ANZ 2018 Half Year Results Documents

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522







Half Year
31 March 2018






Consolidated Financial Report
Dividend Announcement
and Appendix 4D




The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4D of the Australian Securities
Exchange (ASX) Listing Rules. It should be read in conjunction with ANZ’s 2017 Annual Report, and is lodged with the ASX under listing rule
4.2A.

RESULTS FOR ANNOUNCEMENT TO THE MARKET APPENDIX 4D


2


Name of Company: Australia and New Zealand Banking Group Limited
ABN 11 005 357 522



Report for the half year ended 31 March 2018



Operating Results
1



AUD million


Operating income from continuing operations 6% to 10,175





Net statutory profit attributable to shareholders

14% to 3,323





Cash profit
2
-16% to 2,876


Cash profit from continuing operations

4% to 3,493








Dividends
3


Cents

Franked

per

amount
4


share

per share


Proposed Interim dividend

80

100%












Record date for determining entitlements to the proposed 2018 interim dividend 15 May 2018



Payment date for the proposed 2018 interim dividend 2 July 2018








Dividend Reinvestment Plan and Bonus Option Plan

Australia and New Zealand Banking Group Limited (ANZ) has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in
respect of the 2018 interim dividend. For the 2018 interim dividend, ANZ intends to provide shares under the DRP through an on-market purchase and
BOP through the issue of new shares. The 'Acquisition Price' to be used in determining the number of shares to be provided under the DRP and BOP will
be calculated by reference to the arithmetic average of the daily volume weighted average sale price of all fully paid ANZ ordinary shares sold in the
ordinary course of trading on the ASX and Chi-X during the ten trading days commencing on 18 May 2018, and then rounded to the nearest whole cent.
Shares provided under the DRP and BOP will rank equally in all respects with existing fully paid ANZ ordinary shares. Election notices from shareholders
wanting to commence, cease or vary their participation in the DRP or BOP for the 2018 interim dividend must be received by ANZ's Share Registrar by
5.00pm (Australian Eastern Standard Time) on 16 May 2018. Subject to receiving effective contrary instructions from the shareholder, dividends payable
to shareholders with a registered address in the United Kingdom (including the Channel Islands and the Isle of Man) or New Zealand will be converted to
Pounds Sterling or New Zealand Dollars respectively at an exchange rate calculated on 18 May 2018.






1
Unless otherwise noted, all comparisons are to the half year ended 31 March 2017.
2
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. The non-core
items are calculated consistently period on period so as not to discriminate between positive and negative adjustments and fall into one of the three categories: gains or losses included in
earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with the ongoing operations of the Group; treasury shares, revaluation of policy
liabilities, economic hedging and similar accounting items that represent timing differences that will reverse through earnings in the future; and accounting reclassifications between
individual line items that do not impact reported results, such as policyholders tax gross up. Cash profit is not a measure of cash flow or profit determined on a cash basis. The net after
tax adjustment was a reduction to statutory profit of $447 million made up of several items. Refer pages 67 to 71 for further details.
3
There is no conduit foreign income attributed to the dividends.
4
It is proposed that the interim dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 9 cents per ordinary share.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522


3


CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4D
Half year ended 31 March 2018



CONTENTS PAGE



Disclosure Summary 5
Summary 7
Group Results 17
Divisional Results 43
Profit Reconciliation 67
Condensed Consolidated Financial Statements 73
Supplementary Information 109
Definitions 119
ASX Appendix 4D Cross Reference Index 122
Alphabetical Index 123


















This Consolidated Financial Report, Dividend Announcement and Appendix 4D has been prepared for Australia and New Zealand Banking Group Limited
(the “Company” or “Parent Entity”) together with its subsidiaries which are variously described as “ANZ”, “Group”, “ANZ Group”, “the consolidated entity”,
“the Bank”, “us”, “we” or “our”.
All amounts are in Australian dollars unless otherwise stated. The Condensed Consolidated Financial Statements have been reviewed by the Group’s
auditors, KPMG. The Company has a formally constituted Audit Committee of the Board of Directors. The signing of the Condensed Consolidated
Financial Statements was approved by resolution of a Committee of the Board of Directors on 30 April 2018.
When used in this Results Announcement the words “estimate”, “project”, “intend”, “anticipate”, “believe”, “expect”, “should” and similar expressions, as
they relate to ANZ and its management, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. ANZ does not undertake any obligation to publicly release the result of any revisions
to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522


4
This page has been left blank intentionally

DISCLOSURE SUMMARY


5

SUMMARY OF 2018 HALF YEAR RESULTS AND ASSOCIATED DISCLOSURE MATERIALS

The following disclosure items were lodged separately with the ASX and NZX and can be accessed via the ANZ Shareholder Centre on the Group
website http://www.shareholder.anz.com/ within the disclosures for 2018 Half Year Results.

 Consolidated Financial Report, Dividend Announcement & Appendix 4D
 Results Presentation and Investor Discussion Pack
 News Release
 APS 330 Pillar III Disclosure at 31 March 2018
 Key Financial Data
 UK DTR Submission

DISCLOSURE SUMMARY


6
This page has been left blank intentionally

SUMMARY


7

CONTENTS Page

Guide to Half Year Results 9
Statutory Profit Results - including discontinued operations 11
Cash Profit Results - including discontinued operations 12
Key Balance Sheet Metrics - including discontinued operations 13
Large/Notable Items - continuing operations 14
Full Time Equivalent Staff - including discontinued operations 16
Other Non-Financial Information - including discontinued operations 16

SUMMARY


8
This page has been left blank intentionally

SUMMARY


9
Guide to Half Year Results

Presentation of Information
As a result of the sales outlined below, the financial results of the Wealth Australia businesses being divested and associated Group reclassification and
consolidation impacts are treated as discontinued operations from a financial reporting perspective. This impacts the current and comparative financial
information for Wealth Australia and TSO and Group Centre divisions.
The comparative Group Income Statements and Statements of Comprehensive Income have been restated to show discontinued operations separately
from continuing operations in a separate line item ‘profit from discontinued operations’. Included in the March 2018 half year in ‘profit from discontinued
operations’ is a $632 million loss relating to the reclassification of Wealth Australia businesses to held for sale.
Sale of Wealth Australia Businesses
 Sale to IOOF Holdings Limited (IOOF)
On 17 October 2017, the Group announced it had agreed to sell its OnePath pensions and investments (OnePath P&I) and aligned dealer groups
(ADG) businesses to IOOF. The aligned dealer groups business consists of aligned advice businesses that operate under their own Australian
Financial Services licences. Completion is expected in the first half of the 2019 financial year, subject to certain conditions including regulatory
approvals and completing the extraction of the OnePath P&I business from OnePath Life Insurance.
 Sale to Zurich Financial Services Australia (Zurich)
On 12 December 2017, ANZ announced that it had agreed to the sale of its life insurance business to Zurich to further simplify ANZ’s Wealth
Australia division. The transaction is subject to closing conditions and regulatory approval and ANZ expects it to close in the first half of the 2019
financial year.
The retained Wealth Australia business includes lenders mortgage insurance, share investing, financial planning and general insurance distribution.

SUMMARY


10
Cash Profit Results




Total - inclusive of discontinued operations

Continuing operations Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17

Net interest income
7,350
7,456 7,416
7,350
7,456 7,419 -1% -1%
Other operating income
2,090
2,730 2,887
2,458
2,384 2,557 3% -4%
Operating income
9,440
10,186 10,303
9,808
9,840 9,976 0% -2%
Operating expenses
(4,654)
(4,717) (4,731)
(4,411)
(4,480) (4,487) -2% -2%
Profit before credit impairment and income tax
4,786
5,469 5,572
5,397
5,360 5,489 1% -2%
Credit impairment charge
(408)
(479) (720)
(408)
(479) (720) -15% -43%
Profit before income tax
4,378
4,990 4,852
4,989
4,881 4,769 2% 5%
Income tax expense
(1,495)
(1,456) (1,433)
(1,489)
(1,420) (1,406) 5% 6%
Non-controlling interests
(7)
(7) (8)
(7)
(7) (8) 0% -13%
Cash Profit 2,876
3,527 3,411
3,493
3,454 3,355 1% 4%

Average interest earning assets
765,186
752,073 743,906
765,186
752,073 743,906 2% 3%

Average deposits and other borrowings
612,291
607,390 601,218
612,291
607,390 601,218 1% 2%

Funds under management
1
80,178
77,985 76,509
30,596
28,925 27,258 6% 12%

Common Equity Tier 1
2





APRA Basel
11.0%
10.6% 10.1%
11.0%
10.6% 10.1%

Internationally Comparable Basel 3
16.3%
15.8% 15.2%
16.3%
15.8% 15.2%

Earnings per share (basic)
98.3
120.4 116.7
119.4
117.9 114.8 1% 4%

Ordinary share dividend payout ratio
80.4%
66.6% 68.9%
66.2%
68.0% 70.0%
Profitability Ratios




Return on average ordinary shareholders' equity
3

9.8%
12.0% 11.8%
11.9%
11.7% 11.6%
Return on average assets
0.62%
0.76% 0.74%
0.79%
0.78% 0.77%
Net interest margin
1.93%
1.98% 2.00%
1.93%
1.98% 2.00%
Efficiency Ratios




Operating expenses to operating income
49.3%
46.3% 45.9%
45.0%
45.5% 45.0%
Operating expenses to average assets
1.00%
1.02% 1.03%
0.99%
1.02% 1.03%
FTE
4
41,580
44,896 46,046
39,540
42,873 44,015 -8% -10%








1.
Funds under management for continuing operations relates to New Zealand Wealth and Private Bank in Australia division.
2.
Common Equity Tier 1 is not impacted by discontinued operations until sale completion.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Discontinued FTE is based on an estimate. Actual FTE that will transfer to IOOF and Zurich on sale completion is currently being determined.

