A Strategic Overview

1
A Strategic Overview

• Presentation to
• CSFB Australian Financial Services
  ConferenceMelbourne, 27 September 2001
• John McFarlane
• Chief Executive Officer
• Australia and New Zealand Banking Group Limited

2
Five key factors are driving ANZs current and
future performance

• Improving sustainability of earnings
• Revenue growth
• Productivity enhancements
• Risk reduction
• Perform Grow Breakout program

Improved financial outcomes

• Return on Equity target 20
• Earnings per share target 10

3
1. Sustainability of earnings continues to improve
Lending Profile
Focus on lower risk, more sustainable activities

• Investment and emphasis on Personal Financial
  Services
• lower risk
• more sustainable
• higher growth
• Corporate balance sheet growth restricted
• Focus on fee income
• Higher quality corporate book

Business
Consumer
4
2. Significant revenue growth over five years
m
Revenue growth

• Revenue CAGR for
• PFS 8.8,
• CFS 10.7,
• International and subsidiaries 0.2
• Interest income CAGR over the five year period is
  5.7 and 8.2 for non interest income

CAGR 6.7
H2 estimate
5
3. Productivity improvement is providing scope to
invest for growth
Clear leadership on Cost Income ratio
Return on Assets


Target Mid 40s
6
4. We have a continuing focus on reducing risk
Implementation of a range of measures which have
reduced risk
Exited higher risk activities

• emerging markets trading
• retail stockbroking
• Latin America
• Grindlays
• Emerging markets corporate lending

• greater portfolio diversification
• commercial property down from 24 in early 90s
  to 8 today
• early introduction of EVA/NIACC methodologies
• significantly enhanced sophistication of credit,
  market and operating risk management
• more open/transparent disclosure

7
Risk profile of the corporate book is within
expectations and remains sound
Corporate risk grade profile

• Risk actively managed
• Quarterly strategy reports prepared for all high
  risk accounts
• All BB rated high risk accounts reviewed
  regularly
• Single customer concentration limits lowered

AAA to BBB
BBB to BBB-
BB to BB
BB-
gt B
gtB B, B-, CCC non-accrual
8
Consumer portfolio has improved
Arrears gt 60 days

Delinquency levels have improved, driven by

• improved collections activity
• low interest rates and
• stable employment conditions (up to August)

Closely monitoring in light of recent events
9
Provisioning is in line with expectations
m
Actual SP v ELP charge - Corporate Financial
Services

• Slowing domestic economy will increase specific
  provisions for 2H01
• ELP is a function of volume (on and off balance
  sheet), risk grade profile, and level of security
• Specific Provisions tend to be less volatile in
  Personal businesses and track more closely to ELP

ELP charge
SP charge
10
Groups capital adequacy ratio is strong at 10.4

Capital Ratios

• Inner Tier 1 and Tier 1 ratios for September 2001
  expected to be broadly in line with September
  2000
• Ratios were managed down in first half by 1bn
  buy back (completed in May)
• No AASB 1038 Appraisal Value accounting
• Target Inner Tier 1 is 6.0

11
5. Building for the future - a distinctive
strategy

• Proposition
• Entrepreneurial specialists create more value
• Corporations must embrace new technologies
• Value depends on performance, growth and breaking
  out

• Strategy
• ANZ as a portfolio of 16 specialist businesses
• An e-Bank with a human face
• Drive results, invest in growth businesses and
  create new paradigms/culture

• Implications
• Specialist approach to customer and product
  businesses
• Transform the way we do business with IP
  technology
• Meet expectations, fund growth by cost reduction,
  transform

Specialise
12
Transforming ANZ through Perform, Grow and
Breakout

• Focus corporate transformation
• Benchmark global industry/players
• Looking for dramatic change
• Horizon 3-10 years
• Success dramatic market cap increase

Break out

• Focus specialisation and out-growing the
  market
• Benchmark competitors in each business
• Looking for breakout moves in key
• businesses (eg QTV, TPMOs)
• Horizon 2-5 years
• Success 4-5 moves taking share and
• worth AUD1bn market cap each

Grow

• Focus performance
• Benchmark market expectations
• Looking for six monthly delivery
• Horizon 1-3 years
• Success meet/exceed expectations
• consistently

Perform
13
Looking forward we are targeting further
improvement in each key factor

• asset growth biased towards consumer and small
  business
• corporate focus on increasing ROA

Improving earnings sustainability

• annual investment in growth businesses
• revenue growth at least equal to nominal GDP
  growth

Revenue growth

• targeting mid 40s by 2003
• consistent improvement half on half

Lower cost-income

• reductions in single customer limits
• portfolio risk management approach

Risk reduction

• breakout cultural change program
• values based leadership

Perform Grow Breakout program
14
We are performing well and on track to deliver on
our commitments
Measure EPS growth ROE Cost-income ratio Inner
Tier 1 Credit rating
2003 Commitments gt 10 gt 20 mid
40s 6 maintain AA category
As at Mar-01 13 19.6 49.4 6.2 maintained

• Outlook 2001
• Specific provisions should be marginally above
  ELP
• Earnings expected to be towards the top end of
  analyst forecasts

15
The material in this presentation is general
background information about the Banks
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
Gentry Head of Investor Relations ph (613) 9273
4185 fax [phone] e-mail
gentryp_at_anz.com