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

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Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

Full Year 30 September 2017

Consolidated Financial Report Dividend Announcement and Appendix 4E

The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4E of the Australian Securities Exchange (ASX) Listing Rules. It should be read in conjunction with ANZ’s 2017 Annual Report, and is lodged with the ASX under listing rule 4.3A.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

Name of Company:

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

Report for the year ended 30 September 2017	Report for the year ended 30 September 2017
Operating Results1				AUD million
Operating income		-1%	to	20,273
Net statutory profit attributable to shareholders		12%	to	6,406
Cash profit 2		18%	to	6,938
Dividends3		Cents		Franked
		per		amount 4
		share		per share
Proposed final dividend		80		100%
Interim dividend		80		100%
Record date for determining entitlements to the proposed 2017 final dividend			14	November 2017
Payment date for the proposed 2017 final dividend			18	December 2017

Dividend Reinvestment Plan and Bonus Option Plan

Australia and New Zealand Banking Group Limited (ANZ) has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the 2017 final dividend. For the 2017 final dividend, ANZ intends to provide shares under the DRP through an on-market purchase (as approved by APRA) and BOP through the issue of new shares. The 'Acquisition Price' to be used in determining the number of shares to be provided under the DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the ordinary course of trading on the ASX during the ten trading days commencing on 17 November 2017, and then rounded to the nearest whole cent. Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election notices from shareholders wanting to commence, cease or vary their participation in the DRP or BOP for the 2017 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 15 November 2017. Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling or New Zealand Dollars respectively at an exchange rate calculated on 17 November 2017.

1 Unless otherwise noted, all comparisons are to the year ended 30 September 2016. 2

Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. The non-core items are calculated consistently period on period so as not to discriminate between positive and negative adjustments and fall into one of the three categories: gains or losses included in earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with the ongoing operations of the Group; treasury shares, revaluation of policy liabilities, economic hedging and similar accounting items that represent timing differences that will reverse through earnings in the future; and accounting reclassifications between individual line items that do not impact reported results, such as policyholders tax gross up. Cash profit is not a measure of cash flow or profit determined on a cash basis. The net after tax adjustment was an addition to statutory profit of $532 million made up of several items. Refer pages 75 to 79 for further details.

3 There is no conduit foreign income attributed to the dividends. 4

It is proposed that the final dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 10 cents per ordinary share.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

The information on which the Condensed Consolidated Financial Statements is based is in the process of being audited by the Group’s external auditors, KPMG. The financial information contained in the Condensed Consolidated Financial Statements section of this report includes financial information extracted from the Annual Report together with financial information that has not been audited. The Group’s Annual Report will be available on 6 November 2017, and will include a copy of KPMG’s audit report.

Cash profit is not subject to review or audit by the external auditor. The external auditor has informed the Audit Committee that recurring adjustments have been determined on a consistent basis across each period presented, and the additional adjustments for the impact of the reclassification of Shanghai Rural Commercial Bank to held for sale in the March 2017 half, September 2017 half and September 2017 full year are appropriate.

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David M Gonski, AC Chairman

Shayne C Elliott Director

25 October 2017

RESULTS FOR ANNOUNCEMENT TO THE MARKET

APPENDIX 4E

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E

Year ended 30 September 2017

*CONTENTS*	*PAGE*
Disclosure Summary	7
Summary	9
Group Results	19
Divisional Results	49
Profit Reconciliation	75
Condensed Consolidated Financial Statements	81
Supplementary Information	101
Definitions	115
ASX Appendix 4E Cross Reference Index	118
Alphabetical Index	119

This Consolidated Financial Report, Dividend Announcement and Appendix 4E has been prepared for Australia and New Zealand Banking Group Limited (the “Company” or “Parent Entity”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “the consolidated entity”, “the Bank”, “us”, “we” or “our”.

All amounts are in Australian dollars unless otherwise stated.The Company has a formally constituted Audit Committee of the Board of Directors. The signing of the unaudited Condensed Consolidated Financial Statements was approved by resolution of a Committee of the Board of Directors on 25 October 2017.

When used in this Results Announcement the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ANZ does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

ABN 11 005 357 522

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DISCLOSURE SUMMARY

SUMMARY OF 2017 FULL YEAR RESULTS AND ASSOCIATED DISCLOSURE MATERIALS

The following disclosure items were lodged separately with the ASX and NZX and can be accessed via the ANZ Shareholder Centre on the Group website http://www.shareholder.anz.com/ within the disclosures for 2017 Full Year Results.

Available 26 October 2017 – 2017 Full Year Results

Consolidated Financial Report, Dividend Announcement & Appendix 4E
Results Presentation and Investor Discussion Pack
News Release
Key Financial Data Summary

Available on or after 6 November 2017

2017 Annual Report
2017 ANZBGL Parent Entity Financial Statements
2017 Annual Review
2017 Corporate Governance Statement
APS 330 Pillar III Disclosure at 30 September 2017
2017 Corporate Sustainability Review
UK DTR Submission

DISCLOSURE SUMMARY

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SUMMARY

Summary

Statutory Profit Results Cash Profit Results Key Balance Sheet Metrics Cash Profit Results – FX Adjusted Large/Notable Items Full Time Equivalent Staff Other Non-Financial Information

SUMMARY

Statutory Profit Results

Net interest income Other operating income1	Half Year Sep 17 $M Mar 17 $M Movt 7,456 7,416 1% 2,821 2,580 9%	Full Year
		Sep 17 $M Sep 16 $M Movt 14,872 15,095 -1% 5,401 5,451 -1%
Operating income Operating expenses1	10,277 9,996 3% (4,717) (4,731) 0%	20,273 20,546 -1% (9,448) (10,439) -9%
Profit before credit impairment and income tax Credit impairment charge	5,560 5,265 6% (479) (719) -33%	10,825 10,107 7% (1,198) (1,929) -38%
Profit before income tax Income tax expense Non-controlling interests	5,081 4,546 12% (1,579) (1,627) -3% (7) (8) -13%	9,627 8,178 18% (3,206) (2,458) 30% (15) (11) 36%
Profit attributable to shareholders of the Company	3,495 2,911 20%	6,406 5,709 12%

Earnings Per Ordinary Share (cents) Reference Page Basic 92 Diluted 92	Half Year	Movt 20% 19%	Full Year	Full Year
	Sep 17 Mar 17 119.9 100.2 114.7 96.7		Sep 17 Sep 16 Movt 220.1 197.4 11% 210.8 189.3 11%
Ordinary Share Dividends (cents) Interim - 100% franked2 Final - 100% franked2	Reference Page 91 91	Half Year		Full Year Sep 17 Sep 16 80 80 80 80 160 160 73.4% 81.9% 11.0% 10.0% 0.70% 0.63% 1.99% 2.07% 46.6% 50.8% 1.03% 1.15% 1,340 1,912 (142) 17 1,198 1,929 0.23% 0.33% 0.21% 0.34%
		Sep 17 Mar 17 - 80 80 -
Total - 100% franked2 Ordinary share dividend payout ratio3 Profitability Ratios Return on average ordinary shareholders' equity4 Return on average assets5 Net interest margin5,6	91 91 22	80 80 67.2% 80.7% 11.9% 10.1% 0.76% 0.64% 1.98% 2.00%
Efficiency Ratios Operating expenses to operating income1 Operating expenses to average assets1,5		45.9% 47.3% 1.02% 1.03%
Credit Impairment Charge/(Release) Individual credit impairment charge ($M) Collective credit impairment charge/(release) ($M)		554 786 (75) (67)
Total credit impairment charge ($M) 94 Individual credit impairment charge as a % of average gross loans and advances5 Total credit impairment charge as a % of average gross loans and advances5		479 719 0.19% 0.27% 0.16% 0.25%

1. 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 full year: $17 million).

2. Fully franked for Australian tax purposes and carry New Zealand imputation credits of NZD 10 cents per ordinary share for the proposed 2017 final dividend (2017 interim dividend: NZD 9 cents; 2016 final dividend NZD 9 cents; 2016 interim dividend: NZD 10 cents).

3. Dividend payout ratio is calculated using the proposed 2017 final, 2017 interim, 2016 final, and 2016 interim dividends.

4. Average ordinary shareholders’ equity excludes non-controlling interests.

5. Loans and advances and average assets as at 30 September 2017 and 31 March 2017 include assets held for sale.

6. In the March 2017 half, the Group changed its calculation of net interest margin to net home loan deposit offset balances against total interest earning assets. Refer to page 22 for further details.

SUMMARY

Cash Profit Results[1]

Cash Profit Results1
Net interest income Other operating income2	Half Year	Movt 1% -5%	Full Year
	Sep 17 $M Mar 17 $M 7,456 7,416 2,730 2,887		Sep 17 $M Sep 16 $M Movt 14,872 15,095 -1% 5,617 5,499 2%
Operating income Operating expenses2	10,186 10,303 (4,717) (4,731)	-1% 0%	20,489 20,594 -1% (9,448) (10,439) -9%
Profit before credit impairment and income tax Credit impairment charge	5,469 5,572 (479) (720)	-2% -33%	11,041 10,155 9% (1,199) (1,956) -39%
Profit before income tax Income tax expense Non-controlling interests	4,990 4,852 (1,456) (1,433) (7) (8)	3% 2% -13%	9,842 8,199 20% (2,889) (2,299) 26% (15) (11) 36%
Cash profit	3,527 3,411	3%	6,938 5,889 18%
Earnings Per Ordinary Share (cents) Reference Page Basic 37 Diluted 37	Half Year	Movt 3% 3%	Full Year
	Sep 17 Mar 17 120.4 116.7 115.2 111.9		Sep 17 Sep 16 Movt 237.1 202.6 17% 226.4 194.1 17%

			237.1
			226.4
Ordinary Share Dividends Ordinary share dividend payout ratio3	Reference Page 38	Half Year		Full Year
		Sep 17 Mar 17 66.6% 68.9%		Sep 17 Sep 16 67.7% 79.4%
Profitability Ratios Return on average ordinary shareholders' equity4 Return on average assets5 Net interest margin5,6	22	12.0% 11.8% 0.76% 0.75% 1.98% 2.00%		11.9% 10.3% 0.75% 0.65% 1.99% 2.07%
Efficiency Ratios Operating expenses to operating income2 Operating expenses to average assets2,5		46.3% 45.9% 1.02% 1.03%		46.1% 50.7% 1.03% 1.15%
Credit Impairment Charge/(Release) Individual credit impairment charge ($M) Collective credit impairment charge/(release) ($M)	30 30	554 787 (75) (67)		1,341 1,939 (142) 17
Total credit impairment charge ($M) 30 Individual credit impairment charge as a % of average gross loans and advances5 Total credit impairment charge as a % of average gross loans and advances5		479 720 0.19% 0.27% 0.16% 0.25%		1,199 1,956 0.23% 0.34% 0.21% 0.34%

1. Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the results of the ongoing business activities of the Group. Refer to pages 75 to 79 for the reconciliation between statutory and cash profit. Refer to pages 14 to 16 for information on large notable items included in cash profit.

2. In the March 2017 half year, 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 full year: $17 million).

3. Dividend payout ratio is calculated using the proposed 2017 final, 2017 interim, 2016 final, and 2016 interim dividends.

4. Average ordinary shareholders’ equity excludes non-controlling interests.

5. Loans and advances and average assets as at 30 September 2017 and 31 March 2017 include assets held for sale.

SUMMARY

Key Balance Sheet Metrics[1]

Key Balance Sheet Metrics1
Reference Page Capital Management Common Equity Tier 1 - APRA Basel 3 42 - Internationally Comparable Basel 32 42 Credit risk weighted assets ($B)3 104 Total risk weighted assets ($B)3 42 Leverage Ratio 46	As at Sep 17 Mar 17 Sep 16 10.6% 10.1% 9.6% 15.8% 15.2% 14.5% 336.8 341.8 352.0 391.1 397.0 408.6 5.4% 5.3% 5.3%	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -1% -4% -1% -4%
Balance Sheet: Key Items Gross loans and advances ($B) Net loans and advances ($B) Total assets ($B) Customer deposits ($B) Total equity ($B)	584.1 580.4 580.0 580.3 576.3 575.9 897.3 896.5 914.9 467.6 468.2 449.6 59.1 57.9 57.9	1% 1% 1% 1% 0% -2% 0% 4% 2% 2%
Liquidity Risk Reference Page Liquidity Coverage Ratio 40	Half Year Average Sep 17 Mar 17 Sep 16 135% 135% 125%	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 0% 10%
Reference Page Impaired Assets Gross impaired assets ($M) 32 Gross impaired assets as a % of gross loans and advances Net impaired assets ($M) 32 Net impaired assets as a % of shareholders' equity Individual provision ($M) 31 Individual provision as a % of gross impaired assets Collective provision ($M) 31 Collective provision as a % of credit risk weighted assets	As at Sep 17 Mar 17 Sep 16 2,384 2,940 3,173 0.41% 0.51% 0.55% 1,248 1,671 1,866 2.1% 2.9% 3.2% 1,136 1,269 1,307 47.7% 43.2% 41.2% 2,662 2,785 2,876 0.79% 0.81% 0.82%	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -19% -25% -25% -33% -10% -13% -4% -7%
Net Assets Net tangible assets attributable to ordinary shareholders ($B)4 Net tangible assets per ordinary share ($)	51.9 50.6 50.1 17.66 17.24 17.13	3% 4% 2% 3%

1. Balance Sheet amounts and metrics as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

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

3. Includes $25.9 billion increase in credit risk weighted assets associated with increased capital requirements for Australian residential mortgages introduced in July 2016.

4. Equals total shareholders’ equity less total preference share capital, non-controlling interests, goodwill and other intangible assets.

SUMMARY

Cash Profit Results – FX Adjusted

The following tables present the Group’s cash profit results neutralised for the impact of foreign currency translation. Comparative data has been adjusted to remove the translation impact of foreign exchange movements by retranslating prior period comparatives at current period foreign exchange rates. Refer to page 35 for further details on the impact of exchange rate movements.

Cash Profit - September 2017 Full Year vs September 2016 Full Year

Net interest income Other operating income	Full Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Sep 16 $M Sep 16 $M Sep 16 $M 14,872 15,095 (47) 15,048 5,617 5,499 (61) 5,438	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Sep 16 Sep 17 v. Sep 16 Sep 17 v. Sep 16 -1% 0% -1% 2% -1% 3%
Operating income Operating expenses	20,489 20,594 (108) 20,486 (9,448) (10,439) 75 (10,364)	-1% -1% 0% -9% 0% -9%
Profit before credit impairment and income tax Credit impairment charge	11,041 10,155 (33) 10,122 (1,199) (1,956) 17 (1,939)	9% 0% 9% -39% -1% -38%
Profit before income tax Income tax expense Non-controlling interests	9,842 8,199 (16) 8,183 (2,889) (2,299) (7) (2,306) (15) (11) - (11)	20% 0% 20% 26% 1% 25% 36% 0% 36%
Cash profit	6,938 5,889 (23) 5,866	18% 0% 18%

Cash Profit - September 2017 Half Year vs March 2017 Half Year

Net interest income Other operating income	Half Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Mar 17 $M Mar 17 $M Mar 17 $M 7,456 7,416 (34) 7,382 2,730 2,887 (23) 2,864	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Mar 17 Sep 17 v. Mar 17 Sep 17 v. Mar 17 1% 0% 1% -5% 0% -5%
Operating income Operating expenses	10,186 10,303 (57) 10,246 (4,717) (4,731) 23 (4,708)	-1% 0% -1% 0% 0% 0%
Profit before credit impairment and income tax Credit impairment charge	5,469 5,572 (34) 5,538 (479) (720) 2 (718)	-2% -1% -1% -33% 0% -33%
Profit before income tax Income tax expense Non-controlling interests	4,990 4,852 (32) 4,820 (1,456) (1,433) 9 (1,424) (7) (8) - (8)	3% -1% 4% 2% 0% 2% -13% 0% -13%
Cash profit	3,527 3,411 (23) 3,388	3% -1% 4%

Derivative valuation adjustments $M Equity accounted earnings SRCB & BOT $M Software capital- isation changes $M Asian minority valuation adjustments $M Restruct- uring $M Esanda Dealer Finance divestment $M Derivative CVA methodolo- gy change $M	- - - - - 31 - (102) 345 - (231) - 78 (237)	(102) 345 - (231) - 109 (237) - - (556) - (278) (17) -	(102) 345 (556) (231) (278) 92 (237) - - - - - (23) -	(102) 345 (556) (231) (278) 69 (237) 31 - 167 - 77 (24) 69 - - - - - - -	(71) 345 (389) (231) (201) 45 (168)	March 2017 Half Year	Derivative valuation adjustments $M Equity accounted earnings SRCB $M Sale of Asia Retail and Wealth businesses $M Gain on sale 100 Queen St, Melbourne $M	- - - - 162 58 (324) 114	162 58 (324) 114 - - - -	162 58 (324) 114 - - - -	162 58 (324) 114 (49) - 40 (2) - - - -	113 58 (284) 112
Cash profit $M	15,095 5,499	20,594 (10,439)	10,155 (1,956)	8,199 (2,299) (11)	5,889		Cash profit $M	7,416 2,887	10,303 (4,731)	5,572 (720)	4,852 (1,433) (8)	3,411
		229 (310) 58 114 - - - -	229 (310) 58 114 - - - -	229 (310) 58 114 (69) 40 - (2) - - - -	160 (270) 58 112	September 2017 Half Year Large/notable items included in cash profit Derivative valuation adjustments $M Sale of Asia Retail and Wealth businesses $M		- - 67 14	67 14 - -	67 14 - -	67 14 (20) - - -	47 14
Cash profit $M	14,872 5,617	20,489 (9,448)	11,041 (1,199)	9,842 (2,889) (15)	6,938		Cash profit $M	7,456 2,730	10,186 (4,717)	5,469 (479)	4,990 (1,456) (7)	3,527
		Operating income Operating expenses	Profit before credit impairment and income tax Credit impairment charge	Profit before income tax Income tax expense Non-controlling interests	Cash profit	Cash Profit Net interest income Other operating income Operating income Operating expenses Profit before credit impairment and income tax Credit impairment charge Profit before income tax Income tax expense Non-controlling interests Cash profit

SUMMARY

Large/notable items

Large/notable items included in cash profit are described below on a pre-tax basis.

Sales and investment related adjustments

Asian minority investments

Valuation adjustments

During the March 2016 half year, the Group recognised a $260 million impairment to its equity accounted investment in AMMB Holdings Berhad (AmBank) bringing the carrying value in line with its value-in-use calculation.
On 30 March 2016, Bank of Tianjin (BoT) completed a capital raising and listing on the Hong Kong Stock Exchange through an Initial Public Offering (IPO). As the Group did not participate in the capital raising, its ownership interest decreased from 14% to 12%. As a consequence, the Group ceased equity accounting for its investment in BoT and recognised a net gain of $29 million in relation to the remeasurement of the investment to fair value and recycling the associated equity accounted reserves.

The net impact of these valuation adjustments was $231 million in 2016.

Equity accounted earnings

On 30 March 2016, the Group ceased equity accounting for its investment in BoT as outlined above.
On 3 January 2017, the Group announced that it had agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB). As a consequence, the Group ceased equity accounting for its investment in SRCB from that date and commenced accounting for it as an asset held for sale.

A summary of the large/notable valuation and equity accounted earnings associated with Asian minority investments is shown in the table below. Equity accounted earnings for BoT and SRCB include equity accounted earnings from 1 October 2015 that will no longer form part of future cash profit results.

ofit results.
Sep-17 Full Year Mar-17 Half Year Sep-16 Full Year	Valuation adjustments AmBank $M BoT $M Total	Equity accounted earnings
		BoT $M SRCB $M Total
	- - - - - - (260) 29 (231)	- 58 58 - 58 58 86 259 345

• Sale of Asia Retail and Wealth businesses

The Group announced that it had agreed to sell Retail and Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to Singapore’s DBS Bank on 31 October 2016. As a result of the sale agreement, the Group recognised a $324 million charge to impair software, goodwill and fixed assets as well as providing for costs associated with the sale in the March 2017 half (refer Note 10). In the September 2017 half, a $14 million gain was recognised in relation to the sale.

At balance date, Asia Retail and Wealth businesses in China, Singapore and Hong Kong have transitioned to DBS. The remaining businesses in Taiwan and Indonesia will transition in early 2018. The transfer of Vietnam Retail to Shinhan Bank Vietnam will also be completed in early 2018.

Esanda Dealer Finance divestment

On 1 November 2015, the Group sold the Esanda Dealer Finance portfolio with the majority of the business transferred by 31 December 2015. Large/notable items include the gain on sale of the Esanda Dealer divestment of $66 million and earnings and expenses recognised from 1 October 2015 that will no longer form part of future cash profit results. The total pre-tax impact for the September 2016 full year is $69 million.

Derivative methodology change and valuation adjustments

• Derivative CVA methodology change

In determining the fair value of a derivative position, the Group recognises a CVA (credit valuation adjustment) to reflect the probability that the counterparty may default and the Group may not receive the full market value of outstanding transactions. It represents an estimate of the credit adjustment a market participant would include when deriving a purchase price to acquire the exposure. During the September 2016 half, the Group revised its methodology for determining the derivative credit valuation adjustment to make greater use of market information and enhanced modelling, and to align with leading market practice. The impact was a charge of $237 million in 2016.

Derivative valuation adjustments

In determining the fair value of derivative positions, adjustments are made to the risk free value to include factors such as the impact of credit and funding. The impact of valuation adjustments has increased significantly following the derivative CVA methodology change implemented in 2016 and changes previously made to align funding valuation adjustments (FVA) with emerging market practice. In the September 2017 half, a $67 million gain (Mar 17 half: $162 million gain) was recognised to reflect the impact of funding and credit valuation adjustments, net of associated hedges. A $229 million gain was recognised in the September 2017 full year. A $102 million loss was recognised in the September 2016 full year excluding the impact of the derivative CVA methodology change described above.

SUMMARY

Other large/notable items

Gain on sale of 100 Queen Street, Melbourne

The Group sold the 100 Queen Street office tower and former head office in Melbourne, Australia in the March 2017 half. The transaction resulted in a gain on sale of $114 million.

Software capitalisation changes

During the March 2016 half, the Group amended the application of the Group’s software capitalisation policy by increasing the threshold for capitalisation of software development costs to $20 million, reflecting the increasingly shorter useful life of smaller items of software, and directly expensing more project related costs. For software assets at 1 October 2015 with an original cost below the revised threshold, the carrying values were expensed through an accelerated amortisation charge of $556 million in the September 2016 full year (recognised in TSO and Group Centre).

• Restructuring

The Group accelerated the process of reshaping its workforce in 2016 to build a simpler, more agile bank. A restructuring expense of $278 million was recognised in the September 2016 full year and this is included as a large/notable item. Restructuring expenses of $62 million in the September 2017 full year (Sept 17 half: $26 million, Mar 17 half $36 million) are not considered to be large/notable.

SUMMARY

Full Time Equivalent Staff

As at 30 September 2017, ANZ employed 44,896 people worldwide (Mar 17: 46,046; Sep 16: 46,554) on a full-time equivalent basis ("FTEs").

Division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	Half Year Sep 17 Mar 17 Movt 11,387 11,447 -1% 4,754 4,899 -3% 6,207 6,250 -1% 2,110 2,114 0% 3,981 4,719 -16% 16,457 16,617 -1%	Full Year
		Sep 17 Sep 16 Movt 11,387 11,563 -2% 4,754 5,112 -7% 6,207 6,317 -2% 2,110 2,174 -3% 3,981 4,894 -19% 16,457 16,494 0%
Total	44,896 46,046 -2%	44,896 46,554 -4%
Average FTE	45,675 46,462 -2%	46,068 48,633 -5%
Geography Australia Asia Pacific, Europe & America New Zealand	Half Year Sep 17 Mar 17 Movt 19,667 19,722 0% 17,474 18,563 -6% 7,755 7,761 0%	Full Year
		Sep 17 Sep 16 Movt 19,667 19,957 -1% 17,474 18,728 -7% 7,755 7,869 -1%
Total	44,896 46,046 -2%	44,896 46,554 -4%

1. Full time equivalent staff have been restated to reflect organisational changes. The net impact of these organisational changes was a decrease in TSO and Group Centre of 8,012 FTE as at September 2016, offset by an FTE increase (reallocation) across other divisions. Nil impact to total Group FTE. Refer to page 50 for further details.

Other Non-Financial Information

Shareholder value - ordinary shares Share price ($) - high - low - closing Closing market capitalisation of ordinary shares ($B) Total shareholder returns (TSR)	Half Year Sep 17 Mar 17 Movt 32.95 32.44 2% 27.18 25.78 5% 29.60 31.82 -7% 86.9 93.4 -7% -1.8% 22.4% large	Full Year
		Sep 17 Sep 16 Movt 32.95 29.17 13% 25.78 21.86 18% 29.60 27.63 7% 86.9 80.9 7% 13.1% 9.2% 42%

Credit Ratings Moody's Investor Services Standard & Poor's Fitch Ratings	As at Sep 17
	Short-Term Long-Term Outlook P-1 Aa3 Stable A-1+ AA- Negative F1+ AA- Stable

SUMMARY

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GROUP RESULTS

Group Results

Cash Profit Net Interest Income Other Operating Income Operating Expenses Technology Infrastructure Spend Software Capitalisation Credit Risk Income Tax Expense Impact of Foreign Currency Translation Earnings Related Hedges Earnings per Share Dividends Economic Profit Condensed Balance Sheet Liquidity Risk Funding Capital Management Leverage Ratio Other Regulatory Developments

GROUP RESULTS

Non-IFRS Information

The Group provides additional measures of performance in the Consolidated Financial Report & Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in Australian Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when presenting this information.

Cash Profit

Cash profit represents ANZ’s preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory profit (refer to Definitions for further details). The adjustments made in arriving at cash profit are included in statutory profit which is in the process of being audited within the context of the Group’s Annual Report. Cash profit is not subject to review or audit by the external auditor. The external auditor has informed the Audit Committee that recurring adjustments have been determined on a consistent basis across each period presented, and the additional adjustments for the impact of the reclassification of Shanghai Rural Commercial Bank to held for sale in the March 2017 half, September 2017 half and September 2017 full year is appropriate.

The Group Results section is reported on a cash profit basis.

Statutory profit attributable to shareholders of the Company Adjustments between statutory profit and cash profit1 Treasury shares adjustment Revaluation of policy liabilities Economic hedges Revenue hedges Structured credit intermediation trades Reclassification of SRCB to held for sale	Half Year Sep 17 $M Mar 17 $M Movt 3,495 2,911 20% (18) 76 large (2) 36 large 31 178 -83% 6 (105) large (2) (1) 100% 17 316 -95%	Full Year
		Sep 17 $M Sep 16 $M Movt 6,406 5,709 12% 58 44 32% 34 (54) large 209 102 large (99) 92 large (3) (4) -25% 333 - n/a
Total adjustments between statutory profit and cash profit	32 500 -94%	532 180 large
Cash Profit	3,527 3,411 3%	6,938 5,889 18%

1. Refer to pages 75 to 79 for analysis of the adjustments between statutory profit and cash profit.

Group Performance - cash profit Net interest income Other operating income	Half Year Sep 17 $M Mar 17 $M Movt 7,456 7,416 1% 2,730 2,887 -5%	Full Year
		Sep 17 $M Sep 16 $M Movt 14,872 15,095 -1% 5,617 5,499 2%
Operating income Operating expenses	10,186 10,303 -1% (4,717) (4,731) 0%	20,489 20,594 -1% (9,448) (10,439) -9%
Profit before credit impairment and income tax Credit impairment charge	5,469 5,572 -2% (479) (720) -33%	11,041 10,155 9% (1,199) (1,956) -39%
Profit before income tax Income tax expense Non-controlling interests	4,990 4,852 3% (1,456) (1,433) 2% (7) (8) -13%	9,842 8,199 20% (2,889) (2,299) 26% (15) (11) 36%
Cash profit	3,527 3,411 3%	6,938 5,889 18%

Cash Profit/(Loss) By Division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	Half Year Sep 17 $M Mar 17 $M Movt 1,897 1,798 6% 815 1,021 -20% 692 677 2% 115 123 -7% 69 (217) large (61) 9 large	Full Year
		Sep 17 $M Sep 16 $M Movt 3,695 3,547 4% 1,836 1,041 76% 1,369 1,268 8% 238 324 -27% (148) 159 large (52) (450) -88%
Cash profit	3,527 3,411 3%	6,938 5,889 18%

GROUP RESULTS

Group Cash Profit – September 2017 Full Year v September 2016 Full Year

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September 2017 v September 2016

Cash profit increased 18% partly reflecting the impact of a number of large/notable items taken in 2016 and rigorous cost management in 2017.

Net interest income decreased $223 million (-1%) largely due to a 8 basis points decrease in the net interest margin, partially offset by 2% growth in average interest earning assets. The growth in average interest earning assets reflects ANZ’s strategic focus on home loans, in particular owner occupier, partially offset by reductions from Institutional portfolio rebalancing and the partial completion of the Asia Retail and Wealth sale. The lower net interest margin reflects the combined impact of deposit competition, growth in the liquidity portfolio and lower earnings on capital. This was partially offset by differentiated repricing in home loans across investor and owner occupier, principal and interest and interest only loans which on a net basis benefited margins. The major bank levy was introduced in 1 July 2017 which also reduced net interest income by $86 million.
Other operating income increased $118 million (+2%) benefiting from a net year on year change in derivative valuation adjustments of $331 million (Sept 17: $229 million gain; Sept 16: $102 million loss), an improvement in Markets income of $102 million, and the $114 million gain on sale of 100 Queen Street, Melbourne. Prior year comparatives include the adverse impact of Asian minority valuation adjustments of $231 million and the $237 million derivative CVA methodology change. Partly offsetting this, a number of sales related transactions had unfavourable impacts including a $310 million net charge related to the Asia Retail and Wealth sale, and $365 million loss of income from SRCB, BoT and Esanda Dealer Finance. There was a $186 million reduction in funds management and insurance income, and a $75 million decrease in net fee and commission income.
Operating expenses decreased $991 million (-9%) primarily due to the $556 million charge for software capitalisation policy changes and the $278 million charge for restructuring taken in 2016. Personnel expenses reduced by $363 million reflecting a 5% reduction in average FTE. Partly offsetting this are increases in underlying technology expenses of $55 million and increases in other expenses of $106 million as the result of non-lending losses and higher technology related consulting expenses.
Credit impairment charges decreased $757 million (-39%). Individual credit impairment charges decreased by $598 million (-31%) primarily the result of a benign credit environment. Collective impairment charges decreased by $159 million due to an improvement in the Group’s overall risk profile and portfolio rebalancing in Institutional, partially offset by economic overlay adjustments.
September 2017 v March 2017

Cash profit increased 3% compared with the March 2017 half.

Net interest income increased $40 million (+1%) as the result of a 1% increase in average interest earning assets, partially offset by a 2 basis point decrease in net interest margin. Average interest earning assets growth reflects ANZ’s strategic focus on home loans, partially offset by a reduction in Institutional due to portfolio rebalancing, and partial completion of the Asia Retail and Wealth sale. The net margin decrease was driven by growth in the liquidity portfolio, lower earnings on capital, partially offset by improved asset and deposit margins. The major bank levy was introduced in July 2017 which reduced net interest income by $86 million.
Other operating income decreased $157 million (-5%) primarily the result of lower derivatives valuation adjustments of $95 million, a reduction in Markets underlying income of $241 million and cessation of equity accounting for SRCB of $58 million. In the March 2017 half, the Group recognised a $114 million gain on sale of 100 Queen Street, Melbourne, offset against by a net $310 million charge related to the Asia Retail and Wealth sale.
Operating expenses decreased $14 million (0%) driven by a $118 million reduction in personnel expenses resulting from a 2% reduction in average FTE. Other expenses increased $113 million due to higher technology related consulting expenses.
Credit impairment charges decreased $241 million (-33%). Individual credit impairment charges decreased by $233 million (-30%) due to a $243 million decrease in Institutional driven by lower provisions and higher write-backs. Collective impairment charges decreased $8 million driven by an improvement in the Group’s overall risk profile, portfolio rebalancing in Institutional, and the net movement in the economic overlay adjustment.

GROUP RESULTS

Net interest income

In the March 2017 half, the Group changed its calculation of net interest margin to net home loan deposit offset balances against total interest earning assets. The revised calculation is in line with other major banks. Originally reported net interest margin (Sep 16 full year: 2.00%) and total average interest earning assets (Sep 16 full year: $754,160 million) have been restated accordingly.