SUMMARY


11
Statutory Profit Results - including discontinued operations




Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Net interest income
7,350
7,456 7,419

-1% -1%
Other operating income
2,825
2,347 2,176

20% 30%
Operating income
10,175
9,803 9,595

4% 6%
Operating expenses
(4,411)
(4,480) (4,487)

-2% -2%
Profit before credit impairment and income tax
5,764
5,323 5,108

8% 13%
Credit impairment charge
(408)
(479) (719)

-15% -43%
Profit before income tax
5,356
4,844 4,389

11% 22%
Income tax expense
(1,426)
(1,427) (1,447)

0% -1%
Non-controlling interests
(7)
(7) (8)

0% -13%
Profit attributable to shareholders of the Company from continuing operations 3,923
3,410 2,934

15% 34%
Profit/(Loss) from discontinued operations
(600)
85 (23)

large large
Profit attributable to shareholders of the Company 3,323
3,495 2,911

-5% 14%


Earnings Per Ordinary Share (cents)

Half Year

Movement

Reference
Page
Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Basic
88
114.2
119.9 100.2

-5% 14%
Diluted 88
108.6
114.7 96.7 -5% 12%



Half Year

Reference Page Mar 18 Sep 17 Mar 17
Ordinary Share Dividends (cents)
Interim - 100% franked
1
87
80
- 80
Final - 100% franked
1
87
-
80 -
Total - 100% franked
1
87
80
80 80
Ordinary share dividend payout ratio
2
87
69.6%
67.2% 80.7%
Profitability Ratios

<3
Return on average ordinary shareholders' equity
3

11.3%
11.9% 10.1%
Return on average assets
4

0.71%
0.76% 0.64%
Net interest margin
1.93%
1.98% 2.00%
Efficiency Ratios

Operating expenses to operating income
46.8%
45.9% 47.3%
Operating expenses to average assets
4

1.00%
1.02% 1.03%
Credit Impairment Charge/(Release)

Individual credit impairment charge ($M) 92
430
554 786
Collective credit impairment charge/(release) ($M) 92
(22)
(75) (67)
Total credit impairment charge ($M) 92
408
479 719
Individual credit impairment charge as a % of average gross loans and advances
4

0.15%
0.19% 0.26%
Total credit impairment charge as a % of average gross loans and advances
4

0.14%
0.16% 0.24%
1.
Fully franked for Australian tax purposes and carry New Zealand imputation credits of NZD 9 cents per ordinary share for the proposed 2018 interim dividend (2017 final dividend: NZD 10
cents; 2017 interim dividend: NZD 9 cents).
2.
Dividend payout ratio is calculated using the proposed 2018 interim, 2017 final and 2017 interim dividends.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Average assets and average gross loans and advances include assets held for sale.

SUMMARY


12
Cash Profit Results - including discontinued operations
1




Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Net interest income

7,350
7,456 7,419

-1% -1%
Other operating income

2,458
2,384 2,557

3% -4%
Operating income

9,808
9,840 9,976

0% -2%
Operating expenses

(4,411)
(4,480) (4,487)

-2% -2%
Profit before credit impairment and income tax

5,397
5,360 5,489

1% -2%
Credit impairment charge

(408)
(479) (720)

-15% -43%
Profit before income tax

4,989
4,881 4,769

2% 5%
Income tax expense

(1,489)
(1,420) (1,406)

5% 6%
Non-controlling interests

(7)
(7) (8)

0% -13%
Cash profit from continuing operations

3,493
3,454 3,355

1% 4%
Cash profit from discontinued operations

(617)
73 56

large large
Cash profit

2,876
3,527 3,411

-18% -16%


Earnings Per Ordinary Share (cents)

Half Year

Movement

Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Basic
98.3
120.4 116.7

-18% -16%
Diluted
94.2
115.2 111.9 -18% -16%



Half Year


Reference
Page Mar 18 Sep 17 Mar 17
Ordinary Share Dividends
Ordinary share dividend payout ratio
2

80.4%
66.6% 68.9%
Profitability Ratios



Return on average ordinary shareholders' equity
3

9.8%
12.0% 11.8%
Return on average assets
4

0.62%
0.76% 0.74%
Net interest margin
1.93%
1.98% 2.00%
Efficiency Ratios



Operating expenses to operating income
49.3%
46.3% 45.9%
Operating expenses to average assets
4

1.00%
1.02% 1.03%
Credit Impairment Charge/(Release)



Individual credit impairment charge ($M) 27
430
554 787
Collective credit impairment charge/(release) ($M) 27
(22)
(75) (67)
Total credit impairment charge ($M) 27
408
479 720
Individual credit impairment charge as a % of average gross loans and advances
4

0.15%
0.19% 0.27%
Total credit impairment charge as a % of average gross loans and advances
4

0.14%
0.16% 0.25%

Cash Profit/(Loss) By Division

Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia

1,915
1,857 1,759 3% 9%
Institutional
793
859 1,065 -8% -26%
New Zealand
726
692 677 5% 7%
Wealth Australia
44
37 58 19% -24%
Asia Retail & Pacific
106
65 (222) 63% large
TSO and Group Centre
(91)
(56) 18 63% large
Discontinued Operations
(617)
73 56 large large
Cash profit by division

2,876
3,527 3,411 -18% -16%
1.
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the results of the ongoing business activities of the Group. Refer to pages
67 to 71 for the reconciliation between statutory and cash profit. Refer to pages 14 to 15 for information on large notable items included in cash profit.
2.
Dividend payout ratio is calculated using the proposed 2018 interim, 2017 final and 2017 interim dividends.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Average assets and average gross loans and advances include assets held for sale.

SUMMARY


13
Key Balance Sheet Metrics - including discontinued operations
1




As at

Movement

Reference
Page Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Capital Management



Common Equity Tier 1


- APRA Basel 3 38
11.0%
10.6% 10.1%
- Internationally Comparable Basel 3
2
38
16.3%
15.8% 15.2%
Credit risk weighted assets ($B) 112
342.8
336.8 341.8 2% 0%
Total risk weighted assets ($B) 38
395.8
391.1 397.0 1% 0%
Leverage Ratio 40
5.4%
5.4% 5.3%
Balance Sheet: Key Items



Gross loans and advances ($B)
595.5
584.1 580.4 2% 3%
Net loans and advances ($B)
591.9
580.3 576.3 2% 3%
Total assets ($B)
935.1
897.3 896.5 4% 4%
Customer deposits ($B)
472.8
467.6 468.2 1% 1%
Total equity ($B)
59.5
59.1 57.9 1% 3%


Half Year Average

Movement
Liquidity Risk
Reference
Page Mar 18 Sep 17 Mar 17
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Liquidity Coverage Ratio 36
134%
135% 135% -1% -1%
Net Stable Funding Ratio 37
114.9%
113.9% 112.5% 1% 2%





As at

Movement

Reference
Page Mar 18 Sep 17 Mar 17
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Impaired Assets



Gross impaired assets ($M) 29
2,034
2,384 2,940 -15% -31%
Gross impaired assets as a % of gross loans and advances
0.34%
0.41% 0.51%
Net impaired assets ($M) 29
1,018
1,248 1,671 -18% -39%
Net impaired assets as a % of shareholders' equity
1.7%
2.1% 2.9%



Individual provision ($M) 28
1,016
1,136 1,269 -11% -20%
Individual provision as a % of gross impaired assets
50.0%
47.7% 43.2%
Collective provision ($M) 28
2,579
2,662 2,785 -3% -7%
Collective provision as a % of credit risk weighted assets
0.75%
0.79% 0.81%
Net Assets

Net tangible assets attributable to ordinary shareholders ($B)
3

53.0
51.9 50.6 2% 5%
Net tangible assets per ordinary share ($)
18.27
17.66 17.24 3% 6%


As at

Movement
Net Loans And Advances By Division
Mar 18
$B
Sep 17
$B
Mar 17
$B
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia
339.4
333.6 325.5 2% 4%
Institutional
137.9
131.6 132.1 5% 4%
New Zealand
111.3
107.9 104.9 3% 6%
Wealth Australia
1.7
1.7 1.8 0% -6%
Asia Retail & Pacific
2.2
5.5 12.4 -60% -82%
TSO and Group Centre
(0.7)
- (0.4) n/a 75%
Discontinued Operations
0.1
- - n/a n/a
Net loans and advances by division 591.9
580.3 576.3 2% 3%
1.
Balance Sheet amounts and metrics include assets and liabilities held for sale.
2.
See page 38 for further details regarding the differences between APRA Basel 3 and Internationally Comparable Basel 3 standards.
3.
Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets.

SUMMARY


14
Large/Notable items - continuing operations
Large/notable items included in cash profit are described below.
Divestment impacts
The Group announced the following divestments in line with the Group’s strategy to create a simpler, better capitalised, better balanced and more agile
bank. The financial impacts from these divestments are summarised below:

