Australia and New Zealand Banking Group Ltd. - Annual Report 2014

==> picture [145 x 4] intentionally omitted <==

==> picture [149 x 6] intentionally omitted <==

==> picture [168 x 6] intentionally omitted <==

==> picture [174 x 6] intentionally omitted <==

==> picture [171 x 6] intentionally omitted <==

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

Full Year 30 September 2014

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 2014 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 2014

Operating Results1				A$ million
Operating income		8%	to	20,054
Net statutory profit attributable to shareholders		15%	to	7,271
Cash profit 2		10%	to	7,117
Dividends3	Cents			Franked
		per		amount 4
	share			per share
Proposed final dividend		95		100%
Interim dividend		83		100%
Record date for determining entitlements to the proposedfinaldividend				11 November 2014
Payment date for the proposedfinaldividend				16 December 2014

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 2014 final dividend. For the 2014 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares. 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 14 November 2014, 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 2014 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 12 November 2014. Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling or New Zealand dollars respectively at an exchange rate calculated on 14 November 2014.

1 Unless otherwise noted, all comparisons are to the year ended 30 September 2013. 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 a reduction to statutory profit of $154 million made up of several items. Refer pages 90 to 99 for further details.

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

4

It is proposed that the final dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 12 cents per ordinary share.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

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 100 to 123 are in the process of being audited.

==> picture [109 x 24] intentionally omitted <==

David M Gonski, AC Chairman

==> picture [82 x 37] intentionally omitted <==

Michael R P Smith, OBE Director

30 October 2014

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

This page has been left blank intentionally

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 2014

*CONTENTS*	*PAGE*
Section 1 – Media release	6
Section 2 – Snapshot	10
Section 3 – CEO overview	18
Section 4 – CFO overview	20
Section 5 – Segment review	48
Section 6 – Geographic review	82
Section 7 – Profit reconciliation	90
Section 8 – Condensed consolidated financial statements	100
Section 9 – Supplementary information	124
Definitions	138
ASX Appendix 4E Cross Reference Index	141
Alphabetical Index	142

This Consolidated Financial Report and Dividend Announcement has been prepared for Australia and New Zealand Banking Group Limited (the “Company” or “Parent Entity”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “the Bank”, “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 being audited by the Group’s auditors, KPMG. The Company has a formally constituted Audit Committee of the Board of Directors. The signing of the Condensed Consolidated Financial Statements was approved by resolution of a Committee of the Board of Directors on 30 October 2014.

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

This page has been left blank intentionally

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

For Release: 31 October 2014

Media Release

==> picture [95 x 32] intentionally omitted <==

ANZ 2014 Full Year Result

- good 2014 result across all markets, well positioned for the operating environment –

Performance Highlights[1]

Statutory profit after tax of $7.3 billion up 15%. Cash profit[2] of $7.1 billion up 10%.
Final Dividend of 95 cents per share fully franked is up 14% on the Interim Dividend and brings the Total Dividend for FY14 to 178 cents per share up 9%. Earnings per share increased 9% to 260.3 cents.
Profit before provisions (PBP) up 7%.
Adjusting for the contribution of foreign exchange[3] (FX) and the disposal of ANZ Trustees and the SSI shareholding[4] , revenue increased 4% and expenses 1.8%.The cost to income ratio (CTI) on the same basis improved a further 94 basis points (bps) to 44.3%.
Customer deposits grew 9.5% with net loans and advances up 8%.
Provision charge was $989 million down 17%.
Return on equity (RoE) up 10 bps to 15.4%.
Common Equity Tier 1 (CET1) ratio on an Australian Prudential Regulation Authority (APRA) Basel 3 basis up 47 bps from the end of March to 8.79% .On an internationally comparable Basel 3 basis[5 ] CET1 was 12.7%.

ANZ Chief Executive Officer Mike Smith said: “This is another good performance that demonstrates consistent execution of our super regional strategy which is positioning ANZ well in a more constrained operating environment.

“We made progress in all our key markets by creating a better bank for all our customers whether big, small, retail or corporate. There were market share gains in key segments in Australia, the New Zealand business performed strongly following the brand simplification and Global Wealth performed well .

“The result also saw continued momentum from our international business in Asia Pacific Europe and America which now accounts for 24% of Group revenues. This provides ANZ with meaningful and differentiated growth options without the need to take on more risk. With the phase of high investment in Asia largely complete, we are seeing a greater share of Asia-led revenue growth translate to profit.

“Clearly though the macro drivers of growth in the sector are slowing and the environment is looking more challenging. We anticipated these challenges by setting targets for improving business productivity and shareholder returns, while actively reducing risk. This result highlights continued progress against those targets.

“Our enterprise approach to productivity and technology has seen ANZ consolidate its position as one of the most efficient banks in the world. We are progressively standardising processes and systems, streamlining teams, introducing more straight-through processing, as well as more convenient online and mobile banking self-service options.

“We have seen good growth and returns are also improving with more opportunities to continue improving capital efficiency by actively re-shaping our portfolio of businesses,” Mr Smith said.

1 All comparisons are Full Year to 30 September 2014 compared to Full Year 2013 and on a cash basis unless otherwise noted.

2 Statutory profit has been adjusted to exclude non-core items to arrive at Cash Profit which measures the result for the ongoing activities of the Group.

3 ANZ’s overseas operations are subject to the impact of foreign currency translation impacts. To assist with period on period comparability, comparative data is adjusted to remove the impact of foreign exchange movements. 4 The sale of ANZ Trustees was announced in April 2014 and completed in July 2014. The sale of ANZ’s shareholding in Saigon Securities Inc (SSI) was announced in September 2014.

5 Methodology per Australian Bankers’ Association International comparability of capital ratios of Australia’s major banks (August 2014).

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

PERFORMANCE BY DIVISION[1 ]

AUSTRALIA

Following a strong 2013 performance, the Australia Division (Retail and Business Banking) maintained momentum with PBP up 6% and cash profit rising 7%. Revenue grew 5% with expenses up 3%; excluding investment initiatives funded by the sale of ANZ Trustees expense growth was 2%. Divisional cost to income improved by a further 60 bps to 37.2%. Margins were well managed, improving by 5 bps in the second half and credit quality remained sound with the provision charge flat year on year (YoY).

The Retail business was particularly strong delivering a 12% increase in profit with lending up 7% and deposits up 5%. Net customer numbers grew by over 79,000[6] and customer satisfaction increased to place ANZ second among the four major banks[7] . ANZ was named Home Lender of the Year for the 13th out of the past 16 years. ANZ is on track to record its 19[th] consecutive quarter of above system growth in Home Lending.

In Business Banking we added approximately 27,000 net new customers during the year. Lending grew 3% and deposits 8% with momentum building in the second half. Lending to small businesses grew strongly, up 16%. The business is making the most of ANZ’s super regional capabilities and delivering a meaningful competitive advantage with 1,377 cross border referrals during the year.

The Banking on Australia program is continuing to transform the way we do business by improving distribution capability, delivering new digital and mobile solutions, building capability and improving productivity by simplifying products and processes.

Branch sales capacity has improved with more than two thirds of our frontline sales staff now accredited to sell Home Loans and more than half accredited to sell basic Wealth and Small Business products.

INTERNATIONAL AND INSTITUTIONAL BANKING (IIB)

IIB has grown and diversified its earnings by geography, product and customer, and is becoming more resilient against changeable market conditions. Despite a challenging second-half environment, particularly in the third quarter, IIB delivered an 11% increase in cash profit with PBP up 6%. Revenue trends improved in the fourth quarter which was up 9% on the third quarter. Costs were well managed up 3% adjusting for FX and additional investment initiatives funded by the ANZ Trustees sale proceeds.

Cash profit from Asia increased 25%[8] and revenue 10%. Revenue has grown strongly over the past 5 years with a compound annual growth rate of 23%.The Division’s revenue mix has diversified with more significant contributions from Foreign Exchange, Trade and Cash Management and Debt Capital Markets. Together with our differentiated geographic footprint, this has driven an increase in products per customer as well as growth in Asia cross-border revenue, which increased 9%.

Lending volumes grew 15% with customer deposits up 12%. Despite low levels of market volatility during the third quarter Global Markets delivered a 16% increase in profit for the year with costs held flat in the second half. More than 75% of Global Markets revenue came from customer facing activities and 47% now comes from outside Australia and New Zealand.

ANZ’s regional capability helped the business to regain the number one lead bank position in Institutional Banking in Australia and retain the number one lead bank position in New Zealand[9] . ANZ has also had the fastest recorded rise in the Greenwich Associates relationship strength survey covering Asia, narrowing the gap on the number three ranked competitor.

The quality of our Institutional lending book continues to improve with lending to investment grade clients now 78% of the loan book up from 60% in 2008. This improvement is reflected in the declining provision charge for IIB with the charge down 32% this year.

NEW ZEALAND (all figures in NZD)

The New Zealand Division’s 10% growth in cash profit reflects the successful execution of the simplification strategy during the past two years. The Division is now better able to capture scale advantages with increased brand recognition, lower costs and better customer service delivery through improved products, processes and distribution footprint. Revenue grew 2% while expenses reduced 3% to deliver 7% PBP growth. At 41.1% the Division’s cost to income is now 730 bps lower than in 2010.

6 Excludes Esanda contracts. 7 Roy Morgan Research. Retail Main Financial Institution customer satisfaction – retail customers 14+. Very of Fairly Satisfied. 6-months to Sep-14. 8 All Asia financial data including profit, revenue and compound growth rates are in USD. 9 Peter Lee Associates Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand 2014.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

Lending grew 5% while customer deposits were up 10%. Credit quality remains strong in both the retail and business banking portfolios.

The Retail business profit grew 16%. The business has continued to grow share in the mortgage market and remains the market leader for new home lending in all major cities. Market share in credit cards, deposits, life insurance and Kiwisaver also increased10.

Business Banking grew lending by 8% while at the same time continuing to improve the credit quality of the portfolio. ANZ has increased the number of specialists available to serve the Commercial, Agri and Small Business Banking sectors and was again awarded the CANSTAR[11] Best Agribusiness Bank.

GLOBAL WEALTH

Cash profit for the Global Wealth Division increased 11%. Excluding the impact of the sale of ANZ Trustees which completed in July and a prior year one off tax credit, profit increased 10%.

More customers are choosing ANZ Wealth solutions, with a 13 per cent increase in the number of wealth solutions being sold through ANZ channels. This has been driven by innovations in physical and digital distribution and in advice, including ANZ Smart Choice Super, the new ANZ Grow Centres and the Grow by ANZ™ app. The Division has continued to improve its efficiency with the cost to income ratio down a further 375 bps.

Private Wealth profit grew 62%, excluding the impact of the sale of ANZ Trustees. The strong performance was driven by a new investment led model with deposits and investment FUM up 20% and 21% respectively. Insurance cash profit grew 16% excluding the impact of the exit of one Group Life Insurance plan with Retail and Direct Life inforce premiums up 10%. Australian Retail Life lapse rates are outperforming the industry average at 12.4%, an improvement of 130 bps. Funds Management income grew 3% with a 12% growth in the average Funds Under Management to $61 billion up $2.4 billion, driven by improved net flows and investment market gains.

GLOBAL TECHNOLOGY AND OPERATIONS

Our Global Technology and Operations Division is helping ANZ build economies of scale, increase our speed to market and strengthen the operating risk control environment. The Group’s regional delivery centres provide regional coverage across time zones helping to drive lower unit costs, improve quality and lower risk. We have been selectively building out common platforms to enable our regional delivery and deliver a faster, easier and more consistent customer experience.

For the third year operations volumes increased while operations costs fell. In Australia the average number of customer complaints has almost halved over the past three years, despite an 8% increase in customers.

CAPITAL AND DIVIDEND

ANZ will distribute $4.9 billion of dividends to shareholders for this year with 73% of this being paid to Australian based Retail and Institutional investors. The Final Dividend of 95 cents per share was up 14% on the Interim Dividend, taking the Total Dividend for 2014 to 178 cents per share up 9%.

Strong organic capital generation of $3.0 billion or 84bps in the second half coupled with the Group’s ongoing focus on capital efficiency, saw ANZ’s capital ratio increase to 8.79% on an APRA Basel 3 CET1 basis. This represents a more than doubling of the Group’s CET1 ratio since before the global financial crisis.

CREDIT QUALITY

The total provision charge of $989 million is a reduction of 17% YoY, driven by management actions to strengthen the lending book and benign credit conditions along with a lower level of new and top up provisions.

The total loss rate for the portfolio declined significantly across the year from 26bps to 19bps reflecting ongoing asset quality improvement. Gross impaired assets continued their downward trend reducing by a further 32%, and have now reduced at an average of $918 million each year since 2010. New impaired assets reduced in all major lending Divisions, with total new impaired assets down 13% YoY.

10 In-force market share.

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

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

OUTLOOK

Mr Smith said: “We expect 2015 to present similar opportunities for ANZ, with a continuation of a stable and benign credit environment. In Australia and New Zealand the consumer sector remains relatively buoyant however we expect a gradual transition to business led growth as business confidence improves. Asia’s economies are set to maintain their position as the world’s best performing region.

“Another uncertainty is regulation and the outcome of the Financial System Inquiry in Australia. It is perhaps not widely understood that Australia’s financial system has been strengthened significantly since the GFC and our major banks are now stronger and safer than ever. While everyone benefits from a well-capitalised , well managed banking system – consumers, shareholders and taxpayers – there is a real cost to the economy of ever more restrictive regulation and policy settings. It is not in Australia’s interest for its financial system to be globally uncompetitive.

“While the banking sector faces a number of headwinds, we believe the environment, ANZ’s strategy, our business mix and the strength of its customer franchise positions us strongly and we are well placed to deliver against our 2016 cost to income and returns targets”, Mr Smith said.

For media enquiries contact:

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

Stephen Ries Head of 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]

Cameron Davis Executive Manager, Investor Relations Tel: +61-3-8654 7793 or +61-435-655033 Email: [email protected]

Video interviews with ANZ’s Chief Executive Officer Mike Smith and Chief Financial Officer Shayne Elliott regarding today’s Full Year 2014 Financial Results announcement can be found at ANZ BlueNotes www.bluenotes.anz.com .

SNAPSHOT

Section 2 – Snapshot

Statutory Profit Results

Cash Profit Results

Key Balance Sheet Metrics

FX Adjusted - Cash Profit Results and Net Loans and Advances FX and Divestment Adjusted - Cash Profit Results Other Non-financial Information

SNAPSHOT

==> picture [515 x 602] intentionally omitted <==

----- Start of picture text -----

Statutory Profit Results
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,032 6,778 4% 13,810 12,758 8%
Other operating income 3,488 2,756 27% 6,244 5,764 8%
Operating income 10,520 9,534 10% 20,054 18,522 8%
Operating expenses (4,474) (4,286) 4% (8,760) (8,257) 6%
Profit before credit impairment and income tax 6,046 5,248 15% 11,294 10,265 10%
Credit impairment charge (459) (527) -13% (986) (1,188) -17%
Profit before income tax 5,587 4,721 18% 10,308 9,077 14%
Income tax expense (1,702) (1,323) 29% (3,025) (2,757) 10%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Profit attributable to shareholders of the Company 3,879 3,392 14% 7,271 6,310 15%
Earnings per ordinary share (cents) Half Year Full Year
Reference Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Page
Basic 111 142.3 124.8 14% 267.1 232.7 15%
Diluted 111 136.5 120.6 13% 257.0 225.7 14%
Half Year Full Year
Reference
Page Sep 14 Mar 14 Sep 14 Sep 13
Ordinary share dividends (cents)
Interim - 100% franked [1 ] 110 n/a 83 83 73
Final - 100% franked [1 ] 110 95 n/a 95 91
Total - 100% franked [1 ] 110 95 83 178 164
Ordinary share dividend payout ratio [2 ] 110 67.6% 67.2% 67.4% 71.4%
Preference share dividend ($M)
Dividend paid [3 ] 110 3 3 6 6
Profitability ratios
Return on average ordinary shareholders' equity [4 ] 16.6% 15.0% 15.8% 15.0%
Return on average assets 1.01% 0.93% 0.97% 0.93%
Net interest margin 2.12% 2.15% 2.13% 2.22%
Efficiency ratios
Operating expenses to operating income 42.5% 45.0% 43.7% 44.6%
Operating expenses to average assets 1.17% 1.17% 1.17% 1.22%
Credit impairment charge/(release)
Individual credit impairment charge ($M) 540 601 1,141 1,158
Collective credit impairment charge/(release) ($M) (81) (74) (155) 30
Total credit impairment charge ($M) 113 459 527 986 1,188
Individual credit impairment charge as a % of average net advances 0.21% 0.24% 0.22% 0.25%
Total credit impairment charge as a % of average net advances 0.17% 0.21% 0.19% 0.26%
----- End of picture text -----

1. Fully franked for Australian tax purposes and carry New Zealand imputation credits of NZD 12 cents per ordinary share for the proposed 2014 final dividend (2014 interim dividend: NZD 10 cents; 2013 final dividend: NZD 10 cents; 2013 interim dividend: NZD 9 cents).

Dividend payout ratio is calculated using the proposed 2014 final, 2014 interim, 2013 final and 2013 interim dividends. 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

==> picture [513 x 702] intentionally omitted <==

----- Start of picture text -----

Cash Profit Results1
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,033 6,764 4% 13,797 12,772 8%
Other operating income 2,877 2,904 -1% 5,781 5,619 3%
Operating income 9,910 9,668 3% 19,578 18,391 6%
Operating expenses (4,474) (4,286) 4% (8,760) (8,257) 6%
Profit before credit impairment and income tax 5,436 5,382 1% 10,818 10,134 7%
Credit impairment charge (461) (528) -13% (989) (1,197) -17%
Profit before income tax 4,975 4,854 2% 9,829 8,937 10%
Income tax expense (1,367) (1,333) 3% (2,700) (2,435) 11%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Cash profit [1 ] 3,602 3,515 2% 7,117 6,492 10%
Earnings per ordinary share (cents) Half Year Full Year
Reference Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Page
Basic 36 131.5 128.7 2% 260.3 238.3 9%
Diluted 36 126.5 124.3 2% 250.6 231.0 8%
Half Year Full Year
Reference
Page Sep 14 Mar 14 Sep 14 Sep 13
Ordinary share dividends (cents)
Ordinary share dividend payout ratio [2 ] 37 72.8% 64.9% 68.9% 69.4%
Profitability ratios
Return on average ordinary shareholders' equity [3 ] 15.3% 15.5% 15.4% 15.3%
Return on average assets 0.94% 0.96% 0.95% 0.96%
Net interest margin 24 2.12% 2.15% 2.13% 2.22%
Profit per average FTE ($) 71,906 70,500 142,064 132,347
Efficiency ratios
Operating expenses to operating income 45.1% 44.3% 44.7% 44.9%
Operating expenses to average assets 1.17% 1.17% 1.17% 1.22%
Credit impairment charge/(release)
Individual credit impairment charge ($M) 31 542 602 1,144 1,167
Collective credit impairment charge/(release) ($M) 32 (81) (74) (155) 30
Total credit impairment charge ($M) 31 461 528 989 1,197
Individual credit impairment charge as a % of average net advances 0.21% 0.24% 0.22% 0.25%
Total credit impairment charge as a % of average net advances 0.18% 0.21% 0.19% 0.26%
Cash profit by division/geography Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Australia 1,569 1,479 6% 3,048 2,858 7%
International and Institutional Banking 1,331 1,360 -2% 2,691 2,432 11%
New Zealand 525 545 -4% 1,070 877 22%
Global Wealth 299 226 32% 525 471 11%
GTSO and Group Centre (122) (95) 28% (217) (146) 49%
Cash profit by division 3,602 3,515 2% 7,117 6,492 10%
Australia 2,337 2,025 15% 4,362 4,300 1%
Asia Pacific, Europe & America 535 681 -21% 1,216 1,013 20%
New Zealand 730 809 -10% 1,539 1,179 31%
Cash profit by geography 3,602 3,515 2% 7,117 6,492 10%
----- End of picture text -----

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 90 for the reconciliation between statutory and cash profit.

Dividend payout ratio is calculated using the proposed 2014 final, 2014 interim, 2013 final and 2013 interim dividends.

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

SNAPSHOT

==> picture [515 x 394] intentionally omitted <==

----- Start of picture text -----

Key Balance Sheet Metrics
As at Movement
Reference Sep 14 Sep 14
Page Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Capital adequacy
Common Equity Tier 1
- APRA Basel 3 41 8.8% 8.3% 8.5%
- Internationally Comparable Basel 3 [1 ] 41 12.7% 12.2% 12.7%
Credit risk weighted assets ($B) 127 308.9 305.3 287.7 1% 7%
Total risk weighted assets ($B) 127 361.5 360.7 339.3 0% 7%
Balance Sheet: Key Items
Gross loans & advances ($B) 524.4 512.3 486.8 2% 8%
Net loans & advances ($B) 521.8 509.3 483.3 2% 8%
Total assets ($B) 772.1 737.8 703.0 5% 10%
Customer deposits ($B) 403.7 388.0 368.8 4% 9%
Total equity ($B) 49.3 47.0 45.6 5% 8%
Impaired assets
Gross impaired assets ($M) 33 2,889 3,620 4,264 -20% -32%
Net impaired assets ($M) 33 1,713 2,150 2,797 -20% -39%
Net impaired assets as a % of net advances 0.33% 0.42% 0.58%
Net impaired assets as a % of shareholders' equity 3.5% 4.6% 6.1%
Individual provision ($M) 113 1,176 1,470 1,467 -20% -20%
Individual provision as a % of gross impaired assets 40.7% 40.6% 34.4%
Collective provision ($M) 113 2,757 2,843 2,887 -3% -5%
Collective provision as a % of credit risk weighted assets 0.89% 0.93% 1.00%
Net Assets
Net tangible assets per ordinary share ($) 14.65 13.90 13.48 5% 9%
Net tangible assets attributable to ordinary shareholders ($B) 40.4 38.1 37.0 6% 9%
----- End of picture text -----

1. See page 42 for further details regarding the differences between APRA Basel 3 and Internationally Comparable Basel 3 standards.

==> picture [511 x 181] intentionally omitted <==

----- Start of picture text -----

Net loans and advances by division/geography As at ($B) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 287.9 278.3 271.6 3% 6%
International and Institutional Banking 141.8 136.3 123.5 4% 15%
New Zealand 86.1 88.2 81.5 -2% 6%
Global Wealth 6.4 6.0 6.2 6% 3%
GTSO and Group Centre (0.4) 0.5 0.5 large large
Net loans and advances by division 521.8 509.3 483.3 2% 8%
Australia 348.6 336.5 324.3 4% 8%
Asia Pacific, Europe & America 79.2 76.6 69.9 3% 13%
New Zealand 94.0 96.2 89.1 -2% 6%
Net loans and advances by geography 521.8 509.3 483.3 2% 8%
----- End of picture text -----

SNAPSHOT

FX Adjusted1 – Cash Profit Results and Net Loans and Advances

==> picture [511 x 570] intentionally omitted <==

----- Start of picture text -----

Cash profit - FX adjusted
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,033 6,754 4% 13,797 13,089 5%
Other operating income 2,877 2,888 0% 5,781 5,638 3%
Operating income 9,910 9,642 3% 19,578 18,727 5%
Operating expenses (4,474) (4,271) 5% (8,760) (8,479) 3%
Profit before credit impairment and income tax 5,436 5,371 1% 10,818 10,248 6%
Credit impairment charge (461) (527) -13% (989) (1,210) -18%
Profit before income tax 4,975 4,844 3% 9,829 9,038 9%
Income tax expense (1,367) (1,332) 3% (2,700) (2,453) 10%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Cash profit 3,602 3,506 3% 7,117 6,575 8%
Cash profit - FX adjusted by division and geography Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Australia 1,569 1,479 6% 3,048 2,859 7%
International and Institutional Banking 1,331 1,346 -1% 2,691 2,496 8%
New Zealand 525 548 -4% 1,070 971 10%
Global Wealth 299 226 32% 525 479 10%
GTSO and Group Centre (122) (93) 31% (217) (230) -6%
Cash profit by division 3,602 3,506 3% 7,117 6,575 8%
Australia 2,337 2,033 15% 4,362 4,243 3%
Asia Pacific, Europe & America 535 660 -19% 1,216 1,021 19%
New Zealand 730 813 -11% 1,539 1,311 17%
Cash profit by geography 3,602 3,506 3% 7,117 6,575 8%
Net loans and advances by division/geography - FX adjusted As at ($B) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 287.9 278.3 271.6 3% 6%
International and Institutional Banking 141.8 139.8 127.1 1% 12%
New Zealand 86.1 83.9 81.7 3% 5%
Global Wealth 6.4 6.0 6.3 5% 0%
GTSO and Group Centre (0.4) 0.4 0.5 large large
Net loans and advances by division 521.8 508.4 487.2 3% 7%
Australia 348.6 336.5 324.3 4% 8%
Asia Pacific, Europe & America 79.2 80.5 73.7 -2% 7%
New Zealand 94.0 91.4 89.2 3% 5%
Net loans and advances by geography 521.8 508.4 487.2 3% 7%
----- End of picture text -----

1. Comparative data has been adjusted to remove the impact of foreign exchange movements.

SNAPSHOT

FX and Divestments Adjusted – Cash Profit Results

In the September 2014 half, the Group recognised a $125 million pre-tax gain on the sale of ANZ Trustees and a $21 million pre-tax loss arising from the sale of our investment in Saigon Securities Inc (“SSI”). The gain on sale of ANZ Trustees was reinvested in a number of initiatives across the Group. Although neither the gain/loss on the divestments, nor the reinvestment, meet the Group’s definition of a cash profit adjustment, an ex-divestment view of the Group and divisional cash profit is provided to assist comparison of the results to earnings guidance. Comparative data has been adjusted to remove the impact of foreign exchange movements.

==> picture [511 x 356] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,033 6,754 4% 13,797 13,089 5%
Other operating income 2,773 2,888 -4% 5,677 5,638 1%
Operating income 9,806 9,642 2% 19,474 18,727 4%
Operating expenses (4,349) (4,271) 2% (8,635) (8,479) 2%
Profit before credit impairment and income tax 5,457 5,371 2% 10,839 10,248 6%
Credit impairment charge (461) (527) -13% (989) (1,210) -18%
Profit before income tax 4,996 4,844 3% 9,850 9,038 9%
Income tax expense (1,385) (1,332) 4% (2,718) (2,453) 11%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Cash profit 3,605 3,506 3% 7,120 6,575 8%
Cash profit before tax - FX and Divestments adjusted by
division and geography Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Australia 2,277 2,113 8% 4,391 4,074 8%
International and Institutional Banking 1,826 1,804 1% 3,646 3,359 9%
New Zealand 728 761 -4% 1,486 1,343 11%
Global Wealth 323 313 3% 636 575 11%
GTSO and Group Centre (158) (147) 7% (309) (313) -1%
Cash profit before tax 4,996 4,844 3% 9,850 9,038 9%
Australia 3,305 2,928 13% 6,218 6,048 3%
Asia Pacific, Europe & America 692 800 -14% 1,521 1,208 26%
New Zealand 999 1,116 -10% 2,111 1,782 18%
Cash profit before tax 4,996 4,844 3% 9,850 9,038 9%
----- End of picture text -----

Reconciliation of Divestment related adjustments by division and geography

==> picture [516 x 271] intentionally omitted <==

----- Start of picture text -----

Sep 14 - Half Year Sep 14 - Full Year
Adjustments Adjustments
(Profit)/ (Profit)/
Cash loss on Adjusted Cash loss on Adjusted
Profit sale Initiatives [1] cash profit Profit sale Initiatives [1] cash profit
Australia 2,238 - 39 2,277 4,352 - 39 4,391
International and Institutional Banking 1,765 21 40 1,826 3,585 21 40 3,646
New Zealand 728 - - 728 1,486 - - 1,486
Global Wealth 407 (125) 41 323 720 (125) 41 636
GTSO and Group Centre (163) - 5 (158) (314) - 5 (309)
Cash profit before tax 4,975 (104) 125 4,996 9,829 (104) 125 9,850
Income tax expense and (1,373) 20 (38) (1,391) (2,712) 20 (38) (2,730)
non-controlling interests
Cash profit 3,602 (84) 87 3,605 7,117 (84) 87 7,120
Australia 3,313 (125) 117 3,305 6,226 (125) 117 6,218
Asia Pacific, Europe & America 663 21 8 692 1,492 21 8 1,521
New Zealand 999 - - 999 2,111 - - 2,111
Cash profit before tax 4,975 (104) 125 4,996 9,829 (104) 125 9,850
Income tax expense and (1,373) 20 (38) (1,391) (2,712) 20 (38) (2,730)
non-controlling interests
Cash profit 3,602 (84) 87 3,605 7,117 (84) 87 7,120
----- End of picture text -----

1. Following the sale of ANZ Trustees, the Group reinvested the gain on sale in a number of initiatives across the Group. This included spend relating to restructuring, technology developments and uplifting sales capabilities.

SNAPSHOT

==> picture [515 x 153] intentionally omitted <==

----- Start of picture text -----

Other Non-financial Information
As at Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Full time equivalent staff (FTE) [1 ] 50,328 49,850 49,866 1% 1%
Assets per FTE ($M) 15.3 14.8 14.1 3% 9%
Share price
- high $35.07 $34.06 $32.09 3% 9%
- low $30.47 $28.84 $26.30 6% 16%
- closing $30.92 $33.06 $30.78 -6% 0%
Market capitalisation of ordinary shares ($B) 85.2 90.7 84.5 -6% 1%
----- End of picture text -----

1. In the September 2014 half, the Group migrated onto a single global HR platform. In doing so, the Group revised and standardised the measure of FTE and this resulted in an increase in FTE. Comparative information has been restated. Refer to page 136 for a summary of FTE movements.

==> picture [514 x 89] intentionally omitted <==

----- Start of picture text -----

As at Sep 14
Credit Ratings Short-Term Long-Term Outlook
Moody's Investor Services P-1 Aa2 Stable
Standard & Poor's A-1+ AA- Stable
Fitch Ratings F1+ AA- Stable
----- End of picture text -----

SNAPSHOT

This page has been left blank intentionally

CEO OVERVIEW

CEO Overview1

Strategy and Performance

ANZ is building the best connected, most respected bank across the Asia Pacific region to provide shareholders with above-peer earnings growth.

The strategy has three key elements – strong domestic markets, profitable Asian growth and an enterprise wide approach to operations and technology. ANZ is particularly focused on the significant organic growth opportunities which exist within the Asia Pacific region and our distinctive Asia Pacific footprint sees us uniquely positioned to meet the needs of customers who are dependent on regional capital, trade and wealth flows.

This year, our differentiated strategy delivered a 10% increase in cash profit to $7.1 billion, with a Return on Equity of 15.4%, earnings per share of 260.3 cents and a fully-franked dividend of 178 cents per share. Our Common Equity Tier 1 ratio strengthened to 8.8% at the end of September. Adjusting for foreign exchange and the disposal of ANZ Trustees and ANZ’s share of SSI[2] , the result was driven by 4% revenue growth, 1.8% expense growth, and an 18% reduction in provisions. Total shareholder returns for the past twelve months were 5.9% and revenue sourced from the APEA region were 24% of total Group revenue.

While ANZ is continuing to pursue it’s growth aspirations in the region, we have a clear strategy in place to leverage the scale in our business to also improve returns, and so ANZ advised the market last year of a goal to lift Group RoE to 16% or above by the end of FY16 in part driven by improving returns in Asia Pacific.

Strategic Progress

While global economic conditions remained volatile, conditions across the Asia Pacific region were more robust by comparison. However, relatively low credit growth and variations in the level of market volatility meant conditions for banking remained challenging, particularly for institutional banking where historically low levels of volatility impacted growth in the third quarter.

Two years ago, ANZ took the view that ongoing challenging market conditions required a greater focus by the banking sector on both productivity and capital management, and put in place a number of initiatives to drive improvements in both measures. These initiatives have delivered steady improvement in both our cost and capital position, including a continued improvement in the cost to income and common equity capital ratios.

We’ve built stronger positions in our home markets of Australia and New Zealand, with further gains in productivity and market share, and further penetration of Wealth products into our existing customer base in these markets.
In IIB, profit from Asia increased 25% and revenue 10%[3] . Revenue has consistently grown at double digit rates with the cumulative annual growth rate over the last 5 years standing at 23%. The Division’s revenue mix has diversified substantially over the past five years with more significant contributions emerging from more capital efficient products like Foreign Exchange, Trade and Cash Management and Debt Capital Markets.
Our Operations and Technology functions are helping ANZ build economies of scale, increase our speed to market and strengthen the operating risk control environment for the business. The Group’s regional delivery centres provide full service regional coverage across our operating time zones helping to drive lower unit costs, improve quality and lower risk. We have been selectively building out common platforms to enable our regional delivery and deliver a faster, easier more consistent customer experience. Outcomes are positively impacting across the Group; for the third year in a row operations volumes increased while operations costs fell. We processed more than 8 million transactions a day. In Australia the average number of customer complaints has almost halved over the past three years despite an 8% increase in customers.
Strong organic capital generation of $5.6 billion coupled with the Group’s ongoing focus on capital efficiency saw ANZ’s capital ratio increase to 8.8% on an Australian Prudential Regulation Authority (APRA) Basel 3 Common Equity Tier 1 (CET1) basis and 12.7% on an internationally comparable Basel 3 CET1 basis[4] . Customer funding remained stable at 63% of total funding.
The total loss rate for the lending portfolio declined significantly across the year from 26 bps to 19 bps reflecting ongoing asset quality improvement. Gross impaired assets continued their downward trajectory, reducing by a further 32% and have now reduced at an average of $918 million each year since 2010.

Medium to Long Term Strategic Goals

ANZ is committed to delivering strong total shareholder returns and above-peer earnings growth over the business cycle, targeting a Group cost to income ratio below 43% and return on equity above 16% by 2016. The target dividend payout ratio remains at 65-70% of cash profit, 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 core markets of Australia and New Zealand by growing our Retail and Commercial operations, driving productivity benefits, leveraging our 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 are now working under one brand and on one technology platform and have far more efficient market coverage.
Focus our Asian 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.
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 – utilising our management bench-strength and continuing to deepen our international talent pool.
Apply strict criteria when reviewing existing investment and new inorganic opportunities.
1
The CEO Overview is reported on a cash basis.
2
3 ANZ announced the sale of the ANZ Trustees business in April 2014 and completed the sale in July 2014. ANZ announced the sale of its 17.5% interest in Saigon Securities Inc in September 2014. IIB Asia profit and revenue figures are in USD.
4 See page 42 for further details regarding differences between APRA Basel 3 and Internationally Comparable Basel 3 Standards.

CEO OVERVIEW

This page has been left blank intentionally

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 Condensed balance sheet Liquidity risk Capital management Other regulatory developments Investment spend Software capitalisation

CFO OVERVIEW

Non-IFRS information

The Group provides additional measures of performance in the Results Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian Securities and Investments Commission (ASIC) Regulatory Guide RG230 has been followed when presenting this information.

Cash profit

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 2014 Annual Financial Statements are 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.

==> picture [511 x 76] intentionally omitted <==

==> picture [511 x 145] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Adjustments between statutory profit
and cash profit [1 ]
Treasury shares adjustments (13) 37 large 24 84 -71%
Revaluation of policy liabilities (23) (3) large (26) 46 large
Economic hedges (150) 78 large (72) (57) 26%
Revenue and net investment hedges (119) 18 large (101) 159 large
Structured credit intermediation trades 28 (7) large 21 (50) large
Total adjustments between
statutory profit and cash profit [1 ] (277) 123 large (154) 182 large
----- End of picture text -----

1 Refer to pages 90 to 99 for analysis of the reconciliation of statutory profit to cash profit.

Cash Profit

==> picture [511 x 168] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,033 6,764 4% 13,797 12,772 8%
Other operating income 2,877 2,904 -1% 5,781 5,619 3%
Operating income 9,910 9,668 3% 19,578 18,391 6%
Operating expenses (4,474) (4,286) 4% (8,760) (8,257) 6%
Profit before credit impairment and income tax 5,436 5,382 1% 10,818 10,134 7%
Credit impairment charge (461) (528) -13% (989) (1,197) -17%
Profit before income tax 4,975 4,854 2% 9,829 8,937 10%
Income tax expense (1,367) (1,333) 3% (2,700) (2,435) 11%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Cash profit 3,602 3,515 2% 7,117 6,492 10%
----- End of picture text -----

Refer to page 35 for the impact of exchange rates and revenue hedges on cash profit.

CFO OVERVIEW

Divisional performance

During the September 2014 half, Operations, Technology, Property and certain enablement functions supporting the operating divisions (including Human Resources, Risk, Finance and Legal) were transferred from the operating divisions to GTSO and Group Centre. This change aligns with our strategy of building on common infrastructure with an enterprise focus. Comparative information has been restated.

==> picture [511 x 115] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Cash profit by division $M $M $M $M
Australia 1,569 1,479 6% 3,048 2,858 7%
International and Institutional Banking 1,331 1,360 -2% 2,691 2,432 11%
New Zealand 525 545 -4% 1,070 877 22%
Global Wealth 299 226 32% 525 471 11%
GTSO and Group Centre (122) (95) 28% (217) (146) 49%
Cash profit/(loss) 3,602 3,515 2% 7,117 6,492 10%
----- End of picture text -----

Cash profit by division – September 2014 Full Year v September 2013 Full Year

==> picture [516 x 153] intentionally omitted <==

----- Start of picture text -----

54
193 7,117
(71)
259
190
$m
6,492
FY13 Australia International and New Zealand Global Wealth GTSO and Group FY14
Cash profit Institutional Banking Centre Cash profit
----- End of picture text -----

September 2014 v March 2014

Australia

Profit increased 6% due to a 5% increase in net interest income, with strong growth in home loans and small business lending and a 5 bps increase in net interest margin, along with a 1% increase in other operating income, partially offset by a 4% increase in operating expenses and a 3% increase in credit impairment charges.

