News Release
For Release: 18 February 2021

Transcript of bluenotes interview with ANZ Chief Executive
Officer Shayne Elliott
Andrew Cornell:

Morning Shayne, thanks very much for joining us for this trading
update. We still are in a period of uncertainty – restrictions, lockdowns
in Australia, New Zealand, around the world – but you’ve described
this result as “strong in difficult conditions”. So perhaps a bit better
than we would have expected six months ago. So can you break that
down into the elements that are because the scenarios are not as badas we thought and, secondly, what is in this result that is still a
response to the pandemic? And then perhaps most importantly, what
are the underlying numbers in here that tell you a story about thebank?

Shayne Elliott:

Yes sure. Look what have we learnt over the last year? We’ve learnt
that the world changes and it changes really fast. Whether that’s thehealth situation which has been incredibly volatile in the way thatpeople have to go about their lives or, really importantly from thebank’s perspective, the level of government support and the nature ofthat support. I mean, first we’re blessed – we live in well run countries
that have managed this incredibly well and governments have been
incredibly flexible. And so that means the environment is moving
literally day-to-day.
And what’s great about ANZ is over some many years now we’ve built
really strong foundations that says we’re also able to flex and changewith the operating environment. So we went into this situation lastyear in a really strong position – we had everything set well, we hadlots of capital, we had lots of liquidity, we had good customer
relationships, we knew what we were doing and we had amazing
operational resilience. And, in the last period … the trading update
period – the last quarter of 2020 – that really just came to the fore.
And it really showed the strength of our position. So we were able toreally flex and change whether operationally – we could deal withlockdowns – or whether it’s about getting out there and actually doing
what we’re supposed to do, which is lean in and support the economy.
And we lent really strongly – we saw really good lending growththrough that period for those that needed it – businesses,homeowners. We were able to provide support for those that needed
in in terms of deferrals and other forms of assistance. And all thewhile, doing it in a really well run, safe manner.
Now you mentioned … the underlying real benefits of our business isthe diversification. We’re not just a business here in Australia or justwith New Zealand. We’ve also got our international franchise and what
was pleasing to me was that all of our businesses performed well andcontributed not only for their own customer base but also forshareholders. And there’s lots to be proud of in that response – goodAustralia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522

customer outcomes, good returns, decent returns for shareholders andactually a stronger bank today than even when we started three orfour months ago into this quarter.
Andrew Cornell:

And the unwinding of some provisions that were set last year when weperhaps thought things were going to be worse than they are. That’s
not as significant as this underlying performance you’re talking about.

Shayne Elliott:

No, I mean it’s there and you can see it in the numbers and we did
unwind a little. Let’s not forget that last year we set aside $A1.7 billionof collective provisions in case we needed them, in case the COVID
situation continued to deteriorate. And that was based on a wholebunch of scenarios around house prices falling and unemployment
being high et cetera. Now as I said, actually during the December
quarter what we found is that the outlook isn’t quite as bad as thatand so that meant we were able to just trim those back a little bit. Soliterally we released about 10 per cent of those provisions. So we’restill incredibly well provided if and when things did … deteriorate
further but the outlook is a lot more positive today where we sit today
Andrew than it was going into the fourth quarter of 2020.
So that’s an important driver but, I look through that and look at
what’s going on in our core business. We grew share in Australianhome loans - our single biggest business, we had record volumes inour New Zealand home loans business – we’ve been really run off ourfeet there in terms of supporting Kiwis into homes. Our Institutionalbank and particularly on the international side, really performed well
supporting those customers who needed liquidity. And if you
remember a year ago, we said we’re going to stand there ready tosupport those big end of town customers if the risk-reward was right.
And we saw that come through in terms of the margin expansion inthat business. So I think it was an all-round really good result and wenow enter into ‘21 feeling really well set for whatever may comeduring what is likely to be another volatile year.

Andrew Cornell:

And when you look at that underlying result then, there’s someelements there that you’ve called out in the press release and the ASX
announcement – the balance sheet is strong, a good performance on
costs, capital. Are they the elements that you thought wereparticularly good in this last period?

Shayne Elliott:

What I love about this result is there’s lots to like about every part of it
and that’s what I’m really pleased with the progress that we go into
the year in an incredibly strong position to help our customers throughwhat will be a tough time. We’ve got real momentum in terms of ourlending into those segments that we like and the segments where wewant to grow – so primarily home owners and small business. So thatis going really well and we have lent into that – so that’s on therevenue side.
Our expenses, yet again we’ve shown that we can run the bank atslightly less than it used to cost. So we’ve kept our “run the bank”
costs really tight while still investing at record amounts for the futurein terms of digital and automation and new products and features
which we’re really excited about. And then of course the credit line
right now is pretty benign in terms of real losses. So again, it was rightacross the board.

Now when you add all that up it says at the end of the day you end up
with … being able to add to our capital position. So we closed thequarter at record levels of capital, we’ve never had so much capital interms of ratio or absolute amounts and that’s a good thing because itmeans we’re well positioned, as I said, to take whatever may comethis year.
Andrew Cornell:

Are there areas then that you want to focus on for improvement?

Shayne Elliott:

Well there are always areas to improve. I think we’ve got our focus
right on customers in stress and there is still going to be some andthey’re still going to need some help. We’ve got our focus on
customers in need of growth funds and there’s good opportunity there.
But in terms of running the bank, I would say our real focus where weneed to do more is on the pace of execution. And what we saw in 2020
was this massive shift of customers towards digital choices – youknow, more and more Australians and New Zealanders want to bankonline and using their mobile phones and they want to do more things
on there. And we’ve got a really exciting agenda of releases over the
coming year and that’s… we want to get on with that and we want tobe able to do that and I’m feeling that we have the capacity to do it.
We’ll do the right thing about COVID, we’ll do the right thing looking
after customers and be on the front foot about some really exciting
new propositions for those that need them.

Andrew Cornell:

Given the outlook for the year ahead, and obviously it’s a brave person
who is going assume that it will continue this way, but it does look sortof more promising with vaccines. What then can we look forward to interms of the growth outlook for the bank and for shareholders too, theshareholders in the bank?

Shayne Elliott:

Sure. So first of all, we’re really conscious that we’re managing otherpeople’s money and that the bank belongs to those shareholders. Andwe’re also conscious that we asked a lot of them last year – we asked
them to delay dividends and take a reduced payout. That was the rightthing to do to protect their interests for the long-term and we’re going
to continue to have that approach. We’ll continue to manage it really
prudently.
We’re sitting on a lot of capital - that’s our shareholders’ money. Andat some point, when the environment is more certain, we’ll be in agreat position to decide what’s the best way forward. What are theoptions? Well obviously we’ve got to think about the dividends andthat will be a decision for the board. There are other capitalmanagement opportunities and of course there’s growth. And we do
see growth opportunity – our ability to redeploy some, maybe not allof that capital, to really sow the seeds for future growth andopportunity for shareholder interests over the long-term.

Andrew Cornell:

Well thanks very much for joining us this morning Shayne.

Shayne Elliott:Thank you.

For media enquiries contact:
Stephen Ries
Head of Corporate Communications
Tel: +61 409 655 551
Approved for distribution by ANZ’s Continuous Disclosure Committee