Gain/(Loss) on sale from divestments Divested business results
Cash Profit Impact
Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
$M
Sep 17
$M
Mar 17
$M
Asia Retail and Wealth businesses
85
14 (284)
24
117 145
SRCB
(86)
- -
-
- 58
MCC
121
- -
-
24 15
UDC
18
- -
-
- -
Total 138
14 (284)
24
141 218
 Asia Retail and Wealth businesses
The Group announced that it had agreed to sell its Retail and Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia to
Singapore’s DBS Bank on 31 October 2016, and its Retail business in Vietnam to Shinhan Bank Vietnam on 21 April 2017. The Group successfully
completed the transition of businesses in China, Singapore and Hong Kong in the September 2017 half, and Vietnam, Taiwan, and Indonesia in the
March 2018 half. The Group recognised the following impacts:
 In the March 2018 half, the Group recognised a $85 million gain relating to the sale of the remaining Asia Retail and Wealth businesses, net of
costs associated with the sale and tax expenses.
 In the September 2017 half, the Group recognised a $14 million gain on the partial completion of the Asia Retail and Wealth sale comprising sale
premium and recoveries, net of related sale costs.
 In the March 2017 half year, the Group recognised a $284 million loss relating to the reclassification of assets to held for sale in addition to costs
associated with the sale and tax expenses.
 Shanghai Rural Commercial Bank (SRCB)
On 3 January 2017, the Group announced it had agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB). On 18 September 2017,
the Group announced a revision to the 3 January 2017 arrangement in which Baoshan Iron & Steel Co. Ltd. (Bao) replaced Shanghai Sino-Poland
Enterprise Management Development Corporation Limited to join China COSCO Shipping Corporation Limited (COSCO) to acquire ANZ’s 20%
stake in SRCB. Under the updated arrangement, COSCO and Bao each acquired a 10% stake in SRCB. The key financial terms of the revised sale
agreement were unchanged from the original transaction announcement. The sale was completed in the March 2018 half and the Group recognised
a net loss of $86 million. This reflects equity accounted earnings of $58 million in the March 2017 half which increased the carrying value prior to the
reclassification to held for sale, and additional foreign exchange and tax expenses related to the delay in sale completion. Allowing for the impact of
equity accounted earnings, the net loss on sale was $28 million.
 Metrobank Card Corporation (MCC)
On 18 October 2017, the Group announced it had entered into an agreement with its joint venture partner Metropolitan Bank & Trust Company
(Metrobank) in relation to its 40% stake in the Philippines based Metrobank Card Corporation (MCC). The Group has agreed to sell 20% of its stake,
and entered into a put option to sell the remaining 20% stake exercisable in the fourth quarter of FY18 on the same terms for the same consideration.
The first 20% stake sale was completed in the March 2018 half and the Group recognised a net $121 million gain.
 UDC Finance (UDC)
On 11 January 2017, the Group announced that it had entered into a conditional agreement to sell UDC to HNA Group (HNA). On 21 December
2017, the Group announced that it had been informed that New Zealand’s Overseas Investment Office had declined HNA’s application to acquire
UDC and the agreement with HNA was terminated in January 2018. In the March 2018 half, an $18 million cost recovery was recognised in respect
of the terminated transaction process.
On 20 March 2018, the Group announced that it was continuing to examine a broad range of options for UDC’s future including an Initial Public
Offering (IPO) and trade sale.
Other large/notable items
 Derivative valuation adjustments
In determining the fair value of derivative positions, adjustments are made to the risk free value to include factors such as the impact of credit and
funding. Following changes made to the credit valuation adjustment (CVA) methodology in 2016 and changes previously made to align funding
valuation adjustment (FVA) with emerging market practices these adjustments became more susceptible to changes in market inputs which can
fluctuate significantly. Decreasing credit spreads and increasing yields drove significant gains in 2017. In the March and September 2017 half, a $113
million gain and a $47 million gain was recognised respectively to reflect the impact of funding and credit valuation adjustments, net of associated
hedges and tax expenses. The derivative valuation adjustments in the March 2018 half are immaterial and therefore not included as a large/notable
item.
 Gain on sale of 100 Queen Street, Melbourne
The Group sold the 100 Queen Street office tower and former head office in Melbourne, Australia during the March 2017 half. The transaction
resulted in a net gain on sale of $112 million.

SUMMARY


15
Large/Notable items - continuing operations

Within continuing cash profit, the Group has recognised some large/notable items. These items are shown in the tables below.



March 2018 Half Year

March 2017 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Continuing cash
profit
$M
Gain/(Loss) on sale
from divestments
$M
Divested business
results
$M

Continuing cash
profit
$M
Gain/(Loss) on sale
from divestments
$M
Divested business
results
$M
Derivative valuation
adjustments
$M
Gain on sale of 100
Queen St,
Melbourne
$M
Cash Profit


Net interest income
7,350
- 53

7,419 - 249 - -
Other operating income
2,458
238 38

2,557 (324) 194 162 114
Operating income
9,808
238 91

9,976 (324) 443 162 114
Operating expenses
(4,411)
- (35)

(4,487) - (120) - -
Profit before credit impairment and income tax
5,397
238 56

5,489 (324) 323 162 114
Credit impairment charge
(408)
- (26)

(720) - (71) - -
Profit before income tax
4,989
238 30

4,769 (324) 252 162 114
Income tax expense
(1,489)
(100) (6)

(1,406) 40 (34) (49) (2)
Non-controlling interests
(7)
- -

(8) - - - -
Cash profit from continuing operations 3,493
138 24

3,355 (284) 218 113 112



March 2018 Half Year September 2017 Half Year

Large/notable items included in continuing cash profit Large/notable items included in continuing cash profit

Continuing cash
profit
$M
Gain/(Loss) on sale
from divestments
$M
Divested business
results
$M
Continuing cash
profit
$M
Gain/(Loss) on sale
from divestments
$M
Divested business
results
$M
Derivative valuation
adjustments
$M
Gain on sale of 100
Queen St,
Melbourne
$M
Cash Profit
Net interest income
7,350
- 53

7,456 - 193 - -
Other operating income
2,458
238 38

2,384 14 127 67 -
Operating income
9,808
238 91

9,840 14 320 67 -
Operating expenses
(4,411)
- (35)

(4,480) - (97) - -
Profit before credit impairment and income tax
5,397
238 56

5,360 14 223 67 -
Credit impairment charge
(408)
- (26)

(479) - (53) - -
Profit before income tax
4,989
238 30

4,881 14 170 67 -
Income tax expense
(1,489)
(100) (6)

(1,420) - (29) (20) -
Non-controlling interests
(7)
- -

(7) - - - -
Cash profit from continuing operations 3,493
138 24

3,454 14 141 47 -

SUMMARY


16
Full Time Equivalent Staff - including discontinued operations

As at 31 March 2018, ANZ employed 41,580 people worldwide (Sep 17: 44,896; Mar 17: 46,046) on a full-time equivalent basis (FTEs).

Division

As at

Movement

Mar 18 Sep 17 Mar 17
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia
13,701
13,885 13,898 -1% -1%
Institutional
6,505
6,783 6,950 -4% -6%
New Zealand
6,319
6,372 6,417 -1% -2%
Wealth Australia
2,388
2,512 2,512 -5% -5%
Asia Retail & Pacific
1,199
3,664 4,637 -67% -74%
TSO and Group Centre
11,468
11,680 11,632 -2% -1%
Total 41,580
44,896 46,046

-7% -10%

Average FTE 44,029
45,674 46,462

-4% -5%


Geography

As at

Movement

Mar 18 Sep 17 Mar 17
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia
19,351
19,657 19,712 -2% -2%
Asia Pacific, Europe & America
14,511
17,484 18,573 -17% -22%
New Zealand
7,718
7,755 7,761 0% -1%
Total 41,580
44,896 46,046 -7% -10%


Other Non-Financial Information - including discontinued operations


Half Year

Movement
Shareholder value - ordinary shares

Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Share price ($)


- high
27.35
32.95 32.44 -17% -16%
- low
26.81
27.18 25.78 -1% 4%
- closing


26.86
29.60 31.82 -9% -16%
Closing market capitalisation of ordinary shares ($B)
77.9
86.9 93.4 -10% -17%
Total shareholder returns (TSR)
-6.8%
-1.8% 22.4% large large





As at Mar 18
Credit Ratings

Short-Term Long-Term Outlook

Moody's Investor Services

P-1 Aa3 Stable
Standard & Poor's A-1+ AA- Negative
Fitch Ratings F1+ AA- Stable

GROUP RESULTS


17


CONTENTS Page

Cash Profit 18
Group Performance 19
Net Interest Income - continuing operations 20
Other Operating Income - continuing operations 22
Operating Expenses - continuing operations 24
Investment Spend - continuing operations 25
Software Capitalisation - continuing operations 26
Credit Risk - including discontinued operations 27
Income Tax Expense - continuing operations 31
Impact of Foreign Currency Translation - continuing operations 32
Earnings Related Hedges - including discontinued operations 33
Earnings per Share - continuing operations 33
Dividends - continuing operations 34
Economic Profit - continuing operations 34
Condensed Balance Sheet - including discontinued operations 35
Liquidity Risk - including discontinued operations 36
Funding - including discontinued operations 37
Capital Management - including discontinued operations 38
Leverage Ratio - including discontinued operations 40
Other Regulatory Developments 40

GROUP RESULTS


18
Non-IFRS Information
The Group provides additional measures of performance in the Consolidated Financial Report & Dividend Announcement which are prepared on a basis
other than in accordance with accounting standards. The guidance provided in Australian Securities and Investments Commission (ASIC) Regulatory
Guide 230 has been followed when presenting this information.
Cash Profit
Cash profit represents ANZ’s preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and
Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory
profit (refer to Definitions for further details). The adjustments made in arriving at cash profit are included in statutory profit which is subject to review
within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not subject to review or audit by the
external auditor. The external auditor has informed the Audit Committee that recurring adjustments have been determined on a consistent basis across
each period presented, and the adjustments for the sale impact of the Shanghai Rural Commercial Bank (SRCB) in the March 2018, September 2017
and March 2017 half year are appropriate.
The Group Results section is reported on a cash profit basis for continuing operations unless otherwise stated. For continuing operations,
comparatives have been restated accordingly. For information on discontinued operations please refer the Guide to Half Year Results on page
9 and 10.


Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Statutory profit attributable to shareholders of the Company from continuing
operations

3,923
3,410 2,934 15% 34%


LO
Adjustments between statutory profit and cash profit
1


Revaluation of policy liabilities

(10)
(8) 33 25% large
Economic hedges

(124)
31 178 large large
Revenue hedges

40
6 (105) large large
Structured credit intermediation trades
(3)
(2) (1) 50% large
Sale of SRCB

(333)
17 316 large large
Total adjustments between statutory profit and cash profit for continuing operations
(430)
44 421 large large
Cash profit from continuing operations

3,493
3,454 3,355 1% 4%
1.
Refer to pages 67 to 71 for analysis of the adjustments between statutory profit and cash profit.

Group performance - cash profit

Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Net interest income
7,350
7,456 7,419 -1% -1%
Other operating income
2,458
2,384 2,557 3% -4%
Operating income
9,808
9,840 9,976 0% -2%
Operating expenses
(4,411)
(4,480) (4,487) -2% -2%
Profit before credit impairment and income tax
5,397
5,360 5,489 1% -2%
Credit impairment charge
(408)
(479) (720) -15% -43%
Profit before income tax
4,989
4,881 4,769 2% 5%
Income tax expense
(1,489)
(1,420) (1,406) 5% 6%
Non-controlling interests
(7)
(7) (8) 0% -13%
Cash profit from continuing operations

3,493
3,454 3,355 1% 4%




Half Year

Movement
Cash profit/(loss) by Division
Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia

1,915
1,857 1,759

3% 9%
Institutional
793
859 1,065 -8% -26%
New Zealand
726
692 677 5% 7%
Wealth Australia
44
37 58 19% -24%
Asia Retail & Pacific
106
65 (222) 63% large
TSO and Group Centre
(91)
(56) 18 63% large
Cash profit from continuing operations

3,493
3,454 3,355 1% 4%

GROUP RESULTS


19
Group Performance

Group Cash Profit - March 2018 Half Year v March 2017 Half Year

 March 2018 v March 2017
Cash profit from continuing operations increased 4% compared with the March 2017 half reflecting the impact of large/notable items in the March
2018 half, rigorous cost management and a reduction in credit impairment charges.
 Net interest income decreased $69 million (-1%) largely due to a 7 basis point decrease in the net interest margin, partially offset by 3% growth
in average interest earning assets. The lower net interest margin reflects growth in lower margin liquid assets and lower earnings on capital, the
sale of Retail Asia and Wealth businesses, and the introduction of the major bank levy from July 2017. This was partially offset by higher deposit
margins and differentiated pricing in home loans. The increase in average interest earning assets reflects growth in ANZ’s home loans and
Institutional banking portfolios, partially offset by the sale of Asia Retail and Wealth businesses.
 Other operating income decreased $99 million (-4%) largely the result of Markets income, and large/notable items which include divestment
impacts. Refer to page 22 and 23 for further details on key movements.
 Operating expenses decreased $76 million (-2%) primarily due to a reduction in personnel and premises expenses. Refer to page 24 for further
details on key movements.
 Credit impairment charges decreased $312 million (-43%) largely due to lower individual credit impairment charges. Refer to page 27 and 28 for
further details on key movements.

