio - including discontinued operations

44

Capital Management - Other Developments

45

19

GROUP RESULTS
Non-IFRS Information
Statutory profit is prepared in accordance with recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). The Group provides additional measures of performance in the Consolidated Financial Report &Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian
Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when presenting this information.

Cash Profit
Cash profit, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers toassess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items
from statutory profit (refer to Definitions on pages 131 to 132 for further details). The adjustments made in arriving at cash profit are included in statutory
profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not
subject to review by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on aconsistent basis across each period presented.
This Group Results section is reported on a cash profit basis from continuing operations unless otherwise stated. For information on
discontinued operations please refer to Note 13 of the Condensed Consolidated Financial Statements.

Half Year

Statutory profit attributable to shareholders of the Company fromcontinuing operations
Adjustments between statutory profit and cash profit1
Economic hedges
Revenue and expense hedges

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

2,951

2,040

1,635

45%

80%

large

51

461

(340)

-89%

(12)

(156)

120

-92%

large

-

-

(2)

n/a

-100%

39

305

(222)

-87%

large

2,990

2,345

1,413

28%

large

Structured credit intermediation trades
Total adjustments between statutory profit and cash profit fromcontinuing operations
Cash profit from continuing operations
1.

Movement

Refer to pages 71 to 73 for analysis of the adjustments between statutory profit and cash profit.

Half Year

Group performance - cash profit

Movement

Net interest income

Mar 21$M
6,986

Sep 20$M
6,827

Mar 20$M
7,222

Mar 21
v. Sep 20
2%

Other operating income

1,437

2,346

1,357

-39%

6%

Operating income

8,423

9,173

8,579

-8%

-2%

Operating expenses(4,482)(4,778)(4,605)-6%-3%

Profit before credit impairment and income tax

3,941

4,395

3,974

-10%

-1%

491

(1,064)(1,674)

large

large

Profit before income tax

4,432

3,331

2,300

33%

93%

Income tax expense(1,442)

(986)

(886)

46%

63%

-

-

(1)

n/a

-100%

Cash profit from continuing operations

2,990

2,345

1,413

28%

large

Cash Profit/(Loss) by Division
Australia Retail and Commercial

Mar 21$M
1,782

Sep 20$M
1,123

Mar 20$M
1,214

Mar 21
v. Sep 20
59%

Mar 21v. Mar 20
47%

Institutional

948

1,244

610

-24%

55%

New Zealand

771

450

567

71%

36%

Credit impairment (charge)/releaseNon-controlling interests

Half Year

Mar 21v. Mar 20-3%

Movement

7

(82)

20

large

-65%

TSO and Group Centre

(518)

(390)

(998)

33%

-48%

Cash profit from continuing operations

2,990

2,345

1,413

28%

large

Pacific

20

GROUP RESULTSNet Interest Income - continuing operations
Half Year

Movement

Mar 21$M
6,986

Sep 20$M
6,827

Mar 20$M
7,222

Mar 21
v. Sep 20
2%

Mar 21v. Mar 20-3%

Average interest earning assets

857,524

869,110856,652-1%

0%

Average deposits and other borrowings

696,066

690,104

668,514

1%

4%

1.63

1.57

1.69

6 bps

-6 bps-3%

Group
Cash net interest income1

Net interest margin (%) - cash
Group (excluding Markets business unit)
Cash net interest income1

6,584

6,457

6,822

2%

Average interest earning assets

580,971580,532

576,494

0%

1%

Average deposits and other borrowings

532,132

504,392

477,033

5%

12%

2.27

2.22

2.37

5 bps

-10 bps

Net interest margin (%) - cash

Half Year
Mar 21$M

Cash profit net interest margin by major division1
Australia Retail and Commercial
Net interest margin (%) - cash

Sep 20$M

Movement
Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20-9 bps

2.56

2.53

2.65

3 bps

Average interest earning assets

311,211305,924

305,981

2%

2%

Average deposits and other borrowings

240,094

222,191

210,214

8%

14%

0.77

0.73

0.78

4 bps

-1 bpsAverage interest earning assets

397,339424,614415,490-6%-4%

Average deposits and other borrowings

292,475

321,745

305,506-9%-4%

Institutional
Net interest margin (%) - cash

New Zealand
Net interest margin (%) - cash

1.

2.32

2.20

2.31

12 bps

1 bps

Average interest earning assets

120,580

120,104

121,955

0%-1%

Average deposits and other borrowings

95,86492,75690,3293%

6%Includes large/notable items of -$56 million for the March 2021 half (Sep 20 half: -$25 million; Mar 20 half: $53 million). Refer to pages 13 to 17 for further details on large/notable items.
Also includes the major bank levy of -$189 million for the March 2021 half (Sep 20 half: -$210 million; Mar 20 half: -$196 million).

Group net interest margin - March 2021 Half Year v March 2020 Half Year

1.

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



March 2021 v March 2020
Net interest margin (-6 bps)
Wholesale funding and deposit pricing (+2 bps): driven by favourable funding costs, partially offset by deposit margin compression.



Asset pricing (0 bps): higher Institutional lending margins were offset by competition in home lending in the Australia Retail and Commercial
division.



Asset and funding mix (+2 bps): driven by favourable deposit mix with growth in at-call deposits, as well as customer deposits replacing
wholesale funding. This was partially offset by unfavourable product mix from the impacts of customers switching from variable to fixed homeloans, and lower unsecured lending in the Australia Retail and Commercial, and New Zealand divisions.



Liquidity (-6 bps): driven by growth in liquid assets.

Impact of rates net of repricing (-5 bps): driven by the impact of central bank rate cuts on earnings on capital and replicated deposits, net of
repricing.

Markets Balance Sheet activities (+4 bps): driven by lower Markets average interest earning assets as a result of lower reverse repurchaseagreements and foreign currency translation movements.

Large/notable (-3 bps): driven by lower net interest income from divested UDC business and higher customer remediation.

21

GROUP RESULTS
Average interest earning assets (+$0.9 billion or flat)

Average net loans and advances (-$18.2 billion or -3%): driven by decrease in Institutional lending and the impact of foreign currency translation
movements, partially offset by home lending growth in the Australia Retail and Commercial, and New Zealand divisions.



Average trading and investment securities (+$19.2 billion or +15%): driven by an increase in liquid assets in Markets, partially offset by the
impact of foreign currency translation movements.



Average cash and other liquid assets (flat): higher central bank balances were offset by lower reverse repurchase agreements and the impact offoreign currency translation movements.

Average deposits and other borrowings (+$27.6 billion or +4%)


Average deposits and other borrowings (+$27.6 billion or +4%): driven by growth in deposits across all divisions, partially offset by the impact offoreign currency translation movements.

Group net interest margin - March 2021 Half Year v September 2020 Half Year1.

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

March 2021 v September 2020
Net interest margin (+6 bps)
 Wholesale funding and deposit pricing (+4 bps): driven by deposit optimisation across all divisions and favourable wholesale funding costs.
 Asset pricing (+2 bps): driven by higher Institutional lending margins partially offset by competition in home lending in the Australia Retail andCommercial division.
 Asset and funding mix (+3 bps): driven by favourable deposit mix with growth in at-call deposits and favourable divisional lending mix fromstronger growth in the Australia Retail and Commercial, and New Zealand divisions relative to the Institutional division. This was partially offset byunfavourable product mix from the impacts of customers switching from variable to fixed home loans, and lower unsecured lending in the Australia
Retail and Commercial, and New Zealand divisions.
 Liquidity (-3 bps): driven by growth in liquid assets.
 Impact of rates net of repricing (-3 bps): driven by the impact of central bank rate cuts on earnings on capital and replicated deposits, net of
repricing.
 Markets Balance Sheet activities (+4 bps): driven by lower Markets average interest earning assets as a result of lower reverse repurchaseagreements and the impact of foreign currency translation movements.
 Large/notable items (-1 bps): driven by lower net interest income from divested UDC business, partially offset by lower customer remediation.
Average interest earning assets (-$11.6 billion or -1%)
Average net loans and advances (-$20.9 billion or -3%): driven by a decrease in Institutional lending and the impact of foreign currencytranslation movements, partially offset by home lending growth in the Australia Retail and Commercial, and New Zealand divisions.



Average trading and investment securities (+$12.4 billion or +9%): driven by an increase in liquid assets in Markets, partially offset by the impactof foreign currency translation movements.



Average cash and other liquid assets (-$3.0 billion or -2%): driven by decreases in settlement balances and reverse repurchase agreements aswell as the impact of foreign currency translation movements, partially offset by higher central bank balances.

Average deposits and other borrowings (+$6.0 billion or +1%)


Average deposits and other borrowings (+$6.0 billion or +1%): driven by growth in the Australia Retail and Commercial, and New Zealanddivisions, and increases in commercial paper and certificates of deposit, partially offset by a decrease in the Institutional division and the impactof foreign currency translation movements.

22

GROUP RESULTS
Other Operating Income - continuing operations
Half Year

Movement

Mar 21$M
1,011

Sep 20$M
1,080

Mar 20$M
1,135

Mar 21
v. Sep 20-6%

Mar 21v. Mar 20-11%

Markets other operating income

638

1,120

764

-43%

-16%

Share of associates' profit/(loss)

(242)

20

135

large

large

30

126

(677)

-76%

large

1,437

2,346

1,357

-39%

6%

Net fee and commission income1

Other1,2
Total cash other operating income from continuing operations

Half Year

Movement

Other operating income by division
Australia Retail and Commercial

Mar 21$M
302

Sep 20$M
566

Mar 20$M
595

Mar 21
v. Sep 20-47%

Mar 21v. Mar 20-49%

Institutional

1,014

1,482

1,167

-32%

-13%

New Zealand

238

226

247

5%

-4%

Pacific

33

34

50

-3%

-34%

TSO and Group Centre

(150)

38

(702)

large

-79%

Total cash other operating income from continuing operations

1,437

2,346

1,357

-39%

6%

Half Year

Markets income
Mar 21$M
402

Net interest income
Other operating income
Total cash Markets income from continuing operations

Sep 20$M
370

Movement
Mar 20$M
400

Mar 21
v. Sep 20
9%

Mar 21v. Mar 20
1%

638

1,120

764

-43%

-16%

1,040

1,490

1,164

-30%

-11%

Other operating income (excluding large/notable items)
Other operating income included a number of items collectively referred to as large/notable items of -$603 million for the March 2021 half (Sep 20 half:-$137 million; Mar 20 half: -$850 million). While these items form part of total cash other operating income from continuing operations, they have been
excluded from the tables below given their nature and significance. Refer to items on pages 13 to 17 for further details on large/notable items.
Other operating income (excluding large/notable items)

Half Year

Movement

Net fee and commission income1

Mar 21$M
1,051

Sep 20$M
1,086

Mar 20$M
1,163

Mar 21
v. Sep 20-3%

Mar 21v. Mar 20-10%

Markets other operating income

610

1,138

764

-46%

-20%

Share of associates' profit/(loss)

105

88

135

19%

-22%

Other1,2

274

171

145

60%

89%

2,040

2,483

2,207

-18%

-8%

Total cash other operating income from continuing operations

Half Year

Other operating income by division (excluding large/notable items)

Movement

Mar 21$M
596

Sep 20$M
582

Mar 20$M
625

Mar 21
v. Sep 20
2%

Mar 21v. Mar 20-5%

Institutional

989

1,498

1,164

-34%

-15%

New Zealand

225

225

254

0%

-11%

Pacific

33

34

50

-3%

-34%

Australia Retail and Commercial

TSO and Group Centre
Total cash other operating income from continuing operations
1.
2.

Excluding the Markets business unit.
Includes foreign exchange earnings and net income from insurance business.

23

197

144

114

37%

73%

2,040

2,483

2,207

-18%

-8%

GROUP RESULTS
Other operating income - March 2021 Half Year v March 2020 Half YearMarch 2021 v March 2020
Other operating income increased by $80 million (+6%). Excluding large/notable items, other operating income decreased $167 million (-8%).
Net fee and commission income (-$124 million or -11%)

$49 million decrease in the Institutional division driven by lower trade-related fees and loan syndication fees.

$39 million decrease in the Australia Retail and Commercial division driven by lower credit card and international transaction volumes due to
COVID-19 impacts.

$23 million decrease in the New Zealand division driven by the reduction or removal of fees and lower volume related fee income due to COVID19 impacts.

$12 million decrease driven by higher customer remediation.

Markets income (-$124 million or -11%)
Markets income decreased $124 million (-11%) driven by $126 million (-16%) decrease in Other operating income, partially offset by $2 million (+1%)
increase in Net interest income. This was primarily attributable to the following business activities:$130 million decrease in Foreign Exchange income driven by elevated income in the March 2020 half as corporates and financial institutions
sought foreign exchange solutions at the onset of the pandemic, and currency volatility presented favourable trading conditions, partially offset bylower customer remediation.

$162 million decrease in Rates income driven by reduced demand for hedging solutions.

$29 million decrease in Commodities income as the March 2020 half income was elevated from oil price volatility while the March 2021 half had
seen reduced demand for hedging solutions and less favourable trading conditions.

$164 million increase in Balance Sheet income from increasing value of high quality liquid assets.

$36 million increase in Credit and Capital Markets income driven by more favourable Credit Trading conditions and higher Sales revenues fromnew bond issuance activity by customers.

Share of associates’ profit/(loss) (-$377 million)$212 million decrease driven by the Group’s share of AmBank 1MDB settlement in the March 2021 half.

$135 million decrease driven by the Group’s share of AmBank goodwill impairment in the March 2021 half.

$30 million decrease in profits from associates from AmBank ($21 million) and PT Panin ($9 million).

Other (+$707 million)$815 million increase driven by the impairment of PT Panin ($220 million) and AmBank ($595 million) in the March 2020 half.

$110 million increase in the TSO and Group Centre division primarily due to realised gains from rebalancing the liquidity portfolio in Treasury($31 million), and higher realised gains on economic hedges against foreign currency denominated revenue streams ($62 million) which offset
net unfavourable foreign currency translations elsewhere in the Group.

$27 million increase in the Institutional division primarily driven by widening credit spread impacts on loans measured at fair value in the March
2020 half.

$238 million decrease driven by the loss on reclassification of ANZ Share Investing to held for sale ($251 million) in the Australia Retail andCommercial division, partially offset by gain from the sale of a legacy insurance portfolio to Tower ($13 million) in the New Zealand division.

24

GROUP RESULTS
March 2021 v September 2020
Other operating income decreased by $909 million or (-39%). Excluding large/notable items, other operating income decreased $443 million (-18%).
Net fee and commission income (-$69 million or -6%)


$33 million decrease driven by higher customer remediation.

$26 million decrease in the Australia Retail and Commercial division driven by seasonality of unsecured portfolio rebates and incentives, partially
offset by increased customer activity.

$12 million decrease in the Institutional division driven by lower trade-related fees and loan syndication fees.

Markets income (-$450 million or -30%)
Markets income decreased $450 million (-30%) driven by $482 million (-43%) decrease in Other operating income, partially offset by $32 million(+9%) increase in Net interest income. This was primarily attributable to the following business activities:$210 million decrease in Rates income driven by lower customer hedging demands and excess market liquidity.

$109 million decrease in Credit and Capital Markets income from the normalisation of trading and issuance levels from elevated conditions in the
September 2020 half.

$110 million decrease in Derivative valuation adjustments driven by a non-repeat of credit valuation adjustment gains in the September 2020 half.

$66 million decrease in Balance Sheet income driven by gains recognised in the September 2020 half from yield curve movements.

$54 million increase in Foreign Exchange income primarily driven by lower customer remediation.

Share of associates’ profit/(loss) (-$262 million)$212 million decrease driven by the Group’s share of AmBank 1MDB settlement in the March 2021 half.

$135 million decrease driven by the Group’s share of AmBank goodwill impairment in the March 2021 half.

$68 million increase driven by the PT Panin AASB 9 adjustment in the September 2020 half.

$16 million increase in profits from associates relating to PT Panin.

Other (-$96 million or -76%)


$238 million decrease driven by loss on reclassification of ANZ Share Investing to held for sale ($251 million) in the Australia Retail andCommercial division, partially offset by gain from the sale of a legacy insurance portfolio to Tower ($13 million) in the New Zealand division.

$38 million increase driven by a loss on sale of UDC in the September 2020 half.

$35 million increase in the TSO and Group Centre division primarily due to realised gains from rebalancing the liquidity portfolio in Treasury ($31
million), and higher realised gains on economic hedges against foreign currency denominated revenue streams ($23 million) which offset net
unfavourable foreign currency translations elsewhere in the Group, partially offset by a $26 million decrease driven by dividend income from Bankof Tianjin in the September 2020 half.

$40 million increase in the Australia Retail and Commercial division due to the gain on disposal of the offsite ATM network, reduction in insurance
claims due to lower arrears and higher transaction rebates in the March 2021 half.

25

GROUP RESULTS
Operating Expenses - continuing operations
Half Year

Movement

Personnel

Mar 21$M
2,449

Sep 20$M
2,413

Mar 20$M
2,465

Mar 21
v. Sep 20
1%

Mar 21v. Mar 20-1%

Premises

350

384

405

-9%

-14%

Technology

785

985

839

-20%

-6%

Restructuring

105

56

105

88%

0%

Other

793

940

791

-16%

0%

Total cash operating expenses from continuing operations

4,482

4,778

4,605

-6%

-3%

Full time equivalent staff (FTE) from continuing operations

37,84437,506

37,834

1%

0%

Average full time equivalent staff (FTE) from continuing operations

37,594

37,69537,7590%0%Operating expenses by division
Australia Retail and Commercial

Mar 21$M
2,000

Sep 20$M
2,026

Mar 20$M
2,065

Mar 21
v. Sep 20-1%

Institutional

1,274

1,268

1,290

0%

-1%

New Zealand

623

745

690

-16%

-10%

Pacific

71

129

76

-45%

-7%

Movement

Half YearTSO and Group Centre
Total cash operating expenses from continuing operations

Mar 21v. Mar 20
-3%

514

610

484

-16%

6%

4,482

4,778

4,605

-6%

-3%

Half Year

Movement

Australia Retail and Commercial

Mar 21
14,118

Sep 2014,078Mar 2014,061Mar 21
v. Sep 20
0%

Mar 21v. Mar 20
0%

Institutional

5,215

5,291

5,350

-1%

-3%

New Zealand

6,691

6,679

7,009

0%

-5%

Pacific

1,101

1,113

1,108

-1%

-1%

TSO and Group Centre1

10,71910,345

10,306

4%

4%

Total FTE from continuing operations

37,84437,506

37,834

1%

0%

Average FTE from continuing operations

37,594

37,69537,7590%

0%

FTE by division

1

1.

FTE has been restated to reflect the transfer of New Zealand Technology operations from the TSO and Group Centre division to the New Zealand division (Sep 20: 918; Mar 20: 906).

Operating expenses (excluding large/notable items)
Operating expenses included a number of items collectively referred to as large/notable items of $266 million for the March 2021 half (Sep 20 half: $490
million; Mar 20 half: $244 million). While these items form part of total cash operating expenses from continuing operations, they have been excluded
from the tables below given their nature and significance. Refer to pages 13 to 17 for further details on large/notable items.
Expenses (excluding large/notable items)

Half Year

Movement

Personnel

Mar 21$M
2,396

Sep 20$M
2,334

Premises351

Technology

780

Restructuring

-

Other
Total cash operating expenses from continuing operations

Mar 20$M
2,401

Mar 21
v. Sep 20
3%

Mar 21v. Mar 20
0%

383

404

-8%

-13%

773

787

1%

-1%

-

-

n/a

n/a

689

798

769

-14%

-10%

4,216

4,288

4,361

-2%

-3%

Movement

Half Year

Expenses by division (excluding large/notable items)

Australia Retail and Commercial

Mar 21$M
1,869

Sep 20$M
1,892

Mar 20$M
1,904

Mar 21
v. Sep 20-1%

Mar 21v. Mar 20-2%

Institutional

1,188

1,207

1,278

-2%

-7%

New Zealand

613

622

653

-1%

-6%

Pacific

70

73

74

-4%

-5%

TSO and Group Centre
Total cash operating expenses from continuing operations

26

476

494

452

-4%

5%

4,216

4,288

4,361

-2%

-3%

GROUP RESULTS
Operating expenses - March 2021 Half Year v March 2020 Half YearMarch 2021 v March 2020
Operating expenses decreased by $123 million (-3%). Excluding large/notable items, operating expenses decreased $145 million (-3%).

Personnel expenses decreased $16 million (-1%) resulting from investment in digital capabilities and process automation which contributed tolower average FTE in the current period, and the impact of favourable foreign currency translation movements. This was partially offset by wage
inflation and higher employee leave expenses from granting all employees ‘thank-you’ leave to recognise their support during COVID-19.



Premises expenses decreased $55 million (-14%) driven by ongoing optimisation of our property footprint.

Technology expenses decreased $54 million (-6%) resulting from lease-related items in the March 2020 half.



Restructuring expenses were flat, with lower business and distribution channel changes in the Australia Retail and Commercial division, offset by
operational changes in the TSO and Group Centre division in the March 2021 half.



Other expenses increased $2 million (flat) as a litigation settlement ($69 million), higher customer remediation ($17 million) offset lower
marketing and travel expenses.

March 2021 v September 2020
Operating expenses decreased by $296 million (-6%). Excluding large/notable items, operating expenses decreased $72 million (-2%).
Personnel expenses increased $36 million (+1%) driven by higher employee leave expenses, partially from granting all employees ‘thank-you’leave to recognise their support during COVID-19, wage inflation and additional resourcing needed to provide COVID-19 hardship support. Thiswas partially offset by investment in digital capabilities and process automation which contributed to lower average FTE in the current period,
favourable foreign currency translation movements and lower customer remediation costs ($16 million).

Premises expenses decreased $34 million (-9%) driven by ongoing optimisation of our property footprint.

Technology expenses decreased $200 million (-20%) largely as a result of accelerated amortisation of $197 million due to a change inapplication of the software capitalisation policy in the September 2020 half.



Restructuring expenses increased $49 million (+88%) relating to business and property changes in the Australia Retail and Commercial division,and operational changes in the TSO and Group Centre division.

Other expenses decreased $147 million (-16%) driven by a goodwill write-off in the Pacific and New Zealand divisions in the September 2020
half ($77 million), lower customer remediation ($22 million) and lower marketing expenses and lower BAU expenses. This was partially offset bya litigation settlement recognised in the March 2021 half ($69 million).

27

GROUP RESULTS
Investment Spend - continuing operations
Movement

Half Year

Investment expensed

Mar 21$M
609

Sep 20$M
608

Mar 20$M
491

Mar 21
v. Sep 20
0%

Mar 21v. Mar 20
24%

Investment capitalised

160

224

198

-29%

-19%

Total investment spend from continuing operations

769

832

689

-8%

12%

Mar 20$M
217

Mar 21
v. Sep 20-6%Investment spend by division

Half Year
Mar 21$M
253

Australia Retail and Commercial

Sep 20$M
269

Movement
Mar 21v. Mar 20
17%

Institutional

83

86

78

-3%

6%

New Zealand

98

132

94

-26%

4%

-

-

-

n/a

n/a

TSO and Group Centre

335

345

300

-3%

12%

Total investment spend from continuing operations

769

832

689

-8%

12%

Pacific

Software Capitalisation - continuing operations
As at 31 March 2021, the Group’s intangible assets included $961 million of costs incurred to acquire and develop software. Details are presented in thetable below:
Half Year

Balance at start of period
Software capitalised during the period

Movement

Mar 21$M
1,039

Sep 20$M
1,263

Mar 20$M
1,323

Mar 21
v. Sep 20-18%

Mar 21v. Mar 20
-21%

156

194

181

-20%

-14%

(233)

(219)

(241)

6%

-3%

-

(197)

-

-100%

n/a

(1)

-

(2)

n/a

-50%

Amortisation during the period- Current period amortisation- Accelerated amortisation

1

Software impaired/written-off
Foreign currency translation movements
Total capitalised software from continuing operations

-

(2)

2

-100%

-100%

961

1,039

1,263

-8%

-24%

Mar 21
v. Sep 20-10%

Mar 21v. Mar 20
-36%
-31%

Capitalised software by division

As at

Movement

Mar 21$M
133

Sep 20$M
147

Mar 20$M
209

Institutional

135

139

196

-3%

New Zealand

8

16

33

-50%

-76%

TSO and Group Centre

685

737

825

-7%

-17%

Total capitalised software from continuing operations

961

1,039

1,263

-8%

-24%

Australia Retail and Commercial

1.

In the September 2020 half, the Group amended the application of its software amortisation policy to reflect the shorter useful life of software caused by rapidly changing technology andbusiness requirements. As a result, the Group recognised accelerated amortisation of $197 million during the September 2020 half which was recognised in the following divisions:

Accelerated amortisation

Sep 20 half$M

Australia Retail and Commercial

31

Institutional

38

New Zealand

11

TSO and Group Centre

117

Total

197

28

GROUP RESULTS
Credit Risk - continuing operations
The impact and duration of COVID-19 on the global economy and how governments, businesses and consumers respond remains uncertain. This
uncertainty is reflected in the Group’s assessment of expected credit losses (ECL) from its credit portfolio which are subject to a number of management
judgements and estimates. The judgements and estimates made by management were based on a variety of internal and external information, as well as
the Group’s experience with respect to the performance of the portfolio under previously stressed conditions. Refer to Note 1 of the Condensed
Consolidated Financial Statements for further information.
Loan Deferral and Relief Packages (Support Packages)
From March 2020 the Group offered various forms of assistance to customers to counteract the impact of COVID-19 on the ability of customers to meettheir loan obligations. The assistance provided included arrangements such as temporary deferral of principal and interest repayments, replacing
principal and interest with interest only repayments, and extension of loan maturity dates.
These support packages were phased out during the March 2021 half. In the case of home loan support packages, 94% of all loans in Australia and New
Zealand where customers took advantage of a support package have reverted back to loan repayments, with the remaining 6% having been either
restructured or transferred to hardship. For business loan support packages in Australia, 90% of loans have returned to loan payments, with theremaining 10% having been restructured or transferred to hardship. For those customers who took up loan support packages, it is considered that the
packages, as well as government support measures, may have obscured repayment delinquencies that might otherwise have occurred over the loandeferral period and those that may still occur in the future. Thus the Group has provided a component of ECL for expected delinquencies and increases insignificant increase in credit risk (SICR).
Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan
population and are managed accordingly.
Credit impairment charge/(release)
Half Year
Collectively assessed
Australia Retail and Commercial

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

(515)

526

525

large

large

Institutional

(110)

4

369

large

large

New Zealand

(53)

104

144

large

large

-

35

10

-100%

-100%

Total collectively assessed

(678)

669

1,048

large

large

Individually assessed
Australia Retail and Commercial

134

278

318

-52%

-58%

Institutional

55

49

272

12%

-80%

New Zealand

(5)

62

35

large

large

Pacific

3

6

1

-50%

large

Total individually assessed

187

395

626

-53%

-70%

Total credit impairment charge/(release)
Australia Retail and Commercial

(381)

804

843

large

large

Institutional

(55)

53

641

large

large

New Zealand

(58)

166

179

large

large

Pacific

Pacific
Total credit impairment charge/(release)

3

41

11

-93%

-73%

(491)

1,064

1,674

large

large

29

GROUP RESULTS
Credit impairment charge/(release), cont'dCollectively assessed

Individually assessedStage 3 Recoveries
and writebacks
$M

Total
$M

Total
$M

Stage 1
$M

Stage 2
$M

Stage 3
$M

Total
$M

Stage 3 New andincreased$M

Australia Retail and Commercial

(136)

(357)

(22)

(515)

326

(192)

134

(381)

Institutional

(89)

(8)

(13)

(110)

88

(33)

55

(55)

New Zealand

(6)

(30)

(17)

(53)

34

(39)

(5)

(58)

Pacific

(2)

(1)

3

-

7

(4)

3

3

Total

(233)

(396)

(49)

(678)

455

(268)

187

(491)

804

March 2021 Half Year

September 2020 Half Year
Australia Retail and Commercial

123

410

(7)

526

454

(176)

278

Institutional

-

1

3

4

124

(75)

49

53

New Zealand

(19)

104

19

104

88

(26)

62

166

Pacific

(3)

34

4

35

9

(3)

6

41

Total

101

549

19

669

675

(280)

395

1,064

March 2020 Half Year
Australia Retail and Commercial

105

395

25

525

511

(193)

318

843

Institutional

203

177

(11)

369

327

(55)

272

641

New Zealand

39

86

19

144

59

(24)

35

179

Pacific

7

3

-

10

3

(2)

1

11

Total

354

661

33

1,048

900

(274)

626

1,674

Collectively assessed credit impairment (charge)/releaseMarch 2021 v March 2020
The collectively assessed credit impairment charge decreased $1,726 million driven by decreases across the Australia Retail and Commercial(-$1,040 million), Institutional (-$479 million) and New Zealand (-$197 million) divisions. Collectively assessed credit impairment provision increased
substantially in the March 2020 half driven by the forward-looking impacts of the COVID-19 pandemic. Improvement in the economic outlook together
with a reduction in volumes, and improvements in portfolio mix and risk resulted in collectively assessed credit impairment provision releases in the
March 2021 half.

March 2021 v September 2020
The collectively assessed credit impairment charge decreased $1,347 million driven by decreases across the Australia Retail and Commercial(-$1,041 million), Institutional (-$114 million) and New Zealand (-$157 million) divisions. Collectively assessed credit impairment provision increased
substantially in the September 2020 half driven by the forward-looking impacts of the COVID-19 pandemic. Improvement in the economic outlook
together with a reduction in volumes, and improvements in portfolio mix and risk resulted in collectively assessed credit impairment provision
releases in the March 2021 half.

Individually assessed credit impairment (charge)/releaseMarch 2021 v March 2020
The individually assessed credit impairment charge decreased by $439 million (-70%) driven by decreases across the Institutional (-$217 million),
Australia Retail and Commercial (-$184 million), and New Zealand (-$40 million) divisions. The individually assessed credit impairment charges
remained subdued due to the impact of COVID-19 support packages.

March 2021 v September 2020
The individually assessed credit impairment charge decreased by $208 million (-53%) driven by decreases across the Australia Retail andCommercial (-$144 million), and New Zealand (-$67 million) divisions. The individually assessed credit impairment charges remained subdued due tothe impact of COVID-19 support packages.

30

GROUP RESULTS
Allowance for expected credit losses1
As at
Collectively assessed
Australia Retail and Commercial

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

2,331

2,845

2,320

-18%

0%

Institutional

1,364

1,513

1,590

-10%

-14%

New Zealand

513

570

541

-10%

-5%

77

80

50

-4%

54%

4,285

5,008

4,501

-14%

-5%

Individually assessed
Australia Retail and Commercial

520

610

582

-15%

-11%

Institutional

191

158

406

21%

-53%

New Zealand

79

102

79

-23%

0%

Pacific

19

21

26

-10%

-27%

Total individually assessed

809

891

1,093

-9%

-26%

Allowance for ECL
Australia Retail and Commercial

2,851

3,455

2,902

-17%

-2%

Institutional

1,555

1,671

1,996

-7%

-22%

New Zealand

592

672

620

-12%

-5%

Pacific

96

101

76

-5%

26%

5,094

5,899

5,594

-14%

-9%

Pacific
Total collectively assessed

Total allowance for ECL

Individuallyassessed

Collectively assessedStage 1
$M
462

Stage 2
$M
1,530

Stage 3
$M
339

Total
$M
2,331

Stage 3
$M
520

Total
$M
2,851

Institutional

940

407

17

1,364

191

1,555

New Zealand

141

313

59

513

79

592

As at March 2021
Australia Retail and Commercial

Pacific

18

42

17

77

19

96

Total

1,561

2,292

432

4,285

809

5,094

As at September 2020
Australia Retail and Commercial

597

1,886

362

2,845

610

3,455

Institutional

1,056

426

31

1,513

158

1,671

New Zealand

147

346

77

570

102

672

Pacific

20

46

14

80

21

101

Total

1,820

2,704

484

5,008

891

5,899

As at March 2020
Australia Retail and Commercial

474

1,477

369

2,320

582

2,902

Institutional

1,115

444

31

1,590

406

1,996
620

New Zealand

200

279

62

541

79

Pacific

26

13

11

50

26

76

Total

1,815

2,213

473

4,501

1,093

5,594

1.

Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.

31

GROUP RESULTS
Long-Run Loss Rates
Management believes that disclosure of modelled long-run historical loss rates for individually assessed provisions assists in assessing the longer term
expected loss rates of the lending portfolio as it removes the volatility of reported earnings created by the use of accounting losses. The long-run loss
methodology used for economic profit is an internal measure and is not based on the credit loss recognition principles of AASB 9 Financial Instruments.
In addition, given it is based on an average historical long-run loss rate it may not fully reflect the potential impacts associated with COVID-19.
As at
Long-run loss as a % of gross lending assets by division

Mar 21

Sep 20Mar 20Australia Retail and Commercial

0.24%

0.27%

0.28%

New Zealand

0.15%

0.16%

0.19%

Institutional

0.25%

0.30%

0.25%

Total Group

0.23%

0.26%

0.26%

Gross Impaired Assets
As at

Movement

Mar 21$M
1,941

Sep 20$M
2,001

Mar 20$M
2,209

Mar 21
v. Sep 20-3%

Mar 21v. Mar 20-12%

Restructured items2

300

254

226

18%

33%

Non-performing commitments and contingencies1

232

204

164

14%

41%

2,473

2,459

2,599

1%

-5%

Impaired loans

(778)

(851)

(1,055)-9%-26%

Non-performing commitments and contingencies

(31)

(40)

(38)

-23%

-18%

Net impaired assets

1,664

1,568

1,506

6%

10%

Gross impaired assets by division
Australia Retail and Commercial

Impaired loans1

Gross impaired assets
Individually assessed provisions

1,228

1,634

1,544

-25%

-20%

Institutional

892

434

742

large

20%

New Zealand

310

347

264

-11%

17%

Pacific

43

44

49

-2%

-12%

Gross impaired assets

2,473

2,459

2,599

1%

-5%

Gross impaired assets by size of exposure
Less than $10 million

1,474

1,713

1,680

-14%

-12%

$10 million to $100 million

267

339

349

-21%

-23%

Greater than $100 million

732

407

570

80%

28%

Gross impaired assets

2,473

2,459

2,599

1%

-5%

1.