Group Cash net interest income1 Average interest earning assets2,3 Average deposits and other borrowings3 Net interest margin (%) - cash2	Half Year Sep 17 $M Mar 17 $M Movt 7,456 7,416 1% 752,073 743,906 1% 603,019 597,337 1% 1.98 2.00 -2 bps	Full Year
		Sep 17 $M Sep 16 $M Movt 14,872 15,095 -1% 748,000 730,835 2% 600,186 586,453 2% 1.99 2.07 -8 bps
Group (excluding Markets) Cash net interest income1 Average interest earning assets2,3 Average deposits and other borrowings3 Net interest margin (%) - cash2	7,014 6,938 1% 536,939 538,598 0% 454,934 452,671 0% 2.61 2.58 3 bps	13,952 14,063 -1% 537,766 533,447 1% 453,805 453,280 0% 2.59 2.64 -5 bps

Cash profit net interest margin by major division Australia1 Net interest margin (%)2 Average interest earning assets2 Average deposits and other borrowings Institutional Net interest margin (%) Average interest earning assets Average deposits and other borrowings New Zealand1 Net interest margin (%) Average interest earning assets3 Average deposits and other borrowings3	Half Year Sep 17 $M Mar 17 $M Movt 2.68 2.69 -1 bps 316,412 308,391 3% 198,826 193,671 3% 0.96 1.05 -9 bps 306,863 302,578 1% 247,128 242,402 2% 2.31 2.30 1 bps 108,763 109,664 -1% 78,747 79,190 -1%	Full Year
		Sep 17 $M Sep 16 $M Movt 2.68 2.75 -7 bps 312,412 298,764 5% 196,256 183,196 7% 1.01 1.13 -12 bps 304,727 305,446 0% 244,772 232,959 5% 2.31 2.37 -6 bps 109,212 103,166 6% 78,968 75,418 5%

1. Cash net interest income includes income relating to assets held for sale and income earned on assets prior to divestment.

2. In the March 2017 half, the Group changed its calculation of net interest margin to net Australian home loan deposit offset balances against total average interest earning assets (Mar 17 half: $24,979 million; Sep 16 full year: $23,325 million).

3. Average Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

Group net interest margin – September 2017 Full Year v September 2016 Full Year

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GROUP RESULTS

September 2017 v September 2016

Net interest margin (-8 bps)

Asset mix and funding mix (+1 bps): favourable mix impact from a lower proportion of wholesale funding and run-off of lower margin lending products in Institutional, partially offset by the adverse mix impact from growth in Australia home loans.
Funding costs (-2 bps): impact of higher hybrid and subordinated debt and the introduction of the major bank levy.
Deposit competition (-3 bps): lower margin from increased competition in Australia and New Zealand, partially offset by improved margins in Asia.
Asset competition and risk mix (+4 bps): increase driven by Australian and New Zealand home loans repricing.
Markets and treasury (-8 bps): adverse impact to earnings on capital as the result of lower interest rates, growth in the liquidity portfolio and lower earnings from markets activities.

Average interest earning assets (+$17.2 billion or +2%)

Average gross loans and advances (+$6.1 billion or +1%): excluding the impact of foreign currency translation, the increase was +$7.4 billion (+1%) driven by growth in Australia and New Zealand home loans, partially offset by a decline in Institutional due to portfolio rebalancing, and the partial completion of the Asia Retail and Wealth sale.
Average trading and available-for-sale assets (+$5.7 billion or +6%): excluding the impact of foreign currency translation, the increase was +$6.5 billion (+7%) driven by growth in the liquidity portfolio.
Average cash and other liquids (+$5.2 billion or +7%): excluding the impact of foreign currency translation, the increase was +$6.8 billion (+9%) driven by liquidity management requirements, market volatility and volume of derivative transactions.

Average deposits and other borrowings (+$13.7 billion or +2%)

Average deposits and other borrowings (+$13.7 billion or +2%): excluding the impact of foreign currency translation, the increase was +$18.0 billion (+3%) driven by growth in customer deposits across Australia, New Zealand and Institutional divisions, partially offset by a decline of deposits and other borrowings in Treasury, as well as the partial completion of the Asia Retail and Wealth sale.

Group net interest margin – September 2017 Half Year v March 2017 Half Year

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September 2017 v March 2017

Net interest margin (-2 bps)

Asset mix and funding mix (+1 bps): favourable mix impact from a higher proportion of capital, partially offset by the adverse mix impact from growth in Australian home loans.
Funding costs (-1 bps): adverse impact due to the introduction of the major bank levy.
Deposit competition (+1 bps): improved deposit margins in Australia, partially offset by lower margins in New Zealand.
Asset competition and risk mix (+1 bps): driven by Australian and New Zealand home loan repricing, partially offset by lower Institutional and lending margins.
Markets and treasury (-4 bps): adverse impact to earnings on capital as the result of lower interest rates, growth in the liquidity portfolio and lower earnings from markets activities.

GROUP RESULTS

Average interest earning assets (+$8.2 billion or +1%)

Average gross loans and advances (+$2.6 billion or +1%): excluding the impact of foreign currency translation, the increase was +$4.9 billion (+1%), driven by growth in Australia and New Zealand home loans, partially offset by a decline in Institutional due to portfolio rebalancing, and the partial completion of the Asia Retail and Wealth sale.
Average trading and available for sale assets (+$1.7 billion or +2%): excluding the impact of foreign currency translation, the increase was +$2.4 billion (+2%) driven by growth in liquidity portfolio.
Average cash and other liquids (+$3.9 billion or +5%): excluding the impact of foreign currency translation, the increase was +$4.9 billion (+6%) driven by liquidity management requirements, market volatility and derivative transaction volumes.

Average deposits and other borrowings (+$5.7 billion or +1%)

Average deposits and other borrowings (+$5.7 billion or +1%): excluding the impact of foreign currency translation, the increase was +$9.6 billion (+2%) driven by growth in customer deposits across Australia and Institutional divisions, partially offset by the partial completion of the Asia Retail and Wealth sale.

GROUP RESULTS

Other operating income

Net fee and commission income1 Net funds management and insurance income1 Markets other operating income2 Share of associates' profit1 Other1, 3	Half Year Sep 17 $M Mar 17 $M Movt 1,185 1,177 1% 664 668 -1% 550 886 -38% 127 173 -27% 204 (17) large	Full Year
		Sep 17 $M Sep 16 $M Movt 2,362 2,437 -3% 1,332 1,518 -12% 1,436 766 87% 300 544 -45% 187 234 -20%
Cash other operating income	2,730 2,887 -5%	5,617 5,499 2%

Markets income Net interest income Other operating income2	Half Year Sep 17 $M Mar 17 $M Movt 442 478 -8% 550 886 -38%	Full Year
		Sep 17 $M Sep 16 $M Movt 920 1,032 -11% 1,436 766 87%
Cash Markets income	992 1,364 -27%	2,356 1,798 31%

Other operating income by division Australia Institutional2 New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre3	Half Year Sep 17 $M Mar 17 $M Movt 616 602 2% 989 1,357 -27% 336 317 6% 538 539 0% 176 (139) large 75 211 -64%	Full Year
		Sep 17 $M Sep 16 $M Movt 1,218 1,206 1% 2,346 1,733 35% 653 644 1% 1,077 1,244 -13% 37 478 -92% 286 194 47%
Cash other operating income	2,730 2,887 -5%	5,617 5,499 2%

1. Excluding Markets.

2. Markets other operating income for the September 2016 full year includes a charge of $237 million related to the derivative CVA methodology change.

3. Other income for the September 2017 full year includes the $324 million charge related to the sale of Asia Retail and Wealth businesses, and the $114 million gain on sale of 100 Queen Street, Melbourne. The September 2016 full year includes the $260 million impairment of the investment in AmBank, the $29 million gain on cessation of equity accounting of BoT, and the $66 million gain on the Esanda Dealer Finance divestment.

Other operating income – September 2017 Full Year v September 2016 Full Year

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September 2017 v September 2016

Other operating income Increased by $118 million (+2%). Key drivers:

Net fee and commission income (-$75 million or -3%)

$70 million decrease in the Asia Retail and Pacific division as the result of lower performance and partial sale completion.
$56 million decrease in Institutional primarily due to portfolio rebalancing.
$40 million increase in Australia division primarily due to growth in Small Business and Deposits.

Net funds management and insurance income (-$186 million or -12%)

$163 million decrease in Wealth Australia primarily due to adverse retail life claims, reduced fee income as expected from ongoing rationalisation of legacy investment platforms to SmartChoice, lower income on invested capital, partially offset by favourable Lenders Mortgage Insurance experience.
$37 million decrease in the Asia Retail and Pacific division as the result of lower performance and partial sale completion.

GROUP RESULTS

Cash Markets income (+$558 million or +31%)

Excluding the $237 million charge relating to the derivative CVA methodology change in 2016, Cash Markets income increased $321 million:
$244 million increase in Balance Sheet Trading driven by tighter credit spreads which generated mark to market gains in the March 2017 half, as well as increased income from higher average liquidity portfolio holdings throughout 2017.
$227 million increase in Franchise Trading primarily attributable to a $229 million gain associated with derivative credit and funding valuation adjustments, net of associated hedges which benefitted from decreasing credit spreads and increasing yield curves. Favourable trading conditions seen in 2016 continued in the March 2017 half post the US election, however became more subdued in the September 2017 half.
$150 million decrease in Franchise Sales due to the impact of business transformational initiatives (client and product rationalisation to align to Institutional strategy, reduce risk exposures and improve returns) and market conditions limiting client activity particularly for longer tenor hedging as a result of low FX volatility and the low interest rate environment.

Share of associates’ profit (-$244 million or -45%)

$287 million decrease due to cessation of equity accounting for BoT from March 2016 and SRCB from January 2017.
$44 million net increase in profits from associates of which $38 million relates to P.T. Bank Pan Indonesia.

Other (-$47 million or -20%)

$310 million decrease as a result of the reclassification to held for sale and partial completion of the Asia Retail and Wealth sale.
$66 million decrease due to the Esanda Dealer Finance gain on divestment taken in the March 2016 half.
$231 million increase due to the Asian minority valuations adjustments in the March 2016 half.
$114 million increase due to the gain on sale of 100 Queen Street, Melbourne.
September 2017 v March 2017

Other operating income decreased by $157 million (-5%). Key drivers:

Net fee and commission income (+$8 million or +1%)

$19 million increase in the New Zealand division as the result of renewed card scheme incentives.
$19 million decrease in Institutional primarily due to portfolio rebalancing.

Net funds management and insurance income (-$4 million or -1%)

Cash Markets income (-$372 million or -27%)

$261 million decrease in Franchise Trading attributable to a $95 million reduction in derivative credit and funding valuation adjustments, net of associated hedges, following significant gains in the March 2017 half and more challenging trading conditions compared to the previous eighteen months.
$78 million decrease in Balance Sheet Trading with lower mark to market gains associated with credit spreads movements.
$33 million decrease in Franchise Sales as the impact of business transformational initiatives moderated in the September 2017 half, however benign market conditions continued as the low interest rate environment persisted.

Share of associates’ profit (-$46 million or -27%)

$58 million loss of income due to cessation of equity accounting for SRCB from January 2017.
$12 million net increase in profits from associates of which $9 million relates to Metrobank Card Corporation.

Other (+$221 million)

$324 million increase as the result of the reclassification of Asia Retail and Wealth businesses to held for sale in the March 2017 half, partially offset by a $14 million gain recognised in relation to the sale in the September 2017 half.
$26 million increase as the result of a dividend received from Bank of Tianjin.
$114 million decrease as a result of the gain on sale of 100 Queen Street, Melbourne recognised in the March 2017 half.

GROUP RESULTS

Operating Expenses

Personnel expenses Premises expenses Technology expenses1 Restructuring expenses Other expenses	Half Year Sep 17 $M Mar 17 $M Movt 2,530 2,648 -4% 454 457 -1% 835 831 0% 26 36 -28% 872 759 15%	Full Year
		Sep 17 $M Sep 16 $M Movt 5,178 5,541 -7% 911 928 -2% 1,666 2,167 -23% 62 278 -78% 1,631 1,525 7%
Total cash operating expenses	4,717 4,731 0%	9,448 10,439 -9%
Full time equivalent staff (FTE) Average full time equivalent staff (FTE)	44,896 46,046 -2% 45,675 46,462 -2%	44,896 46,554 -4% 46,068 48,633 -5%

1. Technology expenses include a $556 million charge associated with accelerated amortisation from the software capitalisation policy changes in the September 2016 full year. Refer to page 14 for further details.

Expenses by division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	Half Year Sep 17 $M Mar 17 $M Movt 1,730 1,693 2% 1,357 1,379 -2% 593 600 -1% 373 370 1% 298 353 -16% 366 336 9%	Full Year
		Sep 17 $M Sep 16 $M Movt 3,423 3,426 0% 2,736 2,958 -8% 1,193 1,225 -3% 743 801 -7% 651 808 -19% 702 1,221 -43%
Total cash operating expenses	4,717 4,731 0%	9,448 10,439 -9%

Operating expenses – September 2017 Full Year v September 2016 Full Year

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September 2017 v September 2016

Operating expenses decreased by $991 million (-9%) reflecting a number of large/notable items taken in 2016.

Personnel expenses decreased $363 million (-7%) due to a 5% reduction in average FTE partially offset by wage inflation.
Technology expenses decreased $501 million (-23%) primarily as the result of the software capitalisation policy charge of $556 million recognised in 2016. Excluding this, Technology expenses increased $55 million (+3%) due to investment in future growth and productivity initiatives.
Restructuring expenses decreased $216 million (-78%) with larger investment in 2016 at the reset of the Group’s strategy.
Other expenses increased $106 million (+7%) due to non-lending losses and higher technology related consulting expenses.
September 2017 v March 2017

Operating expenses decreased by $14 million.

Personnel expenses decreased $118 million (-4%) mainly due to a 2% reduction in average FTE.
Other expenses increased $113 million (+15%) due to higher technology related consulting expenses.

GROUP RESULTS

Technology infrastructure spend

Technology infrastructure spend includes expenditure that develops and enhances the Group's technology infrastructure to meet business and strategic objectives and to improve capability and efficiency. Investment is categorised based on primary objective but may contibute to multiple investment categories. Digital and data spend has predominantly been classified as Productivity. The analysis below aggregates all projects over $1 million. Spend on projects less than $1 million was $166 million in the September 2017 full year (Sep 17 half $82 million; Mar 17 half $84 million).

Expensed investment spend Capitalised investment spend	Half Year Sep 17 $M Mar 17 $M Movt 323 225 44% 227 160 42%	Full Year
		Sep 17 $M Sep 16 $M Movt 548 526 4% 387 400 -3%
Technology infrastructure spend	550 385 43%	935 926 1%
Comprising Growth Productivity Risk and compliance Infrastructure and other	Half Year Sep 17 $M Mar 17 $M Movt 163 122 34% 127 83 53% 127 101 26% 133 79 68%	Full Year
		Sep 17 $M Sep 16 $M Movt 285 333 -14% 210 171 23% 228 229 0% 212 193 10%
Technology infrastructure spend	550 385 43%	935 926 1%

Technology infrastructure spend breakdown:

September 2017 v September 2016: Investment spend increased marginally, with a 23% increase in productivity spend offset by a 14% reduction in growth spend. Investments included frontline and digital customer solutions to improve banker and customer experience.
September 2017 v March 2017: Investment spend increased significantly in the September 2017 half due to increased investment in technology maintenance and infrastructure projects, frontline and digital customer solutions to improve banker and customer experience.

Sep-17 $M

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Technology infrastructure spend by division Australia Institutional New Zealand Asia Retail & Pacific Wealth Australia TSO and Group Centre	Half Year Sep 17 $M Mar 17 $M Movt 197 130 52% 104 60 73% 35 31 13% 2 1 100% 22 25 -12% 190 138 38%	Full Year
		Sep 17 $M Sep 16 $M Movt 327 274 19% 164 175 -6% 66 75 -12% 3 7 -57% 47 69 -32% 328 326 1%
Technology infrastructure spend	550 385 43%	935 926 1%

GROUP RESULTS

Software capitalisation

As at 30 September 2017, the Group’s intangible assets included $1,860 million of costs incurred to acquire and develop software. Details are set out in the table below:

the table below:
Balance at start of period Software capitalised during the period Amortisation during the period - Current period amortisation - Accelerated amortisation Software impaired/written-off - Reclassification of Asia Retail and Wealth to held for sale1 - Other Foreign exchange differences	Half Year Sep 17 $M Mar 17 $M Movt 1,922 2,202 -13% 232 172 35% (272) (295) -8% - - n/a - (154) -100% (16) (1) large (6) (2) large	Full Year
		Sep 17 $M Sep 16 $M Movt 2,202 2,893 -24% 404 431 -6% (567) (500) 13% - (556) -100% (154) (4) large (17) (23) -26% (8) (39) -79%
Total capitalised software	1,860 1,922 -3%	1,860 2,202 -16%
Net book value by Division Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific1 TSO and Group Centre	Half Year Sep 17 $M Mar 17 $M Movt 441 459 -4% 559 608 -8% 24 26 -8% 17 19 -11% - - n/a 819 810 1%	Full Year
		Sep 17 $M Sep 16 $M Movt 441 488 -10% 559 782 -29% 24 27 -11% 17 20 -15% - 63 -100% 819 822 0%
Total	1,860 1,922 -3%	1,860 2,202 -16%

1. Reclassification of Asia Retail and Wealth to held for sale includes impairment of software supporting both the Institutional and Asia Retail and Wealth businesses. Only components relating to the Asia Retail and Wealth businesses have been impaired which were recorded on the Institutional and Asia Retail and Pacific balance sheet. These impairment charges are recognised as other operating income in the Condensed Consolidated Income Statement.

GROUP RESULTS

Credit risk

Credit risk
Division Australia Institutional New Zealand Asia Retail & Pacific TSO and Group Centre	Full Year Sep 17 Individual charge $M Collective charge $M Total charge $M 883 14 897 177 (97) 80 116 (38) 78 165 (21) 144 - - -	Full Year Sep 16 Individual charge $M Collective charge $M Total charge $M 898 22 920 776 (33) 743 104 16 120 161 11 172 - 1 1	Movement
			Sep 17 v. Sep 16
			Individual charge % Collective charge % Total charge % -2% -36% -3% -77% large -89% 12% large -35% 2% large -16% n/a -100% -100%
Total	1,341 (142) 1,199	1,939 17 1,956	-31% large -39%

Division Australia Institutional New Zealand Asia Retail & Pacific TSO and Group Centre	Half Year	Half Year	Movement
	Sep 17	Mar 17	Sep 17 v. Mar 17
	Individual charge $M Collective charge $M Total charge $M	Individual charge $M Collective charge $M Total charge $M 430 42 472 210 (85) 125 61 (24) 37 86 (11) 75 - 11 11	Individual charge % Collective charge % Total charge % 5% large -10% large -86% large -10% -42% 11% -8% -9% -8% n/a large large
	453 (28) 425
	(33) (12) (45)
	55 (14) 41
	79 (10) 69
	- (11) (11)
Total	554 (75) 479	787 (67) 720	-30% 12% -33%

Individual credit impairment charge

Individual credit impairment charge
New and increased individual credit impairments Australia Institutional New Zealand Asia Retail & Pacific	Half Year Sep 17 $M Mar 17 $M Movt 641 617 4% 101 299 -66% 109 102 7% 97 104 -7%	Full Year
		Sep 17 $M Sep 16 $M Movt 1,258 1,223 3% 400 846 -53% 211 202 4% 201 201 0%
New and increased individual credit impairments	948 1,122 -16%	2,070 2,472 -16%
Recoveries and write-backs Australia Institutional New Zealand Asia Retail & Pacific	(188) (187) 1% (134) (89) 51% (54) (41) 32% (18) (18) 0%	(375) (325) 15% (223) (70) large (95) (98) -3% (36) (40) -10%
Recoveries and write-backs	(394) (335) 18%	(729) (533) 37%
Total individual credit impairment charge	554 787 -30%	1,341 1,939 -31%

• September 2017 v September 2016

The individual credit impairment charge decreased $598 million (-31%) driven by a $402 million (-16%) decrease in new and existing provisions predominantly in Institutional largely arising from portfolio rebalancing, combined with a $196 million (+37%) increase in recoveries and write-backs in Australia and Institutional divisions from better than expected outcomes in impaired asset workouts.

• September 2017 v March 2017

The individual credit impairment charge decreased $233 million (-30%) driven primarily by a $243 million decrease in Institutional due to lower new individual provisions from portfolio rebalancing and higher write-backs and recoveries. This is partially offset by an increase of $23 million (+5%) in the Australia division driven by Retail and Small Business portfolios.

GROUP RESULTS

Collective credit impairment charge

Collective credit impairment charge
Collective credit impairment charge/(release) by source Lending growth Risk profile Economic cycle adjustment	Half Year Sep 17 $M Mar 17 $M Movt (18) (30) -40% (91) (78) 17% 34 41 -17%	Full Year
		Sep 17 $M Sep 16 $M Movt (48) (3) large (169) 20 large 75 - n/a
Total collective credit impairment charge/(release)	(75) (67) 12%	(142) 17 large

• September 2017 v September 2016

The collective credit impairment charge decreased $159 million driven by a reduction in Institutional due to portfolio rebalancing, and further improvement in the Institutional and New Zealand divisional risk profile. This was partially offset by an economic overlay adjustment of $75 million.

• September 2017 v March 2017

The collective credit impairment release increased $8 million, driven by continued portfolio contraction in Institutional due to portfolio rebalancing, further risk profile improvement across all divisions, and a net movement in the economic overlay adjustment.

Provision for credit impairment

Division Australia Institutional New Zealand Asia Retail & Pacific TSO and Group Centre	As at Sep 17 Individual provision $M Collective provision $M1 Total provision $M 703 1,202 1,905 282 1,004 1,286 131 323 454 20 130 150 - 3 3	As at Sep 16 Individual provision $M Collective provision $M1 Total provision $M 606 1,188 1,794 569 1,115 1,684 117 374 491 15 196 211 - 3 3	Movement
			Sep 17 v. Sep 16
			Individual provision % Collective provision % Total provision % 16% 1% 6% -50% -10% -24% 12% -14% -8% 33% -34% -29% n/a 0% 0%
Total	1,136 2,662 3,798	1,307 2,876 4,183	-13% -7% -9%

Division Australia Institutional New Zealand Asia Retail & Pacific TSO and Group Centre	As at Sep 17 Individual provision $M Collective provision $M1 Total provision $M 703 1,202 1,905 282 1,004 1,286 131 323 454 20 130 150 - 3 3	As at Mar 17 Individual provision $M Collective provision $M1 Total provision $M 647 1,230 1,877 470 1,024 1,494 135 335 470 17 182 199 - 14 14	Movement
			Sep 17 v. Mar 17
			Individual provision % Collective provision % Total provision % 9% -2% 1% -40% -2% -14% -3% -4% -3% 18% -29% -25% n/a -79% -79%
Total	1,136 2,662 3,798	1,269 2,785 4,054	-10% -4% -6%

1. The collective provision includes amounts for off-balance sheet credit exposures of $544 million as at 30 September 2017 (Mar 17 half : $574 million; Sep 16 full year: $631 million). The impact on the Income Statement for the full year ended 30 September 2017 was a $66 million release (Mar 17 half: $46 million release; Sep 16 full year: $32 million release).

GROUP RESULTS

Group Expected Loss

Management believe that disclosure of modelled expected loss data for individual provisions assists in assessing the longer term expected loss rates of the lending portfolio as it removes the volatility of reported earnings created by the use of accounting losses. The expected loss methodology is used internally for return on equity analysis and economic profit reporting.

Asia Retail and Wealth

ANZ announced the sale of six Asia Retail and Wealth businesses in 2017, of which three are now completed with the remainder to occur in first half 2018.
The increase in Asia Retail and Wealth expected loss reflects the partial completion of the sale of those businesses with the countries to be completed having proportionally higher unsecured lending (primarily credit cards).

Expected loss as a % of gross lending assets Australia New Zealand Institutional Subtotal Asia Retail	As at
	Sep 17 Sep 16 0.33% 0.33% 0.22% 0.26% 0.30% 0.35% 0.31% 0.33% 2.67% 1.51%
Total	0.32% 0.35%

Gross Impaired Assets[1]

Impaired loans Restructured items2 Non-performing commitments and contingencies	As at Sep 17 $M Mar 17 $M Sep 16 $M 2,118 2,478 2,646 167 367 403 99 95 124	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -15% -20% -54% -59% 4% -20%
Gross impaired assets Individual provisions Impaired loans Non-performing commitments and contingencies	2,384 2,940 3,173 (1,118) (1,253) (1,278) (18) (16) (29)	-19% -25% -11% -13% 13% -38%
Net impaired assets	1,248 1,671 1,866	-25% -33%
Gross impaired assets by division Australia Institutional New Zealand Asia Retail & Pacific	1,310 1,227 1,170 624 1,061 1,405 307 409 346 143 243 252	7% 12% -41% -56% -25% -11% -41% -43%
Gross impaired assets	2,384 2,940 3,173	-19% -25%
Gross impaired assets by size of exposure Less than $10 million $10 million to $100 million Greater than $100 million	1,622 1,724 1,784 655 1,106 899 107 110 490	-6% -9% -41% -27% -3% -78%
Gross impaired assets	2,384 2,940 3,173	-19% -25%

1. Loans and advances as at 30 September 2017 and 31 March 2017 include assets held for sale.

2. Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.

• September 2017 v September 2016

Gross impaired assets decreased $789 million (-25%) driven by Institutional (-$781 million) and New Zealand (-$39 million) divisions due to higher repayments and upgrades on a small number of large exposures, and Asia Retail and Pacific division (-$109 million) due to the partial completion of the Asia Retail and Wealth sale. This was partially offset by an increase in the Australia division (+$140 million) driven by Corporate Banking, Small Business Banking and home loan portfolios. The Group’s individual provision coverage ratio on impaired assets was 47.7% at 30 September 2017 (Sep 16: 41.2%).

• September 2017 v March 2017

Gross impaired assets decreased $556 million (-19%) driven by Institutional (-$437 million) and New Zealand (-$102 million) divisions with higher repayments and upgrades on a small number of large exposures, combined with Asia Retail and Pacific division (-$100 million) due to the partial completion of the Asia Retail and Wealth sale. This was partially offset by an increase in Australia (+$83 million) driven by Corporate Banking, Small Business Banking and home loan portfolios. The Group’s individual provision coverage ratio on impaired assets was 47.7% at 30 September 2017 (Mar 17: 43.2%).

GROUP RESULTS

New Impaired Assets[1]

New Impaired Assets1
Impaired loans Restructured items Non-performing commitments and contingencies	Half Year Sep 17 $M Mar 17 $M Movt 1,315 1,637 -20% 21 88 -76% 89 62 44%	Full Year
		Sep 17 $M Sep 16 $M Movt 2,952 3,267 -10% 109 274 -60% 151 87 74%
Total new impaired assets	1,425 1,787 -20%	3,212 3,628 -11%
New impaired assets by division Australia Institutional New Zealand Asia Retail & Pacific	844 816 3% 269 547 -51% 216 296 -27% 96 128 -25%	1,660 1,704 -3% 816 1,151 -29% 512 484 6% 224 289 -22%
Total new impaired assets	1,425 1,787 -20%	3,212 3,628 -11%

• September 2017 v September 2016

New impaired assets decreased $416 million (-11%) primarily driven by Institutional as the result of an improved risk profile from portfolio rebalancing.

• September 2017 v March 2017

New impaired assets decreased by $362 million (-20%) primarily driven by lower new impairments for Institutional as the result of an improved risk profile from portfolio rebalancing, and New Zealand Commercial and Agri.

Ageing analysis of net loans and advances that are past due but not impaired

1-29 days 30-59 days 60-89 days >90 days	As at Sep 17 $M Mar 17 $M Sep 16 $M 8,790 9,123 7,966 2,143 2,355 1,910 1,148 1,148 1,070 2,953 2,771 2,703	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -4% 10% -9% 12% 0% 7% 7% 9%
Total	15,034 15,397 13,649	-2% 10%

1. Loans and advances as at 30 September 2017 and 31 March 2017 include assets held for sale.

• September 2017 v September 2016

The 90 days past due but not impaired increased $250 million (+9%) primarily in Australia division due to growth in the home loan portfolio and portfolio deterioration mainly in Western Australia.

• September 2017 v March 2017

The 90 days past due but not impaired increased $182 million (+7%) primarily in Australia division due to growth in the home loan portfolio and portfolio deterioration mainly in Western Australia.

GROUP RESULTS

Income tax expense

Income tax expense on cash profit Effective tax rate (cash profit)	Half Year Sep 17 $M Mar 17 $M Movt 1,456 1,433 2% 29.2% 29.5%	Full Year
		Sep 17 $M Sep 16 $M Movt 2,889 2,299 26% 29.4% 28.0%

• September 2017 v September 2016

The effective tax rate has increased from 28.0% to 29.4%. The 140 basis point increase is primarily due to a reduction in equity accounted earnings (+106 bps) and the non-recurrence of a tax provision release in the prior year (+87 bps). This is partially offset by the non-tax deductible impairment of AmBank recognised in the March 2016 half (-95 bps).

• September 2017 v March 2017

The effective tax rate has decreased from 29.5% to 29.2%. The 30 basis point decrease is primarily due to increased offshore earnings in the September 2017 half which attract a lower average tax rate. Offshore earnings in the March 2017 half are impacted by the reclassification of Asia Retail and Wealth businesses to held for sale.

GROUP RESULTS

Impact of foreign currency translation

The following tables present the Group’s cash profit results and net loans and advances neutralised for the impact of foreign currency translation. Comparative data has been adjusted to remove the translation impact of foreign currency movements by retranslating prior period comparatives at current period foreign exchange rates.

Cash Profit - September 2017 Full Year vs September 2016 Full Year

Net interest income Other operating income	Full Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Sep 16 $M Sep 16 $M Sep 16 $M 14,872 15,095 (47) 15,048 5,617 5,499 (61) 5,438	Movement FX unadjusted FX impact FX adjusted Sep 17 v. Sep 16 Sep 17 v. Sep 16 Sep 17 v. Sep 16 -1% 0% -1% 2% -1% 3%
Operating income Operating expenses	20,489 20,594 (108) 20,486 (9,448) (10,439) 75 (10,364)	-1% -1% 0% -9% 0% -9%
Profit before credit impairment and income tax Credit impairment charge	11,041 10,155 (33) 10,122 (1,199) (1,956) 17 (1,939)	9% 0% 9% -39% -1% -38%
Profit before income tax Income tax expense Non-controlling interests	9,842 8,199 (16) 8,183 (2,889) (2,299) (7) (2,306) (15) (11) - (11)	20% 0% 20% 26% 1% 25% 36% 0% 36%
Cash profit	6,938 5,889 (23) 5,866	18% 0% 18%

Cash Profit by Division - September 2017 Full Year vs September 2016 Full Year

Cash Profit by Division - September 2017 Full Year vs	September 2016 Full Year
Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	Full Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Sep 16 $M Sep 16 $M Sep 16 $M 3,695 3,547 - 3,547 1,836 1,041 (12) 1,029 1,369 1,268 9 1,277 238 324 (1) 323 (148) 159 (3) 156 (52) (450) (16) (466)	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Sep 16 Sep 17 v. Sep 16 Sep 17 v. Sep 16 4% 0% 4% 76% -2% 78% 8% 1% 7% -27% -1% -26% large 2% large -88% 1% -89%
Cash profit by division	6,938 5,889 (23) 5,866	18% 0% 18%

Net loans and advances by Division - September 2017 vs September 2016

	As at Actual FX unadjusted FX impact FX adjusted Sep 17 $B Sep 16 $B Sep 16 $B Sep 16 $B	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Sep 16 Sep 17 v. Sep 16 Sep 17 v. Sep 16 6% 0% 6%
Australia	345.4 327.1 - 327.1
Institutional	119.6 125.9 (1.9) 124.0	-5% -1% -4%
New Zealand1	107.9 107.9 (3.8) 104.1	0% -4% 4%
Wealth Australia	1.7 2.0 - 2.0	-15% 0% -15%
Asia Retail & Pacific1	5.7 13.4 (0.3) 13.1	-57% -1% -56%
TSO and Group Centre	- (0.4) - (0.4)	-100% 0% -100%
Net loans and advances by division1	580.3 575.9 (6.0) 569.9	1% -1% 2%

1. Net loans and advances as at 30 September 2017 and 31 March 2017 include net loans and advances held for sale.

GROUP RESULTS

Cash Profit - September 2017 Half Year vs March 2017 Half Year

Net interest income Other operating income	Half Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Mar 17 $M Mar 17 $M Mar 17 $M 7,456 7,416 (34) 7,382 2,730 2,887 (23) 2,864	Movement FX unadjusted FX impact FX adjusted Sep 17 v. Mar 17 Sep 17 v. Mar 17 Sep 17 v. Mar 17 1% 0% 1% -5% 0% -5%
Operating income Operating expenses	10,186 10,303 (57) 10,246 (4,717) (4,731) 23 (4,708)	-1% 0% -1% 0% 0% 0%
Profit before credit impairment and income tax Credit impairment charge	5,469 5,572 (34) 5,538 (479) (720) 2 (718)	-2% -1% -1% -33% 0% -33%
Profit before income tax Income tax expense Non-controlling interests	4,990 4,852 (32) 4,820 (1,456) (1,433) 9 (1,424) (7) (8) - (8)	3% -1% 4% 2% 0% 2% -13% 0% -13%
Cash profit	3,527 3,411 (23) 3,388	3% -1% 4%

Cash Profit by Division - September 2017 Half Year vs March 2017 Half Year

Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre	Half Year Actual FX unadjusted FX impact FX adjusted Sep 17 $M Mar 17 $M Mar 17 $M Mar 17 $M 1,897 1,798 - 1,798 815 1,021 (7) 1,014 692 677 (9) 668 115 123 - 123 69 (217) 3 (214) (61) 9 (10) (1)	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Mar 17 Sep 17 v. Mar 17 Sep 17 v. Mar 17 6% 0% 6% -20% 0% -20% 2% -2% 4% -7% 0% -7% large 0% large large large large
Cash profit by division	3,527 3,411 (23) 3,388	3% -1% 4%

Net loans and advances by Division - September 2017 vs March 2017

	As at Actual FX unadjusted FX impact FX adjusted Sep 17 $B Mar 17 $B Mar 17 $B Mar 17 $B	Movement
		FX unadjusted FX impact FX adjusted
		Sep 17 v. Mar 17 Sep 17 v. Mar 17 Sep 17 v. Mar 17 3% 0% 3%
Australia	345.4 336.7 - 336.7
Institutional	119.6 120.8 (1.0) 119.8	-1% -1% 0%
New Zealand1	107.9 104.9 0.7 105.6	3% 1% 2%
Wealth Australia	1.7 1.8 - 1.8	-6% 0% -6%
Asia Retail & Pacific1	5.7 12.5 (0.3) 12.2	-54% -1% -53%
TSO and Group Centre	- (0.4) - (0.4)	-100% 0% -100%
Net loans and advances by division1	580.3 576.3 (0.6) 575.7	1% 0% 1%

1. Net loans and advances as at 30 September 2017 and 31 March 2017 include net loans and advances held for sale.

GROUP RESULTS

Earnings related hedges

Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily New Zealand Dollar, US Dollar and US Dollar correlated). New Zealand Dollar exposure relates to the New Zealand geography and USD exposures relate to Asia Pacific, Europe & America. Details of these hedges are set out below.

