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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:  H
Market Flag:  Y

HOMEX - Melbourne                                                     

Net interest income

                                        1999          1998        Movt
                                         $M           $M           %
Interest income                         8674          9,499        -9%
Interest expense                      (5,029)        (5,952)      -16%
Net interest income                    3,645          3,547         3%

Interest spread and net 
interest average margin                   %            %
Gross interest spread                  2.57          2.40          n/a
Interest forgone on 
impaired assets                       (0.10)        (0.07)         n/a
Net interest spread                    2.47          2.33          n/a
Interest attributable to 
net non-interest bearing items         0.58          0.64          n/a
Net interest average margin            3.05          2.97          n/a
Average interest earning assets ($M) 120,191       119,728          0%

Net interest income increased 3% on 1998 reflecting:

*  the growth in mortgage and corporate lending in
   Australia, up $6 billion and $4 billion respectively
   offset by                                                     

*  reduction in wholesale banking and capital                  
   markets activities.                                         

The Group net interest margin increased 8 basis
points reflecting:                                           

* the replacement of debt funding with preference            
  share capital (4 basis points)

* change in asset mix away from lower margin                 
  interbank lending to higher margin loans and               
  advances, following the wind down of wholesale                 
  banking and capital markets activities in late 1998                 

* positive asset and liability management position,
  mainly in New Zealand, which benefited from the
  positioning of the book and the lower interest rate
offset by

* volume growth in lower margin mortgage origination business

* reduced benefit of free funds due to lower interest rates

* increased interest forgone on non-accrual loans.

Other operating income

                                         1999         1998        Movt
                                          $M           $M         %

Fee income
    Lending                              679          592          15%
    Other including commissions l      1,075          982           9%
Total fee income                       1,754        1,574          11%

Foreign exchange earnings                340          373          -9%
Profit(loss) on trading instruments       89          (83)         n/a
Other income                             138          235         -41%
Total other operating income           2,321        2,099          11%

1 Includes commissions from funds management business, comparatives 

The 11% growth in other operating income reflected the success of the
Group'S objective to diversify streams.

Lending fees were up 15% from 1998 reflecting: 

* improved collection procedures and realignment of fee structures 
across businesses, including Personal Financial Services and Asset 
Finance, to better reflect the costs of service 

* growth in commercial bill volumes, particularly trade related bills 
in Corporate Financial Services Non-lending fees were up 9% as a 
result of: 

* growth in card fees due to increased transaction activity as the 
success of co-branded cards continues - 1.5 million cards are on 

* increased commission income due to ongoing expansion in our funds 
management businesses with funds under management and administration 
increasing by S1.8 billion to $14.7 billion in Australia and New 

* increased volumes and realignment of fee structures to better 
reflect the cost of providing services 

* growth in "ANZ On Line", the PC based banking products for 
Corporate customers.

Foreign exchange income benefited from strengthening in the AUD
against USD, but reduced overall from 1998 record levels, reflecting
the reduction in volatility of Asian currencies.

Profit and loss on trading instruments is now back to more normal
levels, having rebounded from the losses in London capital markets in
1998. Activity mainly reflects customer flow business in Australia
and New Zealand.

Other income in 1998 benefited from: * $26 million gain on the
demutualisation of the Credit Reference Association of Australia
(CRAA) * sale of our residual interest in the Commercial Bank of Oman
($8 million)

In addition, the netting of sub-lease rental income in the 1999 year
($21 million), and the cessation of ANZ Securities Institutional
broking activities, have decreased the level of 1999 Other income.