ANZ Full Year Results Presentation
13 November 2023
Start of Transcript
Jill Campbell: Good morning, everyone, thanks for joining us. I am Jill Campbell, ANZ’s
Head of Investor Relations. You are joining us for the presentation of our Full Year 2023
Results being presented from ANZ’s offices in Melbourne on the lands of the Wurundjeri
people. On behalf of the ANZ team speaking today, I pay my respects to Elders, past andpresent, and I extend those respects to any Aboriginal and Torres Strait Islander people
joining us for today’s presentation.
Our Results materials were lodged this morning with the ASX, and they are also available
on the ANZ website in the shareholder centre. A replay of this presentation including the
Q&A, will be available on our website from around mid-afternoon. The Results presentationmaterials and the presentation itself being broadcast may contain forward looking
statements or opinions and in that regard, I would draw your attention to the disclaimer,
which is on page 2 of the slide deck.
Our CEO, Shayne Elliott, and CFO, Farhan Faruqui, will present for around 35 minutes, or
so, after which, I will go over the procedure for Q&A, before moving to questions
themselves. But ahead of that, a reminder that if you do want to ask a question, you needto do that via the phone, and with that, I will hand to Shayne.

Shayne Elliott: Hey, thanks, Jill. Today our focus is on financial results, and we will be
discussing assets, liabilities and economic data, but behind those are people, families, andbusinesses, and I want to acknowledge those in the community struggling with inflationand higher interest rates, particularly those with less secure employment, lower incomes,
and renters, many of whom are disproportionately younger.
Our savings tools in ANZ Plus, and our Saver Plus program, plus our support for Build toRent and other entry level housing programs, are helping, but more needs to be done.
Thankfully for those with existing loans, even first home buyers, the number of customers
experiencing financial stress remains modest by historic standards, but for each one thiswill be highly distressing.
Now, it is highly likely we will be called on to provide more support in the coming year and
we are ready and able to do so. On the global stage we remain deeply troubled by theongoing conflict in Ukraine, and now the tragedy unfolding in the Middle East. These

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events are profoundly distressing for many in our community, including our own people,
and we are doing what we can to support them.
Now, last year, we described our ’22 Result as one of the best, and 2023 isundoubtedly our best ever. On a cash basis, revenue increased 13% and profit 14% versus
last year, both to all-time highs. Given the seasonality in our business mix and the impact
of rate rises, the first half was stronger. However, on its own, the second half was an
outstanding result, demonstrating the underlying strength of our franchise.
Importantly, we continued to invest building a better Bank to deliver long-term growthwith sustainable returns. An 83% of that investment was expensed during the year
exhibiting discipline and accountability. Our balance sheet is strong, provisions forpotential credit losses remain high, and Common Equity Tier 1 sits at 13.3%.
Net tangible assets per share is the highest on record at $21.78 and return on equity
increased 54 basis points to 10.9% for the year. Now, setting aside the capital retained topurchase Suncorp Bank, underlying return on equity was 11.7%. Each division contributedwith good quality volume growth managing both risk adjusted margins and expense as
well, demonstrating the benefits of a simpler better balance portfolio and an experienced
team.
Now, it is pleasing to see that all divisions delivered a return on equity sustainably above
cost of capital, and reflecting that strength the Board announced a dividend of 81 centsand an additional one-off dividend of 13 cents per share. The proposed total final dividend
is therefore 94 cents and will be partially franked at 56%, and Farhan will walk through thedetails.
Now, we entered the new financial year well positioned for the environment. A strong
balance sheet, targeted momentum, diversified growth options, benefitting from consistentand deliberate investment. In our home markets, customers are finding conditions moredifficult, and last week’s rate hike by the RBA will be difficult for many.
Customers are being forced to make tough choices, but overwhelmingly, they remain
financially robust. As of today, hardship levels remain low, but that is not to diminish thestress felt by those increasingly on the edge. As I said, it is likely that more will need ourhelp, and we have the capacity to assist those in need without impacting our ability tosupport growth, business investment and job creation through prudent lending, that is thebenefit of a stronger and simpler Bank.

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Now, a year ago I shared priorities for 2023 and we did what we said we would do. We
grew Commercial New Zealand and Institutional particularly around sustainability andpayments, underpinning long-term competitive advantage for ANZ. We delivered on
productivity despite higher inflation. At the same time, we continued to invest in our ANZ
Plus business which delivered above expectations.
Shareholders overwhelmingly supported our Non-Operating Holding Company structure,
which will provide greater flexibility to better service customers, and finally, we remain
confident that we will receive approval for the acquisition of Suncorp Bank and are well
prepared for integration to deliver benefits to customers and shareholders.
Now, in Australian retail, we increased home loan processing capacity which enabledconsistent turnaround times despite higher volumes. Coupled with ongoing digitisation fordeposit account opening, we generated high quality Retail balance sheet growth. The buildof ANZ Plus continues at pace, now a fully-fledged business line within Australian Retail.
Since launching a little over 18 months ago, Plus has welcomed over 500,000 customers,
and $10 billion in deposits. More than we had targeted, and a little less than half of thosecurrently joining are new to ANZ, higher than last year, with average balances increasing.
Importantly, Plus operates at a marginal acquisition cost 40% lower than our Classic
business, with variable servicing costs 20% lower, and falling further as we grow.
Plus is the fastest growing, most contemporary major Bank offering for retail savers,
and last week we quietly launched the Plus Home Loan, dramatically reducing the time andcost of assessment, approval, and settlement.
Last year, we created as stand-alone Commercial business and it has solidified its positionas our highest returning division. We focused on the basics, existing non-core high risk
propositions like margin lending and broker originated asset finance. The reduction inrevenue was more than offset by growing our core business which improved risk adjusted
margins and returns.
Commercial lending grew strongly, and deposits, which are nearly twice as large, also grew
showing the underlying resilience of our SME customer base. It was pleasing to see strong
momentum in our digital platform, GoBiz, where drawn lending consistently grew 10% to
20% month on month. Like Plus, GoBiz operates at a much lower cost, while delivering
greater responsiveness and speed to decision for customers.
New Zealand is a story of quality and resilience after years of consistent investment.
Starting with the merger of our brands and systems in 2012, which is still delivering
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benefits through to the completion of the BS11 regulatory program, further increasing
resilience. ANZ New Zealand is well diversified and well managed, and despite the tougher
economic and regulatory environment, continues to deliver better outcomes for customers
while generating decent consistent returns to shareholders.
Economically, many consider New Zealand to be a leading indicator for Australia given it isfurther ahead in the tightening cycle, and we agree. As the largest Bank in New Zealand,
and with the most balanced portfolio of businesses, we get better data and insight thanmost.
I get to interrogate that as a member of the New Zealand Board, and we agree that while
delinquencies have slowly risen, overall customers continue to manage the cost of living
and challenges of higher rates well, and this reinforces the benefits of strong employment
conditions, high savings buffers built during COVID, and prudent bank lending in recent
years. We are optimistic that the new government will focus on much needed reform andhelp rebuild consumer and business confidence.
Institutional had an outstanding year. After years of disciplined execution, strengthening
the balance sheet, and improving productivity and rebalancing the business, institutional
generated the highest ever returns for shareholders, while supporting customers throughthe cycle. Revenue grew 26% year on year, profit before provisions 45% and cash profit
53%. These are impressive results.
For the first time, each of its business lines, Transaction Banking, Markets and Corporate
Finance generated revenues above $2 billion with Transaction Banking growing 47% to an
all-time high of $2.3 billion. Institutional is a diverse well-balanced business delivering
decent consistent returns. That transformation has largely been driven by our payments
and currency processing businesses which are low capital, high return, with high barriers
to entry.
While built for institutional, these platforms are increasingly servicing other ANZ
customers, leveraging scale and bringing top end capability to a broader audience. For
example, Transactive Global which is used by the world’s leading multinationals andfinancial institutions, and rated number one by users, is now available to our medium sizedbusinesses within the Commercial Bank. Over 60% of Transactive Global’s users are
Commercial Bank customers.
The scale of these platforms is impressive processing 13 billion data points a day. We
process around 60% of Australia and New Zealand correspondent clearing payments andPage 4 of 47

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provide services to more than 90% of the world’s globally systemic banks facilitating $164
trillion in payments in, out and around the markets in which we operate, and over the longrun underlying transactional growth should outpace nominal GDP.
Now, on a PCP basis, payments initiated in customer systems were up 16%, real time
payments 31%, and third-party deposit accounts opened by our customers for theircustomers, grew 25%. Collectively, these services drive revenue and positive deposit beta,
helping Institutional deliver an ROE of 13%, double that reported in 2016. Even more
pleasing, is the transformation of International which in seven years has come from a dragon the Group, with low single digit ROE, to an accretive 15% return.
Now, I have spoken today about the benefits of diversification, but hopefully you will noticeconsistent themes across our businesses, focusing on products and customers where wecan add value, and askew towards processing related revenues, because they are low
capital with high operating leverage, and they reward sector leading investment intechnology and security.
With regards to security, we continue to invest keeping customers safer from criminals.
Each month we block up to 3 million malicious emails, and 12 million attacks against our
public facing web services. Recently, we ran a pilot using AI to identify and close suspected
mule accounts linked to fraud, scams, money laundering, and other financial crimes. We
introduced biometrics to identify payment anomalies and removed about 1,600 phishing or
fraudulent websites impersonating ANZ and put in place measures to stop scammers
impersonating ANZ in text messages.
We regularly deliver education campaigns through our Bank channels and I recently wrote
to all customers in Australia to warn them of the dangers of scams and how to avoid them,but we recognise there is always more to do. ANZ Plus will soon roll out cutting edge
features branded Scam Safe to provide even great security for customers.
Now, looking ahead, our job is to ensure we have the strength and agility to manage any
environment. The outlook is certainly tougher. Geopolitical risks are rising with trade andcapital flows changing faster than we have seen in some time. We are well positioned forthese changes. Australians came into the cycle with virtually every mortgage having beenassessed with a 300-basis point interest rate buffer and New Zealand was similar.
Now, most of that has been absorbed, but coupled with strong savings levels which at ANZ
are still rising, higher income growth, particularly for those with home loans who are
generally better off than average and house prices stabilising, household balance sheets
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remain in good shape, and the same can be said for most of our small business customers.
However, housing affordability has increased as a policy focus with most Australian states
announcing housing targets.
New housing requires significant material and labour, which are in short supply andcompeting with climate transition, so the cost of construction will likely rise as thesetargets, and higher immigration force more demand into the sector. Now, this should
underpin house prices, which coupled with strong employment conditions, mean we areconfident that we can cautiously grow home lending in a low-risk way, while maintaining
decent returns.
Globally office property remains a sector at risk challenged by higher interest rates,
working from home, and a preference for greener buildings. At ANZ we have the smallest
commercial property exposure of our peers and are focused on highly rated diversified
portfolios, managed by people we know well, with proven track records and financial
flexibility. It remains a watch point for the sector, but we are alert and well positioned.
More broadly, the demand for resources globally is substantial across defence,
infrastructure, housing and climate. In addition, there are shifts in global flows which are
likely to have some permanence. The US economy has become an importer of foreign
direct investment possibly due to the Inflation Reduction Act and efforts at reshoring.
China has seen a slowdown in FDI, debt and demographics are changing China’s growth
dynamics. It is still an $18 trillion giant but growing more slowly and absorbing different
resources.
These changes, plus global instabilities have forced a search for alternative manufacturingbases and areas to invest. India dominates given its enviable geopolitical position, andeconomic reforms, but others are also benefiting such as Singapore and Vietnam. Given
these trends, our leading Institutional franchise built on long-term relationships, specialist
skills and a unique regional network means we are at the heart of the resulting shift in
trade and capital flows and are well placed to assist global customers who are leadingtransformation and grow with them.
Now, in more challenging times delivery excellence, and strategic consistency, and theability to flex resources is critical, and today’s Results are evidence of that, be it strategy,
capital risk, productivity or our experienced team. We have held a steady hand over sevenyears, and structurally we find ourselves in the right place at the right time, off the back ofyears of investment and diligent execution.
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Our priorities for the coming year build on that. We will continue to run the Group
prudently, using our strength to support customers through challenging times and seek
opportunity from our regional network. We will further improve productivity using tools likegenerative AI and process simplification to build further capacity for investment.
We will grow the number of customers using ANZ Plus particularly those new to ANZ anddeepen their engagement whilst starting to migrate existing customers from ANZ Classic.
We will invest more in Commercial, driving growth in chosen segments, and further
enhance our sustainability, currency and payment platforms, and finally complete theacquisition of Suncorp Bank, delivering the benefits of superior technology and customer
propositions to their 1.2 million customers.
Now, none of this is possible without the right people and culture. We have worked hard todevelop teams with the right behaviours and skills needed to continue our transformation.
We actively invest in employing engagement with our most recent score of 87% we are
best in class for any industry anywhere in the world. Now, this may not sit on our balance
sheet, but it is a real asset, and part of the reason we secured over 90% support for ourrecent enterprise bargaining agreement and won the award as best finance graduate
program in Australia two years running.
Now standing back, the difference between Australian banks has never been more
pronounced. ANZ led the way on simplification but has retained the most diversified andbalanced set of divisions. Each of them has a strong sense of purpose, a clear strategy
built on unique strengths and generates returns sustainably above cost of capital. Our
Commercial Bank is deposit rich with significant growth opportunities.
While Institutional is more international and increasingly driven by payments and currency
processing. Australian Retail is the smallest of our peers, but rapidly transforming to adigital first financial wellbeing proposition by growing our newest business ANZ Plus.
New Zealand led our simplification, allowing us to invest in better outcomes for the almost
one in two kiwis that we serve, while generating reliable returns to shareholders.
On its own, New Zealand is arguably the most valuable banking franchise in Australasia.
So today I'm confident our diversity is a strength. We're more fleet afoot and are putting
the flexibility and diversification to good use.
Revenue growth will be harder to come by. So, while investing to deliver better customer
outcomes, we'll increase focus on capital efficiency, risk management, and productivity.
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I'm confident we have a fortress balance sheet, the right portfolio, and a proven teamcapable of managing through challenging times and making the tough calls.
And with that, I'll hand over to Farhan to talk through the result in more detail.

