News Release
For Release: 7 May 2024

Transcript of bluenotes video interview with ANZ Chief
Financial Officer Farhan Faruqui
BRETT FOLEY: Farhan, thanks for joining bluenotes at the half year result. Now ANZ is coming
off a record year in 2023 and the sector's had two years of high inflation and interest rates todeal with. How are you thinking about this result and what stands out to you?
FARHAN FARUQUI: Well, Brett, we’re quite pleased with our result. Off the back of a strong
year we've actually delivered stable outcomes, both in terms of revenue, as well as Net Profit
After Tax (NPAT). And we've done that with all four of our businesses performing well,delivering returns above the cost of equity and actually exiting the half with strong
momentum. At the Group level, we've grown both customer lending and customer deposits –so generally, quite pleasing in terms of the financial outcomes. But I think equally,strategically, we've made progress. ANZ Plus continues to do well, continues to grow,attracting new customers to the platform. On Suncorp Bank, while we've been waiting for all
the approvals to come through – and there are still a couple to go – we've been readying
ourselves for the integration and we feel equally confident as before in terms of our ability todeliver the financial benefits of that particular acquisition. And finally, in the simplification
journey that we've been on for a few years, we've made yet more progress in this half withthe sale of a large part of our AmBank equity position, and that has freed up about $668
million of capital, which in turn has allowed us to announce a $2 billion on-market share buyback today. It's basically a story of delivering what we have promised and we continue to bepleased with that.
BRETT FOLEY: So speaking of capital and the buy-back you announced today, can you talkus through the decision making behind that process?
FARHAN FARUQUI: Yes Brett, so the Board continues to look at the best and most efficientuse of capital at all times. And in the context of our performance, our strong balance sheet
position today, the Board felt comfortable with announcing a $2 billion on-market share buyback. Now obviously that has an enduring benefit to our shareholders, because it reduces theshare count and effectively over time improves our return on equity as well. This is a goodoutcome for our shareholders and a good outcome in terms of the best use of capital for usthat was available today. But it's important to note, Brett, that even when you pro forma ourcapital position for the share buy-back, as well as the capital that we've set aside for thecompletion of the Suncorp Bank acquisition, our CET1 ratio – our capital ratio – is still 11.8%,
which basically places us amongst the best capitalised banks in the world. And that's very
important to us because it allows us to serve our customers. It allows us to access accretive
growth opportunities, across our businesses, and therefore places us in a very strong position
going into an uncertain environment.
BRETT FOLEY: So inflation is proving to be stubbornly high. How are you planning to continue
to manage cost efficiently?

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FARHAN FARUQUI: Well, we've actually had one of the strongest track records, I would argue,of major Australian banks in terms of managing our costs and our cost discipline. If you think
about it, Brett, from 2018, we've actually produced about $1.5 billion of effectively cumulative
per annum benefits from productivity. And the productivity doesn't necessarily come from a
restructuring perspective only, it comes from what work we do around automation, around
improving and streamlining our processes, in terms of digitising our service propositions, etcetera. So it's actually an enduring amount of productivity and that gives us the confidence
that there's more. And even in this half, we've delivered $200 million of productivity. Our
focus is to continue to make sure that we offset inflationary impacts as much as possible,
thus effectively allowing us to continue to invest in productivity and growth initiatives andensuring that our businesses are investing in technology where appropriate. So I feel pretty
confident that we have the tools and the discipline to continue to manage our cost inflationary
impacts. In fact, I would argue that it's sort of not a one-off exercise for us. It's pretty much
how we work and it's part of our DNA and I think you should assume that that will continue.
BRETT FOLEY: So the external outlook remains incredibly uncertain. Where to from here andhow are you thinking about the next 12 months?
FARHAN FARUQUI: Well the good news is that, Brett, in my 30 plus years career in banking,I don't think I've ever sat in any situation and said, well, everything is so clear and certainahead. We're always in an uncertain environment, whether it's from an economic standpoint,
from a competitive standpoint, from a technology standpoint, or from a geopoliticalperspective. So the reality is that as a bank, our job is to deal into, effectively what are
uncertain environments. And our job and our focus, as always, has to be to make sure that
we have a set of diversified businesses, ideally those that are largely uncorrelated, which wedo across our four businesses. And we have to make sure, in order to get the value ofdiversification, is to ensure that they are healthy businesses, all four of them. And in our case,as I mentioned earlier, all four are performing well and delivering above cost of capital returnoutcomes. So, we are in a good spot in terms of our diversification to deal into that uncertain
environment. We feel that we have the risk settings, the balance sheet strength and thestrategy to be able to cope with the uncertainty that lies ahead.
BRETT FOLEY: So finally, net interest margin (NIM) is always top of mind for Australianinvestors and analysts. As CFO, how are you managing margins?
FARHAN FARUQUI: Well, I think first to start with Brett, we've delivered a NIM outcome thishalf which actually underlines the stability in our net interest margins. So our underlying net
interest margin, our business NIM, were down two basis points, half on half. But interestingly
within that, there are some very interesting trends. So, for example, in the Institutional
business, we've actually been able to manage our margins, half on half, to expand three basis
points. And that's not been done by accident, it's very much a planned process in terms of
how we want to look at the discipline around lending, as well as ensuring that we are very
dynamic in terms of how we manage our deposit and deposit mix shifts. So that has been agreat effort and we've ended up with an expansion of margin in the Institutional business.
For Retail, where we have had an extreme competitive environment, we've actually been able
to target profitable segments, continue to have a differentiated broker proposition – a verystrong broker proposition – continue to improve our processes and our service levels, which
has allowed us to effectively exit March – which is the end of the first half – one basis point
higher on NIM, to where we exited in September last year. So it's been a strong period ofmanagement – now half on half, that impact doesn't show up in Australia Retail because there
are impacts from second half that flow through to first half. So we think that we've actually
managed margins very dynamically and it's a grind. We have to make sure that we are
dynamic around how we manage margins. We have to be thoughtful around our customer

selection and segment targeting, et cetera – and we’ve done well. And I think the mostimportant part of this, which I have said many, many times before, is that while NIM isimportant, risk adjusted NIM is even more important. And once again, in this half, we've
continued to expand the premium between risk adjusted NIM and NIM.
BRETT FOLEY: Farhan, thanks so much for your time.
FARHAN FARUQUI: Thank you.
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