International and Institutional Banking

Profit decreased 2% due to a 10% decrease in Global Markets operating income from lower volatility and weaker customer demand for foreign exchange, partially offset by a 2% increase in Transaction Banking operating income and a 66% decrease in credit impairment charges.

New Zealand (in NZD)

Profit decreased 4%, primarily due to an increase in the credit impairment charge as a result of lower write-backs of individual provisions and lower releases of collective provision overlays. Profit before provisions was up 4% due to a 3% increase in net interest income (driven by growth across both housing and non-housing lending), partially offset by a 4% decrease in other operating income (mainly from timing impact of credit card rebates) and a 1% increase in operating expenses.

Global Wealth

Profit increased 32% driven primarily by the profit on sale of ANZ Trustees. Excluding this, and the subsequent spend on initiatives in 2H14, profit increased 4% with a 14% increase in insurance income driven by strong in-force premium growth and the impact of a Group Life Plan exit in the March half, partially offset by higher claims. The March half results also reflect the benefit of a non-recurring insurance settlement.

GTSO and Group Centre

Net loss increased 28% with higher operating expenses from increased investment in enterprise projects, higher depreciation and amortisation and higher costs from the expansion of Group Hubs, partially offset by higher operating income from greater capital held in Group Centre.
September 2014 v September 2013

Australia

Profit increased 7% due to a 6% increase in net interest income on the back of growth in home loans and small business lending, partially offset by a 3% increase in operating expenses.

CFO OVERVIEW

International and Institutional Banking

Profit increased 11% due to higher net interest income attributable to the Group’s liquidity positions, asset and liability repricing mismatches and volume growth in Global Transaction Banking, higher fee income from volume driven growth in Global Transaction Banking and Retail Asia Pacific, an 11% increase in Global Markets operating income (driven by demand for commodities, foreign exchange products and origination activity) and a 32% decrease in credit impairment charges, partially offset by an 8% increase in operating expenses.

New Zealand (in NZD)

Profit increased 10% with a 5% increase in net interest income (driven by above system lending growth), a 3% decrease in operating expenses and improvement in the credit impairment charge, partially offset by a 9% decrease in other operating income primarily related to the one-off impact of the gain from the sale of the EFTPOS business and the EFTPOS related revenue stream earned in 2013. Excluding the impact of the EFTPOS sale in 2013, profit increased 13% with revenue growth of 4% and expenses reducing 2% delivering profit before credit impairment and income tax growth of 9%.

Global Wealth

Profit increased 11% driven primarily by the profit on sale of ANZ Trustees. Excluding this, and the subsequent spend on initiatives, along with the one off tax consolidation adjustment in September 2013, cash profit increased 10%. This was driven by solid growth in Private Wealth customer deposits, investment funds under management and improved margins, as well as 4% increase in insurance income due to improved claims and lapse experience, partially offset by the impact of a Group Life insurance plan exit. The 2014 results also reflect the benefit of a nonrecurring insurance settlement.

GTSO and Group Centre

Net loss increased 49%, with realised losses from foreign currency hedges (offsetting realised gains elsewhere in the Group) and higher operating expenses from increased investment in enterprise projects, higher depreciation and amortisation and higher costs from the expansion of Group Hubs.

Refer to Section 5 – Segment Review on pages 48 to 81 for further details.

CFO OVERVIEW

Review of Group results

Income and expenses

Net interest income

==> picture [511 x 166] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Group $M $M $M $M
Cash net interest income 7,033 6,764 4% 13,797 12,772 8%
Average interest earning assets 661,515 632,400 5% 646,997 575,339 12%
Average deposit and other borrowings 517,178 498,484 4% 507,856 450,065 13%
Net interest margin (%) - cash 2.12 2.15 -3 bps 2.13 2.22 -9 bps
Group (excluding Global Markets)
Cash net interest income 6,492 6,253 4% 12,745 11,977 6%
Average interest earning assets 509,284 492,601 3% 500,966 453,094 11%
Average deposit and other borrowings 394,661 381,118 4% 387,908 347,198 12%
Net interest margin (%) - cash 2.54 2.55 -1 bps 2.54 2.64 -10 bps
----- End of picture text -----

==> picture [511 x 217] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Cash net interest margin by major division $M $M $M $M
Australia
Net interest margin (%) 2.53 2.48 5 bps 2.51 2.52 -1 bps
Average interest earning assets 284,927 276,779 3% 280,864 264,270 6%
Average deposit and other borrowings 158,166 155,314 2% 156,744 146,482 7%
International and Institutional Banking
Net interest margin (%) 1.45 1.54 -9 bps 1.49 1.61 -12 bps
Average interest earning assets 275,491 258,198 7% 266,868 227,740 17%
Average deposit and other borrowings 225,999 216,062 5% 221,045 188,981 17%
New Zealand
Net interest margin (%) 2.48 2.48 0 bps 2.48 2.49 -1 bps
Average interest earning assets 88,549 85,864 3% 87,210 74,650 17%
Average deposit and other borrowings 57,180 54,516 5% 55,852 46,672 20%
----- End of picture text -----

Group net interest margin – September 2014 Half Year v March 2014 Half Year

==> picture [518 x 177] intentionally omitted <==

----- Start of picture text -----

5
215 1
212
(1) (6) (2)
bps
1H14 Asset mix and funding Funding costs Deposit competition Asset competition Markets and treasury 2H14
Cash net interest mix and risk mix Cash net interest
margin margin
----- End of picture text -----

September 2014 v March 2014

Net interest margin (-3 bps)

Asset mix and funding mix (-1 bp): adverse asset mix impact arising from an increased proportion of Home Loans and slower growth in higher margin Cards.
Funding costs (+1 bp): benefit from favourable wholesale funding costs.
Deposit competition (+5 bps): benefit from active margin management across deposit products, particularly term deposits.

CFO OVERVIEW

Asset competition and risk mix (-6 bps): continued pressure on lending margins, including significant competition and switching from variable to fixed home loans mainly in New Zealand, competition in Global Loans and lower spreads within Corporate and Commercial Banking.
Markets and treasury (-2 bps): primarily from lower earnings on capital from lower interest rates as well as the impact of financial markets activities.

Average interest earning assets (+$29.1 billion or +5%)

Australia (+$8.1 billion or 3%): driven by growth in variable home loan products where market share continues to increase.
International and Institutional Banking ($+17.3 billion or 7%): $12.4 billion increase in Global Markets mainly from growth in the liquidity portfolio, as well as growth in settlement balances. Fixed rate lending in Global Loans grew by $3.7 billion.
New Zealand (+$2.7 billion or 3%): driven by lending market share growth across both the Retail and Commercial businesses.
Global Wealth and Group Centre (+$1 billion): mainly in Treasury relating to RBA requirements to facilitate overnight settlements.

Average deposits and other borrowings (+$18.7 billion or +4%)

Australia (+$2.9 billion or 2%): growth in customer deposits within Retail and Commercial, predominantly at call products.
International and Institutional Banking ($+9.9 billion or 5%): increases in Transaction Banking customer deposits, external repos for funding purposes in Global Markets, and commercial paper funding in APEA.
New Zealand (+$2.7 billion or 5%): increased customer deposits across Retail and Commercial.
Global Wealth and Group Centre (+$3.2 billion): higher repo borrowings in Treasury and higher Private Bank customer deposits in Global Wealth.

Group net interest margin – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 165] intentionally omitted <==

----- Start of picture text -----

5
222 2
213
(3)
(10)
(3)
bps
FY13 Asset mix and funding Funding costs Deposit competition Asset competition Markets and treasury FY14
Cash net interest mix and risk mix Cash net interest
margin margin
----- End of picture text -----

September 2014 v September 2013

Net interest margin (-9 bps)

Asset mix and funding mix (-3 bps): adverse asset mix impact from faster growth in lower margin Trade business and slower growth in higher margin Cards and Payments business.
Funding costs (+2 bps): benefit from favourable wholesale funding costs.
Deposit competition (+5 bps): benefit from active margin management across deposit products, particularly term deposits.
Asset competition and risk mix (-10 bps): continued pressure on lending margins, including significant competition and switching from variable to fixed in the home loan market in Australia and New Zealand, competition in Global Loans and the impact of improving the credit quality of the lending portfolio.
Markets and treasury (-3 bps): primarily from lower earnings on capital from lower interest rates as well as the impact of financial markets activities.

Average interest earning assets (+$71.7 billion or +12%)

Australia (+$16.6 billion or 6%): market share growth in variable home loan products and small business lending facilities.
International and Institutional Banking ($+39.2 billion or 17%): $23 billion increase in Global Markets mainly from growth in the liquidity portfolio, higher settlement balances and loans and advances, as well as the impact of a weaker AUD. Global Loans increased $8.6 billion and Transaction Banking increased $4.8 billion, with strong growth in Asia.
New Zealand (+$12.6 billion or 17%): market share growth and stronger economic conditions drove increased Retail and Commercial lending, as well as the impact of a stronger NZD.
Global Wealth and Group Centre (+$3.3 billion): growth in Treasury relating to RBA requirements to facilitate overnight settlements.

CFO OVERVIEW

Average deposits and other borrowings (+$57.8 billion or +13%)

Australia (+$10.3 billion or 7%): growth in customer deposits within Retail and Commercial, predominantly at call products.
International and Institutional Banking ($+32.1 billion or 17%): increased customer deposits in both term deposits and transaction accounts across Australia and APEA, partly driven by increased liquidity, as well as the impact of weaker AUD on offshore balances.
New Zealand (+$9.2 billion or 20%): increased market share in Commercial customer deposits and issuance of commercial paper funding.
Global Wealth and Group Centre (+$6.2 billion): increase in Treasury repo borrowings and increase in Private Bank deposits in Global Wealth, mainly at call products.

CFO OVERVIEW

Income and expenses, cont’d

==> picture [511 x 140] intentionally omitted <==

----- Start of picture text -----

Other operating income
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Fee Income [1 ] 1,183 1,191 -1% 2,374 2,316 3%
Foreign exchange earnings [1 ] 52 43 21% 95 209 -55%
Net income from funds management and insurance 666 617 8% 1,283 1,216 6%
Share of associates profit [1 ] 267 243 10% 510 478 7%
Other [1,2] 143 90 59% 233 90 large
Global Markets other operating income 566 720 -21% 1,286 1,310 -2%
Cash other operating income 2,877 2,904 -1% 5,781 5,619 3%
----- End of picture text -----

1. Excluding Global Markets.

Other income includes $125 million gain on sale of ANZ Trustees in July 2014 and $21 million loss arising on sale of SSI in September 2014.

==> picture [511 x 196] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Global Markets income $M $M $M $M
Net interest income 541 511 6% 1,052 795 32%
Other operating income 566 720 -21% 1,286 1,310 -2%
Cash Global Markets income 1,107 1,231 -10% 2,338 2,105 11%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Other operating income by division $M $M $M $M
Australia 595 588 1% 1,183 1,190 -1%
International and Institutional Banking [1 ] 1,432 1,597 -10% 3,029 2,911 4%
New Zealand 171 178 -4% 349 347 1%
Global Wealth [2 ] 850 727 17% 1,577 1,387 14%
GTSO and Group Centre (171) (186) -8% (357) (216) 65%
Cash other operating income 2,877 2,904 -1% 5,781 5,619 3%
----- End of picture text -----

1. Includes a $21 million loss arising on sale of SSI in September 2014.

Includes a $125 million gain on sale of ANZ Trustees in July 2014.

Other operating income – September 2014 Full Year v September 2013 Full Year

143 5,781 5,619 58 67 32 (24) (114) $m FY13 Fee income Foreign exchange Net income from funds Share of associaties Other Global Markets other FY14 Cash other earnings management and profit operating income Cash other operating income insurance operating income

September 2014 v March 2014

Fee income (-$8 million or -1%)

Transaction Banking decreased $8 million primarily due to decreased trade finance volumes in China and Singapore.

Foreign exchange (+$9 million or +21%)

Australia Retail increased $9 million due to seasonally higher card activity.

Net income from funds management and insurance (+$49 million or +8%)

Global Wealth increased $35 million due to strong in-force premium growth and the impact of a Group life plan exit in the March half, partially offset by higher claims.
Retail Asia Pacific increased $8 million mainly due to stronger sales of investment and insurance products in Singapore and Taiwan.

CFO OVERVIEW

Share of associates profit (+$24 million or +10%)

AMMB Holdings Berhad (AMMB) increased $21 million, mainly due to a gain from partial divestment of its insurance businesses.
Bank of Tianjin (BoT) decreased $17 million due to lower earnings, mainly as a result of higher credit provisions and a reduced share of profits from dilution of the Group’s interest.
Shanghai Rural Commercial Bank (SRCB) increased $6 million, mainly due to an impairment of an investment (held by SRCB) recognised in the March 2014 half.
P.T. Bank Pan Indonesia increased $6 million due to higher earnings driven by lending growth.
Metrobank Card Corporation (MCC) increased by $4 million, mainly due to cards lending growth and higher fee income, along with a one-off gain of $2 million from disposal of shares in Visa Inc.

Other income (+$53 million or +59%)

Global Wealth increased $94 million due to a $125 million gain on sale of ANZ Trustees partially offset by a non-recurring insurance settlement gain relating to a legacy NZ Funds Management matter in the March 2014 half.
Asia Partnerships decreased $33 million due to the BoT dilution gain of $12 million (from non-participation in a rights issue) recorded in the March 2014 half and the loss arising from the sale of our investment in SSI ($21 million) in September 2014.
Global Loans decreased $4 million due to the profit on restructuring of structured lease assets recognised in the March 2014 half.

Global Markets income (-$124 million or -10%)

In more difficult market conditions, with lower volatility reducing customer flow and margins, operating income has decreased by 10%.

Capital Markets operating income increased by 11%, as a result of strong client activity across Asian markets.
APEA operating income decreased by 19%, as Asian currency movements and flatter yield curves did not support the strong levels of customer demand for foreign exchange products seen in the March half.
Balance Sheet operating income increased by 3%, primarily due to the effective management of the Group’s interest rate position.

Refer to page 63 for further information.

September 2014 v September 2013

Fee income (+$58 million or +3%)

Transaction Banking increased $23 million off the back of lending growth in APEA ($13 million) and New Zealand ($3 million) and a $6 million increase in non-lending fees.
Retail Asia Pacific increased $30 million, primarily due to growth in fee income from Retail and Transaction Banking.
New Zealand increased $15 million, largely due to movements in exchange rates ($28 million), partially offset by a decrease in income following the sale of EFTPOS in 2013.
Corporate and Commercial Banking increased $12 million, largely driven by growth in Small Business Banking.
Cards and Payments decreased $10 million, primarily as a result of improved customer payment behaviour on consumer credit cards.

Foreign exchange (-$114 million or -55%)

Group Centre decreased $146 million driven primarily by realised losses on foreign currency revenue hedges (offsetting translation gains elsewhere in the Group).
Global Transaction Banking increased $17 million, mainly due to a combination of volume and margin growth in Australia.

Net income from funds management and insurance (+$67 million or +6%)

Global Wealth increased $36 million, primarily due to stronger growth across the Funds Management and Insurance businesses, partially offset by the impact of a Group life plan exit in March 2014.
Retail Asia Pacific increased $13 million, due to stronger sales of investment and insurance products primarily in Singapore, and the weakening of the AUD.

Share of associates profit (+$32 million or +7%)

AMMB increased $22 million, mainly due to a gain from the partial divestment of its insurance businesses.
MCC increased $6 million, primarily due to lending growth in cards, higher fee income and a one-off gain of $2 million from disposal of shares in Visa Inc.
BoT increased $2 million, mainly due to higher earnings from lending growth, partially offset by a reduced share of profits following the dilution of the Group’s interest.
P.T. Bank Pan Indonesia increased $2 million, due to earnings growth, partially offset by the weakening of the IDR.

Other income (+$143 million or +large %)

Global Wealth increased $148 million due to a $125 million gain on sale of ANZ Trustees and a non-recurring insurance settlement gain relating to a legacy NZ Funds Management matter in the March 2014 half.
Asia Partnerships increased $18 million due to the BoT dilution gain of $12 million (from non-participation in a rights issue) in 2014 and the $26 million impairment on SSI in 2013, partially offset by the $21 million loss arising from the sale of our investment in SSI in 2014.

CFO OVERVIEW

Specialised Finance increased $11 million, mainly driven by revaluation of lease assets in Australia.
New Zealand decreased $19 million, primarily due to the gain on sale of EFTPOS New Zealand Limited recorded in 2013.
Global Markets income (+$233 million or +11%)

Growth across most product classes and regions saw operating income increase by 11%:

Sales income increased by 5%, driven by demand for Commodities, Foreign Exchange products and origination activity.
APEA operating income increased 21%, driven by strong growth across Commodities and Fixed Income businesses, as well as very strong customer demand for foreign exchange products in China, Hong and Taiwan during the March half.
Further tightening of credit spreads has benefited the Fixed Income business in Australia and New Zealand.
Within Global Markets, other operating income was impacted by a $75 million decrease from derivative positions offset in net interest income.
Refer to page 63 for further information.

CFO OVERVIEW

Income and expenses, cont’d

==> picture [511 x 129] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Expenses $M $M $M $M
Personnel expenses 2,558 2,530 1% 5,088 4,905 4%
Premises expenses 446 442 1% 888 843 5%
Technology expenses 660 606 9% 1,266 1,122 13%
Restructuring expenses 78 35 large 113 85 33%
Other expenses 732 673 9% 1,405 1,302 8%
Total cash operating expenses 4,474 4,286 4% 8,760 8,257 6%
Total full time equivalent staff (FTE) [1 ] 50,328 49,850 1% 50,328 49,866 1%
----- End of picture text -----

1. In the September 2014 half, the Group migrated onto a single global HR platform. In doing so, the Group revised and standardised the measure of FTE and this resulted in an increase in FTE. Comparative information has been restated. Refer to page 136 for a summary of FTE movements.

==> picture [511 x 115] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Expenses by division $M $M $M $M
Australia 1,557 1,500 4% 3,057 2,967 3%
International and Institutional Banking 1,619 1,596 1% 3,215 2,985 8%
New Zealand 519 514 1% 1,033 960 8%
Global Wealth 531 495 7% 1,026 955 7%
GTSO and Group Centre 248 181 37% 429 390 10%
Total cash operating expenses 4,474 4,286 4% 8,760 8,257 6%
----- End of picture text -----

Operating expenses – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 167] intentionally omitted <==

----- Start of picture text -----

103 8,760
144 28
183 45
8,257
$m
FY13 Personnel Premises Technology Restructuring Other expenses FY14
Cash operating expenses expenses expenses expenses Cash operating
expenses expenses
----- End of picture text -----

September 2014 v March 2014
Personnel expenses increased $28 million (1%) due to seasonally higher leave provision costs and increased project resources.
Premises expenses increased $4 million (1%) due to higher asset write offs.
Technology expenses increased $54 million (9%) with higher depreciation and amortisation, higher software impairment expense and increased data storage costs.
Restructuring expenses increased $43 million (large %) due to productivity and business restructuring initiatives within the Australia and IIB divisions.
Other expenses increased $59 million (9%) primarily due to higher advertising spend, write down of intangible assets in Global Wealth and increased spend on project consultants.
September 2014 v September 2013
Personnel expenses increased $183 million (4%) due to the adverse impact of foreign exchange movements and annual salary increases partially offset by lower temporary staff costs and the benefit of increased utilisation of our hub resources.
Premises expenses increased $45 million (5%) due to rent increases and the full year impact of transition to new buildings in Sydney and New Zealand in 2013, along with the adverse impact of foreign exchange movements.
Technology expenses increased $144 million (13%) with increased depreciation and amortisation, higher data storage and software licence costs and increased use of outsourced providers.
Restructuring expenses increased $28 million (33%) due to the productivity and business restructuring initiatives within the Australia and IIB divisions, partly offset by the completion of “NZ Simplification” in 2013.
Other expenses increased $103 million (8%) primarily due to higher advertising spend, write down of intangible assets in Global Wealth, and GST credits in 2013.

CFO OVERVIEW

Credit risk

Overall asset quality improved during the September 2014 half, with gross impaired assets down $731 million (20%) to $2,889 million at 30 September 2014. The Group continues to maintain a prudent approach to provisioning, with total credit impairment provisions of $3,933 million as at 30 September 2014, a decrease of $380 million (9%) compared to 31 March 2014.

The total credit impairment charge of $461 million decreased by $67 million (13%) compared to the March 2014 half.

==> picture [511 x 193] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Credit impairment charge/(release) $M $M $M $M
Individual credit impairment charge 542 602 -10% 1,144 1,167 -2%
Collective credit impairment charge/(release) (81) (74) 9% (155) 30 large
Total credit impairment charge 461 528 -13% 989 1,197 -17%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Credit impairment charge/(release) $M $M $M $M
Australia 416 403 3% 819 820 0%
International and Institutional Banking 54 161 -66% 215 317 -32%
New Zealand 26 (34) large (8) 37 large
Global Wealth (1) (1) 0% (2) 4 large
GTSO and Group Centre (34) (1) large (35) 19 large
Total credit impairment charge 461 528 -13% 989 1,197 -17%
----- End of picture text -----

==> picture [511 x 127] intentionally omitted <==

----- Start of picture text -----

Individual Credit Impairment Charge
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Individual credit impairment charge by division $M $M $M $M
Australia 413 374 10% 787 771 2%
International and Institutional Banking 75 215 -65% 290 280 4%
New Zealand 50 13 large 63 95 -34%
Global Wealth 1 - n/a 1 2 -50%
GTSO and Group Centre 3 - n/a 3 19 -84%
Total individual credit impairment charge 542 602 -10% 1,144 1,167 -2%
----- End of picture text -----

==> picture [511 x 229] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
New and increased individual credit impairments
Australia 557 557 0% 1,114 1,132 -2%
International and Institutional Banking 151 295 -49% 446 450 -1%
New Zealand 138 112 23% 250 295 -15%
Global Wealth 1 3 -67% 4 4 0%
GTSO and Group Centre 1 - n/a 1 19 -95%
New and increased individual credit impairments 848 967 -12% 1,815 1,900 -4%
Recoveries and writebacks
Australia (144) (183) -21% (327) (361) -9%
International and Institutional Banking (76) (80) -5% (156) (170) -8%
New Zealand (88) (99) -11% (187) (200) -7%
Global Wealth - (3) -100% (3) (2) 50%
GTSO and Group Centre 2 - n/a 2 - n/a
Recoveries and writebacks (306) (365) -16% (671) (733) -8%
Total individual credit impairment charge 542 602 -10% 1,144 1,167 -2%
----- End of picture text -----

 September 2014 v March 2014

The individual credit impairment charge decreased $60 million (10%) primarily due to a large single name provision in IIB during the March 2014 half. This was partially offset by lower recoveries in Australia and New Zealand during the September 2014 half.

 September 2014 v September 2013

The individual credit impairment charge decreased by $23 million (2%) due to an improvement in credit quality primarily in New Zealand, partially offset by lower recoveries in Australia and IIB.

CFO OVERVIEW

==> picture [511 x 244] intentionally omitted <==

----- Start of picture text -----

Collective Credit Impairment Charge
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Collective credit impairment charge/(release) by source $M $M $M $M
Lending growth 61 85 -28% 146 136 7%
Risk profile (42) (190) -78% (232) (43) large
Portfolio mix (10) (10) 0% (20) (29) -31%
Economic cycle and concentration risk adjustment (90) 41 large (49) (34) 44%
Total collective credit impairment charge/(release) (81) (74) 9% (155) 30 large
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Collective credit impairment charge/(release) by division $M $M $M $M
Australia 3 29 -90% 32 49 -35%
International and Institutional Banking (21) (54) -61% (75) 37 large
New Zealand (24) (47) -49% (71) (58) 22%
Global Wealth (2) (1) 100% (3) 2 large
GTSO and Group Centre (37) (1) large (38) - n/a
Total collective credit impairment charge/(release) (81) (74) 9% (155) 30 large
----- End of picture text -----

 September 2014 v March 2014

The collective credit impairment release increased by $7 million from the March 2014 half, driven mainly by releases from economic cycle overlays as a result of improved credit conditions.

The $3 million charge in Australia was primarily due to lending growth being mostly offset by releases from economic cycle overlays. The $21 million release in IIB was due to improved customer credit ratings on a number of customer exposures. The New Zealand release of $24 million and the GTSO & Group Centre release of $37 million were driven by releases from economic cycle overlays that originally related to legacy New Zealand events and global uncertainty respectively.

 September 2014 v September 2013

The collective credit impairment charge decreased $185 million from the September 2013 year, due to releases associated with the crystallisation of individual provisions on a few large IIB exposures, and as a result of upgrades to a number of customer exposures in IIB and New Zealand. In addition, there was a net decrease in the economic cycle overlays.

The $32 million charge in Australia was primarily due to lending growth. The $75 million release in IIB was due to a combination of the crystallisation of individual provisions on a few large exposures and improved customer credit ratings. The New Zealand release of $71 million was driven by improved credit quality and a reduction in the economic cycle overlays held for legacy events, partially offset by lending growth. The GTSO & Group Centre release of $38 million was driven by a release of the economic cycle overlays, that originally related to global uncertainty.

CFO OVERVIEW

Credit risk, cont’d

==> picture [215 x 14] intentionally omitted <==

Provision for credit impairment balance

==> picture [511 x 77] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Collective provision [1 ] 2,757 2,843 2,887 -3% -5%
Individual provision 1,176 1,470 1,467 -20% -20%
Total provision for credit impairment 3,933 4,313 4,354 -9% -10%
----- End of picture text -----

1. The collective provision includes amounts for off-balance sheet credit exposures $613 million at 30 September 2014 (Mar 14: $597 million; Sep 13: $595 million). The impact on the income statement for the full year ended 30 September 2014 was a $1 million charge (Mar 14 half: $8 million release; Sep 13 full year: $37 million charge).

==> picture [215 x 14] intentionally omitted <==

Gross Impaired Assets

==> picture [511 x 323] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Impaired loans 2,682 3,314 3,751 -19% -28%
Restructured items 67 60 341 12% -80%
Non-performing commitments and contingencies 140 246 172 -43% -19%
Gross impaired assets 2,889 3,620 4,264 -20% -32%
Individual provisions
Impaired loans (1,130) (1,396) (1,440) -19% -22%
Non-performing commitments and contingencies (46) (74) (27) -38% 70%
Net impaired assets 1,713 2,150 2,797 -20% -39%
Gross impaired assets by division
Australia 1,253 1,463 1,685 -14% -26%
International and Institutional Banking 1,093 1,471 1,758 -26% -38%
New Zealand 532 668 765 -20% -30%
Global Wealth 11 18 30 -39% -63%
GTSO and Group Centre - - 26 n/a -100%
Gross impaired assets 2,889 3,620 4,264 -20% -32%
Gross impaired assets by size of exposure
Less than $10 million 1,896 2,204 2,235 -14% -15%
$10 million to $100 million 683 897 1,491 -24% -54%
Greater than $100 million 310 519 538 -40% -42%
Gross impaired assets 2,889 3,620 4,264 -20% -32%
----- End of picture text -----

 September 2014 v March 2014

Gross impaired assets decreased by 20% primarily due to improved portfolio credit quality resulting in lower levels of new impairment, combined with higher write-offs in IIB and Australia Division during the September 2014 half. The Group has an individual provision coverage ratio on impaired assets of 40.7% at 30 September 2014, up from 40.6% at 31 March 2014.

 September 2014 v September 2013

Gross impaired assets decreased by 32% primarily due to improved portfolio credit quality resulting in lower levels of new impairment, combined with higher write-offs in IIB and Australia Division. The Group has an individual provision coverage ratio on impaired assets of 40.7% at 30 September 2014, up from 34.4% at 30 September 2013.

CFO OVERVIEW

Credit risk, cont’d

==> picture [511 x 206] intentionally omitted <==

----- Start of picture text -----

New Impaired Assets
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Impaired loans 1,303 1,431 -9% 2,734 3,238 -16%
Restructured items 7 10 -30% 17 37 -54%
Non-performing commitments and contingencies 17 100 -83% 117 12 large
Total new impaired assets 1,327 1,541 -14% 2,868 3,287 -13%
New impaired assets by division
Australia 830 758 9% 1,588 1,722 -8%
International and Institutional Banking 183 516 -65% 699 899 -22%
New Zealand 308 263 17% 571 631 -10%
Global Wealth 6 4 50% 10 9 11%
GTSO and Group Centre - - n/a - 26 -100%
Total new impaired assets 1,327 1,541 -14% 2,868 3,287 -13%
----- End of picture text -----

 September 2014 v March 2014

New impaired assets decreased 14% primarily due to large single name provisions in IIB during the March 2014 half which did not recur in the September 2014 half. This was partially offset by increases in the Australia Corporate & Commercial Banking and the New Zealand Commercial portfolios.

 September 2014 v September 2013

New impaired assets decreased 13% due to portfolio credit quality improving across most divisions, with lower new impaired assets in the Australia Business Banking and New Zealand Retail portfolios, as well as non-recurrence of large single name impairments in IIB.

==> picture [514 x 115] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Ageing analysis of net loans and advances Sep 14 Sep 14
that are past due but not impaired Sep 14 Mar 14 Sep 13 v. Mar14 v. Sep 13
1-5 days 3,082 3,345 3,096 -8% 0%
6-29 days 4,559 4,660 4,416 -2% 3%
30-59 days 1,624 2,037 1,506 -20% 8%
60-89 days 1,005 980 927 3% 8%
>90 days 1,982 2,061 1,818 -4% 9%
Total 12,252 13,083 11,763 -6% 4%
----- End of picture text -----

 September 2014 v March 2014

The 90 days past due but not impaired fell by 4%, primarily within the Australia home loans and New Zealand wholesale portfolio. The 30-59 days delinquencies decreased 20% due to higher pending loan extension approvals experienced in the March 2014 half.

 September 2014 v September 2013

The 90 days past due but not impaired increased by 9%, primarily within the Australia home loans portfolio. This was driven by a combination of portfolio growth as well as changes in the treatment of hardship ageing for the September 2014 year.

CFO OVERVIEW

Income tax expense

==> picture [511 x 63] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Income tax expense on cash profit 1,367 1,333 3% 2,700 2,435 11%
Effective tax rate (cash profit) 27.5% 27.5% 0% 27.5% 27.2% 1%
----- End of picture text -----

September 2014 v March 2014

The effective tax rate was unchanged at 27.5%.The impact of a higher proportion of Australian profits in the September 2014 half was largely offset by the tax associated with the sale of ANZ Trustees and SSI.

September 2014 v September 2013

The effective tax rate increased 0.3%. The impact of the Global Wealth non-recurring tax consolidation adjustment recognised in 2013 is largely offset by a higher proportion of offshore profits in 2014.

Impact of exchange rate movements/revenue hedges

==> picture [517 x 192] intentionally omitted <==

----- Start of picture text -----

Half Year Sep 2014 Full Year Sep 2014
v. Half Year Mar 2014 v. Full Year Sep 2013
FX FX FX FX
FX unadjusted adjusted Impact FX unadjusted adjusted Impact
% growth % growth $M % growth % growth $M
Net interest income 4% 4% (10) 8% 5% 317
Other operating income -1% 0% (16) 3% 3% 19
Operating income 3% 3% (26) 6% 5% 336
Operating expenses 4% 5% 15 6% 3% (222)
Profit before credit impairment and income tax 1% 1% (11) 7% 6% 114
Credit impairment charge -13% -13% 1 -17% -18% (13)
Profit before income tax 2% 3% (10) 10% 9% 101
Income tax expense 3% 3% 1 11% 10% (18)
Non-controlling interests 0% 0% - 20% 20% -
Cash profit 2% 3% (9) 10% 8% 83
----- End of picture text -----

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

==> picture [517 x 167] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 7,033 6,754 4% 13,797 13,089 5%
Other operating income 2,877 2,888 0% 5,781 5,638 3%
Operating income 9,910 9,642 3% 19,578 18,727 5%
Operating expenses (4,474) (4,271) 5% (8,760) (8,479) 3%
Profit before credit impairment and income tax 5,436 5,371 1% 10,818 10,248 6%
Credit impairment charge (461) (527) -13% (989) (1,210) -18%
Profit before income tax 4,975 4,844 3% 9,829 9,038 9%
Income tax expense (1,367) (1,332) 3% (2,700) (2,453) 10%
Non-controlling interests (6) (6) 0% (12) (10) 20%
Cash profit (FX adjusted) 3,602 3,506 3% 7,117 6,575 8%
----- End of picture text -----

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

After taking into account the realised losses on hedging arrangements, movements in average exchange rates resulted in an increase of $83 million in the Group’s cash profit over the prior year. Realised losses on hedges reduced cash profit by $130 million (pre-tax) compared to the prior year. Hedge gains/losses are recorded against other operating income in GTSO & Group Centre. Excluding the impact of hedges, other operating income (FX unadjusted) would have increased 5% on the prior year.

CFO OVERVIEW

Earnings related hedges

The Group has taken out economic hedges against New Zealand Dollar and US Dollar (and USD correlated) revenue and expense streams. New Zealand dollar exposure relates to the New Zealand geography and USD exposure relates to APEA. Details of these hedges are set out below.

==> picture [511 x 127] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 13
NZD Economic hedges $M $M $M $M
Net open NZD position (notional principal) [1 ] 2,042 2,275 2,042 1,549
Amount taken to income (pre tax statutory basis) [2 ] 107 (104) 3 (178)
Amount taken to income (pre tax cash basis) [3 ] (78) (71) (149) (42)
USD Economic hedges
Net open USD position (notional principal) [1 ] 797 900 797 1,294
Amount taken to income (pre tax statutory basis) [2 ] (25) (5) (30) (75)
Amount taken to income (pre tax cash basis) [3 ] (4) (15) (19) 4
----- End of picture text -----

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 2014, the following hedges are in place to partially hedge future earnings against adverse movements in exchange rates:

NZD 2.3 billion at a forward rate of approximately NZD 1.12 / AUD.
USD 0.7 billion at a forward rate of approximately USD 0.91 / AUD.

During the September 2014 half:

NZD 0.9 billion of economic hedges matured and a realised loss of $78 million (pre-tax) was recorded in cash profit.
USD 0.4 billion of economic hedges matured and a realised loss of $4 million (pre-tax) was recorded in cash profit.
An unrealised gain of $164 million (pre-tax) on the outstanding NZD and USD economic hedges was recorded in the statutory income statement during the half and has been treated as an adjustment to statutory profit as these are hedges of future NZD and USD revenues.

During the September 2014 full year:

NZD 1.7 billion of economic hedges matured and a realised loss of $149 million (pre-tax) was recorded in cash profit.
USD 0.8 billion of economic hedges matured and a realised loss of $19 million (pre-tax) was recorded in cash profit.
An unrealised gain of $141 million (pre-tax) on the outstanding NZD and USD economic hedges was recorded in the statutory income statement during the year and has been treated as an adjustment to statutory profit as these are hedges of future NZD and USD revenues.

==> picture [510 x 197] intentionally omitted <==

----- Start of picture text -----

Earnings per share [1 ]
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Cash earnings per share (cents)
Basic 131.5 128.7 2% 260.3 238.3 9%
Diluted 126.5 124.3 2% 250.6 231.0 8%
Cash weighted average number of ordinary shares (M) [2 ]
Basic 2,736.7 2,728.0 0% 2,732.2 2,722.1 0%
Diluted 2,945.2 2,918.8 1% 2,934.4 2,904.7 1%
Cash profit ($M) 3,602 3,515 2% 7,117 6,492 10%
Preference share dividends ($M) (3) (3) 0% (6) (6) 0%
Cash profit less preference share dividends ($M) 3,599 3,512 2% 7,111 6,486 10%
Diluted cash profit less preference share dividends ($M) 3,726 3,628 3% 7,354 6,710 10%
----- End of picture text -----

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

2. Includes Treasury shares held in Global Wealth.

CFO OVERVIEW

Dividends

==> picture [510 x 134] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Dividend per ordinary share (cents)
Interim (fully franked) n/a 83 n/a 83 73 14%
Final (fully franked) [1 ] 95 n/a n/a 95 91 4%
Total (fully franked) 95 83 14% 178 164 9%
Ordinary share dividends used in payout ratio ($M) [2 ] 2,619 2,278 15% 4,897 4,500 9%
Cash profit ($M) 3,602 3,515 2% 7,117 6,492 10%
Less: Preference share dividends paid (3) (3) 0% (6) (6) 0%
Ordinary share dividend payout ratio (cash basis) [2 ] 72.8% 64.9% 68.9% 69.4%
----- End of picture text -----

1. 2014 final dividend is proposed.

Dividend payout ratio is calculated using proposed 2014 final dividend of $2,619 million, which is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2014 half and September 2013 full year are calculated using actual dividend paid of $2,278 million and $4,500 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 95 cents be paid on each eligible fully paid ANZ ordinary share on 16 December 2014. The proposed 2014 final dividend will be fully franked for Australian tax purposes and New Zealand imputation credits of NZD 12 cents per ordinary share will also be attached.

