Preliminary Final Report/Media Release/Financial Statements

Document date:  Thu 25 Oct 2001
Published:  Thu 25 Oct 2001 12:14:56
Document No:  182866
Document part:  L
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)

CORPORATE

ROGER DAVIS

Comprises Corporate and Institutional Banking, Global Foreign 
Exchange, Global Capital Markets, Global Structured Finance and 
Global Transaction Services

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

Net interest income                              428     819     723
Other external operating income                  575   1,140   1,004
Net inter business unit fees                     (16)    (36)    (45)
Operating income                                 987   1,923   1,682
External operating expenses                     (303)   (594)   (574)
Net inter business unit expenses                 (69)   (146)   (141)
Operating expenses                              (372)   (740)   (715)
Profit before debt provision                     615   1,183     967
Provision for doubtful debts                     (90)   (178)   (153)
Income tax expense and outside equity
 interests                                      (144)   (268)   (212)
Net profit attributable to members of
 the Company                                     381     737     602
Net loans and advances including acceptances  49,695  49,695  49,146
Other external assets                         18,496  18,496  16,015
External assets                               68,191  68,191  65,161
Deposits and other borrowings                 29,476  29,476  21,681
Other external liabilities                    29,342  29,342  29,024
External liabilities                          58,818  58,818  50,705

Net interest average margin                    1.95%   1.93%   1.90%
Return on assets                               1.13%   1.09%   0.97%
Return on risk weighted assets                 1.03%   1.03%   0.93%
Operating expenses to operating income         37.7%   38.5%   42.5%
Operating expenses to average assets           1.11%   1.10%   1.16%

Net specific provisions                          166     226     (19)
Net specific provision as a % of average
 net advances                                  0.62%   0.43%  (0.04%) 
Net non-accrual loans                            530     530     314
Net non-accrual loans as a % of net
 advances                                      1.01%   1.01%   0.62%
Total employees                                3,126   3,126   3,251

Corporate contributed $381 million (39%) to the Group's operating 
result for the half, a 7% increase over the March 2001 result.

The key factors were:

* increased lending margins resulting from a strong emphasis on 
pricing for risk

* good cost management, with continued expenditure on technology 
improvements

Despite weakening economic conditions the result reflects only a 
minimal deterioration in the risk profile. Increased net non-accrual 
loans and net specific provisions in the second half largely reflect 
downgrades and potential losses on a small number of high profile 
customers.

CORPORATE BANKING

BOB EDGAR

Managing customer relationships and developing product strategies for 
medium sized businesses (turnover $10 million to $100 million)

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

Net interest income                              117     239     236
Other external operating income(1)                77     147     138
Net inter business unit fees                      (3)     (8)    (10)
Operating income                                 191     378     364
External operating expenses                      (46)    (91)    (97)
Net inter business unit expenses                 (18)    (38)    (38)
Operating expenses                               (64)   (129)   (135)
Profit before debt provision                     127     249     229
Provision for doubtful debts                     (25)    (50)    (47)
Income tax expense and outside equity
 interests                                       (35)    (68)    (65)
Net profit attributable to members of
 the Company                                      67     131     117
Operating expenses to operating income          33.5%   34.1%   37.1%
Net specific provisions                           26      53      18
Net non-accrual loans                            238     238     215
Total employees                                  740     740     794
   
(1) Includes commercial bill income

Corporate Banking manages its middle market customer base on a
geographic basis and has a high proportion of sole bank
relationships. A heavy emphasis on cross selling and solution selling
has enabled ANZ to build and maintain overall market share at just
under one third of all primary bank relationships of middle market
companies(2).

The Corporate Banking profit increased by 5% to $67 million in the
second half. Key features of the result were:

* a 4% reduction in net interest income, with improved lending
margins offset by deposit rate cuts. Balance sheet growth was
deliberately constrained in a slowing economy

* a 10% increase in other external income, due to strong growth in
both lending and non-lending fees, as a result of pricing initiatives

* reduced operating expenses, due to an ongoing focus on technology
driven process efficiencies

Economic loss provisioning is within expected levels despite the
weakening economic conditions. Specific provisions remained stable.
Net non-accrual loans decreased because of a reduction in the volume
of new non-accrual loans and good asset realisation rates. going
forward, the economic slowdown may impact some sectors of the
corporate market and there for the continuation of current risk
monitoring and mitigation strategies will be key in order to minimise
potential losses.

This result reflects the contribution from lending, leasing and 
deposit products, with revenues from other ANZ products used by 
corporate client being booked in other CFS business units (for 
example, foreign exchange, capital markets and trade services). 
Approximately 50% of total customer profitability is booked in these 
other business units.

(2) Source: Roberts Research


INSTITUTIONAL BANKING

BOB EDGAR

Managing customer relationships and developing financial services 
solutions and strategies for large businesses (turnover greater than 
$100 million) and specialised industry segments including property 
lending

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

Net interest income                               98     191     148
Other external operating income(1)               135     252     205
Net inter business unit fees                       1       1       -
Operating income                                 234     444     353
External operating expenses                      (34)    (66)    (56)
Net inter business unit expenses                 (12)    (24)    (24)
Operating expenses                               (46)    (90)    (80)
Profit before debt provision                     188     354     273
Provision for doubtful debts                     (34)    (66)    (59)
Income tax expense and outside equity
 interests                                       (49)    (94)    (73)
Net profit attributable to members of
 the Company                                     105     194     141
Operating expenses to operating income          19.7%   20.3%   22.7%
Net specific provisions                           82      93       -
Net non-accrual loans                             87      87      57
Total employees                                  428     428     435
   
(1) Includes commercial bill income

In addition to its own lending and corporate leasing products, 
Institutional Banking utilises specialist product offerings from ANZ 
Investment Bank and Investment Management to ensure complete 
financial solutions are provided to its customers. The business 
currently enjoys the largest share (26%) of "lead" institutional 
banking relationships. Institutional Banking has recently been 
recognised as having achieved leading industry ratings for overall 
relationship satisfaction and understanding and knowledge of 
business(2).

Institutional Banking profit increased by 18% to $105 million in the 
second half. Key features of the result were:

* higher net interest income resulting from increased lending margins,
with improving pricing for risk

* a 15% increase in other external income reflecting a strong 
focus on fee based income, particularly associated with advisory and 
structuring services

* maintenance of tight cost control

Despite higher provisioning levels in a weakening economy, the risk 
profile experienced only minimal deterioration over the period with 
non-performing assets being held to less than 1% of the total book. 
Net specific provisions and non-accrual loans increased significantly 
in the second half, relating to potential losses on a small number of 
high profile customers.

This result reflects the contribution to profit from lending based
products, with revenues from other products used by institutional
clients being booked in other CFS business units (for example,
foreign exchange, capital markets, trade and transaction services).

(2) Source: Greenwich Associates

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