2017 HALF YEAR RESULTS

Transcription

1 2017 HALF YEAR RESULTS RESULTS PRESENTATION AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 MAY 2017 To be read in conjunction with ANZ 2017 half year Investor Discussion Pack

2 2017 HALF YEAR RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 MAY 2017

3 HEADLINE FINANCIAL PERFORMANCE $m Growth Statutory Profit 2,738 2,911 +6% Cash Profit 2,782 3, % EPS (cents) % Adjusted Pro-forma ROE 9.7% 11.8% +210bp Profit 3,224 3, % EPS (cents) % ROE 11.2% 12.5% +130bp Dividend per share (cents) CET1 Ratio (APRA Basel 3) 9.8% 10.1% +32bp CET1 Ratio (International) % 15.2% +123bp NOTE: Adjusted Pro-forma refers to Cash Profit adjusted to remove the impact of Specified items as detailed in ANZ First Half 2017 Results Announcement pages CET1 Internationally comparable Basel 3: Internationally comparable methodology aligns with APRA s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor 3

4 FOUR PRIORITIES BUILDING A BETTER BANK 1. Creating a simpler, better balanced bank 2. Focusing on areas where we can win 3. Building a superior everyday experience to compete in the digital age 4. Driving a purpose and values led transformation 4

5 WORK TO DATE PROGRESS 1. Completed senior executive team 2. Further rebalancing of the portfolio 3. More progress on disposals 4. Continued reshaping of workforce 5. Adjusted operating model 6. Changed cost trajectory 7. Better response to changing expectations 5

6 RESPONDING TO CHANGING EXPECTATIONS 1. Reduced interest rates on credit cards 2. Constructive responses to parliamentary inquiries 3. Ongoing customer innovation Apple Pay & ANZ BladePay TM Voice Bio Security Digital Card Replacement Be Trade Ready 6

7 PROGRESS ON PORTFOLIO REBALANCING A BETTER BALANCED, HIGHER RETURN BUSINESS CAPITAL ALLOCATION 1 % of total Capital allocated (Sep 16 & Mar 17 on a post announced divestments basis) MAR-16 SEP-16 MAR-17 Institutional Retail & Commercial Wealth RORWA 2 (Pre provision) 2.73% 2.82% 2.89% RORWA 3 (Post tax) 1.62% 1.65% 1.80% 1. Sep-16 and Mar-17 include the impact of higher residential mortgage risk weights from regulatory change. Mar-17 further Pro-forma adjusted for the sale of Asia Retail and Wealth businesses in 5 Asian countries and the announced disposal of UDC and SRCB. Institutional capital allocation is shown under the 2015 IIB structure, including Global Institutional, Asia minority interests and Asia Retail & Pacific 2. RORWA (pre provision) is calculated on annualised Profit Before Provisions (Adjusted Pro-forma basis for Mar-16, Sep-16 & Mar-17) / Average Risk Weighted Assets 3. RORWA (post tax) is calculated on annualised cash profit (Adjusted Pro-forma basis for Mar-16, Sep-16 & Mar-17) / Average Risk Weighted Assets 7

8 CAPITAL EFFICIENCY EXECUTIVE FOCUS COMMON EQUITY TIER 1 GENERATION CET1 bps First half average 1H12 Cash Profit RWA impact Capital Deductions Net capital generation Gross dividend Dividend Reinvestment Plan Core change in CET Other items Net change in CET Cash profit for, and are on Adjusted Pro-forma basis adjusted for Specified items. 2. Represents movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles. 8

9 OPERATING ENVIRONMENT WELL POSITIONED ENVIRONMENTAL FORCES STRATEGIC RESPONSE Lower credit growth Strong capital management Low wage growth Absolute cost discipline Regulatory intervention Geopolitical & economic uncertainty Risk based pricing Lower global trade volumes De-risking 9

10 OUR FOCUS 1. Consistent execution 2. Responsible growth in Retail & Commercial 3. Ongoing re-positioning of Institutional 4. Further rationalisation of non-core assets 5. Continued focus on productivity 6. Implementing Scaled Agile 10

11 SCALED AGILE FASTER TO MARKET, MORE EFFICIENT, HIGHER ENGAGEMENT WATERFALL METHODOLOGY Project based Multiple Handoffs Sequential Specialists, Hierarchical AGILE METHODOLOGY 1 Team based Generalists Self-directed Collaborative Plan SPRINT 1 Deliver Rework Rework Design Develop Test SPRINT 2 Deliver Rework Deliver SPRINT 3 Rework Deliver Time Time 1. Sprint refer to a fixed unit of time, agreed upon in advance of the Sprint, incorporating Plan, Design, Develop, Test and Deliver stages 11

12 RESULTS SUMMARY FROM () TO () RETURN ON EQUITY % 12.5% CET1 RATIO 9.8% 10.1% EARNINGS PER SHARE cents 124 cents 1. Adjusted Pro-forma basis 12

13 2017 HALF YEAR RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 MAY 2017

