2019 Annual General Meeting – CEO’s Address

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
ANZ Centre Melbourne, Level 9A, 833 Collins Street, Docklands VIC 3008
17 December 2019
Market Announcements Office
ASX Limited
Level 4
20 Bridge Street
SYDNEY NSW 2000
Australia and New Zealand Banking Group Limited (ANZ) 2019 Annual General
Meeting – Chief Executive Officer's Address
Attached is the Chief Executive Officer’s address which will be delivered at ANZ’s 2019
Annual General Meeting. It has been approved for distribution by ANZ’s Continuous
Disclosure Committee.
Yours faithfully
Simon Pordage
Company Secretary
Australia and New Zealand Banking Group Limited

CEO ADDRESS
2019 ANNUAL GENERAL MEETING
17 December 2019
Brisbane

Thanks David. I’d also like to welcome you all here today and acknowledge the
traditional owners of the land on which this meeting is taking place.

I’d also like to echo David’s earlier comments about the bushfires impacting
large parts of Australia, and of course here in Queensland.

It’s been a tragedy for many communities and we will step-up to provide the
support necessary.

This has been a challenging year for ANZ and our customers.

Economic growth has been slower than we have been used to, and we have had
to navigate increased regulatory activity and global uncertainty.

Fortunately, we prepared well.

Our strong sense of purpose, our clear strategy and an experienced
management team means we are well positioned in what will likely be a tough
period ahead.

Business Performance

While David has given you a broad overview of our financial result, I want to
give you my perspective on our how we are tracking, particularly within our
divisions.

Retail & Commercial in Australia had a difficult year. While increased remediation
charges have had a significant impact on earnings, we are leaning into our
issues and the work already underway will help prepare us for the future.

We have also been upfront about our operational challenges in Australia,
particularly within our home loan business – which with a more deliberately
cautious approach - meant we lost market share in the first half.

However, I am pleased to report that process and policy improvements have
been implemented and driven a steady recovery.

As a result, we expect the increases in home loan applications we saw in the
second half of the year to continue well into 2020.

New Zealand delivered another solid underlying result.

Regulatory and compliance costs contributed to higher operating expenses but a
focus on operational efficiency offset inflation in business-as-usual expenses.

There are challenges ahead in New Zealand, particularly in relation to the
amount of capital we will be required to hold under the RBNZ’s final capital
requirements.

But as already highlighted, our team in New Zealand is focussed on the efficient
use of shareholder funds and we are well placed to meet this challenge without
the need to raise additional capital.

Another issue requiring attention during the year was the decision to part with
our former New Zealand CEO. Although tough, this was the right decision and
sent the right message to our people.

However, the management team has done an excellent job in difficult
circumstances and our New Zealand Board expects to announce a permanent
Chief Executive soon.

The Institutional division was a bright spot despite macro conditions impacting
the financial performance in the second half.

You may recall that we implemented a major restructure of our Institutional
business three years ago.

That has proven to be a timely decision and your Institutional business has
returned to profitable growth and is providing vital diversification for the Group.

In tandem with our international network, this business offers our customers
something our rivals just can’t match.

At a group level, our balance sheet has never been stronger and expenses have
been tightly managed for the fourth year in a row.

We maintained our sector leading capital position while also returning $5.6
billion to shareholders through dividends and our recently completed buy-back.

In the current environment, a strong balance sheet and good cost control will be
vital to protect shareholders’ long term interests.

In addition to being a stronger bank, we also need to be safer and for us that
means easier to manage and with less things that can go wrong.

We also completed the sale of other non-core assets like our Life Insurance
businesses in Australia and New Zealand.

Critically in this environment, we have reduced the cost and risk of operating the
bank while also improving our culture.

We have asked a lot of our people but they have risen to the challenge and in
addition to delivering a simpler stronger bank, our staff survey recorded the
highest level of employee engagement in our history.

The combination of these and other factors mean your bank is simpler, stronger
and safer than before.

But let me assure shareholders today, with the challenges facing the sector, we
are not sitting idle.

This year, we invested a record amount of $1.4bn on our business and will
invest more again in 2020.

These investments are designed to strengthen our infrastructure, reduce the risk
of running the bank and drive better services for our customers.

This makes ANZ one of the largest technology investors in the country and is
essential for building the capability to thrive over the years to come.

Strategy

Four years ago we recognised that while banking would remain attractive, a step
change in the operating environment meant the strategies of the past would no
longer be successful.

The cornerstone of our strategy is to generate decent and stable returns by
improving the financial well-being of our customers.

We know we will only achieve our aspiration by focussing on the things that
really add value to customers. And do those right the first time.

In order to achieve this, we will continue to simplify our business, improve our
customer proposition and invest in innovations that deliver better customer
outcomes.

That means we need the right people who listen, learn and adapt. We will also
put the best tools and insights into the hands of our customers and people.
Given we must manage the business for both the short and long term, we have
agreed to focus on some key elements over the coming year to ensure longer-
term profitable and cautious growth.

