Australia and New Zealand
Banking Group Limited
ACN 005 357 522

Consolidated Results
andDividend Announcement

Year Ended
30 September 1997

FOR PRIORITY TRANSMISSION
Name of Company:

Australia and New Zealand Banking Group Limited
ACN 005 357 522

Report for the year ended 30 September 1997
A$ Million
Group operating revenue- before abnormal items- after abnormal items

11,846
11,991

Group operating profit after income tax and outside equity interests- before abnormal items- after abnormal items

1,171
1,024

Group net abnormal (loss) after tax(147)

Final dividend per share
This year
Last year

Books close for final ordinary dividend
Payment of final ordinary dividend

fully franked at 36%
fully franked at 36%

26 cents
24 cents

12 December 1997
21 January 1998

The final dividend will be payable to shareholders registered in the books of the Company at close ofbusiness on 12 December 1997. Transfers must be lodged before 5:00 pm on that day to participate.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
ACN 005 357 522
CONSOLIDATED RESULTS AND DIVIDEND ANNOUNCEMENT
Year Ended 30 September 1997
PAGE

CONTENTSCONSOLIDATED RESULTS.............................................................................................................................................. 1
FINANCIAL HIGHLIGHTS ................................................................................................................................................ 2
CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS......................................................................................... 4
PROFIT AND LOSS ACCOUNT ...................................................................................................................................... 15
BALANCE SHEET ........................................................................................................................................................... 16
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY....................................................................................... 17
STATEMENT OF CASH FLOWS..................................................................................................................................... 18
INCOME ........................................................................................................................................................................... 19
OPERATING EXPENSES................................................................................................................................................. 20
DOUBTFUL DEBTS CHARGE......................................................................................................................................... 21
ABNORMAL ITEMS ........................................................................................................................................................ 21
INCOME TAX EXPENSE................................................................................................................................................. 22
DIVIDENDS ..................................................................................................................................................................... 23
EARNINGS PER SHARE.................................................................................................................................................. 24
INVESTMENT SECURITIES ........................................................................................................................................... 24
NET LOANS AND ADVANCES ...................................................................................................................................... 24
IMPAIRED ASSETS ......................................................................................................................................................... 25
PROVISIONS FOR DOUBTFUL DEBTS.......................................................................................................................... 28
SHARE CAPITAL AND OPTIONS................................................................................................................................... 29
SEGMENT ANALYSIS .................................................................................................................................................... 30
DERIVATIVE FINANCIAL INSTRUMENTS .................................................................................................................. 34
CONTINGENT LIABILITIES........................................................................................................................................... 39
NOTES TO THE STATEMENT OF CASH FLOWS ......................................................................................................... 40
CAPITAL ADEQUACY.................................................................................................................................................... 41
AVERAGE BALANCE SHEET AND RELATED INTEREST.......................................................................................... 42
INTEREST SPREADS AND NET INTEREST AVERAGE MARGINS ............................................................................ 45
US GAAP RECONCILIATION ......................................................................................................................................... 46
ACCOUNTING POLICIES ............................................................................................................................................... 47
EXCHANGE RATES ........................................................................................................................................................ 47
SIGNIFICANT EVENTS SINCE BALANCE DATE......................................................................................................... 47
DEFINITIONS .................................................................................................................................................................. 48
ALPHABETICAL INDEX................................................................................................................................................. 49
ANALYST AND MEDIA ENQUIRIES............................................................................................................................. 50

All amounts are in Australian dollars unless otherwise stated. The results on which this announcement is based havebeen audited by the Group’s auditors, KPMG. The Company has a formally constituted Audit and Compliance
Committee of the Board of Directors. This report was approved by resolution of a Committee of the Board of
Directors on 19 November 1997.

