ANZ 2021 Full Year Results Documents
Australia and New Zealand Banking Group Limited
ABN 11 005 357 522
Full Year
30 September 2021
Consolidated Financial Report
Dividend Announcement
and Appendix 4E
The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4E of the Australian Securities
Exchange (ASX) Listing Rules. It should be read in conjunction with ANZ’s 2021 Annual Report (when released), and is lodged with the ASX
under listing rule 4.3A.
RESULTS FOR ANNOUNCEMENT TO THE MARKET APPENDIX 4E
2
Name
of Company: Australia and New Zealand Banking Group Limited
ABN 11 005 357 522
Report for the year ended 30 September 2021
Operating Results
1
AUD million
Statutory operating income from continuing operations -1%to 17,420
Statutory profit attributable to shareholders 72% to 6,162
Cash profit
2
69% to 6,181
Cash profit from continuing operations
2
65% to 6,198
Dividends
3
Cents Franked
per amount
share per share
Proposed final dividend
4
72 100%
Interim dividend 70 100%
Record date for determining entitlements to the proposed 2021 final dividend 9 November 2021
Payment date for the proposed 2021 final dividend 16 December 2021
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 proposed 2021 final dividend. For the 2021 final 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 12 November 2021, 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 2021 final dividend must be received by ANZ's Share
Registrar by 5.00pm (Australian Eastern Daylight Time) on 10 November 2021. 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 12 November 2021.
1
Unless otherwise noted, all comparisons are to the year ended 30 September 2020.
2
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the core 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 comprise economic hedging and similar accounting items that
represent timing differences that will reverse through earnings in the future. The net after tax adjustment was an increase to statutory profit of $19 million (all attributable to continuing
operations) made up of several items. Refer pages 77 to 80 for further details.
3
There is no conduit foreign income attributed to the dividends.
4
It is proposed that the final dividend will be fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents per ordinary share.
RESULTS FOR ANNOUNCEMENT TO THE MARKET APPENDIX 4E
3
KPMG has audited the financial statements contained within the Australia and New Zealand Banking Group Limited Annual Report and has issued an
unmodified audit report. The Annual Report will be available on 3 November 2021, and will include a copy of the KPMG audit report. The financial
information contained in the Condensed Consolidated Financial Statements section of this report includes financial information extracted from the audited
financial statements.
Cash profit is not subject to 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.
Paul D O’Sullivan Shayne C Elliott
Chairman Managing Director
27 October 2021
RESULTS FOR ANNOUNCEMENT TO THE MARKET APPENDIX 4E
4
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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522
5
CONS
OLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4E
Year ended 30 September 2021
CONTENTS PAGE
Disclosure Summary 7
Summary 9
Group Results 21
Divisional Results 53
Profit Reconciliation 77
Condensed Consolidated Financial Statements 81
Supplementary Information 107
Definitions 119
ASX Appendix 4E Cross Reference Index 122
Alphabetical Index 123
This Consolidated Financial Report, Dividend Announcement and Appendix 4E (Results Announcement) has been prepared for Australia and New
Zealand Banking Group Limited (‘ANZBGL’, ‘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 Company has a formally constituted Audit Committee of the Board of Directors. The
Condensed Consolidated Financial Statements were approved by resolution of a Committee of the Board of Directors on 27 October 2021.
DISCLAIMER & IMPORTANT NOTICE:
The material in the Results Announcement contains general background information about the Bank’s activities current as at 27 October 2021. It is
information given in summary form and does not purport to be complete. It is not intended to be and should not 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.
The Results Announcement may contain forward-looking statements or opinions including statements regarding our intent, belief or current expectations
with respect to ANZ’s business operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk
management practices. When used in the Results Announcement, the words ‘forecast’, ‘estimate’, ‘project’, ‘intend’, ‘anticipate’, ‘believe’, ‘expect’, ‘may’,
‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’, ‘could’, ‘should’ and similar expressions, as they relate to ANZ and its management, are intended to identify
forward-looking statements or opinions. Those statements: are usually predictive in character; or may be affected by inaccurate assumptions or unknown
risks and uncertainties; or may differ materially from results ultimately achieved. As such, these statements should not be relied upon when making
investment decisions. These statements only speak as at the date of publication and no representation is made as to their correctness on or after this
date. Forward-looking 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.
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522
6
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DISCLOSURE SUMMARY
7
SUMMARY OF 2021 FULL 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 https://www.anz.com/shareholder/centre/reporting/.
Available on 28 October 2021 - 2021 Full Year Results
•Consolidated Financial Report, Dividend Announcement & Appendix 4E
•Investor Discussion Pack
•News
Release
•Key Financial Data (available on website only)
Available on or after 3 November 2021
2021 Annual Report
2021 Corporate Governance Statement
APS 330 Pillar III Disclosures at 30 September 2021
2021 Climate Related Financial Disclosures
2021 Environment, Social and Governance (ESG) Supplement
United Kingdom Disclosure and Transparency Rules Submission
DISCLOSURE SUMMARY
8
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SUMMARY
9
CONTENTS Page
Guide to Full Year Results 10
Statutory Profit Results 11
Cash Profit Results 12
Key Balance Sheet Metrics 14
Large/Notable Items - continuing operations 15
Full Time Equivalent Staff 20
Other Non-Financial Information 20
SUMMARY
10
Guide to Full Year Results
CORONAVIRUS (COVID-19)
The COVID-19 pandemic continues to cause major disruptions to community health and economic activities with wide-ranging impacts across many
business sectors in Australia, New Zealand and globally.
During the September 2021 half, the spread of the Delta variant resulted in new and extended lockdowns in Sydney, Melbourne and Auckland. The
Group continues to offer support to our customers to counteract the impact of COVID-19. Whilst customer loan repayment deferral support was provided
as a result of the recent lockdowns, they were less significant when compared to those provided in the previous financial year.
Facilities which
transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan population and are
managed accordingly.
The ramifications of COVID-19 remain uncertain and it is difficult to predict the ongoing impact or duration of the pandemic and relaxation of restrictions.
In preparing the Condensed Consolidated Financial Statements, the Group has made various accounting estimates for future events based on forecasts
of economic conditions which reflect expectations and assumptions as at 30 September 2021 that the Group believes are reasonable under the
circumstances.
While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses (ECL) where the Group
recognised a credit impairment release of $567 million pre-tax in the September 2021 full year (Sep 20 full year: $2,738 million charge). The credit
impairment release in the current period was primarily driven by the release of allowance for collectively assessed ECL largely reflecting the impact of an
improved economic outlook relative to the outlook at 30 September 2020, together with improvements in portfolio mix.
Refer to Note 1 of the Condensed Consolidated Financial Statements for further details on key estimation uncertainties associated with the preparation of
the 30 September 2021 results.
NON-IFRS INFORMATION
Statutory profit is prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). 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, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core business activities of the Group, enabling readers to
assess Group and Divisional performance against prior periods and against peer institutions. The adjustments made in arriving at cash profit are included
in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2021 Annual Report (when released). Cash profit is not
subject to audit by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on a
consistent basis across each period presented.
Adjustments between statutory profit and cash profit - To calculate cash profit, the Group excludes non-core items from statutory profit. Refer to
pages 77 to 80 for adjustments between statutory and cash profit.
Large/notable items within cash profit - The Group’s cash profit result from continuing operations includes a number of items collectively referred
to as large/notable items. While these items form part of cash profit, given their nature and significance, they have been presented separately
together with comparative information, where relevant, to provide transparency and aid comparison. Refer to pages 15 to 19 for details of
large/notable items.
DISCONTINUED OPERATIONS
The financial results of the divested Wealth Australia businesses are treated as discontinued operations from a financial reporting perspective. The Group
Income Statement and Statement of Comprehensive Income present discontinued operations separately from continuing operations in a separate line
item ‘Profit/(Loss) from discontinued operations’.
SUMMARY
11
Statutory Profit Results
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 7,175 6,986 3% 14,161 14,049 1%
Other operating income
1,878 1,381 36% 3,259 3,588 -9%
Operating income
9,053 8,367 8% 17,420 17,637 -1%
Operating expenses (4,569) (4,482) 2% (9,051) (9,383) -4%
Profit before credit impairment and income tax
4,484 3,885 15% 8,369 8,254 1%
Credit impairment (charge)/release 76 491 -85% 567 (2,738) large
Profit before income tax
4,560 4,376 4% 8,936 5,516 62%
Income tax expense (1,331) (1,425) -7% (2,756) (1,840) 50%
Non-controlling interests
(1) - n/a (1) (1) 0%
Profit attributable to shareholders of the Company from continuing operations
3,228 2,951 9% 6,179 3,675 68%
Profit/(Loss) from discontinued operations (9) (8) 13% (17) (98) -83%
Profit attributable to shareholders of the Company
3,219 2,943 9% 6,162 3,577 72%
Earnings Per Ordinary Share (cents)
Half Year Full Year
Reference
Page
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Basic
96
113.4 103.7 9% 217.1 126.4 72%
Diluted 96
106.7 98.4 8% 204.9 118.0 74%
Half Year Full Year
Reference
Page
Sep 21 Mar 21 Sep 21 Sep 20
Ordinary Share Dividends (cents)
Interim
1
- 70 70 25
Final
1
72 - 72 35
Total
72 70 142 60
Ordinary share dividend payout ratio
2
63.1% 67.7% 65.3% 47.6%
Profitability Ratios
Return on average ordinary shareholders' equity
3
10.2% 9.5% 9.9% 5.9%
Return on average assets
0.63% 0.56% 0.59% 0.34%
Net interest margin
1.65% 1.63% 1.64% 1.63%
Net interest income to average credit RWAs
4.18% 3.99% 4.09% 3.81%
Efficiency Ratios
Operating expenses to operating income 50.9% 53.8% 52.3% 54.5%
Operating expenses to average assets
0.90% 0.87% 0.88% 0.91%
Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M) 69 187 256 1,021
Collectively assessed credit impairment charge/(release) ($M)
(145) (678) (823) 1,717
Total credit impairment charge/(release) ($M) 100
(76) (491) (567) 2,738
Individually assessed credit impairment charge as a % of average gross loans and advances
4
0.02% 0.06% 0.04% 0.16%
Total credit impairment charge/(release) as a % of average gross loans and advances
4
(0.02%) (0.16%) (0.09%) 0.43%
1.
Fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents for the proposed 2021 final dividend (2021 interim dividend: NZD 8 cents;
2020 final dividend: NZD 4 cents; 2020 interim dividend: NZD 3 cents).
2.
Dividend payout ratio for the September 2021 half is calculated using the proposed 2021 final dividend of $2,030 million, based on the forecast number of ordinary shares on issue at the
dividend record date. Dividend payout ratios for the March 2021 half and September 2020 full year were calculated using actual dividends paid of $1,992 million and $1,703 million
respectively.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
SUMMARY
12
Cash Profit Results
1
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 7,175 6,986 3% 14,161 14,049 1%
Other operating income
1,849 1,437 29% 3,286 3,703 -11%
Operating income
9,024 8,423 7% 17,447 17,752 -2%
Operating expenses (4,569) (4,482) 2% (9,051) (9,383) -4%
Profit before credit impairment and income tax
4,455 3,941 13% 8,396 8,369 0%
Credit impairment (charge)/release 76 491 -85% 567 (2,738) large
Profit before income tax
4,531 4,432 2% 8,963 5,631 59%
Income tax expense (1,322) (1,442) -8% (2,764) (1,872) 48%
Non-controlling interests
(1) - n/a (1) (1) 0%
Cash profit from continuing operations
3,208 2,990 7% 6,198 3,758 65%
Cash profit/(loss) from discontinued operations (9) (8) 13% (17) (98) -83%
Cash profit
3,199 2,982 7% 6,181 3,660 69%
Earnings Per Ordinary Share (cents) Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Basic
112.7 105.0 7% 217.7 129.3 68%
Diluted
106.1 99.6 7% 205.5 120.6 70%
Half Year Full Year
Reference
Page
Sep 21 Mar 21 Sep 21 Sep 20
Ordinary Share Dividends
Ordinary share dividend payout ratio
2
63.5% 66.8% 65.1% 46.5%
Profitability Ratios
Return on average ordinary shareholders' equity
3
10.2% 9.7% 9.9% 6.0%
Return on average assets
0.62% 0.57% 0.60% 0.35%
Net interest margin
1.65% 1.63% 1.64% 1.63%
Net interest income to average credit RWAs
4.18% 3.99% 4.09% 3.81%
Efficiency Ratios
Operating expenses to operating income 51.0% 53.5% 52.2% 53.8%
Operating expenses to average assets
0.90% 0.87% 0.88% 0.91%
Credit Impairment Charge/(Release)
Individually assessed credit impairment charge ($M) 31 69 187 256 1,021
Collectively assessed credit impairment charge/(release) ($M) 31
(145) (678) (823) 1,717
Total credit impairment charge/(release) ($M) 31
(76) (491) (567) 2,738
Individually assessed credit impairment charge as a % of average gross loans and advances
4
0.02% 0.06% 0.04% 0.16%
Total credit impairment charge/(release) as a % of average gross loans and advances
4
(0.02%) (0.16%) (0.09%) 0.43%
Cash Profit/(Loss) By Division Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 1,835 1,782 3% 3,617 2,337 55%
Institutional
939 948 -1% 1,887 1,854 2%
New Zealand
737 771 -4% 1,508 1,017 48%
Pacific
(10) 7 large (3) (62) -95%
TSO and Group Centre
(293) (518) -43% (811) (1,388) -42%
Discontinued Operations
(9) (8) 13% (17) (98) -83%
Cash profit
3,199 2,982 7% 6,181 3,660 69%
1.
Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the results of the core business activities of the Group. Refer to pages 77
to 80 for the reconciliation between statutory and cash profit. Refer to pages 15 to 19 for information on large/notable items included in cash profit from continuing operations.
2.
Dividend payout ratio for the September 2021 half is calculated using the proposed 2021 final dividend of $2,030 million, based on the forecast number of ordinary shares on issue at the
dividend record date. Dividend payout ratios for the March 2021 half and September 2020 full year were calculated using actual dividends paid of $1,992 million and $1,703 million
respectively.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
SUMMARY
13
Key Cash Profit Metrics
Discontinued Operations
The Group completed the sale of its aligned dealer groups (ADGs) business to IOOF Holdings Limited (IOOF) on 1 October 2018, its life insurance
business to Zurich Financial Services Australia (Zurich) on 31 May 2019 and its OnePath pensions and investments (OnePath P&I) business to IOOF on
31 January 2020.
The financial results of these divested businesses are treated as discontinued operations from a financial reporting perspective. The financial results after
transaction completion primarily relate to residual operational costs on separation and part recovery based on the respective Transition Service
Agreements.
There were no material financial impacts from the discontinued operations in the current or prior comparative periods.
Continuing Operations
Key cash profit metrics specific to continuing operations are presented in the table below:
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Earnings Per Ordinary Share (cents) - continuing operations
Earnings per share (basic) 113.0 105.3 7% 218.3 132.7 65%
Half Year Full Year
Sep 21 Mar 21
Sep 21 Sep 20
Ordinary Share Dividends - continuing operations
Ordinary share dividend payout ratio 63.3% 66.6% 64.9% 45.3%
Profitability Ratios - continuing operations
Return on average ordinary shareholders' equity
1
10.2% 9.7% 9.9% 6.2%
Return on average assets
0.62% 0.57% 0.60% 0.36%
Net interest margin
1.65% 1.63% 1.64% 1.63%
Net interest income to average credit RWAs
4.18% 3.99% 4.09% 3.81%
Efficiency Ratios - continuing operations
Operating expenses to operating income
50.6% 53.2% 51.9% 52.9%
Operating expenses to average assets
0.89% 0.86% 0.87% 0.89%
1.
Average ordinary shareholders’ equity excludes non-controlling interests.
SUMMARY
14
Key Balance Sheet Metrics
As at Movement
Reference
Page
Sep 21 Mar 21 Sep 20
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Capital Management
Common Equity Tier 1 (Level 2)
- APRA Basel 3 45
12.3% 12.4% 11.3%
- Internationally Comparable Basel 3
1
45 18.3% 18.1% 16.7%
Credit risk weighted assets ($B) 46
342.5 341.9 360.0 0% -5%
Total risk weighted assets ($B) 46
416.1 408.2 429.4 2% -3%
APRA Leverage Ratio 49
5.5% 5.5% 5.4%
Balance Sheet: Key Items
Gross loans and advances ($B) 633.8 618.6 622.1 2% 2%
Net loans and advances ($B)
629.7 614.4 617.1 2% 2%
Total assets ($B)
978.9 1,018.3 1,042.3 -4% -6%
Customer deposits ($B)
593.6 561.5 552.4 6% 7%
Total equity ($B)
63.7 62.6 61.3 2% 4%
As at Movement
Liquidity Risk
Reference
Page
Sep 21 Mar 21 Sep 20
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Liquidity Coverage Ratio
2
43 136% 138% 139% -2% -3%
Net Stable Funding Ratio 44
124% 121% 124% 3% 0%
As at Movement
Reference
Page
Sep 21 Mar 21 Sep 20
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Impaired Assets
Gross impaired assets ($M) 35
1,965 2,473 2,459 -21% -20%
Gross impaired assets as a % of gross loans and advances
0.31% 0.40% 0.40%
Net impaired assets ($M) 35
1,278 1,664 1,568 -23% -18%
Net impaired assets as a % of shareholders' equity
2.0% 2.7% 2.6%
Individually assessed provision ($M) 33 687 809 891 -15% -23%
Individually assessed provision as a % of gross impaired assets
35.0% 32.7% 36.2%
Collectively assessed provision ($M) 33
4,195 4,285 5,008 -2% -16%
Collectively assessed provision as a % of credit risk weighted assets
1.22% 1.25% 1.39%
Net Tangible Assets
Net tangible assets attributable to ordinary shareholders ($B)
3
59.5 58.5 56.9 2% 5%
Net tangible assets per ordinary share ($)
21.09 20.57 20.04 3% 5%
As at Movement
Net Loans and Advances by division
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Australia Retail and Commercial 341.2 344.3 339.4 -1% 1%
Institutional
4
158.2 147.5 157.6 7% 0%
New Zealand
5
128.5 120.5 116.6 7% 10%
Pacific
1.8 1.7 1.9 6% -5%
TSO and Group Centre
- 0.4 1.6 -100% -100%
Net loans and advances by division
629.7 614.4 617.1 2% 2%
1.
See page 48 for further details regarding the differences between APRA Basel 3 and Internationally Comparable Basel 3 standards.
2.
Liquidity Coverage Ratio is calculated on a half year average basis.
3.
Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets.
4.
Excluding the impact of foreign currency translation, the Institutional division Net loans and advances increased 5% compared to March 2021 and 1% compared to September 2020.
5.
Excluding the impact of foreign currency translation, the New Zealand division Net loans and advances increased 3% compared to March 2021 and 7% compared to September 2020.
SUMMARY
15
Large/Notable Items - continuing operations
Large/notable items included in cash profit from continuing operations are described below.
Divestment impacts
As the divestments below did not qualify as discontinued operations under accounting standards, they form part of the continuing operations. The
financial impacts from these divestments are summarised below including the business results for those divestments that have completed.
Gain/(Loss) on sale from divestments Completed divestment business results
Half Year Full Year Half Year Full Year
Cash Profit Impact
Sep 21
$M
Mar 21
$M
Sep 21
$M
Sep 20
$M
Sep 21
$M
Mar 21
$M
Sep 21
$M
Sep 20
$M
UDC - - - (44) - - - 79
New Zealand legacy insurance portfolio
- 13 13 - - - - -
ANZ Share Investing
- (251) (251) - - - - -
Profit/(Loss) before income tax
- (238) (238) (44) - - - 79
Income tax benefit/(expense) and non-controlling
interests
- - - 10 - - - (22)
Cash profit/(loss) from continuing operations
- (238) (238) (34) - - - 57
UDC Finance (UDC)
The Group completed the sale of UDC to Shinsei Bank Limited (Shinsei Bank) on 1 September 2020. The Group recognised a loss after tax of
$34 million in the September 2020 full year comprising a loss on disposal of $29 million, a $31 million loss on the reversal of the life-to-date cash
profit adjustments on the economic hedges of assets sold, $6 million of transaction costs, partially offset by a $22 million release from the foreign
currency translation reserve, and a $10 million tax credit.
New Zealand legacy insurance portfolio
The Group sold and transferred its rights and obligations relating to servicing a legacy portfolio of insurance underwritten by Tower Limited (Tower) in
the New Zealand division to Tower and recognised a gain after tax of $13 million during the March 2021 half.
ANZ Share Investing
The Group reclassified its ANZ Share Investing (ANZSI) business as held for sale during the March 2021 half as the Group continued its
simplification strategy. As a result of remeasuring the net assets at fair value less costs to sell, the Group recognised a loss after tax of $251 million
relating to the write-down of goodwill attributable to the business. This had no impact to Common Equity Tier 1 (CET1) capital as it resulted in an
equivalent reduction in capital deductions.
On 16 September 2021, the Group announced it had reached an agreement to transition customers from its ANZSI platform to a CMC Markets-
branded platform over the next 12 to 18 months. The agreement did not result in any further gain or loss to the Group as the business had been
remeasured to its fair value less costs to sell. The revenue received from share investing activities is not material.
Other large/notable items
Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Half Year Full Year
Sep 21 Mar 21 Sep 21 Sep 20
Cash Profit Impact
$M $M $M $M
Operating income
(68) (74) (142) (174)
Operating expenses
(93) (92) (185) (209)
Profit/(Loss) before income tax
(161) (166) (327) (383)
Income tax benefit/(expense) and non-controlling interests 48 58 106 104
Cash profit/(loss) from continuing operations
(113) (108) (221) (279)
Litigation settlements
The Group reached an agreement to settle a United States class action related to the Bank Bill Swap Rate (BBSW) and the trading of BBSW-based
products, and recognised expenses of $48 million after tax in relation to the settlement and related costs during the March 2021 half. The settlement
is without admission of liability and remains subject to negotiation and execution of complete settlement terms as well as court approval.
Restructuring
The Group recognised restructuring expenses of $16 million after tax in the September 2021 half year and $92 million after tax in the September
2021 full year (Mar 21 half: $76 million; Sep 20 full year: $115 million) largely relating to business and property changes in the Australia Retail and
Commercial division and operational changes in the TSO and Group Centre division.
SUMMARY
16
Asian associate items
Half Year Full Year
Sep 21 Mar 21 Sep 21 Sep 20
$M $M $M $M
AmBank 1MDB settlement
- (212) (212) -
AmBank goodwill impairment
- (135) (135) -
PT Panin AASB 9 adjustment
- - - (68)
Profit/(Loss) before income tax
- (347) (347) (68)
Income tax benefit/(expense) and non-controlling interests - - - 2
Cash profit/(loss) from continuing operations
- (347) (347) (66)
AmBank 1MDB settlement
Following AMMB Holdings Berhad’s (AmBank) agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its
involvement with 1Malaysia Development Berhad (1MDB), the Group recognised a $212 million reduction in equity accounted earnings after tax
reflecting its share of the settlement provision during the March 2021 half. This had no impact to CET1 capital as it resulted in an equivalent reduction
in capital deductions.
AmBank goodwill impairment
AmBank partially impaired goodwill and the Group recognised a $135 million reduction in equity accounted earnings after tax reflecting its share of
the impairment during the March 2021 half. This had no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.
PT Panin AASB 9 adjustment
When the Group adopted AASB 9 Financial Instruments on 1 October 2018, an estimate of PT Bank Pan Indonesia (PT Panin)’s transition
adjustment was recognised through opening retained earnings to align accounting policies. During the September 2020 full year, PT Panin adopted
AASB 9 and recognised a transition adjustment in retained earnings. The $66 million after tax represents the Group’s equity accounted share of the
transition adjustment net of amounts previously adjusted by the Group on 1 October 2018. This had no impact to CET1 capital as it resulted in an
equivalent reduction in capital deductions.
Asian associate impairments
The Group recognised an impairment of $815 million after tax in respect of two of the Group’s equity accounted investments during the September
2020 full year to adjust their carrying values in line with their value in use (VIU) calculations. AmBank was impaired by $595 million and PT Panin
was impaired by $220 million. This had no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.
The Group completed impairment assessments of the carrying values as at 30 September 2021 and determined that no further adjustment to
carrying values was necessary.
Accelerated software amortisation
The Group amended the application of its software amortisation policy during the September 2020 full year to reflect the shorter useful life of various
types of software, including regulatory and compliance focused assets and purchased assets. These changes reflect the Group’s rapidly changing
technology and business needs and ongoing reinvestments in purchased and internally developed software to ensure assets remain fit for purpose.
As a result of these changes, the Group recognised accelerated amortisation of $138 million after tax during the September 2020 full year. This had
no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.
Goodwill write-off
The Group wrote off goodwill of $77 million after tax previously held in the Pacific and New Zealand divisions during the September 2020 full year:
Pacific division - The impact of COVID-19 on the economies of the Pacific region had been significant and conditions were expected to take
some time to recover. Goodwill of $50 million after tax for the division was impaired in the September 2020 full year.
New Zealand division - As a result of changes in the economic environment and outlook, the Group announced its intention to begin winding up
the Bonus Bonds business (‘Bonus Bonds’, a managed investment product) in the New Zealand division by 31 October 2020. As a result, the
Group wrote off the associated goodwill of $27 million after tax in the September 2020 full year.
This had no impact to CET1 capital as it resulted in an equivalent reduction in capital deductions.
Lease-related items
Following the adoption of the new lease accounting standard (AASB 16) on 1 October 2019 the Group recognised additional charges which were
presented as a large/notable item at the time as the 2019 comparatives were prepared under the previous lease accounting standard (AASB 117).
The ongoing AASB 16 impacts for the September 2020 full year ar
e now presented on a consistent basis to the September 2021 full year. The
residual lease related item relates to non-recurring items recognised in the September 2020 full year.
SUMMARY
17
Large/Notable items - continuing operations
Cash Profit Results
Half Year
Full Year
Sep 21
Large/
notables
Sep 21
ex. Large/
notables Mar 21
Large/
notables
Mar 21
ex. Large/
notables
Movt
ex. Large/
notables
Sep 21
Large/
notables
Sep 21
ex. Large/
notables Sep 20
Large/
notables
1
Sep 20
ex. Large/
notables
Movt
ex. Large/
notables
$M
$M
$M
$M
$M
$M
%
$M
$M
$M
$M
$M
$M
%
Net interest income
7,175
(30)
7,205
6,986
(56) 7,042
2%
14,161
(86)
14,247
14,049
28 14,021
2%
Other operating income
1,849
(38)
1,887
1,437
(603) 2,040
-8%
3,286
(641)
3,927
3,703
(987)
4,690
-16%
Operating income
9,024
(68)
9,092
8,423
(659) 9,082
0%
17,447
(727)
18,174
17,752
(959) 18,711
-3%
Operating expenses
(4,569)
(115)
(4,454)
(4,482)
(266) (4,216)
6%
(9,051)
(381)
(8,670)
(9,383)
(734) (8,649)
0%
Profit before credit im
pairment and income tax
4,455
(183)
4,638
3,941
(925) 4,866
-5%
8,396
(1,108)
9,504
8,369 (1,693) 10,062
-6%
Credit impairment (charge)/release
76
-
76
491
-
491
-85%
567
-
567
(2,738)
(23) (2,715)
large
Profit/(Loss) before income tax
4,531
(183)
4,714
4,432
(925) 5,357
-12%
8,963
(1,108)
10,071
5,631 (1,716)
7,347
37%
Income tax benefit/(expense)
and non-controlling interests
(1,323)
54
(1,377)
(1,442)
108 (1,550)
-11%
(2,765)
162
(2,927)
(1,873)
215 (2,088)
40%
Cash profit/(loss) from continuing operations
3,208
(129)
3,337
2,990
(817) 3,807
-12%
6,198
(946)
7,144
3,758 (1,501)
5,259
36%
Cash Profit/(Loss) By Division
Half Year
Full Year
Sep 21
Large/
notables
Sep 21
ex. Large/
notables Mar 21
Large/
notables
Mar 21
ex. Large/
notables
Movt
ex. Large/
notables
Sep 21
Large/
notables
Sep 21
ex. Large/
notables Sep 20
Large/
notables
1
Sep 20
ex. Large/
notables
Movt
ex. Large/
notables
$M
$M
$M
$M
$M
$M
%
$M
$M
$M $M $M $M %
Australia Retail and Commercial
1,835
(110)
1,945
1,782
(414) 2,196
-11%
3,617
(524)
4,141
2,337
(297)
2,634
57%
Institutional
939
(4)
943
948
(34)
982
-4%
1,887
(38)
1,925
1,854
(69)
1,923
0%
New Zealand
737
(11)
748
771
6
765
-2%
1,508
(5)
1,513
1,017
(60)
1,077
40%
Pacific
(10)
(1)
(9)
7
(1)
8
large
(3)
(2)
(1)
(62)
(67)
5
large
TSO and Group Centre
2
(293)
(3)
(290)
(518)
(374)
(144)
large
(811)
(377)
(434)
(1,388) (1,008)
(380)
14%
Cash profit/(loss) from continuing operations
3,208
(129)
3,337
2,990
(817) 3,807
-12%
6,198
(946)
7,144
3,758 (1,501)
5,259
36%
1.
Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted o
n 1 October 2019 as the comparative periods are now presented on a consistent basis to the September 2021 full year.
2.
TSO and Group Centre included the loss on sale and a component
of the divested business result
s for the UDC divestment complet
ed in the September 2020 full year.
SUMMARY
18
Large/Notable items - continuing operations
The Group has recognised some large/notable items within cash p
rofit from continuing operations. These items are shown in the
tables below.
September 2021
Full Year
September 2020
Full Year
Large/notable items include
d in continuing cash profit
Large/notable items include
d in continuing cash profit
Gain/(Loss)
on sale from
divestments
$M
Customer
remediation
$M
Litigation
settlements
$M
Restruc-
turing
$M
Asian
associate
items
$M
Total
$M
Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-off
$M
Restruc-
turing
$M
Lease-
related
items
1
$M
Accelerated
software
amortisation
$M
Asian
associate
impairments
$M
Asian
associate
items
$M
Total
$M
Cash Profit
Net interest income
-
(86)
-
-
-
(86)
-
134
(106)
-
-
-
-
-
-
28
Other operating income
(238)
(56)
-
-
(347)
(641)
(38)
2
(68)
-
-
-
-
(815)
(68)
(987)
Operating income
(238)
(142)
-
-
(347)
(727)
(38) 136
(174)
-
-
-
-
(815)
(68)
(959)
Operating expenses
-
(185)
(69)
(127)
-
(381)
(6)
(34)
(209)
(77) (161) (50)
(197)
-
-
(734)
Profit before credit impairment and income tax
(238)
(327)
(69)
(127)
(347)
(1,108)
(44) 102
(383)
(77) (161) (50)
(197)
(815)
(68)
(1,693)
Credit impairment (charge)/ release
-
-
-
-
-
-
-
(23)
-
-
-
-
-
-
-
(23)
Profit before income tax
(238)
(327)
(69)
(127)
(347)
(1,108)
(44)
79
(383)
(77) (161) (50)
(197)
(815)
(68)
(1,716)
Income tax benefit/(expense) and non-controlling interests
-
106
21
35
-
162
10
(22)
104
-
46 16
59
-
2
215
Cash profit/(loss) from continuing operations
(238)
(221)
(48)
(92)
(347)
(946)
(34)
57
(279)
(77) (115) (34)
(138)
(815)
(66)
(1,501)
September 2021 Half Year
March 2021 Half Year
Large/notable items in
cluded in continuing
cash profit
Large/n
otable items included in
continuing cash profit
Gain/(Loss)
on sale from
divestments
$M
Customer
remediation
$M
Litigation
settlements
$M
Restruc-
turing
$M
Asian
associate
items
$M
Total
$M
Gain/(Loss) on
sale from
divestments
$M
Customer
remediation
$M
Litigation
settlements
$M
Restructuring
$M
Asian
associate
items
$M
Total
$M
Cash Profit
Net interest income
-
(30)
-
-
-
(30)
-
(56)
-
-
-
(56)
Other operating income
-
(38)
-
-
-
(38)
(238)
(18)
-
-
(347)
(603)
Operating income
-
(68)
-
-
-
(68)
(238)
(74)
-
-
(347)
(659)
Operating expenses
-
(93)
-
(22)
-
(115)
-
(92)
(69)
(105)
-
(266)
Profit before credit impairment and income tax
-
(161)
-
(22)
-
(183)
(238)
(166)
(69)
(105)
(347)
(925)
Credit impairment (charge)/ release
-
-
-
-
-
-
-
-
-
-
-
-
Profit before income tax
-
(161)
-
(22)
-
(183)
(238)
(166)
(69)
(105)
(347)
(925)
Income tax benefit/(expense) and non-controlling interests
-
48
-
6
-
54
-
58
21
29
-
108
Cash profit/(loss) from continuing operations
-
(113)
-
(16)
-
(129)
(238)
(108)
(48)
(76)
(347)
(817)
1.
Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted o
n 1 October 2019 as the comparative periods are now presented on a consistent basis to the September 2021 full year.
SUMMARY
19
Large/Notable items - continuing operations
The Group has recognised some large/notable items within cash p
rofit from continuing operations. The impact of these items on
the divisional results are shown in the tables below.
September 2021
Full Year
September 2020
Full Year
Large/notable items include
d in continuing cash profit
Large/notable items include
d in continuing cash profit
Gain/(Loss)
on sale from
divestments
$M
Customer
remediation
$M
Litigation
settlements
$M
Restruc-
turing
$M
Asian
associate
items
$M
Total
$M
Gain/(Loss)
on sale from
divestments
$M
Divested
business
results
$M
Customer
remediation
$M
Goodwill
write-off
$M
Restruc-
turing
$M
Lease-
related
items
1
$M
Accelerated
software
amortisation
$M
Asian
associate
impairments
$M
Asian
associate
items
$M
Total
$M
Profit before income tax
Australia Retail and Commercial
(251)
(337)
-
(52)
-
(640)
-
-
(270)
-
(89) (34)
(31)
-
-
(424)
Institutional
-
28
(69)
(24)
-
(65)
-
-
(20)
-
(17) (14)
(38)
-
-
(89)
New Zealand
13
(16)
-
(9)
-
(12)
-
73
(76)
(27)
(31)
-
(11)
-
-
(72)
Pacific
-
(2)
-
(1)
-
(3)
-
-
(17)
(50)
-
(3)
-
-
-
(70)
TSO and Group Centre
2
-
-
-
(41)
(347)
(388)
(44)
6
-
-
(24)
1
(117)
(815)
(68)
(1,061)
Profit before income tax
(238)
(327)
(69)
(127)
(347)
(1,108)
(44)
79
(383)
(77) (161) (50)
(197)
(815)
(68)
(1,716)
Income tax benefit/(expense) and non-controlling interests
-
106
21
35
-
162
10
(22)
104
-
46 16
59
-
2
215
Cash profit/(loss) from continuing operations
(238)
(221)
(48)
(92)
(347)
(946)
(34)
57
(279)
(77) (115) (34)
(138)
(815)
(66)
(1,501)
September 2021 Half Year
March 2021 Half Year
Large/notable items include
d in continuing cash profit
Large/notable items include
d in continuing cash profit
Gain/(Loss)
on sale from
divestments
$M
Customer
remediation
$M
Litigation
settlements
$M
Restruc-
turing
$M
Asian
associate
items
$M
Total
$M
Gain/(Loss) on
sale from
divestments
$M
Customer
remediation
$M
Restructuring
$M
Litigation
settlements
$M
Asian
associate
items
$M
Total
$M
Profit before income tax
Australia Retail and Commercial
-
(146)
-
(12)
-
(158)
(251)
(191)
(40)
-
-
(482)
Institutional
-
3
-
(8)
-
(5)
-
25
(16)
(69)
-
(60)
New Zealand
-
(16)
-
1
-
(15)
13
-
(10)
-
-
3
Pacific
-
(2)
-
-
-
(2)
-
-
(1)
-
-
(1)
TSO and Group Centre
-
-
-
(3)
-
(3)
-
-
(38)
-
(347)
(385)
Profit before income tax
-
(161)
-
(22)
-
(183)
(238)
(166)
(105)
(69)
(347)
(925)
Income tax benefit/(expense) and non-controlling interests
-
48
-
6
-
54
-
58
29
21
-
108
Cash profit/(loss) from continuing operations
-
(113)
-
(16)
-
(129)
(238)
(108)
(76)
(48)
(347)
(817)
1.
Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted o
n 1 October 2019 as the comparative periods are now presented on a consistent basis to the September 2021 full year.
2.
TSO and Group Centre included the loss on sale and a component
of the divested business result
s for the UDC divestment complet
ed in the September 2020 full year.
SUMMARY
20
Full Time Equivalent Staff
As at 30 September 2021, ANZ employed 40,221 staff (Mar 21: 38,555 ; Sep 20: 38,579) on a full-time equivalent (FTE) basis.
Division
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Australia Retail and Commercial 14,480 14,118 3% 14,480 14,078 3%
Institutional
5,332 5,215 2% 5,332 5,291 1%
New Zealand
1
7,060 6,691 6% 7,060 6,679 6%
Pacific
1,089 1,101 -1% 1,089 1,113 -2%
TSO and Group Centre
1
11,723 10,719 9% 11,723 10,345 13%
Total FTE from continuing operations
39,684 37,844 5% 39,684 37,506 6%
Discontinued operations
2
537 711 -24% 537 1,073 -50%
Total FTE including discontinued operations
40,221 38,555 4% 40,221 38,579 4%
Average FTE from continuing operations 38,489 37,594 2% 38,043 37,728 1%
Average FTE including discontinued operations
39,093 38,532 1% 38,813 38,976 0%
Geography
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Australia 19,552 18,664 5% 19,552 18,689 5%
Asia, Pacific, Europe & America
13,196 12,678 4% 13,196 12,680 4%
New Zealand
7,473 7,213 4% 7,473 7,210 4%
Total FTE
40,221 38,555 4% 40,221 38,579 4%
1.
FTE has been restated to reflect the transfer of New Zealand Technology operations from the TSO and Group Centre division to the New Zealand division (Sep 20: 918).
2.
The discontinued operations FTE is based on an estimate of the staff working in the divested businesses based on an allocation methodology and includes staff retained in the Group
working on transitioning the sold businesses to the purchasers.
Other Non-Financial Information
Half Year
Full Year
Shareholder value - ordinary shares
Sep 21 Mar 21 Movt
Sep 21 Sep 20 Movt
Share price ($)
- high 29.64 29.55 0% 29.64 28.67 3%
- low
26.65 16.97 57% 16.97 14.10 20%
- closing
28.15 28.18 0% 28.15 17.22 63%
Closing market capitalisation of ordinary shares ($B)
79.5 80.2 -1% 79.5 48.8 63%
Total shareholder returns (TSR)
2.4% 66.6% large 70.7% -36.9% large
As at Sep 21
Credit ratings
Short-
Term
Long-
Term Outlook
Moody's Investor Services P-1 Aa3 Stable
Standard & Poor's A-1+ AA- Stable
Fitch Ratings F1 A+ Stable
GROUP RESULTS
21
CONTENTS Page
Cash Profit 22
Net Interest Income - continuing operations 23
Other Operating Income - continuing operations 25
Operating Expenses - continuing operations 28
Investment Spend - continuing operations 30
Software Capitalisation - continuing operations 30
Credit Risk - continuing operations 31
Income Tax Expense - continuing operations 37
Impact of Foreign Currency Translation - continuing operations 38
Earnings Related Hedges - continuing operations 40
Earnings Per Share - continuing operations 40
Dividends - continuing operations 41
Economic Profit - continuing operations 41
Condensed Balance Sheet - including discontinued operations 42
Liquidity Risk - including discontinued operations 43
Funding - including discontinued operations 44
Capital Management - including discontinued operations 45
Leverage Ratio - including discontinued operations 49
Capital Management - Other Developments 50
GROUP RESULTS
22
Non-IFRS Information
Statutory profit is prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). 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, a non-IFRS measure, represents ANZ’s preferred measure of the result of the core 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 on pages 119 to 120 for further details). The adjustments made in arriving at cash profit are included in statutory
profit which is subject to audit within the context of the external auditor’s audit of the 2021 ANZ Annual Report (when released). Cash profit is not subject
to audit by the external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on a
consistent basis across each period presented.
This Group Results section is reported on a cash profit basis from continuing operations unless otherwise stated.
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Statutory profit attributable to shareholders of the Company from
continuing operations
3,228 2,951 9% 6,179 3,675 68%
Adjustments between statutory profit and cash profit
1
Economic hedges (128) 51 large (77) 121 large
Revenue and expense hedges
108 (12) large 96 (36) large
Structured credit intermediation trades
- - n/a - (2) -100%
Total adjustments between statutory profit and cash profit from
continuing operations
(20) 39 large 19 83 -77%
Cash profit from continuing operations 3,208 2,990 7% 6,198 3,758 65%
1.
Refer to pages 77 to 80 for analysis of the adjustments between statutory profit and cash profit.
Group performance - cash profit
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 7,175 6,986 3% 14,161 14,049 1%
Other operating income
1,849 1,437 29% 3,286 3,703 -11%
Operating income
9,024 8,423 7% 17,447 17,752 -2%
Operating expenses (4,569) (4,482) 2% (9,051) (9,383) -4%
Profit before credit impairment and income tax
4,455 3,941 13% 8,396 8,369 0%
Credit impairment (charge)/release 76 491 -85% 567 (2,738) large
Profit before income tax
4,531 4,432 2% 8,963 5,631 59%
Income tax expense (1,322) (1,442) -8% (2,764) (1,872) 48%
Non-controlling interests
(1) - n/a (1) (1) 0%
Cash profit from continuing operations
3,208 2,990 7% 6,198 3,758 65%
Half Year Full Year
Cash Profit/(Loss) by Division
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 1,835 1,782 3% 3,617 2,337 55%
Institutional
939 948 -1% 1,887 1,854 2%
New Zealand
737 771 -4% 1,508 1,017 48%
Pacific
(10) 7 large (3) (62) -95%
TSO and Group Centre
(293) (518) -43% (811) (1,388) -42%
Cash profit from continuing operations
3,208 2,990 7% 6,198 3,758 65%
GROUP RESULTS
23
Net Interest Income - continuing operations
Half Year
Full Year
Group
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Cash net interest income
1
7,175 6,986 3% 14,161 14,049 1%
Average interest earning assets
869,825 857,524 1% 863,691 862,882 0%
Average deposits and other borrowings
728,925 696,066 5% 712,540 679,336 5%
Net interest margin (%) - cash
1.65 1.63 2 bps 1.64 1.63 1 bps
Group (excluding Markets business unit)
Cash net interest income
1
6,736 6,584 2% 13,320 13,279 0%
Average interest earning assets
618,904 580,971 7% 599,989 578,514 4%
Average deposits and other borrowings
563,767 532,132 6% 547,992 490,740 12%
Net interest margin (%) - cash
2.17 2.27 -10 bps 2.22 2.30 -8 bps
Half Year
Full Year
Cash profit net interest margin by major division
1
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial
Net interest margin (%) - cash 2.59 2.56 3 bps 2.58 2.59 -1 bps
Average interest earning assets
308,937 311,211 -1% 310,071 305,953 1%
Average deposits and other borrowings
245,089 240,094 2% 242,598 215,816 12%
Institutional
Net interest margin (%) - cash 0.85 0.77 8 bps 0.81 0.76 5 bps
Average interest earning assets
374,016 397,339 -6% 385,645 420,052 -8%
Average deposits and other borrowings
302,551 292,475 3% 297,527 313,625 -5%
New Zealand
Net interest margin (%) - cash 2.34 2.32 2 bps 2.33 2.26 7 bps
Average interest earning assets
125,729 120,580 4% 123,162 121,030 2%
Average deposits and other borrowings
100,444 95,864 5% 98,161 91,542 7%
1.
Includes large/notable items of -$30 million for the September 2021 half and -$86 million for the September 2021 full year (Mar 21 half: -$56 million; Sep 20 full year: $28 million). Refer to
pages 15 to 19 for further details on large/notable items. Also includes the major bank levy of -$157 million for the September 2021 half and -$346 million for the September 2021 full year
(Mar 21 half: -$189 million; Sep 20 full year: -$406 million).
Group net interest margin - September 2021 Full Year v September 2020 Full Year
1.
Markets Balance Sheet activities includes the impact of discretionary liquid assets and other Balance Sheet activities.
September 2021 v September 2020
Net interest margin (+1 bps)
Wholesale funding & deposit pricing (+7 bps): driven by deposit margin management across all divisions and favourable wholesale funding costs.
Asset pricing (0 bps): higher Institutional lending margins were offset by competition in home lending in the Australia Retail and Commercial and
New Zealand divisions.
Asset and funding mix (+1 bps): driven by favourable deposit mix with growth in at-call deposits, as well as increased customer deposits relative
to wholesale funding. This was partially offset by unfavourable product mix from the impacts of customers switching from variable to fixed rate
home loans, and lower unsecured lending in the Australia Retail and Commercial and New Zealand divisions.
Liquidity (-7 bps): driven by growth in lower yielding liquid assets.
Impact of rates net of repricing (-5 bps): driven by the impact of low interest rates on earnings on capital and replicating deposits.
Markets Balance Sheet activities (+6 bps): driven by a reduction in lower margin Markets average interest earning assets as a result of lower
reverse repurchase agreements.
GROUP RESULTS
24
Large/notable items (-1 bps): driven by the loss of net interest income from the divested UDC business, partially offset by reduced customer
remediation.
Average interest earning assets (+$0.8 billion or flat)
Average net loans and advances (-$19.1 billion or -3%): driven by a decrease in Institutional lending and the impact of foreign currency
translation movements, partially offset by home lending growth in the New Zealand and Australia Retail and Commercial divisions.
Average trading and investment securities (+$8.8 billion or +7%): driven by higher liquid assets partially offset by the impact of foreign currency
translation movements.
Average cash and other liquid assets (+$11.2 billion or +9%): driven by higher central bank balances, partially offset by decreases in settlement
balances, lower reverse repurchase agreements and the impact of foreign currency translation movements.
Average deposits and other borrowings (+$33.2 billion or +5%)
Average deposits and other borrowings (+$33.2 billion or +5%): driven by growth in at-call deposits across all divisions and increases in
commercial paper and certificates of deposit, partially offset by lower term deposits and the impact of foreign currency translation movements.
Group net interest margin - September 2021 Half Year v March 2021 Half Year
1.
Markets Balance Sheet activities includes the impact of discretionary liquid assets and other Balance Sheet activities.
September 2021 v March 2021
Net interest margin (+2 bps)
Wholesale funding & deposit pricing (+4 bps): driven by deposit margin management across all divisions and favourable wholesale funding costs.
Asset pricing (-2 bps): driven by increased competition in home lending in the Australia Retail and Commercial and New Zealand divisions,
partially offset by stronger Institutional margins.
Asset and funding mix (0 bps): driven by favourable deposit mix with growth in at-call deposits, as well as increased customer deposits relative to
wholesale funding. This was offset by the impacts of customers switching from variable to fixed rate home loans.
Liquidity (-3 bps): driven by growth in lower yielding liquid assets.
Impact of rates net of repricing (-1 bps): driven by the impact of low interest rates on earnings on capital and replicating deposits.
Markets Balance Sheet activities (+3 bps): driven primarily by a reduction in lower margin Markets average interest earning assets as a result of
lower reverse repurchase agreements.
Large/notable items (+1 bps): driven by lower customer remediation.
Average interest earning assets (+$12.3 billion or +1%)
Average net loans and advances (+$0.9 billion or flat): driven by home lending growth in the New Zealand division partially offset by a decline in
the Australia Retail and Commercial division.
Average trading and investment securities (-$13.9 billion or -10%): driven by a reduction in liquid assets in Markets.
Average cash and other liquid assets (+$25.3 billion or +20%): driven by higher central bank balances, partially offset by lower reverse
repurchase agreements.
