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Preliminary Final Report/Media Release/Financial Statements

Document date:  Thu 25 Oct 2001
Published:  Thu 25 Oct 2001 11:59:23
Document No:  182866
Document part:  K
Market Flag:  Y
Classification:  Preliminary Final Report , Full Year Accounts , Dividend Record Date , Dividend Pay Date , Dividend Rate

AUSTRALIA AND NEW ZEALAND BANKING GROUP       2001-10-25  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (CONTINUED)

CARDS AND E-PAYMENTS
BRIAN HARTZER


Provides consumer and commercial credit cards, personal loans, and 
merchant payment facilities in Australia, New Zealand, and selected 
overseas markets.

                                        HALF         FULL       FULL
                                        YEAR         YEAR       YEAR
                                       SEP 01       SEP 01     SEP 00
                                        $M            $M         $M

Net interest income                     177           332        265
Other external operating                184           364        316
 income
Net inter business unit                 (23)          (54)       (65)
 fees
OPERATING INCOME                        338           642        516
External operating                     (128)         (247)      (201)
 expenses
Net inter business unit                 (35)          (67)       (55)
 expenses
OPERATING EXPENSES                     (163)         (314)      (256)
Profit before debt                      175           328        260 
 provision
Provision for doubtful                  (74)         (141)      (133)
 debts
Income tax expense and                  (36)          (67)       (46)
 outside equity interests
NET PROFIT ATTRIBUTABLE TO               65           120         81
MEMBERS OF THE COMPANY

Operating expenses to                  47.0%         47.8%      49.2%
 operating income
Net specific provisions                  74           138        140
Net non-accrual loans                     2             2          3
TOTAL EMPLOYEES                       1,000         1,000        805

Cards profit increased by 18% to $65 million in the second half. Key 
features of the result were:

* net interest income increased reflecting a 5% increase in card 
outstandings, an increase in the percentage of customers paying 
interest, and lags between wholesale and official rates falling

* other external income was 2% higher, with increased business volumes
and the introduction of new fees partly offset by seasonal variations 
in annual card fees

* operating expenses increased by $12 million, driven by increased 
business volume and the new business in Hong Kong 

* net specific provisions increased by $10 million mainly on credit 
card outstanding due to a general deterioration in the Australian 
economy and higher bankruptcy losses. As part of an ongoing risk 
management initiative, unproductive personal loans and credit card 
outstandings with a gross value of $247 million were sold to a 
collections agency

Cards continue to focus on leveraging its distinct capabilities in 
issuing, acquiring and new technology platforms to deliver outstanding
revenue and earnings growth. In July, ANZ and Visa announced a 
strategic program to implement credit card chip technology and to 
launch a new, secure internet shopping system. This was the first 
substantial commitment to chip technology in Australia and New 
Zealand.

MORTGAGES
GREG CAMM

Provision of mortgage finance secured by residential real estate in 
Australia and New Zealand

                                       HALF         FULL       FULL
                                       YEAR         YEAR       YEAR
                                      SEP 01       SEP 01     SEP 00
                                        $M            $M         $M

Net interest income                     331           654        520
Other external operating                 35            64         61
 income
Net inter business unit                (106)         (198)      (193)
 fees
OPERATING INCOME                        260           520        388
External operating                      (51)         (107)      (101)
 expenses                                                            
Net inter business unit                 (21)          (44)       (53)
 expenses
OPERATING EXPENSES                      (72)         (151)      (154)
Profit before debt                      188           369        234
 provision
Provision for doubtful                  (12)          (24)       (22)
 debts
Income tax expense and                  (60)         (117)       (74)
 outside equity interests
NET PROFIT ATTRIBUTABLE TO              116           228        138
MEMBERS OF THE COMPANY

Operating expenses to                  26.2%         27.7%      37.9%
 operating income
Net specific provisions                  15            21         18
Net non-accrual loans                    50            50         36
TOTAL EMPLOYEES                         903           903        907

Mortgages profit increased by 4% to $116 million in the second half. 
Key features of the result were:

* net interest income increased 2% benefiting from lags between the 
falls in wholesale and official rates; lending volumes increased by 
$3.8 billion in the second half, before securitisation of $2 billion 
of assets (net growth $1.8 billion)

* increased fee income reflected higher sales, although this was 
offset by higher inter business unit fees on strong sales through the 
retail network

* external operating expenses show a 9% decrease due to traditionally 
lower marketing spend in the second half

* the increase in net specific provisions during the second half is 
due to a reassessment of provisions against non-accrual loans in New 
Zealand. The reduction in net non-accrual loans reflects the 
increased provisions

Specific achievements in the second half 2001 included:

* Product Quality - for the third consecutive year, ANZ has been named
Australia's Home Lender of the Year by Personal Investor magazine. 
Five star Cannex ratings were also retained in key product categories

* Funding - successfully issued ANZ's first global asset 
securitisation of US$1 billion

* ETransformation - introduction of web-site for third party 
originators and mortgage managers

* Straight Through Processing - implemented all phases of a new 
origination system

The slowing Australian economy is expected to reduce income growth 
from new business in 2001/02. In addition, portfolio margins are 
expected to decrease, due to a less favourable interest rate 
environment and to the adverse effect of securitisation on interest 
income. Our response to the slowing economy is an increased focus on 
customer retention, product and service innovation, risk management, 
productivity improvements and additional origination and servicing 
alliances.

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