News Release
ANZ reports 2016 Full Year Result
ANZ today announced a Statutory Profit after tax for the Financial Year ended 30 September 2016 of$5.7 billion down 24% and a Cash Profit1 of $5.9 billion down 18%.
The FY16 result reflects a good performance in ANZ’s core domestic franchises and significant
reshaping of the business driven by ANZ’s strategic focus to create a simpler, better capitalised andmore balanced bank that produces better outcomes for customers and shareholders.
The result reflects an emphasis on delivering strong capital and cost management outcomes together
with $1,077 million of charges (after tax) for Specified Items primarily related to reshaping the Groupto position it for improved performance in future years.
Adjusted Pro-Forma Cash Profit2 was $7.0 billion down 3%, while Profit before Provisions increased 6%
as the benefits of simplification and rebalancing initiatives began to emerge. Return on equity wasstable in the second half of the financial year at 12.2% (adjusted Pro-forma Cash Profit basis).
The Final Dividend of 80 cents per share is consistent with guidance provided at the Interim Profit
announcement. The Total Dividend for FY16 is 160 cents per share fully franked down 12%.
Selected Group Financial Information

Half YearEarnings ($m)

2H16

1H16

FY16

FY15

5,321
2,971

4,786
2,738

10,107
5,709

11,712
7,493

5,318
3,107
106.7
10.9
2.00
0.36%

4,837
2,782
95.9
9.7
2.01
0.32%

10,155
5,889
202.6
10.3
2.00
0.34%

11,159
7,216
260.3
14.0
2.04
0.22%

5,815
3,467
44.6%
119.1
12.2%

5,737
3,499
45.0%
120.6
12.2%

11,552
6,966
44.8%
239.7
12.2%

10,927
7,145
46.0%
257.8
13.8%

Sep-160.82%
0.55%

Mar-160.86%
0.51%

Sep-150.85%
0.47%

Sep-16

Mar-16

Sep-15

580.0
408.6
449.6
5.3%
9.6%

565.9
388.3
446.8
5.1%
9.8%

574.3
401.9
444.6
5.1%
9.6%

Statutory Profit basis
Profit before credit impairment and tax
Statutory Profit
Cash Profit basis1
Profit before credit impairment and tax
Cash Profit
Earnings Per Share (cents)
Return on Equity (%)
Net Interest Margin (%)
Total Credit Impairment Charge as a % of avg GLAs (%)
Adjusted Pro-forma Cash Profit basis2
Profit before credit impairment and tax
Adjusted Pro-forma Cash Profit
Operating expenses to income (CTI, %)Earnings Per Share (cents)
Return on Equity (%)
Selected Group Financial Information
Credit Quality
Collective Provision as a % of Credit RWA (%)
Gross impaired assets as a % of GLAs (%)
Balance sheet ($b)

Full Year

Gross Loans and Advances (GLAs)
Total Risk Weighted Assets (RWAs)
Customer Deposits
Leverage Ratio (%)
Common Equity Tier 1 Ratio (%)
Common Equity Tier 1 Ratio Internationally Comparable
Basel 3 (%)
Other14.5%

14.0%

13.2%

Sep-16

Mar-16

Sep-15Full time equivalent staff (FTE)

46,554

48,89650,152

ANZ Chief Executive Officer Shayne Elliott said: “This year we delivered another good performance inAustralia and New Zealand with our consumer and small business franchises producing strong results
based on a disciplined approach to market share and tight cost management.
“We also took steps to create a better experience for our customers and to compete efficiently in thedigital age. This included the successful launch of Apple Pay and Android Pay in Australia and Apple Payin New Zealand. These are market-leading initiatives that have delivered good growth in new to bankcustomers.
“In Institutional Banking there has also been significant progress in improving returns and building asimpler business focussed on regional trade and capital flows. This included a meaningful reduction in
low yielding assets and improved productivity.
“We are also making changes to ensure we are fairer and more balanced in the way we deal withcustomers and to demonstrate our commitment to community responsibility. The current discussion
about the banking sector in Australia however shows that we still have more to do to shift our culture
and evolve the way we do business,” he said.
Strategic Priorities
Createasimpler,bettercapitalised, better balanced
and more agile bank.

FY16 Progress Highlights•

Portfolio rebalancing underway, retail and commercial RWAs
increased (6%)3, Institutional RWAs reduced (down 15%).