Average deposits and other borrowings (+$32.9 billion or +5%)
Average deposits and other borrowings (+$32.9 billion or +5%): driven by growth in at-call deposits across all divisions and increases in
commercial paper and certificates of deposit, partially offset by lower term deposits.
GROUP RESULTS
25
Other Operating Income - continuing operations
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net fee and commission income
1
1,052 1,011 4% 2,063 2,215 -7%
Markets other operating income
492 638 -23% 1,130 1,884 -40%
Share of associates' profit/(loss)
66 (242) large (176) 155 large
Other
1
239 30 large 269 (551) large
Total cash other operating income from continuing operations
1,849 1,437 29% 3,286 3,703 -11%
Half Year Full Year
Other operating income by division
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 587 302 94% 889 1,161 -23%
Institutional
864 1,014 -15% 1,878 2,649 -29%
New Zealand
231 238 -3% 469 473 -1%
Pacific
32 33 -3% 65 84 -23%
TSO and Group Centre
135 (150) large (15) (664) -98%
Total cash other operating income from continuing operations
1,849 1,437 29% 3,286 3,703 -11%
Markets income
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 439 402 9% 841 770 9%
Other operating income
492 638 -23% 1,130 1,884 -40%
Total cash Markets income from continuing operations
931 1,040 -10% 1,971 2,654 -26%
Other operating income (excluding large/notable items)
Other operating income included a number of items collectively referred to as large/notable items of -$38 million for the September 2021 half and
-$641 million for the September 2021 full year (Mar 21 half: -$603 million; Sep 20 full year: -$987 million). While these items form part of total cash other
operating income from continuing operations, they have been excluded from the tables below given their nature and significance. Refer to items on pages
15 to 19 for further details on large/notable items.
Other operating income (excluding large/notable items) Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net fee and commission income
1
1,089 1,051 4% 2,140 2,249 -5%
Markets other operating income
491 610 -20% 1,101 1,902 -42%
Share of associates' profit/(loss)
66 105 -37% 171 223 -23%
Other
1
241 274 -12% 515 316 63%
Total cash other operating income from continuing operations
1,887 2,040 -8% 3,927 4,690 -16%
Other operating income by division (excluding large/notable
items)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 627 596 5% 1,223 1,207 1%
Institutional
862 989 -13% 1,851 2,662 -30%
New Zealand
231 225 3% 456 479 -5%
Pacific
32 33 -3% 65 84 -23%
TSO and Group Centre
135 197 -31% 332 258 29%
Total cash other operating income from continuing operations
1,887 2,040 -8% 3,927 4,690 -16%
1.
Excluding the Markets business unit.
GROUP RESULTS
26
Other operating income - September 2021 Full Year v September 2020 Full Year
September 2021 v September 2020
Other operating income decreased by $417 million (-11%). Excluding large/notable items, other operating income decreased $763 million (-16%).
Net fee and commission income (-$152 million or -7%)
$71 million decrease in the Institutional division driven by lower fees in Transaction Banking and Corporate Finance due to lower volumes since
the March 2020 half as a result of COVID-19 impacts.
$41 million decrease driven by higher customer remediation.
$23 million decrease in the Australia Retail and Commercial division driven by a reduction in the cards business contribution and other fee
declines due to lower volumes and the removal of fees.
$16 million decrease in the New Zealand division driven by reduced commission income due to the wind-up of the Bonus Bonds business and
reduction or removal of fees, partially offset by higher funds management income.
Markets income (-$683 million or -26%)
Markets income decreased $683 million (-26%) driven by $754 million (-40%) decrease in Other operating income, partially offset by $71 million
(+9%) increase in Net interest income. This was primarily attributable to the following business activities:
$376 million decrease in Rates income driven by reduced customer demand for hedging solutions, low interest rate volatility and excess liquidity.
$151 million decrease in Credit and Capital Markets income driven by less favourable credit trading conditions and lower customer and
government debt issuance volumes.
$127 million decrease in Derivative valuation adjustments driven by a credit valuation adjustment gain in the September 2020 full year.
$121 million decrease in Foreign Exchange income driven by lower volatility and reduced customer demand for longer-tenor hedging solutions,
partially offset by customer remediation provision releases.
$49 million decrease in Commodities income driven by reduced demand for hedging solutions and less favourable trading conditions in precious
metals.
$141 million increase in Balance Sheet income from net realised gains during the period.
Share of associates’ profit/(loss) (-$331 million)
$212 million decrease driven by the Group’s share of AmBank 1MDB settlement.
$135 million decrease driven by the Group’s share of AmBank goodwill impairment.
$52 million decrease in share of associates’ profits from AmBank ($44 million) and PT Panin ($8 million).
$68 million increase driven by the PT Panin AASB 9 adjustment in the September 2020 full year.
Other (+$820 million)
$815 million increase driven by the impairment of PT Panin ($220 million) and AmBank ($595 million) in the September 2020 full year.
$116 million increase in the TSO and Group Centre division primarily driven by higher realised gains on economic hedges against foreign
currency denominated revenue streams ($91 million) which offset net unfavourable foreign currency translations elsewhere in the Group.
$63 million increase in the Institutional division driven by favourable adjustments to loans measured at fair value in Corporate Finance.
$38 million increase in the Australia Retail and Commercial division driven by an increase in net insurance income and a gain on disposal of the
offsite ATM network.
$38 million increase driven by a loss on sale of UDC in the September 2020 full year.
GROUP RESULTS
27
$238 million decrease driven by the loss on reclassification of ANZ Share Investing to held for sale ($251 million) in the Australia Retail and
Commercial division, partially offset by gain from the sale of a legacy insurance portfolio to Tower ($13 million) in the New Zealand division.
September 2021 v March 2021
Other operating income increased by $412 million (+29%). Excluding large/notable items, other operating income decreased $153 million (-8%).
Net fee and commission income (+$41 million or +4%)
$42 million increase in the Australia Retail and Commercial division driven by the timing of recognition of Cards incentives, partially offset by
lower merchants’ fees due to lower spend in the September 2021 half.
Markets income (-$109 million or -10%)
Markets income decreased $109 million (-10%) driven by $146 million (-23%) decrease in Other operating income, partially offset by $37 million
(+9%) increase in Net interest income. This was primarily attributable to the following business activities:
$78 million decrease in Credit and Capital Markets income driven by less favourable credit trading conditions.
$45 million decrease in Foreign Exchange income driven by lower customer demand for hedging solutions and customer remediation provision
releases in the March 2021 half.
$14 million decrease in Derivative valuation adjustments driven by lower net positive funding valuation adjustments.
$11 million decrease in Commodities income driven by reduced demand for hedging solutions and less favourable trading conditions in precious
metals.
$4 million decrease in Rates income driven by the continued impact of low interest rate volatility and excess liquidity.
$43 million increase in Balance Sheet income from net realised gains during the period.
Share of associates’ profit/(loss) (+$308 million)
$212 million increase driven by the Group’s share of AmBank 1MDB settlement in the March 2021 half.
$135 million increase driven by the Group’s share of AmBank goodwill impairment in the March 2021 half.
$39 million decrease in share of associates’ profits from AmBank ($24 million) and PT Panin ($15 million).
Other (+$209 million)
$238 million increase driven by loss on reclassification of ANZ Share Investing to held for sale ($251 million) in the Australia Retail and
Commercial division in the March 2021 half, partially offset by gain from the sale of a legacy insurance portfolio to Tower ($13 million) in the New
Zealand division, also in the March 2021 half.
GROUP RESULTS
28
Operating Expenses - continuing operations
Half Year Full Year
1
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Personnel 2,497 2,449 2% 4,946 4,878 1%
Premises
355 350 1% 705 789 -11%
Technology
803 785 2% 1,588 1,824 -13%
Restructuring
22 105 -79% 127 161 -21%
Other
892 793 12% 1,685 1,731 -3%
Total cash operating expenses from continuing operations
4,569 4,482 2% 9,051 9,383 -4%
Full time equivalent staff (FTE) from continuing operations 39,684 37,844 5% 39,684 37,506 6%
Average full time equivalent staff (FTE) from continuing operations 38,489 37,594 2% 38,043 37,728 1%
Half Year Full Year
Operating expenses by division
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 2,024 2,000 1% 4,024 4,091 -2%
Institutional
1,173 1,274 -8% 2,447 2,558 -4%
New Zealand
702 623 13% 1,325 1,435 -8%
Pacific
73 71 3% 144 205 -30%
TSO and Group Centre
597 514 16% 1,111 1,094 2%
Total cash operating expenses from continuing operations
4,569 4,482 2% 9,051 9,383 -4%
Half Year Full Year
FTE by division
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Australia Retail and Commercial 14,480 14,118 3% 14,480 14,078 3%
Institutional
5,332 5,215 2% 5,332 5,291 1%
New Zealand
1
7,060 6,691 6% 7,060 6,679 6%
Pacific
1,089 1,101 -1% 1,089 1,113 -2%
TSO and Group Centre
1
11,723 10,719 9% 11,723 10,345 13%
Total FTE from continuing operations
39,684 37,844 5% 39,684 37,506 6%
Average FTE from continuing operations 38,489 37,594 2% 38,043 37,728 1%
1.
FTE has been restated to reflect the transfer of New Zealand Technology operations from the TSO and Group Centre division to the New Zealand division (Sep 20: 918).
Operating expenses (excluding large/notable items)
Operating expenses included a number of items collectively referred to as large/notable items of $115 million for the September 2021 half year and
$381 million for the September 2021 full year (Mar 21 half: $266 million; Sep 20 full year: $734 million). While these items form part of total cash
operating expenses from continuing operations, they have been excluded from the tables below given their nature and significance. Refer to pages 15 to
19 for further details on large/notable items.
Expenses (excluding large/notable items) Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Personnel 2,438 2,396 2% 4,834 4,735 2%
Premises
355 351 1% 706 787 -10%
Technology
797 780 2% 1,577 1,560 1%
Restructuring
- - n/a - - n/a
Other
864 689 25% 1,553 1,567 -1%
Total cash operating expenses from continuing operations
4,454 4,216 6% 8,670 8,649 0%
Expenses by division (excluding large/notable items)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 1,932 1,869 3% 3,801 3,796 0%
Institutional
1,166 1,188 -2% 2,354 2,485 -5%
New Zealand
691 613 13% 1,304 1,275 2%
Pacific
71 70 1% 141 147 -4%
TSO and Group Centre
594 476 25% 1,070 946 13%
Total cash operating expenses from continuing operations
4,454 4,216 6% 8,670 8,649 0%
GROUP RESULTS
29
Operating expenses - September 2021 Full Year v September 2020 Full Year
September 2021 v September 2020
Operating expenses decreased by $332 million (-4%). Excluding large/notable items, operating expenses increased $21 million (flat).
Personnel expenses increased $68 million (+1%) driven by an uplift in investment in digital capabilities, cloud enabled simplification and meeting
regulatory and compliance obligations, as well as additional resourcing for COVID-19 hardship support, regulatory mandated complaints support
and Home Loans operations. This was partially offset by the continued benefits enabled by customers embracing digital channels, and
favourable foreign currency translation movements.
Premises expenses decreased $84 million (-11%) driven by ongoing optimisation of property footprint across all geographies and lower lease-
related costs.
Technology expenses decreased $236 million (-13%) driven by accelerated amortisation ($197 million) and lease-related items ($50 million) in
the September 2020 full year, benefits from vendor contract negotiations, lower amortisation and favourable foreign currency translation
movements. This was partially offset by increased spend on investment initiatives.
Restructuring expenses decreased $34 million (-21%) driven by lower charges in the Australia Retail and Commercial and New Zealand
divisions, partially offset by operational changes in the TSO and Group Centre division.
Other expenses decreased $46 million (-3%) driven by a goodwill write-off in the September 2020 full year ($77 million), lower travel expenses
and lower freight and cartage. This was partially offset by increased spend on investment initiatives, and a litigation settlement ($69m).
September 2021 v March 2021
Operating expenses increased by $87 million (+2%). Excluding large/notable items, operating expenses increased $238 million (+6%) due to higher
investment spend.
Personnel expenses increased $48 million (+2%) driven by an uplift in investment in digital capabilities, cloud enabled simplification and meeting
regulatory and compliance obligations, as well as additional resourcing for COVID-19 hardship support, regulatory mandated complaints support
and Home Loans operations. This was partially offset by reduced employee leave expenses and continued benefits enabled by customers
embracing digital channels.
Technology expenses increased $18 million (+2%) driven by increased spend on investment initiatives, partially offset by lower amortisation
charges.
Restructuring expenses decreased $83 million (-79%) driven by lower charges across all divisions.
Other expenses increased $99 million (+12%) driven by increased spend on investment initiatives and seasonally higher marketing spend,
partially offset by a litigation settlement in the March 2021 half ($69 million).
GROUP RESULTS
30
Investment Spend - continuing operations
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Investment expensed
1
841 593 42% 1,434 1,055 36%
Investment capitalised
1
217 159 36% 376 419 -10%
Total investment spend from continuing operations
1
1,058 752 41% 1,810 1,474 23%
Investment spend by division Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial
1
319 236 35% 555 439 26%
Institutional
108 83 30% 191 164 16%
New Zealand
147 98 50% 245 226 8%
TSO and Group Centre
484 335 44% 819 645 27%
Total investment spend from continuing operations
1
1,058 752 41% 1,810 1,474 23%
1.
Investment spend from continuing operations has been restated to reflect the transfer of investment spend to business as usual expenses in the Australia Retail and Commercial division to
better reflect the ongoing nature of certain expenses (Mar 21 half: $17 million; Sep 20 full year: $47 million).
Software Capitalisation - continuing operations
As at 30 September 2021, the Group’s intangible assets included $960 million of costs incurred to acquire and develop software. Details are presented in
the table below:
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Balance at start of period 961 1,039 -8% 1,039 1,323 -21%
Software capitalised during the period
200 156 28% 356 375 -5%
Amortisation during the period
- Current period amortisation (201) (233) -14% (434) (460) -6%
- Accelerated amortisation
1
- - n/a - (197) -100%
Software impaired/written-off
- (1) -100% (1) (2) -50%
Total capitalised software from continuing operations
960 961 0% 960 1,039 -8%
Capitalised software by division Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia Retail and Commercial 130 133 -2% 130 147 -12%
Institutional
131 135 -3% 131 139 -6%
New Zealand
14 8 75% 14 16 -13%
TSO and Group Centre
685 685 0% 685 737 -7%
Total capitalised software from continuing operations
960 961 0% 960 1,039 -8%
1.
In the September 2020 full year, the Group amended the application of its software amortisation policy to reflect the shorter useful life of software caused by rapidly changing technology
and business requirements. As a result, the Group recognised accelerated amortisation of $197 million during the September 2020 full year which was recognised in the following divisions:
Accelerated amortisation
Sep 20
$M
Australia Retail and Commercial 31
Institutional 38
New Zealand 11
TSO and Group Centre 117
Total 197
GROUP RESULTS
31
Credit Risk - continuing operations
The impact and duration of COVID-19 on the global economy and how governments, businesses and consumers respond remains uncertain. This
uncertainty is reflected in the Group’s assessment of expected credit losses (ECL) from its credit portfolio which are subject to a number of management
judgements and estimates. The judgements and estimates made by management are based on a variety of internal and external information, as well as
the Group’s experience with respect to the performance of the portfolio under previously stressed conditions. Refer to Note 1 of the Condensed
Consolidated Financial Statements for further information.
Loan Deferral and Relief Packages (Support Packages)
From March 2020 the Group offered various forms of assistance to customers to counteract the impact of COVID-19 on the ability of customers to meet
their loan obligations. The assistance provided included arrangements such as temporary deferral of principal and interest repayments, replacing
principal and interest with interest only repayments, and extension of loan maturity dates. These support packages were phased out during the March
2021 half.
During the September 2021 half, the spreading of the Delta variant resulted in new and extended lockdowns in Sydney, Melbourne and Auckland. Whilst
customer loan repayment deferral support was provided as a result of the recent lockdowns, they were less significant when compared to those provided
in the previous financial year.
Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan
population and are managed accordingly.
For customers who took up loan support packages, it is considered that the packages, as well as government support measures, may have obscured
repayment delinquencies that might otherwise have occurred over the loan deferral period and those that may still occur in the future. Thus the Group
has provided a component of ECL for expected delinquencies and significant increases in credit risk (SICR).
Credit impairment charge/(release)
Half Year
Full Year
Collectively assessed
Sep 21
$M
Mar 21
$M
Movt
Sep 21
$M
Sep 20
$M
Movt
Australia Retail and Commercial (106) (515) -79%
(621) 1,051 large
Institutional
(49) (110) -55%
(159) 373 large
New Zealand
(8) (53) -85%
(61) 248 large
Pacific
15 - n/a
15 45 -67%
TSO and Group Centre
3 - n/a
3 - n/a
Total collectively assessed (145) (678) -79% (823) 1,717 large
Individually assessed
Australia Retail and Commercial 61 134 -54%
195 596 -67%
Institutional
15 55 -73%
70 321 -78%
New Zealand
(10) (5) 100%
(15) 97 large
Pacific
3 3 0%
6 7 -14%
TSO and Group Centre
- - n/a
- - n/a
Total individually assessed 69 187 -63% 256 1,021 -75%
Total credit impairment charge/(release)
Australia Retail and Commercial (45) (381) -88%
(426) 1,647 large
Institutional
(34) (55) -38%
(89) 694 large
New Zealand
(18) (58) -69%
(76) 345 large
Pacific
18 3 large
21 52 -60%
TSO and Group Centre
3 - n/a
3 - n/a
Total credit impairment charge/(release) (76) (491) -85% (567) 2,738 large
GROUP RESULTS
32
Credit impairment charge/(release), cont'd
Collectively assessed
Individually assessed
Stage 1 Stage 2 Stage 3 Total
Stage 3 -
New and
increased
Stage 3 -
Recoveries
and write-
backs Total Total
September 2021 Full Year $M $M $M $M $M $M $M $M
Australia Retail and Commercial
(168) (419) (34) (621) 611 (416) 195 (426)
Institutional
(103) (49) (7) (159) 145 (75) 70 (89)
New Zealand
2 (40) (23) (61) 55 (70) (15) (76)
Pacific
(3) 4 14 15 13 (7) 6 21
TSO and Group Centre
3 - - 3 - - - 3
Total
(269) (504) (50) (823) 824 (568) 256 (567)
September 2020 Full Year
Australia Retail and Commercial 228 805 18 1,051 965 (369) 596 1,647
Institutional 203 178 (8) 373 451 (130) 321 694
New Zealand 20 190 38 248 147 (50) 97 345
Pacific 4 37 4 45 12 (5) 7 52
TSO and Group Centre - - - - - - - -
Total 455 1,210 52 1,717 1,575 (554) 1,021 2,738
September 2021 Half Year
Australia Retail and Commercial
(32) (62) (12) (106) 285 (224) 61 (45)
Institutional
(14) (41) 6 (49) 57 (42) 15 (34)
New Zealand
8 (10) (6) (8) 21 (31) (10) (18)
Pacific
(1) 5 11 15 6 (3) 3 18
TSO and Group Centre
3 - - 3 - - - 3
Total
(36) (108) (1) (145) 369 (300) 69 (76)
March 2021 Half Year
Australia Retail and Commercial (136) (357) (22) (515) 326 (192) 134 (381)
Institutional (89) (8) (13) (110) 88 (33) 55 (55)
New Zealand (6) (30) (17) (53) 34 (39) (5) (58)
Pacific (2) (1) 3 - 7 (4) 3 3
TSO and Group Centre - - - - - - - -
Total (233) (396) (49) (678) 455 (268) 187 (491)
Collectively assessed credit impairment charge/(release)
September 2021 v September 2020
The collectively assessed credit impairment charge decreased $2,540 million driven by decreases across the Australia Retail and Commercial
(-$1,672 million), Institutional (-$532 million) and New Zealand (-$309 million) divisions. Collectively assessed credit impairment provision increased
substantially in the September 2020 full year driven by the forward-looking impacts of the COVID-19 pandemic. Improvement in the economic
outlook together with improvements in portfolio mix resulted in collectively assessed credit impairment provision releases in the September 2021 full
year.
September 2021 v March 2021
The collectively assessed credit impairment release decreased $533 million driven by decreases across the Australia Retail and Commercial
($409 million), Institutional ($61 million) and New Zealand ($45 million) divisions. Collectively assessed credit impairment provisions decreased
substantially in the March 2021 half driven by improvement in the economic outlook and improvements in portfolio mix. The collectively assessed
credit impairment release in September 2021 half was primarily driven by underlying changes in portfolio risk combined with a relatively stable view
of forward-looking economic outlook.
GROUP RESULTS
33
Individually assessed credit impairment charge/(release)
September 2021 v September 2020
The individually assessed credit impairment charge decreased by $765 million (-75%) driven by decreases across the Australia Retail and
Commercial (-$401 million), Institutional (-$251 million), and New Zealand (-$112 million) divisions. The decrease in the Australia Retail and
Commercial division was driven by lower impairments as the underlying flows remained subdued due to the impact of various COVID-19 support
initiatives. The decrease in the Institutional division was driven by a number of impairments in the September 2020 full year. The decrease in the
New Zealand division was driven by lower transitions to impairment and the write-back of a large Agri customer.
September 2021 v March 2021
The individually assessed credit impairment charge decreased by $118 million (-63%) driven by decreases across the Australia Retail and
Commercial (-$73 million) and Institutional (-$40 million) divisions. The decrease in the Australia division was driven by lower impairments in the
home loan portfolio as underlying delinquency flows remained subdued due to the impact of various COVID-19 support initiatives, combined with
higher write-backs and recoveries in the Commercial portfolio. The decrease in the Institutional division was driven by lower transitions to impaired
loans.
Allowance for expected credit losses
1
As at Movement
Collectively assessed
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Australia Retail and Commercial 2,225 2,331 2,845 -5% -22%
Institutional
1,346 1,364 1,513 -1% -11%
New Zealand
526 513 570 3% -8%
Pacific
95 77 80 23% 19%
TSO and Group Centre
3 - - n/a n/a
Total collectively assessed 4,195 4,285 5,008 -2% -16%
Individually assessed
Australia Retail and Commercial 406 520 610 -22% -33%
Institutional
195 191 158 2% 23%
New Zealand
63 79 102 -20% -38%
Pacific
23 19 21 21% 10%
TSO and Group Centre
- - - n/a n/a
Total individually assessed 687 809 891 -15% -23%
Allowance for ECL
Australia Retail and Commercial 2,631 2,851 3,455 -8% -24%
Institutional
1,541 1,555 1,671 -1% -8%
New Zealand
589 592 672 -1% -12%
Pacific
118 96 101 23% 17%
TSO and Group Centre
3 - - n/a n/a
Total allowance for ECL 4,882 5,094 5,899 -4% -17%
1.
Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments -
undrawn and contingent facilities.
GROUP RESULTS
34
Allowance for expected credit losses, cont'd
1
Collectively assessed
Individually
assessed
As at September 2021
Stage 1
$M
Stage 2
$M
Stage 3
$M
Total
$M
Stage 3
$M
Total
$M
Australia Retail and Commercial 430 1,467 328 2,225 406 2,631
Institutional
949 373 24 1,346 195 1,541
New Zealand
154 317 55 526 63 589
Pacific
18 48 29 95 23 118
TSO and Group Centre
3
- - 3 - 3
Total
1,554 2,205 436 4,195 687 4,882
As at March 2021
Australia Retail and Commercial 462 1,530 339 2,331 520 2,851
Institutional 940 407 17 1,364 191 1,555
New Zealand 141 313 59 513 79 592
Pacific 18 42 17 77 19 96
TSO and Group Centre
-
- - - - -
Total 1,561 2,292 432 4,285 809 5,094
As at September 2020
Australia Retail and Commercial 597 1,886 362 2,845 610 3,455
Institutional 1,056 426 31 1,513 158 1,671
New Zealand 147 346 77 570 102 672
Pacific 20 46 14 80 21 101
TSO and Group Centre
-
- - - - -
Total 1,820 2,704 484 5,008 891 5,899
1.
Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments -
undrawn and contingent facilities.
GROUP RESULTS
35
Long-Run Loss Rates
Management believes that disclosure of modelled long-run historical loss rates for individually assessed 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 long-run loss
methodology used for economic profit is an internal measure and is not based on the credit loss recognition principles of AASB 9 Financial Instruments.
In addition, given it is based on an average historical long-run loss rate it may not fully reflect the potential impacts associated with COVID-19.
As at
Long-run loss as a % of gross lending assets by division
Sep 21 Mar 21 Sep 20
Australia Retail and Commercial
0.22% 0.24% 0.27%
New Zealand
0.13% 0.15% 0.16%
Institutional
0.25% 0.25% 0.30%
Total Group
0.22% 0.23% 0.26%
Gross Impaired Assets
As at
Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Impaired loans
1
1,549 1,941 2,001 -20% -23%
Restructured items
2
355 300 254 18% 40%
Non-performing commitments and contingencies
1
61 232 204 -74% -70%
Gross impaired assets
1,965 2,473 2,459 -21% -20%
Individually assessed provisions
Impaired loans
(666) (778) (851) -14% -22%
Non-performing commitments and contingencies
(21) (31) (40) -32% -48%
Net impaired assets
1,278 1,664 1,568 -23% -18%
Gross impaired assets by division
Australia Retail and Commercial 1,041 1,228 1,634 -15% -36%
Institutional
704 892 434 -21% 62%
New Zealand
164 310 347 -47% -53%
Pacific
56 43 44 30% 27%
Gross impaired assets
1,965 2,473 2,459 -21% -20%
Gross impaired assets by size of exposure
Less than $10 million 1,289 1,474 1,713 -13% -25%
$10 million to $100 million
222 267 339 -17% -35%
Greater than $100 million
454 732 407 -38% 12%
Gross impaired assets
1,965 2,473 2,459 -21% -20%
1.
Impaired loans and non-performing commitments and contingencies do not include exposures that are collectively assessed for Stage 3 ECL, which comprise unsecured retail exposures of
90+ days past due and defaulted but well secured exposures.
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.
September 2021 v September 2020
Gross impaired assets decreased $494 million (-20%) driven by decreases across the Australia Retail and Commercial (-$593 million) and New
Zealand (-$183 million) divisions, partially offset by an increase in the Institutional ($270 million) division. The decrease in the Australia Retail and
Commercial division was driven by the repayment of a single name restructured exposure and decreases in the retail portfolio as underlying
delinquency flows remained subdued due to the impact of various COVID-19 support initiatives. The decrease in the New Zealand division was
driven by upgrade of a large Agri customer and a number of Agri asset sales. The increase in the Institutional division was driven by impairments of a
small number of well secured single name exposures in the March 2021 half.
September 2021 v March 2021
Gross impaired assets decreased $508 million (-21%) driven by decreases across the Institutional (-$188 million), Australia Retail and Commercial
(-$187 million), and New Zealand (-$146 million) divisions. The decrease in the Institutional division was driven by the repayments of several single
name exposures. The decrease in the Australia Retail and Commercial division was due to the underlying delinquency flows remaining subdued
reflecting the impact of various COVID-19 support initiatives. The decrease in the New Zealand division was driven by upgrade of a large Agri
customer and a number of Agri asset sales.
The Group’s individually assessed provision coverage ratio on impaired assets was 35.0% at 30 September 2021 (Mar 21: 32.7%; Sep 20: 36.2%).
GROUP RESULTS
36
New Impaired Assets
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Impaired loans
1
508 798 -36% 1,306 2,488 -48%
Restructured items
2
70 239 -71% 309 70 large
Non-performing commitments and contingencies
1
33 84 -61% 117 231 -49%
Total new impaired assets
611 1,121 -45% 1,732 2,789 -38%
New impaired assets by division
Australia Retail and Commercial 461 421 10% 882 1,645 -46%
Institutional
62 602 -90% 664 768 -14%
New Zealand
75 69 9% 144 361 -60%
Pacific
13 29 -55% 42 15 large
Total new impaired assets
611 1,121 -45% 1,732 2,789 -38%
1.
Impaired loans and non-performing commitments and contingencies do not include exposures that are collectively assessed for Stage 3 ECL, which comprise unsecured retail exposures of
90+ days past due and defaulted but well secured exposures.
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.
September 2021 v September 2020
New impaired assets decreased $1,057 million (-38%) driven by the Australia Retail and Commercial (-$763 million), New Zealand (-$217 million)
and Institutional (-$104 million) divisions. The decrease in the Australia Retail and Commercial division was due to the underlying delinquency flows
remaining subdued due to the impact of various COVID-19 support initiatives. The decrease in the New Zealand division was driven by the new
impairment of a large Agri customer in the September 2020 full year. The decrease in the Institutional division was driven by the higher impairment
volumes in September 2020.
September 2021 v March 2021
New impaired assets decreased by $510 million (-45%) driven by the Institutional division (-$540 million) due to impairments of a small number of
well secured single name exposures in March 2021 half. This was partially offset by Australia Retail and Commercial ($40 million) with small
increases in restructured home loan and personal loan impairments.
Ageing analysis of net loans and advances that are past due but not impaired
1
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
1-29 days 4,757 5,657 5,161 -16% -8%
30-59 days
1,751 1,732 1,028 1% 70%
60-89 days
860 691 569 24% 51%
90+ days
3,065 3,290 3,844 -7% -20%
Total
10,433 11,370 10,602 -8% -2%
1.
Excludes eligible customers impacted by COVID-19 who applied for and were granted a 6 month repayment deferral package for the duration of the deferral. Customers who were 30 days
past due or greater were not eligible for the 6 month repayment deferral packages.
September 2021 v September 2020
Net loans and advances past due but not impaired decreased $169 million (-2%) driven by a decrease in the 90+ days segment in the Australia
Retail and Commercial and New Zealand divisions home loan portfolios as underlying delinquency flows remained subdued due to the impact of
various COVID-19 support initiatives. This was partially offset by increases in the 30-59 days and 60-89 days segments as customer positions
normalise post the various Covid-19 support initiatives.
September 2021 v March 2021
Net loans and advances past due but not impaired decreased $937 million (-8%) driven by decreases in the 1-29 days and 90+ days segments. The
decrease in the 1-29 days segment was driven by the Australia Retail and Commercial division home loan portfolio. The decrease in the 90+ days
segment was due to the underlying delinquency flows remaining subdued due to the impact of various COVID-19 support initiatives. This was
partially offset by increase in the 30-59 days and 60-89 days segments as customer positions normalise post the various Covid-19 support initiatives.
GROUP RESULTS
37
Income Tax Expense - continuing operations
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in the profit and loss.
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Cash profit before income tax from continuing operations 4,531 4,432 2% 8,963 5,631 59%
Prima facie income tax expense at 30%
1,359 1,330 2% 2,689 1,689 59%
Tax effect of permanent differences:
Gains or losses on sale from divestments - (4) -100% (4) 2 large
Impairment of investment in AmBank and PT Panin
- - n/a - 245 -100%
Share of associates' (profit)/loss
(19) 72 large 53 (47) large
Reclassification of ANZ Share Investing to held for sale
- 75 -100% 75 - n/a
Interest on convertible instruments
22 22 0% 44 52 -15%
Overseas tax rate differential
(37) (50) -26% (87) (88) -1%
Provision for foreign tax on dividend repatriation
11 26 -58% 37 20 85%
Other
(7) (20) -65% (27) 25 large
Subtotal
1,329 1,451 -8% 2,780 1,898 46%
Income tax (over)/under provided in previous years (7) (9) -22% (16) (26) -38%
Income tax expense from cash profit
1,322 1,442 -8% 2,764 1,872 48%
Australia 893 1,023 -13% 1,916 1,129 70%
Overseas 429 419 2% 848 743 14%
Income tax expense from cash profit
1,322 1,442 -8% 2,764 1,872 48%
Effective tax rate 29.2% 32.5% 30.8% 33.2%
September 2021 v September 2020
The effective tax rate decreased from 33.2% to 30.8%. The decrease of 241 bps was driven by the non-tax deductible impairment of investments in
AmBank and PT Panin in the September 2020 full year (-435 bps), partially offset by lower equity accounted earnings (+142 bps) and the non-tax
deductible impacts of the reclassification of ANZ Share Investing to held for sale in the March 2021 half (+84 bps).
September 2021 v March 2021
The effective tax rate decreased from 32.5% to 29.2%. The decrease of 334 bps was driven by higher equity accounted earnings (-207 bps) and the
non-tax deductible impacts of the reclassification of ANZ Share Investing to held for sale in the March 2021 half (-169 bps).
GROUP RESULTS
38
Impact of Foreign Currency Translation - continuing operations
The following tables present the Group’s cash profit results, net loans and advances and customer deposits neutralised for the impact of foreign currency
translation movements. 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.
September 2021 Full Year v September 2020 Full Year
Full Year Movement
Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted
Sep 21
$M
Sep 20
$M
Sep 20
$M
Sep 20
$M
Sep 21
v. Sep 20
Sep 21
v. Sep 20
Net interest income 14,161 14,049 (137) 13,912 1% 2%
Other operating income
3,286 3,703 7 3,710 -11% -11%
Operating income
17,447 17,752 (130) 17,622 -2% -1%
Operating expenses (9,051) (9,383) 147 (9,236) -4% -2%
Profit before credit impairment and income tax
8,396 8,369 17 8,386 0% 0%
Credit impairment (charge)/release 567 (2,738) 43 (2,695) large large
Profit before income tax
8,963 5,631 60 5,691 59% 57%
Income tax expense (2,764) (1,872) (24) (1,896) 48% 46%
Non-controlling interests
(1) (1) - (1) 0% 0%
Cash profit from continuing operations
6,198 3,758 36 3,794 65% 63%
Cash profit/(loss) from continuing operations by division
Australia Retail and Commercial 3,617 2,337 - 2,337
55% 55%
Institutional
1,887 1,854 (23) 1,831
2% 3%
New Zealand
1,508 1,017 (5) 1,012
48% 49%
Pacific
(3) (62) 4 (58)
-95% -95%
TSO and Group Centre
(811) (1,388) 60 (1,328) -42% -39%
Cash profit from continuing operations
6,198 3,758 36 3,794 65% 63%
Net loans and advances by division
Australia Retail and Commercial 341,233 339,381 - 339,381
1% 1%
Institutional
158,231 157,634 (415) 157,219
0% 1%
New Zealand
128,466 116,625 3,671 120,296
10% 7%
Pacific
1,771 1,866 (7) 1,859
-5% -5%
TSO and Group Centre
18 1,587 (1) 1,586 -99% -99%
Net loans and advances
629,719 617,093 3,248 620,341 2% 2%
Customer deposits by division
Australia Retail and Commercial 252,504 234,594 - 234,594
8% 8%
Institutional
239,628 223,288 (1,309) 221,979
7% 8%
New Zealand
97,719 91,004 2,864 93,868
7% 4%
Pacific
3,767 3,534 (13) 3,521
7% 7%
TSO and Group Centre
(35) (57) 1 (56) -39% -38%
Customer deposits
593,583 552,363 1,543 553,906 7% 7%
GROUP RESULTS
39
September 2021 Half Year v March 2021 Half Year
Half Year Movement
Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted
Sep 21
$M
Mar 21
$M
Mar 21
$M
Mar 21
$M
Sep 21
v. Mar 21
Sep 21
v. Mar 21
Net interest income 7,175 6,986 7 6,993 3% 3%
Other operating income
1,849 1,437 13 1,450 29% 28%
Operating income
9,024 8,423 20 8,443 7% 7%
Operating expenses (4,569) (4,482) (2) (4,484) 2% 2%
Profit before credit impairment and income tax
4,455 3,941 18 3,959 13% 13%
Credit impairment (charge)/release 76 491 1 492 -85% -85%
Profit before income tax
4,531 4,432 19 4,451 2% 2%
Income tax expense (1,322) (1,442) (4) (1,446) -8% -9%
Non-controlling interests
(1) - - - n/a n/a
Cash profit from continuing operations
3,208 2,990 15 3,005 7% 7%
Cash profit/(loss) from continuing operations by division
Australia Retail and Commercial
1,835 1,782 - 1,782 3% 3%
Institutional
939 948 2 950 -1% -1%
New Zealand
737 771 5 776 -4% -5%
Pacific
(10) 7 - 7 large large
TSO and Group Centre
(293) (518) 8 (510) -43% -43%
Cash profit from continuing operations
3,208 2,990 15 3,005 7% 7%
Net loans and advances by division
Australia Retail and Commercial
341,233 344,269 - 344,269 -1% -1%
Institutional
158,231 147,446 3,063 150,509 7% 5%
New Zealand
128,466 120,482 4,845 125,327 7% 3%
Pacific
1,771 1,713 61 1,774 3% 0%
TSO and Group Centre
18 449 1 450 -96% -96%
Net loans and advances
629,719 614,359 7,970 622,329 3% 1%
Customer deposits by division
Australia Retail and Commercial
252,504 241,315 - 241,315 5% 5%
Institutional
239,628 223,666 7,066 230,732 7% 4%
New Zealand
97,719 93,201 3,748 96,949 5% 1%
Pacific
3,767 3,394 119 3,513 11% 7%
TSO and Group Centre
(35) (53) 1 (52) -34% -33%
Customer deposits
593,583 561,523 10,934 572,457 6% 4%
GROUP RESULTS
40
Earnings Related Hedges - continuing operations
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily New
Zealand Dollar and US Dollar). New Zealand Dollar exposure relates to the New Zealand geography and USD exposures relate to Asia, Pacific, Europe &
America geography. Details of these hedges are set out below.
Half Year Full Year
NZD Economic hedges
Sep 21
$M
Mar 21
$M
Sep 21
$M
Sep 20
$M
Net open NZD position (notional principal)
1
2,652 2,444 2,652 2,276
Amount taken to income (pre-tax statutory basis)
2
(91) 26 (65) (7)
Amount taken to income (pre-tax cash basis)
3
2 18 20 6
USD Economic hedges
Net open USD position (notional principal)
1
528 463 528 453
Amount taken to income (pre-tax statutory basis)
2
(26) 26 - 48
Amount taken to income (pre-tax cash basis)
3
38 16 54 (23)
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 30 September 2021, the following hedges were in place to partially hedge future earnings against adverse movements in exchange rates:
NZD 2.8 billion at a forward rate of approximately NZD 1.06/AUD.
USD 0.4 billion at a forward rate of approximately USD 0.74/AUD.
During the September 2021 full year:
NZD 1.8 billion of economic hedges matured and a realised gain of $20 million (pre-tax) was recorded in cash profit.
USD 0.4 billion of economic hedges matured and a realised gain of $54 million (pre-tax) was recorded in cash profit.
An unrealised loss of $139 million (pre-tax) on the outstanding NZD and USD economic hedges was recorded in the statutory Income Statement
during the year. This unrealised loss has been treated as an adjustment to statutory profit in calculating cash profit as these are hedges of future
NZD and USD revenues.
Earnings Per Share - continuing operations
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Cash earnings per share (cents) from continuing operations
Basic
113.0 105.3 7% 218.3 132.7 65%
Diluted
106.4 99.9 7% 206.0 123.7 67%
Cash weighted average number of ordinary shares (M)
Basic 2,838.4 2,838.7 0% 2,838.6 2,830.9 0%
Diluted
3,105.5 3,084.4 1% 3,098.8 3,201.1 -3%
Cash profit from continuing operations ($M) 3,208 2,990 7% 6,198 3,758 65%
Cash profit from continuing operations used in calculating diluted
cash earnings per share ($M)
3,303 3,082 7% 6,385 3,959 61%
GROUP RESULTS
41
Dividends - continuing operations
Half Year Full Year
Dividend per ordinary share (cents) - continuing operations
1
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Interim - 70 70 25
Final
72 - 72 35
Total
72 70 3% 142 60 large
Ordinary share dividends used in payout ratio ($M)
2,3
2,030 1,992 2% 4,022 1,703 large
Cash profit from continuing operations ($M)
3,208 2,990 7% 6,198 3,758 65%
Ordinary share dividend payout ratio (cash basis)
3
63.3% 66.6% 64.9% 45.3%
1.
Fully franked for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 8 cents for the proposed 2021 final dividend (2021 interim dividend: NZD 8 cents;
2020 final dividend: NZD 4 cents; 2020 interim dividend: NZD 3 cents).
2.
Dividend paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries to the Group’s non-controlling equity holders (Sep 2021 half: nil; Mar 2021 half: nil; Sep
2020 full year: nil).
3.
Dividend payout ratio is calculated using proposed 2021 final dividend of $2,030 million, based on the forecast number of ordinary shares on issue at the dividend record date. Dividend
payout ratios for the March 2021 half and September 2020 full year were calculated using actual dividend paid.
The Directors propose a final dividend of 72 cents be paid on each eligible fully paid ANZ ordinary share on 16 December 2021. The proposed 2021 final
dividend will be fully franked for Australian tax purposes. New Zealand imputation credits of NZD 8 cents per ordinary share will also be attached.
Economic Profit - continuing operations
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Statutory profit attributable to shareholders of the Company from
continuing operations
3,228 2,951 9% 6,179 3,675 68%
Adjustments between statutory profit and cash profit from continuing operations
(20) 39 large 19 83 -77%
Cash profit from continuing operations
3,208 2,990 7% 6,198 3,758 65%
Economic credit cost adjustment (561) (895) -37% (1,456) 778 large
Imputation credits
560 549 2% 1,109 1,092 2%
Economic return from continuing operations
3,207 2,644 21% 5,851 5,628 4%
Cost of capital (2,438) (2,621) -7% (5,059) (4,921) 3%
Economic profit from continuing operations
769 23 large 792 707 12%
Economic profit is a risk adjusted profit measure used to evaluate business unit performance. This is used for internal management purposes and is not
subject to audit by the external auditor.
At a business unit level, capital is allocated based on Regulatory 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,
operational risk, market risk and other risks.
Economic profit is calculated via a series of adjustments to cash profit:
The economic credit cost adjustment replaces the accounting credit loss charge with internal expected loss based on the average long-run loss rate
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 (7.75% for the September 2021 half and 8.5% for the March 2021 half with
the average of 8.125% being applied to the September 2020 full year for comparative purposes).
Economic profit increased by $746 million against the March 2021 half with higher cash profit, higher imputation credits, favourable economic credit cost
adjustment and lower cost of capital.
Economic profit increased by $85 million against the September 2020 full year due to higher cash profit and imputation credits partially offset by
unfavourable economic credit cost adjustment and higher cost of capital.
GROUP RESULTS
42
Condensed Balance Sheet - including discontinued operations
As at
Movement
Assets
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Cash / Settlement balances owed to ANZ / Collateral paid 168.0 146.3 129.7 15% 30%
Trading and investment securities
127.8 138.3 144.3 -8% -11%
Derivative financial instruments
38.7 104.7 135.3 -63% -71%
Net loans and advances
629.7 614.4 617.1 2% 2%
Other
14.7 14.6 15.9 1% -8%
Total assets
978.9 1,018.3 1,042.3 -4% -6%
Liabilities
Settlement balances owed by ANZ / Collateral received 23.1 26.7 31.5 -13% -27%
Deposits and other borrowings
743.1 706.6 682.3 5% 9%
Derivative financial instruments
36.0 102.9 134.7 -65% -73%
Debt issuances
101.1 107.6 119.7 -6% -16%
Other
11.9 11.9 12.8 0% -7%
Total liabilities
915.2 955.7 981.0 -4% -7%
Total equity 63.7 62.6 61.3 2% 4%
September 2021 v September 2020
Cash / Settlement balances owed to ANZ / Collateral paid increased $38.3 billion (+30%) driven by an increase in balances with central banks,
partially offset by decreases in reverse repurchase agreements, collateral paid and the impact of foreign currency translation movements.
Trading and investment securities decreased $16.5 billion (-11%) driven by a decrease in liquid assets in Markets.
Derivative financial assets and liabilities decreased $96.6 billion (-71%) and $98.7 billion (-73%) respectively driven by a reduction following a
change in legal arrangements for the settlement of derivative transactions with a central clearing counterparty (reduction of $55.1 billion in
derivative assets and $55.2 billion in derivative liabilities), and the impact of market rate movements.
Net loans and advances increased $12.6 billion (+2%) driven by increases across the New Zealand (+$8.2 billion) and Australia Retail and
Commercial (+$1.9 billion) divisions reflecting home loan growth, and the impact of foreign currency translation movements.
Settlement balances owed by ANZ / Collateral received decreased $8.4 billion (-27%) driven by decreases in collateral received and cash
clearing account balances.
Deposits and other borrowings increased $60.8 billion (+9%) driven by increases in customer deposits across the Australia Retail and
Commercial (+$17.9 billion), Institutional (+$17.6 billion) and New Zealand (+$3.9 billion) divisions, an increase in commercial paper
(+$16.5 billion) and certificates of deposit (+$5.2 billion), a further $8.1 billion drawdown of the RBA Term Funding Facility (TFF) and a
$1.2 billion drawdown of the Reserve Bank of New Zealand’s (RBNZ) Funding for Lending Programme (FLP) and Term Lending Facility (TLF),
and the impact of foreign currency translation movements. This was partially offset by decreases in deposits from banks and repurchase
agreements (-$10.0 billion).
Debt issuances decreased $18.6 billion (-16%) driven by lower senior debt issuances which were partially replaced by the further drawdown of
the TFF, classified in Deposits and other borrowings.
September 2021 v March 2021
Cash / Settlement balances owed to ANZ / Collateral paid increased $21.7 billion (+15%) driven by increases in balances with central banks and
the impact of foreign currency translation movements, partially offset by decreases in settlement balances owed to ANZ and collateral paid.
Trading and investment securities decreased $10.5 billion (-8%) driven by a decrease in liquid assets in Markets, partially offset by the impact of
foreign currency translation movements.
Derivative financial assets and liabilities decreased $66.0 billion (-63%) and $66.9 billion (-65%) driven by a reduction following a change in legal
arrangements for the settlement of derivative transactions with a central clearing counterparty in the September 2021 half (reduction of
$55.1 billion in derivative assets and $55.2 billion in derivative liabilities), and the impact of market rate movements.
Net loans and advances increased $15.3 billion (+2%) driven by higher lending volumes in the Institutional division (+$7.7 billion), an increase in
the New Zealand division (+$3.1 billion) reflecting home loan growth, and the impact of foreign currency translation movements. This was
partially offset by a decrease in the Australia Retail and Commercial division (-$3.0 billion) driven by home loans.
Deposits and other borrowings increased $36.5 billion (+5%) driven by increases in customer deposits across the Australia Retail and
Commercial (+$11.2 billion) and Institutional (+$8.9 billion) divisions, a further $8.1 billion drawdown of the TFF and a $1.2 billion drawdown of
the RBNZ FLP and TLF, and the impact of foreign currency translation movements. This was partially offset by decreases in deposits from banks
and repurchase agreements (-$3.0 billion) and certificates of d
eposit (-$2.6 billion).
Debt issuances decreased $6.5 billion (-6%) driven by lower senior debt issuances which were partially replaced by the further drawdown of the
TFF, classified in Deposits and other borrowings.
GROUP RESULTS
43
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 globally, including APRA. As part of meeting LCR requirements, ANZ has a Committed Liquidity Facility (CLF) with the Reserve Bank of
Australia (RBA). The CLF was established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an
alternative form of contingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible
to be pledged as security with the RBA. The total amount of the CLF available to a qualifying Authorised Deposit-taking Institution (ADI) is set
annually by APRA. In September 2021, APRA wrote to ADIs to advise that APRA and the RBA consider there to be sufficient HQLA for ADIs to meet
their LCR requirements, and therefore the use of the CLF should no longer be required beyond 2022.
From 1 January 2021, ANZ’s CLF is $10.7 billion (2020 calendar year end: $35.7 billion). Consistent with APRA’s requirement, ANZ’s CLF will
decrease to zero through equal reductions on 1 January, 30 April, 31 August and 31 December 2022. This reduction will be managed as part of
ANZ’s funding plans over this period.
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).
