ME43515 AR_99_cover.FA 16/11/99 12:05 PM Page 3

VISIONANZ is a vibrant financial services company
that delivers:• Superior performance and value to ourshareholders• An experience which delights our customers• An environment where our people excel

M

CONTENTS

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ANZ at a Glance2

Chairman’s Report

6

Corporate Governance

7

Chief Executive Officer’s Review

8

Chief Financial Officer’s Review

10

Business Commentaries

12

Board of Directors

20Group Executive

22

Risk Management

23

Community Involvement

24

Concise Financial Report

25

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Jennifer Duigan,
Senior Sales
Consultant, at oneof our new lookbranches.

KEY DATES
Record Date for Final Dividend

19/11/99

Annual General Meeting – Sydney

20/12/99

Payment of Final Dividend

20/12/99

Announcement of Interim Results

3/5/00*Record Date for Interim Dividend

9/6/00*

Payment of Interim Dividend

3/7/00**tentative dates only

Australia and New Zealand Banking Group Limited
ACN 005 357 522
www.anz.com
Printed on environmentally sensitive paper

1999 ANNUAL REPORTME43515 AR_99_cover.FA 16/11/99 12:26 PM Page 2

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED1999 ANNUAL REPORTME43515 AR_99_Inside.FA 16/11/99 12:39 PM Page 1

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Profit after tax* up

1999

HIGHLIGHTS

$M
1480

1500

1000

Earnings per share up 17% to 90.6 cents
500

Profit after tax and abnormals up to$1,480 million ($1,106m)
Profit before abnormals also up to$1,480 million ($1,175m)

0

-500
91

92

93

94

95

96

97

98

99

*after abnormals

Annual dividend increased 8% to 56 cents
Non-accrual loans stabilised
Cost income ratio down to 55.0% (60.9%)
Material improvement in business mix
Active capital management

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED1

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AT
A GLANCE

Sharemarket Accumulation Index

SHAREHOLDERS

400
ANZ
339

300
252
All Ords

200

100

Sept: 91

92

93

94

95

96

97

98

99

• Total shareholder return of 19.6% during
year (16.2% for broader market)• $814 million dividends (8% increase)• 35,000 new shareholders• 28,000 staff shareholders• Revamped Shareholder Privilege Package• Franking increased
Shareholders at the Annual General
Meeting in December 1998.

STAFF• 30,171 employees• $1,732 million in personnel expenses• Introduced new online training courses toenable staff self-development• Revitalised the graduate recruitment
program: 170 graduates recruited in Australia• Introduced sales incentive schemes forfront-line sales staff• Introduced a program to develop key talent
for executive positions
Overall Satisfaction Level
from Staff Survey July 1999
%
70
60
50
40
30

Diane Basham,Continuous Improvement
and Quality Assurance

2

20

52%
ANZ

61%
Databaseaverage forall companies
39%
Average forcompanies
undergoing
major structuralchange1001999 ANNUAL REPORTME43515 AR_99_Inside.FA 16/11/99 12:40 PM Page 3

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CUSTOMERS

Gateway Performance% Return since launch 1 January 1998
25
Gateway
20

Benchmark

15
10
5
0
Australian
Shares Property Bonds

International
Bonds Shares• Premier Banking launched in Australia and
New Zealand• Launch of anz.com – over 100,000
customers registered for Internet Banking• Online share trading launched throughalliance with E*TRADE Australia• 11 new Premier branches opened
Denise Pearson, Sales Consultant at one of our
new look Premier suites with ANZ customer.

COMMUNITY• $676 million tax expense• $1,562 million in non personnel expenses• No branch closures in rural areas• $1 million donations• ANZ staff involved in community projects –Foodbank,Youth at Risk, Camp Quality,
Down Syndrome Association of Victoria• ANZ Foundation activities broadened

ANZ staff help out at Foodbank Victoria’s
distribution centre in Melbourne.
From left Sonny Loo, Caroline Seletto,
Rouben Karakachian, David Stewart andSharon Bull of Head Office, Melbourne.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED3

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AT A GLANCEPERSONAL
FINANCIAL SERVICES
accelerating growth
Comprises: Consumer and Small Business• 13% home loan market share in Australia,
up 1%

Banking Products, Mortgages, Funds• Home Loan Bank of the Year

Management, Insurance, Personal• 100,000 Internet customers registerede-Commerce, Cards and Distribution.
4 million Customers (three million in Australia,
one million in New Zealand)
961

Points of representation (808 in
Australia, 153 in New Zealand)

1,343• Leader in credit cards• Town & Country integrated• 11 new Premier branches opened• New scheme to reward sales staff introduced

ATMs (987 in Australia, 356 in
New Zealand)

48,138EFTPOS terminals (34,886 inAustralia, 13,252 in New Zealand)
GROUP

Profit after tax$1480M

Personal

42%

Scott Blunden,
Chirnside Park, Victoria

CORPORATEFINANCIAL SERVICES

Corporatebuilding on a leading position

37%
12%

Comprises: Business Banking, ANZ Investment
Bank, ANZ Asset Finance, Asset Management

Internationaland Corporate e-Commerce• Leading corporate bank in Australia and
New Zealand with 81,000 customers• Reduced risk exposure in Business Banking
and ANZ Investment Bank
• Exited capital markets business in London• Risk Magazine – ANZ equal first inAustralian Dollar Currency Options(worldwide)4

Tony Marinelli,Business Banking• No. 1 Adviser and Arranger for Project
Finance deals in South Asia in
Project Finance Magazine• Significant efficiency gains in Esanda
and UDC• Established investment management division• FX Online and eGate payments
gateway launched1999 ANNUAL REPORTME43515 AR_99_Inside.FA 16/11/99 2:11 PM Page 5

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INTERNATIONAL

simplify and focus
Comprises: ANZ’s international network in 33• Leading bank in the Pacificcountries including ANZ Grindlays• Won Best Foreign Bank in India Euromoney award

1 million Customers
186

Points of representation

40

ATMs

715

EFTPOS terminals• Rebalancing the mix of activities andcountry positions to reduce risk
• Acquired 10% stake in Panin Bank,
Indonesia with option to aquire further 18%• Closed representative offices in
Latin America

Staff

Assets30,171$149B
Charts exclude central
items and discontinued
businesses

38%

43%

16%

Sharon Yu andJoe Guo of Shanghai

45%

TECHNOLOGY
27%

12%

building competitive
advantage through technology

and Payments• New foreign exchange and money markets
trading system implemented in Australia andSingapore• Year 2000 system repairs and all major
testing phases completed• Continued implementation of theCommercial Banking System in ourInternational network

Comprises: Technology, e-Commerce• Designed and implemented a new
e-Commerce platform• Substantial progress made in the rollout of
ANZ’s internal web-infrastructure• Converted New Zealand to ANZ coresystems platform and transferred processing
to Australia
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED• Town & Country integrated to ANZ
core platforms• First online Board meeting• Reduced staff turnover substantially
Deslin Foster,Internet Banking
5ME43515 AR_99_Inside.FA 16/11/99 12:41 PM Page 6

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CHAIRMAN’S REPORT

It has been a good year for the Bank with substantial progress in improving our performanceand in implementing our focused strategy.
The profit of $1,480 million is a record for the company. Earnings per share increased by 17% to90.6 cents. Costs have been lowered and risks have been reduced.The management and staff areto be complimented on this result.
Directors are pleased to be able to increase the annual dividend by 8% to 56 cents per share.
Franking was increased to 75% for the interim dividend and 80% for the final dividend.
Franking was 60% in the previous year. ANZ expects to increase the level of franking again in
the current year.
There have been two changes on the Board during the year with the retirements of an
Executive Director, John Ries on 18 December 1998 and of a long standing non-executive
Director, Colin Harper on 30 September 1999. Mr Ries retired after 38 years employment with
ANZ during which period he held many senior positions, rising to the position of Executive
Director. Mr Harper served the Board with distinction for 23 years.We thank both gentlemen
for their contributions and wish them well in their retirement.
It is particularly pleasing to report that since the last Annual General Meeting over 28,000
employees have become shareholders following the introduction of the new Employee Share
Scheme. Directors believe it is in the interests of the Bank to have employees as shareholders as
it further aligns their interests with those of all shareholders.
Looking forward there are clearly further challenges. One of these is the transition to the newmillennium.We are well prepared in our own operations for Y2K and remain comfortable thatthe event will proceed smoothly, although we are mindful that we are dependent on theexternal infrastructure around us operating normally.Another challenge is the improvement of
our technology and our drive to be a leading player in e-Commerce.We also have many
programs under way that will deliver better performance on our existing activities.
Overall the Group is in a strong capital position and since year end we have announced an onmarket ordinary share buyback of up to $500 million as the first step in addressing our surplus
capital.We have put in place an excellent management team.This, along with the clarification ofstrategy, provides a greater sense of direction and provides a strong foundation for ANZ tocontinue to perform and deliver value to shareholders.

Charles Goode
Chairman

6

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John McFarlane andCharles Goode online
at the Board meeting.

CORPORATE GOVERNANCE
ANZ was the first listed company in Australia to move to ‘online’ Board meetings. Information isprovided to Directors via a secure website.

Experienced Balanced Board

Effective Committee Structure• Seven non-executive Directors andChief Executive Officer• Four main committees covering Audit, Risk, Strategy
and Human Resources• Wide range of business backgrounds –see pages 20 and 21 for Directors’ details• Separate Nominations Committee• Retirement age 70, Directors appointed after 1993
will retire after 15 years service• Chaired by non-executive Directors• Regular meetings, more than 60 in 1999

• Details on page 31• Directors elected by shareholders every three years

Good Corporate Governance
Board of Directors to

•
•
•
•

Chart direction of Group
Monitor management’s performance
Ensure regulatory and ethical standards are met
Appoint Chief Executive Officer

Ethical Standards

Active Participation• Non-executives ‘independent’ – not substantial
customers/suppliers nor past executives• 11 board meetings per year

• Non-executive Chairman• Regular Business Unit presentations• Directors must hold 2000 shares (page 31) restrictions on share trading• Open access to information including independent
expert advice at company’s expense• Code of Conduct covers conflict of interest
procedures• Regular meetings with staff and visits to branches andoffshore operations• Annual strategy review• Indemnity for Directors
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED7

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CHIEF EXECUTIVE OFFICER’S REPORT
Strong results and strategic progress in 1999

‘The 1999 result at ANZ demonstrates a commitment to delivering value for our shareholders.
With earnings per share growth of 17%, we are now delivering good earnings momentum.
Risks and costs have been reduced. Australia and New Zealand both showed much higher thantrend growth, with the strongest performance in Personal Financial Services, which now
accounts for 42% of Group earnings.
‘We have enunciated a clear strategy to deliver superior returns for our shareholders. Let me
outline it and the progress we have made this year in each of the key areas.’
Strategic Plans

