2004 INVESTOR SNAPSHOTTHE YEAR AT A GLANCE

Our goal is to become Australasia's leading, most respected and fastest
growing major bank. We came a long way in 2004 while at the same timedelivering another good financial performance. Importantly we have rewarded
our shareholders and shared the benefits with customers, our people andthe community.

2004 HIGHLIGHTS> Completed the $4.9 billion acquisition of The National
Bank of New Zealand and made good progress with
the integration of our New Zealand business.
> Undertook a successful $3.6 billion Rights Issue.
> Created strong momentum in the Personal and Corporate
divisions, which performed well delivering improved
service for customers and growing market share.
> Established a sustainable foundation for theInstitutional division through more efficient use ofcapital and lower risk.

> Took further steps in a multi-year program ofstructural de-risking which is now largely completewith ANZ’s risk profile now comparable with othermajor Australian banks.
> Continued to create an environment of opportunity,
challenge and development for our people.
Staff satisfaction now stands at 85%.
> Developed innovative programs to strengthen ourconnection with the community including responses
to major social issues that involve the financial services
industry such as financial literacy and savings.

> Produced solid performances in New Zealand, Asia
Pacific, Esanda and ING Australia.

$m

$b
84

3000

significant items (A)

20

27.3

'99 '00 '01 '02 '03 '04

23.8

0

25

15

16.0

500

Our profit in 2004 of $2,815 million represents
an increase of 20% over the previous year.
This was driven by the acquisition of The
National Bank of New Zealand during the year,
combined with solid underlying growth inmost parts of the Group. The Institutional result
was flat, as we continued to reduce risk.
Costs increased slightly.

20.0

1480
1000

30

STRONG PROFIT GROWTH
year on year net profit

26.5

2348

1870

2168

1500

44 1703

2000

34.6

2731

154

2500

35

10

5

'99 '00 '01'02'03 '04
0

MARKET CAPITALISATION DOUBLEDIN 5 YEARS
market capitalisation at
30 september

Over the past five years ANZ’s market
capital value has more than doubled,
driven mainly by strong growth inunderlying earnings.

STRATEGIC PRIORITIESSUSTAINABLE

MARKETLOWDISTINCTIVEEARNINGSHAREHOLDER
VALUELEADERSHIPCOST

CUSTOMERCOMMUNITY& SUPERIOR& LOWSERVICE

TRUST

MARKETRISKGROWTHCREDIT RATING(B) COST TO INCOME RATIO Excludes the effect of significant items andgoodwill amortisation.

Maintained AA- Credit Rating

KEY TO GRAPHS(A) SIGNIFICANT ITEMS In the year ended 30 September 2004 there were significant
items of $84 million, including gain related to the buy-back of TrUEPrS preference
shares ($84 million after tax), gain on finalising ING Australia completion accounts($14 million after tax), and incremental costs associated with the NBNZ integration($14 million after tax). There were significant items totalling $154 million after tax
in 2002 and $44 million in 2000.

FINANCIAL TERMS AND KEY DEFINITIONS
Can be found in the Glossary of Financial Terms.

FURTHER EXPLANATION OF KEY MEASURESCan be found in the Chief Financial Officer’s Review.

$

60%

250

247.5

.....................................................

150

211.7

172.0

target
range

136.3

.....................................................
.....................................................

40%

200

anz

198.3

50%

.....................................................

100

100.0

.....................................................

50

30%

.....................................................

year

'99

'00

'01

'02

'03

'04

'99 '00 '01 '02'03'04
0WORLD-LEADING PRODUCTIVITY
cost to income ratio (b)HEALTHY SHAREHOLDER RETURNS
value of $100 investment in anz shares over 5 years

During 2004 our cost to income ratio remained broadly
stable at 45.3%, staying within our target range. ANZ
remains one of the most efficient major banks in the world.
We continued to increase the rate of organic investmentin the Australian franchise to increase market share,
particularly in Personal and Corporate.

Share price re-based for rights issue. Assumes re-investingof dividends. Total shareholder return (TSR) in 2004 was 17%.
The TSR annualised for the last five years, assuming full
reinvestment of dividends, was 20%. This was driven by steadily
increasing dividends and strong growth in the share price.

cents

$m
2000

120

1572

'99 '00 '01'02'03 '04
0

828

20

1031

56
40

1000

1275

73
64

60

1500

The 2004 dividend was a record
with a 47cents interim dividend
and a 54 cents final dividend, both
100% franked. Adjusting for thebonus element of the Rights Issue,
dividends grew by 10.8% broadly
in line with the growth in earnings
per share excluding significant items
and goodwill amortisation.

1750

85

80

STRONG DIVIDEND GROWTH
dividends per share
1457

95

101

100

500

'99 '00 '01'02'03 '04
0

INCREASED SHAREHOLDER VALUE AS
MEASURED BY EVA™
eva™

Economic value added (EVA™) grew by
11% in 2004, driven by sound underlying
performance and continued success in
reducing risk across the Group,particularly in our Institutional division.

anz's goal is to become
australasia's leading, most respected
and fastest growing major bank.

8

10

12

20

CHAIRMAN’SREPORTA MESSAGE FROMJOHN MCFARLANE

CHIEF FINANCIAL
OFFICER’S REVIEWSENIOR
MANAGEMENTCharles Goode comments
on ANZ’s performance,
key issues for the Boardand the outlook for 2005.

John McFarlane discusses
ANZ’s business strategy,
progress made in 2004
and future priorities.

A review of the Group’s
financial performance.

ANZ’s senior management
team and their approachto leadership, people andculture.

22

34

38

40

BUSINESSDIVISIONS

BUSINESSPERFORMANCETHE
COMMUNITYTHE
ENVIRONMENT

The leaders of ANZ’scustomer divisions
each discuss theirdivision’s performanceand priorities.

Details of the contribution
made by each business to
ANZ’s 2004 performance.

Outlines ANZ’s
approach to building
community trust.

ANZ’s approach toenvironmental improvement,
achievements in 2004
and future priorities.

42

44

54

72

BOARD OFDIRECTORSCORPORATEGOVERNANCE

REMUNERATIONREPORT

GUIDE TO CONCISE
FINANCIAL REPORT

Biographies of ANZ’s
Board of Directors.

Details of ANZ’s
approach tocorporate governance.

Details of remuneration
policy and practices,
including remunerationtables for Directors andExecutives.

This guide assists
readers’ understandingof each section of theConcise Financial Report.

75

79

87

88

DIRECTORS’REPORT

CONCISEFINANCIAL REPORTDIRECTORS’DECLARATION

AUDITORS’REPORT

Directors’ overview of
the Group for 2004.

Financial information
including the Consolidated
Statements of Financial
Performance, Financial
Position and Cash Flows.

The Directors’
declaration on theConcise Financial
Report.

The independent audit
report on the Concise
Financial Report.

89

92

SHAREHOLDERINFORMATIONGLOSSARY OF
FINANCIAL TERMS

Key financial information,
stock exchange
information andshareholder dates.

Definitions of financial
terms used in thisreport are provided.

EMMA EVANSSENIOR SALES CONSULTANTPERSONAL BANKING AND WEALTH MANAGEMENTSURFERS PARADISE

I was helping a customer who came in to look at our products
because she was unhappy with her bank. I ended up
transferring her home loan, absolutely everything to ANZ.
After, she sent three other people to me for home loans.
Sometimes it’s that simple. If you deliver great service, thecustomer goes away smiling and refers people to you.

BARRY BAILEY (AND OSLO)
CUSTOMER SERVICE CONSULTANT
ANZ INTERNET BANKING
VICTORIA

I originally trained for a role in Cards but now I'm on theInternet Banking Help Desk. A lot of clients I deal with are
elderly and not used to computers. So I talk to them on
the phone and they're pretty happy when I get them up andrunning with internet banking.

EVA LIU BOYD
CUSTOMER SERVICE OFFICERMANNERS STREET BRANCH
THE NATIONAL BANK OF NEW ZEALAND

Service is not just greeting your customer or asking
how their day is but actually putting yourself in theirposition so you understand more and can help that little
bit more. Sometimes you get a great reaction and its like
'wow, I did that'. If you are always putting customers firstthen they will come back for that service.

FRANK HAGEALIBUSINESS DEVELOPMENT MANAGERCORPORATE BANKINGSYDNEYThe reason I enjoy working at ANZ is the opportunity
to run your own business, to do it your way. You can lookoutside the square and come up with different solutions
for clients. I'm always looking for clients who have that
requirement, where I can do something special.

JASON BATSON
BRANCH MANAGER WARRAGUL & TRAFALGARANZ RURAL BANKING
VICTORIA

The big change for us has been the feeling that everytime
you walk in the door to work it’s your business. It means we
can make local decisions, which are right for our branch andour community. You really run your own race and we havea happier team and happier customers as a result.

8 I chairman’s report

DELIVERING PERFORMANCE AND GROWTHCHAIRMAN’S REPORT2004 was a good year for ANZ. The Group delivered on its commitments to shareholders, producing a record profit, higher
dividends and a strong capital position. Importantly, this was achieved with a prudent approach to risk. Total shareholder
return for 2004 was 17%.

Performance

Customers and the Community

In the year ended 30 September 2004, profit after tax was up
20% to a new record of $2,815 million. This includes ten months’
contribution from The National Bank of New Zealand. Excluding
The National Bank of New Zealand and significant items, profit
after tax was $2,536 million, up 8%.

I have often emphasised our commitment to improving
customer service and our position in the communities we serve.

The Directors were pleased to increase the dividend to $1.01 pershare fully franked, an increase of 10.8% taking into account theeffect of the Rights Issue. This is the 13th consecutive increasein annual dividends and a further increase in our dividend payout
ratio, as ANZ’s cash earnings per share have grown.
A strong performance in our Personal Division drove much of
our growth. This is an area we have focussed on as part of our
specialisation strategy and we are now seeing the benefits.
Understanding shareholders value sustainable growth, we havealso continued to focus on the prudent management of margins,risks and capital as well as investing for the future.
The return on ordinary shareholders’ equity was down to 18.1%
in 2004 from 20.6% in 2003. This reduction is primarily associatedwith the impact of our New Zealand acquisition. Our cost to income
ratio of 45.3% continues to be the lowest of the major Australianbanks and reflects our position as one of the most efficient banks inthe world. Risks continue to be well managed. Specific provisions
were down by 16% to $443 million.
Our capital position is strong, with the Group’s adjusted common
equity ratio at 5.1%. This is above our target range. We
announced plans for an on-market share buy-back to enhance
ANZ’s capital management.

During 2004, on all measures, customer service improved.
We have invested in modernising our branches, improving our
focus on health and safety and developing innovative new
products. As a result, in the Personal Division, not only do ourcustomers say we are doing a better job, our staff are moresatisfied and we are gaining market share.
As importantly, we have taken a broader role in the community.
While you can read about this in more detail later in this report,
I would like to acknowledge the work of thousands of ANZ staff
who volunteered their time to help local schools, rebuild community
facilities and support the needs of people in financial difficulty.

Governance and Regulation
Regulatory focus continued to increase during the year. New
measures included the governance standards associated with
CLERP 9 in Australia, the US Sarbanes Oxley Act andInternational Financial Reporting Standards.
A strong focus on corporate governance and transparency is not
only an ethical and stewardship responsibility, it can give ANZ
a strong advantage.
Nevertheless the trend toward greater regulation means thecost involved in complying with these regulations is now
quite a significant item. We estimate this additional cost has
reduced earnings in 2004 by between half and one percent.
There is a danger of further regulation diminishing returns forboth shareholders and the community.

Expansion and Growth
Our acquisition of The National Bank of New Zealand has provided
ANZ with a stronger, more sustainable and diversified domestic
business base. We have already made good progress withintegration of our New Zealand businesses. Our approach has
been low risk, emphasising the priority we have given to retaining
customers and protecting our franchise. Legal amalgamation wasachieved in June with the creation of ANZ National Bank Limited.

The Board’s Focus in 2004

In other areas, we have maintained momentum in our specialist
businesses. Our Personal and Corporate Divisions performed
well. The Institutional Division was subdued, reflecting in parta strategic decision to reduce risk with consequent earnings
sacrifice.

During the year the Board placed more emphasis on developing along-term growth strategy including our strategy for East Asia. The
Board recognises that opportunities to improve our efficiency bycost reduction alone are becoming more limited. While we will
ensure ANZ continues to be an efficient bank, we will place increasingemphasis on growth as a means of delivering superior value toshareholders over the coming years.

Our specialisation strategy has provided ANZ with focus andvitality. In May 2004 we reorganised our specialist businesses
into five customer service divisions: Personal, Institutional,
Corporate, New Zealand and Asia Pacific. The change is designed
to accelerate growth and build market share by harnessing
synergies between the businesses.

ANZ’s Board met 8 times in 2004 with many specific activities
being carried out by the Board’s committees. Some of the key
issues for the Board were oversight of integration issues related
to the acquisition of The National Bank of New Zealand, the longterm strategy for technology and a continuing focus on risk
management.

chairman’s report I 9

ANZ has continued to deliver on its promises to shareholders in 2004.We acquired
The National Bank of New Zealand making us the leading bank in New Zealand.
There was a successful $3.6 billion Rights Issue associated with the acquisition
making us the number three bank in Australia based on market capitalisation.
And we produced another good financial performance.

New Directors

OutlookDuring 2004, the Board appointed three new directors. These
appointments have added to the Board’s experience and expertiseand allowed careful management of a transition with the planned
retirement of John Dahlsen and Brian Scott in 2005.

In 2004, the Australian and New Zealand economies performed
well. We benefited from a buoyant property market and low
levels of unemployment. Both economies are enjoying oneof the best periods of sustained economic growth that wehave experienced.

On 1 February 2004, Dr Greg Clark joined the ANZ Board. Dr Clark
has international experience and a distinguished career intechnology including leading roles at News Corporation, IBM
and presently at Clark Capital Partners. He is also a Directorof James Hardie Industries. Dr Clark will especially assist theBoard in its deliberations in the area of technology, which is acomplex area and one of the major opportunities and challenges
facing banking in the 21st Century.
Mr John Morschel and Mr David Meiklejohn joined the Board
on 1 October 2004.
Mr Morschel was a Director of Westpac Banking Corporation,
including two years as Executive Director. He is currently
Chairman of Rinker Group Limited and is a Director of Rio
Tinto plc, Singapore Telecommunications Limited and Tenix
Pty Limited. He brings with him extensive experience in banking
and financial services.
Mr Meiklejohn is currently Chairman of PaperlinX Limited and SPC
Ardmona Limited and a director of One Steel Limited and WMC
Resources Limited. Mr Meiklejohn has a strong background in
finance and accounting including at Amcor Limited where he was
Chief Financial Officer and later Executive Director.

Looking ahead, we expect the economies in Australia and New
Zealand to continue to perform relatively well, although there is
likely to be some softening in overall credit growth associated withan easing in the housing boom and the modest rises we have seen
in interest rates. Overseas markets are expected to continue
to strengthen although there are challenges posed by rising oil
prices, the twin deficits in the United States and the global
security environment.
ANZ has established a reputation for delivering to ourshareholders. We have a strong financial foundation and weare making tangible progress in advancing our strategic position.
The momentum we have established and our emphasis on
growth should enable us to continue to deliver value for ourshareholders, our people and the community.
That momentum has come from the talent and hard work of
ANZ’s people. On behalf of the Board and all shareholders,
I thank them for their contribution to ANZ and to their own
communities.

Charles Goodechairman

10 I chief executive officer’s report

LEADERSHIP AND GROWTHA MESSAGE FROM JOHN McFARLANE

We have produced good financial
performance. Total return toshareholders was a strong 17%.

Delivering sustainable value to shareholders over the longer term involves morethan producing superior financial results. It’s also about ensuring our customers
want to do business with us, our staff want to invest their careers with us and that
we have earned the trust of the community.

ANZ has come a long way in 2004 while at the same timedelivering another good financial performance. Importantly
we have rewarded our shareholders and shared the benefits
with our customers, our people and the community.
> We completed the $4.9 billion acquisition of The National
Bank of New Zealand and have made good progress with the
integration of our New Zealand businesses. The acquisition has
been immediately accretive to cash earnings per share.
> There was a $3.6 billion Rights Issue to fund the acquisition.
The Rights Issue was over subscribed and rewarded shareholders
who participated.
> Our Personal and Corporate divisions performed wellfollowing several years of hard work. They have good momentum,
delivering improved service for customers and growing market
share.
> Institutional Division was subdued but we have now
established a more sustainable foundation for the Division
having increased economic value added through more efficientuse of capital and lower risk.
> Our New Zealand business performed reasonably in the face ofsignificant competition and the normal uncertainties associatedwith a major acquisition. Our Pacific business performed well,
but Asia was subdued. Esanda, our asset finance business, also
performed well, and ING Australia continued to show improvement.
> We have largely completed a seven-year program of structuralde-risking. As a result ANZ’s risk profile has been substantiallyreduced and is now comparable with other major Australianbanks.
> We have continued to develop our culture, which we now
consider a competitive advantage. We have created a new
structure for our specialist businesses, led by an experienced
team with a strong track record, to help accelerate growthand build market share.

> We have developed innovative programs to strengthen ourconnection with the community. This includes responses tosome of the major social issues involving the financial services
industry such as financial literacy and savings, and programs
which help our people engage with the community.
The acquisition of The National Bank of New Zealand has
made us the leading bank in New Zealand and the clear
number three Australian bank based on market capitalisation.
Our market capitalisation has increased from $27.3 billion
in 2003 to $34.6 billion. We have done this while delivering astrong 17% total shareholder return during the year, well above
the sector average.
Outcomes like these don’t just happen. They come about
through the hard work and enthusiasm of our people. Similarly,
our future aspirations are only good intentions unless they
are accompanied by a focussed and disciplined strategy, hard
work and genuine sense of excitement about the future.

Sustainable Performance and Value
We have now established the foundation to lift our sights andbe clear that ANZ's aspiration is to become Australasia's leading,most respected and fastest growing major bank.
This reflects my strong belief that delivering value toshareholders is not just about building the capacity of theorganisation to perform and grow consistently in the shortterm but ensuring ANZ can stand the test of time and deliver
sustainable performance and value over the long term.
The aspiration also reflects my views about what makes
successful companies and translates into a clear set of priorities
for ANZ.
> Companies who combine superior revenue growth withsuperior efficiency generally produce the highest earnings growthand share price multiples.

chief executive officer’s report I 11

The acquisition of The National Bank of New
Zealand has made us the leading bank in New
Zealand. We are now focused on organic expansion
in Australia, selective investments in Asia Pacific,
and consolidating our position in New Zealand.

We will have a greater emphasis on superior
revenue growth and on increased investment
to achieve this.

Our approach in recent years has involved moderate revenue
growth and significant efficiency gains. ANZ is now very efficient,among the most efficient banks globally, and so our priority has
to be to generate superior revenue growth.

It’s about sharing the benefits of our success with customers,
staff and the community. It recognises companies do not serve
shareholders exclusively, but others as well. We are making
progress here too.

> Companies with market leadership generally produce thehighest long-term shareholder returns. We are now the leadingbank in New Zealand and have a number of other leading
positions in Australia and the Pacific. We now need to increase
market share in each of our core businesses, particularly inthose lower risk, more sustainable businesses where we areunderweight such as Australian personal banking and small
business banking.

We established a program of cultural change in 1999 and it
continues today. This program has been designed to transform
ANZ’s culture from the traditional, bureaucratic banking culture
into a modern, vibrant organisation.

> Companies with distinctive relationships and service generally
increase market share and produce the highest sustainable
revenue growth. Specialisation has helped us make real progressin this area. It has provided our businesses with focus and vitality
and we have great products for our customers. This year, we
reorganised to harness synergies between the specialist
businesses and to broaden and deepen their offering to customers.
It is good progress but we need to do more to develop tangible
reasons for customers to choose ANZ over our competitors.
> Companies that manage costs effectively are able to improveearnings, offer lower prices and free up resources for investment
in future revenue growth. We are going to support growth withincreased investment funded by reallocating resources togrowth businesses, re-investing funds generated by growthand continuing to run our business in a lean, agile way.
> Companies that engage in non-core or risky activities
generally produce sub-standard and volatile shareholder returns
and divert management attention from what is important.
We have had a consistent strategy of ceasing high-risk activities
and narrowing our focus to core businesses where we haverealistic leadership prospects.

Over 18,000 people within ANZ have been through this programin its various phases, with each phase tackling a different priority
or issue. Initially, much of the program was aimed at increasing
accountability, freedom and openness and developing a common
set of values. We are currently working at getting the wholeorganisation aligned to the customer and to superior revenue
growth.
The program reflects our people are an investment rather
than a resource. As a result, we have seen a radical rise in staff
satisfaction, which now stands at 85%.
In the 1990s, there was much resentment of banks in thecommunity. Now, with the community programs we have put
in place, and by running the bank in a way we can be proud of,
I believe community sentiment has improved.
We announced a moratorium on rural branch closures in 1999
and we have stuck to it. We have assisted our staff to connect
with their local communities through paid volunteer leave and theestablishment of the ANZ Community Fund. We have also set out
an ambitious agenda on issues like financial literacy and savings
through business-community partnerships.
We have created a very different bank at ANZ. A bank that has asustainable foundation, that is positioned for growth and onethat I believe will continue to deliver value for shareholders overthe short and the longer term.

Value for all Stakeholders
I want to emphasise, however, that our aspiration recognises thatdelivering sustainable value to shareholders in the long-term
involves more that just a focus on growth, costs and managing risk.

John McFarlane
chief executive officer

12 I chief financial officer’s review

7 GOOD REASONSFOR INVESTING IN ANZ

1

PROFIT GROWTH
AND EARNINGS PER SHARE> Accretion from the NBNZ purchase, and its capitalfunding (+2.3 cents).
> The issuance of shares under the dividend reinvestment
and bonus option plans and employee share option schemes(-1.8 cents).
PROFIT GROWTHThe Group recorded a profit after tax of $2,815 million for theyear ended 30 September 2004, an increase of 20% over theyear ended 30 September 2003.
Profit excluding significant items and the 10 months’
contribution from NBNZ increased by 8% to $2,536 million with:
Earnings per share, or EPS, and core profit growth are two of
the key measures used to understand ANZ’s performance,> Net interest income increasing by 5% driven by solid lending
growth particularly in Mortgages and deposit growth in Personal
and Corporate, partly offset by lower net interest margins.

EPS represents the earnings of the company divided by theweighted average number of shares on issue. Excluding
significant items and goodwill amortisation from EPS provides
a measure of performance sometimes referred to as Cash EPS,
which we consider provides a clearer picture of the core
performance of the group.

> Other income increasing 7% driven by growth in non-lending
fees based on higher business volumes, the under-accrual ofcard loyalty points in 2003 and an increased contribution fromING Australia, offset by reduced income from the TrUEPrS swap
which contributed $35 million to profit after tax in 2003.

During the year, ANZ completed the purchase of The National
Bank of New Zealand (NBNZ). In addition, our profit was affectedby a number of significant items including a net gain of $84 million
after tax from release of deferred swap income associated with
the TrUEPrS hybrid instrument. This gain is not expected to recur.
The final coupon paid to holders of TrUEPrS ($36 million) is alsoclassified as a significant item.
EARNINGS PER SHARE

Earnings per share increased 7.5% to 153.1 cents. Cash EPS
increased 10.1% to 161.1 cents affected by:> Asset quality continuing to improve with the economic
loss provision rate down 6 basis points. This reflected a
reduction in the additional charge taken in the Corporate Centre
for unexpected offshore losses and the increased proportionof lower risk domestic assets. Net specific provisions reduced
19% to $429 million with the reduction assisted by thede-risking of the offshore book.
PICTURED ABOVE - Anna McGill (centre), Ben Hall (left) and Bianca Snee (right)
ANZ Courtenay Place Branch - Wellington, New Zealand> Growth in existing ANZ businesses (+14.3 cents).

$m

cents

$m

2500

significant items

2168'00 '01 '02 '03 '04

2348

0

1500

1703

500

NET PROFIT
AFTER TAX
2004 profit boosted
by NBNZ acquisitionand continued coreearnings growth.

1870

1000

2000

2536

2731

CASH EARNINGSPER SHARE
2004 maintains
the upward trend
in cash earnings
per share growth.

3000

2348

1500

1870

2000

2168

'00 '01 '02 '03 '04

154

50

2500

44 1703

134.0

146.3

100.5

113.7

100

161.1

150

84

3000

200

0

> Operating expenses increasing 6%, largely driven by anincrease in staff numbers as our focus turns to growth.

1000

500

0

'00 '01 '02 '03 '04

PROFIT GROWTH
EXCLUDING NBNZ ANDSIGNIFICANT ITEMS
Excluding the positive
impacts of the NBNZ
acquistion, ANZ’s coreearnings demonstrated
continued growth.

chief financial officer’s review I 13

123

DIVIDENDS ANDTOTAL SHAREHOLDER RETURNS

The total return to an investor over a given period comprises the
combination of dividends paid and the movement in the market
value of their shares over that period. This combination iscommonly referred to as the Total Shareholder Return (TSR).
TSR not only reflects the immediate return to shareholders
by way of the dividend, but also any change in the market’s
assessment of the long term value which the company isbuilding, which will be seen as a change in the share price.
In order to maintain a balance between dividends andreinvestment in the business, ANZ’s practice in recent years has
been to increase dividends at approximately the same rate as
the growth in earnings per share excluding significant items andgoodwill amortisation (Cash EPS). In the year ended 30
September 2004, Cash EPS grew by 10.1% to 161.1 cents.
The fully franked dividend for the year grew by 10.8% after
adjusting for the bonus element of the Rights Issue, with anannual dividend of $1.01. The interim dividend of 47 centsand the final dividend of 54 cents were both records for ANZ,
reflecting our continuing growth. The Group expects that it will
be able to maintain full franking for the foreseeable future.
TSR in the year to 30 September 2004 was 17%. Over the past
five years, the TSR for an investor in ANZ who fully reinvested all
dividends, was 20% compound, reflecting our continuing
delivery of growth and value to our shareholders.

PICTURED ABOVE - Tomoko Sakai, ANZ Surfers Paradise.
RIGHT - Tracy Waters and Michael Turner, ANZ Warragul Branch

120

250

18.1

'99 '00 '01'02'03 '04
0

15

20.6

20

20

19.3

73

40

%
25

20.2

95
85

'99 '00 '01 '02'03 '04

60
56

100.0
50

Share price re-basedfor Rights Issue.
Assumes re-investingof dividends.

80

64

136.3

100

SHAREHOLDER
RETURNS
value of $100
investment in anz
shares over 5 years

101

211.7

172.0

198.3

150

100

The 2004 dividend was arecord with a 47cents
interim dividend and a 54
cents final dividend, both
100% franked. Adjustingfor the bonus element of
the Rights Issue, dividends
grew by 10.8% broadly inline with the growth inearnings per shareexcluding significant items
and goodwill amortisation.

23.2

247.5

200

0

DIVIDEND GROWTH
dividends per share

cents

$

RETURN ON EQUITY
10

5'00 '01 '02 '03 '04
0

Return on equity wasdampened by theeffects of accounting
for goodwill following
the NBNZ acquisition.

14 I chief financial officer’s review

mainly arising in the Institutional and Mortgages businesses.

234> Wholesale rate movements had a significant impact, reducing
the net interest margin by 6 basis points.

REVENUE AND
BALANCE SHEET GROWTH

Revenue growth is one of the most important measures of ourperformance, reflecting our success in gaining new customers
and winning more business from our existing customers.
Revenue growth is the essential foundation for sustainablegrowth in profits and shareholder value.
ANZ’s revenue comprises net interest income and otheroperating income.
NET INTEREST INCOME at $5,254 million increased by $943 million(22%), driven by:
VolumeAverage net loans and advances grew by $44.8 billion (32%)
overall with growth mainly attributable to the acquisition of NBNZ($26.4 billion), Mortgages Australia ($13.0 billion), Corporate($2.3 billion) and Institutional Australia ($1.8 billion). Average
net loans and advances reduced by $2.4 billion (20%) in
overseas markets as a result of our risk reduction strategy andexchange rate movements.
Average deposits and other borrowings grew $37.2 billion(31%), largely driven by growth from the NBNZ acquisition($25.3 billion), Treasury ($3.4 billion), Personal ($3.4 billion),and Corporate ($1.7 billion).
MarginNet Interest Margin contracted by 18 basis points owing to:> Changes in the mix of assets and liabilities that negatively
affected the net interest margin by 6 basis points.
> Competitive pressures reduced margins by 3 basis points,$m> Funding costs associated with unrealised trading gains reduced
margins by 4 basis points, directly offset by equivalent gains in
trading income.
> A number of other factors, including foreign exchange revenue
hedging income, credit card volumes carrying interest and thesubstitution of USD TrUEPrS hybrid with AUD StEPS, combined
to contribute a 6 basis point increase in net interest margins.
OTHER OPERATING INCOME at $3,391 million increased $583
million (21%). Excluding significant items, other operating income
increased $459 million (16%) due largely to the $259 million
contribution from NBNZ.

Lending fees increased by $18 million, driven by lending growth in
Corporate, Personal and Esanda offset by a $16 million reductionin Institutional reflecting our offshore risk reduction strategy.
Non-lending fee income increased by $165 million, driven mainly
by growth in Personal ($112 million), Institutional ($39 million)
and Esanda ($9 million).
Foreign exchange earnings increased $16 million with increased
commodity and structured product sales in Institutional.
Profit on trading instruments increased $31 million, with alower proportion of revenue booked as interest due to fundingof cashflows.
Other operating income reduced $30 million with a reduction inincome received on the TrUEPrS swap partly offset by increased
equity accounted income from ING Australia.

%

200

3.0

2.49

2.67

140.2

113.3

124.5

100.6

100

104.9

145.9

131.8

138.0

100

4000

183.3

150

2.77

150

2.77

2.5
200

2.87

28.4

34.2

250

162.6

7119

126 967 7552

6406

7477

6000

174 6815

8000> Funding costs associated with the acquisition of NBNZ resulted
in a 3 basis point decline in the Group’s interest margin.

$b

$b

10000

> Margins were also reduced by 2 basis points by increases inretail broker payments.

2.0

1.5

1.0
50
50

2000

0.5

0

'00 '01 '02 '03 '04

0

REVENUE
Continued revenue
momentum was a featureof the 2004 result.
significant item

nbnz

'00 '01 '02 '03 '04'00 '01 '02 '03 '04
0

NET LENDING ASSET GROWTH
Profit growth was volume
driven, more than offsetting
lower margins.
nbnz

DEPOSIT AND BORROWINGS GROWTH
Deposits continued to grow, althoughstronger lending growth required morewholesale funding.
nbnz'00 '01 '02 '03 '04
0.0

NET INTEREST MARGIN
Net interest averagemargins have decreased
this year in line with longterm trends for the industry.

chief financial officer’s review I 15

345

COST
PERFORMANCE
Controlling costs and ensuring that we operate
efficiently is one of the ways we maximise returns
to our shareholders. The cost to income ratio
expresses the Group’s expenses as a percentage ofrevenue and is one of the clearest and most widelyused measures of efficiency in the banking industry.

60> Technology costs increased by $44 million largely due tocosts associated with the rollout of the new telling platform
and increased depreciation associated with investments intechnology.
> Premises costs increased $17 million, with increased
investment in the branch network and changes inaccounting methodology for rental costs.
> The appreciation of the Australian dollar suppressed cost
growth by $39 million.

$m
21
incremental integration

nbnz

goodwill

443

other

129

34

3433

technology

17 premises

personnel costs.....................................................
.....................................................
.....................................................
.....................................................
.....................................................

30

44

40

110

3228

50

4026

%

– customer facing positions (600 staff) in New Zealand,
Foreign Exchange, Capital Markets, Trade Finance andPersonal; and– central functions (155 staff) driven mainly by anescalating compliance focus and project related activity.

.....................................................

PICTURED BELOWLEFT Sonya Witton
and Peter Kotanidis
ANZ Dorcas Street,
Melbourne. BELOWRIGHT Meg Llewellyn
and David Young,
ANZ Dorcas Street
Melbourne.

During the year ended 30 September 2004 the cost
to income ratio remained broadly stable at 45.3%,
staying within our target range (see chart below). We
continued to increase investment in organic growth
opportunities in the Australian franchise aimed
at improving our market share. Operating expenses
increased by $798 million, of which $572
million occurred because of the acquisition of NBNZ
with a further $21 million in NBNZ incremental
integration costs. Excluding these factors
operating costs increased by $205 million (6%)
driven by:> Personnel expenses increased $110 million as a resultof annual salary increases together with an increase in staff
numbers of 775, mainly in:

'99

'00

'01

'02

'03

'04

COST TO INCOME RATIOANZ remains an efficient bankwith a cost to income ratio within ourtarget range.
anz

target range

03
sep

04 sepexcl. nbnz andsignificant items

04
sep

ANALYSIS OF EXPENSE GROWTH
Cost growth was mainly driven by theacquisition of NBNZ and our investment
in sustainable growth areas of the Group.

16 I chief financial officer’s review

45

LOW RISK

The economic environment in Australia and New Zealandremained positive throughout the year, with robust economic
growth, unemployment at low levels and low interest rates. Thiswas complemented by strong global economic growth, creatinga relatively benign credit environment.
Arrears and loss rates in the consumer portfolio, including
residential property, continued to track at or near record lows.
ANZ nonetheless continues to adhere to conservative lending
criteria, for example, assessing borrowers’ capacity to absorb
an increase in interest rates in the loan approval process forresidential property.
Integration of NBNZ into ANZ’s global risk framework is
progressing well.
We continued to apply our conservative approach to market risk.
One indicator which reflects this approach is our low level of
Value at Risk, covering both physical and derivative trading
positions, relative both to our peers and historic levels.
ANZ continued to pursue its risk reduction strategy, with continued
rebalancing of the Group’s lending portfolio towards core customers,
domestic markets and consumer businesses. The combination of theeconomic environment and consistent application of our risk
reduction strategy was reflected in the 2004 results.
ECONOMIC LOSS PROVISIONThe Group economic loss provision (ELP) charge was $632
million compared with $614 million in the year to September
2003. The increase was driven by volume growth and $62 million
arising from the acquisition of NBNZ offset by lower risk in our
existing businesses.

$m

$m

38

37

62

63

41

45

60

55

59

55

5 63

200

4 46

300

80

443 910 81400

527 32500

383 27 11 62

9 60

6 45

632 17 19 64

600

100

45

700

614 31

531 19 8 73400

502 24 7 69

600

800

520 1 8 91

800%
728 50860 491000

PICTURED
Robin Sloan
ANZ Dorcas Street
Melbourne

40

20

200
100

'00 '01 '02 '03 '04
0'00 '01 '02 '03 '04
00

ECONOMIC LOSS PROVISION (ELP)NET SPECIFIC PROVISIONS (NSP)
Lower risk is reflected in both ELP rate and NSP reductions.
offshore (in%)

new zealand (in%)

australia (in%)'00 '01 '02 '03 '04

LENDING ASSET BUSINESS MIX
Lending portfolio mix is now lower
risk and more sustainable.
commercial

consumerchief financial officer’s review I 17

The ELP rate decreased 8 basis points over the year in line with
the Group’s improving risk profile. This was a result of soundgrowth in lower risk domestic assets (principally mortgages),
the acquisition of the relatively low risk NBNZ franchise, thecontinued de-risking of the offshore portfolio and a lower central
charge for unexpected offshore losses.
NET SPECIFIC PROVISIONSNet specific provisions (NSP) were $443 million, down $84
million from the year to September 2003. The reduction in losses
was principally in the international operations of Institutional,
which reduced $121 million over the year. NSP in theAustralian and New Zealand portfolios increased over the yearby 11% and 56% respectively. The increase in Australia wasprimarily due to one account in the telecommunications industry($87 million) whilst in New Zealand the acquisition of NBNZ
added an additional $14 million over the year. As a percentage ofnet lending assets, NSP reduced to 22 basis points, down from
34 basis points in September 2003.
GROSS NON-ACCRUAL LOANS

Gross non-accrual loans decreased to $829 million, down from
$1,007 million as at September 2003. This improvement wasachieved notwithstanding the inclusion of $81 million of NBNZ nonaccruals loans in the portfolio this year. The overall reduction in nonaccruals was primarily the result of realisations, upgrades and writeoffs of a number of large balances in the Institutional portfolios. The
default rate (new non accruals/average gross lending assets) has
decreased since September 2003 by 10 basis points, from 63 basis
points to 53 basis points in the year to September 2004.
GENERAL PROVISION BALANCE

The general provision balance at 30 September 2004 remained
strong at $1,992 million (1.01% of risk weighted assets), comparedwith $1,534 million (1.01% of risk weighted assets) as at 30
September 2003. The general provision balance increased $458
million during the year, due to the ELP rate being higher than theactual loss rate, plus the general provision of $282 million included
as part of the acquisition of NBNZ. This represents a surplus of$532 million over the Australian Prudential Regulatory Authority(APRA) minimum guideline.

