Australia and New Zealand Banking Group Ltd. - Annual Report 2013

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

Full Year 30 September 2013

Consolidated Financial Report Dividend Announcement and Appendix 4E

The Consolidated Financial Report and Dividend Announcement constitutes the preliminary final report and contains information required by Appendix 4E of the Australian Securities Exchange Listing Rules. It should be read in conjunction with ANZ’s 2013 Annual Report when released, and is lodged with the Australian Securities Exchange under listing rule 4.3A.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

Name of Company: Australia and New Zealand Banking Group Limited ABN 11 005 357 522

Report for the full year ended 30 September 2013

Operating Results1				A$ million
Operating income		4%	to	18,446
Net statutory profit attributable to shareholders		11%	to	6,272
Cash profit 2		11%	to	6,498
Dividends3	Cents			Franked
		per		amount 4
	share			per share
Proposed final dividend		91		100%
Interim dividend		73		100%
Record date for determining entitlements to the proposed final dividend				13 November 2013
Payment date for the proposed final dividend				16 December 2013

Dividend Reinvestment Plan and Bonus Option Plan

Australia and New Zealand Banking Group Limited (ANZ) has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the 2013 final dividend. For the 2013 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares and has announced an intention to neutralise the impact of the issuance of those shares through an on-market buyback of shares in an amount equal to the value of those shares issued under the DRP and BOP. The 'Acquisition Price' to be used in determining the number of shares to be provided under the DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the ordinary course of trading on the ASX during the ten trading days commencing on 13 November 2013, and then rounded to the nearest whole cent. Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election notices from shareholders wanting to commence, cease or vary their participation in the DRP or BOP for the 2013 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 13 November 2013. Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in Great Britain (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling and New Zealand dollars respectively at an exchange rate calculated on 15 November 2013.

1 Compared to year ended 30 September 2012

2 Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, and has been provided to assist readers to understand the results for the ongoing activities of the Group. The net after tax adjustment was an increase to cash profit of $226 million made up of several items. Refer pages 82 to 84 of the ANZ Consolidated Financial Report and Dividend Announcement for the full year 30 September 2013 for further details

3 There is no foreign conduit income attributed to the dividends 4

It is proposed the final dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZ 10 cents per ordinary share

APPENDIX 4E STATEMENT

The directors of Australia and New Zealand Banking Group Limited confirm that the financial information and notes of the consolidated entity set out on pages 92 to 109 are in the process of being audited.

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John Morschel Chairman

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Michael R P Smith Director

28 October 2013

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E

Full year ended 30 September 2013

*CONTENTS*	*PAGE*
Section 1 – Media release	1
Section 2 – Snapshot	7
Section 3 – CEO overview	11
Section 4 – CFO overview	13
Section 5 – Segment review	39
Section 6 – Geographic review	73
Section 7 – Profit reconciliation	81
Section 8 – Condensed consolidated financial statements	91
Section 9 – Supplementary information	111
Definitions	124
Alphabetical Index	127

This Consolidated Financial Report and Dividend Announcement has been prepared for Australia and New Zealand Banking Group Limited (the “Company”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “us”, “we” or “our”.

All amounts are in Australian dollars unless otherwise stated. The information on which the Condensed Consolidated Financial Statements are based, is in the process of being audited by the Group’s auditors, KPMG. The Company has a formally constituted Audit Committee of the Board of Directors. The signing of these Condensed Consolidated Financial Statements was approved by resolution of a Committee of the Board of Directors on 28 October 2013.

When used in this Results Announcement the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ANZ does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

For Release: 29 October 2013

Media Release

ANZ 2013 Full Year Result

- super regional strategy driving improved customer outcomes, profit growth and stronger shareholder returns -

Performance Highlights – FY 2013 compared to FY2012 (YOY)[1]

Statutory net profit after tax $6.3 billion; Cash Profit[2] after tax $6.5 billion; both up 11%.
Return on equity (RoE) up 20 basis points (bps) to 15.3%. Earnings per share (EPS) up 9% to 238.5 cents.
Fully franked final dividend of 91 cents per share (cps) taking the total dividend for FY13 to 164 cps up 13%.
Over $1.3 billion was invested in growth and transformation initiatives across the bank during the year, including the Banking on Australia program and expansion in Asia.
Customer deposits grew 12% with net loans and advances up 10%.
Credit quality improved further with gross impaired assets down 18% and the provision charge down 5%.
ANZ’s strong capital position improved further with the Common Equity Tier 1 (CET1) ratio up 47 bps to 8.5% and internationally harmonised Basel 3 basis CET1 up 76 bps to 10.8%. ANZ will again be neutralising the impact of the Dividend Reinvestment Plan (DRP) via an on-market buyback of ANZ shares.

ANZ Chief Executive Officer Mike Smith said: “This is a strong performance, the result of a distinctive long-term strategy focused on growth in our domestic franchises and targeted expansion in Asia.

“This consistency and operational discipline are producing better outcomes for our customers and for our shareholders. Importantly, the long-term nature of what we are building at ANZ means there is still more gas in the tank.

“In 2013 we have continued to attract more customers with further market share gains in Australian Retail and Commercial. In New Zealand brand consideration is at an historic high and we are growing market share in home loans and Small Business Banking. In Wealth we are providing more financial solutions to more ANZ customers while using innovation to create new growth opportunities.

“In International and Institutional Banking (IIB), a third of our Institutional clients are now using ANZ in more than one country. For large clients the value of our Asian network is even more pronounced. Almost 90% of our top 100 customers use ANZ in more than five countries. Together this has seen IIB Asia income grow from 24% to 34% of total IIB income in the past three years and cross-border income is growing three times faster than local income.

“Importantly, we are continuing to drive organic growth using strong operational and financial management disciplines to fund significant investments for the future.

“Our focus on operational excellence, business simplification and enabling technology is delivering economies of scale, improved speed to market and stronger controls. For example, this year we achieved an 18% increase in productivity by reducing operations expenses by 10%.

1 All comparisons are Full Year to 30 September 2013 compared to Full Year to 30 September 2012 and on a cash basis unless otherwise noted. 2 Statutory profit has been adjusted to exclude non-core items to arrive at Cash Profit, the result for the ongoing activities of the Group.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

“ANZ’s distinctive strategy is also seen in our financial management. We remain one of the best capitalised banks in the world with an increasingly high-quality balance sheet.

“Together this has seen us deliver on our promises to shareholders. In 2013 we achieved strong growth in profit and earnings per share along with an increased return on equity, which has enabled us to pay a higher dividend, distributing $4.5 billion to shareholders, largely retail investors and Australian superannuation funds.

“The scale of the transformation at ANZ over the past six years is significant and we are now beginning to unlock the real potential of our franchise in Australia, New Zealand and Asia-Pacific. This means we can continue to grow while also targeting a further reduction in our cost-to-income ratio to 43% or better, along with improving our return on equity to at least 16% by the end of the 2016 financial year[3] .

“Today, the continued shift of global growth to Asia means that our strategy focussed on building an Asia-connected bank makes more sense than ever. It is creating growth options in all our businesses by allowing us to better meet the needs of customers by capturing the banking opportunities linked to regional capital, trade and wealth flows.

“Our 2013 results demonstrate that our super regional strategy is not just about the promise of future growth and returns. It also shows the hard work of our 47,500 people is delivering strong results for our customers and for our shareholders today,” Mr Smith said.

PERFORMANCE BY DIVISION[4]

AUSTRALIA

The Australia Division grew profit 11%, driven by 7% income growth and a 2% decrease in expenses. ANZ had the strongest overall growth of the major banks across home loans, deposits and credit cards. Home loans have grown faster than system[5] for the past 14 quarters and branch home loan sales increased 16% during the year. We welcomed 30,000 new Commercial and Corporate Banking (C&CB) customers and the C&CB business has grown lending above system[6] for the past 6 quarters.

We’re bringing our super regional expertise to our customers; a quarter of C&CB relationship staff have hands-on experience in key Asian markets and all frontline relationship staff have received Super Regional training; cross border referrals from C&CB Australia grew 45% during the year.

ANZ has lent $750 million to new Australian small businesses as part of our $1 billion pledge announced in April 2013. Under our Banking on Australia program we’ve invested in over 170,000 hours of frontline sales training; 74 branches have been transformed; 201 Smart ATMs have been installed; and we are strengthening our lead in digital and mobile channels.

ANZ’s goMoney™ mobile banking app now supports more than 1 million active users and has processed over $56 billion of transactions since inception. We have increased the number of registered ANZ FastPay™ customers by 34% during the year, enabling more of our small business customers to be paid on the go. Mobility tools including iPads and related apps are increasing the amount and quality of time our C&CB relationship team spends with our customers.

INTERNATIONAL AND INSTITUTIONAL BANKING (IIB)

The IIB Division grew profit 15%, with productivity gains (expenses down 3%) and ongoing credit quality improvements (provisions down 30%) key contributors to the result. We are leveraging our market leading position in Australia and New Zealand while increasing the contribution coming from Asia. A third of Institutional customers today deal with ANZ in multiple countries and 48% of revenue came from Asia Pacific Europe & Americas (APEA) in 2013.

Products linked to trade and investment flows experienced double digit volume growth with Trade up 27%, Foreign Exchange (FX) turnover up 35% and Cash Management deposits up 15%. An expanded product range, particularly in FX, helped to deliver 11% growth in Global Markets income which topped $2 billion in FY13, with a record high percentage of income coming from APEA in the second half.

3 Targets are on a cash basis

4 All comparisons are Full Year to 30 September 2013 compared to Full Year to 30 September 2012 and on a cash basis unless otherwise noted. 5 To June quarter 2013. Retail Source: APRA Monthly Banking Statistics, excludes impact from sale of Origin Mortgage Management Services 6 RBA Lending and Credit Aggregates – Non Financial Corporations

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

Our strong relationship focus is being recognised in key customer surveys with ANZ retaining its number one ranking in key categories in the Peter Lee Associates annual surveys in Australia and New Zealand; being ranked number one in overall FX Services voted by Financial Institutions by Asiamoney and improving its ranking to number four in the Asia focused Greenwich Associates large corporate banking annual survey.

Our Asian Commercial business is growing quickly (compound annual growth rate 29% over the past 3 years) and is a valuable source of markets and trade finance revenue. Asia Pacific Retail deposits grew 24% to $12.9 billion.

NEW ZEALAND (all comparisons are in NZD)

The New Zealand Division grew profit 29%. Productivity and credit quality improvements were key features of the result; expenses decreased 15% and the provision charge reduced 76%. Now under one ANZ banner we have focused investment on our brand, sales training, branch coverage and digital capability. As well as productivity gains this investment has driven market share increases in home loans and credit cards and strong growth in Small Business Banking.

Branch coverage is up 7% since 2010, while branch costs have declined. Our simplified and improved product range has been awarded 21 CANSTAR[7] 5 star ratings for outstanding value products. A focus on simplification has increased frontline staff time spent with customers by 10% and increased training has improved retail sales through proprietary channels. We are now selling more home loans through branches, outperforming system growth in the major markets of Auckland and Christchurch.

We are investing in digital capability, with greater than 50% of customers using digital channels, accounting for 57% of transactions. ANZ has leveraged its regional product capabilities launching ANZ goMoney™, currently the most downloaded banking app in the country. The ANZ FastPay™ merchant app which enables merchant transactions via smartphone launches soon.

Commercial business lending volumes grew strongly particularly in Small Business Banking, where there was a 13% increase in new to bank customers. We’re connecting business customers to the region through customer tours to India, Hong Kong and China.

GLOBAL WEALTH

The Global Wealth Division grew profit 36%, profit before provisions grew 20% with income up 5% and expenses down 2%. Global Wealth serves over two million customers and manages $59 billion in investment and retirement savings in Australia and New Zealand.

Wealth solutions held by ANZ customers have increased 11%. During the year we introduced ANZ Smart Choice Super, which was awarded Outstanding Value in all life stages by CANSTAR[8] . There are now more than 50,000 ANZ Smart Choice Super customers. We have invested in growth initiatives and will soon launch a new digital platform and a solution for self managed super funds.

We are simplifying the business and leveraging our regional capabilities to drive improved returns. The cost to income ratio declined by 470 bps. Retail life insurance in-force premiums grew 10% and funds under management increased 13% driven by the productivity improvements in both ANZ and aligned planner channels and improved investment market performance.

Retail insurance lapse rates have responded to retention initiatives, and lapse rates in the Australian business remain lower than the industry average.

CREDIT QUALITY

Credit quality continues to improve. Gross impaired assets reduced by 18%, with reductions across all Divisions, and have now reduced at an average of $383 million each half since 2H10. New impaired assets were also down 22%.

The provision charge decreased 5% to $1.197 billion. The Collective Provision ratio of 1.00%[9] provides conservative coverage given the ongoing improvement in credit quality, particularly in Institutional where credit exposure to investment grade clients now comprises 78% of the book compared to 60% in 2H08.

7 CANSTAR NZ Ltd is an is an independent specialist research service and financial data provider. 8 CANSTAR is an independent specialist research service and financial data provider .

9 Collective Provision ratio on an APRA Basel 3 basis. This ratio is the collective provision balance as a proportion of credit risk weighted assets.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

BALANCE SHEET, CAPITAL, LIQUIDITY AND FUNDING

ANZ generated $4.5 billion in net organic capital increasing CET1 on an APRA Basel 3 basis by 47 bps to 8.5% and by 76 bps to 10.8% on an internationally harmonised Basel 3 basis. ANZ will again be neutralising the impact of the DRP via an on-market buyback and there will be no discount on the DRP shares.

The $122 billion liquid asset portfolio provides a strong buffer for the Group. ANZ has a consistent focus on deposit generation with deposits comprising 62% of the funding base. A total of $24 billion of term wholesale funding was issued across a well diversified range of domestic and international investors.

DIVIDEND

The Board believes that a full year dividend payout ratio of between 65% and 70% of Cash Profit is sustainable in the medium term, with a bias towards the upper end of the range in the near term. The final dividend of 91 cps takes the total dividend for the year to 164 cps up 13%, reflecting strong earnings together with a desire to improve shareholder returns.

For media enquiries contact:

Paul Edwards Group GM, Corporate Communications Tel: +61-3-8654 9999 or +61-434-070101 Email: [email protected]

Stephen Ries Senior Manager, Media Relations Tel: +61-3-8654 3659 or +61-409-655551 Email: [email protected]

For investor and analyst enquiries contact: Jill Craig Group GM, Investor Relations Tel: +61-3-8654 7749 or +61-412-047448 Email: [email protected]

Ben Heath Senior Manager, Investor Relations Tel: +61-3-8654 7793 or +61-435-655033 Email: [email protected]

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

Financial Result for the full year ended 30 September 2013

Operating Results1				A$ million
Operating income		3%	to	18,378
Operating expenses		3%	to	8,236
Profit before credit impairment and income tax		9%	to	10,142
Provision for credit impairment		1%	to	1,197
Cash profit 2		11%	to	6,498
Net statutory profit attributable to shareholders		11%	to	6,272
Earnings per ordinary share (cents)		9%	to	238.5
Return on average ordinary shareholders equity 3		20bps	to	15.3%
Dividends 4, 5				Cents
				per
				share
Proposed final dividend – 100% franked				91
Interim dividend – 100% franked				73
Total dividend – 100% franked				164
Record date for determining entitlements to the proposed final dividend				13 November 2013
Payment date for the proposed final dividend				16 December 2013

1 All comparisons are Full Year to 30 September 2013 compared to Full Year to 30 September 2012 and on a Cash basis unless otherwise noted

2 Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, and has been provided to assist readers to understand the results for the ongoing activities of the Group. The net after tax adjustment was an increase to cash profit of $226 million made up of several items. Refer pages 82 to 84 of the ANZ Consolidated Financial Report and Dividend Announcement for the full year 30 September 2013 for further details

3 Average ordinary shareholders’ equity excludes non-controlling interests and preference shares 4

There is no foreign conduit income attributed to the dividends 5

It is proposed the final dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZ 10 cents per ordinary share

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

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SNAPSHOT

Section 2 – Snapshot

Statutory Results Cash Results Key Balance Sheet Metrics

SNAPSHOT

Statutory Results

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	6,558 6,200 6% 12,758 12,110 5%
Other operating income	2,958 2,730 8% 5,688 5,601 2%
Operating income	9,516 8,930 7% 18,446 17,711 4%
Operating expenses	(4,202) (4,034) 4% (8,236) (8,519) -3%
Profit before credit impairment and income tax	5,314 4,896 9% 10,210 9,192 11%
Provision for credit impairment	(600) (588) 2% (1,188) (1,198) -1%
Profit before income tax	4,714 4,308 9% 9,022 7,994 13%
Income tax expense	(1,377) (1,363) 1% (2,740) (2,327) 18%
Non-controlling interests	(5) (5) 0% (10) (6) 67%
Profit attributable to shareholders of the Company	3,332 2,940 13% 6,272 5,661 11%

Earnings per ordinary share (cents)	Half Year Full Year
Reference Page	Sep 13 Mar 13 Movt Sep 13 Sep 12 Mov
Basic 102	122.6 108.6 13% 231.3 213.4 8%
Diluted 102	118.6 105.4 13% 224.4 205.6 9%


		Half Year Full Year

	Reference Page
Ordinary share dividends (cents)		Sep 13 Mar 13 Sep 13 Sep 12
Interim - 100% franked1	101	n/a 73 73 66
Final - 100% franked1	101	91 n/a 91 79
Total - 100% franked1	101	91 73 164 145
Ordinary share dividend payout ratio2	101	75.0% 68.2% 71.8% 69.4%


Preference share dividend ($M)

Dividend paid3	101	3 3 6 11


Profitability ratios

Return on average ordinary shareholders' equity4		15.3% 14.4% 14.9% 14.6%
Return on average assets		0.96% 0.90% 0.93% 0.90%
Net interest margin		2.20% 2.24% 2.22% 2.31%
Net interest margin (excluding Global Markets)		2.61% 2.65% 2.63% 2.71%
Efficiency ratios


Operating expenses to operating income		44.2% 45.2% 44.6% 48.1%
Operating expenses to average assets		1.21% 1.23% 1.22% 1.36%


Credit impairment provisioning/(release)
Individual provision charge ($M)	104	574 584 1,158 1,577
Collective provision charge/(release) ($M)	104	26 4 30 (379)
Total provision charge ($M)	104	600 588 1,188 1,198
Individual provision charge as a % of average net advances		0.25% 0.27% 0.26% 0.38%
Total provision charge as a % of average net advances		0.26% 0.27% 0.27% 0.29%

1. Fully franked for Australian tax purposes and carry New Zealand imputation credits of NZ 10 cents per ordinary share for the proposed 2013 final dividend (2013 interim dividend: NZ 9 cents; 2012 interim and final dividends: nil)

Dividend payout ratio is calculated using 31 March 2012 interim, 30 September 2012 final, 31 March 2013 interim dividends and the proposed 30 September 2013 final dividend 3. Represents dividends paid on Euro Trust Securities (preference shares) issued on 13 December 2004

Average ordinary shareholders’ equity excludes non-controlling interests and preference shares

SNAPSHOT

Cash Profit Results1

	Half Year Full Year	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	6,536 6,236 5% 12,772 12,110 5%
Other operating income	2,756 2,850 -3% 5,606 5,738 -2%
Operating income	9,292 9,086 2% 18,378 17,848 3%
Operating expenses	(4,202) (4,034) 4% (8,236) (8,519) -3%
Profit before credit impairment and income tax	5,090 5,052 1% 10,142 9,329 9%
Provision for credit impairment	(598) (599) 0% (1,197) (1,258) -5%
Profit before income tax	4,492 4,453 1% 8,945 8,071 11%
Income tax expense	(1,171) (1,266) -8% (2,437) (2,235) 9%
Non-controlling interests	(5) (5) 0% (10) (6) 67%
Cash profit1	3,316 3,182 4% 6,498 5,830 11%

Earnings per ordinary share (cents)	Half Year Full Year
Reference Page	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Basic 30	121.5 117.0 4% 238.5 218.5 9%
Diluted 30	117.5 113.2 4% 231.2 210.3 10%

		Half Year Full Year
Ordinary share dividends (cents)	Reference Page	Sep 13 Mar 13 Sep 13 Sep 12
Ordinary share dividend payout ratio2	31	75.4% 63.0% 69.3% 67.3%
Profitability ratios


Return on average ordinary shareholders' equity3		15.1% 15.5% 15.3% 15.1%
Return on average assets		0.95% 0.97% 0.96% 0.93%
Net interest margin	17	2.19% 2.25% 2.22% 2.31%
Net interest margin (excluding Global Markets)	17	2.61% 2.67% 2.63% 2.71%
Profit per average FTE ($)		69,976 66,847 137,230 117,635
Efficiency ratios


Operating expenses to operating income		45.2% 44.4% 44.8% 47.7%
Operating expenses to average assets		1.20% 1.23% 1.22% 1.36%
Credit impairment provisioning/(release)

Individual provision charge ($M)	23	572 595 1,167 1,637
Collective provision charge/(release) ($M)	24	26 4 30 (379)
Total provision charge ($M)	23	598 599 1,197 1,258
Individual provision charge as a % of average net advances		0.25% 0.28% 0.26% 0.40%
Total provision charge as a % of average net advances		0.26% 0.28% 0.27% 0.30%

Cash profit by division/geography	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	1,458 1,415 3% 2,873 2,598 11%
International and Institutional Banking	1,231 1,199 3% 2,430 2,111 15%
New Zealand	484 397 22% 881 642 37%
Global Wealth	266 203 31% 469 346 36%
Group Centre	(123) (32) large (155) 133 large
Cash profit by division	3,316 3,182 4% 6,498 5,830 11%

Australia	2,136 2,164 -1% 4,300 3,870 11%
Asia Pacific, Europe & America	555 460 21% 1,015 963 5%
New Zealand	625 558 12% 1,183 997 19%
Cash profit by geography	3,316 3,182 4% 6,498 5,830 11%

1. Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, and has been provided to assist readers to understand the result for the ongoing business activities of the Group. Refer to page 14 for the reconciliation between statutory and cash profit

Dividend payout ratio is calculated using 31 March 2012 interim, 30 September 2012 final, 31 March 2013 interim dividends and the proposed 30 September 2013 final dividend 3. Average ordinary shareholders’ equity excludes non-controlling interests and preference shares

SNAPSHOT

Key Balance Sheet Metrics

		As at Movement
	Reference	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
	Page
Capital adequacy ratio (%)


Common Equity Tier 1
- APRA Basel 3	35	8.5% 8.2% 8.0%
- Internationally Harmonised Basel 31	35	10.8% 10.3% 10.0%
Credit risk weighted assets ($B)2	114	287.7 275.0 254.9 5% 13%
Total risk weighted assets ($B)2	114	339.3 322.6 300.1 5% 13%
Balance Sheet: Key Items


Net loans & advances ($B)		469.3 442.0 427.8 6% 10%
Total assets ($B)		703.0 672.6 642.1 5% 9%
Customer deposits ($B)		368.8 344.1 327.9 7% 12%
Total equity ($B)		45.6 42.5 41.2 7% 11%
Impaired assets


Gross impaired assets ($M)	26	4,264 4,685 5,196 -9% -18%
Net impaired assets ($M)	27	2,797 3,142 3,423 -11% -18%
Net impaired assets as a % of net advances		0.60% 0.71% 0.80%
Net impaired assets as a % of shareholders' equity		6.1% 7.4% 8.3%

Individual provision ($M)	104	1,467 1,543 1,773 -5% -17%
Individual provision as a % of gross impaired assets		34.4% 32.9% 34.1%
Collective provision ($M)	104	2,887 2,769 2,765 4% 4%
Collective provision as a % of credit risk weighted assets2		1.00% 1.01% 1.08% 0% -7%
Net Assets


Net tangible assets per ordinary share ($)		13.48 12.56 12.22 7% 10%
Net tangible assets attributable to ordinary shareholders ($B)		37.0 34.5 33.2 7% 11%
Other information
Full time equivalent staff (FTE)		47,512 47,419 48,239 0% -2%
Assets per FTE ($M)		14.8 14.2 13.3 4% 11%
Share price
- high3		$32.09 $29.46 $25.12 9% 28%
- low3		$26.30 $23.42 $20.26 12% 30%
- closing		$30.78 $28.53 $24.75 8% 24%
Market capitalisation of ordinary shares ($B)		84.5 78.3 67.3 8% 26%

1. ANZ’s interpretation of the regulations documented in the Basel Committee publications; “Basel III: A global regulatory framework for more resilient banks and banking systems” (June 2011) and “International Convergence of Capital Measurement and Capital Standards” (June 2006)

September 2013 and March 2013 risk weighted assets under Basel 3 methodology. September 2012 risk weighted assets under Basel 2 methodology. The change from Basel 2 to Basel 3 on 1 January 2013 increased risk weighted assets by $15.2 billion at that date

During the half year reporting period

Net loans & advances by division/geography	As at ($B) Movement
	Sep 13 Sep 13
	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Australia	271.6 262.1 253.9 4% 7%
International and Institutional Banking	110.1 102.5 98.3 7% 12%
New Zealand	81.4 71.6 70.3 14% 16%
Global Wealth	6.2 5.8 5.3 7% 17%
Net loans & advances by division	469.3 442.0 427.8 6% 10%

Australia	320.8 312.3 305.8 3% 5%
Asia Pacific, Europe & America	59.7 51.6 45.3 16% 32%
New Zealand	88.8 78.1 76.7 14% 16%
Net loans & advances by geography	469.3 442.0 427.8 6% 10%

CEO OVERVIEW

CEO Overview

Strategy and Performance

ANZ is executing a focused strategy to build the best connected, most respected bank across the Asia Pacific region, and in doing so provide shareholders with above-peer earnings growth.

The bank is pursuing significant organic growth opportunities in the Asia Pacific region, and with our strong domestic businesses in Australia and New Zealand, our distinctive footprint and super regional connectivity we are uniquely positioned to meet the needs of customers, who are increasingly linked to regional capital and trade flows.

In 2013 our differentiated strategy delivered a record cash profit of $6.5 billion, up 11% from $5.8 billion last year, with a return on equity (ROE) of 15.3%, earnings per share (EPS) of $2.39 and a fully-franked dividend per share of $1.64. This result was driven by 3% revenue growth and 3% expense reductions and a 5% reduction in provisions. Total shareholder returns for the year were 31.5%.

Revenue sourced from the Asia Pacific region represented 21% of total Group revenue.

Strategic progress in 2013

While economic conditions across the Asia Pacific region remain more robust by comparison to much of the rest of the world, conditions for banking were once again challenging – particularly for institutional banking where subdued credit conditions and margin compression have impacted income growth.

Within that environment, management continued to focus on balancing the need for investment to meet the needs of our customers and drive longer-term growth, and the need to generate attractive returns for our shareholders in the near-term. This has been achieved by focusing on both productivity initiatives and capital management to improve returns and support strong EPS growth.

We are building stronger positions in our Australia and New Zealand markets, led by solid market share gains in Australia Retail and Commercial, emerging productivity benefits from our program of simplification in New Zealand, and much improved penetration of Wealth products into our existing customer base in these markets.
We have continued to build in Asia, focused on intermediating the fast growing trade and capital flows in the region with particular emphasis on regional treasury centres like Hong Kong and Singapore and products like Trade, Foreign Exchange and Debt Capital Markets for Institutional customers. The Commercial segment in Asia is quickly emerging as a source of valuable Markets and Trade cross-sell.
Our retail business in Asia is maturing, with improving ROE and cost to income ratio. It is focused on building USD, AUD and RMB liquidity and building our brand across the region.
We reached a level of maturity with Operations and Technology which are now managed on an equal footing as our other Business Divisions. Our operations and technology strategy is delivering economies of scale, speed to market and a stronger control environment to the business, particularly from our regional hubs and our use of common platforms and processes, resulting lower unit costs, better quality and lower risk.
We globalised the operating model for Finance and HR in line with the existing way we manage Risk, and we believe these changes will deliver greater consistency, higher control standards and lower cost.
The Group generated around $4.5 billion of additional capital over the year, and remains well capitalised with a Common Equity Tier 1 ratio of 10.8% at 30 September 2013 on a Basel 3 internationally harmonised basis or 8.5% under APRA’s Basel 3 standards. Customer funding was slightly higher at 62% of total funding.
Gross impaired assets reduced both HOH and YOY, and the Group’s coverage ratios remain strong with CP to CRWA at 1.00% and IP to gross impaired assets at 34.4%.
Finally, we focused on strengthening management depth and the alignment between business, operations, support and technology.

Medium to Long Term Strategic Goals

ANZ is committed to delivering top quartile total shareholder returns and above-peer earnings growth, targeting a Group cost to income ratio of less than 43% and ROE of 16% by the end of September 2016. The target dividend payout ratio remains at around 65-70% of cash profit, with a bias towards the upper end of this range, which we believe to be a sustainable level in a Basel 3 environment.

To do this we will continue to:

Strengthen our position in our Australia and New Zealand markets by growing our Retail and Commercial operations, driving productivity benefits, leveraging the super regional strategy and using technology to drive better functionality;
In Australia, we are transforming the way we serve our customers by investing in physical, mobile and digital channels to support our retail customers, by increasing sales capacity to support our business banking customers, and by investing in customer analytics
In New Zealand, we will work under one brand on one platform with more efficient market coverage
Focus our Asia expansion primarily on Institutional Banking, supporting our Australian and New Zealand customers, targeting profitable markets and segments in which we have expertise and which are connected through trade and capital flows, while continuing to build our niche Commercial and Retail businesses.
Achieve greater efficiency and control through the use of scalable common infrastructure and platforms.
Maintain strong liquidity and actively manage capital to enhance ROE.
Build on our Super Regional capabilities by utilising our management bench-strength and continuing to deepen our international pool of talent.
Apply strict criteria when reviewing existing investment and new inorganic opportunities.

1 The CEO Overview is reported on a cash basis

CEO OVERVIEW

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CFO OVERVIEW

Section 4 – CFO Overview

Cash profit

Divisional performance

Review of Group results

Income and expenses Credit risk Income tax expense Impact of exchange rate movements/revenue hedges Earnings per share Dividends Economic profit Balance sheet, liquidity and capital Deferred acquisition costs and deferred income Software capitalisation

CFO OVERVIEW

Non-IFRS information

The Group provides two additional measures of performance in the Results Announcement which are prepared on a basis other than in accordance with accounting standards - cash profit and economic profit. The guidance provided in Australian Securities and Investments Commission Regulatory Guide 230 has been followed when presenting this information.

Cash profit

From 1 October 2012, the Group changed to reporting profit on a cash basis from reporting profit on an underlying profit basis. Comparative information has been restated on a consistent basis.

Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, and has been provided to assist readers to understand the results for the ongoing business activities of the Group. The adjustments made in arriving at cash profit are included in statutory profit which is subject to audit within the context of the Group statutory audit opinion. The Financial Report is in the process of being audited. Cash profit is not audited by the external auditor, however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.

The CFO Overview is reported on a cash basis.

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Statutory profit attributable to shareholders of the Company	3,332 2,940 13% 6,272 5,661 11%
Adjustments between statutory profit and cash profit1	(16) 242 large 226 169 34%
Cash profit	3,316 3,182 4% 6,498 5,830 11%

	Half Year Full Year

	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Adjustments between statutory profit

and cash profit1

Treasury shares adjustment	31 53 -42% 84 96 -13%
Revaluation of policy liabilities	27 19 42% 46 (41) large
Economic hedging	(205) 192 large (13) 229 large
Revenue and net investment hedges	143 16 large 159 (53) large
Structured credit intermediation trades	(12) (38) -68% (50) (62) -19%
Total adjustments between	(16) 242 large 226 169 34%
statutory profit and cashprofit1

1. Refer to pages 82 to 84 for analysis of the reconciliation of statutory profit to cash profit

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	6,536 6,236 5% 12,772 12,110 5%
Other operating income	2,756 2,850 -3% 5,606 5,738 -2%
Operating income	9,292 9,086 2% 18,378 17,848 3%
Operating expenses	(4,202) (4,034) 4% (8,236) (8,519) -3%
Profit before credit impairment and income tax	5,090 5,052 1% 10,142 9,329 9%
Provision for credit impairment	(598) (599) 0% (1,197) (1,258) -5%
Profit before income tax	4,492 4,453 1% 8,945 8,071 11%
Income tax expense	(1,171) (1,266) -8% (2,437) (2,235) 9%
Non-controlling interests	(5) (5) 0% (10) (6) 67%
Cash profit	3,316 3,182 4% 6,498 5,830 11%

CFO OVERVIEW

Divisional performance

		Half Year Full Year
Cash profit by division	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	1,458 1,415 3% 2,873 2,598 11%
International and Institutional Banking	1,231 1,199 3% 2,430 2,111 15%
New Zealand	484 397 22% 881 642 37%
Global Wealth	266 203 31% 469 346 36%
Group Centre	(123) (32) large (155) 133 large
Cash profit by division	3,316 3,182 4% 6,498 5,830 11%

Cash profit by division – September 2013 Half Year v March 2013 Half Year

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63
87
3,316
32 (91)
43
3,182
$m
1H13 Australia International and New Zealand Global Wealth Group Centre 2H13
Cash profit Institutional Banking Cash profit
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September 2013 v March 2013

Australia

Profit increased 3% driven by a 3% increase in net interest income, with solid growth across both Retail and C&CB, partly offset by a 1% uplift in expenses and 12% higher credit provisions.

International and Institutional Banking

Profit increased 3% mainly due to a 16% improvement in Transaction Banking and 28% lower provisions partly offset by a reduction in other operating income in Global Markets.

New Zealand

Profit increased 22% with net interest income up 9%, partly due to above system mortgage lending growth. In addition, there was a 68% reduction in provision charges, and a 15% improvement in other operating income mainly due to the gain on sale of EFTPOS New Zealand Limited.

Global Wealth

Profit was up 31% primarily due to improved Funds Management results, with a 7% increase in Funds Under Management, along with the inclusion of a non-recurring tax benefit.

Group Centre

Losses increased by $91 million, largely driven by realised losses from foreign currency revenue hedges and increased provisions related to discontinued businesses.
September 2013 v September 2012

Australia

Profit increased 11% driven by an 8% increase in net interest income with strong growth in both average net loans and advances and deposits, and a 2% reduction in expenses due to a reduction in average FTE.

International and Institutional Banking

Profit increased 15% with strong Global Markets revenues and lower credit provision charges across Global Markets and Global Loans, partially offset by lower net interest margins, reflecting higher credit quality and lower earnings on capital utilised in the division.

New Zealand

Profit increased 37% driven primarily by strong deposit and lending growth, an improvement in credit quality and lower costs largely related to our program of Simplification in New Zealand.

CFO OVERVIEW

Global Wealth

Profit increased 36% with a 6% increase in net funds management and insurance income and a 2% reduction in operating expenses along with a favourable non-recurring tax benefit.

Group Centre

Profit was down by $288 million from the prior year, largely driven by the non-recurring gain of $291 million on the sale of Visa shares in 2012.

