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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

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CONTENTS
FY16 Results
CEO and CFO FY16 results presentations	3
CEO Presentation	3
CFO Presentation	17
Corporate profile	39
Treasury	49
Risk	59
Housing portfolio trends	76
Divisional performance	83
Australia Division	84
New Zealand Division and Geography	89
Institutional	93
Wealth Australia	103

All figures within this investor discussion pack are presented on Cash basis in Australian Dollars unless otherwise noted. In arriving at Cash Profit, Statutory Profit has been adjusted to exclude non-core items, further information is set out on page 84 of the 2016 Full Year Consolidated Financial Report.

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

F Y 1 6 R E S U LT S P R E S E N TAT I O N S H AY N E E L L I O T T C H I E F E X E C U T I V E O F F I C E R

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HEADLINE FINANCIAL PERFORMANCE

$m	2016 FULL YEAR	2016 SECOND HALF
FY16 vs FY15 Statutory Profit 5,709 -24% Cash Profit 5,889 -18% Operating Income 20,577 0% Operating Expenses -10,422 11% Profit Before Provisions 10,155 -9% Provisions -1,956 62%	FY16 vs FY15	2H16 vs 1H16
		2,971 9%
		3,107 12%
		10,261 -1%
		-4,943 -10%
		5,318 10%
		-1,038 13%
Cash EPS (cents) 202.6 -22% Cash ROE (%) 10.3% -370bps Dividend per share (cents) 160 -12% CET1 (%) 9.6% 2bps CET1 Internationally Comparable Basel 31 14.5% 130bps		106.7 11%
		10.9% 120bps
		80 0%
		9.6% -20bps
		14.5% 50bps

Internationally Comparable methodology aligns with APRA’s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor.

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HEADLINE COMPONENTS

OPERATIONAL PERFORMANCE

Strong operating performance in Impact from Productivity retail & commercial in reshaping Institutional Aus & NZ

Change in credit cycle

SPECIFIED ITEMS[1 ]

Asia minority investments Capitalised software -$231m -$522m Restructuring charge CVA methodology -$201m -$168m

Esanda dealer finance sale $45m Retail & Wealth Asia sale

Post tax basis. ‘Specified items’ include the impact of software capitalisation policy changes, Asia Partnership impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses, sale of Esanda Dealer Finance business, and derivative credit valuation adjustment. Further detail provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

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ADJUSTED PRO-FORMA

FINANCIAL PERFORMANCE

$m	2016 FULL YEAR	2016 SECOND HALF
Adjusted Pro-forma FY16 vs FY15 Operating Income 20,936 3.5% Operating Expenses -9,384 0.9% Profit Before Provisions 11,552 5.7% Provisions -1,933 79.8%	FY16 vs FY15	2H16 vs 1H16
		10,498 0.6%
		-4,683 -0.4%
		5,815 1.4%
		-1,028 13.6%
Profit 6,966 -2.5%		3,467 -0.9%
ROE 12.2% -160bps		12.2% 0bps

Adjusted Pro-forma refers to Cash Profit adjusted to remove the impact of ‘Specified items’ including the impact of software capitalisation policy changes, Asia Partnership impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses, sale of Esanda Dealer Finance business, and derivative credit valuation adjustment. Further detail provided in the ANZ Full Year 2016 consolidated Financial Report page 16

FOUR PRIORITIES

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BUILDING A BETTER BANK

1. Create a simpler, better

capitalised, better balanced and more agile bank

2. Focus our efforts on attractive areas where we can carve out a winning position

3. Drive a purpose and values led transformation of the Bank

4. Build a superior everyday

experience for our people and

customers in order to compete in the digital age

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GETTING FIT FOR PERFORMANCE

Sustainable growth

New operating model

Rebalancing

FY16

FY17

FY18

FY19 onward

WORK TO DATE

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1. Reset strategy

2. Rebuilt executive team

3. Rebalanced portfolio organically

4. Progressed on disposals

5. Reshaped workforce

6. Changed cost trajectory

7. Adjusted operating model

8. Responding to changing expectations

RETAIL & COMMERCIAL PERFORMANCE

AUSTRALIA & NEW ZEALAND

HIGHLIGHTS AND DRIVERS1	AUSTRALIA	AUSTRALIA	NEW ZEALAND	NEW ZEALAND
Movement vs prior half	1H16	2H16	1H16	2H16
Customer acquisition Small Business Lending (NLA’s) Net interest margins (NIM) Revenue growth Productivity: CTI Provisions Profit growth	+43k +110k +36k +26k +5% +3% +7% +4% +3bps -2bps -6bps -5bps +6% +2% +1% +2% 34.7% -160bps 34.5% -20bps 38.2% -150bps 37.7% -50bps +13% +52m 0% -1m +18% +7m +80% +37m +7% +3% +4% -2%

Financials on an Adjusted Pro-forma basis, NZ financials calculated on NZD

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INSTITUTIONAL PERFORMANCE

TRANSFORMATION PROGRESS

HIGHLIGHTS AND DRIVERS1	INSTITUTIONAL	INSTITUTIONAL
Movement vs prior half	1H16	2H16
Customers Focus on reducing off-strategy low return RWA reductions Net interest margin (NIM)2 Revenue Expenses Profit Before Provisions FTE Product highlights • Markets Sales (Revenue) • Cash management (Revenue) • Digital transaction volumes	>10% reduction >13% reduction $16b -8% $14b -7% +10bps +4bps -3% -0% +3% -6% -8% +6% -4% -10% -5% +4% +9% +5% +3% +12%

Financials on an Adjusted Pro-forma basis

Institutional NIM excluding markets

A GOOD START

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A BETTER BALANCED, HIGHER RETURN BUSINESS

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COMPOSITION OF TOTAL ANZ CAPITAL COMPOSITION OF TOTAL ANZ CAPITAL
SEPTEMBER 2015 [1 ] SEPTEMBER 2016 [1 ]
Institutional Retail & Comm Institutional Retail & Comm
Aus & NZ Aus & NZ
Wealth
Wealth
Capital [2 ] Capital [2]
$53.4b $58.6b
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Charts are Illustrative only as at September 15 & September 16. September 16 is post sale of Asia Retail and Wealth business and includes the impact of higher residential mortgage risk weights from regulatory change.

Institutional shown under the 2015 IIB structure, including Global Institutional, Asia minority interests and Asia Retail & Pacific 2. End of period capital balance

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OPERATING ENVIRONMENT

Low and negative interest rates

Dynamic competitive landscape

Stubborn cost pressures

Turning credit cycle

Increased regulation

Higher capital and liquidity thresholds

Cyclical Structural

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CAPITAL EFFICIENCY

EXECUTIVE FOCUS

COMMON EQUITY TIER 1 GENERATION	COMMON EQUITY TIER 1 GENERATION	COMMON EQUITY TIER 1 GENERATION	COMMON EQUITY TIER 1 GENERATION
CET1 bps	FY12-FY15 FY avg	FY16	Change FY16 vs FY12-FY15 avg
Cash Profit 204 1731 -31 RWA growth -42 25 +67
Capital Deductions2 -32 -21 +11
Net capital generation	130	177 +47

Gross dividend -135 -127 Dividend Reinvestment Plan 29 13 Core change in CET1 24 63 Other items 9 -61 Net change in CET1 33 2

1.Cash profit is on an Adjusted Pro-forma basis adjusted for ‘Specified items’

2.Represents movement in retained earnings in deconsolidated entities, capitalised software and other intangibles.

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BUSINESS OUTLOOK

GETTING MORE STUFF DONE

1. Continued strength and cautious growth in Australia and NZ

2. Ongoing re-positioning of Institutional

3. Continued focus on re-balancing our business portfolio

4. Execution on four business priorities

Create a simpler better bank
Focus where we can win
Drive a purpose and values led transformation
Build a superior customer experience for the digital age

FOCUS FOR 2017

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1. Delivering the benefits of decisions taken in 2016

2. Further re-shaping of our portfolio including decisions on our Wealth business as a result of our strategic review

3. Continued reductions in Institutional RWA

4. Further strengthening of our core franchises in Australia and New Zealand

5. Delivering benefits from our focus on digital

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

F Y 1 6 R E S U LT S P R E S E N TAT I O N MI C H E L L E J A B L K O C H I E F F I N A N C I A L O F F I C E R

OVERVIEW

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Specified items
Portfolio movement
Operating performance
Capital management

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FINANCIAL PERFORMANCE

CASH PROFIT

FULL YEAR 2016

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$m
7,216
-250
-1,077
FY15 cash profit Growth FY16 specified items
(ex specified items)
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5,889 FY16 cash profit

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Cash Profit growth -18.4%
EPS (basic) growth -22.2%
ROE 10.3%
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SECOND HALF 2016

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$m
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685
2,782
1H16 cash profit Growth
(ex specified items)
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3,107
-360
2H16 specified items 2H16 cash profit
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2H16 specified items

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Cash Profit growth 11.7%
EPS (basic) growth 11.3%
ROE 10.9%
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SPECIFIED ITEMS

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ALL TAKEN THROUGH CASH PROFIT

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TOTAL FY16 Capitalised Restructuring Asian Minority Esanda Dealer CVA change in
Specified Items software expenses investments Finance sale methodology
Costs, including Expenses incurred AMMB Impairment Pro-forma adjustment Revised methodology
Cash Profit
accelerated in relation to charge; Bank of to remove the for CVA - greater use
impact ($m) amortisation, resulting organisational Tianjin gain on operating results of of market information
from software restructures cessation of equity that business and gain and sophisticated
capitalisation changes accounting on sale modelling
45
(168)
(201) (231)
(717)
(522) 1H16
2H16
(360)
2H16 (new specified item)
(1,077)
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‘Specified items’ include the impact of software capitalisation policy changes, Asia Partnership impairment charge (AMMB) and gain of cessation of equity accounting (Bank of Tianjin), restructuring expenses, sale of Esanda Dealer Finance business, and derivative credit valuation adjustment. Further detail provided in the ANZ Full Year 2016 consolidated Financial Report page 16

SPECIFIED ITEMS

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CVA METHODOLOGY ADJUSTMENTS

TOTAL FY16 CVA change in Specified Items methodology Revised methodology Cash Profit for CVA - greater use impact ($m) of market information and sophisticated modelling

CVA is a valuation adjustment made in determining the fair value of derivative instruments to incorporate the risk of default by a counterparty to a derivative transaction
Taken as a movement in the revenue line for Markets

(717) (168) (360) 1H16 (1,077) 2H16 2H16 (New specified item)

	CVA movements in FY16 One off adjustments forpriorperiods to mark to market currentportfolio	$(25)m $(143)m

SPECIFIED ITEMS

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CAPITALISED SOFTWARE

CAPITALISED SOFTWARE SPECIFIED ITEM COMPONENTS

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TOTAL FY16 Capitalised
Specified Items software
Costs, including
Cash Profit
accelerated
impact ($m) amortisation, resulting
from software
capitalisation changes
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(717)
(522)
(360)
1H16
(1,077) 2H16
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$m	1H16	2H16	FY16
Accelerated Amortisation 556 - 556 Amortisation benefit (88) (95) (183) Higher expenses from amended policy 161 209 370
TOTAL PRE TAX 629 114 743
TOTAL POST TAX 441 81 522

CAPITALISED SOFTWARE BALANCE

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$m 2,893
2,533
-135
2,170 2,202
1,762 -556
FY12 FY13 FY14 FY15 FY16 net Accelerated FY16
movement amortisation
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SPECIFIED ITEMS

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CAPITALISED SOFTWARE

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CAPITALISED SOFTWARE POLICY CHANGES

Increased the threshold for capitalisation of software development costs
Directly expensing more project related costs

RATIONALE

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1H16
(717)
2H16
(522)
(360)
(1,077)
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Reflects the rapidly changing technology landscape & increased pace of innovation in financial services, resulting in increasingly shorter useful lives for smaller items of software in the “digital world”
Driving more disciplined commercial decisions

IMPACT

CAPITALISED SOFTWARE BALANCE IMPACT

($m)

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2,332 2,533 2,689 2,893 2,249 2,202
Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
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Accelerated amortisation of previously capitalised software balances with an original costs below the revised threshold
Increased operating expenses for software projects in the current period that would otherwise have been capitalised and amortised in future periods
Higher software expenses in the near term but lower amortisation charges in future years
Reduced capitalised software balance

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

SPECIFIED ITEMS

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RESTRUCTURING EXPENSES

TOTAL FY16 Restructuring Specified Items expenses Expenses incurred Cash Profit in relation to impact ($m) organisational restructures 1H16 (717) (201) 2H16 (360) (1,077)

RESTRUCTURE EXPENSES

Reshaping the workforce to reduce complexity and duplication
Aligning to the new organisation structure, including our changing emphasis on Institutional
This includes simplification of the Institutional and Wealth businesses, restructure of Asia Retail & Pacific, and simplification and digitisation in Australia and TSO and Group Centre

BENEFITS

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

Further detail on specified items provided in the ANZ Full Year 2016 consolidated Financial Report page 16.

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PORTFOLIO MOVEMENT

RISK WEIGHTED ASSETS

TOTAL RISK WEIGHTED ASSETS

CREDIT RWA MOVEMENT

(Sep 16 vs Sep 15)

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409
402
387 14 388 18 CRWA increase $2.2bn
14 16
362 38 39 $b 2.2
21 33 38
26
32
Home loan CRWA
25.9
regulatory changes
Risk
0.5
309 340 350 334 326 352 -4.4 FX Impact
(1H16 -2.0bn)
-13.3 Lending Mvmt.
(2H16 -11.3bn)
Esanda DF sale
-4.6
Data/methodology review
-1.9
Sep-14 Mar-15 Sep-15 Mar-16 Sep-16
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Market & IRRBB RWAs Home loan CRWA regulatory changes Op-Risk RWAs Credit RWAs ex home loan RWA changes

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PORTFOLIO MOVEMENT

EAD & LENDING CRWA MOVEMENT[1 ]

(Sep 16 vs Sep 15)

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$b
29.0
Home loan CRWA
regulatory changes
16.3
6.9
5.0
3.1 2.8
1.6
0.3
-0.2
-3.8
-4.6
-8.1
-17.9
-21.1
-23.7
Total AUS HL AUS Non HL NZ other Esanda DF Institutional
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Credit RWA lending movement Exposure at Default movement

FX adjusted

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PORTFOLIO MOVEMENT

INSTITUTIONAL CRWA & MARGINS

INSTITUTIONAL CREDIT RWA MOVEMENT[1 ]

INSTITUTIONAL NIM[1,3 ]

$b

		1H16	1H16		2H16	2H16	FY16
	(Mar	16 vs Sep 15)		(Sep	16 vs Mar 16)		change
	Aus &	NZ	International	Aus & NZ		International	Total
Trade	-1.0		-5.6	-0.1		-2.6	-9.2
Loans	0.9		-5.5	-3.1		-5.1	-12.9
Other2	-3.2		-2.9	0.2		0	-5.8

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%
2.57%
2.65%
2.40%
2.16%
2.06% 2.20%
2.02%
1.79%
1.86%
1.66%
1.39% 1.59%
2H15 1H16 2H16
Australia International
NZ Total Institutional
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PNG included in Australia geography.