 March 2018 v September 2017
Cash profit from continuing operations increased 1% compared with the September 2018 half.
 Net interest income decreased $106 million (-1%) largely due to a 5 basis point decrease in the net interest margin, partially offset by 2% growth
in average interest earning assets. The lower net interest margin reflects growth in lower margin liquid assets and lower earnings on capital, the
sale of Retail Asia and Wealth businesses, and the introduction of the major bank levy from July 2017. This was partially offset by differentiated
pricing in home loans and higher deposit margins. The increase in average interest earning assets reflects growth in ANZ’s home loans and
Institutional banking portfolios, partially offset by the sale of Asia Retail and Wealth businesses.
 Other operating income increased $74 million (+3%) largely the result of large/notable items including divestment activity. Refer to page 22 and
23 for further details on key movements.
 Operating expenses decreased $69 million (-2%) primarily due to lower non-lending losses and discretionary spend. Refer to page 24 for further
details on key movements.
 Credit impairment charges decreased $71 million (-15%) largely due to lower individual credit impairment charges. Refer to page 27 and 28 for
further details on key movements.

GROUP RESULTS


20
Net Interest Income - continuing operations



Half Year

Movement
Group

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Cash net interest income
1

7,350
7,456 7,419 -1% -1%
Average interest earning assets
2

765,186
752,073 743,906 2% 3%
Average deposits and other borrowings
2,3

612,291
607,390 601,218 1% 2%
Net interest margin (%) - cash
1.93
1.98 2.00 -5 bps -7 bps

Group (excluding Markets business unit)

Cash net interest income
1

6,981
7,014 6,941 0% 1%
Average interest earning assets
2

538,968
536,939 538,598 0% 0%
Average deposits and other borrowings
2,3

455,946
459,304 456,551 -1% 0%
Net interest margin (%) - cash
2.60
2.61 2.58 -1 bps 2 bps



Half Year

Movement
Cash profit net interest margin by major division

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia




Net interest margin (%)

2.78
2.73 2.73

5 bps 5 bps
Average interest earning assets

310,830
304,976 297,195

2% 5%
Average deposits and other borrowings

203,239
198,799 193,654

2% 5%






Institutional




Net interest margin (%)

0.91
0.99 1.08

-8 bps -17 bps
Average interest earning assets

333,919
318,464 313,933

5% 6%
Average deposits and other borrowings

257,874
249,308 244,541

3% 5%






New Zealand
1





Net interest margin (%)

2.37
2.31 2.30

6 bps 7 bps
Average interest earning assets
2


108,008
108,763 109,664

-1% -2%
Average deposits and other borrowings
2

79,669
78,747 79,190 1% 1%
1.
Cash net interest income includes income from continuing operations and income earned on assets prior to divestment.
2.
Average balance sheet amounts include assets and liabilities reclassified as held for sale from continuing operations.
3.
In the March 2018 half, certain instruments were reclassified from average non-deposit interest bearing liabilities to average deposit and other borrowings to better reflect their nature.
Comparatives have been restated accordingly (Sep 17 half: $4,371 million; Mar 17 half: $3,881 million).

Group net interest margin - March 2018 Half Year v March 2017 Half Year

 March 2018 v March 2017
Net interest margin (-7 bps)
 Asset mix and funding mix (-1 bps): unfavourable asset mix from the impacts of customer switching and growth in Australia home loans.
 Funding costs (-2 bps): full impact of the major bank levy, partially offset by reduced wholesale funding costs.
 Deposit competition (+2 bps): improved deposit margins in Australia and Institutional divisions.
 Asset competition and risk mix (+2 bps): impact of home loans re-pricing in Australia and New Zealand, partially offset by lower Institutional
lending margins.
 Treasury (-2 bps): adverse impact to earnings on capital as the result of lower interest rates.
 Markets Balance Sheet activities (-5 bps): growth in the liquidity portfolio and lower earnings from markets activities.

GROUP RESULTS


21
 Asia Retail and Wealth (-1 bps): adverse impact from the sale of Asia Retail and Wealth businesses.
Average interest earning assets (+$21.3 billion or +3%)
 Average net loans and advances (+$5.7 billion or +1%): excluding the impact of foreign currency translation, growth was +$10.2 billion or +2%
driven by growth in Australia and New Zealand home loans. This is partially offset by the sale of Asia Retail and Wealth businesses.
 Average trading and available for sale assets (+$7.2 billion or +7%): excluding the impact of foreign currency translation, growth was +$8.3
billion or +8% driven by growth in the liquidity portfolio.
 Average cash and other liquids (+$8.4 billion or +10%): excluding the impact of foreign currency translation, growth was +$9.7 billion or +12%
driven by liquidity management requirements.
Average deposits and other borrowings (+$11.1 billion or +2%)
 Average deposits and other borrowings (+$11.1 billion or +2%): excluding the impact of foreign currency translation growth was +$17.8 billion or
+3% driven by growth in customer deposits in Australia and Institutional businesses, partially offset by the sale of Asia Retail and Wealth
businesses.
Group net interest margin - March 2018 Half Year v September 2017 Half Year

 March 2018 v September 2017
Net interest margin (-5 bps)
 Asset mix and funding mix (-3 bps): unfavourable asset mix from the impacts of customer switching and growth in Australia home loans, and
unfavourable funding mix on a higher proportion of wholesale funding.
 Funding costs (0 bps): impact of the major bank levy, offset by reduced wholesale funding costs.
 Deposit competition (+2 bps): improved deposit margins in Australia and Institutional divisions.
 Asset competition and risk mix (+1 bps): impact of home loans re-pricing in Australia and New Zealand, partially offset by lower Institutional
lending margins.
 Treasury (-1 bps): adverse impact to earnings on capital as the result of lower interest rates.
 Markets Balance Sheet activities (-3 bps): growth in the liquidity portfolio and lower earnings from markets activities.
 Asia Retail and Wealth (-1 bps): adverse margin impact from the sale of Asia Retail and Wealth businesses.
Average interest earning assets (+$13.1 billion or +2%)
 Average net loans and advances (+$3.1 billion or +1%): excluding the impact of foreign currency translation, increase was +$5.4 billion (+1%),
driven by growth in Australia home loans and Institutional lending, partially offset by the sale of Asia Retail and Wealth businesses.
 Average trading and available-for-sale assets (+$5.5 billion or +5%): excluding the impact of foreign currency translation, increase was +$6
billion (+6%) driven by growth in the liquidity portfolio.
 Average cash and other liquids (+$4.5 billion or +5%): excluding the impact of foreign currency translation, increase was +$4.7 billion (+5%)
driven by liquidity management requirements.
Average deposits and other borrowings (+$4.9 billion or +1%)
 Average deposits and other borrowings (+$4.9 billion or +1%): excluding the impact of foreign currency translation, increase was +$7.7 billion
(+1%) driven by growth in Australia and Institutional divisions, partially offset by the loss of deposits associated with the sale of Asia Retail and
Wealth businesses.

GROUP RESULTS


22
Other Operating Income - continuing operations



Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Net fee and commission income
1


1,110
1,185 1,177

-6% -6%
Net funds management and insurance income
1


293
323 345

-9% -15%
Markets other operating income

551
550 886

0% -38%
Share of associates' profit
1


88
127 173

-31% -49%
Other
1


416
199 (24)

large large
Cash other operating income from continuing operations

2,458
2,384 2,557 3% -4%



Half Year Movement
Markets income
Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Net interest income
369
442 478 -17% -23%
Other operating income
551
550 886 0% -38%
Cash Markets income from continuing operations

920
992 1,364

-7% -33%



Half Year

Movement
Other operating income by division
Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia

559
615 602

-9% -7%
Institutional
1,028
998 1,368 3% -25%
New Zealand
338
336 317 1% 7%
Wealth Australia
162
165 179 -2% -9%
Asia Retail & Pacific
184
168 (150) 10% large
TSO and Group Centre
187
102 241 83% -22%
Cash other operating income from continuing operations

2,458
2,384 2,557 3% -4%
1.
Excluding Markets.
Other operating income - March 2018 Half Year v March 2017 Half Year


 March 2018 v March 2017
Other operating income decreased by $99 million (-4%). Key drivers:
Net fee and commission income (-$67 million or -6%)
 $32 million decrease in the Asia Retail and Pacific division as a result of the sale of Asia Retail and Wealth businesses.
 $31 million decrease in the Australia division primarily due to higher interchange costs, lower deposit fee income and the removal of ATM fees
during the March 2018 half.
Net funds management and insurance income (-$52 million or -15%)
 $33 million decrease in the Asia Retail and Pacific division as a result of the sale of Asia Retail and Wealth businesses.
 $19 million decrease in Wealth Australia division primarily due to lower financial planning revenue and lower commission income.