Refer to Section 5 – Segment Review on pages 40 to 71 for further details

CFO OVERVIEW

Review of Group results

Income and expenses

Net interest income

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Group (excluding Global Markets)	$M $M $M $M
Cash net interest income	6,103 5,865 4% 11,968 11,415 5%
Average interest earning assets	467,208 441,233 6% 454,257 420,950 8%
Average deposit and other borrowings	354,615 329,810 8% 342,247 317,977 8%
Net interest margin (%) - cash	2.61 2.67 -6 bps 2.63 2.71 -8 bps

Group
Cash net interest income	6,536 6,236 5% 12,772 12,110 5%
Average interest earning assets	595,426 555,141 7% 575,339 523,461 10%
Net interest margin (%) - cash	2.19 2.25 -6 bps 2.22 2.31 -9 bps


	Half Year Full Year

Cash net interest margin and average interest earning	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
assets by division (excluding Global Wealth)
Australia
Net interest margin (%)	2.52 2.53 -1 bps 2.53 2.48 5 bps
Average interest earning assets ($M)	268,798 259,726 3% 264,275 248,900 6%
Average deposits and other borrowings ($M)	148,692 144,293 3% 146,499 133,258 10%

International and Institutional Banking (excluding Global Markets)
Net interest margin (%)	2.61 2.77 -16 bps 2.69 3.10 -41 bps
Average interest earning assets ($M)	111,580 101,504 10% 106,556 95,998 11%
Average deposits and other borrowings ($M)	84,767 79,319 7% 82,051 76,835 7%

New Zealand
Net interest margin (%)	2.49 2.49 0 bps 2.49 2.63 -14 bps
Average interest earning assets ($M)	77,787 71,499 9% 74,652 67,712 10%
Average deposits and other borrowings ($M)	48,312 45,023 7% 46,672 40,688 15%

Group net interest margin (excluding Global Markets) – September 2013 Half Year v March 2013 Half Year

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267
2
2
261
(4) (2) (3) (1)
bps
1H13 Impact of lower Asset mix and Funding costs Deposits Asset competition Other 2H13
Cash interest rates funding mix competition and risk mix Cash
Net interest margin Net interest margin
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September 2013 v March 2013 (excluding Global Markets)

Net interest margin (-6 bps)

Impact of lower interest rates (-4 bps): lower returns on capital and rate-insensitive deposits in a lower interest rate environment.
Asset mix and funding mix (-2 bps): due to strong growth in lower margin Trade business, including adverse foreign exchange mix impacts from lower margin offshore business increasing as a proportion of the overall portfolio.
Funding costs (+2 bps): wholesale funding costs have reduced slightly during the period but remain elevated.
Deposit competition (+2 bps): small decrease in deposit competition across Australia and New Zealand.
Asset competition and risk mix (-3 bps): continued pressure on lending margins, including lower spreads from improved credit quality within IIB.

CFO OVERVIEW

Average interest earning assets (+$26.0 billion or 6%)

Australia (+$9.1 billion or 3%): Mortgages up $6.6 billion driven by increase in fixed rate and variable rate lending and Corporate & Commercial up $2.2 billion, driven by growth in Fixed Loans and Tailored Commercial Facilities.
IIB (+$10.1 billion or 10%): Transaction Banking up $5.7 billion with an increase in trade finance loans in the APEA region, along with an increase in Global Loans by $2.4 billion.
New Zealand (+$6.3 billion or 9%): uplift in retail lending, particularly fixed rate mortgages, and Small Business Banking.

Average deposits and other borrowings (+$24.8 billion or 8%)

Australia (+$4.4 billion or 3%): reflecting increased customer deposits in Retail from higher volumes on Progress Saver and Mortgage offset products, along with growth in Commercial deposits.
IIB (+$5.4 billion or 7%): increase in term deposits, with growth concentrated in the APEA region.
New Zealand (+$3.3 billion or 7%): uplift in customer deposits in Small Business Banking and Retail Banking.
Group Centre (+$10.5 billion or 21%): increased short term wholesale funding via Commercial Paper and Certificates of Deposit.
September 2013 v September 2012 (excluding Global Markets)

Net interest margin (-8 bps)

Impact of lower interest rates (-9 bps): lower returns on capital and rate-insensitive deposits in a lower interest rate environment.
Funding and asset mix (-2 bps): due to higher growth in lower margin Trade business partially offset by improved funding mix from increased proportion of customer deposits and lower reliance on wholesale funding.
Funding costs (+2 bps): wholesale funding costs have reduced during the period but remain elevated.
Deposit competition (-4 bps): due to increased competition for deposits across all businesses during the period.
Asset competition and risk mix (+4 bps): benefits of active margin management in Australia, partially offset by lower lending margins in IIB, including lower spreads from improved credit quality.

Average interest earning assets (+$33.3 billion or 8%)

Australia (+ $15.4 billion or 6%): Mortgages up $10.4 billion and Corporate & Commercial up $4.8 billion, primarily in Fixed lending and Tailored Commercial Facilities.
IIB (+$10.6 billion or 11%): $1.7 billion growth in Global Loans and $6.8 billion uplift in trade finance lending in Transaction Banking.
New Zealand (+$6.9 billion or 10%): uplift in retail lending, particularly in mortgages.

Average deposits and other borrowings (+$24.3 billion or 8%)

Australia (+ $13.2 billion or 10%): reflecting increased customer deposits in Retail from higher volumes on Progress Saver products, along with growth in Commercial deposits.
IIB (+$5.2 billion or 7%): mainly due to increased customer deposits within the APEA region.
New Zealand (+$6.0 billion or 15%): uplift from Retail and Small Business Banking focussing on higher margin savings and call products.
Group Centre (-$1.0 billion or -2%): increased short term NCD issuance offset by reduced Commercial Paper borrowing.

CFO OVERVIEW

Income and expenses, cont’d

Other operating income

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Fee income1	1,171 1,145 2% 2,316 2,293 1%
Foreign exchange earnings1	75 134 -44% 209 288 -27%
Net income from wealth management	622 594 5% 1,216 1,099 11%
Share of associates' profit1	269 209 29% 478 396 21%
Other1,2	54 27 large 81 449 -82%
Global Markets other operating income3	565 741 -24% 1,306 1,213 8%
Cash other operating income	2,756 2,850 -3% 5,606 5,738 -2%

Excluding Global Markets
2.
Other income includes a $291 million gain on sale of Visa shares in 2012

During the year the Group recognised a funding valuation adjustment of $61 million for the net cost of funding associated with collateralised and uncollateralised derivative positions

Global Markets income
Net interest income	433	371	17%	804	695	16%
Other operating income	565	741	-24%	1,306	1,213	8%
Cash Global Markets income	998	1,112	-10%	2,110	1,908	11%


	Half Year Full Year

Other operating income by division	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	602 587 3% 1,189 1,193 0%
International and Institutional Banking	1,402 1,496 -6% 2,898 2,760 5%
New Zealand	186 162 15% 348 315 10%
Global Wealth	705 680 4% 1,385 1,318 5%
Group Centre1	(139) (75) 85% (214) 152 large
Cash other operating income	2,756 2,850 -3% 5,606 5,738 -2%

Other income includes a $291 million gain on sale of Visa shares in 2012

Other operating income – September 2013 Half Year v March 2013 Half Year

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27
60
26
2,850 28
(59) 2,756
$m (176)
1H13 Fee income Foreign exchange Net income from Share of Other Global Markets 2H13
Cash other earnings wealth associates' profit other operating Cash other
operating income management income operating income
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September 2013 v March 2013

Fee income

New Zealand grew $6 million as a result of movements in exchange rates.
Relationship & Infrastructure increased $5 million due to an increase in corporate advisory activity.
Corporate and Commercial Banking increased $5 million due to volume growth.

Foreign Exchange

Group Centre reduced $89 million mainly driven by realised losses on foreign currency revenue hedges (offsetting translation gains elsewhere in the Group).
Cards & Payments increased $13 million driven by higher volumes as a result of seasonality.
Global Transaction Banking increased $7 million as a result of higher volumes.

CFO OVERVIEW

Net Income from Wealth Management

Global Wealth increased $11 million mainly due to growth in Funds Management income.
Group Centre increased $13 million due to a reduction in the elimination of OnePath investments in ANZ products (offset in net interest income).

Share of associates profit

AMMB Holdings Berhad (AMMB) increased $25 million as a result of higher underlying earnings as well as seasonal factors impacting nonannuity earnings.
Shanghai Rural Commercial Bank (SRCB) increased $17 million mainly attributable to an impairment of an investment in the March 2013 half and growth in interest income.
P.T. Bank Pan Indonesia (Panin Bank) increased $8 million driven by higher underlying business earnings.

Other income

Global Loans increased $14 million mainly due to losses on loan sell downs in the March 2013 half.
New Zealand increased $13 million mainly as a result of the gain on sale of EFTPOS New Zealand Limited in the September 2013 half.
Global Wealth increased $11 million mainly due to an increase in insurance premiums from Lenders Mortgage Insurance.
Asia Partnerships decreased $27 million mainly due to a write-down of the investment in Saigon Securities Inc (SSI) in the September 2013 half.

Global Markets Income

Total Global Markets income was affected by mix impacts between the categories within other operating income and net interest income. Total Global Markets income decreased $114 million or 10%. Key drivers were:

Fixed Income down $137 million (29%). In the March 2013 half conditions were very favourable for the Balance Sheet business as credit spreads tightened significantly, whereas in the September 2013 half credit spreads widened. Additionally, a funding valuation adjustment reduced September 2013 income.
FX Income up $46 million (11%). The FX business had a very strong September 2013 half as the Australian Dollar dropped below the 90 cents level resulting in a significant increase in customer volumes.
Capital Markets down $18 million (15%) mainly driven by reduced deal activity in Loan Syndications.
Refer to page 55 for further information.
September 2013 v September 2012

Fee income

Global Transaction Banking increased $40 million driven by trade finance loan volume growth and pricing initiatives.
Relationship & Infrastructure decreased $9 million due to a reduction in corporate advisory activity.
Global Loans decreased $9 million due to lower volumes of non-yield related fee income in Specialised Finance in Australia.

Foreign Exchange

Group Centre decreased $75 million mainly due to realised foreign currency hedge losses (offsetting translation gains elsewhere in the Group).

Net Income from Wealth Management

Global Wealth increased $65 million mainly due to an increase in insurance and funds management income.
New Zealand grew $11 million mainly due to an increased branch distribution of insurance products and improved Kiwisaver performance.
Retail Asia Pacific increased $8 million as a result of improved insurance and investment performance in Singapore and Indonesia.
Group Centre increased $34 million due to a reduction in the elimination of OnePath investments in ANZ products (offset in net interest income).

Share of associates profit

SRCB increased $33 million mainly attributable to growth in interest income driven by loan repricing and reduced low margin lending as well as lower credit provisions.
Bank of Tianjin (BoT) increased $21 million due to an increase in underlying earnings driven by strong asset growth.
AMMB increased $15 million mainly attributable to an increase in underlying earnings driven by growth in interest income and lower credit provisions.

Other income

Group Centre decreased $320 million mainly due to the $291 million gain on sale of Visa shares in the 2012 year and lower earnings from discontinued businesses.
Global Loans decreased $31 million due mainly to a gain on restructuring a transaction in the 2012 year and losses on loan sell downs in the 2013 year.
Retail Asia Pacific decreased $17 million mainly due to a gain on the Taiwan card portfolio in 2012.
Asia Partnerships decreased $16 million due mainly to the $26 million write-down of SSI in 2013.
New Zealand increased $15 million mainly as a result of the gain on sale of EFTPOS New Zealand Limited in the 2013 year.

CFO OVERVIEW

Global Markets Income

Total Global Markets income was affected by mix impacts between the categories within other operating income and net interest income. Total Global Markets income increased $202 million or 11%. Key drivers were:

Fixed Income increased $43 million (6%) mainly driven by Credit and Balance Sheet trading benefitting from contracting spreads in the 2013 year, more than offsetting the impact of a funding valuation adjustment.
FX Income up $107 million (14%) reflecting the execution of the strategy that has been underway within Global Markets to grow the FX business, particularly in the key global FX markets of Singapore and London. FX income in Asia is up 25% over the year and up 40% in Europe over the same period. The business has on boarded customers and grown market share, with this customer acquisition driving revenue growth in this business.
Capital Markets up $22 million (11%) mainly driven by increased deal activity in Loan Syndications.

Refer to page 55 for further information.

CFO OVERVIEW

Income and expenses, cont’d

Expenses

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Personnel expenses	2,413 2,344 3% 4,757 4,765 0%
Premises expenses	377 356 6% 733 716 2%
Computer expenses1	625 618 1% 1,243 1,383 -10%
Restructuring expenses2	28 57 -51% 85 274 -69%
Other expenses	759 659 15% 1,418 1,381 3%
Total cash operating expenses	4,202 4,034 4% 8,236 8,519 -3%
Total full time equivalent staff (FTE)	47,512 47,419 0% 47,512 48,239 -2%

Computer expenses include nil software impairment (Mar 13 half: $8 million; Sep 12 full year: $274 million)

Restructuring expenses include $4 million related to the NZ Simplification (Mar 13 half: $14 million; Sep 12 full year: $148 million)

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Australia	1,486 1,465 1% 2,951 3,002 -2%
International and Institutional Banking	1,524 1,446 5% 2,970 3,069 -3%
New Zealand	482 470 3% 952 1,061 -10%
Global Wealth	484 460 5% 944 967 -2%
Group Centre	226 193 17% 419 420 0%
Total cash operating expenses	4,202 4,034 4% 8,236 8,519 -3%

Operating Expenses – September 2013 Half Year v March 2013 Half Year

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100 4,202
69 21 7
4,034
(29)
$m
1H13 Personnel Premises Computer expenses Restructuring Other expenses 2H13
Cash operating expenses expenses expenses Cash operating
expenses expenses
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September 2013 v March 2013
Personnel expenses increased $69 million (3%) due to seasonally higher leave provision costs and higher salaries and wages due to the adverse impact of foreign exchange movements.
Premises expenses increased $21 million (6%) due to rent increases and the transition to new buildings in Sydney and New Zealand.
Computer expenses increased $7 million (1%) due to an increase in depreciation and amortisation.
Restructuring expenses reduced $29 million (-51%) due to the wind down of NZ Simplification and a reduction in restructuring activities relative to the March half.
Other expenses increased $100 million (15%) due primarily to higher costs relating to Banking on Australia and investment in technology, along with higher advertising spend.
September 2013 v September 2012
Personnel expenses decreased $8 million (0%), with annual salary increases and the adverse impact of foreign exchange movements being offset by reductions in staff numbers, increased utilisation of our hub resources and lower temporary staff costs.
Premises expenses increased $17 million (2%) mainly due to rent increases and the transition to new buildings in Sydney and New Zealand.
Computer expenses reduced $140 million (-10%) due to the $274 million impairment of software assets in 2012, partially offset by an increase in depreciation and amortisation and technology investment.
Restructuring expenses decreased $189 million (-69%) mainly due to the wind down of NZ Simplification and lower spend on restructuring initiatives.
Other expenses increased $37 million (3%) due to higher costs relating to Banking on Australia and investment in technology, along with higher advertising spend.

CFO OVERVIEW

Credit risk

Overall asset quality has improved half on half, with gross impaired assets reducing by $421 million (9%) to $4,264 million at 30 September 2013, driven by a reduction in significant impaired exposures in IIB and New Zealand.

The Group continues to maintain a prudent approach to provisioning, with total provisions for impairment losses of $4,354 million as at 30 September 2013, up $42 million (1%) from March 2013, but year on year down $184 million (4%) primarily due to decreasing individual provision with improved quality of the IIB lending portfolio.

The total credit impairment charge of $598 million remained stable half on half, and reduced year on year by $61 million (5%).

		Half Year Full Year
Provision for credit impairment charge	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	434 386 12% 820 642 28%
International and Institutional Banking1	133 184 -28% 317 451 -30%
New Zealand	9 28 -68% 37 148 -75%
Global Wealth	3 1 large 4 4 0%
Group Centre	19 - n/a 19 13 46%
Provision for credit impairment charge	598 599 0% 1,197 1,258 -5%

Includes impairment of nil on AFS assets reclassified to Net Loans & Advances (Mar 13 half: $3 million; Sep 12 full year: $35 million)

	Half Year Full Year
Individual provision charge	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	401 370 8% 771 691 12%
International and Institutional Banking1	113 167 -32% 280 740 -62%
New Zealand	37 58 -36% 95 193 -51%
Global Wealth	2 - n/a 2 5 -60%
Group Centre	19 - n/a 19 8 large
Total individual provision charge	572 595 -4% 1,167 1,637 -29%

Includes impairment of nil on AFS assets reclassified to Net Loans & Advances (Mar 13 half: $3 million; Sep 12 full year: $35 million)

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
New and increased provisions	$M $M $M $M
Australia	582 550 6% 1,132 1,049 8%
International and Institutional Banking	205 245 -16% 450 947 -52%
New Zealand	145 150 -3% 295 372 -21%
Global Wealth	4 - n/a 4 9 -56%
Group Centre	19 - n/a 19 11 73%
New and increased provisions for loans and advances	955 945 1% 1,900 2,388 -20%


Recoveries and writebacks
Australia	(181) (180) 1% (361) (358) 1%
International and Institutional Banking	(92) (78) 18% (170) (207) -18%
New Zealand	(108) (92) 17% (200) (179) 12%
Global Wealth	(2) - n/a (2) (4) -50%
Group Centre	- - n/a - (3) -100%
Recoveries and writebacks	(383) (350) 9% (733) (751) -2%
Total individual provision charge	572 595 -4% 1,167 1,637 -29%

CFO OVERVIEW

Credit risk, cont’d

 September 2013 v March 2013

The total individual provision charge decreased $23 million (4%) over the March 2013 half, mainly driven by reductions in IIB and New Zealand, partially offset by increased provisions of $31 million (8%) in Australia division.

 September 2013 v September 2012

The total individual provision charge decreased $470 million (29%) compared to the September 2012 full year, primarily driven by a reduced number of individual provision charges in IIB and New Zealand where credit quality improved. This was partially offset by an increase in the individual provision in Australia division, driven primarily by Commercial lending.

Collective provision charge/(release)

	Half Year Full Year
Collective provision charge by source	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Lending growth	67 69 -3% 136 148 -8%
Risk profile1	(23) (20) 15% (43) (196) -78%
Portfolio mix	(9) (20) -55% (29) (12) large
Economic cycle and concentration risk adjustment1	(9) (25) -64% (34) (319) -89%
Collective provision charge/(release)	26 4 large 30 (379) large

1. Risk profile release in 2012 includes $60 million transferred to Economic cycle and concentration risk adjustment

Collective provision charge/(release) by division
Australia	33	16	large	49	(49)	large
International and Institutional Banking	20	17	18%	37	(289)	large
New Zealand	(28)	(30)	-7%	(58)	(45)	29%
Global Wealth	1	1	0%	2	(1)	large
Group Centre	-	-	n/a	-	5	-100%
Collective provision charge/(release)	26	4	large	30	(379)	large

September 2013 v March 2013

The collective provision charge increased $22 million from March 2013 half primarily driven by a $17 million increase in Australia division.

The $26 million collective provision charge reflects a $33 million charge in Australia division due to growth in the Commercial portfolio, offset partially by seasonal improvement in Retail. The $20 million collective provision charge in IIB was driven by growth, and the release in New Zealand of $28 million reflects economic cycle releases.

 September 2013 v September 2012

The full year collective provision charge increased $409 million from a $379 million release in September 2012 to a $30 million charge in September 2013. The increase was driven primarily by a $98 million increase in Australia division reflecting releases from the economic cycle balance in 2012 and growth in 2013, and a $326 million movement in IIB due to crystallisation of individual provisions on a few large legacy exposures in 2012 and the associated collective provision release.

The $30 million collective provision charge reflects a $49 million charge in Australia division primarily related to volume growth in the Commercial portfolio, a $37 million charge in IIB primarily due to growth, and a release in New Zealand of $58 million reflecting economic cycle releases.

CFO OVERVIEW

Expected loss

Management believe that disclosure of modelled expected loss data for individual provisions will assist in assessing the longer term expected loss rates on the lending portfolio as it removes the volatility in reported earnings created by the use of the IFRS incurred credit loss provisioning. This expected loss methodology[1] is used internally for return on equity analysis and economic profit reporting.

The expected one year loss on the lending portfolio as at the balance date was $1,760 million, an increase of $60 million over the March 2013 half year.

1 This methodology is not related to the expected loss proposals currently being deliberated on by the International Accounting Standards Board.

	% of Group		As at
	exposure at
Expected loss as a percentage of exposure at default	default	Sep 13	Mar 13	Sep 12
Australia	42%	0.30%	0.30%	0.31%
International and Institutional Banking	45%	0.17%	0.18%	0.19%
New Zealand	12%	0.23%	0.24%	0.23%
Global Wealth	1%	0.14%	0.12%	0.15%
Other	0%	0.01%	0.00%	0.00%
Total	100%	0.23%	0.24%	0.24%
Annual expected loss ($million)		1,760	1,700	1,655
	% of		As at
	Group
	gross lending
Expected loss as a percentage of gross lending assets	assets	Sep 13	Mar 13	Sep 12
Australia	58%	0.35%	0.36%	0.36%
International and Institutional Banking	24%	0.51%	0.52%	0.53%
New Zealand	17%	0.26%	0.28%	0.26%
Global Wealth	1%	0.15%	0.13%	0.17%
Other	0%	0.66%	0.65%	0.74%
Total	100%	0.37%	0.38%	0.38%

CFO OVERVIEW

Credit risk, cont’d

Provision for credit impairment balance

	As at ($M) Movement
	Sep 13 Mar 13 Sep 12 Sep 13 Sep 13
	$M $M $M v. Mar 13 v. Sep 12
Collective provision1	2,887 2,769 2,765 4% 4%
Individual provision	1,467 1,543 1,773 -5% -17%
Total provision for credit impairment	4,354 4,312 4,538 1% -4%

1. The collective provision includes amounts for off-balance sheet credit exposures: $595 million at Sep 2013 (Mar 13 half: $531 million; Sep 2012: $529 million). The impact on the income statement for the half year ended 30 September 2013 was a $35 million charge (Mar 13 half: $2 million charge; Sep 2012 full year: $36 million release)

Gross impaired assets

	As at ($M) Movement
	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Impaired loans	3,751 3,978 4,364 -6% -14%
Restructured items	341 524 525 -35% -35%
Non-performing commitments and contingencies	172 183 307 -6% -44%
Gross impaired assets	4,264 4,685 5,196 -9% -18%

	As at ($M) Movement
Gross impaired assets by division	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Australia	1,685 1,746 1,794 -3% -6%
International and Institutional Banking	1,758 1,893 2,222 -7% -21%
New Zealand	765 1,013 1,144 -24% -33%
Global Wealth	30 33 36 -9% -17%
Group Centre	26 - - n/a n/a
Cash gross impaired assets	4,264 4,685 5,196 -9% -18%

 September 2013 v March 2013

Gross impaired assets decreased by 9% over the March 2013 half year, driven primarily by improved credit quality and recovery processes in New Zealand and IIB.

September 2013 v September 2012

Gross impaired assets decreased by 18% over the September 2012 year, driven primarily by improved credit quality and recovery processes in New Zealand and IIB.

CFO OVERVIEW

Credit risk, cont’d

Net impaired assets

Net impaired assets
	As at ($M) Movement
	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Gross impaired assets	4,264 4,685 5,196 -9% -18%
Individual provisions
Impaired loans	(1,440) (1,518) (1,729) -5% -17%
Non-performing commitments and contingencies	(27) (25) (44) 8% -39%
Net impaired assets	2,797 3,142 3,423 -11% -18%

 September 2013 v March 2013

Net impaired assets decreased by 11% over the March 2013 half year driven by several single names returning to performing in IIB and New Zealand, combined with asset realisations and write-offs. The Group has an individual provision coverage ratio on impaired assets of 34.4% at 30 September 2013.

 September 2013 v September 2012

Net impaired assets decreased by 18% over the September 2012 full year driven by several single names returning to performing in IIB and New Zealand, combined with lending book credit quality improvements reducing the flow of new impaired assets. The Group has an individual provision coverage ratio on impaired assets of 34.4% at 30 September 2013, up from 34.1% as at 30 September 2012.

New Impaired Assets

==> picture [261 x 10] intentionally omitted <==

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Impaired loans	1,687 1,551 9% 3,238 3,570 -9%
Restructured items	24 13 85% 37 303 -88%
Non-performing commitments and contingencies	5 7 -29% 12 330 -96%
Total new impaired assets	1,716 1,571 9% 3,287 4,203 -22%

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
New impaired assets by division
Australia	940 782 20% 1,722 1,697 1%
International and Institutional Banking	446 453 -2% 899 1,706 -47%
New Zealand	296 335 -12% 631 787 -20%
Global Wealth	8 1 large 9 13 -31%
Group Centre	26 - n/a 26 - n/a
Total new impaired assets	1,716 1,571 9% 3,287 4,203 -22%

 September 2013 v March 2013

New impaired assets increased by 9% mainly driven by increases in Australia Corporate and Commercial portfolio with ongoing pressures in the rural sector, partially offset by reductions in IIB and New Zealand with improved portfolio credit quality.

 September 2013 v September 2012

New impaired assets decreased by 22% driven by significant reductions in IIB and New Zealand with improved portfolio credit quality.

	As at ($M) Movement
Impaired and Restructured Items by size of exposure	Sep 13 Sep 13
	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Less than $10 million	2,235 2,246 2,311 0% -3%
$10 million to $100 million	1,491 1,659 1,731 -10% -14%
Greater than $100 million	538 780 1,154 -31% -53%
Gross impaired assets1	4,264 4,685 5,196 -9% -18%
Less: Individually assessed provisions for impairment	(1,467) (1,543) (1,773) -5% -17%
Net impaired assets	2,797 3,142 3,423 -11% -18%

1. Includes $341 million restructured items (Mar 2013: $524 million; Sep 2012: $525 million)

CFO OVERVIEW

Credit risk, cont’d

Net impaired assets, cont’d

	As at ($M) Movement
Ageing analysis of net advances	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
that are past due but not impaired
1-5 days	3,096 2,088 2,285 48% 35%
6-29 days	4,416 5,294 4,926 -17% -10%
30-59 days	1,506 1,870 1,478 -19% 2%
60-89 days	927 889 733 4% 26%
>90 days	1,818 1,696 1,713 7% 6%
Total	11,763 11,837 11,135 -1% 6%

CFO OVERVIEW

Income tax expense

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Income tax expense on cash profit	1,171 1,266 -8% 2,437 2,235 9%
Effective tax rate (cash profit)	26.1% 28.4% 27.2% 27.7%

 September 2013 v March 2013

The effective tax rate was down 2.3% primarily due to a favourable OnePath Australia tax consolidation adjustment and higher profit from associates in the September 2013 half. In addition, the September 2013 half included a favourable increase in the overseas tax rate differential.

 September 2013 v September 2012

The effective tax rate was down 0.5%, with the favourable OnePath Australia tax consolidation adjustment being largely offset by an increase in OnePath Australia policyholder contributions tax.

Impact of exchange rate movements/revenue hedges

The Group uses derivative instruments to economically hedge against the adverse impact on future offshore revenue streams from exchange rate movements.

Movements in average exchange rates, net of associated revenue hedges, resulted in an increase of $19 million in the Group’s cash profit after tax for the September 2013 half. This included the impact on earnings (cash basis) from associated revenue and expense hedges, which decreased $80 million (before tax) over the March 2013 half (September 2012 full year: decrease of $103 million). Hedge revenue/cost is booked in the Group Centre.

	Half Year Sep 2013 v. Half Year Mar 2013 Full Year Sep 2013 v. Full Year Sep 2012
	FX unadjusted % growth FX adjusted % growth FX Impact $M FX unadjusted % growth FX adjusted % growth FX Impact $M


Net interest income	5% 3% 123 5% 4% 166
Other operating income	-3% -3% 5 -2% -2% (27)
Operating income	2% 1% 128 3% 2% 139
Operating expenses	4% 2% (102) -3% -5% (110)
Profit before credit impairment and income tax	1% 0% 26 9% 8% 29
Provision for credit impairment	0% -2% (12) -5% -5% (8)
Profit before income tax	1% 1% 14 11% 11% 21
Income tax expense	-8% -7% 5 9% 9% 5
Non-controlling interests	0% 0% - 67% 67% -
Cash profit	4% 4% 19 11% 11% 26

The Group’s cash profit adjusted for exchange rate movements is as follows:

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt


Net interest income	6,536 6,359 3% 12,772 12,276 4%
Other operating income	2,756 2,855 -3% 5,606 5,711 -2%
Operating income	9,292 9,214 1% 18,378 17,987 2%
Operating expenses	(4,202) (4,136) 2% (8,236) (8,629) -5%
Profit before credit impairment and income tax	5,090 5,078 0% 10,142 9,358 8%
Provision for credit impairment	(598) (611) -2% (1,197) (1,266) -5%
Profit before income tax	4,492 4,467 1% 8,945 8,092 11%
Income tax expense	(1,171) (1,261) -7% (2,437) (2,230) 9%
Non-controlling interests	(5) (5) 0% (10) (6) 67%
Cash profit (exchange rate adjusted)	3,316 3,201 4% 6,498 5,856 11%

CFO OVERVIEW

Earnings related hedges

The Group has taken out economic hedges against New Zealand dollar and US dollar (and USD linked) revenue and expense streams. New Zealand dollar exposure relates to the New Zealand geography (refer page 79) and the debt component of New Zealand dollar intra-group funding of this business, which amounted to NZD1.766 billion at 30 September 2013. Most of our US dollar earnings are in APEA (refer page 79). Details of these hedges are set out below.

	Half Year Full Year
NZD Economic hedges	Sep 13 Mar 13 Sep 13 Sep 12
	$M $M $M $M
Net open NZD position (notional principal)1	1,549 1,315 1,549 997
Amount taken to income (pre tax statutory basis)2	(175) (3) (178) 5
Amount taken to income (pre tax cash basis)3	(40) (2) (42) 3
USD Economic hedges
Net open USD position (notional principal)1	1,294 728 1,294 725
Amount taken to income (pre tax statutory basis)2	(88) 13 (75) 122
Amount taken to income (pre tax cash basis)3	(19) 23 4 62

1. Value in AUD at original contract rate 2. Unrealised valuation movement plus realised revenue from closed out hedges 3.

Realised revenue from closed out hedges

As at 30 September 2013, the following hedges are in place to partially hedge future earnings against adverse movements in exchange rates:

NZD1.9 billion at a forward rate of approximately NZD1.23/AUD.
USD1.2 billion at a forward rate of approximately USD0.94/AUD.
September 2013 v March 2013

During the half year:

NZD0.7 billion of economic hedges matured and a realised loss of $40 million (pre-tax) was booked in cash profit.
USD0.5 billion of economic hedges matured and a realised loss of $19 million (pre-tax) was booked in cash profit.
An unrealised loss of $204 million (pre-tax) on the outstanding NZD and USD economic hedges was booked to the income statement during the half and has been treated as an adjustment to statutory profit as these are hedges of future periods’ NZD and USD revenues.
September 2013 v September 2012

During the full year:

NZD1.4 billion of economic hedges matured and a realised loss of $42 million (pre-tax) was booked in cash profit.
USD0.9 billion of economic hedges matured and a realised gain of $4 million (pre-tax) was booked in cash profit.
An unrealised loss of $215 million (pre-tax) on the outstanding NZD and USD economic hedges was booked to the income statement during the year and has been treated as an adjustment to statutory profit as these are hedges of future periods’ NZD and USD revenues.

Earnings per share (cents)

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Cash earnings per share (cents)1
Basic	121.5 117.0 4% 238.5 218.5 9%
Diluted	117.5 113.2 4% 231.2 210.3 10%

Weighted average number of ordinary shares (M)2
Basic	2,727.5 2,716.6 0% 2,722.1 2,663.1 2%
Diluted	2,915.4 2,904.4 0% 2,904.7 2,903.3 0%

Cash profit ($M)	3,316 3,182 4% 6,498 5,830 11%
Preference share dividends ($M)1	(3) (3) 0% (6) (11) -45%
Cash profit less preference share dividends ($M)	3,313 3,179 4% 6,492 5,819 12%

Diluted cash profit less preference share dividends ($M)	3,420 3,289 4% 6,709 6,105 10%

The earnings per share calculation excludes the Euro Trust Securities (preference shares)

2. Includes Treasury shares held in OnePath Australia

CFO OVERVIEW

Dividends

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Dividend per ordinary share (cents)
Interim (fully franked)	n/a 73 n/a 73 66 11%
Final (fully franked)1	91 n/a n/a 91 79 15%
Total (fully franked)	91 73 25% 164 145 13%

Ordinary share dividends used in payout ratio ($M)2	2,497 2,003 25% 4,500 3,919 15%
Cash profit ($M)	3,316 3,182 4% 6,498 5,830 11%
Less: Preference share dividends paid	(3) (3) 0% (6) (11) -45%
Ordinary share dividend payout ratio (cash basis)2	75.4% 63.0% 69.3% 67.3%

1. Final dividend for 2013 is proposed

Dividend payout ratio is calculated using proposed 2013 final dividend of $2,497 million, which is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2013 half year and September 2012 full year are calculated using actual dividend paid of $2,003 million and $3,919 million respectively. Dividend payout ratio is calculated by adjusting profit attributable to shareholders of the company by the amount of preference share dividends paid

The Directors propose that a final dividend of 91 cents be paid on each eligible fully paid ANZ ordinary share on 16 December 2013. The proposed 2013 final dividend will be fully franked for Australian tax purposes.

It is proposed that New Zealand imputation credits of NZ 10 cents per ordinary share will also be attached.

ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the 2013 final dividend and ANZ intends to provide shares under the DRP and BOP through the issue of new shares. ANZ also announced an intention to neutralise the impact of shares issued under the DRP and BOP through an on-market buyback of shares in an amount equal to the value of those shares issued under the DRP and BOP. The “Acquisition Price” to be used in determining the number of shares to be provided under the DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the ordinary course of trading on the ASX during the ten trading days commencing on 13 November 2013, and then rounded to the nearest whole cent. Refer to Note 5 of the Notes to Condensed Consolidated Financial Statements for further details regarding the operation of the DRP and BOP.

Economic profit

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Profit attributable to shareholders of the company	3,332 2,940 13% 6,272 5,661 11%
Adjustments between statutory profit and cash profit	(16) 242 large 226 169 34%
Cash profit	3,316 3,182 4% 6,498 5,830 11%
Economic credit cost adjustment	(205) (171) 20% (376) (330) 14%
Imputation credits	580 644 -10% 1,224 1,131 8%
Economic return	3,691 3,655 1% 7,346 6,631 11%
Cost of capital	(2,402) (2,243) 7% (4,645) (4,261) 9%
Economic profit	1,289 1,412 -9% 2,701 2,370 14%

Economic profit is a risk adjusted profit measure used to evaluate business unit performance and is considered in determining the variable component of remuneration packages. Economic Profit is used for internal management purposes and is not subject to audit.