•The improved composition of CRWA, up $2 billion (1%), was driven
by $8 billion of lending growth in retail and commercial in Australia
and New Zealand, and a $26 billion increase in AustralianMortgages from regulatory changes, largely offset by a $21 billion
decrease in Institutional lending and a $5 billion decrease from thesale of the Esanda dealer finance portfolio.

•CET1 ratio 9.6% at 30 September; organic capital generation
106 bps in the half.

•

Further simplified and refocused the business, reducing duplication,delivered reduction in FTE (down 7% for the year).

•Sold the Esanda dealer finance portfolio, announced the sale of theRetail & Wealth businesses in five Asian countries.

•Pursuing a range of strategic and capital market options in relation
to the Wealth businesses in Australia.

•Reset the 2016 dividend to provide the basis to return to asustainable, fully franked payout ratio of 60-65% of Cash Profit4
over time.

•Focus on growing RWA in higher returning segments improved
Institutional (excluding Markets) margins by 13 bps.

•Grew the high return Institutional cash management business,increasing revenue by 6%; deposit balances by $1 billion up 1%.

•Australia and New Zealand Retail and Commercial customer
numbers increased by 262,000.

•Australia home loan lending up 7%, moved to #3 market share,
maintained #1 market share position in New Zealand.

•Small business lending in Australia up 9%, New Zealand up 11%.

Drive a purpose and values led
transformation of the Bank.

•Revised ANZ’s Corporate Sustainability Framework with focus onfair and responsible banking.

Create a stronger sense of core
purpose, ethics and fairness,investing in leaders who can help
sense and navigate a rapidlychanging environment.

•Supported ABA conduct and remuneration reviews.

•Redesigned ANZ’s performance management process to strengthenalignment to strategy and values.

•Reviewed approach to remuneration including new guidelines onequity clawback.

•Invested in MIT Digital Leadership Program and Leadership
Pathway programs.

•Strengthened the Whistleblower Protection Policy.

Reduce operating costs and risks
byremoving
product
andmanagement complexity, exiting
lowreturnandnon-corebusinesses and reducing ourreliance on low-returning aspectsofInstitutionalbankinginparticular.

Focus our efforts on attractive
areas where we can carve out
a winning position.
Make buying and owning a homeor starting, running and growing asmall business in Australia andNew Zealand easy. Be the bestbank in the world for customers
driven by the movement of goods
and capital in our region.

Build a superior everyday
experience for our people andCustomers to compete in thedigital age.

•

Established new Digital Banking Division to support growth inpriority areas.

•

Build more convenient, engaging
banking solutions to simplify thelives of customers and our people.

First major bank to launch Apple Pay and Android Pay in Australia
and Apple Pay in New Zealand.

•Implemented multi-channel digital platform for Australian retailbanking, more than 1 million customers using goMoney apps onthe new platform.

•Launched Digital Customer Identity Verification.

Wealth and Asia Retail & WealthAt the 2016 Interim Result, ANZ advised that it was conducting strategic reviews of the Group’s Retailand Wealth business in Asia, and its Wealth businesses in Australia and New Zealand. The reviews
considered each business within the context of the overall Group strategy including capital efficiency.
ANZ announced on 31 October 2016 that it had entered into an agreement with DBS to sell the Retailand Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia. ANZ intends to clarify
plans for the remaining businesses in Retail and Wealth in Asia during FY17.
The strategic review of ANZ’s Wealth businesses in Australia and New Zealand concluded that while thedistribution of high quality Wealth products and services should remain a core component of theGroup’s overall customer proposition, ANZ does not need to be a manufacturer of Life and Investments
products.
The initial focus will be on the Australian Wealth business where ANZ is exploring a range of possible
strategic and capital market options that will maintain strong outcomes for customers. This includes
the possible sale of the life insurance, advice and superannuation and investments businesses inAustralia. ANZ will pursue a disciplined approach to this process and will update the market as
appropriate.
The Wealth business in New Zealand will be considered separately during 2017.
Capital and Dividend
The APRA CET1 capital ratio at 30 September was 9.6% (14.5% on an Internationally Comparablebasis). Organic capital generation of 106 basis points in the second half was 33 basis points higher
than the second half average of the past 4 years, primarily driven by Credit RWA reduction (excludingforeign exchange impacts) of $12 billion in the Institutional business.
The Final Dividend of 80 cents per share is the same as for the first half and is in line with guidance.
The total dividend for FY16 of 160 cents per share represents a Dividend Payout Ratio of 81.9% on aStatutory Profit basis and 79.4% on a Cash Profit basis.
ANZ is gradually consolidating to its historical payout range of 60-65% of annual Cash Profit which ANZ
believes provides a more sustainable base reflecting the greater demands for capital arising fromincreased regulatory requirements. On an Adjusted Pro-forma Cash Profit basis the Dividend Payout
Ratio was 67.1%.
Specified Items
In FY16 ANZ recognised the impact of a number of items collectively referred to as Specified Items
which form part of the Group’s Cash Profit. The items are primarily related to initiatives undertaken toreposition the Group for stronger profit before provisions growth in the future. Adjusted Pro-FormaCash Profit information has also been provided to allow the market to better analyse the ongoing
operations of the Group.
ANZ recorded $1,077 million (after tax) of specified items charges in Cash Profit during the Financial
Year, of which almost half ($522 million) related to a change in the application of the software
capitalisation policy. This change in policy effected a 24% reduction in the Capitalised Software balanceyear on year.