Farhan Faruqui: Thank you, Shayne. As Shayne said, this was a record year and is atestament to our multi-year effort to simplify and invest in our core businesses to deliver
strong shareholder outcomes.
For the year, we delivered revenue growth of 13%. In a high inflation world, we limited
expense growth to 5% on a constant currency basis while continuing to invest. Profit
before provisions expanded by 20% and we grew cash profit by 14%. Our provisioning
remained appropriate. Portfolio trends were stable and we ended the year with a strong
capital and liquidity position.
In the second half, we continued our strong expense management focus, delivering a flat
half on half cost outcome on an ex LNI and constant currency basis. We continued ourstrong markets performance, with the second half delivering an on target outcome ofabout $1 billion, following from a strong first half.
On an ex markets basis, our second half revenues grew slightly and we exited the second
half with improving momentum. In short, we delivered what we had promised.
Importantly, we delivered for our shareholders, with a total shareholder return of 16%
over the last six months and 20% over the last 12 months. Our return on equity improved
to 11.7% or over 100 basis points higher year on year when adjusted for the capital set
aside for the Suncorp acquisition.
As a result, the Board approved a final dividend of 94 cents per share, comprised of 81
cents on a 65% franked basis and an additional one-off dividend of 13 cents per share on
an unfranked basis. I will discuss this in more detail later in my remarks.
Now, we've often referred to the benefits of a diversified and well performing portfolio of
businesses. That has actually never been more evident as this particular year, andespecially in this half.
This diversification allows us to capture opportunities when operating conditions in parts ofour portfolio are favourable. Likewise, it reduces earnings volatility when any of themarkets or sectors in which we operate experience more challenging conditions.
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Importantly though, having a set of healthy businesses is crucial to leveraging
diversification benefits. In our case, all four divisions and each region are meaningful
contributors to the Group performance, are each profitable with above cost of capitaloutcomes, and have good prospects for growth.
And while each business over the last five years has experienced different trends, the mixof our portfolio today provides impetus for growth. Before I speak briefly to each business,
I will note that the capital allocated to the businesses on this slide does not include Group
held capital, such as the capital set aside for the Suncorp Bank acquisition.
So starting with the Australia Retail which represents approximately a quarter of cash
profits in Group capital. Our home loan balances grew $22 billion in FY23.
While the Australian mortgage market remains highly competitive, our focus over thisperiod has been on significantly improving our processing capacity and consistency andenhancing our broker proposition. This gives us the ability to grow our mortgage book via
non-price levers.
Australia Retail also grew other operating income by 5% year on year, in part, reflecting
higher cards revenue. Shayne outlined the success thus far of the ANZ Plus business which
has been a key contributor to new to Bank customer acquisition and deposit growth thisyear. Consequently, Australia Retail revenue grew 4% this year and profit before
provisions expanded by 3%.
Our Australia Commercial business consumes less than 10% of Group capital while
contributing around 20% of Group profit. Our Commercial customers account for a quarterof Group revenue, including their contribution to Retail and to Institutional.
It is a net funder to the Group, with approximately two times deposit to assets. The
commercial division grew income 11% this year and had a 12% expansion in profit before
provision.
We continue to invest in this business, positioning it for growth and with a view to
becoming the Bank of choice for Australia's small and medium businesses.
The Institutional business has had an exception year with 26% growth in income. Adding$1.2 billion or 45% year on year increase in profit before provisions. This was also the firstyear where each major business line in Institutional delivered over $2 billion in revenue.

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Institutional is a far less capital intensive business today, courtesy of seven years ofinvestment to build out capability and capacity in capital light, high returning products andplatforms.
As a result, it delivered over 40% of Group profit while utilising one third of Group capitaland has doubled its ROE since 2016. The value of the Institutional division now lies in its
ability to grow diversified and recurring avenue powered by our differentiated regional
network.
Last, but certainly not the least, is our New Zealand division which represents 14% of ourGroup capital and 21% of Group profits. It continues to deliver strong returns and growthyear after year. And in FY23, it had 7% income growth and expanded profit before
provisions by 10%.
As Shayne mentioned, this business has continued to improve its efficiency and leverage
its scale to deliver a cost to income ratio of 36% in FY23.
Moving to shareholder outcomes. We have delivered strong results and have done thiswhile balancing short and long term outcomes, investing for our future, and being
disciplined on cost, risk, and capital management. This has contributed to our strongest
ever EPS outcome this year at 270 cents per share, adjusting for capital set aside for the
Suncorp Bank acquisition.
This would not have been possible had we not undertaken strategic and capitalmanagement actions over the last seven years which reduced our share count by 120
million shares prior to the Suncorp Bank related equity raise.
I'll talk to operating income performance now. A strong outcome, 13% increase in revenue
year on year, with ANZ's business mix allowing us to deal effectively into a rapidlychanging environment. This increase was driven by strong markets performance, higher
volume across all four major businesses, and margin expansion. As I mentioned earlier,half on half revenue was slightly up on an ex markets basis, reflecting the diversified
benefits of our portfolio.
Other operating income, ex markets, was up 30% in the half. While that outcome did
contain some one-off items, we saw an underlying 7% uplift.
On volume, I have already spoken to the strong growth in Australia home lending. But I
would also like to highlight that Australia Commercial experienced growth of 5% for the

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year and the second half for this business represented the strongest half of lending growthin seven years.
Our Institutional and New Zealand business had more stable lending outcomes this year,
reflecting softer credit demand. Importantly, we saw good balance sheet momentum in thelatter part of the second half which positions us well going into FY24.
Overall, customer deposits grew $27 billion over the year, with increases across all
divisions while continuing to target deposit cost optimisation opportunities.
In the Retail and business portfolios, we continue to see a shift toward higher yielding
lower margin term deposits and saving accounts, with the deposit mix now approaching
pre-COVID levels.
Offset accounts, while up by $2 billion in the year, remain stable year on year at 15% ofhome loan balance. Payments in cash management deposits account for approximately
60% of Institutional deposits and average PCM deposit balances grew 5% year on year.
And this reflects the quality of our Institutional customer franchise and contribution fromour platform strategy.
As Shayne mentioned, our cash management and platform volumes have continued toincrease, resulting in the doubling of revenue over two years.
While higher interest rates were supportive, it was largely the payoff from years ofinvestment in technology that enabled this outcome. In my experience with institutionalcustomers, they trust a Bank with their payments and cash management after a vigorous
selection process and thereafter are loathed to move their provider.
We don’t take our customers' trust lightly and continue to execute well and invest intechnology to enable stability and enhance functionality of the platforms.
Moving onto margins. Underlying Group NIM declined seven basis points in the second
half, following a strong first half. Lending margins in Australia and New Zealand Retailcontributed seven basis points decline half on half and reflects the competitive pressuresacross the sector.
As I mentioned, while competitive pressure was intense in the Australian mortgages space,
we have continued to dynamically manage our settings for the business, factoring in
capital requirements, funding costs, costs to serve, and credit quality.
The geographic shape and nature of our deposit relationships, coupled with the strategies
we've deployed, ensured deposit pricing remained a net tail wind in the second half.
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This was offset by the continued mix shift to lower margin deposit products. The market's
NIM compression was largely driven by business opportunities that lend themselves toaccounting asymmetry.
Any NIM dilution in these businesses is more than offset in other operating income,producing return accretive outcomes. While the movements in asset and deposit margins
are important, looking at margin outcomes visually and divisionally really highlights thebenefits of diversification.
As you can see, the New Zealand geography and the rest of the world partially offset themargin impacts of Australia geography. While Australia Retail margins declined, there are
two businesses that I would like to highlight in particular.
Our institutional business' second half margin ex markets was 2.36%. The highest margin
outcome since 2016 and is reflective of our disciplined capital allocation choices.
This is evidenced by the fact that lending and deposit margins in institutional were both up
half on half two basis points and five basis points respectively.
Our Australia Commercial business, where margins increased by an exceptional 60 basis
points year on year and remained reasonably stable in the second half, following from astrong first half.
I'm also pleased with our ongoing improvement in risk adjusted margin trends. While the
NIM decline does affect its trajectory, we have continued to demonstrate the risk disciplineand have maintained a substantial risk adjusted return benefit.
As I have said before, this measure is very meaningful for us as it allows us to calibrate
the return, we generate for the risk that we take.
While we are well positioned with our business mix, the environment ahead remains
challenging and the factors affecting NIM remain similar to last half. Forecasting the exact
timing and impact of these remains difficult but we are confident that the composition of
our business continues to provide us with some resilience.
As with our PCM business, we have focused on strategic capability build in our markets
franchise business to grow recurring income and to increase income diversification.
This is a differentiated markets business from our domestic competitors across productoffering, client mix, and geographic footprint.