FINANCIAL HIGHLIGHTSHIGHLIGHTS

•
•
•
•
•
•
•
1

Underlying profit after tax1 up 17% to $1,308 million, with Australia up
16% and the rest of the world up 19%
Final dividend increased to 26 cents, making 48 cents for the year
fully franked, up 14%
Additional general provision transfer of $137 million
Abnormal charge after tax of $147 million, comprising restructuring costs
less NHB interest
Operating profit after tax and abnormals of $1,024 million
Non-accrual loans at $872 million, down 29%
Growth in total assets of 8%

See definition on page 48

CONSOLIDATED RESULTS
Before additional general provision and abnormal items

1997
$M

1996
$M

Movt
%

Operating profit before income tax andabnormal items
Income tax expense
Outside equity interests
Underlying profit after tax

1,895
(579)
(8)
1,308

1,615
(490)
(9)
1,116

17%
18%
-11%
17%

1,758
(579)
(8)

1,615
(490)
(9)

9%
18%
-11%

1,171

1,116

5%

1,171
(147)

1,116
-

5%
n/a

1,024

1,116

-8%

Before abnormal items
Operating profit before income tax andabnormal items
Income tax expense
Outside equity interests
Operating profit after income tax andbefore abnormal items
After abnormal items
Operating profit after income tax andbefore abnormal items
Abnormal (loss) after tax
Operating profit after income tax andabnormal items

1

FINANCIAL HIGHLIGHTS (continued)
PERFORMANCE MEASUREMENTS

1997

1996

Profitability ratios
Before additional general provision and abnormal items
Return on:
Average shareholders' equity1
Average assets
Average risk weighted assets
Total income

18.9%
1.0%
1.3%
11.0%

18.3%
0.9%
1.3%
9.8%

After abnormal items
Return on:
Average shareholders' equity1
Average assets
Average risk weighted assets
Total income

14.8%
0.7%
1.0%
8.5%

18.3%
0.9%
1.3%
9.8%

Net interest average margin

3.0%

3.3%

Efficiency ratios
Operating expenses to net operating income
Operating expenses to average assets

64.9%
2.7%

67.3%
3.0%

Doubtful debts charge
Specific provision charge for doubtful debts ($M)
General provision charge for doubtful debts ($M)
Specific provision charge as a % of average net advances

86
201
0.1%

117
37
0.1%

Earnings per share (cents)
Basic
Before abnormal items
After abnormal items

78.4
68.6

76.3
76.3

Diluted
Before abnormal items
After abnormal items

78.2
68.4

76.1
76.1

2

DIVIDENDS
Dividend rate (cents)
Interim - fully franked (1996: franked to 9 cents)
Final - fully franked (1996: fully franked)

22
26

equity interests
2
Before abnormal items

2

18
24 1

Excluding outside

FINANCIAL HIGHLIGHTS (continued)
ASSETS AND CAPITAL

1997

1996

Movt
%

Total assets ($M)

138,241

127,604

8%

Risk weighted assets ($M)

106,147

93,517

14%

Shareholders' equity 1 ($M)

6,943

6,290

10%

101,405

92,572

10%

Net tangible assets 2 per share ($)

4.59

4.24

8%

Capital adequacy ratio (%)- Tier 1- Total

6.6%
9.8%

6.7%
10.5%

n/a
n/a

General provision as a % ofrisk weighted assets

0.9%

0.8%

n/a

Non-accrual loans ($M)
Non-accrual loans
Specific provisions
Net non-accrual loans
Specific provision as a % of total non-accrual loans
Net non-accrual loans as a % of net advances
Net non-accrual loans as a % of shareholders' equity3

872
(444)
428
50.9%
0.4%
6.1%

1,225
(501)
724
40.9%
0.8%
11.4%

-29%
-11%
-41%
n/a
n/a
n/a 1

Total advances ($M)

outside equity interests
2
Including net future income tax benefit
3
Includes outside equity interests

3

ExcludingCHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS
Overview

Australia and New Zealand Banking Group Limited
recorded a 17% increase in underlying profit after tax
for the year ended 30 September 1997 to $1,308 million.
This was prior to an additional transfer to the generalprovision of $137 million and abnormal items of $147
million (both after tax) leading to an operating profit
after tax and abnormal items of $1,024 million.

UNDERLYING PROFIT AFTER TAX*
$M
1600

ROE
20%

1400

18%
16%

1200

14%
1000

12%

800

10%

600

8%

Interest margins declined reflecting competitive
pressures and falling interest rates. Despite this, net
interest income increased by 3% from strong growth inbusiness lending in Australia and across the international
network, particularly South Asia, Asia Pacific and the
Middle East.

