ANZ ESG Forum
27 June 2024
Start of Transcript
Shayne Elliott: Good morning and thank you for joining us at our seventh annual ESG
Investor Briefing. Now to begin, I would like to acknowledge that I am joining you fromNaarm on the lands of the Wurundjeri people of the Kulin Nation and I pay my respects totheir Elders past and present and recognise their thousands of years of environmental,social and governance practices. I also acknowledge the Traditional Owners of the lands onwhich you, our attendees, are joining from and the First Nations people here with us today.
Now, as we have done for seven years now, we are here today to discuss our progress inthe area of ESG. We take ESG as seriously as our financial results, so we want to provide
you with the same opportunity to hear from us directly and to ask questions.
Today we will go into some detail on important societal issues affecting business andindividuals in the current economic environment, hardship and scams, as well as ourapproach to First Nations banking. Now to do so I'll be joined by our new Head of First
Nations Strategy Australia, Shelley Cable, and our Customer Fairness Advisor, Evelyn
Halls.
But first, just an overview of our approach. ESG is integral to our purpose, which is toshape a world where people and communities thrive, and we deliver that purpose by
executing our strategy which is focused on improving the financial wellbeing and thesustainability of our customers.
Specifically we help people save for, buy and own a liveable, affordable home or to start orbuy and sustainably grow their business, and we help companies sustainably move goods
and capital around the region. ESG is an important and integrated part of the strategy andcreates long term value for our shareholders while helping us better serve customers.
Now, to keep pace with the rapidly evolving external environment and community
expectations we engage regularly with stakeholders to consider whether we're focused on
the right areas. Following the process this year our three core areas continue to befinancial wellbeing, housing and environmental sustainability. Other areas of focus include
protection from scams and fraud as well as responsible customer engagement, which weare speaking about in more detail today.
Our governance model overseeing progress in these areas includes our Board, Ethics and
ESG committee chaired by Jane Halton and the Ethics and Responsible Banking
Committee, or ERBC, which I chair.
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Since its introduction in 2017 the ERBC has made significant contributions towards
achieving fair, ethical and balanced stakeholder outcomes. This includes establishing our
ethical decision-making framework and deciding who we bank and how we bank them.
At the same time the Board's EESG committee has provided direction on a diverse range of
topics, including some of the toughest we face as a company, such as family violence,
human rights and the economy's transition to net zero. We don't always get it right but wehave robust processes in place and forums for raising important issues.
Looking ahead we are considering how we can further strengthen these committees toensure that ANZ continues to take meaningful action towards our purpose and I'll speak
more on this later.
Looking externally, we are a large company which touches many parts of the economy in
our home markets of Australia and New Zealand, so it's important we don't operate in a
bubble. We work hard to stay alert to and connected with what is happening in the broader
economy and the impact it's having on our customers and the community.
In both Australia and New Zealand, economic growth has slowed, consumption is soft,interest rates are the highest they’ve been in over a decade and inflation is stubbornly
above target. For many people times are incredibly tough. Foodbank alone is deliveringroughly 65,000 meals every day in Melbourne, while heartbreakingly, some Australians are
skipping meals to keep up with everyday costs and we are seeing similar in New Zealand.
In line with the broader economic environment, the number of ANZ home loan customers
in hardship has risen over the last year to around three in every 1,000 people. The number
for small business customers is similar at around two in every 1,000. Now, while thesenumbers are still low in historical terms, we expect they will continue to rise given theexternal environment and we are working hard to help people who are struggling.
Now, we noted the recent ASIC report which found more than one in three Australians
disengaged from the financial hardship application process at least once. To tackle this weare taking measures to improve both the experiences and the outcomes for those seeking
hardship support through an action plan which Evelyn will speak to in more detail.
We are also trying to connect with customers in difficulty sooner, including by using data
analytics and modelling to proactively identify those facing hardship triggers, such as
reduced income or negative cashflow.

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When we do contact these customers, we let them know that ANZ is here to help andprovide information about our financial assistance. This helps us determine quickly whether
support is required, such as pausing or reducing payments or restructuring their loan.
Now, for many it's not necessary, but when it is we can help customers get back their feetfaster.
Now, it's important to also note that many of our home loan customers remain resilientwith 79% actually ahead on their home loan repayments, while offset balances are
growing year on year. For now, employment remains strong and savings built up during
COVID continue to be high in Australia providing many households with some level of
security.
Now, that said, we are aware we also we have customers who are in difficulty and may nothave a credit card or a home loan. These retail customers may not be as visible in our
statistics but they're still our customers and we need to do what we can to help them.
This includes supporting financial wellbeing through our long running flagship financial
wellbeing and education programs Money Minded and Saver Plus. It may also be bymaking sure they have the most appropriate product for their circumstances.
ANZ Plus allow us to offer simple and intuitive wellbeing tools, like setting a savings goal orusing round-ups to set aside money for a rainy day. With more than 740,000 customers
already on board ANZ Plus it's really pleasing to see that 47% of them actively are
engaged in one or more of our financial wellbeing tools. Now, it's important to support andprotect all of our customers and we will continue to stay vigilant.
We also support our customers through our efforts to keep them safe; safe from criminals,
safe from hackers and safe from scammers. Providing a safe place for people's money has
been core to our business for 196 years and that's why investing in security is such a toppriority. Criminals used to rob bank branches, but increasingly they scam customers.
