1996 Annual Report

Australia
New ZealandArgentina
Bahrain
Bangladesh
BrazilChile
China
Cook Islands
FijiFranceGermany
GreeceGuernsey
Hong Kong
India
Indonesia
Iran
Japan
JerseyJordan
Korea
Malaysia
MexicoNepal
Oman
PakistanPapua New Guinea
Philippines
Qatar
Singapore
Solomon Islands
Sri Lanka
Switzerland
TaiwanThailand
Tonga
United Arab Emirates
United Kingdom
United States of America
Vanuatu
Vietnam
Western Samoa

Australia and New Zealand Banking Group Limited

ANZ has branches or representative
offices in 43 countries:

Australia and New Zealand Banking Group Limited ACN 005 357 522
Registered Office: Level 2, 100 Queen Street, Melbourne, Victoria 3000, Australia.
Telephone: (03) 9273 6141 Facsimile: (03) 9273 6142

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED1996 Annual ReportKey Dates

C O N T E N TS
ANZ at a Glance ......................................................... 2
Brief overview of the Group, Australia,
New Zealand and International operations

Books close forFinal Dividend

Chairman’s Report ...................................................... 4

13 December 1996

“good profit outcome for shareholders”

Chief Executive Officer’s Review ............................ 6

Annual General
Meeting“change initiatives are the key task”

Key Strategic Initiatives ........................................... 8

15 January 1997

ANZ Investment Bank
Back Office Support Projects
Commercial Banking System

Payment of
Final Dividend

Commentary
Australia .......................................................... 10

15 January 1997

“new delivery channels”

Announcement ofInterim Results

New Zealand .................................................. 1228 May 1997*

International ................................................... 14

S H A R E H O L D E R
Dividends
The final dividend of 24 cents per share will be paidon 15 January 1997 bringing the full year dividend to
42 cents per share. The interim dividend paid in July
1996 was 50% franked and the final dividend is fully
franked at 36% for Australian taxation purposes.
Dividends may be paid directly to a bank account inAustralia, New Zealand or United Kingdom.
Shareholders who want their dividends paid this way
should advise the relevant Share Registry in writing
prior to books closing date. Dividend reinvestment
and Bonus option plans are available to shareholders.
The plans are detailed in a booklet called “Shareholder
Alternatives”, copies of which are available from the
Share Registrars at the addresses shown.

Stock Exchange Listings
The Group’s ordinary shares are listed on the Australian
Stock Exchange, the International Stock Exchange in
London and the New Zealand Stock Exchange. The
Capital Securities offered in February 1993 are listedon the New York Stock Exchange.

“facing competitive pressures”
American Depositary Receipts“strong growth”

Books close forInterim DividendManagement Structure ........................................... 16

6 June 1997*

Corporate Governance ............................................ 20

Board of Directors.................................................... 18

The Bank of New York sponsors an American
Depositary Receipt program in the United States ofAmerica. The ADRs were listed on the New York
Stock Exchange on 6 December 1994. ADR holders
should deal directly with the Depositary, Bank of New
York, New York, Telephone (212) 815-2729, Fax (212)571-3050 on all matters relating to their ADRs.

Payment ofInterim Dividend

Financial System Inquiry ........................................ 24
ANZ in the Community and Environment ............. 25

7 July 1997*

Seven Year Summary ............................................... 27

19 November 1997*

1996 Financial Statements ...................................... 33

Removal from Annual Report Mailing List

Cover:
Five channels of banking available
to ANZ customers –Australia and New Zealand Banking Group Limited
ACN 005 357 522

OnLine Banking p10

Paper: Corporate Section – 100% Australian paper
Financial Statements – 100% Australian recycled paper

Customer Service Officer p8

Unless otherwise stated, all amounts are expressed in Australian dollars

Front: Smart Card Technology p10

Back: Supermarket Banking p12
Branch Network

ANZ INTERNET ADDRESS Home Page: www.anz.com

Credit Ratings (December 1996)
Short Term Debt
Moody’s Investors Service
Standard & Poor’s Ratings Group

P-1
A-1+

Long Term Debt
Moody’s Investors Service
Standard & Poor’s Ratings Group

Aa3
AA-

Registered Office

Australia

Financial Highlights in Key Currencies ............... 32

Shareholder Information .............Inside back cover

A summary of the Chairman’s
address to the AGM will be
published in the “Shareholder
Contact” magazine issued in
January 1997.

Share Registrars

Announcement of
Final Results*tentative dates only

Chairman’s Address

Change of Address

Review of 1996 Results ........................................... 28

ANZ’s Worldwide Representation ...................... 119

The Annual General Meeting
will be held at the Savoy Ballroom,
Grand Hyatt Melbourne,
123 Collins Street, Melbourne
on Wednesday, 15 January 1997.

Shareholders who wish to contact the Company on
any matter related to their shareholding are invited totelephone or write to the most convenient Share
Registry.

It is important that shareholders notify the Company
in writing if there is a change to their address. For
added protection shareholders should quote their
Shareholder Number.

1116

Annual General Meeting

Level 2, 100 Queen Street, Melbourne,
Victoria 3000 Australia
Phone: (03) 9273-6141
Fax: (03) 9273-6142
Secretary and Chief Financial Officer: D T Craig
General Manager Investor Relations: D H Ward

Enquiries

Risk Management Framework .............................. 22

I N F O R M AT I O N

Shareholders who do not want the Annual Report or
who are receiving more than one copy should advise
the Share Registrar in writing. These shareholders
will continue to receive all other shareholder
information.

Coopers & Lybrand
Level 12, 333 Collins Street,
Melbourne,Victoria 3000
Phone: (03) 9205 4999 Toll Free: 1800 331 721
Fax: (03) 9205 4900
New ZealandC/- ANZ Banking Group (New Zealand) Limited
8th Floor, 215-229 Lambton Quay, Wellington
Phone: (04) 496 7000
Fax: (04) 496 8872

To Consolidate Shareholdings

United Kingdom

Shareholders who wish to consolidate their separate
holdings should advise the share registry in writing.

Computershare Limited
Level 5, Bowman House, 29 Wilson Street,
London EC2M 2SJ
Phone: (0171) 920 0010
Fax: (0171) 920 0120

WHO WE ARE
ANZ is Australia and New Zealand’s

What wasachieved
in 1996

international bank.

Profit growthof 8%

In our home markets of Australia and New Zealand, we are amajor financial institution providing the full range of banking
and other financial services. We seek to differentiate ourselvesfrom our competitors by the quality of our customer service,
our professionalism, and our international capability.

Asset growthof 13%
18.3%
return on
shareholders’equityOverseas, we have a significant presence in countries from theMiddle East through South and East Asia to the Pacific – theregion of greatest geographic and economic relevance to Australia
and New Zealand. These businesses are complemented bywholesale and investment banking operations in the world’s major
financial centres.

Increased
dividends,
42 cents
from 33 cents
Fully franked
final dividend

O U R VA L U E S
We have a strong customer focus and build relationships
based on integrity, superior service and mutual benefit.

Upgrade to
AA status

We strive for profit and sound growth.

Creation ofshareholder
value

We work as a team to serve the best interests of the Group.
We are relentless in pursuit of business innovation andimprovement.
We value and respect people and make decisions about people
based on merit.

Sharemarket
Accumulation Index
250

200

We base recognition and reward on performance.
150

We value open and honest communication.
100

We are responsible, trustworthy and law-abiding in all we do.
50
Sep91 Sep92 Sep93 Sep94 Sep95 Sep96

ANZ

All Ords

ANZAT

GRO U PA

G L A N CE

P RO F ILE

A US T RA L I A$128B Group Assets
43$75B Assets
59% of Group Assets

Countries ofOperation

23,727 Employees

39,721 Employees

1,070 Branches$6.3B Shareholders’ Equity

1,010 Automatic Teller
Machines

1,744 Points ofRepresentation
The Group originated in the United Kingdom in 1835 when the
Bank of Australasia was established by Royal Charter.
In 1951, The Bank of Australasia merged with Union Bank ofAustralia to form Australia and New Zealand Bank Limited which
in 1970 merged with The English, Scottish and Australian Bank
Limited.
In 1977 ANZ transferred its domicile from the United Kingdom toAustralia (Melbourne).
In 1979 ANZ acquired the Bank of Adelaide.
In 1984 ANZ acquired Grindlays Bank plc.
In 1989 ANZ acquired PostBank Limited (in New Zealand).
In 1990 ANZ acquired both the National Mutual Royal Bank
Limited and the Town & Country Building Society in Australia.

2

17,315 EFTPOS Machines
ANZ is one of the “big four” Australian domestic banks providing
a full range of financial services. Within this spectrum, ANZ’srelative strengths are in business banking, cards andinternational banking services.
Through wholly owned subsidiaries ANZ offers complementaryfinancial services-investment and insurance services through
ANZ Funds Management; personal and corporate stockbroking
services through ANZ Stockbroking and ANZ Securities Limited;and specialised leasing, motor vehicle and property financeservices through Esanda Finance Corporation Limited, the largest
finance company in Australia.

Performance

Return on shareholders’ equity 18.3%

Operating profit after tax ................... $ 657 million
Banking .................................... $ 498 million
Esanda ...................................... $ 100 million
ANZ Funds Management ........ $ 59 million
Return on average risk weighted assets 1.2%

Earnings per share 76.3 cents

Lending growth 10%

Performance
Operating profit after tax $1,116 million

Annual dividend 42 cents

Highlights

Asset growth 13%
Return on average risk weighted assets 1.3%

Highlights
Credit rating upgradeFranking lifted to 100% of final dividend
ANZ Grindlays became an Australian bank
Introduction of Economic Value Added
Formation of ANZ Investment Bank
Risk management further strengthened
Group Human Resources strategy developed

Customer satisfaction rated above competitors
Centralisation of back office functions
New products launched• ANZ Direct • ANZ OnLine• Qantas Telstra Visa Card
EFTPOS terminal base doubled
Strong funds management product growth

Forward Strategy
High focus on cost control
Business Banking efficiency improvements
Branch rationalisation

Forward Strategy
Growth, strongest in international operations
Achievement of significant efficiency gains

24 hour telephone banking
Internet Banking
Smart cards
Growth in ANZ Funds Management
Building on ANZ’s international and investmentbanking capability

All data as at 30 September 1996

To pages 4 & 6 for details

To page 10 for details

Australia and New Zealand Banking Group Limited – 1996 Annual ReportNEW

Z EA LAN D

I NT E RNAT I O NA L

$17B Assets
14% of Group Assets$35B Assets
27% of Group Assets

5,939 Employees

41

259

Branches

303

Automatic Teller
Machines

Countries ofOperation

10,055 Employees
208

11,514 EFTPOS Machines
ANZ has been operating in New Zealand since 1840. ANZ is theoldest and one of the largest banks in the country.
ANZ provides a complete range of products and services to theretail and business markets, and is known as New Zealand’s
export bank.
The finance subsidiary (UDC Finance Limited) is New Zealand’s
largest finance company specialising in leasing and motor vehicle
finance.
ANZ Securities (NZ) Limited provides wholesale broking services
while ANZ Funds Management provides investment management
services.

Performance
Operating profit after tax $138 million(Pre-tax profit same as 1995 record)
Return on average risk weighted assets 1.1%
Lending growth 13%

Branches &Representative
Offices

ANZ has a network of niche banking operations (principally
trading as ANZ and ANZ Grindlays) providing trade finance andcommercial banking services in 41 countries outside Australia
and New Zealand, mainly throughout Greater Asia (pages 119 &120 list ANZ’s worldwide representation).
This network is complemented by an active presence in major
global financial centres.
ANZ provides on-the-ground banking services to support theinternational activity of ANZ’s customers worldwide.

Performance
Operating profit after tax ................... $ 321 million
UK & Europe ............................ $ 106 million
Asia Pacific ............................... $ 99 million
South Asia ................................. $ 36 million
Americas .................................... $ 38 million
Middle East ................................ $ 42 million
Return on average risk weighted assets 1.7%
Lending growth 18%

Highlights
Intense competition in overbanked market
Market share maintained
Shift to electronic delivery continues
EFTPOS terminals more than doubled
Supermarket branches, telephone and bill
payment service introduced
Number of branches reduced by 61
42% growth in funds under management in ANZ
Funds Management
Non-executive directors appointed to ANZ(New Zealand) Board

Forward Strategy

Highlights
ANZ Grindlays Bank migrated to Australia
ANZ Investment Bank formed
New branches in Ho Chi Minh City (Vietnam) and
Manila (Philippines)
ANZ Link introduced into China, Middle East andcountries in the Pacific
New banking system (CBS) piloted
Expansion of international card activity
Best Australian Large Business Activity in Asia
Award

Forward Strategy

High focus on cost control
Restructuring delivery channels
Further branch rationalisation
Building on ANZ’s international and investmentbanking capability

Expand ANZ’s representation
Installation of new banking system
Expansion of international cards & electronicbanking and other global products
Expand ANZ Investment Bank activities
Grindlays Private Banking refocus and expansion

To page 12 for details

To page 14 for details

3

C H AI R M AN ’ S

R EP ORT

Dear Shareholders
In 1996 ANZ achieved a good profit outcome for shareholders.
The profit of $1,116 million is an 8% increase on the 1995 profit
before abnormal items. The result was built around continued
growth of the Group’s business across all sectors, particularly theinternational operations. Dividends were increased with the final
dividend fully franked.

Earnings per share grew by 11% to 76.3 cents for the year.
Dividends were increased to 42 cents per share for the year,
compared to 33 cents in 1995. The 1996 final dividend of 24
cents was fully franked at 36%.

Return on Average
Shareholders’ Equity*
%
20
18.3

15
10
5

4

0
-5
-10
-15

91

92

93

94

95

96

*before abnormal items

Earnings andDividends Per Share

A highlight of the year was the upgrade in ANZ’s credit
ratings by US rating agencies Moody’s Investors Service andStandard and Poor’s. These upgrades returned the Group to“AA” status and recognised the improvement in our financial
position. The upgrades also reflected comfort with the changes
we have made to the way we manage risk throughout theGroup. We now have considerable expertise in this area which
will benefit ANZ through the economic cycle.
Corporate Structure

¢
90
76.3

60
42

30

0

-30

-60

We are particularly pleased to be able to move to fullfranking earlier than had been anticipated. We expect to sustain
full franking at least for the 1997 financial year. However,there may be some limit on our franking capacity thereafter
if the proportion of Group profits earned offshore continues
to increase.

91

92

Earnings*

93

94

95

Dividends#*before abnormal items#excludes preference shares

96

Two major changes to our corporate structure were completed
during 1996.
First, the domicile of the major offshore subsidiary ANZ
Grindlays Bank was migrated to Australia from the United
Kingdom. This brings together all the Group’s head office
functions in Melbourne and will enable better co-ordinationand support of our international operations in South Asiaand the Middle East.
The second change was bringing together in one business
unit all the investment banking activities of the Group. We
have had significant investment banking operations for a longtime, particularly in Australia and London. The co-ordinationof these activities on a global basis will enable us to maximisebusiness opportunities wherever they occur.

Australia and New Zealand Banking Group Limited – 1996 Annual Report

With the migration of ANZ Grindlays, Sir
Brian Shaw, Sir John Thompson and Mr Rick
Wheeler-Bennett have retired from the Board of
ANZ Grindlays. We wish them well and thankthem for their significant contributions over many
years.
With ANZ Grindlays now an Australianregistered bank, Ms Margaret Jackson and Dr BrianScott, non-executive directors of the Group, havealso become non-executive directors of ANZ
Grindlays. Also, in Australia, Mr Donald
McDonald, Mr Charles Williams and Mr Lawrence
Willet AO, became non-executive directors ofcompanies within the ANZ Funds Management
group.
In New Zealand, the Hon Fran Wilde and
Mr Jeff Todd joined the Board of ANZ Banking
Group (New Zealand) Limited.
We warmly welcome them all to ANZ.
Managing for Increased Shareholder Value
Many companies around the world have been
seeking ways to align management objectives moreclosely with the creation of long term shareholder
value. The Economic Value Added methodology
developed by consulting firm Stern Stewart & Co
(EVATM) is one approach gathering support amongindustrial companies and financial institutions
worldwide. EVA is a method of determining how
much shareholder value has been created. It
measures profit contributions after making a charge
for credit risk, which represents an estimate ofcredit costs over an economic cycle, and after anallowance for the cost of capital. ANZ is now
using EVA to bring increased focus on customer
and business unit profitability and as a basis for
management remuneration.
The introduction of EVA based remuneration
is part of the Group’s focus to improve the way
we motivate, assess and reward staff which is so
important in a changing environment.

different financial services are becoming
increasingly blurred. The Government has
commissioned a review of the regulatory
framework governing the financial system, chairedby Mr Stan Wallis. ANZ supported the holdingof such an inquiry and has submitted a detailed
statement, a summary of which is contained on
page 24 of this report.
Your directors believe ANZ is of sufficientsize, and has the growth opportunities available tocontinue to be a successful independent bank in
the changing environment.
Outlook
We expect an acceleration in economic activity
in Australia later in 1997, but growth in the firsthalf is likely to remain subdued. There are somerisks to the short-term outlook for New Zealandarising from the prolonged period of very highreal interest rates and uncertainty surrounding thenew political arrangements there. Asia as a wholeshould continue to enjoy strong economic growth.
However some countries within Asia may
encounter periods of less robust growth than inrecent years.
The challenges now facing ANZ are very
different from the last four years. The return tofull franking and ‘AA’ status completes the recovery
process. ANZ is financially strong and well able
to meet the competitive challenges now in frontof us.
Our franchises at home and abroad are strong
with growth opportunities, particularly in ourinternational operations. While we are facing
increasing competitive pressure in our domesticbanking markets, the initial benefits from the
major restructuring program now underway are
expected to emerge during 1997.
Overall, ANZ is well placed to continue to
add to shareholder value over the coming years.

Structural Change in the
Financial Services Industry
Technological development is driving enormouschange in the banking industry. New, moreconvenient and more efficient ways to deliverbanking services are now available to customers,
and new providers are entering the industry. At
the same time distinctions between providers ofCharles Goode
Chairman5

C H I E F E X E CU TI VE
O F F I C E R’S R E V I E W
The Group profit in 1996 of $1,116 million represents an 18.3%
return on shareholders’ equity. This is a good result, achieved
under very competitive market conditions.
With the Australian finance industry undergoing rapidchange, the challenge for management is to increase earnings,
while investing in major change programs to reposition theGroup for the future.

1996 in Review
ANZ achieved an 8% increase in operating profit
after tax to $1,116 million in the year ended
30 September 1996. There were no abnormal
items. The 18.3% return on shareholders’ equity
is significantly above the Group’s cost of capital.

6

Our international operations contributed to
the Group result with strong lending growth,particularly in Asia, and a good performance by
our investment banking operations in London.
In Australia, we have seen a reduction inunderlying profitability reflecting very competitivemarket conditions, higher personnel costs and the
additional costs associated with the significant reengineering program underway. However we
benefited from a lower charge for doubtful debts
and a lower effective tax rate.
In New Zealand underlying earnings
remained stable. The benefits of asset growth wereoffset by competitive pressures on interest margins.
Re-engineering costs continue to be a significant
factor in New Zealand.
Managing our People
The rate of technological advance and change inthe finance industry is creating challenges for theway we manage our staff. Skill requirements arechanging, and entire job functions are being
eliminated. Nevertheless, the delivery of superior
service to our customers remains dependent upon
the best use of resources, both people andtechnology. ANZ is committed to attracting,retaining and developing staff of the highest calibre.
Building on ANZ’s core values we have developed

a comprehensive human resources philosophy toprovide the framework for managing our people.
Central to this is our intention to make
improvements in the way we assess, develop andreward individuals to build a performance based
culture throughout the Group.
A key tenet of this philosophy is to treat all
staff fairly and with dignity and respect. These
principles particularly apply in handling issues
associated with the restructuring program. ANZ
is open and honest in communication with staff
and follows the procedures endorsed by respective
industrial relations authorities. Restructuring isnever an easy process, but is absolutely necessary
if ANZ is to remain a competitive, successful andindependent financial institution.
Strategic Challenges
The strategic issues ANZ faces in our domestic
markets and overseas are very different. In Australia
and New Zealand the priority is to restructure
our business to meet the challenges of intensecompetition. In our international operations theobjective is the continuation of sound growth.
Australia

New competitors and new lower cost delivery
channels are driving downward pressure on interest
margins making improving efficiency in thedelivery of financial services essential.
We have had several initiatives underway forthe past two years to improve efficiency throughcentralisation of back office activity and closer
targeting of services to customer needs. These

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Group Results*
1996

1995

1994

– Australia

657

612

457

– New Zealand

138

146

95

– International

321

275

251

Operating profit after tax ($M)

1,116

1,033

803

Operating profit
before debt provisions and tax ($M)

Total

1,769

1,722

1,586

Return on average shareholders’ equity (%)

18.3

17.6

15.2

Return on average risk weighted assets (%)

1.3

1.3

1.1

Cost to income (%)

67.3

65.9

66.0

Total assets ($B)

128

113

104

Capital adequacy (%)

10.5

10.9

11.3

Employees(full-time equivalents)

39,721 39,240 39,642*before abnormal items

initiatives are now well advanced, with the newcentralised support platform now complete. The
task for 1997 is to complete the implementationof these initiatives and achieve the benefits.
ANZ also has developed new products todeliver banking services electronically including
ANZ OnLine for business customers and ANZ
Direct for retail customers. With the high level ofcustomer acceptance of these products their use
will continue to grow rapidly.
New Zealandefficiency, we are investing in a new core banking
system to be installed across the network over the
next two years (see page 8).
We will also increase the range of banking
services provided in many countries with theintroduction of electronic and card based products.
We have re-organised our investment banking
activities to create a global line of business which
can deliver the best that ANZ can offer whereverin the world this is required. For example, ourlargest customers in Australia can now benefit fromthe full range of ANZ’s London based expertisein Treasury, Capital Markets and Structured andProject Finance (see page 9). We are pleased thatJohn Sunderland, previously a senior executive
with BZW, has joined us to head up ANZ’sinvestment banking activities.
Systems Integrity

One of the rather different issues we face relates
to the integrity of our computer systems after
31 December 1999. Systems may require
modification to ensure that transactions areaccurately processed when the change to the year
2000 occurs. At this stage the review is notcomplete and the total costs of the modifications
cannot be quantified.
Conclusion

International

We see growth opportunities for the Groupparticularly in our international operations andalso in investment banking, cards and funds
management. However, the benefits of growth
are likely to be partially offset by a further
contraction of interest margins in Australia and
New Zealand in the year ahead. Completion of
the implementation of our change initiatives toimprove efficiency is the key task for 1997. This
will involve some branch closures as banking
services are increasingly delivered to customers
using electronic channels. We expect the initial
benefits to emerge during 1997, with moresignificant benefits thereafter.

The strategic expansion of our operations in East
Asia over recent years has identified ANZ asAustralia and New Zealand’s international bank.
In 1996 we opened branches in Manila(Philippines) and Ho Chi Minh City (Vietnam).
We will continue to broaden and deepen thisnetwork. To support expansion, and to improve

Don Mercer
Chief Executive Officer

Competitive conditions are even more intense in
New Zealand leading to significant falls in interest
margins during 1996. For the past two years wehave been working to migrate customertransactions to lower cost delivery channels. The
number of ATMs and EFTPOS terminals havebeen increased, telephone banking has been
introduced and new card products launched.
Strong growth in the use of electronic systems has
enabled a reduction in the number of branches.
This focus on improving efficiency will continue
through 1997.

7

KEY

S T R AT E G I C

I N I TI ATI VES
The centralisation of transaction processing
into co-ordinated state based sites enables more
efficient processing and storage of banking
instructions.
Overall, these projects provide ANZ with astate of the art support platform to significantly
improve efficiency and customer service.

Commercial Banking System

Angela Olsen, Customer Service Officer.
The National Teleservicing Centre has the capacity to handle most of
the 120,000 phone calls received from customers daily.

Back Office Support Projects

8

In the early 1990s ANZ was the first major bankto remove back office functions from metropolitan
branches to improve efficiency and free up staff toconcentrate on customer service. Phase two, thecentralisation of back office functions from a zone
basis (13 around Australia) to national centres, hasbeen underway for the past 18 months and is now
almost complete. This has involved reducing thenumber of back office processing sites from 33 to
8 and the extension of centralised back officesupport services to include country branches.
A key facility in this program is located in
Flinders Street, Melbourne. The National
Teleservicing Centre has the capacity to handle
most of the 120,000 phone calls ANZ receives
from customers daily and operates from 8.00am
to 8.00pm. In early 1997, telephone banking will
be extended to allow customers 24 hour access to
obtain account balances, transfer funds between
accounts and pay bills.
Support for retail lending activities has also
been centralised incorporating computer assisted
online credit assessment which enables branch staff
and mobile lenders to advise most customers ofthe decision on their mortgage application
immediately on completion of the interview. The
monitoring of loans to ensure accounts are in orderand initiation of any necessary follow-up action is
also controlled from the centre.

ANZ operates in 41 countries outside thedomestic markets of Australia and New Zealand.
However, the 170 branches that make up theinternational network have very different support
systems, many of which are still heavily manualand are becoming dated.
A key strategic initiative for ANZ has been todevelop and install a modern core banking systemthroughout the international network to support
the full range of banking products and services.
Such a system, internally referred to as theCommercial Banking System or CBS, has now
been developed. It will replace all existing
computer and paper based processing, accounting
and management information systems.
CBS offers significant benefits to both ANZ
and its customers. For ANZ the installation of astandard system throughout the international
network will increase efficiency through theelimination of manual back office tasks, reduce thecosts of supporting the current multitude ofsystems and improve the collection of accounting
Josephine Sam, Customer Services in Port Vila.
Day 1 for CBS, ANZ’s new Commercial Banking System for theinternational network.

Australia and New Zealand Banking Group Limited – 1996 Annual Reportand risk management information. Importantly,
it provides the platform to support multibranchbanking, as well as enabling the introduction ofretail banking products not currently offered. For
ANZ customers CBS will provide a range ofconsistently high standard banking products andcustomer information and will enable improved
electronic access including remote access to bankaccounts in different countries.
The development phase of CBS has been
completed with the initial pilot in Vanuatu
operating successfully since May. The second
installation is now underway in Bahrain. The
system will be rolled out to other points of the
network over the next twenty-four months.

Formation of ANZ Investment Bank
A key part of ANZ’s business banking franchisehas been the provision of professional Treasury andother sophisticated banking services to large
corporate and institutional customers in Australia,
New Zealand and overseas. Around the worldsome 2,000 staff are involved in this part of ANZ’sbusiness.
Up to now ANZ has been organised primarily
geographically with reporting lines running to“country heads”. To improve product delivery
co-ordination across borders, optimise the use of
ANZ expertise wherever it is located around theworld, assist innovation and improve risk

management, we are drawing all investmentbanking activities into one unit, ANZ Investment
Bank. This will be organised on functional rather
than geographical basis.
The key global lines of business forming theInvestment Bank are:Financial Markets encompassing foreignexchange, derivatives, capital market activities
including specialist funds management andmoney markets;
Global Structured Finance including project
finance, corporate finance, originations andsyndications, leasing and tax based finance andIslamic finance;
Stockbroking and related services including
equity derivatives, capital raising, advice and the
distribution of ANZ originated Australian,
New Zealand and selected Asian equity research;
Relationship Management for large corporate
customers covering Australia, New Zealand, Asia,
UK/Europe and the Americas.

Importantly ANZ’s on-the-ground banking
capability in Asia, where so many infrastructure
projects will proceed in coming years, will be acompetitive advantage for ANZ in winningbusiness.

ANZ has drawn all investment banking activities into one unit
including Treasury functions in Australia and overseas.
ANZ Treasury, Melbourne.

9A U ST R ALI A
With 59% of Group assets generating an equivalent percentage
of Group earnings, the Australian operations remain the largest
part of ANZ’s business. Reasonable loan growth continues tobe achieved in Australia, although intense competitive
pressures are reducing fee income and margins. A majortransformation program has been underway to centralise backoffice functions and utilise new technology to improve
efficiency and customer service. The initial benefits of thisprogram will emerge during 1997 with more significant benefits
thereafter.
ANZ OnLine:
Electronic delivery
channels arechanging the natureof retail andbusiness banking inAustralia.

101996 Financial Performance

Business Developments

The Australian operations produced a contribution
to Group profit of $657 million, up 7% from 1995.
Lower provisions for doubtful debts and a lower
effective tax rate offset the reduction in underlying
earnings.

Growth in the use of electronic delivery channels
is changing the nature of retail and businessbanking in Australia. ANZ’s major projects tocentralise back office functions on a national basis
and more fully utilise online computer assisted
credit assessment, are now in their final phases of
implementation. Further details on this initiative
are on page 8.

Australian lending assets grew 10% withreasonable growth in home mortgage andcorporate lending. However, competitive pressures
reduced interest margins in the second half of theyear. Retail lending fees were also lower due tocompetitive pressure.
Costs were higher, mostly in personnel.
Personnel costs increased as a result of additional
staff being employed in the implementation phaseof the major change programs, salary increases fromthe enterprise bargaining agreement, the effect ofthe move to total employment cost packaging for
managerial staff, restructuring expenses and profit
participation by staff. Costs associated with
developing and running computer systems also
increased, while premises costs fell.
Asset quality continues to improve. The levelof net non-accrual loans fell by over $300 million
or 36%. The total charge to profit for doubtful
debts was lower as a reduction in the generalprovision charge more than offset a higher specificprovision charge. The increase in the specificprovision charge reflected a lower level ofrecoveries and releases rather than an increase in
new and top-up provisions, which remained stable.
Increased levels of tax preferred income andthe favourable resolution of issues under disputewith revenue authorities led to the lower effective
tax rate.

Throughout this process ANZ has maintained
the focus on customer service. Independent
market research shows ANZ as having a clear leadover other major banks in regard to retail customer
satisfaction. Along with the extension of the ATM
and EFTPOS networks, alternative forms ofbanking have also been trialled including the
opening of banking facilities in four supermarkets.
ANZ has introduced a new direct banking
service for customers in Sydney, ANZ Direct. This
includes a range of very competitive mortgage
products along with transaction account and funds
management products delivered only throughelectronic channels. The developments during theyear have been managed against a background ofmajor computer and procedural changes to ensurecompliance with the new Uniform Consumer
Credit Law.
Cards are the key to access electronic banking
services. The issuing of 370,000 ANZ Telstra Visa
Cards since the launch in June 1995 hassignificantly increased our penetration in the cards
market and led to a 45% increase in businessturnover. Qantas joined the program in September
with the launch of the ANZ Qantas Telstra Visa
Card allowing customers to build frequent flyer
points.

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Outlook

Australian Results*
1996

1995

1994

Operating profit after tax ($M)

657

612

457

Operating profit
before debt provisions & tax ($M)

1,016 1,055

953

Return on average risk weighted assets (%)

1.2

1.2

0.9

Total assets ($B)

75

68

64

Employees (full-time equivalents)

23,727 23,129 23,596

Total points of representation

1,261 1,322 1,396*before abnormal items

Esanda, ANZ’s finance company, achieved$4.9 billion in new business writings, an increaseof 2.5% on 1995. Market conditions were very
competitive, which caused a decline in margins
and overall profit. A major initiative is underway
to re-engineer Esanda’s operations using
technology to automate work flows and improve
efficiency.
ANZ Funds Management again achieved
strong growth in sales through the branch networkwith total retail funds under management
increasing by 11% to $7.2 billion. Profits wereslightly below the 1995 record profit which
benefited from a reassessment of mortality
assumptions in ANZ Life.
In Business Banking the process of market
segmentation to improve service delivery acrossthe range of business customers is now complete.
The use of risk adjusted measures as the financial
benchmark for assessing customer profitability isdriving management strategies to improve credit
quality while maximising income and reducing
costs.
The position of trade finance and otherinternational banking services has always been akey part of ANZ’s business, linking the traditionaldomestic business banking franchise with theoverseas network. Process re-engineering and newtechnology such as ANZ OnLine will enablesignificant improvements in the delivery ofcustomer service to be achieved over the next 12months.
At the top end of the corporate market, theglobal needs of ANZ’s largest corporate customers
are being met through ANZ Investment Bank.
This includes treasury operations in Australia,
which continue to perform well, and thestockbroking subsidiary, ANZ Securities, which
has substantially completed its rebuilding program.
Stored value cards were successfully piloted during 1996 for wider use in 1997.

A reasonably promising outlook for the global
economy will support continued growth inAustralia. However, Australian growth rates arelikely to remain subdued into the first half of1997, ahead of an expected acceleration in activity
later in the year and into 1998. Longer-term
prospects for Australia will be shaped by theGovernment’s success in its labour market reforms
and in improving the country’s national saving
performance.
ANZ expects continued intense competitive
pressures in the financial services industry to leadto a further contraction of interest margins. The
task for ANZ in 1997 is to complete theimplementation of the re-engineering initiatives
we have been working on over the past eighteenmonths. This will involve some branch closures
as banking services are increasingly delivered tocustomers using electronic channels.
During 1997 ANZ will be launching further
new banking services, including the introductionof ‘around the clock’ telephone banking service
using interactive voice response technology,
providing home banking facilities over the internet
and expanding the use of stored value cards.
Funds management is the fastest growing partof the Australian financial system and ANZ expects
to participate fully in that growth.
In summary, the key focus for 1997 will be tocontinue with the restructuring of the Australian
operations and ensure the initial benefits emerge
during the year with more significant benefits toflow thereafter.

11

NEW

ZEALA N D

With $17 billion in total assets earning $138 million after tax,
the Group’s New Zealand operations accounted for 14% of
total assets and 12% of total profit in the 1996 financial year.
The banking environment in New Zealand remains intenselycompetitive with increased activity from non-traditional
players in both the consumer and business markets. ANZ’s focus
is to improve efficiency and customer service through thecontinued migration of customers to electronic delivery
channels and rationalisation of the branch network, while
continuing to grow the business.
1996 Financial Performance
ANZ/PostBank is New
Zealand’s third largest
banking group.

12

The performance of the Group’s operations in
New Zealand remains satisfactory. Underlying
earnings were about the same as in 1995, while anincrease in the effective tax rate reduced profits.
Strong growth was achieved in both businessand home mortgage lending. Overall lending
assets grew by 13%, reflecting a slight increase inmarket share. However, very competitive
conditions reduced margins, leaving net interest
income down slightly. Non-interest income
increased as a result of the expansion of UDC’soperating lease business and growth in income
from cards.
Costs increased by 8%, principally reflecting
increased staff salaries, restructuring costs and direct
revenue costs. However, greater focus on costmanagement and a 4% reduction in staff numbers
meant there was little increase in costs in thesecond half.
Asset quality in New Zealand remains very
good. The charge to profit for doubtful debts
remained at a low 0.1% of net lending advances.
Business Developments
The central focus of ANZ’s strategy in
New Zealand has been to migrate customers tomore convenient and efficient electronic delivery
channels, and to seek other internal efficiency
gains. Over the year ATM numbers increased bya further 11% while EFTPOS terminals more thandoubled to 11,500 nationwide. Telephone banking
has also seen a strong growth in registeredcustomers, giving a market penetration of around
10% of the population.

The increased use of electronic channels isfacilitating the reshaping of the distribution
network. Branch numbers were reduced from
320 to 259. At the same time, alternative specialist
sales channels such as supermarket banking andmobile mortgage managers are being trialled or
expanded. Good growth in home mortgage
lending and retail deposits continues to beachieved.
ANZ retains a strong position in the businessbanking market by providing a full suite ofcorporate, treasury and international services. To
further improve customer service, business banking
activities were segmented into Corporate, Middle
Market, and Property, while the global needs ofthe largest corporates are served by ANZ
Investment Bank.
The finance company subsidiary, UDC, whichis the largest finance company in New Zealand,
had another outstanding year. Increased operatinglease activity offset the competitive pressure on
interest margins resulting in another record profit.
Very strong growth in both retail and wholesale funds (42%) saw ANZ Funds Management(ANZFM) in New Zealand exceed the$NZ1 billion funds under management mark.
Good investment performance underpinned thisgrowth. ANZFM’s outstanding performance was
acknowledged by receipt of the industry awards
for the most improved fund manager, the third
best fund manager overall (out of 35) and the firstamong major banks.

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Outlook

New Zealand Results*
1996

1995

1994

Operating profit after tax ($M)

138

146

95

Operating profit
before debt provisions and tax ($M)

222

224

159

Return on average risk weighted assets (%)

1.1

1.3

1.0

Total assets ($B)

17

15

13

Employees (full-time equivalents)

5,939 6,205 6,313

Total points of representation

275

351

424

*before abnormal items

Board Appointments
Following changes to the regulatory regime in
New Zealand, the Group was pleased to appoint
Mr J G Todd and the Hon F H Wilde as nonexecutive directors to the Board of ANZ Banking
Group (New Zealand) Limited. Mr Todd, withhis background in accounting and superannuation
reform, brings to the Board detailed knowledge
and understanding of the finance industry, while
Ms Wilde’s broad experience in local and national
politics and business also brings an added and mostvaluable perspective to ANZ’s New Zealandoperations.

Following a sustained period of strong growth andvery high real interest rates, the New Zealandeconomy has slowed in the past year. Nonetheless,the economy remains sound and ANZ anticipates
strengthening in activity from the second half of1997 and into 1998. Inflation pressures are abating
which should provide some scope for an easing
in monetary policy, although the sustainability oflower interest rates is partly contingent upon astable political and economic policy outlook.
ANZ expects the highly competitive banking
environment will continue through 1997. New
entrants into the home mortgage market will add
to the competition coming from other existingbanks. Increasing disintermediation by corporate
borrowers may dampen demand for traditionalbanking products and services from that sector.
For ANZ, the focus will continue to be on
restructuring delivery channels while generating
more business from the large customer base andinternationally using ANZ’s international network.

13

Supermarket Banking, Auckland.
Alternative specialist channels, such as
supermarket banking, are being trialled.

I N TERN ATI ONA L
A key element of ANZ’s strategy over recent years has been tobuild the Group’s commercial banking presence throughout
Greater Asia, the region of most geographic and economic
relevance to Australia and New Zealand. ANZ is differentiatedfrom the other Australian banks by this international network,
which extends over 41 countries. These operations accountfor 27% of Group assets and 29% of Group profits. They are themost profitable and fastest growing part of the Group.

1996 Financial Performance
ANZ Manila wasofficially opened in
March 1996.

14

The profit contribution from the international
operations increased in 1996 by 17% to $321
million. Strong lending growth (18%) with stable
margins, a good performance by the investmentbanking operations and continuing sound asset
quality underpinned this performance.
The strongest lending growth was achievedin Asia Pacific where businesses established inrecent years continue to expand and deepen.
While good growth was also achieved in South
Asia in domestic currency terms, this was masked
by the appreciation of the Australian dollar against
the Indian rupee. The continuing cost of funding
the deposit with the National Housing Bank andrestructuring provisions adversely affected profits
from South Asia.
A strong performance by the investmentbanking operations in London, particularly in thesecond half, contributed to the profit improvementin UK/Europe. The branch in New York andrepresentative offices in Latin America continued
to expand their cross-border finance activities.
The more mature business in the Middle East
continued to perform well, although with a slightly
lower profit contribution than in 1995, which
benefited from provision write-backs.
Business Developments
There have been several important changes overthe past year in the way ANZ manages its
international operations. In July the domicile ofthe major international subsidiary, ANZ Grindlays
Bank, was migrated from London to Melbourne
and became an Australian bank. This moveconsolidates all the head office functions of theGroup in Melbourne and will enable better coordination and support of our operations in South
Asia and the Middle East. Cost savings result fromthe elimination of duplication.
As noted earlier the investment banking
activities of the Group have been grouped together
in one business unit, ANZ Investment Bank, toprovide greater focus in meeting the global
financial needs of ANZ’s largest customers’
business. A full description of this initiative iscontained on page 9.
The expansion of the network in Asia hascontinued. In March, ANZ officially opened its
first branch in Manila (Philippines), and is the only
Australian bank represented in the Philippines. A
branch was also opened in March in Ho Chi Minh
City, the commercial centre in the south ofVietnam. ANZ is one of only a few internationalbanks to have two branches in Vietnam.
The Group has also announced a restructuringof the operation in Oman. A local company has
been formed, in which ANZ has taken a minority
interest, to acquire the business.
As elsewhere in the Group, the developmentof electronic delivery channels is a key element of
ANZ’s strategy. ANZ Link, which facilitates
remote access by customers to their bank accounts,
was introduced in the Middle East, China andcountries in the Pacific.
ANZ believes that having branches locatedin the countries where its customers are doing
business is the most effective way to deliver highquality and comprehensive international banking
services. The effectiveness of this strategy is clearlyAustralia and New Zealand Banking Group Limited – 1996 Annual Report

International Results*
1996

1995

1994

Operating profit after tax ($M)

321

275

251

Operating profit
before debt provisions and tax ($M)

531

443

474

Return on average risk weighted assets (%)

1.7

1.6

1.6

Total assets ($B)

35

30

27

Employees (full-time equivalents)

10,055 9,906 9,733

Total points of representation

208

208

206

*before abnormal items

demonstrated by ANZ’s receipt of a number ofawards during the year including:International Business Asia magazine’s “BestAustralian Large Business Activity in Asia” andANZ being named as the “Best Commercial Bankin Australia” by Asiamoney partly because of its
international capability.