$m

%

15
67

70

60

15

80

5 28

100

PICTURED RIGHT: Jane Pettit, ANZ Surfers Paradise(background, Heather Hastings, ANZ Surfers Paradise)..........................
..
..
..
..
..
..
36
..
..
..
..
..
..
.

6

maximum over year
minimum over year
average for year
as at end of year

uk , europe, other11

pacific
19

5

americas
asia

4

34
3
40

offshore

20

2

new zealand1
0'96 '04

australia
0

LOCATION OF LENDING
Lending assets are increasingly located in core domestic
markets with a consequent reduction in risk profile.

'00

'01

'02

'03

ANZ VALUE AT RISK
97.5% confidence level
A low level of Value at Risk reflects our conservative approach.

'04

18 I chief financial officer’s review

567

CAPITALEFFICIENCY
Adjusted common equity (ACE) reduced from 5.7% to 5.1% to beslightly above our target range of 4.5% to 5.0%. This has provided
us with the capacity to pursue capital management initiatives.
The ACE target range was reduced by 25 basis points at the time of
the NBNZ acquisition, reflecting the progress made in re-balancing
the portfolio. More recently the target range was reduced by afurther 25 basis points, in recognition of the fact that APRA’s
requirement to take a deduction for capitalised expenses did notchange the underlying economic risk of the business.

PICTURED:
Cheryll Christensen
ANZ Surfers Paradise Branch.

In addition to growth in retained earnings, some of the significant
events affecting the capital ratios during the year were:We regard shareholders’ capital as a scarce resource, to be
managed carefully and efficiently.

> Risk weighted assets increased by $45 billion during the year
including $28 billion associated with the purchase of NBNZ.

In recent years, ANZ has been progressively re-balancing its lending
portfolio, with a higher proportion of assets now in lower risk asset
classes. For example, we have reduced the proportion of assets
outside our domestic markets so that by 30 September 2004, 95%
of our lending assets were located in Australia and New Zealand.
Similarly we have re-weighted the portfolio more heavily towards
consumer lending, which is generally less capital intensive thancorporate lending. This re-balancing has allowed us to reduce theamount of capital we are required to hold as a proportion of riskweighted assets.

> ANZ issued ordinary shares by way of a two for eleven rights
issue at $13 per ordinary share, raising capital of $3,562 million tofund the NBNZ acquisition.

The Group’s capital ratios declined during the year, principally
because of the acquisition of NBNZ and the redemption of the
TrUEPrS preference shares. ANZ’s total capital adequacy ratio (as aproportion of risk-weighted assets) decreased from 11.1% to10.4% over the year to September 2004, with the Tier 1 ratio also
decreasing from 7.7% to 6.9%.

> In December 2003, ANZ bought back its TrUEPrS preference
shares, issued for USD775 million in 1998.

> The dividend reinvestment plan resulted in a $135 million
increase in share capital.
> ANZ raised USD1.1 billion via the issue of stapled securities. Thishybrid loan capital, classified as debt on ANZ’s balance sheet,
qualifies as Tier 1 capital for capital adequacy reporting.

> Purchased goodwill on the acquisition of NBNZ of $3.1 billion
was deducted from Tier 1 capital.
please refer to pages 92 - 93 for a complete glossary

%
(1.3)

1.9

8

$b
35

34.6

5.1

0.2

(0.3)

(0.5)

5.7

6

(0.6)

7

30

5

0

04
sep

15

16.0

1

ACE RATIO DRIVERS
Exceeding our ACE
target range of 4.5%
to 5.0% provides
the capacity to pursue
capital management
initiatives.

20.0

2

03
sep

23.8

20

27.3

25

26.5

other

capital costs

rwa

nbnz

earnings

3

dividend410

5'99 '00 '01'02'03 '04
0

ANZ MARKET
CAPITALISATIONANZ’s market
capitalisation has
more than doubled
over the past five years.

chief financial officer’s review I 19

67

One way of measuring shareholder value is Economic Value
Added (EVA™) growth relative to prior periods. EVA™ for the year
ended 30 September 2004 was $1,750 million up 11% from
$1,572 million in the prior year.

SHAREHOLDER
VALUE

We consider EVA™ to be one of the most effective ways ofdetermining how much shareholder value we are creating and wehave embedded EVA™ methodology into all important decisionmaking processes throughout the Group. We use EVA™ as a key
measure for evaluating business unit performance andcorrespondingly it is a key factor in determining the variable
component of remuneration packages.
EVA™ adjusts our profit for the cost of capital involved in generatingthat profit. It is based on operating profit after tax available toordinary shareholders, adjusted for significant items, the cost ofcapital, and imputation credits (measured at 70% of Australian tax).
Of these, the major component is the cost of capital, which at ANZ
is calculated on ordinary capital at a rate of 11%.
We allocate economic capital to each business unit based on
the unit’s inherent risk profile. It is allocated for several risk
categories including: credit risk, operating risk, interest rate risk,
basis risk, mismatch risk, investment risk, trading risk and otherrisk. This method is designed to help drive appropriate risk
management and business strategies throughout theorganisation.
One of the key drivers of our efforts to reduce risk in our balance
sheet has been EVA™. In our Institutional business, for example,
whilst risk reduction has contributed to flatter profits in theimmediate term, using EVA™ it becomes clear that our strategy
is in the best interests of our shareholders. Institutional has
continued to generate positive EVA™ in spite of the short term
flattening of traditionally measured profit.

PICTURED: Sandra Kay Ross, ANZ Warragul Branch.

The importance of EVA™ for investors is that it allows them todetermine how much value management has created. Using thismethodology, the market value of a company is the combinationof its capital plus the present value of expected future EVA™, orin other words, capital plus the present value of expected futureexcess returns over the cost of that capital.

$19.02$11.51 Intangible net
assets per share$m$8.62*
2000

500'00 '01'02'03 '04
0$3.84* Intangible net
assets per share

1750

1457

1031

1275

1000

1572

1500

$4.78* Net tangible
assets per share
EVATM
Continued profit growth
combined with a reduction
in risk have resulted in
EVATM growth improving value
for shareholders.

30 SEP 1998

> Unique stategy> Strong brand> Sustainable leadership> Talented people> Growth opportunities> Vibrant culture
Compound growth 20% p.a$7.51 Net tangible
assets per share
Compound growth 8% p.a

30 SEP 2004

ANZ’S VALUE IS LARGELY REPRESENTED BY INTANGIBLE ASSETS
Market expectations of future performance determine our current share price.
* adjusted for 2003 Rights Issue

20 I senior management

SENIOR MANAGEMENTLEADERSHIP AND SUSTAINABLE PERFORMANCE

Our challenge is not only building the capacity of an organisation to performand grow in the near term, but also ensuring ANZ delivers sustainable value
over the long term. It leads to the concept of self-renewal, which needs to be
directed. This is the role of leadership – to create a self-renewing organisation.

peter marriottmike grimesteve targett

brian hartzer

sir john anderson

john mcfarlane

chief
financial
officermanaging director
operations, technology
and shared services

group managing
director
institutional(seated)group managing
director
personal division

chief executive
anz national banklimitedchief
executive
officersenior management I 21

Of the top 20 companies in Australia by market capitalisation in
1980, only five remained in the top 20 in 2004. ANZ is one ofthose that has survived and thrived.
This statistic however highlights that companies, in and ofthemselves, are not always sustainable entities. Many deliver
shareholder value for a period and then tend to atrophy unlesslong-term sustainability is made a real priority.
Developing sustainable performance and value at ANZ has meant
the traditional concept of the leader at the top, which others
follow, has had to disappear. These days every person has to bea leader whether they are at the moment of contact with acustomer or at the moment of a decision in their day-to-day role.
It is people who serve customers, create new ideas and makecompanies great. So it is easy to understand why ANZ has placedso much emphasis on creating an environment which can engage
and involve everyone in the organisation and where leadership isfostered at all levels.

We have been transforming ANZ from a traditional banking-type
culture into a modern, vibrant organisation through a program
called Breakout. It is a program which emphasises leadership,
diversity, coaching and development and creates a shared visionof an exciting organisation.
How people feel about working in the organisation and how
passionate and engaged they are in its agenda, is what makes
the difference between a good and a great company.
As leaders, one of our main responsibilities therefore is to create
an environment of opportunity, challenge and development forour people. That involves enhancing their capacity to produce
and create, and to stimulate, release and focus the energy thatwithout effective leadership would remain latent.
Details of Senior Management qualifications and experiencecan be found on www.anz.com/corporateinformation/anzmanagement

bob edgar

elizabeth proustgraham hodges

mark lawrence

shane freeman

elmer funke kupper

peter hawkins

chief
operatingofficermanaging
directoresanda(seated)group managing
director
corporate

chief risk
officer(seated)group generalmanagerpeople capitaland breakout

group managing
directorasia pacificgroup managing
directorgroup strategic
development

22 I business divisions

PERSONAL DIVISION
MAKING A PERSONAL CONNECTION WITH CUSTOMERSA CONVERSATION WITH BRIAN HARTZER
ANZ’s Personal Division is made up of its specialist retail businesses in Australia – Personal and Wealth Distribution,
Mortgages, Credit Cards, Merchant Services and Deposit Products. It involves over 10,000 people working to provide personal
financial services to the 3.25 million Australian customers who use ANZ’s network of 742 branches, 1,228 ATMs,
70,000 EFTPOS devices and internet banking. Brian Hartzer is the Group Managing Director of the Personal Division.
Retail is detail
BH: We have real momentum in our personal banking businessaround strong day-in, day-out management of customer
satisfaction, costs and sales growth. It shows in our results
this year where we have seen an improvement in all the rightmeasures. Whether it is customer satisfaction, sales volumes,
revenue growth, profit growth, staff satisfaction – they are all
going in the right direction.
We’ve made good progress with the initiatives we put in place
to revitalise our branch banking business. We have great
information systems for our managers and a very different local
management model where we have given our people a senseof ownership about their branch. Now in every market, in every
branch, in every role in those branches, we have people whohave the right attitude, who are well-trained, who are proudof what they’re doing and want to connect with customers.
This has unleashed incredible energy and given us theright foundation.

Servicing is not the same as service
BH: It’s timely to be thinking harder about service. What wehave done as an industry in the past 10 to 15 years is focus
on servicing, which I would define as processing hundreds ofthousands of interactions per day, in an efficient way. Thisis different to service, which is about personal connection,
listening, exploring needs, and then executing.
I think most of our energy up until a couple of years ago wasreally spent on servicing, not service. What we’ve gradually
started to do is recognise the importance of service in the waythat I define it. It’s refocusing on what service is really about
which, when you look at the customer satisfaction scores, thathas begun to differentiate us from the other major banks.
That isn’t to say we couldn’t do a lot better, we can, but we dohave real momentum.

Listening for subtle clues
BH: One of the things everyone talks about is the need to focus
on the customer. To me the issue is about how we design the
propositions and the service experience that we put out there
from the way a customer sees it, or the way a customer would
think it was of value.
What I want us to do is to really listen to the customer for
those subtle clues about what actually matters. What does thisparticular service mean for that person in their life at thatpoint in time? How do they think about it? What’s importantto them about it?
So part of being customer-focused is about understanding
what is going on in the customer’s mind and in their life.
It’s about trying to deliver to fit in with that, rather than makethem fit in with us.

Sometimes that might lead to how you design your product,
sometimes it might lead to how you bundle your product,
sometimes it might lead you to recreate the process ofacquiring that product or the process of how you service itafter the sale is made. But it’s about looking at the particular
opportunity through the eyes of the customer, through the lens
they are applying.

Branches are important
BH: In the mid-90s there were lots of people running aroundtalking about the death of the branch and that everything wasgoing electronic. There’s no question there has been a massive
shift in people’s behaviour. But that doesn’t translate into ‘bythe way you don’t need branches anymore’!
In fact branches play an important role for pretty much all
customers, even if they don’t go into them. It’s because part ofour proposition is the ability for customers to go to see someone
and talk about their financial affairs. Frankly, there are certain
types of conversations that you don’t want to have over atelephone.
So we have recognised this but we need to really firm this up.
We need to make sure our branch network is well located andwell signed and staffed to support those kinds of personal
interactions with customers. In fact we are opening branches
in more areas, including some of the higher growth areas.
My aim is to open up to 80 branches over the next three years.
It’s about recognising the importance of the branch network ina multi-channel world.

Big opportunities
BH: One of the big opportunities that has really struck me in myvisits around the network is the burden that we’ve put on thepeople in the network in terms of day-to-day administration.
So one of things we need to do is have a fresh look at all that
stuff and say: how do we trim it down to free up time, so ourpeople can spend less time looking toward head office and moretime looking out toward customers.
We are also making great progress on training. We’ve opened
training facilities in Sydney and Melbourne, there’s one about toopen in Brisbane, and eventually we’ll have one in every capitalcity. It will ensure we have more consistent training for new staff
and greater ability to keep our people up-to-date with training ona regular basis.
It’s not a wholesale change in our business; it is about tweaking
just to make sure all of the little elements that make up ourbusiness system are aligned to generating customer value, overa long period of time.

business divisions I 23

CUSTOMER SATISFACTION WITH MAIN FINANCIAL INSTITUTION
Source: Roy Morgan Research – Main Financial Institution Satisfaction,% satisfied (very or fairly satisfied), 6 monthly moving average100.................................................................

80.................................................................

26% personal distribution * $211m
28% mortgages $224m

60.................................................................

24% cards and merchant services $193m
40.................................................................

%PERSONAL DIVISIONEARNINGS BY BUSINESS

22% banking products $174m

june
96

* includes private and rural banking

june
97

june
98

peer banks

june
99

anz

june
00

june
01

june june june
02
03
04

regional banks‘Retail is detail’, but it's also about personal connections. That means youneed energised people who feel good about what they’re doing, who see how
they contribute, and who want to engage customers in a real discussion about
their needs.

EnergyMomentum

Efficient

PeopleServiceCommunity

24 I business divisions

INSTITUTIONAL DIVISION
AIMING TO STAY A MARKET LEADER
A CONVERSATION WITH STEVE TARGETT

Relationship

GrowthBalance

Customer

The Institutional Division provides financial services tolarge corporations, institutions and governments. It brings
together customer relationship management with ANZ’s
specialist investment banking businesses of financial
markets, corporate advisory services and trade andtransaction services. Steve Targett, who joined ANZ thisyear from Lloyds TSB in the United Kingdom, is theGroup Managing Director of the Institutional Division.
Staying a market leader
ST: It’s been a tough landscape out there for us this year.
There has been intense competition, asset spreads havebeen contracting and there’s been a lack of volatility in financial
markets.
We have a great franchise and a good overall business model.
Our industry segmentation model is a key strength for us and it’s
been a way of differentiating ourselves with clients.

Leadership

Discipline

We’re now pushing that even further and looking at how we
can be effective in a range of more specialist industry sectors.
We have also made good progress working with our colleagues
in corporate banking on an initiative called Wall Street to Main
Street – in other words taking investment banking capabilities
into our core franchise in the corporate bank.

Being relevant to our customers
ST: The next thing for us, which is really critical, is building on
our strengths in presenting ourselves to clients and making it
seamless.
The biggest competitive issue we have is just continuing to outexecute our competitors in the view of our clients. We’ve got tostay relevant in terms of understanding their needs and giving
them the right solutions. That sounds motherhood and apple pie
but that’s what works – getting the right people in the right jobs
in front of clients.

business divisions I 25

The growth challenge

Balancing the international portfolio

ST: The other part of our challenge is to look at the areas where
we can grow. Our best performing business this year was Tradeand Transaction Services and there’s scope to go out and reallybuild that business in areas like custody.

ST: We’ve done a great job in taking the risk out of our offshore balance
sheet so it’s now only 3% of ANZ’s assets. That’s the result of adeliberate strategy to de-risk and improve the quality of the portfolio.

We also see growth opportunities right across Institutionalbuilding products to sell into other segments of the market that
we haven’t sold into before, such as private banking and doing
more in Asia.

We’ve also announced we’ll exit the majority of our London and New
York based project finance activities through the sale of ourinternational project finance business. As a result we’ve largely
completed a structural de-risking program that has been underway
for a number of years.

We’re also having a fresh look at our distribution and our sales
team. If I look at the way we’ve built the business over recent
years, we’ve put a lot of emphasis on originating business but
now we need more on distribution – in Australia, in New Zealandand in our international business.

At the same time we’re starting to see success offshore bysupporting Australian and New Zealand linked customers in theirglobal banking needs. Here again, our industry specialisation
model is key, like Natural Resources, Utilities and Food, Beverages
and Agribusiness.

And as I said, our industry segmentation model is a real strength
and we can grow the business by specialising further – forexample within Healthcare, taking market leadership into asegment like aged care.

We are developing our business in Asia too, and it’s not just about
lending. We can use our balance sheet to some extent but theopportunities are more around securitisation, developing products
for private bank clients, seeing more of the investment flows andgetting our foreign exchange business performing strongly. Tradefinance is definitely a big opportunity in the region, although
we’re selective about identifying customers, commodities and thesort of markets that we want to play in.

It’s about people
ST: We have to remember this business is about people. We havea real depth in people and I believe we are getting the rightpeople in the right jobs.
Having such a depth of good people means two things for us.
One, our people continue to strive to meet the competition andmeet the strategic challenges that face us. They also challenge
the status quo and we’ll always need that.
The other thing good people do is continue to operate in a very
disciplined way and that’s critical as they bring discipline interms of the deals you originate and the sort of structures you
use. That helps ensure we avoid credit and structural problems
emerging. It’s why the people agenda is critical in this business.

We have a new head for our institutional business in Asia and wehave identified some exciting opportunities so I’m confident we
can grow successfully in Asia.

Being spot on with risk
ST: When I think about growing, I think of first making sure thatwe’ve got the right portfolio balance in terms of risk, that we’ve
got credit risk nailed and we’ve got structural risk nailed. So that’s
an area where we have to be absolutely spot-on.
I think this is a quality business with real potential to grow, andif we manage risk sensibly, that growth will be sustainable.

We’re a market leader and we aim to stay a market leader. To do that, we’ve
got to keep doing the things that show our people and our clients that we reallymean business and that we can get things to market quickly.
%
12

0

-6
-9
-12
-15

-2%

-2%

10%

GROWTH IN NPAT IMPACTED
BY DE-RISKING
2004 v 2003

24% markets $185m
16% corporate & structured financing $126m
de-risking low
impact businessde-risking highimpact business-14%

INSTITUTIONAL DIVISIONEARNINGS BY BUSINESS-3transaction
services-3

markets

3

institutionalbanking6

corporate &structured
financing

9

23% transaction services $181m
37% institutional banking $296m

26 I business divisions

CORPORATE DIVISIONBUILDING STRONGER CLIENT PROPOSITIONS, INVESTING IN GROWTH
A CONVERSATION WITH GRAHAM HODGES

Quality

Freedom

Service

Experience

Success

Innovation

We’ve given our people more ability to manage their own businesses and we haverecognised them for their performance. They feel successful and their successhas allowed us to invest more in growing the business.

$b
20

18.9
15.9

15

19% LENDING GROWTH(net lending asset
funds under management)

CORPORATE DIVISIONEARNINGS BY BUSINESS
14% small business banking $49m
34% corporate banking $118m

1052% business banking $177m
50 '03 '04

business divisions I 27

The Corporate Division is ANZ’s specialist business banking division in Australia, serving businesses from sole traders
to corporations with up to several hundred million dollars in turnover. Graham Hodges is the Group Managing Directorof the Corporate Division.
Building powerful client propositions
GH: We’ve delivered a strong financial performance this year
but that’s an outcome from a number of years of hard work inbuilding a better service proposition for our clients.
It’s what we’ve been aiming to do across each of the businesses.
By having better people and more of them in the marketplace,developing more niche business segments where we can provide
specialist services, and by engaging with the broker market wehave been able to grow market share.

Virtuous circle of growth
GH: We have a strategy in the business called ‘earning theright to grow’. It’s about creating that virtuous circle of growing
revenue and investing some of the revenue growth in thebusiness for a stronger performance in the next year.
It’s something we’ve tried to follow for four years now and it’sworked well for us, but it does require quite a lot of discipline
about the way you invest, where you invest and the paybacks
you get for those investments. Some of the really good options
we’ve found right under our feet. For example, we’re underweightin New South Wales and Queensland so we’ve invested strongly
in putting more people in those markets.

Finding jewels in the business
GH: Growth is also about finding the jewels within the businesswhere we have a high probability of success rather than goingfor long-shot opportunities. For example, we’ve developed nichemarkets where we have specialised in building strong customer
propositions. These include a couple of areas such as pharmacies,
aged care and franchising. This idea is really at the heart of our
specialisation strategy because, in fact, business banking is
made up of a whole lot of specialty sectors.
We have also invested just as much on the risk management
side as we have on the business development side: investingin quality assurance managers and making sure we have theright management information systems keeping everyone alert
to the risk issues.

Linking our businesses
GH: We run corporate banking and business banking as
separate businesses because they have different customer
bases and there are different strategies for each business.
However we’ve created a lot more synergy between the businesses.
I mean, we’re working together to look for business opportunities.
We’re holding customer functions together, we’re referring clientsto each other and we’ve created opportunities for people tomove across from one business to the other to expand theircareer paths.

We’re now taking the same approach with small business – thesole traders and very small businesses with just a few employees.
It will be a strategy that links our business banking capability
with our branch banking capability and delivers a really strong
client proposition. That will take a bit of time but, if we do it well,
we should be able to attract a lot more business customers.

Wall Street to Main Street
GH: Another area we’ve had terrific success in this year is ourWall Street to Main Street strategy. Essentially it’s bringing
investment banking solutions used by large corporations to
mid-sized businesses. So, for example, if you’re a family businessfacing generational change or you’re trying to grow rapidly andyou don’t have sufficient capital to do it but there’s a terrificopportunity to expand your business, ANZ can sit behind you
as either an equity partner, providing leverage finance orproviding corporate finance advice.
It’s a strategy that we’ve been building now for almost five years
but in the past 12 months we have made real progress. And ofcourse it opens a whole wealth of opportunities in terms of what
we can do with our clients and allows us to move them frombeing satisfied to genuinely delighted.
We’ve now offered, for the first time, a product called
Development Capital. This allows fast-growing small businesses
that are performing well, but don’t have sufficient equity andcapital behind them, to take that next step by providing capital
support for them. To see that success happen has been terrific.

Cocktails and gold watches
GH: The other thing, which has been really interesting, is therecognition we have given to people with 30 or more years
service. We have regular functions to recognise people who
perform well and who have done special things in the business.
What’s interesting is that many people who are getting gold
watches for long service are also the ones who have thebest performance.
We’ve got a group of quite experienced bankers who arecontributing significantly. They’ve probably surprised
themselves to some extent at how much more they can do andhow much more energised they can be when they’re given theopportunity and the freedom to get out there and drive things.
These people are actually the mainstay of the business in termsof getting things done and providing that experience to people
who perhaps are still learning how to be effective in the marketplace.
For example, we took on some 60 graduates this year and to see
the cocktail of the really experienced people who’ve been with
ANZ for 20 or 30 years and the energy of the new graduatescoming in, is really quite exciting.

28 I business divisions

NEW ZEALAND
LEADING POSITIONS, QUALITY EARNINGS, CONTINUED GROWTH
A CONVERSATION WITH SIR JOHN ANDERSON

Leadership

Excitement

GrowthBrandsCommunity

Customers

The New Zealand Division, known formally as ANZ National Bank Limited, was created following ANZ’s $4.9 billion
acquisition of The National Bank of New Zealand from Lloyds TSB in December 2003. It is New Zealand’s largest bank
employing 8,500 people with leading positions in all market segments. It operates under two brands, ANZ and
The National Bank of New Zealand. Sir John Anderson is the Chief Executive of ANZ National Bank Limited.
An unusual merger

Getting to know each other

JA: This has been quite an unusual merger. Normally one brandconsumes the other’s name and operations but ANZ and The
National Bank have such a large market share we’ve gone down
a two-brand strategy path. In fact, since the merger, the further
we’ve gone the better it is working.

JA: In late 2003, after we announced the merger, many of us
in the bank received feedback from customers saying: ‘look,
we’re just going to wait and see; we’re not quite sure what
all of this means to us’. We don’t get that feedback now.
Customer feedback and customer growth have been positive.

The approach we followed was to take six months working out
exactly what to do, then rapidly driving integration. There’s a real
logic in this. You really have to know where you’re going so you
can head in the right direction.

In the first six months, everyone got to know each other.
ANZ and The National Bank staff have very similar values
which have seen both brands and the teams working extremely
well together. We have very skilled and competent people in ourbusiness in both brands.

business divisions I 29

We have also spent time setting up good governance structures.
So, you might say we’ve spent time getting all the building blocks
in place to go forward. While we’ve been doing that, we’ve still
been able to do business as usual very well.

Excitement and urgency

Enhancing our ability to grow

JA: For both ANZ and The National Bank it has been exciting
for the two companies to come together under one group.
ANZ had started on a very positive path of reviving the ANZ
brand in retail markets in 2003. It has done very well in othermarkets, like institutional banking.

JA: By and large we’ve already finished non-technology
integration. That means 95% of our people are now focusedon the business rather than being distracted by integration.

On The National Bank side, the retail businesses are still
growing well, while the integration with ANZ businesses havestrengthened the business market and operational areas.

There’s been a lot of time spent on reviewing the way forward forsystems because it’s not only a New Zealand solution that we’relooking at, it’s also a Group solution. We’ve reached the rightoutcome, which for retail involves maintaining separate systems
to reduce the risk and complexity of integration and place greater
emphasis on maintaining market share and future growth. We
plan to integrate all our other systems by the end of 2005.

We’ve got a plan, a commitment, and a way forward which has
been communicated to all our people. There’s a sense of
excitement and urgency in the business now many of the
distractions of integration are out of the way.

That’s the battleground
JA: Our three competitive levers are price, speed to market andcustomer service. That’s the battleground.
The National Bank has had a huge advantage in having a single
customer view. That’s a key driver of our high levels of service,satisfaction and growth in the personal businesses. We areaiming to have that capability in both brands.
The other lynchpin to customer relationships is the businessbeing part of the community. Both ANZ and The National Bank
are recognised for their community involvement and this willcontinue in the future.

Continued growth
JA: We’ve got great businesses now the infrastructure is
set up. We’re now there in every market and we’re making
sure we have the leading edge and are getting it right in servicing
the customer.
We have also expressed the intention that we would look at
floating some of the ANZ National shares in New Zealand. We
can't do that until integration has finished, of course, because
you have got to have stable, quality earnings to go forward on
and there are many other complex issues to be considered. But itwould give a whole new emphasis and impetus to staff and to
customers because then they feel even greater ownership of theorganisation. So it's quite an interesting time ahead.

We’re planning on continued growth and delivering quality earnings.
Quality earnings underpin the business strategy and provide the platform
for growth in market share in the future.
%

%

%

100
......................................................................

25

100

80

85

anz

85

80

......................................................................
......................................................................

78

15

86

20

60

60

......................................................................

1040.................................................................

0......................................................................

5

sept
01

westpac

sept
02

anz

nbnz

sept
03

asb

sept
04

bnz

kiwibank

ANZ AND NBNZ SHARE OFPERSONAL CUSTOMERS(MAIN BANK) IS STABLE
Source - ACNielsen Consumer
Finance Monitor

STAFF
SATISFACTION
Based on ANZ
Snapshot Survey
and NBNZ
Viewpoint Survey

20

0

feb feb
03 04

40

20

0

oct feb
02 04

nbnz

30 I business divisions

ASIA PACIFIC
CREATING A NEW PLATFORM FOR GROWTH
A CONVERSATION WITH ELMER FUNKE KUPPER
ANZ’s Asia Pacific Division covers 10 countries in the Pacific where it provides a full range of retail and commercial banking
services and 11 countries in Asia where it primarily serves Australian, New Zealand and Asian corporations doing businessacross the region. The Division also has a local retail partnership with Panin Bank in Indonesia and a credit card jointventure with Metrobank in the Philippines. Elmer Funke Kupper is the Group Managing Director of the Asia Pacific Division.
Extending leadership in the Pacific
EFK: In Asia Pacific we have three big growth agendas. The first ofthese is in the Pacific where we’re already the leading financial
institution. It’s really one of our core ‘domestic’ businesses,
like Australia and New Zealand.
Growth in the Pacific can come from three areas: growth in thenumber of customers, growth in the business we do with eachcustomer and growth in the number of markets we serve.
Given our size in the region, organic growth may look harder for
us. However, there are still opportunities based on improvements
in our products, our sales approach and customer service. For
example, our investments in electronic banking and insurance
have given us new revenue streams, and by offering specialist
advice in areas such as tourism, we can give customers more
complete solutions.
Finally, we can grow by entering countries that we are not intoday. We’ve proven with a number of smaller acquisitions inrecent years that we can add real value, not just to the banks
we acquire, but also to customers by offering new products andservices.

Building relationships
EFK: Our aim in the Pacific is to be the number one financial
institution and most respected company in the region. Part ofour success though, will have to come from building stronger
relationships with local communities and supporting the
economic growth in the region. A good example of this is in Fiji,
where we are working with the United Nations Development
Program to bring basic banking services to 400,000 people inremote rural communities.
There’s also a great pool of talented people in the region andincreasingly we’re relying on our local staff to run the business.
It’s been a great journey for us all in the Pacific over the better
part of a decade and very successful for ANZ.

Growing the Asian network
EFK: The second part of the growth agenda is our ANZ network
in Asia. We can’t underestimate the importance of Asia toAustralia’s future. The flow of trade, investment and people willcontinue to grow. For example, China is undergoing the greatest
economic expansion ever witnessed anywhere in the world.
ANZ is in a unique position to grow with the region. There arevery few banks that have positions in 11 Asian countries, andcombining this with our traditional strength in corporate banking
really gives us something to build on. We’ve shown a commitment
to the region by supporting our customers through the financial
difficulties Asia faced in the late 90s. We’re now adding moreexpertise and people in trade finance, capital markets andforeign exchange to deliver the right solutions to our customers.
This expansion follows several years of ‘de-risking’ the businessand putting tighter asset writing policies in place to establish afoundation for growth. The result has been several years of low
credit losses and non-accrual loans are down to very modest levels.

Partnerships in Asia
EFK: The third growth agenda is our consumer business in Asia,
where economic growth is fuelling tremendous growth in retailbanking.
Increasing wealth is leading to higher levels of savings - weestimate US$1.7 trillion of new retail savings will be generated
in Asia in the next five years. Growth in savings is going to be
rapidly followed by higher spending and increased borrowing.
The growth rates in financial services which result from this arelikely to dwarf what we will see in well developed markets.
We believe we can participate in this growth by developing
partnerships with local banks. In most markets, local banks tend
to dominate in retail banking and Asia will be no different. So
joining forces with a local bank that can benefit from ANZ’s
experience in retail banking makes a lot of sense.
The idea isn’t new for us and we already have experience inmaking it work. For example, with Panin Bank in Indonesia andwith Metrobank in the Philippines. In each case, we have aminority shareholding and we add value through our experiencein credit cards, mortgages, car finance and retail distribution.
Both those businesses are doing well.
Over the next five years we’ll build more partnerships with afocus on retail banking. We’ve recently signed a Memorandumof Understanding with a Shanghai-based credit cooperative andare now working with them to improve their risk management
processes ahead of them becoming a commercial bank.
This strategy isn’t risk free and we’re careful in selecting ourpartners. We’re focusing on consumer banking, which isfundamentally lower risk than corporate banking, we’re making
modest investments and we’re contributing ANZ’s expertise inrisk management and personal banking. This approach gives us
a really good chance of success.
The upside of this strategy could be material over the longer
term. Asia has been on the recovery path from the economic
issues of the late 1990s. Wealth is growing very rapidly andfinancial institutions are moving to take advantage of this.
Our strategy is to give ANZ a new growth platform by participatingin Asia’s economic expansion.

business divisions I 31

Asia Pacific is an important part of our long-term future and it’s a newplatform for ANZ’s growth. We already have great existing businesses in theregion and what we’re building now is a number of new options that cangive us growth five years out or more.

Partner

Low-Risk

GrowthOpportunity

Focus

Local

%
PACIFIC MARKET SHARESTRONG GROWTH IN CARDSON ISSUE IN ASIA

600

298

%

500

Metrobank JV formed in October 2003

100
400

243
232

300

147

94

100 63 61 58 46 45 40 36 34 28

195

100

237

200

20

0

240

png

solomon is.

cook islands

timor leste

fiji

tonga

am.samoa

vanuatu

40

samoa

60

kiribati

80'01 '02 '03 '04
0

metrobank jv
indonesia

32 I business divisions

ESANDA
THINKING OUTSIDE THE SQUAREA CONVERSATION WITH ELIZABETH PROUSTSpecialist

CultureThe market has been a little tougher this year, but we’re demonstrating we canturn around a mature business and create growth by thinking outside the squareand creating a more entrepreneurial culture.

Esanda is ANZ’s specialist asset finance business inAustralia, operating as UDC in New Zealand. It is Australia’s
largest asset-based finance company and a leading providerof vehicle and equipment finance solutions and fixed interest
investments. Elizabeth Proust is Esanda’s Managing Director.
The growth challenge
EP: We had a solid result this year, having delivered 11%
earnings growth. Some of our traditional business however ismature – relatively low growth, low return. So, the challenge
for us is to see how we can turn some or all of our businesses
into growth businesses.
Our focus has increasingly been to emphasise the partsof the business which are growing faster and to invest in newopportunities. For example, car dealerships are an importantsource of business to us but it’s a very competitive area and wehave had great success in providing more finance for cars directly
to end-customers though channels like the internet.
What we are trying to do is to strip away some of the bureaucratic
constraints and make our people more entrepreneurial. It
gives them the opportunity to show that we can grow within
our traditional business and by creating new businesses.

Creating a successful culture
EP: We have also focused on creating a successful culture. We have
had a series of programs with our people that have played an
important role in making the business more vibrant and a greatplace to work.
I’m also passionate about diversity and its role in the businesses
success. It’s both an economic and equity issue. Our people shouldreflect our customer base and the broader community. That includes
ethnic, gender and age diversity. So when I am hiring managers I
make sure there is a woman on every selection panel and that there
is someone from another part of our business. And when I use

recruitment firms to find new people, they need to think outside
the square and find a wide range of people who can do the job.
It’s not just ensuring women get into leadership roles, forexample. It’s also helping get them into line management
so they are seen as being able to manage people, be responsible
for large budgets and for running a business. We need more ofthat in Esanda and UDC, and more broadly within ANZ.

Simplicity, savvy, focus
EP: The other part of being successful and growing is really
understanding customers. Our customers aren’t buying our
products; they’re buying a car or a truck and our products
are a means to an end. So what they want from us is simplicity:that we’re easy to do business with and we will get it right thefirst time.
That’s why we have worked to reengineer our processes to makeEsanda easier to do business with and to redevelop the Esanda
brand. The challenge for finance companies is that products are
increasingly commoditised and we want to stand for somethinga little different. For us, it’s simplicity, savvy, focus, independence.
We have had a very positive response to our new positioning.
Our staff like it, our customers like it and, this will sound likea small thing, our customers are now for the first time getting
statements in a user-friendly format. I see that as a real signthat we are changing.

business divisions I 33

ING AUSTRALIAGETTING BACK TO GROWTH
A CONVERSATION WITH PAUL BEDBROOK

GrowthEfficientCompulsory superannuation is a growth engine and that will continue into theforeseeable future. Greater complexity in tax and retirement income policies
has seen the need for advice increase, with a huge increase in the financial
advice and planning industry.
ING Australia is a joint venture between ANZ and leading
global financial institution, ING Group. ING Australia is
one of Australia’s leading fund managers and life insurers
with over $30 billion in assets under management. Paul
Bedbrook is Chief Executive Officer of ING Australia.
Growth and efficiency
PB: It’s been a good year for us, for the joint venture. We havecome through a tougher period, with the bear market in 20012002 and part of 2003, and now business performance iscontinuing to improve.
After a period of industry consolidation the major players now
have a much bigger market share. The industry is maturing and is
now in what I would call the efficiency phase. It means managing
performance is about operating efficiently on low margins andhigh volume, whereas previously, in the mid and late 90s, it was
all about growth with minimal finesse.

Providing solutions
PB: Around 95% of our business is through intermediaries, suchas adviser groups. So a big part of our philosophy is to service
advisers well and to provide solutions to facilitate what they’retrying to do with their client base.
Having said that, we certainly have a consumer brand which isvery well thought of. Our advertising campaign featuring Billy
Connolly communicates that ‘we speak your language’, and ‘weidentify with you as consumers’. So a lot of what we do isensuring the business lives up to the brand. We’ve made good
progress but there’s still a way to go.

Long term business
PB: Managed funds and life insurance are long-term businesses.
They’re about building funds under management and life
insurance premiums – you have to have business on the books
for a period of time to get the returns coming through.

One of the challenges is how you grow your financial planning
network when for the first year or so they don’t make you money,
but they will in the long run.
To be more successful in terms of growth we need more planners
over time. For ANZ it probably means a range of planners: somethat work at the medium end of the market - the averagecustomer; others that move more upmarket and perhaps 20% ofplanners that can deal with the private bank clients and can havemuch more sophisticated strategies that suit our clients.

