TRANSCRIPTION
Company:

ANZ

Date:

7 September 2023

Duration:

1 Hour 41 Minutes

Reservation Number:

10031280[START OF TRANSCRIPT]
Jill Campbell:

Hi, everyone. Thanks so much for particularly the group that have come down from Sydney
today. We really appreciate that. We know that getting in and out of airports and so forth
isn't the most fun thing in the world. Today, we are presenting on the institutional platforms
business. We'll have four speakers. Once they're finished, we will go to Q&A, and I'll also
explain to you then about how we'll split up the groups too. We're going to take some of you
over to the command centre in 839. There's also a demonstration space in the next room
where there are a number of booths. I'll explain that again later on, and with that, I'm goingto hand across to Mark.

Mark Whelan:

Okay. Thank you very much. Look, welcome everybody, and thanks for joining us today. The
main purpose is, as you all know, is to help you understand our institutional payments
business and cash management, and also focusing particularly on our platform services. So
there is a fair amount of content, but you'll note at the beginning of the packs that we've
given you, we've got a jargon description. So that may help you along the way 'cause it israther complicated. So, we're going to try and keep our discussions today at a very high levelso you walk away with an understanding of what we're doing and why it's so important to
the division, and there'll be opportunities to go into more detail on this in the future. We
believe that we may have to have follow-up sessions simply because of the relevance to thebusiness, but also there is some complexity in what we'll talk about today. As I mentioned
glossary of terms in the slide deck, but we'll also try and keep it as jargon-free as possible as
we go through.
Now, we will explain what it is we do, what we've been investing in and why, and how we've
built what we believe is a sustainable competitive advantage as a result. The payments andcash management business is a very high returning business and is fundamental to ourcustomer proposition. PCM has been a key plank of the division's transformation andrepositioning over the past seven years. However, before we dive into the PCM business, I
wanted just to provide a very brief recap on how we've reshaped the division since 2016 andthe importance of PCM in that reshaping. Now, ANZ institution is a very different business
today to what it was seven years ago, and I cannot emphasise that strongly enough, andunfortunately, it is still not widely understood. So, what is different? In 2016, our divisional
return on equity was 7%. Our customer base was too large with many customers deliveringsub hurdle returns. Our product mix was heavily weighted to lending at low returns anddidn't maximise the full suite of our high-returning products.
Our international network was consuming far too much capital and expenses and delivering
a return well below the cost of capital and well below that 7% I just mentioned. Our
technology stack was complex and not integrated across our geographic network, and there
was a history of regular credit losses as I was reminded by many of the analysts in the room.
So today, institutionals ROE has improved to 14%. We are focused on 6,300 customers ofvery high credit quality, which gives us the dual benefit of reducing capital consumed, butalso the risk of credit losses. Our return on risk weighted assets is now more than doublethat of 2016 at 1.59%. Our product mix is balanced with revenue generated evenly acrosslending, transaction banking and markets. Importantly, the return on standalone lending is
at or above the current cost of capital. Our international network has reduced capital andexpenses significantly, and that continues and now has a return on equity in the mid-teens.
We've invested in global technology platforms consistently over the past seven years andhave significantly simplified the tech stack.
Credit losses have reduced in line with our focus on risk management and the quality of thecustomer base, and our internal expected losses have halved as a result over the period. The
business today is very different and is well positioned to maintain strong returns going
forward. So now, I just want to talk briefly about how this was achieved, and I want to takeyou through the core elements of our institutional strategy. We've had a consistent anddeliberate strategy to refine our business and earn us healthy returns throughout the cycle.
It's been consistent and it's been deliberate for the last seven years. We've concentrated ourefforts on high quality customers who value our product services and also our network, andwe've developed long-term and deep relationships with the best customers globally. We'refocused on priority sectors with the highest return and growth prospects, and that's namely
financial institutions, you'll hear about that today, technology resources and energy andinfrastructure, food, beverage and agriculture and sustainability. We're using our geographic
network and particularly our access to Asian markets to give us unique competitive
advantage.
The first step to do this, however, was making our international network fit for purpose andgetting it performing well. We revised and determined a clearly-defined role, capital
allocation and return expectations for each individual country. The next element was
simplifying our technology and deploying integrated systems across our global network. Thishas proven critical to providing a superior customer experience and is allowing us to embed
automation and provide clean data for more effective insights to our customers. Now we'reusing all five of the elements of the strategy, which you can see here to provide better
propositions to our customers. Today, we're going into detail on our payments and platform
capabilities as one live example of our proposition strategy, but I would emphasise it's
probably been the most critical to our redefining of the business. Before I pass to Lisa who'll
take you through that in more detail, let me talk briefly about our investment in technology
and why it's been so important to the division.

We've even simplified the network and technology supporting our business, creating single
product platforms that are globally integrated, single product platforms globally integrated.
This means one global transaction banking system, one customer onboarding system, one
global loan system, one global trade system, one cash management platform, one markets
platform, and importantly, one customer service platform. Over the past seven years, we've
spent $1.2 billion on this technology and capability built in institutional, which is now also
being leveraged across the group, and we will look to take that into commercial, forexample. The vast majority of this investment has also been expenses. It's not on the credit
card, it's already been expensed. We've been deliberate and thoughtful in this technology
spend, and we have excellent capability internally to develop platforms and solutions. For
the most part, we've developed these tools and systems in-house and only partnered withexternal vendors when it helps us achieve scale. It's a really important point, and you'll hear
Nigel talk a bit about that later on.
This strategy has created a significant advantage to ongoing capability build and is what wecall our digital backbone. So, you'll hear about that a bit today. It's a term we use internally,
but it's about this integrated edition of systems across all our geographies. We believe ourdigital backbone is a differentiator and a game changer for us as a division. Basically, it
allows us to create a consistent customer experience across all of our markets and all of ourgeographies. It's one set of tools and products, one view of the customer bringing the bestof the bank every time we interact with the customers regardless of jurisdiction. It is
powerful and it's going to be even more powerful. It gives each of our customers a unique
identifier and means that our network of countries becomes a truly digital and networked
network. Previously, a collection of countries with different systems not integrated. Today, a
network that is truly integrated providing a customer experience, which is the same
wherever you transact with us globally.
This digital backbone is in place in 10 markets today and will be rolled out to all of our
locations by the end of 2025. It provides real-time data, which is used for enhanced risk
management, regulatory reporting, customer revenue generation, and significant
automation opportunities going forward, whether that's in payments and cash management
markets, debt capital markets or loans, and it positions us very well for future growth
opportunities. Now utilising the technology, we will continue to refine our product mix toobtain optimum returns. This is important. That means more growth in payments and cash
management, which we'll hear about today, a very high returning business, more growth inmarkets, and then growth in trade and loans, but specifically in that order, highest returning
products that are very relevant to customers that are integrated through our systems. This is
key to maintaining customer relevance but also high returns for shareholders. So, insummary, we're confident that the division will now provide sustainable returns. Why? The
quality of our customer base first and foremost. We have deep relationships with customers
that span decades and who we bank across multiple jurisdictions.
This is particularly true for our sticky PCM business. Second, we're working with customers
who value us. They actually value our network and platforms and our deep banking
experience, and we've earned their trust, particularly important when you're talking aboutpayments and cash management and network is unmatched by domestic banks, you know
that. But also, our international counterparts don't have a strong base in Australia or New
Zealand, so it positions us both well against both sets of competitors. We have specificallytargeted customers who want multiple jurisdictional relationships, but importantly areprepared to pay for it. Three, we've invested in technology and systems over the long term.
As I've said earlier, we've invested more than $1.2 billion in our technology, particularly our
payment systems, and we're going to continue to invest. Consequently, we've got a strong
base that we use to create value for our customers and shareholders.
Then finally, our network. Our network of 29 markets, particularly focused on Asia and thePacific region and connected through this digital backbone is now a unique and powerful
differentiator. The international network is now delivering significant returns well above thecost of capital and is an asset that we can leverage further. So, in closing, we've built amodel that is lower risk, higher returning and uses our robust technology, our systems, andour industry knowledge. We have a clear and simple consistent strategy that is wellunderstood by the team across the network and within every geography that we operate in.
So today I've asked Lisa Vasic, the managing director of our transaction banking business,
Leigh Mahoney, who's head of our institutional digital platforms, and also Nigel Dobson,
who leads and delivers the payments technology and processes within the group to sharewith you detail about our PCM business and why it's creating significant value forshareholders and why it's so important to our customer base. So, on that note, I'll pass toyou, Lisa, to take us through the next piece.
Lisa Vasic:

