2020 Annual General Meeting – CEO’s Address & Presentation

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
ANZ Centre Melbourne, Level 9A, 833 Collins Street, Docklands VIC 3008

16 December 2020

Market Announcements Office
ASX Limited
Level 4
20 Bridge Street
SYDNEY NSW 2000





ANZ 2020 Annual General Meeting – Chief Executive Officer Address and
Presentation

Attached is the Chief Executive Officer’s address and presentation, which will be
delivered at ANZ’s 2020 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
2020 ANNUAL GENERAL MEETING
16 December 2020
Melbourne

Thank you Paul and good morning.

I’d also like to extend my welcome to you today and acknowledge the
Wurundjeri and Boon Wurrung Peoples as the traditional owners of the land from
which we are broadcasting this morning.

As Paul mentioned, the thoughts of all our people are with those who have
suffered either from the bushfires that began the year or the pandemic that
defined it .

I know at ANZ we have had many staff impacted by both events and the team
here has rallied around colleagues and families impacted.

Tragically one of our international colleagues recently passed away after
contracting COVID in their local community. We are doing everything we can to
support their family and loved ones.

This only highlights the devastating impacts that will be with us for some time.

It’s also why our purpose - to shape a world where people and communities
thrive - has never been more important.

In fact, it was our purpose that guided the way we worked with customers in
need.

When the bushfires struck, we provided much needed assistance to our
customers as well as volunteer fire services and community organisations.

And as the effects of COVID restrictions became clear, we moved quickly to
provide those impacted with loan repayment deferrals.

This was aided by the massive levels of financial support provided by
governments as well as industry and regulators working closely together.

So me shareholders however have rightly questioned if this support was at the
expense of our shareholders.

The answer is clear – this was completely aligned with shareholder interests.

Treating customers with respect and providing help in the tough times earns
respect and loyalty in the good times.

In addition, in a time of ultra-low interest rates... giving customers a chance to
work things out is cheaper than at any-time in our history and so providing time
through deferrals can be a rational response for many customers, while
delivering greater long term value for ANZ and the community.

We were also mindful of how we approached deferrals, particularly for those
customers already finding it tough before COVID.

For these customers, we relied on ‘tried-and-tested’ assistance measures
normally applied in those difficult circumstances.

And unlike some of our competitors, we didn’t automatically opt our SME
customers into a deferral. Instead, we had thoughtful conversations to ensure it
was the right thing to do for them.

In such times, it is also natural for an organisation to be consumed by managing
the immediate impacts, while missing longer term challenges. So, while
protecting your business is of prime importance, it is not all we are doing.

We are getting on with the job of maintaining a well-managed business and
preparing for future opportunities.

Our strategy hasn’t changed.

We want to improve the financial wellbeing of our customers...we know when our
customers do well, we do well.

To do this:

We will have the right people who listen, learn and adapt. Our ability to mobilise
hundreds of people to help customers through the pandemic and the bushfires
are worthy examples of this.

We will put the best tools and insights in the hands of our people and customers,
such as our ability to open accounts for new-to-bank customers using only the
ANZ app.

And to focus on a few things and do them really well.

This includes helping people buy and own a home, start, run and grow a
business or conduct business around the region.

Our work to simplify and strengthen the bank has materially lowered our
exposure to potential credit and operational risks.

It’s worth remembering how we have de-risked your bank over the recent years,
including actions like:

• Exiting Asia retail and commercial;
• Selling Esanda motor dealer finance business;
• Prioritising owner occupied home loans over investor;
• Not providing a retail home-loan offering to self-managed super funds;
• Maintaining the lowest exposure to commercial property of the major banks;
and
• And of course...more recently...exit ing life insurance, superannuation and
financial planning.

Along with the progress we have made on remediating the failures of the past,
these decisions have meant your bank faces far fewer operational risks during
this crisis. It has also provided us with the capital to stand strong in tough times.

It was of course COVID that had the most material impact on our profitability.

With operating profit before these provisions broadly flat, the largest driver of
the profit reduction was setting aside a further $1.7bn for possible future losses.

To be clear, to date we have not lost a single dollar in terms of credit losses
resulting directly from COVID...but we have built up a substantial rainy day fund
if they do occur.

And looking through the immediate impact of the pandemic, our diversified
business delivered a decent revenue performance.

In Australia, we achieved six-months of consecutive market share growth in our
targeted owner-occupier market, while deposit growth remained very strong.

We also introduced new processes to help customers move to online banking.

The work we have spoken about for several years to simplify and refocus the
Institutional business proved massively beneficial.

In fact, our institutional bank outperformed and I’m proud of its transformation.

It demonstrates the value of a well-balanced, diversified portfolio in a market
defined by high levels of liquidity, low interest rates and geopolitical tensions.