People are paramount
PB: This is actually a people/relationship business – they’re
absolutely paramount. We have a range of programs around thedevelopment of all our staff. For example, we’ll get a businessschool to run courses for first-time supervisors. We have aprogram at the moment with Macquarie University, which is
focused on developing our middle to senior managers. In
addition, the ING Business School, based in Amsterdam, runs
programs in Europe and locally for senior executives.

Looking ahead
PB: We need to get strong growth going again on the funds
management side, instead of relying on recent gains throughefficiencies. We need to grow inflows and our life insurance
business, which does well, but which we think we can acceleratecompared to where it is at the moment – that’s exciting for us.
Part of this involves growing our distribution network. We canincrease planner numbers organically but there may also be
opportunities, where advisers are reviewing where they’re going
to be positioned longer-term, for acquisition opportunities.
And of course, we’ll be pushing very hard with ANZ financial
planning to help that network grow.
There are really four priorities for ING Australia now – we’ve got togrow funds under management, accelerate the insurance growth,
grow distribution numbers and continue the efficiency program.

34 I business performance

OUR

BUSINESS PERFORMANCEPERSONAL
Personal Banking Distribution (including Rural and Private Banking),
Banking Products, Cards and Merchant Banking Services, Mortgages$M
Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2004

2003

%

2,879
(1,551)
(183)
1,145
(343)
802
53.9%
8,934

2,593
(1,439)
(169)
985
(292)
693
55.5%
8,795

11%
8%
8%
16%
17%
16%
– 3%
2%

PERFORMANCEACHIEVEMENTS> Profit – Profit after tax increased by 16% with profit growth of 58%
in Cards and Merchant Services, 22% in Banking Products and 6% in
Personal Banking Distribution offsetting a 2% reduction in Mortgages.
> Cost to Income Ratio – Decreased by 53.9%. Income growth of 11%
outpaced expense growth of 8%. Income growth driven by lending
volume growth of 18%.
> Risk Management – Provision for doubtful debts increased 8%, driven
by lending volume growth. Non-accrual loans and net specific provisions
remained low reflecting sound credit quality.
> Staff – 3% increase in staff in Mortgages to service continued highlevels of customer activity, a temporary increase in Card and MerchantServices staff in the first quarter to handle the higher level of calls
associated with changes associated with the Reserve Bank of Australiainterchange reforms, an increased number of financial planners in
Personal Banking Distribution and increased staffing in Rural Banking.

> Maintained product leadership - our leadership has been recognised
through Personal Investor Bank of the Year 2004, Home Lender of theYear 2004 and Best Transaction Accounts 2004 (Money Magazine).
> Improved service delivery - customer satisfaction at 73.6% (Roy Morgan
August 2004) up 7.2 points in the past 12 months and compares to thepeer average 66%.
> Improved sales productivity and cross-sell - both sales productivity andcross sales are up, benefiting from our investment in customer
relationship management.

INSTITUTIONAL

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

1,927
(701)
(159)
1,067
(279)
788
36.4%
2,926

1,922
(675)
(165)
1,082
(280)
802
35.1%
2,795

0%
4%
– 4%
– 1%
0%
– 2%
4%
5%

Institutional Banking, Markets (formerly Foreign Exchange andCapital Markets), Trade and Transaction Services , Corporate
and Structured Financing

GOALS> Accelerate the momentum in our specialist businesses> Grow deposit share.
> Deepen relationships with our customers.
> Move costs from "back" to "front" (ie enhance our branch networkand streamline process costs).
> Further strengthen our people and culture initiatives.

PERFORMANCE> Profit – After adjusting for the impact of the appreciating Australian
Dollar on translation of offshore earnings, profit after tax was flat. This
result was also affected by the substantial progress made in refocusing
the business to lower risk sectors.
> Cost to Income Ratio – Increased 4% due to flat revenue growth, and
4% increase in expenses due to pension funding costs in the United
Kingdom ($8 million), the impact of the consolidation of TradeCentrix
processing hub, increased technology investments in Markets andTransaction Services, and higher staff costs.
> Risk Management – Provision for doubtful debts was 4% lower
reflecting lower offshore exposures and modest asset growth in Australia.
> Staff – Further investment in Markets capability in London and Asia,
growth in Custody, Commodity Trade Finance in Asia, and International
Payments.

ACHIEVEMENTS> Deepened domestic position - Underpinned by increasing the range of
products and services offered to our institutional clients.

> Developed new revenue streams - Through broadening ANZ's
distribution capability in domestic and offshore markets.
> Built visible offshore franchise - Leveraging the strengths of ourdomestic business and repositioning relationship management of global
corporate clients, particularly in the Northern Hemisphere. In Asia,
continued focus on capability development.
> Maintained excellence in risk management - Established central
Institutional Risk and Compliance function to manage operating risk andcompliance obligations for all divisions (domestic and overseas).

GOALS> Increase revenue and cost efficiency by combining our Markets businesses

and providing a sharper customer focus.
> Continue to maintain excellence in risk management through low offshore

exposure and further investment in our compliance and risk infrastructure.
> Revise the Institutional business model to increase customer focus, leading
to deeper product penetration and greater non-lending income.

business performance I 35

CORPORATE
Corporate Banking Australia, Business Banking Australia
Small Business Banking

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

810
(259)
(59)
492
(148)
344
32.0%
1,671

733
(234)
(55)
444
(133)
311
31.9%
1,596

11%
11%
7%
11%
11%
11%
0%
5%

PERFORMANCE> Profit – Increased by 11% with net interest income growth of 11% due
to strong volumes in average lending and average deposits. Businessgrowth from increased activity with existing customers and new customer
acquisition through a competitive customer service proposition.
> Cost to Income Ratio – Remains well controlled at 32.0%> Risk Management – Provision for doubtful debts increased $4 million(7%), driven by growth in business volumes partly offset by changes in
the portfolio risk profile. Credit quality in the Business Banking sector
remains sound with the portfolio quality reviewed every quarter to detect
any early adverse trends.
> Staff – Continued investment in people with capability training and a
5% increase in front line and specialist staff.

ACHIEVEMENTS> Maintained strong business growth - Continued to expand the businessin under-represented geographies; developed our broker origination
channel; grew specialist business propositions (eg. franchising andinvoice finance); and increased momentum in delivery of ‘Wall Street
to Main Street’ solutions to Corporate Banking customers.

NEW ZEALAND
ANZ New Zealand Banking, ANZ New Zealand Mortgages,
The National Bank of New Zealand, ANZ New ZealandConsumer Finance> Improved customer services and turn around times due toimprovements in straight through processing for loans and customer
documentation and automated credit scoring technologies; re-engineered
frontline processes.
> Expanded specialist business offerings - Launched and developed new
specialist business offerings, including pharmacy and aged care.
> Enhanced staff and management capabilities - Developed capability
based people learning and development curriculum for all frontline roles;
focused on re-alignment of leadership of the business and targeted
development of talented staff.

GOALS> Maintain strong business growth, including further development ofspecialist businesses and customer propositions.
> Establish sustainable business model for new Small Business Banking
segment.
> Further invest in platform and process efficiencies - “Easy to dobusiness with”.
> Foster specialist and leadership capabilities.

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

1,817
(866)
(99)
852
(268)
584
47.7%
7,988

756
(402)
(37)
317
(106)
211
53.2%
2,939

large
large
large
large
large
large
– 10%
large

PERFORMANCEACHIEVEMENTS> Profit – Profit after tax increased $373 million, with the National Bankof New Zealand (NBNZ) contributing $375 million (excluding integration
costs of $11 million) since acquisition on 1 December 2003.
> Profit after tax in ANZ New Zealand businesses increased $9 million,
despite a $3 million reduction resulting from the depreciation in the NZD
over the year, of which Cards increased $9 million, ANZ New Zealand
Banking increased $3 million, whilst Mortgages reduced $4 million.
Integration costs incurred in the year totalled $28 million after tax.
> Cost to Income Ratio – Improved to 47.7% inclusion of NBNZ which has
a lower Cost to Income Ratio than ANZ New Zealand Business (NBNZ
42.1% for 2004).
> Risk management – Credit quality remains sound with the increase in
the provision for doubtful debts charge being driven by the NBNZ
acquisition. Economic loss provisioning methodologies have been
implemented in NBNZ and a $62 million charge recognised in the tenmonths to September 2004. The NBNZ businesses added $81 million togross non-accrual loan volumes with non-accruals in the ANZ New
Zealand businesses reducing.
> Staff – Aside from the additional staff from NBNZ, we added staff in
ANZ New Zealand Banking (frontline) and Mortgages (support) to copewith increased business volumes.

Integration of the two New Zealand registered banks has successfully
progressed through a number of key milestones. The most importantof these was completion of legal amalgamation on 26 June 2004.
On 28 June 2004, the amalgamated registered bank in New Zealandchanged its name from ANZ Banking Group (New Zealand) Limited to
ANZ National Bank Limited.
To date, the integration program has delivered:> The completion of merged organisation structures for all the businesssegments.
> Alignment of People Capital policy and processes.
> Implementation of the Rural Integration Plan.
> Integration programs completed for most central support areas.
> The merging of Institutional Markets operations, including the
restructuring of dealing rooms.

GOALS> Manage a successful integration.
> Leverage the complimentary strengths of both banks to build a better bank.
> Accelerate the turnaround of slow growth businesses.

36 I business performance

ASIA PACIFIC
Provides primarily retail banking services in the Pacific Region
and Asia, including ANZ’s share of PT Panin Bank in Indonesia

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

295
(138)
(23)
134
(23)
111
46.8%
1,711

289
(142)
(19)
128
(28)
100
49.1%
1,624

2%
– 3%
21%
5%
– 18%
11%
– 5%
5%

PERFORMANCE> Profit – Increased by 11%. Excluding exchange rate movements net
interest income grew by 16% as external assets increased 18%, and otheroperating income grew 3% with fee income increasing 20% driven by a
16% increase in loan volumes and higher transaction volumes in theIndonesian Cards business.
> Cost to Income Ratio – Improved to 46.8% due to centralisation ofservices to Quest, our Fiji shared services centre.
> Risk Management – Credit quality remains sound with the provision for
doubtful debts increasing due to growth in credit card volumes inIndonesia. The increase in net specific provision results from a number ofrecoveries/provision reassessments in 2003.
> Staff – Increased capability development and training in Quest to meetincreased demand in the Pacific operations.

ACHIEVEMENTS> Best Practice Business Operating Model - Successful implementation ofstandardised sales and service operating practices in all Pacific countries.
> Leveraged the strengths of the domestic businesses into Asia –Established two ‘hubs’ in Hong Kong and Singapore and increased
presence of new product/industry experts.

ESANDA AND UDC
Provides vehicle and equipment finance and rental services.
Operates in Australia as Esanda and Esanda Fleetpartners andin New Zealand as UDC and Esanda Fleetpartners> Improved decision-making around asset and liability management andpricing practices - Increased rigour in capital and liquidity management
has resulted in improved funding positions across the Pacific.
> Continued centralisation into Quest - Additional back office functions
relocated from a number of Pacific countries.
> Further expanded sales model focusing on customer relationships –Customer advocacy and complaints frameworks being rolled out
progressively across all Asia Pacific countries.

GOALS> Continue to build a viable offshore franchise which adds value to ourglobal customers.
> Maintain our leadership position in the Pacific though improved
processing efficiency and service delivery, enhanced sales productivity
and deeper customer relationships.
> Participate in consumer banking growth in Asia by building on existing
partnerships and developing new opportunities.

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

455
(186)
(67)
202
(59)
143
40.9%
1,292

428
(179)
(63)
186
(57)
129
41.8%
1,311

6%
4%
6%
9%
4%
11%
– 2%
– 1%

PERFORMANCE> Profit – Increased by 11% with 3% growth in net interest income
resulting from continued strong new business writings. This was partly
offset by the run-off of higher yielding loans and increasing new businessfrom better quality, high growth segments that are lower margin. Other
operating income increased by 21% due primarily to changes in the fee
structure for business lending, fees on higher new business writings andincreased fees from value-added fleet management services.
> Cost to Income Ratio – Improved to 40.9% due to continued control of
expenses and growth in income.
> Risk Management – Provision for doubtful debts increased by 6%
driven by increase in lending volumes. Net specific provisions were $25
million lower than last year, reflecting the $20 million write-down
associated with residual value losses on aircraft in the 2003 year andcontinued improvement in the underlying credit quality of the loan book.
> Staff – Continued focus on capability development and ‘back office’ efficiency.

ACHIEVEMENTS> Grew usage segment and lifted returns on the traditional asset financebusiness - Delivered substantial growth in the volume of funded vehicles
and equipment finance; launched vehicle usage product into SMB

segment; traditional finance business continued to improve.
> Redeveloped and revitalised our brand - Successful launch of the Esanda brandwith new advertising improved customer awareness and willingness to trial.
> Improve sales capability through improved training and new incentive
scheme – Focused on technical and behavioural skill building, regular sales
conferences to enhance learning across the teams; introduced new
incentive scheme to encourage revenue growth performance.
> Progressed implementation of operations platform and expand to New
Zealand and Esanda FleetPartners – Completed process re-engineering
programme and significantly improved productivity during a time ofbooming new car sales.

GOALS> Grow the Fleet and asset usage businesses across all customer segments
in Australia and New Zealand.
> Build the Consumer Finance business through new product development.
> Grow Commercial Finance through existing ANZ relationships and vendor
relationship development.
> Continue to improve the cost efficiency while investing in future growth.

business performance I 37

ING AUSTRALIA
A joint venture between ANZ and ING Group, provides integrated
manufacture and distribution of wealth creation, management
and protection products and services aligned to ANZ distribution
and the open market

$M

2004

2003

%

ANZ share of INGA earnings
ANZ Capital hedges
Net Funding Cost
Net return to ANZ

138
(13)
(17)
108

99
(6)
(11)
82

39%
large
55%
32%

PERFORMANCE

GOALS> Profit – Profit increased 32% driven by increased funds management
and capital investment earnings with strong investment markets in 2004
and global uncertainty impacting equity market returns in 2003. Risk
income increased with higher sales of insurance products through the
ANZ network and a favourable claims experience.
> Risk Management – Successfully managed transition to new regulatoryenvironment under Financial Services Reform Act. Significant additional
staff training and process redesign completed.

> Grow our business – in both funds management and life risk.
> Be efficient and cost effective – implement projects to simplify productsystems and improve processes.
> Be easy to do business with – deliver e-business and workflow
initiatives and target straight through processing.
> Improve accountability and focus – realign organisation structure along
key product lines.

ACHIEVEMENTS> Improved cross-sell to bank customers – Alignment of sales andorganisational structures continues to improve cross-sell particularly ininsurance.
> Strengthened Life Risk business – Increased market share, income andwon an award from Personal Investor magazine for the income protection
product.
> Enhanced product range – Re-launched range of investment platforms –OneAnswer – a simple flexible retail offering; Optimix – a specialist multimanager solution; and PortfolioOne – a premium wrap account service.
Launched a new Term allocated pension.

GROUP CENTRE
Operations, Technology, Shared Services, Group People Capital,
Group Risk Management, Group Strategic Development, Group
Financial Management including Treasury and significant items

$M

2004

2003

%

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Staff (FTE)

369
(325)
(42)
2
(67)
(65)
4,232

324
(157)
(106)
61
(41)
20
4,077

14%
large
– 60%
large
63%
large
4%

PERFORMANCE> Profit – The $65 million loss in 2004 was due to an additional $128
million goodwill amortisation largely associated with the NBNZ acquisition
that is booked in the Group Centre. Mismatch profit in Treasury reduced by$31 million after tax and the replacement of TrUEPrS with StEPS reduced
profit by a further $35 million after tax.
These were partly offset by a reduction in the doubtful debt charge forunexpected offshore losses ($45 million after tax) and $84 million profit
after tax on significant items including the gain related to buying back the
TrUEPrS securities ($84 million), the gain on finalising the ING Australia
completion accounts ($14 million) and incremental NBNZ integration costs($14 million).

ACHIEVEMENTS> Extended customer access via web for “self service” enquiries - system
built to enable corporate customers ready access to voucher images via
internet channels.
> Replaced New Zealand payroll system - project successfully completed.

> Rolled-out telling platform in branch network - project successfullycompleted and rolled out across branch network in Australia. The new
telling system is an innovative, flexible, and easy-to-use telling systemthat will serve ANZ well for many years.
> Implemented managed vendor project for learning delivery - managed
vendor system was integrated with ANZ's on-line training system toenable ANZ staff to select from 130 contracted external providers and coordinate training requirements.
> Expanded wholesale funding base - Issued ANZ StEPS and US Stapled
Trust Security together with diversified currency issuances.

GOALS> Implement NZ systems and infrastructure integration.
> Relocate the disaster recovery and development data centre to new facility.
> Develop long-term strategy and options for streamlining the corebanking systems and enhancing single-view-of-the-customer capability.
> Pilot workflow automation initiative in the Operations environment anddevelop opportunities for further application.

38 I the community

BUILDINGCOMMUNITY TRUST

ANZ’s aim to deliver sustainable value recognises that companies do not serve
shareholders exclusively, but others as well. Part of delivering on our aspiration
involves engaging and contributing to the community.
ANZ’s approach to building community trust has increasingly been
to address those issues which directly relate to the relationshipbetween financial services organisations and the community.
Our work has been guided by Australia’s first national survey ofadult financial literacy conducted in 2003. It identified a strong
association between socio-economic status and financial literacy.
The research indicated the 20% of people with the lowest financial
literacy were over-represented by those with lower educationlevels, those not employed, people with lower incomes, low year
savings and people at both extremes of the age profile – 18 to 24
year olds and those aged 70 years and over.
ANZ’s focus recognises that issues around the effective use andmanagement of money, and access to financial products andservices can have a profound effect on people in the mostvulnerable sections of the community. For many others in thecommunity, who understand the fundamentals of money
management, empowering them with stronger financial skills,
knowledge and information means they are better placed to makeinformed decisions about their money and avoid being misled on
financial matters.

Research from the pilot indicates matched savings programs canmake a real difference by helping people develop financial skills,
change their saving and spending behaviours and create assets fortheir families, which can improve their circumstances. As a result,
ANZ has announced it will contribute a further $1 million to expand
the program with its existing partners and through a newpartnership with The Smith Family in Queensland.
ANZ was recognised for Saver Plus in the Prime Minister’s 2004
Awards for Excellence in Community Business Partnerships in the
Victorian Large Business category.

MoneyMinded
ANZ has worked with the Australian Financial Counselling and Credit
Reform Association and the Australian Securities and Investments
Commission to develop MoneyMinded, Australia’s firstcomprehensive adult financial education program.

Making a Difference

MoneyMinded is not ANZ-branded and has been developed
specifically for use by financial counsellors and community
educators, recognising they play a critical role in reaching adults
who can benefit most from financial education. ANZ will partnerwith 100 community organisations during the next five years todeliver the MoneyMinded program to 100,000 people nationally.

By taking targeted steps to improve levels of financial literacy,
encourage savings and develop more accessible products andservices, ANZ believes it can make a long-term difference to thecircumstances of people facing disadvantage.

The Brotherhood of St Laurence will be the first organisation to use
the program. It will use MoneyMinded in its work with people on low
incomes and will facilitate training of other community organisations
interested in using the program.

ANZ has also sought to differentiate itself by the scope and natureof its approach. This has involved:

Community Development Finance> showing community leadership on financial literacy> funding research and knowledge-building activities which assist
policy makers, community organisations and the financial services
industry> addressing the needs of ANZ’s own customers through better
communication, simpler products, and aware and informed staff> creating genuine business-community partnerships to deliver
innovative programs.

Saver Plus
During 2004, ANZ conducted a pilot matched savings program,Australia’s first. Called Saver Plus, it has involved establishingpartnerships with The Brotherhood of St Laurence in Melbourne
Berry Street Victoria in Shepparton, Victoria and The Benevolent
Society in Sydney to assist 270 families on low incomes to savefor costs associated with their children’s secondary education.
ANZ matches every dollar saved with two additional dollars andprogram participants have also been provided with financial skills
training and personal coaching.

ANZ has also conducted a community consultation and research
program to examine how community development finance can bringabout greater levels of financial inclusion in Australia. Community
development finance is an umbrella term which encompasses
programs such as small loans, loans for enterprise development,
matched savings schemes, financial counselling and advice andfinancial literacy training.
As a result we will develop new products during 2005 to reduce theexclusion of low-income earners from mainstream financial services
and provide alternatives to ‘pay day’ lenders and ‘loan-sharks’. We
will also facilitate opportunities for indigenous Australians to accessmicro-credit and to encourage savings.

Financially Fit Workforce
We also believe it is difficult for us as a bank to build trust in thecommunity if people are confused because our products and fee
structures are complex, they do not understand their financial
position or cannot access mainstream financial services. These issues
are fundamental to our customers’ relationship with ANZ and relate
directly to our responsibilities as a provider of financial services.

the community I 39

This is why we have taken steps to create simpler products, sought
to communicate with customers in Plain English and invested inadditional training for our staff to help identify and assign people
struggling with financial literacy or facing financial difficulty. We
have also created a range of materials to help people who want touse and manage their money effectively.

We have made good progress in building the community’s trust
but we know there is still much to do. We believe we can take ourrelationship with the community to a new level by focusing on
those areas that directly relate to our responsibilities as a financial
services company and delivering innovative responses that make agenuine difference to our customers and the community.
PICTURED: Michelle Wakeford and Sonia McCann, Brotherhood of St Laurence, Frankston

SAVER PLUS PARTICIPANT

STAFF INVOLVEMENT"Saver Plus has meant an amazing change in my life.
It’s taught me to save from a background of nothing."“It’s been a learning curve for me but also for the rest of
the branch, about the things that we take for granted.”

Julie, a young mother in Shepparton, Victoria is participating in
ANZ’s Saver Plus program with our partners at Berry Street Victora.

Dianne Mills is ANZ’s Karingal Branch Manager in Victoria.
Participants in Frankston Saver Plus program have accounts at her
branch and Dianne has been assisting in financial literacy sessions.

“The kids can ask me for something now and I can say I’m capableof saving for that. I’ve never felt so proud of anything in my life.”“It’s not just something that’s taught to me and then goes away.
It’s a long-term tool that I can also share with my children.”
Her immediate target is to have enough money to buy a computerand printer for her son who is entering Year 8 in 2005.
Julie says her newfound budgeting skills will also enable her topay for uniforms, school fees and school camps each year.

“The biggest learning for me is knowing the challenges that people
in difficulty face. It was a big shock when I went to the introduction
sessions and there were families with children who had never been
on a school camp or didn’t have the right uniform. That hit hard.”“It’s just been a fantastic opportunity for everyone. First for ANZ
to get out there in the community and give something back.
And for the people involved it’s an opportunity for them to save,
be rewarded and to get a feeling of empowerment about theirfinances.”

40 I the environment

SUSTAINABLE GROWTH AND

THE ENVIRONMENTPICTURED FROM LEFT: Richard Gates, John Clarke and Mike Grime

ANZ recognises it has an opportunity to reduce its environmental
impact and improve the natural environment. This includes
managing the impacts from our day-to-day activities and thecompanies we lend to by financing projects of environmental
benefit, and contributing to change by working with others.
We are committed to understanding the full impact of ouroperations on the environment and to develop innovative
solutions that will help us to meet our objectives and theinterests of the community. This includes:> reducing our environmental ‘footprint’ and managing issues inour supply chain> balancing business and environmental risk in Corporate andInstitutional lending decisions> investing in the environmental sector and providing specialist
solutions to deliver sustainable benefits> engaging with community groups and stakeholders> measuring, reporting and improving our performance.

2004 Achievements
Our progress can be gauged by the work we have completed in
2004. This includes:> completing a detailed review of our Corporate and Institutional
lending policies and procedures in relation to social andenvironmental impacts of our customers. Areas of focus include
climate change, water management, land clearing, salinity, air
quality, safety, community well-being and human rights> establishing an environmental management system based on
the International Standard ISO400 which has formed the basis
for improved environmental reporting and driving further
reductions in our direct environmental impacts> conducting a review of our supply chain for opportunities
to incorporate greater environmental consideration in the
procurement of goods and services> partnering with Pratt Water to assist in the provision of a total
funding package for primary producers to promote the use ofwater saving irrigation systems> strengthening the position of ANZ’s specialist infrastructureservices business as a leader in financing of renewable energy
and water infrastructure projects> improving our environmental rating in the Dow Jones
Sustainability World Index and maintaining membership of the
Financial Times FTSE4Good Index based on meeting heightened
environmental criteria.

Future Priorities
The progress we have made has formed the foundation for a new
set of priorities, which include:> addressing the findings of our review of lending practices toensure lending policies and procedures adequately address
emerging environmental and social issues and risks> further reducing our direct environmental impacts throughtargeted action plans for greater resource efficiency and waste
recycling> enhancing our existing procurement protocols to addressenvironmental risks and opportunities in our supply chain> implement programs and initiatives developed in partnershipwith Greening Australia to deliver targeted social, environmental
and business outcomes> enhancing our data collection capabilities and public reportingof environmental performance including third party verificationof data> finalise and publicly release ANZ’s policies relating to key
environmental issues.
ANZ has also increased its public reporting of its approach,initiatives, performance and commitments for environmental
improvement. This can be found on ANZ’s web site atwww.anz.com/australia/aboutanz

the environment I 41

ANZ’s approach to the environment reflects a view that value can be created forshareholders through strong financial growth based on environmentally soundbusiness practice. Our aim is to ensure long-term business success and make asustainable contribution to society.
Leading environmental change

Investing in change

A conversation with senior management

JC: That’s also creating opportunities for us in areas likeenvironmental technologies, where we can provide private equity
for investment in infrastructure and utilities. We’ve been
concentrating more and more on energy because it offers fairrates of return and we also have strong capabilities.

During 2004, three members of ANZ’s senior management teamwith specific responsibilities and interests in our environment
program, sat down to talk about the issues and the opportunities
to create value through environmentally sound business practice.
Mike Grime is Managing Director, Operations, Technology andShared Services with responsibilities including property andsupply chain management. John Clarke is Managing Director, ANZ
Infrastructure Services. This business specialises in advisory andprivate equity investments in the utilities and infrastructure
sectors including specialist capabilities in renewable energy
assets. Richard Gates, Head of Business Services, Healthcare and
Education in Institutional Banking, has given leadership to ANZ’senvironmental and social risk in lending project.

Managing impacts and risks
MG: We’re a services organisation but with over 30,000 staff and
1,000 properties, the amount of energy, paper and water we use
is really quite significant. It creates a direct impact on theenvironment but of course there are also the impacts associatedwith all the suppliers we have of goods and services.
RG: The environment’s also an issue in our day-to-day businesswith clients. We’ve made headway in managing our direct
impacts but, really, we have to think about the indirect impacts,
particularly the social and environmental impacts of customers
we finance. The majority of our corporate customers, and thebroader community, expect this. A priority for us is to build theenvironmental and social risk assessment capabilities ofrelationship and credit managers and give them rating tools andprocedures they need to back this up.
MG: I agree. The challenge is providing service in a social andenvironmentally sound way. But if we can build that into the way
the organisation thinks, my view is we can find the right balance
to improve the business, reduce costs and risk, and reduce our
impact on the environment.
Paper usage is a good example. By targeting areas that
consume large amounts of paper as an environmental initiative
we can also identify process efficiency opportunities, and reduce
costs. There are other opportunities in setting targets to reducegreenhouse gas emissions, improving office fit out standards andworking with our suppliers to think and act greener.

We’ve spent a lot of time looking at these emerging technologies- solar, biomass, wind-power and bio-diesel. The key thing here
is not to take a major technology risk - you must have goodtechnology so wind power becomes a focus, as does bio-diesel.
We’ve supported a number of projects as a result, and these form
an important renewable segment within our diversified energy
vehicle, the Energy Infrastructure Trust. Investment in sustainable
water processing and delivery systems is also important given
the water scarcity issues facing Australia.

Policy, culture, capabilities
RG: Part of what is required to lift our game in this area is strong
leadership to counter inertia and to empower and educate ourstaff to see and manage risks and opportunities, and then to
engage our customer base. This needs to extend right accoss thebank, not just in the Corporate and Institutional businesses. For
example, Credit Cards have been doing some interesting work
which fits into the social risk area by helping customers
understand the financial implications of lending products.
MG: We have come quite a way with this in our Property andStrategic Sourcing functions. Revising our procurement policy
and contract conditions is one thing, which is very important,however the other element is working with our businesses
to adopt alternative goods and services that have better
environmental outcomes. That’s where having group policy andthe right culture helps.
JC: Yes and we get comments back from a number of people
saying what we are doing on the renewable energy side isinnovative. Really though, I see it as part of our core business inbringing our skills in providing equity, contract negotiations andin structuring contracts to complete these projects. It gives you
a great deal of satisfaction.
RG: What you’re also highlighting is why our approach has to becollaborative. That’s not only working together in the business
but I think it also involves listening and working with ourcustomers and the community.

42 I board of directors

THE BOARD OF DIRECTORSMR C B GOODE, AC

MR J MCFARLANE, OBE

MR J C DAHLSEN

b com (hons) (melb), mba(columbia university, newyork), hon lld (melb), honlld (monash)ma, mballb, mba

Chief Executive Officer

Independent Non-Executive
Director

Chairman

Chief Executive Officer since
October 1997. Mr McFarlane
is also a Director of ANZ
National Bank Limited.

Independent Non-Executive
DirectorAge 66

Working
together toachieveperformance,
growth andsustainability.

Non-executive director since
July 1991. Mr Goode wasappointed Chairman inAugust 1995 and is Ex-officio
member of all Board
Committees.
Experience and expertise
Mr Goode has 29 years ofexperience in the financeindustry and has been aprofessional non-executive
director since 1989. Mr
Goode brings relevant skills
and significant experience inthe finance industry to hisrole as Chairman of theBoard.
Current Directorships
Chairman: Woodside
Petroleum Ltd (Director from1988), Australian United
Investment Company Ltd(Director from 1990),
Diversified United Investment
Ltd (Director from 1991) and
The Ian Potter Foundation(Director from 1997).
Director: Singapore Airlines
Limited (from 1999) and theHoward Florey Institute ofExperimental Physiology andMedicine (from 1987).
Residence Melbourne.

Age 57

Experience and expertise
Mr McFarlane brings broad
skills and extensive
experience in banking of over
30 years. Mr McFarlane is aformer Group Executive
Director, Standard Chartered
Plc, Head of Citibank, United
Kingdom and Managing
Director, Citicorp Investment
Bank Ltd.
Current Directorships
Chairman: The Australian
Bankers Association (fromOctober 1997).
Director: The Financial
Markets Foundation forChildren (from 1999).
President: The International
Monetary Conference (June
2004).
Member: The AustralianBusiness Arts Foundation(from 2000) and Asia
Business Council (from 2004).
Former Directorships
Former Director: BusinessCouncil of Australia (1999 October 2003) and Australian
Graduate School ofManagement Ltd (1999 December 2003).
Former Non-Executive Directorof the London Stock Exchange(1989 - 1991), The Auditing
Practices Board (1991-1997),
The Securities Association(1989 – 1990), Capital RadioPlc (1995 – 1998) and the
Cranfield School ofManagement (1992 – 1996).
Residence Melbourne.

DR G J CLARK
phd, bsc (hons)
Independent Non-Executive
DirectorAge 61Non-executive director since
February 2004.

Chairman of the Audit
Committee
Age 69Non-executive director since
May 1985. Mr Dahlsen is amember of the Nominations& Corporate GovernanceCommittee.

Experience and expertise
Dr Clark is Principal of Clark
Capital Partners, a US based
firm that advises
internationally on technology
and the technology market
place. Previously he held
senior executive positions inIBM, News Corporation andLoral Space andCommunications. He brings
to the Board international
business experience and a
distinguished career in microelectronics, computing andcommunications.

Experience and expertise
The skills and expertise that
Mr Dahlsen has developed in
his legal career together withhis experience in the media,
not-for-profit, businesseducation, banking, retail andsmall business sectors ensurethat he brings anunderstanding of the law andbusiness to his role as a nonexecutive director.

Current Directorships
Director: James Hardie
Industries NV (from 2002).

Director: The Smith Family(from 1995), J C Dahlsen Pty
Ltd Group (from 1973) andthe Warehouse Group Ltd of
New Zealand (from 2001).

Former Directorships
Former Director: Digex(2000 -2002).
Residence Based in New
York, United States ofAmerica but also resides
in Sydney.

Current Directorships
Chairman: Southern Cross
Broadcasting (Australia) Ltd(Director from 1985).

Former Directorships
Former Chairman: Woolworths
Ltd (1992 – 2001).
Former Partner: Corrs
Chambers Westgarth (1963 –1987 and 1989 – 1993).
Former Consultant: Corrs
Chambers Westgarth (1987 –1989 and 1993 - 2002).
Former Director: Melbourne
Business School Ltd (1989 2000) and MPI Mines Ltd(1992 – 2002).
Residence Melbourne.

board of directors I 43

MR J K ELLISDR R S DEANE
phd, b com (hons), fca, fcis,
fnzim

ma (oxon), faicd, hon fie
aust, fausimm, ftse, hon dreng (cqu)Independent Non-Executive
Director

Independent Non-Executive
Director

Chairman of ANZ National
Bank Limited

Chairman of the Risk
Management Committee

Age 63

Age 67

Non-executive director since
September 1994. Dr Deane isa member of the Risk
Management andCompensation Committees.

Non-executive director since
October 1995. Mr Ellis is amember of the Audit
Committee.

Experience and expertise
Dr Deane has skills andexperience in a variety of
sectors including thegovernment, banking andfinance, economics,
telecommunications, andwith charitable and culturalorganisations.
Current Directorships
Chairman: Telecom
Corporation of New Zealand
Limited (Director from 1992,
CEO 1992 to 1999), Fletcher
Building Limited (from2001), Te Papa Tongarewa(Museum of New Zealand)(from 2000), and New ZealandSeed Fund (from 2000).
Director: Woolworths Limited(from 2000),
Former Directorships
Former Director: TransAlta
Corporation (Canada) (2000 –2003) and Fletcher Challenge
Limited (1994 –2001).
Deputy Governor: Reserve
Bank of New Zealand (1982 –
1986).
Former Alternate Executive
Director: International
Monetary Fund (1974 – 1976).
Residence Wellington,
New Zealand.

Experience and expertise
A trained engineer, Mr Ellis
brings to the Board hisanalytical skills together withhis practical understanding ofoperational issues,
investments and acquisitions
across a range of sectors
including natural resources,
manufacturing, biotechnology
and education.
Current Directorships
Chairman: Pacifica Group Ltd(Director from 1999), National
Occupational Health and
Safety Commission (Director
from 2003) and AustraliaJapan Foundation (from1999).
Chancellor: Monash
University (from 1999).
Director: GroPep Ltd (from1999).
Former Directorships
Former Chairman: BHP Ltd(1997 - 1999), Black Range
Minerals Ltd (Director 2000 –January 2004) and Sandvik
Australia Pty Ltd (1994 –2002).
Former Director: Aurora GoldLtd (1999 – 2001).
Residence Melbourne.

MR D M GONSKI, AO

MS M A JACKSON, AC

b com, llb, s.i.a. (aff),
faicd, fcpa

b ec, mba, hon lld,
faicd, fca

Independent Non-Executive
Director

Independent Non-Executive
Director

Age 51Chairman of theCompensation Committee

DR B W SCOTT AO

Age 51

Independent Non-Executive
Director

Non-executive director since
February 2002. Mr Gonski
is a member of the Risk
Management Committee
and the Nominations &Corporate GovernanceCommittee. He represents
the Group as a Director of
ING Australia Limited.
Experience and expertise
Mr Gonski, a lawyer, has awide experience in business,the law and investmentbanking. He also brings to
his role on the Board an
appreciation for thecommunity through his workin the arts and the not-forprofit sector.
Current Directorships
Chairman: Coca Cola Amatil
Limited (Director from1999), and the Investec
Group in Australia (including
Investec Wentworth Pty
Limited) (Director from
2001).
Director: The Westfield
Group Ltd (Director ofWestfield Holdings Limited
from 1985) and John Fairfax
Holdings Limited (from1993).
Former Directorships
Former Chairman: Morgan
Stanley Australia Limited(1999-2002) and Hoyts
Cinemas Limited (19951999).
Former Partner: Freehill
Hollingdale & Page (19791986)
Residence Sydney.

