Australia and New Zealand Banking Group Limited
ABN 11 005 357 522

Half Year
31 March 2020

Consolidated Financial Report
Dividend Announcement
and Appendix 4D

The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4D of the Australian Securities
Exchange (ASX) Listing Rules. It should be read in conjunction with ANZ’s 2019 Annual Report, and is lodged with the ASX under listing rule
4.2A.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Name of Company:

APPENDIX 4D

Australia and New Zealand Banking Group Limited
ABN 11 005 357 522

Report for the half year ended 31 March 2020

Operating Results1

Statutory operating income from continuing operations



-4%

to

8,893

Statutory profit attributable to shareholders



-51%

to

1,545

Cash profit2



-62%

to

1,323

Cash profit from continuing operations2



-60%

to

1,413

AUD million



Dividends

Cents

Proposed interim dividendFrankedperamountshare

per share

TBD3

TBD3

Record date for determining entitlements to the proposed 2020 interim dividend

TBD3

Payment date for the proposed 2020 interim dividend

TBD3

Dividends
Australia and New Zealand Banking Group Limited (ANZ), with consideration to the current uncertainties in the economic outlook and the letter issued by
the Australian Prudential Regulation Authority (APRA) to all Authorised Deposit Taking Institutions (ADIs) on 7 April 2020, on capital management andthe ongoing Coronavirus (COVID-19) pandemic, has deferred the decision on the payment of a 2020 interim dividend until the economic outlook isclearer. Decisions in relation to the Dividend Reinvestment Plan and Bonus Option Plan will also be made at that time as applicable.
The Board will continue to deliberate and an update will be provided at the August 2020 market update.

1
2

3

Unless otherwise noted, all comparisons are to the half year ended 31 March 2019.
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the core business activities of the Group. The non-core
items are calculated consistently period on period so as not to discriminate between positive and negative adjustments, and fall into one of the three categories: gains or losses includedin earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with the core operations of the Group; treasury shares, revaluation of policy
liabilities, economic hedging and similar accounting items that represent timing differences that will reverse through earnings in the future; and accounting reclassifications between
individual line items that do not impact reported results, such as credit risk on impaired derivatives. Cash profit is not a measure of cash flow or profit determined on a cash basis. The net
after tax adjustment was a reduction to statutory profit of $222 million (all attributable to continuing operations) made up of several items. Refer pages 71 to 75 for further details.
The decision on the payment of a 2020 interim dividend has been deferred until the economic outlook is clearer and an update will be provided at the August 2020 market update.

2

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDABN 11 005 357 522

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4D
Half year ended 31 March 2020

CONTENTS

PAGE

Disclosure Summary5

Summary

7

Group Results

19

Divisional Results

47

Profit Reconciliation

71

Condensed Consolidated Financial Statements

77

Supplementary Information

127

Definitions

139

ASX Appendix 4D Cross Reference Index

142

Alphabetical Index

143

This Consolidated Financial Report, Dividend Announcement and Appendix 4D has been prepared for Australia and New Zealand Banking Group Limited(the “Company” or “Parent Entity”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “the consolidated entity”,“the Bank”, “us”, “we” or “our”.
All amounts are in Australian dollars unless otherwise stated. The Company has a formally constituted Audit Committee of the Board of Directors. The
Condensed Consolidated Financial Statements were approved by resolution of a Committee of the Board of Directors on 29 April 2020.
When used in this Results Announcement the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as
they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on theseforward-looking statements, which speak only as of the date hereof. ANZ does not undertake any obligation to publicly release the result of any revisions
to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

3

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDABN 11 005 357 522

This page has been left blank intentionally

4

DISCLOSURE SUMMARY
SUMMARY OF 2020 HALF YEAR RESULTS AND ASSOCIATED DISCLOSURE MATERIALSThe following disclosure items were lodged separately with the ASX and NZX and can be accessed via the ANZ Shareholder Centre on the Groupwebsite http://www.shareholder.anz.com within the disclosures for 2020 Half Year Results.

Consolidated Financial Report, Dividend Announcement and Appendix 4D

Half Year Results Investor Discussion PackNews Release

APS 330 Pillar III Disclosure as at 31 March 2020

Key Financial Data Summary

United Kingdom Disclosure and Transparency Rules Submission

5

DISCLOSURE SUMMARY
This page has been left blank intentionally

6

SUMMARYCONTENTS

Page

Guide to Half Year Results

8

Statutory Profit Results

9Cash Profit Results

10

Financial Performance Summary – Total and continuing operations

11

Key Balance Sheet Metrics

12

Large/Notable Items – continuing operations

13

Full Time Equivalent Staff

17

Other Non-Financial Information

17

7

SUMMARY
Guide to Half Year Results
CORONAVIRUS (COVID-19)
The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of these Condensed Consolidated Financial Statements.
While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses where the Group
recognised a credit impairment charge of $1.7bn pre-tax in the March 2020 half, and the fair value measurement and recoverable amount assessmentsof non-financial assets where the Group recognised an impairment loss of $815 million in respect of two of the Group’s Asian associate investments. For
further details of these estimation uncertainties refer to Note 1 of the Condensed Consolidated Financial Statements
ACCOUNTING STANDARDS ADOPTED
During the period, the Group adopted AASB 16 Leases (AASB 16) and applied a modified retrospective transition approach in recognising all leases(except for leases of low value assets and short term leases) on the balance sheet based on the present value of remaining lease payments as of 1
October 2019. Consequently on 1 October 2019 the Group recognised an increase in lease liabilities of $1.7 billion, a right-of-use lease asset of $1.6
billion, an increase in deferred tax assets of $37 million and a net reduction to opening retained earnings of $88 million. For further details on key
requirements and impacts of the changes refer to Note 1 of the Condensed Consolidated Financial Statements.
The Group early adopted AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform from 1 October 2019. The
standard modifies certain hedge accounting requirements to provide relief from the potential effects of the uncertainty caused by interest rate benchmark
reform.
NON-IFRS INFORMATION
Statutory profit is prepared in accordance with recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). The Group provides additional measures of performance in the Consolidated Financial Report &Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian
Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when presenting this information.
Cash Profit
Cash profit, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers toassess Group and Divisional performance against prior periods and against peer institutions. The adjustments made in arriving at cash profit are included
in statutory profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cashprofit is not subject to review by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been
determined on a consistent basis across each period presented.
Adjustments between statutory profit and cash profit - To calculate cash profit, the Group excludes non-core items from statutory profit. Refer topages 71 to 75 for adjustments between statutory and cash profit.



Large/Notable items within cash profit - The Group’s cash profit result from continuing operations includes a number of items collectively referred
to as large/notable items. While these items form part of cash profit, given their nature and significance, they have been presented separately withcomparative information, where relevant, to provide transparency and aid comparison. Refer to pages 13 to 16 for details of large/notable items.

DISCONTINUED OPERATIONS
The financial results of the divested Wealth Australia businesses and associated Group reclassification and consolidation impacts are treated as
discontinued operations from a financial reporting perspective. The Group Income Statement and Statement of Comprehensive Income show
discontinued operations separately from continuing operations in a separate line item ‘Profit/(Loss) from discontinued operations’.
Sale to IOOF Holdings Limited (IOOF)
In October 2017, the Group announced it had agreed to sell its OnePath pensions and investments (OnePath P&I) business and Aligned Dealer
Groups (ADGs) businesses to IOOF. The sale of the ADG business completed on 1 October 2018 and the OnePath P&I business completed on 31
January 2020.

Sale to Zurich Financial Services Australia (Zurich)
In December 2017, the Group announced it had agreed to sell its life insurance business to Zurich and the transaction completed on 31 May 2019.

Included in the ‘Cash loss from discontinued operations’ is:

A $16 million loss on disposal ($11 million loss after tax) was recognised in the March 2020 half attributable to sale completion costs. The
September 2019 half included a $23 million loss ($81 million loss after tax) attributable to sale related adjustments and write-downs, thereversal of the life-to-date cash profit adjustments on the revaluation of policy liabilities sold to Zurich, partially offset by the recycling on salecompletion of gains previously deferred in equity reserves; andCustomer remediation which includes provisions for expected refunds to customers and related remediation costs associated withinappropriate advice or services not provided in the pensions and investments and life insurance businesses, as follows:
Half Year

Customer remediation (pre-tax)

Mar 20$M
124

Sep 19$M
166

Mar 19$M
75

Customer remediation (post-tax)

94

154

53

8

SUMMARY
Statutory Profit Results
Half Year

Movement

Net interest income

Mar 20$M
7,222

Sep 19$M
7,040

Mar 19$M
7,299

Mar 20Mar 20v. Sep 19 v. Mar 19
3%-1%

Other operating income

1,671

2,452

1,994

-32%

-16%

Operating income

8,893

9,492

9,293

-6%

-4%

Operating expenses(4,605)(4,706)(4,365)-2%

5%Profit before credit impairment and income tax

4,288

4,786

4,928

-10%

-13%

Credit impairment charge(1,674)

(402)

(392)

large

large

Profit before income tax

2,614

4,384

4,536

-40%

-42%

Income tax expense(978)(1,325)(1,284)

-26%

-24%

(1)

(6)

(9)

-83%

-89%

1,635

3,053

3,243

-46%

-50%

(90)

(273)

(70)

-67%

29%

1,545

2,780

3,173

-44%

-51%

Mar 20v. Mar 19
-51%
-52%

Non-controlling interests
Profit attributable to shareholders of the Company from continuing operations
Profit/(Loss) from discontinued operations
Profit attributable to shareholders of the Company

Earnings Per Ordinary Share (cents)

Half Year

Basic
DilutedMovement

Reference
Page
96

Mar 2054.6

Sep 1998.3

Mar 19111.7

Mar 20v. Sep 19
-44%

96

51.5

94.7

106.4

-46%

Half Year
Reference
Page

Mar 20

Sep 19- fully franked1,2,3

95

TBD

N/A

80

- partially franked1

95

TBD

N/A

N/A
N/A

Mar 19Ordinary Share Dividends (cents)
Interim

Final (partially franked)3,4

95

N/A

80

Total

95

TBD

80

80

Ordinary share dividend payout ratio5

95

TBD

81.6%

71.4%

Profitability Ratios
Return on average ordinary shareholders' equity6

5.1%

9.3%

10.8%

Return on average assets7

0.30%

0.56%

0.65%

Net interest margin

1.69%

1.72%

1.79%

Net interest income to average credit RWAs7

3.96%

4.03%

4.23%

Efficiency Ratios
Operating expenses to operating income

53.8%

51.8%

48.6%

Operating expenses to average assets7

0.92%

1.00%

0.94%

626

398

379

1,048

4

13

Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M)
Collectively assessed credit impairment charge/(release) ($M)
Total credit impairment charge ($M)

102

1,674

402

392

Individually assessed credit impairment charge as a % of average gross loans and advances7,8

0.20%

0.13%

0.12%

Total credit impairment charge as a % of average gross loans and advances7,8

0.53%

0.13%

0.13%

1.

The decision on the payment of a 2020 interim dividend has been deferred until the economic outlook is clearer and an update will be provided at the August 2020 market update.
Fully franked for Australian tax purposes (30% tax rate) for the 2019 interim dividend.
3. Carry New Zealand imputation credits of NZD 9 cents for the 2019 interim and final dividend.
4. Partially franked at 70% for Australian tax purposes (30% tax rate).
5. The dividend payout ratio for the March 2020 half will be determined when the decision on the 2020 interim dividend has been made. The dividend payout ratio for the September 2019 halfand March 2019 half are calculated using the 2019 final and 2019 interim dividends respectively.
6. Average ordinary shareholders’ equity excludes non-controlling interests.
7. Average assets, average gross loans and advances and average credit RWAs include assets held for sale.
8. Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
2.

9

SUMMARY
Cash Profit Results1
Half Year

Movement

Net interest income

Mar 20$M
7,222

Sep 19$M
7,040

Mar 19$M
7,299

Mar 20v. Sep 19
3%

Mar 20v. Mar 19-1%

Other operating income

1,357

2,243

2,447

-40%

-45%

Operating income

8,579

9,283

9,746

-8%

-12%

Operating expenses(4,605)(4,706)(4,365)-2%

5%Profit before credit impairment and income tax

3,974

4,577

5,381

-13%

-26%

Credit impairment charge(1,674)

(402)

(393)

large

large

Profit before income tax

2,300

4,175

4,988

-45%

-54%

Income tax expense(886)(1,263)(1,415)

-30%

-37%

(1)

(6)

(9)

-83%

-89%

1,413

2,906

3,564

-51%

-60%

(90)

(259)

(50)

-65%

80%

1,323

2,647

3,514

-50%

-62%

Mar 20v. Mar 19
-62%
-62%

Non-controlling interests
Cash profit from continuing operations
Cash profit/(loss) from discontinued operations
Cash profit

Earnings Per Ordinary Share (cents)

Half Year

Basic
DilutedMovement

Mar 2046.7

Sep 1993.6

Mar 19123.0

Mar 20v. Sep 19
-50%

44.7

90.3

116.8

-50%

Half Year
Reference
Page
Ordinary Share Dividends
Ordinary share dividend payout ratio2
Profitability Ratios
Return on average ordinary shareholders' equity3

Mar 20

Sep 19Mar 19

TBD

85.7%

64.5%

4.4%

8.9%

11.9%

Return on average assets4

0.26%

0.53%

0.72%

Net interest margin

1.69%

1.72%

1.79%

Net interest income to average credit RWAs4

3.96%

4.03%

4.23%

Efficiency Ratios
Operating expenses to operating income

55.2%

52.9%

46.4%

Operating expenses to average assets4

0.92%

1.00%

0.94%

380

Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M)

29

626

398

Collectively assessed credit impairment charge/(release) ($M)

29

1,048

4

13

Total credit impairment charge ($M)

29

1,674

402

393

Individually assessed credit impairment charge as a % of average gross loans and advances4,5

0.20%

0.13%

0.12%

Total credit impairment charge as a % of average gross loans and advances4,5

0.53%

0.13%

0.13%

Cash Profit/(Loss) By Division

Half Year

Australia Retail and Commercial

Movement

Mar 20$M
1,214

Sep 19$M
1,492

Mar 19$M
1,703

Mar 20v. Sep 19-19%

Mar 20v. Mar 19-29%

Institutional

610

816

1,012

-25%

-40%

New Zealand

567

646

753

-12%

-25%

Pacific

20

26

33

-23%

-39%

(998)

(74)

63

large

large

TSO and Group Centre
Discontinued Operations
Cash profit
1.

(90)

(259)

(50)

-65%

80%

1,323

2,647

3,514

-50%

-62%

Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the results of the core business activities of the Group. Refer to pages 71 to
75 for the reconciliation between statutory and cash profit. Refer to pages 13 to 16 for information on large/notable items included in continuing cash profit.
The dividend payout ratio for the March 2020 half will be determined when the decision on the 2020 interim dividend has been made. The dividend payout ratio for the September 2019 halfand March 2019 half are calculated using the 2019 final and 2019 interim dividends respectively.
3. Average ordinary shareholders’ equity excludes non-controlling interests.
4. Average assets, average gross loans and advances and average credit RWAs include assets held for sale.
5. Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
2.

10

SUMMARY
Financial Performance Summary – Total and continuing operations
For financial reporting purposes the results of discontinued operations are shown in a separate line item ‘Profit/(Loss) from discontinued operations’. In the table below, Total cash profit - inclusive of discontinued operations and Cashprofit - continuing operations are shown. For the purpose of understanding the impact of discontinued operations across various Income Statement categories, Total cash profit - inclusive of discontinued operations is presented such thateach Income Statement line item is inclusive of discontinued operations.

Total cash profit - inclusive of discontinued
operations

Movement

Cash profit - continuing operations

Movement

Net interest income

Mar 20$M
7,217

Sep 19$M
7,021

Mar 19$M
7,242

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
0%

Mar 20$M
7,222

Sep 19$M
7,040

Mar 19$M
7,299

Mar 20v. Sep 19
3%

Mar 20v. Mar 19-1%

Other operating income

1,349

2,299

2,651

-41%

-49%

1,357

2,243

2,447

-40%

-45%

Operating income

8,566

9,320

9,893

-8%

-13%

8,579

9,283

9,746

-8%

-12%

Operating expenses(4,725)(4,934)(4,586)-4%

3%(4,605)(4,706)(4,365)-2%

5%Profit before credit impairment and income tax

3,841

4,386

5,307

-12%

-28%

3,974

4,577

5,381

-13%

-26%

Credit impairment charge(1,674)

(402)

(392)

316%

327%

(1,674)

(402)

(393)

316%

326%

Profit before income tax

2,167

3,984

4,915

-46%

-56%

2,300

4,175

4,988

-45%

-54%

Income tax expense(843)(1,331)(1,392)

-37%

-39%

(886)

(1,263)(1,415)

-30%

-37%

(1)

(6)

(9)

-83%

-89%

(1)

(6)

(9)

-83%

-89%

Non-controlling interests
Cash Profit

1,323

2,647

3,514

-50%

-62%

1,413

2,906

3,564

-51%

-60%

Average interest earning assets

856,652

814,831

811,5285%

6%

856,652

814,831

811,528

5%

6%

Average deposits and other borrowings

669,342

642,448

635,8224%

5%669,342

642,448

635,822

4%

5%

Funds under management1

35,66584,171

83,164-58%-57%

35,66535,75433,8160%

5%Earnings per share (basic)

46.7

93.6

123.0

-50%

-62%

49.9

102.7

124.8

-51%

-60%

Ordinary share dividend payout ratio2

TBD

86%

65%

TBD

78.0%

63.6%

1%

1%

Profitability Ratios
Return on average ordinary shareholders' equity3

4.4%

8.9%

11.9%

4.7%

9.8%

12.0%

Return on average assets

0.26%

0.53%

0.72%

0.28%

0.59%

0.77%

Net interest margin

1.68%

1.72%

1.79%

1.69%

1.72%

1.80%

Net interest income to average credit RWAs

3.96%

4.03%

4.23%

3.96%

4.04%

4.26%

55.2%

52.9%

46.4%

53.7%

50.7%

44.8%

0.92%

1.00%

0.94%

0.90%

0.96%

0.94%

38,93939,06039,35937,83437,58837,364

Efficiency Ratios
Operating expenses to operating income
Operating expenses to average assets
FTE4

1.
2.
3.
4.

0%

-1%

Funds under management for continuing operations relates to retained wealth management operations in the New Zealand division and Australia Retail and Commercial division.
The dividend payout ratio for the March 2020 half will be determined when the decision on the 2020 interim dividend has been made. The dividend payout ratio for the September 2019 half and March 2019 half are calculated using the 2019 final and 2019 interim dividends respectively.
Average ordinary shareholders’ equity excludes non-controlling interests.
The discontinued operations FTE is based on an estimate of the staff working in the divested businesses using an allocation methodology and includes staff retained in the Group working on transitioning the sold businesses to the purchasers.

11

SUMMARY
Key Balance Sheet Metrics1
As at

Movement

Reference
Page

Mar 20

Sep 19Mar 19- APRA Basel 3

42

10.8%

11.4%

11.5%

- Internationally Comparable Basel 32

42

15.5%

16.4%

16.9%

Mar 20v. Sep 19

Mar 20v. Mar 19

Capital Management
Common Equity Tier 1 (Level 2)

Credit risk weighted assets ($B)

130

386.0

358.1

345.5

8%

12%

Total risk weighted assets ($B)

42

449.0

417.0

396.3

8%

13%

APRA Leverage Ratio

44

5.0%

5.6%

5.4%

Balance Sheet: Key Items
Gross loans and advances ($B)

661.3

618.8

613.8

7%

8%

Net loans and advances ($B)

656.6

615.3

610.2

7%

8%

1,150.0

981.1

980.3

17%

17%

Customer deposits ($B)

566.5

511.8

493.4

11%

15%

Total equity ($B)

61.4

60.8

60.0

1%

2%

Mar 20v. Mar 19
2%
3%

Total assets ($B)

As at
Liquidity Risk
Liquidity Coverage Ratio (half year average)

Movement

Reference
Page
40

Mar 20139%

Sep 19143%

Mar 19137%

Mar 20v. Sep 19
-4%

41

118%

116%

115%

2%

Mar 20v. Mar 19

Net Stable Funding Ratio

As at

Movement

Reference
Page

Mar 20

Sep 19Mar 19Mar 20v. Sep 19

33

2,599

2,029

2,128

28%

22%

0.39%

0.33%

0.35%

1,506

1,215

1,237

24%

22%

2.5%

2.0%

2.0%
34%

23%

33%

33%

Impaired Assets
Gross impaired assets ($M)
Gross impaired assets as a % of gross loans and advances
Net impaired assets ($M)

33

Net impaired assets as a % of shareholders' equity
Individually assessed provision ($M)

31

Individually assessed provision as a % of gross impaired assets
Collectively assessed provision ($M)

31Collectively assessed provision as a % of credit risk weighted assets

1,093

814

891

42.1%

40.1%

41.9%

4,501

3,376

3,378

1.17%

0.94%

0.98%

Net Tangible Assets
Net tangible assets attributable to ordinary shareholders ($B)3

56.4

55.5

53.7

2%

5%

Net tangible assets per ordinary share ($)

19.89

19.59

18.94

2%

5%

Net Loans And Advances By Division (Excluding Held for Sale)
Australia Retail and Commercial

Mar 20$B
329.8

Sep 19$B
331.9

Mar 19$B
336.6

Mar 20v. Sep 19-1%

Mar 20v. Mar 19-2%

Institutional4

199.4

164.5

151.7

21%

31%

New Zealand5

125.2

116.7

118.8

7%

5%

As at

Pacific
TSO and Group Centre
Net loans and advances by division
1.

Movement

2.2

2.1

2.1

5%

5%

-

0.1

0.1

-100%

-100%

656.6

615.3

609.3

7%

8%

Balance Sheet amounts and metrics include assets and liabilities held for sale unless otherwise stated.
See page 43 for further details regarding the differences between APRA Basel 3 and Internationally Comparable Basel 3 standards.
3. Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets.
4. Excluding the impact of foreign currency translation, the Institutional division Net loans and advances increased 17% compared to September 2019 and 25% compared to March 2019.
5. Excluding the impact of foreign currency translation, the New Zealand division Net loans and advances increased 2% compared to September 2019 and 4% compared to March 2019.
2.

12

SUMMARY
Large/Notable Items – continuing operations
Large/notable items included in cash profit from continuing operations are described below.
Divestment impacts
No divestments were announced or completed in the March 2020 half.
In the September 2019 half and March 2019 half, the Group completed the following divestments. As these divestments did not qualify as discontinued
operations under accounting standards they form part of continuing operations. The financial impacts from these divestments are summarised below
including the business results for those divestments that have completed:

Cash Profit Impact
Paymark

Gain/(Loss) on sale from divestments

Completed divestment business results

Half Year

Half Year

Sep 19$M-

Mar 19$M
37

Sep 19$M-

Mar 19$M
4

Cambodia JV

10

-

10

21

OPL NZ

7

197

-

14

PNG Retail, Commercial and SME

1

-

4

5

Profit/(Loss) before income tax

18

234

14

44

-

(47)

(7)

(19)

18

187

7

25

Income tax benefit/(expense) and non-controlling interests
Cash profit/(loss) from continuing operations

Paymark Limited (Paymark)In January 2018, the Group entered into an agreement to sell its 25% shareholding in Paymark Limited to Ingenico Group. The transaction wascompleted on 11 January 2019. The Group recognised a net gain on sale of $37 million during the March 2019 half.

 ANZ Royal Bank (Cambodia) Ltd (Cambodia JV)In May 2018, the Group announced it had reached an agreement to sell its 55% stake in Cambodia JV to J Trust, a Japanese diversified financial
holding company. The transaction completed on 19 August 2019 and the Group recognised a $10 million net gain on sale, comprising a $30 million
release from foreign currency translation reserve, partially offset by a $17 million dividend withholding tax associated with the sale completion and $3
million of asset write-offs in the September 2019 half.
 OnePath Life (NZ) Ltd (OPL NZ)In May 2018, the Group announced that it had agreed to sell OPL NZ to Cigna Corporation. The transaction completed on 30 November 2018 and
the Group recognised a $197 million net gain on sale in the March 2019 half, comprising a $115 million gain on the reversal of the life-to-date cash
profit adjustments on the revaluation of policy liabilities sold, a $56 million gain on sale, and a $26 million release from the foreign currencytranslation reserve. In the September 2019 half a $7 million surplus provision was released.
 Papua New Guinea Retail, Commercial and Small-Medium Sized Enterprise businesses (PNG Retail, Commercial and SME)
In June 2018, the Group announced it had entered into an agreement to sell its Retail, Commercial and Small-Medium Sized Enterprise (SME)banking businesses in Papua New Guinea to Kina Bank. The transaction completed on 23 September 2019 and the Group recognised a gain of $1
million net of costs associated with the sale.
Other large/notable items


Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Customer remediation charges of $129 million have been recognised in the March 2020 half (Sep 19 half: $485 million; Mar 19 half: $100 million).
$58 million relates to customer remediation impacting operating income (Sep 19 half: $148 million; Mar 19 half: $64 million), and $71 million relates
to customer remediation impacting operating expenses (Sep 19 half: $337 million; Mar 19 half: $36 million).

Royal Commission legal costs
External legal costs associated with responding to the Banking Royal Commission, which completed in February 2019, were nil for the March 2020
half (Sep 19 half: $2 million; Mar 19 half: $13 million).



Restructuring
The Group recognised restructuring expenses of $105 million in the March 2020 half (Sep 19 half: $26 million; Mar 19 half: $51 million) largely
relating to business and property changes in Australia Retail and Commercial division.



Lease-related items
In the March 2020 half, the Group recognised $83 million of additional charges associated with the adoption of the new lease accounting standard on
1 October 2019. Comparative information has not been restated for the adoption of the new lease accounting standard.



Asian associate impairments
During the March 2020 half, the Group recognised a $815 million impairment in respect of two of the Group’s equity accounted investments to adjust
their carrying values in line with their value-in-use calculations (refer Note 1 (iv) of the Condensed Consolidated Financial Statements). AMMB
Holdings Berhad (AmBank) was impaired by $595 million and PT Bank Pan Indonesia (PT Panin) was impaired by $220 million.

13

SUMMARY
Large/Notable items - continuing operations
Cash Profit Results

March 2020 Half Year vs March 2019 Half Year

March 2020 Half Year vs September 2019 Half Year

Mar 19Large/
notablesMar 19ex. Large/
notablesMovt
ex. Large/
notables

$M

$M

$M

%

7,265

7,299

7

7,292

2,196

2,447

231

Mar 20Large/
notablesMar 20ex. Large/
notables

$M

$M

$M

Net interest income

7,222

(43)

Other operating income

1,357

(839)

Operating income

8,579

(882)

9,461

9,746

Operating expenses(4,605)(250)(4,355)(4,365)

Profit before credit impairment and income tax

3,974(1,132)

5,106

5,381

113

Sep 19ex. Large/
notablesMovt
ex. Large/
notablesMar 20Large/
notablesMar 20ex. Large/
notables

$M

$M

$M

$M

$M

$M

%

0%

7,222

(43)

7,265

7,040

(98)

7,138

2%

2,216

-1%

1,357

(839)

2,196

2,243

3

2,240

-2%

238

9,508

0%

8,579

(882)

9,461

9,283

(95)

9,378

1%

(125)

(4,240)3%(4,605)(250)(4,355)(4,706)(384)(4,322)

1%

5,268

-3%

3,974

(1,132)

5,106

4,577

(479)

5,056

1%

Sep 19Large/
notablesCredit impairment charge(1,674)-(1,674)

(393)

1

(394)

large

(1,674)-(1,674)

(402)

(2)

(400)

large

Profit/(Loss) before income tax

2,300(1,132)

3,432

4,988

114

4,874

-30%

2,300

(1,132)

3,432

4,175

(481)

4,656

-26%

Income tax benefit/(expense) and non-controlling interests

(887)

94

(981)

(1,424)(17)(1,407)

-30%

(887)

94

(981)

(1,269)82(1,351)-27%

Cash profit/(loss) from continuing operations

1,413(1,038)

2,451

3,564

97

3,467

-29%

1,413

(1,038)

2,451

2,906

(399)

3,305

-26%

Cash Profit/(Loss) By Division

March 2020 Half Year vs March 2019 Half Year

March 2020 Half Year vs September 2019 Half Year

Mar 19Large/
notablesMar 19ex. Large/
notablesMovt
ex. Large/
notables

$M

$M

$M

%

1,367

1,703

(83)

1,786

(12)

622

1,012

8

1,004

567

(28)

595

753

14

20

(3)

23

33

-

TSO and Group Centre 1

(998)

(842)

(156)

63

Cash profit/(loss) from continuing operations

1,413(1,038)

2,451

3,564

Mar 20Large/
notablesMar 20ex. Large/
notables

$M

$M

$M

1,214

(153)

Institutional

610

New ZealandPacific

Australia Retail and Commercial1.

Sep 19ex. Large/
notablesMovt
ex. Large/
notablesMar 20Large/
notablesMar 20ex. Large/
notables

$M

$M

$M

$M

$M

$M

%

-23%

1,214

(153)

1,367

1,492

(303)

1,795

-24%

-38%

610

(12)

622

816

(32)

848

-27%

739

-19%

567

(28)

595

646

(58)

704

-15%

33

-30%

20

(3)

23

26

(14)

40

-43%

158

(95)

64%

(998)

(842)

(156)

(74)

8

(82)

90%

97

3,467

-29%

1,413

(1,038)

2,451

2,906

(399)

3,305

-26%

TSO and Group Centre includes the Gain/(Loss) on sale from divestments in the September 2019 half and March 2019 half. It also includes the divested business results for the completed sales of Paymark in the March 2019 half.

14

Sep 19Large/
notablesSUMMARY
Large/Notable items - continuing operations
Within continuing cash profit, the Group has recognised some large/notable items. These items are shown in the tables below.
March 2020 Half Year

March 2019 Half Year

Large/notable items included in continuing cash profit
Asian
associate
impairments$M

Large/notable items included in continuing cash profit
Gain/(Loss) on
sale fromdivestments$M

Divestedbusinessresults1$M

Customer
remediation
$M

Royal
Commission
legal costs$M

Restructuring$M

Customer
remediation$M

Restructuring$M

Lease-related
items
$M

Cash Profit
Net interest income

(22)

-

(21)

-

(43)

-

29

(22)

-

-

7

Other operating income

(36)

-

12

(815)

(839)

234

39

(42)

-

-

231

Operating income

(58)

-

(9)

(815)

(882)

234

68

(64)

-

-

238

Operating expenses

(71)

(105)

(74)

-

(250)

-

(25)

(36)

(13)

(51)

(125)

Profit before credit impairment and income tax

113

Total
$M

Total
$M

(129)

(105)

(83)

(815)

(1,132)

234

43

(100)

(13)

(51)

Credit impairment charge

-

-

-

-

-

-

1

-

-

-

1

Profit before income tax

(129)

(105)

(83)

(815)

(1,132)

234

44

(100)

(13)

(51)

114

Income tax benefit/(expense) andnon-controlling interests

38

31

25

-

94

(47)

(19)

30

4

15

(17)

Cash profit/(loss) from continuing operations

(91)

(74)

(58)

(815)

(1,038)

187

25

(70)

(9)

(36)

97

March 2020 Half Year

September 2019 Half Year

Large/notable items included in continuing cash profit
Asian
associate
impairments$M

Large/notable items included in continuing cash profit
Gain/(Loss) on
sale fromdivestments$M

Divestedbusinessresults1$M

Customer
remediation
$M

Royal
Commission
legal costs$M

Restructuring
$M

Total
$M

(98)

Customer
remediation$M

Restructuring$M

Lease-related
items
$M

Cash Profit
Net interest income

(22)

-

(21)

-

(43)

-

21

(119)

-

-

Other operating income

(36)

-

12

(815)

(839)

18

14

(29)

-

-

3

Operating income

(58)

-

(9)

(815)

(882)

18

35

(148)

-

-

(95)

Operating expenses

(71)

(105)

(74)

-

(250)

-

(19)

(337)

(2)

(26)

(384)

Profit before credit impairment and income tax

(129)

(105)

(83)

(815)

(1,132)

18

16

(485)

(2)

(26)

(479)

Total
$M

Credit impairment charge

-

-

-

-

-

-

(2)

-

-

-

(2)

Profit before income tax

(129)

(105)

(83)

(815)

(1,132)

18

14

(485)

(2)

(26)

(481)

Income tax benefit/(expense) andnon-controlling interests

38

31

25

-

94

-

(7)

80

1

8

82

Cash profit/(loss) from continuing operations

(91)

(74)

(58)

(815)

(1,038)

18

7

(405)

(1)

(18)

(399)

1.

Relates to business results for completed divestments.

15

SUMMARY
Large/Notable items - continuing operations
Within continuing cash profit, the Group has recognised some large/notable items. The impact of these items on the divisional results are shown in the tables below.
March 2020 Half Year

March 2019 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Customer
remediation$M

Restructuring$M

Lease-related
items
$M

Asian
associate
impairments
$M

Total
$M

Gain/(Loss) on
sale fromdivestments$M

Divestedbusinessresults1$M

Customer
remediation
$M

Royal
Commission
legal costs$M

Restructuring
$M

Total
$M

Profit before income tax
Australia Retail and Commercial

(101)

(85)

(32)

-

(218)

-

-

(100)

-

(19)

(119)

Institutional

-

(4)

(11)

-

(15)

-

29

-

-

(7)

22

New Zealand

(26)

(11)

(3)

-

(40)

-

20

-

-

(2)

18

Pacific

(2)

-

(2)

-

(4)

-

-

-

-

-

-

TSO and Group Centre2

-

(5)

(35)

(815)

(855)

234

(5)

-

(13)

(23)

193

Profit before income tax

(129)

(105)

(83)

(815)

(1,132)

234

44

(100)

(13)

(51)

114

Income tax benefit/(expense) and non-controllinginterests

38

31

25

-

94

(47)

(19)

30

4

15

(17)

Cash profit/(loss) from continuing operations

(91)

(74)

(58)

(815)

(1,038)

187

25

(70)

(9)

(36)

97

Restructuring
$M

Total
$M

March 2020 Half Year

September 2019 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Customer
remediation$M

Restructuring$M

Lease-related
items
$M

Asian
associate
impairments
$M

Total
$M

Gain/(Loss) on
sale fromdivestments$M

Divestedbusinessresults1$M

Customer
remediation
$M

Royal
Commission
legal costs$M

Profit before income tax
Australia Retail and Commercial

(101)

(85)

(32)

-

(218)

-

-

(347)

-

(1)

(348)

Institutional

-

(4)

(11)

-

(15)

-

17

(49)

-

(9)

(41)

New Zealand

(26)

(11)

(3)

-

(40)

-

-

(75)

-

(6)

(81)

Pacific

(2)

-

(2)

-

(4)

-

-

(14)

-

-

(14)

TSO and Group Centre2

-

(5)

(35)

(815)

(855)

18

(3)

-

(2)

(10)

3

Profit before income tax

(129)

(105)

(83)

(815)

(1,132)

18

14

(485)

(2)

(26)

(481)

Income tax benefit/(expense) andnon-controlling interests

38

31

25

-

94

-

(7)

80

1

8

82

Cash profit/(loss) from continuing operations

(91)

(74)

(58)

(815)

(1,038)

18

7

(405)

(1)

(18)

(399)

1.
2.

Relates to business results for completed divestments.
TSO and Group Centre includes the Gain/(Loss) on sale from divestments in the September 2019 half and March 2019 half. It also includes the divested business results for the completed sales of Paymark in the March 2019 half.

16

SUMMARY
Full Time Equivalent Staff
As at 31 March 2020, ANZ employed 38,939 staff (Sep 19: 39,060; Mar 19: 39,359) on a full-time equivalent (FTE) basis.
As at

Division

Movement

Australia Retail and Commercial

Mar 2014,061

Sep 1913,903

Mar 1913,660Mar 20v. Sep 19
1%

Institutional1

5,350

5,468

6,085

-2%

-12%

New Zealand

6,103

6,121

6,003

0%

2%

Pacific

1,108

1,086

1,096

2%

1%

TSO and Group Centre

11,212

11,01010,5202%

7%

Total FTE from continuing operations

37,83437,58837,3641%

1%

Discontinued operations2

1,105

1,472

1,995

-25%

-45%

Total FTE

38,93939,06039,3590%-1%

Average FTE

39,154

39,147

39,5710%-1%

Mar 20v. Mar 19
1%
-6%

As at

Geography

Mar 20v. Mar 19
3%

Movement

Australia

Mar 2018,823

Sep 1918,874

Mar 1918,652

Mar 20v. Sep 19
0%Asia, Pacific, Europe & America1

12,584

12,695

13,396-1%

New Zealand

7,532

7,491

7,311

1%

3%

Total FTE

38,93939,06039,359

0%

-1%

1.
2.

Institutional division FTE reduced by 606 as a result of the Cambodia JV and PNG Retail, Commercial and SME divestments completed in the September 2019 half.
The discontinued operations FTE is based on an estimate of the staff working in the divested businesses based on an allocation methodology and includes staff retained in the Groupworking on transitioning the sold businesses to the purchasers.

Other Non-Financial Information
Half Year

Movement
Mar 20v. Sep 19

Sep 19- high

28.79

29.30

28.36

-2%

2%

- low

14.10

25.36

22.98

-44%

-39%

- closing

16.96

28.52

26.03

-41%

-35%

48.1

80.8

73.7

-40%

-35%

-38.7%

12.9%

-4.8%

large

large

Closing market capitalisation of ordinary shares ($B)
Total shareholder returns (TSR)

Mar 19Mar 20v. Mar 19

Mar 20Shareholder value - ordinary shares
Share price ($)

As at Mar 20
ShortTerm
P1

LongTerm
Aa3

Standard & Poor's

A-1+

AA-

StableFitch Ratings

F1+

AA-

Negative

Credit Ratings
Moody's Investor Services

Outlook
StableOn 7 April 2020 Fitch Ratings downgraded the Short-term credit rating to F1 and the Long-term credit rating to A+. The outlook remains negative.
On 8 April 2020 Standard & Poor’s revised the outlook to negative.

17

SUMMARYThis page has been left blank intentionally18

GROUP RESULTSCONTENTS

Page

Cash Profit

20

Net Interest Income - continuing operations

21

Other Operating Income - continuing operations

23

Operating Expenses - continuing operations

26

Software Capitalisation - continuing operations

28

Credit Risk - continuing operations

29

Income Tax Expense - continuing operations

35

Impact of Foreign Currency Translation - continuing operations

36

Earnings Related Hedges - continuing operations

37

Earnings per Share - continuing operations

37

Dividends - continuing operations

38

Condensed Balance Sheet - including discontinued operations

39

Liquidity Risk - including discontinued operations

40

Funding - including discontinued operations

41

Capital Management - including discontinued operations

42

Leverage Ratio - including discontinued operations

44

Capital Management - Other Developments

45

19

GROUP RESULTS
Non-IFRS Information
Statutory profit is prepared in accordance with recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). The Group provides additional measures of performance in the Consolidated Financial Report &Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian
Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when presenting this information.

Cash Profit
Cash profit, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers toassess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items
from statutory profit (refer to Definitions on pages 139 to 140 for further details). The adjustments made in arriving at cash profit are included in statutory
profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not
subject to review by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on aconsistent basis across each period presented.
This Group Results section is reported on a cash profit basis for continuing operations unless otherwise stated. For information on
discontinued operations please refer to the Guide to Half Year Results on page 8.
Movement

Half Year

Statutory profit attributable to shareholders of the Company from continuing
operations
Adjustments between statutory profit and cash profit1
Revaluation of policy liabilities

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

1,635

3,053

3,243

-46%

-50%

-100%

-

-

77

n/a

Economic hedges

(340)

(67)

185

large

large

Revenue and expense hedges

120

(79)

60

large

100%

Structured credit intermediation trades

(2)

(1)

(1)

100%

100%

Total adjustments between statutory profit and cash profit fromcontinuing operations

(222)

(147)

321

51%

large

Cash profit from continuing operations

1,413

2,906

3,564

-51%

-60%

1.

Refer to pages 71 to 75 for analysis of the adjustments between statutory profit and cash profit.

