2020 ANNUAL REVIEWOverview

How wecreate value

CUSTOMER STORY

Performanceoverview

Remuneration
overview

Shareholder
information

ADAPTING

Growing businessduring a crisis

An ANZ customer for more than 50 years, fellahamilton has beenin the business of Australian women’s fashion since the early 1970s.
Today, the company is managed by David Hamilton (son of theeponymous founder) and his wife, Sharon Hamilton, CEO.
When the COVID-19 pandemic first hit Australia in March,times were challenging.
Within the first few weeks of lockdowns,
they had to let go of employees at their
Moorabbin factory and retail storesnationally were shut.
However, shortly after, a doctor friend of
Sharon’s asked her to make a scrub set, as
there was a limited supply of PersonalProtective Equipment (PPE).
Sharon recalls the moment demand fortheir washable, hospital-grade PPE started
snowballing and a new direction for thebusiness appeared in ‘fellahealthwear’.

Photo credit: Simon Schluter, The Age“I’m a pharmacist by profession, with manyfriends in the medical industry. After the
first request, I received another, and another,and now we’re making and distributing
thousands of scrubs and gowns to GPs,

dentists and hospitals. We’ve hired backall of our staff and have never been busier,”says Sharon.
David credits the move into making PPE
to his wife’s optimistic nature and tendency
to ‘think outside the box’.
“Changing direction wasn’t easy,” says David.
“It needed us to have intestinal fortitude andcomplete dedication to what we thought
was the right move for our business.”“The road ahead is going to be tough.
While we’re doing well at the moment, weare uncertain about what the future holds,
so we need to remain adaptable and agile
in response to what may come next fromthe pandemic.”

CONTENTS
Overview

1

Our customers

18

2020 performance snapshot

1

Our divisions

25

Our 2020 reporting suite2

Our people

28

What matters most3

Our community

32

Chairman’s message

4

Our approach to climate change 34

CEO’s message

6

Governance

38

COVID-19 – protecting our customers,
employees and the community

8

Risk management

49

How we create value

10

Performance overview

54

About our business

10

Remuneration overview

74

Our vision and strategy

11

Shareholder information

78

How we create value

12

Important dates for shareholders 78

Our operating environment

14

Contacts

Becoming a fairer and more responsible bank 16

79

2020 performance snapshot60c

 ividend forD2020 per share

$3.8b

6.2%

$9.08bCash returnon equity1

funded and facilitatedin sustainable solutions
since 201911.3%
Common equity
Tier 1 Capital3

Cash profit1$20.04
Net tangible
assets per share2

132.7cCash earnings
per share1~1.8m

customer accounts
remediated5$139.5min community
investment4>61,000
people have beenreached through ourfinancial wellbeing
programs, MoneyMinded
and Saver Plus7

33.4%
of womenin leadership6

1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations included in cash profit. It is provided to assist readers inunderstanding the result of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 56. 2. Equals shareholders’equity less preference share capital, goodwill, software and other intangible assets divided by the number of ordinary shares. 3. APRA Level 2. 4. Figure includes forgone revenue of$105 million, being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit organisations and students. 5. Refers toAustralian customer accounts in the last 12 months. 6. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all employees regardless of leavestatus but not contractors (who are included in Full Time Equivalents (FTE)). 7. Includes individuals who have participated in more than one program or product (for example, people whohave participated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded and Saver Plus totals).

ANZ 2020 Annual Review

1Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Our 2020 reporting suite
About this Annual Review
This Annual Review contains key sections from our 2020 Annual
Report. It includes information on our financial and non-financial
performance, providing readers with a holistic view of the Australia
and New Zealand Banking Group Limited’s1 performance. The
complete 2020 Annual Report is available at anz.com/
shareholder/centre.
KPMG provides limited assurance over Environment, Social andGovernance (ESG) content2 within this Annual Review. A copy of
KPMG’s limited assurance report is contained in the ANZ 2020
ESG Supplement.
This review covers all ANZ operations worldwide over which, unlessotherwise stated, we have control for the financial year commencing
on 1 October 2019 and ending 30 September 2020. Monetaryamounts in this document are reported in Australian dollars,
unless otherwise stated.

Our 2020 Corporate Governance Statement discloses how we havecomplied with the ASX Corporate Governance Council’s ‘Corporate
Governance Principles and Recommendations – 3rd edition’ and isavailable at anz.com/corporategovernance.
Our ESG Supplement complements our Annual Report, providing
stakeholders with more detailed ESG disclosures, including:
performance against our ESG targets and approach to ourpriority areas of fair and responsible banking, financial wellbeing,environmental sustainability and housing. In response to
stakeholder feedback, for the first time, we are releasing
our ESG Supplement at the same time as the Annual Report.
The following documents are available atanz.com/shareholder/centre:• News Release• Consolidated Financial Report, Dividend Announcement& Appendix 4E• Results Presentation and Investor Discussion Pack

Reporting suite• The Company Financial Report

We produce a suite of reports to meet the needs and requirementsof a wide range of stakeholders, including shareholders, customers,
employees, regulators, non-government organisations andthe community. In 2021 we intend to review our disclosures toensure they are meeting the evolving needs of our stakeholders.
Specifically, we will consider whether there are additional
reporting frameworks or metrics we could use to enhance ourdisclosures. In this respect we are closely watching work underway
by key sustainability disclosure bodies to develop a coherent andcomprehensive corporate reporting system in which existingsustainability standards and frameworks complement financial
accounting principles.

• Principal Risks and Uncertainties Disclosure• APS 330 Pillar III Disclosure• Climate-related Financial Disclosures
We are continually seeking to improve our reporting suite andwelcome feedback on this review. Please address any questions,comments or suggestions to investor.relations@anz.com.

2020 ANNUAL REPORT

2020 ESG SUPPLEMENT

2020 CLIMATE-RELATEDFINANCIAL DISCLOSURES

2020 CORPORATE
GOVERNANCE STATEMENT

anz.com/annualreportanz.com/cs

anz.com/shareholder/centre

anz.com/corporategovernance1. Group: Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year end and from time to time during the financial year (together, the Group).
2. ESG content includes the following sections: 2020 performance snapshot, What matters most, COVID-19 – protecting our customers, employees and the community, Becoming a fairer andmore responsible bank, Our customers, Our people, Our community, Our approach to climate change and ESG metrics on page 72.

2What matters mostThrough our annual materiality assessment we engage with internal and external stakeholders
to inform our identification of ESG risks and opportunities. We seek to identify those issues thathave the most potential to impact our ability to operate successfully and create value forour shareholders and other stakeholders.
We use the assessment to inform our strategy, ESG targets andexternal reporting.
In 2019 our materiality assessment was focused on issues arisingfrom the Royal Commission. This year we returned to a broader
focus, with an emphasis on the ‘social’ aspects of ESG, andspecifically our support for customers, employees and thecommunity in response to COVID-19.
The bank’s response was well regarded by external stakeholders,with several commenting how the banking sector has responded tothe pandemic has helped to improve community trust lost during
the Royal Commission. They did note, however, that despite thepositive steps taken since the Royal Commission, trust should
remain a key focus and its recovery is fragile.
Both external and internal stakeholder groups identified fairness
and ethical conduct, financial wellbeing and customer experience
as priorities. Some external stakeholders also highlighted theimportance of continuing to act on climate change, while internal
stakeholders emphasised the importance of fraud and data security.

WE ASKED EXTERNAL STAKEHOLDERS:

What is one action ANZ could take to enhance
its reputation as a fair and ethical organisation?
THEY SAID:FAIRNESS AND ETHICAL CONDUCT: a strong

corporate culture, known for ethics, values, fairness andtransparency. Simple and understandable products
and communications (i.e. product disclosure, includingbank fees and charges) and appropriate hardship/collections policies.
FINANCIAL WELLBEING: promoting and enabling

access to safe and affordable products and services,
particularly lower-income and vulnerable customers.
Work with cross-sector partners to help customers,
employees and the broader community meet current
financial commitments and needs, and improve theirfinancial resilience.
CUSTOMER EXPERIENCE: delivering value andimproved customer experience through appropriate
financial products and services for all customers, small
business and retail.
CLIMATE CHANGE: managing the business risks andopportunities associated with climate change. Includes
the role we play in supporting our customers totransition to a low carbon economy.

FRAUD AND DATA SECURITY: policies and processes inplace to prevent fraud and protect customer data andprivacy. Includes customer access to personal data.

—1

Support customers through times of hardship— 2	Continue to resolve issues raised in theRoyal Commission— 3	
Link executive remuneration and performance
metrics to broader ESG considerations—4

Lead on sustainable finance

These insights were presented to the executive Ethics andResponsible Business Committee and the Board Ethics, Environment,
Social and Governance Committee and helped to inform thedevelopment of our ESG targets, as well as our continued response
to COVID-19, including our customer Statement of Intent(see page 8).
Our material ESG issues are ‘mapped’ to the bank’s material risks
on pages 52-53.

Supplementary disclosures

The full list of our material ESG issues, as well as the key
steps in the materiality assessment process, is discussed
in our 2020 ESG Supplement available at anz.com/cs.
Detailed information on other ways in which we haveengaged with stakeholders is also included in the 2020
ESG Supplement.

ANZ 2020 Annual Review

3Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Chairman’s message
COVID-19 has had a profound impact on all our lives.
Whether it is the devastating loss of lives, the cripplingof some businesses and impact on livelihoods, limitations
placed on social activities and the way we are working –2020 will be remembered for generations.
ANZ has of course not been spared fromthe effects of the pandemic. Our full-year
statutory profit of $3.6 billion was down
40% – levels not seen since the height of
the Global Financial Crisis.
Looking through the immediate impact
of COVID-19, the fundamental drivers ofour business continued to perform well.
We are fortunate the actions taken by
our management team over many years
to simplify and improve our operations
have the bank well positioned to support
our customers as well as supporting
economic recovery.
Despite the challenges facing the broader
economy, the Board was pleased to declarea final dividend of 35 cents. This is on top of
the interim dividend announced in August,taking the total payout to 60 cents per share.

Given the uncertain environment, we put
aside $2.7 billion for possible future credit
losses. This takes ANZ’s total credit provision
reserves to $5.9 billion.
We also continued to simplify thebusiness through the year. On 31 January,
we completed the previously announced
sale of our OnePath Pensions andInvestments business to IOOF Holdings
Limited and in September we completed
the sale of UDC Finance in New Zealandto Shinsei Bank Limited.
During the most recent quarter, weannounced the sale of 1,300 offsite
Australian ATMs to Armaguard. While
we will continue to operate our 900
ATMs at our branches around Australia,
this was another step in achieving ouroverall goal to be simpler, more
efficient and better managed.

Supporting customers
For ANZ, 2020 will ultimately be definedby how we stepped up to support ourcustomers and the community throughthis devastating global pandemic.
Almost overnight businesses that wereonce thriving enterprises were restrictedfrom operating, families lost their main
source of income and millions faced
economic uncertainty, and our thoughts
are with those who have been directly
impacted.
I’m proud of the way our bank, under theleadership of our Chief Executive Shayne
Elliott, has risen to support our customers
and I can assure shareholders ANZ willcontinue to play a crucial role in theeconomic recovery of Australia and
New Zealand.

David Gonski, AC

4

Already we have provided loan payment
deferrals for more than 142,000 home loans
and business loans in Australia and New
Zealand. This approach has provided
customers with the time they need torecover while also protecting the interestsof shareholders.
While it’s an impossible task to provide
an accurate outlook for the future, I remain
optimistic about our prospects given
the positive way governments in our
key markets, particularly in Australia and
New Zealand, have responded to thechallenges of COVID-19.
Fortunately, we already are seeing the earlysigns of recovery, particularly in those partsof our business less impacted by COVID-19.
In Western Australia, for instance, our card
data shows spending on ‘dining & takeaway’
was up around 18% on the previous year.
Clearly there are still more challenges ahead
but these early signs provide us with a levelof confidence about the actions taken so far.

Executive remuneration
We know how we reward our most senior
people is important for many shareholders.
The Chair of our Human Resources
Committee, Ilana Atlas, AO, has provided
more detail in the Remuneration Report.
However, I can guarantee shareholders theBoard spent a great deal of time evaluating
the performance of the management teamand deciding how to reward themappropriately.
The Board was pleased with theperformance this year and was particularly
impressed with the way the bank responded
to the challenges presented by COVID-19.
However, given the impact the pandemic
has had on our shareholders, customers
and the broader community, the Board
exercised its discretion by applying a 50%
reduction to the variable remunerationfor our executive team, including ourChief Executive.
The Board also determined there would be
no fixed remuneration increases for any of
its Disclosed Executives, including the Chief
Executive Officer, for the coming year.

Board succession
As you may know, my time at ANZ came toan end at the finalisation of this year’s result
on 28 October. At that date I had been a
director for more than 11 years, originallyserving between 2002 and 2007, and thenreturning as Chair in 2014.
Serving as ANZ’s Chairman will always be ahighlight of my corporate career. Reflecting
on my time here, I am most proud to haveplayed a role in choosing Shayne Elliott tobe our Chief Executive and to work with
him to establish his talented leadershipteam. I know I am leaving ANZ in good
shape under this strong leadership andI will be keenly monitoring ANZ’s progress.

I am also delighted Paul O’Sullivan has
succeeded me as Chairman. Paul is an
outstanding company director who has
already made a strong contribution to theBoard. He has my absolute confidence.
Finally, I would like to thank shareholders
for their support over the years andacknowledge the efforts of our 39,000
people who have been working hard forour customers, shareholders and thebroader community.

David Gonski, AC Chairman

Message from Paul O’Sullivan

I am honoured to succeed David Gonski as the new
Chairman of ANZ. The bank has a proud 185-year history
and I look forward to contributing to its continued success.
While there will be much to consider in the coming year as economies recoverfrom the COVID-19 pandemic, my focus as Chairman will be to continue the work
we have been doing over many years to improve our operations and simplify thebank, particularly through digital and technological innovation.
The Board will also pay close attention to our business growth strategy in theconstantly changing landscape in which we operate. Looking at how we will
ensure success and improved financial performance in the long-term will beof critical importance.
Finally, I’d like to take this opportunity to acknowledge the enormous contribution
David has made and thank him on behalf of all shareholders for his hard work andleadership over the last seven years as Chair.
David steered the Board through some challenging times and helped build anorganisation with a strong focus on governance, accountability, improved culture
and enhanced customer outcomes.
His efforts to strengthen and champion the
bank’s work in the area of Environment, Socialand Governance (ESG), especially with respect
to social and economic inclusion and climatechange, is a legacy of which he should bevery proud.

Paul D O’Sullivan

ANZ 2020 Annual Review

5Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Shayne Elliott

CEO’s message
We could never have forecast 2020, a year that started withdevastating bushfires in Australia and was followed by waves
of a terrible, global pandemic that continues to spread. We
still cannot predict its course but we do remain confident
we can deal with its impacts.
Our thoughts are with those who havesuffered from these events. We need
only look at some of the country towns
impacted by bushfires or the empty city
streets to know these crises have struckat the heart of our community.
We want our customers to know we willcontinue to do all we can to support themthrough the tough times. Fortunately wehave never been in better shape to support
all our stakeholders through what will be
one of history’s periods of great volatility.
While the Chairman’s message has provided
an overview of our financial performance,
I would reiterate we were pleased withhow the business performed in difficult
trading conditions.

6

As a bank, we entered 2020 in robust
condition. We have a strong balance sheetwith record levels of capital and liquidity.
The work done over several years to simplify
the bank means we now focus only on thethings that matter, our people are moreengaged than ever and we are able to quickly
adapt to the challenges the future holds.
While COVID-19 has impacted many parts ofour business, we have not sat idle. Times ofcrisis are when the best companies build forthe future in a prudent and disciplinedmanner. We invested record levels to build
a better bank for our customers and staff,
while continuing to closely manage costs.
In Australia, we achieved strong growthin our targeted home loan segments withabove system growth in the owner-occupiermarket, driven particularly by the refinancing
market. Deposits remained strong as
customers took a sensible approach to
managing their household balance sheet.
We also saw an accelerated shift away fromthe use of cash due to the pandemic and
we introduced new processes to help
customers move to online banking.

Times of crisis are when the best companies build forthe future in a prudent and disciplined manner.

The work done over many years to simplify
and refocus the Institutional businessproved beneficial in a market defined byhigh levels of liquidity, low interest rates andgeopolitical tensions. Increased volatility led
to strong activity in Global Markets which
again performed well and demonstrated
the benefits of a diversified business. As
Australia’s leading international bank, we
remain well positioned to assist domestic
companies doing business in Asia as theglobal economy improves.
COVID-19 appears contained in New Zealand
and we remain well positioned to benefit
from its subsequent economic recovery.
While it was a tough revenue environment,
given low interest rates and a focus on
reducing or simplifying fees, we havemaintained market leadership in ourtargeted segments: home loans, deposits
and KiwiSaver.
Given the critical role data, insights andautomation will play over the coming years,
particularly as we respond to the challenges
of COVID-19 and the daily uncertainty thatbrings, we also made changes to the
executive team with the addition of Emma
Gray to the new role of Group Executive
Data and Automation. This will be a criticalrole in the continued digital transformationof ANZ.
One of the most pleasing aspects of 2020
has been how our people have responded
to the challenge. We were able to successfully
move 95 per cent of our non-branch
employees to working productively fromhome where they were able to support ourcustomers at a time of significant stress.
Employee engagement is at record levels.
I’ve been amazed at their dedication andI’m proud to call them my colleagues.

Climate changeThis year we have released an updated
Climate Change Statement that outlines ourapproach and strengthened commitments
in support of a global transition to net zerocarbon emissions.
We understand the impact – positive andnegative – our financing has on climatechange. We have been working hard on
making a meaningful difference while
supporting long-standing customers who
are making the transition to a low carbon
future. Over the last five years, we have
reduced our lending to thermal coal mining
by almost 70 per cent and increased our
direct lending to renewables by 63 per cent.
Our 2020 Climate Change Statement
focuses on three main areas.
First, we will help our customers byencouraging them to identify climate risks
and opportunities, create transition plans
and report publicly on their progress.
Second, we will support the transition ofindustries to a low carbon future so they
can help grow the economy. A key element
for ANZ is we will no longer directly finance
new assets across the thermal coal value
chain and will exit all directly financed
coal-fired power stations and thermal
coal mines by 2030.
Thirdly, we will reduce our own impact
by managing and reducing emissions
from our operations. We will do this byaccelerating our emission reductions bysourcing 100 per cent of the electricity
needed for our business operations fromrenewables by 2025.

Vale Will Bailey
I would also like to acknowledge
the passing of our former Chief
Executive Officer Will Bailey
in August this year.
Having started as a teller in the
Oakleigh branch of the old ES&A
bank in 1950, Will served as CEO
between 1984 and 1992. He was amentor to many future ANZ leadersand made a significant contribution
in building the ANZ we allknow today.
One of Will’s major legacies wasmodernising the bank, introducing
automation and computerisation –and some technology still in
use today. In fact, ANZ opened
Australia’s first ‘electronic branch’in 1985 under his stewardship. On
behalf of everyone at ANZ, I’d like topass on our condolences to his wife
Dorothy and his family and friends.

Finally, I would like to acknowledge
again the terrific work of our 39,000 people
across the world. From our service centres
in Bangalore and Manila through to ourcontact centres in Australia and branches in
New Zealand, they have all done a great job
for customers in very difficult circumstances
despite competing priorities over this long,arduous period.

Shayne Elliott, Chief Executive Officer

ANZ 2020 Annual Review

7Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

COVID-19 – protecting our customers,
people and community
While our decisions in responding to the COVID-19 pandemic have had a short-term financial
impact – on earnings, profitability and shareholder value – our focus is on the long-term.
A healthy and sustainable community is in everyone’s best interests.
Throughout the pandemic we have sought to balance the needs of all stakeholders. Our approach has been guided by four key principles:

Protect whatmatters

Adapt tothe changing
environment

Engage withstakeholders

Prepare forthe future

These principles informed our ‘Statement of Intent’ (available on anz.com), which outlines support for customers impacted financiallyby the pandemic and our commitment to work with them on a solution that is respectful, fair and appropriate.

Our customers

Our people

In March we announced our initial support package for retailand business customers, offering the option of deferring loan
repayments for a period of six months on a range of products,
including home, personal and business loans.

From early March we moved employees to work-at-homearrangements, split teams and introduced greater distance
between those employees performing essential functions in
the office. By late April approximately 95% of our non-branch
employees had adapted to working from home.

We received over 137,000 applications forhardship assistance in Australia alone.

Any employee concerned about their safety while working
from home (for example, due to domestic and family violence),
could elect to work in the office.
We also introduced 10 days’ of paid coronavirus-related special
leave, and provided a one-off payment to junior and mid-level
employees as a contribution towards working from home
work expenses.

In July we updated our support package for customers continuing
to experience financial difficulty due to COVID-19. Additional
assistance options (depending on the customer’s circumstances)included loan restructuring (for example, an interest only period)or an extension of the deferral period until 31 March 2021.

To protect our people still working in, or returning to the office, wehave put in place multiple controls to minimise the risk of exposure
to COVID-19 in the workplace, including thermal screening; physicaldistancing markers; enhanced cleaning protocols; and robust
incident notification, response and management processes.

Customers with loan repayment deferrals have been proactively
contacted by phone, SMS and/or email/letter to ensure they
understand the impacts of their loan relief and identify if theyneed further support.

Across Australia and New Zealand we have over 1.5 million home loans.

~~Of our 1 million home loans in Australia, 95,000 have received deferrals on their loan
repayments since March 2020, with 74,000 deferred loans active at 30 September.

~

~

~

Of our 529,000 home loans in New Zealand, 24,000 have received deferrals on theirloan repayments since March 2020, with 16,000 deferred loans active at 30 September.

~

~

~

Of our 236,000 business loans in Australia, 23,000 have received deferrals on theirloan repayments since March 2020, with 20,000 deferred loans active at 30 September.

8~

To support the wellbeing of our people we are providing coachingand digital resources through our employee intranet and new‘HealthyMe’ app. Our Employee Assistance Program also remains
available to our people and their immediate family members.
Finally, we are providing enhanced support for employees displaced
from their roles due to redundancy. This has included putting inplace a program for impacted employees, which provides themwith unlimited coaching and workshops to help them find newcareers and support their financial and emotional wellbeing.

Our community
We have worked closely with our community partners throughout
the pandemic – from adapting the way we deliver our financial
literacy programs to our senior executives engaging weekly with
NGOs, consumer advocates and financial counsellors to ensure weare acting responsibly and responsively to real world conditions.
In Australia, we donated $1.5m to the Brotherhood of St Laurence,
The Smith Family and the Financial Counselling Foundation – foreducation, employment, aged care and financial counselling
programs targeted at disadvantaged people affected by COVID-19.
We donated a total of NZ$2 million to Women’s Refuge, Age
Concern New Zealand, the NZ Salvation Army, Red Cross andother local charities in the Pacific to support those most affectedby the crisis.
We also directed $8.4 million of unclaimed remediation monies
to our key community partners to, among other things, help
expand their programs online. COVID-19 has highlighted the needfor diverse and sustainable ways to deliver services to vulnerable
families. One of our partners, The Smith Family, will use the funds
to further digitise their programs so they can continue to support
the education of around 58,000 students online.

Improving the lives of vulnerable Australians
during COVID-19

We have worked together with the Brotherhood of St Laurence(BSL) to adapt shared community programs so participants
can continue receiving support during COVID-19.
In response to the pandemic, we transitioned Saver Plus, amatched savings and financial education program developed
by ANZ and BSL, to digital delivery. This enabled over 2,000
participants to remain on the program by completing financial
education online instead of attending in person workshops.
Between March and September 2020, we provided over
$520,000 towards laptops and tablets, enabling digitalaccess for over 1,100 families and individuals to support
remote schooling and learning.
We were also one of the employers that continued toprovide employment opportunities for refugees and asylum
seekers through BSL’s Given the Chance work placement
program. “This has been very much appreciated by BSL, andfor the participants it has provided security and stability in atime when many areas of their lives are out of control”, BSL’s
Executive Director Conny Lenneberg says.

When children moved to remote learning, many of the families
supported by The Smith Family through their Learning for Life
program struggled to help their children with schoolwork. Thiswas due to a range of factors including some having low educationlevels themselves, limited technical confidence and skills, or having
English as a second language. In addition, digital inclusion issues
such as a lack of devices and internet access further affected somestudents. The educational support and learning programs The Smith
Family provides, with our help, is now needed more than ever, as
children and young people from disadvantaged backgrounds areat higher risk of falling behind due to the pandemic.

"We are incredibly grateful for the generosityand ongoing support of ANZ, who enable us
to continue helping children and families in
need, not just through this challenging time
but into the future as well.”
Dr Lisa O’Brien, Chief Executive Officer, The Smith Family

Supporting women in a time of crisis

Established in the 1970s, Women’s Refuge is New Zealand’s
largest nation-wide organisation supporting women andchildren experiencing domestic and family violence.
During the COVID-19 lockdowns many women haveneeded help to get through the crisis, with the pandemic
exacerbating family violence in some households.
In March 2020, we donated NZ$500,000 to the Women’s
Refuge, a community organisation that ANZ New Zealandhas had a long-standing relationship with.
Dr Ang Jury, CEO of Women’s Refuge commented on theimpact the crisis was having, saying, “we’ve been overwhelmedwith need in recent weeks. Unfortunately for some, there is
not a safe place to self-isolate for long periods of time.”
The funds from ANZ have meant that women and children
can be provided with food, healthcare, communications
services and importantly, safe lodging in motels.
“We are incredibly grateful for this donation from ANZ andthese funds will help ease the financial pressure our refuges
are facing during this time. We are also pleased to be able todirect a portion of the donation to future care and support
for women and children,” said Dr Jury.
Since 2017, ANZ has made it easier for women referred by
Women’s Refuge to set up their own bank account, eventhough they may not have ID or a permanent address.
ANZ NZ CEO Antonia Watson said: “It’s important to look out
for the most vulnerable in our communities during this time,
to not lose sight of their needs, and make sure the people
and organisations who support them are well resourced
and supported.”

ANZ 2020 Annual Review

9Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

About our businessWe provide banking and financial products and services to over 8.5 million retail and businesscustomers, and operate across 33 markets.
Our purpose and values
Our expertise, products and services make us a bank. Our people, purpose, values and culture make us ANZ.

Our purpose is to help shape a world in which people and communities thrive. That is why we strive
to create a balanced, sustainable society in which everyone can take part and build a better life.
Our values are the foundation of how we work – living our values every day enables us to deliver on our strategy and purpose, strengthen
stakeholder relationships and earn the community’s trust. All employees and contractors must comply with our Code of Conduct, whichsets the expected standards of professional behaviour and guides us in applying our values.

