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Preliminary Final Report

Document date:  Thu 26 Oct 2000
Published:  Thu 26 Oct 2000 11:04:14
Document No:  168995
Document part:  J
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 - PERSONAL FINANCIAL SERVICES

                                      2000        1999         MOVT
                                       $M         $M            %

Net interest income                  1,022        984          4%
Fee income                             692        639          8%
Other operating income                 347        328          6%
Operating income                     2,061      1,951          6%
Operating expenses                    (964)      (955)         1%
Operating profit before debt
provisions                           1,097        996         10%
Provision for doubtful debts          (214)      (221)        -3%
Income tax expense                    (236)      (213)        11%
Operating profit after income tax      647        562         15%
Operating profit after income tax
Corporate Relationships                455        379         20%
Asset Finance                           90         81         11%
Foreign Exchange                        68         63          8%
Capital Markets                         34         39        -13%
                                       647        562         15%

Net interest average margin           1.87%     1.83%         N/A
Return on assets                      0.88%     0.79%         N/A     
Return on risk weighted assets        0.87%     0.79%         N/A
Operating expenses to operating 
income                                46.7%     48.8%         N/A     
Operating expenses to average 
assets                                 1.31%    1.33%         N/A
Net specific provisions                  41      125         -67%
Net specific provision as a % of 
average net advances                     01%     0.2%         N/A
Net non-accrual loans                   376      335          12%
Net non-accrual loans as a % of net 
advances                                0.6%     0.6%         N/A
Total employees                       4,689    4,880          -4%
Total assets                         77,169   69,842          10%

Corporate Financial Services profits increased 15% to $647 million 
over the September 1999 result.  This represents 38% of the Group's 
operating result.  The growth in profit reflects:

*  increased net interest achieved largely through repricing existing 
customer loans, at the same time as improving the credit quality of 
the lending portfolio
*  strong growth in fee income with increased transaction fees 
following a review of pricing and cost structures, growth in 
transaction fees associated with "ANZ OnLine", the PC based banking 
product for Corporate customers, and higher lending fees in Structural
Finance and Corporate and Institution banking
*  increased foreign exchange revenue in the first half year with 
volatility in currency markets increasing customer activity
*  lower economic loss provisioning, reflecting the improved credit 
quality in Corporate Financial Services
*  increased profitability in Asset Finance driven by higher fee 
revenue despite buyer caution from May to August as customers awaited 
the introduction of GST, and competition causing a margin decline
offset by
*  higher expenses driven by an increased investment in eCommerce and 
higher salary costs.  However increased use of lower cost electronic 
distribution channels by customers a 4% reduction in staff numbers 
assisted us to constrain cost increases
*  lower capital markets trading profits with fewer trading 
opportunities available during the Y2K transition

Lower specific provisions reflect stable provisioning levels in 
Australia and New Zealand

To improve the distribution of products, Corporate Financial Services 
has realigned its business into product and relationship management 
specialisations.  Corporate and Institutional banking has been 
restructed along industry lines.

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