Half Year

Group performance - cash profit

Movement

Net interest income

Mar 20$M
7,222

Sep 19$M
7,040

Mar 19$M
7,299

Mar 20v. Sep 19
3%

Mar 20v. Mar 19-1%

Other operating income

1,357

2,243

2,447

-40%

-45%

Operating income

8,579

9,283

9,746

-8%

-12%

Operating expenses(4,605)(4,706)(4,365)-2%

5%Profit before credit impairment and income tax

3,974

4,577

5,381

-13%

-26%

Credit impairment charge(1,674)

(402)

(393)

large

large

Profit before income tax

2,300

4,175

4,988

-45%

-54%

Income tax expense(886)(1,263)(1,415)

-30%

-37%

(1)

(6)

(9)

-83%

-89%

1,413

2,906

3,564

-51%

-60%

Non-controlling interests
Cash profit from continuing operations

Half Year

Movement

Mar 20$M
1,214

Sep 19$M
1,492

Mar 19$M
1,703

Mar 20v. Sep 19-19%

Mar 20v. Mar 19-29%

Institutional

610

816

1,012

-25%

-40%

New Zealand

567

646

753

-12%

-25%
-39%

Cash profit/(loss) by Division
Australia Retail and Commercial

Pacific

20

26

33

-23%

TSO and Group Centre

(998)

(74)

63

large

large

Cash profit from continuing operations

1,413

2,906

3,564

-51%

-60%

20

GROUP RESULTSNet Interest Income - continuing operations
Half Year

Movement

Mar 20$M
7,222

Sep 19$M
7,040

Mar 19$M
7,299

Mar 20v. Sep 19
3%

Mar 20v. Mar 19-1%

Average interest earning assets2

856,652

814,831

811,528

5%

6%

Average deposits and other borrowings2

669,342

642,448

635,822

4%

5%

1.69

1.72

1.80

-3 bps-11 bps

6,822

6,829

7,019

0%

-3%

576,494566,907563,5792%

2%

477,861

462,283

459,478

3%

4%

2.37

2.40

2.50

-3 bps-13 bpsGroup
Cash net interest income1

Net interest margin (%) - cash

Group (excluding Markets business unit)
Cash net interest income1
Average interest earning assets

2

Average deposits and other borrowings2
Net interest margin (%) - cash

Half Year

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

2.65

2.58

2.61

7 bps

4 bps

Average interest earning assets

305,981309,684

314,215-1%-3%

Average deposits and other borrowings

210,214204,791

202,765

3%

4%

0.78

0.80

0.85

-2 bps-7 bps415,490375,573372,27011%

12%

305,506

290,948281,770

5%

8%

2.31

2.27

2.39

4 bps

-8 bps121,955

118,714116,2013%

5%90,32986,97086,244

4%

5%

Cash profit net interest margin by major division1
Australia Retail and Commercial
Net interest margin (%) - cash

Institutional
Net interest margin (%) - cash
Average interest earning assets

2

Average deposits and other borrowings2

New Zealand
Net interest margin (%) - cash
Average interest earning assets

2

Average deposits and other borrowings2
1.

2.

Includes large/notable items of -$43 million for the March 2020 half (Sep 19 half: -$98 million; Mar 19 half: $7 million). Refer to pages 13 to 16 for further details on large/notable items. Also
includes the major bank levy of -$196 million for the March 2020 half (Sep 19 half: -$185 million; Mar 19 half: -$178 million).
Average balance sheet amounts include assets and liabilities classified as held for sale from continuing operations in the September 2019 half and the March 2019 half.

Group net interest margin - March 2020 Half Year v March 2019 Half Year

1.

Markets Balance Sheet activities includes the impact of discretionary liquid assets and other Balance Sheet activities.



March 2020 v March 2019
Net interest margin (-11 bps)Asset mix and funding mix (-2 bps): unfavourable asset mix from the impacts of customer switching from interest only to principal and interest
home loans in the Australia Retail and Commercial division, unfavourable mix impacts from a higher proportion of Institutional lending, partly
offset by favourable deposit mix.

Wholesale funding costs (+3 bps): favourable short term funding spreads and broadly stable long term funding costs.



Deposit pricing (-9 bps): margin compression from lower interest rates in all divisions.



Assets pricing (+5 bps): re-pricing of home loans in the Australia Retail and Commercial division, partially offset by increased competition in alldivisions.

Treasury (-6 bps): lower earnings on capital and replicated deposits reflecting a lower interest rate environment.

21

GROUP RESULTS

Markets Balance Sheet activities (-1 bps): growth in lower interest margin Markets Balance Sheet trading activities and the impact of flattening
yield curve. This was partially offset by higher net interest income from Rates and Balance Sheet activity.



Large/notable items (-1 bps): the impact of lease-related items in the Mar 2020 half and divested businesses in the Mar 2019 half.

Average interest earning assets (+$45.1 billion or +6%)


Average net loans and advances (+$18.7 billion or +3%): increase primarily driven by growth in Institutional lending, home loan growth in the
New Zealand division, and foreign currency translation movements.



Average trading and investment securities (+$12.1 billion or +11%): increase primarily driven by higher liquid assets and trading securities inMarkets and the impact of foreign currency translation movements.



Average cash and other liquids (+$14.3 billion or +13%): increase primarily driven by higher central bank cash balances, higher collateralbalances and the impact of foreign currency translation movements.

Average deposits and other borrowings (+$33.5 billion or +5%)


Average deposits and other borrowings (+$33.5 billion or +5%): increase driven by growth in deposits in all divisions, but particularly in
Institutional division, and the impact of foreign currency translation movements.

Group net interest margin - March 2020 Half Year v September 2019 Half Year

1. Markets Balance Sheet activities includes the impact of discretionary liquid assets and other Balance Sheet activities.



March 2020 v September 2019
Net interest margin (-3 bps)Asset mix and funding mix (0 bps): unfavourable product mix from the impacts of customer switching from interest only to principal and interest
home loans in the Australia Retail and Commercial division, unfavourable mix impacts from a higher proportion of Institutional lending offset byfavourable deposit mix.

Wholesale funding costs (+1 bps): favourable short term funding spreads and broadly stable long term funding costs.



Deposit pricing (-5 bps): margin compression from lower rates in all divisions.



Assets pricing (+4 bps): re-pricing in Australia Retail and Commercial and New Zealand divisions, partially offset by increased competition
applying to all divisions.

Treasury (-4 bps): lower earnings on capital and replicated deposits reflecting a lower interest rate environment.

Markets Balance Sheet activities (0 bps): growth in the lower margin Markets Balance Sheet trading activities offset by higher net interest income
from Rates and Balance Sheet activity.



Large/notable (+1 bps): the impact of higher customer remediation in the September 2019 half.

Average interest earning assets (+$41.8 billion or 5%)


Average net loans and advances (+$14.7 billion or +2%): increase primarily driven by growth in Institutional lending, home loans in the New
Zealand division, and the impact of foreign currency translation movements. This was partially offset by a reduction in lending in the Australia
Retail and Commercial division.



Average trading and investment securities (+$8.1 billion or +7%): increase primarily driven by an increase in liquid assets in Markets and theimpact of foreign currency translation movements.



Average cash and other liquids (+$19.0 billion or 18%): increase primarily driven by higher central bank cash balances, and the impact of foreign
currency translation movements.

Average deposits and other borrowings (+$26.9 billion or +4%)


Average deposits and other borrowings (+$26.9 billion or +4%): increase driven predominantly by growth in the Institutional division, and theimpact of foreign currency translation movements.

22

GROUP RESULTS
Other Operating Income - continuing operations

Half Year

Movement

Net fee and commission income1

Mar 20$M
1,135

Sep 19$M
1,275

Mar 19$M
1,218

Mar 20v. Sep 19-11%

Mar 20v. Mar 19-7%15%

Markets other operating income

764

619

667

23%

Share of associates' profit1

135

131

131

3%

3%

Other1,2

(677)

218

431

large

large

Total cash other operating income from continuing operations3

1,357

2,243

2,447

-40%

-45%

Half Year

Movement

Other operating income by division
Australia Retail and Commercial

Mar 20$M595

Sep 19$M
696

Mar 19$M
651

Institutional

1,167

1,066

1,126

9%

4%

New Zealand

247

278

302

-11%

-18%

Pacific

Mar 20v. Sep 19-15%

Mar 20v. Mar 19
-9%

50

54

50

-7%

0%

TSO and Group Centre

(702)

149

318

large

large

Total cash other operating income from continuing operations3

1,357

2,243

2,447

-40%

-45%

1.

Excluding Markets.
2. Includes foreign exchange earnings, net income from insurance business and impairment of Asian associates.
3. Includes large/notable items of -$839 million for the March 2020 half (Sep 19 half: $3 million; Mar 19 half: $231 million). Refer to items on pages 13 to 16 for further details on large/notable
items.

Other operating income - March 2020 Half Year v March 2019 Half Year

Half Year

Markets income
Mar 20$M
400

Net interest income
Other operating income
Total cash Markets income from continuing operations23

Sep 19$M
211

Movement
Mar 19$M
280

Mar 20v. Sep 19
90%

Mar 20v. Mar 19
43%

764

619

667

23%

15%

1,164

830

947

40%

23%

GROUP RESULTS
Other operating income (excluding large/notable items)

Half Year

Movement

Net fee and commission income1

Mar 20$M
1,164

Sep 19$M
1,293

Mar 19$M
1,244

Mar 20v. Sep 19-10%

Mar 20v. Mar 19-6%

Markets other operating income

764

618

665

24%

15%

Share of associates' profit1

135

131

131

3%

3%

Other1,2

133

198

176

-33%

-24%

2,196

2,240

2,216

-2%

-1%

Total cash other operating income from continuing operations

Half Year

Other operating income by division (excluding large/notable items)

Movement

Australia Retail and Commercial

Mar 20$M
625

Sep 19$M704

Mar 19$M
693

Mar 20v. Sep 19-11%

Mar 20v. Mar 19-10%

Institutional

1,163

1,064

1,109

9%

5%

New Zealand

255

287

280

-11%

-9%

Pacific

50

54

50

-7%

0%

TSO and Group Centre

103

131

84

-21%

23%

2,196

2,240

2,216

-2%

-1%

Total cash other operating income from continuing operations
1.

Excluding Markets.
2. Includes foreign exchange earnings and net income from insurance business.

March 2020 v March 2019
Other operating income decreased by $1,090 million (-45%).
Net fee and commission income (-$83 million or -7%)


$56 million decrease in the Australia Retail and Commercial division was primarily driven by the full period impact of fees removed in the priorperiod and lower volume related fees.

$28 million decrease in the New Zealand division primarily due to an increase in commission costs and a reduction in rebates.



$1 million increase due to other small items including lower customer remediation in the March 2020 half and higher commitment fees in theTransaction Banking business, partially offset by decreases due to the impact of divested business results and the slowdown of loan syndication
activities.

Markets income (+$217 million or +23%)
$48 million increase in Franchise Sales due to demand from large corporate customers and financial institutions for FX, Commodities and Rates
products.

$187 million increase in Franchise Trading across all asset classes primarily attributable to improved trading conditions, increased volumes,
particularly in International, and favourable derivative valuation adjustments.

$18 million decrease in Balance Sheet trading primarily attributable to cuts in the Official Cash Rate in Australia.

Share of associates’ profit (+$4 million or +3%)

$4 million increase in profits from associates of which $4 million relates to PT Panin and $5 million relates to AmBank, partially offset by a $4
million reduction following the sale of Paymark.

Other (-$1,108 million)$815 million decrease due to the impairment of PT Panin of $220 million and AmBank of $595 million.

$259 million decrease due to gains on sale ($234 million) from One Path Life NZ and Paymark in the March 2019 half and the impact of divested
business results ($25 million) in the March 2019 half.

$34 million decrease in Institutional division due to widening credit spread impacts on loans measured at fair value.

Other small items including a gain on sale of an investment security in the March 2019 half and higher customer remediation in the March 2020
half were offset by the gross up of sublease income on adoption of the new leasing standard (comparatives not restated).

Excluding large/notable items, other operating income decreased $20 million (-1%).

24

GROUP RESULTS
March 2020 v September 2019
Other operating income decreased by $886 million (-40%).
Net fee and commission income (-$140 million or -11%)

$84 million decrease in the Australia Retail and Commercial division was primarily driven by seasonality of unsecured portfolio rebates andincentives, and lower volume related fees.

$38 million decrease in the New Zealand division due to lower insurance commissions and higher commission costs.

$18 million decrease due to other small items including the impact of divested business results and a decrease in the Institutional division due tohigher merchant scheme fees in the March 2020 half.

Markets income (+$334 million or +40%)
$46 million increase in Franchise Sales due to demand from large corporate customers and financial institutions for FX, Commodities and Rates
products.

$240 million increase in Franchise Trading across all asset classes. Trading conditions supported the franchise from the start of the half, andthen the increase in volatility in the second quarter drove higher risk premiums, which was combined with trading volume growth across all asset
classes. This was partially offset by lower derivative valuation adjustments.

$48 million increase in Balance Sheet trading driven by steepening of yield curves.

Share of associates’ profit (+$4 million or +3%)

$4 million increase in profits from associates of which a $11 million increase relates to PT Panin partially offset by a decrease of $9 million
relating to AmBank.

Other (-$895 million)$815 million decrease due to the impairment of PT Panin of $220 million and AmBank of $595 million.

$44 million decrease in the Institutional division primarily due to widening credit spread impacts on loans measured at fair value.

$27 million decrease due to dividend income from Bank of Tianjin in the September 2019 half.

$21 million decrease due to gains on sale ($18 million) from Cambodia and OnePath Life (NZ) in the September 2019 half and the impact ofdivested business results ($3 million) in the September 2019 half.

$12 million increase due to other smaller items including an increase from the gross up of sublease income on the adoption of the new leasing
standard and higher incentive receipts, partially offset by higher customer remediation in the March 2020 half.

Excluding large/notable items, other operating income decreased $44 million (-2%).

25

GROUP RESULTS
Operating Expenses - continuing operations
Half Year

Personnel

Mar 20$M
2,465

Sep 19$M
2,395

Movement
Mar 19$M
2,370

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
4%

Premises

405

389

406

4%

0%

Technology (excluding personnel)

839

770

764

9%

10%

Restructuring

105

26

51

large

large

Other

791

1,126

774

-30%

2%

Total cash operating expenses from continuing operations1

4,605

4,706

4,365

-2%

5%

Full time equivalent staff (FTE) from continuing operations

37,83437,58837,364

1%

1%

Average full time equivalent staff (FTE) from continuing operations

37,75937,40537,5581%

1%

Half Year

Movement

Expenses by division
Australia Retail and Commercial

Mar 20$M
2,065

Sep 19$M
2,161

Mar 19$M
1,913

Mar 20v. Sep 19-4%

Institutional

1,290

1,347

1,320

-4%

-2%

New Zealand

690

674

612

2%

13%

Pacific

76

80

70

-5%

9%

TSO and Group Centre
Total cash operating expenses from continuing operations1

Mar 20v. Mar 19
8%

484

444

450

9%

8%

4,605

4,706

4,365

-2%

5%

Mar 20v. Mar 19
3%

Movement

Half Year

Australia Retail and Commercial

Mar 2014,061

Sep 1913,903

Mar 1913,660Mar 20v. Sep 19
1%

Institutional

5,350

5,468

6,085

-2%

-12%

New Zealand

6,103

6,121

6,003

0%

2%

Pacific

1,108

1,086

1,096

2%

1%

TSO and Group Centre

11,212

11,01010,5202%

7%

Total FTE from continuing operations

37,83437,58837,364

1%

1%

Average FTE from continuing operations

37,75937,40537,558

1%

1%

FTE by division1.

Includes large/notable items of $250 million for the March 2020 half (Sep 19 half: $384 million; Mar 19 half: $125 million). Refer to items on pages 13 to 16 for further details on large/notable
items.

Operating expenses - March 2020 Half Year v March 2019 Half Year

26

GROUP RESULTS
Expenses (excluding large/notable items)

Half Year

Movement

Personnel

Mar 20$M
2,413

Sep 19$M
2,341

Mar 19$M
2,352

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
3%

Premises

379

387

403

-2%

-6%

Technology (excluding personnel)

790

768

762

3%

4%

-

-

-

n/a

n/a

Restructuring
Other
Total cash operating expenses from continuing operations

773

826

723

-6%

7%

4,355

4,322

4,240

1%

3%

Half Year

Expenses by division (excluding large/notable items)

Movement

Australia Retail and Commercial

Mar 20$M
1,887

Sep 19$M
1,885

Mar 19$M
1,858

Mar 20v. Sep 19
0%

Mar 20v. Mar 19
2%

Institutional

1,275

1,282

1,293

-1%

-1%

New Zealand

671

650

604

3%

11%

Pacific

74

73

70

1%

6%

TSO and Group Centre

448

432

415

4%

8%

4,355

4,322

4,240

1%

3%

Total cash operating expenses from continuing operations

March 2020 v March 2019
Operating expenses increased by $240 million (+5%).
Personnel expenses increased $95 million (+4%) largely driven by higher investment spend in the New Zealand and Australia Retail andCommercial divisions, along with wage inflation, higher customer remediation ($48 million) and adverse foreign currency translation movements.
This was partially offset by lower variable remuneration and business as usual personnel expenses.

Premises expense decreased $1 million largely driven by the consolidation of our property footprint offset by a change in accounting treatment
associated with the new leasing standard (comparatives not restated).

Technology expenses increased $75 million (+10%) largely as a result of a change in accounting treatment associated with the new leasing
standard (comparatives not restated) and an increase in investment spend.



Restructuring expenses increased $54 million largely relating to business and property changes in the Australia Retail and Commercial division.

Other expenses increased $17 million (+2%) largely due to higher investment spend offset by lower customer remediation ($13 million).

Excluding large/notable items, operating expenses increased $115 million (+3%).
March 2020 v September 2019
Operating expenses decreased by $101 million (-2%).
Personnel expenses increased $70 million (+3%) largely driven by wage inflation, higher customer remediation ($18 million), higher investment
spend in the New Zealand and Australia Retail and Commercial divisions and adverse foreign currency translation movements. This waspartially offset by lower variable remuneration and business as usual personnel expenses.

Premises expenses increased $16 million (+4%) largely as a result of a change in accounting treatment associated with the new leasing
standard (comparatives not restated). This was partially offset by lower premises expense in our International network.

Technology expenses increased $69 million (+9%) largely as a result of a change in accounting treatment associated with the new leasing
standard (comparatives not restated) and higher investment spend.



Restructuring expenses increased $79 million largely relating to business and property changes in the Australia Retail and Commercial division.

Other expenses decreased $335 million (-30%) largely driven by lower customer remediation ($284 million), a reduction in consulting spend andlower marketing spend which is typically higher in the September half.

Excluding large/notable items, operating expenses increased $33 million (+1%).

27

GROUP RESULTS
Software Capitalisation - continuing operations
As at 31 March 2020, the Group’s intangible assets included $1,263 million of costs incurred to acquire and develop software. Details are presented in
the table below:
Half Year
Mar 20$M
1,323

Balance at start of period

Sep 19$M
1,368

Movement
Mar 19$M
1,421

Mar 20v. Sep 19-3%

Mar 20v. Mar 19-7%

Software capitalised during the period

181

222

199

-18%

-9%

Amortisation during the period

(241)

(265)

(252)

-9%

-4%

Software impaired/written-off

(2)

(1)

(3)

100%

-33%

Foreign currency translation movements

2

(1)

3

large

-33%

1,263

1,323

1,368

-5%

-8%

Total capitalised software from continuing operations

Net book value by division

As atAustralia Retail and Commercial
Institutional
New Zealand
TSO and Group Centre
Total from continuing operations

28

Movement

Mar 20$M
209

Sep 19$M
260

Mar 19$M
306

Mar 20v. Sep 19-20%

Mar 20v. Mar 19
-32%

196

223

246

-12%

-20%
-43%

8

7

14

14%

850

833

802

2%

6%

1,263

1,323

1,368

-5%

-8%

GROUP RESULTS
Credit Risk – continuing operations
The tables below provide information about the credit provision of the Group.
The impact and duration of COVID-19 on the global economy and how governments, businesses and consumers respond is uncertain. The Expected
Credit Loss (ECL) charge for the half year and ECL provisions as at 31 March 2020 are therefore largely based on management judgement with respect
to the impacts of COVID-19 on the Group’s credit exposures. The judgements and assumptions made by management are based on a variety of internaland external information, as well as the Group’s experience with respect to the performance of the portfolio under previous stressed conditions. The
Group also considers applying temporary adjustments to the ECL for recent and transitory conditions applying to segments of the portfolio.
Credit impairment charge/(release)Collectively assessed
Half Year

Movement

Mar 20$M

Sep 19$M

Australia Retail and Commercial

525

(39)

46

large

large

Institutional

369

33

(23)

large

large

New Zealand

144

17

(5)

large

large

Pacific

10

(6)

(6)

large

large

-

(1)

1

-100%

-100%

1,048

4

13

large

large

Division

TSO and Group Centre
Total

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Individually assessed
Half Year

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Australia Retail and Commercial

318

355

350

-10%

-9%

Institutional

272

-

(12)

n/a

large

New Zealand

35

40

35

-13%

0%

Pacific

1

3

8

-67%

-88%

TSO and Group Centre

-

-

(1)

n/a

-100%

626

398

380

57%

65%

Mar 20v. Sep 19

Division

Total

Mar 20v. Mar 19

Total
Half Year

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Australia Retail and Commercial

843

316

396

large

large

Institutional

641

33

(35)

large

large

New Zealand

179

57

30

large

large

Pacific

11

(3)

2

large

large

-

(1)

-

-100%

n/a

1,674

402

393

large

large

Division

TSO and Group Centre
Total

29

Mar 20v. Mar 19

GROUP RESULTS
Credit impairment charge/(release), cont'dMarch 2020 Half Year

Collectively assessed

Individually assessedStage 3 Recoveries
and writebacks
$M

Total
$M

Total
$M

Stage 1
$M

Stage 2
$M

Stage 3
$M

Total
$M

Stage 3 New andincreased
$M

105

395

25

525

511

(193)

318

843

Institutional

203

177

(11)

369

327

(55)

272

641

New Zealand

39

86

19

144

59

(24)

35

179

Pacific

7

3

-

10

3

(2)

1

11

TSO and Group Centre

-

-

-

-

-

-

-

-

354

661

33

1,048

900

(274)

626

1,674

Division
Australia Retail and Commercial

Total

September 2019 Half Year

Division
Australia Retail and Commercial

Collectively assessed

Individually assessedStage 1
$M

Stage 2
$M

Stage 3
$M

Total
$M

Stage 3 New andincreased$M

Stage 3 Recoveries
and writebacks
$M

Total
$M

Total
$M

(14)

(69)

44

(39)

637

(282)

355

316

Institutional

8

22

3

33

37

(37)

-

33

New Zealand

5

15

(3)

17

71

(31)

40

57

Pacific

(3)

(2)

(1)

(6)

5

(2)

3

(3)

TSO and Group Centre

(1)

-

-

(1)

-

-

-

(1)

Total

(5)

(34)

43

4

750

(352)

398

402

March 2019 Half Year

Division
Australia Retail and Commercial

Collectively assessedStage 1
$M

Individually assessedStage 2
$M

Stage 3
$M

Total
$M

Stage 3 New andincreased$M

Stage 3 Recoveries
and writebacks
$M

Total
$M

Total
$M

(21)

43

24

46

536

(186)

350

396

Institutional

19

(35)

(7)

(23)

18

(30)

(12)

(35)

New Zealand

(4)

(5)

4

(5)

60

(25)

35

30

Pacific

(1)

(4)

(1)

(6)

11

(3)

8

2

TSO and Group Centre

1

-

-

1

-

(1)

(1)

-

Total

(6)

(1)

20

13

625

(245)

380

393

Collectively assessed credit impairment chargeMarch 2020 v March 2019
The collectively assessed credit impairment charge increased by $1,035 million primarily driven by a $479 million increase in the Australia Retail andCommercial division, a $392 million increase in the Institutional division and a $149 million increase in the New Zealand division. The significant
increases across all divisions are primarily due to forward-looking impact of material deterioration in the economic outlook due to the COVID-19
pandemic.

March 2020 v September 2019
The collectively assessed credit impairment charge increased by $1,044 million primarily driven by a $564 million increase in the Australia Retail andCommercial division, a $336 million increase in the Institutional division and a $127 million increase in the New Zealand division. The significant
increases across all divisions are primarily due to forward-looking impact of material deterioration in the economic outlook due to the COVID-19
pandemic.

30

GROUP RESULTS
Individually assessed credit impairment chargeMarch 2020 v March 2019
The individually assessed credit impairment charge increased by $246 million primarily due to a small number of new single name impairments in theInstitutional division. This was partially offset by improved mortgage delinquencies in the Australia retail portfolios combined with ongoing lower
portfolio growth in the unsecured portfolio.

March 2020 v September 2019
The individually assessed credit impairment charge increased by $228 million primarily due to a small number of new single name impairments in theInstitutional division. This was partially offset by improved mortgage delinquencies in the Australia retail portfolios combined with ongoing lower
portfolio growth in the unsecured portfolio.

Allowance for expected credit losses1,2Collectively assessed
As at

Movement

Division

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Australia Retail and Commercial

2,320

1,795

1,834

29%

26%

Institutional

1,590

1,169

1,132

36%

40%

New Zealand

541

374

369

45%

47%

Pacific

50

38

43

32%

16%

Total

4,501

3,376

3,378

33%

33%

Individually assessed
As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Australia Retail and Commercial

582

558

586

4%

-1%
95%

Division

Institutional

406

160

208

large

New Zealand

79

72

73

10%

8%

Pacific

26

24

24

8%

8%

Total

1,093

814

891

34%

23%

Total provision
As at

Movement

Division

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Australia Retail and Commercial

2,902

2,353

2,420

23%

20%

Institutional

1,996

1,329

1,340

50%

49%

New Zealand

620

446

442

39%

40%

Pacific

76

62

67

23%

13%

Total

5,594

4,190

4,269

34%

31%

1.

Includes allowance for expected credit losses for Net loans and advances – at amortised cost, Investment securities – debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.
2. Balance Sheet amounts include assets and liabilities reclassified as held for sale.

31

GROUP RESULTS
Allowance for expected credit losses, cont'd 1,2
As at Mar 20
Individuallyassessed

Collectively assessedStage 1
$M
474

Stage 2
$M
1,477

Stage 3
$M
369

Total
$M
2,320

Stage 3
$M
582

Total
$M
2,902

Institutional

1,115

444

31

1,590

406

1,996

New Zealand

200

279

62

541

79

620

Pacific

26

13

11

50

26

76

Total

1,815

2,213

473

4,501

1,093

5,594

Division
Australia Retail and Commercial

As at Sep 19
Individuallyassessed

Collectively assessedStage 1
$M
370

Stage 2
$M
1,082

Stage 3
$M
343

Total
$M
1,795

Stage 3
$M
558

Total
$M
2,353

Institutional

872

257

40

1,169

160

1,329

New Zealand

152

182

40

374

72

446

Pacific

18

9

11

38

24

62

Total

1,412

1,530

434

3,376

814

4,190

Division
Australia Retail and Commercial

As at Mar 19
Individuallyassessed

Collectively assessedStage 1
$M
384

Stage 2$M
1,150

Stage 3
$M
300

Total
$M
1,834

Stage 3
$M
586

Total
$M
2,420

Institutional

859

234

39

1,132

208

1,340

New Zealand

152

173

44

369

73

442

Pacific

20

11

12

43

24

67

Total

1,415

1,568

395

3,378

891

4,269

Division
Australia Retail and Commercial

1.

Includes allowance for expected credit losses for Net loans and advances – at amortised cost, Investment securities – debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.
2. Balance Sheet amounts include assets and liabilities reclassified as held for sale.

32

GROUP RESULTS

Long-Run Loss Rates
Management believe that disclosure of modelled long-run historical loss rates for individually assessed provisions assists in assessing the longer term
expected loss rates of the lending portfolio as it removes the volatility of reported earnings created by the use of accounting losses. The long-run loss
methodology used for economic profit is an internal measure and is not based on the credit loss principles of AASB 9 Financial Instruments. In addition,
given it is based on an average historical long-run loss rate it does not reflect the potential forward looking impacts associated with COVID-19.
As at
Long-run loss as a % of gross lending assets

Mar 20

Sep 19Mar 19Australia Retail and Commercial division

0.28%

0.29%

0.29%

New Zealand division

0.19%

0.18%

0.19%

Institutional division

0.25%

0.25%

0.27%

Total Group

0.26%

0.26%

0.27%

Gross Impaired Assets1
As at

Movement

Mar 20$M
2,209

Sep 19$M
1,711

Mar 19$M
1,803

Mar 20v. Sep 19
29%

Mar 20v. Mar 19
23%

Restructured items3

226

267

264

-15%

-14%

Non-performing commitments and contingencies2

164

51

61

large

large

2,599

2,029

2,128

28%

22%

(1,055)

(791)

(865)

33%

22%

(38)

(23)

(26)

65%

46%

Net impaired assets

1,506

1,215

1,237

24%

22%

Gross impaired assets by division
Australia Retail and Commercial

1,544

1,468

1,463

5%

6%

Institutional

742

265

373

large

99%

New Zealand

264

245

238

8%

11%

Pacific

Impaired loans2

Gross impaired assets
Individually assessed provisions
Impaired loans
Non-performing commitments and contingencies

49

51

53

-4%

-8%

TSO and Group Centre

-

-

1

n/a

-100%

Gross impaired assets

2,599

2,029

2,128

28%

22%

Gross impaired assets by size of exposure
Less than $10 million

4%

1,680

1,593

1,611

5%

$10 million to $100 million

349

247

328

41%

6%

Greater than $100 million

570

189

189

large

large

Gross impaired assets

2,599

2,029

2,128

28%

22%

1.

Balance sheet amounts include assets and liabilities reclassified as held for sale.
Impaired loans and non-performing commitments and contingencies do not include exposures which are included in collectively assessed Stage 3 ECL, which comprise unsecured retail
exposures greater than 90 days past due and defaulted but well secured exposures.
3. Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of
reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.
2.

March 2020 v March 2019
Gross impaired assets increased $471 million (22%) driven by the Institutional division ($369 million), Australia Retail and Commercial division ($81
million) and New Zealand division ($26 million). The increase in the Institutional division relates to impairments on a small number of single nameexposures. The Australia Retail and Commercial division increase was driven by the implementation of a more market responsive collateral valuation
methodology for the Australian home loan portfolio combined with a single name exposure in the commercial portfolio. The increase in New Zealandis driven by impairments on a small number of single name commercial exposures.

March 2020 v September 2019
Gross impaired assets increased $570 million (28%) driven by the Institutional division ($477 million), Australia Retail and Commercial division ($76
million) and New Zealand division ($19 million). The increase in the Institutional division relates to impairments on a small number of single nameexposures. The Australia Retail and Commercial division increase was driven by the implementation of a more market responsive collateral valuation
methodology for the Australian home loan portfolio combined with a single name exposure in the commercial portfolio.

The Group’s individually assessed provision coverage ratio on impaired assets was 42.1% at 31 March 2020 (Sep 19: 40.1%; Mar 19: 41.9%).

33

GROUP RESULTS
New Impaired Assets1
Half Year

Movement

Mar 20$M
1,407

Sep 19$M
1,070

Mar 19$M857

Mar 20v. Sep 19
31%

Restructured items

23

29

13

-21%

77%

Non-performing commitments and contingencies

140

18

20

large

large

1,570

1,117

890

41%

76%

New impaired assets by division
Australia Retail and Commercial

870

916

715

-5%

22%

Institutional

571

37

41

large

large

New Zealand

125

158

120

-21%

4%

4

6

14

-33%

-71%

Impaired loans

Total new impaired assets

Pacific
TSO and Group Centre
Total new impaired assets
1.

Mar 20v. Mar 19
64%

-

-

-

n/a

n/a

1,570

1,117

890

41%

76%

Balance sheet amounts include assets and liabilities reclassified as held for sale.

March 2020 v March 2019
New impaired assets increased $680 million (76%) with increases in Institutional division ($530 million) related to a small number of impairments ofsingle name exposures. Australia Retail and Commercial division increases ($155 million) driven by the implementation of a more market responsive
collateral valuation methodology for the Australian home loan portfolio combined with a single name exposure in the commercial portfolio.

March 2020 v September 2019
New impaired assets increased by $453 million (41%) with increases in Institutional division ($534 million) related to a small number of impairmentsof single name exposures. This was partially offset by Australia Retail and Commercial division (-$46 million) driven by ongoing lower growth in theunsecured and small business banking portfolio.

Ageing analysis of net loans and advances that are past due but not impaired1,2,3
As at

Movement

1-29 days

Mar 20$M
9,114

Sep 19$M
8,383

Mar 19$M
9,558

Mar 20v. Sep 19
9%

Mar 20v. Mar 19-5%30-59 days

2,772

2,255

2,993

23%

-7%

60-89 days

1,368

1,369

1,436

0%

-5%

>90 days

3,621

3,744

3,328

-3%

9%

Total

16,87515,751

17,315

7%

-3%

1.

Balance sheet amounts include assets and liabilities reclassified as held for sale.
In the September 2019 half, ANZ implemented a more market responsive collateral valuation methodology for the home loan portfolio in Australia which increased the number of home loans
being classified as impaired rather than past due. Comparative information was not restated for the change in methodology.
3. Excludes eligible customers that applied and were granted or are in the process of being granted a 6 month repayment deferral package provided to customers impacted by COVID-19 as at
31 March 2020. Customers who were 30 days past due or greater were not eligible for the 6 month repayment deferral packages.
2.

March 2020 v March 2019
Net loans and advances past due but not impaired decreased $440 million primarily driven by Australia Retail and Commercial division home loan
portfolio in the 1-29 days segment.

March 2020 v September 2019
Net loans and advances past due but not impaired increased $1,124 million primarily driven by Australia Retail and Commercial division and New
Zealand division home loan portfolio in the 1-29 days and 30-59 days segments due to seasonality.

34

GROUP RESULTS
Income Tax Expense - continuing operations
Half Year

Movement

Income tax expense on cash profit

Mar 20$M886

Sep 19$M
1,263

Mar 19$M
1,415

Effective tax rate (cash profit)

38.5%

30.3%

28.4%



Mar 20v. Sep 19-30%

Mar 20v. Mar 19-37%

March 2020 v March 2019
The effective tax rate has increased from 28.4% to 38.5%. The increase of 1,010 bps is primarily due to the non-tax deductible impairment ofinvestments in AmBank and PT Panin (+1,065 bps).

March 2020 v September 2019
The effective tax rate has increased from 30.3% to 38.5%. The increase of 820 bps is primarily due to non-tax deductible impairment of investments
in AmBank and PT Panin (+1,065 bps) partially offset by the impact of customer remediation (-146 bps) in the September 2019 half.

35

GROUP RESULTS
Impact of Foreign Currency Translation - continuing operations
The following tables present the Group’s cash profit results and net loans and advances neutralised for the impact of foreign currency translation
movements. Comparative data has been adjusted to remove the translation impact of foreign currency movements by retranslating prior period
comparatives at current period foreign exchange rates.
Cash Profit - March 2020 Half Year vs March 2019 Half Year
Half Year

Movement

Net interest income

ActualMar 20$M
7,222

FX
unadjusted
Mar 19$M
7,299

FX
impactMar 19$M
55

FX
adjustedMar 19$M
7,354

FX
unadjusted
Mar 20v. Mar 19-1%

FX
adjustedMar 20v. Mar 19-2%

Other operating income

1,357

2,447

41

2,488

-45%

-45%

Operating income

8,579

9,746

96

9,842

-12%

-13%

Operating expenses(4,605)(4,365)(57)(4,422)

5%

4%

Profit before credit impairment and income tax

3,974

5,381

39

5,420

-26%

-27%

Credit impairment charge(1,674)

(393)

2

(391)

large

large

Profit before income tax

2,300

4,988

41

5,029

-54%

-54%

Income tax expense(886)(1,415)(7)(1,422)

-37%

-38%

(1)

(9)

(1)

(10)

-89%

-90%

1,413

3,564

33

3,597

-60%

-61%

656,609

610,169

10,585

620,754

8%

6%

ActualFX
unadjusted

FX
impactFX
adjusted

FX
unadjusted

FX
adjusted

Net interest income

Mar 20$M
7,222

Sep 19$M
7,040

Sep 19$M
29

Sep 19$M
7,069

Mar 20v. Sep 19
3%

Mar 20v. Sep 19
2%

Other operating income

1,357

2,243

22

2,265

-40%

-40%

Operating income

8,579

9,283

51

9,334

-8%

-8%

Operating expenses(4,605)(4,706)(30)(4,736)-2%-3%

Profit before credit impairment and income tax

3,974

4,577

21

4,598

-13%

-14%

Credit impairment charge(1,674)

(402)

(2)

(404)

large

large

Profit before income tax

2,300

4,175

19

4,194

-45%

-45%

Income tax expense(886)(1,263)(6)(1,269)

-30%

-30%

(1)

(6)

-

(6)

-83%

-83%

1,413

2,906

13

2,919

-51%

-52%

656,609615,258

11,760627,018

7%

5%

Non-controlling interests
Cash profit from continuing operations
Balance Sheet
Net loans and advances1

Cash Profit - March 2020 Half Year vs September 2019 Half Year
Half Year

Non-controlling interests
Cash profit from continuing operations

Movement

Balance Sheet
Net loans and advances1
1.

Balance sheet amounts include assets and liabilities reclassified as held for sale from continuing and discontinued operations.

36

GROUP RESULTS
Earnings Related Hedges – continuing operations
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily New
Zealand Dollar, US Dollar and US Dollar correlated). New Zealand Dollar exposure relates to the New Zealand geography and USD exposures relate toAsia, Pacific, Europe & America. Details of these hedges are set out below.
Half Year
Mar 20$M
3,165

Sep 19$M
3,451

Mar 19$M
3,361

Amount taken to income (pre-tax statutory basis)2

(156)

115

(105)

Amount taken to income (pre-tax cash basis)3

(13)

(18)

(25)

USD Economic hedges
Net open USD position (notional principal)1

662

769

561

Amount taken to income (pre-tax statutory basis)2

(39)

(37)

(2)

Amount taken to income (pre-tax cash basis)3

(15)

(8)

-

NZD Economic hedges
Net open NZD position (notional principal)1

1.
2.
3.

Value in AUD at contracted rate.
Unrealised valuation movement plus realised revenue from matured or closed out hedges.
Realised revenue from closed out hedges.

As at 31 March 2020, the following hedges were in place to partially hedge future earnings against adverse movements in exchange rates:

NZD 3.3 billion at a forward rate of approximately NZD 1.05/AUD.



USD 0.4 billion at a forward rate of approximately USD 0.67/AUD.

During the March 2020 half:

NZD 1.1 billion of economic hedges matured and a realised loss of $13 million (pre-tax) was recorded in cash profit.



USD 0.2 billion of economic hedges matured and a realised loss of $15 million (pre-tax) was recorded in cash profit.

An unrealised loss of $167 million (pre-tax) on the outstanding NZD and USD economic hedges were recorded in the statutory Income Statement
during the year. This unrealised loss has been treated as an adjustment to statutory profit in calculating cash profit as these are hedges of future
NZD and USD revenues.

Earnings per Share - continuing operations
Half Year

Movement
Mar 19Mar 20Mar 20v. Sep 19 v. Mar 19

Mar 20

Sep 19

Basic

49.9

102.7

124.8

-51%

-60%

Diluted

47.5

98.7

118.4

-52%

-60%

Basic

2,830.6

2,829.3

2,856.9

0%-1%

Diluted

3,238.6

3,075.5

3,125.8

5%

4%

Cash profit from continuing operations ($M)

1,413

2,906

3,564

-51%

-60%

Cash profit from continuing operations used in calculating diluted
cash earnings per share ($M)

1,537

3,037

3,701

-49%

-58%

Cash earnings per share (cents) from continuing operations

Cash weighted average number of ordinary shares (M)1

1.

Cash weighted average number of ordinary shares for the comparative periods includes ANZ shares previously held in Wealth Australia discontinued operations as treasury shares. Theseshares ceased to be treasury shares on completion of the successor fund transfer on 13 April 2019 in preparation for the disposal of discontinued operations.

