Update on Customer Compensation and Software Amortisation

News Release


For Release: 8 October 2018

Update on Customer Compensation and Software
Amortisation

ANZ today announced that its Full Year 2018 Cash Profit will be impacted by additional
charges for customer compensation, accelerated amortisation of software and other notable
items.

Customer compensation
Charges of $374 million
1
have been recognised in 2H18 for refunds to customers and related
remediation costs. These relate to issues that have been identified from reviews to date.
These reviews remain ongoing.

Approximately 57% relates to customer refunds impacting revenue, with the balance
relating to remediation costs recorded as an expense. The total remediation charge is split
approximately 66%/34% between Continuing and Discontinued operations .

Key items of customer remediation include:

• Compensating customers for issues arising from product reviews in the Australia
Division.

• Compensation for customers receiving inappropriate advice or for services not
provided within ANZ’s former aligned dealer groups
2
.

Software amortisation
ANZ has accelerated the amortisation of certain software assets, predominantly relating to
its International business. This follows a recent review of the International business along
with a number of divestments announced or completed this year. Accelerated amortisation
expense of $206
1
million will be recorded in 2H18.

Other notable items
Along with announced divestments and the matters above, the following notable items will
be highlighted in the FY18 Results Announcement:

• Restructuring charges of $104
1
million in 2H18, largely relating to the previously
announced move of the Australia and Technology Divisions to agile ways of working.

• External legal costs associated with responding to the Royal Commission which will
total $55 million (pre-tax) for FY18.

The impact of these additional charges on ANZ’s Common Equity Tier 1 capital position
compared to 1H18 is expected to be less than 10 basis points.

ANZ’s FY18 Results Announcement will be released on 31 October 2018, with a results
template to be issued in late October.

The following tables are provided to illustrate the impacts of the above items.

1
All items are approximates on an unaudited after tax basis (in the applicable tax jurisdiction) unless otherwise
stated
2
ANZ completed the sale of its Aligned Dealer Groups to IOOF on 1 October 2018
Australia and New Zealand Banking Group Limited ABN 11 005 357 522

Estimated Impact to Continuing Operations profit after tax (versus prior
comparable period):

Item
Full Year 2018
($m)
Full Year 2017
($m)
Movement
($m)
Customer Remediation 294 109 185
Accelerated software amortisation 206 - 206
Restructuring 159 43 116
Royal Commission legal costs 38 - 38
Total Continuing 697 152 545

Item 2H 2018 ($m) 1H 2018 ($m)
Movement
($m)
Customer Remediation 247 48 199
Accelerated software amortisation 206 - 206
Restructuring 104 55 49
Royal Commission legal costs 27 11 16
Total Continuing 584 114 470


Estimated Impact to Discontinued Operations profit after tax (versus prior
comparable period):

Item
Full Year 2018
($m)
Full Year 2017
($m)
Movement
($m)
Customer Remediation 127 - 127

Item 2H 2018 ($m) 1H 2018 ($m)
Movement
($m)
Customer Remediation 127 - 127


For media enquiries contact:

Stephen Ries, +61 409 655 551
For investor enquires contact:

Jill Campbell, +61 412 047 448
Cameron Davis, +61 421 613 819