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Preliminary Final Report/Media Release/Financial Statements

Document date:  Thu 25 Oct 2001
Published:  Thu 25 Oct 2001 09:26:22
Document No:  182866
Document part:  C
Market Flag:  Y
Classification:  Preliminary Final Report , Full Year Accounts , Dividend Record Date , Dividend Pay Date , Dividend Rate


HOMEX - Melbourne                                                     


I am pleased to report a 2001 result that is up 7% on last year (18%
excluding discontinued businesses), at the upper end of analysts'
expectations, and at a new record level. Our good first half
performance was repeated in the second half, despite the more subdued
economy and weaker credit environment.

Earnings per share growth of 10% matched our minimum target. Return
on equity of 20.2% exceeded our 2003 target of 20% and is the highest
level in the last 20 years. As promised, we continued to improve the
cost income ratio, achieving 48.3% for the year, and 47.3% for the
second half. This is now reaching world-class levels.

In our continuing businesses we achieved good revenue growth of 11%.
Costs were again held flat, after adjusting for GST, new acquisitions
and foreign exchange movements. Inner tier 1 capital level is above
our target level, as is prudent in the light of present external
uncertainties. Our strong AA category credit rating was maintained.

All but one of our specialist businesses grew their profits during
the year, and all but four had double-digit earnings growth. This
demonstrates the robustness of our strategy, our disciplined approach
to risk, and the strength and depth of our management team. It
emphasises our focus on growing the top line, our caution on risk,
our rigour on capital allocation, and our decisiveness on costs.

The last four years has seen a major transformation of ANZ. We now
have a more sustainable and balanced business mix, improved positions
in a number of growth sectors, industry-leading productivity, and
considerably lower risk. The current uncertainties in the Middle East
and South Asia provide further affirmation of our decision to sell

All of this has resulted in records for stock price, market
capitalisation and shareholder dividend.

We have made good progress with our other stakeholders. The number of
customers and market share across most measures has increased. Staff
satisfaction has improved substantially. We have also taken a number
of steps to earn the trust of the community, including a new ANZ
Customer Charter, free transactional banking for those over 60, major
concessions for Centrelink and Health cardholders and our moratorium
on regional branch closures.

Of course, not everything has worked in our favour, and there are
areas where we are not doing as well. Although we have made progress
in the areas of customer and community satisfaction, we have a great
deal yet to do. It is well known that banks are not held in high
regard by personal customers or by the community. Changing this
perception of ANZ and contributing to changes in the wider industry
is a major priority of ours over the next few years.

Again, while we have made substantial progress in Personal Financial
Services, we remain underweight strategically in this area. In
particular we need to increase the number of customers in
Metrobanking, Regionalbanking and Small to Medium business. We also
need a stronger position in Wealth Management.

We are also facing substantial competition for deposit funds that is
constraining our ability to grow assets, particularly from
alternative investments. Plans are in place to grow deposits, but the
real solution lies in diversifying our business by growing
alternative revenue streams.

This year we launched the "Breakout" programme to create a
sustainable high performance culture at ANZ. One thousand of our top
managers have now been through the programme, and we are planning to
extend this to 6000 others this year. We believe this initiative will
be the foundation for sustainable performance differentiation in
future years.

As we predicted in the first half, we have seen deterioration in
asset quality in Australia as a result of the recent downturn. This
has been evidenced particularly through some large corporate
collapses and our specific provisions have therefore risen. To
reflect the potential risk arising from global economic uncertainty
and the events of September 11th, we increased the ELP for the year
by an additional $41 million. Our specific provisions are now broadly
in line with ELP for the year, albeit higher for the half. We have
provided for all known problem exposures.

The Australian and New Zealand economies are currently performing
relatively well, but it is likely that the higher level of
uncertainty will have a tangible effect. We are closely monitoring
the situation and are preparing contingency plans to mitigate any
adverse impact should the situation deteriorate, and to be in a
position to take appropriate action quickly, should this be

We will continue to invest in selected growth segments and to improve
the sustainability of our business mix. We are also paying particular
attention to improving customer and staff satisfaction, in building
our strategic position in our core businesses, and in earning the
trust of the community. We have plans for a major transformation of
our branch network domestically over the next few years.
Additionally, strategic opportunities at reasonable values are likely
to present themselves, and we believe this will play to our
advantage. As an example, we recently acquired businesses in four
countries in the Pacific.

We expect a slowing in revenue opportunities until such time as the
economy rebounds. The credit environment is likely to remain subdued,
but barring significant deterioration, losses will be containable. We
are accordingly taking a deliberately cautious approach to our
business, and will continue to manage costs towards a target
cost-income ratio in the mid 40's, and constrain asset growth in
economically sensitive areas.

Taking account of all factors, we remain positive about future
performance, and are leaving our 2002 and 2003 financial targets