2017 FULL YEAR RESULTS

Transcription

1 2017 FULL YEAR RESULTS RESULTS PRESENTATION AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED 26 OCTOBER 2017 ANZ staff volunteers helping out on Daffodil Day to raise vital funds for Cancer Council Australia. Volunteers used ANZ BladePay devices powered by the Shout app to facilitate cashless purchases and donations.

2 CONTENTS 2017 FULL YEAR RESULTS RESULTS CEO and CFO Results Presentations 3 CEO Presentation 3 CFO Presentation 16 Group Financial Performance 33 Corporate Profile, Strategy and Sustainability 47 Business Performance 61 Australia Division Performance 63 Institutional Division Performance 70 New Zealand Division & Geography Performance 78 Wealth Australia Division Performance 87 Group Treasury 91 Risk Management 100 Housing Portfolio Trends 115 Economics 125 All figures within this investor discussion pack are presented on Cash basis in Australian Dollars unless otherwise noted. In arriving at Cash Profit, Statutory Profit has been adjusted to exclude non-core items, further information is set out on page 75 of the 2017 Full Year Consolidated Financial Report. 2

3 2017 FULL YEAR RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

4 HEADLINE FINANCIAL PERFORMANCE ($m) Change ( vs ) Statutory Profit 6,406 12% Cash Profit 6,938 18% Operating Income 20,489-1% Operating Expenses 9,448-9% Profit Before Provisions 11,041 9% Provisions 1,199-39% Cash EPS (cents) % Dividend per share (cents) 160 Stable Cash ROE (%) bp CET1 (%) bp CET1 Internationally Comparable Basel 3 (%) bp 4

5 ASSUMPTIONS UNDERLYING NEW STRATEGY OPERATING ENVIRONMENT 1. Constrained sector growth (High household debt, subdued business investment) 2. Changing customer preferences (More digital, more third party advice) 3. Industry transformation (Open data, new technologies) 4. Growing regulation (Capital, liquidity, compliance) 5. Intensifying competition (Incumbents, new technology entrants) 6. Changing community expectations (Greater accountability and regulation) 5

6 DRIVERS OF PERFORMANCE COST DISCIPLINE $m $b INSTITUTIONAL CREDIT RWAs 5,488 4,951 4,731 4, Sep 15 Sep 16 Sep 17 LEANER ORGANISATION Full time equivalent staff #s 50,152 46,554 44,896 1H16 2H16 1H17 2H17 Sep 15 Sep 16 Sep 17 6

7 A BETTER BALANCED BANK CAPITAL ALLOCATION (%) SEPTEMBER 2015 SEPTEMBER 2016 SEPTEMBER 2017 Includes announced asset disposals 2 Institutional 1 Retail & Commercial Wealth RORWA (Pre provision) 2.93% 2.55% 2.75% RORWA (Post provisions) 1.90% 1.48% 1.73% NOTE: Allocation based on Regulatory Capital. 1. Institutional shown under 2015 IIB Structure, including Global Institutional and Asia Retail & Pacific 2. Pro-Forma adjusted for all announced Asset disposals (Remaining Retail Asia and Wealth, SRCB, MCC, UDC Finance and OnePath Pension & Investment and aligned dealer groups (OP P&I/ADG)) 7

8 BETTER PLACED TO WIN GETTING FIT FOR PURPOSE Rebalancing New operating model Sustainable growth FY18 FY19 onward DRIVERS OF SUSTAINABLE GROWTH 1. Focus A few things done extremely well 2. Speed Listen to customers, test, develop, launch Learn & repeat 3. Digital Balances digital capability Human design & service 4. Culture Stronger sense of core purpose, ethics & fairness Investing in people for a rapidly changing world 8

9 WHERE WE CAN WIN STRATEGIC FOCUS 1. By being the best bank for people who want to buy and own a home, or start, run and grow a small business in Australia and New Zealand 2. Being the best bank for customers who move goods and capital around Asia Pacific ~250,000 net new retail customers Bought and leveraging RealAs property ready For the first time >1m home loan accounts in Aus. Held #1 Market share in NZ Home Loans Strengthened #3 Market Share Aus. Home Loans Introduced First Home Buyer coaches in Aus Small Business deposits up 9% in Australia Commercial deposits up 6% in NZ #1 Institutional lead bank in Aus & NZ 1 #4 Institutional Bank in Asia 2 1. Peter Lee Associates 2017 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2017 respectively) 2. Greenwich Associates 2016 Asian Large Corporate Banking Study (issued in March 2017): ANZ ranked =No.4 9

10 HOW WE WILL WIN COST PLUS CUSTOMER EXPERIENCE CONVENIENT, ENGAGING CUSTOMER SOLUTIONS Expanded digital channels Digital Branches Smart ATMs Digital sales Leading the payment revolution (the only major bank supporting all mobile wallets) Android Pay TM Apple Pay TM Apple Watch Pay FitBit TM Pay Samsung Pay Making business easy ANZ Be Business Ready (Honcho) ANZ Be Trade Ready Employment Hero BladePay TM Samsung Pay Voice Biometrics 10

11 HOW WE WILL WIN CULTURE Clarified ANZ Purpose, Values, Expectations Long term focus on engaging our people Rebalancing performance scorecards Changing what we expect from leaders Protecting social licence Engaging with community and regulators 11

12 CAPITAL COMMON EQUITY TIER 1 CAPITAL GENERATION CET1 bps FY12 avg. Change vs FY12 avg. Cash Profit (26) RWA impact (31) Capital deductions 2 (24) 6 30 Net capital generation Cash profit for excludes large/notable items. 2. Represents movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles. 12

13 FOUR PRIORITIES 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 13

14 OUR FOCUS 1. Capital efficiency 2. Absolute cost discipline 3. Customer experience & innovation 4. Transitioning to New Ways of Working (NWoW) 5. Consolidating improvements in Asia business 6. Engaging with community 7. Final reshaping of non core assets 14

15 KEY INDICATORS Return on equity (%) Cash earnings per share (cents) Economic profit (% growth year on year) CET1 ratio (%) NTA / Avg share ($) Operating Expenses (% growth year on year) Profit Before Provisions / Avg Share $4.03 $3.49 $3.77 Full Time Equivalent staff 50,152 46,554 44,896 Loss Rate (%) Total Shareholder Return (% growth year on year)

16 2017 FULL YEAR RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

17 OVERVIEW Benefited from portfolio rebalancing Maintained strong cost discipline Improved credit quality Strengthened capital Continued exit of non core businesses CASH EARNINGS PER SHARE cents RETURN ON EQUITY % COMMON EQUITY TIER 1 RATIO % % increase in CET1 = ~$4bn of capital

18 AGENDA 1. FULL YEAR 2017 FINANCIAL PERFORMANCE 2. KEY DRIVERS OF THE BUSINESS 3. BALANCE SHEET STRENGTH 4. BASELINE FOR

19 FINANCIAL PERFORMANCE DRIVERS CASH PROFIT FULL YEAR 2017 BUSINESS PERFORMANCE FULL YEAR 2017 $m $m 550 6,938 5% excluding derivative valuation adjustment 5, % From -$71m () to +$160m () 8.5% Cash Profit large items SRCB, Asia Retail & Queen St impacts Business performance Cash Profit 0 Australia NZ Insti. ex derivative valuation adj. Derivative Wealth valuation adj. Asia Retail & Pacific Other total divisional growth LARGE ITEMS & DIVESTMENTS AND GAIN ON SALE large items Equity accounted earnings SRCB & BOT Software capialisation changes Asian minority valuation adjustments (AMMB & BOT) Restructuring charge Esanda Dealer Finance divestment Derivative CVA methodology change SRCB, Asia Retail & Queen St impacts Equity accounted earnings SRCB (1Q) Sale of Asia Retail & Wealth (Loss on sale) Gain of sale of 100 Queen St DETAILS OF LARGE/NOTABLE ITEMS ARE INCLUDED WITHIN THE INVESTOR DISCUSSION PACK 19

20 RETURN ON EQUITY CASH EPS FULL YEAR 2017 cents Business performance % % EPS large items SRCB, Asia Retail & Queen St impacts Revenue Expenses Provisions Tax & OEI Change in share count EPS Business performance CASH ROE FULL YEAR % bp 159bp ROE large items SRCB, Asia Retail & Queen St impacts Revenue Expenses Provisions Tax & OEI Capital generation ROE This drove an Economic Profit increase of 38% 20

21 PORTFOLIO REBALANCING INSTITUTIONAL $b INSTITUTIONAL LENDING MOVEMENT Gross loans and advances 1H17 2H17 $b change Aus/NZ International Aus/NZ International TOTAL Total Trade Loans Other Sep-15 Sep-16 Sep-17 Gross Loans & Advances 1 Credit RWAs 2 AUS & NZ RETAIL & COMMERCIAL $b RETAIL & COMMERCIAL LENDING Gross loans and advances (NZD 69) 64 (NZD 70) 67 (NZD 72) Sep-15 Sep-16 Sep-17 Sep-16 Mar-17 Sep-17 Gross Loans & Advances 1 Credit RWAs Commercial (Aus & NZ) Housing NZ Other retail (Aus & NZ) Housing Aus 1. Including acceptances 2. Not FX adjusted 3. Largely Markets 21

22 RISK ADJUSTED MARGINS & RETURNS TOTAL GROUP DIVISIONS 2 NET INTEREST INCOME (NII) / AVERAGE CREDIT RWA 1 NII / AVERAGE CREDIT RWA 1 (%) 4.54% 4.59% 4.39% 4.52% Aus. ~150bp due to RWA changes H16 2H16 1H17 2h17 1H16 2H16 1H17 2H17 Aus. NZ (NZD) Institutional (ex-markets) NII / AVERAGE CREDIT RWA 1 MOVEMENT PROFIT BEFORE PROVISIONS / AVERAGE TOTAL RWA (%) % July 16 ~31bps June 17 ~3bps Impact of bank levy Impact of mortgage RWA changes Portfolio management and improved returns 1H16 2H16 Aus. NZ (NZD) Institutional 1H17 2H17 1. Excluding Global Markets 2. Australia Division includes impacts from regulatory changes to Australian housing risk weights introduced 1 July Australia Division includes impacts from further increases to Australia housing risk weights following APRA having completed its review of ANZ s mortgage capital model and approved the new model for Australian residential mortgages effective from June

23 INCOME DRIVERS TOTAL INCOME $m TOTAL INCOME GROWTH 10,325 10,269 1,402 1,512 10,303 1,046 10,186 1,255 Half Year growth (vs prior half) Full Year growth % 1H17 2H17 Group ,716 2,464 2,945 2,469 Australia New Zealand (NZD) ,521 1,571 1,577 1,595 Institutional Wealth INSTITUTIONAL (EX. MARKETS) % ( vs ) 4,686 4,722 4,735 4, H16 2H16 1H17 2H17 Credit RWA (ex. Markets) Revenue (ex. Markets) Australia New Zealand Institutional Other 1 1. Other includes Wealth Australia, Asia Retail & Pacific, TSO & Group Centre 23

24 INCOME DRIVERS GROUP NET INTEREST MARGIN GROUP NET INTEREST MARGIN bp 200 1H Funding Funding & Asset cost mix -2 Major Bank levy Deposits Assets Treasury Markets -1-2 Asia Retail exit 198 2H17 NIM 2H17 TIMING IMPACTS 3 rd Quarter 4 th Quarter Home loan repricing * * Home Loan switching * * (& Hong Kong) Asia Retail exits * (China, Singapore) Bank Levy * BALANCE SHEET $b RATE MOVEMENTS % Mar-15 Sep-15 Mar-16 Gross Loans & Advances Sep-16 Customer Deposits Mar-17 Sep-17 0 Sep- 05 OCR Sep- 07 Sep year swap (spot) Sep- 11 Sep- 13 Sep- 15 Replicating Yield Sep

25 MARKETS INCOME MARKETS INCOME $m MARKETS SALES INCOME $m 1,500 1,350 1,363 1, ,200 1,182 1,075 1, Client exits Product exits Market conditions MARKETS AVERAGE VALUE AT RISK (99% VAR) $m $b H15 2H15 1H16 2H16 1H17 2H Mar 15 Sep 15 Mar 16 Sep Mar 17 Sep 17 Trading Sales Balance Sheet Valuation adjustments 1 Traded market risk (LHS) HQLA (RHS) Non-traded interest rate risk (LHS) 1. Excludes Large/notable items in 2H16 for mcva derivative methodology change (-$237m) 25

26 EXPENSE DRIVERS FULL YEAR 2017 EXPENSES 1 $m DIVISIONAL EXPENSE CONTRIBUTION 1 $m 10,439 4,783 4,805 4,731 4, % 124 9,448 1,077 1,100 1,059 1,037 1,460 1,406 1,379 1, ,659 1,681 1,693 1,730 large items Personnel Premises Tech Other 1H16 2H16 1H17 2H17 Other Institutional NZ Aus FTE (TOTAL #) FTE REDUCTION DIVISIONAL EXPENSE GROWTH 50,152 46,554 44,896 YOY change TOTAL -7% -4% % change (HoH) 2H16 1H17 2H17 Aus NZ (NZD) Senior Mgt -16% -6% Institutional Excluding large items 26

27 EXPENSE & INVESTMENT MANAGEMENT BAU VS CHANGE EXPENSES 1 $m 4, , , , TOTAL INVESTMENT SPEND $m ,511 4,551 4,506 4, H16 2H16 1H17 2H17 Run (BAU) Change (Expensed investment spend) Wealth & AR&P 2 TSO & Group Institutional NZ Aus. BAU VS CHANGE EXPENSE GROWTH 1 % change (HoH) 2H16 1H17 2H17 TOTAL BAU CAPITALISED SOFTWARE $b Avg amortization ~4 yrs (vs ~5 yrs in ) Change Sep- 07 Sep- 08 Sep- 09 Sep- 10 Sep- 11 Sep- 12 Sep- 13 Sep- 14 Sep- 15 Sep- 16 Sep- 17 Capitalised software balance Amortisation 1. Excluding large items 2. AR&P = Asia Retail & Pacific 27

28 PROVISIONS TOTAL PROVISION CHARGE $m 1,200 1, , H16 2H H H17 Consumer IP Commercial IP Institutional IP Collective Provision LONG TERM IP LOSS RATES bp Sep 90 Sep 93 IP Loss Rate Sep 96 Sep 99 Sep 02 Sep 05 Sep 08 Sep 11 Median IP Loss Rate (ex- current period) Avg IP loss rate FY14-: 25bp Avg ex Esanda & Asia Retail: 21bp Sep 14 Sep 17 EXPECTED LOSS Individual provision expected loss as % of Gross Lending Assets % Sep 16 Sep 17 Australia New Zealand Institutional Subtotal Asia Retail Total COLLECTIVE PROVISION CHARGE $m 1H16 2H16 1H17 2H17 Lending Growth Change in Risk/Portfolio mix Eco Cycle TOTAL Net impact of new $75m retail trade overlay, less release of $41m Qld flood and Asia Retail & Pacific overlays 28