Our values are:

I NTEGRITYC OL L A BOR AT I ON

A CCO U N TA B I L I TY

E XC E L L ENCE

Bringing our purpose to life

Supporting sustainable development

We are helping to respond to complex societal issues central to ourcustomers and our business strategy. In particular, we are focusing
our efforts on:

We are committed to the United Nations Sustainable
Development Goals (SDGs) and believe that business has
an important role to play in their achievement. Our ESG
targets support 11 of the 17 SDGs.

FINANCIAL WELLBEING – improving the financial wellbeing of our

In 2019 we became a founding signatory to the UN
Principles for Responsible Banking. Under the Principles weare required to set at least two targets that address our mostsignificant (potential) positive and negative impacts, alignedwith the SDGs and the Paris Climate Agreement. Further
information on our progress towards implementing thePrinciples, including targets we have set, is in our 2020
ESG Supplement available at anz.com/cs.

customers, employees and the community by helping them makethe most of their money throughout their lives;
ENVIRONMENTAL SUSTAINABILITY – supporting household,business and financial practices that improve environmental
sustainability; andHOUSING – improving the availability of suitable and affordable

housing options for all Australians and New Zealanders.
We are contributing to these challenges by: developing innovativeand responsible financial products and services; working with ourcustomers; harnessing the skills of our people; and supporting thecommunities in which we live and work.
Fundamental to our approach is a commitment to fair andresponsible banking – keeping pace with the expectations of ourcustomers, employees and the community, behaving fairly andresponsibly and maintaining high standards of conduct.
Throughout this report we illustrate how we have embedded purpose
into our business strategy, including through our Environment,
Social and Governance (ESG) targets and performance objectives.

10

R ESPECTOur vision and strategy
Our vision and strategy describe what we seek to achieve and how we will achieve it.

Our vision

Our strategy

Our vision is to build a bank of which
we can all be proud – whether you area customer, a shareholder or an
employee – known for:Our strategy is to help improve the financial wellbeing of ourcustomers, having the right people who listen, learn and adapt;putting the best tools and insights into their hands and; focusing
on those few things that really add value to customers, and doing
them right the first time.

• delivering value from innovative andconvenient banking services that help
customers get ahead in life – improving
their financial wellbeing• building the best and most diverse
team of people, regardless of where
they ultimately work
• showing leadership on important issues,and doing the right thing, even when it
comes at a cost
• delivering consistently strong financial
results for our shareholders, with abalance between growth and return,short-and long-term results

In particular, we want to help customers:• save for, buy and own a liveable home
• start or buy and grow their business and adopt sustainable business practices• move capital and goods around the region and adopt sustainable business practices.
In doing so, we seek to improve the financial wellbeing of our customers, people andcommunities by helping them make the most of their money throughout their lives;supporting household, business and financial practices that improve environmental
sustainability; and improving the availability of suitable and affordable housing options
for all Australians and New Zealanders.

Creating value forour stakeholders

Strategic Imperatives

Strategy

Create a simpler,better capitalised,better balanced bank

Improving the financial
wellbeing of customers...

Build a superior
experience for ourpeople and customers
in order to compete in
the digital age
Focus our efforts
where we can carve out
a winning position
Drive a purpose
and values-led
transformation of
the bank...looking tosave for,buy andown ahome...looking
to start,
buy andgrow abusiness...with people
who listen,learn and adapt...looking tomove capitaland goods
around theregion...with thebest tools
and insights

Decent returns
for shareholders
Great experiencefor customers
Engaged, adaptable
and capable employees
Improved financial
wellbeing, housing
and environmental
sustainability outcomesfor customers andcommunities...with flexible and resilient digital
infrastructure that supports greatcustomer experience at lower cost

ANZ 2020 Annual Review

11Overview

How wecreate value

OUR VALUEDRIVERS

Performanceoverview

Remuneration
overview

Shareholder
information

CUSTOMERS

Trusted relationships withover 8.5 million retail, businessand Institutional customers.

OUR OPERATINGENVIRONMENT$¢

The risks and opportunities inour operating environment impact
our ability to create value.

FINANCESocial andeconomic impactsof COVID-19
pandemic

How wecreate value

Access to capital through customer
deposits, debt and equity investors andwholesale markets enables us to run ouroperations and execute our strategy.

Limitedcredit growth
PEOPLE

By transforming ourbusiness – embedding apurpose and values-led
culture and simplifying our
products and services – we aim
to create long-term value forall of our stakeholders.

Regulatory
oversight andstakeholder
scrutiny

Our value creation model
outlines how we create value
for our key stakeholders throughTechnologicalour business activities, andchanges
identifies the inputs – or value
drivers – that we rely on to
enable us to deliver thatvalue and meet our
strategic objectives.
Demographic

Employees and contractors withthe key competencies and rightbehaviours to deliver our strategy.

!
RISK MANAGEMENT

Reducing the risk of doing businessfor our customers and the bank, withsystems and processes that are lesscomplex, less prone to error andmore secure.

changes

Increasing
importanceof ESG

Globalisation

TECHNOLOGY AND DATA CAPABILITIES

Flexible, digital-ready infrastructure to provide greatcustomer experience, agility, scale and control.

COMMUNITY AND RELATIONSHIPS

Strong stakeholder relationships are
essential to our brand and reputation.

12

OUR BUSINESS ACTIVITIESSHAREHOLDER VALUE

Operating across 33 markets,
we provide banking and financial
products and services to individualand business customers.

Deliver decent returns enabling shareholders
to meet goals

Through our business activities
we deliver the following outputs:

we provide transaction banking services
we hold deposits for our customers
	we lend money to our retail, businessand institutional customers
	we help customers mitigate
and manage financial risks	we support customers withtrade and capital flows	we provide wealth management
products

132.7 cents earnings per share1
6.2% cash return on equity1
60 cents dividend per share for 2020 with an interim
dividend of 25 cents and a final dividend of 35 cents,
both fully franked$20.04 net tangible assets per share2
CUSTOMER VALUE

Improve the financial wellbeing of our customers
Provide funding for lending, helping customers
to own homes and start and grow businesses
and assist businesses to transact, trade andinvest across our region
Great customer experience through flexible
and resilient digital infrastructure	we provide advisory services

19,839 FTE supporting our retail and commercial
customers, providing $353 billion in home lending and$91billion in business lending (Australia and New Zealand)	we invest in our people to build
a diverse and inclusive workforce

5,291 FTE supporting our Institutional customers, providing$158 billion in lending	we collaborate with partners to build
capacity and improve financial wellbeing
	we pay taxes in the countries within
which we operate	we pay dividends to our shareholders

Custodians of $552 billion of customer deposits across the business
EMPLOYEE VALUE

Build a resilient, adaptable and inclusive workforce
with a strong sense of purpose and ethics
86% employee engagement (up from 77% in 2019)
Employed 919 people from under-represented groups(since 2016)$4.9 billion in employee salaries and benefits
Increasing the skills and capabilities of our people
providing almost 970,000 hours of training

1. On a cash profit (continuing operations) basis. Excludes non-core
items included in statutory profit and discontinued operations
included in cash profit. It is provided to assist readers in understanding
the result of the ongoing business activities of the Group. For further
information on adjustments between statutory and cash profit refer topage 56. 2. Equals shareholders’ equity less preference share capital,
goodwill, software and other intangible assets divided by the
number of ordinary shares. 3. Figure includes forgone revenueof $105 million, being the cost of providing low or fee-free accounts
to a range of customers such as government benefit recipients,
not-for-profit organisations and students. 4. Total taxes borne by
the Group, includes unrecovered GST/VAT, employee related taxes
and other taxes. Inclusive of discontinued operations. 5. Includes
individuals who have participated in more than one programor product (for example, people who have participated in
MoneyMinded as part of Saver Plus are counted twice as they
are included in both the MoneyMinded and Saver Plus totals).

COMMUNITY VALUE

Connect with, and invest in, the communities
in which we operate to support growth,deliver services and develop opportunity
Invested $139.5 million in the community3$2.3 billion in taxes paid to government4> 61,000 people have been reached through our financial
wellbeing programs MoneyMinded and Saver Plus5

ANZ 2020 Annual Review

13Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Our operating environment
The COVID-19 pandemic has fundamentally changed the external environment in which we
operate, and we are adapting in response. A summary of the key external risks currently affecting
our business and our response to them is outlined below.
RISKS

OPPORTUNITIESSocial and economic impacts of COVID-19• Many customers are financially impacted by the
pandemic, and need to adapt to a new environment• Responding to customer circumstances,by providing financial support and information• Working cooperatively with government onpolicies to see our customers through the
COVID-19 pandemic and into a period of growth

Limited credit growth• An economic contraction, lower business confidence andhigher unemployment is limiting credit growth, and manycustomer loans have been deferred• Maintaining our focus on core banking services
to improve customer outcomes, together withefficient allocation of capital and resources

Regulatory oversight and stakeholder scrutiny• Challenges arising from regulatory expectations andhigher community standards and expectations• Rebuilding trust by ‘doing what we say’
• Working cooperatively with regulators,
government and NGOs
• Supporting our customers, employees andthe community through the COVID-19 pandemic
and ensuing recovery period

Technological changes• Increased competition from digitally enabled competitors• Increased cyber attacks and attempted fraud• Changed employment proposition due to stay-at-home
restrictions• Faster deployment of new and improved digital
services, products and processes will help meetcustomer needs for safe and secure banking• Providing staff with appropriate technology, tools
and equipment to work productively from homeduring the pandemic and its aftermath

Demographic changes• Demand for new home lending and some otherbank products may diminish, particularly as population
growth stalls as a result of the pandemic• Growing need for more affordable and accessible
housing in the market• Delivering attractive housing products andservices to grow market share• Partnering with business, government andNGOs to provide innovative and practical models
for the development of affordable housing

Increasing importance of ESG• Failure to meet our ESG commitments and related social
expectations could lead to customer and community
impacts and reduced shareholder value impacts• Strengthening our ESG standards, policies,
processes, products and services and disclosures• Growth of sustainable finance products and services

Globalisation• The COVID-19 pandemic and changing geopoliticalenvironment has hurt global prosperity and cooperation,
threatening flows of trade, investment and people. Thismay challenge supply chains and productivity acrossour geographies

14• Continued strength of traditional exports, developmentof new markets and economic recovery provides
business opportunities in Australia and the region

ANZ STORY

ADAPTING

Banking through timesof change
Much about the world has changed since
ANZ started out as the Bank of Australasia in 1835.
In the 1800s and early 1900s, customers used only
their ‘home’ branch, with tellers recording accountdetails in a ledger book using a quill and inkwell.
By the 1920s, Burroughs ledger machines– akin to typewriters or early adding
machines – were used for calculations,replacing mental arithmetic.

our customers looking to digital solutions– be it online or via their mobile phones –to enable them to do their banking fromthe safety of their home.

Then, in around the 1960s, passbook
accounts were designed with ‘black light’signature panels giving customers the
freedom to bank outside of theirhome branch.

Changing the way we do things to meet theneeds of our customers isn’t new for ANZ.

Fast forward to 2020, and we have morethan three million customers using ourmobile banking app to check accountbalances, view transactions, and send
and receive money.
The COVID-19 pandemic has accelerated
the shift to digital banking, with more ofMore than 100 years ago, the Spanish Flu
pandemic also led to the closure of stateborders, placing restrictions on banking
services.
Staff in ANZ’s Tweed Heads branch in NSW
came up with an innovative way to ensure
money and cheques were still able toflow, using a cigar box and some rope totransport the contents across the river tothe Queensland border at Coolangatta.

Image: Andrew Smith

Now in 2020, we continue to adapt theways in which we deliver products andservices to our customers.
With the majority of non-branch staff
working remotely from home for muchof the year, we had to implement digitalsolutions for almost every aspectof customer engagement – fromaccepting electronic signatures onbank documents, to holding virtualcustomer meetings and events via
phone or video calls.
Over the years, despite the challenges
in our operating environment, serving
customers and providing essentialbanking services has been our priority.

ANZ 2020 Annual Review

15Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Becoming a fairer and more responsible bank
We continue to act in response to the ‘spirit and letter’ of the Royal Commission into Misconduct
in the Banking, Superannuation and Financial Services Industry (the Royal Commission).
Last year we developed an integrated response (‘roadmap’)to act on:• the lessons we identified from our misconduct and failures
to meet community standards and expectations; and• the themes raised in our 2018 APRA Self-Assessment reportacross culture, governance and accountability.
While there has been significant focus this year on the impactsof COVID-19, we recognise the importance of delivering on ourroadmap. Work on the roadmap has continued to deliver better
outcomes for our customers, our people and other stakeholders.
We remain committed to learn from our failures and build a bankthat is worthy of the trust and respect of our customers and thecommunity.

Integrated response to the Royal Commission
and the APRA Self-Assessment

Many of the recommendations in the Royal Commission’s
final report require legislative change. We continue to engage
constructively with government, regulators and industry as
they respond to these.

APRA Self-Assessment
Our roadmap is a multi-year program with defined success measuresand targets in place for each of the five focus areas. These areregularly reviewed and updated to ensure they remain relevant.
Governance and Accountability – The Board has committed tomaintain effective oversight of management’s implementation of
the roadmap and receives quarterly updates.

Our Royal Commission and Self-Assessment Oversight Group
monitors the progress with our roadmap. The Oversight Group is
co-chaired by our Deputy CEO and Chief Risk Officer and provides
regular updates on our progress to the Executive Committee andthe Board.

• Our Banking Executive Accountability Regime (BEAR) outputs
have assisted to clarify and strengthen accountability. BEAR
implementation is aligned with our three lines of defence andembedded within our governance, control and risk management
arrangements.

Our roadmap has five focus areas: Culture; Governance andAccountability; Management of Operational Risk; Remediation;and Simplification. Executive Committee members have‘ownership’ of each focus area.

• We introduced a strengthened Accountability and Consequence
Framework in June 2019, with expanded public disclosure ofsenior management consequences. The first annual effectiveness
review of the Framework was completed in February 2020, withenhancements implemented.

Delivering on our roadmap will give us confidence that thelessons of the Royal Commission and the themes raised in
our Self-Assessment report have been acted on.

Royal Commission
We made 16 commitments as part of our response to the Royal
Commission, to improve the treatment of retail customers, small
businesses and farmers in Australia.
• We have completed 11 commitments to date. We have taken
action on distressed agricultural loans; remuneration of frontline staff; the Retail Banking Remuneration Review (Sedgwick)recommendations; culture and governance; and reporting on
remediation of existing failures.
• Of the remaining five commitments, four are dependent on
the finalisation of related legislation, and one is ongoing as we
continue to assess our culture and respond where changes
are required.

16• We provide public updates on our progress to implement
the Royal Commission recommendations to the House ofRepresentatives Standing Committee on Economics. Our mostrecent update as at 21 August 2020 is available on anz.com.

Culture – We are working towards our aspirational culture andcreating an environment where employees are motivated and'speak up', when they see something wrong. Our Board and theexecutive Enterprise Culture Steering Group provide oversight.
• We promote a strong ‘speak up’ culture. Our most recent
internal employee engagement survey showed an uplift of
5% (from 69% to 74%) in response to the question ‘I can raiseissues and concerns in ANZ without fear of reprisals or negative
consequences’.
• We changed how we financially reward, recognise and manage
the performance of our people to reduce the risk of outcomesthat are not in our customers' best interests, and to support
collaboration, team performance and encourage long-term
thinking. Variable remuneration is now a smaller part of
take-home pay.

• We are building leadership capability to have regular and better
quality performance and coaching conversations, focusing on
outcomes and behaviours.
• We care about our customers. Our Royal Commissioncommitments improve the treatment of retail customers,
small businesses and farmers in Australia.
• Our Dispute Resolution Principles aim to help us be moreaccountable and transparent. We reviewed and updated ourprinciples in November 2019. The principles apply to our people
and our representatives when managing individual retail andsmall business customer complaints, disputes and litigation inAustralia. The principles are available on anz.com.
– The dedicated Indigenous telephone service we establishedin May 2019 has answered 6,641calls since inception, withan average speed to answer of 62 seconds as at
30 September 2020.
– We committed to the Australian Financial Complaints
Authority’s (AFCA) ‘look back’ under its new limits, and to
fully cooperate with AFCA as it resolves disputes. We
established a dedicated team responsible for investigating
legacy complaints, which could be lodged with AFCA until
30 June 2020. 179 legacy complaints were lodged, of which
134 have been closed. The remaining 45 cases are at various
stages of the AFCA process and we remain committed toresolving these where possible.
Management of Operational Risk – We continue to invest ina simplified operating environment, improved strength of systems
and processes, improved control effectiveness, and improved
risk capability.

Strengthening our approach to human rights
We recognise our business activities can have humanrights impacts. To manage these impacts we embed our
expectations across our business activities and relationships
via group-wide policies, training programs, and customer
and supplier screening tools and policies.
This year we commenced a review to strengthen our humanrights policies and processes, aligning our approach moreclosely with the UN Guiding Principles on Business andHuman Rights. This has included a review of our minimum
standards for business customer grievance mechanisms andcommunity engagement, which we expect to complete in
2021. Our approach is being informed by a working groupof external stakeholders, including NGOs, academics, tradeunions, customers, industry associations and humanrights consultants.1
Modern slavery

We are preparing our first statement in response to theAustralian Modern Slavery Act.
Modern slavery is serious exploitation of people which
undermines or deprives them of their freedom including
forced labour, deceptive recruiting and child labour.
The Australian legislation requires us to identify, assess andmanage risks in our business operations and supply chain.
We have identified three key areas in which to improve
our practices:

Remediation – Our customer remediation program continues.
An update on our progress is included on page 21 of this report.

• building awareness of modern slavery throughtraining and education;

Simplification – We have taken strategic action to simplify our• policy and process improvements; andbusiness, products and processes. For example, we completed
the sale of our New Zealand asset finance business, UDC Finance,in September 2020; and we completed the sale of our Pensions andInvestments business to IOOF Holdings Limited on 31 January 2020.

Further detail on our approach to human rights is in
our 2020 ESG Supplement available at anz.com/cs.

• enhancing our due diligence.

1. Their involvement does not infer endorsement of the outcomes of this review or other work carried out by ANZ.

ANZ 2020 Annual Review

17Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Our customers
Supporting our customers through the Australian bushfires and COVID-19 pandemic has been
our primary focus this year, but we have not lost sight of our longer-term priorities – to help
improve the financial wellbeing of our customers and to increase access to more affordable
and sustainable homes.
We are seeking to ensure our products are suited to our customers’
needs and meeting expectations. We are implementing digitalbanking solutions designed to improve financial wellbeing, andprotecting customers from those seeking to take criminal advantageof the shift to digital banking. We are listening to customers andmanaging complaints, taking steps to remediate when necessary
and learning from our mistakes. And we are supporting innovative
housing delivery models across the private, public and not-for-profit
sectors to increase the availability and affordability of homes
in Australia and New Zealand.

Product suitability

Supporting customers during difficult times

Improving customer experience throughdigital innovation

Financial relief packages were implemented quickly to support
customers affected by the bushfires that devastated parts ofAustralia over the summer months. This included the ability tosuspend loan and credit card repayments, temporary interest rate
relief, and early access to term deposit funds without incurring fees.
Specialised ATMs were deployed to impacted centres, and hardshipsupport was provided through referrals and funding to community
counselling services. Proactive contact was made with small
business customers in affected areas and through our insurance
partner QBE, prioritisation was given to claims, including emergency
payments and temporary accommodation costs.
See page 8 for information on how we are supporting ourcustomers during the COVID-19 pandemic. For discussion on thespecific supports available to customers experiencing vulnerability
see our 2020 ESG Supplement available at anz.com/cs.

We are helping our customers better understand how to get morevalue from their products – such as by showing them how to adjust
their use of a particular product, or identifying when there may be
an alternative product better suited to their needs. Our Product
Suitability team develops and manages a number of customer
contact programs to support improved customer outcomes andenhance customers’ financial wellbeing. Program results arereported quarterly to the Board.

We need to ensure our customers can rely on us to provide themwith secure remote access to banking products and services.
Digital platforms such as mobile and internet banking make itpossible for customers to serve themselves, anywhere, anytime andwe are adapting the way we operate to respond to our customers'changing banking habits.
The COVID-19 pandemic has accelerated the shift to digital banking,with mobile phone banking our fastest growing channel. We haveprovided additional education and support for customers using
digital channels for the first time this year, with 300 extra staff
retrained and deployed to assist.
PM

2–4A.M.
PEAK

PM

In Australia, the ANZ App
is helping 3.2 million
customers stay on top of
their day-to-day banking.
PEAK

PM

PM

2–4A.M.

51,000 LOGINSPEAKPeak usage on the ANZ App is
between 4–6pm, and even during
our quietest time between 2–4am,
we see an average of 51,000 logins

2–3A.M.

10,000 CUSTOMERSPeak usage for internet banking
is between 1–2pm, and during ourquietest time between 2–3am, weserve almost 10,000 customers.

2–3A.M.
PEAK

Over the last 12 months we have rolled out several new self-service features to the
ANZ App, including the ability to open new accounts, activate a card, set or change
a card PIN and temporarily block and unblock a card to protect an account fromtheft and fraud. To date, more than 22,000 new accounts have been opened, 760,000
debit and credit cards have been activated, 807,700 card pins have been set orchanged, and 45,300 temporarily block and unblock card requests have beenprocessed through the ANZ App.

18

The ANZ App won
Money Magazine’s
Mobile Banking Appof the Year 2020

HIGHLIGHT

INCREASING THE VALUE CUSTOMERS RECEIVE FROM OUR PRODUCTS

Our Concession Account Suitability program contacts customers in receipt of eligible Centrelink or Veterans’ Affairs benefits with
an offer to move to a low-cost basic bank account. To date we have contacted more than 335,000 customers (210,000 this year) withmore than 14,600 taking up the offer to move to a basic account. From 19 March to 22 July the program was paused as we shifted
our focus to supporting customers impacted by COVID-19.
Our Persistent Credit Card Debt program identifies and contacts credit card customers who are carrying persistent debt1 on theircard to help them pay their debt faster. Customers are offered financial education, and the opportunity to close their card and repay
the remaining debt at a lower interest rate. To date, we have contacted 18,195 customers with 1,450 customers taking up the offer.
This program was also paused while we focused on supporting customers impacted by COVID-19.

We are implementing digital solutions designed to make banking
easier and improve the financial wellbeing of our customers.
In Australia, we launched the ‘set a savings goal’ feature in the ANZ
App to help customers better manage their money and develop
savings habits. Customers receive personalised in-app notifications,encouraging them to set a goal, stay on track and celebrate
milestones along the way. One in 10 active App users has set a goal
this year. There are now more than 240,800 active or achieved goals
in the App, with 24% of these saving for a house, followed by aholiday (17%).
In New Zealand, we introduced several new self-service features to
ANZ goMoney and internet banking, including fixed-rate rollovers.
Customers with an existing fixed-term home loan or flexi homeloan, who want to fix their rate, can now request a personalised rate
for their loan facility and term (based on current market rates)
without needing to call us or visit a branch. One third of all homeloan fixed-rate requests are now completed digitally.
We also implemented customer alerts to mobile phones, letting
customers know when they receive a deposit or have a low balance,
assisting them to manage their finances.

Protecting our customers in a digital world
We have seen a significant increase in malicious emails
seeking to take advantage of our customers, withcyber criminals capitalising on more internet traffic
during the COVID-19 pandemic. Malicious email
tactics include those that claim to have links to mapsof virus outbreaks and related information, tricking people into
downloading malicious software.
The threat landscape is changing at a rapid pace, and we have
responded in kind, moving to leverage automation, machinelearning and advanced analytics. We invest heavily in our cybersecurity capability, and remain in a strong position to keep our
systems, data and customers safe from the increasing pace, scaleand sophistication of cyber attacks.
Our threat intelligence and 24/7 Security Operations Centre analyses
millions of data events every day to help keep customers, employees
and the bank safe online. As malicious campaigns are identified, we
implement targeted, automated capability to block them.

During a 30 day period near the start of the pandemic we blockedaround 550,000 COVID-19-themed emails, and during July 2020 weblocked over 12 million malicious emails alone, an increase of morethan 8 million emails compared to October 2019.
In the context of the changing threat landscape, ANZ did report amajor security event to the Reserve Bank of New Zealand and theAustralian Prudential Regulation Authority in the financial year 2020,
as a result of a distributed denial of service2 attack in New Zealand.
While this attack was similar to what was experienced by otherorganisations, we were able to proactively detect the activity andmitigate the risks through preventative security controls, resulting inminimal disruption to our operations and customer services, and no
impact to customer data.

HIGHLIGHT

MAKING SMALL BUSINESS LENDING EASIER

This year we launched ANZ Online Business Lending. The
platform provides conditional approval for up to $200,000 in
unsecured lending in as little as 20 minutes and access tofunds within four days. Customers using ANZ Online
Business Lending have access to fixed-and variable-termloans as well as overdraft facilities.
As the economy recovers from the impacts of COVID-19,
helping small businesses to access capital in a fast andconvenient way is critical.
According to Mark Hand, ANZ’s Group Executive, Australia
Retail and Commercial Banking, “While the current
economic crisis will be devastating for some businesses,
there has also been a great deal of resilience and some will
be able to come out the other side even stronger. We’re also
starting to see new businesses being created to meet
emerging customer needs.
“This sophisticated new technology is deeply integrated
with ANZ’s existing platforms to provide our customers witha quick, simple and secure lending experience so they canspend more time running and growing their business.”

1. Where for at least the last 12 months a credit card has over 80% of the credit utilised and the customer has been paying 2–3% of the outstanding balance on average each month.
2. A distributed denial of service (DDoS) attack is an attempt to make an online service unavailable by overwhelming it with traffic.

ANZ 2020 Annual Review

19Overview

How wecreate value

CHALLENGE

Performanceoverview

Remuneration
overview

Shareholder
information

Measuring customer experience

SCAM ASSIST

During the COVID-19 pandemic we have seen an increasein customers falling victim to scams, particularly remote
access and investment scams. Digital fraud attempts havealso increased.
In addition, we have seen a number of customers trying to
supplement lost earnings through investments purported
to be high-yield options, such as crypto-currencies.
In 2020, our Australian Scam Assist team investigatedover 5,000 individual scams impacting our Australian Retailand Commercial customers and recovered approximately$25 million on behalf of some of those impacted.
As an industry, we face significant challenges in helping
our customers not fall victim to scams. We work with law
enforcement agencies, collaborating on a number ofoperations to identify and disrupt Australian based actors,
particularly via the Fintel Alliance. Efforts to break-up criminal
syndicates are focused on three key actions: customer andemployee education; improved detection capabilities; andongoing support of law enforcement disruption activities.