Asia Pacific, Europe & America. Details of these hedges are set out below.
NZD Economic hedges Net open NZD position (notional principal)1 Amount taken to income (pre-tax statutory basis)2 Amount taken to income (pre-tax cash basis)3 USD Economic hedges Net open USD position (notional principal)1 Amount taken to income (pre-tax statutory basis)2 Amount taken to income (pre-tax cash basis)3	Half Year Full Year
	Sep 17 $M Mar 17 $M Sep 17 $M Sep 16 $M 3,036 3,347 3,036 3,161 (34) 125 91 (174) (27) (19) (46) (8) - - - - - - - 21 - - - (58)

1. Value in AUD at contracted rate.

2. Unrealised valuation movement plus realised revenue from matured or closed out hedges.

3. Realised revenue from closed out hedges.

As at 30 September 2017, the following hedges were in place to partially hedge future earnings against adverse movements in exchange rates:
NZD 3.3 billion at a forward rate of approximately NZD 1.08 / AUD.

There were no USD hedges in place or impacting income for the September 2017 full year.

During the September 2017 full year:

NZD 1.8 billion of economic hedges matured and a realised loss of $46 million (pre-tax) was recorded in cash profit.
An unrealised gain of $137 million (pre-tax) on the outstanding NZD economic hedges was recorded in the statutory Income Statement during the year. This unrealised gain has been treated as an adjustment to statutory profit in calculating cash profit as these are hedges of future NZD revenues.

Earnings per share

Cash earnings per share (cents) Basic Diluted Cash weighted average number of ordinary shares (million)1 Basic Diluted Cash profit ($M) Cash profit used in calculating diluted cash earnings per share ($M)	Half Year Sep 17 Mar 17 Movt 120.4 116.7 3% 115.2 111.9 3% 2,929.2 2,923.7 0% 3,183.7 3,180.8 0% 3,527 3,411 3% 3,667 3,559 3%	Full Year
		Sep 17 Sep 16 Movt 237.1 202.6 17% 226.4 194.1 17% 2,926.4 2,906.2 1% 3,191.7 3,187.0 0% 6,938 5,889 18% 7,226 6,186 17%

1. Cash weighted average number of ordinary shares includes treasury shares held in Wealth Australia as the associated gains and losses are included in cash profit.

GROUP RESULTS

Dividends

Dividend per ordinary share (cents) Interim (fully franked) Final (fully franked)1	Half Year Sep 17 Mar 17 Movt - 80 n/a 80 - n/a	Full Year
		Sep 17 Sep 16 Movt 80 80 0% 80 80 0%
Total (fully franked) Ordinary share dividends used in payout ratio ($M)2 Cash profit ($M) Ordinary share dividend payout ratio (cash basis)2	80 80 0% 2,350 2,349 0% 3,527 3,411 3% 66.6% 68.9%	160 160 0% 4,699 4,676 0% 6,938 5,889 18% 67.7% 79.4%

1. Final dividend for 2017 is proposed.

2. Dividend payout ratio is calculated using proposed 2017 final dividend of $2,350 million, which is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2017 half and September 2016 full year were calculated using actual dividend paid of $2,349 million and $4,676 million respectively.

The Directors propose that a final dividend of 80 cents be paid on each eligible fully paid ANZ ordinary share on 18 December 2017. The proposed 2017 final dividend will be fully franked for Australian tax purposes, and New Zealand imputation credits of NZD 10 cents per ordinary share will also be attached.

Economic profit

Economic profit
Statutory profit attributable to shareholders of the Company Adjustments between statutory profit and cash profit	Half Year Sep 17 $M Mar 17 $M Movt 3,495 2,911 20% 32 500 -94%	Full Year
		Sep 17 $M Sep 16 $M Movt 6,406 5,709 12% 532 180 large
Cash Profit Economic credit cost adjustment Imputation credits	3,527 3,411 3% (353) (211) 67% 705 721 -2%	6,938 5,889 18% (564) (48) large 1,426 1,160 23%
Economic return Cost of capital	3,879 3,921 -1% (2,647) (2,610) 1%	7,800 7,001 11% (5,257) (5,152) 2%
Economic profit	1,232 1,311 -6%	2,543 1,849 38%

Economic profit is a risk adjusted profit measure used to evaluate business unit performance and is considered in determining the variable component of remuneration packages. This is used for internal management purposes and is not subject to audit.

Economic profit is calculated via a series of adjustments to cash profit. The economic credit cost adjustment replaces the actual credit loss charge with internal expected loss based on the average loss per annum on the portfolio over an economic cycle. The benefit of imputation credits is recognised, measured at 70% of Australian tax. The cost of capital is a major component of economic profit. At the ANZ Group level, this is calculated using average ordinary shareholders’ equity (excluding non-controlling interests) multiplied by the cost of capital rate (currently 9% and applied across comparative periods). At a business unit level, capital is allocated based on economic capital, whereby higher risk businesses attract higher levels of capital. This method is designed to help drive appropriate risk management and ensure business returns align with the relevant credit, operational, market and other risks.

Economic profit increased by $694 million (+38%) against the September 2016 full year due to a 18% increase in cash profit and 23% increase in imputation credits, partially offset by higher economic credit costs.

Economic profit decreased by $79 million (-6%) against the March 2017 half due to higher economic credit costs, partially offset by a 3% increase in cash profit.

GROUP RESULTS

Condensed balance sheet

Condensed balance sheet
Assets Cash / Settlement balances owed to ANZ / Collateral paid Trading and available for sale assets Derivative financial instruments Net loans and advances1 Investment backing policy liabilities Assets held for sale Other1	As at Sep 17 $B Mar 17 $B Sep 16 $B 82.5 89.3 83.3 113.0 108.8 110.3 62.5 63.9 87.5 574.3 564.0 575.9 38.0 37.6 35.7 8.0 14.1 - 19.1 18.8 22.2	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -8% -1% 4% 2% -2% -29% 2% 0% 1% 6% -43% n/a 2% -14%
Total assets	897.4 896.5 914.9	0% -2%
Liabilities Settlement balances owed by ANZ / Collateral received Deposits and other borrowings1 Derivative financial instruments Debt issuances and subordinated debt Policy liabilities and external unit holder liabilities Liabilities held for sale Other1	15.8 14.9 17.0 595.6 581.4 588.2 62.3 65.1 88.7 108.0 109.1 113.1 41.9 41.3 39.5 4.7 17.2 - 10.0 9.6 10.5	6% -7% 2% 1% -4% -30% -1% -5% 1% 6% -73% n/a 4% -5%
Total liabilities	838.3 838.6 857.0	0% -2%
Total equity	59.1 57.9 57.9	2% 2%

1. Balance as at 30 September 2017 and 31 March 2017 exclude assets and liabilities reclassified to held for sale.

September 2017 v September 2016
Derivative financial assets and liabilities decreased $25.0 billion (-29%) and $26.4 billion (-30%) respectively as interest rate movements resulted in lower derivative fair values.
Net loans and advances decreased $1.6 billion. Adjusting for a $6.0 billion decrease due to foreign currency translation and a reclassification of $6.0 billion to assets held for sale, the $10.5 billion increase was primarily driven by home loan growth across Australia (+$18.2 billion) and New Zealand (+$3.8 billion) divisions, partially offset by a $7.4 billion reduction in Asia Retail & Pacific due to the partial completion of the Asia Retail and Wealth sale and a $4.4 billion decrease in Institutional as a result of portfolio rebalancing.
Deposits and other borrowings increased $7.4 billion (+1%). Adjusting for a $8.7 billion decrease due to foreign currency translation and a reclassification of $4.6 billion to liabilities held for sale, the $20.7 billion increase was driven by growth in customer deposits across Institutional, Australia and New Zealand divisions (+$38.6 billion), partially offset by reduction in customer deposits in Asia Retail & Pacific due to the partial completion of the Asia Retail and Wealth sale (-$12.9 billion) and reduction in certificate of deposits, deposit from banks and other borrowings (-$4.8 billion).
Debt issuances and subordinated debt decreased $5.1 billion (-5%). Adjusting for a $1.2 billion decrease due to foreign currency translation, the $3.9 billion decrease was primarily driven by a $4.1 billion reduction in subordinated debt.
September 2017 v March 2017
Cash / Settlement balances owed to ANZ / Collateral paid decreased by $6.8 billion (-8%). Adjusting for a $0.9 billion decrease due to foreign currency translation, the $5.9 billion decrease was primarily driven by decreased cash and settlement balances held by Markets and Treasury.
Trading and available-for-sale assets increased $4.2 billion (+4%). Adjusting for a $0.7 billion decrease due to foreign currency translation, the $4.9 billion increase was primarily driven by driven by increased liquidity portfolio holdings due to balance sheet growth in Markets.
Net loans and advances increased $10.3 billion (+2%). Adjusting for a $0.6 billion decrease due to foreign currency translation, the $10.9 billion increase was primarily driven by home loan growths across Australia (+$8.6 billion) and New Zealand (+$2.1 billion) divisions.
Deposits and other borrowings increased by $14.2 billion (+2%). Adjusting for a $3.0 billion decrease due to foreign currency translation, the $17.2 billion increase was primarily driven by increase in commercial paper issued (+$8.5 billion) and increase in customer deposits across Institutional, Australia and New Zealand divisions (+$14.4 billion), partially offset by decrease in certificate of deposits, deposit from banks and other borrowings (-$5.4 billion).
Assets and liabilities held for sale decreased $6.1 billion (-43%) and $12.5 billion (-73%) respectively due to the partial completion of the Asia Retail and Wealth sale.

Assets and liabilities held for sale as at 30 September 2017 and 31 March 2017 reflects the reclassification of Asia Retail and Wealth businesses, UDC Finance, Shanghai Rural Commercial Bank and Metrobank Card Corporation assets and liabilities to held for sale. Refer to Note 10 to the financial statements for further details.

GROUP RESULTS

Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesale debt, or that the Group has insufficient capacity to fund increases in assets. The timing mismatch of cash flows and the related liquidity risk is inherent in all banking operations and is closely monitored by the Group and managed in accordance with the risk appetite set by the Board.

The Group’s approach to liquidity risk management incorporates two key components:

Scenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by the ability to meet a range of regulatory requirements and internal liquidity metrics mandated by the Board. The metrics cover a range of scenarios of varying duration and level of severity. The objective of this framework is to:
Provide protection against shorter-term extreme market dislocation and stress.
Maintain structural strength in the balance sheet by ensuring that an appropriate amount of longer-term assets are funded with longer-term funding.
Ensure that no undue timing concentrations exist in the Group’s funding profile.

A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking regulators including APRA. As part of meeting LCR requirements, ANZ has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia (RBA). The CLF has been established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of contingent liquidity. The total amount of the CLF available to a qualifying ADI is set annually by APRA. From 1 January 2017, ANZ’s CLF is $43.8 billion (2016 calendar year end: $50.3 billion).

Liquid assets

The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent with Basel 3 LCR:

Highest-quality liquid assets (HQLA1): Cash, highest credit quality government, central bank or public sector securities eligible for repurchase with central banks to provide same-day liquidity.
High-quality liquid assets (HQLA2): High credit quality government, central bank or public sector securities, high quality corporate debt securities and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
Alternative liquid assets (ALA): Assets qualifying as collateral for the CLF and other eligible securities listed by the Reserve Bank of New Zealand (RBNZ).

The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory requirements and the risk appetite set by the Board.

Market Values Post Discount HQLA12 HQLA2 Internal Residential Mortgage Backed Securities (Australia)2 Internal Residential Mortgage Backed Securities (New Zealand)3 Other ALA4	Half Year Average1 Sep 17 $B Mar 17 $B Sep 16 $B 128.7 127.1 119.7 4.7 4.3 4.1 30.3 33.7 35.3 1.1 0.6 1.2 14.9 15.6 17.7	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 1% 8% 9% 15% -10% -14% 83% -8% -4% -16%
Total Liquid Assets	179.7 181.3 178.0	-1% 1%
Cash flows modelled under stress scenario Cash outflows Cash inflows	174.5 172.7 182.9 41.3 38.2 40.2	1% -5% 8% 3%
Net cash outflows	133.2 134.5 142.7	-1% -7%

Liquidity Coverage Ratio5	135% 135% 125%	0% 10%

1. Half year average basis, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.

2. RBA open repo arrangement netted down from CLF, with a corresponding increase in HQLA.

3. New Zealand LCR surplus is excluded from NZ internal RMBS, consistent with APS 330 treatment.

4. 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.

5. All currency Level 2 LCR.

GROUP RESULTS

Funding

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

$22.0 billion of term wholesale debt with a remaining term greater than one year as at 30 September 2017 was issued during the year ended 30 September 2017. The weighted average tenor of new term debt was 5.3 years.

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

Customer deposits and other liabilities1 Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific TSO and Group Centre1	As at Sep 17 $M Mar 17 $M Sep 16 $M 201,365 197,632 187,667 186,782 179,326 171,155 75,323 74,266 72,818 - 326 343 9,157 21,867 22,782 (4,997) (5,202) (5,142)	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 2% 7% 4% 9% 1% 3% -100% -100% -58% -60% -4% -3%
Customer deposits Other funding liabilities2,3	467,630 468,215 449,623 12,838 11,725 14,049	0% 4% 9% -9%
Total customer liabilities (funding)	480,468 479,940 463,672	0% 4%
Wholesale funding4 Debt issuances Subordinated debt Certificates of deposit Commercial paper Other wholesale borrowings2,5,6	90,263 88,778 91,080 17,710 20,297 21,964 55,222 57,428 61,429 18,023 9,482 19,349 65,441 70,070 65,924	2% -1% -13% -19% -4% -10% 90% -7% -7% -1%
Total wholesale funding	246,659 246,055 259,746	0% -5%
Shareholders' equity	59,075 57,908 57,927	2% 2%
Total funding	786,202 783,903 781,345	0% 1%
Funded assets Other short term assets & trade finance assets7 Liquids6	As at Sep 17 $M Mar 17 $M Sep 16 $M 58,576 60,008 65,800 169,317 168,030 161,302	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -2% -11% 1% 5%
Short term funded assets Lending & fixed assets8	227,893 228,038 227,102 558,309 555,865 554,243	0% 0% 0% 1%
Total funded assets	786,202 783,903 781,345	0% 1%
Funding liabilities4,6 Other short term liabilities2 Short term funding Term funding < 12 months Other customer and central bank deposits1,2,9	46,021 51,655 49,288 62,119 53,495 69,028 18,872 20,968 23,668 78,652 81,247 79,115	-11% -7% 16% -10% -10% -20% -3% -1%
Total short term funding liabilities	205,664 207,365 221,099	-1% -7%
Stable customer deposits1,10 Term funding > 12 months Shareholders' equity and hybrid debt	421,172 416,775 402,146 91,840 93,556 90,708 67,526 66,207 67,392	1% 5% -2% 1% 2% 0%
Total stable funding	580,538 576,538 560,246	1% 4%
Total funding	786,202 783,903 781,345	0% 1%

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

2. Securities sold under repurchase agreements reclassified to align with current period presentation.

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

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

5. Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.

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

7. Includes short-dated assets such as trading securities, available for sale securities, trade dated assets and trade finance loans.

8. Excludes trade finance loans.

9. Total customer liabilities (funding) plus Central Bank deposits less stable customer deposits.

10. Stable customer deposits represent operational type deposits or those sourced from retail / business / corporate customers and the stable component of other funding liabilities.

GROUP RESULTS

Capital Management

Capital Ratios Common Equity Tier 1 Tier 1 Total capital	As at	As at
	APRA Basel 3 Sep 17 Mar 17 Sep 16 10.6% 10.1% 9.6% 12.6% 12.1% 11.8% 14.8% 14.5% 14.3%	Internationally Comparable Basel 31
		Sep 17 Mar 17 Sep 16 15.8% 15.2% 14.5% 18.4% 18.2% 17.4% 21.2% 21.3% 20.7%
Risk weighted assets ($B)	391.1 397.0 408.6	306.5 309.4 316.4

Internationally Comparable methodology aligns with APRA’s information paper entitled “International Capital Comparison Study” (13 July 2015).

APRA Basel 3 Common Equity Tier 1 (CET1) – September 2017 v September 2016

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1. Excludes large/notable items for the purposes of Capital Management attribution. Refer to pages 14 to 16.

2. Capital deductions represent the movement in retained earnings in deconsolidated entities, capitalised software (excluding accounting changes relating to the capitalisation of internally generated software assets), EL versus EP shortfall and other intangibles in the period.

3. 9.9 million ordinary shares were provided/issued under the Dividend Reinvestment Plan and Bonus Option Plan for the final 2016 and 2017 interim dividend with neutralisation of the Dividend Reinvestment Plan.

September 2017 v September 2016

ANZ’s CET1 ratio increased 96 bps to 10.6% during the year. Key drivers of the movement in the CET1 ratio were:

Net organic capital generation was 229 bps or $9.3 billion. This was primarily driven by cash profit and a net reduction in underlying RWA growth (excluding foreign exchange impacts, regulatory changes and other one-offs) which collectively provided 223 bps to the CET1 ratio. Throughout the September 2017 full year, RWA reduction was primarily driven by a $16.4 billion decrease in Institutional Credit RWAs (CRWAs) from a reduction in lending, due to portfolio rebalancing.
Payment of the March 2017 Interim and September 2016 Final Dividends (net of shares provided under the DRP, with March 2017 DRP neutralisation) reduced the CET1 ratio by 108 bps.
The transition of Asia Retail and Wealth businesses in China, Singapore and Hong Kong to DBS increased CET1 ratio by 9 bps.
Other impacts are mainly driven by net impacts from RWA measurement changes (reduced CET1 ratio by 27 bps principally from changes to ANZ’s new capital model for Australian Residential Mortgages), and a further 7bps reduction from other impacts associated with movements in non-cash earnings and net foreign currency translation.

GROUP RESULTS

APRA Basel 3 Common Equity Tier 1 (CET1) – September 2017 v March 2017

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1.2. Excludes large/notable items for the purposes of Capital Management attribution. Refer to pages 14 to 16. Capital deductions represent the movement in retained earnings in deconsolidated entities, capitalised software (excluding accounting changes relating to the capitalisation of internally 3. 1.4 million ordinary shares were issued under the Bonus Option Plan for the 2017 interim dividend with neutralisation of the Dividend Reinvestment Plan. generated software assets), EL versus EP shortfall and other intangibles in the period.

• September 2017 v March 2017

ANZ’s CET1 ratio increased 44 bps to 10.6% during the September 2017 half. Key drivers of the movement in the CET1 ratio were:

Net organic capital generation was 118 bps or $4.7 billion. This was primarily driven by cash profit and a net reduction in underlying RWA (excluding foreign exchange impacts, regulatory changes and other one-offs). The RWA reduction was mainly driven by a $7.6 billion decrease in Institutional CRWAs from lower lending due to portfolio rebalancing.
Payment of the March 2017 Interim Dividend (with DRP neutralisation) reduced the CET1 ratio by 58 bps.
The transition of Asia Retail and Wealth businesses in China, Singapore and Hong Kong to DBS increased CET1 ratio by 9 bps.
Other impacts are mainly driven by net impacts from RWA measurement changes (reduced CET1 ratio by 21 bps principally from changes to ANZ’s new capital model for Australian Residential Mortgages), and a further 4 bps reduction from other impacts associated with movements in non-cash earnings and net foreign currency translation.

Total Risk Weighted Assets (RWA) – September 2017 v September 2016

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September 2017 v September 2016

ANZ’s total RWA decreased by $17.5 billion. Excluding the impact of foreign currency exchange translation and other non-recurring CRWA changes, CRWAs decreased by $14.2 billion, primarily driven by a decline in Institutional lending. Other CRWA changes mainly reflect the impact of RWA modelling changes to the Australian Residential Mortgages portfolio, partially offset by the Asia Retail and Wealth business transition of China, Singapore and Hong Kong to DBS. Non-CRWA decreased by $2.3bn mainly driven by lower Operational Risk, from reduced operation size (following portfolio rebalancing in Institutional and the transition of Asia Retail and Wealth businesses) and simplification of portfolios across the Group.

GROUP RESULTS

Total Risk Weighted Assets (RWA) – September 2017 v March 2017

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September 2017 v March 201 7

ANZ’s total RWA decreased by $5.9 billion. Excluding the impact of foreign currency exchange translation and other non-recurring CRWA changes, CRWAs decreased by $6.3 billion primarily driven by a decline in Institutional lending. Other CRWA changes mainly reflect the impact of RWA modelling changes to the Australian Residential Mortgages portfolio, partially offset by the transition of Asia Retail and Wealth business in China, Singapore and Hong Kong to DBS. Non-CRWA decreased by $0.9 billion mainly driven by lower operational risk RWA from reduced operation size (following portfolio rebalancing in Institutional and the transition of Asia Retail and Wealth businesses) and simplification of portfolios across the Group.

APRA to Internationally Comparable[1] Common Equity Tier 1 (CET1) as at 30 September 2017

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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).

The above provides a reconciliation of the CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Comparable Basel 3 standards. APRA views the Basel 3 reforms as a minimum requirement and hence has not incorporated some of the concessions proposed in the Basel 3 rules and has also set higher requirements in other areas. As a result, Australian banks’ Basel 3 reported capital ratios will not be directly comparable with international peers. The International Comparable Basel 3 CET1 ratio incorporates differences between APRA and both the Basel Committee Basel 3 framework (including differences identified in the March 2014 Basel Committee’s Regulatory Consistency Assessment Programme (RCAP) on Basel 3 implementation in Australia) and its application in major offshore jurisdictions.

The material differences between APRA Basel 3 and Internationally Comparable Basel 3 ratios include:

Deductions

Investments in insurance and banking associates – APRA requires full deduction against CET1. On an Internationally Comparable basis, these investments are subject to a concessional threshold before a deduction is required.
Deferred tax assets – A full deduction is required from CET1 for deferred tax assets (DTA) relating to temporary differences. On an Internationally Comparable basis, this is first subject to a concessional threshold before the deduction is required.

GROUP RESULTS

Risk Weighted Assets (RWA)

IRRBB RWA – APRA requires inclusion of Interest Rate Risk in the Banking Book (IRRBB) within the RWA base for the CET1 ratio calculation. This is not required on an Internationally Comparable basis.
Mortgages RWA – APRA imposes a floor of 20% on the downturn Loss Given Default (LGD) used in credit RWA calculations for residential mortgages. Additionally, from July 2016, APRA also requires a higher correlation factor above the Basel framework 15% .The Internationally Comparable Basel 3 framework only requires a downturn LGD floor of 10% and a correlation factor of 15%.
Specialised lending - APRA requires the supervisory slotting approach to be used in determining credit RWA for specialised lending exposures. The Internationally Comparable basis allows for the advanced internal ratings based approach to be used when calculating RWA for these exposures.
Unsecured Corporate Lending LGD – Adjustment to align ANZ’s unsecured corporate lending LGD to 45% to be consistent with banks in other jurisdictions. The 45% LGD rate is also used in the Foundation Internal Ratings-Based approach (FIRB).
Undrawn Corporate Lending Exposure at Default (EAD) – To adjust ANZ’s credit conversion factors (CCF) for undrawn corporate loan commitments to 75% (used in FIRB approach) to align with banks in other jurisdictions.

GROUP RESULTS

Leverage Ratio

At 30 September 2017, the Group’s APRA Leverage Ratio was 5.4% which is above the 3% minimum currently proposed by the Basel Committee on Banking Supervision (BCBS). APRA has not finalised a minimum leverage ratio requirement for Australian ADIs. The following table summarises the Group’s Leverage Ratio calculation:

Tier 1 Capital (net of capital deductions) On-balance sheet exposures (excluding derivatives and securities financing transaction exposures) Derivative exposures Securities financing transaction (SFT) exposures Other off-balance sheet exposures	As at Sep 17 $M Mar 17 $M Sep 16 $M 49,324 48,091 48,285 752,347 747,708 744,359 31,469 30,968 30,600 28,598 30,286 31,417 96,765 97,492 98,460	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 3% 2% 1% 1% 2% 3% -6% -9% -1% -2%
Total exposure measure	909,179 906,454 904,836	0% 0%
APRA Leverage Ratio1	5.4% 5.3% 5.3%
Internationally Comparable Leverage Ratio1	6.2% 6.0% 6.0%

Leverage ratio includes Additional Tier 1 securities subject to Basel 3 transitional relief, net of any transitional adjustments.

September 2017 v September 2016

ANZ’s Leverage Ratio increased 9 bps during the year mainly driven by:

Net organic capital generation (cash earnings) net of dividend payments increased the ratio by 30 bps.
Lower net Additional Tier 1 capital reduced the ratio by 10 bps mainly from redemption of remaining $1.1 billion of transitional CPS2 on issue in March 2017 half.
Net growth in exposures reduced the ratio by 10 bps mainly driven by on balance sheet growth in Australia division (primarily from growth in home loans) partially offset by the transition of Asia Retail and Wealth businesses to DBS. Other impacts lowered the ratio by 1 bp.
September 2017 v March 2017

ANZ’s Leverage Ratio increased 12 bps in the September half mainly driven by:

Net organic capital generation (cash earnings) net of dividend payments increased the ratio by 15 bps.
The above were offset by net growth in exposures which reduced the ratio by 3 bps primarily driven by on balance sheet growth in Australian division (primarily from growth in home loans) partially offset by the transition of Asia Retail and Wealth businesses to DBS.

Other regulatory developments

Financial System Inquiry (FSI)

The Australian Government completed a comprehensive inquiry into Australia’s financial system and the FSI final report was released on 7 December 2014. The contents of the report are wide-ranging and key recommendations that may have an impact on regulatory capital levels include:

Setting capital standards such that Australian Authorised Deposit-taking Institutions’ (ADIs) capital ratios are unquestionably strong;
Raising the average internal ratings-based (IRB) mortgage risk weight to narrow the difference between average mortgage risk weight for ADIs using IRB models and those using standardised risk weights;
Implementing a framework for minimum loss absorbing and recapitalisation capacity in line with emerging international practice;
Developing a common reporting template that improves the transparency and comparability of capital ratios of Australian ADIs; and
Introducing a leverage ratio that acts as a backstop to ADIs risk-based capital requirements, in line with the Basel framework.

APRA supported the FSI’s recommendations and in response introduced the following:

With effect from July 2016, APRA increased the capital requirements for Australian residential mortgage exposures for ADIs accredited to use the IRB approach to credit risk (including ANZ) to at least 25% risk-weighting. APRA also required refinements to residential mortgages risk models which ANZ implemented in June 2017. Collectively these changes have increased average credit risk weighting of ANZ’s residential mortgages to approximately 28% as at September 2017.
In July 2017, APRA released an information paper outlining its assessment on the additional capital required for the Australian banking sector to be considered ‘unquestionably strong’. APRA indicated that “In the case of the four major Australian banks, APRA expects that the increased capital requirements will translate into the need for an increase in CET1 capital ratios, on average, of around 100 basis points above their December 2016 levels. In broad terms, that equates to a benchmark CET1 capital ratio, under the current capital adequacy framework, of at least 10.5 per cent.” APRA also stated that “ADIs should, where necessary, initiate strategies to increase their capital strength to be able to meet these capital benchmarks by 1 January 2020 at the latest.” In order to accommodate future changes to capital framework mainly from:
Basel III changes in respect of credit risk, operational risk and the capital floor and;
Additional changes to address mortgage concentration risk and to improve transparency, comparability and flexibility.

GROUP RESULTS

Discussion papers covering the above are expected to be released in late 2017, with consultation on draft prudential standards taking place throughout 2018. Final standards will then be issued in 2019 to take effect from early 2021. Importantly, APRA has indicated these changes to the capital framework will be accommodated within the 10.5% CET1 benchmark that Australian ADIs are expected to have met, a year ahead of the expected effective date of the new prudential standards.
Net Stable Funding Ratio (NSFR)

APRA released its final standards on NSFR in 2017 confirming that the minimum NSFR of 100% will become a regulatory requirement from 1 January 2018.

As part of managing future liquidity requirements, ANZ monitors the NSFR in its internal reporting and the Group is well placed to meet this requirement by the implementation date.

• Level 3 Conglomerates (Level 3)

APRA is extending its prudential supervision framework to Conglomerate Groups via the Level 3 framework which will regulate a bancassurance group such as ANZ as a single economic entity with minimum capital requirements and additional monitoring of risk exposure levels.

In August 2016, APRA confirmed the deferral of capital requirements for Conglomerate Groups until 2019 at the earliest, to allow for the final capital requirements arising from FSI recommendations as well as from international initiatives that are in progress.

The non-capital components of the Level 3 framework relating to group governance, risk exposures, intragroup transactions and other risk management and compliance requirements came into effect on 1 July 2017. These have had no material impact on the Group’s capital position.

RBNZ review of capital requirements

On May 1, 2017 the RBNZ published an issues paper announcing that it is undertaking a comprehensive review of the capital adequacy framework applying to New Zealand locally incorporated registered banks over 2017 and 2018. The aim of the review is to identify the most appropriate framework for setting capital requirements for New Zealand banks, taking into account how the current framework has operated and international developments in bank capital requirements. The capital review will focus on the three key components of the current framework:

The definition of eligible capital instruments;
The measurement of risk; and
The minimum capital ratios and buffers.

The RBNZ requested feedback about the topics covered by the issues paper for which responses were due on June 9, 2017. Detailed consultation documents on policy proposals and options for each of the three components will be released during 2017, with a view to concluding the review by the first quarter of 2018.

On July 14, 2017, the RBNZ released a consultation paper on what types of financial instruments should qualify as eligible regulatory capital. The consultation paper sets out proposals for reform to the definition of eligible capital instruments for which responses were due September 8, 2017.

The impact on Group and our subsidiary bank in New Zealand (ANZ Bank New Zealand) arising from the above consultations will not be known until the RBNZ finalises their review in 2018.

Current Proposals from the Basel Committee on Banking Supervision (BCBS) on RWA

As part of the BCBS agenda to simplify RWA measurement and reduce their variability amongst banks, the BCBS has issued a number of consultation documents associated with:

Standardised approach to RWA for credit risk;
Revisions to Standardised Measurement Approach to Operational Risk;
Fundamental Review of the Trading Book;
Interest Rate Risk in the Banking Book;
Framework on the imposition of capital floors based on standardised RWA approaches; and
Additional constraints on the use of internal models for credit RWA.

Apart from the review of the Trading Book standard which has been finalised, BCBS is currently deliberating on the other proposals. Once finalised, APRA is expected to incorporate these issues as part of changes to the regulatory capital framework that APRA intends to implement by 2021, as outlined in its July 2017 information paper ‘Strengthening banking system resilience – establishing unquestionably strong capital ratios’.