Other is primarily Markets
Net interest margin excluding Markets

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OPERATING PERFORMANCE

CASH PROFIT

FULL YEAR 2016

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$m
7,216 40
428 5,889
-1,044
-751
FY15 Income Expenses Provisions Tax & NCI FY16 cash
cash profit Profit
SECOND HALF 2016
$m
536
3,107
2,782 -120 -36
-55
1H16 Income Expenses Provisions Tax & NCI 2H16
cash profit cash profit
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	Cash Profit change	Adj. Pro- forma change
Income 0.2% 3.5% Expenses 11.1% 0.9% PBP -9.0% 5.7% Provisions 62.3% 79.8% Net Profit -18.4% -2.5% EPS(basic) -22.2% -7.0%

	Cash Profit change	Adj. Pro- forma change
Income -0.5% 0.6% Expenses -9.8% -0.4% PBP 9.9% 1.4% Provisions 13.1% 13.6% Net Profit 11.7% -0.9% EPS(basic) 11.3% -1.2%

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PORTFOLIO CONTRIBUTION

ADJUSTED PRO-FORMA

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INCOME CONTRIBUTION
(Adjusted Pro-forma)
$m
20,936
20,231
9,365
Australia 8,606
New Zealand 2,985 3,090
Institutional 5,762 5,412
Wealth,
Asia Retail & Pacific, 2,878 3,069
TSO & Group
FY15 FY16
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Adjusted Pro-forma	FY16 vs FY15	2H16 vs 1H16
AUSTRALIA DIVISION Income 8.8% 1.7% Expenses 3.0% 1.1% Profit Before Provisions 12.2% 2.0% Cash Profit 10.3% 2.7%
NEW ZEALAND DIVISION (NZD) Income 3.1% 1.6% Expenses -2.3% 0.5% Profit Before Provisions 6.6% 2.3% Cash Profit 3.4% -1.6%
INSTITUTIONAL Income -6.1% -0.5% Expenses 0.8% -6.0% Profit Before Provisions -12.6% 5.8% Cash Profit -33.8% -5.6%

INCOME DRIVERS

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GROUP NET INTEREST MARGIN

FY16 INCOME CONTRIBUTION

Basis points

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204
5
201 0 200
(3)
(3)
(2)
(1)
Includes Improvement largely
2bp impact in Australian
from the consumer & Asia
sale of trade
Esanda DF (1)bp
(4)bps
2H15 1H16 change 1H16 Funding & Funding cost Deposits Assets Markets & 2H16
Asset mix Treasury
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AUSTRALIA NIM[1] (%)

INSTITUTIONAL NIM[1,2] (%)

NEW ZEALAND NIM[1] (%)

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2.55 2.55 2.54 2.56 2.54 2.52 2.55 2.46 2.40 2.35
2.14 2.06 2.06 2.16 2.20
2H14 1H15 2H15 1H16 2H16 2H14 1H15 2H15 1H16 2H16 2H14 1H15 2H15 1H16 2H16
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Prior halves restated for divisional resegmentation 2. Institutional NIM excluding markets

INCOME DRIVERS

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MARKETS INCOME

TOTAL INCOME YOY

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

$m
2,242 2,169
1,800
2,037
-237
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----- Start of picture text -----

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

$m
625
589
531 543 533 543
1H14 2H14 1H15 2H15 1H16 2H16
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TRADING

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

$m
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----- Start of picture text -----

374
317 337 345
266
221
1H14 2H14 1H15 2H15 1H16 2H16
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----- Start of picture text -----

FY14 FY15 FY16
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Total markets (ex CVA methoodology change) CVA methodology change

TOTAL INCOME HOH

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

838
988 962
1,075
-237
2H15 1H16 2H16
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Total markets (ex CVA methoodology change) CVA methodology change

BALANCE SHEET

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

284 286 276 269
162
121
1H14 2H14 1H15 2H15 1H16 2H16
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VALUATION ADJUSTMENTS $m (CVA & FVA[1] )

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

58
17
-4 -111
-56 -79
$40m for movements in FY16, $197m -237
one off adjustments for prior periods to
mark to market current portfolio
-348
1H14 2H14 1H15 2H15 1H16 2H16
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Valuation adjustment CVA methodology change (specified item)

Adjusted Pro-Forma basis, excludes CVA methodology changes specified item

COST MANAGEMENT

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EXPENSE TREND EXPENSE DRIVERS
$m
Cash Adjusted
11.1% Pro-forma FY15 expenses 9,378
-$211m on a constant
Personnel -132
currency basis
Premises 6
6.8%
6.1% Technology 198
Other 8
Specified items
FY15 charge: $31m 247
(Restructuring) FY16 charge: $278m
Specified items
717
(Other)
0.9%
FY16 expenses 10,422
-0.4%
FY14 Cash FY15 Cash FY16 Cash FY16 2H16 (PCP)
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COST MANAGEMENT

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RESTRUCTURING COSTS DRIVING SIMPLIFICATION, REDUCING FTE

EXPENSES

ACTIONS

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$m • FTE reductions ~ 3,600 (7%) in 2016
278
10,422 • ~50% from role eliminations, utilising restructuring spend
278
•
FY16 actions (from restructuring charge spent: $166m of $278m)
90 Institutional • Delivered savings of ~$100 m in FY16
•
Expected to deliver ~$200m savings annually from FY17
•
FY17 actions (from remaining restructuring charge: $112m of $278m)
•
Expected FY17 benefit of ~$100m
•
Expected to deliver ~$200m savings annually from FY18
89 TSO & Gp centre
10,144
FULL TIME EQUIVALENT (FTE) FY16 MOVEMENT
49 Australia FY 16 movement (FTE #)
18 NZ -119
-297
Wealth, -578
32 -746
Asia Retail and Pacific
FY16 FY16
-1,858
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Restructuring charge Expenses (Cash basis) excluding restructuring charge

TSO & Group Wealth, Asia Retail and Pacific

Instit. Aus NZ

PROVISIONS

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TOTAL PROVISION CHARGE

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$m
1,038
1,050
918
900
750
695
600
461
510
450
300
150
0
-150
2H14 1H15 2H15 1H16 2H16
CP Consumer IP Commercial IP Institutional IP Oswal Settlement
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PROVISION MOVEMENT (2H16 vs 1H16)

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

$m Up $120m
147
120
36 24
-35
-52
Total Oswal Comm. Retail Institutional CP
Settlement (ex Oswal)
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COLLECTIVE PROVISION COVERAGE

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

$b (CRWAs) 350 352
309
0.89% 0.88%
0.85%
0.82%
Sep 14 Sep 15 Sep 16
Credit Risk Weighted Assets
CP Bal. as % of CRWA
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CP Bal. as % of CRWA ex impact of home loan RWA changes

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CAPITAL MANAGEMENT & DIVIDEND

APRA COMMON EQUITY TIER 1 (CET1) POSITION

DIVIDEND & PAYOUT RATIO

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% DPS (cents) DPOR (%)
200 90
181
178
0.22
80
164
0.90 160
-0.06
145 70
150
-0.54 95 95 60
9.81 91 80
50
9.61 79
-0.07 100
-0.60
Net Organic Capital -0.05 40
Generation +106
bps
30
50
83 86 80 20
73
66
10
0 0
Mar-16 Specified Cash RWA Capital Dividends Mortgages Other Sep-16 2012 2013 2014 2015 2016
Items Profit [1 ] usage [2 ] Deductions [3 ] (Net of RWA
DRP) Cash DPOR (RHS) DPS 2nd Half
DPOR (Adjusted Pro-forma) DPS 1st Half
(RHS)
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Cash profit is on an Adjusted Pro-forma basis adjusted for ‘Specified items’ 2. Includes EL vs. EP shortfall
Represents the movement in retained earnings in deconsolidated entities, capitalised software and other intangibles

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RETAIL AND WEALTH PORTFOLIO

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Sale of retail and wealth business in Singapore, China, Hong Kong, Taiwan and Indonesia announced 31 October 2016

No impact in FY16
Estimated premium of $110m to NTA
Estimated CET1 release of 15-20bps
Net transaction P&L impact of $265m, expected to be slightly higher in the first half of financial year 2017, but offset back to ~$265m in subsequent periods
Revenue, direct expenses and provisions to go as country sales complete over next 18 months
Indirect expenses to roll off more slowly (largely over the next 2-3 years)

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ANZ RETAIL & WEALTH TRANSACTION OVERVIEW

Overview

ANZ to sell its retail and wealth business in Singapore, China, Hong Kong, Taiwan and Indonesia to DBS Bank Limited
Sale reflects the bank’s strategic priority to create a simpler, better capitalised and better balanced bank, and follows a review of the retail and wealth business in Asia, taking into consideration:
changes in the retail regulatory environment
ongoing investment required to build a distinctive Asia retail customer proposition
strategic focus of the bank to grow in attractive areas where we can carve out winning positions and improve capital efficiency and shareholder returns
Transaction enables resources in Asia to be focused on running a world class institutional business in the region, serving key institutional clients connected to the region via trade and capital flows

Transaction summary (ANZ financials as at 30 September 2016)

Business being sold includes ~$11 billion in gross loans and advances, ~$7 billion in credit risk weighted assets and ~$17 billion in deposits
In FY16, the business generated revenue of ~$825 million, provisions of ~$160 million; and net profit of ~$50 million
Sale price represents an estimated premium to net tangible assets at completion of approximately $110 million
As part of the transaction, ANZ will take a net loss of ~$265 million including write-downs of software, goodwill and fixed assets; and separation and transaction costs. The impact is expected to be slightly higher in the first half of financial year 2017, but offset back to ~$265 million in subsequent periods

Capital impact

Sale is expected to improve ANZ’s CET1 ratio by ~15 to ~20 bps (~30 bps internationally comparable Basel 3[1] ), and excluding the write-downs in 1HFY17, there will be a small impact on ROE and EPS

Timing

Sales of the business will occur progressively over the next 18 months, with 3 of the 5 countries expected to occur during the second half of the 2017 financial year, and the remaining 2 in the first half of financial year 2018. Sale is conditional upon regulatory approval in each market
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 APRA’s information paper entitled International Capital Comparison Study (13 July 2015)

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ANZ ASIA PORTFOLIO

O N G O I N G B U S I N E S S 1
ANZInstitutional Asia
Gross loans and advances $43b
Deposits $41b FTE 1,490
Coverage (Asian Markets) 15
Products
• Relationship banking - corporate and institutional banking
• Markets, loans and specialised finance - customer solutions,
corporate and institutional sales, commodities solutions, trading,
debt capital markets, syndications, project & structured finance,
structured asset finance, structured export finance
• Transaction banking - trade and supply chain, payments and cash
management and clearing services
ANZ operational hubs
FTE >9,100
Locations: Bengaluru, India; Manila, Philippines; Chengdu, China

N O N C O R E B U S I N E S S
Retail and Wealth Asia – this transaction2
Gross loans and advances ~$11b
Deposits ~$17b
Countries 5
Minority investments in Asia3
# of material minority investments 4
Carrying value ~4.1bn

as at 30 September 2016
excludes ANZ retail and wealth businesses in Vietnam, Cambodia, Philippines & Japan
carrying value as at 31 March 2016 refers to ANZ’s equity accounted investments in AMMB Holdings Berhad, PT Bank Pan Indonesia and Shanghai Rural Commercial Bank. The fourth minority investment refers to ANZ’s investment in Bank of Tianjin, accounted for as an available-for-sale asset

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

C O R P O R AT E P R O F I L E

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CORPORATE PROFILE

OVERVIEW

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Founded in 1835 and headquartered in Melbourne, Australia, ANZ is one of the four largest Australian banks and ranked in the top 25 banks globally by market capitalisation
ANZ serves over 10 million retail, commercial and institutional customers[1] , with consumer and corporate offerings in our core markets and supporting regional trade and investment flows across the region
ANZ is listed on the Australian Stock Exchange (ASX) with a secondary listing on the New Zealand Stock Exchange (NZX)
Credit Ratings: S&P AA- / Negative outlook, Moody’s Aa2 / Negative outlook, Fitch AA- / Stable outlook

	Cash NPAT	Customer Lending3	Customer Deposits	RoRWA2	Staff (FTE)
ANZ Group FY16	$5,889m	$575.9b	$449.6b	1.44%	46,554

Australia Division	$3,573m	$327.1b	$187.6b	2.27%	8,864

New Zealand Division	$1,267m	$107.9b	$72.8b	1.78%	5,240

Institutional Division	$1,057m	$125.9b	$171.1b	0.75%	3,640
Australia	$599m	$65.9b	$65.4b
New Zealand	$190m	$7.0b	$14.3b
International	$268m	$53.0b	$91.4b

Information is on a Cash basis unless otherwise noted

RoRWA: Return on Average Risk Weighted Assets

Customer numbers as at 30 September 2015

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CORPORATE PROFILE

STRATEGIC FOCUS

1. Create a simpler, better capitalised, better balanced and more agile bank

Reduce operating costs and risks by removing product and management complexity
Exit low return and non-core businesses
Reduce reliance on low-return aspects of Institutional banking in particular
Further strengthen the balance sheet by rebalancing our portfolio

2. Focus our efforts on attractive areas where we can carve out a winning position

Make buying and owning a home or starting, running and growing a small business in Australia and New Zealand easy
Be the best bank in the world for customers driven by the movement of goods and capital in our region

3. Drive a purpose and values led transformation of the Bank

Create a stronger sense of core purpose, ethics and fairness,
Invest in leaders who can help sense and navigate the rapidly changing environment

4. Build a superior everyday experience for our people and customers in order to compete in the digital age

Build more convenient, engaging banking solutions to simplify the lives of customers and our own people

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CORPORATE PROFILE

DIGITAL, TECHNOLOGY & OPERATIONS

OUR PORTFOLIO OF DIGITAL SOLUTIONS

DELIVERING BETTER CUSTOMER EXPERIENCE

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SUPPORTED BY OUR MULTI-CHANNEL PLATFORM (MCP)

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First major Australian bank to launch Apple Pay[TM] and Android Pay[TM] . the only bank in New Zealand to offer Apple Pay[TM]
Over 1 million customers using goMoney[TM ] apps on our new Digital Banking Multi-Channel Platform.
Leading levels of customer satisfaction with Mobile Banking channels (98% in NZ, 92% in Australia).
Digital Identity Verification launched with 65% of customers applying for a savings account online having their identity verified successfully.
$72b transactions processed p.a. over goMoney[TM] mobile.
New ANZ website with redesigned Home Loans pages optimised for any device
Multiple awards for customer service/excellence and security (Best Customer Experience Credit Cards, Best Consumer Digital Bank in Pacific , ANZ Indonesia - Customer Experience Banking, Australian Information Security “Information Security Project of the Year”).
Banker Desktop implemented for Personal Loans to enable seamless interaction with customers from discovery to fulfilment.
Enhanced GROW with new Wealth products and Apple Touch Id and Watch support.