6%

400

4%

200

2%

0

0%
1994

Non-interest income was strong with growth of 15%.
Good trading performances in buoyant global markets
led to the significant increase in trading, fee and otherincome. There was also growth in the Cards businessand increased retail transaction fees.

1995

1996

1997

Additional general provision transfer
Group profit after tax*
ROE

Core costs increased by 2%. Staff numbers in Australia
and New Zealand declined as a result of branch closuresand increased automation and centralisation of processes
particularly in retail banking and Esanda. Non-lending
losses were favourable, particularly in the second half.
These were offset, however, by higher profit relatedbonuses in our investment banking activities together
with the fees of the consultants engaged on the ANZ
Global program.

* Before abnormal items

UNDERLYING PROFIT AFTER TAX
1995-1997*
$M
800
700
600
500
400

There was again a low specific provision charge for
doubtful debts of $86 million, and a further fall in nonaccrual loans. In recognition that loan losses would
normally be higher than current levels across the
economic cycle, an additional general provision transfer
of $137 million was made. This was based on theannual average provision implied in our portfolio risk
management models and is not linked to any need toprovide against specific regions, industries or individual
borrowers. The general provision now stands
at 0.9% of risk weighted assets, well in excess of theReserve Bank of Australia guideline of 0.5%.

300
200
100
0
Australia

New ZealandInternational
markets* Before abnormal items

Cost reduction is a major priority for the Group. We are proceeding with the implementation of ANZ Global. Thechange programs resulted in a $417 million before tax restructuring charge. This amount covers both completed
restructuring programs and those ANZ Global projects in train to which the Group is demonstrably committed. Of
this charge, $327 million is abnormal.

4

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONSThe effective tax rate is 32.9% (1996: 30.3%), impacted by the increased general provision charge and the level ofrebateable dividends.
The Arbitrators of the long running dispute with the National Housing Bank of India (“NHB”) handed down theiraward in the Group’s favour on 29 March. The NHB has repaid the deposit together with interest at 18% inaccordance with the decision. Given its size, the $65 million interest receipt (after tax) is disclosed as an abnormal
item. Subsequently, NHB filed documents with the relevant Court to challenge the award. ANZ is confident thatthe award will stand.
The final dividend is increased to 26 cents per share, fully franked, bringing the full year dividend to 48 cents per
share compared to 42 cents for 1996. We said last year that there would be some limit on our future franking
capacity as the proportion of Group profits earned offshore increases. Furthermore, the restructuring costs do
impact our franking capacity. As a result, we do not expect that dividends in 1998 will be fully franked.
At year end, the Group had total assets of $138 billion, shareholders’ equity of $6.9 billion, and a Tier 1 capitalratio of 6.6%.

PROFIT AND LOSS
1997
$M

1996
$M

Net interest income
Other operating income

3,413
2,415

3,317
2,096

Net operating income
Operating expenses

5,828(3,783)

5,413(3,644)

Operating profit before debt provisions
Provisions for doubtful debts
Income tax expense
Outside equity interests

2,045
(287)
(579)
(8)

1,769
(154)
(490)
(9)

Operating profit after income tax before abnormal items
Abnormal (loss) before tax
Income tax benefit - abnormal items
Abnormal (loss) after tax
Operating profit attributable to members of the Company

1,171
(182)
35
(147)
1,024

1,116
1,116

5

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
Net interest income

1997
$M

1996
$M

Interest income
Interest expense

9,431(6,018)9,286(5,969)Net interest income

3,413

3,317

Interest spread and net interest average margin
Gross interest spread
Interest forgone on impaired assets%
2.48(0.06)%
2.67(0.10)Net interest spread
Interest attributable to net non-interest bearing items

2.42
0.60

2.57
0.77

Net interest average margin

3.02

3.34

113,142

99,671

Average interest earning assets ($M)
Net interest income grew by 3% as asset growth offset
reduced margins in the domestic markets.

GROUP NET INTEREST INCOME$B

Competitive pressures in Australia and New Zealand led
to the 19 point decline in gross interest spread. Lower
levels of non-accrual loans and lower interest rates
reduced the related funding costs. However, the lower
interest rates also reduced the earning rate on non-interest
bearing items, resulting in a 32 point reduction in overallmargins.

