Media Release
For Release: 29 April 2010

ANZ 2010 Interim Result
Profit up as ANZ benefits from renewed regional growth
ANZ today announced an underlying profit1 for the half year ended 31 March 2010 of $2.3 billion up
23% on the preceding half (HOH) and 20% higher than the prior corresponding period (PCP).
Statutory profit for the half year ended 31 March 2010 was $1.93 billion up 26% HOH and 36% PCP.
The interim dividend of 52 cents per share fully franked is 6 cents per share or 13% higher PCP.
Key Points2•Underlying profit growth was driven by an 8% growth in profit before provisions excluding
Global Markets (up 3% including Global Markets) and a 32% reduction in the credit
impairment charge.

•Underlying EPS increased 15%.

•Group margins (ex Global Markets) were up 15 basis points (bps) from recovery of higher
funding costs and more sustainable pricing for risk, with Institutional the major contributor.

•Customer deposits grew 2% while Group lending levels were broadly flat with growth inmortgages offset by lower demand in Corporate and Institutional and a repositioning of theInstitutional book.

•The total provision coverage ratio remains high at 2.1% of Credit Risk Weighted Assets(CRWA) with the collective provision ratio at 1.38%3 of CRWA.

•

The reported Tier One capital level at the end of March was 10.7%4.

•

Australia region profit was up 15% with good contributions from the Institutional, Wealthand Commercial businesses and a sound performance in Retail.

•Asia Pacific Europe & Americas (APEA) region USD profit increased 19% or 8% AUD with
Institutional and Partnerships the main contributors.

•New Zealand region profit of NZ$372 million was a NZ$238 million increase on the prior halfwith a 45% reduction in the provision charge.

•Institutional division profit was up 19%, with provisions down 38% and income off 4% as
Global Markets revenues trend back from the above normal 2009 levels. Income grew 8%
excluding Global Markets.

ANZ Chief Executive Officer Mike Smith said: “Across the Group revenue and profit increased. Australia
performed well and we’re establishing greater clarity and discipline around growth. New Zealand’sperformance has improved as the economy recovers and we are seeing the benefits of a tightly
managed business. While Asia Pacific moved to a period of consolidation, it still recorded double digit
profit growth. Institutional’s result shows we are now making tangible progress in turning around thebusiness based on a clear strategy aligned to our super regional objective.
1

Underlying profit reflects the net impact on statutory profit of $373 million from one-off items such as acquisition costs and subsequent fair value
adjustments and hedging timing differences.
2
Numbers are provided on an underlying basis and all comparisons are half on half unless otherwise stated3
Total provision coverage ratio is individual plus collective provisions as a proportion of credit risk weighted assets (CRWA). Collective provision
ratio is collective provisions as a proportion of CRWA
4Proforma 10.4% including balance of RBS transaction.
Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

