Slide 1: a _ L - ae
a _ L - ae
Slide 2: A solid first half for ANZ
A solid first half for ANZ pcp pch Cash EPS* 85.9c {4} 8.9% 4} 4.6% NPAT* $1,492m ‘{} 13.7% ‘{} 5.1% Interim dividend 5ic ‘fh 8.5% Net non-accruals $326m 3 37% 28% Net specific provisions $151m db 23% 39%
Slide 3: Good growth in major divisions and Australia
Good growth in major divisions and Australia Division Personal Banking Institutional New Zealand Bus Corporate Esanda & UDC Asia Pacific ING JV. Geography Australia New Zealand Other Mar-05 v Sep 04 (%) 6 4 NZD ° 6 4 (20) 3 8 1 NZD (7) Mar-05 v Mar-04 (%) NPAT ($m) 442 - 455 77 @ NPAT increase 48 BE
Slide 4: Results Review
Results Review Peter Marriott Chief Financial Officer
Slide 5: A solid result, driven by strong interest income growth
A solid result, driven by strong interest income growth Interest Income Expenses 108 (72) Tax Non- ; (8) 1,492* on —_— interest E J 1,419 income Provisions 10 35 Sep - 04 Mar - 05 a Ahead of expectations Cash EPS Cash EPS » In line with expectations . ‘noanmnnnennmannanaraned > : 82.1 4.6% 85.9 X- B
Slide 6: Strong volume growth reflected in market share gains
Strong volume growth reflected in market share gains Lending Growth Deposit Growth Personal 15% 10% Institutional 14% 15% New Zealand Businesses (Nz$) 11% 6% Corporate 12% 11% Esanda 6% 3% Asia Pacific 13% 0% 5% 10% 15% 20% 0% 5% 10% 15% 20% Sept 04 to Mar 05 (hoh) see | Mar 04 to Mar 05 (pcp)
Slide 7: First half margin decline driven by increased competition
First half margin decline driven by increased competition Margin decline a mix of Structural impacts and Competition 253.4 (8.0) bps 245.4 (1.2) ~ N a ~ Decline 2H04 Asset Mix | Funding Mix | ~ w & Competition = A Mar-04 Sep-04 Mar-05 (5bps) (13bps) eee a
Slide 8: Impact of competition also reflected in non-interest income
Impact of competition also reflected in non-interest income Non interest income impacted by a number of one-offs and increased competition “O.B% ee . Growth constrained by | ANZ fee restructure _ _ (-2.4%) and impact _ ___ from competition _ Personal Institutional New Zealand Corporate
Slide 9: Continued focus on operational efficiency to offset pressure on revenues
Continued focus on operational efficiency to offset pressure on revenues... Controlled underlying expense growth Growth Other 2HO4 als (5) 2,175 movement FX impact z= 201 2,103 8 ee Zig Underlying Compliance 24 12 1% underlying expense growth (hoh) Mar -04 Sep -04 Mar -05 Growth investment includes
Slide 10: ..and provide capacity to fund significant investments in frontline capabilities
..and provide capacity to fund significant investments in frontline capabilities Additional Headcount Productivity of new staff Weighted to Front Line expected to increase over time (1HOS FTE movement) ‘000 32,000 7 7 160 30,000 + 28,000 + + 155 26,000 + 24,000 + + 150 22,000 mE 2 g¢ g @ f B sg ° 5
Slide 11: Risk reduction journey is delivering
Risk reduction journey is delivering Non Accrual Loans Delinquencies remain low - (60 day delinquencies) $m continue to reduce 2.4% amma Mortgages 2.0% 7 1.6% hm commen Credit Cards a i ad 1.2% 7 0.0% T T T T , T T Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- O1 02 02 03 03 04 04 05 Specific Provisions 0
Slide 12: Improved risk profile driving lower ELP charge
Improved risk profile driving lower ELP charge Decline in ELP rate driven by ELP charge exceeded SP improved risk profile requirements by 88% in 1HO5 $m 100 4 (1) 80 4 i 1 60 4 Wa Specific Provisions wwf ELP 40 4 #i ELP Top-Up @ Normalised ELP 20 4 T T T T T T 0 i , T to Vox >i & SSN wn 4 inv — Sf e
Slide 13: Good growth in key customer divisions
Good growth in key customer divisions fe Mar-05 Sep-04 Change Division ($m) ($m) (%) NPAT ($m) Institutional 455 436 —— =—h i hh—“(i‘i Personal Banking 442 417 6 New Zealand 306 291 5 ; NZD 2 Corporate 182 172 6 Esanda & UDC 77 74 4 Asia Pacific 48 60 (20) ores 63 i 61 Hi 3 NPAT increase ING JV i :
Slide 14: Divisional outlook for FY05