Strong Progress in 1999

Improve performance to deliver Economic Value
Added (EVA™) by:• Reducing costs and risks• Turning around sub-optimal segments,
particularly in International• Optimising our capital structure

performanceRe-balance the strategic business mix by:• Accelerating growth in Personal
Financial Services• Building on our strong position in Corporate
Financial Services• Simplifying and focusing ourInternational business• Building a leading e-Commerce business• Withdrawing from all high-risk andnon-core segments

business mix

Leverage technology as a competitive advantage,
particularly utilising web-based systems

technology

Improve the customer experiencecustomer experience

•
•
•
•
•

EVA™ increased in all major business segments
Costs down 4%, cost income ratio 55.0%
International exposures reduced
Gross and net non-accrual loans have been stabilised
Trading risk has been reduced significantly• Domestic markets 84% of earnings• Personal Financial Services 42% of Group earnings• Funds Management and banking integrated in Personal
Financial Services• Withdrawn from the higher risk investmentbanking segments• Over 100,000 customers registered on anz.com Internet banking• ANZ E*TRADE commenced operation in October 1999

•
•
•
•

New Zealand system processing moved to Australia
Y2K preparations complete
Town & Country integration
Rollout of Commercial Banking System tointernational network• Leader in customer satisfaction for Business Banking• Premier Banking launched
Build a strong management team and create anenvironment where people excel

8people• Young high calibre senior management team
• Developing performance orientated culture• New programs to identify and develop key talent havebeen introduced
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Looking forward‘While we have made good progress in 1999 there is more to be done.
We remain committed to the same strategic priorities. However, there aresome specific aspects that will be given particular focus in 2000.
‘With respect to the outlook for the year 2000, we have set ourselves
performance targets to outperform peers. Plans are in place to achieve this.’John McFarlane
Chief Executive Officer

Looking Forward to 2000
performance

•
•
•
•
•

Achieve a 53% cost income ratio in 2000
Making progress towards our return on equity of 20% target
Improve the asset quality in International businesses
Implement stretch performance disciplines throughout the Group
Implement buybackbusiness mix• Focus on Premier and Small Business segments and retailfunds management• Improve the asset mix and return in Corporate Financial Services• Complete the strategic re-positioning of our International business• Achieve a leading domestic market position in both consumer andbusiness e-Commerce

technology• Successfully manage the Y2K transition• Complete rollout of data communication network to branches• Manage introduction of GST

customer experience• Improve customer experience in Personal Financial Services• Extend availability of Premier banking
people• Act on staff survey• Make incentive remuneration available to all staff• Actively manage development of key talent

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED9ME43515 AR_99_Inside.FA 16/11/99 12:42 PM Page 10

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CHIEF FINANCIAL OFFICER’S
REVIEW

Back

Earnings and Dividends per Share Up
Earnings Performance1
¢
90

90.6

60

56

• Earnings per share 90.6 cents; up 17% (1998 – 77.2 cents)• Dividends per share 56 cents; up 8% (1998 – 52 cents)• Payout ratio 62% (1998 – 68%)30

• Franking 75% interim, 80% final (1998 – 60%)
01

Before abnormals

Earnings per share–30

Dividends per share

–60
91

92

93

94

95

96

97

98

99

Profit After Abnormals Up
Operating Profit after Tax
$M
1480

1500

• Operating profit $1,480m (1998 – $1,106m)• Operating profit before abnormals $1,480m (1998 – $1,175m)

1000• No abnormal items (1998 – $69m negative)
500• Net income up 6%, expenses down 4% and provisions up 5%• Profit assisted by replacement of debt funding with issue ofpreference shares and accounting change on treatment of software

0

-500
91

92

93

94

95

96

97

98

99

Increased Profit from Personal Banking
Business Unit Performance
$M
1500

1480

1250

1175

• Personal up 33% – with strong mortgage growth, increased
non-interest revenue and reduced costs

Personal• Corporate up 17% – strong asset growth in Australia, reduced
activity in London

1000
750

• International down 20% – reflecting increased non-accrual loans,reduced assets, and lower foreign exchange earnings

Corporate

500
250• Other – asset and liability management, earnings on central capitalfunds and the discontinued businesses including the London capital
market activity which incurred losses of $87m in 1998

International
Other

0
1998

1999

Solid Income Growth
Operating Income$M
6000

Non-Interest Income
5966

Net Interest Income

5000
4000

3645

3000
2000

• Net interest income up 3% – loan growth of 13% in Australia(mortgage growth 18%), with stable margins (helped by preference
share issue)• Non-interest income increased 11% reflecting strong fee growthand good foreign exchange earnings (albeit down on 1998’s record
level) and reversal of 1998 London trading losses

1000
0
91

10

92

93

94

95

96

97

98

99

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Cost Income Ratio Lower
Operating Expenses%• Expenses were 4% lower than 1998 (2% lower excluding
accounting changes). Personnel and premises costs were reduced
reflecting lower staff numbers. Investment in e-Commerce andY2K activity led to slightly higher computer expenses

80• Cost income ratio reduced to 55%

65• Management cost income ratio target 53% in 2000

60

• Introduction of GST on 1 July 2000, will add approximately$40 million (annualised) to cost base.

55

75
70

55
50
91

92

93

94

95

96

97

98

99

Non-Accrual Loans Stabilised
Asset Quality
Net Non-Accruals• Net non-accruals reduced by 27% to $657m• Gross non-accruals reduced by 7% to $1,543m

Cover Ratio

%
70

$B
57

3

• Problem areas remain China and Middle East
• Specific provision cover is 57% for Group,
68% for overseas markets

60
50

2

40
30

1

657m

20
10

0

0
91

92

93

94

95

96

97

98

99

General Provision Surplus Maintained
Doubtful Debts$M• General provision credited with $510m using Economic Loss
Provisioning (ELP) reflecting 9% average net lending growth andimproved asset quality• Specific Provisioning (SP) drawdown $482m including:• $113m Asia (mostly China), $26m South Asia
• $118m Middle East, $38m in Europe• $179m Australia and New Zealand• General provision has surplus of approximately $428m over theAustralian Prudential Regulation Authority guideline

Balance Sheet• Steady balance sheet assets but improvement in mix

2100

1500

ELP

SP

(34)

1,395

FX
ImpactSurplus for
credit andother risks

900

967

600
300
0
Sep
98

Sep
99

0.5%
RWA
(post Tax)Business Mix Re-focusedInterest Earning Assets
$B

120

120
Other

100
80

• Lower wholesale assets particularly in Interbank in London andin Asia60• Announced on market ordinary share buyback of up to $500m

20• New Zealand tracking stock issue planned0

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

(482)

1,401

1200

120

• Strong lending growth particularly of mortgage lending inAustralia (18%) and New Zealand (10%) and corporate
lending in Australia (12%)

510

1800

Lending

40

Securities
Interbank

1998

1999

11

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Stephen Earle,
420 St Kilda Road,
Melbourne

PERSONAL
accelerating growth

Personal Financial Services provides a fullrange of financial services to around three
million personal and small business customers
in Australia and around one million in New
Zealand. It comprises Consumer and Small
Business Banking Products, Mortgages, Funds
Management, Insurance, Personal e-Commerce,
Cards and Distribution.
Personal Financial Services has beenreorganised around customer segments andproducts to enable delivery of differentiatedservice propositions.
Financial Outcomes• Profit rose from $466m to $622m• Cost income ratio fell from 69.9%
to 62.9%

43%

42%
43%

Profit after tax
$622M

Staff
12,91938%

Assets$56B

Business Outcomes• Won the Personal Investor Home Loan Bankof the Year for 1999 and runner-up Bank of
the Year following wins in 1997 and 1998
• Gained further market share in housing
lending both organically and throughacquisition of the home loan book of thePrimary Industry Bank of Australia• Opened new look branches with dedicatedspace for Premier customers following a
successful pilot in Tasmania• Launched Internet Banking in April 1999;
more than 100,000 customers have registered• Strong sales growth reflecting the
introduction of sales incentive scheme forfront line staff
12

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Share of Housing Lending
%
14

13

12

11

10
94

95

96

97

98

99

Share of Credit Card Purchases
%
30

25

20

ANZ customer enjoying the benefits of Internet Banking
15
94• $3 billion funds under management in the
Gateway Investment Program with four outof five investment categories exceeding
benchmark returns• Retained cards market leadership position
with ANZ cards share of credit card
purchases up from 25% to 27%

95

96

97

98

99

ANZ Gateway
Funds Under Management
$M
3000

2000

• Announced a strategic alliance with
E*TRADE Australia in June to deliver online broking services to personal customers;
ANZ could take up to 40% shareholding in
E*TRADE Australia

1000

0
Feb
98

Jun

Sep

Jan

May

Sep
99

Objectives
Internet Banking Registrations• Build market position by providing
integrated personal financial services
particularly through growth in funds
management and insurance

’000
100

• Deliver differentiated service propositions• Build strong product businesses

50• Continue intense focus on cost management• Build a leading e-Commerce capability
0

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Oct
98

Jan

Apr

Jul

Oct
99

13

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Sarah McMahon,
Tony Evans, Adrienne
Sartori and Andrew
Lourie of Melbourne
Corporate

CORPORATE
building on a leading position
ANZ is the market leader in corporate banking
in Australia and New Zealand. Corporate
Financial Services serves 81,000 corporate
customers in Australia and New Zealand.
It includes Business Banking,ANZ Investment
Bank,ANZ Asset Finance,Asset Management
and Corporate e-Commerce.

Financial Outcomes• Profit rose from $472 million in 1998 to$550 million• The cost income ratio fell from 51.5%
to 47.3%

37%

Profit after tax
$550M

16%

Staff
4,802

45%

Assets$67B

Business Outcomes• Maintained leadership in Business Banking
market share and customer satisfaction while
increasing profitability and reducing risk
• Completed restructure of investmentbanking activities including closure of
London capital markets businesses to focus
on key domestic markets• Risk Magazine – ANZ equal first inAustralian Dollar Currency Options(worldwide)• Achieved significant efficiency improvements
in Esanda in Australia and UDC in New
Zealand by using technology to build on
leadership positions in auto finance• Created a new division to focus ANZ’sinvestment management business

14

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Objectives• Build on our strong position in thecorporate sector to grow fee-based services,
continue to reduce risk and improve returnon assets• Leverage leadership position in online
business to business e-Commerce andexploit new opportunities including
migration to web platforms• Deepen relationships with businesscustomers to include greater provision ofallied financial services such as
superannuation and personal banking
services to employees

ANZ won Best Bank inAustralia in 1999 Global
Finance Survey

Leading Business Bank
ANZ

$B

Next best competitor

Lending Assets

10

Customer
Satisfaction

X

/10

7.5

7.5

5.0

5
2.5
2.5
0

0
ANZ

No.2

ANZ

No.2

Re-engineering Reduces
Finance Company Costs%
3.0

Cost asset ratio

2.5

UDC – New Zealand

2.0

Esanda – Australia

1.5
1996

1997

1998

1999

Australian Risk Profile% of Lending Assets

ANZ Melbourne Dealing Room100

LOW RISKHIGH RISK

1996

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

1999

15

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INTERNATIONAL
simplify and focus