GROUP RESULTS


23
Cash Markets income (-$444 million or -33%)
 $339 million decrease in Franchise Trading primarily attributable to a $151 million reduction in derivative credit and funding valuation
adjustments (net of associated hedges) following significant gains from narrowing credit spreads in the March 2017 half, and a $188 million
reduction due to challenging trading conditions when compared to the March 2017 half which benefited from a strengthening USD and rising
yield curves post the US election.
 $61 million decrease in Balance Sheet Trading driven by lower mark-to-market gains associated with credit spreads movements.
 $44 million decrease in Franchise Sales due to the impact of business transformational initiatives implemented during 2017 (client and product
rationalisation) and subdued client hedge activity due to the ongoing low interest rate environment and low foreign exchange volatility.
Share of associates’ profit (-$85 million or -49%)
 $73 million decrease due to cessation of equity accounting of SRCB from January 2017 ($58 million) and MCC from October 2017 ($15 million).
 $12 million net decrease in profits from associates of which $6 million relates to Ambank and $5 million to P.T. Bank Pan Indonesia.
Other (+$440 million)
 $423 million increase due to a non-recurring $324 million charge recognised on reclassification of Asia Retail and Wealth businesses to held for
sale in the March 2017 half, in addition to a $99 million gain recognised in the March 2018 half associated with sale completions.
 $119 million increase related to the sale of the Group’s 20% stake in MCC.
 $18 million increase relating to a cost recovery in respect of the UDC terminated transaction process.
 $114 million gain on sale of 100 Queen Street, Melbourne recognised in the March 2017 half.

 March 2018 v September 2017
Other operating income increased by $74 million (+3%). Key drivers:
Net fee and commission income (-$75 million or -6%)
 $35 million decrease in the Asia Retail and Pacific division following the progressive sale of Asia Retail and Wealth businesses.
 $32 million decrease in the Australia division primarily due to a reduction in deposit fees and the removal of ATM fees during the March 2018
half.
Net funds management and insurance income (-$30 million or -9%)
 $21 million decrease in the Asia Retail and Pacific division following the progressive sale of Asia Retail and Wealth businesses.
Cash Markets income (-$72 million or -7%)
 $77 million decrease in Franchise Trading attributable to a $56 million reduction in derivative credit and funding valuation adjustments (net of
associated hedges) from narrowing credit spreads relative to the September 2017 half, and a $21 million reduction due to challenging trading
conditions as a result of lower volatility, particularly in the first quarter of the March 2018 half.
Share of associates’ profit (-$39 million or -31%)
 $24 million decrease due to cessation of equity accounting of MCC from October 2017.
 $15 million net decrease in profits from associates of which $6 million relates to Ambank and $6 million to P.T. Bank Pan Indonesia.
Other (+$217 million)
 $119 million increase related to the sale of the Group’s 20% stake in MCC.
 $85 million increase in the net gain recognised on the progressive sale of the Asia Retail and Wealth businesses.
 $18 million increase relating to a cost recovery in respect of the UDC terminated transaction process.

GROUP RESULTS


24
Operating Expenses - continuing operations


Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Personnel expenses
2,402
2,405 2,519 0% -5%
Premises expenses
395
430 432 -8% -9%
Technology expenses
815
803 799 1% 2%
Restructuring expenses
78
26 36 large large
Other expenses
721
816 701 -12% 3%
Total cash operating expenses from continuing operations 4,411
4,480 4,487 -2% -2%
Full time equivalent staff (FTE) from continuing operations
39,540
42,873 44,015 -8% -10%
Average full time equivalent staff (FTE) from continuing operations
41,991
43,658 44,390 -4% -5%



Half Year

Movement
Expenses by division

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia

1,812
1,713 1,669

6% 9%
Institutional

1,371
1,392 1,422

-2% -4%
New Zealand

588
593 600

-1% -2%
Wealth Australia

123
136 126

-10% -2%
Asia Retail & Pacific

146
280 334

-48% -56%
TSO and Group Centre

371
366 336

1% 10%
Total cash operating expenses from continuing operations

4,411
4,480 4,487 -2% -2%
Operating expenses - March 2018 Half Year v March 2017 Half Year



 March 2018 v March 2017
Operating expenses decreased by $76 million (-2%) reflecting the Group’s ongoing focus to re-shape the business, and improve cost efficiency.
 Personnel expenses decreased $117 million (-5%) due to a 5% reduction in average FTE partially offset by wage inflation.
 Premises expenses decreased $37 million (-9%) primarily driven by the reshaping of our Asia footprint.
 Technology expenses increased $16 million (+2%) largely to support an increased technology investment agenda.
 Restructuring expenses increased $42 million associated with the move to agile ways of working in the Australia division and other
transformation activities.
 Other expenses increased $20 million (+3%) largely related to higher consultancy fees associated with increased investment expenditure.

 March 2018 v September 2017
Operating expenses decreased by $69 million (-2%) reflecting strong cost management whilst delivering the Group’s strategy.
 Personnel expenses decreased $3 million (flat) mainly due to a 4% reduction in average FTE.
 Premises expenses decreased $35 million (-8%) primarily driven by the reshaping of our Asia footprint.
 Technology expenses increased $12 million (+1%) largely to support an increased technology investment agenda.
 Restructuring expenses increased $52 million associated with the move to agile ways of working in the Australia division and other
transformation activities.
 Other expenses decreased $95 million (-12%) as the result of lower non-lending losses and discretionary spend.

GROUP RESULTS


25
Investment Spend - continuing operations
Investment spend includes expenditure that develops and enhances the Group's capability to meet business, efficiency and strategic objectives.
Investment is categorised based on primary objective but may contribute to multiple investment categories. The analysis below aggregates all projects
over $1 million. Spend on projects less than $1 million was $57 million in the March 2018 half (Sep 17 half: $82 million; Mar 17 half: $84 million).


Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Expensed investment spend
317
303 208 5% 52%
Capitalised investment spend
165
227 160 -27% 3%
Investment spend from continuing operations 482
530 368

-9% 31%

Comprising Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Business initiatives
270
281 198 -4% 36%
Risk and compliance
110
120 94 -8% 17%
Infrastructure and other
102
129 76 -21% 34%
Investment spend from continuing operations 482
530 368

-9% 31%

Investment spend breakdown:
 March 2018 v March 2017: Investment has been maintained but mix recalibrated to drive a simpler, better balanced bank. Investment is focused
on data strategies, digital customer solutions and streamlining processes and platforms, whilst maintaining infrastructure/compliance spend.
 March 2018 v September 2017: Lower investment spend in the March 2018 half reflects the phasing of initiatives between the periods. Overall,
investment spend has been maintained.


Investment spend by division

Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia

194
197 130 -2% 49%
Institutional

88
104 60 -15% 47%
New Zealand

29
35 31 -17% -6%
Asia Retail & Pacific

1
2 1 -50% 0%
Wealth Australia

4
2 8 100% -50%
TSO and Group Centre

166
190 138 -13% 20%
Investment spend from continuing operations 482
530 368

-9% 31%

GROUP RESULTS


26
Software Capitalisation - continuing operations
As at 31 March 2018, the Group’s intangible assets included $1,775 million of costs incurred to acquire and develop software. Details are set out in the
table below:

Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Balance at start of period
1,856
1,917 2,196 -3% -15%
Software capitalised during the period
198
232 172 -15% 15%
Amortisation during the period
(281)
(271) (294) 4% -4%
Software impaired/written-off


- Reclassification of Asia Retail and Wealth to held for sale
1


-
- (154) n/a -100%
- Other
(5)
(16) (1) -69% large
Foreign exchange differences
7
(6) (2) large large
Total capitalised software from continuing operations 1,775
1,856 1,917

-4% -7%

Net book value by Division As at

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Australia
413
441 459 -6% -10%
Institutional
542
597 649 -9% -16%
New Zealand
20
24 26 -17% -23%
Wealth Australia
13
14 14 -7% -7%
TSO and Group Centre
787
780 769 1% 2%
Total from continuing operations 1,775
1,856 1,917

-4% -7%
1.
Reclassification of Asia Retail and Wealth to held for sale includes impairment of software supporting both the Institutional and Asia Retail and Wealth businesses. Only components relating
to the Asia Retail and Wealth businesses have been impaired which were recorded on the Institutional and Asia Retail and Pacific balance sheet. These impairment charges are recognised
as other operating income in the Condensed Consolidated Income Statement.

GROUP RESULTS


27
Credit Risk - including discontinued operations


Half Year Half Year Movement

Mar 18

Mar 17

Mar 18 v. Mar 17
Division
Individual
charge
$M
Collective
charge
$M
Total
charge
$M

Individual
charge
$M
Collective
charge
$M
Total
charge
$M

Individual
charge
%
Collective
charge
%
Total
charge
%
Australia 337 (25) 312 415 53 468 -19% large -33%
Institutional 28 21 49 225 (96) 129 -88% large -62%
New Zealand 34 (14) 20

61 (24) 37

-44% -42% -46%
Asia Retail & Pacific 31 (4) 27

86 (11) 75

-64% -64% -64%
TSO and Group Centre - - - - 11 11 n/a -100% -100%
Total 430 (22) 408
787 (67) 720 -45% -67% -43%


Half Year

Half Year

Movement

Mar 18

Sep 17

Mar 18 v. Sep 17
Division
Individual
charge
$M
Collective
charge
$M
Total
charge
$M

Individual
charge
$M
Collective
charge
$M
Total
charge
$M

Individual
charge
%
Collective
charge
%
Total
charge
%
Australia 337 (25) 312

449 (32) 417

-25% -22% -25%
Institutional 28 21 49 (29) (8) (37) large large large
New Zealand 34 (14) 20 55 (14) 41 -38% 0% -51%
Asia Retail & Pacific 31 (4) 27

79 (10) 69

-61% -60% -61%
TSO and Group Centre - - -

- (11) (11)

n/a -100% -100%
Total 430 (22) 408
554 (75) 479 -22% -71% -15%

Individual credit impairment charge


Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
New and increased individual credit impairments



Australia

528
619 601 -15% -12%
Institutional

92
123 315 -25% -71%
New Zealand

67
109 102 -39% -34%
Asia Retail & Pacific

41
97 104 -58% -61%
New and increased individual credit impairments
728
948 1,122 -23% -35%
Recoveries and write-backs
Australia
(191)
(170) (186) 12% 3%
Institutional
(64)
(152) (90) -58% -29%
New Zealand
(33)
(54) (41) -39% -20%
Asia Retail & Pacific
(10)
(18) (18) -44% -44%
Recoveries and write-backs
(298)
(394) (335) -24% -11%
Total individual credit impairment charge

430
554 787 -22% -45%
 March 2018 v March 2017
The individual credit impairment charge decreased $357 million (-45%) reflecting $394 million (-35%) decrease in new and existing provisions across
all divisions. Institutional division decreased $197 million (-88%) primarily driven by lower provisions arising from ongoing portfolio rebalancing
combined with a benign credit environment. Australia division decreased $78 million (-19%) driven by a combination of lower provisions and higher
write-backs. New Zealand division decreased $27 million (-44%) driven by lower provisions and a one-off large provision taken in the March 2017
half. Asia Retail & Pacific division decreased $55 million (-64%) due to the sale of Asia Retail and Wealth businesses.
 March 2018 v September 2017
The individual credit impairment charge decreased $124 million (-22%) primarily driven by a $112 million (-25%) decrease in the Australia division
from lower new individual provisions and higher write-backs, and a $48 million (-61%) decrease in the Asia Retail & Pacific division following the
progressive sale of Asia Retail and Wealth businesses. This is partially offset by a $57 million increase in the Institutional division due to lower write-
backs in the March 2018 half.