In New Zealand, it was a tough revenue environment but we maintained
leadership in key segments and we remain well positioned to benefit from the
economic recovery that looks like it is well underway.

And right across the Group, an intense focus on costs allowed us to continue to
invest at record levels.

Customers

There is obviously a lot of interest from shareholders about how our customers
are faring in these difficult times.

Now the customers we approved for deferrals were good customers who, up
until the pandemic hit, were making their payments on-time and in many cases
were ahead of schedule.

Through no fault of their own, they were stood down from their job or their
business was forced to close.

Fortunately for many of our small business customers, the worst of the health
crisis appears to be under control as we entered into the most important month
of the year.

Our card data for the first week of December in Australia is up 14% year-on-
year. Spending is also up in New Zealand.

These positive trends are also flowing through to our deferral numbers.

In our Australian business, 92% of home loan customers that were granted an
initial deferral have already rolled off, or have advised us of their intentions to
do so.

And while our exposure to the SME market is much smaller, the data here is also
looking positive with only 3,000 business loans still on repayment deferrals.

The future

There has been much talk this year about managing through a crisis.

Overnight, organisations have had to adapt to new business models or
completely rethink their distribution.

At ANZ, we moved from 11 large buildings globally, each housing over 1,000
colleagues, to a network of 40,000 home offices.

We became a distributed network overnight and as a result we are more
responsive and flexible than ever before.

There is another way of thinking about a crisis – it i s of course just a period of
rapid change.

In fact, many of the great companies we think of today, companies like
Microsoft, Apple, and Amazon forged their success in periods of great
dislocation.

This is because people in a time of crisis have new needs and good companies
figure out how to provide for them.

And this is where my focus and the focus of my team is. We stand ready to take
advantage of the opportunities that will arise.

We are supporting our best customers and will emerge with stronger
relationships than we started.

We will continue to reshape our portfolio to produce a more balanced, lower risk
business that generates decent, more predictable returns.

We are going to continue to make the bank simpler and easier to manage.

Our recent decision to partner with global payments leader Worldline is a great
example.

This is a partnership that will provide our small business customers with access
to the world’s best technology, allow them to get paid, quickly, safely and at low
cost.

It also releases investment dollars to deliver new capabilities that will strengthen
our customer proposition.

In particular, we are really excited about the opportunities in sustainable
finance, open banking, better utilisation of data and expanding our banking-as -
a- service offerings.

In fact, ANZ is already the largest provider of banking services to other financial
institutions in Australia and New Zealand. This includes our leading market share
positions in clearing as well as providing new-payments platform infrastructure
to other banks.

Concluding remarks

No doubt this has been a tough year and shareholders have unfortunately also
been impacted.

We take our role in protecting and enhancing your wealth seriously.

Through our actions over the last few years, we have freed up $12.5 billion of
your capital, which has enabled us to invest in the business while buying back
more than 100 million shares.

As a result, we are the only major bank in Australia that hasn’t diluted
shareholders in recent years.

And this puts us in a very strong position to support customers while still
providing you with a decent return.

It also means we can play a leading role in financing the recovery in Australia
and New Zealand.

Perhaps one of the most pleasing aspects of 2020 has been how our people have
responded to the challenge.

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

It hasn’t been easy for our people. Most have been forced to work from home,
with many having to juggle multiple commitments including remote learning for
young children.

Despite this they haven’t missed a beat, possibly best evidenced by the record
volumes of home loans processed through this period. I’m really proud of what
they have achieved and I’m proud to call them my colleagues.

Now I’ve been before you at these meetings as Chief Executive for five years.

In that time we have seen incredible change in the environment in which your
bank operates...whether it be the global compression of interest rates and
margins, the wave of regulatory intervention or the challenges of a global
pandemic.

During these challenges, I believe your bank has changed even more
significantly.

We have a substantially simpler business that is less focused on dealing with
problems and more focused on winning and keeping customers.

We have a work force with record engagement focused on our customers.

We have a management team that is diverse, talented and stable with a proven
track record of delivery.

I believe this sets us up to win in the coming years as we help shape a world
where the people and communities we serve once again thrive.

Finally, I’d also like to acknowledge the passing of our former Chief Executive
Will Bailey in August.

Many of you will remember that Will was Chief Executive between 1984 and
1992, having started as a teller in the Oakleigh branch of the old ES&A bank in
1950.

While I did not work with Will, I did meet him at several Retired Officer
functions. He was a mentor to many future ANZ leaders and made a significant

contribution in building the ANZ we all know today, particularly in his efforts to
modernise the bank through the use of technology.

We pass on our condolences to his wife Dorothy, as well as his family and
friends.

With that, I will hand you back to Paul.

Thank you.

