Australia and New Zealand Banking Group Ltd. — Interim / Quarterly Report 2017

Apr 27, 2017

News Release

For release: 28 April 2017

ANZ 2017 Half Year Results Template

ANZ will announce its 2017 Half Year financial results on Tuesday 2 May, 2017. In advance of that announcement, the Group is releasing a template table for Cash Profit Adjusted Pro forma to assist market participants preparing to analyse the Group’s financial performance.

SPECIFIED ITEMS 1H17

ANZ advised at the time of its 1Q17 Trading Update that Specified Item classifications would only be used in FY17 in relation to the impact of asset disposals.

Comparing Specified Items FY17 to FY16

In FY16 a number of actions were classified as Specified Items forming part of the Group’s Cash Profit. This classification assisted investors and analysts to look through the impact of strategic initiatives to compare the underlying business performance trends between FY15 and FY16. The majority of the Specified Items related to accounting methodology changes and restructuring charges.

In order to assist like for like comparisons between FY16 and FY17 the template highlights which of the FY16 specified items should be taken into account. Items which impact both FY16 and FY17 have been removed including higher expenses from changes to capitalised software policy changes and amortisation benefits from accelerated amortisation. Conversely, Asian minority earnings have been added to pro forma due to the cessation of equity accounting.

Reclassification of Asia Retail and Wealth, SRCB and UDC to Held for Sale

ANZ announced on 31 October, 2016 it had agreed to sell its Retail and Wealth business in five Asian countries to Singapore’s DBS Bank[1] . As a result of the sale agreement, the Group has reclassified those businesses as ‘held for sale’ and recognised $284 million of charges (post tax) including impairments to software, goodwill and fixed assets. This loss on reclassification has been classified as a Specified Item (Pro forma Adjustment to Cash Profit)[2] .

ANZ announced on 3 January, 2017 an agreement to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB)[3] . As a consequence ANZ has ceased equity accounting for the investment in SRCB and commenced accounting for it as an asset held for sale. UDC has no impact in 1H17.

All these divestments remain subject to regulatory approvals and satisfaction of conditions.

ADJUSTMENT TO STATUTORY PROFIT 1H17 - SRCB

Due to timing differences between the SRCB reclassification to held for sale ($316m post tax impact in 1H17) and the release of the foreign currency translation and available for sale reserves on completion both elements will be excluded from cash profit in each of the impacted half yearly results.

1 Subject to regulatory approval, the Group expects the sale to be completed in stages in 2017 and early 2018.

2 This amount is slightly higher than the estimated impact outlined at the time of announcement. The difference is due to a bringing forward of the cost of dealing with some properties and will reduce ongoing retained costs.

3 The sale of SRCB remains subject to the customary closing conditions and regulatory approvals but is expected to complete in the second half of FY2017.

Australia and New Zealand Banking Group Limited ABN 11 005 357 522

ADJUSTMENT TO CALCULATION OF GROUP NET INTEREST MARGIN

ANZ advises that Group Net Interest Margin (NIM) has been restated to net home loan deposit offset balances against interest earning assets, which brings ANZ in line with other major banks; however this does not alter the comparison between periods. Prior period restatements are below:

	Cash Net Interest Margin %	Cash Net Interest Income $M	Average Interest Earning Assets $M
Mar 16 Half Year	2.07	7,568	731,395
Sep 16 Half Year	2.06	7,527	730,275

For investor and analyst enquiries contact:

Jill Campbell, +61 3 8654 7749 Cameron Davis, +61 3 8654 7716

Cash Profit Results - Adjusted Pro-forma[1]

$M Cash Profit Net interest income Other operating income	March 2017 Half Year	March 2016 Half Year	Mar 17 v. Mar 16
	Cash profit Asian minority pro-forma Reclassific- ation of Asia Retail & Wealth to held for sale Total specified items Adjusted pro-forma	Cash profit Software capital- isation changes Asian minority pro-forma Asian minority valuation adjustments Restruct- uring Esanda Dealer Finance divestment and pro-forma Derivative CVA methodo- logy change Total specified items Adjusted pro-forma	Movement
	- - - (58) 324 266	7,568 - - - - (31) - (31) 7,537 2,757 - (223) 231 - (78) - (70) 2,687
Operating income Operating expenses	(58) 324 266 - - -	10,325 - (223) 231 - (109) - (101) 10,224 (5,488) 556 - - 138 11 - 705 (4,783)
Profit before credit impairment and income tax Credit impairment charge	(58) 324 266 - - -	4,837 556 (223) 231 138 (98) - 604 5,441 (918) - - - - 13 - 13 (905)
Profit before income tax Income tax expense Non-controlling interests	(58) 324 266 - (40) (40) - - -	3,919 556 (223) 231 138 (85) - 617 4,536 (1,133) (167) - - (37) 29 - (175) (1,308) (4) - - - - - - - (4)
Cash profit	(58) 284 226	2,782 389 (223) 231 101 (56) - 442 3,224

