ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

ANZ 2014 Annual General Meeting
Chairman’s Address

Good morning ladies and gentlemen.
I want to pause for a moment to acknowledge the tragic events which played out
in Sydney earlier this week.
Many of our staff, our customers and our friends work in Sydney’s CBD …. andfrom the early 1960s until last year, Martin Place was the location of our New
South Wales head office.
It makes the events that occurred there is week deeply personal and on behalf ofeveryone at ANZ our thoughts are with all those affected by this terrible tragedy.
Now, as a quorum is present, I formally declare this Annual General Meeting of
Shareholders open. I propose to take the Notice of Meeting as read.
Let me say that after an absence of six years, it is a privilege to be back at the
Bank as your Chairman.
Some of you may remember, I had the honour to serve on your Board from 2002
to 2007.
I am excited to return to the Board of a large bank as I know what a successfulbank can do to support the ambitions of individuals, of businesses, of employees,of shareholders …. and indeed of the community as a whole.
While Australia has one of the highest levels of bank satisfaction in the world, thefact is Australians have a love-hate relationship with our four major banks.
On the one hand, they think the banks are too big and need more competition.
On the other hand, Australians want a strong and safe financial system.
Australians quite rightly have high expectations of their banks. They are
disappointed when we make mistakes or believe we let them down.
However it should never be forgotten that Australia’s banks have played, andcontinue to play, a critical role in building our economy for the benefit of all
Australians.
We provide a safe place for individuals, businesses and government to store theirwealth and to have easy, convenient access to their money.
In doing so, we help people save for homes, for their children’s education and tobuild secure retirement plans.
We also put the savings of a community back to work in that community.
Consumer and business credit is essential to a healthy, diverse and innovative
economy.
And Australia’s banks are the single largest supplier of credit that financesbusiness expansion and creates jobs.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

Australia’s banks supply over three quarters of all the loans to small business ….
we are the biggest lenders for housing …. the biggest lenders to community
groups and the biggest lenders to farmers.
As the biggest lenders to agricultural producers, we understand that we have acommitment to working with farmers throughout the cycle.
We know that conditions in some parts of rural Australia, particularly in New
South Wales and Queensland, are the worst in a generation.
Illustrating that we are aware of these conditions, we recently announced a new
support package for farmers being hurt by the drought in those areas.
That package includes a moratorium on new foreclosures to allow farmers to stayon their land and a twelve month commitment not to increase interest rates on
distressed farms and to provide interest rate relief in cases of extreme distress.
Financial assistance to support farmers choosing to move off the land is also
included in the package, as is increased funding for rural counseling.
However this drought has highlighted a broader issue in rural Australia.
That is the one of farmers and their families who are struggling, not only withdrought, but a range of challenges including high levels of debt, the effects of thelive cattle issue and weaker prices for some of their products.
We will continue working with government, rural organisations and farmers on
this pressing challenge.
Australia’s banks also play an important role in enabling agricultural producers
and, more generally, supporting companies big and small so that they cancompete overseas.
And banks play another critical role by facilitating the exchange of payments
between people, business and governments.
Trillions of dollars flow through the banking system each day. For example, it isestimated that banks process more than 17 billion payments each year valued atover $97 trillion.
Federal, state and local government also rely on banks.
Through direct loans, underwriting and investing in government debt obligations,banks are critical to the long-term financing of state and local government
projects.
Because of the important role we are trusted to play, Australia’s banks have tomaintain a long-term focus.
Indeed, our banking industry in Australia is nearly 200 years old.
Our progress has not always been perfect and banks have made mistakes.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

When we fall short, as can happen in business, we admit it, we learn from it andwe move forward with a stronger understanding and commitment to doing what
is right.
I know that many people talk about banks as large impersonal organisations.
The reality is, they are not.
ANZ is made up of more than 50,000 highly trained and decent people who work
hard to do the right thing and the right thing for our customers every day.
This is a bank that has a very clear sense of its future in Australia, in New
Zealand and in Asia Pacific …. and a very clear sense of how it will contribute to
the success of its customers and to building stronger communities.
Ladies and gentlemen, I would now like to introduce your directors and theexecutives on stage all of whom share the vision of what banks do …. and can do…. to which I have just referred.
To my right is our Chief Executive Officer, Mike Smith.
Further to my right is Graeme Liebelt. Graeme chairs the Human Resources
Committee of our board and you will hear from him later.
Next to Graeme is Ilana Atlas who became a director in September. Ilana is
standing for election at today’s meeting.
To my immediate left is Shayne Elliott, our Chief Financial Officer.
Then we have Ian Macfarlane. Ian is Chair of the Risk Committee. Seated next
to him is Paula Dwyer who is the Chair of the Audit Committee.
And beside Paula, is Lee Hsien Yang. Hsien Yang is the Chair of the Technology
Committee.
And finally on my far left is John Macfarlane. John joined the board in May thisyear and is also standing for election at today’s meeting.
In addition, the ANZ executives behind me from your left are: John Priestley ourCompany Secretary; Shane Buggle, our Deputy Chief Financial Officer; and Bob
Santamaria, our Group General Counsel.
In the audience we also have Andrew Yates from KPMG, our external auditor.
I also want to formally acknowledge a number of directors who have retired in
the past year as part of the succession and renewal process for the Board.
The first is John Morschel who had served on the Board since 2004 and was ourChairman from 2010 until May of this year.
John made an outstanding contribution to ANZ and on behalf of all shareholders
and the Board I would like to thank him for his service.
Two long serving directors, David Meiklejohn …. who ably chaired our Audit
Committee, and Greg Clark …. who was the first chair of our Technology
Committee, retired at last year’s Annual General Meeting.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