In recent years the extent and pace of change in the scams landscape has evolved
significantly as the perpetrators become increasingly sophisticated. Now, at the same time
we have increased investment and prevention and detection tools across the bank,leveraging new technologies such as AI, machine learning and biometrics.
You may have also seen our latest advertisements with the return of our hugely popular
Falcon, an anti-fraud system flagging suspicious transactions. Now, the ads are fun but
they also carry a serious message about extra layers of protection that the Falcon
technology provides.
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We are heartened by the latest National Anti-Scam Centre quarterly numbers showing
overall reported scam losses in the March quarter were down by around 10% from theprevious quarter. Now, at ANZ we are also seeing evidence that our initiatives are helping
reduce fraud and scam losses to customers. Again, Evelyn will talk to the numbers in moredetail. While they're heading in the right direction we know we can't be complacent and weneed to take more action.
Now, I would like to touch briefly on our three ESG areas, starting with housing.
Challenges in the housing market are disproportionately impacting low-income earners,
renters and first home buyers. We know that it has been equally difficult for the property
sector to deliver new housing supply to market as we have seen firsthand the steep
increases in the cost of construction.
We remain focused on helping improve the availability of suitable and affordable housing
options for all Australians and New Zealanders. As part of this we are supporting an
increase in the supply of social and affordable housing by investing in emerging housing
markets, such as specialist disability accommodation, land lease housing and build to rent.
ANZ has a target to fund and facilitate $10 billion of investment by 2030 to deliver more
affordable, accessible and sustainable homes to buy and rent. Now, at the end of March
this year we have delivered more than $5.7 billion toward that commitment since 2018.
A recent example was our financing of the Ground Lease Model 2 Project, a public/private
partnership between the Victorian state government and the Building Communities
Consortium. This project is expected to deliver 1,370 new social, affordable, specialist
disability and market rental residential dwellings across four project sites in Victoria.
The new housing stock will replace aging properties with modern, accessible and moreenergy efficient rentals. The project is a great example of how we work with our customers
and other stakeholders to deliver better housing outcomes.
Now, turning to financial wellbeing. We're working to encourage our customers to build
and maintain financial resilience. Our aim is to have at least 2.5 million customers inAustralia and New Zealand with a financial buffer by the end of 2026.
Now, this is from a baseline of 2.4 million customers, which may not sound like a large
increase to our target. However, in the current external environment even maintaining thebaseline level will be challenging.

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Pleasingly, just last month the Federal government extended funding for Saver Plus andthis will allow more Australians to participate in the award-winning program, which is now
the longest running matched saving and financial education program in the world.
In total, our long running partnership with governments and community organisations, likethe Brotherhood of St Laurence, have helped 60,000 lower income Australians save morethan $29 million, while also receiving $24 million in savings matched by ANZ.
We are now also piloting Save Plus in the Pacific and from July this year we will bepartnering with the Australian Federal Government to expand the reach of Money
Business, our tailored adult financial education for Indigenous Australians. We are in theprocess of building a digital banking and capability module recognising the linkages
between financial wellbeing and digital capability.
Now, finally, we are also making really good progress in environmental sustainability. As
you may know, we have achieved more than $66 billion against our previous sustainable
solutions target since 2015. So we set a new target in April '23 to fund and facilitate atleast $100 billion in social and environmental outcomes by 2030, through customer
activities and direct investments.
By the end of March, we funded and facilitated over $20 billion across 131 transactions
since the new target commenced. For example, ANZ led a US$940 million green export
credit agency backed facility for Hyundai Mobis America to finance the supply of parts fordomestic electric vehicle production in the United States. We've also been engaging withour customers on their transition plans for almost a decade. To explore ways in which ourcustomers can improve their plans which may be facilitated by our financing solutions.
This financial year, we're applying an enhanced assessment framework to our largest
emitting customers. Including a sharper focus on whether our customers are implementing
their transition plans.
Now, this work is being led by our Group Executive, Institutional, Mark Whelan, and Chief
Risk Officer, Kevin Corbally. They recently met with customers, peer institutions, andregulators in Europe to benchmark, learn, and discuss these issues in a market which iswell advanced in this area.
Mark and Kevin are both here today if you have any questions on these topics. Now, I'dlike to introduce Shelley Cable, our new Head of First Nations Strategy, Australia.

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Shelley's role is one of the first of its kind reporting to a Group CEO in corporate Australia,
reflecting the significance of her appointment. A proud Nyoongar woman, Shelley willdevelop and implement an Australian First Nations strategy for the bank while acting as atrusted advisor on First Nations issues and opportunities.
She brings extensive experience across First Nations employment and financial literacy,
most recently as the director of Generation One, an initiative of the Minderoo Foundation.
So over to you, Shelley.
Shelley Cable: Thank you, Shayne, and kaya, good morning, everyone. Ngan kwerl
Shelley. Ngan moort, ngan boodja Noongar. My name is Shelley Cable and I belong to the
Nyoongar people of south western Australia, and I'm very proud to have joined ANZ in
January as the inaugural Head of First Nations Strategy for Australia.
While this role is new, it shouldn't be unexpected as it builds on ANZ's history and trackrecord of reconciliation. From being one of the first major Australian companies to develop
a reconciliation action plan, or RAP, in 2007 to appointing my peer, Karleen Everitt, Te
Kaitohu Rautaki Māori, Head of Te Ao Māori Strategy in 2021, to our support for the Yes
campaign in last year's referendum - my appointment is a logical progression of ANZ's
maturity and commitment to First Nations.