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CORPORATE PROFILE

EARNINGS

INCOME BY DIVISION

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$m
6%
6%
47%
26%
15%
Australia Institutional
New Zealand Wealth Aust.
PROFIT BY DIVISION [2 ]
$m
5%
2%
19%
55%
19%
Australia Wealth Aust.
New Zealand Asia Retail & Pacific
Institutional
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Australia Institutional Asia Retail & Pacific New Zealand Wealth Aust.

INCOME BY CUSTOMER[2 ]

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$m
6%
26%
48%
20%
Retail Institutional
Commercial Wealth
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PROFIT BY CUSTOMER[2 ]

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$m
12%
4%
39%
45%
Retail Institutional
Commercial Wealth
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INSTITUTIONAL INCOME

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$m
44%
47%
9%
Australia International
New Zealand
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INSTITUTIONAL PROFIT

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

$m
57%
18%
25%
Australia International
New Zealand
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Information is on a Cash basis unless otherwise specified and exclude TSO & Group Centre 1. Wealth refers to Wealth Australia customers.

Pro-forma basis

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CORPORATE PROFILE

BALANCE SHEET

LENDING BY REGION[1 ]

EAD[3 ] $b

INSTITUTIONAL GRADE

EAD[2 ] $b

BALANCE SHEET

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

400
300
200
100
0
Australia NZ International
Retail Institutional
Commercial Wealth
----- End of picture text -----

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

400
19%
17%
300 21%
200
79% 81% 83%
100
0
Sep 14 Sep 15 Sep 16
Investment Sub-investment Default
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DEPOSITS BY REGION[3]

INSTITUTIONAL BY TENOR

EAD[2 ] $b

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

400 200
300 150
34%
59%
200 100
100 50 66% 33%
41%
67%
0 0
Australia NZ International Australia NZ International
Retail Institutional Tenor > 1 Year Tenor < 1 Year
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Retail Institutional Commercial Wealth

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

600
550
500
450
400
350
300
250
200
150
100
50
0
Sep 16 Sep 15 Sep 14
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NLA Deposits

NOTE: Information is on a Cash basis unless otherwise specified

Net Loans and Advances. Excludes TSO & Group Centre. Australia includes PNG. 2. Exposure-at-default as defined by APRA standards 3. Excludes TSO & Group Centre. Australia includes PNG.

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CORPORATE PROFILE

RISK WEIGHTED ASSETS BY DIVISION

$b (AUD)	Australia Division	Institutional Division	New Zealand Divisional	Other1	TOTAL
Sep 2015
Credit Risk Weighted Assets 114 169 49 18 350 Market & Operational Risk Weighted Assets 16 29 6 1 52 Total Risk Weighted Assets 130 198 55 19 402 Institutional total RWAs by region Australia & New Zealand 102 Asia,Pacific,Europe & America 96

Sep 2016
Credit Risk Weighted Assets 140 141 53 18 352 Market & Operational Risk Weighted Assets 17 27 6 7 57 Total Risk Weighted Assets 157 168 59 25 409 Institutional total RWAs by region Australia & New Zealand 93 Asia, Pacific, Europe & America 75

Movement
Credit RWA movement +26 -28 +4 0 +2 Total RWA movement +27 -30 +4 +6 +7 Institutional total RWAs by region Australia & New Zealand -9 Asia, Pacific, Europe & America -21

Credit RWA movement: Major drivers(ex. BAU growth)
Mortgage RWA regulatory changes +26 +26 Esanda Dealer Finance Sale -5 -5 Active RWA management -22 -22 FX -6 -6

Other: includes Asia Retail & Pacific, Wealth Australia, Technology, Services & Operations, and Group Centre

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CORPORATE PROFILE

VOLUMES & MARGINS

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ANZ GROUP GROUP NET INTEREST MARGIN [1 ]
$b bps
570 576 204 1 2 1 205
200
522 (2) (1) (5)
483
428
FY15 Aus. NZ Inst. Asia Other FY16 markets FY16
2.31% 2.22% Div. Div. Div. Retail ex
2.13% (ex & markets
2.04% 2.00% markets) Pacific
NET LOANS AND ADVANCES
$b
11
12
0 576
570
(16) (1)
Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 FY15 Aus. Div. NZ Div. Inst. Div. Asia Other FY16
Retail &
NIM (RHS) NLA Pacific
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Information is on a Cash basis unless otherwise specified

1.Australia Division: September 2016 full year included $31 million (September 2016 half: nil, March 2016 half : $31million; September 2015 full year: $255 million) related to the Esanda Dealer Finance assets divested to Macquarie in the March 2016 half.

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CORPORATE PROFILE

PRODUCTIVITY

ANZ GROUP

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$m
442
409
387 389
370
50.6%
47.7%
45.7%
44.9% 44.7%
FY12 FY13 FY14 FY15 FY16
CTI (RHS) Revenue/FTE
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COST TO INCOME

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%
+20bps -50bps +800bps +450bps -510bps
69.2%
63.5%
56.7%
36.0% 39.6%
Aus. Div. NZ Div. Inst. Div. Wealth Aust. Asia Retail
& Pacific
FTE
-3% -2% -14% -10% -17% -7%
24,506
8,864
5,240
3,640 2,925
1,379
Aus. Div. NZ Div. Inst. Div. Wealth Asia Retail TSO &
Aust. & Pacific Group
Centre
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Information is on a Cash basis unless otherwise specified

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CORPORATE PROFILE

PROFITABILITY

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ANZ GROUP
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----- Start of picture text -----

$m
7,117 7,216
6,492
5,830 5,889
1.96% 1.93% 1.97%
1.80%
1.44%
FY12 FY13 FY14 FY15 FY16
RoRWA (RHS) NPAT
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----- Start of picture text -----

RORWA DIVISION
% 78.80
2.27
1.78
1.14
0.75
Aus. Div. NZ Div. Inst. Div. Wealth Aus. Asia Retail
& Pacific
RISK WEIGHTED ASSETS
$b
168
157
59
13
0
Aus. Div. NZ Div. Inst. Div. Wealth Aus. Asia Retail
& Pacific
PROFIT
$m
3,573
1,267
1,057
327
152
Aus. Div. NZ Div. Inst. Div. Wealth Aus. Asia Retail
& Pacific
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Information is on a Cash basis unless otherwise specified

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

T R E A S U RY

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REGULATORY CAPITAL

CAPITAL UPDATE

Capital Position

APRA CET1 ratio of 9.6% on an APRA basis or 14.5% on an Internationally Comparable[1] basis – comfortably above Basel top quartile[2] CET1 of 13.1%
APRA Leverage ratio of 5.3% or 6.0% on an Internationally Comparable basis

Organic Capital Generation

2H16 organic capital generation of 106 bps in 2H16 is 33 bps higher than recent 2H averages[5] , driven mainly by the reduction in Institutional Credit RWA from lending movement ($12b over 2H16 and $21b over FY16, FX adjusted)
Net regulatory and other RWA impost of $26b for 2H16 driven mainly by higher RWA requirements for Australian Mortgages
Final dividend of 80 cents per share reflects revised dividend strategy as announced in 1H16

Capital Outlook

Changes to capital requirements arising from Basel RWA reforms (“Basel IV”) yet to be finalised, however, other minor RWA imposts likely

APRA COMMON EQUITY TIER 1 (CET1)

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

%
0.90 0.22
9.59 9.81 9.61
-0.06
-0.54 -0.60 -0.07 -0.05
Net Organic Capital
Generation +106 bps
Sep-15 Mar-16 Cash RWA Capital Dividends Mortgages Specified Other Sep-16
Profit [3 ] usage Deductions [4 ] (Net of RWA Items [3 ]
DRP)
BASEL III CET1
%
13.2 14.0 14.5
9.6 9.8 9.6
APRA
Internationally Comparable
Sep-15 Mar-16 Sep-16
TOTAL RWA MOVEMENT
$b Total Lending -$11.8b 25.8 0.9 1.7 408.6
388.3
0.6 3.7
-11.9 -0.5
CRWA +$17.7b
Mar-16 Institutional Other Esanda FX Mortgages Op RWA IRRBB Sep-16
Lending Divisional Impact and Other & Mkrt.
Lending CRWA RWA
impacts
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Internationally Comparable methodology aligns with APRA’s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor. 2. Based on Group 1 banks as identified by the BIS (internationally active banks with Tier 1 capital of more than €3 billion). The top quartile of this group was 13.1% as at December 2015. 3. Cash profit is on pro forma basis adjusted for ‘Specified items’. 4. Represents the movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles. 5. 2012-2015 2H averages

REGULATORY CAPITAL GENERATION

COMMON EQUITY TIER 1 GENERATION (bps)	Second half average 2H12 – 2H15	2H16	Full year average FY12 – FY15	FY16
Cash Profit 102 901 204 1731
RWA movement (16) 22 (42) 25
Capital Deductions2 (13) (6) (32) (21)
Net capital generation 73 106 130 177
Gross dividend (64) (60) (135) (127)
Dividend Reinvestment Plan 16 6 29 13
Core change in CET1 capital ratio 25 52 24 63
Other non-core and non-recurring items 2 (72) 9 (61)
Net change in CET1 Capital ratio 27 (20) 33 2

Organic Capital Generation

Net capital generation for FY16 and 2H16 are 177 bps and 106 bps respectively, which is higher than prior period averages (+47 bps and +33 bps respectively). This reflects the benefit of strong balance sheet discipline and the Group’s strategic intent to run-off low return assets in Institutional, offsetting lower Cash NPAT
Non-core and non-recurring items in 2H16 and FY16 largely reflects the impact of Australian IRB mortgage RWA at 25% (-60bps)
1.Cash profit is on an Adjusted Pro-forma basis, adjusted for ‘Specified items’

2.Represents the movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles

INTERNATIONALLY COMPARABLE[1] REGULATORY CAPITAL POSITION

APRA Common Equity Tier 1 (CET1) – 30 September 2016	9.6%
Corporate undrawn EAD and unsecured LGD adjustments Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many jurisdictions	1.5%
Equity Investments & DTAAPRA requires 100% deduction from CET1 vs. Basel framework which allows concessional threshold prior to deduction	1.0%
Mortgages APRA requires use of 20% mortgage LGD floor vs. 10% under Basel framework. Additionally, APRA also requires a higher correlation factor vs 15% under Basel framework to target an average risk weighting of at least 25% for Australian residential mortgages	1.1%
Specialised Lending APRA requires supervisory slotting approach which results in more conservative risk weights than under Basel framework	0.6%
IRRBB RWA APRA includes in Pillar 1 RWA. This is not required under the Basel framework	0.3%
Other Includes impact of deductions from CET1 for capitalised expenses and deferred fee income required by APRA, currency conversion threshold and other retail standardised exposures	0.4%
Basel III Internationally Comparable CET1	14.5%
Basel III Internationally Comparable Tier 1 Ratio	17.4%
Basel III Internationally Comparable Total Capital Ratio	20.7%

Internationally Comparable methodology aligns with APRA’s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor

CET1 AND LEVERAGE IN A GLOBAL CONTEXT

LEVERAGE RATIOS[[1,2 ]]

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CET1 RATIOS [1 ] LEVERAGE RATIOS [[1,2 ]]
0% 5% 10% 15% 20% 25% 0% 1% 2% 3% 4% 5% 6% 7% 8%
Swedbank DBS
Svenska Handelsbanken Intesa Sanpaolo
SEB OCBC
Nordea UOB
ABN Amro Erste Bank
Morgan Stanley ANZ
Danske Bank RBS
UBS BBVA
RBS Standard Chartered
ANZ Credit Agricole Group
Credit Agricole Group Raiffeisen Bank International (RBI)
Intesa Sanpaolo HSBC
Groupe BPCE Rabobank
ING Group Santander
DBS SEB
Standard Chartered Groupe BPCE
Top Citibank Barclays
Erste Bank
quartile Nordea
OCBC
13.1% [3 ] Rabobank CET1 Swedbank Leverage
Credit Suisse
HSBC ANZ ranks in the top ANZ compares equally
Goldman Sachs quartile of the largest Commerzbank ING Group well on leverage,
UOB internationally active UBS however international
Raiffeisen Bank International (RBI) banks [3] and equally is UniCredit comparisons are more
State Street
ranked in the top Danske Bank difficult to make given
JP Morgan
Bank of America quartile of Scotia the favourable treatment
Credit Suisse internationally active RBC of derivatives under US
Commerzbank G-SIBs and D-SIBs Svenska Handelsbanken GAAP
Barclays BNP Paribas
Societe Generale Societe Generale
BNP Paribas BMO
Deutsche Bank ABN Amro
BBVA TD
Santander Deutsche Bank
Wells Fargo
BMO
Scotia Top Quartile Banks (CET1)
RBC
TD
UniCredit
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CET1 and leverage ratios are based on ANZ estimated adjustment for accrued expected future dividends where applicable. ANZ ratios are on an Internationally Comparable basis. All data sourced from company reports and ANZ estimates based on last reported half/full year results assuming Basel III capital reforms fully implemented. 2. Includes adjustments for transitional AT1 where applicable. Exclude US banks as leverage ratio exposures are based on US GAAP accounting and therefore incomparable with other jurisdictions which are based on IFRS. 3. Based on Group 1 banks as identified by the BIS (internationally active banks with Tier 1 capital of more than €3 billion). The top quartile of this group was 13.1% as at December 2015