Outlook
The outlook for the global economy is reasonably
promising, with overall world growth likely tostrengthen during 1997 and 1998. Supporting
this continued expansion is moderate inflation andsmaller current account imbalances than wereexperienced during the 1980s. A gradual slowing
in the US economy, with its more mature businesscycle than elsewhere, is likely to be offset bystronger growth in Western Europe and Japan. Asia
should continue to enjoy strong growth althoughsome countries may encounter periods of lessrobust growth than in recent years.
ANZ expects that its international operations
will continue to grow at a faster rate than thedomestic operations. The careful expansion of thegreenfield operations in East Asia will continue,
and ANZ will look to add strategically to the
network where the business case exists andopportunities arise.
In addition to the growing trade andinvestment flows, the rapid pace of economic
development in Asia is creating numerous demands
for infrastructure projects (ports, airports, electricity
and communications networks) throughout theregion. This presents significant opportunities for
ANZ Investment Bank.

ANZ Ho Chi Minh City, Vietnam, was opened in March 1996.

Upgrading the core banking system used by
the international operations is central to ANZ’s
strategy to build an integrated network. The
new Commercial Banking System (CBS) was
successfully piloted in 1996 and will be
implemented throughout the network over the
next two years. Details of this project are discussed
on page 8. The installation of CBS will supplement
and enable the further expansion of international
electronic banking services currently available online to domestic customers through ANZ Link.
There is enormous demand for card-basedbanking products, enhanced by electronic delivery
channels throughout Greater Asia. ANZ alreadyhas card businesses operating in several countries
in Asia and the Pacific with all processing done in
Melbourne. The combination of ANZ’s customer
base of high net worth individuals in many
countries in the region and the scale of the card
processing operations in Melbourne, provides clear
opportunities for further profitable expansion ofthis business.
Over recent years ANZ has had a consistentinternational strategy of being the bank with theexpertise and on-the-ground presence to assist its
customers with the expansion of their businessactivities in Greater Asia. This aspect of the businessis not only the fastest growing, it is also the mostprofitable. ANZ is now recognised as Australia
and New Zealand’s international bank, a position
on which we intend to build.

15

M ANAG E ME NT

S TRU C TU R E

ANZ is organised into principal business units with a strong customer focus
and support functions which span the group.

Chief Executive Officer
Don Mercer

16

Don Mercer joined ANZ
in March 1984 as
General Manager,
Strategic Planning andEconomics after many
years with Shell
International Petroleum
Co. Ltd where he held
positions in the United
Kingdom, Holland,
Canada, Indonesia andAustralia. In 1988 Don
Mercer was appointed
to the position of Chief
General Manager
Australian RetailServices which he held
until 1992 when hebecame Managing
Director and Chief
Executive Officer.

Executive Director
Alister Maitland
Alister Maitland’s
career with ANZ spans
33 years. Following
positions as an
Economist in Australia,
New Zealand andLondon he wasappointed Chief
Economist in 1979. He
held a number of
executive positions inManagement Services,
Retail Banking and
Global Treasury before
he was appointed
Managing Director ANZ
New Zealand in June
1990. Alister Maitland
assumed his present
post in November 1992
as Executive Director
with responsibilities for
ANZ’s international
operations.

Executive Director
John Ries

ActingManaging Director
ANZ Banking Group(New Zealand)
LimitedAndrew Ward
Retail Banking
Business Banking
Finance Treasury& Economics
Operations &Payment Services
UDC Group
Human Resources
Strategic PlanningJohn Sunderland joined
ANZ in late 1996 tohead the Group’s global
investment banking
activities. He has
responsibility for thevarious businessactivities undertaken by
ANZ to support its large
corporate andinstitutional customers
around the globe. Prior
to joining ANZ John
Sunderland held seniorinvestment banking
roles with BZW in
London, New York andHong Kong.
UK and Europe

South Asia

AmericasMiddle east

Japan / Singapore

Asia

Financial Markets /Capital Markets

Pacific
Global Private
Banking
Correspondent
Banking

CBS Project

U N I T S

John Ries joined ANZ in
1961 and has held
senior management
positions within thecorporate banking andinternational banking
divisions. In June 1988
he was appointed as
Managing Director, ANZ
Grindlays Bank, London.
He returned to
Melbourne in August
1990 to take up the
position of Chief
General Manager
International Banking.
In August 1992, John
Ries was appointed to
the ANZ Board as
Executive Director withresponsibility forAustralia. He currently
has direct oversight of
the Group’s global
investment banking
activities and the bank’sbusiness banking
activities in Australia.
EsandaStructured
Finance

Global Balance
SheetManagement

RelationshipManagement

International
Services

ANZ Securities

NomineesB U S I N E S SManaging Director
ANZ Investment BankJohn Sunderland

Senior General
Manager BusinessBanking
Bob Edgar
Bob Edgar joined ANZ
in December 1984 as
Senior Economist. In
1986 Dr Edgar was
appointed Chief
Economist. Since thenhe has been Group
Executive, Strategic
Planning andEconomics, General
Manager - South Asia,
ANZ Grindlays Bank Plc,
based in Bombay
responsible for India,
Bangladesh and Nepal
and Managing Director,
Esanda. In March 1995
he was appointed to his
present position of
Senior General
Manager - BusinessBanking. Before joining
ANZ Bob Edgar held
senior positions with
the Australian Bankers
Association and theReserve Bank ofAustralia in Sydney.
Business Banking

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Chief General
Manager Australian
Retail DivisionPeter Hawkins
Peter Hawkins joined
ANZ in December 1971
and has had
considerable experiencein all aspects ofbanking. He wasappointed to his present
position in February
1995 after two and ahalf years as Managing
Director ANZ Banking
Group (New Zealand)
Limited, where he reoriented distribution
and service delivery andoversaw the integrationof PostBank into ANZ.
Prior to that Peter
Hawkins was General
Manager Asia Pacific.
Retail Marketing
Retail Operations
NetworkDevelopment
Cards andElectronic
Delivery
Australian Private
Banking
RetailTransformation
Program
Town & Country

Chief General
Manager AustralianOperations &Payments DivisionCharles Carbonaro
Charles Carbonaro
joined ANZ in January
1987. Subsequently heengineered thecentralisation of ANZ’scards business andturned it into a highly
successful operation.
He was appointed to hiscurrent position in
February 1995 and is
responsible for the total
service support of ANZ’sbanking distribution.
National
Teleservicing
CentreComputer &Network Services

Acting Managing
Director ANZ Funds
Management
Bill Casimir

Chief Financial
Officer & Company
Secretary
David Craig

Group General
Manager Credit /Risk Management
Peter MarriottGroup General
Manager Human
Resources
Peter Wilson

Group General
Manager Corporate
Development
Dave Richardson

ANZ Funds
Management is the armof ANZ that offers abroad range of nonbank financial services,
including insurance,
investment, estateplanning andmanagement andfinancial planning, as
well as a range of
personal, business andwholesalesuperannuation
services.

David Craig joined ANZ
in January 1955 at
Temuka, New Zealand.
He has held senior
positions in a number ofdivisions within the
Bank in Australia andoverseas including
Executive Director ANZ
Grindlays, Managing
Director Esanda andChief General Manager
Business Banking. He
was appointed to his
present position in June
1992.

Peter Marriott joined
ANZ in February 1993
as General Manager
Accounting. He waspreviously a partner of
KPMG Peat Marwick
located in the
Melbourne office andhas been involved in thefinance industry formore than 16 years. He
was appointed to hiscurrent position in July
1995 and is responsible
for theinstitutionalisation andoperation of credit andother risk management
systems and processes.

Peter Wilson joined
ANZ in October 1990 asGroup General
Manager, Strategic
Planning andEconomics. From 199295, he was General
Manager, Asia Pacificat ANZ, and responsible
for the bank’s
operations in North
Asia, South East Asia,
Sri Lanka, Papua New
Guinea and the PacificIslands. Peter Wilson
joined ANZ after a 20
year career with theCommonwealth andVictorian Treasuries,
and also as acommissioner with theState Electricity
Commission of Victoria.
He took up his current
role as Group General
Manager, Human
Resources in January
1996.

Dave Richardson joined
ANZ as General
Manager Information
Technology in March
1993. He wasappointed to his current
role as Group General
Manager Corporate
Development in January
1996. This position is
responsible forStrategic Planning,
Economics, Public
Affairs and Technology.
Dave Richardson has
over 20 years
experience inInformation Technology
and has held a variety
of senior positions inColes Myer, Ansett
Australia and overseas.

Financial
Planning
Estate Planning& Management
Insurance

Strategy & Int.
Payments
National FinanceCentreInvestment

Accounting
Audit
Expenditure
Review Group
General Counsel /LegalStrategy

Cards Operations
International
Cards

New ZealandCredit Operations

Investor Relations

International
Credit Operations

Operating Risk

Credit Policy

Regulatory Affairs

Credit / Portfolio
Management

MarketingTransaction
Processing
Centres

Australian Credit
Operations

Operations
Finance
Secretariat
Human Resources
Taxation

Credit Inspection
Group Credit
Management
Market Risk
Oversight

S U P P O RT

Management
Services
Group Executive
Development
Human Resources
PolicyOperations &Administration

Strategic Planning
IT Development
IT Planning &Architecture
Economics
Public Affairs

17

BOAR DO F

D I R ECTOR SMR C B GOODE (left)
B Com (Hons) (Melb), MBA (Columbia University, New York), FCPA, FSIA
ChairmanCompany Director
Director since July 1991, appointed Chairman August 1995.
Director of CSR Limited, Pacific Dunlop Ltd, Queensland Investment Corporation,
Woodside Petroleum Ltd, Mercury Asset Management Ltd and other companies.
Former Chairman and Chief Executive of Potter Partners Group Ltd.
Lives in Melbourne. Age 58.

MR D P MERCER
BSc (Hons), MA (Econ)
Chief Executive Officer
Executive Director since April 1992, appointed Group Managing Director in June
1992 and to his present position in October 1992. A senior executive of the Groupsince 1984 including Chief General Manager, Australian Retail Services (1988 –
1992). Director and President of Australian Coalition of Services Industries Inc.
Director and Victorian President of the Australian Institute of Company Directors
1994– 1996. Former executive of Shell International Petroleum Co. Ltd. (1965 – 1984).
Lives in Melbourne. Age 55.

18(standing left to right)

MR J F RIESB Bus, FCPA, FAIB
Executive Director
Executive Director since August 1992 and appointed to his present position in
October 1992. Thirty-six years experience in banking with the Group including
Managing Director, ANZ Grindlays Bank plc, London (1988 – 1990) and Chief
General Manager, International Banking (1990 – 1992). Lives in Melbourne. Age 52.

MR J K ELLIS
MA (Oxon) FAIMM FTS
Deputy Chairman, The Broken Hill Proprietary Co Ltd.
Director since October 1995. Chairman of Sandvik Australia Pty Ltd. President of
the Minerals Council of Australia and Executive Committee Member of theInternational Copper Association Ltd. Board Member of the Museum ofContemporary Art. Lives in Melbourne. Age 59.

DR B W SCOTT AO (seated)
B Ec, MBA, DBA
Company Director
Director since August 1985. Chairman of Management Frontiers Pty Ltd, W.D.
Scott International Development Consultants Pty Ltd, Television Makers Pty Ltd
and the Foundation for Development Co-operation. Director of Air Liquide
Australia Ltd and the James N. Kirby Foundation Australian member of the Boardof Governors of the Asian Institute of Management and Chairman of the AustraliaKorea Foundation. Former Chairman of the Australian Government’s Trade
Development Council (1984–1990). Lives in Sydney. Age 61.

SIR RONALD TROTTERB Com (Wellington), Hon LLD (Wellington), FCA, Cert in Agriculture
Company Director
Director since December 1988. Chairman of Toyota New Zealand Ltd andWrightson Limited. Director of Air New Zealand Ltd, and Wrightson Farmers
Finance Limited. Formerly Chairman and Chief Executive of Fletcher Challenge
Limited, Director of the Reserve Bank of New Zealand, Chairman of New ZealandBusiness Roundtable and a member of a number of government, economic,
advisory and rural industry bodies. Lives in Wellington, New Zealand. Age 69.

Australia and New Zealand Banking Group Limited – 1996 Annual Report(left to right)

MR J C DAHLSEN
LLB, MBA (Melb)
Solicitor and Company Director
Director since May 1985. Consultant to and former Partner of the legal firm Corrs
Chambers Westgarth. Director of Woolworths Ltd, Southern Cross Broadcasting(Australia) Ltd, Mining Project Investors Pty Ltd, Melbourne Business School Ltd,The Smith Family, and J. C. Dahlsen Pty Ltd Group. Former Chairman of The Herald
and Weekly Times Ltd and Deputy Chairman Myer Emporium Ltd.
Lives in Melbourne. Age 61.

MR R B VAUGHAN AO
Company Director
Director since January 1988. Chairman of MIM Holdings Ltd. Deputy Chairman of
National Commercial Union Assurance Limited and Transgrid. Chairman of theFederal Government’s Trade Policy Advisory Council, APEC Committee and Sugar
Industry Review Working Party, and Vice-President of the Australia Japan
Business Co-operation Committee. President and Chairman of the ResearchInstitute for Asia and the Pacific. Former Chairman and Chief Executive of Dalgety
Farmers Ltd and former Chairman of ICI Australia Ltd.
Lives in Sydney. Age 68.

MS M A JACKSON
MBA, B Econ, FCA
Company Director
Director since March 1994. Chairman of Transport Accident Commission(Victoria). Director of The Broken Hill Proprietary Co Ltd, Pacific Dunlop Ltd,
Qantas Airways Ltd and other companies. Fund Committee Member of The Walterand Eliza Hall Institute of Medical Research.
Lives in Melbourne. Age 43.

19(left to right)

DR R S DEANE
PhD, B Com (Hons), FCA, FCIS, FNZIM
Chief Executive and Managing Director, Telecom New Zealand Limited.
Director since September 1994. Director of Fletcher Challenge Limited, The Centre
for Independent Studies Ltd and Institute of Policy Studies, Victoria University,
Wellington. Formerly Chief Executive, Electricity Corporation of New Zealand Ltd,
Chairman State Services Commission, Alternate Executive Director, International
Monetary Fund and Deputy Governor, Reserve Bank of New Zealand.
Lives in Wellington, New Zealand. Age 55.

MR C J HARPER
CA (Scots)
Company Director
Director since October 1976. Director of CSL Ltd and North Ltd. Former General
Manager and Chief Executive of the merchant bank Australian United Corporation
Ltd (1968 –1976) and since then a professional non-executive director. Inaugural
National Vice President of The Australian Institute of Company Directors.
Lives in Melbourne. Age 65.

MR A T L MAITLAND
B Com, AAIB, FAIM
Executive Director
Executive Director since April 1992 and appointed to his present position in
November 1992. Thirty-three years experience in banking with the Group includingGroup Chief Economist (1979 – 1982) and Managing Director, ANZ Banking Group(New Zealand) Ltd (1990 –1992). Chairman of the Australia India Business Council,
Director of the Committee for Economic Development of Australia, and member ofthe Australian Government’s Trade Policy Advisory Council and APEC Committee.
Lives in Melbourne. Age 55.

CO RP O R AT E

GOV E RNAN C E

The Board of Directors is responsible for the overall corporate
governance of ANZ, ensuring the Group is run in a proper manner.
Policies and procedures are required to balance the objectives ofshareholders, employees, and customers while meeting therequirements of the regulators and the communities in which theGroup operates around the world.
The Role of the Board of Directors
The Board of Directors is responsible toshareholders for the overall corporate governanceof ANZ. This involves charting the direction of
the Group by participating in the setting ofobjectives and strategy formulation andestablishing policy guidelines. The Board is thenresponsible for monitoring management’s runningof the business to ensure implementation is inaccordance with the agreed framework.

20

To achieve these objectives a well structured
Board is necessary. Details of directors, their
qualifications and experience are set out on pages
18 and 19. To ensure the benefit of independentviews the Articles of Association of the Company
state that there must be a majority of nonexecutive directors on the Board.
ANZ’s Board currently has nine nonexecutive directors and three executive directors,
including the Chief Executive Officer. The Articles
also provide that the role of Chairman cannot beheld by an executive director ensuring that theroles of Chairman and Chief Executive Officer
are separate. Non-executive directors appointed

since 1993 have agreed that they will not seek reelection after 15 years service.
Procedural Guidelines
The Board has established guidelines setting out
proper procedures for matters such as conduct ofBoard meetings, conflicts of interest, trading in the
Bank’s shares and obtaining independent
professional advice.
Directors are required to hold at least 2,000
shares in the Company. They must refrain fromdealing in the Company’s shares for their personal
benefit except in three four week periods;
following the announcement of half year and fullyear results, and the Annual General Meeting, andin each case the Chairman of the Board must be
informed prior to any trading. The same
restrictions are also imposed upon senior
management and those staff in departments withaccess to market sensitive information, with thenotification being required to the Chief Executive
Officer.

Attendance of Board and Committee meetings for the period 1/10/95 – 30/9/96.
Board

C B GoodeJ C Dahlsen
R S Deane*
J K Ellis
C J Harper
M A Jackson
A T L Maitland
D P Mercer
J F Ries
B W Scott
Sir Ronald Trotter*
R B Vaughan

A

B

10
10
10
10
10
10
10
10
10
10
10
10

10
10
10
10
10
10
10
10
10
10
9
10

Audit &
Compliance
A
B

Risk
Management
A
B

7
7

13
13
13
13
13
1
4
13

4
7

1
5

1
5

7
7
7

7
6
6

Personnel
A

B

5

3

3

13
10
12
8
1
4
13

3

3

3

3

3

3

Executive App.
Board
& Remuneration Nominations
A
B
A
B

3
3
3
3
3
3
3
3
3
3
3
3

3
3
3
3
3
2
1
3
1
3
3
3

Donations
A

B

Superannuation
A

B

1

1

2

2

1

1

2

2

1

1

8

7

1

1

8

8

Column A–Indicates number of meetings held during the period the Director was a Member of the Board and/or Committee.
Column B–Indicates number of meetings attended during the period the Director was a Member of the Board and/or Committee.
The Chairman is an ex officio member of all Board committees.
*Resident of New ZealandAustralia and New Zealand Banking Group Limited – 1996 Annual Report

To assist in the exercise of their responsibilities,
Directors are entitled to seek independent
professional advice. With the Chairman’s priorapproval the advice can be obtained at theCompany’s expense and is to be made available to
the whole Board.
Committee Structure
The Board’s function is to address issues in theirbroadest context. It is through the Board’s
committee structure that specific areas of detailare examined. There are seven board committees,
each with a defined Charter. These committees
are charged with providing quality andindependent advice to the Board as a whole.
Directors have also participated in meetingsof Committees of the Board (16 meetings during
1996) to declare dividends, to make allotments
under the Company’s various dividend
reinvestment and employee share schemes and tosign the accounts. There is also an Executive
Committee of the Board which has general
executive authority to deal with all matters relating
to the Company’s affairs when normal Board
timetables are not convenient. This committee
was not required to meet during 1996.
Directors also create opportunities to meetand discuss current issues with management andstaff and participate in visits to ANZ operations.
The Board held its March meeting in
New Zealand which allowed Directors to visit
local banking operations, meet staff and customers,
and representatives of the New Zealand
Government.

The Audit & Compliance Committee(Chairman – J C Dahlsen)
Reviews the Group’s accounting policies and practices;financial statements; due diligence processes in relation tocapital raisings; and compliance with the Group’s statutory
responsibilities including those relating to Consumer Credit
Legislation, Trade Practices Act and privacy issues.
Monitors compliance with approved policies and controls;
liaises with internal and external auditors. Approves audit
plans and the audit fee of the external auditor.

The Risk Management Committee(Chairman – C J Harper)
Supervises all aspects of risk management. This includes
approving and overseeing the setting of delegation policies,
standards and reporting mechanisms for credit risk, trading
risk, balance sheet risk and operating risk. Monitors therisks being assumed by the Group to ensure standards arebeing met. A full description of the Group’s Risk
Management procedures is contained on pages 22 to 23 ofthis report.

Personnel Committee(Chairman – Dr B W Scott)
Reviews and advises on executive remuneration policies.
Has been charged with the responsibility of developing the
new senior executive remuneration scheme, which moreclosely aligns management remuneration to the generationof shareholder value.

The Executive Appointment & Remuneration
Committee(Chairman – C B Goode)Approves appointments and individual remuneration
packages for the senior officers of the Group.
The Committee obtains independent advice on theappropriateness of remuneration packages.

Subsidiary Boards – Non-executive Directors

The Board Nominations Committee

ANZ has a number of subsidiary companies someof which have non-executive directors. The major
subsidiaries in this regard are:

(Chairman – C B Goode)
Reviews the composition of the Board to ensure that it
has the appropriate mix of expertise and experience.
Recommends appointments to the Board where it isconsidered that the Board would benefit from the serviceof a new director with particular skills.

ANZ Grindlays Bank Limited

Non-executive directors - M A Jackson, B W Scott
ANZ Banking Group (New Zealand) Limited

Non-executive directors - J G Todd, F H Wilde
Companies within ANZ Funds Management Group

Non-executive directors- D P McDonald, C M Williams, L J Willet AO.
The Group also has independent directors for its
joint ventures overseas as well as advisory boards
in several countries to provide external advice on
local conditions, policies and practices.

The Donations Committee(Chairman – C B Goode)
Advises on donations policy and considers requests forcorporate contributions.

The Superannuation Committee(Chairman – R B Vaughan)
Advises on staff superannuation issues. Members of thecommittee also sit on the Board of the main Australian Staff
Superannuation and Pension companies.

21

RISK

MA NAG E M EN T

Effective risk management is central to good banking. At ANZ weare continuing to strengthen our systems and procedures to ensurerisks are accurately identified and assessed, and to make risk
management a core competence of the organisation.
ANZ manages risk through an approval anddelegation of limits structure that starts with theBoard of Directors. The Risk Management
Committee of the Board approves and oversees
the framework of risk standards, policies andprocesses for credit, market and operating risks.
Delegations pass through Executive Committees
to individual customer controllers and risk
managers. Regular reports and compliance checks
are presented back through the Risk Management
Committee to the Board.

22

The Credit/Risk Management Department
has overall responsibility for ensuring the cohesion
and effectiveness of the Group’s risk management
framework and oversees the activities of all areas
involving risk policy and monitoring. There arealso separate processes of independent review andaudit by both the internal and external auditors
to ensure compliance with policies, procedures
and industry/government regulations.
In banking, there are three major areas of risk;
credit risk, market risk and operating risk.
Credit Risk Management
Credit risk is the potential financial loss resulting
from the failure of customers to honour fully theterms of a loan or contract. Credit risk represents
just over 50% of the Group’s total risk exposure.
ANZ’s credit approvals policy and structure
underpins the soundness of lending decisions. The
Board establishes the framework of delegatedauthority limits for the approval of credit risk
transactions. The largest transactions are approvedby the Risk Management Committee. This
Committee also reviews all asset quality issues,
including portfolio composition, large customer
exposures, and developments in credit
management policy and processes.
The Credit Portfolio and Policy Committee,
involving senior executives, formulates andadministers the credit portfolio strategy, policy andprocesses. Specialist credit and business areas havebeen established for the larger portfolios (eg realestate), whilst a specialist group will continue forthe effective management of problem loans.
At an operational level, in all major lending
decisions, dual approval is required by independent
specialist credit officers alongside customer
relationship managers. A sophisticated customer
credit risk grading system, supported by objective
risk measurement tools, aids in the assessment of
the risk of default at transactional levels. This assistsin the management of individual loans andprovides information for portfolio management
purposes.
Market Risk Management
The Group’s exposure to fluctuations in market
prices is the second largest risk exposure faced by
the Group. There are two key areas, balance sheet
risk and trading risk. Each unit operates with aset limit of financial exposure and such exposures
are independently monitored daily and regularly
reported to the Global Funds Management
Committee and the Risk Management Committee.
Balance Sheet Risk Management
Balance sheet risk is the potential risk to earnings
and capital resulting from changes in interest
rates, liquidity conditions, and the impact of
exchange rate fluctuations on the Group’s capital
position. Balance sheet interest rate risks aremonitored through the Global Funds
Management Committee within limits set by the
Risk Management Committee. The objective is
to minimise the fluctuations in net interest incomethat may occur over time as a result of changes inmarket interest rates. Gap and simulation
modelling techniques are used to manage this risk.
Liquidity management policies seek to ensure
funds are available at all times (including possible“unfounded name crisis” conditions) to meetmaturing obligations as they fall due.
Foreign exchange exposures are managedwith the objective of ensuring that ANZ’s capitalratio is not adversely impacted by movements in
exchange rates.

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Sources of Risk

Operating & Other Risk

Credit Risk
Customers unable to meet contractual obligations

Market Risk
Potential loss due to fluctuations in interest or
exchange rate markets

Illustrative

Trading Risk Management
Trading risk involves the exposure to change in
foreign exchange rates, interest rates and equity/
security prices in our operations and financial
markets. The taking of proprietary trading
positions by business units is limited and highly
controlled (the primary objective of the Group’s
activity in foreign exchange, debt and derivative
markets is to serve customer needs).
With the establishment of ANZ Investment
Bank which groups the majority of the Group’s
trading activities in one unit, the Group’s financial
market activity is more globally co-ordinated andcentrally managed.
Trading activities are governed by a set ofstandards, policies and controls, involving clear
separation of trading and processing functions.
ANZ uses the industry best practice methodology
of managing trading risks through setting limits
for “value at risk” (the potential loss of revenue
which a particular risk position may incur, basedon historical fluctuations in market prices).
The Market Risk Management unit withinGroup Credit/Risk Management provides theindependent monitoring of the exact nature andsize of the risks involved in trading activities andthe balance sheet. It also co-ordinates theProfessional Standards Review in which specialists
conduct reviews of ANZ’s major trading activities
and geographically isolated operations to ensurehigh standards of professional conduct throughout
all offices of the Group worldwide.

Operating Risk Management
ANZ’s operations around the world are open toother forms of business risk that need to beeffectively managed. Examples include the impactof natural disasters, errors in processing andsettlement of transactions, safeguarding of assets,
adherence to laws and regulations, system failure,
fraud and forgery.
The assessment and management of these risks
is undertaken under the auspices of the Operating
Risk Executive Committee. This Committee
assesses, approves and reviews policies, guidelines
and actions in respect of all operating risks of ANZ
world-wide, including those related to business
operations, systems, procedures, security, ethics,
products or services.
Business units are charged with the ongoing
responsibility of identifying and assessing key
operating risks facing their individual units. They
must develop, test and maintain plans which will
ensure that they are capable of prompt resumptionof their businesses should a major disruption occur.
ANZ has decided to follow, whereverpracticable, the risk management standards
established jointly by Australia and New ZealandStandards bodies.

23

THE

FINANCIALSYSTEMI N Q U I RY

In May 1996 the Federal Treasurer announced an inquiry into the financial system, chairedby Mr Stan Wallis. The committee of inquiry was asked to:Provide a stocktake on financial deregulation;
Identify the factors that will drive future change in the financial services industry; andMake recommendations on changes to regulatory arrangements to ensure thefinancial services industry is efficient and competitive, as well as stable, fair andprudently managed.
A discussion paper was issued in late November, with the final report to be submitted to
the Treasurer by 31 March 1997.

ANZ supported the need for a thorough reviewof the financial system. Since the financial market
deregulation of the 1980s, the financial services
industry has changed dramatically. Products andservices traditionally offered by banks are now
available from a much wider range of suppliers
including insurance companies and niche financial
services providers which operate under very
different regulatory frameworks. With morechange ahead, ANZ believed it was timely to assess
the appropriateness of the current regulatory
framework.

24

In its submission to the Inquiry, ANZ
recommended changes to regulatory arrangements
to improve efficiency and responsiveness tocustomer demands while safeguarding the stability
and integrity that are features of Australia’s financial
system.

The key recommendations in ANZ’s
submission were:
The roles of existing regulators be modified toreduce overlap and provide more effective
supervision of financial conglomerates. The
Reserve Bank of Australia to take responsibility
for the prudential oversight of building societies
and credit unions as well as banks.
A ‘lead regulator’ approach to the prudential
supervision of financial conglomerates be
adopted.
Removal of the so-called “Six Pillars” policy which
precludes merger between the largest market
participants, leaving competition policy to be
applied to banking in the same way as it is to otherindustries, ie by the Australian Competition andConsumer Commission.
Debits Tax and Financial Institutions Duty, bothcharged to bank customers, be abolished.

The Canberra Times
Thursday 18 January, 1996

The depositor protection provisions of the Banking
Act be retained.
To safeguard the stability and integrity of thefinancial system, direct access to the payments
system be limited to institutions supervised by the
Reserve Bank of Australia.
Responsibility for consumer protection, currently
fragmented across a range of regulators, bevested with one national regulator.
In recognition of the international nature of thefinancial services industry, Australia to continue
to adhere to the Basle Capital Accord (or any

The Australian
Monday13 May, 1996

The Weekend AustralianSaturday 25 May, 1996

globally recognised framework that succeeds it).

Acceptance of these recommendations would
allow market participants reasonable scope todetermine their preferred size and structure while
ensuring consumer interests are protected throughhealthy and effective competition.

COM MU NI T Y&

E N VI RON M E N T

Each year, ANZ supports a wide range of organisations and activities. These
include charitable contributions to medical research, community welfare,education and heritage projects.
ANZ also contributes to some of Australia’s
leading arts companies such as the AustralianOpera and provides support for a series of freeoutdoor concerts.
At the local level, ANZ plays an active role
supporting sports activities, ethnic festivals andinitiatives in rural areas. Some of these include:
Wagga Wagga Tennis Association
Western Australian Farmers Federation
Chinatown Carnivale – Sydney
Brisbane Broncos
Tasmanian Agricultural Festival

During 1996, ANZ has also encouraged
community involvement by staff through acommitment to the ANZ Foundation, a charitable
trust funded by staff donations.

Zoological Parks Board of NSW – Australia

During 1996, ANZ developed a relationship with
the Zoological Parks Board of New South Walesto support the construction of a lecture theatre
complex at the world famous Taronga Zoo in
Sydney.
The lecture theatre will be a centre of
excellence in environmental education, reflecting
the Zoological Parks Board’s increasing role inconservation research initiatives, international
liaison and its positioning as the leading wildlife
conservation centre in Australasia.

aNZkids program involved ANZ employees who assisted withfundraising.

aNZkids – New Zealand

ANZ’s major community initiative in New
Zealand, called aNZkids, is a program designed
to benefit a wide range of children.
The aNZkids program involved ANZ
employees who assisted with fund-raising, giving
their time to support projects and work alongside
a number of health organisations throughout thecountry to raise public funds. The public donations
received were matched dollar for dollar, up to a
pre-agreed amount, by ANZ.

Model of the new lecture
theatre at Taronga Zoo in
Sydney to be used forenvironmental education.

25

CO MMU NIT Y&

E N VI RON M EN T

A five day Leadership andManagement training program
was provided to staff from
Vietnamese banks.

26

At a local level, each ANZ and PostBank
branch and banking centre had funds available tosupport local kindergartens and playcentres.
Language Nests, similar to kindergartens but withteaching in Maori, Samoan,Tongan or Fijian, andPlunket early childhood health centres, were also
supported. Organisations were chosen for theirhigh degree of parental involvement and theiroutreach into every community in New Zealand.
Banking Education

ANZ, through its presence in developing
countries, assists in building the local financial
infrastructure through training initiatives inbanking.
A five day Leadership and Management
training program was provided to staff from
Vietnamese banks which deal with agriculture,industry development and retailing. Similar
programs have also been conducted in China.
The mix of staff from ANZ and other financial
institutions gives participants the chance to shareideas and build networks which are helpful in the
day to day operations of the financial system. Over
400 staff from other banks have now been trainedin the programs.

The Visy Recycling and Waste Management project is a comprehensive
paper recycling program.

ANZ and the Environment

ANZ believes that being a good corporate citizen
requires recognition of environmental concerns.
Two key programs have been launched internallyover recent years.
An Energy Awareness Program aims to assist
staff in the efficient use of energy at their work
place without affecting existing working
conditions and customer service levels.
The other program is the Visy Recycling andWaste Management project which began in 1995
and is a comprehensive paper recycling program.
The program benefits include reductions in ANZ’s
waste management costs in Australia by more than
50%, saving about $500,000 annually, while
maintaining stringent security controls over the
disposal of confidential information.

SEVEN Y E A R

Profit and loss
Interest income
Interest expense
Net interest income
Other operating income
Net operating income
Operating expenses
Operating profit before tax, debt
provisions and abnormal items
Provisions for doubtful debts - specific- general
Operating profit(loss) before abnormal items
Income tax (expense)benefit
Outside equity interests
Operating profit(loss) before abnormal items
Net abnormal profit(loss)
Operating profit(loss) after income
tax and outside equity interests
Balance sheet1
AssetsLiabilities
Net assets
Issued and paid-up capital
Reserves and retained earnings
Outside equity interests
Share information (per fully paid share)
Dividend - declared rate
Franked portion
Earnings after abnormal items - basic
Net tangible assets
Rights issue
Share price on ordinary shares - high- low
Number of shares on issue (millions)
Ordinary shares - fully paid
- paid to 10¢- preference shares

S U M M A RY
1996

1995

1994

1993

1992

1991

1990

$M

$M

$M

$M

$M

$M

$M

9,286
(5,969)
3,317
2,096
5,413
(3,644)

8,310(5,229)
3,081
1,975
5,056
(3,334)

6,485(3,685)
2,800
1,969
4,769
(3,183)

6,887(4,344)
2,543
1,875
4,418
(3,124)

8,083 10,180 10,188(5,645) (7,578) (7,713)
2,438
2,602
2,475
2,109
2,067
1,765
4,547
4,669
4,240
(3,329) (3,153) (2,848)

1,769
(117)
(37)
1,615
(490)
(9)
1,116
-

1,722
(63)
(111)
1,548
(505)
(10)
1,033
19

1,586
(368)
(13)
1205
(395)
(7)
803
17

1,294
(629)
(5)
660
(193)
(7)
460
(213)

1,218
(1,600)
(337)
(719)
146
(5)
(578)
(1)

1,516
(1,037)
(16)
463
(193)
(4)
266
1

1,392
(788)
(5)
599
(186)
(1)
412
(191)

1,116

1,052

822

247

(579)

267

221

127,604 112,587 103,874 103,045 101,138
121,268 106,840 98,370 97,912 96,547
6,336
5,747
5,504
5,133
4,591
1,478
1,446
1,360
1,315
1,165
4,812
4,254
4,096
3,774
3,377
46
47
48
44
49

98,212
93,194
5,018
1,026
3,958
34

99,30094,977
4,323
972
3,340
11

20.0¢
50%
-60.2¢$3.40
1 for 5
$4.88
$2.87

20.0¢
100%
26.9¢
$4.31
$4.20
$2.92

38.0¢
100%
24.2¢
$4.45
$6.38
$3.95

1,353.6 1,308.2 1,054.5
2.1
3.1
3.6
6.0
6.0
6.0

1,019.3
4.0
6.0

971.1
4.5
-

42.0¢
79%
76.3¢
$4.24
$7.28
$5.41

33.0¢
18%
69.9¢
$3.94
$5.75
$3.55

1,478.1 1,446.0
0.7
0.9
-

25.0¢
55.9¢
$3.58
$5.68
$3.78

20.0¢
13.5¢
$3.43
$4.40
$2.53

Dividend reinvestment plan
Share price- interim- final

$5.59
-

$4.40
$6.27

$3.78
$3.73

$3.42
$4.44

$3.58
$2.51

$3.42
$4.46

$4.35
$2.72

Ratios (after abnormal items)
Dividend payout ratio (ordinary & preference)
Return on average shareholders’ equity
Return on average assets
Capital adequacy - total

55.5%
18.3%
0.9%
10.5%

52.1%
17.9%
0.9%
10.9%

50.5%
15.6%
0.8%
11.3%

133.3%
5.0%
0.2%
10.8%

n/a
-11.4%
-0.6%
9.0%

75.6%
5.8%
0.3%
9.9%

160.0%
5.4%
0.2%
8.6%

Other information
Points of representation
Number of employees (full-time equivalents)
Number of shareholders

1,744
1,881
2,026
2,136
2,302
2,367
39,721 39,240 39,642 40,277 43,977 46,261
121,847 114,829 121,070 115,000 112,036 101,188

2,431
48,182
92,606

1

Assets and liablities have been increased by $2,685 million at 30 September 1994 and by $3,112 million at 30 September 1993, due to thechange in practice, effective 1 October 1994, whereby unrealised losses arising from marking to market trading derivative contracts are not offset
against unrealised gains unless a legal right of set-off exists. Comparative information prior to 30 September 1993 is unavailable

27

REVI E W

O F

1 9 9 6R E S U LT S
Overview

Operating Profit*
$M
1200

1116

1000
800
600
400
200
0
-200
-400
-600

91

92

93

94

95

96

*before abnormal items

The 1996 result was built around continued growth of the group’sbusiness, particularly the international operations. Total income was 7%
higher than in 1995, while costs increased by 9% largely reflecting higher
personnel costs. A lower charge for doubtful debts, together with a lower
effective tax rate also contributed to the higher result.
The international operations contributed strongly with a 17% increasein profit. There was strong lending growth, particularly in Asia, and agood contribution from the investment banking activities based in London.
In Australia ANZ achieved solid asset growth, generating increased
interest income notwithstanding a contraction in interest margins in thesecond half. Costs were higher, mainly personnel expenses. The total
charge for doubtful debts was lower, as was the effective tax rate.

Return on Average
Shareholders’Equity*
%
20
18.3

15

28

Australia and New Zealand Banking Group Limited achieved an 8%
increase in operating profit after tax to $1,116 million for the year ended
30 September 1996. There were no abnormal items. The return on
shareholders’ equity increased to 18.3% from 17.6%. Earnings per share
were 11% higher at 76.3 cents and total dividends per share for the year
were 42 cents, up from 33 cents in 1995, an increase of 9 cents.

In New Zealand underlying earnings were stable. The benefits ofgood asset growth were offset by a decline in interest margins.
At year end, the Group had total assets of $128 billion, shareholders’equity of $6.3 billion, and a Tier 1 capital ratio of 6.7%.

10
5
0
-5
-10
-15

91

92

93

94

95

96

*before abnormal items

Improvement in Profitability
$M
122

1300

-310

293
NonInterest
Income

1200
1033

1000

Group Profit

800

-78

21

20

15

1116

Costs Provisioning Tax

Competitive Lower Balance
Sheet
Pressure NonGrowth
Accruals

New Zealand 12%600
Interest Income

400
200
0

International
29%

Australia
59%

1995
Profit1996
ProfitAustralia and New Zealand Banking Group Limited – 1996 Annual Report

IncomeThe Group’s principal source of revenue is net interest income whicharises from the difference between interest revenue and interest expense.
Net interest income grew by 8%. Good lending growth was achievedin all markets; 10% in Australia, 13% in New Zealand and 18% inInternational. Strong growth in retail liabilities was also achieved inAustralia and New Zealand.
However, there was an 8 basis point decline in the Group’s net interest
margin over the year. Lower margins in New Zealand were the principal
cause, although intensifying competitive pressures in Australia, particularlyin the home mortgage market, reduced margins in the second half. In
International, margins were stable.

