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Preliminary Final Report

Document date:  Wed 04 Nov 1998
Published:  Wed 04 Nov 1998 00:00:00
Document No:  142712
Document part:  J
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

BUSINESS SEGMENT PERFORMANCE

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

                                        1998        1997        Movt
                                         $M          $M           %

Principal Domestic Markets

Personal Banking                         462         359         29%
Business Banking                         223         183         22%
Asset Based Finance                       77          76          1%
Funds Management                          61          47         30%
Investment Banking                       192         163         18%
                                       1,015         828         23%

International Markets
Commercial Banking                       160         159          1%
Investment Banking                       (56)        139          n/a
                                         104         298        -65%
Other                                     56          45         24%
                                       1,175       1,171          0%

Personal Banking - Domestic Markets
                                        1998        1997         Movt
                                         $M          $M           %

Net interest income                    1,777       1,797         -1%
Other operating income                   722         658         10%
Net operating income                   2,499       2,455          2%
Operating expenses                    (1,684)     (1,800)        -6%
Operating profit before debt 
provisions                               815         655         24%
Provision for doubtful debts            (103)       (104)         1%
Income tax expense                      (250)       (192)        30%

Operating profit after income tax 
(before abnormal items)                  462         359         29%

Net specific provision                   (66)        (61)         8%


Personal Banking Domestic operations reported a 29% increase in
profit after tax, before abnormal items, to $462 million in 1998.

The performance improvement has been driven primarily by a
significant reduction in operating costs following the completion of
the branch restructuring programme in Australia and New Zealand.

The increase in net operating income is primarily due to growth in
fee revenue. Strong growth in the mortgage books in Australia and New
Zealand compensated for tightening interest margins, the latter
reflecting competitive pressures experienced throughout the year.

Increased market share and transaction values, particularly in
co-branded cards, generated significant growth in fee revenue.

Business Banking - Domestic Markets
                                        1998        1997       Movt
                                         $M          $M          %
Net interest income                      380         325        17%

Other operating income                   336         320         5%
Net operating income                     716         645        11%
Operating expenses                      (289)       (267)        8%
Operating profit before debt provisions  427         378        13%
Provision for doubtful debts             (83)        (92)      -10%
Income tax expense                      (121)       (103)       17%
Operating profit after income tax 
(before abnormal items)                  223         183        22%
Net specific provision                   (50)         22        n/a

A reasonable level of activity in the corporate sector enabled
Business Banking to record solid growth in both lending asset and
deposit volumes. As a result, interest income increased despite the
continued pressure on margins. The increase in other operating income
was the result of growth in commercial bills, a successful focus on
fee generation, and income from the rapid growth of ANZ OnLine, ANZ's
primary electronic banking product for the corporate sector.

Cost increases were less than revenue growth.

The 1997 net specific provision reflected provision writebacks, while
provisioning in 1998 was impacted by one significant provision.

Asset Finance - Domestic Markets

                                        1998        1997      Movt
                                         $M          $M        %
Net interest income                      376         390       -4%
Other operating income                    18          13       38%
Net operating income                     394         403       -2%
Operating expenses                      (204)       (228)     -11%
Operating profit before debt provisions  190         175        9%
Provision for doubtful debts             (72)        (60)      20%
Income tax expense                       (41)        (39)       5%
Operating profit after income tax 
(before abnormal items)                   77          76        1%
Net specific provision                   (50)        (34)      47%


Despite strong domestic competition, record business writings were
achieved in Australia. Tighter margins were experienced.

Significant change within the organisation, and the move to greater
use of technology, assisted the improved business performance, but
also increased related costs such as telephone and data communication
charges. Other operating costs were substantially reduced reflecting
a major reconfiguration of back-office support areas.

The increase in net specific provision reflected the economic
downturn and higher default rates.


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