The International division provides financial
services including consumer finance, tradefinance, structured finance and foreign exchange
through ANZ’s international network in 33
countries outside Australia and New Zealandand the money centres of Europe and New
York. It includes services to high net worth
individuals through Grindlays Private Bank.
Financial Outcomes• Profit declined from $220 million in 1998
to $176 million• The fall in profit reflects higher non-accrualloans, reduced assets resulting from alower risk profile, and lower foreignexchange earnings• The cost income ratio increased from 51.4%
to 54.7%

16

12%

Profit after tax
$176M

27%

Staff
8,130

12%

Assets$18B

Business Outcomes• Reduced Asian exposures from
US$6.1 billion to US$5.6 billion• Won Best Foreign Bank in India in theBusiness Asia awards• Acquired a 10% stake in Panin Bank inIndonesia with an option to increase theholding to 28%• Acquired credit card operationin Indonesia• Took the first steps in simplifying
international network with the closure offive Latin American representative offices –services are now provided from ANZ
New York

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Key International Markets
Grindlays – Strong foreign bank position• Grindlays South Asia
• Grindlays Middle East
• Grindlays Private Bank
• More than 110 branches• 1–10% market share
Pacific – Leading
domestic position• South Pacific well covered• More than 30 branches• 20–60% market share

Asia – Future positions• South East Asia – target domestic positions• Indonesia, Philippines, Malaysia, Thailand• Network Money Centre Points• Japan, Korea, Singapore, Hong Kong
• Maintain for future growth• China, Vietnam, Taiwan

Distribution of Business 1999
Assets

Mukta Bhatia,
ANZ Grindlays India

Objectives

Profit After Tax

Grindlays
South
Asia

25%

Grindlays
Middle
East

20%

*UK/
Europe22%

Asia
Pacific

35%

19%

13%

33%

33%

*Includes Grindlays Private Bank and structured finance• Simplify and focus the international networkby targeting fewer countries but building astronger presence in those countries• Continue to reduce the risk of activities
undertaken by rebalancing the business mix
towards consumers and maintaining strong
lending policies• Create future growth options, only where it
creates a desired position and can be managed

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED17

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TECHNOLOGY e-COMMERCE & PAYMENTS
building competitive advantage through technology

This division oversees technology ande-Commerce strategy, policy andinfrastructure and manages thepayments business.
Business Outcomes• Developed a completely new, high capacity
e-Commerce platform including servers,
firewalls and networks• Launched a world class internet banking
system for Australia in April and New
Zealand in September• Web-enabled a large portion of ANZ’s
workforce via network upgrades anddesktop deployment of Windows NT. This
project continues• Converted our New Zealand businessto ANZ’s Tasman platform enabling
New Zealand transactions to be processedin Australia
18• Implemented the Commercial Banking
System,ANZ’s standard technology
platform for its international network, inIndia and Sri Lanka. CBS now operates in
15 countries with Pakistan to be completed
this financial year
• Converted Town & Country business to
ANZ banking platforms• Implemented systems changes to support
the Euro, the single European currency,across 37 countries
Objectives• Build a leading position in e-Commerce• Expand the range of offerings available
through the ANZ web site beyond
financial products• Move towards browser-based
front-end systems

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Year 2000 Preparations
Customer Deposits and AccountRecords are Safe

• Budgeted $183 million for total capital andoperating cost of the Year 2000 project forthe period until April 2000 and expect tocomplete the project within budget• Completed remediation and testing for all
ANZ’s buildings where necessary• Completed a major program of end-to-end
testing of ANZ products and services, bothwithin ANZ and with external parties suchas other banks, financial industry regulatorsand service providers• Revised business continuity plans to takeYear 2000 issues into accountProject teamestablished

1996

Systems,
equipment &buildings
inventory

1997

Repair andinternal testingof ANZ
applications• Established a process to minimise the impact
of system changes and new developments
on Year 2000 tested systems, while balancing
the need for business innovation to retain
competitiveness• Established a ‘Managing the Event’ team toco-ordinate ANZ’s activities during thetransition to 2000
• Introduced a systems change freeze during
the latter part of 1999 to protect the
integrity of all our systems• Communicated with customers to assure
them that ANZ is managing the issue andto provide information to assist in theirown preparations

Impact ofsystem changes
on Y2K tested
systems
minimised

1998

Major programof end-to-end
services andproduct testing

1999
Managing theevent team

Systemschange freeze

2000
Remediationof all criticalbuildings

Review of
key suppliers

Vicky Adorno,
Australian Call Centre

IT staff turnover reduced –a critical factor in projectdelivery.

IT staff turnover%Industry Benchmark

25
ANZ

20
15
10
5
0

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Jun
98

Sep

Jan
99

May

Sep

19

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BOARD of DIRECTORSMr C B Goode

Mr J McFarlane OBE

B Com (Hons) (Melb), MBA (Columbia
University, New York)

Chief Executive Officer.

ChairmanCompany Director.
Director since July 1991, appointed Chairman
August 1995. Chairman of Woodside
Petroleum Ltd. Director of CSR Limited,
Singapore Airlines Limited, Queensland
Investment Corporation and other companies.

Lives in Melbourne. Age 61.

MA, MBA, MSI, FRSA, FHKIB, FAIBF
Appointed Group Managing Director and Chief
Executive Officer in October 1997. Director ofAustralian Graduate School of Management
and The Financial Markets Foundation forChildren. Former Group Executive Director,
Standard Chartered plc (1993-1997), Head of
Citibank, United Kingdom (1990 - 1993),
Managing Director, Citicorp Investment Bank
Ltd (1987 - 1990), Director London Stock
Exchange (1989-1991).

Lives in Melbourne. Age 52.

Mr J K Ellis
MA (Oxon) FAICD, Hon FIE Aust,
FAusIMM, FTSE

Company Director.
Director since October 1995. Chairman of
Sandvik Australia Pty Ltd, Australia-JapanFoundation and Australian Minerals & Energy
Environment Foundation. Director of Aurora
Gold Limited and Pacifica Group Limited.
Chancellor of Monash University. Council
Member, Victorian College of the Arts.
Former Chairman, The Broken Hill Proprietary
Co Ltd, International Copper Association Ltd
and Board Member of the Museum ofContemporary Art.

Lives in Melbourne. Age 62.

Dr B W Scott AO
B Ec, MBA, DBA

Company Director.
Director since August 1985. Chairman ofManagement Frontiers Pty Ltd, W.D. Scott
International Development Consultants Pty
Ltd, Television Makers Pty Ltd and The
Foundation for Development Co-operation
Ltd. Chairman and Counsellor of theAustralian Simon University. Director of Air
Liquide Australia Ltd and the James N. Kirby
Foundation Ltd. Australian member of theBoard of Governors of the Asian Institute ofManagement and Chairman of the AustraliaKorea Foundation. Former Chairman of theAustralian Government’s Trade Development
Council (1984 - 1990). Former Federal
President, Institute of Directors in Australia(1982 - 1986).

Lives in Sydney. Age 64.

Mr C J Harper
CA (Scots)

Company Director.
Director since October 1976. Chairman of
CSL Ltd. Former General Manager and Chief
Executive of the merchant bank Australian
United Corporation Ltd (1968 - 1976) and sincethen a professional non-executive director.
Inaugural National Vice President of The
Australian Institute of Company Directors.

Lives in Melbourne. Age 68.
Retired September 1999.

20

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Dr R S Deane
PhD, B Com (Hons), FCA, FCIS, FNZIM

Company Director.
Director since September 1994. Chairman of
Telecom New Zealand Limited and TransAlta
New Zealand Limited. Inaugural Chairman of
New Zealand Seed Fund Management
Limited (Auckland UniServices Limited).
Director of Fletcher Challenge Limited,
Fletcher Challenge Industries Limited, IHC
Mortgages Ltd, The Centre for Independent
Studies Ltd and Institute of Policy Studies,
Victoria University, Wellington and Business
Roundtable. Formerly Chief Executive andManaging Director, Telecom New Zealand
Limited, Chief Executive, Electricity
Corporation of New Zealand Ltd, Chairman
State Services Commission, Alternate
Executive Director, International Monetary
Fund and Deputy Governor, Reserve Bank of
New Zealand.

Lives in Wellington, New Zealand.
Age 58.

Ms M A Jackson
Mr G K Toomey
B Com, FCPA, FCA, FCIS

Director, Qantas Airways Limited

Mr J C Dahlsen
LLB, MBA (Melb)

Solicitor and Company Director.
Director since May 1985. Consultant to andformer Partner of the legal firm Corrs
Chambers Westgarth. Chairman of
Woolworths Ltd and Melbourne Business
School Ltd, Director of Southern Cross
Broadcasting (Australia) Ltd, Mining Project
Investors Pty Ltd, The Smith Family and J. C.
Dahlsen Pty Ltd Group. Former Chairman of
The Herald and Weekly Times Ltd and Deputy
Chairman Myer Emporium Ltd.

Director since March 1998. Deputy Chief
Executive Officer of Qantas Airways Limited.
Director of a number of controlled entities aswell as holding a wide range of executive
responsibilities in the Qantas Group. Directorof Air Pacific Limited.

Lives in Sydney. Age 44.

MBA, B Econ, FCA

Company Director.
Director since March 1994. Chairman ofTransport Accident Commission (Victoria) and
the Playbox Theatre Company Pty Ltd andMalthouse Pty Ltd. Director of The Broken Hill
Proprietary Co Ltd, Pacific Dunlop Ltd, Qantas
Airways Ltd and other companies. Director of
The Brain Imaging Research Foundation.
Board Member of Howard Florey Institute ofExperimental Physiology and Medicine.

Lives in Melbourne. Age 46.

Lives in Melbourne. Age 64.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED21

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GROUP EXECUTIVEEXECUTIVE COMMITTEEJohn McFarlane
Chief Executive Officer

Peter MarriottPeter Hawkins

Roger DavisDavid Boyles

Chief Financial Officer

Personal Financial Services

Corporate Financial Services

Chief Information Officer

PERSONAL FINANCIAL SERVICES

Larry Crawford

Kathryn Fagg

Brian Hartzer

Greg Camm

Australasian Distribution

Banking Products

Cards

Mortgages

CORPORATE FINANCIAL SERVICESINTERNATIONAL

Bob Edgar

Grahame MillerPeter McMahon

Elmer Funke Kupper

Business Banking

Investment Banking

Asset FinanceInternational

CORPORATE CENTRE

22

Elizabeth Proust

Alison Watkins

Mark Lawrence

Corporate Affairs andHuman Resources

Strategy and
Brand Management

Risk Management

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RISK MANAGEMENT
The identification and management of risk is an
essential part of banking.
Risk management policies are approved by the Board with the Board Risk Management
Committee supervising implementation and adherence to policy.
RISKRESPONSE

Credit Risk

• Policy controls aimed at developing and maintaining a welldiversified credit portfolio are supervised by Board Risk
Management Committee.

The potential financial loss
resulting from the failure of acustomer to honour fully theterms of a loan or contract• Major lending decisions require sign-off from an
independent credit area as well as the business area.
The largest transactions require approval by the Credit
and Trading Risk Committee or Risk Management
Commitee.