In this new role, my priority is to develop an Australian First Nations strategy for the bankthat is aligned to our purpose, strategy, and business.
While the strategy is in its early stages of development, I'm happy to share some initial
thinking. Our objective for this strategy is to weave together meaningful actions, projects,
and commitments that leverage our core business strengths and help us to be moredeliberate about our relationships with First Nations in Australia.
We are conducting an extensive consultation process to inform this strategy and areseeking input from many people across our bank, communities, and country.
Importantly, I want to stress that ANZ is not only pursuing this strategy because it's theright thing to do. As our investors, you should know that this is also good for our business.
You can look across the Tasman to ANZ New Zealand's Tākiri-ā-Rangi strategy as an
example, where our focus is on economic equality by advancing Māori business andfinancial wellbeing.

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In Australia, the First Nations economy represents an exciting opportunity for our bank.
This sector contributed around $16 billion to Australia's GDP in 2022 and the sector is
growing rapidly, well above our national growth rate.
Without a strategy on how to bank this sector, we miss the opportunity in front of us.
Therefore, we're developing a business strategy that centres on the common ground. The
win/win opportunities where what's good for First Nations people is also good for ourbusiness, and there are plenty of these opportunities.
The strategy will also be strengths-based and recognise the fact that First Nations peoples
in Australia have run economies and traded for longer than anyone else on the planet
today. There is much for our bank to learn.
At this early stage, and subject to further consultation, it's likely that the strategy will
focus on three key areas: financial wellbeing, banking the First Nations economy, andimproving the cultural capability of our bank.
The strategy will also build on the work already underway in our current Stretch
Reconciliation Action Plan which is approaching its conclusion this year.
We continue to make good progress against the 17 actions, comprising 100 commitmentsin the RAP. Some of our achievements in 2023 included launching a First Nationscommercial banking proposition, which includes the appointment of First Nations bankers
who work directly with First Nations commercial customers, and spending almost $12
million with First Nations businesses, bringing total spending since this RAP commenced tomore than $24 million. These are just some of the examples of the progress that ANZ ismaking.
If we get this strategy right, the commercial opportunity for ANZ is significant. For First
Nations in Australia, this is an exciting opportunity to advance our economic selfdetermination by being included in the financial system, cementing a rightful place in theAustralian economy, and determining our own futures from a position of economic
strength.
I look forward to sharing our Australian First Nations strategy with you in 2025. Now, I'll
hand over to Evelyn Halls, our Customer Fairness Advisor at ANZ.
Evelyn Halls: Thanks, Shelley. Today I'd like to update you on the progress being made in
two key areas for ANZ and our customers, scams and hardships. But first, I'd like to say a
few words about my role at ANZ.
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My role reports directly to Shayne as Group CEO and involves providing advice to guide
ANZ's decision making on the fairness of our products and services for retail and small
business customers.
An industry challenge, if not a global challenge I'll speak to first, is scams. I'm sure you've
all seen news stories about people who have been affected and sometimes devastated byincreasingly sophisticated fraud and scams in our communities.
As Shayne has already highlighted, we are encouraged to see that the numbers ofreported scam losses in Australia has fallen over recent months.
For ANZ, customer scam losses through ANZ Classic for the first half of FY24 are down athird compared with the second half of FY23. Meanwhile, our controls prevented over $100
million of customer funds going to cybercriminals in the 12 months to March 2024.
The downwards trend in losses is partly due to the increased friction we have put in place
to slow down the payment process. But is also thanks to our enhanced Falcon technology
detecting more suspicious transactions.
In fact, currently most customer complaints about fraud and scams relate to transactions
being blocked due to suspected fraud. We continue to invest in innovative detection andprevention measures to stay ahead of the criminals who are creating new scams andfrauds on a weekly, if not daily, basis.
This includes piloting a dedicated team of specialists in our customer protection team who
handle calls about fraud and scams. We recently introduced Crypto Protect, a tool whichturns off the ability for ANZ Plus customers to make payments to cryptocurrency
exchanges used in around half of all scams unless customers choose to override it.
We have also built in additional friction and delays to specific payment destinations which
we have identified as having a high scam or fraud risk. These destinations are updated on
an ongoing basis to reflect the latest data.
Building on our existing scam warnings, this year we will also introduce personalised
messages to inform ANZ classic customers when a transaction or activity is consideredhigh risk, as well as our new scam scoring model using AI to boost our scam detection
capability.
Education is also critical. We're mobilising our MoneyMinded financial literacy program byworking with our community partners to deliver new scam awareness workshops to our
network of coaches in the community sector.
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We've established a partnership with the Brotherhood of St Laurence to deliver scamawareness modules directly to the most vulnerable people in the community.
On ANZ Plus, we've added key scam safe measures that customers can activate for added
security including protection against screen sharing and the ability to detect a range ofpotentially risky apps.
Prevention is critical,but what happens if a customer loses money to a scam? Once we
become aware of a scam, we make every effort to recover lost funds, including bycontacting the bank where the funds had been sent.
The ability to recover funds depends largely on how quickly the scam is reported to us
given the speed with which funds are transferred onwards by scammers.
Where a customer's funds can't be recovered, we review each case to seek to understandexactly how the scam occurred and to determine whether the funds should be reimbursed.