2.



Impaired loans and non-performing commitments and contingencies do not include exposures that are collectively assessed for Stage 3 ECL, which comprise unsecured retail exposures of90+ days past due and defaulted but well secured exposures.
Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of
reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.

March 2021 v March 2020
Gross impaired assets decreased $126 million (-5%) driven by a decrease in the Australia Retail and Commercial division (-$316 million), partially
offset by increases in the Institutional ($150 million) and New Zealand ($46 million) divisions. The decrease in the Australia Retail and Commercial
division was driven by the repayment of a single name restructured exposure and decreases in the retail portfolio as underlying delinquency flows
remained subdued due to COVID-19 support packages. The increases in the Institutional and New Zealand divisions were driven by impairments ofa small number of well secured single name exposures.

March 2021 v September 2020
Gross impaired assets increased $14 million (1%) driven by an increase in the Institutional division ($458 million), partially offset by decreases in theAustralia Retail and Commercial (-$406 million), and New Zealand (-$37 million) divisions. The increase in the Institutional division was driven by
impairments on a small number of well secured single name exposures. The decrease in the Australia Retail and Commercial division was driven by
the repayment of a single name restructured exposure and decrease in the retail portfolio as underlying delinquency flows remained subdued due to
COVID-19 support packages. The decrease in the New Zealand division was driven by the underlying delinquency flows that remained subdued due
to COVID-19 support package.
The Group’s individually assessed provision coverage ratio on impaired assets was 32.7% at 31 March 2021 (Sep 20: 36.2%; Mar 20: 42.1%).

32

GROUP RESULTS
New Impaired Assets
Half Year
Mar 21$M
798

Impaired loans1

Sep 20$M
1,081

Movement
Mar 20$M
1,407

Mar 21
v. Sep 20-26%

Mar 21v. Mar 20-43%

Restructured items2

239

47

23

large

large

Non-performing commitments and contingencies1

84

91

140

-8%

-40%

1,121

1,219

1,570

-8%

-29%

New impaired assets by division
Australia Retail and Commercial

421

775

870

-46%

-52%

Institutional

602

197

571

large

5%

New Zealand

69

236

125

-71%

-45%

Pacific

29

11

4

large

large

1,121

1,219

1,570

-8%

-29%

Total new impaired assets

Total new impaired assets
1.

2.



Impaired loans and non-performing commitments and contingencies do not include exposures that are collectively assessed for Stage 3 ECL, which comprise unsecured retail exposures of90+ days past due and defaulted but well secured exposures.
Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of
reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.

March 2021 v March 2020
New impaired assets decreased $449 million (-29%) driven by the Australia Retail and Commercial (-$449 million), and New Zealand (-$56 million)
divisions due to continued COVID-19 support programs which were in place over the March 2021 half.

March 2021 v September 2020
New impaired assets decreased by $98 million (-8%) driven by the Australia Retail and Commercial (-$354 million), and New Zealand (-$167 million)
divisions, partially offset by an increase in the Institutional division ($405 million). The decrease in the Australia Retail and Commercial, and New
Zealand divisions were due to continued COVID-19 support programs which were in place over the March 2021 half. The increase in the Institutional
division was driven by impairments of a small number of well secured single name exposures.

Ageing analysis of net loans and advances that are past due but not impaired1
As at

Movement

1-29 days

Mar 21$M
5,657

Sep 20$M
5,161

Mar 20$M
9,114

Mar 21
v. Sep 20
10%

Mar 21v. Mar 20-38%

30-59 days

1,732

1,028

2,772

68%

-38%
-49%

60-89 days

691

569

1,368

21%

90+ days

3,290

3,844

3,621

-14%

-9%

Total

11,37010,602

16,875

7%

-33%

1.



Excludes eligible customers impacted by COVID-19 who applied for and were granted a 6 month repayment deferral packages for the duration of the deferral. Customers who were 30 days
past due or greater were not eligible for the 6 month repayment deferral packages.

March 2021 v March 2020
Net loans and advances past due but not impaired decreased $5,505 million (-33%) driven by decreases across all segments in the Australia Retailand Commercial, and New Zealand divisions home loan portfolio due to the customer uptake of COVID-19 support packages from March 2020.

March 2021 v September 2020
Net loans and advances past due but not impaired increased $768 million (+7%) driven primarily by the Australia Retail and Commercial divisionhome loan portfolio in the 1-29 days and 30-59 days segments due to a small number of customers who have become delinquent after rolling off
COVID-19 support packages. The decrease in the 90+ days segment relates to a reduced flow of accounts entering delinquency in prior periods
driven by COVID-19 support packages.

33

GROUP RESULTS
Income Tax Expense - continuing operations
Half Year

Movement

Income tax expense on cash profit

Mar 21$M
1,442

Sep 20$M
986

Mar 20$M
886

Effective tax rate (cash profit)

32.5%

29.6%

38.5%



Mar 21
v. Sep 20
46%

Mar 21v. Mar 20
63%

March 2021 v March 2020
The effective tax rate decreased from 38.5% to 32.5%. The decrease of 600 bps was driven by the non-tax deductible impairment of investments in
AmBank and PT Panin in the March 2020 half (-1,065 bps), partially offset by the non-tax deductible impacts of the reclassification of ANZ ShareInvesting to held for sale in the March 2021 half (+170 bps) and lower equity accounted earnings due to the AmBank 1MDB settlement and goodwill
impairment (+235 bps) and lower other equity accounted earnings (+106 bps).

March 2021 v September 2020
The effective tax rate increased from 29.6% to 32.5%. The increase of 290 bps was driven by the non-tax deductible impacts of the reclassification of
ANZ Share Investing to held for sale in the March 2021 half (+170 bps) and lower equity accounted earnings due to the AmBank 1MDB settlement
and goodwill impairment (+235 bps), partially offset by higher other equity accounted earnings primarily from PT Panin (-54 bps).

34

GROUP RESULTS
Impact of Foreign Currency Translation - continuing operations
The following tables present the Group’s cash profit results, net loans and advances and customer deposits neutralised for the impact of foreign currencytranslation movements. Comparative data has been adjusted to remove the translation impact of foreign currency movements by retranslating priorperiod comparatives at current period foreign exchange rates.
March 2021 Half Year v March 2020 Half Year
Half Year

Movement

ActualFX
unadjusted

FX
impactFX
adjusted

FX
unadjusted

FX
adjusted

Net interest income

Mar 21$M
6,986

Mar 20$M
7,222

Mar 20$M(98)

Mar 20$M
7,124

Mar 21v. Mar 20-3%

Mar 21v. Mar 20-2%

Other operating income

1,437

1,357

(2)

1,355

6%

6%

Operating income

8,423

8,579

(100)

8,479

-2%

-1%

Operating expenses(4,482)(4,605)95(4,510)-3%-1%Profit before credit impairment and income tax

3,941

3,974

(5)

3,969

-1%

-1%

491

(1,674)41(1,633)

large

large

Profit before income tax

Credit impairment (charge)/release

4,432

2,300

36

2,336

93%

90%

Income tax expense(1,442)

(886)

(16)

(902)

63%

60%

-

(1)

-

(1)

-100%

-100%

2,990

1,413

20

1,433

large

large

Non-controlling interests
Cash profit from continuing operations
Cash profit from continuing operations by division
Australia Retail and Commercial

1,782

1,214

-

1,214

47%

47%

Institutional

948

610

(4)

606

55%

56%

New Zealand

771

567

(11)

556

36%

39%

7

20

(1)

19

-65%

-63%

Pacific
TSO and Group Centre

(518)

(998)

36

(962)

-48%

-46%

Cash profit from continuing operations

2,990

1,413

20

1,433

large

large

Australia Retail and Commercial

344,269

329,812-329,8124%

4%Institutional

147,446

199,410(14,007)

185,403

-26%

-20%

New Zealand

120,482

125,195(7,182)

118,013

-4%

2%

1,713

2,176

(241)

1,935

-21%

-11%

449

16

(1)

15

large

large

614,359

656,609(21,431)

635,178-6%-3%

Australia Retail and Commercial

241,315

212,990-

212,99013%

13%

Institutional

223,666

258,517(28,460)

230,057-13%-3%

New Zealand

93,201

91,175(5,231)

85,944

2%

8%

Pacific

3,394

3,845

(432)

3,413

-12%

-1%

(53)

(32)

(1)

(33)

66%

61%

561,523

566,495(34,124)532,371-1%

5%

Net loans and advances by division

Pacific
TSO and Group Centre
Net loans and advances

Customer deposits by division

TSO and Group Centre
Customer deposits

35

GROUP RESULTS
March 2021 Half Year v September 2020 Half Year
Half Year
FX
FX
unadjusted
impactSep 20
Sep 20
$M
$M
6,827
(46)

FX
adjusted
Sep 20$M
6,781

Movement
FX
FX
unadjusted
adjustedMar 21Mar 21
v. Sep 20
v. Sep 20
2%
3%

Net interest income

ActualMar 21$M
6,986

Other operating income

1,437

2,346

3

2,349

-39%

-39%

Operating income

8,423

9,173

(43)

9,130

-8%

-8%

Operating expenses(4,482)(4,778)54(4,724)-6%-5%

Profit before credit impairment and income tax

3,941

4,395

11

4,406

-10%

-11%

491

(1,064)2(1,062)

large

large

Profit before income tax

Credit impairment (charge)/release

4,432

3,331

13

3,344

33%

33%

Income tax expense(1,442)

(986)

(4)

(990)

46%

46%

-

-

-

-

n/a

n/a

2,990

2,345

9

2,354

28%

27%

Non-controlling interests
Cash profit from continuing operations
Cash profit from continuing operations by division
Australia Retail and Commercial

1,782

1,123

-

1,123

59%

59%

Institutional

948

1,244

(19)

1,225

-24%

-23%

New Zealand

771

450

2

452

71%

71%
large

Pacific

7

(82)

5

(77)

large

TSO and Group Centre

(518)

(390)

21

(369)

33%

40%

Cash profit from continuing operations

2,990

2,345

9

2,354

28%

27%

Australia Retail and Commercial

344,269

339,381-339,3811%

1%Institutional

147,446

157,634(3,348)154,286-6%-4%

New Zealand

120,482

116,625(980)

115,645

3%

4%

1,713

1,866

(71)

1,795

-8%

-5%

449

1,587

-

1,587

-72%

-72%

614,359

617,093(4,399)612,6940%0%Australia Retail and Commercial

241,315

234,594-

234,5943%

3%

Institutional

223,666

223,288(7,871)

215,417

0%

4%

New Zealand

93,20191,004(765)

90,2392%

3%

Pacific

3,394

3,534

(129)

3,405

-4%

0%

Net loans and advances by division

Pacific
TSO and Group Centre
Net loans and advances

Customer deposits by division

(53)

(57)

-

(57)

-7%

-7%

561,523552,363(8,765)543,598

2%

3%

TSO and Group Centre
Customer deposits

36

GROUP RESULTS
Earnings Related Hedges - continuing operations
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily New
Zealand Dollar and US Dollar). New Zealand Dollar exposure relates to the New Zealand geography and USD exposures relate to Asia, Pacific, Europe &America geography. Details of these hedges are set out below.
Half Year
Mar 21$M
2,444

Sep 20$M
2,276

Mar 20$M
3,165

Amount taken to income (pre-tax statutory basis)2

26

149

(156)

Amount taken to income (pre-tax cash basis)3

18

19

(13)

USD Economic hedges
Net open USD position (notional principal)1

463

453

662

Amount taken to income (pre-tax statutory basis)2

26

87

(39)

Amount taken to income (pre-tax cash basis)3

16

(8)

(15)

NZD Economic hedges
Net open NZD position (notional principal)1

1.
2.
3.

Value in AUD at contracted rate.
Unrealised valuation movement plus realised revenue from matured or closed out hedges.
Realised revenue from closed out hedges.

As at 31 March 2021, the following hedges were in place to partially hedge future earnings against adverse movements in exchange rates:

NZD 2.6 billion at a forward rate of approximately NZD 1.06/AUD.



USD 0.3 billion at a forward rate of approximately USD 0.67/AUD.

During the March 2021 half:

NZD 1.0 billion of economic hedges matured and a realised gain of $18 million (pre-tax) was recorded in cash profit.



USD 0.2 billion of economic hedges matured and a realised gain of $16 million (pre-tax) was recorded in cash profit.

An unrealised gain of $18 million (pre-tax) on the outstanding NZD and USD economic hedges were recorded in the statutory Income Statement
during the half. This unrealised gain has been treated as an adjustment to statutory profit in calculating cash profit as these are hedges of future NZD
and USD revenues.

Earnings Per Share - continuing operations
Movement

Half Year
Mar 21

Sep 20Mar 20Mar 21
v. Sep 20

Mar 21v. Mar 20

Basic

105.3

82.8

49.9

27%

large

Diluted

99.9

76.1

47.5

31%

large

Basic

2,838.7

2,831.2

2,830.6

0%0%

Diluted

3,084.4

3,200.7

3,238.6-4%-5%

Cash profit from continuing operations ($M)

2,990

2,345

1,413

28%

large

Cash profit from continuing operations used in calculating diluted
cash earnings per share ($M)

3,082

2,435

1,537

27%

large

Cash earnings per share (cents) from continuing operations

Cash weighted average number of ordinary shares (M)37

GROUP RESULTS
Dividends - continuing operations
Half Year
Dividend per ordinary share (cents) - continuing operations1InterimMar 21
70

Sep 20-Movement
Mar 20
25

Final

-

35

-

Total

70

35

25

Ordinary share dividends used in payout ratio ($M)2,3

1,992

994

709

Cash profit from continuing operations ($M)

2,990

2,345

1,413

Ordinary share dividend payout ratio (cash basis)3

66.6%

42.4%

50.2%

1.

2.

3.

Mar 21
v. Sep 20

Mar 21v. Mar 20

100%

large

28%

large

Fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents for the proposed 2021 interim dividend (2020 final dividend: NZD 4 cents;
2020 interim dividend: NZD 3 cents).
Dividend paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries to the Group’s non-controlling equity holders (Mar 2021 half: nil; Sep 2020 half: nil, Mar2020 half: nil).
Dividend payout ratio is calculated using proposed 2021 interim dividend of $1,992 million, based on the forecast number of ordinary shares on issue at the dividend record date. Dividend
payout ratios for the September 2020 half and March 2020 half were calculated using actual dividend paid.

The Directors propose an interim dividend of 70 cents be paid on each eligible fully paid ANZ ordinary share on 1 July 2021. The proposed 2021 interim
dividend will be fully franked for Australian tax purposes. New Zealand imputation credits of NZD 8 cents per ordinary share will also be attached.

Economic Profit - continuing operations
Half Year

Statutory profit attributable to shareholders of the Company fromcontinuing operations

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

2,951

2,040

1,635

45%

80%

39

305

(222)

-87%

large

Cash profit from continuing operations

2,990

2,345

1,413

28%

large

Economic credit cost adjustment

(895)

139

639

large

large

Adjustments between statutory profit and cash profit from continuing operations

Imputation credits

549

546

546

1%

1%

Economic return from continuing operations

2,644

3,030

2,598

-13%

2%

Cost of capital(2,621)(2,613)(2,536)

0%

3%

23

417

62

-94%

-63%

Economic profit from continuing operations

Economic profit is a risk adjusted profit measure used to evaluate business unit performance. This is used for internal management purposes and is not
subject to audit by the external auditor. At a business unit level, capital is allocated based on Regulatory Capital, whereby higher risk businesses attract
higher levels of capital. This method is designed to help drive appropriate risk management and ensure business returns align with the level of risk. Key
risks covered include credit risk, operational risk, market risk and other risks.
Economic profit is calculated via a series of adjustments to cash profit:The economic credit cost adjustment replaces the accounting credit loss charge with internal expected loss based on the average long-run loss rate
per annum on the portfolio over an economic cycle.

The benefit of imputation credits is recognised, measured at 70% of Australian tax.

The cost of capital is a major component of economic profit. At an ANZ Group level, this is calculated using average ordinary shareholders’ equity(excluding non-controlling interests), multiplied by the cost of capital rate (currently 8.5% and applied across comparative periods).

Economic profit decreased by $39 million against the March 2020 half with higher cash profit being more than offset by an unfavourable economic credit
cost adjustment and higher cost of capital.
Economic profit decreased by $394 million against the September 2020 half due to higher cash profit being more than offset by an unfavourable
economic credit cost adjustment.

38

GROUP RESULTS
Condensed Balance Sheet - including discontinued operations
Movement

As at
AssetsCash / Settlement balances owed to ANZ / Collateral paid

Mar 21$B
146.3

Sep 20$B
129.7

Mar 20$B
166.8

Trading and investment securities

138.3

144.3

135.0

-4%

2%

Derivative financial instruments

104.7

135.3

173.7

-23%

-40%

Net loans and advances

614.4

617.1

656.6

0%

-6%

Mar 21
v. Sep 20
13%

Mar 21v. Mar 20
-12%

14.6

15.9

17.9

-8%

-18%

1,018.3

1,042.3

1,150.0-2%-11%

Settlement balances owed by ANZ / Collateral received

26.7

31.5

39.8

-15%

-33%

Other
Total assets
Liabilities
Deposits and other borrowings

706.6

682.3

726.9

4%

-3%

Derivative financial instruments

102.9

134.7

167.4

-24%

-39%

Debt issuances

107.6

119.7

140.2

-10%

-23%

Other

11.9

12.8

14.3

-7%

-17%

Total liabilities

955.7

981.0

1,088.6-3%-12%

Total equity

62.6

61.3

61.4

2%

2%





March 2021 v March 2020Cash / Settlement balances owed to ANZ / Collateral paid decreased $20.5 billion (-12%) driven by the impact of foreign currency translation
movements and decreases in reverse repurchase agreements and collateral paid, partially offset by increases in balances with central banks andsettlement balances owed to ANZ.



Derivative financial assets and liabilities decreased $69.0 billion (-40%) and $64.5 billion (-39%) respectively driven by market rate movements,
primarily due to strengthening of the AUD against the USD and increase in AUD and NZD swap rates.

Net loans and advances decreased $42.2 billion (-6%) driven by the impact of foreign currency translation movements and lower lending
volumes in the Institutional division (-$38.0 billion) as customers repaid COVID-19 lending. This was partially offset by an increase in theAustralia Retail and Commercial division (+$14.5 billion) driven by home loan growth, partially offset by a decrease in unsecured personal
lending and commercial lending, and an increase in the New Zealand division (+$2.5 billion) driven by home loan growth, partially offset by the
reduction in net loans and advances which were part of the UDC sale.

Settlement balances owed by ANZ / Collateral received decreased by $13.1 billion (-33%) driven by the impact of foreign currency translation
movements and decreases in collateral received and cash clearing account balances.



Deposits and other borrowings decreased $20.3 billion (-3%) driven by the impact of foreign currency translation movements, decreases indeposits from banks and repurchase agreements (-$25.1 billion) and a decrease in customer deposits in the Institutional division (-$6.4 billion).
This was partially offset by customer deposit growth in the Australia Retail and Commercial (+$28.3 billion), and New Zealand (+$7.3 billion)
divisions, the drawdown of the RBA Term Funding Facility (TFF) (+$12.0 billion), and increases in commercial paper (+$4.6 billion) andcertificates of deposit (+$2.5 billion).



Debt issuances decreased $32.6 billion (-23%) driven by the impact of foreign currency translation movements and lower senior debt issuances
which were partially replaced by the drawdown of the TFF, classified in Deposits and other borrowings.

March 2021 v September 2020Cash / Settlement balances owed to ANZ / Collateral paid increased $16.6 billion (+13%) driven by increases in balances with central banks andsettlement balances owed to ANZ, partially offset by the impact of foreign currency translation movements and decreases in reverse repurchaseagreements and collateral paid.

Derivative financial assets and liabilities decreased $30.6 billion (-23%) and $31.8 billion (-24%) respectively, driven by market rate movements,
primarily due to the strengthening of the AUD against the USD and NZD and the increase in AUD and NZD swap rates.

Net loans and advances decreased $2.7 billion (flat) with the impact of foreign currency translation movements and lower lending volumes in theInstitutional division (-$6.8 billion) reflecting reduced economic activities and excess liquidity being offset by increases driven by home loan
growth in the Australia Retail and Commercial (+$4.9 billion), and New Zealand (+$4.8 billion) divisions.



Deposits and other borrowings increased $24.3 billion (+4%) driven by increases in customer deposits in the Australia Retail and Commercial(+$6.7 billion), New Zealand (+$3.0 billion) and Institutional (+$8.3 billion) divisions, an increase in commercial paper (+$17.0 billion), and anincrease in certificates of deposit (+$7.7 billion). This was partially offset by the impact of foreign currency translation movements and decreases
in deposits from banks and repurchase agreements (-$7.5 billion).



Debt issuances decreased $12.1 billion (-10%) driven by the impact of foreign currency translation movements and lower senior debt issuances.

39

GROUP RESULTS
Liquidity Risk - including discontinued operations
Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesaledebt, or that the Group has insufficient capacity to fund increases in assets. The timing mismatch of cash flows and the related liquidity risk is inherent inall banking operations and is closely monitored by the Group and managed in accordance with the risk appetite set by the Board.
The Group’s approach to liquidity risk management incorporates two key components:


Scenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by the ability to meet a range of regulatory requirements and internal liquidity metrics mandated by the Board.
The metrics cover a range of scenarios of varying duration and level of severity. The objective of this framework is to:Provide protection against shorter term extreme market dislocation and stress.



Maintain structural strength in the balance sheet by ensuring that an appropriate amount of longer-term assets are funded with longer-term
funding.

Ensure that no undue timing concentrations exist in the Group’s funding profile.

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 globally, including APRA. As part of meeting LCR requirements, ANZ has a Committed Liquidity Facility (CLF) with the Reserve Bank ofAustralia (RBA). The CLF has been established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides analternative form of contingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible
to be pledged as security with the RBA. The total amount of the CLF available to a qualifying Authorised Deposit-taking Institution (ADI) is set
annually by APRA. From 1 January 2021, ANZ’s CLF is $10.7 billion (2020 calendar year end: $35.7 billion). The 2021 CLF reduction is driven by theincrease in government securities outstanding in Australia that are available for ADIs to hold. APRA has indicated that if this increase continues, the
CLF may no longer be required in the foreseeable future.
Liquid assets
The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent with
Basel 3 LCR:Highest-quality liquid assets (HQLA1): Cash, highest credit quality government, central bank or public sector securities eligible for repurchasewith central banks to provide same-day liquidity.

High-quality liquid assets (HQLA2): High credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.



Alternative liquid assets (ALA): Assets qualifying as collateral for the CLF and other eligible securities listed by the Reserve Bank of New
Zealand (RBNZ).

In March 2020, in response to the economic impact of COVID-19, the RBA implemented a Term Funding Facility (TFF). Under the TFF, the RBA has
offered three-year funding to ADI’s secured by RBA eligible collateral. ADIs can include the undrawn but available TFF as a liquid asset for the LCR,
representing a committed central bank facility that can be drawn at the ADI’s discretion. ANZ’s undrawn but available TFF is represented below by
the assets that are eligible to be pledged as security with the RBA.
In November 2020, in response to the economic impact of COVID-19, the RBNZ implemented a Funding for Lending Programme (FLP). Under the
FLP the RBNZ has offered three-year funding to eligible counterparties secured by approved eligible collateral. APRA has advised that the undrawn
but available FLP can be included as a cash inflow for the LCR. As the Level 2 LCR excludes liquid assets held above the NZ dollar LCR of 100%,
the undrawn but available FLP has also reduced the reported Level 2 liquid assets.
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory requirements andthe risk appetite set by the Board.
Half Year Average

Movement

Mar 21$B

Sep 20$B

Mar 20$B

Mar 21
v. Sep 20

Mar 21v. Mar 20

HQLA1

186.2

164.6

159.3

13%

17%

HQLA2

10.4

9.9

9.6

5%

8%

Internal Residential Mortgage Backed Securities2

18.5

35.3

27.7

-48%

-33%

Market Values Post Discount1

Other ALA2
Total liquid assets

7.9

8.6

12.8

-8%

-38%

223.0

218.4

209.4

2%

6%

203.2

203.0

191.9

0%

6%
0%

Cash flows modelled under stress scenario
Cash outflows
Cash inflows

41.3

45.4

41.2

-9%

Net cash outflows

161.9

157.6

150.7

3%

7%

Liquidity Coverage Ratio3

138%

139%

139%

-1%

-1%

1.
2.

3.

Half year average basis, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
Comprised of assets qualifying as collateral for the CLF and TFF up to approved facility limit; and any liquid assets as defined in the RBNZ's Liquidity Policy - Annex: Liquidity Assets Prudential Supervision Department Document BS13A12.
All currency Level 2 LCR.

40

GROUP RESULTS
Funding - including discontinued operations
ANZ targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.
$3.8 billion of term wholesale debt (all of which was subordinated) with a remaining term greater than one year as at 31 March 2021 was issued during
the half.
The following table shows the Group’s total funding composition:
As at

Movement

Mar 21$B

Sep 20$B

Mar 20$B

Mar 21
v. Sep 20

Customer deposits and other liabilities
Australia Retail and Commercial

241.3

234.6

213.0

3%

13%

Institutional

223.6

223.3

258.5

0%

-14%

New Zealand

93.2

91.0

91.2

2%

2%

Pacific

3.4

3.5

3.8

-3%

-11%

561.5

552.4

566.5

2%

-1%

8.9

8.9

11.1

0%

-20%

Total customer liabilities (funding)

570.4

561.3

577.6

2%

-1%

Wholesale funding
Debt issuances and Term Funding Facility

96.0

110.6

119.1

-13%

-19%

Subordinated debt

23.7

21.1

21.1

12%

12%

Certificates of deposit

40.0

32.5

37.9

23%

6%

Commercial paper

26.1

9.1

21.8

large

20%

Other wholesale borrowings3,4

87.9

104.2

130.0

-16%

-32%
-17%

Customer deposits
Other funding liabilities1,2

Mar 21v. Mar 20

Total wholesale funding

273.7

277.5

329.9

-1%

Shareholders' equity

62.6

61.3

61.4

2%

2%

Total funding

906.7

900.1

968.9

1%

-6%

1.
2.
3.
4.

Includes interest accruals, payables and other liabilities, provisions and net tax provisions.
Excludes liability for acceptances as they do not provide net funding.
Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.
Includes RBA open repurchase arrangement netted down by the corresponding exchange settlement account cash balance.

Net Stable Funding Ratio
The following table shows the Level 2 Net Stable Funding Ratio (NSFR) composition:
As at

Movement

Mar 21$B

Sep 20$B

Mar 20$B

Required Stable Funding1
Retail & small and medium enterprises, corporate loans <35% risk weight2

196.0

188.1

187.4

4%

5%

Retail & small and medium enterprises, corporate loans >35% risk weight2

179.0

174.7

193.2

2%

-7%

Other lending3

29.7

28.6

26.9

4%

10%

Liquid assets

12.1

15.3

16.0

-21%

-24%

Other assets4

37.2

38.6

45.3

-4%

-18%

Total Required Stable Funding

454.0

445.3

468.8

2%

-3%

Retail & small and medium enterprise customer deposits

275.7

271.7

257.3

1%

7%

Corporate, public sector entities & operational deposits

105.9

104.3

110.0

2%

-4%

Mar 21
v. Sep 20

Mar 21v. Mar 20

1

Available Stable Funding

Central bank & other financial institution deposits

4.7

5.1

5.5

-8%

-15%

Term funding5

70.7

87.9

95.8

-20%

-26%

Short term funding & other liabilities

5.6

1.4

1.4

large

large

Capital

85.0

80.9

82.1

5%

4%

Total Available Stable Funding

547.6

551.3

552.1

-1%

-1%

Net Stable Funding Ratio

121%

124%

118%

-3%

3%

1.
2.
3.
4.
5.

NSFR factored balance as per APRA Prudential Regulatory Standard APS 210 Liquidity.
Risk weighting as per APRA Prudential Regulatory Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk.
Includes financial institution, central bank and non-performing loans.
Includes off-balance sheet items, net derivatives and other assets.
Includes balances from the drawdown of the RBA Term Funding Facility (TFF).

41

GROUP RESULTS
Capital Management - including discontinued operations
As at
Internationally Comparable Basel 31

APRA Basel 3
Mar 21

Sep 20Mar 20Mar 21

Sep 20Mar 20Common Equity Tier 1

12.4%

11.3%

10.8%

18.1%

16.7%

15.5%

Tier 1

14.3%

13.2%

12.5%

20.5%

19.1%

17.8%

Total capital

18.3%

16.4%

15.5%

25.7%

23.3%

21.5%

Risk weighted assets ($B)

408.2

429.4

449.0

317.5

331.5

353.7

Capital Ratios (Level 2)

1.

Internationally Comparable methodology aligns with APRA’s information paper entitled “International Capital Comparison Study” (13 July 2015).

APRA Basel 3 Common Equity Tier 1 (CET1) - March 2021 v September 20201.

Excludes large/notable and one off items for the purposes of Regulatory Capital Management attribution which are included in ‘other’ with the exception of the Asian associate items and theloss on reclassification of ANZ Share Investing to held for sale which are nil impact to capital since it results in an equivalent reduction in capital deductions. Refer to pages 13 to 17.

March 2021 v September 2020
ANZ’s CET1 ratio increased 110 bps to 12.4% during the March 2021 half. Key drivers of the movement in the CET1 ratio were:

Cash Profit (excluding large/notable items and credit impairment impact) increased the CET1 ratio by +80 bps.

Benefits from credit impairment release including the associated deferred tax assets (DTA) impacts, along with RWA risk migration benefits
mainly from Australian mortgages portfolio associated with lower RWA intensity in part due to changes in household saving and spending
patterns through the COVID-19 period, increased the CET1 ratio by +35 bps.



Lower business RWA usage (excluding foreign currency translation movements, regulatory changes, risk migration and other one-offs) increased
CET1 ratio by +32 bps. This was mainly driven by a reduction in underlying CRWA in the Institutional division and an overall reduction in non
CRWA from movements mainly in Interest Rate Risk in the Banking Book (IRRBB).

Capital deduction of -7 bps was driven by the movements in retained earnings in deconsolidated entities, expected losses in excess of eligible
provision shortfall and other intangible movements in the period.

Payment of the 2020 final dividend (net of BOP and DRP issuance) reduced the CET1 ratio by -20 bps.

Net RWA imposts decreased the CET1 ratio by -6 bps.



Other impacts totalling -4 bps including large/notable adjustments from customer remediation, restructuring and litigation costs (-6 bps) offset byother minor impacts of +2 bps.

Total Risk Weighted Assets

As at

Movement

Mar 21$B
341.9

Sep 20$B
360.0

Mar 20$B
386.0

Mar 21
v. Sep 20-5%

Mar 21v. Mar 20-11%

Market risk and IRRBB RWA

19.1

21.8

15.1

-12%

26%

Operational RWA

47.2

47.6

47.9

-1%

-1%

Total RWA

408.2

429.4

449.0

-5%

-9%

Credit RWA

42

GROUP RESULTS

Total Risk Weighted Assets (RWA) - March 2021 v September 2020March 2021 v September 2020
Total RWA decreased $21.2 billion. Excluding the impact of foreign currency translation movements and other non-recurring CRWA changes,
underlying CRWAs (divisional lending and risk migration) decreased $16.0 billion, mainly driven by lending reduction in the Institutional division andreduced risk migration in the Australia Retail and Commercial division. Other CRWA impacts include net changes from RWA imposts. The decreasein non-CRWA of $3.1 billion was mainly driven by IRRBB reduction of $3.4 billion, mostly from improvement in embedded gains combined with
reduction in repricing and yield curve risk.

APRA to Internationally Comparable1 Common Equity Tier 1 (CET1) as at 31 March 2021

1. ANZ’s interpretation of the regulations documented in the Basel Committee publications: “Basel 3: A global regulatory framework for more resilient banks and banking systems” (June 2011)and “International Convergence of Capital Measurement and Capital Standards” (June 2006). Also includes differences identified in APRA’s information paper entitled “International CapitalComparison Study” (13 July 2015).

The above provides a reconciliation of the CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Comparable Basel 3
standards. APRA views the Basel 3 reforms as a minimum requirement and hence has not incorporated some of the concessions proposed in the Basel3 rules and has also set higher requirements in other areas. As a result, Australian banks’ Basel 3 reported capital ratios will not be directly comparablewith international peers. The International Comparable Basel 3 CET1 ratio incorporates differences between APRA and both the Basel Committee Basel
3 framework (including differences identified in the March 2014 Basel Committee’s Regulatory Consistency Assessment Programme (RCAP) on Basel 3
implementation in Australia) and its application in major offshore jurisdictions.
The material differences between APRA Basel 3 and Internationally Comparable Basel 3 ratios include:
Deductions

Investments in insurance and banking associates - APRA requires full deduction against CET1. On an Internationally Comparable basis, theseinvestments are subject to a concessional threshold before a deduction is required.



Deferred tax assets - A full deduction is required from CET1 for deferred tax assets relating to temporary differences. On an Internationally
Comparable basis, this is first subject to a concessional threshold before the deduction is required.