One of the ways we measure the experience of our customers isthrough our strategic Net Promoter Score (NPS). NPS enables us togauge whether we are meeting customer needs and expectations
and how we are performing relative to peers. It is measured byasking customers how likely they are to recommend ANZ (on a 0–10
scale) and is calculated by subtracting the percentage of detractors(those who give a score of 0–6) from the percentage of promoters(those who give a 9 or 10).
While our performance relative to peers improved for our Australian
Retail customers, we failed to improve relative to peers for ourAustralian Commercial and New Zealand Retail and Commercial
customers. Our Institutional ranking remains at number one in both
Australia and New Zealand.

Managing customer complaints
Internal Dispute Resolution (IDR) plays a vital role in protecting
customers. Fair and robust IDR assists with recognising and fixing
problems that arise, both at an individual customer level and acrossthe business. It allows us to ‘hear’ where changes need to be madeand serves to inform us when we are not meeting customer orcommunity expectations.
In 2019 we commenced a program to review and improve our IDR
policies, systems and practices, with program updates provided to
the Board and ASIC. Capability and quality improvement initiatives
support our objectives of fair, consistent and well communicatedcomplaint outcomes to our customers.

NET PROMOTER SCORE
AUSTRALIA

Retail: ranked 3rd1
(up from 4th at end of 2019)

Commercial: ranked 4th2
(down from equal 3rd at end of 2019)

A foundational element of the IDR program was the establishmentof a Customer Resolution portfolio in early 2020, which is dedicatedto working with our customers when they have a problem:(no change from 2019)• senior executive leadership and complaint management
expertise has been introduced to drive IDR uplift, along withsupporting governance, data, analytics and transformation
capabilities.

Retail: ranked 4th4• the portfolio has been focused on improving the way we handle
our customers' complaints in order to solve complaints earlier andimprove the overall complaint resolution timeframes. Additional
complaint handling staff have been also recruited to support
timely complaint resolution.

Institutional: ranked 1st3

NEW ZEALAND(no change from 2019)

Commercial and agricultural:ranked 5th5(no change from 2019)

Institutional: ranked 1st

6(no change from 2019)• we appointed a Vulnerable Customer Lead to continue thedevelopment of the Divisional vulnerable customer strategy andprovide an important link as we support our customers during
the COVID-19 pandemic and other life changing events.

1. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six-month rolling average to September 2020. Ranking based on the four major Australian banks.
2. DBM Business Atlas. Base: Commercial Banking (<$100 million annual turnover) Main Financial Institution customers. Six-month average to September 2020. Ranking based on the four major
Australian banks. 3. Peter Lee Associates, 2020 Large Corporate and Institutional Relationship Banking surveys, Australia. 4. Retail Market Monitor, Camorra Research, six-month rolling average
to September 2020. Ranking based on the five major New Zealand banks. 5. Business Finance Monitor, TNS Kantar Research. Base: Commercial ($3 million – $150 million annual turnover) andAgricultural (>$500,000 annual turnover) customers. Four-quarter rolling average to Q3 2020. 6. Peter Lee Associates, Large Corporate and Institutional Relationship Banking surveys, New
Zealand 2020, ranked against the Top 4 competitors.

20

Improving our IDR practices

We are continually trying to find ways in which we canencourage feedback in order to provide better experiences
and fair outcomes for customers. Some of the improvements
we are working on include:• development of a new and improved complaints recording
and management system• establishment of a Systemic Issues Management function
with a focus on using complaint data and advanced
techniques such as machine learning and artificial intelligenceto identify issues early• continued investment in the capability of our people and theefficiency of our processes to help customers resolve theircomplaints as quickly as possible.
Further information on customer complaint management
is in our 2020 ESG Supplement available at anz.com/cs.

Customer remediation
We are delivering on our commitment to fair, responsible andefficient customer remediation.
In an effort to fix our past mistakes as quickly as possible, we haveincreased remediation staffing levels significantly since 2018. Acrossthe Group there are now over 1,200 staff working on customer
remediation, with approximately half in dedicated remediation teams.
Our Australian Responsible Banking team is resolving identified
fee or interest discrepancies with over 5.2 million Retail andCommercial customer accounts. Since April 2018, we haverefunded approximately $223 million across approximately
2.9 million customer accounts7.
Our pace of remediation has been steadily increasing and overthe last 12 months we have remediated approximately 1.8 million
customer accounts, compared to approximately 1.1 million overthe 18 months to September 2019.8

Assisting potentially vulnerable customers
to access their money

At the start of the COVID-19 pandemic around 7,000 of ourcustomers only held a passbook account at ANZ. These
accounts do not have the option of an ATM card or access tointernet or phone banking. Customers with these accounts
are typically over 70 years old with their pension income paid
into this account.
We recognised that our customers may have had difficulty
accessing their money in the event of a temporary branchclosure, or if they wanted to self-isolate. Our bankers wereable to reach over 5,000 of these customers to check in onthem considering their specific vulnerability during the
COVID-19 pandemic. We also sent letters with information
on everyday accounts with a Visa debit card that can beused for online/phone shopping, and ATM/store withdrawals.
It also includes access to internet banking and no monthly
account service fees.
We developed a new process enabling customers to open
an everyday account from their home entirely over thephone. We also implemented a technology change toenable passbook customers to establish a recurring transfer
by phone to automatically transfer regular income, suchas pension payments, from their passbook accountto their new everyday account.

More than 500 of these
7,000 customers chose toopen an everyday account.
Over 100 of our passbook customers
set up a recurring transfer to movetheir pension income into theireveryday account.

In Australia, we have an education program to share ‘lessons learnt’and to highlight to staff the impacts on customers when we fail to
get it right. The program is aimed at raising awareness and fostering
a culture where employees are clear on the role they play indelivering quality customer outcomes and safeguarding ourcustomers’ interests.
The Group’s customer remediation activities are regularly reviewed
by the Board. Directors are provided an overview of the status ofremediation matters; regulator engagement; repayments andprovisioning; and reviews underway to identify new matters.

7. In certain instances:•	we make a payment to one of our community partners in lieu of a payment to a customer account. As at 30 September 2020 payments were made to ~238k accounts totalling $744k•	we pay the customer via cheque. As at 30 September 2020 cheques had been issued for ~521k accounts totalling ~$59m. A portion of the cheques remain unpresented•	we offer certain customers access to payment via a payment portal. As at 30 September 2020 offers to access payment via payment portal have been issued for ~10k accounts totalling ~$379k•	we transfer payments through a process for unclaimed monies (includes payments for de-registered companies). As at 30 September 2020 payments transferred via this process have been
made for ~2k accounts totalling ~$1m.
8. The matter is considered complete when all customer payments have been processed. In some cases, remediation teams may continue to close out non-customer payments,
documentation and governance requirements beyond this point.

ANZ 2020 Annual Review

21

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Improving the availability of suitable and affordable housing
Housing-related lending is a key activity ofthe bank. We lend to home owners andinvestors, and for property development
and infrastructure. We believe we can play arole in helping improve the availability andaffordability of housing, including support
for innovative housing delivery models acrossthe private, public and not-for-profit sectors.
At the end of 2018 we committed to fundand facilitate $1 billion of investment
by 2023 to deliver around 3,200 more
affordable, secure and sustainable homes
to buy and rent in Australia. We haveexceeded this target.1
In addition to the $1.02 billion of investment inAustralia, we have also funded and facilitatedaround NZ$1.35 billion to support the delivery
of social and sustainable housing across
New Zealand.

HOUSING

We have continued to build our housing
supply pipeline through direct engagementwith our clients (new and existing),
supporting innovative models to financenew supply.
This year we have:• jointly arranged two additional bondissuances for the Commonwealth’s
National Housing Finance and Investment
Corporation (NHFIC), including the largest
social bond for housing in Australia($562 million)• arranged bonds for Kāinga Ora (Housing
New Zealand Corporation) to support thedelivery of more social and sustainablehousing (jointly NZ$1 billion; solely
NZ$300 million)• supported the first Assemble Model,
designed to bridge the gap between
renting and owning a home to market2• invested in the development of aSpecialist Disability Accommodation(SDA) pipeline• helped build the case for institutional
investment in long-term rental housing
through the backing of a range of‘build-to-hold’ projects.
We have committed to increase ourtarget to fund and facilitate $10 billionof investment by 2030 to deliver more
affordable, accessible and sustainable
homes to buy and rent in Australia
and New Zealand.

DELIVERING ACCESSIBLE HOUSING OPTIONS TO MARKET

As part of the roll-out of the National
Disability Insurance Scheme (NDIS) in
Australia the government has contributed
funding to Specialist Disability
Accommodation (SDA) to encourage
investment in the development of new
high-quality housing for eligible people.
Our Corporate and Institutional Healthteam is developing its expertise andcapacity to ensure our ability to support
this much needed housing supply tomarket. The benefits to help deliver better
connection and opportunity for people
in SDA are key drivers of our interest ininvesting in this emerging asset class.
Over the course of this year, ANZ has
provided credit approved commitments
in excess of $100 million to the SDA sector
and closed its first transactions, partneringwith our clients to deliver SDA housing
and to aid them to grow a pipeline of
new homes across the country.
We have also worked with our existing
property clients to facilitate the inclusionof SDA as a pre-sale element in theirproperty developments. This has allowed
them to partner with developer, Summer
Housing, to include disability housing inmixed developments, providing residents
with access to services and supports.
Our support is broader than debt capital,
with the Summer Foundation receivinga 2019/20 ANZ Community Grant tosupport the roll-out of their Tenancy
Matching service.
“I am thrilled to be assisting people tonavigate their own housing journey,
courtesy of the ANZ Community
Foundation, which funded a Summer
Foundation project to deliver housing
workshops in Tasmania for people withdisability and their families,” said Liz Ellis,
Summer Foundation convenor.
The workshops helped participants to
identify where they wanted to live andto consider their specific housing needs
and preferences. They also provided
guidance on the different housing
models available – including SDA(through the NDIS) and affordable housing.

Summer Housing project

1. Due to the lag between financing and commencement of development, number of homes will be audited and disclosed once projects have been delivered. 2. The Assemble Model is a
new ‘build-to-rent-to-own’ hybrid model that bridges the gap between renting and owning a home. It offers residents a five-year lease with the option to purchase their home at the end of
the lease. The purchase price is fixed from the start of the lease, giving residents a set goal to save towards and mitigating the risk of being priced out of the market during the rental period.

22

HOUSING

INVESTING IN SOCIAL AND AFFORDABLE HOUSING IN NEW ZEALAND

Following the wellbeing bonds we arranged for Housing New Zealand Corporation in 2019, this year we jointly led NZ$1 billionof bond issuances and a sole placement of NZ$300 million for Kāinga Ora – Homes and Communities, to deliver an additional 8,000
new public housing and transitional housing places. All new homes will be built to 6 Homestar, meaning they will far exceed
Building Code (NZ) standards for warmth, dryness and health.
As part of Kāinga Ora’s ongoing build program, already more than 3,000 public housing homes have been built with this ratingaround New Zealand. Not only are these new homes warm and dry, they also contribute to improved financial wellbeing of tenants,
with energy savings estimated to be NZ$570 per household every year.
Kāinga Ora brings together the KiwiBuild Unit, Housing New Zealand and its development subsidiary HLC, and is designed to enable
a more cohesive approach to delivering the government’s priorities for housing and urban development in New Zealand.

In the last 12 months,
we have lent over$60b, helping
more than 170,000
customers in Australia
buy a home.

In the last 12 months,
we have lent over
NZ$18b, helping
more than 55,000
customers in New
Zealand buy a home.

LINKS TO 2020 GROUP PERFORMANCE FRAMEWORK

Despite the serious challenges faced by the banking sector and community this year, our actions over previous years to simplify
and strengthen the bank provided us with the capacity to support our customers at a time of need and strengthen our long-term
relationships. While the focus has been on assisting customers in need, there has also been opportunity to build new customer
relationships and enable more digital services that have been especially valued in a restricted COVID-19 environment. Institutional
performance in key customer satisfaction/relationship strength surveys continued to be a highlight, and a new online payments
experience has been processing ~1 million payments daily and providing digital self-service for Institutional customers.
See section 4.5.3 of the Remuneration report for more details.

ANZ 2020 Annual Review

23

Overview

How wecreate value

Performanceoverview

CUSTOMER STORY

Remuneration
overview

Shareholder
information

ADAPTING

Opportunities arise inchallenging times

Mount Zero Olives is a small,family-owned and operated
business in the Grampians inregional Victoria, producing
and processing certified
organic olives, olive oiland table fruit.
They also partner withlocal growers to produce a
range of pulses and grains.
Supplying predominantly
to restaurants throughout
Australia, the businesshas been hit hard by the
COVID-19 pandemic.
General Manager, Richard Seymour recalls
the moment he first realised they were infor tough times.
“I have a really vivid memory of when thepin was pulled on the Melbourne GrandPrix in March and I knew we were in for aworld of change.”
An ANZ customer for almost two decades,
Richard found himself drawing on hisstrong relationship with the bank,developing a roadmap to guide thebusiness through the pandemic.

24“With the help of ANZ and our businessadvisor, we put together a vision which saw
us quickly pivot to engaging directly withcustomers through an online platform. In amatter of months, we’ve been able to growwhat was around 5% of direct sales tocustomers, to around 35%.”
Mount Zero’s customers have always valued
its sense of brand, the foundation of which,according to Richard, is its proud heritage
as a family business that values
sustainability and supports ‘local’.

“This has really resonated with ourcustomers during the pandemic, as they’vebeen able to reach out to a businessdirectly that was already quite tangible tothem, and not just a paper wrapper on a
product on a supermarket shelf. They know
who we are, where we are from and what
we stand for, and they’ve supported us forthese reasons.”“As horrible as the outlook is for many small
businesses due to the pandemic, it haspresented an opportunity to drive change
and come out stronger on the other side, andfor that, we’re really grateful,” says Richard.

Our divisions
Australia Retail and Commercial"This year has been an extremely tough time
for our customers. We know not every businesswill survive but we also know there is opportunity
for others. We will be working closely withour customers – no matter their situation –to understand their need and to find solutions
that will help them succeed in the future." ark Hand, Group Executive Australia
M
Retail and Commercial Banking

Operating environment
Between drought, bushfires and COVID-19 it
has been a tough year for the economy andmany of our customers.
Unprecedented levels of fiscal stimulus
have so far sheltered Australia from theworst economic impacts and some areas ofthe economy are seeing opportunity, suchas online retail, home exercise equipment
and pet supplies.
Retail customers are accelerating theirshift to online and mobile banking, limiting
branch visits and moving away from cash,
credit cards and personal loans. Insteadthey’ve been saving more, reducing debt
and refinancing their mortgages.
Although Australia is yet to return to normal
activity, businesses are increasingly adapting
to the new environment. Many of ourcommercial customers have proactively
managed costs, been conservative withcapital, and innovated during this crisis.
While we face headwinds from theeconomic contraction, lower business
confidence and higher unemployment, weare focused on supporting our customers,
adapting to the changing environment,
and preparing for a more digital future.

Strategy and focus
Our goal is to be a simpler, more efficient,well-managed business, that is the bankof choice for Australian home owners andbusiness owners. Our priorities are tocontinue to fix our past mistakes, growstrategically and sustainably, reshape ourbusiness for a post-COVID world andprepare for a digitally-enabled and highly
automated future. We are investing in thebusiness through the economic cycle while
continuing to reduce costs to a moresustainable level.
Fixing past mistakes and returning money
owed to customers quickly remains animportant focus. Since April 2018 we have
remediated approximately 2.9 million
customer accounts and issued refundsof approximately $223 million.
We further simplified the business,
including by introducing a more targeted
approach in the Financial Advice businessto focus on affluent and high net worthclients, and announced the sale of 1,300
offsite ATMs to Armaguard.
Across our branch network, we invested
heavily to open digital branches providing
customers with new self-service options,
including smart (deposit taking) ATMs andbusiness cash deposit machines. We also
restored momentum in the home loan
book growing it by ~$10 billion in theyear to $275 billion.
We launched our new Online Business
Lending platform providing small businesses
with conditional approval for up to $200,000
in unsecured lending in as little as 20 minutes,
and access to funds within four days.

Performance highlights
Our response to the shifting environment
has had a very real short-term financial
impact – on revenue, profitability and returns.

Cash profit declined by 27% in 2020
compared to the prior year. Throughcontinued discipline, costs remain
well managed, flat year on year.
Mortgage sales volumes are back to 2017
levels, and Retail and Commercial deposits
are up by $12.7 billion and $13.9 billion
respectively. With lower levels of demandfor credit, commercial lending was flat.
In response to the pandemic we haveprovided assistance to our retail andcommercial customers, including deferrals
on home loans, personal loans, credit cards,
business loans and asset finance as well as
temporary overdraft increases. Around95,000 home loans and 23,000 businessloans received repayment deferrals. We also
increased the size of our hardship team and,diverted branch staff to support the 65%
increase in customer calls for support.
We contributed to communities throughour bushfire financial relief package forcustomers, donated more than $1 million
to support customers and communities
impacted by the fires, and extended our
special paid leave for employees who
volunteer in emergency services.
We received a number of awards, including
Money Magazine’s Mobile Banking App of
the Year, ANZ Canstar’s Small Business Bankof the Year Award for the third consecutive
year and Agribusiness Bank of the YearAward. ANZ Private Bank won a numberof awards, notably ranking #1 in four
categories in Euromoney’s peer-voted
Private Banking and Wealth Management
2020 Survey, including Best Overall.

ANZ 2020 Annual Review

25

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Institutional“In Institutional, our global network positioned us
well to move quickly to respond to the pandemic
and support our valued, long-term customers.
We also mobilised our digital channels to managea sharp rise in transaction volumes, while working
closely with our customers to keep them cyber-safe.”
Mark Whelan,Group Executive Institutional

Operating conditions
The external environment was challenging
in 2020, particularly in the second half as
COVID-19 impacted the global economy
and supply chains. The pandemic led to
sharply lower levels of activity in every
geography and many sectors, and introduced
significant uncertainty about the future for
our Institutional customers. These immediatechallenges were also conflated with disruptive
structural change and geopolitical issues.
At the same time, these disruptions resulted
in strong activity in our markets and lending
businesses, which responded swiftly to market
volatility and unprecedented demand for
liquidity. With a presence in 33 markets
globally, our diverse business was preparedto support our customers and staff in ourhome markets and internationally.
The pandemic has increased competition, andrecord low interest rates continue to narrowmargins and place pressure on revenue.
Slower global demand and competition
led to lower trade finance volumes andrevenues. In the face of these conditions,
Institutional continues to sharpen its focus
on the right customers in priority sectors
and further invest in digital, data andautomation to strengthen the business.

markets, valued our network and were inindustries where ANZ had strong expertise.
Four years on, this strategy is wellprogressed. We have reshaped the business,diversified our revenue streams with greater
emphasis on lower capital-intensive products,
consistently reduced operating costs, andstrengthened our culture, while clearly
establishing our position as the leading
relationship bank in the region.
In the early days of the pandemic we wereable to move quickly to support our key
customers, and in the 6 months to endMarch provided $16 billion1 in additional
lending globally. We maintained adisciplined approach to pricing for risk
and capital management, and undertook
rigorous stress testing to manage credit risk.
Lending volumes declined in the second
half as global capital market conditions
improved, enabling customers to accessdebt and equity markets and repay bankdebt. Credit Risk Weighted Assets ended
the year broadly flat.

Strategy and focus

Through the pandemic, our digital channels
came to the fore, and payment volumes
increased 9.4% year on year. We supported
hundreds of customers working from homeby providing secure remote access via web
and mobile, and helped reduce customer
net losses from fraud by 62%.

In 2016, Institutional laid out a strategy tobuild the best bank for clients moving goods
and capital across the region. Our aim was tobe simpler for our customers and employees,
resilient through the cycle and increase returnon equity. We became more targeted andfocused on customers who would benefit
from regional growth, had a link to our home

We were recognised for supporting ourcustomers, and we maintained our leading
market positions across key geographies(#1 in Australia and New Zealand2, #5 inAsia3 for market penetration). This included#1 for overall relationship quality in Asia3and #1 for Net Promoter Score inAustralia and New Zealand2.

Performance highlights
Institutional continued to deliver the benefitsof a simpler, more disciplined and resilientbusiness in 2020, delivering 1% cash profit
growth compared to the prior year despite
tougher economic conditions. Net loans andadvances declined 4% after peaking in the
middle of the year, while customer deposits
grew 3%.
The results demonstrated the valueof customer, product and geographic
diversification within the business. In a
low interest rate environment, Transaction
Banking and Corporate Finance revenue
declined in 2020, down 15% and 1%
respectively. Markets revenue increased by
49%, as customers sought to manage theirfinancial risks amidst heightened volatility
in Global Markets.
Geographically, lower profit in Australia wasoffset in Asia Pacific, Europe & America and
New Zealand, mainly due to higher markets
revenue as customers managed foreignexchange, interest rate, credit andcommodity price risks.
The Division’s focus on productivity
contributed to another year of cost reduction,with lower full time equivalent staff, property
efficiencies and reduced discretionary spend.
Credit charges increased with tougher
economic conditions and lower forecast
economic growth, however, the credit
quality of the book remains strong.
Through 2020, ANZ Institutional helped
arrange the largest social bond by anAustralian issuer for the National Housing
Finance and Investment Corporation, as wellas $72 billion in funding for the AustralianGovernment’s COVID-19 support package.

1. Institutional Gross Loans and Advances excluding FX and Markets 2. Peter Lee Associates 2020 Large Corporate and Institutional Relationship Banking surveys, Australia & New Zealand.
3. Greenwich Associates 2019 Asian Large Corporate Banking study

26

New Zealand“As New Zealand’s largest bank, we’ve been in a uniqueposition to assist thousands of businesses and many moreindividuals through what has been a tough year for many.
Despite a challenging year, I’m proud that we’ve been able
to continue to support our customers, our communities
and our people.”
Antonia Watson, Chief Executive Officer New ZealandOperating conditions
Throughout the COVID-19 pandemic New
Zealand’s economy remained in an enviable
position relative to many others.
The housing market responded to record
low home loan rates, while being shieldedfrom the economic slowdown by the
mortgage payment deferral scheme andthe government’s wage subsidy scheme.
Surveyed business activity indicators
have increased since February 2020, now atsimilar levels to pre-pandemic, brightening
the outlook for near-term growth.
However, uncertainty, rising unemployment
and winding down of income support
measures will cause some discomfort,
and the impact of the closed border willplay a role in the economy for some time.
Helpfully, and providing some offset,
New Zealand’s export prices are holding
up, indicated by ongoing resilience inexport prices relative to other commodities
and strong operational models in ourcore industries.
The Reserve Bank of New Zealand hastaken a medium-term outlook with acurrent focus on quantitative easing.
They confirmed increased capitalrequirements, originally due to start taking
effect from July 2020, have been delayedby at least one year.

Business focus
We remain committed to delivering greatcustomer experiences and outcomes.
ANZ New Zealand implemented key
government-led initiatives in response to
COVID-19 and a major program of reduced
fees, charges and interest rates.

ANZ led the waiving of Merchant Service
Fees on existing customers’ contactless
debit capability for a limited time andpermanently reduced them after the
COVID-19 lockdown.
Since the pandemic we have provided
financial help to around 43,000 personal,
home and business loan customers throughrepayment deferrals, restructures oradjustments, covering lending of around
NZ$27 billion.
Data and digital initiatives included thelaunch of our electronic verification anduse of data to identify customers who
may be experiencing hardship.
We continued refining our physicalpresence to fewer, improved branches
and reduced hours for selected regional
branches, enabling an efficient andsimplified operating model. ANZ New
Zealand is part of an industry-led trial
for banking hubs in regional areas.
We completed the sale of UDC Finance
Limited to Shinsei Bank in line with oursimplification strategy.
We announced the Bonus Bonds Businesswould close to new investment and that
we intend to start winding up the schemeby the end of October 2020.
In the environmental space, ANZ provided
public submissions to government, completed
New Zealand’s first sustainability-linked loan
and arranged the country’s first inflationlinked sustainability bond.
We aided farmers’ decision-making throughproprietary digital tools including our dairy
and red meat dashboards and a geospatial
tool that analyses weather, soil andcontour data.

Performance highlights
Despite difficult conditions, we maintained
a leading position in core banking productswith ~31% share of mortgages and ~33%
share of households deposits (August 2020)and ~22% share of KiwiSaver (June 2020).
Net loan and advances were flat for the year,
underlying1 net loans and advances grewby 3%, driven by home lending growth of
6%, and the housing market has remained
reasonably resilient.
Customer deposits grew 9% aided byinflows from the government’s wage subsidy
scheme and increased system liquidity
following quantitative easing measuresfrom the RBNZ.
Revenue was impacted by interest-marginpressure from record low interest rates,
simplifying and reducing fees, and a range of
fee waivers initiated to support customers.
Higher credit impairment charges had amaterial impact on our results with asubstantial increase in collective provisions,recognising the possible impacts of future
economic and operating conditions.
Despite a trying year, our staff continued
to play a role in their communities. Many
helped to plant more than 25,000 trees
across New Zealand as part of ourpartnership with Sustainable Coastlines,
and volunteered over 6,000 hours.
Our payroll giving scheme allocated over
NZ $650,000 to 60 charities, and staff
donating to the ANZ New Zealand Staff
Foundation grew from 24.5% to 25.9%.
ANZ donated a total of NZ$2m to Women’s
Refuge, Age Concern New Zealand and theSalvation Army’s foodbank network to
support people through COVID-19, andNZ$1m to grassroots cricket and netballclubs and initiatives nation wide.

1. Adjusting for the sale of UDC

ANZ 2020 Annual Review

27Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Our people
Much of our focus thisyear has been on mobilisingresources to support thechanging needs of ourcustomers and businessduring the COVID-19
pandemic.
While we have continued to develop theculture, capabilities and behaviours needed
to deliver our strategy, our top priority has
been to protect our people, keeping themsafe and well. As discussed on pages 8–9,
our Group-wide COVID-19 response plan
includes supports for vulnerable employees,
employees working from home and thoseon the frontline supporting our customers.

Mobilising our resources
to meet demand
During March we began to experience a
dramatic increase in calls to our dedicatedhardship team in Australia. We received
around four years worth of hardship
applications in the space of only threemonths as almost 94,0001 customers
impacted by COVID-19 sought assistance.