Economic profit is calculated via a series of adjustments to cash profit. The economic credit cost adjustment replaces the actual credit loss charge with internal expected loss based on the average loss per annum on the portfolio over an economic cycle. The benefit of imputation credits is recognised, measured at 70% of Australian tax. The cost of capital is a major component of economic profit. At Group level, this is calculated using average ordinary shareholders’ equity (excluding non-controlling interests), multiplied by the cost of capital rate (currently 11%) plus the dividend on preference shares. At a business unit level, capital is allocated based on economic capital, whereby higher risk businesses attract higher levels of capital. This method is designed to help drive appropriate risk management and ensure business returns align with the relevant risk. Key risks covered include credit risk, operating risk, market risk and other risks.

Economic profit has declined 9% half-on-half due to higher cash profit being offset by a higher economic cost of credit adjustment, lower imputation credits due to lower Australian tax expense and the cost of higher capital levels.

Economic profit increased 14% year-on-year, with strong cash profit growth and higher imputation credits from increased Australian profits partially offset by the cost of higher capital levels.

CFO OVERVIEW

Balance sheet, liquidity and capital

Balance sheet, liquidity and capital
Condensed balance sheet

	As at ($B) Movement
	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Assets
Liquid assets	39.7 53.1 36.6 -25% 9%
Due from other financial institutions	22.2 20.8 17.1 7% 30%
Trading and available-for-sale assets	69.4 62.9 61.2 10% 13%
Derivative financial instruments	45.9 41.7 48.9 10% -6%
Net loans and advances	469.3 442.0 427.8 6% 10%
Regulatory deposits	2.1 1.7 1.5 25% 42%
Investments backing policy liabilities	32.1 31.2 29.9 3% 7%
Other	22.3 19.2 19.2 16% 16%
Total assets	703.0 672.6 642.1 5% 9%
Liabilities
Due to other financial institutions	36.3 43.3 30.5 -16% 19%
Customer deposits	368.8 344.1 327.9 7% 12%
Other deposits and other borrowings	70.9 76.4 69.2 -7% 2%
Deposits and other borrowings	439.7 420.5 397.1 5% 11%
Derivative financial instruments	47.5 45.1 52.6 5% -10%
Bonds and notes	70.4 60.2 63.1 17% 12%
Policy liabilities and external unit holder liabilities	35.9 34.8 33.5 3% 7%
Other	27.6 26.2 24.1 5% 15%
Total liabilities	657.4 630.1 600.9 4% 9%
Total equity	45.6 42.5 41.2 7% 11%

Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesale debt, or that the Group has insufficient capacity to fund increases in assets. The timing mismatch of cash flows and the related liquidity risk is inherent in all banking operations and is closely monitored by the Group. The Group maintains a portfolio of liquid assets to manage potential stresses in funding sources. The minimum level of liquidity portfolio assets to hold is based on a range of ANZ specific and general market liquidity stress scenarios such that potential cash flow obligations can be met over the short to medium term.

The Group’s approach to liquidity risk management incorporates the following key components:

Scenario modelling of funding sources
The Global financial crisis highlighted the importance of differentiating between stressed and normal market conditions in a name-specific crisis and the different behaviour that offshore and domestic wholesale funding markets can exhibit during market stress events. ANZ’s short term liquidity scenario modelling stresses cash flow projections against multiple ‘survival horizons’ over which the Group is required to remain cash flow positive. In addition, longer term scenarios are in place that measure the structural liquidity position of the balance sheet. Scenarios modelled are either prudential requirements or Board mandated scenarios. Under these scenarios, customer and wholesale balance sheet asset/liability flows are stressed.
Liquidity portfolio

The Group holds a diversified portfolio of cash and high credit quality securities that may be sold or pledged to provide same-day liquidity. This portfolio helps protect the Group’s liquidity position by providing cash in a severely stressed environment. All assets held in the prime portfolio are securities eligible for repurchase under agreements with the applicable central bank (i.e. ‘repo eligible’).

The liquidity portfolio is well diversified by counterparty, currency and tenor. Under the liquidity policy framework, securities purchased for ANZ’s liquidity portfolio must be of a similar or better credit quality to ANZ’s external long-term or short-term credit ratings and continue to be repo eligible.

Supplementing the prime liquid asset portfolio, the Group holds additional liquidity:

central bank deposits with the US Federal Reserve, Bank of England, Bank of Japan and European Central Bank of $21.2 billion;
Australian Commonwealth and State Government securities of $6.9 billion and gold and precious metals of $2.9 billion, and
cash and other securities to satisfy local country regulatory liquidity requirements which are not included in the liquid assets below.

CFO OVERVIEW

Liquidity risk, cont’d

Liquidity risk, cont’d
		As at
	Sep 13	Mar 13	Sep 12
Prime liquidity portfolio (Market Values)1	AUD $B	AUD $B	AUD $B
Australia	27.8	25.3	24.0
New Zealand	11.1	10.5	11.0
United States	2.1	1.3	1.4
United Kingdom	5.1	4.4	3.3
Singapore	3.1	3.2	4.5
Hong Kong	0.6	0.3	0.6
Japan	1.4	1.4	1.3
Total excluding internal Residential Mortgage Backed Securities	51.2	46.4	46.1
Internal Residential Mortgage Backed Securities (Australia)	35.7	35.3	34.9
Internal Residential Mortgage Backed Securities (New Zealand)	3.7	3.3	3.0
Total prime portfolio	90.6	85.0	84.0
Other eligible securities including gold and cash on deposit with central banks	31.0	36.8	30.6
Total liquidity portfolio	121.6	121.8	114.6

1. Market value is post the repo discount applied by the applicable central bank

Regulatory Change

The Basel 3 Liquidity changes include the introduction of two new liquidity ratios to measure liquidity risk (the Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR)). A component of the liquidity required under the proposed standards will likely be met via the previously announced Committed Liquidity Facility from the Reserve Bank of Australia (RBA), however the size and availability of the facility has not yet been agreed with APRA and the RBA. While ANZ has an existing stress scenario framework and structural liquidity risk metrics and limits in place, the Basel 3 liquidity requirements proposed are in general more challenging. These changes may impact the future size and composition of both ANZ’s liquidity portfolio and funding base. The Basel Committee on Banking Supervision released revised LCR details in January 2013 which included the re-calibration of certain balance sheet 'run-off factors'. APRA released a second draft Prudential Standard on its requirements in May 2013 which largely adopted the recalibrated Basel run-off factors. ANZ is expecting a final Prudential Standard from APRA before the end of the 2013 calender year as well as draft standards on Basel 3 Liquidity implementation from some offshore regulators from late 2013 onwards.

Wholesale Funding

ANZ targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.

$23.7 billion of term wholesale debt (with a remaining term greater than one year as at 30 September, 2013) was issued during 2013. In addition, $1.1 billion of ANZ Capital Notes and $0.4 billion of ANZ Wealth bonds were issued.

Access to all major global wholesale funding markets remained available to ANZ during 2013.
All wholesale funding needs were comfortably met.
The weighted average tenor of new term debt was 4.3 years (4.6 years in 2012).
The weighted average cost of new term debt issuance decreased in 2013 as a result of improved market conditions. Although average portfolio costs remain substantially above pre-crisis levels, they have started to decrease from these elevated levels during 2013.

CFO OVERVIEW

Liquidity risk, cont’d

The following tables show the Group’s funding composition:

	As at ($M) Movement
	Sep 13 Sep 13
	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Customer deposits and other liabilities1
Australia	152,403 145,550 140,810 5% 8%
International and Institutional Banking	163,151 151,847 142,651 7% 14%
New Zealand	46,494 41,423 39,622 12% 17%
Global Wealth	11,569 10,042 9,449 15% 22%
Group Centre	(4,788) (4,727) (4,656) 1% 3%
Customer deposits	368,829 344,135 327,876 7% 12%
Other2	13,158 12,373 9,841 6% 34%
Total customer deposits and other liabilities (funding)	381,987 356,508 337,717 7% 13%

Wholesale funding3,4
Bonds and notes5	69,570 59,422 62,693 17% 11%
Loan capital	12,804 11,666 11,914 10% 7%
Certificates of deposit	58,276 61,564 56,838 -5% 3%
Commercial paper issued	12,255 14,486 12,164 -15% 1%
Due to other financial institutions	36,306 38,678 30,538 -6% 19%
Other wholesale borrowings6	2,507 4,242 4,585 -41% -45%
Total wholesale funding	191,718 190,058 178,732 1% 7%
Shareholders' equity (excl preference shares)	44,744 41,648 40,349 7% 11%

Total funding	618,449 588,214 556,798 5% 11%

Wholesale funding maturity3,4
Short term wholesale funding (excluding Central Banks)	73,650 72,351 63,433 2% 16%
Central Bank deposits	15,374 18,360 15,475 -16% -1%
Total short term wholesale funding	89,024 90,711 78,908 -2% 13%
Long term wholesale funding
- Less than 1 year residual maturity	20,292 31,977 25,391 -37% -20%
- Greater than 1 year residual maturity	75,240 61,392 68,449 23% 10%
Hybrid capital including preference shares	7,162 5,978 5,984 20% 20%
Total wholesale funding and preference share capital
	191,718 190,058 178,732 1% 7%
excluding shareholders' equity


Total funding maturity
Short term wholesale funding (excluding Central Banks)	12% 12% 11%
Central Bank deposits	3% 3% 3%
Long term wholesale funding
- Less than 1 year residual maturity	3% 5% 5%
- Greater than 1 year residual maturity	12% 11% 12%
Total customer liabilities (funding)	62% 61% 61%
Shareholders' equity and hybrid debt	8% 8% 8%
Total funding and shareholders' equity	100% 100% 100%

Includes term deposits, other deposits and an adjustment to the Group Centre to eliminate ANZ Wealth investments in ANZ deposit products

Includes interest accruals, payables and other liabilities, provisions and net tax provisions, excluding other liabilities in ANZ Wealth

Long term wholesale funding amounts are stated at original hedged exchange rates. Movements due to currency fluctuations in actual amounts borrowed are classified as short term wholesale funding

Liability for acceptances have been removed as they do not provide net funding
5.

Includes net derivative balances, special purpose vehicles, other borrowings and Euro Trust Securities (preference shares)

6. Excludes term debt issued externally by ANZ Wealth

CFO OVERVIEW

Capital Management

Basel 3 Capital Ratios

	As at
	APRA Basel 3 Internationally Harmonised
	Sep 13 Mar 13 Sep 12 Sep 13 Mar 13 Sep 12
Common Equity Tier 1	8.5% 8.2% 8.0% 10.8% 10.3% 10.0%
Tier 1	10.4% 9.8% 9.7% 12.8% 12.1% 11.8%
Total capital	12.2% 11.7% 11.7% 14.7% 14.0% 13.9%
Risk weighted assets ($B)	339.3 322.6 315.4 318.5 307.6 299.5

APRA Basel 3 Common Equity Tier 1 – September 2013 v March 2013

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103
8
(8)
(11) 1 8.49
8.18 (62)
Movement
in
bps
Mar-13 Cash RWA Non-RWA Capital initiatives Dividends [1] Other Sep-13
APRA Basel 3 NPAT Business Usage Business Usage APRA Basel 3
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Following the issue of 14.8 million ordinary shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2013 interim dividend, the Company repurchased $425 million of ordinary shares via an on-market share buy-back resulting in 15.3 million ordinary shares being cancelled

Calculation of Capital Adequacy

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel Accord, ANZ has been accredited by Australian Prudential Regulation Authority (APRA) to use the Advanced Internal Ratings Based (AIRB) methodology for credit risk weighted assets and Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.

Effective 1 January 2013, APRA has adopted the majority of Basel 3 capital reforms in Australia. The Basel 3 reforms include; increased capital deductions from Common Equity Tier 1 (“CET1”) capital, an increase in capitalisation rates (including prescribed minimum capital buffers, fully effective 1 January 2016), tighter requirements around new Additional Tier 1 and Tier 2 securities and transitional arrangements for existing Additional Tier 1 and Tier 2 securities that do not conform to the new regulations. Other changes include capital requirements for counterparty credit risk and an increase in the asset value correlation with respect to exposures to large and unregulated financial institutions.

CFO OVERVIEW

APRA Basel 3 to Internationally Harmonised[2] Basel 3 Common Equity Tier 1 – September 2013 Half Year

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54 10.79
47
22
25
82
Movement
in
8.49
bps
Sep-13 10% allowance for Up to 5% Other Mortgage IRRBB RWA Sep-13
APRA Basel 3 investments in allowance for capital items 20% LGD floor (APRA Pillar 1 Internationally
insurance and banking deferred and others approach) Harmonised
associates tax assets Basel 3
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ANZ’s interpretation of the regulations documented in the Basel Committee publications; “Basel III: A global regulatory framework for more resilient banks and banking systems” (June 2011) and “International Convergence of Capital Measurement and Capital Standards” (June 2006)

The above table provides a reconciliation of CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Harmonised Basel 3 standards. APRA views the Basel 3 reforms as a minimum requirement and hence has not incorporated some of the concessions proposed in the Basel 3 rules and has also set higher requirements in other areas. As a result, Australian banks’ Basel 3 reported capital ratios will not be directly comparable with international peers (Internationally Harmonised Basel 3).

In addition, APRA has implemented an accelerated implementation timetable for the Basel 3 capital reforms, particularly in relation to minimum capital ratios and deductions which became effective 1 January 2013. Introduction of the prescribed minimum capital buffers will be fully effective from 1 January 2016 and the public disclosure of the Leverage Ratio from 1 January 2015.

APRA is still yet to finalise capital standards on the Basel 3 reforms dealing with the leverage ratio, contingent capital and measures to address systematic and inter-connected risks.

Level 3 Conglomerates (“Level 3”)

APRA has announced that it will proceed with implementing Level 3 Conglomerates framework on 1 January 2015, with final Level 3 capital adequacy standards expected to be released by January 2014. The standards will regulate a bancassurance group such as ANZ as a single economic entity with minimum capital requirements and additional reporting on risk exposure levels. Based upon APRA’s draft Level 3 capital adequacy standards released in May 2013, and draft prudential standards covering group governance and risk exposures in December 2012, ANZ is not expecting any material impact on its operations.

CFO OVERVIEW

Deferred acquisition costs and deferred income

The Group recognises as assets deferred acquisition costs relating to the acquisition of interest earning assets or the issuance of funding. The Group also recognises deferred income that is integral to the yield of an originated financial instrument, net of any direct incremental costs. This income is deferred and recognised as net interest income over the expected life of the financial instrument under AASB 139: ‘Financial Instruments: Recognition and Measurement’. Deferred acquisition costs that do not relate to interest earning assets, for example those relating to the acquisition of life investment contracts, are excluded from this analysis.

The balances of deferred acquisition costs and deferred income were:

	Deferred Acquisition Costs1 Deferred Income
	Sep 13 Mar 13 Sep 12 Sep 13 Mar 13 Sep 12
	$M $M $M $M $M $M
Australia	780 745 704 69 70 101
International and Institutional Banking	18 17 12 262 251 276
New Zealand	142 106 80 47 38 35
Global Wealth	2 1 1 3 3 3
Group Centre	49 44 53 - - -
Total	991 913 850 381 362 415

1. Deferred acquisition costs largely include the amounts of brokerage capitalised and amortised in the Australia and New Zealand divisions. Deferred acquisition costs also include capitalised debt raising expenses

Deferred acquisition costs and associated amortisation during the period were:

	Full Year Sep 2013 Full Year Sep 2012

	Amortisation Charge Capitalised Costs1 Amortisation Charge Capitalised Costs1

	$M $M $M $M
Australia	394 470 356 464
International and Institutional Banking	12 18 4 16
New Zealand	43 105 25 72
Global Wealth	- 1 - -
Group Centre	24 20 21 16
Total	473 614 406 568

1. Costs capitalised during the year exclude brokerage trailer commissions paid

CFO OVERVIEW

Software capitalisation

At 30 September 2013, the Group’s intangibles included $2,170 million in relation to costs incurred in acquiring and developing software. Details are set out in the table below:

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Balance at start of period	1,857 1,762 5% 1,762 1,572 12%
Software capitalised during the period	496 284 75% 780 786 -1%
Amortisation during the period	(202) (181) 12% (383) (320) 20%
Software impaired/written-off	- (8) -100% (8) (274) -97%
Foreign exchange differences	19 - n/a 19 (2) large
Total capitalised software	2,170 1,857 17% 2,170 1,762 23%

Capitalised cost analysis by Division	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Australia	136 76 79% 212 180 18%
International and Institutional Banking	162 115 41% 277 345 -20%
New Zealand	10 12 -17% 22 31 -29%
Global Wealth	36 15 large 51 46 11%
Group Centre	152 66 large 218 184 18%
Total	496 284 75% 780 786 -1%

Net book value by Division	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Australia	453 359 26% 453 338 34%
International and Institutional Banking	1,008 914 10% 1,008 873 15%
New Zealand	75 84 -11% 75 81 -7%
Global Wealth	97 75 29% 97 75 29%
Group Centre	537 425 26% 537 395 36%
Total	2,170 1,857 17% 2,170 1,762 23%

SEGMENT REVIEW

Section 5 – Segment Review

Segment performance Australia International and Institutional Banking New Zealand Global Wealth Group Centre

SEGMENT REVIEW

Segment Performance

The Group operates on a divisional structure with Australia, International and Institutional Banking (IIB), New Zealand and Global Wealth being the major operating divisions.

Effective 1 October 2012, Corporate Banking Australia transferred to the Australia division from IIB, and comparatives have been restated accordingly.

There have been no other major structure changes, however prior period comparatives are adjusted for changes such as minor restatements as a result of changes to customer segmentation, changes to net interbusiness unit expense methodologies and the realignment of support functions.

The Segment Review section is reported on a cash basis.

September 2013 Half Year
		International &
		Institutional
AUD M	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	3,396	1,891	971	67	211	6,536
Other operating income	602	1,402	186	705	(139)	2,756
Operating income	3,998	3,293	1,157	772	72	9,292
Operating expenses	(1,486)	(1,524)	(482)	(484)	(226)	(4,202)
Profit before credit impair't and income tax	2,512	1,769	675	288	(154)	5,090
Provision for credit impairment	(434)	(133)	(9)	(3)	(19)	(598)
Profit before income tax	2,078	1,636	666	285	(173)	4,492
Income tax expense and non-controlling interests	(620)	(405)	(182)	(19)	50	(1,176)
Cash profit	1,458	1,231	484	266	(123)	3,316

March 2013 Half Year
		International &
		Institutional
AUD M	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	3,282	1,775	889	58	232	6,236
Other operating income	587	1,496	162	680	(75)	2,850
Operating income	3,869	3,271	1,051	738	157	9,086
Operating expenses	(1,465)	(1,446)	(470)	(460)	(193)	(4,034)
Profit before credit impair't and income tax	2,404	1,825	581	278	(36)	5,052
Provision for credit impairment	(386)	(184)	(28)	(1)	-	(599)
Profit before income tax	2,018	1,641	553	277	(36)	4,453
Income tax expense and non-controlling interests	(603)	(442)	(156)	(74)	4	(1,271)
Cash profit	1,415	1,199	397	203	(32)	3,182

September 2013 Half Year vs March 2013 Half Year
		International &
		Institutional
%	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	3%	7%	9%	16%	-9%	5%
Other operating income	3%	-6%	15%	4%	85%	-3%
Operating income	3%	1%	10%	5%	-54%	2%
Operating expenses	1%	5%	3%	5%	17%	4%
Profit before credit impair't and income tax	4%	-3%	16%	4%	large	1%
Provision for credit impairment	12%	-28%	-68%	large	n/a	0%
Profit before income tax	3%	0%	20%	3%	large	1%
Income tax expense and non-controlling interests	3%	-8%	17%	-74%	large	-7%
Cash profit	3%	3%	22%	31%	large	4%

SEGMENT REVIEW

September 2013 Full Year
		International &
		Institutional
AUD M	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	6,678	3,666	1,860	125	443	12,772
Other operating income	1,189	2,898	348	1,385	(214)	5,606
Operating income	7,867	6,564	2,208	1,510	229	18,378
Operating expenses	(2,951)	(2,970)	(952)	(944)	(419)	(8,236)
Profit before credit impair't and income tax	4,916	3,594	1,256	566	(190)	10,142
Provision for credit impairment	(820)	(317)	(37)	(4)	(19)	(1,197)
Profit before income tax	4,096	3,277	1,219	562	(209)	8,945
Income tax expense and non-controlling interests	(1,223)	(847)	(338)	(93)	54	(2,447)
Cash profit	2,873	2,430	881	469	(155)	6,498

September 2012 Full Year
		International &
		Institutional
AUD M	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	6,163	3,667	1,780	122	378	12,110
Other operating income	1,193	2,760	315	1,318	152	5,738
Operating income	7,356	6,427	2,095	1,440	530	17,848
Operating expenses	(3,002)	(3,069)	(1,061)	(967)	(420)	(8,519)
Profit before credit impair't and income tax	4,354	3,358	1,034	473	110	9,329
Provision for credit impairment	(642)	(451)	(148)	(4)	(13)	(1,258)
Profit before income tax	3,712	2,907	886	469	97	8,071
Income tax expense and non-controlling interests	(1,114)	(796)	(244)	(123)	36	(2,241)
Cash profit	2,598	2,111	642	346	133	5,830

September 2013 Full Year vs September 2012 Full Year	September 2013 Full Year vs September 2012 Full Year
		International &
		Institutional
%	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	8%	0%	4%	2%	17%	5%
Other operating income	0%	5%	10%	5%	large	-2%
Operating income	7%	2%	5%	5%	-57%	3%
Operating expenses	-2%	-3%	-10%	-2%	0%	-3%
Profit before credit impair't and income tax	13%	7%	21%	20%	large	9%
Provision for credit impairment	28%	-30%	-75%	0%	46%	-5%
Profit before income tax	10%	13%	38%	20%	large	11%
Income tax expense and non-controlling interests	10%	6%	39%	-24%	50%	9%
Cash profit	11%	15%	37%	36%	large	11%

SEGMENT REVIEW

Australia

Philip Chronican

Australia division comprises Retail and Corporate and Commercial Banking businesses. Retail includes Home Loans, Deposits, Cards and Payments along with the Retail Distribution Network. Corporate and Commercial Banking includes our core banking offerings to Corporate Banking, Business Banking, Regional Business Banking and Small Business Banking customers and Esanda.

Cash profit – September 2013 Half Year v March 2013 Half Year

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15
114
(21)
1,458
1,415 (48) (17)
$m
1H13 Net interest income Other operating Operating expenses Provision for credit Income tax expense & 2H13
Cash profit income impairment non-controlling Cash profit
interests
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During 2013, we have continued to strengthen our Australian domestic franchise with market share gains in our target segments while maintaining strong margins, cost discipline and asset quality. We continue to leverage ANZ’s Super Regional advantage to bring the whole of ANZ to our customers.

Banking on Australia Transformation Program

Our Banking on Australia program is transforming the business to position ANZ for growth in a changing environment.

We are building our lead in digital and mobile channels to enhance the customer experience, expand our reach and deepen customer loyalty by making it easier for our customers to bank with us, while delivering a lower cost to serve. We are transforming our distribution network to focus on more complex sales, reduce branch footprint costs, build out contact centre capability and improve frontline banker productivity. This has resulted in revenue per FTE increasing 7% and the expense to income ratio reducing from 40.8% in 2012 to 37.5% in 2013.

Our customer connectivity continues to grow with one million active ANZ goMoney[TM] users, more than 7,000 active ANZ FastPay[TM] merchants and 1,200 frontline bankers enabled with mobility tools (iPads).

Banking on Australia is delivering. ANZ had the strongest overall growth of the major banks across Home Loans, Deposits, Cards[1] , and also Share of Wallet[2 ] in 2013. ANZ has now grown Housing Lending at above system levels for 14 consecutive quarters[1 ] and 53% of Home Loans are now sold through our proprietary channels, up from 49% in September 2012. Corporate and Commercial Banking (C&CB) has leveraged Banking on Australia by focusing on delivering an easy, connected and insightful customer experience and utilising ANZ’s super regional footprint. As a result C&CB has grown net customer numbers[3] by 30,000 (8%), delivered strong volume growth and increased cross-sell by 8% over the year.

September 2013 v March 2013

Cash profit increased 3% in the half, with 3% income growth partly offset by a 1% uplift in expenses and a 12% rise in credit provisions. Key factors affecting the result were:

Net interest income growth of 3% was driven by a 4% uplift in average net loans and advances from above system home loan

growth and good C&CB lending growth. Net interest margin was relatively stable, contracting 1bp.

Operating expenses were up 1% driven by investment in our Banking on Australia program.
Individual provisions for credit impairment in Retail increased 6% with a corresponding reduction in collective provisions, reflecting normal seasonal trends. Corporate Banking saw a reduction in individual provisions offset by an increase in collective provisions, reflecting return to productive status of single name exposures. Other C&CB individual provisions increased, impacted by lower asset valuations across rural and vehicle finance sectors. Underlying credit quality remains sound with delinquencies reducing, stable risk grades and a continued reduction in impaired assets.
September 2013 v September 2012

Cash profit increased 11%, with a 7% increase in income and a 2% reduction in expenses, offset by a 28% increase in credit provisions. Key factors affecting the result were:

Net interest income increased 8% from growth in average net loans and advances of 6%, driven by sustained above system growth in home loans, including branch originated home loan sales growth of 16% and strong lending growth in C&CB. Additionally, net interest margin improved 5bps as a result of disciplined margin management, partly offset by deposit pricing pressures.
Operating expenses reduced 2% (flat after adjusting for nonrecurring software impairments in the prior year). Investment spending was funded by a reduction in average FTE and benefits from a focus on productivity and expense management.
Provision for credit impairment increased 28%. The increase in individual provision was driven by lower asset valuations across the rural and vehicle finance sectors in C&CB, partially offset by an improvement in cards delinquency. Collective provisions increased in both Retail and C&CB reflecting asset growth as well as releases in the prior period.
1 Source: APRA Monthly Banking Statistics for the year to June 13
2 Source: Roy Morgan Research: Aust Population aged 14+, rolling 12 months, Trade Banking Consumer Market (Deposits, Cards & Loans), Peers: CBA (excl Bankwest), NAB, Westpac (excl Bank of Melbourne & St George)
3 Excluding Esanda

SEGMENT REVIEW

Australia

Philip Chronican

Australia Total

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	3,396 3,282 3% 6,678 6,163 8%
Other external operating income	602 587 3% 1,189 1,193 0%
Operating income	3,998 3,869 3% 7,867 7,356 7%
Operating expenses	(1,486) (1,465) 1% (2,951) (3,002) -2%
Profit before credit impairment and income tax	2,512 2,404 4% 4,916 4,354 13%
Provision for credit impairment	(434) (386) 12% (820) (642) 28%
Profit before tax	2,078 2,018 3% 4,096 3,712 10%
Income tax expense and non-controlling interests	(620) (603) 3% (1,223) (1,114) 10%
Cash profit	1,458 1,415 3% 2,873 2,598 11%
Consisting of:
Retail	906 826 10% 1,732 1,444 20%
Corporate and Commercial Banking	552 589 -6% 1,141 1,164 -2%
Other	- - n/a - (10) -100%
Cash profit	1,458 1,415 3% 2,873 2,598 11%
Balance Sheet
Net loans & advances	271,619 262,065 4% 271,619 253,933 7%
Other external assets	2,914 2,909 0% 2,914 2,872 1%
External assets	274,533 264,974 4% 274,533 256,805 7%
Customer deposits	152,403 145,550 5% 152,403 140,810 8%
Other external liabilities	13,500 16,577 -19% 13,500 17,479 -23%
External liabilities	165,903 162,127 2% 165,903 158,289 5%
Risk weighted assets1	109,641 105,551 4% 109,641 98,559 11%
Average net loans and advances	266,959 257,920 4% 262,452 247,077 6%
Average deposits and other borrowings	148,692 144,293 3% 146,499 133,258 10%
Ratios
Return on assets	1.08% 1.09% 1.08% 1.04%
Net interest margin	2.52% 2.53% 2.53% 2.48%
Operating expenses to operating income	37.2% 37.9% 37.5% 40.8%
Operating expenses to average assets	1.10% 1.13% 1.11% 1.20%
Individual provision charge/(release)	401 370 8% 771 691 12%
Individual provision charge/(release) as a % of average net advances	0.30% 0.29% 0.29% 0.28%
Collective provision charge/(release)	33 16 large 49 (49) large
Collective provision charge/(release) as a % of average net advances	0.02% 0.01% 0.02% (0.02%)
Net impaired assets	939 1,016 -8% 939 1,078 -13%
Net impaired assets as a % of net advances	0.35% 0.39% 0.35% 0.42%
Total full time equivalent staff (FTE)	14,586 14,518 0% 14,586 14,606 0%

1. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

Australia

Philip Chronican

Individual provision charge/(release)	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Retail	198 186 6% 384 416 -8%
Mortgages	23 22 5% 45 43 5%
Cards & Payments	165 155 6% 320 358 -11%
Deposits1	10 9 11% 19 15 27%
Corporate and Commercial Banking	203 184 10% 387 275 41%
Corporate Banking	(16) 13 large (3) (13) -77%
Esanda	73 53 38% 126 82 54%
Regional Business Banking	53 43 23% 96 80 20%
Business Banking	43 33 30% 76 51 49%
Small Business Banking	50 42 19% 92 75 23%
Individual provision charge/(release)	401 370 8% 771 691 12%

Collective provision charge/(release)	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Retail	- 19 -100% 19 (33) large
Mortgages	7 5 40% 12 (14) large
Cards & Payments	(7) 15 large 8 (21) large
Other	- (1) -100% (1) 2 large
Corporate and Commercial Banking	33 (3) large 30 (16) large
Corporate Banking	18 (6) large 12 (11) large
Esanda	6 (2) large 4 19 -79%
Regional Business Banking	6 (8) large (2) 6 large
Business Banking	- 4 -100% 4 11 -64%
Small Business Banking	3 9 -67% 12 14 -14%
Other	- - n/a - (55) -100%
Collective provision charge/(release)	33 16 large 49 (49) large

Total provision charge/(release)	434 386 12% 820 642 28%

1. Represents individual provision charge on Overdraft balances

SEGMENT REVIEW

Australia

Philip Chronican

Net loans & advances	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Retail	206,269 198,883 4% 206,269 192,740 7%
Mortgages	194,991 187,920 4% 194,991 182,115 7%
Cards & Payments	11,184 10,894 3% 11,184 10,554 6%
Other	94 69 36% 94 71 32%
Corporate and Commercial Banking	65,320 63,182 3% 65,320 61,193 7%
Corporate Banking	9,466 9,296 2% 9,466 9,208 3%
Esanda	16,503 16,352 1% 16,503 15,847 4%
Regional Business Banking	12,121 11,373 7% 12,121 11,372 7%
Business Banking	16,628 16,403 1% 16,628 15,542 7%
Small Business Banking	10,602 9,758 9% 10,602 9,224 15%
Operations and Support	30 - n/a 30 - n/a
Net loans & advances	271,619 262,065 4% 271,619 253,933 7%

Customer deposits	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Retail	106,998 101,986 5% 106,998 97,611 10%
Mortgages	15,114 14,093 7% 15,114 13,187 15%
Cards & Payments	343 322 7% 343 382 -10%
Deposits	91,541 87,571 5% 91,541 84,042 9%
Corporate and Commercial Banking1	45,373 43,549 4% 45,373 43,182 5%
Esanda	19 66 -71% 19 96 -80%
Regional Business Banking	4,926 5,058 -3% 4,926 5,029 -2%
Business Banking	12,618 12,331 2% 12,618 12,791 -1%
Small Business Banking	27,810 26,094 7% 27,810 25,266 10%
Operations and Support	32 15 large 32 17 88%
Customer deposits	152,403 145,550 5% 152,403 140,810 8%

1. Corporate Banking deposits of $5.1 billion are included in the IIB division deposits (Mar 13 half: $5.8 billion; Sep 12 full year: $6.2 billion)

SEGMENT REVIEW

Australia

Philip Chronican

Retail

Retail
	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Net interest income	2,018 1,916 5% 3,934 3,529 11%
Other external operating income	460 452 2% 912 922 -1%
Operating income	2,478 2,368 5% 4,846 4,451 9%
Operating expenses	(992) (982) 1% (1,974) (2,006) -2%
Profit before credit impairment and income tax	1,486 1,386 7% 2,872 2,445 17%
Provision for credit impairment	(198) (205) -3% (403) (383) 5%
Profit before tax	1,288 1,181 9% 2,469 2,062 20%
Income tax expense and non-controlling interests	(382) (355) 8% (737) (618) 19%
Cash profit	906 826 10% 1,732 1,444 20%

Risk weighted assets	53,165 50,815 5% 53,165 47,237 13%

	Half Year Full Year
Individual provision charge/(release)	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Mortgages	23 22 5% 45 43 5%
Cards & Payments	165 155 6% 320 358 -11%
Deposits1	10 9 11% 19 15 27%
Individual provision charge/(release)	198 186 6% 384 416 -8%

Collective provision charge/(release)
Mortgages	7 5 40% 12 (14) large
Cards & Payments	(7) 15 large 8 (21) large
Other	- (1) -100% (1) 2 large
Collective provision charge/(release)	- 19 -100% 19 (33) large

Total provision charge/(release)	198 205 -3% 403 383 5%


	Half Year Full Year

Net loans & advances	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Mortgages	194,991 187,920 4% 194,991 182,115 7%
Cards & Payments	11,184 10,894 3% 11,184 10,554 6%
Other	94 69 36% 94 71 32%
Net loans & advances	206,269 198,883 4% 206,269 192,740 7%

Customer deposits
Mortgages	15,114 14,093 7% 15,114 13,187 15%
Cards & Payments	343 322 7% 343 382 -10%
Deposits	91,541 87,571 5% 91,541 84,042 9%
Customer deposits	106,998 101,986 5% 106,998 97,611 10%

1. Represents individual provision charge on Overdraft balances

SEGMENT REVIEW

Australia

Philip Chronican

Corporate and Commercial Banking

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Net interest income	1,374 1,363 1% 2,737 2,628 4%
Other external operating income	142 136 4% 278 276 1%
Operating income	1,516 1,499 1% 3,015 2,904 4%
Operating expenses	(491) (481) 2% (972) (982) -1%
Profit before credit impairment and income tax	1,025 1,018 1% 2,043 1,922 6%
Provision for credit impairment	(236) (181) 30% (417) (259) 61%
Profit before tax	789 837 -6% 1,626 1,663 -2%
Income tax expense and non-controlling interests	(237) (248) -4% (485) (499) -3%
Cash profit	552 589 -6% 1,141 1,164 -2%

Risk weighted assets	55,310 53,620 3% 55,310 50,608 9%

	Half Year Full Year
Individual provision charge/(release)	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Corporate Banking	(16) 13 large (3) (13) -77%
Esanda	73 53 38% 126 82 54%
Regional Business Banking	53 43 23% 96 80 20%
Business Banking	43 33 30% 76 51 49%
Small Business Banking	50 42 19% 92 75 23%
Individual provision charge/(release)	203 184 10% 387 275 41%

Collective provision charge/(release)
Corporate Banking	18 (6) large 12 (11) large
Esanda	6 (2) large 4 19 -79%
Regional Business Banking	6 (8) large (2) 6 large
Business Banking	- 4 -100% 4 11 -64%
Small Business Banking	3 9 -67% 12 14 -14%
Other	- - n/a - (55) -100%
Collective provision charge/(release)	33 (3) large 30 (16) large

Total provision charge/(release)	236 181 30% 417 259 61%


	Half Year Full Year

Net loans & advances	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Corporate Banking	9,466 9,296 2% 9,466 9,208 3%
Esanda	16,503 16,352 1% 16,503 15,847 4%
Regional Business Banking	12,121 11,373 7% 12,121 11,372 7%
Business Banking	16,628 16,403 1% 16,628 15,542 7%
Small Business Banking	10,602 9,758 9% 10,602 9,224 15%
Net loans & advances	65,320 63,182 3% 65,320 61,193 7%

Customer deposits1
Esanda	19 66 -71% 19 96 -80%
Regional Business Banking	4,926 5,058 -3% 4,926 5,029 -2%
Business Banking	12,618 12,331 2% 12,618 12,791 -1%
Small Business Banking	27,810 26,094 7% 27,810 25,266 10%
Customer deposits	45,373 43,549 4% 45,373 43,182 5%

1. Corporate Banking deposits of $5.1 billion are included in the IIB division deposits (Mar 13 half: $5.8 billion; Sep 12 full year: $6.2 billion)

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

The International and Institutional Banking (IIB) division comprises Global Institutional (including Transaction Banking, Global Loans and Global Markets), Retail Asia Pacific and Asia Partnerships, together with Relationship & Infrastructure.