In March 2020, in response to the economic impact of COVID-19, the RBA implemented a Term Funding Facility (TFF). Under the TFF, the RBA has
offered three-year funding to ADIs secured by RBA eligible collateral. ADIs can include the undrawn but available TFF as a liquid asset for the LCR,
representing a committed central bank facility that can be drawn at the ADI’s discretion. ANZ’s undrawn but available TFF is represented below by
the assets that are eligible to be pledged as security with the RBA. As at 1 July 2021, ANZ’s available TFF has been fully drawn.
In November 2020, in response to the economic impact of COVID-19, the RBNZ implemented a Funding for Lending Programme (FLP). Under the
FLP the RBNZ has offered three-year funding to eligible counter
parties secured by approved eligible collateral. APRA has advised that the undrawn
but available FLP can be included as a cash inflow for the LCR. As the Level 2 LCR excludes liquid assets held above the NZ dollar LCR of 100%,
the undrawn but available FLP has also reduced the reported Level 2 liquid assets.
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
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Market Values Post Discount
1
HQLA1 211.5 186.2 164.6
14% 28%
HQLA2
8.5 10.4 9.9
-18% -14%
Internal Residential Mortgage Backed Securities
2
3.3 18.5 35.3
-82% -91%
Other ALA
2
5.5 7.9 8.6
-30% -36%
Total liquid assets
228.8 223.0 218.4 3% 5%
Cash flows modelled under stress scenario
Cash outflows 208.1 203.2 203.0 2% 3%
Cash inflows
39.3 41.3 45.4 -5% -13%
Net cash outflows
168.8 161.9 157.6 4% 7%
Liquidity Coverage Ratio
3
136% 138% 139% -2% -3%
1.
Half year average basis, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
2.
Comprised of assets qualifying as collateral for the CLF and TFF up to approved facility limit; and any liquid assets as defined in the RBNZ's Liquidity Policy - Annex: Liquidity Assets -
Prudential Supervision Department Document BS13A12.
3.
All currency Level 2 LCR.
GROUP RESULTS
44
Funding - including discontinued operations
ANZ targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.
$10.7 billion of term wholesale debt with a remaining term greater than one year as at 30 September 2021 was issued during the year. In addition, the
Group drew down $8.1 billion of supplementary TFF funding in Australia.
The following table shows the Group’s total funding composition:
As at Movement
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Customer deposits and other liabilities
Australia Retail and Commercial 252.5 241.3 234.6 5% 8%
Institutional
239.6 223.6 223.3 7% 7%
New Zealand
97.7 93.2 91.0 5% 7%
Pacific
3.8 3.4 3.5 12% 9%
Customer deposits
593.6 561.5 552.4 6% 7%
Other funding liabilities
1,2
8.1 8.9 8.9 -9% -9%
Total customer liabilities (funding)
601.7 570.4 561.3 5% 7%
Wholesale funding
Debt issuances and central bank term funding
3
97.1 96.0 110.6 1% -12%
Subordinated debt
25.3 23.7 21.1 7% 20%
Certificates of deposit
37.7 40.0 32.5 -6% 16%
Commercial paper
25.7 26.1 9.1 -2% large
Other wholesale borrowings
4,5
88.5 87.9 104.2 1% -15%
Total wholesale funding
274.3 273.7 277.5 0% -1%
Shareholders' equity 63.7 62.6 61.3 2% 4%
Total funding 939.7 906.7 900.1 4% 4%
1.
Includes interest accruals, payables and other liabilities, provisions and net tax provisions.
2.
Excludes liability for acceptances as they do not provide net funding.
3.
Includes RBA TFF of $20.1 billion (Mar 21: $12.0 billion; Sep 20: $12.0 billion), RBNZ FLP of $0.9 billion (Mar 21: nil; Sep 20: nil) and TLF of $0.3 billion (Mar 21: nil; Sep 20: nil).
4.
Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.
5.
Includes RBA open repurchase arrangement netted down by the corresponding 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
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Required Stable Funding
1
Retail & small and medium enterprises, corporate loans <35% risk weight
2
198.7 196.0 188.1 1% 6%
Retail & small and medium enterprises, corporate loans >35% risk weight
2
182.0 179.0 174.7 2% 4%
Other lending
3
31.9 29.7 28.6 7% 12%
Liquid assets
11.6 12.1 15.3 -4% -24%
Other assets
4
38.3 37.2 38.6 3% -1%
Total Required Stable Funding
462.5 454.0 445.3 2% 4%
Available Stable Funding
1
Retail & small and medium enterprise customer deposits 287.8 275.7 271.7 4% 6%
Corporate, public sector entities & operational deposits
115.5 105.9 104.3 9% 11%
Central bank & other financial institution deposits
4.5 4.7 5.1 -4% -12%
Term funding
5
74.2 70.7 87.9 5% -16%
Short term funding & other liabilities
2.4 5.6 1.4 -57% 71%
Capital
88.3 85.0 80.9 4% 9%
Total Available Stable Funding
572.7 547.6 551.3 5% 4%
Net Stable Funding Ratio 124% 121% 124% 3% 0%
1.
NSFR factored balance as per APRA Prudential Regulatory Standard APS 210 Liquidity.
2.
Risk weighting as per APRA Prudential Regulatory Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk.
3.
Includes financial institution, central bank and non-performing loans.
4.
Includes off-balance sheet items, net derivatives and other assets.
5.
Includes balances from the drawdown of the RBA TFF and RBNZ FLP and TLF funding facilities.
GROUP RESULTS
45
Capital Management - including discontinued operations
As at
APRA Basel 3 Internationally Comparable Basel 3
1
Sep 21 Mar 21 Sep 20 Sep 21 Mar 21 Sep 20
Capital Ratios (Level 2)
Common Equity Tier 1 12.3% 12.4% 11.3% 18.3% 18.1% 16.7%
Tier 1
14.3% 14.3% 13.2% 20.9% 20.5% 19.1%
Total capital
18.4% 18.3% 16.4% 26.3% 25.7% 23.3%
Risk weighted assets ($B)
416.1 408.2 429.4 319.0 317.5 331.5
1.
Internationally Comparable methodology aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015).
APRA Basel 3 Common Equity Tier 1 (CET1) - September 2021 v September 2020
1.
Excludes large/notable items.
September 2021 v September 2020
ANZ’s CET1 ratio increased +100 bps to 12.34% during the September 2021 full year. Key drivers of the movement in the CET1 ratio were:
Cash profit excluding large/notable items and credit impairment charge/(release) (CIC) increased the ratio by +157 bps.
Benefits from credit impairment release including the associated deferred tax assets (DTA) impacts, along with RWA risk migration benefits, in
part driven by lower RWA intensity in the Australian mortgages portfolio from ongoing changes in household saving and spending patterns,
increased the CET1 ratio +47 bps.
Lower business RWA usage (excluding foreign currency translation movements, regulatory changes, risk migration and other one-offs) increased
the CET1 ratio by +17 bps. This was a result of a decrease in underlying Credit RWA (CRWA) primarily in the Institutional division partially offset
by higher non-CRWA (mainly Interest Rate Risk in the Banking Book (IRRBB) RWA).
Capital deductions of -11 bps mainly comprises movements in retained earnings in deconsolidated entities, capitalised expenses and other
equity investments during the period.
Payment of the 2020 final dividend (net of BOP and DRP issuance) and the 2021 interim dividend (net of BOP issuance, with DRP neutralised)
reduced the ratio by -66 bps.
Completion of ~$709 million of the announced $1.5 billion share buy-back (of which $55 million settled after 30 September 2021) reduced the
CET1 ratio by -17 bps.
Large/notable items from customer remediation, restructuring and litigation costs reduced the ratio by -8 bps.
Other impacts totalling -19 bps including Net RWA Imposts of -5 bps, movements in net deferred tax assets not relating to CIC (-12 bps) and net
other impacts of -2 bps.
GROUP RESULTS
46
APRA Basel 3 Common Equity Tier 1 (CET1 ratio) - September 2021 v March 2021
1.
Excludes large/notable items.
September 2021 v March 2021
ANZ’s CET1 ratio decreased 10 bps to 12.34% during the September 2021 half. Key drivers of the movement in the CET1 ratio were:
Cash profit excluding large/notable items and CIC increased the ratio by +80 bps.
Benefits from credit impairment release including the associated DTA impacts, along with RWA risk migration benefits in the Australia Retail and
Commercial and New Zealand divisions, increased the CET1 ratio by +14 bps.
Higher business RWA usage (excluding foreign currency translation movements, regulatory changes, risk migration and other one-offs)
decreased the CET1 ratio by -17 bps in part driven by an increase in IRRBB RWA. This reflects lower embedded gains from maturing capital &
replicating portfolio investments and higher interest rates, as well as management actions such as the investment of replicating deposit growth.
Capital deductions of -6 bps mainly comprises movements in retained earnings in deconsolidated entities, capitalised expenses and other equity
investments during the period.
Payment of the 2021 Interim Dividend (net of BOP issuance, DRP neutralised) reduced the CET1 ratio by -48 bps.
Completion of ~$709 million of the announced $1.5 billion share buy-back (of which $55 million settled after 30 September 2021) reduced the
CET1 ratio by -17 bps.
Large/notable items from customer remediation and restructuring reduced the ratio by -3 bps.
Other impacts totalling -13 bps including movements in net deferred tax assets not relating to CIC impacts (-8 bps) net other impacts of -5 bps.
As at Movement
Total Risk Weighted Assets (RWA)
Sep 21
$B
Mar 21
$B
Sep 20
$B
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Credit RWA 342.5 341.9 360.0 0% -5%
Market risk and IRRBB RWA
25.2 19.1 21.8 32% 16%
Operational RWA
48.4 47.2 47.6 3% 2%
Total RWA
416.1 408.2 429.4 2% -3%
GROUP RESULTS
47
Total Risk Weighted Assets - September 2021 v September 2020
September 2021 v September 2020
Total RWA decreased $13.3 billion. Excluding the impact of foreign currency translation and other non-recurring CRWA changes, underlying CRWA
(divisional lending and risk migration) decreased by $20.3 billion, mainly driven by reduction in the Institutional division and risk migration benefits in
the Australia Retail and Commercial division. Other CRWA impacts include net changes from RWA Imposts. The increase in non-CRWA of
$4.2 billion mainly reflects the $4.5 billion increase in IRRBB RWA. This reflects lower embedded gains from maturing capital and replicating portfolio
investments and higher interest rates, as well as management actions such as the investment of replicating deposit growth.
Total Risk Weighted Assets - September 2021 v March 2021
September 2021 v March 2021
Total RWA increased $7.9 billion. Excluding the impact of foreign currency translation movements and other non-recurring CRWA changes,
underlying CRWA (divisional lending and risk migration) decreased $4.3 billion, mainly from risk migration reduction in the Australia Retail and
Commercial division and New Zealand division. The increase in non-CRWA of $7.3 billion mainly reflects the $7.9 billion increase in IRRBB RWA.
This reflects lower embedded gains from maturing capital and replicating portfolio investments and higher interest rates, as well as management
actions such as the investment of replicating deposit growth.
GROUP RESULTS
48
APRA to Internationally Comparable
1
Common Equity Tier 1 (CET1) as at 30 September 2021
1.
ANZ’s interpretation of the regulations documented in the Basel Committee publications: ‘Basel 3: A global regulatory framework for more resilient banks and banking systems’ (June 2011)
and ‘International Convergence of Capital Measurement and Capital Standards’ (June 2006). Also includes differences identified in APRA’s information paper entitled ‘International Capital
Comparison Study’ (13 July 2015).
The above provides a reconciliation of the CET1 ratio under APRA’s Basel 3 prudential capital standards to Internationally Comparable Basel 3
standards. APRA views the Basel 3 reforms as a minimum requirement and hence has not incorporated some of the concessions proposed in the Basel
3 rules and has also set higher requirements in other areas. As a result, Australian banks’ Basel 3 reported capital ratios will not be directly comparable
with international peers. The International Comparable Basel 3 CET1 ratio incorporates differences between APRA and both the Basel Committee Basel
3 framework (including differences identified in the March 2014 Basel Committee’s Regulatory Consistency Assessment Programme (RCAP) on Basel 3
implementation in Australia) and its application in major offshore jurisdictions.
The material differences between APRA Basel 3 and Internationally Comparable Basel 3 ratios include:
Deductions
Investments in insurance and banking associates - APRA requires a full deduction against CET1. On an Internationally Comparable basis, these
investments are subject to a concessional threshold before a deduction is required.
Deferred tax assets – APRA requires a full deduction from CET1 for DTA relating to temporary differences. On an Internationally Comparable basis,
this is first subject to a concessional threshold before the deduction is required.
Risk Weighted Assets (RWA)
Mortgages RWA - APRA imposes a floor of 20% on the downturn Loss Given Default (LGD) used in credit RWA calculations for residential
mortgages. The Internationally Comparable Basel 3 framework requires a downturn LGD floor of 10%. Additionally, APRA requires a higher
correlation factor than the Basel framework.
IRRBB RWA - APRA requires inclusion of IRRBB within the RWA base for the CET1 ratio calculation. This is not required on an Internationally
Comparable basis.
Specialised lending - APRA requires the supervisory slotting approach to be used in determining credit RWA for specialised lending exposures. The
Internationally Comparable basis allows for the advanced internal ratings based approach to be used when calculating RWA for these exposures.
Unsecured Corporate Lending LGD - an adjustment to align ANZ’s unsecured corporate lending LGD to 45% to be consistent with banks in other
jurisdictions. The 45% LGD rate is also used in the Foundation Internal Ratings-Based approach (FIRB).
Undrawn Corporate Lending Exposure at Default (EAD) - an adjustment to ANZ’s credit conversion factors (CCF) for undrawn corporate loan
commitments to 75% (used in FIRB approach) to align with banks in other jurisdictions.
GROUP RESULTS
49
Leverage Ratio - including discontinued operations
At 30 September 2021, the Group’s APRA Leverage Ratio was 5.5% which is above the 3.5% APRA proposed minimum for internal ratings-based
approach ADIs (IRB ADIs) which includes ANZ. The following table summarises the Group’s Leverage Ratio calculation:
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Tier 1 Capital (net of capital deductions) 59,473 58,431 56,481 2% 5%
On-balance sheet exposures (excluding derivatives and securities financing transaction
exposures)
901,969 878,187 841,830 3% 7%
Derivative exposures
37,769 33,933 32,296 11% 17%
Securities financing transaction exposures
30,484 26,947 58,416 13% -48%
Other off-balance sheet exposures
117,848 114,125 114,128 3% 3%
Total exposure measure
1,088,070 1,053,192 1,046,670 3% 4%
APRA Leverage Ratio 5.5% 5.5% 5.4%
Internationally Comparable Leverage Ratio 6.1% 6.2% 6.0%
September 2021 v September 2020
APRA leverage ratio increased 7 bps during the September 2021 full year. Key drivers of the movement were:
Net organic capital generation (largely from cash profit excluding large/notable items and movements in capital deductions), less dividends paid
(+33 bps).
Net increase from AT1 issuance of CN6 partially offset by CN1 redemption (+4 bps).
On-balance sheet exposure growth in liquids and loan growth in the Institutional and New Zealand divisions partially offset by collateral (-29 bps).
Reduction in securities financing transactions were partially offset by growth in off-balance sheet exposures and derivatives (+9 bps).
Share buy-backs reduced leverage ratio by -7 bps.
Net other impacts (including large/notable items) of -3 bps.
September 2021 v March 2021
APRA leverage ratio decreased 8 bps during the September 2021 half. Key drivers of the movement were:
Net organic capital generation (largely from cash profit excluding large/notable items and movements in capital deductions), less dividends paid
(+9 bps).
Net increase from AT1 issuance of CN6 partially offset by CN1 redemption (+4 bps).
On-balance sheet exposure growth in liquids and loan growth mainly in Institutional division partially offset by collateral (-5 bps).
Growth in off-balance sheet exposures, securities financing transactions and derivatives (-6 bps).
Share buy-backs reduced leverage ratio by -7 bps.
Net other impacts (including large/notable items) of -3 bps.
GROUP RESULTS
50
Capital Management - Other Developments
Capital Requirements - Unquestionably Strong
APRA’s key initiatives in relation to Unquestionably Strong capital requirements are as follows:
In July 2017, APRA released an information paper outlining its assessment on the additional capital required for the Australian banking sector to
be considered ‘unquestionably strong’ as originally outlined in the Financial System Inquiry final report in December 2014. APRA indicated that ‘in
the case of the four major Australian banks, this equated to a benchmark CET1 capital ratio, under the current capital adequacy framework, of at
least 10.5 percent from 1 January 2020’.
APRA is consulting on a number of proposals in relation to risk-weighting framework revisions to credit risk, operational risk, market risk and
interest rate risk in the banking book requirements. In December 2020, APRA released an updated consultation paper regarding proposed
changes to the capital framework for ADIs aimed at embedding ‘unquestionably strong’ levels of capital, improving the flexibility of the framework,
and improving the transparency of ADI capital strength. These proposals replaced previous consultation packages released by APRA on
proposed revisions to the capital framework for ADIs and is expected to be implemented from 1 January 2023. The key aspects of APRA’s
December 2020 proposals are:
- Increased alignment with internationally agreed Basel standards;
- Implementing more risk-sensitive risk weights for residential mortgage lending;
- Introduction of the Basel II capital floor that limits the RWA outcome for Internal Ratings Based (IRB) ADIs to no less than 72.5% of the RWA
outcome under the standardised approach;
- Improving the flexibility of the capital framework through the introduction of a default level of the countercyclical capital buffer (CCyB) and
increasing the capital conservation buffer (CCB) for IRB ADIs;
- Improving the transparency and comparability of ADIs’ capital ratios, including by requiring IRB ADIs to also publish their capital ratios under
the standardised approach; and
- Implementing a Minimum Leverage Ratio for IRB ADIs at 3.5%.
APRA has indicated in their proposals a decrease in RWA, but this would be offset by the increased capital allocation to regulatory buffers.
APRA has also indicated that, as ADIs are currently meeting the ‘unquestionably strong’ benchmarks, it is not APRA’s intention to require ADIs
to raise additional capital. Accordingly, APRA is expected to calibrate the proposed capital requirements for ADIs, measured in dollar terms, to
be consistent at an industry level with the existing ‘unquestionably strong’ capital benchmarks for ADIs under the current capital framework. The
impact of these proposed changes on individual ADIs (including ANZBGL), will vary depending on the final form of requirements implemented by
APRA.
Further updates were provided by APRA throughout 2021 on the capital reforms with additional details around the timing of implementation of the
capital reforms and updates to RWA calibration, which remain broadly in line with key policy objectives as outlined in their December 2020 proposals.
Given the number of items that are yet to be finalised by APRA, the final outcome of any further changes to APRA’s prudential standards or other
impacts on the Group remains uncertain.
APRA Guidance on Capital Management
In December 2020, APRA updated their capital management guidance whereby from the 2021 calendar year, APRA will no longer hold banks to a
minimum level of earnings retention but ADIs will need to maintain vigilance and careful planning in capital management, such as the need for ADI to
conduct regular stress testing and assurance on the capacity to continue to lend, amongst others. APRA also stated that the onus will be on Boards
to carefully consider the sustainable rate for dividends, taking into account the outlook for profitability, capital and the economic environment.
APRA Total Loss Absorbing Capacity Requirements
In July 2019, APRA announced its decision on loss-absorbing capacity in which it will require domestic systemically important banks (D-SIBs),
including ANZ, to increase their Total Capital by 3% of risk weighted assets by January 2024. Based on ANZ’s capital position as at 30 September
2021, this represents an incremental increase in the Total Capital requirement of approximately $3.7 billion, with an equivalent decrease in other
senior funding. APRA has stated that it anticipates that D-SIBs would satisfy the requirement predominantly with Tier 2 capital.
Revisions to Related Entities Framework
APRA announced in August 2019 that it will implement its proposal to reduce limits for Australian ADIs’ exposure to related entities, reducing limits
from 50% of Level 1 Total Capital to 25% of Level 1 Tier 1 Capital. As exposures are measured net of capital deductions, the finalised changes to
APRA’s capital regulations (contained in APS111 below) would affect the measurement of ADIs’ exposures. As a result, the reduction in the above
limits is not expected to have a material impact on ANZ and its subsidiaries. The implementation date for changes to the related entities framework
has been deferred by APRA to 1 January 2022.
Revisions to APS111 Capital Adequacy
In August 2021, APRA released the final revised prudential standard APS111 Capital Adequacy: Measurement of Capital for consultation. The most
material change from APRA’s revision is in relation to the treatment of capital investments for each banking and insurance subsidiary at Level 1 with
the tangible component of the investment changing from 400% risk weighting to:
250% risk weighting up to an amount equal to 10% of ANZ’s net Level 1 CET1; and
the remainder of the investment will be treated as a CET1 capital deduction.
GROUP RESULTS
51
ANZ is reviewing the implications for its current investments. The net impact on the Group is unclear and will depend upon a number of factors
including the capitalisation of the affected subsidiaries at the time of implementation, as well as the effect of management actions being pursued that
have the potential to materially offset the impact of these proposals. Based on ANZ’s current investment in its affected subsidiaries and in the
absence of any offsetting management actions, the above proposals imply a reduction in ANZ’s Level 1 CET1 capital ratio of up to approximately $2
billion (~60 bps). However, ANZ believes that this outcome is unlikely and, post implementation of management actions, the net capital impact could
be minimal. There is no impact on ANZ’s Level 2 CET1 capital ratio arising from these proposed changes. The proposed implementation date has
been deferred by APRA to January 2022.
The Reserve Bank of New Zealand (RBNZ) review of capital requirements
The RBNZ has released new capital adequacy requirements for New Zealand banks, which are set out in the Banking Prudential Requirements
(BPR) documents. The new framework is being implemented in stages during a transition period from October 2021 to July 2028.The key
requirements for ANZ New Zealand Bank (ANZ New Zealand) are as follows:
ANZ New Zealand’s Tier 1 capital requirement will increase to 16% of RWA, of which up to 2.5% of this could be in the form of Additional Tier 1
(AT1) Capital. ANZ New Zealand’s Total Capital requirement will increase to 18% of RWA, of which up to 2% can be Tier 2 Capital.
AT1 capital must consist of perpetual preference shares, which may be redeemable. It is anticipated that ANZ New Zealand will be able to
refinance existing internal AT1 securities to external counterparties. Tier 2 capital must consist of long-term subordinated debt.
As an internal ratings-based (IRB) approach accredited bank, ANZ New Zealand’s RWA outcomes will be increased to approximately 90% of what
would be calculated under the Basel Standardised Measurement Approach (‘standardised approach’). This will be achieved by applying an 85%
output floor for CRWA and increasing the CRWA scalar from 1.06 to 1.20. The net impact on the Group is an increase in CET1 capital of
approximately $1 billion between 30 September 2021 and the end of the transition period in 2028 (based on the Group’s 30 September 2021 balance
sheet). This amount could vary over time subject to changes to capital requirements in ANZ New Zealand (e.g. RWA growth, management buffer
requirements), potential dividend payments and the final form of APS111 implementation.
Under changes outlined in the BPRs, from 1 January 2022 there will be a 12.5% reduction in the regulatory capital recognition of ANZ New Zealand’s
existing Additional Tier 1 capital instruments, including the NZD 500 million Capital Notes (Capital Notes). As a result, ANZ New Zealand has
determined that a Regulatory Event (as defined in the Deed Poll) has occurred in respect of the Capital Notes.
The occurrence of a Regulatory Event means that ANZ New Zealand may choose to redeem the Capital Notes at its discretion. A redemption of the
Capital Notes is subject to certain conditions, including approval from the RBNZ and the Australian Prudential Regulation Authority.
At the date of this report, no decision has been made on whether ANZ New Zealand will redeem the Capital Notes (subject to the regulatory
approvals), and holders should not expect that to occur.
RBNZ on actions to support the banking system
In March 2021, the RBNZ revised its restrictions on permissible dividends and redemption of non-CET1 capital instruments put in place in April 2020.
The updated restrictions allow ANZ New Zealand, a New Zealand subsidiary of ANZBGL to pay up to 50% of its earnings as dividends to its
shareholder. This restriction will remain in place until 1 July 2022, at which point the RBNZ intends to remove the restrictions completely, subject to
prevailing economic conditions.
Further, in the March 2021 update, the RBNZ also announced that it would remove the restrictions on redemption of non-CET1 capital instruments.
However, as the restriction was in place in May 2020, ANZ New Zealand was not permitted to redeem its Capital Notes at the optional exchange date
in May 2020 and did not exercise its option to convert in May 2020. Refer above for discussion on the Capital Notes.
GROUP RESULTS
52
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DIVISIONAL RESULTS
53
CONTENTS Page
Divisional Performance - continuing operations 54
Australia Retail and Commercial - continuing operations 59
Institutional - continuing operations 63
New Zealand - continuing operations 70
Pacific - continuing operations 75
Technology, Services & Operations (TSO) and Group Centre - continuing operations 75
DIVISIONAL RESULTS
Divisional Performance - continuing operations
54
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, and
Technology, Services & Operations (TSO) and Group Centre. For further information on the composition of divisions, refer to the Definitions on page 121.
During the September 2021 half, the New Zealand division reorganised its business units from Retail and Commercial to Personal and Business to better
meet the needs of our customers. Comparative amounts have not been restated as the impact is not considered material.
During the March 2021 half, the presentation of divisional results has been impacted by the following structural changes:
Australia Retail and Commercial division - the Advice business was transferred from Retail to Commercial and Private Bank business within the
division;
Institutional division - a number of small operations were transferred from Corporate Finance to Central Functions within the division;
the New Zealand Technology operations was transferred from the TSO and Group Centre division to the New Zealand division. As these costs were
previously recharged, there is no change to previously reported divisional cash profit, however divisional balance sheet and full time equivalent
employees (FTEs) have been restated to reflect this change.
September 2020 full year comparatives have been restated to reflect these changes.
Other than those described above, there have been no other significant changes.
The divisions reported are consistent with internal reporting provided to the chief operating decision maker, being the Chief Executive Officer.
The Divisional Results section is reported on a cash profit basis for continuing operations. For information on discontinued operations please
refer to the Guide to Full Year Results on page 10.
DIVISIONAL RESULTS
Divisional Performance - continuing operations
55
Cash profit by division - September 2021 Full Year v September 2020 Full Year
September 2021 Full Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income
7,989 3,105 2,870 96 101 14,161
Other operating income
889 1,878 469 65 (15) 3,286
Operating income
8,878 4,983 3,339 161 86 17,447
Operating expenses (4,024) (2,447) (1,325) (144) (1,111) (9,051)
Profit/(Loss) before credit impairment and income tax
4,854 2,536 2,014 17 (1,025) 8,396
Credit impairment (charge)/release 426 89 76 (21) (3) 567
Profit/(Loss) before income tax
5,280 2,625 2,090 (4) (1,028) 8,963
Income tax expense and non-controlling interests (1,663) (738) (582) 1 217 (2,765)
Cash profit/(loss) from continuing operations
3,617 1,887 1,508 (3) (811) 6,198
September 2020 Full Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income 7,916 3,182 2,731 109 111 14,049
Other operating income 1,161 2,649 473 84 (664) 3,703
Operating income 9,077 5,831 3,204 193 (553) 17,752
Operating expenses (4,091) (2,558) (1,435) (205) (1,094) (9,383)
Profit/(Loss) before credit impairment and income tax 4,986 3,273 1,769 (12) (1,647) 8,369
Credit impairment (charge)/release (1,647) (694) (345) (52) - (2,738)
Profit/(Loss) before income tax 3,339 2,579 1,424 (64) (1,647) 5,631
Income tax expense and non-controlling interests (1,002) (725) (407) 2 259 (1,873)
Cash profit/(loss) from continuing operations 2,337 1,854 1,017 (62) (1,388) 3,758
September 2021 Full Year v September 2020 Full Year
Australia
Retail and
Commercial Institutional New Zealand Pacific
TSO and
Group Centre Group
Net interest income 1% -2% 5% -12% -9% 1%
Other operating income -23% -29% -1% -23% -98% -11%
Operating income -2% -15% 4% -17% large -2%
Operating expenses -2% -4% -8% -30% 2% -4%
Profit/(Loss) before credit impairment and income tax -3% -23% 14% large -38% 0%
Credit impairment charge/(release) large large large -60% n/a large
Profit/(Loss) before income tax 58% 2% 47% -94% -38% 59%
Income tax expense and non-controlling interests 66% 2% 43% -50% -16% 48%
Cash profit/(loss) from continuing operations 55% 2% 48% -95% -42% 65%
DIVISIONAL RESULTS
Divisional Performance - continuing operations
56
Cash profit by division - September 2021 Half Year v March 2021 Half Year
September 2021 Half Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income
4,015 1,586 1,477 47 50 7,175
Other operating income
587 864 231 32 135 1,849
Operating income
4,602 2,450 1,708 79 185 9,024
Operating expenses (2,024) (1,173) (702) (73) (597) (4,569)
Profit/(Loss) before credit impairment and income tax
2,578 1,277 1,006 6 (412) 4,455
Credit impairment (charge)/release 45 34 18 (18) (3) 76
Profit/(Loss) before income tax
2,623 1,311 1,024 (12) (415) 4,531
Income tax expense and non-controlling interests (788) (372) (287) 2 122 (1,323)
Cash profit/(loss) from continuing operations
1,835 939 737 (10) (293) 3,208
March 2021 Half Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income 3,974 1,519 1,393 49 51 6,986
Other operating income 302 1,014 238 33 (150) 1,437
Operating income 4,276 2,533 1,631 82 (99) 8,423
Operating expenses (2,000) (1,274) (623) (71) (514) (4,482)
Profit/(Loss) before credit impairment and income tax 2,276 1,259 1,008 11 (613) 3,941
Credit impairment (charge)/release 381 55 58 (3) - 491
Profit/(Loss) before income tax 2,657 1,314 1,066 8 (613) 4,432
Income tax expense and non-controlling interests (875) (366) (295) (1) 95 (1,442)
Cash profit/(loss) from continuing operations 1,782 948 771 7 (518) 2,990
September 2021 Half Year v March 2021 Half Year
Australia
Retail and
Commercial Institutional New Zealand Pacific
TSO and
Group Centre Group
Net interest income 1% 4% 6% -4% -2% 3%
Other operating income 94% -15% -3% -3% large 29%
Operating income 8% -3% 5% -4% large 7%
Operating expenses 1% -8% 13% 3% 16% 2%
Profit/(Loss) before credit impairment and income tax 13% 1% 0% -45% -33% 13%
Credit impairment (charge)/release -88% -38% -69% large n/a -85%
Profit/(Loss) before income tax -1% 0% -4% large -32% 2%
Income tax expense and non-controlling interests -10% 2% -3% large 28% -8%
Cash profit/(loss) from continuing operations 3% -1% -4% large -43% 7%
DIVISIONAL RESULTS
Divisional Performance - continuing operations
57
Cash profit by division (excluding large/notable items
1
) - September 2021 Full Year v September 2020 Full Year
The Group cash profit results include a number of items collectively referred to as large/notable items. While these items form part of cash profit they
have been excluded from the tables below given their nature and significance.
1.
Refer to pages 15 to 19 for a description of large/notable items.
September 2021 Full Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income
8,072 3,104 2,874 96 101 14,247
Other operating income
1,223 1,851 456 65 332 3,927
Operating income
9,295 4,955 3,330 161 433 18,174
Operating expenses (3,801) (2,354) (1,304) (141) (1,070) (8,670)
Profit/(Loss) before credit impairment and income tax
5,494 2,601 2,026 20 (637) 9,504
Credit impairment (charge)/release 426 89 76 (21) (3) 567
Profit/(Loss) before income tax
5,920 2,690 2,102 (1) (640) 10,071
Income tax expense and non-controlling interests (1,779) (765) (589) - 206 (2,927)
Cash profit/(loss) from continuing operations
4,141 1,925 1,513 (1) (434) 7,144
September 2020 Full Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income 7,999 3,185 2,613 121 103 14,021
Other operating income 1,207 2,662 479 84 258 4,690
Operating income 9,206 5,847 3,092 205 361 18,711
Operating expenses (3,796) (2,485) (1,275) (147) (946) (8,649)
Profit/(Loss) before credit impairment and income tax 5,410 3,362 1,817 58 (585) 10,062
Credit impairment (charge)/release (1,647) (694) (322) (52) - (2,715)
Profit/(Loss) before income tax 3,763 2,668 1,495 6 (585) 7,347
Income tax expense and non-controlling interests (1,129) (745) (418) (1) 205 (2,088)
Cash profit/(loss) from continuing operations 2,634 1,923 1,077 5 (380) 5,259
September 2021 Full Year v September 2020 Full Year
Australia
Retail and
Commercial Institutional New Zealand Pacific
TSO and
Group Centre Group
Net interest income 1% -3% 10% -21% -2% 2%
Other operating income 1% -30% -5% -23% 29% -16%
Operating income 1% -15% 8% -21% 20% -3%
Operating expenses 0% -5% 2% -4% 13% 0%
Profit/(Loss) before credit impairment and income tax 2% -23% 12% -66% 9% -6%
Credit impairment (charge)/release large large large -60% n/a large
Profit/(Loss) before income tax 57% 1% 41% large 9% 37%
Income tax expense and non-controlling interests 58% 3% 41% -100% 0% 40%
Cash profit/(loss) from continuing operations 57% 0% 40% large 14% 36%
DIVISIONAL RESULTS
Divisional Performance - continuing operations
58
Cash profit by division (excluding large/notable items
1
) - September 2021 Half Year v March 2021 Half Year
1.
Refer to pages 15 to 19 for a description of large/notable items.
September 2021 Half Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income
4,041 1,586 1,481 47 50 7,205
Other operating income
627 862 231 32 135 1,887
Operating income
4,668 2,448 1,712 79 185 9,092
Operating expenses (1,932) (1,166) (691) (71) (594) (4,454)
Profit/(Loss) before credit impairment and income tax
2,736 1,282 1,021 8 (409) 4,638
Credit impairment (charge)/release 45 34 18 (18) (3) 76
Profit/(Loss) before income tax
2,781 1,316 1,039 (10) (412) 4,714
Income tax expense and non-controlling interests (836) (373) (291) 1 122 (1,377)
Cash profit/(loss) from continuing operations
1,945 943 748 (9) (290) 3,337
March 2021 Half Year
Australia
Retail and
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
TSO and
Group Centre
$M
Group
$M
Net interest income 4,031 1,518 1,393 49 51 7,042
Other operating income 596 989 225 33 197 2,040
Operating income 4,627 2,507 1,618 82 248 9,082
Operating expenses (1,869) (1,188) (613) (70) (476) (4,216)
Profit/(Loss) before credit impairment and income tax 2,758 1,319 1,005 12 (228) 4,866
Credit impairment (charge)/release 381 55 58 (3) - 491
Profit/(Loss) before income tax 3,139 1,374 1,063 9 (228) 5,357
Income tax expense and non-controlling interests (943) (392) (298) (1) 84 (1,550)
Cash profit/(loss) from continuing operations 2,196 982 765 8 (144) 3,807
September 2021 Half Year v March 2021 Half Year
Australia
Retail and
Commercial Institutional New Zealand Pacific
TSO and
Group Centre Group
Net interest income 0% 4% 6% -4% -2% 2%
Other operating income 5% -13% 3% -3% -31% -8%
Operating income 1% -2% 6% -4% -25% 0%
Operating expenses 3% -2% 13% 1% 25% 6%
Profit/(Loss) before credit impairment and income tax -1% -3% 2% -33% 79% -5%
Credit impairment (charge)/release -88% -38% -69% large n/a -85%
Profit/(Loss) before income tax -11% -4% -2% large 81% -12%
Income tax expense and non-controlling interests -11% -5% -2% large 45% -11%
Cash profit/(loss) from continuing operations -11% -4% -2% large large -12%
DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
59
Divisional performance was impacted by a number of large/notable items. Refer to pages 15 to 19 and pages 57 to 58 for details.
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 4,015 3,974 1%
7,989 7,916 1%
Other operating income
587 302 94%
889 1,161 -23%
Operating income
4,602 4,276 8%
8,878 9,077 -2%
Operating expenses (2,024) (2,000) 1%
(4,024) (4,091) -2%
Profit before credit impairment and income tax
2,578 2,276 13%
4,854 4,986 -3%
Credit impairment (charge)/release 45 381 -88%
426 (1,647) large
Profit before income tax
2,623 2,657 -1%
5,280 3,339 58%
Income tax expense and non-controlling interests (788) (875) -10%
(1,663) (1,002) 66%
Cash profit
1,835 1,782 3%
3,617 2,337 55%
Balance Sheet
Net loans and advances 341,233 344,269 -1%
341,233 339,381 1%
Other external assets
2,778 3,510 -21%
2,778 3,663 -24%
External assets
344,011 347,779 -1%
344,011 343,044 0%
Customer deposits 252,504 241,315 5%
252,504 234,594 8%
Other external liabilities 8,978 9,328 -4%
8,978 9,220 -3%
External liabilities
261,482 250,643 4%
261,482 243,814 7%
Risk weighted assets 163,793 163,006 0%
163,793 166,662 -2%
Average gross loans and advances 345,741 346,168 0%
345,954 334,965 3%
Average deposits and other borrowings
245,089 240,094 2%
242,598 215,816 12%
Ratios
Return on average assets 1.06% 1.03%
1.04% 0.69%
Net interest margin
2.59% 2.56%
2.58% 2.59%
Operating expenses to operating income
44.0% 46.8%
45.3% 45.1%
Operating expenses to average assets
1.17% 1.16%
1.16% 1.22%
Individually assessed credit impairment charge/(release)
61 134 -54%
195 596 -67%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
0.04% 0.08%
0.06% 0.18%
Collectively assessed credit impairment charge/(release)
(106) (515) -79%
(621) 1,051 large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.06%) (0.30%)
(0.18%) 0.31%
Gross impaired assets
1,041 1,228 -15%
1,041 1,634 -36%
Gross impaired assets as a % of GLA
0.30% 0.35%
0.30% 0.48%
Total full time equivalent staff (FTE)
14,480 14,118 3%
14,480 14,078 3%
1.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Cash Profit September 2021 v September 2020
Performance September 2021 v September 2020
Lending volumes increased driven by home loan growth, partially offset by
lower unsecured lending due to COVID-19 lockdowns impacts and a
decrease in commercial lending.
Net interest margin decreased driven by unfavourable lending mix from
stronger growth in lower margin fixed rate home loans, deposit margin
compression and lower earnings on capital. This was mostly offset by
deposit and asset repricing benefits, favourable funding deposit mix due to
strong deposit growth, and lower funding costs.
Other operating income decreased driven by the loss on reclassification of
ANZ Share Investing to held for sale and lower credit card and international
transaction volumes due to COVID-19 impacts.
Operating expenses decreased driven by productivity benefits, lower
restructuring expenses, and lease-related items and accelerated
amortisation in the prior year. This was partially offset by higher investment
spend and customer remediation.
Credit impairment charges decreased driven by a collectively assessed
credit impairment release reflecting an improved economic outlook, and
lower individually assessed credit impairment charge as the underlying
flows remained subdued due to the impact of various COVID-19 support
initiatives.
DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
60
Individually assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Retail 47 75 -37% 122 311 -61%
Home Loans
(2) 46 large 44 66 -33%
Cards and Personal Loans
47 26 81% 73 233 -69%
Deposits and Payments
1
2 3 -33% 5 12 -58%
Commercial and Private Bank
14 59 -76% 73 285 -74%
Business Banking
(25) (9) large (34) 119 large
Small Business Banking
40 68 -41% 108 166 -35%
Private Bank and Advice
(1) - n/a (1) - n/a
Individually assessed credit impairment charge/(release)
61 134 -54% 195 596 -67%
Collectively assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Retail (43) (306) -86% (349) 510 large
Home Loans
8 (259) large (251) 483 large
Cards and Personal Loans
(49) (43) 14% (92) 28 large
Deposits and Payments
1
(2) (4) -50% (6) (1) large
Commercial and Private Bank
(63) (209) -70% (272) 541 large
Business Banking
(41) (101) -59% (142) 328 large
Small Business Banking
(21) (108) -81% (129) 213 large
Private Bank and Advice
(1) - n/a (1) - n/a
Collectively assessed credit impairment charge/(release)
(106) (515) -79% (621) 1,051 large
Net loans and advances As at
Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Retail 283,988 287,475 281,570 -1% 1%
Home Loans
277,959 280,747 274,825 -1% 1%
Cards and Personal Loans
5,974 6,682 6,710 -11% -11%
Deposits and Payments
1
55 46 35 20% 57%
Commercial and Private Bank
57,245 56,794 57,811 1% -1%
Business Banking
41,857 41,283 42,264 1% -1%
Small Business Banking
12,027 12,254 12,312 -2% -2%
Private Bank and Advice
3,361 3,257 3,235 3% 4%
Net loans and advances
341,233 344,269 339,381 -1% 1%
Customer deposits
As at
Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Retail 141,404 134,655 133,536 5% 6%
Home Loans
2
38,753 35,901 33,161 8% 17%
Cards and Personal Loans
198 181 237 9% -16%
Deposits and Payments
102,453 98,573 100,138 4% 2%
Commercial and Private Bank
111,100 106,660 101,058 4% 10%
Business Banking
23,981 24,111 23,944 -1% 0%
Small Business Banking
58,128 54,625 49,878 6% 17%
Private Bank and Advice
28,991 27,924 27,236 4% 6%
Customer deposits
252,504 241,315 234,594 5% 8%
1.
Net loans and advances for the deposits and payments business represent amounts in overdraft.
2.
Customer deposit amounts for the home loans business represent balances in offset accounts.
DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
61
September 2021 Full Year
Retail
$M
Commercial and
Private Bank
$M
Total
$M
Net interest income
5,708 2,281 7,989
Other operating income
433 456 889
Operating income
6,141 2,737 8,878
Operating expenses (2,671) (1,353) (4,024)
Profit before credit impairment and income tax
3,470 1,384 4,854
Credit impairment (charge)/release 227 199 426
Profit before income tax
3,697 1,583 5,280
Income tax expense and non-controlling interests (1,187) (476) (1,663)
Cash profit
2,510 1,107 3,617
Individually assessed credit impairment charge/(release) 122 73 195
Collectively assessed credit impairment charge/(release)
(349) (272) (621)
Net loans and advances
283,988 57,245 341,233
Customer deposits
141,404 111,100 252,504
Risk weighted assets
112,156 51,637 163,793
September 2020 Full Year
Net interest income 5,466 2,450 7,916
Other operating income 698 463 1,161
Operating income 6,164 2,913 9,077
Operating expenses (2,660) (1,431) (4,091)
Profit before credit impairment and income tax 3,504 1,482 4,986
Credit impairment (charge)/release (821) (826) (1,647)
Profit before income tax 2,683 656 3,339
Income tax expense and non-controlling interests (803) (199) (1,002)
Cash profit 1,880 457 2,337
Individually assessed credit impairment charge/(release) 311 285 596
Collectively assessed credit impairment charge/(release) 510 541 1,051
Net loans and advances 281,570 57,811 339,381
Customer deposits 133,536 101,058 234,594
Risk weighted assets 112,142 54,520 166,662
September 2021 Full Year v September 2020 Full Year
Net interest income 4% -7% 1%
Other operating income -38% -2% -23%
Operating income 0% -6% -2%
Operating expenses 0% -5% -2%
Profit before credit impairment and income tax -1% -7% -3%
Credit impairment (charge)/release large large large
Profit before income tax 38% large 58%
Income tax expense and non-controlling interests 48% large 66%
Cash profit 34% large 55%
Individually assessed credit impairment charge/(release) -61% -74% -67%
Collectively assessed credit impairment charge/(release) large large large
Net loans and advances 1% -1% 1%
Customer deposits 6% 10% 8%
Risk weighted assets 0% -5% -2%
DIVISIONAL RESULTS
Australia Retail and Commercial - continuing operations
Mark Hand
62
September 2021 Half Year
Retail
$M
Commercial and
Private Bank
$M
Total
$M
Net interest income
2,834 1,181 4,015
Other operating income
358 229 587
Operating income
3,192 1,410 4,602
Operating expenses (1,344) (680) (2,024)
Profit before credit impairment and income tax
1,848 730 2,578
Credit impairment (charge)/release (4) 49 45
Profit before income tax
1,844 779 2,623
Income tax expense and non-controlling interests (554) (234) (788)
Cash profit
1,290 545 1,835
Individually assessed credit impairment charge/(release) 47 14 61
Collectively assessed credit impairment charge/(release)
(43) (63) (106)
Net loans and advances
283,988 57,245 341,233
Customer deposits
141,404 111,100 252,504
Risk weighted assets
112,156 51,637 163,793
March 2021 Half Year
Net interest income 2,874 1,100 3,974
Other operating income 75 227 302
Operating income 2,949 1,327 4,276
Operating expenses (1,327) (673) (2,000)
Profit before credit impairment and income tax 1,622 654 2,276
Credit impairment (charge)/release 231 150 381
Profit before income tax 1,853 804 2,657
Income tax expense and non-controlling interests (633) (242) (875)
Cash profit 1,220 562 1,782
Individually assessed credit impairment charge/(release) 75 59 134
Collectively assessed credit impairment charge/(release) (306) (209) (515)
Net loans and advances 287,475 56,794 344,269
Customer deposits 134,655 106,660 241,315
Risk weighted assets 110,672 52,334 163,006
September 2021 Half Year v March 2021 Half Year
Net interest income -1% 7% 1%
Other operating income large 1% 94%
Operating income 8% 6% 8%
Operating expenses 1% 1% 1%
Profit before credit impairment and income tax 14% 12% 13%
Credit impairment (charge)/release large -67% -88%
Profit before income tax 0% -3% -1%
Income tax expense and non-controlling interests -12% -3% -10%
Cash profit 6% -3% 3%
Individually assessed credit impairment charge/(release) -37% -76% -54%
Collectively assessed credit impairment charge/(release) -86% -70% -79%
Net loans and advances -1% 1% -1%
Customer deposits 5% 4% 5%
Risk weighted assets 1% -1% 0%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
63
Divisional performance was impacted by a number of large/notable items. Refer to pages 15 to 19 and pages 57 to 58 for details.
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 1,586 1,519 4%
3,105 3,182 -2%
Other operating income
864 1,014 -15%
1,878 2,649 -29%
Operating income
2,450 2,533 -3%
4,983 5,831 -15%
Operating expenses (1,173) (1,274) -8%
(2,447) (2,558) -4%
Profit before credit impairment and income tax
1,277 1,259 1%
2,536 3,273 -23%
Credit impairment (charge)/release 34 55 -38%
89 (694) large
Profit before income tax
1,311 1,314 0%
2,625 2,579 2%
Income tax expense and non-controlling interests (372) (366) 2%
(738) (725) 2%
Cash profit
939 948 -1%
1,887 1,854 2%
Balance Sheet
Net loans and advances 158,231 147,446 7%
158,231 157,634 0%
Other external assets
270,759 344,994 -22%
270,759 391,862 -31%
External assets
428,990 492,440 -13%
428,990 549,496 -22%
Customer deposits 239,628 223,666 7%
239,628 223,288 7%
Other deposits and borrowings 70,033 65,675 7%
70,033 73,427 -5%
Deposits and other borrowings
309,661 289,341 7%
309,661 296,715 4%
Other external liabilities 74,383 143,956 -48%
74,383 183,318 -59%
External liabilities
384,044 433,297 -11%
384,044 480,033 -20%
Risk weighted assets 172,041 169,960 1%
172,041 186,502 -8%
Average gross loans and advances 151,298 151,897 0%
151,597 177,252 -14%
Average deposits and other borrowings
302,551 292,475 3%
297,527 313,625 -5%
Ratios
Return on average assets 0.39% 0.35%
0.37% 0.32%
Net interest margin
0.85% 0.77%
0.81% 0.76%
Net interest margin (excluding Markets)
1.86% 1.85%
1.86% 1.78%
Operating expenses to operating income
47.9% 50.3%
49.1% 43.9%
Operating expenses to average assets
0.48% 0.47%
0.48% 0.45%
Individually assessed credit impairment charge/(release)
15 55 -73%
70 321 -78%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
0.02% 0.07%
0.05% 0.18%
Collectively assessed credit impairment charge/(release)
(49) (110) -55%
(159) 373 large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.06%) (0.15%)
(0.10%) 0.21%
Gross impaired assets
704 892 -21%
704 434 62%
Gross impaired assets as a % of GLA
0.44% 0.60%
0.44% 0.27%
Total full time equivalent staff (FTE)
5,332 5,215 2%
5,332 5,291 1%
1.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Cash Profit September 2021 v September 2020
Performance September 2021 v September 2020
Lending volumes increased in Corporate Finance and Transaction Banking,
partially offset by a decrease in Markets. Customer deposits increased in
Transaction Banking and Markets.