Non-executive director since
March 1994. Ms Jackson is amember of the Audit
Committee.
Experience and expertise
A Chartered Accountant, withsignificant financial
expertise, Ms Jackson has
broad industrial experience
including her involvement intransportation, mining, themedia, manufacturing andinsurance. This expertise
coupled with her work inhealth and education
contribute to her role on the
Board.
Current Directorships
Chairman: Qantas Airways
Limited (Director from 1992).
Deputy Chairman: Southcorp
Limited (August 2004).
Director: Billabong
International Limited(from 2000).
Former Directorships
Former Partner: Consulting
Division of KPMG Peat
Marwick (5 March 1991 –30 June 1992).
Former Director: BHP Ltd(1994 – 2000), Pacific
Dunlop (1992 – 2000) andJohn Fairfax Holdings Limited(2003 - August 2004).
Residence Melbourne.

b ec, mba, dba

Chairman of the Nominations& Corporate GovernanceCommittee
Age 69Non-executive director sinceAugust 1985. Dr Scott is alsoa member of theCompensation Committee
and represents the Group asa Director of Metrobank Card
Corporation Inc.
Experience and expertise
A management consultant
and company director, Dr
Scott’s extensive skills andexperience in a range ofbusiness sectors andcommunity organisations
contribute to his role as a
non-executive director.
Current Directorships
Chairman: Management
Frontiers Pty Ltd (Director
from 1985), The Foundation
for Development Cooperation Ltd (Director from1990) and The James N.
Kirby Foundation Ltd(Director from 1981).
Director: Air Liquide Australia
Ltd (from 1985).
Australian member: The
Board of Governors of the
Asian Institute ofManagement (from 1990).
Residence Sydney.

44 I corporate governance

A STRONG ADVANTAGE FOR ANZ

GOOD CORPORATE GOVERNANCE
ANZ believes that good corporate governance and quality disclosure arefundamental to achieving the Company’s vision - to be Australasia’s leading,most respected and fastest growing major bank.
ANZ’s shareholders depend on the
Company’s Board for strategic guidance
and oversight of the Company. The Board
recognises its overriding responsibility
to act honestly, fairly, diligently andprogressively, in accordance with thelaw, in serving the interests of ANZ’sshareholders, as well as its employees,
customers, and the community at large.
Corporate governance is an importantfocus for the Board. Good corporate
governance meets ethical and stewardship
responsibilities, and gives ANZ a strong
commercial advantage. It is receiving
close scrutiny, and for the past two years,
the Board has had a Nominations andCorporate Governance Committee toensure such issues are fully addressed.
ANZ shares and related securities arelisted on the Australian (ASX), the New
Zealand (NZX) and the New York (NYSE)

Stock Exchanges. ANZ must comply with arange of requirements including listing
requirements in Australia and New
Zealand as well as overseas requirements
such as the US Sarbanes-Oxley Act of 2002,
the Securities and Exchange Commission
rules and the New York Stock Exchange
requirements. In addition, ANZ strives
to achieve best practice by taking into
account the principles and guidelines
set out by the ASX Corporate GovernanceCouncil, the New Zealand Securities
Commission and the Combined Codeof the United Kingdom.
In general, the Board resolves:> To embrace principles considered to be
best practice across the jurisdictions; and> To be an ‘early adopter’ where possible
by complying before a published law orrecommendation takes effect.

Consequently, the Board continuallymonitors governance developments
ensuring ANZ’s practices are at bestpractice standard.
During the year, the Board worked closelywith management to review and update
ANZ policies and procedures in light ofrecent changes to regulations, legislationand guidelines across relevant
jurisdictions (see below).

KEY CORPORATE GOVERNANCE ISSUES ADDRESSED BY THE BOARD INCLUDE:
INTERNATIONAL> International Financial ReportingStandards – (IFRS) – ANZ has a formal
program to ensure that the Company isprepared to report, in compliance with
Australian equivalents to IFRS as issued
by the International Accounting Standards
Board, when its results for the half-year
ended 31 March 2006 are announced.
The program is on track to achieve thisschedule.
> Basel II – For ANZ, the new Basel Accord
is scheduled to commence in 2006 for two
years of parallel running with the current
capital Accord, prior to full implementationin January 2008. ANZ has established a
program to ensure the Company achieves
accreditation at the advanced levels forboth credit and operational risk under
Basel II. The program is on schedulewith a number of Basel II requirements
already in place.

AUSTRALIA> ASX Corporate Governance Council –Principles of Good Corporate Governanceand Best Practice Recommendations –ANZ considers these principles importantand has included a table on page 45
outlining its compliance with therecommendations.
> The Corporations Law Economic Reform
Program (Audit Reform and Corporate
Disclosure) Act 2004 - CLERP 9 Act – Thelegislation was passed by Parliament on
25 June 2004. While compliance with the
majority of the changes made by the Act is
not required until ANZ reports for the 2005
financial year, the Company has chosen to
be an ‘early adopter’ of most of the newrequirements.

NEW ZEALAND> NZX Corporate Governance Rules andPrinciples - The NZX has introduced aCorporate Governance Best Practice Code.
As an overseas listed issuer on the NZX,ANZ is deemed to comply with the NZX
Listing Rules provided that it remains listedon the ASX. As required under NZX Listing
Rules, ANZ provide a brief description of
the material differences between the ASX
and NZX governance requirements on
page 94.

OTHER JURISDICTIONS> United States of America – As a "foreign
private issuer" registered with the U.S.
Securities and Exchange Commission (SEC)with securities listed on the New York Stock
Exchange (NYSE), ANZ is required tocomply with certain corporate governancerequirements contained in U.S. securities
laws, including the Sarbanes-Oxley Act of2002 and applicable NYSE ListingStandards. As permitted under the NYSE
Listing Standards, ANZ will provide a brief
description of the material differences
between its corporate governance practices
and the NYSE corporate governancerequirements for foreign private issuers in
ANZ's U.S. Form 20-F annual report filedwith the SEC and posted on anz.com.
> United Kingdom – ANZ monitorsdevelopments in the UK Combined Codethrough changes made by the Higgs Report
and the Smith Report. The Nominations
and Corporate Governance Committee
has considered the changes made to the
Combined Code, and the extent to which
they represent developing trends ininternational corporate governance.

corporate governance I 45

CORPORATE GOVERNANCE RECOGNITION
Governance Metrics International (GMI) Global Rating Report –In August 2004, ANZ participated in a review by GMI of corporate
governance and disclosure practices of the top 2,600 companies
worldwide. ANZ received an overall global rating of 9 out of 10
and was in the top 7% of companies surveyed. In addition, ANZ
received significant recognition for its:
> Board accountability> Remuneration> Corporate behaviour

Horwath Corporate Governance Report - The Horwath Reportranked ANZ equal second for its corporate governance practices
amongst the top 250 Australian companies in September 2004.
ANZ received an overall 5 out of 5 star rating meaning that
the Company’s corporate governance structures met all bestpractice standards.

> Shareholder rights> Market for control and ownership base

ASX CORPORATE GOVERNANCE TABLE
FOCUS & PRINCIPLECOMPLIANCE ()1 LAY SOLID FOUNDATION FOR MANAGEMENT AND OVERSIGHT
1.1

Formalise the functions reserved to the Board and thosedelegated to management
Pg 47 The majority of the Board should be independent
directors

Pg 48 2.2

The chairperson should be an independent director

Pg 47 2.3

The roles of the Chairperson and Chief Executive
Officer should not be exercised by the same person

2.4

The Board should establish a nomination committee Pg 50 

2.5

Provide related disclosures

6.1

Design and disclose a communications strategy topromote effective communication with shareholders
and encourage effective participation
Pg 46 6.2

Request the external auditor to attend the AGM
and be available to answer shareholder questions
about the conduct of the audit and the preparationand content of the auditor’s report
Pg 46 7 RECOGNISE & MANAGE RISKPg 47 



7.1

The Board or appropriate committees should establish
policies on risk oversight and management
Pg 52 7.2

The CEO and CFO should state to the Board in writing that
7.2.1 the statement given in accordance with bestpractice recommendation 4.1 is founded
on a sound system of risk management
and internal compliance and control
which implements the polices adopted
by the Board
Pg 77 3 PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
3.1

Establish a code of conduct to guide the directors,
the CEO, the CFO and any other key executives as to:
3.1.1 the practices necessary to maintainconfidence in the company’s integrity

Pgs 46, 53 

3.1.2 the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices

Pg 53 3.2

Disclose the policy concerning trading in company
securities by directors, officers and employees

Pg 53 3.3

Provide related disclosures

7.2.2 the company’s risk management andinternal compliance and control systemis operating effectively and efficiently
in all material respects
7.3



Require the CEO and CFO to state in writing to theBoard that the company’s financial reports present atrue and fair view, in material respects, of thecompany’s condition and operational results and arein accordance with accounting standards
Pg 77 8.1

The board should establish an audit committee

4.3

Structure the audit committee so that it consists of> only non-executive directors> a majority of independent directors> an independent chairperson, who is not chairpersonof the Board> at least three members
Pg 50 4.4

The audit committee should have a formal charter

4.5

Provide related disclosures

Pg 50 5.2

Provide related disclosuresPg 48 Provide disclosure in relation to the company’s
remuneration policies to enable investors tounderstand the costs and benefits of the policies,
and the link between remuneration paid andto the directors and key executives andcorporate performancePgs 58 to 71 

9.2

The Board should establish a remunerationcommittee

9.3

Clearly distinguish the structure of non-executive
directors remuneration from that of executives Pgs 58 to 71 

9.4

Ensure that payment of equity-based executive
remuneration is made in accordance withthresholds set in plans approved byshareholders
Pgs 58 to 71 

9.5

Provide related disclosuresEstablish written policies and procedures designed
to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
management level for that compliancePgs 46, 53 

Disclose the process for performance evaluationof the Board, its committees, individual directors
and key executives

9.1

5 MAKING TIMELY AND BALANCED DISCLOSURE
5.1



Provide related disclosures

9 REMUNERATE FAIRLY AND RESPONSIBLY

Pg 50 4.2

Pg 52 8 ENCOURAGE ENHANCED PERFORMANCE

4 SAFEGUARD INTEGRITY OF FINANCIAL REPORTING
4.1

COMPLIANCE ()6 RESPECT THE RIGHTS OF SHAREHOLDERS

2 STRUCTURE THE BOARD TO ADD VALUE
2.1

FOCUS & PRINCIPLE

Pg 50 



10 RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS
10.1 Establish and disclose a code of conduct toguide compliance with legal and otherobligations to legitimate stakeholders

Pgs 46, 53 

46 I corporate governance

FOSTERING ETHICAL DECISION MAKING
The Board encourages management topromote and maintain a culture within ANZ
which draws upon a set of unifying values toguide the actions and decisions of theBoard and all employees.
More than 18,000 ANZ employees haveparticipated in the Breakout culture
development program. The program
includes workshops to help staff to apply
values-based decision making, balancing
the competing needs of staff, shareholders,customers and the community in their roles
and activities.
ANZ has three main codes of conduct which
also guide everyday business practice anddecision making throughout the Group.
> ANZ Directors’ Code of Conduct sets
ethical standards for the directors. They are
expected to pursue the highest standards of
ethical conduct in the interests ofshareholders and all other stakeholders.
> ANZ (Employee) Code of Conduct sets
ethical standards for ANZ staff to embrace
and advocate. It establishes an environment
in which ANZ staff, can excel, regardless ofrace, religion, age, ability or gender.
> ANZ Code of Conduct for Financial Officers(adopted from G100 Code of Conduct for
Chief Financial Officers) provides a practicalguide for the CFO and financial staff in theireveryday dealings as to the standards of
ethical behaviour expected in theperformance of their duties in addition to
the ANZ Employee Code of Conduct.

CREATING A SUSTAINABLE
CONTRIBUTION TO SOCIETY
Through ANZ’s values, the Company
places a high emphasis on creating longterm business success, while at the sametime, making a sustainable contribution
to the community. Some examples ofthese contributions are outlined on pages
40 to 41.

DEMONSTRATING ANZ’S COMMITMENT
TO SHAREHOLDER COMMUNICATION
Shareholders are the owners of ANZ,
and the Company’s stated aim is to“perform and grow to create value forour shareholders”.
In order to vote on decisions about
ANZ, and to communicate views to
the Company, shareholders will need
an understanding of the Company’sbusiness operations and performance.
ANZ encourages shareholders to take anactive interest in the Company. It seeks
to provide shareholders with quality
information in a timely fashion generally
through ANZ’s reporting of results, theCompany’s Annual Report, briefings,
newsletters and via its dedicatedshareholder site on anz.com.
ANZ strives for transparency in all its
business practices. The Company
recognises the impact of quality
disclosure on the trust and confidenceof the shareholder, the wider market
and the community.

CONTINUOUS DISCLOSURE
It has long been ANZ’s practice to release
all price sensitive information as required
under the ASX listing rules in a timely
manner:> to all relevant stock exchanges on which
ANZ’s securities are listed; and> to the market and community generally
through ANZ’s media releases, website andother appropriate channels.
ANZ-related releases are posted on
relevant stock exchange websites and on
ANZ’s website.
Through ANZ’s Market (Continuous)
Disclosure Policy (see page 53), theCompany demonstrates its commitment tocontinuous disclosure. The policy reflects
relevant obligations under applicable stock
exchange listing rules and legislation.

ANZ VALUES> Put our customers first> Perform and grow to create value
for our shareholders> Lead and inspire each other> Earn the trust of the community> Breakout, be bold and have thecourage to be different

For reporting purposes, price sensitive
information is information that a reasonable
person would expect to have a material
effect on the price or value of ANZ’ssecurities.
Designated Disclosure Officers have
responsibility for reviewing proposed
disclosures and making decisions in relation
to what information can be or should be
disclosed to the market. All ANZ staff are
required to inform a Disclosure Officer
regarding any potentially price-sensitive
information concerning ANZ as soon as they
become aware of it.

UPHOLDING SHAREHOLDER RIGHTS
ANZ upholds shareholder rights andprovides shareholders with the opportunity
to be involved in shareholder meetings.
To allow as many shareholders as possible
to have an opportunity to attend a meeting,
ANZ rotates shareholder meetings aroundcapital cities. Webcast technology has been
introduced which makes it possible to‘attend’ presentations – to listen to the
speakers and simultaneously viewpresentations over the internet.
Prior to the annual general meeting,shareholders are encouraged to submit anyquestions they have for the Chairman orChief Executive Officer to enable key
common themes to be considered.
The external auditor is present at ANZ
Annual General Meetings and available toanswer shareholder questions. The auditor
can respond on any business item thatconcerns them in their capacity as auditor.
Shareholders have the right to vote on
various resolutions related to company
matters. If shareholders are unable to attend
a meeting they can submit their proxies via
post or electronically through anz.com.
Where votes are taken on a poll, ANZ
appoints an independent party to verify the
results, which are reported to the ASX andposted on anz.com.
During the year, ANZ presentations included:> Annual Results and Acquisition of NBNZ
Announcement – 24 October 2003 –Melbourne, Victoria and Auckland,
New Zealand> Annual General Meeting – 19 December
2003 – Brisbane, Queensland> New Zealand Briefing – 11 March 2004 –Auckland, New Zealand> Interim Results Announcement – 27 April
2004 – Sydney, New South Wales> Australian Personal Customer DivisionMarket Briefing – 8 September 2004 –Melbourne, Victoria

corporate governance I 47

A BALANCED AND WELL QUALIFIED BOARD - SELECTION OF DIRECTORS> Tracking of best practices
and performance of boards
on a global basis> Review of Board-wideskills, knowledge, experienceand perspective> Appointment andelection at Annual
General Meeting

BOARD RESPONSIBILITY
AND DELEGATION OF AUTHORITY
The Board is responsible to shareholders
for the governance of the Group, andoversees its operations and financial
performance. To this end, it sets thestrategic direction and financial
objectives, and monitors operational
performance. It also monitors compliancein terms of ethical and efficiency
standards and regulatory requirements.
The Board also appoints the Chief
Executive Officer and regularly reviews
his performance.
The ANZ Board is chaired by a nonexecutive independent director. Its
structure provides for a division of
responsibility between the Chairman
and the Chief Executive Officer. This is
supported by the ANZ Board Charter(anz.com>about ANZ>corporate
information> Board Charter) whichstates that the Chairman must be an
independent non-executive director
and that the majority of the Board must
comprise independent non-executive
directors.
The Board Charter clearly sets out theBoard’s purpose, powers, and specificresponsibilities. The business of the
Bank is managed under the directionof the Board. The Board delegates to
the Chief Executive Officer and throughhim, to other senior management, theauthority and responsibility for managing
the everyday affairs of the company.
The Board monitors management
and performance on behalf ofshareholders.

> Identification of gaps
and additional needs> Identification ofsuitable candidates

ROLE OF CHAIRMAN
The Chairman plays an importantleadership role with ANZ and is
involved in:> chairing meetings of shareholders andBoard meetings;> monitoring the performance of theBoard and the mix of skills andeffectiveness of individual contributions;> maintaining on-going dialogue with theChief Executive Officer and appropriate
mentoring and guidance;> overseeing Board review processes; and> on-going mentoring of individual
directors.

ACCESS TO DIRECTORSManagement is able to consult withdirectors as required on a regular basis.
Employees and shareholders have accessto the directors either directly or throughthe Company Secretary.

BOARD COMPOSITION, SELECTION
AND APPOINTMENT
The Board strives to achieve a balanceof skills, knowledge, experience andperspective among its directors. To
ensure such a balance, the Board
undertook a review of its nomination andselection process during the year.
The formal process for review andselection of directors is set out above.
Once a director is selected, there areseveral key elements relating toformalisation of appointment including:> Adherence to Directors’ Code of Conduct– This code sets out that directors will
pursue the highest standards of ethicalconduct.
> Meeting shares qualification – ANZ’s
Constitution provides that each director isrequired to hold, within 3 months ofappointment, at least 2,000 fully paid
ordinary shares in the director’s own rightand must continue to hold at least 2,000
shares until the director ceases to holdoffice. Director shareholdings are set out
on page 67.
> Signing Director’s Deed – The Deed
covers a number of issues including
indemnity, directors’ and officers’ liability
insurance, the right to obtain independent
advice and the requirements concerning
confidential information.
> Receipt of Director Handbook – Eachdirector receives a handbook which
outlines the director’s principal obligations,Company policies, charters and processes
as well as Board-specific procedures. It also
sets out details of scheduled Board andCommittee meetings.
> Undertaking Induction training – New
directors take part in a formal induction
program which ensures that directors
meet with ANZ executives and other key
staff members regarding ANZ’s
governance framework, financial
management and business operations.
> Election at next annual general meeting
The ANZ Constitution and the
Corporations Act 2001 both permit theBoard to appoint a person to be a directorof ANZ at any time, but that person mustseek election by shareholders at the next
Annual General Meeting.

NEW DIRECTOR APPOINTMENTS During this year, ANZ announced the appointment of three new Directors to the Board.
New Director
Greg Clark PhD, BSc(Hons)

New Director
John Morschel DipQS

New Director
David Meiklejohn BCom, DipEd

Appointment Date
1 February 2004

Appointment Date
1 October 2004

Appointment Date
1 October 2004

Experience and expertiseInternational experience incomputing and technology

Experience and expertise
Experience as company director
and strong background inbanking and financial services

Experience and expertise
Strong background in financeand as a company director

48 I corporate governance

TENURE AND RETIREMENTANZ’s Constitution provides that at least
one third (or the nearest whole number)of directors must retire at each annual
general meeting, but are eligible forre-election at that meeting (see box below).
An appointee who is filling a casualvacancy has to stand for election at thefirst Annual General Meeting after their
appointment. This requirement does not
apply to the Chief Executive Officer, or
any director retiring at that meeting inany event.
ANZ’s Constitution establishes a director
shall retire at 70 years of age, unlessthe Board determines otherwise. Also,
directors appointed since 1993 haveagreed to retire after 15 years service.

PERFORMANCE EVALUATIONS
Performance evaluations are conductedinternally and cover the Board, each nonexecutive director and Board Committees.
The framework used to assess the
directors is based on the expectation
they are performing their duties in amanner which should create andcontinue to build sustainable value forshareholders, and in accordance with theduties and obligations imposed uponthem by the ANZ Constitution and the law.

> the regular and continuing review of
executive succession planning andexecutive development activities.
Board and non-executive performance
evaluations are conducted in two ways:> Annual review - On an annual basis, ormore frequently if appropriate, theChairman has a one-on-one meeting witheach director specifically addressing theperformance criteria. In addition, they
discuss the effectiveness of the Board andrelated issues including the Board’s
oversight and contribution to theCompany, Board discussion (including theperformance of the non-executive director
and the Chairman), Board memberships,
Committees, and other relevant issues.
They also discuss the performance of theBoard against its Charter. The Chairman
provides a report to the Board on theoutcome of these meetings.
> Re-election statement - Directors whennominating for re-election are required tosubmit a written or oral statement to theBoard setting out the reasons why theyseek re-election. In the director’s absence,
the Board evaluates this statement (having
regard to the performance criteria) when it
considers whether to endorse the relevant
director’s re-election.

The performance criteria takes into
account each director's contribution to:

Each Board committee conducts aself-evaluation at least annually (seepage 50).

> the charting of direction, strategy andfinancial objectives for ANZ;INDEPENDENCE AND MATERIALITY> the monitoring of compliance withregulatory requirements and ethicalstandards;> the monitoring and assessing ofmanagement performance in achieving
strategies and budgets approved by the
Board;> the setting of criteria for, andevaluation of, the Chief Executive
Officer's performance; andUnder its Charter, a majority of nonexecutive directors on the ANZ Board
must satisfy the criteria for
independence. The Board Charter setsout independence parameters in orderto establish whether a non-executive
director may have a relationship with
ANZ which could (or could be perceivedto) impede their decision-making.
Directors are required to seek Board

approval before accepting other Board
appointments or appointments
to charitable or other committees.
In addition, directors are required to
inform the Company of appointments orretirement from external organisations.
In the 2004 financial year, the Board
reviewed its criteria for independence inrespect of the requirements in the ASX
Corporate Governance Council’s Best
Practice Recommendations, NZX andNYSE Corporate Governance Standards,
and the Sarbanes-Oxley Act of 2002. The
Board adopted standards for determining
non-executive director independence
both for members of the Board and the
Audit Committee (some jurisdictions
apply different tests for the assessmentof Audit Committee independence).
The criteria are more rigid than those set
in most jurisdictions including criteria
stipulated specifically for audit committees.
As set out in the Board Charter, arelationship with ANZ is material if areasonable person in the position of anon-executive director of ANZ would
expect there to be a real and sensible
possibility that it would influence a
director’s mind in –> Making decisions on matters likely tocome regularly before the Board or its
committees;> Objectively assessing information andadvice given by management;> Setting policy for general application
across ANZ; and> Generally, carrying out the performanceof his or her role as director.
At its September 2004 meeting, theBoard considered each director’s
independence and in each caseconcluded that the independence criteria
were met by all non-executive directors
as set out on page 49.

DIRECTOR RE-ELECTION PROCEDURES
Where a director is due for retirement by rotation at the next Annual General Meeting, the following process is undertaken at the July
meeting of the Board (or earlier) for determining whether the Board endorses the director’s re-election –STEP 1 - The director is required to submit a written or oral statement to the Board setting out reasons why he/she seeks re-election
STEP 2 - With the director absent from the room, the Board> Evaluates the director’s re-election having regard for the statement provided and the performance criteria on page 48> Passes a resolution stating whether or not the Board supports the director’s re-election having regard to the performance criteria on page 48

STEP 3 – Shareholders receive the Notice of Meeting for the upcoming Annual General Meeting which will
> Provide the director’s experience and related details> State the Board’s resolution on whether or not the Board supports the director’s re-election (an outcome of Step 2)

corporate governance I 49

INDEPENDENCE CRITERIA
In its determination of director independence, the Board includes a review of relationships that directors and their immediate family
members may have such as:> A relationship as an acquirer of services / and or products
from ANZ and/ or its subsidiaries of the following kind :– Personal banking services or products> A relationship as a previous employee or partner of ANZ
and/or its subsidiaries> A relationship as a previous employee or partner of theexternal auditor– Business banking services or products– Sponsorship or donor funds> A relationship as a supplier of services and /or products
to ANZ and / or its subsidiaries of the following kind :– Strategic services / products provider– Professional services provided as a partner or executive> A relationship as an executive officer of another company
where any of ANZ’s present executives serve on that company’scompensation committee> A relationship with a substantial shareholder or officer of anorganisation that has a holding with 5% or more of the voting
shares in ANZ– Professional services provided as an employee– Direct compensation from ANZ (and / or its subsidiaries)
of more than $100,000 (other than as director’s fees)

The Board examined acquirer
relationships associated with eachdirector in respect of the level of lending
and whether ANZ is the sole lender, thecredit rating and whether the account isin order. Due to privacy regulations, ANZ
is unable to disclose details of acquirer
relationships associated with eachdirector. The Board concluded that there
was no such situation which would
impact on a director’s independence.
The Board also examined supplier
relationships associated with eachdirector in respect of the value of therelationship to the supplier, the service or
product provided and its value as well asother relevant information. It particulary
noted several director associations asfollows:> Roderick Deane is Chairman of Telecom
New Zealand Ltd. ANZ acquires> All other material relationships or circumstances by which a
director could be perceived not to be independent ofmanagement and free from any business or other relationshipthat could interfere with their independence.

communication services from Telecom
New Zealand for the Company’s New
Zealand operations.
> David Gonski is a director of Westfield
Holdings Ltd. ANZ leases properties from
Westfield for its branch network in Australia.
> Margaret Jackson is Chairman of Qantas
Airways Limited. ANZ has commercial
relationships with Qantas as a partner inthe co-branded ANZ Frequent Flyer Visa
Cards, as a lessor of airport terminal
properties in Australia and New Zealandfor ANZ automatic teller machines (ATMs),
and as an acquirer of travel services for
ANZ people.
In each case, the Board concluded thathaving regard to the nature and valueof the commercial relationship and themateriality criteria described above, eachof Roderick Deane, David Gonski andMargaret Jackson is independent.

It is Board policy that directors do notparticipate in any decisions regardingtransactions with organisations which
they are associated as acquirer or
supplier. Directors’ biographies on pages
42 to 43 highlight their associations
outside of ANZ.
In terms of length of service, the Board
noted that there are three Board
members with service over ten years.
Notwithstanding Charles Goode’s lengthof service, the Board members
considered that his tenure does notinterfere with his independence as a nonexecutive director or as Chairman. The
Board concluded that the independenceof John Dahlsen and Brian Scott is notcompromised by their service of greaterthan ten years.

DIRECTOR INDEPENDENCE REVIEW PROCESS
The review of non-executive director independence is conducted annually and more frequently where a change in position or
relationship warrants it.

Prior to Board meeting> Non-executive directors
complete an independence
assessment form using thecriteria above> Responses are collated by
the Company Secretary>

During Board meeting> Each director’s response istabled for full Board deliberation> To reach a balanced decision,
each non-executive director is asked
to leave the Board room during
discussion of his/her independence>

Following Board meeting> Outcome of all independence
determinations are minuted> Independence status of eachdirector communicated in the
Annual Report

50 I corporate governance

CONFLICT OF INTEREST
Over and above the issue of
independence, each director has acontinuing responsibility to determine
whether he or she has a potential or
actual conflict of interest in relation to
any material matter which comes before
the Board. Such a situation may arise
from external associations, interests or
personal relationships which might
affect, or be seen potentially to affect,
the director’s position to act in the bestinterest of ANZ.
Under the Director’s Disclosure of Interest
Policy and Policy for Handling Conflictsof Interest (see page 53), the director may
not exercise any influence over the Board
if a potential conflict of interest exists.
The process set out is such that thedirector may not receive relevant Board
papers, may not be present for Board
deliberations on the subject, and may
not vote on any related Board resolutions.
These matters are recorded in the Board
minutes when they occur.

INDEPENDENT ADVICE
In order to assist directors to fulfil their
responsibilities, each director has theright (with the prior approval of the
Chairman) to seek independent
professional advice regarding their
responsibilities at the expense of theGroup. In addition the Board and eachCommittee, at the expense of the Group,
may obtain whatever professional advice
it requires to assist in its work.

CONTINUING EDUCATIONANZ directors take part in a range of training
and continuing education programs.
In addition to a formal induction program,directors receive regular business unit
briefings at each Board meeting. These
briefings provide directors with an insight
into each area of the Company, inparticular, performance, key issues andrisks, and strategy for growth. Directors
also participate in business unit site visits
which provide them with the opportunity
to meet with staff and customers.
Continuing education sessions are held
throughout the year focussing on a rangeof topics including emerging economic
issues, technical developments, pending
legislation, accounting standards,
taxation, risk management and corporate
governance.

BOARD COMMITTEESEach of the four main Committees iscomprised solely of independent directors,
has its own Charter and has the power toinitiate any special investigations it deems
necessary. Committee membership isreviewed annually. Membership criteria are
based on a director’s skills and experience,as well as his/her ability to add value tothe Committee.
The Chairman is an ex-officio member of
all Committees. The Chief Executive
Officer, John McFarlane, is invited toattend Committee meetings, as
appropriate. His presence is not
automatic, however, and he does notattend any meeting where his
remuneration is considered or discussed.
Non-executive directors may attend any
meeting of a Committee on a subject
where they have a special interest.
Committee performance self-evaluations
are conducted annually to review
performance against its Charter and goals
set for the year. The suitability of theCharter and any areas for improvement
are also assessed. The review and statedobjectives for the new financial year are
submitted to the full Board for discussion
and approval.

appointed a new Group General Manager,(Internal) Audit. A revised reporting
system, based on a balanced scorecard,
was put in place on the activities ofInternal Audit including audit activities,
governance, staff, customers, quality andmanagement.
> Revising external auditor policy – The
Policy on Relationship of the External
Auditor Policy was revised during the year
to ensure ANZ continues to meet bestpractice in this area.
> Refining external auditor evaluation –This year the Committee revised its
process for evaluating the external
auditor. The outcome of the evaluation
was reported to the Board.
> Oversighting The National Bank of New
Zealand (NBNZ) acquisition financial
reporting – The Committee monitored
all the financial reporting including
consolidation accounting related to the
NBNZ acquisition.

> the Company’s financial reporting
policies and controls;

The Compensation Committee is
responsible for recommendations to theBoard in respect of the Group’s
compensation program including any
equity-based programs. It also evaluates
the performance of and approves thecompensation for the senior executive
officers and Board appointees (including
the Chief Executive Officer) and approvescompensation levels and policy
guidelines.

> the work of Group (Internal) Audit;

Some 2004 financial year activities:> the Audit Committees of subsidiarycompanies such as ANZ National Bank;> Revising remuneration principles andprocesses – A review of ANZ’scompensation program was conductedto ensure alignment with best practiceprinciples. Related changes wereintroduced during the year.

A copy of each Committee Charter can befound on anz.com > about anz > corporate
governance.
The Audit Committee is responsible foroversight and monitoring of:> the integrity of the Company’s financial
statements and prudential returns;> compliance with regulatory requirements;
and> the appointment, evaluation andoversight of the external auditor.
It is Board policy that all members of the
Audit Committee be financially literate
and that at least one member of theCommittee be a “financial expert” asdefined in the Sarbanes-Oxley Act.
Ms Jackson was designated as the“financial expert” for this purpose for the2004 financial year.
The Audit Committee meets with theexternal auditor without management
being present. The Chairman of the Audit
Committee meets separately andregularly with the Group General Manager(Internal) Audit and the external auditor.
Some 2004 financial year activities:> Monitoring the work of Group (Internal)
Audit – During the year, the Committee> Reviewing performance of senior
executives – The Committee reviewed theperformance of the CEO and the CEO’s
direct reports against agreed
performance measures. Succession
planning was also undertaken.
> Considering non-executive director
compensation and retirement benefits –In accordance with regulatory andcorporate governance principles, theCommittee reviewed and recommended
changes to the compensation structure
for non-executive directors.
The Nominations & Corporate
Governance Committee’s responsibility is
to identify and recommend prospective
Board members, to recommend
processes for Board performance review
and to recommend corporate governanceprinciples, practices and proceduresfor ANZ.

corporate governance I 51

DIRECTORS' MEETINGS
The number of Board meetings and meetings of Committees 1 October 2003 to 30 September 2004 the director was eligible to attend,
and the number of meetings attended by each director were:Board

G J Clark
J C Dahlsen
R S Deane
J K Ellis
D M Gonski
C B GoodeM A Jackson
J McFarlane
B W Scott

A
5
8
8
8
8
8
8
8
8

Audit
Committee

B
5
8
8
8
8
8
8
8
8

A

B

6

6

6

Compensation
Committee

A

B

6

6

Nominations& Corporate
GovernanceCommittee
A
B
5

Risk
Management
Committee

Executive
Committee

SharesCommittee

Committeeof the
Board

A

B

A

B

A

B

A

B

4
4
5
7
8
5
10
5

2

1

1

5
5
4
5

4
4
5
7
8
5
10
5

2

5
5
5
5

1
1
6

1
1
6

4

4

4
2

4
2

3
1

3
1

4

6

6
6

6
6

6
6

6
6

6

6

5
5

5
5

5

5

Column A - Indicates the number of meetings the Director was eligible to attend.
Column B - Indicates the number of meetings attended. The Chairman is an ex-officio member of the Audit, Compensation, Nominations & Corporate Governance, and Risk
Management Committees.

Some 2004 financial year activities:

Some 2004 financial year activities:> Refining director independence criteria- Procedures for confirmation of
independent director status of nonexecutive directors were further refined(see page 49).

> Monitoring risks associated withintegration of NBNZ – The Committee
reviewed regular status reports
highlighting key risks and progress by
integration streams for operational risk,
market risk and credit risk(see page 52).

> Reviewing nominations procedures Procedures for consideration of Board
director nominations were refined andused during the year (see page 47).

> Reviewing the Group’s risk culture – To
ensure the correct balance between risk
and reward. A specific compliancemeasure was introduced to eachbusiness unit’s balanced scorecard.

> Developing principles and procedures –Additional principles and procedures
were developed during the year for
nominations and corporate governanceto ensure ANZ would continue to meet
best practice in these areas.
The Risk Management Committee is
responsible for the review risk in all
aspects of the business. It is responsible
for overseeing, monitoring and reviewing
the Group’s risk management principles
and policies, strategies, processes andcontrols including credit, market, balance
sheet, operational risk and compliance.
It may approve credit transactions andother matters beyond the approval
discretion of executive management.

> Ensuring timely and necessary
mitigating actions are taken in responseto emerging risk issues - Continued toreview regular reports on key emerging
risks, and appropriate responses tobe taken.
Additional Committees
In addition to the four main Board
Committees, the Board has constituteda Shares Committee and an Executive
Committee to assist in carrying out its
functions.

COMMITTEE MEMBERSHIPS 1 OCTOBER 2003 to 30 SEPTEMBER 2004
Audit
Committee

Compensation
Committee

Nominations and Corporate Risk Management
Governance Committee
Committee

John Dahlsen (C)Margaret Jackson (C)Brian Scott (C)Jerry Ellis (C)Jerry Ellis

Roderick DeaneJohn Dahlsen

Roderick Deane

Margaret Jackson (FE)Brian ScottDavid Gonski

David Gonski

Charles Goode(ex-officio)

Charles Goode(ex-officio)

Charles Goode(ex-officio)

Charles Goode(ex-officio)

C = Chairman

FE = Financial Expert

The Executive Committee has the fullpower of the Board and is convened asnecessary between regularly scheduled
Board meetings. The Board also forms
and delegates authority to ad hoc
Committees of the Board as and whenneeded to carry out its functions.
The Shares Committee has the power toadminister ANZ’s Employee Share Plan
and Employee Share Option Plan.

ROLE OF COMPANY SECRETARY
The Board is responsible for theappointment of ANZ’s Company
Secretaries. Currently there are threepeople appointed as Company Secretary.
For management and corporate
governance purposes the following
structure operates.
> The Group General Counsel andCompany Secretary is normally inattendance at all Board and Committee
meetings. He prepares drafts of minutes
and provides legal advice to the Board if
and when required. He works closely with
the Chair of the Nominations andCorporate Governance Committee todevelop and maintain ANZ’s corporate
governance principles. He is responsible
to the Board for the Company Secretary
Office function.
> The Company Secretary is responsiblefor day-to-day operations of the Company
Secretary’s Office including ANZ’scontinuous disclosures to relevant stock
exchanges under the Market (continuous)
Disclosure policy, the management ofdividends, and the relationship with theshare registry provider.
> The Chief Financial Officer is also
appointed as Company Secretary.
Profiles of ANZ’s Company Secretaries
can be found in the Directors’ Reporton page 76.

