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Preliminary Final Report & On-Market Buy-Back

Document date:  Wed 03 Nov 1999
Published:  Wed 03 Nov 1999 00:00:00
Document No:  154638
Document part:  C
Market Flag:  Y

HOMEX - Melbourne                                                     



The 1999 result at ANZ demonstrates a commitment to delivering value
for our shareholders. With earnings per share growth of 17%, we are
now delivering good earnings momentum. Australia and New Zealand both
showed much higher than trend growth, with the strongest performance
in Personal Financial Services, which now accounts for 42% of Group


Our aim is to deliver superior returns for our shareholders. This
will require a higher return on equity, improved sustainability of
earnings, increased productivity, fewer surprises and unexpected
losses, and a capability to execute consistently. To achieve these
objectives we have enunciated a clear strategy to:

* Improve performance to deliver Economic Value Added (EVA(TM)) by:

  Turning around sub-optimal segments, particularly in International
  Reducing costs and risks
  Optimising our capital structure

* Re-balance the strategic business mix by:

  Accelerating growth in Personal Financial Services
  Building on our strong position with domestic Corporate customers
  Simplifying and focusing our International business
  Building a leading e-Commerce business
  Withdrawing from all high-risk and non-core segments

* Leverage technology as a competitive advantage, particularly
  utilising web-based systems

* Improve the customer experience

* Build a strong management team and create an environment where
  people excel


Performance. We improved the EVA(TM) in all of our major business
segments this year, and continue to make substantial improvements in
efficiency. Our costs are down 4% on the previous year and our cost
income ratio at 55.0% is on target against the commitment we made two
years ago. Asset quality has significantly improved and
the risk profile of the Group materially reduced. Domestically,
higher risk credits account for only 3.7% of our lending assets
versus 9% three years ago. Higher risk international exposures
continue to be managed down. Gross and net non-accrual loans have
stabilised. Trading market risk has been reduced significantly.

Business Mix. We now have a higher quality business mix and a
stronger foundation for a more consistent future earnings
performance. Domestic Personal and Corporate Financial Services
account for 79% of our earnings. Personal Financial Services is now
our largest contributor within the Group. Financial services and
banking businesses have been integrated. We have withdrawn from the
higher risk investment banking that was once a material focus of the
Group. Our progress on e-Commerce has been substantial. We now have
over 100,000 registered customers on FXOnline has been very
successful. ANZ E*Trade commenced in October, and we are actively
marketing this service to our customer base.

Technology. We have delivered on major projects such as the migration
of New Zealand back office systems processing to Australia,
completing our preparations for Y2K and the Euro, rolling out a new
platform in our overseas operations and launching of Internet
banking. We have upgraded our technological capability and are now
recognised as an employer of choice in this area. Additionally, Board
meetings went fully on-line during the year.

Customer Experience. Satisfaction levels in our corporate businesses
continue to run at very high levels. Although we have made good
progress, there remains a great deal to do in the personal and small
business areas. The customer base has been re-segmented, and we are
in the process of reorganising these businesses around our customers
and have also put in place detailed plans for providing a
differentiated service to each segment. In particular the pilot of
our new Premier branches has proven very successful.

People. We now have a high-calibre management team of international
as well as domestic standing. Good progress has also been made in
building a performance-orientated culture through the implementation
of stretch targets, and the introduction of incentive schemes,
throughout the company. Programs to identify and develop key talent
have also been introduced with good success.

This year we will give particular attention to: 


* Achieving a 53% cost income ratio
* Making progress towards our 20% ROE target
* Improving the asset quality in International businesses
* Implementing stretch performance disciplines throughout the Group
* Successfully managing the Y2K transition


* Achieving superior growth and improvement in customer experience
  in Personal Financial Services, particularly in the Premier and 
  small business segments and in Retail Funds Management
* Improving the asset mix and return in Corporate Financial Services
* Completing the strategic re-positioning of our International
* Building a leading domestic market position in e-Commerce

Y2K. We are well prepared in our own operations for Y2K and remain
comfortable that the event will proceed smoothly. However, as with
other large companies, we are dependent on the external
infrastructure around us. With Y2K, we are entering uncharted
territory, and there is therefore a small but significant risk that
issues outside our control may arise, particularly in less developed
countries, and this could impact profitability adversely.

Capital Management. The effective management of capital is a priority
for ANZ. The high level of internal capital generated from strong
earnings growth, the implementation of risk reduction programs, and
the preference share issue, have all created a capital surplus for
the Group. We are therefore announcing today an on market ordinary
share buyback of up to $500 million, as the first step in addressing
our surplus capital. We have examined a number of acquisition
opportunities in South East Asia. With the exception of Panin Bank,
these have not met our hurdle criteria and the likelihood of our
making a major international acquisition this year is low.

For this year, we have set ourselves performance targets to
outperform our peers. Plans are in place to achieve this.