Asian Exposure
US$B
15
11.5

10
6.1

5.6

5

• Rebalancing portfolio towards lower risk consumer credit.
• Main area of concern is international cross border
lending, particularly Asia – new lending guidelines
introduced, exposures reduced and focus now on trade,
multinational corporations and consumers. Domestically,
industry concentrations reduced.
Market Risk

Risk to earnings arising frommovements in interest andexchange rates and bond,equity and commodity prices• The Group Asset and Liability Committee oversees theGroup’s balance sheet risk – trading risk is monitored by
the Credit and Trading Risk Committee.
• Main area of concern was proprietary trading –London business exited, institutional stockbroking closed,
remaining activity in foreign exchange and derivatives ismainly customer related flow trading.

0

97

98

99

Market Risk
A$M
25

(Value at Risk–average)23

23
Equities

20
Interest
Foreign
Exchange

15
10
7

5
0

Operating Risk

Operating risk arises from thepotential breakdown of day-today processes

97

98

99

• Prime responsibility of Business Units is to ensurecompliance with policies, regulations and laws.
• The Operating Risk Executive Committee is responsiblefor development and oversight of operating risk policies.
• Main areas of concern are payments fraud andinternational.

Year 2000

Unique event which notwithstanding a $183 million
program may still adversely
impact the Bank

• ANZ has spent significant time and effort to ensure oursystems and processes will continue to operate as usual.
• Processes are in place to assess and minimise counterparty credit risks but losses are still possible.
• This is uncharted territory and there is therefore a small but
significant risk that issues outside our control may arise.

Detailed information on Risk Management is contained on pages 74 and 75 of the Financial Statements
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED23

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COMMUNITY INVOLVEMENT
Esanda is a major sponsor
of junior rugby clinics in
New South Wales andQueensland.

ANZ is strongly involved with thecommunities in which it operates through the
ANZ Staff Foundation, Foodbank, direct
donations and sponsorships.

Foodbank

ANZ Staff Foundation

Other Charitable Donations and• The ANZ Staff Foundation was relaunched
in July with a new logo and ANZ CEOJohn McFarlane as Patron.

Sponsorships• The Foundation is a charitable trust that isfunded by contributions made by ANZ and its
staff. Staff participation in community work
is co-ordinated through the Foundation.
• The Foundation donated a total of $150,000
to various groups including:24• ANZ is a major sponsor of Foodbank($150,000) which provides food for 18,000
people a day across Australia (see page 3).

• Other ANZ donations include:•$10,000 to the CFA Volunteer
Firefighter Appeal – ANZ branches alsocollected donations from the community•$10,000 to the Kosovo Appeal• ANZ sponsorships include:•

the Community Award Category of the
National Multicultural MarketingAwards organised by the Multicultural
Affairs Commission of NSW•

Youth At Risk Australia•

Wimmera Community Care (Victoria)•

LEPSH (South Australia)•

1999 Chinese New Year Festival•

Australian National Committee of
Refugee Women (NSW)•1999 Vietnamese New Year Festival•

Mandurah Job Link (Wetern Australia)

Political Donations•

Fusion Australia (Queensland)•

Devonfield Enterprises (Tasmania)• In Australia in the year to September 1999,
ANZ donated $100,000 to the Liberal Party,$30,000 to the Australian Labor Party and$20,000 to the National Party of Australia.

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1999 CONCISE FINANCIAL REPORTCONTENTS
10 Year Summary

26

Directors’ Report

27

Directors’ Meetings and Shareholdings

31

Profit and Loss

32

Balance Sheet

33

Statement of Cash Flows

34

Notes to the Concise Financial Statements

35

Directors’ Declaration

38

Auditors’ Report

39

Financial Highlights in Key Currencies

39

Exchange Rates

39

Shareholder Information

40

The 1999 Concise Financial Report has been derived from the Group’s
1999 Financial Statements.This concise Financial Report cannot be
expected to provide as full an understanding of the Group’s financial
performance, financial position and financing and investing activities as theGroup’s 1999 Financial Statements.
The Chief Financial Officer’s Review on pages 10 to 11 provides a
discussion and analysis of the financial statements.
1999 Financial Statements

A copy of the Group’s 1999 Financial Statements, including the independent
Auditors’ Report, is available to all shareholders, and will be sent toshareholders without charge upon request.The financial statements can berequested by telephone (Australia: 1800 11 33 99 , Overseas: 61 3 9667 7128) andby internet at investor.relations@anz.com or viewed directly on the Internet
at www.anz.com

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED25

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Ten Year Summary1

1999
$M

1998
$M

1997
$M

1996
$M

1995
$M

1994
$M

1993
$M

1992
$M

1991
$M

1990
$M

Net interest income

3,645

3,547

3,437

3,327

3,084

2,794

2,539

2,427

2,587

2,456

Other operating income
Operating expenses

2,321(3,294)

2,099(3,438)2,110(3,502)

1,839(3,397)

1,754(3,116)

1,793(3,001)

1,730(2,975)

1,990(3,199)1,964(3,035)

1,675(2,739)Operating profit before tax, debt
provision and abnormals
Debt provision
Income tax (expense) benefit
Outside equity interests

2,672
(510)
(676)
(6)

2,208
(487)
(537)
(9)

2,045
(400)
(466)
(8)

1,769
(175)
(469)
(9)

1,722
(237)
(442)
(10)

1,586
(388)
(388)
(7)

1,294
(637)
(190)
(7)

1,218
(2,127)
336
(5)

1,516
(1,062)
(184)
(4)

1,392
(796)
(183)
(1)

Operating profit (loss) after tax
before abnormals
Net abnormal (loss) profit

1,480
–

1,175
(69)

1,171
(147)

1,116
–

1,033
19

803
19

460
(213)

(578)
(1)

266
1

412
(191)

Operating profit (loss) after tax

1,480

1,106

1,024

1,116

1,052

822

247

(579)

267

221

149,007

149,720

138,241

127,604

112,587

103,874

103,045

101,138

98,21299,300Net Assets

9,429

8,391

6,993

6,336

5,747

5,504

5,133

4,591

5,018

4,323

Tier 1 capital ratio
Cost to income ratio2
Return on average ordinary equity3
Return on average assets3

7.9%
55.0%
17.2%
1.0%

7.2%
60.9%
14.6%
0.7%

6.6%
63.1%
14.8%
0.7%

6.7%
65.8%
18.3%
0.9%

6.6%
64.4%
17.9%
0.9%

6.8%
65.4%
15.6%
0.8%

5.9%
69.7%
5.0%
0.2%

4.8%
72.4%
-11.4%
-0.6%

6.0%
66.7%
5.8%
0.3%

5.1%
66.3%
5.4%
0.2%

Shareholder value - ordinary shares
Total return to shareholders(share price appreciation plus dividends)
Market capitalisation
Dividend
Franked portion– interim– finalClosing share price– high– low– 30 Sep

19.6%
16,045
56.0c
75%
80%
$12.45$8.58$10.25-15.6%

62.4%
17,017
48.0c
100%
100%
$11.58$7.10$11.2833.9%
10,687
42.0c
50%
100%
$7.28
$5.41
$7.23

52.4%
8,199
33.0c
0%
33%
$5.75
$3.55
$5.67

2.0%
5,293
25.0c
0%
0%
$5.68
$3.78
$3.91

47.2%
5,285
20.0c
0%
0%
$4.40
$2.53
$4.04

-19.6%

2.3%
3,904
20.0c
100%
100%
$4.20
$2.92
$3.83

-21.4%

13,885
52.0c
60%
60%
$11.88$8.45$9.02

Share information (per fully paid ordinary share)
Earnings before abnormals – basic
Earnings after abnormals – basic
Dividend payout ratio (before abnormals)
Net tangible assets

90.6c
90.6c
62.1%
$5.21

77.2c
72.6c
67.8%
$4.98

78.4c
68.6c
61.6%
$4.59

76.3c
76.3c
55.5%
$4.24

68.5c
69.9c
49.1%
$3.94

54.5c
55.9c
46.4%
$3.58

30.8c
13.5c
65.6%
$3.43

-60.1c-60.2c
n/a
$3.40

26.7c
26.9c
69.6%
$4.31

45.0c
24.2c
79.9%
$4.45

No. of fully paid ordinary shares issued (millions)
DRP issue price– interim– final1,565.4$10.95–

1,539.4$10.64$10.78

1,508.6
$9.77
$9.92

1,478.1
$5.59
$7.60

1,446.0
$4.40
$6.27

1,353.6
$3.78
$3.73

1,308.2
$3.42
$4.44

1,054.5
$3.58
$2.51

1,019.3
$3.42
$4.46

971.1
$4.35
$2.72

Other information
Points of representation
4
No. of employees (full time equivalents)
No. of shareholders

1,147
30,171
214,151

1,205
32,072
151,564

1,473
36,830132,450

1,744
39,721
121,847

1,881
39,240114,829

2,026
39,642
121,070

2,136
40,277
115,000

2,302
43,977
112,0362,367
46,261
101,188

2,431
48,182
92,606

Profit and loss

Balance Sheet
Assets

3,037
20.0c
100%
0%
$4.88
$2.87
$2.88

3,884
38.0c
100%
100%
$6.38
$3.95
$4.00

From 1997, the annual debt provision charge has been calculated based on economic loss provisioning; prior year data has not been restated for this change in measurement approach
Before goodwill amortisation of $10 million and abnormals. Prior year amounts of goodwill amortisation were immaterial
3 After abnormals
4 Prior to 1997 excludes temporary staff
1
2

26

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D i r Nexte c t Backors’ Report

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The directors present their report for the year ended
30 September 1999. The information is provided inconformity with the Corporations Law.
Principal Activities
The principal activities of the Group during the year
were general banking, mortgage and instalment lending,life insurance, leasing, hire purchase and general finance,international and investment banking, investment andportfolio management and advisory services, nominee
and custodian services, stockbroking and executor andtrustee services.
There has been no significant change in the nature of theprincipal activities of the Group during the financial year,
other than the closing of London capital markets operations
and institutional stockbroking in October 1998.

State of Affairs
In the directors’ opinion, there have been no significant
changes in the state of affairs of the Group during thefinancial year, other than:l

Net loans and advances increased by 10% from$94,457 million to $104,063 million, primarily fromgrowth in mortgage lending and commercial lending
in Australia and New Zealand.

lDeposits and other borrowings increased by 2% from$94,599 million to $96,559 million.

l

The charge for doubtful debts has been determinedusing economic loss provisioning and is based on theGroup’s risk management models. The economic loss
provision increased from $487 million to $510 million,
reflecting asset growth offset by an improved risk
profile. Net specific provisions were $482 million.
Gross non–accrual loans decreased to $1,543 million,
or 1.5% of net loans and advances.

l

On 19 November 1998 the Company issued
56,016,000 fully paid non–converting,non–cumulative preference shares for US$6.25 pershare. A further 4,000,000 preference shares were
issued on 24 November 1998 for US$6.25 per share.
The issues of preference shares were for generalbanking purposes. These issues further strengthened
the Group’s capital base.

l

The Group has announced that it plans to issue a new
tracking stock equity instrument in New Zealand in
the first quarter of 2000.