52 I corporate governance

RISK MANAGEMENT ANDCOMPLIANCE
ANZ’s business controls are governed byan ongoing focus on risk and complianceissues within the framework of theCompany’s overall strategy. ANZ hasestablished a comprehensive risk andcompliance management framework toensure best practice alignment.
In terms of risk management andcompliance, the Board provides
leadership, oversees risk appetiteand strategy, and ensures a robust
risk and compliance culture pervades.
The Risk Management Committeeof the Board oversees the Group’s risk
management policies and controls, may
approve credit transactions and othermatters beyond the approval discretionof executive management.
The risks may be broadly grouped under
the four categories noted below. On a
day-to-day basis, the various risks inherent
in ANZ’s operations are managed by bothGroup Risk Management and eachbusiness unit.
> Credit Risk – From a credit risk
perspective, the risk environment for ANZ
has improved over the year and the focus
has been maintained on areas of concern
in our portfolios. ANZ has remained
vigilant in reducing domestic and offshore
credit risk levels.
> Market Risk – During the year, ANZ
conducted a detailed review of its tradingrisks and controls. This review concluded
that ANZ’s market control framework wasappropriate for the scope and volume of
trading activity undertaken. The market
risk control framework has beenstrengthened by the implementation of asingle integrated front-office system for the
Capital Markets business.
> Operational Risk – Significant
improvements have been achieved during
the year in the Group's framework for
operational risk measurement and capital
allocation. Additional operational risk
improvements include:– Technology and Projects - A specialist
Technology Risk function has been
established within Group Risk
Management to enhance the approachto technology risk management and toprovide additional focus on large risk
technology projects.
– Fraud - Fraud prevention and detection
remained a key focus area for risk
management, especially due to thegrowing trend in electronic fraud. ANZ uses
technical tools to detect anomalies incustomer transactions to reduce potential

fraudulent activity. Education continues tobe an essential component in fraud
prevention for both staff and customers.
– Business Continuity and Crisis
Management - The continuous monitoringof country security risk has beenstrengthened by the implementation ofa country security risk rating framework
which assists ANZ’s response to changing
risks in the international businessenvironment and the ongoing safetyof ANZ’s staff and operations.
> Compliance – A dedicated compliancefunction within Group Risk Management
is responsible for the Group’s overall
compliance framework, across all
regulatory and internal operating policy
requirements.
For further information on risk
management, please see pages 16 to 17.

FINANCIAL CONTROLSAs previously noted, the Audit Committeeof the Board oversees the Company’s
financial reporting policies and controls,
integrity of the Company’s financial
statements, the work of Group (internal)
Audit, the Audit Committees of thesubsidiary companies, prudential returns
and compliance with related regulatory
requirements.
To further strengthen controls andprocedures, the Committee agreed that
the Company would undertake a Groupwide program focusing on Section 404
of the Sarbanes-Oxley Act of 2002.
ANZ is in the process of assessing
its readiness to meet Section 404
requirements of the Act. In doing so,
ANZ assesses the appropriateness ofinternal controls of financial reporting andthe financial control activity level relative
to key accounts and locations ofoperations. The program is being
instituted at both Company and business
unit level and is oversighted by aprogram steering committee. ANZ is wellprogressed in its assessment programand expects to be in full compliance withthis section of the Act during the financial
year to 30 September 2005, ANZ’s firstreporting date after the compliance dateof the Act.

AUDITGroup (Internal) Audit
Group (Internal) Audit provides
independent assurance that the designand operation of the risk and control
framework across the Group is effective.
The internal audit function operates undera Charter from the Audit Committee thatgives it unrestricted access to review allactivities of the Group. The Group General

Manager, (Internal) Audit reports to the
Chairman of the Audit Committee.
The Audit Committee monitors theperformance of Group (Internal) Audit
and the Group General Manager,(Internal) Audit.
A risk-based audit approach is used toensure that the higher risk activities ineach business are audited each year. All
audits are conducted in a manner that
conforms to international auditing
standards. Audit results also influence
incentive compensation of business heads.
Group (Internal) Audit plays an active role inensuring compliance with the requirementsof supervisory regulatory authorities. Group(Internal) Audit also works collaboratively
with the external auditor to ensure acomprehensive audit scope.
The Audit Committee plays an active role
in reviewing significant issues arising frominternal audits conducted by Group(Internal) Audit. There is a robust process
for ensuring prompt resolution of audit
issues, which includes monthly reviews ofprogress by the Chief Executive Officer
and the Chairman of the Audit Committee.
The Audit Committee also receives formal
reports on significant issues until
satisfactory action has been taken.
External Audit
The external auditor’s role is to provide
reasonable assurance that ANZ’s financial
reports are accurate and free frommaterial misstatement. The external
auditor is to perform independent auditsin accordance with Australian AccountingStandards. The external auditor provides
reports directly to the Audit Committee.
During the year, the Audit Committee
further strengthened ANZ’s Relationshipwith External Auditor policy. Under thepolicy, the Audit Committee is responsible
for the appointment (subject to ratificationby shareholders), compensation, retention
and oversight of the external auditor.
The policy also stipulates that the Audit
Committee:> Pre-approves all audit and non-audit
services;> Regularly reviews the independence ofthe external auditor;> Evaluates the effectiveness of theexternal auditor .
In addition, ANZ requires a two-year period
before any former partner or employee ofthe external auditor is appointed as adirector or senior executive of ANZ.
The lead partner position of the external
audit should rotate off the ANZ audit after
five years and cannot return for a further
five years. Other senior audit staff are
required to rotate off after a maximum ofseven years.

corporate governance I 53

Any potential appointments of ex-partners
or ex-employees of the external auditor to
the ANZ finance staff, at senior managementlevel or higher, must be pre-approved by the
Chairman of the Audit Committee.

that ANZ produce information relating to
non-audit services provided by ANZ’sauditor, KPMG.

Details on non-audit service can be found in
the Directors’ Report on page 76.

Should the SEC determine that services
provided by KPMG did not comply with theserules, the SEC may seek sanctions, thenature and amount of which are not known.

In the context of the US auditor
independence rules, the SEC has requested

ANZ is currently providing information asrequested.

Whilst ANZ cannot predict the outcome of
the inquiry, based on information currently
available, ANZ does not believe it will havea material adverse effect on the Company.

POLITICAL DONATIONSIn the year to 30 September 2004, ANZ
donated $150,000 to the Liberal Party
and $95,000 to the Labor Party.

Creating sustainable value for shareholders, staff, customers and the community
ANZ’S CODES OF CONDUCTAND POLICIESBelow is an overview of ANZ’s key codesand policies which apply to directors andemployees within the Group. Summariesof these policies can be found on anz.com> about anz > corporate governance.
> Codes of Conduct for Directors and for
Employees – These policies set out the
ethical standards to which directors andemployees are expected to adhere. The
Codes require that directors andemployees adhere to the law, and thatthey disclose any relevant interests, thatthey act in the best interests of the Groupand that they act honestly and ethically inall their dealings. The codes also cover
the confidentiality of information, limitson acceptance of gifts or entertainmentand on use of ANZ goods, services andfacilities. Key contact – Group GeneralCounsel and Company Secretary.
> Code of Conduct for Financial Officers –(adopted from the Group of 100 Code of
Conduct for CFOs and Senior Financial
Officers) The Code requires that Chief
Financial Officers and other finance staff
influencing financial performance adhere
to principles of honesty and integrity,
respect confidentiality of information,
declare conflicts of interest, maintaintransparency in reporting, exercise
diligence and good faith, ensure soundinternal controls and set a standard forother financial professionals. Key contact– Chairman of the Audit Committee.
> Critical Accounting Policies – Details of
the critical accounting policies and anychanges in accounting policies madesince the date of the 2003 Annual Report
are set out on page 82 and in the
Financial Report on pages 130 to 134.
> Directors’ Disclosure of Interests Policy
and Policy for Handling Conflicts ofInterests – The Board has adopted apolicy on disclosure of interests requiringthat directors disclose certain interests,
and actual or potential conflicts ofinterest are addressed. Details of
directors’ dealings with ANZ are set out in
Note 52 of the Financial Report. Key
contact – Group General Counsel andCompany Secretary.

> Employee Indemnity Policy – This
policy provides that the Group will
indemnify employees against any liability
that they incur in carrying out their role
subject to meeting certain requirements.
Further details on this policy and on
indemnities given to certain employees
can be found on page 77 of this Annual
Report. Key contact – General Manager
Operational and Technology Risk.
> Policy on the Prevention of Money
Laundering, Criminal and Terrorist
Financing – This policy covers Anti-Money
Laundering and Anti-Terrorism laws andregulations. It sets out principles related
to identification and record keeping
procedures, the need for staff awarenessand related training, and annual
requirements for independent testing andcompliance reporting. The policy is aimed
at ensuring that ANZ is able to protect its
reputation, integrity, assets, liabilities
and shareholder funds. Key contacts –General Manager Operational andTechnology Risk and General Manager
Group Compliance.
> Market (Continuous) Disclosure Policy– ANZ is committed to achieving bestpractice in the area of continuous
disclosure. The policy is designed toensure that there is full and timely
disclosure of ANZ’s activities toshareholders and the market. The policy
requires that information disclosed to therelevant stock exchanges is placed on
ANZ’s website. Key contacts – Head ofInvestor Relations, Head of Media
Relations, Company Secretary.
> Policy on Relationship with External
Auditor – The Board and the Audit
Committee’s policy on audit and nonaudit services regulates the audit-related
and non-audit services that may be
conducted by ANZ’s external auditor. It
sets in place a formal approval process
regarding the provision of audit and nonaudit services. This approval process isthe responsibility of the Audit Committee.
In addition it sets out the rotation
requirements for the lead partner andother members of the audit team, andprocesses related to the potential
appointment of ex-partners or ex-

employees of the external auditor.
Key contact – Chairman of the Audit
Committee.
> Whistleblower Policy (formerly known
as Serious Complaints Policy) – The
Whistleblower Process is an additional
mechanism by which ANZ staff,
contractors and consultants may voice
any concerns they may have regarding
any malpractice or impropriety that theyfind within ANZ. It requires that
protection be given to employees against
dismissal or penalty as a result of
disclosing concerns in good faith. Key
contacts – Group General Manager,(Internal) Audit and Group GeneralCounsel and Company Secretary.
> Share Trading Policy – This policy
covers trading in ANZ securities by all
employees, contractors and consultants
engaged by ANZ. The policy prohibits
trading in ANZ securities or the securitiesof other entities for all persons aware of
unpublished ANZ price sensitive
information. In addition, it specificallyprohibits trading by certain employees,
contractors and consultants working inspecific areas of ANZ during blackout
periods. A blackout period is the sixweek period leading up to the day after
the announcement of the half yearly andfull year results. The Board has also
resolved to apply the principles of thispolicy to directors’ own trading in ANZshares. Key contact – Head of Investor
Relations.
> New Zealand Policies – Recognising theimportance of ANZ’s presence in New
Zealand and the requirements of theReserve Bank of New Zealand, the ANZ
National Bank Limited Board reviews andapproves all ANZ Group governance andrisk management polices before they are
adopted by ANZ National Bank to ensurethat they meet all New Zealand regulatory
requirements.
> Other Company Policies – Can befound on anz.com. Operational policies
may not be publically available.

54 I remuneration report

REMUNERATION REPORTCONTENTS
Section A.

Remuneration Tables

Section D. Chief Executive Officer’s Remuneration

Section B.

Non-Executive Directors’ Remuneration

Section E. Specified Executives’ Contract Terms

Section C.

Remuneration Structure

Section F.

Equity Instruments relating to Directors and Specified Executives

SECTION A. REMUNERATION TABLES
For the year ended 30 September 2004 details of the emoluments of the directors are set out below:

PRIMARY3
Cashsalary/fees

Value of sharesaquired inlieu of cash
salary/fees2$

Associated entity
board fees (cash)$

Long service
leave accrued
duringthe year$$1Non-executive Directors

CB Goode (Appointed director July 1991;
appointed Chairman August 1995)
Independent Non Executive Director, Chairman

2004

91,000n/a

338,000–

2003

76,000n/a274,000–

G Clark (Appointed February 2004)
Independent Non Executive Director

2004
2003

86,667
n/a

n/a
n/a

–
n/a

–
n/a

JC Dahlsen (Appointed May 1985)7
Independent Non Executive Director

2004
2003

130,000
110,000

n/a
n/a

–
–

–
–

RS Deane (Appointed September 1994)
Independent Non Executive Director

2004
2003

130,000
110,000

n/a
n/a

–
–

117,9589
100,996

JK Ellis (Appointed October 1995)
Independent Non Executive Director

2004
2003

103,000
110,000

n/a
n/a

27,000–––DM Gonski (Appointed February 2002)
Independent Non Executive Director

2004
2003

130,000
110,000

n/a
n/a

–
–

50,15042,500MA Jackson (Appointed March 1994)
Independent Non Executive Director

2004
2003

130,000
88,000n/an/a–
22,000––

BW Scott (Appointed August 1985)7
Independent Non Executive Director

2004
2003

130,000
110,000

n/a
n/a

–
–

24,389–TOTAL OF NON-EXECUTIVE DIRECTORS

2004
2003

930,667
714,000n/an/a

365,000
296,000

192,497
143,496

J McFarlane (Appointed October 1997)
Chief Executive Officer

2004
2003

438
702,565

78,211
23,431

1,882,831
709,685––

TOTAL OF ALL DIRECTORS

2004
2003

930,710
1,416,565

78,211
23,431

2,247,831
1,005,685

192,497
143,496

Executive Director

1 DE Meiklejohn and JP Morschel commenced as directors on 1 October 2004
2 Shares acquired through participation in Directors' Share Plan (relates to CEO only in relation to cash bonus, as Non-Executive Directors do not participate in short-term incentive arrangements).
Value reflects the price at which the shares were purchased on market (amortisation not applicable)
3 Non-monetary benefits for all directors are nil
4 Accrual relates to Directors' Retirement Scheme. If each non-executive director had ceased to be a director as at 30 September 2004, the following benefits would have been payable under the
Directors' Retirement Scheme: CB Goode - $1,069,255; G Clark - $33,008; JC Dahlsen - $402,365; RS Deane - $644,116; JK Ellis - $412,058; DM Gonski - $146,725; MA Jackson - $366,690;
BW Scott - $389,125. The Directors' Retirement Scheme is being reviewed and it is currently planned to be discontinued after 30 September 2005
5 Details of options and deferred shares granted appear in the Annual Report of the year in which they are granted. In accordance with the requirements of AASB1046A, the amortisation value includes a
proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet fully vested as at the commencement of the financial year. It is assumed that 100% of theoptions will vest at the commencement of their exercise period (ie the shortest possible vesting period is assumed). The fair value is determined at grant date and is allocated on a straight-line basis
over the shortest possible vesting period. The fair value is determined using a binomial option pricing model that is explained in section F8. The amount included as remuneration is not related to nor
indicative of the benefit (if any) that may ultimately be realised should the options become exercisableremuneration report I 55

EQUITY5

POST EMPLOYMENTOTHER6
Total

Committee
fees(cash)

Value of sharesaquired in lieu
of cash bonus2

Primary
total

Super
contributions

Retirement
benefit accrued
during the year4

Total
amortisation of
LTI options

$

$

$

$

$

$

$

$

–

n/a

429,000

11,297

99,586n/a–

539,883–n/a

350,000

10,52016,996n/a–

377,516

10,834
n/a

n/a
n/a

97,501
n/a

7,597
n/a

33,008
n/a

n/a
n/a

–
n/a

138,106
n/a

65,05025,000n/an/a

195,050
135,000

11,296
10,52074,35622,430

n/a
n/a

–
–

280,702167,950

19,500–n/an/a267,458
210,996

10,321
9,900

70,99817,151

n/a
n/a

–
–

348,777
238,047

52,25025,000n/an/a

182,250
135,000

11,297
10,52065,78023,384

n/a
n/a

–
–

259,327
168,904

16,050–n/an/a196,200
152,500

11,297
10,52067,22749,078

n/a
n/a

–
–

274,724
212,098

42,250–n/an/a172,250
110,000

10,8999,900

56,352(5,562)11

n/a
n/a

–
–

239,501
114,338

30,75025,000n/a
n/a

185,139
135,000

11,297
10,52064,83915,950

n/a
n/a

–
–

261,275
161,470

236,684
75,000n/an/a

1,724,848
1,228,496

85,301
72,400532,146
139,427

n/a
n/a

–
–

2,342,295
1,440,323––

1,850,006
982,121

3,811,091
2,417,802

417,00010
87,750––2,584,88012
2,538,759

90,61913–

6,903,590
5,044,311

236,684
75,0001,850,006
982,1215,535,939
3,646,298

502,301
160,150

532,146
139,427

2,584,880
2,538,759

90,619–9,245,885
6,484,634

6

Amounts disclosed for remuneration of directors exclude insurance premiums paid by the consolidated entity in respect of directors' and officers' liability insurance contracts which cover current
and former directors and officers, including executive officers of the entity and directors, executive officers and secretaries of the controlled entities. The total premium, which cannot be disclosed
because of confidentiality agreements, has not been allocated to the individuals covered by the insurance policy as, based on all available information, the directors believe that no reasonablebasis for such allocation exists

7

JC Dahlsen and BW Scott will be retiring as directors on 3 February 2005 and 23 April 2005 respectively

8

J McFarlane elected to use almost all his cash salary and bonus to purchase on market deferred shares under the Directors' Share Plan.

9

Amounts paid in NZD are converted to AUD at an average rate for the year of 1.1254 (1.1139 in 2003)

10 Includes $300,000 additional employer contribution, agreed as part of contract extension announced 26 October 2004 (refer to section D2)
11 In accordance with the ANZ Directors' Retirement Scheme (explained in section B2), MA Jackson's Retirement Benefit accrued during the year is shown as negative because the increase in thebalance held in the ANZ Staff Superannuation Scheme (for the year ended 30 September 2003) exceeded the increase in other remuneration for the 3 preceeding years (ie from the 3-year period
ended 30 September 2002 to the 3-year period ended September 2003)
12 Amortisation value of options as a percentage of total remuneration (as shown in the Total column above) was 37% in 2004 (50% in 2003)
13 Relates to reimbursement to J McFarlane for the additional tax liability on his UK Pension Plan holdings, arising as a result of Australian Foreign Investment Fund rules, and J McFarlane’s continuing
Australian residency (in accordance with the contractual agreement detailed in section D2)

56 I remuneration report

For the year ended 30 September 2004 details of the emoluments of the top seven executives (Specified Executives), other than the
Chief Executive Officer, are set out below and include the five most highly remunerated executives in the Company and the Group(as required under the Corporations Act 2001) and the top executives in the Group by authority (as required by AASB1046):

PRIMARY
Cashsalary/fees

Non monetary
benefits1$

Long service
leave accrued
duringthe year$$Specified Executives
Sir J Anderson (appointed 1 December 2003)7
Chief Executive & Director, ANZ National Bank Limited

2004
2003

672,792
n/a

–
n/a

–
n/a

Dr RJ Edgar
Chief Operating Officer

2004
2003

723,651
583,500

56,212
2,399

31,552
31,144

E Funke Kupper8
Group Managing Director Asia-Pacific

2004
2003

654,550
654,850

10,846
10,865

7,277
6,869

BC Hartzer9Group Managing Director Personal Banking

2004
2003

543,062454,072

15,694
11,81257,091
65,425PJO Hawkins
Group Managing Director Group Strategic Development

2004
2003

551,625
593,432

11,678
11,646

7,277
6,869

PR Marriott
Chief Financial Officer

2004
2003

728,451654,850

29,098
10,865

7,277
6,869

S Targett (appointed 5 May 2004)
Group Managing Director Institutional Financial Services

2004
2003

305,407
n/a

5,101
n/a

2,934
n/a

TOTAL

2004
2003

4,179,538
2,940,704

128,62947,587

113,408
117,176

1

Non monetary benefits provided to Specified Executives consist of salary packaged items such as car parking and novated lease motor vehicles

2

Total cash bonus relates to the cash component provided as part of ANZ's short-term incentive program in May 2004 (50% cash) and the full bonus amount from
October 2004 (which was 100% cash, except in those instances where the Specified Executive elected to receive shares in lieu, in which case the value of these elective shares are shown above as
though they were cash). Refer to section C5.1 for further details

3

Details of options and deferred shares granted appear in the Annual Report of the year in which they are granted. In accordance with the requirements of AASB1046A, the amortisation value includes
a proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet fully vested as at the commencement of the financial year. It is assumed that 100% of
the options will vest at the commencement of their exercise period (ie the shortest possible vesting period is assumed) and that deferred shares will vest after 3 years. The fair value is determined at
grant date and is allocated on a straight-line basis over the 3-year vesting period. For options, the fair value is determined using a Binomial Option Pricing model that is explained in section F8.
For deferred shares, the fair value is the weighted average price of the Company's shares on the allocation date. The amount included as remuneration is not related to nor indicative of the benefit(if any) that may ultimately be realised should the options become exercisable4

Accrual relates to Retirement Allowance (refer to section E for further details)

remuneration report I 57

EQUITY3
Total cash
bonus2

POST EMPLOYMENT

Total
amortisation
value of LTI
shares$Totalamortisation
value of LTI
options$

Total
amortisation ofother equity
allocations$

Super
contributions

$

Total
amortisation
value of STI
shares$$Retirement
benefitaccrued during
year4$

335,881
n/a

–
n/a

–
n/a

–
n/a

219,168n/a

67,279n/a

32,160n/a1,327,280
n/a393,000
222,004

197,681236,895

342,662
141,264

256,110
201,924––

46,75238,025

7,163
10,276

2,054,783
1,467,431

385,500
210,008

232,208
315,650

232,024
233,812333,500
452,430––

40,95040,950––1,896,855
1,925,434

424,000
165,005

201,364
272,484

192,239
141,682

298,814265,593––

37,22432,175––

1,769,488
1,408,248

325,000
200,016

214,906
280,451

206,975
219,660

293,966
347,032––

43,87543,875

2,947
2,979

1,658,249
1,705,960

482,000
239,017

243,435
295,927

276,714
255,135

369,376
394,675––

45,542
40,950––2,181,893
1,898,288

267,000
n/a

–
n/a

–
n/a

–
n/a

188,08110
n/a

18,976n/a–n/a787,499n/a2,612,381
1,036,050

1,089,594
1,401,407

1,250,614
991,553

1,551,766
1,661,654

407,249–

300,598
195,975

42,27013,255

11,676,047
8,405,361

Total5,6$

5

Amounts disclosed for remuneration of Specified Executives exclude insurance premiums paid by the consolidated entity in respect of directors’ and officers’ liability insurance contracts which covercurrent and former directors and officers, including executive officers of the entity and directors, executive officers and secretaries of the controlled entities. The total premium, which cannot be
disclosed because of confidentiality agreements, has not been allocated to the individuals covered by the insurance policy as, based on all available information, the directors believe that noreasonable basis for such allocation exists.

6

Amortisation value of options as a percentage of total remuneration (as shown in the Total column above) was as follows: Sir J Anderson - 16% (n/a in 2003); RJ Edgar - 12% (14% in 2003);
E Funke Kupper - 18% (23% in 2003); BC Hartzer - 17% (19% in 2003); PJO Hawkins - 18% (20% in 2003); PR Marriott - 17% (21% in 2003); S Targett - 12% (n/a in 2003)

7

Amounts paid in NZD are converted to AUD at an average rate for the year of 1.1254. Amortisation of other equity allocations for Sir J Anderson relates to the granting of zero priced options (ZPO)
and shares issued under ANZ's $1,000 Employee Share Acquisition Plan (ESAP). ZPOs are granted under the ANZ Share Option Plan and have a nil exercise price and no time-based vesting criteria.
They were designed to deliver equity to the CEO of National Bank of New Zealand and were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ.
Refer to section C7 for further details pertaining to the $1,000 ESAP8

E Funke Kupper was the Managing Director of Personal Banking & Wealth Management Australia prior to 1 May 2004

9

BC Hartzer was the Managing Director of Consumer Finance prior to 1 May 2004

10 Amortisation of other equity allocations for S Targett relates to the grant of deferred shares (four tranches of $700,000 to be issued at 6 month intervals in approximately April and October each year,
subject to Board approval and continued employment) and hurdled options (refer to section C5.2.1 for performance hurdle details) to compensate S Targett for the loss of access to equity as a resultof his resignation from his previous employer

58 I remuneration report

SECTION B. NON-EXECUTIVEDIRECTORS' REMUNERATION
B1. NON-EXECUTIVE DIRECTORS'REMUNERATION POLICY
Non-executive directors' fees are reviewed
annually and are determined by the Boardof Directors based on advice from external
advisors and with reference to fees paid toother non-executive directors ofcomparable companies.
Non-executive directors' fees are within
the maximum aggregate limit agreed toby shareholders at the Annual General
Meeting held on 13 December 2002($2.5 million, excluding retirement
allowances), and are set at levels thatfairly represent the responsibilities of,and the time spent by, the non-executive
directors on Group matters.
Directors receive a fee for being a directorof the Board, and also additional fees for
either chairing or being a member of acommittee. Special work on committees
may attract additional fees, of an amountconsidered appropriate in thecircumstances. An additional fee is also
paid if a non-executive director serves asa director of ANZ National Bank Limited,
ING Australia Ltd or Metrobank Card
Corporation.
The fee structure is illustrated in the tablebelow:
Role

Current Fee

ChairmanNon-executive director
Committee Chair1
Committee Member1$429,000$130,000$32,500$9,750

1 Except Nominations & Corporate Governance Committee,
where the current Chair and Member Fees
are $21,000 and $6,300 respectively.

Directors may elect to take all or part oftheir fees in shares under the Directors'
Share Plan (refer to section B3 for moredetails).
For details of emoluments paid to
directors for the year ended
30 September 2004, refer to theRemuneration tables in section Aof this Remuneration Report.

B2. NON-EXECUTIVE DIRECTORS'RETIREMENT POLICY
All non-executive directors participate in
the ANZ Directors' Retirement Scheme.
Under this scheme, a lump-sum retirement
benefit is payable to non-executive directors
upon their ceasing to be a director.
The lump-sum retirement benefit payable
where the non-executive director has held
office for 8 years or more is equal to thetotal remuneration (excluding retirement
benefit accrual) of the non-executive
director in respect of the 3 years
immediately preceding the non-executive
director ceasing to be a non-executive
director. This benefit is funded in partby the balance held, if any, on the
non-executive director’s behalf in the
ANZ Staff Superannuation Scheme.
For periods of less than 8 years, a
proportionate part of such emoluments ispayable. The non-executive directors are
not entitled to the statutory entitlementsof long service leave and annual leave.
Consistent with Principle 9.3 of theAustralian Stock Exchange (ASX) Corporate
Governance Rules, which states that
non-executive directors should not beprovided with retirement benefits otherthan statutory superannuation, the ANZ
Directors' Retirement Scheme is being
reviewed and it is currently planned to bediscontinued after 30 September 2005.

B3. DIRECTORS’ SHARE PLAN
The Directors' Share Plan is available toboth non-executive and executive
directors. Directors may elect to forgo
remuneration to which they may haveotherwise become entitled and receive
shares to the value of the remuneration
forgone. Participation in the plan isvoluntary and therefore the sharesacquired are not subject to performance
conditions.
Shares acquired under the plan arepurchased on market and are held in trust
for up to 10 years. The director selects a
restriction period of between 1 and 10
years during which the shares cannot be
traded. The shares are subject toforfeiture for serious misconduct.
All costs associated with the plan are
met by the Company.

remuneration report I 59

SECTION C. REMUNERATIONSTRUCTURE
C1. EXECUTIVE REMUNERATIONPHILOSOPHY AND OBJECTIVESANZ's reward policy guides theCompensation Committee andmanagement in shaping remuneration
strategies and initiatives.
The following philosophies underpin ANZ's
reward policy:
1. Focus on creating and enhancing value
for ANZ's shareholders;
2. Differentiation of individual rewards
commensurate with contribution to overall
results and according to individual
accountability, performance and potential;
3. Significant emphasis on "at risk"
components of total rewards linked to theenhancement of shareholder value throughimprovements in Economic Value Added™
(EVA™); and4. The provision of a competitive reward
proposition to successfully attract, motivate
and retain the high quality workforce
required to deliver ANZ's business andgrowth strategies.
During 2004 a comprehensive review of
reward structures has been conductedagainst the backdrop of these philosophies
and against the Company's growth strategy
and corporate governance principles.
As a result, a number of changes to reward
structures are planned for the first half ofthe 2005 financial year. These changes aredetailed in section C5 of this Remuneration
Report.

C2. COMPENSATION COMMITTEEThe Compensation Committee has a charter
which details the terms of reference underwhich the Committee operates. The Chartercan be found on anz.com > about ANZ(listing at top of screen) > Corporate
Information > ANZ Policies > Corporate
Governance and Policies.
The role of the Compensation Committee isdetailed on page 50 of the Corporate
Governance Report.
On a number of occasions throughout theyear, both the Compensation Committee
and management received external advice
on matters relating to remuneration. The
following advisors were used: Hay Group;
Blake Dawson Waldron; Freehills; Mercer
Human Resource Consulting; andPricewaterhouseCoopers.

C3. REMUNERATION STRUCTURE
OVERVIEW
ANZ's reward structures are designed tomeet the needs of the specialised
business units as well as the markets inwhich they operate. As a result, the mix of
remuneration components can vary acrossthe organisation although, wherepracticable, ANZ applies structures andopportunities on a consistent basis for
similar roles and levels. There is a strongemphasis on variable pay opportunities
with total employee remunerationdifferentiated significantly on the basisof performance.
The executive remuneration program isdesigned to support the reward
philosophies detailed in section C1, and tounderpin the Company’s growth strategy.
This program aims to differentiate
remuneration on the basis of achievement
against both individual, business unit andgroup performance targets which arealigned to sustained growth inshareholder value.
The program comprises the following
components:> Fixed remuneration component:salary, non-monetary benefits andsuperannuation contributions.
> Variable or "at risk" component:- Short-Term Incentive (STI); and- Long-Term Incentive (LTI), which
consists of options and deferredshares
The relative weighting of fixed andvariable components, for target
performance, is set according to the sizeor market of the executive's role, with theproportion of remuneration "at risk"increasing for the most senior or complex
roles, or for those roles where there isstrong market pressure to provide greaterlevels of remuneration. Compared to themarket, fixed remuneration levels aredesigned to be around median, as are thevariable components - STI and LTI - except
in cases of superior performance where
total remuneration is designed to reflect
the upper range of competitive market
levels. In this way the remuneration
structure is heavily weighted towards"reward for performance".

C4. FIXED REMUNERATION
For most executives, fixed remunerationconsists of what is referred to as Total
Employment Cost (TEC). TEC comprises a
notional cash salary, a superannuation
contribution (calculated as 9% of thenotional salary except for Sir J Anderson
who receives a superannuation
contribution equal to one eleventh of TEC)
and the remainder as cash or nominatedbenefits. The types of benefits that canbe packaged by executives include
novated car leases, additional
superannuation contributions, carparking, child care and contributions
towards the Employee Share Save Scheme(see note 50 of the 2004 Financial Reportfor details of the Employee Share Save
Scheme).
To ensure fixed remuneration for theCompany's most senior executives
remains competitive, the TEC componentof executive compensation is reviewed
annually based on performance andmarket data, with the level targeted toaround the market median being paid in
the finance industry in the relevant global
markets in which ANZ operates.
International remuneration levels are
considered in assessing market
competitiveness where an executive's
primary place of residence is (or has been)outside of Australia or New Zealand, inwhich case the local market is considered.

60 I remuneration report

C5. VARIABLE REMUNERATION
Variable remuneration forms a significant
part of executives' potential remuneration,
providing an at-risk component that isdesigned to drive performance in both theshort-term (semi annually or annually)
and in the long-term (over 3 years or more).
The opportunities available to executives
under ANZ's variable reward programs arecalibrated to reflect executives' potential
impact on the business; to manageinternal relativities; and to ensurecompetitiveness in the relevant markets
in which they operate.
Most executives participate in the
short-term incentive scheme detailed in
section C5.1. All executives participate
in the long-term incentive plan detailed in
section C5.2, subject to individual
performance thresholds. In some instances,
customised short-term incentive plans will
exist that executives may participate in toensure more precise alignment withbusiness objectives and market practice.
No executives however, may participate inmore than one short-term incentive plan.
C5.1 Short-term Incentives
Short-term incentive (STI) payments
encourage executives to support ANZ's
strategic objectives by providing rewards
that are significantly differentiated on thebasis of achievement against performancetargets. Most executives participate in thescheme explained below. All short-term
incentive schemes are reviewed by theCompensation Committee.
The size of STI payments are based, firstly,
on overall group and business unit
performance results against a balanced
scorecard and, secondly, on individual
performance against financial andnon-financial measures.
> Group and business unit performanceis assessed against a number ofqualitative and quantitative measuresconsistent with the ANZ Balanced
Scorecard Approach. Measures include
but are not limited to:> Change in Economic Value
Added (EVATM);> Customer Satisfaction;> Employee Engagement;> Risk Management; and> Compliance.
Performance against these measures
influences the size of the incentive poolavailable to individuals within eachbusiness unit.

> For individual performance, executives
are ranked against their peers, with better
relative performance attracting a greater
proportion of the incentive pool.
Individual Key Result Areas (KRAs) are set
annually to support the Company
objectives stated in the Balanced
Scorecard noted above, and performanceagainst these KRAs is used as an input toassessing relative ranking.
Up until May 2004, STI payments havebeen made each half year and a portion ofthem have been paid in shares deferredfor 3 years (STI deferred shares).
STI deferred shares have the following
conditions attached:> Shares are subject to a time-based
vesting hurdle of 3 years, during whichtime they are held in trust;> During the deferral period, shares
attract dividends that are paid directly tothe employee; and> Shares issued under this plan may beheld in trust for up to 10 years.
The value used to determine the number
of STI shares to be allocated has been
based on the volume weighted average
price of the Company’s shares traded on
the ASX in the week leading up to andincluding the date of issue.
From October 2004, performance willcontinue to be measured every 6 months,
but payments will be made annually.
Furthermore, bonuses are to be paid
100% in cash (except where specificbusiness schemes require otherwise, or
executives elect to receive shares in lieu).
This change, together with the changes
being made to our long-term incentive
program, is designed to increase thecompetitiveness and clarity of purpose of
the Company's reward structures.
C5.2 Long-term Incentives
Long-term incentives (LTIs) are used as amechanism to link a significant portion of
executives' compensation to theattainment of sustained growth inshareholder value. The size of LTI grants isdetermined by the Company’s
performance and an individual's level of
responsibility, performance and theassessed potential of the executive.
Allocations have typically been made in or
around April and October each year,
although after 2004 the grants will bemade annually in or around November.

There are two components to LTI, eachmaking up approximately half of theannual LTI grant value:> Options; and> Deferred Shares.
Upon exercise, each option entitles theoption holder to one ordinary share.
The conditions under which shares andoptions are granted are approved by the
Board in accordance with the rules of both
the ANZ Employee Share Acquisition Plan
and the ANZ Share Option Plan.
Performance conditions are explained in
more detail below, including changes
planned for the coming year.
C5.2.1 Options
Options are designed to reward executives
for share price growth dependent upon
the Company's Total Shareholder Returnoutperforming peers. Each option has thefollowing features:> An exercise price (or for index-linked
options, the original exercise price) that is
set equal to the weighted average saleprice of all fully paid ordinary shares in
the Company sold on the Australian Stock
Exchange during the 1 week prior to andincluding the date of grant1;> A maximum life of 7 years and an
exercise period that commences after
3 years2, subject to performance hurdles
being cleared. Options are re-tested
monthly (if required) after thecommencement of the exercise period;> Upon exercise, each option entitles theoption-holder to one ordinary share;> In case of resignation or termination on
notice or dismissal for misconduct:
options are forfeited;> In case of redundancy: options are pro
rated and a grace period of 3 months isprovided in which to exercise theremaining options (with hurdles waived,
if applicable);> In case of retirement, death or total &permanent disablement: A grace period of
3 months is provided in which to exercise
all options (with hurdles waived, if
applicable); and> Performance hurdles, which are
explained below for each type of option.
1 For options granted to the CEO, the exercise price is equal
to the weighted average share price during the 5 trading
days immediately before or after the Company's Annual
General Meeting that immediately precedes the allocation.
2 For options granted to the CEO, the life and exercise period
may differ, as disclosed in the tables of the year in which
they are granted.

remuneration report I 61

Hurdled options (granted from February
2000 until July 2002, and from November
2003 until May 2004)
Until May 2004, hurdled options were
granted with the following performance
hurdles attached:
1. Half the options may only be exercised
once the ANZ Total Shareholder Return(ANZ TSR) exceeds the percentage change
in the S&P/ASX 200 Banks (Industry
Group) Accumulation Index, measured
over the same period (since issue) andcalculated as at the last trading day of any
month (once the exercise period hascommenced); and2. The other half of hurdled options may
only be exercised once the ANZ TSR
exceeds the percentage change in the
S&P/ASX 100 Accumulation Index,
measured over the same period (sinceissue) and calculated as at the last trading
day of any month (once the exercise
period has commenced).
These hurdles were originally selected toensure rewards were aligned with shareprice growth in a manner that was easy tounderstand and which took into accountperformance relative to the market. At thetime of implementation these hurdles
were in line with market practice.
Index-linked options (granted from
October 2002 to May 2003)
Index-linked options have a dynamic
exercise price that acts as a built-in
performance hurdle, ie the exercise priceis adjusted in line with the movement in
the S&P/ASX 200 Banks (Industry Group)
Accumulation Index (excluding ANZ).
As an additional constraint, the adjusted
exercise price can only be set at or above
the original exercise price. Index-linked
options ensure that executives are only
rewarded for the true out-performance of
ANZ's share price over and above themovement in the related index. They are
exercisable between the 3rd and 7th year
after grant date, subject to the adjusted
exercise price being above the prevailingshare price.