14 OVERVIEW RETURN ON EQUITY % % growth ( v ) Cash Adjusted Pro-forma Net Profit After Tax 23% 13% Net interest income Net Loans and advances Net interest Margin -2% 3% -7bps -2% 3% -7bps Other income 5% 17% Total income 0% 3% Expenses -14% -1% Provisions -22% -20% CET1 RATIO 10.1% 32bps 32bps Average equity 1% 1% 2H15 Adjusted Pro-forma Cash basis NOTE: Adjusted Pro-forma refers to Cash Profit adjusted to remove the impact of Specified items as detailed in ANZ First Half 2017 Results Announcement pages

15 AGENDA 1 Cash profit compared to last year 2 Key drivers of Result 3 Revenue and margins 4 Capital, funding and dividends 15

16 FINANCIAL PERFORMANCE CASH PROFIT STATUTORY PROFIT CASH PROFIT ADJST PRO-FORMA PROFIT $m $m $m 2,911 2,738 2,782 3,411 3,637 3,224 +6% +23% +$173m +629m +13% +413m Statutory Profit movement Cash Profit movement Adjusted pro-forma movement $629m cash profit growth - $140m change in stat adj. (ex SRCB) 1 - $316m SRCB reclassification 2 $413m operating profit growth Specified items in 3 Impact of divestments in 3 $413m operating profit growth (Like for like operating performance, excluding specified items in & impact of divestments in ) 3 1. Adjustments largely from movement in treasury shares, revaluation of policy liabilities, fair value adjustments from economic and revenue hedges 2. Classified as a non cash item in light of timing differences in recognition of the net loss on reclassification to held for sale () and release of reserves on completion (expected 2H17) 3. Detail of Specified items (SI) and Impact of divestments is shown on slide s including a reconciliation of 2016 items classified as SI s in the First Half 17 Results Announcement vs 2016 Results Announcement 16

17 PORTFOLIO REBALANCING CREDIT RISK WEIGHTED ASSETS CREDIT RWAs 1 CRWA MOVEMENT $b Aus. housing Aus. housing regulatory change on 1 July 2016 $b Aus. non-housing Sep-16 FX Impact Lending Data/Meth. Mvmt. Review Risk Mar-17 LENDING GROWTH MOVEMENT 2 Institutional MAR 17 V SEP 16 ($b) down $3b excluding growth in liquid assets NZ Other Mar-16 Sep-16 Mar-17-8 TOTAL EAD growth Aus Housing -2 Other Retail & Comm. CRWA growth Instit Sep-16 & Mar-17 $26b Aus. housing regulatory change on 1 July 2016 category reflects the impact of higher residential mortgage risk weights from regulatory change 2. Post CRM EAD, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Includes amounts for Securitisation and Other Assets Basel asset classes. Refers to lending movement, excluding FX Impact, Data/Meth Review and Risk. 3. HQLA1 securities 17

18 OPERATING PERFORMANCE CASH PROFIT vs (PCP) $m 2, ,411 3, Cash Adjusted Pro-forma Income -0.2% 3.4% Expenses -13.8% -1.1% PBP 15.2% 7.3% Provisions -21.6% -20.4% Net Profit 22.6% 12.8% EPS (basic) 21.7% 12.0% Cash Profit Income Expenses Provisions Tax & NCI Cash Profit vs (HoH) $m ,411 3, ,299 Cash Adjusted Pro-forma Income 0.3% 1.8% Expenses -4.4% -1.5% PBP 4.8% 4.6% Provisions -30.6% -30.0% Net Profit 9.8% 11.4% EPS (basic) 9.4% 11.0% Cash Profit Income Expenses Provisions Tax & NCI Cash Profit Queen St sale 18

19 PORTFOLIO REBALANCING RISK ADJUSTED RETURNS NET INTEREST INCOME / AVERAGE CREDIT RISK WEIGHTED ASSETS Group ex-markets 4.61% 4.52% 4.79% 4.61% 4.52% 4.39% Australia New Zealand (NZD) Institutional ex-markets 7.42% 7.09% 7.15% 5.12% 4.79% 4.78% 7.42% 7.09% 5.82% 1.96% 1.94% 2.09% PROFIT BEFORE PROVISIONS / AVERAGE TOTAL RISK WEIGHTED ASSETS Group % Australia New Zealand (NZD) Institutional 2.90% 2.73% 3.09% 2.90% 2.73% 2.89% 4.93% 4.61% 4.61% 4.60% 3.84% 3.38% 3.34% 3.33% 1.63% 1.29% 1.89% Adjusted for the impact of higher residential mortgage risk weights from regulatory change 1. and on an Adjusted Pro-forma basis 2. Excludes BOT & SRCB earnings 19

20 INSTITUTIONAL PERFORMANCE INSTITUTIONAL INCOME CONTRIBUTION 1 INSTITUTIONAL CREDIT RISK WEIGHTED ASSETS $m $b 2,945 2,716 2, Mar-15 Sep-15 Mar-16 Sep-16 Mar Trade L&SF Other 961 1,074 1,364 MARKETS INCOME CONTRIBUTION 2 $m ,074 1, L&SF Trade Markets Cash Other Valuation adj. Balance Sheet Sales & Trading Note: L&SF = Loan Product, Specialised Finance and Corporate Advisory; Trade = Trade and Supply Chain; Cash = Payments and Cash Management 1. Adjusted Pro-forma basis. 2. Sales & Trading and Balance Sheet excluding valuation adjustments 20