EMPLOYEE STORYThe ‘Beyond the Branch’ program was launched earlier this year and assists
branch employees to move to business areas requiring additional resources
to meet increased customer demand as a result of COVID-19.
We benefit from transferring ourbranch employees’ customer focus
and experience to the areas of greatest
customer need – including our Customer
Contact Centre, Customer Service
Operations and Customer Resolution– and employees benefit from theopportunity to diversify their skillset
and broaden their career.
The program involves:• identifying the in-demand roles
that are a match for branch
employees;• distributing these roles acrossAustralia, rather than having thembased in our Melbourne head office;• actively promoting and providing
visibility of the opportunities; and• soliciting the support of seniorbranch staff to advocate for the
program and actively support
people moving into these roles.

In response, we developed COVID-19 ‘Talent
Mobility Principles’, the purpose of which
was to ensure we had ‘the right people, in
the right locations, at the right time’, tomeet customer and community needs
during the pandemic.
A campaign was run across Australia,
New Zealand and India to help employees
self-identify their skills and desire to moveinto critical areas of the business, such as
our Customer Contact Centre. Over 1,000
hours of customised virtual training wasdelivered to over 700 staff across ourCustomer Service Operations team andbranches to assist them to move temporarily
to in-demand roles. We have also recruited
approximately 185 new hardship consultants
and provided over 23,000 hours of training
to our Customer Connect (Hardship) teamto ensure ongoing support for our customers
on a COVID-19 assistance package.

1. Requests for COVID-19 assistance received between 1 March 2020 and 31 May 2020.

28

LIFE BEYOND THE BRANCH

Many branch employees have moved
into the Collections and Hardship teamas part of the program. We have also
set up ‘hubs’ in Western Australia, with
Queensland and New South Wales soon
to follow, so as to ‘tap into’ the capabilityof branch staff outside of Victoria.
Solarah Jupp has recently moved
from a branch into the Collectionsand Hardship team.
“I originally applied for 'Beyond theBranch' as I believed the roles suited
my skillset and I was really looking for
a new challenge. Going through thisexperience has meant the world to me– it has broadened my career horizons
far beyond what I could have thoughtpossible in branch. I feel excited for the
future and I’m looking forward to thenext challenge.”
As at 30 September, 197 'Beyond theBranch' roles have been filled, with roles
available in every state in Australia.

Employee engagement

In April, our engagement
result increased to 86%(up from the 77% in 2019),
with increases across allareas of the bank. This is atestament to the resilienceof our people and theirability to adapt to thenew pressures
up 9
and challenges
pointspresented by
COVID-19.

94% of employees said
ANZ is supporting themduring the pandemic, and
95% said senior leaders
have beencommunicating
effectively.

In response to COVID-19
we launched the ‘Team
Health Check’, a newteam wellbeing survey,
and we continue to run
regular pulse surveys tomeasure engagement– results have remained
relatively stablesince April.

CultureThe success of our strategy is dependent
on embedding a culture focused ondelivering great customer outcomes,
making things simpler and always learning.
This work is underpinned by our purpose
and values.
We are taking steps to improve our culture
and are enhancing how we track andmeasure our progress. Our Enterprise
Culture Steering Group (ECSG), chaired by
the CEO and whose membership includes
other members of the Executive Committee,
plays a critical role in guiding our efforts
by helping us to understand our cultural
strengths and development areas.

ownership of outcomes. There aresome reoccurring themes with respect
to challenges, and we are seeking totackle these through initiatives focusedon leadership engagement and change
programs; networking sessions to improve
collaboration and role clarity across functions;and career development opportunities
such as secondments and ‘job shadowing’.

Accountability andConsequence Framework

This year the ECSG has considered theway our organisational culture has changed
during COVID-19, including the opportunities
and risks created by the pandemic – forexample, cross-team collaboration and afocus on execution were identified asstrengths that have enabled us to deliver
positive customer outcomes.

In 2020, we continued to strengthen
and embed the Accountability andConsequence Framework (A&CF). The
Consequence Review Group (CRG), which
is chaired by the CEO, supports the Board
in monitoring the implementation andongoing effectiveness of ANZ’s A&CF, being
cognisant of its impact on the culture of
ANZ. The CRG reviews material events,
accountability and the application ofsuitable consequences where appropriate.
See section 6 of the Remuneration
report for more details.

Culture assessments

Changes to remuneration

Our Internal Audit group has continued
to conduct culture reviews throughout theyear, supporting businesses and functions
to understand their culture and impact
on ANZ’s aspirational and risk culture.

As part of the Group’s Reimagining Reward
program effective 1 October 2019, we madeadjustments to the remuneration mix for
staff, which included replacing individual
variable remuneration for around 80% of
employees with variable remuneration
based on the overall performance of theGroup. These changes respond to many of
the concerns about ‘bonus culture’ raised in
the final report of the Royal Commission,and form part of the wide-ranging reforms
for 2020 regarding how we reward, recognise
and manage the performance of employees.

Assessments are undertaken through a
combination of quantitative and qualitative
analysis, including surveys, focus groups
and interviews. Since 2016, we haveconducted nearly 2,000 focus groups andinterviews and more than 25,000 employees
have participated in culture surveys.
Once complete, a report on cultural
themes, including underlying issues andrelated impacts, is provided to the business.
The business must then develop an action
plan to mitigate any identified cultural
challenges. The plan is monitored andthe effectiveness of the actions in shifting
towards the desired culture is reviewed
before it is ‘closed’.
Internal Audit completed 18 culture reviews
in 2020, 11 of which were re-assessments.
Actions undertaken to address cultural
challenges have generally been effective,
particularly where leaders have taken

We are implementing the recommendations
from Stephen Sedgwick’s ‘Retail Banking
Remuneration Review’, which is focusedon strengthening the alignment of retailbank incentives, sales practices and good
customer outcomes. Recommendations
ANZ is delivering independently are now
100% complete and were implemented
ahead of the October 2020 deadline. We
will continue to work with industry toprogress the remaining recommendations.
Management provides regular updates tothe Board Human Resources Committee
on progress.

ANZ 2020 Annual Review

29Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

OUR NEW WAYS OF LEADINGBe
curiousCreatesharedclarity

Building workforce capability
To help our leaders support their teams
through COVID-19, we provided additional
guidance aligned to two of our desired
leadership behaviours (referred to as our‘New Ways of Leading’), ‘Creating Shared
Clarity’ and ‘Empowering People’. We want
our people leaders to display these behaviours
in order to inspire and engage their teams,
helping them to deliver on the bank’s
strategic imperatives. When we surveyed
our people in July, we saw an increase inleaders modelling all of these behaviours.
We introduced a ‘Leading Through Change’
program for our 7,500 people leaders in
July, to help them lead with confidence andoptimism during this period of ongoing andaccelerated change. On completion, leaders
are provided with new tools to support
themselves and their teams to improve
focus, adapt faster and be more productive.
We have also introduced a simpler andmore flexible approach to performance
management. This includes giving
employees the ability to create and document
meaningful performance and growthobjectives in our new People+ system.
We are continuing to develop priority
capabilities aligned with our strategy andaimed at ‘future-proofing’ our workforce– data and engineering are two key
capabilities on which we are focused.
We have recruited more than 500 softwareand systems engineers over the course of
the year. The COVID-19 pandemic has had
little effect on supply of this capability inthe market and critical engineering talentremains scarce. In response, we areinvesting in innovative recruitment

EmpowerpeopleConnectwith empathy

strategies and have a dedicated teamworking on talent marketing, proactive
sourcing, and continuous improvementof the recruitment approach.
We have continued to invest in thecapabilities of our people through theprovision of training and development
programs. Almost 970,000 hours of learning
were delivered in 2020, including over
530,000 hours of compliance training. Our
Way of Learning (OWL), our digital social
learning platform, enabled employees toaccess learning materials relevant to theircurrent roles and future career aspirations
while working from home. The ability toaccess digital content anywhere, anytime
and on any device led to a 29% increase in
self-directed content access across the bank.

Diversity and inclusion
We want our workforce to reflect thecommunities we serve and believe thatleveraging the diversity of our people will
drive innovation, making us a better bankfor our customers.
As we come to the end of our current suiteof public diversity and inclusion targets,
we have been reflecting on our progressand challenges.
Our Women in Leadership objective focuses
our effort on the categories with the lowest
levels of female representation, being our
Senior Executive, Executive and Senior
Manager populations of the bank. This workis the key to closing our gender pay gap.
Both our Key Management Personnel
and Group Executive Committee are now
gender balanced. The representation of
Women in Leadership1 increased this year

Grow people
selflessly

to 33.4 % (up from 32.5% as at September2019), falling short of our target of
34.1% by the end of 2020. Our progress
is monitored monthly by the CEO andthe Group Execution and Performance
Committee, and will remain a focus.
Over the last four years we have launched
our Spectrum Program – a tailored program
to support autistic individuals into theworkforce – and our Return to Work
Program for people who have taken a career
break. We have welcomed new employee
networks including Cultural Diversity &Inclusion, Faith and Mental Health &Wellbeing and been recognised as a leading
employer for LGBTIQ+ inclusion, inclusion ofpeople with disability and women. We aredeveloping our second ‘Stretch’ Reconciliation
Action Plan (RAP), reflecting and building on
the lessons learnt from our previous RAPs.
We have promoted the participation ofpeople from under-represented groups
in our workforce, including Aboriginal
and Torres Strait Islander peoples, people
with disability and refugees. Challenging
conditions, including most recently the
COVID-19 pandemic, have impacted ourgoal of recruiting >1000 people fromunder-represented groups. We recruited
185 people from under-represented groups
in 2020, bringing the total recruited since2016 to 919.
We are currently finalising our new
Diversity and Inclusion strategy and it will
inform our approach and commitmentsfor 2021 and beyond.
Our new Diversity and Inclusion Policy
is available at anz.com/corporate
governance.

LINKS TO 2020 GROUP PERFORMANCE FRAMEWORKIn a challenging year, significant capacity and attention was focused on managing through COVID-19 and the Australian bushfires,
however, strong progress was still made on key priorities including embedding our new reward framework, building strategic andleadership capabilities, and strengthening governance, accountability and culture. Highlights include a nine point increase in our
employee engagement score, reflecting our strong support for employees and clear senior leader communication during the
pandemic, as well as the enablement of significant increases in our remote working capacity.
See section 4.5.3 of the Remuneration report for more details.

1. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all employees regardless of leave status but not contractors (who are included in FTE).

30

COMMUNITY STORYFINANCIAL WELLBEING

Building financial wellbeing
in the PacificAccording to participants
surveyed in the 2019
MoneyMinded Impact
Report, almost 50% of
people in Fiji and Kiribati
frequently run short ofmoney for food and otherregular expenses.
To help improve thissituation ANZ has partneredwith the United Nations
Development Programme(UNDP) to deliver its
adult financial education
programs, MoneyMinded
and Business Basics.

The program will be delivered to female
small business owners in rural areas acrossFiji, Kiribati, Solomon Islands, Tonga,
and Vanuatu.
Deputy Team Leader for Inclusive Growthat the UNDP Pacific Office in Fiji, Patrick
Tuimalealiifano, said the partnership ismore than just balancing a budget.
“A big part of our work is on helping womenin low income households to have financial
security and control over their future andthe future of their families.
“Building financial literacy and businessacumen translates into confidence and overtime we start seeing these women emerge
as community leaders, entrepreneurs
and successful businesswomen.

The MoneyMinded program is helping
Pacific people create a positive vision for
their future,” he said.
ANZ Regional Executive Pacific, Tessa Price,said the partnership with UNDP enables
ANZ MoneyMinded to reach deeper intorural communities and target different
groups of people, particularly women.
“We’ve already done a lot of work witha number of different groups, including
seasonal workers who receive MoneyMindedtraining before they travel to Australia and
New Zealand. This partnership with the
UNDP means we will be reaching straightto the heart of rural communities andto women who are at the heart of thehousehold,” she said.

ANZ 2020 Annual Review

31How wecreate value

Overview

Performanceoverview

Remuneration
overview

Shareholder
information

Our community
Strong relationships with our stakeholders and the broader community is one of our key value
drivers. We are supporting the communities in which we live and work to recover from thebushfires that devastated parts of Australia earlier this year, and through the COVID-19 pandemic.

We are investing in thecommunity through ourfinancial literacy programs,
as well as through local
partnerships with thenot-for-profit sector,
sponsorship, grants, andstaff volunteering andworkplace giving.

In 2020:

Financial wellbeing
Helping improve the financial wellbeing of our customers is core to our strategy.
We have in particular demonstrated a long-term commitment to helping disadvantaged
people build money management skills and savings capabilities through our financial
inclusion programs.
Being in control of personal and household finances generates improved long-term
financial health and wellbeing, community connectedness and social participation.
More broadly, it also contributes to the social and economic development of communities.

Our financial inclusion programs

20.5% of our employees
Saver Plus was developed by ANZ and the Brotherhood of St Laurence in 2003,

volunteered over
66,000 hours tocommunity organisations,and is co-funded by ANZ and the Australian Government.
Program participants open an ANZ savings account, set a savings goal and save
towards it regularly over 10 months while also attending MoneyMinded financial
education sessions. On reaching their goal, savings are matched by ANZ dollar fordollar, up to $500, which must be spent on education.

we matched employee

Since 2003, Saver Plus has helped more than 47,770 lower-income Australians saveover $24 million to support their own and their children’s educational needs, with
ANZ providing over $19 million in matched funds.

donations, collectively

MoneyMinded supports adults with low levels of financial literacy and those on

contributing almost$3.9

lower incomes across 15 markets, including Australia and New Zealand. It is deliveredby community partner organisations in Australia and New Zealand, and a mix ofcommunity organisations and ANZ employees in Asia and the Pacific.

million tocharitable organisations
in Australia, New Zealand

MoneyBusiness has been operating since 2005 and is designed to build the money
management skills and confidence of Aboriginal and Torres Strait Islanders. Since
inception, it has reached over 82,520 participants and has been delivered in over
320 communities through either Australian Government-funded service providers
or ANZ’s partners.

and Fijiinvesting a total$139.5 million in
the community1“I am in control of my life and my money for the first timesince having children. Thank you to Saver Plus for beinga part of that positive journey in getting my life andhappiness back!”
Saver Plus participant

1. Figure includes forgone revenue of $105 million, being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit
organisations and students.

32

LINKS TO 2020 GROUP PERFORMANCE FRAMEWORK

We have continued to regain community trust following the Royal Commission, and while we know this year has been difficult for many
people, we have had the opportunity prove the value we provide to the community. Our focus on our purpose and values, combinedwith strong governance and leadership, has enabled us to help support the community. While across the industry community sentimentscores have fluctuated during the year, in the RepTrak survey ANZ led for the majority of 2020 and was ranked second based on July to
September results. We achieved an A- rating in the 2019 CDP climate change assessment, the leading score for Australian banks.
See section 4.5.3 of the Remuneration report for more details.

Supporting Australia’s ruraland regional communities
Since 2003, we have been helping build
vibrant and sustainable rural communities
through our Seeds of Renewal financial grants
program, administered by the Foundation
for Rural and Regional Renewal (FRRR).
The program has provided more than
$5 million to help over 800 community
groups. In 2020 we again donated $250,000
to enable local community programs that
support the ongoing prosperity ofregional Australia.

Bushfire relief – helping
communities rebuild
In January 2020, we donated $1 million to
support our customers and the communities
affected by bushfires, including $300,000 tovolunteer fire services across New South
Wales, Victoria and South Australia.
We also matched a further $100,000 of
employee donations to volunteer fire services,
and allocated $500,000 to support local
community services as well as home loancustomers who lost their homes to bushfires
and suffered ongoing financial hardship.
Our $50 billion sustainable finance target
now includes $1 billion specifically forfunding and facilitating initiatives that
support customers and communities
impacted by disasters. Capital may beallocated for weather related events (suchas bushfires, floods and cyclones) or tobuild resilience against non-weather
related disasters such as pandemics.

Workplace giving
Our workplace giving program enables
employees in Australia to make contributions
to around 30 charity partners – many ofwhich operate in areas aligned to ourpriority areas of financial wellbeing,environmental sustainability and housing –through regular pre-tax payroll deductions.
Donations are ‘double matched’ – for every
dollar donated by an employee (up to$5,000 per employee in a tax year) throughthe program, ANZ donates two dollars.
Our employees in New Zealand and Fiji
can also donate through payroll to theirrespective staff foundations (charitable
trusts that provide small grants) and
ANZ double matches donations.

Volunteering
Our Volunteer Leave Policy, which applies
to permanent, regular and fixed-term
employees provides for at least one dayof paid volunteer leave each year.
This year we also made available extended
special paid leave for employees who
volunteer in emergency services to ensure
they were financially supported while they
served their community during thebushfire season.

formation on business, economic, socialand environmental issues affecting ourcustomers and shareholders.
We are also a member of a number ofindustry associations that contribute to
public policy debate and formation.
In 2020, our key membershippayments included:
Australian Banking Association$3,258, 203
Business Council of Australia$93,500
New Zealand Bankers’ Association
NZ $309,079
Business New Zealand
NZ $40,250
We understand that our stakeholders areinterested in the position we take on issues
such as data security, privacy and climatechange, and our membership of industry
associations that develop policies andundertake advocacy on these issues.

Contribution to public policy

This year, in response to stakeholder
feedback, we reviewed the alignment of
ANZ’s policy position on climate changewith those of our industry associations.
The outcomes of this review will beon anz.com/shareholder.

We seek to contribute constructively to
public policy formation and understandthe perspectives of our community’selected representatives, policymakers
and regulators. We contribute to policy

We have also committed to review ourmemberships of industry associations atleast every three years. The results of any
such review, including any material changes
to our position, will be publicly disclosed.

Community organisation receives funding boost with Seeds of Renewal grant

In 2020, ANZ announced a grant of $15,000 to a NSW community organisation, ‘North Coast Community College’ for an Indigenous
land management employment pathway project. The money contributed to strengthening economic participation and employment
related activities for Aboriginal communities through the establishment of a training program run as a social enterprise.

ANZ 2020 Annual Review

33

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Our approach to climate change
We support the Paris Agreement’s goal of transitioning to net zero emissions by 2050 andare committed to playing our part.
We understand the impact – positive andnegative – our financing has on climatechange. Through our lending decisions, we
support companies and projects that
contribute to reducing emissions and thatare resilient to a changing climate. We areconfident we can do this in parallel withsupporting strong economic growth.

Through our disclosures, we seek to provide
investors and other stakeholders withinformation enabling them to assess theadequacy of our approach to climatechange and our ability to manage theassociated risks and opportunities.

This year we released an updated Climate
Change Statement (available on anz.com/cs)
that outlines our approach and strengthenedcommitments in support of a global transition
to net zero emissions. We are focused onlowering emissions in key sectors, in a waythat carefully considers the potential forcommunity impacts and how we canmitigate these.

IN SUPPORTING THE 2050 GOAL, OUR APPROACH IS TO:

Help our customers byencouraging them toidentify climate risks andopportunities, createtransition plans and reportpublicly on their progress

Support transitioning
industries to help growthe economy

Reduce our own impact
by managing and reducing
emissions from our own
operations

Engaging with 100 of our largest emitting business customers on their transition plans
We have engaged with 83 of our largest
emitting business customers to support
them to establish, and where appropriate,
strengthen existing low carbon transition
plans. This engagement will inform thedevelopment of a model that can beapplied across our customer base.
Within each industry our customers
have different starting points. Throughcustomer discussions and reviews ofpublic disclosures we are developing abetter understanding of our customers’
preparation for, and management of, theirclimate-related risks and opportunities.
Insights we have gained from customer
conversations include:
Energy: our engagement in this sector

has initially focused on customers withthermal coal operations; however, we are34

broadening this to include our largest oil
and gas producing customers. While theimpacts of COVID-19 have affectedshort-term demand, some customers arecontinuing to see strong demand forhigh-quality, low-cost Australian thermal
coal for use in high efficiency, lower
emissions (HELE) plants across Asia; theirstrategy is focused on developing highquality thermal coal assets and they arecommitted to improving their external
disclosures.
Other customers have undertaken
scenario analysis (aligned withrecommendations of the Financial Stability
Board Taskforce on Climate-related Financial
Disclosures (TCFD)), revealing that someof their commodities will not perform
well under a low carbon transition; in
response, they are limiting expenditureon thermal coal (with most capital directed
to maintenance rather than expansion),or seeking to divest those assets. Somecompanies are starting to set firmer targets
to work with their suppliers and customers
to seek to reduce the emissions associatedwith the use of their mining commodities,
ie ‘Scope 3’ emissions.
Transport: a key customer in the airline

sector has committed to carbon neutral
growth from 2020 and halving 2005
emissions from international flights
by 2050. This aligns with the goals of theinternational aviation sector.
Buildings: a number of customers haveestablished and are now implementing
net zero by 2030 carbon targets that will beachieved largely through improved energy
efficiency and onsite solar installations.

This is the fourth year we have reported using the TCFD. For detailed information see ‘ANZ 2020 Climate-related Financial Disclosures’on anz.com/annualreport

Our progress on the TCFDOUR PROGRESS TO DATEGOVERNANCE
STRATEGY

FOCUS AREAS – 2021/22

BEYOND 2020 VISION•	Align with regulatory guidance on
climate-related risk governance,
including stress testing of selected
portfolios•	An enhanced
risk management
framework that
anticipates potential
climate-related impacts,
and associatedregulatory requirements•	Climate Change Statement (available on anz.com) reaffirms
support for the Paris Agreement goals and transition to a net
zero carbon economy•	Extending analysis of flood-relatedrisks to incorporate bushfire and otherrisks relating to retail customers•	Managing the net zero carbon transition focuses on an orderly and justtransition that gives careful consideration to the impacts on communities•	Include climate risk reference inlending guidance documents forrelevant industry sectors, usedby our front line bankers•	ANZ business strategy
more closely aligned
to a resilient andsustainable economy
that supports theParis Agreement
and UN Sustainable
Development Goals•	Board Risk Committee oversees management of climate-related risks•	Board Ethics, Environment, Social and Governance Committee
approves climate-related objectives, goals and targets•	Ethics and Responsible Business Committee (executive management)
oversees our approach to environment, social and governance (ESG)
and reviews climate-related risks and opportunities•	Participated in a United Nations Environment Program FinanceIndustry (UNEP FI) working group on TCFD scenario analysis thatissued recommendations and methods to assess portfoliotransition and physical risks•	Low carbon products and services within our Institutional businessfocused on climate-related opportunities•	Analysis of flood-related risks for our home loan portfolio
in a major regional location of Australia•	Test-pilot of socio-economic indicators showing financial resilienceof home loan customers with respect to flood risk
•	Climate change risk added to Group and Institutional
Risk Appetite Statements

RISK MANAGEMENT•	Climate change identified as a Principal Risk and Uncertainty in
our UK Disclosure and Transparency Rules (DTR) Submission•	Guidelines and training provided to over 1,000 of our Institutional
bankers on customers’ transition plan discussions•	Enhanced financial analysis and stronger credit approval terms
applied to agricultural property purchases in regions of low average
rainfall or measured variability•	New agribusiness customers assessed for financial resilience andunderstanding of rainfall and climate trends in their area, and water
budgets considered if irrigating

METRICS AND TARGETS•	Support 100 of our largest emitting customers to establish or
strengthen low carbon transition plans by 2021, with metrics
developed to track progress•	New metrics to enable our progress to be tracked in reducing‘financed emissions’, beginning with two key sectors: commercial
property and power generation. Metrics are tailored to each sector(eg. carbon emissions per square metre of net lettable space forcommercial property) and disclosed every 12 months•	$50 billion target to fund and facilitate sustainable solutions by 2025
•	Target to procure 100% renewable electricity for ANZ’s operations
by 2025•	Supporting 100 of our largest emitting
customers to develop and disclose
their transition plans•	Customer engagement to identify
customer or sector-specific transitionor physical risks, focused on corporate
and Institutional customers•	Develop an enhanced climate risk
management framework that strengthens
our governance and anticipates
potential climate-related impacts andassociated regulatory requirements•	Complete transition plan engagementwith high emitting customers andconsider how to integrate into
customer assessments•	Set targets to reduce metrics for‘financed emissions’ for key sectors
towards a net zero goal by 2050
•	Consider expanding new metrics formeasuring impact of our progress onenvironmental sustainability to otherkey sectors•	Further integrateassessment of climaterelated risks into ourGroup Risk management
framework•	Standard discussions
with business customers
include climate-relatedrisks and opportunities•	Assessment of customertransition plans part ofstandard lending decisions
and portfolio analysis•	Continue to evolve ourreporting with leading
practices to measure thealignment of our lending
with the Paris
Agreement goals•	Reduce ANZ’soperational emissions
in line with thedecarbonisation
trajectory of the Paris
Agreement goals•	Ongoing emissions reduction targets for ANZ energy use alignedwith the Paris Agreement goals

ANZ 2020 Annual Review

35Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

We are supporting household, business and financial practices that improve environmental
sustainability. One way we do this is through encouraging and supporting 100 of our largest
emitting customers to establish, and where appropriate, strengthen existing low carbon
transition plans, by 2021.

CUSTOMER STORYENVIRONMENTAL SUSTAINABILITY

Supporting Wesfarmers to transition
to net zero emissions

Headquartered inWestern Australia andwith around 107,000
employees, Wesfarmers
Limited is one of Australia’s
largest listed companies,
with diversified operations
spanning across almost
30 retail and industrial
businesses.
Better known for its consumer brands suchas Bunnings, Kmart and Officeworks, it also
has interests in fertilisers, chemicals and in
the energy sector.
In September this year, it announced an
accelerated agenda to set and achieve net
zero emissions for its retail operations by2030, and its industrial businesses by 2050.
This is on top of existing 2025 emissions
reduction targets.
Naomi Flutter, an Executive General
Manager at Wesfarmers said its climate
action was driven by a commitment tocontributing positively to the global goalof achieving net zero emissions by 2050.

36“For us, transitioning to achieve net zero
emissions from our business is about doing
what’s right and good for the environment,
and we want to step up and contributein a responsible way. It’s also what ourcustomers believe in and want from us,
and so from that perspective it also
makes good business sense.”
To achieve its goals, Naomi says Wesfarmers
is pulling on numerous levers to significantly
reduce its emissions.
“We’re investing heavily in energy
efficiencies in our retail businesses throughnew technology, solar panels and LED
lighting. And in our industrial business
we’re investing in catalyst technologies
to reduce emissions intensity.”