Economic profit

==> picture [511 x 142] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Statutory profit attributable to shareholders of the Company 3,879 3,392 14% 7,271 6,310 15%
Adjustments between statutory profit and cash profit (277) 123 large (154) 182 large
Cash Profit 3,602 3,515 2% 7,117 6,492 10%
Economic credit cost adjustment (298) (256) 16% (554) (376) 47%
Imputation credits 647 597 8% 1,244 1,248 0%
Economic return 3,951 3,856 2% 7,807 7,364 6%
Cost of capital (2,573) (2,484) 4% (5,057) (4,644) 9%
Economic profit 1,378 1,372 0% 2,750 2,720 1%
----- End of picture text -----

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. This is used for internal management purposes and is not subject to audit by the external auditor.

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 value of imputation credits to our shareholders is recognised, measured at 70% of Australian tax. The cost of capital is a major component of economic profit. At an ANZ 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 for the September half increased $6 million against the March half due to improved cash profit and higher imputation credits, partially offset by a higher economic credit cost adjustment and higher capital levels.

Economic profit for the 2014 year increased 1% against the 2013 year due to improved cash profit, partially offset by higher economic credit cost adjustment, lower imputation credits and higher capital levels.

CFO OVERVIEW

==> picture [511 x 260] intentionally omitted <==

----- Start of picture text -----

Condensed balance sheet
As at ($B) Movement
Sep 14 Sep 14
Assets Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Cash / Settlement balances owed to ANZ / Collateral paid 58.3 56.1 51.0 4% 14%
Trading and available-for-sale assets 80.6 73.5 69.6 10% 16%
Derivative financial instruments 56.4 43.8 45.9 29% 23%
Net loans and advances 521.8 509.3 483.3 2% 8%
Investment backing policy liabilities 33.6 33.2 32.1 1% 5%
Other 21.4 21.9 21.1 -2% 1%
Total assets 772.1 737.8 703.0 5% 10%
Liabilities
Settlement balances owed by ANZ / Collateral received 15.7 12.0 12.6 31% 25%
Deposits and other borrowings 510.1 498.3 466.9 2% 9%
Derivative financial instruments 52.9 45.9 47.5 15% 11%
Debt issuances 80.1 73.6 70.4 9% 14%
Policy liabilities and external unit holder liabilities 37.7 36.7 35.9 3% 5%
Other 26.3 24.3 24.1 8% 9%
Total liabililities 722.8 690.8 657.4 5% 10%
Total equity 49.3 47.0 45.6 5% 8%
----- End of picture text -----

September 2014 v March 2014
Trading and available-for-sale assets increased $7 billion primarily due to larger holdings in the prime liquidity portfolio.
Derivative financial assets and liabilities increased by $13 billion and $7 billion respectively. This was due to increased demand for foreign exchange derivatives and commodity derivatives, as well as the impact of changes in yield curves and foreign exchange rates.
Net loans and advances increased $13 billion, primarily due to a $10 billion increase in the Australia division from higher market share in variable home loans and small business lending, and a $5 billion increase in IIB due to growth in fixed rate institutional loans and reverse repos. This was partially offset by a $2 billion decrease in New Zealand division, primarily due to exchange rate movements.
Deposits and other borrowings increased $12 billion, driven by a $5 billion increase in at call customer deposit products in Australia division and a $12 billion increase in IIB relating to Transaction Banking and Global Markets deposits. This was partially offset by a $6 billion decrease in other borrowings in GTSO & Group Centre.
September 2014 v September 2013
Net loans and advances increased $39 billion, driven by a $16 billion increase in the Australia division from market share growth in variable home loans and small business loans, an $18 billion increase in IIB due to strong refinancing levels in Global Loans and strong growth in Trade Finance, as well as a $5 billion increase in the New Zealand division due to market share growth and stronger economic conditions.
Deposits and other borrowings increased $43 billion, driven by a $9 billion increase in at call deposit products in the Australia division, a $26 billion increase in IIB relating to Transaction Banking and Global Markets deposits, and a $6 billion increase in the New Zealand division due to market share growth in customer deposits.

CFO OVERVIEW

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 (GFC) 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 based on 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 in the following:

central bank deposits with the US Federal Reserve, Bank of England and Bank of Japan of $21.8 billion;
Australian Commonwealth and State Government securities of $8.4 billion and gold & precious metals of $3.0 billion, and
cash and other securities to satisfy local country regulatory liquidity requirements which are not included in the liquid assets below.

==> picture [512 x 208] intentionally omitted <==

----- Start of picture text -----

As at
Sep 14 Mar 14 Sep 13
Prime liquidity portfolio (Market values post haircut) [1 ] $B $B $B
Australia 31.7 28.9 27.8
New Zealand 11.4 12.5 11.1
United States 4.3 3.8 2.1
United Kingdom 5.8 5.2 5.1
Singapore 2.9 3.2 3.1
Hong Kong 1.2 0.8 0.6
Japan 1.3 1.3 1.4
Total excluding internal Residential Mortgage Backed Securities (RMBS) 58.6 55.7 51.2
Internal Residential Mortgage Backed Securities (Australia) 43.5 29.6 35.7
Internal Residential Mortgage Backed Securities (New Zealand) 5.1 5.1 3.7
Total prime portfolio 107.2 90.4 90.6
Other eligible securities including gold and cash on deposit with central banks 33.2 26.6 31.0
Total liquidity portfolio 140.4 117.0 121.6
----- End of picture text -----

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

Wholesale Funding

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

$23.9 billion of term wholesale debt (with a remaining term greater than one year as at 30 September 2014) was issued during 2014. In addition, $1.6 billion of ANZ Capital Notes were issued. All wholesale funding needs were comfortably met. The weighted average tenor of new term debt was 4.9 years (2013: 4.3 years). The average term debt portfolio costs are slowly reducing, however, remain substantially above pre-crisis levels.

CFO OVERVIEW

Liquidity risk, cont’d

The following tables show the Group’s total funding composition:

==> picture [512 x 588] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Customer deposits and other liabilities [1 ]
Australia 161,108 156,310 152,371 3% 6%
International and Institutional Banking 182,701 172,023 163,151 6% 12%
New Zealand 51,360 51,749 46,494 -1% 10%
Global Wealth 13,844 12,699 11,569 9% 20%
GTSO and Group Centre (5,294) (4,759) (4,756) 11% 11%
Customer deposits 403,719 388,022 368,829 4% 9%
Other funding liabilities [2 ] 14,502 10,895 13,158 33% 10%
Total customer liabilities (funding) 418,221 398,917 381,987 5% 9%
Wholesale funding [3 ]
Debt issuances [4 ] 79,291 72,747 69,570 9% 14%
Subordinated debt 13,607 13,226 12,804 3% 6%
Certificates of deposit 52,754 57,707 58,276 -9% -9%
Commercial paper issued 15,152 16,041 12,255 -6% 24%
Other wholesale borrowings [5 ] 42,460 43,871 38,813 -3% 9%
Total wholesale funding 203,264 203,592 191,718 0% 6%
Shareholders' Equity (excl preference shares) 48,413 46,167 44,732 5% 8%
Total Funding 669,898 648,676 618,437 3% 8%
As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Wholesale funding maturity [3,6]
Short term wholesale funding (excluding Central Banks) [7 ] 73,470 82,937 73,650 -11% 0%
Central Bank deposits 18,841 17,512 15,374 8% 23%
Total short term wholesale funding 92,311 100,449 89,024 -8% 4%
Long term wholesale funding
- Less than 1 year residual maturity 22,968 18,695 20,292 23% 13%
- Greater than 1 year residual maturity 81,110 77,127 75,240 5% 8%
Hybrid debt including preference shares 6,875 7,321 7,162 -6% -4%
Total wholesale funding and preference share capital 203,264 203,592 191,718 0% 6%
excluding shareholders' equity
Total funding maturity
Total short term wholesale funding 14% 15% 15%
Long term wholesale funding
- Less than 1 year residual maturity 3% 3% 3%
- Greater than 1 year residual maturity 12% 12% 12%
Total customer liabilities (funding) 63% 62% 62%
Shareholders' equity and hybrid debt 8% 8% 8%
Total Funding 100% 100% 100%
----- End of picture text -----

1. Includes term deposits, other deposits and an adjustment recognised in Group Centre to eliminate Global Wealth investments in ANZ deposit products.

Includes interest accruals, payables and other liabilities, provisions and net tax provisions, excluding other liabilities in Global Wealth. 3.

Excludes liability for acceptances as they do not provide net funding.

Excludes term debt issued externally by Global Wealth. 5.

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

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.

RBA open-repo arrangement netted down by the exchange settlement account cash balance.

CFO OVERVIEW

Capital Management

==> picture [511 x 121] intentionally omitted <==

----- Start of picture text -----

As at
APRA Basel 3 Internationally Comparable Basel 3 [1 ]
Sep 14 Mar 14 Sep 13 Sep 14 Mar 14 [2 ] Sep 13 [2 ]
Capital Ratios
Common Equity Tier 1 8.8% 8.3% 8.5% 12.7% 12.2% 12.7%
Tier 1 10.7% 10.3% 10.4% 15.0% 14.7% 15.1%
Total capital 12.7% 12.1% 12.2% 17.5% 16.8% 17.3%
Risk weighted assets ($B) 361.5 360.7 339.3 295.1 293.2 273.4
----- End of picture text -----

Previously disclosed International Harmonised capital ratios have been replaced with Internationally Comparable capital ratios as per the methodology in the “Australian Bankers’ Association: International comparability of capital ratios of Australia’s major banks” (August 2014) report prepared by PwC Australia.
Restated for change in methodology to Internationally Comparable capital ratios.

APRA Basel 3 Common Equity Tier 1 (CET1) – September 2014 v March 2014

==> picture [518 x 168] intentionally omitted <==

----- Start of picture text -----

100
(11)
(5)
15 8.79
Movement (52)
In bps 8.32
Mar-14 [1] Cash NPAT RWA Business Capital Dividends (net of Other Sep-14
Usage Deductions [2] DRP) [3]
----- End of picture text -----

The 31 March 2014 CET1 ratio of 8.33% has been restated to 8.32% following clarification with APRA on the treatment of a deduction.
Capital Deductions represents the movement in retained earnings in deconsolidated entities, capitalised software and other intangibles in the period.
12.4 million ordinary shares were issued under the Dividend Reinvestment Plan and Bonus Option Plan for the 2014 interim dividend.
September 2014 v March 2014

ANZ’s CET1 ratio increased 47 bps to 8.8% in the half to September 2014 driven by:

Solid capital generation from cash earnings which more than offset RWA growth and other business capital deductions. Net organic capital generation is 84 bps or $3.0 billion.
Payment of the March 2014 Interim Dividend (net of shares issued under the DRP) reduced CET1 ratio by 52 bps whilst maintaining strong capital position as at September 2014.
Other impacts of 15 bps mainly due to higher non-cash earnings impacts, lower net deferred tax asset balance and benefits from data and methodology changes in RWA calculations.
September 2014 v September 2013

ANZ’s CET1 ratio increased 31 bps to 8.8% in the full year to September 2014 driven by:

Net organic capital generation is 144 bps or $4.8 billion on the back of full year cash earnings of $7.1 billion, partially offset by RWA growth and other business capital deductions.
The above is offset by payment of the September 2013 Final Dividend and March 2014 Interim Dividend (net of shares issued under the DRP) which reduces CET1 ratio by 128 bps.
Other impacts of 15 bps mainly due to lower net deferred tax assets (DTA) balance and net benefits from capital initiatives and data and methodology changes in RWA calculations.

CFO OVERVIEW

APRA to Internationally Comparable[1] Common Equity Tier 1 (CET1) – September 2014

==> picture [518 x 194] intentionally omitted <==

----- Start of picture text -----

160 12.73
36
38
38
25
81 16
Movement
8.79
in bps
Sep-14 10% allowance Up to 5% Other capital Mortgage 20% IRRBB RWA Specialised Corporate EAD, Sep-14
APRA CET1 for investments allowance for items LGD floor and (APRA Pillar 1 Lending LGD and Other Internationally
in insurance and deferred tax others approach) (Advanced RWA Comparable
banking assets Treatment) Adjustments CET1
associates
----- End of picture text -----

ANZ’s interpretation of the regulations documented in the Basel Committee publications; “Basel 3: A global regulatory framework for more resilient banks and banking systems” (June 2011) and “International Convergence of Capital Measurement and Capital Standards” (June 2006). Also includes differences identified in PwC’s report on International Comparability of Capital Ratios of Australia’s Major Banks” (August 2014), commissioned by the ABA.

The above provides a reconciliation of the CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Comparable 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. The International Comparable Basel 3 CET1 ratio incorporates differences between APRA and both the Basel Committee Basel 3 framework (including differences identified in the March 2014 Basel Committees Regulatory Consistency Assessment Programme (RCAP) on Basel 3 implementation in Australia) and its application in major offshore jurisdictions.

The material differences in APRA’s Basel 3 and Internationally Comparable Basel 3 ratios include:

Deductions

Investment in insurance and banking associates – APRA requires full deduction against CET1. On an Internationally Comparable basis, these investments are subject to a concessional threshold before a deduction is required.
Deferred tax assets – A full deduction is required from CET1 for deferred tax assets (DTA) relating to temporary differences. On an Internationally Comparable basis, this is first subject to a concessional threshold before the deduction is required.
Capitalised expenses net of deferred fee income – Adjustments to CET1 for capitalised expenses and deferred fee income are not required under an Internationally Comparable basis.

Risk Weighted Assets (RWA)

IRRBB RWA – APRA requires inclusion of Interest Rate Risk in the Banking Book (IRRBB) within the RWA base for the CET1 ratio calculation. This is not required under an Internationally Comparable basis.
Mortgages RWA – APRA imposes a floor of 20% on the downturn Loss Given Default (LGD) used in credit RWA calculations for residential mortgages. The Internationally Comparable Basel 3 framework only requires downturn LGD floor of 10%.
Specialised Lending - APRA requires the supervisory slotting approach be used in determining credit RWA for specialised lending exposures. The Internationally Comparable basis allows for the advanced internal ratings based approach to be used when calculating RWA for these exposures.
Unsecured Corporate Lending LGD – Adjustment to align ANZ’s unsecured corporate lending LGD to 45% to be consistent with banks in other jurisdictions. The 45% LGD rate is also used in the Foundation Internal Ratings-based approach (FIRB).
Undrawn Corporate Lending Exposure at Default (EAD) – To adjust ANZ’s credit conversion factors (CCF) for undrawn corporate loan commitments to 75% (used in FIRB approach) to align with banks in other jurisdictions.

CFO OVERVIEW

Other regulatory developments

Financial System Inquiry (FSI)

The Federal Government announced on 20 November 2013 the appointment of Mr David Murray AO to head of an inquiry into Australia's financial system. On 20 December 2013, the Government announced the terms of reference for the Inquiry saying that "The Inquiry is charged with examining how the financial system could be positioned to best meet Australia's evolving needs and support Australia's economic growth".

ANZ made an initial submission to the Inquiry on 31 March 2014. The Inquiry then released its Interim Report on 15 July 2014 and invited interested parties to make further submissions relating to the issues raised in the report. ANZ has been actively engaged in contributing to the Inquiry's deliberations and provided a second submission on 26 August 2014. The Inquiry is expected to release its final report to the Government in November 2014.

Liquidity Ratios

The Basel 3 Liquidity changes include the introduction of two liquidity ratios to measure liquidity risk (the Liquidity Coverage Ratio (LCR) in 2015 and the Net Stable Funding Ratio (NSFR), expected implementation in 2018). A component of the liquidity requirements under the new standards will be met via the Committed Liquidity Facility (CLF) from the Reserve Bank of Australia (RBA). The Group remains well placed to meet these requirements.

The Basel 3 revised standard on NSFR, released in January 2014, is currently undergoing a global review with the expectation of it being implemented in 2018.

Domestic Systemically Important Bank (D-SIB) Framework

APRA has released details of its D-SIB framework for implementation in Australia and has classified ANZ and three other major Australian banks as domestic systemically important banks. As a result a Capital Conservation Buffer (CCB) will be applied to the four major Australian banks increasing capital requirements by 100 basis points from 1 January 2016, further strengthening the capital position of Australia’s D-SIBs. ANZ’s current capital position is already in excess of APRA’s requirements including the D-SIB overlay. The Group is well placed for D-SIB implementation in January 2016.

Composition of Level 2 ADI Group

APRA provided further clarification to the definition of the Level 2 Authorised Deposit-Taking Institution (ADI) group, where subsidiary intermediate holding companies are now considered part of the Level 2 Group.

The above clarification results in the phasing out, over time, of capital benefits arising from the debt issued by ANZ Wealth Australia Limited (ANZWA). As at 30 September 2014, ANZWA has $805m of debt outstanding which is equivalent to approximately 22bps of CET1. APRA has approved transitional arrangements, in line with the existing maturity profile of the debt in June 2015 ($405m) and March 2016 ($400m). As a result, there is no immediate impact on ANZ’s capital position and the Group is well placed to manage the future transitional impact through organic capital generation.

Level 3 Conglomerates (“Level 3”)

In August 2014, APRA announced its planned framework for the supervision of Conglomerates Group (Level 3) which includes updated Level 3 capital adequacy standards. These standards will regulate a bancassurance group such as ANZ as a single economic entity with minimum capital requirements and additional monitoring on risk exposure levels.

APRA has deferred a decision on the implementation date as well as the final form of the Level 3 framework until the recommendations of the FSI and the Government’s response to them have been announced and considered by APRA. APRA has committed to a minimum transition period of 12 months for affected institutions to comply with the new requirements once an implementation date is established.

Based upon current draft of the Level 3 standards covering capital adequacy, group governance, risk management and risk exposures, ANZ is not expecting any material impact on its operations.

APRA Discussion Paper on Disclosure Reforms

In September 2014, APRA released a consultation package for discussion on the proposed implementation of the internationally agreed disclosure framework on the leverage ratio, liquidity coverage ratio and the identification of potential global systemically important banks (G-SIBs). APRA will consider submissions to these proposed requirements (submissions to APRA closed on 31 October 2014) before finalising the standards for implementation from 1 January 2015.

Leverage Ratio

APRA’s draft leverage ratio will apply to Australian authorised deposit-taking institutions (ADIs) using internal ratings based (IRB) approach to Credit Risk Weighted Assets. Leverage ratio requirements are included in the Basel Committee on Banking Supervision (BCBS) Basel 3 capital framework as a supplement to the current risk based capital requirements and is intended to restrict the build-up of excessive leverage in the banking system.

In the draft requirements, APRA has maintained the BCBS calculation of the leverage ratio of Tier 1 Capital expressed as a percentage of Exposure Measure. However, APRA has not committed to implementing a minimum leverage ratio requirement at this stage, pending BCBS intention to further analyse and calibrate the requirements before introducing the leverage ratio as a Pillar 1 requirement in 2018. The current BCBS minimum requirement is 3%.

Public disclosure of the leverage ratio for Australian IRB ADIs will be included in the first financial report after 1 January 2015, with subsequent disclosures published on a quarterly basis. Explanation of key drivers of material changes in the ADIs leverage ratio between the previous and current reporting periods is also required.

CFO OVERVIEW

Liquidity Coverage Ratio (LCR) disclosures

The proposed LCR external disclosures will formally begin from March 2015, and are largely as expected and in line with the previously released Basel proposals. The LCR will be externally disclosed from 31st March 2015 reporting date, and for each subsequent financial reporting period thereafter. The disclosure will be the average of the previous quarter rather than a spot LCR, and will represent the position of the Level 2 entity.

Globally Systemically Important Bank (G-SIB) indicators disclosures

APRA proposes that the four major Australian ADIs report a set of 12 financial indicators used in the G-SIB framework to identify banks that should be designated as systemically important from a global perspective. These indicators reflects the size, interconnectedness, level of cross jurisdictional activities and complexity of the ADIs which are then used to calculate each ADI’s ‘systemicness’ score. ADIs identified as G-SIBs will be imposed with higher loss absorbency (HLA) requirements in the form of additional CET1 capital. As at reporting date, no Australian ADIs (ANZ included) are considered globally systemically important.

Under current draft requirements, major Australian ADIs must disclose the 12 indicators from 2015 on an annual basis. The indicator values are to be reported as at an ADI’s financial year-end, no later than four months after the date on which the indicator values are based. The disclosures can either be included in an ADI’s annual financial report or in the ‘Regulatory Disclosures’ section of an ADI’s website.

CFO OVERVIEW

Investment spend

Investment spend includes expenditure that develops and enhances the Group's infrastructure to meet business and strategic objectives and to improve capabilities and efficiencies. In 2014, the Group continued to invest strongly with spend of $1,160 million. The reduction compared to 2013 is partly due to efficiency savings from increased utilisation of our Hubs and outsourcing partners. The "Banking on Australia" program continues to be a key focus, building digital and data analytic capabilities. IIB’s investment included the implementation of the core banking system in Hong Kong and continued development of our Transaction Banking and Markets capabilities. Risk and Compliance remains a significant focus with a number of regulatory requirements across the region and investment in technology infrastructure and security.

==> picture [510 x 189] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Expensed investment spend 163 161 1% 324 385 -16%
Capitalised investment spend 470 366 28% 836 884 -5%
Investment spend 633 527 20% 1,160 1,269 -9%
Comprising Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Growth 226 229 -1% 455 522 -13%
Transformation and productivity 159 104 53% 263 255 3%
Risk and compliance 171 137 25% 308 338 -9%
Maintenance and infrastructure 77 57 35% 134 154 -13%
Investment spend 633 527 20% 1,160 1,269 -9%
----- End of picture text -----

CFO OVERVIEW

Software capitalisation

As at 30 September 2014, the Group’s intangibles included $2,533 million in relation to costs incurred in acquiring and developing software. Details are set out in the table below:

==> picture [510 x 366] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Balance at start of period 2,332 2,170 7% 2,170 1,762 23%
Software capitalised during the period 415 362 15% 777 780 0%
Amortisation during the period (221) (205) 8% (426) (383) 11%
Software impaired/written-off (14) (1) large (15) (8) 88%
Foreign exchange differences 21 6 large 27 19 42%
Total capitalised software 2,533 2,332 9% 2,533 2,170 17%
Capitalised cost analysis by Division Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Australia 115 104 11% 219 202 8%
International and Institutional Banking 153 94 63% 247 244 1%
New Zealand 22 11 100% 33 16 large
Global Wealth 16 19 -16% 35 51 -31%
GTSO and Group Centre 109 134 -19% 243 267 -9%
Total 415 362 15% 777 780 0%
Net book value by Division Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Australia 553 493 12% 553 437 27%
International and Institutional Banking 998 904 10% 998 880 13%
New Zealand 53 40 33% 53 32 66%
Global Wealth 93 101 -8% 93 97 -4%
GTSO and Group Centre 836 794 5% 836 724 15%
Total 2,533 2,332 9% 2,533 2,170 17%
----- End of picture text -----

CFO OVERVIEW

This page has been left blank intentionally

SEGMENT REVIEW

Section 5 – Segment Review

Segment performance

Australia International and Institutional Banking (IIB) New Zealand Global Wealth Global Technology, Services and Operations (GTSO) and 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. The IIB and Global Wealth divisions are coordinated globally. GTSO and Group Centre provide support to the operating divisions, including technology, operations, shared services, property, risk management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre also includes Group Treasury and Shareholder Functions.

During the September half:

Operations, Technology, Property, and certain enablement functions supporting the operating divisions (including Human Resources, Risk, Finance and Legal) were transferred from the operating divisions to GTSO and Group Centre. This change aligns with our strategy of building on common infrastructure with an enterprise focus. Comparative information has been restated; and
The Group migrated onto a single Global Human Resources platform. In doing so, the Group revised and standardised the measure of FTE and this resulted in an increase in FTE. Comparative information has been restated.

There have been no other major structure changes, however certain prior period comparatives have been restated as a result of changes to customer segmentation.

The Segment Review section is reported on a cash profit basis.

==> picture [516 x 171] intentionally omitted <==

----- Start of picture text -----

September 2014 Half Year
International &
Institutional GTSO and
AUD M Australia Banking New Zealand Global Wealth Group Centre Group
Net interest income 3,616 2,006 1,102 87 222 7,033
Other operating income 595 1,432 171 850 (171) 2,877
Operating income 4,211 3,438 1,273 937 51 9,910
Operating expenses (1,557) (1,619) (519) (531) (248) (4,474)
Profit before credit impair't and income tax 2,654 1,819 754 406 (197) 5,436
Credit impairment (charge)/release (416) (54) (26) 1 34 (461)
Profit before income tax 2,238 1,765 728 407 (163) 4,975
Income tax expense and non-controlling interests (669) (434) (203) (108) 41 (1,373)
Cash profit 1,569 1,331 525 299 (122) 3,602
----- End of picture text -----

March 2014 Half Year

==> picture [516 x 159] intentionally omitted <==

----- Start of picture text -----

International &
Institutional GTSO and
AUD M Australia Banking New Zealand Global Wealth Group Centre Group
Net interest income 3,429 1,980 1,060 80 215 6,764
Other operating income 588 1,597 178 727 (186) 2,904
Operating income 4,017 3,577 1,238 807 29 9,668
Operating expenses (1,500) (1,596) (514) (495) (181) (4,286)
Profit before credit impair't and income tax 2,517 1,981 724 312 (152) 5,382
Credit impairment (charge)/release (403) (161) 34 1 1 (528)
Profit before income tax 2,114 1,820 758 313 (151) 4,854
Income tax expense and non-controlling interests (635) (460) (213) (87) 56 (1,339)
Cash profit 1,479 1,360 545 226 (95) 3,515
----- End of picture text -----

September 2014 Half Year vs March 2014 Half Year

September 2014 Half Year vs March 2014 Half Year

	International &
	Institutional	GTSO and
AUD M Net interest income Other operating income	Australia Banking New Zealand Global Wealth Group Centre Group 5% 1% 4% 9% 3% 4% 1% -10% -4% 17% -8% -1%
Operating income	5% -4% 3% 16%	76%	3%
Operating expenses	4% 1% 1% 7%	37%	4%
Profit before credit impair't and income tax Credit impairment (charge)/release	5% -8% 4% 30% 3% -66% large 0%	30% 1% large -13%
Profit before income tax	6% -3% -4% 30%	8%	2%
Income tax expense and non-controllinginterests	5% -6% -5% 24%	-27% 3%
Cash profit	6% -2% -4% 32%	28%	2%

SEGMENT REVIEW

September 2014 Full Year

September 2014 Full Year

		International &
		Institutional			GTSO and
AUD M	Australia	Banking	New Zealand	Global Wealth	Group Centre	Group
Net interest income	7,045	3,986	2,162	167	437	13,797
Other operating income	1,183	3,029	349	1,577	(357) 5,781
Operating income	8,228	7,015	2,511	1,744	80	19,578
Operating expenses	(3,057)	(3,215)	(1,033)	(1,026)	(429) (8,760)
Profit before credit impair't and income tax Credit impairment (charge)/release	5,171 (819)	3,800 (215)	1,478 8	718 2	(349) 10,818 35 (989)
Profit before income tax	4,352	3,585	1,486	720	(314) 9,829
Income tax expense and non-controllinginterests	(1,304)	(894)	(416)	(195)	97	(2,712)
Cash profit	3,048	2,691	1,070	525	(217) 7,117

September 2013 Full Year

==> picture [516 x 159] intentionally omitted <==

----- Start of picture text -----

International &
Institutional GTSO and
AUD M Australia Banking New Zealand Global Wealth Group Centre Group
Net interest income 6,670 3,669 1,863 139 431 12,772
Other operating income 1,190 2,911 347 1,387 (216) 5,619
Operating income 7,860 6,580 2,210 1,526 215 18,391
Operating expenses (2,967) (2,985) (960) (955) (390) (8,257)
Profit before credit impair't and income tax 4,893 3,595 1,250 571 (175) 10,134
Credit impairment (charge)/release (820) (317) (37) (4) (19) (1,197)
Profit before income tax 4,073 3,278 1,213 567 (194) 8,937
Income tax expense and non-controlling interests (1,215) (846) (336) (96) 48 (2,445)
Cash profit 2,858 2,432 877 471 (146) 6,492
----- End of picture text -----

September 2014 Full Year vs September 2013 Full Year

September 2014 Full Year vs September 2013 Full Year
	International &
	Institutional	GTSO and
AUD M Net interest income	Australia Banking New Zealand Global Wealth Group Centre 6% 9% 16% 20% 1%		Group 8%
Other operating income	-1% 4% 1% 14%	65%	3%
Operating income Operating expenses	5% 7% 14% 14% 3% 8% 8% 7%	-63% 6% 10% 6%
Profit before credit impair't and income tax	6% 6% 18% 26%	99%	7%
Credit impairment (charge)/release	0% -32% large large large -17%
Profit before income tax	7% 9% 23% 27%	62%	10%
Income tax expense and non-controllinginterests	7% 6% 24% large large 11%
Cash profit	7% 11% 22% 11%	49%	10%

SEGMENT REVIEW

Australia

Philip Chronican

The Australia Division comprises the Retail and Corporate and Commercial Banking (C&CB) business units.

Cash profit – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 154] intentionally omitted <==

----- Start of picture text -----

375
(7) 1
(90) 3,048
(89)
$m 2,858
FY13 Net interest income Other operating income Operating expenses Credit impairment Income tax expense & FY14
Cash profit charge non-controlling interests Cash profit
----- End of picture text -----

Banking on Australia Transformation Strategy

Through “Banking on Australia”, we are transforming the business and strengthening our position in our core markets.

We are transforming our distribution networks, leveraging digital innovation, making it easier for our customers to bank with us and allowing our frontline bankers to have high quality interactions focused on customer needs. ANZ goMoney[TM] has processed over $100 billion in transactions since its launch in September 2010 and 772 Smart ATMs have been rolled out across the network. This increases banker productivity and leverages the 143 branches and business centres which have been transformed to a new format focused around needsbased sales conversations.

We have delivered leading digital and mobile solutions, further enhancing the customer experience, providing connectivity and allowing customers more control over their banking needs. We have implemented integrated, customer friendly online applications for Retail transaction and credit card products, resulting in 21% of sales for these products through digital channels. We launched ANZ Shield in July 2014, a leading soft token multi factor authentication security application, further enhancing ANZ goMoney[TM] .

We have simplified our products and processes to further improve the customer experience and generate productivity, with operations costs declining 6% while absorbing volume increases of 8%. The productivity achieved as a result of the distribution transformation, digital investment and simplification has been reinvested into building the capability of our people and systems, further improving frontline banker effectiveness and sales productivity.

Retail has had two consecutive strong years. Volumes continue to grow above system and margins have been well managed. We have consistently grown Home Loans at above system levels and are on track to record our 19th consecutive quarter[1] , and 52% of Home Loans were sold through our proprietary channels. We also grew retail deposits at system.

C&CB continues to perform well in a subdued credit environment. Lending grew 3% with momentum in the second half driving lending and revenue growth. The Small Business Banking segment is performing strongly with lending up 16%, aided by ANZ’s $2 billion lending pledge and investments made in the frontline. Other business foundations remain strong with deposits growing 8% and customer numbers[2] increasing by 27,000. We have maintained our cost discipline and underlying asset quality remains sound.

 September 2014 v March 2014

Cash profit increased 6%, with 5% income growth, a 4% increase in operating expenses and a 3% increase in credit impairment charges. Key factors affecting the result were:

Net interest income increased 5% primarily due to a 3% rise in average net loans and advances from above system home loan growth and strong growth in Small Business Banking. Net interest margin widened 5 bps as a result of disciplined deposit pricing, partially offset by increased lending competition and portfolio mix.
Operating expenses increased 4%. This was driven primarily by $39 million invested in initiatives to increase sales capacity and capability and accelerate revenue generating projects. Excluding this, costs grew by 1%.
Credit impairment charges increased by 3%, reflecting lower writebacks in C&CB, and increases in the Retail portfolios reflecting normal seasonal trends. A lower collective provision charge was mostly driven by the release of the economic cycle provision by C&CB.
September 2014 v September 2013

Cash profit increased 7%, with 5% income growth, a 3% increase in expenses and flat credit impairment charges.

Key factors affecting the result were:

Net interest income increased 6% primarily due to a 6% increase in average net loans and advances from Home Loans and Small Business Banking. Growth in deposits has been offset by subdued C&CB lending conditions in the middle market sector. Net interest margin contracted 1 bp, reflecting increased lending competition and portfolio mix, partially offset by disciplined deposit pricing.
Operating expenses increased 3%. This was driven partially by $39 million invested in initiatives to increase sales capacity and capability and accelerate revenue generating projects. Excluding this, costs grew by 2% with inflationary impacts partially offset by productivity gains.
Credit impairment charges were flat year on year, with Retail down 6% from improved Home Loan recoveries and lower delinquencies in Cards. In C&CB, credit impairment charges were up 6% driven by increased individual provisions in Corporate Banking and Esanda, offset by improvements across all other C&CB segments.
1 Source: APRA Monthly Banking Statistics 11 months to August 2014. The September 2014 APRA Monthly Banking Statistics are due for release on 31 October 2014.
2 Customer numbers (excludes Esanda) for the 12 months to August 2014.

SEGMENT REVIEW

Australia

Philip Chronican

Australia Total

==> picture [511 x 504] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 3,616 3,429 5% 7,045 6,670 6%
Other operating income 595 588 1% 1,183 1,190 -1%
Operating income 4,211 4,017 5% 8,228 7,860 5%
Operating expenses (1,557) (1,500) 4% (3,057) (2,967) 3%
Profit before credit impairment and income tax 2,654 2,517 5% 5,171 4,893 6%
Credit impairment charge (416) (403) 3% (819) (820) 0%
Profit before tax 2,238 2,114 6% 4,352 4,073 7%
Income tax expense and non-controlling interests (669) (635) 5% (1,304) (1,215) 7%
Cash profit 1,569 1,479 6% 3,048 2,858 7%
Consisting of:
Retail 994 933 7% 1,927 1,725 12%
Corporate and Commercial Banking 575 546 5% 1,121 1,133 -1%
Cash profit 1,569 1,479 6% 3,048 2,858 7%
Balance Sheet
Net loans & advances 287,912 278,279 3% 287,912 271,589 6%
Other external assets 2,814 2,912 -3% 2,814 2,736 3%
External assets 290,726 281,191 3% 290,726 274,325 6%
Customer deposits 161,108 156,310 3% 161,108 152,371 6%
Other external liabilities 11,997 12,330 -3% 11,997 13,397 -10%
External liabilities 173,105 168,640 3% 173,105 165,768 4%
Risk weighted assets 111,567 109,839 2% 111,567 109,596 2%
Average net loans and advances 283,065 274,910 3% 278,999 262,447 6%
Average deposits and other borrowings 158,166 155,314 2% 156,744 146,482 7%
Ratios
Return on assets 1.09% 1.07% 1.08% 1.08%
Net interest margin 2.53% 2.48% 2.51% 2.52%
Operating expenses to operating income 37.0% 37.3% 37.2% 37.7%
Operating expenses to average assets 1.09% 1.08% 1.08% 1.12%
Individual credit impairment charge/(release) 413 374 10% 787 771 2%
Individual credit impairment charge/(release) as a % of average net advances 0.29% 0.27% 0.28% 0.29%
Collective credit impairment charge/(release) 3 29 -90% 32 49 -35%
Collective credit impairment charge/(release) as a % of average net advances 0.00% 0.02% 0.01% 0.02%
Net impaired assets 623 717 -13% 623 939 -34%
Net impaired assets as a % of net advances 0.22% 0.26% 0.22% 0.35%
Total full time equivalent staff (FTE) 10,263 9,920 3% 10,263 10,025 2%
----- End of picture text -----

SEGMENT REVIEW

Australia

Philip Chronican

==> picture [505 x 397] intentionally omitted <==

----- Start of picture text -----

Individual credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail 189 170 11% 359 384 -7%
Home Loans 11 13 -15% 24 45 -47%
Cards & Payments 165 149 11% 314 320 -2%
Deposits [1 ] 13 8 63% 21 19 11%
Corporate and Commercial Banking 224 204 10% 428 387 11%
Corporate Banking 39 70 -44% 109 (3) large
Esanda 84 70 20% 154 126 22%
Regional Business Banking 38 21 81% 59 96 -39%
Business Banking 24 4 large 28 76 -63%
Small Business Banking 39 39 0% 78 92 -15%
Individual credit impairment charge/(release) 413 374 10% 787 771 2%
Collective credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail 8 10 -20% 18 19 -5%
Home Loans 5 9 -44% 14 12 17%
Cards & Payments 5 (1) large 4 8 -50%
Deposits [2 ] (2) 2 large - (1) -100%
Corporate and Commercial Banking (5) 19 large 14 30 -53%
Corporate Banking (18) 10 large (8) 12 large
Esanda 1 (2) large (1) 4 large
Regional Business Banking 2 (4) large (2) (2) 0%
Business Banking (1) 2 large 1 4 -75%
Small Business Banking 11 13 -15% 24 12 100%
Collective credit impairment charge/(release) 3 29 -90% 32 49 -35%
Total credit impairment charge/(release) 416 403 3% 819 820 0%
----- End of picture text -----

1. Represents individual credit impairment charge/(release) on Overdraft balances.

2. Represents collective credit impairment charge/(release) on Overdraft balances.

SEGMENT REVIEW

Australia

Philip Chronican

==> picture [505 x 178] intentionally omitted <==

----- Start of picture text -----

Net loans and advances Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail 220,830 213,112 4% 220,830 206,269 7%
Home Loans 209,391 201,646 4% 209,391 194,991 7%
Cards & Payments 11,346 11,370 0% 11,346 11,184 1%
Deposits [1 ] 93 96 -3% 93 94 -1%
Corporate and Commercial Banking 67,082 65,167 3% 67,082 65,320 3%
Corporate Banking 9,389 9,074 3% 9,389 9,363 0%
Esanda 16,149 16,297 -1% 16,149 16,503 -2%
Regional Business Banking 12,568 11,955 5% 12,568 12,226 3%
Business Banking 16,720 16,525 1% 16,720 16,628 1%
Small Business Banking 12,256 11,316 8% 12,256 10,600 16%
Net loans and advances 287,912 278,279 3% 287,912 271,589 6%
----- End of picture text -----

==> picture [505 x 166] intentionally omitted <==

----- Start of picture text -----

Customer deposits Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail 112,101 109,376 2% 112,101 106,998 5%
Home Loans [1 ] 17,684 16,308 8% 17,684 15,114 17%
Cards & Payments 384 326 18% 384 343 12%
Deposits 94,033 92,742 1% 94,033 91,541 3%
Corporate and Commercial Banking [2 ] 49,007 46,934 4% 49,007 45,373 8%
Esanda 1 1 0% 1 19 -95%
Regional Business Banking 4,964 4,955 0% 4,964 4,926 1%
Business Banking 14,346 13,185 9% 14,346 12,618 14%
Small Business Banking 29,696 28,793 3% 29,696 27,810 7%
Customer deposits 161,108 156,310 3% 161,108 152,371 6%
----- End of picture text -----

1. Net loans and advances for the Deposits business represents amounts in overdraft. Customer deposit amounts for the Home Loans business represents balances in offset accounts. 2.