GROUP RESULTS

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DIVISIONAL RESULTS

Divisional Results

Divisional performance Australia Institutional New Zealand Wealth Australia Asia Retail & Pacific Technology, Services & Operations (TSO) and Group Centre

DIVISIONAL RESULTS

Divisional Performance

During the March 2017 half, the Group made changes to the Group’s operating model for technology, operations and shared services to accelerate delivery of its technology and digital roadmap, bring operations closer to its customers and continue operational efficiency gains. As a result of these organisational changes, divisional operations from Technology, Services & Operations (“TSO”) and Group Centre have been realigned to divisions. The residual TSO and Group Centre now contains Group Technology, Group Hubs, Enterprise Services and Group Property and the Group Centre. The Group operates on a divisional structure with six divisions: Australia, New Zealand, Institutional, Asia Retail & Pacific, Wealth Australia, and Technology, Services & Operations and Group Centre. For further information on the composition of divisions refer to the Definitions on page 117.

Other than the changes described above, there have been no other significant structural changes during the year. However, certain prior period comparatives have been restated to align with current period presentation. The divisions reported below are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.

The Divisional Results section is reported on a cash profit basis.

				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
September 2017 Full Year	$M	$M	$M	$M	$M	$M	$M
Net interest income	8,384	3,068	2,519	9	606	286	14,872
Other operating income	1,218	2,346	653	1,077	37	286	5,617
Operating income	9,602	5,414	3,172	1,086	643	572	20,489
Operating expenses	(3,423)	(2,736)	(1,193)	(743)	(651)	(702)	(9,448)
Profit before credit impairment and income tax	6,179	2,678	1,979	343	(8)	(130)	11,041
Credit impairment charge	(897)	(80)	(78)	-	(144)	-	(1,199)
Profit before income tax	5,282	2,598	1,901	343	(152)	(130)	9,842
Income tax expense and non-controlling interests	(1,587)	(762)	(532)	(105)	4	78	(2,904)
Cash profit/(loss)	3,695	1,836	1,369	238	(148)	(52)	6,938

				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
September 2016 Full Year	$M	$M	$M	$M	$M	$M	$M
Net interest income	8,202	3,447	2,448	11	698	289	15,095
Other operating income	1,206	1,733	644	1,244	478	194	5,499
Operating income	9,408	5,180	3,092	1,255	1,176	483	20,594
Operating expenses	(3,426)	(2,958)	(1,225)	(801)	(808)	(1,221)	(10,439)
Profit before credit impairment and income tax	5,982	2,222	1,867	454	368	(738)	10,155
Credit impairment charge	(920)	(743)	(120)	-	(172)	(1)	(1,956)
Profit before income tax	5,062	1,479	1,747	454	196	(739)	8,199
Income tax expense and non-controlling interests	(1,515)	(438)	(479)	(130)	(37)	289	(2,310)
Cash profit/(loss)	3,547	1,041	1,268	324	159	(450)	5,889

September 2017 Full Year vs September 2016	Full Year
				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
Net interest income	2%	-11%	3%	-18%	-13%	-1%	-1%
Other operating income	1%	35%	1%	-13%	-92%	47%	2%
Operating income	2%	5%	3%	-13%	-45%	18%	-1%
Operating expenses	0%	-8%	-3%	-7%	-19%	-43%	-9%
Profit before credit impairment and income tax	3%	21%	6%	-24%	large	-82%	9%
Credit impairment charge	-3%	-89%	-35%	n/a	-16%	-100%	-39%
Profit before income tax	4%	76%	9%	-24%	large	-82%	20%
Income tax expense and non-controlling interests	5%	74%	11%	-19%	large	-73%	26%
Cash profit/(loss)	4%	76%	8%	-27%	large	-88%	18%

DIVISIONAL RESULTS

Cash profit by division – September 2017 Full year v September 2016 Full year

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				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
September 2017 Half Year	$M	$M	$M	$M	$M	$M	$M
Net interest income	4,251	1,480	1,259	4	275	187	7,456
Other operating income	616	989	336	538	176	75	2,730
Operating income	4,867	2,469	1,595	542	451	262	10,186
Operating expenses	(1,730)	(1,357)	(593)	(373)	(298)	(366)	(4,717)
Profit before credit impairment and income tax	3,137	1,112	1,002	169	153	(104)	5,469
Credit impairment charge	(425)	45	(41)	-	(69)	11	(479)
Profit before income tax	2,712	1,157	961	169	84	(93)	4,990
Income tax expense and non-controlling interests	(815)	(342)	(269)	(54)	(15)	32	(1,463)
Cash profit/(loss)	1,897	815	692	115	69	(61)	3,527

				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
March 2017 Half Year	$M	$M	$M	$M	$M	$M	$M
Net interest income	4,133	1,588	1,260	5	331	99	7,416
Other operating income	602	1,357	317	539	(139)	211	2,887
Operating income	4,735	2,945	1,577	544	192	310	10,303
Operating expenses	(1,693)	(1,379)	(600)	(370)	(353)	(336)	(4,731)
Profit before credit impairment and income tax	3,042	1,566	977	174	(161)	(26)	5,572
Credit impairment charge	(472)	(125)	(37)	-	(75)	(11)	(720)
Profit before income tax	2,570	1,441	940	174	(236)	(37)	4,852
Income tax expense and non-controlling interests	(772)	(420)	(263)	(51)	19	46	(1,441)
Cash profit/(loss)	1,798	1,021	677	123	(217)	9	3,411

September 2017 Half Year vs March 2017 Half Year

				Wealth	Asia Retail	TSO and Group
	Australia	Institutional	New Zealand	Australia	& Pacific	Centre	Group
Net interest income	3%	-7%	0%	-20%	-17%	89%	1%
Other operating income	2%	-27%	6%	0%	large	-64%	-5%
Operating income	3%	-16%	1%	0%	large	-15%	-1%
Operating expenses	2%	-2%	-1%	1%	-16%	9%	0%
Profit before credit impairment and income tax	3%	-29%	3%	-3%	large	large	-2%
Credit impairment charge	-10%	large	11%	n/a	-8%	large	-33%
Profit before income tax	6%	-20%	2%	-3%	large	large	3%
Income tax expense and non-controlling interests	6%	-19%	2%	6%	large	-30%	2%
Cash profit/(loss)	6%	-20%	2%	-7%	large	large	3%

DIVISIONAL RESULTS

Australia

Fred Ohlsson

Australia Fred Ohlsson
Net interest income Other operating income	Half Year Sep 17 $M Mar 17 $M Movt 4,251 4,133 3% 616 602 2%	Full Year
		Sep 17 $M Sep 16 $M Movt 8,384 8,202 2% 1,218 1,206 1%
Operating income Operating expenses	4,867 4,735 3% (1,730) (1,693) 2%	9,602 9,408 2% (3,423) (3,426) 0%
Profit before credit impairment and income tax Credit impairment charge	3,137 3,042 3% (425) (472) -10%	6,179 5,982 3% (897) (920) -3%
Profit before income tax Income tax expense and non-controlling interests	2,712 2,570 6% (815) (772) 6%	5,282 5,062 4% (1,587) (1,515) 5%
Cash profit	1,897 1,798 6%	3,695 3,547 4%
Balance Sheet Net loans and advances Other external assets	345,344 336,736 3% 3,084 2,952 4%	345,344 327,109 6% 3,084 2,921 6%
External assets	348,428 339,688 3%	348,428 330,030 6%
Customer deposits Other external liabilities	201,365 197,632 2% 10,847 11,117 -2%	201,365 187,667 7% 10,847 11,842 -8%
External liabilities	212,212 208,749 2%	212,212 199,509 6%
Risk weighted assets1 Average gross loans and advances Average deposits and other borrowings Ratios Return on average assets Net interest margin2 Operating expenses to operating income Operating expenses to average assets	170,632 159,575 7% 343,174 333,965 3% 198,826 193,671 3% 1.10% 1.08% 2.68% 2.69% 35.5% 35.8% 1.00% 1.01%	170,632 157,410 8% 338,582 322,614 5% 196,256 183,196 7% 1.09% 1.10% 2.68% 2.75% 35.6% 36.4% 1.01% 1.06%
Individual credit impairment charge/(release) Individual credit impairment charge/(release) as a % of average GLA Collective credit impairment charge/(release) Collective credit impairment charge/(release) as a % of average GLA Gross impaired assets Gross impaired assets as a % of GLA	453 430 5% 0.26% 0.26% (28) 42 large (0.02%) 0.03% 1,310 1,227 7% 0.38% 0.36%	883 898 -2% 0.26% 0.28% 14 22 -36% 0.00% 0.01% 1,310 1,170 12% 0.38% 0.36%
Total full time equivalent staff (FTE)	11,387 11,447 -1%	11,387 11,563 -2%

1. Risk weighted assets from 30 September 2016 includes APRA’s revised average mortgage risk weight targets.

2. In the March 2017 half, the Group changed its calculation of net interest margin to net Australian home loan deposit offset balances against total interest earning assets (Mar 17 half: $24,979 million; Sep 16 full year: $23,325 million).

Performance September 2017 v September 2016

Retail lending volumes grew in home loans, particularly in New South Wales. Corporate & Commercial banking volumes grew 1% with Corporate Banking increasing 7%. Customer deposits grew across all portfolios.
Net interest margin declined as the result of higher average funding costs, lower earnings on deposits due to the lower interest rate environment and the introduction of the major bank levy.
Operating expenses were broadly flat due to a reduction in FTE driven by productivity efforts focused on simplifying the business, partially offset by inflation and increased investment in the business, particularly in the second half.
Credit impairment charges decreased primarily due to lower single name charges in Corporate and Commercial Banking, partially offset by volume growth and higher delinquency rates for home loans in Western Australia.

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DIVISIONAL RESULTS

Australia

Fred Ohlsson

Australia Fred Ohlsson
Individual credit impairment charge/(release) Retail Home Loans Cards and Personal Loans Deposits and Payments1 Private Bank Corporate & Commercial Banking Corporate Banking Asset Finance Regional Business Banking Business Banking Small Business Banking	Half Year Sep 17 $M Mar 17 $M Movt 259 238 9% 44 38 16% 202 187 8% 13 13 0% - - n/a 194 192 1% 3 18 -83% 19 21 -10% 42 31 35% 19 20 -5% 111 102 9%	Full Year
		Sep 17 $M Sep 16 $M Movt 497 435 14% 82 53 55% 389 361 8% 26 21 24% - - n/a 386 463 -17% 21 33 -36% 40 86 -53% 73 104 -30% 39 45 -13% 213 195 9%
Individual credit impairment charge/(release)	453 430 5%	883 898 -2%

Collective credit impairment charge/(release) Retail Home Loans Cards and Personal Loans Deposits and Payments1 Private Bank Corporate & Commercial Banking Corporate Banking Asset Finance Regional Business Banking Business Banking Small Business Banking	Half Year Sep 17 $M Mar 17 $M Movt (33) 26 large 2 8 -75% (33) 17 large (2) 1 large - - n/a 5 16 -69% 19 7 large (6) 4 large - 3 -100% (7) - n/a (1) 2 large	Full Year
		Sep 17 $M Sep 16 $M Movt (7) 29 large 10 21 -52% (16) 8 large (1) - n/a - - n/a 21 (7) large 26 3 large (2) 5 large 3 (10) large (7) (8) -13% 1 3 -67%
Collective credit impairment charge/(release)	(28) 42 large	14 22 -36%
Total credit impairment charge/(release)	425 472 -10%	897 920 -3%

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

DIVISIONAL RESULTS

Australia

Fred Ohlsson

Australia Fred Ohlsson
Net loans and advances Retail Home Loans Cards and Personal Loans Deposits and Payments1 Private Bank Corporate & Commercial Banking Corporate Banking Asset Finance Regional Business Banking Business Banking Small Business Banking	As at Sep 17 $M Mar 17 $M Sep 16 $M 276,775 268,695 259,330 264,612 256,174 246,743 10,544 10,918 11,021 84 90 95 1,535 1,513 1,471 68,569 68,041 67,779 14,973 14,334 14,004 8,676 8,592 8,384 14,211 13,905 14,284 15,125 15,495 15,536 15,584 15,715 15,571	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 3% 7% 3% 7% -3% -4% -7% -12% 1% 4% 1% 1% 4% 7% 1% 3% 2% -1% -2% -3% -1% 0%
Net loans and advances	345,344 336,736 327,109	3% 6%

Customer deposits Retail Home Loans2 Cards and Personal Loans Deposits and Payments Private Bank Corporate & Commercial Banking Corporate Banking3 Regional Business Banking Business Banking Small Business Banking	As at Sep 17 $M Mar 17 $M Sep 16 $M 144,235 141,899 135,162 26,771 25,593 24,131 299 266 273 106,506 106,811 102,592 10,659 9,229 8,166 57,130 55,733 52,505 3,573 3,477 2,915 5,689 5,976 5,836 11,580 11,129 10,416 36,288 35,151 33,338	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 2% 7% 5% 11% 12% 10% 0% 4% 15% 31% 3% 9% 3% 23% -5% -3% 4% 11% 3% 9%
Customer deposits	201,365 197,632 187,667	2% 7%

1. Net loans and advances for the deposits and payments business represent amounts in overdraft.

2. Customer deposit amounts for the home loans business represent balances in offset accounts.

3. Some Corporate Banking deposits are included in Institutional division deposits.

DIVISIONAL RESULTS

Australia Fred Ohlsson

	Retail $M C&CB $M Australia Total $M 5,705 2,679 8,384 792 426 1,218
September 2017 Full Year
Net interest income Other operating income
Operating income Operating expenses	6,497 3,105 9,602 (2,354) (1,069) (3,423)
Profit before credit impairment and income tax Credit impairment (charge)/release	4,143 2,036 6,179 (490) (407) (897)
Profit before income tax Income tax expense and non-controlling interests	3,653 1,629 5,282 (1,098) (489) (1,587)
Cash profit	2,555 1,140 3,695
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	497 386 883 (7) 21 14 276,775 68,569 345,344 144,235 57,130 201,365 107,059 63,573 170,632


September 2016 Full Year
Net interest income Other operating income	5,475 2,727 8,202 785 421 1,206
Operating income Operating expenses	6,260 3,148 9,408 (2,364) (1,062) (3,426)
Profit before credit impairment and income tax Credit impairment (charge)/release	3,896 2,086 5,982 (464) (456) (920)
Profit before income tax Income tax expense and non-controlling interests	3,432 1,630 5,062 (1,025) (490) (1,515)
Cash profit	2,407 1,140 3,547
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	435 463 898 29 (7) 22 259,330 67,779 327,109 135,162 52,505 187,667 93,308 64,102 157,410
September 2017 Full Year vs September 2016 Full Year Net interest income Other operating income	4% -2% 2% 1% 1% 1%
Operating income Operating expenses	4% -1% 2% 0% 1% 0%
Profit before credit impairment and income tax Credit impairment (charge)/release	6% -2% 3% 6% -11% -3%
Profit before income tax Income tax expense and non-controlling interests	6% 0% 4% 7% 0% 5%
Cash profit	6% 0% 4%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	14% -17% -2% large large -36% 7% 1% 6% 7% 9% 7% 15% -1% 8%

1. Risk weighted assets from 30 September 2016 includes APRA’s revised average mortgage risk weight targets.

DIVISIONAL RESULTS

Australia Fred Ohlsson

	Retail $M C&CB $M Australia Total $M 2,914 1,337 4,251 400 216 616
September 2017 Half Year
Net interest income Other operating income
Operating income Operating expenses	3,314 1,553 4,867 (1,187) (543) (1,730)
Profit before credit impairment and income tax Credit impairment (charge)/release	2,127 1,010 3,137 (226) (199) (425)
Profit before income tax Income tax expense and non-controlling interests	1,901 811 2,712 (572) (243) (815)
Cash profit	1,329 568 1,897
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	259 194 453 (33) 5 (28) 276,775 68,569 345,344 144,235 57,130 201,365 107,059 63,573 170,632


March 2017 Half Year
Net interest income Other operating income	2,791 1,342 4,133 392 210 602
Operating income Operating expenses	3,183 1,552 4,735 (1,167) (526) (1,693)
Profit before credit impairment and income tax Credit impairment (charge)/release	2,016 1,026 3,042 (264) (208) (472)
Profit before income tax Income tax expense and non-controlling interests	1,752 818 2,570 (526) (246) (772)
Cash profit	1,226 572 1,798
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	238 192 430 26 16 42 268,695 68,041 336,736 141,899 55,733 197,632 95,538 64,037 159,575
September 2017 Half Year vs March 2017 Half Year Net interest income Other operating income	4% 0% 3% 2% 3% 2%
Operating income Operating expenses	4% 0% 3% 2% 3% 2%
Profit before credit impairment and income tax Credit impairment (charge)/release	6% -2% 3% -14% -4% -10%
Profit before income tax Income tax expense and non-controlling interests	9% -1% 6% 9% -1% 6%
Cash profit	8% -1% 6%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets1	9% 1% 5% large -69% large 3% 1% 3% 2% 3% 2% 12% -1% 7%

1. Risk weighted assets from 30 September 2016 includes APRA’s revised average mortgage risk weight targets.

DIVISIONAL RESULTS

Institutional

Mark Whelan

Institutional Mark Whelan
Net interest income Other operating income1	Half Year Sep 17 $M Mar 17 $M Movt 1,480 1,588 -7% 989 1,357 -27%	Full Year
		Sep 17 $M Sep 16 $M Movt 3,068 3,447 -11% 2,346 1,733 35%
Operating income Operating expenses1	2,469 2,945 -16% (1,357) (1,379) -2%	5,414 5,180 5% (2,736) (2,958) -8%
Profit before credit impairment and income tax Credit impairment (charge)/release	1,112 1,566 -29% 45 (125) large	2,678 2,222 21% (80) (743) -89%
Profit before income tax Income tax expense and non-controlling interests	1,157 1,441 -20% (342) (420) -19%	2,598 1,479 76% (762) (438) 74%
Cash profit	815 1,021 -20%	1,836 1,041 76%
Balance Sheet Net loans and advances Other external assets	119,636 120,791 -1% 254,653 258,119 -1%	119,636 125,955 -5% 254,653 281,705 -10%
External assets	374,289 378,910 -1%	374,289 407,660 -8%
Customer deposits Other deposits and borrowings	186,782 179,326 4% 57,297 61,207 -6%	186,782 171,155 9% 57,297 56,341 2%
Deposits and other borrowings Other external liabilities	244,079 240,533 1% 94,676 94,971 0%	244,079 227,496 7% 94,676 121,304 -22%
External liabilities	338,755 335,504 1%	338,755 348,800 -3%
Risk weighted assets Average gross loans and advances Average deposits and other borrowings Ratios Return on average assets Net interest margin Net interest margin (excluding Markets) Operating expenses to operating income Operating expenses to average assets	148,881 159,230 -6% 121,897 125,645 -3% 247,128 242,402 2% 0.41% 0.51% 0.96% 1.05% 2.03% 2.17% 55.0% 46.8% 0.68% 0.69%	148,881 168,428 -12% 123,766 133,753 -7% 244,772 232,959 5% 0.46% 0.25% 1.01% 1.13% 2.10% 2.20% 50.5% 57.1% 0.68% 0.72%
Individual credit impairment charge/(release) Individual credit impairment charge/(release) as a % of average GLA Collective credit impairment charge/(release) Collective credit impairment charge/(release) as a % of average GLA Gross impaired assets Gross impaired assets as a % of GLA	(33) 210 large (0.05%) 0.34% (12) (85) -86% (0.02%) (0.14%) 624 1,061 -41% 0.52% 0.87%	177 776 -77% 0.14% 0.58% (97) (33) large (0.08%) (0.02%) 624 1,405 -56% 0.52% 1.10%
Total full time equivalent staff (FTE)	4,754 4,899 -3%	4,754 5,112 -7%

1. 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 operating expenses to more accurately reflect the nature of these items. Comparatives have been restated (Sep16 full year: $17 million).

Performance September 2017 v September 2016

Lending volumes down due to portfolio rebalancing mainly in Loans & Specialised Finance and Transaction Banking. Customer deposits grew in Markets and Transaction Banking.
Net interest margin ex-Markets decreased due to asset pricing competition, the introduction of the major bank levy and the mix impact of lower lending volumes and higher deposit volumes, partially offset by margin improvements in Payments and Cash Management.
Other operating income increased significantly due to positive derivative valuation adjustments and higher Markets Balance Sheet income as a result of tightening credit spreads.
Operating expenses decreased due to a reduction in FTE as a result of ongoing simplification of the business, partially offset by higher nonlending losses, regulatory and compliance spend.

==> picture [256 x 154] intentionally omitted <==

Credit impairment charges decreased significantly due to a benign credit environment, higher write-backs and an overall reduction in lending assets driven by portfolio rebalancing.

DIVISIONAL RESULTS

Institutional

Mark Whelan

Institutional by Geography

Australia Net interest income Other operating income1	Half Year Sep 17 $M Mar 17 $M Movt 833 865 -4% 478 668 -28%	Full Year
		Sep 17 $M Sep 16 $M Movt 1,698 1,870 -9% 1,146 606 89%
Operating income Operating expenses1	1,311 1,533 -14% (652) (621) 5%	2,844 2,476 15% (1,273) (1,339) -5%
Profit before credit impairment and income tax Credit impairment (charge)/release	659 912 -28% 10 (119) large	1,571 1,137 38% (109) (293) -63%
Profit before income tax Income tax expense and non-controlling interests	669 793 -16% (222) (242) -8%	1,462 844 73% (464) (254) 83%
Cash profit	447 551 -19%	998 590 69%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	(30) 164 large 20 (45) large 64,224 65,175 -1% 77,094 68,910 12% 74,043 78,512 -6%	134 330 -59% (25) (37) -32% 64,224 65,938 -3% 77,094 65,361 18% 74,043 80,618 -8%
Asia Pacific, Europe, and America Net interest income Other operating income	487 545 -11% 395 521 -24%	1,032 1,231 -16% 916 1,030 -11%
Operating income Operating expenses	882 1,066 -17% (617) (674) -8%	1,948 2,261 -14% (1,291) (1,452) -11%
Profit before credit impairment and income tax Credit impairment (charge)/release	265 392 -32% 11 (4) large	657 809 -19% 7 (432) large
Profit before income tax Income tax expense and non-controlling interests	276 388 -29% (60) (105) -43%	664 377 76% (165) (111) 49%
Cash profit	216 283 -24%	499 266 88%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	19 41 -54% (30) (37) -19% 48,428 48,148 1% 95,910 96,684 -1% 64,622 69,719 -7%	60 422 -86% (67) 10 large 48,428 53,006 -9% 95,910 91,481 5% 64,622 75,014 -14%
New Zealand Net interest income Other operating income	160 178 -10% 116 168 -31%	338 346 -2% 284 97 large
Operating income Operating expenses	276 346 -20% (88) (84) 5%	622 443 40% (172) (167) 3%
Profit before credit impairment and income tax Credit impairment (charge)/release	188 262 -28% 24 (2) large	450 276 63% 22 (18) large
Profit before income tax Income tax expense and non-controlling interests	212 260 -18% (60) (73) -18%	472 258 83% (133) (73) 82%
Cash profit	152 187 -19%	339 185 83%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	(22) 5 large (2) (3) -33% 6,984 7,468 -6% 13,778 13,732 0% 10,216 10,999 -7%	(17) 24 large (5) (6) -17% 6,984 7,011 0% 13,778 14,313 -4% 10,216 12,796 -20%

DIVISIONAL RESULTS

Institutional

Mark Whelan

Institutional Mark Whelan
Individual credit impairment charge/(release) Transaction Banking Loans & Specialised Finance Markets Central Functions	Half Year Sep 17 $M Mar 17 $M Movt (1) 41 large (30) 165 large - - n/a (2) 4 large		Full Year
			Sep 17 $M Sep 16 $M Movt 40 178 -78% 135 565 -76% - 26 -100% 2 7 -71%
Individual credit impairment charge/(release)	(33) 210 large		177 776 -77%
Collective credit impairment charge/(release) Transaction Banking Loans & Specialised Finance Markets Central Functions	Half Year Sep 17 $M Mar 17 $M Movt (1) (5) -80% (8) (80) -90% (4) 4 large 1 (4) large		Full Year
			Sep 17 $M Sep 16 $M Movt (6) (3) 100% (88) (28) large - (2) -100% (3) - n/a
Collective credit impairment charge/(release)	(12) (85) -86%		(97) (33) large
Total credit impairment charge/(release)	(45) 125 large		80 743 -89%
Net loans and advances Transaction Banking Loans & Specialised Finance Markets Central Functions		As at	Sep 16 $M 13,810 83,537 28,380 228	Movement Sep 17 v. Mar 17 Sep 17 v. Sep 16 8% -6% -4% -8% 2% 3% -1% -4% -1% -5%
		Sep 17 $M Mar 17 $M 13,020 12,083 77,094 79,895 29,303 28,591 219 222
Net loans and advances		119,636 120,791 125,955

Customer deposits Transaction Banking Loans & Specialised Finance Markets Central Functions	As at Sep 17 $M Mar 17 $M Sep 16 $M 96,000 89,028 91,019 993 943 884 89,431 88,947 78,871 358 408 381	Movement Sep 17 v. Mar 17 Sep 17 v. Sep 16 8% 5% 5% 12% 1% 13% -12% -6% 4% 9%
Customer deposits	186,782 179,326 171,155

DIVISIONAL RESULTS

Institutional

Mark Whelan

	Transaction Banking $M Loans & Specialised Finance $M Markets $M Central Functions $M Institutional Total $M 855 1,271 920 22 3,068 731 142 1,436 37 2,346
September 2017 Full Year
Net interest income Other operating income
Operating income Operating expenses	1,586 1,413 2,356 59 5,414 (884) (523) (1,326) (3) (2,736)
Profit before credit impairment and income tax Credit impairment (charge)/release	702 890 1,030 56 2,678 (34) (47) - 1 (80)
Profit before income tax Income tax expense and non-controlling interests	668 843 1,030 57 2,598 (203) (233) (281) (45) (762)
Cash profit	465 610 749 12 1,836
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	40 135 - 2 177 (6) (88) - (3) (97) 13,020 77,094 29,303 219 119,636 96,000 993 89,431 358 186,782 23,365 76,373 48,594 549 148,881
	880 1,498 1,032 37 3,447 775 157 766 35 1,733

September 2016 Full Year
Net interest income Other operating income1
Operating income Operating expenses1	1,655 1,655 1,798 72 5,180 (921) (585) (1,285) (167) (2,958)
Profit before credit impairment and income tax Credit impairment (charge)/release	734 1,070 513 (95) 2,222 (175) (537) (24) (7) (743)
Profit before income tax Income tax expense and non-controlling interests	559 533 489 (102) 1,479 (177) (151) (110) - (438)
Cash profit	382 382 379 (102) 1,041
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	178 565 26 7 776 (3) (28) (2) - (33) 13,810 83,537 28,380 228 125,955 91,019 884 78,871 381 171,155 24,918 89,619 52,285 1,606 168,428
September 2017 Full Year vs September 2016 Full Year Net interest income Other operating income	-3% -15% -11% -41% -11% -6% -10% 87% 6% 35%
Operating income Operating expenses	-4% -15% 31% -18% 5% -4% -11% 3% -98% -8%
Profit before credit impairment and income tax Credit impairment (charge)/release	-4% -17% large large 21% -81% -91% -100% large -89%
Profit before income tax Income tax expense and non-controlling interests	19% 58% large large 76% 15% 54% large n/a 74%
Cash profit	22% 60% 98% large 76%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	-78% -76% -100% -71% -77% 100% large -100% n/a large -6% -8% 3% -4% -5% 5% 12% 13% -6% 9% -6% -15% -7% -66% -12%

DIVISIONAL RESULTS

Institutional

Mark Whelan

	Transaction Banking $M Loans & Specialised Finance $M Markets $M Central Functions $M Institutional Total $M 423 601 442 14 1,480 366 58 550 15 989
September 2017 Half Year
Net interest income Other operating income
Operating income Operating expenses	789 659 992 29 2,469 (437) (261) (680) 21 (1,357)
Profit before credit impairment and income tax Credit impairment (charge)/release	352 398 312 50 1,112 2 38 4 1 45
Profit before income tax Income tax expense and non-controlling interests	354 436 316 51 1,157 (105) (123) (85) (29) (342)
Cash profit	249 313 231 22 815
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	(1) (30) - (2) (33) (1) (8) (4) 1 (12) 13,020 77,094 29,303 219 119,636 96,000 993 89,431 358 186,782 23,365 76,373 48,594 549 148,881
	432 670 478 8 1,588 365 84 886 22 1,357

March 2017 Half Year
Net interest income Other operating income1
Operating income Operating expenses1	797 754 1,364 30 2,945 (447) (262) (646) (24) (1,379)
Profit before credit impairment and income tax Credit impairment (charge)/release	350 492 718 6 1,566 (36) (85) (4) - (125)
Profit before income tax Income tax expense and non-controlling interests	314 407 714 6 1,441 (98) (110) (196) (16) (420)
Cash profit	216 297 518 (10) 1,021
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	41 165 - 4 210 (5) (80) 4 (4) (85) 12,083 79,895 28,591 222 120,791 89,028 943 88,947 408 179,326 23,883 82,896 51,648 803 159,230
September 2017 Half Year vs March 2017 Half Year Net interest income Other operating income	-2% -10% -8% 75% -7% 0% -31% -38% -32% -27%
Operating income Operating expenses	-1% -13% -27% -3% -16% -2% 0% 5% large -2%
Profit before credit impairment and income tax Credit impairment (charge)/release	1% -19% -57% large -29% large large large n/a large
Profit before income tax Income tax expense and non-controlling interests	13% 7% -56% large -20% 7% 12% -57% 81% -19%
Cash profit	15% 5% -55% large -20%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	large large n/a large large -80% -90% large large -86% 8% -4% 2% -1% -1% 8% 5% 1% -12% 4% -2% -8% -6% -32% -6%

DIVISIONAL RESULTS

Institutional

Mark Whelan

Analysis of Markets operating income

Composition of Markets operating income by business activity1 Franchise Sales2 Franchise Trading3 Balance Sheet4	Half Year Sep 17 $M Mar 17 $M Movt 451 483 -7% 263 525 -50% 278 356 -22%	Full Year
		Sep 17 $M Sep 16 $M Movt 934 1,084 -14% 788 561 40% 634 390 63%
Markets operating income pre-derivative CVA methodology change	992 1,364 -27%	2,356 2,035 16%
Derivative CVA methodology change5	- - n/a	- (237) -100%
Markets operating income	992 1,364 -27%	2,356 1,798 31%

1. In determining the fair value of derivative positions adjustments are made to the risk free value to include factors such as the impact of credit and funding and bid-offer spreads. In the March 2017 half, the impact of these adjustments and where relevant the hedging of the associated exposure were included as part of Franchise Trading Income to better align with how these are overseen and risk managed and comparatives were restated. These adjustments were previously allocated between Franchise Sales, Franchise Trading and Balance Sheet.

2. Franchise Sales represents direct client flow business on core products such as fixed income, foreign exchange, commodities and capital markets.

3. Franchise Trading primarily represents management of the Group’s strategic positions and those taken as part of direct client sales flow. Franchise Trading also includes the impact of the derivative valuation adjustments which includes credit and funding adjustments, bid-offer adjustments and associated hedges. For the September 2017 full year, the impact of credit and funding, net of associated hedges, contributed a gain of $229 million (Mar 17 half: $162 million gain: Sep 16 full year: loss of $102 million excluding the impact of the Derivative CVA methodology changes).

4. Balance Sheet represents hedging of interest rate risk on the Group’s loan and deposit books and the management of the Group’s liquidity portfolio.

5. Refer to pages 14 to 16 for further details.

Composition of Markets operating income by geography Australia Asia Pacific, Europe & America New Zealand	Half Year Sep 17 $M Mar 17 $M Movt 437 634 -31% 415 535 -22% 140 195 -28%	Full Year
		Sep 17 $M Sep 16 $M Movt 1,071 814 32% 950 1,024 -7% 335 197 70%
Markets operating income pre-derivative CVA methodology change	992 1,364 -27%	2,356 2,035 16%
Derivative CVA methodology change	- - n/a	- (237) -100%
Markets operating income	992 1,364 -27%	2,356 1,798 31%

DIVISIONAL RESULTS

Institutional Mark Whelan

Market risk

Traded market risk

Below are aggregate Value at Risk (VaR) exposures at 99% confidence level covering both physical and derivatives trading positions for the Bank’s principal trading centres. All figures are in AUD.