Wesfarmers has banked with ANZ since the1980s and we are supporting the company
in its transition journey.
“We value the role ANZ plays as a key
banking partner – especially with respect
to the open and constructive dialogue wehave with them on our transition agenda,”says Naomi.

CUSTOMER STORYENVIRONMENTAL SUSTAINABILITYNew Zealand’s agribusinesses leading
the way on transition planningGreenhouse Gas Emissions(GHG) from the foodand fibre sector, (and its
associated waste) accountfor around half of New
Zealand’s total emissions.¹
Synlait Milk Limited isworking hard to reduce
emissions in line with its
commitment to the Paris
Agreement goals.
According to Hamish Reid, Director of
Sustainability and Brand at Synlait, “weneed to act now and we need to be bold.
It’s both a matter of mitigating climaterelated risks and at the same time, seizing
opportunities to reimagine all aspectsof our business and value chain.”Synlait is implementing a range of initiatives
to reduce emissions and deliver long-term
financial benefits.
Targets relating to climate, welfare, water
and waste have been set – including an
off-farm² 50% reduction in GHG emissions
per kg of product by 2028, and an on-farm
35% reduction in GHG emissions per kg ofmilk solids by 2028.
Within its on-farm certification program,
Lead With Pride™, educational resources
and milk price incentives are being offeredto its farmer suppliers to implement bestpractice GHG mitigation techniques. It
has also recently opted for an energy andemissions efficient electrode boiler, rather
than the traditional coal-fired boiler, to
run its fresh milk and cream facility in
Canterbury, NZ.
Synlait has been an ANZ customer since
2000, when the company’s founders bought
their first few Canterbury dairy farms, before
then expanding into processing in 2008. In
2019, ANZ arranged and funded a NZ$50 million
sustainability linked loan which has supported
Synlait’s sustainability agenda.

“ANZ enabled us to enter into an ESG linked
loan, sending two strong signals to ourstakeholders. First, that leading banks today
recognise that sustainability performance
results in lower risk, and second, thatsustainability performance can lead tofinancial benefits. Having a diversity oflike-minded partners accompanying us
in our transition is critical for us to achieve
our goals,” says Hamish.
Another customer ANZ is assisting with
its transition towards a low carbon futureis Silver Fern Farms Limited.
Since 2018, the grass-fed red meat
processing and exporting company has
reduced its GHG emissions by 8%, andreduced its fossil fuel usage by 12% since2017. It is targeting a 30% reduction on
2005 levels of the GHG emissions intensityof its operations per tonne of productbefore 2030.
“We’ve taken a number of steps to embedsustainability within our company, frombeing the first red meat processor to certify
our carbon footprint in New Zealand, tohaving strong Board involvement in oursustainability agenda, to incorporating
sustainability and climate reporting into
our parent co-operative’s external
disclosures,” says Justin Courtney, Headof Communications and Sustainability
from Silver Fern Farms.

Silver Fern Farms uses a ‘whole of farm’system approach to reduce carbon in the
supply chain as a way to enhance thenatural, biodiverse farming environments
in New Zealand.
“In addition to our own initiatives, suchas sourcing animals from farms rich inbiodiversity and sourcing electricity from
100% renewable sources, we’re proactively
working with suppliers to better understandtheir carbon footprints and where theopportunities lie to reduce and optimise
carbon absorption on their farms,” says Justin.
The engagement with our largest emitting
customers on their transition plans is a toppriority for ANZ, as we seek to support themto manage the climate-related risks andopportunities. Synlait and Silver Fern Farms
are just two out of the 100 customers weare engaging with on their transition plans.

1. www.mpi.govt.nz/protection-and-response/environment-and-natural-resources/emissions-trading-scheme/agriculture-and-greenhouse-gases/ 2. On-farm: Synlait’s farmer suppliers(scope 3). Off-farm: Synlait’s own manufacturing processes (scope 1 and 2) and non-farm scope 3 emissions.

ANZ 2020 Annual Review

37

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

GovernanceCorporate Governance Framework
SHAREHOLDERS

BOARD OF DIRECTORS

Audit
Committee

Ethics, Environment,
Social and GovernanceCommittee

Risk
Committee

Human
Resources
Committee

Digital Businessand Technology
Committee

Nomination and
Board Operations
Committee

Board reserved powers and delegation of authority

CHIEF EXECUTIVE OFFICERGROUP EXECUTIVE COMMITTEEBoard of Directors

ANZ’s strong governance framework provides a solid structure for effective and responsible
decision-making within the organisation.
The Board is responsible for the oversight of ANZ and its sound andprudent management, with specific duties as set out in its charter
available at anz.com/corporategovernance.

delegations of authority framework that clearly outlines thosematters delegated to the CEO and other members of senior
management.

There are six principal Board Committees – the Audit Committee,
the Ethics, Environment, Social and Governance Committee, the Risk
Committee, the Human Resources Committee, the Digital Businessand Technology Committee and the Nomination and Board
Operations Committee.

For further detail on ANZ’s governance framework see our2020 Corporate Governance Statement available atanz.com/corporategovernance.

Each Committee has its own charter setting out its roles andresponsibilities. At management level, the Group Executive
Committee comprises ANZ’s most senior executives. There is a38

Full biography details can be found on our website atanz.com/directors and on pages 44–48 of this review.

PAUL O'SULLIVAN

Chairman, Independent Non-Executive Director

ILANA ATLAS, AO

Independent Non-Executive Director

JANE HALTON, AO PSM

Independent Non-Executive Director

GRAEME LIEBELT

Independent Non-Executive Director

SHAYNE ELLIOTT

Chief Executive Officer, Executive Director

PAULA DWYER

Independent Non-Executive Director

RT HON SIR JOHN KEY, GNZM AC

Independent Non-Executive Director

JOHN MACFARLANE

Independent Non-Executive Director

ANZ 2020 Annual Review

39Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Directors’ meetings
The number of Board, and Board Committee, meetings held during the year and each Directors’ attendance at those meetings are set out below:

Board

Risk
Committee

Audit
Committee

Human
Resources
Committee

Ethics,Environment,
Social andGovernanceCommittee

A

B

A

B

A

A

B

A

PAUL O'SULLIVAN

11

11

5

5

5

5

ILANA ATLAS, AO

14

14

PAULA DWYER

1414

SHAYNE ELLIOTT

1414

DAVID GONSKI, AC 21414

JANE HALTON, AO PSM

1414

RT HON SIR JOHN KEY, GNZM AC

14

14

7

7

GRAEME LIEBELT

14

14

7

7

8

8

JOHN MACFARLANE

14

14

7

7

8

8

7

7

7

7

B

8

8

6

6

8

8

6

6

8

8

5

B

Digital Businessand Technology
Committee
A

B

5

5

5

SpecialCommitteeof the Board1

Nominations
and Board
Operations

SharesCommittee1

A

A

B

A

B

1

1

1

1

1

1

1

1
2

2

3

3

B

6

6

5

5

6

6

1

1

6

6

5

5

6

6

1

1

5

5

6

5

1

1

1

1

1

1

6

6
6

6

Column A Indicates the number of meetings the Director was eligible to attend as a member. Column B Indicates the number of meetings attended. The Chairman became an ex-officio
member of the Risk, Audit, Human Resources, Ethics, Environment, Social and Governance, Digital Business and Technology and Nomination and Board Operations Committees on 28 October
2020, upon David Gonski's retirement. With respect to Committee meetings, the table above records attendance of Committee members. Any Director is entitled to attend these meetings
and from time to time Directors attend meetings of Committees of which they are not a member. 1. The meetings of the Special Committee of the Board and Shares Committee as referred
to in the table above include those conducted by written resolution. 2. David Gonski retired as Chairman and as a Non-Executive Director on 28 October 2020.

40

Executive Committee
Below from left to right1

Emma Gray

Group Executive Data and Automation

7

Kevin Corbally

Group Chief Risk Officer

Joined the Executive Committee on 19 March 2018.

Joined the Executive Committee on 1 May 2020

82

Joined the Executive Committee* on 20 October 2014.

Maile Carnegie

Group Executive Digital and Australia Transformation

Mark Whelan

Group Executive Institutional

Joined the Executive Committee on 27 June 2016.

93

Joined the Executive Committee on 17 June 2019.

Farhan Faruqui

Group Executive International

Antonia Watson

Chief Executive Officer New Zealand

Joined the Executive Committee on 1 February 2016.

104(appointed CEO on 1 January 2016).
Joined the Executive Committee* on 1 June 2009.

Gerard FlorianGroup Executive Technology

Joined the Executive Committee on 30 January 2017.

5

Alexis George

Deputy Chief Executive Officer andGroup Executive Wealth Australia

Joined the Executive Committee on 1 December 2016.

6Kathryn van der Merwe

Shayne Elliott

Chief Executive Officer

11

Michelle Jablko

Chief Financial Officer

Joined the Executive Committee on 18 July 2016.

12Mark Hand

Group Executive Australia Retailand Commercial Banking

Group Executive Talent and Culture

Joined the Executive Committee on 15 May 2018.

Joined the Executive Committee on 1 May 2017.

*previously known as Management Board.

Full biography details can be found on our website at anz.com/exco.

ANZ 2020 Annual Review

41

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Board areas of focus
The Board and its Committees engage in key strategic, governance and oversight activities
each year. The list below is not a comprehensive list of all the matters but is illustrative toprovide stakeholders with an insight into some of the key matters considered by the
Board during the year.

CRISIS MANAGEMENTOver the year, Australia and the world has faced many crises,
and the Board and its Committees have played an active rolein providing oversight of the impact of and ANZ’s response
to, them, including the bushfires in Australia and the
COVID-19 pandemic.

In relation to the Australian bushfires, this included reviewing ANZ’scustomer relief response, the impact to our customers, staff and theeconomy generally, ANZ’s public commitments and contributions,and ANZ’s next steps to support ongoing resilience for communities
affected by this and future disasters. In addition to this, the Board
attended a bushfire marketplace where ANZ hosted at its Melbourne
Head Office small business customers and their peers who had
been impacted by the devastating bushfires in Victoria where
customers sold their goods and services.
In relation to the COVID-19 pandemic, the Board adopted amulti-faceted approach utilising the range of its Committees aswell as discussions at the Board itself. At the onset of the pandemic,
Directors received a weekly informal briefing as to developments,
supplemented with more detailed discussions at Board andCommittee meetings.

42

Key topics of those discussions included:• the measures put in place to support our customers, customer
take up of those measures, ANZ’s delivery of those measures andongoing communications with impacted customers;• the impact of the pandemic on the economy (domestic andinternational, looking at both the immediate and longer-term
impacts of the pandemic), on various industries, and ANZ’s risk
approach to them, including risk appetite settings;• discussions regarding the impact of the pandemic on thefinancial performance and position of the Group, including in
relation to capital requirements and the payment of dividends
to shareholders;• the impact of the pandemic on ANZ’s people, and the different
geographic responses undertaken in the jurisdictions ANZ
operates in, the steps ANZ was taking to protect and support its
people and to prepare and equip them for operating remotely,
including looking at the potential cultural impacts this may have.
The Board also had numerous discussions in relation to geopoliticalmatters and their potential impact on ANZ’s operations.

RISK, REGULATION AND REPUTATIONENGAGEMENT

The Board and its Committees
also continued overseeing theimportant work being carried out
by Management to implement thelessons learnt from the Royal
Commission, progress against ANZ’s
self-assessment roadmap, as well
as ANZ’s approach to improving
organisational and risk culture.

In addition, the Board continued its
oversight of customer remediation,highlighting the importance to the Groupof redressing customers when things gowrong and providing oversight ofprevention and detection activities.
The Board and its Committees also had
detailed and regular updates in relation
to interactions with regulators around theworld, including ASIC, APRA, AUSTRAC,
AFCA, RBNZ, FMA and MAS. Directors also
met with key regulators during the courseof the year with the purpose of maintaining
constructive and two-way dialogue.
The Board and its Committees also had
numerous meetings in relation todeveloping ANZ’s Compliance Strategy,
its approach to the management of
non-financial risks, risk appetite settings
and the triennial independent review
of ANZ’s approach to compliance with
APRA Prudential Standard CPS 220 “RiskManagement”.
The Board and its Committees also
discussed key environmental and social
risk matters, including ANZ’s approach toclimate change, reviewing and approving
ANZ’s Climate Change Statement, reviewing
ANZ’s industry association alignment withclimate policy and changes to Modern
Slavery and Human Rights laws.

STRATEGY AND THE FUTURE

In addition to the informal briefings
around the COVID-19 pandemic,
meetings with regulators and attending
the bushfire marketplace outlined
above, the Directors continued theirapproach to meeting with customers,
staff and investors, both in person
and virtually.

This included having a virtual session withall of ANZ’s Country Heads to discuss topicalmatters impacting their businesses.
A subset of Directors played an active rolein attending meetings with Management
throughout the year to actively engage andchallenge their approach to stress testing
the portfolio against severe but plausible
events to inform risk appetite setting andcapital planning processes.
Prior to the pandemic, the Board had
established regular meetings in diverse
geographic areas with a view to maximisinginteractions with customers, staff and otherstakeholders. It is envisaged that this willcontinue when the environment allows it.
During the financial year, the Board held
physical meetings in Melbourne, Sydney
and Brisbane.

The Board and its Committees
continued to focus on longer-term
strategic matters. Directors participatedin an annual Board strategy session
utilising internal and external experts tochallenge and provide different pointsof view to assist the Board andManagement in setting the strategic
direction of the Group.

The Board received regular updates on theimplementation of the Group’s strategy
from the Chief Executive Officer, andcorresponding updates from Risk andInternal Audit in relation to theirassessments of the risks associated withManagement’s approach to implementing
the strategy.
The Board also received numerous updates
in relation to the strategic approach todigitally transform its Australian Retailand Commercial business.
Finally, the Board carried out succession
planning in respect of the Chairman,
with the Board appointing Paul O’Sullivan
to succeed David Gonski, following his
retirement on 28 October 2020.

ANZ 2020 Annual Review

43

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Directors’ qualifications, experienceand special responsibilities
As at the date of this review, the Board
comprises seven Non-Executive Directors andone Executive Director, the Chief Executive
Officer. David Gonski was Chairman and a
Non-Executive Director from 2014 until his
retirement in October 2020. The names of
the current Directors, together with detailsof their qualifications, experience andspecial responsibilities are set out below.
Audit Committee
Ethics, Environment, Social andGovernance Committee
Risk Committee

Paul O’Sullivan

CHAIR
MEMBERPOSITION

Chairman, Independent Non-Executive Director
QUALIFICATIONSBA (Mod) Economics, Advanced Management Program of Harvard
RESPONSIBILITIESChairman since October 2020 and a Non-Executive Director sinceNovember 2019.
Paul is an ex-officio member of all Board Committees and Chair of
the Ethics, Environment, Social and Governance Committee andthe Nomination and Board Operations Committee.
CAREER

Human Resources Committee

Digital Business and Technology Committee

Nomination and Board Operations Committee

Paul has experience in the telecommunications and oil
and gas sectors, both in Australia and overseas. He has held senior
executive roles with Singapore Telecommunications (Singtel) andwas previously the CEO of Optus. He has also held management
roles with the Colonial Group and the Royal Dutch Shell Group in
Canada, the Middle East, Australia and United Kingdom.
RELEVANT OTHER DIRECTORSHIPS

Chairman: Singtel Optus Pty Limited (from 2014, Director from2004) and Western Sydney Airport Corporation (from 2017).
Director: Coca-Cola Amatil (from 2017), Telkomsel Indonesia(from 2010) and St Vincent’s Health Australia (from 2019).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Director: Healthscope Limited (2016–2019) andNational Disability Insurance Agency (2017–2020).

Age | 60 years

44

Residence | Sydney, Australia

Shayne Elliott

Ilana Atlas, AO

CHAIR
MEMBERPOSITIONPOSITION

Chief Executive Officer and Executive Director

Independent Non-Executive Director

QUALIFICATIONSQUALIFICATIONS

BCom

BJuris (Hons), LLB (Hons), LLM

RESPONSIBILITIESRESPONSIBILITIES

Chief Executive Officer and Executive Director since
1 January 2016.

Non-Executive Director since September 2014. Ilana is Chair of
the Human Resources Committee and is a member of the Audit
Committee, Ethics, Environment, Social and GovernanceCommittee and the Nomination and Board Operations
Committee.

CAREER

Shayne has over 30 years’ experience in banking in Australia andoverseas, in all aspects of the industry. Shayne joined ANZ as CEO
Institutional in June 2009, and was appointed Chief Financial
Officer in 2012.
Prior to joining ANZ, Shayne held senior executive roles at EFG
Hermes, the largest investment bank in the Middle East, which
included Chief Operating Officer. He started his career with Citibank
New Zealand and worked with Citibank/Citigroup for 20 years,
holding various senior positions across the UK, USA, Egypt, Australiaand Hong Kong.
Shayne is a Director of the Financial Markets Foundation for Children
and a member of the Australian Banking Association, the BusinessCouncil of Australia and the Australian Customs Advisory Board.

CAREER

Ilana brings a strong financial services background and legal
experience to the Board. Ilana was a partner at law firm Mallesons
Stephen Jaques (now King & Wood Mallesons), where in addition
to her practice in corporate law, she held a number of management
roles in the firm including Executive Partner, People and Information,and Managing Partner. She also worked at Westpac for 10 years,
where her roles included Group Secretary and General Counsel
and Group Executive, People, where she was responsible for humanresources, corporate affairs and sustainability. Ilana has a strong
commitment to the community, in particular the arts and education.
RELEVANT OTHER DIRECTORSHIPSRELEVANT OTHER DIRECTORSHIPS

Director: ANZ Bank New Zealand Limited (from 2009) andthe Financial Markets Foundation for Children (from 2016).
Member: Business Council of Australia (from 2016), the Australian
Banking Association (from 2016, Chairman 2017-2019) and theAustralian Customs Advisory Board (from 2020).

Age | 56 years

Residence | Melbourne, Australia

Chairman: Coca-Cola Amatil Limited (from 2017, Director from2011) and Jawun (from 2017, Director from 2014).
Director: Paul Ramsay Foundation (from 2017).
Member: Panel of Adara Partners (from 2015).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Director: OneMarket Limited (2018-2019), Westfield
Corporation Limited (2014–2018), Human Rights Law Centre Ltd(2012–2017) and Treasury Corporation of New South Wales(2013–2017).
Former Fellow: Senate of the University of Sydney (2015–2019).

Age | 66 years

Residence | Sydney, Australia

ANZ 2020 Annual Review

45

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Directors’ qualifications, experience and special responsibilities continued

Paula Dwyer

Jane Halton, AO PSM

CHAIR

CHAIR

MEMBERMEMBERPOSITIONPOSITION

Independent Non-Executive Director

Independent Non-Executive Director

QUALIFICATIONSQUALIFICATIONS

BCom, FCA, SF Fin, FAICD

BA (Hons) Psychology, FIPAA, Hon. FAAHMS, Hon. FACHSE,
Hon. DLitt, FAIM , FAICDRESPONSIBILITIESNon-Executive Director since April 2012. Paula is Chair of
the Audit Committee and is a member of the Risk Committee,
Human Resources Committee and Nomination and Board
Operations Committee.
CAREER

Paula has extensive experience in financial markets, corporate
finance, risk management and investments, having held senior
executive roles at Calibre Asset Management, Ord Minnett (nowJ P Morgan) and at Price Waterhouse (now PricewaterhouseCoopers).
Her career as a company director spans financial services,
investment, insurance, healthcare, gambling and entertainment,
fast moving consumer goods, property and construction andretailing sectors. Paula has a strong interest in education andmedical research, having served as a member of the Geelong
Grammar School Council and the Business and Economics
Faculty at the University of Melbourne and as Deputy Chairmanof Baker IDI.
RELEVANT OTHER DIRECTORSHIPS

Chairman: Tabcorp Holdings Limited (from 2011, Director from2005), Kin Group Advisory Board (from 2014) and Allianz Australia
Limited (from 2020, Director from 2019).
Director: Lion Pty Ltd (from 2012).
Member: Kirin International Advisory Board (from 2012) andAustralian Government Takeovers Panel (from 2017).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Chairman: Healthscope Limited (2014-2019).

RESPONSIBILITIESNon-Executive Director since October 2016. Jane is Chair of theDigital Business and Technology Committee and is a memberof the Human Resources Committee, Ethics, Environment,
Social and Governance Committee and Nomination and
Board Operations Committee.
CAREER

Jane’s 33 year career in the public service includes the positions ofSecretary of the Australian Department of Finance, Secretary of theAustralian Department of Health, Secretary for the Department of
Health and Ageing, and Executive Co-ordinator (Deputy Secretary)of the Department of the Prime Minister and Cabinet. She brings to
the Board extensive experience in finance, insurance, risk management,
information technology, human resources, health and ageing andpublic policy. She also has significant international experience.
Jane has contributed extensively to community health through local
and international organisations including the World Health Organisation
and National Aboriginal and Torres Strait Islander Health Council.
RELEVANT OTHER DIRECTORSHIPS

Chairman: Vault Systems (from 2017), Coalition for Epidemic
Preparedness Innovations (Norway) (from 2018, Member from2016) and Council on the Ageing Australia (from 2017).
Director: Clayton Utz (from 2017) and Crown Resorts Limited(from 2018).
Member: Executive Board of the Institute of Health Metrics and
Evaluation at the University of Washington (from 2007) and National
COVID-19 Commission Advisory Board (from 2020).
Adjunct Professor: University of Sydney and University of Canberra.
Council Member: Australian Strategic Policy Institute (from 2016).

Age | 60 years

Residence | Melbourne, Australia
Age | 60 years

46

Residence | Canberra, Australia

RT Hon Sir John Key,GNZM AC

Graeme Liebelt

CHAIR
MEMBERMEMBERPOSITIONPOSITION

Independent Non-Executive Director

Independent Non-Executive Director

QUALIFICATIONSQUALIFICATIONS

BCom, DCom (Honoris Causa)

BEc (Hons), FAICD, FTSE, FIMLRESPONSIBILITIESRESPONSIBILITIESNon-Executive Director since February 2018. Sir John is amember of the Ethics, Environment, Social and GovernanceCommittee, Risk Committee, Digital Business and Technology
Committee and Nomination and Board Operations Committee.

Non-Executive Director since July 2013. Graeme is Chair of the
Risk Committee and is a member of the Audit Committee, Human
Resources Committee and Nomination and Board Operations
Committee.

CAREERCAREER

Sir John was Prime Minister of New Zealand from 2008 to 2016,
having commenced his political career in 2002. Sir John had a longcareer in international finance, primarily for Bankers Trust in New
Zealand and Merrill Lynch in Singapore, London and Sydney. He waspreviously a member of the Foreign Exchange Committee of theFederal Reserve Bank of New York (from 1999 to 2001).

Graeme brings to the Board his experience of a 23-year executive
career with Orica Limited (including a period as Chief Executive
Officer), a global mining services company with operations in morethan 50 countries. He has extensive international experience and astrong record of achievement as a senior executive, including instrategy development and implementation. Graeme is committed
to global trade and cooperation, as well as community education.

Sir John was made a Knight Grand Companion of the New ZealandOrder of Merit in the 2017 Queen’s Birthday Honours. In 2017 Sir
John became a Companion of the Order of Australia for advancing
the Australia-New Zealand bilateral relationship.
RELEVANT OTHER DIRECTORSHIPS

Chairman: ANZ Bank New Zealand Limited (from 2018,
Director from 2017).
Director: Palo Alto Networks (from 2019).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Chairman: The International Democratic Union(2014–2018).

RELEVANT OTHER DIRECTORSHIPS

Chairman: Amcor Limited (from 2013, Director from 2012)
Director: Australian Foundation Investment Company Limited(from 2012) and Carey Baptist Grammar School (from 2012).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Chairman: DuluxGroup Limited (2018–2019, Director
from 2016).

Age | 66 years

Residence | Melbourne, Australia

Former Director: Air New Zealand Limited (2017-2020).

Age | 59 years

Residence | Auckland, New Zealand

ANZ 2020 Annual Review

47

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Directors’ qualifications, experience and special responsibilities continued

Company Secretaries’ qualifications
and experience

John Macfarlane

Currently there are two people appointed as Company Secretariesof the Company. Details of their roles are contained in the Corporate
Governance Statement.

MEMBER

Their qualifications and experience are as follows
POSITION

Independent Non-Executive Director

Ken Adams

QUALIFICATIONS

BCom, MCom (Hons)RESPONSIBILITIESNon-Executive Director since May 2014. John is a memberof the Audit Committee, Risk Committee, Digital Businessand Technology Committee and Nomination and Board
Operations Committee.
CAREER

John is one of Australia’s most experienced international bankers
having previously served as Executive Chairman of Deutsche Bank
Australia and New Zealand, and CEO of Deutsche Bank Australia.
John has also worked in the USA, Japan and PNG, and brings to
the Board a depth of banking experience in ANZ’s key markets inAustralia, New Zealand and the Asia Pacific. He is committed tocommunity health, and is a Director of the Aikenhead Centreof Medical Discovery Limited (from 2016).
RELEVANT OTHER DIRECTORSHIPSPOSITIONQUALIFICATIONSGroup General Counsel

BA, LLB, LLM

Ken joined ANZ as Group General Counsel in August 2019, having
assisted ANZ with major legal issues for over 10 years. Prior to ANZ,
Ken was a Partner of Freehills and later Herbert Smith Freehills for
21 years, and for 6 years was a member of the Herbert Smith
Freehills Global Board. Ken is one of Australia’s leading commercial
lawyers with significant experience in class actions, and complex
problems requiring strategic and multi-disciplinary analysis. He
holds a Master of Laws from the University of Melbourne and isa co-author of Class Actions in Australia.

Simon Pordage

Director: Colmac Group Pty Ltd (from 2014), AGInvest Holdings
Limited (MyFarm Limited) (from 2014, Chairman 2014–2016),
Balmoral Pastoral Investments (from 2017) and L1 Long Short
Fund (from 2018).
RELEVANT FORMER DIRECTORSHIPS HELD IN LAST
THREE YEARS INCLUDE

Former Director: St Vincent’s Institute of Medical Research(2008–2019) and Craigs Investment Partners Limited (2013-2020).