29 CREDIT QUALITY GROSS IMPAIRED ASSETS $m % % of Total GLAs 6,561 5,581 5,196 4,264 3,173 2,889 2,719 FY10 FY11 FY12 FY13 FY14 Gross impaired assets (GIA) 2,384 GIA as a % of GLA (RHS) CONSUMER 90+ DAY ARREARS Sep 13 Mar- 14 Sep 14 Home Loans Aus. Mar- 15 Sep 15 Cards Aus. Mar- 16 HOME LOANS 90+ DPD BY STATE 1 % Sep 16 Mar- 17 Home Loans NZ VIC & TAS NSW QLD WA SA & NT & ACT Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Portfolio Sep Excludes Non Performing Loans 29

30 CAPITAL, LIQUIDITY & DIVIDENDS CAPITAL DIVIDEND AND DIVIDEND PAYOUT RATIO % DPS (cents) DPOR (%) Sep-16 Mar-17 Organic capital generation Dividends Asia Retail & Wealth Other Sep FUNDING & LIQUIDITY Net Stable Funding Ratio Liquidity Coverage Ratio % 113% 114% 125% 135% 135% Sep 16 Mar 17 Sep-17 Sep 16 Mar 17 Sep Cash DPOR (RHS) 2nd half DPS 1st half DPS 30

31 ASIA RETAIL & WEALTH DIVESTMENT FINANCIAL IMPACTS ASIA RETAIL CONTRIBUTION TO EARNINGS $m $m (anticipated) ASIA RETAIL INDIRECT COST REDUCTION PROFILE Earnings 1 earnings 2 FY18 anticipated earnings impact (partial year ownership) 350 Revenue down ~85% Expenses ~275 Allocated group costs, addressing as part of overall simplification program - Direct down ~85% - indirect down $80-90m Provisions down ~70% ~-85 ~-50 ~140 Cash Profit CET1 benefit 9bp 6+ bp Countries settled in 2H17 Countries to settle 1H18 China, Singapore, Hong Kong Indonesia, Taiwan, Vietnam Sep-16 Sep-17 FY18 FY19 Residual indirect costs (post FY19) 1. Approximates. Difference to 31/10/16 announcement due to inclusion of Vietnam, timing and rounding 2. Excludes loss on sale impact of $270m (post tax) 31

32 ANNOUNCED DIVESTMENTS 2018 IMPACTS INDICATIVE CHANGE IN CONTRIBUTION FROM DIVESTMENTS (FY18 vs ) 1 $m Asia Retail SRCB MCC UDC FY18 Total (lower earnings) Revenue ~ ~-80 ~-750 Expenses Direct ~-185 ~-25 ~-210 Expenses Indirect ~-85 ~-85 Provisions ~-85 ~-5 ~-90 OnePath P&I Completion 1H19 Loss on sale CET1 impact 15bp Cash Profit (pre gain / loss on sale) ~ ~-40 ~-310 Gain / (Loss) on sale ~60 Nominal ~245 ~100 ~255 3 CET1 impact ~6+ bp ~40bp ~9bp ~10bp ~65+ bp Basis for lower earnings 3 divestments in 2H17, 3 in 1H18: Revenue -~85%, Direct exp. -~85% Indirect exp. -~30% Provisions -~70% Cessation of equity accounting earnings Cessation of equity accounting earnings ~9 months earnings impact All divestments are indicative and subject to regulatory approvals 1. Indicative only based on anticipated timing and earnings as a basis for FY18. not necessarily representative of future earnings 2. Estimated loss on sale at completion some separation costs to be incurred in FY18 3. Includes MCC (+245), UDC (+100), Asia Retail (+60) and ~150m P&I costs 32

33 2017 FULL YEAR RESULTS INVESTOR DISCUSSION PACK 26 October 2017 FINANCIAL PERFORMANCE AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

34 GROUP PERFORMANCE STATUTORY & CASH PROFIT RECONCILIATION STATUTORY & CASH PROFIT STATUTORY TO CASH ADJUSTMENTS 1 $m 7,493 7,216 5,709 growth Statutory profit 12.2% Cash Profit 17.8% 5,889 6,406 6,938 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. $m Statutory Profit 5,709 6,406 Adjustments Treasury share adjustment Revaluation of policy liabilities (54) 34 Economic hedges Revenue Hedges 92 (99) Structured credit intermediation trades (4) (3) Revaluation of SRCB to held for sale Total adjustments Cash Profit 5,889 6,938 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). The sale is subject to customary closing conditions and regulatory approvals. In the March 2017 half, the Group recognised a $219 million impairment to the investment, $11 million of foreign exchange losses and $86 million of tax expenses, following the reclassification of the investment to held for sale. The 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 cash profit result, however the net impact will be included within cash profit for full year reporting. Statutory Profit Cash Profit 1. Definitions of the adjustments between statutory profit and cash profit are detailed in the 2017 Full Year Results (Consolidated Financial Report & Dividend Announcement) within the Profit Reconciliation section. 34

35 FINANCIAL PERFORMANCE OVERVIEW CASH PROFIT & LARGE/NOTABLE ITEMS REVENUE $m 20,537 20,594 20,489 EXPENSES $m 9,378 $9,522 on a consistent basis to & 1 10,439 9,448 2H17 (vs 1H17) Growth (Cash basis) $m % change $m % change Income 20, , Expenses 9, , PBP 11, , Provisions 1, Cash Profit 6, , LARGE/NOTABLE ITEMS IN CASH PROFIT 2 PROFIT BEFORE PROVISIONS CASH PROFIT $m $m 11,159 11,041 7,216 6,938 10,155 5,889 Post tax impact ($m) 1H17 2H17 Derivative valuation adj. (71) Equity accounted earnings Sale of Asia Retail & Wealth - (270) (284) 14 Gain on sale 100 Queen St Software Capitalisation changes (389) Asian minority valuation adj. (231) Restructuring (201) Esanda Dealer Finance divest Derivative CVA methodology change (168) TOTAL (670) 60 (1) Consistent basis excludes Esanda Dealer Finance from 2015 expense base and applies capitalised software expenses based on revised policy announced in 2016 (higher expensed threshold) 2. Profit and loss impacts of large/notable items is shown on the following 3 Large/Notable Items slides 35

36 LARGE/NOTABLE ITEMS IN CASH PROFIT Cash profit impact Profit & Loss item ANZ Division 1H17 2H17 CASH PROFIT 5,889 6,938 3,411 3,527 CASH PROFIT COMPOSITION: - Cash profit excluding large/notable items 6,559 6,878 3,412 3,466 Large/notable items (670) 60 (1) 61 Large/Notable items: Derivative valuation adjustments Other operating income Institutional (71) Equity accounted earnings (SRCB & BOT) SRCB ( & ) & BOT () equity accounted earnings prior to reclassification of these Asian minority investments to available for sale Sale of Asia Retail & Wealth businesses As a result of the sale relating to Asia Retail & Wealth businesses, the Group recognised charges to impair software, goodwill and fixed assets as well as provide for redundancies. Gain on sale 100 Queen St, Melbourne Gain on sale of the Group s 100 Queen Street office tower and former head office in Melbourne Software Capitalisation changes Accelerated amortisation charge associated with changes to the Group s software capitalisation policy Asian minority valuation adjustment Recognised impairment on AMMB; recognised gain on BoT on cessation of equity accounting Other operating income TSO & Group Centre Other operating income Asia Retail & Pacific - (270) (284) 14 Other operating income TSO & Group Centre Expenses TSO & Group Centre (389) Other operating income TSO & Group Centre (231) Restructuring Restructuring expense associated with accelerating the process of reshaping the Group s workforce to build a simpler, more agile bank Esanda Dealer Finance divestment Esanda Dealer Finance earnings prior to transfer of assets to acquirer. Derivative CVA methodology change Impact of revised methodology for determining the derivative credit valuation adjustment (associated with the derivative portfolio) to make greater use of market information and enhanced modelling, and to align with leading market practice. Expenses Net interest income, Other operating income, Provisions Australia New Zealand Institutional Asia Retail & Pacific TSO & Group Centre (201) Australia Other operating income Institutional (168)

37 LARGE/NOTABLE ITEMS DETAIL PROFIT & LOSS: FULL YEAR 2016 & 2017 September 2017 Full Year Large/notable items in cash profit September 2016 Full Year Large/notable items in cash profit Cash profit $M Derivative valuation adj. $M Equity accounted earnings SRCB $M Sale of Asia Retail & Wealth businesses $M Gain on Sale 100 Queen St $M Cash profit $M Derivative valuation adj. $M Equity accounted earnings SRCB & BOT $M Software capitalisation changes $M Asian minority valuation adj. $M Restructuring $M 1 Esanda Dealer Finance divestment $M Derivative CVA method. change $M Net interest income 14, , Other operating income 5, (310) 114 5,499 (102) (231) - 78 (237) Operating income 20, (310) ,594 (102) (231) (237) Operating expenses (9,448) (10,439) - - (556) - (278) (17) - Profit before credit impairment and income tax 11, (310) ,155 (102) 345 (556) (231) (278) 92 (237) Credit impairment charge Profit before income tax (1,199) (1,956) (23) - 9, (310) 114 8,199 (102) 345 (556) (231) (278) 69 (237) Income tax expense (2,889) (69) - 40 (2) (2,299) (24) 69 Non-controlling interests (15) (11) Cash profit 6, (270) 112 5,889 (71) 345 (389) (231) (201) 45 (168) 1. Restructuring charges by division: Australia $49m, Institutional $90m, New Zealand $18m, Wealth Australia $20m, Asia Retail & Pacific $12m, TSO & Group Centre $89m 2. Further information is set out on page of the 2017 Full Year Consolidated Financial Report 37

38 LARGE/NOTABLE ITEMS DETAIL PROFIT & LOSS: HALF YEAR 2017 Sep Half Year Cash profit $M Large/notable items in cash profit Derivative valuation adj. $M Sale of Asia Retail & Wealth businesses $M Cash profit $M March 2017 Half Year Large/notable items in cash profit Derivative valuation adj. $M Equity Sale of accounted Asia Retail earnings & Wealth SRCB businesses $M $M Gain on sale 100 Queen St $M Net interest income 7, Other operating income 7, , , (324) 114 Operating income 10, , (324) 114 Operating expenses (4,717) - - (4,731) Profit before credit impairment and income tax 5, , (324) 114 Credit impairment charge Profit before income tax (479) - - (720) , , (324) 114 Income tax expense (1,456) (20) - (1,433) (49) - 40 (2) Non-controlling interests (7) - - (8) Cash profit 3, , (284) Further information is set out on page of the 2017 Full Year Consolidated Financial Report 38

39 BALANCE SHEET CUSTOMER DEPOSITS BY SEGMENT $b Sep-15 Sep-16 Sep-17 GROWTH 2H17 (vs 1H17) TOTAL 4.0% -0.1% Institutional 9.2% 4.2% Transaction Banking 5.5% 7.8% Loans & Specialised Finance 12.3% 5.1% Markets 13.4% 0.5% Commercial (Aus & NZ) 7.6% 1.0% Small Business (Aus) 8.8% 3.2% Business & Regional Business Banking (Aus) 6.3% 1.0% Corporate (Aus) 22.6% 2.8% Commercial (NZ) 2.4% -5.3% Other Retail (Aus & NZ) 5.8% 1.0% Other Retail (Aus) 5.8% 1.0% Housing (Aus & NZ) 5.7% 3.4% Housing (Aus) 10.9% 4.6% Housing (NZ) 3.7% 2.9% Institutional Commercial (Aus & NZ) Other Retail (Aus & NZ) Housing (Aus & NZ) Other 1 1. Other largely Asia Retail & Pacific 39

40 BALANCE SHEET NET LOANS & ADVANCES BY SEGMENT $b Sep Sep-16 Sep-17 GROWTH 2H17 (vs 1H17) TOTAL 0.8% 0.7% Institutional -5.0% -1.0% Transaction Banking -5.7% 7.8% Loans & Specialised Finance -7.7% -3.5% Markets 3.3% 2.5% Commercial (Aus & NZ) -0.1% 1.3% Small Business (Aus) 0.1% -0.8% Business & Regional Business Bank (Aus) -1.6% -0.2% Asset Finance 3.5% 1.0% Corporate (Aus) 6.9% 4.5% Commercial (NZ) -2.2% 2.2% Other Retail (Aus & NZ) -3.9% -2.2% Other Retail (Aus) -3.4% -2.9% Other Retail (NZ) -5.8% -0.3% Housing (Aus & NZ) 6.1% 3.2% Housing (Aus) 7.2% 3.3% Housing (NZ) 1.6% 3.4% Institutional Commercial (Aus & NZ) Other Retail (Aus & NZ) Housing (Aus & NZ) Other 1 1. Other largely Asia Retail & Pacific 40

41 NET INTEREST MARGIN GROUP & DIVISIONAL MARGIN PERFORMANCE GROUP FULL YEAR (bp) AUSTRALIA (bp) Bank levy impact ~2bp NEW ZEALAND (bp) INSTITUTIONAL (bp) Bank levy impact ~1bp GROUP HALF YEAR (bp) AUSTRALIA (bp) Bank levy impact ~4bp NEW ZEALAND (bp) INSTITUTIONAL (bp) Bank levy impact ~2bp H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17 41

42 IMPACTS OF DECLINING RATES LOWER RETURNS ON CAPITAL AND LOW RATE DEPOSITS % The lower earnings rate on capital and low rate deposits reduced Group NIM by ~4bp in. Headwind is expected to reduce in FY Sep- 05 Sep- 06 Sep- 07 Sep- 08 Sep- 09 Sep- 10 Sep- 11 Sep- 12 Sep- 13 Sep- 14 Sep- 15 Sep- 16 Sep- 17 OCR 3 year swap (spot) Replicating Yield 1. AUD OCR / Swap rates 2. AUD average capital portfolio yield displayed. The Group s overall portfolio includes multiple portfolios & currencies. 42

43 TOTAL OPERATING INCOME BY CATEGORY TOTAL INCOME AIEA & NIM TOTAL MARKETS INCOME $m 20,537 20,597 20, , , $m % % 1.99% $m 2,169 2,356 1,798 1, ,436 1,107 1, ,234 4,192 3, NIM (RHS) AIEA Other operating Net interest income 14,616 15,098 14,872 SHARE OF ASSOCIATES PROFIT $m OTHER NON INTEREST INCOME $m 4, ,504 2, ,189 3, ,518 1,332 2,437 2, Share of Assoc Profit Other operating income 1 Markets other op. income Net interest income Other Bank of Tianjin SRCB AMMB Panin Other FX earnings Funds Mgt & Ins. Fees & Commissions 1. Excluding Markets other income and Share of Associates Profit 43