21 PRODUCTIVITY EXPENSE COMPOSITION 1 $m 4, , , % -1.5% expenses Personnel Premises Tech Other Personnel Premises expenses Tech Other expenses EXPENSE GROWTH 1 (PCP) FULL TIME EQUIVALENT STAFF (FTE) CHANGE 2 7.2% 6.5% 2.8% -1.0% -1.1% 2H , Wealth, AR&P -702 Instit Aus -344 TSO -241 Group centre -151 NZ 1. Adjusted Pro-Forma basis for,, 2. AR&P: Asia Retail & Pacific; Instit. = Institutional; TSO = Technology, Services & Operations 21

22 INVESTMENT TOTAL INVESTMENT SPEND 1 TOTAL INVESTMENT SPEND 1 $m Reduction a result of refocused strategy and project disciplines $m % 33% 62% 67% Expensed 2H15 Capitalised 64% 63% 66% 36% 37% 34% Wealth & AR&P 2 Institutional TSO & Group New Zealand Australia CAPITAL SOFTWARE BALANCE $b Sep- 07 Sep- 08 Sep- 09 Sep- 10 Sep- 11 Post $556m accelerated amortisation from changes to software capitalisation policy Sep- 12 Sep- 13 Sep- 14 Sep- 15 Sep- 16 Mar Includes investment spend on projects of less than $1m 2. AR&P = Asia Retail & Pacific 22

23 CREDIT QUALITY TOTAL PROVISION CHARGE $m 1,100 1,038 1, H15 Consumer IP Institutional IP Commercial IP Collective Provision 720 ANZ HISTORICAL OBSERVED LOSS RATES bps Sep 90 COLLECTIVE PROVISION CHARGE $m Sep 93 Sep 96 Sep 99 IP Loss Rate Median IP Loss Rate Sep 02 Sep 05 Sep 08 Sep 11 Sep 14 2H15 Lending Growth Risk/Portfolio mix Eco Cycle Mar Risk/Portfolio mix impact of -$78m includes $49m transfer to individual provisions. impact of -$30m includes $39m transfer to individual provisions 23

24 REVENUE COMPOSITION DIVISIONAL PERFORMANCE INCOME CONTRIBUTION $m +3% 10,224 10,384 1,344 1,390 10,569 1,312 GROWTH AUS. NZ (NZD) INST L ( VS ) 2,716 2,701 2,945 Income 2% 1% 8% Expenses 2% 0% -6% PBP 2% 2% 25% 1,521 1,571 1,577 Cash Profit 1% 2% 52% ( VS ) Income 0% 0% 9% 4,643 4,722 4,735 Expenses 1% -3% -2% PBP 0% 2% 21% Cash Profit -1% 6% 69% Australia New Zealand Institutional Wealth & other 1. Adjusted Pro-forma basis 24

25 AUSTRALIA & NEW ZEALAND INCOME CONTRIBUTION 1 $m +2% AUSTRALIA DIVISION LENDING Home Loans ($b) Corporate & Commercial ($b) 6, ,295 6, % +3% ,544 1,561 1,552 1,084 1,146 1,139 NEW ZEALAND DIVISION LENDING Home Loans (Retail) (NZDb) Commercial (NZDb) +7% +1% 3,099 3,161 3, Aus Retail NZ Retail Aus C&CB NZ Comm 1. Adjusted Pro-forma basis. NZ excludes central functions 25

26 NET INTEREST MARGINS GROUP NET INTEREST MARGIN bps -2bp -4bp Funding & Asset mix Funding cost Deposits Assets Markets & Treasury BALANCE SHEET $b H DIVISIONAL NIM bps 2.73% 2.54% 2.04% 1.19% 2.75% 2.40% 2.16% 1.15% 2.69% 2.30% 2.17% 1.05% NLAs Customer Deposits Aus NZ Institutional Institutional (ex Markets) 26

27 CAPITAL, LIQUIDITY & DIVIDENDS CAPITAL % DIVIDEND AND DIVIDEND PAYOUT RATIO DPS (cents) DPOR (%) Sep-16 Organic capital generation Dividends Other Mar FUNDING & LIQUIDITY 40 Net Stable Funding Ratio 108% 113% 111% Liquidity Coverage Ratio 125% 135% Sep 16 Mar 17 Mar 17 (Proforma) 1 1. Adjusted for the sale of Asia Retail & Wealth in 5 countries Sep 16 Mar Cash DPOR (RHS) Pro-forma DPOR (RHS) nd half DPS 1st half DPS 27

28 2017 HALF YEAR RESULTS GROUP PERFORMANCE ADDITIONAL INFORMATION AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED 2 MAY 2017

29 FINANCIAL PERFORMANCE CASH PROFIT VS (PCP MOVEMENT) $m 665 2, , , , % +23% Cash profit specified items VS (HOH MOVEMENT) $m 3, Asian minority pro-forma -122 Adjusted Pro-forma profit 3,264 growth 373 Adjusted Pro-forma profit 3,637 Impact of divestments -226 Cash profit 3, % +10% Cash profit specified items Asian minority pro-forma Adjusted Pro-forma profit growth Adjusted Pro-forma profit Impact of divestments Cash profit 29