Cash profit – September 2013 Half Year v March 2013 Half Year

==> picture [503 x 160] intentionally omitted <==

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116
37 1,231
1,199 51
(94)
(78)
$m
1H13 Net interest income Other operating Operating expenses Provision for credit Income tax expense & 2H13
Cash profit income impairment non-controlling Cash profit
interests
----- End of picture text -----

IIB’s result reflected continued progress of the Super Regional Strategy, through diversified income streams, improved quality of lending and enhanced connectivity for our customers.

We are doing more business with more customers in more products in more countries and this has helped offset margin pressure compared to prior periods.

Our continued expansion into Asia is illustrated by APEA now contributing 48% of income, with 10% income growth year on year. With the build out of scale and capability in Asia, IIB has benefitted from strong volume growth in Asia compared to the more constrained business environments in Australia and New Zealand.

Focus on growing Trade and Markets businesses has reduced reliance on net interest income and has seen other operating income increase 5% year on year.

Disciplined cost management has helped fund IIB’s investment in growth areas.

The 21% fall in gross impaired assets during the year reflects our continued actions to de-risk the Global Institutional portfolio, with 78% of the Institutional lending book now being investment grade (compared to 60% in 2008) and transforming the lending book to shorter dated Trade exposures.

September 2013 v March 2013

Cash profit increased by 3%, with improved performance by Transaction Banking and lower credit provisions being partially offset by higher operating expenses and reduced other operating income in Global Markets.

Key factors affecting the result were:

Net interest income increased 7%, driven by Transaction Banking and Global Markets. Net interest margin (excluding Global Markets) declined by 16 basis points driven by continued mix shift to lower risk trade products and Retail lending, a lower interest rate environment, improving credit quality across the lending portfolio and declining margins on deposits and trade products. Average customer deposits were 5% higher and average net loans and advances increased 8%, with growth concentrated in the APEA region.
Other external operating income decreased by 6%, with increases in Global Loans, Transaction Banking and Asian Partnerships offset by a 24% decrease in Global Markets, where improved sales revenue driven by increased customer flow was offset by funding valuation adjustments and normalisation of trading income.
Operating expenses were 5% higher, due to greater investment in strategic initiatives and IT project spend.
Provision charges for credit impairment decreased 28%, due to lower individual provision charges in the second half driven by recoveries in Australia.
September 2013 v September 2012

Cash profit increased 15%, driven by the strong Global Markets performance, lower credit provision charges in the Global Institutional businesses and write down of software assets in 2012, partially offset by margin compression.

Key factors affecting the result were:

Net interest income was flat. Solid growth in APEA accounted for most of the overall increases in average customer deposits (up 11%) and average net loans and advances (up 10%). However, net interest margin (excluding Global Markets) declined 41 basis points reflecting a continued mix shift to lower risk trade products, a lower rate environment, improving credit quality across the lending portfolio and margin compression from competition.
Other external operating income increased 5%, driven by the focus on growing Trade and Markets business and improved contributions from Asia Partnerships.
Operating expenses were 3% lower (2% higher after adjusting for non-recurring software impairments in the prior year), with cost savings from productivity gains and greater utilisation of the hub resources offset by continued re-investment in the business.
Provision charges for credit impairment were 30% lower, due in most part to higher individual provision charges booked in 2012 on a few legacy Global Institutional loans in Australia and also to improved quality across the lending book in 2013.

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

International and Institutional Banking Total

International and Institutional Banking Total
	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	1,891 1,775 7% 3,666 3,667 0%
Other external operating income	1,402 1,496 -6% 2,898 2,760 5%
Operating income	3,293 3,271 1% 6,564 6,427 2%
Operating expenses	(1,524) (1,446) 5% (2,970) (3,069) -3%
Profit before credit impairment and income tax	1,769 1,825 -3% 3,594 3,358 7%
Provision for credit impairment	(133) (184) -28% (317) (451) -30%
Profit before income tax	1,636 1,641 0% 3,277 2,907 13%
Income tax expense and non-controlling interests	(405) (442) -8% (847) (796) 6%
Cash profit	1,231 1,199 3% 2,430 2,111 15%
Consisting of:
Global Institutional	1,064 1,037 3% 2,101 1,904 10%
Asia Partnerships	212 186 14% 398 344 16%
Retail Asia Pacific	15 32 -53% 47 60 -22%
Relationship & Infrastructure	(60) (56) 7% (116) (197) -41%
Cash profit	1,231 1,199 3% 2,430 2,111 15%
Balance Sheet
Net loans & advances	110,107 102,570 7% 110,107 98,278 12%
Other external assets1	186,417 182,875 2% 186,417 169,189 10%
External assets	296,524 285,445 4% 296,524 267,467 11%
Customer deposits	163,151 151,847 7% 163,151 142,651 14%
Other deposits and borrowings	6,632 9,193 -28% 6,632 9,040 -27%
Deposits and other borrowings	169,783 161,040 5% 169,783 151,691 12%
Other external liabilities	84,919 82,572 3% 84,919 76,642 11%
External liabilities	254,702 243,612 5% 254,702 228,333 12%
Risk weighted assets2	174,789 166,407 5% 174,789 152,741 14%
Average net loans and advances	107,619 99,816 8% 103,728 94,130 10%
Average deposits and other borrowings	162,516 154,309 5% 158,424 143,325 11%
Ratios
Return on assets	0.82% 0.87% 0.85% 0.82%
Net interest margin	1.57% 1.65% 1.61% 1.85%
Net interest margin (excluding Global Markets)	2.61% 2.77% 2.69% 3.10%
Operating expenses to operating income	46.3% 44.2% 45.2% 47.8%
Operating expenses to average assets	1.02% 1.06% 1.04% 1.19%
Individual provision charge/(release)	113 167 -32% 280 740 -62%
Individual provision charge/(release) as a % of average net advances	0.21% 0.34% 0.27% 0.79%
Collective provision charge/(release)	20 17 18% 37 (289) large
Collective provision charge/(release) as a % of average net advances	0.04% 0.03% 0.04% (0.31%)
Net impaired assets	1,326 1,401 -5% 1,326 1,541 -14%
Net impaired assets as a % of net advances	1.20% 1.37% 1.20% 1.57%
Total full time equivalent staff (FTE)	13,182 13,298 -1% 13,182 13,838 -5%

1. Comparatives have been adjusted following the reallocation of Goodwill from Group Centre

2. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

International and Institutional Banking

Andrew Geczy

International and Institutional Banking by Geography

International and Institutional Banking by Geography
	Half Year Full Year
Australia	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	976 935 4% 1,911 1,974 -3%
Other external operating income	459 575 -20% 1,034 1,136 -9%
Operating income	1,435 1,510 -5% 2,945 3,110 -5%
Operating expenses	(542) (546) -1% (1,088) (1,243) -12%
Profit before credit impairment and income tax	893 964 -7% 1,857 1,867 -1%
Provision for credit impairment	(33) (80) -59% (113) (357) -68%
Profit before income tax	860 884 -3% 1,744 1,510 15%
Income tax expense and non-controlling interests	(252) (265) -5% (517) (451) 15%
Cash profit	608 619 -2% 1,227 1,059 16%

Individual provision charge/(release)	12 77 -84% 89 668 -87%
Collective provision charge/(release)	21 3 large 24 (311) large
Net loans & advances	46,499 47,430 -2% 46,499 49,173 -5%
Customer deposits	56,881 52,115 9% 56,881 55,969 2%

Asia Pacific, Europe and America
Net interest income	766 698 10% 1,464 1,374 7%
Other external operating income	859 798 8% 1,657 1,456 14%
Operating income	1,625 1,496 9% 3,121 2,830 10%
Operating expenses	(898) (821) 9% (1,719) (1,675) 3%
Profit before credit impairment and income tax	727 675 8% 1,402 1,155 21%
Provision for credit impairment	(89) (99) -10% (188) (91) large
Profit before income tax	638 576 11% 1,214 1,064 14%
Income tax expense and non-controlling interests	(115) (129) -11% (244) (256) -5%
Cash profit	523 447 17% 970 808 20%

Individual provision charge/(release)	92 87 6% 179 74 large
Collective provision charge/(release)	(3) 12 large 9 17 -47%
Net loans & advances	57,534 49,679 16% 57,534 43,671 32%
Customer deposits	94,199 89,442 5% 94,199 77,274 22%

New Zealand
Net interest income	149 142 5% 291 319 -9%
Other external operating income	84 123 -32% 207 168 23%
Operating income	233 265 -12% 498 487 2%
Operating expenses	(84) (79) 6% (163) (151) 8%
Profit before credit impairment and income tax	149 186 -20% 335 336 0%
Provision for credit impairment	(11) (5) large (16) (3) large
Profit before income tax	138 181 -24% 319 333 -4%
Income tax expense and non-controlling interests	(38) (48) -21% (86) (89) -3%
Cash profit	100 133 -25% 233 244 -5%

Individual provision charge/(release)	9 3 large 12 (2) large
Collective provision charge/(release)	2 2 0% 4 5 -20%
Net loans & advances	6,074 5,461 11% 6,074 5,434 12%
Customer deposits	12,071 10,290 17% 12,071 9,408 28%

SEGMENT REVIEW

International and Institutional Banking

Andrew Geczy

Individual provision charge/(release)	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Retail Asia Pacific	38 23 65% 61 (13) large
Global Institutional	74 144 -49% 218 735 -70%
Transaction Banking	11 15 -27% 26 53 -51%
Global Loans	64 122 -48% 186 587 -68%
Global Markets	(1) 7 large 6 95 -94%
Relationship & Infrastructure	1 - n/a 1 18 -94%
Individual provision charge/(release)	113 167 -32% 280 740 -62%

Collective provision charge/(release)	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Retail Asia Pacific	(20) (6) large (26) (9) large
Global Institutional	39 21 86% 60 (256) large
Transaction Banking	9 10 -10% 19 1 large
Global Loans	31 8 large 39 (199) large
Global Markets	(1) 3 large 2 (58) large
Relationship & Infrastructure	1 2 -50% 3 (24) large
Collective provision charge/(release)	20 17 18% 37 (289) large

Total provision charge/(release)	133 184 -28% 317 451 -30%

Net loans & advances	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Retail Asia Pacific	7,220 5,693 27% 7,220 4,939 46%
Global Institutional	101,166 95,563 6% 101,166 92,238 10%
Transaction Banking	24,127 22,202 9% 24,127 19,001 27%
Global Loans	70,582 67,654 4% 70,582 67,665 4%
Global Markets	6,457 5,707 13% 6,457 5,572 16%
Relationship & Infrastructure	1,721 1,314 31% 1,721 1,101 56%
Net loans & advances	110,107 102,570 7% 110,107 98,278 12%

Customer deposits	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Retail Asia Pacific	12,916 10,932 18% 12,916 10,423 24%
Global Institutional	148,716 139,547 7% 148,716 130,695 14%
Transaction Banking	74,641 62,511 19% 74,641 65,124 15%
Global Loans	730 722 1% 730 847 -14%
Global Markets	73,345 76,314 -4% 73,345 64,724 13%
Relationship & Infrastructure	1,519 1,368 11% 1,519 1,533 -1%
Customer deposits	163,151 151,847 7% 163,151 142,651 14%

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Global Institutional

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	1,652 1,554 6% 3,206 3,234 -1%
Other external operating income	975 1,121 -13% 2,096 1,998 5%
Operating income	2,627 2,675 -2% 5,302 5,232 1%
Operating expenses	(1,062) (1,064) 0% (2,126) (2,126) 0%
Profit before credit impairment and income tax	1,565 1,611 -3% 3,176 3,106 2%
Provision for credit impairment	(113) (165) -32% (278) (479) -42%
Profit before income tax	1,452 1,446 0% 2,898 2,627 10%
Income tax expense and non-controlling interests	(388) (409) -5% (797) (723) 10%
Cash profit	1,064 1,037 3% 2,101 1,904 10%
Consisting of:

Transaction Banking	317 273 16% 590 557 6%
Global Loans	389 361 8% 750 707 6%
Global Markets	358 403 -11% 761 640 19%
Cash profit	1,064 1,037 3% 2,101 1,904 10%
Balance Sheet

Net loans & advances	101,166 95,563 6% 101,166 92,238 10%
Other external assets	178,274 176,215 1% 178,274 162,844 9%
External assets	279,440 271,778 3% 279,440 255,082 10%
Customer deposits	148,716 139,547 7% 148,716 130,695 14%
Other deposits and borrowings	6,629 9,190 -28% 6,629 8,994 -26%
Deposits and other borrowings	155,345 148,737 4% 155,345 139,689 11%
Other external liabilities	83,960 81,793 3% 83,960 75,940 11%
External liabilities	239,305 230,530 4% 239,305 215,629 11%
Risk weighted assets	163,889 155,382 5% 163,889 141,586 16%
Average net loans and advances	99,402 93,225 7% 96,322 89,022 8%
Average deposits and other borrowings	148,911 142,013 5% 145,472 132,461 10%
Ratios
Return on assets	0.75% 0.79% 0.77% 0.78%
Net interest margin	1.43% 1.50% 1.47% 1.69%
Net interest margin (excluding Global Markets)	2.39% 2.54% 2.46% 2.85%
Operating expenses to operating income	40.4% 39.8% 40.1% 40.6%
Operating expenses to average assets	0.75% 0.81% 0.78% 0.87%
Individual provision charge/(release)	74 144 -49% 218 735 -70%
Individual provision charge/(release) as a % of average net advances	0.15% 0.31% 0.23% 0.83%
Collective provision charge/(release)	39 21 86% 60 (256) large
Collective provision charge/(release) as a % of average net advances	0.08% 0.05% 0.06% (0.29%)
Net impaired assets	1,237 1,353 -9% 1,237 1,519 -19%
Net impaired assets as a % of net advances	1.22% 1.42% 1.22% 1.65%

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Global Institutional by Product

Global Institutional by Product
	Half Year Full Year
Transaction Banking	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	429 390 10% 819 861 -5%
Other external operating income	358 346 3% 704 658 7%
Operating income	787 736 7% 1,523 1,519 0%
Operating expenses	(338) (329) 3% (667) (691) -3%
Profit before credit impairment and income tax	449 407 10% 856 828 3%
Provision for credit impairment	(20) (25) -20% (45) (54) -17%
Profit before income tax	429 382 12% 811 774 5%
Income tax expense and non-controlling interests	(112) (109) 3% (221) (217) 2%
Cash profit	317 273 16% 590 557 6%

Risk weighted assets1	35,470 34,255 4% 35,470 30,162 18%

Individual provision charge/(release)	11 15 -27% 26 53 -51%
Collective provision charge/(release)	9 10 -10% 19 1 large
Net loans & advances	24,127 22,202 9% 24,127 19,001 27%
Customer deposits	74,641 62,511 19% 74,641 65,124 15%

Global Loans
Net interest income	789 793 -1% 1,582 1,678 -6%
Other external operating income	53 34 56% 87 127 -31%
Operating income	842 827 2% 1,669 1,805 -8%
Operating expenses	(207) (192) 8% (399) (455) -12%
Profit before credit impairment and income tax	635 635 0% 1,270 1,350 -6%
Provision for credit impairment	(95) (130) -27% (225) (388) -42%
Profit before income tax	540 505 7% 1,045 962 9%
Income tax expense and non-controlling interests	(151) (144) 5% (295) (255) 16%
Cash profit	389 361 8% 750 707 6%

Risk weighted assets1	81,541 75,191 8% 81,541 75,368 8%

Individual provision charge/(release)	64 122 -48% 186 587 -68%
Collective provision charge/(release)	31 8 large 39 (199) large
Net loans & advances	70,582 67,654 4% 70,582 67,665 4%

Global Markets
Net interest income	434 371 17% 805 695 16%
Other external operating income	564 741 -24% 1,305 1,213 8%
Operating income	998 1,112 -10% 2,110 1,908 11%
Operating expenses	(517) (543) -5% (1,060) (980) 8%
Profit before credit impairment and income tax	481 569 -15% 1,050 928 13%
Provision for credit impairment	2 (10) large (8) (37) -78%
Profit before income tax	483 559 -14% 1,042 891 17%
Income tax expense and non-controlling interests	(125) (156) -20% (281) (251) 12%
Cash profit	358 403 -11% 761 640 19%

Risk weighted assets1	46,878 45,936 2% 46,878 36,056 30%

Individual provision charge/(release)	(1) 7 large 6 95 -95%
Collective provision charge/(release)	(1) 3 large 2 (58) large
Customer deposits	73,345 76,314 -4% 73,345 64,724 13%

1. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Analysis of Global Markets operating income
	Half Year Full Year
Composition of Global Markets	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
operating income by product class
Fixed income	325 470 -31% 795 761 4%
Foreign exchange	455 409 11% 864 757 14%
Capital markets	104 122 -15% 226 203 11%
Other	114 111 3% 225 187 20%
Global Markets operating income	998 1,112 -10% 2,110 1,908 11%

	Half Year Full Year
Composition of Global Markets	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
operating income by geography
Australia	453 525 -14% 978 903 8%
Asia Pacific, Europe & America	453 447 1% 900 774 16%
New Zealand	92 140 -34% 232 231 0%
Global Markets operating income	998 1,112 -10% 2,110 1,908 11%


	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Composition of Global Markets
operating income by activity	$M $M $M $M
Sales1	608 575 6% 1,183 1,162 2%
Trading2	233 283 -18% 516 403 28%
Balance sheet3	157 254 -38% 411 343 20%
Global Markets operating income	998 1,112 -10% 2,110 1,908 11%


	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Composition of Global Markets' Sales income
by geography1
Australia	245 263 -7% 508 539 -6%
Asia Pacific, Europe & America	290 263 10% 553 485 14%
New Zealand	73 49 49% 122 138 -12%
Global Markets' Sales income	608 575 6% 1,183 1,162 2%

	Half Year Full Year
Composition of Global Markets' Trading and	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Balance Sheet income by geography2,3
Australia	208 262 -21% 470 364 29%
Asia Pacific, Europe & America	162 185 -12% 347 289 20%
New Zealand	20 90 -78% 110 93 18%
Global Markets'
	390 537 -27% 927 746 24%
Trading and Balance Sheet income

1. Sales represents direct client flow business on core products such as fixed income, FX, commodities and capital markets

2. Trading primarily represents management of the Group’s strategic positions and those taken as part of direct client sales flow

Balance sheet represents hedging of interest rate risk on the Group’s loan and deposit books and the management of the Group’s liquidity portfolio

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Analysis of Global Markets operating income, cont’d

Global Markets continues to see the benefits of building a "franchise-led" business. Global Markets is expanding its flow product offering particularly across the Foreign Exchange, Commodities and Debt Capital Markets assets classes, strategically aligned to the business' increased presence across the APEA region, which now accounts for 43% of Global Markets revenues. Domestically, particularly in 1H13, favourable trading conditions have driven growth across the Fixed Income business.

September 2013 v March 2013
In less favourable market conditions Global Markets has produced a credible result with revenues down by 10%:
Sales revenues (including Capital Markets) are up 6% on increased customer acquisition, particularly in the FX business where the weakening AUD has seen increased customer flow.
APEA revenue is flat despite difficult trading conditions as we continue to expand our footprint in those markets, with the FX business performing well.
The tightening of credit spreads in the March half, which benefited the Fixed Income business in Australia and New Zealand, was not repeated at the same levels.
In the September half a funding valuation adjustment was recognised for the net cost of funding associated with collateralised and uncollateralised derivative positions.

 September 2013 v September 2012

Revenues were up 11% driven by Foreign Exchange and Commodities growing 14% and 74% respectively:

APEA revenue was up 16%, driven by contributions from both trading and sales.
Sales revenue (including Capital Markets) saw positive momentum in the September 2013 half resulting in an annual result up 2% as reduced volatility in the March 2013 half provided relatively subdued customer activity.

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Market risk

Traded market risk

Below are aggregate Value at Risk (VaR) exposures at 99% confidence level covering both physical and derivatives trading positions for the Bank’s principal trading centres. All figures are in AUD.

99% confidence level (1 day holding period)
	As at	High for	Low for	Avg for	As at	High for	Low for	Avg for
	Sep 13	period	period	period	Sep 12	year	year	year
		Sep 13	Sep 13	Sep 13		Sep 12	Sep 12	Sep 12
	$M	$M	$M	$M	$M	$M	$M	$M
Value at Risk at 99% confidence
Foreign exchange	3.0	12.6	2.3	5.2	3.5	10.0	3.5	5.9
Interest rate	3.9	11.6	2.8	5.8	4.5	8.1	2.8	5.4
Credit	4.2	8.6	2.8	4.2	4.0	7.5	2.6	4.7
Commodities	1.6	4.2	1.2	2.3	1.8	4.8	1.5	3.3
Equity	1.4	3.4	0.6	1.6	1.2	4.0	0.7	1.6
Diversification benefit	(8.5)	n/a	n/a	(10.4)	(6.9)	n/a	n/a	(11.6)
Total VaR	5.6	13.6	4.9	8.7	8.1	13.6	5.7	9.3

Non-traded interest rate risk

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

99% confidence level (1 day holding period)

	As at	High for	Low for	Avg for	As at	High for	Low for	Avg for
	Sep 13	period	period	period	Sep 12	year	year	year
		Sep 13	Sep 13	Sep 13		Sep 12	Sep 12	Sep 12
	$M	$M	$M	$M	$M	$M	$M	$M
Value at Risk at 99% confidence
Australia1	66.3	71.8	25.5	49.3	25.9	28.5	13.7	20.4
New Zealand	12.6	17.9	10.0	13.2	11.2	14.6	10.3	12.3
Asia Pacific, Europe & America	9.7	11.1	4.2	6.3	5.5	6.0	4.5	5.2
Diversification benefit	(11.4)	n/a	n/a	(16.1)	(14.9)	n/a	n/a	(15.3)
Total VaR	77.2	79.6	27.3	52.7	27.7	29.4	15.7	22.6

Impact of 1% rate shock on the next 12 months’ net interest income[2 ]

	As at
	Sep 13	Sep 12
As at period end	1.00%	1.55%
Maximum exposure	1.72%	2.45%
Minimum exposure	1.00%	1.26%
Average exposure (in absolute terms)	1.29%	1.95%

1. The increase in VaR reflects higher volumes of capital, rate insensitive deposits and liquidity holdings together with a lengthening of the investment term of capital.

2. The impact is expressed as a percentage of net interest income. A positive result indicates that a rate increase is positive for net interest income. Conversely, a negative indicates a rate increase is negative for net interest income.

SEGMENT REVIEW

International and Institutional Banking Andrew Geczy

Global Institutional by Geography

Global Institutional by Geography
	Half Year Full Year
Australia	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	975 933 5% 1,908 1,965 -3%
Other external operating income	448 569 -21% 1,017 1,116 -9%
Operating income	1,423 1,502 -5% 2,925 3,081 -5%
Operating expenses	(515) (545) -6% (1,060) (1,205) -12%
Profit before credit impairment and income tax	908 957 -5% 1,865 1,876 -1%
Provision for credit impairment	(33) (80) -59% (113) (356) -68%
Profit before income tax	875 877 0% 1,752 1,520 15%
Income tax expense and non-controlling interests	(255) (263) -3% (518) (455) 14%
Cash profit	620 614 1% 1,234 1,065 16%

Risk weighted assets1	79,125 79,198 0% 79,125 74,998 6%

Individual provision charge/(release)	11 78 -86% 89 655 -86%
Collective provision charge/(release)	21 3 large 24 (299) large
Net loans & advances	46,499 47,430 -2% 46,499 49,173 -5%
Customer deposits	56,881 52,115 9% 56,881 55,969 2%

Asia Pacific, Europe & America
Net interest income	530 479 11% 1,009 951 6%
Other external operating income	444 428 4% 872 714 22%
Operating income	974 907 7% 1,881 1,665 13%
Operating expenses	(464) (440) 5% (904) (769) 18%
Profit before credit impairment and income tax	510 467 9% 977 896 9%
Provision for credit impairment	(68) (80) -15% (148) (119) 24%
Profit before income tax	442 387 14% 829 777 7%
Income tax expense and non-controlling interests	(97) (97) 0% (194) (180) 8%
Cash profit	345 290 19% 635 597 6%

Risk weighted assets1	73,073 65,584 11% 73,073 56,483 29%

Individual provision charge/(release)	53 63 -16% 116 83 40%
Collective provision charge/(release)	16 16 0% 32 36 -11%
Net loans & advances	48,594 42,673 14% 48,594 37,632 29%
Customer deposits	79,765 77,142 3% 79,765 65,318 22%

New Zealand
Net interest income	147 142 4% 289 318 -9%
Other external operating income	83 124 -33% 207 168 23%
Operating income	230 266 -14% 496 486 2%
Operating expenses	(83) (79) 5% (162) (152) 7%
Profit before credit impairment and income tax	147 187 -21% 334 334 0%
Provision for credit impairment	(12) (5) large (17) (4) large
Profit before income tax	135 182 -26% 317 330 -4%
Income tax expense and non-controlling interests	(36) (49) -27% (85) (88) -3%
Cash profit	99 133 -26% 232 242 -4%

Risk weighted assets1	11,691 10,600 10% 11,691 10,105 16%

Individual provision charge/(release)	10 3 large 13 (3) large
Collective provision charge/(release)	2 2 0% 4 7 -43%
Net loans & advances	6,073 5,460 11% 6,073 5,433 12%
Customer deposits	12,070 10,290 17% 12,070 9,408 28%

1. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

International and Institutional Banking

Andrew Geczy

Retail Asia Pacific

Retail Asia Pacific
	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	218 206 6% 424 393 8%
Other external operating income	163 159 3% 322 326 -1%
Operating income	381 365 4% 746 719 4%
Operating expenses	(347) (308) 13% (655) (665) -2%
Profit before credit impairment and income tax	34 57 -40% 91 54 69%
Provision for credit impairment	(18) (17) -6% (35) 22 large
Profit before income tax	16 40 -60% 56 76 -26%
Income tax expense and non-controlling interests	(1) (8) -88% (9) (16) -40%
Cash profit	15 32 -53% 47 60 -22%

Risk weighted assets	6,378 6,870 -7% 6,378 6,714 -5%


	Half Year Full Year

	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Individual provision charge/(release)	37 23 61% 61 (13) large
Collective provision charge/(release)	(20) (6) large (26) (9) large
Net loans & advances	7,220 5,693 27% 7,220 4,939 46%
Customer deposits	12,916 10,932 18% 12,916 10,423 24%

Asia Partnerships

Asia Partnerships
	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	(20) (19) 5% (39) (39) 0%
Other external operating income	236 206 15% 442 386 15%
Operating income	216 187 16% 403 347 16%
Operating expenses	(4) (3) 33% (7) (8) -13%
Profit before credit impairment and income tax	212 184 15% 396 339 17%
Provision for credit impairment	- - n/a - - n/a
Profit before income tax	212 184 15% 396 339 17%
Income tax expense and non-controlling interests	- 2 -100% 2 5 -60%
Cash profit	212 186 14% 398 344 16%

SEGMENT REVIEW

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SEGMENT REVIEW

New Zealand David Hisco

The New Zealand division comprises Retail and Commercial business units. Retail includes Mortgages, Cards and Unsecured Lending to personal customers. Commercial includes Commercial & Agri (‘CommAgri’) and Small Business Banking.

New Zealand’s results and commentary are reported in NZD. AUD results are shown on page 65.

Cash profit – September 2013 Half Year v March 2013 Half Year

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26
23 571
16 (19)
28
497
NZD m
1H13 Net interest income Other operating Operating expenses Provision for credit Income tax expense 2H13
Cash profit income impairment & non-controlling Cash profit
interests
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The New Zealand division has successfully completed its brand integration and moved to a single core banking system. This has driven continued benefits as we leverage our scale and work to build a better bank for our customers.

By investing in our digital channels, optimising our branch network and simplifying our business, we are enhancing the experience for customers while making it easier for them to deal with us. This has driven an increase in revenue of 12% per FTE and 16% per branch in 2013. We grew market share in target segments and our brand consideration improved more than any other bank in New Zealand.

Retail update

Under a single brand, the Retail business progressed its optimisation of the branch network which has resulted in increased coverage and cost savings. Lending volumes have held up well in a subdued credit environment and net interest margin has stabilised notwithstanding unfavourable product mix impacts.

Commercial update

Commercial has focused on growing Small Business Banking and improving the quality of the CommAgri lending portfolio. Small Business Banking delivered above-system lending growth through investment in sales capability which has more than offset the impact of margin compression.

September 2013 v March 2013

Cash profit increased 15% in the September half driven by an improvement in net interest income and other operating income, cost savings and a reduction in credit impairment charges.

Key factors affecting the result were:

Net interest income increased by 3% with average net loans and advances growing 2%, primarily due to above-system lending growth for mortgages. Net interest margin was stable in the period. Lower wholesale funding costs and improvement in deposit margins were offset by compression in lending margins from competitive pressures and customers continuing to favour lower margin fixed rate products.
Other operating income increased 8% mainly from the gain on sale from divesting EFTPOS New Zealand Limited (‘EFTPOS’).

Continued growth in credit card fee income has substantially offset income foregone from the sale of EFTPOS.

Operating expenses were 4% lower. This included a NZ$15m reduction in NZ Simplification (‘NZS’) costs as the integration of the two bank systems and brands completed. Excluding NZS, operating costs reduced 1% from productivity gains in leveraging our business scale, more than off-setting inflationary impacts.
Provisioning charges reduced 72% in the half reflecting continued improvements in credit quality. Individual provision charges declined NZ$31m with the loss rate decreasing 8 basis points to 9 basis points reflecting lower levels of new individual provisions and higher recovery levels in the Commercial book. Collective provision was lower than the previous half by $5 million, mainly reflecting smaller release of economic cycle and model risk provisions in the September 2013 half.
September 2013 v September 2012

Cash profit increased 29% predominantly from strong deposit and lending growth, lower costs and a substantial reduction in provisioning charges, partly offset by net interest margin contraction.

Key factors affecting the result were:

Average lending growth of 4% in a subdued credit environment was driven by above-system growth in mortgages and small business bank lending, with a lower reliance on CommAgri lending. Net interest margin contracted 14 basis points due to strong lending competition, unfavourable mix impacts from customers preferring lower margin fixed rate products, and higher year on year wholesale funding costs, partially offset by improved deposit margins, particularly in term deposits.
Other operating income increased 4%, driven by the gain on sale of EFTPOS and an increase in wealth management and insurance revenues.
Operating expenses reduced 15% (3% after adjusting for NZS), reflecting productivity benefits from simplifying our business and leveraging our scale.
Credit impairment charges reduced 76% driven by lower individual provisioning levels as credit quality and processes both continued to improve, particularly in the Commercial book. The collective provision release was $11 million higher due to a larger release of economic cycle and model risk provisions in 2013.