This was part of a succession plan that saw Paula and Graeme join the Board.
David and Greg gave significant service to ANZ over many years and we also
thank them.
Finally, Peter Hay and Alison Watkins also retired from the Board as a result of
their commitments at other companies.
Both Peter and Alison made an important contribution to Board deliberations andwe also extend thanks to them for their service.
All the rest of the senior management team are here.
They are seated in the front row and I know they would welcome the chance tomeet you over a cup of tea after the meeting.
Let me take this opportunity to say that having worked closely with Mike and his
team in recent months, I am impressed with the depth of capability and theinternational experience of our senior management group.
It is an even stronger executive team than when I left in 2007 and it is a teamthat I believe ranks among the best leadership groups of any commercial bankglobally.
Before I discuss ANZ’s financial performance in 2014 let me expand on thefoundation from which we operate.
Next year we mark the 180th anniversary of ANZ’s founding. Over those years
our growth has mirrored the growth of Australia and New Zealand, and in more
recent times the growth of Asia Pacific.
Guiding us over almost two centuries has been a focus on acting with honesty
and integrity, on growing our business sustainably, on managing risk, and on
approaching our role in society with a strong sense of duty and care toward ourcustomers and towards the community.
Our corporate responsibility framework emphasises three priority areas.
The first is sustainable development. By this I mean integrating social andenvironmental considerations into our business decisions, and our products andservices.
Our aim is to help our customers achieve their sustainability ambitions anddeliver long-term value for all our stakeholders.
It is in this area of sustainability that the issue we will be dealing with inresolution 5 becomes relevant.
While ANZ is not a high carbon emitter we do lend to the energy sector including
financing power generation.
We apply the same principles here as we do to every other part of our loan book.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

We use a combination of sophisticated systems and experienced staff todetermine whether our loans are to borrowers who will be able to repay thoseloans …. now and in the future …. and given a wide range of scenarios.
We work hard to ensure what clients do with our funds complies with ourobligations to society.
That’s why we meet with non-government and other groups to discuss theseissues. We know that there are a range of views on how the world can transition
to a lower carbon economy.
As a company, it’s not our job to act as the moral police or take on the role ofgovernment. Our job is to ensure the sustainability of our business and to do theright thing by our stakeholders …. our staff, our shareholders and the broader
community.
I said earlier that we do undertake detailed planning to factor related risks into
our lending decisions.
This includes an assessment of our customer’s ability to deal with a range ofclimate change scenarios and possible regulatory changes.
We aim to be very transparent on our lending exposures.
Our various reports, which are published on our website, include details of ourlending policies.
APRA, the Australian Prudential Regulation Authority, also requires that we issue
a public quarterly report on capital adequacy and risk management practices.
We are also announcing today that ANZ will report on carbon emissions from our
project finance lending to the power generation sector. This report is available on
our website from today.
It shows that the average emissions intensity of generation financed by ANZ is 20
per cent lower than the Australian average.
It also shows that outside Australia, the average emissions intensity of power
generation financed by ANZ is 17 per cent below the grid average in thosecountries.
This new disclosure shows we are supporting the transition to a lower carbon
economy. It also means you will be able to track our progress in reducing theemissions intensity of our power generation portfolio.
We believe this is a practical step forward and I understand that this places ANZ
at the forefront of financed emissions reporting globally.
As a Board we are committed to carefully monitoring the sustainability of ourlending in this area. We are equally committed to work with government,
business and the community to address the policy risks associated with energy
supply and climate change.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