Age | 60 years

Residence | Melbourne, Australia

POSITIONQUALIFICATIONS

Company Secretary

LLB (Hons), FGIA, FCG (CS, CGP)

Simon joined ANZ in May 2016. He is a Chartered Secretary andChartered Governance Practitioner and has extensive company
secretarial and corporate governance experience. From 2009 to 2016he was Company Secretary for Australian Foundation Investment
Company Limited and a number of other listed investment companies.
Other former roles include being Deputy Company Secretary for ANZ
and Head of Board Support for Barclays PLC in the United Kingdom.
He is a formal brand ambassador for, and is a former National President
and Chairman of, Governance Institute of Australia, and is a member
and former Chairman of its National Legislation Review Committee.
Simon is committed to the promotion and practice of good
corporate governance, and regularly presents on governance issues.

48

Risk management
2020 has seen the external operating environment dramatically impacted by a number of events,
notably the COVID-19 pandemic, the effects of which continue to unfold. The strength of the
ANZ Risk Management Framework has underpinned our response to the crisis. It has provided
the flexibility to adapt to the rapidly changing environment while maintaining sound risk
management practices.

Our progressThis year we have continued to invest
in our Risk Management Framework,
processes and systems which has further
strengthened our ability to respond tochanges in our existing risks but also deal
with new risks that have been introduced
through the increasingly complex external
environment, with particular focus on theareas outlined below:
COVID-19

In response to the COVID-19 pandemic, wedeveloped a range of support measures toassist employees and customers, and tomaintain safe and secure operations. The
risk management function contributed tothe successful execution of this support,
including through:• Enactment of our Business Continuity
Plan enabling our operations to respondswiftly to the changing environment
without material disruption to criticalbusiness services. This allowed us
to continue operating through the
pandemic by:– scaling of remote working capacity,
enabling the majority of non-branch
employees to work productively
from home– ensuring no material impacts on
critical business services– remaining agile and able to adapt
to changing conditions in line withgovernment restrictions.
• Continued partnering with ourbusinesses to protect the bank by:– prioritising the re-rating of the Wholesale
book, with re-ratings complete for
93% of our total Institutional portfolio,
74% of our total Commercial Australia
portfolio, and 83% of our New ZealandCommercial & Agri portfolios; and– undertaking a series of industry deep
dives and stress tests across ourportfolios to assess potential
credit outcomes.
• Investment in systems, providing:– enhanced data analytics to better
analyse and observe customer
behaviour– an improved collections andhardship platform that enables
customers to manage their arrears
online while facilitating holistic
conversations with customers
about their financial situation.
Culture and conduct• We recognise that an ethical culture isa pre-determinant for us to deliver on
our strategy, and that in order to prevent
unfair customer outcomes we need to
be able to identify and understand any
behavioural misalignment in order totake corrective action. This year, to further
enhance how we measure, monitor andmanage conduct risk, we have exploredthe use of behavioural science techniques
to improve compliant behaviour and will
look to apply the methodology more
broadly in the coming year.
• In order to align with ANZ’s aspirational
culture, priorities for this year havecontinued to focus on transforming
behaviours through: focusing on'speak-up'; continuing to strengthen
our Accountability and Consequence
Framework; fortifying leadership; further
embedding the new remuneration,
recognition and performance
management framework; listening
and responding to our people; andfostering an 'always learning' culture.

• Risk culture (as a critical component of
our organisational culture) remains animportant focus for the organisation. In
addition to targeted initiatives created
to enhance elements of our risk culture,
our evolution to a more explicit andsimple approach to the management andmeasurement of risk culture will allow us
to more easily monitor progress towards
our desired risk culture state, and assess
the effectiveness of our actions.
Non-financial risk

We are continuing to improve the way inwhich we manage our obligations andoperational risks, following the redesignand simplification of our non-financial risk
framework in 2019. Our Compliance andOperational Risk Strategy provides acomprehensive, proactive and well-planned
approach to improving ANZ’s managementof non-financial risk, guided by our purpose
and contributing to the bank’s strategic
priority to improve the financial wellbeingof our customers.
Financial crime

Protecting the Australian banking systemfrom criminal use is one of our mostimportant roles. We continue to invest
in our financial crime risk management
program to ensure we regularly assess
and manage our financial crime risks.
Our program is designed to be compliant
with our financial crime obligations and
we report information that is useful togovernment authorities to disrupt
financial crime. Further information isin our 2020 ESG Supplement available
at anz.com/cs.

ANZ 2020 Annual Review

49

Overview

How wecreate value

Performanceoverview

Emerging risks

The risklandscapeis continually
evolving and we are
therefore constantly
reviewing issues toconsider their materiality
to the bank’s operations.

Three risks that continue to evolve andthat we seek to better understand are:Geopolitical risk: We continue to closely
monitor and support our businesses tomanage ongoing geopolitical tensions
and uncertainty.
Cybersecurity risk: Our approach to
mitigating cybersecurity risk involves
a range of controls relying on people,
technology and process and we arecontinually testing our defences internallyand through independent third parties.
For further detail on our approach to
cybersecurity risk refer to pages 19 to 20.
Climate change risk: The financial risks
associated with climate change remain a
key focus. Developing an enhanced risk
management framework that anticipates
potential climate-related impacts, andassociated regulatory requirements is apriority. We have set a new ESG target
to develop this enhanced framework
by FY22. For further detail on our
approach to climate-related financial
risk refer to pages 34 to 35.

Remuneration
overview

Shareholder
information

Our Risk Management
Framework
The Board is responsible for establishingand overseeing the Group’s Risk
Management Framework (RMF). The
Board has delegated authority to theBoard Risk Committee (BRC) to develop
and monitor compliance with the Group’s
risk management policies. The Committee
reports regularly to the Board on its
activities. The key pillars of the Group’s
RMF include:• the Risk Appetite Statement (RAS),
which sets out the Board’s expectations
regarding the degree of risk that theGroup is prepared to accept in pursuing
its strategic objectives and its operating
plan; and• the Risk Management Statement (RMS),
which describes the Group’s strategy
for managing risks and a summary of
the key elements of the RMF that giveeffect to that strategy. The RMS includes:a description of each material risk; andan overview of how the RMF addresses
each risk, with reference to the relevant
policies, standards and procedures. It also
includes information on how the Groupidentifies, measures, evaluates, monitors,
reports and then either controls or
mitigates material risks.

The Group operates a Three Linesof-Defence Model in regard to risk
management that helps embed a culture
where risk is everyone’s responsibility.
The business – as the first line of defence –has day to day ownership of risks andcontrols and is accountable for
identifying and managing its own risks.
The Group Risk function is the secondline of defence, providing a strong andindependent oversight of the work
undertaken to manage the risk, as well
as developing and maintaining the RMF.
The final line of defence is Internal Audit
and includes independent assurance
that evaluates the adequacy andeffectiveness of both first and secondline risk management approaches.
The governance and oversight of risk,
while embedded in day-to-day activities,
is also the focus of committees andregular forums across the bank (seediagram next page). The committees
and forums discuss and monitor
known and emerging risks, reviewing
management plans and monitoring
progress to address known issues.

"The strength and adaptability of the bank's
risk function has played a key role in helping
navigate the organisation through thecurrent changing environment."
Kevin Corbally, Chief Risk Officer

LINKS TO 2020 GROUP PERFORMANCE FRAMEWORKCOVID-19 introduced a range of both new and increased risks for ANZ, our employees and our customers. Our existing strong Risk
Management Framework enabled us to respond well to these risks. We have continued to develop and improve our financial andoperational resilience and have maintained our focus on managing risk controls, demonstrating accountability for fixing issues ina timely and sustainable manner. Strong progress continues on risk culture maturity, evidenced in employee engagement scores,
with ‘Leaders accountable for risk’ (87%) – up on 2019, and ‘Raise issues without fear of reprisal’ (74%) – also up on 2019.
See section 4.5.3 of the Remuneration report for more details.

50

BOARD OF DIRECTORSCEOPRINCIPAL BOARD COMMITTEES

Audit
Committee

Ethics, Environment,
Social & GovernanceCommittee

Risk
Committee

Digital Business& Technology
Committee

Nomination &Board Operations
Committee

Human
Resources
Committee

Consequence
Review GroupEXECUTIVE COMMITTEE
ANZ's most senior executives meet regularly to discuss performance and review shared initiatives

GROUP PERFORMANCE AND EXECUTIVE COMMITTEE (GPEC)
Oversight of the Group's overall operational performance and position and the execution of the operating planGroup

KEY MANAGEMENT COMMITTEES

Credit & Market
Risk Committee(CMRC)

Group Asset &Liability Committee(GALCO)

Credit Ratings
System OversightCommittee(CRSOC)

Capital and Stress
Testing OversightCommittee(CSTOC)

Sub-commitee of CMRC

Sub-commitee of GALCOCountry

Division

Modelling Ratings Working Groups
and Usage Forums

Wholesale
Ratings
WorkingGroup(WRWG)

RetailRatings
WorkingGroup(RRWG)

Wholesale
Model
Usage
Forum
(WMUF)

Regional or Country Risk
Management Committees (RMCs)

Operational Risk
Executive
Committee (OREC)

Divisional
Initiatives
ReviewCommittees(DIRC) /Project Advisory
Councils (PAC)

Ethics &Responsible
Business Committee(ERBC)

Investment
Committee

Various Division SpecificManagement Committees
Divisional
Risk
Management
Committees(RMC)

Operational
Risk
Committees

Product
Committees

Divisional
Consequence
Review
GroupsDivisional
Consequence
Review
GroupsCountry Assets and Liabilities
Committees (ALCOs)

ANZ 2020 Annual Review

51

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Key material risks
The material risks facing the group per the group’s Risk Management Statement, and how these risks are managed, are summarised below.
Note as part of the annual review of our Risk Management Strategy we have removed reputational risk as a key material risk. We recognisethat reputational risk is largely a consequence of the impact of other material risks. Reputational consequences are therefore mitigatedthrough the appropriate management of other material risks.
Risk type

Description

Managing the risk

We pursue an active approach to Capital Management
through ongoing review, and Board approval, of the level
and composition of our capital base against key policy
objectives.

CapitalAdequacy
Risk

The risk of loss arising from the Groupfailing to maintain the level of capitalrequired by prudential regulators andother key stakeholders (shareholders, debt
investors, depositors, rating agencies, etc.)
to support ANZ’s consolidated operations
and risk appetite.

Compliance
Risk

The risk of failure to act in accordance with Key features of how we manage Compliance Risk as partof our Operational Risk and Compliance Framework include:
laws, regulations, industry standards andcodes, internal policies and procedures• centralised management of key obligations, andand principles of good governance asemphasis on identifying changes in regulations and theapplicable to the Group’s businesses.
business environment, so as to enable us to proactively
assess emerging compliance risks and implement
robust reporting and certification processes.
• recognition of incident management as a separate
element to enhance ANZ's ability to identify, manage
and report on incidents/breaches in a timely manner.
• the Whistleblower Protection Policy allowing employees
and contractors to make confidential, anonymous
submissions regarding concerns relating to accounting,internal control, compliance, audit and other matters.

Credit Risk

The risk of financial loss resulting from:• a counterparty failing to fulfil its
obligations; or• a decrease in credit quality of acounterparty resulting in a financial loss

Our Credit Risk framework is top down, being defined bycredit principles and policies. Credit policies, requirements
and procedures cover all aspects of the credit life cycle— for example: transaction structuring, risk grading, initialapproval, ongoing management and problem debt
management, as well as specialist policy topics.

Credit Risk incorporates the risks
associated with us lending to customers
who could be impacted by climatechange or by changes to laws, regulations,or other policies adopted by governmentsor regulatory authorities, including carbon
pricing and climate change adaptation or
mitigation policies.
Liquidity andFunding Risk

The risk that the Group is unable to meetits payment obligations as they fall due,
including:• repaying depositors or maturingwholesale debt; or• the Group having insufficient capacity
to fund increases in assets.

52

Key principles in managing our Liquidity and Funding
Risk include:• maintaining our ability to meet liquidity ‘survival
horizons’ under a range of stress scenarios to meet cash
flow obligations over a short-to-medium term horizon;• maintaining a strong structural funding profile; and• maintaining a portfolio of high-quality liquid assets to
act as a source of liquidity in times of stress.

Material
ESG issues1

Risk typeMarket Risk

Description

Managing the risk

The risk to the Group’s earnings
arising from:• changes in any interest rates, foreignexchange rates, credit spreads, volatility,
and correlations; or• fluctuations in bond, commodity or
equity prices.

Material
ESG issues1

Our risk management and control framework for Market
Risk involves us quantifying the magnitude of market risk
within the trading and balance sheet portfolios throughindependent risk measurement. This identifies the rangeof possible outcomes, the likely timeframe, and thelikelihood of the outcome occurring. Then we allocate an
appropriate amount of capital to support these activities.

Operational
Risk

The risk of loss and/or non-compliancewith laws resulting from inadequate or
failed internal processes, people and/or
systems, or from external events. Thisdefinition includes legal risk, and the riskof reputation loss, or damage arising frominadequate or failed internal processes,
people and systems, but excludes
strategic risk.

We operate a three-lines-of-defence model to manage
Operational Risk, with each line of defence having
defined roles, responsibilities and escalation paths
to support effective communication and effective
management of our operational risk. We also haveongoing review mechanisms to ensure Operational
Risk and Compliance Framework continues to meetorganisational needs and regulatory requirements.

Strategic Risk

Risks that affect or are created by anorganisation’s business strategy andstrategic objectives. Strategic risk mightarise from making poor strategic businessdecisions, from the sub-standard executionof decisions, from inadequate resource
allocation, or from a failure to respond well
to changes in the business environment.

We consider and manage strategic risks through ourannual strategic planning process, managed by the
Executive Committee and approved by the Board. Where
the strategy leads to an increase in other Key Material
Risks (e.g. Credit Risk, Market Risk, Operational Risk)
the risk management strategies associated with theserisks form the primary controls.

Technology
Risk

The risk of loss and/or non-compliancewith laws resulting from inadequate or
failed internal processes, people andsystems or from external events impactingon IT assets, including the compromise ofan IT asset’s confidentiality, integrity
or availability.

Technology Risk is managed in accordance with ANZ’s
Operational Risk and Compliance Framework, which isconsistent with the management of Operational Risk.

Fairness andethical conduct

Fraud anddata security

Customerexperience

Corporate
governanceDigitalinnovation

For further information about
the principal risks and uncertainties
that the Group faces, see our“Principal Risks and Uncertainties”
disclosure available at anz.com/
shareholder/centre.

1. See page 3 for information on our material ESG issues

ANZ 2020 Annual Review

53

Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

OUR PERFORMANCE (continued)

Performance overview
GROUP PERFORMANCEThe results of the Group’s operations and financial position are set out on pages 54-71. Page 11 outlines the Group’s strategy and pages
10-27 describes in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks is outlined on pages 49-53.
Statutory profit after tax for the year ended 30 September 2020 decreased 40% on the prior year to $3,577 million. Statutory return on
equity is 5.9% and statutory earnings per share is 126.4 cents, a decrease of 40% on prior year.

GROUP PROFIT RESULTS
2020

2019

Statutory
$m

Cash
$m

Statutory
$m

Cash
$m

Net interest income
Other operating income

14,0493,588

14,0493,703

14,3394,446

14,3394,690

Operating income

17,637(9,383)17,752(9,383)

18,785(9,071)

19,029(9,071)

8,254(2,738)8,369(2,738)

9,714
(794)

9,958
(795)

Income tax expense
Non-controlling interests

5,516(1,840)(1)

5,631(1,872)(1)

8,920(2,609)(15)

9,163(2,678)(15)

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

3,675
(98)

3,758
(98)

6,296
(343)

6,470
(309)

Profit for the year

3,577

3,660

5,953

6,161

Income Statement

Operating expenses
Profit before credit impairment and income tax
Credit impairment charge
Profit before income tax

The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure whichenables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents thefinancial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives andleaders through our remuneration plans.
Refer to page 56 for adjustments between statutory and cash profit.
Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that adjustments between
statutory and cash profit have been determined on a consistent basis across each of the periods presented.
As a result of the sale of our OnePath pensions and investment (OnePath P&I) and aligned dealer groups (ADG) businesses to IOOF Holdings
Limited and our life insurance business to Zurich Financial Services Australia, the financial results of these businesses and associated Group
reclassification and consolidation impacts are treated as discontinued operations from a financial reporting perspective (refer to page 67).
CORONAVIRUS (COVID-19)
The ongoing COVID-19 pandemic is causing major disruptions to community health and economic activity with wide-ranging impacts across
many business sectors in Australia, New Zealand and globally. Additionally, many of the Group’s customers have been impacted by the
COVID-19 pandemic. As a result, during the year the Group launched support packages for retail and commercial customers in Australia and
New Zealand, including the option of an up to six-month loan repayment deferral. The Group is continuing to work with customers impacted
by COVID-19 to restructure loans and in some circumstances will provide an extension to loan repayment deferrals for a further period.
Regulators and governments have implemented a broad range of measures to promote financial stability in response to COVID-19. Those
measures implemented by governments and regulators in Australia and New Zealand include financial assistance packages for homeowners
and businesses, liquidity and funding initiatives to strengthen the banking system, and regulatory changes to capital requirements.
The ongoing COVID-19 pandemic has also increased the estimation uncertainty in the preparation of the financial statements. The Group has
made various accounting estimates for future events in the financial statements based on forecasts of economic conditions which reflect
expectations and assumptions as at 30 September 2020 and that the Group believes are reasonable under the circumstances. There is aconsiderable degree of judgement involved in preparing these estimates. The underlying assumptions are also subject to uncertainties which
are often outside the control of the Group. Accordingly, actual economic conditions are likely to be different from those forecast since
anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact accounting estimates
included in the financial statements.

54

OUR PERFORMANCE (continued)

While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses where theGroup recognised a credit impairment charge of $2.7 billion pre-tax in the year ended 30 September 2020, the fair value measurement andrecoverable amount assessments of non-financial assets where the Group recognised an impairment charge of $815 million in respect of twoof the Group’s Asian associate investments and an impairment charge of $77 million in respect of goodwill. For further details of theseestimation uncertainties refer to the detailed notes in the financial statements. The ramifications of COVID-19 continue to be uncertain and it
remains difficult to predict the impact or duration of the pandemic.
ACCOUNTING STANDARDS ADOPTED
During the September 2020 full year, the Group adopted AASB 16 Leases (AASB 16) and applied a modified retrospective transition approachin recognising all leases (except for leases of low value assets and short term leases) on the balance sheet based on the present value ofremaining lease payments as of 1 October 2019. Consequently on 1 October 2019 the Group recognised an increase in lease liabilities of $1.7
billion, a right-of-use lease asset of $1.6 billion, an increase in deferred tax assets of $37 million and a net reduction to opening retained
earnings of $88 million. For further details on key requirements and impacts of the changes refer to Note 1 of the consolidated financial
statements.
The Group early adopted AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform from 1 October
2019. The standard modifies certain hedge accounting requirements to provide relief from the potential effects of the uncertainty caused byinterest rate benchmark reform. For further details on interest rate benchmark reform refer Note 1 of the consolidated financial statements.

CONTINUING OPERATIONS
We believe cash profit from continuing operations is a particularly important performance measure as we continue to strategically reposition
ourselves to create a simpler, better capitalised, better balanced and more agile bank. Key measures of our financial position and performanceare set out below.
Total operating income –cash1 ($m)
17,752

2020

9,383

2020

2019

19,029

2019

9,071

2020
2019

2.

Credit impairment
charge – cash1 ($m)

2020

Return on equity –cash1 (%)

1.

Operating expenses –cash1 ($m)

6.2
10.9

Earnings per share –cash1 (cents)

2,738

Cash profit1
($m)
2020

3,758

2019 795

2019

6,470

Common equity
tier 1 (%)

Dividend per share(cents)2

2020

132.7

2020

11.3

2020 60

2019

227.6

2019

11.4

2019

160

Information has been presented on a cash profit from continuing operations basis. Discontinued operations are detailed on page 67.
The Directors propose a final dividend of 35 cents fully franked for Australia tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 4 cents per ordinary shares.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

55

55

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

ADJUSTMENTS BETWEEN STATUTORY AND CASH PROFIT1

3,675

2020 Statutory
profit –continuing
operations

121

(36)

(2)

3,758

Economic
hedges

Revenue andexpense hedges

Structured
creditintermediation
trades2020 Cashprofit –continuing
operations

Description of adjustments between continuing operations statutory profit and cash profit:
Adjustment
Economic hedges
2020: $121 million
2019: $118 million
Revenue andexpense hedges
2020: ($36) million
2019: ($19) million

Reason for the adjustment
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
Statement. ANZ removes the fair value adjustments from cash profit since the profit or loss resulting from thehedge transactions will reverse over time to match with the profit or loss from the economically hedged item aspart of cash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
correlated), as well as ineffectiveness from designated accounting hedges.

Structured credit
intermediation
trades2020: ($2) million
2019: ($2) million

ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis with eight
US financial guarantors. This involved selling credit default swaps (CDSs) as protection over specific debt structuresand purchasing CDS protection over the same structures. ANZ has subsequently exited its positions with six US
financial guarantors. The remaining two portfolios with a $0.3 billion notional value are being monitored with aview to reducing the exposures when ANZ deems it cost effective relative to the perceived risk associated with a
specific trade or counterparty.

Revaluation of policy
liabilities – OnePath
Life (NZ)
2020: nil
2019: $77 million

When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect
the present value of the obligation, with the impact of changes in the market discount rate each period beingreflected in the Income Statement. ANZ includes the impact on the re-measurement of insurance contracts
attributable to changes in market discount rates as an adjustment to statutory profit to remove the volatility
attributable to changes in market interest rates which reverts to zero over the life of insurance contracts. With thesale completion of the OnePath Life (NZ) Ltd business this adjustment is no longer required.

1.

Information has been presented on a cash profit from continuing operations basis. Discontinued operations are detailed on page 67.

56
56

ANZ 2019 ANNUAL REPORTOUR PERFORMANCE (continued)

GROUP CASH PROFIT PERFORMANCE
Cash profit performance and the analysis thereof has been presented on a cash profit from continuing operations basis. Discontinued
1
operations
are describedon page
67.
GROUP CASHPROFITPERFORMANCE

6,470

(290)

(987)
(312)

2019 Cashprofit –continuing
operations

Net interest
incomeOther
operatingincomeOperatingexpenses(1,943)Creditimpairment
charge820

3,758

Income tax
expense &non-controllinginterests

2020 Cashprofit –continuing
operations

2020
$m

2019
$m

Movt

Net interest income
Other operating income

14,0493,703

14,339
4,690

-2%
-21%

Operating income

17,752(9,383)19,029(9,071)

-7%
3%

8,369
(2,738)

9,958
(795)

-16%
244%

Income tax expense
Non-controlling interests

5,631(1,872)(1)

9,163(2,678)
(15)

-39%
-30%
-93%

Profit after tax from continuing operations

3,758

6,470

-42%

Operating expenses
Profit before credit impairment and income tax
Credit impairment charge
Profit before income tax

Cash profit from continuing operations decreased $2,712 million (42%) compared with the 2019 financial year.
• net interest income decreased $290 million (-2%) largely due to lower interest rates and competitive pressures resulting in a 13 basis point
decrease in the net interest margin, partially offset by 6% growth in average interest earning assets. The lower net interest margin reflects
lower earnings on capital, customers switching to principal and interest home loans in Australia and from variable to fixed loans in both
Australia and New Zealand, a higher proportionate growth in the lower margin Institutional business and the impacts of growth in liquid
assets due to increased system liquidity, partially offset by favourable short-term funding costs and growth in at-call deposits. The increasein average interest earning assets reflects the impact of foreign currency translation movements and growth in the Institutional banking
portfolio, increases in average trading and investment securities and increases in average cash and other liquid assets.
• other operating income decreased $987 million (-21%) largely as the result of the impairment of Asian associates of $815 million, a reduction
associated with divestments of $342 million, a decrease in net fee and commission income of $252 million excluding divestment impacts, a
reduction in share of associates’ profit of $107 million, and a $79 million decrease due to widening credit spread impacts on loans measured
at fair value in Institutional. This was partially offset by higher Markets Other operating income of $598 million.
• operating expenses increased $312 million (3%) primarily due to an accelerated software amortisation charge of $197 million, lease-related
items of $85 million, higher restructuring expenses of $84 million, goodwill impairments of $77 million and higher compliance spend. Thiswas partially offset by lower customer remediation of $164 million within operating expenses, and productivity benefits.
• credit impairment charges increased $1,943 million largely due to additional collectively assessed credit impairment charges for the
expected impact of COVID-19.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

57

57

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

LARGE/NOTABLE ITEMS INCLUDED IN CASH PROFIT FROM CONTINUING OPERATIONS
Within continuing cash profit, the Group recognised a number of large/notable items. The impact of these items on a post-tax basis is
as follows:
2020
$m

2019
$m

OnePath Life NZ Ltd (OPL NZ)
ANZ Royal Bank (Cambodia) Ltd (Cambodia JV)
PNG Retail, Commercial and SME
Paymark
UDC Finance (UDC)
Divested business results1

(34)

157
10
1
37
-

OnePath Life NZ Ltd (OPL NZ)
ANZ Royal Bank (Cambodia) Ltd (Cambodia JV)
PNG Retail, Commercial and SME
Paymark
UDC Finance (UDC)
Other large/notable items

57

10
11
7
4
71

(279)
(138)
(815)
(66)
(72)
(115)
(77)

(475)
(10)
(54)
-

Gain/(Loss) on sale of divestments

Customer remediation
Accelerated software amortisation
Asian associates impairments
Asian associate AASB 9 adjustment
Lease-related items
Royal Commission legal costs
Restructuring
Goodwill write-off
1.

For business results that relate to completed divestments, comparative information has been restated for large/notable items included in the 2020 financial year.

58
58

ANZ 2019 ANNUAL REPORTOUR PERFORMANCE (continued)

Description of large/notable items:
Item

Description

Gain/(Loss) on sale ofdivestments

The 2020 financial year included a loss on sale upon completion of the sale of UDC. The 2019 financial year included
a gain on sale upon completion of the sale of OPL NZ, Paymark, Cambodia JV, and PNG Retail, Commercial and SME
businesses.

Divested businessresults

The 2020 financial year includes the divested business results of UDC (comparative information restated). The 2019financial year also included the divested business results of the Cambodia JV, OPL NZ, PNG Retail, Commercial and
SME, and Paymark.

Customer remediation Customer remediation includes provisions for expected refunds to customers, remediation project costs and related
customer and regulatory claims, penalties and litigation outcomes.
Accelerated softwareamortisation

Accelerated amortisation charge arising from the revised application of the Group’s software amortisation policy toreflect the shorter useful life of software caused by rapidly changing technology and business requirements. Refer
to Note 20 Goodwill and Other Intangible Assets of the consolidated financial statements for further details.