We consider factors such as whether ANZ was or should have been aware that thecustomer may be the victim of a scam and whether we had the opportunity to intervene,
as well as warnings given to the customer and their response to those warnings. We also
take into account customer vulnerability.
Generally, we will reimburse where we consider ANZ could and should have acted toprevent the loss and failed to do so, as well as where required by law or the e-payments
code.
We will continue to work closely with other banks across industry sectors and withgovernment and regulators to proactively identify and address scam trends so thattogether, we can stay ahead of scammers and protect Australians from emerging threats.
This includes through the government's new cutting-edge intel loop, an exchange between
banks, telcos, digital platforms, and the Australian Financial Crimes Exchange whichenables near real-time data sharing about the latest tactics and tools used by scammers.
Now I'd like to turn to the issue of hardship, which Shayne touched on briefly. As hementioned, the number of customers in hardship has been slowly rising over the past year
or so. Whilst still lower than it has been in the past, it is an extremely concerning anddistressing time for each of these customers.
The drivers have been consistent over the past two years -primarily reduced income,increased commitments, medical reasons, unemployment, and separation.
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As Shayne also mentioned, we are delivering an action plan to improve the experience andthe outcomes for our customers seeking hardship support. We want to ensure that ourhardship processes are simple, accessible, and easy to use, and provide sustainableoutcomes suitable to each customer's individual circumstances.
Our action plan is focused on five key areas. First, improving policies, procedures, andtraining for our staff. Second, ensuring executive level end to end oversight. Third,
improving our customer communications so they are clearer and more personalised.
Fourth, evolving our customer experience through reporting and surveys. And finally, fifth,
providing specialist support to vulnerable customers in financial difficulty.
We have a dedicated team of people in Customer Connect whose role is to work withcustomers to tailor the support to best suit their needs and individual situation.
When a customer applies for hardship, this team will speak with them to understand theirsituation and discuss the options available. That may be by providing short term options,such as a loan repayment pause, partial payment reduction, or interest only payments orlonger-term solutions such as reviewing and restructuring loan terms and repayment.
Looking ahead, we do anticipate that hardship numbers will rise further given the external
environment. But I do want to assure customers who are struggling, that we are here to
support them. Now, I would like to hand back to Shayne before we go to questions.
Shayne Elliott: Thanks Evelyn. Now, today we've spoken mostly about what we've done in
the first year and I'd like to speak briefly about the next 12 months. Our core focus areas
will continue to be housing, financial wellbeing, and environmental sustainability, but wealso need to stay ahead of emerging risks.
One of the ways we do this is through an ESG issues radar which points to many of the
topics discussed here today. Looking ahead, we're alert to the following five themes.
First, supporting our customers as cost-of-living pressures increase. Given the economic
environment, we expect financial stress will rise over the next 12 months and we'recommitted to executing our hardship action plan to help those who are struggling.
Second, managing the ethical choices we make as we further roll out generative AI. You've
heard us mention today how AI can be a force for good, helping protect customers bydetecting and preventing fraud.

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But it also raises ethical questions around how it's used and the potential unintended
consequences for our people and our customers. We're continuing to look at the
implications and how we can respond to those issues in a thoughtful and ethical way.
Third, supporting the transition to net zero. This is a significant opportunity for ANZ. We
want to be the leading Australia and New Zealand based bank in supporting customers totransition to net zero by 2050.
So it's important that we're at the leading edge of providing innovative solutions, but wealso need to be on alert to greenwashing risk. We'll continue to manage this primarily
through our robust risk management policies and processes.
Fourth, diversity and inclusion will be enormously important. In a fast-changing world, with
rapid technological advancements and massive opportunities around innovation, a peopleoriented business like ours needs to work hard to attract and retain the best people.
In terms of gender balance, we've made good progress and increased our women in
leadership to 37.3% in 2023. Now, this exceeds our target of 36.9% but we know we havemuch more to do. Inclusion goes beyond gender to include diversity of cultures and sexual
identification and our job is to be as open and inclusive as possible.
Fifth and finally, as the world continues to evolve and adapt at pace, we need to makesure our governance is fit for purpose. Over the next 12 months, we'll enhance theobjectives for the ERBC and look at the measures we're using to track progress. We lookforward to updating you on our progress next year.
So, in closing, we understand there's more to do, but we are making progress.
We recognise the importance of ESG and delivering long term benefits to our shareholders.
Managing ESG well delivers stronger governance outcomes, a lower risk bank, and moresustainable earnings as we adapt to the rapidly changing environment.
I'm confident we have the right team and plans in place, underpinned by our strong
financial performance to continue to deliver for our customers, our people, and ourshareholders.
I'll now hand over to the operator who will open the floor to your questions. Thank you.
Operator: Thank you. If you wish to ask a question, please press star one on yourtelephone and wait for your name to be announced. If you wish to cancel your request,
please press star two. If you're on a speakerphone, please pick up the handset to ask yourquestion.
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Your first question comes from Jonathan Mott with Barrenjoey. Please go ahead.
Jonathan Mott: (Barrenjoey, Analyst) Thank you. I've got a question for Shayne and it
goes back to the topic of housing and something you've talked about a lot over the lastyear in particular. Which is that mortgages have become a product only for the rich. I think
you described them as a luxury good.
To look at it, you've seen that the average household income for mortgage borrowers has
risen by close to 30% over the last two years and is going up towards the mid 60
percentile to get into the housing market.
