Australia and New Zealand Banking Group Ltd. — Earnings Release 2014

Feb 27, 2014

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Media Release

For Release: 28 February 2014

ANZ New Zealand sustains strong performance

Australia and New Zealand Banking Group Limited (ANZ) NZ Branch Disclosure Statement for the three months ended 31 December 2013 was released today, showing a lift in performance for ANZ New Zealand[1] with unaudited statutory profit of NZ$393 million, up from $296 million in the three months ended 31 December 2012.

Unaudited cash profit[2] was NZ$416 million, up from $315 million, reflecting gathering economic improvement with an increase in lending and lower provisions for bad and doubtful debts, as well as reduced costs and productivity gains from simplifying the business.

The successful merger of the ANZ and National Bank brands and technology systems has enabled the business to continue growing deposits and lending, including market share growth in mortgages.

Key points[2]

• Unaudited cash profit of $416 million

• Unaudited statutory profit of $393 million

• Profit before credit impairment (cash basis) up 18%

• Significant cost reductions, mainly due to completion of the integration of the core banking system, and productivity gains from simplifying the business

• Lower credit impairment provisions charges as credit quality continues to improve

• Growth of $1,421 million in gross lending since 30 September 2013 supporting New Zealand’s economic recovery

• Growth of 3% in customer deposits over the three months

A table of key financial information follows below

For media enquiries contact: Pete Barnao Communications Manager, Media Tel: +64-9-252 6623 or +64-27-277 3139 Email: Pete.Barnao@anz.com

1 ANZ New Zealand represents all of ANZ’s operations in New Zealand, including ANZ Bank New Zealand Limited, its parent company ANZ Holdings (New Zealand) Limited and the New Zealand branch of ANZ. 2 Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, the result for the ongoing business activities of ANZ New Zealand. All comparisons in Key Points are on a cash profit basis and relate to the prior comparative period unless otherwise stated. Refer to Summary of Key Financial Information for details of reconciling items between cash profit and statutory profit.

Summary of Key Financial Information - ANZ New Zealand

Profit (unaudited)	3 Months 31 Dec 2013 3 Months 31 Dec 2012 Movement Dec 13 v Dec 12 Movement Dec 13 v Dec 12 Year September 2013 $M $M $M % $M
Net interest income Other external operating income Operating income Operating expenses Profit before credit impairment and income tax Provision for credit impairment Profit before income tax Income tax expense	688 655 33 5% 2,641 241 217 24 11% 868
	929 872 57 7% 3,509 371 398 (27) -7% 1,498
	558 474 84 18% 2,011 (19) 43 (62) large 65
	577 431 146 34% 1,946 161 116 45 39% 513
Cashprofit	416 315 101 32% 1,433
Reconciliation of cash profit to statutory profit Cash profit 416 315 101 32% 1,433 Reconciling items (net of tax): Economic hedging volatility1 (19) (17) (2) 12% (39) Insurancepolicyasset valuations2 (4) (2) (2) 100% (25)
Statutory profit	393 296 97 33% 1,369
Consisting of: Retail Commercial Operations & Support New Zealand Businesses Wealth Institutional Other	116 86 30 35% 380 184 148 36 24% 699 (5) (6) 1 -17% (11)
	295 228 67 29% 1,068 25 19 6 32% 79 97 72 25 35% 281 (1) (4) 3 -75% 5
Cashprofit	416 315 101 32% 1,433
Reconcilingitems	(23) (19) (4) 21% (64)
Statutory profit	393 296 97 33% 1,369
1. Economic hedging - fair value gains/(losses) 2. Insurance policy assets ANZ New Zealand enters into economic hedges to manage its interest rate and foreign exchange risk. Statutory profit includes volatility from fair value gains or losses on economic hedges that are not designated in accounting hedge relationships under IFRS, as well as ineffectiveness from designated accounting cash flow and fair value hedges. Fair value gains/(losses) on all of these economic hedges are excluded from cash profit, as the profit or loss resulting from these transactions will reverse over time to match the profit or loss from the economically hedged item. Profit and loss volatility is created by the remeasurement of policyholder assets for changes in market discount rates, which over time reverses to zero.