Net interest margin ex-Markets increased driven by improved lending
margins.
Other operating income decreased driven by lower Markets revenue
following normalisation of financial market conditions and the impact of
surplus system liquidity, partially offset by lower customer remediation.
Other operating expenses decreased driven by productivity benefits and
accelerated amortisation in the prior year, partially offset by a litigation
settlement and higher restructuring expenses.
Credit impairment charges decreased driven by a collectively assessed
credit impairment release reflecting an improved economic outlook, and
lower individually assessed credit impairment charges in Transaction
Banking.
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
64
Institutional by Geography
Half Year Full Year
Australia
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 992 884 12%
1,876 1,779 5%
Other operating income
432 491 -12%
923 1,052 -12%
Operating income
1,424 1,375 4%
2,799 2,831 -1%
Operating expenses (586) (654) -10%
(1,240) (1,197) 4%
Profit before credit impairment and income tax
838 721 16%
1,559 1,634 -5%
Credit impairment (charge)/release 6 68 -91%
74 (279) large
Profit before income tax
844 789 7%
1,633 1,355 21%
Income tax expense and non-controlling interests (255) (228) 12%
(483) (413) 17%
Cash profit
589 561 5%
1,150 942 22%
Individually assessed credit impairment charge/(release) 16 34 -53%
50 72 -31%
Collectively assessed credit impairment charge/(release)
(22) (102) -78%
(124) 207 large
Net loans and advances
91,084 89,755 1%
91,084 98,992 -8%
Customer deposits
91,352 88,824 3%
91,352 89,369 2%
Risk weighted assets
91,322 93,452 -2%
91,322 99,632 -8%
Asia, Pacific, Europe, and America
Net interest income 438 478 -8%
916 1,077 -15%
Other operating income
314 419 -25%
733 1,240 -41%
Operating income
752 897 -16%
1,649 2,317 -29%
Operating expenses (501) (532) -6%
(1,033) (1,174) -12%
Profit before credit impairment and income tax
251 365 -31%
616 1,143 -46%
Credit impairment (charge)/release 4 (20) large
(16) (381) -96%
Profit before income tax
255 345 -26%
600 762 -21%
Income tax expense and non-controlling interests (58) (87) -33%
(145) (183) -21%
Cash profit
197 258 -24%
455 579 -21%
Individually assessed credit impairment charge/(release) - 24 -100%
24 242 -90%
Collectively assessed credit impairment charge/(release)
(4) (4) 0%
(8) 139 large
Net loans and advances
60,907 51,694 18%
60,907 52,168 17%
Customer deposits
126,512 115,331 10%
126,512 113,036 12%
Risk weighted assets
68,293 63,922 7%
68,293 71,884 -5%
New Zealand
Net interest income 156 157 -1%
313 326 -4%
Other operating income
118 104 13%
222 357 -38%
Operating income
274 261 5%
535 683 -22%
Operating expenses (86) (88) -2%
(174) (187) -7%
Profit before credit impairment and income tax
188 173 9%
361 496 -27%
Credit impairment (charge)/release 24 7 large
31 (34) large
Profit before income tax
212 180 18%
392 462 -15%
Income tax expense and non-controlling interests (59) (51) 16%
(110) (129) -15%
Cash profit
153 129 19%
282 333 -15%
Individually assessed credit impairment charge/(release) (1) (3) -67%
(4) 7 large
Collectively assessed credit impairment charge/(release)
(23) (4) large
(27) 27 large
Net loans and advances
6,240 5,997 4%
6,240 6,474 -4%
Customer deposits
21,764 19,511 12%
21,764 20,883 4%
Risk weighted assets
12,426 12,586 -1%
12,426 14,986 -17%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
65
Individually assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Transaction Banking (7) 5 large
(2) 245 large
Corporate Finance
22 51 -57%
73 77 -5%
Markets
- (1) -100%
(1) (1) 0%
Individually assessed credit impairment charge/(release)
15 55 -73%
70 321 -78%
Collectively assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Transaction Banking 14 (8) large
6 15 -60%
Corporate Finance
(70) (95) -26%
(165) 358 large
Markets
7 (7) large
- - n/a
Collectively assessed credit impairment charge/(release)
(49) (110) -55%
(159) 373 large
Net loans and advances
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Transaction Banking 17,348 14,295 14,192
21% 22%
Corporate Finance
113,720 105,026 111,253
8% 2%
Markets
27,021 28,097 32,160
-4% -16%
Central Functions
142 28 29
large large
Net loans and advances
158,231 147,446 157,634
7% 0%
Customer deposits
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Transaction Banking 133,202 120,775 123,963
10% 7%
Corporate Finance
981 1,817 966
-46% 2%
Markets
103,470 99,272 96,464
4% 7%
Central Functions
1,975 1,802 1,895
10% 4%
Customer deposits
239,628 223,666 223,288
7% 7%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
66
September 2021 Full Year
Transaction
Banking
$M
Corporate
Finance
$M
Markets
$M
Central
Functions
$M
Total
$M
Net interest income
661 1,591 841 12 3,105
Other operating income
634 94 1,130 20 1,878
Operating income
1,295 1,685 1,971 32 4,983
Operating expenses (677) (600) (1,121) (49) (2,447)
Profit/(Loss) before credit impairment and income tax
618 1,085 850 (17) 2,536
Credit impairment (charge)/release (4) 92 1 - 89
Profit/(Loss) before income tax
614 1,177 851 (17) 2,625
Income tax expense and non-controlling interests (178) (334) (221) (5) (738)
Cash profit/(loss)
436 843 630 (22) 1,887
Individually assessed credit impairment charge/(release) (2) 73 (1) - 70
Collectively assessed credit impairment charge/(release)
6 (165) - - (159)
Net loans and advances
17,348 113,720 27,021 142 158,231
Customer deposits
133,202 981 103,470 1,975 239,628
Risk weighted assets
26,061 95,994 48,643 1,343 172,041
September 2020 Full Year
Net interest income 833 1,556 770 23 3,182
Other operating income 687 59 1,884 19 2,649
Operating income 1,520 1,615 2,654 42 5,831
Operating expenses (812) (607) (1,095) (44) (2,558)
Profit/(Loss) before credit impairment and income tax 708 1,008 1,559 (2) 3,273
Credit impairment (charge)/release (260) (435) 1 - (694)
Profit/(Loss) before income tax 448 573 1,560 (2) 2,579
Income tax expense and non-controlling interests (163) (154) (392) (16) (725)
Cash profit/(loss) 285 419 1,168 (18) 1,854
Individually assessed credit impairment charge/(release) 245 77 (1) - 321
Collectively assessed credit impairment charge/(release) 15 358 - - 373
Net loans and advances 14,192 111,253 32,160 29 157,634
Customer deposits 123,963 966 96,464 1,895 223,288
Risk weighted assets 23,739 102,923 59,345 495 186,502
September 2021 Full Year v September 2020 Full Year
Net interest income -21% 2% 9% -48% -2%
Other operating income -8% 59% -40% 5% -29%
Operating income -15% 4% -26% -24% -15%
Operating expenses -17% -1% 2% 11% -4%
Profit/(Loss) before credit impairment and income tax -13% 8% -45% large -23%
Credit impairment (charge)/release -98% large 0% n/a large
Profit/(Loss) before income tax 37% large -45% large 2%
Income tax expense and non-controlling interests 9% large -44% -69% 2%
Cash profit/(loss) 53% large -46% 22% 2%
Individually assessed credit impairment charge/(release) large -5% 0% n/a -78%
Collectively assessed credit impairment charge/(release) -60% large n/a n/a large
Net loans and advances 22% 2% -16% large 0%
Customer deposits 7% 2% 7% 4% 7%
Risk weighted assets 10% -7% -18% large -8%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
67
September 2021 Half Year
Transaction
Banking
$M
Corporate
Finance
$M
Markets
$M
Central
Functions
$M
Total
$M
Net interest income
335 808 439 4 1,586
Other operating income
314 49 492 9 864
Operating income
649 857 931 13 2,450
Operating expenses (309) (300) (530) (34) (1,173)
Profit/(Loss) before credit impairment and income tax
340 557 401 (21) 1,277
Credit impairment (charge)/release (7) 48 (7) - 34
Profit/(Loss) before income tax
333 605 394 (21) 1,311
Income tax expense and non-controlling interests (96) (171) (117) 12 (372)
Cash profit/(loss)
237 434 277 (9) 939
Individually assessed credit impairment charge/(release) (7) 22 - - 15
Collectively assessed credit impairment charge/(release)
14 (70) 7 - (49)
Net loans and advances
17,348 113,720 27,021 142 158,231
Customer deposits
133,202 981 103,470 1,975 239,628
Risk weighted assets
26,061 95,994 48,643 1,343 172,041
March 2021 Half Year
Net interest income 326 783 402 8 1,519
Other operating income 320 45 638 11 1,014
Operating income 646 828 1,040 19 2,533
Operating expenses (368) (300) (591) (15) (1,274)
Profit/(Loss) before credit impairment and income tax 278 528 449 4 1,259
Credit impairment (charge)/release 3 44 8 - 55
Profit/(Loss) before income tax 281 572 457 4 1,314
Income tax expense and non-controlling interests (82) (163) (104) (17) (366)
Cash profit/(loss) 199 409 353 (13) 948
Individually assessed credit impairment charge/(release) 5 51 (1) - 55
Collectively assessed credit impairment charge/(release) (8) (95) (7) - (110)
Net loans and advances 14,295 105,026 28,097 28 147,446
Customer deposits 120,775 1,817 99,272 1,802 223,666
Risk weighted assets 25,648 92,905 50,135 1,272 169,960
September 2021 Half Year v March 2021 Half Year
Net interest income 3% 3% 9% -50% 4%
Other operating income -2% 9% -23% -18% -15%
Operating income 0% 4% -10% -32% -3%
Operating expenses -16% 0% -10% large -8%
Profit/(Loss) before credit impairment and income tax 22% 5% -11% large 1%
Credit impairment (charge)/release large 9% large n/a -38%
Profit/(Loss) before income tax 19% 6% -14% large 0%
Income tax expense and non-controlling interests 17% 5% 13% large 2%
Cash profit/(loss) 19% 6% -22% -31% -1%
Individually assessed credit impairment charge/(release) large -57% -100% n/a -73%
Collectively assessed credit impairment charge/(release) large -26% large n/a -55%
Net loans and advances 21% 8% -4% large 7%
Customer deposits 10% -46% 4% 10% 7%
Risk weighted assets 2% 3% -3% 6% 1%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
68
Analysis of Markets operating income
1
Half Year Full Year
Composition of Markets operating income by product
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Foreign Exchange 262 307 -15%
569 690 -18%
Rates
124 128 -3%
252 628 -60%
Credit and Capital Markets
61 139 -56%
200 351 -43%
Commodities
32 43 -26%
75 124 -40%
Franchise Revenue
479 617 -22%
1,096 1,793 -39%
Balance Sheet
2
445 402 11%
847 706 20%
Derivative valuation adjustments
3
7 21 -67%
28 155 -82%
Markets operating income
931 1,040 -10%
1,971 2,654 -26%
1.
Markets operating income includes net interest income and other operating income.
2.
Balance Sheet represents hedging of interest rate risk on the Group’s loan and deposit books and the management of the Group’s liquidity portfolio.
3.
Includes funding and credit valuation adjustments.
Half Year Full Year
Composition of Markets operating income by geography
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Australia 438 402 9%
840 842 0%
Asia, Pacific, Europe & America
370 517 -28%
887 1,413 -37%
New Zealand
123 121 2%
244 399 -39%
Markets operating income
931 1,040 -10%
1,971 2,654 -26%
DIVISIONAL RESULTS
Institutional - continuing operations
Mark Whelan
69
Market risk
Traded market risk
Below are aggregate Value at Risk (VaR) exposures at a 99% confidence level covering both physical and derivative trading positions for the Bank’s
principal trading centres.
99% confidence level (1 day holding period)
High for Low for Avg for
High for Low for Avg for
As at year year year
As at year year year
Sep 21
$M
Sep 21
$M
Sep 21
$M
Sep 21
$M
Sep 20
$M
Sep 20
$M
Sep 20
$M
Sep 20
$M
Value at Risk at 99% confidence
Foreign exchange
3.8 10.0 1.3 3.9 2.0 6.1 1.2 3.1
Interest rate
9.6 19.6 4.3 8.8 9.6 13.8 3.3 7.2
Credit
6.3 22.2 5.3 13.7 13.9 17.1 1.8 8.6
Commodities
3.1 5.0 1.3 2.8 3.0 4.7 1.3 2.6
Equity
- - - - - - - -
Diversification benefit
(9.4) n/a n/a (9.7) (10.9) n/a n/a (8.0)
Total VaR
13.4 30.0 8.7 19.5 17.6 31.9 5.7 13.5
Non-traded interest rate risk
Non-traded interest rate risk is managed by Markets and relates to the potential adverse impact of changes in market interest rates on future net interest
income for the Group. Interest rate risk is reported using various techniques including VaR and scenario analysis based on a 1% shock.
99% confidence level (1 day holding period)
High for Low for Avg for
High for Low for Avg for
As at year year year As at year year year
Sep 21
$M
Sep 21
$M
Sep 21
$M
Sep 21
$M
Sep 20
$M
Sep 20
$M
Sep 20
$M
Sep 20
$M
Value at Risk at 99% confidence
Australia
67.0 81.8 61.9 69.8 60.8 60.8 18.8 33.4
New Zealand
21.6 32.8 21.6 26.7 26.3 26.3 9.4 15.2
Asia, Pacific, Europe & America
31.5 34.9 29.0 32.0 29.4 30.2 17.8 24.2
Diversification benefit
(32.9) n/a n/a (53.7) (61.4) n/a n/a (29.5)
Total VaR
87.2 87.2 59.3 74.8 55.1 58.3 31.5 43.3
Impact of 1% rate shock on the next 12 months’ net interest income
As at
Sep 21 Sep 20
As at period end 2.43% 1.25%
Maximum exposure
2.43% 1.61%
Minimum exposure
0.98% 0.52%
Average exposure (in absolute terms)
1.55% 1.01%
DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
70
Divisional performance was impacted by a number of large/notable items. Refer to pages 15 to 19 and pages 57 to 58 for details (in AUD).
Table reflects NZD for New Zealand (AUD results shown on page 74)
Half Year Full Year
Sep 21
NZD M
Mar 21
NZD M
Movt
Sep 21
NZD M
Sep 20
NZD M
Movt
Net interest income 1,570 1,490 5%
3,060 2,895 6%
Other operating income
244 255 -4%
499 501 0%
Operating income
1,814 1,745 4%
3,559 3,396 5%
Operating expenses (745) (668) 12%
(1,413) (1,520) -7%
Profit before credit impairment and income tax
1,069 1,077 -1%
2,146 1,876 14%
Credit impairment (charge)/release 18 63 -71%
81 (366) large
Profit before income tax
1,087 1,140 -5%
2,227 1,510 47%
Income tax expense and non-controlling interests (305) (315) -3%
(620) (431) 44%
Cash profit
782 825 -5%
1,607 1,079 49%
Balance Sheet
Net loans and advances 134,537 131,250 3%
134,537 125,981 7%
Other external assets
3,944 4,153 -5%
3,944 4,522 -13%
External assets
138,481 135,403 2%
138,481 130,503 6%
Customer deposits 102,336 101,530 1%
102,336 98,304 4%
Other deposits and borrowings 5,734 3,543 62%
5,734 1,748 large
Deposits and other borrowings
108,070 105,073 3%
108,070 100,052 8%
Other external liabilities 19,694 19,526 1%
19,694 23,385 -16%
External liabilities
127,764 124,599 3%
127,764 123,437 4%
Risk weighted assets 74,524 71,220 5%
74,524 71,348 4%
Average gross loans and advances 133,666 129,047 4%
131,363 128,358 2%
Average deposits and other borrowings
106,744 102,546 4%
104,651 97,032 8%
Net funds management income
116 109 6% 225 219 3%
Funds under management 39,043 36,489 7% 39,043 35,223 11%
Average funds under management
37,878 35,468 7% 36,687 34,809 5%
Ratios
Return on average assets 1.14% 1.25%
1.19% 0.82%
Net interest margin
2.34% 2.32%
2.33% 2.26%
Operating expenses to operating income
41.1% 38.3%
39.7% 44.8%
Operating expenses to average assets
1.08% 1.01%
1.05% 1.15%
Individually assessed credit impairment charge/(release)
(11) (6) 83%
(17) 103 large
Individually assessed credit impairment charge/(release) as a % of average GLA
1
(0.02%) (0.01%)
(0.01%) 0.08%
Collectively assessed credit impairment charge/(release)
(7) (57) -88%
(64) 263 large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.01%) (0.09%)
(0.05%) 0.20%
Gross impaired assets
173 338 -49%
173 374 -54%
Gross impaired assets as a % of GLA
0.13% 0.26%
0.13% 0.30%
Total full time equivalent staff (FTE)
7,060 6,691 6%
7,060 6,679 6%
1.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Cash Profit September 2021 v September 2020
Performance September 2021 v September 2020
Lending volumes increased driven by home loan growth.
Net interest margin increased driven by favourable deposit mix, lower
funding costs and deposit repricing benefits, partially offset by headwinds
from lower home loan margins due to competition, unfavourable lending mix
with growth weighted to fixed rate home loans, and lower income post UDC
sale completion in September 2020.
Operating expenses decreased driven by lower customer remediation and
restructuring expenses, lower expenses post UDC sale completion,
realisation of productivity benefits, and goodwill impairment and accelerated
software amortisation in the prior year. This was partially offset by higher
personnel costs and investment spend.
Credit impairment charges decreased driven by collectively assessed credit
impairment release reflecting an improved economic outlook, and lower
individually assessed credit impairment charge due to lower transitions to
impairment and the write-back of a large Agri customer.
DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
71
Individually assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
NZD M
Mar 21
NZD M Movt
Sep 21
NZD M
Sep 20
NZD M Movt
Personal 4 9 -56%
13 41 -68%
Home Loans
1 - n/a
1 5 -80%
Other
3 9 -67%
12 36 -67%
Business
(15) (15) 0% (30) 62 large
Individually assessed credit impairment charge/(release)
(11) (6) 83% (17) 103 large
Collectively assessed credit impairment charge/(release)
Half Year Full Year
Sep 21
NZD M
Mar 21
NZD M Movt
Sep 21
NZD M
Sep 20
NZD M Movt
Personal 9 (41) large
(32) 102 large
Home Loans
20 (36) large
(16) 78 large
Other
(11) (5) large
(16) 24 large
Business
(16) (16) 0% (32) 161 large
Collectively assessed credit impairment charge/(release)
(7) (57) -88%
(64) 263 large
Net loans and advances
As at Movement
Sep 21
NZD M
Mar 21
NZD M
Sep 20
NZD M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Personal 95,379 92,418 86,648
3% 10%
Home Loans
93,785 90,060 84,270
4% 11%
Other
1,594 2,358 2,378
-32% -33%
Business
39,158 38,832 39,333 1% 0%
Net loans and advances
134,537 131,250 125,981
3% 7%
Customer deposits
As at Movement
Sep 21
NZD M
Mar 21
NZD M
Sep 20
NZD M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Personal 78,592 81,358 79,867
-3% -2%
Business
23,744 20,172 18,437 18% 29%
Customer deposits
102,336 101,530 98,304
1% 4%
DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
72
September 2021 Full Year
Personal
NZD M
Business
NZD M
Central
Functions
NZD M
Total
NZD M
Net interest income
1,995 1,064 1 3,060
Other operating income
486 13 - 499
Operating income
2,481 1,077 1 3,559
Operating expenses (1,147) (262) (4) (1,413)
Profit before credit impairment and income tax
1,334 815 (3) 2,146
Credit impairment (charge)/release 19 62 - 81
Profit before income tax
1,353 877 (3) 2,227
Income tax expense and non-controlling interests (375) (246) 1 (620)
Cash profit
978 631 (2) 1,607
Individually assessed credit impairment charge/(release) 13 (30) - (17)
Collectively assessed credit impairment charge/(release)
(32) (32) - (64)
Net loans and advances
95,379 39,158 - 134,537
Customer deposits
78,592 23,744 - 102,336
Risk weighted assets
39,787 32,596 2,141 74,524
September 2020 Full Year
Net interest income 1,814 1,073 8 2,895
Other operating income 489 11 1 501
Operating income 2,303 1,084 9 3,396
Operating expenses (1,214) (303) (3) (1,520)
Profit before credit impairment and income tax 1,089 781 6 1,876
Credit impairment (charge)/release (143) (223) - (366)
Profit before income tax 946 558 6 1,510
Income tax expense and non-controlling interests (273) (156) (2) (431)
Cash profit 673 402 4 1,079
Individually assessed credit impairment charge/(release) 41 62 - 103
Collectively assessed credit impairment charge/(release) 102 161 - 263
Net loans and advances 86,648 39,333 - 125,981
Customer deposits 79,867 18,437 - 98,304
Risk weighted assets 38,308 30,839 2,201 71,348
September 2021 Full Year v September 2020 Full Year
Net interest income 10% -1% -88% 6%
Other operating income -1% 18% -100% 0%
Operating income 8% -1% -89% 5%
Operating expenses -6% -14% 33% -7%
Profit before credit impairment and income tax 22% 4% large 14%
Credit impairment (charge)/release large large n/a large
Profit before income tax 43% 57% large 47%
Income tax expense and non-controlling interests 37% 58% large 44%
Cash profit 45% 57% large 49%
Individually assessed credit impairment charge/(release) -68% large n/a large
Collectively assessed credit impairment charge/(release) large large n/a large
Net loans and advances 10% 0% n/a 7%
Customer deposits -2% 29% n/a 4%
Risk weighted assets 4% 6% -3% 4%
DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
73
September 2021 Half Year
Personal
NZD M
Business
NZD M
Central
Functions
NZD M
Total
NZD M
Net interest income
1,009 561 - 1,570
Other operating income
238 8 (2) 244
Operating income
1,247 569 (2) 1,814
Operating expenses (600) (144) (1) (745)
Profit before credit impairment and income tax
647 425 (3) 1,069
Credit impairment (charge)/release (13) 31 - 18
Profit before income tax
634 456 (3) 1,087
Income tax expense and non-controlling interests (177) (128) - (305)
Cash profit
457 328 (3) 782
Individually assessed credit impairment charge/(release) 4 (15) - (11)
Collectively assessed credit impairment charge/(release)
9 (16) - (7)
Net loans and advances
95,379 39,158 - 134,537
Customer deposits
78,592 23,744 - 102,336
Risk weighted assets
39,787 32,596 2,141 74,524
March 2021 Half Year
Net interest income 986 503 1 1,490
Other operating income 248 5 2 255
Operating income 1,234 508 3 1,745
Operating expenses (547) (118) (3) (668)
Profit before credit impairment and income tax 687 390 - 1,077
Credit impairment (charge)/release 32 31 - 63
Profit before income tax 719 421 - 1,140
Income tax expense and non-controlling interests (198) (118) 1 (315)
Cash profit 521 303 1 825
Individually assessed credit impairment charge/(release) 9 (15) - (6)
Collectively assessed credit impairment charge/(release) (41) (16) - (57)
Net loans and advances 92,418 38,832 - 131,250
Customer deposits 81,358 20,172 - 101,530
Risk weighted assets 39,190 29,924 2,106 71,220
September 2021 Half Year v March 2021 Half Year
Net interest income 2% 12% -100% 5%
Other operating income -4% 60% large -4%
Operating income 1% 12% large 4%
Operating expenses 10% 22% -67% 12%
Profit before credit impairment and income tax -6% 9% n/a -1%
Credit impairment (charge)/release large 0% n/a -71%
Profit before income tax -12% 8% n/a -5%
Income tax expense and non-controlling interests -11% 8% -100% -3%
Cash profit -12% 8% large -5%
Individually assessed credit impairment charge/(release) -56% 0% n/a 83%
Collectively assessed credit impairment charge/(release) large 0% n/a -88%
Net loans and advances 3% 1% n/a 3%
Customer deposits -3% 18% n/a 1%
Risk weighted assets 2% 9% 2% 5%
DIVISIONAL RESULTS
New Zealand - continuing operations
Antonia Watson
74
Table reflects AUD for New Zealand
NZD results shown on page 70
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 1,477 1,393 6%
2,870 2,731 5%
Other operating income
231 238 -3%
469 473 -1%
Operating income
1,708 1,631 5%
3,339 3,204 4%
Operating expenses (702) (623) 13%
(1,325) (1,435) -8%
Profit before credit impairment and income tax
1,006 1,008 0%
2,014 1,769 14%
Credit impairment (charge)/release 18 58 -69%
76 (345) large
Profit before income tax
1,024 1,066 -4%
2,090 1,424 47%
Income tax expense and non-controlling interests (287) (295) -3%
(582) (407) 43%
Cash profit
737 771 -4%
1,508 1,017 48%
Consisting of:
Personal 431 486 -11%
917 635 44%
Business
307 284 8%
591 378 56%
Central Functions
(1) 1 large
- 4 -100%
Cash profit
737 771 -4%
1,508 1,017 48%
Balance Sheet
Net loans and advances 128,466 120,482 7%
128,466 116,625 10%
Other external assets
3,766 3,812 -1%
3,766 4,186 -10%
External assets
132,232 124,294 6%
132,232 120,811 9%
Customer deposits 97,719 93,201 5%
97,719 91,004 7%
Other deposits and borrowings 5,474 3,252 68%
5,474 1,618 large
Deposits and other borrowings
103,193 96,453 7%
103,193 92,622 11%
Other external liabilities 18,806 17,923 5%
18,806 21,648 -13%
External liabilities
121,999 114,376 7%
121,999 114,270 7%
Risk weighted assets 71,161 65,376 9%
71,161 66,049 8%
Average gross loans and advances 125,780 120,639 4%
123,216 121,096 2%
Average deposits and other borrowings
100,444 95,864 5%
98,161 91,542 7%
Net funds management income
109 102 7%
211 207 2%
Funds under management 37,280 33,495 11%
37,280 32,608 14%
Average funds under management
35,643 33,157 7%
34,412 32,839 5%
Ratios
Return on average assets 1.14% 1.25%
1.19% 0.82%
Net interest margin
2.34% 2.32%
2.33% 2.26%
Operating expenses to operating income
41.1% 38.3%
39.7% 44.8%
Operating expenses to average assets
1.08% 1.01%
1.05% 1.15%
Individually assessed credit impairment charge/(release)
(10) (5) 100%
(15) 97 large
Individually assessed credit impairment charge/(release) as a % of average GLA
1
(0.02%) (0.01%)
(0.01%) 0.08%
Collectively assessed credit impairment charge/(release)
(8) (53) -85%
(61) 248 large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.01%) (0.09%)
(0.05%) 0.20%
Gross impaired assets
164 310 -47%
164 347 -53%
Gross impaired assets as a % of GLA
0.13% 0.26%
0.13% 0.30%
Total full time equivalent staff (FTE)
7,060 6,691 6%
7,060 6,679 6%
1.
Credit impairment charge used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
DIVISIONAL RESULTS
Pacific - continuing operations
Antonia Watson
Divisional performance was impacted by a number of large/notable items. Refer to pages 15 to 19 and pages 57 to 58 for details of these items.
75
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Net interest income 47 49 -4%
96 109 -12%
Other operating income
32 33 -3% 65 84 -23%
Operating income
79 82 -4% 161 193 -17%
Operating expenses
1
(73) (71) 3% (144) (205) -30%
Profit/(Loss) before credit impairment and income tax
6 11 -45% 17 (12) large
Credit impairment (charge)/release (18) (3) large (21) (52) -60%
Profit/(Loss) before income tax
(12) 8 large (4) (64) -94%
Income tax (expense)/benefit and non-controlling interests 2 (1) large 1 2 -50%
Cash profit/(loss)
(10) 7 large (3) (62) -95%
Balance Sheet
Net loans and advances 1,771 1,713 3% 1,771 1,866 -5%
Customer deposits
3,767 3,394 11% 3,767 3,534 7%
Risk weighted assets
3,682 3,176 16% 3,682 3,357 10%
Total full time equivalent staff (FTE)
1,089 1,101 -1% 1,089 1,113 -2%
1.
Includes $50 million of goodwill written-off in the September 2020 full year.
TSO and Group Centre - continuing operations
Divisional performance was impacted by a number of large/notable items. Refer to pages 15 to 19 and pages 57 to 58 for details of these items.
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Share of associates' profit/(loss) 66 (242) large (176) 156 large
Operating income (other)
119 143 -17% 262 (709) large
Operating income
1
185 (99) large 86 (553) large
Operating expenses
2
(597) (514) 16% (1,111) (1,094) 2%
Profit/(Loss) before credit impairment and income tax
(412) (613) -33% (1,025) (1,647) -38%
Credit impairment (charge)/release (3) - n/a (3) - n/a
Profit/(Loss) before income tax
(415) (613) -32% (1,028) (1,647) -38%
Income tax benefit and non-controlling interests 122 95 28% 217 259 -16%
Cash profit/(loss)
(293) (518) -43% (811) (1,388) -42%
Risk weighted assets 5,246 6,319 -17% 5,246 6,429 -18%
Total full time equivalent staff (FTE)
11,723 10,719 9% 11,723 10,345 13%
1.
Includes -$347 million in the March 2021 half in respect of the Group’s share of the AmBank 1MDB settlement and goodwill write-off. The September 2020 full year includes impairment
charge for AmBank and PT Panin of -$815 million, PT Panin AASB 9 adjustment of -$68 million and UDC loss on sale of -$44 million. Refer to pages 15 to 19 for further details on
large/notable items.
2.
Includes restructuring expense of $3 million in the September 2021 half and $41 million in the September 2021 full year (Mar 21 half: $38 million; Sep 20 full year: $24 million) and
accelerated software amortisation of $117 million in the September 2020 full year. Refer to pages 15 to 19 for further details on large/notable items.
DIVISIONAL RESULTS
76
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PROFIT RECONCILIATION
77
CONTENTS Page
Adjustments between statutory profit and cash profit 78
Explanation of adjustments between statutory profit and cash profit - continuing operations 78
Reconciliation of statutory profit to cash profit 79
PROFIT RECONCILIATION
78
Non-IFRS information
Statutory profit is prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards, which comply with
International Financial Reporting Standards (IFRS). 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 ASIC’s
Regulatory Guide 230 has been followed when presenting this information.
Adjustments between statutory profit and cash profit
Cash profit represents ANZ’s preferred measure of the result of the core 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 on pages 119 to 120 for further details). The adjustments made in arriving at cash profit are included in statutory profit which is
subject to audit within the context of the external auditor’s audit of the 2021 Annual Report (when released). Cash profit is not subject to audit by the
external auditor. The external auditor has informed the Audit Committee that cash profit adjustments have been determined on a consistent basis across
each period presented.
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Statutory profit attributable to shareholders of the Company from
continuing operations
3,228 2,951 9% 6,179 3,675 68%
Adjustments between statutory profit and cash profit from continuing
operations
Economic hedges (128) 51 large (77) 121 large
Revenue and expense hedges
108 (12) large 96 (36) large
Structured credit intermediation trades
- - n/a - (2) -100%
Total adjustments between statutory profit and cash profit from continuing
operations
(20) 39 large 19 83 -77%
Cash profit from continuing operations 3,208 2,990 7% 6,198 3,758 65%
Statutory profit/(loss) attributable to shareholders of the Company from
discontinued operations
(9) (8) 13% (17) (98) -83%
Adjustments between statutory profit and cash profit from discontinued
operations
- - n/a
- - n/a
Cash profit/(loss) from discontinued operations
(9) (8) 13% (17) (98) -83%
Cash profit 3,199 2,982 7% 6,181 3,660 69%
Explanation of adjustments between statutory profit and cash profit - continuing operations
Economic hedges
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in accordance with accounting standards, result
in fair value gains and losses being recognised within the Income Statement. This includes gains and losses arising from approved classes of
derivatives not designated in accounting hedge relationships but which are considered to be economic hedges as well as ineffectiveness from
designated accounting hedges.
Economic hedges comprise:
Funding related swaps (primarily cross currency interest rate swaps) used to convert the proceeds of foreign currency debt issuances into
floating rate Australian dollar and New Zealand dollar debt that do not qualify for hedge accounting. The main drivers of these fair value
movements are currency basis spreads and Australian dollar and New Zealand dollar fluctuations against other major funding currencies.
Economic hedges of select structured finance and specialised leasing transactions that do not qualify for hedge accounting. The main drivers of
these fair value adjustments are movements in the Australian and New Zealand term structure of interest rates.
Ineffectiveness arising from certain factors in designated accounting hedge relationships.
The Group removes the fair value adjustments from cash profit since the profit or loss will reverse over time to match with the profit or loss from the
underlying hedged item.
In the September 2021 half, the majority of the gain on economic hedges relates to funding related swaps, principally from the weakening of AUD
and NZD against USD.
Revenue and expense hedges
The Group enters into economic hedges to manage hedges of larger foreign exchange denominated revenue and expense streams, primarily NZD
and USD (and USD correlated). The loss on revenue and expense hedges in the September 2021 full year was mainly due to the weakening of AUD
against the USD and NZD in the September 2021 half.
Structured credit intermediation trades
ANZ entered into a series of structured credit intermediation trades prior to the Global Financial Crisis involving the selling of credit default swaps
(CDSs) as protection over specific debt structures and purchasing CDS protection over the same structures. ANZ has subsequently exited its
positions with the remaining two CDS deals having matured during the March 2021 half. Accordingly, the notional value of outstanding bought and
sold CDSs at 30 September 2021 was nil (Mar 21: nil; Sep 20: $0.3 billion).
PROFIT RECONCILIATION
79
Reconciliation of statutory profit to cash profit
Adjustments to statutory profit
Statutory
profit
Economic
hedges
Revenue and
expense
hedges
Structured
credit
intermediation
trades
Total
adjustments
to statutory
profit Cash profit
$M $M $M $M $M $M
September 2021 Full Year
Net interest income 14,161 - - - - 14,161
Other operating income
3,259 (110) 137 - 27 3,286
Operating income
17,420 (110) 137 - 27 17,447
Operating expenses (9,051) - - - - (9,051)
Profit before credit impairment and tax
8,369 (110) 137 - 27 8,396
Credit impairment (charge)/release 567 - - - - 567
Profit before income tax
8,936 (110) 137 - 27 8,963
Income tax expense (2,756) 33 (41) - (8) (2,764)
Non-controlling interests
(1) - - - - (1)
Profit after tax from continuing operations
6,179 (77) 96 - 19 6,198
Profit/(Loss) after tax from discontinued operations (17) - - - - (17)
Profit after tax
6,162 (77) 96 - 19 6,181
September 2020 Full Year
Net interest income 14,049 - - - - 14,049
Other operating income 3,588 169 (51) (3) 115 3,703
Operating income 17,637 169 (51) (3) 115 17,752
Operating expenses (9,383) - - - - (9,383)
Profit before credit impairment and tax 8,254 169 (51) (3) 115 8,369
Credit impairment (charge)/release (2,738) - - - - (2,738)
Profit before income tax 5,516 169 (51) (3) 115 5,631
Income tax expense (1,840) (48) 15 1 (32) (1,872)
Non-controlling interests (1) - - - - (1)
Profit after tax from continuing operations 3,675 121 (36) (2) 83 3,758
Profit/(Loss) after tax from discontinued operations (98) - - - - (98)
Profit after tax 3,577 121 (36) (2) 83 3,660
PROFIT RECONCILIATION
80
Reconciliation of statutory profit to cash profit, cont’d
Adjustments to statutory profit
Statutory
profit
Economic
hedges
Revenue and
expense
hedges
Structured
credit
intermediation
trades
Total
adjustments
to statutory
profit Cash profit
$M $M $M $M $M $M
September 2021 Half Year
Net interest income 7,175 - - - - 7,175
Other operating income
1,878 (183) 154 - (29) 1,849
Operating income
9,053 (183) 154 - (29) 9,024
Operating expenses (4,569) - - - - (4,569)
Profit before credit impairment and tax
4,484 (183) 154 - (29) 4,455
Credit impairment (charge)/release 76 - - - - 76
Profit before income tax
4,560 (183) 154 - (29) 4,531
Income tax expense (1,331) 55 (46) - 9 (1,322)
Non-controlling interests
(1) - - - - (1)
Profit after tax from continuing operations
3,228 (128) 108 - (20) 3,208
Profit/(Loss) after tax from discontinued operations (9) - - - - (9)
Profit after tax
3,219 (128) 108 - (20) 3,199
March 2021 Half Year
Net interest income 6,986 - - - - 6,986
Other operating income 1,381 73 (17) - 56 1,437
Operating income 8,367 73 (17) - 56 8,423
Operating expenses (4,482) - - - - (4,482)
Profit before credit impairment and tax 3,885 73 (17) - 56 3,941
Credit impairment (charge)/release 491 - - - - 491
Profit before income tax 4,376 73 (17) - 56 4,432
Income tax expense (1,425) (22) 5 - (17) (1,442)
Non-controlling interests - - - - - -
Profit after tax from continuing operations 2,951 51 (12) - 39 2,990
Profit/(Loss) after tax from discontinued operations (8) - - - - (8)
Profit after tax 2,943 51 (12) - 39 2,982
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
81
CONTENTS Page
Condensed Consolidated Income Statement 82
Condensed Consolidated Statement of Comprehensive Income 83
Condensed Consolidated Balance Sheet 84
Condensed Consolidated Cash Flow Statement 85
Condensed Consolidated Statement of Changes in Equity 86
Notes to Condensed Consolidated Financial Statements 87
CONDENSED CONSOLIDATED INCOME STATEMENT
Australia and New Zealand Banking Group Limited
82
Half Year
Full Year
Note
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Interest income 9,650 9,879 -2% 19,529 24,426 -20%
Interest expense
(2,475) (2,893) -14% (5,368) (10,377) -48%
Net interest income 2
7,175 6,986 3% 14,161 14,049 1%
Other operating income 2 1,754 1,571 12% 3,325 3,355 -1%
Net income from insurance business 2
58 52 12% 110 78 41%
Share of associates' profit/(loss) 2, 10
66 (242) large (176) 155 large
Operating income
9,053 8,367 8% 17,420 17,637 -1%
Operating expenses 3 (4,569) (4,482) 2% (9,051) (9,383) -4%
Profit before credit impairment and income tax
4,484 3,885 15% 8,369 8,254 1%
Credit impairment (charge)/release 6 76 491 -85% 567 (2,738) large
Profit before income tax
4,560 4,376 4% 8,936 5,516 62%
Income tax expense (1,331) (1,425) -7% (2,756) (1,840) 50%
Profit after tax from continuing operations
3,229 2,951 9% 6,180 3,676 68%
Profit/(Loss) after tax from discontinued operations (9) (8) 13% (17) (98) -83%
Profit for the period
3,220 2,943 9% 6,163 3,578 72%
Comprising:
Profit attributable to shareholders of the Company 3,219 2,943 9% 6,162 3,577 72%
Profit attributable to non-controlling interests
1 - n/a 1 1 0%
Earnings per ordinary share (cents) including discontinued
operations
Basic 4 113.4 103.7 9% 217.1 126.4 72%
Diluted 4
106.7 98.4 8% 204.9 118.0 74%
Earnings per ordinary share (cents) from continuing operations
Basic 4 113.7 104.0 9% 217.7 129.8 68%
Diluted 4
107.0 98.7 8% 205.4 121.1 70%
Dividend per ordinary share (cents)
72 70 3% 142 60 large
The notes appearing on pages 87 to 105 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Australia and New Zealand Banking Group Limited
83
Full Year
Sep 21
$M
Sep 20
$M Movt
Profit for the period from continuing operations
6,180 3,676 68%
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Investment securities - equity securities at FVOCI 80 (157) large
Other reserve movements
(41) 13 large
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
1
456 (550) large
Other reserve movements
(1,052) 712 large
Income tax attributable to the above items 301 (180) large
Share of associates' other comprehensive income
2
(48) 51 large
Other comprehensive income after tax from continuing operations
(304) (111) large
Profit/(Loss) after tax from discontinued operations (17) (98) -83%
Other comprehensive income after tax from discontinued operations - - n/a
Total comprehensive income for the period
5,859 3,467 69%
Comprising total comprehensive income attributable to:
Shareholders of the Company 5,858 3,467 69%
Non-controlling interests
1 - n/a
1.
Includes foreign currency translation differences attributable to non-controlling interests of nil (Sep 20 full year: $1 million loss).
2.
Share of associates’ other comprehensive income includes:
Sep 21 full year
$M
Sep 20 full year
$M
FVOCI reserve gain/(loss) (42) 48
Defined benefits gain/(loss) (5) 3
Cash flow hedge reserve gain/(loss) 1 (1)
Foreign currency translation reserve gain/(loss) (2) 1
Total (48) 51
The notes appearing on pages 87 to 105 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEET
Australia and New Zealand Banking Group Limited
84
As At Movement
Assets Note
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Cash and cash equivalents
1
151,260 124,460 107,923 22% 40%
Settlement balances owed to ANZ
7,530 9,778 7,541 -23% 0%
Collateral paid
2
9,166 12,059 14,308 -24% -36%
Trading securities
44,688 46,331 50,913 -4% -12%
Derivative financial instruments
2
38,736 104,666 135,331 -63% -71%
Investment securities
83,126 91,990 93,391 -10% -11%
Net loans and advances 5
629,719 614,359 617,093 3% 2%
Regulatory deposits
671 859 801 -22% -16%
Investments in associates
1,972 1,854 2,164 6% -9%
Current tax assets
57 170 161 -66% -65%
Deferred tax assets
2,339 2,105 2,124 11% 10%
Goodwill and other intangible assets
4,124 4,024 4,379 2% -6%
Premises and equipment
2,734 2,792 3,013 -2% -9%
Other assets
2,735 2,892 3,144 -5% -13%
Total assets
978,857 1,018,339 1,042,286 -4% -6%
Liabilities
Settlement balances owed by ANZ 17,427 19,188 22,241 -9% -22%
Collateral received
2
5,657 7,552 9,304 -25% -39%
Deposits and other borrowings 7
743,056 706,623 682,333 5% 9%
Derivative financial instruments
2
36,035 102,926 134,711 -65% -73%
Current tax liabilities
419 203 349 large 20%
Deferred tax liabilities
70 73 80 -4% -13%
Payables and other liabilities
8,647 8,558 9,128 1% -5%
Employee entitlements
602 600 596 0% 1%
Other provisions
2,214 2,417 2,579 -8% -14%
Debt issuances
101,054 107,623 119,668 -6% -16%
Total liabilities
915,181 955,763 980,989 -4% -7%
Net assets 63,676 62,576 61,297 2% 4%
Shareholders' equity
Ordinary share capital 8 25,984 26,615 26,531 -2% -2%
Reserves 8
1,228 741 1,501 66% -18%
Retained earnings 8
36,453 35,210 33,255 4% 10%
Share capital and reserves attributable to shareholders of the Company
63,665 62,566 61,287 2% 4%
Non-controlling interests 8 11 10 10 10% 10%
Total shareholders' equity
63,676 62,576 61,297 2% 4%
1.
Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.
2.
During the September 2021 half, a change was made to the legal arrangements for the settlement of derivative transactions with a central clearing counterparty which resulted in the reduction of
derivative financial instrument assets by $55.1 billion, derivative financial instrument liabilities by $55.2 billion and net collateral paid by $0.1 billion.
The notes appearing on pages 87 to 105 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Australia and New Zealand Banking Group Limited
85
Full Year
Sep 21
$M
Sep 20
$M
Profit after income tax 6,163 3,578
Adjustments to reconcile to net cash flow from operating activities:
Credit impairment charge/(release) (567) 2,738
Impairment of investment in associates
- 815
Depreciation and amortisation
1
1,087 1,391
Goodwill write-off
- 77
(Profit)/loss on sale of premises and equipment
(11) (8)
Net derivatives/foreign exchange adjustment
2
(6,350) (2,678)
(Gain)/loss on sale from divestments
238 25
Other non-cash movements
(237) (80)
Net (increase)/decrease in operating assets:
Collateral paid 4,995 283
Trading securities
10 (1,803)
Loans and advances
(8,259) (7,119)
Other assets
143 (76)
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings
3
48,896 39,873
Settlement balances owed by ANZ
(4,928) 11,476
Collateral received
(3,466) 1,739
Other liabilities
2
6,108 (9,949)
Total adjustments
37,659 36,704
Net cash (used in)/provided by operating activities
4
43,822 40,282
Cash flows from investing activities
Investment securities:
Purchases (52,639) (40,029)
Proceeds from sale or maturity
63,445 28,642
Proceeds from divestments, net of cash disposed
13 1,309
Repayment of IOOF secured notes
- (800)
Net investments in other assets
(561) (587)
Net cash (used in)/provided by investing activities
10,258 (11,465)
Cash flows from financing activities
Deposits and other borrowings drawn down
3
9,310 12,002
Debt issuances:
5
Issue proceeds 12,624 12,260
Redemptions
(27,709) (21,430)
Dividends paid
6
(2,834) (2,861)
On market purchase of treasury shares
(79) (122)
Repayment of lease liabilities
(330) (281)
Share buy-back
(654) -
Net cash (used in)/provided by financing activities
(9,672) (432)
Net increase/(decrease) in cash and cash equivalents 44,408 28,385
Cash and cash equivalents at beginning of period 107,923 81,621
Effects of exchange rate changes on cash and cash equivalents
(1,071) (2,083)
Cash and cash equivalents at end of period
151,260 107,923
1.
Includes accelerated amortisation of $197 million in the September 2020 full year following the Group’s change in the application of its software amortisation policy in 2020.
2.
Certain non-cash adjustments were reclassified from Other liabilities to Net derivatives/foreign exchange adjustment within Net cash (used in)/provided by operating activities to better reflect
the nature of the item. Comparatives have been restated (Sep 20 full year: $368 million reduction to net derivative foreign exchange adjustment).
3.
Funding in relation to RBA Term Funding Facility (TFF) has been reclassified from operating activities to financing activities. Comparatives have been restated (Sep 20 full year:
$12,002 million).
4.
Net cash (used in)/provided by operating activities includes interest received of $19,649 million (Sep 20 full year: $24,791 million), interest paid of $5,793 million (Sep 20 full year:
$11,156 million) and income taxes paid of $2,427 million (Sep 20 full year $2,348 million).
5.
Non-cash changes in debt issuances includes fair value hedging gain of $1,488 million (Sep 20 full year: $1,127 million loss) and foreign exchange gains of $1,525 million (Sep 20 full year:
$1,623 million gain).
6.
Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.