Corporate Banking deposits are included in the International and Institutional Banking division deposits.

SEGMENT REVIEW

Australia

Philip Chronican

Retail

==> picture [511 x 546] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 2,211 2,066 7% 4,277 3,929 9%
Other operating income 450 449 0% 899 912 -1%
Operating income 2,661 2,515 6% 5,176 4,841 7%
Operating expenses (1,049) (1,002) 5% (2,051) (1,978) 4%
Profit before credit impairment and income tax 1,612 1,513 7% 3,125 2,863 9%
Credit impairment charge (197) (180) 9% (377) (403) -6%
Profit before tax 1,415 1,333 6% 2,748 2,460 12%
Income tax expense and non-controlling interests (421) (400) 5% (821) (735) 12%
Cash profit 994 933 7% 1,927 1,725 12%
Risk weighted assets 56,305 54,959 2% 56,305 53,153 6%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Individual credit impairment charge/(release) $M $M $M $M
Home Loans 11 13 -15% 24 45 -47%
Cards & Payments 165 149 11% 314 320 -2%
Deposits [1 ] 13 8 63% 21 19 11%
Individual credit impairment charge/(release) 189 170 11% 359 384 -7%
Collective credit impairment charge/(release)
Home Loans 5 9 -44% 14 12 17%
Cards & Payments 5 (1) large 4 8 -50%
Deposits [2 ] (2) 2 large - (1) -100%
Collective credit impairment charge/(release) 8 10 -20% 18 19 -5%
Total credit impairment charge/(release) 197 180 9% 377 403 -6%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Net loans and advances $M $M $M $M
Home Loans 209,391 201,646 4% 209,391 194,991 7%
Cards & Payments 11,346 11,370 0% 11,346 11,184 1%
Deposits 93 96 -3% 93 94 -1%
Net loans and advances 220,830 213,112 4% 220,830 206,269 7%
Customer deposits
Home Loans 17,684 16,308 8% 17,684 15,114 17%
Cards & Payments 384 326 18% 384 343 12%
Deposits 94,033 92,742 1% 94,033 91,541 3%
Customer deposits 112,101 109,376 2% 112,101 106,998 5%
----- End of picture text -----

1. Represents individual credit impairment charge/(release) on Overdraft balances.

2. Represents collective credit impairment charge/(release) on Overdraft balances.

SEGMENT REVIEW

Australia

Philip Chronican

==> picture [511 x 657] intentionally omitted <==

----- Start of picture text -----

Corporate and Commercial Banking
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 1,405 1,363 3% 2,768 2,741 1%
Other operating income 145 139 4% 284 278 2%
Operating income 1,550 1,502 3% 3,052 3,019 1%
Operating expenses (508) (498) 2% (1,006) (989) 2%
Profit before credit impairment and income tax 1,042 1,004 4% 2,046 2,030 1%
Credit impairment charge (219) (223) -2% (442) (417) 6%
Profit before tax 823 781 5% 1,604 1,613 -1%
Income tax expense and non-controlling interests (248) (235) 6% (483) (480) 1%
Cash profit 575 546 5% 1,121 1,133 -1%
Risk weighted assets 54,163 53,716 1% 54,163 55,289 -2%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Individual credit impairment charge/(release) $M $M $M $M
Corporate Banking 39 70 -44% 109 (3) large
Esanda 84 70 20% 154 126 22%
Regional Business Banking 38 21 81% 59 96 -39%
Business Banking 24 4 large 28 76 -63%
Small Business Banking 39 39 0% 78 92 -15%
Individual credit impairment charge/(release) 224 204 10% 428 387 11%
Collective credit impairment charge/(release)
Corporate Banking (18) 10 large (8) 12 large
Esanda 1 (2) large (1) 4 large
Regional Business Banking 2 (4) large (2) (2) 0%
Business Banking (1) 2 large 1 4 -75%
Small Business Banking 11 13 -15% 24 12 100%
Collective credit impairment charge/(release) (5) 19 large 14 30 -53%
Total credit impairment charge/(release) 219 223 -2% 442 417 6%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Net loans and advances $M $M $M $M
Corporate Banking 9,389 9,074 3% 9,389 9,363 0%
Esanda 16,149 16,297 -1% 16,149 16,503 -2%
Regional Business Banking 12,568 11,955 5% 12,568 12,226 3%
Business Banking 16,720 16,525 1% 16,720 16,628 1%
Small Business Banking 12,256 11,316 8% 12,256 10,600 16%
Net loans and advances 67,082 65,167 3% 67,082 65,320 3%
Customer deposits [1 ]
Esanda 1 1 0% 1 19 -95%
Regional Business Banking 4,964 4,955 0% 4,964 4,926 1%
Business Banking 14,346 13,185 9% 14,346 12,618 14%
Small Business Banking 29,696 28,793 3% 29,696 27,810 7%
Customer deposits 49,007 46,934 4% 49,007 45,373 8%
----- End of picture text -----

1. Corporate Banking deposits are included in the International and Institutional Banking division deposits.

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

International and Institutional Banking (IIB) division comprises Global Products servicing Global Banking and International Banking customers across three major product sets (Global Transaction Banking, Global Loans and Global Markets), Retail Asia Pacific focusing on affluent and emerging affluent customers across 21 countries and Asia Partnerships.

Cash profit – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 154] intentionally omitted <==

----- Start of picture text -----

118
317 102
2,691
(48)
$m (230)
2,432
FY13 Net interest income Other operating income Operating expenses Credit impairment Income tax expense & FY14
Cash profit charge non-controlling interests Cash profit
----- End of picture text -----

IIB’s four key strategic priorities are: Connecting with more customers by providing seamless value, Delivering leading products through Insights, Intensifying balance sheet discipline and Scaling and optimising infrastructure.

The customer franchise is going from strength to strength. ANZ’s unique regional capability helped the business to regain the number one lead bank position in Institutional Banking in Australia and retain the number one lead bank position in New Zealand in the Peter Lee survey. ANZ has also had the fastest ever rise in the Greenwich relationship strength survey covering the Asia region, narrowing the gap on the number 3 player.

Revenue from Global Banking customers grew in line with the overall IIB average for the year, where we continued to see strong momentum within Financial Institutions. Revenue from International Banking customers was modest as declining margins had a larger impact. Retail Asia Pacific was our highest growth customer segment, benefiting from strong volume momentum across Asia in both lending and deposits. We continued to balance growth against risk which is reflected in net interest income and improved credit outcomes.

 September 2014 v March 2014

Cash profit decreased by 2%, driven largely by a decrease in foreign exchange income, partially offset by a reduction in credit impairment.

Key factors affecting the result were:

Net interest income increased 1%. Average deposits increased 5% and average net loans and advances increased 10%, with growth across all regions. Income from increased volumes was offset by a decline in net interest margin of 9 bps, driven mainly by Global Loans price competition and growth focused on higher credit quality customers.

and a decrease in credit impairment charge partially offset by an increase in operating expenses.

Key factors affecting the result were:

Net interest income increased 9%, primarily due to higher returns from the Bank’s liquidity positions, asset and liability repricing mismatches and volume driven growth in Global Transaction Banking. Average deposits increased 17% and average net loans and advances increased 20%, with growth across all regions. Net interest margin declined by 12 bps driven by Global Loans price competition and growth focused on higher credit quality customers.
Other operating income increased 4% with good performances across most lines of business. Global Transaction Banking and Retail Asia Pacific increased mainly due to volume growth, while Global Loans increased primarily due to higher fee income in Specialised Finance. The increase in Asia Partnerships was due to growth in underlying revenue, and a gain arising from the dilution of our Bank of Tianjin stake, partially offset by a loss arising from the sale of our investment in SSI.
Operating expenses increased 8%. Business as usual expenses, excluding FX impacts and $40 million spend associated with the IIB organisational structure increased 3%, reflecting well managed cost control and investment in targeted growth areas and supporting infrastructure.
Credit impairment charges decreased 32%, primarily due to collective provision releases relating to the crystallisation of individual provisions and improved customer credit ratings.
Other operating income decreased by 10%, driven largely by a reduction in foreign exchange income as lower market volatility impacted customer activity.
Operating expenses increased by 1%. Excluding FX impacts and $40 million spend associated with the new IIB organisational structure, business as usual expenses were flat.
Credit impairment charges decreased 66%, primarily due to lower individual credit impairment charges in Global Transaction Banking, Global Loans and Global Markets.

 September 2014 v September 2013

Cash profit increased 11%, driven primarily by an increase in operating income in our fixed income business and Global Transaction Banking

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

International and Institutional Banking Total

==> picture [511 x 568] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 2,006 1,980 1% 3,986 3,669 9%
Other operating income 1,432 1,597 -10% 3,029 2,911 4%
Operating income 3,438 3,577 -4% 7,015 6,580 7%
Operating expenses (1,619) (1,596) 1% (3,215) (2,985) 8%
Profit before credit impairment and income tax 1,819 1,981 -8% 3,800 3,595 6%
Credit impairment charge (54) (161) -66% (215) (317) -32%
Profit before tax 1,765 1,820 -3% 3,585 3,278 9%
Income tax expense and non-controlling interests (434) (460) -6% (894) (846) 6%
Cash profit 1,331 1,360 -2% 2,691 2,432 11%
Consisting of:
Global Products 1,165 1,143 2% 2,308 2,074 11%
Asia Partnerships 239 239 0% 478 414 15%
Retail Asia Pacific (1) 45 large 44 49 -10%
Central Functions (72) (67) 7% (139) (105) 32%
Cash profit 1,331 1,360 -2% 2,691 2,432 11%
Balance Sheet
Net loans & advances 141,826 136,335 4% 141,826 123,467 15%
Other external assets 201,054 178,222 13% 201,054 172,655 16%
External assets 342,880 314,557 9% 342,880 296,122 16%
Customer deposits 182,701 172,023 6% 182,701 163,151 12%
Other deposits and borrowings 39,604 38,172 4% 39,604 33,642 18%
Deposits and other borrowings 222,305 210,195 6% 222,305 196,793 13%
Other external liabilities 78,315 61,658 27% 78,315 57,761 36%
External liabilities 300,620 271,853 11% 300,620 254,554 18%
Risk weighted assets 190,543 189,562 1% 190,543 174,397 9%
Average net loans and advances 145,924 132,114 10% 139,038 115,628 20%
Average deposits and other borrowings 225,999 216,062 5% 221,045 188,981 17%
Ratios
Return on assets 0.79% 0.86% 0.83% 0.85%
Net interest margin 1.45% 1.54% 1.49% 1.61%
Net interest margin (excluding Global Markets) 2.37% 2.49% 2.43% 2.72%
Operating expenses to operating income 47.1% 44.6% 45.8% 45.4%
Operating expenses to average assets 0.97% 1.01% 0.99% 1.04%
Individual credit impairment charge/(release) 75 215 -65% 290 280 4%
Individual credit impairment charge/(release) as a % of average net advances 0.10% 0.33% 0.21% 0.24%
Collective credit impairment charge/(release) (21) (54) -61% (75) 37 large
Collective credit impairment charge/(release) as a % of average net advances (0.03%) (0.08%) (0.05%) 0.03%
Net impaired assets 741 975 -24% 741 1,327 -44%
Net impaired assets as a % of net advances 0.52% 0.72% 0.52% 1.07%
Total full time equivalent staff (FTE) 7,862 8,226 -4% 7,862 8,258 -5%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking

Andrew Géczy

International and Institutional Banking by Geography

==> picture [514 x 643] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Australia $M $M $M $M
Net interest income 1,016 988 3% 2,004 1,892 6%
Other operating income 398 442 -10% 840 1,035 -19%
Operating income 1,414 1,430 -1% 2,844 2,927 -3%
Operating expenses (562) (550) 2% (1,112) (1,101) 1%
Profit before credit impairment and income tax 852 880 -3% 1,732 1,826 -5%
Credit impairment charge 3 (77) large (74) (113) -35%
Profit before tax 855 803 6% 1,658 1,713 -3%
Income tax expense and non-controlling interests (250) (243) 3% (493) (508) -3%
Cash profit 605 560 8% 1,165 1,205 -3%
Individual credit impairment charge/(release) 20 81 -75% 101 89 13%
Collective credit impairment charge/(release) (23) (4) large (27) 24 large
Net loans & advances 57,808 55,106 5% 57,808 49,528 17%
Customer deposits 66,647 60,891 9% 66,647 56,881 17%
Asia Pacific, Europe, and America
Net interest income 851 831 2% 1,682 1,482 13%
Other operating income 890 1,026 -13% 1,916 1,669 15%
Operating income 1,741 1,857 -6% 3,598 3,151 14%
Operating expenses (975) (961) 1% (1,936) (1,723) 12%
Profit before credit impairment and income tax 766 896 -15% 1,662 1,428 16%
Credit impairment charge (55) (85) -35% (140) (188) -26%
Profit before tax 711 811 -12% 1,522 1,240 23%
Income tax expense and non-controlling interests (128) (161) -20% (289) (249) 16%
Cash profit 583 650 -10% 1,233 991 24%
Individual credit impairment charge/(release) 48 127 -62% 175 179 -2%
Collective credit impairment charge/(release) 7 (42) large (35) 9 large
Net loans & advances 77,533 74,790 4% 77,533 67,685 15%
Customer deposits 103,992 98,402 6% 103,992 94,199 10%
New Zealand
Net interest income 139 161 -14% 300 295 2%
Other operating income 144 129 12% 273 207 32%
Operating income 283 290 -2% 573 502 14%
Operating expenses (82) (85) -4% (167) (161) 4%
Profit before credit impairment and income tax 201 205 -2% 406 341 19%
Credit impairment charge (2) 1 large (1) (16) -94%
Profit before tax 199 206 -3% 405 325 25%
Income tax expense and non-controlling interests (56) (56) 0% (112) (89) 26%
Cash profit 143 150 -5% 293 236 24%
Individual credit impairment charge/(release) 7 7 0% 14 12 17%
Collective credit impairment charge/(release) (5) (8) -38% (13) 4 large
Net loans & advances 6,485 6,439 1% 6,485 6,254 4%
Customer deposits 12,061 12,730 -5% 12,061 12,071 0%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking

Andrew Géczy

==> picture [512 x 127] intentionally omitted <==

----- Start of picture text -----

Individual credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail Asia Pacific 48 38 26% 86 61 41%
Global Products 27 176 -85% 203 219 -7%
Global Transaction Banking 12 101 -88% 113 26 large
Global Loans 13 54 -76% 67 187 -64%
Global Markets 2 21 -90% 23 6 large
Central Functions - 1 -100% 1 - 100%
Individual credit impairment charge/(release) 75 215 -65% 290 280 4%
----- End of picture text -----

==> picture [512 x 296] intentionally omitted <==

----- Start of picture text -----

Collective credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail Asia Pacific 10 (31) large (21) (26) -19%
Global Products (30) (24) 25% (54) 62 large
Global Transaction Banking (16) 18 large 2 19 -89%
Global Loans (14) (43) -67% (57) 41 large
Global Markets - 1 -100% 1 2 -50%
Central Functions (1) 1 large - 1 -100%
Collective credit impairment charge/(release) (21) (54) -61% (75) 37 large
Total credit impairment charge/(release) 54 161 -66% 215 317 -32%
Net loans and advances Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail Asia Pacific 8,766 7,851 12% 8,766 7,220 21%
Global Products 132,806 128,193 4% 132,806 115,960 15%
Global Transaction Banking 30,070 30,772 -2% 30,070 28,775 5%
Global Loans 84,207 82,149 3% 84,207 74,054 14%
Global Markets 18,529 15,272 21% 18,529 13,131 41%
Central Functions 254 291 -13% 254 287 -11%
Net loans and advances 141,826 136,335 4% 141,826 123,467 15%
----- End of picture text -----

==> picture [512 x 127] intentionally omitted <==

----- Start of picture text -----

Customer deposits Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Retail Asia Pacific 14,371 13,336 8% 14,371 12,916 11%
Global Products 168,179 158,544 6% 168,179 150,093 12%
Global Transaction Banking 86,075 81,142 6% 86,075 76,014 13%
Global Loans 730 896 -19% 730 734 -1%
Global Markets 81,374 76,506 6% 81,374 73,345 11%
Central Functions 151 143 6% 151 142 6%
Customer deposits 182,701 172,023 6% 182,701 163,151 12%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

Global Products

==> picture [511 x 543] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 1,739 1,718 1% 3,457 3,185 9%
Other operating income 999 1,160 -14% 2,159 2,131 1%
Operating income 2,738 2,878 -5% 5,616 5,316 6%
Operating expenses (1,141) (1,151) -1% (2,292) (2,181) 5%
Profit before credit impairment and income tax 1,597 1,727 -8% 3,324 3,135 6%
Credit impairment charge 3 (152) large (149) (281) -47%
Profit before tax 1,600 1,575 2% 3,175 2,854 11%
Income tax expense and non-controlling interests (435) (432) 1% (867) (780) 11%
Cash profit 1,165 1,143 2% 2,308 2,074 11%
Consisting of:
Global Transaction Banking 337 228 48% 565 563 0%
Global Loans 426 434 -2% 860 753 14%
Global Markets 402 481 -16% 883 758 16%
Cash profit 1,165 1,143 2% 2,308 2,074 11%
Balance Sheet
Net loans & advances 132,806 128,193 4% 132,806 115,960 15%
Other external assets 194,339 171,926 13% 194,339 166,650 17%
External assets 327,145 300,119 9% 327,145 282,610 16%
Customer deposits 168,179 158,544 6% 168,179 150,093 12%
Other deposits and other borrowings 39,596 38,168 4% 39,596 33,635 18%
Deposits and other borrowings 207,775 196,712 6% 207,775 183,728 13%
Other external liabilities 78,360 60,954 29% 78,360 57,012 37%
External liabilities 286,135 257,666 11% 286,135 240,740 19%
Risk weighted assets 182,608 181,412 1% 182,608 166,749 10%
Average net loans and advances 137,442 124,024 11% 130,752 109,350 20%
Average deposits and other borrowings 212,420 202,663 5% 207,555 177,437 17%
Ratios
Return on assets 0.73% 0.76% 0.74% 0.76%
Net interest margin 1.30% 1.38% 1.34% 1.43%
Net interest margin (excluding Global Markets) 2.09% 2.20% 2.14% 2.42%
Operating expenses to operating income 41.7% 40.0% 40.8% 41.0%
Operating expenses to average assets 0.71% 0.76% 0.74% 0.79%
Individual credit impairment charge/(release) 27 176 -85% 203 219 -7%
Individual credit impairment charge/(release) as a % of average net advances 0.04% 0.28% 0.16% 0.20%
Collective credit impairment charge/(release) (30) (24) 25% (54) 62 large
Collective credit impairment charge/(release) as a % of average net advances (0.04%) (0.04%) (0.04%) 0.06%
Net impaired assets 648 873 -26% 648 1,230 -47%
Net impaired assets as a % of net advances 0.49% 0.68% 0.49% 1.06%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

Global Products by Business

==> picture [511 x 681] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Global Transaction Banking $M $M $M $M
Net interest income 459 441 4% 900 810 11%
Other operating income 370 373 -1% 743 710 5%
Operating income 829 814 2% 1,643 1,520 8%
Operating expenses (374) (378) -1% (752) (704) 7%
Profit before credit impairment and income tax 455 436 4% 891 816 9%
Credit impairment charge 4 (119) large (115) (45) large
Profit before tax 459 317 45% 776 771 1%
Income tax expense and non-controlling interests (122) (89) 37% (211) (208) 1%
Cash profit 337 228 48% 565 563 0%
Risk weighted assets 37,799 37,918 0% 37,799 35,590 6%
Individual credit impairment charge/(release) 12 101 -88% 113 26 large
Collective credit impairment charge/(release) (16) 18 large 2 19 -89%
Net loans & advances 30,070 30,772 -2% 30,070 28,775 5%
Customer deposits 86,075 81,142 6% 86,075 76,014 13%
Global Loans
Net interest income 739 766 -4% 1,505 1,580 -5%
Other operating income 63 67 -6% 130 111 17%
Operating income 802 833 -4% 1,635 1,691 -3%
Operating expenses (217) (222) -2% (439) (418) 5%
Profit before credit impairment and income tax 585 611 -4% 1,196 1,273 -6%
Credit impairment charge 1 (11) large (10) (228) -96%
Profit before tax 586 600 -2% 1,186 1,045 13%
Income tax expense and non-controlling interests (160) (166) -4% (326) (292) 12%
Cash profit 426 434 -2% 860 753 14%
Risk weighted assets 90,456 88,755 2% 90,456 82,042 10%
Individual credit impairment charge/(release) 13 54 -76% 67 187 -64%
Collective credit impairment charge/(release) (14) (43) -67% (57) 41 large
Net loans & advances 84,207 82,149 3% 84,207 74,054 14%
Customer deposits 730 896 -19% 730 734 -1%
Global Markets
Net interest income 541 511 6% 1,052 795 32%
Other operating income 566 720 -21% 1,286 1,310 -2%
Operating income 1,107 1,231 -10% 2,338 2,105 11%
Operating expenses (550) (551) 0% (1,101) (1,059) 4%
Profit before credit impairment and income tax 557 680 -18% 1,237 1,046 18%
Credit impairment charge (2) (22) -91% (24) (8) large
Profit before tax 555 658 -16% 1,213 1,038 17%
Income tax expense and non-controlling interests (153) (177) -14% (330) (280) 18%
Cash profit 402 481 -16% 883 758 16%
Risk weighted assets 54,353 54,739 -1% 54,353 49,117 11%
Individual credit impairment charge/(release) 2 21 -90% 23 6 large
Collective credit impairment charge/(release) - 1 -100% 1 2 -50%
Net loans & advances 18,529 15,272 21% 18,529 13,131 41%
Customer deposits 81,374 76,506 6% 81,374 73,345 11%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

Analysis of Global Markets operating income

==> picture [511 x 214] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Composition of Global Markets Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
operating income by product class $M $M $M $M
Fixed income 489 540 -9% 1,029 845 22%
Foreign exchange 363 537 -32% 900 883 2%
Capital markets 131 118 11% 249 252 -1%
Other 124 36 large 160 125 28%
Global Markets operating income 1,107 1,231 -10% 2,338 2,105 11%
Half Year Full Year
Composition of Global Markets Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
operating income by geography $M $M $M $M
Australia 477 480 -1% 957 965 -1%
Asia Pacific, Europe & America 490 602 -19% 1,092 902 21%
New Zealand 140 149 -6% 289 238 21%
Global Markets operating income 1,107 1,231 -10% 2,338 2,105 11%
----- End of picture text -----

==> picture [511 x 90] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Composition of Global Markets Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
operating income by activity $M $M $M $M
Sales [1 ] 573 635 -10% 1,208 1,152 5%
Trading [2 ] 252 322 -22% 574 558 3%
Balance sheet [3 ] 282 274 3% 556 395 41%
Global Markets operating income 1,107 1,231 -10% 2,338 2,105 11%
----- End of picture text -----

==> picture [511 x 89] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Composition of Global Markets Sales income Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
by geography [1 ] $M $M $M $M
Australia 248 248 0% 496 489 1%
Asia Pacific, Europe & America 261 318 -18% 579 546 6%
New Zealand 64 69 -7% 133 117 14%
Global Markets Sales income 573 635 -10% 1,208 1,152 5%
----- End of picture text -----

==> picture [511 x 98] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Composition of Global Markets Trading and Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Balance Sheet income by geography [2,3] $M $M $M $M
Australia 229 232 -1% 461 476 -3%
Asia Pacific, Europe & America 229 284 -19% 513 356 44%
New Zealand 76 80 -5% 156 121 29%
Global Markets
534 596 -10% 1,130 953 19%
Trading and Balance Sheet income
----- End of picture text -----

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.

3. 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 Géczy

Analysis of Global Markets operating income

Global Markets has delivered a strong result, with full year operating income increasing by 11% in a challenging market. Growth has been driven by the continued push into the APEA region which now accounts for 47% of operating income, while the performance of the Commodities business reflects the benefits of the super-regional strategy and strong demand for Australian commodity products, especially gold, by Asian clients.

While the March 2014 half saw certain pockets of Asian currency movements contribute to good customer flow, overall market volatility remained at historically low levels. Generally, global rates remained static and the AUD/USD traded in a tight range above 90 cents for most of the year which diminished customer demand for hedging.

New Zealand, with favourable economic conditions, has seen operating income increase 21% from September 2013.

Tightening credit spreads benefited the Fixed Income business, in particular holdings in the prime liquidity portfolio.

September 2014 v March 2014
In more difficult market conditions, with lower volatility reducing customer flow and margins, operating income has decreased by 10%:
Capital Markets operating income increased by 11%, as a result of strong client activity across Asian markets.
APEA operating income decreased by 19%, as Asian currency movements and flatter yield curves did not support the strong levels of customer demand for foreign exchange products seen in the March half.
Balance Sheet operating income increased by 3%, primarily due to the effective management of the Group’s interest rate position.
September 2014 v September 2013

Growth across most product classes and regions saw operating income increase by 11%:

Sales income increased by 5%, driven by demand for Commodities, Foreign Exchange products and origination activity.
APEA operating income increased 21%, driven by strong growth across Commodities and Fixed Income businesses, as well as very strong customer demand for foreign exchange products in China, Hong and Taiwan during the March half.
Further tightening of credit spreads has benefited the Fixed Income business in Australia and New Zealand.

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

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)

==> picture [505 x 132] intentionally omitted <==

----- Start of picture text -----

As at High for Low for Avg for As at High for Low for Avg for
Sep 14 year year year Sep 13 year year year
Sep 14 Sep 14 Sep 14 Sep 13 Sep 13 Sep 13
$M $M $M $M $M $M $M $M
Value at Risk at 99% confidence
Foreign exchange 11.9 18.5 1.7 8.9 3.0 12.6 2.3 5.2
Interest rate 10.4 16.6 3.8 8.1 3.9 11.6 2.8 5.8
Credit 5.8 5.8 2.7 3.8 4.2 8.6 2.8 4.2
Commodities 2.0 2.8 0.9 1.4 1.6 4.2 1.2 2.3
Equity 1.3 2.5 0.4 1.0 1.4 3.4 0.6 1.6
Diversification benefit (18.6) n/a n/a (10.5) (8.5) n/a n/a (10.4)
Total VaR 12.8 22.9 5.5 12.7 5.6 13.6 4.9 8.7
----- End of picture text -----

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)

==> picture [505 x 111] intentionally omitted <==

----- Start of picture text -----

As at High for Low for Avg for As at High for Low for Avg for
Sep 14 year year year Sep 13 year year year
Sep 14 Sep 14 Sep 14 Sep 13 Sep 13 Sep 13
$M $M $M $M $M $M $M $M
Value at Risk at 99% confidence
Australia 41.8 64.5 39.1 50.1 66.3 71.8 25.5 49.3
New Zealand 8.9 11.4 8.9 10.4 12.6 17.9 10.0 13.2
Asia Pacific, Europe & America 9.1 10.6 8.9 9.8 9.7 11.1 4.2 6.3
Diversification benefit (13.4) n/a n/a (13.7) (11.4) n/a n/a (16.1)
Total VaR 46.4 76.3 43.3 56.6 77.2 79.6 27.3 52.7
----- End of picture text -----

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

==> picture [505 x 80] intentionally omitted <==

----- Start of picture text -----

As at
Sep 14 Sep 13
As at period end 0.97% 1.00%
Maximum exposure 1.48% 1.72%
Minimum exposure 0.74% 1.00%
Average exposure (in absolute terms) 1.12% 1.29%
----- End of picture text -----

1. 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 Géczy

Global Products by Geography

==> picture [511 x 681] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Australia $M $M $M $M
Net interest income 1,016 988 3% 2,004 1,889 6%
Other operating income 398 442 -10% 840 1,038 -19%
Operating income 1,414 1,430 -1% 2,844 2,927 -3%
Operating expenses (546) (537) 2% (1,083) (1,101) -2%
Profit before credit impairment and income tax 868 893 -3% 1,761 1,826 -4%
Credit impairment charge 3 (77) large (74) (113) -35%
Profit before tax 871 816 7% 1,687 1,713 -2%
Income tax expense and non-controlling interests (254) (247) 3% (501) (504) -1%
Cash profit 617 569 8% 1,186 1,209 -2%
Risk weighted assets 83,500 83,814 0% 83,500 79,118 6%
Individual credit impairment charge/(release) 20 81 -75% 101 89 13%
Collective credit impairment charge/(release) (23) (4) large (27) 24 large
Net loans & advances 57,808 55,106 5% 57,808 49,527 17%
Customer deposits 66,647 60,890 9% 66,647 56,881 17%
Asia Pacific, Europe & America
Net interest income 585 569 3% 1,154 1,002 15%
Other operating income 457 589 -22% 1,046 886 18%
Operating income 1,042 1,158 -10% 2,200 1,888 17%
Operating expenses (513) (525) -2% (1,038) (918) 13%
Profit before credit impairment and income tax 529 633 -16% 1,162 970 20%
Credit impairment charge 2 (76) large (74) (152) -51%
Profit before tax 531 557 -5% 1,088 818 33%
Income tax expense and non-controlling interests (127) (129) -2% (256) (187) 37%
Cash profit 404 428 -6% 832 631 32%
Risk weighted assets 87,524 84,462 4% 87,524 75,907 15%
Individual credit impairment charge/(release) - 88 -100% 88 118 -25%
Collective credit impairment charge/(release) (2) (12) -83% (14) 34 large
Net loans & advances 68,514 66,650 3% 68,514 60,179 14%
Customer deposits 89,471 84,924 5% 89,471 81,142 10%
New Zealand
Net interest income 138 161 -14% 299 294 2%
Other operating income 144 129 12% 273 207 32%
Operating income 282 290 -3% 572 501 14%
Operating expenses (82) (89) -8% (171) (162) 6%
Profit before credit impairment and income tax 200 201 0% 401 339 18%
Credit impairment charge (2) 1 large (1) (16) -94%
Profit before tax 198 202 -2% 400 323 24%
Income tax expense and non-controlling interests (54) (56) -4% (110) (89) 24%
Cash profit 144 146 -1% 290 234 24%
Risk weighted assets 11,584 13,136 -12% 11,584 11,724 -1%
Individual credit impairment charge/(release) 7 7 0% 14 12 17%
Collective credit impairment charge/(release) (5) (8) -38% (13) 4 large
Net loans & advances 6,484 6,437 1% 6,484 6,254 4%
Customer deposits 12,061 12,730 -5% 12,061 12,070 0%
----- End of picture text -----

SEGMENT REVIEW

International and Institutional Banking Andrew Géczy

Retail Asia Pacific

==> picture [511 x 227] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 230 225 2% 455 424 7%
Other operating income 182 177 3% 359 322 11%
Operating income 412 402 2% 814 746 9%
Operating expenses (355) (343) 3% (698) (650) 7%
Profit before credit impairment and income tax 57 59 -3% 116 96 21%
Credit impairment charge (58) (7) large (65) (35) 86%
Profit before tax (1) 52 large 51 61 -16%
Income tax expense and non-controlling interests - (7) -100% (7) (12) -42%
Cash profit (1) 45 large 44 49 -10%
Risk weighted assets 7,305 6,747 8% 7,305 6,359 15%
Individual credit impairment charge/(release) 48 38 26% 86 61 41%
Collective credit impairment charge/(release) 10 (31) large (21) (26) -19%
Net loans & advances 8,766 7,851 12% 8,766 7,220 21%
Customer deposits 14,371 13,336 8% 14,371 12,916 11%
----- End of picture text -----

Asia Partnerships

==> picture [511 x 142] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income (8) (8) 0% (16) (14) 14%
Other operating income 240 252 -5% 492 441 12%
Operating income 232 244 -5% 476 427 11%
Operating expenses (5) (4) 25% (9) (8) 13%
Profit before credit impairment and income tax 227 240 -5% 467 419 11%
Profit before tax 227 240 -5% 467 419 11%
Income tax expense and non-controlling interests 12 (1) large 11 (5) large
Cash profit 239 239 0% 478 414 15%
----- End of picture text -----

SEGMENT REVIEW

This page has been left blank intentionally

SEGMENT REVIEW

New Zealand David Hisco

The New Zealand division comprises Retail and Commercial business units.

New Zealand’s results and commentary are reported in NZD. AUD results are shown on page 74.

Cash profit – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 154] intentionally omitted <==

----- Start of picture text -----

55
104 37 1,170
(47)
(39)
1,060
NZD m
FY13 Net interest income Other operating income Operating expenses Credit impairment Income tax expense & FY14
Cash profit charge non-controlling interests Cash profit
----- End of picture text -----

The continued execution of our simplification strategy has underpinned a strong financial performance across the businesses during 2014. We have continued to realise gains from effectively leveraging our marketleading resources and connections. We have simplified and improved processes and products in order to deliver a higher level of service to our customers. The brand is strong, with consideration at record highs. The financial outcomes of our strategy are reflected in improved returns and a strong downward trend in the cost to income ratio.

We are growing both lending and deposits in excess of system[1] and at the same time we are improving the quality of our portfolio. We have created a stronger bank, and established a platform for consistent, sustainable earnings growth.

Retail

During 2014, we achieved good progress in optimising our market leading branch network and enhanced our digital channels. We are improving the customer experience, and are strongly positioned to attract and retain more customers. We are meeting more needs per customer, and earning more revenue per FTE and per branch.

Commercial

We have increased our network of banking specialists serving the commercial, agri and small business banking sectors. We aim to maintain leadership not only in our extensive coverage but in the connections and insights that we provide our customers. Our simplification strategy has been a key factor in our small business banking and commercial businesses delivering above-system[1] lending growth for the 2014 year. At the same time, resources invested in improving credit quality, particularly in the agri book, have resulted in a significantly improved provisioning result. The agri business, after a period of re-balancing, is now positioned for renewed growth.

 September 2014 v March 2014

Cash profit was 4% lower as a result of higher credit impairment. Profit before credit impairment and income tax expense increased 4%, reflecting good net interest income growth and relatively flat expenses. Key factors affecting the result were:

Net interest income increased 3%, primarily due to lending growth. Average net loans and advances grew 3%, with good growth across both the housing and non-housing portfolios. Despite the intense lending competition, net interest margin was held stable. Lending mix remains a negative factor with customers continuing to favour lower margin fixed rate products over higher margin variable rate products. The overall margin impact was mitigated by a reduction in the average cost of wholesale funding, and by improved deposit margins.
Other operating income decreased 4%. Although strong growth in card volumes was maintained into the second half, headline cards revenue was lower half on half due to the timing of rebates (mostly received in the first half).
Operating expenses were 1% higher, reflecting increased project activity in the second half. Despite this impact, the cost to income ratio improved 70 basis points to 40.8% to continue the consistent trend of productivity improvement.
The credit impairment charge increased NZ$65 million. The individual charge was NZ$39 million higher with provision writebacks down from the high levels of the first half, particularly in the CommAgri portfolio. The release from collective provision was NZ$26 million lower, reflecting the impact of lending growth. Credit quality has continued to improve, although at a slower rate compared with the first half.
September 2014 v September 2013
Cash profit increased 10%, due to lending growth, cost productivity and credit quality improvement.

Key factors affecting the result were:

Net interest income increased 5%, due to above-system lending growth. Margins were well managed in a competitive environment that was further constrained by a shift to fixed rate lending. Net interest margin contraction for the year was held to 1 basis point.
Other operating income decreased 9%. The 2013 result included a NZ$17 million gain from the sale of the EFTPOS business, as well as revenue earned by that business prior to its divestment. Excluding the EFTPOS impact, other operating income in 2014 matched that of the 2013 year.
Operating expenses decreased 3%. The 2013 result included NZ$22 million of restructuring costs related to the systems integration project and NZ$12 million of operating costs in the EFTPOS business prior to its sale. Excluding these items, underlying costs were held flat with cost productivity offsetting inflationary impacts and investment spend.
The credit impairment charge decreased by NZ$55 million. The individual credit impairment charge decreased 40%, with the level of new provisions having slowed and write-backs remaining high. The release from the collective provision increased despite a lower release of economic overlay provision, reflecting improvements in credit quality which have more than offset the impact of lending growth.
1 Source: RBNZ schedules S7 and S8 : 11 months to Aug 2014.