Now, if I step back and look at some of the comments you said, you started with the
purpose of ANZ shaping a world where people and communities thrive. Yet we're in asituation where it's very, very difficult for young people to break into the housing market.
Then when I look at the newspaper article, it says new policies have just come out where
people earning more than $400,000 income in 145 expensive postcodes, now have waived
their mortgage insurance up to 95% LVR.
So I'm trying to piece this together. That what can you do to actually try and get especially
younger people who aren't necessarily high-income earners into the housing market?
I know everyone falls on responsible lending. So it's worth also noting what John Lonsdalecame out yesterday and actually said, and I'll quote from his speech at the ABA, where hesaid most of the framework is principle based and there's significant room for banks to run
the businesses the way they want.
That means by their ability to set their own business strategy, pricing, and risk appetite.
So what can you do really on housing to make the community thrive and help young
people get into the housing market?
Shayne Elliott: Yes, thanks for the question, Jonathan. It's a very important question and
one that we spend a lot of time thinking about. I mean I think obviously there's two sides well, there's more than that. But there's obviously two ways we can do that.
We do need to make sure that our lending and risk appetite is appropriate not just forpeople with lots of money or lots of assets or high incomes, but we need to make sure that
that's appropriate and fair, within the rules.
Again, not blaming just the regulators themselves but within the regulatory framework wehave. Which, principles or not, is still restrictive. Yes?
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We still have to abide by those principles. So I think they’re still restrictive. But where wereally think we can lean in more is actually on the supply side.
You know, just last Friday actually, we had a - something we do very often, we sit downwith a lot of our developer, in the residential and other spaces, customers and talk to them
about how we can better support them in terms of getting more product to market.
You know? Now, I'm not suggesting that we can solve that all on our own. But we can bevery, very supportive in making sure we're supporting the right developers with the rightbusiness models et cetera.
You'd be aware of things like, you know, one of our customers is Assemble which is areally interesting, innovative business model which is bringing affordable housing and thatsort of essential worker belt, and it's got a model of how they're able to do that, partneringboth with the super industry and the bank.
So we think there's real opportunity in some of these newer models with the land leasemodels et cetera. So we're focused, again, what ANZ does well, where we have ourstrengths, clearly is skewed on the institutional side, it’s something that we have strength
in relative to our peers and so we think we can do a lot more on that side.
Having said all that, the challenge in that market is scale and the question is what we’refocused on, with Kevin and Mark and the team in Institutional, is there’s some really goodmodels out there, but at the moment they’re delivering hundreds of homes and units andwe need to find a way to do thousands and tens of thousands, and that’s really where wethink we can get the best leverage in terms of increasing the supply of affordable andliveable homes.
I won’t bore you with the details, because you know them, but again, we got a lot of
feedback from our property customers on where there is opportunity to reduce the costs ofconstruction. Some of it is to do with their regulation, some of it is to do with other bits
and pieces, et cetera. But we have a voice in that as well as part of the overall ecosystemon housing to make sure that we lobby for the right sorts of changes that can reduce thecost of construction.
Jonathan Mott: (Barrenjoey, Analyst) So is there anything that you can do on the pricing
and risk appetite to help younger people get into the housing market? I understand the
supply side and that’s a challenge that a lot of people have been talking about. As a bank
you can affect the demand side of credit a lot more easily than you can impact the supply
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side, you’ve obviously making some changes in policy and pricing at the very top end,
what can you do at the midlevel for young people?
Shayne Elliott: Well that’s also an interesting question. I’m not sure I agree with you thatthat necessarily we can do more on that side. When you look at ANZ and our business mix,
we over index proudly around Institutional, that we do have a significant force there interms of our balance sheet capability and what we can do on the supply side. But I takeyour point.
Look the reality is and you know this better than anybody and if we were sitting here in adifferent forum talking about financials, the returns on home loans aren’t what they used
to be. So when the average return now on home lending is above but barely above cost ofcapital, your options are limited. That’s part of the reason that the industry, not just us,that is part of the reason the industry is skewing towards the wealthy, because sadly wealso need to generate returns above cost of capital in a sustainable way and that’s why
there is that kind of skew to that area.
So look, that doesn’t mean we do nothing. It means that we constantly have to be looking
for policy settings, products, et cetera, that can make those sorts of things affordable andencourage first home buyers, but also, as you know, it needs to be economicallysustainable from our point of view. Which brings me to ANZ Plus and again, I’ll do my little
spruik here, but part of the whole - the beauty of our ANZ Plus platform is to build and wehave now, a dramatically lower-cost platform to operate on. Now we’ve still got a way togo.
The way that we can reduce the cost of production from our side, the cost of producing ahome loan, there’s two big inputs. There’s lots, obviously and again, the people on the callknow them, I won’t bore you. But [there] is operational cost, it’s not the biggest, but it’s
the cost of the money, the cost of funds that go into making up a home loan and theoperational cost. Plus is designed to radically reduce both, particularly operational costs.
So now we have in trial a truly digital home loan - not everybody wants one of those, I get
that, but for those who do, that is a radically lower cost proposition, which means then thepeople who will benefit from that lower cost, sure, shareholders, but also will mean we will
have the ability to have more attractive pricing out there for young people as well.
