Media Release
For Release: 29 October 2009

ANZ 2009 Annual Result
Australia and New Zealand Banking Group Limited (ANZ) today announced an underlying profit for
the year ended 30 September 2009 of $3,772 million up 10% on the prior year.
Underlying profit reflects the net impact on statutory profit of $829 million from one-off items,
hedging timing differences and non-continuing businesses. Statutory profit decreased 11% to$2,943 million. The final dividend of 56 cents per share fully franked is 25% lower than 2008, inline with guidance.
Overview1
Group - Strong underlying business performance
Revenue up 17%. Costs up 12% including costs associated with expansion in the Asia
Pacific Region, remediation and growth in Institutional and Group transformation.
Underlying EPS decreased 4%. A 16% increase in the weighted average number of shares
coupled with reduced statutory profit led to a reduction in statutory EPS of 23%.
Net Interest Margin2 up 16 bps with higher funding costs partially offsetting improvements
in asset margins.
Customer deposit growth up 14%, net loans and advances flat (FX adjusted) with growth in
the Retail book offset by a decrease in the Institutional book.
Business Units - Good performance from Australia, strong growth in Asia Pacific,
challenging conditions impact New Zealand, Institutional income up significantly
Australia region profit up 13% - strong contributions from Retail (up 13%) and Institutional(up just over 100%).
The Asia Pacific Europe & Americas (APEA) region profit up 81% - strong contributions from
Asia Partnerships and Institutional.
New Zealand region profit decreased 34% - good contribution from Institutional,
challenging economic conditions impacted margins in Retail and Commercial and drove
higher provisions.
Institutional division profit up 82% - income up 37% driven largely by Global Markets
business.
Credit – Strong provision coverage, growth in impaired loans slowing.
Total credit impairment charge up 46% to $3,056 million. Increases across all regions but
highest percentage growth in New Zealand.
Collective provision coverage ratio3 1.31%. Total provisions coverage ratio 1.97%.
Gross impaired loans $4,392 million; rate of growth slowed in the second half.
Significant reduction in the credit charge related to the credit intermediation trades in thesecond half.
12
3

Numbers are provided on an underlying basis and all comparisons are year on year unless otherwise statedExcluding net interest income impact of cash flow on derivatives

Collective provisions as a proportion of credit risk weighted assets (CRWA). Total provision coverage ratio is individualplus collective provisions as a proportion of CRWA

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

2

ANZ Chief Executive Officer Mike Smith said: “While 2009 has been the most difficult year in many
decades for financial services around the world, ANZ has remained financially robust, with a clear
growth strategy led by an experienced team of bankers. This has allowed us to deliver a strong
result and a better outcome for shareholders and for customers.
“This result highlights the momentum we now have which is assisting us to deliver on the priorities
we set for ANZ in December 2007. We’ve made good progress with the turnaround of Institutional,
revenue is growing faster than costs, we are delivering excellent results in Asia and our largest
franchise - Australia - is performing well.
“We’ve continued to focus on the key drivers for the Bank – maintaining our strong capital andliquidity position, ensuring we have adequate provision coverage, completing remediation in partsof the business and making investments that position ANZ for future growth.
“Importantly, we’ve been able to work from a position of strength to take advantage of strategic
growth opportunities in our core geographies in Australia, New Zealand and Asia. In Wealth, weare moving to full ownership of ING Australia and ING New Zealand and in Asia, we’ve agreed toacquire RBS businesses in six countries.
“In a year that started off only weeks after the collapse of Lehman Brothers, the high-water markof the global financial crisis, we have continued to support our customers, delivered a good result
for shareholders and made meaningful progress in delivering on our strategy to build a superregional bank,” Mr Smith said.
PERFORMANCE BY GEOGRAPHIC REGION
Australia
The Australia region performed well producing a 13% increase in profit after tax (PAT) to $2,560
million.
The standout performers were the Retail and Institutional businesses, with PAT growth of 13% andjust over 100% respectively. Given the difficult year experienced by middle market and small
business owners, Commercial produced a creditable result, with PAT up 2%. Weaker equity
markets heavily impacted the Wealth business with PAT down 85%.
The Retail business grew revenue three times faster than costs. In the Institutional business verystrong revenue growth (up 28%) was reinvested in their rebuild and refocus program which is
gaining significant traction. Deposit growth has been a feature this year with customer deposits up
16% to $153 billion. Growth in net loans and advances in the Retail business of 10%, largely in themortgage business, was offset by a 20% decrease in Institutional loans and advances, reflecting arepositioning of the book, lower demand in line with the cycle and a repayment focus by clients.
Credit provision charges trended in line with expectations, up 23% with Retail up 43%, Commercial
up 83% and Institutional stabilising (up 4%). While provisions grew in Retail, off a low base, thebusiness’ focus on responsible lending can be seen in leading 60 day delinquency trends in both themortgages and credit card portfolios which are well contained.
ANZ’s Australian Retail business had the largest increase in net customer numbers of any bankduring the year and remains the highest rated of the major banks for customer satisfaction.
Asia Pacific, Europe & America (APEA)
Asia Pacific, Europe & America (APEA) region PAT increased 81% to $699 million, representing
18.5% of group earnings. Strong contributions from Partnerships and Institutional drove most of
this growth. PAT from Partnerships grew 78% to $331 million, which includes some favourable
reassessment of credit provisioning requirements and earnings adjustments.