Risk Weighted Assets (RWA)Mortgages RWA - APRA imposes a floor of 20% on the downturn Loss Given Default (LGD) used in credit RWA calculations for residential
mortgages. The Internationally Comparable Basel 3 framework requires a downturn LGD floor of 10%. Additionally, from July 2016, APRA requires ahigher correlation factor than the Basel framework.



IRRBB RWA - APRA requires inclusion of IRRBB within the RWA base for the CET1 ratio calculation. This is not required on an Internationally
Comparable basis.

Specialised lending - APRA requires the supervisory slotting approach to be used in determining credit RWA for specialised lending exposures. The
Internationally Comparable basis allows for the advanced internal ratings based approach to be used when calculating RWA for these exposures.



Unsecured Corporate Lending LGD - an adjustment to align ANZ’s unsecured corporate lending LGD to 45% to be consistent with banks in otherjurisdictions. The 45% LGD rate is also used in the Foundation Internal Ratings-Based approach (FIRB).



Undrawn Corporate Lending Exposure at Default (EAD) - an adjustment to ANZ’s credit conversion factors (CCF) for undrawn corporate loan
commitments to 75% (used in FIRB approach) to align with banks in other jurisdictions.

43

GROUP RESULTS
Leverage Ratio - including discontinued operations
At 31 March 2021, the Group’s APRA Leverage Ratio was 5.5% which is above the 3.5% APRA proposed minimum for internal ratings-based approach
ADIs (IRB ADIs) which includes ANZ. The following table summarises the Group’s Leverage Ratio calculation:

As at

Movement

Mar 21$M
58,431

Sep 20$M
56,481Mar 20$M
56,295

Mar 21
v. Sep 20
3%On-balance sheet exposures (excluding derivatives and securities financing transaction
exposures)

878,187

841,830

899,4114%-2%

Derivative exposures

33,93332,29642,868

5%

-21%
-60%

Tier 1 Capital (net of capital deductions)

Mar 21v. Mar 20
4%

Securities financing transaction exposures

26,94758,41667,443-54%

Other off-balance sheet exposures

114,125

114,128

114,6770%0%1,053,192

1,046,670

1,124,399

1%-6%

APRA Leverage Ratio

5.5%

5.4%

5.0%

Internationally Comparable Leverage Ratio

6.2%

6.0%

5.6%

Total exposure measureMarch 2021 v September 2020
APRA leverage ratio increased 15 bps during the March 2021 half. Key drivers of the movement were:

Net organic capital generation (largely from cash profit excluding large/notable and one-off items) less dividends paid (+25 bps).

On balance sheet exposure growth in liquids and loan growth in the Australia Retail and Commercial, and New Zealand divisions (-10 bps).

44

GROUP RESULTS
Capital Management - Other Developments


Capital Requirements - Unquestionably Strong
APRA’s key initiatives in relation to Unquestionably Strong capital requirements are as follows:

In July 2017, APRA released an information paper outlining its assessment on the additional capital required for the Australian banking sector tobe considered ‘unquestionably strong’ as originally outlined in the Financial System Inquiry final report in December 2014. APRA indicated that“in the case of the four major Australian banks, this equated to a benchmark CET1 capital ratio, under the current capital adequacy framework, ofat least 10.5 percent from 1 January 2020”.



APRA is consulting on a number of proposals in relation to risk-weighting framework revisions to credit risk, operational risk, market risk andinterest rate risk in the banking book requirements. In December 2020, APRA released an updated consultation paper regarding proposedchanges to the capital framework for ADIs aimed at embedding ‘unquestionably strong’ levels of capital, improving the flexibility of the framework,
and improving the transparency of ADI capital strength. These proposals replaced previous consultation packages released by APRA in 2018and 2019 in relation to proposed revisions to the capital framework for ADIs and is expected to be implemented from 1 January 2023. The key
aspects of APRA’s latest December 2020 proposals are:
- Increased alignment with internationally agreed Basel standards;- Implementing more risk-sensitive risk weights for residential mortgage lending;- Introduction of the Basel II capital floor that limits the RWA outcome for IRB ADIs to no less than 72.5% of the RWA outcome under the
standardised approach;- Improving the flexibility of the capital framework through the introduction of a default level of the countercyclical capital buffer (CCyB) of 100
bps of RWA and increasing the capital conservation buffer (CCB) for IRB ADIs by 150 bps (from 250 bps to 400 bps);- Improving the transparency and comparability of ADIs’ capital ratios, including by requiring IRB ADIs to also publish their capital ratios under
the standardised approach; and- Implementing a Minimum Leverage Ratio for IRB ADIs at 3.5%.
APRA has indicated in their proposals a decrease in RWA by approximately 10% for IRB ADIs, 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 is expected to calibrate the proposed capital requirements for
ADIs, measured in dollar terms, to be consistent at an industry level with the existing ‘unquestionably strong’ capital benchmarks for ADIs under
the current capital 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.

Given the number of items that are yet to be finalised by APRA, the final outcome of any further changes to APRA’s prudential standards or otherimpacts on the Group remains uncertain.


APRA Guidance on Capital Management
In December 2020, APRA updated their capital management guidance whereby from the 2021 calendar year, APRA will no longer hold banks to aminimum level of earnings retention but ADIs will need to maintain vigilance and careful planning in capital management, such as the need for ADI toconduct regular stress testing and assurance on the capacity to continue to lend, amongst others. APRA also stated that the onus will be on Boards
to carefully consider the sustainable rate for dividends, taking into account the outlook for profitability, capital and the economic environment.



APRA Total Loss Absorbing Capacity Requirements
In July 2019, APRA announced its decision on loss-absorbing capacity in which it will require domestic systemically important banks (D-SIBs),
including ANZ, to increase their Total Capital by 3% of risk weighted assets by January 2024. Based on ANZ’s capital position as at 31 March 2021,
this represents an incremental increase in the Total Capital requirement of approximately $4 billion, with an equivalent decrease in other seniorfunding. APRA has stated that it anticipates that D-SIBs would satisfy the requirement predominantly with Tier 2 capital.



Revisions to Related Entities Framework
APRA announced in August 2019 that it will implement its proposal to reduce limits for Australian ADIs’ exposure to related entities, reducing limits
from 50% of Level 1 Total Capital to 25% of Level 1 Tier 1 Capital. As exposures are measured net of capital deductions, the proposed changes to
APRA’s capital regulations (contained in APS111 below) would affect the measurement of ADIs’ exposures. On the basis that the APS111 revisions
are implemented as currently proposed, the reduction in the above limits is not expected to have a material impact on ANZ and its subsidiaries. The
implementation date for changes to the related entities framework has been deferred by APRA to 1 January 2022.



Revisions to APS111 Capital Adequacy
In October 2019, APRA released a discussion paper on draft revisions to the prudential standard APS111 Capital Adequacy: Measurement of Capitalfor consultation. The most material change from APRA’s proposal is in relation to the treatment of capital investments for each banking andinsurance subsidiary at Level 1 with the tangible component of the investment changing from 400% risk weighting to:

250% risk weighting up to an amount equal to 10% of ANZ’s net Level 1 CET1; andthe remainder of the investment will be treated as a CET1 capital deduction.

ANZ is reviewing the implications for its current investments. The net impact on the Group is unclear and will depend upon a number of factors
including the capitalisation of the affected subsidiaries at the time of implementation, the final form of the prudential standard, as well as the effect ofmanagement actions being pursued that have the potential to materially offset the impact of these proposals. Based on ANZ’s current investment in
its affected subsidiaries and in the absence of any offsetting management actions, the above proposals implies a reduction in ANZ’s Level 1 CET1
capital ratio of up to approximately $2 billion (~60 bps). However, ANZ believes that this outcome is unlikely and, post implementation ofmanagement actions, the net capital impact could be minimal. There is no impact on ANZ’s Level 2 CET1 capital ratio arising from these proposedchanges. The proposed implementation date has been deferred by APRA to January 2022.

45

GROUP RESULTS

The Reserve Bank of New Zealand (RBNZ) review of capital requirements
In December 2019, the RBNZ announced its capital review policy decisions for New Zealand Banks. In November 2020, the RBNZ released for
consultation its draft Banking Prudential Requirements for these capital policy changes. The key requirements include:

Tier 1 capital requirement of 16% of RWA for ANZ Bank New Zealand Limited (ANZ New Zealand) of which up to 2.5% of this could be in theform of Additional Tier 1 (AT1) Capital. Total Capital requirement remained at 18% of RWA of which up to 2% can be Tier 2 Capital;

Redeemable preference shares are allowable as AT1 capital. It is anticipated that ANZ New Zealand will be able to refinance existing internal
AT1 securities to external counterparties;

Increase RWA outcomes for IRB banks to approximately 90% of what would be calculated under the standardised approach:-Apply an 85% output floor for credit risk RWA of IRB banks; and-Increase the scalar applied to credit risk RWA of IRB banks from 1.06 to 1.2;

Implemented over a transition period concluding on 1 July 2028.

The net impact on the Group is an increase in CET1 capital of approximately $0.7 billion between 31 March 2021 and the end of the transition period(based on the Group’s 31 March 2021 balance sheet). This amount could vary over time subject to changes to capital requirements in ANZ New
Zealand (e.g. from RWA growth), potential dividend payments and the level of capital already retained by ANZ New Zealand to meet the final RBNZ
requirements.


RBNZ announcement on actions to support the banking system
In March 2021, the RBNZ announced that the restrictions on dividends and redemption of non-CET1 capital instruments put in place in April 2020 will
be eased. The updated restrictions will allow ANZ New Zealand, a New Zealand subsidiary of ANZBGL to pay up to 50% of their earnings as
dividends to shareholders. This restriction will remain in place until 1 July 2022, at which point the RBNZ intends to remove the restrictions
completely, subject to prevailing economic conditions.
Further, in the March 2021 update, the RBNZ announced that it will remove the restrictions on redemption of non-CET1 capital instruments.
However, as the restriction was in place in May 2020, ANZ New Zealand was not permitted to redeem its NZD 500 million Capital Notes at theredemption date and did not exercise its option to convert in May 2020. The terms of the Capital Notes provide for their conversion into a variable
number of ANZBGL shares in May 2022 subject to certain conditions. Conversion would result in an increase in the Group’s CET1 capital(approximately 10 bps) at Level 2.

46

DIVISIONAL RESULTSCONTENTS

Page

Divisional Performance - continuing operations

48

Australia Retail and Commercial - continuing operations

53

Institutional - continuing operations

57

New Zealand - continuing operations

64

Pacific - continuing operations

69

Technology, Services & Operations (TSO) and Group Centre - continuing operations

69

47

DIVISIONAL RESULTS
Divisional Performance - continuing operations
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, andTechnology, Services & Operations (TSO) and Group Centre. For further information on the composition of divisions, refer to the Definitions on page 133.
The presentation of divisional results has been impacted by the following structural changes during the period. Prior period comparatives have been
restated:Australia Retail and Commercial division - the Advice business was transferred from Retail to Commercial and Private Bank business within thedivision;



Institutional division - a number of small operations were transferred from Corporate Finance to Central Functions within the division;

the New Zealand Technology operations was transferred from the TSO and Group Centre division to the New Zealand division. As these costs werepreviously recharged, there is no change to previously reported divisional cash profit, however divisional balance sheet and full time equivalent
employees (FTEs) have been restated to reflect this change.

Other than those described above, there have been no other significant changes.
The divisions reported are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.

The Divisional Results section is reported on a cash profit basis for continuing operations. For information on discontinued operations pleaserefer to the Guide to Half Year Results on page 8.

48

DIVISIONAL RESULTS
Divisional Performance - continuing operations
Cash profit by division - March 2021 Half Year v March 2020 Half Year

March 2021 Half YearNet interest income

Australia
Retail andCommercial
$M
3,974

Institutional
$M
1,519

New Zealand
$M
1,393

Pacific$M
49

TSO andGroup Centre
$M
51

Group
$M
6,986

Other operating income

302

1,014

238

33

(150)

1,437

Operating income

4,276

2,533

1,631

82

(99)

8,423

Operating expenses(2,000)(1,274)

(623)

(71)

(514)

(4,482)

Profit/(Loss) before credit impairment and income tax

2,276

1,259

1,008

11

(613)

3,941

381

55

58

(3)

-

491

Profit/(Loss) before income tax

2,657

1,314

1,066

8

(613)

4,432

Income tax expense and non-controlling interests

(875)

(366)

(295)

(1)

95

(1,442)

Cash profit/(loss) from continuing operations

1,782

948

771

7

(518)

2,990

Australia
Retail andCommercial
$M
4,048

Institutional
$M
1,624

New Zealand
$M
1,410

Pacific$M
65

TSO andGroup Centre
$M
75

Group
$M
7,222
1,357

Credit impairment (charge)/release

March 2020 Half YearNet interest income
Other operating income

595

1,167

247

50

(702)

Operating income

4,643

2,791

1,657

115

(627)

8,579

Operating expenses(2,065)(1,290)

(690)

(76)

(484)

(4,605)

Profit/(Loss) before credit impairment and income tax

2,578

1,501

967

39

(1,111)

3,974

Credit impairment (charge)/release

(843)

(641)

(179)

(11)

-

(1,674)

Profit/(Loss) before income tax

1,735

860

788

28

(1,111)

2,300

Income tax expense and non-controlling interests

(521)

(250)

(221)

(8)

113

(887)

Cash profit/(loss) from continuing operations

1,214

610

567

20

(998)

1,413

Australia
Retail andCommercial-2%

Institutional-6%

New Zealand-1%

Pacific-25%

TSO andGroup Centre
-32%

Group
-3%

Other operating income

-49%

-13%

-4%

-34%

-79%

6%

Operating income

-8%

-9%

-2%

-29%

-84%

-2%
-3%

March 2021 Half Year v March 2020 Half YearNet interest income

Operating expenses

-3%

-1%

-10%

-7%

6%

Profit/(Loss) before credit impairment and income tax

-12%

-16%

4%

-72%

-45%

-1%

Credit impairment charge/(release)

large

large

large

-73%

n/a

large

Profit/(Loss) before income tax

53%

53%

35%

-71%

-45%

93%

Income tax expense and non-controlling interests

68%

46%

33%

-88%

-16%

63%

Cash profit/(loss) from continuing operations

47%

55%

36%

-65%

-48%

large

49

DIVISIONAL RESULTS
Divisional Performance - continuing operations
Cash profit by division - March 2021 Half Year v September 2020 Half Year

March 2021 Half YearNet interest income

Australia
Retail andCommercial
$M
3,974

Institutional
$M
1,519

New Zealand
$M
1,393

Pacific$M
49

TSO andGroup Centre
$M
51

Group
$M
6,986

302

1,014

238

33

(150)

1,437

Operating income

4,276

2,533

1,631

82

(99)

8,423

Operating expenses(2,000)(1,274)

(623)

(71)

(514)

(4,482)

Profit/(Loss) before credit impairment and income tax

2,276

1,259

1,008

11

(613)

3,941

381

55

58

(3)

-

491

Profit/(Loss) before income tax

2,657

1,314

1,066

8

(613)

4,432

Income tax expense and non-controlling interests

(875)

(366)

(295)

(1)

95

(1,442)

Cash profit/(loss) from continuing operations

1,782

948

771

7

(518)

2,990

Australia
Retail andCommercial
$M
3,868

Institutional
$M
1,558

New Zealand
$M
1,321

Pacific$M
44

TSO andGroup Centre
$M
36

Group
$M
6,827
2,346

Other operating income

Credit impairment (charge)/release

September 2020 Half YearNet interest income
Other operating income

566

1,482

226

34

38

Operating income

4,434

3,040

1,547

78

74

9,173

Operating expenses(2,026)(1,268)

(745)

(129)

(610)

(4,778)

Profit/(Loss) before credit impairment and income tax

2,408

1,772

802

(51)

(536)

4,395

Credit impairment (charge)/release

(804)

(53)

(166)

(41)

-

(1,064)

Profit/(Loss) before income tax

1,604

1,719

636

(92)

(536)

3,331

Income tax expense and non-controlling interests

(481)

(475)

(186)

10

146

(986)

Cash profit/(loss) from continuing operations

1,123

1,244

450

(82)

(390)

2,345

Australia
Retail andCommercial
3%

Institutional-3%

New Zealand
5%

Pacific
11%

TSO andGroup Centre
42%

Group
2%

March 2021 Half Year v September 2020 Half YearNet interest income
Other operating income

-47%

-32%

5%

-3%

large

-39%

Operating income

-4%

-17%

5%

5%

large

-8%

Operating expenses

-1%

0%

-16%

-45%

-16%

-6%

Profit/(Loss) before credit impairment and income tax

-5%

-29%

26%

large

14%

-10%

Credit impairment (charge)/release

large

large

large

-93%

n/a

large

Profit/(Loss) before income tax

66%

-24%

68%

large

14%

33%

Income tax expense and non-controlling interests

82%

-23%

59%

large

-35%

46%

Cash profit/(loss) from continuing operations

59%

-24%

71%

large

33%

28%

50

DIVISIONAL RESULTS
Divisional Performance - continuing operations
Cash profit by division (excluding large/notable items1) - March 2021 Half Year v March 2020 Half Year
The Group cash profit results include a number of items collectively referred to as large/notable items. While these items form part of cash profit they
have been excluded from the tables below given their nature and significance.

1.

Refer to pages 13 to 17 for a description of large/notable items.

March 2021 Half YearNet interest income

Australia
Retail andCommercial
$M
4,031

Institutional
$M
1,518

New Zealand
$M
1,393

Pacific$M
49

TSO andGroup Centre
$M
51

Group
$M
7,042

Other operating income

596

989

225

33

197

2,040

Operating income

4,627

2,507

1,618

82

248

9,082

Operating expenses(1,869)(1,188)

(613)

(70)

(476)

(4,216)

Profit/(Loss) before credit impairment and income tax

2,758

1,319

1,005

12

(228)

4,866

381

55

58

(3)

-

491

3,139

1,374

1,063

9

(228)

5,357

Income tax expense and non-controlling interests

(943)

(392)

(298)

(1)

84

(1,550)Cash profit/(loss) from continuing operations

2,196

982

765

8

(144)

3,807

Australia
Retail andCommercial
$M
4,058

Institutional
$M
1,626

New Zealand
$M
1,348

Pacific$M
67

TSO andGroup Centre
$M
70

Group
$M
7,169
2,207

Credit impairment (charge)/release
Profit/(Loss) before income tax

March 2020 Half YearNet interest income
Other operating income

625

1,164

254

50

114

Operating income

4,683

2,790

1,602

117

184

9,376

Operating expenses(1,904)(1,278)

(653)

(74)

(452)

(4,361)

Profit/(Loss) before credit impairment and income tax

2,779

1,512

949

43

(268)

5,015

Credit impairment (charge)/release

(843)

(641)

(159)

(11)

-

(1,654)

Profit/(Loss) before income tax

1,936

871

790

32

(268)

3,361

Income tax expense and non-controlling interests

(581)

(253)

(221)

(9)

103

(961)

Cash profit/(loss) from continuing operations

1,355

618

569

23

(165)

2,400

Australia
Retail andCommercial-1%

Institutional-7%

New Zealand
3%

Pacific-27%

TSO andGroup Centre
-27%

Group
-2%

March 2021 Half Year v March 2020 Half YearNet interest income
Other operating income

-5%

-15%

-11%

-34%

73%

-8%

Operating income

-1%

-10%

1%

-30%

35%

-3%

Operating expenses

-2%

-7%

-6%

-5%

5%

-3%

Profit/(Loss) before credit impairment and income tax

-1%

-13%

6%

-72%

-15%

-3%

Credit impairment (charge)/release

large

large

large

-73%

n/a

large

Profit/(Loss) before income tax

62%

58%

35%

-72%

-15%

59%

Income tax expense and non-controlling interests

62%

55%

35%

-89%

-18%

61%

Cash profit/(loss) from continuing operations

62%

59%

34%

-65%

-13%

59%

51

DIVISIONAL RESULTS
Divisional Performance - continuing operations
Cash profit by division (excluding large/notable items1) - March 2021 Half Year v September 2020 Half Year

1.

Refer to pages 13 to 17 for a description of large/notable items.

March 2021 Half YearNet interest income
Other operating income

Australia
Retail andCommercial
$M
4,031

Institutional
$M
1,518

New Zealand
$M
1,393

Pacific$M
49

TSO andGroup Centre
$M
51

Group
$M
7,042

596

989

225

33

197

2,040

Operating income

4,627

2,507

1,618

82

248

9,082

Operating expenses(1,869)(1,188)

(613)

(70)

(476)

(4,216)

Profit/(Loss) before credit impairment and income tax

2,758

1,319

1,005

12

(228)

4,866

381

55

58

(3)

-

491

Profit/(Loss) before income tax

3,139

1,374

1,063

9

(228)

5,357

Income tax expense and non-controlling interests

(943)

(392)

(298)

(1)

84

(1,550)Cash profit/(loss) from continuing operations

2,196

982

765

8

(144)

3,807

Australia
Retail andCommercial
$M
3,941

Institutional
$M
1,559

New Zealand
$M
1,265

Pacific$M
54

TSO andGroup Centre
$M
33

Group
$M
6,852
2,483

Credit impairment (charge)/release

September 2020 Half YearNet interest income
Other operating income

582

1,498

225

34

144

Operating income

4,523

3,057

1,490

88

177

9,335

Operating expenses(1,892)(1,207)

(622)

(73)

(494)

(4,288)

Profit/(Loss) before credit impairment and income tax

2,631

1,850

868

15

(317)

5,047

Credit impairment (charge)/release

(804)

(53)

(163)

(41)

-

(1,061)

Profit/(Loss) before income tax

1,827

1,797

705

(26)

(317)

3,986

Income tax expense and non-controlling interests

(548)

(492)

(197)

8

102

(1,127)

Cash profit/(loss) from continuing operations

1,279

1,305

508

(18)

(215)

2,859

Australia
Retail andCommercial
2%

Institutional-3%

New Zealand
10%

Pacific-9%

TSO andGroup Centre
55%

Group
3%

March 2021 Half Year v September 2020 Half YearNet interest income
Other operating income

2%

-34%

0%

-3%

37%

-18%

Operating income

2%

-18%

9%

-7%

40%

-3%

Operating expenses

-1%

-2%

-1%

-4%

-4%

-2%

5%

-29%

16%

-20%

-28%

-4%

large

large

large

-93%

n/a

large

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

72%

-24%

51%

large

-28%

34%

Income tax expense and non-controlling interests

72%

-20%

51%

large

-18%

38%

Cash profit/(loss) from continuing operations

72%

-25%

51%

large

-33%

33%

52

DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 17 and pages 51 to 52 for details.
Half Year
Mar 21$M
3,974

Net interest income

Sep 20$M
3,868

Movement
Mar 20$M
4,048

Mar 21
v. Sep 20
3%

Mar 21v. Mar 20
-2%

302

566

595

-47%

-49%

Operating income

4,276

4,434

4,643

-4%

-8%

Operating expenses(2,000)(2,026)(2,065)-1%-3%

Profit before credit impairment and income tax

2,276

2,408

2,578

-5%

-12%

Other operating income

381

(804)

(843)

large

large

Profit before income tax

Credit impairment (charge)/release

2,657

1,604

1,735

66%

53%

Income tax expense and non-controlling interests

(875)

(481)

(521)

82%

68%

Cash profit

1,782

1,123

1,214

59%

47%

Balance Sheet
Net loans and advances

344,269

339,381329,812

1%

4%

Other external assets

3,510

3,663

3,836

-4%

-8%

External assets

347,779

343,044333,648

1%

4%

Customer deposits

241,315

234,594

212,990

3%

13%

9,328

9,220

9,478

1%

-2%

External liabilities

250,643

243,814

222,468

3%

13%

Risk weighted assets

163,006

166,662

161,758-2%

1%

Average gross loans and advances

346,168

336,314333,617

3%

4%

Average deposits and other borrowings

240,094

222,191

210,2148%

14%

RatiosReturn on average assets

1.03%

0.67%

0.72%

Net interest margin

2.56%

2.53%

2.65%

Operating expenses to operating income

46.8%

45.7%

44.5%

Operating expenses to average assets

1.16%

1.20%

1.23%

134

278

318

-52%

-58%

0.08%

0.17%

0.19%
large

large

-25%

-20%

0%

0%

Other external liabilities

Individually assessed credit impairment charge/(release)
Individually assessed credit impairment charge/(release) as a % of average GLA1
Collectively assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release) as a % of average GLA1

(515)

526

525

(0.30%)

0.31%

0.31%

Gross impaired assets

1,228

1,634

1,544

Gross impaired assets as a % of GLA

0.35%

0.48%

0.46%

Total full time equivalent staff (FTE)

14,11814,07814,0611.

Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Performance March 2021 v March 2020

Cash Profit March 2021 v March 2020

 Lending volumes increased driven by home loan growth, partially offset
by lower unsecured lending due to lower consumer demand, increased
customer repayments following fiscal and regulatory stimulus and alower interest rate environment, and a decrease in commercial lending.
 Net interest margin decreased driven by unfavourable lending mix fromproportionately more growth in lower margin fixed rate home loanscompared to higher margin unsecured lending, deposit margincompression and lower earnings on capital. This was partially offset bylower funding costs, favourable funding deposit mix and asset anddeposit repricing benefits.
 Other operating income decreased driven by the loss on
reclassification of ANZ Share Investing to held for sale and lower credit
card and international transaction volumes due to COVID-19 impacts.
 Operating expenses decreased driven by productivity benefits andlower restructuring expenses, partially offset by higher customer
remediation and investment spend.
 Credit impairment charges decreased driven by a collectively assessed
credit impairment release reflecting an improved economic outlook andlower individually assessed credit impairment charge due to the impact
of COVID-19 support packages.

53

DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
Individually assessed credit impairment charge/(release)

Half Year
Mar 21$M
75

Retail

Sep 20$M
155

Movement
Mar 20$M
156

Mar 21
v. Sep 20-52%

Mar 21v. Mar 20-52%

Home Loans

46

38

28

21%

64%

Cards and Personal Loans

26

111

122

-77%

-79%

Deposits and Payments1

3

6

6

-50%

-50%

Commercial and Private Bank

59

123

162

-52%

-64%

Business Banking

(9)

47

72

large

large

Small Business Banking

68

76

90

-11%

-24%

134

278

318

-52%

-58%

Mar 21
v. Sep 20
large

Mar 21v. Mar 20
large

Individually assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release)

Half Year

Movement

Mar 21$M(306)

Sep 20$M
235

Mar 20$M
275

Home Loans

(259)

244

239

large

large

Cards and Personal Loans

(43)

(6)

34

large

large

Deposits and Payments1

(4)

(3)

2

33%

large

Commercial and Private Bank

(209)

291

250

large

large

Business Banking

(101)

191

137

large

large

Small Business Banking

(108)

100

113

large

large

(515)

526

525

large

large

Mar 21
v. Sep 20
2%

RetailCollectively assessed credit impairment charge/(release)

Net loans and advances

As at

RetailHome Loans
Cards and Personal Loans
Deposits and Payments1

Movement

Mar 21$M
287,475

Sep 20$M
281,570

Mar 20$M
272,011

Mar 21v. Mar 20
6%

280,747

274,825

263,580

2%

7%

6,682

6,710

8,370

0%

-20%
-25%

46

35

61

31%

56,79457,81157,801-2%-2%

Business Banking

41,28342,26441,759-2%-1%

Small Business Banking

12,254

12,312

13,0300%-6%Private Bank and Advice

3,257

3,235

3,012

1%

8%

344,269

339,381329,8121%

4%

Mar 21
v. Sep 20
1%

Commercial and Private Bank

Net loans and advances
Customer deposits

As at

Movement

Mar 21$M
134,655

Sep 20$M
133,536

Mar 20$M
123,435

35,901

33,161

28,133

8%

28%

181

237

254

-24%

-29%

Deposits and Payments

98,573

100,138

95,048-2%

4%

Commercial and Private Bank

106,660

101,058

89,555

6%

19%

Business Banking

24,111

23,944

20,6301%

17%

Small Business Banking

54,62549,87843,77310%25%

Private Bank and Advice

27,924

27,23625,1523%

11%

241,315

234,594

212,9903%

13%

RetailHome Loans2
Cards and Personal Loans

Customer deposits
1.
2.

Net loans and advances for the deposits and payments business represent amounts in overdraft.
Customer deposit amounts for the home loans business represent balances in offset accounts.

54

Mar 21v. Mar 20
9%

DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand

March 2021 Half YearNet interest income

Retail$M
2,874

Commercial andPrivate Bank
$M
1,100

Total
$M
3,974

Other operating income

75

227

302

Operating income

2,949

1,327

4,276

Operating expenses(1,327)(673)(2,000)

Profit before credit impairment and income tax

1,622

654

2,276

231

150

381

Profit before income tax

1,853

804

2,657

Income tax expense and non-controlling interests

(633)

(242)

(875)

Cash profit

1,220

562

1,782

75

59

134

Credit impairment (charge)/release

Individually assessed credit impairment charge/(release)

(306)

(209)

(515)

Net loans and advances

287,475

56,794344,269

Customer deposits

134,655

106,660

241,315

Risk weighted assets

110,672

52,334

163,006

March 2020 Half YearNet interest income

2,742

1,306

4,048

Other operating income

365

230

595

Operating income

3,107

1,536

4,643

Operating expenses(1,325)(740)(2,065)

Profit before credit impairment and income tax

1,782

796

2,578

Credit impairment (charge)/release

(431)

(412)

(843)

Profit before income tax

1,351

384

1,735

Collectively assessed credit impairment charge/(release)

Income tax expense and non-controlling interests

(405)

(116)

(521)

Cash profit

946

268

1,214

Individually assessed credit impairment charge/(release)

156

162

318

Collectively assessed credit impairment charge/(release)

275

250

525

Net loans and advances

272,01157,801

329,812

Customer deposits

123,435

89,555

212,990

Risk weighted assets

107,41254,346

161,758

March 2021 Half Year v March 2020 Half YearNet interest income

5%

-16%

-2%

Other operating income

-79%

-1%

-49%

Operating income

-5%

-14%

-8%

Operating expenses

0%

-9%

-3%

Profit before credit impairment and income tax

-9%

-18%

-12%

Credit impairment (charge)/release

large

large

large

Profit before income tax

37%

large

53%

Income tax expense and non-controlling interests

56%

large

68%

Cash profit

29%

large

47%

Individually assessed credit impairment charge/(release)

-52%

-64%

-58%

Collectively assessed credit impairment charge/(release)

large

large

large

Net loans and advances

6%

-2%

4%

Customer deposits

9%

19%

13%

Risk weighted assets

3%

-4%

1%

55

DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand

Retail$M
2,874

March 2021 Half YearNet interest income
Other operating income

Commercial andPrivate Bank
$M
1,100

Total
$M
3,974

75

227

302

Operating income

2,949

1,327

4,276

Operating expenses(1,327)(673)(2,000)

Profit before credit impairment and income tax

1,622

654

2,276

231

150

381

1,853

804

2,657

Income tax expense and non-controlling interests

(633)

(242)

(875)

Cash profit

1,220

562

1,782

Credit impairment (charge)/release
Profit before income tax

Individually assessed credit impairment charge/(release)

75

59

134

Collectively assessed credit impairment charge/(release)

(306)

(209)

(515)

Net loans and advances

287,475

56,794344,269

Customer deposits

134,655

106,660

241,315

Risk weighted assets

110,672

52,334

163,006

2,724

1,144

3,868

September 2020 Half YearNet interest income
Other operating income

333

233

566

Operating income

3,057

1,377

4,434

Operating expenses(1,335)(691)(2,026)

Profit before credit impairment and income tax

1,722

686

2,408

Credit impairment (charge)/release

(390)

(414)

(804)

Profit before income tax

1,332

272

1,604

Income tax expense and non-controlling interests

(398)

(83)

(481)

Cash profit

934

189

1,123

Individually assessed credit impairment charge/(release)

155

123

278

Collectively assessed credit impairment charge/(release)

235

291

526

Net loans and advances

281,570

57,811

339,381

Customer deposits

133,536

101,058

234,594

Risk weighted assets

112,142

54,520166,662

March 2021 Half Year v September 2020 Half YearNet interest income

6%

-4%

3%

Other operating income

-77%

-3%

-47%

Operating income

-4%

-4%

-4%

Operating expenses

-1%

-3%

-1%

Profit before credit impairment and income tax

-6%

-5%

-5%

Credit impairment (charge)/release

large

large

large

Profit before income tax

39%

large

66%

Income tax expense and non-controlling interests

59%

large

82%

Cash profit

31%

large

59%

Individually assessed credit impairment charge/(release)

-52%

-52%

-52%

Collectively assessed credit impairment charge/(release)

large

large

large

2%

-2%

1%

Net loans and advances
Customer deposits

1%

6%

3%

Risk weighted assets

-1%

-4%

-2%

56

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 17 and pages 51 to 52 for details.
Half Year

Movement

Net interest income

Mar 21$M
1,519

Sep 20$M
1,558

Mar 20$M
1,624

Mar 21
v. Sep 20-3%

Mar 21v. Mar 20-6%

Other operating income

1,014

1,482

1,167

-32%

-13%
-9%

Operating income

2,533

3,040

2,791

-17%

Operating expenses(1,274)(1,268)(1,290)0%-1%Profit before credit impairment and income tax

1,259

1,772

1,501

-29%

-16%

55

(53)

(641)

large

large

Profit before income tax

Credit impairment (charge)/release

1,314

1,719

860

-24%

53%

Income tax expense and non-controlling interests

(366)

(475)

(250)

-23%

46%

Cash profit

948

1,244

610

-24%

55%

Balance Sheet
Net loans and advances

147,446

157,634

199,410-6%-26%

Other external assets

344,994

391,862

461,548

-12%

-25%

External assets

492,440

549,496

660,958

-10%

-25%

Customer deposits

223,666

223,288258,517

0%-13%

Other deposits and borrowings

65,67573,427

96,639-11%-32%

Deposits and other borrowings

289,341

296,715355,156-2%-19%

Other external liabilities

143,956

183,318

229,611

-21%

-37%

External liabilities

433,297

480,033

584,767

-10%

-26%

Risk weighted assets

169,960

186,502207,028-9%-18%

Average gross loans and advances

151,897

179,138

175,366

-15%

-13%

Average deposits and other borrowings

292,475

321,745

305,506-9%-4%

RatiosReturn on average assets

0.35%

0.42%

0.23%

Net interest margin

0.77%

0.73%

0.78%

Net interest margin (excluding Markets)1

1.85%

1.75%

1.81%

Operating expenses to operating income

50.3%

41.7%

46.2%

Operating expenses to average assets

0.47%

0.42%

0.48%

55

49

272

12%

-80%

Individually assessed credit impairment charge/(release) as a % of average GLA

0.07%

0.05%

0.31%

Collectively assessed credit impairment charge/(release)

(110)

4

369

large

large

(0.15%)

0.00%

0.42%
large

20%

-1%

-3%

Individually assessed credit impairment charge/(release)2

Collectively assessed credit impairment charge/(release) as a % of average GLA2

892

434

742

Gross impaired assets as a % of GLA

Gross impaired assets

0.60%

0.27%

0.37%

Total full time equivalent staff (FTE)

5,215

5,291

5,350

1.