At 30 September 1999, the Group had 1,147 pointsof representation.
ResultConsolidated operating profit after income tax andabnormal items attributable to members of the Company
was $1,480 million. Further details are contained in the
Chief Executive Officer’s Review and the Chief Financial
Officer’s Review commencing on pages 8 and 10
respectively of the 1999 Annual Report and these pages
are incorporated in and form part of this report.
Dividends
The directors propose payment of a final dividend of
30 cents per ordinary fully paid share, partially franked to80%, to be formally declared on 22 November 1999 andto be paid on 20 December 1999. The proposed payment
amounts to $470 million.
During the financial year, the following dividends were
paid on fully paid ordinary shares (final dividend: partiallyfranked to 60%; interim dividend: partially franked to 75%):
Type

Final
InterimCents pershare

Amount before
bonus option
$m

28
26

431
404

Date ofpayment

21 December 1998
5 July 1999

The final dividend for the year ended 30 September 1998
was paid on 21 December 1998 and detailed in the
Directors’ Report dated 9 November 1998.

While the above matters are those considered to besignificant changes, reviews of matters affecting theGroup’s state of affairs are also contained in the
Chairman’s Report, the Chief Executive Officer’s
Review and the Chief Financial Officer’s Review.
Events since the End of the Financial Year
On 3 November 1999 the Group announced its
intention to undertake an on market ordinary sharebuyback of up to $500 million. Other than this, nomatter or circumstance has arisen between 30 September
1999 and the date of this report that has significantly
affected or may significantly affect the operations of theGroup in future financial years, the results of those
operations or the state of affairs of the Group in
future years.

Review of Operations
A review of the operations of the Group during thefinancial year and the results of those operations arecontained in the Chairman’s Report, Chief Executive
Officer’s Review and the Chief Financial Officer’s
Review, which are incorporated in and form part ofthis report.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Future Developments
Details of likely developments in the operations of theGroup in future financial years are contained in the
Chairman’s Report and the Chief Executive Officer’s
Review. In the opinion of the directors, disclosure of
any further information would be likely to result in
unreasonable prejudice to the Group.
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Directors’ Report
Rounding of Amounts
The Company is a company of the kind referred to in theAustralian Securities and Investments Commission classorder 98/100 dated 10 July 1998 pursuant to section
341(1) of the Corporations Law. As a result, amounts inthis report and the accompanying financial statements havebeen rounded to the nearest million dollars except whereotherwise indicated.
Shareholdings
The directors’ interests, beneficial and non–beneficial, inthe shares of the Company are detailed on page 31 of the1999 Annual Report and this table is incorporated in andforms part of this report.
Share Options
Details of share options granted to directors, senior
executives and officers, and unissued shares under option,
are shown under Directors’ and Executive Officers’
Emoluments in this report, and in note 42 of the
Financial Statements.
No person entitled to exercise any option has or had, by
virtue of an option, a right to participate in any share issueof any other body corporate.
The names of all persons who currently hold options
granted under the schemes are entered in the register kept
by the Company pursuant to section 170 of the
Corporations Law and the register may be inspected
free of charge.
Directors, Qualifications and Experience
The Board includes seven non–executive directors who
have a diversity of business and community experienceand one director with executive responsibilities who has
extensive banking experience. The names, qualifications
and experience of the directors who are in office at thedate of this report are contained on pages 20 and 21 of the1999 Annual Report and those pages are incorporated inand form part of this report.
Colin James Harper and John Francis Ries retired as
directors on 30 September 1999 and 18 December 1998
respectively, having held office since before thecommencement of the financial year.
Special responsibilities and attendance at meetings, areshown on page 31.
Directors’ and Executive Officers’ Emoluments
The Human Resources Committee (the Committee) of
the Board assists the Board in its oversight of major
policies and guidelines relating to the management of
human resources.

The Committee’s responsibilities include the review of
all proposed remuneration and profit sharing programs.
The Committee recommends these programs to theBoard for approval and monitors their ongoing operation.
It also reviews and approves all personnel entitlements
for senior executives, approving the same or, in the caseof Board appointees, making remuneration
recommendations to the Board. The Executive Director
does not participate in discussions and decisions relating
to his own remuneration.
The Committee does not set fees for the Chairman orother non–executive directors. These are based on advice
received from external advisors and approved by the
Board. Non–executive directors’ fees are within the limit
set by shareholders at the Annual General Meeting of
21 January 1998, and are set at levels which fairly represent
the responsibilities of and time spent by the non–executive
directors on Group matters. Regard is also had to thelevel of fees payable to non–executive directors incomparable companies.
The Group’s remuneration policy is to ensure that
remuneration packages properly reflect the duties andresponsibilities of the senior executives and are sufficient to
attract, retain and motivate personnel of the requisite quality.
Remuneration packages are structured in such a way thata significant part of the individual’s reward depends upon
the achievement of business objectives and the profitabilityof the Group as measured by the Economic Value
AddedTM Methodology.
All senior executives have performance objectives
including the achievement of key strategic milestones andoperating performance targets. These objectives are agreed
at the beginning of the year. Performance bonus payments
are contingent on the achievement of agreed performancegoals, assessed through the annual performance
management process.
Two thirds of the performance related bonus of senior
executives other than the Executive Director is paid asdeferred shares in the Company, with half of these sharesdeferred a minimum of twelve months and half deferred
for a minimum of three years. The issue price of deferredshares is based on the average closing price of theCompany’s shares during the five trading days prior to therelevant Board meeting.
Deferred shares are held in trust and vest with the senior
executive after the relevant period. If the senior executive
leaves or is dismissed during that period, the sharesare forfeited.
Details of the emoluments of each director and of the five
most highly paid officers for the Group and the Company
are shown on page 29.

The Committee consists of the executive andnon–executive directors shown in the table on page 31.

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Directors’ Report
Amounts in $

Base
fee

Subsidiary
Board

Committee
fee

Retiring
allowance

Superannuation
contributions

Total

300,000

–

–

–

6,960

306,960

85,000–10,000–6,650

101,650

85,00059,533

–

–

4,741

149,274

85,000

–

–

–

5,950

90,95085,000–10,000269,000

8,312

372,31285,0002,500

10,000–6,885

104,385

85,00010,00010,000–5,194

110,194

Non executive directors

C B Goode (Chairman)J C Dahlsen
R S Deane
J K Ellis
C J Harper1
M A Jackson
B W Scott
G K Toomey
185,000

–

–

–

4,741

89,741

895,000

72,03340,000269,000

49,433

1,325,466

Retired 30 September 1999

Salaryor fees$

Performance
relatedbonus (cashcomponent)
$

Other
$

Total
cash
and otherbenefits$

Deferredshares(number
issued)Deferredshares(value on
issue)$

Benefits1$

J McFarlane (Executive director)

1,431,750

433,333–

68,250–1,933,333

87,1892

866,6672

D L Boyles

592,211200,000

28,21429,575–850,000

40,2413400,0003

250,000

19,69331,850–950,000

3

P J O Hawkins

648,457

50,301500,0003

P R Marriott

577,976

175,000

2,700

27,680–783,356

35,2113350,0003

522,275

175,000

2,700

25,025–725,000

35,2113350,0003

J F Ries4 (Executive director)

154,970

–

1,412

7,455

1,301,286

1,465,123––

C Carbonaro

382,539

375,000

23,451

19,353

264,892

1,065,235––

Superannuation
contributions$

Executive Management Committee

Other disclosable executive

L Crawford
Former executives

5

1
2

3

4

5

Benefits include the provision of housing, cars and parking, private health insurance and subsidised loans
Two thirds of the performance related bonus will be paid as deferred shares, subject to approval at the Annual General Meeting. These shares are deferred for aminimum of twelve months
Two thirds of the performance related bonus of senior executives other than the Executive Director is paid as deferred shares in the Company with half ofthese shares deferred for a minimum of twelve months, and half deferred for a minimum of three years. The shares are forfeitable upon the recipient leaving
the Group within the relevant period for reasons other than retirement, retrenchment, death or disablement
Retired 18 December 1998, final payment included payment under contract ($650,000), annual leave and long service leave payout ($458,681), retirement
allowance ($192,605)
Retired 10 September 1999

Options issued to disclosable executives during 1999
Number issued
Series 21
Series 11Name
D L Boyles
C Carbonaro
L Crawford
P J O Hawkins
P R Marriott
1
2

50,000100,000
100,000
100,000
75,000250,000–
200,000
300,000
250,000

Exercise price
Series 1
Series 2
$
$
8.97
8.97
8.97
8.97
8.97

11.20
–
11.20
11.20
11.20

Estimated value
Series 1
Series 2$$

Total2$47,27394,547
94,547
94,54770,910380,461
94,547361,097494,372
404,098

333,188–266,550
399,825
333,188

Series 1 was issued 28 October 1998. Series 2 was issued 2 June 1999
All options expire 5 years from the date of issue. These options can be exercised between 3 - 5 years from the date of the issue. Each option entitles theholder to purchase one ordinary share in the Company. The options may only be exercised if certain performance conditions are met. The estimated value
disclosed above is calculated using a modified Black - Scholes model

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED29

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Directors’ Report
Directors’ and Officers’ Indemnity
The Company’s Constitution (Rule 143) permits theCompany to indemnify each officer of the Company
against certain liabilities (other than a liability to theCompany or a related body corporate) incurred in theexecution and discharge of the officer’s duties.
The Company is not permitted to indemnify officers in
respect of liability arising from conduct involving a lack ofgood faith or for costs and expenses incurred in defending
proceedings (unless the officer ultimately is successful inthose proceedings). The Company’s ability to indemnify
extends to all officers and employees, including directors,
secretaries (namely, P R Marriott, P J Mathews,
K K Phillips and J L Slatter) and executive officers.
During the financial year, and again since the end of thefinancial year, the Company has paid a premium for an
insurance policy for the benefit of the directors, secretaries(as named above), and executive officers of the Company,and directors, secretaries and executive officers of relatedbodies corporate of the Company. In accordance with
common commercial practice, the insurance policy
prohibits disclosure of the nature of the liability insured
against and the amount of the premium.
The Company has indemnified the trustees and former
trustees of certain of the Company’s superannuation funds
and directors, former directors, officers and former officersof trustees of various Company sponsored superannuation
schemes in Australia. Under the relevant Deeds ofIndemnity, the Company must indemnify each indemnified
person if the assets of the relevant fund are insufficient tocover any loss, damage, liability or cost incurred by theindemnified person in connection with the fund, being
loss, damage, liability or costs for which the indemnified
person would have been entitled to be indemnified out of
the assets of the fund in accordance with the trust deed
and the Superannuation Industry (Supervision) Act 1993.
This indemnity survives the termination of the fund.
Some of the indemnified persons are or were directors or
executive officers of the Company.