Hurdled options (to be granted from
November 2004)
From November 2004, the hurdles
attached to options will change.
The proportion of options that become
exercisable will depend upon the TSR
achieved by ANZ relative to the companies
in the comparator group shown below.
Performance equal to the median TSR of
the comparator group will result in half theoptions becoming exercisable.
Performance above median will result infurther options becoming exercisable,
increasing on a straight-line basis until allof the options become exercisable where
ANZ TSR is at or above the 75th percentile
in the comparator group. These new
performance hurdles are more consistent
with current market practice in thefinancial services industry and are alignedwith the Company’s strategic focus on
growth.
Comparator Group
National Australia Bank St George Bank
Commonwealth Bank
WestpacQBE
AMP
AXA Asia Pacific
IAG
Suncorp Metway
Macquarie
C5.2.2 Deferred Shares (LTI)
Deferred Shares granted under the longterm incentive arrangements are designed
to reward executives for superior growthwhilst also encouraging retention and anincrease in the Company’s share price.
> Shares are subject to a time-based
vesting hurdle of 3 years, during whichtime they are held in trust;> During the deferral period, the employee
is entitled to any dividends paid on theshares;> Shares issued under this plan may beheld in trust for up to 10 years;> The value used to determine the numberof LTI deferred shares to be allocated has
been based on the volume weighted
average price of the shares traded on the
ASX in the week leading up to andincluding the date of issue;> In case of resignation or termination on
notice or dismissal for misconduct: LTI
shares are forfeited;> In case of redundancy: the number of
LTI shares that are released is pro rated
according to the time held as a proportionof the vesting period; and> In case of retirement, death or total &permanent disablement: LTI shares are
released to executives.

62 I remuneration report

C6. PERFORMANCE OF ANZ
The following table shows how ANZ's Total Shareholder Return (TSR, which includes share price growth, dividends and other capitaladjustments) has performed against two comparator groups, measured from various dates (which approximately coincide with previous
major option allocations) to 30 September 2004. The measure shown ("ANZ out-performance against the index") is intended to demonstrate
the link between company performance and the value delivered to executives as part of the long-term incentive arrangements (ie themeasure reflects the hurdle attached to previously granted hurdled options, as explained under section C5.2.1).

Measurement Period

1 Apr 04- 30 Sep 04
1 Oct 03 - 30 Sep 04
1 Apr 03- 30 Sep 04
1 Oct 02 - 30 Sep 04
1 Apr 02- 30 Sep 04
1 Oct 01 - 30 Sep 04
1 Apr 01- 30 Sep 04
1 Oct 00 - 30 Sep 04
1 Apr 00- 30 Sep 04
1 Oct 99 - 30 Sep 04

ANZ out-performance against
S&P/ASX 100 Accumulation Index1

ANZ out-performance against
S&P/ASX 200 Banks Accumulation Index1,2

Number of months

Measured point-to-point

Measured point-to-point

6
12
18
24
30
36
42
48
54
60

-7%
-3%
-16%
-11%
9%
8%
39%
52%
98%
91%

6%
10%
6%
10%
15%
6%
32%
31%
51%
63%

1 Out-performance is measured in absolute percentage points by which the Company's TSR has exceeded or lagged the relevant accumulation index, over the measurement period,eg the Company's TSR from 01 Oct 99 to 30 Sep 04 was 146.3%, whilst the S&P/ASX100 Accumulation Index grew by 55.8% in the same period. This represents a 91% out-performanceby the Company
2 The Banking and Finance Accumulation Index is used instead of the S&P/ASX 200 Banks (Industry Group) Accumulation Index for any portion of a performance period extending
before April 2000

C7. OTHER EMPLOYEE SHARE SCHEME$1,000 Employee Share Acquisition Plan
All permanent employees (other than the most senior executives) who have had continuous service for one year with the Company or any of
its controlled entities may be eligible to participate in a scheme enabling the issue of up to $1,000 of shares to an employee in eachfinancial year, subject to the approval of the Board. The shares are retained in trust for a three-year vesting period. On expiration of that
period, an employee may generally sell the shares, transfer them into their name, or have them retained in the trust. On termination,
the shares are generally transferred into the employee's name. Forfeiture provisions may apply outside of Australia, depending on thejurisdiction.
The Company has made six offers under the $1,000 Employee Share Acquisition Plan, with a seventh scheduled for December 2004.
A total of 8,258,575 shares have been granted under the plan as at 30 September 2004.

remuneration report I 63

SECTION D. CHIEF EXECUTIVEOFFICER'S REMUNERATION

D2. CEO'S CONTRACT TERMS

D1. CEO REMUNERATION OVERVIEW

On 26 October 2004, the Company
announced an extension to J McFarlane's
contract:

The structure of J McFarlane's
compensation, which is in accordancewith his agreement, is as follows:> The term of the contract will be
extended by one year to
30 September 2007;> Fixed Compensation: Consists of salary,
benefits and superannuation
contributions. Since October 2003,
J McFarlane has elected to receive almost
all of his Fixed Compensation in the formof shares purchased under the Directors'
Share Plan.

> In addition to mandatory
superannuation contributions, theCompany will make additional employer
contributions of $300,000 per annum(effective from 1 October 2003), paid
quarterly to J McFarlane's chosen
superannuation fund; and> Short-Term Incentive: J McFarlane's
Short-Term Incentive is based on theGroup's EPS Growth and EVATM
performance against target and an annual
assessment of J McFarlane's achievementof specific objectives agreed with theBoard. J McFarlane's Short-Term Incentive
may be paid in cash or in sharespurchased under the Directors' SharePlan. J McFarlane has typically elected
to receive shares.

> Subject to shareholder approval at theAnnual General Meeting in December 2004,
it is proposed that J McFarlane be offered
175,000 Performance Shares, describedin section D4.

> Long-Term Incentive: J McFarlane'sLong-Term Incentive was approved byshareholders at the Annual General
Meeting in December 2001. Four tranchesof options were approved for granting by
the Board: 500,000 in 2001; 1,000,000 in
2002; 1,000,000 in 2003 and 500,000 in
2004. The exercise of these options issubject to performance hurdles being
satisfied. J McFarlane's specificperformance hurdles, for options granted
during the year, are indicated in section F3.
Subject to shareholder approval at theAnnual General Meeting in December
2004, it is proposed that J McFarlane beoffered 175,000 Performance Shares aspart of his contract extension.
The conditions attached to these
Performance Shares are explained in
section D4 below.
The compensation of J McFarlane for theyear ended 30 September 2004 is set out
in Section A of this Remuneration Report.

A separate agreement, made on
23 October 2001, provides forreimbursements to J McFarlane for any
additional tax liabilities that may arise on
his UK Pension Plan holdings as a result of
his continuing Australian residency.
Under this agreement, ANZ reimburses
J McFarlane for any additional tax liability
incurred on his UK Pension Plan during his
employment with ANZ, arising as aconsequence of Australian Foreign
Investment Fund rules. In the event ofdecreased Australian tax liabilities due toa decreased value in J McFarlane's UK
Pension Plan, the reduced liability will be
used to offset potential subsequent
reimbursements.

D3. CEO'S RETIREMENT AND
TERMINATION BENEFITS
In accordance with J McFarlane's contract
variation (refer section D2), J McFarlane's
nominated superannuation fund receives$300,000 per annum (effective from
1 October 2003, paid quarterly) in
addition to mandatory superannuation
contributions.
J McFarlane can terminate his employment
agreement by providing 12 months'
notice. ANZ may terminate theemployment agreement by providing
notice equal to the unexpired term of theemployment agreement (which ends on
1 October 2007). If ANZ terminates theemployment agreement without noticeand thus breaches its obligation toprovide the required notice, ANZ has
agreed with J McFarlane that the damages
payable by ANZ for breach of contract
would be equal to the Total Employment
Cost (TEC) that would otherwise bereceived over the remainder of thecontract (TEC comprises salary or fees,
non-monetary benefits and mandatory
superannuation contributions).
In circumstances of serious misconduct,
J McFarlane is only entitled to payment of
TEC up to the date of termination.
Payment of accumulated superannuation
benefits plus statutory entitlements oflong service leave and annual leave(calculated on the basis of salary or fees)
applies in all events of separation.
In the event of resignation not approvedby the Board or dismissal for serious
misconduct, all unexercised options will
be forfeited. In the event of termination on
notice, all option grants may be exercised.
Upon separation, option entitlements
must be exercised within 6 months oftermination. In the event of serious
misconduct, shares held in the Directors'
Share Plan will be forfeited.
On resignation or termination on notice,
shares will be released.

64 I remuneration report

D4. ALLOCATION OF PERFOMANCESHARES (DECEMBER 2004)

D5. CEO'S PARTICIPATION IN EQUITYPROGRAMS

Subject to shareholder approval, 175,000
Performance Shares will be issued to
J McFarlane on 31 December 2004.
No dividends will be payable on theshares until they vest. Vesting will be
subject to the following time andperformance hurdles being satisfied:J McFarlane participates in the Directors'
Share Plan, which is explained in section
B3. Refer to section F for details of grants
and holdings.

> The performance hurdle will bemeasured during the performance period
by comparing ANZ's Total Shareholder
Return (ANZ TSR) with that of a comparatorgroup of selected major financial services
companies in the S&P/ASX 100 Index,
excluding ANZ. The companies to be usedin the comparator group will be as
approved by the Board.
> The percentage of Performance Sharesthat will vest will depend upon the TSR
achieved by ANZ relative to the companies
in the comparator group. Performanceequal to the median TSR of thecomparator group will result in half the
Performance Shares vesting. For eachpercentile above the median an additional
2% of Performance Shares will vest,
increasing on a straight-line basis until allof the Performance Shares vest where
ANZ TSR is at or above the 75th percentileof TSRs in the comparator group.
> TSR will be measured for ANZ and thecomparator group over the same period(since grant) and calculated as at the last
trading day of any month, once theperformance period has commenced.
The first opportunity for Performance
Shares to vest will be after the second
anniversary of grant, after which the
Performance Shares will continue to betested monthly until they are forfeited
5 years after the grant date, or 100% vest,
whichever is the earlier.
Performance Shares will be forfeited ifthey have not vested five years after grant
or if J McFarlane ceases to be an employeeof the Company by reason of serious
misconduct. If J McFarlane resigns
without the prior approval of the Board,unvested Performance Shares will be
forfeited.

J McFarlane also participates in the ANZ
Share Option Plan, which is described in
section C5.

remuneration report I 65

SECTION E. SPECIFIED EXECUTIVES' CONTRACT TERMS
Contractual terms for most executives are similar, but do, on occasions, vary to suit different needs.
Section E1 details the contractual terms for those Specified Executives who are on open-ended contracts. Section E2 details the contractual
terms for Sir J Anderson, who is on a fixed term contract.

E1. OPEN-ENDED CONTRACTS (RJ EDGAR, E FUNKE KUPPER, BC HARTZER, PJO HAWKINS, PR MARRIOTT, S TARGETT)
Length of Contract

Open-ended.

Fixed Compensation

The Total Employment Cost (TEC) package consists of salary, mandatory employer superannuation
contributions and benefits.

STI

Eligible to participate. Target opportunity of 66.67% of Total Employment Cost (refer to section C5.1
for details of short-term incentive arrangements).

LTI

Eligible to participate at the Board’s discretion - refer to section C5.2 for long-term incentive
arrangements.

Resignation

Employment may be terminated by giving 6 months' written notice.
On resignation any options and unvested deferred shares will be forfeited.
As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on resignation for illness, incapacity, or domestic reasons; refer toOther Aspects (below) for more details.

Retirement

On retirement, shares and options are generally released in full, although this is only stated in thecontracts of E Funke Kupper (for shares) and PR Marriott (both shares and options). Furthermore,
PR Marriott is entitled to a bonus on retirement, pro-rated for the proportion of the final performance
period that is worked prior to cessation of employment, and subject to adjustment for performance inaccordance with the short-term incentive arrangements in place at the time. As a result of being
employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible to receive a
Retirement Allowance on retirement; refer to Other Aspects (below) for more details.

Termination on Notice by ANZANZ may terminate the employment agreement by providing 12 months' written notice or payment inlieu of the notice period based on TEC.
On termination on notice by ANZ, any options or LTI deferred shares that have vested, or will vest
during the notice period will be released, in accordance with the ANZ Share Option Plan Rules.
LTI shares that have not yet vested will generally be forfeited, although for some executives(E Funke Kupper, BC Hartzer and PR Marriott) these shares will be released in full. Deferred shares
granted under STI arrangements will vest in full for all executives.
Discretion to pay bonuses on a pro-rata basis (depending on termination date, and subject tobusiness performance) applies in most cases, but is contracted for BC Hartzer and PR Marriott.

Redundancy

If ANZ terminates employment for reasons of bona fide redundancy, a severance payment will bemade that is equal to 12 months TEC.
All STI deferred shares are released. All options granted since 24 April 2002 are released on a pro-ratabasis - all prior grants may be exercised. All LTI deferred shares granted since 23 October 2002 arereleased on a pro-rata basis - all prior grants will vest.
Discretion to pay bonuses on a pro-rata basis (depending on termination date, and subject tobusiness performance) applies in most cases, but is contracted for BC Hartzer and PR Marriott.
As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on retrenchment; refer to Other Aspects (below) for more details.

Death or Total andPermanent Disablement

All options and shares released; pro-rata bonus.
As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on death; refer to Other Aspects (below) for more details.

Termination for serious misconduct

ANZ may terminate the employment agreement at any time without notice, and the employee will only
be entitled to payment of TEC up to the date of termination. On termination for serious misconduct,any options, unvested deferred shares or vested deferred shares still held in trust will be forfeited.

66 I remuneration report

Other Aspects

S Targett: subject to continuing employment and the approval of the Board, four tranches of deferred shares(sign-on deferred shares), each worth $700,000, are to be granted at six month intervals in or around April
and October each year, and Hurdled Options (sign-on options) worth $750,000 are to be granted within
3 months of commencement of employment, to compensate for the loss of equity from S Targett's previous
employer. On termination on notice, a pro-rata proportion of the sign-on options can be exercised, basedon the period of employment, and sign-on deferred shares will vest in full, including any scheduled to be
granted during the notice period.
PJO Hawkins: for the period ending 31 December 2005, any payments on cessation of employment(including payout of accrued but untaken Long Service Leave) will be based on a TEC of $750,000.
In instances where a retirement allowance is payable under ANZ policy (ie for RJ Edgar andPJO Hawkins in instances of retirement, death, retrenchment or resignation for illness, incapacity,or domestic reasons), the retirement allowance is calculated as follows: 3 months of notional salary(which is 65% of TEC) plus an additional 3% of notional salary for each year of full time service above
10 years, less the total accrual value of long service leave (including taken and untaken).

remuneration report I 67

E2. FIXED TERM CONTRACT (SIR J ANDERSON)
Length of Contract

Ends 30 September 2005.

Fixed Compensation

The Total Employment Cost (TEC) package is inclusive of employer contributions to thesuperannuation fund.

STI

Short term incentive payments are subject to both business and individual performance.
The target payment is 50% of TEC.

LTI

Fixed at NZD500,000 worth of zero-priced options annually, granted in two tranches per annum.
The share options can be exercised at any time during employment and within 6 months ofthe termination of employment.

Resignation

Sir J Anderson may terminate his employment by giving 12 months' written notice. On resignation,
any share options which have not been exercised as at the termination date are forfeited.

Retirement

A policy for payment of retirement gratuities was in place with NBNZ employees prior to theacquisition by the Company of NBNZ. This policy has been continued for eligible staff who were
ANZ National Bank Limited employees as at 1 December 2003, including Sir J Anderson. Under thispolicy, a payment will be made to Sir J Anderson on his retirement that is equal to the number of fullyears' service divided by 35 and multiplied by 85% of finishing salary (where finishing salary is fixed
remuneration less any superannuation contribution). This value is then grossed up for tax (ie divided
by 0.61) and from this value the total accrual value of long service leave taken is deducted.

Termination on Notice by ANZANZ National Bank Limited may terminate the employment agreement by providing notice or
payment in lieu of notice equal to the unexpired term of the employment agreement(which ends on30 September 2005). On termination on notice by ANZ any options may be exercisedin accordance with the ANZ Share Option Plan Rules.

Death or Total andPermanent Disablement
Terminated for serious misconduct

All shares released; pro rata bonus.
ANZ National Bank Limited may terminate the employment agreement at any time without notice,and Sir J Anderson will only be entitled to payment up to the date of termination. On termination forserious misconduct any share options which have not been exercised as at the termination date may
not be exercised.

E3. PARTICIPATION IN EQUITY PROGRAMS
A number of shares and options are granted to executives under the remuneration programs detailed in Section C. For specified executives,
details of all grants made during the year are listed in Section F. Aggregate holdings of shares and options are also shown.
The deferred shares component of the STI is administered under the ANZ Employee Share Acquisition Plan. For executives, the shares aredeferred for three years, although some employees may receive shares deferred for one year, depending upon the role or jurisdiction.
The deferred shares component of the LTI is also administered under the ANZ Employee Share Acquisition Plan.
The shares are deferred for three years.

68 I remuneration report

SECTION F. EQUITY INSTRUMENTS RELATING TO DIRECTORS AND SPECIFIED EXECUTIVES
F1. SHAREHOLDINGS OF NON-EXECUTIVE DIRECTORS

Name

Balance ofshares as
at 1 October
20031

Sharesacquired
during the year
in lieu of salary2

Shares acquired
during the year
through theexercise of rights3

Other sharesacquired
duringthe year4

Balance ofshares held
as at 30 Sept
20041,5

Balance ofshares held
as at 4 Nov
20041,6CB Goode
G Clark
JC Dahlsen
RS Deane
JK Ellis
DM Gonski
MA Jackson
DE Meiklejohn
JP Morschel
BW Scott403,334–
105,243
75,00065,367
2,099
78,245n/an/a72,207

14,215
–
–
–
1,097
–
–
n/a
n/a
–

75,922–
16,609364
12,996382
13,861
n/a
n/a
199

8,993
2,000
63
–
5,016
50,131
1,191
n/a
n/a
69

502,464
2,000
121,91575,36484,476
52,612
93,297n/an/a
72,475523,933
2,000
121,91575,364
86,17954,667
93,297
5,502
4,185
72,475

1 Balance of shares held at 1 October 2003, 30 September 2004 and 4 November 2004, includes directly held shares, nominally held shares and shares held by personally related entities
2 All shares acquired in lieu of salary were done so under the Directors' Share Plan (refer to section B3 of this Remuneration Report for an overview of the Directors' Share Plan)
3 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing
ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities. CB Goode, RS Deane,
JK Ellis and DM Gonski exercised their full allocation of rights (nominally held, directly held and rights held by personally related entities) on 28 November 2003.
The following rights were sold: JC Dahlsen - 2,528; MA Jackson - 364; and BW Scott - 12,933
4 Other shares acquired may include those acquired under the Dividend Reinvestment Plan
5 The following shares were nominally held as at 30 September 2004: CB Goode - 114,349; JC Dahlsen - 39,473; RS Deane - 73,000; JK Ellis - 17,197; DM Gonski - 50,000; MA Jackson - 10,632;
BW Scott - 6,563
6 The directors' relevant interest in shares as required by the Corporations Act 2001 is as follows: CB Goode 521,096; G Clark 2,000; JC Dahlsen 107,064; RS Deane 75,364; JK Ellis 83,484;
DM Gonski 54,667; MA Jackson 91,297; DE Meiklejohn 5,502; JP Morschel 4,185; and BW Scott 71,117. Any differences between the balances in this footnote and the table is due to theapplication of AASB 1046

F2. SHAREHOLDINGS OF CEO (INCLUDING MOVEMENTS DURING THE YEAR)
Balance ofshares as at
1 Oct 20031

Sharesacquired
during the year
in lieu of bonus2

Sharesacquired
during the year
in lieu of salary2

Shares acquired
during the year
through the exercise
of options3

Shares acquired
during the year
through the exerciseof rights4

Other sharesacquired during
the year

Total numberof shares
sold during
the year

Balanceof shares
held as at
30 Sep 20041,5

Balanceof shares
held as at
4 Nov 20041,6

1,264,559

42,928103,633

750,000

225,80756,580753,000

1,690,507

1,568,891

1 Balance of shares held at 1 October 2003, 30 September 2004 and 4 November 2004 includes directly held shares, nominally held shares and shares held by personally related entities
2 All shares acquired in lieu of salary or bonus were done so under the Directors' Share Plan (refer to section B3 of this Remuneration Report for an overview of the Directors' Share Plan)
3 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)
4 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing
ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities
5 945,145 shares were held nominally as at 30 September 2004
6 This also represents the Chief Executive Officer’s relevant interest in shares as required by the Corporations Act 2001

F3. OPTIONS GRANTED TO CEO DURING THE YEAR1
Type ofoptions2

Grant date

Number granted
during the year

Value per option
at grant date3$

Exercise price4$

Dateexercisable

Expiry date

Hurdled (CEO)31 Dec 03

1,000,000

2.11

17.48

31 Dec 05

31 Dec 085

1 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)
2 One half of the options may be exercised only if the ANZ TSR calculated over the period commencing on the grant date and ending on the last day of any month after the second anniversary of their
grant date exceeds the percentage change in the S&P/ASX 200 Banks (Industry Group) Accumulation Index over that same period; and the other half of the options may be exercised only if the
ANZ TSR calculated over the relevant period exceeds the percentage change in the S&P/ASX 100 Accumulation Index over that same period
3 Refer to section F8 for details of the valuation methodology and inputs
4 The exercise price is equal to the weighted average share price during the 5 trading days immediately after the Company's 2003 Annual General Meeting
5 Treatment of options on termination of employment is explained in section D3

F4. OPTION HOLDINGS OF CEO (INCLUDING MOVEMENTS DURING THE YEAR)1,2
Balance as
at 1 Oct 03

Granted during
the year as
remuneration

Exercisedduring the year

2,750,000

1,000,000

750,000

Date ofexerciseof options

Number ofordinary sharesissued on exercise
of options

Share price ondate of exercise$

Amount paid
per share$

Balance
as at
30 Sep 04

Numbervestedduringthe year

Vested andexercisable
as at
30 Sep 04

1 Jul 04
2 Jul 04

100,000
650,000

18.17
18.14

14.06
14.06

3,000,000

1,250,000

500,000

1 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)
2 This table does not include the 225,807 rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase
2 new ordinary shares for every 11 existing shares registered in their name as at 31 October 2003. The CEO chose to exercise all of his rights on 28 November 2003

remuneration report I 69

F5. DEFERRED SHARES GRANTED TO SPECIFIED EXECUTIVES DURING THE YEAR

NameType ofdeferredshare1

Number ofdeferred shares
granted Nov 032

Value ofdeferred shares
granted Nov 033$

Number ofdeferred shares
granted May 044

Value ofdeferred shares
granted May 043$

Number of otherdeferred shares
granted during
the year

Value of otherdeferred shares
granted during
the year$

Sir J Anderson (app 1 Dec 2003)5

Other

–

–

–

–

55

991

Dr RJ Edgar

STI
LTI

6,781
33,889118,982594,627

7,683
8,452

140,073
154,093––––

E Funke Kupper

STI
LTI

7,636
6,838

133,984
119,982

7,052
6,256

128,569
114,056––––

BC Hartzer

STI
LTI

7,322
7,408

128,474
129,983

7,244
7,135

132,069
130,082––––

PJO Hawkins

STI
LTI

7,123
7,522

124,982
131,983

6,860
6,586

125,068
120,073––––

PR Marriott

STI
LTI

7,978
9,573

139,985
167,971

9,604
9,275

175,096
169,097––––

S Targett (app 5 May 2004)6

Other

–

–

–

–

38,419700,437

1 Deferred shares issued as STI shares are granted under the ANZ Short-Term Incentive program. Deferred shares issued as LTI shares are granted under the ANZ Long-Term Incentive program.
The shares are restricted for 3 years and may be held in trust for up to ten years. Refer to section C5 for more details
2 Shares granted in November 2003 were in relation to incentives earned for the half year ended 30 September 2003
3 The value per share used in this calculation is the volume weighted average price of the Company’s shares traded on the ASX on the day the shares were granted
4 Shares granted in May 2004 were in relation to incentives earned for the half year ended 31 March 2004
5 Other shares issued (3 March 2004) to Sir J Anderson during the year relates to the $1,000 Employee Share Acquisition Plan. Refer to section C7 for further details
6 Other shares issued to S Targett relates to the issue of deferred shares (four tranches of $700,000 to be issued at 6 month intervals in approximately April and October each year, subject to Board
approval and continuing employment) to compensate S Targett for the loss of access to equity as a result of his resignation from his previous employer

F6. AGGREGATE SHAREHOLDINGS OF SPECIFIED EXECUTIVES
Balanceof shares as at
1 Oct 031

Sharesgrantedduring the year
as remuneration2

Number of sharesacquired during theyear through theexercise of options

Shares acquired
during the year
through theexercise of rights3

Other sharesacquired
duringthe year4

Total numberof shares soldduring the year

Balanceof shares
held as at
30 Sep 20041,5

Numbervested during
the year

Sir J Anderson(app 1 Dec 2003)–
Dr RJ Edgar
255,114
157,051
E Funke Kupper6
BC Hartzer
75,148PJO Hawkins
1,149,754
PR Marriott
539,989
S Targett (app 5 May 2004)–

55
50,024
20,146
21,787
20,96828,452
38,419

11,96795,000365,000
60,000170,000
250,000––
37,295
175
13,665
209,048
460
–

–
6,781
7,636
7,781
7,123
8,966
–

–
60,000365,000
99,335170,000
150,000–

12,022384,214185,008
79,046
1,386,893
677,867
38,419–25,482
44,97927,072
41,46240,381–Name

1 Balance of shares held at 1 October 2003 and 30 September 2004, include directly held shares, nominally held shares and shares held by personally related entities
2 STI shares granted on 5 November 2003 have not been included in these figures as they related to the half year ended 30 September 2003. Instead, these shares have been reflected in the“Other shares acquired during the year” column
3 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing
ordinary shares registered in their name as at 31 October 2003. Amounts pertaining to the rights issue include directly held rights, nominally held rights, and rights held by personally related entities
4 Other shares acquired include those acquired through the Dividend Reinvestment Plan and STI shares granted on 5 November 2003 in relation to the half year ended 30 September 2003
5 The following shares were held nominally as at 30 September 2004: Sir J Anderson - 55; RJ Edgar - 180,991; E Funke Kupper - 183,224; BC Hartzer - 69,480; PJO Hawkins - 233,821;
PR Marriott - 230,817; S Targett - 38,419
6 Amounts shown do not include ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS). E Funke Kupper held 500 ANZ StEPS as at 1 October 2003; this holding remained unchanged up to andincluding 30 September 2004

70 I remuneration report

F7. OPTIONS GRANTED TO SPECIFIED EXECUTIVES DURING THE YEAR
Type ofoptions1

Number granted
during the year2

Grant date

Value per option
at grant date3$

Exercise price
$

Name

Date
exercisable

Expiry date4

Sir J Anderson (app 1 Dec 2003)

Zero priced5

11,96711 May 04

18.23

–

11 May 04

10 May 06

Dr RJ Edgar

HurdledHurdled66,666
63,1155 Nov 03
11 May 04

2.34
2.44

17.55
18.22

5 Nov 06
11 May 07

4 Nov 1010 May 11

E Funke Kupper

HurdledHurdled

51,282
46,7225 Nov 03
11 May 04

2.34
2.44

17.55
18.22

5 Nov 06
11 May 07

4 Nov 1010 May 11

BC Hartzer

HurdledHurdled55,55553,2795 Nov 03
11 May 04

2.34
2.44

17.55
18.22

5 Nov 06
11 May 07

4 Nov 1010 May 11

PJO Hawkins

HurdledHurdled56,41049,1815 Nov 03
11 May 04

2.34
2.44

17.55
18.22

5 Nov 06
11 May 07

4 Nov 1010 May 11

PR Marriott

HurdledHurdled71,794
69,2635 Nov 03
11 May 04

2.34
2.44

17.55
18.22

5 Nov 06
11 May 07

4 Nov 1010 May 11

S Targett (app 5 May 2004)

Hurdled307,337

11 May 04

2.44

18.22

11 May 07

10 May 11

1 For Hurdled options, the following performance hurdles apply: one half of the options may be exercised only if the ANZ TSR calculated over the period commencing on the date of grant and ending on
the last day of any month after the Date exercisable exceeds the percentage change in the S&P/ASX 200 Banks (Industry Group) Accumulation Index over that same period; and the other half of theoptions may be exercised only if the ANZ TSR calculated over the relevant period exceeds the percentage change in the S&P/ASX 100 Accumulation Index over that same period. Refer to section C5.2.1
for further information
2 No additional options were granted in the period up to and including 4 November 2004
3 Refer to section F8 for details of the valuation methodology and inputs
4 Treatment of options on termination of employment is explained in section E
5 Zero priced options are granted under the ANZ Share Option Plan and have a nil exercise price and no time-based vesting criteria. They are specifically designed to deliver equity to Sir J Anderson,
and were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ

F9. AGGREGATE OPTION HOLDINGS OF SPECIFIED EXECUTIVES (INCLUDING MOVEMENTS DURING THE YEAR)
Balance as
at 1 Oct 03

Granted during
the year as
remuneration

Allocation ofrights arising fromrenounceable rights
issue

n/a

Name

Type

Sir J Anderson(appointed 1 Dec 2003)

Zero-priced1–

11,967

Index-Linked
Hurdled

272,000
170,000–
129,781n/a

n/a

250,000
499,000–
98,004n/an/a28,557

Index-Linked
HurdledRights2

222,000
247,000n/a–
108,834n/a

13,665

Index-Linked
HurdledRights2

183,000
381,000n/a–
105,591n/a

209,048

Index-Linked
HurdledRights2
Other3311,000
668,000
n/a
11,000–141,057n/a–

n/a

307,337

Dr RJ Edgar

Rights2
E Funke Kupper

Index-Linked
HurdledRights2

BC Hartzer

PJO Hawkins

PR Marriott

S Targett(appointed 5 May 2004)

Hurdled

46,38698,185n/a

1 Zero priced options first granted in May 2004, and specifically designed to deliver equity to Sir J Anderson. These options are granted under the ANZ Share Option Plan and have a nil exercise priceand no time-based vesting criteria. They were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ
2 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ Shareholders were eligible to purchase 2 new ordinary shares for every 11 existing
ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities
3 Other refers to share options granted to a personally related entity

remuneration report I 71

F8. OPTIONS VALUATIONS
For options granted in the current year, valuations have been determined in accordance with the fair value measurement provisions of
Accounting Standards AASB 1046 and 1046A. The following table outlines the general assumptions used in the option pricing model.
Option type

HurdledHurdledHurdled (CEO)Zero-priced

Grant date

Option value1$

Exercise price(5 day VWAP)$

Share priceat grant$

ANZ expectedvolatility2

Option term

Vesting period

Expectedlife

Expected
dividends3

Risk freeinterest rate4

5 Nov 03
11 May 04
31 Dec 03
11 May 04

2.34
2.44
2.11
18.23

17.55
18.22
17.48
0

17.13
18.10
17.68
n/a

20.50%
19.00%
20.00%
n/a

7 years
7 years
5 years
2 years

3 years
3 years
2 years
0 years

5 years
5 years
3.5 years
n/a

5.00%
5.40%
5.50%
n/a

5.80%
5.97%
5.56%
n/a

1 The Binomial Option Pricing Model (“the model”) is used to assess the value of ANZ's options (other than zero-priced options, for which the value is the volume weighted average price of theCompany's shares traded on the ASX on the day of the options were granted). The model utilises probability theory to determine the value of an ANZ option based on likely share prices at the expiry
date of the option. In accordance with AASB 1046 and 1046A, the model reflects both the performance hurdles that currently apply to the Hurdled Options and the non-transferability of the options.
Under the terms of the Options, the hurdle conditions (outlined in section C5.2.1) must be met before the options may be exercised during the exercise period
2 Expected volatility represents a measure of the amount by which ANZ's share price is expected to fluctuate over the life of the options. The measure of volatility used in the model is the annualised
standard deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility isthen used to estimate a reasonable expected volatility over the expected life of the options
3 In estimating the fair value of the ANZ option grant, expected dividends were included in the application of the model. The expected dividend yield applied to the model was based on an analysis of
ANZ's historical dividend payments and yields
4 The risk-free interest rate is based on the implied yield currently available on zero-coupon bonds issued by the Australian government, with a remaining term equal to the expected life of ANZ's options

Share price ondate of exercise
of options including
rights $Amount paid
per share$

Balance
as at
30 Sep 04

Total
numbervestedduring the year

Vested andexercisable
as at
30 Sep 04

11 May 04

18.10

0.00

–

11,967––60,00035,00037,295n/a
7 Jan 04
14 May 04
28 Nov 03

–

–

9,091

n/a
13.62
12.98
13.00

272,000

17.86
17.62
16.82

204,781–

95,00046,386–––
270,000
95,000175

n/a
12 May 04
12 May 04
28 Nov 03––

28,382

n/a
13.62
12.98
13.00

250,000

18.29
18.29
16.82

232,004–

365,000
28,557–––60,00013,665n/a
2 Feb 04
28 Nov 03

–

17.56
16.82

n/a
13.62
13.00

222,000
295,834––
102,000
13,665–42,000––170,000
209,048n/a
11 Mar 04
28 Nov 03

–

19.20
16.82

n/a
13.62
13.00

183,000
316,591––
250,000
209,048–
80,000––250,000460–

n/a
12 Feb 04
28 Nov 03
n/a

97,725

17.95
16.82

10.48
13.00
n/a

311,000
559,057–
11,000–250,000
98,1856,000–
275,000–
11,000

–

n/a

n/a

307,337––

Exercisedduring the year

Date ofexerciseof options

11,967

Sale of rights
arising fromthe renounceable
rights issue

72 I concise financial report

CONCISE

2004 FINANCIAL REPORT

A copy of the Group’s 2004 Financial Report, including the independent Auditors’
Report, is available to all shareholders, and will be sent to shareholders withoutcharge upon request. The Financial Report can be requested by telephone(Australia: 1800 11 33 99, Overseas: (+ 61 3) 9615 5989) or by email toinvestor.relations@anz.com

CONTENTS
Guide to Concise Financial Report
Ten Year Summary
Directors’ ReportStatement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to the Concise Financial
Statements
Directors’ Declaration
Auditors’ Report
Financial Highlights in Key Currencies
Exchange Rates
Shareholder Information

72
74
75
79
80
81
82
87
88
89
89
90

GUIDE TO CONCISE FINANCIALREPORT
INTRODUCTION
ANZ presents two reports, the ANZ Annual
Report (this document) and the ANZ
Financial Report. Both reports show how
ANZ performed during the year ended
30 September 2004 and the overall
financial position of the Group at the endof the year. ANZ also publishes anannouncement to the market each halfyear. All these documents are on anz.com.
ANZ prepares its financial reports inaccordance with Australian AccountingStandards. Particular terms required by
the Standards may not be familiar to somereaders. This guide and the Glossary of
Financial Terms (on pages 92 to 93) aredesigned to assist readers to understandthe report.

ANNUAL REPORT CONTENTS
The ANZ Annual Report has two main
sections - the 2004 Annual Report and theConcise Financial Report.

This Concise Financial Report cannot be
expected to provide as full an understandingof the Group’s financial performance,
financial position and financing andinvesting activities as the Group’s 2004
Financial Report. Analysis and discussionof the Concise Financial Report is on theinside front cover and pages 12 to 19.

The front section, the Annual Report,
contains information about significant
matters that impacted the management
and performance of ANZ during the year,
including discussion and analysis of thefinancial results, updates on the specialist
business units and Group-wide programs
and information on the directors andsenior management.

The Concise Financial Report contains
financial information required byAustralian Accounting Standards including
the Consolidated Statements of Financial
Performance, Financial Position and Cash
Flows. These statements have been
prepared by ANZ's staff, reviewed by
ANZ's Board and Audit Committee, andaudited by our external auditor, KPMG.
The assets, liabilities and results ofcontrolled companies are included within
the consolidated results of the Group.

TEN YEAR SUMMARY
It includes summarised information on
financial performance, financial position,
shareholder value, share and otherinformation from 1995 to 2004.

DIRECTORS' REPORTThis report provides the reader with an
overview of the Group for the year ended
30 September 2004 including principal
activities, results, state of affairs,
dividends, review of operations, events
since the end of the financial year, future
developments, environmental regulation,
directors' qualifications and experience,company secretaries qualifications andexperience, non-audit services andauditors' independence declaration,
directors and officers who were previously
partners of the auditor, CEO/CFO
declaration, directors' and officers'
indemnity, directors' and executive
officers' remuneration policy, directors'
shareholdings and executive officers'
share options.

concise financial report I 73

CONSOLIDATED STATEMENT OFFINANCIAL PERFORMANCECONSOLIDATED STATEMENT OF CASH
FLOWSFinancial performance refers to ANZ's
profit for the year including:

The Consolidated Statement of Cash Flowssummarises the Group's cash payments
and cash receipts for the financial year.
The values may differ from those shown in
the Consolidated Statement of Financial
Performance because the Consolidated
Statement of Financial Performance isprepared on an accrual accounting basis.

> the sources of ANZ's income split
between net interest income and otherincome;> the expenses incurred by ANZ during
the year;> provision for doubtful debts; and> ANZ's tax expense for the year.
The key figure to look at is "Net profit
attributable to shareholders of theCompany", which is the profit for the year.