2.

Institutional (ex-Markets) net interest margin has been aligned to how it is reported internally by removing the impact of surplus funding within this segment. Comparative information has
been restated accordingly.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Performance March 2021 v March 2020

Cash Profit March 2021 v March 2020

 Lending volumes decreased across all businesses. Customer
Deposits reduced in Markets and Transaction Banking.
 Net interest margin ex-Markets increased driven by improved
lending margins.
 Other operating income decreased driven by lower Markets
revenue as financial market conditions normalised and lower fee
income in Corporate Finance and Transaction Banking, partially
offset by lower customer remediation.
 Other operating expenses decreased driven by lower personnel
costs and discretionary spend, partially offset by a litigation
settlement.
 Credit impairment charges decreased driven by a collectively

assessed credit impairment release in the March 2021 halfreflecting an improved economic outlook and lower individuallyassessed credit impairment charges in Transaction Banking.

57

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

Institutional by Geography
Half Year
Mar 21$M
884

Australia
Net interest income

Sep 20$M
859

Movement
Mar 20$M
920

Mar 21
v. Sep 20
3%

Mar 21v. Mar 20
-4%
25%

491

660

392

-26%

Operating income

1,375

1,519

1,312

-9%

5%

Operating expenses

(654)

(613)

(584)

7%

12%

Profit before credit impairment and income tax

721

906

728

-20%

-1%

Credit impairment (charge)/release

68

(5)

(274)

large

large

Other operating income

Profit before income tax

789

901

454

-12%

74%

Income tax expense and non-controlling interests

(228)

(275)

(138)

-17%

65%

Cash profit

561

626

316

-10%

78%
-32%

Individually assessed credit impairment charge/(release)

34

22

50

55%

Collectively assessed credit impairment charge/(release)

(102)

(17)

224

large

large

Net loans and advances

89,75598,992

115,637-9%-22%

Customer deposits

88,82489,36990,648-1%-2%

Risk weighted assets

93,452

99,632103,240-6%-9%

Net interest income

478

541

536

-12%

-11%

Other operating income

419

542

698

-23%

-40%

Operating income

897

1,083

1,234

-17%

-27%

Operating expenses

(532)

(559)

(615)

-5%

-13%

Profit before credit impairment and income tax

365

524

619

-30%

-41%

Credit impairment (charge)/release

(20)

(56)

(325)

-64%

-94%
17%

Asia, Pacific, Europe, and America

Profit before income tax

345

468

294

-26%

Income tax expense and non-controlling interests

(87)

(102)

(81)

-15%

7%

Cash profit

258

366

213

-30%

21%

Individually assessed credit impairment charge/(release)

24

27

215

-11%

-89%

Collectively assessed credit impairment charge/(release)

(4)

29

110

large

large

Net loans and advances

51,694

52,16876,849-1%-33%

Customer deposits

115,331

113,036

148,602

2%-22%

Risk weighted assets

63,922

71,88489,491-11%-29%

New Zealand
Net interest income

157

158

168

-1%

-7%

Other operating income

104

280

77

-63%

35%

Operating income

261

438

245

-40%

7%

Operating expenses

(88)

(96)

(91)

-8%

-3%

Profit before credit impairment and income tax

173

342

154

-49%

12%

7

8

(42)

-13%

large

180

350

112

-49%

61%

Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests

(51)

(98)

(31)

-48%

65%

Cash profit

129

252

81

-49%

59%
large

Individually assessed credit impairment charge/(release)

(3)

-

7

n/a

Collectively assessed credit impairment charge/(release)

(4)

(8)

35

-50%

large

Net loans and advances

5,997

6,474

6,924

-7%

-13%

Customer deposits

19,511

20,883

19,267-7%

1%

Risk weighted assets

12,586

14,986

14,297

-16%

-12%

58

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Half Year

Individually assessed credit impairment charge/(release)

Movement

Mar 21$M
5

Sep 20$M
18

Mar 20$M
227

Mar 21
v. Sep 20-72%

Mar 21v. Mar 20-98%

Corporate Finance

51

31

46

65%

11%

Markets

(1)

-

(1)

n/a

0%

Individually assessed credit impairment charge/(release)

55

49

272

12%

-80%

Transaction Banking

Half Year

Collectively assessed credit impairment charge/(release)

Movement

Transaction Banking

Mar 21$M(8)

Sep 20$M(37)

Mar 20$M
52

Mar 21
v. Sep 20-78%

Mar 21v. Mar 20
large

Corporate Finance

(95)

46

312

large

large

Markets

(7)

(5)

5

40%

large

(110)

4

369

large

large

Collectively assessed credit impairment charge/(release)

As at

Net loans and advances

Movement

Transaction Banking

Mar 21$M
14,295

Sep 20$M
14,192

Mar 20$M
22,023

Corporate Finance

105,026

111,253

128,570-6%-18%

Markets

28,09732,16048,714-13%-42%

Central Functions
Net loans and advances

Mar 21v. Mar 20
-35%

28

29

103

-3%

-73%

147,446

157,634

199,410

-6%

-26%

As at

Customer deposits
Mar 21$M
120,775

Transaction Banking

Mar 21
v. Sep 20
1%

Sep 20$M
123,963

Movement
Mar 20$M
124,159

Mar 21
v. Sep 20-3%

Mar 21v. Mar 20-3%

Corporate Finance

1,817

966

971

88%

87%

Markets

99,272

96,464

131,277

3%-24%

Central Functions

1,802

1,895

2,110

-5%

-15%

Customer deposits

223,666

223,288258,517

0%

-13%

59

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

March 2021 Half YearNet interest income

Transaction
Banking$M
326

Other operating income

320

45

638

11

Operating income

646

828

1,040

19

2,533

Operating expenses

(368)

(300)

(591)

(15)

(1,274)

Profit/(Loss) before credit impairment and income tax

278

528

449

4

1,259

3

44

8

-

55

281

572

457

4

1,314

Income tax expense and non-controlling interests

(82)

(163)

(104)

(17)

(366)

Cash profit/(loss)

199

409

353

(13)

948

Credit impairment (charge)/release
Profit/(Loss) before income tax

Corporate
Finance$M
783

Markets$M
402

Central
Functions
$M
8

Total
$M
1,519
1,014

Individually assessed credit impairment charge/(release)

5

51

(1)

-

55

Collectively assessed credit impairment charge/(release)

(8)

(95)

(7)

-

(110)

Net loans and advances

14,295

105,026

28,097

28

147,446

Customer deposits

120,775

1,817

99,272

1,802

223,666

Risk weighted assets

25,64892,90550,135

1,272

169,960

March 2020 Half YearNet interest income

456

754

400

14

1,624

Other operating income

356

31

764

16

1,167

Operating income

812

785

1,164

30

2,791

Operating expenses

(404)

(301)

(561)

(24)

(1,290)

Profit/(Loss) before credit impairment and income tax

408

484

603

6

1,501

Credit impairment (charge)/release

(279)

(358)

(4)

-

(641)

Profit/(Loss) before income tax

129

126

599

6

860

Income tax expense and non-controlling interests

(68)

(34)

(134)

(14)

(250)

Cash profit/(loss)

61

92

465

(8)

610

Individually assessed credit impairment charge/(release)

227

46

(1)

-

272

Collectively assessed credit impairment charge/(release)

52

312

5

-

369

Net loans and advances

22,023

128,570

48,714

103

199,410

Customer deposits

124,159971

131,277

2,110

258,517

Risk weighted assets

29,036

109,824

67,690478

207,028

March 2021 Half Year v March 2020 Half YearNet interest income

-29%

4%

1%

-43%

-6%

Other operating income

-10%

45%

-16%

-31%

-13%

Operating income

-20%

5%

-11%

-37%

-9%

Operating expenses

-9%

0%

5%

-38%

-1%

Profit/(Loss) before credit impairment and income tax

-32%

9%

-26%

-33%

-16%

Credit impairment (charge)/release

large

large

large

n/a

large

Profit/(Loss) before income tax

large

large

-24%

-33%

53%

Income tax expense and non-controlling interests

21%

large

-22%

21%

46%

Cash profit/(loss)

large

large

-24%

63%

55%

Individually assessed credit impairment charge/(release)

-98%

11%

0%

n/a

-80%

Collectively assessed credit impairment charge/(release)

large

large

large

n/a

large

Net loans and advances

-35%

-18%

-42%

-73%

-26%

Customer deposits

-3%

87%

-24%

-15%

-13%

Risk weighted assets

-12%

-15%

-26%

large

-18%

60

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

March 2021 Half YearNet interest income

Transaction
Banking$M
326

Other operating income

320

45

638

11

Operating income

646

828

1,040

19

2,533

Operating expenses

(368)

(300)

(591)

(15)

(1,274)

Profit/(Loss) before credit impairment and income tax

278

528

449

4

1,259

3

44

8

-

55

281

572

457

4

1,314

Income tax expense and non-controlling interests

(82)

(163)

(104)

(17)

(366)

Cash profit/(loss)

199

409

353

(13)

948

Credit impairment (charge)/release
Profit/(Loss) before income tax

Corporate
Finance$M
783

Markets$M
402

Central
Functions
$M
8

Total
$M
1,519
1,014

Individually assessed credit impairment charge/(release)

5

51

(1)

-

55

Collectively assessed credit impairment charge/(release)

(8)

(95)

(7)

-

(110)

Net loans and advances

14,295

105,026

28,097

28

147,446

Customer deposits

120,775

1,817

99,272

1,802

223,666

Risk weighted assets

25,64892,90550,135

1,272

169,960

September 2020 Half YearNet interest income

377

802

370

9

1,558

Other operating income

331

28

1,120

3

1,482

Operating income

708

830

1,490

12

3,040

Operating expenses

(408)

(306)

(534)

(20)

(1,268)

Profit/(Loss) before credit impairment and income tax

300

524

956

(8)

1,772

Credit impairment (charge)/release

19

(77)

5

-

(53)

Profit/(Loss) before income tax

319

447

961

(8)

1,719

Income tax expense and non-controlling interests

(95)

(120)

(258)

(2)

(475)

Cash profit/(loss)

224

327

703

(10)

1,244

Individually assessed credit impairment charge/(release)

18

31

-

-

49

Collectively assessed credit impairment charge/(release)

(37)

46

(5)

-

4

Net loans and advances

14,192111,253

32,16029

157,634

Customer deposits

123,963966

96,464

1,895

223,288

Risk weighted assets

23,739102,923

59,345495

186,502

March 2021 Half Year v September 2020 Half YearNet interest income

-14%

-2%

9%

-11%

-3%

Other operating income

-3%

61%

-43%

large

-32%
-17%

Operating income

-9%

0%

-30%

58%

Operating expenses

-10%

-2%

11%

-25%

0%

Profit/(Loss) before credit impairment and income tax

-7%

1%

-53%

large

-29%

Credit impairment (charge)/release

-84%

large

60%

n/a

large

Profit/(Loss) before income tax

-12%

28%

-52%

large

-24%

Income tax expense and non-controlling interests

-14%

36%

-60%

large

-23%

Cash profit/(loss)

-11%

25%

-50%

30%

-24%

Individually assessed credit impairment charge/(release)

-72%

65%

n/a

n/a

12%

Collectively assessed credit impairment charge/(release)

-78%

large

40%

n/a

large

Net loans and advances

1%

-6%

-13%

-3%

-6%

Customer deposits

-3%

88%

3%

-5%

0%

Risk weighted assets

8%

-10%

-16%

large

-9%

61

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Analysis of Markets operating income1
During the March 2021 half, the Group aligned reporting of Markets Franchise Revenue to its respective product lines (Foreign Exchange, Rates, Credit
and Capital Markets, and Commodities) to better reflect the underlying nature of Markets’ business. Prior period presentation of Markets Franchise
Revenue by Sales and Trading is retained this period to assist with transition to the new presentation.
Half Year
Mar 21$M
307

Sep 20
$M
253

Rates

128

Credit and Capital Markets

139

Commodities

Movement
Mar 20$M
437

Mar 21
v. Sep 20
21%

Mar 21v. Mar 20
-30%

338

290

-62%

-56%

248

103

-44%

35%

43

52

72

-17%

-40%

Franchise Revenue

617

891

902

-31%

-32%

Balance Sheet2
Derivative valuation adjustments3

402
21

468
131

238
24

-14%
-84%

69%
-13%

Markets operating income

1,040

1,490

1,164

-30%

-11%

Composition of Markets operating income by business activity
Franchise Sales

Mar 21$M
419

Sep 20$M
471

Mar 20$M
513

Mar 21
v. Sep 20-11%

Mar 21v. Mar 20-18%

Franchise Trading

219

551

413

-60%

-47%

Balance Sheet2

402

468

238

-14%

69%

1,040

1,490

1,164

-30%

-11%

21

131

24

-84%

-13%

Composition of Markets operating income by productForeign Exchange

Half Year

Markets operating income

Movement

Includes:Derivative valuation adjustments3
1.
2.
3.

Markets operating income includes net interest income and other operating income.
Balance Sheet represents hedging of interest rate risk on the Group’s loan and deposit books and the management of the Group’s liquidity portfolio.
Includes funding and credit valuation adjustments.

Half Year

Movement

Mar 21$M402

Sep 20$M
517

Mar 20$M
325

Mar 21
v. Sep 20-22%

Mar 21v. Mar 20
24%

Asia, Pacific, Europe & America

517

673

740

-23%

-30%

New Zealand

121

300

99

-60%

22%

1,040

1,490

1,164

-30%

-11%

Composition of Markets operating income by geography
Australia

Markets operating income

62

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Market risk
Traded market risk
Below are aggregate Value at Risk (VaR) exposures at 99% confidence level covering both physical and derivatives trading positions for the Bank’s
principal trading centres.
99% confidence level (1 day holding period)

As atHigh for
periodLow forperiodAvg forperiodAs at

High foryear

Low foryear

Avg foryear

Mar 21$M

Mar 21$M

Mar 21$M

Mar 21$M

Sep 20$M

Sep 20$M

Sep 20$M

Sep 20$M

Foreign exchange

3.2

10.0

2.0

4.6

2.0

6.1

1.2

3.1

Interest rate

6.2

19.6

4.3

10.1

9.6

13.8

3.3

7.2

Credit

14.8

22.2

9.3

14.4

13.9

17.1

1.8

8.6

Commodities

2.6

3.4

1.3

2.4

3.0

4.7

1.3

2.6

-

-

-

-

-

-

-

-

(11.3)

n/an/a(10.1)(10.9)

n/a

n/a

(8.0)

15.5

30.0

14.0

21.4

17.6

31.9

5.7

13.5

Value at Risk at 99% confidence

EquityDiversification benefit
Total VaR

Non-traded interest rate risk
Non-traded interest rate risk is managed by Markets and relates to the potential adverse impact of changes in market interest rates on future net interest
income for the Group. Interest rate risk is reported using various techniques including VaR and scenario analysis based on a 1% shock.
99% confidence level (1 day holding period)

As atHigh for
periodLow forperiodAvg forperiodAs at

High foryear

Low foryear

Avg foryear

Mar 21$M

Mar 21$M

Mar 21$M

Mar 21$M

Sep 20$M

Sep 20$M

Sep 20$M

Sep 20$M

Australia

67.3

81.8

63.6

72.3

60.8

60.8

18.8

33.4

New Zealand

26.5

32.8

26.5

29.8

26.3

26.3

9.4

15.2

Asia, Pacific, Europe & America

33.5

33.5

29.4

31.9

29.4

30.2

17.4

24.2

Diversification benefit(55.2)

n/a

n/a(66.0)(61.4)

n/an/a(29.5)

72.1

79.4

59.3

68.0

55.1

58.3

31.5

43.3

Value at Risk at 99% confidence

Total VaR

Impact of 1% rate shock on the next 12 months’ net interest income margin
As at
As at period end

Mar 21
1.74%

Sep 201.25%

Maximum exposure

1.74%

1.61%

Minimum exposure

1.00%

0.52%

Average exposure (in absolute terms)

1.31%

1.01%

63

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 17 and pages 51 to 52 for details (in AUD).
Table reflects NZD for New Zealand (AUD results shown on page 68)
Half Year

Movement

Mar 21
NZD M
1,490

Sep 20
NZD M
1,416

Mar 20
NZD M
1,479

Mar 21
v. Sep 20
5%

Mar 21v. Mar 20
1%

255

242

259

5%

-2%

Operating income

1,745

1,658

1,738

5%

0%

Operating expenses

(668)

(796)

(724)

-16%

-8%

Profit before credit impairment and income tax

1,077

862

1,014

25%

6%

63

(178)

(188)

large

large

Net interest income
Other operating income

Credit impairment (charge)/release
Profit before income tax

1,140

684

826

67%

38%

Income tax expense and non-controlling interests

(315)

(199)

(232)

58%

36%

Cash profit

825

485

594

70%

39%

Balance Sheet
Net loans and advances

131,250

125,981

128,560

4%

2%

Other external assets

4,153

4,522

4,805

-8%

-14%

External assets

135,403130,503

133,365

4%

2%

Customer deposits

101,530

98,304

93,626

3%

8%
-20%

Other deposits and borrowings

3,543

1,748

4,456

large

Deposits and other borrowings

105,073

100,052

98,082

5%

7%

Other external liabilities

19,52623,38528,095-17%-31%

External liabilities

124,599

123,437

126,177

1%-1%

Risk weighted assets

71,22071,34872,5020%-2%

Average gross loans and advances

129,047

128,748

127,968

0%

1%

Average deposits and other borrowings

102,546

99,324

94,740

3%

8%

109

106

113

3%

-4%

Net funds management income
Funds under management

36,48935,22332,504

4%

12%

Average funds under management

35,46834,81634,472

2%

3%

RatiosReturn on average assets

1.25%

0.73%

0.90%

Net interest margin

2.32%

2.20%

2.31%

Operating expenses to operating income

38.3%

48.0%

41.7%

Operating expenses to average assets

1.01%

1.20%

1.10%

(6)

66

37

large

large

(0.01%)

0.10%

0.06%
large

large

-10%

25%

0%

-5%

Individually assessed credit impairment charge/(release)
Individually assessed credit impairment charge/(release) as a % of average GLA1
Collectively assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release) as a % of average GLA1
Gross impaired assets

(57)

112

151

(0.09%)

0.17%

0.24%

338

374

271

Gross impaired assets as a % of GLA

0.26%

0.30%

0.21%

Total full time equivalent staff (FTE)

6,691

6,679

7,009

1.

Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Performance March 2021 v March 2020

Cash Profit March 2021 v March 2020

 Lending volumes increased driven by home loan growth, partially
offset by decrease in commercial lending and the impact of the saleof UDC in the September 2020 half.
 Net interest margin was broadly flat as favourable deposit mix andloan and deposit repricing were offset by headwinds from
unfavourable lending mix, a low interest rate environment and lower
net interest income from UDC post sale completion in the
September 2020 half.
 Operating expenses decreased driven by FTE reduction, lower
discretionary costs and lower expenses from UDC post salecompletion in the September 2020 half.

 Credit impairment charges decreased driven by collectively
assessed credit impairment release reflecting an improved
economic outlook and lower individually assessed credit impairment
charge due to the impact of COVID-19 support packages andhigher write-backs.

64

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Individually assessed credit impairment charge/(release)

Half Year

RetailMovement

Mar 21
NZD M

Sep 20
NZD M

Mar 20
NZD M

9

21

20

-57%

-55%

-

3

2

-100%

-100%

Home Loans

Mar 21
v. Sep 20

Mar 21v. Mar 20

Other

9

18

18

-50%

-50%

Commercial

(15)

45

17

large

large

Individually assessed credit impairment charge/(release)

(6)

66

37

large

large

Collectively assessed credit impairment charge/(release)

Movement

Half Year

RetailMar 21
NZD M

Sep 20
NZD M

Mar 20
NZD M

Mar 21
v. Sep 20

Mar 21v. Mar 20

(41)

40

62

large

large

Home Loans

(36)

28

50

large

large

Other

(5)

12

12

large

large

Commercial

(16)

72

89

large

large

Collectively assessed credit impairment charge/(release)

(57)

112

151

large

large

As at

Net loans and advances

Movement

Mar 21
NZD M
92,418

Sep 20
NZD M
86,648Mar 20
NZD M
85,001

Home Loans

90,06084,27082,253

7%

9%

Other

2,358

2,378

2,748

-1%

-14%

Commercial

38,83239,33343,559-1%-11%

Net loans and advances

131,250

125,981

128,5604%

2%

RetailAs at

Customer deposits

Mar 21
v. Sep 20
7%

Mar 21v. Mar 20
9%Movement

Mar 21
NZD M
81,358

Sep 20
NZD M
79,867

Mar 20
NZD M
76,408Mar 21
v. Sep 20
2%

Mar 21v. Mar 20
6%

Commercial

20,172

18,437

17,2189%

17%

Customer deposits

101,530

98,304

93,626

3%

8%

Retail65

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
RetailNZD M
986

March 2021 Half YearNet interest income
Other operating income

Commercial
NZD M
503

Central
Functions
NZD M
1

Total
NZD M
1,490

248

5

2

255

Operating income

1,234

508

3

1,745

Operating expenses

(547)

(118)

(3)

(668)

Profit before credit impairment and income tax

687

390

-

1,077

Credit impairment (charge)/release

32

31

-

63

Profit before income tax

719

421

-

1,140

Income tax expense and non-controlling interests

(198)

(118)

1

(315)

Cash profit

521

303

1

825

Individually assessed credit impairment charge/(release)

9

(15)

-

(6)

Collectively assessed credit impairment charge/(release)

(41)

(16)

-

(57)

Net loans and advances

92,41838,832-

131,250

Customer deposits

81,35820,172-

101,530

Risk weighted assets

39,19029,9242,106

71,220March 2020 Half YearNet interest income

922

549

8

1,479

Other operating income

254

5

-

259
1,738

Operating income

1,176

554

8

Operating expenses

(574)

(146)

(4)

(724)

Profit before credit impairment and income tax

602

408

4

1,014

Credit impairment (charge)/release

(82)

(106)

-

(188)

Profit before income tax

520

302

4

826

Income tax expense and non-controlling interests

(146)

(85)

(1)

(232)

Cash profit

374

217

3

594

Individually assessed credit impairment charge/(release)

20

17

-

37

Collectively assessed credit impairment charge/(release)

62

89

-

151

Net loans and advances

85,001

43,559-128,560

Customer deposits

76,40817,218-93,626

Risk weighted assets

37,202

33,914

1,386

72,502

March 2021 Half Year v March 2020 Half YearNet interest income

7%

-8%

-88%

1%

Other operating income

-2%

0%

n/a

-2%

Operating income

5%

-8%

-63%

0%

Operating expenses

-5%

-19%

-25%

-8%

Profit before credit impairment and income tax

14%

-4%

-100%

6%

Credit impairment (charge)/release

large

large

n/a

large

Profit before income tax

38%

39%

-100%

38%

Income tax expense and non-controlling interests

36%

39%

large

36%

Cash profit

39%

40%

-67%

39%

Individually assessed credit impairment charge/(release)

-55%

large

n/a

large

Collectively assessed credit impairment charge/(release)

large

large

n/a

large

Net loans and advances

9%

-11%

n/a

2%

Customer deposits

6%

17%

n/a

8%

Risk weighted assets

5%

-12%

52%

-2%

66

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson

March 2021 Half YearNet interest income

RetailNZD M
986

Commercial
NZD M
503

Central
Functions
NZD M
1

Total
NZD M
1,490

Other operating income

248

5

2

255
1,745

Operating income

1,234

508

3

Operating expenses

(547)

(118)

(3)

(668)

Profit before credit impairment and income tax

687

390

-

1,077

Credit impairment (charge)/release

32

31

-

63

Profit before income tax

719

421

-

1,140

Income tax expense and non-controlling interests

(198)

(118)

1

(315)

Cash profit

521

303

1

825

9

(15)

-

(6)

Individually assessed credit impairment charge/(release)

(41)

(16)

-

(57)

Net loans and advances

92,41838,832-

131,250

Customer deposits

81,35820,172-

101,530

Risk weighted assets

39,19029,9242,106

71,220

September 2020 Half YearNet interest income

892

524

-

1,416

Other operating income

235

6

1

242

Operating income

1,127

530

1

1,658

Operating expenses

(640)

(157)

1

(796)

Profit before credit impairment and income tax

487

373

2

862

Credit impairment (charge)/release

(61)

(117)

-

(178)

Profit before income tax

426

256

2

684

Income tax expense and non-controlling interests

(127)

(71)

(1)

(199)

Cash profit

299

185

1

485

Individually assessed credit impairment charge/(release)

21

45

-

66

Collectively assessed credit impairment charge/(release)

40

72

-

112

Net loans and advances

86,64839,333-125,981

Customer deposits

79,867

18,437-98,304

Risk weighted assets

38,30830,8392,201

71,348

Collectively assessed credit impairment charge/(release)

March 2021 Half Year v September 2020 Half YearNet interest income

11%

-4%

n/a

5%

Other operating income

6%

-17%

100%

5%

Operating income

9%

-4%

large

5%

Operating expenses

-15%

-25%

large

-16%

Profit before credit impairment and income tax

41%

5%

-100%

25%

Credit impairment (charge)/release

large

large

n/a

large

Profit before income tax

69%

64%

-100%

67%

Income tax expense and non-controlling interests

56%

66%

large

58%

Cash profit

74%

64%

0%

70%

Individually assessed credit impairment charge/(release)

-57%

large

n/a

large

Collectively assessed credit impairment charge/(release)

large

large

large

n/a

Net loans and advances

7%

-1%

n/a

4%

Customer deposits

2%

9%

n/a

3%

Risk weighted assets

2%

-3%

-4%

0%

67

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Table reflects AUD for New Zealand
NZD results shown on page 64
Half Year
Mar 21$M
1,393

Net interest income
Other operating income

Sep 20$M
1,321

Movement
Mar 20$M
1,410

Mar 21
v. Sep 20
5%

Mar 21v. Mar 20
-1%
-4%

238

226

247

5%

Operating income

1,631

1,547

1,657

5%

-2%

Operating expenses

(623)

(745)

(690)

-16%

-10%

Profit before credit impairment and income tax

1,008

802

967

26%

4%

58

(166)

(179)

large

large

Credit impairment (charge)/release
Profit before income tax

1,066

636

788

68%

35%

Income tax expense and non-controlling interests

(295)

(186)

(221)

59%

33%

Cash profit

771

450

567

71%

36%

Consisting of:Retail

486

278

357

75%

36%

Commercial

284

171

207

66%

37%

1

1

3

0%

-67%

771

450

567

71%

36%

Balance Sheet
Net loans and advances

120,482

116,625

125,195

3%-4%

Other external assets

3,812

4,186

4,679

-9%

-19%

External assets

124,294

120,811

129,874

3%-4%

Customer deposits

93,20191,004

91,175

2%

2%

Other deposits and borrowings

3,252

1,618

4,339

large

-25%

Central Functions
Cash profit

Deposits and other borrowings

96,45392,622

95,514

4%

1%

Other external liabilities

17,92321,64827,360

-17%

-34%
-7%

External liabilities

114,376

114,270

122,8740%

Risk weighted assets

65,376

66,04970,604-1%-7%

Average gross loans and advances

120,639

120,182

122,0110%-1%

Average deposits and other borrowings

95,86492,75690,3293%

6%

Net funds management income

102

100

107

2%

-5%

Funds under management

33,49532,60831,653

3%

6%

Average funds under management

33,15732,49932,8682%

1%

RatiosReturn on average assets

1.25%

0.73%

0.90%

Net interest margin

2.32%

2.20%

2.31%

Operating expenses to operating income

38.3%

48.0%

41.7%

Operating expenses to average assets

1.01%

1.20%

1.10%
large

large

large

large

-11%

17%

0%

-5%

Individually assessed credit impairment charge/(release)
Individually assessed credit impairment charge/(release) as a % of average GLA1
Collectively assessed credit impairment charge/(release)

(5)

62

35

(0.01%)

0.10%

0.06%

(53)

104

144

(0.09%)

0.17%

0.24%

310

347

264

Gross impaired assets as a % of GLA

0.26%

0.30%

0.21%

Total full time equivalent staff (FTE)

6,691

6,679

7,009

Collectively assessed credit impairment charge/(release) as a % of average GLA1
Gross impaired assets

1.

Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

68

DIVISIONAL RESULTS
Pacific - continuing operations
Antonia Watson
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 17 and pages 51 to 52 for details of these items.

Half YearNet interest income

Mar 21$M
49

Sep 20$M
44

Movement
Mar 20$M
65

Mar 21
v. Sep 20
11%

Mar 21v. Mar 20-25%

Other operating income

33

34

50

-3%

-34%

Operating income

82

78

115

5%

-29%

Operating expenses1

(71)

(129)

(76)

-45%

-7%

Profit/(Loss) before credit impairment and income tax

11

(51)

39

large

-72%

Credit impairment (charge)/release

(3)

(41)

(11)

-93%

-73%

Profit/(Loss) before income tax

8

(92)

28

large

-71%

Income tax expense and non-controlling interests

(1)

10

(8)

large

-88%

Cash profit/(loss)

7

(82)

20

large

-65%

Balance Sheet
Net loans and advances

1,713

1,866

2,176

-8%

-21%

Customer deposits

3,394

3,534

3,845

-4%

-12%

Risk weighted assets

3,176

3,357

3,547

-5%

-10%

Total full time equivalent staff (FTE)

1,101

1,113

1,108

-1%

-1%

1.

Includes $50 million of goodwill written-off in the September 2020 half.

TSO and Group Centre - continuing operations
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 17 and pages 51 to 52 for details of these items.
Movement

Half Year
Mar 21$M(242)

Share of associates profit/(loss)

Sep 20$M
21

Mar 20$M
135

Mar 21
v. Sep 20
large

Mar 21v. Mar 20
large

Operating income (other)

143

53

(762)

large

large

Operating income1

(99)

74

(627)

large

-84%

Operating expenses2

(514)

(610)

(484)

-16%

6%

Profit/(Loss) before credit impairment and income tax

(613)

(536)

(1,111)14%-45%

Credit impairment (charge)/release

-

-

-

n/a

n/a

(613)

(536)

(1,111)

14%

-45%

95

146

113

-35%

-16%

Cash profit/(loss)

(518)

(390)

(998)

33%

-48%

Risk weighted assets

6,319

6,429

5,664

-2%

12%

Total full time equivalent staff (FTE)

10,71910,345

10,306

4%

4%

Profit/(Loss) before income tax
Income tax benefit and non-controlling interests

1.

2.

Includes -$347 million in the March 2021 half in respect of the Group’s share of the AmBank 1MDB settlement and goodwill write-off. The March 2020 half includes -$815 million impairment
charge for AmBank and PT Panin. Refer to pages 13 to 17 for further details on large/notable items.
Includes restructuring expense of $38 million in the March 2021 half (Sep 20 half: $19 million; Mar 20 half: $5 million). The September 2020 half includes $117 million of accelerated
software amortisation. Refer to pages 13 to 17 for further details on large/notable items.

69

DIVISIONAL RESULTS
This page has been left blank intentionally70

PROFIT RECONCILIATIONCONTENTS

Page

Adjustments between statutory profit and cash profit

72

Explanation of adjustments between statutory profit and cash profit - continuing operations

72

Reconciliation of statutory profit to cash profit

73

71

PROFIT RECONCILIATION
Non-IFRS information
Statutory profit is prepared in accordance with recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). The Group provides additional measures of performance in the Consolidated Financial Report &Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in ASIC’s
Regulatory Guide 230 has been followed when presenting this information.