SEGMENT REVIEW

New Zealand David Hisco

New Zealand Total

Table reflects NZD for New Zealand AUD results shown on page 65

	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
Net interest income	1,142 1,114 3% 2,256 2,294 -2%
Other external operating income	219 203 8% 422 405 4%
Operating income	1,361 1,317 3% 2,678 2,699 -1%
Operating expenses	(566) (589) -4% (1,155) (1,366) -15%
Profit before credit impairment and income tax	795 728 9% 1,523 1,333 14%
Provision for credit impairment	(10) (36) -72% (46) (191) -76%
Profit before income tax	785 692 13% 1,477 1,142 29%
Income tax expense and non-controlling interests	(214) (195) 10% (409) (315) 30%
Cash profit	571 497 15% 1,068 827 29%
Consisting of:
Retail	203 177 15% 380 364 4%
Commercial	367 332 11% 699 596 17%
Operations & Support	1 (12) large (11) (133) -92%
Cash profit	571 497 15% 1,068 827 29%
Balance Sheet
Net loans & advances	91,484 89,258 2% 91,484 88,041 4%
Other external assets1	4,287 4,228 1% 4,287 4,434 -3%
External assets	95,771 93,486 2% 95,771 92,475 4%
Customer deposits	52,244 51,650 1% 52,244 49,644 5%
Other deposits and borrowings	4,765 4,337 10% 4,765 5,445 -12%
Deposits and other borrowings	57,009 55,987 2% 57,009 55,089 3%
Other external liabilities	15,542 16,614 -6% 15,542 17,477 -11%
External liabilities	72,551 72,601 0% 72,551 72,566 0%
Risk weighted assets2	50,319 50,787 -1% 50,319 49,762 1%
Average net loans and advances	90,194 88,530 2% 89,364 86,076 4%
Average deposits and other borrowings	56,817 56,429 1% 56,624 52,420 8%
Ratios
Return on assets	1.21% 1.08% 1.14% 0.91%
Net interest margin	2.49% 2.49% 2.49% 2.63%
Operating expenses to operating income	41.6% 44.7% 43.1% 50.6%
Operating expenses to average assets	1.20% 1.27% 1.24% 1.51%
Individual provision charge/(release)	42 73 -42% 115 249 -54%
Individual provision charge/(release) as a % of average net advances	0.09% 0.17% 0.13% 0.29%
Collective provision charge/(release)	(32) (37) -14% (69) (58) 19%
Collective provision charge/(release) as a % of average net advances	(0.07%) (0.08%) (0.08%) (0.07%)
Net impaired assets	573 881 -35% 573 979 -41%
Net impaired assets as a % of net advances	0.63% 0.99% 0.63% 1.11%
Total full time equivalent staff (FTE)	7,400 7,755 -5% 7,400 8,217 -10%

1. Comparatives have been adjusted following the reallocation of Goodwill from the Group Centre

2. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

New Zealand David Hisco

Individual provision charge/(release)	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
Retail	37 39 -5% 76 75 1%
Commercial	5 34 -85% 39 174 -78%
CommAgri	4 28 -86% 32 157 -80%
Small Business Banking	1 6 -83% 7 17 -59%
Individual provision charge/(release)	42 73 -42% 115 249 -54%

Collective provision charge/(release)	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt

Retail	(10) (9) 11% (19) (12) 58%
Commercial	(22) (28) -21% (50) (46) 9%
CommAgri	(30) (19) 58% (49) (42) 17%
Small Business Banking	8 (9) large (1) (4) -75%
Collective provision charge/(release)	(32) (37) -14% (69) (58) 19%

Total provision charge/(release)	10 36 -72% 46 191 -76%

Net loans & advances	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt

Retail	36,422 35,806 2% 36,422 35,506 3%
Commercial	55,062 53,452 3% 55,062 52,535 5%
CommAgri	34,615 34,239 1% 34,615 34,369 1%
Small Business Banking	20,447 19,213 6% 20,447 18,166 13%
Net loans & advances	91,484 89,258 2% 91,484 88,041 4%


Customer deposits	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
Retail	32,077 31,392 2% 32,077 30,538 5%
Commercial	20,167 20,258 0% 20,167 19,106 6%
CommAgri	9,414 9,644 -2% 9,414 9,208 2%
Small Business Banking	10,753 10,614 1% 10,753 9,898 9%
Customer deposits	52,244 51,650 1% 52,244 49,644 5%

SEGMENT REVIEW

New Zealand David Hisco

Retail

Retail
	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt

Net interest income	475 451 5% 926 937 -1%
Other external operating income	152 145 5% 297 289 3%
Operating income	627 596 5% 1,223 1,226 0%
Operating expenses	(318) (320) -1% (638) (659) -3%
Profit before credit impairment and income tax	309 276 12% 585 567 3%
Provision for credit impairment	(27) (30) -10% (57) (63) -10%
Profit before income tax	282 246 15% 528 504 5%
Income tax expense and non-controlling interests	(79) (69) 14% (148) (140) 6%
Cash profit	203 177 15% 380 364 4%

Risk weighted assets	19,364 19,504 -1% 19,364 18,756 3%


	Half Year Full Year

	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
Individual provision charge/(release)	37 39 -5% 76 75 1%
Collective provision charge/(release)	(10) (9) 11% (19) (12) 58%
Net loans & advances	36,422 35,806 2% 36,422 35,506 3%
Customer deposits	32,077 31,392 2% 32,077 30,538 5%

SEGMENT REVIEW

New Zealand David Hisco

Commercial

Commercial
	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt

Net interest income	660 655 1% 1,315 1,337 -2%
Other external operating income	68 58 17% 126 121 4%
Operating income	728 713 2% 1,441 1,458 -1%
Operating expenses	(243) (245) -1% (488) (505) -3%
Profit before credit impairment and income tax	485 468 4% 953 953 0%
Provision for credit impairment	17 (6) large 11 (128) large
Profit before income tax	502 462 9% 964 825 17%
Income tax expense and non-controlling interests	(135) (130) 4% (265) (229) 16%
Cash profit	367 332 11% 699 596 17%

Risk weighted assets	30,467 30,866 -1% 30,467 30,603 0%


	Half Year Full Year

Individual provision charge/(release)	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
CommAgri	4 28 -86% 32 157 -80%
Small Business Banking	1 6 -83% 7 17 -59%
Individual provision charge/(release)	5 34 -85% 39 174 -78%

Collective provision charge/(release)
CommAgri	(30) (19) 58% (49) (42) 17%
Small Business Banking	8 (9) large (1) (4) -75%
Collective provision charge/(release)	(22) (28) -21% (50) (46) 9%

Total provision charge/(release)	(17) 6 large (11) 128 large


	Half Year Full Year

Net loans & advances	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
CommAgri	34,615 34,239 1% 34,615 34,369 1%
Small Business Banking	20,447 19,213 6% 20,447 18,166 13%
Net loans & advances	55,062 53,452 3% 55,062 52,535 5%


Customer deposits
CommAgri	9,414 9,644 -2% 9,414 9,208 2%
Small Business Banking	10,753 10,614 1% 10,753 9,898 9%
Customer deposits	20,167 20,258 0% 20,167 19,106 6%

SEGMENT REVIEW

New Zealand David Hisco

New Zealand Total

Table reflects AUD for New Zealand NZD results shown on page 61

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	971 889 9% 1,860 1,780 4%
Other external operating income	186 162 15% 348 315 10%
Operating income	1,157 1,051 10% 2,208 2,095 5%
Operating expenses	(482) (470) 3% (952) (1,061) -10%
Profit before credit impairment and income tax	675 581 16% 1,256 1,034 21%
Provision for credit impairment	(9) (28) -68% (37) (148) -75%
Profit before income tax	666 553 20% 1,219 886 38%
Income tax expense and non-controlling interests	(182) (156) 17% (338) (244) 39%
Cash profit	484 397 22% 881 642 37%
Consisting of:
Retail	171 142 20% 313 283 11%
Commercial	312 265 18% 577 462 25%
Operations & Support	1 (10) large (9) (103) -91%
Cash profit	484 397 22% 881 642 37%
Balance Sheet
Net loans & advances	81,414 71,584 14% 81,414 70,268 16%
Other external assets1	3,815 3,391 13% 3,815 3,539 8%
External assets	85,229 74,975 14% 85,229 73,807 15%
Customer deposits	46,494 41,423 12% 46,494 39,622 17%
Other deposits and borrowings	4,240 3,478 22% 4,240 4,346 -2%
Deposits and other borrowings	50,734 44,901 13% 50,734 43,968 15%
Other external liabilities	13,831 13,324 4% 13,831 13,949 -1%
External liabilities	64,565 58,225 11% 64,565 57,917 11%
Risk weighted assets2	44,781 40,731 10% 44,781 39,717 13%
Average net loans and advances	76,664 70,635 9% 73,658 66,812 10%
Average deposits and other borrowings	48,312 45,023 7% 46,672 40,688 15%
Ratios
Return on assets	1.21% 1.08% 1.14% 0.91%
Net interest margin	2.49% 2.49% 2.49% 2.63%
Operating expenses to operating income	41.6% 44.7% 43.1% 50.6%
Operating expenses to average assets	1.20% 1.27% 1.24% 1.51%
Individual provision charge/(release)	37 58 -36% 95 193 -51%
Individual provision charge/(release) as a % of average net advances	0.10% 0.16% 0.13% 0.29%
Collective provision charge/(release)	(28) (30) -7% (58) (45) 29%
Collective provision charge/(release) as a % of average net advances	(0.07%) (0.09%) (0.08%) (0.07%)
Net impaired assets	510 706 -28% 510 782 -35%
Net impaired assets as a % of net advances	0.63% 0.99% 0.63% 1.11%
Total full time equivalent staff (FTE)	7,400 7,755 -5% 7,400 8,217 -10%

1. Comparatives have been adjusted following the reallocation of Goodwill from Group Centre

2. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology

SEGMENT REVIEW

Global Wealth Joyce Phillips

The Global Wealth division comprises Private Wealth, Funds Management and Insurance business units which provides investment, superannuation, insurance products and services (including Private Banking) for customers across Australia, New Zealand and Asia.

Cash profit – September 2013 Half Year v March 2013 Half Year

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55 266
11
14
9
203
$m (24) (2)
1H13 Net interest Other operating Net funds Operating Provision for Income tax 2H13
Cash profit income income management and expenses credit impairment expense & non- Cash profit
insurance income controlling
interests
----- End of picture text -----

Global Wealth is focused on delivering innovative and compelling financial solutions to our customers across the region, that enable them to actively engage in growing and protecting their wealth.

Global Wealth serves over two million customers and manages $58.6 billion in investment and retirement savings. Customers can access ANZ’s Wealth solutions through teams of highly qualified financial planners and advisers, innovative online and mobile platforms, ANZ Private Bankers and ANZ’s branch network.

Global Wealth is investing in strategic growth initiatives to change the game in wealth. The focus of these initiatives is on digital platforms that better connect customers to their wealth, innovative solutions for the self-directed customers and programs to leverage capabilities across the region to deliver service and scale efficiencies.

Funds Management update

The Funds Management business continues to strengthen the core retail superannuation and investment offerings. ANZ’s Smart Choice Super product experienced strong growth with higher levels of insurance take-up which is an embedded feature of the product. Strategic initiatives continue to focus on simplifying operational processes, as well as reshaping the business to overcome the impacts of the changing regulatory environment.

The New Zealand business continues to hold a dominant market position in KiwiSaver with strong growth in net flows and the business’ key focus is to improve customer experience by offering innovative solutions and enhancing self service capabilities.

Insurance update

The business is focused on strengthening our position in the insurance market with strong growth in inforce premium across Direct and Retail channels. In an environment that is challenging, continued investment in claims management processes and targeted retention activities have contributed to an improvement in claims experience and a stabilising of lapse rates over the past 12 months.

Private Wealth update

Business momentum remains strong, with continued focus on building a platform for growth through strengthening resources and improved product offerings and global investment solutions for our customers.

 September 2013 v March 2013

Cash Profit improved by 31%, driven by improved Funds Management and Insurance results, along with a favourable one-off tax consolidation adjustment.

Key factors affecting the result were:

Funds Management operating income improved by 5% as a result of 7% growth in FUM to $58.6 billion, primarily driven by improved investment markets. Whilst the investment markets were volatile, growth in domestic equity markets was solid with the ASX200 up by 5.1%. Funds Management margins remain under pressure reflecting contraction of the legacy portfolio and subdued demand in high margin growth products.
Insurance operating income increased by 4% due to strong growth in inforce premium and improved general insurance event and working claims, partially offset by adverse life insurance related claims and lapse experience.
Private Wealth operating income was up by 11%. Volumes continued to improve with customer deposits and net loans and advances growing by 15% and 7% respectively.
Operating expenses grew by 5%, primarily driven by investment in strategic growth initiatives, with a new focus on innovation to enable customers to be self-directed. In addition, costs grew from compliance related project costs and additional distribution capacity.

 September 2013 v September 2012

Cash Profit increased by 36%, with a 5% increase in operating income, a 2% reduction in expenses, as well as the inclusion of a favourable one-off tax consolidation adjustment.

Key factors affecting the result were:

Funds Management operating income increased by 4%. This was mainly driven by 13% growth in FUM as a result of strong gains from the investment market, partially offset by margin contraction and losses from the annuity portfolio.
Insurance operating income grew 6% driven by improved life insurance related claims and stable lapse experience, along with strong growth in inforce premium in retail products. General insurance operating margins also improved, delivering a strong result with 11% higher inforce premium, as well as improved event and working claims.
Private Wealth operating income was up by 6% mainly driven by solid growth in volumes. Net loans and advances grew by 15% and customer deposits increased by 22%.
Operating expenses reduced by 2% (broadly flat after adjusting for non-recurring software impairments in the prior year), with productivity and simplification activities offsetting increased investment in strategic growth initiatives.

SEGMENT REVIEW

Global Wealth Joyce Phillips

Global Wealth Total

Global Wealth Total
	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Net interest income	67 58 16% 125 122 2%
Other operating income	94 80 18% 174 172 1%
Net funds management and insurance income	611 600 2% 1,211 1,146 6%
Operating income	772 738 5% 1,510 1,440 5%
Operating expenses	(484) (460) 5% (944) (967) -2%
Profit before credit impairment and income tax	288 278 4% 566 473 20%
Provision for credit impairment	(3) (1) large (4) (4) 0%
Profit before income tax	285 277 3% 562 469 20%
Income tax expense and non-controlling interests	(19) (74) -74% (93) (123) -24%
Cash profit	266 203 31% 469 346 36%
Consisting of:
Business Segment
Funds Management1	74 54 37% 128 68 88%
Insurance	113 108 5% 221 203 9%
Private Wealth	26 24 8% 50 37 35%
Corporate and Other2	53 17 large 70 38 84%
Total Global Wealth	266 203 31% 469 346 36%

Australia	236 173 36% 409 300 36%
New Zealand	35 30 17% 65 51 27%
Asia Pacific, Europe & America	(5) - n/a (5) (5) 0%
Total Global Wealth	266 203 31% 469 346 36%

Income from invested capital3	19 28 -32% 47 57 -18%

Balance Sheet
Funds under management	58,578 54,805 7% 58,578 51,667 13%
Average funds under management	56,507 53,218 6% 54,990 50,723 11%
In-force premiums	1,986 1,893 5% 1,986 1,822 9%
Customer deposits	11,569 10,042 15% 11,569 9,449 22%
Net loans & advances	6,187 5,776 7% 6,187 5,361 15%
Ratios
Operating expenses to operating income	62.7% 62.3% 62.5% 67.2%
Funds management expenses to average FUM4
Australia	0.55% 0.59% 0.57% 0.72%
New Zealand	0.46% 0.49% 0.46% 0.61%
Insurance expenses to in-force premiums
Australia	11.5% 10.8% 10.9% 11.6%
New Zealand	36.1% 41.6% 37.4% 40.9%
Retail insurance lapse rates
Australia	14.1% 13.3% 13.7% 13.9%
New Zealand5	16.7% 15.7% 15.9% 16.6%
Total full time equivalent staff (FTE)	4,267 4,164 2% 4,267 4,024 6%
Aligned adviser numbers6	2,133 2,160 -1% 2,133 2,265 -6%

1. Funds management includes Pensions & Investments business and E*Trade

2. Corporate and other includes income from invested capital, profits from advice and distribution business and unallocated corporate tax credits

Income from invested capital represents after tax revenue generated from investing insurance and investment business’ capital balances (required for regulatory purposes) net of group funding charges and borrowing costs which is included as part of Corporate and Other results. The invested capital as at 30 September 2013 was $2.1 billion (Sep 12: $2.1 billion), which comprises fixed interest securities of 33% and cash and term deposits of 67% (Sep 12: 26% fixed interest securities and 74% cash and term deposits)

4. Funds management expense and FUM only relates to Pensions & Investments business

Comparatives have been amended following refinement of calculation methodology

6. Includes corporate authorised representatives of dealer groups wholly or partially controlled by OnePath Group and ANZ Group financial planners. Comparatives have been amended to align to current year classification methodology

SEGMENT REVIEW

Global Wealth Joyce Phillips

Global Wealth Joyce Phillips

Major business segments

	Half Year Full Year
Funds Management1	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	17 18 -6% 35 36 -3%
Other operating income	36 33 9% 69 56 23%
Funds management income	406 388 5% 794 776 2%
Funds management volume related expenses	(191) (183) 4% (374) (365) 2%
Operating income	268 256 5% 524 503 4%
Operating expenses	(178) (183) -3% (361) (412) -12%
Profit before credit impairment and income tax	90 73 23% 163 91 79%
Provision for credit impairment	- - n/a - - n/a
Profit before income tax	90 73 23% 163 91 79%
Income tax expense and non-controlling interests	(16) (19) -16% (35) (23) 52%
Cash profit	74 54 37% 128 68 88%

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Insurance	$M $M $M $M
Net interest income	13 13 0% 26 29 -10%
Other operating income	33 25 32% 58 67 -13%
Insurance income	383 366 5% 749 687 9%
Insurance volume related expenses	(146) (133) 10% (279) (258) 8%
Operating income	283 271 4% 554 525 6%
Operating expenses	(132) (124) 6% (256) (249) 3%
Profit before credit impairment and income tax	151 147 3% 298 276 8%
Provision for credit impairment	- - n/a - - n/a
Profit before income tax	151 147 3% 298 276 8%
Income tax expense and non-controlling interests	(38) (39) -3% (77) (73) 5%
Cash profit	113 108 5% 221 203 9%

	Half Year Full Year
Private Wealth	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	59 50 18% 109 104 5%
Other operating income	25 23 9% 48 48 0%
Net funds management income	23 23 0% 46 40 15%
Operating income	107 96 11% 203 192 6%
Operating expenses	(66) (61) 8% (127) (134) -5%
Profit before credit impairment and income tax	41 35 17% 76 58 31%
Provision for credit impairment	(3) (1) large (4) (4) 0%
Profit before income tax	38 34 12% 72 54 33%
Income tax expense and non-controlling interests	(12) (10) 20% (22) (17) 29%
Cash profit	26 24 8% 50 37 35%

1. Funds management includes Pensions & Investments business and E*Trade

SEGMENT REVIEW

Global Wealth

Joyce Phillips

	Half Year Full Year
Net insurance income	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Life Insurance Planned profit margin
Group & Individual	183 173 6% 356 356 0%
Experience profit/(loss)1	(24) (12) 100% (36) (60) -40%
Assumption changes2	- - n/a - 1 -100%
General Insurance operating profit margin	36 28 29% 64 45 42%
Australia	195 189 3% 384 342 12%
Life Insurance Planned profit margin
Individual	45 44 2% 89 74 20%
Experience profit/(loss)1	(3) - n/a (3) 6 large
Assumption changes2	- - n/a - 7 -100%
New Zealand	42 44 -5% 86 87 -1%
Total	237 233 2% 470 429 10%

1. Experience profit/(loss) variations are gains or losses arising from actual experience differing from plan on Group and Individual business (Australia) and Individual business (New Zealand)

Assumption changes are gains or losses arising from a change in valuation methods and best estimate assumptions

	Half Year	Full Year
Operating expenses by business segment	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Funds management3	178 183 -3% 361 412 -12%
Insurance	132 124 6% 256 249 3%
Private Wealth	66 61 8% 127 134 -5%
Corporate and Other	108 92 17% 200 172 16%
Total	484 460 5% 944 967 -2%

Funds management includes Pensions & Investments business and E*Trade

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Operating expenses by geography	$M $M $M $M
Australia	395 378 4% 773 800 -3%
New Zealand	58 54 7% 112 112 0%
Asia Pacific, Europe & America	31 28 11% 59 55 7%
Total	484 460 5% 944 967 -2%


	As at ($M) Movement
	Sep 13 Sep 13
Funds under management	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Funds under management - average	56,507 53,218 50,723 6% 11%
Funds under management - end of period	58,578 54,805 51,667 7% 13%
Composed of:
Australian equities	19,164 18,208 15,234 5% 26%
Global equities	11,583 10,301 10,441 12% 11%
Cash and fixed interest	24,153 22,775 22,676 6% 7%
Property and infrastructure	3,678 3,521 3,316 4% 11%
Total	58,578 54,805 51,667 7% 13%


	As at ($M) Movement

Funds under management by region	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Australia	47,362 45,385 42,842 4% 11%
New Zealand	11,216 9,420 8,825 19% 27%
Total	58,578 54,805 51,667 7% 13%

SEGMENT REVIEW

Global Wealth

Joyce Phillips

Global Wealth Joyce Phillips
	Sep 13	In-	Out-	Other1	Sep 12
Funds Management cashflows by product	$M	flows	flows		$M
OneAnswer	18,301	2,629	(2,779)	2,146	16,305
Other Personal Investment	5,551	535	(994)	479	5,531
Employer Super	14,028	1,490	(1,769)	1,366	12,941
Oasis	5,885	813	(1,028)	828	5,272
ANZ Trustees	3,597	433	(103)	474	2,793
Kiwisaver	3,813	938	(311)	666	2,520
Private Bank - New Zealand	3,879	719	(552)	599	3,113
Other New Zealand	3,524	488	(917)	761	3,192
Total	58,578	8,045	(8,453)	7,319	51,667

1. Other includes investment income net of taxes, fees and charges and distributions

	As at ($M) Movement
Insurance annual in-force premiums	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Group	447 439 431 2% 4%
Individual	1,067 1,006 967 6% 10%
General Insurance	472 448 424 5% 11%
Total	1,986 1,893 1,822 5% 9%

Insurance annual in-force premiums by region
Australia	1,839 1,756 1,694 5% 9%
New Zealand	147 137 128 7% 15%
Total	1,986 1,893 1,822 5% 9%

	Sep 13 $M New business $M Lapses $M Sep 12 $M
Insurance in-force book movement
Group	447 55 (39) 431
Individual	1,067 249 (149) 967
General Insurance	472 167 (119) 424
Total	1,986 471 (307) 1,822

Insurance in-force book movement by region
Australia	1,839 445 (300) 1,694
New Zealand	147 26 (7) 128
Total	1,986 471 (307) 1,822
	Australia New Zealand Total $M $M $M 3,721 370 4,091 224 19 243 309 27 336 (302) 5 (297) 3,952 421 4,373 (29) 1 (28) (679) - (679) 3,244 422 3,666

Embedded value and value of new business (insurance and investments only)
Embedded value as at September 20122
Value of new business3
Expected return4
Experience deviations and assumption changes5
Sub-total embedded value before economic assumption changes
and net transfer
Economic assumptions change6
Net transfer7
Embedded value as at September 2013

2. Embedded value represents the present value of future profits and releases of capital arising from the business in force at the valuation date, and adjusted net assets. It is determined using best estimate assumptions with franking credits included at 70% of face value. Projected cash flows have been discounted using capital asset pricing model risk discount rates of 8.75%-10.50%. ANZ Lenders Mortgage Insurance business is not included in the valuation

Value of new business represents the present value of future profits less the cost of capital arising from the new business written over the period 4. Expected return represents expected increase in value over the period

5. Experience deviations and assumption changes arise from deviations from and changes to best estimate assumptions underlying the prior period embedded value. The adverse movement for the Australian business is primarily due to increases in future assumed lapse rates on the retail business and increased claim rates on group business. A reduction in margins on the employer super product following the introduction of MySuper have also reduced the value. New Zealand has experienced positive claims experience in the past 12 months

6. Risk discount rates have increased by 75-100bps over the twelve month period leading to a negative impact. The discount rate impact in the New Zealand business was offset by the increase in the exchange rate for the New Zealand dollar

Net transfer represents net capital movements over the period including capital injections, transfer of cash dividends and value of franking credits. In the past 12 months, there was a $375 million capital withdrawal, $240 million net dividend payment and $64 million franking credits transferred to the ANZ group

SEGMENT REVIEW

Group Centre

Group Centre comprises Global Services & Operations, Group Technology, Group Human Resources, Group Risk, Group Strategy, Group Corporate Affairs, Group Corporate Communications, Group Treasury, Global Internal Audit, Group Finance, Group Marketing, Innovation and Digital, Shareholder Functions and discontinued businesses. Group Centre segment results are after internal recharges to operating segments.

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income1	211 232 -9% 443 378 17%
Other external operating income1	(139) (75) 85% (214) 152 large
Operating income	72 157 -54% 229 530 -57%
Operating expenses	(226) (193) 17% (419) (420) 0%
Profit/(Loss) before credit impairment and income tax	(154) (36) large (190) 110 large
Provision for credit impairment	(19) - n/a (19) (13) 46%
Profit/(Loss) before income tax	(173) (36) large (209) 97 large
Income tax expense and non-controlling interests	50 4 large 54 36 50%
Cash profit/(loss)	(123) (32) large (155) 133 large

Total full time equivalent staff (FTE)	8,077 7,684 5% 8,077 7,554 7%

1. Includes offsetting variances between net interest and other income as a result of elimination entries associated with the consolidation of OnePath Australia.

Cash profit – September 2013 Half Year v March 2013 Half Year

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(21)
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46
(64)
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1H13 Net interest Other operating Operating Provision for Income tax 2H13
Cash profit income income expenses credit expense & non- Cash profit
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 September 2013 v March 2013

Key factors affecting the result were:

Operating income decreased $85 million largely due to realised losses from foreign currency hedges.
Operating expenses increased $33 million due to increased investment in enterprise projects and the impact of a GST credit in the first half.
Provision for credit impairment increased $19 million due to provisions relating to discontinued businesses in the September 2013 half.
September 2013 v September 2012

Key factors affecting the result were:

Operating income decreased $301 million mainly due to a $291 million gain on sale of VISA shares in the September 2012 half.
Operating expenses decreased $1 million largely due to $24 million software impairment expense in 2012 offset by higher depreciation and amortisation and restructuring expenses in 2013.
Provision for credit impairment increased $6 million due to higher provisions relating to discontinued businesses in 2013.

SEGMENT REVIEW

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GEOGRAPHIC REVIEW

Section 6 – Geographic Review

Geographic performance Australia geography Asia Pacific, Europe & America geography New Zealand geography

GEOGRAPHIC REVIEW

Geographic Performance

		Half Year Full Year
Statutory Profit	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	2,140 1,958 9% 4,098 3,728 10%
Asia Pacific, Europe & America	584 460 27% 1,044 951 10%
New Zealand	608 522 16% 1,130 982 15%
	3,332 2,940 13% 6,272 5,661 11%

	Half Year Full Year
Cash Profit	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Australia	2,136 2,164 -1% 4,300 3,870 11%
Asia Pacific, Europe & America	555 460 21% 1,015 963 5%
New Zealand	625 558 12% 1,183 997 19%
	3,316 3,182 4% 6,498 5,830 11%


	As at ($M) Movement

Net loans & advances	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Australia	320,775 312,247 305,817 3% 5%
Asia Pacific, Europe & America	59,737 51,620 45,310 16% 32%
New Zealand	88,783 78,113 76,696 14% 16%
Net loans & advances	469,295 441,980 427,823 6% 10%


	As at ($M) Movement

	Sep 13 Sep 13
Customer deposits	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Australia	207,903 195,850 194,695 6% 7%
Asia Pacific, Europe & America	98,126 92,736 80,464 6% 22%
New Zealand	62,800 55,549 52,717 13% 19%
Customer deposits	368,829 344,135 327,876 7% 12%

GEOGRAPHIC REVIEW

Australia geography

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	4,631 4,514 3% 9,145 8,669 5%
Other external operating income	1,533 1,677 -9% 3,210 3,547 -10%
Operating income	6,164 6,191 0% 12,355 12,216 1%
Operating expenses	(2,678) (2,602) 3% (5,280) (5,621) -6%
Profit before credit impairment and income tax	3,486 3,589 -3% 7,075 6,595 7%
Provision for credit impairment	(488) (466) 5% (954) (1,008) -5%
Profit before tax	2,998 3,123 -4% 6,121 5,587 10%
Income tax expense and non-controlling interests	(862) (959) -10% (1,821) (1,717) 6%
Cash profit	2,136 2,164 -1% 4,300 3,870 11%
Adjustments between statutory profit and cash profit	4 (206) large (202) (142) 42%
Statutory profit	2,140 1,958 9% 4,098 3,728 10%
Balance Sheet

Net loans & advances	320,775 312,247 3% 320,775 305,817 5%
Other external assets	132,379 126,486 5% 132,379 123,592 7%
External assets	453,154 438,733 3% 453,154 429,409 6%
Customer deposits	207,903 195,850 6% 207,903 194,695 7%
Other deposits and borrowings	59,510 63,239 -6% 59,510 55,782 7%
Deposits and other borrowings	267,413 259,089 3% 267,413 250,477 7%
Other external liabilities	156,225 148,116 5% 156,225 148,506 5%
External liabilities	423,638 407,205 4% 423,638 398,983 6%
Risk weighted assets1	196,416 192,118 2% 196,416 179,957 9%
Average net loans and advances	316,228 309,310 2% 312,778 299,026 5%
Average deposits and other borrowings	266,842 255,299 5% 261,087 251,751 4%
Ratios
Net interest margin - cash	2.45% 2.52% 2.48% 2.49%
Net interest margin (excluding Global Markets)	2.75% 2.79% 2.77% 2.79%
Operating expenses to operating income - cash	43.4% 42.0% 42.7% 46.0%
Operating expenses to average assets - cash	1.18% 1.20% 1.19% 1.32%
Individual provision charge/(release) - cash	433 447 -3% 880 1,366 -36%
Individual provision charge/(release) as a % of
	0.27% 0.29% 0.28% 0.46%
average net advances - cash

Collective provision charge/(release) - cash	55 19 large 74 (358) large
Collective provision charge/(release) as a % of
	0.03% 0.01% 0.02% (0.12%)
average net advances - cash

Net impaired assets	1,822 2,097 -13% 1,822 2,314 -21%
Net impaired assets as a % of net advances	0.57% 0.67% 0.57% 0.76%
Total full time equivalent staff (FTE)	21,137 21,350 -1% 21,137 21,682 -3%

September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology.

GEOGRAPHIC REVIEW

Asia Pacific, Europe & America geography

Table reflects AUD for the APEA region

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	768 682 13% 1,450 1,338 8%
Other external operating income	872 809 8% 1,681 1,485 13%
Operating income	1,640 1,491 10% 3,131 2,823 11%
Operating expenses	(903) (822) 10% (1,725) (1,559) 11%
Profit before credit impairment and income tax	737 669 10% 1,406 1,264 11%
Provision for credit impairment	(91) (99) -8% (190) (99) 92%
Profit before income tax	646 570 13% 1,216 1,165 4%
Income tax expense and non-controlling interests	(91) (110) -17% (201) (202) 0%
Cash profit	555 460 21% 1,015 963 5%
Adjustments between statutory profit and cash profit	29 - n/a 29 (12) large
Statutory profit	584 460 27% 1,044 951 10%
Geographic segments:

Asia	355 301 18% 656 555 18%
Europe & America	98 68 44% 166 218 -24%
Pacific	102 91 12% 193 190 2%
Cash profit	555 460 21% 1,015 963 5%
Balance Sheet

Net loans & advances	59,737 51,620 16% 59,737 45,310 32%
Other external assets	76,913 80,897 -5% 76,913 65,571 17%
External assets	136,650 132,517 3% 136,650 110,881 23%
Customer deposits	98,126 92,736 6% 98,126 80,464 22%
Other deposits and borrowings	4,992 8,319 -40% 4,992 7,398 -33%
Deposits and other borrowings	103,118 101,055 2% 103,118 87,862 17%
Other external liabilities	38,306 38,975 -2% 38,306 30,453 26%
External liabilities	141,424 140,030 1% 141,424 118,315 20%
Risk weighted assets1	85,586 78,416 9% 85,586 69,261 24%
Average net loans and advances	57,336 47,326 21% 52,345 41,112 27%
Average deposits and other borrowings	100,037 89,150 12% 94,608 77,182 23%
Ratios
Net interest margin	1.17% 1.20% 1.18% 1.33%
Net interest margin (excluding Global Markets)	1.99% 2.15% 2.06% 2.34%
Operating expenses to operating income - cash	55.1% 55.1% 55.1% 55.3%
Operating expenses to average assets - cash	1.24% 1.27% 1.25% 1.38%
Individual provision charge/(release) - cash	94 87 8% 181 81 large
Individual provision charge/(release) as a % of
	0.33% 0.37% 0.35% 0.19%
average net advances - cash

Collective provision charge/(release) - cash	(3) 12 large 9 18 -50%
Collective provision charge/(release) as a % of
	(0.01%) 0.06% 0.02% 0.04%
average net advances - cash

Net impaired assets	386 337 15% 386 319 21%
Net impaired assets as a % of net advances	0.65% 0.65% 0.65% 0.70%
Total full time equivalent staff (FTE)	18,091 17,413 4% 18,091 17,500 3%

September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology.

GEOGRAPHIC REVIEW

Asia Pacific, Europe & America geography

Table reflects USD for the APEA region

	Half Year Full Year
	Sep 13 USD M Mar 13 USD M Movt Sep 13 USD M Sep 12 USD M Movt
Net interest income	731 709 3% 1,440 1,375 5%
Other external operating income	830 840 -1% 1,670 1,526 9%
Operating income	1,561 1,549 1% 3,110 2,901 7%
Operating expenses	(859) (854) 1% (1,713) (1,602) 7%
Profit before credit impairment and income tax	702 695 1% 1,397 1,299 8%
Provision for credit impairment	(86) (103) -17% (189) (102) 85%
Profit before income tax	616 592 4% 1,208 1,197 1%
Income tax expense and non-controlling interests	(86) (114) -25% (200) (208) -4%
Cash profit	530 478 11% 1,008 989 2%
Adjustments between statutory profit and cash profit	29 - n/a 29 (11) large
Statutory profit	559 478 17% 1,037 978 6%
Geographic segments:

Asia	338 313 8% 651 570 14%
Europe & America	94 71 32% 165 224 -26%
Pacific	97 94 3% 191 195 -2%
Cash profit	529 478 11% 1,007 989 2%
Balance Sheet

Net loans & advances	55,627 53,809 3% 55,627 47,403 17%
Other external assets	71,617 84,327 -15% 71,617 68,601 4%
External assets	127,244 138,136 -8% 127,244 116,004 10%
Customer deposits	91,376 96,669 -5% 91,376 84,182 9%
Other deposits and borrowings	4,648 8,671 -46% 4,648 7,739 -40%
Deposits and other borrowings	96,024 105,340 -9% 96,024 91,921 4%
Other external liabilities	35,669 40,627 -12% 35,669 31,860 12%
External liabilities	131,693 145,967 -10% 131,693 123,781 6%
Risk weighted assets1	79,698 81,741 -2% 79,698 72,461 10%
Average net loans and advances	54,774 49,158 11% 51,974 42,255 23%
Average deposits and other borrowings	95,267 92,601 3% 93,937 79,329 18%
Ratios
Net interest margin	1.17% 1.20% 1.18% 1.33%
Net interest margin (excluding Global Markets)	1.99% 2.15% 2.06% 2.34%
Operating expenses to operating income - cash	55.1% 55.1% 55.1% 55.3%
Operating expenses to average assets - cash	1.24% 1.27% 1.25% 1.37%
Individual provision charge/(release) - cash	90 90 0% 180 82 large
Individual provision charge/(release) as a % of
	0.33% 0.37% 0.35% 0.19%
average net advances - cash

Collective provision charge/(release) - cash	(4) 13 large 9 20 -55%
Collective provision charge/(release) as a % of
	(0.01%) 0.06% 0.02% 0.04%
average net advances - cash

Net impaired assets	362 350 3% 362 333 9%
Net impaired assets as a % of net advances	0.65% 0.65% 0.65% 0.70%
Total full time equivalent staff (FTE)	18,091 17,413 4% 18,091 17,500 3%

September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology.