3.5
3
2.5
2
1.5

The reduction in margins was more than offset by strong
growth in interest earning assets in International markets,particularly South Asia, Asia Pacific and the Middle
East, the investment bank and business lending inAustralia.

1
0.5
0
1994

6

1995

1996

1997

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
Other operating income

1997
$M

1996
$M

570
964

550
854

1,534

1,404

Foreign exchange earnings
Profit on trading instruments
Other income

245
192
444

231
113
348

Total other operating income

2,415

2,096

Fee income
Lending
Other including commissions
Total fee income

Non-interest income increased by 15%. Strong growth in our Cards business together with higher transaction andcorporate advisory fees lifted fee income.
Foreign exchange continues to be a stable core business. Good trading performances in buoyant global markets led to thesignificant increase in trading, fee and other income. The Group is involved in investment banking capital markets
activities. This portion of the Group’s earnings is sensitive to asset prices in the global financial markets. Profits before
tax from these activities were $208 million in 1997 (1996: $100 million). Refer page 32.
Strong growth in operating lease income and the profit on the sale of the Omani operation also lifted other income.

Operating expenses

Personnel expenses
Premises expenses
Computer expenses
Other expenses
Total core operating expenses
Direct income-related expenditure
Restructuring costs1

1,949
362
330
715
3,356
337
90

1,805
385
328
774
3,292
295
57

Total operating expenses

3,783

3,644

Employees (FTE)

35,92639,721

1

In addition, restructuring costs of $327 million have been treated as abnormal in the year ended 30 September 1997

Core costs increased by 2%. Staff numbers in Australia and New Zealand declined as a result of branch closures andincreased automation and centralisation of processes particularly in retail banking and Esanda, albeit there were higher
overtime and temporary staff costs relating to these major change programs. Personnel costs grew by 8% as a result ofhigher performance related bonuses in our investment banking activities and higher overtime and temporary staff costs.
The recruitment of relatively highly paid professional staff in the investment bank and the impact of high salary inflation
in South Asia and Middle East also contributed to the increase in personnel expenses.
Premises costs fell due to branch closures while computer expenses were steady. Expansion of our Cards and operatinglease business underpinned the growth in direct income-related costs.

Other expenses fell reflecting a favourable non-lending loss experience both in Australia and following resolution ofcertain Indian scam related issues in the second half.

7

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
Provisions for doubtful debts

1997
$M

1996
$M

Specific provision charge (credit)
Australia
New Zealand

95
(8)

108
11

Principal domestic markets
International markets

87
(1)

119
(2)

Total specific provision charge
General provision charge

86
201

117
37

Total provisions for doubtful debts

287

154

The specific provision charge fell by 26%, reflecting
continued good credit conditions and experience. New
and increased provisions were slightly down while
releases and recoveries were also favourable to last year.

SPECIFIC PROVISION CHARGE
$M
300
270
240

The general provision charge was $201 million,
including an additional transfer of $137 million. The
latter was in recognition that loan losses would normallybe higher than current levels across the economic cycle.
The additional general provision transfer was based on
the annual average provision implied in our portfolio
risk management models and is not linked to any need toprovide against specific regions, industries or individual
borrowers. The general provision now stands at 0.9%
of risk weighted assets, well in excess of the Reserve
Bank of Australia guideline of 0.5%.

210
180
150
120
90
60
30
0
1997

1996

1995

New and increased provisions
Releases and recoveriesSpecific provision charge

NON-ACCRUAL LOANS$B

Non-accrual loans

Provision
Coverage %60%

Gross non-accruals were reduced by $353 million to$872 million through asset realisations and reduced new
non-accrual loans.

3

50%
40%

2
30%

Net non-accrual loans fell to $428 million and represent
6% of shareholders’ equity at September 1997, downfrom 11% in 1996.

20%

1

10%

The Group remains well provided with the coverage ratio(specific provisions to gross non-accrual loans) now
above 50%.

0

0%
1994

1995

1996

1997

S p e c ific p r o v i s i o n
N e t n o n - a c c r u a l lo a n s
P ro v is io n c o v e r a g e ( r i g h t h a n d s c a l e )8CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
Balance SheetGroup assets grew by 8%.
Good lending growth was achieved, particularly inbusiness lending in Australia, the investment bank andinternational markets (South Asia, Asia Pacific and the
Middle East).
Funding for asset growth came from the wholesale market,
as well as from increased retail and corporate deposits.
Total shareholders’ equity increased to $7 billion andcapital resources increased to $10.4 billion, after theredemption of some subordinated debt.