CONSOLIDATED STATEMENT OFFINANCIAL POSITION
This Statement is a summary of theassets, liabilities and shareholders' equity
as at 30 September 2004. It shows what
ANZ as a Group owns as assets, what it
owes as liabilities and its net assets.
Net assets are equal to total shareholders'equity. The assets and liabilities are listed
in order of liquidity, with those assets
representing cash shown first and those
hardest to convert to cash, such as fixed
assets, last.

Cash in the Statement refers to cash on
hand, bank deposits and other forms ofhighly liquid investments that can readily
be converted to cash.

NOTES TO THE CONCISE FINANCIAL
STATEMENTS
These notes provide details on the basisof preparation of the Concise Financial
Report, critical accounting policies, major
events this financial year, dividends,
contingent liabilities and contingent
asset, segment analysis, capitalmanagement, equity instruments issued
to employees, and events since the endof the financial year.

DIRECTORS' DECLARATIONThis declaration contains the directors’
sign-off that the Concise Financial Reportcomplies with Accounting Standards andprovides a true and fair view of theperformance and financial positionof the Company.

AUDITORS' REPORTThe independent audit report is theexternal and independent opinion on theConcise Financial Report.

FINANCIAL HIGHLIGHTS IN KEY
CURRENCIES AND EXCHANGE RATESFinancial performance and financial
position is provided in other currencies USD, GBP, NZD - to allow readers to easily
compare results of ANZ with companies
who report in other currencies. Exchange
rates (average and closing) are also
provided.

SHAREHOLDER INFORMATION
Information is provided on ordinary shares
including the twenty largest shareholders
and the distribution of shareholdings,
and preferences shares - ANZ Stapled
Exchangeable Preferred Securities(ANZ StEPS). It also includes details on
voting rights for ordinary shares and
ANZ StEPS and employee shareholder
information.
Glossary of Financial Terms - Please see
pages 92 to 93.
The glossary contains details on key
financial terms.

74 I concise financial report

1,2

TEN YEAR SUMMARY

2004
$m

2003
$m

2002
$m

2001
$m

2000
$m

1999
$m

1998
$m

1997
$m

1996
$m

1995
$m

Net interest income
Other operating income
Operating expenses

5,254
3,391
(4,026)

4,311
2,808
(3,228)

4,018
2,970
(2,905)

3,833
2,573
(3,092)

3,801
2,583
(3,314)

3,655
2,377
(3,300)

3,547
2,142
(3,442)

3,437
2,110
(3,502)

3,327
1,839
(3,397)

3,084
1,754
(3,116)

Profit before tax, debt provisionand prior period abnormals
Provision for doubtful debts1
Income tax expense
Outside equity interests

4,619
(632)
(1,168)
(4)

3,891
(614)
(926)
(3)

4,083
(860)
(898)
(3)

3,314
(531)
(911)
(2)

3,070
(502)
(863)
(2)

2,732
(510)
(736)
(6)

2,247
(487)
(576)
(9)

2,045
(400)
(466)
(8)

1,769
(175)
(469)
(9)

1,722
(237)
(442)
(10)

2,815

2,348

2,322

1,870

1,703

1,480

1,175

1,171

1,116

1,033

–

–

–

–

44

–

(69)

(147)

–

19

2,815

2,348

2,322

1,870

1,747

1,480

1,106

1,024

1,116

1,052

259,345
Assets2
Net Assets
17,925Tier 1 capital ratio
6.9%
Return on average ordinary equity3,4 17.8%
1.1%
Return on average assets3
Cost to income ratio5
45.3%

195,591
13,787
7.7%
20.6%
1.2%
45.1%

183,105
11,465
7.9%
21.6%
1.3%
46.0%

185,493
10,551
7.5%
20.2%
1.1%
48.0%

172,467
9,807
7.4%
19.3%
1.1%
51.7%

152,801
9,429
7.9%
17.6%
1.0%
54.5%

153,215
8,391
7.2%
15.9%
0.7%
60.9%

138,241
6,993
6.6%
17.2%
0.7%
63.1%

127,604
6,336
6.7%
18.3%
0.9%
65.8%

112,587
5,747
6.6%
17.9%
0.9%
64.4%

17.0%

6.7%

15.3%

26.2%

36.3%

19.6%

–15.6%

62.4%

33.9%

52.4%

34,586
101c
100%
100%
$19.44$15.94$19.02

27,314
95c
100%
100%
$18.45$15.01$17.17

26,544
85c
100%
100%
$19.70$15.23$16.8823,783
73c
100%
100%
$16.71$12.63$15.2820,002
64c
100%
100%
$12.87$9.18$12.7016,04556c
75%
80%$12.11$8.12$9.80

13,88552c
60%
60%$11.52$7.65$8.62

17,017
48c
100%
100%
$11.08$6.79$10.7910,687
42c
50%
100%
$6.96
$5.17
$6.91

8,199
33c
0%
33%
$5.50
$3.40
$5.42

153.1
67.5%
$7.51

142.4c64.2%$7.49

141.4c57.8%$6.58

112.7c62.0%$5.96

102.5c
59.1%
$5.49

86.9c
62.1%
$5.21

69.7c
67.8%
$4.98

65.8c
61.6%
$4.59

73.2c
55.5%
$4.24

67.1c
49.1%
$3.94

1,818.4$17.84–

1,521.7$18.48$16.61

1,503.9$19.24$18.32

1,488.3$15.05$18.33

1,506.2$11.62$14.45

1,565.4$10.95$11.501,539.4$10.64$10.78

1,508.6
$9.77
$9.92

1,478.1
$5.59
$7.60

1,446.0
$4.40
$6.27

1,190

1,019

1,018

1,056

1,087

1,147

1,205

1,473

1,744

1,881

28,755
252,072

23,137
223,545

22,482
198,716

22,501
181,667

23,134
179,829

30,171
179,945

32,072
151,564

36,830132,450

39,721
121,847

39,240114,829

Financial Performance

Net Profit after tax
before prior period abnormals
Net prior period abnormal
profit (loss)
Net profit after tax
Financial Position

Shareholder value – ordinary shares
Total return to shareholders(share price movement
plus dividends)
Market capitalisation
Dividend
Franked portion–interim–final–high
Share price6–low–30 Sep
Share information(per fully paid ordinary share)
Earnings per share6 –basic
Dividend payout ratio7
Net tangible assets8
No. of fully paid ordinary
shares issued (millions)–interim
DRP issue price9–finalOther information
Points of representation10
No. of employees (full timeequivalents)11
No. of shareholders1212

From 1997, the annual debt provision charge has been calculated based on economic loss provisioning; prior year data has not been restated for this change in measurement approach
Data for 1998, 1999, 2000 and 2001 includes the consolidation of assets in the statutory funds of ANZ Life as required by an accounting standard applicable from 1 October 1999. Not applicable for2002 and 2003, due to the sale of ANZ Life to ING Australia Ltd (INGA) on 1 May 2002. As a result of the aquisition of NBNZ in December 2003, the 2004 results include the consolidation of assets inthe statutory funds of NBNZ Life Insurance Limited as required by an accounting standard
3 Excludes significant items and outside equity interests
4 For the periods 1997 to 2002 the return on average ordinary equity calculation accrues the dividend over the year. From 2003, dividends may no longer be accrued and as such are not included in
the calculation of return on average ordinary equity
5 Excludes goodwill amortisation, abnormals and significant items
6 Prior periods adjusted for the bonus elements of the November 2003 Rights Issue
7 For 2004 and 2003 the dividend payout ratio includes the final dividend of $983 million and $777 million respectively which is proposed but not provided for in terms of AASB 1044 Provisions,Contingent Liabilities and Contingent Assets which is effective from the September 2003 financial year
8 Equals shareholders equity less preference share capital and unamortised goodwill
9 DRP represents Dividend Reinvestment Plan
10 Includes branches, offices, representative offices and agencies
11 Prior to 1997, excludes temporary staff
12 From 2000 onwards the number of shareholders does not include the number of employees whose only shares are held by ANZEST Pty Ltd as the trustee for shares issued under the termsof any ANZ employee incentive plandirectors’ report I 75

DIRECTORS’ REPORTThe directors present their report together
with the Concise Financial Report of theconsolidated entity (the Group), being
Australia and New Zealand Banking Group
Limited (the Company) and its controlled
entities, for the year ended 30 September
2004 and the Auditors' Report thereon.
The information is provided in conformity
with the Corporations Act 2001.

PRINCIPAL ACTIVITIESThe principal activities of the Groupduring the year were general banking,mortgage lending, leasing, hire purchaseand general finance, international andinvestment banking, nominee andcustodian services, executor and trustee
services and through its joint venture ING
Australia Limited (INGA) and ANZ National
Bank Limited, life insurance and wealthmanagement.
There has been no significant change in
the nature of the principal activities of theGroup during the financial year.
At 30 September 2004, the Group had
1,190 points of representation.

RESULT> Profit - Consolidated net profit after
income tax attributable to shareholders of
the Company was $2,815 million, an
increase of 20% over the prior year.
> Net loans and advances increased by
37% from $149,465 million to $204,962
million, primarily due to the acquisition of
National Bank of New Zealand (NBNZ) andgrowth in mortgage lending andcommercial lending in Australia.
> Deposits and other borrowings
increased by 35% from $124,494 million
to $168,557 million primarily due to theacquisition of NBNZ and to fund asset
growth.
> The provision for doubtful debts has
been determined using economic loss
provisioning (ELP) and is based on theGroup's risk management models. The ELP
charge increased 3% from $614 million to$632 million, including $62 million
relating to NBNZ. The current charge
reflects a decrease in the ELP rate over theyear in line with the Group's improving
risk profile. This is as a result of growth in
low risk domestic assets (principallymortgages), the acquisition of NBNZ, thecontinued risk reduction strategy covering
the overseas portfolio and high risk
assets, and a lower Corporate Centre
charge reflecting lower unexpected

offshore losses. ANZ’s ELP models
recognise that the general provisionbalance must be regularly reviewed, andin rare situations, increased to coverunusual events. The balance is at an
appropriate level.
> Net specific provisions were$443 million, down $84 million fromthe prior year. Gross non-accrual loans
decreased to $829 million, down from
$1,007 million, or 0.4%, down from
0.7%, of net loans and advances.
The reductions reflect the strategy to
reduce risk in overseas portfolios(not including New Zealand).
Further details are contained in the
Chief Financial Officer’s review on
pages 12 to 19 of this Annual Report.

Further review of matters affecting theGroup's state of affairs are also containedin this Annual Report under the
Chairman's Report on pages 8 to 9, theChief Executive Officer's Report on pages
10 to 11 and the Chief Financial Officer's
Review on pages 12 to 19.

DIVIDENDS
The directors propose that a final fully
franked dividend of 54 cents per fully
paid ordinary share be declared on
15 November 2004 and be paid on
17 December 2004. The proposed
payment amounts to approximately$983 million.
During the financial year, the following
fully franked dividends were paid on fully
paid ordinary shares:

STATE OF AFFAIRSIn the directors' opinion, there have beenno significant changes in the state ofaffairs of the Group during the financial
year, other than:> Acquisition of the National Bank of New
Zealand (NBNZ) - On 24 October 2003,
the Company announced it had enteredinto an agreement to acquire NBNZ andthe acquisition was completed on
1 December 2003. On 26 June 2004,
NBNZ was amalgamated with ANZ Banking
Group (New Zealand) Limited to create
ANZ National Bank Limited.
> Funding of NBNZ acquisition > Renounceable Rights Issue - In November/
December 2003, the Company issued
276,847,766 ordinary shares by way of a
2 for 11 "Renounceable Rights Issue" at$13 per share in the Company, raising$3,562 million (net of issue costs).
> US Stapled Trust Security Issue On 27 November 2003, the Company
raised US$1.1 billion via the issue of
non-cumulative stapled trust securities,
to support the capital and funding baseof the Group.
> Trust Securities Issues (TrUEPrS) On 12 December 2003, the Company
bought back its 124,032,000 TrUEPrS thatwere issued at US$6.25 per share in
1998. Further details are included on
page 83 of this Annual Report.
> Reduction of Risk - The Company has
been actively reducing the overall risk
profile of the Group. Net specificprovisions of $443 million were down
16% compared to the prior year. This was
below the amount accrued for doubtful
debts in the Statement of Financial
Performance of $632 million.

Type

Final
2003
Interim2004

Cents pershare

Amount before
bonus options
$m

51

777

47

850

Date ofpayment

19 December
2003
1 July 2004

REVIEW OF OPERATIONS
A review of the operations of the Groupduring the financial year and the results of
those operations are contained in the
Chairman's Report, the Chief Executive
Officer's Report, and the Chief Financial
Officer's Review and Business
Performance on pages 8 to 9, 10 to 11, 12
to 19 and 34 to 37 respectively of thisAnnual Report.

76 I directors’ report

EVENTS SINCE THE END OF THE
FINANCIAL YEAR
> Merger of ANZ’s trustee businessannounced with Equity Trustees Limited(announced 12 October 2004);> On-market share buyback of atleast $350 million pending regulatory
approval for a new offshore hybrid
equity transaction (announced
26 October 2004); and> Sale of London-headquarteredproject finance activities (announced
26 October 2004).
Other than the items above (these arefurther described in Note 9 of the Concise
Report to this Annual Report on page 86),
no matter or circumstance has arisen
between 30 September 2004 and the dateof this report that has significantly
affected or may significantly affect theoperations of the Group in future financial
years, the results of those operations or
the state of affairs of the Group in futureyears.

FUTURE DEVELOPMENTS
Details of likely developments in theoperations of the Group in future financial
years are contained in the Chairman's
Report and the Chief Executive Officer's
Report. In the opinion of the directors,
disclosure of any further information
would be likely to result in unreasonableprejudice to the Group.

ENVIRONMENTAL REGULATIONThe operations of the Group are notsubject to any particular or significant
environmental regulation under a law of
the Commonwealth or of a State or
Territory. However, the operations of theGroup may become subject toenvironmental regulation when enforcing
securities over land. ANZ has developed
policies to appropriately manage suchenvironmental risks. ANZ has not incurred
any environmental liabilities during theyear. Further information on ANZ's
environmental framework and practices
can be found in this Annual Report on
pages 38 to 39 and on anz.com.

DIRECTORS’ QUALIFICATIONSAND EXPERIENCE
From 1 October 2003 to 31 January 2004,
the Board was comprised of seven nonexecutive directors. Three new nonexecutive director appointments weremade in 2004: Dr Greg Clark on
1 February 2004; and Mr David Meiklejohnand Mr John Morschel on 1 October 2004.

These new appointees will be retiring andseeking election at the 2004 Annual
General Meeting. Information about these
directors is included in the Notice ofAnnual General Meeting.
At the date of this report, the Board
comprises ten non-executive directors
who have a diversity of business andcommunity experience and one executive
director, the chief executive officer, who
has extensive banking experience.
The names of directors and details of their
qualifications and experience is containedon pages 42 and 43 of this Annual Reportand on anz.com.
Special responsibilities and attendanceat meetings by directors, are shownon page 51 of this Annual Report.
For those directors in office at
30 September 2004, details of thedirectorships of other listed companies
held by each director in the 3 years prior
to the end of the 2004 financial year are
listed in this Annual Report on thepages 42 and 43.

COMPANY SECRETARIES’QUALIFICATIONS AND
EXPERIENCE
Currently there are three people appointed
as Company Secretary of the Company.
Details of their roles are containedon page 51. Their qualifications are
as follows:> Tim L'Estrange, LLB, BCom, ANZ Group
General Counsel and Company Secretary
Mr L'Estrange has a long-standing legal
career spanning 25 years. He hassignificant experience in corporate law.
Mr L'Estrange joined ANZ in 2003.
Prior to ANZ, he worked closely with
Boards and senior management of major
corporations, banks and financial
institutions. Mr L'Estrange was the
National Executive Partner, Litigation and
Dispute Resolution of Allens Arthur
Robinson and a member of the Board ofManagement of that firm. He was also
Managing Partner of Allen Allen & Hemsley.
> Peter Marriott, BEc (Hons),
ANZ Chief Financial Officer.
Mr Marriott has been involved in thefinance industry for more than 20 years.
Mr Marriott joined ANZ in 1993. Prior tohis career at ANZ, Mr Marriott was aPartner in the Melbourne office of the then
KPMG Peat Marwick. He is a Fellow of anumber of professional organisations
including the Institute of Chartered
Accountants in Australia and theAustralian Institute of Banking and

Finance. He is also a Member of theAustralian Institute of Company Directors.
> John Priestley, BEc, LLB, ANZ Deputy
General Counsel and Company Secretary.
Mr Priestley, a qualified lawyer, joined
ANZ in 2004. Prior to ANZ, he had a longcareer with the Mayne Group as Company
Secretary and Group General Manager,
Corporate Services responsible for thelegal, company secretarial, complianceand insurance functions.

NON-AUDIT SERVICES
The Company's Relationship with External
Auditor Policy states that the external
auditor may not provide services that areperceived to be in conflict with the role of
the auditor. These include consulting
advice and sub-contracting of operational
activities normally undertaken bymanagement, and engagements where
the auditor may ultimately be required toexpress an opinion on its own work.
Specifically the policy:> Limits the non-audit services that may
be provided;> Requires that audit and permitted nonaudit services must be pre-approved by
the Audit Committee, or pre-approved by
the Chairman of the Audit Committee andnotified to the Audit Committee; and> Requires the external auditor to notcommence an audit engagement for theGroup, until the Group has confirmed thatthe engagement has been pre-approved.
The Audit Committee has reviewed asummary of non-audit services provided
by the external auditor for 2004, and has
confirmed that the provision of non-audit
services for 2004 is compatible with thegeneral standard of independence for
auditors imposed by the Corporations
Act 2001. This has been formally advised
to the Board of Directors.
The external auditor has confirmed to the
Audit Committee that they have compliedwith the Company's Relationship with
External Auditor Policy on the provision of
non-audit services by the external auditor
for 2004.

directors’ report I 77

The non-audit services supplied by theGroup's external auditor, KPMG, andthe amount paid or payable by type of
non-audit service during the year to
30 September 2004 are as follows:

Non-audit service

Amount paid/payable$’000

Co-sourced internal audit services1 1,260
Tax compliance andrelated services
628
Controls and process reviews
249
Review of the non-cumulative
US Stapled Trust Securities issue 219
NBNZ due diligence oversight420
Sarbanes-Oxley and International
Financial ReportingStandard matters
335
Accounting advice
170
Securitisation review
128
Review of capital raising circulars
73
Other
157
Total
3,639
1 The work performed by KPMG was independent of theexternal audit team and management

The directors are satisfied that theprovision of non-audit services by theexternal auditor during the year to
30 September 2004 is compatible withthe general standard of independence for
auditors imposed by the Corporations
Act 2001.

AUDITOR’S INDEPENDENCE
DECLARATIONThe Company's lead auditor has provided
a written declaration under Section 307C
of the Corporations Act 2001 that to thebest of his knowledge and belief, there
have been no contraventions of:> the auditor independence requirementsof the Corporations Act 2001 in relation to
the audit; and> the applicable Australian code ofprofessional conduct in relation to theaudit.
A copy of this declaration is detailed on
page 88 of this Annual Report.
This declaration is incorporated in andforms part of the Directors' Report.

DIRECTORS AND OFFICERS WHO
WERE PREVIOUSLY PARTNERS
OF THE AUDITOR
The following persons are currently
officers of the Group and were partners
of KPMG at a time when KPMG was theauditor of Australia and New Zealand
Banking Group Limited:> Ms Margaret Jackson, Non-executive
Director (left KPMG in June 1992);> Mr Peter Marriott, Chief Financial Officer(left KPMG in January 1993).

CEO/CFO DECLARATIONThe Chief Executive Officer and the Chief
Financial Officer have given a declaration
to the Board concerning the Group's
financial statements under section
295A(2) of the Corporations Act 2001 andrecommendations 4.1 and 7.2 of the ASX
Corporate Governance Council Principles
of Good Corporate Governance and Best
Practice Recommendations.

DIRECTORS’ AND OFFICERS’INDEMNITY
The Company's Constitution (Rule 11.1)
permits the Company to indemnify each
officer or employee of the Company
against liabilities (so far as may bepermitted under the Corporations Act 2001)
incurred in the execution and discharge ofthe officer's or employee's duties.
It is the Company's policy that its
employees should not incur any liability
for acting in the course of theiremployment legally, within the policies of
the Company and provided they act ingood faith.
Under the policy, the Company will
indemnify employees against any liability
they incur in carrying out their role. The
indemnity protects employees and former
employees who incur a liability whenacting as an employee, trustee or officerof the Company, or a subsidiary of theCompany at the request of the Company.
The indemnity is subject to the
Corporations Act 2001 and will not apply
in respect of any liability arising from:> a claim by the Company;> a claim by a related body corporate;> a lack of good faith;> illegal or dishonest conduct; or> non compliance with the Company's
policies or discretions.

The Company has entered into Deeds ofAccess, Insurance and Indemnity witheach of its directors and secretaries andwith certain employees and certain otherindividuals who act as directors of related
body corporates or of another company.
To the extent permitted by law, theCompany indemnifies the individual for all
liabilities, including costs, damages andexpenses incurred in their capacity as an
officer of the company to which they havebeen appointed.
The Company has indemnified thetrustees and former trustees of certain of
the Company's superannuation funds anddirectors, former directors, officers andformer officers of trustees of various
Company sponsored superannuation
schemes in Australia. Under the relevant
Deeds of Indemnity, the Company must
indemnify each indemnified person if theassets of the relevant fund are insufficient
to cover any loss, damage, liability or cost
incurred by the indemnified person inconnection with the fund, being loss,
damage, liability or costs for which theindemnified person would have been
entitled to be indemnified out of theassets of the fund in accordance with thetrust deed and the Superannuation
Industry (Supervision) Act 1993.
This indemnity survives the terminationof the fund. Some of the indemnified
persons are or were directors or executive
officers of the Company.
The Company has also indemnified certain
employees of the Company, being trustees
and administrators of a trust which is a
subsidiary entity, from and against any
loss, damage, liability, tax, penalty,
expense or claim of any kind or naturearising out of or in connection with thecreation, operation or dissolution of thetrust, where they are acting in good faithand in a manner that they reasonably
believed to be within the scope of theauthority conferred by the trust.

78 I directors’ report

Except for the above, neither the Company
nor any related body corporate of theCompany has indemnified or made anagreement to indemnify any person who isor has been an officer or auditor of theCompany or of a related body corporate.
During the financial year, and again since
the end of the financial year, the Company
has paid a premium for an insurance
policy for the benefit of the directors,
secretaries, and senior managers of theCompany, and directors, secretaries andsenior managers of related bodies
corporate of the Company. In accordancewith common commercial practice, theinsurance policy prohibits disclosure of
the nature of the liability insured against
and the amount of the premium.

DIRECTORS’ AND EXECUTIVEOFFICERS’ REMUNERATIONPOLICY
Details of ANZ's remuneration policy inrespect of the directors and executive
officers is detailed in the Remuneration
Report on pages 54 to 71 of this Annual
Report and pages 6 to 23 of the 2004
Financial Report. Details of the
remuneration paid to each non-executive
director, the Chief Executive Officer andother specified executives are detailed in
the Remuneration Report. The
Remuneration Report is incorporated inand forms part of this Directors' Report.

DIRECTORS’ SHAREHOLDINGSROUNDING OF AMOUNTS

The directors' shareholdings, bothbeneficial and non-beneficial, as at thedate of this report in the shares of theCompany are detailed in the
Remuneration Report.

The Company is a company of the kindreferred to in Australian Securities andInvestments Commission class order
98/100 dated 10 July 1998 (as amended)pursuant to section 341(1) of the
Corporations Act 2001. As a result,amounts in this report and theaccompanying financial statements havebeen rounded to the nearest million
dollars except where otherwise indicated.

EXECUTIVE OFFICERS’ SHAREOPTIONS
Details of share options issued over
un-issued shares granted to the Chief
Executive Officer, senior executives andofficers, and on issue as at the date ofthis report are detailed in the
Remuneration Report and note 50 of the2004 Financial Report.
No person entitled to exercise any option
has or had, by virtue of an option, a rightto participate in any share issue of any
other body corporate. The names of all
persons who currently hold options areentered in the register kept by theCompany pursuant to section 170 of the
Corporations Act 2001. This register may
be inspected free of charge.

Signed in accordance with a resolution of
the directors.

Charles Goode
Director

John McFarlane
Chief Executive Officer
4 November 2004

concise financial report I 79

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIESCONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCEFOR THE YEAR ENDED 30 SEPTEMBER 2004
2004
$mConsolidated
2003
$m

2002
$m

Total income

17,50813,023

12,007

Interest income
Interest expense

14,117(8,863)

10,215(5,904)

9,037(5,019)Net interest income
Proceeds, net of costs, on disposal of investments
Carrying amount of assets given up

5,254
–
–

4,311
–
–

4,018
566
(392)

Profit on disposal of investments
Other operating income
Share of joint venture profit from INGA
Share of associates profit (net of writeoffs)

–
3,246
97
48

–
2,702
55
51

174
2,765
2
29

Operating income
Operating expenses

8,645(4,026)

7,119(3,228)6,988(2,905)

Profit before debt provision and income tax
Provision for doubtful debts

4,619
(632)

3,891
(614)

4,083
(860)

Profit before income tax

3,987

3,277

3,223

Income tax expense(1,168)

(926)

(898)

Profit after income tax
Net profit attributable to outside equity interests

2,819
(4)

2,351
(3)

2,325
(3)

Net profit attributable to shareholders of the Company

2,815

2,348

2,322

Currency translation adjustments, net of hedges after tax

233

(356)

(98)

Total adjustments attributable to shareholders of the Company recognised directly in equity

233

(356)

(98)

Total changes in equity other than those resulting from transactions with shareholders as owners

3,048

1,992

2,224

Earnings per ordinary share (cents)
Basic
Diluted

153.1
149.7

142.4
141.7

141.4
140.4

Dividend per ordinary share (cents)

101

95

85

Net tangible assets per ordinary share ($)

7.51

7.49

6.58

The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements

80 I concise financial report

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIESCONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2004
Note

Consolidated
2004
2003
$m
$m

AssetsLiquid assets
Due from other financial institutions
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Regulatory deposits
Shares in associates and joint venture entities
Deferred tax assets
Goodwill1
Other assets
Premises and equipment

6,363
4,781
5,478
7,746
204,962
12,466
176
1,960
1,454
3,269
9,158
1,532

6,592
2,427
4,213
4,767
149,465
13,178
101
1,814
1,165
160
10,224
1,485

Total assets

259,345

195,591

7,349
168,557
12,466
1,914
14,212845
27,602
8,475

6,467
124,494
13,1781,083
13,611
769
16,572
5,630

Total liabilities

241,420

181,804

Net assets

17,925

13,787

8,005
987
579
8,336

4,175
2,212
180
7,203

Share capital and reserves attributable to shareholders of the Company
Outside equity interests

17,90718

13,77017

Total shareholders’ equity

17,925

13,787

Liabilities
Due to other financial institutions
Deposits and other borrowings
Liability for acceptances
Income tax liabilities
Payables and other liabilities
Provisions
Bonds and notes
Loan capital

3

Shareholders’ equity
Ordinary share capitalPreference share capital
Reserves
Retained profits

Contingent liabilities and contingent asset
The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements
1 Excludes notional goodwill of $754 million (September 2003: $821 million) included in the net carrying value of ING Australia Limited

3

5

concise financial report I 81

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIESCONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 SEPTEMBER 2004
2004
$mConsolidated
2003
$m

2002
$m

Inflows (Outflows)

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

14,515
3
3,257(8,258)(2,110)(312)(2,093)
(247)
(19)
514

10,887
7
3,170(5,724)(1,848)(279)(1,952)(1,312)
1
1,669

10,1483
2,637(5,367)(1,900)(268)(1,893)(853)(28)(1,030)Net cash provided by operating activities

5,250

4,619

1,449

(325)
522
(76)
(22,757)
(35)

1,113
(44)
52
(19,944)
(2)

(442)
554
37
(9,441)(1)(7,560)4,850(3,871)
2,445(2,851)
2,436(3,224)–(1,050)

(345)
53
–
1,780

(368)
51
–
1,401

(385)
101
248
483

(27,117)(19,167)(10,311)(272)
11,216(1,061)(2,946)13,9951,000(1,211)
9,152
362

14,181(4,100)8,255(4,095)

4,537(3,519)

2,694
(368)
(1)
(1,561)
3,695––(1,045)

3,380
(437)
(1)
(1,322)
120
1,000
(13)
–

759
(589)
1
(1,178)112–––

Net cash provided by financing activities

23,37818,936

8,426

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

5,250(27,117)
23,378

4,619(19,167)
18,936

1,449(10,311)
8,426

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

1,511
7,315
(972)

4,388
7,925
(4,998)

(436)
9,071
(710)

Cash and cash equivalents at end of year

7,854

7,315

7,925

Cash flows from investing activities
Net decrease (increase)
Liquid assets – greater than three months
Due from other financial institutions
Regulatory deposits
Loans and advances
Shares in controlled entities and associates
Investment securities
Purchases
Proceeds from sale or maturity
Controlled entities, associates and joint venture entities
Purchased (net of cash acquired)
Premises and equipment
Purchases
Proceeds from sale
Recovery from NHB litigation
Other
Net cash (used in) investing activities
Cash flows from financing activities
Net (decrease) increase
Due to other financial institutions
Deposits and other borrowings
Payables and other liabilities
Bonds and notes
Issue proceeds
Redemptions
Loan capital
Issue proceeds
Redemptions
Decrease (increase) in outside equity interests
Dividends paid
Share capital issues (ordinary capital)
StEPS preference share issue
StEPS issue costs
Preference Share buyback

The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements

82 I concise financial report

NOTES TO THE CONCISE
FINANCIAL STATEMENTS
1: BASIS OF PREPARATION OF
CONCISE FINANCIAL REPORTThis Concise Financial Report has been
derived from the Group’s 2004 Financial
Report which complies with the
Corporations Act 2001, AccountingStandards, Urgent Issues Group
Consensus Views and other authoritative
pronouncements of the Australian
Accounting Standards Board.
A full description of the accounting
policies adopted by the Group is provided
in the 2004 Financial Report. The
accounting policies are consistent withthose of the previous financial year.

2: CRITICAL ACCOUNTING POLICIESThe Group has identified the following
critical accounting policies:> Economic loss provisioning;> Specific provisioning;> Deferred acquisition costs, software
assets and deferred income;> Derivatives and hedging;> Special purpose and off-balance sheet
vehicles;> Valuation of investment in ING Australia
Limited; and> Valuation of goodwill in ANZ National
Bank Limited.
Details of the critical accounting
policies are contained within the ANZ
results announcement released on
26 October 2004 and in the 2004
Financial Report. The results announcement
can be obtained from www.anz.com.

3: MAJOR EVENTS THISFINANCIAL YEAR
> Acquisition of the National Bank of New
Zealand (NBNZ)The Company acquired NBNZ on
1 December 2003 from Lloyds TSB.
The price paid was $5,112 million(at 30 September 2004 exchange rates).
This includes acquisition costs,
a $68 million refund received on the pricepaid to Lloyds TSB and the impact of thestrengthening of the New Zealand dollar.

The purchase price at the originalexchange rate on the date of acquisition
was $4,842 million. The purchase priceexcluded a dividend to Lloyds TSB of NZD
575 million ($498 million) from NBNZ’sretained earnings and transaction costs of$25 million.
The acquisition was funded as follows:> A 2 for 11 “Renounceable Rights Issue”
at $13 per share in the Company raising$3,562 million; and> A US Stapled Trust Security Issue,
subordinated debt, and wholesalefunding.
> Legal amalgamation of NBNZ
On 26 June 2004, NBNZ was amalgamatedinto ANZ Banking Group (New Zealand)
Limited. ANZ Banking Group (New
Zealand) Limited changed its name to
ANZ National Bank Limited.
> Renounceable Rights Issue
In accordance with the Prospectus lodged
with ASIC on 24 October 2003, theCompany issued 276,847,766 ordinary
shares by way of a 2 for 11 rights issue at$13 per ordinary share, raising capital of$3,562 million (net of issue costs). The
rights were closed on 24 November 2003
and the shares allotted on
28 November 2003 and 4 December 2003.
> US Stapled Trust Security Issue
On 27 November 2003, the Company
raised USD1.1 billion via the issue of
1.1 million stapled non-cumulative trust
securities, to support the capital andfunding base of the Group following thedecision to acquire NBNZ. The issue wasstructured as a stapled security
comprising an interest paying note issued
by a wholly owned subsidiary of ANZ anda preference share on which dividends
will not be paid whilst it is stapled to anote. The notes are due on 15 December
2053 at which date the issue will
mandatorily convert to ordinary shares,
based on the formula in the offering
memorandum, unless redeemed orbought back prior to that date.
The US Stapled Trust Securities qualify as
Tier 1 capital as defined by the Australian
Prudential Regulation Authority, and the
securities are classified as debt under
Australian and US Accounting Standards,
with distribution on the securities treatedas interest expense.

> Trust Securities Issues (ANZ TrUEPrS)
On 12 December 2003, the Company
bought back its 124,032,000 TrUEPrS
preference shares that were issued for
USD775 million in 1998.
Income, expenses and dividends relating
to the ANZ TrUEPrS transaction have beenrecorded as significant items.
Profit after tax relating to the ANZ TrUEPrStransaction of $84 million included$77 million from the close out of interest
rate swaps. Final cash dividends of$36 million were paid to holders of
ANZ TrUEPrS in the 2004 financial year.

concise financial report I 83

4: DIVIDENDS
Ordinary Dividends
2004
$m

2003
$m

2002
$m

Interim dividend
Final dividend
Bonus option plan adjustment

850
7771
(29)

666
–
(25)

583
692
(23)

Dividends on ordinary shares1

1,598

641

1,252

1 Change in accounting standard in 2003. Dividends no longer accrued and are recorded when declared. Full year dividend of $983 million not included in above table.

A fully franked final dividend of 54 cents, is proposed to be paid on each fully paid ordinary share on 17 December 2004 (2003: final
dividend of 51 cents, paid 19 December 2003, fully franked: 2002: final dividend of 46 cents, paid 13 December 2002, fully franked).
The 2004 interim dividend of 47 cents, paid 1 July 2004, was fully franked (2003: interim dividend of 44 cents, paid 1 July 2003, fully franked;
2002: interim dividend of 39 cents, paid 1 July 2002, fully franked).
The tax rate applicable to the franking credits attached to the interim dividend and to be attached to the proposed final dividend is 30%(2003: 30%; 2002: 30%).
Preference Dividends
2004
$m

2003
$m

2002
$m

ANZ TrUEPrSANZ Stapled Exchangeable Preferred Securities (ANZ StEPS)

36
62

102
–

117
–

Dividends on preference shares

98

102

117

Trust Securities Issues (ANZ TrUEPrS)In 1998 ANZ TrUEPrS issued 124,032,000 preference shares, raising USD 775 million via Trust Securities issues. The Trust Securities carried
an entitlement to a distribution of 8% (on USD 400 million) and 8.08% (on USD 375 million). The amounts were payable quarterly in arrears.
Payment dates were the fifteenth days of January, April, July and October in each year. The preference shares were bought back on
12 December 2003.
ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS)
On 23 September 2003, the Group issued 10 million ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS) at $100 each,raising $1 billion ($987 million net of issue costs of $13 million). ANZ StEPS comprise 2 fully paid securities - an interest paying
unsecured note stapled to a fully paid preference share.
Distributions on ANZ StEPS are non-cumulative and are payable quarterly in arrears (on 15 March, 15 June, 15 September and 15 Decemberof each year) based upon a floating distribution rate equal to the 90 day bank bill rate plus a margin. At each payment date the 90 day bankbill rate is reset for the next quarter. Dividends are not payable on the preference share while it is stapled to the note. If distributions are
not paid on ANZ StEPS, the Company may not pay dividends or return capital on its ordinary shares or any other share capital ranking below
the preference share component.
Dividend Franking Account
The amount of franking credits available to the Company for the subsequent financial year is $111 million (2003 and 2002: nil), after
adjusting for franking credits that will arise from the payment of tax on Australian profits for the 2004 financial year, $421 million franking
credits which will be utilised in franking the proposed final dividend and franking credits that may not be accessible by the Company at present.
The 2004 amount includes franking credits that were transferred from Australian wholly-owned entities to the parent entity at 1 October 2003
when these entities entered the Australian tax consolidated group.