3
An increase in total credit provisions to $276 million was mainly due to changes to risk grades toreflect the changed economic conditions.
The Group has continued to invest significantly in the region, including deepening the Institutional
business and advancing the Retail and Wealth platforms, as well as continuing to build out branch
networks in Indonesia, Vietnam and China complemented by the agreement to acquire certain RBS
assets announced in August. There are now 8,555 staff in the APEA region, excluding RBS, up from6,769 a year ago. This includes a significant investment in front line staff.
New Zealand (all figures in this section are in NZD)New Zealand’s economic downturn has been more pronounced and protracted than that inAustralia. The same challenging economic conditions that enabled a very strong result in the Global
Markets trading and sales businesses also drove margin reduction resulting from deposit
competition and slower system growth across the Retail, Commercial and Rural businesses. Profit
before Provisions (PBP) increased 8%, while an almost three-fold increase in credit provisions
drove a 32% decrease in PAT.
An increase in credit provision charges to $889 million was the result of general deterioration
across the book with the largest increase in the Commercial business albeit from very low levels in
2008.
Margins across the Retail, Commercial and Rural businesses experienced a significant contraction of
26 bps impacted by intensified deposit competition, higher wholesale funding costs and higher
costs from increased early mortgage payouts.
Customer deposits and lending growth were largely flat for the year, in line with the domestic
economic conditions. Customer deposits increased in both the Retail and Institutional businesses
while Commercial deposits declined with overall tightening of business cash flows.
Costs are being well managed, up 4% for the year, with strong transformation savings coupled withinvestment in the business.
While up 30% year on year, Institutional profit decreased half on half (down 48%) primarilyreflecting a return to more normal trading volumes in the Global Markets business.
INSTITUTIONAL
Institutional division profit, across the geographic regions, was a highlight for the Group, up 82%.
Revenue rose 37% to finish the year just under $5 billion, almost half of which came from the
Global Markets business. The Institutional team leveraged their strong revenue growth to makeinvestments in improved systems and processes and to grow frontline staff numbers.
Interest rate and general market volatility coupled with increased customer penetration drove asignificant increase in both customer related and trading revenue within the Global Markets
business, resulting in revenue growth of 77% to $2.2 billion. Transaction Banking revenue grew
12% and Specialised Lending (including Relationship Lending) by 23%.
Customer deposits grew 19%, while reduced demand associated with the economic climate, some
repositioning of the loan book and a repayments focus by clients accessing the equity markets
drove an 18% decrease in Net Lending Assets.
Australian exposures in the property, securities lending and agribusiness sectors and a limited
number of single name exposures were largely responsible for the 10% increase in the credit
provision charge for the year. Total provisions dropped 4% half on half and the rate of growth in
non-performing loans slowed significantly in the second half.

