Preliminary Final Report

Document date:  Thu 26 Oct 2000
Published:  Thu 26 Oct 2000 10:58:08
Document No:  168995
Document part:  K
Market Flag:  Y
Classification:  Preliminary Final Report , Dividend Record Date , Dividend Pay Date , Dividend Rate 

AUSTRALIA & NEW ZEALAND BANKING GROUP LI      2000-10-26  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

BUSINESS SEGMENT - INTERNATIONAL

                                              2000     1999      Movt
                                                $M       $M         %

Net interest income                            159      185      -14%
Fee income                                      69       58       19%
Other operating income                          60       70      -14%
OPERATING INCOME                               288      313      - 8%
Operating expenses                            (190)    (168)      13%
OPERATING PROFIT BEFORE DEBT PROVISIONS         98      145      -32%
Provision for doubtful debts                   (22)     (51)     -57%
Income tax expense                             (36)     (32)      13%
OPERATING PROFIT AFTER INCOME TAX               40       62      -35%
Net interest average margin                   1.85%    2.05%      n/a
Return on assets                              0.41%    0.68%      n/a
Return on risk weighted assets                0.69%    1.11%      n/a
Operating expenses to operating income        65.6%    53.2%      n/a 
Operating expenses to average assets          1.96%    1.81%      n/a
Net specific provisions                         94      121      -22%
Net specific provision as a % of
 average net advances                          2.4%     3.3%      n/a
Net non-accrual loans                          188      155       21%
Net non-accrual loans as a % of net
 advances                                      3.9%     4.4%      n/a
Total employees                              1,961    2,211      -11%
TOTAL ASSETS                                 8,011    5,814       38%

The international business segment result is different from the
Overseas Markets result included on page 20. International business
segment results are equity standardised and reflect management of the
continuing commercial International network. This segment excludes
the operations of the Grindlays business in the 10 months prior to
sale which are reported separately, and excludes the Investment
Banking operations of the mature markets of UK, Europe and Americas,
which are included in Corporate Financial Services.

The continuing International network contributed $40 million to the
Group result, down 35% over the September 1999 year. Key drivers of
the result were:

* reduced interest margins in Asia as a result of the exit of higher
  risk accounts and increased proportion of low yielding structured
  finance assets, combined with a reduction in margins in the Pacific
  as the IMF injected funds into PNG

* increased fee revenue following a review of ANZ and competitor
  pricing

* significant asset growth from structured finance and business
  banking operations in Asia, combined with the impact of foreign
  exchange movements

* lower other income reflecting equity accounted start up costs in
  eAsia ventures ($3 million)

* an increase in operating expenses as a result of restructuring
  costs in Asia, investment in eAsia, increased profit share costs and
  the amortisation of capitalised CBS software

* a reduction in expected loss factors due to an improvement in the
  credit quality of the lending portfolio in Asia with a significant
  reduction in off-balance sheet exposures and run off in higher risk
  loans

* increased income tax expense due to the write-off of deferred tax
  balances in China and Korea

The reduction in specific provisions demonstrates the improvement in
the risk profile and the stabilisation of credit problems. The
provision was dominated by $56 million further provisioning on
Daewoo, of which $46 million was in the March half year, and a $25
million provision on a single "exit account" where there was an
unexpected deterioration in the financial position of the customer in
the second half.


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