30 FINANCIAL PERFORMANCE SPECIFIED ITEMS (SI) SPECIFIED ITEMS $m 2, ,224 1 Software capitalisation changes 389 Restructuring 101 Asian Minority pro-forma -223 AmBank & BOT valuation adjustments 231 Cash profit specified items Asian minority pro-forma Adjusted Pro-forma profit Esanda DF divestment -56 TOTAL 442 SPECIFIED ITEMS 1 $m 3, ,264 Restructuring 100 Asian Minority pro-forma -122 Esanda DF divestment 11 CVA methodology change 168 TOTAL 157 Cash profit specified items Asian minority pro-forma Adjusted Pro-forma profit SPECIFIED ITEMS IMPACT OF DIVESTMENTS $m 3,637 3, Asian Minority pro-forma -58 Impairment on sale of Asia Retail & Wealth in 5 countries 284 TOTAL 226 Pro-forma profit Impact of divestments Cash profit 1. Reconciliation of 2016 items classified as SI s in the First Half 17 Results Announcement vs 2016 Results Announcement is shown on slide items no longer classified as SI in Results Announcement include higher expenses from changes to capitalised software policy & amortisation benefit from accelerated amortisation (a recurring item in FY16 and FY17) items added to SI classification include Asian minority pro-forma due to cessation of equity accounting in order to show like for like positions across 2016 and 30

31 GROUP PERFORMANCE 2016 SPECIFITED ITEM RECONCILIATION $m SPECIFIED ITEMS Results disclosure Software capitalisation changes Asian minority valuation Adjust. 1 Restructuring Esanda DF divestment CVA methodology change Subtotal Specified items Asian Minority pro-forma TOTAL SPECIFIED ITEMS RA Income Expenses PBP Profit FY16 RA Income Expenses PBP Profit Change to specified items Income Expenses PBP Profit $m SPECIFIED ITEMS Results disclosure Software capitalisation changes Asian minority valuation Adjust. 1 Restructuring Esanda DF divestment CVA methodology change Subtotal Specified items Asian Minority pro-forma TOTAL SPECIFIED ITEMS RA Income Expenses PBP Profit FY16 RA Income Expenses PBP Profit Change to specified items Income Expenses PBP Profit Software capitalisation changes: Reported Number as at 31 March 2017 includes only the one off accelerated amortisation amount. Higher expenses from amended capitalised software policy, and amortisation benefit from accelerated amortisation has been removed from 2016 specified item as costs are incurred in both financial years 2016 and 2017 Asia Minority pro-forma (Cessation of Equity Accounting): Normalised for transfer of 20% ownership of SRCB from equity accounted to held for sale as at 31 December 2016 and transfer of 12% ownership in Bank of Tianjin from Equity accounted to available for sale as at 31 March

32 ASSET DIVESTMENTS EARNINGS IMPACTS BASED ON FULL COMPLETION OF TRANSACTIONS 1 $m Announced divestments Cessation of Equity Accounting ASIA RETAIL & Bank of TOTAL WEALTH 2 SRCB UDC Tianjin IMPACT Revenue ~(850) ~(250) ~(100) ~(150) ~(1,350) Expenses ~(400) to ~(600) - ~(30) - ~(430) to ~(630) Profit Before Provisions ~(250) to ~(450) ~(250) ~(70) ~(150) ~(720) to ~(920) Provisions ~(150) - ~(10) - ~(160) Cash Profit (pre tax) ~(100) to ~(300) ~(250) ~(60) ~(150) ~(560) to ~(760) Cash Profit (post tax) ~(530) to ~(680) Gain / Loss on sale (approx.) ~(290) ~0 ~100 n/a ~(190) CET1 benefit from sale (approx.) ~15 to 20bp ~40bp ~10bp n/a ~65 to 70bp Date of signing 30 Oct Dec Jan Expected completion Progressively to 1H18 Mid 2017 calendar year Late 2017 calendar year n/a n/a All financial impacts detailed above are treated as Cash Profit items Due to timing differences with SRCB reclassification to held for sale ($316m impact in ), and the release of foreign currency translation and available for sale reserves ($289m release in 2H17) both elements will excluded from cash profit in each of the impacted half yearly result. 1. Profit and Loss impacts based on most recent full year contribution to ANZ financial performance 2. Excludes Vietnam 32

33 GROUP PERFORMANCE GROUP PERFORMANCE TRENDS 1 INCOME EXPENSES PROVISIONS $m $m $m 10,569 10,195 10,342 10,224 10,384 4,775 4,783 4,805 4,731 4, , % CAGR 0% CAGR 13% CAGR 2H15 2H15 2H15 CASH PROFIT RISK WEIGHTED ASSETS RETURN ON AVG RWAs 2 $m $b Includes $26b RWA increase from % 3,676 3,540 3,637 APRA housing regulatory changes 3,224 3, Impacted by $26b RWA increase from APRA housing regulatory changes 1.97% 1.83% 1.62% 1.65% 1.80% 2% CAGR 1% CAGR -4% CAGR 2H15 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 2H15 1. Adjusted Pro-forma basis unless otherwise specified. CAGR is based on a pro-forma growth rate for the period to 2. Income is on an annualised basis 33