4
NON-CORE ITEMSANZ adjusts statutory profit for non-core items to calculate underlying profit. Separating out noncore items assists with analysis of the underlying trends in the business, as the items are related
either to non-continuing businesses, economic hedging or significant items that sit outside theongoing business activities of the Group. A reconciliation table is included on the last page of thisannouncement.
There was a net $829 million in non-core items in 2009. The key items related to one-off provisions(New Zealand tax on conduit transactions, ANZ’s share of the ING NZ investor settlement),
organisational transformation costs (One ANZ), losses from non-continuing businesses (Credit
Intermediation Trades and the Private Equity and Alternative Assets businesses) and amounts
related to the accounting treatment of currency and interest rate hedge valuations which reverseas the instruments move towards maturity (Economic Hedging).
The credit risk adjustment charge on the Group’s Structured Credit Intermediation Trades reduced$595 million after-tax in the second half as credit spreads tightened significantly, to be $69 million
after-tax for the year.
CREDIT ENVIRONMENT
While the credit cycle is playing out largely as expected and there are signs of stabilisation,
particularly in Australia, ANZ believes it is prudent to maintain strong provision coverage levels.
The collective provision as a proportion of Credit Risk Weighted Assets (CRWA) now sits at 1.31%
while the total provision as a proportion of CRWAs is now 1.97%.
The total credit provision charge for the year was $3.06 billion, up 46% for the year but only 13%
in the second half. While the individual provision charge increased across all regions the collective
provision was much lower than the prior year. The largest proportionate increase in provisions
occurred in New Zealand.
The rate of growth in Gross Impaired Loans declined half on half with a total at 30 September of$4.4 billion.
CAPITAL AND FUNDING
ANZ took early and measured steps to manage its capital and funding programs throughout the
global financial crisis. This included initiatives to strengthen the balance sheet, boost liquidity andthe quantity and composition of capital, to stay ahead of changes in the cycle and to allow theGroup to capitalise on opportunities that have and will arise.
ANZ’s capital base has been progressively strengthened since late 2007 but most recently throughthe raising of $5.7 billion of ordinary equity4. The Group’s Tier 1 capital ratio was 10.6% at theend of September 2009 compared to 7.7% a year ago. Adjusting for the announced acquisitions ofcertain RBS assets in Asia and the ING Group’s share of the ING Australia and ING New Zealandjoint ventures, the pro-forma Tier 1 ratio reduces to 9.5%.
Global liquidity conditions have improved over the year. Deposit growth has been strong with theproportion of total funding from customers increasing from 50% to 55%. ANZ executed its full year
term wholesale funding requirements well ahead of schedule raising a total of $25.8 billion. A
combination of stronger deposit growth and consistent term debt issuance has reduced the relianceon short term wholesale funding from 22% to 17%.

4

Institutional placement $2.5 billion, Share Purchase Plan $2.2 billion and final 2008 DRP underwrite

5
OUTLOOKMr Smith said: “The economic slow-down is continuing to play out much as we expected. In thisphase, we have seen bad debts emerge from highly leveraged entities and more recently from theCommercial sector and higher risk personal customers. We expect this will continue into 2010.
However given the resilience of the Australian economy, the stabilisation we are beginning to see in
the New Zealand economy and the strength of the Asian economies, particularly China, we believe
credit quality has now stabilised.
“It’s prudent however to be cautious. The global economy is still facing many difficulties and theAustralian economy remains fragile.
“For ANZ, we are also facing a number of headwinds in 2010. This includes the strength of theAustralian Dollar and a less favourable Markets environment.
“I’m confident however we can maintain the performance momentum we now have in the Groupand that we will continue to have opportunities to grow and to advance our super regional strategy
in 2010 to deliver value for our shareholders.”
For media enquiries contact:
Paul Edwards
Group GM, Corporate Communications
Tel:+61 (0)3 9273 6955
+61 (0)434-070 101
Email: Paul.Edwards@anz.com