Okay. Thanks, Mark. It's great to be with you today. As Mark mentioned, I'm Lisa Vasic, themanaging director for transaction banking globally. Let me start by outlining what ourtransaction banking business does. We partner with 4 1/2 thousand customers around theworld delivering two businesses, payments and cash management, which includes ourplatforms business and our trade and supply chain finance business. Our discussions today
are centre on the payments and cash management business, which I'll refer to as PCM,
acronym number one. PCM is fundamental to our customers securely moving money andmanaging their liquidity to support their business. For ANZ, PCM is an anchor for developing
deep banking relationships and provides circa 80% of transaction banking's profit courtesy ofa materially high ROE.
Our customers depend on us to receive and make payments domestically and cross-border,
to manage liquidity via cash pooling and sweeps to optimise cashflow and working capital,
provide visibility, control and security over their cash, and importantly, to give advice andsolutions on how to digitise their cash flow, use their data, build customer propositions andsupport treasury-related processes. We have a unique role to help our customers grow theirbusinesses profitably and manage risk through integrating banking into their businesssystems, providing digital solutions to streamline processes, offering insights based on thedata we manage, and most importantly, helping them improve experiences for their end
customers. We play a pivotal role in helping customers move from traditional payment
methods such as checks and cash to newer capabilities such as real-time payments. This isabout the digital transformation, but there are four criteria that are really critical for ourcustomers in choosing who they use as their payments and cash management provider.
They are, number one, superior product including integration capability, channel proposition
service, and banker capability.
Number two, data insights and thought leadership. Number three, and probably one of themost important, ongoing and long-term investment and commitment by ANZ specific to
PCM capability, and four, our governance, risk management and contractual undertakings.
We measure all of these metrics. As Mark mentioned, we have invested heavily anddelivered in capability and capacity and have a great base from which to move forward. We
have a dedicated industry and innovation team in addition to our product management thatis focused on ensuring we stay current and effectively leverage emerging customer
technology and industry developments. Our PCM products anchor our long-term customer
relationships that we can then broaden to include the full in-store product suite. Being theleading provider of PCM solutions in Australia and New Zealand brings significant advantages
to our institutional business. We are the number one in marketeer in both markets as rated
by customers in the annual Peter Lee Large Corporate Survey, and we've led the market for
more than seven years in net customer acquisitions.
In addition to our domestic position, our international network is unique and highly valuedby our customers across the Asia-Pacific region, Europe and North America. Customers use
our regional expertise and network to deliver banking services including PCM in countries
such as Singapore, Hong Kong, and China, as well as countries where there are fewer highlyrated banking partners such as Lao, Vietnam, Indonesia, and the Philippines. As a result, we
provide PCM capabilities to companies such as Amazon, BHP, Toyota Motors, American
Express, Temasek, Lend-Lease and Izzy Industries to name but a few. The PCM businessdelivers significant income that is the characteristics of annuity income and operational
deposits for our institutional business. Operational deposits are funds that are used to meetcustomer's day-to-day liquidity needs and require the underlying payments and collections
to be categorised as such under ACRA and BAU regulations. These deposits are sizable, sticky
and less sensitive to interest rate movements and form the core of our customer's liquidity
management. As of the 31st of March this year, PCM held 103 billion in operational deposits
on behalf of our customers, providing a considerable source of high quality liquidity for thegroup.
This represents 60% of institutionals overall deposit base. There are three elements thatmake our PCM business unique. Number one, our regional network, which supports
customers moving trading capital across Asia- Pacific. Our network compares favourably toregional and global competitors who have broad network reach but lack the depth ofrelationships in our home markets. Number two, we're operating at a scale and velocity
unmatched by our domestic peers. Number three, our long-term relationships with ourcustomers, and there are two reasons why our PCM relationships tend to be long term.
Firstly, we are part of our customer's day-to-day operations and business activities.
Secondly, integrating our customer's enterprise resource planning with banking systems iscomplex. However, we are working very hard to make transitioning to ANZ seamless for ourcustomers, and Leigh Mahoney will share some more detail shortly. So, when we talk aboutplatforms, what do we mean? Platform services forms a part of our PCM business. These are
the services we provide to our customers, primarily banks and financial institutions, giving
them access to our technology, our processes, our systems and expertise to in turn deliver
services to their end customers.
We have an enterprise-wide capability in payments, which provides the ANZ group withscale delivery and cost advantages, and Nigel Dobson will speak on this a little later. Our
payments capability delivers revenue from both interest margins and fees. It is resilient
throughout the cycle and creates economies of scale. It generates new revenue streams andincreases operational deposits via intermediaries such as brokers, wealth managers,
superannuation funds, and our core customer base, including government. Our platform
service comprises correspondent banking, executing and clearing transactions in Australia
and New Zealand on behalf of international banks. Client monies, enabling our customers to
set up virtual accounts, also known as accounts on behalf of for their underlying customers,
supporting both the stockbroking professional service firms, administrators, leasing
companies, lawyers and property service companies. Agency services, offering otherfinancial institutions access to our technology and expertise and compliance measures sothey don't have to have a physical presence here in Australia or directly connect to local
payment clearing systems. We can do that on their behalf.
Real-time payments, or MPP Agency, which allows our customers, including financial
institutions, government agencies, and large corporates to use ANZ's new payment
infrastructure to provide real-time payment services to their customers. ANZ has a long
history as an intermediary or platform bank. Today we are the number one clearing bank inAustralia and New Zealand with 60% market share, and we are the number one bankoffering agency products. We're expert at settling transactions and delivering funds. In fact,
we provide clearing services to more than 500 financial institutions. It is the strength of our
PCM offering that drives opportunities and scale in our platform's business and gives us acredibility to deliver these services. Our customers want an experienced, innovative, andtrusted partner that already manages regulatory risk exceptionally well. This is not
something that can be easily emulated. Our expertise, digital know-how and deep
relationships with our customers has created an opportunity for lasting competitive
advantage, a lowered risk profile, and a diversified income stream with high return on
equity.
To the end of the March half, our PCM business earns circa 860 million in revenue with areturn on equity through the cycle in excess of 80%, delivering around a quarter of
institutionals profit and circa 10% of ANZ group profit in the period. The PCM business is asmall consumer of ANZ's capital, given the only credit exposures to overdrafts and corporatecards. Only 3% of institutionals risk weighted assets are associated with PCM. Our customers
are highly rated. The nature of what we manage for these customers, they're operating cash
flows are low risk making the overall PCM business low financial risk. Around 80% of our
PCM revenue comes from net interest income and 20% from fees. In the platform space, it'saround 60% from net interest income and 40% from fees. The income stream is sticky andsustainable, even times of interest rate variability, and with a large portion of theoperational balances at fixed net interest margins and at a lower rate pricing compared towholesale and term deposit funding. Our average relationship exceeds 10 years internum
and has a low churn. Turning our attention to the financial contribution that platform
services deliver.
In the first half of 23 platform services deliver about a quarter of PCM revenue andapproximately 12% of deposits. Over time, we expect new income from the client monies
proposition to fuel future growth. The number of accounts on the client monies platform has
increased from 52,000 accounts in first half 19 to 411,000 accounts in first half '23, andgrowing. The customers that use client monies platforms are wealth and stockbroking firms
who hold large pools of highly valued operational deposits. I appreciate that I've covered a
lot of ground quite quickly. So, there are two points I'll make in closing. Number one, ourleadership position in PCM in Australia and New Zealand and our unique regional networkand technology provides us with a competitive advantage. Number two, our position issustainable given the four following points. Trust, what we help customers manage isabsolutely critical to their ongoing business operations. Strong financial commitment,
particularly to build the expertise and ongoing investment in the payment, technology andinnovation to support our customers. Three, the benefits of scale. This model works because
we manage millions of payments daily and have capacity to grow. And finally, our globally
relevant network. ANZ is the only domestic bank truly networked around the region, and it'llbe very expensive and time-consuming to replicate. I'd now like to introduce Leigh
Mahoney, head of institutional digital platforms. Leigh has been driving our customer digitalplatforms for the past 10 years and we've asked him to speak to you today about ourplatform services in more detail. Over to you, Leigh.
Leigh Mahoney:

Thanks, Lisa. It's good to see that I'm not the only one here with a tie on today. So, for thoseof you that wore a tie, thank you very much. So, I'm Leigh Mahoney and I look after thedigital experience for ANZ's institutional customers, which includes the integration of ourplatform services into our customers' businesses. Now, as Lisa mentioned, we have an
integrated service proposition that relies upon four core platform services within the PCM
business correspondent banking agency services, real-time payments and client monies that
we onsell to our customers so that they can provide banking functionality to their clients. So,
I'm going to cover four things today. Why integration is crucial to a PCM business, why ANZ
is leading the market, why we have a niche market, and why our position is difficult toreplicate.
So why integration is crucial to a PCM business. Providing critical banking services at scale isheavily dependent on integrating our solutions into our customer's technology environment
and their business operations. I'm sure you've all used a mobile phone app or a web portal
to do your banking. When we are processing transactions on behalf of other major financial
institutions, that service obviously needs to scale up and reliably and efficiently process
millions of instructions and transactions each day and be measured to the millisecond. To dothis, we harness APIs, data security, and cloud technology to build automated payments anddata integration between customers and ANZ. Customers initiate a payment or transactionin their system either manually or automatically, and the instructions are seamlessly