99% confidence level (1 day holding period)

Value at Risk at 99% confidence Foreign exchange Interest rate Credit Commodities Equity Diversification benefit	High for Low for Avg for As at year year year Sep 17 $M Sep 17 $M Sep 17 $M Sep 17 $M 4.2 10.5 2.5 5.1 6.3 21.3 5.1 7.9 4.4 5.4 2.0 3.4 2.2 3.8 1.4 2.1 - 0.5 - 0.2 (7.6) n/a n/a (7.7)	High for Low for Avg for As at year year year
		Sep 16 $M Sep 16 $M Sep 16 $M Sep 16 $M 4.0 11.4 2.2 5.2 4.7 20.1 4.1 9.1 3.3 4.6 2.2 3.2 2.5 2.8 1.1 1.7 0.5 2.0 0.1 0.2 (6.8) n/a n/a (6.2)
Total VaR	9.5 24.9 6.9 11.0	8.2 25.4 6.1 13.2

Non-traded interest rate risk

Non-traded interest rate risk is managed by Markets and relates to the potential adverse impact of changes in market interest rates on future net interest income for the Group. Interest rate risk is reported using various techniques including VaR and scenario analysis based on a 1% shock.

99% confidence level (1 day holding period)

Value at Risk at 99% confidence Australia New Zealand Asia Pacific, Europe & America Diversification benefit	High for Low for Avg for As at year year year Sep 17 $M Sep 17 $M Sep 17 $M Sep 17 $M 31.6 37.5 25.9 31.3 11.8 15.1 11.1 12.4 14.6 19.0 14.3 15.9 (20.6) n/a n/a (19.7)	High for Low for Avg for As at year year year Sep 16 $M Sep 16 $M Sep 16 $M Sep 16 $M 38.4 40.6 28.0 33.7 11.4 11.4 8.8 10.0 14.7 17.3 14.4 15.8 (24.0) n/a n/a (22.9
Total VaR	37.4 44.0 33.5 39.9	40.5 44.7 31.3 36.6

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

As at period end Maximum exposure Minimum exposure Average exposure (in absolute terms)	As at
	Sep 17 Sep 16 0.52% 0.37% 0.65% 0.48% 0.01% 0.00% 0.28% 0.21%

DIVISIONAL RESULTS

New Zealand David Hisco

Table reflects NZD for New Zealand (AUD results shown on page 68)

New Zealand David Hisco _Table reflects NZD for New Zealand (AUD results shown on page_68)
Net interest income Other operating income Net funds management and insurance income	Half Year Sep 17 NZD M Mar 17 NZD M Movt 1,352 1,334 1% 177 153 16% 182 183 -1%	Full Year
		Sep 17 NZD M Sep 16 NZD M Movt 2,686 2,629 2% 330 337 -2% 365 354 3%
Operating income Operating expenses	1,711 1,670 2% (635) (636) 0%	3,381 3,320 2% (1,271) (1,316) -3%
Profit before credit impairment and income tax Credit impairment (charge)/release	1,076 1,034 4% (44) (39) 13%	2,110 2,004 5% (83) (129) -36%
Profit before income tax Income tax expense and non-controlling interests	1,032 995 4% (290) (278) 4%	2,027 1,875 8% (568) (514) 11%
Cash profit	742 717 3%	1,459 1,361 7%
Balance Sheet1 Net loans and advances Other external assets	117,242 114,731 2% 3,869 7,032 -45%	117,242 113,145 4% 3,869 4,723 -18%
External assets	121,111 121,763 -1%	121,111 117,868 3%
Customer deposits Other deposits and borrowings	81,855 81,238 1% 3,721 2,949 26%	81,855 76,362 7% 3,721 5,358 -31%
Deposits and other borrowings Other external liabilities	85,576 84,187 2% 22,294 22,228 0%	85,576 81,720 5% 22,294 21,494 4%
External liabilities	107,870 106,415 1%	107,870 103,214 5%
Risk weighted assets Average gross loans and advances Average deposits and other borrowings	60,971 62,421 -2% 116,671 114,087 2% 84,490 83,884 1%	60,971 62,523 -2% 115,383 110,559 4% 84,188 80,975 4%
Ratios1 Return on average assets Net interest margin Operating expenses to operating income Operating expenses to average assets	1.23% 1.20% 2.31% 2.30% 37.1% 38.1% 1.06% 1.07%	1.22% 1.19% 2.31% 2.37% 37.6% 39.6% 1.06% 1.15%
Individual credit impairment charge/(release) Individual credit impairment charge/(release) as a % of average GLA Collective credit impairment charge/(release) Collective credit impairment charge/(release) as a % of average GLA Gross impaired assets Gross impaired assets as a % of GLA	59 64 -8% 0.10% 0.11% (15) (25) -40% (0.03%) (0.04%) 334 448 -25% 0.28% 0.39%	123 112 10% 0.11% 0.10% (40) 17 large (0.03%) 0.02% 334 363 -8% 0.28% 0.32%
Total full time equivalent staff (FTE)	6,207 6,250 -1%	6,207 6,317 -2%

1. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

Performance September 2017 v September 2016

Volumes grew in home loans in addition to higher balances in funds under management. Customer deposits grew across all portfolios.
Net interest margin declined as the result of a higher proportion of lower margin fixed rate lending and term deposits, pricing competition and higher average funding costs.
Other operating income decreased, more than offset by an increase in Net funds management and insurance income as the result of higher funds under management balances.
Operating expenses decreased as the result of a reduction in FTE driven by automation and transaction migration to lower cost channels, partially offset by inflation.
Credit impairment charges decreased due to an increase in write-backs and credit quality improvements across the Retail and Commercial and Agri portfolios, partially offset by increases to new and existing provisions.

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DIVISIONAL RESULTS

New Zealand

David Hisco

Individual credit impairment charge/(release) Retail Home Loans Other Commercial	Half Year Sep 17 NZD M Mar 17 NZD M Movt 25 21 19% (1) (6) -83% 26 27 -4% 34 43 -21%	Half Year Sep 17 NZD M Mar 17 NZD M Movt 25 21 19% (1) (6) -83% 26 27 -4% 34 43 -21%	Full Year	Full Year
			Sep 17 NZD M Sep 16 NZD M Movt 46 52 -12% (7) (4) 75% 53 56 -5% 77 60 28%
Individual credit impairment charge/(release)	59 64 -8%		123 112 10%
Collective credit impairment charge/(release) Retail Home Loans Other Commercial	Half Year Sep 17 NZD M Mar 17 NZD M Movt (6) (7) -14% (2) (3) -33% (4) (4) 0% (9) (18) -50%		Full Year
			Sep 17 NZD M Sep 16 NZD M Movt (13) 3 large (5) (1) large (8) 4 large (27) 14 large
Collective credit impairment charge/(release)	(15) (25) -40%		(40) 17 large
Total credit impairment charge/(release)		44 39 13%		83 129 -36%
Net loans and advances1 Retail Home Loans Other Commercial		As at		Movement Sep 17 v. Mar 17 Sep 17 v. Sep 16 3% 5% 3% 5% 0% -2% 2% 1% 2% 4% Movement Sep 17 v. Mar 17 Sep 17 v. Sep 16 2% 7% -6% 6% 1% 7%
Net loans and advances		117,242 114,731 113,145
Customer deposits1 Retail Commercial		As at Sep 17 NZD M Mar 17 NZD M Sep 16 NZD M 67,797 66,292 63,111 14,058 14,946 13,251
Customer deposits		81,855 81,238 76,362

1. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

Net funds management and insurance income

Net funds management and insurance income
Insurance Insurance income Insurance volume related expenses Funds Management Funds management income Funds management volume related expenses	Half Year Sep 17 NZD M Mar 17 NZD M Movt 81 85 -5% 86 91 -5% (5) (6) -17% 101 98 3% 116 109 6% (15) (11) 36%	Full Year
		Sep 17 NZD M Sep 16 NZD M Movt 166 167 -1% 177 180 -2% (11) (13) -15% 199 187 6% 225 210 7% (26) (23) 13%
Total net funds management and insurance income	182 183 -1%	365 354 3%
In-force premiums1 Funds under management Average funds under management Life insurance expenses to Life in-force premiums Retail Insurance lapse rates Funds Management expenses to average FUM2	194 192 1% 28,490 27,146 5% 27,810 26,383 5% 29.9% 30.1% 14.6% 13.8% 0.29% 0.32%	194 190 2% 28,490 26,485 8% 27,096 24,775 9% 29.9% 33.4% 14.2% 15.4% 0.30% 0.36%

1. In-force premiums reflect the disposal of the New Zealand medical business in the September 2016 full year.

2. Funds Management expense and FUM excludes Bonus Bonds and Private Bank.

DIVISIONAL RESULTS

New Zealand David Hisco

	Retail NZD M Commercial NZD M Central Functions NZD M New Zealand Total NZD M 1,773 900 13 2,686 314 18 (2) 330 367 1 (3) 365
September 2017 Full Year
Net interest income Other operating income Net funds management and insurance income
Operating income Operating expenses	2,454 919 8 3,381 (1,007) (259) (5) (1,271)
Profit before credit impairment and income tax Credit impairment (charge)/release	1,447 660 3 2,110 (33) (50) - (83)
Profit before income tax Income tax expense and non-controlling interests	1,414 610 3 2,027 (395) (171) (2) (568)
Cash profit	1,019 439 1 1,459
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances1 Customer deposits1 Risk weighted assets1	46 77 - 123 (13) (27) - (40) 76,279 40,963 - 117,242 67,797 14,058 - 81,855 28,757 31,004 1,210 60,971


September 2016 Full Year
Net interest income Other operating income Net funds management and insurance income	1,730 889 10 2,629 309 20 8 337 355 2 (3) 354
Operating income Operating expenses	2,394 911 15 3,320 (1,048) (257) (11) (1,316)
Profit before credit impairment and income tax Credit impairment (charge)/release	1,346 654 4 2,004 (55) (74) - (129)
Profit before income tax Income tax expense and non-controlling interests	1,291 580 4 1,875 (350) (163) (1) (514)
Cash profit	941 417 3 1,361
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	52 60 - 112 3 14 - 17 72,730 40,415 - 113,145 63,111 13,251 - 76,362 29,580 31,950 993 62,523
September 2017 Full Year vs September 2016 Full Year Net interest income Other operating income Net funds management and insurance income	2% 1% 30% 2% 2% -10% large -2% 3% -50% 0% 3%
Operating income Operating expenses	3% 1% -47% 2% -4% 1% -55% -3%
Profit before credit impairment and income tax Credit impairment (charge)/release	8% 1% -25% 5% -40% -32% n/a -36%
Profit before income tax Income tax expense and non-controlling interests	10% 5% -25% 8% 13% 5% 100% 11%
Cash profit	8% 5% -67% 7%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	-12% 28% n/a 10% large large n/a large 5% 1% n/a 4% 7% 6% n/a 7% -3% -3% 22% -2%

1. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

DIVISIONAL RESULTS

New Zealand David Hisco

	Retail NZD M Commercial NZD M Central Functions NZD M New Zealand Total NZD M 896 454 2 1,352 169 9 (1) 177 183 1 (2) 182
September 2017 Half Year
Net interest income Other operating income Net funds management and insurance income
Operating income Operating expenses	1,248 464 (1) 1,711 (509) (132) 6 (635)
Profit before credit impairment and income tax Credit impairment (charge)/release	739 332 5 1,076 (19) (25) - (44)
Profit before income tax Income tax expense and non-controlling interests	720 307 5 1,032 (200) (87) (3) (290)
Cash profit	520 220 2 742
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances1 Customer deposits1 Risk weighted assets1	25 34 - 59 (6) (9) - (15) 76,279 40,963 - 117,242 67,797 14,058 - 81,855 28,757 31,004 1,210 60,971


March 2017 Half Year
Net interest income Other operating income Net funds management and insurance income	877 446 11 1,334 145 9 (1) 153 184 - (1) 183
Operating income Operating expenses	1,206 455 9 1,670 (498) (127) (11) (636)
Profit before credit impairment and income tax Credit impairment (charge)/release	708 328 (2) 1,034 (14) (25) - (39)
Profit before income tax Income tax expense and non-controlling interests	694 303 (2) 995 (195) (84) 1 (278)
Cash profit	499 219 (1) 717
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances1 Customer deposits1 Risk weighted assets1	21 43 - 64 (7) (18) - (25) 74,379 40,352 - 114,731 66,292 14,946 - 81,238 29,358 32,086 977 62,421
September 2017 Half Year vs March 2017 Half Year Net interest income Other operating income Net funds management and insurance income	2% 2% -82% 1% 17% 0% 0% 16% -1% n/a 100% -1%
Operating income Operating expenses	3% 2% large 2% 2% 4% large 0%
Profit before credit impairment and income tax Credit impairment (charge)/release	4% 1% large 4% 36% 0% n/a 13%
Profit before income tax Income tax expense and non-controlling interests	4% 1% large 4% 3% 4% large 4%
Cash profit	4% 0% large 3%
Individual credit impairment charge/(release) Collective credit impairment charge/(release) Net loans and advances Customer deposits Risk weighted assets	19% -21% n/a -8% -14% -50% n/a -40% 3% 2% n/a 2% 2% -6% n/a 1% -2% -3% 24% -2%

1. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

DIVISIONAL RESULTS

New Zealand David Hisco

Table reflects AUD for New Zealand NZD results shown on page 64

Net interest income Other operating income Net funds management and insurance income	Half Year Sep 17 $M Mar 17 $M Movt 1,259 1,260 0% 166 144 15% 170 173 -2%	Full Year
		Sep 17 $M Sep 16 $M Movt 2,519 2,448 3% 310 314 -1% 343 330 4%
Operating income Operating expenses	1,595 1,577 1% (593) (600) -1%	3,172 3,092 3% (1,193) (1,225) -3%
Profit before credit impairment and income tax Credit impairment (charge)/release	1,002 977 3% (41) (37) 11%	1,979 1,867 6% (78) (120) -35%
Profit before income tax Income tax expense and non-controlling interests	961 940 2% (269) (263) 2%	1,901 1,747 9% (532) (479) 11%
Cash profit	692 677 2%	1,369 1,268 8%
Consisting of: Retail Commercial Central Functions	484 472 3% 206 206 0% 2 (1) large	956 877 9% 412 389 6% 1 2 -50%
Cash profit	692 677 2%	1,369 1,268 8%
Balance Sheet1 Net loans and advances Other external assets	107,886 104,884 3% 3,560 6,429 -45%	107,886 107,893 0% 3,560 4,505 -21%
External assets	111,446 111,313 0%	111,446 112,398 -1%
Customer deposits Other deposits and borrowings	75,323 74,266 1% 3,424 2,696 27%	75,323 72,818 3% 3,424 5,109 -33%
Deposits and other borrowings Other external liabilities	78,747 76,962 2% 20,515 20,320 1%	78,747 77,927 1% 20,515 20,496 0%
External liabilities	99,262 97,282 2%	99,262 98,423 1%
Risk weighted assets Average gross loans and advances Average deposits and other borrowings	56,106 57,064 -2% 108,751 107,704 1% 78,747 79,190 -1%	56,106 59,621 -6% 108,229 102,972 5% 78,968 75,418 5%
In-force premiums2 Funds under management Average funds under management	179 175 2% 26,215 24,816 6% 25,922 24,912 4%	179 181 -1% 26,215 25,256 4% 24,934 23,075 8%
Ratios1 Return on average assets Net interest margin Operating expenses to operating income Operating expenses to average assets	1.23% 1.20% 2.31% 2.30% 37.1% 38.1% 1.06% 1.07%	1.22% 1.19% 2.31% 2.37% 37.6% 39.6% 1.06% 1.15%
Individual credit impairment charge/(release) Individual credit impairment charge/(release) as a % of average GLA Collective credit impairment charge/(release) Collective credit impairment charge/(release) as a % of average GLA Gross impaired assets Gross impaired assets as a % of GLA	55 61 -10% 0.10% 0.11% (14) (24) -42% (0.03%) (0.04%) 307 409 -25% 0.28% 0.39%	116 104 12% 0.11% 0.10% (38) 16 large (0.03%) 0.02% 307 346 -11% 0.28% 0.32%
Life insurance expenses to Life in-force premiums Retail Insurance lapse rates Funds Management expenses to average FUM3	29.9% 30.1% 14.6% 13.8% 0.29% 0.32%	29.9% 33.4% 14.2% 15.4% 0.30% 0.36%
Total full time equivalent staff (FTE)	6,207 6,250 -1%	6,207 6,317 -2%

1. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

2. In-force premiums reflect the disposal of the New Zealand medical business in the September 2016 full year.

3. Funds Management expense and FUM excludes Bonus Bonds and Private Bank.

DIVISIONAL RESULTS

Wealth Australia Alexis George

Wealth Australia Alexis George
Net interest income Other operating income Net funds management and insurance income	Half Year Sep 17 $M Mar 17 $M Movt 4 5 -20% 38 46 -17% 500 493 1%	Full Year
		Sep 17 $M Sep 16 $M Movt 9 11 -18% 84 88 -5% 993 1,156 -14%
Operating income Operating expenses	542 544 0% (373) (370) 1%	1,086 1,255 -13% (743) (801) -7%
Profit before income tax Income tax expense and non-controlling interests	169 174 -3% (54) (51) 6%	343 454 -24% (105) (130) -19%
Cash profit	115 123 -7%	238 324 -27%
Consisting of: Insurance Funds Management Corporate and Other	104 102 2% 42 41 2% (31) (20) 55%	206 253 -19% 83 87 -5% (51) (16) large
Total Wealth Australia	115 123 -7%	238 324 -27%
Income from invested capital1	37 41 -10%	78 110 -29%
Key metrics In-force premiums Life Insurance General Insurance Average in-force premiums Life Insurance General Insurance Funds under management Average funds under management	1,614 1,600 1% 231 226 2% 1,607 1,602 0% 228 225 1% 49,060 49,251 0% 49,248 48,375 2%	1,614 1,603 1% 231 226 2% 1,609 1,560 3% 228 367 -38% 49,060 48,251 2% 48,808 47,621 2%
Ratios Operating expenses to operating income Insurance expenses to In-force premiums Retail Insurance lapse rates Funds Management expenses to average FUM2	68.8% 68.0% 11.6% 11.9% 14.4% 13.8% 0.46% 0.50%	68.4% 63.8% 11.7% 12.1% 14.1% 14.0% 0.48% 0.54%
Total full time equivalent staff (FTE)	2,110 2,114 0%	2,110 2,174 -3%
Aligned adviser numbers3	1,432 1,511 -5%	1,432 1,545 -7%

1. Income from invested capital represents after tax revenue generated from investing all Insurance and Funds Management business's capital balances held for regulatory purposes. The invested capital as at 30 September 2017 was $3.3 billion (Mar 17: $3.4 billion; Sep 16: $3.4 billion), which comprises fixed interest securities of 49% and cash deposits of 51% (Mar 17: 48% fixed interest securities and 52% cash deposits, Sep 16: 48% fixed interest securities and 52% cash deposits).

2. Funds Management expense and funds under management relates to the Pensions & Investments business and excludes ANZ Share Investing.

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

Performance September 2017 v September 2016

Insurance income decreased as the result of adverse retail life claims experience, a one-off experience loss due to the exit of a Group Life insurance plan, partially offset by reinsurance profit share and favourable claims experience in Lenders Mortgage Insurance.
Funds Management income decreased in line with the planned strategy to rationalise the legacy portfolio to SmartChoice, a simpler and lower risk model, which is now complete.
Corporate & Other income decreased due to realised gains in 2016 which was not repeated and investment market volatility on the guaranteed business.
Operating expenses decreased due to productivity initiatives that resulted in a reduction in FTE, partially offset by inflation and higher regulatory compliance and remediation spend.

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DIVISIONAL RESULTS

Wealth Australia

Alexis George

Major business units

Major business units
Insurance Net interest income Insurance income Insurance volume related expenses	Half Year Sep 17 $M Mar 17 $M Movt 11 11 0% 364 354 3% (119) (110) 8%	Full Year
		Sep 17 $M Sep 16 $M Movt 22 23 -4% 718 828 -13% (229) (270) -15%
Operating income Operating expenses	256 255 0% (107) (109) -2%	511 581 -12% (216) (222) -3%
Profit before income tax Income tax expense and non-controlling interests	149 146 2% (45) (44) 2%	295 359 -18% (89) (106) -16%
Cash profit	104 102 2%	206 253 -19%

Funds Management Net interest income Other operating income Funds management income Funds management volume related expenses	Half Year Sep 17 $M Mar 17 $M Movt 13 14 -7% 33 40 -18% 330 314 5% (175) (161) 9%	Full Year
		Sep 17 $M Sep 16 $M Movt 27 30 -10% 73 72 1% 644 692 -7% (336) (338) -1%
Operating income Operating expenses	201 207 -3% (141) (151) -7%	408 456 -11% (292) (331) -12%
Profit before income tax Income tax expense and non-controlling interests	60 56 7% (18) (15) 20%	116 125 -7% (33) (38) -13%
Cash profit	42 41 2%	83 87 -5%

Insurance metrics

Insurance metrics
Insurance operating margin Life Insurance Planned profit margin Group & Individual Experience profit/(loss)1 General Insurance operating profit margin	Half Year Sep 17 $M Mar 17 $M Movt 72 64 13% (22) (26) -15% 54 64 -16%	Full Year
		Sep 17 $M Sep 16 $M Movt 136 151 -10% (48) (8) large 118 110 7%
Total	104 102 2%	206 253 -19%

1. Experience profit/(loss) variations are gains or losses arising from actual experience differing from plan, predominantly driven by lapses, claims and expenses.

		As at		Movement	Movement
	Sep 17	Mar 17	Sep 16	Sep 17	Sep 17
Insurance annual in-force premiums	$M	$M	$M	v Mar 17	v Sep 16
Group	431	427	445	1%	-3%
Individual	1,183	1,173	1,158	1%	2%
General Insurance	231	226	226	2%	2%
Total	1,845	1,826	1,829	1%	1%

		New
	Sep 16	business	Lapses	Sep 17
Insurance in-force book movement	$M	$M	$M	$M
Group	445	38	(52)	431
Individual	1,158	137	(112)	1,183
General Insurance	226	165	(160)	231
Total	1,829	340	(324)	1,845

DIVISIONAL RESULTS

Wealth Australia Alexis George

Funds Management metrics

Funds Management metrics
Funds under management Australian equities International equities Cash and fixed interest Property and infrastructure	As at Sep 17 $M Mar 17 $M Sep 16 $M 14,091 15,393 15,248 13,001 12,442 11,044 18,127 17,763 18,582 3,841 3,653 3,377	Movement
		Sep 17 v Mar 17 Sep 17 v Sep 16 -8% -8% 4% 18% 2% -2% 5% 14%
Total	49,060 49,251 48,251	0% 2%
Funds Management cash flows by product Open solutions OneAnswer Frontier ANZ Smart Choice Wrap (Voyage and Grow) Closed solutions Retail Employer	Sep 16 Inflows Outflows $M $M $M 9,958 1,575 (1,346) 11,190 2,363 (1,410) 2,160 645 (378) 19,028 739 (2,994) 5,915 143 (587)	Other1 Sep 17 $M $M 745 10,932 3,729 15,872 654 3,081 (170) 16,603 (2,899) 2,572
Total	48,251 5,465 (6,715)	2,059 49,060

1. Other includes investment income net of taxes, fees and charges and distributions. It also includes the transition of funds under management from Employer Super to ANZ Smart Choice of approximately $2.9 billion as a result of regulatory changes in the industry.

Embedded value and value of new business (insurance and investments only)1	$M
Embedded value as at September 20162	4,536
Value of new business3	138
Expected return4	304
Experience deviations and assumption changes5	(85)
Embedded value before economic assumption changes and net transfer	4,893
Economic assumptions change6	(110)
Net transfer7	(291)
Embedded value as at September 2017	4,492

1. The product lines used are on the same basis as prior periods. This is different to the product lines that are subject to a strategic review.

2. Embedded value represents the present value of future profits and releases of capital arising from the business in-force at the valuation date, and adjusted net assets. It is determined using best estimate assumptions with franking credits included at 70% of face value. Projected cash flows have been discounted using capital asset pricing model risk discount rates of 7.75%9.50%. ANZ Lenders Mortgage Insurance, ANZ Financial Planning and ANZ Share Investing businesses are not included in the valuation.

3. Value of new business represents the present value of future profits less the cost of capital arising from new business written over the period.

4. Expected return represents the expected increase in value over the period.

5. Experience deviations and assumption changes arise from deviations and changes to best estimate assumptions underlying the prior period embedded value. Negative experience was primarily driven by adverse claims experience during the year, strengthening of claims assumptions in Retail Insurance partially offset by implementation of various product initiatives.

6. Interest rate movements have led to a negative value impact.

7. Net transfer represents the net capital movements over the period including capital injections, transfer of cash dividends paid and value of franking credits. There was $225 million of cash dividends paid, $12 million of dividends in AT1 preference shares paid and the value of $54 million of franking credits which is expected to be transferred to the parent entity.

DIVISIONAL RESULTS

Asia Retail & Pacific David Hisco

Net interest income Other operating income1	Half Year Sep 17 $M Mar 17 $M Movt 275 331 -17% 176 (139) large	Full Year Sep 17 $M Sep 16 $M Movt 606 698 -13% 37 478 -92%
Operating income Operating expenses1	451 192 large (298) (353) -16%	643 1,176 -45% (651) (808) -19%
Profit before credit impairment and income tax Credit impairment (charge)/release	153 (161) large (69) (75) -8%	(8) 368 large (144) (172) -16%
Profit before income tax Income tax expense and non-controlling interests1	84 (236) large (15) 19 large	(152) 196 large 4 (37) large
Cash profit/(loss)1	69 (217) large	(148) 159 large
Balance Sheet2 Net loans and advances Customer deposits Risk weighted assets	5,666 12,525 -55% 9,157 21,867 -58% 6,972 12,601 -45%	5,666 13,370 -58% 9,157 22,782 -60% 6,972 13,372 -48%
Ratios2 Return on average assets Net interest margin Operating expenses to operating income Operating expenses to average assets	0.73% -1.89% 3.08% 3.00% 66.1% 183.9% 3.15% 3.08%	-0.71% 0.65% 3.03% 2.96% 101.2% 68.7% 3.11% 3.30%
Individual credit impairment charge/(release) Individual credit impairment charge/(release) as a % of average GLA Collective credit impairment charge/(release) Collective credit impairment charge/(release) as a % of average GLA Gross impaired assets Gross impaired assets as a % of GLA	79 86 -8% 1.51% 1.31% (10) (11) -9% -0.19% -0.17% 143 243 -41% 2.46% 1.91%	165 161 2% 1.40% 1.13% (21) 11 large -0.18% 0.08% 143 252 -43% 2.46% 1.86%
Total full time equivalent staff (FTE)	3,981 4,719 -16%	3,981 4,894 -19%

1. Includes large/notable items related to restructuring, and the impact of the partial completion of the Asia Retail and Wealth sale. For large/notable items breakdown please refer to pages 14 to 16.

2. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

Asia Retail and Wealth Net interest income Other operating income1	Half Year Sep 17 $M Mar 17 $M Movt 208 264 -21% 126 (193) large	Full Year
		Sep 17 $M Sep 16 $M Movt 472 561 -16% (67) 371 large
Operating income Operating expenses1	334 71 large (234) (291) -20%	405 932 -57% (525) (685) -23%
Profit before credit impairment and income tax Credit impairment (charge)/release	100 (220) large (54) (71) -24%	(120) 247 large (125) (162) -23%
Profit before income tax Income tax expense and non-controlling interests1	46 (291) large (3) 32 large	(245) 85 large 29 (11) large
Cash profit/(loss)1	43 (259) large	(216) 74 large
Balance Sheet2 Net loans and advances Customer deposits Risk weighted assets Total full time equivalent staff (FTE)	3,472 10,248 -66% 5,805 18,727 -69% 3,102 8,922 -65% 2,764 3,556 -22%	3,472 11,041 -69% 5,805 19,580 -70% 3,102 9,420 -67% 2,764 3,704 -25%

2. Balance Sheet amounts as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

DIVISIONAL RESULTS

Technology, Services & Operations and Group Centre

Technology, Services & Operations and Group Centre
Operating income (minority investments in Asia)1 Operating income (other)2	Half Year Sep 17 $M Mar 17 $M Movt 150 170 -12% 112 140 -20% 262 310 -15% (366) (336) 9%	Full Year
		Sep 17 $M Sep 16 $M Movt 320 335 -4% 252 148 70%
Operating income Operating expenses3		572 483 18% (702) (1,221) -43%
Profit before credit impairment and income tax Credit impairment (charge)/release	(104) (26) large 11 (11) large	(130) (738) -82% - (1) -100%
Profit before income tax Income tax expense and non-controlling interests	(93) (37) large 32 46 -30%	(130) (739) -82% 78 289 -73%
Cash profit/(loss)	(61) 9 large	(52) (450) -88%
Risk weighted assets Total full time equivalent staff (FTE)	7,291 7,588 -4% 16,457 16,617 -1%	7,291 8,460 -14% 16,457 16,494 0%

~~1.~~ Includes large/notable items related to Asian minority investment adjustments. For large/notable items breakdown please refer to pages 14 to 16.

2. Includes large/notable item relating to the sale of 100 Queen Street, Melbourne. Refer pages 14 to 16.

3. Includes large/notable items related to software capitalisation and restructuring. For large/notable items breakdown please refer to pages 14 to 16.

DIVISIONAL RESULTS

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PROFIT RECONCILIATION

Profit Reconciliation

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

PROFIT RECONCILIATION

Non-IFRS information

The Group provides additional measures of performance in the Consolidated Financial Report & Dividend Announcement which are prepared on a basis other than in accordance with accounting standards. The guidance provided in ASIC’s Regulatory Guide 230 has been followed when presenting this information.

Adjustments between statutory profit and cash profit

Cash profit represents ANZ’s preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory profit (refer to Definitions for further details). The adjustments made in arriving at cash profit are included in statutory profit which is in the process of being audited within the context of the external auditor’s audit of the Group’s Annual Report. Cash profit is not subject to review or audit by the external auditor. The external auditor has informed the Audit Committee that recurring adjustments have been determined on a consistent basis across each period presented, and the additional adjustments for the impact of the reclassification of Shanghai Rural Commercial Bank to held for sale in 2017 reporting is appropriate.

Statutory profit attributable to shareholders of the Company Adjustments between statutory profit and cash profit Treasury shares adjustment Revaluation of policy liabilities Economic hedges Revenue hedges Structured credit intermediation trades Reclassification of SRCB to held for sale	Half Year Sep 17 $M Mar 17 $M Movt 3,495 2,911 20% (18) 76 large (2) 36 large 31 178 -83% 6 (105) large (2) (1) 100% 17 316 -95%	Full Year
		Sep 17 $M Sep 16 $M Movt 6,406 5,709 12% 58 44 32% 34 (54) large 209 102 large (99) 92 large (3) (4) -25% 333 - n/a
Total adjustments between statutory profit and cash profit	32 500 -94%	532 180 large
Cash Profit	3,527 3,411 3%	6,938 5,889 18%

Explanation of adjustments between statutory profit and cash profit

Treasury shares adjustment

ANZ shares held by the Group in Wealth Australia (Sep 17: 15.4 million shares; Mar 17: 15.3 million shares; Sep 16: 17.7 million shares) are deemed to be Treasury shares for accounting purposes. Dividends and realised and unrealised gains and losses from these shares are reversed as these are not permitted to be recognised as income for statutory reporting purposes. In deriving cash profit, these earnings are included to ensure there is no asymmetrical impact on the Group’s profits because the Treasury shares are held to support policy liabilities which are revalued through the Income Statement. Accordingly, the full year gain of $58 million after tax ($61 million pre-tax) reversed for statutory accounting purposes has been added back to cash profit.

Revaluation of policy liabilities

When calculating policy liabilities, the projected future cash flows on insurance contracts are discounted to reflect the present value of the obligation, with the impact of changes in the market discount rate each period being reflected in the Income Statement. ANZ includes the impact on the remeasurement of the insurance contract attributable to changes in market discount rates as an adjustment to statutory profit to remove the volatility attributable to changes in market interest rates which reverts to zero over the life of the insurance contract.

Economic and revenue hedges

The Group enters into economic hedges to manage its interest rate and foreign exchange risk which in accordance with accounting standards, result in fair value gains and losses being recognised within the income statement. ANZ removes the fair value adjustments from cash profit since the profit or loss resulting from the hedge transactions will reverse over time to match with the profit or loss from the economically hedged item as part of cash profit. This includes gains and losses arising from approved classes of derivatives not designated in accounting hedge relationships but which are considered to be economic hedges, including hedges of larger foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD correlated), as well as ineffectiveness from designated accounting hedges.