But look, I’m not going to profess that we have all the answers, we don’t. It’s a very, very
complex issue, I know and all I can say is we get it, it’s our responsibility to lean in and bepart of the broader discussion, whether it’s with government and governments of various
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flavours, state and federal, and also obviously with the industry who produce andobviously with our regulators as well.
Jonathan Mott: (Barrenjoey, Analyst) Thank you for the detailed answer.
Shayne Elliott: Thanks.
Operator: Your next question comes from Andrew Triggs with J.P. Morgan. Please go
ahead.
Andrew Triggs: (J.P. Morgan, Analyst) Thank you. Morning Shayne, just a follow up
actually on Jon’s question. Look I would agree with respect to the residential property
development side of things. There was a 2016 thematic review that APRA undertook on the
sector and it acknowledged or had concerns around controls and weaking underwriting
standards in the residential property development market. But what that drove was, atleast I think was one of the big drivers, was a 15 percentage point loss in banks’ share of sorry, major banks’ share of bank-originated commercial property exposures.
Shayne Elliott: Yes.
Andrew Triggs: (J.P. Morgan, Analyst) I would have thought the two are pretty closely
linked. We’ve seen things like the amount of pre-commitments required in order for a bankto extend credit to a property development greater than 100%, typically a reduction in
LVRs in that space too. That’s all good from a credit quality perspective, but it would
appear to be accentuating the issues on supply. Just interested in your comments…
Shayne Elliott: I agree.
Andrew Triggs: (J.P. Morgan, Analyst) …if you think there’s any potential for loosening
from APRA on that side of things?
Shayne Elliott: That’s a question for APRA. I agree with you. I mean you can’t have it bothways as a community. We - I’m not pointing fingers at anybody, but as a society we havevoted either consciously or not for safety.
Andrew Triggs: (J.P. Morgan, Analyst) Exactly.
Shayne Elliott: We want the banks to be safe, we want people to be safe, we want nobody
to lose their home, nobody to end up in difficulty, nobody to lose their business. Those are
all laudable objectives, but they come at a cost and the cost is exactly what we’re talking
about now, which means that middle Australia gets locked out. As we know, the average
Australian can’t afford the average Australian home. Yes, okay, we can sit there and say
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it’s because the prices are high, but it’s also because they do have less access to credit
than they would have had in the past.
So yes, this is, again, I’m not suggesting anybody sat around and designed this outcome
for it, but this is the outcome we have. We have a very safe system and the cost is thatsome people are locked out. I don’t see that getting better anytime soon, unless there’s
some form of intervention. Our job, as a reasonable, not the largest, but a reasonable
player in the space is to be actively engaged and try to be constructive. That’s what wewant to do.
We’re very happy to have construct - and we do, by the way and I listened to John’s
speech yesterday and so at APRA, but it’s not fair to - I’m not suggesting it’s all APRA’s
fault either, by the way, there’s a system here that has many, many players in it. I thinkit’s time, under some sort of auspices, to get more people around the table and really talkthrough these issues and understand what can be done, because clearly it’s becoming
more and more unacceptable for the broader community.
Andrew Triggs: (J.P. Morgan, Analyst) Thank you and just on a different topic, the ASIC
report on hardship in May this year, just interested to what extent was there abenchmarking element that you could see how ANZ compared to peers and also just ageneral question, do you see a risk of any lookback remediation for past hardshiptreatment of customers?
Shayne Elliott: It’s a great question. I’m going to - Kevin’s here. He can talk about it. Juston hardship, just while he’s getting up to the microphone, the hardship parameters arereally, really important. Again, I think we need to be - they’re not right for everybody. Our
first responsibility, because even - hardship programs aren’t for free from a customer
perspective. There are implications of going onto hardship and so we do need to bethoughtful. It doesn’t mean just because somebody wants hardship the right thing to do isliterally go into those programs. It is for many, but our first responsibility is to say is thisthe appropriate action to take.
But in terms of your question on the report, Kevin, do you want to cover that?
Kevin Corbally: Yes, Shayne, thank you. Look Andrew, the key thing probably to note isthat we weren’t actually one of the participants in that review that ASIC undertook. ASIC
has separately looked at our hardship processes and I would say that some of the findingsthat were in that report were also findings that would have applied to us. So as a result,

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because we weren’t a participant in it, we’re not actually aware of what, if any,
benchmarking exercises were undertaken.
Andrew Triggs: (J.P. Morgan, Analyst) Okay, thank you. Any chance of lookback treatment
or remediation?
Shayne Elliott: I don’t think - that’s a good question, I’m not aware that that’s being evendiscussed or sought about. I think our hardship program is set up pretty well in terms ofobviously we do our own lookback reviews. I haven’t heard that being raised as any sortof…
Kevin Corbally: I mean ASIC did indicate in the report that they would consider whether
there was a need for any impact on any of the individual banks that participated in it.
That’s the only thing I saw on it.
Andrew Triggs: (J.P. Morgan, Analyst) Thank you.
Kevin Corbally: Thank you.
Operator: Your next question comes from Mayleah House with Ethical Partners Funds
Management. Please go ahead.
Mayleah House: (Ethical Partners Funds Management, Head of Stewardship) Thank you
Shayne and thank you team, firstly just wanted to acknowledge the great work that ANZ
has done and is doing on the First Nations strategy. Really pleasing to see that today. My
question goes to the comments made around transition plans and enhanced framework.
I’m interested if you could provide a little bit more colour around what specifically thatenhanced framework looks like and how you’re assessing the credibility of transition plans
and what steps you’ll take if customers don’t meet those expectations. Thank you.