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Our investment in building capability and deepening client relationships has helped growmarkets income to $2.1 billion in FY23. While customer franchise income has increased on
average 16% over the last two years.
Moving to costs we have delivered to our guidance of 5% FY23 cost growth, excluding LNI,
on a constant currency basis. Our second half '23 cost performance was strong, with cost
growth flat, excluding LNI on a constant currency basis.
The growth in large and notable items in the second half was attributable to increased
restructuring costs and the new government impost of compensation scheme of last resort.
The restructuring costs are largely related to our productivity agenda for FY24. Productivity
is an ongoing discipline for us. Not a one-off program of work and our continued focus
allows us to invest in our business' growth and momentum.
Moving onto the key drivers of our cost movements. Like all businesses, we've had tonavigate the heightened inflationary environment, affecting in particular our salary andthird party vendor costs.
We have been considered in our approach to FTE management and made choices thatbalance our cost objectives and our workforce capability.
For example, in the context of rising third party vendor costs, we have made decisions toinsource certain activities and ultimately reduced costs.
Our FTE increases in international locations have been partly in support of our growth in
our international business, but also for building bench strength and intellectual property in
critical skillsets for the future, such as digital and technology.
We have also continued to prioritise growth and productivity initiatives, which now
represent 62% of our investment slate, the highest level in recent years.
Importantly, we pay for our investment now. With an investment OpEx rate of 83%, we
retain the lowest capital software balance of all domestic peers.
Turning to productivity, we have continued to realise benefits from automation and digitalchannels, simplifying our technology, infrastructure, middle office efficiencies, and property
rationalisation.
Looking ahead, we expect head winds arising from inflation to remain. But perhaps slightly
lower than in FY23. We are well positioned with our productivity agenda to face into thesewhile continuing to invest in the business.
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Turning to risk. We've spoken previously about the work undertaken over a number ofyears to improve the quality of ANZ's lending book. The outcomes have both balance sheet
and P&L benefits, including improving the return on risk weighted assets.
Portfolio quality improvement has been driven by a combination of more disciplined
customer selection and strategic focus in particular, in Institutional.
A reduction in the proportion of unsecured business and increasing collateral coverage in
Commercial, along with rebalancing exposures away from riskier sectors and disposals,
including Asia Retail, Asia Commercial, and Esanda.
Our portfolio mix is now weighted towards lower risk categories, such as sovereigns andfinancial institutions. The outcome of the portfolio improvement that I just outlined, delivera lower actual loss, with our IP loss rate reducing from 34 basis points in 2016 to one basis
point in the last two years.
This means, as the chart shows, we have gone from being the Bank with the highest credit
losses to being the lowest of our peers. While the IP charge is up half on half, this is due tolower writebacks and recoveries rather than an increasing trend of new and increased
individual provisions.
Moving onto collective provisions we took a prudent approach to provisioning, reflecting
ongoing uncertainties in the macro environment. While there are some signs of increased
customer stress in Australia with mortgages 90 days past due increasing four basis points
to 64 basis points during the half, the ratio remains well below pre-COVID levels of 112
basis points.
In New Zealand, we've seen a slightly faster increase during the half. Although the 90 days
past due number remains lower than the Australian portfolio.
Impaired assets for the year were steady at 21 basis points. And impairment levels remain
near historic lows. We look closely at emerging trends, including any change in thequantum or composition of customers requesting hardship support.
In our Australian mortgage business, 0.2% of our customers are currently in hardship.
Which while slightly up half on half, remains below pre-COVID levels of 0.3%.
Our scenario and weights continue to recognise risks to the outlook, although we did makea small reduction to the weighting to our most severe scenario.
Our collective provision balance of just over $4 billion is $2.2 billion over our base casemodelled outcome and over $900 million above our downside scenario.
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Moving onto capital, our Level 2 capital position remains strong at 13.3% CET1 ratio,
which is 16 points higher for the half. The capital impact from the proposed Suncorp Bankacquisition is 128 basis points.
So on a proforma basis, which also includes a small amount of surplus capital in the NOHC,
our CET1 ratio is 12.1%. In terms of key drivers for the half, outside of the normal cash
and dividend impacts, we have experienced modest RWA usage for the second half due
mainly to solid mortgage growth as I previously outlined.
With regard to future capital management opportunities, these are under constantconsideration. However, the most important and material capital requirement in the nearterm is the proposed Suncorp Bank acquisition. The Tribunal is scheduled to provide theiroutcome in February. It is not that far away. In addition to capital, our funding andliquidity position also remains strong and well above regulatory minimums.
As Shayne mentioned, the final dividend is 94 cents per share comprised of an 81 cents
per share partially franked dividend and an additional one-off, unfranked dividend of 13
cents per share. The level of franking reflects the geographically diverse nature of ourbusiness as well as the timing of the proposed Suncorp Bank transaction.
Our business mix, including the strong performance of International and New Zealand,delivers a higher absolute dividend per share than would be the case if ANZ only operated
in the Australian market. As you know, we pay Australian tax and generate Australianfranking credits only on our Australian-sourced income. Therefore, this mix will continue toimpact franking in the future.
The Board understands that lower franking may not have been anticipated by someshareholders and in recognition of this and given our strong performance, the Board
agreed that the one-off unfranked dividend was appropriate.
In conclusion, we will continue to have a sharp focus on shareholder value while deliveringstrong customer experience through our highly engaged workforce. We have made theconscious choice of investing in our future but we are also clear that we need to deliver
efficiencies today to afford us that investment.
So my focus as CFO will remain on productivity and deriving value from our investments. I
will also ensure prudent capital and liquidity settings and managed growth in risk-adjusted
return for our shareholders. I feel confident that we have the strategy, a high performing
mix of businesses and an experienced team to sustainably deliver value to ourshareholders in a safe and responsible way and aligned with our purpose of shaping a
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world where people and communities thrive. Thank you very much and I’ll hand back to Jill
now.
Jill Campbell: Thanks, Farhan and I know you’ve all done this a million times but anyway,
if you can try and keep it to two questions each. The operator will walk you through theprocedure and then she’ll hand over to Andrew Lyons is our first question. [Rachel]?
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 are on a speaker phone, please pick up the handset to ask
your question. Your first question comes from Andrew Lyons with Goldman Sachs. Please,go ahead.
Andrew Lyons: (Goldman Sachs, Analyst) Thanks, Shayne, Farhan and Jill. Good
morning, everyone. Just a question on your NIM. Your 2023 year-over-year metrics lookstrong across the Group but I just wanted to focus in on the second half momentum.
Over the last six months you’ve grown your domestic mortgages at nearly 1.8 times
system which has seen your Retail Banks’ average loans grow at 3% half-over-half but thishas clearly contributed to the 33 basis point decline in the Retail Banking NIM andtherefore an 11% half-over-half decline in net interest income and I’d also note thequarterly NIM trend suggests a NIM exit at somewhat lower level into FY24.
So Shayne, can you please just talk to how the growth strategy in mortgages will be in thebest interest of shareholders? Then I’ve got a second question.
Shayne Elliott: Yes, sure. Thanks, Andrew. I mean first of all, it’s worth just repeatingsome of the stuff I’ve already said. The fact that ANZ operates a more diversified portfolio
than our peers so we’re not just an Australian Retail business but having said that, clearly
each of our four divisions has to stand on its own two feet and they do in terms of theirresults and their responsibility to deliver good customer outcomes but also deliver long you know, shareholder - decent shareholder returns in the long term.
So we believe we have our settings appropriate for the times where our customers out
there are increasingly price sensitive given the challenges. But we need to be able to offerthat while generating fair and decent returns related to our cost of capital.
Now, obviously that - there’s a lot of moving parts in there in terms of NIM but also thecost base at which we operate and for over the long-term, that’s why we are investingheavily moving - and you know, you saw that we’ve just launched, quietly, and it will be a
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slow start, our Digital Home Loan on the ANZ Plus platform which radically reduces thecost point.
But to answer your question, we will generate sustainable returns through customer
relationships, not just in terms of single product offering to people and we do monitor the
return on equity for the division over time. Did you want to add anything about themargins?
Farhan Faruqui: Well I mean, I think it’s important and Andrew, you know this but we because of the diversification, while we certainly saw pressure in the Australia Retailmarket continuing in the second half, we also saw off-setting outcomes in the Institutional
business where we extended margins.
So I think it goes to Shayne’s point that it is a very different portfolio to some of our peers
and therefore our ability to manage the margin pressures in one part of our business withpotential opportunities in other parts of our business is far more significant. I think theother point, I think it’s also important when we look at half-on-half, Andrew, is that it’s
probably good to compare not just half-on-half but also on a full-year basis because thetiming of certain actions that we took versus maybe some of our peers was different.
So we had more focus on deposit pricing in the second half than we had on the first half
and therefore there was a bit more of a pronounced impact from a deposit standpoint in
the second half. So I think it’s just to kind of think about looking through the year rather
than looking in the half because timing actions does impact the outcomes on a half-on-halfbasis.
Shayne Elliott: The only thing I’d add, just to round that out, I mean in terms of an
incentive setting, in terms of the way that we run the business, we do focus our
Executives, including myself but all the people who run the divisions, on a balance
scorecard approach. So they’re not incentivised around revenue or purely on market shareor volume. They have a balance sheet of metrics and one of those clearly is aroundeconomic profit which is highly correlated to their ability to generate sustainable returns
above cost of capital. Did you have a second question, Andrew?
Andrew Lyons: (Goldman Sachs, Analyst) Yes, I do. Thanks for that detail on that. You’ve
paid a one-off DPS this half, just reflecting the low franking levels of the core dividend.
Now, part of this is clearly the geographical mix but also the timing of transactions. Maybe
one for Farhan. Can you perhaps just talk about how you think about the sustainablefranking levels of the business? I guess assuming the scenario where the deal is approved
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and perhaps the scenario where the deal isn’t approved. Any details on that’d beappreciated.
Shayne Elliott: Well I might start actually. I’ll let - thanks, Andrew. I mean I think of the- at the risk of stating the obvious but I’ll do it anyway. Look, the Board is very consciousof the fact that those franking - you know, that franking credits are more valuable in ourcustomer’s hands than in ours. So that’ll always be a really important part of a decision
around the level of franking.
Secondly, the Board is also very conscious of the fact that predictability and certainty isalso very much valued by shareholders. Whether that’s the amount of dividend or the levelof franking. So that also goes into the mix. I think the important thing here is, as you
referred to, our business is inherently more diversified. That’s a good thing and it’s
actually, we see that as a real positive, particularly at this kind of - this point in the global
economic cycle. We have more levers and more ability to maximise our earnings capacity
globally but that does have consequences around franking.
So the Board is conscious of that mix in making the decisions but Farhan can talk througha little bit more about your question about how to - I understand the question about how
do you predict from here.
Farhan Faruqui: Yes. So I think, Andrew, the - obviously the decision around Suncorp
Bank in February will then be a function - we will then decide or the Board will then decideat that point as to any further capital management actions as required. So that does
impact, obviously, the total share count which of course impacts our ability to frank as wellas to generate more Australian-sourced earnings if we are successful with Suncorp Bank.
So all of those things are in the mix and it’s uncertain at this point as to where that goes.
The level of franking, though, away from the Suncorp Bank acquisition is actually driven,
as I said, by the fact - by the mix of the businesses and of course that is hard to predict interms of what that future mix is. It is possible that as Australian businesses, grow,particularly in our commercial business et cetera, we might see that mix turning backtowards a more positive franking outcome but it’s hard to predict that and we will ofcourse have to manage that on an ongoing basis.
But I think the point I would make though is that the franking levels for the 81 cents per
share that we gave, the Board did consider the level of consistency both of franking as well
as of the dividend level as we made that decision.
Andrew Lyons: (Goldman Sachs, Analyst) Thank you so much.
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Operator:

The next question comes from Ed Henning with CLSA. Please, go ahead.