delivered into ANZ systems and executed. So, integration is the key to offering wholesalebanking services to clients. Aside from the practical implications of managing millions oftransactions each day, integration offers opportunities for customers to create efficiency
through automation and straight through processing.
ANZ has more customers using integration technology and platform offerings than ourcompetitors, with 59% of customer surveyed in the Peter Lee large corporate customer
research using ANZ's integration tools, and I attribute our success in this space to three
things. Firstly, exceptional credentials and expertise in managing security and flexibility.
Secondly, being able to mitigate transition risk by using proprietary translation technology.
Now for customers, this means that ANZ can accept almost any file format and translate it
into our systems. And thirdly, helping our customers solve business process problems
through our custom workflow technology. A recent example where we helped a global
insurance company to deliver Australia's first real-time insurance claims process. All threefactors are a function of the depth and expertise here at ANZ and are a product of thedecisions that we've made over the past 12 years to build solutions in-house and partnerwith customers to tailor our offering to their needs, using the same building blocks eachtime.
So why is ANZ leading the market here? Well, our experience shows that without a suite ofhighly flexible ready-made integration tools, customers really struggled to incorporate
external banking systems with their enterprise resource planning or treasury platforms.
Customers need a knowledgeable experienced business partner to deliver integration forthem. The cost of doing it for themselves is high, both in dollars and in risk. Our solution, wecall Fileactive, is the number one banking integration tool in the market and it wasdeveloped in-house here at ANZ. In the Peter Lee research, customers rated Fileactive
number one across all measures including functionality, message and file delivery, data
management, and integration. We have more customers using integrated solutions than any
other bank in the region, and demand is growing. More than 210 million transactions were
initiated and over 1 billion processed using Fileactive last year.
Fileactive reduces operating risk for customers, supports scaling capacity, and helps us
partner with our customers to manage their day-to-day operational risk. We're also focusedon helping our customers improve their systems and processes to take advantage ofopportunities created by richer payment data enabled by the latest ISO standards, newpayment services like PayTo in Australia, which is the modern real-time replacement fortraditional direct debit receivables and real-time payments. So, while we have a nichemarket, our real-time payments agency service is a great example of a market niche that has
been created by offering platform services coupled with integration tools. Seven years ago,
ANZ invested in building the infrastructure systems and processes needed to connect ANZ toAustralia's real-time payments network. And we built this infrastructure in-house choosing
to build it once and reuse it many times across our retail, commercial and institutional
businesses.

So, we built real-time payments for our own customers and then we created an agency
proposition on selling our infrastructure process and systems to our financial institution
customers and in turn enabling them to offer real-time payments to their customers. So, thismeans that as our customer's business grows, so does ours. We've also taken this approachfor our same day domestic processing capability. Last year we processed 315 million
payments through agency arrangements resulting in institutional processing, more
payments for other banks' customers than for our own direct customers, creating newrevenue from existing infrastructure. And importantly, as the industry changes from legacy
payment systems to newer real-time platforms, we are well positioned to capitalise. We
won 10 out of 11 real-time payment agency mandates as well as the Global Finance
Innovation award for real-time payments.
Our bank customers real-time payment volumes have grown 43% compared to system
growth of 22% and we expect this to continue. In addition to payment services, our clientmoney solution that Lisa referred to earlier, combines our real-time payments and accountmanagement capabilities to create a self-serve cash management platform. Customers cancreate accounts on behalf of their clients, accept funds, and in the case of stockbrokers, as
an example, allow their clients to begin trading instantly. At the half year, we at around
411,000 client monies accounts, which is nine times more accounts than we hold for ourown direct customers, a sign of the success of this particular platform. Customers using
these platforms can focus their product and technology investment on their customer value
proposition and use our technology to power their business. Today we have a niche market
based on long-term investment in technology processes, systems, and our deep banking
expertise and experience.
So why do we think this is difficult to replicate? Well, we earned the opportunity to deliver
platform services to large institutional customers because we have a leading payments andcash management business. And our platform offering relies on six factors, robust, resilientand efficient technology, deep banking expertise and customer relationships, quality
processes, supporting global payment systems, infrastructure and regulatory compliance, aculture of closely managing operating risk. We've invested heavily in automation andmonitoring tools to ensure effective service delivery, and you'll see more of this at our
payments control centre. Keenly monitoring and leading industry trends, responding tochanging customer demands, and effective customer onboarding and integration processes.
All of these factors require specialist skills and expertise, significant investment, and time,
meaning it won't be cheap, quick or easy to compete with ANZ. Delivering platform services
is only made possible by the capacity built into the underlying platforms though, and I'll
hand over to Nigel now to talk a bit more about this and how we continue to evolve to assist
our clients in the new digital economy. Over to Nigel.
Nigel Dobson:

Thank you, Leigh. And good morning to everybody. I'm Nigel Dobson and I look after the
bank's end-to-end global payments capability as part of ANZ's banking services portfolio.
Payments are the lifeblood of any bank. And Lisa and Leigh have covered the all importanttransaction capture elements of the payment lifecycle and the business benefits of executing
well. Where my banking services team comes in is to support the business by linking

transaction capture seamlessly with transaction fulfilment, and it's at its form. It's thisperspective that I'll be talking to you about today. Five years ago we brought together ateam of engineers, payment specialists, operations, and banking experts to create a single
team responsible for payments processing, including technology build, run, change, andoperations. This organisational change enabled us to create a set of enterprise payments
platforms that not only support Lisa and Leigh's business, they also support the payment
services requirements of the wider enterprise.
The development of our payments platforms has followed two guiding principles, one, build
for reuse and scale, and two, self engineer and operate. These two principles have allowed
us to create a highly efficient and flexible payments ecosystem for the bank, allowing ANZ tomove away from a legacy environment, which was slow to change and very difficult tomaintain. This approach has also allowed us to create capacity to innovate in areas where
our customers are looking to leverage our expertise and more on this at the moment. As I've
mentioned, our strategic payments platforms are enterprise assets supporting retail,commercial and institutional businesses in 29 markets covering over 121 payment types andaccessing 28 different distribution channels. These platforms service more than 8 million
customers, 24/7, 365 days a year. Each year, we secure and facilitate the movement of over7 billion payments for our customers, which total $164 trillion in value.
Now our ability to create scale within ANZ and thereby offer services to other financial
institutions has delivered strong ongoing return on investment in our payment systems andwe're benefiting from both increased operational efficiency and resilience. We made thestrategic decision to build a number of our critical payments platforms in-house, in particular
our payments services and payments data platforms, as well as the integration tools that
Leigh mentioned earlier. This decision recognised that as a domestic bank increasingly
transacting around the region, we needed to be the best at holding, storing and moving
money for our clients. We aim to be highly responsive and flexible and to be in control of theend-to-end value chain. Being heavily dependent on vendors wasn't going to deliver that forus, wasn't going to deliver what we needed. And our experience had taught us that when wewere reliant on technology software vendors, changes were slow and we're often one ofmany customers waiting in line.
And we had very little control over the development roadmap and even less ability to onsell
our payment services intellectual property to other FIs. Now we have much greater control
over the design and development process, making it easier to prioritise and implementchanges as the environment and customer demands evolve, as well as maintaining strongalignment to any changes in the bank strategy. Taking the build in-house or self engineering
approach has allowed us to assemble an expert team of engineers and developers and we
now retain the IP that goes into delivering our payments technology. Our payments
engineering practise was rated in the top decile of engineering functions globally by Deloitte
in 2021. And our banking and payments expertise informs the continuous improvement of
our services as we innovate and work with our customers to meet their evolving needs.
We've established a strong innovation credentials over time, and as Lisa mentioned, this is
key criteria for customer retention and acquisition.

Our reputation for innovation leads customers to call us first when they want to know whatmight be driving greater efficiency or better outcomes in their business. In payments, thenumber one opportunity our customers are asking us about at the moment is digital assets
and currencies. Customers are thinking about how digital currencies might change the way
we hold store and move their money in the future. Digital assets and currencies are likely tobe the next generation of our payment services, and we've built the flexibility through ourengineering teams to engage in practical test and learn experiments with our customers. So
in March last year, for example, we executed the first ever Australian dollar bank issued
stable coin transaction using our A$DC, digital currency for the Victor Morgan Group
resulting in a $30 million real value payment. And just to link that back to PCM, this would
be a new form factor of Australian dollars that would be a new payment type for Lisa's
business in the future.
Beyond PCM, we've been working with the environmentals team in Insto and in April thisyear we worked with the Grower Carbon ventures to successfully tokenize Australian carbon
credit units and trade then using our Australian dollar digital currency with a settlement
occurring in near real time. Now, we undertook this transaction as part of the RBA's Central
Bank digital currency pilot where ANZ fully participated as a leading bank in four out of the
14 selected use cases. In a recent survey conducted by BNY Mellon, it was shown that 97%
of institutional investors think that tokenization is set to revolutionise asset management in
the future. And we see digital assets, tokenization, and decentralised networks as an
emerging form of financial market infrastructure. Something we know pretty well. With
digital tokens simply replacing the form factor of money and assets in the future. So, we
think the main benefits are the potential for greater transaction efficiency and themitigation of settlement related counterparty risk.
The process known as atomic settlement where two assets exchanged simultaneously and inreal time can eliminate delivery versus payment risk, which today is managed by centralised
clearing houses and largely exists because asset transactions occur on different market
infrastructure to the payment leg of the transaction. And this is often why we have T+2
sediment life cycles. Our immediate customer opportunities are revolving around our
nature-based assets, which is complimentary to our sustainability strategy. And this includes
tokenized carbon, biodiversity, and reef credits. And these are the emerging asset classes
where we believe the existing market infrastructure is very immature and in need ofmodernization, but we're also active in collaborating more globally. For example, ANZ
recently, in fact, just last week, announced that we participated in a series of experiments,
cooperative experiments led by Swift and 11 other global banks and market infrastructure
providers, in an effort to prove that the existing Swift infrastructure network can be used toaccess decentralised networks, which will host the digital asset markets of the future.
And finally, our approach to innovation as a well-regulated institution has been firstly tobuild on our excellent engineering capability and secondly, to closely collaborate with ourrisk and market management experts to ensure we remain consistently within our
regulatory perimeter. We've also maintained an open dialogue with our regulators and weshare learnings periodically as we progress. So, in summary, our approach to exploringdigital assets and other innovations is consistent with our approach to modernising our
payments systems and leading in that innovation space for our clients. We develop expertise
in-house, work closely with regulators to learn and educate and partner with customers todevelop a range of commercially interesting digital asset solutions to solve the problems ourcustomers will have in the future. Thank you very much. And Mark, back to you.
Mark Whelan:

So, there'll be questions about atomic settlement later for all of you just to find out.