BALANCE SHEET
AssetsInterbank balances
Loan portfolio
Trading and investment
securities
Other
Liabilities and equity
Interbank balances
Deposits and borrowings
Acceptances
Other
Capital resources

1997
$B

1996
$B

11.6
98.2

11.4
89.9

10.4
18.0

9.9
16.4

138.2

127.6

10.9
89.2
14.0
13.7
10.4

12.7
79.7
14.0
11.3
9.9

138.2

127.6

Capital adequacy

The Reserve Bank of Australia’s guideline ratio of
qualifying capital to risk weighted assets is a minimum of
8.0%, of which Tier 1 capital must be at least 4.0%. The
Group’s capital adequacy ratio is 9.8%, with a Tier 1 ratioof 6.6%, down 0.1% from September 1996. Retained
earnings and dividend reinvestment supported the 14%
growth in risk weighted assets achieved over the year. The
Group seeks to maintain the Tier 1 ratio in the range of
6.5% to 7.0%.

CAPITAL ADEQUACY RATIO
%
12
10
8
6
4
2
0
1994

1995
Total

9

1996
Tier 1

1997

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
Risk management

Effective management of risk is a core competency of all major financial institutions. The major risk areas arebroadly defined as follows:• Credit Risk - risk of financial loss from the failure of customers to honour fully the terms of a credit facility.
• Market Risk - comprises balance sheet and trading risk which involve risk to earnings and capital from changes
in interest rates and liquidity, currency fluctuations, foreign currency capital fluctuations, equity and commodity
prices.
• Operating Risk - the risks of day to day business operations, including preparedness to recover from a disaster,processing and settling of transactions, safeguarding of assets and adherence to laws and regulations etc.
These risks are managed within an overall risk management framework that provides defined standards, policies andprocesses and is co-ordinated by Group Risk Management.
The risk management processes are subject to the oversight of the Risk Management Committee of the Board. This
includes the review of risk exposures and credit portfolio strategy, policy, process and controls (including
establishing approval authorities for the management of exposures).
Specialist units assist the Risk Management Committee in its oversight capacity and are responsible for the strategic
co-ordination of risk matters. For example, with respect to credit risk management, the Board has delegated specificcredit authority limits to the Credit Approvals Committee. The Global Funds Management Committee co-ordinates
matters relating to market risk. The Operating Risk Executive Committee maintains and reviews operating risk
policy and monitors operating practices.
We have reviewed our exposures in Asia and are satisfied that there are no immediate concerns. Non-accrual loans
in Asia total $16 million and loans to higher risk counterparties (equivalent to a Moody’s rating of B+ or less) total$111 million. Further information is provided at Appendix A.

10

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
AUSTRALIA

1997

1996

Movt
%

1,158
764
627

1,016
657
657

14%
16%
-5%

Operating profit after tax as a % of averagerisk weighted assets
1
Operating expenses to net operating income
1
Operating expenses to average assets

1.0%
69.0%
3.3%

1.2%
70.7%
3.5%

n/a
n/a
n/a

Specific provision charge as a %of average net advances
Net non-accrual loans ($M)
Net non-accrual loans
as a % of net advances
2

0.1%
313
0.4%

0.2%
586
0.9%

n/a
-47%
n/a

Lending growth (%)
Total assets ($M)
Risk weighted assets ($M)

8.9%
80,321
66,6879.8%
75,11059,681n/a
7%
12%Employees (FTE)

21,11323,727-11%

1

Operating profit before debt provisions ($M)
1
Underlying profit after tax ($M)
1Operating profit after tax ($M)
1

1

Before abnormal items

Notwithstanding competitive pressures, underlying profit after tax showed strong growth of 16%. Operating profit
after tax was impacted by the additional general provision charge of $137 million.
Reduced housing margins, together with falling interest rates, resulted in a decline in overall margins. However, thiswas offset by good growth in business lending and, to a lesser extent, housing lending.
Strong growth in the Cards business through the co-branded Telstra/Qantas card and higher transaction fee income
lifted total fee income. Strong trading profits and corporate advisory fees, together with the impact of market
appreciation on the life surplus also boosted total income. Operating expenses were higher with increased personnel
costs reflecting higher profit share. The retail transformation programs resulted in the closure of 200 branches andstaff numbers falling by 11%. Esanda’s operations also underwent major transformation during the year which will
result in significant efficiency improvements.
Our Funds Management activities again grew strongly with funds under management growing by 16%.
Asset quality continues to improve with net non-accrual loans now approaching $300 million or 0.4% of net
advances.