GEOGRAPHIC REVIEW

New Zealand geography

Table reflects AUD results for the New Zealand geography

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Net interest income	1,137 1,040 9% 2,177 2,103 4%
Other external operating income	351 364 -4% 715 706 1%
Operating income	1,488 1,404 6% 2,892 2,809 3%
Operating expenses	(621) (610) 2% (1,231) (1,339) -8%
Profit before credit impairment and income tax	867 794 9% 1,661 1,470 13%
Provision for credit impairment	(19) (34) -44% (53) (151) -65%
Profit before income tax	848 760 12% 1,608 1,319 22%
Income tax expense and non-controlling interests	(223) (202) 10% (425) (322) 32%
Cash profit	625 558 12% 1,183 997 19%
Adjustments between statutory profit and cash profit	(17) (36) -53% (53) (15) large
Statutory profit	608 522 16% 1,130 982 15%
Balance Sheet

Net loans & advances	88,783 78,113 14% 88,783 76,696 16%
Other external assets	24,404 23,266 5% 24,404 25,145 -3%
External assets	113,187 101,379 12% 113,187 101,841 11%
Customer deposits	62,800 55,549 13% 62,800 52,717 19%
Other deposits and borrowings	6,343 4,781 33% 6,343 6,067 5%
Deposits and other borrowings	69,143 60,330 15% 69,143 58,784 18%
Other external liabilities	23,171 22,534 3% 23,171 24,808 -7%
External liabilities	92,314 82,864 11% 92,314 83,592 10%
Risk weighted assets1	57,263 52,048 10% 57,263 50,901 12%
Average net loans and advances	83,724 77,258 8% 80,500 73,109 10%
Average deposits and other borrowings	65,485 60,351 9% 62,925 55,535 13%
Ratios
Net interest margin	2.31% 2.27% 2.29% 2.43%
Net interest margin (excluding Global Markets)	2.52% 2.51% 2.52% 2.63%
Operating expenses to operating income - cash	41.6% 43.5% 42.5% 47.7%
Operating expenses to average assets - cash	1.12% 1.18% 1.15% 1.34%
Individual provision charge/(release) - cash	45 61 -26% 106 192 -45%
Individual provision charge/(release) as a % of
	0.11% 0.16% 0.13% 0.26%
average net advances - cash

Collective provision charge/(release) - cash	(26) (27) -4% (53) (41) 29%
Collective provision charge/(release) as a % of
	(0.06%) (0.07%) (0.07%) (0.05%)
average net advances - cash

Net impaired assets	589 708 -17% 589 790 -25%
Net impaired assets as a % of net advances	0.66% 0.91% 0.66% 1.03%
Total full time equivalent staff (FTE)	8,284 8,656 -4% 8,284 9,057 -9%

1. September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology.

GEOGRAPHIC REVIEW

New Zealand geography

Table reflects NZD results for the New Zealand geography

	Half Year Full Year
	Sep 13 NZD M Mar 13 NZD M Movt Sep 13 NZD M Sep 12 NZD M Movt
Net interest income	1,338 1,303 3% 2,641 2,709 -3%
Other external operating income	411 457 -10% 868 910 -5%
Operating income	1,749 1,760 -1% 3,509 3,619 -3%
Operating expenses	(728) (765) -5% (1,493) (1,725) -13%
Profit before credit impairment and income tax	1,021 995 3% 2,016 1,894 6%
Provision for credit impairment	(22) (43) -49% (65) (194) -66%
Profit before income tax	999 952 5% 1,951 1,700 15%
Income tax expense and non-controlling interests	(262) (253) 4% (515) (415) 24%
Cash profit	737 699 5% 1,436 1,285 12%
Adjustments between statutory profit and cash profit	(20) (44) -55% (64) (20) large
Statutory profit	717 655 9% 1,372 1,265 8%
Balance Sheet

Net loans & advances	99,765 97,398 2% 99,765 96,094 4%
Other external assets	27,422 29,011 -5% 27,422 31,505 -13%
External assets	127,187 126,409 1% 127,187 127,599 0%
Customer deposits	70,567 69,264 2% 70,567 66,051 7%
Other deposits and borrowings	7,129 5,960 20% 7,129 7,601 -6%
Deposits and other borrowings	77,696 75,224 3% 77,696 73,652 5%
Other external liabilities	26,036 28,099 -7% 26,036 31,083 -16%
External liabilities	103,732 103,323 0% 103,732 104,735 -1%
Risk weighted assets1	64,346 64,898 -1% 64,346 63,775 1%
Average net loans and advances	98,494 96,831 2% 97,665 94,188 4%
Average deposits and other borrowings	77,041 75,640 2% 76,343 71,547 7%
Ratios
Net interest margin	2.31% 2.27% 2.29% 2.43%
Net interest margin (excluding Global Markets)	2.52% 2.51% 2.52% 2.63%
Operating expenses to operating income - cash	41.6% 43.5% 42.5% 47.7%
Operating expenses to average assets - cash	1.12% 1.18% 1.15% 1.34%
Individual provision charge/(release) - cash	52 77 -32% 129 245 -47%
Individual provision charge/(release) as a % of
	0.11% 0.16% 0.13% 0.26%
average net advances - cash

Collective provision charge/(release) - cash	(30) (34) -12% (64) (51) 25%
Collective provision charge/(release) as a % of
	(0.06%) (0.07%) (0.07%) (0.05%)
average net advances - cash

Net impaired assets	662 884 -25% 662 990 -33%
Net impaired assets as a % of net advances	0.66% 0.91% 0.66% 1.03%
Total full time equivalent staff (FTE)	8,284 8,656 -4% 8,284 9,057 -9%

September 2013 and March 2013 risk weighted assets under Basel 3 methodology, September 2012 risk weighted assets under Basel 2 methodology.

GEOGRAPHIC REVIEW

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PROFIT RECONCILIATION

Section 7 – Profit Reconciliation

Adjustments between statutory profit and cash profit Explanation of adjustments between statutory profit and cash profit Reconciliation of statutory profit to cash profit

PROFIT RECONCILIATION

Non-IFRS information

Adjustments between statutory profit and cash profit

From 1 October 2012, the Group changed to reporting profit on a cash basis from reporting profit on an underlying profit basis. Comparative information has been restated on a consistent basis.

Statutory profit has been adjusted to exclude non-core items to arrive at cash profit and has been provided to assist readers to understand the results for the ongoing business activities of the Group. These adjustments made in arriving at cash profit are included in statutory profit which is subject to audit within the context of the Group statutory audit opinion. The Financial Report is in the process of being audited. Cash profit is not audited by the external auditor, however the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Statutory profit attributable to shareholders of the Company	3,332 2,940 13% 6,272 5,661 11%
Adjustments between statutory profit and cash profit	(16) 242 large 226 169 34%
Cash profit	3,316 3,182 4% 6,498 5,830 11%

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Adjustments between statutory profit

and cash profit

Treasury shares adjustment	31 53 -42% 84 96 -13%
Revaluation of policy liabilities	27 19 42% 46 (41) large
Economic hedging	(205) 192 large (13) 229 large
Revenue and net investment hedges	143 16 large 159 (53) large
Structured credit intermediation trades	(12) (38) -68% (50) (62) -19%

Total adjustments between
statutory profit and cashprofit	(16) 242 large 226 169 34%

Explanation of adjustments between statutory profit and cash profit

Treasury shares adjustment

ANZ shares held by the Group in the consolidated managed funds and life business are deemed to be Treasury shares for accounting purposes. Dividends and realised and unrealised gains and losses from these shares are reversed as these are not permitted to be recognised in income for statutory reporting purposes. In deriving cash profit, these earnings are included to ensure there is no asymmetrical impact on the Group’s profits because the Treasury shares support policy liabilities which are revalued in deriving income. Accordingly, an adjustment to statutory profit of $31 million gain after tax ($33 million gain pre tax) has been recognised.

Revaluation of policy liabilities

When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect the present value of the obligation, with the impact of changes in the market discount rate each period being reflected in the income statement. ANZ includes the impact on the remeasurement of the insurance contract attributable to changes in market discount rates as an adjustment to cash profit to remove the volatility attributable to changes in market interest rates which reverts to zero over the life of the insurance contract.

Economic hedging and Revenue and net investment hedges

The Group enters into economic hedges to manage its interest rate and foreign exchange risk. The application of AASB 139: Financial Instruments – Recognition and Measurement results in fair value gains and losses being recognised within the income statement. ANZ includes the mark-tomarket adjustments as an adjustment to cash profit as the profit or loss resulting from the transactions will reverse over time to match with the profit or loss from the economically hedged item as part of cash profit. This includes gains and losses arising from:

approved classes of derivatives not designated in accounting hedge relationships but which are considered to be economic hedges, including hedges of NZD and USD revenue;
the use of the fair value option (principally arising from the valuation of the ‘own name’ credit spread on debt issues designated at fair value); and
ineffectiveness from designated accounting cash flow, fair value and net investment hedges.

In the table below, funding and lending related swaps are primarily cross currency interest rate swaps which are being used to convert the proceeds of foreign currency debt issuances into floating rate Australian dollar and New Zealand dollar debt. As these swaps do not qualify for hedge accounting, movements in the fair values are recorded in the Income Statement. The main drivers of these fair values are currency basis spreads and the Australian dollar and New Zealand dollar fluctuation against other major funding currencies. This category also includes economic hedges of select structured finance and specialised leasing transactions that do not qualify for hedge accounting. The main drivers of these fair value adjustments are Australian and New Zealand yield curves.

PROFIT RECONCILIATION

Gains in funding and lending related swaps were the result of a significant weakening in AUD across the major currencies, most notably USD and EUR in the second half of 2013. This was in contrast to the first half of 2013, where losses arose due to the contraction in currency basis spreads, principally from AUD/USD spreads.

Losses arising from the use of the fair value option on own name debt hedged by derivatives are a result of a contraction of the Group’s credit spreads in the first half of 2013, with spreads stabilising in the second half of 2013.

Losses within revenue and net investment hedges were also the result of the significant weakening in AUD against the USD and NZD exchange rates in the second half of 2013.

	Half Year Full Year
Impact on income statement (gains)/losses	Sep 13 Mar 13 Sep 13 Sep 12
	$M $M $M $M
Timing differences where IFRS results in asymmetry between the hedge and hedged items
Funding and lending related swaps	(281) 203 (78) 194
Use of the fair value option on own debt hedged by derivatives	(11) 74 63 119
Revenue and net investment hedges	201 23 224 (75)
Ineffective portion of cash flow and fair value hedges	(2) (6) (8) 16
Profit/(loss) before tax	(93) 294 201 254
Profit/(loss) after tax	(62) 208 146 176

Cumulative pre-tax timing differences
relating to economic hedging (gains)/losses		As at($M)
	Sep 13	Mar 13	Sep 12
Timing differences where IFRS results in asymmetry between the
hedge and hedged items (before tax)
Funding and lending related swaps	678	959	756
Use of the fair value option on own debt hedged by derivatives	(1)	10	(64)
Revenue and net investment hedges	179	(22)	(45)
Ineffective portion of cash flow and fair value hedges	(25)	(23)	(17)
	831	924	630

PROFIT RECONCILIATION

Structured credit intermediation trades

ANZ entered into a series of structured credit intermediation trades from 2004 to 2007. The underlying structures involve credit default swaps (CDS) over synthetic collateralised debt obligations (CDOs), portfolios of external collateralised loan obligations (CLOs) or specific bonds/floating rate notes (FRNs). ANZ sold protection using credit default swaps over these structures and then to mitigate risk, purchased protection via credit default swaps over the same structures from eight US financial guarantors.

Being derivatives, both the sold protection and purchased protection are marked-to-market. Prior to the commencement of the global credit crisis, movements in valuations of these positions were not significant and largely offset each other in income. Following the onset of the credit crisis, the purchased protection has provided only a partial offset against movements in valuation of the sold protection because:

one of the counterparties to the purchased protection defaulted and many of the remaining were downgraded; and
a credit valuation adjustment is applied to the remaining counterparties to the purchased protection reflective of changes to their credit worthiness.

ANZ is actively monitoring this portfolio with a view to reducing the exposure via termination and restructuring of both the bought and sold protection if and when ANZ deems it cost effective relative to the perceived risk associated with a specific trade or counterparty. During the year ANZ terminated all bought CDSs with one financial guarantor along with the corresponding sold CDSs for a net profit of $7 million (including termination costs and release of CVA). The bought and sold protection trades are by nature largely offsetting, with the notional amount on the outstanding bought CDSs and outstanding sold CDSs at September 2013 each amounting to US$4.5 billion (Mar 2013: US$4.7 billion; Sep 2012: US$8.0 billion).

The profit and loss impact of credit risk on structured credit derivatives remains volatile reflecting the impact of market movements in credit spreads and AUD/USD rates.

The (gain)/loss on structured credit intermediation trades is included as an adjustment to cash profit as it relates to a legacy non-core business where the cumulative mark-to-market movements are expected to reverse to zero in future periods.

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Credit risk on intermediation trades
Profit before income tax	(15) (48) -69% (63) (73) -14%
Income tax expense	3 10 -70% 13 11 18%
Profit after income tax	(12) (38) -68% (50) (62) -19%

	As at ($M) Movement
Financial impacts of credit intermediation trades	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Mark-to-market exposure to financial guarantors	179 257 359 -30% -50%
Cumulative costs relating to financial guarantors1
CVA for outstanding transactions	42 54 116 -22% -64%
Realised close out and hedge costs	333 336 322 -1% 3%
Cumulative life to date charges	375 390 438 -4% -14%

1. The cumulative costs in managing the positions include realised losses relating to restructuring of trades in order to reduce risks and realised losses on termination of sold protection trades. It also includes foreign exchange hedging losses

Credit risk on impaired derivatives (nil profit after tax impact)
Reclassification of a charge to income for credit valuation adjustments on defaulted and impaired derivative exposures to provision for credit impairment of $9 million for the full year (Mar 2013 half: $11 million; Sep 2012 full year: $60 million). The reclassification has been made to reflect the manner in which the defaulted and impaired derivatives are managed.
Policyholders tax gross up (nil profit after tax impact)

For statutory reporting purposes policyholder income tax and other related taxes paid on behalf of policyholders are included in both net income from wealth management and the Group’s income tax expense. The gross up of $184 million (Mar 2013 half: $187 million; Sep 2012 full year: $151 million) has been excluded from the cash results as it does not reflect the underlying performance of the business which is assessed on a net of policyholder tax basis.

PROFIT RECONCILIATION

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PROFIT RECONCILIATION

Reconciliation of statutory profit to cash profit

September 2013 Half Year
	Statutory	Adjustments to statutory profit
	profit
		Treasury		Revaluation
		shares	Policyholders	of policy
		adjustment	tax gross up	liabilities
	$M	$M	$M	$M
Net interest income	6,558	-	-	-
Fee income	1,228	-	-	-
Foreign exchange earnings	377	-	-	-
Profit on trading instruments	48	-	-	-
Net income from wealth mgmt	735	33	(184)	38
Other	570	-	-	-
Other operating income	2,958	33	(184)	38
Operating income	9,516	33	(184)	38
Personnel expenses	(2,413)	-	-	-
Premises expenses	(377)	-	-	-
Computer expenses	(625)	-	-	-
Restructuring expenses	(28)	-	-	-
Other expenses	(759)	-	-	-
Operating expenses	(4,202)	-	-	-
Profit before credit impairment and tax	5,314	33	(184)	38
Provision for credit impairment	(600)	-	-	-
Profit before income tax	4,714	33	(184)	38
Income tax expense	(1,377)	(2)	184	(11)
Non-controlling interests	(5)	-	-	-
Profit	3,332	31	-	27

March 2013 Half Year
	Statutory	Adjustments to statutory profit
	profit
		Treasury		Revaluation
		shares	Policyholders	of policy
		adjustment	tax gross up	liabilities
	$M	$M	$M	$M
Net interest income	6,200	-	-	-
Fee income	1,231	-	-	-
Foreign exchange earnings	467	-	-	-
Profit on trading instruments	315	-	-	-
Net income from wealth management	696	57	(187)	28
Other	21	-	-	-
Other operating income	2,730	57	(187)	28
Operating income	8,930	57	(187)	28
Personnel expenses	(2,344)	-	-	-
Premises expenses	(356)	-	-	-
Computer expenses	(618)	-	-	-
Restructuring expenses	(57)	-	-	-
Other expenses	(659)	-	-	-
Operating expenses	(4,034)	-	-	-
Profit before credit impairment and tax	4,896	57	(187)	28
Provision for credit impairment	(588)	-	-	-
Profit before income tax	4,308	57	(187)	28
Income tax expense	(1,363)	(4)	187	(9)
Non-controlling interests	(5)	-	-	-
Profit	2,940	53	-	19

PROFIT RECONCILIATION

September 2013 Half Year

	Adjustments to statutory profit	Adjustments to statutory profit	Adjustments to statutory profit	Adjustments to statutory profit			Cash
							profit
	Revenue and		Structured		Credit risk	Total
Economic	net investment			credit	on impaired	adjustments to
hedging	hedges	intermediation trades			derivatives	statutory profit
$M	$M			$M	$M	$M	$M
(22)	-			-	-	(22)	6,536
-	-			-	-	-	1,228
7	201			-	-	208	585
(43)	-			(15)	(2)	(60)	(12)
-	-			-	-	(113)	622
(237)	-			-	-	(237)	333
(273)	201			(15)	(2)	(202)	2,756
(295)	201			(15)	(2)	(224)	9,292
-	-			-	-	-	(2,413)
-	-			-	-	-	(377)
-	-			-	-	-	(625)
-	-			-	-	-	(28)
-	-			-	-	-	(759)
-	-			-	-	-	(4,202)
(295)	201			(15)	(2)	(224)	5,090
-	-			-	2	2	(598)
(295)	201			(15)	-	(222)	4,492
90	(58)			3	-	206	(1,171)
-	-			-	-	-	(5)
(205)	143			(12)	-	(16)	3,316

March 2013 Half Year

	Adjustments to statutory profit	Adjustments to statutory profit	Adjustments to statutory profit	Adjustments to statutory profit			Cash
							profit
	Revenue and		Structured		Credit risk	Total
Economic	net investment			credit	on impaired	adjustments to
hedging	hedges	intermediation trades			derivatives	statutory profit
$M	$M			$M	$M	$M	$M
36	-			-	-	36	6,236
-	-			-	-	-	1,231
(12)	23			-	-	11	478
7	-			(48)	11	(30)	285
-	-			-	-	(102)	594
241	-			-	-	241	262
236	23			(48)	11	120	2,850
272	23			(48)	11	156	9,086
-	-			-	-	-	(2,344)
-	-			-	-	-	(356)
-	-			-	-	-	(618)
-	-			-	-	-	(57)
-	-			-	-	-	(659)
-	-			-	-	-	(4,034)
272	23			(48)	11	156	5,052
-	-			-	(11)	(11)	(599)
272	23			(48)	-	145	4,453
(80)	(7)			10	-	97	(1,266)
-	-			-	-	-	(5)
192	16			(38)	-	242	3,182

PROFIT RECONCILIATION

September 2013 Full Year
	Statutory	Adjustments to statutory profit
	profit
		Treasury		Revaluation
		shares	Policy-holders	of policy
		adjustment	tax gross up	liabilities
	$M	$M	$M	$M
Net interest income	12,758	-	-	-
Fee income	2,459	-	-	-
Foreign exchange earnings	844	-	-	-
Profit on trading instruments	363	-	-	-
Net income from wealth mgmt	1,431	90	(371)	66
Other	591	-	-	-
Other operating income	5,688	90	(371)	66
Operating income	18,446	90	(371)	66
Personnel expenses	(4,757)	-	-	-
Premises expenses	(733)	-	-	-
Computer expenses	(1,243)	-	-	-
Restructuring expenses	(85)	-	-	-
Other expenses	(1,418)	-	-	-
Operating expenses	(8,236)	-	-	-
Profit before credit impair't and tax	10,210	90	(371)	66
Provision for credit impairment	(1,188)	-	-	-
Profit before income tax	9,022	90	(371)	66
Income tax expense	(2,740)	(6)	371	(20)
Non-controlling interests	(10)	-	-	-
Profit	6,272	84	-	46
September 2012 Full Year
	Statutory	Adjustments to statutory profit
	profit
		Treasury		Revaluation
		shares	Policy-holders	of policy
		adjustment	tax gross up	liabilities
	$M	$M	$M	$M
Net interest income	12,110	-	-	-
Fee income	2,412	-	-	-
Foreign exchange earnings	1,081	-	-	-
Profit on trading instruments	353	-	-	-
Net income from wealth mgmt	1,203	104	(151)	(57)
Other	552	-	-	-
Other operating income	5,601	104	(151)	(57)
Operating income	17,711	104	(151)	(57)
Personnel expenses	(4,765)	-	-	-
Premises expenses	(716)	-	-	-
Computer expenses	(1,383)	-	-	-
Restructuring expenses	(274)	-	-	-
Other expenses	(1,381)	-	-	-
Operating expenses	(8,519)	-	-	-
Profit before credit impair't and tax	9,192	104	(151)	(57)
Provision for credit impairment	(1,198)	-	-	-
Profit before income tax	7,994	104	(151)	(57)
Income tax expense	(2,327)	(8)	151	16
Non-controlling interests	(6)	-	-	-
Profit	5,661	96	-	(41)

PROFIT RECONCILIATION

September 2013 Full Year

Adjustment to statutory profit Cash profit

	Adj	ustment to statutory profit			Cash
					profit
	Revenue and	Structured	Credit risk	Total
Economic	net investment	credit	on impaired	adjustments to statutory
hedging	hedges	intermediation trades	derivatives	profit
$M	$M	$M	$M	$M	$M
14	-	-	-	14	12,772
-	-	-	-	-	2,459
(5)	224	-	-	219	1,063
(36)	-	(63)	9	(90)	273
-	-	-	-	(215)	1,216
4	-	-	-	4	595
(37)	224	(63)	9	(82)	5,606
(23)	224	(63)	9	(68)	18,378
-	-	-	-	-	(4,757)
-	-	-	-	-	(733)
-	-	-	-	-	(1,243)
-	-	-	-	-	(85)
-	-	-	-	-	(1,418)
-	-	-	-	-	(8,236)
(23)	224	(63)	9	(68)	10,142
-	-	-	(9)	(9)	(1,197)
(23)	224	(63)	-	(77)	8,945
10	(65)	13	-	303	(2,437)
-	-	-	-	-	(10)
(13)	159	(50)	-	226	6,498

September 2012 Full Year

Adjustment to statutory profit

Cash profit

	Adj	ustment to statutory profit			Cash
					profit
	Revenue and	Structured	Credit risk	Total
Economic	net investment	credit	on impaired	adjustments to statutory
hedging	hedges	intermediation trades	derivatives	profit
$M	$M	$M	$M	$M	$M
-	-	-	-	-	12,110
-	-	-	-	-	2,412
-	(75)	-	-	(75)	1,006
9	-	(73)	60	(4)	349
-	-	-	-	(104)	1,099
320	-	-	-	320	872
329	(75)	(73)	60	137	5,738
329	(75)	(73)	60	137	17,848
-	-	-	-	-	(4,765)
-	-	-	-	-	(716)
-	-	-	-	-	(1,383)
-	-	-	-	-	(274)
-	-	-	-	-	(1,381)
-	-	-	-	-	(8,519)
329	(75)	(73)	60	137	9,329
-	-	-	(60)	(60)	(1,258)
329	(75)	(73)	-	77	8,071
(100)	22	11	-	92	(2,235)
-	-	-	-	-	(6)
229	(53)	(62)	-	169	5,830

PROFIT RECONCILIATION

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – TABLE OF CONTENTS

*CONTENTS*	*PAGE*
Condensed Consolidated Income Statement	92
Condensed Consolidated Statement of Comprehensive Income	93
Condensed Consolidated Balance Sheet	94
Condensed Consolidated Cash Flow Statement	95
Condensed Consolidated Statement of Changes in Equity	96
Notes to Condensed Consolidated Financial Statements	97

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited

Note	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Interest income	14,301 14,326 0% 28,627 30,538 -6%
Interest expense	(7,743) (8,126) -5% (15,869) (18,428) -14%
Net interest income 2	6,558 6,200 6% 12,758 12,110 5%
Other operating income 2	1,952 1,823 7% 3,775 4,003 -6%
Net funds management and insurance income 2	735 696 6% 1,431 1,203 19%
Share of associates' profit 16	271 211 28% 482 395 22%
Operating income	9,516 8,930 7% 18,446 17,711 4%
Operating expenses 3	(4,202) (4,034) 4% (8,236) (8,519) -3%
Profit before credit impairment and income tax	5,314 4,896 9% 10,210 9,192 11%
Provision for credit impairment 8	(600) (588) 2% (1,188) (1,198) -1%
Profit before income tax	4,714 4,308 9% 9,022 7,994 13%
Income tax expense 4	(1,377) (1,363) 1% (2,740) (2,327) 18%
Profit for the period	3,337 2,945 13% 6,282 5,667 11%
Comprising:
Profit attributable to non-controlling interests	5 5 0% 10 6 67%
Profit attributable to shareholders of the Company
	3,332 2,940 13% 6,272 5,661 11%


Earnings per ordinary share (cents)
Basic 6	122.6 108.6 13% 231.3 213.4 8%
Diluted 6	118.6 105.4 13% 224.4 205.6 9%
Dividend per ordinary share (cents) 5	91 73 25% 164 145 13%

The notes appearing on pages 97 to 109 form an integral part of the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited

		Full Year
	Sep 13	Sep 12	Movt
	$M	$M
Profit for the period	6,282	5,667	11%
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on defined benefit plans	28	(54)	large
Income tax on items that will not be reclassified subsequently to profit or loss
Actuarial gain/(loss) on defined benefit plans	(14)	10	large
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Exchange differences taken to equity	1,712	(416)	large
Available-for-sale assets
Valuation gain/(loss) taken to equity	13	259	-95%
Transferred to income statement	3	(246)	large
Cash flow hedges
Valuation gain/(loss) taken to equity	(186)	43	large
Transferred to income statement	-	17	-100%
Share of associates' other comprehensive income1	18	(31)	large
Income tax on items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve	-	(1)	-100%
Available-for-sale assets revaluation reserve	(7)	(17)	-59%
Cash flow hedge reserve	52	(17)	large
Other comprehensive income net of tax	1,619	(453)	large
Total comprehensive income for the period	7,901	5,214	52%
Comprising total comprehensive income attributable to:
Non-controlling interests	15	3	large
Shareholders of the Company	7,886	5,211	51%

1. Share of associate’s other comprehensive income is comprised of Available-for-sale assets reserve of $18 million (Sep 12: loss of $28 million); Foreign currency translation reserve loss of $1 million (Sep 12: gain of $1 million) and Cash flow hedge reserve of $1 million (Sep 12: loss of $4 million)

The notes appearing on pages 97 to 109 form an integral part of the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited

	As at ($M) Movement
Assets Note	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Liquid assets	39,737 53,077 36,578 -25% 9%
Due from other financial institutions	22,177 20,781 17,103 7% 30%
Trading securities	41,288 39,569 40,602 4% 2%
Derivative financial instruments	45,878 41,700 48,929 10% -6%
Available-for-sale assets	28,135 23,282 20,562 21% 37%
Net loans and advances 7	469,295 441,980 427,823 6% 10%
Regulatory deposits	2,106 1,679 1,478 25% 42%
Investment in associates	4,123 3,719 3,520 11% 17%
Current tax assets	20 55 33 -64% -39%
Deferred tax assets	721 654 785 10% -8%
Goodwill and other intangible assets	7,690 7,142 7,082 8% 9%
Investments backing policy liabilities	32,083 31,199 29,895 3% 7%
Other assets	7,574 5,709 5,623 33% 35%
Premises and equipment	2,164 2,079 2,114 4% 2%
Total assets	702,991 672,625 642,127 5% 9%
Liabilities
Due to other financial institutions	36,306 43,345 30,538 -16% 19%
Deposits and other borrowings 9	439,674 420,474 397,123 5% 11%
Derivative financial instruments	47,509 45,070 52,639 5% -10%
Current tax liabilities	972 735 781 32% 24%
Deferred tax liabilities	14 12 18 17% -22%
Policy liabilities	32,388 31,087 29,537 4% 10%
External unit holder liabilities (life insurance funds)	3,511 3,730 3,949 -6% -11%
Payables and other liabilities	12,594 12,589 10,109 0% 25%
Provisions	1,228 1,172 1,201 5% 2%
Bonds and notes	70,376 60,226 63,098 17% 12%
Loan capital 10	12,804 11,666 11,914 10% 7%
Total liabilities	657,376 630,106 600,907 4% 9%
Net assets	45,615 42,519 41,220 7% 11%
Shareholders' equity
Ordinary share capital	23,641 23,589 23,070 0% 2%
Preference share capital	871 871 871 0% 0%
Reserves 12	(907) (2,528) (2,498) -64% -64%
Retained earnings 12	21,948 20,534 19,728 7% 11%
Share capital and reserves attributable to shareholders of the Company 12
	45,553 42,466 41,171 7% 11%

Non-controlling interests 12	62 53 49 17% 27%
Total shareholders' equity 12	45,615 42,519 41,220 7% 11%

The notes appearing on pages 97 to 109 form an integral part of the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Australia and New Zealand Banking Group Limited

		Full Year	Full Year
		Sep 13	Sep 12
		Inflows	Inflows
		(Outflows)	(Outflows)
	Note	$M	$M
Cash flows from operating activities
Interest received		28,752	30,421
Interest paid		(16,333)	(18,827)
Dividends received		114	80
Other operating income received		9,616	7,432
Other operating expenses paid1		(7,351)	(7,890)
Income taxes (paid)/refunds received		(2,494)	(2,835)
Net cash flows from funds management and insurance business
Premiums, other income and life investment deposits received		6,093	5,955
Investment income and policy deposits received/(paid)		198	78
Claims and policy liability payments		(4,983)	(4,428)
Commission expensepaid		(446)	(439)
Cash flows from operating activities before changes in operating assets and liabilities		13,166	9,547
Changes in operating assets and liabilities arising from
cash flow movements
(Increase)/decrease in operating assets
Liquid assets		(72)	435
Due from other financial institutions		674	(4,256)
Trading securities		768	(4,589)
Loans and advances		(28,952)	(32,748)
Net cash flows from investments backing policy liabilities
Purchase of insurance assets2		(3,505)	(6,917)
Proceeds from sale/maturity of insurance assets		4,341	7,866
Increase/(decrease) in operating liabilities
Deposits and other borrowings2		27,184	32,630
Due to other financial institutions		3,033	4,184
Payables and other liabilities		969	209
Change in operating assets and liabilities arising from cash flow movements		4,440	(3,186)
Net cashprovided by/(used in) operating activities		17,606	6,361
Cash flows from investing activities
Available-for-sale assets
Purchases		(16,320)	(30,441)
Proceeds from sale or maturity		10,224	31,200
Controlled entities and associates
Purchased (net of cash acquired)		(2)	(1)
Proceeds from sale (net of cash disposed)		81	18
Premises and equipment
Purchases		(356)	(319)
Proceeds from sale		-	20
Other assets		(1,234)	(702)
Net cashprovided by/(used in) investing activities		(7,607)	(225)
Cash flows from financing activities
Bonds and notes
Issue proceeds		18,895	24,352
Redemptions		(19,773)	(15,662)
Loan capital
Issue proceeds		1,868	2,724
Redemptions		(1,465)	(2,593)
Dividends paid		(3,226)	(2,219)
Share capital issues		30	60
Share buyback		(425)	-
Net cashprovided by/(used in) financing activities		(4,096)	6,662
Net increase/(decrease) in cash and cash equivalents		5,903	12,798
Cash and cash equivalents at beginning of period		41,450	30,021
Effects of exchange rate changes on cash and cash equivalents		1,670	(1,369)
Cash and cash equivalents at end of period	13	49,023	41,450

1. During the period, the Group reclassified on-market share purchases used to satisfy equity-settled share-based payments from financing to operating cash flows (2012: $55m)

2. During the period, the Group reclassified certain transactions undertaken by the Wealth business in relation to securities issued by entities within the Group in order to better reflect the nature of the cash flows for the Group (2012: $1,032 million)

The notes appearing on pages 97 to 109 form an integral part of the Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited

					Shareholders'
					equity
	Ordinary				attributable to	Non-	Total
	share	Preference		Retained	Equity holders of	controlling	Shareholders'
	capital	shares	Reserves1	earnings	the Bank	interests	equity
	$M	$M	$M	$M	$M	$M	$M
As at 1 October 2011	21,343	871	(2,095)	17,787	37,906	48	37,954
Profit or loss	-	-	-	5,661	5,661	6	5,667
Other comprehensive income for the period	-	-	(406)	(44)	(450)	(3)	(453)
Total comprehensive income for the period	-	-	(406)	5,617	5,211	3	5,214
Transactions with equity holders in
their capacity as equity holders:
Dividends paid	-	-	-	(3,702)	(3,702)	(2)	(3,704)
Dividend income on treasury shares
held within the Group's	-	-	-	24	24	-	24
life insurance statutory funds
Dividend reinvestment plan	1,461	-	-	-	1,461	-	1,461
Transactions with non-controlling interests	-	-	(1)	-	(1)	-	(1)
Other equity movements:
Share based payments/(exercises)	-	-	6	-	6	-	6
Group share option scheme	60	-	-	-	60	-	60
Treasury shares OnePath Australia adjustment	78	-	-	-	78	-	78
Group employee share acquisition scheme	128	-	-	-	128	-	128
Transfer of options/rights lapsed	-	-	(2)	2	-	-	-
As at 30 September 2012	23,070	871	(2,498)	19,728	41,171	49	41,220
Profit or loss	-	-	-	6,272	6,272	10	6,282
Other comprehensive income for the period	-	-	1,600	14	1,614	5	1,619
Total comprehensive income for the period	-	-	1,600	6,286	7,886	15	7,901
Transactions with equity holders in
their capacity as equity holders:
Dividends paid	-	-	-	(4,088)	(4,088)	(1)	(4,089)
Dividend income on treasury shares
held within the Group's	-	-	-	20	20	-	20
life insurance statutory funds
Dividend reinvestment plan	843	-	-	-	843	-	843
Transactions with non-controlling interests	-	-	(10)	-	(10)	(1)	(11)
Other equity movements:
Share based payments/(exercises)	-	-	3	-	3	-	3
Group share option scheme	30	-	-	-	30	-	30
Treasury shares OnePath Australia adjustment	7	-	-	-	7	-	7
Group employee share acquisition scheme	116	-	-	-	116	-	116
Group share buyback	(425)	-	-	-	(425)	-	(425)
Transfer of options/rights lapsed	-	-	(2)	2	-	-	-
As at 30 September 2013	23,641	871	(907)	21,948	45,553	62	45,615

1. Further information on other comprehensive income is disclosed in Note 12

The notes appearing on pages 97 to109 form an integral part of the Condensed Consolidated Financial Statements

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

These Condensed Consolidated Financial Statements:

have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (“AASs”);
should be read in conjunction with ANZ’s Financial Statements for the year ended 30 September 2013 when released and any public announcements made by the Parent Entity and its controlled entities (the Group) for the year ended 30 September 2013 in accordance with the continuous disclosure obligations under the Corporations Act 2001 and the ASX Listing Rules;
do not include all notes of the type normally included in ANZ’s Annual Financial Statements;
are presented in Australian dollars unless otherwise stated; and
were approved by the Board of Directors on 28 October 2013.

i) Accounting policies

These Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computation consistent with those applied in the 2012 Annual Financial Statements. All new AASs and Australian Accounting Standards Board Interpretations applicable to annual reporting periods commencing on or before 1 October 2012 have been applied to the Group effective from their required date of application. The initial application of these Standards and Interpretations has not had a material impact on the financial position or the financial results of the Group. Further details of the Group’s accounting policies will be included in the Group’s 2013 Annual Financial Statements when released.

ii) Use of estimates, assumptions and judgments

The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions that affect reported amounts and the application of accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable. Actual results may differ from these estimates and the estimates may require review in future periods.