44 TOTAL OPERATING INCOME BY DIVISION TOTAL INCOME - CASH $m 20,537 20,594 20, ,123 1,176 1, ,273 1,255 INCOME GROWTH TOTAL 2H17 (vs 1H17) Institutional 5% -16% Transaction Banking -4% -1% 5,762 5,180 5,414 Loans & Specialised Finance -15% -13% Markets 31% -27% NEW ZEALAND 2% 2% 2,985 3,092 3,172 Retail 3% 3% Commercial 1% 2% AUSTRALIA 2% 3% Retail 4% 4% 8,912 9,408 9,602 Commercial -1% 0% Asia Retail & Pacific -45% 135% Wealth -13% 0% TSO & Group Centre 18% -15% TSO & Group Centre Asia Retail & Pacific Wealth Australia Institutional New Zealand Australia 44

45 TOTAL EXPENSES TOTAL EXPENSES $m 10,439 9,378 1,525 9,448 1, , , ,462 1, ,479 5,541 5,178 EXPENSES BY DIVISION $m 10,439 9,378 1,221 9, ,197 1,225 1,193 2,806 2,958 2,736 FTE BY DIVISION FTE # 50,152 46,554 44,896 17,490 16,494 16,457 5,727 4,894 2,347 3,981 2,174 2,110 6,472 6,317 6,207 6,103 5,112 4,754 3,193 3,426 3,423 12,013 11,563 11,387 Sep-15 Sep-16 Sep-17 Other Technology Personnel TSO & Group Centre Wealth Aus. Institutional Restructuring Premises Asia Retail & Pacific New Zealand Australia 45

46 TECHNOLOGY INFRASTRUCTURE SPEND & CAPITALISED SOFTWARE TECHNOLOGY INFRASTRUCTURE SPEND SPEND BY CATEGORY $m EXPENSED / CAPITALISED $m Expensed investment spend Capitalisaed investment spend CAPITALISED SOFTWARE AMORTISATION $b 542 1, Accelerated amortisation Current period amortisation SPEND BY DIVISION $m BALANCE $m 2, , , , Infrastructure / Other Risk & Compliance Productivity Growth TSO & Group Centre Wealth, Asia Retail & Pacific Institutional Aus. & NZ Divisions TSO & Group Centre Wealth, Asia Retail & Pacific Institutional Aus. & NZ Divisions 1. Excluding Markets other income and Share of Associates Profit 46

47 2017 FULL YEAR RESULTS CORPORATE PROFILE AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

48 CORPORATE PROFILE CORPORATE PROFILE PURPOSE AND VISION o o ANZ is a top 5 listed corporate in Australia and number one bank in New Zealand o Market capitalisation of AU$86.9b 1 o Total Assets of AU$897.3 billion 1 We operate in 34 markets across o Australia o New Zealand o Asia o Pacific o Europe o America o Middle East o o Shape a world where people and communities thrive Build the best connected and most respected bank in the region CREDIT RATING S&P MOODY S FITCH o Our ~45,000 staff serve retail, commercial and institutional customers through o consumer and corporate offerings in our core markets, and o Regional trade and capital flows across the region AA- Negative Aa3 Stable AA- Stable o We have over 550,000 shareholders and paid ~$5b in dividends in As at 30 September

49 STRATEGIC PROGRESS- EXAMPLES Create a simpler, better capitalised, better balanced and more agile bank Reduce operating costs and risks by removing complexity and exiting low return and non-core businesses Reduction of Institutional CRWA by $46 billion over two years, $18b year on year $8 billion increase in Retail and Commercial CRWA ( vs ) 53% of Group Capital is now allocated to the Retail and Commercial businesses in Australia and NZ The Group CET1 ratio was 10.6% at 30 September 2017 Completion of announced asset disposals will deliver an estimated additional 80 bps of capital by the end of FY18. Group costs have reduced 9% in absolute terms ( vs ) for the first time since 1999 Focus are efforts on areas where we can carve out a winning position Make buying and owning a home or starting, running and growing a small business in Australia and New Zealand easy. Be the best bank in the world for customers driven by the movement of goods and capital in our region Introduction of First Home Buyer coaches to assist customers navigate the home buying process Increased number of retail customers in Australia from 5.3m to 5.6m In New Zealand we hold a leading position in overall brand consideration (51%) Small business lending in Australia was steady year on year with deposits up 9%. In New Zealand lending increased 5% with deposits up 7% Institutional Payments and Cash Management business is now 21% of Institutional income, up from 19% in Our Institutional business in Aus & NZ ranks No.1 for overall market and lead penetration and the quality of our service 1 and a top 4 Corporate Bank in Asia for a fifth successive year 2 1. Peter Lee Associates 2017 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2017 respectively) 2. Greenwich Associates 2016 Asian Large Corporate Banking Study (issued in March 2017): ANZ ranked =No.4 49

50 STRATEGIC PROGRESS - EXAMPLES Build a superior everyday experience for our people and customers in order to compete in the digital age Build more convenient, engaging banking solutions to simplify the lives of customers and our people The only bank to offer payment options across Apple Pay, Android Pay, Samsung Pay and FitBit Pay backed by the ability to make high value transactions easier with the introduction of voice biometrics Expanded accessibility features for ANZ Visa Debit cards including features to assist customers with visual impairment and reading difficulties Acquired online property site RealAs to bolster our digital offering in Australia s property market Added to our small business product offering through our employment hero partnership while adding to our payments capability with BladePay and FastPay Next Generation Drive a purpose and values led transformation of the Bank Create a stronger sense of core purpose, ethics and fairness, investing in leaders who can help sense and navigate a rapidly changing environment Established CEO-led Responsible Business Committee and revised Charter of ES&G Board Committee Contributed $131m in community investment supported by 113k community volunteering hours by employees. Introduced The ANZ Way, focusing on ANZ s purpose, strategy, refreshed values and Code of Conduct Introduced a new balanced scorecard incentive plan in our branches and retail banking contact centres in Australia Implemented key priorities of our revised Human Rights Standards, including strengthened customer due diligence and employee training 1. Peter Lee Associates 2017 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2017 respectively) 2. Greenwich Associates 2016 Asian Large Corporate Banking Study (issued in March 2017): ANZ ranked =No.4 50

51 CORPORATE SUSTAINABILITY CORPORATE SUSTAINABILITY FRAMEWORK Our Corporate Sustainability Framework supports ANZ s business strategy and is aligned with the bank s Purpose. The Framework has three key areas of focus: Sustainable Growth, Social and Economic Participation and Fair and Responsible Banking. OUR MATERIAL ISSUES Through our annual materiality assessment we engage with a range of internal and external stakeholders to build a clear picture of the ESG risks and opportunities that have the most potential to impact our ability to create value. Stakeholder feedback informs our sustainability approach, reporting and public targets. In 2017, the top rated issues remained similar to those in 2016: Fairness and ethical conduct: stakeholders want us to work harder to get it right and supported cultural change being driven from the highest level within ANZ. Fraud and data security: stakeholders consider we have a key role in educating customers and the wider community about cyber security and must ensure our policies and processes prevent fraud and protect customer data. Responsible lending to business: stakeholders consider the social and environmental impacts of our business lending decisions are core to risk management. Our 2017 Corporate Sustainability Review, discussing progress against the bank s sustainability targets, will be available on anz.com/cs on 12 December Customer experience: stakeholders highlighted fairness, transparency and simplicity of products as central to building customer and community trust. Digital innovation: stakeholders consider keeping pace with digital innovation and customer expectations is core to ANZ s ability to compete successfully now and in the long term. 51

52 CORPORATE SUSTAINABILITY PERFORMANCE ON TARGETS FAIR & RESPONSIBLE BANKING Implemented key priorities of our revised Human Rights Standards, including strengthened customer due diligence and employee training Cyber security education delivered to >60,000 customers Implemented and embedded a third party risk screening tool covering ESG risk for suppliers Almost 500,000 people reached through our financial inclusion programs 1 SOCIAL AND ECONOMIC PARTICIPATION 250 people employed from under-represented groups 2 184,576 customers have registered for gomoney in the Pacific % women in management positions 4 SUSTAINABLE GROWTH Funded and facilitated $6.9 billion in low carbon and sustainable solutions, such as green buildings, low emissions transport, green bonds, renewable energy, efficient irrigation and low emissions gas power generation, since 2015 Reduced carbon emissions from premises energy by 20% against 2013 baseline The information provided covers the period 1 October September 2017 and has not been externally assured. Our full year Corporate Sustainability Review, to be released 12 December 2017, will be assured by KPMG and include our performance against all targets 1. This is the estimated number of people who have benefitted from ANZ s MoneyMinded and SaverPlus programs since Includes Aboriginal and Torres Strait Islander people, people with a disability and refugees 3. Cumulative total since launch in Employee headcount is used for the basis of this disclosure. Includes all employees regardless of leave status excluding contractors (which are included in FTE). 52

53 CORPORATE PROFILE ANZ GROUP FULL YEAR 2017 CASH PROFIT Australia Division Cash profit: $3,695m New Zealand Division Cash profit: $1,369m Institutional Division Cash profit: $1,836m Providing products, services and solutions to Retail and Commercial customers through our Retail and Corporate & Commercial Banking businesses Retail: consumer and private banking customers Commercial: privately owned small, medium and large enterprises and agricultural business Providing products, services and solutions to Retail and Commercial customers through our Retail and Commercial businesses Retail: consumer, wealth, private banking and small business customers Commercial: privately owned medium and large enterprises and agricultural business Provides products, services and solutions to global Institutional and business customers across geographies Products: Cash, Loans & Specialised Finance, Trade and Markets Geographies: located in Australia, New Zealand, Asia, Europe, America, PNG and the Middle East 2017 Cash Profit Australia Division $3,695m New Zealand Division $1,369m Institutional Division Other $1,836m $6,938m All figures provided on a Cash Basis for Full Year Other Includes: Wealth Australia ($238m), Asia Retail & Pacific (-$148m), Technology, Services & Operations and Group Centre (-$52m). Other = $38m 53

54 CORPORATE PROFILE ANZ GROUP SEPTEMBER 2017 Revenue & Expenses CONSUMER (AUS & NZ) COMMERCIAL (AUS, NZ & International) $8,837m $9,395m Institutional 58% Retail $3,981m $4,005m Corporate 42% 67% 33% Revenue Expenses Revenue Expenses Consumer Commercial Revenue 48% 52% $18,232m Expenses 50% 50% $7,986m 1. All figures provided on a Cash Basis for Full Year Other Includes: Wealth Australia, Asia Retail & Pacific, Technology, Services & Operations and Group Centre 54

55 CORPORATE PROFILE ANZ GROUP SEPTEMBER 2017 BALANCE SHEET CONSUMER (AUS & NZ) COMMERCIAL (AUS, NZ & International) Other Retail $350b 5% $227b $257b $209b Institutional 53% 73% Housing 95% Corporate 47% 27% Loans Deposits Loans Deposits Consumer Commercial Loans 61% 39% $577b Deposits 45% 55% $466b 1. All figures provided on a Cash Basis for Full Year Other Includes: Wealth Australia, Asia Retail & Pacific, Technology, Services & Operations and Group Centre 55

56 CUSTOMER EXPERIENCE MARKET POSITION MARKET SHARE AUSTRALIA 1 MARKET SHARE NEW ZEALAND % 13.5% 14.5% 16.9% 18.7% 12.8% 31.1% 34.1% 27.4% 24.5% 29.2% 9.5% Home Loans Household Deposits Business Loans Business Deposits Credit Cards Personal Lending Mortgages Household Deposits Credit Cards KiwiSaver Life Insurance Agri INSTITUTIONAL DIVISION AUSTRALIA NEW ZEALAND ASIA #1 Lead Bank Penetration 3 #1 Lead Bank Penetration 3 Top 4 Corporate Bank 4 Clear leadership positions for key performance indicators including overall market penetration, lead penetration and quality of service (Relationship Strength) Top 4 Corporate Bank in Asia for a fifth successive year 2 31% 26% 24% 24% 46% 28% 25% 54% 43% 42% 28% 28% 9% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank 4 Bank 1 Bank 2 Bank 3 ANZ Bank 5 1. APRA Monthly Banking Statistics as at August Sources: Mortgages - RBNZ, share of all banks as of August 2017, Kiwisaver - IRD, FUM market share as of June 2017, Life insurance - (Financial Services Council), share of all providers as of June Peter Lee Associates 2017 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2017 respectively); ranked against the Top 4 competitors. 4. Greenwich Associates 2016 Asian Large Corporate Banking Study (issued in March 2017): ANZ ranked =No.4 (2017 results published March 2018) 56

57 CUSTOMER EXPERIENCE STRONG FOUNDATION BUILT TO CAPITALISE ON EMERGING MOBILE PAYMENTS LANDSCAPE BUILDING KEY CAPABILITIES KEY ACHIEVEMENTS: 661k cards provisioned across eligible devices in digital wallets with particularly strong adoption of Apple Pay Ongoing customer engagement and adoption with digital wallets with 31m transactions and $1b spend since launch Continued to strengthen ANZ s leadership position in Mobile Payments through launch of ANZ with Samsung Pay, Fitbit Pay and virtual Apple Pay provisioning through gomoney Enabled Australia s domestic payments system, eftpos, to join mobile payments revolution through partnership with Apple Pay Close attention to managing risk and regulatory landscape Demonstrated capability to partner and deliver to customer needs underlying capabilities are scalable DIGITAL WALLET ADOPTION Volume of cards provisioned and available per quarter Q2 206 Q3 Q4 Q1 DIGITAL WALLET USAGE Volume of transactions per quarter m Q2 Q3 Q Apple Pay TM Android Pay TM ANZ Mobile Pay Samsung Pay FitBit TM Pay Q2 Q3 Q4 Q1 Q2 Q3 Q4 57

58 SHAREHOLDER RETURNS 10 YEAR PERFORMANCE DIVIDEND PER SHARE cents % DIVIDEND CONSIDERATIONS Setting a conservative, sustainable DPS Confidence in the strong ongoing capital generation (NPAT) in our Retail / Commercial businesses and continued capital efficiency in Institutional Credit quality trends Expected capital requirements FY08 FY09 FY10 FY11 FY12 FY13 FY14 0 The impact of expected asset sales on earnings and on opportunities for capital management initiatives DPS DPOR Importance of stable payout ratio and franking credits SHARE PRICE TOTAL SHAREHOLDER RETURN $ YEAR () 13.1% 5 YEARS (FY12 ) 59.2% 10 YEARS (FY08 ) 78.2% 7.1% 19.6% Share price close (last trading day in September of the financial year) Share price change TSR Share price change TSR -0.3% Share price change TSR 58

59 FINANCIAL PERFORMANCE 10 YEAR PERFORMANCE CASH BASIS REVENUE $b EXPENSES $b FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY08 FY09 FY10 FY11 FY12 FY13 FY14 PROVISIONS $b CASH PROFIT $b FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY08 FY09 FY10 FY11 FY12 FY13 FY14 59

60 FINANCIAL PERFORMANCE - RATIOS 10 YEAR PERFORMANCE CASH BASIS 1 NET INTEREST MARGIN % Changes to NIM % calculations. Refer footnote COST TO INCOME FY08 FY09 FY10 FY11 FY12 FY13 FY14 1 FY08 FY09 FY10 FY11 FY12 FY13 FY14 RETURN ON EQUITY % EARNINGS PER SHARE cents FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY08 FY09 FY10 FY11 FY12 FY13 FY14 1. 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 2016 NIM is 2.07% 60

