Australia and New Zealand Banking Group Ltd. — Capital/Financing Update 2008

Aug 27, 2008

ANZ Convertible Preference Shares (CPS) Australia and New Zealand Banking Group Limited August 2008

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Disclaimer
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Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) ("ANZ") is the proposed issuer of the ANZ convertible preference shares ("CPS"). Neither ANZ nor any of the JLMs named in this presentation is liable for the content of this presentation.

This presentation has been prepared in good faith from information provided by ANZ, but no representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of ANZ, the JLMs, their respective related bodies corporate, or their directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of ANZ, the JLMs, their respective related bodies corporate, or their directors, employees or agents.

The distribution of this presentation in jurisdictions outside Australia may be restricted by law. If you come into possession of it you should seek advice on such restrictions and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This presentation does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register or qualify CPS or to otherwise permit a public offering of CPS outside Australia and New Zealand. CPS have not been, and will not be, registered under the United States Securities Act of 1933 ("Securities Act") and may not be offered or sold in the United States or to, or for the account or benefit of, a US Person (as defined in Regulation S under the Securities Act).

A public offer of CPS will be made by ANZ pursuant to a Prospectus under Part 6D.2 of the Corporations Act. A Prospectus has been lodged with the Australian Securities and Investments Commission on or about 27 August 2008. A replacement with the margin determined after the Bookbuild will be lodged on or about 4 September 2008. This document is not a Prospectus under Australian law and does not constitute an invitation to subscribe for or buy any securities or an offer for subscription or purchase of any securities or a solicitation to engage in or refrain from engaging in any transaction.

Nothing in this presentation is a promise or representation as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. None of ANZ or the JLMs makes any representation or warranty as to

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Agenda
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1. Transaction overview

2. ANZ investor update

3. Timetable and syndicate details

Issuer	•	Australia and New Zealand Banking Group Limited (ANZ)
Security	•	Convertible Preference Shares (CPS)
Issue Price	•	$100 per CPS
Offer size	•	$500 million with the ability to raise more or less
	•	The Offer is being made to:
Offer structure		•ANZ Securityholders who are Australian or New Zealand residents •Members of the general public who are Australian or New Zealand residents •Clients of Syndicate Brokers
		•Institutional Investors
Purpose	•	Part of ANZ’s ongoing capital management strategy with proceeds being used for ANZ’s general corporate purposes
Listing Issue credit rating	• • •	Expected to be listed on ASX under ASX Code ANZPB Assigned Issue Credit Rating of A+ by Standard & Poor’s; and Provisional issue credit rating of Aa3 by Moody’s

	Offer summary	Offer summary
		•	Preferred, non-cumulative dividends based on a floating rate
		•	Expected to be fully or substantially franked
	Dividends	•	Dividends scheduled quarterly subject to Payment Tests
		•	Dividend Rate = (90 Day Bank Bill Rate + Margin) x (1 – Tax Rate)
		•	Margin expected to be in the range of 2.50% - 2.90% per annum
		•	Initial Mandatory Conversion Date is 16 June 2014
	Mandatory Conversion	•	CPS Holders will receive a variable number of Ordinary Shares on Conversion at a 2.5% discount to 20 day VWAP
		•	Subject to the Mandatory Conversion Conditions being satisfied or ANZ elects for
			a third party to purchase the CPS
		•	The Mandatory Conversion Conditions are intended to provide protection to CPS
	Mandatory		Holders from receiving less than $102.56 worth of Ordinary Shares per CPS on
	Conversion		Conversion
	Conditions	•	ANZ may elect to Redeem CPS if any of the Mandatory Conversion Conditions
			are not satisfied (with APRA’s prior written approval)
		•	CPS may be Exchanged by ANZ prior to 16 June 2014 if an Acquisition Event,
	Optional		Tax Event or Regulatory Event occurs
	Exchange	•	CPS must be Exchanged if a Change of Control Event occurs (subject to APRA’s
			prior written approval)
	Resale Ranking	• •	5 Before any Mandatory Conversion Date, ANZ may choose to arrange that all CPS on issue be acquired from CPS Holders by a third party for $100 per CPS On a winding-up of ANZ, CPS rank ahead of Ordinary Shares, equal with 2003 Trust Securities, 2004 Trust Securities, 2007 Stapled Securities and any other equal ranking instruments, but behind all depositors and other creditors

