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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:  M
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

GEOGRAPHIC SEGMENT - OVERSEAS MARKETS

                                  1999         1998         Movt
                                    $M           $M            %

Net interest income                721          797         -10%
Fee income                         326          330          -1%
Other operating income             188           28        large

Net operating income             1,235        1,155           7%
Operating expenses                (664)        (639)          4%

Operating profit before debt 
provisions                         571          516          11% 
Provision for doubtful debts      (193)        (183)          5%
Income tax expense                (134)        (135)         -1%
Outside equity interests            (6)          (9)        -33%

Operating profit after income 
tax before abnormal items          238          189          26%
Net abnormal loss after tax          -          (58)         n/a

Operating profit after income 
tax and abnormal items             238          131          82%

Net interest average margin      2.25%        2.14%          n/a
Return on ordinary book equity 
(before abnormals)               10.9%         9.4%          n/a

Operating profit after tax 
as a % of average risk 
weighted assets (before 
abnormals)                        0.9%         0.7%          n/a
Operating expenses to net 
operating income                 53.8%        55.3%          n/a
Operating expenses to 
average assets                    2.3%         1.5%          n/a

Net specific provision as a %
of average net advances           1.7%         2.0%          n/a
Net non-accrual loans              282          256          10%
Net non-accrual loans as a % 
of net advances                   1.7%         1.4%          n/a

Total employees                  8,735        9,422          -7%

Lending growth (including 
FX impact)                      (9.0)%        11.8%          n/a
Lending growth (excluding
FX impact)                        0.7%        (2.6%)         n/a

Total assets                    25,520       35,371         -28%
Risk weighted assets            24,029       27,267         -12%


Operating profit before abnormals increased 26% on 1998 reflecting:

* the rebound from trading losses incurred in London in 1998
* strong trade and origination activity in Americas

offset by

* reduced interbank activity
* the impact of deterioration in asset quality in Asia and Middle
  East
* tighter margins reflecting increased competitive pressure in Middle
  East and South Asia
* higher costs in South Asia and Middle East reflecting award wage
  increases and inflationary pressures and growth in costs in the
  continuing businesses of New York and London.

The Group's aggregate Asian exposures reduced in US dollar terms over
September 1998 by USD 0.4 billion. The reduction from September 1998
was largely achieved in China, Indonesia and Japan.

Gross non-accrual loans in Overseas are $870 million, up from $694
million, mainly due to new non-accruals booked in Asia (China ITICs,
which total $56 million, and Korea $80 million).

Net specific provisions representing new and increased provisions
less specific provision releases, less recoveries totalled $297
million for Overseas, including $113 million for Asia (mainly China).

The Asian non-accrual loan portfolio continues to be well provided
with a coverage ratio of 59%

Reduced Treasury and interbank activity in London and lower Asian
exposures reduced total Overseas assets. 

BUSINESS SEGMENT PERFORMANCE

ANZ manages its activities along the following lines of business:
Personal Financial Services, Corporate Financial Services and
International.

* Personal Financial Services comprises Personal Banking (including
  Private Banking) and Funds Management operations in Australia and 
  New Zealand

* Corporate Financial Services comprises Corporate Relationships
  (including Asset Finance, Relationship Banking and Structured
  Finance), Foreign Exchange and Capital Markets operations in
  Australia, New Zealand and the mature markets of UK, Europe and
  Americas

* International comprises countries outside Australia and New
  Zealand, excluding the investment bank operations in the mature
  markets of UK, Europe and Americas.

* Group (including discontinued businesses) comprises the results of
  asset and liability management; earnings on central capital; costs
  relating to hedging capital positions; certain central costs not
  recharged to business units and the results of discontinued
  businesses. Discontinued businesses comprise London capital markets
  activities, interbank money market activities, institutional broking
  and the gain on demutualisation of CRAA in 1998.

Operating profit after tax before abnormals after service transfer
pricing (equity standardised)(1)

                                         Contri-                Movt
                                         bution               Sep 99
                                 1999 to profit      1998  v. Sep 98

                                   $M         %        $M          %

Personal Financial Services       622       42%       466        33%
Corporate Financial Services      550       37%       472        17%
International                     176       12%       220       -20%
Group (including discontinued 
 businesses)                      132        9%        17      large

                                1,480      100%     1,175        26%

(1) Refer definitions on page 63

The result for discontinued businesses after tax was a $6 million
loss, an $81 million turnaround on the 1998 loss of $87 million
before abnormal items. The 1998 result was affected by the $202
million of trading losses (before tax) incurred in London capital
markets.

The remainder of the improvement in Group (including discontinued
businesses) comprises a small increase over 1998 profitability from
the asset and liability management functions of the Group and an
earnings benefit flowing from the preference share capital issue in
late 1998.

Following exit from institutional stockbroking in November 1998, the
Group announced the sale of its retail stockbroking business in
September 1999.

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