The notes appearing on pages 87 to 105 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Australia and New Zealand Banking Group Limited
86
Ordinary
share
capital Reserves
Retained
earnings
Share capital
and reserves
attributable to
shareholders of
the Company
Non-
controlling
interests
Total
shareholders'
equity
$M $M $M $M $M $M
As at 1 October 2019 26,490 1,629 32,664 60,783 11 60,794
Impact on transition to AASB 16 - - (88) (88) - (88)
Profit or loss from continuing operations - - 3,675 3,675 1 3,676
Profit or loss from discontinued operations - - (98) (98) - (98)
Other comprehensive income for the period from continuing operations - (124) 14 (110) (1) (111)
Other comprehensive income for the period from discontinued operations - - - - - -
Total comprehensive income for the period - (124) 3,591 3,467 - 3,467
Transactions with equity holders in their capacity as equity holders:
Dividends paid - - (2,922) (2,922) - (2,922)
Dividend reinvestment Plan
1
61 - - 61 - 61
Other equity movements:
Group employee share acquisition scheme (20) - - (20) - (20)
Other items - (4) 10 6 (1) 5
As at 30 September 2020 26,531 1,501 33,255 61,287 10 61,297
Profit or loss from continuing operations - - 6,179 6,179 1 6,180
Profit or loss from discontinued operations - - (17) (17) - (17)
Other comprehensive income for the period from continuing operations - (264) (40) (304) - (304)
Other comprehensive income for the period from discontinued operations - - - - - -
Total comprehensive income for the period - (264) 6,122 5,858 1 5,859
Transactions with equity holders in their capacity as equity holders:
Dividends paid - - (2,928) (2,928) - (2,928)
Dividend Reinvestment Plan
1
94 - - 94 - 94
Group share buy-back
2
(654) - - (654) - (654)
Other equity movements:
Group employee share acquisition scheme 13 - - 13 - 13
Other items - (9) 4 (5) - (5)
As at 30 September 2021 25,984 1,228 36,453 63,665 11 63,676
1.
4.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2020 final dividend (3.4 million shares for the 2020 interim dividend, nil shares for the 2021 interim
dividend and 2019 final dividend as the shares were purchased on-market and provided directly to shareholders participating in the DRP). On-market share purchases for the DRP were
$199 million for the September 2021 full year (Sep 20 full year: $185 million).
2.
The Company commenced a $1.5 billion on-market share buy-back on 4 August 2021. This resulted in 23 million shares ($654 million) being cancelled in the September 2021 half and a
further 2 million shares ($55 million) being cancelled after 30 September 2021 in respect of purchase orders placed but not settled at 30 September 2021.
The notes appearing on pages 87 to 105 form an integral part of the Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
87
1. Basis of preparation
These Condensed Consolidated Financial Statements:
have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (AASs);
should be read in conjunction with the 2021 ANZ Annual Report (when released) and any public announcements made by the Parent Entity and its
controlled entities (the Group) for the year ended 30 September 2021 in accordance with the continuous disclosure obligations under the
Corporations Act 2001 and the ASX Listing Rules;
do not include all notes of the type normally included in the 2021 ANZ Annual Report (when released);
are presented in Australian dollars unless otherwise stated; and
were approved by the Board of Directors on 27 October 2021.
i) Statement of Compliance
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except where
otherwise indicated, as permitted by Australian Securities and Investments Commission Corporations Instrument 2016/191.
ii) Basis of measurement
The financial information has been prepared in accordance with the historical cost basis except the following assets and liabilities that are stated at their
fair value:
derivative financial instruments as well as, in the case of fair value hedges, the fair value adjustment on the underlying hedged exposure;
financial assets and liabilities held for trading;
financial assets and liabilities designated at fair value through profit and loss;
financial assets at fair value through other comprehensive income; and
assets and liabilities held for sale (except those at carrying value).
In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.
iii) Use of estimates, assumptions and judgements
The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions that
affect reported amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include
complex or subjective decisions or assessments are provided in the 2021 ANZ Annual Report (when released). Such estimates and judgements are
reviewed on an ongoing basis.
A brief explanation of the key estimates, assumptions and judgements, including the impacts of COVID-19, for the year ended 30 September 2021 as set
out below.
Coronavirus (COVID-19) pandemic
The COVID-19 pandemic and its ongoing effects on the global economy has continued to impact our customers, operations and Group performance.
Governments have responded at unprecedented levels to protect the health of the population, local economies and livelihoods. The course of the
pandemic and vaccination levels has varied across the globe and government responses have differed in their extent and timing. Economies are
reopening at different rates whilst the risk of subsequent waves of infection remains. Thus there remains an elevated level of estimation uncertainty
involved in the preparation of these financial statements including:
the extent and duration of the disruption to business arising from the actions of governments, businesses and consumers in the ongoing
management of the virus;
the impact and expected response of the economy (and forecasts of key economic factors including GDP, employment and house prices). This
includes the response of capital markets, and the impacts on credit quality, liquidity, unemployment, consumer spending, as well as specific sector
impacts; and
the efficacy of vaccines against variants of the virus, and the effectiveness of government and central bank measures to support businesses and
consumers through this disruption.
The Group has made various accounting estimates in these Condensed Consolidated Financial Statements based on forecasts of economic conditions
which reflect expectations and assumptions as at 30 September 2021 about future events that the Directors believe are reasonable in the circumstances.
There is a considerable degree of judgement involved in preparing these estimates. The underlying assumptions are also subject to uncertainties which
are outside the control of the Group. Accordingly, actual economic conditions are likely to be different from those forecast since anticipated events
frequently do not occur as expected, and the effect of these differences may significantly impact accounting estimates included in these financial
statements.
The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected credit losses and
recoverable amounts of non-financial assets.
The impact of the COVID-19 pandemic on each of these accounting estimates is discussed further below and/or in the relevant notes in the 2021 ANZ
Annual Report (when released). Readers should consider these disclosures in light of the inherent uncertainties described above.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
88
1. Basis of preparation, cont’d
Allowance for expected credit losses
The Group measures the allowance for expected credit losses (ECL) using an expected credit loss impairment model as required by AASB 9 Financial
Instruments.
The continuing impact of COVID-19 on the global economy, including the roll-out of vaccines and the efficacy against variants of the virus, the extent and
pace of return to pre-pandemic conditions, and how governments, businesses and consumers respond remains uncertain. This uncertainty is reflected in
the Group’s assessment of expected credit losses from its credit portfolio which are subject to a number of management judgements and estimates.
The Group’s allowance for expected credit losses is included in the table below (refer to Note 6 for further information).
As at
Sep 21
$M
Mar 21
$M
Sep 20
$M
Collectively assessed 4,195 4,285 5,008
Individually assessed
687 809 891
Total
1
4,882 5,094 5,899
1.
Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments -
undrawn and contingent facilities.
Individually assessed allowance for expected credit losses
During the September 2021 full year, there was a net decrease in the individually assessed allowance for expected credit losses of $204 million.
In estimating individually assessed ECL for Stage 3 exposures, the Group makes judgements and assumptions in relation to expected repayments, the
realisable value of collateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process.
Judgements and assumptions in respect of these matters have been updated to reflect the ongoing and potential impact of COVID-19.
Collectively assessed allowance for expected credit losses
During the September 2021 full year, the collectively assessed allowance for expected credit losses decreased by $813 million attributable to: a reduction
of $448 million from the improving economic outlook partially offset by changes to scenario weightings and an allowance for model uncertainty due to the
continuing pandemic and reductions in government support programs (such as JobKeeper); a reduction of $282 million due to lower lending volumes and
changes in portfolio composition; a reduction of $153 million attributable to changes in credit risk; partially offset by an increase of $60 million in
management adjustments and an increase of $10 million from foreign currency translation movements.
In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to:
the selection of an estimation technique or modelling methodology; and
the selection of inputs for those models, and the interdependencies between those inputs.
The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between those inputs,
and highlights significant changes during the current period.
The judgements and associated assumptions have been made in the context of the impact of COVID-19, and reflect historical experience and other
factors that are considered to be relevant, including expectations of future events that are believed to be reasonable under the circumstances. The
Group’s ECL estimates are inherently uncertain and, as a result, actual results may differ from these estimates.
Judgement/Assumption Description Considerations for the year ended 30 September 2021
Determining when a
significant increase in
credit risk (SICR) has
occurred
In the measurement of ECL, judgement is involved in
setting the rules and trigger points to determine whether
there has been a SICR since initial recognition of a loan,
which would result in the financial asset moving from Stage
1 to Stage 2. This is a key area of judgement since
transition from Stage 1 to Stage 2 increases the ECL from
an allowance based on the probability of default in the next
12 months, to an allowance for lifetime expected credit
losses. Subsequent decreases in credit risk resulting in
transition from Stage 2 to Stage 1 may similarly result in
significant changes in the ECL allowance.
The setting of precise trigger points requires judgement
which may have a material impact upon the size of the ECL
allowance. The Group monitors the effectiveness of SICR
criteria on an ongoing basis.
The support packages offered to customers in response to
COVID-19 in 2020 and 2021 have ceased with the majority
of customers who took up the support packages having
reverted back to their normal loan repayments. Given the
recency of cessation of these packages, the Group has
provided a component of ECL for expected delinquencies
that may have been obscured by the support measures.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
89
1. Basis of preparation, cont’d
Judgement/Assumption Description Considerations for the year ended 30 September 2021
Measuring both 12-month
and lifetime credit losses
The probability of default (PD), loss given default (LGD)
and exposure at default (EAD) credit risk parameters used
in determining ECL are point-in-time measures reflecting
the relevant forward-looking information determined by
management. Judgement is involved in determining which
forward-looking information variables are relevant for
particular lending portfolios and for determining each
portfolio’s point-in-time sensitivity.
The PD, LGD and EAD models are subject to the Group’s
model risk policy that stipulates periodic model monitoring,
periodic re-validation and defines approval procedures and
authorities according to model materiality.
In the 2021 year, an adjustment was made to the modelled
outcome to account for increased model uncertainties as a
result of COVID-19.
In addition, judgement is required where behavioural
characteristics are applied in estimating the lifetime of a
facility to be used in measuring ECL.
There were no material changes to the policies during the
year ended 30 September 2021.
Base case economic
forecast
The Group derives a forward-looking ‘base case’
economic scenario which reflects ANZ Research -
Economics’ (ANZ Economics) view of future macro-
economic conditions.
There have been no changes to the types of forward-
looking variables (key economic drivers) used as model
inputs in the current year.
As at 30 September 2021, the base case assumptions have
been updated to reflect the evolving situation with respect to
COVID-19, including emergence from lockdowns,
government stimulus measures and roll-out of vaccines. In
determining the expected path of the economy,
assessments of the impact of central bank policies,
governments’ actions, the response of business, and
institution specific responses (such as repayment deferrals)
were considered.
The expected outcomes of key economic drivers for the
base case scenario as at 30 September 2021 are described
below under the heading ‘Base case economic forecast
assumptions’.
Probability weighting of
each economic scenario
(base case, upside,
downside and severe
downside scenarios)
1,2
Probability weighting of each economic scenario is
determined by management considering the risks and
uncertainties surrounding the base case economic
scenario at each measurement date.
The key consideration for probability weightings in the
current period is the continued uncertain economic impacts
of COVID-19.
The Group considers these weightings in each geography to
provide estimates of the possible loss outcomes taking into
account short and long term inter-relationships within the
Group’s credit portfolios.
As at 30 September 2021, a base case weighting of 41.3%
has been applied and more weight has been applied to the
downside scenario given the Group’s assessment of
downside risks.
The assigned probability weightings in Australia, New
Zealand and Rest of world are subject to a high degree of
inherent uncertainty and therefore the actual outcomes may
be significantly different to those projected.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
90
1. Basis of preparation, cont’d
Judgement/Assumption Description Considerations for the year ended 30 September 2021
Management temporary
adjustments
Management temporary adjustments to the ECL
allowance are used in circumstances where it is judged
that our existing inputs, assumptions and model
techniques do not capture all the risk factors relevant to
our lending portfolios. Emerging local or global
macroeconomic, microeconomic or political events, and
natural disasters that are not incorporated into our current
parameters, risk ratings, or forward-looking information are
examples of such circumstances. The use of management
temporary adjustments may impact the amount of ECL
recognised.
The uncertainty associated with the COVID-19 pandemic,
including the roll-out of vaccines and their efficacy, and the
extent to which the actions of governments, businesses
and consumers mitigate against potentially adverse credit
outcomes are not fully incorporated into existing ECL
models which are based on historical underlying data.
Accordingly, management overlays have been applied to
ensure credit provisions are appropriate.
Management have applied a number of adjustments to the
modelled ECL primarily due to the uncertainty associated
with continuing COVID-19 impacts.
Management overlays (including COVID-19 overlays) which
add to the modelled ECL provision have been made for
risks particular to retail, including home loans, small
business and commercial banking in Australia, for personal
and business banking in New Zealand, and for tourism in
the Pacific.
1.
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.
2.
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse
economic conditions.
Base case economic forecast assumptions
The uncertain evolution of the COVID-19 pandemic and associated government, business and consumer responses, increases the risk of the economic
forecast resulting in an understatement or overstatement of the ECL balance due to uncertainties around:
the extent and timing of measures, including roll-out of vaccines and relaxation of containment measures, impacting the spread of COVID-19;
the expected impact on the economy, including the timing and speed of the economic response and differences between sectors; and
the effects of progressive reductions in government stimulus measures, in particular their impact on the extent and duration of economic recovery.
The economic drivers of the base case economic forecasts at 30 September 2021 are set out below. These reflect ANZ Economics’ view of future macro-
economic conditions at 30 September 2021. For years beyond the near term forecasts below, the ECL models project future year economic conditions
including an assumption to eventual reversion to mid-cycle economic conditions.
The base case economic forecasts as at 30 September 2021 indicate a significant improvement in current and expected economic conditions from the
forecasts as at 30 September 2020 reflecting the ongoing progress and actions in responding to the COVID-19 pandemic.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base case economic
scenario. The key consideration for probability weightings in the current period is the effectiveness of actions taken in response to COVID-19, relaxation
of containment measures by governments, and the take-up of vaccines limiting the impact of the virus.
The base case scenario represents a significant improvement in the forecasts since September 2020. Given the uncertainties associated with a potential
ongoing recovery in the economy, the average base case weighting across geographies has been reduced to 41.3% (Sep 20: 50.0%) and the downside
scenario increased to 47.7% (Sep 20: 33.3%).
Forecast calendar year
2021 2022 2023
Australia
GDP (annual % change) 3.4% 3.8% 3.4%
Unemployment rate 5.3% 4.3% 4.1%
Residential property prices (annual % change) 20.5% 6.7% 3.5%
Consumer price index 2.4 1.9 2.2
New Zealand
GDP (annual % change) 4.3% 4.3% 2.9%
Unemployment rate 4.1% 3.9% 3.9%
Residential property prices (annual % change) 22.4% 0.4% 5.2%
Consumer price index 3.3 2.9 1.9
Rest of world
GDP (annual % change) 6.2% 4.2% 2.5%
Consumer price index 3.9 2.5 2.2
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
91
1. Basis of preparation, cont’d
The assigned probability weightings in Australia, New Zealand and Rest of world are subject to a high degree of inherent uncertainty and therefore the
actual outcomes may be significantly different to those projected. The Group considers these weightings in each geography to provide estimates of the
possible loss outcomes and taking into account short and long term inter-relationships within the Group’s credit portfolios. The average weightings
applied across the Group are set out below:
Sep 21 Mar 21 Sep 20
Group
Base
41.3%
41.4% 50.0%
Upside
5.2%
5.5% 10.4%
Downside
47.7%
46.7% 33.3%
Severe Downside
5.8%
6.4% 6.3%
ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future periods,
expected credit losses reported by the Group should be considered as a best estimate within a range of possible estimates. The table below illustrates
the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2021:
Total
$M
Impact
$M
If 1% of stage 1 facilities were included in stage 2 4,250 55
If 1% of stage 2 facilities were included in stage 1 4,188 (7)
100% upside scenario 1,774 (2,421)
100% base scenario 2,337 (1,858)
100% downside scenario 4,337 142
100% severe downside scenario 5,358 1,163
Fair value measurement of financial instruments
The majority of valuation models the Group uses to value financial instruments employ only observable market data as inputs.
For certain financial instruments, we may use data that is not readily observable in current markets where we need to exercise more management
judgement to determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available.
At 30 September 2021, the Group had $1,467 million of assets and $30 million of liabilities where the valuation was primarily derived using unobservable
inputs (Mar 21: $1,224 million assets and $25 million liabilities; Sep 20: $1,183 million assets and $55 million liabilities). The financial instruments which
are valued using unobservable inputs are predominantly equity securities where quoted prices in active markets are not available.
The Group has an investment in the Bank of Tianjin (BoT), which at 30 September 2021 has a carrying value of $991 million (Mar 21: $1,019 million;
Sep 20: $934 million). The listed shares are illiquid, consequently the Group determines the fair value based on a valuation model using comparable bank
pricing multiples as determined by management. Judgement is required in both the selection of the model and inputs used. Although the comparator
group entities operate in the same industry, the nature of their business and local economic conditions may be different from the Group’s investment.
Thus where local conditions change, which impact the price-to-book ratio of the comparator group, the fair value of the asset will change proportionately.
That is, if the price-to-book ratio changed by 10%, the fair value would change by 10%. Since the asset is classified as fair value through other
comprehensive income, changes in the fair value are recorded directly in equity.
Investments in associates
The Group assesses the carrying value of its associate investments for impairment indicators semi-annually.
At 30 September 2021, the impairment assessment of non-lending assets identified that two of the Group’s associate investments, AMMB Holdings
Berhad (AmBank) and PT Bank Pan Indonesia (PT Panin) had indicators of impairment. No impairment was recognised as their carrying values are
supported by their value-in-use (VIU) calculations.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
92
1. Basis of preparation, cont’d
The ongoing impact of COVID-19 on the valuation of AmBank and PT Panin remains uncertain. Significant management judgement is required in
determining the key assumptions underpinning the VIU calculations. Factors may change in subsequent periods and lead to potential future impairments
or reversals of prior period impairments. These include forecast earnings levels in the near term and/or changes in the long term growth forecasts,
required levels of regulatory capital and the post-tax discount rate. The key assumptions used in the VIU calculations are outlined below:
AmBank PT Panin
Sep 21 Mar 21 Sep 20
Sep 21 Mar 21 Sep 20
Carrying Value ($m)
719 685 1,056
1,210 1,140 1,084
Post-tax discount rate 10.6% 11.2% 11.3%
14.4% 14.1% 15.2%
Terminal growth rate
5.0% 5.0% 4.8%
5.1% 5.1% 5.3%
Expected earnings growth (compound annual growth rate - 5 years)
4.2% large 2.8%
6.4% 6.9% 4.2%
Common Equity Tier 1 ratio (5 year average)
13.4% 13.0% 12.9%
12.8% 12.8% 12.8%
The VIU calculations are sensitive to changes in the underlying assumptions with reasonably possible changes in key assumptions having a positive or
negative impact on the VIU outcome, and as such the recoverable amount of the investment.
A change in the September 2021 post-tax discount rate by +/- 50 bps would impact the VIU outcome for PT Panin by ($55 million)/$60 million, and
($84 million)/$106 million for AmBank.
A change in the September 2021 terminal growth rate by +/- 25 bps would impact the VIU outcome for PT Panin by $9 million/($10 million), and
$49 million/($45 million) for AmBank.
Neither investment would be impaired if the discount rate were increased or the terminal growth rate reduced by the reasonably possible changes above.
Goodwill
The Group’s goodwill balance as at 30 September 2021 is $3,089 million.
The Group conducted an assessment as to whether the carrying value of goodwill was impaired. For the purpose of impairment testing, goodwill acquired
in a business combination is allocated at the date of acquisition to the cash generating units (CGUs) that are expected to benefit from the synergies of the
related business combination. These CGUs are the Group’s reportable segments. CGUs with goodwill assets as at 30 September 2021 were the
Australia Retail and Commercial division ($140 million), the New Zealand division ($1,849 million) and the Institutional division ($1,100 million).
Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount. We estimate the recoverable amount
of each CGU to which goodwill is allocated using a fair value less costs of disposal (FVLCOD) approach, with a VIU assessment performed where the
FVLCOD approach indicates an impairment.
Management’s approach used to determine the FVLCOD of each CGU was consistent with the prior periods. The assessment of the recoverable amount
of each CGU has been made considering the impacts of COVID-19 and subsequent economic recovery on both earnings and asset prices, and reflects
expectations of future events that are believed to be reasonable under the circumstances. The key inputs used to determine FVLCOD of each CGU
containing goodwill are noted below:
Future maintainable earnings used for the September 2021 full year assessment for each of the CGUs have been estimated as the sum of the
financial year 2022 financial plan results for each CGU plus an allocation of the central costs recorded outside of the CGUs to which goodwill is
allocated;
Price/Earnings (P/E) multiples applied (including 30% control premium) which are derived from the valuations of comparator entities improved for all
three CGUs:
Price/Earnings Multiples
Division
Sep 21 Full Year Sep 20 Full Year
Australia Retail and Commercial 18.9 16.0
New Zealand 16.4 12.7
Institutional
15.5 13.4
Based on the FVLCOD assessment, no impairment was identified.
Customer remediation provisions
At 30 September 2021, the Group has recognised customer remediation provisions of $886 million (Mar 21: $1,003 million; Sep 20: $1,109 million) which
includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims, penalties and litigation
outcomes.
Determining the amount of the provisions, which represent management’s best estimate of the cost of settling the identified matters, requires the exercise
of significant judgement. It will often be necessary to form a view on a number of different assumptions, including the number of impacted customers, the
average refund per customer, associated remediation project costs, and the implications of regulatory exposures and customer claims having regard to
their specific facts and circumstances.
Consequently, the appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence,
including expert legal advice, and adjustments are made to the provisions where appropriate.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
93
1. Basis of preparation, cont’d
Other provisions
The Group holds provisions for various obligations including restructuring costs, non-lending losses, fraud and forgeries and litigation related claims.
These provisions involve judgements regarding the timing and outcome of future events, including estimates of expenditure required to satisfy such
obligations. The appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence,
including expert legal advice, and adjustments are made to the provisions where appropriate.
v) Accounting policies
These Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computation
consistent with those applied in the 2021 ANZ Annual Report (when released).
Discontinued operations are separately presented from the results of the continuing operations as a single line item ‘Profit/(loss) after tax from
discontinued operations’ in the Condensed Consolidated Income Statement. Notes to the Condensed Consolidated Income Statement have been
presented on a continuing basis.
Accounting standards adopted during the period
On 1 April 2021, the Group early adopted AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2.
This standard addresses issues that may affect the Group at the point of transition from an existing Interbank Offered Rates (IBOR) to a risk-free rate
(RFR), including the effects of changes to contractual cash flows or hedging relationships. The adoption of Interest Rate Benchmark Reform – Phase 2
did not have a material impact on the Group. Details of the impact of IBOR reform on the Group are disclosed in the 2021 Annual Report (when
released).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
94
2. Income
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Interest income 9,650 9,879 -2% 19,529 24,426 -20%
Interest expense
(2,318) (2,704) -14% (5,022) (9,971) -50%
Major bank levy
(157) (189) -17% (346) (406) -15%
Net interest income
7,175 6,986 3% 14,161 14,049 1%
Other operating income
i) Fee and commission income
Lending fees
1
230 244 -6% 474 579 -18%
Non-lending fees
1,286 1,266 2% 2,552 2,687 -5%
Commissions
51 46 11% 97 121 -20%
Funds management income
147 140 5% 287 275 4%
Fee and commission income
1,714 1,696 1% 3,410 3,662 -7%
Fee and commission expense (621) (646) -4% (1,267) (1,337) -5%
Net fee and commission income
1,093 1,050 4% 2,143 2,325 -8%
ii) Other income
Net foreign exchange earnings and other financial instruments income
2
642 729 -12% 1,371 1,809 -24%
Impairment of AmBank
- - n/a - (595) -100%
Impairment of PT Panin
- - n/a - (220) -100%
Reclassification of ANZ Share Investing to held for sale
3
- (251) -100% (251) - n/a
Sale of New Zealand legacy insurance portfolio
- 13 -100% 13 - n/a
Sale of UDC
- - n/a - (7) -100%
Dividend income on equity securities
1 - n/a 1 26 -96%
Other
18 30 -40% 48 17 large
Other income
661 521 27% 1,182 1,030 15%
Other operating income 1,754 1,571 12% 3,325 3,355 -1%
Net income from insurance business 58 52 12% 110 78 41%
Share of associates' profit/(loss) 66 (242) large (176) 155 large
Operating income
4
9,053 8,367 8% 17,420 17,637 -1%
1.
Lending fees exclude fees treated as part of the effective yield calculation in interest income.
2.
Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk
on funding instruments, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.
3.
The loss on reclassification of ANZ Share Investing to held for sale is included within Other operating income to align with the classification of loss on sale that would have applied if the
disposal had completed in the March 2021 half.
4.
Includes charges associated with customer remediation of -$68 million for the September 2021 half and -$142 million for the September 2021 full year (Mar 21 half: -$74 million; Sep 20 full
year: -$174 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
95
3. Operating expenses
Half Year Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
i) Personnel
Salaries and related costs 2,229 2,196 2% 4,425 4,310 3%
Superannuation costs
173 164 5% 337 329 2%
Other
95 89 7% 184 239 -23%
Personnel
1
2,497 2,449 2% 4,946 4,878 1%
ii) Premises
Rent 43 42 2% 85 84 1%
Depreciation
221 225 -2% 446 517 -14%
Other
91 83 10% 174 188 -7%
Premises
355 350 1% 705 789 -11%
iii) Technology
Depreciation and amortisation
2
304 334 -9% 638 858 -26%
Subscription licences and outsourced services
414 372 11% 786 780 1%
Other
85 79 8% 164 186 -12%
Technology
1,2
803 785 2% 1,588 1,824 -13%
iv) Restructuring 22 105 -79% 127 161 -21%
v) Other
Advertising and public relations 107 71 51% 178 177 1%
Professional fees
440 329 34% 769 667 15%
Freight, stationery, postage and communication
90 95 -5% 185 205 -10%
Other
3
255 298 -14% 553 682 -19%
Other
1,3
892 793 12% 1,685 1,731 -3%
Operating expenses
1,2,3
4,569 4,482 2% 9,051 9,383 -4%
1.
Includes customer remediation expenses of $93 million for the September 2021 half and $185 million for the September 2021 full year (Mar 21 half: $92 million; Sep 20 full year: $209
million) allocated across Personnel, Technology and Other expenses.
2.
Includes accelerated amortisation of $197 million in the September 2020 full year.
3.
Includes litigation settlement expenses of $69 million in the March 2021 half and goodwill write-off of $77 million in the September 2020 full year.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
96
4. Earnings per share
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding
during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is calculated by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic EPS calculation for the effect of dilutive
potential ordinary shares.
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Earnings Per Share (EPS) - Basic
Earnings Per Share (cents) 113.4 103.7 9% 217.1 126.4 72%
Earnings Per Share (cents) from continuing operations
113.7 104.0 9% 217.7 129.8 68%
Earnings Per Share (cents) from discontinued operations
(0.3) (0.3) 0% (0.6) (3.4) -82%
Earnings Per Share (EPS) - Diluted
Earnings Per Share (cents) 106.7 98.4 8% 204.9 118.0 74%
Earnings Per Share (cents) from continuing operations
107.0 98.7 8% 205.4 121.1 70%
Earnings Per Share (cents) from discontinued operations
(0.3) (0.3) 0% (0.5) (3.1) -84%
Half Year Full Year
Sep 21 Mar 21 Movt Sep 21 Sep 20 Movt
Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the period ($M) 3,220 2,943 9% 6,163 3,578 72%
Less: Profit attributable to non-controlling interests ($M)
1 - n/a 1 1 0%
Earnings used in calculating basic earnings per share ($M)
3,219 2,943 9% 6,162 3,577 72%
Less: Profit/(Loss) after tax from discontinued operations ($M) (9) (8) 13% (17) (98) -83%
Earnings used in calculating basic earnings per share from continuing
operations ($M)
3,228 2,951 9% 6,179 3,675 68%
Diluted:
Earnings used in calculating basic earnings per share ($M)
3,219 2,943 9% 6,162 3,577 72%
Add: Interest on convertible subordinated debt ($M)
95 92 3% 187 201 -7%
Earnings used in calculating diluted earnings per share ($M)
3,314 3,035 9% 6,349 3,778 68%
Less: Profit/(Loss) after tax from discontinued operations ($M) (9) (8) 13% (17) (98) -83%
Earnings used in calculating diluted earnings per share from
continuing operations ($M)
3,323 3,043 9% 6,366 3,876 64%
Reconciliation of weighted average number of ordinary shares
(WANOS) used in earnings per share calculations
1
WANOS used in calculating basic earnings per share (M)
2,838.4 2,838.7 0% 2,838.6 2,830.9 0%
Add: Weighted average dilutive potential ordinary shares (M)
Convertible subordinated debt (M) 255.8 238.7 7% 250.3 362.2 -31%
Share based payments (options, rights and deferred shares) (M)
11.3 7.0 61% 9.9 8.0 24%
WANOS used in calculating diluted earnings per share (M)
3,105.5 3,084.4 1% 3,098.8 3,201.1 -3%
1. Weighted average number of ordinary shares excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 4.4 million for the September 2021 half and 4.6 million
for the September 2021 full year (Mar 21 half: 4.7 million; Sep 20 full year: 5.0 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
97
5. Net loans and advances
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Australia
Overdrafts 4,190 4,070 4,189 3% 0%
Credit cards outstanding
5,488 6,119 5,984 -10% -8%
Commercial bills outstanding
6,000 6,152 6,383 -2% -6%
Term loans - housing
277,720 280,545 274,967 -1% 1%
Term loans - non-housing
139,885 138,771 150,272 1% -7%
Other
1,319 1,297 1,355 2% -3%
Total Australia
434,602 436,954 443,150 -1% -2%
Asia, Pacific, Europe & America
Overdrafts 407 516 415 -21% -2%
Credit cards outstanding
5 5 6 0% -17%
Term loans - housing
482 472 489 2% -1%
Term loans - non-housing
60,693 51,867 52,682 17% 15%
Other
1,666 1,123 1,051 48% 59%
Total Asia, Pacific, Europe & America
63,253 53,983 54,643 17% 16%
New Zealand
Overdrafts 763 599 610 27% 25%
Credit cards outstanding
1,077 1,181 1,204 -9% -11%
Term loans - housing
94,370 87,561 82,894 8% 14%
Term loans - non-housing
38,699 37,390 38,771 4% 0%
Total New Zealand
134,909 126,731 123,479 6% 9%
Sub-total 632,764 617,668 621,272 2% 2%
Unearned income
1
(434) (437) (460)
-1% -6%
Capitalised brokerage and other origination costs
1
1,434 1,378 1,262 4% 14%
Gross loans and advances
633,764 618,609 622,074 2% 2%
Allowance for expected credit losses (refer to Note 6) (4,045) (4,250) (4,981) -5% -19%
Net loans and advances
629,719 614,359 617,093 3% 2%
1.
Amortised over the expected life of the loan.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
98
6. Allowance for expected credit losses
As at
Sep 21 Mar 21 Sep 20
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
Net loans and advances at
amortised cost
3,379 666 4,045 3,472 778 4,250 4,130 851 4,981
Off-balance sheet commitments
785 21 806 795 31 826 858 40 898
Investment securities - debt securities
at amortised cost
31 - 31 18 - 18 20 - 20
Total
4,195 687 4,882 4,285 809 5,094 5,008 891 5,899
Other Comprehensive Income
Investment securities - debt securities
at FVOCI
1
11 - 11 11 - 11 10 - 10
1.
For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other Comprehensive Income (OCI)
with a corresponding charge to profit or loss.
The following tables present the movement in the allowance for ECL.
Net loans and advances at amortised cost
Allowance for ECL is included in Net loans and advances.
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at 1 October 2019 927 1,378 413 791 3,509
Transfer between stages 204 (270) (95) 161 -
New and increased provisions (net of releases) 30 840 132 718 1,720
Write-backs - - - (164) (164)
Bad debts written off (excluding recoveries) - - - (469) (469)
Foreign currency translation and other movements
1
30 20 5 18 73
As at 31 March 2020 1,191 1,968 455 1,055 4,669
Transfer between stages 187 (291) (106) 210 -
New and increased provisions (net of releases) (112) 841 119 455 1,303
Write-backs - - - (157) (157)
Bad debts written off (excluding recoveries) - - - (640) (640)
Foreign currency translation and other movements
1
(62) (53) (7) (72) (194)
As at 30 September 2020 1,204 2,465 461 851 4,981
Transfer between stages 345 (369) (98) 122 -
New and increased provisions (net of releases) (563) 3 52 333 (175)
Write-backs - - - (171) (171)
Bad debts written off (excluding recoveries) - - - (340) (340)
Foreign currency translation and other movements
1
(11) (14) (3) (17) (45)
As at 31 March 2021 975 2,085 412 778 4,250
Transfer between stages 200 (233) (50) 83 -
New and increased provisions (net of releases) (222) 124 50 284 236
Write-backs
- - - (194) (194)
Bad debts written off (excluding recoveries)
- - - (286) (286)
Foreign currency translation and other movements
1
15 18 5 1 39
As at 30 September 2021
968 1,994 417 666 4,045
1.
Other movements include the impact of discount unwind on individually assessed allowances for ECL and the impact of divestments completed during the September 2020 half and the
March 2020 half.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
99
6. Allowance for expected credit losses, cont’d
Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at 1 October 2019 473 151 21 23 668
Transfer between stages 20 (24) (2) 6 -
New and increased provisions (net of releases) 98 115 (2) 15 226
Write-backs - - - (6) (6)
Foreign currency translation 19 2 1 - 22
As at 31 March 2020 610 244 18 38 910
Transfer between stages 14 (20) - 6 -
New and increased provisions (net of releases) 1 20 6 4 31
Write-backs - - - (8) (8)
Foreign currency translation and other movements
1
(29) (5) (1) - (35)
As at 30 September 2020 596 239 23 40 898
Transfer between stages 36 (34) (3) 1 -
New and increased provisions (net of releases) (52) 4 - (1) (49)
Write-backs - - - (9) (9)
Foreign currency translation (12) (2) - - (14)
As at 31 March 2021 568 207 20 31 826
Transfer between stages 32 (30) (2) - -
New and increased provisions (net of releases) (57) 31 1 2 (23)
Write-backs
- - - (12) (12)
Foreign currency translation
12 3 - - 15
As at 31 September 2021
555 211 19 21 806
1.
Other movements include the impact of divestments completed during the period.
Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at 30 September 2020 20 - - - 20
As at 31 March 2021 18 - - - 18
As at 30 September 2021
31 - - - 31
Investment securities - debt securities at FVOCI
For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in
Other Comprehensive Income (OCI) with a corresponding charge to profit or loss.
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at 30 September 2020 10 - - - 10
As at 31 March 2021 11 - - - 11
As at 30 September 2021
11 - - - 11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
100
6. Allowance for expected credit losses, cont’d
Credit impairment charge/(release) analysis
Half Year Movement Full Year Movement
Sep 21
$M
Mar 21
$M
Sep 21
v. Mar 21
Sep 21
$M
Sep 20
$M
Sep 21
v. Sep 20
New and increased provisions (net of releases)
1,2
- Collectively assessed (145) (678) -79% (823) 1,717 large
- Individually assessed
369 455 -19% 824 1,575 -48%
Write-backs
3
(206) (180) 14% (386) (335) 15%
Recoveries of amounts previously written off
(94) (88) 7% (182) (219) -17%
Total credit impairment charge/(release) from continuing
operations
(76) (491) -85% (567) 2,738 large
1.
Includes the impact of transfers between collectively assessed and individually assessed.
2.
New and increased provisions (net of releases) includes:
Sep 21 half Mar 21 half Sep 21 full year Sep 20 full year
Collectively
assessed
$M
Individually
assessed
$M
Collectively
assessed
$M
Individually
assessed
$M
Collectively
assessed
$M
Individually
assessed
$M
Collectively
assessed
$M
Individually
assessed
$M
Net loans and advances at amortised cost (131) 367 (630) 455 (761) 822 1,479 1,544
Off-balance sheet commitments (25) 2 (49) - (74) 2 226 31
Investment securities - debt securities at
amortised cost
11 - - - 11 - 9 -
Investment securities - debt securities at FVOCI - - 1 - 1 - 3 -
Total (145) 369 (678) 455 (823) 824 1,717 1,575
3.
Consists of write-backs in Net loans and advances at amortised cost of $194 million for the September 2021 half and $365 million for the September 2021 full year (Mar 21 half: $171 million;
Sep 20 full year: $321 million), and Off-balance sheet commitment of $12 million for the September 2021 half and $21 million for the September 2021 full year (Mar 21 half: $9 million; Sep
20 full year: $14 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
101
7. Deposits and other borrowings
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Australia
Certificates of deposit 31,915 34,176 28,258 -7% 13%
Term deposits
49,767 61,503 64,187 -19% -22%
On demand and short term deposits
270,839 247,730 240,945 9% 12%
Deposits not bearing interest
23,209 20,850 18,771 11% 24%
Deposits from banks and securities sold under repurchase agreements
1
49,340 42,651 58,762 16% -16%
Commercial paper
21,451 22,829 7,524 -6% large
Total Australia
446,521 429,739 418,447 4% 7%
Asia, Pacific, Europe & America
Certificates of deposit 4,003 4,532 2,583 -12% 55%
Term deposits
88,481 84,950 86,735 4% 2%
On demand and short term deposits
36,094 27,332 24,366 32% 48%
Deposits not bearing interest
5,709 6,448 5,473 -11% 4%
Deposits from banks and securities sold under repurchase agreements
35,225 35,456 29,127 -1% 21%
Total Asia, Pacific, Europe & America
169,512 158,718 148,284 7% 14%
New Zealand
Certificates of deposit 1,790 1,292 1,650 39% 8%
Term deposits
38,833 39,715 46,351 -2% -16%
On demand and short term deposits
59,822 54,379 49,905 10% 20%
Deposits not bearing interest
20,828 18,618 15,630 12% 33%
Deposits from banks and securities sold under repurchase agreements
2
1,517 910 448 67% large
Commercial paper and other borrowings
4,233 3,252 1,618 30% large
Total New Zealand
127,023 118,166 115,602 7% 10%
Total deposits and other borrowings 743,056 706,623 682,333 5% 9%
1.
Includes $20.1 billion (Mar 21: $12.0 billion; Sep 20: $12.0 billion) of funds drawn under the RBA TFF.
2.
Includes $1.2 billion (Mar 21: nil; Sep 20: nil) of funds drawn under the RBNZ FLP and TLF.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
102
8. Shareholders’ equity
Issued and quoted securities
Half Year
Full Year
Ordinary shares
Sep 21
No.
Mar 21
No.
Sep 21
No.
Sep 20
No.
Opening balance 2,845,541,800 2,840,370,225 2,840,370,225 2,834,584,923
Share Buy-back
1
(23,308,448) - (23,308,448) -
Bonus Option Plan
1,330,300 929,207 2,259,507 2,412,280
Dividend reinvestment plan issues
2
- 4,242,368 4,242,368 3,373,022
Closing balance
2,823,563,652 2,845,541,800 2,823,563,652 2,840,370,225
Less: Treasury Shares (4,401,593) (4,484,712) (4,401,593) (4,927,878)
Closing balance
2,819,162,059 2,841,057,088 2,819,162,059 2,835,442,347
Issued/(Repurchased) during the period (21,978,148) 5,171,575 (16,806,573) 5,785,302
1.
The Company commenced a $1.5 billion on-market share buy-back on 4 August 2021. This resulted in 23 million shares ($654 million) being cancelled in the September 2021 half and a
further 2 million shares ($55 million) being cancelled after 30 September 2021 in respect of purchase orders placed but not settled at 30 September 2021.
2.
The DRP in respect to the 2021 interim dividend was satisfied in full through the on-market purchase and transfer of 7,103,024 shares at $27.91 to participating shareholders. The DRP in
respect to the 2020 final dividend was satisfied in full through the issue of 4,242,368 new shares at $22.19 to participating shareholders (2020 interim dividend; 3,373,022 shares at $18.06).
As at Movement
Shareholders' equity
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Ordinary share capital 25,984 26,615 26,531
-2% -2%
Reserves
Foreign currency translation reserve
611 (503) 155
large large
Share option reserve
76 56 85 36% -11%
FVOCI reserve
170 567 245 -70% -31%
Cash flow hedge reserve
393 643 1,038 -39% -62%
Transactions with non-controlling interests reserve
(22) (22) (22)
0% 0%
Total reserves
1,228 741 1,501 66% -18%
Retained earnings
36,453 35,210 33,255
4% 10%
Share capital and reserves attributable to shareholders of the Company
63,665 62,566 61,287 2% 4%
Non-controlling interests
11 10 10 10% 10%
Total shareholders' equity
63,676 62,576 61,297
2% 4%
9. Changes in composition of the Group
There were no acquisitions or disposals of material controlled entities during the year ended 30 September 2021.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
103
10. Investments in Associates
1
Half Year
Full Year
Sep 21
$M
Mar 21
$M Movt
Sep 21
$M
Sep 20
$M Movt
Share of associates' profit/(loss) 66 (242) large (176) 155 large
Contributions to profit
2
Contribution to
Group post-tax profit
Ownership interest
held by Group
Associates Half Year Full Year As at
Sep 21
$M
Mar 21
$M
Sep 21
$M
Sep 20
$M
Sep 21
%
Mar 21
%
Sep 20
%
P.T. Bank Pan Indonesia (PT Panin) 49 65 114 55 39 39 39
AMMB Holdings Berhad (AmBank)
3,4
18 (307) (289) 102 22 24 24
Other associates
(1) - (1) (2) n/a n/a n/a
Share of associates' profit/(loss)
66 (242) (176) 155
1.
At 31 March 2020, the Group recorded an impairment charge of $815 million in Other operating income with AmBank impaired by $595 million and PT Panin impaired by $220 million.
2.
Contributions to profit reflect the IFRS equivalent results adjusted to align with the Group’s financial year end and accounting policies which may differ from the published results of these
entities. In the September 2020 full year, the Group recognised an adjustment of $68 million to the equity accounted earnings of PT Panin. When the Group adopted AASB 9 Financial
Instruments on 1 October 2018, an estimate of PT Panin’s transition adjustment was recognised through opening retained earnings to align accounting policies. PT Panin adopted AASB 9
during the September 2020 full year recognising a transition adjustment in retained earnings. The adjustment of $68 million represents the Group’s equity accounted share of the transition
adjustment net of amounts previously recognised by the Group on 1 October 2018.
3.
Following AmBank’s agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its involvement with 1Malaysia Development Berhad, the Group recognised a
$212 million reduction in equity accounted earnings reflecting its share of the settlement provision during the March 2021 half, with a corresponding decrease in the carrying value of the
investment.
4.
During the March 2021 half, AmBank partially impaired goodwill carried on its balance sheet and the Group recognised a $135 million reduction in equity accounted earnings reflecting its
share of the impairment recognised by AmBank, with a corresponding decrease in the carrying value of the investment.
11. Contingent liabilities and contingent assets
There are outstanding court proceedings, claims and possible claims for and against the Group. Where relevant, expert legal advice has been obtained
and, in the light of such advice, provisions and/or disclosures as deemed appropriate have been made. In some instances, we have not disclosed the
estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice the interests of
the Group.
Contingent Liabilities
Regulatory and customer exposures
In recent years there has been an increase in the number of matters on which the Group engages with its regulators. There have also been
significant increases in the nature and scale of regulatory investigations, surveillance and reviews, civil and criminal enforcement actions (whether by
court action or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly
against financial institutions both in Australia and globally. The Group has received various notices and requests for information from its regulators as
part of both industry-wide and Group-specific reviews and has also made disclosures to its regulators at its own instigation. The nature of these
interactions can be wide ranging and, for example, include or have included a range of matters including responsible lending practices, regulated
lending requirements, product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice,
insurance distribution, pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-money laundering
and counter-terrorism financing obligations, reporting and disclosure obligations and product disclosure documentation. There may be exposures to
customers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation or
compensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.
Benchmark/rate actions
In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including the
Company – one action relating to the bank bill swap rate (BBSW), and one action relating to the Singapore Interbank Offered Rate (SIBOR) and the
Singapore Swap Offer Rate (SOR). The class actions are expressed to apply to persons and entities that engaged in US-based transactions in
financial instruments that were priced, benchmarked, and/or settled based on BBSW or SIBOR. The claimants seek damages or compensation in
amounts not specified, and allege that the defendant banks, including the Company, violated US anti-trust laws and (in the BBSW case only)
antiracketeering laws, the Commodity Exchange Act, and unjust enrichment principles. In March 2021, the Company reached an agreement to settle
the BBSW class action. The settlement is without admission of liability and remains subject to negotiation and execution of complete settlement
terms as well as court approval. The financial impact of the settlement is not material and has been fully provided at 31 March 2021. The separate
class action in relation to SIBOR is ongoing and is being defended.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
104
11. Contingent liabilities and contingent assets, cont’d
Capital raising actions
In June 2018, the Commonwealth Director of Public Prosecutions commenced criminal proceedings against a number of companies and individuals,
including the Company and a senior employee. It is alleged that the joint lead managers of the Company’s August 2015 underwritten institutional
equity placement engaged in cartel conduct and that the Company and its senior employee were involved in one of those joint lead managers giving
effect to a cartel. The Company and its senior employee are defending the allegations. The trial is currently scheduled to start in April 2022.
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company
alleging failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity
placement. ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary
shares of the placement. The Company is defending the allegations.
Consumer credit insurance litigation
In February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations.
Esanda dealer car loan litigation
In August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake in
relation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.
OnePath superannuation litigation
In December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodians
breached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim
also alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.
New Zealand loan information litigation
In September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending the
allegations.
Royal Commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated with
further regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
The outcomes and total costs associated with these possible exposures remain uncertain.
Security recovery actions
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will be
defended.
Warranties and Indemnities
The Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments.
Clearing and settlement obligations
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising from
these arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear
and RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These
memberships allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common
to all of these memberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by another
member, the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable in
advance.
Parent entity guarantees
The Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these letters
and guarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity of the Company.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
105
11. Contingent liabilities and contingent assets, cont’d
Sale of Grindlays business
On 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain other
businesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act, 1973.
Civil penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.
Contingent Assets
National Housing Bank
The Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer in
the early 1990s.
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceeds
of the cheques were resolved in early 2002.
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to be
shared between the Company and NHB.
12. Significant events since balance date
On 22 October 2021, a Group fund that owns 19% of the shares in Cashrewards Limited announced it would make an off-market takeover offer to
acquire the remaining 81% of the shares, for ~$80 million. The offer is subject to a number of conditions and completion remains uncertain.