Divisional outlook for FYO5 vi s1On rive Personal p> ¢ Continued strong FUM growth, stable margins at Divisional Banking ae level, ongoing investment. ¢ Strong volume growth in Institutional Banking (easing in 2HO5) Institutional 4p and TTS, offset by competitive margin pressure in IB and runoff of
Slide 15: Other financial issues
Other financial issues > Capital position slightly above target range, impact of IFRS/APRA uncertain > $350m buyback to be completed in 2HO5 > Dividend growth in line with cash EPS growth, expect full franking for the foreseeable future > IFRS and Basel II programs on track > Possibility of a modest
Slide 16: Summary
Summary Solid earnings for the half, above target Australia very strong, Personal a standout Very strong asset growth, but margins under pressure Risk reduction journey delivering bottom-line results, provisions and non-accruals down substantially NZ regulatory/integration now well in hand, priority
Slide 17: The face of ANZ is changing
The face of ANZ is changing......... >» Increasing market share across our Personal and Corporate businesses; dominant in NZ, progress in Asia- Pacific > Best-regarded major bank for retail customers > Highest staff engagement of major Australian companies > Strong support for innovative community p
Slide 18: Slide 18
Slide 19: Divisional Performance
Divisional Performance
Slide 20: Focus on the customer is closing the market share gap
Focus on the customer is closing the market share gap Customer Satisfaction* with Main Financial Institution BB me 80 5 754 70 5 65 74 60 5 55 7 50 T T T T T T T T o eye © BAB OG #t N mM ao A BA A © S&S & & E& a A A A OG GC GF FS 8 a + 4+ 4+ N N N N N ou ANZ ——Peer Banks << Regional Banks Market sha
Slide 21: Strong ANZ channels driving Mortgages momentum
Strong ANZ channels driving Mortgages momentum Significant housing market share Increased ANZ channel sales gains* (Mar04- Feb05) 80% 7 76% 70% T 60% -0.2% 50% + 1 ; r 1 1HO3 2HO03 1HO04 2HO04 1HO5 -0.8% mm Y loans by number = % loans by value Significant growth in ANZ Direct* Franchisee sales are a
Slide 22: Banking Products and Consumer Finance performing well
Banking Products and Consumer Finance performing well Good growth in new transaction and savings accounts (‘000s) Gross account acquisition up ~25% / 372 326 309 : | 1HO4 2HO4 HOS 287 2HO3 ANZ online savings account attracting new customers ANZ other accounts ANZ term accounts Competitor high intere
Slide 23: Institutional: building a foundation for growth
Institutional: building a foundation for growth This half has seen good progress in building a foundation for growth — increasing efficiency, sustainability and strategic clarity * Markets integration has organised the business more closely around customers and provides a leaner operating model * Co
Slide 24: Earnings impacted by intense competition and falling credit spreads
Earnings impacted by intense competition and falling credit spreads « A number of external factors have impacted performance - reducing credit spreads adversely impacting margins - Institutional market remains extremely competitive « Asset quality continues to improve: - Investment grade assets now
Slide 25: Corporate: solid performance despite increasing competition
Corporate: solid performance despite increasing competition Corporate Banking — solid Strong growth in Wall Street Balance Sheet growth to Main Street transactions 10% # of transactions Assets (rm) # 2HO3 ”@ LHO4 16 150 ia 2HO4 @ 1HOS 12 120 90 8 60 4 30 or t 0 1HO3 2HO03 1HO4 2HO4 1HO5 Bem MSA wes
Slide 26: We are well positioned for future growth
We are well positioned for future growth Our Business Banking relationship proposition focuses on customer needs... .. driving leading customer satisfaction* (FumM$250k-$5m) 50% (drivers of satisfaction) 100% = 40% 90% + 30% 80% 4 70% 4 20% 60% 4 10% 50% 4 om LC - | commen NZ Bank Bank 2 fo o a oe ¢
Slide 27: New Zealand: good volume growth offset by competitive impacts