37

GROUP RESULTS
Dividends - continuing operations
Half Year
Dividend per ordinary share (cents) - continuing operations
Interim- fully franked1,2,3
1

Movement

Mar 20

Sep 19Mar 19

TBD

N/A

80

- partially franked

TBD

N/A

N/A

Final (partially franked)3,4

N/A

80

N/A

Total

TBD

80

80

Ordinary share dividends used in payout ratio ($M)5
Cash profit from continuing operations ($M)
Ordinary share dividend payout ratio (cash basis)5
1.
2.
3.
4.
5.

TBD

2,268

2,267

1,413

2,906

3,564

TBD

78.0%

63.6%

Mar 20v. Sep 19

Mar 20v. Mar 19

-51%

-60%

The decision on the payment of a 2020 interim dividend has been deferred until the economic outlook is clearer and an update will be provided at the August 2020 market update.
Fully franked for Australian tax purposes (30% tax rate) for the 2019 interim dividend.
Carries New Zealand imputation credits of NZD 9 cents for the 2019 interim and final dividend.
Partially franked at 70% for Australian tax purposes (30% tax rate).
The dividend payout ratio for the March 2020 half will be determined when the decision on the 2020 interim dividend has been made. Dividend payout ratios for the September 2019 halfand March 2019 half were calculated using actual dividend paid of $2,268 million and $2,267 million respectively.

With consideration to the current uncertainties in the economic outlook and the letter issued by the Australian Prudential Regulation Authority (APRA) toall Authorised Deposit Taking Institutions (ADIs) on 7 April 2020, on capital management and the ongoing Coronavirus (COVID-19) pandemic, the ANZboard has deferred the decision on the payment of a 2020 interim dividend until the economic outlook is clearer. Decisions in relation to the Dividend
Reinvestment Plan and Bonus Option Plan will also be made at that time as applicable.
The Board will continue to deliberate and an update will be provided at the August 2020 market update.

38

GROUP RESULTS
Condensed Balance Sheet - including discontinued operations
Movement

As at
AssetsCash / Settlement balances owed to ANZ / Collateral paid

Mar 20$B
166.8

Sep 19$B
100.3

Mar 19$B
109.9

Trading and investment securities

135.0

126.9

121.8

6%

11%

Derivative financial instruments

173.7

120.7

79.4

44%

large

Net loans and advances

656.6

615.3

609.3

7%

8%
-100%

Assets held for saleMar 20v. Sep 19
66%

Mar 20v. Mar 19
52%

-

1.8

43.5

-100%

17.9

16.1

16.4

11%

9%

1,150.0

981.1

980.3

17%

17%

Settlement balances owed by ANZ / Collateral received

39.8

18.8

18.1

large

large

Deposits and other borrowings

726.9

637.7

635.0

14%

14%

Derivative financial instruments

167.4

121.0

80.9

38%

large
-100%

Other
Total assets
Liabilities

Liabilities held for sale

-

2.1

46.6

-100%

Debt issuances

140.2

129.7

129.7

8%

8%

Other

14.3

11.0

10.0

30%

43%

Total liabilities

1,088.6

920.3

920.3

18%

18%

Total equity

61.4

60.8

60.0

1%

2%





March 2020 v March 2019

Cash/Settlement balances owed to ANZ/Collateral paid increased $56.9 billion (+52%) driven by an increase in balances with central banks in
Markets, increased overnight bank deposits in Treasury, increase in short term reverse repurchase agreements in Markets and Treasury,
increase in collateral paid associated with higher derivative liability position and foreign currency translation movements.

Trading and investment securities increased $13.2 billion (+11%) driven by an increase in liquid assets in Markets and the impact of foreign
currency translation movements.



Derivative financial assets and liabilities increased $94.3 billion and $86.5 billion respectively as interest rate and foreign exchange movements
resulted in higher derivative volumes and fair values, particularly in interest rate and foreign exchange swap products.

Net loans and advances increased $47.3 billion (+8%), driven by lending growth in the Institutional division (+$39.3 billion), growth in home loans
in the New Zealand division (+$4.6 billion) and the impact of foreign currency translation movements, partially offset by the decrease in Australia
Retail and Commercial division (-$6.8 billion) across home loans and unsecured portfolios.



Assets and liabilities held for sale decreased $43.5 billion (-100%) and $46.6 billion (-100%) respectively driven by the sale completion of the life
insurance business to IOOF and Zurich, Cambodia JV and PNG Retail, Commercial and SME.



Settlement balances owed by ANZ/Collateral received increased $21.7 billion driven by higher cash clearing account balances in the Institutional
division, an increase in collateral received associated with higher derivative asset position and foreign currency translation movements.



Deposits and other borrowings increased $91.9 billion (+14%) driven by increased customer deposits in the Institutional division (+$37.5 billion),
Australia Retail and Commercial division (+$9.6 billion) and New Zealand division (+$4.4 billion), an increase in deposits from banks andrepurchase agreements (+$10.9 billion), an increase in commercial paper issued (+$6.3 billion) and the impact of foreign currency translation
movements. This was partially offset by reduction in certificates of deposit (-$6.2 billion).



Debt issuances increased $10.5 billion (+8%) driven by senior debt issuances and the impact of foreign currency translation movements.

March 2020 v September 2019

Cash/Settlement balances owed to ANZ/Collateral paid increased $66.5 billion (+66%) driven by an increase in balances with central banks in
Markets, increased overnight bank deposits in Treasury, increase in short term reverse repurchase agreements in Markets and Treasury,
increase in collateral paid associated with higher derivative liability position and foreign currency translation movements.

Trading and investment securities increased $8.1 billion (+6%) driven by an increase in liquid assets in Markets and the impact of foreign
currency translation movements.



Derivative financial assets and liabilities increased $53.0 billion (+44%) and $46.4 billion (+38%) respectively as interest rate and foreignexchange movements resulted in higher derivative volumes and fair values, particularly in interest rate and foreign exchange swap products.

Net loans and advances increased $41.3 billion (+7%), driven by lending growth in the Institutional division (+$29.2 billion), growth in home loans
in the New Zealand division (+$2.8 billion) and the impact of foreign currency translation movements, partially offset by the decrease in Australia
Retail and Commercial division (-$2.1 billion) across home loans and unsecured portfolios.

Settlement balances owed by ANZ/Collateral received increased $21.0 billion driven by higher cash clearing account balances in the Institutional
division, an increase in collateral received associated with higher derivative asset position and foreign currency translation movements.



Deposits and other borrowings increased $89.2 billion (+14%) driven by increased customer deposits in the Institutional division (+$29.2 billion),
Australia Retail and Commercial division (+$5.0 billion) and New Zealand division (+$3.5 billion), an increase in deposits from banks andrepurchase agreements (+$20.2 billion), an increase in commercial paper issued (+$9.8 billion) and the impact of foreign currency translation
movements.

Debt issuances increased $10.5 billion (+8%) driven by senior debt issuances and the impact of foreign currency translation movements.

39

GROUP RESULTS
Liquidity Risk - including discontinued operations
Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesaledebt, or that the Group has insufficient capacity to fund increases in assets. The timing mismatch of cash flows and the related liquidity risk is inherent inall banking operations and is closely monitored by the Group and managed in accordance with the risk appetite set by the Board.
The Group’s approach to liquidity risk management incorporates two key components:


Scenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by the ability to meet a range of regulatory requirements and internal liquidity metrics mandated by the Board.
The metrics cover a range of scenarios of varying duration and level of severity. The objective of this framework is to:Provide protection against shorter term extreme market dislocation and stress.



Maintain structural strength in the balance sheet by ensuring that an appropriate amount of longer-term assets are funded with longer-term
funding.

Ensure that no undue timing concentrations exist in the Group’s funding profile.

A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, ANZ has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia(RBA). The CLF has been established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative
form of contingent liquidity. The total amount of the CLF available to a qualifying Authorised Deposit-taking Institution (ADI) is set annually by APRA.
From 1 January 2020, ANZ’s CLF is $35.7 billion (2019 calendar year end: $48.0 billion).


Liquid assets
The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent with
Basel 3 LCR:Highest-quality liquid assets (HQLA1): Cash, highest credit quality government, central bank or public sector securities eligible for repurchasewith central banks to provide same-day liquidity.

High-quality liquid assets (HQLA2): High credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.



Alternative liquid assets (ALA): Assets qualifying as collateral for the CLF and other eligible securities listed by the Reserve Bank of New
Zealand (RBNZ).

The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory requirements andthe risk appetite set by the Board.
COVID-19 has impacted the normal operations of financial markets including funding markets, however the actions of governments globally and central
banks including; the RBA, RBNZ and the US Federal Reserve have provided significant liquidity support to the system and financial markets generally.
ANZ’s liquidity measures have remained above management targets throughout this period and have strengthened further following the actions of central
banks.

Half Year Average

Movement

Mar 20$B

Sep 19$B

Mar 19$B

Mar 20v. Sep 19

Mar 20v. Mar 19

159.3

131.5

134.5

21%

18%

Market Values Post Discount1
HQLA1
HQLA2

9.6

9.5

7.6

1%

26%

Internal Residential Mortgage Backed Securities

27.7

34.5

34.2

-20%

-19%

Other ALA2

12.8

12.2

12.9

5%

-1%

Total liquid assets

209.4

187.7

189.2

12%

11%

Cash outflows

191.9

176.6

176.3

9%

9%

Cash inflows

41.2

45.4

38.6

-9%

7%

150.7

131.2

137.7

15%

9%

139%

143%

137%

-4%

2%

Cash flows modelled under stress scenario

Net cash outflows
3

Liquidity Coverage Ratio
1.
2.

3.

Half year average basis, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
Comprised of assets qualifying as collateral for the CLF, excluding internal residential mortgage backed securities, up to approved facility limit; and any liquid assets contained in the
RBNZ's Liquidity Policy - Annex: Liquidity Assets - Prudential Supervision Department Document BS13A12.
All currency Level 2 LCR.

40

GROUP RESULTS
Funding - including discontinued operations
ANZ targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.
$11.9 billion of term wholesale debt with a remaining term greater than one year as at 31 March 2020 was issued during the half year ended 31 March
2020.
The following table shows the Group’s total funding composition:
As at

Movement

Mar 20$B

Sep 19$B

Customer deposits and other liabilities
Australia Retail and Commercial

213.0

208.0

203.4

2%

5%

Institutional

258.5

217.3

205.4

19%

26%

New Zealand

91.2

83.4

85.4

9%

7%

Pacific

3.8

3.5

3.5

9%

9%

-

(0.4)

(4.3)

-100%

-100%

Customer deposits

566.5

511.8

493.4

11%

15%

Other funding liabilities2,3

11.1

9.6

8.6

16%

29%

Total customer liabilities (funding)

577.6

521.4

502.0

11%

15%

Wholesale funding
Debt issuances

119.1

113.1

113.4

5%

5%

Subordinated debt

21.1

16.6

16.3

27%

29%

Certificates of deposit

37.9

36.6

43.6

4%

-13%

Commercial paper

21.8

11.7

14.7

86%

48%

Other wholesale borrowings4,5

130.0

92.3

100.1

41%

30%
15%

TSO and Group Centre1

Mar 19$B

Mar 20v. Sep 19

Mar 20v. Mar 19

Total wholesale funding

329.9

270.3

288.1

22%

Shareholders' equity

61.4

60.8

60.0

1%

2%

Total funding

968.9

852.5

850.1

14%

14%

1.

2.
3.
4.
5.

Includes term deposits, other deposits and an adjustment recognised in prior periods in Group Centre to eliminate Wealth Australia discontinued operations investments in ANZ deposit
products.
Includes interest accruals, payables and other liabilities, provisions and net tax provisions, excluding other liabilities in Wealth Australia discontinued operations.
Excludes liability for acceptances as they do not provide net funding.
Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.
Includes RBA open repurchase arrangement netted down by the exchange settlement account cash balance.

Net Stable Funding Ratio
The following table shows the Level 2 Net Stable Funding Ratio (NSFR) composition:
As at

Required Stable Funding1
Retail & small and medium enterprises, corporate loans <35% risk weight22

Movement

Mar 20$B

Sep 19$B

Mar 19$B

Mar 20v. Sep 19

Mar 20v. Mar 19

187.4

182.2

182.9

3%

2%

193.2

180.7

189.1

7%

2%

Other lending3

26.9

27.6

23.2

-3%

16%

Liquid assets

16.0

12.4

10.7

29%

50%

Other assets4

45.3

40.0

40.2

13%

13%

Total Required Stable Funding

468.8

442.9

446.1

6%

5%

Retail & small and medium enterprise customer deposits

257.3

241.3

236.6

7%

9%

Corporate, public sector entities & operational deposits

Retail & small and medium enterprises, corporate loans >35% risk weight

Available Stable Funding1

110.0

93.5

91.5

18%

20%

Central bank & other financial institution deposits

5.5

6.2

6.1

-11%

-10%

Term funding

95.8

95.6

101.2

0%

-5%

Short term funding & other liabilities

1.4

2.0

3.7

-30%

-62%

Capital

82.1

76.9

73.9

7%

11%

Total Available Stable Funding

552.1

515.5

513.0

7%

8%

Net Stable Funding Ratio

118%

116%

115%

2%

3%

1.
2.
3.
4.

NSFR factored balance as per APRA Prudential Regulatory Standard APS 210 Liquidity.
Risk weighting as per APRA Prudential Regulatory Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk.
Includes financial institution and central bank loans.
Includes off-balance sheet items, net derivatives and other assets.

41

GROUP RESULTS
Capital Management - including discontinued operations
As at
Internationally Comparable Basel 31

APRA Basel 3
Mar 20

Sep 19Mar 19Mar 20

Sep 19Mar 19Common Equity Tier 1

10.8%

11.4%

11.5%

15.5%

16.4%

16.9%

Tier 1

12.5%

13.2%

13.4%

17.8%

18.8%

19.3%

Total capital

15.5%

15.3%

15.3%

21.5%

21.4%

21.7%

Risk weighted assets ($B)

449.0

417.0

396.3

353.7

330.4

310.9

Capital Ratios (Level 2)

1.

Internationally Comparable methodology aligns with APRA’s information paper entitled “International Capital Comparison Study” (13 July 2015).

APRA Basel 3 Common Equity Tier 1 (CET1 ratio) - March 2020 v September 20191.

Excludes large/notable items for the purposes of Regulatory Capital Management attribution which are included in ‘other’ with the exception of Asian associate impairments which are nil
impact to capital since it results in an equivalent reduction in capital deductions. Refer to pages 13 to 16.

March 2020 v September 2019
ANZ’s CET1 ratio decreased 60 bps to 10.8% during the March 2020 half. Key drivers of the movement in the CET1 ratio were:

Cash NPAT (excluding large/notable items and credit impairment charge or CIC) increased the CET1 ratio by +87 bps



The above however was offset by :
 The impact from increases in CIC including the associated deferred tax assets (DTA) increase, along with the impact of RWA risk migration, which
totalled -43 bps. These increases were primarily driven by the COVID-19 impact.
 Higher underlying RWA usage (excluding foreign currency translation movements, regulatory changes and other one-offs) from strong lending
growth, mainly within the Institutional division.
 Capital deductions reduced the CET1 ratio by -5 bps, representing the movements in retained earnings in deconsolidated entities, capitalised
software and other intangible movements during the half.
 Payment of the September 2019 final dividend (net of BOP issuance, neutralised DRP) which reduced the CET1 ratio by 53 bps.
 Other impacts of -2 bps. This included the capital benefits from sale of the Pension and Investment business to IOOF (+19 bps), but was morethan offset by the impacts from net increase in RWA imposts (-5 bps) which included the implementation of AASB 16, large/notable adjustments(-7 bps) and various other movements (-9 bps).

Total Risk Weighted Assets

As at

Credit RWA
Market risk and IRRBB RWA

Movement

Mar 20$B
386.0

Sep 19$B
358.1

Mar 19$B
345.5

Mar 20v. Sep 19
8%

Mar 20v. Mar 19
12%

15.1

12.3

13.1

22%

15%

Operational RWA

47.9

46.6

37.7

3%

27%

Total RWA

449.0

417.0

396.3

8%

13%

42

GROUP RESULTS

Total Risk Weighted Assets (RWA) - March 2020 v September 2019

March 2020 v September 2019
Total RWA increased by $32.0 billion. Excluding the impact of foreign currency translation movements and other non-recurring CRWA changes,
underlying CRWAs (divisional lending and risk migration) increased by $16.9 billion, mainly driven by lending growth in the Institutional division.
Other CRWA changes are mainly net impacts from RWA imposts including the impacts from implementation of AASB 16. The total increase in nonCRWA was $4.1 billion, of which of $2.8 billion mainly reflects increase in Market Risk RWA as a result of increased market volatility and IRRBB
RWA due to a deterioration in embedded gains. The increase in Operational Risk RWA of $1.3 billion is due to impacts of foreign exchange
movements.

APRA to Internationally Comparable1 Common Equity Tier 1 (CET1 ratio) as at 31 March 2020

1. ANZ’s interpretation of the regulations documented in the Basel Committee publications: “Basel 3: A global regulatory framework for more resilient banks and banking systems” (June 2011)and “International Convergence of Capital Measurement and Capital Standards” (June 2006). Also includes differences identified in APRA’s information paper entitled “International CapitalComparison Study” (13 July 2015).

The above provides a reconciliation of the CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Comparable Basel 3
standards. APRA views the Basel 3 reforms as a minimum requirement and hence has not incorporated some of the concessions proposed in the Basel3 rules and has also set higher requirements in other areas. As a result, Australian banks’ Basel 3 reported capital ratios will not be directly comparablewith international peers. The International Comparable Basel 3 CET1 ratio incorporates differences between APRA and both the Basel Committee Basel
3 framework (including differences identified in the March 2014 Basel Committee’s Regulatory Consistency Assessment Programme (RCAP) on Basel 3
implementation in Australia) and its application in major offshore jurisdictions.
The material differences between APRA Basel 3 and Internationally Comparable Basel 3 ratios include:
Deductions

Investments in insurance and banking associates - APRA requires full deduction against CET1. On an Internationally Comparable basis, theseinvestments are subject to a concessional threshold before a deduction is required.



Deferred tax assets - A full deduction is required from CET1 for deferred tax assets (DTA) relating to temporary differences. On an Internationally
Comparable basis, this is first subject to a concessional threshold before the deduction is required.

Risk Weighted Assets (RWA)Mortgages RWA - APRA imposes a floor of 20% on the downturn Loss Given Default (LGD) used in credit RWA calculations for residential
mortgages. The Internationally Comparable Basel 3 framework requires a downturn LGD floor of 10%. Additionally, from July 2016, APRA requires ahigher correlation factor than the Basel framework.



IRRBB RWA - APRA requires inclusion of Interest Rate Risk in the Banking Book (IRRBB) within the RWA base for the CET1 ratio calculation. This
is not required on an Internationally Comparable basis.

Specialised lending - APRA requires the supervisory slotting approach to be used in determining credit RWA for specialised lending exposures. The
Internationally Comparable basis allows for the advanced internal ratings based approach to be used when calculating RWA for these exposures.



Unsecured Corporate Lending LGD - an adjustment to align ANZ’s unsecured corporate lending LGD to 45% to be consistent with banks in otherjurisdictions. The 45% LGD rate is also used in the Foundation Internal Ratings-Based approach (FIRB).



Undrawn Corporate Lending Exposure at Default (EAD) - an adjustment to ANZ’s credit conversion factors (CCF) for undrawn corporate loan
commitments to 75% (used in FIRB approach) to align with banks in other jurisdictions.

43

GROUP RESULTS
Leverage Ratio - including discontinued operations
At 31 March 2020, the Group’s APRA Leverage Ratio was 5.0% which is above the 3.5% APRA proposed minimum for internal ratings-based approach
ADI (IRB ADI) which includes ANZ. The following table summarises the Group’s Leverage Ratio calculation:

As at

Movement

Mar 20$M
56,295

Sep 19$M
55,221

Mar 19$M
53,075

Mar 20v. Sep 19
2%

Mar 20v. Mar 19
6%On-balance sheet exposures (excluding derivatives and securities financing transaction
exposures)

899,411810,644

810,91511%

11%

Tier 1 Capital (net of capital deductions)

Derivative exposures

42,86834,25831,43925%

36%

Securities financing transaction exposures

67,44336,92337,287

83%

81%

Other off-balance sheet exposures

114,677

107,400

105,9427%

8%

1,124,399

989,225

985,583

14%

14%

APRA Leverage Ratio

5.0%

5.6%

5.4%

Internationally Comparable Leverage Ratio

5.6%

6.2%

6.0%

Total exposure measureMarch 2020 v September 2019
APRA leverage ratio decreased 57 bps during the half. Key drivers of the movement were:

On balance sheet exposures growth primarily from higher liquids and loan growth in the Institutional business (-32 bps).

Growth in securities financing transactions further decreased the leverage ratio by 15 bps.

Increase in derivatives exposures and non-market other off-balance sheet exposures reduced the leverage ratio by 6 bps.

Net other impacts of -4 bps. This included the benefits from sale of the Pension and Investment business to IOOF (+8 bps) but is more thanoffset by impacts from increased deferred tax assets (-4 bps), large and notable adjustments (-3 bps), impact from implementation of AASB 16 (2 bps) and other items (-3 bps).

44

GROUP RESULTS
Capital Management – Other Developments


Capital Requirements – Unquestionably Strong
The Australian Government completed a comprehensive inquiry into Australia’s financial system in 2014 which included a number of key
recommendations that may have an impact on regulatory capital levels. APRA initiatives in support of the recommendations are:

In July 2017, APRA released an information paper outlining its assessment on the additional capital required for the Australian banking sector tobe considered ‘unquestionably strong’ as originally outlined in the FSI final report in December 2014. APRA indicated that “in the case of the four
major Australian banks, this equated to a benchmark CET1 capital ratio, under the current capital adequacy framework, of at least 10.5 percent
from 1 January 2020”.



APRA is consulting on a number of proposals in relation to risk-weighting framework revisions to credit risk, operational risk, market risk andinterest rate risk in the banking book requirements. While the final forms of these proposals is not yet determined, the Group expects theimplementation of any revisions to the current requirements will result in further changes to the risk weighting framework for certain asset classes
and other risk types (such as market and operational risk). APRA has announced that it does not expect that the changes to the risk weights will
necessitate further increases in capital for ADIs, although this could vary by ADIs depending on the final requirements.



APRA released a discussion paper in August 2018 on adjustments to the overall design of the capital framework to improve transparency,
international comparability and flexibility of the ADIs capital framework. The focus of the proposals is on the presentation of the capital ratios tofacilitate comparability whilst recognising the relative capital strength of ADIs and measures to enhance supervisory flexibility in times of financial
stress.

APRA’s consultation for the above is ongoing. In response to the challenging economic environment resulting from the COVID-19 disruptions, APRA
has:


Announced a temporary change to its expectations with regards to ADIs maintaining bank capital ratios at the Unquestionably Strong benchmark
of 10.5% for CET1. During the period of disruption, APRA would not be concerned if ADIs are not meeting this benchmark as the current large
buffers may be needed to facilitate ongoing lending to the Australian economy.



Deferred its scheduled implementation of changes to ADIs risk-weighting framework by one year. The majority of the capital reforms were initiallydue for implementation on 1 January 2022, but these have now been revised to 1 January 2023. The deferral also includes APRA proposals on
improving transparency, international comparability and flexibility of the ADIs capital framework.

Given the number of items that are yet to be finalised by APRA, the final outcome of the FSI including any further changes to APRA’s prudential
standards or other impacts on the Group remains uncertain.


APRA Guidance on Capital Management
As a result of the COVID-19 disruption, on 7 April 2020, APRA wrote to ADIs and provided additional guidance to ADIs on the factors to consider
when making decisions on discretionary capital distributions such as the Group’s ordinary share dividend. APRA has also indicated that during theperiod of the disruption (and at least in the next two months from the date of the guidance), APRA expects ADIs to seriously consider deferring
decisions on the appropriate level of dividends until the outlook is clearer. However, where a Board is confident that they are able to approve a
dividend before this, on the basis of robust stress testing results that have been discussed with APRA, this should nevertheless be at a materiallyreduced level. Dividend payments should be offset to the extent possible through the use of dividend reinvestment plans and other capitalmanagement initiatives.



APRA Total Loss Absorbing Capacity Requirements
In July 2019, APRA announced its decision on loss-absorbing capacity in which it will require domestic systemically important banks (D-SIBs),
including ANZ, to increase their Total Capital by 3% of risk-weighted assets by January 2024. Based on ANZ’s capital position as at 31 March 2020,
this represents an incremental increase in the Total Capital requirement of approximately $9 billion, with an equivalent decrease in other seniorfunding. APRA has stated that it anticipates that D-SIBs would satisfy the requirement predominantly with Tier 2 capital.



Revisions to Related Entities Framework
APRA announced in August 2019 that it will implement its proposal to reduce limits for Australian ADIs’ exposure to related entities, reducing limits
from 50% of Level 1 Total capital to 25% of Level 1 Tier 1 capital. As exposures are measured net of capital deductions, the proposed changes to
APRA’s capital regulations (contained in APS111 below) would affect the measurement of ADIs exposures. On the basis that the APS111 revisions
are implemented as currently proposed, the reduction in the above limits is not expected to have a material impact on ANZ and its subsidiaries. The
implementation date for changes to the related entities framework has been deferred by APRA to 1 January 2022 (12 month deferral from initial
implementation date of 1 January 2021).

45

GROUP RESULTS


Revisions to APS111 Capital Adequacy
In October 2019, APRA released a discussion paper on draft revisions to the prudential standards APS111 Capital Adequacy: Measurement ofCapital for consultation. The most material change from APRA’s proposal is in relation to the treatment of capital investments for each banking andinsurance subsidiary at Level 1 with the tangible component of the investment changing from 400% risk weighting to:

250% risk weighting up to an amount equal to 10% of ANZ’s net Level 1 Common Equity Tier 1 (CET1); andthe remainder of the investment will be treated as a CET1 capital deduction.

ANZ is reviewing the implications for its current investments. The net impact on the Group is unclear and will depend upon a number of factors
including the capitalisation of the affected subsidiaries at the time of implementation, the final form of the prudential standard, as well as the effect ofmanagement actions being pursued that have the potential to materially offset the impact of these proposals. Based on ANZ’s current investment in
its affected subsidiaries and in the absence of any offsetting management actions, the above proposals implies a reduction in ANZ’s Level 1 CET1
capital ratio of up to approximately $2.5bn (~75 basis points). However, ANZ believes that this outcome is unlikely and, post implementation ofmanagement actions, the net capital impact could be minimal. There is no impact on ANZ’s Level 2 CET1 capital ratio arising from these proposedchanges. The proposed implementation date of 1 January 2021 for these changes is currently under review by APRA in line with theirannouncements to suspend public consultation on revisions to prudential standards that are currently underway or upcoming, with no plans forrecommencement before 30 September 2020.
The Reserve Bank of New Zealand (RBNZ) review of capital requirements
On 5 December 2019, ANZBGL provided an update on the impacts of the release of RBNZ’s final capital requirements. The key changes to the
RBNZ final capital requirements relative to the consultation paper:No change in total Tier 1 capital required for ANZ New Zealand of 16%, the transition period is longer at seven years, and there is a reduced
impact on CET1 capital for the Group;A greater proportion of the increase is in AT1 capital (2.5% compared to the initial proposal of 1.5%), decreasing the amount of CET1 capitalrequired; andRedeemable preference shares are allowable as AT1 capital. It is anticipated that ANZ New Zealand will be able to refinance existing internal
AT1 securities to external counterparties.

At the time of the RBNZ announcement the net impact on the Group is an increase in CET1 capital of approximately A$3.0 billion by July 2027 overthe seven year transition period (based on the Group’s 30 September 2019 balance sheet), which includes an approximately A$1.0 billion
management buffer.
The RBNZ has delayed the commencement date of the increased capital requirements by 12 months to 1 July 2021 (from 1 July 2020) in responseto the uncertainties from the COVID-19 pandemic.


RBNZ announcement on actions to support the banking system
With effect from 2 April 2020, the RBNZ amended ANZ New Zealand's Conditions of Registration to (among other things) prohibit ANZ New Zealandfrom making distributions other than discretionary payments payable to holders of Additional Tier 1 capital instruments. This restriction applies to all
New Zealand-incorporated banks, and is intended to support the stability of the financial system during the COVID-19 pandemic. These requirements
prevent ANZ New Zealand from redeeming its NZ$500 million Capital Notes in May 2020, although ANZ New Zealand can continue making coupon
payments on those Capital Notes. The terms of the Capital Notes provide for their conversion into a variable number of ANZBGL shares in May 2020
(ANZ New Zealand option) or May 2022 subject to certain conditions. Conversion would result in an increase in the Group’s CET1 capital (~12bps at
Level 2). ANZ New Zealand has announced that it will not be exercising its option to convert in May 2020.

46

DIVISIONAL RESULTSCONTENTS

Page

Divisional Performance - continuing operations

48

Australia Retail and Commercial - continuing operations

53

Institutional - continuing operations

57

New Zealand - continuing operations

64

Pacific - continuing operations

69

Technology, Services & Operations (TSO) and Group Centre - continuing operations

69

47

DIVISIONAL RESULTS
Divisional Performance - continuing operations
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, andTechnology, Services & Operations (TSO) and Group Centre. For further information on the composition of divisions, refer to the Definitions on page 141.
The Divisional Results section is reported on a cash profit basis for continuing operations. For information on discontinued operations pleaserefer to the Guide to Half Year Results on page 8.
The divisions reported are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.

48

DIVISIONAL RESULTS

Cash profit by division - March 2020 Half Year v March 2019 Half Year

March 2020 Half YearNet interest income
Other operating income

Australia
Retail andCommercial
$M
4,048

Institutional
$M
1,624

New Zealand
$M
1,410

Pacific$M
65

TSO andGroup Centre
$M
75

Group
$M
7,222
1,357

595

1,167

247

50

(702)

Operating income

4,643

2,791

1,657

115

(627)

8,579

Operating expenses(2,065)(1,290)

(690)

(76)

(484)

(4,605)

Profit before credit impairment and income tax

2,578

1,501

967

39

(1,111)

3,974

Credit impairment (charge)/release

(843)

(641)

(179)

(11)

-

(1,674)

Profit/(Loss) before income tax

1,735

860

788

28

(1,111)

2,300

Income tax expense and non-controlling interests

(521)

(250)

(221)

(8)

113

(887)

Cash profit/(loss) from continuing operations

1,214

610

567

20

(998)

1,413

Australia
Retail andCommercial
$M
4,092

Institutional
$M
1,579

New Zealand
$M
1,385

Pacific$M
68

TSO andGroup Centre
$M
175

Group
$M
7,299
2,447

March 2019 Half YearNet interest income
Other operating income

651

1,126

302

50

318

Operating income

4,743

2,705

1,687

118

493

9,746

Operating expenses(1,913)(1,320)

(612)

(70)

(450)

(4,365)

Profit before credit impairment and income tax

2,830

1,385

1,075

48

43

5,381

Credit impairment (charge)/release

(396)

35

(30)

(2)

-

(393)

Profit/(Loss) before income tax

2,434

1,420

1,045

46

43

4,988

Income tax expense and non-controlling interests

(731)

(408)

(292)

(13)

20

(1,424)

Cash profit/(loss) from continuing operations

1,703

1,012

753

33

63

3,564

Australia
Retail andCommercial-1%

Institutional
3%

New Zealand2%

Pacific-4%

TSO andGroup Centre
-57%

Group
-1%

Other operating income

-9%

4%

-18%

0%

large

-45%

Operating income

-2%

3%

-2%

-3%

large

-12%

Operating expenses

8%

-2%

13%

9%

8%

5%

Profit before credit impairment and income tax

-9%

8%

-10%

-19%

large

-26%

Credit impairment charge/(release)

large

large

large

large

n/a

large

March 2020 Half Year vs March 2019 Half YearNet interest income

Profit/(Loss) before income tax

-29%

-39%

-25%

-39%

large

-54%

Income tax expense and non-controlling interests

-29%

-39%

-24%

-38%

large

-38%

Cash profit/(loss) from continuing operations

-29%

-40%

-25%

-39%

large

-60%

49

DIVISIONAL RESULTS

Cash profit by division - March 2020 Half Year v September 2019 Half Year

March 2020 Half YearNet interest income

Australia
Retail andCommercial
$M
4,048

Institutional
$M
1,624

New Zealand
$M
1,410

Pacific$M
65

TSO andGroup Centre
$M
75

Group
$M
7,222
1,357

595

1,167

247

50

(702)

Operating income

4,643

2,791

1,657

115

(627)

8,579

Operating expenses(2,065)(1,290)

(690)

(76)

(484)

(4,605)

Profit before credit impairment and income tax

2,578

1,501

967

39

(1,111)

3,974

Credit impairment (charge)/release

(843)

(641)

(179)

(11)

-

(1,674)

Profit/(Loss) before income tax

1,735

860

788

28

(1,111)

2,300

Income tax expense and non-controlling interests

(521)

(250)

(221)

(8)

113

(887)

Cash profit/(loss) from continuing operations

1,214

610

567

20

(998)

1,413

Australia
Retail andCommercial
$M
4,000

Institutional
$M
1,501

New Zealand
$M
1,351

Pacific$M
60

TSO andGroup Centre
$M
128

Group
$M
7,040

696

1,066

278

54

149

2,243

Other operating income

September 2019 Half YearNet interest income
Other operating income
Operating income

4,696

2,567

1,629

114

277

9,283

Operating expenses(2,161)(1,347)

(674)

(80)

(444)

(4,706)

Profit before credit impairment and income tax

2,535

1,220

955

34

(167)

4,577

Credit impairment (charge)/release

(316)

(33)

(57)

3

1

(402)

Profit/(Loss) before income tax

2,219

1,187

898

37

(166)

4,175

Income tax expense and non-controlling interests

(727)

(371)

(252)

(11)

92

(1,269)Cash profit/(loss) from continuing operations

1,492

816

646

26

(74)

2,906

Australia
Retail andCommercial
1%

Institutional
8%

New Zealand
4%

Pacific
8%

TSO andGroup Centre
-41%

Group
3%

March 2020 Half Year vs September 2019 Half YearNet interest income
Other operating income

-15%

9%

-11%

-7%

large

-40%

Operating income

-1%

9%

2%

1%

large

-8%

Operating expenses

-4%

-4%

2%

-5%

9%

-2%

Profit before credit impairment and income tax

2%

23%

1%

15%

large

-13%
large

Credit impairment charge/(release)

large

large

large

large

-100%

Profit/(Loss) before income tax

-22%

-28%

-12%

-24%

large

-45%

Income tax expense and non-controlling interests

-28%

-33%

-12%

-27%

23%

-30%

Cash profit/(loss) from continuing operations

-19%

-25%

-12%

-23%

large

-51%

50

DIVISIONAL RESULTS

Cash profit by division (excluding large/notable items1) - March 2020 Half Year v March 2019 Half Year
The Group cash profit results include a number of items collectively referred to as large/notable items. While these items form part of cash profit they
have been excluded from the tables below given their nature and significance.

1.

Refer to pages 13 to 16 for a description of large/notable items.

March 2020 Half YearNet interest income

Australia
Retail andCommercial
$M
4,058

Institutional
$M
1,628

New Zealand
$M
1,423

Pacific$M
67

TSO andGroup Centre
$M
89

Group
$M
7,265
2,196

625

1,163

255

50

103

Operating income

4,683

2,791

1,678

117

192

9,461

Operating expenses(1,887)(1,275)

(671)

(74)

(448)

(4,355)

Profit before credit impairment and income tax

2,796

1,516

1,007

43

(256)

5,106

Credit impairment (charge)/release

(843)

(641)

(179)

(11)

-

(1,674)

Profit/(Loss) before income tax

1,953

875

828

32

(256)

3,432

Income tax expense and non-controlling interests

(586)

(253)

(233)

(9)

100

(981)

Cash profit/(loss) from continuing operations

1,367

622

595

23

(156)

2,451

March 2019 Half YearNet interest income

Australia
Retail andCommercial
$M
4,114

Institutional
$M
1,548

New Zealand
$M
1,381

Pacific$M
68

TSO andGroup Centre
$M
181

Group
$M
7,292

Other operating income

693

1,109

280

50

84

2,216

Other operating income

Operating income

4,807

2,657

1,661

118

265

9,508

Operating expenses(1,858)(1,293)

(604)

(70)

(415)

(4,240)

Profit before credit impairment and income tax

2,949

1,364

1,057

48

(150)

5,268

Credit impairment (charge)/release

(396)

34

(30)

(2)

-

(394)

Profit/(Loss) before income tax

2,553

1,398

1,027

46

(150)

4,874

Income tax expense and non-controlling interests

(767)

(394)

(288)

(13)

55

(1,407)

Cash profit/(loss) from continuing operations

1,786

1,004

739

33

(95)

3,467

Australia
Retail andCommercial-1%

Institutional
5%

New Zealand
3%

Pacific-1%

TSO andGroup Centre
-51%

Group
0%

Other operating income

-10%

5%

-9%

0%

23%

-1%

Operating income

-3%

5%

1%

-1%

-28%

0%

Operating expenses

2%

-1%

11%

6%

8%

3%

Profit before credit impairment and income tax

-5%

11%

-5%

-10%

71%

-3%

Credit impairment charge/(release)

large

large

large

large

n/a

large

March 2020 Half Year vs March 2019 Half YearNet interest income

Profit/(Loss) before income tax

-24%

-37%

-19%

-30%

71%

-30%

Income tax expense and non-controlling interests

-24%

-36%

-19%

-31%

82%

-30%

Cash profit/(loss) from continuing operations

-23%

-38%

-19%

-30%

64%

-29%

51

DIVISIONAL RESULTS

Cash profit by division (excluding large/notable items1) - March 2020 Half Year v September 2019 Half Year

1.

Refer to pages 13 to 16 for a description of large/notable items.

March 2020 Half YearNet interest income

Australia
Retail andCommercial
$M
4,058

Institutional
$M
1,628

New Zealand
$M
1,423

Pacific$M
67

TSO andGroup Centre
$M
89

Group
$M
7,265
2,196

625

1,163

255

50

103

Operating income

4,683

2,791

1,678

117

192

9,461

Operating expenses(1,887)(1,275)

(671)

(74)

(448)

(4,355)

Profit before credit impairment and income tax

2,796

1,516

1,007

43

(256)

5,106

Credit impairment (charge)/release

(843)

(641)

(179)

(11)

-

(1,674)

Profit/(Loss) before income tax

1,953

875

828

32

(256)

3,432

Income tax expense and non-controlling interests

(586)

(253)

(233)

(9)

100

(981)

Cash profit/(loss) from continuing operations

1,367

622

595

23

(156)

2,451

Australia
Retail andCommercial
$M
4,064

Institutional
$M
1,477

New Zealand
$M
1,399

Pacific$M
67

TSO andGroup Centre
$M
131

Group
$M
7,138

Other operating income

September 2019 Half YearNet interest income
Other operating income

704

1,064

287

54

131

2,240

Operating income

4,768

2,541

1,686

121

262

9,378

Operating expenses(1,885)(1,282)

(650)

(73)

(432)

(4,322)

Profit before credit impairment and income tax

2,883

1,259

1,036

48

(170)

5,056

Credit impairment (charge)/release

(316)

(31)

(57)

3

1

(400)

Profit/(Loss) before income tax

2,567

1,228

979

51

(169)

4,656

Income tax expense and non-controlling interests

(772)

(380)

(275)

(11)

87

(1,351)

Cash profit/(loss) from continuing operations

1,795

848

704

40

(82)

3,305

Australia
Retail andCommercial
0%

Institutional
10%

New Zealand2%

Pacific0%

TSO andGroup Centre
-32%

Group
2%

Other operating income

-11%

9%

-11%

-7%

-21%

-2%

Operating income

-2%

10%

0%

-3%

-27%

1%

Operating expenses

0%

-1%

3%

1%

4%

1%

Profit before credit impairment and income tax

-3%

20%

-3%

-10%

51%

1%

Credit impairment (charge)/release

large

large

large

large

-100%

large

March 2020 Half Year vs September 2019 Half YearNet interest income

Profit/(Loss) before income tax

-24%

-29%

-15%

-37%

51%

-26%

Income tax expense and non-controlling interests

-24%

-33%

-15%

-18%

15%

-27%

Cash profit/(loss) from continuing operations

-24%

-27%

-15%

-43%

90%

-26%

52

DIVISIONAL RESULTS
Australia Retail and Commercial – continuing operations
Mark Hand
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 16 and pages 51 to 52 for details.
Half Year
Mar 20$M
4,048

Net interest income

Sep 19$M
4,000

Movement
Mar 19$M
4,092

Mar 20v. Sep 19
1%

Mar 20v. Mar 19
-1%

595

696

651

-15%

-9%

Operating income

4,643

4,696

4,743

-1%

-2%

Operating expenses(2,065)(2,161)(1,913)-4%

8%

Profit before credit impairment and income tax

2,578

2,535

2,830

2%

-9%

Other operating income

Credit impairment charge

(843)

(316)

(396)

large

large

Profit before income tax

1,735

2,219

2,434

-22%

-29%

Income tax expense and non-controlling interests

(521)

(727)

(731)

-28%

-29%

Cash profit

1,214

1,492

1,703

-19%

-29%

Balance Sheet
Net loans and advances

329,812331,871336,584-1%-2%

Other external assets

3,836

4,350

4,151

-12%

-8%

External assets

333,648336,221340,735-1%-2%

Customer deposits

212,990

208,005

203,366

2%

5%

9,478

9,610

9,665

-1%

-2%
4%

Other external liabilities
External liabilities

222,468

217,615

213,031

2%

Risk weighted assets

161,758

162,060

159,3100%

2%

Average gross loans and advances

333,617336,302341,282-1%-2%

Average deposits and other borrowings

210,214204,791

202,765

3%

4%

RatiosReturn on average assets

0.72%

0.88%

0.99%

Net interest margin

2.65%

2.58%

2.61%

Operating expenses to operating income

44.5%

46.0%

40.3%

Operating expenses to average assets

1.23%

1.28%

1.12%

318

355

350

-10%

-9%

0.19%

0.21%

0.21%
large

large

5%

6%

1%

3%

Individually assessed credit impairment charge/(release)
Individually assessed credit impairment charge/(release) as a % of average GLA1
Collectively assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release) as a % of average GLA1

525

(39)

46

0.31%

(0.02%)

0.03%

Gross impaired assets

1,544

1,468

1,463

Gross impaired assets as a % of GLA

0.46%

0.44%

0.43%

Total full time equivalent staff (FTE)

14,061

13,903

13,6601.

Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Cash Profit March 2020 v March 2019

Performance March 2020 v March 2019
Lending volumes declined particularly in home loans due to faster
principal reductions in a low rate environment and competition. Thiswas partially offset by recovery in volumes following the launch of anumber of marketing campaigns and improvements in operational
processes.



Net interest margin increased driven by lower funding costs and homeloan repricing benefits largely offset by headwinds of official cash rate
decreases on low rate deposits and earnings on capital.



Other operating income decreased driven by the full period impact offees removed in the prior period and lower volumes.

Operating expenses increased driven by higher restructuring
expenses, additional charges for lease-related items, higher
remediation expenses and higher investment spend. Inflation increases
were offset by productivity benefits.

Credit impairment charges increased driven by an additional
collectively assessed credit impairment charge for COVID-19 impacts.

53

DIVISIONAL RESULTS
Australia Retail and Commercial – continuing operations
Mark Hand
Individually assessed credit impairment charge/(release)

Half Year
Mar 20$M
156

Retail

Sep 19$M
186

Movement
Mar 19$M
195

Mar 20v. Sep 19-16%

Mar 20v. Mar 19-20%

Home Loans

28

36

45

-22%

-38%

Cards and Personal Loans

122

144

147

-15%

-17%
100%

Deposits and Payments1

6

6

3

0%

162

169

155

-4%

5%

Business Banking

72

73

57

-1%

26%

Small Business Banking

90

96

98

-6%

-8%

318

355

350

-10%

-9%

Mar 19$M
35

Mar 20v. Sep 19
large

Commercial

Individually assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release)

Half Year
Mar 20$M
275

Retail

Sep 19$M(24)

Movement
Mar 20v. Mar 19
largeHome Loans

239

35

49

large

large

Cards and Personal Loans

34

(57)

(16)

large

large

Deposits and Payments1

2

(2)

2

large

0%

250

(15)

11

large

large

Business Banking

137

(15)

4

large

large

Small Business Banking

113

(3)

5

large

large

Commercial

Private Bank
Collectively assessed credit impairment charge/(release)

-

3

2

-100%

-100%

525

(39)

46

large

large

Net loans and advances

As at

Movement

Mar 20$M
272,696

Sep 19$M
274,797

Mar 19$M
279,483

Mar 20v. Sep 19-1%

Mar 20v. Mar 19-2%

263,580

264,981

269,020-1%-2%

Cards and Personal Loans

8,370

8,958

9,574

-7%

-13%

Deposits and Payments1

61

69

42

-12%

45%

Advice

685

789

847

-13%

-19%

Commercial

RetailHome Loans

57,11657,074

57,1010%

0%

Business Banking

41,75941,27540,805

1%

2%

Small Business Banking

13,03013,803

14,265-6%-9%

Private Bank

2,327

1,996

2,031

17%

15%

329,812331,871336,584-1%-2%

Mar 20v. Sep 19
2%

Mar 20v. Mar 19
5%
5%

Net loans and advances
Customer deposits

As at

RetailHome Loans2

Movement

Mar 20$M
123,435

Sep 19$M
120,880

Mar 19$M
117,374

28,13327,07826,915

4%

Cards and Personal Loans

254

265

240

-4%

6%

Deposits and Payments

95,04893,537

90,2192%

5%89,555

87,12585,992

3%

4%

Business Banking

20,63019,731

19,797

5%

4%

Small Business Banking

43,773

41,79940,614

5%

8%

Private Bank

25,152

25,59525,581-2%-2%

Customer deposits

212,990

208,005

203,366

2%

5%

Commercial

1.
2.

Net loans and advances for the deposits and payments business represent amounts in overdraft.
Customer deposit amounts for the home loans business represent balances in offset accounts.

54

DIVISIONAL RESULTS
Australia Retail and Commercial – continuing operations
Mark Hand

Retail$M
2,754

March 2020 Half YearNet interest income
Other operating income

Commercial
$M
1,294

Total
$M
4,048

385

210

595

Operating income

3,139

1,504

4,643

Operating expenses(1,403)(662)(2,065)
2,578

Profit before credit impairment and income tax

1,736

842

Credit impairment (charge)/release

(431)

(412)

(843)

Profit before income tax

1,305

430

1,735

Income tax expense and non-controlling interests

(392)

(129)

(521)

Cash profit

913

301

1,214

Individually assessed credit impairment charge/(release)

156

162

318

Collectively assessed credit impairment charge/(release)

275

250

525

Net loans and advances

272,696

57,116

329,812

Customer deposits

123,435

89,555

212,990

Risk weighted assets

108,238

53,520161,758

March 2019 Half YearNet interest income

2,739

1,353

4,092

Other operating income

425

226

651

Operating income

3,164

1,579

4,743

Operating expenses(1,289)(624)(1,913)

Profit before credit impairment and income tax

1,875

955

2,830

Credit impairment (charge)/release

(230)

(166)

(396)

Profit before income tax

1,645

789

2,434

Income tax expense and non-controlling interests

(493)

(238)

(731)

Cash profit

1,152

551

1,703

195

155

350

Individually assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release)

35

11

46

Net loans and advances

279,483

57,101

336,584

Customer deposits

117,374

85,992

203,366

Risk weighted assets

107,288

52,022

159,310

March 2020 Half Year vs March 2019 Half YearNet interest income

1%

-4%

-1%

Other operating income

-9%

-7%

-9%

Operating income

-1%

-5%

-2%

Operating expenses

9%

6%

8%

Profit before credit impairment and income tax

-7%

-12%

-9%

Credit impairment (charge)/release

87%

large

large

Profit before income tax

-21%

-46%

-29%

Income tax expense and non-controlling interests

-20%

-46%

-29%

Cash profit

-21%

-45%

-29%

Individually assessed credit impairment charge/(release)

-20%

5%

-9%

Collectively assessed credit impairment charge/(release)

large

large

large

Net loans and advances

-2%

0%

-2%

Customer deposits

5%

4%

5%

Risk weighted assets

1%

3%

2%

55

DIVISIONAL RESULTS
Australia Retail and Commercial – continuing operations
Mark Hand

Retail$M
2,754

March 2020 Half YearNet interest income
Other operating income

Commercial
$M
1,294

Total
$M
4,048

385

210

595

Operating income

3,139

1,504

4,643

Operating expenses(1,403)(662)(2,065)
2,578

Profit before credit impairment and income tax

1,736

842

Credit impairment (charge)/release

(431)

(412)

(843)

Profit before income tax

1,305

430

1,735

Income tax expense and non-controlling interests

(392)

(129)

(521)

Cash profit

913

301

1,214

Individually assessed credit impairment charge/(release)

156

162

318

Collectively assessed credit impairment charge/(release)

275

250

525

Net loans and advances

272,696

57,116

329,812

Customer deposits

123,435

89,555

212,990

Risk weighted assets

108,238

53,520161,758

2,774

1,226

4,000

460

236

696

Operating income

3,234

1,462

4,696

Operating expenses(1,585)(576)(2,161)

Profit before credit impairment and income tax

1,649

886

2,535

Credit impairment (charge)/release

(162)

(154)

(316)

Profit before income tax

1,487

732

2,219

Income tax expense and non-controlling interests

(507)

(220)

(727)

Cash profit

980

512

1,492

Individually assessed credit impairment charge/(release)

186

169

355

September 2019 Half YearNet interest income
Other operating income

Collectively assessed credit impairment charge/(release)

(24)

(15)

(39)

Net loans and advances

274,797

57,074

331,871

Customer deposits

120,880

87,125208,005

Risk weighted assets

109,168

52,892

162,060

March 2020 Half Year vs September 2019 Half YearNet interest income

-1%

6%

1%

Other operating income

-16%

-11%

-15%

Operating income

-3%

3%

-1%

Operating expenses

-11%

15%

-4%

Profit before credit impairment and income tax

5%

-5%

2%

Credit impairment (charge)/release

large

large

large

Profit before income tax

-12%

-41%

-22%

Income tax expense and non-controlling interests

-23%

-41%

-28%

Cash profit

-7%

-41%

-19%

Individually assessed credit impairment charge/(release)

-16%

-4%

-10%

Collectively assessed credit impairment charge/(release)

large

large

large

Net loans and advances

-1%

0%

-1%

Customer deposits

2%

3%

2%

Risk weighted assets

-1%

1%

0%

56

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 16 and pages 51 to 52 for details.
Half Year

Movement

Net interest income

Mar 20$M
1,624

Sep 19$M
1,501

Mar 19$M
1,579

Mar 20v. Sep 19
8%

Mar 20v. Mar 19
3%

Other operating income

1,167

1,066

1,126

9%

4%

Operating income

2,791

2,567

2,705

9%

3%

Operating expenses(1,290)(1,347)(1,320)-4%-2%Profit before credit impairment and income tax

1,501

1,220

1,385

23%

8%

Credit impairment (charge)/release

(641)

(33)

35

large

large

Profit before income tax

860

1,187

1,420

-28%

-39%

Income tax expense and non-controlling interests

(250)

(371)

(408)

-33%

-39%

Cash profit

610

816

1,012

-25%

-40%

Balance Sheet
Net loans and advances

199,410

164,526

152,548

21%

31%

Other external assets

461,548

346,094

307,198

33%

50%

External assets

660,958

510,620459,746

29%

44%

Customer deposits

258,517217,259

205,364

19%

26%

Other deposits and borrowings

96,63973,412

79,148

32%

22%

1

Deposits and other borrowings

355,156

290,671284,512

22%

25%

Other external liabilities

229,611

157,505

119,353

46%

92%

External liabilities

584,767

448,176

403,865

30%

45%

Risk weighted assets

207,028

181,088

167,406

14%

24%

Average gross loans and advances

175,366

159,355

153,982

10%

14%

Average deposits and other borrowings

305,506

290,948281,770

5%8%

Ratios1
Return on average assets

0.23%

0.33%

0.44%

Net interest margin

0.78%

0.80%

0.85%

Net interest margin (excluding Markets)

1.81%

2.02%

2.10%

Operating expenses to operating income

46.2%

52.5%

48.8%

Operating expenses to average assets

0.48%

0.54%

0.58%

272

-

(12)

n/a

large

0.31%

0.00%

(0.02%)

369

33

(23)

large

large

0.42%

0.04%

(0.03%)
large

99%

-2%

-12%

Individually assessed credit impairment charge/(release)2

Individually assessed credit impairment charge/(release) as a % of average GLA
Collectively assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release) as a % of average GLA2

742

265

373

Gross impaired assets as a % of GLA

Gross impaired assets

0.37%

0.16%

0.24%

Total full time equivalent staff (FTE)

5,350

5,468

6,085

1.

Balance Sheet amounts include assets and liabilities reclassified as held for sale from continuing operations.
2. Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Performance March 2020 v March 2019

Cash Profit March 2020 v March 2019

Lending volumes increased across all businesses. Customer deposits
grew in Markets and Transaction Banking.



Net interest margin ex-Markets decreased mainly due to lower deposit
margins as a result of lower interest rates.



Other operating income increased mainly due to higher Markets income.



Operating expenses decreased as a result of automation andsimplification initiatives that resulted in lower FTE, lower discretionary
spend and lower property charges.

Credit impairment charges increased due to an additional collectively
assessed credit impairment charge for COVID-19 impacts and anincrease in individually assessed credit impairment charges inTransaction Banking.

57

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

Institutional by Geography1
Half Year
Mar 20$M
920

Australia
Net interest income

Sep 19$M
832

Movement
Mar 19$M874

Mar 20v. Sep 19
11%

Mar 20v. Mar 19
5%

392

518

484

-24%

-19%

Operating income

1,312

1,350

1,358

-3%

-3%

Operating expenses

(584)

(601)

(606)

-3%

-4%

Profit before credit impairment and income tax

728

749

752

-3%

-3%

Credit impairment (charge)/release

(274)

(15)

5

large

large

Other operating income

Profit before income tax

454

734

757

-38%

-40%

Income tax expense and non-controlling interests

(138)

(221)

(227)

-38%

-39%

Cash profit

316

513

530

-38%

-40%

Individually assessed credit impairment charge/(release)

50

(11)

(1)

large

large

Collectively assessed credit impairment charge/(release)

224

26

(4)

large

large

Net loans and advances

115,637

97,58384,65319%

37%

Customer deposits

90,64875,973

71,62319%

27%

Risk weighted assets

103,240

93,09084,617

11%

22%

536

503

546

7%

-2%

Asia, Pacific, Europe, and America
Net interest income

698

419

535

67%

30%

Operating income

1,234

922

1,081

34%

14%

Operating expenses

(615)

(624)

(633)

-1%

-3%

Profit before credit impairment and income tax

619

298

448

large

38%

Credit impairment (charge)/release

(325)

(12)

31

large

large

Profit before income tax

294

286

479

3%

-39%

Income tax expense and non-controlling interests

(81)

(103)

(129)

-21%

-37%

Cash profit

213

183

350

16%

-39%

Individually assessed credit impairment charge/(release)

215

15

(6)

large

large

Collectively assessed credit impairment charge/(release)

110

(3)

(25)

large

large

Net loans and advances

76,84960,20860,45728%

27%

Customer deposits

148,602

123,468

116,080

20%

28%

Risk weighted assets

89,491

74,997

71,24819%

26%

Net interest income

168

166

159

1%

6%

Other operating income

77

129

107

-40%

-28%

Operating income

245

295

266

-17%

-8%

Operating expenses

(91)

(122)

(81)

-25%

12%

Profit before credit impairment and income tax

154

173

185

-11%

-17%

Credit impairment (charge)/release

(42)

(6)

(1)

large

large

Profit before income tax

112

167

184

-33%

-39%

Income tax expense and non-controlling interests

(31)

(47)

(52)

-34%

-40%

Cash profit

81

120

132

-33%

-39%

Other operating income

New Zealand

Individually assessed credit impairment charge/(release)

7

(4)

(5)

large

large

Collectively assessed credit impairment charge/(release)

35

10

6

large

large

Net loans and advances

6,924

6,735

7,438

3%

-7%

Customer deposits

19,267

17,81817,661

8%

9%

Risk weighted assets

14,297

13,001

11,541

10%

24%

1.

Balance Sheet amounts include assets and liabilities reclassified as held for sale from continuing operations.

58

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Half Year

Individually assessed credit impairment charge/(release)

Movement

Mar 20$M
227

Sep 19$M(6)

Mar 19$M(3)

Mar 20v. Sep 19
large

Mar 20v. Mar 19
large

Loans & Specialised Finance

46

4

(10)

large

large

Markets

(1)

-

-

n/a

n/a

Central Functions

-

2

1

-100%

-100%

272

-

(12)

n/a

large

Transaction Banking

Individually assessed credit impairment charge/(release)

Half Year

Collectively assessed credit impairment charge/(release)

Movement

Mar 20$M
52

Sep 19$M
10

Mar 19$M
6

Mar 20v. Sep 19
large

Mar 20v. Mar 19
large

312

12

(22)

large

large

Markets

5

11

(6)

-55%

large

Central Functions

-

-

(1)

n/a

-100%

369

33

(23)

large

large

Transaction Banking
Loans & Specialised FinanceCollectively assessed credit impairment charge/(release)

As at

Net loans and advances1

Movement

Transaction Banking

Mar 20$M
22,023

Sep 19$M
19,495

Mar 19$M
18,200Mar 20v. Sep 19
13%

Mar 20v. Mar 19
21%

Loans & Specialised Finance

128,585

110,554

107,76116%

19%

Markets

48,71434,47325,902

41%

88%

Central Functions
Net loans and advances

88

4

685

large

-87%

199,410

164,526

152,548

21%

31%

As at

Customer deposits1
Mar 20$M
124,159

Transaction Banking
Loans & Specialised FinanceSep 19$M
101,766

Movement
Mar 19$M
99,479Mar 20v. Sep 19
22%

Mar 20v. Mar 19
25%

971

1,013

925

-4%

5%

131,277

112,471

102,41117%

28%

Central Functions

2,110

2,009

2,549

5%

-17%

Customer deposits

258,517217,259

205,364

19%

26%

Markets

1.

Balance Sheet amounts include assets and liabilities reclassified as held for sale from continuing operations.

59

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

Loans &
Specialised
Finance$M
754

March 2020 Half YearNet interest income

Transaction
Banking$M
456

Markets$M
400

Central
Functions
$M
14

Total
$M
1,624

Other operating income

356

31

764

16

Operating income

812

785

1,164

30

1,167
2,791

Operating expenses

(404)

(301)

(561)

(24)

(1,290)

Profit/(Loss) before credit impairment and income tax

408

484

603

6

1,501

Credit impairment (charge)/release

(279)

(358)

(4)

-

(641)

Profit/(Loss) before income tax

129

126

599

6

860

Income tax expense and non-controlling interests

(68)

(34)

(134)

(14)

(250)

Cash profit/(loss)

61

92

465

(8)

610

Individually assessed credit impairment charge/(release)

227

46

(1)

-

272

Collectively assessed credit impairment charge/(release)

52

312

5

-

369

Net loans and advances

22,023

128,585

48,714

88

199,410

Customer deposits

124,159971

131,277

2,110

258,517

Risk weighted assets

29,036

109,823

67,691478

207,028

March 2019 Half Year1
Net interest income

531

742

280

26

1,579

Other operating income

363

77

667

19

1,126

Operating income

894

819

947

45

2,705

Operating expenses

(406)

(322)

(550)

(42)

(1,320)

Profit/(Loss) before credit impairment and income tax

488

497

397

3

1,385

(3)

32

6

-

35
1,420

Credit impairment (charge)/release
Profit/(Loss) before income tax

485

529

403

3

Income tax expense and non-controlling interests

(133)

(142)

(120)

(13)

(408)

Cash profit

352

387

283

(10)

1,012

Individually assessed credit impairment charge/(release)

(3)

(10)

-

1

(12)

Collectively assessed credit impairment charge/(release)

6

(22)

(6)

(1)

(23)

Net loans and advances

18,200107,761

25,902

685

152,548

Customer deposits

99,479925

102,4112,549

205,364

Risk weighted assets

25,47593,19847,902

831

167,406

March 2020 Half Year vs March 2019 Half YearNet interest income

-14%

2%

43%

-46%

3%

Other operating income

-2%

-60%

15%

-16%

4%

Operating income

-9%

-4%

23%

-33%

3%

Operating expenses

0%

-7%

2%

-43%

-2%

Profit/(Loss) before credit impairment and income tax

-16%

-3%

52%

100%

8%

Credit impairment (charge)/release

large

large

large

n/a

large

Profit/(Loss) before income tax

-73%

-76%

49%

100%

-39%

Income tax expense and non-controlling interests

-49%

-76%

12%

9%

-39%

Cash profit/(loss)

-83%

-76%

64%

-18%

-40%

Individually assessed credit impairment charge/(release)

large

large

n/a

-100%

large

Collectively assessed credit impairment charge/(release)

large

large

large

-100%

large

Net loans and advances

21%

19%

88%

-87%

31%

Customer deposits

25%

5%

28%

-17%

26%

Risk weighted assets

14%

18%

41%

-42%

24%

1.

Balance Sheet amounts include assets and liabilities reclassified as held for sale from continuing operations.

60

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

Loans &
Specialised
Finance$M
754

March 2020 Half YearNet interest income

Transaction
Banking$M
456

Other operating income

356

31

764

16

Operating income

812

785

1,164

30

2,791

Operating expenses

(404)

(301)

(561)

(24)

(1,290)Markets$M
400

Central
Functions
$M
14

Total
$M
1,624
1,167

Profit/(Loss) before credit impairment and income tax

408

484

603

6

1,501

Credit impairment (charge)/release

(279)

(358)

(4)

-

(641)

Profit/(Loss) before income tax

129

126

599

6

860

Income tax expense and non-controlling interests

(68)

(34)

(134)

(14)

(250)

Cash profit/(loss)

61

92

465

(8)

610

Individually assessed credit impairment charge/(release)

227

46

(1)

-

272

Collectively assessed credit impairment charge/(release)

52

312

5

-

369

Net loans and advances

22,023

128,585

48,714

88

199,410

Customer deposits

124,159971

131,277

2,110

258,517

Risk weighted assets

29,036

109,823

67,691478

207,028

September 2019 Half YearNet interest income

524

740

211

26

1,501

Other operating income

361

72

619

14

1,066

Operating income

885

812

830

40

2,567

Operating expenses

(407)

(315)

(545)

(80)

(1,347)

Profit/(Loss) before credit impairment and income tax

478

497

285

(40)

1,220

(4)

(16)

(11)

(2)

(33)

Profit/(Loss) before income tax

474

481

274

(42)

1,187

Income tax expense and non-controlling interests

(131)

(132)

(88)

(20)

(371)

Cash profit/(loss)

343

349

186

(62)

816

Credit impairment (charge)/release

Individually assessed credit impairment charge/(release)

(6)

4

-

2

-

Collectively assessed credit impairment charge/(release)

10

12

11

-

33

Net loans and advances

19,495110,554

34,473

4

164,526

Customer deposits

101,766

1,013

112,4712,009

217,259

Risk weighted assets

26,12097,361

57,373234

181,088

March 2020 Half Year vs September 2019 Half YearNet interest income

-13%

2%

90%

-46%

8%

Other operating income

-1%

-57%

23%

14%

9%

Operating income

-8%

-3%

40%

-25%

9%

Operating expenses

-1%

-4%

3%

-70%

-4%

Profit/(Loss) before credit impairment and income tax

-15%

-3%

large

large

23%

Credit impairment (charge)/release

large

large

-64%

-100%

large

Profit/(Loss) before income tax

-73%

-74%

large

large

-28%

Income tax expense and non-controlling interests

-48%

-74%

52%

-29%

-33%

Cash profit/(loss)

-82%

-74%

large

-87%

-25%

Individually assessed credit impairment charge/(release)

large

large

n/a

-100%

n/a

Collectively assessed credit impairment charge/(release)

large

large

-55%

n/a

large

Net loans and advances

13%

16%

41%

large

21%

Customer deposits

22%

-4%

17%

5%

19%

Risk weighted assets

11%

13%

18%

large

14%

61

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan

Analysis of Markets operating income1
Half Year

Movement

Mar 20$M
513

Sep 19$M
467

Mar 19$M
465

Mar 20v. Sep 19
10%

Mar 20v. Mar 19
10%

Franchise Trading3

413

173

226

large

83%

Balance Sheet4

238

190

256

25%

-7%

1,164

830

947

40%

23%

24

48

(10)

-50%

large

Composition of Markets operating income by business activity
Franchise Sales2

Markets operating income
Includes:Derivative valuation adjustments
1.
2.
3.

4.

Markets operating income includes net interest income and other operating income.
Franchise Sales represents direct client flow business on core products such as fixed income, foreign exchange, commodities and capital markets.
Franchise Trading primarily represents management of the Group’s strategic positions and those taken as part of direct client sales flow. Franchise Trading also includes the impact ofvaluation adjustments made when determining the fair value of derivatives (includes credit and funding adjustments, bid-offer adjustments and associated hedges).
Balance Sheet represents hedging of interest rate risk on the Group’s loan and deposit books and the management of the Group’s liquidity portfolio.

Half Year

Movement

Mar 20$M
325

Sep 19$M
292

Mar 19$M
312

Asia, Pacific, Europe & America

740

390

507

90%

46%

New Zealand

99

148

128

-33%

-23%

1,164

830

947

40%

23%

Composition of Markets operating income by geography
Australia

Markets operating income

62

Mar 20v. Sep 19
11%

Mar 20v. Mar 19
4%

DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
Market risk
Traded market risk
Below are aggregate Value at Risk (VaR) exposures at 99% confidence level covering both physical and derivatives trading positions for the Bank’s
principal trading centres.
99% confidence level (1 day holding period)

As atHigh for
periodLow forperiodAvg forperiodAs at

High foryear

Low foryear

Avg foryear

Mar 20$M

Mar 20$M

Mar 20$M

Mar 20$M

Sep 19$M

Sep 19$M

Sep 19$M

Sep 19$M
4.1

Value at Risk at 99% confidence
Foreign exchange

2.7

6.1

1.2

2.8

1.4

9.5

1.2

Interest rate

4.5

8.5

3.3

5.0

3.6

10.4

3.6

5.8

Credit

3.1

5.5

1.8

4.2

5.1

5.4

1.2

3.1

Commodities

1.4

3.4

1.3

2.2

1.6

3.9

1.4

2.2

-

-

-

-

-

-

-

-

(4.2)

n/a

n/a

(6.5)

(5.5)

n/a

n/a

(7.2)

7.5

10.8

5.7

7.7

6.2

13.4

5.1

8.0

EquityDiversification benefit
Total VaR

Non-traded interest rate risk
Non-traded interest rate risk is managed by Markets and relates to the potential adverse impact of changes in market interest rates on future net interest
income for the Group. Interest rate risk is reported using various techniques including VaR and scenario analysis based on a 1% shock.
99% confidence level (1 day holding period)

As atHigh for
periodLow forperiodAvg forperiodAs at

High foryear

Low foryear

Avg foryear

Mar 20$M

Mar 20$M

Mar 20$M

Mar 20$M

Sep 19$M

Sep 19$M

Sep 19$M

Sep 19$M

Australia

21.5

26.6

18.8

23.0

22.7

22.7

16.4

18.9

New Zealand

11.4

11.4

9.4

10.2

9.6

9.6

7.1

8.0

Asia, Pacific, Europe & America

21.5

23.0

17.8

20.1

17.6

17.7

12.9

16.1

Diversification benefit(21.2)

n/an/a(21.2)(17.8)

n/a

n/a(14.8)

33.2

33.2

31.5

32.1

32.1

32.1

25.2

28.2

Value at Risk at 99% confidence

Total VaR

Impact of 1% rate shock on the next 12 months’ net interest income margin
As at
As at period end

Mar 201.09%

Sep 19
1.19%

Maximum exposure

1.56%

1.19%

Minimum exposure

0.60%

0.33%

Average exposure (in absolute terms)

1.06%

0.69%

63

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 16 and pages 51 to 52 for details (in AUD).
Table reflects NZD for New Zealand (AUD results shown on page 68)
Half YearNet interest income
Other operating income
Net income from insurance business1

Movement

Mar 20
NZD M
1,479

Sep 19
NZD M
1,428

Mar 19NZD M
1,464

Mar 20v. Sep 19
4%

Mar 20v. Mar 19
1%

259

294

300

-12%

-14%

-

-

19

n/a

-100%

Operating income

1,738

1,722

1,783

1%

-3%

Operating expenses

(724)

(713)

(647)

2%

12%

Profit before credit impairment and income tax

1,014

1,009

1,136

0%

-11%

Credit impairment (charge)/release

(188)

(61)

(31)

large

large

Profit before income tax

826

948

1,105

-13%

-25%

Income tax expense and non-controlling interests

(232)

(265)

(309)

-12%

-25%

Cash profit

594

683

796

-13%

-25%

Balance Sheet
Net loans and advances

128,560

125,991

124,025

2%

4%

Other external assets

4,690

3,983

3,549

18%

32%

External assets

133,250

129,974

127,574

3%

4%

Customer deposits

93,62690,00489,096

4%

5%

Other deposits and borrowings

4,456

2,461

2,240

81%

99%

Deposits and other borrowings

98,082

92,46591,336

6%

7%

Other external liabilities

28,08825,37723,55511%

19%

External liabilities

126,170

117,842

114,891

7%

10%

Risk weighted assets

72,41270,72762,260

2%

16%

Average gross loans and advances

127,968

125,521

123,000

2%

4%

Average deposits and other borrowings

94,74091,89891,231

3%

4%

113

109

113

4%

0%

Funds under management

32,50434,14531,403-5%

4%

Average funds under management

34,47232,72630,3895%

13%

RatiosReturn on average assets

0.90%

1.06%

1.26%

Net interest margin

2.31%

2.27%

2.39%

Operating expenses to operating income

41.7%

41.4%

36.3%

Operating expenses to average assets

1.10%

1.10%

1.03%

37

42

37

-12%

0%

0.06%

0.07%

0.06%

151

19

(6)

large

large

0.24%

0.03%

(0.01%)

271

265

249

2%

9%

Gross impaired assets as a % of GLA

0.21%

0.21%

0.20%

Total full time equivalent staff (FTE)

6,103

6,121

6,003

0%

2%

Net funds management income

Individually assessed credit impairment charge/(release)
Individually assessed credit impairment charge/(release) as a % of average GLA2
Collectively assessed credit impairment charge/(release)2

Collectively assessed credit impairment charge/(release) as a % of average GLA
Gross impaired assets

1.
2.

Relates to OnePath Life (NZ) Limited, a controlled entity, which was sold on 30 November 2018.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

Performance March 2020 v March 2019

Cash Profit March 2020 v March 2019

Lending and customer deposit volumes grew across all portfolios whilefunds under management increased during the period.



Net interest margin decreased due to compressed deposit margins,partially offset by improved lending margins.



Other operating income decreased primarily due to the loss of income
as the result of the One Path Life (NZ) divestment in the prior period andfee reduction impacts.

Operating expenses increased primarily due to investment spend on
compliance projects.

Credit impairment charges increased due to an additional collectively
assessed credit impairment charge for COVID-19 impacts.

64

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Individually assessed credit impairment charge/(release)

Half Year

RetailMovement

Mar 20
NZD M

Sep 19NZD M

Mar 19NZD M

Mar 20v. Sep 19

Mar 20v. Mar 19
-17%

20

23

24

-13%

Home Loans

2

1

-

-100%

-

Other

18

22

24

-18%

-25%

Commercial

17

19

13

-11%

31%

Individually assessed credit impairment charge/(release)

37

42

37

-12%

0%

Collectively assessed credit impairment charge/(release)

Movement

Half Year

RetailMar 20
NZD M

Sep 19NZD M

Mar 19NZD M

Mar 20v. Sep 19

Mar 20v. Mar 19

62

(7)

5

large

large

Home Loans

50

2

4

large

large

Other

12

(9)

1

large

large

Commercial

89

26

(11)

large

large

Collectively assessed credit impairment charge/(release)

151

19

(6)

large

large

As at

Net loans and advances

Movement

Mar 20
NZD M
85,001

Sep 19NZD M
82,527

Mar 19
NZD M
81,108Home Loans

82,25379,47577,851

3%

6%

Other

2,748

3,052

3,257

-10%

-16%

Commercial

43,55943,46442,9170%

1%

Net loans and advances

128,560

125,991

124,025

2%

4%

RetailAs at

Customer deposits

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
5%

Movement

RetailMar 20
NZD M
76,408

Sep 19NZD M
73,866

Mar 19NZD M
71,882

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
6%

Commercial

17,218

16,13817,214

7%

0%

Customer deposits

93,62690,00489,0964%

5%

65

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson

March 2020 Half YearNet interest income

RetailNZD M
922

Commercial
NZD M
549

Central
Functions
NZD M
8

Total
NZD M
1,479

Other operating income

254

5

-

259

-

-

-

-

Operating income

1,176

554

8

1,738

Operating expenses

(574)

(146)

(4)

(724)

Net income from insurance business1

Profit before credit impairment and income tax

602

408

4

1,014

Credit impairment (charge)/release

(82)

(106)

-

(188)

Profit before income tax

520

302

4

826

Income tax expense and non-controlling interests

(146)

(85)

(1)

(232)

Cash profit

374

217

3

594

Individually assessed credit impairment charge/(release)

20

17

-

37

Collectively assessed credit impairment charge/(release)

62

89

-

151

Net loans and advances

85,001

43,559-128,560

Customer deposits

76,40817,218-93,626

Risk weighted assets

37,20033,914

1,298

72,412

March 2019 Half YearNet interest income

940

517

7

1,464

Other operating income

291

10

(1)

300

1

19

-

-

19

Operating income

1,250

527

6

1,783

Operating expenses

(514)

(128)

(5)

(647)

Profit before credit impairment and income tax

736

399

1

1,136

Credit impairment (charge)/release

(29)

(2)

-

(31)

Net income from insurance businessProfit before income tax

707

397

1

1,105

Income tax expense and non-controlling interests

(197)

(111)

(1)

(309)

Cash profit

510

286

-

796

Individually assessed credit impairment charge/(release)

24

13

-

37

Collectively assessed credit impairment charge/(release)

5

(11)

-

(6)

Net loans and advances

81,10842,917-124,025

Customer deposits

71,882

17,214-89,096

Risk weighted assets

29,89731,344

1,019

62,260March 2020 Half Year vs March 2019 Half YearNet interest income

-2%

6%

14%

1%

Other operating income

-13%

-50%

-100%

-14%

Net income from insurance business1

-100%

n/a

n/a

-100%

Operating income

-6%

5%

33%

-3%

Operating expenses

12%

14%

-20%

12%

Profit before credit impairment and income tax

-18%

2%

large

-11%

Credit impairment (charge)/release

large

large

n/a

large

Profit before income tax

-26%

-24%

large

-25%

Income tax expense and non-controlling interests

-26%

-23%

0%

-25%

Cash profit

-27%

-24%

n/a

-25%

Individually assessed credit impairment charge/(release)

-17%

31%

n/a

0%

Collectively assessed credit impairment charge/(release)

large

large

n/a

large

Net loans and advances

5%

1%

n/a

4%

Customer deposits

6%

0%

n/a

5%

Risk weighted assets

24%

8%

27%

16%

1.

Relates to OnePath Life (NZ) Limited, a controlled entity, which was sold on 30 November 2018.

66

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson

March 2020 Half YearNet interest income

RetailNZD M
922

Commercial
NZD M
549

Central
Functions
NZD M
8

Total
NZD M
1,479

Other operating income

254

5

-

259
1,738

Operating income

1,176

554

8

Operating expenses

(574)

(146)

(4)

(724)

Profit/(Loss) before credit impairment and income tax

602

408

4

1,014

Credit impairment (charge)/release

(82)

(106)

-

(188)

Profit/(Loss) before income tax

520

302

4

826

Income tax expense and non-controlling interests

(146)

(85)

(1)

(232)

Cash profit/(Loss)

374

217

3

594

Individually assessed credit impairment charge/(release)

20

17

-

37

62

89

-

151

Net loans and advances

85,001

43,559-128,560

Customer deposits

76,40817,218-93,626

Risk weighted assets

37,20033,914

1,298

72,412September 2019 Half YearNet interest income

881

540

7

1,428

Other operating income

287

7

-

294

Operating income

1,168

547

7

1,722

Operating expenses

(564)

(146)

(3)

(713)

Profit/(Loss) before credit impairment and income tax

604

401

4

1,009

Credit impairment (charge)/release

(16)

(45)

-

(61)

Profit/(Loss) before income tax

588

356

4

948

Income tax expense and non-controlling interests

(164)

(100)

(1)

(265)

Cash profit/(Loss)

424

256

3

683

Individually assessed credit impairment charge/(release)

23

19

-

42

Collectively assessed credit impairment charge/(release)

(7)

26

-

19

Net loans and advances

82,52743,464-125,991

Customer deposits

73,866

16,138-90,004

Risk weighted assets

36,64533,153929

70,727

Collectively assessed credit impairment charge/(release)

March 2020 Half Year vs September 2019 Half YearNet interest income

5%

2%

14%

4%

-11%

-29%

n/a

-12%

Operating income

1%

1%

14%

1%

Operating expenses

2%

0%

33%

2%

Profit/(Loss) before credit impairment and income tax

0%

2%

0%

0%

Credit impairment (charge)/release

large

large

n/a

large

Profit/(Loss) before income tax

-12%

-15%

0%

-13%

Other operating income

Income tax expense and non-controlling interests

-11%

-15%

0%

-12%

Cash profit/(Loss)

-12%

-15%

0%

-13%

Individually assessed credit impairment charge/(release)

-13%

-11%

n/a

-12%

Collectively assessed credit impairment charge/(release)

large

large

n/a

large

Net loans and advances

3%

0%

n/a

2%

Customer deposits

3%

7%

n/a

4%

Risk weighted assets

2%

2%

40%

2%

67

DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
Table reflects AUD for New Zealand
NZD results shown on page 64
Half Year

Movement

Mar 20$M
1,410

Sep 19$M
1,351

Mar 19$M
1,385

Mar 20v. Sep 19
4%

247

278

284

-11%

-13%

-

-

18

n/a

-100%

Operating income

1,657

1,629

1,687

2%

-2%

Operating expenses

(690)

(674)

(612)

2%

13%
-10%

Net interest income
Other operating income
Net income from insurance business1

Mar 20v. Mar 19
2%

Profit before credit impairment and income tax

967

955

1,075

1%

Credit impairment (charge)/release

(179)

(57)

(30)

large

large

Profit before income tax

788

898

1,045

-12%

-25%

Income tax expense and non-controlling interests

(221)

(252)

(292)

-12%

-24%

Cash profit

567

646

753

-12%

-25%

Consisting of:Retail

357

401

482

-11%

-26%

Commercial

207

242

271

-14%

-24%

3

3

-

0%

n/a

567

646

753

-12%

-25%

Balance Sheet
Net loans and advances

125,195

116,729

118,841

7%

5%

Other external assets

4,567

3,690

3,401

24%

34%
6%

Central Functions
Cash profit

External assets

129,762

120,419

122,2428%

Customer deposits

91,17583,38785,372

9%

7%

Other deposits and borrowings

4,339

2,280

2,146

90%

large

Deposits and other borrowings

95,51485,66787,518

11%

9%

Other external liabilities

27,35323,512

22,571

16%

21%

External liabilities

122,867

109,179

110,089

13%

12%

Risk weighted assets

70,51665,52759,6588%

18%

Average gross loans and advances

122,011

118,789

116,278

3%

5%

Average deposits and other borrowings

90,32986,97086,244

4%

5%

107

103

107

4%

0%

Funds under management

31,653

31,63330,090

0%

5%

Average funds under management

32,86830,97029,1196%

13%

RatiosReturn on average assets

0.90%

1.06%

1.26%

Net interest margin

2.31%

2.27%

2.39%

Operating expenses to operating income

41.7%

41.4%

36.3%

Operating expenses to average assets

1.10%

1.10%

1.03%

35

40

35

-13%

0%

0.06%

0.07%

0.06%

144

17

(5)

large

large

0.24%

0.03%

(0.01%)
8%

11%

0%

2%

Net funds management income

Individually assessed credit impairment charge/(release)2

Individually assessed credit impairment charge/(release) as a % of average GLA
Collectively assessed credit impairment charge/(release)Collectively assessed credit impairment charge/(release) as a % of average GLA2
Gross impaired assets

264

245

238

Gross impaired assets as a % of GLA

0.21%

0.21%

0.20%

Total full time equivalent staff (FTE)

6,103

6,121

6,003

1.
2.