Asian associates
impairments

During the 2020 financial year, the Group recognised an impairment in respect of two of the Group’s investments toadjust their carrying values in line with their value-in-use calculations (refer Note 26 Investments in Associates of theconsolidated financial statements).

Asian associate AASB
9 adjustment

When the Group adopted AASB 9 Financial Instruments on 1 October 2018, an estimate of PT Panin’s transition
adjustment was recognised through opening retained earnings to align accounting policies. PT Panin adopted
AASB 9 during the current financial year recognising a transition adjustment in retained earnings. The adjustment
represents the Group’s equity accounted share of the transition adjustment net of the previous transition
adjustment.

Lease-related items

During the 2020 financial year, the Group recognised charges associated with the adoption of the new leaseaccounting standard on 1 October 2019. Comparative information has not been restated for the adoption of the
new lease accounting standard.

Royal Commission
legal costs

External legal costs associated with responding to the Banking Royal Commission.

Restructuring

Restructuring charges largely related to business and property changes in Australia Retail and Commercial division.

Goodwill write-off

Pacific division: The impact of COVID-19 on the economies of the Pacific has been significant and is expected totake some time to recover. Goodwill of $50 million was impaired. No further impairment was required on the
carrying value of other assets in the Pacific.
New Zealand division: As a result of changes in the economic environment and outlook, the Group has announced
its intention to begin winding up the Bonus Bonds business in New Zealand no later than 31 October 2020. As aresult, the Group wrote off the associated goodwill of $27 million.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

59

59

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

ANALYSIS OF CASH PROFIT PERFORMANCE
Net interest income

Net interest income
Average interest earning assets2
Average deposits and other borrowings2
Net interest margin (%) - cash1,2
1

1.
2.

2020
$m

2019
$m

Movt

14,049862,882
679,336
1.63

14,339813,219
638,380
1.76

-2%
6%
6%
-13bpsIncludes the major bank levy of -$406 million (2019: -$363 million).
Average balance sheet amounts include assets and liabilities of continuing operations reclassified as held for sale.

Net interest income decreased $290 million (-2%) largely due to lower interest rates and competitive pressures, partially offset by 6% growthin average interest earning assets.
Net interest margin reduced 13 bps due to the impact of central bank rate cuts on low rate deposits, earnings on capital and replicateddeposits net of repricing. This was also impacted by customers switching to principal and interest home loans in Australia and from variable to
fixed loans in both Australia and New Zealand, higher proportionate growth in the lower margin Institutional business, the impacts of growthin liquid assets due to increased system liquidity, partially offset by favourable short-term funding costs and growth in at-call deposits.
Average interest earning assets increased $49.7 billion (6%) reflecting growth in the Institutional banking portfolio, growth in liquid assets
and trading securities in Markets, higher central bank cash balances, higher collateral and the impact of foreign currency translation
movements.
Average deposits and other borrowings increased $41.0 billion (6%) driven by growth in all divisions but particularly in the Institutional andAustralia Retail and Commercial divisions, and the impact of foreign currency translation movements.
GROUP NET INTEREST MARGIN FROM CONTINUING OPERATIONS (bps)1762019 Cashnet interest
margin

1.

1
(4)

(4)

(3)

Impact ofrate net of
repricing

Asset &
depositmix

Liquidity

ANZ 2019 ANNUAL REPORT_

Wholesalefunding &deposit
costs

Asset
pricing

163
(1)

(2)

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

60
60

164

2020 Cashnet interest
marginsubtotalMarketbalancesheet
activities1

Large/
notableitems

2020 Cashnet interest
marginOUR PERFORMANCE (continued)

Other operating income
2020
$m

2019
$m

Movt

Markets other operating income
Share of associates' profit
Other1

2,215
1,884
155
(551)

2,493
1,286
262
649

-11%
47%
-41%
large

Total cash other operating income

3,703

4,690

-21%

Net fee and commission income1

Total increase/(decrease)
$m

Movt

Explanation

Net fee andcommission
income1

(278)

-11%

Net fee and commission income decreased primarily due to lower volume related fees
due to the impact of COVID-19, reduction or removal of fees, loss of income fromdivested businesses, partially offset by lower customer remediation impacting Net fee
and commission income.

Markets otheroperating income

598

47%

Markets other operating income increased across Franchise Trading, Franchise Sales andBalance Sheet Trading. This was primarily due to increased customer sales flows andimproved trading conditions, particularly in International, as customers sought Markets
risk management products.

Share of associates'
profit

(107)

-41%

Share of associates’ profit decreased by $107m of which $68 million relates to theGroup’s equity accounted share of PT Panin’s transition adjustment on its adoption of
AASB 9. The equity accounted share of profits decreased by $10 million for PT Panin and$24 million for AmBank.

Other1(1,200)large

Other decreased primarily due the impairment of the Asian associates of $815 million,
the impact of divested businesses of $318 million and $79 million in Institutional division
related to widening credit spread impacts on loans measured at fair value.

Total cash otheroperating income
from continuing
operations

(987)

-21%

OTHER OPERATING INCOME ($m)

(551)

649

155

262

2020
1,884

Net fee and commission
income1
2019

2,215
1,286

2,493

Markets other operating
incomeShare of associates' profit
Other1

1.

Excluding Markets.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

61

61

Overview

How wecreate value

Performanceoverview

Remuneration
overview

OUR PERFORMANCE (continued)

Shareholder
information

Operating expenses
2020$mTotal cash operating expenses from continuing operations2
Full time equivalent staff (FTE) from continuing operations
Average full time equivalent staff (FTE) from continuing operations

2019
$m
9,071
37,58837,4809,383
37,50637,728

Movt
3%
0%
1%

Operating expenses increased by $312 million (3%). Key drivers:
 personnel expenses increased $113 million (2%) largely driven by higher investment spend in the New Zealand and Australia Retail andCommercial divisions, higher customer remediation costs of $80 million, wage inflation and adverse foreign currency translation
movements. This was partially offset by lower variable remuneration and lower business as usual expenses, including reduced employee
leave balances.
 premises expenses decreased $6 million (-1%) largely driven by lower premises expense in our International network, partially offset by achange in accounting treatment associated with the new leasing standard (comparatives not restated).
 technology expenses (excluding personnel) increased $290 million (19%) largely as a result of accelerated amortisation of $197 million due
to a change in application of the software amortisation policy, a change in accounting treatment associated with the new leasing standard(comparatives not restated), an increase in investment spend and customer remediation ($13 million).
 restructuring expenses increased $84 million largely related to business and distribution changes in the Australia Retail and Commercial
division.
 other expenses decreased $169 million (-9%) largely due to lower customer remediation of $257 million and lower travel expenses, partially
offset by higher investment spend and Goodwill write-offs of $77 million in Pacific and New Zealand divisions.
OPERATING EXPENSES ($m)

Personnel

1,900

1,731

Premises

161

2020

77
4,878

1,824

1,534

789

795

2019

Technology(excluding personnel)

4,765

Restructuring
Other

Credit impairment
Collectively assessed credit impairment charge/(release) ($m)
Individually assessed credit impairment charge ($m)
Credit impairment charge ($m)
Gross impaired assets ($m)
Credit risk weighted assets ($b)
Total allowance for expected credit losses (ECL) ($m)
Individually assessed as % of gross impaired assets
Collectively assessed as % of credit risk weighted assets

62
62

ANZ 2019 ANNUAL REPORT

2020

2019

Movt

1,717
1,021
2,738
2,459
360.0
5,899
36.2%
1.39%

17
778
795
2,029
358.1
4,190
40.1%
0.94%

large
large
large
21%
1%
41%

OUR PERFORMANCE (continued)

GROSS
IMPAIREDASSETSBY DIVISION($m) ($m)
GROSS
IMPAIREDASSETSBY DIVISION

44

1,634

347

434

51

Australia Retailand Commercial

1,468

245

265

2020

Institutional
New Zealand
2019

Pacific
TSO andGroup Centre

Gross impaired assets increased $430 million (21%) driven by the Institutional division ($169 million), Australia Retail and Commercial division($166 million) and New Zealand division ($102 million). The increase in the Institutional division primarily relates to impairments on a small
number of single name exposures. The Australia Retail and Commercial division increase was driven by home loans with a combination of theimplementation of a more market responsive collateral valuation methodology and impairments as 90 days past due exposures increased,
combined with impairments on a small number of single name exposures in the commercial portfolio. The increase in the New Zealanddivision is driven by impairments on a small number of single name commercial exposures.
COLLECTIVELY ASSESSED CREDIT IMPAIRMENT CHARGE ($m)

1,051

45

7

Institutional

248
373

Australia Retailand Commercial

(12)

2020

10

2019

New ZealandPacific
TSO andGroup Centre

12

The collectively assessed credit impairment charge increased by $1,700 million primarily driven by a $1,044 million increase in the Australia
Retail and Commercial division, a $363 million increase in the Institutional division and a $236 million increase in the New Zealand division.
The significant increases across all divisions are due to forward-looking assessments of the impacts of the COVID-19 pandemic driven by thedeterioration in the economic outlook as well as management adjustments to recognise the risk of credit quality deterioration expected toemerge as COVID-19 stimulus and support programs ease.
INDIVIDUALLY ASSESSED CREDIT IMPAIRMENT CHARGE ($m)

596

7
97

(1)
11
75

705

Institutional

(12)
321

2020

Australia Retailand Commercial

New Zealand
2019

Pacific
TSO andGroup Centre

The individually assessed credit impairment charge increased by $243 million primarily due to a single name impairment in the Institutional
division. This was partially offset by improved delinquencies in the Australia Retail portfolios combined with ongoing lower portfolio growth in
the unsecured portfolio, and lower provisions in the Commercial portfolio.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

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63

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

TOTAL ALLOWANCE FOR EXPECTED CREDIT LOSSES ($m)

3,455

101

Australia Retailand Commercial

2,353

446

672
1,671

62

2020

1,329

Institutional
New Zealand
2019

Pacific
TSO andGroup Centre

During the September 2020 year the collectively assessed allowance for expected credit losses increased by $1,632 million. This was
attributable to changes in economic outlook including impact of scenario weights of $1,018 million, COVID-19 related management
adjustments of $592 million, changes in risk of $61 million and a change in portfolio composition of $46 million, partially offset by reductions
from foreign exchange and divestments of $85 million.
During the September 2020 year, there was a net increase in the individually assessed allowance for expected credit losses of $77 million.
COVID-19 loan assistance packages offered to customers1
Since March 2020, the Group has offered various forms of assistance to customers to counteract the impact of COVID-19 on the ability ofcustomers to meet their loan obligations. The assistance provided has included arrangements such as temporary deferral of principal andinterest repayments, replacing principal and interest with interest only repayments, and extension of loan maturity dates.
The Group does not consider that when a customer is first provided assistance, all other things being equal, that there has been a Significant
Increase in Credit Risk (SICR) and a consequent impact on ECL when assessing provisions. Subsequent to take-up, customers have been
contacted to discuss available options once the packages reach their end date. Additional information on the customer’s financial position
and ability to recommence their loan repayments is used to assist in classification of customers into risk categories. Customers in higher risk
categories, and those that have requested a deferral extension have been classified as having a SICR. The Group continues to work with ourcustomers on arrangements in respect of their loan obligations once the assistance package has ceased.
The categories of assistance packages provided and the amounts outstanding as at 30 September 2020 are noted in the following table:

Assistance package category
Loan deferral package
RetailCommercial and other
Interest only
RetailCommercial and otherTerm extensions
RetailCommercial and other
Total
RetailCommercial and other
Total
1.

Total
At 30 September
2020$m

26,117
8,989

3,705
193

29,822
9,182

126
33

2,287
494

2,413
527

3
24
35,292

611
66
7,356

614
90
42,64826,246
9,046
35,292

6,603
753
7,356

32,8499,799
42,648COVID-19 loan deferral packages are available to customers if either their loan repayments are less than 30 days past due, or if their repayments are less than 90 days past due but were up to date
at 1 March 2020.

64
64

Australia Geography New Zealand Geography
At 30 September 2020 At 30 September 2020$m$m

ANZ 2019 ANNUAL REPORTOUR PERFORMANCE (continued)

DIVISIONAL PERFORMANCE

2020
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)
Customer deposits ($b)
Number of FTE

2019
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)
Customer deposits ($b)
Number of FTE

Australia
Retail andCommercial

Pacific

TSO andGroup
Centre

2.59%
45.1%

Group

3.10%
106.2%

n/a
n/a

1.63%
52.9%

1,017

(62)

(1,388)

3,758

157.6
223.3
5,291

116.6
91.0
5,761

1.9
3.5
1,113

1.6
11,263617.1
552.4
37,506Australia
Retail andCommercial

Institutional

New
Zealand

Pacific

TSO andGroup
Centre

Group

2.59%
43.2%

0.82%
50.6%

2.33%
38.8%

3.75%
64.7%

n/a
n/a

1.76%
47.7%

3,195

1,828

1,399

59

(11)

6,470

331.9
208.0
13,903

164.5
217.3
5,468

116.7
83.4
6,121

2.1
3.5
1,086

0.1
(0.4)
11,010615.3
511.8
37,588Institutional

New
Zealand

0.76%
43.9%

2.26%
44.8%

2,337

1,854

339.4
234.6
14,078ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

65

65

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

DIVISIONAL PERFORMANCE
Australia Retail and Commercial
Lending volumes increased in the September 2020 half driven by successful home loan growth, partially offset by lower consumer
demand for unsecured borrowing and increased customer repayments following fiscal and regulatory stimulus and a low interest
rate environment. Net interest margin was flat as the headwinds from official cash rate decreases on low customer rate deposits andearnings on capital, unfavourable lending mix from proportionately more growth in lower margin home loans compared to higher
margin unsecured lending were offset by home loan repricing benefits, lower funding costs and a favourable deposit mix impact.
Other operating income decreased driven by lower credit card and international transaction volumes driven by COVID-19 impacts
and fee removals. Operating expenses were flat with higher investment spend, higher restructuring expenses, additional charges forlease-related items, accelerated amortisation due to changes in application of the software policy and inflationary increases being
offset by productivity benefits and lower remediation expenses. Credit impairment charges increased driven by collectively assessed
credit impairment charges for the expected impact of COVID-19.
Institutional
Average lending volumes increased against the prior period. Customer deposits increased in Transaction Banking, partially offset bydecreases in the other businesses. Net interest margin ex-Markets decreased mainly due to the impact of low interest rates on
deposit margins. Other operating income increased due to higher Markets income, partly offset by lower volume related fee incomein the transaction banking business with a subdued international trade environment. Operating expenses decreased as a result of
lower personnel costs, lower discretionary spend, lower property charges and lower remediation expenses, partly offset byaccelerated amortisation due to changes in application of the software policy and additional charges for lease-related items. Credit
impairment charges increased due to higher collectively assessed credit impairment charge for the expected impact of COVID-19
and an increase in individually assessed credit impairment charges in Transaction Banking.
New ZealandLending ended flat against the prior period impacted by the sale of UDC at the end of the year. Customer deposit volumes grewacross all portfolios while funds under management increased during the period. Net interest margin decreased mainly due to lower
interest rates compressing deposit margins. Other operating income decreased primarily driven by fee changes and lower volume
related fee income and fee waivers due to the impact of COVID-19. Operating expenses increased due to higher investment spend
on compliance projects, goodwill write-off related to the Bonus Bonds business, accelerated amortisation due to changes inapplication of the software policy, and increased restructuring charges. Credit impairment charges increased driven by higher
collectively assessed credit impairment charges for the expected impact of COVID-19.
Pacific
Operating income for the Pacific division declined from the prior year due to the impact of COVID-19. Costs were higher largely due
to a goodwill write-off. Credit impairment charges increased driven by higher collectively assessed credit impairment charges for the
expected impact of COVID-19.
TSO and Group Centre
The 2020 financial year included the impairment of the Asian associates and a loss on sale of UDC. The 2019 financial year included
the gain on sale of OnePath Life (NZ), Paymark, Cambodia JV and PNG Retail, Commercial and SME.

66
66

ANZ 2019 ANNUAL REPORTOUR PERFORMANCE (continued)

DISCONTINUED OPERATIONS
The financial results of the divested Wealth Australia businesses and associated Group reclassification and consolidation impacts are treated as
discontinued operations from a financial reporting perspective.
The comparative Group Income Statement and Statement of Comprehensive Income have been restated to show discontinued operations
separately from continuing operations in a separate line item ‘Profit/(Loss) from discontinued operations’.
 Sale to IOOF Holdings Limited (IOOF)
On 17 October 2017, the Group announced it had agreed to sell its OnePath P&I and ADGs businesses to IOOF. The aligned dealer groups
business consists of ADGs that operate under their own Australian Financial Services licences. The sale of the ADGs completed on 1 October
2018 and the OnePath P&I business completed on 31 January 2020.
 Sale to Zurich Financial Services Australia (Zurich)
On 12 December 2017, ANZ announced that it had agreed to the sale of its life insurance business to Zurich and regulatory approval was
obtained on 10 October 2018. The transaction was completed on 31 May 2019.
Included in the ‘Cash loss from discontinued operations’ is: a $18 million loss on disposal ($13 million loss after tax) was recognised in the September 2020 full year attributable to sale completion
costs. The September 2019 full year included a $23 million loss ($81 million loss after tax) attributable to sale related adjustments and writedowns, the reversal of the life-to-date cash profit adjustments on the revaluation of policy liabilities sold to Zurich, partially offset by therecycling on sale completion of gains previously deferred in equity reserves; and customer remediation which includes provisions for expected refunds to customers and related remediation costs associated withinappropriate advice or services not provided in the pensions and investments and life insurance businesses. An amount of $126 million
pre-tax, $96 million post tax was recognised in the 2020 financial year (2019: $241m pre-tax, $207 million post-tax).
E x p l a n a t i o n o f a d j u s t m e n t s b e t w e e n s t a t u t o r y p ro f i t a n d c a s h p r o f i t
 Treasury shares adjustment
ANZ shares held by the Group in Wealth Australia discontinued operations are deemed to be Treasury shares for accounting purposes.
Dividends and realised and unrealised gains and losses from these shares are reversed as they are not permitted to be recognised as income
for statutory reporting purposes. In deriving cash profit, these earnings are included to ensure there is no asymmetrical impact on theGroup’s profits because the Treasury shares are held to support policy liabilities which are revalued through the Income Statement. With thesale completion of the life insurance business to Zurich, there are no ANZ shares held by the Group in discontinued operations
 Revaluation of policy liabilities
When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect the present value of theobligation, with the impact of changes in the market discount rate in each period being reflected in the Income Statement. ANZ includes
the impact on the re-measurement of the insurance contract attributable to changes in market discount rates as an adjustment to statutory
profit to remove the volatility attributable to changes in market interest rates which reverts to zero over the life of the insurance contract.
With the sale completion of the life insurance business to Zurich, the 2019 financial year includes the reversal of the life-to-date cash profit
adjustments on the revaluation of policy liabilities sold, reducing cash profit by $15 million from discontinued operations.
2020
$m

2019
$m

Statutory profit/(loss) from discontinued operations

(98)

(343)

Adjustments between statutory profit and cash profit
Treasury shares adjustment
Revaluation of policy liabilities

-

34
(11)
45

(98)

(309)

Cash profit/(loss) from discontinued operations

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

67

67

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

FINANCIAL POSITION OF THE GROUP – INCLUDING DISCONTINUED OPERATIONSCondensed balance sheet
As at
2020
$b

2019
$b

Movt

129.7
144.3
135.3
617.1
15.9

100.3
126.9
120.7
615.3
1.8

29%
14%
12%
0%
-100%

16.1

-1%

1,042.3

981.1

6%

Settlement balances owed by ANZ / Collateral received
Deposits and other borrowings
Derivative financial instruments

31.5
682.3
134.7

18.8
637.7
121.0

68%
7%
11%

Debt issuances
Liabilities held for sale
Other

119.7
12.8

129.7
2.1
11.0

-8%
-100%
16%

Total liabilities

981.0

920.3

7%

Total equity

61.3

60.8

1%

AssetsCash / Settlement balances owed to ANZ / Collateral paid
Trading and investment securities
Derivative financial instruments
Net loans and advances
Assets held for sale
Other
Total assets
LiabilitiesCash/Settlement balances owed to ANZ/Collateral paid increased $29.4 billion (+29%) driven by an increase in balances with central
banks, increased overnight inter-bank deposits, and an increase in short term reverse repurchase agreements, partially offset by foreign
currency translation movements.

Trading and investment securities increased $17.4 billion (+14%) primarily driven by an increase in liquid assets in Markets, partially offset
by the impact of foreign currency translation movements.



Derivative financial assets and liabilities increased $14.6 billion (+12%) and $13.7 billion (+11%) respectively as interest rate and foreignexchange movements resulted in higher derivative volumes and fair values, particularly in interest rate and foreign exchange
swap products.

Net loans and advances increased $1.8 billion (+0%), driven by growth in home loans in the Australia Retail and Commercial division(+$10.1 billion) and New Zealand division (+$4.4 billion), partially offset by lower credit volumes in other products as a result of theongoing impacts of COVID-19 in the Institutional (-$4.1 billion) and Australia Retail and Commercial (-$1.6 billion) divisions, higher credit
provisions (-$1.5 billion) as a result of the ongoing impacts of COVID-19, the sale of the UDC business in New Zealand division in
September 2020 (-$3.4 billion) and foreign currency translation movements.



Deposits and other borrowings increased $44.6 billion (+7%) driven by increased customer deposits in the Australia Retail andCommercial division (+$26.6 billion), Institutional division (+$11.8 billion), and New Zealand division (+$7.8 billion) and drawdown of the
RBA Term Funding Facility (TFF) (+$12 billion). This was partially offset by a reduction in certificates of deposit (-$4.0 billion), commercial
paper issued (-$2.7 billion) and the impact of foreign currency translation movements.

Debt issuances decreased $10.0 billion (-8%) driven by lower senior debt issuances. Funding was partially replaced by the RBA TFF, which
is classified as Deposits and other borrowings.

68

ANZ 2019 ANNUAL REPORT68

OUR PERFORMANCE (continued)

Funding
2020

2019

$b

$b

Wholesale funding
Shareholders’ equity

561.3
277.5
61.3

521.4
270.3
60.8

Total funding

900.1

852.5

Net Stable Funding Ratio

124%

116%

Customer liabilities

The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.
$13.2 billion of term wholesale debt with a remaining term greater than one year as at 30 September 2020 was issued during the year.
In March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system. The RBA is providing a three-year secured funding
facility to ADIs at a fixed rate of 0.25%. APRA has determined that the TFF qualifies for inclusion in determining the Liquidity Coverage Ratio(LCR) and Net Stable Funding Ratio (NSFR).
ADIs can obtain initial funding of up to 3% of their existing credit outstanding to Australian households and businesses. ADIs have access toadditional funding if they increase lending to small and medium-sized businesses. As at 30 September 2020, ANZ had drawn $12 billion fromits initial TFF allowance of $12 billion and had drawn $0 billion from its additional TFF allowance of $6 billion.
Liquidity
Full year average

Total liquid assets ($b)
Liquidity Coverage Ratio (LCR) 1
1

1.

2020

2019

213.9
139%

188.4
140%

Full year average, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.

The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent
with Basel 3 LCR: highest-quality liquid assets (HQLA1): Cash, highest credit quality government, central bank or public sector securities eligible for
repurchase with central banks to provide same-day liquidity.
 high-quality liquid assets (HQLA2): High credit quality government, central bank or public sector securities, high quality corporate debt
securities and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
 alternative liquid assets (ALA): Assets qualifying as collateral for the Committed Liquidity Facility (CLF) and other eligible securities listed by
the Reserve Bank of New Zealand (RBNZ).
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory
requirements and the risk appetite set by the Board.
COVID-19 has impacted the normal operations of financial markets including funding markets, however the actions of governments globallyand central banks including the RBA, RBNZ and the US Federal Reserve have provided significant liquidity support to the system and financial
markets generally. ANZ’s liquidity measures have remained above regulatory requirements throughout this period.

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

69

69

Overview

How wecreate value

Performanceoverview

OUR PERFORMANCE (continued)

Remuneration
overview

Shareholder
information

Capital management
2020

2019

Movt

Common Equity Tier 1 (Level 2)- APRA Basel 3

11.3%

11.4%

Credit risk weighted assets ($b)

360.0

358.1

1%

Total risk weighted assets ($b)

429.4

417.0

3%

APRA Leverage ratio

5.4%

5.6%

APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable asregulatory capital and provides methods of measuring the risks incurred by the Bank.
The Group’s Common Equity Tier 1 ratio was 11.3% based on APRA Basel 3 standards, exceeding APRA’s minimum requirements. It decreased
2 bps as cash earnings and divestments were offset by the impact of dividends during the year.
At 30 September 2020 the Group’s APRA leverage ratio was 5.4% which is above the 3.5% proposed minimum for internal ratings based
approach ADI (IRB ADI) which includes ANZ.
Dividends
Our financial performance allowed us to propose that a final dividend of 35 cents be paid on each eligible fully paid ANZ ordinary share,bringing the total dividend for the year ended 30 September 2020 to 60 cents per share. This represents a dividend payout ratio of 45.3% ofcash profit from continuing operations.
The proposed 2020 final dividend of 35 cents per share will be fully franked for Australian taxation purposes, and carry New Zealand
imputation credits of NZD 4 cents per ordinary share. It will be paid on 16 December 2020 to owners of ordinary shares at close of business on
10 November 2020 (record date).
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2020 final dividend.
For the 2020 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares.
Further details on dividends provided for or paid during the year ended 30 September 2020 are set out in Note 5 of the consolidated financial
statements.
Shareholders Returns
Earnings per share –cash1 (cents)

Dividend per share(cents)Dividend payout
ratio1 (%)

Total shareholder
return (%)

2020 45.3

2020 (36.9)

2020

132.7

2020 60

2019

227.6

2019

1.

2019

70.1

Information has been presented on a cash profit from continuing operations basis. Discontinued operations are detailed on page 67.

