Update on impact of large notable items on 2H20 results

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
9/833 Collins Street Docklands Victoria 3008 Australia
News Release
For Release: 27 October 2020

Update on impact of large notable items on 2H20 results

ANZ today announced its second half 2020 Cash Profit will be impacted by an after tax
charge of $528m (approximately a 5 basis points impact on common equity tier one capital)
as a result of large notable items, including remediation costs and accelerated software
amortisation. The charge impacts Statutory Profit by a similar amount.

Remediation charges recognised in the second half of 2020 will be $188m (after tax), largely
related to an acceleration of remediation programs and product reviews across the Group.

Changes to the application of ANZ’s software amortisation policy resulted in a $138 million
(after tax) charge being recognised in the second half of 2020. These changes were made to
reflect the increasingly shorter useful life of various types of software assets caused by
rapidly changing technology and business requirements.

The remaining charges of $202m (after tax) include the write-down of goodwill in ANZ’s
Pacific business, the impact of AASB 9 accounting changes on ANZ’s investment in PT Panin
and restructuring charges.

The following tables are provided to illustrate the impacts of the above items to cash
continuing profit after tax (versus prior comparable periods):

Item 2H 2020
($m)
1H 2020
($m)
Movement
($m)
Customer remediation 188 91 97
Accelerated software amortisation 138 - 138
Goodwill write-off 77 - 77
Asian Associate AASB 9 adj 66 - 66
Asian Associate impairments - 815 (815)
Restructuring 41 74 (33)
Lease related items 14 58 (44)
Divestment impacts 4 (27) 31
Total 528 1,011 (483)

Item Full year 2020
($m)
Full year 2019
($m)
Movement
($m)
Customer remediation 279 475 (196)
Accelerated software amortisation 138 - 138
Goodwill write-off 77 - 77
Asian Associate AASB 9 adj 66 - 66
Asian Associate impairments 815 - 815
Restructuring 115 54 61
Lease related items 72 - 72
Divestment impacts (23) (308) 285
Royal Commission - 10 (10)
Total 1,539 231 1,308

For media enquiries contact:
Stephen Ries, +61 409 655 551
For analyst enquiries contact:
Jill Campbell, +61 412 047 448
Cameron Davis, +61 421 613 819

Approved for distribution by ANZ’s Continuous Disclosure Committee

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.


September 2020 Full Year

September 2019 Full Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-off
$M
Restructur-
ing
$M
Lease-
related
items
$M
Accelerated
software
amortisation
$M
Asian
associate
impairments
$M
Asian
associate
AASB 9
adjustment
$M
Total
$M
Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Royal
Commission
legal costs
$M
Restructur-
ing
$M
Total
$M
Cash Profit
Net interest income - 134 (106) - - (40) - - - (12) - 192 (141) - - 51
Other operating income (38) 2 (68) - - 22 - (815) (68) (965) 252 54 (71) - - 235
Operating income (38) 136 (174) - - (18) - (815) (68) (977) 252 246 (212) - - 286
Operating expenses (6) (34) (209) (77) (161) (85) (197) - - (769) - (79) (373) (15) (77) (544)
Profit before credit impairment
and income tax
(44) 102 (383) (77) (161) (103) (197) (815) (68) (1,746) 252 167 (585) (15) (77) (258)
Credit impairment charge - (23) - - - - - - - (23) - (14) - - - (14)
Profit before income tax (44) 79 (383) (77) (161) (103) (197) (815) (68) (1,769) 252 153 (585) (15) (77) (272)
Income tax benefit/(expense)
and non-controlling interests
10 (22) 104 - 46 31 59 - 2 230 (47) (50) 110 5 23 41
Cash profit/(loss)
from continuing operations
(34) 57 (279) (77) (115) (72) (138) (815) (66) (1,539) 205 103 (475) (10) (54) (231)

September 2020 Half Year March 2020 Half Year

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

Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-off
$M
Restructur-
ing
$M
Lease-
related
items
$M
Accelerated
software
amortisation
$M
Asian
associate
impairment
$M
Asian
associate
AASB 9
adjustment
$M
Total
$M
Divested
business
results
$M
Customer
remediation
$M
Restructur-
ing
$M
Lease-
related
items
$M
Asian
associate
impairment
$M
Total
$M
Cash Profit