Operating Income
$M
6000
2096

5000
4000
3317

3000
2000
1000
0

91

Other operating income for the Group came from lending fees, otherbanking fees, foreign exchange earnings, the net profit or loss on securities
and other income which included rental and leasing income.
Fee income grew 5%, principally in international markets which
benefited from a strong performance by the investment banking operationsin London. Other positive factors were growth in Australian corporate
lending fees in the first half and the expansion of the cards business.
Competitive pressure continued to adversely affect retail lending fees inAustralia, notwithstanding the increase in loan volumes.

92

93

94

95

96

Net Int. Income
Non-Int. Income

Operating Expenses
Premises
10.5%

Computer 9%

Growth in the operating lease business in New Zealand and increased
trading profits from London lifted other income. The Group continues
to make good returns on its foreign exchange activities.

29

Operating Expenses
Higher personnel expenses were the main factor in the 9% increase inoperating costs. In Australia, the higher costs reflected additional staff
being employed in the implementation phase of the major change
programs, salary increases from the enterprise bargaining agreement, theeffect of the move to total employment cost packaging for managerial
staff and profit participation for staff. Restructuring expenses occurred
throughout the Group.
Premises costs were down, principally in Australia. The increase incomputer expenses reflected costs associated with the Australian change
program and systems development for the International network andTreasury.
Within “Other Expenses”, revenue related expenses (credit card
interchange costs, operating lease depreciation and brokerage) were 11%
higher, reflecting significant expansion in business volumes, while nonlending losses were 30% lower.

Other
29.4%

Personnel
51.1%

Operating Expenses
as % of Net Income
%
80
75
70
67.3

65
60
55
50

91

92

93

94

95

96

REVI E W

O F

Net Non-Accrual Loans toShareholders’ Equity

R E S U LT S
Asset Quality

Asset quality continued to improve. Gross non-accrual loans fell by $549
million to $1,225 million as the ongoing asset realisation program morethan offset new non-accrual loans. Net non-accrual loans fell to $724
million and represent 11.4% of shareholders’ equity as at September 1996,
down from 18.8% in 1995. The coverage ratio (specific provisions togross non-accrual loans) has increased slightly to above 40%.

%
80
70
60
50
40
30
20
11.4

10
0

1 9 9 6

91

92

93

94

95

96

The total charge to profit for doubtful debts was reduced by 11% to$154 million. While the level of new and increased provisions was stable,
releases and recoveries were lower leading to a higher specific provision
charge of $117 million compared to $63 million in 1995.
The $37 million general provision charge reflected the growth in risk
weighted assets during the year. (The 1995 general provision charge
included an additional $80 million to bolster the general provision). The
general provision remains at 0.8% of risk weighted assets – well in excessof the industry benchmark of 0.5%.

Provisions for
Doubtful Debts$M
2000

Income Tax

1800

The effective tax rate in 1996 was 30.3%, a slight reduction on 32.6% in
1995 (notwithstanding the increase in the Australian corporate tax rate).
Increased levels of tax preferred income in Australia and the favourable
resolution of issues under dispute with tax authorities led to the lower
effective tax rate.

1600
1400

30

1200
1000
800
600
400
154

200
0

91

92

93

94

95

96

Earnings* andDividends# Per Share
¢
90
76.3

60
42

30

0

-30

-60

91

92

Earnings*

93

94

95

Dividends#*before abnormal items#excludes preference shares

96

Dividends
The strong growth in earnings per share to 76.3 cents led Directors toincrease total dividends to 42 cents from 33 cents in 1995. Just over 55%
of Group earnings was distributed to shareholders as dividends.
The interim dividend of 18 cents was 50% franked, and the final
dividend of 24 cents was fully franked at 36% tax rate. The Group expects
to be able to sustain full franking at least for the 1997 financial year.
However, there may be some limit on franking capacity thereafter, if the
proportion of Group profits earned offshore continues to increase.

Australia and New Zealand Banking Group Limited – 1996 Annual Report

Balance Sheet
Total Group assets grew by 13% to $128 billion.
Strong lending growth was achieved across the Group. The strongest
lending growth was achieved in International (18%), particularly in Asia.
In Australia, the 10% lending growth was principally in corporate andhome mortgage lending. In New Zealand, business and home mortgage
lending both contributed to the 13% growth in lending assets.
Wholesale liquid assets also grew strongly, particularly in London.
Good growth in retail deposits was achieved in Australia and
New Zealand, reducing the reliance on wholesale funding and contributing
to the maintenance of interest margins.

Group Assets
$B
128

120
100

94

80
60
40
20
0

91

92

93

94

95

96

Total Assets
Risk Weighted Assets

Capital Resources
ANZ continues to be a very soundly capitalised bank with an overall
capital adequacy ratio of 10.5%. This is in line with ANZ’s domestic andinternational peers. Under the Reserve Bank of Australia (RBA) guidelines,
ANZ must maintain a ratio of qualifying capital to risk weighted assets ofat least 8%.

Group Assets
New Zealand 14%

The Group’s Tier 1 (paid up capital, share reserves and retained profits)
ratio stood at 6.7%, up from 6.6% at September 1995. The Group seeks
to maintain the Tier 1 ratio in the range of 6.5% to 7.0%.

31

Tier 2 capital (principally subordinated debt and general provision
for doubtful debts) increased by 5%. The issue of USD 500 million
subordinated debt more than offset the repayment of NZD 125 million
subordinated debt in December, the amortisation of existing Tier 2 debt,
and the impact of the stronger Australian dollar.
Due to a change in RBA prudential requirements, the Group’s
investments in funds management subsidiaries are now deducted fromthe aggregate of Tier 1 and Tier 2 capital. This resulted in a 0.2% fall in
the capital adequacy ratio.

International
27%

Australia
59%

Capital Adequacy
%
12
10.5

10
*8

6.7

6
*4
2
0

91

92

Tier 1*RBA minima

93

94

95

96

FIN A NC I A L HI G HLI G HTSCU RR E NC I E S
1996

32

I N

1996

K EY

1996

1996

Millions
Profit and loss
Net income
Operating expenses
Profit before tax and doubtful debts
Provisions for doubtful debts - specific- general
Profit before tax and abnormal items
Income tax expense
Outside equity interests
Profit after tax and abnormal items

AUD

USD

GBP

NZD1

5,413
(3,644)
1,769
(117)
(37)
1,615
(490)
(9)
1,116

4,160
(2,800)
1,360
(90)
(28)
1,242
(377)
(7)
858

2,686
(1,809)
877
(58)
(18)
801
(243)
(4)
554

6,138
(4,132)
2,006
(133)
(42)
1,831
(556)
(10)
1,265

Profit after tax by geographic segment
Australia
New Zealand
UK & Europe
Asia PacificSouth Asia2
AmericasMiddle East3
Profit after tax

657
138
106
99
36
38
42
1,116

506
106
81
76
28
29
32
858

326
68
53
49
18
19
21
554

745
156
120
112
41
43
48
1,265

127,604
121,268
6,336

100,986
95,972
5,014

64,59361,386
3,207

144,371
137,202
7,169

76.3¢
42.0¢
$4.24

58.7¢
32.4¢
$3.36

37.9p
20.9p
£2.15

86.5¢
47.7¢
$4.80

Balance Sheet
AssetsLiabilities
Shareholders’ equity4

1

1

Ratios
Earnings per share
Dividends per share - declared rate
Net tangible assets per share
1

USD, GBP and NZD amounts - profit and loss converted at average rates for financial year ended 30 September 1996 and balance sheet
items at closing rates at 30 September 1996
2
Includes Bangladesh, India and Nepal
3
Includes Bahrain, Greece, Jordan, Oman, Pakistan, Qatar and United Arab Emirates
4
Includes outside equity interests

1996
Financial
Statements

33

Table of Contents

Page

Page

Alphabetical index ......................................... 35

35 Contingent liabilities andcredit related commitments .................................. 86

Directors’ report ........................................... 36
Profit and loss accounts ................................. 39
Balance sheets .............................................. 40
Statements of changes inshareholders’ equity ...................................... 41
Statements of cash flows ................................ 43

34

Notes to the financial statements
1 Accounting policies ............................................. 44
2 Income ................................................................ 48
3 Expenses .............................................................. 48
4 Remuneration of auditors .................................... 50
5 Abnormal items ................................................... 50
6 Income tax expense ............................................. 51
7 Dividends ............................................................ 52
8 Earnings per share ................................................ 53
9 Liquid assets ......................................................... 54
10 Due from other banks .......................................... 54
11 Trading securities ................................................. 55
12 Investment securities ............................................ 56
13 Net loans and advances ........................................ 57
14 Impaired assets ..................................................... 58
15 Provisions for doubtful debts ................................ 60
16 Regulatory deposits ............................................. 60
17 Shares in controlled entities and associates ............ 60
18 Other assets .......................................................... 62
19 Premises and equipment ...................................... 63
20 Due to other banks .............................................. 63
21 Deposits and other borrowings ............................. 64
22 Income tax liability .............................................. 65
23 Creditors and other liabilities ............................... 65
24 Provisions ............................................................ 65
25 Bonds and notes ................................................... 66
26 Loan capital ......................................................... 67
27 Outside equity interests ........................................ 68
28 Segment analysis .................................................. 68
29 Notes to the statements of cash flows ................... 70
30 Controlled entities ............................................... 72
31 Associates ............................................................. 77
32 Commitments ...................................................... 78
33 Derivative financial instruments ........................... 78
34 Fair value information .......................................... 84

36 Superannuation commitments .............................. 89
37 Assets and liabilities of non-banking
controlled entities ................................................ 90
38 Financing arrangements ....................................... 90
39 Exchange rates ..................................................... 90
40 Employee share purchase andshare option schemes ........................................... 91
41 Related party disclosures ...................................... 93
42 Remuneration of directors ................................... 96
43 Remuneration of executives ................................ 97
44 US GAAP reconciliation...................................... 98
45 Operation of systems in Year 2000 ..................... 101
46 Events since the end of the financial year ........... 101
Directors’ statement .................................... 102
Auditors’ report .......................................... 103
Financial information
1 Capital adequacy ................................................ 104
2 Average balance sheet and related interest .......... 105
3 Interest spreads and net interest average margins . 107
4 Volume and rate analysis .................................... 108
5 Interest sensitivity gap ........................................ 110
6 Investment securities by maturities and yields ..... 111
7 Loans and advances by industry .......................... 112
8 Concentrations of credit risk .............................. 113
9 Maturity distribution andinterest rate sensitivity of loans ........................... 114
10 Cross border outstandings .................................. 114
11 Doubtful debts - industry analysis ....................... 115
12 Certificates of deposit and term
deposit maturities ............................................... 116
13 Short term borrowings ....................................... 116
Shareholder information
1 Major shareholders ............................................. 117
2 Substantial ordinary shareholders ........................ 117
3 Average size of shareholdings ............................. 117
4 Distribution of shareholdings ............................. 117
5 Voting rights of shareholders .............................. 118
6 Holders of non-marketable parcels ..................... 118
7 Employee shareholder information ..................... 118
8 Directors’ shareholding interests ......................... 118

Alphabetical Index

Page

Page

Abnormal items ......................................................... 50
Accounting policies ................................................... 44
Assets and liabilities of non-banking
controlled entities ...................................................... 90
Associates .................................................................. 77
Auditors’ report ....................................................... 103
Average balance sheet and related interest ................ 105
Average size of shareholdings ................................... 117
Balance sheets ........................................................... 40
Bonds and notes ........................................................ 66
Capital adequacy ..................................................... 104
Certificates of deposit and term
deposit maturities .................................................... 116
Commitments ........................................................... 78
Concentrations of credit risk ................................... 113
Contingent liabilities andcredit related commitments ....................................... 86
Controlled entities ..................................................... 72
Creditors and other liabilities ..................................... 65
Cross border outstandings ........................................ 114
Deposits and other borrowings .................................. 64
Derivative financial instruments ................................. 78
Directors’ report ........................................................ 36
Directors’ shareholding interests ............................... 118
Directors’ statement ................................................. 102
Distribution of shareholdings ................................... 117
Dividends .................................................................. 52
Doubtful debts - industry analysis ............................ 115
Due from other banks ............................................... 54
Due to other banks .................................................... 63
Earnings per share ..................................................... 53
Employee share purchase and shareoption schemes.......................................................... 91
Employee shareholder information .......................... 118
Events since the end of the financial year ................. 101
Exchange rates .......................................................... 90
Expenses ................................................................... 48
Fair value information ............................................... 84
Financial information .............................................. 104
Financing arrangements ............................................. 90
Holders of non-marketable parcels ........................... 118
Impaired assets ........................................................... 58

Income ..................................................................... 48
Income tax expense ................................................... 51
Income tax liability .................................................... 65
Interest sensitivity gap .............................................. 110
Interest spreads and net interest
average margins ....................................................... 107
Investment securities ................................................. 56
Investment securities by maturities and yields .......... 111
Liquid assets .............................................................. 54
Loan capital ............................................................... 67
Loans and advances by industry ............................... 112
Major shareholders .................................................. 117
Maturity distribution andinterest rate sensitivity of loans ................................. 114
Net loans and advances .............................................. 57
Notes to the financial statements ............................... 44
Notes to the statements of cash flows ......................... 70
Other assets ............................................................... 62
Operation of systems in Year 2000 ........................... 101
Outside equity interests ............................................. 68
Premises and equipment ............................................ 63
Profit and loss accounts .............................................. 39
Provisions .................................................................. 65
Provisions for doubtful debts ..................................... 60
Regulatory deposits ................................................... 60
Related party disclosures ........................................... 93
Remuneration of auditors ......................................... 50
Remuneration of directors ........................................ 96
Remuneration of executives ...................................... 97
Segment analysis ........................................................ 68
Shareholder information .......................................... 117
Shares in controlled entities and associates .................. 60
Short term borrowings ............................................ 116
Statements of cash flows ............................................ 43
Statements of changes in shareholders’ equity ............. 41
Substantial ordinary shareholders ............................. 117
Superannuation commitments ................................... 89
Trading securities ...................................................... 55
US GAAP reconciliation ........................................... 98
Volume and rate analysis .......................................... 108
Voting rights of shareholders .................................... 118

35

Directors’ Report

The directors present their report together with theaccounts of the parent entity (the Company) and theconsolidated accounts of the Economic entity for theyear ended 30 September 1996.
The information is provided in conformity with the
Corporations Law.

Activities
The principal activities of the Economic entity during
the year were general banking, mortgage andinstalment lending, life insurance, leasing, hire purchaseand general finance, international and investmentbanking, investment and portfolio management andadvisory services, nominee and custodian services,
stockbroking and executor and trustee services.
There has been no significant change in the natureof the principal activities of the Economic entity during
the financial year.
At 30 September 1996, the Economic entity had
1,744 points of representation.

36

ResultConsolidated operating profit after income tax
attributable to members of the Company was$1,116 million. Further details are contained in the
Chief Executive Officer’s Review and the Review of1996 Results on pages 6 and 7 and pages
28 to 31 respectively of the 1996 Annual Report.

Review of Operations
A review of the operations of the Economic entity
during the financial year and the results of those
operations are contained in the Chairman’s Report, theChief Executive Officer’s Review, the Review of 1996
Results and in the financial statements.
State of Affairs
In the directors’ opinion, there have been no
significant changes in the state of affairs of the
Economic entity during the financial year, other than:Net loans and advances increased by 11% from
$68,216 million to $75,901 million, primarily from
non-housing term loan growth of $6,087 million.
Deposits and other borrowings increased by 13% from$70,238 million to $79,709 million.
The charge for provisions for doubtful debts
reduced by 11% to $154 million. New and increased
specific provisions were $292 million and releases andrecoveries totalled $175 million. The charge for thegeneral provision reduced from $111 million in 1995 to$37 million for 1996. Gross non-accrual loans fell to$1,225 million, or 1.6% of net loans and advances, from
$1,774 million at 30 September 1995.
ANZ Grindlays Bank plc, a wholly owned
subsidiary, changed its place of incorporation from theUnited Kingdom to Australia on 22 July 1996 and was
renamed ANZ Grindlays Bank Limited on that date.

Dividends
The directors propose payment of a final dividend of
24 cents per ordinary fully paid share, fully franked at
36%, to be formally declared on 16 December 1996
and to be paid on 15 January 1997. The proposed
payment amounts to $355 million.

ANZ Grindlays Bank Limited has been granted an

Since the end of the previous financial year, theagencies, Moody’s Investor Services and Standard andfollowing partially franked dividends on fully paid

authority under the Banking Act of Australia and issubject to the supervision of the Reserve Bank ofAustralia.
During the year the Economic entity’s credit ratings
were upgraded to “AA” status by United States rating
Poors.
While the above matters are those considered to beordinary shares have been paid:

significant changes in the state of affairs, reviews of
Type

Final
InterimCents pershare

Amount before
bonus option$mDate ofpayment

260
264

17 Jan 1996
8 July 1996

18
18

The final dividend paid on 17 January 1996 was detailed
in the directors’ report dated 1 December 1995.
Neither the interim dividend paid on 8 July 1996 nor
the current proposed dividend have been mentioned inprevious directors’ reports.

matters affecting the Economic entity’s state of affairs
are contained in the Chairman’s Report, the Chief
Executive Officer’s Review, the Review of 1996
Results and the financial statements.

Directors’ Report

Events since the End of the Financial Year
No item, transaction or event of a material and unusual
nature has arisen between 30 September 1996 and thedate of this report that has significantly affected or may
significantly affect the operations of the Economic
entity, the results of those operations or the state ofaffairs of the Economic entity in subsequent years.
Future Developments
Details of likely developments in the operations of the
Economic entity in subsequent financial years arecontained in the Chairman’s Report and the Chief
Executive Officer’s Review on pages 4 and 5 and pages
6 and 7 respectively of the 1996 Annual Report.
In the opinion of the directors, disclosure of any
further information would be likely to result in
unreasonable prejudice to the Economic entity.

Rounding of Amounts
The Company is a company of the kind referred to in
the Australian Securities Commission class order
94/1253, issued on 17 August 1994 pursuant to section
313(6) of the Corporations Law. As a result, amounts
in this report and the accompanying financial
statements have been rounded to the nearest million
dollars except where otherwise indicated.
Shareholdings
The directors’ interests, beneficial and non-beneficial,in the shares of the Company are detailed on page 118.
The directors are not aware of any single beneficial
interest of five per cent or more in the share capital of
the Company.

The Company is of the kind referred to in classorder 94/284 issued by the Australian Securities
Commission on 8 March 1994 under which thedirectors are relieved from the need to disclose thenames of employees and relevant details in respect of
options granted to those employees under the schemes.
The directors have availed themselves of the relief
granted under this class order.
The names of all persons who currently holdoptions granted under the schemes are entered in theregister kept by the Company pursuant to section
216C of the Corporations Law and the register may beinspected free of charge.
No person entitled to exercise any option has orhad, by virtue of the option, a right to participate inany share issue of any other body corporate.
Further details on the ANZ Group Share Option
Scheme are contained in Note 40 of the financial
statements and form part of this report.

Directors’ Share and Option Purchase Scheme
At the date of this report, there are 100,000
unexercised options over ordinary shares of $1 each atan exercise price of $3.43 per share with an expiry dateof 1 March 1998 or 90 days after cessation of adirector’s term of office, whichever is the earlier.
50,000 partly paid shares were issued during theyear ended 30 September 1996. In addition 100,000
fully paid shares were issued during the year upon theexercise of options.
Details of directors’ shareholdings interests are setout on page 118 of the Shareholder Information sectionof the 1996 Annual Report.

Share Options
ANZ Group Share Option Scheme
At the date of this report, there are 7,445,000
outstanding options at an exercise price of $5.34 pershare. The options held by current employees cannot
be exercised earlier than three years from the date ofissue or later than 30 January 1999 and may only be
exercised if the basic earnings per share of the Company(before abnormal items) for the relevant one of thefinancial years ending 30 September 1996, 1997 or
1998 are at least 50% over the equivalent figure for the
1993 financial year. 185,000 options were exercisedand 185,000 shares issued since the end of the financial
year, in accordance with the Rules of the Scheme.

Directors, their Qualifications and Experience
The Board includes nine non-executive directors who
have a diversity of business and community experienceand three directors with executive responsibilities who
have extensive banking experience. The names,
qualifications and experience of the directors who are
in office at the date of this report are contained on
pages 18 and 19 of the 1996 Annual Report.
Special responsibilities and attendance at meetings,
are shown on pages 20 and 21 of the 1996 Annual
Report.

37

Directors’ Report

38

Directors’ Benefits
No director has, during or since the end of the financial
year, received or become entitled to receive a benefit(other than a benefit included in the aggregate amountof emoluments received, or due and receivable, bydirectors shown in the Company’s financial statements
for the financial year or the fixed salary of a full-time
employee of the Company, or an entity controlled by
the Company, or a body corporate that was related to
the Company at a relevant time) because of a contractthat the director, or a firm of which the director is amember, or an entity in which the director has asubstantial financial interest, has made with theCompany or an entity that the Company controlled, ora body corporate that was related to the Company,
when the contract was made or when the director
received, or became entitled to receive the benefit,
with the exception of benefits which may arise
pursuant to the subscription by a director for shares
under the Directors’ Share and Option Purchase
Scheme or benefits that may be deemed to have arisen
because legal fees have been paid or are payable toCorrs Chambers Westgarth of which J C Dahlsen is aconsultant.
Further details are set out in note 41 to the financial
statements dealing with Related Party Disclosures.

Directors’ and Officers’ Indemnity
Article 143 provides that to the extent permitted by the
Corporations Law “every director, secretary or
employee of the Company shall be entitled to beindemnified by the Company against all costs, charges,
losses, expenses and liabilities incurred by him in theexecution and discharge of his duties or in relation
thereto”. The Corporations Law prohibits a company
from indemnifying directors, secretaries, executive
officers and auditors for liabilities except for a liability
to a party, other than the Company or a related body

corporate, where the liability arises out of conduct
involving good faith, and for costs and expenses
incurred in defending proceedings in which the officer
or auditor is successful. An indemnity for officers or
employees, who are not directors, secretaries or
executive officers, is not expressly restricted by the
Corporations Law.
In addition to its obligations under Article 143, itis the policy of the Company to:(a) indemnify, in the same terms as Article 143,
directors, secretaries and executive officers ofrelated bodies corporate; and(b) indemnify other employees of related bodies
corporate for all liability incurred,
where they are acting in good faith in furtherance ofthe objectives of the Company and its related bodies
corporate.
The directors, the secretaries of the Company,
being D T Craig, R T Jones and J E Clark, andexecutive officers of the Company have the benefit of
the indemnity in Article 143.
During the financial year, and again since the endof the financial year, the Company has paid a premium
for an insurance policy for the benefit of the directors,
secretaries as named above and executive officers of theCompany, and directors, secretaries and executive
officers of related bodies corporate of the Company. In
accordance with common commercial practice, theinsurance policy prohibits disclosure of the nature of
the liability insured against and the amount of thepremium.
Except for the above, during the financial year andsince the end of it, no person has been indemnified nor
has the Company or a related body corporate of theCompany made an agreement for indemnifying any
person who is or has been an officer or auditor of theCompany or of a related body corporate.

Signed in accordance with a resolution of the directors.

Charles B GoodeD P Mercer

Chairman

Chief Executive Officer

29 November 1996Australia and New Zealand Banking Group Limited and Controlled Entities
Profit and Loss Accounts for the year ended 30 September 1996

Note

1996
$M

Consolidated
1995
$M

1994
$M

Interest income
Interest expense

2
3

9,286
(5,969)8,310(5,229)6,485(3,685)

5,974(4,037)5,230(3,546)

Net interest income
Other operating income

2

3,317
2,096

3,081
1,975

2,800
1,969

1,937
1,994

1,684
1,447

Operating income
Operating expenses

3

5,413
(3,644)

5,056(3,334)

4,769(3,183)

3,931(2,574)3,131(2,303)Operating profit before
debt provisions and abnormal items
Provisions for doubtful debts

3

1,769
(154)

1,722
(174)

1,586
(381)

1,357
(110)

828
(149)

Operating profit before abnormal items
Abnormal profit

5

1,615
-

1,548
-

1,205
17

1,247
-

679
-

1,615

1,548

1,222

1,247

679

Operating profit

The Company
1996
1995
$M
$M

Income tax (expense)benefit
Operating profit
Abnormal items

6
5

(490)
-

(505)
19

(395)
2

(224)
-

(271)
22

Income tax expense

6

(490)

(486)

(393)

(224)

(249)

Operating profit after income tax
Outside equity interests

1,125
(9)

1,062
(10)

829
(7)

1,023
-

430
-

Operating profit after income tax
attributable to members of the Company

1,116

1,052

822

1,023

430

Retained profits at start of year

1,106

585

198

317

337

Total available for appropriation
Transfers (to)from reserves
Dividends provided for or paid
Ordinary shares
Preference shares

2,222
(55)

1,637
(27)

1,020
(42)

1,340
15

767
46

(584)
-

(424)
(80)

(313)
(80)

(574)
-

(416)
(80)

1,583

1,106

585

781

317

76.3
76.3

68.5
69.9

54.5
55.9

7

Retained profits at end of year
Earnings per share(cents)
Before abnormal items
After abnormal items

8

The notes appearing on pages 44 to 101 form an integral part of these financial statements

39Australia and New Zealand Banking Group Limited and Controlled Entities
Balance Sheets as at 30 September 1996

Note

AssetsLiquid assets
Due from other banks
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Due from controlled entities
Regulatory deposits
Shares in controlled entities and associates
Other assets
Premises and equipment

9
10
11
12
13

The Company
1996
1995
$M
$M

6,901
11,3527,334
2,570
75,901
14,013
1,163
10
6,340
2,020

5,054
8,759
5,785
2,833
68,216
12,646
1,174
10
6,119
1,991

4,784
8,258
6,157
910
48,086
13,307
6,251
612
4,769
4,196
480

2,472
5,352
4,840
832
41,686
11,766
6,066
553
5,004
3,796
403

127,604

112,587

97,81082,77012,68279,70914,013
575
7,471
954
2,264
3,600

11,161
70,23812,646
652
6,481
862
1,579
3,221

11,36350,443
13,307
4,310
301
5,551
785
2,264
3,196

9,499
42,776
11,766
3,068
285
4,731
667
1,579
2,699

121,268

106,840

91,52077,070Net assets

6,336

5,747

6,290

5,700

Shareholders’ equity
Issued and paid-up capital
Reserves
Retained profits

1,478
3,229
1,583

1,446
3,148
1,106

1,478
4,031
781

1,446
3,937
317

6,290
46

5,700
47

6,290
-

5,700
-

6,336

5,747

6,290

5,700

16
17
18
19

Total assets
Liabilities
Due to other banks
Deposits and other borrowings
Liability for acceptances
Due to controlled entities
Income tax liability
Creditors and other liabilities
Provisions
Bonds and notes
Loan capital

20
21

22
23
24
25
26

Total liabilities

40

Consolidated
1996
1995
$M
$M

Share capital and reserves attributable tomembers of the Company
Outside equity interests

27

Total shareholders’ equity and outside
equity interests
Commitments
Derivative financial instruments
Contingent liabilities and credit related
commitments

32
33
35

The notes appearing on pages 44 to 101 form an integral part of these financial statements

Australia and New Zealand Banking Group Limited and Controlled Entities
Statements of Changes in Shareholders’ Equity for the year ended 30 September 1996

1996
$M

Consolidated
1995$M

Authorised capital
2,100,000,000 shares of $1 each
1,000,000,000 preference shares of $0.01 each

2,100
10

2,100
10

2,100
10

2,100
10

2,100
10

Total authorised capital

2,110

2,110

2,110

2,110

2,110

1,446
-

1,360
(6)

1,315
-

1,446
-

1,360
(6)

23
3
6
#
#

129
(100)
47
2
11
3
#

34
2
5
4
#

23
3
6
#
#

129
(100)
47
2
11
3
#

Total issued and paid-up capital

1,478

1,446

1,360

1,478

1,446

Share premium reserve
Balance at start of year
Premium on issue of shares
Conversion of preference shares
Share buy-back

2,516
121
-

2,905
621
(594)
(416)

2,783
122
-

2,516
121
-

2,905
621
(594)
(416)

Total share premium reserve

2,637

2,516

2,905

2,637

2,516

Asset revaluation reserve
Balance at start of year
Revaluation of investments in controlled entities
Transfer to retained profits

-

-

-

1,143
24
(15)

574
615
(46)

Total asset revaluation reserve

-

-

-

1,152

1,143

(88)

(87)

142

223

225

(95)

(1)

(229)

(36)

(2)

Total foreign currency translation reserve

(183)

(88)

(87)

187

223

General reserve
Balance at start of year
Transfers from retained profits

571
55

544
27

502
42

55
-

55
-

Total general reserve

626

571

544

55

55

Capital reserve

149

149

149

-

-

Total reserves

3,229

3,148

3,511

4,031

3,937

Issued and paid-up capital
Balance at start of year
Conversion of preference shares
Ordinary shares1
Shares issued on conversion of preference shares
Share buy-backDividend reinvestment plan2
Employee share purchase scheme3
Bonus option plan4
Senior officers’ share purchase scheme5
Directors’ share and option purchase scheme6

Foreign currency translation reserve
Balance at start of year
Currency translation adjustments,
net of hedges after tax

1994
$M

The Company
1996
1995
$M
$M

41

Australia and New Zealand Banking Group Limited and Controlled Entities
Statements of Changes in Shareholders’ Equity for the year ended 30 September 1996

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

1,106

585

198

317

337

1,116

1,052

822

1,023

430

2,222
(55)

1,637
(27)

1,020
(42)

1,340
15

767
46

(584)
-

(424)
(80)

(313)
(80)

(574)
-

(416)
(80)

Retained profits at end of year

1,583

1,106

585

781

317

Total shareholders’ equity attributable tomembers of the Company

6,290

5,700

5,456

6,290

5,700

1996

The Company
1995

Note

Retained profits
Balance at start of year
Operating profit after income tax
attributable to shareholders of the Company
Total available for appropriation
Transfers (to)from reserves
Dividends provided for or paid
Ordinary shares
Preference shares

Number of issued shares

42

7

Ordinary shares of $1 each fully paid
Ordinary shares of $1 each paid to 10 cents per shareNon-redeemable non-cumulative 13.25% converting
preference shares of $1 each fully paid

1,478,089,641
687,500

Total number of issued shares

1,478,777,141

-

1994

1,446,047,877 1,353,580,687
929,500
2,103,000-

6,000,000

1,446,977,377 1,361,683,687

The notes appearing on pages 44 to 101 form an integral part of the financial statements# Amounts less than $500,000
61
Directors’ share and option purchase scheme
The purpose of the issues of ordinary shares was toissue of sharesstrengthen the Economic entity's capital base and to raise
50,000 ordinary shares at $6.20 per share (partly paid to $0.10)
funds for general purposes
2
50,000 ordinary shares at $3.44 per share (on exercise of options)
Dividend reinvestment plan issues were
50,000 ordinary shares at $4.09 per share (on exercise of options)
12,904,287 ordinary shares at $6.27 per shareissue proceeds from conversion of partly paid to fully paid
9,759,336 ordinary shares at $5.59 per share3
50,000 ordinary shares at $3.75 per share
Employee Share Purchase Scheme issues were
50,000 ordinary shares at $4.09 per share
2,791,459 ordinary shares at $4.96 per share
50,000 ordinary shares at $6.20 per share
358,024 ordinary shares at $4.80 per share
4
Total uncalled capital at 30 September 1996 was $3.2 million,
Bonus option plan issues werecomprising capital of $0.6 million and share premium of $2.6 million
3,473,973 ordinary shares at $6.27 per share
2,311,685 ordinary shares at $5.59 per share
5
Senior officers’ share purchase scheme
issue of shares
51,000 ordinary shares at $6.20 per shareissue proceeds from conversion of partly paid to fully paid
3,000 ordinary shares at $3.42 per share
10,000 ordinary shares at $3.44 per share
27,000 ordinary shares at $3.75 per share
10,000 ordinary shares at $4.85 per share
10,000 ordinary shares at $4.90 per share
3,000 ordinary shares at $4.93 per share
5,000 ordinary shares at $5.04 per share
28,000 ordinary shares at $5.20 per share
3,000 ordinary shares at $5.26 per share
16,000 ordinary shares at $5.36 per share
17,000 ordinary shares at $5.42 per share
10,000 ordinary shares at $5.46 per share

Australia and New Zealand Banking Group Limited and Controlled Entities
Statements of Cash Flows for the year ended 30 September 1996

Note

1996
$M

Consolidated
1995
$M

1994
$M

Inflows/(Outflows)

Cash flows from operating activities
Interest received
Dividends received
Fees and other income received
Interest paid
Personnel expenses paid
Premises expenses paid
Other operating expenses paid
Income taxes paid
Net (increase)decrease in trading securities

The Company
1996
1995
$M
$M
Inflows/(Outflows)

9,458
111
1,946
(6,136)(1,850)(351)(1,134)(353)(1,595)

7,945
4
1,918
(4,864)(1,618)(362)(1,118)(153)(1,222)

6,446
5
1,919
(3,789)(1,459)(362)(1,058)
(160)
852

6,061
516
1,490
(4,101)(1,309)
(333)
(755)
(79)
(1,339)

5,035
8
1,423
(3,299)(1,115)
(364)
(727)
(12)
(1,678)

96

530

2,394

151

(729)

(171)
(28)
(8,269)-(1,801)(291)(7,487)
(6)

(646)
107
(5,114)
-

(562)
(61)
(6,769)480(1,584)(27)(3,798)56(2,166)2,381(6,949)8,573(13,747)
13,252(718)
609(4,875)
6,491

13
14

(81)
14

12
23

(198)
-

(22)
-

(412)
104
(954)

(361)
69
(44)

(269)
373
464

(202)
5
(1,832)

(95)
16
335

(9,488)(8,364)(5,545)(9,248)(3,503)

2,094
10,109
879

520
6,080
(186)

570
3,839
259

2,395
7,959
929
653

780
3,385
(1,109)
83

1,427
(655)

655
(578)

547
(592)

1,427
(655)

655
(578)

634
(110)
(8)
(354)
18
-

165
(8)
(241)
19
(516)

353
(271)
(2)
(198)
31
-

634
(343)
18
-

(233)
19
(516)

Net cash provided by financing activities

14,034

5,910

4,536

13,0172,486

Net cash provided by(used in) operating activities
Net cash used in investing activities
Net cash provided by financing activities

96(9,488)14,034530(8,364)
5,910

2,394
(5,545)
4,536

151(9,248)13,017(729)(3,503)
2,486

Net increase(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign currency translation on opening balances

4,642
7,079
(475)

(1,924)
9,092
(89)

1,385
9,080
(1,373)

3,920
3,238
(354)

(1,746)
5,044(60)

29(b) 11,246

7,079

9,092

6,804

3,238

Net cash provided by(used in)operating activities
Cash flows from investing activities
Net (increase)decrease
Due from other banks
Regulatory deposits
Loans and advances
Shares in controlled entities and associates
Investment securities
Purchases
Proceeds from sale or maturity
Controlled entities
Purchased (net of cash acquired)Proceeds from sale (net of cash disposed)
Premises and equipment
Purchases
Proceeds from sale
Other
Net cash used in investing activities
Cash flows from financing activities
Net increase(decrease)
Due to other banks
Deposits and other borrowings
Due from/to controlled entities
Creditors and other liabilities
Bonds and notes
Issue proceeds
Redemptions
Loan capital
Issue proceeds
Redemptions
Decrease in outside equity interests
Dividends paid
Share capital issues
Share buy-backCash and cash equivalents at end of year

29(a)

29(c)

The notes appearing on pages 44 to 101 form an integral part of these financial statements

43

Notes to the Financial Statements

1: Accounting Policies
This general purpose financial report complies withthe accounts provisions of the Banking Act,applicable Australian Accounting Standards, theaccounts provisions of the Corporations Law andUrgent Issues Group Consensus Views. The
accounting policies are consistent with thoseadopted in the prior year.
The financial statements also include disclosuresrequired by the United States Securities andExchange Commission in respect of foreign
registrants.
(i) Bases of accounting
These financial statements have been prepared inaccordance with the historical cost convention
except where otherwise stated.
The carrying values of all non-current assets
have been assessed and are not in excess of theirrecoverable amounts. In assessing recoverable
amounts, the relevant cash flows have not been
discounted to their present value.

44(ii) Consolidation
The financial statements of the Economic entity area consolidation of the financial statements ofAustralia and New Zealand Banking Group
Limited (the Company) and its controlled entities
listed in note 30.
Where controlled entities have been sold or
acquired during the year, their operating results
have been included to the date of disposal or fromthe date of acquisition.
(iii) Goodwill
Goodwill, representing the excess of the purchaseconsideration over the fair value of the identifiable
net assets of a controlled entity at the date ofgaining control, is recognised as an asset andamortised on a straight line basis over the period
during which the benefits are expected to arise, notexceeding 20 years.
The unamortised balance of goodwill and theperiod of amortisation are reviewed annually.
Where the balance exceeds the value of expected
future benefits, the difference is charged to the
profit and loss account.
(iv) Shares in controlled entities and associates
Shares in controlled entities are revalued annuallybased on the net tangible assets of the entity.
Associates are accounted for by the cost
method. Supplementary equity financial statements
are not prepared as the impact is immaterial.

(v) Foreign currency
All amounts are expressed in Australian dollars,
unless otherwise stated.
Revenues and expenses of overseas branches
and controlled entities are translated at averageexchange rates for the year, while assets andliabilities are translated at the mid-point rates of
exchange ruling at balance date.
Net translation differences arising from thetranslation of overseas branches and controlled
entities considered to be self-sustaining operations
are included in the foreign currency translation
reserve, after allowing for those positions hedged
by foreign exchange contracts and related currency
borrowings.
Assets and liabilities denominated in foreign
currencies are translated into Australian dollars at
the rates of exchange ruling at balance date.
It is the Economic entity’s general policy inrespect of trading risk to maintain a substantiallymatched position in foreign currencies, and thetotal amount of unmatched foreign currency assets
and liabilities and consequent foreign currency
exposures are not material.
(vi) Comparative figures
Where necessary, amounts shown for the previous
year have been reclassified to facilitate comparison.
(vii) Rounding of amounts
The Company is a company of the kind referred toin the Australian Securities Commission class order
94/1253, dated 17 August 1994. Consequently,
amounts in the financial statements have beenrounded to the nearest million dollars except whereotherwise indicated.
(viii) Life insurance business
The Economic entity conducts life insurance
business through ANZ Life Assurance Company
Limited (ANZ Life). The Economic entity’s
financial statements include its interest in theactuarially assessed surplus of ANZ Life’s statutory
funds for the year, after allowing for increases inpolicyholder reserves determined on a realistic
basis. The result for the year of $55 million(1995: $52 million) has been included in the profit
and loss account and then transferred to generalreserve within the consolidated financial statements
until available for distribution under therequirements and restrictions of the Life Insurance
Act 1995 and statutory accounting practices.