One third of the Specified Items charges occurred in the second half, including an additional
restructuring charge of $100 million (post tax) and a derivative credit valuation adjustment (CVA) of$168 million (after tax).
The restructuring charge supports the evolution of the Group’s strategy and will underpin further
productivity through reshaping of the workforce to reduce complexity and duplication, and to align withthe changing emphasis in Institutional. ANZ has refined the methodology for the calculation of CVA, acomponent of valuing derivative instruments in the Markets business. The updated methodology makes
greater use of market credit information and more sophisticated exposure modelling and is in line withleading market practice.
A more detailed information pack on specified items is on www.anz.com within the FY16 resultsmaterials.
Credit Quality
The total provision charge of $1.96 billion ($1.94 billion individual provision charge and a $17 million
collective provision charge) equates to a loss rate of 34 basis point of which 3 bps is attributable to therecently announced settlement of the Oswal case. Gross impaired assets increased to $3.17 billion withnew impaired assets up 3% compared to the prior half.
While in aggregate the credit environment is broadly stable, pockets of weakness continue to work
their way through the economy, largely reflecting stress moving through the resources and resources
related sectors. The stress appears to have now largely passed through the Institutional market and is
progressively moving through the Commercial and Retail sectors. ANZ therefore expects provision
charges to remain broadly the same in the 2017 Financial Year as a percentage of gross lending assets.
Outlook
Commenting on the outlook Mr Elliott said: “We are pleased with the initial progress that has been
made this year in reshaping our strategy and setting ANZ on a path towards a sustainableimprovement in customer outcomes and shareholder returns.
“We have a clear strategy and a consistent focus on the simplification of our business and actively
rebalancing our portfolio. Importantly we have the organisation aligned and we have establishedmomentum in relation to the work that still needs to be done. This sets us up well to increase the paceof execution in 2017 and to deliver a better bank for customers and for shareholders,” he said.
Video interviews with Shayne Elliott and Chief Financial Officer Michelle Jablko discussing the 2016 FullYear result announcement are available at www.bluenotes.anz.com.
For media enquiries contact:

For investor and analyst enquiries contact:

Paul Edwards + 61-434-070101
Stephen Ries +61-409-655551

Jill Campbell, Tel: +61-412-047448
Cameron Davis, Tel: +61-421- 613819

Footnotes:
1. Cash Profit excludes non-core items included in Statutory Profit and is provided to assist readers in understanding the results of the ongoing business activities of theGroup. The net after tax adjustment was an addition to Statutory Profit of $130 million comprised of several items. All comparisons are to the full year end September 2015
unless otherwise noted.
2. Adjusted Pro-forma Cash Profit refers to Cash Profit adjusted to remove the impacts of Specified Items including the impact of software capitalisation policy changes,
Asia Partnership impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses, sale of Esanda Dealer Finance business,and derivative credit valuation adjustment. Further detail provided in the ANZ Full Year 2016 consolidated Financial Report.
3. Excludes the impact of increased capital requirements for Australian residential mortgages from July 2016 and the divestment of Esanda Dealer Finance.
4. Previously 65 to 70 per cent of Cash Profit.