BALANCE SHEET STRUCTURE

FUNDED BALANCE SHEET September 2016

NET STABLE FUNDING RATIO (NSFR) September 2016

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$781bn $781bn
Pro-forma NSFR > 105%
Other Short Term
6%
Short-term
assets fun de d Liquids Short Term Funding
with short- 21% 9%
term liabilit ie s Wholesale Funding
Term Funding <12M
3% & Other [2 ] Liquids and
Other Assets [3 ]
Other Customer
Other Short Term Deposits
Assets & Trade 8% 10% Non Financial
Corporates
Other Loans [4 ]
Term ass e ts
funded wi th
stable funding Stable Customer
sources Deposits [1]
Retail/SME
51%
Lending
69%
Residential
Mortgages [5 ]
Term Funding >12M
<35%
12%
Capital
Fixed Assets SHE & Hybrids
9%
& Other 2%
Assets Funding Available Required
Stable Funding Stable Funding
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Stable customer deposits represent operational type deposits or those sourced from retail / business / corporate customers and the stable component of Other funding liabilities. 2. Sovereign, PSE and FI Deposits. 3. Off Balance Sheet, Derivatives, Fixed Assets and Other Assets. 4. All lending other than Residential Mortgages <35% Risk Weight. 5. Includes NSFR impact of selfsecuritised assets backing the CLF

BALANCE SHEET COMPOSITION

The structural composition of the balance sheet improved in FY16

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LONG TERM SHORT TERM
$b
+$9.2b improvement to Long Term -$9.2b reduction in
funding position Short Term funding
-7.0
2.6
-11.0
32.1
-21.7
14.2 -4.2
-3.9
-14.2 13.1
Stable Term Debt FX on Capital inc. Term Term Debt ST Other Liquids net Trade &
Customer Issuance Term Debt Hybrids Lending <12 mths Wholesale Funding of Repo Other
Deposits [1 ] & Fixed Funding Assets
Assets [2 ]
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Sources of funds

Uses of funds

Stable customer deposits represent operational type deposits or those sourced from retail / business / corporate customers and the stable component of Other funding liabilities 2. Excludes trade lending, repo, interbank and bills of acceptances

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LIQUIDITY COVERAGE RATIO

Liquidity Coverage Ratio (LCR)

Liquidity Coverage Ratio (LCR) September 2016

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March 2016 September 2016
Average [1] LCR 126% ($37b Surplus) Average [1] LCR 125% ($35b Surplus)
$176b $178b
Internal RMBS Internal RMBS
$37b $139b $36b $143b
Wholesale
Wholesale
Other ALA [5]
Other ALA [5] Funding
Funding
$19b $18b $16b
$16b
HQLA 2
HQLA 2
$4b
$3b
Customer Deposits Customer Deposits
HQLA 1 & Other [4 ] HQLA 1 & Other [4 ]
$117b $123b $120b $127b
Liquid Assets [2 ] Net Cash Outflows [3 ] Liquid Assets [2 ] Net Cash Outflows [3 ]
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Half year average calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements. 2. Post Haircut market value as prescribed per APS 210, includes Committed Liquidity Facility : $54bn as at 30 September 2015, $50bn as at 31 March 2016. 3. Basel III LCR 30 day stress scenario cash outflows. 4. Other includes off-balance sheet and cash inflows 5. Comprised of assets qualifying as collateral for the CLF, excluding internal RMBS, up to approved facility limit; and any liquid assets contained in the RBNZ's Liquidity Policy - Annex: Liquidity Assets - Prudential Supervision Department Document BS13A12

TERM WHOLESALE FUNDING PORTFOLIO

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Maturities [[2,3 ]]
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Issuance [1,2 ] Maturities [[2,3 ]]
Increase in FY16 issuance driven
$b
by ~9% appreciation of AUD
32
26
24 24
22
20
19
17 17 16 17
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22+
Senior Unsecured Covered Bonds Tier 2
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WEIGHTED AVERAGE TENOR
years
5.5
4.9
3.9
3.5
3.2
2.8
FY15 FY16 FY15 FY16 FY15 FY16
Portfolio Portfolio Total Total Issuance Issuance
ex < 12 ex < 12 Portfolio Portfolio
months months
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PORTFOLIO BY TYPE

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11%
17%
72%
Senior Unsecured Tier 2
Covered Bonds
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PORTFOLIO BY CURRENCY

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6%
1%
34%
24%
35%
Domestic (AUD, NZD) Asia (JPY, HKD, SGD, CNY)
North America (USD, CAD) Other
UK & Europe (£, €, CHF)
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All figures based on historical FX. 1. Includes transactions with a call or maturity date greater than 12 months as at the respective reporting date. 2. Excludes AT1. 3. Tier 2 profile is based on the next optional call date

AUS HOME LOANS FUNDING COSTS

INCREASE IN FUNDING COSTS RELATIVE TO OFFICIAL RBA CASH RATE DRIVEN MAINLY BY INCREASED COMPETITION FOR DEPOSITS

Weighted difference in Home Loans Funding Costs to Official Cash Rate

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2.0%
Short Term Wholesale
1.6% Wholesale Funding accounts
for ~30% of
Long Term movement in
Wholesale
funding costs
1.2%
TDs
0.8%
Deposits account
for ~70% of
At-Call movement in
0.4% Deposits funding costs
0.0%
Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep-
07 08 09 10 11 12 13 14 15 16
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Excludes Equity funding costs and changes in mix, combined impact modest

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

R I S K MA N A G E M E N T

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RISK MANAGEMENT

TOTAL & COLLECTIVE PROVISION (CP) CHARGE

TOTAL PROVISION CHARGE

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$m
2,000 0.4
1,500 0.3
1,000 0.2
500 0.1
0 0.0
-500 -0.1
FY12 FY13 FY14 FY15 FY16
CIC as % Avg.GLA (RHS) IP Charge
CP Charge Oswal Settlement
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CP BALANCE BY DIVISION

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$m
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2,956 2,876
3,000
FY16 vs FY15 $m
2,000
Divisional mvt 17
FX impact (19)
1,000
Esanda DF sale (78)
0
Sep 15 Sep 16
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AUS Insto. NZ Asia Retail & Pacific TSO Group Centre

TOTAL PROVISION CHARGE COMPOSITION

$m

	1H14	2H14	1H15	2H15	1H16	2H16
CIC 528		461	510	695	918	1,038*
CP Composition Lending Growth 85 61 54 50 56 -59 Risk/Portfolio Mix -200 -52 8 62 -30 50 Eco Cycle 41 -90 -7 -72 0 0

* Includes Oswal Settlement ($147m)

IP: Individual Provision charge CP: Collective Provision charge CIC: Total Credit Impairment charge

CRWA & CP AS A % OF CRWA

FY16 CRWA includes new regulatory RWA impost of $26b for Australian Mortgages, resulting in decline in CP / CRWA% coverage ratio. Adjusting for this change ratio is 0.88%

$b

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

350 352
309
288
0.88%
1.00% 0.89% 0.85%
0.82%
Sep 13 Sep 14 Sep 15 Sep 16
Credit Risk Weighted Assets
CP Bal. as % of CRWA
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CP Bal. as % of CRWA excl. impact of mortgage risk weight change

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RISK MANAGEMENT

INDIVIDUAL PROVISION (IP) CHARGE

ANZ HISTORICAL OBSERVED LOSS RATES

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bps
300
200
100
0
Sep92 Sep95 Sep98 Sep01 Sep04 Sep07 Sep10 Sep13 Sep16
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IP Loss Rate Median IP Loss Rate

IP CHARGE COMPOSITION

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$m
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----- Start of picture text -----

1,500 1,047
892
595 572 602 655
1,000 542 455
500
0
-500
1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
New Increased Writebacks & Recoveries
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IP CHARGE BY SEGMENT

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$m
1,200
1,047
1,000 892
800
655
595 572 602 542
600 455
400
200
0
1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
Consumer Commercial Institutional Oswal Settlement
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IP CHARGE BY REGION

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

$m
1,200
1,047
1,000 892
800
655
595 572 602 542
600 455
400
200
0
1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
Australia New Zealand APEA
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RISK MANAGEMENT

IMPAIRED ASSETS

CONTROL LIST

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Index Sep 09 =100
150
100
50
0
Sep Sep Sep Sep Sep Sep Sep Sep
09 10 11 12 13 14 15 16
Control List by limits Control List by no. of groups
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GROSS IMPAIRED ASSETS[1] BY DIVISION

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

6,000
5,196
4,264
4,000
3,173
2,889 2,719
2,000
0
FY12 FY13 FY14 FY15 FY16
Australia New Zealand Institutional Other [2 ]
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NEW IMPAIRED ASSETS BY DIVISION

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To help protect your privacy, PowerPoint has blocked automatic download of this picture. $m
1,844
1,716 1,783 1,784
1,571 1,541
1,327
1,197
1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
Australia New Zealand Institutional Other [2 ]
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GROSS IMPAIRED ASSETS[1] BY EXPOSURE SIZE

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6,000 5,196
4,264
4,000 3,173
2,889
2,719
2,000
0
FY12 FY13 FY14 FY15 FY16
< 10m 10m to 100m > 100m
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Impaired Assets inclusive of Oswal settlement

Other includes Retail Asia & Pacific and Australia Wealth

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RISK MANAGEMENT

RISK WEIGHTED ASSETS

TOTAL RISK WEIGHTED ASSETS

TOTAL RWA MOVEMENT

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

$b $b
409
402 4.3 408.6
401.9 2.2 0.8
38 39 -0.6
362
14 18
340
32
29
21
23
Sep 15 Credit Op RWA IRRBB Mkt. RWA Sep 16
RWA RWA
CRWA MOVEMENT
350 352
$b
309
288 349.8 24.0 0.5 352.0
-4.4
-17.9
Sep 13 Sep 14 Sep 15 Sep 16 Sep 15 FX Impact Lending Data/Meth. Risk Sep 16
Mvmt. Review [1 ]
CRWA Mkt. & IRRBB RWA Op-RWA
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Primarily driven by change to Residential Mortgage risk weights in July 2016 (resulting in a ~$26b CRWA uplift)

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RISK MANAGEMENT

RISK WEIGHTED ASSETS

GROUP EAD[1 ] & CRWAs

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$b 919 910
813
741
38.9% 38.0% 38.1% 38.7%
35.8%
Sep 13 Sep 14 Sep 15 Sep 16
CRWA/EAD % excluding the regulatory changes to mortgage RWAs
CRWA/EAD %
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EAD

GROUP EAD[1] MOVEMENT

SEP 15 V SEP 16

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$b
918.6
920 2.6 910.4
-7.0
900 -3.8
880
860
840
Sep 15 FX Impact Lending Data/Meth. Sep 16
Mvmt. Review
GROUP EAD [1] & CRWA GROWTH [2] MOVEMENT
$b SEP 15 V SEP 16
16.3
6.9
3.1 5.0 2.8 1.6 0.3
-0.2
-4.6
-8.1
EAD Gth. CRWA Gth.
-21.1
-23.7
AUS HL [3 ] AUS NZ Other Esanda Institutional
Non HL Sale
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Post CRM EAD, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Includes amounts for ‘Securitisation’ and ‘Other Assets’ Basel asset classes 2. Refers to lending movement, excluding FX Impact, Data/Meth Review and Risk
Excludes impact of mortgage risk weight regulatory change

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RISK MANAGEMENT

PORTFOLIO COMPOSITION

Category	% of Group EAD	% of Group EAD	% of Portfolio in Non Performing	% of Portfolio in Non Performing	Portfolio Balance in Non Performing
	Sep 15	Sep 16	Sep 15	Sep 16	Sep 16
Consumer Lending	38.6%	40.6%	0.2%	0.1%	$427m
Finance, Investment & Insurance	18.8%	17.4%	0.1%	0.1%	$82m
Property Services	6.6%	6.8%	0.7%	0.4%	$225m
Manufacturing	6.3%	5.2%	0.6%	1.6%	$742m
Agriculture, Forestry, Fishing	3.7%	3.9%	1.8%	1.5%	$520m
Government & Official Institutions	4.6%	6.2%	0.0%	0.0%	$0m
Wholesale trade	3.9%	3.1%	0.4%	0.5%	$141m
Retail Trade	2.6%	2.4%	0.7%	1.2%	$262m
Transport & Storage	2.3%	2.2%	1.1%	0.4%	$87m
Business Services	1.9%	1.7%	0.9%	0.9%	$136m
Resources (Mining)	2.2%	1.8%	2.3%	2.9%	$461m
Electricity, Gas & Water Supply	1.4%	1.3%	0.1%	0.0%	$5m
Construction	1.6%	1.4%	1.7%	2.0%	$253m
Other	5.5%	6.0%	0.4%	0.4%	$209m
Total	100.0%	100.0%
Total Group EAD1 $b	$898b	$895b

EXPOSURE AT DEFAULT (EAD) AS A % OF GROUP TOTAL

EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes and manual adjustments. Data provided is as at Sep 16 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Note that APS330 disclosure is reported on a Post CRM basis from 30June 2016

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RISK MANAGEMENT

GROUP RESOURCES PORTFOLIO

RESOURCES EXPOSURE BY SECTOR

Total EAD (Sep 16): $16b ↓ $4b YoY As a % of Group EAD (Sep 16): 1.8% ↓ 40 bps YoY