Notes to the Financial Statements

The Economic entity’s interest in theaccumulated retained earnings of the life insurance
statutory funds of $354 million(1995: $302 million), together with the net assetsof the shareholders’ funds of ANZ Life, areincluded within the balance sheet of the Economic
entity.
Due to the provisions of the Life Insurance Act
1995, the assets of the life insurance statutory funds
attributable to policyholders of ANZ Life do notform part of the assets to which the Economic
entity is entitled and are therefore not consolidated.
(ix) Funds under management
The Company and certain of its controlled entities
act as trustee and/or manager for a number ofinvestment funds and trusts including retirement
funds, mortgage funds, approved deposit funds, andequity and property unit trusts. The value of funds
under management by the Economic entity
exceeds $12 billion (1995: $10 billion). These
funds have not been consolidated as the Company
does not have direct or indirect control of thefunds.
Where the Company or its controlled entities
incur liabilities in respect of these operations astrustee, a right of indemnity exists against the assetsof the applicable funds or trusts, and as these assets
are sufficient to cover liabilities and it is therefore
not probable that the Company or its controlled
entities will be required to settle the liabilities, theliabilities are not included in the financial
statements. Commissions and fees earned in
respect of the Economic entity’s trust activities areincluded in the profit and loss account.
(x) Income tax
The Economic entity adopts the liability method of
tax effect accounting whereby income tax expense
is calculated based on accounting profit adjusted
for permanent differences. Permanent differences
are items of revenue and expense which arerecognised in the profit and loss account but are
not part of taxable income or vice-versa. Generalprovisions for doubtful debts are treated aspermanent differences as the provisions do not
relate to specific accounts for which a tax
deduction would be available in the event of a loss.
Future tax benefits and deferred tax liabilities
relating to timing differences and tax losses arecarried forward at tax rates applicable to future
periods. Future tax benefits relating to tax losses
are only carried forward where realisation of thebenefit is considered virtually certain.

Provision for Australian income tax is madewhere the earnings of overseas controlled entities
are subjected to Australian tax under theattribution rules for the taxation of foreign sourced
income. Otherwise, no provision is made foroverseas withholding tax or Australian income tax
which may arise on repatriation of earnings fromoverseas controlled entities, where it is expected
these earnings will be retained by those entities tofinance their ongoing business.
(xi) Trading securities
Securities held for trading purposes are recorded atmarket value. Unrealised gains and losses onrevaluation are taken to the profit and loss account.
(xii) Investment securities
Investment securities are those which the
Economic entity purchased with the positive intent
and ability to hold until maturity. Such securities
are recorded at cost or at cost adjusted foramortisation of premiums or discounts. Premiums
and discounts are capitalised and amortised fromdate of purchase to maturity. Interest and dividend
income is accrued.
Changes in market values of securities are nottaken into account unless there is considered to bea permanent diminution in value.
(xiii) Net loans and advances
Net loans and advances include direct financeprovided to customers such as bank overdrafts,
credit cards, term loans, lease finance, hire purchasefinance and commercial bills.
Overdrafts, credit cards and term loans arecarried at principal balances outstanding. Intereston amounts outstanding is accounted for on an
accruals basis.
Finance leases and hire purchase contracts areaccounted for using the finance method whereby
income is taken to account progressively over thelife of the lease or the contract in proportion to theoutstanding investment balance.
Investments in leveraged leases are recorded at
an amount equal to the investment participation,and income is taken to account on an actuarial
basis over the term of each lease.
Customer financing through redeemablepreference shares is included within net loans andadvances. Dividends received on redeemablepreference shares are taken to the profit and loss
account as part of interest income.

45

Notes to the Financial Statements(xiv) Bad and doubtful debts
Specific provisions are maintained to coveridentified doubtful debts.
General provisions are maintained for losses
which, although not specifically identified, are
known from experience to be inherent in any
asset portfolio. The level of the general provision
is determined having regard to economic
conditions, the level of on and off-balance sheet
assets and other general risk factors.
All known bad debts are written off in theyear in which they are identified.
Provisions for doubtful debts are deductedfrom loans and advances in the balance sheet.

46(xv) Credit assessment
All loans are subject to regular scrutiny and gradedaccording to the level of credit risk. Loans areclassified as either productive or non-accrual. The
Economic entity has adopted the Reserve Bank ofAustralia Impaired Assets Guidelines in assessing
non-accrual loans. Non-accrual loans include
loans where the accrual of interest and fees hasceased due to doubt as to full recovery, and loansthat have been restructured with an effective yield
below the Economic entity's average cost of funds
at the date of restructuring. A specific provision israised to cover the expected loss, where fullrecovery of principal is doubtful.
Restructured loans are loans with an effective
yield above the Economic entity's cost of funds
and below the yield applicable to a customer of
equal credit standing.
Cash receipts on non-accrual loans are, in theabsence of a contrary agreement with thecustomer, applied as income or fees in priority to
being applied as a reduction in principal, except
where the cash receipt relates to proceeds from thesale of security.
(xvi) Leasing
Leases entered into by the Economic entity as
lessee are predominantly operating leases, and theoperating lease payments are included in the profit
and loss account in equal instalments over thelease term.
Assets relating to operating leases entered intoby the Economic entity as lessor are included
within Premises and equipment with rental
income and depreciation separately classified inincome and expense.
(xvii) Premises and equipment
Premises and equipment (including computerequipment) are carried at cost less depreciation oramortisation, or at valuation. Any surplus onrevaluation of a class of assets is credited directly tothe asset revaluation reserve. Where a deficit
arises, this is debited to the asset revaluation

reserve to the extent of any previous revaluation
surplus for that class, and the excess debited to the
profit and loss account. Potential capital gains tax
arising from revaluations is not taken into accountas the Economic entity has no current intention todispose of the subject properties.
Valuations of premises are assessed annually byofficers of the Economic entity. All premises overa specified value are also subject to externalvaluation at least once every three years byindependent valuers. Valuations are based on theestimated open market value and assume that thepremises concerned continue to be used in their
existing manner by the Economic entity.
The directors carried out a valuation in
September 1996 supported by independent andofficer valuations. The market value of premises
exceeded the book value by $55 million. This
excess has not been booked in the financial
statements.
Profit or loss on the disposal of premises andequipment is determined as the difference between
the carrying amount of the assets at the time ofdisposal and the proceeds of disposal, and isincluded in the results of the Economic entity inthe year of disposal.
Assets other than freehold land are depreciatedat rates based upon their expected useful economic
lives, using the straight line method. Leasehold
improvements are amortised on a straight line basis
over the remaining period of each lease.
(xviii) Property held for resale
Property held for resale comprises properties heldfor development and sale. These are recorded at
the lower of net investment level or estimatedrealisable value.
To determine estimated realisable value,estimated future cash flows associated with eachdevelopment are expressed in present value terms
using an appropriate discount rate.
Marketing and holding costs such as interest,
rates and taxes associated with each development
are not capitalised (except in the case of selectedmajor developments and only then to the extent
that they are considered recoverable).
Other development costs are capitalised to theextent that they enhance the value of thedevelopment and to the extent they are considered
to be recoverable.
Profit is recognised on sale of a development,
or in the case of multi-staged developments, whenthe value of the sales in a particular stage equals or
exceeds 30% of the total value of lots available forsale in that stage; until that time the profit is offset
against inventory value. Sales are recognised atdate of settlement, or when a deposit (normally10%) is received and it is virtually certain that
settlement will proceed.

Notes to the Financial Statements(xix) Acceptances
Commercial bills accepted but not held in portfolio
are accounted for and disclosed as a liability with acorresponding contra asset.
The Economic entity’s own acceptances
discounted are held as part of either the trading
securities portfolio or the loan portfolio, dependingon whether, at the time of such discount, theintention was to hold the acceptances for resale oruntil maturity.
(xx) Derivative financial instruments
Derivative financial instruments include foreignexchange contracts, forward rate agreements,
interest rate and currency swaps, futures andoptions.
Trading derivative financial instruments,
comprising derivatives entered into for customerrelated or proprietary reasons or for hedging the
trading portfolio, are measured at fair value and all
gains and losses are taken to the profit and loss
account.
Fair value losses arising from trading derivative
financial instruments are not offset against fair value
gains unless a legal right of set-off exists.
Derivative financial instruments designated,and effective, as hedges of underlying non-trading
exposures are accounted for on the same basis as
the underlying exposures.
Gains and losses resulting from the terminationof a derivative instrument that was designated as ahedge of non-trading exposures are deferred andamortised over the remaining period of theoriginal term covered by the terminated instrument
where the underlying exposure still exists. Where
the underlying exposure no longer exists, the gains
and losses are recognised in the profit and loss
account.
Gains and losses on derivative financial
instruments related to hedging exposures arisingfrom anticipated transactions are deferred andrecognised in the financial statements when the
anticipated transaction occurs. These gains andlosses are deferred only to the extent that there is
an offsetting unrecognised (unrealised) gain or loss
on the exposures being hedged. Deferred gains
and losses are amortised over the expected term of
the hedged exposure.
(xxi) Cash and cash equivalents
For the purpose of the statements of cash flows,
cash and cash equivalents include liquid assets andamounts due from other banks with original term
to maturity of 90 days or less.

(xxii) Repurchase agreements
Securities sold under repurchase agreements are
retained in the financial statements and acounterparty liability is disclosed under theclassifications of Due to other banks or Deposits andother borrowings. The difference between the saleprice and the repurchase price is amortised over thelife of the repurchase agreement and charged tointerest expense in the profit and loss account.
Securities purchased under agreements to resell
are recorded as Liquid assets, Net loans andadvances, or Due from other banks, depending on
the term of the agreement and the counterparty.
(xxiii) Superannuation commitments
Contributions, which are determined on an
actuarial basis, to superannuation schemes arecharged to personnel expense in the profit and loss
account.
Any aggregate deficiencies arising from theactuarial valuations of the Economic entity’s defined
benefit schemes have been provided for in thefinancial statements.
The assets and liabilities of the schemes havenot been consolidated as the Company does nothave direct or indirect control of the schemes.
(xxiv) Employee entitlements
The amounts expected to be paid in respect of
employees’ entitlements to annual leave are accrued
at current salary rates including on costs. Liability
for long service leave is accrued in respect of all
applicable employees at the present value of future
amounts expected to be paid.

47

Notes to the Financial Statements

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

Interest income
From other banks
On regulatory deposits
On trading and investment securities
On loans and advances
Dividends from redeemable preference share finance
Other

766
25
754
7,320
9
412

661
43
698
6,502
2
404

516
33
566
5,080
7
283

525
14
480
4,381
216

410
30
419
3,744
191

From controlled entities

9,286
-

8,310
-

6,485
-

5,616
358

4,794
436

Total interest income

9,286

8,310

6,485

5,974

5,230

Other operating income(i) Fee income
Lending
Other

550
854

537
801

559
763

440
571

420
493

From controlled entities

1,404
-

1,338
-

1,322
-

1,011
269

913
268

Total fee income

1,404

1,338

1,322

1,280

1,181

231

226

222

132

130

113
36
116
55

96
33
89
52

126
34
61
42

8
80
28
-

2
60
43
-

6
7
10
118

13
14
4
110

12
(21)
171

6
3
457

(8)
26
3
10

692

637

647

714

266

2,096

1,975

1,969

1,994

1,447

-

-

19

-

-

11,382

10,285

8,473

7,968

6,677

2: Income48(ii) Other income
Foreign exchange earnings
Foreign exchange gains on hedges ofinvestments in controlled entities
Profit on trading instruments
Rental income
Operating lease income
Life insurance fund surplus
Development ventures
IncomeDiminution in value
Profit on sale of premises and equipment
Other1
Total other income
Total other operating income
Abnormal items (refer note 5)
Total income
1

Includes dividend income of $111 million (1995: $4 million) for the Economic entity and $516 million (1995: $8 million) for
the Company. The Company's dividends include dividends received from controlled entities of $405 million (1995: $8 million)

3: Expenses
Interest expense
To other banks
On deposits
On borrowing corporations’ debt
On commercial paper
On bonds and notes
On loan capital
Other

862
3,826
520
247
134
245
135

809
3,271
490
179
114
254
112

637
2,146
472
88
61
207
74

694
2,498
109
134
210
107

647
2,116
59
114
217
97

To controlled entities

5,969
-

5,229
-

3,685
-

3,752
285

3,250
296

Total interest expense

5,969

5,229

3,685

4,037

3,546

Notes to the Financial Statements

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

292
(129)

293
(178)

n/a
n/a

201
(87)

211
(144)

Recoveries of amounts previously written off

163
(46)

115
(52)

456
(88)

114
(26)

67
(22)

Specific provision

117

63

368

88

45

General provision

37

111

13

22

104

154

174

381

110

149

1,387
105

1,270
93

1,170
87

1,031
10

911
8

73
53
29
57
158

64
48
19
13
116

57
28
12
11
103

70
48
27
30
122

60
42
14
8
74

1,862

1,623

1,468

1,338

1,117

204
31
13
137

207
31
16
147

216
30
16
139

144
4
7
92

157
4
8
98

To controlled entities

385
-

401
-

401
-

247
87

267
98

Total premises expenses

385

401

401

334

365

61
172
62

67
150
49

69
127
34

22
141
-

27
121
-

97
231
55
8
49
3
24
7
628

86
224
79
8
49
5
5
588

70
212
98
8
52
7
1
636

64
150
44
3
31
2
15
412

55
137
46
3
32
3
3
363

Management fees - controlled entities

1,397
-

1,310
-

1,314
-

884
18

790
31

Total other expenses

1,397

1,310

1,314

902

821

Total operating expenses

3,644

3,334

3,183

2,574

2,303

Total expenses

9,767

8,737

7,249

6,721

5,998

3: Expenses (continued)
Provisions for doubtful debts (refer note 15)
New and increased provisions
Provision releases

Total provisions for doubtful debts
Operating expenses(i) Personnel
Salaries and wages
Pension fundEmployee taxes
PayrollFringe benefits tax
Provision for employee entitlements
Retrenchment and redeployment
Other
Total personnel expenses(ii) Premises
Rent
Depreciation of buildings and integrals
Amortisation of leasehold improvements
Other(iii) Other
Direct income-related expenditure
Brokerage paid
Interchange and card costs
Operating lease depreciation
Computer costs
Depreciation
Other
Non-lending losses, frauds and forgeries
Remuneration of auditors (refer note 4)
Depreciation of furniture and equipment
Depreciation of motor vehicles
Loss on disposal of premises and equipment
Management fees
Other

49

Notes to the Financial Statements

1996
$'000

Consolidated
1995
$'000

1994
$'000

The Company
1996
1995
$'000
$'000

3,376
8

3,566
84

4,523
230

1,373
-

1,360
-

3,384

3,650

4,753

1,373

1,360

2,419
1,769
42

2,390
2,186
101

2,145
1,357
75

1,177
477
5

916
468
-

4,230

4,677

3,577

1,659

1,384

7,614

8,327

8,330

3,032

2,744

4: Remuneration of Auditors
Amounts received and due and receivable
Auditing the accounts
By KPMGBy other Economic entity auditors

Other services
By KPMG
Audit related services1
Other
By other Economic entity auditors

Total remuneration of auditors

By virtue of an Australian Securities Commission class order dated 29 June 1992, the auditors of Australia and
New Zealand Banking Group Limited and its related bodies corporate, KPMG, have been exempted fromcompliance with the requirements of Section 324(2) of the Corporations Law. The class order exemption
applies in that partners and associates of KPMG not engaged on the audit of Australia and New Zealand
Banking Group Limited and its related bodies corporate may be indebted to the Company, provided that suchindebtedness arose upon ordinary commercial terms and conditions.
1

Audit related services are services other than those relating to the audit of the statutory financial statements of the Economic
entity. These services include prudential supervision reviews for central banks, prospectus and half-yearly reviews, trust audits andother audits required for local statutory purposes

50

Consolidated
1995
$M

1994
$M

-

-

12
7

-

-

-

-

19

-

-

Losses before tax
Sale of premises

-

-

2

-

-

Total abnormal profit before tax

-

-

17

-

-

-

-

2

-

-

-

19

-

-

22

Total abnormal tax benefit

-

19

2

-

22

Total abnormal profit after tax

-

19

19

-

22

1996
$M

The Company
1996
1995
$M
$M

5: Abnormal Items
Profits before tax
Residual gain on sale of LFD Limited’s pastoraland shipping businesses
Sale of controlled entities and associates

Abnormal tax benefit
Sale of controlled entities and associates
Restatement of net deferred tax balances to reflect theincrease in the Australian corporate tax rate

Notes to the Financial Statements

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

1,615

1,548

1,205

1,247

679

581

511

398

449

224

1
(27)
(41)
4
13
(19)

18
(34)
(4)
3
37
(10)

44
(33)
(6)
3
4
(3)

6
(24)
(184)
3
8
(15)

6
(6)
(3)
2
35
14

Income tax over provided in prior years

512
(22)

521
(16)

407
(12)

243
(19)

272
(1)

Total income tax expense on operating profit
before abnormal items

490

505

395

224

271

Abnormal profit before tax

-

-

17

-

-

Prima facie income tax at 36% (1995, 1994: 33%)
Tax effect of permanent differences
Restatement of net deferred tax balances (refer note 5)
Loss on sale and revaluation of premises
Profit on controlled entities and associates
Residual gain on sale of LFD Limited’s pastoraland shipping businesses

-

-

6

-

-

-

(19)
-

1
(5)

-

(22)
-

-

-

(4)

-

-

Total income tax benefit on abnormal items

-

(19)

(2)

-

(22)

Total income tax expense

490

486

393

224

249

Current income tax expense
Deferred income tax expense

355
135

365
121

185
208

142
82

109
140

Total income tax expense

490

486

393

224

249

6: Income Tax Expense
Reconciliation of the prima facie income tax payable
on operating profit and abnormal items with the income
tax expense charged in the profit and loss accountOperating profit before income tax andbefore abnormal items
Prima facie income tax at 36% (1995, 1994: 33%)
Tax effect of permanent differences
Overseas tax rate differential
Other non-assessable income
Rebateable and non-assessable dividends
Non-allowable depreciation and amortisation
General provision for doubtful debts
Other

51

Notes to the Financial Statements

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

Ordinary dividends
Interim dividend
Proposed final dividend
Bonus option plan adjustment (see below)

264
355
(35)

208
260
(44)

146
189
(22)

254
355
(35)

200
260
(44)

Dividends on ordinary shares

584

424

313

574

416

Preference dividends (13.25% per annum, unfranked)
Dividend paid in January
Dividend paid in July

-

40
40

40
40

-

40
40

Dividends on preference shares

-

80

80

-

80

584

504

393

574

496

7: Dividends

Total dividends

A final dividend of 24 cents fully franked at 36% is proposed to be paid on each fully paid ordinary share(1995: final dividend of 18 cents per fully paid share, franked to 6 cents at 36%; 1994: final unfranked
dividend 14 cents per fully paid share). Non-resident shareholders will be exempt from dividend
withholding tax on the full dividend.
The 1996 interim dividend of 18 cents was franked to 9 cents at 36% (1995: unfranked interim dividendof 15 cents per fully paid ordinary share; 1994: unfranked interim dividend of 11 cents per fully paid
ordinary share).
The difference between the consolidated dividend and the Company dividend is due to dividends of$10 million (1995: $8m; 1994: $8m) paid by ANZ U.K. Dividends (AUD) Limited, a wholly owned
controlled entity, under the ‘Dividend Selection Plan’ available to the Company’s shareholders in the United
Kingdom. This plan was suspended after the payment of the 1996 interim dividend.

52

Restrictions which Limit the Payment of Dividends
There are presently no significant restrictions on the payment of dividends from controlled entities to theCompany. Various capital adequacy, liquidity, statutory reserve and other prudential requirements must be
observed by certain controlled entities and the impact on these requirements caused by the payment of cash
dividends is monitored. In practice however, there are significant tax considerations associated with thereceipt of dividends from controlled entities by a company. Payment of dividends from domestic controlled
entities constitutes assessable income to a recipient Australian company. The recipient company is generally
entitled to a rebate of tax otherwise payable on the assessable dividend. Should the recipient company's total
assessable income be less than the dividend income, or it be in a tax loss position, the rebate will reduce orbe eliminated. The Economic entity therefore acts to preserve the availability of rebates by avoiding thepayment of dividends by domestic controlled entities in this situation.
Payments of dividends from overseas controlled entities may attract withholding taxes which have notbeen provided for in these financial statements.
There are presently no restrictions on payment of dividends by the Company other than(i) the share premium reserve is not available for distribution other than in the form of bonus issues (share
dividends); and(ii) reductions of shareholders' equity through payment of cash dividends is monitored having regard to
the regulatory requirements to maintain a specified capital adequacy ratio. In particular, the Reserve
Bank of Australia has advised Australian banks that a bank under its supervision must consult with it
before declaring a dividend if the bank has incurred a loss, or proposes to pay dividends which exceed thelevel of profits earned.

Notes to the Financial Statements

7: Dividends (continued)
Bonus option plan
Dividends paid during the year have been reduced by way of certain shareholders participating in the bonus
option plan and forgoing all or part of their right to dividends in return for the receipt of bonus shares.

Final dividend 1995
Interim dividend 1996

DECLARED
DIVIDEND$M

BONUS OPTIONSEXERCISED$M

AMOUNT
PAID
$M

260
264

22
13

238
251

524

35

489

1996
$M

Consolidated
1995
$M

1994
$M

Before abnormal items
Basic
Operating profit after income tax
attributable to shareholders of the Company
Abnormal items after tax

1,116
-

1,052
(19)

822
(19)

Operating profit after tax before abnormal items
Preference share dividend

1,116
-

1,033
(80)

803
(80)

Total adjusted earnings

1,116

953

723

1,462.3

1,390.3

1,327.6

Basic earnings per share (cents)

76.3

68.5

54.5

After abnormal items
Basic
Operating profit after income tax
attributable to shareholders of the Company
Preference share dividend

1,116
-

1,052
(80)

822
(80)

Total adjusted earnings

1,116

972

742

1,462.3

1,390.3

1,327.6

76.3

69.9

55.9

8: Earnings per Share

Weighted average number of ordinary shares (millions)

Weighted average number of ordinary shares (millions)
Basic earnings per share (cents)

Separate disclosure of diluted earnings per share has not been made as amounts are not materially different
from basic earnings per share.

53

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

9: Liquid Assets
Australia
Coins, notes and cash at bankers
Loans to authorised dealers in Australianshort term money market
Money at call
Other banks’ certificates of deposit
Securities purchased under agreement toresell less than 90 days
Bills receivable and remittances in transit

1,351

256

1,334

240

25
7

314
30
6

-

314
-

130
3

121
176

130
2

121
165

1,516

903

1,466

840

216
687
3,321

259
469
2,756

23
145
2,695

33
60
1,212

900
261

146
521

445
10

125
202

5,385

4,151

3,318

1,632

Total liquid assets

6,901

5,054

4,784

2,472

Maturity analysis based on original term
to maturity at 30 September
Less than 90 days
More than 90 days

4,285
2,616

2,824
2,230

2,456
2,328

1,463
1,009

Total liquid assets

6,901

5,054

4,784

2,472

Australia
Overseas

1,607
9,745

288
8,471

1,507
6,751

288
5,064

Total due from other banks

11,352

8,759

8,258

5,352

Maturity analysis based on original term
to maturity at 30 September
Less than 90 days
More than 90 days

6,961
4,391

4,255
4,504

4,348
3,910

1,775
3,577

Total due from other banks

11,352

8,759

8,258

5,352

Overseas
Coins, notes and cash at bankers
Money at call
Other banks’ certificates of deposit
Securities purchased under agreement toresell less than 90 days
Bills receivable and remittances in transit

54

10: Due from Other Banks

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

11: Trading Securities
Trading securities are allocated between Australia andOverseas based on the domicile of the issuer
Listed - Australia
Commonwealth securities
Local and semi-government securities
Other securities and equity investments

1,496
10
91

2,517
10
39

1,496
10
-

2,517
10
-

1,597

2,566

1,506

2,527

272
265

247
303

236

233

537

550

236

233

Total listed

2,134

3,116

1,742

2,760

Unlisted - Australia
Treasury notes and bills
Other government securities
ANZ accepted bills
Other securities and equity investments

103
1,577
1,317
269

856
1,016
121

103
1,577
1,249
199

856
931
134

3,266

1,993

3,128

1,921

1,564
64
306

272
91
313

1,177
64
46

159
-

1,934

676

1,287

159

Total unlisted

5,200

2,669

4,415

2,080

Total trading securities

7,334

5,785

6,157

4,840

Listed - Overseas
Indian government securities
Other securities and equity investments

Unlisted - Overseas
Treasury notes and bills
Other government securities
Other securities and equity investments

55

Notes to the Financial Statements
Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

12: Investment Securities
Investment securities are allocated between Australia andOverseas based on the domicile of the issuer
Listed - Australia
Commonwealth securities
Local and semi-government securities
Other securities and equity investments

4
46
297

4
29
116

4
46
286

4
7
53

347

149

336

64

304
147
316

352
200
162

10
83
187

12
90
47

767

714

280

149

1,114

863

616

213

Unlisted - Australia
Other securities and equity investments

139

477

134

472

Unlisted - Overseas
New Zealand government securities
Indian government securities
Other government securities
Other securities and equity investments

540
32
576
169

618
2
558
315

9
146
5

9
115
23

1,317

1,493

160

147

Total unlisted

1,456

1,970

294

619

Total investment securities

2,570

2,833

910

832

4
46
297

4
29
117

4
46
286

4
7
55

347

150

336

66

300
149
316

348
203
164

10
83
187

12
90
48

765

715

280

150

1,112

865

616

216

Unlisted - Australia
Other securities and equity investments

140

478

134

471

Unlisted - Overseas
New Zealand government securities
Indian government securities
Other government securities
Other securities and equity investments

537
32
575
171

610
2
558
313

9
145
6

9
115
23

1,315

1,483

160

147

Total market value of unlisted investment securities

1,455

1,961

294

618

Total market value of investment securities

2,567

2,826

910

834

Listed - Overseas
Indian government securities
Other government securities
Other securities and equity investments
Total listed

56

Market value information
Listed - Australia
Commonwealth securities
Local and semi-government securities
Other securities and equity investments

Listed - Overseas
Indian government securities
Other government securities
Other securities and equity investments

Total market value of listed investment securities

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

13: Net Loans and Advances
Loans and advances are classified between Australia andOverseas based on the domicile of the lending point
Australia
Overdrafts
Credit card outstandings
Term loans - owner-occupied housing
Term loans - other
Lease finance (refer below)
Hire purchase
Commercial bills
Redeemable preference share finance
Other

3,358
1,156
15,001
23,026
3,282
5,803
21
20
422

3,887
989
14,21820,335
3,138
5,264
304
20
117

3,352
1,156
15,001
20,583
657
412

3,872
989
14,21817,868651
270
97

52,08948,272

41,16137,965

2,699
231
6,878
15,590
68
458
568
9
329

2,732
210
6,233
12,194
50
419
921
3
260

587
2
187
6,868
22
189
-

436
2
102
3,707
9
11
462
10

26,83023,022

7,855

4,739

Total gross loans and advances

78,91971,29449,01642,704

Provisions for doubtful debts (refer note 15)
Income yet to mature(1,218)(1,800)(1,380)(1,698)

(884)
(46)

(958)
(60)

(3,018)(3,078)(930)(1,018)

Total net loans and advances

75,901

68,21648,086

41,686

Lease finance consists of gross lease receivables
Current
Non-current

885
2,465

1,170
2,018

187
492

105
555

3,350

3,188

679

660

3,493
2,831
3,500
240

4,000
2,126
3,106
198

10,064

9,430

Overseas
Overdrafts
Credit card outstandings
Term loans - housing
Term loans - non-housing
Lease finance (refer below)
Hire purchase
Commercial bills
Redeemable preference share finance
Other

Included in the above are receivables of controlled entity
borrowing corporations net of income yet to mature
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years

57Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

14: Impaired Assets
Summary of impaired assets
Non-accrual loans
Restructured loans
Other real estate owned
Unproductive facilities

1,225
33
82

1,774
25
86

835
25
22

1,305
25
29

1,340

1,885

882

1,359

(501)
(8)

(694)
(8)

(338)
(7)

(447)
(6)

Net impaired assets

831

1,183

537

906

Non-accrual loans
Non-accrual loans
Specific provisions

1,225
(501)

1,774
(694)

835
(338)

1,305
(447)

Total net non-accrual loans

724

1,080

497

858

Restructured loans
For these loans interest and fees are recognised asincome on an accruals basis

33

25

25

25

Other real estate owned
In the event of customer default, any loan security is held
as mortgagee in possession and therefore the Economic entity
does not hold any other real estate owned assets

-

-

-

-

Unproductive facilities
These facilities comprise standby letters of credit,
bill endorsements, documentary letters of credit andguarantees to third parties
Unproductive facilities
Specific provisions

82
(8)

86
(8)

22
(7)

29
(6)

Net unproductive facilities

74

78

15

23

Accruing loans past due 90 days or more
These amounts, comprising loans less than $100,000 or fully
secured, are not classified as impaired assets andtherefore are not included within the above summary

212

153

174

114

Gross impaired assets
Specific provisions
Non-accrual loans
Unproductive facilities

58

Notes to the Financial Statements

14: Impaired Assets (continued)
Further analysis of non-accrual loans at 30 September 1996 and interest and/or other income received
during the year under RBA guidelines is as follows
Consolidated

Non-accrual loans
Without provisions
Australia
New ZealandInternational markets

With provisions and no, or partial
performance1
Australia
New ZealandInternational markets

The Company

Grossbalanceoutstanding$M

Specific
provision$M

Interest and/or
other income
received$M

Gross
Interest and/or
balanceSpecific other income
outstanding provision
received
$M
$M
$M

207
28
32

-

24
1
2

150
7

-

24
1

267

-

27

157

-

25

552
86
123

275
42
117

30
2
3

444
66

243
36

30
1

761

434

35

510

279

31

152
14
31

50
6
11

15
1
3

152
16

50
9

15
1

197

67

19

168

59

16

1,225

501

81

835

338

72

1

With provisions and full performance
Australia
New ZealandInternational markets

Total non-accrual loans
159

A loan’s performance is assessed against its contractual repayment schedule

Total interest forgone on impaired assets
The following tables show the estimated amount of interest income that would have been recorded hadinterest on non-accrual loans been accrued to income (or, in the case of restructured loans, had interest been
accrued at the original contract rate), and the amount of interest income received with respect to such loans.
Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

Gross interest receivable on non-accrual loans andrestructured loans
Australia
New ZealandInternational markets

149
13
19

214
16
40

128
4

173
9

Total gross interest receivable on non-accrual loans andrestructured loans

181

270

132

182

Interest income received
Australia
New ZealandInternational markets

69
4
8

87
15
46

69
3

81
15

Total interest income received

81

148

72

96

Net interest forgone
Australia
New ZealandInternational markets

80
9
11

127
1
(6)

59
1

92
(6)

Total net interest forgone

100

122

60

86

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

15: Provisions for Doubtful Debts
Specific provision
Balance at start of year
Adjustment for exchange rate fluctuations
Bad debts written off
Transfer from profit and loss account (refer note 3)
Acquired

702
(10)
(346)
163
-

1,085
(1)
(497)
115
-

454
(3)
(239)
114
19

760
(373)
67
-

Total specific provision

509

702

345

454

General provision
Balance at start of year
Adjustment for exchange rate fluctuations
Charge to profit and loss account (refer note 3)
Acquired

678
(6)
37
-

567
111
-

504
(1)
22
14

400
104
-

Total general provision

709

678

539

504

1,218

1,380

884

958

%
0.5
0.8

%
0.8
0.8

%
0.5
0.8

%
0.8
0.9

0.5
0.8

0.8
0.8

0.5
0.7

0.7
0.8

Bad debts written off as a % of total advances2

0.4

0.6

0.4

0.7

Specific provision charge as a % of total advances2

0.1

0.1

0.1

0.1

Total provisions for doubtful debts
RatiosProvisions1 as a % of total advances2
Specific
GeneralProvisions as a % of risk weighted assets
Specific
General60

1
2

Excludes provisions for unproductive facilities
Total advances comprise gross loans, advances, acceptances and ANZ accepted bills held as part of trading securities less income
yet to mature

16: Regulatory Deposits
Reserve Bank of Australia
Overseas central banks

551
612

505
669

551
61

505
48

Total regulatory deposits

1,163

1,174

612

553

Refer notes 30 and 31 for details of controlled entities and associates
Controlled entities
At directors’ valuation 1995
At directors’ valuation 1996

4,768

5,003
-

Total shares in controlled entities

4,768

5,003

17: Shares in Controlled Entities and Associates

Associates
Total shares in associates

10

10

1

1

Total shares in controlled entities and associates

10

10

4,769

5,004

Notes to the Financial Statements

17: Shares in Controlled Entities and Associates (continued)
Acquisitions of controlled entities
Consideration$M

Net tangible
assets on
acquisition$M

Goodwill
$M

50.0

#

#

-

100.0
25.0

81
7

81
3

4

88

84

4

Profiton disposal$M

Net tangible
assets on
disposal
$M

-

-

#
#

#
#

Date
acquiredInterest
acquired%

1 Jul 1996

7 Aug 1995
26 Sep 1995

Year ended 30 September 1996
Autofleet Pty Ltd1
Year ended 30 September 1995
Sebrof Holdings Ltd2Bank of Western Samoa3

Disposals of controlled entities
The entire interest in these entities was disposed of during the year

Year ended 30 September 1996 4,5Esanda Limited
Pukeko Holdings Limited
Pukeko Investments Limited
Pukeko Securities Limited6
Year ended 30 September 1995
Broadbreach Waters Pty Ltd
The Potter Mercantile Unit Trust No. 1# Amounts less than $500,000
1
During the year, the remaining 50% interest in Autofleet Pty Ltd was acquired by Esanda Finance Corporation Limited,bringing the total interest to 100%
2
The following entities were included in the acquisition of Sebrof Holdings Ltd by ANZ Banking Group (New Zealand) Limited
Pukeko Holdings Ltd
Pukeko Investments Ltd
3
During 1995, the remaining 25% interest in Bank of Western Samoa was acquired by ANZ Funds Pty Ltd, bringing thetotal interest to 100%
4
The following controlled entities were liquidated during the year ended 30 September 1996 and had no impact on the financial
statements
ANZ II Limited Partnership
ANZ Finance Corporation Limited
ANZ Grindlays Pension Trustees Limited
ANZ Grindlays Trust Holdings Limited
ANZ McCaughan Properties Limited
ANZ Realty Holdings II (USA) Inc
ANZCAP Securities Limited
Anzstock Securities Limited
Binnstone (Sydney) Limited
Capel Court Finance (Vic) Pty Limited
Capel Court Inc
Capel Court Nominees Ltd
5

Castle-Lane (Nominees) Pty Limited
Mercredits Wholesale Limited
Ceylonite Pty Limited
NMRB Australia Finance Limited
Dalyee Pty Limited
NMRB Investments Limited
Development Finance Corporation Limited Noreag Pty Ltd
Durham Developments Pty Limited
Pemarvin Pty Limited
Erolnot Pty Limited
Port Phillip Scouring Pty Limited
ES&A Properties (UK) Limited
Rinope Pty Limited
Fifth Mallatri Pty Ltd
Royaust Management Limited
G&DPL Pty Ltd
Sebrof Holdings Limited
Grindlays Equipment Finance Limited
The National Alliance Insurance
McCaughan Dyson Holdings Limited
Company Limited
Mercantile Underwood Limited
Watlingford Real Estate Pty Limited

The following controlled entities, which had their final meeting prior to 30 September 1996 and will be liquidated within thestatutory period (3 months), had no impact on the financial statements
Capel Court Finance Limited
A.F.T. Limited
ANZ McCaughan Asset Management Limited Capel Court Investments Pty Limited
ANZ McCaughan Clearing Services Limited
NMRB Management Services Limited
Bronzan Pty Limited
6
Formerly ANZ Securities (New Zealand) Limited

61

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

18: Other Assets

62

Property held for resale
Cost of acquisition
Development expenses capitalised
Interest, rates and taxes capitalised

70
68
3

88
84
5

5
14
-

7
12
1

Provision for diminution in value

141
(16)

177
(28)

19
(12)

20
(19)

125

149

7

1

Accrued interest/prepaid discounts
Accrued commission
Prepaid expenses
Future income tax benefits (refer below)
Treasury instruments revaluations
National Housing Bank deposit (refer note 35)
Life insurance reserves (refer note 1[viii])
Other

836
39
48
491
3,070
179
354
1,198

1,102
47
56
666
2,693
198
302
906

575
32
23
344
2,692
523

699
40
30
399
2,467
160

Total other assets

6,340

6,119

4,196

3,796

148
3
26
80
54

225
22
123
91
48

107
3
68
43

167
33
64
35

12
8
22
11
19
108

19
11
34
5
13
75

12
4
4
11
24
68

19
7
8
5
20
41

491

666

344

399

Future income tax benefits comprises
Provision for doubtful debts
Interest
Tax losses
Provision for employee entitlements
Provision for non-lending losses, frauds and forgeries
Provision for leased premises surplus tocurrent requirements
Provision for diminution in development ventures
Development venture income
Treasury instruments
Leveraged leasing
Other

Certain potential future income tax benefits within the Economic entity arising from tax losses and timing
differences which could amount to $5 million (1995: $26 million) have not been recognised as assets
because recovery cannot be regarded as virtually certain.
In addition, potential future income tax benefits within the Economic entity of $133 million(1995: $91 million) arising from realised capital losses for tax purposes have not been recognised as assets
because recovery cannot be regarded as virtually certain.
These benefits will only be obtained if(i) the relevant entities derive future assessable income of a nature and amount sufficient to enable thebenefit of the taxation deductions to be realised;(ii) the relevant entities continue to comply with the conditions for deductibility imposed by law; and(iii) there are no changes in taxation legislation adversely affecting the benefit of the taxation deductions.