“The backdrop to our improving business performance is a considerably better outlook for provisions
which reflects the strength of the economic recovery particularly in Australia and Asia.
“With the multi-speed economic recovery that’s now occurring around the world, our super regional
strategy positions us perfectly to take advantage of the growth story in Asia and the flow on it has to
the Australian and to the New Zealand economies.
“What’s encouraging in this result is that we’re also beginning to see the benefits of the difficult
decisions we’ve taken over the last two and a half years. While there is still a lot to do, we clearly
have a much stronger foundation. It’s allowed us to weather the financial crisis and come out of it astronger bank than we went into it. That’s enabled us to continue to deliver to our shareholders and toour customers.
“However, the scale of the global financial crisis and the depth of the economic downturn in the USand Europe means we have to be realistic about the outlook. Recovery from events of this magnitude
will not happen smoothly.
“We are now half way through our five year plan to create a super regional bank. In this environment
while there’ll be further bumps along the way - I believe ANZ is well positioned and there’s theopportunity for us to aim higher.
“We have a strong base in Australia, New Zealand and the Pacific and increasingly in Asia. We havetighter discipline in the business and a strong management team of experienced international bankers.
It’s giving us real clarity around growth opportunities and greater discipline in sustaining our businessperformance,” Mr Smith said.
PERFORMANCE BY GEOGRAPHIC REGION
Australia
Profit for the Australia region grew 15% HOH with positive contributions from Institutional, Commercialand Wealth, with the Retail business flat impacted by headwinds from intense competition in deposit
pricing, particularly for term deposits, and from lower fees. The reduction or removal of 27 fees isdelivering benefits to customers of around $170 million on an annualised basis.
Household customer deposits rose 4% with the Retail business achieving around 1.7 times system
growth over the half. Lending grew 5% dominated by growth in the mortgage book. Mortgage lending
returned to slightly above system growth rates during the early months of calendar 2010.
ANZ’s customer satisfaction score remains the highest of the major banks, indicating that our customer
proposition of being easy to do business with has appealed to the market with strong growth in trialintention and new account openings.
While Commercial lending demand remained at low levels, ANZ performed well relative to the market
in the face of high levels of degearing over the past year. The Commercial business grew profit 16%
largely the outcome of a decrease in provisions and repricing.
The Wealth result was up strongly against a weak second half 2009, largely through the contribution of
the INGA business, which became 100% ANZ owned from December, and improvement in the equitymarket.
The acquisition of the Landmark financial services business from AWB in December 2009, brought withit around $300 million in deposits and a loan book of around $2.4 billion taking the ANZ Regional
Commercial business into the number two marketshare position.
A 14% increase in Institutional Australia profit was assisted by a 33% decrease in provisions.
Revenues declined 7% with the Global Markets business tracking down on the above trend
performance of second half 2009. Expenses declined 4%.
There has been an uptick in mortgage and business banking arrears over the half however both remain
manageable. Consistent with this stage in the cycle some stress is evident in the small business book.
2Asia Pacific, Europe & America (APEA) (all figures reflect USD)
Following profit growth averaging 59% in the past two years, 2010 will be a lower growth year for theAPEA business as it completes the integration of the businesses acquired from the Royal Bank of
Scotland (RBS). Strong contributions from Partnerships and Institutional drove a 19% HOH increase inprofit; however a higher AUD/USD exchange rate saw profit up 8% when expressed in Australiandollars.
While the Institutional profit contribution was up 20% half on half, it declined 14% PCP following an
unusually strong performance in Global Markets in first half 2009 during which volatility and widening
credit spreads produced particularly high revenues. In line with our customer focused strategy anincreasing level of business flow is now being generated from sales creating a more sustainableperformance.
Strong momentum in customer deposit growth continued up 39% with lending more subdued, up 6%,
as corporates focused on paying down debt. The provision charge reduced by 24%, an outcome of theimproved economic environment.
There has been significant progress in the region during the half with the integration of the RBS
acquisitions on track for full completion in June and recent regulatory approvals for a bank license in
India and preparatory approval for local incorporation in China.
New Zealand (all figures reflect NZD)The New Zealand economy is stabilising and business conditions are slowly beginning to improve,albeit growth remains subdued. The provision charge reduced substantially, down $268 million, driving
a significant profit increase off a low base in the preceding half. Excluding the contribution from thenow consolidated INGNZ, income and balance sheet growth were flat. Tight cost control was a feature
with costs down 5% (excluding INGNZ).
Margins have improved, up 6bps, as higher funding costs continue to be recovered through the rolloverof the fixed rate lending book. This was offset by the impact of the removal or reduction of 29 fees
across our two retail banks, saving customers an estimated $55 million on an annualised basis.
Deposit and asset growth trends were broadly steady, with the outlook for asset growth during theyear remaining weak, as continued de-leveraging by customers and businesses offsets new lending.
Credit quality has begun to show signs of improvement in Retail, however some uncertainty remains
around the Rural and Commercial sectors and more time is required for the full credit impacts of thedownturn to work through. Cycle and concentration risk adjustments have been carried forward toreflect this expectation.
INSTITUTIONAL (all figures FX adjusted)
Institutional profit after tax grew 22% with a 37% lower provision charge. Total income declined 2%,
while income excluding Global Markets grew 10% reflecting good deposit growth, particularly in Asia,
revenue growth of 11% in Trade and Supply Chain driven by strong customer acquisition, and thebenefit of repricing the loan book for credit risk. Expenses were flat on the prior half.
Global Markets revenue declined 15% during the half, a function of reduced market volatility leading tolower customer hedging activity and reduced trading opportunities. Revenues were evenly split
between sales and trading. Capital Markets’ revenue was up 12% and ANZ is now raising more debt
capital for Australian borrowers in the Asian region than any other bank. Looking through the volatility
driven spike in revenues in 2009, the compound annual growth rate for Global Markets’ revenue overthe past two years has been circa 30%.
Average net lending assets were down 8%; however, asset declines have moderated following thelarge decreases in 2009. While the market will retain a cautious tone in the short term, we expect tosee asset growth in the second half. The business is making good progress with its turn around, withan increasing focus on sustainable income streams such as cash management and trade.