61 2017 FULL YEAR RESULTS BUSINESS PERFORMANCE AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

62 FINANCIAL PERFORMANCE DIVISIONAL CONTRIBUTION TO CASH PROFIT Revenue : +5% Expenses : -9% Revenue : -45% Revenue : +2% Expenses : 0% Provisions : -89% Expenses : -19% Provisions : -16% Provisions : -3% ,938 5, Revenue : +3% Expenses : -3% Provisions : -35% Revenue : -13% Expenses : -7% FUM : +2% Revenue : +18% Expenses : -43% Cash Profit Australia New Zealand Institutional Wealth Australia Asia Retail & Pacific TSO & Group Centre Cash Profit 1. Growth rates on a PCP basis ( v ) 62

63 AUSTRALIA FINANCIAL PERFORMANCE REVENUE EXPENSES TOTAL PROVISIONS $m $m $m 8,875 9,408 9,602 3,232 3,426 3, % 36.4% 35.6% 897 Revenue Revenue/Avg FTE ($k) Expenses CTI CASH PROFIT RISK WEIGHTED ASSETS RETURN 1 $m $b % 3,547 3, , % % 7.0% 2.6% 5.9% 2.2% Revenue/RWA Return on RWA 63

64 AUSTRALIA DIVISION PRIORITIES MOVEMENTS PRIORITIES ACTIONS METRICS Simplified products # Products decommissioned <10 <10 47 STRATEGIC FOCUS Create a simpler, better capitalised, better balanced and more agile bank Focus efforts on attractive areas where we can carve out a winning position Build a superior experience for our people and customers to compete in the digital age More digital branches More self service More digital sales More digitally active customers Attract more customers Deepen customer relationships Grow FUM above system Launch innovative solutions to improve banker & customer experience # Digital branches # OTC transactions Digital % of retail sales Digital active customers # Retail Customers Retail Customers holding >1 Product Commercial Cross Sell (% growth) HL (ANZ vs system) 1 Household Deposits (ANZ vs system) 1 Android Pay transaction (000 s) Bladepay transactions (000 s) Electronic verification uptake (trans / month) m 15% 2.9m 5.3m 59.0% 4.8% 1.2x 0.9x m 16% 3.0m 5.4m 59.9% 10.8% 1.0x 0.6x 138 n/a 4, m 21% 3.3m 5.6m 60.6% 6.7% 1.2x 1.1x 1, ,828 Innovative solutions in place, improving the banker and customer experience BladePay Apple Pay TM Android Pay TM, ANZ Mobile Pay Samsung Pay FitBit TM Pay VoiceID to authorise payments 41 new digital branches, full range of digital banking options Digital Branches Improved Frontline Tools for our bankers 1. APRA System growth numbers up to Aug-17 64

65 AUSTRALIA DIVISION CONSISTENTLY DELIVERING SUSTAINABLE RESULTS CONSISTENT GROWTH SUSTAINABLE RETURNS $b $m +6% +7% +5% +4% +6% 3,378 3, % 3, ex levy 2.68 NLA Deposits Cash Profit NIM (%) RIGHTSIZING OUR COST BASE MANAGING OUR RISK 36.4% 36.4% 0.38% 0.36% 0.38% 35.6% 6.0% 5.0% 6.0% 6.0% 2.0% 0.0% 0.25% 0.28% 0.26% Revenue Costs CTI GIA as a % of GLA IP Loss Rate 65

66 AUSTRALIA DIVISION MORE CUSTOMERS, MORE ENGAGEMENT MORE RETAIL CUSTOMERS MORE PRODUCTS PER CUSTOMER 000 s Retail Products Per Customer (%) 6,000 +~300k 5,000 Multiple ,000 3,000 Sep-15 Sep-16 Sep-17 Single Sep-15 Sep-16 Sep-17 Retail Customers ( 000) MORE BUSINESS RELATIONSHIPS BALANCED GROWTH 1, , , % 6.5% 7.1% 6.1% 5.1% 8.7% 6.2% 5.4% Commercial Cross Sell ($m) Commercial Customers ( 000) Household Lending (ANZ) 1 Household Lending (System) 1 Household Deposits (ANZ) 1 Household Deposits (System) 1 1. APRA System growth numbers up to Aug-17 66

67 AUSTRALIA DIVISION RETAIL CONSISTENT GROWTH FOCUSED GROWTH $b Retail FUM ($b), PCP growth (%) +7% +7% +6% +7% 244 NLA 126 Deposits $265b $12b Home Loans +7% Consumer Finance -3% $27b $14b $104b Offsets +11% Transact +7% Savings +6% RESPONDING TO REGULATORY CHANGES Home Loans FUM 64% 64% 69% 36% 36% 31% 62% 58% 63% 34% 37% 33% MANAGING RISK 0.15% 0.09% 0.17% 0.10% 0.18% 0.11% P&I IO OO Investor GIA as a % of GLA IP Loss Rate (%) 67

68 AUSTRALIA DIVISION CORPORATE & COMMERCIAL BANKING BALANCED GROWTH $b +4% -4% +1% +9% GROWNG PRIORITY SEGMENTS 1 - Revenue Growth Health Emerging Corporate +15% +12% NLA Deposits Revenue Lending IMPROVING CRWA PROFILE $b NLA +1% CRWA -2% MANAGING RISK 1.35% 0.58% 1.34% 0.68% 1.43% 0.56% NLA 2 CRWA 2 GIA as % of GLA IP Loss Rate (%) 1. Growth rates reflect Aug-17 pcp 2. On 1 November 2015, the Group sold the Esanda Dealer Finance portfolio with the majority of the business transferred by 31 December

69 AUSTRALIA DIVISION DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR PEOPLE AND CUSTOMERS TRANSLATING INTO BUSINESS OUTCOMES 3.6m Cutting Edge Experiences Launched Fitbit Pay TM, Samsung Pay TM and delivered Touch ID, instant card replacement for customers with a digital wallet and voice biometrics for high value payments. Helping Australians buy a house In its first month alone, 40 thousand unique visitors have used RealAs Australia s most accurate property price prediction service to better buy their home. Launched HOLA, an online home loan service enabling customers to be Auction Ready within minutes generating $200m in FUM pipeline and now accounts for 25% of call centre home loans volumes. Helping Australians start and run their business Partnered with Employment Hero to help our Small Business customers manage their employee base. Launched SBOS, reducing business loan processing times by up to 65% and enabling Walk out working - real time account opening for Deposit & Transaction products. Leading with Data for our clients Built a world class Institutional Data Science team enabling better client experience and winning ANZ new client business. 3.3m digitally active customers 21% of Australia retail sales are completed digitally 83% of value transactions (deposits and withdrawals) are now completed digitally 3.3m 3.0m 2.7m 25% 20% 15% 85% 80% 75% 70% Sep-15 Sep-15 Sep-15 Sep-16 Sep-16 Sep-16 Sep-17 Sep-17 Sep-17 Making banking easier for our customers Opened 41 new digital branches with a full range of digital banking options including digital self-service. Launched PLCC, personal loans online in just a few steps, with an answer within 60 seconds. 15.8m App logons weekly 69

70 INSTITUTIONAL DELIVERING ON OUR STRATEGIC AGENDA RWA $50b (25%) reduction in RWA 1 by focussing on higher return, on-strategy priority segments SIMPLIFICATION 22% fewer staff 2 and 5% reduction in costs 2 by simplifying and streamlining the business NETWORK 36% of Australia and 29% of New Zealand revenue sourced from our International network 3 RISK & RETURN Lowered the risk profile 4 of the business and improved returns 5 of Institutional (15% higher) and the Group CUSTOMER FUTURE FOCUSSED Maintained our leading market position with customers, while transforming the business (37% fewer customers 6 ) Making targeted investment in priority channels and products to improve customer experience and position the business for profitable growth 1. Peak RWA was $199b in January 2015; 2.FTE and expense reduction from to ; 3. From October 2016 to September 2017; 4. Weighted average CCR of the portfolio; 5. Cash profit divided by average risk weighted assets from to ; 6. From peak at September 2015; excludes Papua New Guinea 70

71 INSTITUTIONAL MAINTAINED OUR LEADING MARKET POSITIONS ACROSS OUR KEY GEOGRAPHIES AUSTRALIA NEW ZEALAND ASIA #1 Lead Bank Penetration 1 Top 4 Corporate Bank 2 #1 Lead Bank Penetration 1 31% 46% 54% 26% 24% 24% 43% 42% 28% 25% 28% 28% 9% ANZ Bank 2 Bank 3 Bank 4 ANZ Bank 2 Bank 3 Bank 4 Bank 1 Bank 2 Bank 3 ANZ Bank 5 1. Peter Lee Associates 2017 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand (issued in June and August 2017 respectively) 2. Greenwich Associates 2016 Asian Large Corporate Banking Study (issued in March 2017): ANZ ranked =No.4 71

72 INSTITUTIONAL A SIMPLER, BETTER-BALANCED AND HIGHER RETURNING INSTITUTIONAL REVENUE 1 EXPENSES 1 TOTAL PROVISION CHARGES $m -6% 5% $m -5% -8% $m 5,748 5,180 5,414 2,873 2,958 2, % ,098 50% 51% Revenue Restructuring costs Derivative CVA methodology change Expenses Revenue/Average FTE ($k) Cost-to-income ratio CASH PROFIT 1 RISK WEIGHTED ASSETS RETURN 1 $m -4% 76% $b -25% -12% 1,911 13% 20% 1, , % 2.8% 1, % 1, % 3.4% 1.1% /16 Large/Notable Items Cash Profit Revenue/Average RWA Return on Average RWA 2 1. Excluding large/notable Items (derivative CVA methodology change and restructuring costs): Institutional revenue was $3m (0%) lower; expenses were $130m (5%) lower; cash profit was $564m (44%) higher; and revenue/average RWA was 44bps (15%) higher in 2. Cash Profit divided by average Risk Weighted Assets 72

73 INSTITUTIONAL STRONG MARKETS AND PCM RESULT, WITH L&SF AND TRADE REPOSITIONED REVENUE CONTRIBUTION 1,2 $m $b 5,748-6% 5,180 5% 5,414 CREDIT RISK WEIGHTED ASSETS % % ,170 1,798 2, Trade L&SF Other ,080 1,139 1,795 1, Markets Trade PCM 72 L&SF Other 430 1,156 1, MARKETS REVENUE 2 Balance Sheet 1. L&SF = Loans and Specialised Finance; Trade = Trade and Supply Chain; PCM = Payments and Cash Management 2. Excluding the $237m Derivative CVA methodology change, Institutional revenue was $3m (0%) lower; and Markets revenue was $321m (16%) higher, in 3. Cash Profit divided by average Risk Weighted Assets $m 23 2,170 1,178 1, Franchise Sales Franchise Trading 9% 31% , Derivative valuation adjustments 2, Derivative CVA methodology change 73

74 INSTITUTIONAL SMALLER, BETTER BALANCED AND HIGHER RETURNING TOTAL RWA CREDIT RWA $b $b $b % -12% % -13% CRWA REDUCTION % Sep 15 Sep 16 Sep 17 Sep 15 Sep 16 Sep 17 Sep-16 FX Lending 1 Risk Data & Sep-17 methodology CRWA Other RWA Aus & PNG NZ International REVENUE ON AVERAGE RWA RISK ADJUSTED NIM 2 RETURN ON AVERAGE RWA 3 5.0% 3.3% 3.0% 2.4% 3.6% 3.0% 2.5% 2.8% 5.5% 3.7% 3.4% 2.6% 2.65% 2.46% 1.94% 1.30% 2.52% 2.38% 1.99% 1.44% 2.59% 2.49% 2.11% 1.50% 1.0% 0.5% 2.5% 1.2% 1.5% 0.7% 0.6% 0.2% 1.3% 3.0% 0.6% 1.1% Aus & PNG International Aus & PNG International Aus & PNG International NZ Institutional NZ Institutional NZ Institutional 1. Lending movement comprises $10b reduction from active client management, $3b reduction from shorter tenor across the portfolio and $3b from reduction in counterparty credit risk on derivatives 2. Institutional ex-markets net interest income divided by average credit risk weighted assets 3. Cash profit divided by average risk weighted assets 74

75 INSTITUTIONAL OPTIMISING PORTFOLIO MIX AND MANAGING MARGINS INTEREST EARNING ASSETS 1 VOLUMES AND MARGINS 2 $b % 48% 51% 107 6% 6% 94 8% % 46% 41% % 1.57% 0.64% 0.69% 1.50% 0.72% Aus & PNG NZ International Average Interest Earning Assets 1 Average Customer Deposits Asset margins Deposit margins Average Deposits from Banks NIM BY REGION 3 NIM % 2.06% 2.05% 2.20% 2.49% 1.75% 2.42% 2.10% 1.68% bps % Aus & PNG NZ 1.68% International Institutional 1.54% Balance Sheet Mix 4-5 Asset Pricing and Mix Deposit Pricing and Mix -2 Bank levy 1. Average interest earning assets for L&SF and Trade; 2. Asset margins represents Loan Product, Specialised Finance and Trade. Deposit margins represents Payments and Cash Management; 3. Institutional ex-markets net interest margin; 4. Balance sheet mix represents the portfolio level change between interest earnings assets and interest earning liabilities. In, Institutional had higher interest earning liabilities than interest earning assets, and this mix change is dilutive to Institutional s net interest margin 75

76 INSTITUTIONAL DRIVING PRODUCTIVITY BY SIMPLIFYING AND STREAMLINING THE BUSINESS EXPENSES 1 FTE FTE REDUCTIONS 2 $m -5% -7% -22% -7% -22% 2,873 2,958 6,103 2,736 5,112 57% 4,754 50% 51% -25% -32% Restructuring Costs Cost-to-income ratio Sep 15 Sep 16 Sep 17 Senior Mgmt Sep 15 Other Staff Sep 16 Central Functions Sep-17 Expenses PRODUCTIVITY 1 EXPENSE DRIVERS 1 STP RATES 3 $k $m 20% 18% -8% 2, , % 42 2,736 30% 36% 0.75% 0.68% 0.72% % 88% 93% 84% 88% 79% D&A Personnel Other Trade Cash Management Markets Revenue/Average FTE Operating Expenses/Average Assets 1. Excluding large/notable Items (derivative CVA methodology change and restructuring costs): Institutional expenses were $130m (5%) lower; revenue/fte improved 13%; Opex/Assets was 2 basis points lower; and personnel cost was $175m lower in ; 2. Senior Management and Other Staff include Central Functions. Central Functions comprises enablement and support functions within Institutional; 3. Straight through processed (STP) volumes for Markets (Trade Capture, Confirmation, Settlement), Cash Management (Australia and NZ blended inward and outward payments) and Trade (volumes via the Transactive Trade Portal) 76