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$b 8.6
7.8
6.8
4.9 5.1
4.0 4.0
2.2 2.6 2.3 1.5 3.0 0.9 1.0 1.3 1.1 2.5 3.1 2.9 1.7
Coal Mining Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining
Sep 13 Sep 14 Sep 15 Sep 16
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RESOURCES EXPOSURE CREDIT QUALITY (EAD)

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AUS NZ ASIA OTHER
$b
8.1 0.7 2.9 4.4
24% 27% 21%
47%
76% 73% 79%
53%
AUS NZ ASIA EA & Other
Investment Grade Sub-Investment Grade
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RESOURCES PORTFOLIO MANAGEMENT

Portfolio is skewed towards well capitalised and lower cost resource producers. 22% of the book is less than one year duration
Investment grade exposures represent 65% of portfolio vs. 68% at Sep 15 and Trade business unit accounts for 14% of the total Resources EAD
Mining services customers are subject to heightened oversight given the cautious outlook for the services sector

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RISK MANAGEMENT

COMMERCIAL PROPERTY PORTFOLIO

COMMERCIAL PROPERTY OUTSTANDINGS BY REGION[1 ]

COMMERCIAL PROPERTY OUTSTANDINGS BY SECTOR[1 ]

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$b 38.4 37.9
37.4 37.5 8.0
3.9 3.6
33.9 4.5 4.7
4.1 7.5
8.8
9.5
8.3 8.4
6.9
7.0
6.5
24.6 24.4 25.7 24.8 6.0
22.9
5.5
5.0
Sep 14 Mar 15 Sep 15 Mar 16 Sep 16
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% 100 80 60 40 20

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Sep 14 Sep 15 Sep 16 Offices Retail Industrial Residential Tourism Other

PROPERTY PORTFOLIO MANAGEMENT

After strong 1H16 growth, Australian volumes reduced during 2H16. Residential fell from 1H16 due to loan repayments from completed projects and appetite tightening implemented in 2Q16
New outstandings grew nearly 8% HoH due to underlying volume growth across all major commercial property sectors as well as exchange rate translation movements

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% of Group GLA (RHS) New Zealand
Australia APEA
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APEA[2] reduced in 4Q16 reflecting loan repayments, sell downs and run-off of lower return lending
As per ARF230 disclosure

APEA = Asia Pacific, Europe & America

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RISK MANAGEMENT

ANZLMI HAS MAINTAINED STABLE LOSS RATIOS

FINANCIAL YEAR 2016 RESULTS

LMI & REINSURANCE STRUCTURE

Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 2016 (% FUM)

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Gross Written Premium ($m) $196m
Net Claims Paid ($m) $26m
Loss Rate (of Exposure) 5.1 bps
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ANZLMI MAINTAINS LOW LOSS RATIOS[1 ]

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

150
100
50
0
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-50

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Industry Insurer 1 Insurer 3 ANZ LMI Insurer 2

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LVR<80% Not
LMI Insured
83%
2016 Reinsurance
Arrangement
LVR 80% to 90% LMI LVR > 90% LMI
Insured 9% 8% Insured
Quota Share [2 ]
Arrangement
Aggregate Stop Loss [3]
(LVR > 90%)
Arrangement on
Net Risk Retained
(LVR > 80%)
ANZLMI uses a diversified panel of reinsurers (10+)
comprising a mix of APRA authorised reinsurers and reinsurers
with highly rated security
Reinsurance is comprised of a Quota Share arrangement [2]
with reinsurers for mortgages 90% LVR and above and in
addition an Aggregate Stop Loss arrangement [3] for policies
over 80% LVR
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ANZLMI uses a diversified panel of reinsurers (10+) comprising a mix of APRA authorised reinsurers and reinsurers with highly rated security

Negative Loss ratios are the result of reductions in outstanding claims provisions. Source: APRA general insurance statistics (loss ratio net of reinsurance) ; 2. Quota Share arrangement - reinsurer assumes an agreed reinsured % whereby reinsurer shares all premiums and losses accordingly with ANZLMI ; 3. Aggregate Stop Loss arrangement –reinsurer indemnifies ANZLMI for an aggregate (or cumulative) amount of losses in excess of a specified aggregate amount. When the sum of the losses exceeds the pre-agreed amount, the reinsurer will be liable to pay the excess up to a preagreed upper limit.

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RISK MANAGEMENT

GROUP AGRICULTURE PORTFOLIO

AGRICULTURE EXPOSURE BY SECTOR (% EAD)

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Total EAD (Sep 16) As a % of Group EAD
A$34.5b 3.9%
Dairy
9.7% Beef
Sheep &
11.5% Other
39.6% Livestock
Grain/Wheat
16.4% Horticulture/
Fruit/
Other Crops
9.2% 13.6% Forestry & Fishing/Agriculture Services
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NEW ZEALAND DAIRY CREDIT QUALITY

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

PD increase reflects impact of
NZ$b
lower milk prices
14.0
12.7 12.0 11.6 11.9 12.4 12.4
2.2%
1.8% 1.6% 1.2% 0.9% 0.8% 1.1%
Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16
Wt. Avg. PD (RHS) [1 ] NZ Dairy EAD
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GROUP AGRICULTURE EAD SPLITS[2 ]

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

0.4%
40.2%
59.3%
Australia New Zealand Intl. Markets
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----- Start of picture text -----

2.1%
97.9%
Productive Impaired
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----- Start of picture text -----

5.8%
4.9%
20.0%
69.3%
<60% Secured 80 - <100% Secured
60 - <80% Secured Fully Secured
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Security indicator is based on ANZ extended security valuations
Wholesale PD model changes account for 55 bps in FY16

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RISK MANAGEMENT

NEW ZEALAND MARKET CHARACTERISTICS

GDP CONTRIBUTION BY INDUSTRY[1 ]

BANKING MARKET[2 ]

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7%
12%
29%
6%
3%
4%
10%
8% 20%
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Finance & Business Government Services and other Primary sector Manufacturing Utilities Construction Wholesale & Retail Transport and Comms

88% of NZ banking sector Net Loans & Advances ($365b) are with the big 4 banks

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12%
ANZ
31%
Peer 1
19%
Peer 2
Peer 3
Other Banks
19% 19%
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PRIMARY SECTOR GDP CONTRIBUTION[3 ]

POSITIVE MIGRATION IMPACT ON POPULATION[4 ]

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

21%
11%
8%
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Agriculture Industry[3 ]

Output analysis:

Dairy ~67%
Cattle & Sheep ~22%
• Agri Services ~3% • Veg., Fruit, Nut ~6% • Other ~2%

Agriculture Forestry & Logging Fishing, Aquaculture, Support services Mining

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60%
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Persons, 12 month total (‘000)

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150 PLT Arrivals 100 PLT Departures 50 0 Net PLT Immigration -50 92 94 96 98 00 02 04 06 08 10 12 14 16

Statistics NZ. 2 Source: 2015 KPMG Financial Institutions Performance Survey. 3. Statistics NZ, ANZ analysis, as at June 2016. 4. Statistics NZ, as at September 2016. PLT refers to Permanent Long Term. Data as at September 2016.

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RISK MANAGEMENT

NEW ZEALAND

NEW ZEALAND GEOGRAPHY GROSS IMPAIRED

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

ASSETS
NZ$m
%
1,818
2.5
1,451
2.0
955 1.5
708
419 491 1.0
0.5
0.0
Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16
GIA as % GLA (RHS) Gross impaired Assets
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NEW ZEALAND GEOGRAPHY TOTAL PROVISION CHARGE[2 ] NZ$m

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

200 105
85
103
99
97
100 44 22 30 31 46 50
0
-100 -39
1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16
IP Charge CP Charge
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NEW ZEALAND DIVISION 90+DAYS DELINQUENCIES

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

1.5
Home Loans Commercial Agri
1.0
0.5
0.0
Jan-08 Jan-10 Jan-12 Jan-14 Jan-16
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MORTGAGE DYNAMIC LOAN TO VALUE RATIO[1 ]

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

% of Portfolio
4.0%
3.0%
13.0%
19.0% 61.0%
0-60% 61-70% 71-80% 81-90% 90%+
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Average dynamic LVR as at Aug 2016 (not weighed by balance)
Credit valuation adjustments (CVA) for customers with CCR10 are reported differently for cash profit and headline views of earnings. In the headline (statutory) view of provision reported above, changes in CVA are reported in Other Operating Income, but in the cash profit view of earnings the change in CVA is reclassified to IP

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RISK MANAGEMENT

ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION[1] )

INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD[2] )

ANZ INSTITUTIONAL INDUSTRY COMPOSITION

EAD (Sep 16): A$358b[2 ]

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$b
400
350 27%
32%
300
2% 3%
55% 3%
250
3%
15%
6%
8%
200
43%
150
100
45% 13%
26%
57% 1% 24%
50
74% 14%
14%
86%
0
Total APEA Asia China
Institutional 10%
24%
Tenor <1 Yr Tenor 1Yr+
15%
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Finance (Banks and Central Banks) Government Admin. Property Services³ Services to Fin. & Ins. Machinery & Equip Mnfg Basic Material Wholesaling Electricity & Gas Supply Food,Beverage & Tobacco Mnfg Other ⁴

ANZ INSTITUTIONAL PRODUCT COMPOSITION

EAD (Sep 16): A$358b[2 ]

Loans & Advances Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments

Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Other

Country is defined by the counterparty’s Country of Incorporation. 2. Data provided is as at Sept16 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class “Retail” and manual adjustments. 3. ~85% of the ANZ Institutional “Property Services” portfolio is to entities incorporated in either Australia or New Zealand. 4. Other is comprised of 48 different industries with none comprising more than 2.2% of the Institutional portfolio

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RISK MANAGEMENT

ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION[1] )

COUNTRY OF INCORPORATION[1 ]

ANZ ASIA INDUSTRY COMPOSITION

EAD (Sep 16): A$83b[2 ]

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7.0%
3.0%
4.0%
26.0%
5.0%
7.0%
11.0%
22.0%
15.0%
----- End of picture text -----

China Singapore Taiwan Indonesia Other Japan HK Sth Korea India

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

23%
3%
3% 54%
4%
4%
4%
5%
----- End of picture text -----

Finance Property Services Basic Material Wholesaling Machinery & Equip Mnfg Petroleum,Coal,Chem & Assoc Prod Mnfg Communication Services Pers & Household Good Wholesaling Other³

ANZ ASIA PRODUCT COMPOSITION

EAD (Sep 16): A$83b[2 ]

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

23%
28%
3%
9%
18%
6%
14%
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Loans & Advances

Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Other

Country is defined by the counterparty’s Country of Incorporation. 2. Data is provided is as at Sept16 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class “Retail” and manual adjustments. 3. “Other” within industry is comprised of 44 different industries with none comprising more than 2.5% of the Asian Institutional portfolio; Other product category is predominantly exposure due from other financial institutions.

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RISK MANAGEMENT

ANZ CHINA PORTFOLIO (COUNTRY OF INCORPORATION[1] )

COUNTRY OF INCORPORATION[1 ]

ANZ CHINA INDUSTRY COMPOSITION

EAD (Sep 16): A$22b[2 ]

China EAD

Total China EAD of A$22b, with 52% or A$11.3b booked onshore in China

Tenor

~86% of EAD has a tenor less than 1 year

Risk rating

Compared to Asia, Australia and NZ, China exposure has a stronger average credit rating

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3%
8% 6% Finance (Banks and Central Banks)
Manufacturing
Wholesale Trade
14%
Transport & Storage
Other
68%
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Industry

68% of China exposures to Financial institutions, with ~61% of this to China’s central bank and its Top 5 largest banks

Products

Reduction in ‘Trade & Supply chain’ (A$1.4b in Finance Industry, A$1.4b in Manufacturing), whilst largest growth in
‘Other’ (+A$2.9b) due to increase in Nostro accounts
Within Loans and Advances ~74% have a tenor of less than 1 year, up from 62% as at Sep 15

ANZ CHINA PRODUCT COMPOSITION

EAD (Sep 16): A$22b[2 ]

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19% 18%
4%
11% 2%
18%
27%
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Loans & Advances Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Other

Data is provided is as at Sept16 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class “Retail” and manual adjustments.

Country is defined by the counterparty’s Country of Incorporation

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RISK MANAGEMENT

ANZ INDONESIA PORTFOLIO (COUNTRY OF INCORPORATION[1] )

COUNTRY OF INCORPORATION[1 ]

ANZ INDONESIA INDUSTRY COMPOSITION

EAD (Sep 16): A$3.7b[2 ]

EAD (Sep 16): A$3.7b

Indonesia EAD

Total Indonesia EAD of A$3.7b, with 72% or A$2.7b booked onshore in Indonesia and A$1.0b booked in Singapore

Tenor

~47% of EAD has a tenor less than 1 year

Industry

35% of Indonesia’s portfolio exposure is to governmentrelated entities

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20%
23%
Finance (Banks & Central Banks)
Manufacturing
Mining
8%
Communication Services
Wholesale Trade
10% 21%
Other
16%
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Reduced exposure to Mining, led by coal mining and related services. Sector now comprises 16% of total portfolio compared to 19% as at Sep 15

ANZ INDONESIA PRODUCT COMPOSITION

EAD (Sep 16): A$3.7b[2 ]

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6%
5%
6%
46%
14%
14%
8%
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Loans & Advances
Trade & Supply Chain
Derivatives & Money Market Loans
Traded Securities (e.g. Bonds)
Contingent Liabilities & Commitments
Gold Bullion
Other
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Data is provided is as at Sept16 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class “Retail” and manual adjustments.