Further details of the Group’s critical estimates and judgements will be contained in the Group’s Financial Statements for the year ended 30 September 2013 when released.

iii) Comparatives

Certain amounts in the comparative information have been reclassified to conform with current period financial statement presentations.

During the current year the reporting treatment of chattel mortgages changed from ‘hire purchase’ to ‘term loans – non housing’ within the net loans and advances balance to better reflect the nature of the asset financing transactions. As a result 31 March 2013 hire purchase was reduced by $7,365 million (Sep 2012: $7,100 million reduction); unearned income reduced by $988 million (Sep 2012: $994 million reduction); and term loans – non housing increased by $6,377 million (Sep 2012: $6,106 million increase).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Income

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Interest income	14,301 14,326 0% 28,627 30,538 -6%
Interest expense	(7,743) (8,126) -5% (15,869) (18,428) -14%
Net interest income	6,558 6,200 6% 12,758 12,110 5%

i) Fee and commission income
Lending fees1	373 371 1% 744 697 7%
Non-lending fees and commissions	1,042 1,043 0% 2,085 2,060 1%
Total fee and commission income	1,415 1,414 0% 2,829 2,757 3%
Fee and commission expense	(187) (183) 2% (370) (345) 7%
Net fee and commission income2	1,228 1,231 0% 2,459 2,412 2%

ii) Net funds management and insurance income
Funds management income	444 418 6% 862 825 4%
Investment income	1,832 2,303 -20% 4,135 2,730 51%
Insurance premium income	829 519 60% 1,348 1,237 9%
Commission income/(expense)	(239) (207) 15% (446) (438) 2%
Claims	(364) (345) 6% (709) (598) 19%
Changes in policy liabilities3	(1,734) (1,935) -10% (3,669) (2,449) 50%
Elimination of treasury share (gain)/loss	(33) (57) -42% (90) (104) -13%
Total net funds management and insurance income	735 696 6% 1,431 1,203 19%
iii) Share of associates' profit	271 211 28% 482 395 22%

iv) Other income
Net foreign exchange earnings	377 467 -19% 844 1,081 -22%
Net gains from trading securities and derivatives	33 267 -88% 300 280 7%
Credit risk on intermediation trades	15 48 -69% 63 73 -14%
Movement on financial instruments measured at fair
	236 (241) large (5) (327) -98%
value through profit & loss4

Brokerage income	28 25 12% 53 55 -4%
Gain on sale of investment in Sacombank	- - n/a - 10 -100%
Write-down of investment in SSI	(26) - n/a (26) (31) -16%
Private equity and infrastructure earnings	(3) - n/a (3) 28 large
Gain on sale of Visa shares	- - n/a - 291 -100%
Dilution gain on investment in Bank of Tianjin	- - n/a - 10 -100%
Other	64 26 large 90 121 -26%
Total other income	724 592 22% 1,316 1,591 -17%
Total other operating income	2,958 2,730 8% 5,688 5,601 2%
Total income5	17,259 17,056 1% 34,315 36,139 -5%
Profit before income tax as a % of total income	27.31% 25.26% 26.29% 22.12%

1. Lending fees exclude fees treated as part of the effective yield calculation in interest income

2. Includes interchange fees paid

3. Includes policyholder tax gross up, which represents contribution tax (recovered at 15% on the super contributions made by members) debited to the policyholder account once a year in July when the statement is issued to the members at the end of the 30 June financial year

Includes fair value movements (excluding realised and accrued interest) on derivatives entered into to manage interest rate and foreign exchange risk on funding instruments and not designated as accounting hedges, ineffective portions of cashflow hedges, and fair value movements in financial assets and liabilities designated at fair value

5. Total income includes external dividend income of $4 million (Mar 2013 half: $3 million; Sep 2012 full year: $4 million)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Operating expenses

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Personnel
Employee entitlements and taxes	149 115 30% 264 288 -8%
Salaries and wages	1,556 1,547 1% 3,103 3,066 1%
Superannuation costs - defined benefit plans	5 2 large 7 10 -30%
Superannuation costs - defined contribution plans	140 143 -2% 283 295 -4%
Equity-settled share-based payments	99 101 -2% 200 189 6%
Temporary staff	84 64 31% 148 218 -32%
Other	380 372 2% 752 699 8%
Total personnel expenses	2,413 2,344 3% 4,757 4,765 0%

Premises
Depreciation and amortisation	41 47 -13% 88 90 -2%
Rent	227 208 9% 435 412 6%
Utilities and other outgoings	89 81 10% 170 168 1%
Other	20 20 0% 40 46 -13%
Total premises expenses	377 356 6% 733 716 2%

Computer
Computer contractors	72 109 -34% 181 150 21%
Data communications	60 55 9% 115 106 8%
Depreciation and amortisation	258 238 8% 496 424 17%
Rentals and repairs	71 71 0% 142 131 8%
Software purchased	155 120 29% 275 253 9%
Software impairment	- 8 -100% 8 274 -97%
Other	9 17 -47% 26 45 -42%
Total computer expenses	625 618 1% 1,243 1,383 -10%

Other
Advertising and public relations	129 112 15% 241 229 5%
Audit and other fees	8 10 -20% 18 18 0%
Depreciation of furniture and equipment	48 49 -2% 97 99 -2%
Freight and cartage	33 32 3% 65 65 0%
Loss on sale and write-off of equipment	8 7 14% 15 8 88%
Non-lending losses	26 28 -7% 54 52 4%
Postage and stationery	67 61 10% 128 137 -7%
Professional fees	150 118 27% 268 253 6%
Telephone	36 34 6% 70 69 1%
Travel	102 85 20% 187 170 10%
Amortisation and impairment of intangible assets	50 50 0% 100 110 -9%
Other	102 73 40% 175 171 2%
Total other expenses	759 659 15% 1,418 1,381 3%

Restructuring
New Zealand simplification programme	4 14 -71% 18 148 -88%
Other	24 43 -44% 67 126 -47%
Total restructuring expenses	28 57 -51% 85 274 -69%
Operating expenses	4,202 4,034 4% 8,236 8,519 -3%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Income tax expense

Reconciliation of the prima facie income tax expense on pre-tax profit with
the income tax expense charged in the Income Statement	Half Year Full Year

	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Profit before income tax	4,714 4,308 9% 9,022 7,994 13%
Prima facie income tax expense at 30%	1,415 1,292 10% 2,707 2,398 13%
Tax effect of permanent differences:
Overseas tax rate differential	(25) (16) 56% (41) (48) -15%
Rebateable and non-assessable dividends	(1) (3) -67% (4) (4) 0%
Profit from associates	(81) (63) 29% (144) (118) 22%
Gain on sale of investment in Sacombank	- - n/a - (3) -100%
Write-down of investment in SSI	8 - n/a 8 9 -11%
Offshore Banking Unit	(2) (4) -50% (6) (12) -50%
OnePath Australia - Policyholder income and contributions tax	130 131 -1% 261 106 large
OnePath Australia - Tax consolidation adjustment	(50) - n/a (50) - n/a
Tax provisions no longer required	- (4) -100% (4) (70) -94%
Interest on Convertible Instruments	29 29 0% 58 68 -15%
Other	(49) 2 large (47) (1) large
	1,374 1,364 1% 2,738 2,325 18%
Income tax under/(over) provided in previous years	3 (1) large 2 2 0%
Total income tax expense charged
	1,377 1,363 1% 2,740 2,327 18%
in the income statement

Australia	1,055 1,070 -1% 2,125 1,823 17%
Overseas	322 293 10% 615 504 22%
	1,377 1,363 1% 2,740 2,327 18%
Effective Tax Rate - Group	29.2% 31.6% 30.4% 29.1%

100

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Dividends

	Half Year Full Year

Dividend per ordinary share (cents)	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Interim (fully franked)	n/a 73 n/a 73 66 11%
Final (fully franked)	91 n/a n/a 91 79 15%
Total	91 73 25% 164 145 13%


Ordinary share dividend1	$M $M % $M $M %
Interim dividend	2,003 - n/a 2,003 1,769 13%
Final dividend	- 2,150 n/a 2,150 2,002 7%
Bonus option plan adjustment	(36) (35) 3% (71) (80) -11%
Total2	1,967 2,115 -7% 4,082 3,691 11%

Ordinary share dividend payout ratio (%)3	75.0% 68.2% 71.8% 69.4%

1. Dividends paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries of the Group to non-controlling equity holders of $1 million (Mar 13: nil; Sep 12: $2 million)

Dividends payable are not accrued and are recorded when paid
Dividend payout ratio is calculated using proposed 2013 final dividend of $2,497 million (not shown in the above table). The proposed 2013 final dividend of $2,497 million is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2013 half year and September 2012 full year are calculated using actual dividend paid of $2,003 million and $3,919 million respectively. Dividend payout ratio is calculated by adjusting profit attributable to shareholders of the company by the amount of preference share dividends paid

Ordinary Shares

It is proposed that New Zealand imputation credits of NZ 10 cents per ordinary share will also be attached.

ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the 2013 final dividend. For the 2013 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares. ANZ also announced an intention to neutralise the impact of shares issued under the DRP and BOP through an on-market buyback of shares in an amount equal to the value of those shares issued under the DRP and BOP. The “Acquisition Price” to be used in determining the number of shares to be provided under the DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the ordinary course of trading on the ASX during the ten trading days commencing on 13 November 2013, and then rounded to the nearest whole cent. Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election notices from shareholders wanting to commence, cease or vary their participation in the DRP or BOP for the 2013 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 13 November 2013. Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in Great Britain (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling and New Zealand dollars respectively at an exchange rate calculated on 15 November 2013.

Preference Shares

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Preference share dividend
Euro Trust Securities	3 3 0% 6 11 -45%

Dividend per preference share
Euro Trust Securities	€4.45 €4.37 2% €8.82 €18.18 -51%

101

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Earnings per share

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
Number of fully paid ordinary shares on issue (M)1	2,743.7 2,743.7 0% 2,743.7 2,717.4 1%
Basic


Profit attributable to shareholders of the Company ($M)	3,332 2,940 13% 6,272 5,661 11%
Less Preference share dividends ($M)	(3) (3) 0% (6) (11) -45%
Profit less preference share dividends ($M)	3,329 2,937 13% 6,266 5,650 11%
Weighted average number of ordinary shares (M)2	2,714.8 2,704.1 0% 2,709.4 2,647.4 2%
Basic earnings per share (cents)	122.6 108.6 13% 231.3 213.4 8%


Diluted
Profit less preference share dividends ($M)	3,329 2,937 13% 6,266 5,650 11%
Interest on US Trust Securities ($M)3	17 14 21% 31 30 3%
Interest on UK Stapled Securities ($M)4	- - n/a - 31 -100%
Interest on ANZ Convertible Preference Shares ($M)5	90 96 -6% 186 225 -17%
Interest on ANZ Capital Notes ($M)6	7 - n/a 7 - n/a

Profit attributable to shareholders of the Company
excluding interest on US Stapled Trust Securities, UK Stapled	3,443 3,047 13% 6,490 5,936 9%
Securities, ANZ Convertible Preference Shares and ANZ Capital Notes ($M)

Weighted average number of shares on issue (M)2	2,714.8 2,704.1 0% 2,709.4 2,647.4 2%
Weighted average number of convertible options (M)	4.8 5.3 -9% 5.0 5.3 -6%
Weighted average number of convertible US Trust Securities (M)3	27.5 26.5 4% 27.5 30.5 -10%
Weighted average number of convertible UK Stapled Securities (M)4	- - n/a - 24.6 -100%
Weighted average number of ANZ Convertible Preference Shares (M)5	144.6 156.0 -7% 144.6 179.8 -20%
Weighted average number of convertible ANZ Capital Notes (M)6	11.0 - n/a 5.5 - n/a
Adjusted weighted average number of shares - diluted (M)7	2,902.7 2,891.9 0% 2,892.0 2,887.6 0%
Diluted earnings per share (cents)	118.6 105.4 13% 224.4 205.6 9%

Number of fully paid ordinary shares on issue includes Treasury shares of 28.4 million at 30 September 2013 (Mar 2013: 28.7 million; Sep 2012: 28.8 million)

Weighted average number of ordinary shares excludes 12.6 million Treasury shares held in OnePath (Mar 2013: 12.1 million; Sep 2012: 13.1 million) and 15.8 million in ANZEST Pty Ltd (Mar 2013: 16.6 million; Sep 2012: 15.7 million) for the group employee share acquisition scheme

The US Trust Securities (issued on 27 November 2003) convert to ANZ ordinary shares in 2053 at the market price of ANZ ordinary shares less 5% unless redeemed or bought back prior to that date. The US Trust Security issue can be de-stapled and the investor left with coupon paying preference shares at ANZ’s discretion under certain circumstances. AASB 133 requires that potential ordinary shares for which conversion to ordinary share capital is mandatory must be included in the calculation of diluted EPS

4. UK Stapled Securities (issued on 15 June 2007) was a GBP denominated stapled security that was due to convert to ordinary shares on the fifth anniversary at the market price of ANZ ordinary shares less 5% (subject to certain conversion conditions). Immediately prior to conversion on 15 June 2012 the securities were redeemed by ANZ for cash at face value. AASB 133 requires that potential ordinary shares for which conversion to ordinary share capital is mandatory must be considered in the calculation of diluted EPS up to the date of conversion

5. There are three “Tranches” of convertible preference shares. The first are convertible preference shares (CPS1) issued on 30 September 2008 which convert to ordinary shares on 16 June 2014 at the market price of ANZ ordinary shares less 2.5% (subject to certain conversion conditions). The second are convertible preference shares (CPS2) issued on 17 December 2009 and convert to ordinary shares on 15 December 2016 at the market price of ANZ ordinary shares less 1.0% (subject to certain conversion conditions). The third are convertible preference shares (CPS3) issued on 28 September 2011 that convert to ordinary shares on 1 September 2019 at the market price of ANZ ordinary shares less 1% (subject to certain conversion conditions). AASB 133 requires that potential ordinary shares for which conversion to ordinary share capital is mandatory must be included in the calculation of diluted EPS

6. The ANZ Capital Notes (issued on 7 August 2013) convert to ANZ ordinary shares on 1 September 2023 at the market price of ANZ ordinary shares less 1.0% (subject to certain market conditions). AASB 133 requires that potential ordinary shares for which conversion to ordinary share capital is mandatory must be included in the calculation of diluted EPS

7. The earnings per share calculation excludes the Euro Trust Securities (Preference Shares)

102

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Net loans and advances

	As at ($M) Movement
	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Australia
Overdrafts	6,400 5,779 6,031 11% 6%
Credit card outstandings	8,847 8,761 8,632 1% 2%
Commercial bills outstanding	13,855 16,388 18,223 -15% -24%
Term loans - housing	194,755 187,708 181,971 4% 7%
Term loans - non-housing1	95,659 91,576 89,028 4% 7%
Lease receivables	1,597 1,560 1,603 2% 0%
Hire purchase1	2,118 2,388 2,780 -11% -24%
Other	79 702 480 -89% -84%
	323,310 314,862 308,748 3% 5%

Asia Pacific, Europe & America
Overdrafts	1,239 1,077 892 15% 39%
Credit card outstandings	1,103 994 996 11% 11%
Commercial bills outstanding	2,681 1,539 1,246 74% large
Term loans - housing	5,737 4,494 3,981 28% 44%
Term loans - non-housing	48,775 42,786 37,668 14% 29%
Lease receivables	147 132 143 11% 3%
Other	299 331 161 -10% 86%
	59,981 51,353 45,087 17% 33%

New Zealand
Overdrafts	1,194 987 1,091 21% 9%
Credit card outstandings	1,297 1,135 1,113 14% 17%
Term loans - housing	52,785 46,080 44,754 15% 18%
Term loans - non-housing	33,529 30,062 29,909 12% 12%
Lease receivables	114 119 139 -4% -18%
Hire purchase	642 535 505 20% 27%
Other	110 108 220 2% -50%
	89,671 79,026 77,731 13% 15%
Total gross loans and advances	472,962 445,241 431,566 6% 10%
Less: Provision for credit impairment (refer note 8)	(4,354) (4,312) (4,538) 1% -4%
Less: Unearned income2	(1,067) (1,087) (1,241) -2% -14%
Add: Capitalised brokerage/mortgage origination fees3	942 869 797 8% 18%
Add: Customers' liabilities for acceptances	812 1,269 1,239 -36% -34%
	(3,667) (3,261) (3,743) 12% -2%
Total net loans and advances	469,295 441,980 427,823 6% 10%

1. Comparative information has been restated to reflect the reclassification of chattel mortgages from hire purchase to term loans – non-housing 2.

Includes fees deferred and amortised using the effective interest method of $381 million (Mar 2013: $362 million; Sep 2012: $415 million) 3.

Capitalised brokerage/mortgage origination fees are amortised over the term of the loan

103

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Provision for credit impairment

	Half Year Full Year
Collective provision	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Balance at start of period	2,769 2,765 0% 2,765 3,176 -13%
Charge/(credit) to income statement	26 4 large 30 (379) large
Disposal	- - n/a - (4) -100%
Adjustment for exchange rate fluctuations	92 - n/a 92 (28) large
Total collective provision1	2,887 2,769 4% 2,887 2,765 4%
Individual provision
Balance at start of period	1,543 1,773 -13% 1,773 1,697 4%
New and increased provisions	957 932 3% 1,889 2,293 -18%
Write-backs	(247) (240) 3% (487) (537) -9%
Adjustment for exchange rate fluctuations	54 (3) large 51 (34) large
Discount unwind	(47) (55) -15% (102) (143) -29%
Bad debts written-off	(793) (864) -8% (1,657) (1,503) 10%
Total individual provision	1,467 1,543 -5% 1,467 1,773 -17%
Total provision for credit impairment	4,354 4,312 1% 4,354 4,538 -4%

1. The collective provision includes amounts for off-balance sheet credit exposures: $595 million at Sep 2013 (Mar 2013: $531 million; Sep 2012: $529 million). The impact on the income statement for the half year ended 30 September 2013 was a $35 million charge (Mar 2013 half: $2 million charge; Sep 2012: $36 million release)

	Half Year Full Year
Provision movement analysis	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
New and increased provisions
Australia	658 646 2% 1,304 1,730 -25%
Asia Pacific, Europe & America	143 132 8% 275 187 47%
New Zealand	156 154 1% 310 376 -18%
	957 932 3% 1,889 2,293 -18%
Write-backs	(247) (240) 3% (487) (537) -9%
	710 692 3% 1,402 1,756 -20%
Recoveries of amounts previously written-off	(136) (111) 23% (247) (214) 15%
Individual provision charge for loans and advances	574 581 -1% 1,155 1,542 -25%
Impairment on available-for-sale assets	- 3 -100% 3 35 -91%
Collective provision charge/(credit) to income statement	26 4 large 30 (379) large
Charge to income statement	600 588 2% 1,188 1,198 -1%

	As at ($M) Movement
	Sep 13 Sep 13
Individual provision balance	Sep 13 Mar 13 Sep 12 v. Mar 13 v. Sep 12
Australia	944 955 1,128 -1% -16%
Asia Pacific, Europe & America	262 275 277 -5% -5%
New Zealand	261 313 368 -17% -29%
Total individual provision	1,467 1,543 1,773 -5% -17%

104

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Deposits and other borrowings

	As at ($M) Movement
Australia	Sep 13 Mar 13 Sep 12 Sep 13 v. Mar 13 Sep 13 v. Sep 12
Certificates of deposit	51,449 52,231 47,942 -1% 7%
Term deposits	80,297 78,515 82,356 2% -3%
Other deposits bearing interest and other borrowings	121,932 111,895 106,999 9% 14%
Deposits not bearing interest	5,701 5,373 5,267 6% 8%
Commercial paper	8,015 11,008 7,818 -27% 3%
Borrowing corporations' debt	19 67 95 -72% -80%
	267,413 259,089 250,477 3% 7%

Asia Pacific, Europe & America
Certificates of deposit	4,724 8,030 7,175 -41% -34%
Term deposits	76,259 74,601 62,883 2% 21%
Other deposits bearing interest and other borrowings	18,308 15,412 15,150 19% 21%
Deposits not bearing interest	3,827 3,012 2,654 27% 44%
	103,118 101,055 87,862 2% 17%

New Zealand
Certificates of deposit	2,103 1,303 1,721 61% 22%
Term deposits	30,135 27,053 27,074 11% 11%
Other deposits bearing interest and other borrowings	26,419 22,735 20,604 16% 28%
Deposits not bearing interest	4,918 4,585 3,861 7% 27%
Commercial paper	4,240 3,478 4,346 22% -2%
Borrowing corporations' debt	1,328 1,176 1,178 13% 13%
	69,143 60,330 58,784 15% 18%
Total deposits and other borrowings	439,674 420,474 397,123 5% 11%

10. Loan capital

APRA has granted ANZ transitional capital treatment for the US Trust Securities, ANZ Convertible Preference Shares (CPS) and all outstanding subordinated notes. Transition will apply up until the security's first call date, except in the case of the outstanding USD and NZD Perpetual Subordinated Notes and ANZ CPS3 where the transitional treatment will apply up until the earlier of the end of the transitional period (Jan 2021) and the first call date when either a step up event (i.e. an increase in credit margin) or a conversion to ordinary shares is to occur.

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Tier 1
US Trust Securities1	812 740 10% 812 752 8%
ANZ CPS
ANZ CPS12	1,081 1,080 0% 1,081 1,078 0%
ANZ CPS23	1,963 1,961 0% 1,963 1,958 0%
ANZ CPS34	1,329 1,327 0% 1,329 1,326 0%
ANZ Capital Notes5	1,106 - n/a 1,106 - n/a
Tier 2
Perpetual subordinated notes	1,065 957 11% 1,065 953 12%
Subordinated notes	5,448 5,601 -3% 5,448 5,847 -7%
Total Loan Capital	12,804 11,666 10% 12,804 11,914 7%

1. On 27 November 2003, ANZ issued USD750 million Trust Securities each comprising an interest paying unsecured note and a preference share which are stapled together. ANZ has notified holders that the securities will be redeemed on 16 December 2013. The instrument converts into ANZ ordinary shares at a 5% discount (i) at the holder’s request, if ANZ fails to redeem the instrument on 16 December 2013, or (ii) on 15 December 2053 unless redeemed earlier. The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes

2. On 30 September 2008, ANZ issued convertible preference shares which will convert into ANZ ordinary shares on 16 June 2014 at a 2.5% discount (subject to certain conditions being satisfied). The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes

On 17 December 2009, ANZ issued convertible preference shares which will convert into ANZ ordinary shares on 15 December 2016 at a 1% discount (subject to certain conditions being satisfied). The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes

4. On 28 September 2011, ANZ issued convertible preference shares which will convert into ANZ ordinary shares on 1 September 2019 at a 1% discount (subject to certain conditions being satisfied). If ANZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125% then the convertible preference shares will immediately convert into ANZ ordinary shares at a 1% discount subject to maximum conversion number. Subject to certain conditions, on and from 1 September 2017 the convertible preference shares are redeemable or convertible into ANZ ordinary shares (on similar terms to the mandatory conversion) by ANZ. The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes

5. On 7 August 2013, ANZ issued convertible notes which will convert into ANZ ordinary shares on 1 September 2023 at a 1% discount (subject to certain conditions being satisfied). If ANZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the notes will immediately convert into ANZ ordinary shares at a 1% discount subject to maximum conversion number. Subject to certain conditions, on and from 1 September 2021 the notes are redeemable or convertible into ANZ ordinary shares (on similar terms to the mandatory conversion) by ANZ. The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes

105

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. Share capital

Issued and quoted securities

		Issue price	Amount paid
	Number quoted	per share	up per share
Ordinary shares
As at 30 September 2013	2,743,655,310
Issued during the year	41,550,553
Bought back during the year1	15,252,204
Preference shares
As at 30 September 2013
Euro Trust Securities2,3	500,000	€1,000	€1,000

1. Following the issue of 14.8 million ordinary shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2013 interim dividend, the Company repurchased $425 million of ordinary shares via an on-market share buy-back resulting in 15.3 million ordinary shares being cancelled

On 13 December 2004, ANZ issued €500 million Trust Securities each comprising subordinated floating rate notes due 2053 stapled to a preference share. Subject to certain conditions, the securities are redeemable by the issuer on 16 December 2014. The securities constitute Additional Tier 1 capital as defined by APRA for capital adequacy purposes
3.
APRA has granted ANZ transitional capital treatment for the Euro Trust Securities (preference shares) until their first call date on 16 December 2014

12. Shareholders’ equity

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt
Share capital
Balance at start of period	24,460 23,941 2% 23,941 22,214 8%
Ordinary share capital
Dividend reinvestment plan	392 451 -13% 843 1,461 -42%
Group employee share acquisition scheme1	96 20 large 116 128 -9%
Treasury shares in OnePath Australia2	(20) 27 large 7 78 -91%
Group share option scheme	9 21 -57% 30 60 -50%
Group share buyback3	(425) - n/a (425) - n/a
Total share capital	24,512 24,460 0% 24,512 23,941 2%

Foreign currency translation reserve
Balance at start of period	(2,826) (2,831) 0% (2,831) (2,418) 17%
Currency translation adjustments net of hedges after tax	1,701 5 large 1,706 (413) large
Total foreign currency translation reserve	(1,125) (2,826) -60% (1,125) (2,831) -60%

Share option reserve4
Balance at start of period	53 54 -2% 54 50 8%
Share based payments/(exercises)	3 - n/a 3 6 -50%
Transfer of options/rights lapsed to retained earnings	(1) (1) 0% (2) (2) 0%
Total share option reserve	55 53 4% 55 54 2%

1. As at 30 September 2013, there were 15,821,529 ANZEST Treasury shares outstanding (Mar 13: 16,583,195, Sep 12: 15,673,505) . Shares in the Company which are purchased onmarket by ANZEST Pty Ltd (trustee of ANZ employee share and option plans) or issued by the Company to ANZEST Pty Ltd are classified as Treasury shares (to the extent that they relate to unvested employee share-based awards)

2. As at 30 September 2013, there were 12,573,976 OnePath Australia Treasury shares outstanding (Mar 13: 12,076,540, Sep 12:13,081,042). OnePath Australia purchases and holds shares in the Company to back policy liabilities in the life insurance statutory funds. These shares are classified as Treasury shares

Following the issue of 14.8 million ordinary shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2013 interim dividend, the Company repurchased $425 million of ordinary shares via an on-market share buy-back resulting in 15.3 million ordinary shares being cancelled

4. The share option reserve arises on the grant of share options/deferred share rights/performance rights (“options and rights”) to selected employees under the ANZ Share Option Plan. Amounts are transferred from the share option reserve to other equity accounts when the options and rights are exercised and to retained earnings when lapsed or forfeited after vesting. Forfeited options and rights due to termination prior to vesting are credited to the income statement

106

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Shareholders’ equity, cont’d

==> picture [261 x 13] intentionally omitted <==

	Half Year Full Year
	Sep 13 $M Mar 13 $M Movt Sep 13 $M Sep 12 $M Movt

Available-for-sale revaluation reserve5
Balance at start of period	138 94 47% 94 126 -25%
Gain/(loss) recognised after tax	(21) 15 large (6) 193 large
Transferred to income statement	4 29 -86% 33 (225) large
Total available-for-sale revaluation reserve	121 138 -12% 121 94 29%

Hedging reserve6
Balance at start of period	130 208 -38% 208 169 23%
Gain/(loss) recognised after tax	(52) (81) -36% (133) 27 large
Transferred to income statement	(3) 3 large - 12 -100%
Total hedging reserve	75 130 -42% 75 208 -64%

Transactions with non-controlling interests reserve
Balance at start of period	(23) (23) 0% (23) (22) 5%
Transactions with non-controlling interests	(10) - n/a (10) (1) large
Total transactions with non-controlling interests reserve	(33) (23) 43% (33) (23) 43%
Total reserves	(907) (2,528) -64% (907) (2,498) -64%

Retained earnings
Balance at start of period	20,534 19,728 4% 19,728 17,787 11%
Profit attributable to shareholders of the Company	3,332 2,940 13% 6,272 5,661 11%
Transfer of options/rights lapsed from share option reserve	1 1 0% 2 2 0%
Total available for appropriation	23,867 22,669 5% 26,002 23,450 11%
Actuarial gain/(loss) on defined benefit plans after tax7	41 (27) large 14 (44) large
Ordinary share dividends paid	(1,967) (2,115) -7% (4,082) (3,691) 11%
Dividend income on Treasury shares held within the
	10 10 0% 20 24 -17%
Group's life insurance statutory funds

Preference share dividends paid	(3) (3) 0% (6) (11) -45%
Retained earnings at end of period	21,948 20,534 7% 21,948 19,728 11%

Share capital and reserves attributable to
	45,553 42,466 7% 45,553 41,171 11%
shareholders of the Company

Non-controlling interests	62 53 17% 62 49 27%
Total shareholders' equity	45,615 42,519 7% 45,615 41,220 11%

5. The available-for-sale revaluation reserve arises on the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold or impaired, that portion of the reserve which relates to that financial asset is realised and recognised in the income statement

The hedging reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognised in the income statement when the hedged transaction impacts profit or loss, consistent with the applicable accounting policy

ANZ has taken the option available under AASB 119 Employee Benefits to recognise actuarial gains/losses on defined benefit superannuation plans directly in retained earnings

107

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. Note to the Cash Flow Statement

Reconciliation of cash and cash equivalents

Reconciliation of cash and cash equivalents
	Full Year
	Sep 13	Sep 12
	Inflows	Inflows
	(Outflows)	(Outflows)
	$M	$M
Cash and cash equivalents at the end of the period as shown in the cash flow
statement are reflected in the related items in the balance sheet as follows
Liquid assets	38,552	35,583
Due from other financial institutions	10,471	5,867
	49,023	41,450

14. Contingent liabilities and contingent assets

There are outstanding court proceedings, claims and possible claims against the Group, the aggregate amount of which cannot readily be quantified. Appropriate legal advice has been obtained and, in the light of such advice, provisions as deemed necessary have been made. In some instances we have not disclosed the estimated financial impact as this may prejudice the interests of the Group.

Refer to Note 43 of the 2013 ANZ Annual Financial Statements (when released) for a description of current contingent liabilities and contingent assets.

Bank fees litigation

Litigation funder IMF (Australia) Ltd commenced a class action against ANZ in 2010, followed by a second, similar class action in March 2013. The separate actions are claimed to be on behalf of more than 40,000 ANZ customers for more than $50 million in fees claimed to have been charged to those customers. The second of the class actions is scheduled for trial commencing 2 December 2013. ANZ is defending it. In June 2013, litigation funder Litigation Lending Services (NZ) commenced a representative action against ANZ for certain fees charged to New Zealand customers since 2007. There is a risk that further claims could emerge in Australia, New Zealand or elsewhere.

Security recovery actions

Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets over recent years. ANZ will defend these claims and any future claims.

108

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. Changes in composition of the Group

There were no material entities acquired or disposed during the year ended 30 September 2013 or for the year ended 30 September 2012.

16. Investments in Associates

	Half Year Full Year
	Sep 13 Mar 13 Movt Sep 13 Sep 12 Movt
	$M $M $M $M
Profit after income tax	271 211 28% 482 395 22%

Contributions to profit[1 ]

	Contribution to Group post-tax profit Ownership interest held by Group	Contribution to Group post-tax profit Ownership interest held by Group


Associates	Half Year	Full Year As at
	Sep 13 $M Mar 13 $M	Sep 13 $M Sep 12 $M Sep 13 % Mar 13 % Sep 12 %
P.T. Bank Pan Indonesia	46 38	84 87 39 39 39
Metrobank Card Corporation Inc	10 9	19 15 40 40 40
Bank of Tianjin2	49 44	93 72 18 18 18
AMMB Holdings Berhad	79 54	133 118 24 24 24
Shanghai Rural Commercial Bank	80 63	143 110 20 20 20
Saigon Securities Inc.2	- -	- (1) 18 18 18
Other associates	7 3	10 (6) n/a n/a n/a
Profit after income tax	271 211	482 395

1. The results differ from the published results of these entities due to the application of IFRS, Group Accounting Policies and acquisition adjustments. This amounted to a $5 million increase (Mar 2013 half: $1 million increase; Sep 2012 full year: $12 million reduction). Excludes gains or losses on disposal or valuation adjustments

Significant influence was established via representation on the Board of Directors

17. Significant events since balance date

There are no significant events from 30 September 2013 to the date of signing of this report.

