2016
HALF YEARRESULTS
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
3 M AY 2 0 1 6I N V E S T O R D I S C U S S I O N PA C K
S P E C I F I E D I T E M S A N A LY S I SCash Profit (adjusted pro forma)$m

1H16 growth

1H15

2H15

1H16vs 1H15

vs 2H15

Operating Income

10,04010,191

10,4384%

2%

Operating Expenses

4,572

4,732

4,701

3%

-1%

Profit before Provisions

5,468

5,459

5,737

5%

5%

441

634

905

105%

43%

3,638

3,507

3,499-4%0%3833-717

3,676

3,540

2,782

-24%

-21%

Operating Profit (adjusted pro forma)

Provisions
Operating Profit
Specified Items
Cash Profit‘Adjusted Pro forma’ refers to cash profit adjusted for ‘Specified items’: the impacts of software capitalisation policy changes, Asian Minority Investment
impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses and sale of Esanda Dealer Finance portfolio
Further detail provided in the ANZ Half Year 2016 consolidated Financial Report page 14. Note: Adjusted pro forma has not been adjusted for FX

2

Financial performance
$m
3,676

3,638(38)3,499(139)
2,782(717)(3.8%)(24%)

1H15 cash profit

Specifieditems

1H15 adjusted
pro forma

Operatingperformance

1H16 adjusted
pro forma

Specifieditems

1H16 cash profit

1H15 SPECIFIED ITEMS

1H16 SPECIFIED ITEMSo Esanda (+$45m) pro-forma

o Software capitalisation policy application

adjustment removes the results ofthat businesso Restructuring costs (-$7m)

changes (-$441m)
o Restructuring costs (-$101m)o Asian Minority Investments impairment &gain (-$231m)
o Esanda (+$56m) pro-forma adjustment toremove the operating results of thatbusiness and gain on sale

‘Adjusted Pro forma’ refers to cash profit adjusted for ‘Specified items’: the impacts of software capitalisation policy changes, Asian Minority Investment
impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses and sale of Esanda Dealer Finance portfolio
Further detail provided in the ANZ Half Year 2016 consolidated Financial Report page 14. Note: Adjusted pro forma has not been adjusted for FX3

Financial performance – specific items
1H16 vs 1H15 (PCP)

$m

3,676

3,638

3,499

(38)

(139)

56(441)

1H15 cash
profit

1H15 specified
items

1H15 proforma

OperatingPerfornance

1H16 proforma

Softwarecap changes

March 2016 Half Year

Cashprofit

(231)

(101)

Asian minority Restructuring Esanda Dealer
investments
Finance sale

Cashprofit

Restructuring

EsandaDealerFinance

Adj proforma
pre FX

1H16 cash
profitMar 16 pro forma v.
Mar 15

March 2015 Half Year

Software
AsianEsanda
AdjustedRestructcap
minority
Dealerpro forma
uringchange
inv’s.
Finance

2,782FXimpact

Adj proforma fxadj

Cashprofit

Adj pro Adj pro
forma forma
pre FX Fx adj

Revenue

10,316

-

231

-

(109)

10,438

10,195-(155)

10,040226

10,266

1.2%

4.0%

1.7%

Expenses(5,479)

629

-

138

11(4,701)(4,603)10

21(4,572)(115)(4,687)

19.0%

2.8%

0.3%

PBP

4,837

629

231

138

(98)

5,737

5,592

10(134)

5,468

111

5,579

-13.5%

4.9%

2.8%

Provisions

(918)

---

13(905)(510)-

69(441)

(5)

(446)

80.0%

large

large

PBT

3,919

629

231138(85)

4,832

5,082

10(65)

5,027

106

5,133

-22.9%

-3.9%

-5.9%

Tax & NCI

(1,137)

(188)

-(37)

29(1,333)(1,406)(3)

20(1,389)(27)(1,416)-19.1%

-4.0%

-5.9%

Cash profit

2,782

441

231

101

(56)

3,499

3,676

7(45)

3,638

79

3,717

-24.3%

-3.8%

-5.9%

4

Financial performance – specific items
1H16 vs 2H15 (HOH)

$m

3,540

3,507

3,499

(33)

(8)

56(441)

2H15 cash
profit

1H15 specifieditems

2H15 proforma

OperatingPerformance

1H16 proformaSoftware
cap changes

March 2016 Half Year

Cashprofit

(231)

(101)

Asian minority Restructuring Esanda Dealer
investments
Finance sale

Cashprofit

Restructuring

EsandaDealerFinance

Adj proforma
pre FX

1H16 cash
profitMar 16 pro forma v.
Sep 15September 2015 Half Year

Software
AsianEsanda
Adjusted
Restructcap
minority
Dealerpro forma
uringchange
inv’s.
Finance

2,782

FX
impactAdj proforma fxadj

Cashprofit

Adj pro Adj pro
forma forma
pre FX Fx adj

Revenue

10,316-231-(109)

10,438

10,342-(151)

10,191

135

10,326

-0.3%

2.4%

1.1%

Expenses(5,479)629-138

11(4,701)(4,775)21

22(4,732)(37)(4,769)

14.7%

-0.7%

-1.4%

PBP

4,837

629

231

138

(98)

5,737

5,567

21(129)

5,459

98

5,557

-13.1%

5.1%

3.2%

Provisions

(918)

---

13(905)

(695)

-

61

(634)

(8)

(642)