GROUP RESULTS


28
Collective credit impairment charge



Half Year

Movement
Collective credit impairment charge/(release) by source
Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
Lending growth - excluding Asia Retail and Wealth businesses
4
(11) (25) large large
Lending growth - Asia Retail and Wealth businesses
(4)
(7) (5) -43% -20%
Risk profile
2
(91) (78) large large
Economic cycle adjustment
(24)
34 41 large large
Total collective credit impairment charge/(release)

(22)
(75) (67) -71% -67%
 March 2018 v March 2017
The reduction in the collective credit impairment release of $45 million is primarily driven by risk profile and lending growth releases in the March
2017 half largely due to portfolio rebalancing in the Institutional division, and the partial release of economic cycle adjustments relating to the
Australia and New Zealand divisions in the March 2018 half. The collective credit impairment charge driven by lending growth increased in the March
2018 half reflecting growth in Institutional Loans & Specialised Finance and New Zealand Commercial Agri, offset by reductions in the Australia
division in Business & Private Bank.
 March 2018 v September 2017
The reduction in the collective credit impairment release of $53 million is primarily driven by risk profile releases in the March 2017 half, and the
partial release of economic cycle adjustments relating to the Australia and New Zealand divisions in the March 2018 half. The collective credit
impairment charge driven by lending growth increased in the March 2018 half reflecting growth in Institutional Loans & Specialised Finance and New
Zealand Commercial Agri, offset by reductions in the Australia division in Business & Private Bank.

Provision for credit impairment


As at As at Movement

Mar 18

Sep 17

Mar 18 v. Sep 17
Division
Individual
provision
$M
Collective
provision
$M
1

Total
provision
$M

Individual
provision
$M
Collective
provision
$M
1

Total
provision
$M

Individual
provision
%
Collective
provision
%
Total
provision
%
Australia 577 1,113 1,690 633 1,139 1,772 -9% -2% -5%
Institutional 320 1,101 1,421

353 1,069 1,422

-9% 3% 0%
New Zealand 104 316 420

131 323 454

-21% -2% -7%
Asia Retail & Pacific 15 46 61 19 128 147 -21% -64% -59%
TSO and Group Centre - 3 3 - 3 3 n/a 0% 0%
Total 1,016 2,579 3,595

1,136 2,662 3,798

-11% -3% -5%


As at As at Movement

Mar 18

Mar 17

Mar 18 v. Mar 17
Division
Individual
provision
$M
Collective
provision
$M
1

Total
provision
$M

Individual
provision
$M
Collective
provision
$M
1

Total
provision
$M

Individual
provision
%
Collective
provision
%
Total
provision
%
Australia 577 1,113 1,690 579 1,171 1,750 0% -5% -3%
Institutional 320 1,101 1,421 539 1,085 1,624 -41% 1% -13%
New Zealand 104 316 420

135 335 470

-23% -6% -11%
Asia Retail & Pacific 15 46 61

16 180 196

-6% -74% -69%
TSO and Group Centre - 3 3 - 14 14 n/a -79% -79%
Total 1,016 2,579 3,595

1,269 2,785 4,054

-20% -7% -11%
1.
The collective provision includes amounts for off-balance sheet credit exposures of $522 million as at 31 March 2018 (Sep 17 half: $544 million; Mar 17 half: $574 million). The impact on
the Income Statement for the half year ended 31 March 2018 was a $26 million release (Sep 17 half: $20 million release; Mar 17 half: $46 million release).

GROUP RESULTS


29
Group Expected Loss
Management believe that disclosure of modelled expected loss data for individual provisions assists in assessing the longer term expected loss rates of
the lending portfolio as it removes the volatility of reported earnings created by the use of accounting losses. The expected loss methodology is used
internally for return on equity analysis and economic profit reporting.
Asia Retail and Wealth
On 31 October 2016, ANZ announced the sale of its Asia Retail and Wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia and
Vietnam on 21 April 2017. The Group completed the transition of the businesses in China, Singapore and Hong Kong in the September 2017 half, and
Vietnam, Taiwan and Indonesia in the March 2018 half.

As at
Expected loss as a % of gross lending assets Mar 18 Sep 17 Mar 17
Australia division

0.31%
0.33% 0.33%
New Zealand division

0.21%
0.22% 0.26%
Institutional division

0.32%
0.30% 0.35%
Subtotal

0.29%
0.30% 0.33%
Asia Retail and Wealth businesses

-
2.75% 1.51%
Total Group

0.30%
0.32% 0.35%




Gross Impaired Assets
1




As at

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Impaired loans
1,863
2,118 2,478 -12% -25%
Restructured items
2

76
167 367 -54% -79%
Non-performing commitments and contingencies
95
99 95 -4% 0%
Gross impaired assets 2,034
2,384 2,940 -15% -31%
Individual provisions

Impaired loans
(990)
(1,118) (1,253) -11% -21%
Non-performing commitments and contingencies
(26)
(18) (16) 44% 63%
Net impaired assets 1,018
1,248 1,671 -18% -39%



Gross impaired assets by division


Australia
1,114
1,181 1,148 -6% -3%
Institutional
626
757 1,143 -17% -45%
New Zealand
244
307 409 -21% -40%
Asia Retail & Pacific
50
140 240 -64% -79%
Gross impaired assets 2,034
2,384 2,940 -15% -31%


Gross impaired assets by size of exposure
Less than $10 million
1,487
1,622 1,724 -8% -14%
$10 million to $100 million
547
655 1,106 -16% -51%
Greater than $100 million
-
107 110 -100% -100%
Gross impaired assets 2,034
2,384 2,940 -15% -31%
1.
Balance sheet amounts include assets and liabilities reclassified as held for sale.
2.
Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer. Restructuring may consist of
reduction of interest, principal or other payments legally due, or an extension in maturity materially beyond those typically offered to new facilities with similar risk.
 March 2018 v March 2017
Gross impaired assets decreased $906 million (-31%) driven by Institutional (-$517 million) and New Zealand (-$165 million) divisions, and Asia
Retail & Pacific division (-$190 million) following the sale of the Asia Retail and Wealth businesses. The Group’s individual provision coverage ratio
on impaired assets was 50.0% at 31 March 2018 (Mar 17: 43.2%).
 March 2018 v September 2017
Gross impaired assets decreased $350 million (-15%) in the March 2018 half driven by Institutional (-$131 million), Australia (-$67million) and New
Zealand (-$63 million) divisions, combined with Asia Retail & Pacific division (-$90 million) following the sale of the Asia Retail and Wealth
businesses. The Group’s individual provision coverage ratio on impaired assets was 50.0% at 31 March 2018 (Sep 17: 47.7%).

GROUP RESULTS


30
New Impaired Assets
1



Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Impaired loans

917
1,315 1,637

-30% -44%
Restructured items

21
21 88

0% -76%
Non-performing commitments and contingencies
25
89 62 -72% -60%
Total new impaired assets

963
1,425 1,787 -32% -46%
New impaired assets by division
Australia
699
770 765 -9% -9%
Institutional
124
344 599 -64% -79%
New Zealand
101
216 296 -53% -66%
Asia Retail & Pacific
39
95 127 -59% -69%
Total new impaired assets

963
1,425 1,787 -32% -46%




 March 2018 v March 2017
New impaired assets decreased $824 million (-46%) primarily driven by Institutional division’s improved risk profile from portfolio rebalancing,
combined with a benign credit environment. Improvements in portfolio credit quality in the New Zealand Commercial and Agri business, and
reductions associated with the progressive sale of the Asia Retail and Wealth businesses also contributed to a decrease in new impaired assets.
 March 2018 v September 2017
New impaired assets decreased by $462 million (-32%) primarily driven by Institutional division’s improved risk profile from portfolio rebalancing,
combined with a benign credit environment. Improvements in portfolio credit quality in the New Zealand Commercial and Agri business, and
reductions associated with the progressive sale of the Asia Retail and Wealth businesses also contributed to a decrease in new impaired assets.

Ageing analysis of net loans and advances that are past due but not impaired
1



As at

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M
Mar 18
v. Sep 17
Mar 18
v. Mar 17
1-29 days
8,974
8,790 9,123 2% -2%
30-59 days
2,576
2,143 2,355 CS 20% 9%
60-89 days
1,233
1,148 1,148 7% 7%
>90 days
3,038
2,953 2,771 3% 10%
Total 15,821
15,034 15,397 5% 3%
1.
Balance sheet amounts include assets and liabilities reclassified as held for sale.
 March 2018 v March 2017
Net loans and advances past due but not impaired increased $424 million (+3%) driven by growth in the Australia division home loan portfolio,
combined with seasonality which is consistent with trends observed in the March 2017 half. This was partially offset by the impact of the sale of Asia
Retail and Wealth businesses.
 March 2018 v September 2017
Net loans and advances past due but not impaired increased $787 million (+5%) driven by growth in the Australia division home loan portfolio,
combined with seasonal higher delinquencies compared to the September 2017 half.