SEGMENT REVIEW

New Zealand David Hisco

New Zealand Total

Table reflects NZD for New Zealand AUD results shown on page 74

New Zealand Total

==> picture [511 x 541] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Net interest income 1,201 1,161 3% 2,362 2,258 5%
Other operating income 187 195 -4% 382 421 -9%
Operating income 1,388 1,356 2% 2,744 2,679 2%
Operating expenses (566) (563) 1% (1,129) (1,166) -3%
Profit before credit impairment and income tax 822 793 4% 1,615 1,513 7%
Credit impairment charge (28) 37 large 9 (46) large
Profit before tax 794 830 -4% 1,624 1,467 11%
Income tax expense and non-controlling interests (221) (233) -5% (454) (407) 12%
Cash profit 573 597 -4% 1,170 1,060 10%
Consisting of:
Retail 216 222 -3% 438 379 16%
Commercial 354 377 -6% 731 698 5%
Other 3 (2) large 1 (17) large
Cash profit 573 597 -4% 1,170 1,060 10%
Balance Sheet
Net loans & advances 96,555 94,140 3% 96,555 91,628 5%
Other external assets 3,791 4,015 -6% 3,791 3,837 -1%
External assets 100,346 98,155 2% 100,346 95,465 5%
Customer deposits 57,621 55,205 4% 57,621 52,244 10%
Other deposits and borrowings 6,057 5,401 12% 6,057 4,765 27%
Deposits and other borrowings 63,678 60,606 5% 63,678 57,009 12%
Other external liabilities 18,309 15,969 15% 18,309 15,446 19%
External liabilities 81,987 76,575 7% 81,987 72,455 13%
Risk weighted assets 54,617 53,753 2% 54,617 50,000 9%
Average net loans and advances 95,404 92,882 3% 94,146 89,498 5%
Average deposits and other borrowings 62,350 59,743 4% 61,050 56,624 8%
Ratios
Return on assets 1.15% 1.24% 1.19% 1.14%
Net interest margin 2.48% 2.48% 2.48% 2.49%
Operating expenses to operating income 40.8% 41.5% 41.1% 43.5%
Operating expenses to average assets 1.14% 1.17% 1.15% 1.25%
Individual credit impairment charge/(release) 54 15 large 69 115 -40%
Individual credit impairment charge/(release) as a % of average net advances 0.11% 0.03% 0.07% 0.13%
Collective credit impairment charge/(release) (26) (52) -50% (78) (69) 13%
Collective credit impairment charge/(release) as a % of average net advances (0.05%) (0.11%) (0.08%) (0.08%)
Net impaired assets 384 477 -19% 384 573 -33%
Net impaired assets as a % of net advances 0.40% 0.51% 0.40% 0.63%
Total full time equivalent staff (FTE) 5,080 5,236 -3% 5,080 5,323 -5%
----- End of picture text -----

SEGMENT REVIEW

New Zealand David Hisco

==> picture [512 x 494] intentionally omitted <==

----- Start of picture text -----

Individual credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Retail 31 28 11% 59 76 -22%
Commercial 23 (13) large 10 39 -74%
CommAgri 7 (25) large (18) 32 large
Small Business Banking 16 12 33% 28 7 large
Individual credit impairment charge/(release) 54 15 large 69 115 -40%
Collective credit impairment charge/(release) Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Retail (12) (16) -25% (28) (19) 47%
Commercial (14) (36) -61% (50) (50) 0%
CommAgri (21) (33) -36% (54) (49) 10%
Small Business Banking 7 (3) large 4 (1) large
Collective credit impairment charge/(release) (26) (52) -50% (78) (69) 13%
Total credit impairment charge/(release) 28 (37) large (9) 46 large
Net loans and advances Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Retail 37,123 36,875 1% 37,123 36,422 2%
Commercial 59,432 57,265 4% 59,432 55,206 8%
CommAgri 36,556 35,429 3% 36,556 34,759 5%
Small Business Banking 22,876 21,836 5% 22,876 20,447 12%
Net loans and advances 96,555 94,140 3% 96,555 91,628 5%
Customer deposits Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Retail 34,695 32,656 6% 34,695 32,077 8%
Commercial 22,926 22,549 2% 22,926 20,167 14%
CommAgri 10,829 10,832 0% 10,829 9,414 15%
Small Business Banking 12,097 11,717 3% 12,097 10,753 12%
Customer deposits 57,621 55,205 4% 57,621 52,244 10%
----- End of picture text -----

SEGMENT REVIEW

New Zealand David Hisco

Retail

==> picture [511 x 254] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Net interest income 493 482 2% 975 926 5%
Other operating income 143 154 -7% 297 297 0%
Operating income 636 636 0% 1,272 1,223 4%
Operating expenses (316) (316) 0% (632) (639) -1%
Profit before credit impairment and income tax 320 320 0% 640 584 10%
Credit impairment charge (19) (12) 58% (31) (57) -46%
Profit before tax 301 308 -2% 609 527 16%
Income tax expense and non-controlling interests (85) (86) -1% (171) (148) 16%
Cash profit 216 222 -3% 438 379 16%
Risk weighted assets 19,083 19,271 -1% 19,083 19,367 -1%
Individual credit impairment charge/(release) 31 28 11% 59 76 -22%
Collective credit impairment charge/(release) (12) (16) -25% (28) (19) 47%
Net loans & advances 37,123 36,875 1% 37,123 36,422 2%
Customer deposits 34,695 32,656 6% 34,695 32,077 8%
----- End of picture text -----

SEGMENT REVIEW

New Zealand David Hisco

Commercial

==> picture [511 x 175] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Net interest income 700 672 4% 1,372 1,316 4%
Other operating income 44 47 -6% 91 126 -28%
Operating income 744 719 3% 1,463 1,442 1%
Operating expenses (245) (244) 0% (489) (490) 0%
Profit before credit impairment and income tax 499 475 5% 974 952 2%
Credit impairment charge (9) 49 large 40 11 large
Profit before tax 490 524 -6% 1,014 963 5%
Income tax expense and non-controlling interests (136) (147) -7% (283) (265) 7%
Cash profit 354 377 -6% 731 698 5%
Risk weighted assets 34,857 34,196 2% 34,857 30,407 15%
----- End of picture text -----

==> picture [511 x 323] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Individual credit impairment charge/(release) NZD M NZD M NZD M NZD M
CommAgri 7 (25) large (18) 32 large
Small Business Banking 16 12 33% 28 7 large
Individual credit impairment charge/(release) 23 (13) large 10 39 -74%
Collective credit impairment charge/(release)
CommAgri (21) (33) -36% (54) (49) 10%
Small Business Banking 7 (3) large 4 (1) large
Collective credit impairment charge/(release) (14) (36) -61% (50) (50) 0%
Total credit impairment charge/(release) 9 (49) large (40) (11) large
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Net loans & advances NZD M NZD M NZD M NZD M
CommAgri 36,556 35,429 3% 36,556 34,759 5%
Small Business Banking 22,876 21,836 5% 22,876 20,447 12%
Net loans & advances 59,432 57,265 4% 59,432 55,206 8%
Customer deposits
CommAgri 10,829 10,832 0% 10,829 9,414 15%
Small Business Banking 12,097 11,717 3% 12,097 10,753 12%
Customer deposits 22,926 22,549 2% 22,926 20,167 14%
----- End of picture text -----

SEGMENT REVIEW

New Zealand David Hisco

New Zealand Total

Table reflects AUD for New Zealand NZD results shown on page 70

New Zealand Total

==> picture [511 x 541] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 1,102 1,060 4% 2,162 1,863 16%
Other operating income 171 178 -4% 349 347 1%
Operating income 1,273 1,238 3% 2,511 2,210 14%
Operating expenses (519) (514) 1% (1,033) (960) 8%
Profit before credit impairment and income tax 754 724 4% 1,478 1,250 18%
Credit impairment charge (26) 34 large 8 (37) large
Profit before tax 728 758 -4% 1,486 1,213 23%
Income tax expense and non-controlling interests (203) (213) -5% (416) (336) 24%
Cash profit 525 545 -4% 1,070 877 22%
Consisting of:
Retail 198 203 -2% 401 312 29%
Commercial 324 344 -6% 668 579 15%
Other 3 (2) large 1 (14) large
Cash profit 525 545 -4% 1,070 877 22%
Balance Sheet
Net loans & advances 86,063 88,247 -2% 86,063 81,542 6%
Other external assets 3,380 3,763 -10% 3,380 3,415 -1%
External assets 89,443 92,010 -3% 89,443 84,957 5%
Customer deposits 51,360 51,749 -1% 51,360 46,494 10%
Other deposits and borrowings 5,399 5,063 7% 5,399 4,240 27%
Deposits and other borrowings 56,759 56,812 0% 56,759 50,734 12%
Other external liabilities 16,319 14,970 9% 16,319 13,745 19%
External liabilities 73,078 71,782 2% 73,078 64,479 13%
Risk weighted assets 48,682 50,388 -3% 48,682 44,496 9%
Average net loans and advances 87,496 84,756 3% 86,130 73,769 17%
Average deposits and other borrowings 57,180 54,516 5% 55,852 46,672 20%
Ratios
Return on assets 1.15% 1.24% 1.19% 1.14%
Net interest margin 2.48% 2.48% 2.48% 2.49%
Operating expenses to operating income 40.8% 41.5% 41.1% 43.5%
Operating expenses to average assets 1.14% 1.17% 1.15% 1.25%
Individual credit impairment charge/(release) 50 13 large 63 95 -34%
Individual credit impairment charge/(release) as a % of average net advances 0.11% 0.03% 0.07% 0.13%
Collective credit impairment charge/(release) (24) (47) -49% (71) (58) 22%
Collective credit impairment charge/(release) as a % of average net advances (0.05%) (0.11%) (0.08%) (0.08%)
Net impaired assets 342 446 -23% 342 510 -33%
Net impaired assets as a % of net advances 0.40% 0.51% 0.40% 0.63%
Total full time equivalent staff (FTE) 5,080 5,236 -3% 5,080 5,323 -5%
----- End of picture text -----

SEGMENT REVIEW

Global Wealth Joyce Phillips

The Global Wealth division comprises Funds Management, Insurance and Private Wealth business units that provide investment, superannuation, pension, insurance and private banking solutions to customers across Australia, New Zealand and Asia.

Cash profit – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 152] intentionally omitted <==

----- Start of picture text -----

17
162
6
(71)
525
22
17
471 (99)
$m
FY13 Funds Management Insurance income Private Wealth Corporate and other Operating expenses Credit impairment Income tax expense FY14
Cash profit income income income charge & non-controlling Cash profit
interests
----- End of picture text -----

Global Wealth provides a range of innovative solutions to customers across the Asia Pacific region to make it easier for them to connect, protect and grow their wealth. Global Wealth serves over 2.3 million customers and manages $61 billion in investment and retirement savings. Customers can access ANZ’s wealth solutions through teams of highly qualified financial planners and advisers, innovative digital platforms, ANZ Private Bankers, ANZ branches and direct channels.

ANZ’s customers are increasingly looking for simple, affordable and more convenient ways to manage their wealth. In response to this, Global Wealth developed Grow - a series of innovations across the physical, digital and advice space to help our customers better connect, protect and grow their wealth. These innovations include ANZ Smart Choice Super, a simple direct retirement savings solution, the ANZ Grow Centre, a destination that blends digital tools with the physical wealth specialists, where customers can get help with everything from their digital device to financial advice, and Grow by ANZ, our award winning digital app that brings banking, share investments, super (pension) and insurance, together in the one place.

Key factors affecting the result were:

Funds Management operating income decreased by 2% primarily due to change in portfolio mix.
Insurance operating income increased by 14% reflecting strong inforce premium growth and improved Group Insurance lapse experience partially offset by higher claims.
Excluding the $125m gain on sale of ANZ Trustees, Private Wealth operating income decreased by 3% with growth in customer deposits, investment FUM and improved margins being offset by the absence of ANZ Trustees income in the last quarter.
The divisional operating income in March 2014 includes the benefit of a non-recurring insurance settlement of $26m.
Operating expense increased 7% as a result of $41m spend on revenue generating initiatives and write-down of intangible assets. Excluding this, expenses decreased by 1% despite additional regulatory and compliance costs of $7m.
September 2014 v September 2013

Funds Management

The Funds Management business helps customers grow their wealth through investment, superannuation and pension solutions. Global Wealth has embraced the changing regulatory environment to reshape the business, simplifying operational processes and delivering innovative solutions like ANZ Smart Choice Super and Grow by ANZ.

Insurance

The Insurance business provides protection for all life stages through a comprehensive range of life and general insurance products distributed through intermediated and direct channels. Global Wealth’s focus on retail risk resulted in 10% growth in individual in-force premiums, while continued investment in claims management and retention initiatives in Australia improved claims ratios as well as reduced retail lapse rates by 130 bps.

Private Wealth

Operating in six geographies across the region we continue to strengthen our Private Wealth offerings by building core investment advice capabilities and developing a suite of global investment solutions. This includes leveraging the expertise of strategic partners such as Swiss Private Bank Vontobel.

 September 2014 v March 2014

Cash profit increased by 32% primarily reflecting the impact of the ANZ Trustees sale and subsequent investment in productivity initiatives.

Cash profit increased by 11%, with 14% increase in operating income and 7% increase in expenses. Excluding the one-off tax consolidation adjustment in September 2013 and the impact of the ANZ Trustees sale, cash profit increased by 10%.

Key factors affecting the result were:

Funds Management operating income increased by 3%. This was driven by 12% growth in average FUM as a result of strong performance in investment markets and improvement in net flows by $2.4 billion due to solid growth in ANZ Smart Choice Super and KiwiSaver product.
Insurance operating income increased by 4% despite the exit of a Group Life Insurance plan resulting in a $47m experience loss. Excluding this, income grew 12% due to strong underlying business performance and improved claims and lapse experience. This performance delivered 16% uplift in the Embedded Value (gross of transfers).
Excluding the $125m gain on sale of ANZ Trustees, Private Wealth operating income increased by 18% driven by improved margins and solid growth in customer deposits and investment FUM both up by 20% and 21% respectively.
The divisional operating income also benefitted from a nonrecurring insurance settlement of $26m.
Operating expense increased 7% including $41m spend on revenue generating initiatives and the write-down of intangible assets. Excluding this, expenses increased by 3%, including additional regulatory and compliance costs of $13m.

SEGMENT REVIEW

Global Wealth Joyce Phillips

Global Wealth Total

==> picture [511 x 629] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 87 80 9% 167 139 20%
Other operating income [1 ] 208 120 73% 328 174 89%
Net funds management and insurance income 642 607 6% 1,249 1,213 3%
Operating income 937 807 16% 1,744 1,526 14%
Operating expenses (531) (495) 7% (1,026) (955) 7%
Profit before credit impairment and income tax 406 312 30% 718 571 26%
Credit impairment charge 1 1 0% 2 (4) large
Profit before income tax 407 313 30% 720 567 27%
Income tax expense and non-controlling interests (108) (87) 24% (195) (96) large
Cash profit 299 226 32% 525 471 11%
Consisting of:
Business Segments
Funds Management [2 ] 53 62 -15% 115 128 -10%
Insurance 126 98 29% 224 222 1%
Private Wealth 132 40 large 172 50 large
Corporate and Other [3 ] (12) 26 large 14 71 -80%
Total Global Wealth 299 226 32% 525 471 11%
Australia 243 156 56% 399 411 -3%
New Zealand [4 ] 56 71 -21% 127 66 92%
Asia Pacific, Europe & America - (1) -100% (1) (6) -83%
Total Global Wealth 299 226 32% 525 471 11%
Income from invested capital [5 ] 27 28 -4% 55 57 -4%
Balance Sheet
Funds under management 61,411 61,652 0% 61,411 58,578 5%
Average funds under management 62,106 60,552 3% 61,329 54,990 12%
In-force premiums 2,038 1,955 4% 2,038 1,986 3%
Net loans and advances 5,675 6,009 -6% 5,675 6,187 -8%
Customer deposits 13,844 12,699 9% 13,844 11,569 20%
Average net loans and advances 5,708 6,121 -7% 5,914 5,801 2%
Average customer deposits 13,104 12,278 7% 12,692 10,536 20%
Ratios
Operating expenses to operating income 56.7% 61.3% 58.8% 62.6%
Funds management expenses to average FUM [6 ]
Australia 0.61% 0.60% 0.61% 0.61%
New Zealand 0.35% 0.41% 0.38% 0.46%
Insurance expenses to in-force premiums
Australia 11.2% 11.7% 11.2% 10.9%
New Zealand 35.8% 34.6% 35.4% 37.4%
Retail insurance lapse rates
Australia 12.5% 12.1% 12.4% 13.7%
New Zealand 16.7% 14.9% 16.1% 15.9%
Total full time equivalent staff (FTE) 2,296 2,291 0% 2,296 2,482 -7%
Aligned adviser numbers [7 ] 2,022 2,061 -2% 2,022 2,133 -5%
----- End of picture text -----

1. Other operating income includes $125 million gain on the sale of ANZ Trustees. 2.

Funds Management includes Pensions & Investments business and E*TRADE.

Corporate and Other includes income from invested capital and cash profits from the advice and distribution business.

Includes $26 million cross border settlement of an insurance claim in March 2014 involving both Australia and New Zealand on a net basis. For statutory purposes, the individual components of this settlement have been recognised in their respective geographies.

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 2014 was $2.4 billion (Sep 13: $2.1 billion), which comprises fixed interest securities of 48% and cash and term deposits of 52% (Sep 13: 33% fixed interest securities and 67% cash and term deposits).
6. Funds management expense and FUM only relates to Pensions & Investments business.

Includes corporate authorised representatives of dealer groups wholly or partially owned by ANZ Wealth and ANZ Group financial planners.

SEGMENT REVIEW

Global Wealth Joyce Phillips

==> picture [511 x 177] intentionally omitted <==

----- Start of picture text -----

Major business segments
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Funds Management [1 ] $M $M $M $M
Net interest income 16 17 -6% 33 35 -6%
Other operating income 34 33 3% 67 69 -3%
Funds management income 419 416 1% 835 790 6%
Funds management volume related expenses (202) (194) 4% (396) (372) 6%
Operating income 267 272 -2% 539 522 3%
Operating expenses (195) (184) 6% (379) (360) 5%
Profit before income tax 72 88 -18% 160 162 -1%
Income tax expense and non-controlling interests (19) (26) -27% (45) (34) 32%
Cash profit 53 62 -15% 115 128 -10%
----- End of picture text -----

==> picture [511 x 154] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Insurance $M $M $M $M
Net interest income 15 14 7% 29 27 7%
Other operating income 24 33 -27% 57 57 0%
Insurance income 405 358 13% 763 750 2%
Insurance volume related expenses (137) (135) 1% (272) (279) -3%
Operating income 307 270 14% 577 555 4%
Operating expenses (134) (136) -1% (270) (255) 6%
Profit before income tax 173 134 29% 307 300 2%
Income tax expense and non-controlling interests (47) (36) 31% (83) (78) 6%
Cash profit 126 98 29% 224 222 1%
----- End of picture text -----

==> picture [511 x 168] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Private Wealth $M $M $M $M
Net interest income 74 67 10% 141 109 29%
Other operating income [2] 147 30 large 177 48 large
Net funds management income 22 25 -12% 47 46 2%
Operating income 243 122 99% 365 203 80%
Operating expenses (62) (67) -7% (129) (127) 2%
Profit before credit impairment and income tax 181 55 large 236 76 large
Credit impairment charge 1 1 0% 2 (4) large
Profit before income tax 182 56 large 238 72 large
Income tax expense and non-controlling interests (50) (16) large (66) (22) large
Cash profit 132 40 large 172 50 large
----- End of picture text -----

1. Funds Management includes Pensions & Investments business and E*TRADE.

2. Other operating income includes a $125 million gain on sale of ANZ Trustees.

SEGMENT REVIEW

Global Wealth

Joyce Phillips

==> picture [511 x 650] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Insurance operating margin $M $M $M $M
Life Insurance Planned profit margin
Group & Individual 64 52 23% 116 131 -11%
Experience profit/(loss) [1 ] (11) (25) -56% (36) (30) 20%
Assumption changes [2 ] - - n/a - - n/a
General Insurance operating profit margin [3 ] 47 45 4% 92 83 11%
Australia 100 72 39% 172 184 -7%
Life Insurance Planned profit margin
Individual 21 21 0% 42 36 17%
Experience profit/(loss) [1 ] 5 5 0% 10 2 large
Assumption changes [2 ] - - n/a - - n/a
New Zealand 26 26 0% 52 38 37%
Total 126 98 29% 224 222 1%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Operating expenses by business segment $M $M $M $M
Funds Management [4 ] 195 184 6% 379 360 5%
Insurance 134 136 -1% 270 255 6%
Private Wealth 62 67 -7% 129 127 2%
Corporate and Other 140 108 30% 248 213 16%
Total 531 495 7% 1,026 955 7%
Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Operating expenses by geography segment $M $M $M $M
Australia 439 403 9% 842 781 8%
New Zealand 64 61 5% 125 115 9%
Asia Pacific, Europe & America 28 31 -10% 59 59 0%
Total 531 495 7% 1,026 955 7%
As at ($M) Movement
Sep 14 Sep 14
Funds under management Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Funds under management - average 62,106 60,552 56,507 3% 10%
Funds under management - end of period 61,411 61,652 58,578 0% 5%
Composed of:
Australian equities 16,744 19,947 19,164 -16% -13%
Global equities 16,164 13,468 11,583 20% 40%
Cash and fixed interest 24,937 24,350 24,153 2% 3%
Property and infrastructure 3,566 3,887 3,678 -8% -3%
Total 61,411 61,652 58,578 0% 5%
As at ($M) Movement
Sep 14 Sep 14
Funds under management by region Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 47,502 48,746 47,362 -3% 0%
New Zealand 13,909 12,906 11,216 8% 24%
Total 61,411 61,652 58,578 0% 5%
----- End of picture text -----

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.

3. General Insurance operating profit margin includes ANZ Lenders Mortgage Insurance.

Funds Management includes Pensions & Investments business and E*TRADE.

SEGMENT REVIEW

Global Wealth

Joyce Phillips

==> picture [512 x 157] intentionally omitted <==

----- Start of picture text -----

Sep 14 In- Out- Other [1 ] Sep 13
Funds Management cashflows by product $M flows flows $M
OneAnswer 19,501 2,774 (2,487) 913 18,301
Other Personal Investment 5,768 827 (916) 306 5,551
Employer Super 14,566 2,094 (2,390) 834 14,028
Oasis 6,366 1,097 (932) 316 5,885
ANZ Trustees - 357 (318) (2,756) 2,717
Private Wealth - Australia 1,301 527 (136) 30 880
KiwiSaver 5,162 1,357 (363) 355 3,813
Private Wealth - New Zealand 4,465 883 (554) 257 3,879
Other New Zealand 4,282 1,275 (883) 366 3,524
Total 61,411 11,191 (8,979) 621 58,578
----- End of picture text -----

==> picture [511 x 459] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Insurance annual in-force premiums Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Group 360 336 447 7% -19%
Individual 1,178 1,132 1,067 4% 10%
General Insurance 500 487 472 3% 6%
Total 2,038 1,955 1,986 4% 3%
Insurance annual in-force premiums by region
Australia 1,865 1,780 1,839 5% 1%
New Zealand 173 175 147 -1% 18%
Total 2,038 1,955 1,986 4% 3%
Sep 14 New Lapses Sep 13
business
Insurance in-force book movement $M $M [2 ] $M $M
Group 360 45 (132) 447
Individual 1,178 241 (130) 1,067
General Insurance 500 144 (116) 472
Total 2,038 430 (378) 1,986
Insurance in-force book movement by region
Australia 1,865 388 (362) 1,839
New Zealand 173 42 (16) 147
Total 2,038 430 (378) 1,986
Australia New Zealand Total
Embedded value [3] and value of new business (insurance and investments only) $M $M $M
Embedded value as at September 2013 3,244 422 3,666
Value of new business [4 ] 159 17 176
Expected return [5 ] 308 34 342
Experience deviations and assumption changes [6 ] 3 16 19
Embedded value before economic assumption changes and net transfer 3,714 489 4,203
Economic assumptions change 18 48 66
Net transfer [7 ] (353) (33) (386)
Embedded value as at September 2014 3,379 504 3,883
----- End of picture text -----

1. Other includes investment income (net of taxes), fees, charges, distributions, the impact of the sale of ANZ Trustees and the translation differences on foreign currency balances.

2. New business includes the impact of foreign currency gains on translation.

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 8.50%-10.0%. 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. 5. Expected return represents expected increase in value over the period.

Experience deviations and assumption changes arise from deviations from and changes to best estimate assumptions underlying the prior period embedded value. The favourable movement for the Australian business is primarily due to improved claim assumptions partially offset by tightening lapse assumptions from the Insurance business. Favourable movement for NZ is primarily due to better lapse experience from the Life insurance business.

Net transfer represents net capital movements over the period including restructuring of the business, capital injections, transfer of cash dividends and value of franking credits. There were $266 million of cash dividends and $87 million franking credits transferred to the ANZ Group.

SEGMENT REVIEW

Global Technology, Services and Operations and Group Centre

GTSO and Group Centre provide support to the operating divisions, including technology, operations, shared services, property, risk management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre also includes Group Treasury and Shareholder Functions.

==> picture [511 x 171] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income [1 ] 222 215 3% 437 431 1%
Other operating income [1 ] (171) (186) -8% (357) (216) 65%
Operating income 51 29 76% 80 215 -63%
Operating expenses (248) (181) 37% (429) (390) 10%
Profit before credit impairment and income tax (197) (152) 30% (349) (175) 99%
Credit impairment charge 34 1 large 35 (19) large
Profit before tax (163) (151) 8% (314) (194) 62%
Income tax expense and non-controlling interests 41 56 -27% 97 48 large
Cash profit/(loss) (122) (95) 28% (217) (146) 49%
Total full time equivalent staff (FTE) 24,827 24,177 3% 24,827 23,778 4%
----- End of picture text -----

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

Cash Profit – September 2014 Full Year v September 2013 Full Year

==> picture [518 x 175] intentionally omitted <==

----- Start of picture text -----

6
(146)
49
(217)
$m
54
(141)
(39)
FY13 Net interest Other operating Operating Credit Income tax expense FY14
Cash loss income income expenses impairment & non-controlling Cash loss
charge interests
----- End of picture text -----

September 2014 v March 2014

Key factors affecting the result were:

Operating income increased $22 million with higher income generated from greater capital held in Group Centre.
Operating expenses increased $67 million largely due to increased investment in enterprise projects, higher depreciation and amortisation and increased retrenchment costs.
Credit impairment charges decreased $33 million following the release of an economic cycle provision held in Group Centre.
The increase in FTEs is due to growth in the Group Hubs and increased resources for enterprise projects.
September 2014 v September 2013

Key factors affecting the result were:

Operating income decreased $135 million with higher realised losses from foreign currency hedges (offsetting translation gains elsewhere in the Group).
Operating expenses increased $39 million due to higher depreciation and amortisation, increased investment in enterprise projects and creation of a new Global Compliance function.
Credit impairment charges decreased $54 million due to release of the economic cycle provision and provisions relating to discontinued businesses in 2013.
The increase in FTEs is largely due to growth in the Group Hubs, increased resources for enterprise projects and the creation of a new Global Compliance function.

SEGMENT REVIEW

This page has been left blank intentionally

GEOGRAPHIC REVIEW

Section 6 – Geographic Review

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

GEOGRAPHIC REVIEW

Geographic Performance

The Group's divisions operate across multiple geographies with components of the following divisional results reflected in each geography:

Australia - made up of the Australian component of Australia, International and Institutional Banking (IIB); Global Wealth and GTSO and Group Centre divisions;
Asia, Pacific, Europe & America - made up of the APEA components of IIB, Global Wealth and GTSO and Group Centre divisions; and
New Zealand - made up of the New Zealand components of New Zealand, IIB, Global Wealth and GTSO and Group Centre divisions.

==> picture [511 x 90] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Statutory Profit $M $M $M $M
Australia 2,561 1,931 33% 4,492 4,142 8%
Asia Pacific, Europe & America 531 683 -22% 1,214 1,042 17%
New Zealand 787 778 1% 1,565 1,126 39%
3,879 3,392 14% 7,271 6,310 15%
----- End of picture text -----

==> picture [511 x 89] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Cash Profit $M $M $M $M
Australia 2,337 2,025 15% 4,362 4,300 1%
Asia Pacific, Europe & America 535 681 -21% 1,216 1,013 20%
New Zealand 730 809 -10% 1,539 1,179 31%
3,602 3,515 2% 7,117 6,492 10%
----- End of picture text -----

==> picture [511 x 201] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Net loans & advances Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 348,537 336,466 324,278 4% 7%
Asia Pacific, Europe & America 79,192 76,634 69,893 3% 13%
New Zealand 94,023 96,150 89,093 -2% 6%
521,752 509,250 483,264 2% 8%
As at ($M) Movement
Sep 14 Sep 14
Customer deposits Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 227,823 216,127 207,902 5% 10%
Asia Pacific, Europe & America 107,838 102,463 98,127 5% 10%
New Zealand 68,058 69,432 62,800 -2% 8%
403,719 388,022 368,829 4% 9%
----- End of picture text -----

GEOGRAPHIC REVIEW

Australia geography

==> picture [511 x 505] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 4,889 4,659 5% 9,548 9,145 4%
Other operating income 1,553 1,381 12% 2,934 3,210 -9%
Operating income 6,442 6,040 7% 12,482 12,355 1%
Operating expenses (2,750) (2,648) 4% (5,398) (5,282) 2%
Profit before credit impairment and income tax 3,692 3,392 9% 7,084 7,073 0%
Credit impairment charge (379) (479) -21% (858) (954) -10%
Profit before tax 3,313 2,913 14% 6,226 6,119 2%
Income tax expense and non-controlling interests (976) (888) 10% (1,864) (1,819) 2%
Cash profit 2,337 2,025 15% 4,362 4,300 1%
Adjustments between statutory profit and cash profit 224 (94) large 130 (158) large
Statutory profit 2,561 1,931 33% 4,492 4,142 8%
Balance Sheet
Net loans & advances 348,537 336,466 4% 348,537 324,278 7%
Other external assets 153,020 136,579 12% 153,020 128,905 19%
External assets 501,557 473,045 6% 501,557 453,183 11%
Customer deposits 227,823 216,127 5% 227,823 207,902 10%
Other deposits and borrowings 71,342 73,908 -3% 71,342 66,277 8%
Deposits and other borrowings 299,165 290,035 3% 299,165 274,179 9%
Other external liabilities 161,809 147,174 10% 161,809 149,505 8%
External liabilities 460,974 437,209 5% 460,974 423,684 9%
Risk weighted assets 203,235 201,720 1% 203,235 196,416 3%
Average net loans and advances 349,502 330,036 6% 339,795 314,060 8%
Average deposits and other borrowings 302,884 290,912 4% 296,915 269,095 10%
Ratios
Net interest margin - cash 2.39% 2.38% 2.39% 2.48%
Operating expenses to operating income - cash 42.7% 43.8% 43.2% 42.8%
Operating expenses to average assets - cash 1.13% 1.14% 1.13% 1.19%
Individual credit impairment charge/(release) - cash 437 455 -4% 892 880 1%
Individual credit impairment charge/(release) as a % of 0.25% 0.28% 0.26% 0.28%
average net advances - cash
Collective credit impairment charge/(release) - cash (58) 24 large (34) 74 large
Collective credit impairment charge/(release) as a % of (0.03%) 0.01% (0.01%) 0.02%
average net advances - cash
Net impaired assets 989 1,267 -22% 989 1,819 -46%
Net impaired assets as a % of net advances 0.28% 0.38% 0.28% 0.56%
Total full time equivalent staff (FTE) 21,591 21,821 -1% 21,591 22,229 -3%
----- End of picture text -----

GEOGRAPHIC REVIEW

Asia Pacific, Europe & America geography

Table reflects AUD for the APEA region

==> picture [511 x 505] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 864 855 1% 1,719 1,450 19%
Other operating income 899 1,036 -13% 1,935 1,694 14%
Operating income 1,763 1,891 -7% 3,654 3,144 16%
Operating expenses (1,046) (977) 7% (2,023) (1,740) 16%
Profit before credit impairment and income tax 717 914 -22% 1,631 1,404 16%
Credit impairment charge (54) (85) -36% (139) (190) -27%
Profit before tax 663 829 -20% 1,492 1,214 23%
Income tax expense and non-controlling interests (128) (148) -14% (276) (201) 37%
Cash profit 535 681 -21% 1,216 1,013 20%
Adjustments between statutory profit and cash profit (4) 2 large (2) 29 large
Statutory profit 531 683 -22% 1,214 1,042 17%
Balance Sheet
Net loans & advances 79,192 76,634 3% 79,192 69,893 13%
Other external assets 72,353 66,475 9% 72,353 66,728 8%
External assets 151,545 143,109 6% 151,545 136,621 11%
Customer deposits 107,838 102,463 5% 107,838 98,127 10%
Other deposits and borrowings 28,353 29,791 -5% 28,353 25,306 12%
Deposits and other borrowings 136,191 132,254 3% 136,191 123,433 10%
Other external liabilities 25,834 21,296 21% 25,834 17,944 44%
External liabilities 162,025 153,550 6% 162,025 141,377 15%
Risk weighted assets 96,874 94,353 3% 96,874 85,586 13%
Average net loans and advances 78,181 75,621 3% 76,905 62,380 23%
Average deposits and other borrowings 137,018 133,781 2% 135,404 117,444 15%
Ratios
Net interest margin - cash 1.13% 1.20% 1.17% 1.18%
Operating expenses to operating income - cash 59.3% 51.7% 55.4% 55.3%
Operating expenses to average assets - cash 1.23% 1.22% 1.23% 1.27%
Individual credit impairment charge/(release) - cash 49 127 -61% 176 181 -3%
Individual credit impairment charge/(release) as a % of 0.13% 0.34% 0.23% 0.29%
average net advances - cash
Collective credit impairment charge/(release) - cash 5 (42) large (37) 9 large
Collective credit impairment charge/(release) as a % of 0.01% (0.11%) (0.05%) (0.01%)
average net advances - cash
Net impaired assets 291 326 -11% 291 389 -25%
Net impaired assets as a % of net advances 0.37% 0.43% 0.37% 0.56%
Total full time equivalent staff (FTE) 20,512 19,653 4% 20,512 19,233 7%
----- End of picture text -----

GEOGRAPHIC REVIEW

Asia Pacific, Europe & America geography

Table reflects USD for the APEA region

==> picture [511 x 505] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
USD M USD M USD M USD M
Net interest income 803 778 3% 1,581 1,440 10%
Other operating income 835 945 -12% 1,780 1,684 6%
Operating income 1,638 1,723 -5% 3,361 3,124 8%
Operating expenses (970) (891) 9% (1,861) (1,729) 8%
Profit before credit impairment and income tax 668 832 -20% 1,500 1,395 8%
Credit impairment charge (51) (77) -34% (128) (189) -32%
Profit before tax 617 755 -18% 1,372 1,206 14%
Income tax expense and non-controlling interests (119) (134) -11% (253) (200) 27%
Cash profit 498 621 -20% 1,119 1,006 11%
Adjustments between statutory profit and cash profit (3) 1 large (2) 29 large
Statutory profit 495 622 -20% 1,117 1,035 8%
Balance Sheet
Net loans & advances 69,309 70,756 -2% 69,309 65,084 6%
Other external assets 63,323 61,377 3% 63,323 62,138 2%
External assets 132,632 132,133 0% 132,632 127,222 4%
Customer deposits 94,379 94,603 0% 94,379 91,376 3%
Other deposits and borrowings 24,815 27,507 -10% 24,815 23,565 5%
Deposits and other borrowings 119,194 122,110 -2% 119,194 114,941 4%
Other external liabilities 22,610 19,663 15% 22,610 16,710 35%
External liabilities 141,804 141,773 0% 141,804 131,651 8%
Risk weighted assets 84,784 87,116 -3% 84,784 79,698 6%
Average net loans and advances 72,599 68,911 5% 70,760 61,938 14%
Average deposits and other borrowings 127,245 121,910 4% 124,585 116,612 7%
Ratios
Net interest margin - cash 1.13% 1.20% 1.17% 1.18%
Operating expenses to operating income - cash 59.2% 51.7% 55.4% 55.3%
Operating expenses to average assets - cash 1.23% 1.22% 1.22% 1.27%
Individual credit impairment charge/(release) - cash 47 115 -59% 162 180 -10%
Individual credit impairment charge/(release) as a % of 0.13% 0.33% 0.23% 0.29%
average net advances - cash
Collective credit impairment charge/(release) - cash 4 (38) large (34) 9 large
Collective credit impairment charge/(release) as a % of 0.01% (0.11%) (0.05%) 0.01%
average net advances - cash
Net impaired assets 255 302 -16% 255 362 -30%
Net impaired assets as a % of net advances 0.37% 0.43% 0.37% 0.56%
Total full time equivalent staff (FTE) 20,512 19,653 4% 20,512 19,233 7%
----- End of picture text -----