Other than the matter above, there have been no significant events from 30 September 2021 to the date of signing this report.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
106
This page has been left blank intentionally
SUPPLEMENTARY INFORMATION
107
CONTENTS Page
Capital management - including discontinued operations 108
Average balance sheet and related interest - including discontinued operations 112
Select geographical disclosures - including discontinued operations 117
Exchange rates 118
SUPPLEMENTARY INFORMATION
108
Capital management - including discontinued operations
As at
Movement
Qualifying Capital
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Tier 1
Shareholders' equity and non-controlling interests
63,676 62,576 61,297 2% 4%
Prudential adjustments to shareholders' equity Table 1
3 110 189 -97% -98%
Gross Common Equity Tier 1 capital
63,679 62,686 61,486 2% 4%
Deductions Table 2 (12,320) (11,900) (12,784) 4% -4%
Common Equity Tier 1 capital
51,359 50,786 48,702 1% 5%
Additional Tier 1 capital Table 3 8,114 7,645 7,779 6% 4%
Tier 1 capital
59,473 58,431 56,481 2% 5%
Tier 2 capital Table 4 17,125 16,464 13,957 4% 23%
Total qualifying capital
76,598 74,895 70,438 2% 9%
Capital adequacy ratios (Level 2)
Common Equity Tier 1 12.3% 12.4% 11.3%
Tier 1
14.3% 14.3% 13.2%
Tier 2
4.1% 4.0% 3.3%
Total capital ratio
18.4% 18.3% 16.4%
Risk weighted assets Table 5
416,086 408,166 429,384 2% -3%
SUPPLEMENTARY INFORMATION
109
Capital management - including discontinued operations, cont’d
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Table 1: Prudential adjustments to shareholders' equity
Shareholder Equity attributable to deconsolidated entities
(216) (181) (99) 19% large
Deferred fee revenue including fees deferred as part of loan yields
356 351 379 2% -6%
Other
(137) (60) (91) large 51%
Total
3 110 189 -97% -98%
Table 2: Deductions from Common Equity Tier 1 capital
Unamortised goodwill & other intangibles (excluding ANZ Wealth New Zealand)
(3,091) (2,992) (3,269) 3% -5%
Intangible component of investments in ANZ Wealth New Zealand
(73) (70) (71) 4% 3%
Capitalised software
(960) (961) (1,039) 0% -8%
Capitalised expenses (including loan and lease origination fees)
(1,495) (1,431) (1,316) 4% 14%
Applicable deferred net tax assets
(2,357) (2,109) (2,128) 12% 11%
Expected losses in excess of eligible provisions Table 8
(36) (42) (43) -14% -16%
Investment in other insurance and funds management subsidiaries
(356) (336) (336) 6% 6%
Investment in ANZ Wealth New Zealand
(47) (45) (45) 4% 4%
Investment in associates
(1,972) (1,854) (2,164) 6% -9%
Other equity investments
(1,360) (1,254) (1,149) 8% 18%
Other deductions
(573) (806) (1,224) -29% -53%
Total
(12,320) (11,900) (12,784) 4% -4%
Table 3: Additional Tier 1 capital
ANZ Capital Notes 1
- 1,120 1,119 -100% -100%
ANZ Capital Notes 2
1,609 1,609 1,608 0% 0%
ANZ Capital Notes 3
968 968 967 0% 0%
ANZ Capital Notes 4
1,617 1,615 1,614 0% 0%
ANZ Capital Notes 5
927 927 926 0% 0%
ANZ Capital Notes 6
1,486 - - n/a n/a
ANZ New Zealand Capital Notes
477 459 463 4% 3%
ANZ Capital Securities
1,422 1,347 1,499 6% -5%
Regulatory adjustments and deductions
(392) (400) (417) -2% -6%
Total
8,114 7,645 7,779 6% 4%
Table 4: Tier 2 capital
General reserve for impairment of financial assets
1,412 1,417 1,813 0% -22%
Perpetual subordinated notes
417 395 422 6% -1%
Term subordinated debt notes
15,790 15,220 12,443 4% 27%
Regulatory adjustments and deductions
(494) (568) (721) -13% -31%
Total
17,125 16,464 13,957 4% 23%
SUPPLEMENTARY INFORMATION
110
Capital management - including discontinued operations, cont’d
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Table 5: Risk weighted assets
On balance sheet
258,531 254,448 265,112 2% -2%
Commitments
56,256 55,796 58,991 1% -5%
Contingents
11,974 13,074 11,101 -8% 8%
Derivatives
15,737 18,544 24,833 -15% -37%
Total credit risk weighted assets Table 6
342,498 341,862 360,037 0% -5%
Market risk - Traded 7,127 8,955 8,237 -20% -13%
Market risk - IRRBB
18,036 10,150 13,547 78% 33%
Operational risk
48,425 47,199 47,563 3% 2%
Total risk weighted assets
416,086 408,166 429,384 2% -3%
As at Movement
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate
136,298 135,713 139,415
0% -2%
Sovereign
9,893 7,750 7,545
28% 31%
Bank
9,118 10,092 12,734
-10% -28%
Residential mortgage
110,622 110,206 110,353
0% 0%
Qualifying revolving retail (credit cards)
3,723 3,678 4,337
1% -14%
Other retail
19,660 20,693 21,794
-5% -10%
Credit risk weighted assets subject to Advanced IRB approach
289,314 288,132 296,178
0% -2%
Credit risk specialised lending exposures subject to slotting criteria
36,977 36,476 39,001
1% -5%
Subject to Standardised approach
Corporate
6,632 6,388 10,185
4% -35%
Sovereign
27 76 220
-64% -88%
Residential mortgage
203 203 210
0% -3%
Other retail (includes credit cards)
17 23 33
-26% -48%
Credit risk weighted assets subject to Standardised approach
6,879 6,690 10,648
3% -35%
Credit Valuation Adjustment and Qualifying Central Counterparties
3,270 4,281 7,710
-24% -58%
Credit risk weighted assets relating to securitisation exposures
2,056 2,220 2,125
-7% -3%
Other assets
4,002 4,063 4,375
-2% -9%
Total credit risk weighted assets
342,498 341,862 360,037
0% -5%
SUPPLEMENTARY INFORMATION
111
Capital management - including discontinued operations, cont’d
Collectively and Individually
Assessed Provision
Basel Expected Loss
1
Table 7: Total provision for credit impairment and Basel expected
loss by division
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
$M
Mar 21
$M
Sep 20
$M
Australia Retail and Commercial 2,631 2,851 3,455
2,045 2,278 2,540
Institutional
1,541 1,555 1,671
978 969 1,117
New Zealand
589 592 672
580 606 662
Pacific
118 96 101
12 8 8
TSO and Group Centre
3 - -
3 - -
Total provision for credit impairment and expected loss
4,882 5,094 5,899
3,618 3,861 4,327
1.
Only applicable to Advanced Internal Ratings based portfolios.
As at Movement
Table 8: APRA Expected loss in excess of eligible provisions
Sep 21
$M
Mar 21
$M
Sep 20
$M
Sep 21
v. Mar 21
Sep 21
v. Sep 20
APRA Basel 3 expected loss: non-defaulted 2,346 2,436 2,710 -4% -13%
Less: Qualifying collectively assessed provision
Collectively assessed provision (4,195) (4,285) (5,008) -2% -16%
Non-qualifying collectively assessed provision
436 432 484 1% -10%
Standardised collectively assessed provision
172 173 206 -1% -17%
Non-defaulted excess included in deduction
- - - n/a n/a
APRA Basel 3 expected loss: defaulted 1,272 1,425 1,641 -11% -22%
Less: Qualifying individually assessed provision
Individually assessed provision (687) (809) (891) -15% -23%
Additional individually assessed provision for partial write offs
(204) (213) (302) -4% -32%
Standardised individually assessed provision
51 44 50 16% 2%
Collectively assessed provision on advanced defaulted
(396) (405) (455) -2% -13%
36 42 43 -14% -16%
Shortfall in expected loss not included in deduction - - - n/a n/a
Defaulted excess included in deduction
36 42 43 -14% -16%
Gross deduction 36 42 43 -14% -16%
SUPPLEMENTARY INFORMATION
112
Average balance sheet and related interest
1
- including discontinued operations
Sep 21 Full Year Sep 20 Full Year
Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M %
Loans and advances
Home loans
334,147 10,427 3.1% 321,116 11,909 3.7%
Consumer finance
13,186 1,029 7.8% 15,071 1,376 9.1%
Business lending
240,316 6,551 2.7% 270,708 8,756 3.2%
Individual provisions for credit impairment
(764) - n/a (878) - n/a
Total (continuing operations)
586,885 18,007 3.1% 606,017 22,041 3.6%
Non-lending interest earning assets
Cash and other liquid assets
137,739 95 0.1% 126,572 635 0.5%
Trading and investment securities
138,500 1,350 1.0% 129,664 1,714 1.3%
Other assets
567 77 n/a 629 36 n/a
Total (continuing operations)
276,806 1,522 0.5% 256,865 2,385 0.9%
Total interest earning assets (continuing operations)
2
863,691 19,529 2.3% 862,882 24,426 2.8%
Non-interest earning assets (continuing operations)
172,458 189,081
Total average assets (continuing operations)
1,036,149 1,051,963
Total average assets (discontinued operations)
- 610
Total average assets
1,036,149 1,052,573
Interest bearing deposits and other borrowings
Certificates of deposit
38,790 55 0.1% 35,726 335 0.9%
Term deposits
188,770 1,082 0.6% 222,489 3,545 1.6%
On demand and short term deposits
301,080 1,671 0.6% 257,790 2,421 0.9%
Deposits from banks and securities sold under agreement to
repurchase
81,969 217 0.3% 84,647 712 0.8%
Commercial paper and other borrowings
20,619 57 0.3% 16,529 197 1.2%
Total (continuing operations)
631,228 3,082 0.5% 617,181 7,210 1.2%
Non-deposit interest bearing liabilities
Collateral received and settlement balances owed by ANZ
13,053 23 0.2% 14,159 53 0.4%
Debt issuances & subordinated debt
107,329 1,712 1.6% 124,727 2,483 2.0%
Other liabilities
8,118 551 n/a 8,498 631 n/a
Total (continuing operations)
128,500 2,286 1.8% 147,384 3,167 2.1%
Total interest bearing liabilities (continuing operations)
2
759,728 5,368 0.7% 764,565 10,377 1.4%
Non-interest bearing liabilities (continuing operations)
214,065 226,613
Total average liabilities (continuing operations)
973,793 991,178
Total average liabilities (discontinued operations)
- 707
Total average liabilities
973,793 991,885
Total average shareholders' equity
62,356 60,688
1.
Averages used are predominantly daily averages.
2.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
SUPPLEMENTARY INFORMATION
113
Average balance sheet and related interest
1
- including discontinued operations, cont’d
Sep 21 Full Year Sep 20 Full Year
Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M %
Loans and advances
Australia
401,777 12,895 3.2% 412,025 15,022 3.6%
Asia, Pacific, Europe & America
55,769 1,138 2.0% 66,243 2,165 3.3%
New Zealand
129,339 3,974 3.1% 127,749 4,854 3.8%
Total (continuing operations)
586,885 18,007 3.1% 606,017 22,041 3.6%
Trading and investment securities
Australia
74,192 530 0.7% 65,813 590 0.9%
Asia, Pacific, Europe & America
43,723 590 1.3% 46,448 849 1.8%
New Zealand
20,585 230 1.1% 17,403 275 1.6%
Total (continuing operations)
138,500 1,350 1.0% 129,664 1,714 1.3%
Total interest earning assets
2
Australia
537,559 13,415 2.5% 525,965 15,910 3.0%
Asia, Pacific, Europe & America
167,857 1,792 1.1% 184,076 3,259 1.8%
New Zealand
158,275 4,322 2.7% 152,841 5,257 3.4%
Total (continuing operations)
863,691 19,529 2.3% 862,882 24,426 2.8%
Total average assets
Australia
663,287 665,169
Asia, Pacific, Europe & America
198,905 218,328
New Zealand
173,957 168,466
Total average assets (continuing operations)
1,036,149 1,051,963
Total average assets (discontinued operations)
- 610
Total average assets
1,036,149 1,052,573
Interest bearing deposits and other borrowings
Australia
372,051 2,003 0.5% 349,353 3,820 1.1%
Asia, Pacific, Europe & America
156,190 425 0.3% 168,103 1,850 1.1%
New Zealand
102,987 654 0.6% 99,725 1,540 1.5%
Total (continuing operations)
631,228 3,082 0.5% 617,181 7,210 1.2%
Total interest bearing liabilities
2
Australia
458,804 3,469 0.8% 443,973 5,855 1.3%
Asia, Pacific, Europe & America
174,992 853 0.5% 194,157 2,418 1.2%
New Zealand
125,932 1,046 0.8% 126,435 2,104 1.7%
Total (continuing operations)
759,728 5,368 0.7% 764,565 10,377 1.4%
Total average liabilities
Australia
608,384 607,574
Asia, Pacific, Europe & America
208,420 230,809
New Zealand
156,989 152,795
Total average liabilities (continuing operations)
973,793 991,178
Total average liabilities (discontinued operations)
- 707
Total average liabilities
973,793 991,885
Total average shareholders' equity
Ordinary share capital, reserves, retained earnings and non-controlling
interests
62,356 60,688
Total average shareholders' equity
62,356 60,688
Total average liabilities and shareholders' equity
1,036,149 1,052,573
1.
Averages used are predominantly daily averages.
2.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
SUPPLEMENTARY INFORMATION
114
Average balance sheet and related interest
1
- including discontinued operations, cont’d
Half Year Sep 21 Half Year Mar 21
Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M %
Loans and advances
Home loans
335,999 5,082 3.0% 332,291 5,343 3.2%
Consumer finance
12,821 499 7.8% 13,413 553 8.3%
Business lending
239,224 3,289 2.7% 241,552 3,241 2.7%
Individual provisions for credit impairment
(727) - n/a (802) - n/a
Total (continuing operations)
587,317 8,870 3.0% 586,454 9,137 3.1%
Non-lending interest earning assets
Cash and other liquid assets
150,347 57 0.1% 125,062 38 0.1%
Trading and investment securities
131,581 695 1.1% 145,458 655 0.9%
Other assets
580 28 n/a 550 49 n/a
Total (continuing operations)
282,508 780 0.6% 271,070 742 0.5%
Total interest earning assets (continuing operations)
2
869,825 9,650 2.2% 857,524 9,879 2.3%
Non-interest earning assets (continuing operations)
156,958 188,044
Total average assets (continuing operations)
1,026,783 1,045,568
Total average assets (discontinued operations)
- -
Total average assets
1,026,783 1,045,568
Interest bearing deposits and other borrowings
Certificates of deposit
40,278 25 0.1% 37,294 30 0.2%
Term deposits
182,917 423 0.5% 194,655 659 0.7%
On demand and short term deposits
312,464 812 0.5% 289,633 859 0.6%
Deposits from banks and securities sold under agreement to
repurchase
84,139 89 0.2% 79,787 128 0.3%
Commercial paper and other borrowings
25,010 31 0.2% 16,203 26 0.3%
Total (continuing operations)
644,808 1,380 0.4% 617,572 1,702 0.6%
Non-deposit interest bearing liabilities
Collateral received and settlement balances owed by ANZ
12,538 10 0.2% 13,571 13 0.2%
Debt issuances & subordinated debt
102,612 825 1.6% 112,071 887 1.6%
Other liabilities
7,975 260 n/a 8,263 291 n/a
Total (continuing operations)
123,125 1,095 1.8% 133,905 1,191 1.8%
Total interest bearing liabilities (continuing operations)
2
767,933 2,475 0.6% 751,477 2,893 0.8%
Non-interest bearing liabilities (continuing operations)
196,039 232,192
Total average liabilities (continuing operations)
963,972 983,669
Total average liabilities (discontinued operations)
- -
Total average liabilities
963,972 983,669
Total average shareholders' equity
62,811 61,899
1.
Averages used are predominantly daily averages.
2.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
SUPPLEMENTARY INFORMATION
115
Average balance sheet and related interest
1
- including discontinued operations, cont’d
Half Year Sep 21 Half Year Mar 21
Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M %
Loans and advances
Australia
397,361 6,340 3.2% 406,222 6,555 3.2%
Asia Pacific, Europe & America
58,103 557 1.9% 53,422 581 2.2%
New Zealand
131,853 1,973 3.0% 126,810 2,001 3.2%
Total (continuing operations)
587,317 8,870 3.0% 586,454 9,137 3.1%
Trading and investment securities
Australia
68,193 287 0.8% 80,224 243 0.6%
Asia Pacific, Europe & America
43,246 292 1.3% 44,203 298 1.4%
New Zealand
20,142 116 1.1% 21,031 114 1.1%
Total (continuing operations)
131,581 695 1.1% 145,458 655 0.9%
Total interest earning assets
2
Australia
539,068 6,630 2.5% 536,043 6,785 2.5%
Asia Pacific, Europe & America
170,119 883 1.0% 165,582 909 1.1%
New Zealand
160,638 2,137 2.7% 155,899 2,185 2.8%
Total (continuing operations)
869,825 9,650 2.2% 857,524 9,879 2.3%
Total average assets
Australia
652,539 674,095
Asia Pacific, Europe & America
198,164 199,650
New Zealand
176,080 171,823
Total average assets (continuing operations)
1,026,783 1,045,568
Total average assets (discontinued operations)
- -
Total average assets
1,026,783 1,045,568
Interest bearing deposits and
other borrowings
Australia
379,804 920 0.5% 364,253 1,083 0.6%
Asia Pacific, Europe & America
159,964 194 0.2% 152,396 231 0.3%
New Zealand
105,040 266 0.5% 100,923 388 0.8%
Total (continuing operations)
644,808 1,380 0.4% 617,572 1,702 0.6%
Total interest bearing liabilities
2
Australia
463,606 1,614 0.7% 453,975 1,855 0.8%
Asia Pacific, Europe & America
177,135 405 0.5% 172,836 448 0.5%
New Zealand
127,192 456 0.7% 124,666 590 0.9%
Total (continuing operations)
767,933 2,475 0.6% 751,477 2,893 0.8%
Total average liabilities
Australia
597,847 618,979
Asia Pacific, Europe & America
207,404 209,442
New Zealand
158,721 155,248
Total average liabilities (continuing operations)
963,972 983,669
Total average liabilities (discontinued operations)
- -
Total average liabilities
963,972 983,669
Total average shareholders' equity
Ordinary share capital, reserves, retained earnings and non-
controlling interests
62,811 61,899
Total average shareholders' equity
62,811 61,899
Total average liabilities and shareholder's equity
1,026,783 1,045,568
1.
Averages used are predominantly daily averages.
2.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
SUPPLEMENTARY INFORMATION
116
Average balance sheet and related interest - continuing operations
Half Year
Full Year
Gross earnings rate
Sep 21
%
Mar 21
%
Sep 21
%
Sep 20
%
Australia 2.53 2.62 2.58 3.14
Asia, Pacific, Europe & America
1.00 1.11 1.06 1.80
New Zealand
2.65 2.81 2.73 3.44
Group
2.21 2.31 2.26 2.83
Net interest spread and net interest margin analysis as follows:
Half Year
Full Year
Australia
1
Sep 21
%
Mar 21
%
Sep 21
%
Sep 20
%
Net interest spread 1.82 1.77 1.80 1.74
Interest attributable to net non-interest bearing items
0.08 0.11 0.09 0.17
Net interest margin - Australia
1.90 1.88 1.89 1.91
Asia, Pacific, Europe & America
1
Net interest spread 0.55 0.58 0.56 0.55
Interest attributable to net non-interest bearing items
0.03 0.04 0.04 0.08
Net interest margin - Asia, Pacific, Europe & America
0.58 0.62 0.60 0.63
New Zealand
1
Net interest spread 1.90 1.82 1.86 1.73
Interest attributable to net non-interest bearing items
0.14 0.18 0.16 0.26
Net interest margin - New Zealand
2.04 2.00 2.02 1.99
Group
Net interest spread 1.57 1.54 1.56 1.48
Interest attributable to net non-interest bearing items
0.08 0.09 0.08 0.15
Net interest margin
1.65 1.63 1.64 1.63
Net interest margin (excluding Markets) 2.17 2.27 2.22 2.30
1.
Geographic gross earnings rate, net interest spread and net interest margin are calculated gross of intra-group items (Intra-group interest earning assets and associated interest income and
intra-group interest bearing liabilities and associated interest expense).
SUPPLEMENTARY INFORMATION
117
Select geographical disclosures - including discontinued operations
The following divisions operate across the geographic locations illustrated below:
Australia Retail and Commercial division - Australia
Institutional division – Australia, New Zealand and International
Pacific division - International
New Zealand division - New Zealand
TSO and Group Centre division - Australia, New Zealand and International
Discontinued operations - Australia
The International geography includes Asia, Pacific, Europe & America
Australia
$M
New Zealand
$M
International
$M
Total
$M
September 2021 Full Year
Statutory profit/(loss) attributable to shareholders of the company 4,153 1,800 209 6,162
Cash profit/(loss)
4,184 1,788 209 6,181
Net loans and advances
432,328 134,707 62,684 629,719
Customer deposits
343,818 119,483 130,282 593,583
Risk weighted assets
260,397 83,578 72,111 416,086
September 2020 Full Year
Statutory profit/(loss) attributable to shareholders of the company 2,392 1,261 (76) 3,577
Cash profit/(loss) 2,424 1,293 (57) 3,660
Net loans and advances 439,943 123,108 54,042 617,093
Customer deposits 323,903 111,886 116,574 552,363
Risk weighted assets 272,948 81,035 75,401 429,384
September 2021 Half Year
Statutory profit/(loss) attributable to shareholders of the company 2,082 931 206 3,219
Cash profit/(loss) 2,099 889 211 3,199
Net loans and advances 432,328 134,707 62,684 629,719
Customer deposits 343,818 119,483 130,282 593,583
Risk weighted assets 260,397 83,578 72,111 416,086
March 2021 Half Year
Statutory profit/(loss) attributable to shareholders of the company 2,071 869 3 2,943
Cash profit/(loss) 2,085 899 (2) 2,982
Net loans and advances 434,465 126,482 53,412 614,359
Customer deposits 330,082 112,712 118,729 561,523
Risk weighted assets 262,988 77,960 67,218 408,166
New Zealand geography (in NZD)
Half Year Full Year
Sep 21
NZD M
Mar 21
NZD M Movt
Sep 21
NZD M
Sep 20
NZD M Movt
Net interest income 1,743 1,661 5%
3,404 3,229 5%
Other operating income
364 364 0%
728 820 -11%
Operating income
2,107 2,025 4%
4,132 4,049 2%
Operating expenses (843) (764) 10%
(1,607) (1,736) -7%
Profit before credit impairment and income tax
1,264 1,261 0%
2,525 2,313 9%
Credit impairment (charge)/release 45 70 -36%
115 (401) large
Profit before income tax
1,309 1,331 -2%
2,640 1,912 38%
Income tax expense and non-controlling interests (364) (369) -1%
(733) (541) 35%
Cash profit
1
945 962 -2%
1,907 1,371 39%
Adjustments between statutory profit and cash profit 44 (32) large
12 (35) large
Statutory profit
1
989 930 6%
1,919 1,336 44%
Individually assessed credit impairment charge/(release) - cash (12) (10) 20%
(22) 111 large
Collectively assessed credit impairment charge/(release) - cash
(33) (60) -45%
(93) 290 large
Net loans and advances
141,074 137,786 2%
141,074 132,984 6%
Customer deposits
125,129 122,786 2%
125,129 120,863 4%
Risk weighted assets
87,528 84,928 3%
87,528 87,536 0%
Total full time equivalent staff (FTE)
7,473 7,213 4%
7,473 7,210 4%
1.
Profit for the September 2020 full year includes a NZD 32 million loss on sale of UDC Finance Ltd (UDC). Cash profit for the September 2020 full year also includes an after tax loss of NZD
23 million on the unwind of economic hedges of UDC loans and advances.
SUPPLEMENTARY INFORMATION
118
Exchange rates
Major exchange rates used in the translation of foreign subsidiaries, branches, investments in associates and issued debt are as follows:
Balance sheet Profit & Loss Average
As at Half Year Full Year
Sep 21 Mar 21 Sep 20 Sep 21 Mar 21 Sep 21 Sep 20
Chinese Renminbi 4.6568 4.9879 4.8453 4.8602 4.9209 4.8903 4.7462
Euro
0.6209 0.6490 0.6061 0.6310 0.6263 0.6287 0.6052
Pound Sterling
0.5357 0.5538 0.5539 0.5418 0.5568 0.5492 0.5314
Indian Rupee
53.481 55.883 52.473 55.577 55.046 55.310 49.729
Indonesian Rupiah
10,314 11,073 10,595 10,821 10,711 10,766 9,803
Japanese Yen
80.616 84.229 75.059 82.539 78.911 80.689 73.018
Malaysian Ringgit
3.0162 3.1585 2.9593 3.1297 3.0684 3.0988 2.8563
New Taiwan Dollar
20.060 21.662 20.591 20.988 21.245 21.115 20.290
New Zealand Dollar
1.0473 1.0894 1.0802 1.0626 1.0697 1.0661 1.0600
Papua New Guinean Kina
2.5270 2.6665 2.4858 2.6378 2.6315 2.6347 2.3258
United States Dollar
0.7202 0.7600 0.7110 0.7518 0.7507 0.7512 0.6773
DEFINITIONS
119
AASB - Australian Accounting Standards Board. The term ‘AASB’ is commonly used when identifying Australian Accounting Standards issued by the
AASB.
ADI - Authorised Deposit-taking Institution.
ANZEST - ANZ Employee Share Trust.
ANZ Research - Economics, a business unit within ANZ, which conducts analysis of key economic inputs and developments and assessment of the
potential impacts on the local, regional and global economies.
APRA - Australian Prudential Regulation Authority.
APS - ADI Prudential Standard.
AT1 - Additional Tier 1 capital.
Cash and cash equivalents comprise coins, notes, money at call, balances held with central banks, liquid settlement balances (readily convertible to
known amounts of cash which are subject to insignificant risk of changes in value) and securities purchased under agreements to resell (reverse
repurchase agreements) in less than three months.
Cash profit is an additional measure of profit which is prepared on a basis other than in accordance with accounting standards. Cash profit represents
ANZ’s preferred measure of the result of the core 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 as noted below. These items
are calculated consistently period on period so as not to discriminate between positive and negative adjustments.
Gains and losses are adjusted where they are significant, or have the potential to be significant in any one period, and fall into one of three categories:
1. gains or losses included in earnings arising from changes in tax, legal or accounting legislation or other non-core items not associated with the
core operations of the Group;
2. economic hedging impacts and similar accounting items that represent timing differences that will reverse through earnings in the future; and
3. accounting reclassifications between individual line items that do not impact reported results, such as credit risk on impaired derivatives.
Cash profit is not a measure of cash flow or profit determined on a cash accounting basis.
Collectively assessed allowance for expected credit loss represents the Expected Credit Loss (ECL), which incorporates forward-looking information
and does not require an actual loss event to have occurred for a credit loss provision to be recognised.
Coronavirus (COVID-19) is a respiratory illness which was declared a Public Health Emergency of International Concern. COVID-19 was characterised
as a pandemic by the World Health Organisation on 11 March 2020.
Covered bonds are bonds issued by an ADI to external investors secured against a pool of the ADI’s assets (the cover pool) assigned to a bankruptcy
remote special purpose entity. The primary assets forming the cover pool are mortgage loans. The mortgages remain on the issuer’s balance sheet. The
covered bond holders have dual recourse to the issuer and the cover pool assets. The mortgages included in the cover pool cannot be otherwise pledged
or disposed of but may be repurchased and substituted in order to maintain the credit quality of the pool. The Group issues covered bonds as part of its
funding activities.
Credit risk is the risk of financial loss resulting from the failure of ANZ’s customers and counterparties to honour or perform fully the terms of a loan or
contract.
Credit risk weighted assets (CRWA) represent assets which are weighted for credit risk according to a set formula as prescribed in APS 112/113.
Customer deposits
represent term deposits, other deposits bearing interest, deposits not bearing interest and borrowing corporations’ debt excluding
securitisation deposits.
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation outcomes.
Derivative credit valuation adjustment (CVA) - Over the life of a derivative instrument, ANZ uses a model to adjust fair value to take into account the
impact of counterparty credit quality. The methodology calculates the present value of expected losses over the life of the financial instrument as a
function of probability of default, loss given default, expected credit risk exposure and an asset correlation factor. Impaired derivatives are also subject to
a CVA.
Dividend payout ratio is the total ordinary dividend payment divided by profit attributable to shareholders of the Company.
Funding for Lending Programme (FLP) refers to three-year funding announced by the RBNZ in November 2020 and offered to New Zealand banks,
which aimed to lower the cost of borrowing for New Zealand businesses and households.
Gross loans and advances (GLA) is made up of loans and advances, capitalised brokerage and other origination costs less unearned income.
Impaired assets are those financial assets where doubt exists as to whether the full contractual amount will be received in a timely manner, or where
concessional terms have been provided because of the financial difficulties of the customer. Financial assets are impaired if there is objective evidence of
impairment as a result of a loss event that occurred prior to the reporting date, and that loss event has had an impact, which can be reliably estimated, on
the expected future cash flows of the individual asset or portfolio of assets.
Impaired loans comprise drawn facilities where the customer’s status is defined as impaired.
Individually assessed allowance for expected credit losses is assessed on a case-by-case basis for all individually managed impaired assets taking
into consideration factors such as the realisable value of security (or other credit mitigants), the likely return available upon liquidation or bankruptcy, legal
uncertainties, estimated costs involved in recovery, the market price of the exposure in secondary markets and the amount and timing of expected
receipts and recoveries.
DEFINITIONS
120
Interest rate risk in the banking book (IRRBB) relates to the potential adverse impact of changes in market interest rates on ANZ’s future net interest
income. The risk generally arises from:
1. Repricing and yield curve risk - the risk to earnings or market value as a result of changes in the overall level of interest rates and/or the
relativity of these rates across the yield curve;
2. Basis risk - the risk to earnings or market value arising from volatility in the interest margin applicable to banking book items; and
3. Optionality risk - the risk to earnings or market value arising from the existence of stand-alone or embedded options in banking book items.
Internationally comparable ratios are ANZ’s interpretation of the regulations documented in the Basel Committee publications: ‘Basel 3: A global
regulatory framework for more resilient banks and banking systems’ (June 2011) and ‘International Convergence of Capital Measurement and Capital
Standards’ (June 2006). They also include differences identified in APRA’s information paper entitled International Capital Comparison Study (13 July
2015).
JobKeeper payment is a wage subsidy program introduced by the Australian Government in 2020 to support employees and businesses as a result of
the COVID-19 pandemic. It is designed to help businesses affected by COVID-19 to cover the costs of their employees’ wages so that more employees
can retain their job and continue to earn an income. The program finished on 28 March 2021.
Level 1 in the context of APRA supervision, Australia and New Zealand Banking Group Limited consolidated with certain approved subsidiaries.
Level 2 in the context of APRA supervision, the consolidated ANZ Group excluding associates, insurance and funds management entities, commercial
non-financial entities and certain securitisation vehicles.
Net interest margin is net interest income as a percentage of average interest earning assets.
Net loans and advances represent gross loans and advances less allowance for expected credit losses.
Net Stable Funding Ratio (NSFR) is the ratio of the amount of available stable funding (ASF) to the amount of required stable funding (RSF) defined by
APRA. The amount of ASF is the portion of an ADI capital and liabilities expected to be a reliable source of funds over a one year time horizon. The
amount of RSF is a function of the liquidity characteristics and residual maturities of an ADI’s assets and off-balance sheet activities. ADIs must maintain
an NSFR of at least 100%.
Net tangible assets equal share capital and reserves attributable to shareholders of the Company less unamortised intangible assets (including goodwill
and software).
RBA - Reserve Bank of Australia, Australia’s central bank.
RBNZ - Reserve Bank of New Zealand, New Zealand’s central bank.
Regulatory deposits are mandatory reserve deposits lodged with local central banks in accordance with statutory requirements.
Restructured items comprise facilities in which 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.
Return on average assets is the profit attributable to shareholders of the Company, divided by average total assets.
Return on average ordinary shareholders’ equity is the profit attributable to shareholders of the Company, divided by average ordinary shareholders’
equity.
Risk weighted assets (RWA) are risk weighted according to each asset’s inherent potential for default and what the likely losses would be in the case of
default. In the case of non-asset backed risks (i.e. market and operational risk), RWA is determined by multiplying the capital requirements for those risks
by 12.5.
Settlement balances owed to/by ANZ represent financial assets and/or liabilities which are in the course of being settled. These may include trade
dated assets and liabilities, vostro accounts and securities settlement accounts.
Term Funding Facility (TFF) refers to three-year funding announced by the Reserve Bank of Australia (RBA) on 19 March 2020 and offered to ADIs in
order to support lending to Australian businesses at low cost.
Term Lending Facility (TLF) refers to three to five-year funding offered by the RBNZ between May 2020 and July 2021 to promote lending to New
Zealand businesses.
DEFINITIONS
121
Description of divisions
The Group operates on a divisional structure with five continuing divisions: Australia Retail and Commercial, Institutional, New Zealand, Pacific, and TSO
and Group Centre.
Australia Retail and Commercial
The Australia Retail and Commercial division comprises the following business units:
Retail provides products and services to consumer customers in Australia via the branch network, mortgage specialists, contact centres, a variety of
self-service channels (digital and internet banking, website, ATMs and phone banking) and third party brokers.
Commercial and Private Bank provides a full range of banking products and financial services, including asset financing, across the following
customer segments: medium to large commercial customers, small business owners and high net worth individuals and family groups, in addition to
financial planning services provided by salaried financial planners and investment lending secured by approved securities.
Institutional
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International via the
following business units:
Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing, commodity
financing as well as cash management solutions, deposits, payments and clearing.
Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export finance,
debt structuring and acquisition finance and corporate advisory services.
Markets provides customers with risk management services in foreign exchange, interest rates, credit, commodities and debt capital markets in
addition to managing the Group's interest rate exposure and liquidity position.
New Zealand
The New Zealand division comprises the following business units:
Personal (previously Retail) provides a full range of banking and wealth management services to consumer and private banking customers. We
deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers and
contact centres.
Business (previously Commercial) provides a full range of banking services including small business banking, through our digital, branch and contact
centre channels, and traditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned
small, medium and large enterprises, the agricultural business segment, government and government-related entities.
Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticated
financial solutions provided to business customers through dedicated managers.
Technology, Services & Operations (TSO) and Group Centre
TSO and Group Centre division provides support to the operating divisions, including technology, group operations, shared services, property, risk
management, financial management, strategy, marketing, human resources and corporate affairs. The Group Centre includes residual components of
Group divestments, Group Treasury, Shareholder Functions and minority investments in Asia.
ASX APPENDIX 4E - CROSS REFERENCE INDEX
122
Page
Details of the reporting period and the previous corresponding period (4E Item 1) ................................................................................................................ 2
Results for Announcement to the Market (4E Item 2) ............................................................................................................................................................ 2
Statement of Comprehensive Income (4E Item 3) ......................................................................................................................................................... 82, 83
Statement of Financial Position (4E Item 4) ......................................................................................................................................................................... 84
Statement of Cash Flows (4E Item 5) .................................................................................................................................................................................. 85
Statement of Changes in Equity (4E Item 6) ........................................................................................................................................................................ 86
Dividends and dividend dates (4E Item 7) .............................................................................................................................................................................. 2
Dividend Reinvestment Plan (4E Item 8) ............................................................................................................................................................................... 2
Net Tangible Assets per security (4E Item 9) ....................................................................................................................................................................... 14
Details of entities over which control has been gained or lost (4E Item 10) ....................................................................................................................... 102
Details of associates and joint venture entities (4E Item 11) .............................................................................................................................................. 103
Other significant information (4E Item 12) .......................................................................................................................................................................... 105
Accounting standards used by foreign entities (4E Item 13) ............................................................................................................................. Not applicable
Commentary on results (4E Item 14) ................................................................................................................................................................................... 21
Statement that accounts are being audited (4E Item 15) ....................................................................................................................................................... 3
ALPHABETICAL INDEX
123
PAGE
Allowance for Expected Credit Losses ................................................................................................................................................................................. 98
Appendix 4E Cross Reference Index ................................................................................................................................................................................. 122
Appendix 4E Statement ......................................................................................................................................................................................................... 2
Average Balance Sheet and Related Interest .................................................................................................................................................................... 112
Basis of Preparation ............................................................................................................................................................................................................. 87
Capital Management .......................................................................................................................................................................................................... 108
Changes in Composition of the Group ............................................................................................................................................................................... 102
Condensed Consolidated Balance Sheet ............................................................................................................................................................................. 84
Condensed Consolidated Cash Flow Statement .................................................................................................................................................................. 85
Condensed Consolidated Income Statement ....................................................................................................................................................................... 82
Condensed Consolidated Statement of Changes in Equity .................................................................................................................................................. 86
Condensed Consolidated Statement of Comprehensive Income ......................................................................................................................................... 83
Contingent Liabilities and Contingent Assets ..................................................................................................................................................................... 103
Definitions .......................................................................................................................................................................................................................... 119
Deposits and Other Borrowings ......................................................................................................................................................................................... 101
Dividends ............................................................................................................................................................................................................................. 41
Divisional Results ................................................................................................................................................................................................................. 53
Earnings Per Share .............................................................................................................................................................................................................. 96
Exchange Rates ................................................................................................................................................................................................................. 118
Full Time Equivalent Staff .................................................................................................................................................................................................... 20
Group Results ...................................................................................................................................................................................................................... 21
Income ................................................................................................................................................................................................................................. 94
Income Tax Expense ........................................................................................................................................................................................................... 37
Investments in Associates .................................................................................................................................................................................................. 103
Net Loans and Advances ..................................................................................................................................................................................................... 97
Operating Expenses ............................................
................................................................................................................................................................. 95
Profit Reconciliation ............................................................................................................................................................................................................. 77
Select Geographical Disclosures ....................................................................................................................................................................................... 117
Shareholders’ Equity .......................................................................................................................................................................................................... 102
Significant Events Since Balance Date .............................................................................................................................................................................. 105
Summary ................................................................................................................................................................................................................................ 9
---
Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
News Release
For Release: 28 October 2021
2021 Full Year Result & Proposed Final Dividend
ANZ today announced an audited
1
Statutory Profit after tax for the year ended 30
September 2021 of $6,162 million, up 72% on the pr ior year with a key driver being the
partial reversal of COVID-19 related credit provisions.
Cash Profit
2
from continuing operations, before credit impairment and tax, was $8,396
million, flat to the prior year.
ANZ’s Common Equity Tier 1 Ratio was stronger at 12.3% while Cash Return on Equity
increased to 9.9%. The proposed Final Dividend is 72 cents per share, fully franked.
GROUP FINANCIAL INFORMATION
Earnings ($m) FY21 FY20 Movement
Statutory Profit After Tax 6,162 3,577 +72%
Cash Profit (continuing operations) 6,198 3,758 +65%
Profit before credit impairment & tax 8,396 8,369 0%
Profit before credit impairment, tax &
large/notables
3
9,504 10,062 -6%
Earnings per share (cents) 218.3 132.7 +65%
Return on equity 9.9% 6.2% +376bps
Return on average assets 0.60% 0.36% +24bps
Net Tangible Assets per ordinary share ($) 21.09 20.04 +5%
Dividend per share (cents) 142 60 +82
Credit Provision Charge ($m) FY21 FY20 Movement
Total Provision Charge / (release) (567) 2,738 large
Individual Provision Charge / (release) 256 1,021 -75%
Collective Provision Charge / (release) (823) 1,717 large
Balance Sheet ($b) Sep 21 Sep 20 Movement
Gross Loans and Advances (GLAs) 633.8 622.1 +2%
Total Risk Weighted Assets (RWAs) 416.1 429.4 -3%
Customer Deposits 593.6 552.4 +7%
Common Equity Tier 1 Ratio (CET1) 12.3% 11.3% +100bps
Other FY21 FY20 Movement
Average FTE from continuing operations 38,043 37,728 +1%
1 The Group’s Annual Report will be available on 3 November 2021 and will include a copy of KPMG’s audit report dated 27 October 2021.
2 Cash Profit excludes non-core items included in Statutory Profit with the net after tax adjustment an increase to Statutory Profit of $19m, made up of
several items.
3 ANZ announced on 20 October 2021 Statutory and Cash Profit after tax will be impacted by $129 million of large/notable items in the second half.
CEO COMMENTARY
4
• Profits grew in Australia Retail & Commercial despite challenges in home loans
processing
• New Zealand had one of its strongest years with solid balance sheet momentum
• Consistent performance in Institutional with returns again well above the Group cost
of capital
• Expenses tightly managed while increasing investment
• Capital managed prudently
ANZ Chief Executive Officer Shayne Elliott said: “This year demonstrated the benefits of our
diversified portfolio as we provided solid returns for shareholders while also successfully
navigating the continuing impacts of COVID-19 on our customers and our people.
“Australia Retail & Commercial grew lending and customer deposits during the year and
delivered good margin performance across the division. Home loan revenue growth was in
the low double digits. However, second half volumes were impacted by a competitive
refinancing market, customers paying down their loans faster and processing issues. We
have been working on a range of improvements and they are already having a positive
impact on processing times.
“A focus on improving customer outcomes as well as realising the benefits of prior
investments helped New Zealand deliver one of its strongest performances ever. Home
loans grew 11% while still taking proactive steps to bring balance to the housing market,
such as lifting the deposit required for investor lending. We also maintained our position as
the largest provider of KiwiSaver, growing funds under management by 16% to NZ$19
billion.
“Institutional delivered another consistent performance, reflecting the benefits of a simpler,
more diversified franchise. This is a business providing sustainable returns well above the
Group cost of capital. Markets revenue just below $2 billion in the current environment is
testament to its strength and diversity as well as prudent risk settings.
“Our progress in simplifying the business drove down the cost of running the bank for the
third consecutive year and we continue to invest in new initiatives at record pace to build a
stronger base for future growth. We also managed shareholder capital prudently and led the
industry in returning funds to shareholders.
“While we benefitted from a more benign credit environment, indicators such as 90+ days
past due and deferrals performed better than expected and reflected our prudent
management over many years. We recognise the outlook remains somewhat uncertain and
we have more than $4 billion of credit reserves should conditions deteriorate.
“We managed our business against the backdrop of COVID-19. Our employee engagement
remained at historically high levels, even as staff largely worked remotely, and we
supported our customers in need through the reinstatement of loan deferrals as well as
providing finance to increase economic activity,” Mr Elliott said.
DIVIDEND & CAPITAL
Capital management remained a feature with ANZ’s Common Equity Tier 1 Ratio of 12.3%,
remaining ~$6 billion
5
above Australian Prudential Regulation Authority’s ‘Unquestionably
Strong’ benchmark. Combined with solid earnings and improving conditions, the Board
determined a Final Dividend of 72 cents per share (cps) was appropriate, taking the Total
Di vidend for 2021 to 142cps, up by 82cps on the prior year.
4 All commentary is presented on a Cash Profit continuing basis excluding large/notable items with growth rates compared with the Full Year ended 30
September 2020 unless otherwise stated.
5 Based on Level 2 CET1 of 10.75%.
In August 2021, ANZ commenced a buy-back of $1.5 billion shares on-market. This
reflected our ability to continue to support our customers while also returning surplus capital
in a prudent, fair and flexible manner. As at 30 September 2021, ANZ is almost half-way
through its current $1.5 billion buyback and will continue to consider the best use of any
surplus capital.
ANZ also announced the Dividend Reinvestment Plan (DRP) will continue to apply for the
Final 2021 Dividend at no discount and that it plans to neutralise the impact of the shares
allocated under the DRP.
CREDIT QUALITY
The total provision result for the full year was a net release of $567 million comprising:
• a collective provision (CP) release of $823 million
• an individually assessed provision (IP) charge of $256 million
The CP release is due to a combination of factors, with changes to the portfolio volume, mix
and risk profile occurring throughout the year, and the economic outlook improving in the
first half. As at 30 September 2021, the uncertainty arising from extended lockdowns in
major cities has limited further such releases in the second half.
In general, our customers continued to manage well through the pandemic, leading to a low
IP charge for the full year. Disciplined focus on strategy and customer selection in
Institutional has contributed to this strong result, as has the continued impact of
government and bank support packages. At the end of the financial year, the CP balance of
$4,195 million represents additional provisions of $819 million compared with pre-COVID
levels at 30 September 2019.
OPERATIONAL HIGHLIGHTS
Australia Retail & Commercial
• Applications for our automated business lending proposition, ANZ GoBiz, have averaged
2,900 per-month since launching in May 2021. GoBiz provides real-time conditional
approval through an on -line platform, including new-to-bank customers.
• Provided 179,000 new home loan accounts in Australia, up 5% from FY20.
• 49% of all retail sales in Australia, including home loans, are now through digital
channels, up from 40% in FY20.
New Zealand
• Maintained market leadership in core product sectors; home loans grew by almost
~NZ$10b or 11% with a record ~82,000 new home loan accounts processed and
178,000 existing customers re-fixing their home loans during the year.
• Remains the largest KiwiSaver provider with NZ$19 billion under management, an
increase of NZ$2.6 billion or 16% on the previous year.
• 41% of all retail sales in New Zealand, including home loans, are now through digital
channels, up from 38% in FY20.
Institutional
• 24% increase in the volume of payments made by our customers through our digital
payments platform.
• Disciplined expense management with the division achieving 11 consecutive halves of
absolute cost reduction.
• Transactions processed by ANZ on the New Payments Platform for other banks increased
112% year-on -year.
• Revenue from our Sustainable Finance business up 63% year-on -year; also ranked #1
Market Leader in ESG finance in Australia and New Zealand
6
, as well as launching a new
Sustainability-Linked Derivative product across our franchise.
6
According to the 2021 Peter Lee Associates Large Corporate and Institutional Relationship Banking Surveys in Australia and New Zealand (customers
using ESG).
Digital & Technology
• New savings and deposits proposition being developed as part of ANZx moved to Beta
phase with successful launch of a staff trial.
• Separation of ventures and incubator business, 1835i, to create a stand-alone entity to
accelerate growth and deliver new digital solutions.
• Strong progress on open banking obligations as a CDR Data Holder and on track to
commence data sharing for businesses customers on 1 November 2021.
FURTHER COMMENTS
Mr Elliott said: “We are making good progress in the multi-year transformation of ANZ. We
continue to invest in group-wide automation, cloud migration and digitisation to enable low
cost, sustainable customer growth.
“In Australia, we are building growth-oriented retail and small business propositions centred
around delivering compelling digital offerings that will improve the financial wellbeing of our
customers and drive long-term customer and revenue growth. We have our eye on the long-
term opportunity and made significant progress and these investments, known internally as
ANZx, will become more visible to customers into 2022.
“New Zealand is expected to continue to deliver robust returns and maintain its strong
market position.
“Institutional is now a better-balanced, more predictable and higher returning business. We
are in a strong position to take advantage of the structural tailwinds we believe will impact
institutional banking, particularly in a rising interest rate environment and the build out of
our banking platforms business. Changes from the implementation of APRA’s proposed
capital reforms are also likely to be a further tailwind for Institutional.
“Sustainable finance will be one of the mega-trends to impact the global economy in the
next few years. Given our broad international network and leadership in institutional
banking, we believe we are the best-placed of the domestic banks to support the economic
transition. In fact, we have been operating in the sustainability business since it emerged
and we’re well on target to provide $50 billion worth of sustainable finance solutions by
2025.
“Experience tells us the real impacts of COVID-19 will not be fully understood until at least
the end of 2022, however we’re well positioned financially and culturally to respond. There
will be opportunities that arise and we are investing for growth with the mindset and agility
to continue to deliver for customers, shareholders and the community.
“Finally, I would also like to acknowledge our 40,000 people who have been unwavering in a
challenging and at times confronting environment,” Mr Elliott said.
An interview with Shayne Elliott can be found at bluenotes.anz.com
.
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
For analyst enquiries contact:
Jill Campbell
GGM Investor Relations
Tel: +61 3 8654 7749
Cameron Davis
Executive Manager Investor Relations
Tel: +61 3 8654 7716
Approved for distribution by ANZ’s Continuous Disclosure Committee
---
FULL YEAR RESULTS
2021
FULL YEAR ENDED 30 SEPTEMBER 2021
RESULTS PRESENTATION AND INVESTOR DISCUSSION PACK
28 OCTOBER 2021
Approved for distribution by ANZ’s Continuous Disclosure Committee
Australia and New Zealand Banking Group Limited 9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
DISCLAIMER & IMPORTANT NOTICE
1
ThematerialinthispresentationisgeneralbackgroundinformationaboutANZ’sactivitiescurrentasatthedateofthepresentation.Itisinformation
giveninsummaryformanddoesnotpurporttobecomplete.Itisnotintendedtobeandshouldnotberelieduponasadvicetoinvestorsorpotential
investorsanddoesnottakeintoaccounttheinvestmentobjectives,financialsituationorneedsofanyparticularinvestor.Theseshouldbeconsidered,
withorwithoutprofessionaladvicewhendecidingifaninvestmentisappropriate.
Thispresentationmaycontainforward-lookingstatementsoropinionsincludingstatementsregardingourintent,belieforcurrentexpectationswith
respecttoANZ’sbusinessoperations,marketconditions,resultsofoperationsandfinancialcondition,capitaladequacy,specificprovisionsandrisk
managementpractices.Whenusedinthispresentation,thewords‘forecast’,‘estimate’,‘project’,‘intend’,‘anticipate’,‘believe’,‘expect’,‘may’,
‘probability’,‘risk’,‘will’,‘seek’,‘would’,‘could’,‘should’andsimilarexpressions,astheyrelatetoANZanditsmanagement,areintendedtoidentify
forward-lookingstatementsoropinions.Thosestatements:areusuallypredictiveincharacter;ormaybeaffectedbyinaccurateassumptionsor
unknownrisksanduncertainties;ormaydiffermateriallyfromresultsultimatelyachieved.Assuch,thesestatementsshouldnotberelieduponwhen
makinginvestmentdecisions.Thesestatementsonlyspeakasatthedateofpublicationandnorepresentationismadeastotheircorrectnessonor
afterthisdate.Forward-lookingstatementsconstitute“forward-lookingstatements”forthepurposesoftheUnitedStatesPrivateSecuritiesLitigation
ReformActof1995.ANZdoesnotundertakeanyobligationtopubliclyreleasetheresultofanyrevisionstotheseforward-lookingstatementstoreflect
eventsorcircumstancesafterthedatehereoftoreflecttheoccurrenceofunanticipatedevents.