• ANZ CPS qualifies as Non-innovative Residual Tier 1 capital under APRA’s Prudential Standards

• ANZ CPS further bolster ANZ’s regulatory capital position

Regulatory capital position as at 31 March 2008	Reported March 2008	Pro forma1 March 2008
Tier 1 capital ratio	6.9%	7.0%
Total capital ratio	10.1%	10.2%

• Other significant capital initiatives since 31 March 2008 include:

• underwriting of the re-investment of ANZ’s 2008 interim dividend, which raised $703 million on 1 July 2008; and

• conversion of $1 billion of ANZ StEPS to Ordinary Shares expected to

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Agenda
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1. Transaction overview

2. ANZ investor update

3. Timetable and syndicate details

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Result Overview
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March 08 v March 07

Cash[* ] Profit Before Provisions (PBP) 11% Revenue 12% (13% FX adjusted)

12% (13% FX adjusted)

Credit costs $980m

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$740m

Headline profit (after tax) $1,963m 7% Cash[ ] profit (after tax) $1,674m 14% Cash[ ] EPS 16%

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Economic momentum slowing from higher
interest rates, petrol prices and drop in confidence
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Real Gross State Product

Retail sales and consumer sentiment

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1.0 % change (trend) 140
8 %
retail sales monthly % change 130
120
7
2006-07 (e) 0.5 110
2007-08 (f)
6 100
2008-09
consumer confidence
90
5 annualised monthly
0.0 80
04 05 06 07 08
4
Business credit
3
25 % change from year earlier
20
2
15
1
10
5
0
NSW SA VIC TAS ACT QLD WA NT 0
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House prices

Population growth

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2.0 % change from year earlier
20 Australia
Australia
15
1.5
10
5
1.0
0
US
-5
0.5
-10
US
-15
0.0
% change from year earlier
-20
01 02 03 04 05 06 07 08
01 02 03 04 05 06 07 08
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Housing market balance

Mortgage delinquency rates*

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Forecast
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5 % of total loans outstanding
Underlying Requirement US
200
4
160
3
120 Completions
80 2
40 Australia
1
0
0
-40
01 02 03 04 05 06 07 08
-80
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Australia

Credit Cards 60+ Days Arrears

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2.0%
1.5%
1.0%
0.5%
0.0%
Oct Dec Feb Apr Jun Aug
FY06 FY07 FY08
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Mortgages Retail 60+ Days Arrears

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0.5%
0.4%
0.3%
0.2%
0.1%
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New Zealand Credit Card & Home Loan 60+ Day Arrears

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2.0%
1.5%
1.0%
0.5%
0.0%
Oct Dec Feb Apr Jun Aug
Cards FY07 Cards FY08
Home loans FY07 Home loans FY08
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90 days past due (NZ Businesses)

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1.4%
% of GLA
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
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|||||
|---|---|---|---|
|Individual|Collective|Total provisions by division|
|provisions|provisions|($m)|
|($m)|($m)|
||
||Includes full-year cycle|*|
|~750|
|~1,450|~2,200|
|adjustment of ~ $425m for|
|the impact of higher oil|
|prices, interest rates,|
|securities lending &|
|~375|slowing economic growth|
|~850|
|484|
|567|
|376|43|
|296|
|604|69|
|83|69|
|31|
|386|
|188|52|
|2007|2008|
|2007|2008|2007|2008|
|Second half|
|Second half|Personal|Institutional|
|First half|
|First half|NZ Businesses|Asia Pacific / Other|