GEOGRAPHIC REVIEW

Asia Pacific, Europe & America geography

Table reflects AUD results for the APEA regions

==> picture [511 x 90] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Statutory Profit $M $M $M $M
Asia 347 498 -30% 845 657 29%
Europe & America 100 60 67% 160 192 -17%
Pacific 84 125 -33% 209 193 8%
531 683 -22% 1,214 1,042 17%
----- End of picture text -----

==> picture [511 x 89] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Cash Profit $M $M $M $M
Asia 347 497 -30% 844 656 29%
Europe & America 104 59 76% 163 164 -1%
Pacific 84 125 -33% 209 193 8%
535 681 -21% 1,216 1,013 20%
----- End of picture text -----

==> picture [511 x 89] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Net loans & advances Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Asia 68,733 67,802 61,306 1% 12%
Europe & America 6,923 5,450 5,459 27% 27%
Pacific 3,536 3,382 3,128 5% 13%
79,192 76,634 69,893 3% 13%
----- End of picture text -----

==> picture [511 x 201] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Customer deposits Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Asia 62,776 61,894 59,644 1% 5%
Europe & America 40,307 36,013 34,115 12% 18%
Pacific 4,755 4,556 4,368 4% 9%
107,838 102,463 98,127 5% 10%
As at ($M) Movement
Sep 14 Sep 14
Risk weighted assets Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Asia 70,078 70,222 61,533 0% 14%
Europe & America 19,422 17,362 17,834 12% 9%
Pacific 7,374 6,769 6,219 9% 19%
96,874 94,353 85,586 3% 13%
----- End of picture text -----

GEOGRAPHIC REVIEW

New Zealand geography

Table reflects AUD results for the New Zealand geography

==> picture [511 x 505] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Net interest income 1,280 1,250 2% 2,530 2,177 16%
Other operating income 425 487 -13% 912 715 28%
Operating income 1,705 1,737 -2% 3,442 2,892 19%
Operating expenses (678) (661) 3% (1,339) (1,235) 8%
Profit before credit impairment and income tax 1,027 1,076 -5% 2,103 1,657 27%
Credit impairment charge (28) 36 large 8 (53) large
Profit before tax 999 1,112 -10% 2,111 1,604 32%
Income tax expense and non-controlling interests (269) (303) -11% (572) (425) 35%
Cash profit 730 809 -10% 1,539 1,179 31%
Adjustments between statutory profit and cash profit 57 (31) large 26 (53) large
Statutory profit 787 778 1% 1,565 1,126 39%
Balance Sheet
Net loans & advances 94,023 96,150 -2% 94,023 89,093 6%
Other external assets 24,962 25,511 -2% 24,962 24,098 4%
External assets 118,985 121,661 -2% 118,985 113,191 5%
Customer deposits 68,058 69,432 -2% 68,058 62,800 8%
Other deposits and borrowings 6,665 6,597 1% 6,665 6,503 2%
Deposits and other borrowings 74,723 76,029 -2% 74,723 69,303 8%
Other external liabilities 25,086 23,989 5% 25,086 23,028 9%
External liabilities 99,809 100,018 0% 99,809 92,331 8%
Risk weighted assets 61,420 64,667 -5% 61,420 57,263 7%
Average net loans and advances 95,512 92,606 3% 94,063 80,817 16%
Average deposits and other borrowings 77,276 73,791 5% 75,538 63,526 19%
Ratios
Net interest margin - cash 2.29% 2.32% 2.30% 2.29%
Operating expenses to operating income - cash 39.8% 38.1% 38.9% 42.7%
Operating expenses to average assets - cash 1.10% 1.10% 1.10% 1.15%
Individual credit impairment charge/(release) - cash 56 20 large 76 106 -28%
Individual credit impairment charge/(release) as a % of 0.12% 0.04% 0.08% 0.13%
average net advances - cash
Collective credit impairment charge/(release) - cash (28) (56) -50% (84) (53) 58%
Collective credit impairment charge/(release) as a % of
(0.06%) (0.12%) (0.09%) (0.07%)
average net advances - cash
Net impaired assets 431 557 -23% 431 589 -27%
Net impaired assets as a % of net advances 0.46% 0.58% 0.46% 0.66%
Total full time equivalent staff (FTE) 8,225 8,376 -2% 8,225 8,404 -2%
----- End of picture text -----

GEOGRAPHIC REVIEW

New Zealand geography

Table reflects NZD results for the New Zealand geography

==> picture [511 x 505] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
NZD M NZD M NZD M NZD M
Net interest income 1,395 1,370 2% 2,765 2,641 5%
Other operating income 463 534 -13% 997 868 15%
Operating income 1,858 1,904 -2% 3,762 3,509 7%
Operating expenses (739) (725) 2% (1,464) (1,497) -2%
Profit before credit impairment and income tax 1,119 1,179 -5% 2,298 2,012 14%
Credit impairment charge (30) 39 large 9 (65) large
Profit before tax 1,089 1,218 -11% 2,307 1,947 18%
Income tax expense and non-controlling interests (294) (331) -11% (625) (515) 21%
Cash profit 795 887 -10% 1,682 1,432 17%
Adjustments between statutory profit and cash profit 63 (34) large 29 (64) large
Statutory profit 858 853 1% 1,711 1,368 25%
Balance Sheet
Net loans & advances 105,485 102,571 3% 105,485 100,113 5%
Other external assets 28,005 27,215 3% 28,005 27,079 3%
External assets 133,490 129,786 3% 133,490 127,192 5%
Customer deposits 76,355 74,069 3% 76,355 70,566 8%
Other deposits and borrowings 7,478 7,038 6% 7,478 7,309 2%
Deposits and other borrowings 83,833 81,107 3% 83,833 77,875 8%
Other external liabilities 28,143 25,590 10% 28,143 25,876 9%
External liabilities 111,976 106,697 5% 111,976 103,751 8%
Risk weighted assets 68,908 68,985 0% 68,908 64,346 7%
Average net loans and advances 104,143 101,484 3% 102,817 98,050 5%
Average deposits and other borrowings 84,263 80,865 4% 82,568 77,072 7%
Ratios
Net interest margin - cash 2.29% 2.32% 2.30% 2.29%
Operating expenses to operating income - cash 39.8% 38.1% 38.9% 42.7%
Operating expenses to average assets - cash 1.10% 1.10% 1.10% 1.15%
Individual credit impairment charge/(release) - cash 61 22 large 83 128 -35%
Individual credit impairment charge/(release) as a % of 0.12% 0.04% 0.08% 0.13%
average net advances - cash
Collective credit impairment charge/(release) - cash (31) (61) -49% (92) (63) 46%
Collective credit impairment charge/(release) as a % of
(0.06%) (0.12%) (0.09%) (0.07%)
average net advances - cash
Net impaired assets 483 594 -19% 483 662 -27%
Net impaired assets as a % of net advances 0.46% 0.58% 0.46% 0.66%
Total full time equivalent staff (FTE) 8,225 8,376 -2% 8,225 8,404 -2%
----- End of picture text -----

PROFIT RECONCILIATION

Section 7 – Profit Reconciliation

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

PROFIT RECONCILIATION

Non-IFRS information

The Group provides additional measures of performance in the Results Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in ASIC’s RG230 has been followed when presenting this information.

Adjustments between statutory profit and cash profit

==> picture [511 x 76] intentionally omitted <==

==> picture [511 x 143] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Adjustments between statutory profit
and cash profit
Treasury shares adjustments (13) 37 large 24 84 -71%
Revaluation of policy liabilities (23) (3) large (26) 46 large
Economic hedging (150) 78 large (72) (57) 26%
Revenue and net investment hedges (119) 18 large (101) 159 large
Structured credit intermediation trades 28 (7) large 21 (50) large
Total adjustments between
statutory profit and cash profit (277) 123 large (154) 182 large
----- End of picture text -----

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 insurance 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, the half year gain of $13 million after tax ($16 million pre tax) eliminated for statutory accounting purposes has been added back to cash profit.

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 removes the mark-to-market adjustments from 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; and
ineffectiveness from designated accounting 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 curve movements.

For funding and lending related swaps, widening basis spreads from movements in currency pairs (primarily AUD/USD and USD/EUR), resulted in significant gains during the September half. This was in contrast to the March half where losses were driven from a narrowing of basis spreads from the same currency pairs.

PROFIT RECONCILIATION

Gains within revenue and net investment hedges were primarily the result of significant strengthening in the AUD against NZD exchange rate during the September half.

During the period the Group early adopted the part of AASB 9 Financial Instruments relating to gains and losses attributable to changes in own credit risk of financial liabilities designated at ‘Fair value through profit or loss’. As these gains/losses are now presented in other comprehensive income rather than statutory profit they no longer form part of the cash profit adjustments. This was applied retrospectively and comparative information in the tables below have been restated.

==> picture [511 x 124] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 13
Adjustments to the income statement $M $M $M $M
Timing differences where IFRS results in asymmetry between the
hedge and hedged items
Funding and lending related swaps (203) 100 (103) (78)
Revenue and net investment hedges (169) 26 (143) 224
Ineffective portion of designated accounting hedges (10) 10 - (8)
Increase/(decrease) to cash profit before tax (382) 136 (246) 138
Increase/(decrease) to cash profit after tax (269) 96 (173) 102
----- End of picture text -----

Cumulative increase/(decrease) to cash profit pre-tax
relating to economic hedging		As at($M)
	Sep 14	Mar 14	Sep 13
	$M	$M	$M
Timing differences where IFRS results in asymmetry between the hedge and hedged items (before tax)
Funding and lending related swaps Revenue and net investment hedges	575 36	778 205	678 179
Ineffective portion of designated accounting hedges	(25) (15) (25)
	586	968	832

PROFIT RECONCILIATION

Structured credit intermediation trades

ANZ entered into a series of structured credit intermediation trades with US financial guarantors from 2004 to 2007. The underlying structures involved 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 measured at fair value and marked-to-model. Prior to the commencement of the global financial crisis, movements in valuations of these positions were not significant and largely offset each other in income. Following the onset of the financial 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 exposures 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 September half, ANZ terminated all bought protection positions with three financial guarantors along with corresponding sold protection positions for a net loss of $37 million (including termination costs and release of CVA). The termination of these trades results in the remaining exposure being reduced to two financial guarantors.

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 30 September 2014 each amounting to USD 1.0 billion (Mar 14: USD 4.4 billion; Sep 13: USD 4.5 billion). The decrease in notional balances of USD 3.4 billion from March 2014 is primarily due to the termination of trades mentioned above.

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, unless terminated early, the fair value movements are expected to reverse to zero in future periods.

==> picture [511 x 76] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Increase/(decrease) to cash profit $M $M $M $M
Profit before income tax 31 (9) large 22 (63) large
Income tax expense (3) 2 large (1) 13 large
Profit after income tax 28 (7) large 21 (50) large
----- End of picture text -----

==> picture [511 x 113] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Financial impacts of credit intermediation trades Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Mark-to-market exposure to financial guarantors 82 136 179 -40% -54%
Cumulative costs relating to
financial guarantors [1 ]
CVA for outstanding transactions 24 33 42 -27% -43%
Realised close out and hedge costs 373 333 333 12% 12%
Cumulative life to date charges 397 366 375 8% 6%
----- End of picture text -----

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.

Other reclassifications between statutory profit and cash profit

Credit risk on impaired derivatives (nil profit after tax impact)

The charge to income for credit valuation adjustments on defaulted and impaired derivative exposures of $2 million has been reclassified to credit impairment charges in the September 2014 half (Mar 14 half: $1 million charge; Sep 13 full year: $9 million charge). 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 $213 million for the September 2014 half (Mar 14 half: $29 million; Sep 13 full year: $371 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

This page has been left blank intentionally

PROFIT RECONCILIATION

Reconciliation of statutory profit to cash profit

==> picture [503 x 727] intentionally omitted <==

----- Start of picture text -----

September 2014 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 7,032 - - -
Fee income 1,260 - - -
Foreign exchange earnings 480 - - -
Profit on trading instruments 124 - - -
Net income from funds management and insurance 927 (16) (213) (32)
Other 697 - - -
Other operating income 3,488 (16) (213) (32)
Operating income 10,520 (16) (213) (32)
Personnel expenses (2,558) - - -
Premises expenses (446) - - -
Technology expenses (660) - - -
Restructuring expenses (78) - - -
Other expenses (732) - - -
Operating expenses (4,474) - - -
Profit before credit impairment and tax 6,046 (16) (213) (32)
Credit impairment charge (459) - - -
Profit before income tax 5,587 (16) (213) (32)
Income tax expense (1,702) 3 213 9
Non-controlling interests (6) - - -
Profit 3,879 (13) - (23)
March 2014 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 6,778 - - -
Fee income 1,255 - - -
Foreign exchange earnings 593 - - -
Profit on trading instruments 15 - - -
Net income from funds management and insurance 611 40 (29) (5)
Other 282 - - -
Other operating income 2,756 40 (29) (5)
Operating income 9,534 40 (29) (5)
Personnel expenses (2,530) - - -
Premises expenses (442) - - -
Technology expenses (606) - - -
Restructuring expenses (35) - - -
Other expenses (673) - - -
Operating expenses (4,286) - - -
Profit before credit impairment and tax 5,248 40 (29) (5)
Credit impairment charge (527) - - -
Profit before income tax 4,721 40 (29) (5)
Income tax expense (1,323) (3) 29 2
Non-controlling interests (6) - - -
Profit 3,392 37 - (3)
----- End of picture text -----

PROFIT RECONCILIATION

September 2014 Half Year

==> picture [504 x 344] intentionally omitted <==

----- Start of picture text -----

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
1 - - - 1 7,033
- - - - - 1,260
3 (169) - - (166) 314
4 - 31 2 37 161
- - - - (261) 666
(221) - - - (221) 476
(214) (169) 31 2 (611) 2,877
(213) (169) 31 2 (610) 9,910
- - - - - (2,558)
- - - - - (446)
- - - - - (660)
- - - - - (78)
- - - - - (732)
- - - - - (4,474)
(213) (169) 31 2 (610) 5,436
- - - (2) (2) (461)
(213) (169) 31 - (612) 4,975
63 50 (3) - 335 (1,367)
- - - - - (6)
(150) (119) 28 - (277) 3,602
----- End of picture text -----

March 2014 Half Year

==> picture [504 x 345] intentionally omitted <==

----- Start of picture text -----

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
(14) - - - (14) 6,764
- - - - - 1,255
- 26 - - 26 619
- - (9) 1 (8) 7
- - - - 6 617
124 - - - 124 406
124 26 (9) 1 148 2,904
110 26 (9) 1 134 9,668
- - - - - (2,530)
- - - - - (442)
- - - - - (606)
- - - - - (35)
- - - - - (673)
- - - - - (4,286)
110 26 (9) 1 134 5,382
- - - (1) (1) (528)
110 26 (9) - 133 4,854
(32) (8) 2 - (10) (1,333)
- - - - - (6)
78 18 (7) - 123 3,515
----- End of picture text -----

PROFIT RECONCILIATION

==> picture [503 x 343] intentionally omitted <==

----- Start of picture text -----

September 2014 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 13,810 - - -
Fee income 2,515 - - -
Foreign exchange earnings 1,073 - - -
Profit on trading instruments 139 - - -
Net income from funds management and insurance 1,538 24 (242) (37)
Other 979 - - -
Other operating income 6,244 24 (242) (37)
Operating income 20,054 24 (242) (37)
Personnel expenses (5,088) - - -
Premises expenses (888) - - -
Technology expenses (1,266) - - -
Restructuring expenses (113) - - -
Other expenses (1,405) - - -
Operating expenses (8,760) - - -
Profit before credit impair't and tax 11,294 24 (242) (37)
Credit impairment charge (986) - - -
Profit before income tax 10,308 24 (242) (37)
Income tax expense (3,025) - 242 11
Non-controlling interests (12) - - -
Profit 7,271 24 - (26)
----- End of picture text -----

September 2013 Full Year

==> picture [503 x 344] intentionally omitted <==

----- Start of picture text -----

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 funds management and insurance 1,431 90 (371) 66
Other 667 - - -
Other operating income 5,764 90 (371) 66
Operating income 18,522 90 (371) 66
Personnel expenses (4,905) - - -
Premises expenses (843) - - -
Technology expenses (1,122) - - -
Restructuring expenses (85) - - -
Other expenses (1,302) - - -
Operating expenses (8,257) - - -
Profit before credit impair't and tax 10,265 90 (371) 66
Credit impairment charge (1,188) - - -
Profit before income tax 9,077 90 (371) 66
Income tax expense (2,757) (6) 371 (20)
Non-controlling interests (10) - - -
Profit 6,310 84 - 46
----- End of picture text -----

PROFIT RECONCILIATION

September 2014 Full Year

==> picture [504 x 330] intentionally omitted <==

----- Start of picture text -----

Adjustment 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
(13) - - - (13) 13,797
- - - - - 2,515
3 (143) - - (140) 933
4 - 22 3 29 168
- - - - (255) 1,283
(97) - - - (97) 882
(90) (143) 22 3 (463) 5,781
(103) (143) 22 3 (476) 19,578
- - - - - (5,088)
- - - - - (888)
- - - - - (1,266)
- - - - - (113)
- - - - - (1,405)
- - - - - (8,760)
(103) (143) 22 3 (476) 10,818
- - - (3) (3) (989)
(103) (143) 22 - (479) 9,829
31 42 (1) - 325 (2,700)
- - - - - (12)
(72) (101) 21 - (154) 7,117
----- End of picture text -----

September 2013 Full Year

==> picture [504 x 345] intentionally omitted <==

----- Start of picture text -----

Adjustment 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
(59) - - - (59) 608
(100) 224 (63) 9 (145) 5,619
(86) 224 (63) 9 (131) 18,391
- - - - - (4,905)
- - - - - (843)
- - - - - (1,122)
- - - - - (85)
- - - - - (1,302)
- - - - - (8,257)
(86) 224 (63) 9 (131) 10,134
- - - (9) (9) (1,197)
(86) 224 (63) - (140) 8,937
29 (65) 13 - 322 (2,435)
- - - - - (10)
(57) 159 (50) - 182 6,492
----- End of picture text -----

PROFIT RECONCILIATION

This page has been left blank intentionally

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – TABLE OF CONTENTS

*CONTENTS*	*PAGE*
Condensed Consolidated Income Statement	101
Condensed Consolidated Statement of Comprehensive Income	102
Condensed Consolidated Balance Sheet	103
Condensed Consolidated Cash Flow Statement	104
Condensed Consolidated Statement of Changes in Equity	105
Notes to Condensed Consolidated Financial Statements	106

100

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited

==> picture [515 x 324] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Note Sep 14 Mar 14 [1 ] Movt Sep 14 Sep 13 [1 ] Movt
$M $M $M $M
Interest income 15,094 14,430 5% 29,524 28,627 3%
Interest expense (8,062) (7,652) 5% (15,714) (15,869) -1%
Net interest income 2 7,032 6,778 4% 13,810 12,758 8%
Other operating income 2 2,291 1,898 21% 4,189 3,851 9%
Net funds management and insurance income 2 927 611 52% 1,538 1,431 7%
Share of associates' profit 2,15 270 247 9% 517 482 7%
Operating income 10,520 9,534 10% 20,054 18,522 8%
Operating expenses 3 (4,474) (4,286) 4% (8,760) (8,257) 6%
Profit before credit impairment and income tax 6,046 5,248 15% 11,294 10,265 10%
Credit impairment charge 8 (459) (527) -13% (986) (1,188) -17%
Profit before income tax 5,587 4,721 18% 10,308 9,077 14%
Income tax expense 4 (1,702) (1,323) 29% (3,025) (2,757) 10%
Profit for the period 3,885 3,398 14% 7,283 6,320 15%
Comprising:
Profit attributable to non-controlling interests 6 6 0% 12 10 20%
Profit attributable
3,879 3,392 14% 7,271 6,310 15%
to shareholders of the Company
Earnings per ordinary share (cents)
Basic 6 142.3 124.8 14% 267.1 232.7 15%
Diluted 6 136.5 120.6 13% 257.0 225.7 14%
Dividend per ordinary share (cents) 5 95 83 14% 178 164 9%
----- End of picture text -----

1. Comparative amounts have changed. Refer to Note 17 for details.

The notes appearing on pages 106 to 123 form an integral part of the Condensed Consolidated Financial Statements.

101

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited

==> picture [508 x 467] intentionally omitted <==

----- Start of picture text -----

Full Year
Sep 14 Sep 13 Movt
$M $M [1 ]
Profit for the period 7,283 6,320 15%
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Remeasurement gain/(loss) on defined benefit plans 43 43 0%
Fair value gain/(loss) attributable to changes in own credit risk of financial liabilities (35) (63) -44%
designated at fair value
Income tax on items that will not be reclassified subsequently to profit or loss
Remeasurement gain/(loss) on defined benefit plans (11) (18) -39%
Fair value gain/(loss) attributable to changes in own credit risk of financial liabilities 10 19 -47%
designated at fair value
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Exchange differences taken to equity 487 1,712 -72%
Exchange differences transferred to income statement 37 - n/a
Available-for-sale revaluation reserve
Valuation gain/(loss) taken to equity 134 13 large
Transferred to income statement (47) 3 large
Cash flow hedge reserve
Valuation gain/(loss) taken to equity 165 (186) large
Transferred to income statement (31) - n/a
Share of associates' other comprehensive income [2 ] (24) 18 large
Income tax on items that may be reclassified subsequently to profit or loss
Available-for-sale assets revaluation reserve (23) (7) large
Cash flow hedge reserve (41) 52 large
Other comprehensive income net of tax 664 1,586 -58%
Total comprehensive income for the period 7,947 7,906 1%
Comprising total comprehensive income attributable to:
Non-controlling interests 16 15 7%
Shareholders of the Company 7,931 7,891 1%
----- End of picture text -----

1. Comparative amounts have changed. Refer to Note 17 for details.

2. Share of associates other comprehensive income is comprised of Available-for-sale assets reserve loss of $25 million (Sep 13: gain of $18 million); Foreign currency translation reserve of nil (Sep 13: loss of $1 million) and Cash flow hedge reserve gain of $1 million (Sep 13: gain of $1 million).

The notes appearing on pages 106 to 123 form an integral part of the Condensed Consolidated Financial Statements.

102

CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited

==> picture [515 x 551] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Assets Note Sep 14 Mar 14 Sep 13 [1 ] v. Mar 14 v. Sep 13
Cash 32,559 33,651 25,270 -3% 29%
Settlement balances owed to ANZ 20,241 16,209 19,225 25% 5%
Collateral paid 5,459 6,219 6,530 -12% -16%
Trading securities 49,692 46,170 41,288 8% 20%
Derivative financial instruments 56,369 43,829 45,878 29% 23%
Available-for-sale assets 30,917 27,330 28,277 13% 9%
Net loans and advances 7 521,752 509,250 483,264 2% 8%
Regulatory deposits 1,565 2,205 2,106 -29% -26%
Investment in associates 4,582 4,323 4,123 6% 11%
Current tax assets 38 64 20 -41% 90%
Deferred tax assets 417 446 725 -7% -42%
Goodwill and other intangible assets 7,950 7,969 7,690 0% 3%
Investments backing policy liabilities 33,579 33,197 32,083 1% 5%
Premises and equipment 2,181 2,150 2,164 1% 1%
Other assets 4,791 4,803 4,352 0% 10%
Total assets 772,092 737,815 702,995 5% 10%
Liabilities
Settlement balances owed by ANZ 10,114 8,133 8,695 24% 16%
Collateral received 5,599 3,880 3,921 44% 43%
Deposits and other borrowings 9 510,079 498,318 466,915 2% 9%
Derivative financial instruments 52,925 45,876 47,509 15% 11%
Current tax liabilities 449 285 972 58% -54%
Deferred tax liabilities 120 41 14 large large
Policy liabilities 34,554 33,402 32,388 3% 7%
External unit holder liabilities (life insurance funds) 3,181 3,334 3,511 -5% -9%
Payables and other liabilities 10,984 9,615 9,059 14% 21%
Provisions 1,100 1,115 1,228 -1% -10%
Debt issuances 80,096 73,552 70,376 9% 14%
Subordinated debt 10 13,607 13,226 12,804 3% 6%
Total liabilities 722,808 690,777 657,392 5% 10%
Net assets 49,284 47,038 45,603 5% 8%
Shareholders' equity
Ordinary share capital 24,031 23,529 23,641 2% 2%
Preference share capital 871 871 871 0% 0%
Reserves (239) (334) (907) -28% -74%
Retained earnings 24,544 22,905 21,936 7% 12%
Share capital and reserves attributable to 12 49,207 46,971 45,541 5% 8%
shareholders of the Company
Non-controlling interests 12 77 67 62 15% 24%
Total shareholders' equity 12 49,284 47,038 45,603 5% 8%
----- End of picture text -----

1. Comparative amounts have changed. Refer to Note 17 for details.

The notes appearing on pages 106 to 123 form an integral part of the Condensed Consolidated Financial Statements.

103

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Australia and New Zealand Banking Group Limited

==> picture [500 x 621] intentionally omitted <==

----- Start of picture text -----

Full Year
Sep 14 Sep 13 [1]
Inflows Inflows
(Outflows) (Outflows)
Note $M $M
Cash flows from operating activities
Interest received 29,327 28,752
Interest paid (14,886) (16,333)
Dividends received 127 114
Other operating income received 2,704 9,616
Other operating expenses paid (8,123) (7,351)
Income taxes (paid)/refunds received (3,207) (2,494)
Net cash flows from funds management and insurance business
Premiums, other income and life investment deposits received 7,549 6,093
Investment income and policy deposits received/(paid) 620 198
Claims and policy liability payments (5,578) (4,983)
Commission expense paid (471) (446)
Cash flows from operating activities before changes in
8,062 13,166
operating assets and liabilities
Changes in operating assets and liabilities arising from
cash flow movements
(Increase)/decrease in operating assets
Collateral paid 1,271 348
Trading securities (8,600) 768
Loans and advances (35,154) (30,137)
Net cash flows from investments backing policy liabilities
Purchase of insurance assets (4,856) (3,505)
Proceeds from sale/maturity of insurance assets 4,625 4,341
Increase/(decrease) in operating liabilities
Deposits and other borrowings 36,592 27,541
Settlement balances owed by ANZ 1,358 3,279
Collateral received 1,435 1,391
Payables and other liabilities 910 (1,025)
Change in operating assets and liabilities arising from
cash flow movements (2,419) 3,001
Net cash provided by/(used in) operating activities 5,643 16,167
Cash flows from investing activities
Available-for-sale assets
Purchases (12,652) (16,320)
Proceeds from sale or maturity 11,136 10,224
Controlled entities and associates
Purchased (net of cash acquired) - (2)
Proceeds from sale (net of cash disposed) 251 81
Premises and equipment
Purchases (370) (356)
Other assets (292) (1,234)
Net cash provided by/(used in) investing activities (1,927) (7,607)
Cash flows from financing activities
Debt issuances
Issue proceeds 17,156 18,895
Redemptions (10,710) (19,773)
Subordinated debt
Issue proceeds 3,258 1,868
Redemptions (2,586) (1,465)
Dividends paid (3,827) (3,226)
Share capital issues 4 30
Share buyback (500) (425)
Net cash provided by/(used in) financing activities 2,795 (4,096)
Net increase/(decrease) in cash and cash equivalents 6,511 4,464
Cash and cash equivalents at beginning of period 41,111 35,507
Effects of exchange rate changes on cash and cash equivalents 607 1,140
Cash and cash equivalents at end of period 13 48,229 41,111
----- End of picture text -----

1. Comparative amounts have changed. Refer to Note 17 for details.

The notes appearing on pages 106 to 123 form an integral part of the Condensed Consolidated Financial Statements.

104

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited

==> picture [514 x 524] intentionally omitted <==

----- Start of picture text -----

Shareholders'
equity
attributable to Non- Total
Ordinary Preference Retained Equity holders of controlling Shareholders'
share capital shares Reserves [1] earnings the Bank interests equity
$M $M $M $M $M $M $M
As at 1 October 2012 23,070 871 (2,498) 19,728 41,171 49 41,220
Restatement (refer Note 17) - - - (17) (17) - (17)
As at 1 October 2012 (restated) 23,070 871 (2,498) 19,711 41,154 49 41,203
Profit or loss - - - 6,310 6,310 10 6,320
Other comprehensive income for the period - - 1,600 (19) 1,581 5 1,586
Total comprehensive income for the period - - 1,600 6,291 7,891 15 7,906
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 Global Wealth 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) 21,936 45,541 62 45,603
Profit or loss - - - 7,271 7,271 12 7,283
Other comprehensive income for the period - - 653 7 660 4 664
Total comprehensive income for the period - - 653 7,278 7,931 16 7,947
Transactions with equity holders in
their capacity as equity holders:
Dividends paid - - - (4,700) (4,700) (1) (4,701)
Dividend income on treasury shares
held within the Group's - - - 22 22 - 22
life insurance statutory funds
Dividend reinvestment plan 851 - - - 851 851
Transactions with non-controlling interests - - 10 - 10 - 10
Other equity movements:
Share based payments/(exercises) - - 13 - 13 - 13
Group share option scheme 4 - - - 4 - 4
Treasury shares Global Wealth adjustment 24 - - - 24 - 24
Group employee share acquisition 11 - - - 11 - 11
scheme
Group share buyback (500) - - - (500) - (500)
Transfer of options/rights lapsed - - (8) 8 - - -
As at 30 September 2014 24,031 871 (239) 24,544 49,207 77 49,284
----- End of picture text -----

1. Further information on reserves is disclosed in Note 12.

The notes appearing on pages 106 to 123 form an integral part of the Condensed Consolidated Financial Statements.

105

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 Annual Financial Statements for the year ended 30 September 2014 when released and any public announcements made by the Parent Entity and its controlled entities (the Group) for the year ended 30 September 2014 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 30 October 2014.

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 2013 Annual Financial Statements, except for changes in policies described below. Comparative information has been restated where appropriate (refer to note 17 for further details).

AASB 119 Employee Benefits – Revised 2011 (‘AASB 119’)

The Group applied the amendment to AASB 119 from 1 October 2013. This resulted mainly in changes to the measurement of interest cost pertaining to defined benefit obligations. In accordance with transitional provisions the changes have been applied retrospectively, with the net impact of initial application recognised in retained earnings as at 1 October 2012.

AASB 10 Consolidated Financial Statements (‘AASB 10’)

AASB 10 replaced AASB 127 Consolidated and Separate Financial Statements and Interpretation 112 Consolidation – Special Purpose Entities to establish revised guidance for consolidation of financial statements. The Standard provides a revised definition of ‘control’ based on whether the investor is exposed to, or has rights to, variable returns from its involvement with an investee and has the ability to affect those returns through its power over the investee. ‘Control’ is established as the single basis for consolidation for all entities, regardless of the nature of the investee.

The Group applied AASB 10 from 1 October 2013 and the initial application did not materially impact the Group.

AASB 9 Financial Instruments (‘AASB 9’)

A revised version of AASB 9 was issued by the Australian Accounting Standards Board in December 2013 which, unless early adopted, is effective for the Group’s 30 September 2019 financial year-end.

The Group has early adopted, from 1 October 2013, the part of AASB 9 relating to gains and losses attributable to changes in own credit risk of financial liabilities designated as ‘fair value through profit or loss’. Accordingly, such gains and losses that were previously recognised in the income statement will now be presented in other comprehensive income. There will be no recycling of these gains or losses on disposal. This change has been applied retrospectively.

Cash and cash equivalents

During the year, the Group redefined cash and cash equivalents, for the purposes of the presentation of the cash flow statement to include coins, notes, money at call, balances held with central banks, liquid settlement balances and securities purchased under agreements to resell (“reverse repos”) in less than three months.

ii) Basis of measurement

The financial information has been prepared in accordance with the historical cost basis except that the following assets and liabilities are stated at their fair value:

derivative financial instruments as well as, in the case of fair value hedging, the fair value adjustment on the underlying hedged exposure;
available-for-sale financial assets;
financial instruments held for trading; and
assets and liabilities designated at fair value through profit and loss.

In accordance with AASB 1038 Life Insurance Contracts, life insurance liabilities are measured using the Margin on Services model.

In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.

iii) 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. Discussion of the critical accounting estimates and judgements, which include complex or subjective decisions or assessments, will be covered in Note 2 of the 2014 Annual Financial Statements when released. Such estimates and judgements are reviewed on an ongoing basis.

iv) Rounding of amounts

The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except where otherwise indicated, as permitted by Australian Securities and Investments Commission Class Order 98/100.

v) Comparatives

Certain amounts in the comparative information have been reclassified to conform with current period financial statement presentations (refer to note 17 for further details).

106

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Income

==> picture [511 x 489] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 14 Sep 13 Sep 14
$M $M v. Mar 14 $M $M v. Sep 13
Interest income 15,094 14,430 5% 29,524 28,627 3%
Interest expense (8,062) (7,652) 5% (15,714) (15,869) -1%
Net interest income 7,032 6,778 4% 13,810 12,758 8%
i) Fee and commission income
Lending fees [1 ] 383 396 -3% 779 744 5%
Non-lending fees and commissions 1,091 1,069 2% 2,160 2,085 4%
Total fee and commission income 1,474 1,465 1% 2,939 2,829 4%
Fee and commission expense (214) (210) 2% (424) (370) 15%
Net fee and commission income [2 ] 1,260 1,255 0% 2,515 2,459 2%
ii) Net funds management and insurance income
Funds management income 459 458 0% 917 862 6%
Investment income 1,424 1,232 16% 2,656 4,135 -36%
Insurance premium income 780 534 46% 1,314 1,348 -3%
Commission income/(expense) (241) (230) 5% (471) (446) 6%
Claims (362) (345) 5% (707) (709) 0%
Changes in policy liabilities [3 ] (1,149) (998) 15% (2,147) (3,669) -41%
Elimination of treasury share (gain)/loss 16 (40) large (24) (90) -73%
Total net funds management and insurance income 927 611 52% 1,538 1,431 7%
iii) Share of associates' profit 270 247 9% 517 482 7%
iv) Other income
Net foreign exchange earnings 480 593 -19% 1,073 844 27%
Net gains from trading securities and derivatives 123 15 large 138 300 -54%
Credit risk on credit intermediation trades (31) 9 large (22) 63 large
Movement on financial instruments measured at fair
221 (124) large 97 58 67%
value through profit & loss [4 ]
Brokerage income 22 28 -21% 50 53 -6%
Loss on divestment / writedown of investment in SSI (21) - n/a (21) (26) -19%
Dilution gain on investment in Bank of Tianjin - 12 -100% 12 - n/a
Insurance settlement - 26 -100% 26 - n/a
Gain on sale of ANZ Trustees 125 - n/a 125 - n/a
Other 112 84 33% 196 100 96%
Total other income 1,031 643 60% 1,674 1,392 20%
Total other operating income [5 ] 3,488 2,756 27% 6,244 5,764 8%
Total income 18,582 17,186 8% 35,768 34,391 4%
----- End of picture text -----

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 not designated as accounting hedges entered into to manage interest rate and foreign exchange risk on funding instruments, ineffective portions of cashflow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit and loss.

5. Total other operating income includes external dividend income of $1.1 million (Mar 14 half: $0.2 million; Sep 13 full year: $4.3 million).

107

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Operating expenses

==> picture [511 x 533] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 14 Sep 13 Sep 14
$M $M v. Mar 14 $M $M v. Sep 13
Personnel
Employee entitlements and taxes 147 131 12% 278 264 5%
Salaries and wages 1,750 1,745 0% 3,495 3,391 3%
Superannuation costs - defined benefit plans 6 4 50% 10 15 -33%
Superannuation costs - defined contribution plans 152 148 3% 300 283 6%
Equity-settled share-based payments 105 110 -5% 215 200 8%
Other 398 392 2% 790 752 5%
Total personnel expenses 2,558 2,530 1% 5,088 4,905 4%
Premises
Depreciation and amortisation 99 99 0% 198 183 8%
Rent 224 226 -1% 450 435 3%
Utilities and other outgoings 89 89 0% 178 170 5%
Other 34 28 21% 62 55 13%
Total premises expenses 446 442 1% 888 843 5%
Technology
Data communications 43 61 -30% 104 115 -10%
Depreciation and amortisation 285 265 8% 550 496 11%
Licences and outsourced services 204 196 4% 400 335 19%
Rentals and repairs 84 69 22% 153 142 8%
Software impairment 14 1 large 15 8 88%
Other 30 14 large 44 26 69%
Total technology expenses 660 606 9% 1,266 1,122 13%
Other
Advertising and public relations 153 125 22% 278 241 15%
Audit and other fees 8 11 -27% 19 18 6%
Non-lending losses, frauds and forgeries 25 27 -7% 52 54 -4%
Professional fees 137 102 34% 239 249 -4%
Travel and entertainment expenses 100 93 8% 193 187 3%
Amortisation and impairment of other intangible assets 73 45 62% 118 100 18%
Freight, stationery, postage and telephone 138 135 2% 273 263 4%
Other 98 135 -27% 233 190 23%
Total other expenses 732 673 9% 1,405 1,302 8%
Restructuring [1 ] 78 35 large 113 85 33%
Total operating expenses 4,474 4,286 4% 8,760 8,257 6%
----- End of picture text -----

1. Restructuring expenses for the September 2014 full year includes $40 million relating to the restructuring within the International and Institutional Banking segment.