Ed Henning: (CLSA, Analyst) Hi. Thanks for taking my questions. Just the first one on
margin and second one on cost. Just the first one on margin. Can you just go back to on
slide - I think it’s slide 27 and just talk about the mix change on the TDs and transaction
accounts?
Obviously you’re growing ANZ Plus, I’m just interested, is this starting to slow at all? Iknow you talked about different changes you’ve made in the second half. Just thinking
about that impact going forward and then secondly, on the lending side, you’ve got
obviously the back book repricing which you showed in the lending margin coming off on
the housing side. I’m just interested how far you’re through that if you - if obviously
current rates hold and how long you think that’ll continue to play out in the margins as thefirst question, please.
Shayne Elliott: Yes, I’ll get Farhan to talk through that, thanks, Ed. Just a couple ofcomments at a high level. I mean it’s worth, I think, reflecting on the fact that our Retailbusiness obviously looks very different than our peers. In fact, the demographic is reallyinteresting.
Our demographic skew is slightly older and quite a bit more affluent. That means thatwhen you look at there’s a higher propensity to be interested in savings products because
it tends to be older people thinking about savings and therefore a little bit more ratesensitive. That’s why you see a little bit more sensitivity around the differential between
transactional accounts and savings. That’s one.
The second point I would say, while ANZ Plus is in the - you know, we’re really pleased
with - we’ve generated far more deposits than we had hoped for at this time. Obviously it’s
still relatively small in the stack, as you can see on that page. What’s interesting about
that, as I said, about a little less than half of that is coming from new-to-Bank customers.
So we’re really pretty excited about - and that’s precisely what it’s designed to do.
It’s designed to actually broaden the pipe, if you will, of transactional accounts and newcustomer acquisition but you can talk a little bit more about the trends we’re seeing.
Farhan Faruqui: Yes.
Shayne Elliott: Because there has been some changes.
Farhan Faruqui: No, so I think just speaking to the deposits first and it is a function of
the shift from, as Shayne said, from at-call to TDs. That has been, as you can see, pretty
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pronounced and we have seen over the - so if I look at second half last year versus firsthalf - versus the end of this year, there’s been about a 9% shift from at-call to TDs.
That of course means that that has an impact and a drag on margins but then having said
that - and it’s too early to call it, obviously, Ed, but we started to see a slowing in that shift
towards the end of the second half but of course we’ll have to see how the rate outlook
potentially may impact that going forward. So I think that’s the first thing.
The second is that on the lending side, as you mentioned yourself, the back book repricing was particularly elevated in the first half. That has started to slow and has actuallyslowed even further as we exited the second half. So we expect that - again, depending on
the rate outlook and the environment and the competition, we expect that to be a lesser
headwind going into next year.
But having - but you know, but there continues to be competition on the front book and ofcourse we’ll have to watch that and we’ll have to see where the rate outlook and the macro
environment shifts. So that’s what makes it hard to actually give you a sense of where themargin trajectory is but some of the trends which were headwinds, such as the shift to TDs
which is, as I said, getting closer to pre-COVID levels now as well as the back book repricing impact has slowed down, particularly with most of the back book now pretty muchat contemporary pricing. Almost 70% of our home loans right now are on contemporary
pricing.
So I think that’s something we will continue to monitor as we go forward but a lot of
unknowns in terms of rate changes as well as competitive intensity going forward.
Shayne Elliott: Another thing I would just add to it - and I know you want to ask aquestion on cost. If you go to the next slide on page 28, actually, is that bottom right chart
there about client monies. That platform cash management accounts.
This really plays to a strength that ANZ has and it goes to what I talked about, the ability
for us to democratise these really high-level platforms that we built in institutional.
Essentially what this is, is where our customers - many of them are permanent financial
institutions, brokers et cetera, offering accounts to their customers.
What’s great about this, it’s leveraging the scale and the technology we’ve built ininstitutional but we get Retail credit treatment for those in terms of those deposits. So
while that’s - you know, that is becoming a very significant driver of liquidity and Retailvalued liquidity for ANZ over time, building on our strengths.
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Ed Henning:(CLSA, Analyst) All right, thank you for that…

Shayne Elliott: Did you want to ask [a follow up]? Yes.
Ed Henning:(CLSA, Analyst) Yes, I do. Thank you for that. That was - I appreciate

the detail. On slide 34, you obviously give us the walk-through on the expenses and you
talk about hopefully a little bit less inflation pressure next year. Can you just touch onsome of the other components?
The strategic investment. Are you going to be able to hold that flat or is there an
increasing headwind there? Also, you had more restructuring in the period and you had
some transaction costs. You know, how should we think about restructuring andtransaction costs as well?
Shayne Elliott: Yes, so Farhan will go through that. Hey, we have done a good job on
productivity and I’m not getting embarrassed to say that. You know and that’s been thecase for a number of years. We’ve been able to - let’s remember that when we - I
understand the tendency to relate everything back to a CPI base but remember we operatein 29 markets. Most of our people who we pay a wage to, don’t live in Australia. They live
somewhere else.
So our CPI is very much a global blended inflation number that we manage to. So while it’sinteresting to think about the Australian CPI and it clearly is relevant, it’s not actually the
only driver. So what you’ve seen over time is our ability to continue to keep our cost
growth, including investments, lower than what we would see our basket of traditional
inflation.
That means we’ve been able to deliver productivity over a period of time. Now, some ofthat moves around because of our need or desire to invest in various opportunities. So
that is a little bit of a moving target.
Certainly from an investment perspective, who can say about the future but from where
we sit today, we sort of feel we’ve met - we’re sort of somewhere at that peak investment
cycle. We’ve had a couple of the big ones like BS11 roll off. That’s not to say there won’t
be new things but we’re not seeing - we’re not expecting a material shift in the total
amount of cash that we have to invest.
Whether that’s in regulatory requirements and compliance or whether that’s building new
propositions. Whether that’s feeding and rolling out things like ANZ Plus or GoBiz or the
Cloud transformation or the work we’re doing in Institutional payments. That should be
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relatively stable if not come down a little bit over the next year. But Farhan, you’ve got
more detail on those sort of…
Farhan Faruqui: Yes, look, I think Shayne has actually covered it. There’s nothing at thispoint that we can see, Ed, which suggests that there is going to be anything but a stable toslightly down outcome in terms of our investment spend, if you like, going into next year.
There’s nothing on the horizons but I - as I always say, you can never say never because
something might show up in the middle of the year but at this point, knowing what weknow, we are pretty confident that it will be stable to slightly down.
From an inflationary standpoint and some of the other boxes on that page 34, obviously
wage levels are going up and that starts to come through now. From the month ofOctober. So that’s already baked into our numbers for ’24.
Vendor inflation is continuing as I - as Shayne says, we pay for our people and we pay forother people’s people. Those people are getting wage level increases as well and they’re
operating on a global basis so there are different CPI outcomes for them. So vendor
inflation will continue to remain a pressure.
Strategic initiatives, as we said, largely stable year-on-year and the good news is, because
we pay for our investment now and we have been extremely disciplined around making
sure that we continue to OpEx as much of our investment spend, the D&A is actually asmall tailwind for us in this year, in this half.
So that hopefully will continue to help us and - but clearly, given the level of inflationarypressures, we will have to out-perform on productivity and that’s what we’re setting
ourselves to do which is why our restructuring costs were higher towards the end of theyear. We’ll expect them to stay similar levels next year in order to continue to make sure
we’re delivering outcomes, not just for ’24 from a cost standpoint but also building an exit
rate into ’25.
Ed Henning: (CLSA, Analyst) Thank you for that.
Operator: Your next question comes from John Storey with UBS. Please, go ahead.
John Storey:(UBS, Analyst) Great. Morning, Shayne. Morning, Farhan. Thanks very muchfor the opportunity to ask a question. First question I had was just on asset quality. The
charge that you took in the second half of the year seems to some extent inconsistent withsome of the underlying trends that you’ve seen. Just with regard to the portfolio, NPLs are

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quite a lot and your ECL allowance, particularly for net loans and advances, has gone
down. 3% half-on-half.
Maybe just if you could just give a little bit - unpack a little bit more detail around what is
actually driving that and maybe Shayne, if you could just conceptually just provide yourview on what you think the quality of the book actually looks like at this point in the cyclewith a few more interest rate hikes on the horizon.
Shayne Elliott: Yes, so I’ll do that first. Thanks for the question. I mean again, without
stating the obvious, obviously we - the results of our charges, particularly on a collective
basis, are the result of the models that we have and the underlying assumptions we makearound our basic economic forecast, you know, in our downside scenario.
So I’m not suggesting that it’s a black box entirely and we just computer says andtherefore we adopt that number. It requires, obviously, a lot of testing and judgment but
the reality is that when you think about the scenarios we’re in today and the level ofprovisioning, it’s extraordinarily strong. I mean we’re sitting here with $4 billion worth ofcollective which is our base case.
Well let’s talk about the downside. It’s at almost $900 million higher than the downsideand when you go through the downside, it’s pretty grim. The downside needs to see
unemployment essentially double over the next year, house prices to fall materially andquite significant slowdown in the economy. So I’m not suggesting that it’s got zeroprobability, always really bad things can happen, but it’s pretty unlikely. So, you sit there
and go - anyway, we go through this pretty robustly, so I think it stacks up pretty wellwhen you look at actually what the underlying assumptions are.
But then I stand back, and I’ll get Kevin, our Chief Risk Officer, to talk a little bit moreeloquently about that, but if I stand back to your question and the quality of our balance
sheet, we have spent seven years de-risking our business and ensuring that we arebanking the right people and the right industries at the right time. I accept it’s hard for you
to see, and then I accept that you rely on a lot of statistical analysis to show that, butwhen you look at the quality of our large exposures, the quality of even within our homeloan business, and you look at the average credit score of the customers that we’re writing
home loans for today versus where we were in the past, and really importantly, versus ourpeers, you can see that we are writing very high-quality and higher quality business than
we’ve had for some time.