77 INSTITUTIONAL DISCIPLINED PORTFOLIO MANAGEMENT AND BENIGN CREDIT ENVIRONMENT EXPOSURE-AT-DEFAULT 1 GROSS IMPAIRED ASSETS NEW IMPAIRED ASSETS $b $m $m -10% -1% -35% -56% 402 1, % 17% 15% 42% % 34% % 83% 85% Sep 15 Sep 16 Sep 17 Sep 15 Sep 16 Sep 17 +7% -29% 1, Sep 15 Sep 16 Sep 17 Investment CRWA/EAD % Aus & PNG NZ International Aus & PNG NZ International Sub-investment INDIVIDUAL PROVISIONS COLLECTIVE PROVISIONS TOTAL LOSS RATE 2 $m $m % % 0.06% -97 Oswal Settlement Emerging Corporates Individual Provisions 1. Net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Includes amounts for 'Securitisation' and 'Other Assets' Basel asset classes 2. Credit Impairment Charges divided by average Gross Lending Assets 77

78 NEW ZEALAND FINANCIAL PERFORMANCE 1 REVENUE NZDm EXPENSES NZDm TOTAL PROVISIONS NZDm 3,211 3,320 3,381 1,303 1,316 1, % 39.6% 37.6% Revenue Revenue/Avg FTE ($k) Expenses CTI CASH PROFIT NZDm RISK WEIGHTED ASSETS NZDb RETURN 1,339 1,361 1, % 5.31% 5.55% 2.22% 2.18% 2.39% Sep 15 Sep 16 Sep 17 Revenue/RWA Return on RWA 1. includes large/notable items relevant to New Zealand Division. These are software capitalisation changes and restructuring costs 78

79 NEW ZEALAND DIVISION PRIORITIES PRIORITIES ACTIONS METRICS SEP 15 SEP 16 SEP 17 #1 in service Grow customer satisfaction and brand consideration Brand Consideration % 49.6% 50.9% Migrant Banking Brand Consideration 1 66% 75% 74% Retail Net Promoter Score KiwiSaver provider % 24.8% 24.5% STRATEGIC FOCUS Home ownership and running a small business Leading digital bank Make banking easier for home owners and small business Build a digital bank with a human touch Home Loans (Market Share) % 31.5% 31.1% Home Loan (FUM) 5 $68b $73b $77b Household deposits (Market Share) % 31.7% 34.1% Business Loans (Market Share) % 29.6% 28.4% Digitally active customers 1.2m 1.2m 1.3m Value transactions completed digitally 75% 80% 82% Leader in mobile banking 2 29% 32% 37% Funding gap 5 $29.5b $29.3b $28.1b NLA 5 $114.4b $120.7b $124.9b Create a simpler better balanced bank Continue to automate, simplify and industrialise Deposits 5 $84.9b $91.4b $96.8b Mortgages LVR <80% % 93.3% 94.1% FTE 6,472 6,317 6,207 CTI 40.6% 39.6% 37.6% 1. Source: McCulley Research Brand Tracking (online survey, first choice or seriously considered); six month rolling average 2. Source: Camorra Retail Market Monitor (RMM); six month rolling score 3. Source: RBNZ, September 2017 FUM market share as of June Source: RBNZ, September 2017 share of all banks as of August Changes in RBNZ data reporting from February 2017 onwards has resulted in a step change in data vs prior periods 5. New Zealand Geography (NZD) 6. Dynamic basis, as of September

80 NEW ZEALAND STRATEGIC FOCUS SIMPLER, BETTER BALANCED BANK BALANCE SHEET 1 PROFITABILITY & MARGIN 2 NZDb Focus on customer deposit growth encouraging New Zealanders to save NZDm NIM stabilised 2H ,339 1,361 1, % % 2.2% Sep 15 Sep 16 Sep % Funding gap (RHS) NLA Deposits Cash Profit NIM (RHS) MORTGAGES LOAN TO VALUE RATIO 3 FTE & CTI % 93.3% Continue to de-risk the bank by improving credit profile 94.1% 6,472 Simplification and automation contributing to FTE and CTI reductions 6,317 6,207 60% 40% Sep % 6.7% Sep % Sep 17 20% < 80% LVR mortgages > 80% LVR mortgages FTE CTI (RHS) 1. NZ Geography 2. NZ Division 3. Dynamic basis, as of September

81 NEW ZEALAND STRATEGIC FOCUS # 1 IN SERVICE NET CUSTOMER GROWTH BRAND CONSIDERATION 1 New Zealand Division ( 000) #2 #2 # % % 45.5% Sep 15 Sep 16 Sep 17 Net Retail acquisition (new less defection) ANZ brand consideration RETAIL NET PROMOTER SCORE BRAND CONSIDERATION MIGRANTS ( 000) % 80% 60% 40% -0.6 Sep 15 Sep 16 Sep 17 Sep 15 Sep 16 Sep 17 20% 0% Net migration 3 Brand consideration 1 (RHS) 1. Source: McCulley Research Brand Tracking (online survey, first choice or seriously considered); six month rolling average 2. Source: Camorra Retail Market Monitor (RMM); six month rolling score 3. Source: Statistics NZ, 12 months to September 81

82 NEW ZEALAND ENVIRONMENT GDP 1 INFLATION 2 Annual average % change % 3.4% 2.5% 3.0% 2.6% 2.9% 2.8% F 2018F 2019F 0.0 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 CPI Expectations Actual CPI HOUSE PRICES 3 Annual % change (3 month avg) CONSUMER CONFIDENCE 4 Index Auckland NZ ex-auckland Actual Seasonally adjusted 1. Source: ANZ Research 2. Source: ANZ, Statistics NZ 3. Source: ANZ, REINZ 4. Source: Roy Morgan, ANZ Research 82

83 NEW ZEALAND RETAIL MARKET SHARE Maintained our leading position in core banking products to support our vision of helping more Kiwis succeed Focus on well managed sustainable growth means our deposit growth has exceeded that of lending 31.1% 34.1% Mortgages 1 Maintained our #1 market share position while continuing to lead the market in responsible lending Managed risk by taking a cautious approach in selected segments (overseas income earners and long term interest only loans) Household deposits 1 Continued to experience strong household deposit growth in an increasingly competitive marketplace with our emphasis on encouraging New Zealanders to save 27.4% 24.5% Credit cards 1 Focus on productive business has seen our attention remain on interest bearing balances and share of spend remains strong Simplified our product offerings in the market, reducing the number of active consumer products from 11 to 5 KiwiSaver 2 #1 KiwiSaver provider with almost 735,000 KiwiSaver members. FUM growth of $1.8b, taking total FUM to >$11b 9.5% Life insurance 3 Continued to improve the quality of proprietary distribution, with bank channel lapse rates improving 140bps from last year Digital capabilities enhanced through market leading life and general insurance premium calculators 1. Source: RBNZ, share of all banks as of August Source: RBNZ, FUM market share as of June Source: FSC (Financial Services Council), share of all providers as of June

84 NEW ZEALAND COMMERCIAL COMMERCIAL AND AGRI PORTFOLIO (GLA) 48% 12% 27% 6% 3% 4% Agri Property Wholesale & Retail Trade Manufacturing Entertainment, Leisure & Tourism Other AGRI PORTFOLIO (GLA) 1 NZDb Dairy as a % of total NZ Geography 12.4% 11.9% 11.7% 10.9% 10.0% FY13 FY14 Dairy Sheep & Beef Other rural COMMERCIAL AND AGRI CREDIT QUALITY GIA AS % OF GLA 0.94% 0.67% 0.68% 0.56% 0.47% AGRI MARKET SHARE % 30.3% 1.4% 2.5% 0.6% 0.0% 29.7% -2.8% -4.7% 0.6% 29.2% 2.2% 2H15 1H16 2H16 1H17 2H17 1H16 2H16 1H17 Aug 17 ANZ market share ANZ growth System growth 1. NZ Geography (Gross Loans and Advances) 2. Source: RBNZ, changes in RBNZ data reporting from February 2017 onwards has resulted in a step change in data vs prior periods 84

85 NEW ZEALAND DIGITAL DELIVERING SUPERIOR EXPERIENCE FOR OUR PEOPLE AND CUSTOMERS Apply & Open functionality in gomoney for Everyday Accounts, Savings, Cards, Loans and KiwiSaver TRANSLATING INTO BUSINESS OUTCOMES 1.4m +171k 1.3m 1.3m 1.2m digitally active customers 1.1m Sep 15 Sep 16 Sep 17 Banker Workbench 1 won a Gold Award for User Experience in 2017 NZ Design Institute Awards 82% 85% 80% +6% Enabled self-service to report lost or stolen cards and arrange a replacement card via gomoney of value transactions 2 (deposits and withdrawals) are now completed digitally 75% 70% Sep 15 Sep 16 Sep 17 An enhanced and intuitive view of the Cards pages on ANZ.co.nz #1 40% 30% +8% First Bank in NZ to launch Apple Pay TM considered a leader in mobile banking 20% Sep 15 Sep 16 Sep Banker Workbench is a frontline ANZ tool 2. As at point of time, September

86 NEW ZEALAND GEOGRAPHY CASH PROFIT 2H17 1H17 PROFIT BEFORE PROVISIONS 1 NZDm 2,407 2,244 2,631 NZDm NZDm NZDm Income 4,077 2,029 2,048 Net interest 3,078 1,544 1,534 Other income Expenses 1, PBP 2,631 1,301 1,330 3,885-1,478 Revenue 3,824 4,077-1,580-1,446 Expenses Provisions charge Cash profit 1, CTI 35.5% 35.9% 35.0% Customer deposits 96,829 96,829 96,259 NLA 124, , ,954 RWA 2 72,162 72,162 74,511 BALANCE SHEET NZDb Sep 15 Customer Deposits Sep 16 NLA Sep includes large/notable items relevant to New Zealand Geography. These are software capitalisation changes, derivative credit valuation adjustment changes and restructuring costs 2. RWA is on an APRA basis 86

87 WEALTH AUSTRALIA PRIORITIES PRIORITIES ACTIONS METRICS Integrate into the bank propositions Embedded Wealth program Wealth Solutions held by ANZ customers 1 956k 993k 998k 2 Solutions uplift 1 n/a 3.9% 0.5% 2 Empower advisers Grow for Advice Grow for Advice Insurance offer developed and piloted Client engagement tool, Wealth Report and Projection Modeller launched Launch of digital underwriting pre-assessment tool for advisers STRATEGIC FOCUS Australia s leading life insurer One Care repricing Launch Essentials Retail Life Inforce Premium ($m) ,038 Retail Life New Business ($m) Retail Lapse rate 13.3% 14.0% 14.1% Voyage & Grow Wrap: Avg FUM ($m) 1,599 1,954 2,848 Simplify super and investment Launched Grow Wrap Completed transition program Inflows ($m) Smart Choice: Avg FUM ($m) 3 3,414 9,850 14,430 Legacy book transitioned ($m) 4 17% 57% 100% Develop our people Women in Management % % 45.5% Employee engagement 73% 6 71% 69% 7 Notes: 1.Sourced from Wealth Analytics. Wealth solutions are matched only to customers with an existing retail relationship and customer number. Match rates vary between products. Excludes $0 balance superannuation accounts, Oasis, Group Life, Inactive Share Trading accounts and legacy Employer Super customers/accounts; 2. As at 31 August 2017; 3. This includes the transition of Closed Employer Super plans to ANZ Smart Choice (Employer) 4. Percentage is based on ADA member count transitioned. 5. Women in Management is defined as the proportion of female staff in Group 1-4 roles; 6. Talent and Culture figures for are for Global Wealth and include Private Bank and Wealth outside of Australia; 7. engagement score based on MyVoice Pulse survey, a significantly smaller sample size than previous years Sources: Wealth Analytics; NMG 87

88 WEALTH AUSTRALIA FINANCIAL HIGHLIGHTS PROFIT CONTRIBUTION $m 157 Adverse Insurance claims experience Margin decline due to rationalisation of Funds Management portfolio Lower realised gains due to rebalancing of invested capital Disciplined expense management Claims experience steady in 2H17 Margin decline due to rationalisation of Funds Management portfolio has stabilised Disciplined expense management H16 Insurance Funds Management Corp & Other Expenses 2 Tax 1H17 Insurance Funds Management Corp & Other Expenses Tax 2H17 EMBEDDED VALUE 1 $m REVENUE & COST TREND $m 4,012 4,505 4,752 1, , , Sep-15 Sep-16 Sep-17 Income Expenses 1. 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. 2. Decrease in expenses includes $7m in restructuring costs in 2H17. The underlying reduction in expenses was $14m. 88

89 WEALTH AUSTRALIA INSURANCE PRODUCT MIX IN INDIVIDUAL LIFE INSURANCE IN-FORCE $m % RETAIL LIFE LAPSE RATES 1,093 1,158 1, % 14.0% 14.1% 30% 31% 30% 70% 69% 70% COMPOSITION OF LIFE INSURANCE IN-FORCE $m 1,516 28% 1,603 28% 1,614 27% 72% 72% 73% Income Protection Lump Sum Group Individual EMBEDDED VALUE 1 $m 304 Underlying growth of 8% 4,893 4, , Sep-16 Value of New Business Expected Return Experience Deviations Subtotal Economic Assumption changes Net Transfers Sep 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. 89

90 WEALTH AUSTRALIA FUNDS MANAGEMENT FUNDS MANAGEMENT AVERAGE FUM SMARTCHOICE ACTIVE MEMBERS $b % growth +3% % 26% 24% 31% Retail Employer 1 (vs ) (vs ) FUNDS MANAGEMENT FUM BY SOLUTION FUM $b Open solutions 1 Closed solutions 1 +97% -40% Sep-15 Sep-16 Sep-17 Sep-15 Sep-16 Sep-17 ANZ Smart Choice Legacy Retail Wrap (Voyage & Grow) Legacy Employer OneAnswer Frontier FUNDS MANAGEMENT NETFLOWS BY SOLUTION $m Open solutions 1 Closed solutions OneAnswer Frontier 953 ANZ Smart Choice 267 Wrap (Voyage & Grow) (2,255) Retail (444) Employer 1. Includes the transition of Closed Employer Super plans to ANZ Smart Choice (Employer) 90

91 2017 FULL YEAR RESULTS TREASURY AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

