ANZ NZ 2017 Full Year Result

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
News Release
For release: 26 October 2017

ANZ NZ 2017 Full-Year Result

Australia and New Zealand Banking Group Limited (ANZ) results for the
Financial Year to 30 September 2017 were released today. ANZ New
Zealand
1
delivered a statutory profit of NZ$1.78 billion, up 15% on the prior
financial year. Cash profit
2
was NZ$1.86 billion, up 21%.

ANZ New Zealand Chief Executive Officer David Hisco said the bank’s
continued solid performance was due mostly to lending growth and ongoing
strong cost management. The result was also buoyed by a lower than normal
provision charge, reflecting growth in some parts of the New Zealand
economy.

“We have reduced the number of products from almost 350 in 2012 to offer
fewer than 90 in 2017, improving staff efficiency and making life simpler for
them and our customers,” Mr Hisco said.

“Our expenses decreased 8% in FY17 and are below our 2010 levels, while
we’ve maintained high customer satisfaction. That’s a remarkable
achievement and reflects our team’s strong discipline, high productivity and
our digital push.

“The strength in some parts of the economy also meant fewer bad loans to
contend with and a more benign credit environment saw the provision
charge trend lower.”

FY17 revenue increased 7% to NZ$4.08 billion comprised of net interest
income of NZ$3.08 billion up 2% and other operating income of NZ$999
million up 26%, reflecting higher markets trading income and valuation gains
on derivatives predominantly in the first half.

Net interest margin stabilised in the second half of FY17 after a period of
contraction caused by increased funding costs and a customer preference for
fixed rate home loans.

One of the highlights of the year was customer deposits increasing 6%.
Another was KiwiSaver, with almost 735,000 New Zealanders investing over
NZ$11 billion of their retirement savings in an ANZ KiwiSaver scheme.


1
ANZ New Zealand represents all of ANZ’s operations in New Zealand, including ANZ Bank New Zealand Limited, its
parent company ANZ Holdings (New Zealand) Limited and the New Zealand branch of ANZ.

2
Statutory profit has been adjusted to exclude non-core items to arrive at cash profit, the result for the ongoing
business activities of ANZ New Zealand. Refer to Summary of Key Financial Information for details of reconciling
items between cash profit and statutory profit.

“Our results reflect our number one market position in home loans, deposits,
credit cards and KiwiSaver. One in two New Zealanders have a financial
relationship with us and we’re proud of the role we play in the community.”

Mr Hisco said he was particularly proud of the time staff volunteered in the
community in FY17 (up 14% to 18,440 hours), the NZ$658,528 in
community donations via the ANZ Staff Foundation and the almost NZ$1
million raised for Daffodil Day
3
. More than 650 people in vulnerable
communities completed the bank’s financial literacy programme
MoneyMinded. ANZ New Zealand’s carbon footprint reduced by 6%.

Key Points

All comparisons are Financial Year 30 September 2017 compared to Financial Year 30 September 2016 unless
otherwise noted
 Statutory profit up 15% at NZ$1.78 billion.
 Cash profit up 21% at NZ$1.86 billion.
 Revenue up 7% at NZ$4.08 billion.
 Expenses decreased 8% (or 2% adjusting for charges associated with
a change to the application of ANZ’s software capitalisation policy in
FY16), reflecting ongoing disciplined cost management and
productivity gains. Now below FY10 levels.
 Lower levels of credit losses reflect improvements in credit quality in
the Retail, and Commercial and Agri portfolios, partially offset by new
provisions.
 Customer deposits up 6% and gross lending up 4%.

ANZ New Zealand continued to be a technology-driven organisation,
constantly looking at ways to innovate and meet customers’ needs.

“ANZ was the first bank in New Zealand to offer Apple Pay and in one year
almost half of eligible
4
customers have set it up, which is an impressive
uptake of a new technology. We’ve also made banking on the go faster and
easier on our ANZ goMoney app.

“We’re focused on technology with a ‘human touch’ because our customers
tell us they still want to have key financial conversations directly with our
staff.”

FY17 was a record year for ANZ New Zealand’s contribution to the economy.

We paid around:
 NZ$680 million in corporate taxes (more than 5% of New Zealand’s
total corporate tax take);
 NZ$800 million in staff wages and salaries;
 NZ$545 million to local contractors and suppliers;

3
Daffodil Day is the Cancer Society’s annual fundraiser.
4
ANZ retail customer with an ANZ Visa Debit or personal ANZ Visa credit card and an Apple Pay
compatible iPhone.

 NZ$13 million in sponsorships and charitable donations; and
 NZ$70 million in dividends to about 17,500 New Zealand shareholders
and managed funds.

A table of key financial information follows


For media enquiries contact:
Emma Mellow, 021 614 165

Summary of Key Financial Information
ANZ New Zealand


Half yearHalf yearSep 17 vSep 17 vFull yearFull yearSep 17 vSep 17 v
ProfitSep 17Mar 17Mar 17Mar 17Sep 17Sep 16Sep 16Sep 16
NZ$mNZ$mNZ$m%NZ$mNZ$mNZ$m%
Net interest income1,544 1,534 10 1%3,078 3,029 49 2%
Other operating income485 514 (29)-6%999 795 204 26%
Operating income2,029 2,048 (19)-1%4,077 3,824 253 7%
Operating expenses728 718 10 1%1,446 1,580 (134)-8%
Profit before credit impairment and
income tax
1,301 1,330 (29)-2%2,631 2,244 387 17%
Credit impairment charge19 40 (21)-53%59 149 (90)-60%
Profit before income tax1,282 1,290 (8)-1%2,572 2,095 477 23%
Income tax expense355 362 (7)-2%717 566 151 27%
Cash profit927 928 (1)0%1,855 1,529 326 21%
Reconciliation of cash profit to statutory profit
Cash profit927 928 (1)0%1,855 1,529 326 21%
Reconciling items (net of tax):
Economic hedging volatility
1
(26)(24)(2)8%(50)(29)(21)72%
Insurance policy asset valuations
2
10 (35)45 large(25)42 (67)large
Statutory profit 911 869 42 5%1,780 1,542 238 15%
Comprising:
Retail520 499 21 4%1,019 941 78 8%
Commercial220 219 1 0%439 417 22 5%
Operations & Support2 (1)3 large1 3 (2)-67%
New Zealand Businesses742 717 25 3%1,459 1,361 98 7%
Institutional164 198 (34)-17%362 199 163 82%
Other 21 13 8 62%34 (31)65 large
Cash profit927 928 (1)0%1,855 1,529 326 21%
Reconciling items(16)(59)43 (75)13 (88)
Statutory profit911 869 42 5%1,780 1,542 238 15%
1. Economic hedging volatility - fair value gains/(losses)
2. Insurance policy assets valuations
ANZ New Zealand enters into economic hedges to manage its interest rate and foreign exchange risk. Statutory profit
includes volatility from fair value gains or losses on economic hedges that are not designated in accounting hedge
relationships under IFRS, as well as ineffectiveness from designated accounting cash flow and fair value hedges. Fair value
gains/(losses) on all of these economic hedges are excluded from cash profit, as the profit or loss resulting from these
transactions will reverse over time to match the profit or loss from the economically hedged item.
Profit and loss volatility is created by the remeasurement of policyholder assets for changes in market discount rates, which
over time reverses to zero.