The Company has also indemnified officers of theCompany, being trustees and administrators of a subsidiary
entity, being a trust, from and against any loss, damage,liability, tax, penalty, expense or claim of any kind or
nature arising out of or in connection with the creation,
operation or dissolution of the trust, where they are acting
in good faith and in a manner that they reasonably
believed to be within the scope of the authority conferredby the trust.
It is the Company’s policy that its employees should
not incur any liability for acting in the course of
their employment.
Under the policy, the Company will indemnify employees
against any liability they incur in carrying out their role
unless the claim is by the Company or a related body
corporate. The indemnity protects employees who incura liability when acting as an employee, trustee or officer of
the Company, a subsidiary of the Company or anothercompany at the request of the Company.
The indemnity is subject to the provisions of the law andwill not apply in respect of any liability arising from:la claim by the Company;la lack of good faith;lillegal or dishonest conduct; orlnon compliance with Company policies or discretions.

Except for the above, during the financial year and since
the end of it, no person has been indemnified nor has theCompany or a related body corporate of the Company
made an agreement to indemnify any person who is or
has been an officer or auditor of the Company or of a
related body corporate.

Signed in accordance with a resolution of the directors.

Charles GoodeJohn McFarlane

Chairman

Chief Executive Officer

8 November 1999
30

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Directors’ Meetings
The number of Board meetings and meetings of Committees during the year, and the number of meetings attended byeach director wereC B GoodeJ C Dahlsen
R S Deane1
J K Ellis
C J Harper2
M A Jackson
J McFarlane
J F Ries3
B W Scott
G K Toomey

Audit,
Risk
ComplianceManagement & Finance
A
B
A
B

Human
Resources
A
B

Strategic
IssuesA
B

Nominations Executive
Committee Committee
A
B
A
B

SharesCommittee
A
B

Committeeof the
Board
A
B

A

Board
B

11

11

11

11

8

8

8

8

5

4

1

1

6

6

15

15

7

7

11

11

–

–

8

8

–

–

5

4

–

–

2

2

3

3

1

1

11

10

11

10

–

–

–

–

5

4

–

–

1

1

–

–

–

–

11

11

11

10

–

–

8

8

–

–

–

–

1

1

1

1

–

–

11

11

11

10

–

–

8

8

–

–

1

1

4

4

8

8

2

2

11

11

–

–

8

7

–

–

5

5

–

–

3

3

2

2

2

2

11

11

11

10

8

7

8

8

5

5

1

1

7

7

3

3

8

8
–

2

2

2

2

–

–

–

–

–

–

–

–

2

2

–

–

–

11

11

–

–

8

8

8

8

–

–

1

1

–

–

2

2

1

1

11

11

11

8

–

–

8

8

–

–

–

–

–

–

1

1

–

–

Column A - Indicates the number of meetings the director was eligible to attend
Column B - Indicates the number of meetings attended. In addition, there were Committee meetings which were attended by those directors necessary andavailable to meet quorum requirements: Executive Committee of the Board - 7 times, Committee of the Board - 10 times, Shares Committee - 18 times,
Donations Committee - once (C B Goode and J McFarlane). The Chairman is an ex-officio member of all Board Committees
1 Resident of New Zealand
2 Retired as a Director on 30 September 1999
3 Retired as a Director on 18 December 1998

Major Committees
Audit, Compliance & Finance (Chairman - J C Dahlsen) reviews the Group’s accounting policies and practices; reviews
financial statements, due diligence processes in relation to capital raisings and compliance with the Group’s statutory
responsibilities; monitors compliance with approved policies and controls; approves audit plans and the audit fee of theexternal auditor.
Risk Management (Chairman - J K Ellis) oversees all aspects of risk management; approves the delegation policies,
standards and reporting mechanisms for credit risk, market risk, balance sheet risk and operating risk (see page 23).
Human Resources (Chairman - B W Scott) oversees human resources policies and guidelines including remuneration
schemes, industrial relations strategies, staff development programs, and assessment of senior executives.
Strategic Issues (Chairman - M A Jackson) oversees proposed acquisitions, divestments and joint ventures; monitors the
progress of major projects.

Directors’ Shareholding Interests
Beneficially held

Non-beneficially held
SharesShares

OptionsC B GoodeJ C Dahlsen
R S Deane
J K Ellis
C J Harper1
M A Jackson
J McFarlane
J F Ries3
B W Scott
G K Toomey

161,190–

133,174

83,400–12,00075,000––53,911––55,500

–

–

Total
1
2
3
4

78,391––

302,000

1,000,0002–

164,243

210,7104–

55,403

–

–

2,148

–

–

1,031,186

1,210,710

145,174Retired as a Director on 30 September 1999
500,000 options exercisable at $12.12 after 1 February 2000; 500,000 options exercisable at $11.40 after 1 June 2001
Retired as a Director on 18 December 1998
10,710 options exercisable at $8.76; 100,000 options exercisable at $10.65; 100,000 options exercisable at $11.40; all options are exercisable by
30 December 1999
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED31

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Australia and New Zealand Banking Group Limited and Controlled Entities
Profit and Loss Account for the year ended 30 September 1999

Note

Interest income
Interest expense
Net interest income
Other operating income
Operating income
Operating expenses

1999
$M

Consolidated
1998
$M

1997
$M

8,674

9,499

9,455

(5,029)(5,952)(6,018)

3,645

3,547

3,437

2,321

2,099

2,110

5,966

5,646

5,547

(3,294)(3,438)(3,502)

Operating profit before debt provision and abnormal items
Provision for doubtful debts

2,672

2,208

2,045

(510)

(487)

(400)

Operating profit before abnormal items
Abnormal loss

2,162

1,721

1,645

–

(102)

(182)

2,162

1,619

1,463

(676)

(537)

(466)

–

33

35

Income tax expense

(676)

(504)

(431)

Operating profit after income tax
Outside equity interests

1,486

1,115

1,032

(6)

(9)

(8)

Operating profit after income tax
attributable to members of the Company

1,480

1,106

1,024

Retained profits at start of year

2,412

1,830

1,583

Total available for appropriation
Transfers (to) from reserves
Ordinary share dividends provided for or paid
Preference share dividends paid

3,892

2,936

2,607

2

Operating profit before income tax
Income tax (expense) benefit
Operating profit
Abnormal loss

Retained profits at end of year

2

(54)

223

(82)

3

(814)

(747)

(695)

3

(72)

–

–

2,952

2,412

1,830

90.6

77.2

78.4

90.6

72.6

68.6

90.3

76.9

78.2

90.3

72.4

68.4

Earnings per ordinary share (cents)
Basic

Before abnormal items
After abnormal items
Diluted

Before abnormal items
After abnormal items

32

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Australia and New Zealand Banking Group Limited and Controlled Entities
Balance Sheet as at 30 September 1999
Consolidated
Note

1999
$M

1998
$M

5,283

7,527

3,472

4,158

4,259

5,973

AssetsLiquid assets
Due from other financial institutions
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Regulatory deposits
Shares in associates
Other assets
Premises and equipment
Total assets

4,695

3,979

104,063

94,457

14,85815,648

616

1,530

32

11

10,305

14,864

1,424

1,573

149,007

149,720

Liabilities

Due to other financial institutions
Deposits and other borrowings
Liability for acceptances
Income tax liability
Creditors and other liabilities
Provisions
Bonds and notes
Loan capital
Total liabilities
Net assets

9,001

10,75896,55994,59914,85815,648

1,051

914

9,422

14,009

1,010

987

4,456

666

3,221

3,748

139,578

141,329

9,429

8,391

4,770

4,581

1,145

645

Shareholders’ equity

Ordinary share capitalPreference share capital
Reserves
Retained profits

4

536

697

2,952

2,412

Share capital and reserves attributable to members of the Company
Outside equity interests

9,403

8,335

26

56

Total shareholders’ equity and outside equity interests

9,429

8,391

Contingent liabilities

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED5

33

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Australia and New Zealand Banking Group Limited and Controlled Entities
Statement of Cash Flows for the year ended 30 September 1999
1999
$M

Consolidated
1998
$M

1997
$M

Inflows (Outflows)
Cash flows from operating activities

Interest received
Dividends received
Fees and other income received
Interest paid
Personnel expenses paid
Premises expenses paid
Other operating expenses paid
Income taxes paid
Net decrease in trading securities
Net cash provided by operating activities

8,679

9,403

157

169

9,389
327

2,089

1,797

1,664

(5,039)(6,238)(5,996)(1,840)(2,001)(2,155)

(282)

(291)

(315)

(977)

(1,085)

(759)

(535)

(423)

(426)

1,442

926

304

3,694

2,257

2,033

616

2,299

1,840

828

(308)

(14)

(12,936)(9,680)(8,029)(5,527)(5,490)(3,140)

4,670

5,279

2,803

(2)

(8)

(11)

–

–

41

(94)

–

–

(177)

(143)

(219)

142

75

47

(610)

1,483

1,389

(13,090)(6,493)(5,293)

Cash flows from investing activities

Net decrease (increase)
Due from other financial institutions
Regulatory deposits
Loans and advances
Investment securities
Purchases
Proceeds from sale or maturity
Controlled entities and associates
Purchased (net of cash acquired)Proceeds from sale (net of cash disposed)
Transferred from controlled entities to associates (net of cash)
Premises and equipment
Purchases
Proceeds from sale
Other
Net cash (used in) investing activities
Cash flows from financing activities

Net (decrease) increase
Due to other financial institutions
Deposits and other borrowings
Creditors and other liabilities
Bonds and notes
Issue proceeds
Redemptions
Loan capital
Issue proceeds
Redemptions
Decrease in outside equity interests
Dividends paid
Share capital issues

34

(779)

(2,047)(2,787)

5,202

2,131

7,861

743

(288)

425

4,330

802

973

(479)

(2,174)(1,434)

–

559

323

(256)

(273)

(851)

(1)

(3)

(3)

(671)

(491)

(478)

591

714

39

Net cash provided by (used in) financing activities

8,680(1,070)4,068

Net cash provided by operating activities
Net cash (used in) investing activities
Net cash provided by (used in) financing activities

3,694

2,257

2,033

(13,090)(6,493)(5,293)8,680(1,070)4,068

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign currency translation on opening balances(716)(5,306)

808

8,981

12,456

11,246(1,631)

1,831

402

Cash and cash equivalents at end of year

6,634

8,981

12,456

1999 ANNUAL REPORTME43515 AR_99_Inside.FA 16/11/99 12:57 PM Page 35

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Notes to the Concise Financial Statements
1: Accounting Policies

Change in Accounting Policy

This concise financial report has been derived from theGroup’s 1999 Financial Statements which comply with the
Corporations Law, Australian Accounting Standards, Urgent
Issues Group Consensus Views and other authoritative
pronouncements of the Australian Accounting Standards
Board. A full description of the accounting policies adopted
by the Group is provided in the 1999 Financial Statements.
The accounting policies are consistent with those of theprevious financial year except for the change disclosed.