84 I concise financial report

5: CONTINGENT LIABILITIES AND
CONTINGENT ASSET
Contingent Liabilities
There are outstanding court proceedings,
claims and possible claims against theGroup, the aggregate amount of whichcannot readily be quantified.
The Group in Australia is being audited by
the Australian Taxation Office (ATO) as
part of normal ATO procedures. The Grouphas received various assessments that are
being disputed and may receive further
assessments.
At the Company’s request the ATO isreviewing the taxation treatment of thesale of Grindlays in 2000.
During the year, the Company and the
ATO settled the dispute over the taxation
treatment of lease assignments
undertaken in 1991 and 1992. The
settlement was within existing provisions.
The Group in New Zealand is being
audited by local revenue authorities aspart of normal revenue authority
procedures, with a particular focus on
certain kinds of structured financetransactions. On 30 September 2004, theGroup in New Zealand received Notices of
Proposed Adjustment (the 'Notice') inrespect of one of these structured financetransactions undertaken in the 2000
financial year. The Notice is formal advice
that the New Zealand Inland Revenue
Department (IRD) is proposing to amend
tax assessments. The Notice is not a tax
assessment and does not establish a tax
liability, but it is the first step in a formal
dispute process. Should the same
position be adopted by the IRD on theremaining transactions of that kind, themaximum potential tax liability would beapproximately NZD348 million (includinginterest tax effected) for the period to
30 September 2004. Of that maximum
potential liability, approximately
NZD116 million is subject to tax
indemnities provided by Lloyds TSB Bank
PLC under the agreement by which ANZ
acquired the National Bank of New
Zealand and which relates to transactions
undertaken by the National Bank of
New Zealand before December 2003.
Based on external advice, the Group has
assessed the likely progress of these andother issues, and believes that it holds
appropriate provisions.
Further details regarding Group contingent
liabilities are contained in the 2004
Financial Report.

Contingent Asset
On 14 October 2003 ANZ issued
proceedings in the Victorian Supreme
Court against its captive insurancecompany ANZcover Insurance Pty Ltd(ANZcover) regarding its insurance claim
consequent upon settlement of its former
subsidiary ANZ Grindlays Bank Limited’s
1992 dispute with India’s National
Housing Bank (NHB). ANZcover is anauthorised general insurer restricted toinsuring the interests of ANZ and its
subsidiaries. ANZcover in turn purchases
reinsurance from global reinsurers,
primarily in the London reinsurance
market. ANZcover has no retained
exposure to the NHB claim which is fully
re-insured, save for a small exposure
arising from the insolvency of some reinsurers in the London market.
The January 2002 settlement of the NHB
litigation saw Grindlays recover Rupees
6.20 billion ($248 million at 19 January
2002 rates) of the disputed monies that
Grindlays Bank had lodged with the Court,
which by that time totalled Rupees
16.45 billion ($661 million at 19 January
2002 rates), including interest, with
NHB receiving the balance. ANZ in turn
received a payment of USD 124 million
from Standard Chartered Bank under theterms of the Indian Indemnity (refer Note
48 in the 2004 Financial Report).
The claim of $130 million plus compoundinterest is for the balance of the limit ofindemnity under ANZcover’s reinsurance
arrangements for the 1991-92 policy year.
The proceedings remain on foot.

concise financial report I 85

6: SEGMENT ANALYSIS
During the year ended 30 September 2004, the Group managed its activities along the following lines of business:
Personal Banking Australia, Institutional, New Zealand Business, Corporate Australia, Esanda and UDC, Asia Pacific, ING Australia and other.
A description of each of the operating business segments, including the types of products and services the segments provide to customers,
is detailed in the 2004 Financial Report.
As the composition of segments has changed over time, September 2003 comparatives have been adjusted to be consistent with the 2004
segment definitions detailed in the 2004 Financial Report. Comparatives for the year ended 30 September 2002 have not been provided asdata could not reasonably be disaggregated into the changed segments.

BUSINESS SEGMENT ANALYSIS1, 2
Consolidated
30 September 2004

Personal
Banking
Australia$mInstitutional$m

New
ZealandBusiness$m

Corporate
Australia$mEsandaand UDC$m

Asia
Pacific$m

ING
Australia$m

Other3$m

Consolidated
Total
$m

External interest income
External interest expense
Net intersegment interest

5,818(1,313)(2,590)2,341(2,347)658

3,312(1,842)
(176)

903
(513)
248

1,060
(592)
(107)

165
(115)
100

–
(21)
(2)

518
(2,120)1,869

14,117(8,863)–

Net interest income
Other external operating income
Net intersegment income

1,915
832
132

652
1,299
(24)

1,294
518
5

638
270
(98)

361
104
(10)

150
145
–

(23)
116
–

267
107
(5)

5,254
3,391
–

Operating income

2,879

1,927

1,817

810

455

295

93

369

8,645

Other external expenses
Net intersegment expenses(1,263)
(288)

(578)
(123)

(736)
(130)

(201)
(58)

(158)
(28)

(109)
(29)

2
(2)

(983)
658

(4,026)–

Operating expenses(1,551)

(701)

(866)

(259)

(186)

(138)

–

(325)

(4,026)

Profit before debt provision and income tax
Charge for doubtful debts
Income tax and outside equity interests

1,328
(183)
(343)

1,226
(159)
(279)

951
(99)
(268)

551
(59)
(148)

269
(67)
(59)

157
(23)
(23)

93
–
15

44
(42)
(67)

4,619
(632)
(1,172)

802

788

584

344

143

111

108

(65)

2,815

Total external assets

93,73855,73655,87018,992

14,524

2,379

1,777

16,329259,345

Total external liabilities

40,03649,06047,275

21,397

12,261

4,924

416

66,051

241,420

Consolidated
30 September 2003

Personal
Banking
Australia$mInstitutional$m

New
ZealandBusiness$m

Corporate
Australia$mEsandaand UDC$m

Asia
Pacific$m

ING
Australia$m

Other3$m

Consolidated
Total
$m

External interest income
External interest expense
Net intersegment interest

4,625(1,044)(1,810)2,170(2,087)
620

1,060
(475)
(88)

734
(403)
243

1,005
(512)
(143)

167
(123)
96

–
(16)
–

454
(1,244)
1,082

10,215(5,904)–

Net interest income
Other external operating income
Net intersegment income

1,771
701
121

703
1,245
(26)

497
254
5

574
251
(92)

350
86
(8)

140
149
–

(16)
90
–

292
32
–

4,311
2,808
–

Operating income

2,593

1,922

756

733

428

289

74

324

7,119

Other external expenses
Net intersegment expenses(1,144)
(295)

(551)
(124)

(280)
(122)

(180)
(54)

(155)
(24)

(111)
(31)

2
(2)

(809)
652

(3,228)–Operating expenses(1,439)

(675)

(402)

(234)

(179)

(142)

–

(157)

(3,228)

Profit before debt provision and income tax
Doubtful debt provision
Income tax and outside equity interests

1,154
(169)
(292)

1,247
(165)
(280)

354
(37)
(106)

499
(55)
(133)

249
(63)
(57)

147
(19)
(28)

74
–
8

167
(106)
(41)

3,891
(614)
(929)

693

802

211

311

129

100

82

20

2,348

Total external assets

79,82956,977

14,37915,993

13,460

2,027

1,736

11,190195,591

Total external liabilities

35,66048,00512,016

19,508

10,795

4,524

403

50,893

181,804

Net profit after income tax

BUSINESS SEGMENT ANALYSIS1, 2

Net profit after income tax

1 Results are equity standardised
2 Intersegment transfers are accounted for and determined on an arm’s length or cost recovery basis
3 Includes Treasury, Operations, Technology and Shared Services, Corporate Centre, Risk Management, Group Financial Management and significant items

86 I concise financial report

7: CAPITAL MANAGEMENTThe Group’s total capital adequacy ratio has decreased to 10.4% (2003: 11.1%). The Tier 1 ratio reduced to 6.9% (2003: 7.7%) and theTier 2 ratio has remained at 4.0%.
Our principal focus going forward is Adjusted Common Equity, defined as Tier 1 capital, less preference shares at current exchange rates anddeductions from total capital, (including investment in funds management subsidiaries and ING Australia). Adjusted Common Equity reduced
to 5.1% of risk weighted assets (2003: 5.7%) reflecting the lower risk profile of the Group.

8: EQUITY INSTRUMENTS ISSUED TO EMPLOYEESUnder existing Australian Accounting Standards, equity instruments issued to employees are not required to be expensed. The impact ofexpensing options1, and shares issued under the $1,000 employee share plan, has been calculated and is disclosed below.
2004$mConsolidated
2003
$m

2002
$m

Net profit attributable to shareholders of the Company
Expenses attributable to:– Options issued to Group Heads1– Options issued to general management1– Shares issued under $1,000 employee share plan

2,815

2,348

2,322

(8)
(23)
(22)

(8)
(24)
(18)

(7)
(19)
(18)

Total

2,762

2,298

2,278

1 Based on fair values estimated at grant date determined in accordance with the fair value measurement provisions of AASB 1046. Value of options are amortised on a straight-line basis over thevesting period

9: EVENTS SINCE THE END OF THE FINANCIAL YEARANZ Trustees merger with Equity Trustees Limited
On 12 October 2004, the Company announced it had signed a heads of agreement with Equity Trustees Limited, to merge the Group's trustee
business with Equity Trustees Limited. The merged business will create Australia's third largest trustee company and the leading manager
of charitable foundations.
In consideration, the Company will become the major shareholder in Equity Trustees Limited with a 37.5% share of the expanded issued
capital, and receive $3 million in cash.
Completion of the merger is expected early in 2005 subject to the outcomes of due diligence, regulatory and government approvals andapproval by Equity Trustees' shareholders. The Company will equity account for its investment in Equity Trustees Limited and recognisea small profit from the transfer of the Group's trustee business.
The financial effect of this merger has not been recognised in these financial statements.
Share buyback
On 26 October 2004, the Company announced the intention to undertake an on-market share buyback of at least $350 million.
The buyback is contingent on regulatory approval for a new offshore hybrid equity transaction.
The financial effect of this buyback has not been reflected in these financial statements.
Sale of London-headquartered project finance activities
On 26 October 2004, the Company announced entry into a Memorandum of Understanding for the sale, subject to due diligence and otherstandard conditions, of the majority of its London-headquartered project finance activities to Standard Chartered Bank. The amount of theloans and commitments is approximately $2 billion. The premium from the sale above book value is not expected to be significant.
The financial effect of this sale has not been reflected in these financial statements.

directors’ declaration I 87

DIRECTORS’ DECLARATION
The directors of Australia and New Zealand Banking Group Limited declare that in their opinion the accompanying Concise Financial Reportof the Consolidated Group for the year ended 30 September 2004 complies with Accounting Standard AASB 1039 ‘Concise Financial Reports’.
In our report on the Group’s 2004 Financial Report we declared that:a) the financial statements and notes comply with the Corporations Act 2001, including:i) complying with applicable Australian Accounting Standards and other mandatory professional reporting requirements;ii) giving a true and fair view of the financial position of the Company and of the consolidated entity and of their performance as
represented by the results of their operations and their cash flows; andiii) that the directors have been given the declaration under section 295A of the Corporations Act 2001.
b) in the directors’ opinion at the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
Signed in accordance with a resolution of the directors.

Charles Goode
Director

John McFarlane
Chief Executive Officer
4 November 2004

88 I auditors’ report

INDEPENDENT AUDIT REPORTON CONCISE FINANCIAL REPORTTO THE MEMBERS OF
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITEDSCOPE
We have audited the Concise Financial
Report of Australia and New Zealand
Banking Group Limited (“the Company”)
and its controlled entities for the financial
year ended 30 September 2004,
consisting of the statement of financial
performance, statement of financial
position, statement of cash flows,
accompanying notes 1 to 9 as set out on
pages 79 to 86, and the accompanying
discussion and analysis on the statementof financial performance, statement offinancial position and statement of cash
flows set out on pages 12 to 19 in order toexpress an opinion on it to the membersof the Company. The Company’s directors
are responsible for the Concise Financial
Report.

Our procedures in respect of the audit of
the Concise Financial Report included
testing that the information in the Concise
Financial Report is consistent with the full
financial report and examination, on a test
basis, of evidence supporting theamounts, discussion and analysis, andother disclosures which were not directly
derived from the full financial report.
These procedures have been undertaken
to form an opinion whether, in all material
respects, the Concise Financial Report ispresented fairly in accordance with
Australian Accounting Standard AASB
1039 ‘Concise Financial Reports’.
The audit opinion expressed in this reporthas been formed on the above basis.

AUDIT OPINION
In our opinion the Concise Financial
Report of Australia and New Zealand
Banking Group Limited and its controlled
entities for the year ended 30 September
2004 complies with Australian AccountingStandard AASB 1039 ‘Concise Financial
Reports’.

Our audit has been conducted inaccordance with Australian AuditingStandards to provide reasonableassurance as to whether the Concise
Financial Report is free of material
misstatement.
We have also performed an independent
audit of the full financial report ofAustralia and New Zealand Banking Group
Limited and its controlled entities
included in the annual financial report for
the year ended 30 September 2004.
Our audit report on the full financial report
was signed on 4 November 2004, and was
not subject to any qualification.

COPY OF THE AUDITOR’SINDEPENDENCE DECLARATIONLEAD AUDITOR’S INDEPENDENCE
DECLARATION UNDER SECTION 307COF THE CORPORATIONS ACT 2001
I declare that, to the best of myknowledge and belief, during the financial
year ended 30 September 2004 there
have been:> no contraventions of the auditor
independence requirements as set out in
the Corporations Act 2001 in relation to
the audit; and> no contraventions of the applicable
Australian code of professional conduct inrelation to the audit.

Chris Hall
Partner

Melbourne
4 November 2004
KPMG

Chris Hall
Partner
Melbourne
4 November 2004

shareholder information I 89

FINANCIAL HIGHLIGHTS IN KEY CURRENCIES
2004
AUD

2004
USD1

2004
GBP1

2004
NZD1

Operating income
Operating expenses

8,645(4,026)

6,279(2,924)

3,505(1,632)

9,729(4,531)

Profit before debt provision and income tax
Provision for doubtful debts

4,619
(632)

3,355
(459)

1,873
(256)

5,198
(711)

Profit before income tax
Income tax expense
Net profit attributable to outside equity interests

3,987(1,168)
(4)

2,896
(848)
(3)

1,617
(474)
(2)

4,487
(1,314)(5)

Profit after income tax

2,815

2,045

1,141

3,168

AssetsLiabilities
Shareholders’ equity2
Ratios – per ordinary share

259,345
241,420
17,925

185,821
172,977
12,844103,297
96,1587,139

277,499
258,319
19,180Earnings per share – basic
Dividends per share – declared rate
Net tangible assets per share

153.1c101c$7.51

111.2c
73c
$5.38

62.1p
41p
£2.99

172.3c114c$8.04

Millions

Financial Performance

Financial Position

1 USD, GBP and NZD amounts – items relating to financial performance converted at average rates for financial year 30 September 2004 and items relating to financial position at closing rates
at 30 September 2004
2 Includes outside equity interests

EXCHANGE RATESThe exchange rates used in the translation of the results and the assets and liabilities of major overseas branches and controlled entities
are:
2004

Great British pound
United States dollar
New Zealand dollar

2003

2002

Closing

Average

Closing

Average

Closing

Average

0.39830.71651.07000.40540.72631.12540.40700.6795
1.1431

0.38220.6124
1.11390.34770.5441
1.15850.3621
0.53231.2001

90 I shareholder information

ORDINARY SHARESAt 13 October 2004 the twenty largest holders of ordinary shares held 1,091,080,872 ordinary shares, equal to 60% of the total issued
ordinary capital.
Name

Number of shares%

National Nominees Ltd
Chase Manhattan Nominees Ltd
Westpac Custodian Nominees Ltd
Citicorp Nominees Pty Ltd
RBC Global Services Australia
Nominees Pty Ltd
ANZ Nominees Ltd
Cogent Nominees Pty Ltd
Queensland Investment Corporation
AMP Life Ltd
HKBA Nominees Ltd

241,352,476
241,084,758
230,985,111
90,412,119
58,764,704

13.27
13.26
12.70
4.97
3.23

50,221,700
40,639,319
28,235,896
23,427,620
19,015,397

2.76
2.23
1.55
1.29
1.05

Name

PSS Board
IAG Nominees Pty Ltd
ANZEST Pty Ltd (Deferred Share Plan A/C)
Government Superannuation Office
Victorian Workcover Authority
Australia Foundation Investment
Company Ltd
IOOF Investment Management Ltd
Westpac Financial Services Ltd
ANZEST Pty Ltd (ESAP Share Plan A/C)
Transport Accident Commission

Total

Number of Shares%

11,223,610
8,702,901
8,662,230
7,912,760
5,641,887

0.62
0.48
0.48
0.44
0.31

5,470,797
5,406,169
4,806,257
4,760,819
4,354,342

0.30
0.30
0.26
0.26
0.24

1,091,080,872

60.00

Distribution of shareholdings
At 13 October 2004
Range

Number ofholders% ofholders

Number ofshares% ofshares1 to 1,000 shares
1,001 to 5,000 shares
5,001 to 10,000 shares
10,001 to 100,000 sharesOver 100,001 shares

132,171
94,925
14,952
9,606
418

52.43
37.66
5.93
3.81
0.17

57,824,343
208,426,821
103,987,888
201,713,846
1,246,461,935

3.18
11.46
5.72
11.09
68.55

Total

252,072

100.001,818,414,833

100.00

At 13 October 2004:> there were no entries in the Register of Substantial Shareholdings;> the average size of holdings of ordinary shares was 7,214 (2003: 6,713) shares; and> there were 5,137 holdings (2003: 3,857 holdings) of less than a marketable parcel (less than $500 in value or 26 shares based on a market price of $19.66), which is less than 2.04% of the total
holdings of ordinary shares.

Voting rights of ordinary shares
The Constitution provides for votes to be cast:i) on show of hands, 1 vote for each shareholder; andii) on a poll, 1 vote for each fully paid ordinary share.

shareholder information I 91

PREFERENCE SHARES - ANZ STAPLED EXCHANGEABLE PREFERRED SECURITIES (ANZ STEPS)At 13 October 2004, the twenty largest holders of ANZ StEPS held 5,011,961 securities, equal to 50.12% of the total issued securities.
Name

Number of shares%

ANZ Nominees Ltd
1,010,559
Chase Manhattan Nominees Ltd
963,814
IOOF Investment Management Ltd
492,000
RBC Global Services Australia Nominees Pty Ltd 402,887
Potter Warburg Nominees Pty Ltd
300,470
National Nominees Ltd
269,515
Permanent Trustee Australia Ltd
264,146
Citicorp Nominees Pty Ltd
190,010
Westpac Custodian Nominees Ltd
161,918
UBS Nominees Pty Ltd
160,000

10.10
9.64
4.92
4.03
3.00
2.70
2.64
1.90
1.62
1.60

Name

UCA Cash Management Fund Ltd
Brispot Nominees Pty Ltd
Austrust Ltd
The Australian National University
ANZ Executors and Trustee Company Ltd
Elise Nominees Pty LtdUOB Kay Hian Pte Ltd
Gordon Merchant No2 Pty Ltd
Transport Accident Commission
Questor Financial Services

Total

Number of Shares%

152,500
98,462
95,31885,00075,97564,74464,50059,00052,26348,880

1.53
0.98
0.95
0.85
0.76
0.65
0.65
0.59
0.52
0.49

5,011,961

50.12

Distribution of ANZ StEPS holdings
At 13 October 2004
Range

Number ofholders% ofholders

Number of
securities% ofsecurities

1 to 1,000 securities
1,001 to 5,000 securities
5,001 to 10,000 securities
10,001 to 100,000 securities
Over 100,001 securities

10,264
549
56
49
11

93.92
5.02
0.51
0.45
0.10

2,516,362
1,346,145
456,233
1,676,194
4,005,066

25.17
13.46
4.56
16.76
40.05

Total

10,929100.0010,000,000

100.00

At 13 October 2004: There are 2 holders of less than a marketable parcel (less than $500 in value or 5 units) (2003: nil)

Voting rights of ANZ StEPSA preference share does not entitle its holder to vote at any general meeting of ANZ except in the following circumstances:a) on a proposal:(i) to reduce the share capital of ANZ;(ii) that affects rights attached to the preference shares;(iii) to wind up ANZ; or(iv) for the disposal of the whole of the property, business and undertaking of ANZ;b) on a resolution to approve the terms of a buy-back agreement;c) during a period in which a dividend which has been declared as payable on a dividend payment date has not been paid in full; ord) during the winding-up of ANZ.
If a poll is conducted on a resolution on which a holder is entitled to vote, the holder has one vote for each preference share held.

EMPLOYEE SHAREHOLDER INFORMATIONAt the Annual General Meeting in January 1994, shareholders approved an aggregate limit of 7% of all classes of shares and options,which remain subject to the rules of a relevant incentive plan, being held by employees and directors.
At 30 September 2004 participants held 2.62% (2003: 2.76%) of the issued shares and options of ANZ under the following incentive plans:> ANZ Employee Share Acquisition Plan;> ANZ Employee Share Save Scheme;> ANZ Share Option Plan; and> ANZ Directors’ Share Plan.

92 I glossary of financial terms

GLOSSARY OF

FINANCIAL TERMS
adjusted common equity (ace) - Tier
one capital less preference shares atcurrent rates and deductions from
regulatory capital.
arrears - a contractually due andpayable sum which remains
overdue/unpaid.
assets - resources controlled by thecompany. Assets can be in the form ofmoney, such as cash or amounts owed;
they can be fixed assets such as property
or equipment; or they can be intangibles
such as a company's goodwill,trademarks and patents. For accounting
purposes, assets are future economic
benefits which are controlled by theentity and result from past transactions
or events. For banks, loans are assets.
bonds and notes - the Group’s liability
for long-term financing issued inwholesale markets.
capital adequacy ratio - a measure thatcompares our regulatory capital with our
risk-weighted assets.
cash earnings per share - earnings per
share excluding significant items andgoodwill amoritisation.
consolidated statement of financial
position - a financial statement thatreports a company’s assets or resources
and the claims against them - including
liabilities or obligations of a businessand shareholders equity.
cost to income ratio (cti) - a businessefficiency measure. It’s the ratio of our
expenses (excluding goodwill
amortisation) to our income.
credit rating - a measurement of thecredit worthiness of a business. AAA is
the top credit rating accorded by ratings
agencies such as Moody’s InvestorsService and Standard & Poor’s. The
better our credit rating, the cheaper wecan borrow money from capital markets.
ANZ’s long-term credit rating is AA-.
credit risk - the potential for loss arisingfrom the failure of a customer or counterparty to meet its contractual obligations.
customer liability for acceptances the amounts owed to the Group from
customers for acceptances, a form oflending.
deferred tax assets - the future tax
savings to the Group as a result of timing
differences that arise due to different
treatment of transactions underaccounting and tax rules.

deposits and other borrowings ANZ’s largest liability, this represents
ANZ’s obligations to our depositors.
dividend (interim) - the amount of thecompany’s after-tax earnings declaredand paid to shareholders at the half-year
results. It is usually expressed as anumber of cents per share, or as
dividend per share.

earnings on each business unit’s bookcapital and attributing earnings on thebusiness unit’s risk adjusted capital. Thisenhances comparability of business unit
performance. Geographic results are notequity standardised.
franked dividends - dividends paid by
the company out of profits on which thecompany has already paid Australian tax.

dividend per share (dps) - the amountof the Company's after tax earnings
declared and paid to ordinary
shareholders. It is usually expressed as anumber of cents per share, or as adividend per share.

full time equivalent (fte) - our total
staff numbers based on the working
week. For example, two part-time staff inAustralia each working 20-hours a week
would be defined as one FTE as theirhours add up to 40-hours a week.

due from other financial
institutions - the monies owed to ANZ
by other banks and financial institutions.

goodwill - the remaining amount, after
amortisation, of the historic excess over
net asset value paid by ANZ for theacquisition of other companies.

earnings per share (eps) - the amount,in dollars, of earnings divided by the
number of shares. For example, if theearnings are $2 million and 1 million
shares are outstanding, the earnings per
share would be $2.00 ($2 million
1 million shares = $2.00). The earnings
figure is based on profit after tax, withsome accounting adjustments.
economic loss provisioning (elp) (orprovision for doubtful debts) - eachmonth the Group recognises an expense
for credit losses based on the expectedlong-term loss ratio for each part of theloan portfolio. The method used by theGroup for determining this monthly
expense charge is referred to as‘economic loss provisioning’ (ELP). The
Group uses ELP models to calculate theexpected loss by considering:

impaired assets - loans or other credit
facilities where there is reasonable doubt
about the collectability of interest, fees
(past and future) or principal
outstanding, or where concessionalterms have been provided because of
the financial difficulties of the customer.
income tax liabilities - the amounts
payable in respect of income tax.
interest margin - a measure which tells
us how much interest we have generated
by lending money after accounting forour costs of borrowing that money, either
from customers or financial markets. Theinterest margin is calculated by dividing
net interest by average interest-earning
assets. This is expressed as a percentage.

> the history of credit loss for each typeand risk grade of lending; andinvestment securities - the investments
in securities that ANZ intends to hold tomaturity.

> the size, composition and risk profile ofthe current loan portfolio.
economic value added (eva™) - a
measure of risk-adjusted accounting
profit. It is based on operating profit aftertax, adjusted for one-off items, the costof capital, imputation credits andeconomic credit costs.

liability - a company’s obligations to alender, supplier of goods and services, a
tax authority and others. For accounting
purposes, liabilities are future sacrificesof economic benefits that an entity is
obliged to make as a result of pasttransactions or events. For ANZ, liabilities
are largely money we have borrowed tofund our lending activities.

equity - the residual interest in theassets of a company after deducting all
liabilities. As a publicly listed company,
our shareholders own these net assets.
This is called shareholders’ equity.

liability for acceptances - the amountowed to customers who have purchased
customer acceptances from the Group.

equity standardisation - EVA™
principles are in use throughout theGroup, whereby risk adjusted capital isallocated and charged against Business
Units. Equity standardised profit isdetermined by eliminating the impact ofloan capital - the long-term funding thatwould rank behind other creditors, andahead of only shareholders in the eventof a winding up.
liquid assets - the cash or cash
equivalents held by ANZ.

glossary of financial terms I 93

market capitalisation of ordinary
shares - the stock market’s assessmentof a company’s value, calculated bymultiplying the number of shares on
issue by the current share price.
market risk - the potential loss theGroup may incur from changes to interest
rates, foreign exchange rates or the
prices of equity shares and indices,
commodities, debt securities and otherfinacial contracts, including derivatives.
It also includes the risk that the Groupwill incur due to increased interest
expenses arising from funding
requirements during periods of poor
market liquidity.
net loans and advances - ANZ’s largest
asset by value, this consists of the loans
ANZ has advanced to individuals andorganisations, less an allowance for
doubtful loan recoveries.
net profit after tax (npat) - a
company’s net profit after all taxes,
expenses and bad debt provisions havebeen deducted from the operating
income.
net specific provision - the transferfrom the general provision to the specificprovision (representing new andincreased specific provisions lessspecific provision releases) lessrecoveries.
non-accrual loans - loans where there
is reasonable doubt about thecollectability of interest, fees (past andfuture) or principal outstanding, or whereconcessional terms have been provided
because of the financial difficulties of thecustomer.
non-interest income - includes fees,
profits on capital markets trading, foreignexchange earning and any other revenue
that is not interest income.
numbers shown in brackets ( ) - thebrackets are there to indicate a negative
figure, instead of using a minus symbol.
operating revenue - the income ANZ
generates from its activities. This
includes net interest, fee income andearnings from capital markets andforeign exchange dealings.
operational risk - the direct or indirectloss resulting from inadequate or failed
internal processes, systems or fromexternal events.
ordinary and preference share capital- the amounts received when shares wereorginally subscribed for.

organic growth - where we have grownassets or liabilities through growth in our
existing businesses rather than throughacquisition of another company.

service transfer pricing - is used toallocate services that are provided bycentral areas of the company to each ofits business units.

other assets - includes assets that do
not fit into the categories listed here
including the increase in market value ofamounts receivable from derivatives(refer also to ‘Payables and otherliabilities’) and interest accrued and not
yet received.

significant items - events which are“one-off” and not expected to berepeated. These are described in detail
within the results. Special notations are
made for any calculations which either
include or exclude these transactions.

payables and other liabilities includes various operating creditors,
accrued interest payable and market
value of amounts payable on derivatives
held by the Group.
premises and equipment - the valueof all the land, buildings, furniture,equipment, etc. which are owned by
the Group.
profit per (fte) - this productivity
measure that shows, on average, howmuch profit is earned by each staff
member.

specific provisioning - the Group
maintains a specific provision for
doubtful debts arising from its exposure
to organisations and credit
counterparties. When it is identified thatfull repayment of a loan on our book isunlikely, we will create a specificprovision for that loan.
tier one capital - the highest quality
capital from a prudential perspective. It
consists of paid-up ordinary shares,
general reserves, retained earnings, andcertain preference shares less specified
deductions.

provisions - the Group’s accrued
obligations for long service, annual leaveand other obligations, which althoughknown, are not yet payable.

tier two capital - includes generalprovisions for doubtful debts (subject toa limit), asset revaluation reserves,mandatory convertible notes and similiar
capital instruments.

regulatory deposits - the cash ANZ has
deposited at central banks to meet
regulatory requirements.

trading securities - the securities heldby ANZ that are regularly bought and soldas part of its normal trading activities.

reserves - retained profits plus
surpluses or deficits arising from, forexample, revaluations of properties,
foreign exchange gains or losses on
offshore operations.
retained profits - the amount of profits
retained by the Group.
return on equity (roe) - a calculation
which shows the return the company has
made on the money shareholders haveinvested in ANZ. It is expressed as apercentage.
risk-weighted assets - the Group’s
assets adjusted for the risk of thecounterparty. The relative risk weight foreach counterparty is determined by the
Bank for International Settlements. For
example, a mortgage with a LVR (loan tovaluation ratio) below 80 per cent carries
a risk weighting of just 50 per cent.
shares in associates - ANZ’sinvestment in companies where theinterest is large enough to provide
influence rather than control over thecompany.

94 I

NEW ZEALAND STOCK EXCHANGEDISCLOSURE

The following statement is included as
required under New Zealand Stock
Exchange (NZX) Listing Rules which
requires ANZ, as an "Overseas Listed
Issuer", to include a statement of thematerial differences between Australian
Stock Exchange (ASX) corporate
governance rules and principles andthose applicable under the NZX Corporate
Governance Best Practice Code (NZX
Code). Irrespective of any differences,
ANZ complies with all applicablegovernance principles and requirements
both in Australia and New Zealand.
The ASX corporate governance rules andprinciples specifically address corporate
governance matters in relation to risk
management, internal controls andstakeholder interests which are notspecifically addressed in the NZX Code.
The ASX principles and rules also provide
greater emphasis on the need for issuers
to disclose internal corporate governancepolicies and procedures to shareholders(including for example disclosure of
insider trading policies, performancemeasurement procedures andremuneration policies).
The ASX corporate governance principles
and rules require ANZ to comply or
explain any non-compliance, while someof the NZX governance requirements aremandatory under the NZX Listing Rules.
For example, the ASX Corporate
Governance Council Principles of Good
Corporate Governance and Best Practice
Recommendations suggest that amajority of directors be independent. The
NZX Listing Rules require that at least two
directors be independent (or if there are
8 or more directors, at least 3 or one third
be independent).

In New Zealand, governance rules
concerning the independence of auditors
are covered in the NZX Code. In Australia,
they are covered more extensively in the
Corporations Act 2001 and the ASX
Corporate Governance Council Principles
of Good Corporate Governance and Best
Practice Recommendations.
There are also some differences in otheraspects of corporate regulation generally
in Australia and New Zealand. For
example:> ASX Listing Rules do not require
shareholder approval of majortransactions to the same extent required
by NZX Listing Rules.
> The ASX related party transaction
provisions require shareholder approval
only for related party acquisitions or
dispositions of assets exceeding 5% ofshareholders equity. Whereas the NZX
related party transaction provisions
require shareholder approval for related
party acquisitions, dispositions and othertransactions exceeding 5% of the issuer's
average market capitalisation, and for an
additional category of service
arrangements where the threshold is anannual gross cost of 0.5% of the issuer's
average market capitalisation.
> Restrictions on buybacks and financial
assistance covered by the NZX Listing
Rules are not addressed in the ASX
Listing Rules, but are covered inAustralia's Corporations Act.
Details on ANZ’s corporate governanceare set out on pages 44-53.

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DIVIDENDS

AMERICAN DEPOSITARY RECEIPTS

HANDY CONTACTS

The final dividend of 54 cents per share,
fully franked, will be paid on 17 December
2004. A Dividend Reinvestment Plan (DRP)
and Bonus Option Plan (BOP) are available
to shareholders. The plans are detailed
in a plan booklet called 'Shareholder
Alternatives', copies of which are available
from the ANZ Share Registry at the addresses
shown in the right hand column under the
Share Registry heading.
ANZ has reviewed the way that it pays
its dividends to reduce costs, minimise thepotential for fraud and enhance conveniencefor shareholders. Dividend payments toall shareholders in Australia, New Zealandand the UK (other than to those who haveelected to participate fully in either the DRPor the BOP), are only made by direct credit
to a nominated bank account.

The Bank of New York sponsors an American
Depositary Receipt (ADR) program in the
United States of America and ADRs are listedon the New York Stock Exchange. ADR holders
should deal directly with the Bank of New York,New York, telephone 1-888-269-2377 (tollfree for domestic callers), 1-610-382-7836(for international callers) or by email toshareowners@bankofny.com on all mattersrelating to their ADR holdings.

ANZ
Registered Office
Level 6
100 Queen Street
Melbourne VIC 3000
Australia
Telephone +613 9273 6141
Facsimile +613 9273 6142
Company Secretary: Tim L'Estrange

STOCK EXCHANGE LISTINGSThe Group's ordinary shares are listedon the Australian Stock Exchange and the
New Zealand Stock Exchange.
The Group's other stock exchange
listings include:> Australian Stock Exchange - ANZ Stapled
Exchangeable Preferred Securities (ANZStEPS) [ANZ Holdings (New Zealand) Limitedand Australia and New Zealand Banking
Group Limited]; senior and subordinateddebt [Australia and New Zealand Banking
Group Limited];> London Stock Exchange - Senior andsubordinated debt securities issued off theEuro Medium Term Note program [Australia
and New Zealand Banking Group Limited,
ANZ National Bank Limited, and ANZ National(Int'l) Limited];> Luxembourg Stock Exchange - Senior debt
[ANZ National Bank Limited], and seniorand subordinated debt [Australia and
New Zealand Banking Group Limited];> New York Stock Exchange - American
Depository Receipts [Australia and New
Zealand Banking Group Limited];> New Zealand Stock Exchange - Seniorand subordinated debt [ANZ National
Bank Limited];

2004 FINANCIAL REPORT
A copy of the Group's 2004 Financial Report,
including the independent Auditors' Report,
is available to all shareholders, and will besent to shareholders without charge uponrequest. The Financial Report can berequested by telephone (Australia 1800 11
33 99, Overseas +613 9415 4014), by email
at investor.relations@anz.com or viewed
directly on the Internet at www.anz.com

REMOVAL FROM MAILING LIST
Shareholders who do not wish to receive a
copy of the Annual Report must advise theShare Registry.

ANZ is proud to be a foundation memberof eTree, an incentive scheme to encourage
shareholders of Australian companies toreceive their shareholder communications
electronically. Register your email addressat www.eTree.com.au/anz and in return
ANZ will donate $2 to Landcare Australia tosupport reforestation projects in your home
state or territory.

Investor Relations
Level 22
100 Queen Street
Melbourne VIC 3000
Australia
Telephone +613 9273 6466Facsimile +613 9273 4899
investor.relations@anz.com

SHARE REGISTRY
Australia
GPO Box 2975
Melbourne VIC 8060
Australia
Telephone 1800 11 33 99 / +613 9415 4010
Facsimile +613 9413 2500
anzshareregistry@computershare.com.au
New Zealand
Private Bag 92119
Auckland 1020
New Zealand
Telephone 0800 174 007
Facsimile +649 488 8787
United Kingdom
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH
Telephone +44 870 702 0000
Facsimile +44 870 703 6101

IMPORTANT DATES FOR SHAREHOLDERS

CHANGE OF ADDRESS
Shareholders who have changed theiraddress will need to advise the Share
Registry in writing, quoting their shareholder
number, registered details, name andcompany as applicable. If you have purchased
your shares through a broker you will needto inform your broker of the change.

Date

Event

26 October 2004 Annual Result Announced
17 December 2004 Annual General Meeting[Melbourne]
17 December 2004 Final Dividend Payment

CREDIT RATINGS
26 April 2005*

Interim Results Announced

1 July 2005*

Interim Dividend Payment

Short Term
> Singapore Stock Exchange - The Euro
Medium Term Note program [ANZ National
Bank Limited and ANZ National (Int'l)
Limited]. The Euro Medium Term Note
program was delisted from the Singapore
Stock Exchange in October 2004; and> Swiss Stock Exchange - Senior debt
[Australia and New Zealand Banking
Group Limited].

Moody's Investors Service
Standard & Poor's Rating Group

P-1
A1+

Long Term
Moody's Investors Service
Aa3(outlook stable)
Standard & Poor's Rating GroupAA(outlook stable)

25 October 2005* Annual Results Announced
16 December 2005*Annual General Meeting[Adelaide]
16 December 2005*Final Dividend Payment* tentative dates