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Half Yearly Report/ASIC Half Yearly Accounts

Document date:  Thu 26 Apr 2001
Published:  Thu 26 Apr 2001 14:34:30
Document No:  175940
Document part:  N
Market Flag:  Y
Classification:  Half Yearly Report , Half Year Audit Review , Half Year Directors' Statement , Half Year Accounts , Dividend Record Date , Dividend Pay Date , Dividend Rate , Other

AUSTRALIA AND NEW ZEALAND BANKING GROUP       2001-04-26  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (CONTINUED)

INTERNATIONAL AND SUBSIDIARIES 
ELMER FUNKE KUPPER

Comprises the Group's operations in the Asia Pacific region together 
with the Asset Finance and ANZ Investments businesses.

                                                   HALF      HALF
                                                   YEAR      YEAR
                                                   MAR 01    MAR 00
                                                   $M        $M

Net interest income                                312       310
Other external operating income                    238       238
Net inter business unit fees                       (45)      (43)

Operating income                                   505       505
External operating expenses                       (217)     (219)
Net inter business unit expenses                   (40)      (17)

Operating expenses                                (257)     (236)

Profit before debt provision                       248       269
Provision for doubtful debts                       (45)      (47)
Income tax expense and outside equity interests    (70)     (100)

Net profit attributable to members 
 of the Company                                    133       122

Net loans and advances including acceptances    16,784    15,106
Other external assets                            8,765     7,568

External assets                                 25,549    22,674

Deposits and other borrowings                   16,580    14,458
Other external liabilities                      11,694     9,185

External liabilities                            28,274    23,643

Net interest average margin                       2.62%     3.12%
Return on assets                                  0.91%     1.18%
Return on risk weighted assets                    1.34%     1.41%
Operating expenses to operating income           50.7%     46.3%
Operating expenses to average assets              1.75%     2.26%

Net specific provisions                             29        76
Net specific provision as a % of average          
 net advances                                     0.36%     1.02%
Net non-accrual loans                              208       215
Net non-accrual loans as a % of net advances      1.2%      1.4%

Total employees                                  3,973     4,156

The results for International and Subsidiaries include the business
units and the central support unit. The services provided by the
central support unit are allocated to the business units. As a result
of this allocation, the sum of individual profit and loss line items
of the business units does not equal the corresponding line item in
the profit and loss of International and Subsidiaries.


ASSET FINANCE
PETER MCMAHON

Provision of asset based finance including leasing and hire purchase; 
and issues of debentures to investors.

                                                   HALF      HALF
                                                   YEAR      YEAR
                                                   MAR 01    MAR 00
                                                   $M        $M

Net interest income                                177       186
Other external operating income                     27        22
Net inter business unit fees                        (5)       (6)

Operating income                                   199       202
External operating expenses                        (81)      (84)
Net inter business unit expenses                   (15)      (14)

Operating expenses                                 (96)      (98)

Profit before debt provision                       103        104
Provision for doubtful debts                       (33)       (33)
Income tax expense and outside equity interests    (23)       (25)

Net profit attributable to members
 of the Company                                     47        46

Operating expenses to operating income            47.7%     48.0%
Net specific provisions                             36        24
Net non-accrual loans                               80        67

Total employees                                  1,378     1,484

Asset Finance operates as Esanda in Australia and as UDC in New
Zealand, and as Esanda FleetPartners in Australia and New Zealand.
Asset Finance distributes a range of vehicle, equipment and financing
products to the retail and commercial markets. Financing products are
distributed through intermediaries, Esanda FleetPartners and
telephone/internet based sales centres. The business also offers
debentures to investors, marketed through the customer business
units, investment brokers and financial planners.

The Asset Finance result increased 7% over the September half year to
$47 million. Key drivers of the result were:

* a 5% reduction in operating expenses, reflecting the success of
technology driven efficiency initiatives, including some re-engineerin
of its back office processes. Asset Finance is progressively moving
its operations to web-based platforms in line with the
eTransformation strategy

* operating income remaining flat. Subdued growth resulting from
continued competitive pressure on margins, together with a slowing
economy, offset strong contributions from its finance company, UDC,
in New Zealand and from the Australian Fleet business

* $2 million of costs associated with the introduction of GST were
absorbed into the existing Esanda cost base during the current half
year

The increase in net non-accrual loans reflects a modest deterioration
in the credit environment.