2021 FULL YEAR RESULTS
2
CEO and CFO Results Presentations 3
CEO Presentation3
CFO Presentation17
Corporate Overview and Environment, Social & Governance (ESG)35
Additional Information –Group Performance48
Divisional Performance58
Australia Retail & Commercial 60
Institutional67
New Zealand Division72
Treasury77
Risk Management88
Housing Portfolio103
All figures within this investor discussion pack are presented on Cash Profit (Continuing operations) basis in Australian Dollars unless otherwise noted. In arriving at Cash Profit, Statutory Profit
has been adjusted to exclude non-core items, further information is set out in the 2021 Full Year Consolidated Financial Report
CONTENTS
FULL YEAR RESULTS
2021
SHAYNE ELLIOTT
CHIEF EXECUTIVE OFFICER
SIMPLER, BETTER BALANCED FOUNDATION FOR GROWTH
CAPITAL STRENGTHCAPITAL ALLOCATIONRISK INTENSITYNET TANGIBLE ASSETS
APRA Level 2 CET1 Ratio %% of total
1
CRWA/EAD
2
%NTA per share $
4
9.6
10.6
11.4
12.3
Sep
15
Sep
17
Sep
19
Sep
21
0
25
50
75
100
Sep
15
Sep
17
Sep
19
Sep
21
38.7
37.3
36.6
33.4
Sep
15
Sep
21
Sep
17
Sep
19
1.Allocation based on Regulatory Capital. Institutional in Sep 15 includes Asia Retail & Pacific in line with 2015 Institutional and International Banking structure
2.Credit Risk Weighted Assets (CRWA) as a % of Exposure at Default (EAD). Sep 21 excludes increased exposure to the RBA via higher exchange settlement account balances
16.86
17.66
19.59
21.09
Sep
15
Sep
21
Sep
17
Sep
19
Institutional
Retail & Comm.
Aus Wealth
Asia P’ships
ENTERING 2022 FROM A POSITION OF STRENGTH
5
STRONGER BALANCE SHEET
~$6b
CET1 CAPITAL ABOVE UNQUESTIONABLY
STRONG
~$4b
CREDIT RESERVES
(COLLECTIVE PROVISION BALANCE)
~40%
IMPROVEMENT IN INTERNAL EXPECTED
LOSS OVER THE PAST 5 YEARS
STRONGER CULTURE
81%
INDUSTRY LEADING STAFF ENGAGEMENT
(ENGAGEMENT SCORE JUL 21)
35.3%
REPRESENTATION OF WOMEN IN
LEADERSHIP, UP FROM 33.4% IN SEP 20
#1
RANKING OVERALL AMONGST MAJOR
DOMESTIC PEERS IN THE 2021 REPTRAK
CORPORATE REPUTATION SURVEY
STRONGER CUSTOMERS
+$25b
NET INCREASE IN AUS & NZ RETAIL &
COMMERCIAL DEPOSITS (SEP 21 VS SEP 20)
>530k
SAVINGS GOALS SET THROUGH THE ANZ APP
(AUSTRALIA) SINCE LAUNCH IN OCT 19
-20%
REDUCTION IN GROUP 90+ DAYS PAST DUE
(SEP 21 VS SEP 20)
FULL YEAR 2021 FINANCIAL SNAPSHOT
6
1.Includes the impact of Large / Notable items, excludes discontinued operations
2.Collectively assessed provisions as a % of Credit RiskWeighted Assets
3.Comparatives as reported in FY20 Results Announcement
FY21
FY21 change
(FY21 vs FY20)
2 year change
(FY21 vs FY19)
3
Statutory Profit ($m)6,162+72%+4%
Cash Profit (continuing operations)
1
($m)6,198+65%-4%
Return on Equity (%)9.9+376bps-95bps
Earnings Per Share (cents)218.3+65%-4%
Cash Profit (continuing operations) ex Large / Notable items ($m)7,144+36%+7%
Dividend PerShare (cents)142+82 cents-18 cents
Franking (%)1000%+15%
CET1 Ratio (APRA Level 2) (%)12.3+100bps+98bps
Net TangibleAssets Per Share ($)21.09+5%+8%
Collective Provision Coverage Ratio
2
(%)1.22-17bps+28bps
PORTFOLIO PERFORMANCE
DRIVING BENEFITS FROM DIVERSIFICATION
7
FY21 v FY20
1
Australia R&C
2
New Zealand (NZD)Institutional
Institutional
ex Markets
Risk Adjusted Margins+13bps+43bps+18bps+2bps
Profit Before Provisions+2%+12%-23%-3%
Cash Profit after tax+57%+41%Flat+76%
Risk Weighted Assets-2%+4%-8%-3%
Return on Risk WeightedAssets
3
+91bps+59bps+10bps+50bps
Net Loans and Advances+1%+7%Flat+5%
Customer Deposits+8%+4%+7%+7%
1.Cash continuing ex Large / Notable items
2.Retail & Commercial
3.Cash Profit after tax as a % of avgRisk Weighted Assets
GROWTH OPPORTUNITIES –INSTITUTIONAL PLATFORMS
8
SCALABLE, POSITIVE OPERATING LEVERAGE, CAPITAL LIGHT
1.Based on number of payments
2.New Payments Platform
PAYMENTSNPP AGENCY PAYMENTS
2
PLATFORM CASH MGMT ACCOUNTS
INDEXED DATA
1
FY19 = 100
INDEXED DATA
1
FY19 = 100
INDEXED DATA FY19 = 100
100
105
130
FY19FY21FY20
5%
24%
PAYMENTS MADE BY INSTITUTIONAL
CUSTOMERS GLOBALLY TO SUPPLIERS
AND EMPLOYEES THROUGH OUR
DIGITAL CHANNELS
100
467
988
FY19FY20FY21
367%
112%
100
220
530
FY21FY19FY20
120%
141%
CLEARING AND SETTLING REAL-TIME
PAYMENTS FOR OTHER BANKS IN
AUSTRALIA
DEPOSIT MANAGEMENT FOR ENTITIES
HOLDING FUNDS ON BEHALF OF THEIR
CLIENTS
GROWTH OPPORTUNITIES -INSTITUTIONAL
WHERE WE SUPPORT OUR CUSTOMERSSUSTAINABLE FINANCE FEE INCOME (INDEXED DATA)
INDEX FY18 = 100
SUSTAINABILITY
9
Supporting
sustainability in
resource extraction,
basic materials &
new technologies
Enabling the
transition
towards lower
emissions
buildings
Assisting
sustainable
food, beverage
& agriculture
practices and
supply chains
Accelerating
companies in
transitioning
energy from
‘brown’
to ‘green’
Banking the
electrification
of the
transportation
value chain
Offering
Environmental
Sustainability (ES)
solutions to &
partnering with ES
focused financial
institutions
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
FY20FY19FY18FY21
63%
Participated in 81
sustainable
finance deals with
a total deal size of
$119b during FY21
SOURCE OF COMPETITIVE ADVANTAGE IS SHIFTING
THE WORLD IS CHANGING IN RETAIL & COMMERCIAL BANKING
10
1OWNERSHIPOFPHYSICALDISTRIBUTIONISNOLONGERAMATERIALSOURCEOFADVANTAGE
2APPROPRIATE, INSIGHTFULUSEOFDATAWILLBECOMEASOURCEOFADVANTAGE
3COMPETITIONWILLBECOMEMOREINTENSEANDMOREDISRUPTIVE
4CONSUMERLENDINGISBECOMINGMORECAPITALINTENSIVEANDLESSPROFITABLE
5THEPROVISIONOF‘ADVICE’ ISBECOMINGMORERISKYANDMORECOMPLEX
6REGULATIONANDPENALTIESINCREASING
7KEYTALENTWILLBEHARDERTOCOMEBYANDRETAIN
THE BANK WE’RE BUILDING
PURPOSE-LED TRANSFORMATION WILL DRIVE BETTER OUTCOMES FOR STAKEHOLDERS
11
Customers will have better
financial wellbeing, more
sustainable practices and
generate higher life-time
value for shareholders
Better access to capital and
talent, driving greater capacity
to invest
Better financial outcomes
Better acquisition and retention
rates, higher share
of target customers
Better data,
risk decisions
and pricing
Better customer propositions:
‘purposeful’, engaging, efficient
and ‘safe’
Better financial wellbeing and
sustainability outcomes
More engaged workforce
Higher customer engagement,
greater use of our products
and services
FINANCIAL WELLBEING PRINCIPLES
GUIDING THE WAY WE ARE TRANSFORMING THE BANK AND DEVELOPING SERVICES
12
Spendless
than you earn
Give
what you can
Save regularly
towards your goals
Protect
what you can’t
afford to lose
Build
towards your
retirement
Borrow
within your means
Invest
in things that
grow
13579
2
4
68
Pay
your most expensive
debt first
Put money aside
for a rainy day
GROWTH OPPORTUNITIES –ANZ PLUS
WHAT OUR CUSTOMERS WILL SEE FIRST IN ANZ PLUS
13
New channel
To help you spend less, save more, create
healthy money habits
Coaches
Expert supportand coaching, when you need
it, improvingyour financial wellbeing
Updatedbrand
Designed for a contemporary, digital-first world, we
have a fresh new take on the ANZ brand identity
VENTURES
GROWTH OPPORTUNITIES –STRATEGIC PARTNERS
14
CREATION
LAB
PIVOTING INVESTMENT FOR GROWTH
EXPENSES
1
TOTAL INVESTMENT SPEND BY CATEGORY
CHANGE THE BANK
$b
RUN THE BANK
$b
15
1.Cash continuing excluding Large / Notable items. Prior periods restated to reflect current management classification between BAUand Investment Expensed
2.Pro-Forma view adjusts the original metric reported in FY15 to reflect comparable accounting policies and continuing organisational structure as the FY21 results
* This page may contain forward-looking statements or opinions. Please refer to ANZ’s Disclaimer and Important Notice with respect to such statements on page 1
0.6
0.9
1.3
FY20FY15
2
FY23
(Exit rate)
ambition
FY21
~1.0
8.2
7.7
7.4
FY23
(Exit rate)
ambition
FY21FY15
2
FY20
~7.0
22%
24%
47%
7%
FY21
$1.8b
~80% EXPENSED
Growth
Asset Lifecycle ManagementProductivity & Simplification
Regulatory, Compliance & Risk
Up from 18% of spend in
FY20. Growth examples incl.
•ANZx
•Sustainability
•GoBiz
•1835i
•Platforms
FY21
PRIORITIES FOR 2022
16
RESTORE
MOMENTUM IN
AUSTRALIA HOME
LOANS
LAUNCH
ANZ PLUS; POSITION
FOR A DIGITAL HOME
LOAN PROPOSITION
SEED
PROFITABLE, HIGH
RETURN GROWTH IN
INSTITUTIONAL
COMPLETE
BS11, RECYCLE CAPITAL
& IMPROVE RETURNS
IN NZ
CONTINUE
GROUP SIMPLIFICATION
& PRODUCTIVITY
FULL YEAR RESULTS
2021
FARHAN FARUQUI
CHIEF FINANCIAL OFFICER
OVERVIEW
18
CONTINUING OPERATIONS
CASH PROFITCASH EPSROE
$m
cents
%
6,470
3,758
6,198
FY19FY20FY21
228
133
218
FY19FY20FY21
10.9
6.2
9.9
FY21FY19FY20
1CORPORATESTRENGTH
2FINANCIALPERFORMANCE
3INVESTINGFORTHEFUTURE
4FOCUSAREAS
AGENDA
19
CAPITAL
20
1.Excludes Large / Notable items
2.Mainly comprises the movement in retained earnings in deconsolidated entities, other equity investments and capitalisedexpenses
3.A total of ~$709m of the announced $1.5b share buy back executed (of which $55m settled after 30 September 2021)
4.Other impacts include movements in non-cash earnings, net foreign currency translation, deferred tax asset deduction not relatedto CIC and movement in reserves
CORPORATESTRENGTH
APRA LEVEL 2 CET1 RATIO
%
Credit Impacts: +14bps
0.80
0.01
0.02
0.11
Net DTA
on CIC
Business
RWA
movement
Capital
deductions
2
Interim
dividend
Share
buy back
3
Large/Notable
items
12.0
Sep 21Sep 21
(Level 1)
-0.13
Credit
impairment
release
(net of tax)
Sep 20Risk
migration
Mar 21
-0.03
Cash Profit
(ex CIC &
L/N)
1
-0.17
-0.06
-0.48
-0.17
11.3
12.4
12.3
Other
4
>50% from DTA
(ex credit impacts)
CREDIT QUALITY
GROSS IMPAIRED ASSETS (GIA)RISK INTENSITY
$b
Credit Risk Weighted Assets as a % of Exposure at Default
1
%
LONG RUN LOSS RATES (INTERNAL EXPECTED LOSS)
2
bps
21
1.Sep 21 excludes increased exposure to the RBA via higher exchange settlement account balances
2.IEL: Internal Expected Loss (IEL) is an internal estimate of the average annualisedloss likely to be incurred through a credit cycle
37
3535
32
30
2727
262626
23
22
Mar
21
Sep
20
Sep
18
Mar
16
Sep
16
Sep
17
Mar
17
Mar
18
Mar
19
Sep
19
Mar
20
Sep
21
0.55%
0.41%
0.35%
0.33%
0.40%
0.31%
4
2
0
1
3
2.1
Sep 17Sep 18Sep 16Sep 19
3.2
Sep 20Sep 21
2.4
2.0
2.5
2.0
Australia R&C
New Zealand
Institutional
Pacific / Other
GIA as a % of GLA
CORPORATESTRENGTH
39
37
36
37
36
33
Sep 16Sep 20Sep 17Sep 19Sep 18Sep 21
FINANCIAL PERFORMANCE
GROUP PROFIT DRIVERS
$m
CONTINUING OPERATIONS
22
1.Further detail on Large / Notable items is included within the Investor Discussion Pack
2.Prior periods restated to reflect current management classification between BAU and Investment Expensed
3,758
6,198
555
193
335
3,282
Income
(ex Markets)
ProvisionsTax & NCIBAU expenses
2
Markets incomeLarge / Notable
items after tax
1
FY20Investment
2
FY21
-730
-356
-839
65%
FINANCIALPERFORMANCE
FY20FY21
2,6721,942
FY20FY21
1,501946
Expenses: -21
163
161
165
4
3
1
Asset &
funding mix
Wholesale
funding &
deposit pricing
Asset pricing1H21LiquidityImpact of rates
net of repricing
2H21
underlying
1
Markets
Balance Sheet
activities
2
Large /
Notable items
2H21
-1
-3
-2
0
NET INTEREST MARGIN
CONTINUING OPERATIONS
23
1.Excluding Large / Notable items and Markets Balance Sheet activities
2.Includes the impact of discretionary liquid assets and other Balance Sheet activities
-2bps
+2bps
Deposit / funding mix+1
Replicating portfolio volume+1
Home Loan SVRto Fixed-2
GROUP NET INTEREST MARGIN (NIM)
bps
FINANCIALPERFORMANCE
NET INTEREST MARGIN DRIVERS
24
FINANCIALPERFORMANCE
VARIABLE RATE TO FIXED SHIFT
INCREASED SYSTEM LIQUIDITYCOMPETITIVE PRICING
DEPOSIT RATE MANAGEMENT
CUSTOMER FUNDING MIXTERM WHOLESALE FUNDING
$38b
AVERAGE CHANGE IN AUS & NZ HL MIX IN
2H21 (FIXED UP $22b, SVR DOWN $16b)
-4bps
IMPACT TO GROUP NIMIN 2H21 FROM
INCREASED DEPOSITS AND CLFREDUCTION
~30%
OF THE HOUSING PORTFOLIO HAD A
PRICING EVENT IN 2H21
$40b
AVERAGE CHANGE IN TD VS AT-CALL MIX IN
2H21 (TD’S DOWN $12b, AT-CALL UP $28b)
+3bps
IN 2H21 FROM DEPOSIT RATE MANAGEMENT
~65%
REDUCTION IN WHOLESALE ISSUANCE 2H21
(EX TFF) RELATIVE TO FY16-FY19 HY AVG
AUSTRALIA RETAIL & COMMERCIAL
NET LOANS & ADVANCES
$b
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
25
Home LoansCommercialCards & Personal Loans
264
275
281
278
58
58
57
57
Sep 21
6
8
7
Mar 20
7
Sep 20Mar 21
330
339
341
344
5.88
5.68
5.84
5.99
2H212H201H201H21
3,181
3,125
3,253
3,247
1,502
1,398
1,374
1,421
2H211H202H201H21
4,683
4,523
4,627
4,668
RetailCommercial
Underlying earnings
INCOME
$m
UNDERLYINGEARNINGSFINANCIALPERFORMANCE
RISK ADJUSTED MARGINS
Net Interest Income as a % of average Credit Risk Weighted Assets
%
AUSTRALIA HOUSING
PORTFOLIO COMPOSITIONHOME LOAN BALANCE & FLOWS
Net Loans & Advances
$b
$b
26
281
278
25
7
New Sales
excl. Refi-In
Mar 21Net OFI RefiRedraw &
Interest
Repay
/ Other
Sep 21
-2
-33
Average of prior 3 halves
+20+7+7-28
12%
Sep 21
20%
2%
6%
265
60%
19%
67%
62%
64%
Mar 19
8%
3%
5%
10%
3%
Sep 19
8%
21%
4%
2%
Mar 20
269
65%
22%
278
66%
3%
2%
Sep 20
22%
2%
8%
2%
8%
22%
Mar 21
2%
264
275
281
OO P&IInv I/OInv P&IOO I/OEquity Manager
FINANCIALPERFORMANCE
HOME LOAN ACTIONS
•Increased operations staff to support assessment
•Streamlining origination process to reduce handling time
•Progressing work on digitisation& automation
INSTITUTIONAL
INCOME
1
RISK ADJUSTED MARGINS
2
$m
Net Interest Income as a % of average Credit Risk Weighted Assets
%
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
27
TradeMarketsPCMCorporate Finance
49
32
28
27
129
111
105
114
21
Sep 20
1
13
Mar 20
1
1
13
Mar 21
1
16
Sep 21
199
158
147
158
1.Trade: Trade & Supply Chain; PCM: Payments & Cash Management
2.Excluding Markets business unit
2.07
1.90
1.97
2.03
2H212H201H201H21
1,164
1,508
1,012
930
231
209
189
187
580
498
460
460
786
829
828
857
2H20
29
1H20
13
18
1H212H21
14
2,790
3,057
2,507
2,448
MarketsTradeCorporate FinancePCMOther
UNDERLYINGEARNINGS
NET LOANS & ADVANCES
1
$b
FINANCIALPERFORMANCE
NEW ZEALAND DIVISION
INCOMERISK ADJUSTED MARGINS
NET LOANS & ADVANCES
NZDb
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
28
Personal OtherPersonal HousingBusiness
82
84
90
94
40
39
39
39
Sep 21
3
2
Mar 20
2
Sep 20
2
Mar 21
125
126
131
135
4.72
4.44
4.93
5.08
2H201H201H212H21
1,188
1,127
1,220
1,252
484
469
508
569
3
8
1H211H20
1
1,731
2H20
-2
2H21
1,680
1,597
1,819
PersonalBusinessOther
NZDm
Net Interest Income as a % of average Credit Risk Weighted Assets
%
FINANCIALPERFORMANCE
PROVISION CHARGE & BALANCE
TOTAL PROVISION CHARGE & LOSS RATESCOLLECTIVE PROVISION BALANCE & COVERAGE
$m
$m
CONTINUING OPERATIONS
29
1.Individual Provision charge as a % of average Gross Loans & Advances
2.Total credit impairment charge / (release) as a % of average Gross Loans & Advances
3.Collective Provision balance as a % of Credit Risk Weighted Assets
626
395
1,048
669
-678
1,674
-145
1H202H202H21
187
69
1H21
1,064
-491
-76
Individual Provision chargeCollective Provision charge / (release)
1H202H201H212H21
IP loss rate
1
(%)0.200.120.060.02
Totalloss rate
2
(%)0.530.33-0.16-0.02
Mar 20Sep 20Mar 21Sep 21
CollectiveProvision balance ($m)4,5015,0084,2854,195
Collective Provision coverage
3
1.17%1.39%1.25%1.22%
3,539
3,435
746
55
10
760
Volume
/ mix
-41
FXChange
in risk
Mar 21Eco. Fcst.
& scenario
weights
Additional
overlays
Sep 21
4,285
-83
-31
4,195
Modelled ECLAdditional Overlays
FINANCIALPERFORMANCE
Collective Provision charge / (release): -145
933
929
53
47
9
360
1,289
8,670
Other
8,649
InvestmentFY21
-140
InflationFY20 FX adj.
7,580
FX
7,381
FY20
7,716
Annual leave
8,509
-308
Productivity
EXPENSES
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
30
EXPENSE DRIVERS
$m
+2%
flat
Investment Expensed (change the bank)
1
BAU (run the bank)
1
BAU costs: -199 (-3%)
FINANCIALPERFORMANCE
In line with guidance of +1%
to +2% expense growth in
FY21 (FX adjusted)
1.Prior periods restated to reflect current management classification between BAU and Investment Expensed
PRODUCTIVITY
31
FY21 RUN THE BANK PRODUCTIVITY
FY21 INITIATIVES DELIVERED
EVOLVINGCUSTOMER
ACQUISITIONANDDISTRIBUTION
MODELS
OPTIMISEDCUSTOMERSERVICING
AND
TRANSACTIONPROCESSING
MODERNISEDPRODUCT
MANAGEMENT
TECHNOLOGYMODERNISATION
PROPERTYANDENABLEMENT
SIMPLIFICATION
~$130m
~$50m
~$75m
~$20m
~$35m
$308m
•Refinement of coverage models across all businesses
•Investment in digital channels, reduced physical presence
•Back-office process automation & simplification
•Enabling digital transactions & customer self-service
•Middle office consolidation
•In-sourcing specialised activities
•Network & software contract review & optimisation
•Infrastructure simplification
•Reduced commercial propertyfootprint
•Operatingmodel enhancements
FINANCIALPERFORMANCE
INVESTMENT SPEND
INVESTMENT SPEND
1
EXPENSED & CAPITALISED
1
$m$m
CAPITALISED SOFTWARE
CONTINUING OPERATIONS
32
2,893
2,202
1,856
1,421
1,323
1,039
960
4.9
4.7
3.9
3.2
2.72.7
2.4
Sep 15Sep 16Sep 17Sep 18Sep 20Sep 19Sep 21
Capitalised software balanceAvg amortisation period (yrs)
$m
1H20
71%
2H20
72%
29%
79%
28%
21%
1H21
79%
1,058
21%
2H21
663
811
752
Investment ExpensedInvestment Capitalised
1.Prior periods restated to reflect current management classification between BAU and Investment Expensed
INVESTINGFOR
THEFUTURE
361
564
812
113
226
245
159
164
191
197
171
223
341
349
339
FY21FY19
1,171
FY20
1,474
1,810
Technology InfrastructureAustralia R&C and ANZx
New Zealand
Institutional
Enablement, Property & Other
INVESTMENT SPEND –ALIGNED TO STRATEGIC PRIORITIES
FY21 INVESTMENT SPEND
1
FY21 INVESTMENT SPEND BY CATEGORY (EXAMPLES)
$m
33
1.Prior periods restated to reflect current management classification between BAU and Investment Expensed
* This page may contain forward-looking statements or opinions. Please refer to ANZ’s Disclaimer and Important Notice with respect to such statements on page 1
17%
18%
FY20
54%
47%
11%
22%
24%
7%
FY21
1,474
1,810
Asset Lifecycle Management
Regulatory, Compliance & Risk
Productivity & Simplification
Growth
Growth
•ANZx
•Sustainability
•GoBiz
•1835i
•Platforms
Productivity & Simplification
•Migration to Cloud
•Digital customer experience
•Banker experience
•Customer authentication
•Property rationalisation
•Automation
Asset Lifecycle Management
•Application upgrades
•Capacity & storage
•Release management
Regulatory, Compliance & Risk
•BS11 (RBNZ Outsourcing)
•Benchmark Transition (‘IBOR’)
•Home & business lending
processes
•Open Banking
•Cyber security
CONTINUING OPERATIONS
INVESTINGFOR
THEFUTURE
Estimated share
of investment
spend in FY22
~30%
~30%
~35%
~5%
FOCUS AREAS
34
FOCUSAREAS
Home loansSimplification
Capital &
investment allocation
Growth initiatives
Disciplined
execution
Risk adjusted
returns
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
CORPORATE OVERVIEW AND
ENVIRONMENT, SOCIAL & GOVERNANCE (ESG)
STRATEGY
OUR PURPOSE AND STRATEGY
OUR ESG APPROACH SUPPORTS THE EXECUTION OF OUR STRATEGY
36
Platforms & people
To improve the financial wellbeing & sustainability of our customers
We will do this by providing excellent services, tools and insights that engage and retain
customers and positively change their behaviour
Help people save for,
buy & own a sustainable,
liveableand affordable
home
Help people start or buy
and sustainably grow
their business
Help companies move goods
and capital around the region
and sustainably grow their
business
Propositions customers
love; services that
meet changing needs
Flexible and resilient
digital banking
platforms
Partnerships that
unlock value
Purpose and values-led
people
THE BANK WE’RE BUILDING
PURPOSE-LED TRANSFORMATION WILL DRIVE BETTER OUTCOMES FOR STAKEHOLDERS
37
Customers will have better
financial wellbeing, more
sustainable practices and
generate higher life-time
value for shareholders
Better access to capital and
talent, driving greater capacity
to invest
Better financial outcomes
Better acquisition and retention
rates, higher share
of target customers
Better data,
risk decisions
and pricing
Better customer propositions:
‘purposeful’, engaging, efficient
and ‘safe’
Better financial wellbeing and
sustainability outcomes
More engaged workforce
Higher customer engagement,
greater use of our products
and services
THE BANK WE’RE BUILDING
38
GIVING CUSTOMERS ACCESS TO...
Platforms
More agile and
more resilient banking
infrastructure platforms
provided to ANZ
and third parties
Propositions
Easy to use services
that improve the
financial wellbeing
and sustainability
of customers
Partnerships
Integrated,
data-enabled,
Home Owner and
Business Owner
ecosystems
People
A diverse team, who
listen, learn and adapt to
deliver outcomes that
address financial and
sustainability challenges
...and delivering consistently strong shareholder returns
THE BANK WE’RE BUILDING
DELIVERING IMPROVED LIFETIME VALUE
39
‘PURPOSE&
VALUESDRIVEN’
•Build the team
•Establish Our Purpose
•Reinvigorate Our Values
•Create a more open, less
hierarchical organisation
•Strengthen our delivery and
performance culture
•Sell non-core businesses
•Re-shape Institutional
•Strengthen balance sheet
•Re-balance the portfolio
•De-risk the business
•Drive productivity and
capital efficiency
•Strengthen our control
frameworks
•Enhance data capabilities
•Build cloud capabilities
•Automate key processes
•Establish new platforms
(BS11, ANZx)
•Establish GoBiz
•Reshape the workforce
•Establish Ways of Working
•Build service-based
businesses
•Scale up priority segments
•Environmental Sustainability
•Grow Banking Platforms
•Establish partnerships to
support target customers
•Build and scale new
businesses adjacent to the
core
‘SIMPLIFYAND
STRENGTHEN’
‘PROFITABLYGROW’
Largely completed
Work in progress
Yet to really start
‘DIGITISE’
31.1
32.0
32.5
33.4
35.3
20172018201920202021
SUSTAINABILITY PERFORMANCE TRENDS
40
FULL YEAR 2021 DISCLOSURE
1. Figure includes forgone revenue (2021 = $106m), being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and the elderly. International
transfer fees were waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19. 2.The 2017 engagement survey was run as a pulse survey sent to 10% of the bank’s employees
with a 57% response rate. For all other years the employee engagement survey was sent to all staff 3. Includes individuals who have participated in more than one program (for example, people who have participated in MoneyMinded
as part of Saver Plus are counted twice as they are included in both the MoneyMindedand Saver Plus totals) 4. 2016 –2019 figures represent annual contributions towards ANZ’s 2020 $15b sustainable solutions target, which had an
environmental focus. In FY20, ANZ set a new 2025 $50b target with an expanded focus on environmental sustainability, housing andfinancial wellbeing. 5. Measures representation at the Senior Manager, Executive and Senior Executive
Levels.Includes all employees regardless of leave status but not contractors (which are included in FTE)
COMMUNITY INVESTMENT
1
MONEYMINDED& SAVER PLUS
3
SUSTAINABLE FINANCE $50b
TARGET
4
Total community investment ($m)
Estimated # of people reached
Funded and facilitated ($b)
EMPLOYEE ENGAGEMENT
2
Employee engagement score (%)
ENVIRONMENTAL FOOTPRINT TARGET
Scope 1 & 2 greenhouse gas
emissions (k tonnes CO
2
-e)
WOMEN IN LEADERSHIP
5
Representation (%)
131.0
136.9
142.2
139.5
139.7
20172019201820202021
181
171
157
134
111
20172018201920202021
80,074
88,308
90,724
61,367
67,620
20182017201920202021
72
73
77
86
81
20192017201820202021
4.5
4.6
7.6
7.6
9.2
1.4
1.4
0.1
2.3
201720182019
9.1
20202021
12.9
Other SocialEnvironmentalHousing
OUR FY21 ESGTARGETS
FINANCIAL WELLBEING
41
Publish Adult Financial
Wellbeing Research to inform
our product design and
financial literacy program
delivery, by end 2022
Analysis of survey data has been completed, with key insights focused on improving
understanding of socio-economic and behaviouraldeterminants of financial wellbeing in
Australia and New Zealand
We are on track to launch the survey report by December 2021
Support 250,000 customers
to build a savings habit,
by end 2021
(Australia/New Zealand)
TARGET
PERFORMANCE
Since October 2020 we have supported around 151,600 customersto build a savings
habit. This includes:
omore than 3,000 Saver Plus new participants actively saving using a Progress
Saver account; and
o148,567 customers who have set savings goals using the ‘set a savings goal’
feature in the ANZ App
Since the introduction of the ‘set a savings goal’ feature in October 2019, 319,081
customers have set a saving goal
Our ESG targets support 11 of the 17United Nations Sustainable Development Goals.
This year we have achieved or made good progress against 92% of our targets, and did not achieve 8%.
See our 2021 ESG Supplement for the complete suite of FY21 ESG targets and details on full year performance (when released).
OUR FY21 ESGTARGETS
ENVIRONMENTAL SUSTAINABILITY
42
Encourage & support 100 of
our largest emitting business
customers to establish, and
where appropriate,
strengthen existing low
carbon transition plans, by
end 2021
•We have engaged with 100 of our largest emitting business customers to
support them to establish, or strengthen, low carbon transition plans. We will
continue our engagement with customers, seeking improvements to their plans and
reviewing their biodiversity commitments, as part of our new FY22 ESG target
Fund & facilitate at least $50
billion by 2025 towards
sustainable solutions for our
customers
TARGET
PERFORMANCE
•Since October 2019, we have funded and facilitated AU$21.95 billion towards the
target, of which AU$12.18 billionis fundedand AU$9.77 billionis facilitated
•The majority of target transactions provide funding for sustainability-linked
lending, renewable energy, green buildings and affordable housing, and facilitate
ESG-format bond issuance
OUR FY21 ESGTARGETS
HOUSING
43
1.Off a FY21 baseline
Support more customers
into healthier homes with
our Healthy Home Loan
Package and Interest-free
Insulation Loans –through a
2%
1
increase of funds under
management and a 4%
1
increase in customer
numbers by 2025
(New Zealand)
Since October 2020, we have supported 1,065 households into healthier homes
through our Healthy Home Loan Package (36 households) and our Interest-free
Insulation Loans (1,029 households)
Fund & facilitate AU$10
billion of investment by 2030
to deliver more affordable,
accessible and sustainable
homes to buy and rent
(Australia /New Zealand)
TARGET
PERFORMANCE
Since October 2020, we have funded and facilitated AU$1.29 billion and
NZ$150 million of investment to deliver more affordable, accessible and
sustainable homes to buy and rent
OUR FY21 ESGTARGETS
FAIR AND RESPONSIBLE BANKING
44
Design & commence
implementation of a Human
Rights Grievance
Mechanism, using the UN
Guiding Principles on
Business and Human Rights,
by end 2021
Final design framework for the Human Rights Grievance Mechanism (GM) has been
approved by ERBC and Board EESG Committee. Implementation of the GM has
commenced, including governance, embedding into policy and process, training,
disclosures and communications
The GM will be made public in Q1 FY22 after a final external stakeholder information
session. Public reporting will commence in mid to late FY22
Develop & commence
implementation of a new
Customer Vulnerability
Framework to improve the
support we provide to
customers experiencing
vulnerability, by end 2021
(Australia)
TARGET
PERFORMANCE
Implementation of our Customer Vulnerability Framework continues, including
implementing inclusive design principles in our product management framework, ensuring
our products are accessible, inclusive and do not cause harm; extending the pilot of our
independent interpreter service to our Customer Protection team, improving our ability to
assist customers from non-English speaking backgrounds; and increased proactive
engagement with a range of community stakeholders to ensure our approach is well
informed
OUR APPROACH TO CLIMATE CHANGE
COMMITTED TO PLAYING OUR PART & SUPPORTING OUR CUSTOMERS IN TRANSITION TO NET-ZERO EMISSIONS BY 2050
•The most important role we can play in enabling a transition to net-zero is to finance our customers’ efforts to reduce
emissions, while also helping them tap into the significant opportunities as a result of this transition
•In October, ANZ became the first Australian bank to join the Net-Zero Banking Alliance –reflecting our commitment
to align our lending portfolios with the goal of achieving net-zero emissions by 2050
•Our updated Climate Change Statement, together with our 2021 Climate-related Financial Disclosures report, will be
released prior to our Annual General Meeting (AGM)
45
Help our
customers &
support
transitioning
industries
•Funding & facilitating at least $50 billion by 2025 to help our customers improve environmental sustainability, increase access
to affordable housing and promote financial wellbeing
•Working with & supporting our largest emitting customers to build climate change mitigation & adaptation risk into their
strategies
•Identifying opportunities & financing our customers’ transition activities via products such as ‘Green’ and Sustainability Linked
Loans
Engage
constructively &
transparently with
stakeholders
•Disclosing how we identify, assess and manage climate-related financial risks and opportunities using the Financial Stability
Board Task Force on Climate-related Financial Disclosures (TCFD) recommendations
•Disclosing better metrics so the emissions impact of our financing can be tracked annually, starting with commercial
property and power generation
•Engaging with stakeholders on climate change and increasing transparency on our approach
RESOURCES PORTFOLIO
THERMAL COAL MINING EXPOSURE
EXPOSURE AT DEFAULT (EAD) $b
EXPOSURE AT DEFAULT (EAD) $b
46
OUR RESOURCES PORTFOLIO
8.6
7.8
7.0
7.4
8.2
8.2
6.7
5.9
4.9
4.0
3.5
4.4
5.2
5.4
4.1
3.9
2.9
1.7
1.4
1.2
1.5
1.2
1.1
1.0
1.3
1.1
1.0
0.9
1.0
0.9
1.2
1.2
0.7
0.7
0.8
0.6
1.7
1.2
0.8
0.7
0.8
17.3
0.6
Sep-19Sep-18
0.6
Sep-15
0.4
Sep-17Sep-16
0.3
0.5
Sep-20
0.5
Mar-21
0.4
Sep-21
20.0
16.2
14.0
15.3
17.0
13.0
14.2
Services to mining
Thermal Coal MiningOther Mining
Metallurgical Coal Mining
Metal Ore Mining
Oil & Gas Extraction
0.0
0.5
1.0
1.5
2.0
Sep-16Sep-15Sep-17Sep-18Mar-19Sep-20Sep-19Mar-20Mar-21Sep-21
•Since 2015 our exposure to thermal coal mining has reduced by
~75%
•Several diversified mining customers have divested thermal coal
interests in recent years, or signalled intention not to invest in
expansionary capex
•ANZ’s exposure to thermal coal mining is a small portion of our
overall lending (now comprising <0.05% of our Group Exposure
at Default)
OUR ESG RELATED DISCLOSURES
47
ESG SupplementESG Briefing
Climate Change Investor
Round Table
Human RightsHousingFinancial Wellbeing
https://www.anz.com/shareho
lder/centre/reporting/sus
tainability/
https://www.anz.com/content
/dam/anzcom/sharehold
er/ESG-Investor-
presentation.pdf
https://www.anz.com.au/abou
t-us/esg-
priorities/environmental-
sustainability/climate-
change/
https://www.anz.com.au/abou
t-us/esg-priorities/fair-
responsible-
banking/human-rights/
https://www.anz.com.au/abou
t-us/esg-
priorities/housing/
https://www.anz.com.au/abou
t-us/esg-
priorities/financial-
wellbeing/
ESG information &
progress against
our ESG targets
Annual event to
brief investors
on ESG matters
Investor update on
Climate Change
related disclosures
Our approach to
human rights
ANZ-CoreLogic Housing
Affordability Report, the
pre-eminent guide to trends
& drivers of housing
affordability across Australia
Our financial
wellbeing programs,
including ANZ Roy
Morgan financial
wellbeing indicator
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
ADDITIONAL INFORMATION -GROUP PERFORMANCE
SHAREHOLDER RETURNS
EARNINGS PER SHARE
1,2
DIVIDEND PER SHARE
SHARE PRICEDIVIDEND PAYOUT RATIO
cents
cents
$
%
10 YEAR PERFORMANCE
1.Cash Continuing basis
2.As reported
49
145
164
178
181
160160160160
60
142
FY19FY18FY15FY17FY12FY13FY14FY16FY20FY21
67
69
69
71
79
68
79
74
47
65
69
71
70
45
65
FY19FY17FY14FY12FY17FY13FY16FY15FY19FY18FY20FY21FY18FY20FY21
24.8
30.8
30.9
27.1
27.6
29.6
28.2
28.5
17.2
28.2
2014201220192013201720152016201820202021
Share price close (last trading day in September of the financial year)
219
238
260260
203
233
223
228
133
218
FY12FY17FY13FY14FY16FY15FY19FY18FY20FY21
Cash Profit (Continuing operations)
Cash Profit
Total Shareholder Return(as reported)
35.4%31.5%5.9%-7.5%9.2%13.1%0.6%9.2%-36.9%70.7%
FINANCIAL PERFORMANCE
FY21 CASH PROFIT DRIVERS
2H21 CASH PROFIT DRIVERS
$m
$m
50
CONTINUING OPERATIONS
1.Comparative numbers have been restated to remove the recurring impact of the new lease accounting standard (AASB 16) adopted on 1 October 2019 as the comparative periods are now presented
on a consistent basis to the September 2021 full year
LARGE / NOTABLE ITEMS$m1H212H21
Total (after tax)
-817-129
Divestments incl. Gain/(Loss) on sale-238-
Customer remediation-108-113
Litigation settlements-48-
Restructuring-76-16
Asian associateitems-347-
LARGE / NOTABLE ITEMS$mFY20
1
FY21
Total (after tax)
-1,501-946
Divestments incl. Gain/(Loss) on sale23-238
Customer remediation-279-221
Litigation settlements--48
Restructuring-115-92
Asian associateitems-66-347
Asian associateimpairments-815-
Accelerated software amortisation-138-
Other-111-
3,758
6,198
555
193
3,282
Markets
income
Large /
Notable items
after tax
FY20Income
(ex Markets)
ProvisionsExpensesTax & NCIFY21
-730
-21
-839
2,990
3,208
688
92
173
Expenses2H211H21
-82
Large /
Notable items
after tax
ProvisionsIncome
(ex Markets)
Tax & NCIMarkets
income
-238
-415
RISK ADJUSTED PERFORMANCE
GROUP
1,2
AUSTRALIA R&CINSTITUTIONAL
1
NEW ZEALAND
2
AVERAGE CREDIT RISK WEIGHTED ASSETS
$b
51
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
1.Ex Markets business unit
2.Adjusted for Balance Sheet impacts of divestments
4.22
3.95
4.21
4.32
1H211H202H202H21
5.88
5.68
5.84
5.99
1H211H202H202H21
2.07
1.90
1.97
2.03
2H211H202H201H21
4.72
4.44
4.93
5.08
1H202H201H212H21
312
1H212H201H202H21
321
328
316
1H21
134
139
1H202H202H21
139
138
1H202H212H201H21
114
125
119
113
1H20
58
2H201H212H21
575757
NET INTEREST INCOME / AVERAGE CREDIT RISK WEIGHTED ASSETS
%
RISK ADJUSTED RETURN
GROUP
1
AUSTRALIAR&CINSTITUTIONALNEW ZEALAND
1
PROFIT BEFORE PROVISIONS / AVERAGE TOTAL RISK WEIGHTED ASSETS
%
AVERAGE TOTAL RISK WEIGHTED ASSETS
$b
52
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
1.Adjusted for Balance Sheet impacts of divestments
2.38
2.32
2.31
2.25
2H211H202H201H21
3.43
3.22
3.34
3.36
1H202H202H211H21
1.64
1.88
1.48
1.50
2H201H201H212H21
2.91
2.66
3.03
2.97
1H212H201H202H21
411
1H202H201H212H21
435
421
422
1H20
163
2H20
162
1H212H21
162
166
185
170
1H202H201H212H21
197
179
2H20
65
2H211H211H20
65
66
69
TOTAL OPERATING INCOME
53
TOTAL INCOME BY DIVISION
NET INTEREST INCOME BY DIVISIONOTHER OPERATING INCOME
$b
$b
$b
4.6
1.7
-0.5
4.3
2.8
4.6
1H20
1.5
0.2
3.0
4.4
2H20
0.0
1.6
2.5
1H21
0.2
1.7
2.5
2H21
8.6
9.2
8.4
9.0
0.1
1.6
0.1
4.0
1.6
0.1
1.6
0.1
1.4
3.9
1H20
1.3
2H20
6.8
4.0
1.5
1.4
1H21
7.2
4.0
1.5
2H21
7.0
7.2
Australia R&CInstitutionalNZOther
0.1
1.1
0.8
0.1
2H21
-0.7
1.0
1H20
1.1
0.0
0.1
1.1
1.8
1.4
2.3
1.1
2H20
0.6
-0.2
0.0
1H21
0.2
0.5
1.4
OtherMarketsFee & comm.Assoc. profit
1.5
1.7
4.7
1H21
1.6
0.3
4.7
3.1
2.8
1H20
0.3
4.5
2H20
4.6
0.3
1.6
0.3
2.5
2.4
2H21
9.4
9.3
9.1
9.1
Continuing Continuing ex L/N
0.1
1.5
1.3
1.3
1.6
1H20
4.1
0.1
3.9
1.6
2H20
0.1
7.2
1.4
4.0
1H21
6.9
0.1
1.5
1.6
4.0
2H21
7.0
7.2
Continuing Continuing ex L/N Continuing Continuing ex L/N
2H21
1.1
0.1
0.8
0.1
0.1
1.2
1H20
0.2
1.1
1.1
2H20
0.1
0.3
1.1
0.6
1H21
0.1
0.5
0.2
2.0
2.2
2.5
1.9
OtherAustralia R&CInstitutionalNZ
LENDING ASSETS
AVERAGE INTEREST EARNING ASSETS
NET LOANS & ADVANCES (EOP)
$b
54
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
866
857
870
5
3
5
2
8
1H212H20Institutional
ex Markets
Australia R&CNew ZealandAustralia R&CInstitutional
ex Markets
Markets,
Treasury, Other
New ZealandMarkets,
Treasury, Other
2H21
-15
-2
-2
617
614
630
5
4
8
12
Australia R&CAustralia R&CSep-20Markets,
Treasury, Other
Institutional
ex Markets
New ZealandMar-21New ZealandInstitutional
ex Markets
-3
Markets,
Treasury, Other
Sep-21
-1
-6
-6
$b
BALANCE SHEET COMPOSITION
EXPOSURE AT DEFAULT
1
RISK WEIGHTED ASSETSNET LOANS & ADVANCESCUSTOMER DEPOSITS
$b (EOP)$b (EOP)$b (EOP)$b (EOP)
55
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis,net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2%
2%
15%
15%
44%
44%
Sep-19
39%
2%
39%
Sep-20
17%
41%
39%
Sep-21
414
429
416
42%
1%
40%
16%
41%
Sep-19
1%
16%
43%
Sep-20
1%
Sep-21
16%
40%
43%
512
552
594
14%
1%
3%
14%
39%
46%
Sep-19
45%
39%
Sep-20
7%
14%
42%
37%
Sep-21
977
1,010
1,080
Australia R&CNew ZealandInstitutionalOther
26%
1%
0%
27%
19%
0%
Sep-19
54%
19%
55%
Sep-20
20%
25%
54%
Sep-21
612
617
630
EXPENSE MANAGEMENT
56
TOTAL EXPENSES BY DIVISION
TOTAL EXPENSES BY CATEGORYFULL TIME EQUIVALENT STAFF
$b
$b
000s
4.8
0.6
2.1
1H20
0.6
0.7
0.7
4.6
1.3
0.7
0.7
1.3
2.0
2H20
0.6
1.3
2.0
1H21
0.7
1.2
2.0
2H21
4.5
4.6
0.8
0.9
0.4
0.8
0.4
0.1
0.4
1H20
2.5
0.9
0.1
1.0
2H20
2.4
0.8
4.6
0.1
0.8
2.4
1H21
0.0
0.8
0.4
2.5
2H21
4.8
4.5
4.6
NZAustralia R&CInstitutionalOther
1.1
1.1
10.3
14.1
Mar-20
5.2
10.3
7.0
5.4
14.1
37.5
6.7
1.1
5.3
14.1
Sep-20
39.7
10.7
6.7
Mar-21
1.1
11.7
7.1
5.3
14.5
Sep-21
37.8
37.8
TSO & Group CentreInstitutional
Australia R&CPacificNZ
0.7
0.7
0.6
1H20
4.2
0.5
1.3
1.9
0.6
4.5
1.2
1.9
2H20
1.9
0.5
0.6
1.2
1.9
4.4
1H21
0.7
1.2
2H21
4.3
Continuing Continuing ex L/N
2.4
1H20
0.4
0.8
0.8
0.8
2.3
0.4
0.8
0.7
2H20
4.5
2H21
0.8
0.4
0.9
2.4
1H21
0.8
0.4
2.4
4.4
4.3
4.2
Continuing Continuing ex L/N Continuing (EOP)
Restructuring
Personnel
Premises
TechnologyOther
CUSTOMER REMEDIATION
CUSTOMER REMEDIATIONCUMULATIVE CUSTOMER REMEDIATION
CONTINUING OPERATIONS
PRE TAX $m
CONTINUING & DISCONTINUED OPERATIONS
POST TAX $m
57
1.Includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims, penalties and litigation outcomes
35
156
36
337
71
138
92
93
110
42
29
36
32
18
38
19