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

19: Premises and Equipment
Freehold and leasehold land and buildings
At directors’ valuation 1993
At costProvision for depreciation

944
26
(20)

997
10
(13)

83
1
(1)

32
2
(1)

950

994

83

33

121
(71)

149
(85)

61
(35)

95
(52)

50

64

26

43

811
(429)

861
(457)

374
(210)

411
(240)

382

404

164

171

668
(423)

547
(329)

416
(260)

317
(183)

245

218

156

134

430
(97)

347
(76)

-

-

333

271

-

-

60

40

51

22

2,020

1,991

480

403

Australia
Overseas717
11,965648
10,513717
10,646648
8,851

Total due to other banks

12,682

11,161

11,3639,499

Leasehold improvements
At costProvision for amortisation

Furniture and equipment
At costProvision for depreciation

Computer equipment
At costProvision for depreciation

Motor vehicle operating lease assets
At costProvision for depreciation

Capital works in progress
At costTotal premises and equipment

20: Due to Other Banks

63

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

21: Deposits and Other Borrowings
Deposits and other borrowings are classified between Australia
and Overseas based on the location of the deposit taking point
Australia
Certificates of deposit
1,135
Term deposits
17,366
Other deposits bearing interest
17,612
Deposits not bearing interest
2,751
Commercial paper
2,341
Borrowing corporations’ debt
5,286
Securities sold under agreement to repurchase
394
Other borrowings
Unsecured
20

2,618
15,973
14,910
2,860
2,044
5,044
128

1,135
17,313
17,612
2,751
1,394
394

2,618
15,92814,910
2,857
1,221
128

109

20

109

46,90543,686

40,61937,771

4,218
16,880
5,837
2,459
946
1,199
1,171

2,077
14,315
5,187
2,396
1,166
1,158
155

2,203
5,583
547
257
1,142

596
3,673
384
158
103

94
-

7
91

92
-

91

32,80426,552

9,824

5,005

Total deposits and other borrowings

79,70970,23850,44342,776

Included in the above are liabilities of controlled entity
borrowing corporations with remaining terms to maturity
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years

5,374
121
1,806
131

4,540
1,476
1,009
-

7,432

7,025

5,887
1,545

5,735
1,290

7,432

7,025

Overseas
Certificates of deposit
Term deposits
Other deposits bearing interest
Deposits not bearing interest
Commercial paper
Borrowing corporations’ debt
Securities sold under agreement to repurchase
Other borrowings
SecuredUnsecured

64

Charges over assets in respect of these borrowings1
SecuredUnsecured

1

Debenture stock of controlled entity borrowing corporations is constituted and secured by trust deeds and collateral debentures,
giving floating charges over the assets of these controlled entities

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

22: Income Tax Liability
Australia
Provision for income tax
Provision for deferred income tax (refer below)

116
384

181
349

95
154

88
168

500

530

249

256

14
61

41
81

25
27

2
27

75

122

52

29

Total income tax liability

575

652

301

285

Provision for deferred income tax comprises
Lease finance
Depreciation
Investment income
Other

204
33
8
200

186
32
6
206

33
8
1
139

26
16
1
152

445

430

181

195

306
748
1,648
93
170
436

308
795
1,448
61
289

228
497
1,648
88
170
183

216
552
1,446
56
122

3,401

2,901

2,814

2,392

164
647
2,249
134
594
282

146
802
2,179
105
112
236

13
312
1,890
49
376
97

15
341
1,880
35
3
65

4,070

3,580

2,737

2,339

7,471

6,481

5,551

4,731

Employee entitlements
Dividends (refer note 7)
Non-lending losses, frauds and forgeries
Leased premises surplus to current requirements
Other

272
355
171
32
124

260
260
168
49
125

211
355
120
21
78

182
260
98
39
88

Total provisions

954

862

785

667

Overseas
Provision for income tax
Provision for deferred income tax (refer below)

23: Creditors and Other Liabilities
Australia
Creditors
Accrued interest and unearned discounts
Treasury instruments revaluations
Accrued charges
Security settlements
Other liabilities

Overseas
Creditors
Accrued interest and unearned discounts
Treasury instruments revaluations
Accrued charges
Security settlements
Other liabilities

Total creditors and other liabilities

24: Provisions

65

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

25: Bonds and Notes
USD medium term notes
GBP medium term notes
AUD medium term notes
JPY medium term notes
USD 125m floating rate notes due 1996
GBP 200m floating rate notes due 1997
GBP 78m floating rate notes due 1997
USD 250m floating rate notes due 1998
USD 300m floating rate note due 1998

834
89
235
257
154
379
316

78
84
235
105
165
418
163
331
-

834
89
235
257
154
379
316

78
84
235
105
165
418
163
331
-

Total bonds and notes

2,264

1,579

2,264

1,579

Bonds and notes by currency
USD United States dollars
GBP Great British pounds
JPY Japanese yen
AUD Australian dollars

1,529
243
257
235

575
664
105
235

1,529
243
257
235

575
664
105
235

2,264

1,579

2,264

1,579

831
1,038
333
62

249
644
624
62

831
1,038
333
62

249
644
624
62

2,264

1,579

2,264

1,579

Bonds and notes by maturity
Due not later than 1 year
Due later than 1 year but not later than 2 years
Due later than 2 years but not later than 5 years
Due later than 5 years

66Notes to the Financial Statements

Interest
Rate%

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

26: Loan Capital
Perpetual subordinated notes
USD 300m
floating rate notes
USD 258.7m fixed rate notes
USD 120m
floating rate notes
USD 30m
floating rate notes

379
327
152
38

397
343
159
40

379
327
-

397
343
-

896

939

706

740

40
49
114
38
88
253
57
65
55
177
88
58
119
253
316
157
632
16
5
6
18
100

45
49
135
40
93
265
48
65
55
185
93
109
58
125
265
331
166
17
6
8
19
105

40
49
114
38
88
253
65
55
177
88
58
119
253
316
632
16
5
6
18
100

45
49
135
40
93
265
65
55
185
93
58
125
265
331
17
6
8
19
105

2,704

2,282

2,490

1,959

Total loan capital

3,600

3,221

3,196

2,699

Loan capital by currency
USD United States dollars
AUD Australian dollars
GBP Great British pounds
JPY
Japanese yen
NZD New Zealand dollars
LUX Luxembourg francs

3,032
227
176
125
40

2,518
227
173
149
109
45

2,685
227
119
125
40

2,153
227
125
149
45

3,600

3,221

3,196

2,699

40
985
1,679
896

1,073
1,209
939

40
928
1,522
706

1,025
934
740

3,600

3,221

3,196

2,699

Subordinated notes
LUX 1,000m fixed notes due 1998
AUD 48.8m
fixed notes due 1999
JPY
10,000m fixed notes due 19992
USD 30m
floating rate notes due 1999
USD 70m
floating rate notes due 1999
USD 200m
floating rate notes due 1999
GBP 22.7m
fixed notes due 2000
AUD 65m
floating rate notes due 2000
AUD 55.3m
floating rate notes due 2000
USD 140m
floating rate notes due 2000
USD 70m
floating rate notes due 2000
NZD 125m
floating rate notes due 2000
AUD 58.2m
floating rate notes due 20014
GBP 60m
fixed notes due 2001
USD 200m
floating rate notes due 2002
USD 250m
fixed rate notes due 2004
USD 125m
floating rate notes due 2005
USD 500m
fixed notes due 2006
USD 12.5m
floating rate notes due 2007
JPY
482m
floating rate notes due 2007
JPY
568.8m floating rate notes due 2008
USD 14.3m
floating rate notes due 2008
USD 79m
floating rate notes due 20085

Loan capital by maturity
Due later than 1 year but not later than 2 years
Due later than 2 years but not later than 5 years
Due later than 5 years
Perpetual

1

LIBOR1 + 0.15
9.125
LIBOR + 0.80
LIBOR + 0.80

9.375
7.720
7.430, 5.800
LIBOR + 0.46
LIBOR + 0.46
LIBOR + 0.50
7.050
BB3 + 0.40
BB + 0.40
LIBOR + 0.50
LIBOR + 0.625

14.25
BB + 0.40
12.625
LIBOR + 0.70
6.25
LIBOR + 0.45

7.55
LIBOR + 0.50
LIBOR + 0.50
LIBOR + 0.55
LIBOR + 0.50
LIBOR + 1.03

LIBOR is an average of rates offered for US dollar deposits by leading banks in London
Two equal tranches of notes were issued with different interest rates3
BB is the stated average of Bank Bill rates
4
Prior to July 1996 the interest rate was 12.5% p.a.
5
After January 2002 the interest rate is LIBOR+ 0.53%
Loan capital is subordinated in right of payment to the claims of depositors and all other creditors of the Company and its
controlled entities which have issued the notes, and constitutes tier 2 capital as defined by the Reserve Bank of Australia for capital
adequacy purposes
267Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

27: Outside Equity Interests
Issued and paid-up capital
Reserves
Retained profits

22
14
10

30
14
3

Total outside equity interests

46

47

28: Segment Analysis
The following analysis shows segment income, operating profit, total assets and risk weighted assets based on
geographical locations and income, operating profit and total assets by industry segments.

1996

Geographical
IncomeAustralia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

68

Operating profit before income tax
Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East
Abnormal items
Australia
New ZealandOperating profit after income tax
Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East
Abnormal items
Australia
New Zealand

Consolidated
1995
$M
%

1994
$M

%

60
16
8
7
3
3
3

5,191
1,138
740
504
369
265
266

62
13
9
6
4
3
3

10,285

100

8,473

100

55
13
9
9
5
4
5

903
204
116
124
57
60
84

58
13
8
8
4
4
5

639
141
99
89
77
85
75

53
12
9
7
6
7
6

100

1,548

100

1,205

100

$M

%

6,623
1,886
1,000
826
435
325
287

58
16
9
7
4
3
3

6,145
1,657
861
680
339
317
286

11,382

100

886
203
155
147
81
64
79
1,615
-

-

14
3

-

-

17

1,615

1,548

1,222

657
138
106
99
36
38
42

59
12
10
9
3
3
4

612
146
83
79
27
39
47

59
14
8
8
3
4
4

457
95
64
57
32
59
39

57
12
8
7
4
7
5

1,116

100

1,033

100

803

100

-

19
-

16
3

-

19

19

1,116

1,052

822

Notes to the Financial Statements

Consolidated
1995

1996

1994

$M

%

$M

%

$M

%

75,11017,46315,008
9,163
3,333
4,723
2,804

59
13
12
7
3
4
2

67,594
15,31012,001
7,874
3,306
3,666
2,836

60
13
11
7
3
3
3

63,706
12,73010,279
7,582
3,299
3,701
2,577

61
12
10
7
3
4
3

127,604

100 112,587

100 103,874

100

59,681
13,492
6,220
5,358
2,244
4,527
1,995

64
14
7
6
2
5
2

53,531
11,748
5,238
4,766
2,213
3,535
2,045

65
14
6
6
3
4
2

50,941
9,709
4,687
4,110
2,111
2,838
1,631

67
13
6
5
3
4
2

93,517

100

83,076100

76,027

100

9,951
1,253
178

87
11
2

8,955
1,154
176

87
11
2

7,299
1,005
169

86
12
2

11,382100

10,285

100

8,473

100

1,330
201
84

82
13
5

1,217
234
97

79
15
6

965
182
58

80
15
5

1,615
-

100

1,548
-

100

1,205
17

100

28: Segment Analysis (continued)
Total assets
Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

Risk weighted assets
Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

Industry
IncomeGeneral and investment banking
FinanceInsurance and funds management

Operating profit before income tax
General and investment banking
FinanceInsurance and funds management
Abnormal items

1,548

1,615
Operating profit after income tax
General and investment banking
FinanceInsurance and funds management
Abnormal items

Total assets
General and investment banking
FinanceInsurance and funds management

1,222

909
133
74

81
12
7

793
158
82

77
15
8

622
128
53

78
16
6

1,116
-

100

1,033
19

100

803
19

100

1,116

1,052

822

116,411
10,639554

91 102,120
8
9,997
1
470

91
9
-

94,512
8,968
394

91
9
-

127,604

100 112,587

100 103,874

100

69

Notes to the Financial Statements

1996
$M

Consolidated
1995
$M

1994
$M

The Company
1996
1995
$M
$M

29: Notes to the Statements of Cash Flowsa) Reconciliation of operating profit after income
tax to net cash provided by(used in)operating activities
Inflows(Outflows)

Operating profit after income tax

70

Adjustments to reconcile operating profit after
income tax to net cash provided by operating activities
Provision for doubtful debts
Depreciation and amortisation
Provisions for employee entitlements and other
Payments from provisions
Loss(profit) on sale of premises and equipment
Profit on sale of controlled entities and associates
Provision for surplus lease space
Net (increase)decrease
Trading securities
Interest receivable
Accrued income
Net debit tax balances
Amortisation of discounts/premiums included
in interest income
Net (decrease)increase
Interest payable
Accrued expenses
Amortisation of discounts/premiums included
in interest expense
Other
Total adjustments
Net cash provided by(used in) operating activities

Inflows(Outflows)

1,116

1,052

822

1,023

430

154
255
189
(194)
14
(7)

174
236
201
(190)
1
2

381
209
199
(124)
2
(7)
(7)

110
108
81
(49)
12
(8)

149
102
76
(86)
(3)
-

(1,595)230
8
137(1,222)
(282)
6
333

852
(3)
5
233

(1,339)101
8145(1,678)
(177)
3
237

(58)

(83)

(50)

(14)

(18)

(167)
62

364
(2)

(92)
26

(64)
44

246
16

(48)

1
(61)

2
(54)

(7)

1
(27)

(1,020)

(522)

1,572

(872)

(1,159)

96

530

2,394

151

(729)

4,285
6,961

2,824
4,255

3,771
5,321

2,456
4,348

1,463
1,775

11,246

7,079

9,092

6,804

3,238

b) Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial year
as shown in the statements of cash flows are reconciled to
the related items in the balance sheets as follows:
Liquid assets - less than 90 days
Due from other banks - less than 90 days

Notes to the Financial Statements

Consolidated
1995
$M

1994
$M

13
2
1
(1)
(5)
(10)
-

81
-

56
12
4
125
3
1
(107)
(32)
(19)
(1)
(5)
(6)

10
1,672
42
83
4
(39)
(16)
(1,596)
(7)
(9)
-

2
145
22
2,093
9
2
(36)
(1,195)(1,015)
(3)
-

-

81
-

31
5

144
64

24
-

Consideration paid
Cash acquired

(13)

81
-

36
(48)

208
(10)

24
(2)

Cash consideration (received)paid

(13)

81

(12)

198

22

Fair value of net assets disposed
Premises and equipment
Outside equity interests in controlled entities

-

-

5
(1)

-

-

Fair value of net assets disposed
Net profit on disposal

-

-

4
5

-

-

Consideration received/receivable
Deferred settlements

14

14

9
14

-

-

Cash consideration received

14

14

23

-

-

135
6

192
11

137
5

135
6

192
11

1996
$M

The Company
1996
1995
$M
$M

29: Notes to the Statements of Cash Flows (continued)c) Acquisitions and disposals
Details of aggregate assets and liabilities of controlled entities
acquired, and disposed of, by the Economic entity are as follows
Fair value of net assets acquired
Liquid assets
Due from other banks
Trading securities
Regulatory deposits
Net loans and advances
Other assets
Premises and equipment
Due to other banks
Creditors and other liabilities
Deposits and other borrowings
Due to controlled entities
Income tax liability
Provisions
Outside equity interests in controlled entities
Fair value of net assets acquired
Goodwill on acquisitiond) Non-cash financing and investing activities
Share capital issue
Dividend reinvestment plan
Bonus option plan71

Notes to the Financial Statements

Incorporated
inBook value
1996
1995
$M
$M

Contribution to
the consolidated
result1996 1995$M$M
Nature of Business

30: Controlled Entities
All controlled entities are 100% owned unless otherwise noted1
Australia and New Zealand Banking Group Limited2

72

Adelaide Nominees Limited *England
A.F.T. Investors Services Limited ‡Australia
6
Australian Fixed Trusts Limited ‡Australia
1
A.F.T. Property Management Pty Limited ‡Australia#
A.F.T. Property Services Pty Limited ‡Australia
1
Australia
63
ANZ Adelaide Group Limited ‡ 4
ANZ Bank (Guernsey) Limited *Guernsey27
ANZ Management Company (Guernsey) Limited *Guernsey#
ANZ Trust Company (Guernsey) Limited *Guernsey#
ANZ Business Licensing Pty Ltd ‡Australia
ANZ Capital Hedging Limited ‡Australia52
ANZ (Delaware) Inc. *USA#
ANZ Eurofinance B.V. *Netherlands
2
ANZ Executors & Trustee Company Limited
Australia
41
ANZ Executors Nominees Limited
Australia#
ANZ Executors & Trustee Co. (Canberra) Limited
Australia
1
ANZ Executors & Trustee Co. (South Australia) Limited Australia
1
B. & R. Securities Proprietary Limited
Australia
ANZ Finance (Far East) Limited ‡Australia
22
ANZ Funds Pty Ltd ‡Australia
3,327
Hong Kong#
ANZ Grindlays International Limited * 5
ANZ Asia Pacific Holdings Limited * 6
Hong Kong
71
ANZ Asia Limited *Hong Kong
2
ANZ Bank (Vanuatu) Limited *Vanuatu#
ANZ Securities (Asia) Limited * 7
Hong Kong2
ANZ International Private Limited *Singapore
715
ANZCOVER Insurance Pte Ltd*Singapore75
ANZ Holdings (New Zealand) Limited *New Zealand203
ANZ Banking Group (New Zealand) Limited *New Zealand355
ANZ Finance (New Zealand) No. One Limited * New Zealand
ANZ Investment Services (New Zealand) Limited * New Zealand
Bage Investments Limited *New Zealand221
Endeavour Investments (New Zealand) Limited * New Zealand843
New Zealand
8
UDC Group Holdings Limited * 8
UDC Finance Limited * 9
New Zealand
54
Mutual Leasing Limited *New Zealand16
Kea Car Sales Limited *New Zealand
1
Truck Leasing Limited *New Zealand
2
Truck Rental Limited *New Zealand
UDC Leasing Limited *New Zealand16
National Mutual Permanent Building Society *New Zealand
12
ANZ Singapore Limited *Singapore11
Index Computing Private Limited *India#
Siam Digest Limited *Thailand#Bank of Western Samoa *Western Samoa
18
LFD Limited
Australia
204
Active Day Hospitals of Australia Pty Limited §Australia#
Asquith Investments Pty Limited §Australia#
Glen Gala Estates Pty Limited
Australia#
BF Limited
Australia
1
Binnstone Pty Limited
Australia#
Binnstone Traders Pty Limited
Australia#
DAOL Limited
Australia#
DBPL Pty Limited
Australia#
DET Pty Limited §Australia#
DFN Pty Limited
Australia#
DPSPL Pty Limited
Australia#
GNPL Limited
Australia
11
Montage Pty Limited
Australia#
RFDL Limited
Australia
1

6
1
1
60
25
#
#
16
2
32
#
1
1
22
3,548
4
2
#
2
715
25
199
349
217
830
65
53
4
1
2
#
12
11
#
#
18
201
#
#
#
1
#
#
#
#
#
#
#
11
#
1

557

417

Banking

#
3
3
#
8
#
9
#
#
#
21
#
1
8
3
1
(2)
15
(12)
60
1
13
47
22
5
#
2
#
6
#
#
3
23
1
3
#
5
#
(1)
#
#
#
#
8

#
(1)
3
7
#
10
#
#
#
55
#
1
9
2
#
#
6
(13)
75
1
10
48
20
4
#
2
(1)
5
#
#
2
(1)
11
#
#
6
#
#
5

Non-operative
Holding Company
Non-operative
Real Estate Manager
Real Estate Manager
Property Owner
Banking
Funds Management
Company Administration
Non-operative
Capital Hedging
FinanceFinance
Trustee/Nominee
Non-operative
Trustee/Nominee
Trustee/Nominee
Non-operative
Property Owner
Holding Company
Holding Company
Holding Company
Finance Banking
Finance Banking
Merchant Banking
Holding Company
Insurance
Holding Company
Banking
Investment
Funds Management
Investment
Holding Company
Holding Company
Finance
Lease FinanceNon-operative
Leasing
Non-operative
Lease FinanceNon-operative
Merchant Banking
Computer Consultant
Investment
Banking
FinanceFinance
Investment
Property Development
Non-operative
Non-operative
Non-operative
Non-operative
Non-operative
FinanceNon-operative
Non-operative
Non-operative
Non-operative
FinanceNotes to the Financial Statements

Contribution to
the consolidated
result1996 1995$M$M
Nature of BusinessIncorporated
inBook value
1996
1995
$M
$M

EnglandEngland

82
-

193
-

#
#

EnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandEnglandUSA
EnglandEnglandEnglandEnglandEnglandEnglandEngland
Australia
Australia
Australia
Australia
Australia
Australia
Cayman Islands
Australia
Australia
Australia
Australia
JerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyJerseyAustralia
Australia
Italy
Switzerland
Switzerland
India
India
India
Bahrain
Cayman Islands
Netherlands
Pakistan
Pakistan
Switzerland
Nepal
Switzerland

#
43
29
1
#
115
9
#
46
6
#
3
130
51
#
#
#
#
#
#
#
#
#
#
#
#
841
204
#
5
1
14
#
#
2
#
10
7

#
1
193
59
30
3
1
115
8
#
#
#
#
#
39
6
#
80
80
#
#
#
#
#
#
#
#
#
#
#
#
1,120
219
1
4
1
5
#
#
2
#
1
3

2
#
4
#
#
#
(1)
#
3
1
(6)
#
#
#
#
#
#
(1) 27
2
2
#
#
#
#
#
1
1
1
1
#
17
17
2
1
(3)
94 119
#
#
#
#
2
2
#
#
#
#
3
2
#
#

30: Controlled Entities (continued)
Minerva Holdings Limited * 10
ANZ Global Nominees Limited * 11,12
ANZ Grindlays Executor & Trustee
Company Limited * 12
ANZ Grindlays Export Finance Limited * 12
ANZ Grindlays Finance Corporation Limited * 12
Camberley Developments Limited * § 12
ANZ Leasing Limited *ANZ Leasing (No.2) Limited *ANZMB Limited *ANZ McCaughan (UK) Limited *ANZ Securities (UK) Limited * 13
ANZ Securities Inc. *Brandts Nominees Limited * 12
Minerva Nominees Limited *National and Grindlays Bank Limited *Grindlays Nominees Limited * 14
PFP Finance Limited *Spey Industrials Limited *Gillespie Bros & Company Limited *Town & Country Land Holdings Limited
ANZ Lenders Mortgage Insurance Pty Limited
Glencove Pty Limited §T&C Management Pty Limited
T&C Technology Pty Limited §Topgard Pty Ltd § 15
GMBS International No.3 Ltd * § 15
Town & Country Housing Trust
Town & Country Property Growth Trust
Town & Country Properties Ltd
ANZ General Insurance Pty Limited
ANZ Grindlays Jersey Holdings Limited *ANZ Grindlays Bank (Jersey) Limited *ANZ Grindlays Bank Nominees (Jersey) Limited *ANZ Grindlays Trust Corporation (Jersey) Limited *ANZ Grindlays Nominees Limited *ANZ Grindlays Secretaries Limited *ANZ Grindlays Trust (Jersey) Limited *ANZ Grindlays Yacht Services Limited *ANZ One Limited *ANZ Three Limited *ANZ Two Limited *Olec Secretaries Limited *Olec Trustee Limited *Valiant Heart Limited *ANZ Grindlays Holdings Limited ‡ 16
ANZ Grindlays Bank Limited 17
ANZ Finanziaria Sp A * §ANZ McCaughan Securities (Switzerland) AG *ANZ Grindlays Trust (Switzerland) SA *Clive Street Nominees Private Limited †Esanda Finanz and Leasing Limited * 18
Finanz Investments (Private) Limited *Grindlays Bahrain Bank B.S.C. † 19
Grindlays International (Cayman Islands) Limited †Grindlays International (Nederland) B.V. †Grindlays Modaraba Management (Private) Limited †Grindlays Services of Pakistan (Private) Limited †Hotel Regina S.A. * 20
Nepal Grindlays Bank Limited †Societe Immobiliere Quai Du Mont-Blanc 7 *5#Holding Company
Property/Nominee
Non-operative
Export Finance
Investment Company
Non-operative
Lease FinanceLease FinanceNon-operative
Investment Company
Non-operative
BrokerNomineeNomineeNon-operative
NomineeNon-operative
Non-operative
Non-operative
Property Development
Mortgage Insurance
Non-operative
Property Manager
Non-operative
Non-operative
Non-operative
Property Investment
Property Investment
Management
General Insurance
Holding Company
BankingNominee
Trust Manager
NomineeCompany Administration
Trust Manager
Non-operative
NomineeNomineeNominee
Secretarial Services
Non-operative
Property Holder
Holding Company
Banking
Non-operative
Holding Company
Trust Manager
Nominee
Lease FinanceNon-operative
Banking
Non-operative
Holding Company
Fund Management
Fund Management
Non-operative
Banking
Property Holder

73Notes to the Financial Statements

IncorporatedinContribution to
the consolidated
Book value
result1996
1995
1996 1995
$M
$M
$M
$M

Nature of Business

30: Controlled Entities (continued)

74

A.N.Z. Holdings Limited ‡ANZ Infrastructure Investments Limited
ANZ Investment Holdings Limited ‡530 Collins Street Property Trust
A.N.Z. Investments Limited
A.N.Z Discounts Limited
ANZ Leasing Pty Ltd ‡ANZ Leasing (ACT) Pty Ltd ‡ANZ Leasing (NSW) Pty Ltd ‡ANZ Leasing (NT) Pty Ltd ‡ANZ Leasing (Vic) Pty Ltd ‡ANZ Life Assurance Company Limited
ANZ Limited Partnership * 21
ANZ Managed Investments Limited
A.N.Z Nominees Limited ‡ANZ Nominees (Guernsey) Limited *ANZ Payment Services Pty Limited ‡ANZ Participacoes E Servicos Ltda *ANZ Pensions (UK) Limited *A.N.Z Properties (Australia) Limited ‡Weelya Pty Ltd ‡ANZ Realty Holdings (USA) Inc. *ANZ Securities (Holdings) Limited 22
ANZ Futures Limited 23
ANZ Securities (Corporate) Limited 24
ANZ Securities (NZ) Limited * 25
ANZMAC Securities (NZ) Nominees Limited *Tui Nominees Limited *ANZ Securities (Services) Pty Limited 26
A.N.Z. Securities (USA) Inc * 27
ANZ Securities Limited 28
ANZ Margin Services Pty Limited 29
Bow Lane Nominees Pty Ltd
Skeet Nominees Pty Ltd
Australian International Limited *ANZ U.K. Dividends (AUD) Limited *Australia and New Zealand Banking Group(PNG) Limited *Dinias Pty Ltd ‡Eriel Pty Limited ‡E.S.&A. Holdings Limited ‡E.S.&A. Properties (Australia) Limited ‡Esanda Finance Corporation Limited
Autofleet Pty Limited 30
Esanda (Finance) Australia Limited
Esanda (Wholesale) Proprietary Limited
Finance Corporation of Australia Limited
Esanda Equipment Credit Pty Limited
International Corporate Park Management Pty Ltd
Mercantile Credits Limited
Alliance Holdings Limited
Alliance Acceptance Co. Limited
The John Beesley Alliance Unit Trust
ANZCAP Leasing Nominees Pty Ltd
ANZCAP Leasing Nominees (Vic) Pty Ltd
ANZCAP Leasing Services Limited
ANZCAP Leasing (Vic) Pty Ltd
F.C.A. Finance Pty Limited ‡Analed Pty Ltd ‡Grindlays Eurofinance BV *Japan Australia Venture CapitalFund (MIC) Limited
Mardi Pty Limited §Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
USA
Australia
Australia
Guernsey
Australia
BrazilEngland
Australia
Australia
USA
Australia
Australia
Australia
New Zealand
New Zealand
New ZealandAustralia
USA
Australia
Australia
Australia
Australia
VanuatuEngland
Papua New
GuineaAustralia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Netherlands
Australia
Australia

128
#
44
397
16
354
70
#
#
21
1
47
#
1
1
2
6
#
#

125
27
397
16
302
61
#
1
22
4
73
#
1
1
2
6
#
1

#
(4)
#
18
#
(44)
55
11
(1)
#
(1)
1
#
(1)
4
#
6
#
#

#
1
26
1
(39)
52
14
(7)
1
#
(1)
(8)
2
15
#
#

Property owner
Investment
Investment
Investment Activities
Deposit Taker
Superannuation Contributor
Leveraged Leasing
Leveraged Leasing
Leveraged Leasing
Leveraged Leasing
Leveraged Leasing
Life Assurance
Non-operative
Investment Services
Nominee Services
Nominee Services
Lockbox Services
Representative
Pension Fund Trustee
Property Owner
Property Owner
Non-operative
Holding Company
Futures Trading
Corporate Advisory
Stockbroking
NomineeNominee
Administration
Stockbroking
Stockbroking
NomineeNomineeNomineeMerchant Banking
Dividend Plan

27
2
6
937
#
#
#
75
8
#
9
119
2
#
#
#
#
#
13
#
5

14
7
834
#
#
75
8
#
9
119
2
#
#
#
#
#
8
#
6

13
2
#
95
#
3
#
(2)
1
#
#
#
#
1
#
3
2
#

11
2
94
#
7
#
(2)
#
#
#
1
#
4
2
2
5
#

Banking
Non-operative
TrusteeProperty Owner
Property Owner
General Finance
Fleet Management
Lease FinanceMotor Vehicle FinanceReal Estate FinanceLease FinanceManagement Company
General FinanceHolding Company
Finance
Property Development
Lease FinanceLease FinanceLease FinanceLease FinanceReal Estate Finance
Property Development
Finance

5
-

6
-

#
-

#
-

Investment
Non-operative

Notes to the Financial Statements

Incorporated
inBook value
1996
1995
$M
$M

Australia
Australia
Australia
Australia
USA
Australia
Australia
Australia
Australia
Australia
Indonesia
Australia
Australia
Singapore

420
57
1
132
1
41
4
-

Contribution to
the consolidated
result1996 1995$M$M
Nature of Business

30: Controlled Entities (continued)
NMRB Limited ‡ANZ Capel Court Limited
Capel Court International Investments Pty Ltd ψ
Capel Court Management Limited ψCapel Court Pacific Inc. * §NMRB Finance Limited §NMRSB Limited ‡Ecomel Pty Limited ‡Elgeba Pty Limited ‡NMRB Insurance (Agents) Pty Limited ‡PT ANZ Panin Bank *The Anchorage Port Stephens Pty Ltd 31
The Anchorage Unit Trust 31
Zan Investments Limited * §

328
57
1
#
132
1
37
21
128

2
5
1
#
#
#
#
8
#

4
1
#
#
1
#
#
#
5
(2)

Total contributions to the Economic entity result after
income tax and abnormal items
Adjustment for controlled entities sold/liquidated
Adjustments on consolidation

1,116 1,048#
4##

Consolidated operating profit after income tax

1,116 1,052

*
†
‡
ψ

#
§
1

2

3

4

5

6

7

Holding Company
Investment Banking
Investment
Investment
Non-operative
Non-operative
Holding Company
AgencyAgencyNon-operative
Banking
Property Management
Property Development
Investment

Audited by overseas KPMG firms
Audited by firms other than members of KPMG
These controlled entities and the Company entered into a Deed of Cross Guarantee in respect of relief granted from specific accounting andfinancial reporting requirements and other matters in accordance with Australian Securities Commission class order 95/1530 dated
10 November 1995
These controlled entities and ANZ Capel Court Limited entered into a deed of Cross Guarantee in respect of relief granted from specificaccounting and financial reporting requirements and other matters in accordance with Australian Securities Commission class order 95/1530
dated 10 November 1995
Amounts less than $500,000
Company currently in liquidation
All controlled entities are 100% owned with the exception of Australia and New Zealand Banking Group (PNG) Limited (93%),
Esanda Finanz and Leasing Limited (51%), GMBS International No. 3 Limited (33%), Grindlays Bahrain Bank B.S.C (40%),
International Corporate Park Management Pty Ltd (72%), Japan-Australia Venture Capital Fund (MIC) Ltd (77%), Nepal Grindlays
Bank Limited (50%), PT ANZ Panin Bank (85%), The Anchorage Port Stephens Pty Ltd (33%), The Anchorage Unit Trust (33%),
Topgard Pty Ltd (33%), Town & Country Housing Trust (93% (1995: 90%)), Truck Leasing Limited (80%) and Truck Rentals
Limited (80%)
Australia and New Zealand Banking Group Limited carries on business in various countries throughout the world. Overseas controlled
entities carry on business in their country of incorporation with the exception of ANZ McCaughan Securities Limited, which has a branch
office in the United Kingdom and representative offices in Japan and Hong Kong; ANZ Grindlays Bank Limited, which has branch offices in
Switzerland, Bangladesh, India, Bahrain, Dubai, Jordan, Oman, Pakistan, Qatar, UAE, Greece and Sri Lanka; and ANZ
Nominees Limited which has operations in New ZealandOutside equity interests hold ordinary shares or units in the following controlled entities:
Australia and New Zealand Banking Group (PNG) Limited - 371,507 PGK1 shares (7%)
Esanda Finanz and Leasing Limited - 2,365,000 INR10 shares (49%)
GMBS International No. 3 Limited - 67 USD1 shares (67%)
Grindlays Bahrain Bank B.S.C - 3,600,000 BHD1 shares (60%)
International Corporate Park Management Pty Ltd - 1,393 class "A" shares and 2 class "D" shares (28%)
Japan-Australia Venture Capital Fund (MIC) Limited - 19,224 $1 shares (23%)
Nepal Grindlays Bank Limited - 750,000 NPR100 shares (50%)
PT ANZ Panin Bank - 7,500 IDR1m shares (15%)
The Anchorage Port Stephens Pty Ltd - 66 $1 shares (67%)
The Anchorage Unit Trust - 19,702,673 $1 units (67%)
Topgard Pty Ltd - 67 $1 shares (67%)
Town & Country Housing Trust - 2,535,122 $1 units (7%)
Truck Leasing Limited - 633,000 NZD1 shares (20%)
Truck Rentals Limited - 20 NZD1 shares (20%)
ANZ Adelaide Group Limited owns 100% of the issued ordinary shares of Penplaza Investments Pty Limited but does not control that company
as it does not have substantially all the risks and benefits incidental to ownership or control
ANZ Grindlays International Limited was previously a controlled entity of Australia and New Zealand Banking Group Limited and waspurchased by ANZ Funds Pty Ltd during the year
ANZ Asia Pacific Holdings Ltd was previously a controlled entity of ANZ International Pte Ltd and was purchased by ANZ Grindlays
International Limited during the year
Formerly ANZ McCaughan Securities (Asia) Limited

75

Notes to the Financial Statements

8

9

10

11
12

13
14
15

16
17

18

19

20

21

22
23
24
25
26
27
28
29

76

30

31

32

ANZ Banking Group (New Zealand) Ltd owns an additional 21% of the issued ordinary shares of UDC Group Holdings Ltd. This
investment is recorded in the books of ANZ Banking Group (New Zealand) Ltd at an amount of $8m
During the year, the assets and liabilites of Southland Development Corporation Limited, UDC Developments Limited and UDC Finance(1991) Limited were amalgamated with those of UDC Finance Limited
Minerva Holdings Limited was previously a controlled entity of Grindlays Equipment Finance Limited and was purchased by ANZ Funds
Pty Ltd during the year
Formerly Anvid Limited
These entities were previously controlled entities of ANZ Grindlays Bank Ltd and were purchased by Minerva Holdings Limited during theyear
Formerly ANZ McCaughan Securities (UK) Limited
Formerly National and Grindlays Bank Trust Company Limited
Town & Country Land Holdings Limited controls Topgard Pty Limited and GMBS International No. 3 Ltd as it has substantially all therisks and benefits incidental to ownership
Formerly ANZ Holdings (UK) plc
Formerly ANZ Grindlays Bank plc. Australia and New Zealand Banking Group Limited owns an additional 25% of the issued ordinary
shares of ANZ Grindlays Bank Limited. This investment is recorded in the books of Australia and New Zealand Banking Group Limited at
an amount of $71m
Index Computing Pte Limited owns an additional 21% of the issued ordinary shares of Esanda Finanz and Leasing Ltd. This investment isrecorded in the books of Index Computing Pte Limited at an amount of $0.4m
ANZ Grindlays Bank Limited controls Grindlays Bahrain Bank B.S.C. due to the existence of a management contract that gives ANZ
Grindlays Bank Limited the capacity to dominate decision making
ANZ McCaughan Securities (Switzerland) AG owns an additional 50% of the issued ordinary share capital of Hotel Regina SA. This
investment is recorded in the books of ANZ McCaughan Securities (Switzerland) AG at an amount of $50
ANZ Realty Holdings (USA) Inc owns an additional 10.9% of the issued ordinary shares of ANZ Limited Partnership. This investment
is recorded in the books of ANZ Realty Holdings (USA) Inc at an amount of nil
Formerly ANZ McCaughan Limited
Formerly ANZ McCaughan Futures Limited
Formerly ANZ McCaughan Corporate Limited
Formerly ANZ McCaughan Securities (NZ) Limited
Formerly ANZ McCaughan Services Pty Limited
Formerly ANZ McCaughan Securities (USA) Inc
Formerly ANZ McCaughan Securities Limited
Formerly Snipe Nominees (1981) Pty Limited
Esanda Finance Corporation Limited acquired the remaining 50% interest in Autofleet Pty Ltd during the year. At 30 September 1996 it is a
100% owned controlled entity (1995:50%)
The Company has no ownership interest in The Anchorage Port Stephens Pty Ltd or The Anchorage Unit Trust but controls them because it
has assumed responsibility for the business and operating decisions of these entities, in order to maximise the financial return to the Economic
entityThe following entities: AFT (Canberra) Ltd, ANZASSS No. 2 (NMRBE) Pty Ltd, ANZASSS No. 3 (NMRBS) Pty Ltd, ANZASSS
No. 4 (FCA) Pty Ltd, ANZASSS No. 5 (MCL) Pty Ltd, ANZASSS No. 6 (ANZCAP) Pty Ltd, ANZASSS No. 7 (T&C) Pty
Ltd, McCaughan RBF Pty Ltd, ANZ Pensions Pty Ltd, ANZ Staff Superannuation (Australia) Pty Limited, DPF Pty Ltd and Greater
Pacific Nominees Pty Limited all of which act as the corporate trustee for a number of the ANZ staff superannuation funds, have not been
consolidated into the accounts of the Economic entity, although the Company owns 100% of the issued ordinary share capital of these entities.
These entities are not controlled entities as they do not meet the control criteria as specified in AASB 1024 “Consolidated Accounts”. They
currently act as the trustee of regulated superannuation funds, in accordance with the Superannuation Industry (Supervision) Act 1993 andRegulations (“SIS Legislation”). They exercise their powers and duties in the best interests of the beneficiaries. In addition, there is equal
employer/employee director representation for each of these entities, in accordance with the SIS Legislation

Notes to the Financial Statements

Incorporated
inInterest%

Book value
1996 1995$M $M

New Zealand

50.0

5

4

31 Mar UDC Finance Limited

Finance

Guernsey

50.0

#

#

31 Mar Australia and New
Zealand Banking
Group Limited

Fund Administration

Asian International MerchantBankers Berhad

Malaysia

26.5

4

4

31 JanMerchant Banking

Cardlink Services Ltd

Australia

20.0

#

#

30 JunCharge Card Services Ltd

Australia

20.0

#

#

30 JunComputer Services Ltd
Cribellum Pty Ltd

Western Samoa
Australia

22.8
37.5

#
#

#
#

31 Dec30 JunFleetlink Leasing Pty Ltd 1

Australia

50.0

1

1

30 JunIndustrial Asset Management Pty Limited Australia

50.0

#

#

30 JunMalcha Properties Limited

50.0

#

#

31 Mar

Meadow Springs FairwayVillage Pty Ltd Australia

39.0

#

#

30 JunMondex Australia Pty Ltd

25.0

#

-

31 DecBalance
date

Held By

Principal
activity

31: Associates
Amalgamated Finance Limited
ANZ Grindlays 3i Investment
Services Limited

India

Australia

ANZ Grindlays
Bank Limited
Australia and New
Zealand Banking
Group Limited
Australia and New
Zealand Banking
Group Limited
Bank of Western Samoa
Australia and New
Zealand Banking
Group Limited
Esanda FinanceCorporation Limited
Esanda FinanceCorporation Limited
ANZ Grindlays
Bank Limited
Town & Country
Land Holdings Limited
Australia and New
Zealand Banking
Group Limited
Mercantile Credits
Limited
Australia and New
Zealand Banking
Group Limited

Mulwala Unit Trust

Australia

50.0

#

#

30 JunNetwork Trust

Australia

37.5

#

#

30 JunNew Zealand Bankcard
Associates Limited §New Zealand

50.0

#

#

Renishaw Pty Ltd

Australia

50.0

#

#

Rosignol Development Corporation

Panama50.0##

Roslin Pty Ltd

Australia

25.0

#

#

Tovepool Pty Limited

Australia

50.0

#

#

Valuta Group Pty Ltd

Australia

33.3

#

#

30 Sep ANZ Banking Group(New Zealand) Limited
30 Jun Mercantile Credits
Limited
30 Sep ANZ Grindlays
Bank Limited
30 Jun ANZ Capel Court
Limited30 Jun Mercantile Credits
Limited30 Jun Capel Court
Management Limited

Associates disposed of or reclassified as controlled entities
or unlisted equity investments during the current year#

1

Total shares in associates

1010# Amounts less than $500,000§ Company currently in liquidation
1
Formerly Link Asset Management Pty Ltd

Charge Card Services

Property Management

Computer Services
Property
Development
Lease Finance/
Management
Lease Finance/
Management
Property Owner
Property
Development
Stored Value
Card Technology
Non-operative
Property
Development

Non-operative
Non-operative
Non-operative
Investment
Non-operative
Investment

77

Notes to the Financial Statements

Consolidated
1996
1995
$M
$M

The Company
1996
1995
$M
$M

32: Commitments
Capital expenditure
Contracts for outstanding capital expenditure
Not later than 1 year

43

49

9

19

Total capital expenditure commitments

43

49

9

19

Lease rentals
Future rentals in respect of leases
Land and buildings
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years

143
131
251
475

142
133
267
420

114
107
204
472

110
106
210
371

1,000

962

897

797

4
3
1
-

16
4
5
2

1
-

12
1
1
-

8

27

1

14

Total lease rental commitments

1,008

989

898

811

Total commitments

1,051

1,038

907

830

Furniture and equipment
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years

78
33: Derivative Financial Instruments
Derivatives
Derivative instruments are contracts whose value is derived from one or more underlying financial
instruments or indices. They include swaps, forward rate agreements, futures, options and combinations ofthese instruments. The use of derivatives and their sale to customers as risk management products is an
integral part of the Economic entity’s trading activities. Derivatives are also used to manage the Economic
entity’s own exposure to fluctuations in exchange and interest rates as part of its asset and liability
management activities. Derivatives are subject to the same types of credit and market risk as other financial
instruments, and the Economic entity manages these risks in a consistent manner.
The principal exchange rate contracts used by the Economic entity are forward foreign exchange
contracts, currency swaps and currency options. Forward foreign exchange contracts are agreements to buy
or sell a specified quantity of foreign currency on a specified future date at an agreed rate. A currency swap
generally involves the exchange, or notional exchange, of equivalent amounts of two currencies and acommitment to exchange interest periodically until the principal amounts are re-exchanged on a future date.
Currency options provide the buyer with the right, but not the obligation, either to purchase or sell a fixedamount of a currency at a specified rate on or before a future date. As compensation for assuming theoption risk, the option writer generally receives a premium at the start of the option period.
The principal interest rate contracts used by the Economic entity are forward rate agreements, interest
rate futures, interest rate swaps and options. Forward rate agreements are contracts for the payment of thedifference between a specified interest rate and a reference rate on a notional deposit at a future settlement
date. There is no exchange of principal. An interest rate future is an exchange traded contract for thedelivery of a standardised amount of a fixed income security or time deposit at a future date. Interest rate
swap transactions generally involve the exchange of fixed and floating interest payment obligations without
the exchange of the underlying principal amounts.
Derivative transactions generate income for the Economic entity from buy-sell spreads and from trading
positions taken by the Economic entity. Income from these transactions is taken to net interest income,foreign exchange earnings or profit on trading instruments. Income or expense on derivatives entered into
for balance sheet hedging purposes is accrued and recorded as an adjustment to the interest income or
expense of the related hedged item.