34 GROUP PERFORMANCE TREASURY CAPITAL Further detail on capital, funding and liquidity is contained in the investor discussion pack available on shareholder.anz.com APRA COMMON EQUITY TIER 1 (CET1) % bps Net Organic Capital Generation +119 bps REGULATORY CAPITAL GENERATION COMMON EQUITY TIER 1 GENERATION (bps) First half average 4 1H12 Cash Profit RWA movement (21) BASEL III CET1 INTERNATIONAL COMPARABILITY % Sep Cash Profit 2 RWA (ex FX) Capital Dividends Deductions 3 (Net of DRP) Other Mar Capital Deductions 3 (15) 1 2 Net capital generation Gross dividend (70) (60) (57) Dividend Reinvestment Plan Core change in CET1 capital ratio Other non-core and nonrecurring items 7 (73) (16) Sep-15 Mar-16 Sep-16 APRA Internationally Comparable 1 Mar-17 Net change in CET1 capital ratio 9 (20) Internationally Comparable methodology aligns with APRA s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor. 2. Cash profit for, and are on Adjusted Pro-forma basis adjusted for Specified items. 3. Represents the movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles H averages. 34

35 GROUP PERFORMANCE TREASURY FUNDING & LIQUIDITY Further detail on capital, funding and liquidity is contained in the investor discussion pack available on shareholder.anz.com NSFR 1 COMPOSITION MARCH 2017 NSFR ~113% MARCH 2017 PRO-FORMA NSFR ~111% 2 LCR 7 COMPOSITION MARCH 2017 LCR 135% $478b $181b Wholesale Funding & Other 3 Non Financial Corporates $423b Liquids and Other Assets 4 Other Loans 5 Internal RMBS $34b Other ALA 8 $16b HQLA 2 $4b $134b Wholesale Funding $14b Retail/SME Residential Mortgages 6 <35% HQLA 1 $127b Customer Deposits & Other 9 $120b Capital Available Stable Funding Required Stable Funding Liquid Assets Net Cash Outflows 1. All figures shown on a Level 2 basis and based on current estimates; 2. Pro-forma, adjusted for sale of Asia Retail & Wealth in 5 countries; 3. Other includes Sovereign, PSE and FI Deposits; 4. Other Assets include Off Balance Sheet, Derivatives, Fixed Assets and Other Assets; 5. All lending other than Residential Mortgages <35% Risk Weight; 6. Includes NSFR impact of selfsecuritised assets backing the CLF; 7. All figures shown on a Level 2 basis; 8. Comprised of assets qualifying as collateral for the CLF, excluding internal RMBS and any assets contained in the RBNZ s Liquidity Policy Annex: Liquidity Assets Prudential Supervision Department Document BS13A12; 9. Other includes off-balance sheet and cash inflows 35

36 GROUP PERFORMANCE RISK MANAGEMENT PROVISIONS & CREDIT QUALITY Further detail on provisions and credit quality is contained in the investor discussion pack available on shareholder.anz.com TOTAL PROVISION CHARGE 1 $m 1,500 1, IP CHARGE COMPOSITION % $m ,500 1, , H14 2H14 2H H14 2H14 2H15 CIC as % Avg.GLA (RHS) CP Charge IP Charge New Increased Writebacks & Recoveries GROSS IMPAIRED ASSETS BY EXPOSURE SIZE $m 4,000 3,000 2,000 1, ,620 Mar 14 2,889 2,708 Sep 14 Mar 15 2,719 2,883 Sep 15 Mar 16 < 10m 10m to 100m > 100m 3,173 Sep 16 2,940 Mar 17 HOME LOAN 90+ DAYS DELINQUENCIES % Mar 12 Mar 13 Australia Mar 14 Mar 15 New Zealand Mar 16 Mar IP: Individual Provision charge CP: Collective Provision charge CIC: Total Credit Impairment charge 2. Other includes Retail Asia & Pacific and Australia Wealth 36

37 RISK MANAGEMENT RISK MANAGEMENT PORTFOLIO COMPOSITION Further detail on provisions and credit quality is contained in the investor discussion pack available on shareholder.anz.com EXPOSURE AT DEFAULT (EAD) AS A % OF GROUP TOTAL Category % of Group EAD % of Portfolio in Non Performing Portfolio Balance in Non Performing Sep 16 Mar 17 Sep 16 Mar 17 Mar 17 TOTAL GROUP EAD (Mar 17) = $899b 1 5.8% 1.3% 1.7% 1.4% Consumer Lending 40.6% 41.2% 0.1% 0.1% $447m Finance, Investment & Insurance 17.4% 17.7% 0.1% 0.0% $25m Property Services 6.8% 6.7% 0.4% 0.3% $166m Manufacturing 5.2% 5.0% 1.6% 1.2% $550m Agriculture, Forestry, Fishing 3.9% 3.8% 1.5% 1.4% $485m 2.3% 2.1% 3.0% 6.1% 3.8% 5.0% 6.7% 1.9% 41.2% Government & Official Institutions 6.2% 6.1% 0.0% 0.0% $0m Wholesale trade 3.1% 3.0% 0.5% 0.5% $142m Retail Trade 2.4% 2.3% 1.2% 0.7% $154m Transport & Storage 2.2% 2.1% 0.4% 0.8% $146m Business Services 1.7% 1.7% 0.9% 1.0% $146m Resources (Mining) 1.8% 1.9% 2.9% 2.1% $357m Electricity, Gas & Water Supply 1.3% 1.3% 0.0% 0.1% $16m Construction 1.4% 1.4% 2.0% 1.9% $234m 17.7% Other 6.0% 5.8% 0.4% 0.6% $291m Total 100.0% 100.0% $3,159m Total Group EAD 1 $b $895b $899b 1. EAD excludes amounts for Securitisation and Other Assets Basel classes and manual adjustments. Data provided is as at Mar 17 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Note that APS330 disclosure is reported on a Post CRM basis from 30 June