FY20Statutory Profit After Tax
down 40% year on year

FY20 Collective Provision Charge
$1.7b
Collective Provision Balance
$5.0b (Sep-20)

FY20 Total Dividends Per Share
60cents
FullyFranked

CAPITAL
Common Equity Tier 1 Capital
$b
15
27
39
49
Sep-16Sep-08
1
Sep-12Sep-20
1. Sep-08 based on Fundamental Tier 1 Capital

SUSTAINABLE FINANCE & RENEWABLES TRANSACTIONS
Lendlease
AUD 500m
inaugural 7-year green
bond
Mercury
NZD 100m
inaugural 10-year
green bond
ANZ
AUD 1,250m
Tier 2 Capital 10yr
SDG Bond
Downer
AUD 1,400m
inaugural
sustainability-linked
loan
Canberra Metro
AUD 280m
inaugural 5yr green
loan for a public
private partnership
Olam
JPY 7,000m
inaugural 5-year
sustainability-linked
bond
YandinWind Farm
AUD 366m
project debt & equity
advisory
Formosa 2 Offshore
Wind Farm
TWD 6,380m/
EUR 90m
project finance loan

OUR 2020 CLIMATE CHANGE STATEMENT
Priority areas and how we are making change
Help our
customers
by encouraging them to
identify climate risks and
opportunities, create transition
plans and report publicly on
their progress
Support
transitioning
industries
to help grow the economy
Reduce our
own impact
by managing and reducing
emissions from our own
operations

OUR PURPOSE
To shape a world where people
and communities thrive

OUR STRATEGY
IMPROVE THE FINANCIAL WELL BEING OF OUR CUSTOMERS
Put the best tools and
insights in the hands
of our people and
customers
Have the right
people who listen,
learn and adapt
Focus on a few
things and do them
really well

AUSTRALIA HOUSING
ANZ home loan portfolio
Net Loans and Advances ($b)
178
178
188
80
79
82
258
Mar-20Sep-19
269
Sep-20
257
Owner OccupiedInvestor
1. Source: APRA Monthly ADI statistics
ANZ home loan market share
1
Apr-20May-20Jun-20Jul-20Sep-20
14.1%
Aug-20Oct-20
14.0%
14.2%
14.3%
14.4%
14.5%
14.6%

CUSTOMER LOAN DEFERRALS
1
Accounts (000s)
5
81
112
125
124124
110
48
33
31
Jun-20Mar-20Oct-20Aug-20Jul-20Apr-20Sep-20May-20Nov-20Dec-20 (11
th
)
1. End of month net position for Australia & New Zealand Home Loans and Australia Business Loans. Oct-20, Nov-20 & Dec-20 (11
th
) excludes accounts currently deferred where customer has indicated return
to payment at expiry

CAPITAL
Common Equity Tier 1 Capital freed up (FY16-FY20) $b
12.5
2.6
6.9
4.5
8.0
SourceUse
12.5
3.0
Announced asset sales
Retained for growth and capital mgt.
Announced buy-back completed
Net imposts (Reg. change, net of efficiencies)
Institutional reshaping

EquityInvestors
Jill Campbell
GroupGeneral Manager Investor
Relations
+61 3 8654 7749
+61 412 047 448
jill.campbell@anz.com
Cameron Davis
Executive Manager Investor
Relations
+61 3 8654 7716
+61 421613 819
cameron.davis@anz.com
Harsh Vardhan
Senior Manager
Investor Relations
+61 3 8655 0878
+61 466 848 027
harsh.vardhan@anz.com
Retail InvestorsDebt Investors
Michelle Weerakoon
Manager Shareholder Services &
Events
+61 3 8654 7682
+61 411 143 090
michelle.weerakoon@anz.com
Scott Gifford
Head of Debt Investor Relations
+61 3 8655 5683
+61 434 076 876
scott.gifford@anz.com
Our Shareholderinformationanz.com/shareholder/centre/
DISCLAIMER & IMPORTANT NOTICE: The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in
summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial
situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate
This presentation may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to ANZ’s business and operations, market conditions,
results of operations and financial condition, capital adequacy, specific provisions and risk management practices. When usedinthis presentation, 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. Such statements constitute “forward-looking statements” for the purposes of the United States Private Securities Litigation
Reform Act of 1995. 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 to
reflect the occurrence of unanticipated events.
FURTHER INFORMATION

=== IR PAGE TRANSCRIPT: Transcript of Interview with Acting CFO and CRO ===

Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
For Release: 05 May 2021

Transcript of podcast with ANZ Chief Risk Officer Kevin
Corbally, ANZ Acting Chief Financial Officer Shane Buggle
and ANZ GGM Investor Relations Jill Campbell

JILL CAMPBELL: Hi everyone. I’m Jill Campbell, the head of investor relations for ANZ.
Welcome to all of you listening to today’s discussion, which accompanies ANZ’s release of its
first half 2021 financial results. As we always do, we’ve released a number of materials
today via the ASX. All of which are also available on the ANZ website in the Shareholder
Centre. Our CEO and acting CFO present the results to the market and a slide pack
accompanies that presentation. You might find it useful to refer to that slide pack after
listening to this interview. The presentation which occurs at 10 am is taped and it’s available
for replay on our website. I’m speaking today with our Chief Risk Officer Kevin Corbally and
our acting CFO Shane Buggle. Covering some areas of interest to those of you looking to
delve a little deeper into several areas of the result. I’m going to start with you Shane. ANZ
announced an increased dividend today. Dividends ultimately are a board decision. What
kinds of factors do the management team and the Board weigh up in making those
decisions?