Country is defined by the counterparty’s Country of Incorporation

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

H O U S I N G P O RT F O L I O T R E N D S

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AUSTRALIA HOME LOANS

PORTFOLIO OVERVIEW

	Portfolio2	Portfolio2	Flow			Portfolio	Portfolio
	FY15	FY16	FY16			FY15	FY16
Number of Home Loan accounts Total FUM2 Average Loan Size % Owner Occupied % Investor % Equity Line of Credit % Paying Variable Rate Loan % Paying Fixed Rate Loan % Broker originated	954k 975k 177k13 $231bn $246bn $65bn $242k $252k $407k4,5 58% 62% 68% 37% 34% 29% 5% 4% 3% 88% 87% 84% 12% 13% 16% 48% 49% 52%				Average LVR at Origination4,5,6 Average Dynamic LVR5,6,7 Market Share1 % Ahead of Repayments8 Offset Balances9 % Paying Interest Only3 % Paying Principle & Interest3 % First Home Buyer % Low Doc12 Home Loan IP Loss Rate Group IP Loss Rate % of Australia Geography Lending10 % of Group Lending10,11	71% 71% 50% 52% 15.6% 15.5% 42% 39% $22b $24b 37% 37% 63% 63% 7% 7% 7% 5% 0.01% 0.02% 0.20% 0.34% 60% 62% 40% 43%

Source for Australia: APRA 2. Home Loans (exclusive of Non Performing Loans, exclusive of offset balances) 3. Excludes Equity Manager 4. Originated FY15 for FY15, originated FY16 for FY16 5. Unweighted 6. Including capitalised premiums 7. Valuations updated Sep’16 where available 8. % of Owner Occupied and Investment Loans that are one month or more ahead of repayments. Excludes Equity Loans 9. Balances of Offset accounts connected to existing Instalment Loans 10. Based on Gross Loans and Advances 11. Group Cash Profit basis. 12. Low Doc is comprised of less than or equal to 60% LVR mortgages primarily for self-employed without scheduled PAYG income. However, it also has ~A$500m of less than or equal to 80% LVR mortgages, primarily booked pre-2008. 13. New accounts includes increases to existing accounts and split loans (fixed and variable components of the same loan)

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AUSTRALIA HOME LOANS

PORTFOLIO TRENDS

HOME LOAN BALANCE & LENDING FLOWS[1 ]

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$b
+7%
15
1
-53
52 246
231
Sep-15 New sales Net OFI Refi Redraw & Repay Sep-16
exc Refi-in Interest / Other
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HOME LOAN PORTFOLIO: LOAN TO VALUE RATIO[1,2,3 ]

% of portfolio

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50
40
30
20
10
0
0-60% 61-75% 76-80% 81-90% 91-95% 95%+
Sep-12 Sep-13 Sep-14 Sep-15 Sep-16
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PORTFOLIO[1] & FLOW COMPOSITION

By purpose:

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Portfolio Flow
5% 5% 4% 3%
37% 37% 34% 29%
58% 58% 62% 68%
Sep-14 Sep-15 Sep-16 FY16
Equity Investor Owner Occ
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By channel:

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Portfolio Flow
47% 48% 49% 52%
53% 52% 51% 48%
Sep-14 Sep-15 Sep-16 FY16
Broker Proprietary
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By location:
Portfolio Flow
7% 6% 6% 5%
17% 16% 15% 10%
15%
19% 18% 18%
36%
26% 29% 30%
31% 31% 31% 34%
Sep-14 Sep-15 Sep-16 FY16
SA WA QLD/NT NSW/ACT VIC/TAS
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Exclusive of Non Performing Loans. 2. Including capitalised premiums
Valuations updated Sep-16 where available

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AUSTRALIA DIVISION

PORTFOLIO PERFORMANCE

AUS DIV 90+ DAY DELINQUENCIES[1 ]

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%
2.0
1.5
1.0
0.5
0.0
Sep Mar Sep Mar Sep Mar Sep-
13 14 14 15 15 16 16
Home Loans (inclusive of hardship change) Consumer Cards
Corporate & Commercial Banking³
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HOME LOAN DELINQUENCIES[1 ]

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%
2.0
1.5
1.0
0.5
0.0
Sep Mar Sep Mar Sep Mar Sep-
13 14 14 15 15 16 16
30+ DPD 90+ Owner Occupied 90+ Investor
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HOME LOANS REPAYMENT PROFILE[4 ]

HOME LOANS 90+ DPD BY STATE[1,2 ]

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55% 58%
52%
33%
35%
31%
2% 3% 3% 7% 6% 5% 4% 3% 3%
Overdue On Time 1 Month 2 Months >3 Months
ahead ahead ahead
Sep-14 Sep-15 Sep-16
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%
1.5
1.2
0.9
0.6
0.3
0.0
VIC NSW QLD WA Portfolio
& ACT
Sep 12 Sep 13 Sep 14 Sep 15 Sep 16
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Exclusive of Non Performing Loans.
VIC, NSW & ACT, QLD and WA represent 91% of total portfolio, with remaining 9% distributed between TAS, NT and SA. 3. Includes Small Business, Commercial Cards and Asset Finance
Repayment profile on % of Owner Occupied and Investment loans. Excludes equity loans, non performing loans and offset balances. Overdue refers to past due by 1 day+

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AUSTRALIA HOME LOANS

UNDERWRITING PRACTICES AND MATERIAL POLICY CHANGES

Multiple checks during origination process

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Pre - application [1] Income & Expenses
Application Know Your Customer
Income Verification
Income Shading
Serviceability Expense Models
Interest Rate Buffer
Repayment Sensitisation
LVR Policy
Collateral / LMI policy
Valuations
Valuations Policy
Credit Credit History
Assessment
Bureau Checks
Documentation
Fulfilment
Security
Quality assurance, info verification & policy reviews
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2015/2016 changes to lending standards and underwriting: Serviceability

Interest rate floor applied to new and existing mortgage lending introduced at 7.25%
Introduction of an income adjusted living expense floor (HEM)
Introduction of a 20% haircut for overtime and commission income
Increased income discount factor for residential rental income from 20% to 25%

Material Policy changes

LVR cap reduced to 90% for investment loans
LVR cap reduced to 70% in high risk mining towns
Decreased maximum interest only term of owner occupied interest only loans to 5 years
Withdrawal of lending to non-residents
End-to-end home lending responsibility managed within ANZ
Effective hardship & collections processes
Full recourse lending
ANZ assessment process across all channels
Limited acceptance of foreign income to demonstrate serviceability and tightened controls on verification
Tightening of acceptances for guarantees
Customers have the ability to assess their capacity to borrow on ANZ tools

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NEW ZEALAND MORTGAGES

PORTFOLIO OVERVIEW [1]

	Portfolio	Portfolio	Growth			Portfolio	Portfolio
	FY15	FY16	FY16			FY15	FY16
Number of Home Loan accounts Total FUM Average Loan Size at Origination Average Loan Size % of NZ Geography Lending % of Group Lending % Owner Occupied % Investor % Paying Variable Rate Loan % Paying Fixed Rate Loan % Broker originated	502k 511k 1.8% NZ$68b NZ$73b 7.4% NZ$306k NZ$300k (2.0%) NZ$135k NZ$143k 5.9% 57% 58% 156bps 10% 12% 131bps 74% 73% (124bps) 26% 27% 124bps 25% 24% (112bps) 75% 76% 112bps 31% 34% 251bps				Average LVR at Origination2 Average Dynamic LVR3 Market Share4 % Paying Interest Only5 % Paying Principal & Interest % First Home Buyer % Low Doc Mortgage Loss Rates Group Loss Rates	64% 60% 47% 44% 31.6% 31.5% 23% 24% 77% 76% N/A N/A 0.6% 0.5% 0.01% (0.01%) 0.20% 0.34%

Average LVR at Origination (not weighted by balance)
Average dynamic LVR as at September 2016 (not weighted by balance) 4. Source for New Zealand: RBNZ 5. Excludes revolving credit facilities
New Zealand Geography

NEW ZEALAND

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HOME LENDING[1 ]

FLOW[2 ]

PORTFOLIO

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11% 10%
41% 41%
48% 49%
FY15 FY16
Branch Broker Mobile mortgage managers
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6% 6%
25% 24%
24% 23%
9% 9%
7% 7%
11% 10%
75% 76%
43% 45%
FY15 FY16 FY15 FY16
Auckland Christchurch Other Nth Is.
Fixed Variable
Wellington Other Sth Is. Other³
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MARKET SHARE[4]

AUCKLAND MARKET SHARE[5 ]

Share of new home loans registrations in Auckland

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31.0% 31.2% 31.6% 31.6% 31.5%
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5.4% 5.0%
4.0% 4.1% 4.0% 4.5%
3.3% 2.9%
2.1% 2.2%
2H14 1H15 2H15 1H16 2H16
ANZ market share ANZ growth System growth
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31.4% 32.8%
28.7%
23.3% 23.9% 24.9%
FY14 FY15 FY16
ANZ Leading peer bank
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New Zealand Geography
Retail and Small Business Banking mortgage flow. Branch includes Small Business Banking Managers 3. Other includes loans booked centrally (Business Direct, Contact Centre, Lending Services, Property Finance) 4. Source: RBNZ September 2016, share of all banks
Source: CoreLogic September 2016

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2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

AUST RALIA AND NEW ZEALAND BANKING G RO UP LIMIT ED Nov ember 2016

D I V I S I O N A L I N F O R MAT I O N

AUSTRALIA

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SIMPLER, BETTER CAPITALISED & MORE AGILE BANK

SALE OF ESANDA DEALER FINANCE

MORE EFFICIENT OPERATIONS

$8bn

$4.6b



Lending assets sold, comprising point-ofsale finance and bailment facilities offered to motor vehicle dealers

[Credit RWA benefit, 16bps CET1 benefit to ] the Group

Better quality residual portfolio post sale, improved loss rate

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Reduction in
3% more transactions -4%
operations unit
costs
5% lower ($/txn/min)
operational costs
FY15 FY16
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OPTIMISING BRANCH NETWORK

SIMPLIFYING HEAD OFFICE

5% gross reduction in FTEs, enabling reinvestment for NSW

61%

new and refurbished branches in NSW during the year

Increase in proportion of Retail sales enabled roles, from 54% in FY14 to 61% in FY16

36 more digital branches, experiencing 29% more new to bank customers than a comparable traditional branch

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9,192
9,078
8,830
184 NSW
investment
8,646
FY14 FY15 FY16
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NOTE: Information is on an Adjusted Pro-forma basis unless otherwise specified

AUSTRALIA

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HOME LOANS

GOOD BUSINESS

GROWING STRONGLY

$247b[Home Loan Portfolio ] $65b Gross sales of $65bn (43% of group lending) Strong FUM growth driving #3 Achieved market share[1 ]  7% $3.3b revenue Number of people we helped to 168k  $6bn[Increase in Proprietary ] buy a property channel FUM growth 1.0x system growth[1 ]  13%[NSW Home Loan ] FUM growth

MANAGED PRUDENTLY

52%[Dynamic LVR of the ] portfolio  Balanced volume and margin, optimising revenue  Credit policies strengthened

2bps IP loss rate

NOTE: Information is on an Adjusted Pro-forma basis unless otherwise specified 1. APRA excluding incorporations, as at September 2016

AUSTRALIA

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SMALL BUSINESS BANKING

GOOD BUSINESS

Small Business Lending $49b & Deposit Portfolio

 9% Strong lending FUM growth

Launched ANZ Business Ready



Local, specialised bankers, offering industry specialisation



GROWING STRONGLY

36%[New business lending to ] startups, supporting innovation

 17%[Increase in core transaction ] account deposits

 6%[Increase in small business ] customers who bank with us

[Sales productivity ] (Revenue/FTE)

 7%

MANAGED PRUDENTLY

70% % portfolio that is well secured

Balanced growth, diversified portfolio, low concentration risk



Credit policies strengthened

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
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Risk based pricing

NOTE: Information is on an Adjusted Pro-forma basis unless otherwise specified

AUSTRALIA

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INVESTING IN CAPABILITY AND CAPACITY IN NSW

FOCUSED INVESTMENT IN NSW

DRIVING STRONGER GROWTH IN NSW vs NATIONAL GROWTH

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184 Expanding our sales capacity with 184 additional Home Loan 13%
FTE hired in NSW since FY15. FUM [1 ] 7%
C&CB total
9%
Investing in our branch network with 25 new and Customer
25 6%
refurbished branches across the state in FY16 Revenue
Business 9%
Increasing the investment in our marketing Lending FUM 7%
27%
spend in NSW in FY16
Business 4%
Deposit FUM [1 ] 3%
#2 Rank in Top of Mind Awareness in Sydney [4]
9%
Card Spend [1 ]
6%
Rank in both Home Loans and Overall Purchase
#2
Intention [4] Retail Deposits 8%
FUM [2 ] 7%
Australia’s first dedicated Home Loans centre Transact
5%
NSW
1 [st] opened in Parramatta Deposit
2%
Acquisition [3 ] National
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NOTE: Information is on an Adjusted Pro-forma basis unless otherwise specified

PCP: Comparing end of period 30 September 2016 to 30 September 2015 for FUM. Card spend relates to card spend volume in dollars. 2. Excludes offset balances 3. Refers to Branch channel only 4. Source: Brand Monitor (IP SOS) August 2016.