92 REGULATORY CAPITAL CAPITAL UPDATE Capital Position APRA CET1 ratio of 10.6% achieves APRA s unquestionably strong requirements well ahead of 2020 implementation. Internationally Comparable 1 CET 1 ratio of 15.8% above the APRA Unquestionably Strong top quartile 2 calibration of 15% and Basel top quartile 3 CET1 of 14.4%. APRA Leverage ratio of 5.4% or 6.2% on an Internationally Comparable basis. Organic Capital Generation & Dividend Relative to historical averages, higher organic capital generation for (+229bp) and 2H17 (+118bp) was mainly driven by the reduction in Institutional Credit RWA (from lending) of $16.4bn and $7.6bn respectively. Final dividend of 80 cents fully franked, consistent with transition to revised 60%-65% payout strategy. Capital Outlook ANZ intends to neutralise shares allocated under the Final Dividend Re-investment Plan (DRP) by acquiring an equivalent number of shares on market. Announced asset sales would increase the CET1 ratio by ~80 bps (taking Sep-17 pro-forma CET1 ratio to ~ 11.4%). As we receive the proceeds from the announced sales of non-core businesses we will have the flexibility to consider additional capital management initiatives. APRA COMMON EQUITY TIER 1 (CET1) % Net Organic Capital Generation +118bps Sep-16 BASEL III CET1 % 9.6 Mar-17 Sep Cash NPAT 4 APRA RWA Capital Dividends Asia Business Deductions 5 (Net Retail Release DRP) Divestments 10.1 Mar Internationally Comparable Other 6 Sep Sep 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.Based on APRA information paper Strengthening banking system resilience - establishing unquestionably strong capital ratios released in July Based on Group 1 banks as identified by the BIS (internationally active banks with Tier 1 capital of more than 3 billion). The top quartile of this group was 14.4% as at December Cash Earnings excludes Large/notable items. 5. Represents the movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles. 6. Other mainly due to implementation of ANZ s new Australian mortgages capital model. 92

93 REGULATORY CAPITAL GENERATION COMMON EQUITY TIER 1 GENERATION (bps) Second half average 2H12 2H16 2H17 Full Year average FY12- Cash Profit RWA movement (10) 25 (31) 54 Organic Capital Generation Strong net organic capital generation in and 2H17. Reflects progress on the Group s strategy to reshape its business, including the run-off of low returning assets in Institutional. Capital Deductions 2 (9) 5 (24) 6 Net capital generation Gross dividend (63) (59) (133) (115) Dividend Reinvestment Plan Core change in CET1 capital ratio Other non-core and nonrecurring items Net change in CET1 capital ratio (13) (16) (6) (25) Non-Core and non-recurring items Non-core and non-recurring items in 2H17 and largely reflect the impact of increased risk weights following implementation of ANZ s new Australian mortgages capital model -22bps, non cash adjustments and FX impacts, partially offset by benefits from Asia Retail and Wealth sale +9bps (Singapore, Hong Kong and China). 1. Cash profit for 2H17 and excludes large/notable items (which are included as as capital deductions and other non-core and non-recurring items ). 2. Represents movement in retained earnings in deconsolidated entities, capitalised software, EL v EP shortfall and other intangibles. 93

94 INTERNATIONALLY COMPARABLE 1 REGULATORY CAPITAL POSITION APRA Common Equity Tier 1 (CET1) 30 September % Corporate undrawn EAD and unsecured LGD adjustments Equity Investments & DTA Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many jurisdictions APRA requires 100% deduction from CET1 vs. Basel framework which allows concessional threshold prior to deduction 1.4% 1.1% Mortgages APRA requires use of 20% mortgage LGD floor vs. 10% under Basel framework. Additionally, APRA also requires a higher correlation factor vs 15% under Basel framework 1.3% Specialised Lending APRA requires supervisory slotting approach which results in more conservative risk weights than under Basel framework 0.6% IRRBB RWA APRA includes in Pillar 1 RWA. This is not required under the Basel framework 0.4% Other Includes impact of deductions from CET1 for capitalised expenses and deferred fee income required by APRA, currency conversion threshold and other retail standardised exposures 0.4% Basel III Internationally Comparable CET1 15.8% Basel III Internationally Comparable Tier 1 Ratio 18.4% Basel III Internationally Comparable Total Capital Ratio 21.2% 1. 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. 94

95 CET1 AND LEVERAGE IN A GLOBAL CONTEXT Swedbank Svenska Handelsbanken Nordea SEB ABN Amro Danske Bank Morgan Stanley ANZ Cedit Agricole Group HSBC RBS ING Group Rabobank Groupe BPCE Deutsche Bank Standard Chartered Intesa Sanpaolo UBS Credit Suisse DBS UOB Barclays Citibank Commerzbank UniCredit Raiffeisen Bank International Erste Bank JP Morgan Goldman Sachs BNP Paribas State Street OCBC Societe Generale Wells Fargo Bank of America Scotia BMO CET1 RATIOS 1 LEVERAGE RATIOS 1,2 5% 10% 15% 20% 25% 30% APRA Top quartile of 15.0% 3 Basel Top quartile 14.4% 4 CET1 ANZ ranks in the top quartile of the largest internationally active banks 4 and equally is ranked in the top quartile of internationally active G- SIBs and D-SIBs UOB DBS OCBC Intesa Sanpaolo BBVA HSBC Standard Chartered ANZ Erste Bank Credit Agricole Group Rabobank Raiffeisen Bank International RBS Credit Suisse UniCredit SEB Swedbank Santander Group BPCE Barclays Nordea Commerzbank ING Group Svenska Handelsbanken UBS Scotia RBC BMO Societe Generale BNP Paribas Danske Bank Deutsche Bank TD 3% 4% 5% 6% 7% BBVA ABN Amro TD RBC Santander Top Quartile Banks (CET1) 1. CET1 and leverage ratios are based on ANZ estimated adjustment for accrued expected future dividends where applicable. ANZ ratios are on an Internationally Comparable basis. All data sourced from company reports and ANZ estimates based on last reported half/full year results assuming Basel III capital reforms fully implemented. 2. Includes adjustments for transitional AT1 where applicable. Exclude US banks as leverage ratio exposures are based on US GAAP accounting and therefore incomparable with other jurisdictions which are based on IFRS. 3. Based on APRA information paper Strengthening banking system resilience - establishing unquestionably strong capital ratios release in July Based on Group 1 banks as identified by the BIS (internationally active banks with Tier 1 capital of more than 3 billion). The top quartile of this group was 14.4% as at December % Leverage ANZ compares equally well on leverage, however international comparisons are more difficult to make given the favourable treatment of derivatives under US GAAP 95

96 BALANCE SHEET STRUCTURE FUNDED BALANCE SHEET Sep 2017 SOURCES AND USES OF FUNDS Sep 16 to Sep 17 $786b $786b Other Short Term 6% LONG TERM +$16.1b improvement to Long Term funding position SHORT TERM -$16.1b reduction in Short Term funding position Liquids 22% Short Term Funding 8% Term Funding <12M 2% 22.0 Other Short Term Assets & Trade 7% Other Customer Deposits 10% Lending 69% Fixed Assets & Other 2% Stable Customer Deposits 1 53% Term Funding >12M 12% SHE & Hybrids 9% Stable Customer Deposits 1 Term Debt Issuance Term Debt <12 mths FX on Term Debt Capital inc. Hybrids Sources of funds Term Lending & Fixed Assets ST Wholesale Funding Uses of funds -8.0 Liquid Assets Trade, Other Aseets & Other Funding Assets Funding 1. Stable customer deposits represent operational type deposits or those sourced from retail / business / corporate customers and the stable component of Other funding liabilities. 2. Excludes trade lending, repo, interbank and bills of acceptances. 3. Includes $5.3b mandatory and $2.7b discretionary liquids growth. 96

97 FUNDING & LIQUIDITY METRICS NSFR COMPOSITION Sep 2017 $483b Wholesale Funding & Other 1 Non Financial Corporates Retail/SME $425b Liquids and Other Assets 2 Other Loans 3 NSFR MOVEMENT Sep 16 v Sep 17 % 108% 107% -1% 1% 2% 1% 2% 1% 114% Capital Residential Mortgages 4 <35% LCR COMPOSITION (AVERAGE) Available Stable Funding $181b Internal RMBS $33b Other ALA 6 $15b HQLA 2 $5b Required Stable Funding Other ALA 1 $15b $134b Wholesale Funding $13b Sep- 16 MOVEMENT IN AVERAGE LCR SURPLUS (A$b) to LCR 126% 36 Asia Retail & Wealth Sep-16 Proform a 10 Retail/SM E 2 Corp / FI / PSE Wholesal e Funding 2 Derivative s & Other Assets 2 Other 5 1 Sep- 17 LCR 135% 47 HQLA 1 $128b Customer Deposits & Other 7 $121b -6 Liquid Assets Net Cash Outflows CLF 8 Liquid Retail / Corp / FI / Wholesale Other LCR Surplus Assets SME PSE Funding LCR Surplus All figures shown on a Level 2 basis. 1. Other includes Sovereign, PSE and FI Deposits. 2. Other Assets include Off Balance Sheet, Derivatives, Fixed Assets and Other Assets. 3. All lending other than Residential Mortgages <35% Risk Weight. 4. Includes NSFR impact of self-securitised assets backing the Committed Liquidity Facility (CLF). 5. Net of other ASF and other RSF. 6. Comprised of assets qualifying as collateral for the Committed Liquidity Facility (CLF), excluding internal RMBS and any assets contained in the RBNZ s Liquidity Policy Annex: Liquidity Assets Prudential Supervision Department Document BS13A Other includes off-balance sheet and cash inflows. 8. RBA CLF reduced by $6.5b, from 1 January 2017 (to $43.8b). 97

98 TERM WHOLESALE FUNDING PORTFOLIO 1 ISSUANCE MATURITIES $b FY13 FY14 FY18 FY19 FY20 FY21 FY22 FY23 FY24+ Senior Unsecured Covered Bonds Tier 2 RMBS WEIGHTED AVERAGE TENOR years PORTFOLIO BY TYPE 9% 1% 17% PORTFOLIO BY CURRENCY 6% 22% 33% 73% 39% Portfolio ex <12 months Total Portfolio Issuance Senior Unsecured Covered Bonds 1. All figures based on historical FX and exclude AT1. Includes transactions with a call or maturity date greater than 12 months as at the respective reporting date. Tier 2 maturity profile is based on the next callable date. Tier 2 RMBS Domestic (AUD, NZD) North America (USD, CAD) UK & Europe (,, CHF) Asia (JPY, HKD, SGD, CNY) 98

99 FOREIGN CURRENCY HEDGING EARNINGS COMPOSITION (BY CURRENCY) EARNINGS PER SHARE FX IMPACT 1 Other MYR PGK INR IDR CNY Other 9.0% AUD 66.0% -0.4% v -0.7% 2H17 v 1H17 NZD 25.0% TRANSLATION RATES (INCLUSIVE OF HEDGES) The key objective of hedging is to manage short term EPS volatility arising from foreign currency earnings Hedges currently in place: FY18: ~70% of NZD FY19: ~50% of NZD FY20: ~5% of NZD Hedging has reduced the impact of a 5% movement of the AUD on FY18 EPS to circa 1% FY13 FY Underlying basis, inclusive of hedges. NZ Translation (LHS) USD Translation (RHS) 99

100 2017 FULL YEAR RESULTS RISK MANAGEMENT AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

101 RISK MANAGEMENT TOTAL & COLLECTIVE PROVISION (CP) CHARGE TOTAL PROVISION CHARGE $m $m CP BALANCE BY DIVISION 2,000 1,500 1, ,258 FY12 1,197 FY FY14 1,205 1,956 1, ,000 2,000 1, ,876 Sep 16 2,662 Sep 17 Sep17 vs Sep16 $m Divisional mvt (142) FX impact (72) CIC as % Avg.GLA CP Charge IP Charge AUS Insto. NZ Asia Retail & Pacific TSO Group Centre TOTAL PROVISION CHARGE COMPOSITION CRWA & CP AS A % OF CRWA $m $b 2H14 1H15 2H15 1H16 2H16 1H17 2H CIC , CP Composition 1.00% % % Lending Growth Change in Risk/Portfolio Mix Eco Cycle % 0.85% 0.82% CP Bal. as a % of CRWA (excl. impact of mortgage risk weight changes) IP: Individual Provision charge CP: Collective Provision charge CIC: Total Credit Impairment charge 1. and CRWA includes the impact of regulatory changes and revised capital models on Australian mortgage CRWA. Excluding these: CP Balance as a % of CRWA increases to 88 bp; 2. 2H17 Eco Cycle charge includes a $75m overlay for retail trade Sep 13 Sep 14 Credit Risk Weighted Assets CP Bal. as % of CRWA Sep 15 Sep % 1 Sep

102 RISK MANAGEMENT INDIVIDUAL PROVISION (IP) CHARGE ANZ HISTORICAL LOSS RATES bps $m IP CHARGE COMPOSITION ,000 2,000 1, ,637 1,167 1,144 1,110 1,939 1,341 0 Sep 90 Sep 93 Sep 96 Sep 99 Sep 02 Sep 05 Sep 08 Sep 11 Sep 14 Sep 17-1,000 FY12 FY13 FY14 IP Loss Rate Median IP Loss Rate (ex- current period) New Increased Writebacks & Recoveries IP CHARGE BY SEGMENT IP CHARGE BY REGION $m $m 2,000 1,939 2,000 1,637 1,637 1,500 1,167 1,144 1,110 1,341 1,500 1,167 1,144 1,000 1,000 1,110 1,939 1, FY12 FY13 FY14 0 FY12 FY13 FY14 Consumer Commercial Institutional Australia New Zealand APEA 102

103 RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST Index Sep 09 = 100 $m GROSS IMPAIRED ASSETS BY DIVISION bp Sep 09 Sep 10 Sep 11 Control List by Limits Sep 12 Sep 13 Sep 14 Sep 15 Control List by No. of Groups Sep 16 Sep 17 6,000 5,196 4, ,000 0 FY12 Australia New Zealand 4,264 2, FY13 FY14 Institutional Other , ,719 2, Group GIA/Group GLA (EOP) NEW IMPAIRED ASSETS BY DIVISION GROSS IMPAIRED ASSETS BY EXPOSURE SIZE $m $m 4,000 3,628 6,000 3,287 2,980 3,212 5,196 2,868 4,264 3,000 4,000 2,889 3,173 2,000 2,719 2,384 1,000 2, FY13 FY14 FY12 FY13 FY14 Australia New Zealand Institutional Other < 10m 10m to 100m > 100m 1. Other includes Retail Asia & Pacific and Australian Wealth 103

104 RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS TOTAL RWA MOVEMENT $b $b Sep 16 Credit RWA Op RWA IRRBB RWA Mkt. RWA Sep 17 CRWA MOVEMENT $b Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 CRWA (ex Inst.) CRWA (Inst.) Op-RWA Sep 16 FX Impact Lending Mvmt. Data/Meth. Review Risk Sep 17 Mkt. & IRRBB RWA 104

105 RISK MANAGEMENT RISK WEIGHTED ASSETS GROUP EAD 1 & CRWAs GROUP EAD 1 MOVEMENT $b SEP 17 v SEP 16 ($b) Sep 16 FX Impact Lending Mvmt. Data/Meth. Review Sep 17 39% 38% 38% 39% 37% GROUP EAD 1 & CRWA GROWTH 2 MOVEMENT SEP 17 v SEP 16 ($b) Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 AUS HL -1.2 AUS Non HL NZ -6.1 Other Institutional EAD CRWA/EAD % EAD Gth. CRWA Gth. 1. 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 2. Refers to lending movement, excluding FX Impact, Data/Meth Review and Risk 105

