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Half Yearly Report/ASIC Half Yearly Accounts

Document date:  Thu 26 Apr 2001
Published:  Thu 26 Apr 2001 15:40:19
Document No:  175940
Document part:  P
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)

GEOGRAPHIC SEGMENT PERFORMANCE

                                          HALF      %    HALF      %
                                          YEAR           YEAR
                                          MAR 01         MAR 00
                                           $M            $M
Net profit attributable to members of
the Company

Australia                                   704    79%    565    69%
New Zealand                                 126    14     116    14
Overseas Markets                             65     7     136    17

                                            895   100%    817   100%

                                          AS AT          AS AT
                                          MAR 01         MAR 00
                                          $M             $M
TOTAL ASSETS

Australia                                 129,321       116,352
New Zealand                                22,891        21,542
Overseas Markets                           28,755        29,064

                                          180,967       166,958

RISK WEIGHTED ASSETS

Australia                                  96,650        85,198
new Zealand                                14,871        15,025
Overseas Markets                           25,479        26,330

                                          137,000       126,553

GEOGRAPHIC SEGMENT - AUSTRALIA

                                          HALF YEAR      HALF YEAR
                                          MARCH 01       MARCH 00
                                          $M             $M

Net interest income                         1,414         1,263
Fee income                                    685           623
Other operating income                        276           242

Operating income                            2,375         2,128
Operating expenses                         (1,131)       (1,114)

Profit before debt provision                1,244         1,014
Provision for doubtful debts                 (177)         (173)
Income tax expense                           (363)         (275)

Net profit after income tax before            704           566
abnormal items
Net prior period abnormal profit                -            (1)

Net profit attributable to members            704           565
of the Company

RATIOS EXCLUDE ABNORMAL ITEMS

Net interest average margin                  2.97%         2.98%
Return on ordinary book equity               25.9%         19.0%

Return on risk weighted assets               1.49%         1.37%
Operating expenses to operating income       47.5%         52.2%
Operating expenses to average assets         1.79%         1.98%

Net specific provision                        177           102
Net specific provision as a % of average     
Net advances                                 0.34%         0.22%
Net non-accrual loans                         430           257
Net non-accrual loans as a % of net advances  0.4%          0.3%

Total employees                            16,309        16,742

Lending growth                                1.8%         7.0%

Total assets                               129,321      116,352
                                          
Risk weighted assets                        96,650       85,198

Profit after tax in Australia, at $704 million, was 11% ($70 million) 
higher than the September 2000 half year excluding prior year 
abnormals. This increase reflects the following main influences:

* net interest income was up 4%, due to lending growth of 1.8% and a 5
basis point in average margin
- lending growth, in particular from mortgages, was significantly 
lower than in 2000 due to the slowing economy and housing market 
coupled with short term operational problems which curtailed the level
of third party mortgage sales

- average margin benefited from the fall in wholesale interest rates 
ahead of mortgage rates and from repricing of corporate loans

* fee income was 6% higher due to transaction volume growth in fees 
from Cards, Institutional Banking, Global Structured Finance and 
Global Transaction Services

* other income was up 24% due to strong growth in foreign exchange 
earnings and the sale of investment in St George, offset by equity 
investment write-downs and lower E*Trade milestone income

* operating expenses were flat after allowing for the impact of GST, 
which added costs of $18 million. Performance related salary increases
were absorbed by other cost reductions

* the economic loss provision was in line with the provisions in 2000,
reflecting the low growth in lending during the March 2001 half year

* specific provisions were $41 million higher, reflecting the prudent 
assessment of potential losses on certain larger corporate exposures

GEOGRAPHIC SEGMENT - NEW ZEALAND

Murray Horn

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

Net interest income                         246            240
Fee income                                  143            133
Other operating income                       39             30

Operating income                            428            403
Operating expenses                         (232)          (227)

Profit before debt provision                196            176
Provision for doubtful debts                (19)           (18)
Income tax expense                          (51)           (42)

Net profit after income tax before
abnormal items                              126            116
Net prior period abnormal profit              -              -
Net profit attributable to members
of the Company                              126            116

RATIOS EXCLUDE ABNORMAL ITEMS

Net interest average margin                2.60%          2.66%
Return on ordinary book equity             25.1%          24.8%

Return on risk weighted assets             1.76%          1.62%
Operating expenses to operating income     53.3%          56.1% 
Operating expenses to average assets       2.12%          2.25%

