Skip to content

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:  J
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

+++++++++++++++++++++++++
CAPITAL ADEQUACY

The Group's capital position is very strong. On 3 November 1999 the
Group announced its intention to undertake an on market ordinary
share buyback of up to $500 million. The Australian Prudential
Regulation Authority (APRA) guideline ratio of qualifying capital to
risk weighted assets is a minimum of 8% of which Tier 1 capital must
be at least 4%. The Group's total capital adequacy ratio was stable
at 10.7%. The Tier 1 ratio of 7.9% is up from 7.2% at September 1998.
due to the issue of a further USD 375 million of preference shares in
November 1998 and retained profits.

RISK MANAGEMENT

ANZ continues to engender a robust culture of sound risk management
principles and processes throughout all lines of business and across
all risk dimensions, and is committed to achieving global best
practice in our risk management processes. Last year, ANZ announced a
strategy to re-balance the risk profile of the Group and increase the
emphasis on lower risk consumer related activities that create a more
stable earnings stream. Substantial progress has been made in 1999:

* Investment Banking restructuring

ANZ Investment Bank management has transferred to Melbourne, and the
sale of the emerging markets funds management business has been
completed. The residual emerging market bond portfolio has been
reduced to $43 million.

* Traded market risk

Traded market risk has been reduced substantially, with exposure now
typically less than one third of those seen last year. This reduction
in exposure has been accompanied by an enhanced level of market risk
management expertise within Group Risk Management and increased focus
on stress testing, which has enabled the Group to significantly
reduce potential losses in extreme market conditions.

* Credit risk

ANZ is re-balancing the international portfolio, placing emphasis on
lower risk assets reflecting the Group's areas of traditional
strength in trade, foreign exchange and supporting the needs of our
network customers and consumer related activities.

Australia and New Zealand: Strong growth in the mortgage lending
book, boosted by strategic acquisitions and alliances has progressed
the Group's strategic imperative towards a heavier emphasis on
consumer related business, Within Australia and New Zealand, mortgage
lending no", accounts for 41% of on-balance sheet lending exposure
(39% in 1998) with the mortgage lending portfolio increasing by 16%.
There has been continued improvement in the risk profile of corporate
lending activities in Australia and New Zealand and good progress in
reducing risk concentrations by customer and industry - commercial
property lending is now less than 10% of Australia and New Zealand
lending assets.

Asia: During the past 12 months ANZ has continued to manage down its
exposures in Asia. 'There has been a strategic refocus towards higher
quality credit exposures and developing network business,
particularly trade finance, rather than foreign currency lending to
local entities. Asia contributed $113 million to our total specific
provisions in 1999, compared with $263 million last year. Looking
forward, we expect further improvement in many of the Asian
economies, although continued problems in Korea, China and Indonesia
may impact any significant improvement overall.

Middle East and South Asia: Clearly the recent developments in
Pakistan are of concern. The military leaders have stated that their
intervention is temporary in order that they may stabilise the
country's position. While it is expected that any instability will be
contained, it is difficult to predict whether recent re-scheduling of
debt negotiations (Paris/London clubs) will remain unchanged.

Total lending in Pakistan is USD704 million of which Trade and local
currency lending represents 59%. The higher risk cross border term
lending (USD113 million) is appropriately provisioned. ANZ will
continue to take a conservative view of developments and make
specific provisions for defaulted assets.

While conditions elsewhere in the region are still unsettled, the
only other material issue is a customer fraud in the Middle East
involving several other international banks for which ANZ has an
exposure of $40 million, which is fully provisioned.

ANZ has been preparing for the transition to Year 2000 since 1996,
39 countries and across all its wholly owned subsidiaries.

ANZ is committed to addressing Year-2000-specific issues throughout
its operations. ANZ's aim is to minimise the effect on its
shareholders, customers and business partners of any problems ANZ
might encounter in the transition to Year 2000.

ANZ remains comfortable that the event will proceed smoothly.
However, as with other large organisations, we are dependent on the
external infrastructures around us operating normally. 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.

Deposits in ANZ Bank accounts and its customers' bank account records
are safe. All of ANZ's own banking facilities are expected to
function as usual.

ANZ released a Year 2000 statement to the Australian Stock Exchange
on 30 September 1999, A full copy of this statement is available on
www.anz.com

National Housing Bank of India

Following the Arbitration Award handed down in the Group's favour on
29 March 1997, the National Housing Bank of India (NHB) had the award
reviewed by the Special Court in Mumbai, which on 4 February 1998
ordered that the award be set aside. ANZ has filed an appeal with the
Supreme Court of India seeking that the Special Court's order be set
aside. As the matter is subjudice comment by the parties is limited.
The Group has obtained legal advice from Senior Counsel and based on
that advice no provision has been made in respect of the claim.


MORE TO FOLLOW


                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      1