70
70

160

ANZ 2019 ANNUAL REPORT

2019

9.2

OUR PERFORMANCE (continued)

FIVE YEAR SUMMARY
20201
$m

20191
$m

20181
$m

20171
$m

2016
$m

14,0493,703(9,383)8,369(2,738)(1,872)
(1)
3,758
(98)
3,660
(83)
3,577

14,3394,690(9,071)
9,958(795)(2,678)
(15)
6,470
(309)
6,161
(208)
5,953

14,514
4,853(9,401)
9,966(688)(2,775)
(16)
6,487
(682)
5,805
595
6,400

14,875
4,941(8,967)
10,849(1,199)(2,826)
(15)
6,809
129
6,938
(532)
6,406

15,095
5,499(10,439)
10,155(1,956)(2,299)
(11)
5,889
n/a
5,889
(180)
5,709

1,042,286
61,29711.3%
16.7%

981,137
60,794
11.4%
16.4%

943,182
59,405
11.4%
16.8%

897,326
59,075
10.6%
15.8%

914,869
57,927
9.6%
14.5%

5.9%
0.3%
53.8%

10.0%
0.6%
49.5%

10.9%
0.7%
52.0%

11.0%
0.7%
46.1%

10.0%
0.6%
50.7%

Total return to shareholders (share price movement plus
dividends)-36.9%

9.2%

0.6%

13.1%

9.2%

Market capitalisation
Dividend (cents)
Franked portion– interim– finalShare price– high (dollars)– low (dollars)– closing (dollars)

48,83960
100%
100%$28.67$14.10$17.2280,842
160
100%
70%$29.30$22.98$28.5280,979
160
100%
100%
$30.80$26.08$28.1886,948
160
100%
100%
$32.95$25.78$29.6080,886
160
100%
100%
$29.17$21.86$27.63Financial performance - cash2
Net interest income
Other operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment charge
Income tax expense
Non-controlling interests
Cash profit from continuing operations2
Cash profit/(loss) from discontinued operations
Cash profit
Adjustments to arrive at statutory profit2
Profit attributable to shareholders of the Company
Financial position
AssetsNet assets
Common Equity Tier 1
Common Equity Tier 1 – Internationally
Comparable Basel 33
Return on average ordinary equity (statutory)4Return on average assets (statutory)
Cost to income ratio (cash)2
Shareholder value – ordinary shares

Share information(per fully paid ordinary share)
Earnings per share (cents) (statutory)
Dividend payout ratio (statutory)
Net tangible assets per ordinary share5
No. of fully paid ordinary shares issued (millions)
Dividend reinvestment plan (DRP) issue price– interim– final

126.4
47.6%
$20.04
2,840

210.0
76.2%
$19.59
2,835

221.6
72.1%
$18.47
2,874

220.1
73.4%
$17.66
2,937

197.4
81.9%
$17.132,927$18.06-$27.79$25.03$27.76$26.03$28.80$29.02$24.82$28.16

Other information
No. of employees (full time equivalents)
No. of shareholders

38,579553,171

39,060506,847

39,924509,238

44,896522,425

46,554545,2561.

During 2018, part of Wealth Australia and TSO and Group Centre division was classified as a discontinued operation. 2017 comparatives have been restated accordingly. 2016 has not been
restated. All ratios are presented on a Group basis inclusive of discontinued operations across all periods.
2.
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. Cash profit is not
audited; however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented, and the adjustments
for the sale impact of Shanghai Rural Commercial Bank (SRCB) in 2018 and 2017 are appropriate.
3.
Internationally Comparable Methodology applied for 2016–2020 aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015). Basel Internationally
Comparable ratios do not include an estimate of the Basel l capital floor requirement.
4.
Average ordinary equity excludes non-controlling interests and preference shares.
5.
Equals shareholders’ equity less preference share capital, goodwill, software and other intangible assets divided by the number of ordinary shares

ANZ 2020 Annual Review
ANZ 2020 ANNUAL REPORT

71

71

Overview

Performanceoverview

How wecreate value

Five year summary (continued)

Remuneration
overview

Shareholder
information

2020

2019

2018

2017

2016

Fair and Responsible Banking

Net Promoter Score Ranking (relative to peers)
Australia Retail1

3

4

3

4

2

2

Australia Commercial

4

3

3

4

4

l3

Australia Institutional

1

1

1

2

1

New Zealand Retail

4

4

4

4

4

New Zealand Commercial and Agricultural5

5

5

5

5

5

New Zealand Institutional

1

1

1

3

1

Breaches7

569

784

1,114

1,443

1,408

Investigations resulting in termination

93

151

226

262

254

Whistleblower reports

157

156

137

121

71

1,070,930

998,474

889,135

550,361

453,054

86

77

73

72

74

33.4

32.5

32.0

31.1

29.9

139.5

142.2

136.9

131.1

89.8

66,402

134,930

124,113113,127

113,071

20.5

42.4

34.6

29.4

-

Environmental sustainability ($ billion)

7.57

7.60

4.65

4.51

2.37

Housing ($ billion)

1.45

Other social ($ billion)14

0.06

4

6

Code of conduct

Financial Wellbeing

Help enable social and economic participationof 1 million people by 2020 (cumulative total)8
Employees
Employee engagement (%)9
Total Women in Leadership (%)

10

Community
Total community investment ($m)
Volunteer hours
Employee volunteering participation rate (%)

11

Sustainable solutions AU$50 billion target12

Total funded or facilitated towards:
13

Environmental Sustainability

Environmental footprint
Total scope 1 & 2 GHG emissions (tCO2e)

134,093

156,568

171,012

180,993

193,569

Total scope 1,2 & 3 GHG emissions (tCO2e)203,700

250,857

266,906

273,216

299,224

Renewables (%)

87

83

76

70

63

Coal (%)

5

9

13

16

19

Gas (%)

7

8

10

13

18

1,501

1,371

1,076

1,141

875

Project finance portfolio

15

Project finance commitment to renewable energy ($m)
Average emissions intensity of generation financed
Australia (tCO2e/Mwh generated)

0.40

0.54

0.66

0.58

0.62

Outside Australia (tCO2e/Mwh generated)

0.01

0.02

0.08

0.24

0.16

1. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six month rolling average to Sep’16, Sep’17, Sep’18, Sep’19 & Sep'20. Ranking based on the four major
Australian banks. 2. DBM Business Atlas. Base: Commercial (<$100 million annual turnover) Main Financial Institution customers. Six month average to Sep’16, Sep’17, Sep’18, Sep’19 & Sep'20.
Ranking based on the four major Australian banks. 3. Peter Lee Associates, 2020 Large Corporate and Institutional Relationship Banking surveys, Australia. 4. Retail Market Monitor, Camorra
Research, six month rolling average to Sep’16, Sep’17, Sep’18, Sep’19 & Sep'20. Ranking based on the five major New Zealand banks. 5. Business Finance Monitor, TNS Kantar Research. Base:
Commercial ($3 million – $150 million annual turnover) and Agricultural (>$500K annual turnover) customers. Four quarter rolling average to Q3’16, Q3’17, Q3’18, Q3’19 & Q3’20. Ranking basedon the five major New Zealand commercial / agricultural banks. 6. Peter Lee Associates Large Corporate and Institutional Relationship Banking surveys, New Zealand 2016 - 2020, ranked
against the Top 4 competitors (in 2016 rank based on question ‘which bank would you most likely to recommend’). 7. Resulting in a formal consequence or the employee leaving ANZ
8. Target commenced in 2016. Performance includes people helped through our initiatives to support financial wellbeing, including our financial inclusion, employment and community
programs, and targeted banking products and services for small business and retail customers. Refer to the 2020 ESG Supplement for methodology. 9. The 2017 engagement survey was
run as a pulse survey sent to 10% of the bank's employees with a 57% response rate. 10. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all
employees regardless of leave status but not contractors (which are included in FTE). 11. Commenced reporting in 2017. 12. 2016 –2019 figures represent annual contributions towards ANZ’s
2020 $15bn sustainable solutions target, which had an environmental focus. In 2020, ANZ set a new 2025 $50bn target with an expanded focus on environmental sustainability, housing andfinancial wellbeing. 13. Commenced reporting in 2020. 14. Commenced reporting in 2020. Includes Green, Social, Sustainability Bond transactions issued by Financial Institutions that align to
SDG 6, 7, 9, 11, 12 and 13 and indirectly align to Financial Wellbeing. 15. Breakdowns for 2020, 2018 and 2017 do not total to 100% due to rounding.

72

This page has been intentionally left blank.

ANZ 2020 Annual Review

73Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Remuneration overview
The following pages provide a summary of the remuneration for our Key Management Personnel (KMP): Non-Executive Directors (NEDs),
Chief Executive Officer (CEO) and Disclosed Executives. In this section we have included the remuneration tables that shareholder feedback
has told us are of the most interest. The full Remuneration Report is contained in the Annual Report from page 74 onwards, and includes
details of our remuneration strategy and framework, and the remuneration practices that apply to KMP. The report can be accessed via the
ANZ website at anz.com/annualreport.

NED REMUNERATIONThe Human Resources (HR) Committee reviewed NED fees for 2020 and determined not to increase Chairman, NED or Committee fees
except for the Digital Business and Technology Committee Chair fee (which increased from $35,000 to $45,000) in recognition of thesignificant increase in workload of the Committee Chair.
2020 STATUTORY REMUNERATION – NEDS
Post-employment

Short-term NED benefits
Fees1$

Non monetary
benefits$

Super
contributions1$

Total
remuneration2$

2020

803,824-

21,176825,000

2019

639,351-

20,649660,000

2020

323,324-

21,176

344,500

2019

275,851-

20,649296,500

2020

354,326-

10,674

365,000

2019

296,351-

20,649317,000

2020

307,824-

21,176

329,000

2019

246,058-

20,649266,7072020

279,824-

21,176

301,000

2019

229,131-

20,649249,780

2020

342,324-

21,176

363,500

Financial
year
Current Non-Executive Directors
D Gonski1
I Atlas1

P Dwyer
J Halton
J Key

1

1

1, 3

G Liebelt1

2019294,851-

20,649315,500

J Macfarlane1

2020

297,324-

21,176

318,5002019

249,851-

20,649270,500

P O’Sullivan 4

2020

243,331-

19,207

262,538

Total of all Non-Executive Directors

2020

2,952,101-

156,937

3,109,038

2019

2,231,444-

144,543

2,375,987

1. Year-on-year differences in fees relate to the 20% reduction to the Chairman fee and the NED member fees in 2019 (as a consequence of a decision taken by the Directors that their fees
should reflect shared accountability for the failures highlighted by the Royal Commission), changes in Committee memberships and changes to the superannuation Maximum Contribution
Base. From 1 January 2020 to 30 June 2020, P Dwyer elected to receive all payments in fees and therefore did not receive superannuation contributions during this period. 2. Long-term
benefits and share-based payments do not apply for the NEDs. 3. In addition to the fees shown above that J Key received as a NED for Australia and New Zealand Banking Group Limited(ANZBGL), as Chairman for ANZ Bank New Zealand Limited J Key also received a total of NZD 391,000 in 2020 and NZD 382,950 in 2019. 4. P O’Sullivan commenced as a NED on 4 November
2019, so 2020 remuneration reflects a partial service year.

CEO AND DISCLOSED EXECUTIVES’ REMUNERATIONYEAR-ON-YEAR REMUNERATION AWARDED
These tables show a year-on-year comparison of remuneration awarded to the CEO and Disclosed Executives for the 2018, 2019 and 2020
performance periods. Remuneration awarded includes any cash payments (e.g. fixed remuneration and cash variable remuneration) and thevalue of deferred shares and performance rights awarded for the year but which have not yet vested (i.e. the value was not received during
the year).

74

CEO

Financial
Fixed
year remuneration
$

AVR1
cash
$

AVR1
deferredshares
$

Total
AVR1
$

Threshold vesting

Full vesting

AVR1 as % of

Total
LTVR2
performance remuneration
awardedrights
$
$

LTVR2
Total
performance remuneration
awardedrights$$Target Maximum
opport- opportunity
unity

CEO
S Elliott2020

2,500,000 625,000

625,000 1,250,000

1,750,000

5,500,000

3,500,000

7,250,000

50%

33%

2019

2,100,000

750,000

750,000 1,500,000

2,100,000

5,700,000

4,200,000

7,800,000

71%

48%

2018

2,100,000

875,000

875,000 1,750,000

1,400,000

5,250,000

2,800,000

6,650,000

83%

56%

1. Annual Variable Remuneration. 2. Long Term Variable Remuneration.

The 2020 LTVR has not yet been awarded to the CEO, approval will be sought from shareholders at the 2020 Annual General Meeting (AGM).
Note the CEO’s 2018 LTVR award was significantly reduced as a result of the matters raised in the Royal Commission relating to conduct
issues and associated reputational damage (as previously disclosed).
DISCLOSED EXECUTIVES
Threshold vesting
Financial
Fixed
year remuneration
$

VR1
cash
$

Full vestingVR1 as % of

VR1
VR1
VR1
Total
Total
deferred performance remuneration performance remuneration
awardedawardedsharesrights2rights2$$$$$

Targetopportunity

Maximum
opportunity

52%

34%

Current Disclosed Executives
2020

M Carnegie

K Corbally

1,200,000

409,200

409,200

421,600

2,440,000

843,200

2,861,600

2019

1,000,000

495,000

495,000

510,000

2,500,000

1,020,000

3,010,000

75%

50%

2018

1,000,000

528,000

528,000

544,000

2,600,000

1,088,000

3,144,000

80%

53%

2020

1,100,000

429,000

429,000

442,000

2,400,000

442,000

2,400,000

66%

44%

2019

950,000

478,500

478,500

493,000

2,400,000

493,000

2,400,000

85%

57%

2018

486,000

164,835

164,835

169,830

985,500

169,830

985,500

83%

55%(6.5 months in role)

G Florian2020

1,075,000

371,250

371,250

382,500

2,200,000

765,000

2,582,500

52%

35%

A George

2020

1,100,000

363,000

363,000

374,000

2,200,000

748,000

2,574,000

50%

33%

2019

1,000,000

528,000

528,000

544,000

2,600,000

1,088,000

3,144,000

80%

53%

2018

876,000

354,750

354,750

365,500

1,951,000

731,000

2,316,500

61%

41%

2020

1,200,000

462,000

462,000

476,000

2,600,000

952,000

3,076,000

58%

39%

2019

726,000

198,000

198,000

204,000

1,326,000

408,000

1,530,000

41%

28%

1,100,000

363,000

363,000

374,000

2,200,000

748,000

2,574,000

50%

33%

(12 months/4.5 months
as Deputy CEO)M Hand(9 months as Disclosed
Executive)

2020

M Jablko

2019

1,000,000

544,500

544,500

561,000

2,650,000

1,122,000

3,211,000

83%

55%

2018

1,000,000

577,500

577,500

595,000

2,750,000

1,190,000

3,345,000

88%

58%

K van der Merwe

2020

850,000

330,000

330,000

340,000

1,850,000

680,000

2,190,000

59%

39%

A Watson

2020

1,015,599

334,681334,681344,8222,029,783

689,645

2,374,605

50%

33%

2019

219,440

170,255

113,504-

503,199-

503,199

65%

43%

2020

1,200,000

363,000

363,000

374,000

2,300,000

748,000

2,674,000

46%

31%

2019

1,200,000

874,500

874,500

901,000

3,850,000

1,802,000

4,751,000

110%

74%

2018

1,200,000

717,750

717,750

739,500

3,375,000

1,479,000

4,114,500

91%

60%

3

(3.5 months in role)

M Whelan

1. Variable Remuneration. 2. Deferred share rights for the Chief Risk Officer (CRO). 3. Paid in NZD and converted to AUD.

ANZ 2020 Annual Review

75Overview

How wecreate value

Remuneration
overview

Performanceoverview

Shareholder
information

2020 VARIABLE REMUNERATION AWARDED
This table shows the variable remuneration awarded to the CEO and Disclosed Executives for the year ending 30 September 2020. The
average 2020 VR outcome for Disclosed Executives was 36% of maximum opportunity (ranging from 31% to 44%). Despite good
performance these outcomes were deemed by the Board to better reflect the impact of the current economic conditions.
CEO AND DISCLOSED EXECUTIVES
Maximum opportunity

S Elliott1=

AVR $1,250,000++$625,000

33% of max$625,000

LTVR $3,500,000 performance rights face value at full vesting (subject to shareholder approval at the 2020 AGM)

M Carnegie=

VR $1,661,600

K Corbally2=

VR $1,507,500

+

+

+

=

VR $1,474,000

33% of max+

39% of max$952,000+

33% of max$363,000 $363,000 $748,000

K van der Merwe

Cash

+

35% of max$765,000$462,000 $462,000

M Jablko

VR $1,474,000+$371,250=

VR $1,876,000

M Whelan

44% of max$442,000$363,000 $363,000 $748,000

M HandVR $1,359,006+=

VR $1,474,000+$429,000$371,250

A George

34% of max$843,200+$429,000

G Florian

A Watson+=

VR $1,300,000

VR $1,340,000+$409,200 $409,200

=

+

+

$330,000 $330,000=+$334,681=+$334,681+

39% of max$680,000

33% of max$689,645+

31% of max$363,000 $363,000 $748,000

Deferred shares or deferred share rights

Performance rights face value at full vesting3

1. Variable remuneration for the CEO = AVR + LTVR. 2. CRO receives deferred share rights instead of performance rights. 3. Divide by two to convert to face value at threshold vesting for
performance rights.

762020 ACTUAL REMUNERATION RECEIVED
This table shows the remuneration the CEO and Disclosed Executives actually received in relation to the 2020 performance year as cash, or in
the case of prior equity awards, the value which vested in 2020.
CEO AND DISCLOSED EXECUTIVES

Fixedremuneration$

Cash variable
remuneration$

Deferred variable
remuneration
which vested
Totalcash during the year1$$

Other deferredremuneration
which vested
during the year1$

Actualremuneration
received$

Deferred variable
remuneration which
lapsed/forfeitedduring the year1, 2$

CEO and Current Disclosed Executives
S Elliott

2,500,000

625,000

3,125,000

597,362-

3,722,362(3,768,401)

M Carnegie

1,200,000

409,200

1,609,200

276,999-

1,886,199(241,617)

K Corbally

1,100,000

429,000

1,529,000

247,891-

1,776,891(135,003)

G Florian

1,075,000

371,250

1,446,250

141,723-

1,587,973-

A George

1,100,000

363,000

1,463,000

222,997-

1,685,997(117,474)

M Hand1,200,000

462,000

1,662,000

335,786-

1,997,786(196,368)

1,100,000

363,000

1,463,000

326,785

195,305

1,985,090(241,617)

850,000

330,000

1,180,000

125,309-1,305,309-

A Watson4

1,015,599

334,6811,350,280

289,148-

1,639,428(90,473)

M Whelan

1,200,000

363,000

1,563,000

570,684-

2,133,684(1,374,281)

M Jablko

3

K van der Merwe

1. The point in time value of previously deferred remuneration granted as shares/share rights and/or performance rights is based on the one day Volume Weighted Average Price (VWAP) of
the Company’s shares traded on the ASX on the date of vesting or lapsing/forfeiture multiplied by the number of shares/share rights and/or performance rights. 2. The lapsed/forfeited values
relate to the performance rights we awarded in November/December 2016 which lapsed in November/December 2019 due to the performance hurdles not being met. 3. Other deferredremuneration for M Jablko relates to previously disclosed compensation for deferred remuneration forfeited as a result of joining ANZ. 4. Paid in NZD and converted to AUD.			
					

ANZ 2020 Annual Review

77Overview

How wecreate value

Performanceoverview

Remuneration
overview

Shareholder
information

Important dates for shareholders1
MAY 2021

NOVEMBER 2021

5 May

Half Year Results Announcement

8 November

Final Dividend Ex-Date

10 MayInterim Dividend Ex-Date

9 November

Final Dividend Record Date

11 MayInterim Dividend Record Date

10 November

DRP/BOP/Foreign Currency Record Date

12 MayDRP/BOP/Foreign Currency Record Date

DECEMBER 2021

JULY 2021
1 JulyInterim Dividend Payment Date

16 December

Final Dividend Payment Date

16 December

Annual General Meeting (Adelaide)

OCTOBER 2021
14 OctoberClosing date for receipt of Director Nominations

28 October

Annual Results Announcement

OUR INTERNATIONAL PRESENCE AND EARNING COMPOSITION BY GEOGRAPHY2

INTERNATIONAL$(57) MILLION

AUSTRALIA$2,522 MILLIONNEW ZEALAND$1,293 MILLIONINTERNATIONAL
ASIA

China
Hong Kong
India
Indonesia
Japan
Laos
Malaysia

PACIFIC

Myanmar
The Philippines
Singapore
South Korea
TaiwanThailand
VietnamAmerican Samoa
Cook Islands
Fiji
Guam
Kiribati
New Caledonia
Papua New Guinea

Samoa
Solomon Islands
Timor-Leste
Tonga
Vanuatu

EUROPEMIDDLE EAST

FranceGermany
United Kingdom

United ArabEmirates (Dubai)
UNITED STATESOF AMERICA

1. If there are any changes to these dates, the Australian Securities Exchange will be notified accordingly. 2. On a Cash profit (continuing operations) basis. Excludes non-core items included
in statutory profit and discontinued operations included in cash profit. It is provided to assist readers in understanding the result of the ongoing business activitives of the Group. For further
information on adjustments between statutory and cash profit refer to page 56.

78

Contacts
REGISTERED OFFICEANZ Centre Melbourne
Level 9, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 3 9273 5555
Facsimile: +61 3 8542 5252
Company Secretary: Simon Pordage
INVESTOR RELATIONS
Level 10, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 3 8654 7682
Facsimile: +61 3 8654 8886
Email: investor.relations@anz.com
Web: shareholder.anz.com
Group General Manager
Investor Relations: Jill Campbell
COMMUNICATIONSAND PUBLIC AFFAIRSLevel 10, 833 Collins Street
Docklands VIC 3008 Australia
Telephone: +61 2 6198 5001
Email: Tony.Warren@anz.com
Group General Manager Communications
and Public Affairs: Tony Warren
SHARE AND SECURITIESREGISTRAR AUSTRALIA
AUSTRALIA

Computershare Investor Services Pty Ltd
GPO Box 2975
Melbourne VIC 3001Australia
Telephone within Australia: 1800 11 33 99
International Callers: +61 3 9415 4010
Facsimile: +61 3 9473 2500
Email: anzshareregistry@computershare.com.au
Austraclear Services Limited
20 Bridge Street
Sydney NSW 2000 Australia
Telephone:1300 362 257
JAPANJapan Securities Depository Center,
Incorporated
1-1, Nihombashi Kayabacho 2-chome,
Chuo-ku, Tokyo 103-0025 Japan
Telephone: +81-3-3661-0161 (Main) /+81-3-3661-7193 (Book-Entry
Transfer Department)

LUXEMBOURG

Deutsche Bank Luxembourg S.A.
2, Boulevard Konrad Adenauer
L-1115 Luxembourg, Luxembourg
Telephone: +352 4 21 22 656
NEW ZEALAND

Computershare Investor
Services Limited
Private Bag 92119
Auckland 1142 New Zealand
Telephone: 0800 174 007
Facsimile: +64 9 488 8787
UNITED KINGDOM

Computershare Investor
Services PLC
The Pavilions Bridgwater Road
Bristol BS99 6ZZ UK

MORE INFORMATION

General Information on ANZ can beobtained from our website: anz.com.
Shareholders can visit our Shareholder
Centre at anz.com/shareholder/centre.
ANZ Corporate Governance: For
information about ANZ’s approach to
Corporate Governance and to obtaincopies of ANZ’s Constitution, Board/Board
Committee Charters, Code of Conduct
and summaries of other ANZ policies ofinterest to shareholders and stakeholders,
visit anz.com/corporategovernance.
Australia and New Zealand Banking
Group Limited ABN 11 005 357 522.
This Annual Review has been prepared forAustralia and New Zealand Banking Group
Limited (“the Company”) together with its
subsidiaries which are variously described
as: “ANZ”, “Group”, “ANZ Group”, “the Bank”,“us”, “we” or “our”.

Telephone: +44 870 702 0000
Facsimile: +44 870 703 6101
UNITED STATESThe Bank of New York Mellon
240 Greenwich St, Floor 7E
New York, NY 10286 USA

Founding Signatory of:

Telephone: +1 1800 254 2826
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000 USA
USA Toll Free Telephone:1888 269 2377
Telephone for International Callers:
1201 680 6825
Web:
www-us.computershare.com/investor
Email: shrrelations@bnymellon.com

DISCLOSURE INSIGHT ACTION

Deutsche Bank Trust Company Americas
60 Wall Street, 24th Floor Mailstop
NYC 60-2407
New York, NY 10005 USA
Telephone: +1 212 250 2500
GERMANY

Deutsche Bank Aktiengesellschaft
COO Global Markets Operations
Schuldschein Operations
Mainzer Landstr. 11-174
60272 60329 Frankfurt am Main Germany
Telephone: +49 69 910 31441
Facsimile: +49 69 910 85025
Email: GTO-FFT.SDO@db.com

ANZ 2020 Annual Review

79

50 years as a Brand, 185 years as a Bank
On 1 October 1970, in what was then the largest
merger in Australian banking history, ANZ Bank Ltd
merged with the English, Scottish and Australian Bank
Limited to form Australia and New Zealand Banking
Group Limited – the modern ANZ.

1835

1887

1970

A NEW
BANK

WOMEN IN THE
WORKFORCEANZBEGINS

MERGER
WITH ES&A

The Bank ofAustralasia opens
in Sydney.

Bank of Australasia employs
its first female typist,
believed to be the firstwoman employed by anAustralian bank. Mary
Switte was appointed to theposition of 'lady typewriter'.

In London, the Bank
of Australasia merges
with the Union Bank
of Australia to form
ANZ Bank Limited.

ANZ Bank Limited
merges with the English,
Scottish and Australian
Bank to become Australia
and New Zealand
Banking Group Limited.

1996
CONNECTED

anz.com launches,
followed closely byphone banking andinternet banking.

2003

2010

2012

2016

NATIONAL
BANK OFNEW ZEALANDANZ GOMONEY™
LAUNCHES

BRINGING IT
ALL TOGETHERAPPLE PAY AND
ANDROID PAY

COVID-19 SUPPORTPACKAGEANZ is the first bank inAustralia to offer customersa mobile-to-mobile payment
application.

National Bank of
New Zealand integrates
into the ANZ brand.

With the launch ofApple Pay and Android
Pay, ANZ customers
in Australia now able
to make tap and go
payments wherevercontactless payments
accepted.

ANZ launches anunprecedented
support package forsmall business andhome loan customers
with the potential toinject $6 billion into
the Australianeconomy and assist
in the recovery fromthe COVID-19 crisis.

ANZ Bank Limited
acquires National
Bank of New Zealandfrom Lloyds TSB.

The evolution of the ANZ brand

80

1951

2020

We are adapting to the changing
environment, protecting our people,
customers and shareholders, engaging
proactively with our stakeholders and,
together, preparing for the future.

shareholder.anz.com
Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.
ANZ’s colour blue is a trade mark of ANZ.