Shayne Elliott: Great question. I’m looking over to Mark. Do you want to come and talkabout that? It’s a great question. So just to answer the last part of the question, there’s
lots of things we can do when we undertake those reviews. I would say that 99% of them
are constructive conversations we have with our customers. We’re not at loggerheads withpeople, we’re constructively both trying to solve the same problem, obviously fromdifferent perspectives. So when we’re not comfortable, we engage in a dialogue and we
explain why. That will change our relationship and it will change our risk appetite.
In extreme - and this hasn’t happened for a while, but it did, in an extreme, we would
contemplate no longer banking that customer. If we really got to a point where we said,
hey, this is a customer who just doesn’t get it and they don’t have credible funded plans,
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we need to reassess the nature of our relationship. Now as I said, that’s pretty rare,
because we bank largely responsible, well-run, well-governed organisations, not to meanthat they’re prefect and doesn’t mean they don’t have their own challenges, but generally
it’s a constructive conversation. But we are trying to strengthen it.
Mark, maybe you want to talk to how we plan to do that.
Mark Whelan: Yes, that covers a fair amount of it. I mean the way we engage in theseconversations with customers is around three particular areas, which is around thegovernance that they have in place from Board down, disclosures that they have in themarket and publicly disclosed disclosures, and also targets with regards to what they’ve
set themselves internally. Now we’ve been having those conversations with thesecustomers for many years now and what we’re doing in when we say we’re lifting thatassessment, we’re just asking for more detail.
We’re certainly lifting the bar on each of those three particular areas about where they’relooking to make disclosures and the governance practices they’ve put in place. We’ve said
that we want to - and we classify these customers with regards to those areas in an A, B,
C, D category. A being very advanced, D being not so, and those that sit in between. We
then have conversations, as Shayne said, around these different areas in that classification
and what we’ve said to many of our customers now is that we want to see progress, moreprogress in these areas, by 2025 and if we’re not seeing the progress, particularly from
our Cs and Ds moving in the right direction, then we need to have further discussions withthem or start making decisions around the approach we’re taking in supporting them intheir transition. So that’s pretty much what we do.
Mayleah House: (Ethical Partners Funds Management, Head of Stewardship) Can I justclarify, you mentioned targets here, do you have any expectations or assessments of how
those targets are aligned to a 1.5 degree pathway? What’s your position on offsets andcustomers using offsets to meet those targets as opposed to prioritising absolute emissions
reductions in the first instance?
Mark Whelan: Yes, we look for TCFD-aligned disclosures in the first instance and withregards to offsets, we see that as a legitimate tool to be used and you’ll see that, as thegovernment has pointed out, in the safeguard mechanisms as well. So we see that as alegitimate tool but it should only be one tool in ensuring that they meet their targets. We
want to see real progress in their underlying move to decarbonising their own businesses,
but also we understand that some industries that we’re talking to here are very difficult toPage 18 of 22

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decarbonise and that therefore offsets will be part of that solution, but not the only part ofthat solution.
Mayleah House: (Ethical Partners Funds Management, Head of Stewardship) Great, thankyou.
Shayne Elliott: Thank you.
Operator: Your next question comes from Matthew Wilson with Jefferies. Please go ahead.
Matthew Wilson: (Jefferies, Analyst) Yes, good afternoon or good morning team, thanks forthe opportunity to ask a question. Just on deposits, whilst home loans are very important,
do you think they get a disproportionate level of attention from an ESG perspective?
Certain banks are now making more money in an absolute sense from paying below
market or paying zero on a retail deposit, so from an ESG perspective, do you think banks
can enable retail depositors to earn a rate closer to the market rate to earn bonus interest
given most of the time the conditions associated with earning that bonus interest aretricky? Or will it take the government to move on deposits to get a fairer outcome from an
ESG perspective on the deposit market?
Shayne Elliott: It’s a really good question. Overall I think as an industry - and I include allof you on the line on this one - we do spend too much time talking about home loans ingeneral. The reality is, we have at a really simplistic level, we have one privileged positionin the community and that is the ability to take deposits. Anybody can do a home loan
pretty much, it’s not very hard and it’s not terribly restricted, but not everybody can take adeposit. So we do have a privileged position there and to your point, we need to makesure we cherish that position and invest in it.
So, part of, again without over spruiking it, part of the proposition around Plus has always
been to how do we (a) move onto a lower-cost platform, but one that allows us to haveinnovative and appropriate, well managed products in the deposit space, because weultimately, our business philosophy has to be, we need to be in the business of gatheringhigh-quality deposits and then using those to lend where it’s appropriate. So that isfundamental to our strategy.
In terms of pricing, hand on my heart, I’m not sure which banks you’re talking about, wedon’t have a big deposit base sitting at zero or whatever. Most of our customers - we’ve
got a range of products as you know and most of our customers are pretty good in termsof - and we do have products that pay fair and reasonable rates. We need to do a betterjob. At the moment Plus is our platform that we’re really pushing on and as you - andPage 19 of 22

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again, I’m not, I know this is not a paid-for advert - but we’re paying 4.9% essentially on
a current account, no conditions, no fees, et cetera, up to $250,000.So we do have really
good, simple, appropriate products and we’re nudging and encouraging people to takeadvantage of those things.
