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Preliminary Final Report/Media Release/Financial Statements

Document date:  Thu 25 Oct 2001
Published:  Thu 25 Oct 2001 14:32:32
Document No:  182866
Document part:  N
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)

GLOBAL TRANSACTION SERVICES
CAROLE ANDERSON

Provision of cash management, trade finance, international payments, 
clearing and custodian services principally to institutional and 
corporate customers, and B2B eCommerce services. 

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

Net interest income                      99           192        178  
 Other external operating               119           236        219
 income
Net inter business unit                 (11)          (24)       (32)
 fees
OPERATING INCOME                        207           404        365
External operating                      (56)         (108)      (104)
 expenses
Net inter business unit                 (41)          (84)       (94)
 expenses
OPERATING EXPENSES                      (97)         (192)      (198)
Profit before debt                      110           212        167
 provision
Provision for doubtful                   (4)           (8)        (5)
 debts
Income tax expense and                  (36)          (69)       (57)
 outside equity interests
NET PROFIT ATTRIBUTABLE TO               70           135        105
MEMBERS OF THE COMPANY

Operating expenses to                  46.9%         47.5%      54.2%
 operating income
Net specific provisions                  (2)           (1)        (2)
Net non-accrual loans                     9             9          8
TOTAL EMPLOYEES                         866           866        887

Global Transaction Services' (GTS) profit increased by 8% to $70 
million in the second half. Key features of the result were:

* higher net interest income from growth in deposits and securities 
lending which was partly offset by continued margin contraction as 
interest rates fell

* a 2% increase in other operating income, which includes higher 
structured trade and cash management transaction fees. The 
introduction of new international payments products contributed to the
year on year growth of 8%

* operating expenses increased by 2%, with lower personnel costs from 
staffing reductions offset by costs associated with establishing a 
trade processing joint venture, software spend on enhancing eCommerce 
capabilities and slightly higher non-lending losses

In an annual survey of customer satisfaction by independent 
consultants, Roberts Research Group, ANZ International Trade 
Services has been rated as the best of the major Australian banks 
for the last four years. ANZ Cash Management topped the June 2001 
Asiamoney magazine poll as Overall Best Cash Management Bank in 
Australia. Respondents were drawn from larger corporate and 
institutional customers.

GTS is well placed to achieve growth objectives, with areas of 
strong, sustainable competitive advantage in Trade and Cash 
Management. Our strategy includes the e-enablement of products and 
delivery channels, and the implementation of new business models, 
for example wholesale transaction services and the Proponix trade 
processing joint venture.

B2B eCommerce

Over the course of this year Business eCommerce completed its 
development agenda including:

* incorporation of Public Key Infrastructure (PK) into the Secure 
Access & Authentication System

* development of ANZ Impact, a web-based financial modelling and 
data capture tool for use by business customers and front line staff

* automation of Commercial Bill drawdowns and rollovers with plans to 
automate other debt products

* introduction of a customised user interface to the bank enabling 
corporate customer staff to tailor the way they access and view 
information and applications

With completion of these developments, responsibility for 
commercialising and developing further eCommerce products has been 
taken up by individual business units.

INTERNATIONAL AND SUBSIDIARIES
ELMER FUNKE UPPER

Comprises the Group's operations in the Asia and Pacific regions 
together with the Asset Finance and Investment Management businesses

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

Net interest income                     303           615       613
Other external operating                270           508       446 
 income
Net inter business unit                 (46)          (91)      (92)
 fees
OPERATING INCOME                        527         1,032       967
External operating                     (200)         (417)     (450)
 expenses                                                            
Net inter business unit                 (43)          (83)      (40)
 expenses
OPERATING EXPENSES                     (243)         (500)     (490) 
Profit before debt                      284           532       477
 provision
Provision for doubtful                  (46)          (91)      (87)
 debts
Income tax expense and                  (87)         (157)     (170)
 outside equity interests
NET PROFIT ATTRIBUTABLE TO              151           284       220

Net loans and advances 
 including acceptances               16,532        16,532    16,072
Other external assets                 9,884         9,884     8,300
External assets                      26,416        26,416    24,372
Deposits and other
 borrowings                          16,740        16,740    15,312
Other external liabilities           10,238        10,238    10,013
External liabilities                 26,978        26,978    25,325

Net interest average margin            2.36%         2.48%     2.96%
Return on assets                       0.97%         0.94%     0.85%
Return on risk weighted assets         1.48%         1.41%     1.20%
Operating expenses to operating        45.7%         48.2%     50.4%
Operating expenses to average
 assets                                1.54%         1.64%     1.88
Net specific provisions                  52            81       154
Net specific provision as
 a % of average net advances           0.62%         0.49%     1.01%
Net non-accrual loans                   156           156       248
Net non-accrual loans
 as a % of net advances                0.93%          0.93%    1.53%
TOTAL EMPLOYEES                       3,799          3,799    4,079

International and Subsidiaries Division contributed $151 million (15%)
to the Group's operating result for the half, a 14% increase over the 
March 2001 result. The key factors were:

* a well defined asset writing strategy in Asia, focussing on 
capturing trade flows in the region as well as maintaining and 
strengthening relationships with top end multinational corporate 
clients

* a re energised sales platform in the Pacific augmented by a 
continuous improvement program

* selective acquisitions and start ups in the Pacific augmented by a 
continuous improvement program

* selective acquisitions and start ups in the Pacific region

* improved Investment Management performance

* introduction of a new technology enabled operating platform in Asset
Finance

ASSET FINANCE
PETER McMAHON

Provision of asset based finance including leasing and hire purchase; 
and issues of debentures to investors

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

Net interest income                     170          347         364
 Other external operating                32           59          50
 income
Net inter business unit                 (3)           (8)        (12)
 fees
OPERATING INCOME                       199           398         402
External operating                     (77)         (158)       (169)
 expenses
Net inter business unit                (15)          (30)        (30)
 expenses
OPERATING EXPENSES                     (92)         (188)       (199)
Profit before debt                     107           210         203
 provision
Provision for doubtful                 (33)          (66)        (65)
 debts
Income tax expense and                 (22)          (45)        (48)
 outside equity interests
NET PROFIT ATTRIBUTABLE TO              52            99          90
MEMBERS OF THE COMPANY

Operating expenses to                  45.7%         46.7%      49.0%
 operating income
Net specific provisions                  50            86         60
Net non-accrual loans                    66            66         60
TOTAL EMPLOYEES                       1,270         1,270      1,491


Asset Finance operates as Esanda in Australia and as UDC in New 
Zealand, and as Esanda FleetPartners in Australia and New Zealand. 
The business also offers debentures to investors, marketed through 
the customer business units, investment brokers and financial 
planners.

Asset Finance's profit increased by 11% to $52 million in the second 
half. The key features of the result were:

* operating income remained relatively steady, with new business 
profitability holding satisfactorily in the face of competitive 
pressures and the need to focus on maintaining a quality loan book

* a 4% reduction in operating expenses, driven by staff reductions 
achieved by organisational realignment and business rationalisation. 
This is consistent with a strategy of focusing on intermediaries and 
developing excellence in operational processing, coupled with the 
continued success of technology-driven efficiency initiatives

* an increase in the level of specific provisions mainly in the 
small business segment of the portfolio, which has been more 
sensitive to the softening economy over the last 12 months. net 
non-accruals decreased due to recoveries and non-provisioned 
write-offs

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