These include:

 Running our core businesses well while remediating past failures
 Keeping Institutional focused on cautious, profitable growth
 Actively managing the NZ capital challenges

 Continuing the transformation of our Australia business, as well as
implementing our response to the Royal Commission
 Driving further simplification and automation across the Group
 And finally, building a more resilient, adaptable and capable workforce

Simplification has become the mantra of the industry. However, our early action
has seen the successful divestment of 23 businesses since 2016.

This has not only improved our focus and reduced complexity, it has also
released around $7 billion in shareholder funds.

This is on top of the $5 billion that was released from the transformation of our
institutional business.

We don’t just sit on this capital.

Around half of this $12 billion was used to reinvest in our core Australia Retail
business as well as to respond to new capital requirements.

A quarter was returned to shareholders through our recent buy-backs, while the
remainder strengthened our balance sheet and provided options for the future.


Customers and community

We also recognise we have a broader role to play in the community.

In fact, it is our purpose of shaping a world where people and communities
thrive that guides this work.

As such, we remain committed to supporting our customers’ social,
environmental and economically sustainable initiatives.

We have already funded around $20 billion of these projects in recent years and
have set ourselves an ambitious new target to fund $50 billion or more by 2025.

This is not just the right thing to do...it’s also good business.

Take for instance the financing of renewable energy, where our leadership
position has been financially beneficial for shareholders.

An example of this was the €1 billion Sustainable Development Goal Bond that
we issued just last month.

There was extremely strong demand from the world’s largest investors, meaning
we were able to raise the funds at a good price for shareholders.

In turn, we are able to support innovative projects that will provide a solid
return for the bank - while also having environmental and community benefits.

This is not just about financing large renewable projects.

For example, the support we provided Seaforth Civil in Mackay or Zappala
Quarries near Cairns to purchase energy efficient equipment resulted in fuel
reductions of up to 50%. While smaller in scale, this is equally important.

The same can be said of our pledge to help Kiwis better protect their homes
from damp and cold conditions.

We know half of all Kiwi homes lack adequate insulation, making them cold,
damp and expensive to heat. That also has health impacts for residents.

These loans, while interest free, are mutually beneficial. The homes we are
financing are safer and better quality, and our customers are healthier.

It’s also why we are so committed to improving the financial literacy of our
customers through our programs like MoneyMinded.

Having reached almost 90,000 people this year alone, one of the best ways we
can contribute to the community is by investing our expertise and resources to
support people as they build their financial wellbeing.

At ANZ, we believe it makes good business to carefully manage environmental
and social risks.

Sustainable, long term shareholder returns actually depend on a company being
a stronger thread in the social fabric of society.

Customers expect us to be good citizens, our regulators expect us to be alive to
environmental, social and governance issues – as do our investors.

We have also been responding to regulator interest in our management of
carbon risks with our detailed disclosures aligning with the Financial Stability
Board’s guidelines.

Effectively what we are trying to do is to negotiate how positive social outcomes
and good business outcomes work together for the benefit of all stakeholders.

Royal Commission

In February, the Royal Commission’s final report set out how banks, and others,
had failed their customers.

At ANZ, we are paying customers back as fast as we can and acting on the
Commission’s recommendations.

For retail and commercial banking in Australia, we currently estimate that over
3.4 million bank accounts need fixing.

To date, we’ve made good on more than one million of these bank accounts.
While each issue is unique, on average we have refunded these customers
around $60 each.

No one is proud of the fact we need to remediate mistakes of the past but we
are learning from our failures and strengthening the bank as a result. We’re
teaching our people about what went wrong and how it affected our customers
to ensure we don’t make these mistakes again.

To meet the letter and spirit of the Royal Commission’s report, we have made
significant progress on the sixteen initiatives we announced in February.

We have also implemented the Sedgwick pay recommendations we were able to
act on now, made our senior executive accountability frame-work stronger and
implemented changes to help family farmers in distress.

There has also been considerable shareholder interest in the role banks play in
the prevention of financial crime.

We take this role incredibly seriously and have been proactively reviewing the
systems and processes we use to transfer money to ensure we are reporting the
information required by our regulators.

I can confirm to shareholders today that while this review remains ongoing, we
have not identified any material issues. We are also not aware of any impending
litigation from AUSTRAC.

Changing how we reward our people

Importantly, we have reformed how we pay people to reduce incentive
payments and better align us with our customers’ interests.

This means variable remuneration is now a smaller part of our people’s take
home pay and these reduced bonuses are determined by the overall
performance of the bank.

This is not about paying our people less.

It is an industry leading initiative that will positively enhance our culture and
become an important point of differentiation.

It also reduces the potential negative impact an over emphasis on individual
bonuses within a bank can have on customers and the community. It is a
positive for shareholders.

As part of this, we also strengthened our accountability frameworks to ensure
there are appropriate consequences for the small number of people who do not
meet standards of behaviour or performance.

Conclusion

These measures we have taken and continue to take are why, despite the
challenges, my team and I are excited about the opportunity ahead.

We are building a better bank for customers, the community and our colleagues
that is ultimately better for you our shareholders...a bank that is lower risk,
drives better outcomes and costs less to run.

We have achieved a great deal this year and none of this would have been
possible without a passionate and engaged workforce.

The people who work for your company are committed to doing the best by our
customers and their colleagues. I’m proud of what they have achieved over the
last few years.

Thank you