Notes to the Financial Statements

33: Derivative Financial Instruments (continued)
Credit risk
The credit risk of derivative financial instruments arises from the potential for a counterparty to default on its
contractural obligation. Credit risk arises when market movements are such that the derivative has a positive
value to the Economic entity. It is the cost of replacing the contract in the event of counterparty default.
The Economic entity limits its credit risk within a conservative framework by dealing with creditworthy
counterparties, setting credit limits on exposures to counterparties, and obtaining collateral whereappropriate.
The following table provides an overview of the Economic entity’s exchange rate and interest rate
derivatives. It includes all trading and non trading contracts. Notional principal amounts measure theamount of the underlying physical or financial commodity and represent the volume of outstandingtransactions. They are not a measure of the risk associated with a derivative.
The gross replacement cost is the cost of replacing those financial instruments with a positive market
value to the Economic entity. It represents the potential credit loss had all counterparties defaulted on thereporting date and any collateral become worthless. There is no allowance for netting arrangements.
The credit equivalent amount is calculated in accordance with the Reserve Bank of Australia’s Capital
Adequacy guidelines. It combines the aggregate gross replacement cost with an allowance for the potential
increase in value over the remaining term of the transaction should market conditions change.

Consolidated

Notional
principal
amount
1996
$M

Gross
replacement
cost
1996
$M

Creditequivalentamount1996$M

Notional
principal
amount
1995
$M

Gross
replacement
cost
1995
$M

Creditequivalentamount1995$M

Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold1

159,243
5,872
5,637
5,385

1,487
127
47
n/a

2,916
355
111
n/a

147,791
3,127
6,569
6,243

1,647
35
103
n/a

3,164
162
175
n/a

176,137

1,661

3,382

163,730

1,785

3,501

95,994148,495
87,864
4,001
3,632
248

65
1,256
n/a
8
n/a
3

137
1,567
n/a
15
n/a
4

72,754
94,67656,488
3,376
3,249
64

55
1,146
n/a
9
n/a
11

86
1,346
n/a
12
n/a
13

340,234

1,332

1,723

230,607

1,221

1,457

516,371

2,993

5,105

394,337

3,006

4,958

Interest rate contracts
Forward rate agreements
Swap agreements
Futures contracts2
Options purchased
Options sold1
Other contracts

1
2

Options sold have no credit exposure, as they represent obligations rather than assets
Replacement costs have not been included as there is minimal credit risk associated with exchange traded futures, where the clearing
house is the counterparty

79

Notes to the Financial Statements

33: Derivative Financial Instruments (continued)
The maturity structure of derivative activity is a primary component of potential credit exposure. The tablebelow shows the remaining maturity profile by class of derivatives based on notional principal amounts.
Remaining life
Consolidated

At 30 September 1996

Less than
1 year$M

1 to 5 years$M

Greater than
5 years
$M

Total
$M

Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold157,429
1,645
5,454
5,239

1,800
3,921
183
146

14
306
-

159,243
5,872
5,637
5,385

169,767

6,050

320

176,137

81,57386,09664,403
2,576
2,269
228

14,421
58,51822,926
1,293
1,230
19

3,881
535
132
133
1

95,994148,495
87,864
4,001
3,632
248

237,145

98,407

4,682

340,234

406,912

104,457

5,002

516,371

145,087
736
6,205
6,033

2,686
2,107
364
210

18
284
-

147,791
3,127
6,569
6,243

158,061

5,367

302

163,730

66,63954,64240,221
2,426
2,093
49

6,115
37,705
16,224
868
1,074
15

2,329
43
82
82
-

72,754
94,67656,488
3,376
3,249
64

166,070

62,001

2,536

230,607324,131

67,3682,838

394,337

Interest rate contracts
Forward rate agreements
Swap agreements
Futures contracts
Options purchased
Options sold
Other contracts

Total

80

At September 1995

Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options soldInterest rate contracts
Forward rate agreements
Swap agreements
Futures contracts
Options purchased
Options sold
Other contracts
Total

Notes to the Financial Statements

33: Derivative Financial Instruments (continued)
Concentrations of credit risk exist for groups of counterparties when they have similar economic
characteristics. Major concentrations of credit risk arise by location and type of customer.
The following table shows the concentrations of credit risk, by class of counterparty and by geographic
location, measured by credit equivalent amount. In excess of 82% of the Economic entity’s exposures arewith counterparties which are either Australian banks or banks based in other OECD countries.
Consolidated

Credit equivalent
1996
1995
$M
$M

Class of Counterparty

Commonwealth and OECD governments
Australian and OECD banks
Corporations, non-OECD banks and others

60
4,200
845

99
3,993
866

5,105

4,958

Credit equivalent
1996
1995
$M
$M

Geographic location

Australia
New ZealandInternational markets

1,959
486
2,660

1,889
363
2,706

5,105

4,958

81

Market risk
The market risk of derivatives arises from the potential for changes in value due to movements in interestand foreign exchange rates.
The Economic entity calculates value at risk based on historical models of movements in interest rates
and exchange rates, and using a 97.5% confidence level that the adverse movements will not exceed thevalue at risk. If value at risk is estimated to be $1 million, then based on historical analysis over
500 working days there is approximately one chance in 40 of seeing an adverse movement in excess of$1 million for the specified period. Reflecting the nature of its trading activities, the Economic entity
monitors its value at risk by reference to close-to-close (overnight) risk levels.
Below are the Economic entity’s aggregate value at risk figures covering both physical and derivatives
trading positions for its principal treasury trading centres.

Consolidated

Value at risk at 97.5% confidence
Foreign exchangeInterest rate

As at
30 Sep 96$M

Maximum
1996$M

Average
1996
$M

As at
30 Sep 95$M

Maximum
1995$M

Average
1995
$M

2
10

5
13

2
6

1
5

5
10

2
6

Notes to the Financial Statements
33: Derivative Financial Instruments (continued)
The next table shows the fair values of the Economic entity’s derivatives by product type, disaggregated intogross unrealised gains and gross unrealised losses. The fair value of a derivative represents the aggregate netpresent value of the cash inflows and outflows required to extinguish the rights and obligations arising fromthe derivative in an orderly market as at the reporting date. Fair value does not indicate future gains orlosses, but rather the unrealised gains and losses from marking to market all derivatives at a particular point
in time.

Consolidated

Foreign exchange contracts
Spot and forward contracts
Gross unrealised gains
Gross unrealised losses
Swap agreements
Gross unrealised gains
Gross unrealised losses
Options purchased
Options sold82

Interest rate contracts
Forward rate agreements
Gross unrealised gains
Gross unrealised losses
Swap agreements
Gross unrealised gains
Gross unrealised losses
Futures contracts
Gross unrealised gains
Gross unrealised losses
Options purchased
Options sold
Other contracts
Gross unrealised gains
Gross unrealised losses

Total

Fair value
as at
30 Sep 1996
$M

Averagefair value
1996$M

Fair value
as at
30 Sep 1995
$M

Averagefair value
1995
$M

1,510
(1,778)

1,515(1,736)

1,668(1,801)

1,612(1,788)

127
(343)
47
(73)

88
(325)
66
(104)

35
(254)
102
(118)

118
(266)
97
(131)

(510)

(496)

(368)

(358)

65
(71)

5
(23)

55
(65)

84
(86)

1,256
(1,579)1,174(1,385)

1,145(1,504)

1,183(1,415)

6
(26)
8
-

12
(30)
7
(7)

1
(14)
6
(9)

4
(7)
10
(15)

3
-

2
-

9
-

10
(1)

(338)

(245)

(376)

(233)

(848)

(741)

(744)

(591)

The fair values of derivatives vary over time depending on movements in interest and exchange rates andthe trading or hedging strategies used. The negative fair value as at 30 September 1996 does not represent
the profitability from such transactions. It arises from contracts that have generated net positive cash flows(on which interest is being earned) since their inception but which are expected to generate negative cash
flows over their remaining term.

Notes to the Financial Statements
33: Derivative Financial Instruments (continued)
In addition to customer and trading activities, the Economic entity uses, inter alia, derivatives to manage therisk associated with its balance sheet. The principal objectives of asset and liability management are to hedge
the market value of the Economic entity’s capital and to manage and control the sensitivity of the Economic
entity’s income while maintaining acceptable levels of interest rate and liquidity risk. The Economic entity
also uses a variety of foreign exchange derivatives to hedge against adverse movements in the value of
foreign currency denominated assets and liabilities.
The table below shows the notional principal amount, gross replacement cost and fair value ofderivatives held by the Economic entity, split between those entered into for customer-related and trading
purposes, and those entered into for balance sheet hedging purposes.
Notional
principal
amount
1996
$M

Gross
replacement
cost
1996
$M

Fair
value
1996
$M

Notional
principal
amount
1995
$M

Gross
replacement
cost
1995
$M

Fair
value
1995
$M

Foreign exchange contracts
Customer-related and trading purposes 165,861
Balance sheet hedging purposes
10,276

1,587
74

(323)
(187)

158,218
5,512

1,695
90

(326)
(42)

176,137

1,661

(510)

163,730

1,785

(368)

Interest rate contracts
Customer-related and trading purposes 317,122
Balance sheet hedging purposes
23,112

1,102
230

(396)
58

211,835
18,772

992
229

(447)
71

340,234

1,332

(338)

230,607

1,221

(376)

516,371

2,993

(848)

394,337

3,006

(744)

Consolidated

Total

83
Detailed below are the net deferred realised and unrealised gains and losses arising from hedging contracts
used to manage interest rate exposure or used to hedge anticipated transactions. These gains and losses aredeferred only to the extent that there is an offsetting unrecognised gain or loss on the exposure being
hedged. Deferred gains or losses are generally amortised over the expected term of the hedged exposure.

Consolidated

Expected recognition in income
Within one year
One to two years
Two to five years
Greater than five years

Balance sheet
hedging
contracts
at 30 Sep 1996
$M

Balance sheet
hedging
contracts
at 30 Sep 1995
$M

19
(16)
39
(20)

43
(20)
48
(21)

22

50

Notes to the Financial Statements

34: Fair Value Information
US accounting standard, Statement of Financial Accounting Standards No. 107 (SFAS 107), “Disclosuresabout Fair Value of Financial Instruments”, requires disclosure of the estimated fair value of on and offbalance sheet financial instruments for which it is practical to estimate fair value. The disclosures exclude all
non-financial instruments, such as regulatory deposits, and specified financial instruments, such as leases andinvestments in controlled entities. Accordingly, the aggregate estimated fair value amounts do not represent
the underlying value of the Economic entity.
Quoted market prices, when available, are used as the measure of fair value. In cases where quoted
market prices are not available, fair values are based on present value estimates or other valuation
techniques. For the majority of short term financial instruments, defined as those which reprice or maturein 90 days or less, with no significant change in credit risk, the fair value was assumed to equate to thecarrying amount in the Economic entity’s balance sheet.
The estimates of fair value are based on relevant information available as at 30 September 1996. While
best judgement is used in estimating the fair value of financial instruments, there are inherent weaknesses inany estimation technique. Many of the estimates involve uncertainties and matters of significant judgement
and cannot be determined with precision. Changes in underlying assumptions could significantly affectthese estimates.
SFAS 107 requires that fair values be calculated by reference to the value of one trading unit without
regard to any premium or discount that may result from concentrations of ownership of a financial
instrument, possible taxes on the sale of financial instruments and estimated transaction costs. Furthermore,market prices or rates of discount are not available for many of the financial instruments valued andsurrogates have been used which may not reflect the price that would apply in an actual sale. Therefore,
for substantially all financial instruments, the fair value estimates are not necessarily indicative of theamounts the Economic entity could have realised in a sale transaction as at 30 September 1996.
The estimated fair value amounts have not been updated for the purposes of these financial statements
since 30 September 1996 and, therefore, the estimated fair value of these financial instruments subsequent
to 30 September 1996 may be different from the amounts reported.
Carrying value
1996
1995

84
Significant financial assets
Loans, advances and acceptances
Investment securities and shares in associates
Trading securities
Other financial assets

Estimated fair value
1996
1995

$M

$M

$M

$M

87,034
2,580
7,334
23,86378,067
2,843
5,785
19,083

88,1002,577
7,334
23,99378,8692,843
5,785
19,179Loans, advances and acceptances
The carrying value of loans, advances and acceptances is net of specific and general provisions for doubtful
debts and income yet to mature, and also excludes lease finance receivables. Lease finance receivables havea carrying value of $2,880 million (1995: $2,795 million) and an estimated fair value of $2,864 million(1995: $2,779 million). The estimated fair value of loans, advances and acceptances represents thediscounted amount of estimated future cash flows and accordingly has not been adjusted for either specificor general provisions for doubtful debts.
Estimated contractual cash flows for performing loans are discounted at estimated current market rates todetermine fair value. For loans with doubt as to collection, expected cash flows (inclusive of the value of
security) are discounted using a rate which includes a premium for the uncertainty of the flows.
The difference between estimated fair value of loans, advances and acceptances and in carrying value
reflects changes in interest rates and the credit worthiness of borrowers since loan origination. The excess
of estimated fair value of loans, advances and acceptances over the carrying value is primarily a result of theoffsetting of the general provision for doubtful debts against the carrying value and the effect of declining
interest rates.

Notes to the Financial Statements

34: Fair Value Information (continued)
Investment securities and shares in associates
Fair value is based on quoted market prices or broker or dealer price quotations. If this information is notavailable, fair value has been estimated using quoted market prices for securities with similar credit, maturity
and yield characteristics, or by reference to the net tangible asset backing of the investee.
Trading securities
Trading securities are carried at market value, with the resulting gains and losses included in trading
revenue. Market value is generally based on quoted market prices, broker or dealer price quotations, or
prices for securities with similar credit risk, maturity and yield characteristics.
Other financial assets
Included in this category are cash, amounts due from other banks, accrued interest and fees receivable. The
carrying values of these financial instruments are considered to approximate their fair values as they are shortterm in nature or are receivable on demand.
The fair values of derivative financial instruments such as interest rate swaps and currency swaps were
calculated using discounted cash flow models based on current market yields for similar types of instruments
and the maturity of each instrument. Foreign exchange contracts and interest rate option contracts werevalued using market prices and option valuation models as appropriate.
Properties held for resale, future income tax benefits and prepaid expenses are not considered financial
assets.
Carrying value
1996
1995
$M
$M

Significant financial liabilities
Deposits and other borrowings and acceptances
Loan capital and bonds and notes
Other financial liabilities

93,722
5,864
19,79782,8844,800
17,412Estimated fair value
1996
1995
$M
$M

93,7305,863
19,85782,894
4,773
17,441

Deposits and other borrowings and acceptances
Under SFAS 107, the estimated fair value of deposits with no stated maturity, which includes non-interest
bearing deposits, is deemed to equal the amount repayable on demand. SFAS 107 does not permit the fairvalue to be adjusted for any value expected to be derived from retaining the deposits for a future period oftime.
For interest bearing fixed maturity deposits and other borrowings and acceptances without quoted
market prices, market borrowing rates of interest for debt with a similar remaining maturity are used to
discount contractual cash flows.
The estimated fair value of interest bearing deposits and other liabilities reflects the shortening term of
the Economic entity’s funding during the year ended 30 September 1996.
Loan capital and bonds and notes
The aggregate fair value of loan capital and bonds and notes at 30 September 1996 was calculated based onquoted market prices. For those debt issues where quoted market prices were not available, a discounted cash
flow model using a yield curve appropriate for the remaining term to maturity of the instrument was used.
Other financial liabilities
This category includes amounts due to other banks, accrued interest and fees payable for which the carrying
amount is considered to be a reasonable estimate of fair value.
The fair values of derivative financial instruments were determined on the basis described under thecaption “other financial assets”.
Income tax liabilities, other provisions and accrued charges are not considered financial liabilities.
Commitments and contingencies
As outlined in note 35, the Economic entity has various credit-related commitments. Based upon the levelof fees currently charged for granting such commitments, taking into account maturity and interest rates,
together with any changes in the creditworthiness of counterparties since origination of the commitments,
their estimated replacement or fair value is not material.

85

Notes to the Financial Statements

35: Contingent Liabilities and Credit Related Commitments
Contingent liabilities
The Economic entity guarantees the performance of customers by issuing standby letters of credit andguarantees to third parties. The risk involved is essentially the same as the credit risk involved in extending
loan facilities to customers, therefore these transactions are subjected to the same credit origination, portfolio
maintenance and collateral requirements for customers applying for loans. As the facilities may expire
without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.
The credit risk of these facilities may be less than the contract amount, but as it cannot be accurately
determined, the credit risk has been taken to be the contract amount.
Consolidated
1996
1995
Contract
Contract
amountamount$M$M

The Company
1996
1995
Contract
Contract
amountamount$M$M

Controlled Entities
1996
1995
Contract
Contract
amountamount$M$M

Guarantees
Standby letters of credit
Bill endorsements
Documentary letters of credit
Performance related contingents
Other

2,149
355
29
1,349
6,614
828

2,165
215
14
1,320
6,454
1,049

1,431
319
25
608
5,328
631

1,402
205
12
652
4,182
772

718
36
4
741
1,286
197

763
10
2
668
2,272
277

Total contingent liabilities

11,324

11,217

8,342

7,225

2,982

3,992

Credit related commitments
The credit risk of the following facilities may be less than the contract amount, but as it cannot be accurately
determined, the credit risk has been taken to be the contract amount.
Consolidated
1996
1995
Contract
Contract
amountamount$M$M

86
Undrawn facilities
Underwriting facilities
Securities lending

The Company
1996
1995
Contract
Contract
amountamount$M$M

Controlled Entities
1996
1995
Contract
Contract
amountamount$M$M

30,014361
590

25,453267-

21,59282
590

17,228
133
-

8,422
279
-

8,225
134
-

30,96525,72022,264

17,361

8,701

8,359

Notes to the Financial Statements

35: Contingent Liabilities and Credit Related Commitments (continued)
The details and estimated maximum amount of contingent liabilities classified according to the party fromwhom the contingent liability could arise are set out below
The Company
In accordance with the clearing arrangements set out in the Australian Payments Clearing Association
Regulations for the Australian Paper Clearing System and the Bulk Electronic Clearing System, theCompany has a commitment to provide liquidity support to these clearing systems in the event of a failure
to settle by a member institution.
Controlled entities(i) The Economic entity will indemnify each customer of controlled entities engaged in nominee activities
against loss suffered by reason of such entities failing to perform any obligation undertaken by them to acustomer.
(ii) Pursuant to class order 95/1530 dated 10 November 1995, relief was granted during the year to anumber of wholly owned controlled entities (refer footnote ‡ in note 30) from the Corporations Law
requirements for preparation, audit, and publication of accounts. It is the condition of the class orderthat the Company and each of its controlled entities enter into a Deed of Cross Guarantee.
A Deed of Cross Guarantee under the class order was lodged and approved by the Australian Securities
Commission. The effect of the Deed is that the Company guarantees to each creditor payment in full ofany debt in the event of winding up any of the controlled entities under certain provisions of the
Corporations Law. The Company will only be liable in the event that after six months any creditor has
not been paid in full. The controlled entities have also given similar guarantees in the event that theCompany is wound up. A Deed of Revocation was executed during the year for all companies whichwere party to a Deed of Cross Guarantee (as amended) under previous class orders.
At 30 September 1996 the controlled entities which are parties to the Deed had external aggregate assets
of $2,721 million (1995: $2,960 million); external aggregate liabilities of $747 million(1995: $753 million); and their operating profit after tax and abnormal items for the year was$418 million (1995: $16 million).
(iii) Pursuant to class order 95/1530 dated 10 November 1995, relief was granted during the year to anumber of wholly owned controlled entities (refer footnote Ψ in note 30) from the Corporations Law
requirements for preparation, audit and publication of accounts. It is the condition of the class orderthat ANZ Capel Court Limited and each of its controlled entities enter into a Deed of Cross Guarantee.
A Deed of Cross Guarantee under the class orders was lodged and approved by the Australian Securities
Commission. The effect of the Deed is that ANZ Capel Court Limited guarantees to each creditor
payment in full of any debt in the event of winding up any of its controlled entities under certain
provisions of the Corporations Law. ANZ Capel Court Limited will only be liable in the event thatafter six months any creditor has not been paid in full. The controlled entities have also given similar
guarantees in the event that ANZ Capel Court Limited is wound up. A Deed of Revocation was
executed during the year for all companies which were party to a Deed of Cross Guarantee (asamended) under previous class orders.
At 30 September 1996 ANZ Capel Court Limited and its controlled entities which are party to the Deed
had external aggregate assets of $358 million (1995: $279 million); external aggregate liabilities of$163 million (1995: $191 million); and their operating profit after tax and abnormal items for the year
was $1 million (1995: $1 million).
(iv) The Company has guaranteed payment on maturity of the principal and accrued interest of commercial
paper notes issued by ANZ (Delaware) Inc. of $946 million (1995: $1,164 million).
(v) The Company is party to an underpinning agreement with ANZ Grindlays Bank Limited whereby theCompany undertakes to assume risk in relation to credit facilities extended by ANZ Grindlays Bank
Limited to certain individual customers which exceed 25% of ANZ Grindlays Bank Limited’s capitalbase.
(vi) The Company is party to an underpinning agreement with ANZ Banking Group (New Zealand) Ltd
whereby the Company undertakes to assume risk in relation to credit facilities extended by ANZ
Banking Group (New Zealand) Ltd to individual customers which exceed 35% of ANZ Banking Group(New Zealand) Ltd's capital base.
(vii)The Company has guaranteed, on a subordinated basis, the issue of $157 million Subordinated Floating
Rate Notes issued by ANZ Banking Group (New Zealand) Ltd.

87

Notes to the Financial Statements

35: Contingent Liabilities and Credit Related Commitments (continued)
GeneralThere are outstanding court proceedings, claims and possible claims against the Economic entity, theaggregate amount of which cannot readily be quantified. Where considered appropriate, legal advice has
been obtained and, in the light of such advice, provisions as deemed necessary have been made.
India - National Housing Bank
The branch of ANZ Grindlays Bank Limited in India (“the Bank”) has received a claim, aggregating
approximately Indian Rupees 5.06 billion ($179 million) from the National Housing Bank (“NHB”) in thatcountry. The claim arises out of certain cheques drawn by NHB in favour of the Bank, the proceeds ofwhich were credited into the account of one of the customers of the Bank.
On 4 November 1992, and pursuant to a directive from the Reserve Bank of India (“RBI”), the Bank
made a payment to NHB under protest, without admission of liability, and subject to an agreement with
NHB, entered into on the same date, providing for arbitration of the disputes between the parties. The
RBI, which is NHB’s parent company, has confirmed in writing, that it will ensure that NHB meets its
liabilities under this arbitration agreement, including repaying the Bank if NHB loses the arbitration.
The arbitration is currently in progress and arbitration arrangements provide that the matter is treated as
sub-judice and therefore comment by the parties is limited.
The Economic entity has obtained firm legal advice from senior counsel and based on that advice noprovision has been made in respect of the claim or the amount paid to NHB.

88

India - Financial markets scam
The after effects of the much publicised 1992 India financial markets scam continue. Banks, including ANZ
Grindlays Bank Limited, which provided banking services to banks and brokers subsequently identified as
involved in the scam, are now facing legal issues as transactions are potentially unwound and the legality ofsome transactions which were commonly executed in the market are challenged. Resolution of thesematters is likely to be protracted, especially because in many cases these issues are without legal precedent,
and the Economic entity may be exposed to claims and potential losses the aggregate amount of whichcannot be quantified. The Economic entity is being advised by senior counsel and no material loss iscurrently anticipated.
India - Foreign Exchange Regulation Act
In 1991 certain amounts were transferred from non-convertible Indian Rupee accounts to convertible
Rupee accounts maintained with the Bank in India. In making these transactions it would appear that theprovisions of the Foreign Exchange Regulation Act 1973 were inadvertently not complied with. The
Bank, on its own initiative, brought these transactions to the attention of the Reserve Bank of India.
The Indian authorities have served preliminary notices on the Bank and certain of its officers in India
which could lead to proceedings and possible penalties. The Economic entity’s lawyers in India have
prepared responses to these notices, and the Economic entity considers that the outcome will have nomaterial adverse effect on the financial statements.

Notes to the Financial Statements

36: Superannuation Commitments
A number of pension/superannuation schemes have been established by the Economic entity worldwide.
The Economic entity is obliged to contribute to the schemes as a consequence of legislation and provisionsof trust deeds. Legal enforceability is dependent on the terms of the legislation and trust deeds.
The major schemes with assets in excess of $20 million areContribution levels
Employee Employer

Last formal
actuarial
valuation

ActuaryCountry

SchemeScheme type

Australia

ANZGROUP (Australia)
Staff Pension Scheme1

DefinedBenefit Scheme nil

Balance of cost

Dec 1995

C J Haberecht F.I.A.A.

Australia

ANZ Australian Staff
Superannuation Scheme 2

DefinedContribution
SchemeBalance of cost3

Dec 1995

C J Haberecht F.I.A.A.

Balance of cost

Dec 1993

William M Mercer Ltd

Balance of cost4

Dec 1993

William M Mercer Ltd

Balance of cost

Dec 1995

Watson, Wyatt Partners

New Zealand ANZGROUP (New Zealand)
Staff Superannuation Scheme 1, 2

England

2.5%
minDefined5.5%
Benefit Scheme minorDefinedContribution 2.5%
Schememin

ANZ UK Staff Pension
Scheme1

DefinedBenefit Scheme nil

Balance of cost: the Economic entity’s contribution is assessed by the actuary after taking account of members’ contributions and thevalue of the schemes’ assets
1
These schemes provide for pension benefits
2
These schemes provide for lump sum benefits
3
As recommended by the actuary, not to exceed 7.25% of members’ superannuation salaries for the financial year ended
30 September 19974
7.5% of superannuation salaries

Details of major defined benefit schemes are as follows

89

Employer’s
contribution$M

Accruedbenefits$M

Net market value of
assets held by scheme$M

Excess(deficiency) of
net market valueof assets overaccrued benefits$M

ANZGROUP (Australia)
Staff Pension Scheme1

5

64

44

(20)

53

ANZ UK Staff Pension Scheme2

-

459

584

125

429

Vestedbenefits$M

1996
SchemeVestedbenefits$M

Employer’s
contribution$M

Accruedbenefits$M

Net market value of
assets held by scheme$M

Excess(deficiency) of
net market valueof assets overaccrued benefits$M

ANZGROUP (Australia)
Staff Pension Scheme3

5

66

50

(16)

54

ANZ UK Staff Pension Scheme4

-

433

545

112

397

1995
Scheme1

Amounts were measured at 30 September 1996
Amounts were measured at 31 December 1995
3
Amounts were measured at 31 December 1994
4
Amounts were measured at 30 September 1995
2

Any aggregate deficit arising from the actuarial valuation of the Economic entity’s defined benefit schemes
has been provided for in the Economic entity’s financial statements.

Notes to the Financial Statements

37: Assets and Liabilities of Non-Banking Controlled Entities
Under class order 92/621 issued by the Australian Securities Commission on 24 June 1992, the balance
sheets of the Economic entity and the Company are presented in accordance with International
Accounting Standard IAS 30 “Disclosures in the Financial Statements of Banks and Similar Financial
Institutions”. This standard requires assets and liabilities of a bank to be classified by their nature and to bedisclosed in their approximate order of liquidity. The class order requires the amounts of total assets andtotal liabilities reported in the consolidated balance sheet that are attributable to controlled entities which
are not prescribed corporations, defined in Section 408A(1) of the Corporations Law as either anAustralian Bank or a body corporate that is registered under the Life Insurance Act 1995 at the end of thefinancial year, to be separately disclosed.

Total assets
Total liabilities

1996
$M

1995
$M

34,25728,56640,42832,872

38: Financing Arrangements
The financing arrangements of controlled entity borrowing corporations and controlled entities registeredunder the Financial Corporations Act (Australia) 1974 are detailed below

90

Financing arrangements which are available to suchcontrolled entities (under normal financial arrangements)
Credit standby arrangements
Commercial bills acceptance discount lines
Standby lines
Other financing arrangements
Overdrafts and other financing arrangements
Total finance made available to such controlled entities
Financing arrangements which have been made available bysuch controlled entities (contractually arranged for each client)Standby lines

1995
Available
Unused$M$M

Available$M

1996
Unused
$M

100
1,955

100
1,854

100
1,723

100
1,721

457

449

450

444

2,512

2,403

2,273

2,265

482

127

424

110

In addition, credit facilities of $126 million (1995: $111 million) have been made available to the Economic
entity, of which $7 million is utilised as at 30 September 1996 (1995: $55 million).

39: Exchange Rates
The exchange rates used in the translation of the results and the assets and liabilities of major overseas
branches and controlled entities are
Closing

Average

Closing

1995
Average

1994
Closing
Average

0.5062
0.7914
1.1314

0.49630.76851.13400.47640.75201.14980.46590.74061.14070.46850.73931.2254

1996

Great British pound
United States dollar
New Zealand dollar

0.46530.70641.2200Notes to the Financial Statements

40: Employee Share Purchase and Share Option Schemes
The Company has four share purchase and share option schemes available for employees and directors of theGroup: the ANZ Group Employee Share Purchase Scheme; the ANZ Group Senior Officers’ Share Purchase
Scheme; the ANZ Group Share Option Scheme; and the Directors’ Share and Option Purchase Scheme.
Shareholders of the Company have approved the Rules of each of the schemes. Fully paid ordinary sharesissued under these schemes rank equally with other existing fully paid ordinary shares, except for fully paid
ordinary shares issued on conversion from partly paid shares which are not entitled to the first dividend paid.
Partly paid ordinary shares, paid to 10 cents, issued under the ANZ Group Senior Officers’ Share Purchase
Scheme and the Directors’ Share and Option Purchase Scheme are not entitled to dividends payable by theCompany, but are entitled to one vote for every ten partly paid shares. They are also entitled to participate inrights and bonus issues.
Each option granted under the ANZ Group Share Option Scheme and the Directors’ Share and Option
Purchase Scheme entitles a holder to purchase one ordinary share subject to any attached terms andconditions.
An offer to employees and non-executive directors cannot be made under any of the schemes if an issue
pursuant to that offer will result in the aggregate of shares issued, and those liable to be issued pursuant toexercisable options granted under any of the schemes, and bonus shares issued in respect of shares issued
under these schemes, exceeding 7% of the issued capital of the Company.
During the financial year, loans at concessional interest rates were available for financing sharespurchased under the ANZ Group Employee Share Purchase Scheme and the ANZ Group Senior Officers’
Share Purchase Scheme. Shares issued under these schemes are free of brokerage and stamp duty costs.
The market price of one ordinary share at 30 September 1996 was $7.23.
Amounts received from employee share purchase and share option schemes are accounted for as follows− the par value of fully paid shares and amounts received on partly paid shares are recognised as issued andpaid-up capital;− the difference between par value and issue price is credited to the share premium reserve; and− amounts received for options are credited to the general reserve.

91

Amounts received from employee share purchase and share option schemes during the financial year,
excluding calls on partly paid shares issued in prior financial years, were recognised as follows
The Company

Issued and paid-up capital
Share premium reserve
General reserve

1996

1995

3,200,483
12,679,869-

3,411,594
11,087,670
64,100ANZ Group Employee Share Purchase Scheme
All employees, excluding part-time service employees, who have had continuous service for one year with
the Company or any of its controlled entities are eligible to participate in this scheme. Each eligible
employee’s entitlement depends on the employment level of the employee, and the maximum entitlement is
5,000 ordinary shares.
During the financial year, 3,149,483 fully paid ordinary shares were issued at a 20% discount to themarket price at 28 February 1996 to 2,300 eligible employees for a total consideration of $15,564,152.
33,618 employees were eligible to participate in this offer. The total market value of the shares at issue date,
which was 22 March 1996, was $19,652,774. At 30 September 1996, 39,663,335 ordinary shares had been
issued since the commencement of this scheme.
ANZ Group Senior Officers’ Share Purchase Scheme
Senior officers eligible to participate in this scheme may be offered fully paid or partly paid ordinary shares.
During the financial year, 51,000 fully paid ordinary shares were issued at market price to 10 eligible
senior officers for a total consideration of $316,200, which was the total market value of the shares at issue
date which was 28 February 1996. 775 senior officers were eligible to participate in this offer.
At 30 September 1996, 11,035,400 fully paid ordinary shares and 7,805,000 partly paid ordinary shares
had been issued since the commencement of this scheme. The partly paid ordinary shares were paid to
10 cents on application and the balance payable either at the request of the employee or upon cessation of
employment, except in the event of death, retirement or illness, in which case, the balance is payable threemonths after the event.

Notes to the Financial Statements

40: Employee Share Purchase and Share Option Schemes (continued)
ANZ Group Share Option Scheme
Executive directors and executive officers may be invited to purchase options at one cent each under thisscheme. These options do not entitle the holder to participate in a share issue of any other body corporate
apart from the Company.
No options were issued during the financial year. 80,000 options granted under the scheme lapsed
during the financial year.
At 30 September 1996, 7,630,000 options were outstanding under this scheme. These options may
only be exercised within the exercisable period if the basic earnings per share of the Economic entity(before abnormal items) for one of the financial years ending 30 September 1996, 1997 or 1998 is at least
50% over the equivalent figure for the 1993 financial year.
No. of options outstandingat 30 September 1996

92

Exercise price1,350,000$5.34

1,520,000$5.34

4,760,000$5.34

Exercisable period(subject to performance condition)

Not exercisable before
31 Jan 1997, or later than 30 Jan 1999
Not exercisable before
22 Dec 1997, or later than 30 Jan 1999
Not exercisable before
23 Mar 1998, or later than 30 Jan 1999

These options will expire immediately on termination of employment, except in the event of retirement,
death or where agreed by the directors of the Company, in which case, the directors may allow the options
to be exercised. 185,000 options were exercised by former employees since the end of the financial year withthe consent of the directors. In the event of a takeover offer or takeover announcement, the directors of theCompany may allow the options to be exercised within thirty days from the date of notification.
If there is a bonus issue prior to the expiry or exercise of the options, option holders are entitled to thoseshares as if the options have been exercised prior to that issue. These shares will be allotted to the option
holder when the options are exercised.
Directors’ Share and Option Purchase Scheme
Each non-executive director is entitled to subscribe for up to 50,000 partly paid ordinary shares at market
price, paid to 10 cents, under this scheme, with the balance payable any time at the request of the director
or upon ceasing to be a director, except in the event of retirement, death or illness, in which case the balanceis payable ninety days after such date.
Each director is, subject to the Board’s approval, eligible to subscribe for an equivalent number of
options at one cent each under this scheme. Options granted under this scheme are exercisable within five
years after issuance or within 90 days after ceasing to be a director, if earlier. The exercise price of an
option is based on the market price of an ordinary share when the option is granted, less one cent, which ispayable on issue of the option.
During the financial year, one director was eligible to subscribe for up to 50,000 shares under thescheme. 50,000 partly paid shares, paid to 10 cents, were issued on 28 February 1996 at $6.20, which was
the market price as at that date.
No options were offered during the financial year. 100,000 options were exercised during the financialyear.
At 30 September 1996, 950,000 partly paid shares, paid to 10 cents and 1,100,000 options had been
issued since the commencement of this scheme.
No. of options outstandingat 30 September 1996

100,000

Exercise Price

Expiry date

$3.43

1 March 1998

Notes to the Financial Statements

41: Related Party Disclosures
The directors during the year wereC B GoodeJ C Dahlsen
Dr R S Deane
J K Ellis (appointed 1 October 1995)
C J Harper
M A Jackson

A T L Maitland
D P Mercer
J F Ries
Dr B W Scott
Sir Ronald Trotter
R B Vaughan

Australian banks, parent entities of Australian banks and controlled entities of Australian banks havebeen exempted, subject to certain conditions, by an Australian Securities Commission class order,
93/837 dated 6 August 1993, from making disclosures of loans made, guaranteed or secured by a bank torelated parties (other than specified categories of directors) and financial instrument transactions (other thanshares and share options) of a bank where a director of the relevant entity is not a party to the transaction
and where the loan or financial instrument transaction is lawfully made and occurs in the course ofordinary banking business either at arm’s length or with the approval of a general meeting of the relevant
entity and its ultimate chief entity (if any).
The class order does not apply to a loan or financial instrument transaction of which any director of
the relevant entity should reasonably be aware that, if not disclosed, would have the potential to adversely
affect the decisions made by users of the financial statements about the allocation of scarce resources.
A condition of the class order is that for each financial year to which it applies, the Company must
provide evidence to the Commission that the Company has systems of internal controls and procedures
which(i) in the case of any material financial instrument transaction, ensure that; and(ii) in any other case, are designed to provide a reasonable degree of assurance that,any financial instrument transaction of a bank which may be required to be disclosed in the Company’s
financial statements in accordance with AASB 1017 “Related Party Disclosures”, and which is not enteredinto regularly, is drawn to the attention of the directors.

93(a) Transactions with directors and director-related entities
Shares and Share Options
Aggregate number of shares and share options issued to directors of the Company and their director-related
entities by the Company were as follows
The Company
1996
1995
No.
No.

Fully paid ordinary shares in the Company
Partly paid ordinary shares in the Company

224,229
50,00056,508100,000

Certain executive directors have acquired fully paid ordinary shares under the ANZ Group Senior Officers’
Share Purchase Scheme on conditions no more favourable than those offered to other employees. Allother fully paid ordinary shares were acquired on terms and conditions no more favourable than thoseoffered to other shareholders.
Certain non-executive directors have acquired partly paid ordinary shares under the Directors’ Shareand Option Purchase Scheme, approved by shareholders in January 1988. No share options have been
issued to directors under this scheme during the financial year.
The reduction in the number of partly paid shares held by directors of the Company and their directorrelated entities during the financial year was 100,000 (1995: nil).
Aggregate number of shares and share options held directly, indirectly or beneficially by directors of theCompany and their director-related entities, as at balance date, were as follows

Fully paid ordinary shares in the Company
Partly paid ordinary shares, paid to 10 cents per share, in the Company
Share options over ordinary shares in the Company

1996
No.

1995
No.

872,544
290,000
1,200,000

698,315340,000
1,300,000

Notes to the Financial Statements

41: Related Party Disclosures (continued)
Directors of the Company and their director-related entities received normal dividends on these shares, withthe exception of partly paid ordinary shares, paid to 10 cents per share, which qualify for dividends only
when fully paid.
Loans made to Directors
Loans made to non-executive directors of the Company and controlled entities are made in the course ofordinary business on normal commercial terms and conditions. Loans to executive directors of theCompany and controlled entities are made pursuant to the Executive Directors' Loan Scheme authorised byshareholders on 18 January 1982, on the same terms and conditions applicable to other employees within
the Economic entity in accordance with established policy.
Under the Australian Securities Commission class order referred to above, disclosure is limited to theaggregate amount of loans made, guaranteed or secured by(i) the Company to its directors;(ii) any controlled entity to the directors of the Company;(iii) banking corporation controlled entities to their directors; and(iv) non-banking corporation controlled entities to directors of controlled entities and to parties related toany one of them or the directors of the Company.