As a result, the Board, does not believe that altering our constitution as
suggested by resolution 5, will provide shareholders with a meaningfulunderstanding of our carbon risk management or exposure …. or indeed be useful
in longer term considerations.
The second priority area in our corporate responsibility framework is building themost diverse and inclusive workforce of any major bank in our region.
There is still much to do. However I am very pleased to report that in 2014, ourratio of Women in Management increased slightly to 39.2% and we wererecognised during the year as Employer of Choice by the Workplace Gender
Equality Agency.
We also exceeded our global targets for hiring people with a disability.
And reflecting our business strategy and the diversity of our customer base, 26%of our Australian graduate intake in 20I4 spoke an Asian language …. which is agreat result.
The third priority area is building the financial capability of communities acrossour region.
For example, we have now reached nearly 300,000 people through our
MoneyMinded adult financial education program. This program helps people build
their skills, knowledge and confidence in managing their money.
The gains we have made in market share and in customer satisfaction in key
areas of our Australian, New Zealand and Asia Pacific businesses demonstratethat customers are responding to this approach.
Let me now turn to ANZ’s strategy and our financial performance in 2014.
What is clear to me following my return to ANZ, is that since the Global Financial
Crisis Mike Smith and his management team have transformed ANZ into a bankthat is more customer focused, more regionally diversified, more efficient …. andindeed more sustainable.
Your bank has the right strategy to deliver strong shareholder returns today andover the longer term.
ANZ’s super regional strategy is based on three pillars.
The first is strengthening the core franchises we have in our home markets ofAustralia and New Zealand.
The second is profitable growth in Asia by servicing trade, capital and wealthflows into and across the region.
Our international business in Asia Pacific, Europe and America, now drives nearlya quarter of our total revenues.
This provides ANZ with meaningful growth options without the need to take on
additional risk.

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ANZ 2014 Annual General Meeting
Chairman’s Address, 18 December 2014

During my last time at ANZ, the Board knew we had to be in Asia, we just didn’tknow how. Mike’s super regional strategy has very successfully provided the“how”.
The third pillar of the strategy involves a whole of company approach to building
the business on common platforms and processes to reduce unit costs,
complexity …. and indeed risk.
I am pleased to report that our focus on these three pillars saw your bankperforming well in 2014 with statutory profit up 15 per cent to $7.3 billion.
The final dividend, which was paid into shareholder’s bank accounts this week,
was up 14 per cent to 95 cents a share fully franked. The total dividend for theyear was up 9 per cent to $1.78 a share.
This has seen ANZ distribute $4.9 billion of dividends to shareholders for thisyear. Over 70 per cent of this will be paid to our Australian-based retail andinstitutional investors.
Strong organic capital generation of $3 billion in the second half of the year,
coupled with our ongoing focus on capital efficiency, saw ANZ’s Common Equity
Tier I capital ratio increase to 8.8%.
Credit quality also improved. Gross impaired assets continued their downward
trend reducing by a further 32%, and have now reduced at an average of a little
over $900 million each year since 2010.
This consistent performance means ANZ remains one of the world’s strongest
banks. And indeed, this year we were named one of the world’s 20 safest banks,and one of the 10 safest commercial banks in the world.
Australia has of course benefited from having a very stable, strong andconservatively managed financial system.
This was recognised in the final report of the Financial System Inquiry, often
called the Murray Inquiry, released earlier this month.
We believe the Financial System Inquiry should be commended for its principlesbased approach and for referring a number of its recommended changes to thebanking system to APRA.
APRA and the other government authorities steered Australia’s banking systemwell during the Global Financial Crisis. We have a good working relationship with
APRA and have a great deal of respect for its people.
We also support a risk-based approach to capital management and the adoptionof measures to maintain a strong domestic financial system.
At the invitation of the Federal Government, we’ll be making submissions in
response to the Inquiry’s report in the next few months …. and we welcome being
involved in discussions with them, with APRA and with other interested parties.
Whatever happens after discussions next year ladies and gentlemen, I want you
to know that ANZ is already strong and has a range options open to ensure it is“unquestionably strong”.

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Chairman’s Address, 18 December 2014

I assure shareholders that your bank has been actively managing its capital
position in anticipation of this and will continue to do so.
Finally, let me turn to the outlook.
The resources sector, which has been such an important driver of the Australianeconomy in recent years, is going through a period of transition from an
investment phase to a production phase.
At the same time, while it is clear hard and soft commodities will continue to play
an important role in Australia’s future, our services sector including our worldclass providers of education, health, information technology and engineering
services will need to become an even more important part of our economic
future.
As a country we have dealt with extraordinary challenges over the past decadeand there is no reason to expect we will not see sustained economic growth overthe longer term.
We have low interest rates, low inflation, a strong financial system and a growing
population. Our resources base in both hard and soft commodities …. and theskills of our people ….. are unique and these will continue to be in demand as the
Asian economies grow.
In 2015, while we expect interest rates to remain low and the decline in theAustralian dollar will be good for many sectors of the economy, we believe theeconomy will grow somewhat more slowly than in the past year.
In anticipation of this, we have been adjusting the way we execute our strategy
to ensure we can deliver on shareholder expectations.
It means that in a slightly more challenging environment, ANZ is well positioned
to maintain its momentum and to deliver peer-leading Earnings per Share growthand Total Shareholder Return over the medium-term.
Before I ask our Chief Executive Officer Mike Smith to speak, let me sincerely
thank the more than 50,000 individual members of staff who work for ANZ
around the world.
Results like this don’t just happen. They are the result of a clear and consistent
strategy, purposeful management action and the hard work and dedication of allof our people in 33 countries.
The Board appreciates what all of you do and I believe so to do our shareholders.

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