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July trading update confirmed underlying business is
performing well, albeit impacted by provisions
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A number of key observations from the 28 July 2008 Trading Update

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PBP/Underlying:
Expenses: Performing well, Provisions:
Expected to be ~8% increase ~1.6bn (~290%)
Income: ~9% higher up on FY07
Expected to be
up 8-9%
NPAT:
>$3bn
(vs $3.9bn in 07)
$3,924m
Profit Before Provisions
~8%
Cash EPS
down 20%
to 25%
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Further details from the trading update
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• No direct exposure to US sub prime reaffirmed

• Strong capital position being maintained. Anticipate Tier 1 ratio of > 7%

• Collective Provision reset to in excess of 1% of Credit Risk Weighted Assets

• 1.5% DRP discount will continue together with flexibility to underwrite 2008 dividend.

• ANZ StEPS hybrid securities to be converted into ordinary shares at a 2.5% discount

Net Interest Margin remaining stable with repricing initiatives

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2.5% 1.5%
2.3%
2.0% 1.0%
1.8%
1.5% 0.5%
1.3%
1.0% 0.0%
Oct-07 Dec-07 Feb-08 Apr-08 Jun-08
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Group Net Interest Margin (adjusted for
markets volume and NII)
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Group Funding profile – June 2008

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Group
Customer
Funding Short term
51% wholesale debt
16%
Commercial
Bills
Hybrids & SHE
4%
6%
Term Debt
Term Debt
(resid. mat
(resid. mat
<12 mths)
>12 mths)
9%
14%
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Maintaining significantly higher liquidity portfolio ($bn)

Cash and other Liquid Assets Internal

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FY08 term funding requirement completed *

	Volume (A$bn)	Tenor (yrs	) Cost (bp)	# deals
Term Debt >1Yr tenor	19.2	4.4	109	118
Term debt <1Yr (excl extendables)	8.4	0.8	13	195
Extendable notes	6.5	1.2	34	2
FY08 total	34.1	2.9	71	315
FY07 total	23.2	3.2	8	297

Term funding costs continue to increase

(CDS spread for ANZ 5 year senior Debt)

150 100 50 0

8.5

8.9

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Agenda
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1. Transaction overview

2. ANZ investor update

3. Timetable and syndicate details

Key dates for the Offer	Date
Offer announced and lodgement of Initial Prospectus with ASIC	27 August 2008
Bookbuild to determine Margin	3 September 2008
Announcement of Margin and lodgement of Replacement Prospectus with ASIC	4 September 2008
Opening Date of Offer	4 September 2008
Closing Date for ANZ Securityholder Offer and General Offer (by 5.00pm)	24 September 2008
Closing Date for Broker Firm Offer (by 10.00am)	29 September 2008
Issue Date	30 September 2008
CPS commence trading on ASX (deferred settlement basis)	1 October 2008
Holding Statements despatched by	3 October 2008
CPS commence trading on ASX (normal settlement basis)	6 October 2008

Australia and New Zealand Banking Group Limited

Rick Moscati, Group Treasurer 03 9273 1368 Steven Craig, Head of Capital and Balance Sheet Management 03 9273 2974 Cameron Davis, Senior Manager Investor Relations 03 9273 5629

Joint Lead Managers

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Joint Lead Managers	Joint Lead Managers	Joint Lead Managers
		Tony Kench 02 8223 7550 Truong Le 02 8223 7551
Angelos Giannakopoulos 03 9273 1774 Adam Vise 03 9273 3880	Fraser Todd 02 8225 4692 Alex Allegos 03 8643 9709	Tony Kench 02 8223 7550 Truong Le 02 8223 7551
Rupert Daly 02 8258 1408 Mozammel Ali 02 8258 1845	Andrew Shade 02 8667 5614 Gemma Cordeiro 02 9253 5488	Rob Foale 02 9321 8742 Hamish Kelly 02 9320 1165

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