38 STRATEGIC PRIORITIES PROGRESS Reduce operating costs & risks Remove product and management complexity. Exist low return and non-core businesses. Reduce reliance on low return aspects of Institutional. Make buying & owning a home or starting, running & growing a small business in Aus. & NZ easy Be the best bank in the world for customers driven by movement of goods and capital in our region. Build more convenient, engaging banking solutions to simplify the lives of customers and our people APRA CET1 ratio 10.1% (up 52bps); costs down 2% FTE down 1% Announced sale of SRCB, UDC, Asia Retail & Wealth in 6 countries Further reduction in Credit Risk Weighted Assets in Institutional, with continued growth in Australia division Home lending FUM up $8b in Aus & NZ 5% increase in Small Business deposits 33% of Institutional revenue from Cross border flow 2 Our Institutional business in Aus & NZ ranks No.1 for overall market and lead penetration and the quality of our service 3 Top 4 Corporate Bank in Asia for a fifth successive year 4 20% of projects being delivered under the Agile framework that delivered ApplePay TM Delivery of Honcho and Blade to improve customer experience 44 applications decommissioned reducing complexity and risk Create a strong sense of core purpose, ethics & fairness. Invest in leaders who can help sense and navigate a rapidly changing environment. Re-aligned staff performance objectives, increasing customer focus ESG board Diversified leadership expertise, new Group Executive Talent and Culture, established new Chief Tech officer and Data officer roles 1. All financial numbers are on an Adjusted Pro-forma basis unless otherwise stated. All growth rates vs 2. Cross border flows defined as thrown revenue (the region where the relationship with the customer exists is different to the region where the revenue is generated and booked). Region defined as Australia, Pacific, NZ, Asia, Europe and America 3. Peter Lee Associates 2016 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2016 respectively). Quality of service is based on No.1 ranking for Relationship Strength Index (RSI) that the bank achieved in the above surveys. 4. Greenwich Associates 2017 Asian Large Corporate Banking Study (issued in March 2017): =No.4 38

39 INCOME AND OUTFLOWS INCOME OUTFLOWS $10.3b $10.3b RETAIL AND COMMERCIAL (AUS & NZ) (61%) PERSONNEL (26%) 26% of ANZ s income was 61% of income from Retail and Commercial customers in our home markets $2.6b paid in wages and salaries to ~46,000 employees In we helped Australians and New Zealanders buy and own their homes and start and run their businesses providing $320b in home lending and $105b in business lending $6.3b $2.1b EXPENSES (20%) including payments to suppliers and investment in the community, were 20% of our income $0.7b PROVISIONS (7%) INSTITUTIONAL (29%) $1.4b TAXES (14%) paid in company tax with $1.2b paid in Australia Our Institutional business ranks No.1 for overall DIVIDEND (23%) 23% of income will be market and lead penetration and the quality of our service 1 in Aus & NZ and the Top 4 Corporate $2.9b $2.3b distributed to ~550,000 shareholders Bank in Asia for a fifth successive year 2 OTHER 3 (10%) $1.1b $1.1b RETAINED EARNINGS (10%) retained for future growth and capital strength 1. Peter Lee Associates 2016 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2016 respectively). Quality of service is based on No.1 ranking for Relationship Strength Index (RSI) that the bank achieved in the above surveys. 2. Greenwich Associates 2017 Asian Large Corporate Banking Study (issued in March 2017): =No.4 3. Other Includes Wealth Australia, Asia Pacific & Retail, TSO and Group Centre 39

40 DIVISIONAL CONTRIBUTION DIVISIONAL RESULTS 1 INCOME $m EXPENSES $m $m CASH PROFIT AFTER TAX 10,224 10,384 10,569 4,783 4,805 4,731 3,224 3,264 3,637 4,643 4,722 4,735 1,521 1,571 1,577 2,716 2,701 2,945 1,344 1,390 1,312 1,660 1,680 1, ,460 1,406 1,379 1,076 1,102 1,059 Australia New Zealand Institutional Wealth & other 1,773 1, , , GROWTH INCOME EXPENSES PBP NPAT HOH PCP HOH PCP HOH PCP HOH PCP Australia 0% 2% 1% 2% 0% 2% -1% 1% New Zealand (NZD) 0% 1% -3% 0% 2% 2% 6% 2% Institutional 9% 8% -2% -6% 21% 25% 69% 52% Wealth & Other -6% -2% -4% -2% -12% -6% -31% 6% 1. Adjusted Pro-forma basis 40

