BASEL III PILLAR 3 DISCLOSURE AS AT 31 DECEMBER 20 DECEMBER 20 PILLAR 3 / 2018 FIRST QUARTER CHART PACK AUSTRALIA AND NEW Z EALAND BANKING GROUP LIMITED 20 FEBRUARY 2018 To be read in conjunction with ANZ 20 Basel III Pillar 3 disclosure as at 31 December 20
SUMMARY Capital, Funding & Liquidity Common Equity Tier 1 (CET1) ratio of 10.82% at, 25bp increase from. CET1 ratio includes the proceeds of the sale of Shanghai Rural Commercial Bank stake and a small benefit from the sale of the Asian retail and wealth businesses (Taiwan & Vietnam settlements in the December quarter). APRA s unquestionably strong requirements achieved well ahead of 2020 implementation. Shares allocated under 20 Final Dividend Re-investment Plan (DRP) neutralised by acquiring equivalent number of shares on market. Funding and liquidity position remains strong with LCR 131% ( quarter avg) and NSFR 114% (as at 31- ). Portfolio movement Total Risk Weighted Assets (RWA) increased $2.4b, including a $2.3b increase in Credit RWA, with growth in Residential Mortgages, Corporate and Bank Pillar 3 categories Credit RWA increases comprised: $0.6b lending growth (underlying growth of $2.6b offset by $b divestments in Retail Asia portfolio) $2.1b methodology/data changes (Inclusive of a $1.5b interim RWA overlay on the NZ Residential Mortgage portfolio pending approval of updated Mortgage capital model) $0.4b reduction from improvement in the portfolio risk profile Credit Quality Gross impaired assets reduced by 9.3% to $2.2b, including 6% reduction in Australia Division, 7% reduction in Institutional and 11% reduction in New Zealand Division. Total provision charge of $202m in 1Q18 with individual provision charge of $220m. Residential Mortgage 90+ day past due loans (as a % of Residential Mortgage EAD) increased by 1bp. Australia Housing update Home lending portfolio grew at 1.2 times system in the December quarter, with Owner Occupied growth of 10% annualised (1.4 times system), Investor growth of 2% annualised 1. Interest only new business in the December quarter (1Q18) represented 14.3% of total new business flows. $5.7b of interest only loans switched to principal and interest in 1Q18, compared with $9.5b in 4Q and $4.3b per quarter on average across 1Q to 3Q. Growth refers to December 20 vs September 20 unless otherwise stated 1. Source: ANZ analysis of Home Loans Market Share APRA Banking statistics. December 20 report. 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, and ANZ targeted activity to identify, any change in circumstances. 2
CAPITAL, LIQUIDITY & FUNDING APRA CET1 CAPITAL MOVEMENT % Equivalent to ~11.3% on a pro forma basis taking into consideration announced asset divestments yet to settle and $1.5b share buy back announced in December 20 and commenced January 2018 APRA COMMON EQUITY TIER 1 (CET1) % 9.6 9.4 9.8 9.7 9.6 9.5 10.1 9.8 10.6 10.8 10.6 0.5 0.3 10.8-0.6 Dec-15 Mar- Jun- Dec- Mar- Jun- LEVERAGE RATIO % 4.9 5.3 5.3 5.4 5.5 Dividends Asset Sales Other Dec-15 Mar- Jun- Dec- Mar- Jun- Leverage Ratio APRA Proposed Minimum 4%. 3
PORTFOLIO MOVEMENT RISK WEIGHTED ASSETS & EXPOSURE AT DEFAULT (EAD) TOTAL RISK WEIGHTED ASSETS (RWA) (Note: Corporate Banking included in Institutional 2 ) 402 38 14 388 38 180 2 409 397 391 393 39 18 39 37 37 152 143 133 137 0 2 200 199 204 203 Growth largely driven by seasonality in the Trade business CREDIT RWA MOVEMENT DRIVERS 336.8 0.0-0.4 2.6-2.1 Inclusive of a $1.5b interim RWA overlay on the NZ Residential Mortgage portfolio pending approval of updated Mortgage capital model 339.1 Mar- CRWA (ex. Insto) Mar- CRWA (Insto) Mkt. & IRRBB RWA Op-RWA FX Risk Lending Mvmt. Asia Retail Data / Divest. Methodology changes EXPOSURE AT DEFAULT (EAD) & CRWA/EAD 1 % 903 889 894 899 903 920 45 38.7 37.6 Mar- CRWA/EAD % 39.4 EAD 38.0 Mar- 37.3 36.9 40 35 30 25 20 CREDIT RWA MOVEMENT BY SEGMENT 336.8 Asia Retail divestment of $b Credit RWAs impacted Residential Mortgage, Corporate & Other categories Residential Mortgage Corporate 0.9 Inclusive of a $1.5b interim RWA overlay on the NZ Residential Mortgage portfolio pending approval of updated Mortgage capital model Sovereign & Banks -2.6 Other 339.1 1. EAD excludes Securitisation and Other assets whereas CRWA is inclusive as per APS 330 2. Institutional RWAs are inclusive of Corporate Banking, transferred from Australia Division to Institutional in October 20 and backdated to September 2015 for the purposes of chart time series 4