3

CREDIT ENVIRONMENT
While the credit environment has improved over the past year the impact of the financial crisis and thedifficulties associated with the global economic downturn are still evident in the corporate, rural andand small business markets in Australia and New Zealand. ANZ believes it is prudent to take a cautious
approach to its credit provision outlook.
While total impaired assets grew during the half the amount of new impaired assets fell 13%. The
make up of the new impaired assets is more broadly spread, largely driven by the lower end of
Institutional and the middle market and better secured. ANZ expects the absolute level of impairedloans to continue to increase, albeit at a slower rate, into 2011, however the growth in new impaireds
should continue to fall.
The provision charge is declining consistent with the movement in new impaired loans with both theindividual and collective provision charges decreasing.
Loss rates have improved across all categories. While there has been a reduction in the number oflarge single name defaults as the economic environment improves, stress has continued to work its
way through the system and ANZ has therefore retained a substantial portion of collective provisionbalance for economic overlay and concentration risk.
The coverage ratios remain strong with the total provision ratio at over 2.1% of CRWA and thecollective provision ratio steady at 1.38% of CRWA.
CAPITAL AND FUNDING
Tier One capital at the end of March was 10.7%5 with a Core Tier One ratio of 8.5%. Prime liquidity
levels at $63 billion remain strong with the Group having raised around 70% of its 2010 wholesalefunding requirements.
Deposit growth has moderated after the significant growth in the past 18 months however deposit
costs have continued to increase particularly in Australia. The proportion of funding originating from
customer funds is 56%.
NON-CORE ITEMS
ANZ provides underlying profit figures which adjust statutory profit for non-core items. The Group
believes that separating out non-core items helps with the analysis of the underlying business trends.
There was a net $373 million in non-core items in the first half. The key adjustment of $322 million
related to acquisition costs and valuation adjustments. This includes an adjustment, required under
newly revised accounting rules, to the carrying value of ANZ’s existing 49% holding in the ING joint
venture of $181 million, based on the fair value of the 51% acquired.
There was $95 million after tax of acquisition transaction and integration costs related to the ING,
Landmark and RBS transactions and a small amount for the amortisation of acquisition relatedintangibles.
The credit valuation adjustment (CVA) related to the Group’s Credit Intermediation Trades reduced bya further $51 million during the half and has now cumulatively reduced by $646 million over the last 12months. A period of credit market recovery at the beginning of this calendar year was used to exit
some of the exposures such that the notional exposure has reduced by around 25%.

510.7% reported. Proforma 10.4% including balance of RBS transaction.

4

OUTLOOK“Clearly with the magnitude of issues in the US and Europe, we are going to see lower economic
growth around the world compared to the decade prior to the financial crisis. In Australia, growth is
now expected to be over 3% in 2010 while in New Zealand we expect growth of almost 2% after theeconomy contracted in 2009.
“Asia will remain the world’s best performing region with annual economic growth of almost 8%(excluding Japan) which highlights the significance of our super regional strategy,” Mr Smith said.
For media enquiries contact:Paul Edwards
Group GM, Corporate Communications
Tel: +61 (3) 8654 9999 or +61 (0)434 070 101

Stephen Ries
Senior Manager, Media Relations
Tel: +61 (3) 8654 3659 or +61 (0)401 561 480Email: Paul.Edwards@anz.com

Email: Stephen.Ries@anz.com

For investor and analyst enquiries contact:
Cameron DavisManager, Investor Relations
Tel: +61 3 8654 7716 or +61 (0) 421 613 819
Email: Cameron.Davis@anz.com

Jill Craig
Group GM, Investor Relations
Tel: +61 (3) 8654 7749 or +61 (0) 412 047 448

Email: Jill.Craig@anz.com
ANZ Profit and Loss Statement by Division

HalfyearMar 10$M

Halfyear
Sep 09$M

Halfyear
Mar 09$M

Movt
Mar 10v. Sep 09%

Movt
Mar 10v. Mar 09%

Profit after tax by business unit
1,269

1,090

954

16%

33%

Asia Pacific, Europe & America

306

296

419

3%

-27%

Institutional

818

687

732

19%

12%

New Zealand Businesses

172

49266

large

-35%

Group Centre

(79)

(97)

(166)

-19%

-52%
-36%

Australia

less: Institutional Asia Pacific, Europe & America

(188)

(164)

(295)

15%

Underlying profit

2,298

1,861

1,910

23%

20%

Adjustments between statutory profit and underlying profit

(373)

(338)

(491)

10%

-24%

Profit attributable to shareholders of the Company

1,925

1,523

1,419

26%

36%

1,212

1,090

954

11%

27%

Asia Pacific, Europe & America

307

296

419

4%

-27%

Institutional

818

687

732

19%

12%

New Zealand Businesses

16449266

large

-38%

Underlying profit excluding acquisitions
Australia

Group Centre

(58)

(97)

(166)

-40%

-65%

less: Institutional Asia Pacific, Europe & America

(188)

(164)

(295)

15%

-36%

Underlying profit

2,255

1,861

1,910

21%

18%

1,269

1,090

954

16%

33%

Asia Pacific, Europe & America

306

252

309

21%

-1%

Institutional

818

672

663

22%

23%

New Zealand Businesses

17252254

large-32%

Group Centre

(79)

(105)

(156)

-25%

-49%

less: Institutional Asia Pacific, Europe & America

(188)

(148)

(236)

27%

-20%

Underlying profit

2,298

1,813

1,788

27%

29%

Underlying profit excluding exchange rate movements
Australia5