Lisa Vasic:

You can take those.

Mark Whelan:

Yeah, I'll take those. Yeah, exactly. I think that last piece was really just to take you through.
We've got a very stable, substantial business today, but it is changing. Digital assets will be at
the forefront of that and Nigel's working hard to keep us relevant in that space. So, look,thank you, Nigel, for the presentation. Also, I know I'm very conscious that we've covered a
lot of information with you today and it can be complex and as I said, we will have further
sessions on this, but also we'll be shortly taking some questions we can dive deeper into
areas that you'd like more explanation on. But before we move to the Q&A, let me justsummarise three key points that I think we wanted to emphasise today.
First, we now have a much smaller but much better and world-class customer base. This isimportant because quality institutional businesses are built on the quality of the customer
base. And we've concentrated really hard on that in the last seven years. And with that
customer base, we're providing a full suite of products today, not a heavy emphasis that as
we did seven years ago on lending, but a much stronger emphasis on our payments and cash
management business, our markets, and then lending. So, it's been reversed order if you
like. We're doing that across multiple geographies, but I have to emphasise that thecornerstone with those relationships is the growing and highly profitable payments and cash
management business that we've talked about today. That's the key. That is one of the big
differentiators for us. Second thing I'd say is that we've reshaped the international network
to be high returning and is now an asset to the division. It wasn't in the past. We had acollection of countries which we called a network they weren't networked, they didn't havetechnology, they weren't aligned to key strategy and they weren't focused on return. That
has changed and this is now an asset, the international network is now an asset to thedivision rather than what we saw in the past, which was a financial drag. And I know you'll
have many questions in this. We believe it is sustainable at the sorts of levels that we'reseeing today. And finally, our investment in technology and process simplification is driving atrue network. And what I mean by that, and it's being done through our digital backbone,which we've shown you today, but with significant growth opportunities and productbenefits that'll come from that backbone being deployed right across all of our geographies,
connecting our business and connecting it significantly with long-term relationships withquality customers. That's a powerful proposition. So, we've covered a lot. I know we want to
get to questions, so I'll pass to you now, Jill, to take us through the questions and we're
happy to answer anything that you may have. I'll sit on this side.

Jill Campbell:Lisa, put the microphone back up and as Mark put it, we fully appreciate this is the first timea lot of you have heard this and your brain's probably about to explode, so we'll get
feedback from you after the session and that'll help inform how we need to follow this up,
what we could do better, what we could do differently, et cetera. Andrew.

Andrew Lyons:Thanks. Andrew Lyons from Goldman Sachs. Mark, maybe a question for you, just looking attransaction banking more holistically, your revenue return on risk weighted assets over the
past decade have basically doubled over a period in which we've basically done a full roundtrip on rates, so you can't put it back to rates. There's two questions, I guess. Part of thisimprovement appears to have been the mix of the business, which has shifted far more
towards PCM away from trade. But can you maybe just talk about how PCM returns haveactually developed over that period, particularly as you've built out this platform services
business. What do the returns of that part of the business look like? And then I guess thesecond question, just in relation to the extent that you've had a lot of success in the PCM
business, will that require you ultimately to offer more trade to your customers going
forward and maybe see that mix shift a little bit back towards trade?

Mark Whelan:

Yep. You can jump in on this too, Lisa. The heart of the PCM business is that it's reallyintegrated into the customer activity. It's effectively we're managing their working capital forthem, if you want to put it in really simple terms. Whatever their payments that they're
making, the cash that they're collecting from their customers, the way that they're driving
new growth in their business effectively flows through to us, which allows us to ingest thepayments and then make the payments, but store the value. I think, what's the term you
used?

Nigel Dobson:

Captured fulfilment.

Mark Whelan:

Captured fulfilment and store and fulfil. And so, there's a number of benefits that come toflow through to us on that. First of all, the first really important one is you're integrated withthe customer, which means as they grow, we grow. We see more volumes and multipliereffect for our business, which is why we've shown those graphs of the number oftransactions, et cetera that you see. So really important to the customer and they rely
heavily on us. And as they're more successful, we're more successful, which is why we focus
really heavily on high quality customers that really have those high volumes. And so, when
you look at what happens through interest rate... So, where we make the money is obviously
in fees, it's in the operational balances, in other deposits they give us through moving the
cash into TDs and other and back. So, there's lots of flow that occurs. And so, as rates rise,obviously we'll make more money on that, but as rates will shift, we've really enhanced our
margin management around that significantly over the period.
And then the final thing I'd make here is that we focus pretty heavily on customers that havethis need, both domestic and internationally and multi-jurisdictional. And this is where the
network becomes really important. We don't just do this for customers in Australia or New
Zealand. We're doing it in multiple geographies and increasingly across several of thosegeographies and integrated, which again creates us in a sustainable position and allows us toget not only benefits from US dollar rate movements, but also Australian rate movements,
key rerate movements in some local markets as well. So, there's a real multiplier effect on it,
Andrew. And so, the upside for us, I think going forward is still significant. Even though we've
got large market positions. I think in the domestic markets, we think there's significant
growth offshore and this multiplier effect, don't underestimate it.
As customers grow and do more with GDP, we're not only doing that directly with our own
internal systems, directly with our customers, but we're doing it with other customers'
customers. That's what the agency business is, that's what client money is, client monies is
all about. And we'll need to talk to those particular things with you more so you understandit more deeply. But we're basically banking our customers' customers, even though they're
not directly with us, our main customer is, but their customers, which could be 416,000
accounts, I think is the number, means you get this multiplier effect.
So this has been a deliberate strategy. It hasn't happened by chance. We knew that if you
looked at where our returns were in 2016, high emphasis, 45% of our revenue from lending,
low return. Yet we had this asset that we wanted to build on and we put all of the major partof our investment into this part of the business because one, it integrates your customers,
makes them sticky. Anyone can lend money. People can't replicate this capability very
quickly, but you get multiplier effects in volume, which actually helps us with margins as
rates move up and down. And also the multi jurisdictional piece of it means you get
multiplier effects. So hopefully that helps. I can't remember the second part of the question.
Lisa Vasic:

I can maybe answer the second part, if that's okay, Mark.

Mark Whelan:

Yup.

Lisa Vasic:

So, I think there's a couple of things to think about. First of all, our franchise has grown. So, if
I look back to where we were probably 2015, 2016 in terms of where PCM, the number ofcustomers we now have that have ANZ as their primary transaction banker has increased
significantly, particularly across our home markets and throughout the region. So, the size ofour customer base has grown. Secondly, as Mark said, it's our agency or our platform's
business has continued to grow. We have through our risk governance, through ourtechnology frameworks, been able to capitalise on changes in the market and acquiresignificant market share, particularly over the last four years, which is seen both in ourcorrespondent banking business and our agency business have double digit growth. And wecontinue to see a lot of that growth continue as they start to evolve more of their businessmodels.
So, I think that's a really important piece. So, the mix within TB, in transaction banking, haschanged. We, on the trade side as well, we have also changed the composition of our trade
book from traditional trade loans and focused more on the supply chain finance. Why is thatimportant? It comes back to actually the PCM part, which is a lot of our customers data is so
critical to the way that they manage their businesses and what we call that kind of real-time
economy and also counterparty risk. So, it's really about growing our PCM business as a

share of the whole transaction banking business. And then it's also repositioning our tradebusiness to parts of it that we know is where our customers are going, such as supply chain
finance, which also do generate higher returns as well.
Jill Campbell:

Phillip.

Phillip:

Hey, thanks for the opportunity. I know you've mentioned a few customer names today, but
can you just specifically run us through a list of a few customer wins that's taken place overthe last maybe couple of years as a result of the increased capability? Thank you.

Mark Whelan:

Lisa, you can kind of...

