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AUSTRALIA and NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522 CONSOLIDATED FINANCIAL REPORT and DIVIDEND ANNOUNCEMENT Year Ended 30 September 2001

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AUSTRALIA and NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522 CONSOLIDATED FINANCIAL REPORT and DIVIDEND ANNOUNCEMENT Year Ended 30 September 2001 AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522 CONSOLIDATED FINANCIAL REPORT AND DIVIDEND ANNOUNCEMENT Year Ended 30 September 2001 CONTENTS PAGE HIGHLIGHTS 1 FINANCIAL HIGHLIGHTS NET OPERATING RESULT 2 CONTINUING OPERATIONS 2 PERFORMANCE MEASUREMENTS 3 STATEMENT OF FINANCIAL POSITION 4 ASSETS AND CAPITAL 5 CHIEF FINANCIAL OFFICER’S REVIEW OVERVIEW 6 BUSINESS SEGMENT PERFORMANCE 9 GEOGRAPHIC SEGMENT PERFORMANCE 33 FIVE YEAR SUMMARY 37 FINANCIAL STATEMENTS AND NOTES 38 APPENDIX 4B STATEMENT 82 RISK MANAGEMENT 83 SUPPLEMENTARY FINANCIAL INFORMATION (Country Exposures) 85 DEFINITIONS 87 ALPHABETICAL INDEX 88 All amounts are in Australian dollars unless otherwise stated. The information on which this announcement is based is in the process of being audited by the Group’s auditors, KPMG. The Company has a formally constituted Audit Committee of the Board of Directors. This report was approved by resolution of a Committee of the Board of Directors on 25 October 2001. Corporate Affairs Level 20, 100 Queen Street Melbourne Vic 3000 Telephone 03 9273 6190 Facsimile 03 9273 4899 www.anz.com For Release: 25 October 2001 ANZ earnings growth highlights new momentum Australia and New Zealand Banking Group Limited (ANZ) today announced a record operating profit after tax of $1,870 million for the year ended September 2001, up 7% on last year (FY2000 $1,747m). Earnings on continuing operations were up 18% (FY2000 $1,597m). Results Summary • Operating profit after tax: Full year: $1,870 million, up 7% (up 18% in continuing operations) Second half: $975 million, up 9% on the first half • Earnings per ordinary share up 10% to 117.4 cents • Return on ordinary shareholders’ equity of 20.2% up from 19.3% • Final dividend 40 cents, up 5 cents with 100% franking • Full year dividend 73 cents, up 14% • Cost management continues. Cost income ratio down to 48.3% • Provisioning increased but within expectations Economic loss provision $531 million up from $502 million in 2000 Net specific provisions $520 million contained within overall economic loss provision • Sale of Grindlays on 31 July 2000 reduced exposure to Middle East and South Asia ANZ Chairman, Mr Charles Goode said: “This is a strong result. It is another positive performance, the result of four years hard work in strategically repositioning ANZ. Because of that work we are well placed in a less certain economic environment.” “During the last 12 months, we have achieved 18% earnings growth in our ongoing businesses and, for the first time in 20 years, return on equity is above 20%. Management and staff are to be congratulated on their achievements,” Mr Goode said. Chief Executive Officer, Mr John McFarlane said: “We have created a new momentum at ANZ. This new momentum has come from a consistent focus on improving financial performance, creating a more sustainable business mix, reducing risk and building a new culture.” “We expect the economic and credit environment to remain subdued through 2002 but we believe the situation will be containable. As a result we are taking a more cautious approach to our business. Australia and New Zealand Banking Group Limited ABN 11 005 357 522 “Despite the slowing world economy and uncertainty created by September 11, ANZ’s momentum and our distinctive strategy means we are well placed to continue to deliver on our financial targets and to take advantage of the opportunities this market will create. “Our repositioning means we are accelerating the program to make ANZ more valuable to a broader range of stakeholders, especially to our customers and the community,” Mr McFarlane said. For media enquiries, contact: For analyst enquiries, contact: Paul Edwards Philip Gentry Head of Group Media Relations Head of Investor Relations Tel: 03-9273 6955 or 0409-655 550 (mobile) Tel: 03-9273 4185 or 0411-125 474 Email: [email protected] Email: [email protected] ANZ’s 2001 Annual Results are available on www.anz.com Chief Executive Officer’s Review 2001 Annual Results I am pleased to report a 2001 result that is up 7% on last year (18% excluding discontinued businesses), at the upper end of analysts’ expectations, and at a new record level. Our good first half performance was repeated in the second half, despite the more subdued economy and weaker credit environment. Earnings per share growth of 10% matched our minimum target. Return on equity of 20.2% exceeded our 2003 target of 20% and is the highest level in the last 20 years. As promised, we continued to improve the cost income ratio, achieving 48.3% for the year, and 47.3% for the second half. This is now