SHANE BUGGLE: Thanks Jill. Look at the outset I think it’s important to say that The Board -
and indeed management - are very aware of how much shareholders value dividends. We
know that last year the reduced dividend was really hard on lots of our shareholders. In this
half the dividend decision required the weighing up of a few factors – our capital levels, and
within that the level of capital generation which reflects how our business is travelling, and
of course the level of credit provisions held. This is an important consideration given the
environment we’re in. We know the market values a level of predictability and sustainability
in dividend flow, so we’re pleased to be able to move closer to our longer term payout ratio
and to fully frank the dividend. The environment though is still unpredictable. We saw
another snap lockdown in WA only recently. And the world is a long way from being out of
the woods. While Australia and New Zealand have come through well so far, some
conservatism is warranted. I also want to say that shareholders should see the dividend
announced today as a sign the Group is well placed.

JILL CAMPBELL: Well, last year, and actually a few times now ANZ has returned capital.
Given that the Group is sitting at 12.5% CET1 on a proforma basis, will we do that again?

SHANE BUGGLE: Look, capital efficiency remains a key element of ANZ’s strategy and
you’ve seen the Group’s focus on that over the last five years. And I think we can say we’ve
been a good steward of capital. As you say, our CET ratios are comfortably above APRA’s
‘unquestionably strong’ benchmark, about $7 billion dollars above it in fact. So clearly we
have some flexibility to consider capital management if the capital isn’t required in the
business or there aren’t reinvestment opportunities. However, there’s still a fair bit of
uncertainty across the various economies we operate in and being strongly capitalised is
important. For example, we won’t see the full impact of the end of JobKeeper for a few
months and there are parts of the economy that are having a harder time. So we have to
balance a strong capital position and the desire for capital efficiency with where we are in
this cycle. And that balance is something we continue to discuss.

JILL CAMPBELL: Thanks Shane. I’m going to move to you now Kevin. ANZ released a net
$491 million of provisions today, credit provisions. It’s quite amazing isn’t, it if you think
back to this time last year? Can you walk through the thinking behind that outcome?

KEVIN CORBALLY: Sure. And just to clarify that net $491 million provision release that you
refer to is comprised of a $678 million collective provision release, which is offset by a $187
million individual provision charge. And there’s a number of balancing factors here which

have to be weighed up. We came into this financial year in a strong position both from a
capital and provisioning perspective and we’re now at 12.5% Common Equity Tier 1 ratio
and we’ve got $5.1 billion in total provision balances, which includes $4.3 billion in collective
provision balances at the end of the first half. And you may recall last year I mentioned that
we had a relatively new accounting standard – referred to AASB 9 – which applies to all
banks. And it required us to hold provisions for future losses, not only due to circumstances
today, but also due to how we expect the economy to evolve in the future. So that’s more of
a forward-looking assessment and I think I referred to it as setting money aside for the
future rainy day that you may or may not need. Now we put on $1.7 billion of additional
provision charges between March and September last year for that rainy day. And look,
essentially it hasn’t rained as much as we thought it might. So through the first half of this
year we’ve released about a third of that increase from last year. Now the improved
economic outlook – noting that this is relative to what were pretty dire estimates this time
last year – gives us comfort to release some of that build-up in provisions. The economy and
then, by definition, many of our customers both big and small are currently appearing to be
in a much better place than was anticipated at the same time last year. And we also saw
some portfolio reductions in Exposure at Default during the half – largely in Institutional –
as well as improved trading conditions across a number of sectors, which have resulted in
an improvement in our risk ratings of both our Institutional and elements of our Commercial
and Retail customer base. Nevertheless though, we thought it was prudent and appropriate
to hold onto a significant amount of the build-up. Given as Shayne just mentioned a few
moments ago, we’re not out of the woods yet.

JILL CAMPBELL: Ok, so let’s go into that last comment just a little bit more, if you could
expand on it. What kinds of things would you need to see? What are you looking for that
would give you more comfort to perhaps release some more provision in the future?

