Preliminary Final Report

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

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

INTERNATIONAL                                     1998    1997    Movt
                                                    $M     $M      %


Net interest income                                797    713    12%
Other operating income                             358    531   -33%
Net operating income                             1,155  1,244    -7%
Operating expenses                                (639)  (582)   10%
Operating profit before debt provisions            516    662   -22%
Provision for doubtful debts                      (131)   (75)   75%
Income tax expense                                (155)  (218)  -29%
Outside equity interests                            (9)    (8)   13%
Operating profit after income tax 
(before abnormal items)                            221    361   -39%
Net abnormal (loss)profit after tax                (58)    49    n/a
Operating profit after tax and abnormal items      163    410   -60%

Operating profit after income tax 
(before abnormal items)                       
UK and Europe                                      (56)   105    n/a
Asia Pacific                                       108     97    11%
South Asia                                          78     84    -7%
Americas                                            36     24    50%
Middle East                                         55     51     8%
                                                   221    361   -39%

Net interest average margin                      1.94%  1.79%    n/a
Return on book equity (before 
abnormal items)                                  11.0%  22.6%    n/a
Operating profit after tax as a % 
of average risk weighted assets                   0.9%   1.5%    n/a
Operating expenses to net operating income       55.3%  46.8%    n/a
Operating expenses to average assets              1.5%   1.4%    n/a
Net specific provision as a % of average 
net advances                                      2.0%   0.0%    n/a
Net non-accrual loans                              256    41    large
Net non-accrual loans as a % of net advances      1.4%   0.3%    n/a

Employees (FTE)
UK and Europe                                      872   848      3%
Asia Pacific                                     2,558 2,725     -6%
South Asia                                       4,319 4,209      3%
Americas                                           165   162      2%
Middle East                                      1,245  1,305    -5%
Employees (FTE) - Permanent                       9,159  9,249    -1%
Employees (FTE) - Temporary                        263    259     2%
Total employees                                  9,422  9,508    -1%
Lending growth (including FX impact)              11.8%  17.0%   n/a
Lending growth (excluding FX impact)              (2.6%) (6.8%)  n/a
Total assets                                    35,371 39,089   -10%
Risk weighted assets                            27,267 25,128     9%

                                                            
CHIEF FINANCIAL OFFICER'S REVIEW (continued)

Overall decline in international profit after tax reflects:

* a reduction in trading securities income of $291 million (from $89
million profit to $202 million loss) due principally to losses from
emerging markets debt activities in London
              
*  higher ELP, reflecting the Asia deterioration
              
*  strong foreign exchange earnings across the network 

*  reserving of interest relating to the National Housing Bank higher
spreads due to winding back lower margin money market activities,
offsetting competitive margin pressures across the network.

The Group's aggregate Asian exposure reduced in US dollar terms by
47% over the year, from US$11.5 billion to US$6.1 billion (refer page
59), achieved mainly by contracting non-strategic lending,
principally in the interbank market. ANZ remains committed to its
core strengths in the region as Australia and New Zealand's
international bank and continues to support strategic network and
trade relationships across Asia.

* Total non-accrual loans relating to Asia increased by $339 million 
to $357 million 

* net specific provisions of $263 million

* Asian portfolio is well provided with a coverage ratio of 66%.

Outside of Asia specific provisions of $109 million and principally 
comprised of Middle East $60 million and London capital markets $34 
million.  Middle East also accounted for $217 million is non-accrual 
loans.

MORE TO FOLLOW


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