Lisa Vasic:

Yeah, absolutely. I've got to be careful because we've got to get permission from all of ourcustomers, but maybe I can talk a bit by sector. So, in the client money space, there's been
specific stockbrokers that we have worked with. We're now providing the core cash
management account that sits on their platform. So, if you go across the market, you canprobably see who have been some of the winners in that space and underlying that is an
ANZ account that supports their customers with their broking activity. So that's probably oneof the big areas that we've seen a lot of growth with.
The core customer base, COVID was actually really challenging in terms of most customers
did not want to move their transaction banking during a period of what I'll call continuous
BCP. However, we did have some key customers, Lendlease who we actually recently had
present to our board was probably one of the biggest mandates here locally that we've hadtransition across to ANZ. And again, one of probably the largest customers on the ASX 200
and also very complex in terms of their transaction banking requirements.
We've also had more recent wins. And again, these are really looking at multinationals,
you're looking at fig customers as well, particularly some of the insurers. And again in thecorrespondent banking business, a number of the banks. So, our key areas of focus remain in
the financial institutions, also non-bank financial institutions where we're seeing above
system growth. But we are continuing to see growth in our core corporate and institutional
franchise.
And I suggest after this session, there's a booth in there called the NPP or the real-time
payments paid to, really simply what we see, this is probably being ANZ's opportunity toreally leverage and continue to grow our market. As we see this, the next buying decision,
particularly for customers here locally, what is it really simply it helps our customers at the
top end of the market be able to collect payments using the real-time payments network. It
is not regulatory driven, it is voluntary investment that ANZ has decided to make to support
our customers as they transition from traditional payment methods into real-time payment
methods. And we see that really as being probably the next area where we're going to seesome positive competition in the market.

Mark Whelan:

We have one, some big government mandates, which are public as well, being obviously
New South Wales' biggest bank, transaction banking business in the country and also more
recently South Australian government. So, it's across different sectors and we are a bit
cautious about mentioning the name simply because we have to first get permission that
we're going to say that, obviously.

Jill Campbell:

I might go to this side of the room just briefly. So, Ed.

Ed Henning:Thank you. Can you touch a little bit more on competition both domestically andinternationally? Your domestic peers have obviously spent a lot of money on retail banking
and SME banking. Are they coming back? Where are they at at the moment on theinstitutional side? And also you talked about the really high returns, especially on thepayment side. Are you worried about a rogue player coming in and pricing really cheaply andcan you just run through that please?

Mark Whelan:

Yeah, can I start and then Lisa again, you, and Leigh maybe can also. The first thing I'd say
about what we've built, and this is why I emphasise the digital backbone a bit because put
simply all that is is that we're deploying one system that handles a certain product... If I've
got loans or trade or markets, which we've traditionally built internally and use some
vendors, but one system that goes to every part of the business that we operate in, so every
country, if you think about it that way. Effectively that's the vertebrae, if you like. And thenwithin the spine is that we've linked that through a single customer identifier, which allows
us then to connect all of that from a data perspective, which means we can service thecustomer better, they get similar service regardless of where they deal with us, but we also
get clean data for regulators and others.
So, it makes us more efficient, risk management particularly, and in an area of operationalrisk and cyber, this is really important. So that's quite important. We've done that for the
network and we'll finish that soon as I've suggested. But there's a lot of that quality system
and integration that we can take deeper into the group. So for example, with what we're
doing, you're hearing the other banks are investing in their business banking space. We'retalking with Claire now internally around what we can take down into her world to utilise
what we've already built, whether it's in PCM, whether it's in trade, loans, financial markets,particularly how we can integrate and take that down rather than build new stuff there. And
I think that's a real value, for us, proposition going forward, not just for obviously volume
going through our channels, but also obviously allowing us a better proposition if you like tomarket for that segment.
But did you want to add...

Lisa Vasic:

Absolutely, and maybe come back to the question on competition. So, I think each of thebanks have obviously focused their attention on different parts of the market. ANZ's always
had a very strong institutional franchise. We started off as a trade bank. So, for us it's verymuch in our DNA, and I know Shayne talks about that, having a strong trade bank means
generally you have a strong corresponding bank recognising the cross-border element. Andthen for us it's logically that you have a strong payments and cash management bank. So wehave been very specific with Mark's sponsorship about directing capital and investment into
those three lines of business, recognising they form part of our customer's working capital.
It's where you have the highest engagement with your customers to understand the needs
within their business and also you can actually then strengthen and broaden out the fullcapability across the institutional space.
So, for us, this is about a full service proposition of which the working capital elements, PCM,
correspondent banking, and trade really formed that anchor point of having thoseconversations. And particularly in a really data rich world, our customers are expecting us toprovide insights to help them manage and provide prompts in their business today. So interms of competition, we will always see competition. I take competition's actually a goodthing. It keeps the bar constantly being moved and from a perspective is we don't see a lot interms of our domestic peers, but they will always try and support their customers that areimportant to their franchise. So, I think that is going to be a continuum and I think that's avery healthy environment to be on.
In terms of new players coming to the market, we've seen fintechs come into the market fora long time, and I would like to be quite clear is we are a banker to fintechs as much as we
see them as competition in certain spaces. And again, what they are bringing in is innovation
into the marketplace, which we know from an industry and also from regulatory perspective,
I think makes for a healthy ecosystem for our market. So, for us, we see those actuallycomplimentary to what we're doing as a PCM business.
In terms of the price play... which I think where your question was going, Phil... You'realways, and we've always seen, whether it's direct banking peers coming with a specific priceplay or we're going to see with monoline price coming with a price play. What we do know isa lot of our customers don't want to have multi-vendor relationships. It adds complexity into
their business, whether that's through technology integration, whether it's throughcontractual obligations, whether it's through vendor management, what they would preferto do is provide full service capability from a single provider on the assumption that that fullservice provider continues to innovate and keep the product set contemporary to support
their business.
Leigh, I don't know if you want to add...
Leigh Mahoney:

Yeah, just a couple of things.
Sorry, on the... Thanks, Mark.
The transaction banking platform, that's a market leading platform now for us in Australia
and New Zealand and increasingly the globe. It's a lot easier for us to take that platform
down and leverage a single asset into our commercial customer base as opposed to taking a
retail platform and bringing it up, especially because of the complexity that we have withour customers and increasingly with regards to the product set that they use. So we'relooking to leverage that down into our commercial segment. On the competition side, we
speak to a lot of fintechs who are trying to or maybe attempt to directly join these networks
and after they realise some of the complexity and the time and the cost that it takes to get
direct access to these networks, the conversation quickly changes into how can we be partof the capability that you've built. And so I think that that's a real strong play for us and it's
one of those things that I think that we'll continue to grow as we move forward.
Ed Henning:

Sorry, can I just...

Leigh Mahoney:

Gosh, so many.

Ed Henning:

You talked obviously domestic players aren't doing a lot, fintechs you're trying to integrate
with, but what about the offshore players? Are you worried about someone that mightcome in and play there and...

Nigel Dobson:

Can I answer that question because I think the proof... I'd be thinking about that, because I
wondered if a bit of that was part of your question.

Mark Whelan:

That's where I wanted to go.

Nigel Dobson:

Okay, all right.

Mark Whelan:

You go. No, no.

Nigel Dobson:

I'll jump in there. But I think the proof point that we already service the domestic payment
needs of the major international banks really shows you that they've made decisions fortheir network countries and network customers that going over the high quality domestic
player like ANZ for their domestic payments servicing is the right strategic choice. So, I think
we've got the evidence because we bank them, we facilitate their payments, we connect
with integration services as Leigh mentioned, and that's their strategy and they're very
happy with it and they're very long-term relationships.

Mark Whelan:

Yeah. The other thing just on that, too, is that with the international competitor... I know
we're going to get to them all, don't worry. Even if we have to jump right into some coffee
time... With the international customers, we're very careful of selecting. That's why I've
concentrated, remember we've got 6,300, we'll build on that now, but we were 27,000. We
were spreading, we were trying to do everything to everybody and we were leading withlending. So we were competing with Citibank and others in countries that we were justnever going to, we were getting hammered. And so, we had the wrong proposition and to
the point that Lisa made around, we are a trade bank, but we were not leading with thepayments cash management and trade integration to get the, and that's where the value
was. We're actually just trying to compete on lending. So, we've flipped that and what that's
meant is we've chosen customers specifically that want an Australian, New Zealand piece,
and or both and also are keen to be banking with us in Asia particularly because we're notreally offering transaction banking in the US, right?

In Asia particularly, we are operating in a number of countries where and compete very wellwith the likes of Citibank, Standard Chartered. So our product capability is very good, but
we're selecting customers who want both Australia and New Zealand league as well as themulti jurisdictions in Asia with what we can develop. And I think that's flipped the profile. So,
we do compete with them, sometimes we lose, but a lot of the time we win and we've got anumber of major companies... We haven't got permission to talk about those names that
operate with us in multiple... Like 12, 15 jurisdictions either in trade, in supply chain, but alsoin PCM. So, it's not an easy market, but I think our proposition is pretty good and it's
targeted. That's the big difference.
Jill Campbell:

Brendan.

Brendan Sproules:

Good morning, Brendan Sproules from Citi. I've just got a couple of questions, just on themix of your current business at the moment. I think it's on slide 17, you show the deposit
balances, which obviously actually fell a little bit during the last half and you show there thatthe operational deposits around two thirds. To what extent in this business are you going to
get migration out of operational deposits into higher rate term deposits? We're familiar withthis concept in retail and then I have a second question.

Mark Whelan:

You can jump into on this one too, Lisa. But look, we get that all the time... As rates move up
or as customers' operations and what they're doing themselves might be slowing orwhatever, and then they've got excess cash, they'll maybe move it into TDs. You see thatmovement all the time. We do manage the margins in TDs as much as what we try and dowith the operational accounts. So, you'll see that shift move up and down based on
individual customer requirements, but also what's happening in the general economy. And
you are seeing a little bit more active management of that as rates have gone higher as you
would expect from customers, but it does move around. Did you want to add more to that?

