2000 Annual Results

Presentation to Fixed Interest

Investors

Australia and New Zealand Banking Group Limited 1 November 2000

John McFarlaneChief Executive Officer

Page 2

2000 Annual Result• Strong result – better than expectations

– $1,703m up 15%

– $885m second half up 8.2% on first half

• We delivered on all our commitments

– Financial performance

– Rebalancing the portfolio

– Reducing risk

• Restructuring program accelerates strategy

– Sensible application of surplus capital

– EPS accretive

– Superior to buyback alternative

Page 3

Our three year commitments to shareholders

• Achieve superior financial performance– Deliver double-digit earnings growth

– Improve return on equity

– Bring down our cost income ratio to 53%

• Re-balance our portfolio– Increase proportion of Personal business

– Enhance leadership position of Corporate

– Simplify and focus our International business

– Build momentum in eCommerce

• Reduce risk

Page 4

Financial Parameters

• Assets $172 billion

• Shareholders equity* $9.8 billion

• Return on average ordinary shareholders’ equity (excl. abnormals) 18.3%

• Credit ratings: AA - (stable) S&P’s

Aa3 (stable) Moody’s

*Includes $1.4b preference shares

Page 5

Financial Highlights

• NPAT before abnormals $1,703 million versus $1,480 million

• Income up 6%, cost flat

• Cost income ratio 51.7% (54.5%)

• ROA 1.03% (1.0%)

• $361m restructuring charge to accelerate new strategy

Page 6

We have delivered superior financial performance

1171 1175

1480

1703

400

600

800

1000

1200

1400

1600

1800

1997 1998 1999 2000

$m NPAT

CAGR 13.3%

18.3

16.915.5

17.2

10

12

14

16

18

20

1997 1998 1999 2000

% ROE

51.7

54.5

60.963.1

45

50

55

60

65

1997 1998 1999 2000

Cost Income Ratio

100

100

84

135

020406080

100120140160

1997 1998 1999 2000

Total Shareholder Return

Page 7

Good progress across the board

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

$1,900

1480

1999 20002000

Net interest income

146

Lending fee 48

Other fee 111

Other income

47

Debt provisioning

8

Costs (14) Tax & outside

interests(123)

Profit before abnormals

1703

Abnormals44

Net profit after

abnormals1747

Page 8

Cost-income ratio continues to decline

45

50

55

60

65

70

1997 1998 1999 2000

NAB

CBA

WBC

ANZ

Target - comfortably in the 40’s

*

*

* estimate of market expectations for 2000

51.7

63.1

Page 9

We didn’t get everything right – firm action taken

• Personal loan portfolio

• International provisioning from historical book

• Panin writedown to market

• Took action to put historical Grindlays issues behind us

Page 10

We have re-balanced our portfolio

302

772

547

647251

149

1997 2000

NPAT Loans & Advances

PFS

CFS

International

41577

65264

46861

456847966

5930

1997 2000

27%

50%

23%

49%

41%

10%

56%

39%

5%

43%

49%

8%

• Includes Grindlays

• Excludes Group

Page 11

Portfolio breakdown - indicative

International

PersonalCorporate

Other

0

100

Cards

Wealth Mgmt

Mortgages

Funds Mgmt

General Banking

Small Business

Corporate

Foreign Exchange

Asset Finance

Capital Markets

Institutional

ANZIB Financial Services

Transaction Services

0 100AsiaPacific

%

* Excluding Grindlays ($127m)

$1,703m*

40m*

$772m $647m

International CustomerBusinesses

100

0

%

Personal Corporate

Page 12

We continue to reduce risk

43

3936

20

25

30

35

40

45

AN

Z 1

999

AN

Z 2

000

AN

Z 2

000

- ex

Gri

ndla

ys

ELP Factors

bp’s

1997 1998 1999 2000

Market Risk (Av. VaR)

A$m2323

5.4 4.4

• Beta reducing towards 1.0, in line with peer average

Page 13

Overall book continues to improve

18 16

1615

49 53

14 13

3 30%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999 2000

AAA to BBB+

BBB to BBB-

BB + to BB

BB-

> B

Australian Lending Asset Profile

28.4 31.7 36.2 40.6

41.843.6

45.548.4

0

10

20

30

40

50

60

70

80

90

100

Mar-99 Sep-99 Mar-00 Sep-00

Other

Mortgages

$b

Australian Loans & Advances

• Investment grade 66% of book

• Diversified portfolio

• Minimal exposure to media/telco’s

• Mortgages now represent 46% of book, up from 40% in March 1999

Page 14

Non-accrual loans stable despite asset growth

1662

1543

1391

872

699657

900

428

0

200

400

600

800

1000

1200

1400

1600

1800

1997 1998 1999 20000.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2.0%Gross Non-Accrual Loans (LHS)