GROUP RESULTS


31
Income Tax Expense - continuing operations



Half Year

Movement


Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Income tax expense on cash profit

1,489
1,420 1,406

5% 6%
Effective tax rate (cash profit)
29.8%
29.1% 29.5%
 March 2018 v March 2017
The effective tax rate has increased from 29.5% to 29.8%. The increase of +30 bps is primarily due the non-tax deductible net loss on completion of
the sale of Shanghai Rural Commercial Bank in the March 2018 half (+176 bps) and a reduction in equity accounted earnings (+57 bps). This is
partially offset by an increase in offshore earnings in the March 2018 half (-82 bps) which attract a lower average tax rate, non-taxable profit on the
disposal of 20% of the Group’s stake in Metrobank Card Corporation (-74 bps) and a tax provision release (-46 bps). Offshore earnings in the March
2017 half were lower due to the reclassification of Asia Retail and Wealth businesses to held for sale.
 March 2018 v September 2017
The effective tax rate increased from 29.1% to 29.8%. The increase of +70 bps is primarily due to the non-tax deductible net loss on completion of
the sale of Shanghai Rural Commercial Bank in the March 2018 half (+176 bps) and a reduction in equity accounted earnings (+26 bps). This is
partially offset by non-taxable profit on the disposal of 20% of the Group’s stake in Metrobank Card Corporation (-74 bps) and a tax provision release
(-46 bps).

GROUP RESULTS


32
Impact of Foreign Currency Translation - continuing operations
The following tables present the Group’s cash profit results and net loans and advances neutralised for the impact of foreign currency translation.
Comparative data has been adjusted to remove the translation impact of foreign currency movements by retranslating prior period comparatives at
current period foreign exchange rates.

Cash Profit - March 2018 Half Year vs March 2017 Half Year

Half Year Movement

Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted


Mar 18
$M
Mar 17
$M
Mar 17
$M
Mar 17
$M
Mar 18
v. Mar 17
Mar 18
v. Mar 17
Net interest income
7,350
7,419 (67) 7,352 -1% 0%
Other operating income
2,458
2,557 6 2,563 -4% -4%
Operating income
9,808
9,976 (61) 9,915 -2% -1%
Operating expenses
(4,411)
(4,487) 42 (4,445) -2% -1%
Profit before credit impairment and income tax
5,397
5,489 (19) 5,470 -2% -1%
Credit impairment charge
(408)
(720) 5 (715) -43% -43%
Profit before income tax
4,989
4,769 (14) 4,755 5% 5%
Income tax expense
(1,489)
(1,406) 4 (1,402) 6% 6%
Non-controlling interests
(7)
(8) - (8) -13% -13%
Cash profit 3,493
3,355 (10) 3,345 4% 4%
Balance Sheet

Net loans and advances
1

591,947
576,304 3,819 580,123 3% 2%
1.
Balance sheet amounts include assets and liabilities reclassified as held for sale.

Cash Profit- March 2018 Half Year vs September 2017 Half Year
Half Year Movement

Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted


Mar 18
$M
Sep 17
$M
Sep 17
$M
Sep 17
$M
Mar 18
v. Sep 17
Mar 18
v. Sep 17
Net interest income
7,350
7,456 (32) 7,424 -1% -1%
Other operating income
2,458
2,384 22 2,406 3% 2%
Operating income
9,808
9,840 (10) 9,830 0% 0%
Operating expenses
(4,411)
(4,480) 18 (4,462) -2% -1%
Profit before credit impairment and income tax
5,397
5,360 8 5,368 1% 1%
Credit impairment charge
(408)
(479) - (479) -15% -15%
Profit before income tax
4,989
4,881 8 4,889 2% 2%
Income tax expense
(1,489)
(1,420) (3) (1,423) 5% 5%
Non-controlling interests
(7)
(7) 1 (6) 0% 17%
Cash profit 3,493
3,454 6 3,460 1% 1%
Balance Sheet

Net loans and advances
1

591,947
580,293 4,378 584,671 2% 1%
1.
Balance sheet amounts include assets and liabilities reclassified as held for sale.

GROUP RESULTS


33
Earnings Related Hedges - including discontinued operations
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily New
Zealand Dollar, US Dollar and US Dollar correlated). New Zealand Dollar exposure relates to the New Zealand geography and USD exposures relate to
Asia Pacific, Europe & America. Details of these hedges are set out below.



Half Year
NZD Economic hedges
Mar 18
$M
Sep 17
$M
Mar 17
$M
Net open NZD position (notional principal)
1


2,669
3,036 3,347
Amount taken to income (pre-tax statutory basis)
2


(50)
(34) 125
Amount taken to income (pre-tax cash basis)
3


7
(27) (19)
1.
Value in AUD at contracted rate.
2.
Unrealised valuation movement plus realised revenue from matured or closed out hedges.
3.
Realised revenue from closed out hedges.
As at 31 March 2018, the following hedges were in place to partially hedge future earnings against adverse movements in exchange rates:
 NZD 2.9 billion at a forward rate of approximately NZD 1.08 / AUD.
There were no USD hedges in place or impacting income for the March 2018 half.
During the March 2018 half:
 NZD 0.9 billion of economic hedges matured and a realised gain of $7 million (pre-tax) was recorded in cash profit.
 An unrealised loss of $57 million (pre-tax) on the outstanding NZD economic hedges was recorded in the statutory Income Statement during the
half. This unrealised loss has been treated as an adjustment to statutory profit in calculating cash profit as these are hedges of future NZD
revenues.

Earnings per Share - continuing operations



Half Year

Movement
Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Cash earnings per share (cents) from continuing operations
1




Basic


119.4
117.9 114.8

1% 4%
Diluted
113.4
112.9 110.1

0% 3%



Cash weighted average number of ordinary shares (M)
2





Basic
2,924.6
2,929.2 2,923.7

0% 0%
Diluted
3,204.3
3,183.7 3,180.8

1% 1%



Cash profit from continuing operations ($M)
3,493
3,454 3,355 1% 4%
Cash profit used in calculating diluted cash earnings per share ($M)
3,634
3,594 3,503 1% 4%
1.
Calculation is based on weighted average number of ordinary shares. No adjustment for the impact of discontinued operations.
2.
Cash weighted average number of ordinary shares includes treasury shares held in Wealth Australia as the associated gains and losses are included in cash profit.

GROUP RESULTS


34
Dividends - continuing operations



Half Year

Movement
Dividend per ordinary share (cents) - continuing operations

Mar 18 Sep 17 Mar 17

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Interim (fully franked)
1


80
- 80

n/a 0%
Final (fully franked)
-
80 - n/a n/a
Total (fully franked)
80
80 80 0% 0%



Ordinary share dividends used in payout ratio ($M)
2

2,313
2,350 2,349 -2% -2%
Cash profit from continuing operations
3,493
3,454 3,355 1% 4%
Ordinary share dividend payout ratio (cash basis)
2


66.2%
68.0% 70.0%
1.
Interim dividend for 2018 is proposed.
2.
Dividend payout ratio is calculated using proposed 2018 interim dividend of $2,313 million, which is based on the forecast number of ordinary shares on issue at the dividend record date.
Dividend payout ratios for the September 2017 half and March 2017 half were calculated using actual dividend paid of $2,350 million and $2,349 million respectively.

The Directors propose an interim dividend of 80 cents be paid on each eligible fully paid ANZ ordinary share on 2 July 2018. The proposed 2018 interim
dividend will be fully franked for Australian tax purposes, and New Zealand imputation credits of NZD 9 cents per ordinary share will also be attached.

Economic Profit - continuing operations


Half Year

Movement

Mar 18
$M
Sep 17
$M
Mar 17
$M

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Statutory profit attributable to shareholders of the Company from continuing
operations

3,923
3,410 2,934

15% 34%
Adjustments between statutory profit and cash profit from continuing operations
(430)
44 421 large large
Cash Profit from continuing operations
3,493
3,454 3,355 1% 4%
Economic credit cost adjustment
(369)
(353) (211) 5% 75%
Imputation credits
600
687 707 -13% -15%
Economic return from continuing operations
3,724
3,788 3,851 -2% -3%
Cost of capital
(2,624)
(2,626) (2,588) 0% 1%
Economic profit from continuing operations

1,100
1,162 1,263 -5% -13%

Economic profit is a risk adjusted profit measure used to evaluate business unit performance and is considered in determining the variable component of
remuneration packages. This is used for internal management purposes and is not subject to audit.
Economic profit is calculated via a series of adjustments to cash profit. The economic credit cost adjustment replaces the actual credit loss charge with
internal expected loss based on the average loss per annum on the portfolio over an economic cycle. The benefit of imputation credits is recognised,
measured at 70% of Australian tax. The cost of capital is a major component of economic profit. At an ANZ Group level, this is calculated using average
ordinary shareholders’ equity (excluding non-controlling interests), multiplied by the cost of capital rate (currently 9.5% and applied across comparative
periods). At a business unit level, capital is allocated based on economic capital, whereby higher risk businesses attract higher levels of capital. This
method is designed to help drive appropriate risk management and ensure business returns align with the level of risk. Key risks covered include credit
risk, operating risk, market risk and other risks.
Economic profit decreased $163 million (-13%) against the March 2017 half driven by higher economic credit costs and lower imputation credits on lower
Australian profits, partially offset by higher cash profit.
Economic profit decreased $62 million (-5%) against the September 2017 half driven by lower imputation credits on lower Australian profits, partially
offset by higher cash profit.