41 AUSTRALIA PERFORMANCE AUSTRALIA DIVISION PERFORMANCE TRENDS 1 INCOME EXPENSES PROVISIONS $m $m $m 4,643 4,722 4,735 1,660 1,660 1,680 1,693 4,422 1,596 4, % CAGR 3% CAGR 20% CAGR 2H15 2H15 2H15 CASH PROFIT RISK WEIGHTED ASSETS RETURN ON AVG RWAs 2 $m $b Includes $26b RWA increase from % 1,773 1,821 1,798 1,597 1,657 APRA housing regulatory changes Impacted by $26b RWA increase from APRA housing regulatory changes 2.89% 2.83% 2.77% 2.61% 2.27% 6% CAGR 19% CAGR -11% CAGR 2H15 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 2H15 1. Adjusted Pro-forma basis. CAGR is based on the period to 2. Earnings are on an annualised basis 41

42 AUSTRALIA AUSTRALIA DIVISION PERFORMANCE 1 92 $m 1, ,798 PROFIT GROWTH HOH PCP Retail -1% 2% Commercial -1% 0% TOTAL -1% 1% profit Income Expenses Provisions Tax & NCI profit VOLUMES $b NET INTEREST MARGIN 2.76% 2.74% 2.69% $m OTHER OPERATING INCOME Mar-16 NLAs Sep-16 Customer Deposits Mar-17 STAFF COST TO INCOME ASSET QUALITY 12,017 11,605 11, % 35.6% 35.8% 0.33% 0.35% % 0.27% 0.36% 0.28% Revenue per FTE ($k) 2 FTE Total loss rate (%) 3 GIA as a % of GLAs 1. Adjusted Pro-form basis 2. Income is on an annualised basis 3. Credit impairment charges (annualised) / Average GLA for the period 42

43 AUSTRALIA PERFORMANCE DRIVERS OVER 6 MILLION CUSTOMERS MORE PRODUCTS PER CUSTOMER (%) 000 s 331k Products per Customer 6,100 6,000 Multiple 5, ,800 5,700 Single 5, ,500 Mar 15 Mar 16 Mar 17 Mar-15 Mar-16 Mar-17 GOOD MOMENTUM System growth (APRA) 1.5x 1.4x 1.1x 0.8x 0.5x 0.6x 1.2x 1.6x NSW INVESTMENT DELIVERING 11% 11% 8% 8% 7% 5% 4% 8% 5% 4% 2H15 Home Loans Retail Deposits Home Loans FUM NSW Small Bus Lending FUM National Household deposit FUM Small Bus. deposit FUM Customer Growth 43

44 WEALTH AUSTRALIA PERFORMANCE 1 $m PROFIT GROWTH HOH PCP Insurance -20% -19% Funds Mgt -15% 5% TOTAL -24% -30% profit EMBEDDED VALUE 2 Income LIFE INSURANCE IN-FORCE $b 1,569 1,603 28% 28% Expenses $m 4,261 4,505 4,559 % Tax & NCI RETAIL LAPSE RATES 13.0% FUNDS MGT AVG FUM $b profit 15.0% 13.8% 72% Group 72% Individual 1,600 27% 73% 48 Insurance Revenue impacted by adverse disability claims experience and a one-off loss as a result of the exit of a Group Life insurance plan Partially offset by reinsurance profit share benefits and favourable claims experience in Lenders Mortgage Insurance. Funds Management Decline in profitability reflects planned strategy to rationalise the legacy portfolio to Smart Choice, a simpler and lower risk model 1. Adjusted Pro-forma, excluding restructuring cost of $9m post tax. 2. Embedded value includes Insurance and Funds Management businesses only. The product lines used are on the same basis as the Results Announcement in prior periods. This is different to the product lines used in the strategic review. Embedded value is adjusted to allow for the impact of dividends and net transfers. 44

45 INSTITUTIONAL PERFORMANCE PERFORMANCE TRENDS 1 INCOME EXPENSES PROVISIONS $m $m $m 2,961 2,945 2,786 1,449 2,716 1,413 1,460 2,701 1,406 1, % CAGR -1% CAGR % CAGR 2H15 2H15 2H15 CASH PROFIT RISK WEIGHTED ASSETS RETURN ON AVG RWAs 2 $m $b % % 1,047 1, % % 0.68% % -1% CAGR -10% CAGR 6% CAGR 2H15 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 2H15 1. On a pro forma basis excluding Specified Items relating to restructuring (FY15 and FY16) and the derivative CVA methodology change (). CAGR is based on the period to 2. Earnings are on an annualised basis 45

46 INSTITUTIONAL PERFORMANCE $m ,021 PROFIT GROWTH HOH PCP 670 Markets 46% 169% Transaction Banking 3% 25% Loans & SF 150% 13% TOTAL 69% 52% profit Income Expenses Provisions Tax & NCI profit VOLUMES NET INTEREST MARGIN 2 OTHER OPERATING INCOME $b $m % 2.21% 2.17% 1, ,357 Mar-16 NLAs Sep-16 Customer Deposits Mar-17 STAFF COST TO INCOME ASSET QUALITY 5, % 5,112 4,899 54% 52% 1.01% 47% 940 1,006 1, % 0.65% 0.87% 0.20% Revenue per FTE ($k) 3 FTE Total loss rate (%) 4 GIA as a % of GLAs 1. On a pro forma basis excluding Specified Items relating to restructuring (FY15 and FY16) and the derivative CVA methodology change () 2. Institutional net interest margin excluding Markets 3. Income is on an annualised basis 4. Credit impairment charges (annualised) / Average GLA for the period 46