PORTFOLIO MOVEMENT MOVEMENT BY SEGMENTS CRWA & EAD MOVEMENT BY SEGMENT (Dec vs Sep ) Inclusive of a $1.5b interim RWA overlay on the NZ Residential Mortgage portfolio pending approval of updated Mortgage capital model 3.3 2.1 0.9 14.0 Growth in assets held with central banks, in part reflects seasonality INSTITUTIONAL DIVISIONAL RWA (Includes Corporate Banking) 3 210 30 180 9 27 Growth largely driven by seasonality in the Trade business 159 26 3 26 152 133 137-2.6-2.6 Residential Mortgage (Housing) Corporate Sovereign & Bank Other Credit RWA EAD CRWA Other RWA HOUSING CREDIT RWA & EAD 344 355 361 331 369 372 NON HOUSING CREDIT RWA & EAD 1 572 545 539 538 534 548 58 60 87 89 97 99 292 274 265 253 240 240 Mar- Mar- Mar- Mar- CRWA EAD CRWA increase includes impacts from regulatory changes 2 CRWA increase includes impacts from new models 2 CRWA EAD 1. Non Housing based on APS330 Pillar 3, all Credit RWA categories excluding Residential Mortgage category 2. Housing based on APS330 Pillar 3 Residential Mortgage category. Change in CRWA from Mar- to includes impacts from regulatory changes to Australia housing risk weights introduced 1 July 20. Change in CRWA from Mar- to includes impacts from further increases to Australia housing risk weights following APRA having completed its review of ANZ s mortgage capital model and approved the new model for Australia residential mortgages effective from June 20 3. Note: Institutional RWAs are inclusive of Corporate Banking, transferred from Australia Division to Institutional in October 20 and backdated to September 2015 for the purposes of chart time series 5
CREDIT QUALITY PROVISION CHARGE Total Provision charge ($m) 1,205 1,956 1,199 202 Individual provision (IP) charge ($m) 2,000 1,939 1,500 1,110 1,341 1,000 500 220 0 FY15 FY FY 1Q18 1st quarter IP charge Last 3 quarters IP charge IP CHARGE COMPOSITION BY QUARTERS 25% 33% 31% 18% 27% 22% 23% 26% 23% 24% 39% 34% 21% 30% 31% 14% 20% % 24% 19% 2014 2015 20 20 Avg 2014-20 4Q 3Q 2Q 1Q GROSS IMPAIRED ASSETS 2 PAST DUE LOANS > 90 DAYS AS A % OF EAD $m % 0.60 4,000-9.3% 0.59 0.56 3,3 0.53 0.55 0.50 0.50 3,000 2,719 0.48 2,384 2,2 0.43 0.44 0.42 2,000 0.39 1,000 0 Sep 15 Mar- Mar- Australia New Zealand Institutional Other 1 Residential Mortgage Retail (Pillar 3 QRR & Other Retail categories) 1. Other includes Retail Asia & Pacific and Australia Wealth 2. Excluding unsecured 90 days past due 6
AUSTRALIA HOUSING HOUSING LENDING GROWTH 1 ANZ growth x System (System = 1) 1.4 1.3 1.2 1.1 1.0 SWITCHING: INTEREST ONLY TO PRINCIPAL & INTEREST $m 1,189 965 1,857 6,8 2,267 3,7 2,638 3,114 3,336 3,439 0.9 0.8 1Q 2Q Early conversions ($m) 3Q Contractual ($m) 4Q 1Q18 0.7 0.6 0.5 0.4 0.3 0.2 0.1 ANZ AUSTRALIA HOME LOAN DELINQUENCIES 2,3 % 1.5 1.0 0.5 0.0 Sep 15 Mar Sep Mar Sep Dec Qtr 0.0 Sep- 15 Dec- 15 Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- ANZ System 30+ DPD % 90+ Owner Occupied 90+ Investor 1. ANZ analysis of APRA monthly banking statistics. December 20 2. Excludes Non Performing Loans 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, and ANZ targeted activity to identify, any change in circumstances. 7
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 1995. 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 +61 3 8654 7749 +61 412 047 448 jill.campbell@anz.com Cameron Davis Executive Manager Investor Relations +61 3 8654 77 +61 421 613 819 cameron.davis@anz.com Katherine Hird Senior Manager Investor Relations +61 3 8655 3261 +61 435 965 899 katherine.hird@anz.com Retail Investors Michelle Weerakoon Manager Shareholder Services & Events +61 3 8654 7682 +61 411 143 090 michelle.weerakoon@anz.com Debt Investors Scott Gifford Head of Debt Investor Relations +61 3 8655 5683 +61 434 076 876 scott.gifford@anz.com Mary Karavias Associate Director, Debt Investor Relations +61 3 8655 4318 +61 421 865 953 mary.karavias@anz.com 8