New Zealand: good volume growth offset by competitive impacts Businesses performing as expected — ANZ Retail rebuilding continues, forecast customer attrition impacting Institutional (hoh NPAT growth NZ$) (2.4%) (5.4%) (13.6%) ANZ Retail NBNZ Retail Corporate Rural Institutional uDCc 1HOS NPAT (Nz$)
Slide 28: Market share trends are encouraging
Market share trends are encouraging Regaining share in Mortgages* its* * (share of new mortgage registration by number) Stable share of household deposits 35% J / 45% 30% 4 40% 25% 4 Chet 35% 20% eee ea ee 30% 15% 4 10% 4 \---------------------- 25% \smaiaaie NI ZN ASB t 5% 4 —eNz Westpac: 20% + T r
Slide 29: NBNZ integration to be completed by end of 2005
NBNZ integration to be completed by end of 2005 NZ$m 2004 2005 2006 2007 Total Integration costs 49 153 18 0 Incremental Integration costs 29 pence Cost synergies 6 33 53 63 Revenue synergies 1 24 39 47 Attrition 20 32 34 34 e¢ No material change to forecast integration costs and benefits e A risk e
Slide 30: Asian businesses showing positive growth
Asian businesses showing positive growth ANZ Asian Network * NPAT grew by 12% excluding . Treasury * Investments in Trade Finance and leveraging growth in trade flows has resulted in 47% NPAT growth from corresponding . period * Balance sheet remains flat as we . focus on maintaining a high standard
Slide 31: Pacific - solid momentum impacted by structural changes in economies
Pacific - solid momentum impacted by structural changes in economies Earnings impacted by drop in PNG « NPAT grew 8% on 1H04. Property sales in 2HO4 and $ Treasury bil’ rate’ structural changes in PNG resulting in a 6% fall in NPAT (A$m) Treasury bill rates (10.9% to 4.9%) caused NPAT to be down 4%
Slide 32: Esanda: benefiting from reshaping our business
Esanda: benefiting from reshaping our business Over the past 3 years, Esanda & UDC businesses have been reshaped; « Increasing focus on lower risk / higher growth ROE markets via * additional front line staff in growth areas * restructuring the UDC business structure from franchisees to relationship
Slide 33: Improving INGA returns from strong insurance income
Improving INGA returns from strong insurance income NPAT increased 5% driven by: Significant increase in ANZ Network . ; Agm funds flows (gross flows) ¢ Funds management income decreased by 5%, with higher fee income offset largely by an increase in 3,000 4 distribution costs 2,500 4 ¢ Risk income u
Slide 34: Financial Information
Financial Information
Slide 35: Solid growth in low yield assets continues to impact margins
Solid growth in low yield assets continues to impact margins Increased Institutional and Mortgages growth driving asset mix impact Asset Mix Approx NIM Impact Margin (1HO5 v 2H04) (bps) Non Lending Low Assets Institutional (0.6) Mortgages (0.8) Corporate - High Retail (0.9) Non Lending La Assets % o
Slide 36: Composition of "other" in the high level margin analysis
Composition of “other” in the high level margin analysis Other Items (0.6 basis points hoh) (0.4) 1.8) Brokerage FX Revenue Capital Markets Impact Hedging Derivatives ¢ NIM increased resulting from reduced funding costs associated with unrealised gains (offset in P&L on Trading Securities) ¢ The fol
Slide 37: Capital position above target range
Capital position above target range Drivers of the ACE ratio ¢ Currently above target range % wok Earnings * Continue to 6.00 5 0.79 generate surplus capital 5.75 4 « Uncertainty Buy Back regarding ACE 5.50 4 (0.06) INGA impact of IFRS 5.25 | Dividends impact ° $350m buy-back 5.08 ongoing - anticipa
Slide 38: APRA changes to Hybrid rules could reduce organic funding capacity
APRA changes to Hybrid rules could reduce organic funding capacity Capital Generation & Usage % of RWA Cash Earnings Dividend 1.59% (1.0%) Core DRP/BOP Generation INGA etc 0.09% 0-68% (0.11%) Fund RWA oa =a 0.57% es ns so ao aD og Ss ow is fon ou i= cd wo aD = 7 . : = 2 5 £ gs ee $ é Options availab
Slide 39: Ideal capital structure versus organic generation
Ideal capital structure versus organic generation Organic generation 0% Hybrids Ideal structure e¢ Should APRA constrain the issuance of Hybrids, we may be unable to return surplus ACE to shareholders. Regulatory Tier 1 capital may be increasingly funded by ACE capital. ¢ Currently ANZ has $3.3 bill