Relates to OnePath Life (NZ) Limited, a controlled entity, which was sold on 30 November 2018.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.

68

DIVISIONAL RESULTS
Pacific - continuing operations
Antonia Watson
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 16 and pages 51 to 52 for details of these items.

Half Year
Sep 19$M
60

Mar 20$M
65

Net interest income

Movement
Mar 19$M
68

Mar 20v. Sep 19
8%

Mar 20v. Mar 19-4%

Other operating income

50

54

50

-7%

0%

Operating income

115

114

118

1%

-3%

Operating expenses

(76)

(80)

(70)

-5%

9%

Profit/(Loss) before credit impairment and income tax

39

34

48

15%

-19%

Credit impairment (charge)/release

(11)

3

(2)

large

large

Profit/(Loss) before income tax

28

37

46

-24%

-39%

Income tax expense and non-controlling interests

(8)

(11)

(13)

-27%

-38%

Cash profit/(loss)

33

-23%

-39%

20

26

Balance Sheet
Net loans and advances

2,176

2,120

2,135

3%

2%

Customer deposits

3,845

3,546

3,474

8%

11%

Risk weighted assets

3,547

3,400

3,840

4%

-8%

Total full time equivalent staff (FTE)

1,108

1,086

1,096

2%

1%

TSO and Group Centre - continuing operations
Divisional performance was impacted by a number of large/notable items. Refer to pages 13 to 16 and pages 51 to 52 for details of these items.
Half Year

Movement

Share of associates profit

Mar 20$M
135

Sep 19$M
133

Mar 19$M
126

Mar 20v. Sep 19
2%

Mar 20v. Mar 19
7%

Operating income (other)1

(762)

144

367

large

large

Operating income

(627)

277

493

large

large

Operating expenses2

(484)

(444)

(450)

9%

8%

(1,111)

(167)

43

large

large

-

1

-

-100%

n/a

(1,111)

(166)

43

large

large

Profit/(Loss) before credit impairment and income tax
Credit impairment (charge)/release
Profit/(Loss) before income tax
Income tax benefit and non-controlling interests

113

92

20

23%

large

Cash profit/(loss)

(998)

(74)

63

large

large

Risk weighted assets

5,752

4,501

5,607

28%

3%

Total full time equivalent staff (FTE)

11,212

11,01010,520

2%

7%

1.

2.

Includes the impairment of Asian associates of $815 million in the March 2020 half. The September 2019 half included the gain on sale from divestments of $18 million (Mar 19 half: $234
million).
Includes large/notable items of $36 million in the March 2020 half (Sep 19 half: $12 million; Mar 19 half: $26 million).

69

DIVISIONAL RESULTS
This page has been left blank intentionally70

PROFIT RECONCILIATIONCONTENTS

Page

Adjustments between statutory profit and cash profit

72

Explanation of adjustments between statutory profit and cash profit - continuing operations

72

Explanation of adjustments between statutory profit and cash profit - discontinued operations

73

Reconciliation of statutory profit to cash profit

75

71

PROFIT RECONCILIATION
Non-IFRS information
The Group provides additional measures of performance in the Consolidated Financial Report & Dividend Announcement which are prepared on a basis
other than in accordance with accounting standards. The guidance provided in ASIC’s Regulatory Guide 230 has been followed when presenting thisinformation.

Adjustments between statutory profit and cash profit
Cash profit represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers to assess Group andDivisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory
profit (refer to Definitions on pages 139 to 140 for further details). The adjustments made in arriving at cash profit are included in statutory profit which is
subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not subject toreview by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on a consistentbasis across each period presented.
Movement

Half Year

Statutory profit attributable to shareholders of the Company fromcontinuing operations
Adjustments between statutory profit and cash profit from continuing
operations
Revaluation of policy liabilities

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

1,635

3,053

3,243

-46%

-50%

-

-

77

n/a

-100%

Economic hedges

(340)

(67)

185

large

large

Revenue and expense hedges

120

(79)

60

large

100%

Structured credit intermediation trades

(2)

(1)

(1)

100%

100%

Total adjustments between statutory profit and cash profit fromcontinuing operations

(222)

(147)

321

51%

large

Cash profit from continuing operations

1,413

2,906

3,564

-51%

-60%

(90)

(273)

(70)

-67%

29%

-

7

(18)

-100%

-100%

-

7

38

-100%

-100%

-

14

20

-100%

-100%

(90)

(259)

(50)

-65%

80%

1,323

2,647

3,514

-50%

-62%

Statutory loss attributable to shareholders of the Company fromdiscontinued operations
Adjustments between statutory profit and cash profit from discontinued
operations
Treasury shares adjustment
Revaluation of policy liabilities
Total adjustments between statutory profit and cash profit fromdiscontinued operations
Cash loss from discontinued operations

Cash profit

Explanation of adjustments between statutory profit and cash profit - continuing operations


Revaluation of policy liabilities – OnePath Life (NZ)
When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect the present value of the obligation,with the impact of changes in the market discount rate each period being reflected in the Income Statement. ANZ includes the impact on the remeasurement of insurance contracts attributable to changes in market discount rates as an adjustment to statutory profit to remove the volatility
attributable to changes in market interest rates which revert to zero over the life of insurance contracts. With the sale completion of OnePath Life
(NZ) Ltd in the March 2019 half, this adjustment is no longer required.



Economic and revenue and expense hedges
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in accordance with accounting standards, resultin fair value gains and losses being recognised within the Income Statement. ANZ removes the fair value adjustments from cash profit since the profit
or loss resulting from the hedge transactions will reverse over time to match with the profit or loss from the economically hedged item as part of cash
profit. This includes gains and losses arising from approved classes of derivatives not designated in accounting hedge relationships but which areconsidered to be economic hedges, including hedges of larger foreign exchange denominated revenue and expense streams, primarily NZD and
USD (and USD correlated), as well as ineffectiveness from designated accounting hedges.
Economic hedges comprise:Funding related swaps (primarily cross currency interest rate swaps) used to convert the proceeds of foreign currency debt issuances into
floating rate Australian dollar and New Zealand dollar debt. As these swaps do not qualify for hedge accounting, movements in the fair values
are recorded in the Income Statement. The main drivers of these fair values are currency basis spreads and Australian dollar and New Zealanddollar fluctuations against other major funding currencies.



Economic hedges of select structured finance and specialised leasing transactions that do not qualify for hedge accounting. The main drivers ofthese fair value adjustments are movements in the Australian and New Zealand term structure of interest rates.



Ineffectiveness from designated accounting hedge relationships.

72

PROFIT RECONCILIATIONIn the March 2020 half, the majority of the gain on economic hedges adjusted from cash profit relates to funding related swaps, principally fromwidening basis spreads on AUD/USD and NZD/USD currency pairs and from the weakening of both the AUD and NZD against USD.
The loss on revenue and expense hedges adjusted from cash profit in the March 2020 half was mainly due to the weakening of AUD against the
USD and NZD.
Half Year
Mar 20$M(480)

Sep 19$M(96)

Mar 19$M
260

Mar 20v. Sep 19
large

Mar 20v. Mar 19
large

169

(111)

85

large

99%

Increase/(decrease) to cash profit before tax

(311)

(207)

345

50%

large

Increase/(decrease) to cash profit after tax

(220)

(146)

245

51%

large

Economic hedges
Revenue and expense hedgesMovement

Structured credit intermediation trades
ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis with eight US financial guarantors. This
involved selling credit default swaps (CDSs) as protection over specific debt structures and purchasing CDS protection over the same structures.
ANZ has subsequently exited its positions with six US financial guarantors and is monitoring the remaining two portfolios with a view to reducing theexposures when ANZ deems it cost effective relative to the perceived risk associated with a specific trade or counterparty.
The notional value of outstanding bought and sold CDSs at 31 March 2020 amounted to $0.4 billion (Sep 19: $0.3 billion; Mar 19: $0.3 billion). Whileboth the bought and sold CDSs are measured at fair value through profit and loss, the associated fair value movements do not fully offset due to theimpact of credit risk on the bought CDSs which is driven by market movements in credit spreads and AUD/USD and NZD/USD rates. The fair valueof the CDSs (excluding CVA) is $17 million (Sep 19: $19 million; Mar 19: $20 million) with CVA on the bought protection of $0.7 million (Sep 19: $3
million; Mar 19: $4 million).
The profit and loss associated with the bought and sold protection is included as an adjustment to cash profit as it relates to a legacy business where,
unless terminated early, the fair value movements are expected to reverse to zero in future periods.

Credit risk on impaired derivatives (nil profit after tax impact)
Derivative credit valuation adjustments on defaulted and impaired derivatives exposures are reclassified to cash credit impairment charges to reflect
the manner in which the defaulted and impaired derivatives are managed.

Explanation of adjustments between statutory profit and cash profit - discontinued operations
Treasury shares adjustment
ANZ shares held by the Group in Wealth Australia discontinued operations are deemed to be Treasury shares for accounting purposes. Dividends
and realised and unrealised gains and losses from these shares are reversed as they are not permitted to be recognised as income for statutory
reporting purposes. In deriving cash profit, these earnings are included to ensure there is no asymmetrical impact on the Group’s profits because theTreasury shares are held to support policy liabilities which are revalued through the Income Statement. With the sale completion of the life insurance
business to Zurich in the September 2019 half, there are no further ANZ shares held by the Group in Wealth Australia discontinued operations (Mar19: 15.5 million shares).



Revaluation of policy liabilities - Wealth Australia discontinued operations
When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect the present value of the obligation,with the impact of changes in the market discount rate each period being reflected in the Income Statement. ANZ includes the impact on the remeasurement of the insurance contract attributable to changes in market discount rates as an adjustment to statutory profit to remove the volatility
attributable to changes in market interest rates which reverts to zero over the life of the insurance contract. With the sale completion of the life
insurance business to Zurich in the September 2019 half, this adjustment is no longer required.



Policyholders tax gross up (nil profit after tax impact)
For statutory reporting purposes, policyholders income tax and other related taxes paid on behalf of policyholders are included in both otheroperating income and the Group’s income tax expense. The gross up of $101 million income tax recoveries for the March 2020 half (Sep 19 half: nil;
Mar 19 half: $19 million income tax paid) has been excluded from discontinued cash results as it does not reflect the underlying performance of thebusiness which is assessed on a net of policyholders tax basis.

73

PROFIT RECONCILIATION
Adjustments to statutory profit

March 2020 Half YearNet interest income

Economic
hedges

Revenue andexpensehedges

Structured
creditintermediation
tradesCredit risk
on impaired
derivatives

Total
adjustments tostatutory profit

Cash profit

$M

$M

$M

$M

$M

$M

$M

-

-

-

-

-

-

-

7,222

Statutory profit

Treasurysharesadjustment

Revaluationof policy
liabilities

$M

$M

7,222
47

-

-

-

-

-

-

-

47

Other

1,624

-

-

(480)

169

(3)

-

(314)

1,310
1,357

Net income from insurance business
Other operating income

1,671

-

-

(480)

169

(3)

-

(314)

Operating income

8,893

-

-

(480)

169

(3)

-

(314)

8,579

Operating expenses(4,605)

-

-

-

-

-

-

-

(4,605)

Profit before credit impairment and tax

4,288

-

-

(480)

169

(3)

-

(314)

3,974

Credit impairment charge(1,674)

-

-

-

-

-

-

-

(1,674)

Profit before income tax

2,614

-

-

(480)

169

(3)

-

(314)

2,300

Income tax expense

(978)

-

-

140

(49)

1

-

92

(886)

(1)

-

-

-

-

-

-

-

(1)

1,635

-

-

(340)

120

(2)

-

(222)

1,413

(90)

-

-

-

-

-

-

-

(90)

Profit after tax

1,545

-

-

(340)

120

(2)

-

(222)

1,323

September 2019 Half YearNet interest income

7,040

-

-

-

-

-

-

-

7,040

49

-

-

-

-

-

-

-

49

2,403

-

-

(96)

(111)

(2)

-

(209)

2,194

Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

Net income from insurance business
Other
Other operating income

2,452

-

-

(96)

(111)

(2)

-

(209)

2,243

Operating income

9,492

-

-

(96)

(111)

(2)

-

(209)

9,283

Operating expenses(4,706)

-

-

-

-

-

-

-

(4,706)

Profit before credit impairment and tax

4,786

-

-

(96)

(111)

(2)

-

(209)

4,577

Credit impairment charge

(402)

-

-

-

-

-

-

-

(402)

Profit before income tax

4,384

-

-

(96)

(111)

(2)

-

(209)

4,175

Income tax expense(1,325)

-

-

29

32

1

-

62

(1,263)

(6)

-

-

-

-

-

-

-

(6)

3,053

-

-

(67)

(79)

(1)

-

(147)

2,906

Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

(273)

7

7

-

-

-

-

14

(259)

Profit after tax

2,780

7

7

(67)

(79)

(1)

-

(133)

2,647

74

PROFIT RECONCILIATION
Adjustments to statutory profit

March 2019 Half YearNet interest income
Net income from insurance business
Other

Economic
hedges

Revenue andexpensehedges

Structured
creditintermediation
tradesCredit risk
on impaired
derivatives

Total
adjustments tostatutory profit

Cash profit

$M

$M

$M

$M

$M

$M

$M

-

-

-

-

-

-

7,299

Statutory profit

Treasurysharesadjustment

Revaluationof policy
liabilities

$M

$M

7,299

-

77

-

(7)

-

-

-

-

(7)

70

1,917

-

115

260

85

(1)

1

460

2,377

Other operating income

1,994

-

108

260

85

(1)

1

453

2,447

Operating income

9,293

-

108

260

85

(1)

1

453

9,746

Operating expenses(4,365)

-

-

-

-

-

-

-

(4,365)

Profit before credit impairment and tax

4,928

-

108

260

85

(1)

1

453

5,381

Credit impairment charge

(392)

-

-

-

-

-

(1)

(1)

(393)

Profit before income tax

4,536

-

108

260

85

(1)

-

452

4,988

Income tax expense(1,284)

-

(31)

(75)

(25)

-

-

(131)

(1,415)

(9)

-

-

-

-

-

-

-

(9)
3,564

Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax

3,243

-

77

185

60

(1)

-

321

(70)

(18)

38

-

-

-

-

20

(50)

3,173

(18)

115

185

60

(1)

-

341

3,514

75

PROFIT RECONCILIATIONThis page has been left blank intentionally76

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - TABLE OF CONTENTSCONTENTS

Page

Condensed Consolidated Income Statement

79

Condensed Consolidated Statement of Comprehensive Income

80

Condensed Consolidated Balance Sheet81

Condensed Consolidated Cash Flow Statement82

Condensed Consolidated Statement of Changes in Equity

83

Notes to Condensed Consolidated Financial Statements

84

Directors’ Declaration

122

Auditor’s Review Report and Independence Declaration

124

77

DIRECTORS’ REPORTThe Directors present their report on the Condensed Consolidated Financial Statements for the half year ended 31 March 2020.
Directors
The names of the Directors of the Company who held office during and since the end of the half year are:
Mr DM Gonski, AC

Chairman

Mr SC Elliott

Director and Chief Executive Officer

Ms IR Atlas, AO

Director

Ms PJ Dwyer

Director

Ms SJ Halton, AO PSM

Director

Mr GR Liebelt

Director

Rt Hon Sir JP Key, GNZM AC

Director

Mr JT MacFarlane

Director

Mr P O’Sullivan

Director, appointed 4 November 2019

Result
The consolidated profit attributable to shareholders of the Company was $1,545 million, and consolidated profit attributable to shareholders of theCompany from continuing operations was $1,635 million. Further details are contained in Group Results on pages 19 to 46 which forms part of this report,
and in the Condensed Consolidated Financial Statements.
Review of operations
A review of the operations of the Group during the half year and the results of those operations are contained in the Group Results on pages 19 to 46
which forms part of this report.
Lead auditor’s independence declaration
The lead auditor’s independence declaration given under section 307C of the Corporations Act 2001 (as amended) is set out on page 125 which forms
part of this report.
Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by ASIC Corporations Instrument 2016/191.
Significant events since balance dateWith effect from 2 April 2020, the Reserve Bank of New Zealand (RBNZ) amended the conditions of registration for ANZ Bank New Zealand Limited (ANZ
Bank NZ), a New Zealand subsidiary of ANZ Banking Group Limited (ANZBGL) to (among other things) prohibit ANZ Bank NZ from making distributions
other than discretionary payments payable to holders of Additional Tier 1 capital instruments. These amendments were also applied to other locallyincorporated banks in New Zealand to further support the stability of the New Zealand banking financial system during this period of economic
uncertainty. These requirements prevent ANZ Bank NZ from redeeming its NZ$500 million Capital Notes in May 2020, although it can continue making
coupon payments on those Capital Notes. As ANZ Bank NZ has announced that it will not be exercising its option to convert in May 2020, the terms of
the Capital Notes provide for their conversion into a variable number of ANZBGL shares in May 2022 subject to certain conditions (refer to note 13).
Conversion would result in an increase in the Group’s CET1 capital (~12 bps) at Level 2. The amendments will also prevent ANZ Bank NZ from paying
dividends to ANZBGL.
Other than the matter above there have been no other significant events from 31 March 2020 to the date of signing this report that have not beenadjusted or disclosed.
Signed in accordance with a resolution of the Directors.

David M Gonski, AC
ChairmanShayne C Elliott
Director

29 April 202078

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited
Half Year
Note
Interest income
Interest expense

Movement

Mar 20$M
13,800

Sep 19$M
15,107

Mar 19$M
15,970Mar 20v. Sep 19-9%

Mar 20v. Mar 19
-14%
-24%

(6,578)(8,067)(8,671)-18%

Net interest income

2

7,222

7,040

7,299

3%

-1%

Other operating income

2

1,489

2,272

1,786

-34%

-17%

Net income from insurance business
Share of associates' profit

2

47

49

77

-4%

-39%

2, 18

135

131

131

3%

3%

8,893

9,492

9,293

-6%

-4%

3

(4,605)(4,706)(4,365)

-2%

5%

4,288

4,786

4,928

-10%

-13%

Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment charge

9Profit before income tax
Income tax expense

4

Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations

12

Profit for the period(1,674)

(402)

(392)

large

large

2,614

4,384

4,536

-40%

-42%

(978)

(1,325)(1,284)

-26%

-24%

1,636

3,059

3,252

-47%

-50%

(90)

(273)

(70)

-67%

29%

1,546

2,786

3,182

-45%

-51%

1,545

2,780

3,173

-44%

-51%

1

6

9

-83%

-89%

Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests
Earnings per ordinary share (cents) including discontinued
operations
Basic

6

54.6

98.3

111.7

-44%

-51%

Diluted

6

51.5

94.7

106.4

-46%

-52%

Basic

6

57.8

107.9

114.1

-46%

-49%

Diluted

6

54.3

103.6

108.7

-48%

-50%

5

TBD

80

80

n/a

n/a

Earnings per ordinary share (cents) from continuing operations

Dividend per ordinary share (cents)1
1.

The decision on the payment of a 2020 interim dividend has been deferred until the economic outlook is clearer and an update will be provided at the August 2020 market update.

The notes appearing on pages 84 to 120 form an integral part of the Condensed Consolidated Financial Statements.

79

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited
As at

Movement

Mar 20$M
1,636

Sep 19$M
3,059

Mar 19$M
3,252

Mar 20v Sep 19-47%

Mar 20v Mar 19
-50%

Investment securities - equity securities at FVOCI

(115)

(131)

176

-12%

large

Other reserve movements

236

56

11

large

large

Profit for the period from continuing operations

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve1

1,281

(137)

834

large

54%

Other reserve movements

83

392

517

-79%

-84%

Income tax attributable to the above items

(76)

(101)

(187)

-25%

-59%

Share of associates' other comprehensive income2

10

13

13

-23%

-23%

1,419

92

1,364

large

4%

(90)

(273)

(70)

-67%

29%

Other comprehensive income after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Other comprehensive income after tax from discontinued operations
Total comprehensive income for the period

-

(139)

42

-100%

-100%

2,965

2,739

4,588

8%

-35%

2,965

2,729

4,578

9%

-35%

-

10

10

-100%

-100%

Comprising total comprehensive income attributable to:Shareholders of the Company
Non-controlling interests
1.
2.

Includes foreign currency translation differences attributable to non-controlling interests of $1 million loss (Sep 19 half: $4 million gain; Mar 19 half: $1 million gain).
Share of associates’ other comprehensive income includes a FVOCI reserve gain of $7 million (Sep 19 half: $15 million gain; Mar 19 half: $5 million gain), defined benefits gain of $3 million(Sep 19 half: nil; Mar 19 half: $7 million gain), cash flow hedge reserve of nil (Sep 19 half: $2 million loss; Mar 19 half: nil) and a foreign currency translation reserve gain of nil (Sep 19 half:nil; Mar 19 half: $1 million gain) that may be reclassified subsequently to profit or loss.

The notes appearing on pages 84 to 120 form an integral part of the Condensed Consolidated Financial Statements.

80CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited

As At
AssetsCash and cash equivalents1

Note

Mar 20$M
143,093

Sep 19$M
81,621

Movement
Mar 19$M
93,996

Mar 20v. Sep 19
75%

Mar 20v. Mar 19
52%

Settlement balances owed to ANZ

6,961

3,739

4,041

86%

72%

Collateral paid

16,762

15,006

11,86012%41%

Trading securities

49,06843,16942,85714%

14%

Derivative financial instruments

173,677

120,667

79,37544%

large

Investment securities

85,92383,70978,8823%

9%656,609615,258

609,2817%

8%

Net loans and advances

8

Regulatory deposits
Assets held for sale

12

Investments in associates

804

879

944

-9%

-15%

-

1,831

43,549

-100%

-100%

2,313

2,957

2,737

-22%

-15%

Current tax assets

452

265

500

71%

-10%

Deferred tax assets2

1,816

1,356

1,146

34%

58%

Goodwill and other intangible assets

4,957

4,861

5,017

2%

-1%

Premises and equipment2

3,211

1,924

1,863

67%

72%

Other assets

4,309

3,895

4,222

11%

2%

Total assets

1,149,955

981,137

980,270

17%

17%

Settlement balances owed by ANZ

22,314

10,867

12,371large

80%Collateral received

17,463

7,929

5,726

large

large

726,909637,677

634,98914%

14%

167,364

120,951

80,87138%

large

Current tax liabilities

244

260

159

-6%

53%

Deferred tax liabilities

94

67

48

40%

96%

-

2,121

46,555

-100%

-100%

10,536

7,968

7,641

32%

38%

Liabilities

Deposits and other borrowings

10

Derivative financial instruments

Liabilities held for sale

12

Payables and other liabilities2
Employee entitlements
Other provisions

11

Debt issuances

13

Total liabilities
Net assets

635

588

567

8%

12%

2,773

2,224

1,680

25%

65%

140,248

129,691

129,692

8%

8%

1,088,580

920,343920,29918%

18%

61,37560,794

59,971

1%

2%

Shareholders' equity
Ordinary share capital

16

26,44026,49026,0480%

2%

Reserves

16

2,851

1,629

1,709

75%

67%

Retained earnings2

16

32,07332,66432,064-2%

0%61,36460,78359,821

1%

3%

11

11

150

0%

-93%

61,37560,794

59,971

1%

2%

Share capital and reserves attributable to shareholders of the Company
Non-controlling interests

16

Total shareholders' equity
1.
2.

Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.
On adoption of AASB 16 on 1 October 2019, the Group recognised right-of-use assets of $1.6 billion presented within Property Plant and Equipment and lease liabilities of $1.7 billion presented
within Payables and other liabilities. This resulted in a reduction to opening retained earnings of $88 million and an increase in deferred tax assets of $37 million. Comparative information has
not been restated. Refer to Note 1 for further details.

The notes appearing on pages 84 to 120 form an integral part of the Condensed Consolidated Financial Statements.

81CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Australia and New Zealand Banking Group Limited
The Condensed Consolidated Cash Flow Statement includes discontinued operations. Please refer to Note 12 for cash flows associated with discontinued
operations and cash and cash equivalents reclassified as held for sale.
Half Year

Profit after income tax

Mar 20$M

Sep 19$M

Mar 19
$M7

1,546

2,786

3,182

1,674
815

403
-

391
-

613

443

428

(4)

(4)

(1)

1,859

3,326

1,614

Adjustments to reconcile to net cash flow from operating activities:
Provision for credit impairment charge
Impairment of investment in associates
Depreciation and amortisation1(Profit)/loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment(Gain)/loss on sale from divestments

11

(19)

(118)

Other non-cash movements

(99)

(295)

(61)

Net (increase)/decrease in operating assets:
Collateral paid

(904)

(2,850)(643)

Trading securities

1,761(1,423)(6,518)Loans and advances(30,392)(8,336)(1,932)-(3,331)

(211)

(687)

430

(884)

Deposits and other borrowings

67,503(2,050)9,056

Settlement balances owed by ANZ

11,202(1,520)443

Collateral received

8,379

1,928

(924)

Investments backing policy liabilities
Other assets
Net increase/(decrease) in operating liabilities:

Life insurance contract policy liabilities

-

(110)

110

(8,630)

2,421

(281)

Total adjustments

53,101(10,987)469

Net cash (used in)/provided by operating activities2

54,647(8,201)

3,651

Purchases(17,369)(10,725)(13,122)

Proceeds from sale or maturity

18,997

7,720

13,508Proceeds from divestments, net of cash disposed

691

1,415

706

Proceeds from/(Repayment of) IOOF secured notes

(800)

-

800

Other liabilities

Cash flows from investing activities
Investment securities:

Other assets
Net cash (used in)/provided by investing activities

(33)

(112)

(396)

1,486

(1,702)

1,496

Cash flows from financing activities
Debt issuances:3
Issue proceeds

11,933

8,863

17,037

Redemptions(10,427)(12,177)(10,781)

Dividends paid4(2,228)(2,229)(2,242)On market purchase of treasury shares

(122)

-

(112)

Repayment of lease liabilities5

(148)

-

-

-

-

(1,120)Net cash (used in)/provided by financing activities(992)(5,543)

2,782

Net (decrease)/increase in cash and cash equivalents

55,141(15,446)

7,929

Cash and cash equivalents at beginning of period

81,621

94,26384,964

Share buy-backEffects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period6
1.

6,331

2,804

1,370

143,093

81,621

94,263

Includes depreciation of right-of-use assets recognised on 1 October 2019 following the adoption of AASB 16. Comparatives have not been restated.
Net cash inflows/(outflows) from operating activities includes income taxes paid of $1,480 million (Sep 19 half: $1,194 million; Mar 19 half: $1,935 million).
3. Non-cash changes in debt issuances includes fair value hedging loss of $1,103 million (Sep 19 half: $978 million; Mar 19 half: $1,459 million) and foreign exchange losses of $8,536 million(Sep 19 half: $2,711 million; Mar 19 half: $1,104 million).
4. Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.
5. Relates to repayments of lease liabilities which the Group commenced recognising on 1 October 2019 following the adoption of AASB 16. Comparative information has not been restated.
6. Includes cash and cash equivalents recognised on the face of balance sheet of $143,093 million (Sep 19 half: $81,621 million; Mar 19 half: $93,996 million) with no amounts recorded aspart of assets held for sale. (Sep 19 half: nil; Mar 19 half: $267 million).
7. Certain Mar 19 half items have been restated to reflect the impact from adoption of AASB 9.
2.

The notes appearing on pages 84 to 120 form an integral part of the Condensed Consolidated Financial Statements.

82

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited
Share capitaland reserves
attributable toshareholders of
the Company$M

Noncontrollinginterests$M

Total
shareholders'equity$M

Ordinary
share
capital$M

Reserves$M

Retainedearnings$M

27,205323

31,73759,265140

59,405

-

14

(624)

(610)

-

(610)

Profit or loss from continuing operations

-

-

3,243

3,243

9

3,252

Profit or loss from discontinued operations

-

-

(70)

(70)

-

(70)

Other comprehensive income for the period from continuing operations

-

1,351

12

1,363

1

1,364

Other comprehensive income for the period from discontinued operations

-

42

-

42

-

42

-

1,393

3,185

4,578

10

4,588

As at 1 October 2018
Impact on transition to AASB 9

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:1
Dividends paid2
Dividend income on treasury shares held within the Group's
life insurance statutory funds
Group share buy-back3--(2,254)(2,254)-(2,254)

-

-

12

12

-

12

(1,120)--(1,120)-(1,120)

Other equity movements:1
Group employee share acquisition scheme
Other items
As at 31 March 2019

(37)

-

-

(37)

-

(37)

-

(21)

8

(13)

-

(13)

26,0481,709

32,064

59,821

150

59,971

Profit or loss from continuing operations

-

-

3,053

3,053

6

3,059

Profit or loss from discontinued operations

-

-

(273)

(273)

-

(273)

Other comprehensive income for the period from continuing operations

-

42

46

88

4

92

Other comprehensive income for the period from discontinued operations

-

(139)

-

(139)

-

(139)

-

(97)

2,826

2,729

10

2,739

-

-

(2,227)(2,227)(2)(2,229)Treasury shares Wealth Australia adjustment4

405

-

-

405

-

405

Group employee share acquisition scheme

37

-

-

37

-

37

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:1
Dividends paid2
Other equity movements:1

Other items
As at 30 September 2019

-

17

1

18

(147)

(129)

26,4901,629

32,66460,783

11

60,794

Impact on transition to AASB 16

-

-

(88)

(88)

-

(88)

Profit or loss from continuing operations

-

-

1,635

1,635

1

1,636

Profit or loss from discontinued operations

-

-

(90)

(90)

-

(90)

Other comprehensive income for the period from continuing operations

-

1,249

171

1,420

(1)

1,419

Other comprehensive income for the period from discontinued operations

-

-

-

-

-

-

-

1,249

1,716

2,965

-

2,965

-

-

(2,228)(2,228)-(2,228)(50)

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:1
Dividends paid2
1

Other equity movements:

Group employee share acquisition scheme

(50)

-

-

(50)

-

-

(27)

9

(18)

-

(18)

26,4402,851

32,07361,364

11

61,375

Other items
As at 31 March 2020
1.
2.

3.

4.

Current and prior periods include discontinued operations.
No new shares were issued under the Dividend Reinvestment Plan (DRP) for the 2019 final dividend (nil shares for the 2019 interim dividend; nil shares for the 2018 final dividend) as theshares were purchased on-market and provided directly to the shareholders participating in the DRP. On-market share purchases for the DRP in the March 2020 half were $185 million (Sep
19 half: $233 million; Mar 19 half: $199 million).
The Company completed a $3.0 billion on-market share buy-back of ANZ ordinary shares purchasing $1,120 million worth of shares in the Mar 2019 half resulting in 42.0 million shares
being cancelled in the March 2019 half.
The successor fund transfer performed in preparation for the sale of the Group’s wealth business to Zurich and IOOF completed on 13 April 2019. As a result, the Group no longer
eliminates the ANZ shares previously held in Wealth Australia discontinued operations (treasury shares).

The notes appearing on pages 84 to 120 form an integral part of the Condensed Consolidated Financial Statements.

83

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These Condensed Consolidated Financial Statements:

have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (AASs);

should be read in conjunction with ANZ’s Annual Financial Statements for the year ended 30 September 2019 and any public announcements madeby the Parent Entity and its controlled entities (the Group) for the half year ended 31 March 2020 in accordance with the continuous disclosure
obligations under the Corporations Act 2001 and the ASX Listing Rules;

do not include all notes of the type normally included in ANZ’s Annual Financial Report;

are presented in Australian dollars unless otherwise stated; andwere approved by the Board of Directors on 29 April 2020.

i)Statement of Compliance

These Condensed Consolidated Financial Statements have been prepared in accordance with the Corporations Act 2001 and AASB 134 which ensurescompliance with IAS 34 Interim Financial Reporting.
ii) Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by Australian Securities and Investments Commission Corporations Instrument 2016/191.
iii) Basis of measurement
The financial information has been prepared in accordance with the historical cost basis except that the following assets and liabilities are stated at theirfair value:

derivative financial instruments as well as, in the case of fair value hedges, the fair value adjustment on the underlying hedged exposure;financial assets and liabilities held for trading;financial assets and liabilities designated at fair value through profit and loss;financial assets at fair value through other comprehensive income;

assets and liabilities held for sale (except those at carrying value as per Note 12).

In accordance with AASB 1038 Life Insurance Contracts, life insurance liabilities are measured using the Margin on Services model.
In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.
iv) Use of estimates, assumptions and judgements
The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions that
affect reported amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include
complex or subjective decisions or assessments are provided in the 2019 ANZ Annual Financial Report. Such estimates and judgements are reviewed on
an ongoing basis.
A brief explanation of the key estimates, assumptions and judgements that have changed during the half year ended 31 March 2020 follows.
Coronavirus (COVID-19) pandemic
The ongoing COVID-19 pandemic has increased the estimation uncertainty in the preparation of these Condensed Consolidated Financial Statements.
The estimation uncertainty is associated with:

the extent and duration of the disruption to business arising from the actions by governments, businesses and consumers to contain the spread of thevirus;

the extent and duration of the expected economic downturn (and forecasts for key economic factors including GDP, employment and house prices).
This includes the disruption to capital markets, deteriorating credit, liquidity concerns, increasing unemployment, declines in consumer discretionary
spending, reductions in production because of decreased demand, and other restructuring activities; andthe effectiveness of government and central bank measures that have and will be put in place to support businesses and consumers through thisdisruption and economic downturn.

The Group has developed various accounting estimates in these Condensed Consolidated Financial Statements based on forecasts of economic
conditions which reflect expectations and assumptions as at 31 March 2020 about future events that the Directors believe are reasonable in thecircumstances. There is a considerable degree of judgement involved in preparing forecasts. The underlying assumptions are also subject touncertainties which are often outside the control of the Group. Accordingly, actual economic conditions are likely to be different from those forecast since
anticipated events frequently do not occur as expected, and the effect of those differences may significantly impact accounting estimates included inthese financial statements.
The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses, fairvalue measurement, and recoverable amount assessments of non-financial assets.
The impact of the COVID-19 pandemic on each of these accounting estimates is discussed further below and/or in the relevant note to these Condensed
Consolidated Financial Statements. Readers should carefully consider these disclosures in light of the inherent uncertainty described above.
Allowance for expected credit losses
The Group measures the allowance for expected credit losses (ECL) using an expected credit loss impairment model as required by AASB 9 Financial
Instruments. The Group’s accounting policy for the recognition and measurement of the allowance for expected credit losses is described at Note 13 to
ANZ’s Annual Financial Statements for the year ended 30 September 2019.

84

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below shows the Group’s allowance for expected credit losses (refer to Note 9 and Note 14 for further information).

As at
Mar 20$M

Sep 19$M

Mar 19$M

Collectively assessed

4,501

3,376

3,378

Individually assessed

1,093

814

891

5,594

4,190

4,269

Total

1,2

1.

Includes allowance for expected credit losses for Net loans and advances – at amortised cost, Investment securities – debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.
2. Includes assets and liabilities reclassified as held for sale from continuing and discontinued operations.

Individually assessed allowance for expected credit losses
In estimating individually assessed ECL for Stage 3 exposures, the Group makes judgements and assumptions in relation to expected repayments, therealisable value of collateral, the business prospects for the customer, competing claims and the likely cost and duration of the work-out process.
Judgements and assumptions in respect of these matters have been updated to reflect the potential impact of COVID-19.
Collectively assessed allowance for expected credit losses
During the March 2020 half the collectively assessed allowance for expected credit losses increased by $1,125 million. This was attributable to changes
in economic outlook of $1,031 million, foreign exchange of $77 million and changes in portfolio composition and risk of $17 million.
In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to:

the selection of an estimation technique or modelling methodology, noting that the modelling of the Group’s ECL estimates are complex; andthe selection of inputs for those models, and the interdependencies between those inputs.

The modelling methodology applied in estimating in ECL in these Condensed Consolidated Financial Statements is consistent with that applied in ANZ’s
Annual Financial Statements for the year ended 30 September 2019.
The impact of COVID-19 on the global economy and how governments, businesses and consumers respond is uncertain. This uncertainty is reflected in
the Group’s assessment of expected credit losses from its credit portfolio which are subject to a number of management judgements and estimates.
The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between those inputs,
and highlights significant changes during the current period.
The judgements and associated assumptions have been made within the context of the impact of COVID-19, and reflect historical experience and otherfactors that are considered to be relevant, including expectations of future events that are believed to be reasonable under the circumstances. In relation
to COVID-19, judgements and assumptions include the extent and duration of the pandemic, the impacts of actions of governments and other authorities,
and the responses of businesses and consumers in different industries, along with the associated impact on the global economy. Accordingly, theGroup’s ECL estimates are inherently uncertain and, as a result, actual results may differ from these estimates.
Judgement/Assumption

Description

Changes and considerations during the half year
ended 31 March 2020

Determining when asignificant increase in credit
risk (SICR) has occurred

In the measurement of ECL, judgement is involved insetting the rules and trigger points to determine whether
there has been a SICR since initial recognition of a loan,
which would result in the financial asset moving from‘stage 1’ to ‘stage 2’. This is a key area of judgement sincetransition from stage 1 to stage 2 increases the ECL froman allowance based on the probability of default in the next
12 months, to an allowance for lifetime expected credit
losses. Subsequent decreases in credit risk resulting intransition from stage 2 to stage 1 may similarly result insignificant changes in the ECL allowance. The setting of
precise trigger points requires judgement which may havea material impact upon the size of the ECL allowance.

Various initiatives, such as payment holidays anddeferrals have been offered to customers in this halfyear recognising the potential detrimental impact of
COVID-19. Such offers, if accepted, are notautomatically considered to indicate SICR but are usedas necessary within the broader set of indicators used
to assess and grade customer facilities.

Measuring both 12-monthand lifetime credit losses

ECL is a function of the probability of default (PD), the loss
given default (LGD) and the exposure at default (EAD)
which are point-in-time measures reflecting the relevant
forward looking information determined by management.
Judgement is involved in determining which forwardlooking information variables are relevant for particularlending portfolios and for determining the sensitivity of theparameters to movements in these forward looking
variables.

The PD, EAD and LGD models are subject to theGroup’s model risk policy that stipulates periodic model
monitoring, periodic re-validation and defines approval
procedures and authorities according to model
materiality. There were no material changes to thepolicies during the half year ended 31 March 2020.

In addition, judgement is required where behaviouralcharacteristics are applied in estimating the lifetime of a
facility to be used in measuring ECL.

There were no changes to behavioural lifetime
estimates during the half year ended 31 March 2020.

85

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Judgement/Assumption

Description

Changes and considerations during the half year
ended 31 March 2020

Base case economic
forecast

The Group derives a forward looking “base case”
economic scenario which reflects ANZ’s view of the most
likely future macro-economic conditions.

There have been no changes to the types of forward
looking variables (key economic drivers) used asmodel inputs in the current half year.
As at 31 March 2020, the base case assumptions havebeen updated to reflect the rapidly evolving situation
with respect to COVID-19. This includes anassessment of the impact of central bank (monetary
policy), governments (wage subsidies), and institution
specific responses (such as payment holidays). These
are considered in determining the length and severityof the forecast economic downturn.
The expected outcomes of key economic drivers forthe base case scenario as at 31 March 2020 and thosepreviously used as at 30 September 2019 aredescribed below under the heading “Forecast basecase assumptions”.

Probability weighting ofeach scenario (base case,upside1, downside1 andsevere downside2
scenarios)

Probability weighting of each scenario is determined bymanagement considering the risks and uncertainties
surrounding the base case scenario.