Net interest income - 59 (84) - - (19) - - - (44) 75 (22) - (21) - 32
Other operating income (38) 1 (32) - - 10 - - (68) (127) 1 (36) - 12 (815) (838)
Operating income (38) 60 (116) - - (9) - - (68) (171) 76 (58) - (9) (815) (806)
Operating expenses (6) (16) (138) (77) (56) (11) (197) - - (501) (18) (71) (105) (74) - (268)
Profit before credit impairment
and income tax
(44) 44 (254) (77) (56) (20) (197) - (68) (672) 58 (129) (105) (83) (815) (1,074)
Credit impairment charge - (3) - - - - - - - (3) (20) - - - - (20)
Profit before income tax (44) 41 (254) (77) (56) (20) (197) - (68) (675) 38 (129) (105) (83) (815) (1,094)
Income tax benefit/(expense)
and non-controlling interests
10 (11) 66 - 15 6 59 - 2 147 (11) 38 31 25 - 83
Cash profit/(loss)
from continuing operations
(34) 30 (188) (77) (41) (14) (138) - (66) (528) 27 (91) (74) (58) (815) (1,011)
.

Large/Notable items - continuing operations

Within continuing cash profit, the Group has recognised some large/notable items. The impact of these items on the divisional results are shown in the tables below.




September 2020 Full Year

September 2019 Full Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-offs
$M
Restructur-
ing
$M
Lease-
related
items
$M
Accelerated
software
amortisation
$M
Asian
associate
impairments
$M
Asian
associate
AASB 9
adjustment
$M
Total
$M
Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Royal
Commission
legal costs
$M
Restructur-
ing
$M
Total
$M
Profit before income tax
Australia Retail and
Commercial
- - (270) - (89) (68) (31) - - (458) - - (447) - (20) (467)
Institutional - - (20) - (17) (24) (38) - - (99) - 46 (49) - (16) (19)
New Zealand - 73 (76) (27) (31) (4) (11) - - (76) - 105 (75) - (8) 22
Pacific - - (17) (50) - (3) - - - (70) - - (14) - - (14)
TSO and Group Centre (44) 6 - - (24) (4) (117) (815) (68) (1,066) 252 2 - (15) (33) 206
Profit before income tax (44) 79 (383) (77) (161) (103) (197) (815) (68) (1,769) 252 153 (585) (15) (77) (272)
Income tax benefit/(expense)
and non-controlling interests
10 (22) 104 - 46 31 59 - 2 230 (47) (50) 110 5 23 41
Cash profit/(loss)
from continuing operations
(34) 57 (279) (77) (115) (72) (138) (815) (66) (1,539) 205 103 (475) (10) (54) (231)


September 2020 Half Year

March 2020 Half Year

Large/notable items included in continuing cash profit

Large/notable items included in continuing cash profit

Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-off
$M
Restructur-
ing
$M
Lease-
related
items
$M
Accelerated
software
amortisation
$M
Asian
associate
impairment
$M
Asian
associate
AASB 9
adjustment
$M
Total
$M
Divested
business
results
$M
Customer
remediation
$M
Restructur-
ing
$M
Lease-
related
items
$M
Asian
associate
adjustments
$M
Total
$M
Profit before income tax
Australia Retail and Commercial - - (169) - (4) (36) (31) - - (240) - (101) (85) (32) - (218)
Institutional - - (20) - (13) (13) (38) - - (84) - - (4) (11) - (15)
New Zealand - 39 (50) (27) (20) (1) (11) - - (70) 34 (26) (11) (3) - (6)
Pacific - - (15) (50) - (1) - - - (66) - (2) - (2) - (4)
TSO and Group Centre (44) 2 - - (19) 31 (117) - (68) (215) 4 - (5) (35) (815) (851)
Profit before income tax (44) 41 (254) (77) (56) (20) (197) - (68) (675) 38 (129) (105) (83) (815) (1,094)
Income tax benefit/(expense)
and non-controlling interests
10 (11) 66 - 15 6 59 - 2 147 (11) 38 31 25 - 83
Cash profit/(loss)
from continuing operations
(34) 30 (188) (77) (41) (14) (138) - (66) (528) 27 (91) (74) (58) (815) (1,011)