11

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
NEW ZEALAND

1

Operating profit before debt provisions ($M)
1
Underlying/Operating profit after tax ($M)

1997

1996

Movt
%

225
165

222
138

1%
20%

1

Operating profit after tax as a % of averagerisk weighted assets
1
Operating expenses to net operating income
1
Operating expenses to average assets
Specific provision (credit)/charge as a % of
average net advances
Net non-accrual loans ($M)
Net non-accrual loans as a % of net advances

1.2%
75.0%
3.7%

1.1%
74.3%
4.0%

n/a
n/a
n/a

(0.1%)
74
0.5%

0.1%
80
0.6%

n/a
-8%
n/a

Lending growth (%)
Total assets ($M)
Risk weighted assets ($M)

6.0%
18,831
14,332

13.1%
17,463
13,492n/a
8%
6%

Employees (FTE)

5,564

5,939

-6%

1

Before abnormal items

While New Zealand profit before debt provisions was steady, the profit after tax increased by 20% benefiting fromnet provision releases and a lower effective tax rate.
Competitive pressures remained intense which, together with the impact of the capital repatriation to Australia, led to a 47 basis
point fall in margins. Lending growth, while down on 1996 levels, improved in the second half with strong housing growth.

The deterioration in the cost to income ratio reflects, inter alia, higher restructuring costs and adjustments to theresidual value of leased assets. Core costs were stable.
The UDC leasing business continued to grow, driving the increase in non-fee income.
Restructuring of the operations in New Zealand continued with a further 62 branches closed, resulting in a 6% fallin staff numbers.
The funds management operation in New Zealand had a very successful year with excellent investment results
attracting a strong inflow of new funds, lifting funds under management by 17%.

12

CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued)
INTERNATIONAL

1997

1996

Movt
%

662

531

25%

112
95
82
36
54

106
99
36
38
42

6%
-4%
128%
-5%
29%

379

321

18%

Operating profit after tax as a % of averagerisk weighted assets
1
Operating expenses to net operating income
1
Operating expenses to average assets

1.6%
44.8%
1.3%

1.7%
50.9%
1.6%

n/a
n/a
n/a

Specific provision credit as a % of
average net advances
Net non-accrual loans ($M)
Net non-accrual loans as a % of net advances(0.0%)
41
0.3%(0.0%)
58
0.4%

n/a
-29%
n/a

Lending growth (%)
Total assets ($M)
Risk weighted assets ($M)

17.0%
39,08925,12818.4%
35,031
20,344

n/a
12%
24%

Employees (FTE)
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

848
2,725
4,209
162
1,305

938
2,651
4,902
162
1,402

-10%
3%
-14%
0%
-7%

Employees (FTE)

9,249

10,055-8%

1

Operating profit before debt provisions ($M)
1
Underlying/Operating profit after tax ($M)
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East
1

1

Before abnormal items

ANZ’s international businesses have continued to perform well. Profit before debt provisions increased by 25%
driven by lending growth of 17% at stable spreads and strong growth in non-interest income. Asset quality remained
good. In Asia, non-accrual loans total $16 million and loans to higher risk counterparties (equivalent to a Moody’s
rating of B+ or less) total $111 million.
Strong trading profits and portfolio management performance fees underpinned the continuing strong UK earnings.
Asia Pacific experienced good lending growth, but profits were constrained by increased provisioning in
Sri Lanka in the first half.
South Asia again achieved strong lending growth and benefited from the removal of the funding drag relating to the
NHB deposit, which was repaid in April, and the release of non-lending loss provisions.
The Middle East also had good lending growth and benefited from the sale of Omani operations in the first half.

13