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I look at our small business cohort. Our small business cohort is again very different towhat our peers - for every dollar we lend, $1.80 in deposits, for every dollar we lend,
significantly well secured in general, either through premises and property or other assets.
So, I actually - I don’t take it for granted; we spend huge amounts of time ensuring that
we de-risk and get our business focus right but the quality of the book is strong.
One more anecdote on that. When you look at things like non-investment grade names ofany meaningful exposure, so anything more than $50 million, Mark Whelan, who looks
after Institutional, Kevin, our Chief Risk Officer and I literally are familiar with every single
one of those names. The benefits of simplifying our business and being able to see thosenames and those exposures on a spreadsheet and be able to not just rely on models I
think has given us a really, really strong book and our ability to manage it is certainly agreat benefit. Kevin, did you want to talk through the specific question?
Kevin Corbally: Shayne, I think that’s a pretty comprehensive but John, a couple ofthings I’d add. First of all, there’s a very rigorous process that we go through to determine
our provision outcomes. If I look initially at the individual provision level, you’re right tosay that something like mortgages, our 90 days past due are up on the half, they’re up 4
basis points, still substantially below where we were pre-COVID and also still well below a
number of our peers who have report recently would be the first thing I’d say.
Secondly, we actually look at credit cards, personal loans, and small business, which
historically have been a big contribution to individual provision outcome. Thosedelinquency levels are actually still falling. If you look at our mortgagee in possession
numbers, we’re down 80% on mortgagee in possession from where we were pre-COVID.
The actual results, therefore, that’s why they’re as low as they are on the IP side, and in
addition what I’d say to what Shayne said on the Institutional business, Institutional or
corporate more broadly, we have 90% of that corporate book is either investment grade or
it’s fully secured. So, a very different profile from what we had before in the book.
Then the other point I’d make on that is that sovereigns, financial institutions, andmortgages, if you go back to GFC days, they made up 52% of our book. Today that’s 72%,
so quite a big shift in the nature of the book, and they are very low default levels.
The final thing I’d say is under Australian accounting standards we need to set aside froma collective provision perspective essentially enough - to hold 12 months of coverage froma collective provisioning viewpoint. On that 12 months of coverage, we’re essentiallysaying if you look at our CP balance of $4.03 billion, that’s $2.2 billion above our base
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case, it’s over $900,000, as Shayne said, above a downside, a downside that says
effectively in the next 12 months that unemployment will almost double from where it istoday to 6.9%, that property prices will fall by 14%, and that Australia will be in arecession.
Given all of that, we think that the provisioning level that we’ve got is a prudent one but
it’s also an appropriate level when you reflect the quality of the book together with thebroader macroeconomic environment.
Farhan Faruqui: Can I just maybe help round that off a little bit, John, because I thinkboth Shayne and Kevin have covered it in detail. I think it’s important just to step backand just to make sure we understand while there has been a small step-up in impairment
half-on-half, overall for the full year we have remained pretty steady.
The fact that there has been a slight increase in the half on impairment has not beenreflected in provisions which talks to the quality of collateral and security coverage wehave on those names, and if you look at our IP for the year, if you ignored the write-backthat we’ve had in the last half and the half before that, there is no new IP or no increased
IP in the half as well. So, the quality of our portfolio is best reflected in the fact that our
individual provisions remain fairly stable and even on an impaired basis remain as historiclows.
John Storey:(UBS, Analyst) That’s great. I’m actually going to leave it there andgive other people opportunity for questions. Thanks very much.
Shayne Elliott: Thanks, John.
Operator: Your next question comes from Andrew Triggs with JP Morgan. Please go
ahead.
Andrew Triggs: (JP Morgan, Analyst) Thank you, good morning. Shayne, could I just ask- you made the comment a few times about the diversity of your portfolio leading to better
NIM outcomes. Just noting that we didn’t really see that this half but the underlying NIM
was down 7 basis points, that’s roughly the same as what we saw from NAB and Westpac.
In that context, I’m interested to know whether you’re disappointed with that outcome andfrom where you would sit, what would you put that down to?
Shayne Elliott: It’s a fair question, Andrew. Just to be clear, I don’t know that I did saythat our diversification would lead to better NIM outcomes, I meant get better outcomesoverall. When I think about the returns more broadly and the strength of our business inPage 25 of 47

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terms of revenue growth and the opportunities. I understand the question. No, I don’t
think I’m disappointed. I’m not disappointed with where we are. I think it’s very easy, and
I understand the need to compare and contrast to others but our business is different.
When we think about the Australian retail business, which is I guess where most people
are focused today when they’re talking about NIM, then wanting to compare us versus ourfriends. Let’s not forget our business is a lot smaller and different than them, and evensimple things like the way that some of our peers report their retail and commercial
business is different than ours.
For example, when we have all of our home loans sitting in retail whether they’re for retailcustomers or small business customers, some of our peers have those home loans sittingin their commercial bank, so it’s not necessarily a like-for-like comparison, but I’m notdisappointed with where we are. We have a different starting point, we have a different
strategy, we have a long-term view on how we’re going to create that competitive
advantage over the time.
Look, I’m the first to accept we start in a more difficult and more challenging position thanmany of our peers and that’s why we’re investing in our new platforms like ANZ Plus.
That’s where we are in terms of diversification. What’s really positive here though is thefact that our International businesses, at a time when Australian retail is under enormouscompetitive pressure, not just our business, the entire sector, which is driving greatoutcomes for customers, more difficult to operate, we have more levers to pull.
That’s what’s great about this business at ANZ; we’re able to see and allocate more capital
into our Institutional Bank or into New Zealand, and really drive returns. Because that’s
what we need to do at ANZ. We want to maximise our earning capacity for shareholders,by doing the right thing, by being purpose-driven and by driving good customer outcomes,
but it’s nice to have four businesses of meaningful scale to be able to flex and resource as
opposed to be committed to essentially just one like many of our peers.
Farhan Faruqui: Yes. I think just for that point of diversification, Andrew, the fact that wewere able to grow Institutional margins ex markets half-on-half, the fact that we were able
to preserve a very, very strong half in the Commercial NIM expansion from the first half
into the second half, the fact that we have been able to manage our New Zealand businessquite well in the context of the pressures and the macro environment in New Zealandallows us the ability to create some offsets to the pressure that we faced here.

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I think it’s also important to note that given - despite the fact that we’ve had the mortgage
growth we’ve had, our structural funding gap in Australia still is the lowest amongst ourpeers. The pressure from a going forward perspective in terms of our funding relative to
our peers is still lower, and we have flexibility around the Australian - the growth in
Institutional Australian PCM deposits, our commercial business which is 2:1 deposit toloans here in Australia, and the fact that we have varying sources in Australia Retail, plus
there’s obviously the new source for growth in deposits but also the fact that we use thirdparty deposits gives us flexibility. So, we have a lot of levers that we can continue to use
in order to manage margins as we go forward, and that’s where the diversification I thinkis really powerful.
Andrew Triggs: (JP Morgan, Analyst) Thank you, Farhan. Could I just ask a directquestion? Should we expect ANZ to grow above home loan system in the next half, andcould you maybe defend offering $3,000 cashbacks for first homebuyers in the context ofyour comment that’s it’s a really difficult and competitive home loan environment at the
moment?
Shayne Elliott: Yes, I can answer that. I don’t know. I don’t know that we - we don’t
target necessarily market share growth as the right thing to do. What we try to do is get
the balance right between attracting the right kind of customers - as I mentioned, we’revery conscious of - we look at the credit scores of the customers that we are onboarding in
our home loan business versus everybody else, and we’re pretty confident that we’re
attracting high-quality customers. Because we need to be lending responsibly, so that’s thefirst thing.
Secondly, we need to be able to do so at a return that is fair and decent for ourshareholders. Now, there’s lots of moving parts that go into that calculation in terms of thecost of funds, et cetera, but really importantly, the operational cost of supporting that andthat’s why we’ve invested really heavily in our processing capacity to ensure that themarginal cost of new loans is as low as it possibly can be. That’s why we’re excited about
things like ANZ Plus which will take that to a whole new level.
The cashback, look, I know there’s been lots of focus and I know it’s fun to write about,but the reality is the cashback on offer at ANZ at the moment is pretty tight in terms ofeligibility. It’s not a broad-brush offering. There is a part of the market, understandably,that really value that, particularly around first homebuyers, and we see it as a part of ourmarketing suite of options to be out there. Going to - your simple question was are we
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sitting here targeting growing above system just for the sake of it? No. Will there be times
where we grow a little bit more than system? Absolutely.
Now, as you know, part of it depends on what the system is and we don’t have full insight
into that. The pricing that we have out in the market today, whether it’s in our branches orwhether it’s through brokers, as of right now we don’t have perfect insight to where all of
our competition is. We don’t know precisely what discounts they’re offering; we don’t know
precisely what other specials they have on today. We put our best foot forward, which isbased on generating a fair and decent return, and the system will be what it will be, andthere’ll be times we’re above and there’ll be times we’re below.
Just to correct something you said, just to make sure we’re on the - our cashback is not$3,000, it’s $2,000, and as I said, the eligibility for that is quite tight, actually.
Andrew Triggs: (JP Morgan, Analyst) Thank you, Shayne.
Shayne Elliott: Thanks.
Operator: The next question comes from Jonathan Mott with Barrenjoey. Please go ahead.
Jonathan Mott: (Barrenjoey, Analyst) Thank you. I’ve got a question on the institutional
business, it’s now the biggest division, and we saw in the fourth quarter the margin - inthe whole half and also the fourth quarter, the margin has continued to expand.
Shayne, in the past we’ve talked a lot ab this and the rate benefit in that business and you
highlighted it wasn’t the absolute level of rates, it was more the shape of the yield curve,
and in recent times it looks like we’re hopefully getting towards the top of the global
interest rate cycle. The US 10-year - or the US yield curve is inverted, Australia is pretty
flat, so do you think the impact from here of rates and the outlook for the Institutional
margin is probably peaking at current levels?
Shayne Elliott: First of all, I stand by those comments. I think that’s true. Obviously,
there’s lots of factors in there, what’s driving this is also some mix issues, I’ll come to thatin a second. But broadly, you’re right. I think it’s a fair assumption to say who knows
precisely when we’re somewhere near the top of the rate cycle and I don’t know when theturning point will be, and so yield curve shapes are more likely to flatten and therefore
that will be a bit of a headwind on Institution on the Payments and Cash Management
margin.
Having said that, on the other side of it is that what you’re seeing in institutional is there’squite a significant shift towards more sort of operational balances through - the more Page 28 of 47

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when we talk about things like Transactive Global - when customers are signing up to use
Transactive Global, that’s really generating operating balances which are - have much
lower yield on them, and therefore lower costs for us and so there’s a mix issue here whichshould continue to be pretty supportive for Institutional.
Look, you can’t - if you go to page 30 and you look at the great progress that Institutional
have had - clearly, I’m not suggesting, and neither’s Farhan or Mark, that you should
extrapolate that line - no, but neither would you see that as sort of retracing back towhere it used to be. We think there is a - there is an underlying strength now in thatbusiness given the scope of the transactional deposits, et cetera, that should see
Institutional margins hold up pretty well.
The other thing I would say is actually, it’s the lending margins that have also been really
supportive in Institutional. That’s probably surprising to many. We’ve spent a lot of today
talking about lending margins and home loans in Australia which clearly are reallycompetitive. Institutional lending is always competitive but in the sector that we focus on
and our customer base - the world’s very best companies - we’ve actually been able to see
those lending margins maintained and actually increase in the fourth quarter. So, I’d say
overall margins should be more stable than not, Jonathan. But your broader point, you arecorrect that the shape of the curve is one of the drivers.
Farhan Faruqui: I think, just to add to that. I totally agree, Shayne, that the lending
margins have been exceptionally robust over the last 12 to 18 months, actually, reflecting
the customer base. But I think the other thing from a deposit standpoint, Jonathan, whichtalks to the benefits that are coming through the Institution numbers and volume andprocessing are actually quite substantial.
Because if you think about the institutional deposit base, the actual deposit beta is very
high in institutional because a lot of the deposits are actually contracted and are linked tothe base rate so you don’t actually get as much pickup from rates as you would get, say,in a retail business or in the commercial business because of the nature of the Institutional
deposits.
So, when I say that rates are supportive, they surely are, but that’s not where the big
increase is coming from. The fact that we’re growing volumes, we’re preserving margins sorry, we’re preserving customers and growing our share with the customers is really
what’s driving that outcome. So, as long as we can continue to do that, which is our focus,

