News Release
For release: 17 February 2017

ANZ Trading Update - 3 Months to 31 December 2016
Performance Highlights
Basis of comparison: First Quarter to 31 December 2016 compared to the quarterly average of thesecond half of Financial Year 2016 unless otherwise noted. The results are unaudited.

GroupRetail &CommercialInstitutionalCredit
Quality(IncludingDecember
Quarter APS330)

 Statutory net profit $1.6 billion up 8%. Cash Profit of $2.0 billion up 31%(Adjusted Proforma up 20%1) benefited from a good performance inAustralia and New Zealand Retail and in Institutional along with a lowerprovision charge and the sale of 100 Queen Street.
 Profit before Provisions up 17% (Adjusted Proforma up 9%).
 Revenue up 7% (Adjusted Proforma up 4%).
 Further progress was made on efficiency with expenses down 4%(Adjusted Proforma down 1%) driven by current and prior period
productivity initiatives and tight cost management.
 Group Net Interest Margin (NIM) declined several basis points (bps)reflecting lower earnings on capital and higher funding costs driven by
improving liability mix from strong deposit growth.
 The core businesses in Australia and New Zealand performed well. Retailwas again a strong contributor in particular in the home lending segment
while lending volumes in Commercial were more subdued.
 Deposit growth was a feature in both countries and was particularly strong
in Australia, with Commercial up 6% and Household up 4%.2
 Initiatives including ApplePay and AndroidPay are driving ongoing net
customer acquisition gains in Australian Retail Transaction Banking.
 Credit Risk Weighted Assets (CRWA) reduced by $0.9 billion (FXadjusted), with a ~$3 billion decrease in Institutional lending products
RWA during the quarter and growth in Markets.
 Improvement in RWA composition, assisted by increased sovereign
exposures, drove a reduction in the average risk weight of theInstitutional portfolio.
 Global Markets income of $706 million benefited from favourable trading
conditions arising from a strengthening USD and rising yield
curves. Customer Sales and Franchise Trading accounted for 77% of theGlobal Markets income with Balance Sheet also performing strongly
benefiting from tighter bond spreads. Valuation adjustments provided a$99 million benefit.
 Gross Impaired Assets increased 1.8%.The Total Provision charge was$283 million with the Individual Provision (IP) charge $325 million. A
Collective Provision release of $42 million was assisted by portfolio
composition improvement and exposures transferring to IP. There were nochanges to management overlays.
 Risk Weighted Assets grew 1% ($3.8 billion) for the quarter. CRWA grew
1% largely reflecting FX impacts, with growth in Australian Home Lending
CRWA being offset by a reduction in Institutional CRWA.
 The average risk weight of the lending book declined 50 bps driven by
improved Institutional portfolio mix and Australian home lending growth.

1 Adjusted Proforma refers to Cash Profit adjusted to remove the impact of ‘Specified items’ in FY16 including the accelerated amortisation impact ofsoftware capitalisation policy application changes, Asia Partnership impairment charge (AMMB) and gain on cessation of equity accounting (Bank ofTianjin), restructuring expenses in FY16, sale of Esanda Dealer Finance business, and derivative credit valuation adjustment. Note, FY16 specified
items have been restated to remove the impacts of amortisations benefit and higher project expenses from the amended application of policy as thoseparticular Specified items in FY16 were made to allow comparability with FY15. Further detail provided in the ANZ Full Year 2016 consolidated Financial
Report page 16. Restructuring expenses incurred in 1Q17 have not been classified as ‘Specified items’.
2 Growth from end of FY2016 to end of December 2016 (1 October to 31 December 2016).

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

Capital &Funding APRA Common Equity Tier 1 (CET1) ratio was 9.5% at 31 December.
 Excluding the payment of the 2016 Final Dividend (net of the Dividend
Reinvestment Plan), CET1 increased 40 bps in the first quarter, primarily
driven by organic capital generation of 48 bps which is substantiallystronger than the Post Basel III 1Q average of 21 bps.
 There was no capital benefit from asset disposals in the quarter.