Lisa Vasic:

And I think the critical thing here is the classification of the deposit. So, we generally support
and provide a premium to our customers, because they are operational deposits, because
we have the payments, both the receivables and the collections to get that rightcategorization. So, customers will generally move things into term deposits when they've
either got counterparty risks or they've got particular treasury policies that they need to dothat. But we often find a lot of customers do not want to have to actively manage that
portfolio because that's there to support the day-to-day working capital of the business. So,
you generally find it's not as rate sensitive as what we'll call wholesale funds, which
generally does go into the market to seek higher return. That's why you'll see it remains
relatively stable and it's more about our customer acquisition. So, while we're bringing on
more customers who are bringing more operational deposits both on the direct PCM
business and also the platform's business is really where you're going to see the movementin that operational balance because once it moves into a term deposit, the classification
changes and it becomes a wholesale deposit.

Brendan Sproules:

And just my second question, which is on slide 20, you show us the split of PCM revenue into
primary propositions and platform services. Now you've had a big pickup in the activity andplatform services. How big is that or how's that mix going to change as we look out sort ofover into the medium term?
Lisa Vasic:

So maybe let me start where it's probably come from and then we can think about where it'scome to. So, where it's come from is, if I probably go back three years, that was probably
half of where it is today in terms of comprising about 21% by proposition, that was probably
just over 10 plus percent. So, we anticipate this will continue to grow higher than system
growth, recognising that intermediaries and different parties are taking a larger part of themarket share in certain propositions. So, our growth will be pegged off the back of their
growth.

Brendan Sproules:

Thank you.

Jill Campbell:

Motty.

Jon Mott:I have two questions if I could. The first one, there's some good buzzwords, full service
proposition, digital backbone, all that stuff. When you pitch for a new business, use
Lendlease or any of the others that you've been talking about winning, do you actually go
through its competitive... State government's extremely competitive... Do you look at it at a
product level even though you're providing what's the return at each individual product orthey look at it at a customer wide. So yes, we're losing on this product but we're making on
another product. How do you price to win that transaction? And then secondly, just anotherone, especially when you're doing financial institution transactions for another bank or astockbroking firm or whatever it is, how do you manage KYC and AML? Because even though
it might be your customer, it looks really bad if it goes through your platform and you're
executing a lot of money laundering for a third party.

Mark Whelan:

That last piece is really important.

Lisa Vasic:

Absolutely.

Mark Whelan:

So, you guys go for this.

Lisa Vasic:

So maybe I'll start with the last question first, and this is where the strength of ourcorrespondent banking business has served us very well in terms of really understanding
what we call enhanced customer due diligence. And then being also operating in 29 markets
and facing off against multiple regulators gives us a really good line of sight around not only
where the market is today in terms of expectations around KYC, but where it is going. So, we
work very closely with both of our internal teams in terms of our financial crime risk, ourcompliance teams, but also with the regulators. We're recognising this is a growing area that
we take very seriously around what we call the operating risk associated with this space. So,
we are disproportionately investing our capability in terms of compliance, in terms of our
financial crime teams and particularly in terms of the enhanced due diligence, thetransaction monitoring that Leigh referred to a little bit earlier, and that is a contrarian areathat we'll continue to focus on.

In terms of the RFP element, PCM is highly competitive. Banks know the value when you go
through and you are doing a syndicated lending facility. Our customers know that the PCM isthe cream on the cake and that they want to give it to what they deem as their primarybanking provider recognising the returns. Our customers are quite aware of the value of thebusiness and they will look to leverage that. But what they're fundamentally looking for iscapability and commitment to ongoing investment. I referred back to the average tenant
being over 10 years. Customers don't like to move their PCM, it is not easily transportable. It
takes a lot of technology integration effort. It takes a lot of business process engagement. So
that's why if you are able to make sure that you can retain the customer and the franchisethrough that continual investment and capability and grow because you've got a clear partof differentiation, that's where you can actually generally build out the franchise and createthat differentiated proposition.
John Mott:

So, does that mean sometimes you've seen in retail banking for years you provide a great
discount in the first year, then the longer you keep them, you make more money out of thecustomer and you're prepared to price very aggressively to win the transaction, win thecustomer knowing that it's the longevity where you make your returns. Is that how you think
about it?

Lisa Vasic:

Sometimes again, each customer proposition will be different. So, it'll be different. Somecustomers are much more fee sensitive, some are interest rate sensitive, some are verymuch capability in what I call transition risk, which is why Leigh's area, particularly in termsof the integration and translation capabilities are so critical. A lot of our customers operate
on legacy infrastructure. The hardest thing for them is not about the demand side for new
capability, it's actually how do they allow their systems to allow them to access new
capabilities such as real-time payments. So, the services we can provide around helping
them with that digital transformation is really critical for keeping contemporary capability intheir hands and for their business. So, no two customers are the same. Price always is
critical. After you go through that list of requirements in terms of a commitment to thebusiness in terms of ongoing innovation, data thought leadership, product capability,transition and implementation services, it always, there'll be a discussion around price.

Mark Whelan:

The capability piece, the price always comes into it, Jonathan, but the capability piece isreally important. We're talking about the cash management and transactional, how they run
their, it's their vein, their blood in their veins. So, we have to be able to demonstrate we've
got the capability today to do that well and whether we can do it across jurisdictional...
That's why... Jurisdictions, that's why the customer selection piece is really important for us
and the ongoing investment, whether it's in cyber or whether it's in just product capability,
very, very important for us to do that and having ongoing investment. But then theinnovation piece also has to be at the front. So, we've won a lot of transaction banking
mandates of recent years based on our data insights because we put effort into that so we
could tell customers what they were seeing in each individual stores, for example, arounddifferent sales and some of the reasons why the demographics of the people going into thestores.

So, there's a lot of value added benefit that we try and bring into that whole bidding
process, which wouldn't be visible to you, but the data and insights is critical. As we getdigital backbone... I know it's a term that, I like it, a lot of people don't, but anyway, I like it.
You can visualise it. The benefit of that is the data's going to be clean, first time ever,
because we don't have multiple systems that aren't integrated. We're going to have single
use systems that are integrated, cleaner data, much better insights is a key capability piece
for customers going forward. And then you've got the other innovation, which is the stuff
while we sort of sprinkled some... What we're doing in digital assets and digital currencies,
because that's going to be the next level of innovation. Our systems have to be in a position
where we're positioned for that when it comes. I'm not going to make a lot of money on it
today, but it's going to be important to customers in due course. And that's why what we're
doing in Nigel's team here is important.
Leigh Mahoney:

I just had a couple of points if I may. The transition is hard, right? Customer transition ishard. The reason we are market leading is because we've invested a lot of money to make iteasy so that if somebody's banking somewhere else, they can come across to us with aminimum of fuss and change to their own existing systems. I think that's one of the secretsauce elements around our success in that the AMLKYC, I mean the client monies platform,
one of the hardest integration parts of building that platform is the integration upstream forpayments out screening and then accounts in screening. So, it's tightly integrated up anddown the stack. One of the challenges of building one of those systems and the data insightsthat Mark mentioned, you'll see some of that out in the booths later on.

Mark Whelan:

We agonise that, that KYC is a really important question. I'm glad you asked it because we're
hoping we'll get it. It is really important. I worry less, I shouldn't say this, but I worry lessabout credit today than I've ever worried, only because I think the quality that the customer
base keeps us relatively safe. You can't rely on it completely. And where our risk
management processes and focus and culture is a lot different than what it was in 2016. I
worry more about this because that's the area that you need to have right. So we're
uncomfortable about that all the time and that's a good thing because this is really
important business for us. It's important to our customers as well, but very important to theregulators. So, we agonise over this.

Jill Campbell:

Could you pass it to Triggs? Thanks.

Andrew Triggs:

Thanks, Jill. Andrew Triggs from JP Morgan. I just wondered if you had any data or if you giveit a sense of what the AsiaPac systems growing at in terms of the fee pool for payments andplatforms and has ANZ growth been demonstrably strong without bearing out some of theadvantages that you talked to today? And then just second point maybe around that KYCML
piece. A lot's been made of Westpac pulling out of the correspondent banking business. Just
interested to hear your thoughts on just how substantive the benefit that has been off thatis sort of over, been a bit overemphasised.

Lisa Vasic:

Can you just on the question, which angle are you looking at in terms of the exodus,
overemphasised in terms of?

Andrew Triggs:

In terms of the revenue benefit to ANZ from major domestic player exiting the fold?

Lisa Vasic:

Yeah.

Mark Whelan:

You can maybe mention how many customers we picked up. I think probably, yeah.