Slide 40: Dividend growth in line with cash EPS growth
Dividend growth in line with cash EPS growth $0.60 4 $0.50 4 $0.40 4 $0.30 4 $0.20 4 $0.10 4 Dividend growth in line with cash EPS growth 1H99 1HOO iHO1 1HO2 1HO3 1HO4 1HO5 Payout ratio slightly above long term sustainable ratio % Offshore earnings 100 5 90 Non-cash J and One-off 80 structural items
Slide 41: New Zealand structured finance transactions
New Zealand structured finance transactions e IRD audit focused on so called “conduit” transactions « Notices of Proposed Adjustment and assessments received as expected « Net potential liability on all similar transactions $NZ268m* e Legislative change to ‘thin cap’ rules in NZ will make these tran
Slide 42: New Zealand currency risk substantially hedged
New Zealand currency risk substantially hedged Attractive rates for hedging « Revenue hedging undertaken when roe ] future revenue currency is believed to be outside 1.30 | AUD/NZD its normal trading range and 1.254 Ko inconsistent with their value 1.204 e Revenue from FX hedges is Lie | reported as
Slide 43: Australia and NZ remain attractive markets over the medium to long term
Australia and NZ remain attractive markets over the medium to long term Average Real GDP growth 4% 5 3% 4 2% 4 1% 7 0% + Aust. NZ US UK Japan lf 1995-2004 (a) @ 2005-2010 (f) e Medium term outlook for Australia and NZ economies is to outperform major global markets ¢ Australia and NZ continue to pro
Slide 44: Short term mismatch income driven by cash to day spread
Short term mismatch income driven by cash to 90 day spread e ANZ Group is subject to a mismatch between the 3 month rate and the cash rate Rolling average rates (%) Cash 90 Day Spread 2HO03 4.75 4.74 +0.01 1HO4 5.12 5.21 -0.09 2H04 5.25 5.48 -0.23 1HO5 5.29 5.42 -0.13 e All variable rate mortgages r
Slide 45: Long term mismatch income impacted by flat yield curves
Long term mismatch income impacted by flat yield curves * We seek to adopt a conservative approach to Balance Sheet Management by * avoiding proprietary trading * seeking good opportunities for low risk earnings * Treasury’s income is expected to vary as the economic cycle changes and the shape of t
Slide 46: Credit Quality
Credit Quality
Slide 47: Improvement in risk profile reflected in lower loss and default rates
Improvement in risk profile reflected in lower loss and default rates New Non Accruals reducing $m og: coe 900 5 - 1.4% Net Specific Provision 824 by size 800 1.2% $10m - $25m 700 1.0% 600 500 0.8% 400 L 0.6% 300 tr 0.4% 200 r 0.2% 100 0 t 0.0% Mar- Sep- Mar- Sep- Mar- 02 02 03 04 05 om Aust/NZ te @
Slide 48: New Specific Provisions down 25% on 2H04
New Specific Provisions down 25% on 2H04 $m 450 4 400 350 4 Geographic Specific Provisions Mar- Sep- Mar- Sep- Mar- Sep- Mar- -50- 02 02 03 03 «404 04 #405 mAust BNZ FRUK/US BAsia tt! Other Inter Specific Provisions by Source 420°" 100 80 4 60 | 40 | 205 Sep-04 Mar-05 §1 Domestic Corporate li Asset
Slide 49: Group risk grade profile
Group risk grade profile ANZ Group — Outstandings $149bn = $158bn $165bn = $207bn = $222bn = $235bn AAA to BBB MW Wit BB+ to BB >BB- B+ to CCC Non Accrual * Total investment grade as at Mar 05 - $163bn or 69.2% of the portfolio * 80% of lending growth has been investment grade
Slide 50: Geographic risk grade profiles
Geographic risk grade profiles Australia & New Zealand International $212bn $227bn $10bn $9bn $155bn $198bn AAA to BBB BBB. 501g’ BB+ to BB TW BB- >BB- Sep-03 Mar-04 Sep-04 Mar-05 Mar-04 B+ to CCC 2.0% 1.7% 1.8% 1.7% 4.0% Non Accrual 04% 04% 0.3% 0.2% 3.3%
Slide 51: Institutional risk grade profile
Institutional risk grade profile Institutional - Outstandings $45bn $43bn $43bn $45bn $49bn AAA to BBB Total investment grade as at Mar 05: BBB- $34bn or 70.6% of the portfolio, up a a from $31ibn or 195% 68.5% BB+ to BB BB- >BB- : 29 Sep-03 Mar-04 Sep-04 B+ to CCC 3.2% 1.9% 1.8% Non Accrual 1.6% 1.