Economic hedges comprises:

Funding related swaps (primarily cross currency interest rate swaps) used to convert the proceeds of foreign currency debt issuances into floating rate Australian dollar and New Zealand dollar debt. As these swaps do not qualify for hedge accounting, movements in the fair values are recorded in the income statement. The main drivers of these fair values are currency basis spreads and the Australian dollar and New Zealand dollar fluctuations against other major funding currencies.
Economic hedges of select structured finance and specialised leasing transactions that do not qualify for hedge accounting. The main drivers of these fair value adjustments are movements in the Australian and New Zealand term structure of interest rates.
Ineffectiveness from designated accounting hedge relationships.

In the September 2017 full year, the majority of the loss in economic hedges adjusted from cash profit relates to funding related swaps, principally from tightening basis spreads on currency pairs most notably USD/EUR and USD/JPY.

Gains on revenue hedges adjusted from cash profit in the September 2017 full year are the result of the strengthening of the AUD against the NZD.

PROFIT RECONCILIATION

Economic hedges Revenue hedges	Half Year Sep 17 $M Mar 17 $M 42 254 8 (148)	Full Year
		Sep 17 $M Sep 16 $M 296 180 (140) 93
Increase/(decrease) to cash profit before tax	50 106	156 273
Increase/(decrease) to cash profit after tax	37 73	110 194

Structured credit intermediation trades

ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis with eight US financial guarantors. This involved selling credit default swaps (CDSs) as protection over specific debt structures and purchasing CDS protection over the same structures. ANZ has subsequently exited its positions with six US financial guarantors and is monitoring the remaining two portfolios with a view to reducing the exposures when ANZ deems it cost effective relative to the perceived risk associated with a specific trade or counterparty.

The notional value of outstanding bought and sold CDSs at 30 September 2017 amounted to $0.7 billion (Mar 17: $0.7 billion: Sep 16: $0.7 billion). Both the bought and sold CDSs are measured at fair value through profit and loss. However, the associated fair value movements do not fully offset due to the impact of credit risk on the bought CDSs which is driven by market movements in credit spreads and AUD/USD and NZD/USD rates. The fair value of the CDSs (excluding CVA) is $59 million (Mar 17: $65 million; Sep 16: $67 million) with CVA on the bought protection of $7 million (Mar 17: $9 million; Sep 16: $11 million).

The profit and loss associated with the bought and sold protection is included as an adjustment to cash profit as it relates to a legacy business where, unless terminated early, the fair value movements are expected to reverse to zero in future periods.

Reclassification of SRCB to held for sale

On 3 January 2017, the Group announced that it had agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB). On 18 September 2017, the Group announced a revision to the 3 January arrangement in which Baoshan Iron & Steel Co. Ltd. (Bao) replaced Shanghai Sino-Poland Enterprise Management Development Corporation Limited to join China COSCO Shipping Corporation Limited (COSCO) to acquire ANZ’s 20% stake in SRCB. Under the updated arrangement, COSCO and Bao will each acquire a 10% stake in SRCB. The key financial terms of the revised sale agreement are unchanged from the transaction announced previously. The sale is subject to customary closing conditions and regulatory approvals and is expected to be completed by late 2017.

In the September 2017 full year, the Group recognised a $219 million impairment to the investment (Mar 17 half: $219 million), $12 million of foreign exchange losses (Mar 17 half: $11 million) and $102 million of tax expenses (Mar 17 half: $86 million), following the reclassification of the investment to held for sale. This loss will be largely offset by the release of foreign currency translation and available for sale reserves of $289 million on sale completion. In light of the timing difference (and that these amounts largely offset), the impact is excluded from the cash profit result.

Other reclassifications between statutory profit and cash profit

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

The charge to income for derivative credit valuation adjustments of $1 million on defaulted and impaired derivative exposures has been reclassified to cash credit impairment charges in the September 2017 full year (Mar 17 half: $1 million; Sep 16 full year: $27 million). The reclassification has been made to reflect the manner in which the defaulted and impaired derivatives are managed.

Policyholders tax gross up (nil profit after tax impact)

For statutory reporting purposes, policyholders income tax and other related taxes paid on behalf of policyholders are included in both net funds management and insurance income and the Group’s income tax expense. The gross up of $277 million for the September 2017 full year (Mar 17 half: $161 million; Sep 16 full year: $217 million) has been excluded from the cash results as it does not reflect the underlying performance of the business which is assessed on a net of policyholders tax basis.

Cash profit $M 14,872	Cash profit $M 14,872	2,453 1,332 1,832	5,617	20,489 (9,448)	11,041 (1,199)	9,842 (2,889) (15)	6,938	15,095	2,545 1,518 1,436	5,499	20,594 (10,439)	10,155 (1,956)	8,199 (2,299) (11)	5,889
	Total adjustments to statutory profit $M -	- (168) 384	216	216 -	216 (1)	215 317 -	532	- - - - - - - -	- - - - - - - - (217) (75) - - - - - (246) - - 180 93 (6) 27 - 294	(217) (75) 180 93 (6) 27 - 48	(217) (75) 180 93 (6) 27 - 48 - - - - - - - -	(217) (75) 180 93 (6) 27 - 48 - - - - - (27) - (27)	(217) (75) 180 93 (6) - - 21 217 21 (78) (1) 2 - - 159 - - - - - - - -	- (54) 102 92 (4) - - 180
	Reclassi- fication of SRCB to held for sale $M -	- - 231	231	231 -	231 -	231 102 -	333
	Credit risk on impaired derivatives $M -	- - 1	1	1 -	1 (1)	- - -	-
y profit	Structured credit intermediation trades $M -	- - (4)	(4)	(4) -	(4) -	(4) 1 -	(3)
ments to statutor	Revenue hedges $M -	- - (140)	(140)	(140) -	(140) -	(140) 41 -	(99)
Adjust	Economic hedges $M -	- - 296	296	296 -	296 -	296 (87) -	209
	Revaluation of policy liabilities $M -	- 48 -	48	48 -	48 -	48 (14) -	34
	Policyholders tax gross up $M -	- (277) -	(277)	(277) -	(277) -	(277) 277 -	-
	Treasury shares adjustment $M -	- 61 -	61	61 -	61 -	61 (3) -	58	-	- 46 -	46	46 -	46 -	46 (2) -	44
Statutory profit $M September 2017 Full Year Net interest income 14,872		2,453 1,500 1,448	5,401	20,273 (9,448)	10,825 (1,198)	9,627 (3,206) (15)	6,406	September 2016 Full Year Net interest income 15,095	Net fee and commission income 2,545 Net funds management and insurance income 1,764 Other 1,142	Other operating income 5,451	Operating income 20,546 Operating expenses (10,439)	Profit before credit impairment and tax 10,107 Credit impairment charge (1,929)	Profit before income tax 8,178 Income tax expense (2,458) Non-controlling interests (11)	Profit 5,709
		Net fee and commission income Net funds management and insurance income Other	Other operating income	Operating income Operating expenses	Profit before credit impairment and tax Credit impairment charge	Profit before income tax Income tax expense Non-controlling interests	Profit

Statutory Adjustments to statutory profit Cash profit Treasury shares adjustment Policyholders tax gross up Revaluation of policy liabilities Economic hedging Revenue hedges Structured credit intermediation trades Credit risk on impaired derivatives Reclassi- fication of SRCB to held for sale Total adjustments to statutory profit profit $M $M $M $M $M $M $M $M $M $M $M September 2017 Half Year Net interest income 7,456 - - - - - - - - - 7,456	1,227 664 839	2,730	10,186 (4,717)	5,469 (479)	4,990 (1,456) (7)	3,527	7,416	1,226 668 993	2,887	10,303 (4,731)	5,572 (720)	4,852 (1,433) (8)	3,411
Total adjustments to statutory profit $M -	- (140) 49	(91)	(91) -	(91) -	(91) 123 -	32	March 2017 Half Year Net interest income 7,416 - - - - - - - - -	Net fee and commission income 1,226 - - - - - - - - - Net funds management and insurance income 696 82 (161) 51 - - - - - (28) Other 658 - - - 254 (148) (2) 1 230 335	Other operating income 2,580 82 (161) 51 254 (148) (2) 1 230 307	Operating income 9,996 82 (161) 51 254 (148) (2) 1 230 307 Operating expenses (4,731) - - - - - - - - -	Profit before credit impairment and tax 5,265 82 (161) 51 254 (148) (2) 1 230 307 Credit impairment charge (719) - - - - - - (1) - (1)	Profit before income tax 4,546 82 (161) 51 254 (148) (2) - 230 306 Income tax expense (1,627) (6) 161 (15) (76) 43 1 - 86 194 Non-controlling interests (8) - - - - - - - - -	Profit 2,911 76 - 36 178 (105) (1) - 316 500
Reclassi- fication of SRCB to held for sale $M -	- - 1	1	1 -	1 -	1 16 -	17
Credit risk on impaired derivatives $M -	- - -	-	- -	- -	- - -	-
Structured credit intermediation trades $M -	- - (2)	(2)	(2) -	(2) -	(2) - -	(2)
Revenue hedges $M -	- - 8	8	8 -	8 -	8 (2) -	6
Economic hedging $M -	- - 42	42	42 -	42 -	42 (11) -	31
Revaluation of policy liabilities $M -	- (3) -	(3)	(3) -	(3) -	(3) 1 -	(2)
Policyholders tax gross up $M -	- (116) -	(116)	(116) -	(116) -	(116) 116 -	-
	- (21) -	(21)	(21) -	(21) -	(21) 3 -	(18)

	1,227 804 790	2,821	10,277 (4,717)	5,560 (479)	5,081 (1,579) (7)	3,495
	Net fee and commission income Net funds management and insurance income Other	Other operating income	Operating income Operating expenses	Profit before credit impairment and tax Credit impairment charge	Profit before income tax Income tax expense Non-controlling interests	Profit

PROFIT RECONCILIATION

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – TABLE OF CONTENTS

*CONTENTS*	*PAGE*
Condensed Consolidated Income Statement	82
Condensed Consolidated Statement of Comprehensive Income	83
Condensed Consolidated Balance Sheet	84
Condensed Consolidated Cash Flow Statement	85
Condensed Consolidated Statement of Changes in Equity	86
Notes to Condensed Consolidated Financial Statements	87

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited

Note Interest income Interest expense	Half Year Sep 17 $M Mar 17 $M Movt 14,694 14,426 2% (7,238) (7,010) 3%	Full Year
		Sep 17 $M Sep 16 $M Movt 29,120 29,951 -3% (14,248) (14,856) -4%
Net interest income 2 Other operating income1 2 Net funds management and insurance income 2 Share of associates' profit 2,13	7,456 7,416 1% 1,890 1,711 10% 804 696 16% 127 173 -27%	14,872 15,095 -1% 3,601 3,146 14% 1,500 1,764 -15% 300 541 -45%
Operating income Operating expenses1 3	10,277 9,996 3% (4,717) (4,731) 0%	20,273 20,546 -1% (9,448) (10,439) -9%
Profit before credit impairment and income tax Credit impairment charge 8	5,560 5,265 6% (479) (719) -33%	10,825 10,107 7% (1,198) (1,929) -38%
Profit before income tax Income tax expense 4	5,081 4,546 12% (1,579) (1,627) -3%	9,627 8,178 18% (3,206) (2,458) 30%
Profit for the period	3,502 2,919 20%	6,421 5,720 12%
Comprising: Profit attributable to non-controlling interests Profit attributable to shareholders of the Company	7 8 -13% 3,495 2,911 20%	15 11 36% 6,406 5,709 12%
Earnings per ordinary share (cents) Basic 6 Diluted 6 Dividend per ordinary share (cents) 5		220.1 197.4 11% 210.8 189.3 11% 160 160 0%
	119.9 100.2 20% 114.7 96.7 19% 80 80 0%

The notes appearing on pages 87 to 100 form an integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited

Profit for the period Other comprehensive income Items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Foreign currency translation reserve: Exchange differences taken to equity1 Exchange differences transferred to Income Statement Other reserve movements Income tax attributable to the above items Share of associates' other comprehensive income2	Full Year
	Sep 17 $M Sep 16 $M Movt 6,421 5,720 12% 26 (82) large (748) (456) 64% - (126) -100% (339) 75 large 20 - n/a 1 4 -75%
Other comprehensive income net of tax	(1,040) (585) 78%
Total comprehensive income for the period	5,381 5,135 5%
Comprising total comprehensive income attributable to: Non-controlling interests Shareholders of the Company	9 4 large 5,372 5,131 5%

1. Includes foreign currency translation differences attributable to non-controlling interests of $6 million loss (Sep 16 full year: $7 million loss).

2. Share of associates’ other comprehensive income includes an available for sale revaluation reserve loss of $1 million (Sep 16 full year: $10 million gain) and a foreign currency translation reserve gain of $2 million (Sep 16 full year: $nil) that may be reclassified subsequently to profit or loss, and the remeasurement of defined benefit plans of $nil (Sep 16 full year: $6 million loss) that will not be reclassified subsequently to profit or loss.

The notes appearing on pages 87 to 100 form an integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited

Assets Note Cash and cash equivalents1 Settlement balances owed to ANZ Collateral paid Trading securities Derivative financial instruments Available for sale assets Net loans and advances 7 Regulatory deposits Assets held for sale 10 Investment in associates Current tax assets Deferred tax assets Goodwill and other intangible assets Investments backing policy liabilities Premises and equipment Other assets	As at Sep 17 $M Mar 17 $M Sep 16 $M 68,048 75,185 66,220 5,504 2,930 4,406 8,987 11,179 12,723 43,605 44,085 47,188 62,518 63,882 87,496 69,384 64,685 63,113 574,331 564,035 575,852 2,015 2,154 2,296 7,970 14,145 - 2,248 2,286 4,272 30 242 126 675 572 623 6,970 7,053 7,672 37,964 37,602 35,656 1,965 1,979 2,205 5,112 4,497 5,021	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -9% 3% 88% 25% -20% -29% -1% -8% -2% -29% 7% 10% 2% 0% -6% -12% -44% n/a -2% -47% -88% -76% 18% 8% -1% -9% 1% 6% -1% -11% 14% 2%
Total assets	897,326 896,511 914,869	0% -2%
Liabilities Settlement balances owed by ANZ Collateral received Deposits and other borrowings 9 Derivative financial instruments Current tax liabilities Deferred tax liabilities Liabilities held for sale 10 Policy liabilities External unit holder liabilities (life insurance funds) Payables and other liabilities Provisions Debt issuances Subordinated debt	9,914 9,736 10,625 5,919 5,189 6,386 595,611 581,407 588,195 62,252 65,050 88,725 241 185 188 257 224 227 4,693 17,166 - 37,448 37,111 36,145 4,435 4,227 3,333 8,350 8,054 8,865 1,158 1,179 1,209 90,263 88,778 91,080 17,710 20,297 21,964	2% -7% 14% -7% 2% 1% -4% -30% 30% 28% 15% 13% -73% n/a 1% 4% 5% 33% 4% -6% -2% -4% 2% -1% -13% -19%
Total liabilities	838,251 838,603 856,942	0% -2%
Net assets	59,075 57,908 57,927	2% 2%
Shareholders' equity Ordinary share capital Reserves Retained earnings	29,088 29,036 28,765 37 115 1,078 29,834 28,640 27,975	0% 1% -68% -97% 4% 7%
Share capital and reserves attributable to shareholders of the Company 11 Non-controlling interests 11	58,959 57,791 57,818 116 117 109	2% 2% -1% 6%
Total shareholders' equity 11	59,075 57,908 57,927	2% 2%

1. Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.

The notes appearing on pages 87 to 100 form an integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Australia and New Zealand Banking Group Limited

Australia and New Zealand Banking Group Limited
Profit after income tax Adjustments to reconcile to net cash provided by/(used in) operating activities: Provision for credit impairment Depreciation and amortisation (Profit)/loss on sale of premises and equipment Net derivatives/foreign exchange adjustment Profit on Esanda Dealer Finance divestment Impairment of investment in AmBank Reclassification of SRCB to held for sale Sale of Asia Retail and Wealth businesses Other non-cash movements Net (increase)/decrease in operating assets: Collateral paid Trading securities Net loans and advances Investments backing policy liabilities Other assets Net increase/(decrease) in operating liabilities: Deposits and other borrowings Settlement balances owed by ANZ Collateral received Life insurance contract policy liabilities Other liabilities	Full Year
	Inflows Inflows (Outflows) (Outflows) Sep 17 $M Sep 16 $M 6,406 5,709 1,198 1,929 972 1,475 (114) (4) (3,409) (1,434) - (66) - 260 231 - 338 - (242) (338) 3,533 (3,183) 2,081 332 (17,838) (14,797) (2,122) (2,062) 509 (441) 30,904 23,128 (627) (589) (310) (1,027) 2,260 1,921 202 28
Total adjustments	17,566 5,132
Net cash provided by/(used in) operating activities1	23,972 10,841
Cash flows from investing activities Available for sale assets: Purchases Proceeds from sale or maturity Esanda Dealer Finance divestment Sale of Asia Retail and Wealth businesses Other assets	(27,220) (44,182) 19,751 23,745 - 6,682 (5,213) - (148) (655)
Net cash (used in) investing activities	(12,830) (14,410)
Cash flows from financing activities Debt issuances: Issue proceeds Redemptions Subordinated debt: Issue proceeds Redemptions Dividends paid Share buyback	23,973 29,204 (22,578) (27,959) 1,155 6,177 (4,831) (900) (4,210) (4,564) (176) -
Net cash (used in)/provided by financing activities	(6,667) 1,958
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Effects of exchange rate changes on cash and cash equivalents	4,475 (1,611) 66,220 69,278 (2,647) (1,447)
Cash and cash equivalents at end of period	68,048 66,220

1. Net cash provided by/(used in) operating activities includes income taxes paid of $2,864 million (Mar 17 half year: $1,497 million; Sep 16 full year: $2,840 million).

The notes appearing on pages 87 to 100 form an integral part of the Condensed Consolidated Financial Statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited

				Shareholders'
				equity
	Ordinary			attributable to	Non-	Total
	share		Retained	Equity holders	controlling	Shareholders'
	capital	Reserves	earnings	of the Bank	interests	equity
	$M	$M	$M	$M	$M	$M
As at 1 October 2015	28,367	1,571	27,309	57,247	106	57,353
Profit or loss	-	-	5,709	5,709	11	5,720
Other comprehensive income for the period	-	(504)	(74)	(578)	(7)	(585)
Total comprehensive income for the period	-	(504)	5,635	5,131	4	5,135
Transactions with equity holders in
their capacity as equity holders:
Dividends paid	-	-	(5,001)	(5,001)	(1)	(5,002)
Dividend income on treasury shares
held within the Group's	-	-	24	24	-	24
life insurance statutory funds
Dividend reinvestment plan	413	-	-	413	-	413
Other equity movements:
Treasury shares Wealth Australia adjustment	(153)	-	-	(153)	-	(153)
Group employee share acquisition scheme	138	-	-	138	-	138
Other items	-	11	8	19	-	19
As at 30 September 2016	28,765	1,078	27,975	57,818	109	57,927
Profit or loss	-	-	6,406	6,406	15	6,421
Other comprehensive income for the period	-	(1,049)	15	(1,034)	(6)	(1,040)
Total comprehensive income for the period	-	(1,049)	6,421	5,372	9	5,381
Transactions with equity holders in
their capacity as equity holders:
Dividends paid	-	-	(4,609)	(4,609)	(1)	(4,610)
Dividend income on treasury shares
held within the Group's	-	-	26	26	-	26
life insurance statutory funds
Dividend reinvestment plan	374	-	-	374	-	374
Group share buy-back1	(176)	-	-	(176)	-	(176)
Other equity movements:
Treasury shares Wealth Australia adjustment	69	-	-	69	-	69
Group employee share acquisition scheme	56	-	-	56	-	56
Other items	-	8	21	29	(1)	28
As at 30 September 2017	29,088	37	29,834	58,959	116	59,075

1. Following the issue of $176 million shares under the Dividend Reinvestment Plan for the 2017 interim dividend, the Company repurchased $176 million of shares via an on-market share buy-back.

The notes appearing on pages 87 to 100 form an integral part of the Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

These Condensed Consolidated Financial Statements:

have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (“AASs”);
should be read in conjunction with ANZ’s Annual Financial Statements for the year ended 30 September 2017 and any public announcements made by the Parent Entity and its controlled entities (the Group) for the year ended 30 September 2017 (when released) in accordance with the continuous disclosure obligations under the Corporations Act 2001 and the ASX Listing Rules;
do not include all notes of the type normally included in ANZ’s Annual Financial Statements;
are presented in Australian dollars unless otherwise stated; and
were approved by the Board of Directors on 25 October 2017.

i) Accounting policies

Except as outlined below, these Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computation consistent with those applied in the 2016 ANZ Annual Financial Statements.

Assets and liabilities held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition.

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

ii) Basis of measurement

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

derivative financial instruments as well as, in the case of fair value hedging, the fair value adjustment on the underlying hedged exposure;
available for sale financial assets;
financial instruments held for trading;
other financial assets and liabilities designated at fair value through profit and loss; and
assets and liabilities held for sale (except those at carrying value as per note (i)).

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

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

iii) Use of estimates, assumptions and judgements

The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions that affect reported amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include complex or subjective decisions or assessments are provided in Note 1 of the 2017 ANZ Annual Financial Statements (when released). Such estimates and judgements are reviewed on an ongoing basis.

At 30 September 2017, the impairment assessment of non-lending assets identified that two of the Group’s associate investments (AMMB Holdings Berhad (AmBank) and PT Bank Pan Indonesia (PT Panin) had indicators of impairment. Although their market value (based on share price) was below their carrying value, no impairment was recognised as the carrying value was supported by their value in use (VIU).

The VIU calculation is sensitive to a number of key assumptions, including discount rate, long term growth rates, future profitability and capital levels. The key assumptions used in the value in use calculations are outlined below:

Post-tax discount rate Terminal growth rate Expected NPAT growth (compound annual growth rate – 5 years) Core equitytier 1 ratio	As at 30 Sep 17
	AmBank PT Panin 9.6% 13.3% 4.8% 5.4% 4.5% 9.9% 10.5% to 13.3% 11.3%

iv) Rounding of amounts

The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except where otherwise indicated, as permitted by Australian Securities and Investments Commission Corporations Instrument 2016/191.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Income

2. Income
Interest income Interest expense Major bank levy	Half Year Sep 17 $M Mar 17 $M Movt 14,694 14,426 2% (7,152) (7,010) 2% (86) - n/a	Full Year
		Sep 17 $M Sep 16 $M Movt 29,120 29,951 -3% (14,162) (14,856) -5% (86) - n/a
Net interest income	7,456 7,416 1%	14,872 15,095 -1%
i) Fee and commission income Lending fees1 Non-lending fees and commissions2	363 369 -2% 1,475 1,518 -3%	732 779 -6% 2,993 2,928 2%
Fee and commission income Fee and commission expense	1,838 1,887 -3% (611) (661) -8%	3,725 3,707 0% (1,272) (1,162) 9%
Net fee and commission income	1,227 1,226 0%	2,453 2,545 -4%
ii) Other income Net foreign exchange earnings and other financial instruments income3 Impairment of AmBank Gain on cessation of equity accounting of investment in Bank of Tianjin (BoT) Gain on the Esanda Dealer Finance divestment Derivative CVA methodology change Derivative valuation adjustments Gain on sale of 100 Queen Street, Melbourne Sale of Asia Retail and Wealth businesses Reclassification of SRCB to held for sale Other	511 705 -28% - - n/a - - n/a - - n/a - - n/a 67 162 -59% - 114 -100% 14 (324) large (1) (230) -100% 72 58 24%	1,216 969 25% - (260) -100% - 29 -100% - 66 -100% - (237) -100% 229 (102) large 114 - n/a (310) - n/a (231) - n/a 130 136 -4%
Other income	663 485 37%	1,148 601 91%

Other operating income4	1,890 1,711 10%	3,601 3,146 14%
iii) Net funds management and insurance income Funds management income Investment income Insurance premium income Commission expense Claims Changes in policy liabilities5 Elimination of treasury share (gain)/loss	492 472 4% 863 1,608 -46% 891 812 10% (294) (260) 13% (383) (380) 1% (786) (1,474) -47% 21 (82) large	964 932 3% 2,471 2,350 5% 1,703 1,562 9% (554) (457) 21% (763) (734) 4% (2,260) (1,843) 23% (61) (46) 33%
Net funds management and insurance income	804 696 16%	1,500 1,764 -15%
iv) Share of associates' profit	127 173 -27%	300 541 -45%

Operating income	10,277 9,996 3%	20,273 20,546 -1%

1. Lending fees exclude fees treated as part of the effective yield calculation in interest income.

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 operating expenses to more accurately reflect the nature of these items. Comparatives have been restated accordingly (Sep 16 full year: $17 million).

3. Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk on funding instruments, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit and loss.

4. Total other operating income includes external dividend income of $27.3 million (Mar 17 half year nil; Sep 16 full year: $27.3 million).

5. Includes policyholder tax gross up, which represents contribution tax (recovered at 15% on the super contributions made by members) debited to the policyholder account once a year in July when the statement is issued to the members at the end of the 30 June financial year.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Operating expenses

Personnel Salaries and related costs Superannuation costs Other	Half Year Sep 17 $M Mar 17 $M Movt 2,227 2,329 -4% 159 163 -2% 144 156 -8%	Full Year
		Sep 17 $M Sep 16 $M Movt 4,556 4,879 -7% 322 337 -4% 300 325 -8%
Total personnel expenses	2,530 2,648 -4%	5,178 5,541 -7%
Premises Rent Other	252 248 2% 202 209 -3%	500 485 3% 411 443 -7%
Total premises expenses	454 457 -1%	911 928 -2%
Technology Depreciation and amortisation1 Licences and outsourced services2 Other	351 376 -7% 334 303 10% 150 152 -1%	727 1,198 -39% 637 614 4% 302 355 -15%
Total technology expenses	835 831 0%	1,666 2,167 -23%

Restructuring	26 36 -28%	62 278 -78%
Other Advertising and public relations Professional fees Freight, stationery, postage and telephone Other	131 123 7% 264 189 40% 134 132 2% 343 315 9%	254 261 -3% 453 413 10% 266 277 -4% 658 574 15%
Total other expenses	872 759 15%	1,631 1,525 7%
Total operating expenses	4,717 4,731 0%	9,448 10,439 -9%

1. The September 2016 full year includes a $556 million charge for accelerated amortisation associated with software capitalisation policy changes.

2. In the March 2017 half, a change was made to the classification of certain fees payable. These items have been reclassified from operating income to other operating expenses to more accurately reflect the nature of these items. Comparatives have been restated accordingly (Sep 16 full year: $17 million).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Income tax expense

Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in the profit and loss.

Profit before income tax Prima facie income tax expense at 30% Tax effect of permanent differences: Wealth Australia - policyholders income and contributions tax Share of associates' profit Write down of investment in AmBank Reclassification of SRCB to held for sale Tax provisions no longer required Interest on Convertible Instruments Overseas tax rate differential Gain on cessation of equity accounting for BoT Other	Half Year Sep 17 $M Mar 17 $M Movt 5,081 4,546 12% 1,524 1,364 12% 81 113 -28% (38) (52) -27% - - n/a 16 156 -90% - - n/a 34 35 -3% (32) (5) large - - n/a 12 17 -29%	Full Year
		Sep 17 $M Sep 16 $M Movt 9,627 8,178 18% 2,888 2,453 18% 194 152 28% (90) (162) -44% - 78 -100% 172 - n/a - (71) -100% 69 70 -1% (37) (45) -18% - (9) -100% 29 15 93%
Income tax over provided in previous years	1,597 1,628 -2% (18) (1) large	3,225 2,481 30% (19) (23) -17%
Total income tax expense	1,579 1,627 -3%	3,206 2,458 30%
Australia Overseas	1,159 1,190 -3% 420 437 -4%	2,349 1,752 34% 857 706 21%
	1,579 1,627 -3%	3,206 2,458 30%
Effective Tax Rate - Group	31.1% 35.8%	33.3% 30.1%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Dividends

5. Dividends
Dividend per ordinary share (cents) Interim (fully franked) Final (fully franked)	Half Year Sep 17 Mar 17 Movt - 80 n/a 80 - n/a	Full Year
		Sep 17 Sep 16 Movt 80 80 0% 80 80 0%
Total	80 80 0%	160 160 0%
Ordinary share dividend ($M)1 Interim dividend Final dividend Bonus option plan adjustment	2,349 - n/a - 2,342 n/a (40) (42) -5%	2,349 2,334 1% 2,342 2,758 -15% (82) (91) -10%
Total	2,309 2,300 0%	4,609 5,001 -8%
Ordinary share dividend payout ratio (%)2	67.2% 80.7%	73.4% 81.9%

1. Dividends paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries of the Group to non-controlling equity holders for the September 2017 full year of $1.3 million (Mar 17 half: $1.3 million; Sep 16 full year: $1.4 million).

2. Dividend payout ratio is calculated using the proposed 2017 final dividend of $2,350 million (not shown in the above table). The proposed 2017 final dividend of $2,350 million is based on the forecast number of ordinary shares on issue at the dividend record date. Dividend payout ratios for the March 2017 half year and September 2016 full year are calculated using actual dividends paid of $2,349 million and $4,676 million respectively.

Ordinary Shares

The Directors propose that a final dividend of 80 cents be paid on each eligible fully paid ANZ ordinary share on 18 December 2017. The proposed 2017 final dividend will be fully franked for Australian tax purposes, and New Zealand imputation credits of NZ 10 cents per ordinary share will also be attached.

ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2017 final dividend. For the 2017 final dividend, ANZ intends to provide shares under the DRP through an on-market purchase (as approved by APRA) and BOP through the issue of new shares. The “Acquisition Price” to be used in determining the number of shares to be provided under the DRP and BOP will be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the ordinary course of trading on the ASX during the ten trading days commencing on 17 November 2017, and then rounded to the nearest whole cent. Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election notices from shareholders wanting to commence, cease or vary their participation in the DRP or BOP for the 2017 final dividend must be received by ANZ's Share Registrar by 5.00pm (Australian Eastern Daylight Time) on 15 November 2017.