Matthew Wilson: (Jefferies, Analyst) Excellent, thanks Shayne.
Shayne Elliott: Thank you.
Operator: Your next question comes from Brendan Sproules, with Citi. Please go ahead.
Brendan Sproules: (Citi, Analyst) Good morning team, Brendan from Citi. Look I justwanted to ask around particularly slide 40 where you’ve shown the targets around thedecarbonisation of certain sectors. I mean for a lot of these customers’ transition plans, it’s
the decarbonation of the grid that’s going to be the key component. There’s been a big
discussion in Canberra in recent weeks and months, so how does ANZ think about theseplans if the grid isn’t reshaped in the way that it’s currently seen now? Are you going tolook at these targets annually, given some of the uncertainty around the decarbonation of
the grid?
Shayne Elliott: So we do look at the targets and it’s a really good - again, it’s an excellent
question. This is a complex ecosystem obviously and what we’re trying to do here is be
responsible and have pathways around certain high-intensity sectors that you would
expect around oil and gas and aluminium, cement, et cetera. But also I take your point,that at the end of the day, that’s all really interesting, we should do the right thing. The
ultimate thing here, the grid plays a really important role. So yes, we do.
Look all I can say, big topic at both the Board ESG committee and at the management
ERBC committee and what we try to do here is: this is not a set-and-forget policy,
nowhere near it. I mean we have - we’re constantly, literally every couple of months
getting people in, experts, regulators and people from different markets, operators,
different environmental groups to learn and understand what’s possible, where the real
challenges are and where we could be doing a better job.
I mentioned in my chat that Kevin and Mark were recently - we do this every year, Europe,
pick a place, but Europe seems to be more thoughtful and perhaps more advanced
depending on the way you think about things on these issues. So we spend quite a bit oftime there trying to learn too, not just on climate but even broader on things likebiodiversity and others, to sort of get a sense of where this is all headed and what areother banks doing and where are things we can learn. So all I can say is that it’s constantly
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under review and I take the point about the greater needs are the things that we continue
to learn and adapt in terms of our - the baselines we set, the targets and how we think we
can have the biggest impact.
I do think ANZ has a slightly unique challenge and opportunity because we have a big
indexing to an institutional bank, as opposed to some of our peers who are obviously much
more focused on retail. So we have a different perspective and that comes with somedifferent challenges as well.
Brendan Sproules: (Citi, Analyst) I just had a second question, if I may, just coming backto the mortgage discussion and the availability of credit, how do you take into effect the
insufficient supply of housing? I mean from a regulator’s perspective, I imagine that
expanding the availability of credit now might actually just bid up the existing stock
further. How do you think about that debate?
Shayne Elliott: We do think about that a lot. I mean again, overly simplistic, too much of
the recent conversation in the broader community and again, irrespective of who is saying
it, has been around demand, how do we get more demand into the system, whether it’sdifferent programs to help people to buy, et cetera and insufficient conversation and action
has been taken on supply side. How do we get - it’s sad to sit here and think about thesignificant increases in demand, looking at pricing and at the same time, housing
approvals are falling. So it is a complex, obviously, issue and that’s why, as I said, we doneed to do much more as an industry and certainly at ANZ we take that really seriously
around what we need to do on the supply side.
I don’t know that - from a regulatory point of view I don’t know that that’s terribly
restrictive on what we need to do there, I think it’s just good old-fashioned economics,
that the maths doesn’t work from a developer’s point of view today when they tot it all up
and turn to the costs of construction, the time it takes for development approvals, which iscost, et cetera.
Yes, okay, access to credit is part of it and we can probably do a better job there and you
and some of your other questions there have pointed out maybe the industry is being alittle bit restrictive on commercial property, I’d argue for good reason given the history,
but nonetheless maybe we can do a better job on that, but I think it’s much more
complex.
Yes, we are actively - we have a head of housing strategy, not so much about - it’s nothing
to do with doing home loans but actually trying to be a thought-leader in this whole
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program. We think there’s lots to be done in these new business models, whether it’sbuild-to-rent or the model that I talked about with Assemble and others as well. We thinkthat’s where we can be of the best assistance.
Brendan Sproules: (Citi, Analyst) Thank you.
Shayne Elliott: Thanks.
Operator: Thank you. There are no further questions at this time. I’ll now hand back to Mr
Shayne Elliott for closing remarks.
Shayne Elliott: Okay. I think we’re done. I think we’re good. I’m looking at my team here,
I think we’re good. Thank you very much. I will just say thank you very much for thequestions. Thanks to Evelyn and Shelley for their comments. As I said in my opening
remarks, at ANZ we do take this seriously. We don’t always get it right. It is a very, very
fast-moving space.
What’s important to us is that we have the governance settings right and as I mentioned
there, and it may have been missed a little bit, we are doing quite a big review of both our
Board Committee and the Management Committee. They’ve been in place for five, six,seven years, they’ve been really effective. We can point to a bunch of things we think
we’ve improved as a result, but we also feel like it’s time for another reboot.
Given that the challenges ahead are different, lots of questions today about housing, we
get that and that’s really core to who and what we are. Lots of questions also about thebroader idea of financial wellbeing, particularly in a time of cost-of-living challenges and ofcourse the environment.
So, there’s lots to do but we need to uplift our governance approach, which we’re reallyworking on as we speak, and we’ll be able to talk more about that at next year’s forum.
Thanks, everybody for your time and thank you for your questions.
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