INVESTMENT MANAGEMENT
BRUCE BONYHADY

Sourcing and product development of managed investments and insurance 
products

                                                   HALF      HALF
                                                   YEAR      YEAR
                                                   MAR 01    MAR 00
                                                   $M        $M

Net interest income                                 28       29
Other external operating income                    134      140 
Net inter business unit fees                       (40)     (35) 

Operating income                                   122       134
External operating expenses                        (56)      (41)
Net inter business unit expenses                    (8)       (7)

Operating expenses                                 (64)      (48)

Profit before debt provision                        58        86
Provision for doubtful debts                         -         -
Income tax expense and outside equity interests    (24)       (43)

Net profit attributable to members
 of the Company                                     34       43

Operating expenses to operating income            52.5%     35.8%
Net specific provisions                             -         - 

Total employees                                    676         626

Retail FUM ($B)                                    12.6       10.8
Net Retail flows                                     1.0       0.2
Assirt ranking Flows(1)                              6        12
Wholesale FUM ($B)                                   4.6       4.4
Underlying expenses as a % of 
 total average FUM                                  0.64%     0.55%

(1) Quarter ending 31 December 2000

Investment Management operates three businesses: funds management,
insurance and trustees. The funds management business sources and
manufactures a range of retail and wholesale investment management
products for distribution predominantly by ANZ customer businesses.
The insurance business sources and underwrites risk products and
third party general insurance. The trustee business manages
charitable trust assets and private estates for individuals and
executors.

Investment Management has not structured its funds management
entities in a way that allows a market value of those entities to be
recognised, consequently these results do not include any appraisal
or embedded value. The profit in Investment Management increased 
$7 million over the September 2000 half year. Key drivers of the 
result were:

* strong growth in funds under management contributing to higher fee 
income

* additional Life Company shareholder investment earnings as
shareholder funds were largely invested in fixed interest securities
in a falling interest rate environment

* increased expenses, as higher volumes resulted in increased policy
acquisition and maintenance expenses ($8 million), while improved
cost controls and lower one off expenses reduced operating expenses
($5 million)

Compared to the March 2000 half year, operating income for the
current half year was adversely impacted by lower Policy holder
investment income due to weak equity markets. Operating expenses have
increased since March 2000, mainly in the launch of new
products/marketing ($3 million) and personnel ($7 million) costs, as
the Group invests further to grow this business.

Life Company planned margins have been taxed at the full corporate 
rate from 1 July 2000, resulting in a $4 million increase in 
shareholder tax expense for half year to 31 March 2001 (results for 
September 2000 were impacted only for one quarter). Policyholder tax 
expense has decreased due to lower investment income, with the net 
result being flat. In the half year ended 30 March 2000, higher 
policy-holder investment income resulted in higher tax expense.


ASIA
JOHN WINDERS

Provision of primarily corporate and institutional banking services
in 11 Asian countries

                                                   HALF      HALF
                                                   YEAR      YEAR
                                                   MAR 01    MAR 00
                                                   $M        $M

Net interest income                                 65        57
Other external operating income                     43        36
Net inter business unit fees                         -         - 

Operating income                                   108        93
External operating expenses                        (48)      (46)
Net inter business unit expenses                    (8)       (5)

Operating expenses                                 (56)      (51)

Profit before debt provision                        52        42
Provision for doubtful debts                        (8)      (11)
Income tax expense and outside equity interests    (13)      (20)

Net profit attributable to members
 of the Company                                     31        11

Operating expenses to operating income            51.9%     54.8%
Net specific provisions                             (9)       51 
Net non-accrual loans                              118       141  

Total employees                                    581       626

Asia manufactures and distributes a large range of
corporate/institutional and trade finance products together with
personal lending, deposits and retail credit card products. Asia's
business mix is 85% corporate/institutional and 15% retail. Asia's
branches and overseas offices provide a distribution/relationship
management network for Asia manufactured products as well as ANZ
Investment Bank products.

Asia profit increased by $23 million over the September 2000 half 
year.  Key drivers of the result are:

* net interest income increasing 16% with higher volumes resulting 
from a refocussed asset writing strategy to target multinational 
corporate clients and trade finance, together with interest recoveries
in the current half year

* other income increasing $7 million with higher foreign exchange 
revenue earned from volatility in foreign exchange markets, combined 
with profits on the sale of a Singapore property and the wind up of a 
superannuation scheme in Hong Kong

* operating costs have reduced by $9 million from the September 2000 
half year which included a full year allocation of head office cost.  
Lower staff numbers from several voluntary retirement schemes are 
driving reductions in external expenses

* effective tax rate reducing over the previous two half years which 
included the write-off of tax assets of $7 million in March 2000 and 
$3 million in September 2000

New specific provisions returned to more normal levels as the asset 
writing strategy focussed on lower risk and re-balancing the credit 
portfolio and there were recoveries on past provisions.  The 2000 
specific provision included $81 million provided for two corporate 
customers.


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