32.1%

42.7%

41.0%

PBT

3,919

629

231

138

(85)

4,832

4,872

21(68)

4,825

90

4,915

-19.6%

0.1%

-1.7%

Tax & NCI

(1,137)

(188)

-(37)

29(1,333)(1,332)(6)20(1,318)(27)(1,345)-14.6%

1.1%

-0.9%

Cash profit

2,782441231

101(56)

3,499

3,540

15(48)

3,507

63

3,570

-21.4%

-0.2%

-2.0%

5

Specified items 1H16 – All above the line

Total

PROFIT IMPACT
1H16($m)

Capitalised
SoftwareRestructuring
expenses

Asian Minority
Investments

Esanda Dealer
Finance sale

Costs, including
accelerated
amortisation,
resulting fromsoftwarecapitalisation
changes

Expenses incurredin relation toorganisational
restructures

AMMB Impairment
charge; Bank of
Tianjin gain on
cessation of equity
accounting

Pro-formaadjustment toremove theoperating results ofthat business andgain on sale
56

(101)
(231)
(441)

(717)

CET1 IMPACTS
P&L IMPACTS

Zero

Restructure
MarginalPartnerships
Zero

Positive

Timing ofexpenses

Timing ofExpenses

One time OOI
impactNegative

Further detail on ’Specified items’ is provided in the ANZ Half Year 2016 consolidated Financial Report page 14.

6

Specified items 1H16 – All above the line

Capitalised
SoftwareTotalCosts, including
accelerated
amortisation,
resulting fromsoftware
capitalisation
changes

PROFIT IMPACT
1H16($m)

CAPITALISED SOFTWARE BALANCE IMPACT($m)
2,689

2,893
2,249

Mar-14

Sep-14
Balanceo Directly expensing more project related costs
RATIONALEo Reflects the rapidly changing technology landscape& increased pace of innovation in financial services,
resulting in increasingly shorter useful lives forsmaller items of software in the “digital world”

IMPACT

(717)

2,332

o Increased the threshold for capitalisation ofsoftware development costso Driving more disciplined commercial decisions

(441)

2,533

CAPITALISED SOFTWARE POLICY CHANGES

Mar-15

Sep-15Mar-16

Impact of policy changeso Accelerated amortisation of previously capitalised
software balances with an original costs below therevised thresholdo Increased operating expenses for software projects
in the current period that would otherwise havebeen capitalised and amortised in future periodso Higher software expenses in the near term but
lower amortisation charges in future years
o Reduced capitalised software balance

Further detail on ’Specified items’ is provided in the ANZ Half Year 2016 consolidated Financial Report page 14.

7

Specified items 1H16 – All above the line

TotalRestructuring
expenses
Expenses incurredin relation toorganisationalrestructures

PROFIT IMPACT
1H16($m)(101)

RESTRUCTURE EXPENSES
o Reshaping the workforce to reduce complexity andduplicationo Aligning to the new organisation structure, including
our changing emphasis on Institutional andinternational banking
o $138m (pre tax) expenses associated with 1H16
organisational restructure & provision for planned
actions in 2H16
BENEFITS(717)

o Streamlined divisions with improved connectivity
and productivity
o Simpler organisational structure with fewer senior
management required to run the businesso Right sized support and enablement functions tomeet business requirements

Further detail on ’Specified items’ is provided in the ANZ Half Year 2016 consolidated Financial Report page 14.

8Specified items 1H16 – All above the lineTotal

Asian Minority
Investments

ASIAN MINORITY INVESTMENT
ADJUSTMENTS

AMMB Impairment
charge; Bank ofTianjin gain on
cessation of equity
accountingo During the March 2016 half, the Group
recognised a $260 million impairment to its
equity accounted investment in AMMB
Holdings Berhad (Ambank) bringing thecarrying value in line with value-in-use
calculations

PROFIT IMPACT
1H16($m)(231)(717)

Carrying value of Asia Minority Investments$b6543210

1H16 BOT
transferred toAFS asset

FY09 FY10 FY11 FY12 FY13 FY14 FY15 1H16o On 30 March 2016, Bank of Tianjin (BoT), an
equity accounted investment, completed acapital raising. As the Group did notparticipate in the capital raising, its
ownership interest decreased from 14% to12%. As a consequence, the Group ceased
equity accounting the investment in BoT andcommenced accounting for the investment
as for as an available for sale asset. A netgain of $29 million was recognised inrelation to the remeasurement of theinvestment to fair value and recycling theassociated equity accounted reserves

Bank of Tianjin (BOT)PT Bank Pan Indonesia

AMMB Holdings Berhad

Shanghai Rural Commercial Bank

Further detail on ’Specified items’ is provided in the ANZ Half Year 2016 consolidated Financial Report page 14.

9Specified items 1H16 – All above the line

Total

PROFIT IMPACT
1H16($m)

Esanda Dealer
Finance sale
Pro-forma
adjustment toremove theoperating results ofthat business andgain on sale
56

ESANDA DEALER FINANCE SALEo On 1 November 2015, the Group sold theEsanda Dealer Finance portfolios with themajority of the business transferred by 31December 2015.
o Proforma results have been prepared on theassumption that the sale which occurred
during the March 2016 half took effect from1 October 2014, effectively restating theGroup’s cash profit for each of the March
2015, September 2015 and March 2016
halves.

(717)

Further detail on ’Specified items’ is provided in the ANZ Half Year 2016 consolidated Financial Report page 14.

10

Further Information

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