AUSTRALIA

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PERFORMANCE DRIVERS

NET CUSTOMER GROWTH

Australia Division (‘000)

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+325k
6,000
5,900
5,800
5,700
5,600
5,500
5,400
Sep 14 Sep 15 Sep-16
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GROW PRODUCTS PER CUSTOMER

Retail Products per Customer %

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Multiple 58 59 60
Single 42 41 40
Sep 14 Sep 15 Sep 16
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DEEPENING CUSTOMER RELATIONSHIPS

C&CB contribution of total customer revenue $m

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Total
Customer 3,991 4,129 4,386
Revenue
Sep 14 Sep 15 Sep 16
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STRONG FUM GROWTH (PCP[1] )

FUM growth

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Retail Deposits 7%
Business Lending 7%
Home Loans 7%
Cards Spend 6%
Personal Loans 3%
Business Deposits 3%
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NOTE: Information is on an Adjusted Pro-forma basis unless otherwise specified 1. PCP: Comparing end of period 30 September 2016 to 30 September 2015 for FUM. Card spend relates to card spend volume in dollars

NEW ZEALAND

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KEY PRODUCTS MARKET SHARE

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Mortgages [1 ] Household Deposits [1 ] Credit Cards [1 ] Life Insurance [2 ] KiwiSaver [3 ]
29.3%
31.6% 31.5% 31.2% 31.7% 29.7% 27.2% 28.7% 24.4% 24.7%
9.8% 9.7%
Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Sep 16 Sep 15 Jun-16
Share of Balances Share of Spend
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Mortgages

Maintained our #1 market share position while taking a lead role in promoting a responsible approach to lending in a low interest rate environment
• Continuing to improve the quality of our book by reducing appetite in segments such as foreign income earners and long term interest only loans Household deposits
We have been focussed on supporting New Zealanders to save, by increasing both customer and staff awareness with relevant deposit offers
We have experienced strong household deposit growth in an increasingly competitive marketplace

Credit cards

Decline in share of outstanding balances reflects our decision to move away from 0% balance transfers
Share of spend continues to grow strongly and the launch of Apple Pay [TM] is expected to drive additional credit card sales

Life Insurance

Maintained share in an increasingly competitive insurance landscape
We continue to improve the quality of proprietary distribution, with bank channel lapse rates improving 25bps from last year

KiwiSaver

We now have more than 710,000 KiwiSaver members, FUM growth of NZ$1.8b in FY16 with market share up 30bps[3 ]
Annualised defection rate of 4.9% well below market average of 7.5%
Source: RBNZ, share of all banks as at September 16
Source: FSC (Financial Services Council), share of all providers as at September 16 3. RBNZ, share of FUM of all providers as at June 16

NEW ZEALAND

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AUCKLAND

NET MIGRATION FOR AUCKLAND[1 ]

Net Migration 000’s

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21.0k 28.4k 32.8k
60
40
20
0
Sep 14 Sep 15 Sep 16
Arrivals Departures
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HOUSE PRICES[2]

[NZ$’000 ]

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1,000
800 Auckland
600
Rest of NZ
400
200
0
Sep Sep Sep Sep Sep
00 04 08 12 16
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EXPOSURE TO AUCKLAND HOME LOANS[3 ]

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70% 72% 67%
30% 28% 33%
Market ANZ Top 3 Peers
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ANZ MORTGAGE LVR PROFILE FOR AUCKLAND[4 ]

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%
18%
0-60%
61-70%
10%
71-80%
81-90% 1% 2%
90%+ 69%
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Auckland Rest of country

Statistics NZ
Core Logic, stock (number) of mortgage registrations. Top 3 peer banks are ASB, WBC and BNZ, as of September 2016 4. Dynamic basis, as of September 2016

REINZ

NEW ZEALAND

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AGRICULTURE PORTFOLIO[1]

AGRI PORTFOLIO (GLA)

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NZ$b
40 Dairy as a % of total NZ Geog
12% 11% 11% 10% 10%
30
20
10
0
FY12 FY13 FY14 FY15 FY16
Dairy Sheep & Beef Other Rural
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AGRI CREDIT QUALITY – GIA AS % OF GLAs

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3.63%
1.99%
1.05% 1.15%
0.69%
FY12 FY13 FY14 FY15 FY16
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MARKET SHARE[2 ] AGRICULTURE

APPROACH TO THE AGRICULTURE SECTOR

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32.4% 31.3% 30.3%
9.3%
5.8%
4.0%
2.9%
0.6%
-0.2%
FY14 FY15 FY16
ANZ market share ANZ growth System growth
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Portfolio: Agri portfolio comprises 67% Dairy, 23% (NZ$18b) Sheep & Beef, 10% Other

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Profile Well established customer base and a highly
secured portfolio. Stresses seen in Dairy are
reflected in GIA as a % of GLA which has
increased in FY16. ANZ Agri lending remained
broadly flat in the year
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Customer approach

Long-standing relationships with a focus on supporting existing dairy customers. Stringent credit assessment process

New Zealand Geography (Gross Loans and Advances) 2. Source: RBNZ, share of all banks as at September 16

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NEW ZEALAND GEOGRAPHY

2016 FULL YEAR	GROWTH RATES (% CHANGE)	GROWTH RATES (% CHANGE)
	Cash	Adjusted Pro- forma1
FY16 vs FY15	NZ(NZD)	NZ(NZD)
Income	(2%)	0%
Net interest	5%	5%
Other income	(21%)	(17%)
Expenses	7%	(2%)
PBP	(7%)	0%
Provisions Charge	96%	96%
Cash Profit	(9%)	(2%)
AIEA	8%	8%
Customer Deposits	8%	8%
Gross Loans & Adv.	5%	5%
RWA	3%	3%

SECOND HALF 2016	GROWTH RATES (% CHANGE)	GROWTH RATES (% CHANGE)
	Cash	Adjusted Pro-forma1
2H16 vs 1H16	NZ(NZD)	NZ(NZD)
Income	2%	4%
Net interest	3%	3%
Other income	(2%)	8%
Expenses	(6%)	0%
PBP	8%	7%
Provisions Charge	98%	98%
Cash Profit	4%	3%
AIEA	3%	3%
Customer Deposits	1%	1%
Gross Loans & Adv.	3%	3%
RWA	2%	2%

Specified items relevant to New Zealand Geography are software capitalisation changes, derivative credit valuation adjustment changes and restructuring

INSTITUTIONAL

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2016 FINANCIAL PERFORMANCE IMPACTED BY TRANSFORMATION

REVENUE[1 ]

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$m
-10%
5,715 5,762 5,175
1,291 1,340 1,350
5,715 5,762 5,412
-237
FY14 FY15 FY16
Revenue ex SI ($m) Rev ex SI/FTE (Avg) ($k)
Specified items (SI)
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EXPENSES [2 ]
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$m +5%
2,806 2,935
2,540
2,500 2,798 2,821
40 8 114
FY14 FY15 FY16
Specified items (SI) Expenses ex SI
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TOTAL PROVISIONS

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$m
+274%
741
198
144
FY14 FY15 FY16
Credit Impairment Charge
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PROFIT BEFORE PROVISIONS
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$m
-24%
3,175
2,956
2,240
3,215 2,964
2,591
-40 -8
-351
FY14 FY15 FY16
Specified items (SI) PBP ex SI
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RISK WEIGHTED ASSETS

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

CASH PROFIT
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----- Start of picture text -----

$m
-46%
2,143
1,967
491
459
1,057
325
2,171
1,973
1,303
-28 -6
-246
FY14 FY15 FY16
Specified items (SI) Cash Profit ex SI/FTE (Avg) ($k)
Cash Profit ex SI
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$b -15%
198
182
168
3.2% 3.0% 2.9%
Sep 14 Sep 15 Sep 16
RWA Rev ex SI/RWA %
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Specified items within revenue reflects the change in methodology for derivative credit valuation adjustment calculation
Specified items within expenses reflects the impact of software capitalisation policy changes (FY16 only) and restructuring costs (FY14 to FY16)

INSTITUTIONAL

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SIGNIFICANT ONE-OFF-ITEMS IN 2016

ONE-OFF ITEM[1 ] DESCRIPTION $m 237 5,412 Revenue Derivatives credit Revised methodology for 5,175 valuation determining the credit valuation adjustment adjustment (CVA) for derivatives FY16 Revenue CVA Adjusted FY16 Revenue $m 2,935 Expenses Restructuring costs Expenses incurred in relation to 2,821 and software organisational restructures and costs -90 -24 capitalisation resulting from software capitalisation changes changes (including accelerated amortisation) FY16 Restructuring Software Adjusted Expenses costs capitalisation FY16 changes Expenses $m 741 Provisions Oswal settlement Commercial settlement of a 594 significant single name legal dispute -147 impacting provisions, as announced to the ASX on 22 September 2016 FY16 Provisions Oswal Adjusted FY16 settlement Provisions

One-off items are shown on a pre-tax basis

INSTITUTIONAL

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PROGRESS ON INSTITUTIONAL TRANSFORMATION AGENDA

	PRIORITIES	ACTIONS PROGRESS	1H16 2H16
IMMEDIATE FOCUS	Improve capital efficiency	Actively sell down or run off low-returning RWAs across Loans & Specialised Finance, Markets and Transaction Banking Improve return on RWA through disciplined pricing and active customer management RWA Margin	Stabilised Improved
	Reduce costs	Lower FTE by reducing organisational complexity and rightsizing support and enablement functions Simplify and streamline the division to improve productivity Build an appropriately scaled coverage model to win on the basis of customer and industry insight FTE Cost
	Connect customers across the region	Focus on and serve key institutional customers connected to the region via trade and capital flows Increase geographic focus to move decision-making closer to the customer Cross-border flow
GROWTH	Continue targeted investment	Target the build out of regional Trade, Cash Management and Markets platforms Improve customer experience and straight-through- processing rates, and reduce operational risk STP rates
	Grow profitable businesses	Grow our Markets Sales and Cash Management businesses Cash Markets Sales

INSTITUTIONAL

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INSTITUTIONAL TRANSFORMATION PROGRESS

BUSINESS SIMPLIFICATION AND SHARPENED FOCUS REDUCING FTE, COST AND RWA

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CUSTOMER MOVEMENT [1] STAFF [2 ] EXPENSES
$m
-1%
-13%
5% 47
9% 1%
-14% 2,861
18 2,821
63
90% -46% -16%
-105
2,798
Customer Customer FY16 Central Functions Senior Mgmt Other Staff FY15 D&A Personnel Other FY16
exits acquisitions
Australia NZ International Sep 15 Sep 16 FX Impact
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----- Start of picture text -----

8%
1% -13%
5%
9% 1%
-14%
91%
90% -46% -16%
FY15 Customer Customer FY16 Central Functions Senior Mgmt Other Staff
exits acquisitions
Australia NZ International Sep 15 Sep 16
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OUTCOMES FROM REDUCTION IN LOW RETURNING ASSETS

RISK WEIGHTED ASSETS REVENUE

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

bps
-15%
198
-6
168
-22 -2
Sep 15 FX RWA active Other Sep 16
management
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----- Start of picture text -----

$m
-8%
5,861
99
-158
5,762 5,412
-291
FY15 RWA active Other FY16
management
FX Impact
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----- Start of picture text -----

NIM [3 ]
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----- Start of picture text -----

bps
+13bps
2 1 219
6
4
206
FY15 Asia Deposit Loans Other FY16
Trade volumes volume
run-off & mix mgmt.
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Customer exits account for a 14% reduction in the customer base. The net change in customers (including new customers) was a 9% reduction. Customer numbers exclude PNG 2. Senior management and other staff include central functions. Central functions comprises enablement and support functions within Institutional 3. NIM ex-Markets

NOTE: All financial information on a cash profit Adjusted Pro-forma basis

INSTITUTIONAL

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MANAGING THE PORTFOLIO FOR THE CHANGING CREDIT ENVIRONMENT

DISCIPLINED PORTFOLIO MANAGEMENT

PORTFOLIO CREDIT WEIGHTING

EMERGING CORPORATES

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

EAD [1] $b -8%
388
355
330 1%
18% 1%
17%
21%
79% 81% 82%
Sep 14 Sep 15 Sep 16
Investment Sub-investment Default
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----- Start of picture text -----

-8% CRWA [2] $b
-83%
388
355 2.0
1%
18% 1%
17%
81% 82%
0.3
Sep 15 Sep 16 Sep 15 Sep 16
Sub-investment Default
PORTFOLIO TRENDS REFLECTIVE OF CHANGING ENVIRONMENT
LOSS RATES [3] PROVISIONS HALF ON HALF [3] -16%
$m 323
271
0.44% 154
111
88
0.26%
0.11% 0.14%
-10
FY13 FY14 FY15 FY16 1H14 2H14 1H15 2H15 1H16 2H16
20+ yr Historical Median Loss Rate Credit Impairment Charges [3 ]
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----- Start of picture text -----

0.96%
0.45% 0.44%
0.28% 0.26%
0.11% 0.14%
FY10 FY11 FY12 FY13 FY14 FY15 FY16
CIC/GLA (%) [3 ] 20+ yr Historical Median Loss Rate
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Exposure-at-default as defined by APRA Prudential Standards. 2. CRWA refers to counterparty credit risk weighted assets. 3. CIC refers to total credit impairment charges excluding the Oswal settlement on 22 September 2016. Median IP Loss Rate denominator is Net Loans & Advances. 10% of the individual provision charges in FY16 (1% in FY15) are to customers classified as Emerging Corporates NOTE: All financial information on a cash profit Adjusted Pro-forma basis

INSTITUTIONAL

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PRIORITY PRODUCTS PERFORMING WELL GIVEN MARKET CONDITIONS

MARKETS

REVENUE COMPOSITION[1 ]

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

$m
Sales Trading Balance Sheet
-3%
+5%
1,121 1,168 1,060 -19%
547 603 599 574 398 378
FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16
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MARKETS SALES REVENUE[1] HALF ON HALF

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

$m
----- End of picture text -----

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

-11% -13%
+5%
592 529 626 542 516 544
1H14 2H14 1H15 2H15 1H16 2H16
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CASH MANAGEMENT

CASH MANAGEMENT REVENUE

MIGRATION OF CUSTOMERS TO A SINGLE INTERFACE[2]

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

$m
+7% CAGR
491 512 538 542 565 582 57%
20%
9%
1H14 2H14 1H15 2H15 1H16 2H16 2H15 1H16 2H16
Revenue % of applicable total revenue transitioned to Transactive Global
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Markets income restated from prior disclosures due to transfer of Pacific to Asia Retail & Pacific and Loan Syndications to Loans & Specialised Finance 2. Online (TB Transactive Global) migrations across Australia and New Zealand NOTE: All financial information on a cash profit Adjusted Pro-forma basis

INSTITUTIONAL

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MANAGING COST THROUGH SIMPLIFICATION

PROGRESS ON EXPENSE MANAGEMENT

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

EXPENSES IMPACT OF TRANSFORMATION ON EXPENSES
$m +1% $m
-1%
Transformation
2,798 2,821 47 delivering $105m
2,500
reduction
49% 52% 63 2,861
44%
18
2,798
-105
FY14 FY15 FY16 FY15 FX FY15 D&A Personnel Other
Expenses Cost to Income ratio FX Adj
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----- Start of picture text -----

$m
-1%
Transformation
47
delivering $105m
reduction
63 2,861
18 2,821
2,798
-105
FY15 FX FY15 D&A Personnel Other FY16
FX Adj
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SIMPLIFICATION OUTCOMES