reaching world-class levels. In our continuing businesses we achieved good revenue growth of 11%. Costs were again held flat, after adjusting for GST, new acquisitions and foreign exchange movements. Inner tier 1 capital level is above our target level, as is prudent in the light of present external uncertainties. Our strong AA category credit rating was maintained. All but one of our specialist businesses grew their profits during the year, and all but four had double-digit earnings growth. This demonstrates the robustness of our strategy, our disciplined approach to risk, and the strength and depth of our management team. It emphasises our focus on growing the top line, our caution on risk, our rigour on capital allocation, and our decisiveness on costs. The last four years has seen a major transformation of ANZ. We now have a more sustainable and balanced business mix, improved positions in a number of growth sectors, industry-leading productivity, and considerably lower risk. The current uncertainties in the Middle East and South Asia provide further affirmation of our decision to sell Grindlays. All of this has resulted in records for stock price, market capitalisation and shareholder dividend. We have made good progress with our other stakeholders. The number of customers and market share across most measures has increased. Staff satisfaction has improved substantially. We have also taken a number of steps to earn the trust of the community, including a new ANZ Customer Charter, free transactional banking for those over 60, major concessions for Centrelink and Health cardholders and our moratorium on regional branch closures. Of course, not everything has worked in our favour, and there are areas where we are not doing as well. Although we have made progress in the areas of customer and community satisfaction, we have a great deal yet to do. It is well known that banks are not held in high regard by personal customers or by the community. Changing this perception of ANZ and contributing to changes in the wider industry is a major priority of ours over the next few years. Again, while we have made substantial progress in Personal Financial Services, we remain underweight strategically in this area. In particular we need to increase the number of customers in Metrobanking, Regionalbanking and Small to Medium business. We also need a stronger position in Wealth Management. We are also facing substantial competition for deposit funds that is constraining our ability to grow assets, particularly from alternative investments. Plans are in place to grow deposits, but the real solution lies in diversifying our business by growing alternative revenue streams. This year we launched the “Breakout” programme to create a sustainable high performance culture at ANZ. One thousand of our top managers have now been through the programme, and we are planning to extend this to 6000 others this year. We believe this initiative will be the foundation for sustainable performance differentiation in future years. As we predicted in the first half, we have seen deterioration in asset quality in Australia as a result of the recent downturn. This has been evidenced particularly through some large corporate collapses and our specific provisions have therefore risen. To reflect the potential risk arising from global economic uncertainty and the events of September 11th, we increased the ELP for the year by an additional $41 million. Our specific provisions are now broadly in line with ELP for the year, albeit higher for the half. We have provided for all known problem exposures. The Australian and New Zealand economies are currently performing relatively well, but it is likely that the higher level of uncertainty will have a tangible effect. We are closely monitoring the situation and are preparing contingency plans to mitigate any adverse impact should the situation deteriorate, and to be in a position to take appropriate action quickly, should this be necessary. We will continue to invest in selected growth segments and to improve the sustainability of our business mix. We are also paying particular attention to improving customer and staff satisfaction, in building our strategic position in our core businesses, and in earning the trust of the community. We have plans for a major transformation of our branch network domestically over the next few years. Additionally, strategic opportunities at reasonable values are likely to present themselves, and we believe this will play to our advantage. As an example, we recently acquired businesses in four countries in the Pacific. We expect a slowing in revenue opportunities until such time as the economy rebounds. The credit environment is likely to remain subdued, but barring significant deterioration, losses will be containable. We are accordingly taking a deliberately cautious approach to our business, and will continue to manage costs towards a target cost-income
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