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ASIC Half Yearly Accounts/media release

Document date:  Wed 05 May 1999
Published:  Wed 05 May 1999 00:00:00
Document No:  148215
Document part:  B
Market Flag:  N

HOMEX - Melbourne                                                     


* Operating profit after tax $716 million ($625 million)

* Earnings per ordinary share up 8% to 44.7 cents, from 41.3 cents

* Interim dividend 26 cents per share, up 2 cents. Franking increased
to 75% from 60%

* Return on ordinary shareholders' equity 17.3% (17.1%)

* Cost to income ratio down to 55.8% (59.9%)

* Good profit performance in Australia and New Zealand

- Australia up 29% to $480 million 
- New Zealand up 46% to $102 million 
- International down 26% to $134 million (up $185 million on second 
half 1998) 

* Operating expenses decline by 5% to $1,643 million

* Economic loss provision charge and specific provisions stabilise

* Strong capital position gives flexibility to pursue strategic and
capital management options



We are on track to achieve the annual performance objectives I set 18
months ago when I arrived at ANZ.

Double-digit earnings growth: Reported earnings increased 15% from
the first half of 1998 and EPS grew by 8%. The higher capital ratio,
following the preference share issues, and the change to amortisation
of software development costs, both positively impacted earnings in
the first half. At the same time, the growth in earnings from
continuing operations demonstrated our ability to replace the income
from discontinued higher risk businesses and to grow higher quality
earnings. We are expecting an even stronger second half.

ROE above 15%: The Return on Shareholders Equity for the first half
was 17.3%. This is significantly above our cost of capital. We have
set ourselves a new internal target of 20% and are making good
progress towards this.

Cost-income ratio below 53%: The cost income ratio has been reduced
to 55.8% from 59.9%. Costs were reduced and good income growth
achieved. Clearly this ratio does benefit from increased capital and
accounting changes, nevertheless we achieved a 2 percentage-point
reduction excluding these. We are well on the way to the target of
53% in 2000.

Reduce risk: Non-core Asian exposures continue to be reduced, market
risk levels are close to half last year's levels, and in our domestic
markets, asset growth has been centred on mortgages and lower risk
corporate business. While the Group continued to experience unusually
high credit losses from its international operations, these were
contained within the stable economic loss provisioning charge and
were in line with our expectations.


This has been a very active period for the management at ANZ and
there have been a number of significant developments in the Group's
business since 1 October 1998.

In the Australian home mortgage market, ANZ achieved the fastest
organic growth of any major lender. In addition we acquired the
residential mortgage business of the Primary Industry Bank of
Australia (now called Origin) which has recently announced a funding
alliance with Aussie Home Loans. ANZ's Australian mortgage portfolio
grew by 11% in the latest six months. We also launched Premier
Banking with specially equipped branches to provide differentiated
customer service to our high value personal customers.

In funds management, ANZ Gateway posted $2.3 billion in assets in the
first 15 months with 4 out of the 5 investment classes exceeding
benchmark performance. It was particularly pleasing to see ANZ's own
investment team maintain top quartile investment performance. In
credit cards, the Qantas Telstra Visa card consolidated its leading
position in the Australian market and was launched in New Zealand.

We are also reshaping our technology for the 21st century. We
recently successfully launched our upgraded Internet banking service.
Our Year 2000 programme is on track and inside budget, and testing
with other financial institutions has commenced. Implementation of
our new Tasman technology platform has commenced and full rollout in
New Zealand is scheduled by August. Internationally, our CBS system
is now in place in most designated countries.


The Group's vision has been redefined to provide greater focus for
our people as follows:

ANZ is a vibrant financial services company that delivers:
- Superior performance and value for our shareholders 
- An experience which delights our customers 
- An environment where our people excel 


We are making good progress on each of these dimensions. However, we
are sharpening our strategic focus to ensure success. In summary, our
business strategy going forward is to:

Accelerate growth in our personal financial services businesses,
particularly in funds management by harnessing our distribution

Build on our strong market position in the corporate sector to grow
fee based services. Continue to reduce risk and improve return on

Simplify our international network to improve returns by focusing on
Asia and the Pacific, by continuing to reduce risk and by selectively
investing in growth franchises. This will include narrowing the focus
to products such as trade and structured finance, foreign exchange,
personal banking, credit cards, funds management and auto-finance.

Swiftly build a leading e-commerce presence, and develop our payments
and transactional banking capabilities. Create the operational and
customer technology platform for the future by using web-based


We are also focusing management on the strategic priorities to align
the whole organisation around these and the needs of our customers.
We will:

Redefine our current banking businesses more broadly as financial
services businesses to leverage our distribution channels and
relationships with customers.

Organise the Group into four business segments:

- Personal Financial Services 
- Corporate Financial Services
- International
- Technology, E-commerce and Payments

Upgrade strategic and financial management to oversee performance and
improve the balance of our business mix, to drive down costs, lower
risk, improve capital efficiency, and to improve return on assets.

Devolve responsibility for operations and support activities to the
customer businesses, creating a lean corporate centre. Business
managers will have end to end control over activities that impact
their customers and their business economics.

Set realistic but demanding Group targets for Total Shareholder
Returns relative to our competitor banks.

Build a performance culture by setting clear individual targets, by
delegating authority, and by recognising and rewarding those who


Over the next three years, our strategy will be driven substantially
through organic growth. However, we will consider acquisitions where
they add to shareholder value and enhance our strategic options.

These strategies are designed to enable us to breakout to a new
relative share price trajectory. They also enable us to preserve and
develop strategic options for the consolidation of the financial
services industry on our terms.

At the same time they will enable us to build our reputation as an
organisation that delivers consistently on our promises to our
shareholders, to our customers and to our staff.