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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:  K
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

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FUNDS MANAGEMENT - DOMESTIC MARKETS
                                     1998         1997      Movt
                                      $M           $M         %

Net interest income                   19           27       -30%
Other operating income               149          133        12%  ______________________________________________________________________

Net operating income                 168          160         5%
Operating expenses                  (107)        (101)        6%
______________________________________________________________________

Operating profit before tax           61           59         3%
Income tax expense                     -          (12)     -100%
______________________________________________________________________

Operating profit after 
income tax (before abnormal items)    61           47        30%
______________________________________________________________________

Operating profit after tax rose by 30% to $61 million. This result
was after absorbing significant costs associated with the launch of
the Gateway Investment Program, including the abolition of entry and
exit fees on most products. Expenses were increased by restructuring.
A prior year tax credit relating to the Life company aided the
result.

The Gateway Investment Programme achieved new retail sales of
$1 billion in the seven months to 30 September. Revenues were also
raised by increased sales of insurance products. These sales were
made through branches and a large number of direct mail campaigns as
well as by financial planners.

The New Zealand business continues to expand strongly.


INTERNATIONAL (EXCLUDING INVESTMENT BANKING)

                                  1998           1997      Movt
                                   $M             $M         %

Net interest income                490            440       11%
Other operating income             312            294        6%
______________________________________________________________________

Net operating income               802            734        9%
Operating expenses                (426)          (388)      10%
______________________________________________________________________

Operating profit before
debt provisions                    376            346        9%
Provision for doubtful debts      (119)           (62)      92%
Income tax expense                 (88)          (117)     -25%
Outside equity interests            (9)            (8)      13%
______________________________________________________________________

Operating profit after income 
tax (before abnormal items)        160            159        1%
______________________________________________________________________

Net specific provision             (98)           (20)      large
______________________________________________________________________

The result from the Group's international commercial banking
operations was steady. A strong performance in foreign exchange,
which benefited from currency volatility, and from Private Banking
operations in Europe underpinned the result and partly offset the
impact of a higher provisioning from the deterioration in Asia. The
result was also constrained by the reserving of interest relating to
the National Housing Bank of India.

Year on year comparisons of income and costs are masked by movements
in the underlying currencies compared to the Australian dollar. Real
costs were up slightly, mainly due to the expansion of funds
management and cards businesses.


INVESTMENT BANKING - TOTAL
                                  1998          1997       Movt
                                   $M            $M          %

Net interest income                279           270         3%
Other operating income             447           629       -29%
______________________________________________________________________

Net operating income               726           899       -19%
Operating expenses                (488)         (539)       -9%
______________________________________________________________________

Operating profit before                                   
debt provisions                    238           360       -34%
Provision for doubtful debts       (97)          (72)       35%
Income tax (expense)benefit         (5)           14        n/a
______________________________________________________________________

Operating profit after income 
tax (before abnormal items)        136           302       -55%
______________________________________________________________________

Net specific provision            (264)           15        n/a
______________________________________________________________________

The Investment Bank profit after tax before abnormals of $136 million
was some $166 million lower than 1997.

Two businesses performed poorly in the year. Losses sustained by
Capital Markets in London amounted to $128 million after tax against
a profit of $50 million the previous year. Equities Division felt the
effect of falling markets and increasing competition, recording an
after tax loss of $11 million against a profit of $39 million for
1997. These businesses have been exited.

Volatility, stemming principally from the Asian crisis, helped
produce an excellent performance by the Foreign Exchange activity,
which achieved year on year growth in profit after tax of 
$73 million.

Operating expenses benefited from lower profit share.

The significant increase in specific provisioning was driven mainly
by events in Asia coupled with provisions in London from capital
markets activities.


CONTINUING/DISCONTINUED OPERATIONS

Operating profit after tax before abnormal items

                                    1998         1997       Movt
                                     $M           $M          %

Continuing operations              1,262        1,049        20%
Discontinued operations              (87)         122        n/a
                                  ____________________________________
                                   1,175        1,171         0%
                                  ____________________________________

Continuing operations  
  Operating expenses to net 
  operating income                  58.6%        63.6%       n/a
                                  ____________________________________


Following the decision to exit businesses, the above table discloses
the results of continuing operations. Discontinued operations
principally comprise London capital markets activities, interbank
money market activities, institutional broking and gain on sale of
CRAA.

MORE TO FOLLOW

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