Adjustments between statutory profit and cash profit
Cash profit represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers to assess Group andDivisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory
profit (refer to Definitions on pages 131 to 132 for further details). The adjustments made in arriving at cash profit are included in statutory profit which is
subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not subject toreview by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on a consistentbasis across each period presented.
Movement

Half Year

Statutory profit attributable to shareholders of the Company from continuing
operations

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

2,951

2,040

1,635

45%

80%

Adjustments between statutory profit and cash profit from continuing operations
Economic hedges

51

461

(340)

-89%

large

Revenue and expense hedges

(12)

(156)

120

-92%

large
-100%

Structured credit intermediation trades
Total adjustments between statutory profit and cash profit from continuing operations
Cash profit from continuing operations
Statutory loss attributable to shareholders of the Company from discontinued
operations
Adjustments between statutory profit and cash profit from discontinued operations
Cash profit from discontinued operations

Cash profit

-

-

(2)

n/a

39

305

(222)

-87%

large

2,990

2,345

1,413

28%

large

(8)

(8)

(90)

0%

-91%

-

-

-

n/a

n/a

(8)

(8)

(90)

0%

-91%

2,982

2,337

1,323

28%

large

Explanation of adjustments between statutory profit and cash profit - continuing operations


Economic hedges
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in accordance with accounting standards, resultin fair value gains and losses being recognised within the Income Statement. This includes gains and losses arising from approved classes ofderivatives not designated in accounting hedge relationships but which are considered to be economic hedges as well as ineffectiveness fromdesignated accounting hedges.
Economic hedges comprise:Funding related swaps (primarily cross currency interest rate swaps) used to convert the proceeds of foreign currency debt issuances into
floating rate Australian dollar and New Zealand dollar debt that do not qualify for hedge accounting. The main drivers of these fair value
movements are currency basis spreads and Australian dollar and New Zealand dollar fluctuations against other major funding currencies.



Economic hedges of select structured finance and specialised leasing transactions that do not qualify for hedge accounting. The main drivers ofthese fair value adjustments are movements in the Australian and New Zealand term structure of interest rates.



Ineffectiveness from designated accounting hedge relationships.

The Group removes the fair value adjustments from cash profit since the profit or loss will reverse over time to match with the profit or loss from theunderlying hedged item.
In the March 2021 half, the majority of the loss on economic hedges relates to funding related swaps, principally from the strengthening of AUD and
NZD against USD and narrowing of basis spreads on the EUR/USD currency pair.


Revenue and expense hedges
The Group enters into economic hedges to manage hedges of larger foreign exchange denominated revenue and expense streams, primarily NZD
and USD (and USD correlated). The gain on revenue and expense hedges in the March 2021 half was mainly due to the strengthening of AUD
against the USD and NZD.

Structured credit intermediation trades
ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis with eight US financial guarantors. This
involved selling credit default swaps (CDSs) as protection over specific debt structures and purchasing CDS protection over the same structures.
ANZ has subsequently exited its positions with the remaining two CDS deals having matured during the March 2021 half. Accordingly, the notional
value of outstanding bought and sold CDSs at 31 March 2021 was nil (Sep 20: $0.3 billion; Mar 20: $0.3 billion).

72

PROFIT RECONCILIATION
Reconciliation of statutory profit to cash profit

Adjustments to statutory profit
Structured
creditintermediation
tradesTotal
adjustments
to statutory
profitCash profit

Statutory
profitEconomic
hedges

Revenue andexpensehedges

$M

$M

$M

$M

$M

$M

March 2021 Half YearNet interest income

6,986

-

-

-

-

6,986

Other operating income

1,381

73

(17)

-

56

1,437

Operating income

8,367

73

(17)

-

56

8,423

Operating expenses(4,482)

-

-

-

-

(4,482)

Profit before credit impairment and tax

3,885

73

(17)

-

56

3,941

491

-

-

-

-

491

Credit impairment (charge)/release
Profit before income tax

4,376

73

(17)

-

56

4,432

Income tax expense(1,425)

(22)

5

-

(17)

(1,442)

Non-controlling interests

-

-

-

-

-

-

2,951

51

(12)

-

39

2,990

(8)

-

-

-

-

(8)

Profit after tax

2,943

51

(12)

-

39

2,982

September 2020 Half YearNet interest income

6,827

-

-

-

-

6,827

Other operating income

1,917

649

(220)

-

429

2,346

Operating income

8,744

649

(220)

-

429

9,173

Operating expenses(4,778)

-

-

-

-

(4,778)

Profit before credit impairment and tax

3,966

649

(220)

-

429

4,395

Credit impairment (charge)/release(1,064)

-

-

-

-

(1,064)

Profit before income tax

2,902

649

(220)

-

429

3,331

Income tax expense

(862)

(188)

64

-

(124)

(986)

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

Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

-

-

-

-

-

-

2,040

461

(156)

-

305

2,345

(8)

-

-

-

-

(8)

Profit after tax

2,032

461

(156)

-

305

2,337

March 2020 Half YearNet interest income

7,222

-

-

-

-

7,222

Other operating income

1,671

(480)

169

(3)

(314)

1,357

Operating income

8,893

(480)

169

(3)

(314)

8,579

Operating expenses(4,605)

-

-

-

-

(4,605)

Profit before credit impairment and tax

4,288

(480)

169

(3)

(314)

3,974

Credit impairment (charge)/release(1,674)

-

-

-

-

(1,674)

Profit before income tax

2,614

(480)

169

(3)

(314)

2,300

Income tax expense

(978)

140

(49)

1

92

(886)

(1)

-

-

-

-

(1)

1,635

(340)

120

(2)

(222)

1,413

Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax

(90)

-

-

-

-

(90)

1,545

(340)

120

(2)

(222)

1,323

73

PROFIT RECONCILIATIONThis page has been left blank intentionally74

CONDENSED CONSOLIDATED FINANCIAL STATEMENTSCONTENTS

Page

Directors’ Report76

Condensed Consolidated Income Statement

77

Condensed Consolidated Statement of Comprehensive Income

78

Condensed Consolidated Balance Sheet79

Condensed Consolidated Cash Flow Statement80

Condensed Consolidated Statement of Changes in Equity

81

Notes to Condensed Consolidated Financial Statements

82

Directors’ Declaration

118

Auditor’s Review Report and Independence Declaration

119

75

DIRECTORS’ REPORTThe Directors present their report on the Condensed Consolidated Financial Statements for the half year ended 31 March 2021.
Directors
The names of the Directors of the Company who held office during and since the end of the half year are:
Mr PD O’Sullivan

Chairman

Mr SC Elliott

Director and Chief Executive Officer

Mr DM Gonski, AC

Director, retired on 28 October 2020

Ms IR Atlas, AO

Director

Ms PJ Dwyer

Director

Ms SJ Halton, AO PSM

Director

Mr GR Liebelt

Director

Rt Hon Sir JP Key, GNZM AC

Director

Mr JT MacFarlane

Director

Result
The consolidated profit attributable to shareholders of the Company was $2,943 million, and consolidated profit attributable to shareholders of theCompany from continuing operations was $2,951 million. Further details are contained in Group Results on pages 19 to 46 which forms part of this report,
and in the Condensed Consolidated Financial Statements.
Review of operations
A review of the operations of the Group during the half year and the results of those operations are contained in the Group Results on pages 19 to 46
which forms part of this report.
Lead auditor’s independence declaration
The lead auditor’s independence declaration given under section 307C of the Corporations Act 2001 (as amended) is set out on page 120 which forms
part of this report.
Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by ASIC Corporations Instrument 2016/191.
Significant events since balance date
On 26 April 2021, the Group posted notice that it will exercise its option to redeem wholesale A$700,000,000 floating rate subordinated notes due May
2026. The notes will be redeemed on 17 May 2021 for their par value of $700 million.
Other than the matter above, there have been no other significant events from 31 March 2021 to the date of signing this report that have not beenadjusted or disclosed.
Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
ChairmanShayne C ElliottManaging Director

4 May 2021

76

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited
Half Year
Note
Interest income
Interest expense

Movement

Mar 21$M
9,879

Sep 20$M
10,626

Mar 20$M
13,800Mar 21
v. Sep 20-7%

Mar 21v. Mar 20-28%(2,893)(3,799)(6,578)

-24%

-56%

Net interest income

2

6,986

6,827

7,222

2%

-3%

Other operating income

2

1,571

1,866

1,489

-16%

6%

Net income from insurance business

2

52

31

47

68%

11%

2, 19

(242)

20

135

large

large

8,367

8,744

8,893

-4%

-6%

3

(4,482)(4,778)(4,605)

-6%

-3%

3,885

3,966

4,288

-2%

-9%

491

(1,064)(1,674)

large

large

4,376

2,902

2,614

51%

67%
46%

Share of associates' profit/(loss)
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release

10

Profit before income tax
Income tax expense

4

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

13

Profit for the period(1,425)

(862)

(978)

65%

2,951

2,040

1,636

45%

80%

(8)

(8)

(90)

0%

-91%

2,943

2,032

1,546

45%

90%

2,943

2,032

1,545

45%

90%

-

-

1

n/a

-100%

Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests
Earnings per ordinary share (cents) including discontinued
operations
Basic

6

103.7

71.8

54.6

44%

90%

Diluted

6

98.4

66.3

51.5

48%

91%

Basic

6

104.0

72.1

57.8

44%

80%

Diluted

6

98.7

66.5

54.3

48%

82%

5

70

35

25

n/a

n/a

Earnings per ordinary share (cents) from continuing operations

Dividend per ordinary share (cents)

The notes appearing on pages 82 to 117 form an integral part of the Condensed Consolidated Financial Statements.

77

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited
Half Year
Mar 21$M
2,951

Profit for the period from continuing operations

Movement

Sep 20$M
2,040

Mar 20$M
1,636

Mar 21
v. Sep 20
45%

Mar 21v. Mar 20
80%

Other comprehensive income

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

124

(42)

(115)

large

large

Other reserve movements

(20)

(223)

236

-91%

large

Foreign currency translation reserve1(658)(1,831)

1,281

-64%

large

Other reserve movements

(319)

629

83

large

large

Income tax attributable to the above items

82

(104)

(76)

large

large

Share of associates' other comprehensive income2

41

41

10

0%

large

(750)

(1,530)

1,419

-51%

large

(8)

(8)

(90)

0%

-91%

Items that may be reclassified subsequently to profit or loss

Other comprehensive income after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Other comprehensive income after tax from discontinued operations
Total comprehensive income for the period

-

-

-

n/a

n/a

2,193

502

2,965

large

-26%

2,193

502

2,965

large

-26%

-

-

-

n/a

n/a

Comprising total comprehensive income attributable to:Shareholders of the Company
Non-controlling interests
1.
2.

Includes foreign currency translation differences attributable to non-controlling interests of nil (Sep 20 half: nil; Mar 20 half: $1 million loss).
Share of associates’ other comprehensive income includes:
Mar 21 half$M

Sep 20 half$M

Mar 20 half
$M

FVOCI reserve gain/(loss)

47

41

7

Defined benefits gain/(loss)

(5)

-

3

Cash flow hedge reserve gain/(loss)

1

(1)

-

Foreign currency translation reserve gain/(loss)

(2)

1

-

Total

41

41

10

The notes appearing on pages 82 to 117 form an integral part of the Condensed Consolidated Financial Statements.

78

CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited

As At
AssetsCash and cash equivalents1

Note

Mar 21$M
124,460

Sep 20$M
107,923

Movement
Mar 20$M
143,093

Mar 21
v. Sep 20
15%

Mar 21v. Mar 20-13%

Settlement balances owed to ANZ

9,778

7,541

6,961

30%

40%

Collateral paid

12,05914,308

16,762-16%-28%

Trading securities

46,33150,91349,068-9%-6%

104,666

135,331

173,677

-23%

-40%

91,99093,391

85,923-2%

7%614,359

617,093656,609

0%-6%

Derivative financial instruments

8

Investment securities
Net loans and advances

9

859

801

804

7%

7%

1,854

2,164

2,313

-14%

-20%

Current tax assets

170

161

452

6%

-62%

Deferred tax assets

2,105

2,124

1,816

-1%

16%

Goodwill and other intangible assets

4,024

4,379

4,957

-8%

-19%

Premises and equipment

2,792

3,013

3,211

-7%

-13%

Other assets

2,892

3,144

4,309

-8%

-33%

Total assets

1,018,339

1,042,286

1,149,955

-2%

-11%

Settlement balances owed by ANZ

19,18822,241

22,314-14%-14%

Collateral received

7,552

9,304

17,463-19%-57%

Regulatory deposits
Investments in associates

Liabilities

Deposits and other borrowings

11706,623

682,333

726,9094%-3%

Derivative financial instruments

8102,926

134,711167,364

-24%

-39%

Current tax liabilities

203

349

244

-42%

-17%

Deferred tax liabilities

73

80

94

-9%

-22%

8,558

9,128

10,536-6%-19%

Payables and other liabilities
Employee entitlements

600

596

635

1%

-6%

Other provisions

12

2,417

2,579

2,773

-6%

-13%

Debt issuances

14

107,623

119,668

140,248

-10%

-23%

Total liabilities

955,763

980,989

1,088,580

-3%

-12%

Net assets

62,576

61,297

61,3752%

2%

Shareholders' equity
Ordinary share capital

17

26,61526,531

26,4400%

1%

Reserves

17

741

1,501

2,851

-51%

-74%

Retained earnings

17

35,21033,25532,0736%

10%62,566

61,28761,364

2%

2%

10

10

11

0%

-9%

62,576

61,297

61,3752%

2%

Share capital and reserves attributable to shareholders of the Company
Non-controlling interests

17

Total shareholders' equity
1.

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

The notes appearing on pages 82 to 117 form an integral part of the Condensed Consolidated Financial Statements.

79

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Australia and New Zealand Banking Group Limited
The Condensed Consolidated Cash Flow Statement includes discontinued operations. Please refer to Note 13 of the Condensed Consolidated Financial
Statements for cash flows associated with discontinued operations.
Half Year
Mar 21$M

Sep 20$M

Mar 20
$M

2,943

2,032

1,546

(491)
-

1,064
-

1,674
815

563

778

613

-

77

-

(Profit)/loss on sale of premises and equipment

(11)

(4)

(4)

Net derivatives/foreign exchange adjustment

1,859

Profit after income tax
Adjustments to reconcile to net cash flow from operating activities:
Credit impairment charge/(release)
Impairment of investment in associates
Depreciation and amortisation1
Goodwill write-off(6,556)(4,905)(Gain)/loss on sale from divestments

238

14

11

Other non-cash movements

74

19

(99)

Net (increase)/decrease in operating assets:
Collateral paid

1,730

1,187

(904)

Trading securities(3,660)(3,564)

1,761

Loans and advances(1,372)

23,273(30,392)

47

611

(687)

Deposits and other borrowings

35,594(15,628)

67,503

Settlement balances owed by ANZ(2,929)274

11,202

Collateral received(1,313)(6,640)8,379

Other liabilities

4,964

(951)

(8,630)Total adjustments

26,878(4,395)

53,101

Net cash (used in)/provided by operating activities2

29,821(2,363)54,647Purchases(12,863)(22,660)(17,369)

Proceeds from sale or maturity

12,323

9,645

18,997

13

618

691

-

-

(800)

Other assets

(366)

(554)

(33)

Net cash (used in)/provided by investing activities(893)(12,951)

1,486

Other assets
Net increase/(decrease) in operating liabilities:

Cash flows from investing activities
Investment securities:

Proceeds from divestments, net of cash disposed
Repayment of IOOF secured notes

Cash flows from financing activities
Debt issuances:3
Issue proceeds

4,648

327

11,933

Redemptions(11,366)(11,003)(10,427)

Dividends paid4

(879)

(633)

(2,228)On market purchase of treasury shares

(79)

-

(122)

Repayment of lease liabilities

(158)

(133)

(148)

(7,834)(11,442)(992)

Net cash (used in)/provided by financing activities
Net increase/(decrease) in cash and cash equivalents

21,094(26,756)

55,141

Cash and cash equivalents at beginning of period

107,923

143,093

81,621

Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period
1.

(4,557)(8,414)

6,331

124,460

107,923

143,093

Includes accelerated amortisation of $197 million in the September 2020 half following the Group’s change in the application of its software amortisation policy to reflect the shorter useful lifeof software caused by rapidly changing technology and business requirements.
2. Net cash (used in)/provided by operating activities includes interest received of $9,907 million (Sep 20 half: $10,916 million; Mar 20 half: $13,875 million), interest paid of $3,226 million (Sep
20 half: $4,354 million; Mar 20 half: $6,802 million) and income taxes paid of $1,424 million (Sep 20 half: $868 million; Mar 20 half: $1,480 million).
3. Non-cash changes in debt issuances includes fair value hedging loss of $1,311 million (Sep 20 half: $24 million loss; Mar 20 half: $1,103 million loss) and foreign exchange gains of $4,077
million (Sep 20 half: $10,159 million gain; Mar 20 half: $8,536 million loss).
4. Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.
The notes appearing on pages 82 to 117 form an integral part of the Condensed Consolidated Financial Statements.

80CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited

As at 1 October 2019

Ordinary
share
capital$M

Reserves$M

Retainedearnings$M

26,4901,629

32,664

Impact on transition to AASB 16
Profit or loss from continuing operations

Share capitaland reserves
attributable toshareholders of
the Company$M

Noncontrollinginterests$M

Total
shareholders'equity$M60,783

11

60,794

-

-

(88)

(88)

-

(88)

-

-

1,635

1,635

1

1,636

Profit or loss from discontinued operations

-

-

(90)

(90)

-

(90)

Other comprehensive income for the period from continuing operations

-

1,249

171

1,420

(1)

1,419

Other comprehensive income for the period from discontinued operations

-

-

-

-

-

-

-

1,249

1,716

2,965

-

2,965

-

-

(2,228)(2,228)-(2,228)

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid
Other equity movements:
Group employee share acquisition scheme
Other items
As at 31 March 2020

(50)

-

-

(50)

-

(50)

-

(27)

9

(18)

-

(18)

26,4402,851

32,07361,364

11

61,375

Profit or loss from continuing operations

-

-

2,040

2,040

-

2,040

Profit or loss from discontinued operations

-

-

(8)

(8)

-

(8)

Other comprehensive income for the period from continuing operations-(1,373)(157)(1,530)-(1,530)

Other comprehensive income for the period from discontinued operations

-

-

-

-

-

-

-

(1,373)

1,875

502

-

502

-

-

(694)

(694)

-

(694)

61

-

-

61

-

61

30

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Other equity movements:
Group employee share acquisition scheme

30

-

-

30

-

-

23

1

24

(1)

23

26,531

1,501

33,25561,287

10

61,297

Profit or loss from continuing operations

-

-

2,951

2,951

-

2,951

Profit or loss from discontinued operations

-

-

(8)

(8)

-

(8)

Other comprehensive income for the period from continuing operations

-

(731)

(19)

(750)

-

(750)

Other comprehensive income for the period from discontinued operations

-

-

-

-

-

-

-

(731)

2,924

2,193

-

2,193

-

-

(973)

(973)

-

(973)

94

-

-

94

-

94

(10)

Other items
As at 30 September 2020

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Other equity movements:
Group employee share acquisition scheme

(10)

-

-

(10)

-

-

(29)

4

(25)

-

(25)

26,615741

35,21062,566

10

62,576

Other items
As at 31 March 2021
1.

4.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2020 final dividend (3.4 million shares for the 2020 interim dividend).

The notes appearing on pages 82 to 117 form an integral part of the Condensed Consolidated Financial Statements.

81

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation

These Condensed Consolidated Financial Statements:

have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (AASs);

should be read in conjunction with ANZ’s Annual Financial Statements for the year ended 30 September 2020 and any public announcements madeby the Parent Entity and its controlled entities (the Group) for the half year ended 31 March 2021 in accordance with the continuous disclosure
obligations under the Corporations Act 2001 and the ASX Listing Rules;

do not include all notes of the type normally included in ANZ’s Annual Financial Report;

are presented in Australian dollars unless otherwise stated; andwere approved by the Board of Directors on 4 May 2021.

i)

Statement of Compliance

These Condensed Consolidated Financial Statements have been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim
Financial Reporting which ensures compliance with IAS 34 Interim Financial Reporting.
ii) Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by Australian Securities and Investments Commission Corporations Instrument 2016/191.
iii) Basis of measurement
The financial information has been prepared in accordance with the historical cost basis except that the following assets and liabilities are stated at theirfair value:

derivative financial instruments as well as, in the case of fair value hedges, the fair value adjustment on the underlying hedged exposure;financial assets and liabilities held for trading;financial assets and liabilities designated at fair value through profit and loss;financial assets at fair value through other comprehensive income; and

assets and liabilities held for sale (except those at carrying value as per Note 13).

In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.
iv) Use of estimates, assumptions and judgements
The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions that
affect reported amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include
complex or subjective decisions or assessments are provided in the 2020 ANZ Annual Financial Report. Such estimates and judgements are reviewed on
an ongoing basis.
A brief explanation of the key estimates, assumptions and judgements for the half year ended 31 March 2021 follows.
Coronavirus (COVID-19) pandemic
The COVID-19 pandemic and its effect on the global economy have impacted our customers, operations and Group performance. The outbreaknecessitated governments to respond at unprecedented levels to protect the health of the population, local economies and livelihoods. It has affecteddifferent regions at different times and at varying degrees and there remains a risk of subsequent waves of infection. Thus the pandemic has significantly
increased the estimation uncertainty in the preparation of these financial statements including:the extent and duration of the disruption to business arising from the actions of governments, businesses and consumers to contain the spread of thevirus;

the impact, extent and duration of the expected economic downturn (and forecasts for key economic factors including GDP, employment and house
prices). This includes disruption to capital markets, and the impacts on credit quality, liquidity, unemployment, consumer spending, as well as specificsector impacts and other restructuring activities; andthe efficacy, extent and pace of roll-out of vaccines, as well as the effectiveness of government and central bank measures that have been and will
be put in place to support businesses and consumers through this disruption.

The Group has made various accounting estimates in these Condensed Consolidated Financial Statements based on forecasts of economic conditions
which reflect expectations and assumptions as at 31 March 2021 about future events that the Directors believe are reasonable in the circumstances.
There is a considerable degree of judgement involved in preparing these estimates. The underlying assumptions are also subject to uncertainties which
are often outside the control of the Group. Accordingly, actual economic conditions are likely to be different from those forecast since anticipated events
frequently do not occur as expected, and the effect of those differences may significantly impact accounting estimates included in these financial
statements.
The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses,
carrying values of goodwill, fair value measurement, and recoverable amounts of non-financial assets.
The impact of the COVID-19 pandemic on each of these accounting estimates is discussed further below and/or in the relevant note in the 2020 ANZ
Annual Financial Report. Readers should consider these disclosures in light of the inherent uncertainty described above.

82

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

Allowance for expected credit losses
The Group measures the allowance for expected credit losses (ECL) using an expected credit loss impairment model as required by AASB 9 Financial
Instruments. The Group’s accounting policy for the recognition and measurement of the allowance for expected credit losses is described at Note 13 to
ANZ’s Annual Financial Statements for the year ended 30 September 2020.
The continuing impact of COVID-19 on the global economy, including the roll-out of vaccines, and how governments, businesses and consumers
respond remains uncertain. This uncertainty is reflected in the Group’s assessment of expected credit losses from its credit portfolio which are subject toa number of management judgements and estimates.
The table below shows the Group’s allowance for expected credit losses (refer to Note 10 and Note 15 for further information).
As at
Mar 21$M

Sep 20$M

Mar 20$M

Collectively assessed

4,285

5,008

4,501

Individually assessed

809

891

1,093

5,094

5,899

5,594

Total
1.

1

Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.

Individually assessed allowance for expected credit losses
During the March 2021 half, there was a net decrease in the individually assessed allowance for expected credit losses of $82 million.
In estimating individually assessed ECL for Stage 3 exposures, the Group makes judgements and assumptions in relation to expected repayments, therealisable value 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 the ongoing and potential impact of COVID-19.
Collectively assessed allowance for expected credit losses
During the March 2021 half, the collectively assessed allowance for expected credit losses decreased by $723 million attributable to: a reduction of $417
million due to the improving economic outlook offset by changes to scenario weightings and an allowance for model uncertainty due to the continuing
pandemic and recent wind-back of government support programs (such as JobKeeper); a reduction of $199 million due to lower lending volumes andchanges in portfolio composition; a reduction of $112 million attributable to changes in credit risk; and a reduction of $45 million from foreign currencytranslation offset by an increase of $50 million in management adjustments.
In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to:

the selection of an estimation technique or modelling methodology, noting that the modelling of the Group’s ECL estimates are complex; 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 in the context of the impact of COVID-19, and reflect historical experience and otherfactors 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 half year ended 31 March 2021

Determining when asignificant increase incredit risk (SICR) has
occurredIn the measurement of ECL, judgement is involved insetting 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 froman allowance based on the probability of default in thenext 12 months, to an allowance for lifetime expectedcredit losses. Subsequent decreases in credit risk
resulting in transition from stage 2 to stage 1 may similarly
result in significant changes in the ECL allowance.

The support packages offered to customers in response
to COVID-19 in 2020 are no longer being offered, and the
majority of customers who took up the support packages
have reverted back to their normal loan repayments.

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.

83

The support packages, as well as government support
measures, may have obscured repayment delinquencies
that might otherwise have occurred and those that may
still occur in the future. Thus the Group has provided acomponent of ECL for expected delinquencies andincreases in SICR.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’dJudgement/Assumption

Description

Considerations for the half year ended 31 March 2021

Measuring both 12month and lifetime credit
lossesThe probability of default (PD), loss given default (LGD)
and exposure at default (EAD) credit risk parameters
used in determining ECL are point-in-time measuresreflecting the relevant forward-looking information
determined by management. Judgement is involved indetermining which forward-looking information variables
are relevant for particular lending portfolios and for
determining each portfolio’s point-in-time sensitivity.

The PD, EAD and LGD models are subject to the Group’smodel risk policy that stipulates periodic model monitoring,
periodic re-validation and defines approval procedures andauthorities according to model materiality.

In addition, judgement is required where behaviouralcharacteristics are applied in estimating the lifetime of a
facility to be used in measuring ECL.

There were no material changes to the policies during thehalf year ended 31 March 2021.

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 forwardlooking variables (key economic drivers) used as model
inputs in the current period.

Base case economic
forecast

In the March 2021 half, an adjustment was made to themodelled outcome to account for continuing model
uncertainties as a result of COVID-19.

As at 31 March 2021, the base case assumptions havebeen updated to reflect the current phase of COVID-19,
including containment in key geographies, government
stimulus measures and roll-out of vaccines. In determining
the expected path and timing out of the current economic
downturn, assessments of the impact of central bankpolicies, governments’ actions, the response of business,and institution specific responses (such as repayment
deferrals) were considered.
The expected outcomes of key economic drivers for thebase case scenario as at 31 March 2021 are described
below under the heading “Base case economic forecast
assumptions”.

Probability weighting ofeach economic scenario(base case, upside1,
downside1 and severe
downside2 scenarios)

Probability weighting of each economic scenario is
determined by management considering the risks anduncertainties surrounding the base case economic
scenario at each measurement date.

The key consideration for probability weightings in thecurrent period is the extent and timing of recovery from theeconomic downturn caused by COVID-19.
The Group considers these weightings in each geography
to provide the best estimate of the possible loss outcomes
and has analysed inter-relationships and correlations (overboth the short and long term) within the Group’s credit
portfolios in determining them.
As at 31 March 2021, a reduced weighting was applied tothe base case forecast which reflects a significantly
improved and largely optimistic view of base caseeconomic conditions by ANZ Economics. Greater
weighting has been applied to the downside scenario given
the Group’s assessment of downside risks.
The assigned probability weightings in Australia, New
Zealand and Rest of world are subject to a high degree of
inherent uncertainty and therefore the actual outcomesmay be significantly different to those projected.

84

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’dJudgement/Assumption

Description

Considerations for the half year ended 31 March 2021

Management temporary
adjustments

Management temporary adjustments to the ECL
allowance are used in circumstances where it is judgedthat our existing inputs, assumptions and modeltechniques do not capture all the risk factors relevant toour lending portfolios. Emerging local or global
macroeconomic, microeconomic or political events, andnatural disasters that are not incorporated into ourcurrent 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.

Management have applied a number of adjustments to themodelled ECL primarily due to the uncertainty associatedwith continuing COVID-19 impacts.
Management overlays (including COVID-19 overlays)
which add to the modelled ECL provision have been madefor risks particular to retail including home loans, small
business and commercial banking in Australia, for retail,commercial and agri banking in New Zealand, and for
tourism in the Pacific.

The uncertainty associated with the COVID-19
pandemic, including the roll-out of vaccines, and theextent to which the actions of governments, businesses
and consumers mitigate against potentially adverse
credit outcomes are not fully incorporated into existing
ECL models which are based on historical underlying
data. Accordingly, management overlays have been
applied to ensure credit provisions are appropriate.
1.

2.

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.
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse
economic conditions.

Base case economic forecast assumptions
The uncertain evolution of the COVID-19 pandemic increases the risk to the economic forecast resulting in an understatement or overstatement of the
ECL balance due to uncertainties around:The extent and duration of measures, including the roll-out of vaccines, to contain the spread of COVID-19;



The extent and duration of the economic down-turn, along with the speed and timing required for economies to recover; andThe effectiveness of government stimulus measures, in particular their impact on the magnitude of economic downturn and the extent and durationof the recovery.

The economic drivers of the base case economic forecasts at 31 March 2021 are set out below. These reflect ANZ Economics’ view of future macroeconomic conditions at 31 March 2021. For years beyond the near term forecasts below, the ECL models project future year economic conditions
including an assumption to eventual reversion to mid-cycle economic conditions.
Actual calendar year

Forecast calendar year

2020

2021

2022

GDP

-2.4%

4.8%

3.3%

Unemployment

6.5%

6.2%

5.3%

Residential property prices

1.9%

17.4%

6.5%

Consumer price index

0.8

2.4

1.7

-3.0%

3.6%

3.7%

Australia

New ZealandGDP
Unemployment

4.6%

5.4%

4.6%

Residential property prices

15.6%

17.4%

4.1%

1.7

1.9

1.6

GDP

-3.5%

6.0%

3.2%

Consumer price index

1.2

2.5

2.0

Consumer price index
Rest of world

The base case economic forecasts as at 31 March 2021 indicate a significant improvement in current and expected economic conditions from theforecasts as at 30 September 2020 reflecting the ongoing progress and actions in responding to the COVID-19 pandemic.
Probability weightings
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base case economic
scenario. The key consideration for probability weightings in the current period is the effectiveness of actions taken in response to COVID-19 and theability of vaccines to limit the impact of the virus.
The base case scenario represents a significant improvement in the forecasts since September 2020. Given the uncertainties associated with a potential
recovery in the economy, the average base case weighting across geographies has been reduced to 41.4% (Sep 20: 50.0%) and the downside scenario
increased to 46.7% (Sep 20: 33.3%).

85

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

The assigned probability weightings in Australia, New Zealand and Rest of world are subject to a high degree of inherent uncertainty and therefore theactual outcomes may be significantly different to those projected. The Group considers these weightings in each geography to provide the best estimateof the possible loss outcomes and has analysed inter-relationships and correlations (over both the short and long term) within the Group’s credit portfolios
in determining them. The average weightings applied across the Group are set out below:
31 March 2021

30 September 2020

31 March 2020

41.4%

50.0%

50.0%

Group
Base
Upside

5.5%

10.4%

12.7%

Downside

46.7%

33.3%

27.3%

Severe Downside

6.4%

6.3%

10.0%

ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future 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 31 March 2021:

If 1% of stage 1 facilities were included in stage 2

Total
$M
4,342

Impact$M
57

If 1% of stage 2 facilities were included in stage 1

4,278

(7)

100% upside scenario

1,815(2,470)100% base scenario

2,487(1,798)

100% downside scenario

4,412

127

100% severe downside scenario

5,508

1,223

Fair value measurement of financial instruments
The majority of valuation models the Group uses to value financial instruments employ only observable market data as inputs.
For certain financial instruments, we may use data that is not readily observable in current markets where we need to exercise more management
judgement to determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available.
At 31 March 2021, the Group had $1,224 million of assets and $25 million of liabilities where the valuation was primarily derived using unobservable
inputs (Sep 20: $1,183 million assets and $55 million liabilities; Mar 20: $1,296 million assets and $67 million liabilities). The financial instruments which
are valued using unobservable inputs are predominantly equity investment securities where quoted prices in active markets are not available.
The Group has an investment in the Bank of Tianjin (BoT), which at 31 March 2021 has a carrying value of $1,019 million (Sep 20: $934 million; Mar 20:$1,053 million). As a result of illiquidity of the quoted share price, the Group determines the fair value based on a valuation model using comparable bankpricing multiples as determined by management. Judgement is required in both the selection of the model and inputs used. Although the comparatorgroup entities operate in the same industry, the nature of their business and local economic conditions may be different from the Group’s investment.
Thus where local conditions change, which impact the price-to-book ratio of the comparator group, the fair value of the asset will change proportionately.
That is, if the price-to-book ratio changed by 10%, the fair value would change by 10%. Since the asset is classified as fair value through othercomprehensive income, changes in the fair value are recorded directly in equity.
Investments in associates
The Group assesses the carrying value of its associate investments for impairment indicators semi-annually.
At 31 March 2021, the impairment assessment of non-lending assets identified that two of the Group’s associate investments AMMB Holdings Berhad(AmBank) and PT Bank Pan Indonesia (PT Panin) had indicators of impairment. Although their market value (based on share price) was below theircarrying value, no impairment was recognised as their carrying values are supported by their value in use (VIU) calculations.

86

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

The ongoing impact of COVID-19 on the valuation of AmBank and PT Panin remains uncertain. Significant management judgement is required todetermine the key assumptions underpinning the VIU calculations. Factors may change in subsequent periods and lead to potential future impairments orreversals of prior period impairments. This includes forecast earnings levels in the near term and/or changes in the long term growth forecasts, required
levels of regulatory capital and the post-tax discount rate. The key assumptions used in the VIU calculations are outlined below:

Mar 21

AmBank
Sep 20Mar 20Mar 21PT Panin
Sep 20Carrying Value ($m)

685

1,056

1,161

1,140

1,084

1,130

Post-tax discount rate

11.2%

11.3%

12.4%

14.1%

15.2%

13.9%

Terminal growth rate

5.0%

4.8%

4.9%

5.1%

5.3%

5.3%

Mar 20

Expected earnings growth (compound annual growth rate - 5 years)¹

large

2.8%

1.0%

6.9%

4.2%

2.6%

Common Equity Tier 1 ratio (5 year average)

13.0%

12.9%

11.5%

12.8%

12.8%

12.3%

1.

