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Half Yearly Report/ASIC accounts

Document date:  Fri 26 Apr 2002
Published:  Fri 26 Apr 2002 10:50:58
Document No:  189561
Document part:  H
Market Flag:  Y
Classification:  Half Yearly Report , Half Year Audit Review , Half Year Directors' Statement , Half Year Accounts , Dividend Rate

AUSTRALIA AND NEW ZEALAND BANKING GROUP       2002-04-26  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

BUSINESS SEGMENT PERFORMANCE

Under the umbrella of a common vision and over-arching strategy, ANZ
is managed as a portfolio of 16 specialist businesses. Some of these
businesses are grouped to form segments where there are synergistic
benefits. A description of each business, and of segment totals,
together with analysis of results is contained further on.

The Group from time to time modifies the organisation of its
businesses to enhance the focus on delivery of specialised products
or services to customers. Prior period numbers are adjusted for such
organisational changes to allow comparability.

Net profit for each business is determined after service transfer
pricing and equity standardisation.

                                                HALF   HALF   MOVT
                                                YEAR   YEAR   MAR 02 
                                               MAR 02 MAR 01 V MAR 01
                                                $M      $M      %

Personal Banking                                218     204     7%

Personal Banking Australia                      129     130    -1%
Personal Banking New Zealand                     46      46     -
Personal Banking Pacific Asia                    43      28    54%

Corporate Businesses                            256     222    15%

Corporate Banking                                68      61    11%
Global Institutional Banking                    113      95    19%
Global Transaction Services                      75      66    14%

ANZ Investment Bank                             155     143     8%

Global Foreign Exchange                          41      42    -2%
Global Capital Markets                           32      24    33%
Global Structured Finance                        41      39     5%
Corporate Finance & Advisory                     41      38     8%

Wealth Management and ANZ Investments            80      58    38%
Small to Medium Business                         68      55    24%
Mortgages                                       115     108     6%
Consumer Finance                                 79      40    98%
Asset Finance                                    49      45     9%
Group Treasury                                   63      26   142%

Operating segments total                      1,083     901    20%

Corporate Centre                                (17)     (6)  183%

Profit excluding NHB recovery and special 
 general provision for doubtful debts         1,066     895    19%

COMPILATION OF SEGMENT RESULTS

The Group uses service transfer pricing mechanisms to allocate
services that are provided by central areas to each of its business
units. The objective of service transfer pricing is to remove
cross-subsidies between business units, and ensure each business
accounts for the costs of the services it uses. Transfer pricing
arrangements are reviewed periodically. Changes in transfer pricing
arrangements in current periods are, to the extent possible,
reflected in prior period comparatives to assist comparability.

The profit and loss statement of each business unit includes net
inter business unit fees and net inter business unit expenses. This
treatment is consistent with the Group's strategy of managing along
specialist business lines. Net inter business unit fees includes
intra-group receipts or payments for sales commissions. A product
business (for example, Mortgages) will pay a distribution channel
(for example, Personal Banking) for product sales. Both the payment
and receipt are shown as net inter business unit fees. Net inter
business unit expenses consist of the charges made to business units
for the provision of support services. Examples of services provided
include technology and payments, risk management, finance and human
resources management. Both payments by business units and receipts by
service providers are shown as net inter business unit expenses.

The results of segments may include business units and a support
unit. The services provided by the support unit are allocated to the
business units. As a result of this allocation, the sum of individual
profit and loss line items of the business units may not equal the
corresponding line item in the profit and loss statement of the
segment.

Return on asset ratios include net intra group assets which are risk
weighted at 0% for return on risk weighted assets calculations.

Equity standardised profit is determined by eliminating the impact of
earnings on each business unit's book capital and attributing
earnings on the business unit's economic capital. This enhances
comparability of business unit performance. Changes to the
methodology for allocating capital to business units will result,
from time to time, in restatements of prior period comparatives.
Geographic results are not equity standardised.

SEGMENTS REORGANISATION

During the half, the former Personal, Corporate and International and
Subsidiaries divisions were dissolved and business units were
reorganised into the current portfolio. Further reorganisation of the
Personal Banking segment is underway to re-position the consumer
businesses for future growth.

CREDIT COST CALCULATION

A further enhancement to the Group's process for calculating economic
loss provision and credit risk capital was implemented during the
half. This changed the provision for doubtful debts and net interest
income of some business units. Prior period numbers have been
restated to give meaningful comparisons.


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