106 RISK MANAGEMENT PORTFOLIO COMPOSITION 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 Sep 17 Sep 16 Sep 17 Sep 17 TOTAL GROUP EAD (Sep 17) = $903b 1 6.0% 1.3% 1.7% 1.4% Consumer Lending 40.6% 41.5% 0.1% 0.1% $436m Finance, Investment & Insurance 17.4% 17.2% 0.1% 0.0% $20m Property Services 6.8% 6.6% 0.4% 0.3% $150m Manufacturing 5.2% 4.5% 1.6% 0.7% $289m Agriculture, Forestry, Fishing 3.9% 3.8% 1.5% 1.2% $393m 2.3% 2.0% 3.0% 7.2% 3.8% 4.5% 6.6% 1.5% 41.5% Government & Official Institutions 6.2% 7.2% 0.0% 0.0% $0m Wholesale trade 3.1% 3.0% 0.5% 0.5% $136m Retail Trade 2.4% 2.3% 1.2% 0.8% $170m Transport & Storage 2.2% 2.0% 0.4% 0.7% $16m Business Services 1.7% 1.7% 0.9% 1.1% $169m Resources (Mining) 1.8% 1.5% 2.9% 1.2% $170m Electricity, Gas & Water Supply 1.3% 1.3% 0.0% 0.1% $16m Construction 1.4% 1.4% 2.0% 2.3% $290m 17.2% Other 6.0% 6.0% 0.4% 0.6% $208m Total 100.0% 100.0% $2,673m Total Group EAD 1 $b $895b $903b 1. EAD excludes amounts for Securitisation and Other Assets Basel classes and manual adjustments. Data provided is as at Sep 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

107 RISK MANAGEMENT GROUP RESOURCES PORTFOLIO RESOURCES EXPOSURE BY SECTOR TOTAL EAD (Sep 17): $14b As a % of Group EAD (Sep 17): 1.5% Coal Mining Metal Ore Mining Oil & Gas Extraction Other Mining Services To Mining Sep 14 Sep 15 Sep 16 Sep 17 RESOURCES EXPOSURE CREDIT QUALITY (EAD) $b AUS NZ ASIA OTHER RESOURCES PORTFOLIO MANAGEMENT Portfolio is skewed towards well capitalised and lower cost resource producers. 29% of the book is less than one year duration. 46% 54% AUS 20% 80% NZ 38% 62% ASIA 15% 85% EA & Other Investment grade exposures represent 66% of portfolio vs. 65% at Sep'16 and Trade business unit accounts for 16% of the total Resources EAD. Mining services customers are subject to heightened oversight given the cautious outlook for the services sector. Investment Grade Sub-Investment Grade 107

108 RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY REGION 1 $b % COMMERCIAL PROPERTY OUSTANDINGS BY SECTOR Sep 15 Mar 16 Sep 16 Mar 17 Jun 17 % of Group GLA New Zealand Australia APEA Offices Sep 14 Sep 14 Sep 16 Jun 17 Retail Industrial Residential PROPERTY PORTFOLIO MANAGEMENT Tourism Australia volumes decreased by 3%, primarily driven by tightening strategies in Residential development and Land exposures. The decrease in Industrial exposure was offset by increase in Office volumes, mainly due to rebalancing of portfolio mix by one of the major REITs. New Zealand volumes grew 8% across the portfolio over the 9 months of, driven by investment lending to larger commercial customers across Office, Retail and Industrial. APEA volumes for 2Q17 declined 15% qoq due to continued RWA optimisation efforts to reduce lower returns lending, a more competitive landscape and margin compression evidenced in key markets of HK & Singapore. Other 1. As per ARF230 disclosure 2. APEA = Asia Pacific, Europe & America 108

109 RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) Total EAD (Sep 17) As a % of Group EAD A$34.0b 3.8% 9.7% NEW ZEALAND DAIRY CREDIT QUALITY NZ$b PD increase reflects customer downgrades driven by continued low milk price; PD decrease reflects subsequent impact of milk price recovery % 37.7% Dairy Beef 1.8% 1.6% 1.2% 0.9% 0.8% 1.1% 2.2% 1.9% 16.9% Sheep & Other Livestock Grain/Wheat Horticulture/Fruit/Other Crops Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep % 14.2% Forestry & Fishing/Agriculture Services Wt. Avg. Probability of Default 1 NZ Dairy EAD GROUP AGRICULTURE EAD SPLITS % 0.3% 42.4% 1.7% 98.3% 72.2% 5.8% 4.1% 17.8% Australia New Zealand Intl. Markets Productive Impaired <60% Secured 60 - <80% Secured 80 - <100% Secured Fully Secured 1. Wholesale PD model changes account for 55 bps increase in 2. Security indicator is based on ANZ extended security valuations 109

110 RISK MANAGEMENT NEW ZEALAND NEW ZEALAND GEOGRAPHY GROSS IMPAIRED ASSETS NZ$m 1,818 1, Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep NEW ZEALAND GEOGRAPHY TOTAL PROVISION CHARGE 1 NZ$m H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H GIA as % GLA GIA IP Charge CP Charge NEW ZEALAND DIVISION 90+DAYS DELINQUENCIES MORTGAGE DYNAMIC LOAN TO VALUE RATIO 2 % of portfolio 1.5 Home Loans Commercial Agri 0-60% 13% % 71-80% % 90%+ 19% 4% 2% 62% 0.0 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep Credit valuation adjustments (CVA) for customers with CCR10 are reported differently for cash profit and headline views of earnings. In the headline (statutory) view of provision reported above, changes in CVA are reported in Other Operating Income, but in the cash profit view of earnings the change in CVA is reclassified to IP 2. Dynamic basis, as of September

111 RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION 1 ) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD 2 ) ANZ INSTITUTIONAL INDUSTRY COMPOSITION $b EAD (Sep 17): A$ Finance (Banks and Central Banks) % Government Admin. 31% Property Services³ Services to Fin. & Ins % 3% Machinery & Equip Mnfg 3% Electricity & Gas Supply 51% 250 3% Basic Material Wholesaling 8% 18% Food, Beverage & Tobacco Mnfg 200 8% Other % ANZ INSTITUTIONAL PRODUCT COMPOSITION % Total Institutional 61% APEA 20% 80% Asia 10% 90% China EAD (Sep 17): A$ % 12% 1% 11% 23% 25% Loans & Advances Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Tenor <1 Yr Tenor 1Yr+ 15% Other 1. Country is defined by the counterparty s Country of Incorporation. 2. Data provided is as at Sep17 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class Securitisation, Other Assets, Retail and manual adjustments. 3. ~88% of the ANZ Institutional Property Services portfolio is to entities incorporated in either Australia or New Zealand. 4. Other is comprised of 48 different industries with none comprising more than 2.0% of the Institutional portfolio. 111

112 RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION 1 ) COUNTRY OF INCORPORATION 1 ANZ ASIA INDUSTRY COMPOSITION EAD (Sep 17): A$91b 2 EAD (Sep 17): A$91b 2 6% 6% 3% 3% 6% 27% 22% 3% 3% 3% 3% 4% 4% 58% Finance Basic Material Wholesaling Machinery & Equip Mnfg Petroleum,Coal,Chem & Assoc Prod Mnfg Communication Services Pers & Household Good Wholesaling Government Administration Other³ 11% ANZ ASIA PRODUCT COMPOSITION EAD (Sep 17): A$91b 2 15% 23% 24% 22% Loans & Advances Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments Japan China Singapore HK Taiwan Sth Korea Indonesia India Other 2% 20% 14% 13% 5% Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Other 1. Country is defined by the counterparty s Country of Incorporation. 2. Data provided is as at Sep17 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class Securitisation, Other Assets, Retail and manual adjustments. 3. Other within industry is comprised of 46 different industries with none comprising more than 3.2% of the Asian Institutional portfolio; Other product category is predominantly exposure due from other financial institutions. 112

113 RISK MANAGEMENT ANZ CHINA INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION 1 ) COUNTRY OF INCORPORATION 1 EAD (Sep 17): A$21b 2 EAD (Sep 17): A$21b 2 ANZ CHINA INDUSTRY COMPOSITION China EAD Total China EAD of A$21b, with 39% or A$8.0b booked onshore in China Tenor ~90% of EAD has a tenor less than 1 year Risk rating China exposure has a stronger average credit rating compared to Australia. Industry 65% of China exposures to Financial institutions, with ~62% of this to China s central bank and its Top 5 largest banks Products Largest growth in Derivatives & Money Market Loans (+A$2.0b) mostly from increase in Money Market Loans whilst reduction in Other (A$2.9b) due to decline in Nostro accounts Within Loans and Advances ~69% have a tenor of less than 1 year, down from ~74% as at Sep 16 12% 13% 2% 8% ANZ CHINA PRODUCT COMPOSITION EAD (Sep 17): A$21b 2 38% 6% 6% 16% 65% 26% 7% 1% Finance (Banks and Central Banks) Manufacturing Wholesale Trade Transport & Storage Other Loans & Advances Traded Securities (e.g. Bonds) Contingent Liabilities & Commitments Trade & Supply Chain Derivatives & Money Market Loans Gold Bullion Other 1. Country is defined by the counterparty s Country of Incorporation 2. Data provided is as at Sep17 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class Securitisation, Other Assets, Retail and manual adjustments. 113

114 RESIDENTIAL DEVELOPMENT AUSTRALIAN COMMERCIAL PROPERTY EXPOSURE OVERVIEW PROFILE (Sep 17) Overall Apartment Development limits reduced by $0.7bn (17%) in the second half of Tightening strategies were introduced to moderate appetite for Inner City Apartment development during 2015, with formal changes made to lending guidelines for residential development since Jan Strategies include increase in Pre-sales coverage, with lower level of foreign buyers, and reduced LVRs. Limits to Inner City Apartment Development remained modest accounting for 20% of total. This was spread mainly across Melbourne, Brisbane and Sydney. Average qualifying pre-sales and LVRs were 104% and 57% respectively for Inner City Apartment Developments. Outside of Inner City, Apartment Development limits were weighted 59% towards NSW and otherwise diversified across VIC, QLD and WA. Ongoing monitoring of development projects with regular internal management reporting, noting our facilities are continuing to be repaid on time to date. Industry trends and risks are being closely monitored with tightening strategies implemented where appropriate. $0.7b of inner city CBD apartment developments predominantly in Brisbane and Melbourne. $b Apartment Development Other Development Residential & Subdivision Investment $0.7bn Inner City Apartment Dev. Syd $0.1 $0.3 Bris $0.6 VIC WA $0.1 Total Residential Limits: $9.5bn 34% 36% Apartment Development: $3.4bn $0.3 Melb $0.3 QLD $1.6 NSW 22% 8% $2.7bn Other Apartment Dev. 114

115 2017 FULL YEAR RESULTS HOUSING AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

116 AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio 1 Flow 2 Portfolio 1 Number of Home Loan accounts 975k 1,008k 178k 3 Total FUM 1 $246bn $264bn $67bn Average Loan Size $252k $262k $379k % Owner Occupied 4 62% 63% 66% % Investor 4 34% 33% 32% % Equity Line of Credit 4% 4% 2% % Paying Variable Rate Loan 5 87% 83% 82% % Paying Fixed Rate Loan 5 13% 17% 18% % Paying Interest Only 6 36% 31% 27% 7 % Broker originated 49% 51% 56% Average LVR at Origination 8,9,10 71% 69% Average Dynamic LVR 9,10,11 52% 50% Market Share % 15.7% % Ahead of Repayments 13 73% 71% Offset Balances 14 $24b $27b % First Home Buyer 7% 7% % Low Doc 15 5% 4% Loss Rate % 0.02% % of Australia Geography Lending 17 62% 64% % of Group Lending 17,18 43% 45% 1. Home Loans (excludes Non Performing Loans, excludes offset balances) 2. YTD (12 months to) unless noted 3. New accounts includes increases to existing accounts and split loans (fixed and variable components of the same loan) 4. The current classification of Investor vs Owner Occupier, as reported to regulators and the market, is based on the classification at origination (as advised by the customer) and the ongoing precision relies on the customers obligation to advise ANZ of any change in circumstances. We have initiated a customer contact program to determine whether there are any inconsistencies in this approach. Outcomes and impacts will be determined in due course 5. Excludes Equity Manager 6. Based on APRA definition ie includes Equity Manager 7. September Half to Date 8. Originated for, originated for 9. Unweighted 10. Includes capitalised premiums 11. Valuations updated to Sep 17 where available 12. Source for Australia: APRA to Aug % of Owner Occupied and Investment Loans that have any amount ahead of repayments. Includes Offset balances. Excludes Equity Manager. Excludes Non Performing Loans. 14. Balances of Offset accounts connected to existing Instalment Loans 15. Low Doc is comprised of less than or equal to 60% LVR mortgages primarily for self-employed without scheduled PAYG income. However, it also has ~A$500m of less than or equal to 80% LVR mortgages, primarily booked pre Write-off net of recoveries 17. Based on Gross Loans and Advances 18. Based on Group Cash Profit basis. 116

117 AUSTRALIA HOME LOANS PORTFOLIO TRENDS LOAN BALANCE & LENDING FLOWS 1 DYNAMIC LOAN TO VALUE RATIO 1,2,3 $b % of portfolio New Sales exc Refi-In 5 Net OFI Refi +7% 15 Redraw & Interest -53 Repay / Other % Sep-12 Mar % Sep-13 Mar % Sep-14 Mar % Sep-15 Mar % Sep-16 Mar-17 95%+ Sep-17 PORTFOLIO 1,4 & FLOW 5 COMPOSITION By purpose: Portfolio Flow 5% 4% 4% 2% 37% 34% 33% 32% 58% 62% 63% 66% By origination LVR 6 : Flow 24% 24% 23% 20% 18% 22% 21% 19% 58% 54% 56% 61% By location: Portfolio Flow 7% 7% 7% 5% 16% 15% 14% 8% 14% 17% 17% 16% 36% 29% 30% 31% 31% 31% 32% 37% FY14 Owner Occ Investor Equity >80% LVR 80% LVR <80% LVR VIC/TAS NSW/ACT QLD/NT WA SA 1. Excludes Non Performing Loans. 2. Includes capitalised premiums 3. Valuations updated to Sep 17 where available 4. The current classification of Investor vs Owner Occupier, as reported to regulators and the market, is based on the classification at origination (as advised by the customer) and the ongoing precision relies on the customers obligation to advise ANZ of any change in circumstances. We have initiated a customer contact program to determine whether there are any inconsistencies in this approach. Outcomes and impacts will be determined in due course. 5. YTD (12 months to) unless noted 6. Includes capitalised premiums 117

118 AUSTRALIA DIVISION PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES 1 HOME LOAN DELINQUENCIES 1,3 % % Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Home Loans Personal Loans 30+ DPD % 90+ Investor Consumer Cards Corporate & Commercial Owner Occupied HOME LOANS REPAYMENT PROFILE 4 HOME LOANS 90+ DPD BY STATE 1 3% Overdue 3% 71% of accounts ahead of repayments 27% On Time 26% 13% 16% < 1 Month ahead 6% 6% 4% 1 Month ahead 2 Months ahead 3% 47% 46% >= 3 Months ahead % VIC & TAS NSW & ACT QLD WA SA & NT Portfolio Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep Excludes Non Performing Loans 2. Comprises Small Business, Commercial Cards and Asset Finance 3. The current classification of Investor vs Owner Occupier, as reported to regulators and the market, is based on the classification at origination (as advised by the customer) and the ongoing precision relies on the customers obligation to advise ANZ of any change in circumstances. We have initiated a customer contact program to determine whether there are any inconsistencies in this approach. Outcomes and impacts will be determined in due course. 4. % of Owner Occupied and Investment Loans that have any amount ahead of repayments. Includes Offset balances. Excludes Equity Manager. Excludes Non Performing Loans. 118