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

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

FTE
-14%
4,328 4,218
3,640
Sep 14 Sep 15 Sep 16
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----- Start of picture text -----

EXPENSES EX-D&A [1 ]
----- End of picture text -----

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

$m -3%
2,697
2,574 63 2,609
215
2,634 2,609
2,359
141 164 212
FY14 FY15 FY16
Other FX D&A
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Totals exclude depreciation and amortisation cost NOTE: All financial information on a cash profit Adjusted Pro-forma basis

INSTITUTIONAL

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PROGRESS ON CAPITAL EFFICIENCY INITIATIVES

TARGETED, CONSISTENT RISK WEIGHTED ASSET REDUCTIONS

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

RWA REDUCTION: 2 YEARS RWA REDUCTION: FY16
$b $b
-7% -$16b
12
198
$37b
11 -$14b
182 -7 1 182 1
-21
168 -10
168
-16 -12
-3
Sep 14 FX Growth Dilutive asset Business Sep 16 Sep 15 FX Active Growth Mar 16 FX Active Growth Sep 16
reductions practice mgmt mgmt
initiatives
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REDUCTION IN LOWER RETURNING RISK WEIGHTS (PRINCIPALLY IN INTERNATIONAL)

RWA REDUCTION BY REGION

REVENUE AND CRWA REDUCTION RELATIONSHIP[2 ]

% of total RWA

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

48% 46% 47% 50% 50%
7% 7% 6% 7% 8%
45% 47% 47% 43% 42%
Sep 14 Mar 15 Sep 15 Mar 16 Sep 16
Australia [1] NZ International
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----- Start of picture text -----

6% 6% 7%
4% 4% 5%
cRWA Revenue cRWA Revenue cRWA Revenue
active impact active impact active impact
reductions reductions reductions
2H15 1H16 2H16
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The Australia region includes Australia and PNG. PNG represents 2% of total risk weighted assets in Sep 16
CRWA refers to counterparty credit risk-weighted assets. CRWA and revenue impacts are shown for the half, on a non-cumulative basis NOTE: All financial information on a cash profit Adjusted Pro-forma basis

100

INSTITUTIONAL

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BALANCE SHEET DISCIPLINE FOCUS CONTINUES

PORTFOLIO MANAGEMENT

LOAN AND TRADE BOOK REDUCTION

PORTFOLIO BY REGION

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

Net Loans and Advances Targeted Net Loans and Advances
$b $b
-18% reduction of
lower returning
113 118 113 118 97
97 NLAs
24
28 22 13 54% 53% 43%
19 22
7%
6% 6%
66 72 62 40% 41% 50%
Sep 14 Sep 15 Sep 16 Sep 14 Sep 15 Sep 16
Loan Product Specialised Finance Trade Australia [3] NZ International
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OUTCOMES FROM BALANCE SHEET DISCIPLINE

INSTITUTIONAL MARGINS[1]

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

2.85%
2.65%
2.57%
2.11% 2.06% 2.16% 2.40%
2.20%
2.06% 1.86%
1.79%
2.02%
1.66%
1.30% 1.59%
1.39%
1H15 2H15 1H16 2H16
Australia [3] NZ International Institutional
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TRANSITION TO PROVIDING CUSTOMER SOLUTIONS[2]

Number of customers

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

54% 55% 57%
46% 45% 43%
----- End of picture text -----

Sep 14

Sep 15 Sep 16

Loan Product + 1 or 2 other products Loan Product + 3 or more other products

NIM shown on the basis of Institutional ex-Markets
Refers to any additional product(s) other than Loan Product. Excludes PNG 3. The Australia region includes Australia and PNG
NOTE: All financial information on a cash profit Adjusted Pro-forma basis

101

INSTITUTIONAL

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GLOBALLY CONSISTENT CUSTOMER EXPERIENCE THROUGH DIGITAL INVESTMENT

CUSTOMER SOLUTIONS

HOST-TO-HOST SOLUTION[1]

==> picture [301 x 121] intentionally omitted <==

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

Cash Mgt customers
Continued Host-to-Host rollout driving
uplift
+14%
154
135
118
Sep 15 Mar 16 Sep 16
----- End of picture text -----

Customers on Host-to-Host (GCIS) platform (indexed to 100 at March 2015)

DIGITAL TRANSACTIONAL VOLUMES[1 ]

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

Transactions (m)
+12%
67
60
55
2H15 1H16 2H16
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----- Start of picture text -----

Volumes processed through GCIS
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OPERATIONAL EFFICIENCY THROUGH DIGITAL INVESTMENT

GLOBAL MARKETS STP RATES[2 ]

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

+11ppt
73% 79% 84%
Sep 14 Sep 15 Sep 16
STP rates
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----- Start of picture text -----

DEPOSIT BALANCES PER CUSTOMER [2 ]
$m/customer Uplift reflects improved customer
experience
+13%
4.0
3.6 3.7
Sep 15 Mar 16 Sep 16
Average deposit balance ($m per client)
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Global Customer Integration Solution (GCIS) provides host-to-host connectivity that allows two way data exchange with our customers in a highly secure, file agnostic environment. GCIS enables a closer integration on payments that significantly increases straight through processing for our customers. 2. Data represents process stages from trade capture, confirmations to settlements. Aggregate rate for volumes traded in September each year. 3. Average balance per customer excludes customers with zero balance. Pacific (ex PNG) no longer included in Institutional.

102

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WEALTH AUSTRALIA

FINANCIAL HIGHLIGHTS

EMBEDDED VALUE GROWTH[1 ]

==> picture [296 x 108] intentionally omitted <==

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

CAGR
14.0%
4,801
4,308
3,732
3,244
FY13 FY14 FY15 FY16
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REVENUE/ FTE

==> picture [14 x 10] intentionally omitted <==

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

$k
----- End of picture text -----

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

+7.9%
+9.5%
843 852 831 910 70
65
60
55
FY13 FY14 [2 ] FY15 [3 ] FY16 [4 ]
CTI % (incl. Regulatory & Compliance costs) Revenue/FTE ($k)
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INCREASING REGULATORY AND COMPLIANCE COSTS

Super related compliance (Stronger Super reforms, MySuper, SuperStream/ATO E-Commerce)
Life Insurance recommendations regarding advisor commissions for life insurance products
Increased scrutiny on financial advice and regulatory review of claims payments practices
Foreign Account Tax Compliance Act reporting obligations
Increased oversight and information requests from government and regulators across the industry

BROADLY FLAT EXPENSE BASE

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

$m
+1.1% CAGR
743 781 750 767
16 29 40 47 70
60
727 752 710 720
50
40
FY13 FY14 [5 ] FY15 [3 ] FY16 [4 ]
----- End of picture text -----

CTI % (incl. Regulatory & Compliance costs) CTI % (excl. Regulatory & Compliance costs) Regulatory & Compliance Expenses ($m) BAU Expenses ($m)

Embedded Value is adjusted to allow for the impact of dividends and net transfers 2. FY14 FTE includes a restatement of 55 Direct Channels FTE to Australia Division 3. FY15 CTI has been Pro-forma Adjusted for Restructuring costs (-$1m) 4. FY16 CTI has been Pro-forma Adjusted for Restructuring costs (-$20m), and Capitalisation write-offs (-$9m) 5. FY14 has been normalised to exclude a Corporate branding cost of $9m

103

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WEALTH AUSTRALIA

INSURANCE – CONSISTENT, DIVERSIFIED PRODUCT MIX

COMPOSITION OF RETAIL INSURANCE IN-FORCE

STABLE LAPSE RATES[1 ]

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

$m $m
+2% +6%
1,516 1,569 1,603 1,516 1,603
28% 28% 28% 28% 28%
72% 72% 72% 72% 72%
2H15 1H16 2H16 FY15 FY16
Group Individual
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----- Start of picture text -----

% - 60bps
14.6% 13.5% 13.3% 14.0%
FY13 FY14 FY15 FY16
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PRODUCT MIX IN INDIVIDUAL LIFE INSURANCE

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

IN-FORCE
----- End of picture text -----

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

+2%
+6%
$m $m
1,130 1,158 1,158
1,093
31% 31% 31%
30%
69% 69% 70% 69%
1H16 2H16 FY15 FY16
Income Protection Lump Sum
----- End of picture text -----

EMBEDDED VALUE[2]

==> picture [18 x 10] intentionally omitted <==

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

$m
----- End of picture text -----

==> picture [315 x 115] intentionally omitted <==

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

317 8 4,468 37 31 4,536
4,012 131
Sep-15 Value of Expec. Exper. Subtotal Economic Net Sep-16
New Bus. Return Deviations Assumption Transfers
changes
----- End of picture text -----

A definition change to the Australian risk lapse rate was implemented in September 2015 to reflect the inclusion of partial premium reductions within the policy renewal period. Prior comparative periods have been restated to align with revised methodology

104

Embedded value includes Insurance and Funds Management businesses

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WEALTH AUSTRALIA

FUNDS MANAGEMENT – SIMPLER, LOWER MARGIN, LOWER RISK MODEL

FUNDS MANAGEMENT AVERAGE FUM[1]

SMARTCHOICE ACTIVE MEMBERS ARE GROWING

Impacted by investment markets

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

$b +1.9% $b
-0.9%
47 47 48 48 48
2H15 1H16 2H16 FY15 FY16
----- End of picture text -----

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

Retail
Employer
72%
42%
24%
16%
FY14 v FY15 FY15 v FY16
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FLAGSHIP PRODUCTS CONTINUE TO PERFORM

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

FUM WELL
$b +67%
14
12 2
9 2 2
2
1
1
9 10
7
FY14 FY15 FY16
Retail- SC Wrap (Voyage & Grow) OneAnswer Frontier
----- End of picture text -----

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

FY16 FUNDS MANAGEMENT NETFLOWS BY
SOLUTION
$m Open solutions Closed solutions
1,368
514 332
(1,226)
(1,980)
OneAnswer ANZ Wrap Retail Employer
Frontier Smart (Voyage
Choice & Grow)
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Funds Management average FUM excludes Private Wealth FUM. This is now included under Australia division

105

Further Information

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Our Shareholder information

DISCLAIMER & IMPORTANT NOTICE: The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate

This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to ANZ’s business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in this presentation, 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. Such statements constitute “forward-looking statements” for the purposes of the United States Private Securities Litigation Reform Act of 1995. 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 to reflect the occurrence of unanticipated events.

shareholder.anz.com

Equity Investor

Jill Campbell

Group General Manager Investor Relations

+61 3 8654 7749

+61 412 047 448 [email protected]

Cameron Davis

Executive Manager Investor Relations

+61 3 8654 7716
+61 421 613 819

[email protected]

Katherine Hird

Senior Manager Investor Relations +61 3 8655 3261 +61 435 965 899 [email protected]

Retail Investors

Debt Investors

Michelle Weerakoon

Manager Shareholder Services & Events

+61 3 8654 7682 +61 411 143 090 [email protected]

Donna Chow

Associate Director Debt Investor Relations +61 3 8655 1402 [email protected]

AI assistant

Australia and New Zealand Banking Group Ltd. — Annual Report 2016

10425_rns_2016-11-13_35dd4119-d5ed-4ff1-8feb-a1db8b3cf20e.pdf

2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

CONTENTS

2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

HEADLINE FINANCIAL PERFORMANCE

HEADLINE COMPONENTS

OPERATIONAL PERFORMANCE

SPECIFIED ITEMS[1 ]

ADJUSTED PRO-FORMA

FINANCIAL PERFORMANCE

FOUR PRIORITIES

BUILDING A BETTER BANK

GETTING FIT FOR PERFORMANCE

Sustainable growth

WORK TO DATE

1. Reset strategy

2. Rebuilt executive team

3. Rebalanced portfolio organically

8. Responding to changing expectations

RETAIL & COMMERCIAL PERFORMANCE

AUSTRALIA & NEW ZEALAND

INSTITUTIONAL PERFORMANCE

TRANSFORMATION PROGRESS

A GOOD START

A BETTER BALANCED, HIGHER RETURN BUSINESS

OPERATING ENVIRONMENT

CAPITAL EFFICIENCY

EXECUTIVE FOCUS

BUSINESS OUTLOOK

GETTING MORE STUFF DONE

1. Continued strength and cautious growth in Australia and NZ

FOCUS FOR 2017

1. Delivering the benefits of decisions taken in 2016

2016 FULL YEAR INVESTO R DISCU S S IO N PAC K

OVERVIEW

FINANCIAL PERFORMANCE

CASH PROFIT

FULL YEAR 2016

SECOND HALF 2016

SPECIFIED ITEMS

ALL TAKEN THROUGH CASH PROFIT

SPECIFIED ITEMS

CVA METHODOLOGY ADJUSTMENTS

SPECIFIED ITEMS

CAPITALISED SOFTWARE

CAPITALISED SOFTWARE SPECIFIED ITEM COMPONENTS

CAPITALISED SOFTWARE BALANCE

SPECIFIED ITEMS

CAPITALISED SOFTWARE

CAPITALISED SOFTWARE POLICY CHANGES

RATIONALE

IMPACT

CAPITALISED SOFTWARE BALANCE IMPACT

SPECIFIED ITEMS

RESTRUCTURING EXPENSES

RESTRUCTURE EXPENSES

BENEFITS

PORTFOLIO MOVEMENT

RISK WEIGHTED ASSETS

TOTAL RISK WEIGHTED ASSETS

CREDIT RWA MOVEMENT

PORTFOLIO MOVEMENT

EAD & LENDING CRWA MOVEMENT[1 ]

PORTFOLIO MOVEMENT

INSTITUTIONAL CRWA & MARGINS

INSTITUTIONAL CREDIT RWA MOVEMENT[1 ]

INSTITUTIONAL NIM[1,3 ]

$b

OPERATING PERFORMANCE

CASH PROFIT

FULL YEAR 2016

PORTFOLIO CONTRIBUTION

ADJUSTED PRO-FORMA

INCOME DRIVERS

GROUP NET INTEREST MARGIN

FY16 INCOME CONTRIBUTION

AUSTRALIA NIM[1] (%)

INSTITUTIONAL NIM[1,2] (%)

Australia and New Zealand Banking Group Ltd. Annual Report 2016