Net specific provision                       10             18
Net specific provision as a % of 
average net advances                       0.12%          0.22%
Net non-accrual loans                        68             46
Net non-accrual loans as a % of
net advances                                0.4%           0.3%

Total Employees                           3,831          4,053

Lending growth (including FX impact)        9.4%          14.5% 
Lending growth (excluding FX impact)       (0.4%)         11.2% 

Total assets                             22,891         21,542
Risk weighted assets                     14,871         15,025

The environment in New Zealand has been subdued, with limited new 
lending and stable margins. Excluding restructuring costs, the current
result was 1% up on the previous half. The September 2000 half 
included $31 million of abnormal costs relating to the substantial 
restructuring of the Bank's technology, premises and operational 
infrastructure. Key impacts were:

* increase in net interest income from asset growth, with margins 
remaining constrained due to competitive pressures and lower asset and
liability management earnings

* fee income slightly above the levels of the preceding half, with 
limited volume growth

* continued improvement in foreign exchange and treasury trading 
income, with market conditions more conducive to trading

* operating costs continue to be contained. The acquisition of EFTPOS 
NZ Limited, however, has added to the cost base in New Zealand

* lending growth has been impacted by the slow housing market in New 
Zealand

* credit quality remains sound. Non-accrual loans remain at low 
levels, although they have increased compared with the preceding half.
$15 million of the increase arose from standardising the 
classification and management of the mortgage portfolio with 
Australian practice and is, therefore, not comparable to the 
preceeding years figures. $5 million of the increase is due to a 
reduction in specific provisions

ANZ  New Zealand will continue to focus on transforming its IT 
infrastructure in order to better serve its customers, in particular 
retail customers. In a highly competitive environment, growing the 
business whilst containing costs, and maintaining credit quality, 
remains crucial.

GEOGRAPHIC SEGMENT - OVERSEAS MARKETS

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

Net interest income                          219            369
Fee income                                   110            171
Other operating income                         8             91

Operating income                             337            631
Operating expenses                          (197)          (322)

Profit before debt provision                 140            309
Provision for doubtful debts                 (45)           (65)
Income tax expense                           (29)          (107) 
Outside equity interests                      (1)            (1)

Net profit after income tax before            
abnormal items                                65            136
Net prior period abnormal profit               -               -
Net profit attributable to members
of the Company                                65            136

RATIOS EXCLUDE ABNORMAL ITEMS     
           
Net interest average margin                 1.35%          2.14%  
Return on ordinary book equity               5.1%          12.1%

Return on risk wieghted assets              0.56%          1.07%
Operating expenses to 
operating income                            58.2%          51.0%
Operating expenses to average assets        1.08%          1.73% 
                                                         
Net specific provision                        (6)            77
Net specific provision as a % of
average net advances                      (0.08%)          0.91%
Net non-accrual loans                        229            251 
Net non-accrual loans as a % of
net advances                                 1.4%           1.4%

Total employees                            2,675          8,145

Lending growth (including FX impact)        20.6%           8.0%
Lending growth (excluding FX impact)        11.0%           1.5%

Total assets                              28,755         29,064
Risk weighted assets                      25,479         26,330


The overseas market result comparatives for 2000 are dominated by the 
effect of the sale of Grindlays in July 2000. The profit after tax for
the March 2001 half year includes a net loss of $12 million from 
discontinued businesses, including the joint venture with OCBC. If the
results of discontinued overseas businesses are excluded from the 
March 2001 and September 2000 results, March 2001 shows a profit 
increase of $10 million  from September 2000. This increase in 
underlying profit is due to the following

* interest income increased 11% ($19 million), of which $14 million 
was due to the impact of exchange rate movements and the remainder to 
lending volume growth

* fee income increased 11% ($11 million), with $6 million due to the 
impact of exchange rate movements. The underlying growth was mainly in
US fee income from structured financing areas

* other income decreased by $19 million, due to the $43 million 
write-down of the investment in Panin offset by a dividend of $11 
million from Panin. In the September 2000 half year result a 
write-down of the Panin investment was included in abnormal items. 
There was underlying growth of $5 million in foreign exchange income

* after adjusting for the $8 million impact of exchange rate 
movements, operating expenses were $2 million lower showing the 
benefit of rationalisation and restructuring activities

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