KEVIN CORBALLY: Sure. Look, remember we struck our provisions estimates at the end of
March. There was then, and quite frankly there still are, a number of uncertainties. So for
example, JobKeeper and JobSeeker had only just finished, the deferral program for
mortgage and commercial customers had just finished, Brisbane had actually announced a
lockdown. And looking back, the volatility in economic outlook over the last year has been
quite extraordinary. I think about this time last year, and even September last year I should
say, our economists thought housing prices would decline by 9% this year. Now the
expectation is up by 17%. And as a management team, together with the Board, we have to
shepherd through that and strike some sort of balance. And additionally, other factors like
the speed of vaccine rollout, sporadic snap lockdowns and events happening offshore, all
have to be considered. While things are definitely way better in Australia and New Zealand
than they were this time last year, this is an extreme event and there’s quite a bit yet to
play out. So we want to exercise some caution notwithstanding the strong capital and
provision balance that I mentioned before.

JILL CAMPBELL: Ok. So with banks like ANZ, or any of the big banks and small banks, they
have what are called internal risk models that have to deal into these kinds of situations.
How does a model deal into this?

KEVIN CORBALLY: In what I suppose I would call normal or relatively benign economic
conditions, the models that we use to calculate our expected credit loss work well for our
provision estimates. But the models were not calibrated to deal with the extreme economic
movements that we’ve seen in the last 12 months. We moderated our economic scenario
weights so there was reduced weighting to the base case, which is – our base case is
somewhat at the optimistic end of consensus forecasts. And we increased the weightings to
the downside with some additional provisions that we held onto to reflect the higher risk
associated with our models under those volatile economic conditions. We also took a small
increase in our management overlays to reflect the fact that our modelled delinquency
numbers don’t reflect that the substantial deferral support packages that have assisted our
customers. And we re-evaluate the effectiveness of the modelled delinquency peaks every
quarter and in this case we took an additional $50m increase to overlays that are held
predominately for our Mortgages and Small Business books. So stepping back and thinking
about where the economy is at, especially relative to last year, how many of our customers

have returned to normal payments post the payment deferrals. But also the level of
volatility and uncertainty that still exists, we believe our current provision levels are prudent
and appropriate and we’re comfortable with the level of the release.

JILL CAMPBELL: Thank you. So most of what we’ve just talked about is really about what
we’d call collective provision. If we talk a little bit now about individual provision because
that tends to be the money you do lose. It was quite a bit lower this half and we saw this in
the quarter as well than the longer term, how should we think about that?

KEVIN CORBALLY: The first step is to think about the composition of the individual provision
charge, it’s actually an aggregate of provisions taken for newly impaired exposures,
increases in provisions that we hold for existing impaired exposures and then any write
backs or recoveries that we receive as part of our workout activities. And essentially in the
half, write backs and recoveries were basically in line with the last two halves and
substantially offset provisions that we raised for new impaireds. Increased impaireds were a
relatively small component of the provision charge for the half. There’s no question this is
abnormally low. F or example, over the last seven or eight halves we would average around
$400 million in a half. I think this reflects a few things. Importantly, it reflects the fact that
our larger customers are in a much better financial position and also unquestionably I think
it reflects the ongoing work on reducing our risk profile and improving the credit quality of
our book - not just in our Institutional business - over the last number of years. In addition,
it clearly also reflects the government support by way of various programs over the course
of last year and early into this year. And also the deferral programs that the banks provided.
And these last two factors provided customers I think with valuable time to navigate the
first stages of the crisis.

JILL CAMPBELL: Absolutely. Thank you. Shane I’m going to go back to you now we’ll talk
about margins. Good margin performance in the first half, when you look through it, what
were the drivers?

SHANE BUGGLE: Thanks Jill. Look it is a good margin performance, in fact this is the best
margin performance in a decade. Margin was up 6 basis points in the half or 3 basis points
to 160 basis points on an underlying basis. And importantly, the margin was up in each of
our divisions. This outcome is in line with the outlook provided at both the Full Year 20
Result and the First Quarter Trading Update. And so over the period we’ve had to manage
across a number of competing factors. Now the trading environment both helped and hurt.
Now there’s a chart in the pack which will step you through what I’m just about to talk
through.

JILL CAMPBELL: Right.

SHANE BUGGLE: I recommend people have a look at that. So we saw a negative 3 basis
points impact from low rates on capital and replicated deposits, net of repricing after the
standard and variable cash rate change. We also saw a negative 3 basis points impact
arising from holding higher liquid assets. The higher liquids meant we were able to reduce
our reliance on the RBA’s committed liquidity facility and so while negative for margins, it’s
actually a positive for returns. Asset margins improved 2 basis points and that was the
outcome of better Institutional lending margins, somewhat offset by competitive pressures
in home lending. There was a mix benefit primarily in liabilities and specifically we saw
higher at call deposits which were up 5 per cent on average. And finally we benefited from
good deposit management pricing across all business as well as lower wholesale funding
costs. Together, those two items drove a 4 basis points benefit.