94

The directors involved are
A D Betham3,4
A K Bommakanti3
I Brandon1,2
T J Brennan3
D J Brunskill1,2
A Buhindi1,4
M I Calderwood3
G J Camm1,3
P J Conway2
J C Dahlsen1,3
P H Ellis3
C J Harper1,3

P J O Hawkins3
M B Hensley3,4
P F Horsfall1,2,3,4
G G Howard3,4
W D B Johnstone3
B J Jolliffe1,2,3,4
R G Jones1,3
R E Knight3
J M Lineham3
A T L Maitland1,3,4
D W Manoa2,3
D P Mercer1,2,3,4

I F Peterkin1
J F Ries1,2,3,4
J L Roach1,3,4
J D Tait3
J G Todd1,2
R R Trotter2
R H C Turner3,4
D B Valentine3,4
A E Ward1,3
D F Wicks1

1

Repayments made during the year
Loans made during the year
3
Repayments made during the prior year
4
Loans made during the prior year2

The aggregate amount of such loans outstanding at 30 September was
Consolidated
1996
1995
$’000
$’000

The Company
1996
1995
$’000
$’000

Balance outstanding at 30 September
Total interest received

2,176
173

5,657
304

1,198
89

2,736
98

The aggregate amount of repayments received
from directors and their director-related
entities during the year was
Normal terms and conditions
Employee terms and conditions

1,012
1,689

523
1,345

305
1,460

5
839

The aggregate amount of loans made during
the financial year was
Normal terms and conditions
Employee terms and conditions

273
238

696
1,382

13
187

1,004

Notes to the Financial Statements

41: Related Party Disclosures (continued)
Other transactions of Directors and Director-Related Entities(i) Financial instrument transactions
Under the Australian Securities Commission class order referred to above, disclosure of financial instrumenttransactions regularly made by a bank is limited to disclosure of such transactions with a director of theentity concerned. AASB 1017 requires financial instrument transactions which have occurred on arm’s
length terms and conditions, and are deemed trivial or domestic in nature, to be disclosed by generaldescription.
Financial instrument transactions between the directors and the banks during the financial year were in
the nature of normal personal banking, investment and deposit transactions. These transactions occurredon an arm’s length basis and on normal commercial terms and conditions no more favourable than thosegiven to other employees or customers.
(ii) Transactions other than financial instrument transactions of banks
All other transactions with directors and their director-related entities are conducted on arm’s length terms
and conditions, and are deemed trivial or domestic in nature. These transactions are in the nature ofdeposits, debentures, or investment transactions conducted with non-bank controlled entities.
(b) Transactions with associated entities
During the course of the year the Company and the Economic entity conducted transactions withassociated entities (listed in note 31) on normal commercial terms and conditions, other than an interest
free loan of nil (1995: $3,768,602) to Network Trust and a loan of $2,390,000 (1995: $2,390,000) to
Valuta Group Pty Ltd at an interest rate of 5%. A provision for doubtful debts of nil (1995: $646,093) isheld against the loan to Network Trust. Transactions with associated entities are detailed below.
Consolidated
1996
1995
$’000
$’000

Aggregate
Amounts receivable from associated entities
provision for doubtful debts
provision for doubtful debts - charge
Property held for resale indevelopment ventures with associated entities
provision for diminution in value
Interest revenue
Dividend revenue
Interest expense
Other revenue

The Company
1996
1995
$’000
$’000

2,290
-

12,795
846
646

300
-

4,069
646
646

509
2,581
105
172

356
356
1,092
1,639
-

24
-

356
356
39
-

95

Notes to the Financial Statements

42: Remuneration of Directors
Remuneration includes salaries, bonuses, other benefits (including non-cash benefits) and retirement
benefits and superannuation contributions. The maximum total remuneration for non-executive directorsof the company was set at the Annual General Meeting on 20 January 1995 at $0.85 million. Total fees
paid to non-executive directors by the Company for the year was $0.7 million (1995: $0.7 million).
The number of directors of the Company with total remuneration in each of the following bands
was
The Company
1996
1995

$50,001 to $60,000$60,001 to $70,000$70,001 to $80,000$80,001 to $90,000$90,001 to $100,000$130,001 to $140,000

4
4
-

1
2
3
1
1
1

The Company
1996
1995

$160,001 to $170,000$480,001 to $490,000$530,001 to $540,000$580,001 to $590,000$810,001 to $820,000$1,000,001 to $1,010,000

Total number of directors

Consolidated
1996
1995
$’000
$’000

Total remuneration received or due and receivableby directors of the Company and controlled
entities from the Company or related body corporate1
1

96

7,555

9,477

1
2
1

2
1
1
-

12

13

The Company
1996
1995
$’000
$’000

2,911

3,040

Including the total remuneration of executive directors, excluding executive directors of controlled entities who are executives of theCompany

Under class order 96/1171 issued by the Australian Securities Commission on 25 July 1996, the Company
is relieved from the disclosure requirements in respect of directors’ remuneration set out in Australian
Accounting Standard AASB 1017 “Related Party Disclosures”. The disclosure requirements in respect of
directors’ remuneration set out in Schedule 5 of the Corporations Law have been complied with.
Remuneration amounts (including comparatives) are disclosed in accordance with the class order.

Notes to the Financial Statements

43: Remuneration of Executives
Remuneration includes salaries, bonuses, other benefits, and superannuation contributions. The
remuneration of executives who work wholly or mainly outside Australia are excluded from this disclosure.
The number of executives with total remuneration exceeding $100,000 in each of the following bands was
Consolidated
1996
1995

$110,001 to $120,000$130,001 to $140,000$140,001 to $150,000$150,001 to $160,000$160,001 to $170,000$170,001 to $180,000$180,001 to $190,000$190,001 to $200,000$200,001 to $210,000$210,001 to $220,000$220,001 to $230,000$230,001 to $240,000$240,001 to $250,000$250,001 to $260,000$260,001 to $270,000$270,001 to $280,000$280,001 to $290,000$290,001 to $300,000$300,001 to $310,000$320,000 to $330,000$330,001 to $340,000

2
11
21
3
2
4
2
51
1
4
2
1
1
1
3
4
1
21
11

3
3
11
3
3
2
1
2
2
2
3
31
41
2
2
3
21
-

The
Company
1996
1995

1
1
1
1
2
1
1
1
1
1
3
1
21
-

2
2
1
2
31
1
2
3
21
-

Consolidated
1996
1995

$340,001 to $350,000$350,001 to $360,000$360,001 to $370,000$370,001 to $380,000$380,001 to $390,000$390,001 to $400,000$400,001 to $410,000$420,001 to $430,000$430,001 to $440,000$440,001 to $450,000$460,001 to $470,000$480,001 to $490,000$520,001 to $530,000$540,001 to $550,000$580,001 to $590,000$640,001 to $650,000$650,001 to $660,000$720,001 to $730,000$760,001 to $770,000$810,001 to $820,000$1,000,001 to $1,010,000$1,140,001 to $1,150,000

Total number of executives
Total remuneration received or due and receivable directly
or indirectly by executives of the Company and controlled entities ($’000)
1

The
Company
1996 1995

1
1
21
31
1
1
1
2
1
2
2
11
1
11
1
-

1
1
3
21
11
2
11
11
11
11
11
1
11

1
1
1
31
1
1
1
2
1
2
2
11
1
1
-

1
1
3
1
2
1
11

63

58

36

28

19,778 18,109 13,621 9,827

The executives whose remuneration is recorded in these bands include fixed term employees with contracts which recognise their
particular expertise and that they have been recruited by the Economic entity for specialised activities. These bands also include
employees in the sharebroking industry whose income includes bonuses in accord with the practice of that industry

97Notes to the Financial Statements

44: US GAAP Reconciliation
The consolidated financial statements of the Economic entity are prepared in accordance with Generally
Accepted Accounting Principles applicable in Australia (“Australian GAAP”) which differ in some respects
from Generally Accepted Accounting Principles in the United States (“US GAAP”).
The following are reconciliations of the financial statements, applying US GAAP instead of Australian
GAAP
1996

1995

1994

$M

$M

$M

1,116

1,052

822

(i)

1

2

1

(i)
(ii)
(ii)
(iii)
(vii)

4
(36)
(7)
4
5

2
(36)
(5)
5
2

3
(37)
(5)
17
-

(iv)

-

-

10

1,087

1,022

811

(i)
(i)
(ii)
(ii)
(v)
(vii)

6,290
(366)
33
807
(436)
355
34

5,700
(370)
32
807
(393)
260
30

5,456
(372)
30
807
(352)
189
-

(iii)

-

(4)

(9)

6,717

6,062

5,749

127,604 112,587
(366)
(370)
33
32
807
807
(436)
(393)
26
26

103,874
(372)
30
807
(352)
-

(350)

(315)

127,280 112,339

103,672

Note

Operating profit after income tax using
Australian GAAP
Items having the effect of increasing(decreasing)reported income:Depreciation charged on the difference between revaluation
amount and historical cost of buildings
Difference in gain or loss on disposal of properties revalued
under historical cost
Amortisation of goodwill
Write-off of goodwill
Amortisation of sale-leaseback gain over lease term
Pension expense adjustment
Amortisation of capitalised profit arising from sale ofColes Myer warrants
Net income according to US GAAP98

Shareholders’ equity reported at year end using
Australian GAAP
Elimination of gross asset revaluation reserves
Adjustment to provision for depreciation on buildings revalued
Restoration of previously deducted goodwill
Accumulated amortisation and write-off of goodwill
Provision for final dividend
Pension expense adjustment
Restoration of deferred gain on sale-leaseback transactions
less amortisation
Shareholders’ equity according to US GAAP
Total assets reported using Australian GAAP
Elimination of gross asset revaluation reserves
Adjustment to provision for depreciation on buildings revalued
Restoration of previously deducted goodwill
Accumulated amortisation and write-off of goodwill
Prepaid pension adjustment
Reclassification of deferred tax assets against deferred
tax liabilities
Total assets according to US GAAP

(i)
(i)
(ii)
(ii)
(vii)
(vi)

(388)

Notes to the Financial Statements

44: US GAAP Reconciliation (continued)(i)
Premises and equipment
Properties have been revalued by the Economic
entity at various times, increasing the book valueof these assets (refer note 1 (xvii) in the Financial
Statements). Under Australian GAAP, any
increments on revaluation are credited directly to
the Asset Revaluation Reserve (“ARR”), anddecrements are debited to the ARR to the extent
of any previous revaluation increments.
Decrements in excess of any previous
revaluation increments are charged to the Profit
and Loss Account. The ARR forms part of
Shareholders’ equity.
Under US GAAP, revaluation of properties is
not permitted except for decrements which are
regarded as permanent.
Accordingly, under Australian GAAP,
depreciation charges are generally higher andprofits on disposal are lower than those required
under US GAAP. The depreciation charges,
together with the profits and losses on revalued
assets sold have been adjusted to historical cost in
the US GAAP reconciliation.
(ii)
Goodwill
The Economic entity changed its accounting
policy in respect of goodwill in the financial year
ended 30 September 1993. Previously, goodwill
on acquisition was charged in full to the
Economic entity’s Profit and Loss Account in theyear of acquisition. Under US GAAP, goodwill iscapitalised and amortised over the period of time
during which the benefits are expected to arise,such period not exceeding 40 years generally or
25 years in respect of bank acquisitions.
Adjustments have been made in the US
GAAP reconciliation statement to writeback
goodwill written-off in full and to amortise such
goodwill over the period of the expected benefits.
Additionally, to the extent that periodic
reviews of the carrying amount of goodwill lead toa write-down of goodwill previously capitalisedfor US purposes, this is adjusted in the US GAAP
reconciliation.
(iii) Sale-leaseback transactions
Under Australian GAAP for operating leases, gains
on disposal under sale-leaseback transactions canbe recognised in the period of sale. Under US
GAAP, the gain is amortised over the remaining
lease term. This difference in treatment has beenadjusted in the US GAAP reconciliation.

(iv) Option transactions - Coles Myer Warrants
Under US GAAP, premia on options written overequities held in portfolio are amortised over theterm of the option. Adopting Australian GAAP,
the Economic entity has recognised as profit thatpart of the option premium associated with thewarrant issue representing the intrinsic value of theoption, and amortised the remainder. This has
been adjusted in the US GAAP reconciliation.
(v)
Dividends
Under Australian GAAP, dividends are shown in
the Profit and Loss Account in the period towhich they relate rather than in the period when
they are declared as required by US GAAP. Thisdifference in treatment has been adjusted in the
US GAAP shareholders’ equity reconciliation.
(vi) Income taxes
Under Australian GAAP, tax benefits relating tocarry forward tax losses must be “virtually certain”
of being realised before being booked.
Realisations of benefits relating to other timing
differences must be “beyond a reasonable doubt”
before they may be booked. These tests are as
stringent as those applied under US GAAP andhence no write-down of future tax benefits isrequired.
Australian GAAP allows offsetting of future
income tax benefits and liabilities to the extent
they will reverse in the same period. US GAAP
requires an offset of these two items where reversal
will occur within twelve months and in the period
exceeding twelve months. This has been adjusted
in the US GAAP reconciliation.
(vii) Pension commitments
Under Australian GAAP, contributions in respectof defined benefit schemes are made at levels
necessary to ensure that these schemes aremaintained with sufficient assets to meet theiractuarially assessed liabilities. Any net deficiency
arising from the aggregation of assets and liabilitiesof the Economic entity’s defined benefit schemesis provided for in the Economic entity’s financial
statements (refer note 36 in the Financial
Statements). Under US SFAS 87, “Employer’s
Accounting for Pensions”, pension expense is afunction of an employee’s service period, interest
costs, actuarial return on the schemes’ assets,
amortisation of unrecognised prior service costs
and unrecognised net gains or losses. No
adjustment was made to the US GAAP
reconciliation in 1994 as the impact on net
income, shareholders’ equity and total assets was
not material.

99

Notes to the Financial Statements

44: US GAAP Reconciliation (continued)(viii) Post retirement benefits
Post retirement benefits other than pension
payments are not material and no adjustment isrequired in the US GAAP reconciliation.
(ix) Trading securities
US GAAP requires that in instances where trading
securities are not bought and held principally forthe purpose of selling them in the near term, theyshould be classified as available for sale andrecorded at market value with unrealised profits
and losses in respect of market value adjustments
recognised in Shareholders’ equity.
No adjustment is required to be made in the
US GAAP reconciliation as the effect ofreclassifying certain trading securities as available
for sale is not material.
(x)

100

Foreclosed and in-substance foreclosed
assetsThe Economic entity does not carry assets
acquired in foreclosure proceedings or assets thatwould be treated as in-substance foreclosures
under US GAAP as a separate balance sheet item,
because the Economic entity considers the
management of security by the Economic entity toconstitute part of the loan recovery program.
These assets are carried on the Economic entity’sbalance sheet under Loans and Advances. As partof doubtful debt assessment procedures, provisions
are raised to reflect any shortfall in the collateralvalue over the loan balance where full recovery ofa loan is considered doubtful. As a result, theseassets are effectively carried at the fair or market
value of the collateral which approximates net
realisable value. Therefore, the application of the
Securities and Exchange Commission’s Financial
Reporting Policy 401.09 regarding in-substanceforeclosures would not result in an adjustment in
the US GAAP reconciliation.
(xi) Accounting for the impairment of loans
SFAS 114 “Accounting by Creditors for
Impairment of a Loan”, as amended by SFAS 118“Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosures”,
requires the value of an impaired loan to bemeasured as the present value of future cash flows
discounted at the loan's effective interest rate, theloan's observable market price or the fair value ofthe collateral, if the loan is collateral dependent.
There is no requirement under Australian GAAP
to discount the expected future cash flows
attributable to impaired loans in assessing the levelof specific provision for doubtful debts.
No adjustment is required in the US GAAP
reconciliation as the estimated fair value of
impaired loans is not materially different from thecarrying value as at 30 September 1996.

(xii) Accounting for the impairment of longlived assets and for long-lived assets to bedisposed of
SFAS 121, “Accounting for the Impairment ofLong-Lived Assets and for Long-Lived Assets to
be Disposed Of ”, requires that where an event ora change in circumstance indicates that thecarrying value of an asset that is expected to beheld and used may not be recoverable, an
impairment loss shall be recognised. The standard
also requires that where there is a committed plan
to dispose of an asset, the asset shall be reported at
the lower of the carrying value or fair value lessselling costs.
SFAS 121 will become effective in the
Economic entity’s financial statements for the year
ending 30 September 1997. The adoption of thisstandard is not anticipated to have a material
impact on the Economic entity’s net income, total
assets or shareholders’ equity.
(xiii) Accounting for stock-compensation
plans
Under Australian GAAP, an expense is notrecognised for share options issued to employees
or for shares issued at a discount. SFAS 123“Accounting for Stock-Based Compensation”,
requires share options and shares issued to
employees to be recognised using either the fairvalue based method or the intrinsic value based
method as prescribed by APB No 25. No
adjustment is made for the impact of the intrinsic
value based method in the US GAAP
reconciliation as the impact is not material.
The disclosure provisions of SFAS 123, which
are not effective until financial years commencing
on or after 15 December 1995, have not been
adopted by the Economic entity. They will be
adopted in the financial year commencing on
1 October 1996.
(xiv) Accounting for transfers andservicing of financial assets andextinguishments of liabilities
The Economic entity has not adopted theprovisions of SFAS 125 “Accounting for Transfersand Servicing of Financial Assets andExtinguishments of Liabilities”. SFAS 125
prescribes the accounting and reporting
requirements for transfers of financial assets andextinguishments of liabilities occurring after
31 December 1996. The Statement also requires,
under certain circumstances, a transferor of
financial assets that are pledged as collateral toreclassify those assets and the transferee torecognise those assets and their obligation to
return them.
It is estimated that the adoption of theprovisions of SFAS 125 by the Economic entity as
at 30 September 1996 would not have resulted ina material adjustment to the US GAAP
reconciliation.

Notes to the Financial Statements

44: US GAAP Reconciliation (continued)(xv)

Details of Pension Schemes and Pension Expense

Reconciliations of the funded status of major defined benefit schemes as at 30 June 1996 are summarised
below. Details of the funding of the schemes are set out in note 36.
Australian Scheme
accumulated
benefits exceed
assetsUK Scheme
assets exceed
accumulated
benefits$M$M

Accumulated benefit obligation - vested

58

456

Projected benefit obligation
Fair value of plan assets

58
47

498
603

(Deficiency)excess of assets over projected benefit obligation
Unrecognised net transition loss(gain)
Unrecognised net loss(gain)
Unrecognised prior service cost
Adjustment needed to recognise minimum liability

(11)
8
3
(11)

105
(45)
(49)
15
-

(Pension liability)prepaid pension cost

(11)

26

Australian
SchemeUK Scheme

7.5%
9.0%

8.75%
-

5%
3%
8%

7%
9.5%

The assumptions used in the actuarial calculations are as follows

Discount rate used in determining present values- active members- pensioners
Annual increase in future compensation levels- salary- pensions
Expected long-term rate of return on assets

The elements of the net periodic pension cost of the above schemes are as follows
1996$M

Service cost
Interest cost
Actual return on schemes’ assets
Net amortisation and deferral
Net periodic pension cost

11
44
(96)
42
1

The Economic entity also sponsors defined contribution schemes. Details of the major schemes are set out innote 36. The Economic entity’s contributions to major defined contribution schemes amounted to$83 million for the year.

45: Operation of Systems in Year 2000
The Economic entity is reviewing its systems to ensure they will operate satisfactorily when the yearchanges from 1999 to 2000. The reason for this is that some computer systems process transactions basedon storing two digits for the year of a transaction, rather than a full four digits (for example, “96” for 1996).
These systems may require modification to ensure that transactions are accurately processed in the year
2000. At this stage the review is not complete and the total cost of the modifications cannot be quantified.
Such costs, being in the nature of maintenance, will be expensed.

46: Events Since the End of the Financial Year
There have been no significant events since 30 September 1996 to the date of this Report.

101

Directors’ Statement

In the opinion of the directors of Australia and
New Zealand Banking Group Limited, theaccompanying financial statements of theCompany and the Economic entity are properly
drawn up in accordance with the provisions of the
Corporations Law in the manner authorised for aprescribed corporation being a bank and on thisbasis(i) the financial statements set out on pages 39 to
101 are drawn up so as to give a true and fairview of the results and cash flows for thefinancial year ended 30 September 1996, andthe state of affairs at 30 September 1996, of
the Company and the Economic entity;(ii) the consolidated accounts have been madeout in accordance with Divisions 4A and 4Bof Part 3.6 of the Corporations Law; and(iii) at the date of this statement there arereasonable grounds to believe that theCompany will be able to pay its debts as andwhen they fall due.

102

The financial statements have been prepared inaccordance with applicable Australian AccountingStandards and Urgent Issues Group Consensus
Views.
The Company and some of its wholly owned
controlled entities listed in note 30 executed a
Deed of Cross Guarantee enabling them to takeadvantage of the accounting and audit relief
offered by the class order 95/1530, dated
10 November 1995 issued by the Australian
Securities Commission.
The nature of the Deed of Cross Guarantee is toguarantee each creditor payment in full of any
debt in accordance with the terms of the Deed of
Cross Guarantee.
At the date of this statement, there are reasonablegrounds to believe that the Company and its
controlled entities to which the class orders apply,
are able, as an Economic entity, to meet any
obligations or liabilities to which they are, or may
become, subject by virtue of the Deed of Cross
Guarantee.

Signed in accordance with a resolution of the directors

Charles B Goode
Chairman
29 November 1996

D P Mercer
Chief Executive Officer

Auditors’ Report
To the Members of Australia and
New Zealand Banking Group Limited
Scope
We have audited the financial statements ofAustralia and New Zealand Banking Group
Limited for the financial year ended
30 September 1996, consisting of the profit andloss accounts, balance sheets, statements ofchanges in shareholders’ equity, statements of cash
flows, accompanying notes and the directors’
statement set out on pages 39 to 102. The
financial statements comprise the accounts of theCompany and the consolidated accounts of the
Economic entity being the Company and its
controlled entities. The Company’s directors are
responsible for the preparation and presentation of
the financial statements and the information they
contain. We have conducted an independent
audit of these financial statements in order toexpress an opinion on them to the members of
the Company.
Our audit has been conducted in accordancewith Australian Auditing Standards (which aresubstantially the same as auditing standards
generally accepted in the United States ofAmerica) to provide reasonable assurance as towhether the financial statements are free ofmaterial misstatement. Our procedures included
examination, on a test basis, of evidence
supporting the amounts and other disclosures in
the financial statements, and the evaluation of
accounting policies and significant accounting
estimates. These procedures have been
undertaken to form an opinion as to whether, inall material respects, the financial statements arepresented fairly in accordance with accounting
standards and other mandatory professional
reporting requirements (Urgent Issues Group
Consensus Views) and statutory requirements inthe manner authorised for a prescribedcorporation being a banking corporation so as topresent a view which is consistent with ourunderstanding of the Company’s and theEconomic entity’s financial position, the results of
their operations and their cash flows.
The names of the controlled entities of which
we have not acted as auditors are set out innote 30. We have received sufficient informationand explanations concerning these controlled
entities to enable us to form an opinion on the
consolidated accounts.
The audit opinion expressed in this report has
been formed on the above basis.
Qualification
The audit report on the financial statements forthe year ended 30 September 1996 of a controlled
entity of the Company, being ANZ Grindlays

KPMG
Chartered Accountants
Melbourne
29 November 1996

Bank Limited, states that the ultimate outcome ofa claim against ANZ Grindlays Bank Limited by
the National Housing Bank of India is at present
uncertain.
This material uncertainty is detailed withinnote 35 of the financial statements under theheading “India - National Housing Bank”. Inview of the circumstances, and in particularhaving regard to the legal opinion obtained by
the Economic entity, we concur with the basis onwhich the financial statements of the Economic
entity have been presented.
Qualified Audit Opinion
In our opinion, the financial statements ofAustralia and New Zealand Banking Group
Limited, and, subject to the effects of suchadjustments, if any, as might have been required
had the ultimate resolution of the uncertainty
discussed in the qualification paragraph been
known, the financial statements of the Economic
entity, are properly drawn up:(a) so as to give a true and fair view of:(i) the state of affairs of the Economic entity
at 30 September 1996 and 1995 and of theresults and cash flows of the Economic
entity for the financial years ended on
30 September 1996, 1995 and 1994;(ii) the state of affairs of the Company at
30 September 1996 and 1995 and of theresults and cash flows of the Company forthe financial years ended 30 September
1996 and 1995; and(iii) the other matters required by Divisions 4,
4A and 4B of Part 3.6 of the Corporations
Law to be dealt with in the financial
statements;(b) in accordance with the provisions of the
Corporations Law in the mannerauthorised for a prescribed corporation
being a banking corporation; and(c) in accordance with applicable Australian
Accounting Standards and othermandatory professional reporting
requirements.
Accounting principles generally accepted inAustralia vary in certain respects from accounting
principles generally accepted in the United Statesof America. An explanation of the majordifferences between the two sets of principles ispresented in note 44 to the financial statements.
The application of the United States principles
would have affected the determination of
consolidated net profit for each of the three years
in the period ended 30 September 1996 and thedetermination of the consolidated financial
position as of 30 September 1996, 1995 and 1994
to the extent summarised in note 44 to thefinancial statements.

P M Burroughs
Partner103

Financial Information

1: Capital Adequacy
The Reserve Bank of Australia (RBA) adopts a risk-based capital assessment framework for Australian banks
based on internationally accepted capital measurement standards. This risk-based approach requires eligible
capital to be divided by total risk weighted assets, with the resultant ratio being used as a measure of a bank’s
capital adequacy in relation to its credit risk.
Capital is divided into tier 1, or ‘core’ capital, and tier 2, or ‘supplementary’ capital. For capital
adequacy purposes, eligible tier 2 capital cannot exceed the level of tier 1 capital. Banks are required todeduct from total capital any strategic holdings of other banks' capital instruments and investments in entities
engaged in life insurance, funds management and securitisation activities. Under RBA guidelines, banks
must maintain a ratio of qualifying capital to risk weighted assets of at least 8 per cent.
Risk weightings are applied to balance sheet assets and to credit converted off-balance sheet exposures
to determine total risk weighted assets. Categories of risk weights are assigned based upon the nature of thecounterparty and the relative liquidity of the assets concerned.
1996
$M

1995
$M

Tier 1
Total shareholders’ equity and outside
equity interests
Unamortised goodwill
Net future income tax benefit

6,336
(17)
(46)

5,747
(8)
(236)

Tier 1 capital

6,273

5,503

895
709

943
678

1,604

1,621

2,419

2,213

Tier 2 capital

4,023

3,834

Investment in ANZ Life
Investments in funds management
and securitisation activities2

(354)

(302)

(122)

n/a

Total qualifying capital

9,820

9,035

Qualifying capital

1996
$M

1995
$M

1995
$M

1996
$M

Tier 2
Perpetual notes - subordinatedGeneral provision for doubtful debts
Subordinated notes

1041

Balance sheet assets

AssetsLiquid assets
Due from other banks
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Regulatory deposits
Shares in associates
Other assets
Premises and equipment

Off-balance sheet exposures
Direct credit substitutes
Trade and performance related items
Commitments
Foreign exchange, interest rate andother market related transactions

Risk weighted assets

6,901
11,3527,334
2,570
75,901
14,013
1,163
10
6,340
2,020

5,054
8,759
5,785
2,833
68,216
12,646
1,174
10
6,119
1,991

1,715
2,403
2,681
630
59,142
12,948
178
10
1,538
2,020

1,534
1,771
1,809
840
52,44912,178
134
10
1,740
1,991

127,604

112,587

83,26574,456

Contract/
notional amountCreditequivalent

3,360
7,964
30,965

3,419
7,798
25,720

3,360
3,577
4,085

3,419
3,496
2,204

2,369
3,202
3,431

2,437
3,068
1,898

516,371394,337

5,105

4,958

1,250

1,217

10,252

8,620

93,517

83,076

Capital adequacy ratios
Tier 1
Tier 2
Deductions

%
6.7
4.3
(0.5)

%
6.6
4.6
(0.3)

Total
1
Subordinated note issues are reduced each year by 20% of the original amount during the last five years to maturity
2
RBA guidelines did not require investments in funds management and securitisation activities to be deducted in 1995

10.5

10.9

Total risk weighted assets andoff-balance sheet exposures

Financial Information

2: Average Balance Sheet and Related Interest
Averages used in the following table are predominantly daily averages. Interest income figures are presented
on a tax-equivalent basis. Non-accrual loans are included under the interest earning asset category “Loans,advances and bills discounted”. Amounts classified as “International markets” represent assets and liabilitiesof the Economic entity’s non-Australian and non-New Zealand banking offices and controlled entities.
1995

1996
Averagebalance$M

Interest earning assets
Due from other banks
Australia
New ZealandInternational markets
Regulatory deposits with
Reserve Bank of Australia
Investments in public securities
Australia
New ZealandInternational markets
Loans, advances andbills discounted
Australia
New ZealandInternational markets
Other assets
Australia
New ZealandInternational markets

Non-interest earning assets
Acceptances
Australia
New ZealandInternational markets
Premises and equipment
Other assets
Provisions for doubtful debts
Australia
New ZealandInternational markets

Average
Interest
rate
$M
%

1994

Averagebalance$M

Average
Interest
rate$M%

Averagebalance$M

Interest$M

Average
rate
%

630
346
10,209

41
27
699

6.5
7.8
6.8

390
339
8,940

25
28
607

6.4
8.3
6.8

737
660
7,002

27
37
452

3.6
5.6
6.5

535

13

2.4

491

30

6.1

460

22

4.8

4,897
1,090
2,973

380
88
289

7.8
8.1
9.7

4,464
1,116
3,195

332
81
290

7.4
7.3
9.1

4,485
1,013
3,577

238
59
294

5.3
5.8
8.2

48,39912,619
11,770

4,939
1,315
1,084

10.2
10.4
9.2

44,783
11,134
10,313

4,471
1,143
922

10.0
10.3
8.9

41,411
8,803
9,510

3,648
714
743

8.8
8.1
7.8

618
760
4,825

53
77
293

8.6
10.1
6.1

861
800
4,086

61
70
278

7.1
8.8
6.8

779
254
4,766

47
17
229

6.0
6.7
4.8

99,671

9,298

9.3

90,9128,338

9.2

83,457

6,527

7.8

12,581
597
462
2,027
6,842

11,521
672
586
1,982
7,714

10,708
740
703
1,934
8,675

(1,002)
(118)
(238)

(1,163)(96)(300)(1,607)
(117)
(632)

21,151

20,916

20,404

Total assets

120,822

111,828

103,861

Total assets
Australia
New ZealandInternational markets

70,917
16,212
33,69366,095
14,92430,80962,743
12,18728,931

120,822

111,828

103,861

41.3%

40.9%

39.6%

% of total assets attributable
to overseas activities

105

Financial Information
2: Average Balance Sheet and Related Interest (continued)
1995

1996

106

Interest bearing liabilities
Time deposits
Australia
New ZealandInternational markets
Savings deposits
Australia
New ZealandInternational markets
Other demand deposits
Australia
New ZealandInternational markets
Due to other banks
Australia
New ZealandInternational markets
Commercial paper
Australia
New ZealandInternational markets
Borrowing corporations’ debt
Australia
New ZealandInternational markets
Loan capital, bonds and notes
Australia
New ZealandInternational markets
Other liabilities1
Australia
New ZealandInternational markets

Average
Interest
rate$M%

Averagebalance$M

Average
Interest
rate$M%

Averagebalance$M

Interest$M

Averagerate%

18,542
7,313
11,722

1,340
622
785

7.2
8.5
6.7

17,605
6,175
9,885

1,251
491
644

7.1
8.0
6.5

14,374
4,061
9,154

757
239
481

5.3
5.9
5.3

7,530
2,183
1,142

264
83
57

3.5
3.8
5.0

7,408
1,959
1,158

239
52
55

3.2
2.7
4.7

7,440
1,930
1,038

209
41
48

2.8
2.1
4.6

8,683
1,534
810

520
121
35

6.0
7.9
4.3

7,207
1,395
628

408
103
30

5.7
7.4
4.8

7,355
1,293
727

289
61
21

3.9
4.7
2.9

397
732
11,501

27
72
763

6.8
9.8
6.6

213
863
10,902

15
69
722

7.0
8.0
6.6

340
901
10,958

15
42
580

4.3
4.7
5.3

2,469
1,087

186
61

7.5
5.6

1,601
1,173

110
68

6.9
5.8

1,738
932

75
39

4.3
4.2

5,081
1,167
-

420
99
-

8.3
8.5
-

4,915
1,137
2

402
87
-

8.2
7.7
-

4,779
877
-

386
59
-

8.1
6.7
-

4,246
186
621

322
19
37

7.6
10.2
6.0

4,060
120
605

314
17
38

7.7
14.2
6.3

4,194
102
618

223
15
30

5.3
14.7
4.9

676
698

76
7
53

n/a
n/a
n/a

727
406

78
9
27

n/a
n/a
n/a

469
7
642

45
6
24

n/a
n/a
n/a

88,3205,969

6.8

80,1445,229

6.5

73,9293,685

5.0

Non-interest bearing liabilities
Deposits
Australia
2,736

New Zealand

1994

Averagebalance
$M

3,340

3,581

1,139

1,075

855

1,249

1,139

1,082

12,581
597
462
7,586

11,521
672
586
7,420

10,708
740
703
6,935

26,35025,75324,604

Total liabilities

114,670

105,897

98,533

Total liabilities
Australia
New ZealandInternational markets

66,67915,352
32,63962,193
14,022
29,68258,561
11,39728,575

114,670

105,897

98,533

6,152

5,931

5,328

Total liabilities andshareholders’ equity

120,822

111,828

103,861% of total liabilities attributable
to overseas activities

41.9%

41.3%

40.6%

International markets
Acceptances
Australia
New ZealandInternational markets
Other liabilities

Shareholders’ equity

1

Includes foreign exchange swap costs

Financial Information

3: Interest Spreads and Net Interest Average Margins
1996
$M

1995
$M

1994
$M

2,271
484
574

2,102
494
513

1,983
364
495

3,329

3,109

2,842

55,07914,81529,77750,98913,38926,53447,871
10,73024,856

99,671

90,912

83,457

%

%

%

9.85
10.17
7.94
9.33

9.65
9.87
7.90
9.17

8.32
7.71
6.91
7.82

Australia
Gross interest spread
Interest forgone on impaired assets2

3.37(0.15)

3.46(0.25)

3.87(0.47)Net interest spread3
Interest attributable to net non-interest bearing items

3.22
0.90

3.21
0.91

3.40
0.74

Net interest average margin - Australia

4.12

4.12

4.14

New ZealandGross interest spread
Interest forgone on impaired assets2

2.43(0.06)

2.77(0.01)

2.80(0.14)Net interest spread3
Interest attributable to net non-interest bearing items

2.37
0.90

2.76
0.93

2.66
0.73

Net interest average margin4 - New Zealand

3.27

3.69

3.39

International markets
Gross interest spread
Interest forgone on impaired assets2

1.49(0.04)

1.48
0.02

1.67
0.16

Net interest spread3
Interest attributable to net non-interest bearing items

1.45
0.48

1.50
0.43

1.83
0.16

Net interest average margin4 - International markets

1.93

1.93

1.99

Group
Gross interest spread
Interest forgone on impaired assets2

2.67(0.10)

2.79(0.14)

3.07(0.24)Net interest spread3
Interest attributable to net non-interest bearing items

2.57
0.77

2.65
0.77

2.83
0.57

Net interest average margin4 - Group

3.34

3.42

3.40

Net interest income
Australia
New ZealandInternational markets

Average interest earning assets
Australia
New ZealandInternational markets

Gross earnings rate1
Australia
New ZealandInternational markets

Total
Interest spreads and net interest average margins may be analysed as follows

4

1

Average interest rate received on interest earning assets
Refer note 14 to the Financial Statements
3
Average interest rate received on interest earning assets less the average interest rate paid on interest bearing liabilities
4
Net interest income as a percentage of average interest earning assets
2

107Financial Information

4: Volume and Rate Analysis
The following table allocates changes in interest income and interest expense between changes in volume
and changes in rate for the past two years. Volume and rate variances have been calculated on the
movement in average balances and the change in the interest rates on average interest earning assets andaverage interest bearing liabilities. The variance caused by the change of both volume and rate has been
allocated in proportion to the relationship of the absolute dollar amounts of each change to the total.

Volume$M

108

Interest earning assets
Due from other banks
Australia
New ZealandInternational markets
Regulatory deposits with
Reserve Bank of Australia
Investments in public securities
Australia
New ZealandInternational markets
Loans, advances and bills discounted
Australia
New ZealandInternational markets
Other assets
Australia
New ZealandInternational markets
Change in interest income

1996 over 1995
Change due to
Rate
$M

Total
$M

Volume$M

1995 over 1994
Change due to
Rate
$M

Total
$M

16
1
87

(2)
5

16
(1)
92

(16)
(22)
131

14
13
24

(2)
(9)
155

2

(19)

(17)

2

6

8

33
(2)
(21)

15
9
20

48
7
(1)

(1)
6
(33)

95
16
29

94
22
(4)

367
155
133

101
17
29

468
172
162

312
214
66

511
215
113

823
429
179

(19)
(4)
47

11
11
(32)

(8)
7
15

5
46
(36)

9
7
85

14
53
49

795

165

960

674

1,137

1,811

Financial Information

4: Volume and Rate Analysis (continued)
Volume$M

Interest bearing liabilities
Time deposits
Australia
New ZealandInternational markets
Savings deposits
Australia
New ZealandInternational markets
Other demand deposits
Australia
New ZealandInternational markets
Due to other banks
Australia
New ZealandInternational markets
Commercial paper
Australia
New ZealandInternational markets
Borrowing corporations’ debt
Australia
New ZealandInternational markets
Loan capital, bonds and notes
Australia
New ZealandInternational markets
Other liabilities
Australia
New ZealandInternational markets

1996 over 1995
Change due to
Rate
$M

Total
$M

Volume$M

1995 over 1994
Change due to
Rate
$M

Total
$M

67
95
123

22
36
18

89
131
141

194
151
41

300
101
122

494
252
163

4
6
(1)

21
25
3

25
31
2

(1)
1
6

31
10
1

30
11
7

87
11
8

25
7
(3)

112
18
5

(6)
5
(3)

125
37
12

119
42
9

13
(11)
40

(1)
14
1

12
3
41

(7)
(2)
(3)

7
29
145

27
142

65
(5)

11
(2)

76
(7)

(6)
12

41
17

35
29

14
2
-

4
9
-

18
11
-

11
19
-

5
9
-

16
28
-

14
8
1

(6)
(7)
(2)

8
1
(1)

(7)
3
(1)

98
(1)
9

91
2
8

(6)
22

4
4

(2)
26

27
(3)
(11)

6
6
14

33
3
3

Change in interest expense

557

183

740

420

1,124

1,544

Change in net interest income

238

(18)

220

254

13

267

109

Financial Information

5: Interest Sensitivity Gap
The following table represents the interest rate sensitivity as at 30 September 1996 of the Economic entity’s
assets, liabilities and off-balance sheet instruments repricing (ie when interest rates applicable to each asset or
liability can be changed) in the periods shown.
Sensitivity to interest rates arises from mismatches in the period to repricing of assets and that of thecorresponding liability funding. These mismatches are managed within policy guidelines for gap positions.
Major changes in gap positions can be made to adjust the profile as market outlooks change.