GROUP RESULTS


35
Condensed Balance Sheet - including discontinued operations



As at

Movement
Assets
Mar 18
$B
Sep 17
$B
Mar 17
$B

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Cash / Settlement balances owed to ANZ / Collateral paid
1

98.0
82.5 89.3 19% 10%
Trading and available for sale assets
1

115.3
113.0 108.8 2% 6%
Derivative financial instruments
1

70.9
62.5 63.9 13% 11%
Net loans and advances
1

588.9
574.3 564.0 3% 4%
Investments backing policy liabilities
1

-
38.0 37.6 -100% -100%
Assets held for sale
45.3
8.0 14.1 large large
Other
1

16.7
19.1 18.8 -12% -11%
Total assets 935.1
897.4 896.5 4% 4%
Liabilities

Settlement balances owed by ANZ / Collateral received
20.0
15.8 14.9 27% 34%
Deposits and other borrowings
1

616.2
595.6 581.4 3% 6%
Derivative financial instruments
70.6
62.3 65.1 13% 8%
Debt issuances and subordinated debt
114.9
108.0 109.1 6% 5%
Policy liabilities and external unit holder liabilities
1

-
41.9 41.3 -100% -100%
Liabilities held for sale
44.8
4.7 17.2 large large
Other
1

9.1
10.0 9.6 -9% -5%
Total liabilities 875.6
838.3 838.6 4% 4%
Total equity 59.5
59.1 57.9 1% 3%
1.
Balances exclude assets and liabilities held for sale.
 March 2018 v March 2017
 Cash / Settlement balances owed to ANZ / Collateral paid increased $8.7 billion (+10%). Adjusting for a $1.5 billion increase due to foreign
currency translation, the $7.2 billion increase was primarily driven by increased liquidity portfolio holdings due to balance sheet growth in
Markets.
 Trading and available-for-sale assets increased $6.5 billion (+6%). Adjusting for a $0.5 billion increase due to foreign currency translation and
$1.0 billion decrease due to assets reclassified as held for sale, the $7.0 billion increase was primarily driven by increased liquidity portfolio
holdings due to balance sheet growth in Markets.
 Derivative financial assets and liabilities increased $7.0 billion (+11%) and $5.5 billion (+8%) respectively as foreign exchange rate and
interest rate movements resulted in higher derivative fair values.
 Net loans and advances increased $24.9 billion (+4%). Adjusting for a $3.8 billion increase due to foreign currency translation, the $21.1 billion
increase was primarily driven by growth in home loans across Australia (+$13.8 billion) and New Zealand (+$3.2 billion) divisions, and lending
growth in the Institutional division (+$4.9 billion).
 Deposits and other borrowings increased $34.8 billion (+6%). Adjusting for a $3.1 billion increase due to foreign currency translation, the $31.7
billion increase was primarily driven by growth in customer deposits across Institutional, Australia and New Zealand divisions (+$18.1 billion),
and a $21.6 billion increase in deposits from banks and commercial paper, partially offset by a reduction of $7.1 billion in certificates of
deposit.
 Debt issuances and subordinated debt increased $5.8 billion (+5%). Adjusting for a $0.5 billion increase due to foreign currency translation,
the $5.3 billion increase was primarily driven by senior debt issuances.
 March 2018 v September 2017
 Cash / Settlement balances owed to ANZ / Collateral paid increased by $15.5 billion (+19%). Adjusting for a $2.2 billion increase due to foreign
currency translation, the $13.3 billion increase was primarily driven by increased liquidity portfolio holdings due to balance sheet growth in
Markets.
 Derivative financial assets and liabilities increased $8.4 billion (+13%) and $8.3 billion (+13%) respectively as foreign exchange rate and
interest rate movements resulted in higher derivative fair values.
 Net loans and advances increased $14.6 billion (+3%). Adjusting for a $4.4 billion increase due to foreign currency translation, the $10.2 billion
increase was primarily driven by growth in home loans across Australia (+$5.8 billion) and New Zealand (+1.0 billion) divisions, and lending
growth in Institutional division (+$4.3 billion).
 Deposits and other borrowings increased by $20.6 billion (+3%). Adjusting for a $5.9 billion increase due to foreign currency translation, the
$14.7 billion increase was primarily driven by growth in customer deposits across Australia and New Zealand divisions (+$5.3 billion), and a
$18.9 billion increase in deposits from banks and commercial paper, partially offset by a reduction of $7.9 billion in certificates of deposit and
reverse repurchase agreements.
 Debt issuances and subordinated debt increased $6.9 billion (+6%). Adjusting for a $0.9 billion increase due to foreign currency translation,
the $6.0 billion increase was primarily driven by senior debt issuances.

Investments backing policy liabilities, policy liabilities and external unit holder liabilities balances as at March 2018 reflect the reclassification of
assets and liabilities to held for sale. Refer to Note 11 to the financial statements for details of assets and liabilities held for sale.

GROUP RESULTS


36
Liquidity Risk - including discontinued operations
Liquidity risk is the risk that the Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesale
debt, or that the Group has insufficient capacity to fund increases in assets. The timing mismatch of cash flows and the related liquidity risk is inherent in
all banking operations and is closely monitored by the Group and managed in accordance with the risk appetite set by the Board.
The Group’s approach to liquidity risk management incorporates two key components:
 Scenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by the ability to meet a range of regulatory requirements and internal liquidity metrics mandated by the Board.
The metrics cover a range of scenarios of varying duration and level of severity. The objective of this framework is to:
 Provide protection against shorter-term extreme market dislocation and stress.
 Maintain structural strength in the balance sheet by ensuring that an appropriate amount of longer-term assets are funded with longer-term
funding.
 Ensure that no undue timing concentrations exist in the Group’s funding profile.
A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, ANZ has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia
(RBA). The CLF has been established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative
form of contingent liquidity. The total amount of the CLF available to a qualifying ADI is set annually by APRA. From 1 January 2018, ANZ’s CLF is
$46.9 billion (2017 calendar year end: $43.8 billion).
 Liquid assets
The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent with
Basel 3 LCR:
 Highest-quality liquid assets (HQLA1): Cash, highest credit quality government, central bank or public sector securities eligible for repurchase
with central banks to provide same-day liquidity.
 High-quality liquid assets (HQLA2): High credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
 Alternative liquid assets (ALA): Assets qualifying as collateral for the CLF and other eligible securities listed by the Reserve Bank of New
Zealand (RBNZ).
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory requirements and
the risk appetite set by the Board.


Half Year Average

Movement

Mar 18
$B
Sep 17
$B
Mar 17
$B

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Market Values Post Discount
1




HQLA1
2

131.8
128.7 127.1

2% 4%
HQLA2
4.9
4.7 4.3

4% 14%
Internal Residential Mortgage Backed Securities (Australia)
2

31.6
30.3 33.7

4% -6%
Internal Residential Mortgage Backed Securities (New Zealand)
3

6.2
1.1 0.6

large large
Other ALA
4

13.8
14.9 15.6

-7% -12%
Total Liquid Assets
188.3
179.7 181.3 5% 4%



Cash flows modelled under stress scenario


Cash outflows
180.5
174.5 172.7 3% 5%
Cash inflows
40.4
41.3 38.2 -2% 6%
Net cash outflows

140.1
133.2 134.5 5% 4%









Liquidity Coverage Ratio
5


134%
135% 135% -1% -1%
1.
Half year average basis, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
2.
RBA open repo arrangement netted down from CLF, with a corresponding increase in HQLA.
3.
Includes ANZ Bank New Zealand Limited LCR surplus, capped at Level 1 all currency LCR for 31 March 2018. Prior periods exclude ANZ Bank New Zealand Limited’s LCR surplus.
4.
Comprised of assets qualifying as collateral for the CLF, excluding internal RMBS, up to approved facility limit; and any liquid assets contained in the RBNZ's Liquidity Policy - Annex:
Liquidity Assets - Prudential Supervision Department Document BS13A12.
5.
All currency Level 2 LCR.

GROUP RESULTS


37
Funding - including discontinued operations
ANZ targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.
$13.1 billion of term wholesale debt with a remaining term greater than one year as at 31 March 2018 was issued during the half year ended 31 March
2018.
The following table shows the Group’s total funding composition:


As at

Movement

Mar 18
$B
Sep 17
$B
Mar 17
$B

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Customer deposits and other liabilities
1


Australia

204.2
201.3 197.6 1% 3%
Institutional

190.7
189.0 181.5 1% 5%
New Zealand

79.2
75.3 74.3 5% 7%
Wealth Australia

-
- 0.3 n/a -100%
Asia Retail & Pacific

3.4
7.0 19.8 -51% -83%
TSO and Group Centre
1


(4.7)
(5.0) (5.3) -6% -11%
Customer deposits

472.8
467.6 468.2 1% 1%
Other funding liabilities
2,3


8.0
8.5 7.9 -6% 1%
Total customer liabilities (funding)

480.8
476.1 476.1 1% 1%
Wholesale funding
4



Debt issuances

97.5
90.3 88.8 8% 10%
Subordinated debt

17.2
17.7 20.3 -3% -15%
Certificates of deposit

50.3
55.2 57.4 -9% -12%
Commercial paper

24.1
18.0 9.5 33% large
Other wholesale borrowings
2,5,6


84.4
69.2 73.9 22% 14%
Total wholesale funding

273.5
250.4 249.9 9% 9%
Shareholders' equity

59.5
59.1 57.9 1% 3%
Total funding

813.8
785.6 783.9 4% 4%
1.
Includes term deposits, other deposits and an adjustment recognised in Group Centre to eliminate Wealth Australia investments in ANZ deposit products.
2.
Non-bank trade dated liabilities reclassified to align with current period presentation.
3.
Includes interest accruals, payables and other liabilities, provisions and net tax provisions, excluding other liabilities in Wealth Australia.
4.
Excludes liability for acceptances as they do not provide net funding.
5.
Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.
6.
Includes RBA open repo arrangement netted down by the exchange settlement account cash balance.


Net Stable Funding Ratio
The following table shows the Level 2 Net Stable Funding Ratio (NSFR) composition:


As at

Movement

Mar 18
$B
Sep 17
$B
Mar 17
$B

Mar 18
v. Sep 17
Mar 18
v. Mar 17
Required Stable Funding
1


Retail & small and medium enterprises, corporate loans <35% risk weight
2


184.0
181.7 178.1 1% 3%
Retail & small and medium enterprises, corporate loans >35% risk weight
2


177.2
176.2 176.2 1% 1%
Other lending
3


19.1
17.2 15.6 11% 22%
Liquid assets

9.7
9.3 9.3 4% 4%
Other assets
4


38.4
39.1 44.8 -2% -14%
Total Required Stable Funding

428.4
423.5 424.0

1% 1%




Available Stable Funding
1



Retail & small and medium enterprise customer deposits

233.4
230.7 236.2 1% -1%
Corporate, public sector entities & operational deposits

83.4
80.8 73.8 3% 13%
Central bank & other financial institution deposits

4.2
4.2 2.8 0% 50%
Term funding

94.0
87.6 89.9 7% 5%
Short term funding & other liabilities

2.7
5.3 0.5 -49% large
Capital

74.4
73.9 73.9 1% 1%
Total Available Stable Funding

492.1
482.5 477.1

2% 3%
Net Stable Funding Ratio

114.9%
113.9% 112.5% 1% 2%
1.
NSFR factored balance as per APS 210 Liquidity.
2.
Risk weighting under APS 112 Capital Adequacy: Standardised Approach to Credit Risk.
3.
Includes financial institution and central bank loans.
4.
Includes off-balance sheet items, net derivatives and other assets.