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while there will be some moderation, et cetera, with the rates changing, the bulk of therates benefit actually - just passes through to the customers in Institutional.
Jonathan Mott: (Barrenjoey, Analyst) Thank you. Can I just ask another quick one? You
said that the trials for ANZ Plus mortgages are just going through now. When do you
expect that to be rolled out more generally, and when you do the rollout, is it effectively
going to be all new mortgages are written on the new platform which is a lot cheaper tooperate for a marginal mortgage going forward?
Shayne Elliott: Great question. The product is available today but only for eligible
customers, so what does that mean? So let me stand back. Over time - yes, over time and that won’t be in the next year or two. ANZ Plus will become the predominant channel
for home loans.
The reason it takes a few years is what we’ve started with them and the way we’ve built it
into it is truly digital so there’s a lot of stuff being written out there or people pretending to
be digital but what you’ll find is there’s still significant human intervention somewhere
along the way, mostly in the assessment or settlement process.
So, we’ve built it in a truly digital way. What that means for the customer - if you’reeligible - and what does eligible mean today? As of today, it’s pretty basic - single
borrower, no offset, PAYG, sort of less than 80% LVR and an ANZ Plus customer - soyou’re already with ANZ Plus, so as you can imagine, that’s pretty narrow today.
That person, what we’ve seen is - [we lie] - we’re doing that now - we’re offering that tocustomers - we can get you through from starting that application through to settlement because it’s refi only at this point - within 45 minutes - the entire process, right? So, we’re
there. What we’ve got to do is we’ve got to just expand the pipe slowly.
Our plan is to get over the next 12 months where the eligibility for that will be somewherearound 10% for the addressable market so we’re going to have joint accounts soon, we’ll
offer something to do with offsets early in the new - in 2024 - et cetera, et cetera. So,
we’ve got to build it out, Jonathan, in the way - as I say, at the moment, it’s offered - it’s
only on Android. We’ll add iOS in a couple of weeks’ time, and it’s offered through the Plus
platform itself.
Then, understandably, we need to have a broker offering for that and that is being built as
we speak. I’m not going to give you a timetable on that, but as you can imagine, that’s apretty important part of the offering as well. But one day - not next year and it won’t be
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the year after - it’ll be the predominant channel but certainly over the next couple of years
we’re going to expand that out as broadly as we can for obvious reasons.
We think it’s better for many customers - not all. Not everybody wants to be able to dotheir home loan on their phone. We want to expand it out as quickly as we can for the
obvious reasons - better for customers, far, far lower costs for us, and actually, we thinkbetter outcomes from a risk and responsible banking point of view as well.
Jonathan Mott: (Barrenjoey, Analyst) Thank you.
Operator: Your next question comes from Brendan Sproules with Citi, please go ahead.
Brendan Sproules:(Citi, Analyst) Hi. Good morning, team. I just have a couple ofquestions on the demand for debt. I was wondering if you could give some comments
around the demand for debt in the institutional Bank. Obviously, Shayne, you mentionedthat the margin from the lending side are actually reasonably strong. I’m just wondering
why you’re not seeing a faster growth there.
Also, secondly, in the commercial business, obviously you’re putting some moreinvestment there. You had some growth after a long period of flat lending in the second
half. I was just wondering what the outlook and the pipeline is in the SME business.
Shayne Elliott: Sure. Well, we’ll go straight to the experts on this. I’ll get Mark Whelan totalk about institutional and then I’ve got Clare to give you a bit of colour on commercial.
So, Mark, the demand for debt and institutional - what we’re seeing?
Mark Whelan: Yeah. Look, thanks Brendan. It’s slowed in the second half. I think you’veseen that across most of the numbers that have come out both here and also globally.
There’s definitely been a slowdown in appetite for new lending. What we have seen iscustomers more paying down some of the debt, not - and rather than rolling it over.
Having said that, I don’t - it’s not as significant shift. What we are seeing is customers justbeing a little bit more cautious and they are ready to invest, but I think that’s likely tocome once we’ve seen clarity around terminal rates globally and I think some of thegeopolitical issues that we’re seeing have meant that customers are just being cautious.
So I don’t think it’s a significant trend that we’ll see longer term, but I do think that you’ll
see customers remain cautious. The upside is that we are starting to see a bit of M&A
activity here. You are also seeing that little bit in the international markets and obviously,
in climate and sustainable type projects, that’s still growing. So it’s a bit of a mixed bag,Page 31 of 47

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but I think you’ll see still a little bit of pressure for the next six months or so. I do think it
will pick up later next year would be our full expectation.
One of the things I’d point to here, if you look at the Asian market and particularly in thelast 12 months, we’ve seen loan syndications down about 30%. So people are just taking a
step back here, but as I said, I would expect that will start to turn around maybe in six
months’ time.
Shayne Elliott: While Clare’s coming up to the podium, I’ll just also add I think again, I
don't want to overstate it Brendan, but it goes also to the quality of our customer base. I
mean the reality is, at the top end of our customer base, a lot of them are just sitting on
huge wads of cash still. So you know, they don’t have the same need for funding as they
have in the past and that will change as they start to be more assertive about investing
and I want to go back to what I said in my commentary, this is where I think ANZ sits in areally, really strong position.
What we are seeing from our largest institutional customers, they’re rethinking the world,
they’re rethinking supply chain, they’re rethinking where they want to invest. That was
already happening; the China Plus One and all that sort of stuff, but that’s acceleratingwith more risks geopolitically and guess what? We’re exactly where they want to be. Yes,
we have operations in places like India and we took our Board there earlier this year, ourIndia business is going extraordinarily well.
In a few weeks’ time, Mark and I are off to Vietnam. We will be celebrating 30 years in
Vietnam. Again, a little bit under the radar there, probably doesn’t get the same profile ofother places, but ANZ’s got a terrific franchise in Vietnam and more multinationals arebuilding, growing, investing in places like Vietnam and of course, Singapore as I mentioned
which is one our largest regional operations, goes from strength to strength.
So we’re seeing really good opportunity as those customers move capital and supply chain
trade flows around the region, we’re everywhere they need to be. But Clare, maybe a little
bit of insight on the commercial changes that we’re seeing.
Clare Morgan: Yeah, so what we’re seeing with Australian small to medium businesses iscertainly some softness in certain sectors and we’re certainly seeing smaller businesses
impacted by things like higher inflation, shortage of labour and lower consumer confidence.
That’s playing out in some of the sectors that you’d expect such as consumer discretionary
and retail, some hospitality and the like.

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That said, we are actually really positive on demand for lending across the economy
because we obviously are very focused on a much more diversified set of customers and
we are growing well in the industries where we think there is favourable outlook. So things
like agriculture, things like manufacturing, exporters and importers in target industries. So
that’s probably the real focus for us is targeted growth in favourable industries that we
think are going to have positive long-term outlook and so that’s certainly where we areseeing the growth.
I think the other thing that’s worth mentioning is that we are very focused on not just a
lending conversation with Australian businesses. We really want to have a conversation
with Australian businesses about whole of customer outcomes and that includes things
such as cash flow, but can be as broad as and hopefully, if you’ve seen through theresults, customer needs that might have relevance from an institutional productperspective or a retail product perspective. So we are really interested in having thatwhole of customer relationship going forward.
In the results, the lending numbers are probably a little bit understated as a result of someof the exits that we’ve made over the last year as well where we sold the investment
lending to Bendigo Bank as an example. So some of that is taken out from the growth
rates that you’ve seen there. So positively, we are seeing very strong work in the pipelineand very strong customer engagement and conversations with our bankers who are very
active in the market.
Shayne Elliott: Thanks Clare. Did you have a second question?
Brendan Sproules:(Citi, Analyst) Yes, I do, please. Just on the mortgage market. I

noticed in New Zealand that you’ve had - picked up growth in the second half. Could you
maybe contrast the pricing dynamic in the New Zealand mortgage market versus what wesee here in Australia?
Farhan Faruqui: So yeah, so thanks for that, Brendan. We saw a small increase. We had- if you recall, we had lost share in the market in the first half, so we recovered a little bitof that share in the second half, but I think there is a more moderation of competition in
the New Zealand market. In fact, we saw front book NIM actually improving during thesecond half from a very low base to be fair, but we saw it improving in the second half. So
New Zealand market dynamics are - just because of the fact that they’ve been ahead on
the tightening cycle are probably returning more than normal now than our Australianretail business.
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Brendan Sproules:(Citi, Analyst) Thank you.