Kevin Foley
Senior Manager, Corporate Communications
Tel:+61 (0)2 9227 1026
+61 (0)401 561 480
Email: Kevin.Foley@anz.com

For investor and analyst enquiries contact:
Jill Craig
Group GM, Investor Relations
Tel:+61 (0)3 9273 4185
+61 (0)412 047 448
Email: Jill.Craig@anz.com

Cameron DavisManager, Investor Relations
Tel:+61 (0)3 9273 5629
+61 (0)421 613 819
Email: Cameron.Davis@anz.com

-Impairment of intangible - Origin Australia

New Zealand tax rate change

Profit attributable to shareholders of the Company

Revenue and net investment hedges

Economic hedging - fair value gains/losses

Organisational transformation costs

7,043

3

(1,016)

-

754

10

Credit risk on impaired derivatives

Non-continuing businesses (including Credit intermediation
trades)(35)-

One ANZ restructuring costs

ANZ share of ING New Zealand investor settlement

-

7,327

7,385

30

(360)

-

-

(24)

-

(187)

(82)

-

(173)

(118)

-

8,299

PBP

3,005

3,135

-

-

-

6

5

-

3,124

3,908

3

(1,016)

-

748

10

(35)

(5)

-

4,203

PBP

-

-

-

-

-

-

31

(82)

-

-

-

-

3,056

Credit

1,632

-

-

1

10

-

-

-

1,621

CreditHalf Year Sep 2009

6,225

-

-

-

-

24

-

15

-

-

-

118

-

6,068

Revenue Expenses

13,61030

Tax on New Zealand Conduits

Underlying business performance

Profit attributable to shareholders of the Company

Revenue and net investment hedges

(360)

-

Organisational transformation costs

Economic hedging - fair value gains/losses

-

(172)

(82)

-

Gains on Visa shares

Non-continuing businesses (including Credit intermediation
trades)Credit risk on impaired derivatives

Structured transaction

(173)

-

One ANZ restructuring costs

ANZ share of ING New Zealand investor settlement-

14,367Tax on New Zealand Conduits

Underlying business performance

Revenue Expenses

Full Year 2009

1,526

2

(709)

-

593

-

(24)

(4)

(196)

1,864

NPAT

2,943

21

(248)

-

-

(17)

-

(185)

-

-

(121)

(83)

(196)

3,772

NPAT

6,567

27

656

-

(926)

(92)

(138)

-

-

7,040

6,463

(37)

348

-

(34)

(218)

353

(555)

(156)

(127)

-

-

-

6,889

PBP

3,090

-

-

24

9

-

-

113

-

2,944

3,477

27

656

(24)

(935)

(92)

(138)

(113)

-

4,096

PBP

Credit

1,373

-

-

-

30

(92)

-

-

-

1,435

Credit

1,948

-

-

-

-

-

-

14

(156)

-

-

-

-

2,090

Half Year Mar 2009

5,696

-

-

-

34

218

-

38

-

-

-

-

-

5,406

Revenue Expenses

12,159

(37)

348

-

-

-

353

(517)

(156)

(127)

-

-

-

12,295

Revenue Expenses

Full Year 2008

1,417

19

461

(17)

(778)

-

(97)

(79)

-

1,908

NPAT

3,319

(26)

243

1

(24)

(152)

248

(397)

-

-

-

-

3,426

NPAT

7%

4%

14%

20%

1%

6%

12%

3%

PBP

Growth Rate

9%

12%

Revenue Expenses

12%

17%

PBP

Growth Rate
Revenue Expenses

19%

13%

Credit54%

46%

Credit

8%

-2%

NPAT

-11%

10%

NPAT

6