108

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Income tax expense

==> picture [511 x 318] intentionally omitted <==

----- Start of picture text -----

Reconciliation of the prima facie income tax expense on pre-tax profit with Half Year Full Year
the income tax expense charged in the Income Statement
Sep 14 Mar 14 Sep 14 Sep 14 Sep 13 Sep 14
$M $M v. Mar 14 $M $M v. Sep 13
Profit before income tax 5,587 4,721 18% 10,308 9,077 14%
Prima facie income tax expense at 30% 1,676 1,416 18% 3,092 2,723 14%
Tax effect of permanent differences:
Overseas tax rate differential (37) (59) -37% (96) (41) large
Rebateable and non-assessable dividends (1) (1) 0% (2) (4) -50%
Profit from associates (81) (74) 9% (155) (144) 8%
Writedown of investment in SSI - - n/a - 8 -100%
Sale of ANZ Trustees and SSI (11) - n/a (11) - n/a
Offshore Banking Unit 6 (1) large 5 (6) large
Global Wealth - Policyholder income and contributions tax 149 21 large 170 261 -35%
Global Wealth - Tax consolidation adjustment - - n/a - (50) -100%
Tax provisions no longer required (25) (25) 0% (50) (4) large
Interest on Convertible Instruments 39 32 22% 71 58 22%
Other (14) 14 large - (46) -100%
1,701 1,323 29% 3,024 2,755 10%
Income tax under/(over) provided in previous years 1 - n/a 1 2 -50%
Total income tax expense charged in the income statement 1,702 1,323 29% 3,025 2,757 10%
Australia 1,251 885 41% 2,136 2,078 3%
Overseas 451 438 3% 889 679 31%
1,702 1,323 29% 3,025 2,757 10%
Effective Tax Rate - Group 30.5% 28.0% 29.3% 30.4%
----- End of picture text -----

109

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Dividends

==> picture [511 x 170] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Dividend per ordinary share (cents) Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Interim (fully franked) n/a 83 n/a 83 73 14%
Final (fully franked) 95 n/a n/a 95 91 4%
Total 95 83 14% 178 164 9%
Ordinary share dividend ($M) [1 ]
Interim dividend 2,278 - n/a 2,278 2,003 14%
Final dividend - 2,497 n/a 2,497 2,150 16%
Bonus option plan adjustment (39) (42) -7% (81) (71) 14%
Total [2 ] 2,239 2,455 -9% 4,694 4,082 15%
Ordinary share dividend payout ratio (%) [3 ] 67.6% 67.2% 67.4% 71.4%
----- End of picture text -----

1. Dividends paid to ordinary equity holders of the Company. Excludes dividends payable by subsidiaries of the Group to non-controlling equity holders (Sep 14 half: nil, Mar 14 half: $1 million; Sep 13 full year: $1 million).

2. Dividends payable are not accrued and are recorded when paid.

Dividend payout ratio is calculated using proposed 2014 final dividend of $2,619 million (not shown in the above table). The proposed 2014 final dividend of $2,619 million is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2014 half and September 2013 full year are calculated using actual dividend paid of $2,278 million and $4,500 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

ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2014 final dividend. For the 2014 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares. 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 14 November 2014, 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 2014 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 12 November 2014.

Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling or New Zealand Dollars respectively at an exchange rate calculated on 14 November 2014.

Preference Shares

==> picture [511 x 102] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Preference share dividend ($M)
Euro Trust Securities 3 3 0% 6 6 0%
Dividend per preference share
Euro Trust Securities € 4.72 € 4.60 3% € 9.32 € 8.82 6%
----- End of picture text -----

110

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Earnings per share

==> picture [511 x 350] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Number of fully paid ordinary shares on issue (M) [1 ] 2,756.6 2,744.1 0% 2,756.6 2,743.7 0%
Basic
Profit attributable to shareholders of the Company ($M) 3,879 3,392 14% 7,271 6,310 15%
Less Preference share dividends ($M) (3) (3) 0% (6) (6) 0%
Profit less preference share dividends ($M) 3,876 3,389 14% 7,265 6,304 15%
Weighted average number of ordinary shares (M) [2 ] 2,724.2 2,715.2 0% 2,719.7 2,709.4 0%
Basic earnings per share (cents) 142.3 124.8 14% 267.1 232.7 15%
Diluted
Profit less preference share dividends ($M) 3,876 3,389 14% 7,265 6,304 15%
Interest on US Trust Securities ($M) [3 ] - 7 -100% 7 31 -77%
Interest on ANZ Convertible Preference Shares ($M) [4 ] 70 85 -18% 155 186 -17%
Interest on ANZ Capital Notes ($M) [5 ] 57 24 large 81 7 large
Profit attributable to shareholders of the Company
excluding interest on US Trust Securities, ANZ Convertible Preference Shares 4,003 3,505 14% 7,508 6,528 15%
and ANZ Capital Notes ($M)
Weighted average number of shares on issue (M) [2 ] 2,724.2 2,715.2 0% 2,719.7 2,709.4 0%
Weighted average number of convertible options (M) 5.5 5.0 10% 5.5 5.0 10%
Weighted average number of convertible US Trust Securities (M) [3 ] - 16.8 -100% 6.1 27.5 -78%
Weighted average number of ANZ Convertible Preference Shares (M) [4 ] 113.8 134.5 -15% 127.5 144.6 -12%
Weighted average number of convertible ANZ Capital Notes (M) [5 ] 89.2 34.5 large 63.1 5.5 large
Adjusted weighted average number of shares - diluted (M) [6 ] 2,932.7 2,906.0 1% 2,921.9 2,892.0 1%
Diluted earnings per share (cents) 136.5 120.6 13% 257.0 225.7 14%
----- End of picture text -----

1. Number of fully paid ordinary shares on issue includes Treasury shares of 25.6 million at 30 September 2014 (Mar 14: 26.9 million; Sep 13: 28.4 million), comprised of 13.8 million in ANZEST Pty Ltd (Mar 14: 14.3 million; Sep 13: 15.8 million) and 11.8 million Treasury shares held in Global Wealth (Mar 2014: 12.6 million; Sep 2013: 12.6 million).

2. Weighted average number of ordinary shares excludes 14.5 million weighted average number of ordinary Treasury shares held in ANZEST Pty Ltd (Mar 14: 15.0 million; Sep 13: 16.4 million) for the group employee share acquisition scheme and 12.5 million weighted average number of ordinary Treasury shares held in Global Wealth (Mar 14: 12.8 million; Sep 13: 12.7 million).

The US Trust Securities (issued on 27 November 2003) were due to 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 Securities were redeemed by ANZ for cash at face value on 16 December 2013.

4. There are three “tranches” of convertible preference shares. The first are convertible preference shares (CPS1) issued on 30 September 2008 which were convertible to ANZ ordinary shares on 16 June 2014 (unless redeemed prior to that date) at the market price of ANZ ordinary shares less 2.5%. On 31 March 2014, 6.3 million CPS1 were cancelled and re-invested in ANZ Capital Notes 2 (CN2) issued on that date and on 16 June 2014, 4.5 million CPS1 were redeemed by ANZ for cash at face value. The second are convertible preference shares (CPS2) issued on 17 December 2009 that 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 1.0% (subject to certain conversion conditions).

5. There are two “tranches” of ANZ Capital Notes. The first are ANZ Capital Notes 1 (CN1) issued on 7 August 2013 which 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). The second are ANZ Capital Notes 2 (CN2) issued on 31 March 2014 which convert to ANZ ordinary shares on 24 March 2024 at the market price of ANZ ordinary shares less 1.0% (subject to certain market conditions).

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

111

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Net loans and advances

==> picture [510 x 515] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia
Overdrafts 6,199 5,756 6,400 8% -3%
Credit card outstandings 8,791 8,852 8,847 -1% -1%
Commercial bills outstanding 11,684 12,224 13,855 -4% -16%
Term loans - housing 209,122 201,396 194,755 4% 7%
Term loans - non-housing 111,902 106,967 99,162 5% 13%
Lease receivables 1,481 1,563 1,597 -5% -7%
Hire purchase 1,492 1,764 2,118 -15% -30%
Other 56 490 80 -89% -30%
350,727 339,012 326,814 3% 7%
Asia Pacific, Europe & America
Overdrafts 1,312 1,456 1,239 -10% 6%
Credit card outstandings 1,241 1,135 1,103 9% 13%
Commercial bills outstanding 3,343 2,431 2,681 38% 25%
Term loans - housing 6,639 6,063 5,737 10% 16%
Term loans - non-housing 66,106 65,115 58,927 2% 12%
Lease receivables 177 140 147 26% 20%
Other 264 121 303 large -13%
79,082 76,461 70,137 3% 13%
New Zealand
Overdrafts 1,118 1,221 1,194 -8% -6%
Credit card outstandings 1,408 1,430 1,297 -2% 9%
Term loans - housing 55,627 57,254 52,785 -3% 5%
Term loans - non-housing 35,316 35,790 33,526 -1% 5%
Lease receivables 247 295 312 -16% -21%
Hire purchase 746 720 642 4% 16%
Other 112 117 111 -4% 1%
94,574 96,827 89,867 -2% 5%
Total gross loans and advances 524,383 512,300 486,818 2% 8%
Less: Provision for credit impairment (refer Note 8) (3,933) (4,313) (4,354) -9% -10%
Less: Unearned income (892) (922) (954) -3% -6%
Add: Capitalised brokerage/mortgage origination fees [1 ] 1,043 1,000 942 4% 11%
Add: Customers' liabilities for acceptances 1,151 1,185 812 -3% 42%
(2,631) (3,050) (3,554) -14% -26%
Total net loans and advances 521,752 509,250 483,264 2% 8%
----- End of picture text -----

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

112

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Provision for credit impairment

==> picture [511 x 206] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Collective provision $M $M $M $M
Balance at start of period 2,843 2,887 -2% 2,887 2,765 4%
Charge/(credit) to income statement (81) (74) 9% (155) 30 large
Adjustment for exchange rate fluctuations (5) 30 large 25 92 -73%
Total collective provision [1 ] 2,757 2,843 -3% 2,757 2,887 -5%
Individual provision
Balance at start of period 1,470 1,467 0% 1,467 1,773 -17%
New and increased provisions 846 966 -12% 1,812 1,889 -4%
Write-backs (190) (257) -26% (447) (487) -8%
Adjustment for exchange rate fluctuations (4) 12 large 8 51 -84%
Discount unwind (35) (30) 17% (65) (102) -36%
Bad debts written-off (911) (688) 32% (1,599) (1,657) -4%
Total individual provision 1,176 1,470 -20% 1,176 1,467 -20%
Total provision for credit impairment 3,933 4,313 -9% 3,933 4,354 -10%
----- End of picture text -----

1. The collective provision includes amounts for off-balance sheet credit exposures of $613 million at 30 September 2014 (Mar 14: $597 million; Sep 13: $595 million). The impact on the income statement for the full year ended 30 September 2014 was a $1 million charge (Mar 14 half: $8 million release; Sep 13 full year: $37 million charge).

==> picture [511 x 194] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
Provision movement analysis $M $M $M $M
New and increased provisions
Australia 604 688 -12% 1,292 1,304 -1%
Asia Pacific, Europe & America 94 152 -38% 246 275 -11%
New Zealand 148 126 17% 274 310 -12%
846 966 -12% 1,812 1,889 -4%
Write-backs (190) (257) -26% (447) (487) -8%
656 709 -7% 1,365 1,402 -3%
Recoveries of amounts previously written-off (116) (108) 7% (224) (247) -9%
Individual credit impairment charge for loans and advances 540 601 -10% 1,141 1,155 -1%
Impairment on available-for-sale assets - - n/a - 3 -100%
Collective credit impairment charge/(credit) to income statement (81) (74) 9% (155) 30 large
Credit impairment charge 459 527 -13% 986 1,188 -17%
----- End of picture text -----

==> picture [510 x 177] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Individual provision balance
Australia 740 941 944 -21% -22%
Asia Pacific, Europe & America 236 296 262 -20% -10%
New Zealand 200 233 261 -14% -23%
Total individual provision 1,176 1,470 1,467 -20% -20%
Collective provision balance
Australia 1,829 1,887 1,862 -3% -2%
Asia Pacific, Europe & America 515 492 530 5% -3%
New Zealand 413 464 495 -11% -17%
Total collective provision 2,757 2,843 2,887 -3% -5%
----- End of picture text -----

113

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Deposits and other borrowings

==> picture [510 x 410] intentionally omitted <==

----- Start of picture text -----

As at ($M) Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia
Certificates of deposit 49,446 51,217 51,448 -3% -4%
Term deposits 78,779 77,900 80,297 1% -2%
Other deposits bearing interest and other borrowings 142,244 132,331 121,932 7% 17%
Deposits not bearing interest 6,845 6,157 5,701 11% 20%
Deposits from banks 15,613 13,617 6,767 15% large
Commercial paper 6,237 8,812 8,015 -29% -22%
Borrowing corporations' debt 1 1 19 0% -95%
299,165 290,035 274,179 3% 9%
Asia Pacific, Europe & America
Certificates of deposit 2,083 4,986 4,725 -58% -56%
Term deposits 82,956 79,586 76,259 4% 9%
Other deposits bearing interest and other borrowings 20,885 19,077 18,308 9% 14%
Deposits not bearing interest 4,211 3,990 3,827 6% 10%
Deposits from banks 22,540 22,449 20,314 0% 11%
Commercial paper 3,516 2,166 - 62% n/a
136,191 132,254 123,433 3% 10%
New Zealand
Certificates of deposit 1,226 1,504 2,103 -18% -42%
Term deposits 30,981 32,686 30,135 -5% 3%
Other deposits bearing interest and other borrowings 30,330 29,841 26,419 2% 15%
Deposits not bearing interest 5,348 5,468 4,918 -2% 9%
Deposits from banks 40 30 160 33% -75%
Commercial paper 5,399 5,063 4,240 7% 27%
Borrowing corporations' debt 1,399 1,437 1,328 -3% 5%
74,723 76,029 69,303 -2% 8%
Total Deposits and other borrowings 510,079 498,318 466,915 2% 9%
----- End of picture text -----

114

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. Subordinated debt

==> picture [511 x 205] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Additional Tier 1 Capital [1 ]
US Trust Securities [2 ] - - n/a - 812 -100%
Convertible Preference Shares (ANZ CPS)
ANZ CPS1 [3 ] - 454 -100% - 1,081 -100%
ANZ CPS2 [4 ] 1,967 1,965 0% 1,967 1,963 0%
ANZ CPS3 [5 ] 1,333 1,331 0% 1,333 1,329 0%
ANZ Capital Notes (ANZ CN)
ANZ CN1 [6 ] 1,109 1,107 0% 1,109 1,106 0%
ANZ CN2 [7 ] 1,595 1,593 0% 1,595 - n/a
Tier 2 Capital [8 ]
Perpetual subordinated notes 1,087 1,108 -2% 1,087 1,065 2%
Subordinated notes 6,516 5,668 15% 6,516 5,448 20%
Total subordinated debt 13,607 13,226 3% 13,607 12,804 6%
----- End of picture text -----

1. ANZ Capital Notes are Basel III compliant. APRA has granted transitional capital treatment for ANZ CPS2 and CPS3 until their first conversion date.

2. On 27 November 2003, ANZ issued USD 750 million Trust securities which were redeemed on 16 December 2013. 3.

On 30 September 2008, ANZ issued convertible preference shares (CPS1). $627 million CPS1 were reinvested in ANZ Capital Notes 2 (CN2) on 31 March 2014 and the remaining $454 million CPS1 were bought back on 16 June 2014.

On 17 December 2009, ANZ issued convertible preference shares (CPS2) which will convert into ANZ ordinary shares on 15 December 2016 at a 1% discount (subject to certain conditions being satisfied).

On 28 September 2011, ANZ issued convertible preference shares (CPS3) 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 a 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.

6. On 7 August 2013, ANZ issued convertible notes (ANZ Capital Notes 1 or CN1) 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 a 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.

7. On 31 March 2014, ANZ issued convertible notes (ANZ Capital Notes 2 or CN2) which will convert into ANZ ordinary shares on 24 March 2024 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 a maximum conversion number. Subject to certain conditions, on and from 24 March 2022 the notes are redeemable or convertible into ANZ ordinary shares (on similar terms to the mandatory conversion) by ANZ.

8. The convertible subordinated notes are Basel III compliant. APRA has granted transitional capital treatment for all other outstanding subordinated notes until their first call date or, in the case of the perpetual subordinated notes the earlier of the end of the transitional period (January 2021) and the first call date when a step-up event occurs. If ANZ receives a notice of nonviability from APRA, then the notes will immediately convert into ANZ ordinary shares at a 1% discount subject to a maximum conversion number.

115

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 2014	2,756,627,771
Issued during the full year1,2 Bought back during full year2	28,861,617 15,889,156
Preference shares As at 30 September 2014 Euro Trust Securities3,4	500,000	€1,000	€1,000

12.4 million ordinary shares were issued under the Dividend Reinvestment Plan and Bonus Option Plan for the 2014 interim dividend.
The Company issued 16.2 million ordinary shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2013 final dividend. Following the announcement of the 2013 final dividend, the Company repurchased $500 million of ordinary shares via an on-market share buy-back resulting in 15.9 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 issuer can buy back securities on or after 15 December 2014. The securities constituted Additional Tier 1 capital as defined by APRA for capital adequacy purposes.

4. APRA has granted ANZ transitional Basel 3 Capital treatment for the Euro Trust Securities preference shares until their first call date on 15 December 2014.

12. Shareholders’ equity

==> picture [511 x 308] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Share capital
Balance at start of period 24,400 24,512 0% 24,512 23,941 2%
Ordinary share capital movements
Dividend reinvestment plan 375 476 -21% 851 843 1%
Group employee share acquisition scheme [1 ] 99 (88) large 11 116 -91%
Treasury shares in Global Wealth [2 ] 26 (2) large 24 7 large
Group share option scheme 2 2 0% 4 30 -87%
Group share buyback [3 ] - (500) -100% (500) (425) 18%
Total share capital 24,902 24,400 2% 24,902 24,512 2%
Foreign currency translation reserve
Balance at start of period (566) (1,125) -50% (1,125) (2,831) -60%
Transfer to the income statement 48 (11) large 37 - n/a
Currency translation adjustments net of hedges (87) 570 large 483 1,706 -72%
Total foreign currency translation reserve (605) (566) 7% (605) (1,125) -46%
Share option reserve [4 ]
Balance at start of period 52 55 -5% 55 54 2%
Share based payments/(exercises) 8 5 60% 13 3 large
Transfer of options/rights lapsed to retained earnings - (8) -100% (8) (2) large
Total share option reserve 60 52 15% 60 55 9%
----- End of picture text -----

1. As at 30 September 2014, there were 13.8 million ANZEST Treasury shares outstanding (Mar 14: 14.3 million, Sep 13: 15.8 million) . 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 2014, there were 11.8 million Global Wealth Treasury shares outstanding (Mar 14: 12.6 million, Sep 13: 12.6 million). Global Wealth purchases and holds shares in the Company to back policy liabilities. These shares are classified as Treasury shares.

The Company issued 16.2 million ordinary shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2013 final dividend. Following the announcement of the 2013 final dividend, the Company repurchased $500 million of ordinary shares via an on-market share buy-back resulting in 15.9 million ordinary shares being cancelled.

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.

116

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Shareholders’ equity, cont’d

==> picture [511 x 514] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
$M $M $M $M
Available-for-sale revaluation reserve [5 ]
Balance at start of period 151 121 25% 121 94 29%
Gain/(loss) recognised 7 62 -89% 69 (6) large
Transferred to income statement 2 (32) large (30) 33 large
Total available-for-sale revaluation reserve 160 151 6% 160 121 32%
Cash flow hedge reserve [6 ]
Balance at start of period 62 75 -17% 75 208 -64%
Gain/(loss) recognised 117 - n/a 117 (133) large
Transferred to income statement (10) (13) -23% (23) - n/a
Total hedging reserve 169 62 large 169 75 large
Transactions with non-controlling interests reserve
Balance at start of period (33) (33) 0% (33) (23) 43%
Transfer to the income statement 10 - n/a 10 (10) large
Total transactions with non-controlling interests reserve (23) (33) -30% (23) (33) -30%
Total reserves (239) (334) -28% (239) (907) -74%
Retained earnings
Balance at start of period 22,905 21,936 4% 21,936 19,728 11%
Restatement (refer Note 1) - - n/a - (17) -100%
Restated balance at beginning of period 22,905 21,936 4% 21,936 19,711 11%
Profit attributable to shareholders of the Company 3,879 3,392 14% 7,271 6,310 15%
Transfer of options/rights lapsed from share option reserve - 8 -100% 8 2 large
Total available for appropriation 26,784 25,336 6% 29,215 26,023 12%
Remeasurement gain/(loss) on defined benefit plans 6 26 -77% 32 25 28%
Fair value gain/(loss) attributable to changes in (14) (11) 27% (25) (44) -43%
own credit risk of financial liabilites designated at fair value
Ordinary share dividend paid (2,239) (2,455) -9% (4,694) (4,082) 15%
Dividend income on Treasury shares held within the 10 12 -17% 22 20 10%
Group's life insurance statutory funds
Preference share dividend paid (3) (3) 0% (6) (6) 0%
Retained earnings at end of period 24,544 22,905 7% 24,544 21,936 12%
Share capital and reserves attributable to 49,207 46,971 5% 49,207 45,541 8%
shareholders of the Company
Non-controlling interests 77 67 15% 77 62 24%
Total shareholders' equity 49,284 47,038 5% 49,284 45,603 8%
----- End of picture text -----

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 recognised in the income statement.

6. The cash flow 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.

117

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13. Note to the Cash Flow Statement

==> picture [500 x 121] intentionally omitted <==

----- Start of picture text -----

Full Year
Sep 14 Sep 13
$M $M
Reconciliation of cash and cash equivalents
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:
Cash 32,559 25,270
Settlement balances owed to ANZ 15,670 15,841
48,229 41,111
----- End of picture text -----

14. Changes in composition of the Group

On 4 July 2014, the Group disposed of its ownership interest in ANZ Trustees Limited. The contribution to Group profit after tax for the period (1 October 2013 to 4 July 2014) from ordinary activities was $3.7 million (for the year ended 30 September 2013 was $4.7 million). There were no other material entities acquired or disposed of during the years ended 30 September 2014 and 2013.

15. Investments in Associates

	Half Year Full Year
	Sep 14 Mar 14 Movt Sep 14 Sep 13 Movt
	$M $M $M $M
Share of associates'profit	270 247 9% 517 482 7%

Contributions to profit[1 ]

==> picture [519 x 141] intentionally omitted <==

----- Start of picture text -----

Contribution to Ownership interest
Group profit after tax held by Group
Associates Half Year Full Year As at
Sep 14 Mar 14 Sep 14 Sep 13 Sep 14 Mar 14 Sep 13
$M $M $M $M % % %
P.T. Bank Pan Indonesia 46 40 86 84 39 39 39
Bank of Tianjin [2,3] 39 56 95 93 14 14 18
AMMB Holdings Berhad 88 67 155 133 24 24 24
Shanghai Rural Commercial Bank 74 68 142 143 20 20 20
Other associates 23 16 39 29 n/a n/a n/a
Share of associates' profit 270 247 517 482
----- End of picture text -----

1. Contributions to profit reflect the IFRS equivalent results adjusted to align with the Group’s financial year end which may differ from the published results of these entities. Excludes gains or losses on disposal or valuation adjustments.

Significant influence was established via representation on the Board of Directors.

The Group did not participate in a rights issue during the March 2014 half, and as a result the Group’s interest was reduced to 14%.

118

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. Contingent liabilities and contingent assets

There are outstanding court proceedings, claims and possible claims for and against the Group. Where relevant, expert legal advice has been obtained and, in the light of such advice, provisions and/or disclosures as deemed appropriate have been made. In some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice the interests of the Group.

Note 43 of the 2014 ANZ Annual Financial Statements (when released) will contain a description of contingent liabilities and contingent assets as at 30 September 2014. A summary of some of those contingent liabilities is set out below.

Bank fees litigation

Litigation funder Bentham IMF Limited commenced a class action against ANZ in 2010, followed by a second similar class action in March 2013. Together the class actions are claimed to be on behalf of more than 40,000 ANZ customers.

On 5 February 2014, the Federal Court delivered reasons for judgment in the second class action. The first class action is in abeyance. The customers currently involved in these class actions are only part of ANZ’s customer base for credit cards and transaction accounts.

The applicants contended that the relevant exception fees were unenforceable penalties (at law and in equity) and that various of the fees were also unenforceable under statutory provisions governing unconscionable conduct, unfair contract terms and unjust transactions. On the penalties claims, the Court found in ANZ's favour in relation to all but one of the fee types that were in issue in the case, namely honour fees (retail and business), dishonour fees (business), overlimit and non-payment fees. The Court found against ANZ in respect of late payment fees on the basis that they were unenforceable penalties. In respect of the claims of unconscionable conduct, unfair contract terms and unjust transactions, the Court found in ANZ’s favour. Both ANZ and the applicants appealed the Court’s decision. The appeal hearing was held in August 2014. The appeal court is yet to give a decision. Given the complexity of the issues involved, the potential for the parties to seek further appeals and the possible need for certain issues to be remitted for further consideration by the court below, the ultimate implications of the appeal court's decision (when made) may not be known for some time.

In August 2014, litigation funder Bentham IMF Limited commenced a separate class action against ANZ for late payment fees charged to ANZ customers in respect of commercial credit cards and other ANZ products (at this stage not specified). The action is expressed to apply to all relevant customers, rather than being limited to those who have signed up with Bentham IMF Limited. The action is at an early stage and has been put on hold while the appeal court decision in the earlier class action is outstanding.

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.

119

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. Changes to comparatives

Certain amounts reported as comparative information have changed as a result of the adoption of new accounting standards or being reclassified to conform with current period financial statement presentations.

The following changes have been made:

Balance Sheet reclassification

During the period, the classification of the Balance Sheet and Cash Flow Statement has changed to more consistently reflect the nature of the financial assets and liabilities. Prior to this reclassification, the Balance Sheet was classified according to both nature and counterparty. The key changes include:

Assets

Securities purchased under agreements to resell in less than three months previously reported in Liquid assets are now classified as Cash.
Money at call, bills receivable and remittances in transit previously reported in Liquid assets are now classified as either Cash, Settlement balances owed to ANZ or Net loans and advances depending on the nature of the asset.
Loans to other banks previously reported in Due from other financial institutions are now classified as Net loans and advances.
Collateral paid previously reported in Due from other financial institutions is now classified separately.
Issued security settlements previously reported in Other assets are now classified as Settlement balances owed to ANZ.

Liabilities

Loans from other banks previously reported in Due to other financial institutions are now classified as Deposits and other borrowings.
Collateral received previously reported in Due to other financial institutions is now classified separately.
Issued security settlements previously reported in Other liabilities are now classified as Settlement balances owed by ANZ.
Cash Flow Statement

The Group restated line items in the Cash Flow Statement to align with the revised balance sheet classifications discussed above. In addition, loans and advances with financial institution counterparties with original maturities of less than 90 days were removed from the definition of ‘cash equivalents’ (as presented in the Cash Flow Statement). These balances now form part of Net loans and advances in the Balance Sheet and the associated cash inflows/outflows form part of cash flows from operating activities. The Group considers that this change better reflects the characteristics of those financial instruments.

Employee benefits

The adoption of the revised AASB119 has resulted in changes to the measurement of the Group’s defined benefit obligations.

Own credit risk of financial liabilities designated at fair value

The early application of the own credit requirements in AASB 9 has resulted in the fair value loss attributable to own credit risk of financial liabilities designated at fair value being reclassified from other operating income to other comprehensive income. This has resulted in a restatement of the Income Statement and the Statement of Comprehensive Income with no impact on the Balance Sheet.

• Business taxes reported in Asia

During the period business taxes which were previously reported as a contra to revenue were classified as expenses to better reflect the nature of the transaction.

The impact of these changes to the primary financial statements are set out below:

==> picture [503 x 211] intentionally omitted <==

----- Start of picture text -----

Half Year ($M)
March 2014
Previously Own credit Currently
reported risk reported
Net interest income 6,778 - 6,778
Other operating income 2,740 16 2,756
Operating income 9,518 16 9,534
Operating expenses (4,286) - (4,286)
Profit before credit impairment and income tax 5,232 16 5,248
Provision for credit impairment (527) - (527)
Profit before income tax 4,705 16 4,721
Income tax expense and non-controlling interests (1,324) (5) (1,329)
Profit attributable to shareholders of the Company 3,381 11 3,392
Other comprehensive income net of tax attributable to shareholders of the Company 602 (11) 591
Total comprehensive income attributable to 3,983 - 3,983
shareholders of the Company
----- End of picture text -----

120

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

==> picture [503 x 352] intentionally omitted <==

----- Start of picture text -----

As at ($M)
September 2013
Balance
Previously sheet Employee Currently
Assets reported reclassification benefits reported
Liquid assets 39,737 (39,737) - -
Due from other financial institutions 22,177 (22,177) - -
Cash - 25,270 - 25,270
Settlement balances owed to ANZ - 19,225 - 19,225
Collateral paid - 6,530 - 6,530
Available-for-sale assets 28,135 142 - 28,277
Net loans and advances 469,295 13,969 - 483,264
Deferred tax assets 721 - 4 725
Other assets 7,574 (3,222) - 4,352
All other assets 135,352 - - 135,352
Total assets 702,991 - 4 702,995
Liabilities
Due to other financial institutions 36,306 (36,306) - -
Settlement balances owed by ANZ - 8,695 - 8,695
Collateral received - 3,921 - 3,921
Deposits and other borrowings 439,674 27,241 - 466,915
Payables and other liabilities 12,594 (3,551) 16 9,059
All other liabilities 168,802 - - 168,802
Total liabilities 657,376 - 16 657,392
Net assets 45,615 - (12) 45,603
Retained earnings 21,948 - (12) 21,936
All other equity 23,667 - - 23,667
Total shareholders' equity 45,615 - (12) 45,603
----- End of picture text -----

==> picture [503 x 206] intentionally omitted <==

----- Start of picture text -----

Full Year ($M)
September 2013
Previously Business tax Employee Own credit Currently
reported restatement benefits risk reported
Net interest income 12,758 - - - 12,758
Other operating income 5,688 13 - 63 5,764
Operating income 18,446 13 - 63 18,522
Operating expenses (8,236) (13) (8) - (8,257)
Profit before credit impairment and income tax 10,210 - (8) 63 10,265
Provision for credit impairment (1,188) - - - (1,188)
Profit before income tax 9,022 - (8) 63 9,077
Income tax expense and non-controlling interests (2,750) - 2 (19) (2,767)
Profit attributable to shareholders of the Company 6,272 - (6) 44 6,310
Other comprehensive income net of tax attributable to shareholders of the Company 1,614 - 11 (44) 1,581
Total comprehensive income attributable to 7,886 - 5 - 7,891
shareholders of the Company
----- End of picture text -----

==> picture [503 x 166] intentionally omitted <==

----- Start of picture text -----

Full Year ($M)
September 2013
Previously Currently
reported reported
Inflows Inflows
(Outflows) Reclassification (Outflows)
Net cash provided by/(used in) operating activities 17,606 (1,439) 16,167
Net cash provided by/(used in) investing activities (7,607) - (7,607)
Net cash provided by/(used in) financing activities (4,096) - (4,096)
Net increase/(decrease) in cash and cash equivalents 5,903 (1,439) 4,464
Cash and cash equivalents at beginning of period 41,450 (5,943) 35,507
Effects of exchange rate changes on cash and cash
equivalents 1,670 (530) 1,140
Cash and cash equivalents at end of period 49,023 (7,912) 41,111
----- End of picture text -----

121

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

==> picture [500 x 352] intentionally omitted <==

----- Start of picture text -----

As at ($M)
1 October 2012
Balance
Previously sheet Employee Currently
Assets reported reclassification benefits reported
Liquid assets 36,578 (36,578) - -
Due from other financial institutions 17,103 (17,103) - -
Cash - 25,143 - 25,143
Settlement balances owed to ANZ - 14,016 - 14,016
Collateral paid - 6,878 - 6,878
Available-for-sale assets 20,562 79 - 20,641
Net loans and advances 427,823 8,804 - 436,627
Deferred tax assets 785 - 7 792
Other assets 5,623 (1,239) - 4,384
All other assets 133,653 - - 133,653
Total assets 642,127 - 7 642,134
Liabilities
Due to other financial institutions 30,538 (30,538) - -
Settlement balances owed by ANZ - 5,416 - 5,416
Collateral received - 2,531 - 2,531
Deposits and other borrowings 397,123 23,690 - 420,813
Payables and other liabilities 10,109 (1,099) 24 9,034
All other liabilities 163,137 - - 163,137
Total liabilities 600,907 - 24 600,931
Net assets 41,220 - (17) 41,203
Retained earnings 19,728 - (17) 19,711
All other equity 21,492 - - 21,492
Total shareholders' equity 41,220 - (17) 41,203
----- End of picture text -----

18. Significant events since balance date

There have been no significant events from 30 September 2014 to the date of signing of this report.