JILL CAMPBELL: The drag on margins that comes from, what gets called in the industry,
replicating deposits, has been pretty persistent and this is for the sector, not just ANZ.
You’ve mentioned it in your commentary that it might be lower in the next half, can you
walk through why?

SHANE BUGGLE: Yes, that’s a really good question. So just standing back thinking about
that portfolio, the tenor of that portfolio is three to five years and so the sector has seen a

headwind arise as maturing tranches are replaced by new tranches at lower interest rates.
We called out, as you said, a 3 basis point impact for the first half 21 and that’s precisely
where we came in. In the second half we think the impact will be more like 1 basis point and
that’s for a couple of reasons, the first is the impact of the older tranches rolling off relative
to current investment yields is reducing, so the delta between the two is reducing. And
secondly, with rates moving higher recently there’s been an opportunity to invest deposit
growth over the last 12 months at better yields out of the five-year swap which reduces the
NIM drag. We’ll update on how we’re seeing FY22 at the Full Year results.

JILL CAMPBELL: Sure. The area of deposits looks like it’s been a benefit and again, this is
the sector, not just ANZ. Is there much more that you can do in that space?

SHANE BUGGLE: Yes, you’re right. Deposit growth in the system was strong last year off the
back of the high level government assistance. And the lockdowns limited people’s activity as
well. So we’ve seen our customers, and that’s pretty much across the board, behaving
conservatively and responsibly and building up buffers if you like. You would have to
imagine sector deposit growth, given its coming off that much elevated base, will moderate
in the second half. Although households will see the benefit of tax refunds and it’s possible
that stronger credit growth will assist businesses. Opportunities to do more repricing in
deposits are reducing, although we will see the full half benefit in the second half from
repricing done in the first half.

JILL CAMPBELL: Okay. If we go to costs now. So still with you Shane. Another good cost
outcome, and this has become something that ANZ’s built up a bit of a track record on,
when you look at the results travel through this half, what do you see, how does that work?

SHANE BUGGLE: Well you’re right, strong cost management has been a key element of
ANZ’s broader strategy since the start of financial year 16 and through that period we’ve
delivered consistent absolute cost reductions in expenses – that’s over the five-year period.
So the way we think about it is to focus on continuing to reduce the running, what we call
the running of the business costs so that we can increase investment in what we call our
accelerated strategy, without increasing the overall cost base. And if you adjust for FX, total
costs were down 1 per cent for the half after absorbing around $25 million of inflation. That
savings that we generated in running the business costs, helped us absorb an increase in
people costs as we responded to extra demand related to COVID, which was additional call
centre staff for example. A nd some higher leave costs that included granting extra leave to
staff as recognition for their efforts through COVID. As I mentioned, we’ve continued to
invest through the savings we’ve got from the running of the business and we’ve invested in
digital channels, process automation, optimising our property footprint, and simplifying end
to end processes. Broadly, if you think about it, this is the work to be able to deliver faster,
better, cheaper services to our customers over time and a better experience for our teams
and staff.

JILL CAMPBELL: And just finishing up, when you think about the $8 billion cost base
ambition that ANZ has, are the drivers of that – so I guess the path from here – are they
any different to the way that the costs have been structured over the last five years? Or is it
a case of just building on what we’ve already done?

SHANE BUGGLE: Yes, the last one. The premise is exactly the same – continue to work
away on reducing running the business costs so we can invest. We have, as you said Jill, a
really good track record on this, a real discipline in the organisation. It is now after five
years, part of the DNA of the organisation.

JILL CAMPBELL: It’s a thing.

SHANE BUGGLE: It’s a thing. So, finding headroom to increase investment is important as
this drives real benefits and not only in terms of costs, but importantly in customer
experience and operational risk and reducing operational risk. The more automated
processes are and the more straight through they are, the less manual intervention is
required and so the less chance of an error or a delay. Our customer’s expectations have

continued to evolve and we are evolving along with them. We want banking to be an easy
experience given it is such an important part of our customer’s lives.

JILL CAMPBELL: Absolutely. So thanks to both of you and that’s the end of our session
today. As I’ve mentioned to those of you listening, there’s quite a bit of material available
on our website around the results, so please make sure to have a look at that. Thank you.


For media enquiries contact:

Stephen Ries
Head of Corporate Communications
Tel: +61 409 655 551
Nick Higginbottom
Senior Manager Media Relations
Tel: +61 403 936 262


Approved for distribution by ANZ’s Continuous Disclosure Committee

=== IR PAGE TRANSCRIPT: Transcript of Interview with CEO ===

Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
News Release
For Release: 5 May 2021

Transcript of bluenotes video interview with ANZ Chief
Executive Officer Shayne Elliott

ANDREW CORNELL: Morning Shayne, thanks very much for joining us on bluenotes for the
morning of the half year result. On the surface this looks a very strong, perhaps surprisingly
strong set of numbers, but how much of that is due to the economic fallout from the
pandemic not being as bad as feared? And how much is operational things that ANZ has
done?