At 30 September 1996

3 to 6months$M

6 to 12months$M

1 to 5years$M

Greaterthan 5
years
$M

Not
bearing
interest
$M

Total
$M

Net loans and advances
Liquid assets
and due from other banks
Trading and investment securities
Other assets

41,819

7,799

7,806

17,1271,335

1575,901

13,924
4,357
872

2,514
1,186
7

730
354
-

202
1,902
14

4
1,794
3

879
311
22,65018,253
9,904
23,546

Total assets

60,972

11,506

8,890

19,245

3,136

23,855

127,604

28,014
22,529

6,835
393

5,661
85

3,558
4

160
438

5,210

44,22828,65914,656
3,329
34

2,641
1,038
5

1,376
274
-

357
517
15

43
706
-

431
22,95919,504
5,864
23,01368,562

10,912

7,396

4,451

1,347

28,600121,268

Certificates of deposit
and term deposits
Other deposits
Other borrowingsand due to other banks
Bond, notes and loan capital
Other liabilities
Total liabilities

110

To 3
months$M

Shareholders’ equity andoutside equity interests
Off-balance sheet items affecting
interest rate sensitivity

-

-

-

-

-

6,336

6,336

5,359

(820)

(1,197)(2,712)

(630)

-

-

Interest sensitivity gap- net- cumulative(2,231)(2,231)(226)(2,457)297 12,082 1,159(2,160) 9,922 11,081(11,081)--Financial Information

6: Investment Securities by Maturities and Yields
Investment securities are allocated between Australia and Overseas based on the domicile of the issuer.
Based on remaining term tomaturity at 30 September 1996
Due in 1 year
or less$M

Due between
1 year and5 years$M

Due between
5 years and
10 years$M

Due after
10 years
$M

Total
$M

Market
value
total
$M

4
9
281

37
152

1

2

4
46
436

4
46
437

294

189

1

2

486

487

526
28
88
507
302

14
231
164
174

12
22
3

5
2
6

540
28
336
695
485

537
27
332
697
487

1,451

583

37

13

2,084

2,080

Total book value

1,745

772

38

15

2,570

n/a

Total market value

1,741

772

37

17

n/a

2,567

At book value

Australia
Commonwealth securities
Local and semi-government securities
Other securities and equity investments

Overseas
New Zealand government securities
US treasury and government securities
Indian government securities
Other government securities
Other securities and equity investments

Weighted average yields1
Australia
Commonwealth securities
Local and semi-government securities
Other securities and equity investments

%

%

%

%

8.35
7.70
6.53

8.04
7.42

-

5.73

Overseas
New Zealand government securities
US treasury and government securities
Indian government securities
Other government securities
Other securities and equity investments

9.21
5.67
9.60
10.54
8.41

8.00
11.65
9.29
7.38

11.76
5.45
5.59

13.22
10.50
8.65

1

Based on coupon rates for fixed interest securities, effective yields for discounted securities and dividend yield for equity investments at
30 September 1996

111

Financial Information

7: Loans and Advances by Industry
The Economic entity’s loans and advances classified according to industry segments are set out below
1996
$M

1995
$M

1994
$M

1993
$M

1992
$M

2,038
950
1,302
2,472
70
3,282
2,998
7,384
857
23,518
4,210
3,008

1,721
1,053
1,079
2,106
104
3,138
2,639
7,109
817
22,734
3,615
2,157

1,884
851
827
2,359
345
3,179
1,752
6,379
704
21,674
3,362
1,451

1,802
759
894
1,638
205
3,212
1,948
6,252
774
19,676
3,497
2,042

1,889
727
896
2,333
327
3,610
2,006
6,357
1,022
19,2453,309
2,257

52,08948,272

44,76742,69943,978

1,471
439
393
4,493
377
68
3,722
3,115
753
8,034
1,711
2,254
n/a

1,309
501
319
2,066
320
51
3,973
3,221
602
7,488
1,554
1,618
n/a

750
481
237
1,703
595
52
2,598
2,388
373
6,245
1,485
1,486
n/a

901
449
227
1,776
409
63
2,821
2,366
331
5,492
1,524
1,391
600

722
505
356
2,043
408
68
2,912
2,251
414
4,777
1,375
1,022
691

26,83023,022

18,39318,35017,544Gross loans and advances

78,91971,294

63,16061,04961,522

Provisions for doubtful debts
Income yet to mature3(1,218)(1,800)(1,380)(1,698)(1,652)(1,477)(2,690)(2,075)(3,338)(2,417)(3,018)(3,078)(3,129)(4,765)(5,755)75,901

68,21660,031

56,28455,767Australia
Agriculture, forestry, fishing and mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other

112

Overseas
Agriculture, forestry, fishing and mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other
Rescheduled country debt

Net loans and advances

n/a Not applicable
1
Personal includes non-business loans to individuals through overdrafts, personal loans, credit cards and fully drawn advances
2
Real estate mortgage includes residential and commercial property exposure. Loans within this category must be for the purchase of such properties
and must be secured by property
3
Effective from 30 September 1994, the Economic entity ceased the practice of reserving interest on certain non-accrual loans. The reserved interest
balance as at 30 September 1994 of $286 million for the Economic entity has been written back against the relevant loan accounts. Income yet
to mature as at 30 September 1993 includes reserved interest of $517 million for the Economic entity

Financial Information

8: Concentrations of Credit Risk
Concentrations of credit risk exist if a number of counterparties are engaged in similar activities and have
similar economic characteristics that would cause their ability to meet contractual obligations to be
similarly affected by changes in economic or other conditions. Off-balance sheet transactions of the
Economic entity are substantially with other banks.
1995

1996
Loans andadvances Acceptances$M$M

Australia
Agriculture, forestry, fishingand mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other

Overseas
Agriculture, forestry, fishingand mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other

Total portfolio
1
2

Total
$M

Specific
provision
$M

Total
$M

Specific
provision
$M

2,038
950
1,302
2,472
70
3,282
2,998
7,384
857
23,518
4,210
3,008

556
228
1,629
1,054
8
2,155
343
111
4,079
1,904
890

2,594
1,178
2,931
3,526
78
3,282
5,153
7,727
968
27,597
6,114
3,898

21
27
18
22
8
17
35
12
82
51
53

2,326
1,534
2,178
3,734
114
3,138
4,409
7,417
1,001
25,898
5,383
2,552

25
36
23
32
14
62
40
15
126
75
57

52,08912,95765,046346

59,684

505

1,471
439
393
4,493
377
68
3,722
3,115
753
8,034
1,711
2,254

24
94
1
218
311
28
45
6
168
161

1,495
533
394
4,711
377
68
4,033
3,143
798
8,040
1,879
2,415

4
6
3
23
3
55
15
16
8
28
2

1,352
589
325
2,356
322
51
4,335
3,262
636
7,494
1,698
1,836

11
9
7
26
3
54
11
16
10
27
23

26,8301,056

27,886

163

24,256

197

78,91914,01392,932509

83,940702

Personal includes non-business loans to individuals through overdrafts, personal loans, credit cards and fully drawn advances
Real estate mortgage includes residential and commercial property exposure. Loans within this category must be for the purchase of suchproperties and must be secured by property

113

Financial Information

9: Maturity Distribution and Interest Rate Sensitivity of Loans
Due in 1 year
or less$M

Due between
1 year and5 years$M

Due over5 years
$M

Total
$M

Australia
Agriculture, forestry, fishing and mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal
Real estate - construction
Real estate - mortgage
Retail and wholesale trade
Other
Overseas

1,036
440
406
847
5
861
1,353
2,296
433
2,092
1,993
1,308
14,112

767
357
453
993
29
1,808
1,450
2,182
281
3,124
1,639
1,198
7,485

235
153
443
632
36
613
195
2,906
143
18,302
578
502
5,233

2,038
950
1,302
2,472
70
3,282
2,998
7,384
857
23,518
4,210
3,008
26,830Gross loans and advances

27,182

21,76629,971

78,919Interest rate sensitivity
Fixed interest rates1
Variable interest rates

14,497
12,685

15,361
6,405

13,05816,91342,91636,003

27,182

21,76629,971

78,919Based on remaining term
to maturity at 30 September 1996

1

114

Housing loans and other loans that are capped for an initial period are treated as fixed interest rate loans and maturity profiled on the principal
repayments due over the term of the loan

10: Cross Border Outstandings
Cross border outstandings of the Economic entity to countries which individually represented in excess of
0.75% of the Economic entity’s total assets are shown below. There were no cross border outstandings to
any other country exceeding 0.75% of total assets.
Cross border foreign outstandings are based on the country of domicile of the borrower or guarantorof the ultimate risk and comprise loans (including accrued interest), placements with banks, acceptancesand other monetary assets denominated in currencies other than the borrower’s local currency.

Total
$M

% of
Economic
entityassetsCommitments
includingirrevocableletters of credit
$M

2,984
875
776
577
282
456
69

3,582
2,470
2,223
2,207
1,294
1,224
1,121

2.8
1.9
1.7
1.7
1.0
1.0
0.9

1,217
16
27
175
248
218
63

3,134
2,114
910
493
253
484

3,935
3,656
1,476
1,752
1,667
891

3.5
3.2
1.3
1.6
1.5
0.8

1,871
436
560
678
34
746

Governments
and other
official institutions$M

Banks andother financial
institutions
$M

Other
commercial
and industrial$M

At 30 September 1996
New Zealand
USA
United Kingdom
Japan
Singapore
Hong Kong
France

10
916
96
78
22
1
87

588
679
1,351
1,552
990
767
965

At 30 September 19951
New ZealandUnited Kingdom
USA
Japan
Singapore
India

77
98
87
94
26
361

724
1,444
479
1,165
1,388
46

1

Prior year amounts include gross unhedged investment in overseas branches and controlled entities

Financial Information

11: Doubtful Debts - Industry Analysis
1996
$M

1995
$M

1994
$M

1993
$M

1992
$M

Balance at start of year
Adjustment for exchange rate fluctuations
Write-offs (refer (i) below)
Transfer from/charge to profit and loss account
Provisions acquired(disposed)
Tax (liability)benefit realised on rescheduled debt
Recognition of provisions previously netted
against tax benefits
Other

1,380
(16)
(346)
200
-

1,652
(2)
(497)
226
-

2,690
(84)
(1,427)
469
3
-

3,338
56
(1,440)
718
(22)
(2)

1,993
110
(769)
1,975
40
1

-

1

1

35
7

(12)

Total provisions for doubtful debts

1,218

1,380

1,652

2,690

3,338

(11)
(17)
(19)
(8)
(12)
(49)
(46)
(6)
(77)
(33)
(23)

(19)
(11)
(29)
(11)
(45)
(41)
(47)
(6)
(102)
(50)
(55)

(75)
(52)
(95)
(34)
(#)
(26)
(79)
(42)
(36)
(382)
(127)
(21)

(55)
(75)
(22)
(49)
(53)
(46)
(91)
(22)
(576)
(93)
(18)

(37)
(56)
(21)
(36)
(3)
(28)
(45)
(48)
(16)
(206)
(61)
(38)

n/a
(45)

n/a
(81)

(321)
(137)

(82)
(258)

(11)
(163)

(346)

(497)

(1,427)(1,440)

(769)

3
1
2
3
3
2
9
1
9
2
2

1
1
3
2
3
1
10
3
4
3

4
1
3
4
4
1
11
1
5
6
3

1
2
1
5
5
#
8
#
7
2
1

1
1
#
1
4
1
10
#
6
1
5

n/a
9

n/a
21

12
33

30
9

7

46

52

88

71

37

Net write-offs

(300)

(445)

(1,339)(1,369)(732)

Ratio of net write-offs to averageloans and acceptances

0.3%

0.6%

1.9%

1.9%

1.0%

(i) Total write-offs by industry
Australia
Agriculture, forestry, fishing and mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other
Overseas
Rescheduled country debt
Other
Total write-offs(ii) Total recoveries by industry
Australia
Agriculture, forestry, fishing and mining
Business service
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Lease finance
Manufacturing
Personal1
Real estate - construction
Real estate - mortgage2
Retail and wholesale trade
Other
Overseas
Rescheduled country debt
Other
Total recoveries# Amounts less than $500,000
n/a Not applicable
1
Personal includes non-business loans to individuals through overdrafts, personal loans, credit cards and fully drawn advances
2
Real estate mortgage includes residential and commercial property exposure. Loans within this category must be for the purchase of such properties andmust be secured by property

115

Financial Information

12: Certificates of Deposit and Term Deposit Maturities
The following table shows the maturity profile of the Economic entity’s certificates of deposit and term
deposits in excess of $100,000 issued at 30 September 1996

Australia
Certificates of deposit
Term deposits

Overseas
Certificates of deposit
Term deposits

Total

Due in3 monthsor less$M

Due between
3 months
and 6 months$M

Due between
6 months
and 1 year$M

Due inover 1 year
$M

Total
$M

980
7,177

39
1,130

72
863

44
589

1,135
9,759

8,157

1,169

935

633

10,894

2,205
9,378

1,441
1,780

347
756

216
342

4,209
12,256

11,583

3,221

1,103

558

16,46519,740

4,390

2,038

1,191

27,359

13: Short Term Borrowings
The Economic entity’s short term borrowings comprise commercial paper, as well as unsecured notes
issued by subsidiary borrowing corporations with an original term to maturity of less than one year. The
Economic entity has commercial paper programmes in the United States, where it issues paper through
ANZ (Delaware) Inc., and in Europe and Asia, where the Economic entity issues paper direct.

116

Balance at end of year
Commercial paper - ANZ (Delaware) Inc.
Commercial paper - otherUnsecured notes
Weighted average interest rate at end of year
Commercial paper - ANZ (Delaware) Inc.
Commercial paper - otherUnsecured notes
Maximum amount outstanding at any monthend during year
Commercial paper - ANZ (Delaware) Inc.
Commercial paper - otherUnsecured notes
Average amount outstanding during year
Commercial paper - ANZ (Delaware) Inc.
Commercial paper - otherUnsecured notes
Weighted average interest rate during year
Commercial paper - ANZ (Delaware) Inc.
Commercial paper - otherUnsecured notes

1996
$M

1995
$M

1994
$M

946
2,341
490

1,164
2,046
382

1,375
1,730
394

5.58%
7.22%
6.93%

5.76%
5.71%
7.40%

4.86%
5.15%
6.95%

1,841
3,021
506

1,860
2,396
419

1,439
2,048
481

1,087
2,469
478

1,172
1,602
379

931
1,740
466

5.58%
7.53%
6.48%

5.80%
6.90%
7.40%

4.16%
4.29%
6.94%

Shareholder Information

1: Major Shareholders
Ordinary shares
At 8 November 1996 the twenty largest holders of ordinary shares held 761,601,271 ordinary shares, equal
to 51.5 per cent of the total issued ordinary capital.
Chase Manhattan Nominees Ltd
Westpac Custodian Nominees Limited
ANZ Nominees Ltd
National Nominees Limited
MLC Life Limited
Australian Mutual Provident Society
State Authorities Superannuation Board
Queensland Investment Corporation
Permanent Trustee Company Limited
Permanent Trustee Australia Limited
The National Mutual Life Association of Australasia Limited
Mercantile Mutual Life Insurance Company Limited
Pendal Nominees Pty Limited
Citicorp Nominees Pty Limited
Commonwealth Custodial Services Limited
Perpetual Trustees Nominees Limited
HKBA Nominees Pty Limited
Prudential Corporation Australia Limited
Perpetual Trustees Victoria Limited
Barclays Australian Custodian Services Limited

Number of shares%

171,790,437
120,298,089
75,140,425
65,390,474
33,379,089
32,862,238
30,959,941
28,804,585
24,678,981
20,797,283
17,557,421
17,107,171
16,678,740
16,487,349
16,462,655
16,092,837
15,368,867
15,362,917
13,871,734
12,510,038

11.6
8.2
5.1
4.4
2.3
2.2
2.1
1.9
1.7
1.4
1.2
1.2
1.1
1.1
1.1
1.1
1.0
1.0
0.9
0.9

761,601,271

51.5

117

2: Substantial Ordinary Shareholders
At 8 November 1996, there was one entry in the Register of Substantial Shareholdings.
During the year to 8 November 1996 a notice was received from The Capital Group Companies, Inc.
advising that on 21 December 1995 they became a substantial shareholder with a holding of 72,390,211
ordinary shares. This holding is held by several of the nominee companies listed in item 1 above.

3: Average Size of Shareholdings
At 8 November 1996 the average size of holding of ordinary shareholdings was 12,119 (1995: 12,594)
shares.

4: Distribution of Shareholdings
Ordinary shares - fully paid
At 8 November 1996
Range

1 to 1,000 shares
1,001 to 5,000 shares
5,001 to 10,000 shares
10,001 to 100,000 sharesOver 100,001 shares

Number ofholders% ofholders

Number ofshares’000% ofshares43,78657,43912,252
7,924
566

35.9
47.1
10.0
6.5
0.5

21,552
137,463
86,722
168,952
1,063,401

1.5
9.3
5.9
11.4
71.9

121,967100.0

1,478,090

100.0

Shareholder Information

5: Voting Rights of Shareholders
Ordinary shares - fully paid
The Articles provide for(i) on show of hands 1 vote;(ii) on a poll 1 vote for each ordinary share held; and(iii) 1 vote for every 10, 10 cent paid shares issued pursuant to the Company’s Senior Officers’ Share
Purchase Scheme and the Directors’ Share and Option Purchase Scheme.

6: Holders of Non-Marketable Parcels
Ordinary shares
At 8 November 1996, shareholdings of less than a marketable parcel (1 to 99 shares) were
5,370 (1995: 4,838), which is 4.4% of the total holdings of ordinary shares.

7: Employee Shareholder Information
At the January 1994 Annual General Meeting, shareholders approved a limit of 7% of the issued share capitalof the Company on the number of shares which may be issued under the Employee and Senior Officers’
Share Purchase Schemes and the unissued shares to which options may be granted under any incentive
schemes for employees and directors of the Group.
At 8 November 1996, participants in the Employee and Senior Officers’ Share Purchase Schemes held
1.8% (1995: 1.9%) of the issued share capital. Options to purchase 7,730,000 ordinary shares have been
granted under the Directors’ Share and Option Purchase and the ANZ Group Share Option Schemes.

8: Directors’ Shareholding Interests

118
C B GoodeJ C Dahlsen
Dr R S Deane
J K Ellis
C J Harper
M A Jackson
A T L Maitland
D P Mercer
J F Ries
Dr B W Scott
Sir Ronald Trotter
R B Vaughan

A

B

C

D

E

253,199
33,40025,00052,343
26,81420,02682,73062,056
102,000
32,284
12,40083,91350,00050,00040,00050,00050,00050,000-50,00050,000-300,000
500,000
300,000-

12,000-786,165

290,000

100,000

1,100,000

12,000

A Beneficially held - fully paid ordinary shares of $1.00 each
B Beneficially held - partly paid ordinary shares of $1.00 each, paid to 10 cents, issued pursuant to the Directors’ Share and Option
Purchase Scheme
C Beneficially held - options issued pursuant to the Directors’ Share and Option Purchase Scheme to take up shares in the Company during
the period of 5 years after issue at market prices fixed as at the time of issue less one cent, which was paid on issue of the option
D Beneficially held - options issued pursuant to the ANZ Group Share Option Scheme to take up shares in the Company no earlier than 3
years or later than 5 years after issue at market prices fixed as at the time of issue less one cent, which was paid on issue of the option, provided
certain performance criteria are met
E Non-beneficially held - fully paid ordinary shares of $1.00 eachWO RL DW I D EAustralia
Group Headquarters
Australia and New Zealand Banking
Group Limited,
100 Queen Street,
Melbourne,
Victoria 3000
GPO Box 537E,
Melbourne 3001
Telephone: (61-3) 9273 5555
Telex: AA 68210 (International)
AA 139920 (Domestic)
Fax: (61-3) 9273 4909

R E P R ES E N TATI ON

Esanda Finance Corporation Limited,
85 Spring Street,
Melbourne 3000
Telephone: (61-3) 9666 9100
Fax: (61-3) 9666 9626
Town & Country Bank(a division of Australia and New
Zealand Banking Group Limited)
297 Murray Street,
Perth W.A. 6000
Telephone: (61-9) 267 3333
Fax: (61-9) 267 3435

Cook Islands

Papua New Guinea

Australia and New Zealand Banking
Group Limited,
Development Bank Building,
PO Box 907,
Avarua, Rarotonga
Telephone: (682) 21750
Telex: 62038
Fax: (682) 21760

Australia and New Zealand Banking
Group (PNG) Limited,
2nd Floor, Defens Haus,
Cnr Champion Parade and Hunter
Street,Port Moresby
Telephone: (675) 3223 333
Telex: 22178
Fax: (675) 3223 306

Fiji

New ZealandAustralia and New Zealand Banking
Group Limited,
ANZ House,
PO Box 179, Suva
Telephone: (679) 302 144
Telex: 2194
Fax: (679) 300 267

Headquarters

Hong Kong
Australia and New Zealand Banking
Group Limited
27th Floor,
One Exchange Square,
8 Connaught Place Central,
Hong Kong
Telephone: (852) 2843 7111
Telex: 86019
Fax: (852) 2525 2475

13 Grenfell Street,
Adelaide 5000
GPO Box 1819,
Adelaide 5001
Telephone: (61-8) 218 8122

ANZ Banking Group(New Zealand) Limited,
215-229 Lambton Quay, Wellington
PO Box 1492, Wellington
Telephone: (64-4) 496 7000
Telex: NZ 3385
Fax: (64-4) 473 6919
ANZ Bank House
Cnr Queen & Victoria Streets
Auckland
Telephone: (64-9) 358 9200
Fax: (64-9) 358 9339
104 Victoria Street,
Christchurch
Telephone: (64-3) 371 4100
Fax: (64-3) 371 4120

Tasmania

Subsidiary Companies

ANZ Centre
2nd Floor,
22 Elizabeth Street,
Hobart 7000
GPO Box 504E,
Hobart 7001
Telephone: (61-02) 212 601

ANZ Securities (NZ) Limited,
21st Floor, ASB Building,
135 Albert Street, Auckland
PO Box 6243,
Wellesley Street, Auckland
Telephone: (64-9) 308 9867
Freephone: 0800 800 611
Telex: 63372
Fax: (64-9) 309 9410
UDC Group Holdings Limited,113-119 The Terrace, Wellington
PO Box 1616, Wellington
Telephone: (64-4) 471 4500
Fax: (64-4) 471 4592

Principal State Offices

New South Wales
20 Martin Place,
Sydney 2000
GPO Box 495,
Sydney 2001
Telephone: (61-2) 227 1911

Queensland
324 Queen Street,
Brisbane 4000
GPO Box 1051,
Brisbane 4001
Telephone: (61-7) 3228 3228

South Australia

Western Australia
77 St. George’s Terrace,
Perth 6001
GPO Box L905, Perth 6001
Telephone: (61-9) 323 8111

Australian Capital Territory
25 Petrie Plaza,
Canberra City 2601
GPO Box 371,
Canberra City 2601
Telephone: (61-6) 276 4100

Northern Territory
43 Smith Street The Mall,
Darwin 0801
GPO Box 1, Darwin 0800
Telephone: (61-89) 823 555

Subsidiary Companies
ANZ Funds Management,(ANZ Managed Investments
Limited/ANZ Life Assurance
Company Limited/ANZ Executors
and Trustee Company
Limited)68 Pitt Street, Sydney 2000
Telephone: (61-2) 216 2345
Fax: (61-2) 216 2350
ANZ Securities Limited,
10th Floor, 530 Collins Street,
Melbourne 3000
Telephone: (61-3) 9205 1400
Fax: (61-3) 9649 7023

Indonesia
PT ANZ Panin Bank
17th Floor, BNI Building
JI. Jend.,
Sudirman No. 1
Jakarta Pusat 10220
Telephone: (62-21) 251 0530
Fax: (62-21) 570 5135

Japan

International

Australia and New Zealand Banking
Group Limited,
8th Floor,
Yanmar Tokyo Bldg,
1-1 Yaesu 2-Chome,
Chuo-ku, Tokyo 104
Telephone: (81-3) 3271 1151
Telex: 24157
Fax: (81-3) 3281 8417
ANZ Banking Group(Merchant Banking),
Tokyo Representative Office,
8th Floor,
Yanmar Tokyo Bldg,
1-1 Yaesu 2-Chome,
Chuo-ku, Tokyo 104
Telephone: (81-3) 5202 0731
Fax: (81-3) 5202 0730

Headquarters

Korea

Australia and New Zealand Banking
Group Limited,
International Banking Division,
20th Floor, 100 Queen Street,
Melbourne, Victoria 3000
Telephone: (61-3) 9273 6042
Fax: (61-3) 9273 4777

Australia and New Zealand Banking
Group Limited,
18th Floor, Kyobo Building,
1 Chongro 1,
Chongro-Ku, KPO 1065, Seoul
Telephone: (82-2) 730 3151
Telex: 27338
Fax: (82-2) 737 6325

Asia Pacific

Malaysia

China, Peoples Republic ofAustralia and New Zealand Banking
Group Limited,
201A West Wing Office Complex,
Equatorial hotel,
65 Yanan Road WestShanghai 200040
Telephone: (86-21) 248 8877
Fax: (86-21) 248 0080

Australia and New Zealand Banking
Group Limited,
Suite 1, 4th Floor,
Wisma Genting,Jalan Sultan Ismail 50250
Kuala Lumpur
Telephone: (60-3) 261 6088
Telex: 31054
Fax: (60-3) 261 3210

Philippines
Australia and New Zealand Banking
Group Limited,Tower One,
Ayala Triangle, Ayala Avenue
Makati City
Telephone: (623) 848 5091
Fax: (623) 848 5086

Singapore
Australia and New Zealand Banking
Group Limited,
10 Collyer Quay,
No 17 02/05,
Ocean Building,Singapore 0104
Telephone: (65) 535 8355
Telex: 23336
Fax: (65) 539 6111

Solomon Islands
Australia and New Zealand Banking
Group Limited,
Mendana Avenue,
HoniaraTelephone: (677) 21835
Telex: 66321
Fax: (677) 22957

Sri Lanka
ANZ Grindlays Bank Limited,
PO Box 112,
37 York Street,
Colombo 1
Telephone: (94-1) 446 130
Telex: 21130/21521/21845
Fax: (94-1) 446 158

TaiwanAustralia and New Zealand Banking
Group Limited,
8F, 44 Chung Shan North Road,
Section 2, Taipei
Telephone: (886-2) 568 3353
Telex: 11894
Fax: (886-2) 511 1232

Tonga
Australia and New Zealand Banking
Group Limited,
Cnr Railway & Salote Roads,
Nuku’ Alofa
Tel: (676) 24944
Fax: (676) 23870

ThailandAustralia and New Zealand Banking
Group Limited,
Representative Office
9th Floor, Tower A,
Diethelm Towers,
93/1 Wireless Road,
Bangkok 10330
Telephone: (66-2) 256 6350
Telex: 21583
Fax: (66-2) 256 6347

Vanuatu
ANZ Bank (Vanuatu) Limited,
ANZ House,
Kumul Highway, Port Vila
Telephone: (678) 22536
Telex: 21012
Fax: (678) 22814

119

WORLDW I D E
Vietnam, Socialist Republic ofAustralia and New Zealand Banking
Group Limited,
14 Le Thai To Street,
Hanoi
Telephone: (84-4) 8258 190
Fax: (84-4) 8258 188

Western Samoa
Bank of Western Samoa,
PO Box L1855, Apia
Telephone: (685) 22422
Telex: 258 BWS SX
Fax: (685) 24595

South Asia
India
ANZ Grindlays Bank Limited,
PO Box 725,
90 Mahatma Gandhi Road,
Mumbai 400 001
Telephone: (91-22) 267 1295
Telex: 011-4792 RDSA IN
Fax: (91-22) 261 9903

Middle East

EuropeAmericas

Bahrain

United Kingdom

United States of America

Grindlays Bahrain Bank
B.S.C. (c),PO Box 793,
Manama Centre,
Government Road,
ManamaTelephone: (973) 225 999
Telex: 8335
Fax: (973) 224 482
ANZ Grindlays Bank plc,
Offshore Banking Unit,
PO Box 5793
1st Floor,
Manama Centre,
ManamaTelephone: (973) 224 210
Telex: 8722/8723/8796
Fax: (973) 224 478

Australia and New Zealand Banking
Group Limited, Minerva House,
PO Box 7,
Montague Close,
London SE1 9DH
Telephone: (44-171) 378 2121
Telex: 8812741-4 ANZBKAG
Fax: (44-171) 378 2378
Australia and New Zealand Banking
Group Limited,
Private Bank,
13 St. James’s Square,
London SW1Y 4LF
Telephone: (44-171) 930 4611
Telex: 885043-6 GRNDLY G
Fax: (44-171) 930 5501

New York
Australia and New Zealand Banking
Group Limited,
1177 Avenue of the Americas
New York,
NY 10036
Telephone: (1-212) 801 9800
Telex: 667559
Fax: (1-212) 801 9859

Iran

PO Box 2465,
19 Netaji Subhas Road,
Calcutta 700 001
Telephone: (91-33) 208 346
Telex: 021 7341 GBCL IN
Fax: (91-33) 282 266

Australia and New Zealand Banking
Group Limited,
3rd Floor, No. 14, 4th Alley, Shahid
Ahmad Ghasir,(ex Bucharest Avenue),
Tehran 15146
Telephone: (98-21) 873 3554
Telex: 213948
Fax: (98-21) 873 3559

Northern India

JordanEastern India

120

R E P R ES E N TATI ON

PO Box 624,
‘H’ Block, Connaught Circus,
New Delhi 110 001
Telephone: (91-11) 332 0793
Telex: 031-66528 GBND IN
Fax: (91-11) 332 2364

Southern India
PO Box 1359,
19 Rajaji Salai,
Madras 600 001
Telephone: (91-44) 534 4025
Telex: 041-212 GBMS IN
Fax: (91-44) 534 1065

Western India
PO Box 141,
90 Mahatma Gandhi Road,
Bombay 400 001
Telephone: (91-22) 267 1295
Telex: 011-2240 GBBY IN
Fax: (91-22) 261 9903

Bangladesh
ANZ Grindlays Bank Limited,
PO Box 502,
No. 2 Dilkusha C.A.,
Dhaka - 1000
Telephone: (880-2) 833 958
Telex: 642597/642841/642654
Fax: (880-2) 956 2329

Nepal
Nepal Grindlays Bank Limited,
Kantipath PO Box 3990,
Kathmandu
Telephone: (977-1) 228 474
Telex: 2531/2532
Fax: (977-1) 228 692

ANZ Grindlays Bank Limited,
PO Box 9997,
Shmeissani,
Amman
Telephone: (962-6) 660201/7
Telex: 21980/21209
Fax: (962-6) 679115

Oman
Oman Savings & Finance Bank,PO Box 3550,
Ruwi, Postal Code 112
Telephone: (968) 70 3013/4035/
5826
Telex: 3393
Fax: (968) 70 6911

Pakistan
ANZ Grindlays Bank Limted,
PO Box 5556,
I.I. Chundrigar Road,
Karachi,Tel: (92-21) 241 4131/2671
Telex: 2755
Fax: (92-21) 241 4914

Qatar
ANZ Grindlays Bank Limited,
PO Box 2001, Doha
Telephone: (974) 418 222
Telex: 4209
Fax: (974) 428 077/423 956

United Arab Emirates
ANZ Grindlays Bank Limited,
PO Box 4166,
Al Maktoum Street(Near Deira Clock Tower)
Deira, Dubai
Telephone: (971-4) 285 663/
228 171
Telex: 45618
Fax: (971-4) 233 501

Channel Islands
ANZ Bank (Guernsey) Limited,
PO Box 153,
St. Peter Port,
Guernsey
Telephone: (44-1481) 72 6771
Telex: 4191663 ANZGSY G
Fax: (44-1481) 72 7851
ANZ Grindlays Bank (Jersey) Limited
PO Box 80,
West House, West’s Centre,Peter Street,
St. Helier, Jersey
Telephone: (44-1534) 874248
Telex: 4192062 GRNDLY G
Fax: (44-1534) 877695
ANZ Grindlays Trust
Corporation (Jersey) LimitedWest House, West’s CentrePeter Street,
St Helier, Jersey
Tel: (44-1534) 607351
Fax: (44-1534) 37600

FranceAustralia and New Zealand
Banking Group Limited,
6 rue de Berri 75008
Paris
Telephone: (33-1) 40 75 0537
Telex: 643311 F ANZB
Fax: (33-1) 40 75 0546

Germany
Australia and New Zealand
Banking Group Limited,Mainzer Landstr. 46,60325
Frankfurt/Main 17
Telephone: (49-69) 710 0080
Telex: 4185126 ANZBD
Fax: (49-69) 710 00821

GreeceANZ Grindlays Bank Limited,
7 Merlin Street,
PO Box 30391,
Athens 10671
Telephone: (30-1) 3624 601
Telex: 214651 GRIN GR
Fax: (30-1) 3603 811

Switzerland
ANZ Grindlays Bank Limited,
Case Postale 1560,
7 Quai du Mont Blanc,
CH-1211
Geneva 1
Telephone: (44-22) 906 0111
Telex: 412521 ANZCH
Fax: (44-22) 906 0122

Argentina
Australia and New Zealand Banking
Group Limited,
Bouchard 547,
10th Floor,
1106 Buenos Aires
Tel: (54-1) 315 2330
Fax: (54-1) 313 3967

BrazilAustralia and New Zealand Banking
Group Limited,
Av Nilo Pecanha,
50 Grupo 810,
20.044
Rio de Janeiro-RJ
Telephone: (55-21) 240 2294
Fax: (55-21) 220 0840

Chile
Australia and New Zealand Banking
Group Limited,
Representative Office,
Edificio Atlantis,
Av. El Bosque Norte 0440,
Las Condes,
Santiago
Telephone: (56-2) 203 5217
Fax: (56-2) 203 5226

MexicoAustralia and New Zealand Banking
Group Limited,
Representative Office,Ejercito Nacional,
No 926-20 Piso11510 Mexico D.F.
Tel: (52-5) 580 1036
Fax: (52-5) 580 1031

Key Dates

C O N T E N TS
ANZ at a Glance ......................................................... 2
Brief overview of the Group, Australia,
New Zealand and International operations

Books close forFinal Dividend

Chairman’s Report ...................................................... 4

13 December 1996

“good profit outcome for shareholders”

Chief Executive Officer’s Review ............................ 6

Annual General
Meeting“change initiatives are the key task”

Key Strategic Initiatives ........................................... 8

15 January 1997

ANZ Investment Bank
Back Office Support Projects
Commercial Banking System

Payment of
Final Dividend

Commentary
Australia .......................................................... 10

15 January 1997

“new delivery channels”

Announcement ofInterim Results

New Zealand .................................................. 1228 May 1997*

International ................................................... 14

S H A R E H O L D E R
Dividends
The final dividend of 24 cents per share will be paidon 15 January 1997 bringing the full year dividend to
42 cents per share. The interim dividend paid in July
1996 was 50% franked and the final dividend is fully
franked at 36% for Australian taxation purposes.
Dividends may be paid directly to a bank account inAustralia, New Zealand or United Kingdom.
Shareholders who want their dividends paid this way
should advise the relevant Share Registry in writing
prior to books closing date. Dividend reinvestment
and Bonus option plans are available to shareholders.
The plans are detailed in a booklet called “Shareholder
Alternatives”, copies of which are available from the
Share Registrars at the addresses shown.

Stock Exchange Listings
The Group’s ordinary shares are listed on the Australian
Stock Exchange, the International Stock Exchange in
London and the New Zealand Stock Exchange. The
Capital Securities offered in February 1993 are listedon the New York Stock Exchange.

“facing competitive pressures”
American Depositary Receipts“strong growth”

Books close forInterim DividendManagement Structure ........................................... 16

6 June 1997*

Corporate Governance ............................................ 20

Board of Directors.................................................... 18

The Bank of New York sponsors an American
Depositary Receipt program in the United States ofAmerica. The ADRs were listed on the New York
Stock Exchange on 6 December 1994. ADR holders
should deal directly with the Depositary, Bank of New
York, New York, Telephone (212) 815-2729, Fax (212)571-3050 on all matters relating to their ADRs.

Payment ofInterim Dividend

Financial System Inquiry ........................................ 24
ANZ in the Community and Environment ............. 25

7 July 1997*

Seven Year Summary ............................................... 27

19 November 1997*

1996 Financial Statements ...................................... 33

Removal from Annual Report Mailing List

Cover:
Five channels of banking available
to ANZ customers –Australia and New Zealand Banking Group Limited
ACN 005 357 522

OnLine Banking p10

Paper: Corporate Section – 100% Australian paper
Financial Statements – 100% Australian recycled paper

Customer Service Officer p8

Unless otherwise stated, all amounts are expressed in Australian dollars

Front: Smart Card Technology p10

Back: Supermarket Banking p12
Branch Network

ANZ INTERNET ADDRESS Home Page: www.anz.com

Credit Ratings (December 1996)
Short Term Debt
Moody’s Investors Service
Standard & Poor’s Ratings Group

P-1
A-1+

Long Term Debt
Moody’s Investors Service
Standard & Poor’s Ratings Group

Aa3
AA-

Registered Office

Australia

Financial Highlights in Key Currencies ............... 32

Shareholder Information .............Inside back cover

A summary of the Chairman’s
address to the AGM will be
published in the “Shareholder
Contact” magazine issued in
January 1997.

Share Registrars

Announcement of
Final Results*tentative dates only

Chairman’s Address

Change of Address

Review of 1996 Results ........................................... 28

ANZ’s Worldwide Representation ...................... 119

The Annual General Meeting
will be held at the Savoy Ballroom,
Grand Hyatt Melbourne,
123 Collins Street, Melbourne
on Wednesday, 15 January 1997.

Shareholders who wish to contact the Company on
any matter related to their shareholding are invited totelephone or write to the most convenient Share
Registry.

It is important that shareholders notify the Company
in writing if there is a change to their address. For
added protection shareholders should quote their
Shareholder Number.

1116

Annual General Meeting

Level 2, 100 Queen Street, Melbourne,
Victoria 3000 Australia
Phone: (03) 9273-6141
Fax: (03) 9273-6142
Secretary and Chief Financial Officer: D T Craig
General Manager Investor Relations: D H Ward

Enquiries

Risk Management Framework .............................. 22

I N F O R M AT I O N

Shareholders who do not want the Annual Report or
who are receiving more than one copy should advise
the Share Registrar in writing. These shareholders
will continue to receive all other shareholder
information.

Coopers & Lybrand
Level 12, 333 Collins Street,
Melbourne,Victoria 3000
Phone: (03) 9205 4999 Toll Free: 1800 331 721
Fax: (03) 9205 4900
New ZealandC/- ANZ Banking Group (New Zealand) Limited
8th Floor, 215-229 Lambton Quay, Wellington
Phone: (04) 496 7000
Fax: (04) 496 8872

To Consolidate Shareholdings

United Kingdom

Shareholders who wish to consolidate their separate
holdings should advise the share registry in writing.

Computershare Limited
Level 5, Bowman House, 29 Wilson Street,
London EC2M 2SJ
Phone: (0171) 920 0010
Fax: (0171) 920 0120

1996 Annual Report

Australia
New ZealandArgentina
Bahrain
Bangladesh
BrazilChile
China
Cook Islands
FijiFranceGermany
GreeceGuernsey
Hong Kong
India
Indonesia
Iran
Japan
JerseyJordan
Korea
Malaysia
MexicoNepal
Oman
PakistanPapua New Guinea
Philippines
Qatar
Singapore
Solomon Islands
Sri Lanka
Switzerland
TaiwanThailand
Tonga
United Arab Emirates
United Kingdom
United States of America
Vanuatu
Vietnam
Western Samoa

Australia and New Zealand Banking Group Limited

ANZ has branches or representative
offices in 43 countries:

Australia and New Zealand Banking Group Limited ACN 005 357 522
Registered Office: Level 2, 100 Queen Street, Melbourne, Victoria 3000, Australia.
Telephone: (03) 9273 6141 Facsimile: (03) 9273 6142

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED1996 Annual Report