Subject to receiving effective contrary instructions from the shareholder, dividends payable to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or New Zealand will be converted to Pounds Sterling or New Zealand Dollars respectively at an exchange rate calculated on 17 November 2017.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Earnings per share

Earnings reconciliation Profit for the period ($M) Less: profit attributable to non-controlling interests ($M) Earnings used in calculating basic earnings per share ($M) Weighted average number of ordinary shares (M)1 Basic earnings per share (cents)	Earnings reconciliation Profit for the period ($M) Less: profit attributable to non-controlling interests ($M) Earnings used in calculating basic earnings per share ($M) Weighted average number of ordinary shares (M)1 Basic earnings per share (cents)	Earnings reconciliation Profit for the period ($M) Less: profit attributable to non-controlling interests ($M) Earnings used in calculating basic earnings per share ($M) Weighted average number of ordinary shares (M)1 Basic earnings per share (cents)	Earnings reconciliation Profit for the period ($M) Less: profit attributable to non-controlling interests ($M) Earnings used in calculating basic earnings per share ($M) Weighted average number of ordinary shares (M)1 Basic earnings per share (cents)	Earnings reconciliation Profit for the period ($M) Less: profit attributable to non-controlling interests ($M) Earnings used in calculating basic earnings per share ($M) Weighted average number of ordinary shares (M)1 Basic earnings per share (cents)		Half Year Sep 17 Mar 17 Movt 3,502 2,919 20% (7) (8) -13% 3,495 2,911 20% 2,914.0 2,906.6 0% 119.9 100.2 20%	Full Year
							Sep 17 Sep 16 Movt 6,421 5,720 12% (15) (11) 36% 6,406 5,709 12% 2,910.3 2,891.7 1% 220.1 197.4 11%






Earnings reconciliation Earnings used in calculating basic earnings per share ($M) Add: interest on convertible subordinated debt ($M) Earnings used in calculating diluted earnings per share ($M)						3,495 2,911 20% 140 148 -5% 3,635 3,059 19%	6,406 5,709 12% 288 297 -3% 6,694 6,006 11%




Weighted average number of shares on issue1 Shares used in calculating basic earnings per share (M) Add: Weighted average dilutive potential ordinary shares (M) Convertible subordinated debt (M) Share based payments (options, rights and deferred shares) (M)						2,914.0 2,906.6 0% 243.0 247.1 -2% 11.5 10.0 15%	2,910.3 2,891.7 1% 253.3 273.9 -8% 11.9 6.8 75%





Adjusted weighted average number of shares - diluted (M)						3,168.5 3,163.7 0%	3,175.5 3,172.4 0%
Diluted earnings per share (cents)						114.7 96.7 19%	210.8 189.3 11%
1. W	eighted average number of s	hares excludes the weighted average numb		er of treasury sha	res	held in ANZEST and Wealth Australia as summ Sep 16 full year (Million) 11.1 14.5 25.6	arised in the table below:
		Sep 17 half (Million)	Mar 17 half (Million)	Sep 17 full yea (Million)	r	Sep 16 full year (Million)
	ANZEST Pty Ltd	7.5	8.8	8.1		11.1
	Wealth Australia	15.2	17.1	16.2		14.5
	Total treasury shares	22.7	25.9	24.3		25.6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Net loans and advances

Australia Overdrafts Credit cards outstanding Commercial bills outstanding Term loans - housing Term loans - non-housing Lease receivables Hire purchase contracts Other	As at Sep 17 $M Mar 17 $M Sep 16 $M 5,939 5,786 6,248 8,632 8,846 8,864 8,471 9,232 9,868 264,105 255,721 246,351 124,307 123,464 123,006 1,153 1,084 1,158 634 641 829 15 415 81	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 3% -5% -2% -3% -8% -14% 3% 7% 1% 1% 6% 0% -1% -24% -96% -81%
Total Australia	413,256 405,189 396,405	2% 4%
Asia Pacific, Europe & America Overdrafts Credit cards outstanding Commercial bills outstanding Term loans - housing Term loans - non-housing Lease receivables Other	449 743 825 869 1,351 1,396 2,597 2,065 2,724 2,469 6,501 6,866 48,304 50,066 54,567 117 163 232 34 320 448	-40% -46% -36% -38% 26% -5% -62% -64% -4% -11% -28% -50% -89% -92%
Total Asia Pacific, Europe & America	54,839 61,209 67,058	-10% -18%
New Zealand Overdrafts Credit cards outstanding Term loans - housing Term loans - non-housing Lease receivables Hire purchase contracts	957 1,158 1,080 1,508 1,503 1,586 70,735 68,592 69,927 40,697 40,247 41,625 189 198 215 1,263 1,115 1,048	-17% -11% 0% -5% 3% 1% 1% -2% -5% -12% 13% 21%
Total New Zealand	115,349 112,813 115,481	2% 0%

Sub-total	583,444 579,211 578,944	1% 1%
Unearned income Capitalised brokerage/mortgage origination fees1 Customer liability for acceptances2	(411) (458) (544) 1,058 1,040 1,064 - 565 571	-10% -24% 2% -1% -100% -100%
Gross loans and advances (including assets classified as held for sale)	584,091 580,358 580,035	1% 1%
Provision for credit impairment (refer to Note 8)	(3,798) (4,054) (4,183)	-6% -9%
Net loans and advances (including assets classified as held for sale)	580,293 576,304 575,852	1% 1%
Net loans and advances held for sale (refer to Note 10)	(5,962) (12,269) -	-51% n/a
Net loans and advances	574,331 564,035 575,852	2% 0%

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

2. Customer liability for acceptances has been recognised as Other assets from 30 September 2017.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Provision for credit impairment

Individual provision Balance at start of period New and increased provisions Write-backs Adjustment for exchange rate fluctuations and transfers Discount unwind Bad debts written-off Esanda Dealer Finance divestment	Half Year Sep 17 $M Mar 17 $M Movt 1,269 1,307 -3% 948 1,121 -15% (280) (221) 27% (2) (12) -83% (8) (24) -67% (791) (902) -12% - - n/a	Full Year
		Sep 17 $M Sep 16 $M Movt 1,307 1,061 23% 2,069 2,445 -15% (501) (311) 61% (14) (9) 56% (32) (65) -51% (1,693) (1,722) -2% - (92) -100%
Total individual provision	1,136 1,269 -10%	1,136 1,307 -13%
Collective provision Balance at start of period Charge/(release) to Income Statement Adjustment for exchange rate fluctuations and transfers Esanda Dealer Finance divestment Asia Retail and Wealth divestment	2,785 2,876 -3% (75) (67) 12% (9) (24) -63% - - n/a (39) - n/a	2,876 2,956 -3% (142) 17 large (33) (19) 74% - (78) -100% (39) - n/a
Total collective provision1	2,662 2,785 -4%	2,662 2,876 -7%

Total provision for credit impairment	3,798 4,054 -6%	3,798 4,183 -9%

1. The collective provision includes amounts for off-balance sheet credit exposures of $544 million as at 30 September 2017 (Mar 17: $574 million; Sep 16: $631 million). The impact on the Income Statement for full year ended 30 September 2017 was a $66 million release (Mar 17 half: $46 million release; Sep 16 full year: $32 million release) .

Provision movement analysis New and increased individual provisions Write-backs	Half Year Sep 17 $M Mar 17 $M Movt 948 1,121 -15% (280) (221) 27%	Full Year
		Sep 17 $M Sep 16 $M Movt 2,069 2,445 -15% (501) (311) 61%
Recoveries of amounts previously written-off	668 900 -26% (114) (114) 0%	1,568 2,134 -27% (228) (222) 3%
Individual credit impairment charge Collective credit impairment charge/(release)	554 786 -30% (75) (67) 12%	1,340 1,912 -30% (142) 17 large
Credit impairment charge	479 719 -33%	1,198 1,929 -38%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Deposits and other borrowings

Australia Certificates of deposit Term deposits On demand and short term deposits Deposits not bearing interest Deposits from banks and securities sold under repurchase agreements Commercial paper	As at Sep 17 $M Mar 17 $M Sep 16 $M 50,565 51,875 52,295 72,679 72,471 69,740 190,480 179,928 169,773 10,221 9,268 8,729 35,896 37,824 34,519 14,599 6,786 13,842	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -3% -3% 0% 4% 6% 12% 10% 17% -5% 4% large 5%
Total Australia	374,440 358,152 348,898	5% 7%
Asia Pacific, Europe & America Certificates of deposit Term deposits On demand and short term deposits Deposits not bearing interest Deposits from banks and securities sold under repurchase agreements Commercial paper	2,894 4,629 7,001 78,863 90,449 84,583 21,769 23,468 24,968 4,519 4,650 4,745 23,251 24,765 23,167 - - 393	-37% -59% -13% -7% -7% -13% -3% -5% -6% 0% n/a -100%
Total Asia Pacific, Europe & America	131,296 147,961 144,857	-11% -9%
New Zealand Certificates of deposit Term deposits On demand and short term deposits Deposits not bearing interest Deposits from banks and securities sold under repurchase agreements Commercial paper & other borrowings	1,763 924 2,133 41,829 40,236 37,824 38,143 38,762 40,360 8,173 7,832 7,418 145 662 73 4,380 3,888 6,632	91% -17% 4% 11% -2% -5% 4% 10% -78% 99% 13% -34%
Total New Zealand	94,433 92,304 94,440	2% 0%
Total deposits and other borrowings (including liabilities classified as held for sale)	600,169 598,417 588,195	0% 2%
Deposits and other borrowings held for sale (refer to Note 10)	(4,558) (17,010) -	-73% n/a
Total deposits and other borrowings	595,611 581,407 588,195	2% 1%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. Assets and liabilities held for sale

The Group announced the following strategic divestments in line with the Group’s strategy to simplify the businesses and improve capital efficiency. Accordingly, they are presented as assets and liabilities held for sale.

Asia Retail and Wealth Businesses

The Group announced that it had agreed to sell Retail and Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to Singapore’s DBS Bank on 31 October 2016, and its Retail business in Vietnam to Shinhan Bank Vietnam on 21 April 2017. During the September 2017 half, the Group successfully completed the sales in China, Singapore and Hong Kong. Subject to regulatory approval, the sales in Vietnam, Taiwan, and Indonesia are expected to complete in late 2017 and early 2018 and these remaining countries form the assets and liabilities held for sale. These businesses are part of the Asia Retail & Pacific division.

UDC Finance

On 11 January 2017, the Group announced it had agreed to sell UDC Finance to HNA Group. The sale is subject to certain conditions (including regulatory approvals) and we are working with HNA Group towards completion of the sale. This business is part of the New Zealand division.

Shanghai Rural Commercial Bank

On 3 January 2017, the Group announced that it had agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB). On 18 September 2017 the Group announced a revision to the 3 January arrangement in which Baoshan Iron & Steel Co. Ltd. (Bao) replaced Shanghai Sino-Poland Enterprise Management Development Corporation Limited to join China COSCO Shipping Corporation Limited (COSCO) to acquire ANZ’s 20% stake in SRCB. Under the updated arrangement, COSCO and Bao will each acquire a 10% stake in SRCB. The key financial terms of the revised sale agreement are unchanged from the transaction announced previously. The sale is subject to customary closing conditions and regulatory approvals and is expected to complete late 2017. This asset is part of the TSO and Group Centre Division.

Metrobank Card Corporation

On 18 October 2017, the Group announced it had entered into an agreement with its joint venture partner Metropolitan Bank & Trust Company (Metrobank) in relation to its 40% stake in the Philippines based Metrobank Card Corporation (MCC). The Group has agreed to sell 20% of its stake, and entered into a put option to sell the remaining 20% stake, exercisable in the fourth quarter of 2018 on the same terms for the same consideration. The asset has been classified as held for sale at 30 September 2017 as sale negotiations were well progressed at that time, and it was highly probable the sale transaction would complete within12 months. The sale is subject to customary closing conditions and regulatory approvals. This asset is part of the TSO and Group Centre Division.

Income Statement impact relating to assets and liabilities held for sale

During the September 2017 full year, the Group recognised the following impacts in relation to assets and liabilities held for sale:

$310 million loss relating to the reclassification and partial completion of the Asia Retail and Wealth sale comprising of $222 million of software, goodwill and other assets impairment charges and $88 million of various other charges net of recoveries and sale premium.
$333 million loss relating to the Group’s investment in SRCB comprising of a $219 million impairment to the investment, $12 million of foreign exchange losses, and $102 million of tax expenses.

During the March 2017 half year, the Group recognised the following impacts in-relation to the assets and liabilities:

$324 million loss relating to the reclassification of the Group’s Asia Retail and Wealth businesses to held for sale comprising of $225 million of software, goodwill and other assets impairment charges and $99 million of costs associated with the sale.
$316 million loss relating to the Group’s investment in SRCB comprising of a $219 million impairment to the investment, $11 million of foreign exchange losses, and $86 million of tax expenses.

The net result of these impacts is included in ‘Other income’ and ‘Income tax expense’ (refer Note 2 and 4).

Assets and liabilities held for sale

At 30 September 2017, assets and liabilities held for sale are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at 30 September 2017 Net loans and advances Investment in associates Goodwill and other intangible assets Other assets	Asia Retail and Wealth businesses $M UDC Finance $M Shanghai Rural Commercial Bank $M Metrobank Card Corporation $M Total $M
	3,283 2,679 - - 5,962 - - 1,748 120 1,868 - 122 - - 122 - 18 - - 18
Total assets held for sale	3,283 2,819 1,748 120 7,970
Deposits and other borrowings Current tax liabilities Deferred tax liabilities Payables and other liabilities Provisions	3,602 956 - - 4,558 - 22 - - 22 - (8) - - (8) 47 30 - - 77 43 1 - - 44
Total liabilities held for sale	3,692 1,001 - - 4,693

As at 31 March 2017 Net loans and advances Investment in associates Goodwill and other intangible assets Other assets	Asia Retail and Wealth businesses $M UDC Finance $M Shanghai Rural Commercial Bank $M Metrobank Card Corporation $M Total $M
	9,776 2,493 - - 12,269 - - 1,735 - 1,735 - 118 - - 118 - 23 - - 23
Total assets held for sale	9,776 2,634 1,735 - 14,145
Deposits and other borrowings Current tax liabilities Payables and other liabilities Provisions	15,818 1,192 - - 17,010 - 31 - - 31 44 30 - - 74 50 1 - - 51
Total liabilities held for sale	15,912 1,254 - - 17,166

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. Shareholders’ equity

11. Shareholders’ equity
Issued and quoted securities Ordinary share capital Closing balance Issued duringtheperiod1	Half Year Sep 17 No. Mar 17 No. 2,937,415,327 2,936,037,009 1,378,318 8,560,349	Full Year
		Sep 17 No. Sep 16 No. 2,937,415,327 2,927,476,660 9,938,667 24,762,299

1. The Company issued 7.5 million shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2017 interim dividend (8.6 million shares for the 2016 final dividend; 9.7 million shares for the 2016 interim dividend) and nil shares to satisfy obligations under the Group’s Employee share acquisition plans during the September 2017 half (Mar 17 half: nil; Sep 16 full year: 5.3 million shares). Following the provision of 7.5 million shares under the Dividend Reinvestment Plan and Bonus Option Plan for the 2017 interim dividend, the Company repurchased 6.1 million of shares via an on-market share buy-back resulting in 6.1 million shares being cancelled.

repurchased 6.1 million of shares via an on-market share buy-back resulting in 6.1 million shares being cancelled.
Shareholders' equity Ordinary share capital Reserves Foreign currency translation reserve Share option reserve Available for sale revaluation reserve Cash flow hedge reserve Transactions with non-controlling interests reserve	As at
	Sep 17 $M Mar 17 $M Sep 16 $M 29,088 29,036 28,765 (196) (140) 544 87 67 79 38 31 149 131 180 329 (23) (23) (23)
Total reserves Retained earnings	37 115 1,078 29,834 28,640 27,975
Share capital and reserves attributable to shareholders of the Company Non-controlling interests	58,959 57,791 57,818 116 117 109
Total shareholders' equity	59,075 57,908 57,927

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. Changes in composition of the Group

There were no acquisitions or disposals of material controlled entities for the year ended 30 September 2017.

13. Investments in Associates

13. Investments in Associates
Share of associates' profit		Half Year Sep 17 $M Mar 17 $M Sep 17 v. Mar 17 127 173 -27%	Full Year Sep 17 $M Sep 16 $M Sep 17 v. Sep 16 300 541 -45% Ownership interest held by Group
Contributions to profit1 Associates P.T. Bank Pan Indonesia AMMB Holdings Berhad Shanghai Rural Commercial Bank2 Bank of Tianjin (up to 30 March 2016)3 Other associates4	Contribution to Group post-tax profit Half Year Full Year Sep 17 $M Mar 17 $M Sep 17 $M Sep 16 $M 51 50 101 64 48 48 96 94 - 58 58 259 - - - 86 28 17 45 38 127 173 300 541
	Half Year Sep 17 $M Mar 17 $M 51 50 48 48 - 58 - - 28 17		As at
			Sep 17 % Mar 17 % Sep 16 % 39 39 39 24 24 24 20 20 20 12 12 12 n/a n/a n/a







Share of associates' profit	127 173

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

2. On 3 January 2017, the Group announced that it had agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB). On 18th September the Group announced a revision to the 3 January arrangement in which Baoshan Iron & Steel Co. Ltd. (Bao) replaced Shanghai SinoPoland Enterprise Management Development Corporation Limited to join China COSCO Shipping Corporation Limited (COSCO) to acquire ANZ’s 20% stake in SRCB. Under the updated arrangement, COSCO and Bao will each acquire a 10% stake in SRCB. The key financial terms of the revised sale agreement are unchanged from the transaction announced previously. The sale is subject to customary closing conditions and regulatory approvals and is expected to be completed by late 2017. As a consequence, the Group ceased equity accounting for the investment in SRCB and commenced accounting for it as an asset held for sale.

3. On 30 March 2016, the Bank of Tianjin (BoT) completed a capital raising and initial public offering (IPO) on the Hong Kong Stock Exchange. As a result, the Group’s equity interest reduced from 14% to 12% and the Group ceased equity accounting the investment due to losing the ability to appoint directors to the Board of BoT at this date. From 31 March 2016, the investment was classified as an available for sale asset.

4. Includes Metrobank Card Corporation (MCC).On 18 October 2017, the Group announced it had entered into an agreement with its joint venture partner Metropolitan Bank & Trust Company (Metrobank) in relation to its 40% stake in the Philippines based Metrobank Card Corporation (MCC). The Group has agreed to sell 20% of its stake, and entered into a put option to sell the remaining 20% stake, exercisable in the fourth quarter of 2018 on the same terms for the same consideration. As the sale was announced after balance date, equity accounted earnings are included for the September 2017 full year.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

14. Contingent liabilities and contingent assets

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

Note 33 of the 2017 ANZ Annual Financial Statements (when released) will contain a description of contingent liabilities and contingent assets as at 30 September 2017. A summary of some of those contingent liabilities is set out below.

Bank fees litigation

A litigation funder commenced a class action against the Company in 2010, followed by a second similar class action in March 2013. The applicants contended that certain exception fees (honour, dishonour and non-payment fees on transaction accounts and late payment and over-limit fees on credit cards) were unenforceable penalties and that various of the fees were also unenforceable under statutory provisions governing unconscionable conduct, unfair contract terms and unjust transactions. A further action, limited to late payment fees only, commenced in August 2014.

The penalty and statutory claims in the March 2013 class action failed and the claims have been dismissed. The August 2014 action was discontinued in October 2016.

The original claims in the 2010 class action have been dismissed. A new claim has been added to the 2010 class action, in relation to the Company’s entitlement to charge certain periodical payment non-payment fees.

Benchmark/rate actions

In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including the Company – one action relating to the bank bill swap rate (BBSW), and one action relating to the Singapore Interbank Offered Rate (SIBOR) and the Singapore Swap Offer Rate (SOR). The class actions are expressed to apply to persons and entities that engaged in US-based transactions in financial instruments that were priced, benchmarked, and/or settled based on BBSW, SIBOR, or SOR. The claimants seek damages or compensation in amounts not specified, and allege that the defendant banks, including the Company, violated US anti-trust laws, anti-racketeering laws, the Commodity Exchange Act, and (in the BBSW case only) unjust enrichment principles. The Company is defending the proceedings. The matters are at an early stage.

In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil penalty or other financial impact is uncertain. The matter is at an early stage.

Regulatory reviews and customer exposures

In recent years there have been significant increases in the nature and scale of regulatory investigations and reviews, enforcement actions (whether by court action or otherwise) and the quantum of fines issued by regulators, particularly against financial institutions both in Australia and globally. The nature of these investigations and reviews can be wide ranging and, for example, currently include a range of matters including responsible lending practices, product suitability, wealth advice, pricing and competition, conduct in financial markets and capital market transactions. During the year, ANZ has received various notices and requests for information from its regulators as part of both industry-wide and ANZ-specific reviews. There may be exposures to customers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.

Security recovery actions

Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets over recent years. ANZ will defend these claims.

15. Subsequent events since balance date

On 17 October 2017, the Group announced it had agreed to sell OnePath pensions and investments (OnePath P&I) and aligned dealer groups (ADG) business to IOOF Holdings Limited (IOOF) for $975 million. Completion is expected in March 2019 half subject to certain conditions including regulatory approvals and the completion of the extraction of the OnePath P&I business from OnePath Life Insurance. The expected accounting loss on sale of ~$120 million is anticipated as a result of the sale, however the final gain/loss on sale will be determined at completion and will be impacted by transaction and separation costs, final determination of goodwill to be disposed, other balances and final taxation impacts.

On 18 October 2017, the Group announced it had entered into an agreement with its joint venture partner Metropolitan Bank & Trust Company (Metrobank) regarding the sale of its 40% stake in the Philippines based Metrobank Card Corporation (MCC). The Group has agreed to sell one half its 40% stake in MCC to Metrobank, for US$144 million (A$184 million) expected to settle in late 2017. The Group also entered into a put option to sell its remaining 20% stake to Metrobank, exercisable in the September 2018 half on the same terms and for the same consideration. If exercised, this would deliver a total sale price of US$288 million (A$368 million). The sale is subject to customary regulatory approvals.

On 23 October 2017, the Group announced it had reached a confidential in-principle agreement with the Australian Securities and Investments Commission (ASIC) to settle court action in respect of interbank trading and the bank bill swap rate (BBSW). A final resolution had not been agreed at the date of this report. Based on the in-principle agreement, the financial impact to ANZ has been reflected in the financial statements.

Other than the matters above, there have been no significant events from 30 September 2017 to the date of signing this report.

100

SUPPLEMENTARY INFORMATION

Supplementary Information

Capital management Average balance sheet and related interest Funds management and insurance income analysis (Group) Select geographical disclosures Exchange rates

101

SUPPLEMENTARY INFORMATION

Capital management

Qualifying Capital Tier 1 Shareholders' equity and non-controlling interests Prudential adjustments to shareholders' equity Table 1	As at Sep 17 $M Mar 17 $M Sep 16 $M 59,075 57,908 57,927 (481) (509) (481)	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 2% 2% -6% 0%
Gross Common Equity Tier 1 capital Deductions Table 2	58,594 57,399 57,446 (17,258) (17,182) (18,179)	2% 2% 0% -5%
Common Equity Tier 1 capital Additional Tier 1 capital Table 3	41,336 40,217 39,267 7,988 7,874 9,018	3% 5% 1% -11%
Tier 1 capital	49,324 48,091 48,285	3% 2%
Tier 2 capital Table 4	8,669 9,648 10,328	-10% -16%
Total qualifying capital	57,993 57,739 58,613	0% -1%
Capital adequacy ratios Common Equity Tier 1 Tier 1 Tier 2	10.6% 10.1% 9.6% 12.6% 12.1% 11.8% 2.2% 2.4% 2.5%
Total	14.8% 14.5% 14.3%
Risk weighted assets Table 5	391,113 397,040 408,582	-1% -4%

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SUPPLEMENTARY INFORMATION

Capital management, cont’d

Table 1: Prudential adjustments to shareholders' equity Treasury shares attributable to ANZ Wealth Australia policyholders Accumulated retained profits and reserves of insurance and funds management entities Deferred fee revenue including fees deferred as part of loan yields Available for sale reserve attributable to deconsolidated subsidiaries Other	As at Sep 17 $M Mar 17 $M Sep 16 $M 326 324 395 (711) (811) (875) 131 175 238 (83) (82) (110) (144) (115) (129)	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 1% -17% -12% -19% -25% -45% 1% -25% 25% 12%
Total	(481) (509) (481)	-6% 0%
Table 2: Deductions from Common Equity Tier 1 capital Unamortised goodwill & other intangibles (excluding ANZ Wealth Australia and New Zealand) Intangible component of investments in ANZ Wealth Australia and New Zealand Capitalised software Capitalised expenses including loan and lease origination fees Applicable deferred net tax assets Expected losses in excess of eligible provisions Table 8 Investment in other insurance and funds management subsidiaries Investment in ANZ Wealth Australia and New Zealand Investment in banking associates and minority interests Other deductions	(3,553) (3,532) (3,913) (2,100) (2,099) (2,103) (1,826) (1,887) (2,139) (1,149) (1,129) (1,148) (946) (902) (899) (719) (696) (700) (274) (274) (297) (1,750) (1,749) (1,752) (3,919) (3,826) (4,674) (1,022) (1,088) (554)	1% -9% 0% 0% -3% -15% 2% 0% 5% 5% 3% 3% 0% -8% 0% 0% 2% -16% -6% 84%
Total	(17,258) (17,182) (18,179)	0% -5%
Table 3: Additional Tier 1 capital Convertible Preference Shares ANZ CPS2 ANZ CPS3 ANZ Capital Notes 1 ANZ Capital Notes 2 ANZ Capital Notes 3 ANZ Capital Notes 4 ANZ Capital Notes 5 ANZ Bank NZ Capital Notes ANZ Capital Securities Regulatory adjustments and deductions	- - 1,068 573 1,340 1,340 1,116 1,116 1,115 1,604 1,603 1,602 963 962 962 1,608 1,607 1,604 925 - - 457 454 473 1,206 1,218 1,329 (464) (426) (475)	n/a -100% -57% -57% 0% 0% 0% 0% 0% 0% 0% 0% n/a n/a 1% -3% -1% -9% 9% -2%
Total	7,988 7,874 9,018	1% -11%
Table 4: Tier 2 capital General reserve for impairment of financial assets Perpetual subordinated notes Term subordinated debt notes Regulatory adjustments and deductions Transitional adjustments	200 257 267 1,150 1,156 1,190 8,108 10,841 11,281 (789) (518) (936) - (2,088) (1,474)	-22% -25% -1% -3% -25% -28% 52% -16% -100% -100%
Total	8,669 9,648 10,328	-10% -16%

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SUPPLEMENTARY INFORMATION

Capital management, cont’d

Table 5: Risk weighted assets On balance sheet Commitments Contingents Derivatives	As at Sep 17 $M Mar 17 $M Sep 16 $M 254,534 253,532 259,356 53,546 56,279 58,167 11,704 12,648 13,295 17,050 19,350 21,215	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 0% -2% -5% -8% -7% -12% -12% -20%
Total credit risk Table 6 Market risk - Traded Market risk - IRRBB Operational risk	336,834 341,809 352,033 5,363 6,323 6,188 11,611 10,332 11,700 37,305 38,576 38,661	-1% -4% -15% -13% 12% -1% -3% -4%
Total risk weighted assets	391,113 397,040 408,582	-1% -4%

Table 6: Credit risk weighted assets by Basel asset class Subject to Advanced IRB approach Corporate Sovereign Bank Residential mortgage Qualifying revolving retail (credit cards) Other retail	As at Sep 17 $M Mar 17 $M Sep 16 $M 121,915 127,544 130,799 7,555 6,718 6,634 13,080 14,267 14,884 96,267 86,218 84,275 7,059 7,513 7,334 31,077 31,004 31,360	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -4% -7% 12% 14% -8% -12% 12% 14% -6% -4% 0% -1%
Credit risk weighted assets subject to Advanced IRB approach	276,953 273,264 275,286	1% 1%

Credit risk specialised lending exposures subject to slotting criteria	31,845 33,896 36,100	-6% -12%
Subject to Standardised approach Corporate Residential mortgage Other retail (includes credit cards)	13,365 16,264 20,459 950 2,354 2,493 2,000 3,131 3,277	-18% -35% -60% -62% -36% -39%
Credit risk weighted assets subject to Standardised approach	16,315 21,749 26,229	-25% -38%

Credit Valuation Adjustment and Qualifying Central Counterparties	7,269 8,168 9,371	-11% -22%
Credit risk weighted assets relating to securitisation exposures Other assets	1,083 1,171 1,203 3,369 3,561 3,844	-8% -10% -5% -12%
Total credit risk weighted assets	336,834 341,809 352,033	-1% -4%

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SUPPLEMENTARY INFORMATION

Capital management, cont’d

Table 7: Total provision for credit impairment and expected loss by division Australia Institutional New Zealand Asia Retail & Pacific TSO and Group Centre	Collective Provision and Individual Provision Sep 17 $M Mar 17 $M Sep 16 $M 1,905 1,877 1,794 1,286 1,494 1,683 454 470 491 150 199 211 3 14 4	Basel Expected Loss1
		Sep 17 $M Mar 17 $M Sep 16 $M 2,835 2,735 2,654 866 1,337 1,404 754 766 802 8 5 7 - - 1
Total provision for credit impairment and expected loss	3,798 4,054 4,183	4,463 4,843 4,868

1. Only applicable to Advanced Internal Ratings based portfolios.

Table 8: APRA Expected loss in excess of eligible provisions APRA Basel 3 expected loss: non-defaulted Less: Qualifying collective provision Collective provision Non-qualifying collective provision Standardised collective provision	As at Sep 17 $M Mar 17 $M Sep 16 $M 2,829 2,866 2,959 (2,662) (2,785) (2,876) 352 349 350 200 257 267	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 -1% -4% -4% -7% 1% 1% -22% -25%
Non-defaulted excess included in deduction APRA Basel 3 expected loss: defaulted Less: Qualifying individual provision Individual provision Additional individual provision for partial write offs Standardised individual provision Collective provision on advanced defaulted	719 687 700 1,634 1,977 1,909 (1,136) (1,269) (1,307) (300) (540) (509) 117 149 195 (320) (308) (304)	5% 3% -17% -14% -10% -13% -44% -41% -21% -40% 4% 5%
Shortfall in expected loss not included in deduction	(5) 9 (16) 5 - 16	large -69% n/a -69%
Defaulted excess included in deduction	- 9 -	-100% n/a
Gross deduction	719 696 700	3% 3%

105

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest1, 2, 3

Average balance sheet and related interest 1, 2, 3
Loans and advances Home loans Consumer finance Business lending Individual provisions for credit impairment	Full Year Sep 17 Avg bal Int Rate $M $M % 307,312 14,193 4.6% 23,319 2,357 10.1% 227,732 9,388 4.1% (1,291) - n/a	Full Year Sep 16
		Avg bal Int Rate $M $M % 291,551 14,379 4.9% 24,659 2,457 10.0% 235,911 10,006 4.2% (1,113) - n/a
Total	557,072 25,938 4.7%	551,008 26,842 4.9%
Non-lending interest earning assets Cash and other liquid assets Trading and available for sale assets Other assets	84,161 654 0.8% 105,398 2,322 2.2% 1,369 206 n/a	78,916 623 0.8% 99,676 2,316 2.3% 1,235 170 n/a
Total	190,928 3,182 1.7%	179,827 3,109 1.7%
Total interest earning assets4	748,000 29,120 3.9%	730,835 29,951 4.1%
Non-interest earning assets	171,084	177,074
Total average assets	919,084	907,909
Deposits and other borrowings Certificates of deposit Term deposits On demand and short term deposits Deposits from banks and securities sold under agreement to repurchase Commercial paper and other borrowings	58,553 1,267 2.2% 199,651 4,041 2.0% 219,979 3,607 1.6% 63,464 821 1.3% 10,875 265 2.4%	62,717 1,505 2.4% 198,440 3,837 1.9% 205,673 4,163 2.0% 52,034 647 1.2% 24,492 635 2.6%
Total	552,522 10,001 1.8%	543,356 10,787 2.0%
Non-deposit interest bearing liabilities Collateral received and settlement balances owed by ANZ Debt issuances & subordinated debt Other liabilities	10,910 67 0.6% 113,297 3,885 3.4% 2,779 295 n/a	11,337 71 0.6% 103,596 3,773 3.6% 5,195 225 n/a
Total	126,986 4,247 3.3%	120,128 4,069 3.4%
Total interest bearing liabilities4	679,508 14,248 2.1%	663,484 14,856 2.2%
Non-interest bearing liabilities	181,312	187,284
Total average liabilities	860,820	850,768
Total average shareholders' equity	58,264	57,141

1. Averages used are predominantly daily averages.

2. In the March 2017 half, the Group changed its calculation of net interest margin to net Australian home loan deposit offset balances against total average interest earning assets (Sep 16 half: $23,653 million; Mar 16 half: $22,996 million). Refer to page 22 for further details.

3. Balance sheet amounts and metrics as at 30 September 2017 include assets and liabilities held for sale.

4. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.

106

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest1, 2, 3 (cont’d)

Average balance sheet and related interest 1, 2, 3 (cont’d)
Loans and advances Australia Asia Pacific, Europe & America New Zealand	Full Year Sep 17 Avg bal Int Rate $M $M % 379,137 18,324 4.8% 62,278 2,141 3.4% 115,657 5,474 4.7%	Full Year Sep 16
		Avg bal Int Rate $M $M % 366,603 18,786 5.1% 74,244 2,437 3.3% 110,161 5,619 5.1%
Total	557,072 25,939 4.7%	551,008 26,842 4.9%
Trading and available for sale assets Australia Asia Pacific, Europe & America New Zealand	59,650 1,332 2.2% 31,330 560 1.8% 14,418 429 3.0%	57,448 1,371 2.4% 28,041 462 1.6% 14,187 483 3.4%
Total	105,398 2,321 2.2%	99,676 2,316 2.3%
Total interest earning assets4 Australia Asia Pacific, Europe & America New Zealand	470,056 20,074 4.3% 144,049 3,013 2.1% 133,895 6,033 4.5%	449,446 20,569 4.6% 152,508 3,085 2.0% 128,881 6,297 4.9%
Total	748,000 29,120 3.9%	730,835 29,951 4.1%
Total average assets Australia Asia Pacific, Europe & America New Zealand	596,514 169,630 152,940	576,893 179,431 151,585
Total average assets	919,084	907,909
Interest bearing deposits and other borrowings Australia Asia Pacific, Europe & America New Zealand	322,837 6,595 2.0% 141,543 1,330 0.9% 88,142 2,076 2.4%	309,714 7,350 2.4% 148,751 1,077 0.7% 84,891 2,360 2.8%
Total	552,522 10,001 1.8%	543,356 10,787 2.0%
Total interest bearing liabilities4 Australia Asia Pacific, Europe & America New Zealand	403,650 9,425 2.3% 165,464 1,901 1.1% 110,394 2,922 2.6%	387,780 10,224 2.6% 170,146 1,439 0.8% 105,558 3,193 3.0%
Total	679,508 14,248 2.1%	663,484 14,856 2.2%
Total average liabilities Australia Asia Pacific, Europe & America New Zealand	537,791 188,154 134,875	525,213 193,029 132,526
Total average liabilities	860,820	850,768
Total average shareholders' equity Ordinary share capital, reserves, retained earnings and non-controlling interests	58,264	57,141
Total average shareholders' equity	58,264	57,141
Total average liabilities and shareholder's equity	919,084	907,909

1. Averages used are predominantly daily averages.

2. In the March 2017 half, the Group changed its calculation of net interest margin to net Australian home loan deposit offset balances against total average interest earning assets (Sep 16 half: $23,653 million; Mar 16 half: $22,996 million). Refer to page 22 for further details.