For AmBank the expected earnings growth is noted as large due to the large loss arising in the current forecast year due to the impact of the 1MDB settlement and the impairment of
goodwill. The expected earnings growth for years 2-5 for AmBank is 7.3%.

The VIU calculations are sensitive to changes in the underlying assumptions with reasonably possible changes in key assumptions having a positive or
negative impact on the VIU outcome, and as such the recoverable amount of the investment.


A change in the March 2021 post-tax discount rate by +/- 50bps would impact the VIU outcome for PT Panin by ($58 million) / $66 million, and ($71
million) / $84 million for AmBank.



A change in the March 2021 terminal growth rate by +/- 25bps would impact the VIU outcome for PT Panin by $15 million / ($16 million) and $5
million / ($6 million) for AmBank.

Neither investment would be impaired if the discount rate were increased or the terminal growth rate reduced by the reasonably possible changes above.
GoodwillOn the reclassification of ANZ Share Investing as held for sale as at 31 March 2021, the relevant assets and liabilities were remeasured at the lower of
their carrying value and the fair value less costs to sell resulting in $251 million of goodwill attributable to this business been written down. After the write
down, the Group’s goodwill balance was $2,989 million.
The Group conducted an assessment as to whether the carrying value of the goodwill was impaired. For the purpose of impairment testing, goodwill
acquired in a business combination is allocated at the date of acquisition to the cash generating units (CGUs) that are expected to benefit from thesynergies of the related business combination. These CGUs are the Group’s reportable segments. CGUs with goodwill assets as at 31 March 2021 were
the Australia Retail and Commercial division ($153 million), the New Zealand division ($1,777 million) and the Institutional division ($1,059 million).
Goodwill is considered to be impaired if the carrying amount of the relevant Cash Generating Unit (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 VIU assessment
performed where the FVLCOD approach indicates an impairment.
Management’s approach used to determine the FVLCOD of each CGU was consistent with the prior period. The assessment of the recoverable amountof each CGU has been made in consideration of the impacts of COVID-19 and subsequent economic recovery on both earnings and asset prices, andreflects expectations of future events that are believed to be reasonable under the circumstances. The key inputs used to determine FVLCOD of each
CGU containing goodwill are noted below:

Future maintainable earnings for each of the CGU’s used for the March 2021 half year assessment are similar or slightly above those used for the2020 full year.

Price/Earnings (P/E) multiples applied (including 30% control premium) - the P/E multiples derived from the valuations of comparator entities
improved for all three CGUs:
Price/Earnings Multiples
Division

Mar 21 Half YearSep 20 Full Year

Australia Retail and Commercial

19.6

16.0

New Zealand

15.7

12.7

Institutional

16.8

13.4

Based on this assessment, no impairment was identified.
Customer remediation provisions
At 31 March 2021, the Group has recognised customer remediation provisions of $1,003 million (Sep 20: $1,109 million; Mar 20: $1,094 million) which
includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims, penalties and litigation
outcomes.
Determining the amount of the provisions, which represent management’s best estimate of the cost of settling the identified matters, requires the exerciseof significant judgement. It will often be necessary to form a view on a number of different assumptions, including the number of impacted customers, theaverage refund per customer, associated remediation project costs, and the implications of regulatory exposures and customer claims having regard totheir specific facts and circumstances.
Consequently, 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.

87

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

Other provisions
The Group holds provisions for various obligations including restructuring costs, non-lending losses, fraud and forgeries and litigation related claims.
These provisions involve judgements regarding the timing and outcome of future events, including estimates of expenditure required to satisfy suchobligations. 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.
v)

Accounting policies

These Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computationconsistent with those applied in the 2020 ANZ Annual Financial Report.
Discontinued operations are separately presented from the results of the continuing operations as a single line item ‘Profit/(loss) after tax fromdiscontinued operations’ in the Condensed Consolidated Income Statement. Notes to the Condensed Consolidated Income Statement have beenpresented on a continuing basis.
Accounting standards adopted during the period
On 1 October 2020, the Group adopted the revised Conceptual Framework for Financial Reporting. The new Framework includes updated definitions andcriteria for the recognition and derecognition of assets and liabilities. Additionally, it introduces new concepts on measurement, including factors toconsider when selecting a measurement basis. The adoption of the revised conceptual framework did not have a material impact on the Group.
In addition to the above, several amendments to existing accounting standards apply for the first time in 2021, but do not have a material impact on theGroup.
vi) Future accounting developments
Interest Rate Benchmark Reform
In September 2020, the AASB issued AASB 2020-8 Amendments to Australian Accounting Standards - Interest Rate Benchmark Reform - Phase 2. This
standard addresses issues that may affect the Group at the point of transition from an existing Interbank Offer Rate (IBOR rate) to a Risk Free Rate
(RFR), including the effects of changes to contractual cash flows or hedging relationships. The standard includes amendments that provide practical
expedients in respect of:

accounting for changes in the basis for determining contractual cash flows as a result of IBOR reform by updating the effective interest rate resulting
in no immediate profit or loss impact. This applies only when the change is necessary as a direct consequence of the reform, and the new basis fordetermining the contractual cash flows is economically equivalent to the previous basis.

Permitting changes to hedge documentation and hedge designation as a result of IBOR reform without discontinuing the existing hedge accounted
relationship.

The standard applies to the Group in the 2022 financial year and earlier application is permitted. The Group is in the process of assessing the impact of
the new standard on its financial statements and timing of adoption.
The Group has exposure to IBOR rates that are subject to reform through its issuance of debt, the structural interest rate risk position, holdings ofinvestment securities; products denominated in foreign currencies and associated hedging. The Group's hedging relationships are exposed to various
IBOR rates subject to reform including USD, GBP, CHF and JPY LIBOR and Euro Interbank Offered Rate (EURIBOR).
To manage the impact of IBOR reform, the Group has established an enterprise-wide Benchmark Transition Program and is continuing to monitor market
developments in relation to the transition and their impact on the Group’s financial assets and liabilities to ensure that no unexpected consequences or
disruption arises.
AASB 9 General hedge accounting
AASB 9 introduces new hedge accounting requirements which more closely align accounting with risk management activities undertaken when hedging
financial and non-financial risks.
AASB 9 provides the Group with an accounting policy choice to continue to apply AASB 139 Financial Instruments: Recognition and Measurement(AASB 139) hedge accounting requirements until the International Accounting Standard Board’s ongoing project on macro hedge accounting iscompleted. The Group currently applies the hedge accounting requirements of AASB 139.

88

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.

IncomeHalf Year

Movement

Interest income

Mar 21$M
9,879

Sep 20$M
10,626

Mar 20$M
13,800Mar 21
v. Sep 20-7%

Mar 21v. Mar 20
-28%
-58%

Interest expense(2,704)(3,589)(6,382)-25%

Major bank levy

(189)

(210)

(196)

-10%

-4%

Net interest income

6,986

6,827

7,222

2%

-3%

Other operating incomei) Fee and commission income
Lending fees1
Non-lending fees

244

276

303

-12%

-19%

1,266

1,246

1,441

2%

-12%

Commissions

46

75

46

-39%

0%

Funds management income

140

136

139

3%

1%

Fee and commission income

1,696

1,733

1,929

-2%

-12%

Fee and commission expense

(646)

(585)

(752)

10%

-14%

Net fee and commission income

1,050

1,148

1,177

-9%

-11%

729

710

1,099

3%

-34%

-

-

(595)

n/a

-100%

ii) Other income
Net foreign exchange earnings and other financial instruments income2
Impairment of AmBank
Impairment of PT Panin
Reclassification of ANZ Share Investing to held for sale3
Sale of New Zealand legacy insurance portfolio
Sale of UDC
Dividend income on equity securities
Other
Other income
Other operating income
Net income from insurance business

-

-

(220)

n/a

-100%

(251)

-

-

n/a

n/a

13

-

-

n/a

n/a

-

(7)

-

-100%

n/a

-

26

-

-100%

n/a

30

(11)

28

large

7%

521

718

312

-27%

67%

1,571

1,866

1,489

-16%

6%

52

31

47

68%

11%

Share of associates' profit/(loss)

(242)

20

135

large

large

Operating income4

8,367

8,744

8,893

-4%

-6%

1.

Lending fees exclude fees treated as part of the effective yield calculation in interest income.
Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk
on funding instruments, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.
3. The loss on reclassification of ANZ Share Investing to held for sale is included within Other operating income to align with the classification of loss on sale that would have applied if the sale
had completed in the March 2021 half.
4. Includes charges associated with customer remediation of $74 million for the March 2021 half (Sep 20 half: $116 million; Mar 20 half: $58 million).
2.

89

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3.

Operating expenses
Half Year

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

2,196

2,133

2,177

3%

1%

Superannuation costs

164

160

169

3%

-3%

Other

89

120

119

-26%

-25%

2,449

2,413

2,465

1%

-1%

i) Personnel
Salaries and related costs

Personnel1ii) Premises
Rent

42

41

43

2%

-2%

Depreciation

225

254

263

-11%

-14%

Other

83

89

99

-7%

-16%

Premises

350

384

405

-9%

-14%

Depreciation and amortisation2

334

517

341

-35%

-2%

Subscription licences and outsourced services

372

375

405

-1%

-8%

Other

79

93

93

-15%

-15%

Technology1,2

785

985

839

-20%

-6%

iv) Restructuring

105

56

105

88%

0%

iii) Technologyv) OtherAdvertising and public relations

71

88

89

-19%

-20%

Professional fees

329

374

293

-12%

12%

Freight, stationery, postage and communication

95

101

104

-6%

-9%

Other3

298

377

305

-21%

-2%

Other1,3
Operating expenses1,2,3
1.

793

940

791

-16%

0%

4,482

4,778

4,605

-6%

-3%

Includes customer remediation expenses of $92 million for the March 2021 half (Sep 20 half: $138 million; Mar 20 half: $71 million) across Personnel, Technology and Other expenses.
Includes accelerated amortisation of $197 million for the September 2020 half.
3. Includes litigation settlement expenses of $69 million for the March 2021 half and goodwill write-off of $77 million for the September 2020 half.
2.

90

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4.

Income tax expense

Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in the profit and loss.
Half Year

Movement

Profit before income tax from continuing operations

Mar 21$M
4,376

Sep 20$M
2,902

Mar 20$M
2,614

Mar 21
v. Sep 20
51%

Mar 21v. Mar 20
67%

Prima facie income tax expense at 30%

1,313

871

784

51%

67%

Gains or losses on sale from divestments

(4)

2

-

large

n/a

Impairment of investment in AmBank and PT Panin

-

-

245

n/a

-100%

Share of associates' (profit)/loss

72

(6)

(41)

large

large

Reclassification of ANZ Share Investing to held for sale

75

-

-

n/a

n/a
-24%

Tax effect of permanent differences:

Interest on convertible instruments

22

23

29

-4%

Overseas tax rate differential

(50)

(51)

(35)

-2%

43%

Provision for foreign tax on dividend repatriation

26

6

14

large

86%

Other

(20)

20

5

large

large

Subtotal

1,434

865

1,001

66%

43%

Income tax (over)/under provided in previous years

(9)

(3)

(23)

large

-61%

1,425

862

978

65%

46%

Australia

1,013

535

580

89%

75%

Overseas

412

327

398

26%

4%

65%

46%

Income tax expense

Income tax expense

1,425

862

978

Effective tax rate

32.6%

29.7%

37.4%

91

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5.

Dividends
Half Year

Dividend per ordinary share (cents)1

Movement

Mar 21
70

Sep 20-Mar 20
25

Final

-

35

-

Total

70

35

25

-

709

2,268

InterimOrdinary share dividend ($M)2
Interim dividend

Mar 21
v. Sep 20

Mar 21v. Mar 20

100%

large

Final dividend

994-

Bonus option plan adjustment

(21)

(15)

(40)

40%

-48%

Total

973

694

2,228

40%

-56%

67.7%

48.9%

45.9%

Ordinary share dividend payout ratio (%)3
1.

2.

3.

Fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents for the proposed 2021 interim dividend (2020 final dividend: NZD 4 cents;
2020 interim dividend: NZD 3 cents).
Dividends paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries of the Group to non-controlling equity holders (Mar 21 half: nil; Sep 20 half: nil; Mar 20
half: nil).
The dividend payout ratio for the March 2021 half is calculated using the proposed 2021 interim dividend of $1,992 million, based on the forecast number of ordinary shares on issue at thedividend record date. Dividend payout ratios for the September 2020 half and March 2020 half were calculated using actual dividend paid of $994 million and $709 million respectively.

Ordinary Shares
The Directors propose an interim dividend of 70 cents be paid on each eligible fully paid ANZ ordinary share on 1 July 2021. The proposed 2021 interim
dividend will be fully franked for Australian tax purposes. New Zealand imputation credits of NZD 8 cents per ordinary share will also be attached.
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2021 interim dividend.

92

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.

Earnings per share

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding
during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is calculated by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic EPS calculation for the effect of dilutive
potential ordinary shares.
Half Year

Movement

Mar 21

Sep 20Mar 20Mar 21
v. Sep 20

Mar 21v. Mar 20

Earnings Per Share (EPS) - Basic
Earnings Per Share (cents)

103.7

71.8

54.6

44%

90%

Earnings Per Share (cents) from continuing operations

104.0

72.1

57.8

44%

80%

Earnings Per Share (cents) from discontinued operations

(0.3)

(0.3)

(3.2)

0%

-91%

Earnings Per Share (cents)

98.4

66.3

51.5

48%

91%

Earnings Per Share (cents) from continuing operations

98.7

66.5

54.3

48%

82%

Earnings Per Share (cents) from discontinued operations

(0.3)

(0.2)

(2.8)

50%

-89%

Mar 21v. Mar 20

Earnings Per Share (EPS) - Diluted

Half Year

Movement

Mar 21

Sep 20Mar 20Mar 21
v. Sep 20

2,943

2,032

1,546

45%

90%
-100%

Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the period ($M)
Less: Profit attributable to non-controlling interests ($M)

-

-

1

n/a

Earnings used in calculating basic earnings per share ($M)

2,943

2,032

1,545

45%

90%

Less: Profit/(Loss) after tax from discontinued operations ($M)

(8)

(8)

(90)

0%

-91%

2,951

2,040

1,635

45%

80%

2,943

2,032

1,545

45%

90%

92

90

124

2%

-26%

3,035

2,122

1,669

43%

82%

(8)

(8)

(90)

0%

-91%

3,043

2,130

1,759

43%

73%

2,838.7

2,831.2

2,830.6

0%

0%

238.7

362.2

401.4

-34%

-41%

7.0

7.3

6.6

-4%

6%

3,084.4

3,200.7

3,238.6-4%-5%

Earnings used in calculating basic earnings per share from continuing
operations ($M)
Diluted:Earnings used in calculating basic earnings per share ($M)
Add: Interest on convertible subordinated debt ($M)
Earnings used in calculating diluted earnings per share ($M)
Less: Profit/(Loss) after tax from discontinued operations ($M)
Earnings used in calculating diluted earnings per share fromcontinuing operations ($M)

Reconciliation of weighted average number of ordinary shares(WANOS) used in earnings per share calculations1
WANOS used in calculating basic earnings per share (M)Add: Weighted average dilutive potential ordinary shares (M)Convertible subordinated debt (M)Share based payments (options, rights and deferred shares) (M)
WANOS used in calculating diluted earnings per share (M)1.

Weighted average number of ordinary shares for the March 2021 half excludes 4.7 million weighted average number of treasury shares held in ANZEST Pty Ltd (Sep 20 half: 5.0 million; Mar
20 half: 4.9 million).

93

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.

Segment analysisi) Description of segments
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, and TSO
and Group Centre. For further information on the composition of divisions refer to the Definitions on page 133.
The presentation of divisional results has not been impacted by methodology or structural changes during the period.
The divisions reported below are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.
ii) Operating segments
ANZ measures the performance of continuing segments on a cash profit basis. To calculate cash profit, certain non-core items are removed fromstatutory profit. Details of these items are included in the ‘Other items’ section of this note.
Transactions between divisions across segments within ANZ are conducted on an arm’s-length basis and disclosed as part of the income and expensesof these segments.
For information on discontinued operations please refer to Note 13 of the Condensed Consolidated Financial Statements.

Australia
Retail andCommercial$M

Institutional$M

New
Zealand
$M

3,974

1,519

1,393

- Lending fees

111

123

6

- Non-lending fees

618

348

293

- Commissions

29

1

16

- Funds management income

17

1

122

- Fee and commission expense

(286)

(144)

(215)

March 2021 Half YearNet interest income

Pacific$M

TSO andGroup
Centre$M

Otheritems1
$M

Group
Total
$M

49

51

-

6,986

4

-

-

244

10

(3)

-

1,266

-

-

-

46

-

-

-

140

(1)

-

-

(646)

Net fee and commission income

Net income from insurance business
Other income

52

-

-

-

-

-

52

(240)

685

16

20

96

(56)

521

1

-

-

-

(243)

-

(242)

Operating income

4,276

2,533

1,631

82

(99)

(56)

8,367

Profit/(Loss) after tax from continuing operations

1,782

948

771

7

(518)

(39)

2,951

Share of associates’ profit/(loss)

Profit/(Loss) after tax from discontinued operations(8)

Profit after tax attributable to shareholders
1.

2,943

In evaluating the performance of the operating segments, certain items are removed from statutory profit where they are not considered integral to the ongoing performance of the segment.
These items are presented in section (iii) below.

94

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.

Segment analysis, cont’dAustralia
Retail andCommercial
$M
3,868

Institutional
$M
1,558

- Lending fees

134

132

6

- Non-lending fees

616

370

255

- Commissions

42

-

33

-

September 2020 Half YearNet interest income

New
Zealand$M
1,321

TSO andGroup
Centre$M
36

Other
items1
$M
-

4

-

-

276

11

(6)

-

1,246

-

-

75

Pacific
$M
44

Group
Total
$M
6,827

Net fee and commission income- Funds management income

18

1

117

-

-

-

136

- Fee and commission expense

(266)

(130)

(188)

(1)

-

-

(585)

Net income from insurance business

30

-

-

-

1

-

31

Other income

(7)

1,109

3

20

22

(429)

718

Share of associates’ profit/(loss)

(1)

-

-

-

21

-

20

Operating income

4,434

3,040

1,547

78

74

(429)

8,744

Profit/(Loss) after tax from continuing operations

1,123

1,244

450

(82)

(390)

(305)

2,040

Profit/(Loss) after tax from discontinued operations(8)

Profit after tax attributable to shareholders

2,032

March 2020 Half YearNet interest income

4,048

1,624

1,410

- Lending fees

133

156

8

- Non-lending fees

694

406

331

- Commissions

25

-

21

- Funds management income

12

1

126

65

75

-

7,222

6

-

-

303

18

(8)

-

1,441

-

-

-

46

-

-

-

139

Net fee and commission income- Fee and commission expense

(322)

(178)

(248)

(4)

-

-

(752)

Net income from insurance business

47

-

-

-

-

-

47

Other income

6

782

9

30

(829)

314

312

Share of associates’ profit

-

-

-

-

135

-

135

Operating income

4,643

2,791

1,657

115

(627)

314

8,893

Profit/(Loss) after tax from continuing operations

1,214

610

567

20

(998)

222

1,635

Profit/(Loss) after tax from discontinued operations(90)

Profit after tax attributable to shareholders
1.

1,545

In evaluating the performance of the operating segments, certain items are removed from statutory profit where they are not considered integral to the ongoing performance of the segment.
These items are presented in section (iii) below.

iii) Other items
The table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Half Year

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20
large

Item gains/(losses)

Related segment

Economic hedges

Institutional, New Zealand, TSO andGroup Centre

(51)

(461)

340

-89%

Revenue and expense hedges

TSO and Group Centre

12

156

(120)

-92%

large

Structured credit intermediation trades

Institutional

-

-

2

n/a

-100%

(39)

(305)

222

-87%

large

Total from continuing operations

95

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.

Derivative financial instruments

Derivative financial instruments are contracts whose value is derived from one or more underlying variables or indices defined in the contract, require little
or no initial net investment and are settled at a future date. Derivatives include contracts traded on registered exchanges and contracts agreed between
counterparties. The use of derivatives and their sale to customers as risk management products is an integral part of the Group’s trading and sales
activities. Derivatives are also used to manage the Group’s own exposure to fluctuations in foreign exchange and interest rates as part of its asset andliability management activities.
The following table provides an overview of the Group’s interest rate, foreign exchange, commodity and credit derivatives. They include all trading andbalance sheet risk management contracts. The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations inmarket rates relative to the terms of the derivative.

AssetsLiabilities

AssetsLiabilities

AssetsLiabilities

Mar 21$M

Mar 21$M

Sep 20$M

Sep 20$M

Mar 20$M

Mar 20$M

Forward rate agreements

10

(12)

86

(86)

255

(250)

Futures contracts

45

(74)

31

(231)

78

(160)

Swap agreements

73,125(71,523)

109,918(105,578)

112,934(108,736)

Options purchased

1,192

-

1,676

-

2,436

-

-

(1,162)-(2,609)-(3,865)74,372(72,771)

111,711(108,504)

115,703(113,011)

Fair Values
Interest rate contracts

Options sold
Total
Foreign exchange contracts
Spot and forward contracts

15,858(14,389)

11,882(11,461)

26,038(23,964)

Swap agreements

12,683(13,833)

8,766(12,388)

27,624(27,138)

Options purchased

311

-

372

-

837

-

-

(587)

-

(502)

-

(937)

Total

28,852(28,809)

21,020(24,351)

54,499(52,039)

Commodity contracts

1,439(1,345)

2,577(1,834)

3,449(2,288)Structured credit derivatives purchased

-

-

18

-

16

-

Other credit derivatives purchased

1

(1)

4

(3)

4

(6)

1

(1)

22

(3)

20

(6)

Structured credit derivatives sold

-

-

-

(18)

-

(17)

Other credit derivatives soldOptions sold

Credit default swaps

Credit derivatives purchased

2

-

1

(1)

6

(3)

Credit derivatives sold

2

-

1

(19)

6

(20)

Total

3

(1)

23

(22)

26

(26)

104,666(102,926)

135,331(134,711)

173,677(167,364)

Derivative financial instruments

96

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.

Net loans and advances
As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

Overdrafts

4,070

4,189

4,997

-3%

-19%

Credit cards outstanding

6,119

5,984

7,383

2%

-17%

Australia

6,152

6,383

6,414

-4%

-4%

Term loans - housing

280,545274,967

263,596

2%

6%

Term loans - non-housing

Commercial bills outstanding

138,771

150,272

164,346-8%-16%

Lease receivables

958

991

1,066

-3%

-10%

Hire purchase contracts

339

364

452

-7%

-25%

436,954443,150448,254

-1%

-3%

516

415

476

24%

8%

5

6

7

-17%

-29%

Total Australia
Asia, Pacific, Europe & America
Overdrafts
Credit cards outstanding

472

489

531

-3%

-11%

Term loans - non-housing

51,867

52,68278,803-2%-34%

Lease receivables

1,108

1,031

29

7%

large

15

20

28

-25%

-46%

53,98354,64379,874

-1%

-32%

599

610

795

-2%

-25%
-15%

Term loans - housing

Other
Total Asia, Pacific, Europe & America
New Zealand
Overdrafts
Credit cards outstanding

1,181

1,204

1,389

-2%

Term loans - housing

87,56182,89485,301

6%

3%

Term loans - non-housing

37,39038,771

43,373-4%-14%

Lease receivables

-

-

138

n/a

-100%

Hire purchase contracts

-

-

1,657

n/a

-100%

Total New Zealand

126,731

123,479

132,653

3%-4%

Sub-total

617,668

621,272

660,781-1%-7%

Unearned income1,2

(437)

(460)

(661)

-5%

-34%

Capitalised brokerage and other origination costs1,2

1,378

1,262

1,158

9%

19%

618,609

622,074

661,278-1%-6%

Gross loans and advances
Allowance for expected credit losses (refer to Note 10)
Net loans and advances
1.

2.

(4,250)(4,981)(4,669)-15%-9%614,359

617,093656,609

0%-6%

In the March 2021 half, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of
the balances. Comparatives have been restated accordingly (Sep 20 half: $394 million; Mar 20 half: $293 million).
Amortised over the expected life of the loan.

97

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10.

Allowance for expected credit losses
As at
Collectively
assessed$M

Mar 21
Individuallyassessed$M

3,472

Net loans and advances atamortised cost
Off-balance sheet commitments
Investment securities - debt securities
at amortised cost
Total

Total
$M

Collectively
assessed$M

Sep 20Individuallyassessed
$M

778

4,250

4,130

795

31

826

18

-

18

4,285

809

11

-

Other Comprehensive Income
Investment securities - debt securities
at FVOCI1
1.

Total
$M

Collectively
assessed$M

Mar 20Individuallyassessed
$M

Total
$M

851

4,981

3,614

1,055

4,669

858

40

898

872

38

910

20

-

20

15

-

15

5,094

5,008

891

5,899

4,501

1,093

5,594

11

10

-

10

9

-

9

For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other Comprehensive Income (OCI)
with a corresponding charge to profit or loss.

The following tables present the movement in the allowance for ECL.
Net loans and advances at amortised cost
Allowance for ECL is included in Net loans and advances.

Stage 3
Stage 1
$M

Collectively
Stage 2
assessed$M$M

Individuallyassessed
$M

Total
$M
3,509

As at 1 October 2019

927

1,378

413

791

Transfer between stages

204

(270)

(95)

161

-

New and increased provisions (net of releases)

30

840

132

718

1,720

-

-

-

(164)

(164)
(469)

Write-backs
Bad debts written off (excluding recoveries)

-

-

-

(469)

30

20

5

18

73

1,191

1,968

455

1,055

4,669

Transfer between stages

187

(291)

(106)

210

-

New and increased provisions (net of releases)

Foreign currency translation and other movements1
As at 31 March 2020

(112)

841

119

455

1,303

Write-backs

-

-

-

(157)

(157)

Bad debts written off (excluding recoveries)

-

-

-

(640)

(640)

(62)

(53)

(7)

(72)

(194)

As at 30 September 2020

1,204

2,465

461

851

4,981

Transfer between stages

345

(369)

(98)

122

-

New and increased provisions (net of releases)

(563)

3

52

333

(175)

-

-

-

(171)

(171)
(340)

Foreign currency translation and other movements1

Write-backs
Bad debts written off (excluding recoveries)

-

-

-

(340)

Foreign currency translation and other movements1

(11)

(14)

(3)

(17)

(45)

As at 31 March 2021

975

2,085

412

778

4,250

1.

Other movements include the impact of discount unwind on individually assessed allowances for ECL and the impact of divestments completed during the September 2020 half and the
March 2020 half.

98

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10.

Allowance for expected credit losses, cont’d

Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Stage 3As at 1 October 2019

Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

473

151

21

23

668

Transfer between stages

20

(24)

(2)

6

-

New and increased provisions (net of releases)

98

115

(2)

15

226

Write-backs

-

-

-

(6)

(6)

Foreign currency translation

19

2

1

-

22

As at 31 March 2020

610

244

18

38

910

Transfer between stages

14

(20)

-

6

-

New and increased provisions (net of releases)

1

20

6

4

31

-

-

-

(8)

(8)

Write-backs
1

(29)

(5)

(1)

-

(35)

596

239

23

40

898

Transfer between stages

36

(34)

(3)

1

-

New and increased provisions (net of releases)

(52)

4

-

(1)

(49)

Foreign currency translation and other movements
As at 30 September 2020

Write-backs

-

-

-

(9)

(9)

Foreign currency translation

(12)

(2)

-

-

(14)

As at 31 March 2021

568

207

20

31

826

Individuallyassessed
$M

Total
$M

1.

Other movements include the impact of divestments completed during the period.

Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.

Stage 3
Stage 1
$M

Collectively
Stage 2
assessed$M$M

As at 31 March 2020

14

1

-

-

15

As at 30 September 2020

20

-

-

-

20

As at 31 March 2021

18

-

-

-

18

Investment securities - debt securities at FVOCIFor FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in
Other Comprehensive Income (OCI) with a corresponding charge to profit or loss.
Stage 3
Stage 1
$M

Collectively
Stage 2
assessed$M$M

Individuallyassessed
$M

Total
$M

As at 31 March 2020

9

-

-

-

9

As at 30 September 2020

10

-

-

-

10

As at 31 March 2021

11

-

-

-

11

99

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10.

Allowance for expected credit losses, cont’dCredit impairment charge/(release) analysis
Half Year
Mar 21$M

Movement

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

New and increased provisions (net of releases)1,2- Collectively assessed

(678)

669

1,048

large

large

- Individually assessed

455

675

900

-33%

-49%

Write-backs3

(180)

(165)

(170)

9%

6%

Recoveries of amounts previously written off

(88)

(115)

(104)

-23%

-15%

Total credit impairment charge/(release)

(491)

1,064

1,674

large

large

1.

Includes the impact of transfers between collectively assessed and individually assessed.
2. New and increased provisions (net of releases) includes:
Mar 21 half

Mar 20 half

Individuallyassessed$M

Collectively
assessed$M

Individuallyassessed$M

Collectively
assessed$M

Individuallyassessed$M

Net loans and advances at amortised cost

(630)

455

638

665

841

879

Off-balance sheet commitments

(49)

-

21

10

205

21

Investment securities - debt securities at amortised cost

-

-

8

-

1

-

Investment securities - debt securities at FVOCI

1

-

2

-

1

-

(678)

455

669

675

1,048

900

Total
3.

Sep 20 half

Collectively
assessed$M

Consists of write-backs in Net loans and advances at amortised cost of $171 million (Sep 20 half: $157 million; Mar 20 half: $164 million), and Off-balance sheet commitment of $9 million(Sep 20 half: $8 million; Mar 20 half: $6 million).

Loan Deferral and Relief Packages (Support Packages)
From March 2020 the Group offered various forms of assistance to customers to counteract the impact of COVID-19 on the ability of customers to meettheir loan obligations. The assistance provided included arrangements such as temporary deferral of principal and interest repayments, replacing
principal and interest with interest only repayments, and extension of loan maturity dates. The loan repayment deferral package is considered to be aloan modification under AASB 9. This either results in the loan being derecognised and replaced with a new loan (substantial modification) or the existing
loan continuing to be recognised (non-substantial modification).
These support packages were phased out during the March 2021 half. In the case of home loan support packages, 94% of all loans in Australia and New
Zealand where customers took advantage of a support package have reverted back to loan repayments, with the remaining 6% having been either
restructured or transferred to hardship. For business loan support packages in Australia, 90% of loans have returned to loan payments, with theremaining 10% having been restructured or transferred to hardship. For those customers who took up loan support packages, it is considered that the
packages, as well as government support measures, may have obscured repayment delinquencies that might otherwise have occurred over the loandeferral period and those that may still occur in the future. Thus the Group has provided a component of ECL for expected delinquencies and increases in
SICR.
Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan
population and are managed accordingly.

100

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Deposits and other borrowings
As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

Certificates of deposit

34,17628,25834,73321%-2%

Term deposits

61,50364,187

69,056-4%-11%

Australia

On demand and short term deposits

247,730

240,945

220,135

3%

13%

Deposits not bearing interest

20,85018,771

14,41011%45%

Deposits from banks and securities sold under repurchase agreements1

42,651

58,762

52,942-27%-19%

Commercial paper

22,8297,524

17,435large

31%

Total Australia

429,739

418,447

408,7113%

5%Asia, Pacific, Europe & America
Certificates of deposit

4,532

2,583

1,494

75%

large

Term deposits

84,95086,735

121,141-2%-30%

On demand and short term deposits

27,332

24,36624,21112%

13%

Deposits not bearing interest

6,448

5,473

7,101

18%

-9%

Deposits from banks and securities sold under repurchase agreements

35,45629,127

46,39722%-24%

Total Asia, Pacific, Europe & America

158,718

148,284

200,344

7%-21%

New ZealandCertificates of deposit

1,292

1,650

1,651

-22%

-22%

Term deposits

39,71546,35150,414-14%-21%

On demand and short term deposits

54,37949,90545,9789%18%

Deposits not bearing interest

18,61815,63014,050

19%

33%

910

448

1,422

large

-36%

Deposits from banks and securities sold under repurchase agreements

3,252

1,618

4,339

large

-25%

Total New Zealand

118,166

115,602

117,8542%0%

Total deposits and other borrowings

706,623

682,333

726,909

4%-3%

Commercial paper and other borrowings

1.

In March 2020, the Reserve Bank of Australia announced a Term Funding Facility (TFF) which is a three-year funding facility to ADIs at a fixed rate of 0.25%. ADIs are able to obtain initialfunding of up to 3% of their existing outstanding credit with access to additional funding if they increase lending to small and medium-sized businesses. As at 31 March 2021, ANZ had drawn$12 billion (Sep 20: $12 billion) from its initial TFF allowance of $12 billion and it had drawn $0 billion (Sep 20: $0 billion) from its additional TFF allowance of $8 billion.

101

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Other provisions
As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

826

898

910

-8%

-9%

Customer remediation

1,003

1,109

1,094

-10%

-8%

Restructuring costs

122

105

128

16%

-5%

Non-lending losses, frauds and forgeries

77

79

82

-3%

-6%

ECL allowance on undrawn facilities (refer to Note 10)

Other
Total other provisions

389

388

559

0%

-30%

2,417

2,579

2,773

-6%

-13%

Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner inwhich that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are expensed
as incurred.
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advances andlosses 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 and circumstances that affectthe 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 a businesscombination.