Mar 17 v. Mar 16

			Mar 17 v.
Profit before income tax by division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	March 2017 Half Year	March 2016 Half Year	Mar 16
	Cash profit Asian minority pro-forma Reclassific- ation of Asia Retail & Wealth to held for sale Total specified items Adjusted pro-forma	Cash profit Software capital- isation changes Asian minority pro-forma Asian minority valuation adjustments Restruct- uring Esanda Dealer Finance divestment and pro-forma Derivative CVA methodo- logy change Total specified items Adjusted pro-forma	Movement
	- - - - - - - - - - - - - 324 324 (58) - (58)	2,529 - - - 24 (19) - 5 2,534 879 - - - 53 - - 53 932 889 - - - 3 - - 3 892 235 - - - 13 - - 13 248 75 - - - 12 - - 12 87 (688) 556 (223) 231 33 (66) - 531 (157)
Profit before income tax Income tax expense & non- controllinginterests	(58) 324 266 - (40) (40)	3,919 556 (223) 231 138 (85) - 617 4,536 (1,137) (167) - - (37) 29 - (175) (1,312)
Cash profit	(58) 284 226	2,782 389 (223) 231 101 (56) - 442 3,224

1. Cash Profit numbers reported in prior periods have been restated as the result of the following:

2. In the March 2017 half, a change was made to the classification of certain fees payable. These items have been reclassified from other operating income to other operating expenses to more accurately reflect the nature of these items. Comparatives have been restated accordingly (Sep 16 half: $8 million; Mar 16 half: $9 million). This change impacted Group and the Institutional division.

3. In the March 2017 half, an organisational change took place which impacted cash profit within divisions with nil impact on total Group cash profit. This was the result of moving operations previously sitting in Technology, Services & Operations (“TSO”) and Group Centre to other divisions. This change impacted all divisions.

Cash Profit Results - Adjusted Pro-forma[1]

$M Cash Profit Net interest income Other operating income	March 2017 Half Year	September 2016 Half Year	Mar 17 v. Sep 16
	Cashprofit Asian minority pro-forma Reclassific- ation of Asia Retail & Wealth to held for sale Total specified items Adjusted pro-forma	Cashprofit Software capital- isation changes Asian minority pro-forma Asian minority valuation adjustments Restruct- uring Esanda Dealer Finance divestment and pro-forma Derivative CVA methodo- logy change Total specified items Adjusted pro-forma	Movement
	- - - (58) 324 266	7,527 - - - - - - - 7,527 2,742 - (122) - - - 237 115 2,857
Operating income Operating expenses	(58) 324 266 - - -	10,269 - (122) - - - 237 115 10,384 (4,951) - - - 140 6 - 146 (4,805)
Profit before credit impairment and income tax Credit impairment charge	(58) 324 266 - - -	5,318 - (122) - 140 6 237 261 5,579 (1,038) - - - - 10 - 10 (1,028)
Profit before income tax Income tax expense Non-controlling interests	(58) 324 266 - (40) (40) - - -	4,280 - (122) - 140 16 237 271 4,551 (1,166) - - - (40) (5) (69) (114) (1,280) (7) - - - - - - - (7)
Cash profit	(58) 284 226	3,107 - (122) - 100 11 168 157 3,264
Profit before income tax by division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	March 2017 Half Year	September 2016 Half Year	Mar 17 v. Sep 16
	Cashprofit Asian minority pro-forma Reclassific- ation of Asia Retail & Wealth to held for sale Total specified items Adjusted pro-forma	Cashprofit Software capital- isation changes Asian minority pro-forma Asian minority valuation adjustments Restruct- uring Esanda Dealer Finance divestment and pro-forma Derivative CVA methodo- logy change Total specified items Adjusted pro-forma	Movement
	- - - - - - - - - - - - - 324 324 (58) - (58)	2,533 - - - 45 16 - 61 2,594 600 - - - 39 - 237 276 876 858 - - - 18 - - 18 876 219 - - - 7 - - 7 226 121 - - - 1 - - 1 122 (51) - (122) - 30 - - (92) (143)
Profit before income tax Income tax expense & non- controllinginterests	(58) 324 266 - (40) (40)	4,280 - (122) - 140 16 237 271 4,551 (1,173) - - - (40) (5) (69) (114) (1,287)
Cash profit	(58) 284 226	3,107 - (122) - 100 11 168 157 3,264

• 1 Cash Profit numbers reported in prior periods have been restated as the result of the following:

• In the March 2017 half, a change was made to the classification of certain fees payable. These items have been reclassified from other operating income to other operating expenses to more accurately reflect the nature of these items. Comparatives have been restated accordingly (Sep 16 half: $8 million; Mar 16 half: $9 million). This change impacted Group and the Institutional division.

• In the March 2017 half, an organisational change took place which impacted cash profit within divisions with nil impact on total Group cash profit. This was the result of moving operations previously sitting in Technology, Services & Operations (“TSO”) and Group Centre to other divisions. This change impacted all divisions.