SHAYNE ELLIOTT: Well, inevitably Andrew it is a little bit of both. But talking about the
strong result, I think it’s important to put it into perspective. What we’re seeing here is
really a rebound, like the economy that we’ve seen rebound, so too has the bank’s result
rebounded. And a lot of that is absolutely linked to the much better outlook we’ve seen and
the much better performance we’ve seen in the economy. So that’s true. If I think about the
overall result though to put it in perspective, it’s still lower than it had been some years ago
so we shouldn’t forget that. But, of course, in order to take advantage of those opportunities
in order to participate in that rebound it’s really down to the operational performance of the
bank. Did we get the right settings in terms of capital? Did we have the right responses to
customers? Were we able to operate successfully through a very, very difficult period of
time? At ANZ we’re very proud of the fact that we’ve been able to do that – stand by
customers, get things done for them in a really unusual set of circumstances. So it’s a really
good result for the time, but we think we can do better and that’s what we’re really focussed
on, better for our customers and actually better for our shareholders.

I might, if you will, just walk through a little bit. If I think about revenue, revenue was down
a little bit. So what does that tell you? It says that we had more customers we were able to
serve, doing more things for them, processing more transactions, but actually overall
customers paid us less for that. That’s a good thing for customers. That’s a good thing for
the economy. And in response to that – which wasn’t news to us, we’ve been preparing for
this for a period of time knowing that banking was always going to get harder, not
necessarily ... we didn’t foresee a pandemic, but we knew it was always going to be harder –
so that’s why we’ve been really trimming our sails, if you will, and getting our costs
appropriately set. And we had a very good result on costs again where we got the cost of
running the bank down in absolute terms. And of course, the real boost to the result and the
reason the headline looks good is, of course, releasing those credit provisions. Last year we
were worried, quite rightly, and put aside a lot of money for a rainy day. As it turned out,
the economy performed better, we didn’t need all of those reserves so we released a little
bit of it and that’s what’s really given a bit of a boost to the result this half.


ANDREW CORNELL: And if we dig down a bit into those results, and setting aside the terrible
and ongoing consequences of the pandemic, we’ve seen as in many things, a sort of
acceleration in what’s happened in the last 12 months. There’s been multiple business cycles
almost. Corporates were gearing up then there was deferrals by retail customers on home
loans, then there was that rapid take up of digital banking – so much was happening. So
how did this play out in the individual business in the bank? Was it different across the
bank?

SHAYNE ELLIOTT: Absolutely it was different across the bank. Let’s not forget we operate in
32 markets around the world, mostly in Asia-Pacific and of course at a first instance all of

those countries have been going through different levels of managing through COVID, the
actual health consequences. What I’m really pleased about though is that at ANZ,
operationally we really didn’t miss a beat. We were able to respond really quickly to what
was going on, almost in real time. Getting people out of the office, back at home. Getting
them back into the office. Giving customers access to liquidity when they needed it and
actually getting it back and taking on liquidity when they didn’t. Getting customers to move
to those digital channels, we had to literally write code and get new apps out so that people
could operate digitally in a matter of weeks. So that inherent agility that we’ve been working
on at ANZ, while not perfect, really came through in this year and that’s really what you
want to have. You want to have a business that can respond at pace, continue to operate,
do the right thing for customers and quickly adapt to the times.

ANDREW CORNELL: And yet, you’ve referenced several times ongoing caution – I mean
really, when we see what’s happening in India for example, we can see why there’s ongoing
caution – but when you look at that mix of businesses again, are there some where you’re
more cautious and some where you’re more optimistic than others?

SHAYNE ELLIOTT: Yes. So first of all, we’re a bank, let’s not forget that we are highly
leveraged as an organisation and so we have to be extremely prudent and thoughtful when
we run the bank in terms of our risk appetite – whether that’s from a balance sheet
perspective or whether it’s operationally. Remember this result Andrew, is really talking
about the bank as at the 31st of March. Well that was literally the day or the day after
things like JobKeeper finished. So it’s a bit early to tell what the consequences of that are.
We’re very optimistic. There are lots of reasons to be positive about the outlook, particularly
in Australia and New Zealand. But there are also things to be cautious about – we don’t
know how the vaccine rollout’s going to go globally, there are some geopolitical tensions
that are still making waves in terms of trade and capital flow and those sorts of things. So
right now, we’re cautiously optimistic. We’re feeling like we’ve got our settings in a really
good position, lots of capital – in fact record levels of capital – lots of liquidity, so that
means we’ve got the ability to support customers who need it. And, operationally, a really
resilient team of people who have got the right technology and tools to be able to do the
right thing and pivot where that help is needed.