102

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.

Discontinued operations and assets and liabilities held for salei)

Discontinued operations

The sale of the Group’s Aligned Dealer Groups (ADGs) business completed on 1 October 2018, the sale of OnePath pensions and investments (OnePath
P&I) business completed on 31 January 2020, and the sale of the Group’s life insurance business completed on 31 May 2019.
As a result of the sale transactions outlined above, the financial results of the businesses were treated as discontinued operations from a reporting
perspective.
Details of the financial performance and cash flows of discontinued operations are presented below.

Income Statement
Movement

Half Year
Mar 21$M-

Sep 20$M-

Mar 20$M(5)

Mar 21
v. Sep 20
n/a

Mar 21v. Mar 20-100%

Other operating income

27

63

(109)

-57%

large

Operating income

27

63

(114)

-57%

large

Operating expenses

(38)

(80)

(120)

-53%

-68%

Profit/(Loss) before credit impairment and income tax

(11)

(17)

(234)

-35%

-95%

-

-

-

n/a

n/a

Profit/(Loss) before income tax

(11)

(17)

(234)

-35%

-95%

Income tax (expense)/benefit

3

9

144

-67%

-98%

Profit/(Loss) for the period attributable to shareholders of the Company1

(8)

(8)

(90)

0%

-91%

Net interest income

Credit impairment (charge)/release1.

Includes the results of the OnePath P&I business up to sale completion in January 2020.

Income Statement impact relating to discontinued operations
During the March 2021 half, the Group recognised the following impacts in relation to discontinued operations:$1 million of customer remediation charges ($1 million loss after tax) recorded in operating expenses.

During the September 2020 half, the Group recognised the following impacts in relation to discontinued operations:$2 million loss on disposal ($2 million loss after tax) recorded in operating income attributable to sale completion costs.

$2 million of customer remediation charges ($2 million loss after tax) recorded in operating expenses.

During the March 2020 half, the Group recognised the following impacts in relation to discontinued operations:$16 million loss on disposal ($11 million loss after tax) recorded in operating income attributable to sale completion costs.

$124 million of customer remediation charges ($128 million recorded in operating income and a release of $4 million recorded in operating
expenses) and an associated $30 million tax benefit.

$101 million charge was recorded in operating income offset by a $101 million tax benefit within income tax expense relating to the finalisation of
the policyholder tax position associated with the sale of the life insurance business to Zurich.

Cash Flow Statement
Half YearNet cash provided by/(used in) operating activities

Mar 21$M-

Sep 20$M-

Net cash provided by/(used in) investing activities-

Net cash provided by/(used in) financing activities-

Net increase/(decrease) in cash and cash equivalents-

103

Movement
Mar 20$M(25)

Mar 21
v. Sep 20
n/a

-

-

n/a

n/a

-

25

n/a

-100%

-

-

n/a

n/a

Mar 21v. Mar 20-100%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.

Discontinued operations and assets and liabilities held for sale, cont’dii)

Assets and liabilities held for sale

As at 31 March 2021, the following divestments met the criteria to be classified as held for sale under accounting standards but based on materiality havenot been presented separately as assets and liabilities held for sale on the Balance Sheet. There were no assets and liabilities held for sale in the
September and March 2020 halves.
Worldline Joint Venture
In December 2020, the Group announced it had entered into a joint-venture with European-based payments company Worldline. The joint venturearrangement involves ANZ and Worldline forming a newly created merchant acquiring group, with ANZ and Worldline holding a 49% and 51%
interest respectively. The transaction is expected to complete in the 2022 financial year and is subject to regulatory and other approvals and card
scheme arrangements. At 31 March 2021, the net assets associated with this business were $8 million primarily relating to equipment of $30 million,
various other assets of $5 million and payables and other liabilities of $27 million.



ANZ Share Investing
During the March 2021 half, the Group reclassified its ANZ Share Investing business as held for sale reflecting a continuation of the Group’s
simplification strategy. As a consequence of remeasuring the net assets at fair value less costs to sell the Group recognised a loss of $251 million in
Other operating income relating to the write-down of goodwill attributable to the business. At 31 March 2021, the net assets associated with thisbusiness were $12 million primarily relating to goodwill.

104

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Debt issuances
As at

Total unsubordinated debt

Movement

Mar 21$M
83,963

Sep 20$M
98,607

Mar 20$M
119,136

Mar 21
v. Sep 20-15%

Mar 21v. Mar 20-30%

Additional Tier 1 Capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)2
ANZ CN1

1,120

1,119

1,119

0%

0%

ANZ CN2

1,609

1,608

1,607

0%

0%

ANZ CN3

968

967

966

0%

0%

ANZ CN4

1,615

1,614

1,613

0%

0%

ANZ CN5
ANZ Capital Securities3
ANZ New Zealand Capital Notes4

927

926

926

0%

0%

1,347

1,499

1,712

-10%

-21%

459

463

487

-1%

-6%

Tier 2 Capital
Perpetual subordinated notes5

395

422

485

-6%

-19%

Term subordinated notes6

15,22012,443

12,19722%

25%

Total subordinated debt

23,66021,061

21,11212%

12%

Total debt issuances

107,623

119,668

140,248

-10%

-23%

1.
2.

ANZ Capital Notes, ANZ Capital Securities and the ANZ New Zealand Capital Notes are Basel 3 compliant instruments.
Each of the ANZ Capital Notes will convert into a variable number of ANZ ordinary shares on a specified mandatory conversion date at a 1% discount (subject to certain conditions being
satisfied). If ANZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the notes will immediately convert into avariable number of ANZ ordinary shares at a 1% discount subject to a maximum conversion number. Subject to certain conditions, the notes are redeemable or convertible into ANZ ordinary
shares (on similar terms to mandatory conversion) by ANZ at its discretion on an early redemption or conversion date.
IssuerIssue dateIssue amount$M

Early redemption or conversion
date

Mandatory conversion
date

CN1

ANZ

7 Aug 2013

1,120

1 Sep 2021

1 Sep 2023

CN2

ANZ

31 Mar 2014

1,610

24 Mar 2022

24 Mar 2024

CN3

ANZ, acting through its New Zealand branch

5 Mar 2015

970

24 Mar 2023

24 Mar 2025

CN4

ANZ

27 Sep 2016

1,622

20 Mar 2024

20 Mar 2026

CN5

ANZ

28 Sep 2017931

20 Mar 2025

20 Mar 2027

3.

On 15 June 2016, ANZ acting through its London branch issued US$1 billion fully-paid perpetual subordinated contingent convertible securities (ANZ Capital Securities). If ANZ’s Common
Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the securities will immediately convert into a variable number of ANZ
ordinary shares at a 1% discount subject to a maximum conversion number. Subject to certain conditions, on the First Reset Date (15 June 2026) and on each 5 year anniversary, ANZ has
the right to redeem all of the securities at its discretion.
4. On 31 March 2015, ANZ Bank New Zealand Limited (ANZ New Zealand) issued NZ$500 million convertible notes (ANZ New Zealand Capital Notes). If ANZ or ANZ New Zealand’s Common
Equity Tier 1 capital ratio is equal to or less than 5.125%, ANZ receives a notice of non-viability from APRA, ANZ New Zealand receives a direction from RBNZ or a statutory manager isappointed to ANZ New Zealand and makes a determination, then the ANZ New Zealand Capital Notes will immediately convert into a variable number of ANZ ordinary shares at a 1%
discount subject to a maximum conversion number. In April 2020, the RBNZ informed New Zealand-incorporated registered banks (including ANZ New Zealand) that they should not redeem
capital instruments at that time. Accordingly, ANZ New Zealand was not permitted to redeem the ANZ New Zealand Capital Notes on the optional exchange date (25 May 2020), although it
can continue making coupon payments on those notes. As ANZ New Zealand did not exercise its option to convert the notes in May 2020, the terms of the ANZ New Zealand Capital Notes
provide for their conversion into a variable number of ANZ ordinary shares on 25 May 2022 at a 1% discount (subject to certain conditions being satisfied).
5. The USD 300 million perpetual subordinated notes have been granted Basel 3 transitional capital treatment until the end of the transition period in December 2021.
6. All the term subordinated notes are convertible and are Basel 3 compliant instruments. If ANZ receives a notice of non-viability from APRA, then the convertible subordinated notes will
immediately convert into a variable number of ANZ ordinary shares at a 1% discount subject to a maximum conversion number.

105

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Credit risk

Maximum exposure to credit risk
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may bedifferences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these differences
arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to market risk, orbank 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 the 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:

On-balance sheet positions
Net loans and advances

Reported

Excluded1

Maximum Exposure to Credit Risk

As at

As at

As at

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21$M

Sep 20$M

Mar 20$M

614,359

617,093656,609---614,359

617,093656,609

Investment securities- debt securities at amortised cost

7,028

6,816

7,231

-

-

-

7,028

6,816

7,231

- debt securities at FVOCI

83,71585,46077,476---

83,71585,46077,476- equity securities at FVOCI

1,184

1,062

1,166

1,184

1,062

1,166

-

-

-

- debt securities at FVTPL
Other financial assets
Total on-balance sheet positions

63

53

50

-

-

-

63

53

50

300,339319,224

393,862

15,82914,753

14,305284,510

304,471379,557

1,006,688

1,029,708

1,136,394

17,013

15,815

15,471

989,675

1,013,893

1,120,923

252,392

266,716

269,417---

252,392

266,716

269,417

1,259,080

1,296,424

1,405,811

17,013

15,815

15,471

1,242,067

1,280,609

1,390,340

Off-balance sheet commitments
Undrawn and contingent facilities2
Total
1.

Excluded comprises bank notes and coins and cash at bank within liquid assets, and equity securities within Investment securities - equity securities at FVOCI as they do not have credit
exposure.
2. Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed allowance for expected credit losses.

Credit Quality
The Group’s internal Customer Credit Rating (CCR) is used to manage the credit quality of financial assets. To enable wider comparisons, the Group’s
CCRs are mapped to external rating agency scales as follows:
Moody'sRatingStandard &Poor'sRatingDemonstrated 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-CCR 5+ to 6-

Demonstrated sound operational and financial stability over the medium to long termeven though some may be susceptible to cyclical trends or variability in earnings.

Ba1 - B1

BB+ - B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, with variability anduncertainty in profitability and liquidity projected to continue over the short andpossibly medium term.

B2 - Caa

B - CCC

Defaulted

CCR8- to 10

When doubt arises as to the collectability of a credit facility, the financial instrument(or ‘the facility’) is classified as defaulted.

N/A

N/A

Credit Quality
Description

Internal CCR

ANZ Customer Requirement

Strong

CCR 0+ to 4-

Satisfactory

106

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Credit risk, cont’d

Net loans and advances
Stage 3
Collectively
Individuallyassessedassessed$M$M

As at March 2021

Stage 1
$M

Stage 2
$M

Strong390,928

12,204--403,132

Satisfactory

149,462

33,317--

182,779

8,493

14,150--22,643

-

-

4,160

1,941

6,101

548,883

59,671

4,160

1,941

614,655(975)(2,085)

(412)

(778)

(4,250)547,908

57,586

3,748

1,163

610,405

0.18%

3.49%

9.90%

40.08%

0.69%

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

Total
$M

Loans and advances at fair value through profit or loss

3,013

Unearned income1

(437)
1

Capitalised brokerage and other origination costs

1,378

Net carrying amount

614,359

As at September 2020
Strong395,608

18,262--413,870

Satisfactory

133,558

37,577--

171,135

8,461

16,850--25,311

-

-

4,762

2,256

7,018
617,334

Weak
Defaulted
Gross loans and advances at amortised cost

537,627

72,689

4,762

2,256

Allowance for ECL(1,204)(2,465)

(461)

(851)

(4,981)

Net loans and advances at amortised cost

536,423

70,224

4,301

1,405

612,353

0.22%

3.39%

9.68%

37.72%

0.81%

Coverage ratio
Loans and advances at fair value through profit or loss

3,938

Unearned income1(460)

Capitalised brokerage and other origination costs1

1,262

Net carrying amount

617,093

As at March 2020
Strong465,601

14,009--479,610

Satisfactory

114,178

39,137--

153,315

5,959

11,692--

17,651

-

-

4,837

2,435

7,272

Gross loans and advances at amortised cost

585,738

64,838

4,837

2,435

657,848

Allowance for ECL(1,191)(1,968)(455)(1,055)(4,669)Net loans and advances at amortised cost

584,547

62,870

4,382

1,380

653,179

0.20%

3.04%

9.41%

43.33%

0.71%

Weak
Defaulted

Coverage ratio
Loans and advances at fair value through profit or loss

2,932

Unearned income1

(661)
1

Capitalised brokerage and other origination costs

1,158

Net carrying amount1.

656,609

In the March 2021 half, deferred expenses previously netted within Unearned income were reclassified to Capitalised brokerage and other origination costs to better align with the nature of
the balances. Comparatives have been restated accordingly (Sep 20 half: $394 million; Mar 20 half: $293 million).

107

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Credit risk, cont’d

Off-balance sheet commitments - undrawn and contingent facilities
Stage 3
Collectively
Individuallyassessedassessed$M$M

As at March 2021

Stage 1
$M

Stage 2
$M

Strong168,628

1,829

-

-

170,457

Satisfactory

23,398

4,148

-

-

27,546

950

938

-

-

1,888

-

-

135

232

367

192,976

6,915

135

232

200,258

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

Total
$M

(568)

(207)

(20)

(31)

(826)

192,408

6,708

115

201

199,432

0.29%

2.99%

14.81%

13.36%

0.41%

Undrawn and contingent facilities not subject to ECL1

52,960Net undrawn and contingent facilities

252,392

As at September 2020
Strong171,979

3,045

-

-

175,024

Satisfactory

22,983

3,972

-

-

26,955

Weak

1,123

1,132

-

-

2,255

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

-

-

144

203

347

196,085

8,149

144

203

204,581

(596)

(239)

(23)

(40)

(898)

195,489

7,910

121

163

203,683

0.30%

2.93%

15.97%

19.70%

0.44%

1

Undrawn and contingent facilities not subject to ECL

63,033Net undrawn and contingent facilities

266,716

As at March 2020
Strong172,684

1,617

-

-

174,301

Satisfactory

24,433

4,832

-

-

29,265

284

1,156

-

-

1,440

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

-

-

149

164

313

197,401

7,605

149

164

205,319

(610)

(244)

(18)

(38)

(910)

196,791

7,361

131

126

204,409

0.31%

3.21%

12.08%

23.17%

0.44%

Undrawn and contingent facilities not subject to ECL1

65,008Net undrawn and contingent facilities

269,4171.

Commitments that can be unconditionally cancelled at any time without notice.

108

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Credit risk, cont’d

Investment securities - debt securities at amortised cost
Stage 3
Collectively
Individuallyassessedassessed$M$M

Stage 1
$M

Stage 2
$M

Strong

5,657

-

-

-

5,657

Satisfactory

1,389

-

-

-

1,389

Gross investment securities - debt securities at amortised cost

7,046

-

-

-

7,046

(18)

-

-

-

(18)

Net investment securities - debt securities at amortised cost

7,028

-

-

-

7,028

Coverage ratio

0.26%

-

-

-

0.26%

5,594

-

-

-

5,594

As at March 2021

Allowance for ECL

Total
$M

As at September 2020
StrongSatisfactory

1,067

175

-

-

1,242

Gross investment securities - debt securities at amortised cost

6,661

175

-

-

6,836

Allowance for ECL

(20)

-

-

-

(20)

Net investment securities - debt securities at amortised cost

6,641

175

-

-

6,816

Coverage ratio

0.30%

0.00%

-

-

0.29%

5,733

-

-

-

5,733

888

625

-

-

1,513

6,621

625

-

-

7,246

(14)

(1)

-

-

(15)

As at March 2020
StrongSatisfactory
Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost

6,607

624

-

-

7,231

Coverage ratio

0.21%

0.16%

-

-

0.21%

Stage 3
Collectively
Individuallyassessedassessed
$M
$M

Total
$M

Investment securities - debt securities at FVOCI

As at March 2021

Stage 1
$M

Stage 2
$M

Strong83,494

-

-

-

221

-

-

-

221

83,715---83,715

Satisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in other comprehensive income
Coverage ratio

83,494

(11)

-

-

-

(11)

0.01%

-

-

-

0.01%

85,287---85,287

173

-

-

-

173

85,460---85,460

(10)

-

-

-

(10)

0.01%

-

-

-

0.01%

77,213---

77,213As at September 2020
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in other comprehensive income
Coverage ratio

As at March 2020
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in other comprehensive income
Coverage ratio

109

263

-

-

-

263

77,476---77,476

(9)

-

-

-

(9)

0.01%

-

-

-

0.01%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Credit risk, cont’d

Investment securities - debt securities at FVTPL
Stage 3
Collectively
Individuallyassessedassessed$M$M

Stage 1
$M

Stage 2
$M

Satisfactory

63

-

-

-

63

Investment securities - debt securities at FVTPL

63

-

-

-

63

-

-

-

-

-

0.00%

-

-

-

0.00%

Satisfactory

53

-

-

-

53

Investment securities - debt securities at FVTPL

53

-

-

-

53

-

-

-

-

-

0.00%

-

-

-

0.00%

As at March 2021

Allowance for ECL
Coverage ratio

Total
$M

As at September 2020

Allowance for ECL
Coverage ratio

As at March 2020
Satisfactory

50

-

-

-

50

Investment securities - debt securities at FVTPL

50

-

-

-

50

-

-

-

-

-

0.00%

-

-

-

0.00%

Mar 21$M

Sep 20$M

Mar 20$M

280,105

293,171369,909

3,846

10,671

9,033

556

628

615

Allowance for ECL
Coverage ratio

Other financial assets
As at

StrongSatisfactory
Weak
Defaulted
Other financial assets

110

3

1

-

284,510

304,471379,557

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Fair value measurement

The Group carries 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.
i) Assets and liabilities measured at fair value on the balance sheeta)Valuation

The Group has an established control framework, including appropriate segregation of duties, to ensure that fair values are accurately determined,
reported and controlled. The framework includes the following features:

products are approved for transacting with external customers and counterparties only where fair values can be appropriately determined;

when using quoted prices to value an instrument, these are independently verified from external pricing providers;

fair value methodologies and inputs are evaluated and approved by a function independent of the party that undertakes the transaction;



movements in fair values are independently monitored and explained by reference to underlying factors relevant to the fair value; andvaluation adjustments (such as funding valuation adjustments, credit valuation adjustments and bid-offer adjustments) are independently validated
and monitored.

If the Group holds offsetting risk positions, then the Group uses the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure thefair value of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net longposition (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
b)

Fair value approach and valuation techniques

We 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 for that asset or liability exists. This includes the following:
Asset or Liability

Fair Value Approach

Financial instruments classified as:- trading securities- securities sold short- derivative financial assets and liabilities- investment securities- other assets

Valuation techniques are used that incorporate observable market inputs for securities
with similar credit risk, maturity and yield characteristics. Equity instruments that are nottraded in active markets may be measured using comparable company valuation
multiples.

Financial instruments classified as:- net loans and advances- deposits and other borrowings- debt issuances

Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using discount rates incorporating wholesale market interest
rates, or market borrowing rates for debt with similar maturities or with a yield curve
appropriate for the remaining term to maturity.

There were no significant changes to valuation approaches during the current or prior halves.
c)

Fair value hierarchy

The Group categorises financial assets and liabilities carried at fair value into a fair value hierarchy as required by 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.

There were no significant changes to levelling approaches during the current or prior halves.

111

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Fair value measurement, cont’dd)Fair value hierarchy disclosure

The following table presents assets and liabilities carried at fair value:
Fair value measurements
Level 1$M

As at March 2021
AssetsTrading securities1
Derivative financial instruments
Investment securities1
Net loans and advances (measured at fair value)
Total

Level 2
$M

Level 3
$M

Total
$M

41,424

4,907-

46,331

648

103,98434

104,666

83,573

209

1,180

84,962

-

3,003

10

3,013

125,645

112,103

1,224

238,972

Liabilities
-

3,598

-

3,598

Derivative financial instruments

Deposits and other borrowings (designated at fair value)

947

101,95425

102,926

Payables and other liabilities2

3,925

12

-

3,937

-

1,926

-

1,926

4,872

107,49025

112,387

Debt issuances (designated at fair value)
Total
As at September 2020
AssetsTrading securities
Derivative financial instruments
Investment securities
Net loans and advances (measured at fair value)Total

44,004

6,909-

50,913681

134,58862

135,331

85,330137

1,108

86,575

-

3,925

13

3,938

130,015

145,559

1,183

276,757

Liabilities
Deposits and other borrowings (designated at fair value)

-

3,078

-

3,078

Derivative financial instruments

1,120

133,536

55

134,711

Payables and other liabilities2

3,830

13

-

3,843

Debt issuances (designated at fair value)
Total

-

2,159

-

2,159

4,950

138,78655

143,791

As at March 2020
AssetsTrading securities

39,00010,068-49,068Derivative financial instruments

1,565

172,03973

173,677

Available-for-sale assets

76,932550

1,210

78,692

-

2,919

13

2,932

117,497

185,576

1,296

304,369

-

5,461

-

5,461

Derivative financial instruments

1,778

165,51967

167,364

Payables and other liabilities2

4,113

21

-

4,134

-

2,681

-

2,681

5,891

173,682

67

179,640

Net loans and advances (measured at fair value)
Total
Liabilities
Deposits and other borrowings (designated at fair value)

Debt issuances (designated at fair value)
Total
1.

2.

Transfers into and out of levels are measured at the beginning of the reporting period in which the transfer occurred. Transfers from Level 1 to Level 2 and Level 2 to Level 1 for March 2021
and March 2020 halves are immaterial. In the September 2020 half, $100 million of bond securities assets were transferred from Level 2 to Level 1 following increased trading activity tosupport quoted prices.
Payables and other liabilities relates to securities sold short which are classified as held for trading and measured at fair value through profit or loss.

112

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Fair value measurement, cont’dii) Details of fair value measurements that incorporate unobservable market dataa)Level 3 fair value measurements

The net balance of Level 3 financial instruments is an asset of $1,199 million (Sep 20: $1,128 million; Mar 20: $1,229 million). The assets and liabilities
which incorporate significant unobservable inputs primarily include:

equities for which there is no active market or traded prices cannot be observed; andother derivatives referencing market rates that cannot be observed primarily due to lack of market activity.

Bank of Tianjin (BoT)
Movements in the Level 3 balance are due to the revaluation of the Group’s investment in 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 ofequity). The extent of judgement applied in determining the appropriate multiple and comparator group from which the multiple is derived are nonobservable inputs which have resulted in the Level 3 classification.
Other
During the March 2021 half, the Group transferred $35 million of investment security assets and $5 million of derivative liabilities from Level 3 to Level 2,
where valuation parameters for these financial instruments became observable during the period. There were no other transfers in or out of Level 3 in thecurrent or prior halves.
b) Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs not being directly observable in the market place (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameter used in deriving the valuation.
Bank of Tianjin (BoT)The valuation of the BoT investment is sensitive to the selected unobservable input, being the P/B multiple. If the P/B multiple was increased or
decreased by 10% it would result in a $102 million increase or decrease to the fair value of the investment (Sep 20: $93 million; Mar 20: $105 million),
which would be recognised in shareholders’ equity.
Other
The remaining Level 3 balance is immaterial and changes in the Level 3 inputs have a minimal impact on net profit and net assets of the Group.
c)

Deferred fair value gains and losses

When 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 (referred to as the day one gain orloss) in profit or loss. After initial recognition, we recognise the deferred amount in profit or loss over the life of the transaction on a straight line basis orwhen all inputs become observable.
The day one gains and losses deferred are immaterial.

113

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Fair value measurement, cont’diii) Financial assets and liabilities not measured at fair value
The classes of financial assets and liabilities listed in the table below are predominately carried at amortised cost on the Group’s balance sheet. Whilst
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 these financial
assets and liabilities at balance date in the table below, presenting the fair value of the entire class of financial assets and financial liabilities.
Carrying amount in the balance sheet

As at March 2021
Financial assets
Net loans and advances
Investment securities

Fair value

At amortisedcost$M

At fair
value
$M

Total
$M

$M

611,346

3,013

614,359

615,139

7,028

84,962

91,99091,945618,374

87,975706,349

707,084

Deposits and other borrowings

703,025

3,598

706,623

706,813

Debt issuances

105,697

1,926

107,623

109,580Total

808,7225,524

814,246

816,393

618,095

Total
Financial liabilities

As at September 2020
Financial assets
Net loans and advances

613,155

3,938

617,093

Investment securities

6,816

86,57593,391

93,391

619,971

90,513

710,484

711,486

Total
Financial liabilities
Deposits and other borrowings

679,255

3,078

682,333

682,623

Debt issuances

117,509

2,159

119,668

121,453

Total

796,764

5,237

802,001

804,076

653,677

2,932

656,609658,091

As at March 2020
Financial assets
Net loans and advances
Investment securities
Total

7,231

78,69285,92385,944660,908

81,624

742,532

744,035

Financial liabilities
Deposits and other borrowings

721,448

5,461

726,909727,326

Debt issuances

137,5672,681

140,248

138,454

Total

859,0158,142

867,157

865,780114

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17.

Shareholders’ equity
As at

Issued and quoted securities
Ordinary shares
Opening balance
Bonus Option Plan
Dividend reinvestment plan issues

1

Closing balanceLess: Treasury Shares
Closing balanceIssued/(Repurchased) during the period1.

Mar 21No.
2,840,370,225

Sep 20No.
2,836,177,422

Mar 20No.
2,834,584,923

929,207819,781

1,592,499

4,242,368

3,373,022-

2,845,541,800

2,840,370,225

2,836,177,422(4,484,712)(4,927,878)(5,011,537)

2,841,057,088

2,835,442,347

2,831,165,885

5,171,575

4,192,803

1,592,499

The DRP in respect to the 2020 final dividend was satisfied in full through the issue of 4,242,368 shares at $22.19 to participating shareholders. The DRP in respect to the 2020 interim
dividend was satisfied through the issue of 3,373,022 shares at $18.06 to participating shareholders.

As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

26,61526,531

26,440Share option reserve

(503)
56

155
85

1,988
62

FVOCI reserve

567

245

(51)

large

large

Cash flow hedge reserve

643

1,038

874

-38%

-26%

Shareholders' equity
Ordinary share capital
Reserves
Foreign currency translation reserve

Transactions with non-controlling interests reserve

Mar 21
v. Sep 20
0%

Mar 21v. Mar 20
1%

large

large

-34%

-10%

(22)

(22)

(22)

0%

0%

741

1,501

2,851

-51%

-74%

Retained earnings

35,21033,25532,073

6%

10%

Share capital and reserves attributable to shareholders of the Company

62,566

61,28761,364

2%

2%

10

10

11

0%

-9%

62,576

61,297

61,3752%

2%

Total reserves

Non-controlling interests
Total shareholders' equity

18.

Changes in composition of the Group

There were no acquisitions or disposals of material controlled entities for the half year ended 31 March 2021.

115

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
19.

Investments in Associates1
Half Year
Mar 21$M(242)

Share of associates' profit/(loss)

Contributions to profit2

Movement

Sep 20$M
20

Half Year

As at

P.T. Bank Pan Indonesia

Sep 20$M(19)

Mar 20$M
74

AMMB Holdings Berhad3,4

(307)

41

-

(2)

(242)

20

135

Share of associates' profit/(loss)
2.

3.

4.

Mar 21v. Mar 20
large

Ownership interest
held by GroupMar 21$M
65

1.

Mar 21
v. Sep 20
large

Contribution toGroup profit after tax

Associates

Other associates

Mar 20$M
135

Mar 21%
39

Sep 20%39

Mar 20
%
39

61

24

24

24

-

n/a

n/a

n/a

At 31 March 2020, the Group recorded an impairment charge of $815 million in Other operating income with AmBank impaired by $595 million and PT Panin impaired by $220 million.
Contributions to profit reflect the IFRS equivalent results adjusted to align with the Group’s financial year end and accounting policies which may differ from the published results of these
entities. In the September 2020 half, the Group recognised an adjustment of $68 million to the equity accounted earnings of PT Panin. When the Group adopted AASB 9 Financial
Instruments on 1 October 2018, an estimate of PT Panin’s transition adjustment was recognised through opening retained earnings to align accounting policies. PT Panin adopted AASB 9
during the September 2020 half recognising a transition adjustment in retained earnings. The adjustment of $68 million represents the Group’s equity accounted share of the transition
adjustment net of amounts previously recognised by the Group on 1 October 2018.
Following AmBank’s agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its involvement with 1Malaysia Development Berhad, the Group recognised a$212 million reduction in equity accounted earnings reflecting its share of the settlement provision during the March 2021 half, with a corresponding decrease in the carrying value of theinvestment.
During the March 2021 half, AmBank partially impaired goodwill carried on its balance sheet and the Group recognised a $135 million reduction in equity accounted earnings reflecting its
share of the impairment recognised by AmBank, with a corresponding decrease in the carrying value of the investment.

20.

Related party disclosure

There have been no transactions with related parties that are significant to understanding the changes in financial position and performance of the Groupsince 30 September 2020.

21.

Contingent liabilities and contingent assets

There are outstanding court proceedings, claims and possible claims for and against the Group. Where relevant, expert legal advice has been obtained
and, in the light of such advice, provisions (refer to Note 12) and/or disclosures as deemed appropriate have been made. In some instances we have notdisclosed the estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice theinterests of the Group.
Refer to Note 33 of the 2020 ANZ Annual Financial Report for a description of contingent liabilities and contingent assets as at 30 September 2020. A
summary of some of those contingent liabilities, and new contingent liabilities that have arisen in the current reporting period, is set out below.
Regulatory and customer exposures
In recent years there has been an increase in the number of matters on which the Group engages with its regulators. There have also beensignificant increases in the nature and scale of regulatory investigations, surveillance and reviews, civil and criminal enforcement actions (whether bycourt action or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly
against financial institutions both in Australia and globally. The Group has received various notices and requests for information from its regulators aspart of both industry-wide and Group-specific reviews and has also made disclosures to its regulators at its own instigation. The nature of theseinteractions can be wide ranging and, for example, include or have included a range of matters including responsible lending practices, regulated
lending requirements, product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice,
insurance distribution, pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-money launderingand counter-terrorism financing obligations, reporting and disclosure obligations and product disclosure documentation. There may be exposures tocustomers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation orcompensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.

Benchmark/rate actions
In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including theCompany – one action relating to the bank bill swap rate (BBSW), and one action relating to the Singapore Interbank Offered Rate (SIBOR) and theSingapore Swap Offer Rate (SOR). The class actions are expressed to apply to persons and entities that engaged in US-based transactions infinancial instruments that were priced, benchmarked, and/or settled based on BBSW or SIBOR. The claimants seek damages or compensation inamounts not specified, and allege that the defendant banks, including the Company, violated US anti-trust laws and (in the BBSW case only) antiracketeering laws, the Commodity Exchange Act, and unjust enrichment principles. In March 2021, the Company reached an agreement to settle the
BBSW class action. The settlement is without admission of liability and remains subject to negotiation and execution of complete settlement terms aswell as court approval. The financial impact of the settlement is not material and has been fully provided at 31 March 2021. The separate class action
in relation to SIBOR is ongoing and is being defended.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.

116

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
21.
Contingent liabilities and contingent assets, cont’dCapital raising actions
In June 2018, the Commonwealth Director of Public Prosecutions commenced criminal proceedings against the Company and a senior employee
alleging that they were involved in cartel conduct by the joint lead managers of the Company’s August 2015 underwritten institutional equity
placement of approximately 80.8 million ordinary shares. The Company and its senior employee are defending the allegations. The trial is currently
scheduled to start in April 2022.
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company
alleging failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity
placement. ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary
shares of the placement. The Company is defending the allegations.

Consumer credit insurance litigation
In 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 litigation
In 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 litigation
In 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.

Royal Commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
The findings and recommendations of the Commission are resulting in additional costs and may lead to further exposures, including exposuresassociated with further regulator activity or potential customer exposures such as class actions, individual claims or customer remediation orcompensation activities. The outcomes and total costs associated with these possible exposures remain uncertain.

Security recovery actions
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will bedefended.



Warranties and Indemnities
The 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.

22.

Significant events since balance date

On 26 April 2021, the Group posted notice that it will exercise its option to redeem wholesale A$700,000,000 floating rate subordinated notes due May
2026. The notes will be redeemed on 17 May 2021 for their par value of $700 million.
Other than the matter above, there have been no other significant events from 31 March 2021 to the date of signing this report that have not beenadjusted or disclosed.

117

DIRECTORS’ DECLARATION

Directors’ Declaration
The Directors of Australia and New Zealand Banking Group Limited declare that:1.

2.

in the Directors’ opinion the Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements are inaccordance with the Corporations Act 2001, including:

section 304, that they comply with the Australian Accounting Standards and any further requirements in the Corporations Regulations 2001;and

section 305, that they give a true and fair view of the financial position of the Group as at 31 March 2021 and of its performance for the halfyear ended on that date; andin the Directors’ opinion as at the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.

Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
ChairmanShayne C ElliottManaging Director

4 May 2021

118

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION

Independent Auditor’s Review Report to the shareholders of Australia and New Zealand Banking Group Limited
Report on the Condensed Consolidated Financial Statements
Conclusion
We have reviewed the accompanying Condensed Consolidated Financial Statements of Australia and New Zealand Banking Group Limited (the Group).
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Condensed Consolidated Financial
Statements of Australia and New Zealand Banking Group Limited are not in accordance with the Corporations Act 2001, including:i)giving a true and fair view of the Group’s financial position as at 31 March 2021 and of its performance for the half year ended on that date; andii)
complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
The Condensed Consolidated Financial Statements comprise:
The condensed consolidated balance sheet as at 31 March 2021;

The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statementof changes in equity, and condensed consolidated cash flow statement for the half year ended on that date;
Notes 1 to 22 comprising a summary of significant accounting policies and other explanatory information; and
The Directors’ Declaration.
The Group comprises Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the half year’s end or from time totime during the half year.
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our
responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of 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) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code
Responsibilities of the Directors for the Condensed Consolidated Financial Statements
The Directors of the Company are responsible for:
the preparation of the Condensed Consolidated Financial Statements that give a true and fair view in accordance with Australian AccountingStandards and the Corporations Act 2001; andsuch internal control as the Directors determine is necessary to enable the preparation of the Condensed Consolidated Financial Statements thatare free from material misstatement, whether due to fraud or error.
Auditor’s responsibility for the review of the Condensed Consolidated Financial Statements
Our responsibility is to express a conclusion on the Condensed Consolidated Financial Statements based on our review. ASRE 2410 requires us to conclude
whether we have become aware of any matter that makes us believe that the Condensed Consolidated Financial Statements do not comply with the
Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 March 2021 and its performance for the half year ended
on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
A review of Condensed Consolidated Financial Statements consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian
Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified
in an audit. Accordingly, we do not express an audit opinion.

Martin McGrath
Partner

KPMG

Melbourne
4 May 2021

© 2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All right 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.

119

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
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 review of Australia and New Zealand Banking Group Limited for the half year
ended 31 March 2021, there have been:(i)no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and(ii)

no contraventions of any applicable code of professional conduct in relation to the review.

Martin McGrath
Partner

KPMG

Melbourne
4 May 2021

© 2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All right 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.

120

SUPPLEMENTARY INFORMATIONCONTENTS

Page

Capital management - including discontinued operations

122

Average balance sheet and related interest - including discontinued operations

126

Select geographical disclosures - including discontinued operations

129

Exchange rates

130

121

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations

ANZ provides information as required under APRA’s prudential standard APS 330: Public Disclosure. This information is located in the Regulatory
Disclosures section of ANZ’s website: anz.com/shareholder/centre/reporting/regulatory-disclosure.
As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

62,576

61,297

61,375

2%

2%

110

189

227

-42%

-52%

62,686

61,486

61,6022%

2%(11,900)(12,784)(13,271)

-7%

-10%

50,786

48,702

48,331

4%

5%

7,645

7,779

7,964

-2%

-4%

58,431

56,481

56,2953%

4%

16,464

13,957

13,11218%

26%

74,89570,43869,407

6%

8%

Common Equity Tier 1

12.4%

11.3%

10.8%

Tier 1

14.3%

13.2%

12.5%

Tier 2

4.0%

3.3%

2.9%

Total capital ratio

18.3%

16.4%

15.5%

408,166

429,384

449,012-5%-9%Qualifying Capital
Tier 1
Shareholders' equity and non-controlling interests
Prudential adjustments to shareholders' equity1

Table 1Gross Common Equity Tier 1 capital1

Deductions

Table 2

Common Equity Tier 1 capital
Additional Tier 1 capital

Table 3Tier 1 capital
Tier 2 capital

Table 4

Total qualifying capitalMar 21
v. Sep 20

Mar 21v. Mar 20

Capital adequacy ratios (Level 2)

Risk weighted assets
1.

Table 5In the March 2021 half, deferred expenses previously netted within Prudential adjustments to shareholders’ equity were reclassified to Deductions to better align with the nature of thebalances. Comparatives have been restated accordingly (Sep 20 half: $394 million; Mar 20 half: $293 million).

122

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’d
As at
Mar 21$M

Sep 20$M

Movement
Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

Table 1: Prudential adjustments to shareholders' equity
Shareholder Equity attributable to deconsolidated entities

(181)

(99)

(94)

83%

93%

Deferred fee revenue including fees deferred as part of loan yields1

351

379

387

-7%

-9%

Other

(60)

(91)

(66)

-34%

-9%

Total

110

189

227

-42%

-52%

(2,992)(3,269)(3,620)

-8%

-17%

(70)

(71)

(80)

-1%

-13%

Table 2: Deductions from Common Equity Tier 1 capital
Unamortised goodwill & other intangibles (excluding ANZ Wealth New Zealand)
Intangible component of investments in ANZ Wealth New Zealand
Capitalised software(961)(1,039)(1,263)-8%-24%

Capitalised expenses (including loan and lease origination fees)1(1,431)(1,316)(1,225)

9%

17%

Applicable deferred net tax assets(2,109)(2,128)(1,815)

-1%

16%

(42)

(43)

-

-2%

n/a

Investment in other insurance and funds management subsidiaries

(336)

(336)

(336)

0%

0%

Investment in ANZ Wealth New Zealand

(45)

(45)

(48)

0%

-6%

Investment in associates(1,854)(2,164)(2,313)

-14%

-20%

Other equity investments(1,254)(1,149)(1,254)

9%

0%

(806)

(1,224)(1,317)

-34%

-39%

(11,900)(12,784)(13,271)

-7%

-10%

Expected losses in excess of eligible provisions

Table 8Other deductions
Total

Table 3: Additional Tier 1 capital
ANZ Capital Notes 1

1,120

1,119

1,119

0%

0%

ANZ Capital Notes 2

1,609

1,608

1,607

0%

0%

ANZ Capital Notes 3

968

967

966

0%

0%

ANZ Capital Notes 4

1,615

1,614

1,613

0%

0%

ANZ Capital Notes 5

927

926

926

0%

0%

ANZ New Zealand Capital Notes

459

463

487

-1%

-6%

ANZ Capital Securities

1,347

1,499

1,712

-10%

-21%

Regulatory adjustments and deductions

(400)

(417)

(466)

-4%

-14%

Total

7,645

7,779

7,964

-2%

-4%

Table 4: Tier 2 capital
1,417

1,813

1,253

-22%

13%

Perpetual subordinated notes

395

422

485

-6%

-19%

Term subordinated debt notes

15,22012,443

12,197

22%

25%

(568)

(721)

(823)

-21%

-31%

16,464

13,957

13,112

18%

26%

General reserve for impairment of financial assets

Regulatory adjustments and deductions
Total
1.

In the March 2021 half, deferred expenses previously netted within Deferred fee revenue including fees deferred as part of loan yields were reclassified to Capitalised expenses (including
loan and lease origination fees) to better align with the nature of the balances. Comparatives have been restated accordingly (Sep 20 half: $394 million; Mar 20 half: $293 million).

123

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’d
As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

On balance sheet

254,448

265,112285,340-4%-11%

Commitments

55,79658,991

57,866-5%-4%

Contingents

13,074

11,101

13,33518%-2%

Table 5: Risk weighted assets

Derivatives
Total credit risk weighted assets

Table 6

18,544

24,83329,456-25%-37%341,862

360,037

385,997-5%-11%

Market risk - Traded

8,955

8,237

7,102

9%

26%

Market risk - IRRBB

10,15013,547

8,011

-25%

27%

Operational risk

47,19947,56347,902-1%-1%

Total risk weighted assets

408,166

429,384

449,012

-5%

-9%

As at

Movement

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

135,713

139,415150,290-3%-10%

Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate
Sovereign

7,750

7,545

6,915

3%

12%

Bank

10,092

12,734

18,615-21%-46%

Residential mortgage

110,206

110,353

107,351

0%3%Qualifying revolving retail (credit cards)

3,678

4,337

4,956

-15%

-26%

Other retail

20,693

21,79425,080-5%-17%Credit risk weighted assets subject to Advanced IRB approach

288,132

296,178

313,207-3%-8%

Credit risk specialised lending exposures subject to slotting criteria

36,47639,001

41,072-6%-11%

Corporate

6,388

10,185

14,626-37%-56%

Sovereign

76

220

-

-65%

n/a

Residential mortgage

203

210

228

-3%

-11%

Subject to Standardised approach

Other retail (includes credit cards)

23

33

46

-30%

-50%

Credit risk weighted assets subject to Standardised approach

6,690

10,64814,900-37%-55%

Credit Valuation Adjustment and Qualifying Central Counterparties

4,281

7,710

9,679

-44%

-56%

Credit risk weighted assets relating to securitisation exposures

2,220

2,125

2,142

4%

4%

Other assets

4,063

4,375

4,997

-7%

-19%

341,862

360,037

385,997-5%-11%

Total credit risk weighted assets

124

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’dCollectively and Individually
Assessed Provision

Table 7: Total provision for credit impairment and Basel expected
loss by division

Basel Expected Loss1

Australia Retail and Commercial

Mar 21$M
2,851

Sep 20$M
3,455

Mar 20$M
2,902

Mar 21$M
2,278

Sep 20$M
2,540

Mar 20$M
2,415

Institutional

1,555

1,671

1,996

969

1,117

1,367

New Zealand

592

672

620

606

662

737

Pacific

96

101

76

8

8

-

-

-

-

-

-

-

5,094

5,899

5,594

3,861

4,327

4,519

TSO and Group Centre
Total provision for credit impairment and expected loss
1.

Only applicable to Advanced Internal Ratings based portfolios.

As at

Movement

Table 8: APRA Expected loss in excess of eligible provisions

Mar 21$M

Sep 20$M

Mar 20$M

Mar 21
v. Sep 20

Mar 21v. Mar 20

APRA Basel 3 expected loss: non-defaulted

2,436

2,710

2,775

-10%

-12%

Less: Qualifying collectively assessed provisionCollectively assessed provision(4,285)(5,008)(4,501)-14%-5%

Non-qualifying collectively assessed provision

432

484

473

-11%

-9%

Standardised collectively assessed provision

173

206

190

-16%

-9%

-

-

-

n/a

n/a

1,425

1,641

1,744

-13%

-18%

Individually assessed provision

(809)

(891)

(1,093)-9%-26%

Additional individually assessed provision for partial write offs

(213)

(302)

(289)

-29%

-26%

44

50

71

-12%

-38%

(405)

(455)

(440)

-11%

-8%

42

43

(7)

-2%

large

-

-

7

n/a

-100%

Defaulted excess included in deduction

42

43

-

-2%

n/a

Gross deduction

42

43

-

-2%

n/a

Non-defaulted excess included in deduction
APRA Basel 3 expected loss: defaulted
Less: Qualifying individually assessed provision

Standardised individually assessed provisionCollectively assessed provision on advanced defaulted

Shortfall in expected loss not included in deduction

125

SUPPLEMENTARY INFORMATION
Average balance sheet and related interest1 - including discontinued operations
Mar 21 Half YearSep 20 Half Year

Mar 20 Half YearAvg bal
$M

Int
$M

Rate
%

Avg bal
$M

Int
$M

Rate
%

Avg bal
$M

Int
$M

Rate
%

Home loans

332,291

5,343

3.2%

321,705

5,569

3.5%

320,523

6,340

4.0%

Consumer finance

13,413553

8.3%

14,116607

8.6%

16,030766

9.6%

Business lending

241,552

3,241

2.7%

272,530

3,662

2.7%

268,884

5,095

3.8%

(802)

-

n/a

(957)

-

n/a

(798)

-

n/a

586,454

9,137

3.1%

607,394

9,838

3.2%

604,639

12,2014.0%

Loans and advances

Individual provisions for credit impairment
Total (continuing operations)Non-lending interest earning assets
Cash and other liquid assets

125,06238

0.1%

128,066

73

0.1%

125,077562

0.9%

Trading and investment securities

145,458655

0.9%

133,090700

1.1%

126,238

1,015

1.6%

550

49

n/a

560

15

n/a

698

22

n/a

Other assets
Total (continuing operations)

271,070742

0.5%

261,716788

0.6%

252,013

1,599

1.3%

Total interest earning assets (continuing operations)2

857,524

9,879

2.3%

869,110

10,626

2.4%

856,652

13,8003.2%

Non-interest earning assets (continuing operations)

188,044

212,844

165,321

Total average assets (continuing operations)

1,045,568

1,081,954

1,021,973

Total average assets (discontinued operations)

-

-

1,221

1,045,568

1,081,954

1,023,194

Total average assets
Interest bearing deposits and other borrowings
Certificates of deposit

37,29430

0.2%

34,05399

0.6%

37,398236

1.3%

Term deposits

194,655659

0.7%

213,816

1,261

1.2%

231,163

2,286

2.0%

On demand and short term deposits

289,633859

0.6%

275,739992

0.7%

239,786

1,427

1.2%

Deposits from banks and securities sold under agreement torepurchase

79,787128

0.3%

88,16245

0.1%

81,132666

1.6%

Commercial paper and other borrowings

16,20326

0.3%

11,66186

1.5%

21,397110

1.0%

Total (continuing operations)

617,572

1,702

0.6%

623,431

2,483

0.8%

610,876

4,725

1.5%

Non-deposit interest bearing liabilities
Collateral received and settlement balances owed by ANZ

13,57113

0.2%

14,82413

0.2%

13,49540

0.6%

Debt issuances & subordinated debt

112,071887

1.6%

124,092

978

1.6%

125,362

1,507

2.4%

8,263

291

n/a

9,325

325

n/a

7,669

307

n/a

Total (continuing operations)

133,905

1,191

1.8%

148,241

1,316

1.8%

146,526

1,854

2.5%

Total interest bearing liabilities (continuing operations)2

751,477

2,893

0.8%

771,672

3,799

1.0%

757,402

6,579

1.7%

Non-interest bearing liabilities (continuing operations)232,192

249,135

204,148

Total average liabilities (continuing operations)983,669

1,020,807

961,550

-

-

1,414

Total average liabilities

983,669

1,020,807

962,964

Total average shareholders' equity

61,89961,147

60,230

Other liabilities

Total average liabilities (discontinued operations)

1.
2.

Averages used are predominantly daily averages.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.

126

SUPPLEMENTARY INFORMATION
Average balance sheet and related interest1 - including discontinued operations, cont’dMar 21 Half YearSep 20 Half Year

Mar 20 Half YearAvg bal
$M

Int
$M

Rate
%

Avg bal
$M

Int
$M

Rate
%

Avg bal
$M

Int
$M

Rate
%
4.0%

Loans and advances
Australia

406,222

6,555

3.2%

415,126

6,802

3.3%

408,922

8,219

Asia, Pacific, Europe & America

53,422581

2.2%

65,594825

2.5%

66,892

1,339

4.0%

New Zealand

126,810

2,001

3.2%

126,674

2,211

3.5%

128,825

2,643

4.1%

586,454

9,137

3.1%

607,394

9,838

3.2%

604,639

12,201

4.0%

Australia

80,224243

0.6%

69,657232

0.7%

61,968360

1.2%

Asia, Pacific, Europe & America

44,203298

1.4%

44,690348

1.6%

48,207500

2.1%

New Zealand

21,031114

1.1%

18,743120

1.3%

16,063155

1.9%

145,458655

0.9%

133,090700

1.1%

126,238

1,015

1.6%

Australia

536,043

6,785

2.5%

530,800

7,021

2.6%

521,127

8,889

3.4%

Asia, Pacific, Europe & America

165,582909

1.1%

182,434

1,208

1.3%

185,718

2,051

2.2%

New Zealand

155,899

2,185

2.8%

155,876

2,397

3.1%

149,806

2,860

3.8%

857,524

9,879

2.3%

869,110

10,626

2.4%

856,651

13,8003.2%

Total (continuing operations)
Trading and investment securities

Total (continuing operations)
Total interest earning assets2

Total (continuing operations)
Total average assets
Australia

674,095

689,438

640,901

Asia, Pacific, Europe & America

199,650

220,321

216,335

New Zealand
Total average assets (continuing operations)
Total average assets (discontinued operations)
Total average assets

171,823

172,195

164,737

1,045,568

1,081,954

1,021,973

-

-

1,221

1,045,568

1,081,954

1,023,194

Interest bearing deposits and other borrowings
Australia

364,253

1,083

0.6%

358,125

1,380

0.8%

340,526

2,439

1.4%

Asia, Pacific, Europe & America

152,396231

0.3%

164,450469

0.6%

171,757

1,381

1.6%

New Zealand

100,923388

0.8%

100,856

634

1.3%

98,594905

1.8%

617,572

1,702

0.6%

623,431

2,483

0.8%

610,877

4,725

1.5%

Total (continuing operations)
Total interest bearing liabilities2
Australia

453,975

1,855

0.8%

452,717

2,189

1.0%

435,175

3,666

1.7%

Asia, Pacific, Europe & America

172,836448

0.5%

191,167

737

0.8%

197,147

1,681

1.7%

New Zealand

124,666590

0.9%

127,788873

1.4%

125,082

1,232

2.0%

751,477

2,893

0.8%

771,672

3,799

1.0%

757,404

6,579

1.7%

Total (continuing operations)
Total average liabilities
Australia

618,979

631,943

583,204

Asia, Pacific, Europe & America

209,442

232,401

229,218

New Zealand

155,248

156,463

149,128

983,669

1,020,807

961,550

Total average liabilities (continuing operations)
Total average liabilities (discontinued operations)

-

-

1,414

983,669

1,020,807

962,964

Ordinary share capital, reserves, retained earnings and noncontrolling interests

61,89961,147

60,230Total average shareholders' equity

61,89961,147

60,2301,045,568

1,081,954

1,023,194

Total average liabilities
Total average shareholders' equity

Total average liabilities and shareholders' equity
1.

Averages used are predominantly daily averages.
2. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.

127

SUPPLEMENTARY INFORMATION
Half Year
Mar 21%

Sep 20%Mar 20%Australia

2.62

2.74

3.55

Asia, Pacific, Europe & America

1.11

1.35

2.24

New Zealand

2.81

3.08

3.82

Group

2.31

2.45

3.22

Gross earnings rate

Net interest spread and net interest margin analysis as follows:
Half Year
Australia1
Net interest spread

Mar 21%

Sep 20%Mar 20
%

1.77

1.72

1.76

Interest attributable to net non-interest bearing items

0.11

0.12

0.23

Net interest margin - Australia

1.88

1.84

1.99

Net interest spread

0.58

0.58

0.53

Interest attributable to net non-interest bearing items

0.04

0.05

0.10

Net interest margin - Asia, Pacific, Europe & America

0.62

0.63

0.63

Net interest spread

1.82

1.66

1.81

Interest attributable to net non-interest bearing items

0.18

0.23

0.29

Net interest margin - New Zealand

2.00

1.89

2.10

Net interest spread

1.54

1.46

1.48

Interest attributable to net non-interest bearing items

0.09

0.11

0.21

Net interest margin

1.63

1.57

1.69

Net interest margin (excluding Markets)

2.27

2.22

2.37

Asia, Pacific, Europe & America1

1

New Zealand

Group

1.

Geographic gross earnings rate, net interest spread and net interest margin are calculated gross of intra-group items (Intra-group interest earning assets and associated interest income andintra-group interest bearing liabilities and associated interest expense).

128

SUPPLEMENTARY INFORMATION
Select geographical disclosures - including discontinued operations
The following divisions operate across the geographic locations illustrated below:•
Institutional division - International, New Zealand and Australia•
Pacific division - International•
New Zealand division - New Zealand•
TSO and Group Centre operate across all geographies•
Discontinued operations - Australia

The International geography includes Asia, Pacific, Europe & America
Australia$M

New Zealand$M

International
$M

Total
$M

March 2021 Half Year
Statutory profit attributable to shareholders of the company

2,071

Cash profit/(loss)

2,085

869

3

2,943

899

(2)

Net loans and advances

2,982

434,465

126,482

53,412

614,359

Customer deposits

330,082

112,712

118,729

561,523

Risk weighted assets

262,988

77,96067,218408,166

September 2020 Half Year
Statutory profit attributable to shareholders of the company

1,203

509

320

2,032

Cash profit

1,359

648

330

2,337

Net loans and advances

439,943

123,108

54,042

617,093

Customer deposits

323,903111,886

116,574552,363

Risk weighted assets

272,948

81,03575,401

429,384

1,189

752

(396)

1,545

March 2020 Half Year
Statutory profit/(loss) attributable to shareholders of the company
Cash profit/(loss)

1,065

645

(387)

1,323

Net loans and advances

445,449

132,127

79,033656,609

Customer deposits

303,600

110,442

152,453

566,495

Risk weighted assets

270,876

84,90093,235449,011

New Zealand geography (in NZD)
Movement

Half YearNet interest income
Other operating income

Mar 21
NZD M
1,661

Sep 20
NZD M
1,581

Mar 20
NZD M
1,648

Mar 21
v. Sep 20
5%

Mar 21v. Mar 20
1%

364

476

344

-24%

6%

Operating income

2,025

2,057

1,992

-2%

2%

Operating expenses

(764)

(908)

(828)

-16%

-8%

Profit before credit impairment and income tax

1,261

1,149

1,164

10%

8%

70

(169)

(232)

large

large

Profit before income tax

1,331

980

932

36%

43%
45%

Credit impairment (charge)/release

Income tax expense and non-controlling interests

(369)

(286)

(255)

29%

Cash profit1

962

694

677

39%

42%

Adjustments between statutory profit and cash profit

(32)

(147)

112

-78%

large

Statutory profit1

930

547

789

70%

18%

Individually assessed credit impairment charge/(release) - cash

(10)

67

44

large

large

Collectively assessed credit impairment charge/(release) - cash

(60)

102

188

large

large

Net loans and advances

137,786

132,984

135,679

4%

2%

Customer deposits

122,786

120,863

113,411

2%

8%

Risk weighted assets

84,92887,53687,182-3%-3%

Total full time equivalent staff (FTE)

7,213

7,210

7,532

0%

-4%

1.

Statutory profit for the September 2020 half included a NZD 32 million loss on sale of UDC Finance Ltd (UDC). Cash profit for the September 2020 half also included an after tax loss of NZD
23 million on the unwind of economic hedges of UDC loans and advances.

129

SUPPLEMENTARY INFORMATION
Exchange rates
Major exchange rates used in the translation of foreign subsidiaries, branches, investments in associates and issued debt are as follows:
Balance Sheet

Profit & Loss Average

As atHalf Year

Chinese Renminbi

Mar 21
4.9879Sep 204.8453

Mar 204.3895

Mar 214.9209Sep 204.7920Mar 204.7002Euro

0.64900.60610.56190.62630.60380.6066

Pound Sterling

0.55380.55390.50170.55680.54030.5225

Indian Rupee

55.88352.47346.74555.04651.29648.153

Indonesian Rupiah

11,073

10,595

10,126

10,711

10,117

9,487

Japanese Yen

84.22975.05967.01578.91173.09972.937

Malaysian Ringgit

3.15852.95932.6611

3.06842.91532.7969

New Taiwan Dollar

21.662

20.59118.70721.24520.26520.315

New Zealand Dollar

1.08941.0802

1.02691.0697

1.07101.0488

Papua New Guinean Kina

2.66652.48582.11932.63152.36692.2845

United States Dollar

0.76000.71100.61890.75070.68400.6705130

DEFINITIONSAASB - Australian Accounting Standards Board. The term “AASB” is commonly used when identifying Australian Accounting Standards issued by the
AASB.
ADI - Authorised Deposit-taking Institution.
ANZEST - ANZ Employee Share Trust.
ANZ Research – Economics, a business unit within ANZ, which provides analysis of key economic inputs and developments and assessment of thepotential impacts on the local, regional and global economies.
APRA - Australian Prudential Regulation Authority.
APS - ADI Prudential Standard.
AT1 - Additional Tier 1 capital.
Cash and cash equivalents comprise coins, notes, money at call, balances held with central banks, liquid settlement balances (readily convertible to
known amounts of cash which are subject to insignificant risk of changes in value) and securities purchased under agreements to resell (reverse
repurchase agreements) in less than three months.
Cash profit is an additional measure of profit which is prepared on a basis other than in accordance with accounting standards. Cash profit represents
ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers to assess Group and Divisional performance against
prior periods and against 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 be significant 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 other non-core items not associated with thecore operations of the Group;2.

treasury shares, revaluation of policy liabilities, economic hedging impacts and similar accounting items that represent timing differences thatwill reverse through earnings in the future; and3.

accounting reclassifications between individual line items that do not impact reported results, such as policyholders tax gross up.

Cash profit is not a measure of cash flow or profit determined on a cash accounting basis.
Collectively assessed allowance for expected credit loss represents the Expected Credit Loss (ECL). This incorporates forward-looking informationand does not require an actual loss event to have occurred for an impairment provision to be recognised.
Coronavirus (COVID-19) is a respiratory illness caused by a new virus and 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 pool of the ADI’s assets (the cover pool) assigned to a bankruptcy
remote special purpose entity. The primary assets forming the cover pool are mortgage loans. The mortgages 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 pool cannot be otherwise pledged
or disposed of but may be repurchased and substituted in order to maintain the credit quality of the pool. The Group issues covered bonds as part of its
funding activities.
Credit risk is the risk of financial loss resulting from the failure of ANZ’s customers and counterparties to honour or perform fully the terms of a loan orcontract.
Credit risk weighted assets (CRWA) represent assets which are weighted for credit risk according to a set formula as prescribed in APS 112/113.
Customer deposits represent term deposits, other deposits bearing interest, deposits not bearing interest and borrowing corporations’ debt excluding
securitisation deposits.
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer 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 afunction of probability of default, loss given default, expected credit risk exposure and an asset correlation factor. Impaired derivatives are also subject toa CVA.
Dividend payout ratio is the total ordinary dividend payment divided by profit attributable to shareholders of the Company.
Gross loans and advances (GLA) is made up of loans and advances, capitalised brokerage and other origination costs less unearned income.
Impaired assets are those financial assets where doubt exists as to whether the full contractual amount will be received in a timely manner, or whereconcessional terms have been provided because of the financial difficulties of the customer. Financial assets are impaired if there is objective evidence ofimpairment as a result of a loss event that occurred prior to the reporting date, and that loss event has had an impact, which can be reliably estimated, on
the expected future cash flows of the individual asset or portfolio of assets.
Impaired loans comprise drawn facilities where the customer’s status is defined as impaired.
Individually assessed allowance for expected credit losses is assessed on a case-by-case basis for all individually managed impaired assets taking
into consideration factors such as the realisable value of security (or other credit mitigants), the likely return available upon liquidation or bankruptcy, legal
uncertainties, estimated costs involved in recovery, the market price of the exposure in secondary markets and the amount and 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 result of 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 book items; and3.

Optionality risk - the risk to earnings or market value arising from the existence of stand-alone or embedded options in banking book items.

131

DEFINITIONSInternationally comparable ratios are ANZ’s interpretation of the regulations documented in the Basel Committee publications: “Basel 3: A global
regulatory framework for more resilient banks and banking systems” (June 2011) and “International Convergence of Capital Measurement and CapitalStandards” (June 2006). They also include differences identified in APRA’s information paper entitled International Capital Comparison Study (13 July2015).
JobKeeper payment is a wage subsidy program introduced by the Australian Government in 2020 to support employees and businesses as a result of
the COVID-19 pandemic. It is designed to help businesses affected by COVID-19 to cover the costs of their employees’ wages so that more employees
can retain their job and continue to earn an income. The program finished on 28 March 2021.
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 ANZ Group excluding associates, insurance and funds management entities, commercial
non-financial entities and certain securitisation vehicles.
Net interest margin is net interest income as a percentage of average interest earning assets.
Net loans and advances represent gross loans and advances less allowance for expected credit losses.
Net Stable Funding Ratio (NSFR) is the ratio 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 is a function of the liquidity characteristics and residual maturities of an ADI’s assets and off-balance sheet activities. ADIs must maintainan NSFR of at least 100%.
Net tangible assets equal share capital and reserves attributable to shareholders of the Company less unamortised intangible assets (including goodwill
and software).
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 with statutory requirements.
Restructured items comprise facilities in which the original contractual terms have been modified for reasons related to the financial difficulties of thecustomer. Restructuring may consist of reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond thosetypically offered to new facilities with similar risk.
Return on average assets is the profit attributable to shareholders of the Company, divided by average total assets.
Return on average ordinary shareholders’ equity is the profit attributable to shareholders of the Company, 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 ofdefault. In the case of non asset backed risks (i.e. market and operational risk), RWA is determined by multiplying the capital requirements 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 and liabilities, 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 Australian businesses at low cost.

132

DEFINITIONS
Description of divisions
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, and TSO
and Group Centre.

Australia Retail and Commercial
Australia Retail and Commercial division comprises the following business units.
Retail provides products and services to consumer customers in Australia via the branch network, mortgage specialists, contact centres and a variety
of self-service channels (internet banking, phone banking, ATMs, website and digital banking) and third party brokers.

Commercial and Private Bank provides a full range of banking products and financial services, including asset financing, across the following
customer segments: medium to large commercial customers and agribusiness customers across regional Australia, small business owners and highnet worth individuals and family groups, in addition to financial planning services provided by salaried financial planners and investment lending
secured by approved securities.

Institutional
The Institutional division services governments, global institutional and corporate customers across three product sets: Transaction Banking, Corporate
Finance and Markets.
Transaction Banking provides working capital and liquidity solutions including documentary trade, supply chain financing, commodity financing aswell as cash management solutions, deposits, payments and clearing.

Corporate Finance provides loan products, loan syndication, specialised loan structuring and execution, project and export finance, debt structuring
and acquisition finance and corporate advisory.

Markets provide risk management services on foreign exchange, interest rates, credit, commodities and debt capital markets in addition to managing
the Group's interest rate exposure and liquidity position.

New Zealand
The New Zealand division comprises the Retail and Commercial business units.
Retail provides a full range of banking and wealth management services to consumer, private banking and small business banking customers. We
deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers andcontact centres.

Commercial provides a full range of banking services including traditional relationship banking and sophisticated financial solutions through dedicatedmanagers focusing on privately owned medium to large enterprises, the agricultural business segment, government and government-related entities.

Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticatedfinancial solutions provided to business customers through dedicated managers.

Technology, Services & Operations (TSO) and Group Centre
TSO and Group Centre division provide support to the operating divisions, including technology, group operations, shared services, property, risk
management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre includes residual Asia Retail and
Wealth, Group Treasury, Shareholder Functions and minority investments in Asia.
Refer to Note 13 of the Condensed Consolidated Financial Statements for further information on discontinued operations.

133

ASX APPENDIX 4D - CROSS REFERENCE INDEX

Page
Details of the reporting period (4D Item 1) ............................................................................................................................................................................. 2
Results for Announcement to the Market (4D Item 2) ............................................................................................................................................................ 2
Net Tangible Assets per security (4D Item 3) ....................................................................................................................................................................... 12
Details of entities over which control has been gained or lost (4D Item 4) ......................................................................................................................... 115
Dividends and dividend dates (4D Item 5) ............................................................................................................................................................................. 2
Dividend Reinvestment Plan (4D Item 6) ............................................................................................................................................................................... 2
Details of associates and joint venture entities (4D Item 7) ................................................................................................................................................ 116

134

ALPHABETICAL INDEX

Page
Allowance for Expected Credit Losses ................................................................................................................................................................................. 98
Appendix 4D Cross Reference Index ................................................................................................................................................................................. 134
Appendix 4D Statement ......................................................................................................................................................................................................... 2
Auditor’s Review Report and Independence Declaration ................................................................................................................................................... 119
Average Balance Sheet and Related Interest .................................................................................................................................................................... 126
Basis of Preparation ............................................................................................................................................................................................................. 82
Capital Management .......................................................................................................................................................................................................... 122
Changes in Composition of the Group ............................................................................................................................................................................... 115
Condensed Consolidated Balance Sheet ............................................................................................................................................................................. 79
Condensed Consolidated Cash Flow Statement .................................................................................................................................................................. 80
Condensed Consolidated Income Statement ....................................................................................................................................................................... 77
Condensed Consolidated Statement of Changes in Equity.................................................................................................................................................. 81
Condensed Consolidated Statement of Comprehensive Income ......................................................................................................................................... 78
Contingent Liabilities and Contingent Assets ..................................................................................................................................................................... 116
Credit Risk.......................................................................................................................................................................................................................... 106
Debt Issuances .................................................................................................................................................................................................................. 105
Definitions .......................................................................................................................................................................................................................... 131
Deposits and Other Borrowings ......................................................................................................................................................................................... 101
Derivative Financial Instruments .......................................................................................................................................................................................... 96
Directors’ Declaration ......................................................................................................................................................................................................... 118
Directors’ Report .................................................................................................................................................................................................................. 76
Discontinued Operations and Asset and Liabilities Held for Sale ....................................................................................................................................... 103
Dividends ............................................................................................................................................................................................................................. 92
Divisional Results ................................................................................................................................................................................................................. 47
Earnings Per Share .............................................................................................................................................................................................................. 93
Exchange Rates ................................................................................................................................................................................................................. 130
Fair Value Measurement .................................................................................................................................................................................................... 111
Full Time Equivalent Staff .................................................................................................................................................................................................... 18Group Results ...................................................................................................................................................................................................................... 19
Income ................................................................................................................................................................................................................................. 89
Income Tax Expense ........................................................................................................................................................................................................... 91
Investments In Associates.................................................................................................................................................................................................. 116
Net Loans and Advances ..................................................................................................................................................................................................... 97
Operating Expenses............................................................................................................................................................................................................. 90
Profit Reconciliation ............................................................................................................................................................................................................. 71
Related Party Disclosure .................................................................................................................................................................................................... 116
Segment Analysis ................................................................................................................................................................................................................ 94
Select Geographical Disclosures ....................................................................................................................................................................................... 129
Shareholders’ Equity .......................................................................................................................................................................................................... 115
Significant Events Since Balance Date .............................................................................................................................................................................. 117
Summary ................................................................................................................................................................................................................................ 7

135

ALPHABETICAL INDEXTHIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

136