Lisa Vasic:

So, I think correspondent banking requires significant investment and we've seen that pre
the exit of one of our peer banks in that, and if you look at some of the FI metrics statistics
and FI metrics is the global survey for correspondent banking. What we saw predating thatwas that there was a decline in a number of the other banks in terms of their market share.
We were continuing to grow our market share and again, that's about that investment andinnovation capability that is required for our financial institutions. So that really wasprovided, kind of an accelerant to a trend that we were already seeing across the business.
And we were very clear around our customer selection when that event did occur aroundwhich customers were within our risk appetite, recognising back to the questions that we
had earlier around the operational risk. And we'd already had conversations about our
pipeline opportunities with those. So, we will continue to look to see where we can grow ourcorrespondent banking. At 60% market penetration it's,

Lisa Vasic:

You're kind of at that top point. But there is continued cross-sell, which is why the agency is
so important because it's not just about the foreign, what we call the first leg into thecountry, but it's actually the domestic clearing that hangs off the back of it. So, we see those
two very much hand in hand, and our agency proposition has served us very well incontinuing to get the mandates on the correspondent banking side. So, it was an accelerant
probably to the existing growth that was already there, but I wouldn't say in and of itself, it
was the reason for that growth.

Mark Whelan:

We also said no to a number of customers based on that customer selection piece that I
talked about. And we want to be very careful about who we bank, not just lend money to,
but who we bank in this space. So, there's a number that we said that came up, we chosewhich ones we wanted, went after them and got majority of them, but we said no to anumber as well. It's a discipline that we have to have in the business. In this businessparticularly.

Lisa Vasic:

And then just the first part of the question, which is really on the international franchisees,
we've seen quite a lot of growth in our client monies, or what we call our virtual accounts,
particularly around with a lot of the leasing companies throughout the Asia Pacific region.
Similarly, into the insurance. Again, our strength is really around the non-bank financial FIs,
and then also with some of the larger corporates. So, it isn't the same market penetration
obviously as what we have in our home markets, but we're seeing the benefits particularly
with Nigel's connectivity around the real-time payment systems in various jurisdictions
about how we can stitch those together on behalf of our customers. And importantly,
providing liquidity solutions, which we know is really important across the region where
there is challenges around leveraging liquidity based on local regulations and customer

proposition. So, we're very selective where we play in Asia based on our capability andobviously the customer selection process.
Andrew Triggs:

I guess the question was, can you give us a sense of what the total market's growing at? Is ita low single digit, mid-single digit feed pool growth type market within the Asia-Pac region-

Lisa Vasic:

For ANZ or for the general market?

Andrew Triggs:

For the general system?

Lisa Vasic:

For the general system, Asia still continues to grow quite strongly. Part of that has been
obviously the real shift to real-time payments. If you look at the key markets of India,
Singapore, Hong Kong, you've seen really accelerated growth in China into that same bucket
as well is we are seeing that transformation now of payments being microtized in terms of it
might've been one payment for X dollars. You're now seeing customers making multiple
payments recognising that same because they can with a real-time payments. Also thinking
about liquidity. So, we've got a general trend that's seeing the volume of payments increase
and this is why scale and resiliency is so important for many of our customers and why they
do look to AA rated bank with payments credentials because of the importance to be able tosupport that payment growth.

Mark Whelan:

Whereas lending over there has dropped 30% in the last 12 months.

Jill Campbell:

By us or generally?

Mark Whelan:No, generally. So that whole market's dropped in. And that's why you're seeing a bit ofgrowth in the lending markets here and tenor growth, because a lot of the Asian banks arelooking for where they can go to get assets. This business continues to grow and that's
another reason why we like it.

Jill Campbell:

So, we're going to go to Richard then John, and then we'll go back over here. Sorry Azib I'm
not deliberately ignoring you.

Richard Wiles:

Good morning. Richard Wiles, Morgan Stanley. Mark, in your results presentations, you
disclose that the long run loss rate in the institutional business is now expected to be 19
basis points. Commercial is expected to be 53. So, you are suggesting that institutional is lessthan half as risky as commercial-

Mark Whelan:

I'm not suggesting that, but it was-Richard Wiles:

The group's suggesting it. So, it leads me to a few questions around your credit risk profile.
Firstly is you think institutional's lower risk than commercial across the cycle. Which do you
think is more volatile? You think institutional will be less volatile than commercial if we havea downturn? Secondly, how do you think your 19 basis points for institutional loss rates
compares with your domestic peers? Do you think your institutional bank is a lower risk
institutional bank than theirs? Thirdly-

Mark Whelan:

Yeah, I'll never remember all these. Can you-

Richard Wiles:

I'll repeat them all for you, if you want me to-Jill Campbell:

I'm writing them down.

Mark Whelan:

You're writing them down.

Richard Wiles:

Thirdly, is Australian New Zealand loss rates similar to Asia or do you think one's higher thanthe other? And then finally, if 19 basis points is the average loss rate for institutional, and 50
pluses for commercial, and your commercial business is way smaller than CBA and NAB, do
you guys think that your credit risk profile... Do you think you're a lower risk credit risk bankthan the other three major banks in Australia?

Mark Whelan:

I think the mix is... well, and it goes through cycles as you know, Richard. And I think you're
seeing some pressure coming through in that sort of middle market space now finally,
particularly in the construction area and smaller age care facilities and areas like that. So
there's a bit of truth in that. So let me just start with us and commercial. We do have a lower
expected loss and that's been a deliberate strategy because we wanted to bank... we had
27,000 customers in institutional in 2017. We didn't know 20,000 of them. We didn't. We
were just lending money. And so, we've reduced it down to customers that we know, butreally importantly, high quality investment grade customers who we think are of goodcharacter. There's some that we felt we didn't want a bank even in certain industries where
they were highly rated, but we just didn't like the nature of the business.
So, we said no to them. And so, we've been really quite focused on the people that we feelwant our services, but also we can trust in doing business. And I think that's been a big partof the reduction that you've seen in the expected loss rates.

Richard Wiles:

And just lending.

Mark Whelan:

And the second thing was lending, right? We're doing a lot of lending, so we've reduced thatnow risk weighted assets are going back up again, but only on the basis because we'restarting to grow the business again and we're still doing high volumes of DCM and loan
syndications and getting part of that. So, the strategy for us was to deal with less people butof higher quality, lend them less, get a better mix of business, which was more capital light.
And therefore, we've seen that reduction. Won't mean that we won't have losses because,
there'll be something that occurs, but I think the frequency of those losses will be lower andI think the size of them should be lower.
That would be what we're aspiring to, if I can put it that way. But our ROE still... we're at
14%, and we want to maintain that in those teens if you like. I want to continue to see it
grow, but if you look at the ROE of the commercial business, it's much higher than that. Soeven if you've got higher expected losses in that business, I'd take it every day of the week
and I'd certainly take it in small business because they're very profitable businesses. Muchhigher return on equity than necessarily getting institutional. So, our game is to beconsistent and get the returns going to a quality level for a long sustainable period. You'regoing to get some volatility I think in losses potentially in commercial and small businessbecause banks talk about that differently. But to my mind, there's still areas that you want
to invest in because they're very high return on equity. You can take higher losses. I love thesmall business banking. I think we should be going hardJill Campbell:

And most of what we do in small business is liabilities. They've got two and a half times theliabilities to assets.

Mark Whelan:

Correct. And lending. So, I think those franchises are still highly valuable, whether it's with us
or with other banks is my personal view. What was the other...

Jill Campbell:Ultimately do you think you're less risky than peers?

Mark Whelan:

On our Insto business less risky?

Jill Campbell:

Yeah.

Mark Whelan:

I wouldn't say... the peers tend to be more focused on in Australia and New Zealand and lessin Asia. And they're actually doing some stuff. I'm seeing some growth in some of the peers
investing in assets in the US and Canada. We do a little bit of that. We're quite selective
about how much weight we put into those assets. We don't know the customers. While we
don't tend to lend. I would say our customer base is exceptionally good. If we were able toshare with you all the names that we are dealing with, this is a cream of customers globallythat we're dealing with. Deliberate strategy and deliberate propositions to maintainrelevance to them. I actually think it stacks up exceptionally well even when you compare it
to just the top domestic companies, if I can put it that way. So I think we're in good shape.

Richard Wiles:

So, there's this long held perception that you're a lower return and higher risk bank.

Jill Campbell:

Not anymore.

Richard Wiles:

The comment you just made on business banking versus Insto would suggest that because
you're underweight in that space and overweight in Insto, you're still lower return, but are
you actually lower risk?

Mark Whelan:

I don't think we're anywhere near the risk that we were previously. And I think from an
institutional perspective, our risk is at par with the others if not better with some of thequality of the names that we have, and with the growth opportunities we have with the mixof business. I think the share price gets weighed down because we are higher institutional.
That's been the premise for a long time. I think that was very relevant in 2016. Because wewere underperforming. If there was a credit loss, we're usually at the front of the queue.
That was the reality of it. We've worked hard to be at the back of the queue first and thatgets to the quality of the customer.

No, I've seen it a lot of time. It's really true, but it also is to the mix of the business thatyou're providing and what you're providing in the way of capital and lending, et cetera. And
we've reduced that significantly. And we monitor that really closely. So, I think the value ofthe institutional business is probably undervalued, but you guys will be determinant of thateventually. But I do think the main point, it's a much different business than what it was in2016. A much different business.
Jill Campbell:

I do need to keep this moving along, so I bet John, I'm conscious you had your hand up for awhile and then I'll just double check that there's nothing left over this side.

John Storey:Thanks, Jill. Mark, I wanted to just ask you about the international business. Slide 41 right at
the back of your pack. Appreciate obviously you've done a great job in terms of how you've
grown PCM, and I think that's reflected in the deposit franchise.