Specified Items including Progress on non-core Asset Disposals
Since the start of FY2017, ANZ has signed agreements to sell its 20% stake in Shanghai
Rural Commercial Bank (SRCB), the UDC Finance business in New Zealand and ANZ’s Retailand Wealth businesses in five Asian countries. The transactions are expected to complete in
the second half of FY2017 and 1H2018 subject to regulatory approvals.3 For the purposes ofcomparison, if the earnings from the businesses being sold were to be excluded from Cash
Profit performance for 1Q17 it would show an increase of 33% (+31% including).
In FY2016 a number of actions were classified as Specified Items which formed part of theGroup’s Cash Profit. This classification assisted investors and analysts to look through theimpact of strategic initiatives to determine underlying business performance trends andincluded the disposal of Esanda, restructuring charges, a write down of the valuation for theinvestment in AmBank, and accounting methodology changes. In 2017 the classification ofSpecified Items will be limited to the impact of disposals.
Capital and Funding
The transactions outlined above will boost ANZ’s APRA CET1 position by ~$2.7 billion or~70bps upon completion further improving ANZ’s capital flexibility.
Strong deposit growth and solid progress with the Group’s term wholesale funding plan has
contributed to a further improvement in the Group’s liquidity and funding position. TheGroup’s average Liquidity Coverage Ratio (LCR) for the quarter was 137% (proforma 132%
if adjusted for the $6.5 billion reduction in the Committed Liquidity Facility effective January2017). ANZ’s Net Stable Funding Ratio (NSFR) is estimated to be in excess of 108%.
CEO Commentary
ANZ Chief Executive Officer Shayne Elliott said: “The first quarter saw a positive start to theyear. There was further momentum in executing our strategy to build a simpler, betterbalanced and fairer bank that more consistently meets customer expectations, and delivers
improved shareholder returns.
“Our early progress in transforming ANZ is providing capacity to invest in new initiatives
that provide a better experience for customers. Our ability to deliver these outcomes forcustomers while maintaining good earnings momentum has been supported by strong
productivity gains and improved capital efficiency.
“Our key customer businesses delivered good outcomes. Retail and Commercial in Australia
and New Zealand again performed well. Highlights include market share gains in customer
deposits and Australian home lending, and further gains in new-to-bank customers driven
by the success of ApplePay and AndroidPay. Institutional Banking delivered pleasing resultsin Australia and Asia. This has seen us manage the revenue impact of initiatives to improve
capital efficiency and returns.

3 For further information on the asset disposals see the information pack lodged with today’s 1Q17 Trading Update available on www.anz.com

“We also saw progress with a strong organic capital generation performance. Together withthe capital benefits from the sale of minority investments and non-core businesses, thisleaves us in a very strong capital position ahead of domestic and international regulatorychanges. Once the regulatory environment is clearer, we will be in a position to consider
what capital flexibility this provides us.
“The outlook on provisions is also a little more positive. It is still too early to be definitive
about the year as a whole however the first quarter together with our experience during firstsix weeks of the second quarter suggests the credit environment is marginally better thanwe expected at the time of our 2016 Full Year result which was for the provision charge in2017 to remain broadly the same as a percentage of gross lending assets.
“Overall we have seen good progress in the first quarter. Clearly though, there is still agreat deal to do to sustain this progress in a low growth environment and to deliver a
winning proposition that meets our customers’ rapidly changing needs,” Mr Elliott said.
An interview with Shayne Elliott discussing the trading update is available atbluenotes.anz.com.
For media enquiries contact:

For investor/analyst enquiries contact:

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

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

SUPPORT MATERIAL TO ASSIST WITH ANALYSIS IS AVAILABLE ON ANZ.COM IN THE
SHAREHOLDER CENTRE
A supporting materials pack has been lodged with the ASX and NZX today to assist with analysis ofANZs 1Q17 financial outcomes and is available on the ANZ website ( www.anz.com) in the Shareholder
Centre along with this Trading Update News Release, the APS330 disclosure, and other lodged
materials.