119 AUSTRALIA HOME LOANS AREAS OF INTEREST WESTERN AUSTRALIA Greater focus on Acquisition & Collection management strategies have been applied Exposure to WA has decreased since Mar-16 driven by the economic environment and credit policy tightening (mining town lending, etc) Currently WA makes up 14% of portfolio FUM (and decreasing), however makes up 30% of 90+ (and approximately half of portfolio losses 1 ) Tailored treatment of collection and account management strategies Conservative approach to provisions management WA OUTSTANDING BALANCE $b HOME LOAN INTEREST ONLY (IO) Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan 80% of IO customers have net income >$100k pa. (vs portfolio 64%) IO customers typically further ahead of repayments vs portfolio avg Arrears levels are lower for Interest Only vs overall portfolio Recent policy and pricing changes have led to a reduction in IO lending resulting in ANZ meeting the APRA 30% threshold lending requirement INTEREST ONLY FLOW COMPOSITION 2 IO % of total flows Will meet APRA s 30% limit within agreed timeframe 30% 0 Sep 13 Mar 14 Sep 14 Mar 15 Sep15 Mar 16 Sep 16 Mar 17 Sep 17 2H16 1H17 2H17 HOME LOANS AND WA 90+ DELINQUENCIES $b 2 1 PAYMENTS IN ADVANCE 3 Average number of monthly payments ahead of scheduled repayments Sep 13 Sep 14 WA 90+ Rate Sep 15 Portfolio 90+ Rate Sep 16 Sep 17 Portfolio Interest Only 1. Losses is based on New Individual Provision Charges 2. Based on APRA definition i.e. includes Equity Manager 3. Excludes Non Performing Loans; Includes offset balances 119

120 AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES 1 Quality assurance, info verification & policy reviews Multiple checks during origination process Pre - application 2 Application Serviceability Collateral / Valuations Credit Assessment Fulfilment End-to-end home lending responsibility managed within ANZ Effective hardship & collections processes Full recourse lending Income & Expenses Know Your Customer Income Verification Income Shading Expense Models Interest Rate Buffer Repayment Sensitisation LVR Policy LMI policy Valuations Policy Credit History Bureau Checks Documentation Security ANZ assessment process across all channels Serviceability Aug'15 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Apr'16 Introduction of an income adjusted living expense floor (HEM) Introduction of a 20% haircut for overtime and commission income Increased income discount factor for residential rental income from 20% to 25% ANZ Policy changes Jun'15 LVR cap reduced to 70% in high risk mining towns Jul'15 LVR cap reduced to 90% for investment loans Sep'16 Withdrawal of lending to non-residents Limited acceptance of foreign income to demonstrate serviceability and tightened controls on verification Dec'16 Tightening of acceptances for guarantees Jan'17 Decreased maximum interest only term of owner occupied interest only loans to 5 years May'17 The maximum interest only period reduced from 10 years to 5 years for investment lending to align to owner occupier lending Reduced LVR cap of 80% for Interest Only 3 lending Interest only lending no longer available on new Simplicity PLUS loans (owner occupier and investment lending) Jun 17 Minimum default housing expense (rent/board) applied to all borrowers not living in their own home and seeking RILs 4 or EMAs 5 Oct 17 Restrict Owner Occupier and Investment Lending (New Security to ANZ) to Maximum 80% LVR for all apartments within 7 inner city Brisbane postcodes. Restrict Investment Lending (New Security to ANZ) to Maximum 80% LVR for all apartments within 4 inner city Perth postcodes to 2017 changes to lending standards and underwriting 2. Customers have the ability to assess their capacity to borrow on ANZ tools 3. Excludes investment lending for specific medical practitioners (eligible Medicos) where LVR cap is a maximum of 90% of lending. 4. Residential Investment Loans 5 Equity Manager Accounts 120

121 AUSTRALIA HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO ANZ conducts regular stress tests of its loan portfolios to meet risk management objectives and satisfy regulatory requirements. Stress tests are highly assumption-driven; results will depend on economic assumptions, on modelling assumptions, and on assumptions about actions taken in response to the economic scenario. This illustrative recession scenario assumes significant reductions in consumer spending and business investment, which lead to eight consecutive quarters of negative GDP growth. This results in a significant increase in unemployment and material nationwide falls in property prices. Estimated portfolio losses under these stressed conditions are manageable and within the Group s capital base, with cumulative total losses at A$1.6b over three years (net of LMI recoveries). Assumptions Current Year 1 Year 2 Year 3 Unemployment rate 5.8% 9.0% 10.5% 11.5% Cash Rate 1.5% 0.25% 0.25% 0.25% Real GDP year ended growth Cumulative reduction in house prices % -2.4% 4.7% % -38.3% -32.7% Portfolio size 1 (A$b) Outcomes Base Year 1 Year 2 Year 3 Net Losses (A$m) Net losses (bps) Exposure at default 121

122 LENDERS MORTGAGE INSURANCE ANZLMI HAS MAINTAINED STABLE LOSS RATIOS FINANCIAL YEAR 2017 RESULTS LMI & REINSURANCE STRUCTURE Gross Written Premium ($m) Net Claims Paid ($m) $173.6m $14.7m Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 2017 (% New Business FUM) LVR<80% Not LMI Insured 84% Loss Rate (of Exposure) 2.4 bps 2017 Reinsurance Arrangement LVR 80% to 90% LMI Insured 10% 6% LVR > 90% LMI Insured ANZLMI MAINTAINS LOW LOSS RATIOS FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 Industry ANZ LMI Insurer 1 Insurer 2 Insurer 3 Aggregate Stop Loss 3 Arrangement on Net Risk Retained (LVR > 80%) Quota Share 2 Arrangement (LVR > 90%) ANZLMI uses a diversified panel of reinsurers (10+) comprising a mix of APRA authorised reinsurers and reinsurers with highly rated security Reinsurance is comprised of a Quota Share arrangement 2 with reinsurers for mortgages 90% LVR and above and in addition an Aggregate Stop Loss arrangement 3 for policies over 80% LVR 1. Negative Loss ratios are the result of reductions in outstanding claims provisions. Source: APRA general insurance statistics (loss ratio net of reinsurance) ; 2. Quota Share arrangement - reinsurer assumes an agreed reinsured % whereby reinsurer shares all premiums and losses accordingly with ANZLMI ; 3. Aggregate Stop Loss arrangement reinsurer indemnifies ANZLMI for an aggregate (or cumulative) amount of losses in excess of a specified aggregate amount. When the sum of the losses exceeds the pre-agreed amount, the reinsurer will be liable to pay the excess up to a preagreed upper limit. 122

123 NEW ZEALAND MORTGAGES PORTFOLIO OVERVIEW 1 Portfolio Growth Portfolio Growth Number of Home Loan accounts 511k 520k 1.7% Total FUM NZ$73b NZ$77b 5.0% Average Loan Size at Origination 2 NZ$300k NZ$285k -5.0% Average Loan Size 2 NZ$143k NZ$148k 3.3% % of NZ Geography Lending 58% 61% 290bps % of Group Lending 12% 12% 10bps % Owner Occupied 73% 73% 72bps % Investor 27% 27% -72bps % Paying Variable Rate Loan 24% 21% -346bps % Paying Fixed Rate Loan 76% 79% 346bps % Broker Originated 34% 35% 90bps Average LVR at Origination 2 60% 59% -108bps Average Dynamic LVR 2 44% 43% -106bps Market Share % 31.1% -38bps % Paying Interest Only 4 24% 22% -154bps % Paying Principal & Interest 76% 78% 154bps % First Home Buyer N/A N/A N/A % Low Doc % 0.44% -5bps Mortgage Loss Rates (0.01%) (0.01%) - Group IP Loss Rates 0.34% 0.21% -13bps 1. New Zealand Geography 2. Average data as of September Source for New Zealand: RBNZ, as of August Changes in RBNZ data reporting from February 2017 onwards has resulted in a step change in data vs prior periods 4. Excludes revolving credit facilities 5. Low Documentation (Low Doc) lending allowed customers who met certain criteria to apply for a mortgage with reduced income confirmation requirements. New Low Doc lending ceased in

124 NEW ZEALAND HOME LENDING 1 FLOW 2 PORTFOLIO 11% 11% 40% 37% 49% 52% 24% 21% 76% 79% 6% 6% 23% 22% 9% 9% 7% 10% 10% 7% 45% 46% Branch Broker Mobile mortgage managers Fixed Variable Auckland Wellington Christchurch Other Sth Is. Other Nth Is. Other³ MARKET SHARE 4 ANZ MORTGAGE LVR PROFILE % 31.5% 31.1% 31.1% 0-60% 13% 4% 2% 61-70% 4.1% 4.0% 4.5% 5.0% 3.1% 2.0% 2.4% 2.3% 71-80% 81-90% 90%+ 19% 62% 1H16 ANZ market share 2H16 ANZ growth 1H17 Aug 17 System growth 1. New Zealand Geography 2. Retail and Small Business Banking mortgage flow. Branch includes Small Business Banking Managers ( restated) 3. Other includes loans booked centrally (Business Direct, Contact Centre, Lending Services, Property Finance) 4. Source: RBNZ, changes in RBNZ data reporting from February 2017 onwards has resulted in a step change in data vs prior periods 5. Dynamic basis, as of September

125 2017 FULL YEAR RESULTS ECONOMICS AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED

126 ECONOMICS GDP ANZ GLOBAL LEAD INDEX GLOBAL Contribution to ANZ GLI Above trend activity and rising Below trend activity and falling US euro area Japan China ANZ GLI ppt contribution US Other Developed China India Other Emerging forecasts AUSTRALIA forecasts AUSTRALIAN STATE GROWTH %yoy 5 % change y/y GDP % q/q GDP y/y Previous forecasts -10 NSW VIC TAS SA QLD WA

127 ECONOMICS BUSINESS & CONSUMER CONDITIONS Index BUSINESS CONDITIONS AND CONFIDENCE Business conditions Business confidence Source: NAB, ANZ Research CONSUMER CONFIDENCE BUSINESS CONDITIONS BY STATE Net balance of respondents, 3-month average NSW VIC QLD WA SA TAS JOBS GROWTH AND UNEMPLOYMENT s per month Unemployment rate (RHS) Trend % Source: Roy Morgan, ANZ Research -30 Employment growth (000s, LHS) Source: ABS, ANZ Research

128 ECONOMICS HOUSING Dwellings ('000) SUPPY DEMAND Forecast Surplus Shortage BUILDING APPROVALS Dwelling approvals ('000s per month) House prices ($000, sa) HOUSE PRICES 1,400 1,200 1, Housing Balance - Actual Housing Balance - Unchanged Headship Ratios Australia capital city average Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra * Seasonally adjusted by ANZ Research Source: CoreLogic, ANZ Research Source: ABS, ANZ Research MORTGAGE RATES VS HOUSE PRICING % change, Y/Y Total dwellings (sa) Houses (sa) Flats/units/townhouses (sa) House prices (LHS) Total dwellings (trend) Houses (trend) Flats/units/townhouses (trend) Mortgage rate ('blended' investor/ooh, standard variable), advanced 6 months, inverted (RHS) % 128

129 ECONOMICS HOUSING AFFORDABILITY HOUSING AFFORDABILITY DEBT & DEBT SERVICING % household income % of household income Household debt Household interest payments (RHS) 0 Source: ABS, CoreLogic RP Data, ANZ Research HOUSEHOLD DEBT & DEPOSITS 1 Source: RBA, ANZ Research ASSET GROWTH CHART 20 Total housing prices (y/y % change) Australian capital cities Australia rest of state/territory * Seasonally adjusted by ANZ Research Source: CoreLogic RP Data, ANZ Research Sources: 1. ABS, RBA. Housing Debt refers to ratio of housing debt to annualised household disposable income. Deposits include transferrable and other deposits. 129

130 ECONOMICS INFLATION AND INTEREST RATES INFLATION VS RBA TARGET 6 RBA CASH RATE 5 forecasts y/y % change ANZ forecasts RBA cash rate, per cent RBA target band Headline CPI Underlying CPI* * Average of trimmed mean and weighted median Source: ABS, RBA, ANZ Research UNIT LABOUR COSTS VS DOMESTIC MAKRET SERVICES INFATION ANZ forecasts Current market pricing Source: Bloomberg, RBA, ANZ Research G7 INFLATION % change y/y % change y/y Domestic market services inflation (lhs)* * Excludes deposit & loan facilities to June quarter 2011, housing services Source: ABS, NAB, ANZ Research Non-farm unit labour costs, forward 1 year, (RHS) 130

131 ECONOMICS WESTERN AUSTRALIA GSP / GDP %yoy EMPLOYMENT y/y % change (trend) EMPLOYMENT BY SECTOR Professional, Scientific and Technical Services Manufacturing Retail Trade Mining Other Services Arts and Recreation Services Information Media and Telecommunications Administrative and Support Services Wholesale Trade Transport, Postal and Warehousing Electricity, Gas, Water and Waste Services Rental, Hiring and Real Estate Services Financial and Insurance Services Public Administration and Safety Accommodation and Food Services Agriculture, Forestry and Fishing Health Care and Social Assistance Education and Training Construction TOTAL '000 change in employment over the year to Aug-17 Source: ABS, ANZ Research Western Australia Source: ABS, ANZ Research HOUSE PRICES House prices (y/y % change) Australia (excluding Western Australia) Perth Western Australia - Rest of state * Seasonally adjusted by ANZ Research Source: CoreLogic, ANZ Research 131

132 ECONOMICS AUSTRALIA FORECAST TABLE Australia annual % growth GDP Domestic final demand Headline CPI Core CPI Employment Wages Unemployment (ann. avg) Current Account (% of GDP) Terms of Trade Private Sector Credit Housing Business Personal RBA cash rate (% year end) yr bond yield (% year end) year bond yield (% year end) AUD/USD (year-end value)

133 ECONOMICS GLOBAL & ASIA FORECAST TABLES GROSS DOMESTIC PRODUCT (YEAR-AVERAGE % CHANGE) average average 2017F 2018F 2019F United States Euro area United Kingdom Japan China Korea Taiwan Indonesia Thailand Hong Kong Malaysia Singapore Philippines Vietnam East Asia ex. Japan India Australia New Zealand World Quarterly GDP are annualised growth rates. 2. Fiscal years e.g is year-ending March New GDP base year is NZ GDP numbers are production based GDP(P). Source: Consensus Economics, Tomson Reuters Datastream, ANZ Research. 133

134 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