Slide 52: ANZ's provision levels remain strong
ANZ’s provision levels remain strong Specific Provision/Non- General Accrual Loans Provision/RWAs 0.94% 38% ANZ Mar05 CBADec04 NABSep04 WBC Sep 04 ANZ Mar 05 CBA Dec 04 NAB Sep 04 WBC Sep 04
Slide 53: Continued strong growth in Mortgages
Continued strong growth in Mortgages « LVR at origination consistent with 12 Strong LVR profile months ago % 7 9 90% LVR at origination Mar 04 80% 4 * Improved Dynamic LVR compared to 5 | if LVR at origination Mar 05 March 2004 with strong residential 70% + / sae 60% + sset reciation a app atlo 50%
Slide 54: Inner City lending improving
Inner City lending improving ¢ There has been a gradual shift toward Owner . Occupied, although Investment loans remain Inner City Accounts & Exposure more popular 415 « Inner City exposure represents 4% of the wa # Accounts Mortgages Australia total portfolio @ Exposure « There is only one delinque
Slide 55: Industry exposures - Australia & New Zealand
Industry exposures —- Australia & New Zealand Lending Assets (AUD) % of Portfolio (RHS scale) % in High Risk (RHS scale) % in Non Accrual (RHS scale) Health & Community Cultural & Recreational Forestry & Fishing Services Services 20bn 10.0% 20bn a 10.0% 20bn 10.0% 15bn 7.0% 15bn 7.0% 15bn 7.0% 10bn
Slide 56: Industry exposures - Australia & New Zealand
Industry exposures — Australia & New Zealand Lending Assets (AUD) % of Portfolio (RHS scale) % in High Risk (RHS scale) % in Non Accrual (RHS scale) Finance - Other Transport & Storage Utilities 20bn 10.0% 20bn 10.0% 20bn 10.0% 15bn 7.0% 15bn 7.0% 15bn 7.0% 10bn 4.0% 10bn 4.0% 10bn 4.0% Sbn 1.0% Sbn
Slide 57: Industry exposures - Australia & New Zealand
Industry exposures - Australia & New Zealand Lending Assets (AUD) % of Portfolio (RHS scale) % in High Risk (RHS scale) % in Non Accrual (RHS scale) Real Estate Operators & Dev. Retail Trade Agriculture 20bn 10.0% 20bn 10.0% 20bn 10.0% 9 9 15bn 7.0% i5bn 7.0% toon 7.0% 106n 4.0% — 10bn 4.0% — 10bn 4
Slide 58: Other Information
Other Information
Slide 59: Building a competitive advantage through our people
Building a competitive advantage through our people High Staff Engagement Aust’n Banking & Finance Ave. 40% 54% ANZ 60% New Zealand & 4% 64% Personal Banking Aust. Focus on improving engagement... .. while building upon a great employment brand « Full census conducted for first time in Nov 2004 « Su
Slide 60: ANZ Community Investment
ANZ Community Investment Financial literacy and matched savings program for low income families ANZ donates $2 for every $1 saved for children’s educational needs In 2004, $240,500 was saved by the 257 participants - ANZ contributed $481,000 2005 target is to support a further 500 families and to pr
Slide 61: Update on Basel II and IFRS
Update on Basel II and IFRS ive IFRS IFRS comparative accounts, except IAS 32/39 /) | first year of adoption aE NZ ANZ Aus GAAP Quarterly Interim GDS Results Evaluation ) complete : System oo & build Implementation / j Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2005 2006 APRA Prudential Standards Issue
Slide 62: Delivering value to shareholders
Delivering value to shareholders $m NPAT growth 1,600 7 112 492 1400 | T ° 85.9 cents cash EPS a good 1,200 4 1,050 ily . 1,000 4 sos ik first half result ’ 817 8004 716 600 7 ¢ Focus and discipline again neal delivered strong os performance 1H99 1HOO 1HOi 1HO2 1HO3 1HO4 1HO5 e Shareholders rewarded
Slide 63: The material in this presentation is general background information about the Bank's activities
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