109

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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110

SUPPLEMENTARY INFORMATION

Section 9 – Supplementary information

Capital management Average balance sheet and related interest Exchange rates

111

SUPPLEMENTARY INFORMATION

Capital management

	Basel 3 Basel 3 Basel 2 Movement
Qualifying Capital	Sep 13 Mar 13 Sep 12 Sep 13 Sep 13
	$M $M $M v. Mar 13 v. Sep 12
Tier 1
Shareholders' equity and non-controlling interests	45,615 42,519 41,220 7% 11%
Prudential adjustments to shareholders' equity Table 1	(932) (958) (3,857) -3% -76%
Gross Common Equity Tier 1 capital	44,683 41,561 37,363 8% 20%
Deductions Table 2	(15,892) (15,170) (10,839) 5% 47%
Common Equity Tier 1 capital	28,791 26,391 26,524 9% 9%
Additional Tier 1 capital Table 3	6,401 5,365 5,977 19% 7%
Tier 1 capital	35,192 31,756 32,501 11% 8%

Tier 2 capital Table 4	6,190 6,062 4,073 2% 52%
Totalqualifying capital	41,382 37,818 36,574 9% 13%
Capital adequacy ratios

Common Equity Tier 1	8.5% 8.2% 8.8%
Tier 1	10.4% 9.8% 10.8%
Tier 2	1.8% 1.9% 1.4%
Total	12.2% 11.7% 12.2%
Risk weighted assets Table 5
	339,265 322,582 300,119 5% 13%

112

SUPPLEMENTARY INFORMATION

Capital management, cont’d

	Basel 3 Basel 3 Basel 2 Movement
	Sep 13 $M Mar 13 $M Sep 12 $M Sep 13 v. Mar 13 Sep 13 v. Sep 12
Table 1: Prudential adjustments to shareholders' equity
Treasury shares attributable to OnePath policy holders	272 253 280 8% -3%
Reclassification of preference share capital	(871) (871) (871) 0% 0%
Accumulated retained profits and reserves of insurance, funds management and securitisation entities
	(583) (573) (1,660) 2% -65%

Deferred fee revenue including fees deferred as part of loan yields	381 362 415 5% -8%
Hedging reserve	n/a n/a (208) n/a n/a
Available-for-sale reserve attributable to deconsolidated subsidiaries	(90) (105) (94) -14% -4%
Dividend not provided for	n/a n/a (2,149) n/a n/a
Accrual for Dividend Reinvestment Plans	n/a n/a 430 n/a n/a
Other	(41) (24) - 67% n/a
Total	(932) (958) (3,857) -3% -76%

Table 2: Deductions from Common Equity Tier 1 capital
Unamortised goodwill & other intangibles (excluding OnePath Australia and New Zealand)
	(3,970) (3,717) (3,052) 7% 30%

Intangible component of investments in OnePath Australia and New Zealand	(2,096) (2,075) (2,074) 1% 1%
Capitalised software	(2,102) (1,800) (1,702) 17% 24%
Capitalised expenses including loan and lease origination fees	(979) (884) (850) 11% 15%
Applicable deferred net tax assets	(1,102) (990) (301) 11% large
Expected losses in excess of eligible provisions	(376) (526) (542) -29% -31%
Investment in ANZ insurance and funds management subsidiaries	(453) (684) (327) -34% 39%
Investment in OnePath Australia and New Zealand	(1,059) (1,042) (721) 2% 47%
Investment in banking associates	(3,361) (2,956) (1,070) 14% large
Other deductions	(394) (496) (200) -21% 97%
Total	(15,892) (15,170) (10,839) 5% 47%

Table 3: Additional Tier 1 capital
Convertible Preference Shares
ANZ CPS1	1,081 1,080 1,078 0% 0%
ANZ CPS2	1,963 1,961 1,958 0% 0%
ANZ CPS3	1,329 1,327 1,326 0% 0%
ANZ Capital Notes	1,106 - - n/a n/a
Preference Shares	871 871 871 0% 0%
Hybrid Securities	812 740 752 10% 8%
Regulatory adjustments and deductions	(78) (17) (8) large large
Transitional adjustments	(683) (597) n/a 14% n/a
Total	6,401 5,365 5,977 19% 7%

Table 4: Tier 2 capital
General reserve for impairment of financial assets	245 244 234 0% 5%
Perpetual subordinated notes	1,065 957 953 11% 12%
Subordinated debt	5,448 5,601 5,847 3% -7%
Regulatory adjustments and deductions	(340) (740) (2,961) -54% -89%
Transitional adjustments	(228) - n/a n/a n/a
Total	6,190 6,062 4,073 2% 52%

113

SUPPLEMENTARY INFORMATION

Capital management, cont’d

Capital management, cont’d

	Basel 3 Basel 3 Basel 2 Movement

	Sep 13 $M Mar 13 $M Sep 12 $M Sep 13 v. Mar 13 Sep 13 v. Sep 12


Table 5: Risk weighted assets
On balance sheet	208,326 199,121 190,210 5% 10%
Commitments	47,809 45,250 42,807 6% 12%
Contingents	11,184 10,174 9,962 10% 12%
Derivatives	20,332 20,433 11,896 0% 71%
Total credit risk	287,651 274,978 254,875 5% 13%
Market risk - Traded	4,303 6,850 4,664 -37% -8%
Market risk - IRRBB	18,287 12,629 12,455 45% 47%
Operational risk	29,024 28,125 28,125 3% 3%
Total risk weighted assets	339,265 322,582 300,119 5% 13%

		Basel 3 Basel 3 Basel 2 Movement
		Sep 13 $M Mar 13 $M Sep 12 $M Sep 13 v. Mar 13 Sep 13 v. Sep 12
Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate		121,586 114,700 111,796 6% 9%
Sovereign		4,360 4,382 4,088 -1% 7%
Bank		16,270 15,838 11,077 3% 47%
Residential mortgage		47,559 44,597 42,959 7% 11%
Qualifying revolving retail (credit cards)		7,219 7,234 7,092 0% 2%
Other retail		24,328 23,200 21,277 5% 14%
Credit risk weighted assets
		221,322 209,951 198,289 5% 12%
subject to Advanced IRB approach


Credit risk specialised lending exposures
		27,640 27,842 27,628 -1% 0%
subject to slotting criteria


Subject to Standardised approach
Corporate		19,285 17,157 18,168 12% 6%
Residential mortgage		1,922 1,827 1,812 5% 6%
Qualifying revolving retail (credit cards)		1,728 2,068 2,028 -16% -15%
Other retail		985 1,248 1,165 -21% -15%
Credit risk weighted assets subject to Standardised approach		23,920 22,300 23,173 7% 3%

Credit Valuation Adjustment and
		8,501 8,949 n/a -5% n/a
Qualifying Central Counterparties


Credit risk weighted assets relating to securitisation exposures		2,724 2,549 1,170 7% large
Credit risk weighted assets relating to equity exposures		n/a n/a 1,030 n/a n/a
Other assets		3,544 3,387 3,585 5% -1%
Total credit risk weighted assets		287,651 274,978 254,875 5% 13%

114

SUPPLEMENTARY INFORMATION

Capital management, cont’d

		Regulatory Expected
		Collective Provision Loss
		As at ($M) As at ($M)
Table 7: Collective provision and regulatory expected loss by division		Sep 13 Sep 12 Sep 13 Sep 12
Australia		1,123 1,073 2,393 2,309
International and Institutional Banking		1,310 1,224 1,037 1,270
New Zealand		399 413 763 814
Global Wealth		12 11 21 23
Group Centre		43 44 19 1
Cash collective provision and regulatory expected loss		2,887 2,765 4,233 4,417
Adjustments between statutory and cash		- - 9 20
Collective provision and regulatory expected loss		2,887 2,765 4,242 4,437

	As at ($M) Movement
Table 8: Expected loss in excess of eligible provisions	Sep 13 Mar 13 Sep 12 Sep 13 Sep 13
	$M $M $M v. Mar 13 v. Sep 12

Basel expected loss
Defaulted	1,854 1,976 2,168 -6% -14%
Non-defaulted	2,388 2,349 2,269 2% 5%
	4,242 4,325 4,437 -2% -4%

Less: Qualifying collective provision
Collective provision	(2,887) (2,769) (2,765) 4% 4%
Non-qualifying collective provision	346 341 334 1% 4%
Standardised collective provision	245 245 269 0% -9%
Deferred tax asset	n/a n/a 625 n/a n/a
	(2,296) (2,183) (1,537) 5% 49%

Less: Qualifying individual provision
Individual provision	(1,467) (1,543) (1,773) -5% -17%
Standardised individual provision	219 249 268 -12% -18%
Collective provision on advanced defaulted	(322) (322) (312) 0% 3%
	(1,570) (1,616) (1,817) -3% -14%

Gross deduction	376 526 1,083 -29% -65%
50/50 deduction	n/a n/a 542 n/a n/a

115

SUPPLEMENTARY INFORMATION

Capital management, cont’d

Table 9: APRA Basel 3 Common Equity Tier 1

	Half Year	Half Year
	Sep 13 vs Mar 13
APRA Basel 3 Common Equity Tier 1
Cash profit after preference share dividends	+103bps ($3.3B)
Risk weighted assets
Portfolio growth and mix	-4bps
Risk migration and Expected Losses in excess of Eligible Provisions	+4bps
Non-credit risk	-8bps
Capital retention in insurance businesses and associates	-4bps
Capitalised software and intangibles	-12bps
Other items	+5bps
Organic Capital Generation	+84bps
ANZ LMI Refinance	+5bps
Other	+3bps
Capital initiatives	+8bps
Ordinary share dividends	-62bps
Other	+1bps
Total Common Equity Tier 1 movement	+31bps
September 2013 APRA Basel 3 Common Equity Tier 1	8.5%

116

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest

Averages used in the following tables are predominantly daily averages. Interest income figures are presented on a tax-equivalent basis. Impaired loans are included under the interest earning asset category, ‘loans and advances’.

Intra-group interest earning assets and interest bearing liabilities are treated as external assets and liabilities for the geographic segments.

	Half year Sep 13 Half year Mar 13
	Ave bal Int Rate Ave bal Int Rate
	$M $M % $M $M %
Interest earning assets
Due from other financial institutions
Australia	4,091 55 2.7% 3,204 52 3.3%
Asia Pacific, Europe & America	14,220 89 1.2% 14,487 80 1.1%
New Zealand	1,390 8 1.2% 1,479 6 0.8%
Regulatory Deposits
Asia Pacific, Europe & America	1,089 4 0.7% 939 3 0.7%
Trading and available-for-sale assets
Australia	38,938 629 3.2% 36,511 605 3.3%
Asia Pacific, Europe & America	18,661 132 1.4% 15,270 124 1.6%
New Zealand	9,860 174 3.5% 9,786 180 3.7%
Loans and advances
Australia	318,989 9,467 5.9% 312,158 9,841 6.3%
Asia Pacific, Europe & America	58,171 975 3.3% 48,093 887 3.7%
New Zealand	84,512 2,491 5.9% 78,101 2,333 6.0%
Other assets
Australia	11,331 158 2.8% 5,787 99 3.4%
Asia Pacific, Europe & America	31,648 61 0.4% 27,019 61 0.4%
New Zealand	2,526 58 4.6% 2,307 55 4.8%
Intragroup assets
Australia	3,199 216 13.5% 1,907 217 22.8%
Asia Pacific, Europe & America	7,527 (11) -0.3% 8,718 1 0.0%
	606,152 14,506 565,766 14,544
Intragroup elimination	(10,726) (205) (10,625) (218)
	595,426 14,301 4.8% 555,141 14,326 5.2%
Non-interest earning assets
Derivatives
Australia	33,717 32,978
Asia Pacific, Europe & America	4,568 5,193
New Zealand	6,809 6,758
Premises and equipment	2,102 2,082
Insurance assets	31,460 30,216
Other assets	25,624 27,189
Provisions for credit impairment
Australia	(2,762) (2,846)
Asia Pacific, Europe & America	(834) (767)
New Zealand	(789) (843)
	99,895 99,960
Total average assets	695,321 655,101

117

SUPPLEMENTARY INFORMATION

	Half year Sep 13 Half year Mar 13
	Ave bal Int Rate Ave bal Int Rate
	$M $M % $M $M %
Interest bearing liabilities
Time deposits
Australia	136,597 2,508 3.7% 134,895 2,803 4.2%
Asia Pacific, Europe & America	79,280 333 0.8% 70,817 333 0.9%
New Zealand	30,606 590 3.8% 28,654 569 4.0%
Savings deposits
Australia	24,765 414 3.3% 23,564 424 3.6%
Asia Pacific, Europe & America	5,582 13 0.5% 4,968 12 0.5%
New Zealand	7,840 127 3.2% 6,225 106 3.4%
Other demand deposits
Australia	87,304 1,191 2.7% 82,892 1,217 2.9%
Asia Pacific, Europe & America	11,397 17 0.3% 10,432 16 0.3%
New Zealand	17,113 203 2.4% 15,683 195 2.5%
Due to other financial institutions
Australia	12,531 157 2.5% 10,084 137 2.7%
Asia Pacific, Europe & America	26,420 82 0.6% 24,325 82 0.7%
New Zealand	1,662 13 1.6% 1,481 14 1.9%
Commercial paper
Australia	12,200 173 2.8% 8,400 139 3.3%
New Zealand	4,030 61 3.0% 4,395 67 3.1%
Borrowing corporations' debt
Australia	46 2 8.6% 81 3 7.7%
New Zealand	1,264 28 4.4% 1,165 27 4.6%
Loan capital, bonds and notes
Australia	64,618 1,375 4.2% 64,881 1,497 4.6%
Asia Pacific, Europe & America	3,331 20 1.2% 1,142 11 1.9%
New Zealand	13,985 322 4.6% 13,692 332 4.9%
Other liabilities
Australia1	1,989 53 5.3% 1,616 116 14.4%
Asia Pacific, Europe & America	1,945 18 1.9% 1,647 19 2.3%
New Zealand	243 43 35.3% 329 7 4.3%
Intragroup liabilities
New Zealand	10,726 205 3.8% 10,625 218 4.1%
	555,474 7,948 521,993 8,344
Intragroup elimination	(10,726) (205) (10,625) (218)
	544,748 7,743 2.9% 511,368 8,126 3.2%
Non-interest bearing liabilities
Deposits
Australia	5,605 5,416
Asia Pacific, Europe & America	3,637 2,765
New Zealand	4,615 4,143
Derivatives
Australia	31,469 29,419
Asia Pacific, Europe & America	4,904 5,550
New Zealand	6,968 6,723
Insurance Liabilities	31,355 29,891
External unit holder liabilities	3,729 3,949
Other liabilities	13,857 14,111
	106,139 101,967
Total average liabilities	650,887 613,335

1. Includes foreign exchange swap costs

118

SUPPLEMENTARY INFORMATION

	Full year Sep 13 Full year Sep 12
	Ave bal Int Rate Ave bal Int Rate
	$M $M % $M $M %
Interest earning assets
Due from other financial institutions
Australia	3,649 107 2.9% 3,283 125 3.8%
Asia Pacific, Europe & America	14,353 169 1.2% 12,461 188 1.5%
New Zealand	1,435 14 1.0% 1,509 16 1.1%
Regulatory Deposits
Asia Pacific, Europe & America	1,014 8 0.8% 1,026 7 0.7%
Trading and available-for-sale assets
Australia	37,728 1,234 3.3% 33,568 1,372 4.1%
Asia Pacific, Europe & America	16,970 256 1.5% 15,022 265 1.8%
New Zealand	9,823 354 3.6% 8,877 353 4.0%
Loans and advances
Australia	315,582 19,308 6.1% 302,063 21,400 7.1%
Asia Pacific, Europe & America	53,146 1,862 3.5% 41,905 1,766 4.2%
New Zealand	81,316 4,824 5.9% 73,994 4,572 6.2%
Other assets
Australia	8,566 257 3.0% 4,216 175 4.2%
Asia Pacific, Europe & America	29,340 121 0.4% 23,304 167 0.7%
New Zealand	2,417 113 4.7% 2,233 132 5.9%
Intragroup assets
Australia	2,554 433 17.0% 4,318 575 13.3%
Asia Pacific, Europe & America	8,121 (9) -0.1% 7,293 (24) -0.3%
	586,014 29,051 535,072 31,089
Intragroup elimination	(10,675) (424) (11,611) (551)
	575,339 28,627 5.0% 523,461 30,538 5.8%
Non-interest earning assets
Derivatives
Australia	33,349 36,492
Asia Pacific, Europe & America	4,879 4,783
New Zealand	6,784 9,974
Premises and equipment	2,092 2,085
Insurance Assets	30,840 29,973
Other assets	26,404 25,217
Provisions for credit impairment
Australia	(2,804) (3,037)
Asia Pacific, Europe & America	(801) (793)
New Zealand	(816) (885)
	99,927 103,809
Total average assets	675,266 627,270

119

SUPPLEMENTARY INFORMATION

	Full year Sep 13 Full year Sep 12
	Ave bal Int Rate Ave bal Int Rate
	$M $M % $M $M %
Interest bearing liabilities
Time deposits
Australia	135,747 5,313 3.9% 134,508 6,821 5.1%
Asia Pacific, Europe & America	75,059 666 0.9% 60,643 741 1.2%
New Zealand	29,633 1,158 3.9% 27,981 1,130 4.0%
Savings deposits
Australia	24,166 837 3.5% 21,779 862 4.0%
Asia Pacific, Europe & America	5,276 25 0.5% 4,280 24 0.6%
New Zealand	7,035 234 3.3% 3,757 119 3.2%
Other demand deposits
Australia	85,104 2,408 2.8% 77,581 2,845 3.7%
Asia Pacific, Europe & America	10,916 33 0.3% 9,817 29 0.3%
New Zealand	16,400 398 2.4% 15,135 391 2.6%
Due to other financial institutions
Australia	11,311 293 2.6% 7,308 260 3.6%
Asia Pacific, Europe & America	25,375 164 0.6% 21,624 181 0.8%
New Zealand	1,572 27 1.7% 1,851 32 1.7%
Commercial paper
Australia	10,306 311 3.0% 11,676 510 4.4%
New Zealand	4,212 128 3.0% 3,669 123 3.4%
Borrowing corporations' debt
Australia	63 5 7.9% 220 14 6.4%
New Zealand	1,215 55 4.5% 1,124 55 4.9%
Loan capital, bonds and notes
Australia	64,749 2,873 4.4% 63,620 3,461 5.4%
Asia Pacific, Europe & America	2,240 31 1.4% 89 2 1.8%
New Zealand	13,839 653 4.7% 13,278 664 5.0%
Other liabilities1
Australia	1,803 170 n/a 2,060 206 n/a
Asia Pacific, Europe & America	1,797 37 n/a 1,394 53 n/a
New Zealand	286 50 n/a 200 (95) n/a
Intragroup liabilities
New Zealand	10,675 424 4.0% 11,611 551 4.7%
	538,779 16,293 495,205 18,979
Intragroup elimination	(10,675) (424) (11,611) (551)
	528,104 15,869 3.0% 483,594 18,428 3.8%
Non-interest bearing liabilities
Deposits
Australia	5,511 5,103
Asia Pacific, Europe & America	3,202 2,387
New Zealand	4,380 3,863
Derivatives
Australia	30,447 31,329
Asia Pacific, Europe & America	5,226 5,044
New Zealand	6,845 9,207
Insurance Liabilities	30,625 28,386
External unit holder liabilities	3,839 4,779
Other liabilities	13,983 14,014
	104,058 104,112
Total average liabilities	632,162 587,706

1. Includes foreign exchange swap costs

120

SUPPLEMENTARY INFORMATION

	Half Year Full Year
	Sep 13 $M Mar 13 $M Sep 13 $M Sep 12 $M

Total average assets
Australia	452,699 435,205 443,975 425,515
Asia Pacific, Europe & America	144,521 128,441 136,502 113,341
New Zealand	108,827 102,080 105,464 100,025
less intragroup elimination	(10,726) (10,625) (10,675) (11,611)
	695,321 655,101 675,266 627,270
% of total average assets attributable to overseas activities	35.4% 33.9% 34.6% 32.9%

Average interest earning assets
Australia	376,548 359,567 368,079 347,448
Asia Pacific, Europe & America	131,316 114,526 122,944 101,011
New Zealand	98,288 91,673 94,991 86,613
less intragroup elimination	(10,726) (10,625) (10,675) (11,611)
	595,426 555,141 575,339 523,461

Total average liabilities
Australia	422,482 405,565 414,046 398,639
Asia Pacific, Europe & America	138,571 123,831 131,221 107,562
New Zealand	100,560 94,564 97,570 93,116
less intragroup elimination	(10,726) (10,625) (10,675) (11,611)
	650,887 613,335 632,162 587,706
% of total average liabilities attributable to overseas activities	35.1% 33.9% 34.5% 32.2%

Average interest bearing liabilities
Australia	340,050 326,413 333,249 318,752
Asia Pacific, Europe & America	127,955 113,331 120,663 97,847
New Zealand	87,469 82,249 84,867 78,606
less intragroup elimination	(10,726) (10,625) (10,675) (11,611)
	544,748 511,368 528,104 483,594

Total average shareholders' equity1
Ordinary share capital, reserves and retained earnings	43,563 40,895 42,233 38,693
Preference share capital	871 871 871 871
	44,434 41,766 43,104 39,564
Total average liabilities and shareholders' equity	695,321 655,101 675,266 627,270

1. Average shareholders’ equity includes OnePath Australia shares that are eliminated from the closing shareholders’ equity balance of $273 million (Mar 2013: $253 million; Sep 2012: $280 million)

121

SUPPLEMENTARY INFORMATION

	Half Year Full Year
	Sep 13 % Mar 13 % Sep 13 % Sep 12 %


Gross earnings rate1
Australia	5.58 6.03 5.80 6.81
Asia Pacific, Europe & America	1.90 2.02 1.96 2.35
New Zealand	5.54 5.63 5.58 5.86
Total Group	4.79 5.18 4.98 5.83

Interest spread and net interest average margin may be analysed as follows:

Australia
Net interest spread	2.14 2.14 2.14 2.10
Interest attributable to net non-interest bearing items	0.33 0.36 0.34 0.39
Net interest margin2- Australia	2.47 2.50 2.48 2.49

Asia Pacific, Europe & America
Net interest spread	1.15 1.19 1.17 1.30
Interest attributable to net non-interest bearing items	0.02 0.01 0.01 0.03
Net interest margin2- Asia Pacific, Europe & America	1.17 1.20 1.18 1.33

New Zealand
Net interest spread	1.91 1.89 1.90 2.08
Interest attributable to net non-interest bearing items	0.40 0.38 0.39 0.35
Net interest margin2- New Zealand	2.31 2.27 2.29 2.43

Group
Net interest spread	1.96 1.99 1.98 2.02
Interest attributable to net non-interest bearing items	0.24 0.25 0.24 0.29
Net interest margin2	2.20 2.24 2.22 2.31
Net interest margin (excluding Global Markets)	2.61 2.65 2.63 2.71

1. Average interest rate received on average interest earning assets

2. Statutory basis

122

SUPPLEMENTARY INFORMATION

Exchange rates

Major exchange rates used in translation of results of offshore controlled entities and branches and investments in associates were as follows:

	Balance sheet	Profit & Loss Average
	As at	Half Year Full Year
	Sep 13 Mar 13 Sep 12	Sep 13 Mar 13 Sep 13 Sep 12
Chinese Yuan	5.6976 6.4793 6.5848	5.8062 6.4746 6.1395 6.5150
Euro	0.6896 0.8152 0.8092	0.7193 0.7938 0.7565 0.7914
Great British Pound	0.5760 0.6886 0.6437	0.6148 0.6574 0.6360 0.6522
Indian Rupee	58.5306 56.7378 55.1714	56.0561 56.2402 56.1479 53.9494
Indonesian Rupiah	10,860.1 10,127.4 10,022.6	9,689.6 10,034.1 9,861.4 9,476.4
Malaysian Ringgit	3.0334 3.2351 3.2077	2.9978 3.1876 3.0925 3.1998
New Zealand Dollar	1.1237 1.2469 1.2529	1.1733 1.2533 1.2132 1.2883
Papua New Guinea Kina	2.2385 2.2297 2.1773	2.1095 2.1850 2.1472 2.1657
United States Dollar	0.9312 1.0424 1.0462	0.9474 1.0387 0.9929 1.0278

123

DEFINITIONS

AAS - Australian Accounting Standards.

AASB - Australian Accounting Standards Board.

Cash profit is a measure of profit which is prepared on a basis other than in accordance with accounting standards. Cash profit represents a measure of the result of the ongoing business activities of the Group, enabling shareholders to assess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes items from statutory net profit as below. These items are calculated consistently period on period so as not to discriminate between positive and negative adjustments.

Gains and losses are adjusted where they are significant, or have the potential to be significant in any one period, and fall into one of three categories:

non-core gains or losses included in earnings arising from changes in tax, legal, accounting legislation or other non-core items not associated with the ongoing operations of the Group;
treasury shares, revaluation of policy liabilities, economic hedging impacts and similar accounting items that represent timing differences that will reverse through earnings in the future; and
accounting reclassifications between individual line items that do not impact reported results, such as policyholder tax gross up.

The adjustments made in arriving at cash profit are included in statutory profit which is subject to audit within the context of the Group statutory audit opinion. The Financial Report is in the process of being audited. Cash profit is not subject to audit by the external auditor, however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.

Collective provision is the provision for credit losses that are inherent in the portfolio but not able to be individually identified. A collective provision may only be recognised when a loss event has already occurred. Losses expected as a result of future events, no matter how likely, are not recognised.

Customer deposits represent term deposits, other deposits bearing interest, deposits not bearing interest and borrowing corporations debt excluding securitisation deposits.

Economic Profit is a risk adjusted profit measure. Economic Profit is determined by adjusting cash profit with economic credit costs, the benefit of imputation credits and the cost of capital. This measure is used to evaluate business unit performance and is included in determining the variable component of remuneration packages.

Expected loss is determined based on the expected average annual loss of principal over the economic cycle for the current risk profile of the lending portfolio.

Funding valuation adjustment (FVA) – valuation adjustments are integral to determining the fair value of derivatives. FVA is a fair value adjustment applied to account for funding risk inherent in derivative portfolios. FVA is applied by discounting future expected cash flows on collateralised and uncollateralised derivatives by the appropriate cost of funding.

IFRS – International Financial Reporting Standards.

Impaired commitments and contingencies comprises undrawn facilities and contingent facilities where the customer’s status is defined as impaired.

Impaired loans comprises drawn facilities where the customer’s status is defined as impaired.

Individual provision charge is the amount of expected credit losses on financial instruments assessed for impairment on an individual basis (as opposed to on a collective basis). It takes into account expected cash flows over the lives of those financial instruments.

Liquid assets are cash and cash equivalent assets. Cash equivalent assets are highly liquid investments with short periods to maturity, are readily convertible to cash at ANZ’s discretion and are subject to an insignificant risk of material changes in value.

Net interest average margin is net interest income as a percentage of average interest earning assets.

Net loans and advances includes gross loans and advances and acceptances and capitalised brokerage/mortgage origination fees, less unearned income and provisions for credit impairment.

Net tangible assets equals share capital and reserves attributable to shareholders of the Group less preference share capital and unamortised intangible assets (including goodwill and software).

Operating expenses excludes the provision for impairment of loans and advances charge.

Operating income includes net funds management and insurance income, share of associates profit and other operating income.

Repo discount is a discount applicable on the repurchase by a central bank of an eligible security pursuant to a repurchase agreement.

124

DEFINITIONS

Restructured items comprise facilities in which the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.

Revenue includes net interest income, net funds management and insurance income, share of associates profit and other operating income.

Segment review description

The Group operates and manages its cash results on a divisional structure with Australia, International & Institutional Banking (IIB), New Zealand and Global Wealth.

Group Centre comprises functions that service the organisation globally.

Australia

The Australia division comprises Retail and Corporate and Commercial Banking and business units. Retail includes Mortgages, Deposits, Cards and Payments along with the Retail Distribution Network. Corporate and Commercial Banking includes Corporate Banking, Esanda, Regional Business Banking, Business Banking and Small Business Banking.

Retail
Retail Distribution delivers banking solutions to customers via the Australian branch network, ANZ Direct and specialist sales channels.
Retail Products is responsible for delivering a range of products including mortgages, credit cards, personal loans, transaction banking, savings accounts and deposits, using capabilities in product, analytics, customer research, segmentation, strategy and marketing. It also provides online and electronic payment solutions for businesses.
- Mortgages provides housing finance to consumers in Australia for both owner occupied and investment purposes.
- Cards and Payments provides consumer and commercial credit cards, personal loans and merchant services.
- Deposits provides transaction banking, savings and investment products, such as term deposits and cash management accounts.
Corporate and Commercial Banking (‘C&CB’)
Corporate Banking provides a full range of banking services offering traditional relationship banking and sophisticated financial solutions, largely to privately owned companies with a turnover greater than A$125 million.
Esanda provides motor vehicle and equipment finance.
Regional Business Banking provides a full range of banking services to non metropolitan business banking customers.
Business Banking provides a full range of banking services, including risk management, to metropolitan based small to medium sized business clients with a turnover of up to A$125 million.
Small Business Banking provides a full range of banking services for metropolitan and regional based small businesses in Australia with lending up to A$1 million.

International and Institutional Banking

The International and Institutional Banking division comprises Global Institutional, Retail Asia Pacific and Asia Partnerships business units, along with Relationship & Infrastructure.

Global Institutional provides global financial services to government, corporate and institutional clients with a focus on solutions for clients with complex financial needs, based on a deep understanding of their businesses and industries, with particular expertise in natural resources, agriculture and infrastructure. Institutional delivers transaction banking, specialised and relationship lending and markets solutions in Australia, New Zealand, Asia Pacific, Europe and America.
Transaction Banking provides working capital solutions including deposit products, cash transaction banking management, trade finance, international payments, and clearing services principally to institutional and corporate customers.
Global Markets provides risk management services to corporate and institutional clients globally in relation to foreign exchange, interest rates, credit, commodities, debt capital markets, wealth solutions and equity derivatives. Markets provides origination, underwriting, structuring and risk management services, advice and sale of credit and derivative products globally. Markets also manages the Group’s interest rate risk position and liquidity portfolio.
Global Loans provides term loans, working capital facilities and specialist loan structuring. It provides specialist credit analysis, structuring, execution and ongoing monitoring of strategically significant customer transactions, including project and structured finance, debt structuring and acquisition finance, loan product structuring and management, structured asset and export finance.
Retail which provides retail and small business banking services to customers in the Asia Pacific region and also includes investment and insurance products and services for Asia Pacific customers.
Asia Partnerships which is a portfolio of strategic partnerships in Asia. This includes investments in Indonesia with PT Bank Pan Indonesia, in the Philippines with Metrobank Cards Corporation, in China with Bank of Tianjin and Shanghai Rural Commercial Bank, in Malaysia with AMMB Holdings Berhad and in Vietnam with Saigon Securities Incorporation.
Relationship & Infrastructure includes client relationship management teams for global institutional and financial institution and corporate customers in Australia, New Zealand, Asia Pacific, Europe and America corporate advisory and central support functions. Relationship and infrastructure also includes businesses within IIB which are discontinued.

125

DEFINITIONS

Segment review description, cont’d

New Zealand

The New Zealand division comprises Retail and Commercial business units, and Operations and Support which includes the central support functions (including Treasury funding).

Retail
Includes Mortgages, Credit Cards and Unsecured Lending to personal customers in New Zealand.
Commercial
Commercial & Agri (CommAgri) provides financial solutions through a relationship management model for medium-sized businesses, including agri-business, with a turnover of up to NZ$150 million. Asset Finance (including motor vehicle and equipment finance), operating leases and investment products are provided under the UDC brand.
Small Business Banking provides a full range of banking services to small enterprises, typically with turnover of less than NZ$5 million.

Global Wealth

The Global Wealth division comprises Funds Management, Insurance and Private Wealth which provides investment, superannuation, insurance products and services as well as Private Banking for customers across Australia, New Zealand and Asia.

Private Wealth specialises in assisting individuals and families to manage, grow and preserve their wealth. The businesses within Private Wealth include Private Bank, ANZ Trustees and Super Concepts.
Funds Management includes the Pensions and Investment business of OnePath Group (in Australia and New Zealand), E*Trade and Investment Lending.
Insurance includes the Insurance business of OnePath Group (in Australia and New Zealand) and Lender’s Mortgage Insurance.

Group Centre

Group Centre comprises Global Services & Operations, Group Technology, Group Human Resources, Group Risk, Group Strategy, Group Corporate Affairs, Group Corporate Communications, Group Treasury, Global Internal Audit, Group Finance, and Group Marketing, Innovation and Digital, Shareholder functions and discontinued businesses.

126

ALPHABETICAL INDEX

PAGE

Basis of preparation ............................................................................................................................................................................................................. 97 CEO Overview ..................................................................................................................................................................................................................... 11 CFO Overview...................................................................................................................................................................................................................... 13 Changes in composition of the Group................................................................................................................................................................................ 109 Condensed Consolidated Balance Sheet............................................................................................................................................................................. 94 Condensed Consolidated Cash Flow Statement.................................................................................................................................................................. 95 Condensed Consolidated Income Statement....................................................................................................................................................................... 92 Condensed Consolidated Statement of Comprehensive Income......................................................................................................................................... 93 Condensed Statement of Changes in Equity........................................................................................................................................................................ 96 Contingent liabilities and contingent assets ....................................................................................................................................................................... 108 Definitions .......................................................................................................................................................................................................................... 124 Deposits and other borrowings........................................................................................................................................................................................... 105 Dividends ........................................................................................................................................................................................................................... 101 Earnings per share............................................................................................................................................................................................................. 102 Geographic review ............................................................................................................................................................................................................... 73 Income ................................................................................................................................................................................................................................. 98 Income tax expense........................................................................................................................................................................................................... 100 Investments in associates .................................................................................................................................................................................................. 109 Loan capital........................................................................................................................................................................................................................ 105 Media Release ....................................................................................................................................................................................................................... 1 Net loans and advances..................................................................................................................................................................................................... 103 Note to the Cash Flow Statement ...................................................................................................................................................................................... 108 Operating expenses............................................................................................................................................................................................................. 99 Profit reconciliation............................................................................................................................................................................................................... 81 Provision for credit impairment........................................................................................................................................................................................... 104 Segment review ................................................................................................................................................................................................................... 39 Shareholders’ equity .......................................................................................................................................................................................................... 106 Share capital ...................................................................................................................................................................................................................... 106 Significant events since balance date ................................................................................................................................................................................ 109 Snapshot................................................................................................................................................................................................................................ 7 Supplementary Information – Average balance sheet and related interest........................................................................................................................ 117 Supplementary Information – Capital management ........................................................................................................................................................... 112 Supplementary Information – Exchange rates ................................................................................................................................................................... 121

127

ALPHABETICAL INDEX

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AI assistant

Australia and New Zealand Banking Group Ltd. — Annual Report 2013

10425_rns_2013-10-28_4cffa190-430e-4bb4-be53-d66006e8b02d.pdf

Australia and New Zealand Banking Group Limited

Report for the full year ended 30 September 2013

Dividend Reinvestment Plan and Bonus Option Plan

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E

Media Release

ANZ 2013 Full Year Result

- super regional strategy driving improved customer outcomes, profit growth and stronger shareholder returns -

Performance Highlights – FY 2013 compared to FY2012 (YOY)[1]

PERFORMANCE BY DIVISION[4]

AUSTRALIA

INTERNATIONAL AND INSTITUTIONAL BANKING (IIB)

NEW ZEALAND (all comparisons are in NZD)

GLOBAL WEALTH

CREDIT QUALITY

BALANCE SHEET, CAPITAL, LIQUIDITY AND FUNDING

DIVIDEND

Financial Result for the full year ended 30 September 2013

CONTENTS

Section 2 – Snapshot

SNAPSHOT

SNAPSHOT

Cash Profit Results1

SNAPSHOT

Key Balance Sheet Metrics

CEO Overview

Strategy and Performance

Strategic progress in 2013

Medium to Long Term Strategic Goals

CONTENTS

Section 4 – CFO Overview

Non-IFRS information

Cash profit

The CFO Overview is reported on a cash basis.

CFO OVERVIEW

Divisional performance

Cash profit by division – September 2013 Half Year v March 2013 Half Year

Australia

International and Institutional Banking

New Zealand

Global Wealth

Group Centre

Australia

International and Institutional Banking

New Zealand

Global Wealth

Group Centre

Review of Group results

Income and expenses

Net interest income

Group net interest margin (excluding Global Markets) – September 2013 Half Year v March 2013 Half Year

Net interest margin (-6 bps)

CFO OVERVIEW

Average interest earning assets (+$26.0 billion or 6%)

Average deposits and other borrowings (+$24.8 billion or 8%)

Net interest margin (-8 bps)

Average interest earning assets (+$33.3 billion or 8%)

Average deposits and other borrowings (+$24.3 billion or 8%)

CFO OVERVIEW

Income and expenses, cont’d

Other operating income

Other operating income – September 2013 Half Year v March 2013 Half Year

Fee income

Foreign Exchange

CFO OVERVIEW

Net Income from Wealth Management

Share of associates profit

Other income

Global Markets Income

Fee income

Foreign Exchange

Net Income from Wealth Management

Share of associates profit

Other income

Global Markets Income

CFO OVERVIEW

Income and expenses, cont’d

Expenses

Australia and New Zealand Banking Group Ltd. Annual Report 2013