The key consideration for probability weightings in thecurrent period is the continuing impact of COVID-19.
In addition to the base case forecast which reflects
largely the negative economic consequences of
COVID-19, greater weighting has been applied to thedownside and severe downside scenarios given theGroup’s assessment of downside risks.
The assigned probability weightings in Australia, New
Zealand and Rest of world are subject to a high degreeof inherent uncertainty and therefore the actual
outcomes may be significantly different to thoseprojected. The Group considers these weightings ineach geography to provide the best estimate of thepossible loss outcomes and has analysed interrelationships and correlations (over both the short andlong term) within the Group’s credit portfolios indetermining them.

Management temporary
adjustments

1.

2.

Management temporary adjustments to the ECL allowance
are adjustments used in circumstances where it is judgedthat our existing inputs, assumptions and modeltechniques do not capture all the risk factors relevant toour lending portfolios. Emerging local or global
macroeconomic, microeconomic or political events, andnatural disasters that are not incorporated into our current
parameters, risk ratings, or forward-looking information are
examples of such circumstances. The use of management
temporary adjustments may impact the amount of ECL
recognised.

Temporary adjustments have been assessed in thecontext of COVID-19 and the extent that associatedcredit loss exposures are captured within the modelled
economic scenarios. While changes to temporary
adjustment have been made to select industries andportfolios, there has been no material change to theoverall temporary adjustments in the March 2020 half.

The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse
economic conditions.

Base case economic forecast assumptions
The uncertain evolution of the COVID-19 pandemic increases the risk to the forecast resulting in an understatement or overstatement of the ECL balance
due to uncertainties around:The extent and duration of measures to stop or reduce the speed of the spread of COVID-19;



The extent and duration of the economic down turn, along with the time required for economies to recover; andThe effectiveness of government stimulus measures, in particular their impact on the magnitude of economic downturn and the extent and durationof the recovery.

The Group’s base case economic forecast scenarios reflects a sharp deterioration in economic conditions in the second quarter with a gradualimprovement thereafter. It reflects a widespread shutdown in the 2nd quarter of calendar 2020 followed thereafter by a progressive relaxation.

86

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The economic drivers of the base case economic forecasts at 31 March 2020 and those that were used at 30 September 2019 are set out below. These
reflect ANZ’s view, at the respective reporting dates, of the most likely future macro-economic conditions.
Base case economic forecast as at 31 March 2020

Base case economic forecast as at 30 September 2019

Expected contraction in GDP in the 2020 calendar year,with some recovery in 2021.

Expected to improve modestly.

Australia:GDP

GDP is expected to contract 13% in the June 2020 quarterand to recover thereafter resulting in the 2020 calendar
year GDP contracting 4.7% then growing by 4.1% in the2021 calendar year.


Unemployment rate

Unemployment is expected to increase significantly over
the June quarter, recovering gradually over the remainderof 2020 and 2021, but remaining higher than pre COVID19 levels.

Expected to remain essentially flat.

The unemployment rate is expected to reach 13% in theJune 2020 quarter before moderate recovery in the
September 2020 quarter. It is expected to average 9.0%
for calendar year 2020 and 7.3% for calendar year 2021.
Residential property
valuesProperty prices are expected to fall progressively by 4.1%
in calendar year 2020 (taking into account growth pre
COVID-19) and contract a further 6.3% in calendar year
2021.

Expected to improve after a period of decline.

Consumer priceindex

CPI growth is forecast to fall moderately in 2020 from 2019
levels, returning to 2019 levels in 2021.

Growth expected to rise from current levels.

CPI growth is forecast at 1.2% for calendar year 2020 and
1.6% for calendar year 2021.
New Zealand

GDP

Expected sizeable contraction in GDP in June quarter,
rebounding partially over the remainder of the year.
Moderate GDP growth is expected in 2021.

Expected to improve modestly.

GDP is expected to contract by 17% in the June 2020
quarter, rebounding in the September 2020 quarter once
activity resumes, resulting in the 2020 calendar year GDP
contracting 6.7% then growing by 4.2% in the 2021
calendar year.


Unemployment rate

Unemployment is expected to increase significantly over
the June quarter, recovering gradually over the remainderof 2020 and 2021, but remaining significantly higher thanlevels of 1H20. It is expected to average 7.4% for calendar
year 2020 and 7.7% for calendar year 2021.

Expected to remain stable.



Residential property
valuesProperty prices are expected to contract by 1.9% in
calendar year in 2020, followed by 6.0% growth incalendar year 2021.

Expected to achieve modest levels of growth.

Consumer priceindex

CPI growth is forecast at slightly lower levels than 2019
across 2020 and 2021.

Expected to rise modestly.

CPI growth is forecast at 1.5% for calendar year 2020 and
1.5% for calendar year 2021.
Rest of worldGDP

Expected contraction in GDP in the 2020 calendar year,with modest growth in 2021.

Growth is forecast to taper lower in the near term due touncertainty in the global outlook.

GDP is expected to contract 3.6% over the 2020 calendar
year and then grow by 2.0% over the 2021 calendar year.
Consumer priceindex

Inflation is forecast to fall significantly in 2020 from 2019
levels, increasing in 2021.
Inflation is forecast at 0.9% for calendar year 2020 and
1.7% for calendar year 2021.

87

Expected to remain soft.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ECL - Sensitivity analysis
The uncertainty on the impact of COVID-19 introduced significant estimation uncertainty in relation to the measurement of the Group’s allowance for
expected credit losses. The rapidly evolving consequences of COVID-19 and government, business and consumer responses could result in significant
adjustments to the allowance within the current and next financial years.
Given current economic uncertainties and the judgment applied to factors used in determining the expected default of borrowers in future periods,
expected credit losses reported by the Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of ECL to key factors used in determining it:
ECL sensitivity - Weightings applied to forecast scenarios
Total ECL
$m
1,969
4,319
5,293
6,472

100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario

Impact$m(2,533)
(183)
791
1,970

Fair Value Measurement of Financial Instruments
The majority of valuation models the Group uses to value financial instruments employ only observable market data as inputs. This has not changed as aresult of COVID-19.
For certain financial instruments, we may use data that is not readily observable in current markets where we need to exercise more management
judgement to determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available.
The financial instruments which are subject to valuation using unobservable inputs are disclosed in the Group’s fair value hierarchy in Note 15, and are
predominantly equity investment securities where quoted prices in active markets are not available. At 31 March 2020 the Group had $1,296m of assets
and $67m of liabilities where the valuation was primarily derived using an unobservable input (Sep 19: $1,272m assets and $52m liabilities; Mar 19:$1,365m assets and $43m liabilities).
The Group has an investment in the Bank of Tianjin (BoT), which at 31 March 2020 has a carrying value of $1,053m (Sep 19: $1,106m; Mar 19:$1,215m). As a result of persistent illiquidity of the quoted share price, the Group determines the fair value based on a valuation model using comparablebank pricing multiples as determined by management. Judgement is required in both the selection of the model and inputs used. Although thecomparator group entities operate in the same industry, the nature of their business and local economic conditions may be different from the Group’s
investment. Thus where local conditions change, which impact the price-to-book ratio of the comparator group, the fair value of the asset will change
proportionately. That is, if the price-to-book ratio changed by 10%, the fair value would change by 10%. As the asset is classified as fair value throughother comprehensive income, changes in the fair value are reflected directly in equity.
Investments in associates
At 31 March 2020, the impairment assessment of non-lending assets identified that two of the Group’s associate investments AMMB Holdings Berhad(AmBank) and PT Bank Pan Indonesia (PT Panin) had indicators of impairment; specifically their market value (based on share price) was below theircarrying value. The Group performed value in use (VIU) calculations to assess if the carrying value of the investments were impaired.
The VIU calculations are sensitive to a number of key assumptions, including discount rates, long term growth rates, future profitability and capital levels.
Changes in key assumptions could have a positive or adverse impact on the recoverable amount of the investment. The key assumptions used in the VIU
calculations are outlined below:
AmBankMar 20PT Panin
Sep 19Mar 20

Sep 19Carrying Value ($m)

1,161

1,586

1,130

1,350

Post-tax discount rate

12.4%

10.7%

13.9%

13.3%

Terminal growth rate

4.9%

4.8%

5.3%

5.3%

Expected NPAT growth (compound annual growth rate - 5 years)

1.0%

4.1%

2.6%

6.5%

Common Equity Tier 1 ratio

11.5% 11.9% to 12.7%

12.3%

11.6%

While the underlying performance of both investments continues to be strong, the assumptions in the VIU were adjusted to reflect reasonable estimatesof the impact of COVID-19 and the increased risks associated with the estimated cash flows. Accordingly in performing the VIU calculation as at 31
March 2020 expected NPAT growth estimates were reduced; higher risk weight asset growth estimates were used in the early years and a higher
discount rate was used assuming that higher risk premiums would more than offset reductions in risk free rates.
As the adjusted VIU calculations did not support the carrying value of either investment as at 31 March 2020 the Group recorded an impairment charge of$815 million in the March 2020 half with AmBank impaired by $595 million and PT Panin impaired by $220 million. Both investments form part of the TSO
and Group Centre operating segment.
The impact of COVID-19 on the valuation of AmBank and PT Panin is uncertain. Significant management judgment is required to determine theassumptions underpinning the VIU calculations. Changes in key assumptions could have a positive or adverse impact on the recoverable amount of theinvestment.

88

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Customer remediation provision
At 31 March 2020, the Group has recognised provisions of $1,094 million (Sep 19: $1,139 million; Mar 19: $698 million) in respect of customer
remediation which includes provisions for expected refunds to customers, remediation project costs and costs associated and related customer andregulatory claims, penalties and litigation outcomes.
Determining the amount of the provisions, which represent management’s best estimate of the cost of settling the identified matters, requires the exerciseof significant judgement. It will often be necessary to form a view on a number of different assumptions, including the number of impacted customers, theaverage refund per customer, associated remediation project costs, and the implications of regulatory exposures and customer claims having regard totheir specific facts and circumstances.
Consequently, the appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence,
including expert legal advice, and adjustments are made to the provisions where appropriate.
Other provisions
The Group holds provisions for various obligations including restructuring costs and surplus lease space, non- lending losses, fraud and forgeries andlitigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including estimates of expenditure
required to satisfy such obligations. The appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience andother relevant evidence, including expert legal advice, and adjustments are made to the provisions where appropriate.
Useful lives of software
Management judgement is used to assess the useful life of software assets. A number of factors can influence the useful lives of software assets,
including changes to business strategy, significant divestments and the pace of technological change.
The Group reassess the useful lives of software assets on a semi-annual basis.
v)

Accounting policies

These Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computationconsistent with those applied in the 2019 ANZ Annual Financial Report with the exception of policies associated with new standards adopted during theperiod as discussed below.
Discontinued operations are separately presented from the results of the continuing operations as a single line item ‘profit/(loss) after tax fromdiscontinued operations’ in the Condensed Consolidated Income Statement. Notes to the Condensed Consolidated Income Statement have beenpresented on a continuing basis. Assets and liabilities of discontinued operations have been presented as held for sale in the Condensed Consolidated
Balance Sheet as at 31 March 2020.
Accounting standards adopted during the period
AASB 16 Leases (AASB 16)
AASB 16 became effective for the Group from 1 October 2019 and replaced the previous standard AASB 117 Leases (AASB 117). AASB 16 primarily
impacts the Group’s property and technology leases which were previously classified as operating leases. Under AASB 117, operating leases were notrecognised on balance sheet and rent payments were expensed over the lease term.
Under AASB 16, the Group recognises all leases (except for leases of low value assets and short term leases) on balance sheet under a single
accounting model. Accordingly, the Group recognises its right to use an underlying leased asset over the lease term as a right-of-use (ROU) asset, andits obligation to make lease payments as a lease liability. In the income statement, the Group recognises depreciation expense on the ROU asset andinterest expense on the lease liability. As a result, lease expenses will be higher in the early periods of a lease and lower in the later periods of the lease
compared to the previous standard where expenses were constant over the lease term. Cumulative expenses over the life of a lease will not change.
As permitted by the standard, the Group does not recognise ROU assets and lease liabilities for leases of low value items and short term leases (lessthan 12 months). Instead, the lease payments associated with these leases are recognised as operating expense in the income statement on a straightline basis over the lease term.
The Group has applied the modified retrospective transition approach whereby initial lease liabilities are recognised based on the present value ofremaining lease payments as of the transition date. The initial ROU asset recognised for certain large commercial and retail leases was measured as if
AASB 16 had always been applied to the leases. For all other leases, the initial ROU asset was measured as equal to the initial lease liability.
The implementation of AASB 16 requires management to make certain key judgements including the determination of lease terms, discount rates andidentifying arrangements that contain a lease.
Based on the modified retrospective transition approach, the Group recognised lease liabilities of $1.7 billion presented within Payables and otherliabilities and right-of-use assets of $1.6 billion presented within Property Plant and Equipment. This resulted in a reduction to opening retained earnings
of $88 million and an increase in deferred tax assets of $37 million as of 1 October 2019. Comparatives have not been restated.
In addition, the Group elected to apply the following practical expedients as permitted under the modified retrospective transition approach:a) Impairment of ROU assets at the transition date were assessed by relying on onerous lease provisions previously recognised as of 30 September
2019 under AASB 117;b) Initial direct costs associated with entering leases prior to the transition date were excluded from the carrying value of ROU assets recognised attransition;c) No ROU assets or lease liabilities were recognised for certain leases with less than 12 months remaining as of the transition date; these leases weretreated as short-term leases with all lease payments recognised in rent expense as incurred; andd) Hindsight was used to determine the lease term of contracts that contained options to extend the lease.

89

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table reconciles the operating lease commitments disclosed under AASB 117 as at 30 September 2019 to the opening lease liabilities
recognised under AASB 16 as at 1 October 2019.
$M
1,656

Operating Lease Commitments as of 30 September 2019
Increase in lease term for extension options

210

Exclusion of low value leases and leases of less than 12 months(19)

Exclusion of service components

(10)
(17)

Other
Total Undiscounted Lease Payments

1,820

Effect of discounting at a weighted average incremental borrowing rate of 2.44%(141)

Total lease liabilities under AASB 16

1,679

During the reporting period, the Group recognised the following amounts in the income statement
Depreciation expense on ROU assets$M
203

Interest expense on lease liabilities

20

Interest expense on makegood provisions

1

Rent expense in relation to low value leases and leases of less than 12 months

11

Other Income in relation to subleases

12

The Group's accounting policies with respect to lease arrangements where it acts as lessor have not changed under AASB 16 except where the Group
subleases certain leased properties. Where the Group acts as intermediate lessor, it classifies the sublease as either a finance lease or operating leaseby reference to the ROU asset of the head lease. Income from operating subleases is recognised in Other Operating Income in the Income Statement.
Interest Rate Benchmark Reform
Background
Interbank offered rates (IBORs), such as the London Interbank Offered Rate (LIBOR), play a critical role in global financial markets, serving as reference
rates for derivatives, loans and securities, and as parameters in the valuation of financial instruments.
Uncertainty surrounding the integrity of IBOR rates has in recent years, led regulators, central banks and market participants to work towards a transition
to alternative risk-free benchmark reference rates (RFR’s) and market-led working groups in respective jurisdictions have recommended alternative riskfree reference rates, which are gradually being adopted. Progress in the transition to these new benchmarks has resulted in significant uncertainty in the
future of IBOR benchmarks beyond 1 January 2022.
Accounting amendments
In response to the uncertainty about the long-term viability of these benchmark rates, and LIBOR in particular, the International Accounting Standards
Board (IASB) has established a project to consider the financial reporting implications of the reform. The transition from LIBOR is expected to have an
impact on various elements of financial instrument accounting, including hedge accounting, as well as fair value methodologies and disclosures.
In October 2019, the AASB issued AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform, which amends
certain existing hedge accounting requirements to provide relief from potential effects of the uncertainty caused by the interest rate benchmark reform.
The Group elected to early adopt the amendments from 1 October 2019 which have not had a significant impact on the Group.
These amendments address the accounting effects of uncertainty in the period leading up to the reform arising from the Group’s ability to satisfy theexisting prospective hedge effectiveness requirements of AASB 139. This uncertainty arises as it is not known when the hedged items (such as debt
issuances) and associated hedging instruments (such as interest rate swaps) will be changed to reference the RFR’s, or if both the hedging item and theassociated hedging instrument will move to the new rates at the same time. The Group has applied this amendment to all hedge accounted relationships(cash flow or fair value hedges) where the reform gives rise to uncertainties about the timing or amount of IBOR based cash flows of the hedged item or
hedging instrument.
The IASB has commenced working on Phase 2 of its IBOR Reform project, which focuses on potential issues that might affect financial reporting oncethe existing rate is replaced with an alternative rate. The Group is monitoring these developments and continues to assess the expected financial impact.
Impact of IBOR reform
The Group has exposure to IBOR through its issuance of debt, the structural interest rate risk position, holdings of investment securities; products
denominated in foreign currencies and associated hedging activities in our treasury and markets businesses within TSO and Group Centre andInstitutional divisions respectively.
The Group has established an enterprise-wide Benchmark Transition Program to manage the transition. The program includes the assessment andactions necessary to accommodate the transition to RFR’s as they apply to internal processes and systems including pricing, risk management,
documentation and hedge arrangements. The program includes management of the impact on customers.
Impact of IBOR reform on the Group’s hedging relationships
The most significant interest rate benchmarks to which the Group's hedging relationships are exposed to are USD LIBOR, Euro Interbank Offered Rate
(Euribor), Bank Bill Swap Rate (BBSW) and Bank Bill Market (BKBM).
Of these benchmarks the Group expects BBSW, BKBM and EURIBOR to exist as benchmark rates for the foreseeable future and therefore does notbelieve its BBSW, BKBM or EURIBOR benchmark fair value or cash flow hedges to be directly impacted by IBOR reform.

90

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below details the carrying values of the Group's exposures designated in hedge accounting relationships that will be impacted by IBOR reform,
principally USD Libor. The nominal value of the associated hedging instruments are also included:
As at 31 March 20
Hedged items

USD LIBOR exposures
AUD$M

Investment securities at FVOCI

17,144

Net loans and advances

135

Debt issuances

42,935

Hedging instruments

Notional designated up to
31 December 2021
AUD$M

Notional designated beyond
31 December 2021
AUD$M

Fair value hedges
Cash flow hedges

22,352-

34,965
1,212

Total Notional Amount
AUD $M
57,317
1,212

As at 31 March, 2020 the Group also has GBP LIBOR, CHF LIBOR and JPY LIBOR exposures designated in hedge accounting relationships of $1,118
million, $1,073 million and $3,582 million respectively.
vi) Future accounting developments
AASB 9 - General hedge accounting
AASB 9 introduces new hedge accounting requirements which more closely align accounting with risk management activities undertaken when hedging
financial and non-financial risks.
AASB 9 provides the Group with an accounting policy choice to continue to apply AASB 139 Financial Instruments: Recognition and Measurement(AASB 139) hedge accounting requirements until the International Accounting Standards Board’s ongoing project on macro hedge accounting iscompleted. The Group currently applies the hedge accounting requirements of AASB 139.

91

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.

IncomeHalf Year

Movement

Interest income

Mar 20$M
13,800

Sep 19$M
15,107

Mar 19$M
15,970Mar 20v. Sep 19-9%

Mar 20v. Mar 19-14%

Interest expense(6,382)(7,882)(8,493)

-19%

-25%

Major bank levy

(196)

(185)

(178)

6%

10%

Net interest income

7,222

7,040

7,299

3%

-1%

Other operating incomei) Fee and commission income
Lending fees1
Non-lending fees

303

299

303

1%

0%

1,441

1,552

1,507

-7%

-4%

Commissions

46

76

48

-39%

-4%

Funds management income

139

126

128

10%

9%

Fee and commission income

1,929

2,053

1,986

-6%

-3%

Fee and commission expense

(752)

(741)

(721)

1%

4%

Net fee and commission income

1,177

1,312

1,265

-10%

-7%

Net foreign exchange earnings and other financial instruments income2

1,099

898

380

22%

large

Impairment of AmBank

(595)

-

-

n/a

n/a

Impairment of PT Panin

(220)

-

-

n/a

n/a

Sale of OPL NZ

-

7

82

-100%

-100%

Sale of Paymark

-

-

37

n/a

-100%

Sale of Cambodia JV

-

10

-

-100%

n/a

Sale of PNG Retail, Commercial & SME

-

1

-

-100%

n/a

Dividend income on equity securities

-

28

-

-100%

n/a

Other

28

16

22

75%

27%

Other income

312

960

521

-68%

-40%

1,489

2,272

1,786

-34%

-17%

iii) Net income from insurance business

47

49

77

-4%

-39%

iv) Share of associates' profit

135

131

131

3%

3%

8,893

9,492

9,293

-6%

-4%

ii) Other income

Other operating income

3

Operating income
1.

Lending fees exclude fees treated as part of the effective yield calculation in interest income.
2. Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk
on funding instruments, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit and loss.
3. Includes charges associated with customer remediation of $58 million for the March 2020 half (Sep 19 half: $148 million; Mar 19 half: $64 million).

92

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3.

Operating expenses
Half Yeari) Personnel
Salaries and related costs
Superannuation costs

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

2,177

2,122

2,127

3%

2%

169

147

146

15%

16%

119

126

97

-6%

23%

2,465

2,395

2,370

3%

4%

Rent2

43

218

232

-80%

-81%

Depreciation3

263

86

81

large

large

Other

99

85

93

16%

6%

Premises

405

389

406

4%

0%

Depreciation and amortisation3

341

357

337

-4%

1%

Licences and outsourced services

405

339

333

19%

22%

Other

93

74

94

26%

-1%

Technology (excluding personnel)

839

770

764

9%

10%

iv) Restructuring

105

26

51

large

large

Advertising and public relations

89

129

97

-31%

-8%

Professional fees

293

308

229

-5%

28%

Freight, stationery, postage and communication

104

109

107

-5%

-3%

-

2

13

-100%

-100%

Other
Personnel1ii) Premisesiii) Technologyv) OtherRoyal Commission legal costs
Other

305

578

328

-47%

-7%

Other1

791

1,126

774

-30%

2%

4,605

4,706

4,365

-2%

5%

Operating expenses

1

1.

Includes customer remediation expenses of $71 million for the March 2020 half (Sep 19 half: $337 million; Mar 19 half: $36 million).
2. Following the adoption of AASB16 on 1 October 2019, with the exception of low value leases and leases of less than 12 months, expenses associated with operating leases are shown as
depreciation of the right-of-use asset and interest expense associated with the lease liability (comparatives not restated).
3. Includes depreciation and amortisation on right-of-use assets which the Group commenced recognising on the adoption of AASB 16 (comparatives not restated).

93

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4.

Income tax expense

Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in the profit and loss.
Half Year

Profit before income tax from continuing operations
Prima facie income tax expense at 30%

Movement

Mar 20$M
2,614

Sep 19$M
4,384

Mar 19$M
4,536

Mar 20v. Sep 19-40%

Mar 20v. Mar 19
-42%

784

1,315

1,361

-40%

-42%

-100%

Tax effect of permanent differences:
Gains or losses on sale from divestments

-

(5)

(20)

-100%

Impairment of investment in AmBank and PT Panin

245

-

-

n/a

n/a

Share of associates' profit

(41)

(39)

(39)

5%

5%

Interest on convertible instruments

29

30

33

-3%

-12%

Overseas tax rate differential

(35)

(48)

(64)

-27%

-45%

Provision for foreign tax on dividend repatriation

14

30

9

-53%

56%

Tax provisions no longer required

-

(8)

(6)

-100%

-100%

Other

5

71

6

-93%

-17%

Subtotal

-22%

1,001

1,346

1,280

-26%

Income tax (over)/under provided in previous years

(23)

(21)

4

10%

large

Income tax expense

978

1,325

1,284

-26%

-24%

Australia

580

867

815

-33%

-29%

Overseas

398

458

469

-13%

-15%

-26%

-24%

Income tax expense
Effective tax rate

94

978

1,325

1,284

37.4%

30.2%

28.3%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5.

Dividends
Half Year

Dividend per ordinary share (cents)

Movement

Mar 20

Sep 19Mar 19- fully franked1,2,3

TBD

N/A

80

- partially franked1

TBD

N/A

N/A

N/A

80

N/A

TBD

80

80

Mar 20v. Sep 19

Mar 20v. Mar 19

InterimFinal- partially franked3,4
Total

Ordinary share dividend ($M)5Interim dividend
Final dividend
Bonus option plan adjustment
Total
Ordinary share dividend payout ratio (%)6
1.
2.
3.
4.
5.
6.

-

2,267

-

2,268

-

2,295

(40)

(40)

(41)

0%

-2%

0%

-1%

2,228

2,227

2,254

TBD

81.6%

71.4%

The decision on the payment of a 2020 interim dividend has been deferred until the economic outlook is clearer and an update will be provided at the August 2020 market update.
Fully franked for Australian tax purposes (30% tax rate) for the 2019 interim dividend.
Carries New Zealand imputation credits of NZD 9 cents for the 2019 interim and final dividend.
Partially franked at 70% for Australian tax purposes (30% tax rate).
Dividends paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries of the Group to non-controlling equity holders (Sep 19 half: $1.6 million; Mar 19 half: nil).
The dividend payout ratio for the March 2020 half will be determined when the decision on the 2020 interim dividend has been made. Dividend payout ratios for the September 2019 halfand March 2019 half were calculated using actual dividend paid of $2,268 million and $2,267 million respectively.

With consideration to the current uncertainties in the economic outlook and the letter issued by the Australian Prudential Regulation Authority (APRA)
to all Authorised Deposit Taking Institutions (ADIs) on 7 April 2020, on capital management and the ongoing Coronavirus (COVID-19) pandemic, theANZ board has deferred the decision on the payment of a 2020 interim dividend until the economic outlook is clearer. Decisions in relation to the
Dividend Reinvestment Plan and Bonus Option Plan will also be made at that time as applicable.
The Board will continue to deliberate and an update will be provided at the August 2020 market update.

95

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.

Earnings per share
Half Year
Mar 20Movement

Sep 19Mar 19Mar 20v. Sep 19

Mar 20v. Mar 19

Earnings Per Share (EPS) - Basic
Earnings Per Share (cents)

54.6

98.3

111.7

-44%

-51%

Earnings Per Share (cents) from continuing operations1

57.8

107.9

114.1

-46%

-49%

Earnings Per Share (cents) from discontinued operations

(3.2)

(9.6)

(2.4)

-67%

33%

Earnings Per Share (EPS) - Diluted
Earnings Per Share (cents)

51.5

94.7

106.4

-46%

-52%

Earnings Per Share (cents) from continuing operations1

54.3

103.6

108.7

-48%

-50%

Earnings Per Share (cents) from discontinued operations

(2.8)

(8.9)

(2.3)

-69%

22%

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding
during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is calculated by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic EPS calculation for the effect of dilutive potential
ordinary shares.
Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the period ($M)

1,546

2,786

3,182

-45%

1

6

9

-83%

-89%

Earnings used in calculating basic earnings per share ($M)

1,545

2,780

3,173

-44%

-51%

Less: Profit/(Loss) after tax from discontinued operations ($M)

(90)

(273)

(70)

-67%

29%

1,635

3,053

3,243

-46%

-50%

1,545

2,780

3,173

-44%

-51%

Less: Profit attributable to non-controlling interests ($M)

Earnings used in calculating basic earnings per share from continuing
operations ($M)-51%

Diluted:Earnings used in calculating basic earnings per share ($M)
Add: Interest on convertible subordinated debt ($M)

124

131

137

-5%

-9%

Earnings used in calculating diluted earnings per share ($M)

1,669

2,911

3,310

-43%

-50%

Less: Profit/(Loss) after tax from discontinued operations ($M)

(90)

(273)

(70)

-67%

29%

1,759

3,184

3,380

-45%

-48%

2,830.6

2,828.4

2,841.3

0%

0%

401.4

237.9

260.5

69%

54%

6.6

8.3

8.4

-20%

-21%

3,238.6

3,074.6

3,110.2

5%

4%

Earnings used in calculating diluted earnings per share fromcontinuing operations ($M)

Reconciliation of weighted average number of ordinary shares(WANOS) used in earnings per share calculations1,2
WANOS used in calculating basic earnings per share (M)Add: Weighted average dilutive potential ordinary shares (M)Convertible subordinated debt (M)Share based payments (options, rights and deferred shares) (M)
WANOS used in calculating diluted earnings per share (M)1.

The successor fund transfer performed in preparation for the sale of the Group’s wealth businesses to Zurich and IOOF was completed on 13 April 2019. Post this date, treasury shares heldin Wealth Australia discontinued operations ceased to be eliminated in the Group’s consolidated financial statements and are included in the denominator used in calculating earnings per
share. If the weighted average number of treasury shares held in Wealth Australia discontinued operations was included in the denominator used in calculating earnings per share fromcontinuing operations in the comparative periods, basic earnings per share from continuing operations for the September 2019 half and March 2019 half would have been 107.9 cents and113.5 cents respectively and diluted earnings per share from continuing operations for the September 2019 half and March 2019 half would have been 103.5 cents and 108.1 cents
respectively.
2. Weighted average number of ordinary shares excludes the weighted average number of treasury shares held in ANZEST and Wealth Australia discontinued operations as summarised in thetable below:
Mar 20 half
(Million)

Sep 19 half
(Million)

Mar 19 half
(Million)

ANZEST Pty Ltd

4.9

4.6

4.9

Wealth Australia discontinued operations

-

0.9

15.6

Total treasury shares

4.9

5.5

20.5

96

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.

Segment analysisi) Description of segments
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, New Zealand, Institutional, Pacific, and TSO
and Group Centre. For further information on the composition of divisions refer to the Definitions on page 141.
The presentation of divisional results has not been impacted by methodology or structural changes during the period.
The divisions reported below are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.
ii) Operating segments
ANZ measures the performance of continuing segments on a cash profit basis. To calculate cash profit, certain non-core items are removed fromstatutory profit. Details of these items are included in the ‘Other items’ section of this note. Transactions between divisions across segments within ANZ
are conducted on an arm’s-length basis and disclosed as part of the income and expenses of these segments.
For information on discontinued operations please refer to Note 12.

Australia
Retail andCommercial$M

Pacific$M

TSO andGroup
Centre$M

Otheritems1
$M

Group
Total
$M

65

75

-

7,222

6

-

-

303

18

(8)

-

1,441

-

-

-

46

-

-

-

139

(4)

-

-

(752)

Institutional$M

New
Zealand
$M

4,048

1,624

1,410

- Lending fees

133

156

8

- Non-lending fees

694

406

331

- Commissions

25

-

21

- Funds management income

12

1

126

- Fee and commission expense

(322)

(178)

(248)

Net income from insurance business

47

-

-

-

-

-

47

Other income

6

782

9

30

(829)

314

312

March 2020 Half YearNet interest income
Net fee and commission income

Share of associates’ profit

-

-

-

-

135

-

135

Operating income

4,643

2,791

1,657

115

(627)

314

8,893

Profit/(Loss) after tax from continuing operations

1,214

610

567

20

(998)

222

1,635

Profit/(Loss) after tax from discontinued operations(90)

Profit after tax attributable to shareholders
1.

1,545

In evaluating the performance of the operating segments, certain items are removed from statutory profit where they are not considered integral to the ongoing performance of the segment
and are evaluated separately.

97

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.

Segment analysis, cont’dAustralia
Retail andCommercial

Institutional

New
Zealand

$M
4,000

$M
1,501

$M
1,351

- Lending fees

146

138

8

- Non-lending fees

791

412

337

- Commissions

35

-

40

September 2019 Half YearNet interest income

Pacific

TSO andGroup
CentreOther
items1

Group
Total

$M
60

$M
128

$M
-

$M
7,040

7

-

-

299

22

(10)

-

1,552

-

1

-

76

Net fee and commission income- Funds management income

4

1

123

-

(2)

-

126

- Fee and commission expense

(335)

(170)

(232)

(5)

1

-

(741)

Net income from insurance business

48

-

-

-

1

-

49

Other income

9

685

2

30

25

209

960

Share of associates’ profit

(2)

-

-

-

133

-

131

Operating income

4,696

2,567

1,629

114

277

209

9,492

Profit/(Loss) after tax from continuing operations

1,492

816

646

26

(74)

147

3,053

Profit/(Loss) after tax from discontinued operations(273)

Profit after tax attributable to shareholders

2,780

March 2019 Half YearNet interest income

4,092

1,579

1,385

- Lending fees

144

144

8

- Non-lending fees

708

435

354

- Commissions

40

-

21

- Funds management income

10

1

120

68

175

-

7,299

7

-

-

303

20

(10)

-

1,507

-

(13)

-

48

-

(3)

-

128
(721)

Net fee and commission income- Fee and commission expense

(322)

(168)

(227)

(4)

-

-

Net income from insurance business

52

-

18

-

-

7

77

Other income

18

714

4

27

218

(460)

521

Share of associates’ profit

1

-

4

-

126

-

131

Operating income

4,743

2,705

1,687

118

493

(453)

9,293

Profit/(Loss) after tax from continuing operations

1,703

1,012

753

33

63

(321)

3,243

Profit/(Loss) after tax from discontinued operations(70)

Profit after tax attributable to shareholders
1.

3,173

In evaluating the performance of the operating segments, certain items are removed from statutory profit where they are not considered integral to the ongoing performance of the segment
and are evaluated separately.

iii) Other items
The table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Half Year

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

-

-

(77)

n/a

-100%

Institutional, New Zealand, TSO andGroup Centre

340

67

(185)

large

large

Revenue and expense hedges

TSO and Group Centre

(120)

79

(60)

large

100%

Structured credit intermediation trades

Institutional

2

1

1

100%

100%

222

147

(321)

51%

large

Item gains/(losses)

Related segment

Revaluation of policy liabilities

New Zealand

Economic hedges

Total from continuing operations

98

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.

Net loans and advances
As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Australia
Overdrafts

4,997

5,867

5,832

-15%

-14%

Credit cards outstanding

7,383

7,781

8,168

-5%

-10%

Commercial bills outstanding

6,414

6,159

6,441

4%

0%

Term loans - housing

263,596

264,786

268,766

0%-2%

Term loans - non-housing

164,346

145,538

132,733

13%

24%

1,066

929

966

15%

10%

452

535

561

-16%

-19%

448,254431,595

423,467

4%

6%

476

541

611

-12%

-22%

7

7

12

0%

-42%

531

504

770

5%

-31%

78,80361,491

61,405

28%

28%

29

274

305

-89%

-90%

Lease receivables
Hire purchase contracts
Total Australia
Asia, Pacific, Europe & America
Overdrafts
Credit cards outstanding
Term loans - housing
Term loans - non-housing1
Lease receivables1
Other
Total Asia, Pacific, Europe & America

28

19

13

47%

large

79,87462,836

63,116

27%

27%

New Zealand
Overdrafts

795

859

1,040

-7%

-24%

Credit cards outstanding

1,389

1,453

1,552

-4%

-11%

Term loans - housing

85,301

78,51879,4109%

7%

Term loans - non-housing

43,37341,30842,930

5%

1%

138

146

162

-5%

-15%

Lease receivables

1,657

1,580

1,592

5%

4%

Total New Zealand

132,653

123,864

126,6867%

5%

Sub-total

660,781618,295

613,269

7%

8%

(368)

(398)

(446)

-8%

-17%

Hire purchase contracts

Unearned income
Capitalised brokerage/mortgage origination fees

2

Gross loans and advances (including assets reclassified as held for sale)
Allowance for expected credit losses (refer to Note 9)
Net loans and advances (including assets reclassified as held for sale)
Net loans and advances held for sale (refer to Note 12)
Net loans and advances
1.
2.

865

870

947

-1%

-9%

661,278

618,767

613,7707%

8%(4,669)(3,509)(3,601)33%

30%

656,609615,258

610,169

7%

8%

-

-

(888)

n/a

-100%

656,609615,258

609,2817%8%During the March 2020 half, the Group reclassified certain arrangements from Lease receivables to Term loans – non-housing. Comparatives were not restated.
Capitalised brokerage/mortgage origination fees are amortised over the expected life of the loan.

99

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.

Allowance for expected credit losses

The following tables present the movement in the allowance for ECL (including allowance for ECL on financial assets held for sale) for the March 2020,
September 2019 and March 2019 half year’s.
Net loans and advances - at amortised cost
Allowance for ECL is included in Net loans and advances.

Stage 3
Stage 1$M

As at 1 October 2018

Collectively
Stage 2
assessed$M$M

Individuallyassessed
$M

Total
$M
3,564

920

1,391

359

894

Transfer between stages

133

(228)

(53)

148

-

New and increased provisions (net of releases)

(124)

244

74

475

669

Write-backs

-

-

-

(152)

(152)

Bad debts written off (excluding recoveries)

-

-

-

(498)

(498)

Foreign currency translation and other movements

11

8

1

(2)

18
3,601

As at 31 March 2019

940

1,415

381

865

Transfer between stages

160

(253)

(87)

180

-

New and increased provisions (net of releases)

(172)

221

122

569

740

-

-

-

(230)

(230)
(578)

Write-backs

-

-

-

(578)

(1)

(5)

(3)

(15)

(24)

As at 30 September 2019

927

1,378

413

791

3,509

Transfer between stages

204

(270)

(95)

161

-

New and increased provisions (net of releases)

30

840

132

718

1,720

Write-backs

-

-

-

(164)

(164)

Bad debts written off (excluding recoveries)

-

-

-

(469)

(469)

30

20

5

18

73

1,191

1,968

455

1,055

4,669

Individuallyassessed
$M

Total
$M
11

Bad debts written off (excluding recoveries)
Foreign currency translation and other movements

Foreign currency translation and other movements
As at 31 March 2020

Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.

Stage 3
Stage 1
$M

Collectively
Stage 2
assessed$M$M

As at 1 October 2018

9

2

-

-

Transfer between stages

-

-

-

-

-

New and increased provisions (net of releases)

2

(1)

-

-

1

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

-

-

-

-

-

11

1

-

-

12

Transfer between stages

-

-

-

-

-

New and increased provisions (net of releases)

-

-

-

-

-

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

As at 31 March 2019

Foreign currency translation and other movements

1

-

-

-

1

As at 30 September 2019

12

1

-

-

13

Transfer between stages

-

-

-

-

-

New and increased provisions (net of releases)

1

-

-

-

1

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

1

-

-

-

1

As at 31 March 2020

14

1

-

-

15

100

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.

Allowance for expected credit losses, cont’d

Investment securities - debt securities at FVOCIFor FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in
Other Comprehensive Income (OCI) with a corresponding charge to profit or loss.
Stage 3
Stage 1$M
As at 1 October 2018

Collectively
Stage 2
assessed$M$M

Individuallyassessed
$M

Total
$M
14

14

-

-

-

-

-

-

-

-

(3)

-

-

-

(3)

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

-

-

-

-

-

11

-

-

-

11

Transfer between stages

-

-

-

-

-

New and increased provisions (net of releases)

1

-

-

-

1

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

(4)

-

-

-

(4)

As at 30 September 2019

8

-

-

-

8

Transfer between stages

-

-

-

-

-

New and increased provisions (net of releases)

1

-

-

-

1

Write-backs

-

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

-

-

-

-

-

As at 31 March 2020

9

-

-

-

9

Transfer between stages
New and increased provisions (net of releases)

As at 31 March 2019Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Provisions.
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

As at 1 October 2018

474

166

15

26

681

Transfer between stages

19

(19)

-

-

-

New and increased provisions (net of releases)

(34)

3

(1)

1

(31)
-

Write-backs

-

-

-

-

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

5

2

-

(1)

6

464

152

14

26

656

Transfer between stages

18

(20)

1

1

-

New and increased provisions (net of releases)

(12)

19

6

-

13
(3)

As at 31 March 2019

Write-backs

-

-

-

(3)

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

3

-

-

(1)

2

As at 30 September 2019

473

151

21

23

668

Transfer between stages

20

(24)

(2)

6

-

New and increased provisions (net of releases)

98

115

(2)

15

226

Write-backs

-

-

-

(6)

(6)

Bad debts written off (excluding recoveries)

-

-

-

-

-

Foreign currency translation and other movements

19

2

1

-

22

As at 31 March 2020

610

244

18

38

910

101

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.