Net Non-Accrual Loans (LHS)

$mNon-Accrual Loans/Loans & advances (RHS)

Historic

870

59

623

50

681651

0

100

200

300

400

500

600

700

800

900

1000 1999

2000

Aust. Inter.NZ

Geographic

$m

Page 15

Provisioning levels strengthen

500

700

900

1100

1300

1500

1700

1900

2100

2.7

3.1

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

1999 2000

1395

502 (383)

(51)(90)

1373

967

1999 2000 APRA Guideline

s

ELP charge

Net SP transfer

FX impact

Sale of Grindlays

ELP - Economic Loss Provision

SP - Specific Provision

General ProvisionELP charge*

* ex Grindlays for 2000

Times$m

Surplus406

Page 16

Accelerating our transformation program

• Standardisation and rationalisation of IT and processing platforms

• Rationalisation and upgrading of EFTPOS network

• Transformation of Branch Network

• Improving efficiency in Asia/Pacific by rationalising IT platforms and centralising back office processing

• Establishing new business platform for Esanda

35 Initiatives across our portfolio of businesses including:

Expected cost reduction

$300m

Page 17

Building for the future - recap on our strategy

Proposition

• Specialists will win over conglomerates

• Corporations need to embrace new technologies

• Value depends on performance and growth

Strategy

• Reconfigure ANZ as a portfolio of 21 specialist businesses

• An e-Bank with a human face

• Drive results whilst investing in growth businesses

Perform and Grow

e-Transform

Specialise

Implications

• Specialist approach to customer and product businesses

• Transform the way we do business by using IP technology

• Meet expectations, fund growth by cost reduction

Page 18

ANZ in the medium term

• Material reallocation of resources

• Substantial e-transformation reducing costs and focused service

• Performance optimised– EPS, ROE, investment– capital management

• Transformational cultural change

• Substantial portfolio shifts

• Narrower, more focused portfolio with leading positions

• Increased investment in high growth business

• Modern performance culture

• Higher stock rating

ANZ in 1 - 2 years ANZ in 3 - 7 years

Page 19

Capital management will continue

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

Mar-99 Sep-99 Mar-00 Sep-00100

105

110

115

120

125

130

135

140

Tier 1

Inner Tier 1

RWA's

% $b

7.77.9

7.5

7.4

6.76.9

6.56.4

Progress• $1014m of buyback• Capping of DRP/BOP to reduce

dilution• Remaining $500m buyback in

progress• Restructure more EPS accretive

than buyback

Capital ManagementPhilosophy:• Capital scarce resource to be

managed effectively and efficiently• Maintain capital consistent with

ANZ’s AA status and peer group ratings

– Tier 1 (6.5 - 7.0%)– Inner Tier 1 (6.0%)

Page 20

Goals going forward

• EPS growth above peer average (target 10+%)

• ROE over 20%

• Cost-income ratio comfortably in the 40’s

• Inner Tier 1: 6%

• Maintain AA category credit rating

Domestic Corporate Bond Investor Presentation

1 November 2000

Rick SawersGroup Treasurer

Page 22

Wholesale Term Funding - Anticipated

1999/2000 Term Funding Objectives – Forecast term wholesale funding requirement

A$5/$6 billion– To be sourced

30% Domestic markets60% Euro markets10% US market

– Extend ANZ domestic yield curve– Build liquid lines + A$500 million.

Constraints envisaged:– S128F– Issue Size– Inconsistent pricing between AA rated banks

Page 23

Wholesale Term Funding - In RetrospectScorecard 1999/2000 Financial Year

• Issued A$5.9 billion term wholesale debt

• Sourced 11% Domestic market (v 30%)80% Euro markets (v 60%)9% US markets (v 10%)

• Domestic Market:Increased 10/2002 series by an $300 millionAdded new series - $500 million 9/2004Extended yield curveOutstandings now A$1.75 billionMTBs trading within 1bp

• S128F still unresolved

Page 24

Term Debt Issued 1999/2000

AUD13% CHF

2%

E20%

HKD10%

USD54%

JPY1%

Page 25

Wholesale Term Funding - Strategy for 2000/2001

• Pursue diversification - by investors and markets

• Maintain prudent approach to liability maturity management– spread of maturities from 1 to 5 years with an objective to

achieve a weighted average term of 3 years– maintain yield curve out to a maximum of 5 years in both

domestic and euro markets

• Funding requirement $6 billion subject to amount of securitisation undertaken

• Sourced20% domestically80% offshore

Page 26

Wholesale Term Funding

Issues to Resolve:

– S128F

– Transparency of issuance• no standardised practice established• Consider US style “Pot System”

Page 27

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.

For further information visit

www.anz.com

or contact

Philip GentryHead of Investor Relations

ph: (613) 9273 4185 fax: (613) 9273 4091 email: gentryp@anz.com