47 INSTITUTIONAL MAINTAINING LEADING MARKET POSITIONS RWA REDUCTIONS MARGINS 2 WORKFORCE RESHAPING 3 $b 198 Sep 15-8 FX -28 RWA active mgt -3 Other 1 AUSTRALIA #1 Lead Bank Penetration 4 36% 159 Mar-17 FTE # NEW ZEALAND ASIA #1 Lead Bank Penetration 4 Top 4 Corporate Bank 5 49% 2.58% 2.16% 1.94% 1.86% 1.59% 2.40% 2.21% 2.05% 1.79% 1.66% Au & PNG NZ International 2.46% 2.17% 2.09% 1.70% 1.62% Institutional Institutional (risk adjusted) -19% Senior Mgmt 54% Mar 16-12% Other Staff Sep 16-17% Central Functions Mar 17 27% 25% 20% 34% 27% 43% 42% 28% 28% 6% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank 4 Bank 1 Bank 2 Bank 3 ANZ Bank 5 1. Other includes operating risk and market risk 2. Net interest margin excluding Markets. Risk adjusted NIM is Net Interest Income / total Credit Risk Weighted Assets 3. Senior management and other staff include central functions. Central functions comprises enablement and support functions within Institutional 4. Peter Lee Associates 2016 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2016 respectively 5. Greenwich Associates 2017 Asian Large Corporate Banking Study (issued in March 2017): =No.4 47

48 NEW ZEALAND PERFORMANCE NZ DIVISION PERFORMANCE TRENDS 1 INCOME EXPENSES PROVISIONS NZ$m NZ$m NZ$m 1,648 1,672 1,670 1,591 1, % CAGR -0.9% CAGR % CAGR 2H15 2H15 2H15 CASH PROFIT RISK WEIGHTED ASSETS RETURN ON AVG RWAs 2 NZ$m NZ$b % % 2.33% 2.32% % 2.31% 3.6% CAGR 5.2% CAGR -1.9% CAGR 2H15 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 2H15 1. Adjusted Pro-forma, &. CAGR is based on the period to 2. Earnings are on an annualised basis 48

49 NEW ZEALAND PERFORMANCE NZ DIVISION PERFORMANCE 1 NZ$m PROFIT GROWTH HOH PCP Retail 2% 7% Commercial 12% -2% TOTAL 6% 2% profit Income Expenses Provisions Tax & NCI profit VOLUMES NZ$b NET INTEREST MARGIN 2.40% 2.35% 2.30% OTHER OPERATING INCOME NZ$m Mar-16 NLAs Sep-16 Customer Deposits Mar-17 STAFF COST TO INCOME ASSET QUALITY 6,401 6,317 6, % 39.3% 38.1% 0.27% 0.32% % 0.15% 0.39% 0.07% Revenue per FTE ($k) 2 FTE Total loss rate (%) 3 GIA as a % of GLAs 1. Adjusted Pro-forma basis 2. Income is on an annualised basis 3. Credit impairment charges (annualised) / Average GLA for the period 49

50 NEW ZEALAND STRATEGIC FOCUS CUSTOMER OUTCOMES NET CUSTOMER GROWTH BRAND CONSIDERATION 1 New Zealand Division ( 000) #2 #2 # % % 43.8% Mar-15 Mar-16 Mar-17 Net Retail acquisition (new less defection) Mar-15 Mar-16 Mar-17 ANZ brand consideration RETAIL NET PROMOTER SCORE 2 % 9.9 BRAND CONSIDERATION MIGRANTS 71,932 75,000 67,619 60,000 56, % 80% ,000 30,000 60% 40% -7.7 Mar- 15 Mar- 16 Mar ,000 0 Mar-15 Mar-16 Mar-17 Brand consideration 1 Net migration 3 20% 0% 1. McCulley Research Brand Tracking (online survey, first choice or seriously considered); six month rolling average 2. Camorra Retail Market Monitor (RMM); six month rolling score 3. Source: Statistics NZ 50

51 FURTHER INFORMATION Our Shareholder information shareholder.anz.com DISCLAIMER & IMPORTANT NOTICE: The material in this presentation is general background information about the Bank s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to ANZ s business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in this presentation, the words estimate, project, intend, anticipate, believe, expect, should and similar expressions, as they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such statements constitute forward-looking statements for the purposes of the United States Private Securities Litigation Reform Act of ANZ does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. Equity Investors Jill Campbell Group General Manager Investor Relations jill.campbell@anz.com Cameron Davis Executive Manager Investor Relations cameron.davis@anz.com Katherine Hird Senior Manager Investor Relations katherine.hird@anz.com Retail Investors Michelle Weerakoon Manager Shareholder Services & Events michelle.weerakoon@anz.com Debt Investors Scott Gifford Head of Debt Investor Relations scott.gifford@anz.com 51