122

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

This page has been left blank intentionally

123

SUPPLEMENTARY INFORMATION

Section 9 – Supplementary information

Capital management

Average balance sheet and related interest Full time equivalent staff Exchange rates

Funds management and insurance income reconciliation

124

SUPPLEMENTARY INFORMATION

Capital management

==> picture [511 x 303] intentionally omitted <==

----- Start of picture text -----

Half Year Movement
Sep 14 Mar 14 Sep 13 Sep 14 Sep 14
Qualifying Capital $M $M $M v. Mar 14 v. Sep 13
Tier 1
Shareholders' equity and non-controlling interests 49,284 47,038 45,603 5% 8%
Prudential adjustments to shareholders' equity Table 1 (1,211) (1,071) (932) 13% 30%
Gross Common Equity Tier 1 capital 48,073 45,967 44,671 5% 8%
Deductions Table 2 (16,297) (15,947) (15,892) 2% 3%
Common Equity Tier 1 capital 31,776 30,020 28,779 6% 10%
Additional Tier 1 capital Table 3 6,825 7,279 6,401 -6% 7%
Tier 1 capital 38,601 37,299 35,180 3% 10%
Tier 2 capital Table 4 7,138 6,335 6,190 13% 15%
Total qualifying capital 45,739 43,634 41,370 5% 11%
Capital adequacy ratios
Common Equity Tier 1 8.8% 8.3% 8.5%
Tier 1 10.7% 10.3% 10.4%
Tier 2 2.0% 1.8% 1.8%
Total 12.7% 12.1% 12.2%
Risk weighted assets Table 5 361,529 360,740 339,265 0% 7%
----- End of picture text -----

125

SUPPLEMENTARY INFORMATION

Capital management, cont’d

==> picture [510 x 598] intentionally omitted <==

----- Start of picture text -----

As at Movement
Sep 14 Mar 14 Sep 13 Sep 14 Sep 14
$M $M $M v. Mar 14 v. Sep 13
Table 1: Prudential adjustments to shareholders' equity
Treasury shares attributable to ANZ Wealth policy holders 249 275 273 -9% -9%
Reclassification of preference share capital (871) (871) (871) 0% 0%
Accumulated retained profits and reserves of insurance and funds management entities (794) (727) (583) 9% 36%
Deferred fee revenue including fees deferred as part of loan yields 392 391 381 0% 3%
Available-for-sale reserve attributable to deconsolidated subsidiaries (105) (81) (90) 30% 17%
Other (82) (58) (42) 41% 95%
Total (1,211) (1,071) (932) 13% 30%
Table 2: Deductions from Common Equity Tier 1 capital
Unamortised goodwill & other intangibles (excluding ANZ Wealth Australia and (3,995) (4,126) (3,970) -3% 1%
New Zealand)
Intangible component of investments in ANZ Wealth Australia and New Zealand (2,096) (2,107) (2,096) -1% 0%
Capitalised software (2,401) (2,252) (2,102) 7% 14%
Capitalised expenses including loan and lease origination fees (1,099) (1,058) (979) 4% 12%
Applicable deferred net tax assets (809) (934) (1,102) -13% -27%
Expected losses in excess of eligible provisions (240) (145) (376) 66% -36%
Investment in other insurance and funds management subsidiaries (402) (428) (453) -6% -11%
Investment in ANZ Wealth Australia and New Zealand (979) (984) (1,059) -1% -8%
Investment in banking associates (3,811) (3,565) (3,361) 7% 13%
Other deductions (465) (348) (394) 34% 18%
Total (16,297) (15,947) (15,892) 2% 3%
Table 3: Additional Tier 1 capital
Convertible Preference Shares
ANZ CPS1 - 454 1,081 -100% -100%
ANZ CPS2 1,967 1,965 1,963 0% 0%
ANZ CPS3 1,333 1,331 1,329 0% 0%
ANZ Capital Notes 1 1,109 1,107 1,106 0% 0%
ANZ Capital Notes 2 1,595 1,593 - 0% n/a
Preference Shares 871 871 871 0% 0%
Hybrid Securities - - 812 n/a -100%
Regulatory adjustments and deductions (50) (42) (78) 19% -36%
Transitional adjustments - - (683) n/a -100%
Total 6,825 7,279 6,401 -6% 7%
Table 4: Tier 2 capital
General reserve for impairment of financial assets 228 212 245 8% -7%
Perpetual subordinated notes 1,087 1,108 1,065 -2% 2%
Subordinated debt 6,516 5,668 5,448 15% 20%
Regulatory adjustments and deductions (399) (354) (340) 13% 17%
Transitional adjustments (294) (299) (228) -2% 29%
Total 7,138 6,335 6,190 13% 15%
----- End of picture text -----

126

SUPPLEMENTARY INFORMATION

==> picture [510 x 167] intentionally omitted <==

----- Start of picture text -----

As at Movement
Sep 14 Mar 14 Sep 13 Sep 14 Sep 14
$M $M $M v. Mar 14 v. Sep 13
Table 5: Risk weighted assets
On balance sheet 221,147 217,606 208,326 2% 6%
Commitments 53,140 53,777 47,809 -1% 11%
Contingents 14,658 12,903 11,184 14% 31%
Derivatives 19,940 21,042 20,332 -5% -2%
Total credit risk 308,885 305,328 287,651 1% 7%
Market risk - Traded 7,048 7,104 4,303 -1% 64%
Market risk - IRRBB 13,627 16,359 18,287 -17% -25%
Operational risk 31,969 31,949 29,024 0% 10%
Total risk weighted assets 361,529 360,740 339,265 0% 7%
----- End of picture text -----

==> picture [510 x 372] intentionally omitted <==

----- Start of picture text -----

As at Movement
Sep 14 Mar 14 Sep 13 Sep 14 Sep 14
$M $M $M v. Mar 14 v. Sep 13
Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate 129,087 123,743 121,586 4% 6%
Sovereign 4,923 4,545 4,360 8% 13%
Bank 20,329 20,269 16,270 0% 25%
Residential mortgage 50,068 50,426 47,559 -1% 5%
Qualifying revolving retail (credit cards) 7,546 7,260 7,219 4% 5%
Other retail 26,858 26,416 24,328 2% 10%
Credit risk weighted assets 238,811 232,659 221,322 3% 8%
subject to Advanced IRB approach
Credit risk specialised lending exposures 29,505 28,522 27,640 3% 7%
subject to slotting criteria
Subject to Standardised approach
Corporate 23,121 26,255 19,285 -12% 20%
Residential mortgage 2,344 1,966 1,922 19% 22%
Qualifying revolving retail (credit cards) 1,908 1,796 1,728 6% 10%
Other retail 1,081 1,073 985 1% 10%
Credit risk weighted assets subject to Standardised approach 28,454 31,090 23,920 -8% 19%
Credit Valuation Adjustment and 7,394 8,065 8,501 -8% -13%
Qualifying Central Counterparties
Credit risk weighted assets relating to securitisation exposures 1,030 1,253 2,724 -18% -62%
Other assets 3,691 3,739 3,544 -1% 4%
Total credit risk weighted assets 308,885 305,328 287,651 1% 7%
----- End of picture text -----

127

SUPPLEMENTARY INFORMATION

Capital management, cont’d

==> picture [515 x 421] intentionally omitted <==

----- Start of picture text -----

Collective Provision Regulatory Expected Loss
Sep 14 Mar 14 Sep 13 Sep 14 Mar 14 Sep 13
Table 7: Collective provision and regulatory expected loss by division $M $M $M $M $M $M
Australia 1,156 1,152 1,123 2,446 2,481 2,393
International and Institutional Banking 1,257 1,265 1,310 1,329 1,570 1,046
New Zealand 330 372 399 718 784 763
Global Wealth 10 11 12 13 14 21
Other 4 43 43 - - 19
Collective provision and regulatory expected loss 2,757 2,843 2,887 4,506 4,849 4,242
As at ($M) Movement
Sep 14 Mar 14 Sep 13 Sep 14 Sep 14
Table 8: Expected loss in excess of eligible provisions $M $M $M v. Mar 14 v. Sep 13
Basel expected loss: non-defaulted 2,486 2,476 2,388 0% 4%
Less: Qualifying collective provision n/a n/a
Collective provision (2,757) (2,843) (2,887) -3% -5%
Non-qualifying collective provision 283 300 346 -6% -18%
Standardised collective provision 228 212 245 8% -7%
Non-defaulted excess included in deduction 240 145 92 66% large
Basel expected loss: defaulted 2,020 2,373 1,854 -15% 9%
Less: Qualifying individual provision
Individual provision (1,176) (1,470) (1,467) -20% -20%
Additional individual provision for partial write offs [1 ] (777) (797) - -3% n/a
Standardised individual provision 150 153 219 -2% -32%
Collective provision on advanced defaulted (256) (275) (322) -7% -20%
(39) (16) 284 large large
Shortfall in expected loss not included in deduction 39 16 - large n/a
Defaulted excess included in deduction - - 284 n/a -100%
Gross deduction 240 145 376 66% -36%
----- End of picture text -----

1. Included in eligible provisions post September 2013 due to a change in RWA calculation methodology.

128

SUPPLEMENTARY INFORMATION

Capital management, cont’d

Table 9: APRA Basel 3 Common Equity Tier 1

==> picture [507 x 196] intentionally omitted <==

----- Start of picture text -----

Half Year
Sep 14 vs Mar 14
APRA Basel 3 Common Equity Tier 1
Cash profit after preference share dividends +100bps($3.6B)
Risk weighted assets
Portfolio growth and mix -13bps
Non-credit risk +2bps
Capital retention in insurance businesses and associates -6bps
Capitalised software and intangibles -5bps
Other items +6bps
Organic capital generation +84bps
Ordinary share dividends (net of dividend reinvestment plan) -52bps
Other +15bps
Total Common Equity Tier 1 movement +47bps
September 2014 APRA Basel 3 Common Equity Tier 1 ratio 8.8%
----- End of picture text -----

129

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. In the March 2014 half, the classification of the balance sheet was amended to more consistently reflect the nature of the financial assets and liabilities. As a result, average balance and related interest comparative information has changed accordingly. Refer to Note 17 of the 2014 Concise Condensed Financial Statements for further information.

==> picture [527 x 640] intentionally omitted <==

----- Start of picture text -----

Half Year Sep 14 Half Year Mar 14
Ave bal Int Rate Ave bal Int Rate
$M $M % $M $M %
Interest earning assets
Settlement balances owed to ANZ
Australia 1,124 13 2.3% 990 14 2.8%
Asia Pacific, Europe & America 13,131 11 0.2% 12,186 7 0.1%
New Zealand 13 1 Lge 53 1 3.8%
Collateral paid
Australia 1,108 15 2.7% 1,296 19 2.9%
Asia Pacific, Europe & America 5,684 1 0.0% 1,291 1 0.2%
New Zealand 764 2 0.5% 723 1 0.2%
Regulatory deposits
Asia Pacific, Europe & America 1,178 5 0.8% 1,225 5 0.8%
Trading and available-for-sale assets
Australia 45,185 712 3.1% 42,539 650 3.1%
Asia Pacific, Europe & America 21,375 188 1.8% 20,443 156 1.5%
New Zealand 12,455 244 3.9% 11,633 223 3.8%
Loans and advances [ 1]
Australia 352,275 9,631 5.5% 332,847 9,249 5.6%
Asia Pacific, Europe & America 78,950 1,119 2.8% 76,408 1,126 3.0%
New Zealand 96,189 2,951 6.1% 93,349 2,674 5.7%
Cash
Australia 8,152 90 2.2% 14,392 165 2.3%
Asia Pacific, Europe & America 21,617 41 0.4% 20,512 41 0.4%
New Zealand 2,291 37 3.2% 2,438 31 2.6%
Other assets
Australia 13 4 n/a 67 9 n/a
Asia Pacific, Europe & America 11 12 n/a 8 20 n/a
New Zealand - 17 n/a - 38 n/a
Intragroup assets
Australia (805) 193 n/a 960 200 n/a
Asia Pacific, Europe & America 10,477 4 n/a 10,627 1 n/a
671,187 15,291 643,987 14,631
Intragroup elimination (9,672) (197) (11,587) (201)
661,515 15,094 4.6% 632,400 14,430 4.6%
Non-interest earning assets
Derivatives
Australia 30,782 29,916
Asia Pacific, Europe & America 6,140 6,972
New Zealand 5,105 6,063
Premises and equipment 2,122 2,143
Insurance assets 33,638 32,765
Other assets 28,965 28,626
Provisions for credit impairment
Australia (2,773) (2,812)
Asia Pacific, Europe & America (769) (787)
New Zealand (677) (743)
102,533 102,143
Total average assets 764,048 734,543
----- End of picture text -----

1. Gross loans and advances including unearned income, capitalised brokerage/mortgage origination fees and customers’ liabilities for acceptances.

130

SUPPLEMENTARY INFORMATION

==> picture [527 x 721] intentionally omitted <==

----- Start of picture text -----

Half Year Sep 14 Half Year Mar 14
Ave bal Int Rate Ave bal Int Rate
$M $M % $M $M %
Interest bearing liabilities
Time deposits
Australia 133,566 2,160 3.2% 136,155 2,255 3.3%
Asia Pacific, Europe & America 82,567 332 0.8% 82,570 348 0.8%
New Zealand 33,735 684 4.0% 32,929 623 3.8%
Savings deposits
Australia 28,270 446 3.1% 26,782 423 3.2%
Asia Pacific, Europe & America 3,498 8 0.5% 4,996 11 0.4%
New Zealand 10,295 193 3.7% 9,184 143 3.1%
Other demand deposits
Australia 104,148 1,296 2.5% 97,221 1,198 2.5%
Asia Pacific, Europe & America 15,811 24 0.3% 13,152 21 0.3%
New Zealand 19,922 262 2.6% 19,023 220 2.3%
Deposits from banks
Australia 20,358 249 2.4% 15,578 199 2.6%
Asia Pacific, Europe & America 27,959 55 0.4% 28,228 62 0.4%
New Zealand 817 13 3.2% 516 6 2.3%
Settlement balances owed by ANZ
Australia 1,726 10 1.2% 1,660 10 1.2%
Asia Pacific, Europe & America 601 - 0.0% 355 - 0.0%
New Zealand 313 4 2.6% 306 2 1.3%
Collateral received
Australia 432 5 2.3% 616 6 2.0%
Asia Pacific, Europe & America 4,501 3 0.1% 1,357 3 0.4%
New Zealand 492 1 0.4% 532 1 0.4%
Commercial paper
Australia 9,749 121 2.5% 8,914 115 2.6%
Asia Pacific, Europe & America 3,252 3 0.2% 805 2 0.5%
New Zealand 5,790 115 4.0% 5,553 80 2.9%
Borrowing corporations' debt
Australia 1 - 0.0% 6 - 0.0%
New Zealand 1,404 32 4.5% 1,399 30 4.3%
Debt issuances & subordinated debt
Australia 66,579 1,383 4.1% 65,426 1,350 4.1%
Asia Pacific, Europe & America 6,708 60 1.8% 4,742 29 1.2%
New Zealand 15,985 398 5.0% 14,298 323 4.5%
Other liabilities
Australia 3,503 99 n/a 2,737 81 n/a
Asia Pacific, Europe & America 2,193 31 n/a 2,195 25 n/a
New Zealand 536 75 n/a 398 86 n/a
Intragroup liabilities
New Zealand 9,672 197 n/a 11,587 202 n/a
614,383 8,259 589,220 7,854
Intragroup elimination (9,672) (197) (11,587) (202)
604,711 8,062 2.7% 577,633 7,652 2.7%
Non-interest bearing liabilities
Deposits
Australia 6,419 6,134
Asia Pacific, Europe & America 3,815 3,893
New Zealand 5,314 5,186
Derivatives
Australia 31,765 31,811
Asia Pacific, Europe & America 6,320 6,676
New Zealand 4,582 6,235
Insurance liabilities 33,866 32,894
External unit holder liabilities 3,334 3,510
Other liabilities 16,387 14,392
111,802 110,731
Total average liabilities 716,513 688,364
----- End of picture text -----

131

SUPPLEMENTARY INFORMATION

==> picture [515 x 641] intentionally omitted <==

----- Start of picture text -----

Full Year Sep 14 Full Year Sep 13
Ave bal Int Rate Ave bal Int Rate
$M $M % $M $M %
Interest earning assets
Settlement balances owed to ANZ
Australia 1,057 27 2.5% 790 23 2.9%
Asia Pacific, Europe & America 12,660 18 0.1% 10,893 10 0.1%
New Zealand 33 2 5.0% 71 2 2.8%
Collateral paid
Australia 1,202 34 2.8% 1,133 39 3.4%
Asia Pacific, Europe & America 3,493 2 0.1% 3,279 4 0.1%
New Zealand 744 2 0.3% 827 2 0.2%
Regulatory deposits
Asia Pacific, Europe & America 1,202 10 0.8% 1,014 8 0.8%
Trading and available-for-sale assets
Australia 43,866 1,361 3.1% 37,728 1,234 3.3%
Asia Pacific, Europe & America 20,910 344 1.6% 16,970 256 1.5%
New Zealand 12,045 467 3.9% 10,049 360 3.6%
Loans and advances [1 ]
Australia 342,587 18,882 5.5% 316,864 19,345 6.1%
Asia Pacific, Europe & America 77,682 2,245 2.9% 63,182 2,022 3.2%
New Zealand 94,773 5,625 5.9% 81,633 4,832 5.9%
Cash
Australia 11,263 255 2.3% 8,944 247 2.8%
Asia Pacific, Europe & America 21,066 81 0.4% 19,541 58 0.3%
New Zealand 2,364 68 2.9% 2,411 60 2.5%
Other assets
Australia 41 12 n/a 6 18 n/a
Asia Pacific, Europe & America 9 32 n/a 4 59 n/a
New Zealand - 57 n/a - 48 n/a
Intragroup assets
Australia 175 394 n/a 2,529 433 n/a
Asia Pacific, Europe & America 10,452 4 n/a 8,147 (9) n/a
657,624 29,922 586,015 29,051
Intragroup elimination (10,627) (398) (10,676) (424)
646,997 29,524 4.6% 575,339 28,627 5.0%
Non-interest earning assets
Derivatives
Australia 30,349 33,349
Asia Pacific, Europe & America 6,555 4,839
New Zealand 5,583 6,784
Premises and equipment 2,133 2,092
Insurance assets 33,203 30,840
Other assets 28,794 26,482
Provisions for credit impairment
Australia (2,792) (2,804)
Asia Pacific, Europe & America (778) (801)
New Zealand (710) (816)
102,337 99,965
Total average assets 749,334 675,304
----- End of picture text -----

1. Gross loans and advances including unearned income, capitalised brokerage/mortgage origination fees and customers’ liabilities for acceptances.

132

SUPPLEMENTARY INFORMATION

==> picture [515 x 721] intentionally omitted <==

----- Start of picture text -----

Full Year Sep 14 Full Year Sep 13
Ave bal Int Rate Ave bal Int Rate
$M $M % $M $M %
Interest bearing liabilities
Time deposits
Australia 134,857 4,413 3.3% 135,748 5,312 3.9%
Asia Pacific, Europe & America 82,568 681 0.8% 75,060 666 0.9%
New Zealand 33,333 1,308 3.9% 29,633 1,158 3.9%
Savings deposits
Australia 27,528 868 3.2% 24,166 837 3.5%
Asia Pacific, Europe & America 4,245 19 0.4% 5,276 25 0.5%
New Zealand 9,741 336 3.4% 7,035 234 3.3%
Other demand deposits
Australia 100,694 2,492 2.5% 85,292 2,397 2.8%
Asia Pacific, Europe & America 14,485 45 0.3% 10,916 33 0.3%
New Zealand 19,474 482 2.5% 16,400 398 2.4%
Deposits from banks
Australia 17,975 448 2.5% 7,820 234 3.0%
Asia Pacific, Europe & America 28,093 117 0.4% 22,837 154 0.7%
New Zealand 667 19 2.8% 601 14 2.3%
Settlement balances owed by ANZ
Australia 1,693 21 1.2% 1,550 22 1.4%
Asia Pacific, Europe & America 479 - 0.0% 980 - 0.0%
New Zealand 309 6 1.9% 358 6 1.7%
Collateral received
Australia 524 12 2.3% 806 23 2.9%
Asia Pacific, Europe & America 2,933 6 0.2% 1,422 6 0.4%
New Zealand 512 2 0.4% 421 1 0.2%
Commercial paper
Australia 9,333 236 2.5% 10,306 311 3.0%
Asia Pacific, Europe & America 2,032 5 0.2% - - 0.0%
New Zealand 5,672 195 3.4% 4,212 128 3.0%
Borrowing corporations' debt
Australia 3 - 0.0% 63 5 7.9%
New Zealand 1,402 62 4.4% 1,215 55 4.5%
Debt issuances & subordinated debt
Australia 66,004 2,733 4.1% 64,749 2,873 4.4%
Asia Pacific, Europe & America 5,728 90 1.6% 2,240 31 1.4%
New Zealand 15,144 721 4.8% 13,839 653 4.7%
Other liabilities
Australia 3,121 180 n/a 2,772 195 n/a
Asia Pacific, Europe & America 2,194 56 n/a 1,966 42 n/a
New Zealand 467 161 n/a 477 56 n/a
Intragroup liabilities
New Zealand 10,627 398 n/a 10,676 424 n/a
601,837 16,112 538,836 16,293
Intragroup elimination (10,627) (398) (10,676) (424)
591,210 15,714 2.7% 528,160 15,869 3.0%
Non-interest bearing liabilities
Deposits
Australia 6,277 5,511
Asia Pacific, Europe & America 3,854 3,202
New Zealand 5,250 4,380
Derivatives
Australia 31,788 30,447
Asia Pacific, Europe & America 6,498 5,226
New Zealand 5,406 6,845
Insurance Liabilities 33,381 30,625
External unit holder liabilities 3,422 3,839
Other liabilities 15,392 13,980
111,268 104,055
Total average liabilities 702,478 632,215
----- End of picture text -----

133

SUPPLEMENTARY INFORMATION

==> picture [504 x 487] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 13
$M $M $M $M
Total average assets
Australia 483,449 467,449 475,470 444,033
Asia Pacific, Europe & America 168,772 159,962 164,379 136,477
New Zealand 121,499 118,719 120,112 105,470
less intragroup elimination (9,672) (11,587) (10,627) (10,676)
764,048 734,543 749,334 675,304
% of total average assets attributable to overseas activities 36.7% 36.4% 36.5% 34.2%
Average interest earning assets
Australia 407,052 393,091 400,191 367,994
Asia Pacific, Europe & America 152,423 142,700 147,474 123,030
New Zealand 111,712 108,196 109,959 94,991
less intragroup elimination (9,672) (11,587) (10,627) (10,676)
661,515 632,400 646,997 575,339
Total average liabilities
Australia 454,341 439,399 446,892 414,046
Asia Pacific, Europe & America 160,829 151,984 156,418 131,253
New Zealand 111,015 108,568 109,795 97,592
less intragroup elimination (9,672) (11,587) (10,627) (10,676)
716,513 688,364 702,478 632,215
% of total average liabilities attributable to overseas activities 36.6% 36.2% 36.4% 34.5%
Average interest bearing liabilities
Australia 368,332 355,095 361,732 333,272
Asia Pacific, Europe & America 147,090 138,400 142,757 120,697
New Zealand 98,961 95,725 97,348 84,867
less intragroup elimination (9,672) (11,587) (10,627) (10,676)
604,711 577,633 591,210 528,160
Total average shareholders' equity
Ordinary share capital, reserves and retained earnings [1 ] 46,664 45,308 45,985 42,218
Preference share capital 871 871 871 871
47,535 46,179 46,856 43,089
Total average liabilities and shareholders' equity 764,048 734,543 749,334 675,304
----- End of picture text -----

1. Average shareholders’ equity at 30 September 2014 includes $245 million of Global Wealth shares that are eliminated from the shareholders’ equity balance (Mar 14: $275 million; Sep 13: $273 million).

134

SUPPLEMENTARY INFORMATION

==> picture [504 x 449] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Sep 14 Mar 14 Sep 14 Sep 13
% % % %
Gross earnings rate [1 ]
Australia 5.22 5.26 5.24 5.80
Asia Pacific, Europe & America 1.81 1.91 1.86 1.96
New Zealand 5.81 5.50 5.66 5.58
Group 4.55 4.58 4.56 4.98
Interest spread and net interest average margin may be analysed as follows: Half Year Full Year
Australia Sep 14 Mar 14 Sep 14 Sep 13
% % % %
Net interest spread 2.10 2.08 2.09 2.14
Interest attributable to net non-interest bearing items 0.29 0.30 0.30 0.34
Net interest margin - Australia [2 ] 2.39 2.38 2.39 2.48
Asia Pacific, Europe & America
Net interest spread 1.11 1.18 1.15 1.17
Interest attributable to net non-interest bearing items 0.02 0.02 0.02 0.01
Net interest margin - Asia Pacific, Europe & America [2 ] 1.13 1.20 1.17 1.18
New Zealand
Net interest spread 1.84 1.90 1.87 1.90
Interest attributable to net non-interest bearing items 0.45 0.42 0.43 0.39
Net interest margin - New Zealand [2 ] 2.29 2.32 2.30 2.29
Group
Net interest spread 1.89 1.92 1.90 1.97
Interest attributable to net non-interest bearing items 0.23 0.23 0.23 0.25
Net interest margin [2 ] 2.12 2.15 2.13 2.22
Net interest margin (excluding Global Markets) [ 2 ] 2.54 2.55 2.55 2.64
----- End of picture text -----

1. Average interest rate received on average interest earning assets.

2. Statutory basis.

135

SUPPLEMENTARY INFORMATION

Full Time Equivalent Staff

At 30 September 2014, ANZ employed 50,328 people worldwide (31 March 2014: 49,850) on a full-time equivalent basis ("FTEs"). During the September 2014 half:

The Group migrated onto a single global Human Resources solution, bringing all regions and business units onto a single platform. As part of this migration the definition of FTE's was modified and standardised which resulted in an increase in FTE. Comparative information has been restated; and
Operations, Technology, Property and certain enablement functions supporting the operating divisions (including Human Resources, Risk, Finance and Legal) were transferred from the operating divisions to GTSO and Group Centre. This change aligns with our strategy of building on common infrastructure with an enterprise focus. Comparative information has been restated.

==> picture [511 x 213] intentionally omitted <==

----- Start of picture text -----

Division As at Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 10,263 9,920 10,025 3% 2%
International and Institutional Banking 7,862 8,226 8,258 -4% -5%
New Zealand 5,080 5,236 5,323 -3% -5%
Global Wealth 2,296 2,291 2,482 0% -7%
GTSO and Group Centre 24,827 24,177 23,778 3% 4%
Totals 50,328 49,850 49,866 1% 1%
Geography As at Movement
Sep 14 Sep 14
Sep 14 Mar 14 Sep 13 v. Mar 14 v. Sep 13
Australia 21,591 21,821 22,229 -1% -3%
Asia Pacific, Europe & America 20,512 19,653 19,233 4% 7%
New Zealand 8,225 8,376 8,404 -2% -2%
Totals 50,328 49,850 49,866 1% 1%
----- End of picture text -----

Exchange rates

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

==> picture [516 x 159] intentionally omitted <==

----- Start of picture text -----

Balance sheet Profit & Loss Average
As at Half Year Full Year
Sep 14 Mar 14 Sep 13 Sep 14 Mar 14 Sep 14 Sep 13
Chinese Yuan 5.3787 5.7480 5.6976 5.7544 5.5544 5.6547 6.1395
Euro 0.6895 0.6716 0.6896 0.6885 0.6672 0.6779 0.7565
Great British Pound 0.5383 0.5552 0.5760 0.5539 0.5565 0.5552 0.6360
Indian Rupee 53.941 55.296 58.531 55.933 56.400 56.166 56.148
Indonesian Rupiah 10,659.9 10,488.7 10,860.1 10,855.2 10,719.3 10,787.5 9,861.4
Malaysian Ringgit 2.8632 3.0169 3.0334 2.9853 2.9644 2.9749 3.0925
New Zealand Dollar 1.1219 1.0668 1.1237 1.0903 1.0959 1.0931 1.2132
Papua New Guinea Kina 2.1717 2.2356 2.2385 2.2651 2.2054 2.2353 2.1472
United States Dollar 0.8752 0.9233 0.9312 0.9289 0.9113 0.9201 0.9929
----- End of picture text -----

136

SUPPLEMENTARY INFORMATION

Funds Management and Insurance Income Reconciliation

==> picture [516 x 232] intentionally omitted <==

----- Start of picture text -----

Half Year Full Year
Mvmt Mvmt
Reference Sep 14 Mar 14 Sep 14 Sep 13
Page $M $M $M $M
Net funds management and insurance income - statutory basis 95 927 611 52% 1,538 1,431 7%
Adjustments between cash and statutory profit
Treasury shares adjustment 95 (16) 40 large 24 90 -73%
Policyholders tax gross up 95 (213) (29) large (242) (371) -35%
Revaluation of policy liabilities 95 (32) (5) large (37) 66 large
Net income from funds management and insurance - cash basis 96 666 617 8% 1,283 1,216 6%
Global Wealth - Net funds management and insurance income 76 642 607 6% 1,249 1,213 3%
Australia - Funds management and insurance income 18 19 -5% 37 41 -10%
International and Institutional Banking - Funds management and 49 41 20% 90 77 17%
insurance income
New Zealand - Funds management and insurance income 38 36 6% 74 70 6%
Inter-segment eliminations (81) (86) -6% (167) (185) -10%
Net income from funds management and insurance - cash basis 96 666 617 8% 1,283 1,216 6%
----- End of picture text -----

137

DEFINITIONS

AAS - Australian Accounting Standards.

AASB - Australian Accounting Standards Board.

Cash and cash equivalents include coins, notes, money at call, balances held with central banks, liquid settlement balances (readily convertible to known amounts of cash which are subject to insignificant risk of changes in value) and securities purchased under agreements to resell (“reverse repos”) in less than three months.

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 noted 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.

Collective provision is the provision for credit losses that are inherent in the portfolio but not able to be individually identified. A collective provision is only recognised when a loss event has 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 credit costs replace the actual credit loss charge with the internal expected loss. This is determined based on the expected average annual loss of principal over the economic cycle for the current risk profile of the lending portfolio.

Economic profit is a risk adjusted profit measure. Economic Profit is determined by adjusting cash profit for 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.

IFRS – International Financial Reporting Standards.

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

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

Individual provision 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.

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

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

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

Operating expenses include personnel expenses, premises expense and other operating expenses (excluding credit impairment charges).

Operating income include net interest income, 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.

138

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.

Segment review description

The Group operates on a divisional structure with Australia, International and Institutional Banking (IIB), New Zealand, and Global Wealth being the major operating divisions. The IIB and Global Wealth divisions are coordinated globally. Global Technology, Services & Operations and Group Centre provide support to the operating divisions, including technology, operations, shared services, property, risk management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre also includes Group Treasury and Shareholder Functions.

During the September half, Operations, Technology, Property, and certain enablement functions (including Human Resources, Risk, Finance and Legal) supporting the operating divisions were transferred from the operating divisions to GTSO and Group Centre. Comparative information has been restated accordingly.

Australia

The Australia division comprises the Retail and Corporate and Commercial Banking business units.

Retail
Retail is responsible for delivering a full range of banking services to consumer customers, using capabilities in product management, analytics, customer research, segmentation, strategy and marketing.
Home Loans provides housing finance to consumers in Australia for both owner occupied and investment purposes, as well as providing housing finance for overseas investors.
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.
Retail delivers banking solutions to customers across multiple distribution channels including the Australian branch network, ANZ Direct, specialist sales channels and digital channels (including goMoney, Internet Banking, anz.com). The retail distribution network provides retail and wealth solutions to consumers, as well as providing small business solutions and meeting the various cash and cheque handling needs of corporate, commercial and institutional customers.
Corporate and Commercial Banking (C&CB)
Corporate Banking provides a full range of banking services including traditional relationship banking and sophisticated financial solutions, primarily to large private companies, smaller listed companies and multi-national corporation subsidiaries.
Regional Business Banking provides a full range of banking services to non-metropolitan commercial and Agri (including corporate) customers.
Business Banking provides a full range of banking services, to metropolitan based small to medium sized business clients with a turnover of A$5 million up to A$125 million.
Small Business Banking provides a full range of banking services to metropolitan and regional based small businesses in Australia with a turnover of up to A$5m and lending up to A$1 million.
Esanda provides motor vehicle and equipment finance.

International and Institutional Banking

International and Institutional Banking division comprises Global Products servicing Global Banking and International Banking customers across three major product sets (Global Transaction Banking, Global Loans and Global Markets), Retail Asia Pacific focusing on affluent and emerging affluent customers across 21 countries and Asia Partnerships.

Global Products

Global Products service Global Banking and International Banking customers across three product sets:

Global Transaction Banking which provides working capital and liquidity solutions including documentary trade, supply chain financing, structured trade finance as well as cash management solutions, deposits, payments and clearing.
Global Markets provides risk management services to clients globally on foreign exchange, interest rates, credit, commodities, debt capital markets and wealth solutions. Markets provide origination, underwriting, structuring and risk management services, advice and sale of credit and derivative products. The business unit also manages the Bank’s interest rate exposure as well as its liquidity position.
Global Loans which provides specialised loan structuring and execution, loan syndication, project and export finance, debt structuring and acquisition finance, structured asset finance and corporate advisory.

139

DEFINITIONS

Segment review description, cont’d

Retail Asia Pacific provides end-to-end financial solutions to individuals and small businesses including deposits, credit cards, loans, investments and insurance. Leveraging our distinctive footprint we enable client’s access to opportunities across the region and connect them to specialists for their banking needs in each location.
Asia Partnerships comprises of strategic partnerships and investments across Asia which provide the Bank with local business and relationship access as well as country and regulatory insights.

New Zealand

The New Zealand division comprises Retail and Commercial business units.

Retail

Retail provides products and services to personal customers via the branch network, mortgage specialists, the contact centre and a variety of self service channels (internet banking, phone banking, ATMs, website and mobile phone banking). Core products include current and savings accounts, unsecured lending (credit cards, personal loans and overdrafts) and home loans secured by mortgages over property. Retail distributes insurance and investment products on behalf of the Global Wealth segment.

Commercial

Commercial provides services to Small Business Banking, Commercial & Agri (CommAgri), and UDC customers. Small Business Banking services are offered to small enterprises (typically with annual revenues of less than NZD 5 million). CommAgri customers consist of primarily privately owned medium to large enterprises. Commercial’s relationship with these businesses ranges from simple banking requirements with revenue from deposit and transactional facilities, and cash flow lending, to more complex funding arrangements with revenue sourced from a wider range of products. UDC is principally involved in the financing and leasing of plant, vehicles and equipment, mainly for small and medium sized businesses, as well as investment products.

Global Wealth

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

Private Wealth includes global private banking business which specialises in assisting individuals and families to manage, grow and preserve their wealth.
Funds Management includes the Pensions and Investment business and E*TRADE.
Insurance includes Life Insurance, General Insurance and ANZ Lenders Mortgage Insurance.
Corporate and other includes income from invested capital and cash profits from the advice and distribution business.

Global Technology, Services & Operations and Group Centre

Settlement balances owed to / from ANZ represent financial assets and/or liabilities which are in the course of being settled. These may include trade dated assets and liabilities, nostro / vostro accounts and settlement accounts.

140

ASX APPENDIX 4E – CROSS REFERENCE INDEX

Page Details of the reporting period and the previous corresponding period (4E Item 1)......................................................................................Table of Contents Results for Announcement to the Market (4E Item 2) .....................................................................................................................................After front cover Statement of Comprehensive Income (4E Item 3) ..................................................................................................................................................... 101, 102 Statement of Financial Position (4E Item 4) ....................................................................................................................................................................... 103 Statement of Cash Flows (4E Item 5) ................................................................................................................................................................................ 104 Statement of Changes in Equity (4E Item 6) ...................................................................................................................................................................... 105 Dividends and dividend dates (4E Item 7).......................................................................................................................................................After front cover Dividend Reinvestment Plan (4E Item 8) ........................................................................................................................................................After front cover Net Tangible Assets per security (4E Item 9)....................................................................................................................................................................... 13 Details of entities over which control has been gained or lost (4E Item 10) ....................................................................................................................... 118 Details of associates and joint venture entities (4E Item 11).............................................................................................................................................. 118 Other significant information (4E Item 12).......................................................................................................................................................................... 122 Accounting standards used by foreign entities (4E Item 13) ..............................................................................................................................Not applicable Commentary on results (4E Item 14) ................................................................................................................................................................................... 20 Statement that accounts are being audited (4E Item 15) ................................................................................................................................After front cover

141

ALPHABETICAL INDEX

PAGE Appendix 4E Statement ......................................................................................................................................................................................................... 1 Appendix 4E Cross Reference Index ................................................................................................................................................................................. 141 Basis of preparation ........................................................................................................................................................................................................... 106 CEO Overview ..................................................................................................................................................................................................................... 18 CFO Overview...................................................................................................................................................................................................................... 20 Changes in composition of the Group................................................................................................................................................................................ 118 Changes to comparatives .................................................................................................................................................................................................. 120 Condensed Consolidated Balance Sheet........................................................................................................................................................................... 103 Condensed Consolidated Cash Flow Statement................................................................................................................................................................ 104 Condensed Consolidated Income Statement..................................................................................................................................................................... 101 Condensed Consolidated Statement of Comprehensive Income....................................................................................................................................... 102 Condensed Statement of Changes in Equity...................................................................................................................................................................... 105 Contingent liabilities and contingent assets ....................................................................................................................................................................... 119 Definitions .......................................................................................................................................................................................................................... 138 Deposits and other borrowings........................................................................................................................................................................................... 114 Dividends ........................................................................................................................................................................................................................... 110 Earnings per share............................................................................................................................................................................................................. 111 Geographic review ............................................................................................................................................................................................................... 82 Income ............................................................................................................................................................................................................................... 107 Income tax expense........................................................................................................................................................................................................... 109 Investments in associates .................................................................................................................................................................................................. 118 Media Release ....................................................................................................................................................................................................................... 6 Net loans and advances..................................................................................................................................................................................................... 112 Note to the Cash Flow Statement ...................................................................................................................................................................................... 118 Operating expenses........................................................................................................................................................................................................... 108 Profit reconciliation............................................................................................................................................................................................................... 90 Provision for credit impairment........................................................................................................................................................................................... 113 Segment review ................................................................................................................................................................................................................... 48 Share capital ...................................................................................................................................................................................................................... 116 Shareholders’ equity .......................................................................................................................................................................................................... 116 Significant events since balance date ................................................................................................................................................................................ 122 Snapshot.............................................................................................................................................................................................................................. 10 Subordinated debt.............................................................................................................................................................................................................. 115 Supplementary Information – Average balance sheet and related interest........................................................................................................................ 130 Supplementary Information – Capital management ........................................................................................................................................................... 125 Supplementary Information – Exchange rates ................................................................................................................................................................... 136 Supplementary Information – Full time equivalent staff...................................................................................................................................................... 136 Supplementary Information – Funds management and insurance income reconciliation................................................................................................... 137

142

AI assistant

Australia and New Zealand Banking Group Ltd. — Annual Report 2014

10425_rns_2014-10-30_22adf75c-6030-44cc-8ad2-9036ac60dffd.pdf

Australia and New Zealand Banking Group Limited

Report for the full year ended 30 September 2014

Dividend Reinvestment Plan and Bonus Option Plan

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E

Media Release

ANZ 2014 Full Year Result

- good 2014 result across all markets, well positioned for the operating environment –

Performance Highlights[1]

PERFORMANCE BY DIVISION[1 ]

AUSTRALIA

INTERNATIONAL AND INSTITUTIONAL BANKING (IIB)

NEW ZEALAND (all figures in NZD)

GLOBAL WEALTH

GLOBAL TECHNOLOGY AND OPERATIONS

CAPITAL AND DIVIDEND

CREDIT QUALITY

OUTLOOK

For media enquiries contact:

For investor and analyst enquiries contact:

CONTENTS

Section 2 – Snapshot

SNAPSHOT

SNAPSHOT

SNAPSHOT

SNAPSHOT

FX Adjusted1 – Cash Profit Results and Net Loans and Advances

SNAPSHOT

FX and Divestments Adjusted – Cash Profit Results

SNAPSHOT

Strategy and Performance

Strategic Progress

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.

Divisional performance

Cash profit by division – September 2014 Full Year v September 2013 Full Year

Australia

International and Institutional Banking

New Zealand (in NZD)

Global Wealth

GTSO and Group Centre

Australia

CFO OVERVIEW

International and Institutional Banking

New Zealand (in NZD)

Global Wealth

GTSO and Group Centre

Review of Group results

Income and expenses

Net interest income

Group net interest margin – September 2014 Half Year v March 2014 Half Year

Net interest margin (-3 bps)

Average interest earning assets (+$29.1 billion or +5%)

Average deposits and other borrowings (+$18.7 billion or +4%)

Group net interest margin – September 2014 Full Year v September 2013 Full Year

Net interest margin (-9 bps)

Average interest earning assets (+$71.7 billion or +12%)

Average deposits and other borrowings (+$57.8 billion or +13%)

CFO OVERVIEW

Income and expenses, cont’d

Other operating income – September 2014 Full Year v September 2013 Full Year

Fee income (-$8 million or -1%)

Foreign exchange (+$9 million or +21%)

Net income from funds management and insurance (+$49 million or +8%)

CFO OVERVIEW

Share of associates profit (+$24 million or +10%)

Other income (+$53 million or +59%)

Global Markets income (-$124 million or -10%)

Fee income (+$58 million or +3%)

Foreign exchange (-$114 million or -55%)

Net income from funds management and insurance (+$67 million or +6%)

Share of associates profit (+$32 million or +7%)

Other income (+$143 million or +large %)

CFO OVERVIEW

Australia and New Zealand Banking Group Ltd. Annual Report 2014