Mark Whelan:

Yep.

John Storey 1:

You've obviously had a big kick in the returns from international, going from 30 basis points
to 170 during a period of time where US dollar interest rates have obviously moved up quite
sharply. I'm just kind of cognizant and conscious of the fact that we are going into a different
rate cycle now. Maybe just get your input on how rate sensitive the international business is,
and what's the impact of rates go down on the international profitability?

Mark Whelan:

Yeah, look, if rates go down, there'll be some impact on a revenue sense. I wouldn't
necessarily say that translates in what we call returns... International was very focused onrevenue in 2016, which meant we were lending money predominantly to anybody. And we
had a very high cost base in the international market because every geography was running
to its own drum. Well double-counting revenue, but single counting expenses. So, they
thought they could drive expenses up. That was the reality of what we were dealing with.
What we've done is we have deployed a different type of proposition to the customers
there, selected customers, reduced the amount of lending. We certainly done more PCMs
and the mix of the business is stronger. As rates go down, you'll probably see some revenue
degradation there, but you're also, we are winning mandates every day.
We're trying to make that up with volume. And also, as this velocity of trade and PCM
occurs, you get some benefit from that. And the mix of the business is significantly different.
I think it's 55% of our revenue generation now in international is from our financial
institutions area. Much higher quality, much higher frequency of volume turnover. And
you'll see some rate movements move will hurt us, but the sustainability of the returns will
be still there. Whether they stay at... we didn't talk about what the ROE was externally. I'll
get into trouble so I won't be able to say that. But it was quite high. I think it'll come down abit, but it won't go back to anywhere near what we saw it. And there's a couple of reasonsfor that. The mix of the business in the product sense and the customer segment sense.
But we've taken an enormous amount of capital out of international, be it because of thelending and the risk weighted asset reductions that we've had. But also, we've repatriated800 million of capital out of Thailand. Returned it. We didn't need it. And we've done thatclinically and surgically across a number of geographies. And we've also taken I think 600
million of costs out of the division in the last five or six years. Big chunk of that wasinternational, because we've downsized and we've focused each country to have a particularrole. They're all trying to be full service institutional businesses to a very small customer
base. And that's where the cost burgeoned. So, it's much more surgical, it's more clinical,
higher quality customer base, better product mix, lower capital usage, and a heavy focus onrisk management and expense management. That's been it. And that's been disciplined all
the way through.
And Simon Ireland, who's actually... and that's maybe another session we should have withyou guys, can take you through what's happened in this period of time. It's a very different
international business. And it's network now because we have single the digital backbone
being deployed, which means you have single technology that's being put out into eachcountry that's integrated, which means better propositions. So, it's a combination of all
those factors. Rates will move up and down. Volatility in markets affects us in that part ofthe business a lot because the VIX is down at 13%. When SBV hit, it was up around 28%. That
floats around. We've got big financial markets, local presence, but again, these things willswing and come around. But do I think that the returns are going to be sustainable throughthe cycle going forward? Yes, I do.
Jill Campbell:John, what we'll have a look for, obviously not just for you, but for the group when we dothe results, let's have a look at whether we can perhaps give you a little bit more granularity
around volume rates, et cetera. I also will need to check whether we'll have some market
stuff in there, I'm assuming.

Mark Whelan:

Yes. Yes.

Jill Campbell:

So, we'll bring that back to the group.

Mark Whelan:

But the international network was not an asset. It was a drag. And we called it a network. It
wasn't a bloody... don't laugh, John. I know you've been telling us for years, but all of you
have. And I agreed, right? But I don't think that's the case today. It's not the case today. And
going forward, I think it's an asset that we'll leverage much more.

Jill Campbell:

But I understand the question of sensitivity rates. That makes sense. I'm so sorry, because
I've kept ignoring you. You're owed an opportunity. Go for it. But we do need to... we'll
probably take one more after this and then we really do need to wrap up so I can show you
some other things.

Azib Khan:

Thanks very much. So, Mark, you've now got a division that's still delivering an ROE in the
mid-teens. I understood from your opening-Mark Whelan:

I said I wouldn't by the way, you remember that?

Jill Campbell:Oh, stop [crosstalk]Mark Whelan:

I just wanted to bring that... I've got to get one back eventually.

Jill Campbell:This is when he goes and writes a paper that-Mark Whelan:

Oh, yeah. Keep it there. And I get that too.

Azib Khan:

I understood from your opening comments that you're saying you'll try to optimise theproduct mix to try to increase the ROE. How high do you think the ROE can go? As you
optimise the product mix? Can we expect the revenue mix to be more skewed to transaction
banking? And can you please shed some light on the extent of revenue synergies between
the PCM sub-business and the markets sub-business?

Jill Campbell:

That's a tricky one.

Mark Whelan:

Yeah, that's a tricky one. I think they're connected but not something... a lot of what we doin markets gets delivered through-

Jill Campbell:That might be something we need to come back to in the-Mark Whelan:

We can... maybe on that last one. Maybe the best way to answer this would be if you lookback in 2015, 2016, we're making about 45% of our... I'll get the numbers a little wrong. So
we can follow... about 45% coming through from the loan product. And it would've been
about 22% from payments cash management, I would've thought?

Jill Campbell:

Yep.

Mark Whelan:

Yep. I want that reversed. And we're on that journey. We're about a third, a third or a third
now between payments or transaction banking. A third into markets and a third into
corporate finance. And by the way, when I say that to... remember in corporate finance,
we've lifted the return on standalone lending. We've got very heavy disciplines in there on
pricing sense now. So that has to lift its game, but we still want less of it ultimately in themix.
So going forward, I'd rather some... I know you'll probably get a little uncomfortable with
this, Lisa, I'd like to see 40-

Jill Campbell:

I didn't plan [crosstalk]Mark Whelan:

40% plus coming from TCM would be my ideal. And then markets say, I don't know, 30% andtrade and loans making up the balance. So that would be 25%. If you can get to that mix, I
think you've got one more sustainable business, and you've got a return on equity that isgoing to be sustainable in that mid-teens, or above, depending on what's happening with
rates to the question that was asked before. Because that will affect it a bit.

John Storey:

Keeping markets 2 billion.

Mark Whelan:No, we always manage... because you don't like us doing markets business, John, but it's afundamental customer proposition, so you have to run it well. I get that. We resource it to a
two billion, but I'd like to still see that move up by the stairwell. But I'd like to see thisbusiness up by the escalator if you like. If I can use those analogies. Because with markets
you don't want to grow too quickly. You can open yourself up to all sorts of risk that you
don't want. And our markets business is heavily oriented to the customer. And so, where
we're investing in markets will be to financial institutions, customers, particularly, securities
licences, capital-wide. And we've got very strong and deep relationships because of these
relationships we're building through PCM, to be frank. So, I'd like to see more of thatbusiness markets. Two billion [inaudible], but I wanted the two billion to go to 2.1.
But I don't want that being done overnight because that's when you're open up too muchrisk. Whereas this business, we've got a different type of risk, which is more the risk that you
asked us about earlier, but the volume and scale business you can get out of that is reallystrong and it's much higher return on equity, whereas markets are still lower than PCM.

Jill Campbell:

So last one, and then for anybody, apologies-

Mark Whelan:

I'll be hanging around if-

Jill Campbell:

I've missed you, we will make sure to come back to you to make sure the question gets
answered.

Speaker 1:

Thank you. You clearly built a very strong network spine for the business across 10 countries
for 1.2 billion. You've still got to roll it out to the remaining 17 over the next two years.
What's the cost to do that? Or given the technology has been built with these single systems
that it can be rolled out to new jurisdictions, is that mostly just integrating if there's any
guidance about how much more it's going to cost to finish it?

Mark Whelan:

One of the things we did in the division is we sort of kept our investment spend because it
made you focus. And as we dismantling a lot of the rubbish in the business, we targeted theinvestment spend to where we wanted to grow PCM and markets predominantly. Also, we
needed a loan system that was global. That's why we put some money into that, because weneeded to manage that risk better. And we've deployed to 10 countries now, the backbone.
We say 29 countries up there. We're not going to deploy it to Samoa. I mean that's not goingto happen. But we have now built the muscle up on how you deploy. And we've done the big
countries.
So, we will continue to do that so that we finalise the full network and get the benefit ofthat, but it won't be as costly as what we've had with the big countries getting out of theway. That's where the big dollars were spent. And look, the team is saying it's two years. I
want it done in 18 months only because I want to get to the next piece that comes off this,which is the automation agenda I think coming out of that is going to be the next wave of
productivity for the division.
Jill Campbell:

Okay. Sorry, I do need to finish this up. So, on your name tag, you'll see that you've either
got a number one or number two. That's not any inference about your quality. No one's
come second. For those that have got a number one on their name tag, you're going tocome with Leigh and Tony and myself. We're going to take you over to the command centre
and fill it. I did check it is the command centre. We're going to do that now and then we'll
bring you back in the next room. So, for the others, in the next room, we have a number ofbooths set up. Lisa alluded to one before, and we have team members at each of thosewhere they'll be able to talk to you about things like the payment platforms, the NPP, I
should say, et cetera. So, if I can just ask anybody with number one, if you can quickly comeover to here and then we will take you over to 839, and bring you back promptly.
[END OF TRANSCRIPT]