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Preliminary Final Report

Document date:  Thu 24 Oct 2002
Published:  Thu 24 Oct 2002 11:49:58
Document No:  196680
Document part:  H
Market Flag:  Y
Classification:  Preliminary Final Report , Periodic Reports - Other , Dividend Record Date , Dividend Pay Date , Dividend Rate

AUSTRALIA AND NEW ZEALAND BANKING GROUP       2002-10-24  ASX-SIGNAL-G

HOMEX - Melbourne                                                     

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CHIEF FINANCIAL OFFICER'S REVIEW (continued)

PERSONAL BANKING AND WEALTH MANAGEMENT
ELMER FUNKE KUPPER

Comprises Personal Banking Australia, Personal Banking New Zealand,
Asia Pacific Personal Banking, Wealth Management and the INGA joint
venture
                                         FULL       FULL      MOVT
                                         YEAR       YEAR     SEP 02
                                        SEP 02      SEP 01   v SEP 01
                                          $M          $M       %

Net interest income                      1,077       1,096     -2% 
Other external operating income            821         814      1%
Net inter business unit fees               306         272     13% 
Operating income                         2,204       2,182      1%
External operating expenses             (1,056)     (1,038)     2%
Net inter business unit expenses          (284)       (292)    -3% 
Operating expenses                      (1,340)     (1,330)     1%
Profit before debt provision               864         852      1%
Provision for doubtful debts               (38)        (38)     0%
Profit before income tax                   826         814      1%
Income tax expense and outside            (253)       (288)   -12%
equity interests 
Net profit attributable to                 573         526      9%
members of the Company 

Net loans & advances including           7,224       6,967      4%
acceptances 
Other external assets                    3,411       6,630    -49%
External assets                         10,635      13,597    -22%
Deposits and other borrowings           37,906      34,082     11%
Other external liabilities               1,436       5,916    -76%
External liabilities                    39,342      39,998     -2%

Net interest average margin              3.12%       3.37%     -7%
Return on assets                         1.42%       1.38%      3%
Return on risk weighted assets           4.71%       4.59%      3%
Operating expenses to operating          60.7%       61.0%      0%
income 
Operating expenses to average            3.30%       3.48%     -5%
assets 
Net specific provisions                    26          30     -13%
Net specific provision as a %            0.38%       0.44%    -15%
of average net advances 
Net non-accrual loans                      22          23      -4%
Net non-accrual loans as a %             0.30%       0.33%     -8%
of net advances 
Total employees                          8,917       9,283     -4%

Net interest income                        602         613     -2%
Other external operating income            288         270      7%
Net inter business unit fees               266         271     -2%
Operating income                         1,156       1,154      -
External operating expenses               (594)       (581)     2%
Net inter business unit expenses          (181)       (186)    -3%
Operating expenses                        (775)       (767)     1%
Profit before debt provision               381         387     -2%
Provision for doubtful debts               (21)        (22)    -5%
Profit before income tax                   360         365     -1%
Income tax expense and outside            (108)       (122)   -11%
equity interests 
Net profit attributable to members         252         243      4%
of the Company 

Operating expenses to operating income    67.0%       66.5%     1%
Net specific provisions                     16          19    -16%
Net non-accrual loans                       12           7     71%
Total employees                          4,582       4,866     -6%

2002 RESULT

Profit after tax grew by 4%, helped by the change in the Australian
tax rate. Profit before tax was 1% lower, with income flat, and a
small increase in expenses. Core deposit business and transaction
volumes were successfully grown throughout the year, but interest
margins in the first half contracted due to falling interest rates.
Profit grew strongly in the second half with margins between
wholesale and official interest rates widening in the rising rate
environment.

FEATURES OF THE SECOND HALF

* Operating income increased by 5%, with growth in both net interest
and other income. Net interest income benefited from higher deposit
volumes and interest margins. 

* Deposit volumes grew by 6%, continuing the impact of marketing
campaigns in the first half and reflecting ANZ's competitive pricing
on term deposit products. Deposit interest margins benefited from the
rises in interest rates during the second half.

* Growth in lending fees and seasonal loan approval fees around
the tax year-end, was partly offset by a reduction in account
transaction and service fees following the migration of Access
customers to the low cost Access Advantage and Select accounts.

* Operating expenses were 3% higher in the half. Personnel expenses
increased, due mainly to the timing of the annual pay award. Software
amortisation and the operating costs emanating from a new branch
sales platform added to technology expenses. These impacts were
partly offset by the benefits of purchasing initiatives, which have
reduced overheads.

* Provision for doubtful debts was slightly lower reflecting lower 
demand for lending in the rural economy.

(graphs)

ACHIEVEMENTS

* Launched the Access Advantage account, providing unlimited ANZ 
transactions for $5 per month.

* Confirmed commitment to rural Australia with establishment of Rural 
Banking unit.

* Launched a Customer Charter, with 10 promises to customers.

* Implemented the Restoring Customer Faith program in Victoria, and 
launched it in New South Wales and New Zealand.

* Improved staff satisfaction from 48% to 75% in the past 12 months.

BUSINESS ENVIRONMENT AND OUTLOOK

* Reflecting ANZ's corporate heritage, Personal Banking Australia has
an underweight position in the consumer segment. Market share in
transaction and deposit banking ranges between 8%-10%.

* ANZ maintains a large footprint in this market segment, with 745
Branches (15% of total branches), and 1,128 ATMs (8% of total ATMs),
leaving ANZ well placed to further grow this segment of the business.

* Apart from general system growth in transaction and deposit
volumes, a key driver for this business is the interest rate trend. A
rising interest rate environment tends to have a beneficial impact,
which was reflected in the improved financial results over the last
six months.

* ANZ has made a strong commitment to reconnect with customers and
the community. A key initiative for achieving this is our Restoring
Customer Faith program, which is designed to significantly improve
the customer service proposition, and to strengthen the links between
branches and their local communities.

OBJECTIVES

* Improve cross sell, particular for wealth management products.

* Significantly increase customer number.

* Continue implementation of Restoring Customer Faith initiative.

* Increase customer satisfaction and maintain this above peer levels.

* Seek greater efficiencies in our back office and support areas.

MORE TO FOLLOW