Operator: Your next question comes from Victor German with Macquarie. Please, go
ahead.
Victor German: (Macquarie Group, Analyst) Thank you. I firstly just wanted to follow up
on John’s question. Maybe a slightly different angle. Given Institutional Bank has a smaller
proportion of its deposits that are hedged, presumably, it means that the benefit of higher
rates comes through quicker for that business. Given where rates are at the moment, it
looks like replicating portfolio capital should continue to provide 7, 8 basis points tailwind
to your margin in 2024.
As a result, particularly in the context of what you said earlier about diminished front-toback book gap on mortgages, do you continue to expect institutional margins tooutperform your other portfolios again in 2024?
Farhan Faruqui: So I think the first one - sorry, I didn’t get the second one, but...
Shayne Elliott: Did we expect institutional margins to outperform the rest of theportfolio?
Farhan Faruqui: Right, so I think on the - thanks, Victor. So the institutional deposits
actually don't have - we don't look at institutional deposits as part of the replicating
volumes. But if you look at the replicating portfolio in general, what I would say is that
we've had obviously continued benefit of the higher rates, but the shift to higher margindeposits has actually meant that the volume of replicating portfolio has actually comedown. Which is why we haven't seen as much benefit of replicating portfolio tailwinds inthe second half as you saw in the first half.
Having said that, if you look at our total replicating portfolio, the blended rate today
because of the long-term hedges that we have, is in the mid twos. So to think about thenext two years, you would imagine that as those tranches that we had invested let's say
three or five years ago are going to start coming back into reinvestment mode, we expectthat our portfolio, replicating portfolio blended with would move towards 4% over the next
12 to 24 months, and that benefit will start to come through in '24 and '25 numbers.
We expect that that should approach 4%, all things being held equal. I think the realvariable here is the mix of deposits in terms of how much moves more towards TDs awayfrom at-call. At this point, the only thing I can say to you is that it has slowed, but it's still
uncertain in terms of how that travels in the course of the next 6 to 12 months.
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Victor German: (Macquarie Group, Analyst) I appreciate that, but given those benefits
are still coming through, and as you said they predominantly benefit your retail Bank andcommercial Bank, that's the tailwind that those businesses have that institutional doesn't
have?
Farhan Faruqui: Yes.
Victor German: (Macquarie Group, Analyst) I'm just putting that into context, what doesthat mean for 2024 margins across different divisions?
Farhan Faruqui: I think what I would say is that from an Institutional - and you asked a
specific question around how we expect institutional deposit margins to behave next year,
look as I mentioned earlier as well, Victor, the Institutional deposits, because of the factthat they have had high deposit betas, as long as the rates stay up at the current levels
and we expect them to stay up at these levels for a longer period of time, we don't expect
anything materially to change in terms of Institutional deposits. It's more driven by how
much volume we have, and that's the key focus from a customer standpoint in terms of
growing the Institutional deposit revenues.
The lending margins are looking, as I said, look pretty stable, in fact we've seen an
expansion in lending margins this half. We don't expect that to reverse in the course of thenext half. I think the point that you were making and that Shayne was making earlier thenMark was making earlier, is that because we hadn't seen the Institutional lending bookgrow in the second half, you didn't see the benefit of that coming through into themargins. But as that starts to turn around, we will start to see those benefits coming
through as they continue to be at reasonably high margins.
So, it's a mixed story effectively in the sense that we expect lending margins outlook
reasonably stable to up, and we expect that the Institutional deposit margins won't haveany significant impact in the next 12 months, but it's a function of course of what happens
to the rate outlook and the macro outlook. Is that helpful, Victor?
Victor German: (Macquarie Group, Analyst) Yes, thank you, I might call up with you lateron that. My second question also on costs, and thank you very much for providing theadditional colour on your cost considerations for next year, but I think in the presentation
you suggested that you're expecting to see better or slight improvement on the cost
performance of 5% that you've seen in 2023.
What's the base that we should be looking at? Because obviously this year you had $170
million of restructuring charges, about $250 million of transaction remediation costs. When
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we're thinking about your growth going into next - your costs going to next year, are wethinking about $10.1 billion being your base? Or should we be thinking of $9.7 million andgrowing from that number?
Farhan Faruqui: So, I think we expect that, as I said, the investment spend is going to
be reasonably stable as we mentioned earlier, as well as the OpEx rate, Victor, so call it
stable to slightly down perhaps in the investment side.
As I said, wages and vendor costs remain - wages obviously we know they've gone
through now but vendor costs remain uncertain and we'll have to continue to manage that
as we go forward. On restructuring, as I said, largely we think more flattish to where we've
ended this year, so that's not going to be a big up or down outcome because we want tocontinue our focus on productivity and make sure that we manage our costs from thatperspective.
Remediation again is a smaller number now so it probably doesn't make a huge difference
year-on-year anyway, so overall I would say that there aren't the big items that arechanging year-on-year, but the challenge of course continues to be managing inflation andfinding productivity offsets to that, and that's where our focus is right now.
By the way, we didn't say that we expect the number to be lower than 5%, we just said
that the inflationary pressures might be a bit lower next year versus this year. Our focus isgoing to be to make sure that we try and improve on that as much as we can.
Victor German: (Macquarie Group, Analyst) Thank you for clarifying, thank you.
Operator: The next question comes from Matthew Wilson with Jefferies, please go ahead.
Matthew Wilson: (Jefferies, Analyst) Good morning team and thank you, hopefully you
can hear me okay?
Shayne Elliott: Yes.
Matthew Wilson: (Jefferies, Analyst) It appears we are early on in a credit cycle, andgiven what you've learnt through COVID with respect to offering hardship, I wonder if you
could disclose what percentage of your home loan book has been restructured, but iscurrently performing?
Farhan Faruqui: So, we actually have very low levels of restructuring, if we can get[Maile] to come and talk to this, or Kevin, but we would say that the restructuring that wasdone over the last 12 months, 55% of those restructured loans are now fully performing
and current.
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Shayne Elliott: I don't have the numbers, I'm just thinking Kevin, I don't think we haveit, we might have to get back to you on that one Matt, in terms that it's low, it's low.
Farhan Faruqui: It is very low.
Shayne Elliott: As I said, I mean I know it's not the same, I know it's not the same, but
the number of people on our books today in hardship, and again I accept it's not the sameas - it's 2,000 out of the million, so it's 0.2%.
Farhan Faruqui: It's 2,000 exactly, so the hardship numbers are very low, and as I said,
55% are current on repayments after coming out of hardship.
Matthew Wilson: (Jefferies, Analyst) That makes sense, and then just secondly with thespecial dividend, given there's no franking, what was the decision tree with respect to nothaving a buyback, albeit it would have been a small buyback, but it's better to reduceshare counts than pay a dividend when you've got no franking…
Shayne Elliott: Look I understand that, and better is a value judgment and I understandthe corporate finance theory. So two things, (1) it would have been small, but (2) I think
really we were conscious about retail shareholders. While lots of retail shareholders
theoretically benefit from a buyback, I think it's hard to - it doesn't really put any money intheir pockets. So, we were very mindful of that and mindful of the fact that for somemaybe it wasn't something they had expected. So, that was the view.
We absolutely, the Board had exactly that debate about weighing up different values of abuyback versus that, and came down on the side that cash in the hand is better here, allfactors considered and given the size, it was relatively modest. You can read anything intothat in - I certainly wouldn't want anybody to read anything into that as any indication of
the Board having changes its view around capital management and the importance of that,
it was a one-off.
Farhan Faruqui: Particularly when the fact that we have a potential further consideration
event once Suncorp transaction is finalised.
Matthew Wilson: (Jefferies, Analyst) Okay, that makes sense, thanks for that.
Shayne Elliott: Thank you.
Operator: The next question comes from Matt Dunger with Bank of America, please go
ahead.
Matt Dunger: (Bank of America, Analyst) Thank you, gentlemen. Just a question on the
net interest margin and the funding, you did $3 billion of pre-funding which based on my
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estimates, appears to be about a 2 basis point net interest margin drag. Can you confirm
that? Also, why did you feel the need to prefund so heavily, given relatively low level ofmaturities in FY24?
Farhan Faruqui: Well I'm not sure, Matt, how you got to the 2 basis points, are you
saying 2 basis point NIM drag in this half? The $3 billion of funding?
Matt Dunger: (Bank of America, Analyst) Yes, that's what it appears to be based on thefront book pricing of the debt issuance.
Farhan Faruqui: Okay, it's definitely not that much, but I'll check and come back to you.
Look I think our view was, on the overall funding, our view was that it's an uncertain
market ahead and we were getting strong access to liquidity and funding at this point, andwe wanted to make sure that we were prudent, and we basically prefunded some of the 24
funding needs.
Now remember there's a bunch of geopolitical events that are out there and obviously
given all of the uncertainties and the fact that we were going a bit later from a results
point of view this half, we wanted to make sure that we would be able to take advantageof the good investor support that we had in September. So, I think it was just more
prudent action rather than anything particularly different to what our approach has been in
the past.
Matt Dunger: (Bank of America, Analyst) Thank you very much.
Shayne Elliott: Do you have a second question, Matt?
Matt Dunger: (Bank of America, Analyst) No, that's all from me, thank you.
Operator: Next question comes from Richard Wiles with Morgan Stanley, please go ahead.
Richard Wiles: (Morgan Stanley, Analyst) Good morning, my first question relates to your
FY24 priorities, one of them is to further improve productivity. What's that actually mean?
Are there any financial targets linked to that priority? Does it mean you'll lower the cost to
income ratio? Does it mean you'll achieve a higher dollar value of cost savings? Could you
give us a bit more clarity on that priority please, Shayne?
Shayne Elliott: Sure, it means that we accept, like always, that we have to deliver morewith less. We understand the onus that in a more inflationary environment that the focus
on that only goes up. Since I've been CEO, we have focused really hard on productivity,and productivity doesn't just mean cost out. Anybody can take costs out, it's not that
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difficult to take costs out, you're going to have to do it well, make sure you don't break the
Bank or hurt customers in doing so.
So, what are we going to do? We've got to be as ruthless as we can around making sure
all of the $10 billion odd that we spend is allocated to generate the very, very best returns
it can. So, it means we'll be looking at things like how do we simplify our processes tomake things faster and cheaper and better for customers? It'll mean we'll consider about
where we allocate. We have 40,000 FTE, those people doing the absolute best that they
can in the right places at the right time. So, we think about the shape of our workforce.
It means that we'll be looking at things like our property strategy. We've been
consolidating property for a number of years, so you get the - is it about CTI? Not really, I
think CTI is sort of interesting and obviously it's an outcome as opposed to a target. I
mean we'd all love CTI to be lower, and New Zealand's a great example, operating at a CTIof 36%, we'd all like it if we could continue to improve that, and we do.
But I don't know that it's a very useful target in and of itself for an executive to drive
towards, because it will tend to mean that people do silly things potentially to get there.
So, it's about just a total focus on costs and getting value from every dollar that we spend.
I'm sorry I can't give you a more target, it's not about an absolute cost reduction either.
Those have a place in time where they're useful, we don't think that's the right thing to do.
What I can tell you, we spent time with the Board last week going through it, we have a
big program of work around productivity, sits at my Executive table, one of our Executives
is leading that in particular, along with Farhan, and we are doing it in a progressive way tomake sure that, as I say, we get value from every dollar that we spend.
Farhan Faruqui: I think, Richard, just to add to what Shayne has said and he's covered
the full breadth of the work that we're doing, but I think the important thing to think about
this, Richard, is that this is not hey let's get these five things done to deliver an outcome
for '24. We're looking at much bigger initiatives, enterprise-wide initiatives across theworld to find optimisation opportunities, whether it's through technology, or whether it's
through property, or whether it's through middle office, or whether it's through otherworkforce related activities. We want to make sure that we're building not for next year
but we're building for the next three years and longer.
So, it's also creating that continuous momentum around ensuring that we will manage theproductivity outcomes not just for this year but for the year after that and the year after

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that. I think that just makes it not a program of work, but it just makes it part of ourongoing focus from costs.
Shayne Elliott: Then without labouring the point, because it's a good question, you mightask well why's it on your priority list? Surely it's just BAU and that's what you guys do
every day, and to some extent that's true. But the reality is we need to sit and think of all
the things we're doing, what's the most important things we have to do over the next
year? That's what we tried to capture in that slide, and I think productivity has to be oneof those things. We are dealing with a more inflationary environment, we're already in the
middle of that.
So, we have to be able to focus on this, so it has gone up our priority list for all of myteam. The second thing is we're feeling much more capable of delivering on productivity
because we have four businesses in good shape and we are getting the benefits
increasingly of sharing more infrastructure. Whether that's technology infrastructure or theways of doing things. So, we want to double down on that and take that to a whole
different level.
Richard Wiles: (Morgan Stanley, Analyst) Okay thank you, and my second question
relates to ANZ Plus. On slide 10, you highlighted the cost to serve for ANZ Plus is 20% lessthan your legacy ANZ retail business. Does that mean you're driving the cost to serve inretail banking down? Or does the duplication of the two platforms at the moment mean theretail Bank cost to serve is still going up?
Shayne Elliott: I'm not sure I understand the question. Let me - I think so what we're
trying to do there is comparing contrasts, what we're colloquially calling ANZ Classic, ourmain business today, the business that everybody, you know, where you're familiar with,versus ANZ Plus. We said hey on a like-for-like basis, and again that one there cost toserve is talking about the variable costs associated with distribution et cetera. If you justlook at that cost, so it doesn't allocate things like a branch network, because I don't knowthat that is a variable cost.
You look at the variable cost, it says hey same product, same onboarding, getting acustomer, it is 20% cheaper today to serve a customer on the Plus platform, whether
that's helping them when something goes wrong, et cetera, versus what it is on the classic
platform. What we're suggesting is that that'll continue, that gap will continue to grow as
we get more and more scale.