Effective 1 October 1998, costs incurred in developing,acquiring and enhancing application software are capitalised
and amortised over the estimated useful life which generally
ranges from 3 to 5 years. The Group previously expensed
these costs. The change results from adoption of the US
Statement of Position 98-1 “Accounting for the Costs ofComputer Software Developed or Obtained for Internal Use”.
The impact on the profit and loss after tax for the year
ended 30 September 1999 is $39 million.

1999
$M

Consolidated
1998
$M

1997
$M

2: Abnormal Items
Profit before tax
Interest on National Housing Bank deposit(Loss) before tax
Restructuring costs
Costs of exiting businesses

–

–

145

–
–

–
(102)

(327)
–

Total abnormal loss before tax

–

(102)

(182)

Income tax (expense) benefit applicable toInterest on National Housing Bank deposit
Restructuring costs
Costs of exiting businesses

–
–
–

–
–
33

(80)
115
–

Total abnormal tax benefit

–

33

35

Total abnormal loss after tax

–

(69)

(147)

Ordinary dividends
Interim dividend
Proposed final dividend
Bonus option plan adjustment

404
470
(60)

366
431
(50)

329
392
(26)

Dividends on ordinary shares

814

747

695

3: Dividends

A final dividend of 30 cents, partially franked to 80%, is proposed to be paid on each fully paid ordinary share on 20 December 1999
(1998: final dividend of 28 cents, paid 21 December 1998, partially franked to 60%; 1997: final dividend of 26 cents, paid 21 January
1998, fully franked). The 1999 interim dividend of 26 cents, paid 5 July 1999, was partially franked to 75%, (1998: interim dividend of
24 cents, paid 6 July 1998, partially franked to 60%; 1997: interim dividend of 22 cents, paid 7 July 1997, fully franked). The unfranked
portion will be sourced from the Company’s foreign dividend account. As a result, non–resident shareholders will be exempt from
dividend withholding tax.
Preference dividends
Dividends on preference shares

72

–

–

The Company has issued 124,032,000 preference shares, raising US$775 million via Trust Securities issues. The Trust Securities carryan entitlement to a distribution of 8% (US$400 million) or 8.08% (US$375 million). The amounts are payable quarterly in arrears.
Shown above are amounts paid from the dates of issue (23 September 1998 and 19 November 1998) to 30 September 1999. Payment
dates are the fifteenth day of January, April, July and October.

Dividend Franking Account
The amount of franking credits available for the subsequent financial year is nil (1998: nil), after adjusting for franking credits thatwill arise from the payment of tax on Australian profits for the 1999 financial year, less franking credits which will be utilised infranking the proposed final dividend and franking credits that may not be accessable by the Company at present.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED35

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Notes to the Concise Financial Statements
4: Share Capital
On 19 November 1998, the Company issued 56,016,000
fully paid non-converting non-cumulative preference sharesfor US$6.25 per share, raising capital of US$350 million for
the Group via a Trust Securities issue.
On the 24 November 1998, the Company issued a further
4,000,000 fully paid non-converting non-cumulative
preference shares for US$6.25 per share raising capital of
US$25 million. These additional shares resulted from theexercise of an option by the underwriters.
The Trust Securities are mandatorily exchangeable for the
preference shares issued by the Company, and carry anentitlement to a non-cumulative trust distribution of 8.08%
per annum payable quarterly in arrears. The Trust
Securities were issued by a non diversified closed end
management investment company registered under the US
Investment Company Act of 1940. The preference shares
themselves carry no present entitlement to dividends.
Distributions to investors in the Trust Securities are funded
by income distributions made by the Group.

carry an entitlement to non-cumulative dividends of 8.08%
per annum payable quarterly in arrears. The mandatoryexchange of the Trust Securities for the preference shares may
occur earlier at the Company’s option or in specified
circumstances.
With the prior consent of the Australian Prudential
Regulation Authority, the preference shares are redeemable at
the Company’s option after 5 years, or within 5 years inlimited circumstances. The entitlement of investors to
distributions on the Trust Securities will cease on redemptionof the preference shares.
The condition of issue of these preference shares are the sameas those of the preference shares issued in September 1998,
however the distribution to Trust Securities holders is 8.08%
compared to 8%.
The transaction costs arising on the issue of these instruments
were recognised directly in equity as a reduction of theproceeds of the equity instruments to which the costs relate.

Upon maturity of the Trust Securities in 2048, investors
will mandatorily exchange the Trust Securities for the
preference shares and thereupon the preference shares will

5: Contingent Liabilities
GeneralThere are outstanding court proceedings, claims and possible ANZ has filed an appeal with the Supreme Court of India
claims against the Group, the aggregate amount of whichseeking that the Special Court’s order be set aside.
cannot readily be quantified. Where considered appropriate,
As the matter is sub judice, comment by the parties is limited.
legal advice has been obtained and, in the light of such
The Group has obtained legal advice from Senior Counsel
advice, provisions as deemed necessary have been made.
and based on that advice no provision has been made in
India – National Housing Bank
respect of the claim.
In 1992 the branch of ANZ Grindlays Bank Limited (theIndia – Foreign Exchange Regulation Act
Bank) in India received a claim, aggregating approximately
Indian Rupees 5.06 billion ($178 million at 30 September In 1991 certain amounts were transferred from nonconvertible Indian Rupee accounts maintained with ANZ
1999 rates) from the National Housing Bank (NHB) in
Grindlays Bank Limited (the Bank) in India. In making thesethat country. The claim arose out of certain chequestransactions it would appear that the provisions of the Foreign
drawn by NHB in favour of the Bank, the proceeds of
Exchange Regulation Act, 1973 were inadvertently notwhich were credited into the account of one of thecomplied with. The Bank, on its own initiative, brought thesecustomers of the Bank.
transactions to the attention of the Reserve Bank of India.
On 29 March 1997, pursuant to an Arbitration Agreement
entered into on 4 November 1992, the Arbitrators made an The Indian authorities have served preliminary notices on theaward on this dispute in favour of the Bank. NHB paid to Bank and certain of its officers in India which could lead toprosecutions and possible penalties. The Bank is contesting
the Bank the principal and interest due under the award
through the courts in India, the validity of the notices that(aggregating Indian Rupees 9.05 billion ($318 million athave been served. Separate to these court proceedings,
30 September 1999 rates)).
adjudications in respect to two of the notices have been heard.
Subsequently, NHB had the award reviewed by the Special No decision has been given in respect of these adjudications.
Court (Trial of Offences Relating to Transactions in
ANZ considers that the outcome will have no material
Securities) at Mumbai, which on 4 February 1998 ordered adverse effect on the September 1999 financial statements.
that the award be set aside.

36

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Notes to the Concise Financial Statements
6: Segment Analysis
The Group for management purposes is organised on an industry basis into three major operating divisions being
Personal Financial Services, Corporate Financial Services and International. Group (including discontinued businesses)
includes the results of asset and liability management, earnings on central capital and results of discontinued businesses.
Each industry segment is identified by the type of products and services it provides to various customers. A descriptionof each of the operating divisions, including the types of products and services the division provides to customers, isprovided in the Financial Statements.

Industry Segment Analysis1

Group(including
discontinued
International businesses)$M$M

Personal
Financial
Services$M

Corporate
Financial
Services$M

Total income

4,697

4,068

1,871

359

10,995

Net interest income
Other operating income

1,861
954

956
903

569
384

259
80

3,645
2,321

Operating income

2,815

1,859

953

339

5,966

Depreciation/amortisation
Other expenses
Income tax and outside equity interests(44)(1,844)

(305)

(31)
(1,071)
(207)

(31)
(644)
(102)

(89)
(50)
(68)

(195)
(3,609)(682)

Operating profit before abnormals

622

550

176

132

1,480

–

–

–

–

–

622

550

176

132

1,480

AssetsIncome tax assets

55,701
214

66,723462

17,859
219

7,517
312

147,800
1,207

Total assets

55,91567,185

18,0787,829

149,007

Liabilities
Income tax liabilities

35,083
185

58,493463

20,935241

24,016
162

138,527
1,051

Total liabilities

35,26858,956

21,17624,178

139,578

Industry Segment Analysis1
Consolidated
30 September 1998

Personal
Financial
Services$M

Corporate
Financial
Services$M

International
$M

Group
(including
discontinued
businesses)$M

Consolidated
Total
$M

Total income (includes abnormals)

4,739

3,856

2,145

788

11,528Net interest income
Other operating income

1,808
825

900
886

597
440

242
(52)

3,547
2,099

Operating income

2,633

1,786

1,037

190

5,646

Depreciation/amortisation
Other expenses
Income tax and outside equity interests(48)(1,895)(224)(24)(1,113)
(177)

(30)
(658)
(129)

(89)
(68)
(16)

(191)
(3,734)(546)

Operating profit before abnormals

466

472

220

17

1,175

Consolidated
30 September 1999

Net abnormals
Operating profit after income tax

Net abnormals

Consolidated
Total
$M

–

–

–

(69)

(69)

466

472

220

(52)

1,106

AssetsIncome tax assets

47,040189

70,222496

19,070162

12,218323

148,550
1,170

Total assets

47,22970,71819,232

12,541

149,720

Liabilities
Income tax liabilities

36,835101

64,913479

23,361
253

15,30681

140,415914

Total liabilities

36,93665,392

23,614

15,387

141,329

Operating profit after income tax

1

Results are equity standardised

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED37

ME43515 AR_99_Inside.FA 16/11/99 12:57 PM Page 38

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Notes to the Concise Financial Statements
6: Segment Analysis$M%

Consolidated
1998
$M
%

6,802
1,625
620
620
585
348
395

62
15
6
6
5
3
3

6,403
2,008
800
868
572
419
458

56
17
7
7
5
4
4

6,390
1,917
1,163
863
655
362
360

55
16
10
7
6
3
3

10,995100

11,528100

11,710100

Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

1,042
200
39
59
61
46
33

70
14
3
4
4
3
2

819
167
(59)
100
72
36
40

70
14
(5)
9
6
3
3

687
123
105
97
84
24
51

59
11
9
8
7
2
4

1,480
–

100

1,175
(69)

100

1,171
(147)

100

Abnormal loss

1999

Geographic Segment Analysis

1997
$M

%

IncomeAustralia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

Operating profit after income tax

1,480

1,106

1,024

Total assets

Australia
New Zealand
UK and Europe
Asia PacificSouth Asia
AmericasMiddle East

103,757
19,730
6,426
5,934
4,471
4,988
3,701

70
13
4
4
3
3
3

94,194
20,15513,803
7,104
5,008
4,919
4,537

63
14
9
5
3
3
3

80,321
18,831
16,886
9,844
3,959
4,611
3,789

58
14
12
7
3
3
3

149,007100

149,720100

138,241100

7: Events Since the End of the Financial Year
On 3 November 1999 the Group announced its intention to undertake an on market ordinary share buyback of up to$500 million. Other than this, there have been no significant events since 30 September 1999 to the date of this report.