3. Balance sheet amounts and metrics as at 30 September 2017 include assets and liabilities held for sale.

4. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.

107

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest1, 2 (cont’d)

Average balance sheet and related interest 1, 2 (cont’d)
Loans and advances Home Loans Consumer Finance Business Lending Individual provision for credit impairment	Half Year Sep 17 Avg bal Int Rate $M $M % 311,138 7,232 4.6% 22,556 1,143 10.1% 225,924 4,724 4.2% (1,262) - n/a	Half Year Mar 17
		Avg bal Int Rate $M $M % 303,459 6,961 4.6% 24,089 1,214 10.1% 229,553 4,664 4.1% (1,320) - n/a
Total	558,356 13,099 4.7%	555,781 12,839 4.6%
Non-lending interest earning assets Cash and other liquid assets Trading and available-for-sale assets Other assets	86,130 325 0.8% 106,245 1,172 2.2% 1,342 98 n/a	82,182 329 0.8% 104,548 1,150 2.2% 1,395 108 n/a
Total	193,717 1,595 1.6%	188,125 1,587 1.7%
Total interest earning assets3	752,073 14,694 3.9%	743,906 14,426 3.9%
Non-interest earning assets	168,196	173,988
Total average assets	920,269	917,894
Deposits and other borrowings Certificates of deposit Term deposits On demand and short term deposits Deposits from banks and securities sold under agreements to repurchase Commercial paper and other borrowings	57,610 603 2.1% 194,258 2,090 2.1% 230,143 1,830 1.6% 62,668 442 1.4% 9,721 116 2.4%	59,500 664 2.2% 205,073 1,951 1.9% 209,759 1,777 1.7% 64,267 379 1.2% 12,035 149 2.5%
Total	554,400 5,081 1.8%	550,634 4,920 1.8%
Non-deposit interest bearing liabilities Collateral received and settlement balances owed by ANZ Debt issuances & subordinated debt Other liabilities	10,839 36 0.7% 114,902 1,945 3.4% 2,657 176 n/a	10,982 31 0.6% 111,683 1,940 3.5% 2,902 119 n/a
Total	128,398 2,157 3.3%	125,567 2,090 3.3%
Total interest bearing liabilities3	682,798 7,238 2.1%	676,201 7,010 2.1%
Non-interest bearing liabilities	178,745	183,894
Total average liabilities	861,543	860,095
Total average shareholders' equity	58,726	57,799

1. Averages used are predominantly daily averages.

2. Balance sheet amounts and metrics as at 30 September 2017 and 31 March 2017 include assets and liabilities held for sale.

3. Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.

108

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest1, 2 (cont’d)

Average balance sheet and related interest 1, 2 (cont’d)
Loans and advances Australia Asia Pacific, Europe & America New Zealand	Half Year Sep 17 Avg bal Int Rate $M $M % 382,613 9,299 4.8% 59,871 1,048 3.5% 115,872 2,752 4.7%	Half Year Mar 17
		Avg bal Int Rate $M $M % 375,642 9,024 4.8% 64,699 1,093 3.4% 115,440 2,722 4.7%
Total	558,356 13,099 4.7%	555,781 12,839 4.6%
Trading and available-for-sale assets Australia Asia Pacific, Europe & America New Zealand	58,974 671 2.3% 33,162 296 1.8% 14,109 205 2.9%	60,330 662 2.2% 29,489 264 1.8% 14,729 224 3.0%
Total	106,245 1,172 2.2%	104,548 1,150 2.2%
Total interest earning assets3 Australia Asia Pacific, Europe & America New Zealand	473,945 10,162 4.3% 144,345 1,522 2.1% 133,783 3,010 4.5%	466,147 9,912 4.3% 143,750 1,491 2.1% 134,009 3,023 4.5%
Total	752,073 14,694 3.9%	743,906 14,426 3.9%
Total average assets Australia Asia Pacific, Europe & America New Zealand	599,342 168,967 151,960	593,672 170,297 153,925
Total average assets	920,269	917,894
Interest bearing deposits and other borrowings Australia Asia Pacific, Europe & America New Zealand	327,013 3,296 2.0% 139,591 740 1.1% 87,796 1,045 2.4%	318,638 3,299 2.1% 143,505 590 0.8% 88,491 1,031 2.3%
Total	554,400 5,081 1.8%	550,634 4,920 1.8%
Total interest bearing liabilities3 Australia Asia Pacific, Europe & America New Zealand	408,615 4,744 2.3% 163,644 1,030 1.3% 110,539 1,464 2.6%	398,657 4,681 2.4% 167,295 871 1.0% 110,249 1,458 2.7%
Total	682,798 7,238 2.1%	676,201 7,010 2.1%
Total average liabilities Australia Asia Pacific, Europe & America New Zealand	541,175 186,034 134,334	534,389 190,287 135,419
Total average liabilities	861,543	860,095
Total average shareholders' equity Ordinary share capital, reserves, retained earnings and non-controlling interests	58,726	57,799
Total average shareholders' equity	58,726	57,799
Total average liabilities and shareholder's equity	920,269	917,894

109

SUPPLEMENTARY INFORMATION

Average balance sheet and related interest1 (cont’d)

Gross earnings rate2 Australia Asia Pacific, Europe & America New Zealand Group	Half Year Sep 17 % Mar 17 % 4.46 4.49 2.08 1.99 4.49 4.52 3.90 3.89	Full Year
		Sep 17 % Sep 16 % 4.48 4.76 2.03 1.89 4.51 4.89 3.89 4.10

Net interest spread and net interest margin may be analysed as follows:

Net interest spread and net interest margin may be analysed as follows:
Australia2 Net interest spread Interest attributable to net non-interest bearing items	Half Year Sep 17 % Mar 17 % 2.08 2.07 0.23 0.24	Full Year
		Sep 17 % Sep 16 % 2.07 2.12 0.24 0.28
Net interest margin - Australia	2.31 2.31	2.31 2.40
Asia Pacific, Europe & America2 Net interest spread Interest attributable to net non-interest bearing items	0.82 0.95 0.05 0.04	0.89 1.04 0.05 0.03
Net interest margin - Asia Pacific, Europe & America	0.87 0.99	0.94 1.07
New Zealand2 Net interest spread Interest attributable to net non-interest bearing items	1.81 1.84 0.34 0.33	1.82 1.83 0.33 0.36
Net interest margin - New Zealand	2.15 2.17	2.15 2.19
Group Net interest spread Interest attributable to net non-interest bearing items	1.79 1.81 0.19 0.19	1.80 1.86 0.19 0.21
Net interest margin	1.98 2.00	1.99 2.07
Net interest margin (excluding Markets)	2.61 2.58	2.59 2.64

1. In the March 2017 half, the Group changed its calculation of net interest margin to net Australian home loan deposit offset balances against total average interest earning assets (Sep 16 half: $23,653 million; Mar 16 half: $22,996 million). Refer to page 22 for further details.

2. Geographic gross earnings rate, net interest spread and net interest margin are calculated gross of intra group items (Intra-group interest earning assets and associated interest income and intra-group interest bearing liabilities and associated interest expense).

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SUPPLEMENTARY INFORMATION

Funds management and insurance income analysis (Group)

The tables below supplement the Wealth Australia disclosures provided on pages 69 to 71 to present the Group’s overall funds management and insurance businesses by incorporating the relevant Australia division, New Zealand division and Asia Retail & Pacific division funds management and insurance businesses.

Reference Page Net funds management and insurance income - statutory basis 82 Adjustments between cash and statutory profit (pre-tax) Treasury shares adjustment 78 Policyholders tax gross up 78 Revaluation of policy liabilities 78	Half Year	Full Year
	Sep 17 $M Mar 17 $M Sep 17 v. Mar 17 804 696 16% (21) 82 large (116) (161) -28% (3) 51 large	Sep 17 $M Sep 16 $M Sep 17 v. Sep 16 1,500 1,764 -15% 61 46 33% (277) (217) 28% 48 (75) large
Net funds management and insurance income - cash basis 78 Wealth Australia - Funds management and insurance income Australia - Funds management and insurance income New Zealand - Funds management and insurance income Asia Retail & Pacific - Funds management and insurance income Inter-divisional eliminations	664 668 -1% 500 493 1% 10 13 -23% 170 173 -2% 35 47 -26% (51) (58) -12%	1,332 1,518 -12% 993 1,156 -14% 23 47 -51% 343 330 4% 82 119 -31% (109) (134) -19%
Net funds management and insurance income - cash basis 25	664 668 -1%	1,332 1,518 -12%
Insurance operating margin Life Insurance Planned profit margin Group & Individual Experience profit/(loss)1 General Insurance operating profit margin	Half Year Sep 17 $M Mar 17 $M Movt 72 64 13% (22) (26) -15% 54 64 -16%	Full Year Sep 17 $M Sep 16 $M Movt 136 151 -10% (48) (8) large 118 110 7% 206 253 -19% 59 40 48% 2 13 -85% 61 53 15% 267 306 -13%







Wealth Australia	104 102 2%
Life Insurance Planned profit margin Individual Experience profit/(loss)1	23 36 -36% (1) 3 large


New Zealand	22 39 -44%
Total	126 141 -11%

Total 126 141 -11% 2	Total 126 141 -11% 2	67 306 -13%
1. Experience profit/(loss) variations are gains or losses arising from actual experience differing from plan, predominantly driven by lapses, claims and expense As at Insurance annual in-force premiums Sep 17 $M Mar 17 $M Sep 16 $M Group 431 427 445 Individual 1,362 1,348 1,339 General Insurance 231 226 226		s. Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 1% -3% 1% 2% 2% 2%
Total	2,024 2,001 2,010	1% 1%
Insurance in-force book movement Group Individual General Insurance	Sep 16 $M New business $M1 445 38 1,339 156 226 165	Lapses $M Sep 17 $M (52) 431 (133) 1,362 (160) 231
Total	2,010 359	(345) 2,024

1. New business includes the impact of foreign currency gains/(losses) on translation.

111

SUPPLEMENTARY INFORMATION

Funds management and insurance income analysis (Group) (cont’d)

Funds under management Funds under management - average Funds under management - end of period	As at Sep 17 $M Mar 17 $M Sep 16 $M 77,746 75,714 74,347 77,985 76,509 75,918	Movement
		Sep 17 v. Mar 17 Sep 17 v. Sep 16 3% 5% 2% 3%
Composed of: Australian equities International equities Cash and fixed interest Property and infrastructure	15,755 17,104 16,963 21,812 20,207 18,422 34,961 34,203 35,800 5,457 4,995 4,733	-8% -7% 8% 18% 2% -2% 9% 15%
Total	77,985 76,509 75,918	2% 3%
Funds Management cash flows by product Wealth Australia Division Open Solutions OneAnswer Frontier ANZ Smart Choice Wrap (Voyage and Grow) Closed Solutions Retail Employer Australia Division Private Bank New Zealand Division KiwiSaver Retail Private Bank Bonus Bonds Other New Zealand	Sep 16 Inflows Outflows Other1 Sep 17 $M $M $M $M $M 9,958 1,575 (1,346) 745 10,932 11,190 2,363 (1,410) 3,729 15,872 2,160 645 (378) 654 3,081 19,028 739 (2,994) (170) 16,603 5,915 143 (587) (2,899) 2,572 2,411 530 (378) 147 2,710 8,864 792 (383) 892 10,165 2,741 3,262 (2,925) 18 3,096 6,682 1,040 (1,038) (65) 6,619 3,397 935 (1,071) (128) 3,133 3,572 334 (632) (72) 3,202
Total	75,918 12,358 (13,142) 2,851 77,985

1. Other includes investment income net of taxes, fees and charges, distributions and the impact of foreign currency translations. In Wealth Australia it also includes the transition of funds under management from Employer Super to ANZ Smart Choice of approximately $2.9 billion, as a result of regulatory changes in the industry.

	Wealth	New
	Australia	Zealand	Total
Embedded value and value of new business (insurance and investments only)	$M1	$M	$M
Embedded value as at September 20162	4,536	616	5,152
Value of new business3	138	14	152
Expected return4	304	50	354
Experience deviations and assumption changes5	(85)	47	(38)
Embedded value before economic assumption changes and net transfer	4,893	727	5,620
Economic assumptions change6	(110)	(56)	(166)
Net transfer7	(291)	(48)	(339)
Embedded value as at September 2017	4,492	623	5,115

1. The product lines used are on the same basis as prior periods. This is different to the product lines that are subject to the strategic review in Wealth Australia.

3. Value of new business represents the present value of future profits less the cost of capital arising from new business written over the period.

4. Expected return represents the expected increase in value over the period.

5. Experience deviations and assumption changes arise from deviations and changes to best estimate assumptions underlying the prior period embedded value. Negative experience in Wealth Australia was primarily driven by adverse claims experience during the year, strengthening of claims assumptions in Retail Insurance partially offset by implementation of various product initiatives.

6. Interest rate movements have led to a negative value impact.

7. Net transfer represents the net capital movements over the period including capital injections, transfer of cash dividends paid and value of franking credits. For Wealth Australia there was $225 million of cash dividends paid, $12 million of dividends in AT1 preference shares paid and the value of $54 million of franking credits which is expected to be transferred to the parent entity. For New Zealand there were NZD $50m of cash dividends paid.

112

SUPPLEMENTARY INFORMATION

Select geographical disclosures

The following divisions operate across the geographic locations illustrated below:

Institutional division – Asia, Europe & America, Pacific and New Zealand
Asia Retail & Pacific division – Asia and Pacific
New Zealand division – New Zealand

Asia Pacific, Europe & America geography

Asia Pacific, Europe & America geography
		Europe &
	Asia	America	Pacific	APEA Total
	$M	$M	$M	$M
September 2017 Full Year
Statutory profit	245	210	168	623
Cash profit	244	169	168	581
Net loans and advances	42,047	8,825	3,208	54,080
Customer deposits	49,616	50,054	5,477	105,147
Risk weighted assets	45,353	18,796	7,578	71,727
September 2016 Full Year
Statutory profit	290	183	161	634
Cash profit	291	206	161	658
Net loans and advances	54,303	8,441	3,636	66,380
Customer deposits	60,635	48,138	5,491	114,264
Risk weighted assets	59,132	21,698	7,725	88,555
September 2017 Half Year
Statutory profit	253	59	73	385
Cash profit	254	62	73	389
Net loans and advances	42,047	8,825	3,208	54,080
Customer deposits	49,616	50,054	5,477	105,147
Risk weighted assets	45,353	18,796	7,578	71,727
March 2017 Half Year
Statutory profit	(8)	151	95	238
Cash profit	(10)	107	95	192
Net loans and advances	49,568	7,695	3,412	60,675
Customer deposits	60,656	52,521	5,374	118,551
Risk weighted assets	55,062	19,852	7,555	82,469

113

SUPPLEMENTARY INFORMATION

New Zealand geography (in NZD)

New Zealand geography (in NZD)
Net interest income Other operating income	Half Year Sep 17 NZD M Mar 17 NZD M Movt 1,544 1,534 1% 485 514 -6%	Full Year
		Sep 17 NZD M Sep 16 NZD M Movt 3,078 3,029 2% 999 795 26%
Operating income Operating expenses	2,029 2,048 -1% (728) (718) 1%	4,077 3,824 7% (1,446) (1,580) -8%
Profit before credit impairment and income tax Credit impairment (charge)/release	1,301 1,330 -2% (19) (40) -53%	2,631 2,244 17% (59) (149) -60%
Profit before income tax Income tax expense and non-controlling interests	1,282 1,290 -1% (355) (362) -2%	2,572 2,095 23% (717) (566) 27%
Cash profit Adjustments between statutory profit and cash profit	927 928 0% (16) (59) -73%	1,855 1,529 21% (75) 13 large
Statutory profit	911 869 5%	1,780 1,542 15%
Individual credit impairment charge/(release) - cash Collective credit impairment charge/(release) - cash Net loans and advances Customer deposits Risk weighted assets Total full time equivalent staff (FTE)	36 69 -48% (17) (29) -41% 124,880 122,954 2% 96,829 96,259 1% 72,162 74,511 -3% 7,755 7,761 0%	105 138 -24% (46) 11 large 124,880 120,651 4% 96,829 91,360 6% 72,162 76,005 -5% 7,755 7,869 -1%

Exchange rates

Major exchange rates used in the translation of foreign subsidiaries, branches, investments in associates and issued debt are as follows:

Chinese Renminbi Euro Pound Sterling Indian Rupee Indonesian Rupiah Japanese Yen Malaysian Ringgit New Taiwan Dollar New Zealand Dollar Papua New Guinean Kina United States Dollar	Balance sheet As at Sep 17 Mar 17 Sep 16 5.2297 5.2716 5.0809 0.6655 0.7160 0.6789 0.5848 0.6122 0.5874 51.289 49.557 50.764 10,565 10,184 9,900 88.404 85.565 76.844 3.3155 3.3834 3.1576 23.795 23.216 23.895 1.0867 1.0939 1.0487 2.5102 2.4304 2.4143 0.7845 0.7644 0.7617	Profit & Loss Average	Profit & Loss Average
		Half Year Sep 17 Mar 17 5.1781 5.1672 0.6729 0.7025 0.5916 0.6071 49.236 50.639 10,191 10,018 84.942 83.904 3.2884 3.3021 23.148 23.681 1.0671 1.0593 2.4348 2.3906 0.7650 0.7533	Full Year
			Sep 17 Sep 16 5.1868 4.8064 0.6896 0.6626 0.6010 0.5159 50.074 49.179 10,132 9,887 84.655 82.039 3.3043 3.0430 23.479 23.904 1.0661 1.0737 2.4193 2.2606 0.7612 0.7361

114

DEFINITIONS

AASB – Australian Accounting Standards Board. The term “AASB” is commonly used when identifying Australian Accounting Standards issued by the AASB.

ADI – Authorised Deposit-taking Institution.

APRA – Australian Prudential Regulation Authority.

APS – ADI Prudential Standard.

BCBS – Basel Committee on Banking Supervision.

Cash and cash equivalents comprise coins, notes, money at call, balances held with central banks, liquid settlement balances (readily convertible to known amounts of cash which are subject to insignificant risk of changes in value) and securities purchased under agreements to resell (“reverse repos”) in less than three months.

Cash profit is an additional measure of profit which is prepared on a basis other than in accordance with accounting standards. Cash profit represents ANZ’s preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory profit as noted below. These items are calculated consistently period on period so as not to discriminate between positive and negative adjustments.

Gains and losses are adjusted where they are significant, or have the potential to be significant in any one period, and fall into one of three categories:

gains or losses included in earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with the ongoing operations of the Group;
treasury shares, revaluation of policy liabilities, economic hedging impacts and similar accounting items that represent timing differences that will reverse through earnings in the future; and
accounting reclassifications between individual line items that do not impact reported results, such as policyholders tax gross up.

Cash profit is not a measure of cash flow or profit determined on a cash accounting basis.

Collective provision is the provision for credit losses that are inherent in the portfolio but not able to be individually identified. A collective provision is only recognised when a loss event has occurred. Losses expected as a result of future events, no matter how likely, are not recognised.

Covered bonds are bonds issued by an ADI to external investors secured against a pool of the ADI’s assets (the cover pool) assigned to a bankruptcy remote special purpose entity. The primary assets forming the cover pool are mortgage loans. The mortgages remain on the issuer’s balance sheet. The covered bond holders have dual recourse to the issuer and the cover pool assets. The mortgages included in the cover pool cannot be otherwise pledged or disposed of but may be repurchased and substituted in order to maintain the credit quality of the pool. The Group issues covered bonds as part of its funding activities.

Credit risk is the risk of financial loss resulting from the failure of ANZ’s customers and counterparties to honour or perform fully the terms of a loan or contract.

Credit risk weighted assets represent assets which are weighted for credit risk according to a set formula as prescribed in APS 112/113.

Customer deposits represent term deposits, other deposits bearing interest, deposits not bearing interest and borrowing corporations’ debt excluding securitisation deposits.

Derivative credit valuation adjustment (CVA) – Over the life of a derivative instrument, ANZ uses a CVA model to adjust fair value to take into account the impact of counterparty credit quality. The methodology calculates the present value of expected losses over the life of the financial instrument as a function of probability of default, loss given default, expected credit risk exposure and an asset correlation factor. Impaired derivatives are also subject to a CVA.

Dividend payout ratio is the total ordinary dividend payment divided by profit attributable to shareholders of the Company, adjusted for the amount of preference share dividends paid.

Gross loans and advances (GLA) is made up of loans and advances, acceptances and capitalised brokerage/mortgage origination fees less unearned income.

IFRS – International Financial Reporting Standards.

Impaired assets are those financial assets where doubt exists as to whether the full contractual amount will be received in a timely manner, or where concessional terms have been provided because of the financial difficulties of the customer. Financial assets are impaired if there is objective evidence of impairment as a result of a loss event that occurred prior to the reporting date, and that loss event has had an impact, which can be reliably estimated, on the expected future cash flows of the individual asset or portfolio of assets.

Impaired loans comprise drawn facilities where the customer’s status is defined as impaired.

Individual provision is the amount of expected credit losses on financial instruments assessed for impairment on an individual basis (as opposed to on a collective basis). It takes into account expected cash flows over the lives of those financial instruments.

Interest rate risk in the banking book (IRRBB) relates to the potential adverse impact of changes in market interest rates on ANZ’s future net interest income. The risk generally arises from:

Repricing and yield curve risk - the risk to earnings or market value as a result of changes in the overall level of interest rates and/or the relativity of these rates across the yield curve;
Basis risk - the risk to earnings or market value arising from volatility in the interest margin applicable to banking book items; and
Optionality risk - the risk to earnings or market value arising from the existence of stand-alone or embedded options in banking book items.

Internationally comparable ratios are 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). They also include differences identified in APRA’s information paper entitled International Capital Comparison Study (13 July 2015).

Net interest margin is net interest income as a percentage of average interest earning assets.

Net loans and advances represent gross loans and advances less provisions for credit impairment.

115

DEFINITIONS

Net tangible assets equal share capital and reserves attributable to shareholders of the Company less preference share capital and unamortised intangible assets (including goodwill and software).

Operating expenses include personnel expenses, premises expenses, technology expenses, restructuring expenses, and other operating expenses (excluding credit impairment charges).

Operating income includes net interest income, net fee and commission income, net funds management and insurance income, share of associates’ profit and other income.

Restructured items comprise facilities in which the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.

Return on average assets is the profit attributable to shareholders of the Company, adjusted for the amount of preference share dividends paid, divided by average total assets.

Return on average ordinary shareholders’ equity is the profit attributable to shareholders of the Company, adjusted for the amount of preference share dividends paid, divided by average ordinary shareholders’ equity.

Regulatory deposits are mandatory reserve deposits lodged with local central banks in accordance with statutory requirements.

Risk weighted assets (RWA) – Assets (both on and off-balance sheet) are risk weighted according to each asset’s inherent potential for default and what the likely losses would be in the case of default. In the case of non asset backed risks (i.e. market and operational risk), RWA is determined by multiplying the capital requirements for those risks by 12.5.

Settlement balances owed to/by ANZ represent financial assets and/or liabilities which are in the course of being settled. These may include trade dated assets and liabilities, nostro/vostro accounts and securities settlement accounts.

116

DEFINITIONS

Description of divisions

During the March 2017 half, the Group made changes to the Group’s operating model for technology, operations and shared services to accelerate delivery of its technology and digital roadmap, bring operations closer to its customers and continue operational efficiency gains. As a result of these organisational changes, divisional operations from Technology, Services & Operations (“TSO”) and Group Centre have been realigned to divisions. The residual TSO and Group Centre now contains Group Technology, Group Hubs, Enterprise Services and Group Property and the Group Centre. The Group operates on a divisional structure with six divisions: Australia, New Zealand, Institutional, Asia Retail & Pacific, Wealth Australia and Technology, Services & Operations and Group Centre.

Other than those described above, there have been no other significant structural changes in 2017. However, certain prior period comparatives have been restated to align with current period presentation. The divisions reported below are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.

Australia

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

Retail provides products and services to consumer and private banking customers in Australia via the branch network, mortgage specialists, the contact centre and a variety of self-service channels (internet banking, phone banking, ATMs, website and digital banking) and third party brokers.
C&CB provides a full range of banking services including traditional relationship banking and sophisticated financial solutions, including asset financing through dedicated managers focusing on privately owned small, medium and large enterprises as well as the agricultural business segment.

Institutional

The Institutional division services global institutional and business customers across three product sets: Transaction Banking, Loans & Specialised Finance and Markets.

Transaction Banking provides working capital and liquidity solutions including documentary trade, supply chain financing as well as cash management solutions, deposits, payments and clearing.
Loans & Specialised Finance provides loan products, loan syndication, specialised loan structuring and execution, project and export finance, debt structuring and acquisition finance, structured trade and asset finance, and corporate advisory.
Markets provide risk management services on foreign exchange, interest rates, credit, commodities, debt capital markets and wealth solutions in addition to managing the Group's interest rate exposure and liquidity position.

New Zealand

The New Zealand division comprises the Retail and Commercial business units.

Retail provides a full range of banking and wealth management services to consumer, private banking and small business banking customers. We deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers and contact centres.
Commercial provides a full range of banking services including traditional relationship banking and sophisticated financial solutions (including asset financing) through dedicated managers focusing on privately owned medium to large enterprises and the agricultural business segment.

Wealth Australia

The Wealth Australia division comprises the Insurance and Funds Management business units, which provide insurance, investment and superannuation solutions intended to make it easier for customers to connect with, protect and grow their wealth.

Insurance includes life insurance, general insurance and ANZ Lenders Mortgage Insurance.
Funds Management includes the Pensions and Investments business and ANZ Share Investing.

Asia Retail & Pacific

The Asia Retail & Pacific division comprises the Asia Retail and Pacific business units, connecting customers to specialists for their banking needs.

Asia Retail provides general banking and wealth management services to affluent and emerging affluent retail customers via relationship managers, branches, contact centres and a variety of self-service digital channels (internet and mobile banking, phone and ATMs). Core products offered include deposits, credit cards, loans, investments and insurance. Refer to Note 10 for details on the sale of Asia Retail and Wealth businesses.
Pacific provides products and services to retail customers, small to medium-sized enterprises, institutional customers and Governments located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticated financial solutions provided to business customers through dedicated managers.

Technology, Services & Operations and Group Centre

TSO and Group Centre provide support to the operating divisions, including technology, group operations, shared services, property, risk management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre includes Group Treasury, Shareholder Functions and minority investments in Asia.

117

ASX APPENDIX 4E – CROSS REFERENCE INDEX

Page Details of the reporting period and the previous corresponding period (4E Item 1) ................................................................................................................ 2 Results for Announcement to the Market (4E Item 2) ............................................................................................................................................................ 2 Statement of Comprehensive Income (4E Item 3) ......................................................................................................................................................... 82, 83 Statement of Financial Position (4E Item 4) ......................................................................................................................................................................... 84 Statement of Cash Flows (4E Item 5) .................................................................................................................................................................................. 85 Statement of Changes in Equity (4E Item 6) ........................................................................................................................................................................ 86 Dividends and dividend dates (4E Item 7) .............................................................................................................................................................................. 2 Dividend Reinvestment Plan (4E Item 8) ............................................................................................................................................................................... 2 Net Tangible Assets per security (4E Item 9) ....................................................................................................................................................................... 12 Details of entities over which control has been gained or lost (4E Item 10) ......................................................................................................................... 99 Details of associates and joint venture entities (4E Item 11) ................................................................................................................................................ 99 Other significant information (4E Item 12) .......................................................................................................................................................................... 100 Accounting standards used by foreign entities (4E Item 13) .............................................................................................................................. Not applicable Commentary on results (4E Item 14) ................................................................................................................................................................................... 19 Statement that accounts are being audited (4E Item 15) ....................................................................................................................................................... 3

118

ALPHABETICAL INDEX

PAGE Appendix 4E Cross Reference Index ................................................................................................................................................................................. 118 Appendix 4E Statement ......................................................................................................................................................................................................... 2 Average Balance Sheet and Related Interest .................................................................................................................................................................... 106 Basis of Preparation ............................................................................................................................................................................................................. 87 Capital Management .......................................................................................................................................................................................................... 102 Changes in Composition of the Group ................................................................................................................................................................................. 99 Condensed Consolidated Balance Sheet ............................................................................................................................................................................. 84 Condensed Consolidated Cash Flow Statement .................................................................................................................................................................. 85 Condensed Consolidated Income Statement ....................................................................................................................................................................... 82 Condensed Consolidated Statement of Changes in Equity .................................................................................................................................................. 86 Condensed Consolidated Statement of Comprehensive Income ......................................................................................................................................... 83 Contingent Liabilities and Contingent Assets ..................................................................................................................................................................... 100 Definitions .......................................................................................................................................................................................................................... 115 Deposits and Other Borrowings ........................................................................................................................................................................................... 95 Dividends ............................................................................................................................................................................................................................. 91 Divisional Results ................................................................................................................................................................................................................. 49 Earnings Per Share .............................................................................................................................................................................................................. 92 Exchange Rates ................................................................................................................................................................................................................. 114 Full Time Equivalent Staff .................................................................................................................................................................................................... 17 Funds Management and Insurance Income Analysis (Group) ........................................................................................................................................... 111 Group Results ...................................................................................................................................................................................................................... 19 Income Tax Expense ........................................................................................................................................................................................................... 90 Income ................................................................................................................................................................................................................................. 88 Investments In Associates.................................................................................................................................................................................................... 99 Net Loans and Advances ..................................................................................................................................................................................................... 93 Operating Expenses ............................................................................................................................................................................................................. 89 Profit Reconciliation ............................................................................................................................................................................................................. 75 Provision for Credit Impairment ............................................................................................................................................................................................ 94 Select Geographical Disclosures ....................................................................................................................................................................................... 113 Shareholders’ Equity ............................................................................................................................................................................................................ 98 Subsequent Events since Balance Date ............................................................................................................................................................................ 100 Summary ................................................................................................................................................................................................................................ 9

119

ALPHABETICAL INDEX

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120

AI assistant

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

10425_rns_2017-10-26_7d78b78f-db7b-449c-8aed-99d4cc4b118c.pdf

Australia and New Zealand Banking Group Limited

Dividend Reinvestment Plan and Bonus Option Plan

CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E

SUMMARY OF 2017 FULL YEAR RESULTS AND ASSOCIATED DISCLOSURE MATERIALS

Available 26 October 2017 – 2017 Full Year Results

CONTENTS

Summary

Statutory Profit Results

SUMMARY

Cash Profit Results[1]

SUMMARY

Key Balance Sheet Metrics[1]

SUMMARY

Cash Profit Results – FX Adjusted

SUMMARY

Large/notable items

Sales and investment related adjustments

Valuation adjustments

Equity accounted earnings

• Sale of Asia Retail and Wealth businesses

Derivative methodology change and valuation adjustments

• Derivative CVA methodology change

Other large/notable items

• Restructuring

SUMMARY

Full Time Equivalent Staff

Other Non-Financial Information

CONTENTS

Group Results

Non-IFRS Information

Cash Profit

Group Cash Profit – September 2017 Full Year v September 2016 Full Year

Net interest income

Group net interest margin – September 2017 Full Year v September 2016 Full Year

GROUP RESULTS

Net interest margin (-8 bps)

Average interest earning assets (+$17.2 billion or +2%)

Average deposits and other borrowings (+$13.7 billion or +2%)

Group net interest margin – September 2017 Half Year v March 2017 Half Year

Net interest margin (-2 bps)

Average interest earning assets (+$8.2 billion or +1%)

Average deposits and other borrowings (+$5.7 billion or +1%)

GROUP RESULTS

Other operating income

Other operating income – September 2017 Full Year v September 2016 Full Year

September 2017 v September 2016

Net fee and commission income (-$75 million or -3%)

Net funds management and insurance income (-$186 million or -12%)

GROUP RESULTS

Cash Markets income (+$558 million or +31%)

Share of associates’ profit (-$244 million or -45%)

Other (-$47 million or -20%)

Net fee and commission income (+$8 million or +1%)

Net funds management and insurance income (-$4 million or -1%)

Cash Markets income (-$372 million or -27%)

Share of associates’ profit (-$46 million or -27%)

Other (+$221 million)

GROUP RESULTS

Operating Expenses

Operating expenses – September 2017 Full Year v September 2016 Full Year

Technology infrastructure spend

Technology infrastructure spend breakdown:

GROUP RESULTS

Software capitalisation

GROUP RESULTS

Credit risk

Individual credit impairment charge

• September 2017 v September 2016

• September 2017 v March 2017

GROUP RESULTS

Collective credit impairment charge

• September 2017 v September 2016

• September 2017 v March 2017

Provision for credit impairment

Group Expected Loss

Asia Retail and Wealth

Gross Impaired Assets[1]

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