Allowance for expected credit losses, cont’dCredit impairment charge/(release) analysis
Half Year
Mar 20$M

Movement

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19
large

New and increased provisions (net of releases)1- Collectively assessed

1,048

4

12

large

- Individually assessed

900

750

624

20%

44%

Write-backs

(170)

(233)

(152)

-27%

12%

Recoveries of amounts previously written off

(104)

(119)

(93)

-13%

12%

Total credit impairment charge

1,674

402

391

large

large

-

-

(1)

n/a

-100%

1,674

402

392

large

large

Less: credit impairment charge/(release) from discontinued operations
Total credit impairment charge from continuing operations
1.

Includes the impact of transfers between collectively assessed and individually assessed.

102

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10.

Deposits and other borrowings
As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

Certificates of deposit

34,733

32,953

Term deposits

69,05674,56039,4815%-12%77,714-7%

On demand and short term deposits

220,135-11%

196,261

180,86312%

Deposits not bearing interest

22%

14,41012,765

12,20213%

18%

Deposits from banks and securities sold under repurchase agreements

52,94243,44749,96422%

6%Australia

Commercial paper

17,435

9,413

12,53085%

39%

Total Australia

408,711369,399372,754

11%

10%

1,494

2,318

3,215

-36%

-54%

Term deposits

121,141

101,586

94,39619%

28%

On demand and short term deposits

24,211

20,787

19,93016%

21%Asia, Pacific, Europe & America
Certificates of deposit

Deposits not bearing interest

7,101

4,648

5,234

53%

36%

Deposits from banks and securities sold under repurchase agreements

46,39733,891

34,70537%

34%

Total Asia, Pacific, Europe & America

200,344

163,230

157,480

23%

27%

89%

New ZealandCertificates of deposit

1,651

1,375

874

20%

Term deposits

50,41450,94150,890-1%-1%

On demand and short term deposits

45,97839,21641,01117%

12%

Deposits not bearing interest

14,05010,92910,38329%

35%

Deposits from banks and securities sold under repurchase agreements

1,422

188

245

large

large

Commercial paper and other borrowings

4,339

2,399

2,896

81%

50%

Total New Zealand

117,854

105,048

106,299

12%

11%

Total deposits and other borrowings (including liabilities reclassified as held for sale)

726,909637,677

636,533

14%

14%

Deposits and other borrowings held for sale (refer to Note 12)
Total deposits and other borrowings

103

-

-

(1,544)

n/a

-100%

726,909637,677

634,989

14%

14%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Other provisions
As at
Mar 20$M

ECL allowance on undrawn facilities

Movement

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

910

668

656

36%

39%

Customer remediation

1,094

1,139

698

-4%

57%

Restructuring costs

128

64

114

100%

12%

Non-lending losses, frauds and forgeries

82

94

101

-13%

-19%

Other
Total other provisions (including liabilities reclassified as held for sale)Less: Other provisions reclassified as held for sale
Total other provisions

559

350

174

60%

large

2,773

2,315

1,743

20%

59%

-

(91)

(63)

-100%

-100%

2,773

2,224

1,680

25%

65%

Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner inwhich that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are expensed
as incurred.
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advances andlosses arising from forgeries, frauds and the correction of operational issues. The amounts recognised are the best estimate of the consideration required
to settle the present obligation at the reporting date, taking into account the risks and uncertainties that surround the events and circumstances that affectthe provision.
Other
Other provisions comprise various other provisions including workers compensation, make-good provisions associated with leased premises, warranties
and indemnities provided in connection with various disposals of businesses and assets, and contingent liabilities recognised as part of a businesscombination.

104

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Discontinued operations and assets and liabilities held for salei)

Discontinued operations

In October 2017, the Group announced it had agreed to sell its OnePath pensions and investments (OnePath P&I) business and Aligned Dealer Groups(ADGs) businesses to IOOF. The sale of the ADG business completed on 1 October 2018 and the sale of OnePath P&I business was completed on 31
January 2020.
In December 2017, the Group announced that it had agreed to the sale of its life insurance business to Zurich Financial Services Australia (Zurich) andthe transaction was completed on 31 May 2019.
As a result of the sale transactions outlined above, the financial results of the businesses being divested and associated Group reclassification andconsolidation impacts are treated as discontinued operations from a reporting perspective.
Details of the financial performance and cash flows of discontinued operations are shown below.

Income Statement
Movement

Half YearNet interest income

Mar 20$M(5)

Sep 19$M(19)

Mar 19$M(57)

Mar 20v. Sep 19-74%

Mar 20v. Mar 19
-91%
large

Other operating income

(109)

46

199

large

Operating income

(114)

27

142

large

large

Operating expenses

(120)

(228)

(221)

-47%

-46%

Profit/(Loss) before credit impairment and income tax

(234)

(201)

(79)

16%

large

-

-

1

n/a

-100%

Profit/(Loss) before income tax

(234)

(201)

(78)

16%

large

Income tax (expense)/benefit

144

(72)

8

large

large

Profit/(Loss) for the period attributable to shareholders of the Company1

(90)

(273)

(70)

-67%

29%

Credit impairment (charge)/release1.

Includes the results of the OnePathP&I business up to sale completion in January 2020 and the life insurance business up to the sale completion in May 2019.

Income Statement impact relating to discontinued operations
During the March 2020 half, the Group recognised the following impacts in relation to discontinued operations:$16 million loss on disposal ($11 million loss after tax) recorded in operating income attributable to sale completion costs.

$124 million of customer remediation charges ($128 million recorded in operating income and -$4 million recorded in operating expenses) andan associated $30 million tax benefit.

$101 million charge was recorded in operating income offset by a $101 million tax benefit within income tax expense relating to the finalisationof the policyholder tax position associated with the sale of the life insurance business to Zurich.

During the September 2019 half, the Group recognised the following impacts in relation to discontinued operations:$1 million net loss from sale related adjustments and write-downs, partially offset by the recycling of gains previously deferred in equity
reserves on sale completion recorded in operating income, and a $64 million income tax expense.

$166 million of customer remediation charges ($106 million recorded in operating income and $60 million recorded in operating expenses) andan associated $12 million tax benefit.

During the March 2019 half, the Group recognised the following impacts in relation to discontinued operations:$75 million of customer remediation charges ($55 million recorded in operating income and $20 million recorded in operating expenses) andan associated $22 million tax benefit.

Cash Flow Statement
Half Year
Mar 20$M(25)

Net cash provided by/(used in) operating activities

Sep 19$M
37

Movement
Mar 19$M(589)

Mar 20v. Sep 19
large

Mar 20v. Mar 19
-96%
-100%

Net cash provided by/(used in) investing activities

-

34

803

-100%

Net cash provided by/(used in) financing activities

25

(71)

(219)

large

large

-

-

(5)

n/a

-100%

Net increase/(decrease) in cash and cash equivalents

105

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Discontinued operations and assets and liabilities held for sale, cont’dii)

Assets and liabilities held for saleAt 31 March 2020, there were no assets and liabilities held for sale.
In the prior periods assets and liabilities held for sale included the assets and liabilities associated with the Group’s discontinued operations as well as theassets and liabilities of other assets or disposal groups, subject to sale, which do not meet the criteria to classify as a discontinued operation under theaccounting standards. The assets and liabilities held for sale were re-measured at the lower of their carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets, financial assets and contractual rights under insurance contracts, which are specifically exempt from thisrequirement and continue to be recognised at their carrying value upon reclassification to held for sale.

Assets and liabilities held for sale1
As at 30 September 2019

Cash and cash equivalents
2

Trading securities

Discontinued
operations$M

As at 31 March 2019

Total
$M

Discontinued
operations
$M

-

-

-

Cambodia JV$M

PNG Retail,Commercial &
SME
$M

Total
$M

267

-

267

919

919

-

-

-

-

Derivative financial instruments

-

-

-

1

-

1

Investment securities

-

-

1,167

-

-

1,167

Net loans and advances

-

-

43

700

145

888

Regulatory deposits

-

-

-

145

-

145

Deferred tax assets

16

16

97

2

-

99

Goodwill and other intangible assets

394

394

1,138

-

-

1,138
39,191

Investments backing policy liabilities2--

39,191--

Premises and equipment

1

1

2

5

6

13

501

501

590

50

-

640

1,831

1,831

42,2281,170

151

43,549Other assets
Total assets held for sale

Deposits and other borrowings

-

-

-

1,064

480

1,544

Current tax liabilities

3

3

(192)

4

-

(188)

Deferred tax liabilities

105

105

338

1

-

339

Policy liabilities--

38,787--38,787External unit holder liabilities

-

-

4,590

-

-

4,590

Payables and other liabilities

1,914

1,914

1,349

53

-

1,402

99

99

35

42

4

81

2,121

2,121

44,9071,164

484

46,555

Provisions3
Total liabilities held for sale1.

Amounts are shown net of intercompany balances.
The successor fund transfer performed in preparation for the sale of the Group’s wealth business to Zurich and IOOF completed on 13 April 2019. As a result, OnePath P&I assets
previously held as Investments backing policy liabilities were shown as Trading securities at 30 September 2019.
3. Includes employee entitlements of $8 million at September 2019, $18 million at March 2019 and other provisions of $91 million at September 2019, $63 million at March 2019.
2.

106

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Discontinued operations and assets and liabilities held for sale, cont’d

Other strategic divestments not classified as discontinued operations but have been presented as held for sale at 31 March 2019 include:

ANZ Royal Bank (Cambodia) Ltd (Cambodia JV) – Institutional division
In May 2018, the Group announced it had reached an agreement to sell its 55% stake in Cambodia JV ANZ Royal Bank to J Trust, a Japanesediversified financial holding company listed on the Tokyo Stock Exchange. The transaction was completed on 19 August 2019.



Papua New Guinea Retail, Commercial and Small-Medium Sized Enterprise businesses (PNG Retail, Commercial & SME) – Institutional
division
In June 2018, the Group announced it had entered into an agreement to sell its Retail, Commercial and Small-Medium Sized Enterprise (SME)banking businesses in Papua New Guinea to Kina Bank. The transaction was completed on 23 September 2019.

Income Statement impact relating to assets and liabilities held for sale in continuing operations
During the September 2019 half, the Group recognised the following impacts in relation to assets and liabilities held for sale:$10 million gain after tax relating to the sale of Cambodia JV, comprising a $30 million release from the foreign currency translation reserve, a $17
million dividend withholding tax associated with the sale completion and $3 million of asset write-offs.

$7 million provision release relating to the sale completion of OPL NZ.

$1 million gain after tax relating to the sale of PNG Retail, Commercial and SME, net of costs associated with the sale.

During the March 2019 half, the Group recognised the following impacts in relation to assets and liabilities held for sale:$69 million gain after tax relating to the sale of the OPL NZ business, comprising a $56 million gain on sale, a $26 million release from the foreign
currency translation reserve and a $13 million income tax expense.

$37 million gain after tax relating to the sale of the Paymark.

The impacts on continuing operations are shown in the relevant Income Statement categories.

107

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.

Debt issuances
Half Year

Movement

Mar 20$M
119,136

Sep 19$M
113,105

Mar 19$M
113,424

Mar 20v. Sep 19
5%

Mar 20v. Mar 19
5%

ANZ CN1

1,119

1,118

1,118

0%

0%

ANZ CN2

1,607

1,607

1,606

0%

0%

ANZ CN3

966

966

965

0%

0%

ANZ CN4

1,613

1,612

1,611

0%

0%

ANZ CN5

926

925

925

0%

0%

ANZ Capital Securities3

1,712

1,481

1,336

16%

28%

ANZ NZ Capital Notes4

487

462

478

5%

2%

Total unsubordinated debt
Additional Tier 1 Capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)2

Tier 2 Capital
Perpetual subordinated notes5
Term subordinated notes6

485

444

423

9%

15%

12,197

7,971

7,806

53%

56%

Total subordinated debt

21,112

16,586

16,26827%

30%

Total debt issuances

140,248

129,691

129,692

8%

8%

1.
2.

ANZ Capital Notes, ANZ Capital Securities and the ANZ NZ Capital Notes are Basel 3 compliant instruments.
Each of the ANZ Capital Notes will convert into a variable number of ANZ ordinary shares on a specified mandatory conversion date at a 1% discount (subject to certain conditions being
satisfied). If ANZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the notes will immediately convert into ANZ
ordinary shares at a 1% discount subject to a maximum conversion number. Subject to certain conditions, the notes are redeemable or convertible to ANZ ordinary shares (on similar terms
to mandatory conversion) by ANZ at its discretion on an early redemption or conversion date.
IssuerIssue dateIssue Amount$M

Early redemption or conversion date

Mandatory conversion date

CN1

ANZ

7 Aug 2013

1,120

1 Sep 2021

1 Sep 2023

CN2

ANZ

31 Mar 2014

1,610

24 Mar 2022

24 Mar 2024

CN3

ANZ, acting through its New Zealand branch

5 Mar 2015

970

24 Mar 2023

24 Mar 2025

CN4

ANZ

27 Sep 2016

1,622

20 Mar 2024

20 Mar 2026

CN5

ANZ

28 Sep 2017931

20 Mar 2025

20 Mar 2027

3.

On 15 June 2016, ANZ acting through its London branch issued fully-paid perpetual subordinated contingent convertible securities (ANZ Capital Securities). If ANZ’s Common Equity Tier 1
capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the securities will immediately convert into ANZ ordinary shares at a 1% discountsubject to a maximum conversion number. Subject to certain conditions, on the First Reset Date (15 June 2026) and each 5 year anniversary, ANZ has the right to redeem all of the
securities at its discretion.
4. On 31 March 2015, ANZ Bank New Zealand Limited (ANZ Bank NZ) issued convertible notes (ANZ NZ Capital Notes) which will convert into ANZ ordinary shares on 25 May 2022 at a 1%
discount (subject to certain conditions being satisfied). If ANZ or ANZ Bank NZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, ANZ receives a notice of non-viability
from APRA, ANZ Bank NZ receives a direction from RBNZ or a statutory manager is appointed to ANZ Bank NZ and makes a determination, then the notes will immediately convert into
ANZ ordinary shares at a 1% discount subject to a maximum conversion number. In April 2020, ANZ Bank NZ announced that the notes will not be redeemed or converted on the optional
exchange date (25 May 2020).
5. The USD 300 million perpetual subordinated notes have been granted Basel 3 transitional capital treatment until the end of the transition period in December 2021.
6. All the term subordinated notes are convertible and are Basel 3 compliant instruments. If ANZ receives a notice of non-viability from APRA, then the convertible subordinated notes will
immediately convert into ANZ ordinary shares at a 1% discount subject to a maximum conversion number.

108

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Credit risk

Maximum exposure to credit risk
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may bedifferences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these differences
arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to market risk, orbank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the group would have to pay if the instrument is called upon.
The table below shows the maximum exposure to credit risk of on-balance sheet, and off-balance sheet, positions before taking account of any collateral
held or other credit enhancements:

On-balance sheet positions2
Net loans and advances

Mar 20$M
656,609

Reported

Excluded1

Maximum Exposure to Credit Risk

As at

As at

As at

Sep 19$M
615,258

Mar 19$M
610,169

Mar 20$M-

Sep 19$M-

Mar 19$M-

Mar 20$M
656,609

Sep 19$M
615,258

Mar 19$M
610,169

Investment securities- debt securities at amortised cost

7,231

5,999

6,176

-

-

-

7,231

5,999

6,176

- debt securities at FVOCI

77,47676,48972,555---77,47676,48972,555- equity securities at FVOCI

1,166

1,221

1,318

1,166

1,221

1,318

-

-

-

- debt securities at FVTPL3

50

-

-

-

-

-

50

-

-

Other financial assets
Total on-balance sheet positions

393,862

269,619

276,816

14,305

11,12449,466

379,557

258,495

227,350

1,136,394

968,586

967,034

15,471

12,34550,784

1,120,923

956,241916,250

269,417

253,123

245,285---

269,417

253,123

245,285

1,405,811

1,221,709

1,212,319

15,471

12,34550,784

1,390,340

1,209,364

1,161,535

Off-balance sheet commitments
Undrawn and contingent facilities4
Total
1.

Excluded comprises bank notes and coins and cash at bank within liquid assets, investments relating to the insurance business where the credit risk is passed onto the policy holder. Equity
securities and precious metal exposures recognised as trading securities have been excluded as they do not have credit exposure. Equity securities within investment securities – equity
securities at FVOCI/available-for-sale financial assets were also excluded as they do not have credit exposure.
2. On-balance sheet position includes assets and liabilities reclassified as held for sale.
3. These facilities are rated as Satisfactory.
4. Undrawn facilities and contingent facilities includes guarantees, letters of credit and performance related contingencies, net of collectively assessed allowance for expected credit losses.

Credit Quality
The Group’s internal Customer Credit Rating (CCR) is used to manage the credit quality of financial assets. To enable wider comparisons, the Group’s
CCRs are mapped to external rating agency scales as follows:
Moody'sRatingStandard &Poor'sRatingDemonstrated superior stability in their operating and financial performance over the
long-term, and whose earnings capacity is not significantly vulnerable to foreseeable
events.

Aaa – Baa3

AAA – BBB-CCR 5+ to 6-

Demonstrated sound operational and financial stability over the medium to long termeven though some may be susceptible to cyclical trends or variability in earnings.

Ba1 – B1

BB+ – B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, with variability anduncertainty in profitability and liquidity projected to continue over the short andpossibly medium term.

B2 - Caa

B - CCC

Defaulted

CCR8- to 10

When doubt arises as to the collectability of a credit facility, the financial instrument(or ‘the facility’) is classified as defaulted.

N/A

N/A

Credit Quality
Description

Internal CCR

ANZ Customer Requirement

Strong

CCR 0+ to 4-

Satisfactory109

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Credit risk, cont’d

Net loans and advances
As at Mar 20
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Strong465,601

14,009--479,610

Satisfactory

114,178

39,137--

153,315

5,959

11,692--

17,651

-

-

4,837

2,435

7,272

585,738

64,838

4,837

2,435

657,848

1,191

1,968

455

1,055

4,669

584,547

62,870

4,382

1,380

653,179

0.20%

3.04%

9.41%

43.33%

0.71%

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

Individuallyassessed
$M

Total
$M

Loans and advances at fair value through profit or loss

2,932

Unearned income

(368)
866

Capitalised brokerage/mortgage origination fees
Net carrying amount

656,609

As at Sep 19
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

Strong425,113

18,597--443,710

Satisfactory

121,030

28,445--

149,475

7,138

10,373--

17,511

-

-

4,699

1,978

6,677

553,281

57,415

4,699

1,978

617,373

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

927

1,378

413

791

3,509

552,354

56,037

4,286

1,187

613,864

0.17%

2.40%

8.79%

39.99%

0.57%

Loans and advances at fair value through profit or loss

922

Unearned income(398)

Capitalised brokerage/mortgage origination fees870

Net carrying amount

615,258

As at Mar 19
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

Strong444,556

10,273--454,829

Satisfactory

112,984

19,843--

132,827

8,808

9,775

-

-

18,583

-

-

4,078

1,961

6,039

566,348

39,891

4,078

1,961

612,278

Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio

940

1,415

381

865

3,601

565,408

38,476

3,697

1,096

608,677

0.17%

3.55%

9.34%

44.11%

0.59%

Loans and advances at fair value through profit or loss

991

Unearned income(446)

Capitalised brokerage/mortgage origination fees

947

Net carrying amount

610,169110

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Credit risk, cont’d

Investment securities - debt securities at amortised cost
As at Mar 20
Stage 3

StrongSatisfactory

Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

5,733

-

-

-

5,733

888

625

-

-

1,513

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

6,621

625

-

-

7,246

14

1

-

-

15

Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost

6,607

624

-

-

7,231

Coverage ratio

0.21%

0.16%

-

-

0.21%

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

4,798

-

-

-

4,798

707

507

-

-

1,214

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

5,505

507

-

-

6,012

As at Sep 19
Stage 3
Stage 1
$M
StrongSatisfactory

Gross investment securities - debt securities at amortised cost
Allowance for ECL

12

1

-

-

13

Net investment securities - debt securities at amortised cost

5,493

506

-

-

5,999

Coverage ratio

0.22%

0.20%

-

-

0.22%

Individuallyassessed
$M

Total
$M

-

4,751

As at Mar 19
Stage 3

StrongSatisfactory

Stage 1
$M

Stage 2
$M

Collectively
assessed
$M

4,751

-

-

666

771

-

-

1,437

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

5,417

771

-

-

6,188

11

1

-

-

12

Gross investment securities - debt securities at amortised cost
Provision for credit impairment
Net investment securities - debt securities at amortised cost

5,406

770

-

-

6,176

Coverage ratio

0.20%

0.13%

-

-

0.19%

111

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Credit risk, cont’d

Investment securities - debt securities at FVOCI
As at Mar 20
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

77,213---

77,213

263

-

-

-

263

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

77,476---77,476

9

-

-

-

9

0.01%

-

-

-

0.01%

Individuallyassessed
$M

Total
$M

-

76,218StrongSatisfactory

Investment securities - debt securities at FVOCIAllowances for ECL recognised in other comprehensive income
Coverage ratio

Individuallyassessed
$M

Total
$M

As at Sep 19
Stage 3

StrongSatisfactory

Stage 1
$M

Stage 2
$M

Collectively
assessed$M

76,218

-

-

271

-

-

-

271

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

76,489---76,489Investment securities - debt securities at FVOCIAllowances for ECL recognised in other comprehensive income
Coverage ratio

8

-

-

-

8

0.01%

-

-

-

0.01%

Individuallyassessed
$M

Total
$M

As at Mar 19
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

72,401---

72,401

154

-

-

-

154

Weak

-

-

-

-

-

Defaulted

-

-

-

-

-

72,555---72,555

11

-

-

-

11

0.02%

-

-

-

0.02%

As at Mar 20

As at Sep 19

As at Mar 19

Total
$M

Total
$M

Total
$M

369,909

248,020

215,307

9,033

10,06011,596

615

415

447

-

-

-

379,557

258,495

227,350

StrongSatisfactory

Investment securities - debt securities at FVOCIAllowances for ECL recognised in other comprehensive income
Coverage ratio

Other financial assets

StrongSatisfactory
Weak
Defaulted
Total carrying amount112

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
14.

Credit risk, cont’d

Off-balance sheet commitments - undrawn and contingent facilities
As at Mar 20
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Strong172,684

1,617

-

-

174,301

Satisfactory

24,433

4,832

-

-

29,265

284

1,156

-

-

1,440

-

-

149

164

313

197,401

7,605

149

164

205,319

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

Individuallyassessed
$M

Total
$M

610

244

18

38

910

196,791

7,361

131

126

204,409

0.31%

3.21%

12.08%

23.17%

0.44%

Undrawn and contingent facilities not subject to ECL1

65,008Net undrawn and contingent facilities

269,417

As at Sep 19
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Strong162,891

1,972

-

-

164,863

Satisfactory

23,655

3,634

-

-

27,289

294

976

-

-

1,270

-

-

140

51

191

186,840

6,582

140

51

193,613

473

151

21

23

668

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

Individuallyassessed
$M

Total
$M

186,367

6,431

119

28

192,945

0.25%

2.29%

15.00%

45.10%

0.35%

1

Undrawn and contingent facilities not subject to ECL

60,178Net undrawn and contingent facilities

253,123

As at Mar 19
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

Strong158,599

1,977

-

-

160,576

Satisfactory

23,519

3,894

-

-

27,413

395

957

-

-

1,352

-

-

96

61

157

182,513

6,828

96

61

189,498

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

464

152

14

26

656

182,049

6,676

82

35

188,842

0.25%

2.23%

14.58%

42.62%

0.35%

Undrawn and contingent facilities not subject to ECL1

56,443Net undrawn and contingent facilities

245,2851.

Commitments that can be unconditionally cancelled at any time without notice.

113

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Fair value measurement

The Group carries a significant number of financial instruments on the balance sheet at fair value. In addition, in the prior period, the Group also held
assets classified as held for sale which were measured at fair value less costs to sell. The fair value is the best estimate of the price that would bereceived to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
i) Assets and liabilities measured at fair value on the balance sheeta)Valuation

The Group has an established control framework, including appropriate segregation of duties, to ensure that fair values are accurately determined,
reported and controlled. The framework includes the following features:

products are approved for transacting with external customers and counterparties only where fair values can be appropriately determined;

when using quoted prices to value an instrument, these are independently verified from external pricing providers;

fair value methodologies and inputs are evaluated and approved by a function independent of the party that undertakes the transaction;



movements in fair values are independently monitored and explained by reference to underlying factors relevant to the fair value; andvaluation adjustments (such as funding valuation adjustments, credit valuation adjustments and bid-offer adjustments) are independently validated
and monitored.

If the Group holds offsetting risk positions, then the Group uses the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure thefair value of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net longposition (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
b)

Fair value approach and valuation techniques

We use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market for that asset or liability exists. This includes the following:
Asset or Liability

Fair Value Approach

Financial instruments classified as:- trading securities- securities sold short- derivative financial assets and liabilities- investment securities- other assets

Valuation techniques are used that incorporate observable market inputs for securities
with similar credit risk, maturity and yield characteristics. Equity instruments that are nottraded in active markets may be measured using comparable company valuation
multiples.

Financial instruments classified as:- net loans and advances- deposits and other borrowings- debt issuances

Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using discount rates incorporating wholesale market interest
rates, or market borrowing rates for debt with similar maturities or with a yield curve
appropriate for the remaining term to maturity.

Assets and liabilities held for sale

Valuation based on the agreed sale price before transaction costs.

Details of significant unobservable inputs used in measuring fair values are described in (ii)(a).
c)

Fair value hierarchy categorisation

The Group categorises financial assets and liabilities carried at fair value into a fair value hierarchy as required by AASB 13 based on the observability of
inputs used to measure the fair value:

Level 1 - valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or
indirectly; andLevel 3 - valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.

d)

Fair value hierarchy disclosure

The following table presents assets and liabilities carried at fair value:114

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Fair value measurement, cont’d
Fair value measurements
Level 1$M

As at March 2020
AssetsLevel 2
$M

Level 3
$M

Total
$M

Trading securities1

39,00010,068-49,068Derivative financial instruments

1,565

172,03973

173,677

Investment securities

76,932550

1,210

78,692Net loans and advances (measured at fair value)2

-

2,919

13

2,932

Assets held for sale

-

-

-

-

117,497

185,576

1,296

304,369

Total
Liabilities
Deposits and other borrowings (designated at fair value)
Derivative financial instruments
Liabilities held for sale
Payables and other liabilities3
Debt issuances (designated at fair value)
Total

-

5,461

-

5,461

1,778

165,51967

167,364

-

-

-

-

4,113

21

-

4,134

-

2,681

-

2,681

5,891

173,682

67

179,640

As at September 2019
AssetsTrading securities
Derivative financial instruments
Investment securities

37,7685,401-

43,169365

120,241

61

120,667
77,71076,000499

1,211

Net loans and advances (measured at fair value)

-

922

-

922

Assets held for sale4

-

1,952

-

1,952

114,133

129,015

1,272

244,420

-

2,301

-

2,301

881

120,018

52

120,951

-

2,121

-

2,121

2,553

38

-

2,591

Total
Liabilities
Deposits and other borrowings (designated at fair value)
Derivative financial instruments
Liabilities held for sale4
Payables and other liabilities3
Debt issuances (designated at fair value)
Total

-

2,589

-

2,589

3,434

127,06752

130,553

42,857As at March 2019
AssetsTrading securities
Derivative financial instruments
Available-for-sale assets
Net loans and advances (measured at fair value)
4

Assets held for saleTotal

35,967

6,890

-

331

78,991

53

79,37571,001393

1,312

72,706

-

991

-

991

-

43,673-

43,673

107,299

130,938

1,365

239,602

Liabilities
Deposits and other borrowings (designated at fair value)
Derivative financial instruments
Liabilities held for sale4
Payables and other liabilities

3

Debt issuances (designated at fair value)
Total
1.

2.
3.
4.

-

2,169

-

2,169

508

80,3204380,871-

46,538-46,538

2,125

42

-

2,167

-

2,414

-

2,414

2,633

131,48343

134,159

Transfers from Level 1 to Level 2 and Level 2 to Level 1 for March 2020 half and previous periods are immaterial. Transfers into and out of levels are measured at the beginning of thereporting period in which the transfer occurred.
During the March 2020 half the Group changed its accounting treatment for certain gold loan products which are now designated as at fair value through profit and loss.
Payables and other liabilities relates to securities sold short which are classified as held for trading are measured at fair value through profit or loss.
The amounts reclassified as assets and liabilities held for sale relate to assets and liabilities measured at fair value less costs to sell in accordance with AASB 5 Non-current Assets Held forSale and Discontinued Operations. The amounts presented reflect fair value excluding cost to sell but including intercompany eliminations.

115

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Fair value measurement, cont’dii) Details of fair value measurements that incorporate unobservable market dataa)Level 3 fair value measurements

The net balance of Level 3 financial instruments is an asset of $1,229 million (Sep 19: $1,220 million; Mar 19: $1,322 million). The assets and liabilities
which incorporate significant unobservable inputs primarily include:

equities for which there is no active market or traded prices cannot be observed;



structured credit products for which credit spreads and default probabilities relating to the reference assets and derivative counterparties cannot be
observed; andother derivatives referencing market rates that cannot be observed primarily due to lack of market activity.

Movements in the Level 3 balance are due to the revaluation of the Group’s investment in Bank of Tianjin.
There were no material transfers into or out of Level 3 during the period.
Bank of Tianjin (BoT)The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is the ratio of the market value of equity to the book value ofequity). The extent of judgment applied in determining the appropriate multiple and comparator group from which the multiple is derived are nonobservable inputs which have resulted in the Level 3 classification.
b) Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs not being directly observable in the market place (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameter used in deriving the valuation.
Bank of Tianjin (BoT)The valuation of the BoT investment is sensitive to the selected unobservable input, being the P/B multiple. If the P/B multiple was increased or
decreased by 10% it would result in a $105 million increase or decrease to the fair value of the investment (Sep 19: $111 million; Mar 19: $121million),
which would be recognised in shareholders’ equity.
Other
The remaining Level 3 balance is immaterial and changes in the Level 3 inputs have a minimal impact on net profit and net assets of the Group.
c)

Deferred fair value gains and losses

When fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount we determine based on the valuation technique (referred to as the day one gain orloss) in profit or loss. After initial recognition, we recognise the deferred amount in profit or loss over the life of the transaction on a straight line basis or
until all inputs become observable.
The day one gains and losses deferred are immaterial.

116

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
15.

Fair value measurement, cont’diii) Financial assets and liabilities not measured at fair value
The classes of financial assets and liabilities listed in the table below are predominately carried at amortised cost on the Group’s balance sheet. Whilst
this is the value at which we expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of these financial
assets and liabilities at balance date in the table below, presenting the fair value of the entire class of financial assets and financial liabilities.
Carrying amount in the balance sheet
At amortised
cost$M

Fair Value

At fair
value
$M

Total
$M

$M

653,677

2,932

656,609658,091

7,231

78,69285,92385,944660,908

81,624

742,532

744,035

Deposits and other borrowings

721,448

5,461

726,909727,326

Debt issuances

137,5672,681

140,248

138,454

Total

859,0158,142

867,157

865,780

616,255

As at March 2020
Financial assets
Net loans and advances1
Investment securities
Total
Financial liabilities

As at September 2019
Financial assets
Net loans and advances

614,336922

615,258

Investment securities

5,999

77,71083,70983,707620,335

78,632698,967

699,962

Total
Financial liabilities
Deposits and other borrowings2

635,376

2,301

637,677

637,961

Debt issuances

127,1022,589

129,691

131,377

Total

762,478

4,890

767,368

769,338

610,983

As at March 2019
Financial assets
Net loans and advances2

608,264

1,879

610,143

Investment securities2

6,176

73,87380,04980,044614,440

75,752

690,192

691,027

Total
Financial liabilities
Deposits and other borrowings2

632,820

3,713

636,533

637,009

Debt issuances

127,278

2,414

129,692

130,558

Total

760,098

6,127

766,225

767,5671.
2.

During the March 2020 half the Group changed its accounting treatment for certain gold loan products which are now designated as at fair value through profit and loss.
Net loans and advances, investment securities and deposits and other borrowings include amounts reclassified to assets and liabilities held for sale. Refer to Note 12.

117

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Shareholders’ equity
Half Year

Issued and quoted securities
Ordinary shares
Opening balance

Mar 20No.
2,834,584,923

Sep 19No.
2,833,175,579

Mar 19No.
2,873,618,118--(42,032,991)

1,592,499

1,409,344

1,590,452---

2,836,177,422

2,834,584,923

2,833,175,579(5,011,537)(4,474,997)(4,640,745)--(15,527,220)

2,831,165,885

2,830,109,926

2,813,007,614

1,592,499

1,409,344(40,442,539)

Group Share Buy-backBonus Option Plan
Dividend reinvestment plan issues:1
Closing balanceLess treasury shares:
Treasury Shares
Treasury Shares in Wealth Australia discontinued operations
Closing BalanceIssued/(Repurchased) during the period
1.

The DRP in respect to the 2019 final dividend was satisfied in full through the on-market purchase and transfer of 7,401,161 shares at $25.03 to participating shareholders. (2019 Interim
dividend; 8,403,922 shares at $27.79, 2018 final dividend; 7,635,365 shares at $26.03).

Half Year
Shareholders' equity
Ordinary share capital
Reserves
Foreign currency translation reserve
Share option reserve

Movement

Mar 20$M

Sep 19$M

Mar 19$M

26,44026,49026,048Mar 20v. Sep 19
0%

Mar 20v. Mar 19
2%

1,988
62

705
89

846
71

large

large

-30%

-13%

FVOCI reserve

(51)

126

370

large

large

Cash flow hedge reserve

874

731

444

20%

97%

Transactions with non-controlling interests reserve

(22)

(22)

(22)

0%

0%

Total reserves

2,851

1,629

1,709

75%

67%

Retained earnings

32,07332,66432,064-2%

0%

Share capital and reserves attributable to shareholders of the Company

61,36460,78359,821

1%

3%

Non-controlling interests
Total shareholders' equity

17.

11

11

150

0%

-93%

61,37560,794

59,971

1%

2%

Changes in composition of the GroupOn 31 January 2020, the Group completed the sale of the OnePath P&I business which included the material entities OnePath Funds Management
Limited and OnePath Custodians Pty Limited. The holding company of these subsidiaries, ANZ Wealth Australia Limited, is no longer considered to be amaterial subsidiary.

118

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

18.

Investments in Associates1
Half Year
Mar 20$M
135

Share of associates' profit

Contributions to profit2

Sep 19
$M
131

As at

P.T. Bank Pan Indonesia

Mar 19$M
70

AMMB Holdings Berhad

61

70

-

(2)

135

131

131

2.

Mar 20v. Mar 19
3%

Half Year
Sep 19$M
63

1.

Mar 20v. Sep 19
3%

Ownership interest
held by GroupMar 20$M
74

Share of associates' profit

Mar 19$M
131

Contribution toGroup profit after tax

Associates

Other associates

Movement

Mar 20%39

Sep 19%39

Mar 19
%
39

56

24

24

24

5

n/a

n/a

n/a

At 31 March 2020, the Group recorded an impairment charge of $815 million in other operating income the half year with AmBank impaired by $595 million and PT Panin impaired by $220
million. Refer to Note 1 of the Condensed Consolidated Financial Statements for more information on the key assumptions used in the value in use (VIU) calculations to arrive at the
impairment charges. Post the impairment charge, the carrying value of AmBank was $1,161 million and PT Panin was $1,130 million.
Contributions to profit reflect the IFRS equivalent results adjusted to align with the Group’s financial year end which may differ from the published results of these entities. Excludes gains orlosses on disposal or valuation adjustments.

19.

Related party disclosure

There have been no transactions with related parties that are significant to understanding the changes in financial position and performance of the Groupsince 30 September 2019.

20.

Contingent liabilities and contingent assets

There are outstanding court proceedings, claims and possible claims for and against the Group. Where relevant, expert legal advice has been obtained
and, in the light of such advice, provisions (refer to Note 11) and/or disclosures as deemed appropriate have been made. In some instances we have notdisclosed the estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice theinterests of the Group.
Refer to Note 33 of the 2019 ANZ Annual Financial Report for a description of contingent liabilities and contingent assets as at 30 September 2019. A
summary of some of those contingent liabilities, and new contingent liabilities that have arisen in the current reporting period, is set out below.
Regulatory and customer exposures
In recent years there has been an increase in the number of matters on which the Group engages with its regulators. There have also beensignificant increases in the nature and scale of regulatory investigations and reviews, civil and criminal enforcement actions (whether by court action
or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly against
financial institutions both in Australia and globally. The Group has received various notices and requests for information from its regulators as part ofboth industry-wide and Group-specific reviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions
can be wide ranging and, for example, currently include a range of matters including responsible lending practices, regulated lending requirements,
product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice, insurance distribution,
pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-money laundering and counter-terrorism
financing obligations, reporting and disclosure obligations and product disclosure documentation. There may be exposures to customers which are
additional to any regulatory exposures. These could include class actions, individual claims or customer remediation or compensation activities. The
outcomes and total costs associated with such reviews and possible exposures remain uncertain.

Bank fees litigation and periodical payment remediation and ASIC action
A litigation funder commenced a class action against the Company in 2010, followed by a second similar class action in March 2013. The applicants
contended that certain exception fees (honour, dishonour and non-payment fees on transaction accounts and late payment and over-limit fees on
credit cards) were unenforceable penalties and that various of the fees were also unenforceable under statutory provisions governing unconscionableconduct, unfair contract terms and unjust transactions. The claims in the March 2013 class action failed and have been dismissed.
The original claims in the 2010 class action have been dismissed. In 2017, a new claim was added to the 2010 class action, in relation to theCompany’s entitlement to charge certain periodical payment non-payment fees. Part of the class of customers had already received remediation
payments from the Company. An agreement to settle the claim was reached in December 2018. The settlement was approved by the court in
December 2019.
In July 2019, ASIC commenced civil penalty proceedings against the Company in relation to the charging of fees for periodical payments in certain
circumstances between August 2003 and February 2016. ASIC seeks civil penalties in respect of alleged false or misleading representations andunconscionable conduct. ASIC also alleges that the Company engaged in misleading or deceptive conduct and breached certain statutory obligations
as a financial services licensee. The trial of the matter is scheduled to commence on 14 September 2020. The outcomes and total costs remain
uncertain. The Company is defending the allegations.

119

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Benchmark/rate actions
In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including theCompany – one action relating to the bank bill swap rate (BBSW), and one action relating to the Singapore Interbank Offered Rate (SIBOR) and theSingapore Swap Offer Rate (SOR). The class actions are expressed to apply to persons and entities that engaged in US-based transactions infinancial instruments that were priced, benchmarked, and/or settled based on BBSW or SIBOR. The claimants seek damages or compensation inamounts not specified, and allege that the defendant banks, including the Company, violated US anti-trust laws and (in the BBSW case only) antiracketeering laws, the Commodity Exchange Act, and unjust enrichment principles. The Company is defending the proceedings. The matters are at
an early stage.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain. The matter is at an early stage.



Capital raising actions
In June 2018, the Commonwealth Director of Public Prosecutions commenced criminal proceedings against the Company and a senior employee
alleging that they were knowingly concerned in cartel conduct by the joint lead managers of the Company’s August 2015 underwritten institutional
equity placement of approximately 80.8 million ordinary shares. The matter is at an early stage. The Company and its senior employee are defending
the allegations.
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company
alleging failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity
placement. ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary
shares of the placement. The matter is at an early stage. The Company is defending the allegations.

Consumer credit insurance litigation
In February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations. The matter is at an early stage.

Franchisee litigation
In February 2018, two related class actions were brought against the Company alleging breaches of contract and unconscionable conduct in relation
to lending to 7-Eleven franchisees. An agreement to settle the claims against the Company was reached in March 2019. The settlement is subject tocourt approval.

Royal Commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
The findings and recommendations of the Commission are resulting in additional costs and may lead to further exposures, including exposuresassociated with further regulator activity or potential customer exposures such as class actions, individual claims or customer remediation orcompensation activities. The outcomes and total costs associated with these possible exposures remain uncertain.

Security recovery actions
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will bedefended.



Warranties and Indemnities
The Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments.

21.