ANDREW CORNELL: You mentioned lots of capital, very strong capital generation. For
investors, last year was obviously a year when they suffered the pain of having dividends
cut, I’m sure they’re welcoming dividends coming back up again. What sort of flexibility then
do you have around that capital maybe in terms of more returns to shareholders?

SHAYNE ELLIOTT: One of the hallmarks, I think, of the way we’ve managed ANZ over the
last few years is really that focus on shareholder value and making sure we’re really looking
after them for the long term. So we’ve been taking a very prudent approach to managing
our shareholders’ capital. We haven’t put our hands into their pocket and asked for more.
Yes, last year we didn’t distribute capital through the normal ways in terms of dividends to
the extent we’ve done in the past because the prudent thing to do was to be a little bit
cautious and I think that has worked, really, extraordinarily well and in the interests of
those shareholders. So we’re conscious of it and it’s great that we’re able to return to a
more normal dividend policy for now. As you quite rightly point out, we’re sitting on a record
level of capital. In the “techy terms” we’re sitting on a CET1 ratio of 12.5% on a proforma
basis. That’s about $7 billion more than we would normally require to be unquestionably
strong. We’re very mindful of that. That money serves us no purpose other than it is a sense
of safety and prudence in a time of uncertainty. And at the time when we’ve got more
confidence about the future, of course we’re very mindful that that money belongs to our
shareholders and we would explore options to return it – either to invest in the business for
growth, or to return it into the pockets of our shareholders.

ANDREW CORNELL: Another comment you made just before is about, even with the
rebound that we hope continues after COVID, this is a mature market. Revenue
opportunities are hard to come by, there’s the focus on absolute costs, so where is the
growth opportunity – if we can set aside the uncertainty?

SHAYNE ELLIOTT: What you really saw over the last five years was a strategy designed to
simplify what we do, get better and better at it, and we think that will result in a lower cost
base and actually give us that platform for growth. Because when you get into that positive
cycle, doing great things for customers at a lower cost, the rest is sort of easy. A nd that’s
where we’re starting to see that coming through in our numbers in terms of the kinds of
customers that are choosing ANZ and the amount of business that they’re giving us. ANZ’s
one of the largest providers, if not the largest provider of banking services, financial
services, to other parts of the financial sector. For example, things like the New Payments
Platform, which enables real time payments in this country. Huge investment. Major banks
invested along with the RBA to create the ability for me to send you money literally in real
time. We built that and then what we’ve done is we’ve said ‘well, we’ve got this great
capability we can provide that to a whole bunch of other financial institutions who didn’t
have that capability’. We are by far the market leader in that, in fact we dominate that quite
significantly. Guess what? Volumes through that machine are skyrocketing, they’re up
hugely year-on -year-on -year and that’s going to be a massive growth engine for us.
Clearing, bit of a “techy” area of banking, but when other banks and other people send
money into Australia or New Zealand that goes through what we call a clearing payments
network. We have, again, more than 50 per cent market share in those things. That’s a
processing business, we’re really good at it, we’ve been growing our share and guess what?
That’s a very, very fast growing business. So there’s a lot of growth in areas like that, which
are probably not the first thing people think about when they think about banking.

ANDREW CORNELL: Well thanks very much for your time. I was just thinking it’s actually
the first time for about 18 months that we’ve been able to shoot this video sitting opposite
one another. What’s it like being back in the office? How do you see the return to office
playing out?

SHAYNE ELLIOTT: Well it’s great. We’re moving back to a hybrid model, I guess like a lot of
companies, where people are working in the office most of the week, but at home when
they need to. We went through an amazing change I think at ANZ ... in terms of getting
people out of the office at home and now we’re seeing this move back. And I look at the
data every day and what our people are telling us is that they want to be in the office, they
like to collaborate – it’s really important for us to be able to do that to deliver great
customer outcomes, but it doesn’t have to be every day. So, coming back into the office has
been great for me. What I’ve really enjoyed about it personally has just been that informal
ability to connect with other people, to be able to solve problems quickly by going to see
somebody. Or, actually it’s the informal running into people in the corridor and saying ‘hey,
I’ve got something on my mind we need to solve it’. A lot of us have got together and said
the speed at which we’re able to solve problems and do things is really enhanced when
you’re with other people and frankly, so is the creativity. So I think this blend is great. It’s
great for ANZ, it suits our culture as an organisation and actually we think it’s going to make
us a stronger company for the years ahead. It was an interesting experiment having to work
from home five days a week, but I’m glad to be back.

ANDREW CORNELL: I’m with you. It’s good to meet other people again and catch up
informally, but thanks very much for your time this morning.

SHAYNE ELLIOTT: Thank you.


For media enquiries contact:

Stephen Ries
Head of Corporate Communications
Tel: +61 409 655 551
Nick Higginbottom
Senior Manager Media Relations
Tel: +61 403 936 262



Approved for distribution by ANZ’s Continuous Disclosure Committee