Directors' Declaration
The directors of Australia and New Zealand Banking
Group Limited declare that the accompanying concise
financial report of the consolidated Group is fairly
presented as an abbreviation of the Group’s
30 September 1999 Financial Statements and complies
with Australian Accounting Standard AASB 1039
“Concise Financial Reports”.
In our report on the Group’s 1999 Financial Statements
we declared that(a) the financial statements and notes comply with the
Corporations Law, including(i) complying with applicable Australian AccountingStandards and other mandatory professional
reporting requirements; and(ii) giving a true and fair view of the financial
position of the Company and of theconsolidated Group and of their performance as
represented by the results of their operations andtheir cash flows; and(b) in the directors’ opinion at the date of thisdeclaration there are reasonable grounds to believethat the Company and consolidated Group will beable to pay its debts as and when they become dueand payable.
Signed in accordance with a resolution of the directors

Charles Goode
Chairman38

8 November 1999

John McFarlane
Chief Executive Officer
1999 ANNUAL REPORTME43515 AR_99_Inside.FA 16/11/99 12:57 PM Page 39

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Auditors' Report
To the members of Australia and New
Zealand Banking Group Limited

discussion and analysis, and other disclosures which were notdirectly derived from the full financial report. These procedures
have been undertaken to form an opinion whether, in all
Scopematerial respects, the concise financial report is presented fairly
We have audited the concise financial report of Australia andin accordance with Accounting Standard AASB 1039 “Concise
New Zealand Banking Group Limited and its controlled entities Financial Reports”.
for the financial year ended 30 September 1999 as set out on
The audit opinion in this report has been formed on thepages 10 to 11, and pages 32 to 38 in order to express an opinion
above basis.
on it to the members of the company. The company’s directors
are responsible for the concise financial report.
Audit Opinion
Our audit has been conducted in accordance with Australian
In our opinion the concise financial report of Australia and
Auditing Standards to provide reasonable assurance whether the
New Zealand Banking Group Limited and its controlled entities
concise financial report is free of material misstatement. We have for the year ended 30 September 1999 complies with AASB 1039
also performed an independent audit of the full financial report“Concise Financial Reports”.
of Australia and New Zealand Banking Group Limited and its
controlled entities for the year ended 30 September 1999.
Our audit report on the full financial report was signed on
8 November 1999, and was not subject to any qualification.
KPMG
P S Nash
Our procedures in respect of the audit of the concise financial
Partner
Chartered
Accountants
report included testing that the information in the concise
financial report is consistent with the full financial report andMelbourne
examination, on a test basis, of evidence supporting the amounts,
8 November 1999

Financial Highlights in Key Currencies
1999
AUD

Millions

1999
USD1

1999
GBP1

1999
NZD1

Profit and loss

Net income
Operating expenses

5,966

3,820

2,346

7,167

(3,294)(2,109)(1,295)(3,957)

Profit before tax and debt provision
Provision for doubtful debts

2,672

1,711

1,051

3,210

(510)

(326)

(201)

(613)

Profit before tax
Income tax expense
Outside equity interests

2,162

1,385

850

2,597

(676)

(433)

(266)

(812)

(6)

(4)

(2)

(7)

Profit after tax

1,480

948

582

1,778

149,007

97,34659,186

187,719

139,578

91,18655,440175,840

9,429

6,160

3,745

11,879

90.6c

58.0c

35.6p

108.8c

56.0c

35.9c

22.0p

67.3c

$5.21

$3.40

£2.07

$6.56

Balance Sheet

AssetsLiabilities
Shareholders’ equity2
Ratios - per ordinary share

Earnings per share - after abnormal items (basic)
Dividends per share - declared rate
Net tangible assets per share

USD, GBP and NZD amounts - profit and loss converted at average rates for financial year 30 September 1999 and balance sheet items at closing rates at
30 September 1999
2 Includes outside equity interests
1

Exchange Rates
The exchange rates used in the translation of the results and the assets and liabilities of major overseas branches and controlled
entities are
1999

Great Britain pound
United States dollar
New Zealand dollar

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

Closing

Average

Closing

1998
Average

Closing

1997
Average

0.3972

0.39320.3496

0.39130.44650.46940.65330.64030.59720.64680.71970.76791.25981.2014

1.18681.15811.1272

1.119139

ME43515 AR_99_Inside.FA 16/11/99 12:57 PM Page 40

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Shareholder Information
Ordinary shares
At 8 October 1999 the twenty largest holders of ordinary shares held 867,878,917 ordinary shares, equal to 55.4 per cent of
the total issued ordinary capital.
Number of shares%

247,508,700
146,568,542
111,082,836
49,452,885
35,869,178
33,952,739
33,890,209
27,836,491
25,668,217
23,953,966

15.8
9.4
7.1
3.1
2.3
2.2
2.2
1.8
1.6
1.5

Chase Manhattan Nominees Ltd
Westpac Custodian Nominees Ltd
National Nominees Ltd
ANZ Nominees Ltd
Citicorp Nominees Pty Ltd
BT Custodial Services Pty Ltd
Perpetual Nominees Ltd
AMP Life Ltd
Permanent Trustee Australia Ltd
Queensland Investment Corporation

Name

Number of Share

Mercantile Mutual Life Insurance Company Ltd
MLC Limited
Perpetual Trustees Nominees Ltd
Perpetual Trustees Victoria Ltd
Commonwealth Custodial Services Ltd
AMP Nominees Pty Ltd
HKBA Nominees Ltd
Perpetual Trustee Company Ltd
Perpetual Trustees Australia Ltd
PSS Board%

22,694,247
21,674,024
17,865,197
13,651,396
13,095,843
10,604,568
9,610,380
7,768,124
7,664,347
7,467,028

1.4
1.4
1.1
0.9
0.8
0.7
0.6
0.5
0.5
0.5

867,878,917

55.4

Distribution of shareholdings
At 8 October 1999
Range

Number ofholders% ofholders

Number ofshares% ofshares1 to 1,000 shares
1,001 to 5,000 shares
5,001 to 10,000 shares
10,001 to 100,000 sharesOver 100,001 shares

122,490
70,80912,469
7,912
471

57.2
33.1
5.8
3.7
0.2

47,370,633
163,566,448
89,033,738
171,671,460
1,093,786,190

3.0
10.4
5.7
11.0
69.9

Total

214,151100

1,565,428,469

100

At 8 October 1999 there was one entry in the Register of Substantial Shareholdings. A notice was received from The CapitalGroup Companies, Inc. advising that on 27 April 1999 it became a substantial shareholder with a holding of 77,757,584
ordinary shares. This holding is held by several nominee companies. At 8 October 1999 the average size of holdings ofordinary shares was 8,352 (1998: 10,106) shares. At 8 October 1999 there were 8,760 shareholdings of less than a marketableparcel (less than $500 in value (49 shares) based on a market price of $10.19), (1998: 5,671), which is 4.7% of the total holdingsof ordinary shares.

Voting rights of ordinary shares
The Constitution provides for(i) on show of hands 1 vote;(ii) on a poll 1 vote for each ordinary share held; and(iii) 1 vote for every 10, 10 cent paid shares issued pursuant to the Company’s Group Share Purchase Scheme.
Preference shares
At 8 October 1999 Hare and Co (a nominee company of The Bank of New York) held 124,032,000 preference shares, being
100 per cent of the total issued preference capital.
Voting rights of preference shares
A preference shareholder may not vote in normal circumstances, but may vote:(i) when a preference share dividend (or equivalent) is not paid by the prescribed quarterly payment date. This entitlement
to vote ceases after full payment of four consecutive quarterly preference share dividends; and(ii) on proposals or resolutions that affect the rights attached to the preference share or reduce the Company’s share capital,
including proposals to dispose of ANZ’s undertakings, or to wind up ANZ or during a winding up of ANZ.
Employee shareholder information
At the January 1994 Annual General Meeting, shareholders approved a limit of 7% of the issued share capital of the Company
on the number of shares which may be issued under the employee share purchase schemes and the unissued shares to which
options may be granted under any incentive schemes for employees and directors of the Group.
At 8 October 1999 participants in the following employee incentive schemes:l
ANZ Group Employee Share Acquisition Plan;l
ANZ Group Share Purchase Scheme; andl
ANZ Group Share Option Scheme (in respect of unissued shares which may be issued on the exercise of options)
held 2.1% (1998: 2.1%) of the issued capital.

40

1999 ANNUAL REPORTME43515 AR_99_cover.FA 16/11/99 12:05 PM Page 4

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Shareholder Information
Dividend

Registered Office

The final dividend of 30 cents per share will be paid on 20

Level 2, 100 Queen Street, Melbourne

December 1999, 80% franked. Dividends may be paid directly

Victoria 3000 Australia

to a bank account in Australia, New Zealand or the United

Phone: (61 3) 9273 6141

Kingdom. Shareholders who want their dividends paid thisFax: (61 3) 9273 6142

way should advise ANZ Share Registry in writing. Dividend

Secretary: J Slatter

Reinvestment and Bonus Option plans are available toshareholders. The plans are detailed in a booklet called

ANZ Share Registry‘Shareholder Alternatives’, copies of which are available from

Australia

New ZealandShare registry at the addresses shown.

Level 12, 565 Bourke Street

Private Bag 92119

Melbourne,Victoria 3000

AucklandAustralia: 1800 11 33 99

Phone: (64 9) 522 0022

Stock Exchange Listings
The Group’s ordinary shares are listed on the Australian
Stock Exchange and the New Zealand Stock Exchange.
The Capital Securities offered in 1993 and the Preference

UK: (44 117) 930 6504
Fax: (64 9) 522 0058
Fax: (61 3) 9611 5710
Email: anzshareregistry@computershare.com.au

Shares issued in 1998 are listed on the New York
Stock Exchange.

American Depositary Receipts

Australian Telephone Numbers

The Bank of New York sponsors an American Depositary

Customer Banking Enquiries

13 13 14

Esanda Finance

13 23 73

Receipt (ADR) program in the United States of America.
The ADRs were listed on the New York Stock Exchange on
6 December 1994. ADR holders should deal directly with
the Depositary, Bank of New York, New York,Telephone

ANZ Funds Management

1800 022 893(212) 815 2729, Fax (212) 571 3050 on all matters relating totheir ADRs.

Credit Ratings (November 1999)

Credit Card Enquiries

13 22 73

Lost or Stolen Cards

1800 033 844

Short Term

Moody’s Investors Service

P-1

Standard & Poor’s Rating Group

A-1+

Long Term Debt

Internet
ANZ product and company information is available
from ANZ's Internet site:

Moody’s Investors Service

Aa3 (outlook stable)

Standard & Poor’s Rating GroupAA- (outlook stable)

1999 Financial Statements
A copy of the Group’s 1999 Financial Statements, including
the independent Auditors’ Report, is available to allshareholders, and will be sent to shareholders without charge
upon request. The Financial Statements can be requested by
telephone (Australia: 1800 11 33 99 , Overseas: 61 3 9667 7128)
and by internet at investor.relations@anz.com or viewed
directly on the Internet at www.anz.com

www.anz.com

ME43515 AR_99_cover.FA 16/11/99 12:02 PM Page 1

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1999 ANNUAL REPORTAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED1999 ANNUAL REPORT • AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ACN 005 357 522
www.anz.com