Significant Events Since Balance Date

With effect from 2 April 2020, the Reserve Bank of New Zealand (RBNZ) amended the conditions of registration for ANZ Bank New Zealand Limited (ANZ
Bank NZ), a New Zealand subsidiary of ANZ Banking Group Limited (ANZBGL) to (among other things) prohibit ANZ Bank NZ from making distributions
other than discretionary payments payable to holders of Additional Tier 1 capital instruments. These amendments were also applied to other locallyincorporated banks in New Zealand to further support the stability of the New Zealand banking financial system during this period of economic
uncertainty. These requirements prevent ANZ Bank NZ from redeeming its NZ$500 million Capital Notes in May 2020, although it can continue making
coupon payments on those Capital Notes. As ANZ Bank NZ has announced that it will not be exercising its option to convert in May 2020, the terms of
the Capital Notes provide for their conversion into a variable number of ANZBGL shares in May 2022 subject to certain conditions (refer to note 13).
Conversion would result in an increase in the Group’s CET1 capital (~12 bps) at Level 2. The amendments will also prevent ANZ Bank NZ from paying
dividends to ANZBGL.
Other than the matter above there have been no other significant events from 31 March 2020 to the date of signing this report that have not beenadjusted or disclosed.

120

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
This page has been left blank intentionally121

DIRECTORS’ DECLARATION

Directors’ Declaration
The Directors of Australia and New Zealand Banking Group Limited declare that:1.

2.

in the Directors’ opinion the Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements are inaccordance with the Corporations Act 2001, including:

section 304, that they comply with the Australian Accounting Standards and any further requirements in the Corporations Regulations 2001;and

section 305, that they give a true and fair view of the financial position of the Group as at 31 March 2020 and of its performance for the halfyear ended on that date; andin the Directors’ opinion as at the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.

Signed in accordance with a resolution of the Directors.

David M Gonski, AC
ChairmanShayne C Elliott
Director

29 April 2020

122

DIRECTORS’ DECLARATIONThis page has been left blank intentionally123

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION

Independent Auditor’s Review Report to the shareholders of Australia and New Zealand Banking Group Limited
Report on the Condensed Consolidated Financial Statements
Conclusion
We have reviewed the accompanying Condensed Consolidated Financial Statements of Australia and New Zealand Banking Group Limited (the Group).
The Group comprises Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the half year’s end or from time
to time during the half year.
The Condensed Consolidated Financial Statements comprise:
The condensed consolidated balance sheet as at 31 March 2020;

The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statementof changes in equity, and condensed consolidated cash flow statement for the half year ended on that date;
Notes 1 to 21 comprising a summary of significant accounting policies and other explanatory information; and
The Directors’ Declaration.
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Condensed Consolidated Financial
Statements of Australia and New Zealand Banking Group Limited are not in accordance with the Corporations Act 2001, including:i)giving a true and fair view of the Group’s financial position as at 31 March 2020 and of its performance for the half year ended on that date; andii)
complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Estimation uncertainty in the preparation of the Condensed Consolidated Financial Statements – Emphasis of Matter
We draw attention to Note 1 (iv) in the Condensed Consolidated Financial Statements, which describes increased estimation uncertainty in the
preparation of the Condensed Consolidated Financial Statements, specifically as it relates to the potential impacts of Coronavirus (COVID-19) on theGroup’s expected credit losses (ECL). These disclosures include key judgements and assumptions in relation to the ECL model inputs and theinterdependencies between those inputs, and highlight significant changes made during the half year ended 31 March 2020.
As described in Note 1(iv) the underlying forecasts and assumptions are subject to uncertainties which are often outside the control of the Group. Actual
economic conditions are likely to be different from those forecast since anticipated events frequently do not occur as expected, and the effect of thosedifferences may significantly impact the resulting accounting estimates.
In our view, this issue is fundamental to the users’ understanding of the Condensed Consolidated Financial Statements and the financial position andperformance of the Group.
Our conclusion is not modified in respect of this matter.
Responsibilities of the Directors for the Condensed Consolidated Financial Statements
The Directors of the Company are responsible for:
the preparation of the Condensed Consolidated Financial Statements that give a true and fair view in accordance with Australian AccountingStandards and the Corporations Act 2001; andsuch internal control as the Directors determine is necessary to enable the preparation of the Condensed Consolidated Financial Statements thatare free from material misstatement, whether due to fraud or error.
Auditor’s responsibility for the review of the Condensed Consolidated Financial Statements
Our responsibility is to express a conclusion on the Condensed Consolidated Financial Statements based on our review. We conducted our review inaccordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the
Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that theCondensed Consolidated Financial Statements are not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s
financial position as at 31 March 2020 and its performance for the half year ended on that date, and complying with Australian Accounting Standard
AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Australia and New Zealand Banking Group Limited, ASRE
2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of Condensed Consolidated Financial Statements consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

KPMG
Melbourne
29 April 2020

Alison Kitchen
Partner124

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Australia and New Zealand Banking Group Limited
I declare that, to the best of my knowledge and belief, in relation to the review of Australia and New Zealand Banking Group Limited for the half year
ended 31 March 2020, there have been:(i)no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and(ii)

no contraventions of any applicable code of professional conduct in relation to the review.

KPMG
Melbourne
29 April 2020

Alison Kitchen
Partner

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (”KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards Legislation.

125

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATIONThis page has been left blank intentionally

126

SUPPLEMENTARY INFORMATIONCONTENTS

Page

Capital management - including discontinued operations

128

Average balance sheet and related interest - including discontinued operations

132

Select geographical disclosures – including discontinued operations

135

Exchange rates

136

Derivative financial instruments

137

127

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations

As at
Qualifying Capital
Tier 1
Shareholders' equity and non-controlling interests
Prudential adjustments to shareholders' equity

Mar 20v. Sep 19

Mar 20v. Mar 19

60,794

59,971

1%

2%

(66)

120

(43)

large

53%

61,30960,91459,928

1%

2%

Table 2

(12,978)(13,559)(14,400)

-4%

-10%

48,33147,35545,528

2%

6%

7,964

7,866

7,547

1%

6%

56,29555,22153,075

2%

6%

Table 3Tier 1 capital
Tier 2 capital

Mar 19$M

61,375

Common Equity Tier 1 capital
Additional Tier 1 capitalSep 19$M

Table 1Gross Common Equity Tier 1 capital
Deductions

Movement

Mar 20$M

Table 4

13,112

8,549

7,569

53%

73%

69,407

63,77060,644

9%

14%

Common Equity Tier 1

10.8%

11.4%

11.5%

Tier 1

12.5%

13.2%

13.4%

Tier 2

2.9%

2.1%

1.9%

8%

13%

Total qualifying capital
Capital adequacy ratios (Level 2)

Total capital ratio
Risk weighted assets

Table 5

128

15.5%

15.3%

15.3%

449,012416,961

396,291

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’d
As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

-

-

328

n/a

-100%

Table 1: Prudential adjustments to shareholders' equity
Treasury shares attributable to ANZ Wealth Australia discontinued operations
policyholders
Shareholder Equity attributable to deconsolidated entities

(94)

107

(352)

large

-73%

Deferred fee revenue including fees deferred as part of loan yields

94

108

143

-13%

-34%

Other

(66)

(95)

(162)

-31%

-59%

Total

(66)

120

(43)

large

53%

Unamortised goodwill & other intangibles (excluding ANZ Wealth Australia
discontinued operations and New Zealand)(3,620)(3,772)(3,865)-4%-6%

Intangible component of investments in ANZ Wealth Australia discontinued
operations and New Zealand

(80)

(556)

(1,494)

-86%

-95%

(1,263)(1,322)(1,360)

-4%

-7%

(932)

(1,178)(1,019)-21%-9%(1,815)(1,376)(1,162)

32%

56%

-

(1)

(42)

-100%

-100%

Investment in other insurance and funds management subsidiaries

(336)

(336)

(270)

0%

24%

Investment in ANZ Wealth Australia discontinued operations and New Zealand

(85)

(103)

(735)

-17%

-88%

Table 2: Deductions from Common Equity Tier 1 capital

Capitalised software
Capitalised expenses including loan and lease origination fees
Applicable deferred net tax assets
Expected losses in excess of eligible provisions

Table 8Investment in banking associates and minority interests(2,291)(2,707)(2,501)-15%-8%

Other deductions(2,556)(2,208)(1,952)

16%

31%

Total

(12,978)(13,559)(14,400)

-4%

-10%

Table 3: Additional Tier 1 capital
ANZ Capital Notes 1

1,119

1,118

1,118

0%

0%

ANZ Capital Notes 2

1,607

1,607

1,606

0%

0%

ANZ Capital Notes 3

966

966

965

0%

0%

ANZ Capital Notes 4

1,613

1,612

1,611

0%

0%

ANZ Capital Notes 5

926

925

925

0%

0%

ANZ Bank NZ Capital Notes

487

462

478

5%

2%

1,712

1,481

1,336

16%

28%

ANZ Capital Securities
Regulatory adjustments and deductions

(466)

(305)

(492)

53%

-5%

Total

7,964

7,866

7,547

1%

6%

large

Table 4: Tier 2 capital
General reserve for impairment of financial assets

1,253

296

307

large

Perpetual subordinated notes

485

444

423

9%

15%

Term subordinated debt notes

12,197

7,971

7,806

53%

56%

Regulatory adjustments and deductions
Total

129

(823)

(162)

(967)

large

-15%

13,112

8,549

7,569

53%

73%

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’d
As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

On balance sheet

285,340

264,533

264,405

8%

8%Commitments

57,86655,05153,0795%

9%Contingents

13,335

12,626

12,1496%

10%

Table 5: Risk weighted assets

29,45625,896

15,89014%

85%

385,997358,106

345,5238%

12%Market risk - Traded

7,102

5,307

5,790

34%

23%

Market risk - IRRBB

8,011

6,922

7,245

16%

11%

Operational risk

47,902

46,62637,7333%

27%

Total risk weighted assets

449,012416,961

396,2918%13%

Derivatives
Total credit risk weighted assets

Table 6

As at

Movement

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

150,290

136,885

127,989

10%17%

Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate
Sovereign

6,915

6,199

7,016

12%

-1%

Bank

18,615

15,96815,511

17%

20%

Residential mortgage

107,351

105,491

101,469

2%

6%

Qualifying revolving retail (credit cards)

4,956

5,255

5,795

-6%

-14%

Other retail25,08026,25828,029-4%-11%Credit risk weighted assets subject to Advanced IRB approach

313,207

296,056

285,809

6%

10%

Credit risk specialised lending exposures subject to slotting criteria

41,07236,31835,69613%

15%

14,626

11,645

12,252

26%

19%

228

216

331

6%

-31%

Subject to Standardised approach
Corporate
Residential mortgage

46

50

81

-8%

-43%

Credit risk weighted assets subject to Standardised approach

14,90011,911

12,66425%

18%

Credit Valuation Adjustment and Qualifying Central Counterparties

9,679

8,682

6,217

11%

56%

Credit risk weighted assets relating to securitisation exposures

2,142

1,859

1,558

15%

37%

Other assets

4,997

3,280

3,579

52%

40%

385,997358,106

345,523

8%

12%

Other retail (includes credit cards)

Total credit risk weighted assets

130

SUPPLEMENTARY INFORMATION
Capital management - including discontinued operations, cont’dCollectively and Individually
Assessed Provision

Table 7: Total provision for credit impairment and Basel expected
loss by division

Basel Expected Loss1

Australia Retail and Commercial

Mar 20$M
2,902

Sep 19$M
2,353

Mar 19$M
2,420

Mar 20$M
2,415

Sep 19$M
2,415

Mar 19$M
2,460

Institutional

1,996

1,329

1,340

1,367

1,022

1,041

New Zealand

620

446

442

737

672

696

Pacific

76

62

67

-

7

8

-

-

-

-

-

1

5,594

4,190

4,269

4,519

4,116

4,206

TSO and Group Centre
Total provision for credit impairment and expected loss
1.

Only applicable to Advanced Internal Ratings based portfolios.

As at

Movement

Table 8: APRA Expected loss in excess of eligible provisions

Mar 20$M

Sep 19$M

Mar 19$M

Mar 20v. Sep 19

Mar 20v. Mar 19

APRA Basel 3 expected loss: non-defaulted

2,775

2,646

2,675

5%

4%

Less: Qualifying collectively assessed provisionCollectively assessed provision(4,501)(3,376)(3,378)33%

33%

Non-qualifying collectively assessed provision

473

435

395

9%

20%

Standardised collectively assessed provision

190

135

151

41%

26%

-

-

-

n/a

n/a

1,744

1,470

1,531

19%

14%

(1,093)

(814)

(891)

34%

23%

(289)

(313)

(310)

-8%

-7%

71

66

85

8%

-16%

(440)

(408)

(373)

8%

18%

-

1

42

-100%

-100%

Shortfall in expected loss not included in deduction

7

-

-

n/a

n/a

Defaulted excess included in deduction

-

1

42

-100%

-100%

Gross deduction

-

1

42

-100%

-100%

Non-defaulted excess included in deduction
APRA Basel 3 expected loss: defaulted
Less: Qualifying individually assessed provision
Individually assessed provision
Additional individually assessed provision for partial write offs
Standardised individually assessed provisionCollectively assessed provision on advanced defaulted

131

SUPPLEMENTARY INFORMATION
Average balance sheet and related interest1, 2 – including discontinued operations
Half Year Mar 20

Half Year Sep 19

Avg bal
$M

Int
$M

Rate
%

Avg bal$M

Int$M

Home loans

320,523

6,340

4.0%

320,818

Consumer finance

16,030766

9.6%

16,651Business lending

268,884

5,095

3.8%

(798)

-

n/a

604,639

12,201

Half Year Mar 19
Rate%

Avg bal
$M

Int
$M

Rate
%

7,006

4.4%

322,407

7,396

4.6%

835

10.0%

17,876887

10.0%

253,334

5,382

4.2%

246,530

5,570

4.5%

(874)

-

n/a

(902)

-

n/a

4.0%

589,929

13,223

4.5%

585,911

13,853

4.7%

Loans and advances

Individual provisions for credit impairment
Total (continuing operations)Non-lending interest earning assets
Cash and other liquid assets

125,077

562

0.9%

105,781624

1.2%

110,337710

1.3%

Trading and investment securities/available-for-sale assets

126,238

1,015

1.6%

118,141

1,219

2.1%

114,169

1,317

2.3%

697

22

n/a

980

41

n/a

1,111

91

n/a

Other assets
Total (continuing operations)

252,012

1,599

1.3%

224,902

1,884

1.7%

225,617

2,118

1.9%

Total interest earning assets (continuing operations)3

856,651

13,8003.2%

814,831

15,1073.7%

811,528

15,971

3.9%

Non-interest earning assets (continuing operations)

165,322

163,987

120,099

Total average assets (continuing operations)

1,021,973

978,818

931,627

Total average assets (discontinued operations)

1,221

8,911

42,564

1,023,194

987,729

974,191

Total average assets
Deposits and other borrowings
Certificates of deposit

37,398236

1.3%

41,561311

1.5%

43,592505

2.3%

Term deposits

231,163

2,286

2.0%

228,739

2,886

2.5%

217,887

2,783

2.6%

On demand and short term deposits

239,786

1,427

1.2%

227,405

1,786

1.6%

215,957

1,892

1.8%

Deposits from banks and securities sold under agreement torepurchase81,132666

1.6%

79,345819

2.1%

81,748913

2.2%

Commercial paper and other borrowings

21,397110

1.0%

10,633116

2.2%

22,127309

2.8%

Total (continuing operations)

610,876

4,725

1.5%

587,683

5,918

2.0%

581,311

6,402

2.2%

Non-deposit interest bearing liabilities
Collateral received and settlement balances owed by ANZ

13,49540

0.6%

12,40763

1.0%

11,60351

0.9%

Debt issuances & subordinated debt

125,362

1,507

2.4%

125,183

1,846

2.9%

120,454

2,060

3.4%

7,669

307

n/a

5,222

240

n/a

2,465

159

n/a

Total (continuing operations)

146,526

1,854

2.5%

142,812

2,149

3.0%

134,522

2,270

3.4%

Total interest bearing liabilities (continuing operations)3

757,402

6,579

1.7%

730,495

8,067

2.2%

715,833

8,672

2.4%

Non-interest bearing liabilities (continuing operations)204,148

182,093

153,751

Total average liabilities (continuing operations)961,550

912,588869,584

Total average liabilities (discontinued operations)

1,414

15,35145,412

Total average liabilities

962,964

927,939

914,996

Total average shareholders' equity

60,23059,79059,195

Other liabilities

1.

Averages used are predominantly daily averages.
Assets and liabilities held for sale are included in continuing operations balance sheet categories and discontinued operations.
3. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
2.

132

SUPPLEMENTARY INFORMATION
Average balance sheet and related interest1, 2 – including discontinued operations (cont’d)Half Year Mar 20

Half Year Sep 19

Avg bal
$M

Int
$M

Rate
%

Avg bal$M

Australia

408,922

8,219

4.0%

400,584

Asia, Pacific, Europe & America

66,892

1,339

4.0%

63,493

New Zealand

128,825

2,643

4.1%

125,852

604,639

12,201

4.0%

589,929

Australia

61,968360

1.2%58,306

Asia, Pacific, Europe & America

48,207500

2.1%

New Zealand

16,063155

1.9%

126,238

1,015

Australia

521,127

Asia, Pacific, Europe & America
New Zealand

Int$M

Half Year Mar 19
Rate%

Avg bal
$M

Int
$M

Rate
%

8,926

4.4%

401,296

9,507

4.8%

1,469

4.6%

61,248

1,456

4.8%

2,828

4.5%

123,367

2,890

4.7%

13,223

4.5%

585,911

13,853

4.7%

542

1.9%

58,709684

2.3%

45,618515

2.3%

41,171455

2.2%

14,217162

2.3%

14,289

178

2.5%

1.6%

118,141

1,219

2.1%

114,169

1,317

2.3%

8,889

3.4%

503,406

9,883

3.9%

505,654

10,633

4.2%

185,718

2,051

2.2%

166,743

2,212

2.6%

163,810

2,206

2.7%

149,806

2,860

3.8%

144,682

3,012

4.2%

142,064

3,132

4.4%

856,651

13,8003.2%

814,831

15,1073.7%

811,528

15,971

3.9%

3,716

2.2%

Loans and advances

Total (continuing operations)
Trading and investment securities/available-for-saleassetsTotal (continuing operations)
Total interest earning assets3

Total (continuing operations)
Total average assets
Australia

640,901

625,713588,469

Asia, Pacific, Europe & America

216,335

192,802

188,160

164,737

160,303

154,998

Total average assets (continuing operations)

1,021,973

978,818

931,627

Total average assets (discontinued operations)

1,221

8,911

42,564

1,023,194

987,729

974,191

New Zealand

Total average assets
Interest bearing deposits andother borrowings
Australia

340,526

2,439

1.4%

333,298

Asia, Pacific, Europe & America

171,757

1,381

1.6%

158,496

New Zealand

98,594905

1.8%

95,889610,877

4,725

1.5%

587,683

Australia

435,175

3,666

1.7%

Asia, Pacific, Europe & America

197,147

1,681

1.7%

New Zealand

125,082

1,232

757,404

6,579

Total (continuing operations)

3,202

1.9%

334,952

1,658

2.1%

150,989

1,554

2.1%

1,059

2.2%

95,370

1,132

2.4%

5,919

2.0%

581,311

6,402

2.2%

426,405

4,680

2.2%

421,237

5,296

2.5%

183,293

1,963

2.1%

176,119

1,864

2.1%

2.0%

120,797

1,424

2.4%

118,477

1,512

2.6%

1.7%

730,495

8,067

2.2%

715,833

8,672

2.4%

Total interest bearing liabilities3

Total (continuing operations)
Total average liabilities
Australia

583,204

556,542

528,775

Asia, Pacific, Europe & America

229,218

211,136

201,315

New Zealand

149,128

144,910

139,494

Total average liabilities (continuing operations)961,550

912,588869,584

Total average liabilities (discontinued operations)

1,414

15,35145,412962,964

927,939

914,996

Ordinary share capital, reserves, retained earnings and noncontrolling interests

60,23059,79059,195

Total average shareholders' equity

60,23059,79059,195

1,023,194

987,729

974,191

Total average liabilities
Total average shareholders' equity

Total average liabilities and shareholder's equity
1.

Averages used are predominantly daily averages.
Assets and liabilities held for sale are included in continuing operations balance sheet categories and discontinued operations.
3. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
2.

133

SUPPLEMENTARY INFORMATION
Half Year
Mar 20%

Sep 19%Mar 19%Australia

3.55

4.12

4.38

Asia, Pacific, Europe & America

2.24

2.64

2.71

New Zealand

3.82

4.15

4.42

Group

3.22

3.70

3.95

Gross earnings rate1

Net interest spread and net interest margin analysis as follows:
Half Year
Australia1
Net interest spread

Mar 20%

Sep 19%Mar 19
%

1.76

1.79

1.75

Interest attributable to net non-interest bearing items

0.23

0.25

0.35

Net interest margin - Australia

1.99

2.04

2.10

Net interest spread

0.53

0.50

0.58

Interest attributable to net non-interest bearing items

0.10

0.13

0.13

Net interest margin - Asia, Pacific, Europe & America

0.63

0.63

0.71

Net interest spread

1.81

1.76

1.82

Interest attributable to net non-interest bearing items

0.29

0.33

0.35

Net interest margin - New Zealand

2.10

2.09

2.17

Net interest spread

1.48

1.50

1.52

Interest attributable to net non-interest bearing items

0.21

0.22

0.28

Net interest margin

1.69

1.72

1.80

Net interest margin (excluding Markets)

2.37

2.40

2.50

Asia, Pacific, Europe & America1

1

New Zealand

Group

1.

Geographic gross earnings rate, net interest spread and net interest margin are calculated gross of intra-group items (Intra-group interest earning assets and associated interest income andintra-group interest bearing liabilities and associated interest expense).

134

SUPPLEMENTARY INFORMATION
Select geographical disclosures – including discontinued operations
The following divisions operate across the geographic locations illustrated below:•
Institutional division - International, New Zealand and Australia•
Pacific division - International•
New Zealand division - New Zealand•
TSO and Group Centre operate across all geographies•
Discontinued operations - Australia
The International geography includes Asia, Pacific, Europe & America
Australia$M

New Zealand$M

International
$M

Total
$M

March 2020 Half Year
Statutory profit attributable to shareholders of the company

1,189

752

(396)

1,545

Cash profit

1,065

645

(387)

1,323

Net loans and advances1

445,449

132,127

79,033656,609

Customer deposits1

303,600

110,442

152,453

566,495

Risk weighted assets1

270,876

84,90093,235449,011

September 2019 Half Year
Statutory profit attributable to shareholders of the company

1,509

846

425

2,780

Cash profit

1,429

813

405

2,647

Net loans and advances1

429,454

123,467

62,337615,258

Customer deposits1

283,586

101,205

127,021511,812

Risk weighted assets1

259,820

78,61378,528416,961

March 2019 Half Year
Statutory profit attributable to shareholders of the company

1,750

877

546

3,173

Cash profit

1,902

1,052

560

3,514

421,279

126,287

62,603

610,169

Customer deposits

270,779

103,034

119,560

493,373

Risk weighted assets1

249,777

71,32275,192396,291

Net loans and advances1
1

1.

Balance Sheet amounts include assets and liabilities held for sale.

New Zealand geography (in NZD)
Movement

Half Year
Mar 20
NZD M
1,648

Net interest income
Other operating income
Operating income

Sep 19
NZD M
1,606

Mar 19NZD M
1,626

Mar 20v. Sep 19
3%

Mar 20v. Mar 19
1%

344

440

654

-22%

-47%

1,992

2,046

2,280

-3%

-13%

Operating expenses

(828)

(850)

(735)

-3%

13%

Profit before credit impairment and income tax

1,164

1,196

1,545

-3%

-25%

Credit impairment (charge)/release

(232)

(67)

(32)

large

large

Profit before income tax

932

1,129

1,513

-17%

-38%

Income tax expense and non-controlling interests

(255)

(310)

(399)

-18%

-36%
-39%

1

Cash profit

677

819

1,114

-17%

Adjustments between statutory profit and cash profit

112

77

(185)

45%

large

Statutory profit1

789

896

929

-12%

-15%

Individually assessed credit impairment charge/(release) - cash

44

37

32

19%

38%

Collectively assessed credit impairment charge/(release) - cash

188

30

-

large

n/a

Net loans and advances

135,679

133,264

131,795

2%

3%

Customer deposits

113,411109,236

107,528

4%

5%

Risk weighted assets

87,182

84,85074,4333%

17%

Total full time equivalent staff (FTE)

7,532

7,491

7,311

1%

3%

1.

Statutory profit for March 2019 half included a NZ$59 million gain on sale of OPL NZ, and a NZ$39 million gain on sale of Paymark. Cash profit also includes an after tax gain of NZ$86
million on the reversal of the life-to-date cash profit adjustments on the revaluation of OPL NZ policy liabilities sold.

135

SUPPLEMENTARY INFORMATION
Exchange rates
Major exchange rates used in the translation of foreign subsidiaries, branches, investments in associates and issued debt are as follows:
Balance Sheet

Profit & Loss Average

As atHalf Year

Chinese Renminbi

Mar 204.3895

Sep 194.8126

Mar 194.7700Mar 204.7002

Sep 194.7917

Mar 194.8805Euro

0.56190.61750.63130.6066

0.61970.6274

Pound Sterling

0.50170.5491

0.54250.52250.55030.5520Indian Rupee

46.74547.73748.99148.15348.40350.906

Indonesian Rupiah

10,126

9,578

10,099

9,487

9,814

10,329Japanese Yen

67.01572.81678.55072.93775.06979.629

Malaysian Ringgit

2.66112.82772.89632.79692.87822.9526

New Taiwan Dollar

18.70720.96021.86320.31521.58022.028

New Zealand Dollar

1.02691.07941.0436

1.04881.05671.0578

Papua New Guinean Kina

2.11932.29712.39242.28452.34672.4051

United States Dollar

0.61890.67540.70940.67050.69230.7145136

SUPPLEMENTARY INFORMATION
Derivative financial instruments
Derivative financial instruments are contracts whose value is derived from one or more underlying variables or indices defined in the contract, require little
or no initial net investment and are settled at a future date. Derivatives include contracts traded on registered exchanges and contracts agreed between
counterparties. The use of derivatives and their sale to customers as risk management products is an integral part of the Group’s trading and sales
activities. Derivatives are also used to manage the Group’s own exposure to fluctuations in foreign exchange and interest rates as part of its asset andliability management activities.
The following table provides an overview of the Group’s foreign exchange, interest rate, commodity and credit derivatives. They include all trading andbalance sheet risk management contracts. The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations inmarket rates relative to the terms of the derivative.
AssetsLiabilities

AssetsLiabilities

AssetsLiabilities

Mar 20$M

Mar 20$M

Sep 19$M

Sep 19$M

Mar 19$M

Mar 19$M

Forward rate agreements

255

(250)

74

(78)

13

(14)

Futures contracts

78

(160)

41

(136)

66

(205)

Swap agreements

112,934(108,736)

86,965(84,575)

55,832(56,028)

Options purchased

2,436

-

1,454

-

1,111

-

-

(3,865)-(2,317)-(1,789)115,703(113,011)

88,534(87,106)

57,022(58,036)

Spot and forward contracts

26,038(23,964)

15,987(15,427)

11,303(10,419)

Swap agreements

27,624(27,138)

13,912(16,326)

9,288(11,087)

Options purchased

837

-

405

-

366

-

-

(937)

-

(514)

-

(506)

Total

54,499(52,039)

30,304(32,267)

20,957(22,012)

Commodity contracts

3,449(2,288)1,807(1,553)

1,328

(738)

Fair Values
Interest rate contracts

Options sold
Total
Foreign exchange contracts

Options sold

Credit default swaps
Structured credit derivatives purchased

16

-

16

-

16

-

Other credit derivatives purchased

4

(6)

4

(3)

14

(59)

Credit derivatives purchased

20

(6)

20

(3)

30

(59)

Structured credit derivatives sold

-

(17)

-

(19)

-

(20)

Other credit derivatives sold

6

(3)

2

(3)

38

(6)

6

(20)

2

(22)

38

(26)

Credit derivatives sold
Total
Derivative financial instruments

26

(26)

22

(25)

68

(85)

173,677(167,364)

120,667(120,951)

79,375(80,871)

137

SUPPLEMENTARY INFORMATIONThis page has been left blank intentionally138

DEFINITIONSAASB - Australian Accounting Standards Board. The term “AASB” is commonly used when identifying Australian Accounting Standards issued by the
AASB.
ANZEST – ANZ Employee Share Trust.
APRA - Australian Prudential Regulation Authority.
APS - ADI Prudential Standard.
Cash and cash equivalents comprise coins, notes, money at call, balances held with central banks, liquid settlement balances (readily convertible to
known amounts of cash which are subject to insignificant risk of changes in value) and securities purchased under agreements to resell (reverse repos) inless than three months.
Cash profit is an additional measure of profit which is prepared on a basis other than in accordance with accounting standards. Cash profit represents
ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers to assess Group and Divisional performance against
prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory profit as noted below. These items
are calculated consistently period on period so as not to discriminate between positive and negative adjustments.
Gains and losses are adjusted where they are significant, or have the potential to be significant in any one period, and fall into one of three categories:
1.

gains or losses included in earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with thecore operations of the Group;2.

treasury shares, revaluation of policy liabilities, economic hedging impacts and similar accounting items that represent timing differences thatwill reverse through earnings in the future; and3.

accounting reclassifications between individual line items that do not impact reported results, such as policyholders tax gross up.

Cash profit is not a measure of cash flow or profit determined on a cash accounting basis.
Collectively assessed allowance for expected credit loss represents the Expected Credit Loss (ECL). This incorporates forward looking informationand does not require an actual loss event to have occurred for an impairment provision to be recognised.
Coronavirus (COVID-19) is a respiratory illness caused by a new virus and declared a Public Health Emergency of International Concern. COVID-19
was characterised as a pandemic by the World Health Organisation on 11 March 2020.
Covered bonds are bonds issued by an ADI to external investors secured against a pool of the ADI’s assets (the cover pool) assigned to a bankruptcy
remote special purpose entity. The primary assets forming the cover pool are mortgage loans. The mortgages remain on the issuer’s balance sheet. The
covered bond holders have dual recourse to the issuer and the cover pool assets. The mortgages included in the cover pool cannot be otherwise pledged
or disposed of but may be repurchased and substituted in order to maintain the credit quality of the pool. The Group issues covered bonds as part of its
funding activities.
Credit risk is the risk of financial loss resulting from the failure of ANZ’s customers and counterparties to honour or perform fully the terms of a loan orcontract.
Credit risk weighted assets (CRWA) represent assets which are weighted for credit risk according to a set formula as prescribed in APS 112/113.
Customer deposits represent term deposits, other deposits bearing interest, deposits not bearing interest and borrowing corporations’ debt excluding
securitisation deposits.
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Derivative credit valuation adjustment (CVA) - Over the life of a derivative instrument, ANZ uses a model to adjust fair value to take into account the
impact of counterparty credit quality. The methodology calculates the present value of expected losses over the life of the financial instrument as afunction of probability of default, loss given default, expected credit risk exposure and an asset correlation factor. Impaired derivatives are also subject toa CVA.
Dividend payout ratio is the total ordinary dividend payment divided by profit attributable to shareholders of the Company.
Gross loans and advances (GLA) is made up of loans and advances, capitalised brokerage/mortgage origination fees less unearned income.
Impaired assets are those financial assets where doubt exists as to whether the full contractual amount will be received in a timely manner, or whereconcessional terms have been provided because of the financial difficulties of the customer. Financial assets are impaired if there is objective evidence ofimpairment as a result of a loss event that occurred prior to the reporting date, and that loss event has had an impact, which can be reliably estimated, on
the expected future cash flows of the individual asset or portfolio of assets.
Impaired loans comprise drawn facilities where the customer’s status is defined as impaired.
Individually assessed allowance for expected credit losses is assessed on a case-by-case basis for all individually managed impaired assets taking
into consideration factors such as the realisable value of security (or other credit mitigants), the likely return available upon liquidation or bankruptcy, legal
uncertainties, estimated costs involved in recovery, the market price of the exposure in secondary markets and the amount and timing of expected
receipts and recoveries.
Interest rate risk in the banking book (IRRBB) relates to the potential adverse impact of changes in market interest rates on ANZ’s future net interest
income. The risk generally arises from:1.

Repricing and yield curve risk - the risk to earnings or market value as a result of changes in the overall level of interest rates and/or the
relativity of these rates across the yield curve;

2.

Basis risk - the risk to earnings or market value arising from volatility in the interest margin applicable to banking book items; and3.

Optionality risk - the risk to earnings or market value arising from the existence of stand-alone or embedded options in banking book items.

Internationally comparable ratios are ANZ’s interpretation of the regulations documented in the Basel Committee publications: “Basel 3: A global
regulatory framework for more resilient banks and banking systems” (June 2011) and “International Convergence of Capital Measurement and CapitalStandards” (June 2006). They also include differences identified in APRA’s information paper entitled International Capital Comparison Study (13 July2015).
Level 1 in the context of APRA supervision, Australia and New Zealand Banking Group Limited consolidated with certain approved subsidiaries.
Level 2 in the context of APRA supervision, the consolidated ANZ Group excluding associates, insurance and funds management entities, commercial
non-financial entities and certain securitisation vehicles.

139

DEFINITIONSNet interest margin is net interest income as a percentage of average interest earning assets.
Net loans and advances represent gross loans and advances less allowance for credit losses.
Net Stable Funding Ratio (NSFR) is the ratio of the amount of available stable funding (ASF) to the amount of required stable funding (RSF) defined by
APRA. The amount of ASF is the portion of an Authorised Deposit-taking Institutions (ADI) capital and liabilities expected to be a reliable source of funds
over a one year time horizon. The amount of RSF is a function of the liquidity characteristics and residual maturities of an ADI’s assets and off-balance
sheet activities. ADIs must maintain an NSFR of at least 100%.
Net tangible assets equal share capital and reserves attributable to shareholders of the Company less unamortised intangible assets (including goodwill
and software).
Regulatory deposits are mandatory reserve deposits lodged with local central banks in accordance with statutory requirements.
Restructured items comprise facilities in which the original contractual terms have been modified for reasons related to the financial difficulties of thecustomer. Restructuring may consist of reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond thosetypically offered to new facilities with similar risk.
Return on average assets is the profit attributable to shareholders of the Company, divided by average total assets.
Return on average ordinary shareholders’ equity is the profit attributable to shareholders of the Company, divided by average ordinary shareholders’equity.
Risk weighted assets (RWA) are risk weighted according to each asset’s inherent potential for default and what the likely losses would be in the case ofdefault. In the case of non asset backed risks (i.e. market and operational risk), RWA is determined by multiplying the capital requirements for those risks
by 12.5.
Settlement balances owed to/by ANZ represent financial assets and/or liabilities which are in the course of being settled. These may include trade
dated assets and liabilities, vostro accounts and securities settlement accounts.

140

DEFINITIONS
Description of divisions
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, and TSO
and Group Centre.

Australia Retail and Commercial
Australia Retail and Commercial division comprises of the following business units.
Retail provides products and services to consumer customers in Australia via the branch network, mortgage specialists, contact centres and a variety
of self-service channels (internet banking, phone banking, ATMs, website, ANZ share investing and digital banking) and third party brokers in
addition to financial planning services provided by salaried financial planners.

Commercial provides a full range of banking products and financial services, including asset financing, across the following customer segments:
medium to large commercial customers and agribusiness customers across regional Australia, small business owners and high net worth individuals
and family groups.

Institutional
The Institutional division services governments, global institutional and corporate customers across three product sets: Transaction Banking, Loans &Specialised Finance and Markets.
Transaction Banking provides working capital and liquidity solutions including documentary trade, supply chain financing, commodity financing aswell as cash management solutions, deposits, payments and clearing.



Loans & Specialised Finance provides loan products, loan syndication, specialised loan structuring and execution, project and export finance, debt
structuring and acquisition finance and corporate advisory.

Markets provide risk management services on foreign exchange, interest rates, credit, commodities and debt capital markets in addition to managing
the Group's interest rate exposure and liquidity position.

New Zealand
The New Zealand division comprises the Retail and Commercial business units.
Retail provides a full range of banking and wealth management services to consumer, private banking and small business banking customers. We
deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers andcontact centres.

Commercial provides a full range of banking services including traditional relationship banking and sophisticated financial solutions through dedicatedmanagers focusing on privately owned medium to large enterprises, the agricultural business segment and governments.

Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticatedfinancial solutions provided to business customers through dedicated managers.

TSO and Group Centre
TSO and Group Centre division provide support to the operating divisions, including technology, group operations, shared services, property, risk
management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre includes residual Asia Retail and
Wealth, Group Treasury, Shareholder Functions and minority investments in Asia.
Refer to Note 12 for details on discontinued operations.

141

ASX APPENDIX 4D - CROSS REFERENCE INDEX

Page
Details of the reporting period (4D Item 1) ...................................................................................................................................................... After front cover
Results for Announcement to the Market (4D Item 2) ..................................................................................................................................... After front cover
Net Tangible Assets per security (4D Item 3) ....................................................................................................................................................................... 12
Details of entities over which control has been gained or lost (4D Item 4) ......................................................................................................................... 118
Dividends and dividend dates (4D Item 5) ...................................................................................................................................................... After front cover
Dividend Reinvestment Plan (4D Item 6) ........................................................................................................................................................ After front cover
Details of associates and joint venture entities (4D Item 7) ................................................................................................................................................ 119

142

ALPHABETICAL INDEXPAGEAppendix 4D Cross Reference Index ................................................................................................................................................................................. 142
Appendix 4D Statement ......................................................................................................................................................................................................... 2
Auditor’s Review Report and Independence Declaration ................................................................................................................................................... 124
Average Balance Sheet and Related Interest .................................................................................................................................................................... 132
Basis of Preparation ............................................................................................................................................................................................................. 84
Capital Management .......................................................................................................................................................................................................... 128
Changes in Composition of the Group ............................................................................................................................................................................... 118
Condensed Consolidated Balance Sheet ............................................................................................................................................................................. 81
Condensed Consolidated Cash Flow Statement .................................................................................................................................................................. 82
Condensed Consolidated Income Statement ....................................................................................................................................................................... 79
Condensed Consolidated Statement of Changes in Equity.................................................................................................................................................. 83
Condensed Consolidated Statement of Comprehensive Income ......................................................................................................................................... 80
Contingent Liabilities and Contingent Assets ..................................................................................................................................................................... 119
Credit Risk.......................................................................................................................................................................................................................... 109
Definitions .......................................................................................................................................................................................................................... 139
Deposits and Other Borrowings ......................................................................................................................................................................................... 103
Derivative Financial Instruments ........................................................................................................................................................................................ 137
Directors’ Declaration ......................................................................................................................................................................................................... 122
Directors’ Report .................................................................................................................................................................................................................. 78
Discontinued Operations and Asset and Liabilities Held for Sale ....................................................................................................................................... 105
Dividends ............................................................................................................................................................................................................................. 95
Divisional Results ................................................................................................................................................................................................................. 47
Earnings Per Share .............................................................................................................................................................................................................. 96
Exchange Rates ................................................................................................................................................................................................................. 136
Fair Value Measurement .................................................................................................................................................................................................... 114
Full Time Equivalent Staff .................................................................................................................................................................................................... 17Group Results ...................................................................................................................................................................................................................... 19
Income ................................................................................................................................................................................................................................. 92
Income Tax Expense ........................................................................................................................................................................................................... 94
Investments In Associates.................................................................................................................................................................................................. 119
Net Loans and Advances ..................................................................................................................................................................................................... 99
Operating Expenses............................................................................................................................................................................................................. 93
Profit Reconciliation ............................................................................................................................................................................................................. 71
Allowance for Expected Credit Losses ............................................................................................................................................................................... 100
Related Party Disclosures .................................................................................................................................................................................................. 119
Segment Analysis ................................................................................................................................................................................................................ 97
Select Geographical Disclosures ....................................................................................................................................................................................... 135
Share Capital ..................................................................................................................................................................................................................... 118
Shareholders’ Equity .......................................................................................................................................................................................................... 118
Subordinated Debt ............................................................................................................................................................................................................. 108
Significant Events Since Balance Date .............................................................................................................................................................................. 120
Summary ................................................................................................................................................................................................................................ 7

143

ALPHABETICAL INDEXTHIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

144