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Expects modest profit growth for year

Document date:  Fri 24 Jul 1998
Published:  Fri 24 Jul 1998 00:00:00
Document No:  139467
Document part:  A
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

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ANZ EXPECTS MODEST PROFIT GROWTH FOR YEAR IN VIEW OF WEAK TRADING
RESULTS IN EMERGING MARKET SECURITIES

ANZ today announced that, as a result of losses from emerging markets
debt securities trading in London in the third quarter and an
acceleration of its cost reduction programme, the Group now expects
to report net profit after tax and before abnormal items for the
1997/98 financial year showing a modest increase on last year. It is
not expected that there will be any abnormal items this year.

After years of profitable contribution the recent high levels of
volatility in emerging markets debt have resulted in losses on
trading securities of $78 million for the June quarter after income
of $62 million in the first half.

The Group is reducing the volatility of future profits by reducing
over time its reliance on higher risk income. The recent high levels
of volatility in emerging markets debt combined with losses in the
June quarter have led to a review of trading strategy. The Bank has
scaled back materially the level of trading risks to focus on
customer business.

This decision will reduce the volatility, and improve the quality, of
Group earnings and is consistent with recent actions to:

* introduce economic loss provisioning at the end of last year;

* redeploy the investment of excess capital (previously held through
the Insurance and Funds Management Operation, in equities, properties
and fixed interest) into lower-risk cash and fixed interest
investments; and,

* reduce non-core loan exposure to Asia.

ANZ has continued to reduce its Asian exposure during the third
quarter and it is now 43% (in USD terms) below the September 1997
level. The Bank reiterates its earlier statements that it expects the
specific provision charge for the year to be, contained within the
anticipated Economic Loss Provision.

level of the first half This charge will be taken above the line and
not as an abnormal item.

ANZ will release its 1998 results on 4 November,

For media enquires:   David Ward      (03) 9273 4185 or 
                      Ian Bremner     (03) 9273 6190

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