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So, I don't know if that answered your question, but that's what I mean. The costs inClassic, if I will, so the main business, the costs to serve there are not going up, not at all.
Maile and the team have a pretty strong productivity focus there to ensure that, because
that's still where most of our customers have an ANZ experience, we want that to be agood experience, but we believe we continue to do that productively without necessarily
increasing the variable or the marginal cost of service within the traditional business.
It's just the fact that if you're a customer and your channel is digital and you use ANZ Plus,
there's many more self-service features in here than we have in Classic and many morethan in our competitors. That means that people look after themselves, they like it better,and therefore the cost of servicing them from our perspective is far, far lower, and really
importantly, generates a better NPS score in doing so, because customers have got more
control.
Richard Wiles: (Morgan Stanley, Analyst) Shayne, maybe just to clarify, if you didn't
have ANZ Plus, the costs wouldn't be lower at the moment in the retail Bank?
Shayne Elliott: I think that's broadly true, who's to say, Richard? It's a really goodquestion, it's a fair question. I'd say broadly no, I mean there might be other things thatare happening in the world that will move costs around in ANZ Classic. For example, thefact that people are using branches less and less, it's got nothing to do with ANZ Plus,that's just the reality, and even without Plus, the customers today are increasingly moving
their transactions onto our ANZ app, our traditional ANZ app.
You can see the data in there for example, 68% of deposit accounts now in retail are
opened digitally. So, that's already happening, so there is even within Classic, there is a
productivity agenda that's happening because customers are behaving and choosing tobehave differently. Plus just takes that to a whole new level. Or put it another way, just to
finish it and round this out, I don't know what the maths is but the cost of operating Plus iseven lower than the cost of operating - so the app on Plus, you know the digital
engagement, is lower than the digital only engagement on ANZ Classic. Hopefully thatmade sense.
Richard Wiles: (Morgan Stanley, Analyst) Okay, thanks Shayne.
Shayne Elliott: Thanks.
Operator: Your next question comes from Azib Khan with E&P, please go ahead.

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Azib Khan: (E&P, Analyst) Thanks very much. Shayne, you've expressed satisfaction withthe diversification that you now have in the business. Can I take that to mean that you're
not looking to change the current capital allocation in any meaningful way?
Shayne Elliott: That's a really interesting question. Depends on your timeframe, so notnecessarily in the short-term, but over the long-term, who can say? I think the point isthat we have options. What we've really tried to create here is optionality. Again maybe
this is helpful, maybe it's not, to some degree we're like a fund manager and we've got$70 billion of our shareholders' capital and we've got these four stocks in our portfolio.
First thing is we're an active investor so we need to make sure that the four stocks arehigh quality, and we've got that and there's still more to do, but we've got four highquality stocks. How we choose to then allocate capital between them will depend on thecircumstances that they find themselves in, the economic environment, where theopportunity is. Where we had the best opportunities for today.
What we've spent a lot of time talking about today in this result is hey, if you look backover the last 12 months, actually and prior, where a lot of that opportunity has been in our
institutional international network, because of our competitive advantage and payments
processing and currency. So, we've put more capital to work there. Now the good news
from your perspective is it doesn't need a lot of capital in order to generate benefits there.
But anyway, the question is, we have optionality. If I sit here today over the next year, it'sunlikely to change very much. Over the next three years it's probably unlikely to changevery much unless something in the environment changes a lot. But we feel pretty goodabout the balance that we have, but as I said, it gives us optionality.
Then the last point about it is of course the [knock] structure we've put in place is the nextstage of that optionality. Now at the moment almost nothing sits outside the Bank, so in
the non-bank there's almost nothing there, but that's another option for us in the future.
Our strategy has been to build flexibility and optionality into our business so that we havethe ability to flex. Look, I tell you what we do feel good about today.
Today is the absolute right time to have that optionality. To have choices. To be able toinvest in payment processing or international institutional or a New Zealand or our
Commercial Bank and not be a one-trick pony stuck in one business servicing only one
customer segment. So we feel good about the optionality. It’s our job to use that
optionality wisely over time.

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Azib Khan: (E&P, Analyst) Shayne, looking beyond the near-term and thinking about thestrategic capital allocation, where would you say you’re overweight or underweight today
from [inaudible].
Shayne Elliott: That’s a good - I think it’s another way of asking your first question but
fair enough. Look, if you could waive a magic wand today and you know, what - you’d love
to be able to put even more and it’s set - first of all, the capital demands of the businessare low but you’d love to put more into our processing businesses.
I mean these businesses are amazing. I mean we tried to give you a flavour of that today
and let’s not forget, those businesses are dealing with the world’s best financial institutions
and corporates. It’s our ability to service and provide cash management platforms,
payment platforms, currency platforms and to them, it's just a - it’s a terrific business.
High barriers to entry. Yes, you have to spend a lot on technology, you have to be really,
really good at what you’re doing. So you’d love to - we want to continue to grow those andwe’ve given you a lot of the data in here. I mean, these things are growing really, really
fast, right? High return and we want to put more into that and we will.
Second area, you’d love to put more capital into and we are, is our Commercial Bank inAustralia. I mean our Commercial Bank looks very different, as I mentioned, to our peers.
It’s a deposit-led strategy as opposed to a lending-led and our sector, if you look at within
the segments within Commercial, it looks again very differently to our peers. We’d love to
put more capital into that and we are doing those.
So those are the areas you want to put more into and the finally in retail, it’s not so muchabout putting more capital in, it’s about really re-allocating the capital that we have withinthat business and clearly that’s really the design around ANZ Plus. To move away from amore commoditised product-led strategy to a more financial wellbeing strategy on this sortof more ecosystem platform.
By the way, that is what we’re doing. There’s always a question of timing of how quickly
you can make those adjustments. We’re getting better at it but there’s - it’s going to takea long time to re-shape ANZ and I’m sitting here today feeling pretty good about how
we’ve re-shaped the business over the last seven years to be where it is today and we’ve
still got a long way to go.
I think the only other thing I would add to that is I don’t - capital allocation is really
important but it’s not like we - one of the challenges at the moment and it’s a goodchallenge to have, by the way, is all four businesses are good. Yes, okay, Retail has more
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challenges than some of the others today but you know, but it wasn’t that long ago that
institutional was the one that had challenges or New Zealand.
So the point about the flexibility is we have now four really good businesses and we - andwe’re not capital constrained. We showed that when we did our capital raising for the
Suncorp Bank acquisition, that our shareholders are supportive and if we want to be able
to invest organic capital or go to the market for capital growth, we know that that’s anoption.
So we’re not holding anybody back. My job is to make sure that all four were decent, highquality businesses to invest in and that’s what we’re talking about today.
Azib Khan: (E&P, Analyst) Just a second question on asset quality. There’s a notable
increase in institutional new impaireds in the second half. Is that driven by single nameexposures or is it more broad based?
Shayne Elliott: If you want, I’ll get Kevin to come up just to make sure we get thattechnically correct. Kevin?
Kevin Corbally: It’s a very small number of individual customers but what I would say isthat we are very well secured in those names.
Shayne Elliott: Yes.
Azib Khan: (E&P, Analyst) Thank you.
Shayne Elliott: Thank you. Next question.
Operator: Next question comes from Brian Johnson with MST Marquee. Please, go ahead.
Brian Johnson: (MST Marquee, Analyst) Thank you very much. Thanks for theopportunity to ask a question and Shayne, I think it should be widely acknowledged thateven though the share price mightn’t look real flash today, you certainly haveoutperformed your peers over the year to date. The first…
Shayne Elliott: Thank you.
Brian Johnson: (MST Marquee, Analyst) The first question I had is just when we have alook on page 33 of the 4E, we can see that the ECL provisioning to the base case is 45.9%,
the downside is 41.2% and the severe downside is 12.9%. Just intuitively, that looks likean incredible level of precision relative to your peers. Can we get a feeling how you set
those weightings and then as a subset of that, if I have a look on page 89, I can see that

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ANZ is the only Bank where APRA are actually taking an expected loss deduction over andabove the eligible provisions of [270 to]...
Shayne Elliott: Yes.
Brian Johnson: (MST Marquee, Analyst) So can we just get a feeling on the weighting
and how we should be thinking about the fact that APRA is saying relative to…
Farhan Faruqui: So I…
Brian Johnson: (MST Marquee, Analyst) …your peers, you don’t seem to be asprovisioned as well.
Shayne Elliott: Yes. Very good.
Farhan Faruqui: So Brian, I’ll take the first question and I’ll ask Kevin to add to thesecond one and also great to hear from you again, Brian. I think just on the collective
provisions, it is - it does sound very specific but what we’ve tried to do is actually think
across our geographies and our businesses to try and understand how we should consider
the severe case scenario because the severe case scenario is not just applicable toAustralia, it’s also applicable to our international geographies and to our New Zealandgeography.
As we thought about the environment globally today, we felt in that the international
weighting towards the severe scenario shouldn’t really change from what we had in thelast half given everything that’s happening from a geopolitical perspective globally but we
did reduce the weighting of New Zealand and Australia to just over 12.5% so that the mix
then created the outcome which as the 12.9%. So it wasn’t designed to create a specificoutcome, it was just the mix shift between international, New Zealand and Australia that
arrived at that outcome.
Shayne Elliott: Yes, so it’s an outcome of our diversification again.
Farhan Faruqui: Yes. Yes.
Shayne Elliott: Kevin, do you want to talk about the second one?
Kevin Corbally: Yes, I will come back to you on that but what I would say is, APRA don’t
actually set the CP levels. That’s accounting standards and us but I will come back to youon the reconciliation. Yes.
Brian Johnson: (MST Marquee, Analyst) Okay.
Shayne Elliott: Thank you.
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Brian Johnson: (MST Marquee, Analyst) Okay, so looking forward to the answer on that
one. Just the other one, Shayne. If I have a look on slide 34 in the slide deck, you say thatyou’ve re-allocated or re-prioritised some of the investment spend.
Shayne Elliott: Yes.
Brian Johnson: (MST Marquee, Analyst) Could we get a feel exactly what you’ve done
there?
Farhan Faruqui: So you’re looking at slide 34 or…
Brian Johnson: (MST Marquee, Analyst) Slide 34.
Farhan Faruqui: Oh, yes. Okay. No, so that reprioritisation is largely refers to, Brian, thefact that we’ve had a reduction in some of our regulatory programs that sort of came off in’23. So notably, things like BS11 which I know, Brian, you’ve followed for a long, longtime.
As some of those have come to a conclusion or some of the fact - some of the incremental
progress that we’ve had on things like capital reforms et cetera, it’s part of that reprioritisation. So they’ve actually - we’ve been able to take our investment spend slightly
down but then reprioritise that to growth and productivity which is now sitting at 62%.
So it’s just more balancing those things but I think the other thing that we’ve done far
more and continue to do better every year, is that we’re being also very thoughtful aroundwhat we prioritise in terms of investment spending and very much aligned to some of the’24 priorities that you’ve seen with Shayne, we want to make sure that everything that weare doing is creating value and is aligned to our most important strategic priorities. So it isa - the bulk of it is the shift away from reg and compliance as programs have come off,
Brian.
Brian Johnson: (MST Marquee, Analyst) So it’s more that you’ve got some flex to focus
on…
Farhan Faruqui: Yes, correct.
Brian Johnson: (MST Marquee, Analyst) …productivity as opposed to spend on reg?
Farhan Faruqui: Exactly. Correct.
Brian Johnson: (MST Marquee, Analyst) Okay, thank you very much. Thank you.
Shayne Elliott: Thanks. Thanks, Brian. Thank you.
Operator: There are no further questions at this time. I’ll now hand back to Jill.
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Jill Campbell: Thanks. Thanks, Rachel and thanks everyone. Obviously the Investor
Relations Team and others are around all afternoon if there was anything you suddenly
think about but thank you so much for joining us today.
End of Transcript

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