86
22
119
22
84
56
30
1H182H18
13
1H192H202H191H201H212H21
67
352
100
485
129
254
166
161
Net Interest IncomeOther Operating IncomeExpenses
40
112
157
407
477
882
973
127
180
334
428
430
431
432
1H201H191H172H192H171H182H18
1,161
2H20
1,269
1H21
1,382
2H21
534
657
1,216
1,401
1,591
1,700
1,814
Balance Sheet
1
$886m provisions on Balance Sheet at Sep-21 ($1,003m at Mar-21)
Discontinued (Wealth businesses)Continuing operations
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
DIVISIONAL PERFORMANCE
NEW ZEALAND
GROSS NEW HOME LOAN ACCOUNTS -NZ
1
#000
KIWISAVERSUPERANNUATION
FUM NZDb
DIGITAL SALES –NZ
% of total personal sales
AUSTRALIA
GROSS NEW HOME LOAN ACCOUNTS -AUS
1
#000
REGISTERED ANZ APP CUSTOMERS
#m
DIGITAL SALES –AUS
% of total retail sales
2.9
Sep 19Sep 21Sep 20
3.3
3.8
AUSTRALIA & NEW ZEALAND
59
1.Includes increases to existing accounts and split loans (fixed and variable components of the same loan)
30%
40%
49%
FY21FY19FY20
6464
92
55
106
87
FY19FY20FY21
170
119
179
2H1H
14.8
16.4
19.1
Sep 21Sep 20Sep 19
26%
38%
41%
FY19FY21FY20
37
38
42
37
30
40
68
FY19
82
FY20FY21
74
1H2H
AUSTRALIA RETAIL & COMMERCIAL
60
FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
Balance SheetIncomeExpenses / FTECredit Quality / RWAsProfit and Returns
NLAs
1
($b) & NIMNII/OOI
2
Contribution ($m)Expenses ($m)Total Provision Charge ($m)Cash Profit ($m)
Customer Deposits ($b)Business Contribution ($m)FTERisk Weighted Assets EOP ($b)Return
4,058
3,941
4,031
4,041
4,683
625
2H21
627
1H21
596
1H20
582
2H20
4,523
4,627
4,668
1,904
1,892
1,869
1,932
2H211H212H201H20
525
526
318
278
-515
1H20
804
2H20
-106
134
1H212H21
843
-381
-45
IPCP
1,355
1,279
2,196
1,945
1H212H201H202H21
14,061
14,078
14,118
14,480
Sep-21Mar-20Mar-21Sep-20
330
339
344
341
2.65%
2.58%
2.60%
2.61%
Mar-20Sep-20Mar-21Sep-21
NIM%NLAsNIIOOI
3,181
3,125
3,253
3,247
1,502
1,398
1,374
1,421
1H20
4,523
2H20
4,627
1H212H21
4,683
4,668
RetailCommercial
213
235
241
253
Mar-20Sep-20Mar-21Sep-21
1.NLAs: Net Loans & Advances
2.NII: Net Interest Income; OOI: Other Operating Income
3.Cash profit divided by average Risk Weighted Assets
162
167
163
164
Sep-20Mar-20Mar-21Sep-21
5.78%
5.54%
5.60%
5.74%
1.67%
1.57%
2.66%
2.39%
1H211H202H202H21
Revenue / Avg RWA
Return on Avg RWA
3
FY20FY21
9,2069,295
FY20FY21
3,7963,801
FY20FY21
1,647(426)
FY20FY21
2,6344,141
61
1,069
1,597
1,389
68
47
13
10
621
31
90
ProvisionsOther
Operating
Income
ExpensesProvisions
-235
2H21 Cash
Profit
(ex L/N)
VolumeTaxTax1H21 Cash
Profit (ex
L/N)
Other
Operating
Income
ExpensesMarginsVolume2H20 Cash
Profit
(ex L/N)
-231
-23
-14
-57
Margins
AUSTRALIA RETAIL & COMMERCIAL -RETAIL
BALANCE SHEET CONTRIBUTION
CASH PROFIT DRIVERS –RETAIL
$m
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
1.Sum of parts in the chart may not add to the total due to rounding
2.Credit Cards & Personal Loans
3.Includes Home Loans offset accounts
61
Sep-21 $b
TOTAL RETAILFY21 v FY202H21 v 1H21
Income+3%0%
Expenses+2%+5%
Profit before provisions+4%-3%
Cash Net Profit after tax+39%-13%
Net Loans & Advances+1%-1%
Customer Deposits+6%+5%
Total Customers+78k+39k
Net Interest Income: +115
Net Interest Income: -37
Net Loans & Advances
Commercial &
Private Bank
57
284
111
Retail141
Customer Deposits
1
341
253
Income driversFY21 v FY202H21 v 1H21
Net Interest+3%-1%
Other Operating+2%+9%
NLA driversFY21 v FY202H21 v 1H21
Home loans+1%-1%
CC& PL
2
-11%-11%
Deposit driversFY21 v FY202H21 v 1H21
Term Deposits-32%-18%
Transact/Savings
3
+14%+9%
AUSTRALIA RETAIL & COMMERCIAL -RETAIL
LENDING COMPOSITIONDEPOSIT COMPOSITION
MARKET SHARE
1
MONTHLY DEPOSIT TREND
$b$b
%
$b
LOANS & DEPOSITS
1.Source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS)
62
Mar-20Mar-19
16
14
27
31
27
45
135
29
26
49
63
Sep-19
53
16
15
19
33
123
24
57
Sep-20
21
134
58
Mar-21
23
Sep-21
39
20
36
117
121
141
28
+5%
SavingsTerm DepositsOffsetTransact
7
10
279
269
Mar-19
9
265
Sep-19
8
264
Mar-20
7
275
Sep-20
282
Mar-21
6
278
274
281
Sep-21
284
272
288
-1%
14.6
18.1
12.5
14.3
18.2
12.5
14.0
18.1
12.6
14.5
18.2
12.5
14.4
18.1
12.5
13.9
18.4
12.5
Housing LendingCredit CardsHousehold Deposits
Mar-19Sep-19Sep-20Mar-21Mar-20Aug-21
Home LoansCards, Personal Loans & Other
135
130
115
120
145
125
140
Sep-
19
Mar-
20
Sep-
20
Mar-
21
Sep-
21
AUSTRALIA RETAIL & COMMERCIAL -RETAIL
HOME LOANS FLOWSHOME LOANS GROWTH
2
CREDIT CARDS GROWTH
2
GROSS LOANS & ADVANCES
1
($b)
% 3-MONTH ANNUALISED
% 3-MONTH ANNUALISED
HOME LOANS AND CREDIT CARDS TRENDS
1.Including Non Performing Loans
2.Source: APRA Monthly Authorised Deposit-taking Institution Statistics (MADIS)
63
-5
0
5
10
15
Jun-
20
Aug-
21
Jun-
19
Sep-
19
Dec-
19
Mar-
20
Sep-
20
Dec-
20
Mar-
21
Jun-
21
ANZAPRA System
-60.0
-40.0
-20.0
0.0
20.0
Dec-
20
Sep-
19
Dec-
19
Jun-
19
Mar-
20
Jun-
20
Mar-
21
Sep-
20
Jun-
21
Aug-
21
APRA SystemANZ
28
28
24
26
26
24
21
16
13
17
19
23
25
3
8
2
2
8
8
8
13
6
7
7
8
-27
7
8
8
-27
-25
-24
7
7
7
-33
-26
-26
-26
-27
-27
-26
-28
-30
2
1H162H162H17
-1
-3
1H17
2
2H201H18
0
2H18
6
-1
1H19
-1
2H15
1
1H201H21
-2
2H21
13
12
4
9
9
7
1
-4
-1
11
-3
2H19
New SalesRedraw & interestNet OFI refinanceRepay / Other
210
599
556
121
13
564
30
17
17
Margins
-146
MarginsVolumeExpensesOther
Operating
Income
ProvisionsTax2H21 Cash
Profit (ex
L/N)
1H21 Cash
Profit (ex
L/N)
ProvisionsExpensesVolume
-101
Other
Operating
Income
0
Tax2H20 Cash
Profit (ex
L/N)
-6
1
-164
AUSTRALIA RETAIL & COMMERCIAL –COMMERCIAL & PRIVATE BANK
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
64
BALANCE SHEET CONTRIBUTION
CASH PROFIT DRIVERS –COMMERCIAL & PRIVATE BANK
Net Interest Income: -25
Net Interest Income: +47
141
284
57
341
Net Loans & Advances
111
Retail
Customer Deposits
1
Commercial &
Private Bank
253
TOTAL COMMERCIAL & PBFY21 v FY202H21 v 1H21
Income-4%+3%
Expenses-3%+1%
Profit before provisions-4%+6%
Cash Net Profit after tax+140%-7%
Net Loans & Advances-1%+1%
Customer Deposits+10%+4%
Total Customers+13k+6k
Income driversFY21 v FY202H21 v 1H21
Net Interest-4%+4%
Other Operating0%0%
NLA drivers
2
FY21 v FY202H21 v 1H21
PB&A+4%+3%
BB-1%+1%
SBB-2%-2%
Deposit driversFY21 v FY202H21 v 1H21
Term Deposits-20%-17%
Transact/Savings+20%+10%
1.Sum of parts in the chart may not add to the total due to rounding
2.PB&A: Private Banking & Advice; BB: Business Banking; SBB: Small Business Banking
Sep-21 $b
$m
AUSTRALIA RETAIL & COMMERCIAL –COMMERCIAL & PRIVATE BANK
LENDING COMPOSITIONDEPOSIT COMPOSITION
BUSINESS BANKINGSMALL BUSINESS BANKING
$b
$b
$b
$b
LOANS & DEPOSITS
65
30
42
Mar-19Sep-19
28
44
17
111
26
46
Sep-20Mar-20
22
25
26
25
107
57
Mar-21
28
21
62
Sep-21
53
14
15
86
87
90
101
+4%
SavingsTerm DepositsTransact
41
41
42
42
41
42
14
14
13
12
12
12
3
Mar-20Mar-21Mar-19
3
57
Sep-19Sep-20
3
3
3
3
Sep-21
58
58
58
58
57
+1%
Small Business BankingBusiness BankingPrivate Bank & Advice
41
41
42
42
41
42
20
20
21
24
24
24
Mar-20Mar-19Sep-19Mar-21Sep-20Sep-21
Net Loans & AdvancesCustomer Deposits
14
14
13
12
12
12
41
42
44
50
55
58
Sep-21Mar-19Sep-19Mar-20Sep-20Mar-21
Net Loans & AdvancesCustomer Deposits
AUSTRALIA COMMERCIAL & PRIVATE BANK
DIVERSIFIED PORTFOLIO –GEOGRAPHICAL VIEWSECURITY PROFILE
DIVERSIFIED PORTFOLIO –INDUSTRY VIEWRISK WEIGHT INTENSITY
SEP-21 % OF EXPOSURE AT DEFAULT (EAD)
1
% OF EXPOSURE AT DEFAULT (EAD)
2
SEP-21 % OF EXPOSURE AT DEFAULT (EAD)
$b
BOOK COMPOSITION & RISK WEIGHT INTENSITY
1.States based on primary postcode. ‘Other’ refers to exposures not reported against a specific state. Some postcodes occur acrosstwo states
2.Fully Secured on a market value basis. Other includes loans secured by cash or via sovereign backing
66
73%
75%
77%
14%
14%
13%
6%
7%
Sep-19
6%
5%
Sep-20
5%
5%
Sep-21
Fully SecuredPartially SecuredOtherUnsecured
65.2%
64.2%
64.3%
63.3%
61.1%
58.8%
Mar-19Sep-20Sep-19
72
Sep-21
52
Mar-20
52
72
Mar-21
7171
54
54
72
71
55
52
Total CRWA/EADEADTotal RWA
27%
26%
14%
11%
8%
15%
NSW/ACT
VIC/TAS
SA/NT
QLD
WA
Other
25%
20%
9%
8%
5%
6%
28%
Comm. Property & Construction
Other Industries
Agri., Forestry & Fishing
Accom. Cafes & Restaurants
Retail Trade
Other Property & Bus. Services
Health & Community Services
NEW ZEALAND DIVISION
67
FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
Balance SheetIncomeExpenses / FTECredit Quality / RWAsProfit and Returns
NLAs
1
(NZDb) & NIMNII/OOI
2
Contribution (NZDm)Expenses (NZDm)Total Provision Charge (NZDm)Cash Profit (NZDm)
Customer Deposits (NZDb)Business Contribution
3
(NZDm)FTERisk Weighted Assets EOP (NZDb)Return
1H20
1,414
266
1,490
242
1,355
2H20
241
1H21
1,680
1,574
245
2H21
1,597
1,731
1,819
685
665
657
734
2H201H201H212H21
134
116
59
2H21
33
-6
2H201H20
-7
-57
1H21
-11
167
175
-63
-18
IPCP
595
545
819
793
2H201H201H212H21
69
71
71
75
Sep-20Mar-20Mar-21Sep-21
6,801
6,679
6,691
7,060
Mar-20Sep-20Mar-21Sep-21
4.92%
4.56%
4.88%
4.98%
1.75%
1.56%
2.31%
2.17%
1H211H202H212H20
Revenue / Avg RWA
Return on Avg RWA
4
125
126
131
135
2.27%
2.15%
2.32%
2.35%
Sep-21Mar-20Sep-20Mar-21
NIM%NLAsNIIOOI
569
2H20
8
1,188
1,819
1,680
484
1H20
1
1,127
469
1,252
1,220
508
3
1H21
-2
2H21
1,597
1,731
PersonalBusinessOther
18
19
2121
44
41
36
34
32
38
45
47
Mar-21
102
98
Mar-20Sep-20Sep-21
94
102
TransactSavings
Term Deposit
1.NLAs: Net Loans & Advances
2.NII: Net Interest Income; OOI: Other Operating Income
3.During the year ended 30 September 2021, the New Zealand Division was reorganised from Retail and Commercial to Personal and Business to better meet the needs of our customers. Comparative amounts have not
been restated as the impact is not considered material
4.Cash profit divided by average Risk Weighted Assets
FY20FY21
3,2773,550
FY20FY21
1,3501,391
FY20FY21
342-81
FY20FY21
1,1401,612
NEW ZEALAND DIVISION
BALANCE SHEET CONTRIBUTION
CASH PROFIT DRIVERS –NZ DIVISION
NZDm
CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
68
Sep-21 NZDb
NZ DIVISIONFY21 v FY202H21 v 1H21
Income+8%+5%
Expenses+3%+12%
Profit before provisions+12%+1%
Cash Net Profit after tax+41%-3%
Net Loans & Advances+7%+3%
Customer Deposits+4%+1%
Net Interest Income: +135
Net Interest Income: +84
96
78
39
24
Net Loans & AdvancesCustomer Deposits
102
Business
Personal
135
Income driversFY21 v FY202H21 v 1H21
Net Interest+11%+6%
Other Operating-4%+2%
NLA driversFY21 v FY202H21 v 1H21
Home loans+10%+4%
Business loans
1
-2%0%
Deposit driversFY21 v FY202H21 v 1H21
Term Deposits-19%-8%
Transact/Savings+21%+6%
545
819
793
43
92
8
238
60
24
4
8
ExpensesProvisionsExpenses2H21 Cash
Profit (ex
L/N)
Margin2H20 Cash
Profit (ex
L/N)
TaxVolumeOther
Operating
Income
Provisions
-77
Tax1H21 Cash
Profit (ex
L/N)
VolumeMargin
-106
Other
Operating
Income
-1
-45
1.Business excludes business loans secured by residential properties
NEW ZEALAND DIVISION
69
BALANCE SHEET
1.Housing includes business loans secured by residential properties
2.Business excludes business loans secured by residential properties, 1H20 includes UDC
3.Source: RBNZ, market share at NZ Geography level, 2H21 data as at August 2021
HOUSING
1
BUSINESS
2
AGRI
ANZ PERFORMANCE (NZDb)
ANZ PERFORMANCE (NZDb)
ANZ PERFORMANCE (NZDb)
RELATIVE TO SYSTEM GROWTH
3
RELATIVE TO SYSTEM GROWTH
3
RELATIVE TO SYSTEM GROWTH
3
0
20
40
60
80
100
Mar-20Sep-20
89.5
Sep-21Mar-21
98.8
95.4
87.6
Owner OccupiedRIL
0
5
10
15
20
25
30
17.9
Sep-21Mar-20Sep-20Mar-21
20.7
17.6
18.1
Other lendingCommercial Property
0
5
10
15
20
25
30
17.2
16.9
Sep-21Mar-20Sep-20
16.1
Mar-21
16.5
DairySheep, cattle and grainOther
30.6%
30.7%
Sep-21Mar-20
30.5%
Sep-20Mar-21
30.4%
3.5%
3.7%
3.1%
3.9%
2.4%
6.4%
6.8%
3.1%
System growthMarket shareANZ growth
22.5%
Mar-21
24.8%
22.7%
Mar-20
23.5%
Sep-20Sep-21
4.1%
0.9%
-6.7%
-11.7%
-0.4%
-3.8%
2.3%
1.6%
Mar-21Sep-20
27.7%
-1.2%
26.9%
Mar-20
27.2%
26.2%
Sep-21
-2.4%
-1.0%
-0.6%
-2.4%
-2.0%-2.1%
0.4%
AUSTRALIA & NEW ZEALAND 90+ DAYS PAST DUE (DPD)
CONSUMER PORTFOLIO
1,2,3
COMMERCIAL PORTFOLIO
4,5
% of Total Portfolio Balances
70
1.Includes Non Performing Loans
2.ANZ delinquencies are calculated on a missed payment basis for amortising and Interest Only loans
3.Australia Home Loans 90+ between Mar-20 and Jun-20 excludes eligible Home Loans accounts that had requested COVID-19 assistance but due to delays in processing had not had the loan repayment deferral applied to the account
4.Australia Commercial includes Business Banking andSmall Business Banking
5.NZ Business is inclusive of Agri (previously shown as a separate series), and excludes UDC
3.5
0.0
0.5
2.5
2.0
1.0
1.5
3.0
4.0
4.5
5.0
Sep-
19
Mar-
17
Sep-
17
Mar-
18
Sep-
18
Mar-
19
Mar-
20
Sep-
20
Mar-
21
Sep-
21
Australia Personal Loans
Australia Consumer Cards
Australia Home Loans
NZ Home Loans
AUSTRALIA COMMERCIAL 90+ Days Past Due
1
as a % of Total Portfolio Balances
2.5
2.0
4.0
1.0
1.5
3.0
4.5
3.5
5.0
Mar-
17
Sep-
17
Mar-
21
Mar-
18
Sep-
18
Mar-
19
Sep-
19
Mar-
20
Sep-
20
Sep-
21
NZ BUSINESS 90+ Days Past Due as a % of Total Portfolio Balances
0.2
0.0
0.1
Sep-
17
Mar-
17
Sep-
18
Mar-
18
Mar-
19
Sep-
19
Mar-
20
Sep-
20
Mar-
21
Sep-
21
INSTITUTIONAL DIGITAL PLATFORMS
71
PROVIDES SCALABLE OPERATING LEVERAGE, CAPITAL LIGHT
1.Indexed to FY19 (at 100)
2.Based on number of payments
PAYMENTS
1
Indexed data
2
RECEIVABLES DATA
1
Indexed data
NPP AGENCY PAYMENTS
1
Indexed data
2
PLATFORM CASH MGT ACCOUNTS
1
Indexed data
•Payments made by customers to their
suppliers and employees through our
digital channels
•Covers payments initiated viaWeb &
Mobile, direct integration with ANZ or via
agency agreements whereby ANZ clears
payments on behalf of other banks
•Used by customers to automatically
reconcile incoming payments, allowing
them to receive funds and have them
ready to use as quickly as possible
•Improves customer cash flow efficiency,
Liquidity and Treasury management
•A service whereby ANZ clears and settles
real-time payments for customers of
Appointer banks on their behalf
•Powering other banks’ customers with
real-time payments
•Deposit management for entities holding
funds on behalf of their clients
•Supporting CX in provision of client money
accounts to activate services/transactions
100
105
130
FY19FY20FY21
+5%
+24%
100
467
988
FY19FY20FY21
+367%
+112%
100
220
530
FY21FY19FY20
+120%
+141%
100
124
137
FY19FY20FY21
+24%
+10%
PLATFORM INITIATIVES ARE ENABLING ADDITIONAL REVENUE OPPORTUNITIES WITHIN ANZ PAYMENTS & CASH MANAGEMENT
DIGITAL SELF SERVICETRADE STPAPI CALLSINCIDENTS PER MILLION PAYMENTS
•In Q4, eStatement and International
Payments Tracking capability saved
customers 6.5k hours of time they would
otherwise spend enquiring via email or
phone. Also enabled online chat within
channel and seamless authentication of
online users when they needed to call us
•Over 99% of Trade payments processed
without the need for human intervention
•Modern integration, delivering real-time
event-driven analytics for improved
decision-making, and fast payments for
improved cash flow efficiency
•0.02 incidents per million payments for
FY21 (down from 0.04 in FY20),
continuing to deliver quality and resilient
payment platforms for customers despite
growing volumes
INSTITUTIONAL
FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
72
1.NLAs: Net Loans & Advances
2.TB: Transaction Banking; CF: Corporate Finance
3.Cash profit divided by average Risk Weighted Assets
Balance SheetIncomeExpenses / FTECredit Quality / RWAsProfit and Returns
NLAs
1
($b) & NIMProduct Composition
2
($m)Expenses ($m)Total Provision Charge ($m)Cash Profit ($m)
Customer Deposits ($b)Income Contribution ($m)FTERisk Weighted Assets ($b)Return
199
158
147
158
2H21
1.85%
1.81%
1H20
1.75%
2H201H21
1.86%
NLAsNIM ex Markets
930
811
707
648
647
786
829
828
857
1,012
13
1,164
29
1H212H201H20
18
1,508
14
2H21
2,790
3,057
2,507
2,448
MarketsTBOtherCF
1,278
1,207
1,188
1,166
2H211H202H201H21
15
272
641
2H212H20
369
4
1H20
49
1H21
55
-110
-49
53
-55
-34
IPCP
618
1,305
982
943
2H211H202H201H21
147
112
114
125
92
90
90
93
19
22
Sep-21Sep-20Mar-20
21
20
Mar-21
259
223224
240
International
NZ
Aust & PNG
1,626
1,559
1,518
1,586
1,164
1,498
989
862
2H21
2,507
1H202H201H21
2,790
3,057
2,448
Net Interest Income
Other Operating Income
5,350
5,291
5,215
5,332
Mar-20Sep-20Mar-21Sep-21
207
187
170
172
185
197
179
170
Sep-20Mar-20Mar-21Sep-21
RWA AVG
RWA EOP
3.02%
3.11%
2.81%
2.86%
0.67%
1.33%
1.10%1.10%
1H202H201H212H21
Revenue/Avg RWA
Return on Avg RWA
3
INSTITUTIONAL
INSTITUTIONAL INCOME COMPOSITION
1
NET LOANS & ADVANCES
$m
$b
EXPOSURE AT DEFAULT
1,2
$b
INCOME & ASSET COMPOSITION: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
73
1.CF: Corporate Finance; Trade: Trade & Supply Chain; PCM: Payments & Cash Management
2.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis,net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
940
826
1,164
1,508
1,012
930
236
234
231
209
189
187
644
652
580
498
460
460
815
810
786
829
828
857
19
23
13
2H191H19
29
2H201H20
2,541
1H21
18
2,790
14
2H21
2,657
2,448
3,057
2,507
TradeMarketsCFOtherPCM
26
34
49
32
28
27
18
19
22
17
108
111
129
111
105
114
14
Sep-20Mar-19Sep-19Mar-20
165
14
Mar-21Sep-21
151
199
158
147
158
MarketsTransaction BankingCorporate Finance
207
220
274
226
228
44
48
169
176
200
186
175
186
7
6
6
Mar-20
41
6
Mar-19Sep-19
36
Sep-20
7
39
Mar-21
6
44
Sep-21
456
423
447
529
455
449
220
PCMMarketsTradeCF
INSTITUTIONAL
NIM EX MARKETS (NII/AIEA)RISK ADJUSTED NIM EX MARKETS
3
bps
bps
NIM
bps
NIM & RISK ADJUSTED RETURNS: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
74
1.Lending NIM represents Corporate Finance and Trade & Supply Chain
2.Deposit NIM represents Payments & Cash Management (PCM)
3.Institutional ex-Markets Net Interest Income divided by average Credit Risk Weighted Assets
2
0
3
1H21Asset
Margin
Funding MixInterest
Rate impact
Deposit
Margins
Earnings
on capital
+ Sub
debt & FX
2H21
185
-2
-2
186
+1bp
207
190
197
203
2H201H201H212H21
Institutional
247
225
222
230
2H211H202H201H21
Aus & PNG
239
224
232
267
1H202H212H201H21
NZ
151
136
149
147
1H211H202H202H21
International
67
46
41
39
1H202H201H212H21
Deposit NIM
2
123
140
141
1H202H201H212H21
127
Lending NIM
1
INSTITUTIONAL
CREDIT RWA (AVG)
1
CREDIT RWA MOVEMENT –FROM MAR 21 (EOP)
CREDIT RWA INTENSITY (EOP)CREDIT RWA MOVEMENT -FROM SEP 19 (EOP)
$b
$b
$b
$b
CREDIT RWA: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
1.Trade: Trade & Supply Chain; CF: Corporate Finance
75
33
35
41
42
35
30
18
18
1917
18
89
91
96
104
95
90
1H20
4
2
1H19
4
142
4
2H192H20
15
4
1H21
4
2H21
142
147
159
167
148
MarketsTradeCFOther
143
156
178
157
142
144
Mar-19
51.5%
51.2%
Sep-20Mar-20Sep-19
51.3%
52.0%
50.8%
Mar-21
48.5%
Sep-21
Credit RWA/EAD (ex Markets)CRWA
3
2
Mar-21Risk MigrationFXVolume
0
DerivativesSep-21
144
142
-3
9
FXSep-19Volume
144
Risk MigrationDerivativesSep-21
156
-3
-9
-9
Volumes
increased by
~$2b in 2H21
INSTITUTIONAL
MARKETS INCOME COMPOSITIONMARKETS AVG VALUE AT RISK (99% VAR)
$m
MARKETS INCOME COMPOSITION: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS
76
Commodities
Foreign ExchangeBalance SheetCredit and Capital Markets
RatesDerivative val/n adj.
326
285
437
274
279
263
241
181
289
336
128
123
87
88
103
248
139
60
72
51
43
256
190
238
468
402
445
48
131
40
24
1H19
-10
1H20
21
35
2H191H212H20
32
7
2H21
940
826
1,164
1,508
1,012
930
24
26
31
67
88
82
8
8
8
19
21
18
20
20
100
60
40
30
80
10
40
1H192H191H202H201H212H21
Non-traded (LHS)Traded (RHS)
ProductDrivers of Franchise Income
Foreign Exchange
Customer FXhedging demand, currency volatility, currency bid-offer
spreads
Rates
Customer interest rate and cross-currency hedgingdemand, Repo
demand and spreads, Government issuance volumes
Credit andCapital
Markets
Credit:Bond turnover, bid-offer spreads, credit spreads
Capital Markets: Customer bond issuance
CommoditiesCustomerhedging demand, commodity price spreads
Non-traded VaR
increased in FY20 with
COVID-related volatility
and then higher HQLA,
before flattening in 2H21
Traded VaR increased with
COVID-related volatility
before reducing in 2H21 on
lower customer activity
$m
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
TREASURY
REGULATORY CAPITAL
CAPITAL UPDATEAPRA LEVEL 2 COMMON EQUITY TIER 1 RATIO (CET1)
●Level 2 CET1 ratio of 12.3% and 18.3% on an Internationally Comparable
basis
1
, which is well in excess of ‘Unquestionably Strong’ benchmark
2
oTotal credit impacts of +14bps primarily from benefits of negative CRWA
migration (reduction in RWA) in Australia Retail & Commercial and NZ
Divisions
oHigher business RWA movement in part driven by IRRBB. This reflects
lower embedded gains from maturing capital & replicating portfolio
investments and higher interest rates, as well as management actions
such as the investment of replicating deposit growth
oCompleted ~$0.7b of $1.5b announced on-market share buy-back
●APRA Level 1 CET1 ratio of 12.0%. Level 1 primarily comprises ANZ BGL
(the Parent including offshore branches) but excludes offshore banking
subsidiaries
3
●Leverage ratio of 5.5% (or 6.1% on an Internationally Comparable basis)
Dividend
●Final Dividend of 72 cents fully franked, representing 61% DPOR on a 2H21
Cash continuing ex Large / Notable basis in line with ANZ long term
sustainable DPOR
●The DRP to be neutralisedby acquiring these shares on market
Regulatory Update
●Industry (via ABA) feedback to APRA on their capital reform proposals
provided. Final impacts to be determined. Further calibration of the
proposals is expected
%
78
1. Internationally Comparable methodology aligns with APRA’s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I
capital floor 2. Based on APRA information paper “Strengthening banking system resilience –establishing unquestionably strongcapital ratios” released in July 2017. 3. Refer to ANZ Basel III APS330 Pillar 3 disclosures 4. Excludes
Large / Notable items 5. Mainly comprises the movement in retained earnings in deconsolidated entities, other equity investments and capitalisedexpenses 6. A total of ~$709m of the announced $1.5b share buy-back executed (of
which $55m settled after 30 September 2021) 7. Other impacts include movements in non-cash earnings, net foreign currency translation, deferred tax asset deduction and movement in reserves 8. On 17 June 2021 a regulatory
event occurred on the NZD500m Capital Notes, and consequently can be redeemed subject to regulatory approvals. The impact has been removed from the pro forma CET1
12.44
12.34
0.80
0.01
0.02
0.11
-0.13
Risk
Migration
Business
RWA
Movement
-0.48
Sep-21
8
Mar-21Cash
Profit
(ex
CIC)
4
Capital
Deduc-
tions
5
CIC
(net of
tax)
Net DTA
on CIC
Interim
Dividend
Share
Buy-
Backs
6
-0.17
Large/
Notable
items
Other
7
-0.17
-0.06
-0.03
Total impact of +14bps
REGULATORY CAPITAL
79
APRA LEVEL 1 CET1 RATIO
%
APRA Level 2 vs Level 1 CET1 Ratiosbps
Level2 HoHmvmt(10)
Level1 HoHmvmt(22)
Level2 vs Level 1 mvmt12
Level 1 CET1 ratio decline is larger relative to Level 2 –this was
primarily driven by impacts from FX movements and other minor
items.
12.23
12.01
0.84
0.01
0.02
0.07
Capital
Deduc-
tions
2
Business
RWA
Movement
-0.19
-0.52
Mar-21Cash
Profit
(ex
CIC)
1
CIC
(net of
tax)
Net DTA
on CIC
Risk
Migration
Interim
Dividend
Share
Buy-
Backs
3
Large
/Notable
Items
Other
4
Sep-21
-0.08
-0.10
-0.03
-0.24
Total impact of +10bps
Level 2:
12.44
Level 2:
12.34
1. Excludes Large / Notable items 2. Mainly comprises the movement in retained earnings in deconsolidated entities and capitalisedexpenses 3. A total of ~$709m of the announced $1.5b share buy-back executed (of which $55m
settled after 30 September 2021) 4. Other impacts include movements in net imposts, non-cash earnings, net foreign currency translation, deferred tax asset deduction and movement in reserves
Level 1 RWA$b
Mar-21375
Sep-21379
INTERNATIONALLY COMPARABLE
1
REGULATORY CAPITAL POSITION
80
1. Internationally Comparable methodology aligns with APRA’s information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of
the Basel I capital floor
APRA Level 2CET1 Ratio –30September 202112.3%
Corporate
undrawn EAD
and unsecured
LGD adjustments
Australian ADI unsecured corporate lending LGDs and undrawn
CCFs exceed those applied in many jurisdictions
1.8%
Equity
Investments &
DTA
APRA requires 100% deduction from CET1 vs. Basel framework
which allows concessional threshold prior to deduction
0.9%
Mortgages
APRA requires use of 20% mortgage LGD floor vs. 10% under
Basel framework. Additionally, APRA also requires a higher
correlation factor vs 15% under Basel framework
1.5%
Specialised
Lending
APRA requires supervisory slotting approach which results in
more conservative risk weights than under Basel framework
0.9%
IRRBB RWA
APRA includes in Pillar 1 RWA. This is not required under the
Basel framework
0.6%
Other
Includes impact of deductions from CET1 for capitalised
expenses and deferred fee income required by APRA, currency
conversion threshold and other retail standardised exposures
0.3%
Basel III InternationallyComparable CET1 Ratio18.3%
Basel III Internationally Comparable Tier 1 Ratio20.9%
Basel III Internationally Comparable Total Capital Ratio26.3%
Level 2 CET1 Ratio
%
11.3
12.4
12.3
16.7
18.1
18.3
Sep-20Mar-21Sep-21
APRA Level 2Internationally Comparable
1
CET1 AND LEVERAGE IN A GLOBAL CONTEXT
CET1 RATIOS
1,2
1. CET1 and leverage ratios are based on ANZ estimated adjustment for accrued expected future dividends, COVID transitional arrangements for expected credit loss and leverage exposure concessional adjustments where details
have been externally disclosed. ANZ ratios are on an Internationally Comparable basis. All data sourced from company reports andANZ estimates based on last reported half/full year results assuming Basel III capital reforms fully
implemented 2. Based on Group 1 banks as identified by the BIS (internationally active banks with Tier 1 capital of more than €3 billion) 3. Includes adjustments for transitional AT1 where applicable. Exclude US banks as leverage
ratio exposures are based on US GAAP accounting and therefore incomparable with other jurisdictions which are based on IFRS
Leverage
ANZ compares well on
leverage, however
international comparisons
are more difficult to make
given the favourable
treatment of derivatives
under US GAAP
0%5%10%15%20%25%
BMO
SEB
ANZ
Svenska Handelsbanken
Credit Agricole Group
Nordea
Swedbank
Natwest
ABN Amro
Danske Bank
Morgan Stanley
Rabobank
Barclays
ING Group
OCBC
HSBC
Credit Suisse
UniCredit
UOB
Groupe BPCE
Intesa Sanpaolo
UBS
DBS
Erste Bank
BBVA
Standard Chartered
Societe Generale
TD
Raiffeisen Bank International (RBI)
JP Morgan
BNP Paribas
Deutsche Bank
Commerzbank
Citibank
Goldman Sachs
Bank of America
Wells Fargo
RBC
Scotia
Santander
State Street
0%1%2%3%4%5%6%7%8%9%
Nordea
Erste Bank
TD
Svenska Handelsbanken
OCBC
BBVA
UOB
Raiffeisen Bank International (RBI)
Rabobank
Intesa Sanpaolo
DBS
ANZ
Swedbank
Credit Suisse
UBS
BNP Paribas
ING Group
HSBC
Credit Agricole Group
UniCredit
Santander
ABN Amro
SEB
Standard Chartered
Danske Bank
Natwest
Groupe BPCE
Commerzbank
Deutsche Bank
Societe Generale
BMO
Barclays
RBC
Scotia
CET1
●Regulators globally have
provided specific COVID related
transitional arrangements, ANZ
has utilised public CET1 levels
and adjusted for Capital
treatment of ECL provisioning
where available
●No adjustments have been made
for RWA concessions related to
COVID(i.e. mortgage deferrals)
LEVERAGE RATIOS
1,2,3
81
BALANCE SHEET STRUCTURE
1
BALANCE SHEET COMPOSITION
82
Corporate, PSE & Operational
Deposits
25%
Assets
FI Lending
4%
Liquid and Other Assets
35%
Mortgages
40%
Non-FI Lending
21%
Short Term Wholesale Debt &
Other Funding
2
23%
Retail & SME Deposits
33%
Long Term Wholesale Debt
3
10%
Capital Incl. Hybrids & T2
9%
Funding
NSFR COMPOSITION
Sep-21
%
463
Non-Financial Corporates
Retail/SME
Capital
Residential
Mortgages
7,8
<35%
Wholesale Funding
3
& Other
4
Available
Stable Funding
Other
Loans
6
Liquids
and Other Assets
5
Required
Stable Funding
573
1. NSFR Required Stable Funding (RSF) and Available Stable Funding (ASF) categories and all figures shown are on a Level 2 basisper APRA prudential standard APS210 2. Includes FI/Bank deposits, Repo funding and other short
dated liabilities 3.Excludes drawn TFF of $8b for FY21 4. ‘Other’ includes Sovereign, and non-operational FI Deposits 5. ‘Other Assets’ include Off Balance Sheet, Derivatives, Fixed Assets and Other Assets 6. All lending >35%
Risk weight 7. Includes NSFR impact of self-securitised assets backing the Committed Liquidity Facility (CLF) 8. <35% Risk weighting as per APRA Prudential Standard 112 Capital Adequacy: Standardised Approach to Credit Risk
9. Net of other ASF and other RSF, and Liquids 10. CLF is $10.7b as at 30 September 2021. Consistent with APRA’s requirement, ANZ’s CLF will decrease to zero through equal reductions on 1 January, 30 April, 31 August and
31 December 2022 11. Reduction in assets (supporting the CLF and TFF) that receive concessional 10% RSF. Includes drawn TFFof$8b for FY21
NSFR MOVEMENT
123.8123.8
5.5
0.6
0.8
1.0
Retail/
Corp/
Operational
Deposits
Sep-20LoansCLF and
TFF
11
-2.2
Sep-21Capital &
Hybrids
LT Debt
3
FI/Bank
& Repo
Other
9
-1.9
-3.8
Pro forma NSFR is ~119% once
RSF benefit associated with TFF
and CLF
10
is removed
Sep-21
Sep-21
$b
LIQUIDITY COVERAGE RATIO (LCR) SUMMARY
1
MOVEMENT IN AVERAGE LCR SURPLUS
3
LCR COMPOSITION (AVERAGE)
$b
FY21 $b
83
1. All figures shown on a Level 2 basis as per APRA Prudential Standard APS210 2. Comprised of assets qualifying as collateral for the Committed Liquidity Facility (CLF), excluding internal RMBS, up to approved facility limit; and
any assets contained in the RBNZ’s liquidity policy –Annex: Liquidity Assets –Prudential Supervision Department Document BS13A3. LCR surplus excludes surplus liquids considered non-transferrable across the Group.
At 30 September 2021, this included $14b of surplus liquids held in NZ. 4. RBA CLF decreased by $25.0b from 1 January 2021 to $10.7b. Consistent with APRA’s requirement, ANZ’s CLF will decrease to zero through equal
reductions on 1 January, 30 April, 31 August and 31 December 2022. 5. ‘Other’ includes off-balance sheet and cash inflows
165
Wholesale funding
Customer deposits
& other
3
Net Cash Outflow
HQLA2
Internal RMBS
Other ALA
2
Liquid Assets
HQLA1
226
FY20
AvgLCR 139%
FY21
AvgLCR 137%
LCR SurplusLCR Surplus
60
61
34
Liquid
Assets
Wholesale
Funding
Corp/FI/
PSE
FY20FY21Other
5
CLF
4
-5
Retail/SME
-22
-3
-2
-1
TERM WHOLESALE FUNDING PORTFOLIO
1
ISSUANCEMATURITIES
PORTFOLIO
PORTFOLIO BY CURRENCY
$b
84
1. All figures based on historical FX and exclude AT1. Includes transactions with an original call or maturity date greater than12 months as at the respective reporting date. Tier 2 maturity profile is based on the next callable date
FY20FY18FY19
11
22
FY15
32
FY16FY17FY21FY22FY23FY24FY25FY26FY27FY28+
19
22
24
25
17
21
30
27
8
3
8
49%
25%
23%
3%
Domestic (AUD, NZD)
Asia (JPY, HKD, SGD, CNY)
UK & Europe (£, €, CHF, NOK)
North America (USD, CAD)
RMBSSenior UnsecuredCovered BondsTier 2TFFNZ FLP / TLF
•ANZ’s term funding requirements depend
on market conditions, balance sheet needs
and exchange rates, amongst other factors
•ANZ depositgrowth outpaced lending
growth in FY21
•ANZ’s cumulative CLF reduction ($10.7b)
and TFF maturities ($20b) over next 3
years is very manageable
•Subject to customer balance sheet
movement, ANZ may have modest senior
debt term funding requirements in FY22
Domestic portfolio
has increased from
33% in FY18
50%
13%
16%
19%
1%
1%
Senior Unsecured
TFF
RMBS
Covered Bonds
Tier 2NZ FLP / TLF
Unsecured issuance
has decreased from
78% in FY18
ANZ’S TIER 2 CAPITAL PROFILE
1
ANZ’STIER 2 CAPITAL REQUIREMENT TO PROGRESSIVELY
INCREASE TO MEET TLAC REQUIREMENT
TIER 2 CAPITAL
FUNDING PROFILECAPITAL AMORTISATION PROFILE
3
Notional amount
Notional amount, $m
$m
85
1. Profile is AUD equivalent based on historical FX, excluding Perpetual Floating rate notes issued 30 October 1986 (which losesBasel III transitional relief in 2021) and ANZ NZ $600m floating rate notes issuedSeptember 2021
Comprises Tier 2 capital in the form of Capital Securities only (i.e. does not include other Tier 2 capital such as eligibleGeneral reserve for impairment of financial assets)
2. Current RWAs $416b as at 30 September 2021
3.Amortisation profile is modelled based on scheduled first call date for callable structures and in line with APRA’s amortisationrequirements for bullet structures
By Format
By Currency
27%
73%
Bullet
Callable
45%
19%
18%
7%
6%
3%
2%
AUD Domestic
USD
SGD
AUD Offshore
EUR
JPY
GBP
674
131
2,937
3,437
5,637
225
2,849
FY22FY25FY27FY23FY24FY26FY31+FY28
0
FY27FY22FY26FY23FY24FY25FY28
2,444
FY31+
1,368
824
3,893
3,811
225
0
2,849
Bullet AmortisationCallable
•ANZ BGL issued $11.4b since July-2019 across AUD, EUR, GBP, and USD
•FY22 T2issuance expected to be ~$4b
•Remaining required Tier 2 capital net increase of ~$4b to ~$21b by January-
2024 (Based on 5% of current RWAs
2
)
•Planned issuance in multiple currencies in both callable and bullet format
•Increased T2 issuance expected to be offset by reduction in other senior
unsecured funding
•In addition to ANZ BGL T2 TLAC needs, ANZ NZ has modest T2 requirements
of 2% of ANZ NZ RWA by 2028. ANZ NZ issued an inaugural NZD $600m T2
under these rules in September-2021
•Well managed amortisation profile provides flexibility regarding issuance tenor
Scheduled Bullet and Call Date Profile
FY19 Ave: 2.08%
1H19 Ave: 2.21%2H19 Ave: 1.95%
FY20 Ave: 1.40%
1H20 Ave: 1.64%2H20 Ave: 1.20%
FY21 Ave: 0.88%
1H21 Ave: 0.92%2H21 Ave: 0.85%
CAPITAL
2
& REPLICATING DEPOSITS PORTFOLIO
%
86
1. Proxy for hedged investment rate
2. Includes other Non-Interest Bearing Assets & Liabilities
AUSTNZAPEA
Volume ($A)~94b~35b~9b
Volume Change(YoY)
~16b
increase
~6b
increase
~1b
decrease
Target DurationRolling 3 to 5 yearsVarious
Proportion Hedged~63%~90%Various
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
Jan
20
May
19
Mar
19
Mar
20
Sep
19
Jul
19
Nov
19
May
20
Jul
20
Sep
20
Nov
20
Jan
21
Mar
21
May
21
Jul
21
Sep
21
3mth BBSW (Monthly Avg)Portfolio Earnings Rate5 Year AUD Swap Rate
1
PORTFOLIO EARNINGS RATE (HISTORICAL)CAPITAL & REPLICATING DEPOSITS PORTFOLIO
(AUSTRALIA)
IMPACTS OF RATE MOVEMENTS
•The 5 Year AUD Swap Rateincreased ~50bps over FY21,
providing more attractive hedging (i.e. investment)
opportunities
•Since 1 October 2021, 5 year spot AUD Swap Rate has
increased further
Portfolio Earnings Rate is a
combination of term swap
rates (hedged component)
and 3mth BBSW (unhedged)
5 Year AUD Swap Rate
increased ~50bps over FY21
Since 1 October 2021,
5 year AUD Swap Rate
has increased further
CAPITAL FRAMEWORK
CURRENT REGULATORY PROPOSALS AND RECENT REVISED IMPLEMENTATION DATES
1
87
1. Timeline is based on calendar year and is largely based on APRA’s 2021 Policy Priorities: Interim Update (published September2021)
2. Only in relation to the 3% of RWA increase in Total Capital requirements announced in July 2019
First half CY2021Second half CY2021CY2022Implementation Date
RBNZ Capital Framework2028
Leverage RatioConsultationFinalise2023
Standardised Approach to Credit RiskConsultationFinalise2023
Internal Ratings-based Approach to
Credit Risk
ConsultationFinalise2023
Operational RiskFinalise2023
FundamentalReview of the Trading
Book (incl. Counterparty Credit Risk)
Consultation
2025
(2023 Finalisation)
Interest Rate Risk in the Banking BookFinalise2024
LossAbsorbing Capacity (LAC)
2
2024
Capital Treatment for Investments in
Subsidiaries (Level 1)
Finalise2022
Associations with Related Entities2022
Transition
Transition
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
RISK MANAGEMENT
RISK MANAGEMENT
TOTAL CREDIT IMPAIRMENT CHARGE
ANZ HISTORICAL LOSS RATES
1
(basis points)LONG RUN LOSS RATE (INTERNAL EXPECTED LOSS
2
)(%)
$m
LONG RUN PROVISIONS & LOSS RATES
1.IP Charge as a % of average Gross Loans and Advances (GLA)
2.IEL: Internal Expected Loss (IEL) is an internal estimate of the average annualisedloss likely to be incurred through a credit cycle
89
-900
-600
-300
0
300
600
900
1,200
1,500
1,800
1H111H101H191H091H082H092H142H112H082H101H122H121H132H131H141H151H172H151H162H162H171H182H182H212H191H202H201H21
Commercial IPConsumer IPInstitutional IPCP Charge / (Release)
0
50
100
150
200
250
Sep-
11
Sep-
90
Sep-
05
Sep-
93
Sep-
99
Sep-
21
Sep-
96
Sep-
02
Sep-
14
Sep-
08
Sep-
17
Sep-
20
IP Loss RateMedian Annual IP Loss Rate (excl. current period)
DivisionMar-16Sep-16Mar-17Sep-17Mar-18Sep-18Mar-19Sep-19Mar-20Sep-20Mar-21Sep-21
Aus. R&C
0.350.330.330.33
0.310.290.290.290.28
0.27
0.240.22
New
Zealand
0.250.260.260.22
0.210.190.190.180.19
0.16
0.150.13
Insti-
tutional
0.370.360.350.30
0.320.270.270.250.25
0.30
0.250.25
Pacific 1.471.791.601.691.951.781.601.401.30
1.46
1.742.15
Subtotal
0.340.330.330.30
0.300.270.270.260.26
0.26
0.230.22
Asia Retail
1.501.511.512.7500000000
Total
0.370.350.350.320.300.270.270.260.260.260.230.22
RISK MANAGEMENT
INDIVIDUAL PROVISION CHARGEINDIVIDUAL PROVISION CHARGE BY DIVISION
$m
$m
INDIVIDUAL PROVISION CHARGE
90
1.Annualisedloss rate as a % of Gross Loans and Advances (GLA)
229
495
153
136
116
122
93
158
93
175
79
103
922
826
969
812
612
594
532
592
807
500
376
266
-259
-274
-335
-394
-298
-373
-245
-352
-274
-280
-268
-300
2H18
626
343
1H191H181H162H172H161H172H19
187
1H202H201H212H21
430
892
1,047
787
554
380
398
395
69
NewIncreasedWritebacks & Recoveries
429
469
430
453
337
375
350
355
318
278
134
61
61
61
55
62
55
339
435
210
79
272
49
81
82
86
-52
3
28
2H20
34
3
43
1H17
35
2H171H162H21
-33
2H16
31
395
1H18
15
5
2H18
35
69
-12
7
1H19
40
0
187
2H19
554
1
398
1H20
6
-5
3
1H21
-10
15
892
1,047
787
430
626
343
380
Pacific / OtherAustralia R&CInstitutionalNew Zealand
Ratios1H162H161H172H171H182H181H192H191H202H201H212H21
IP loss rate (bps)
1
3136271915121213201262
Total loss rate (bps)
1
3236251614913135333-16-2
IP balance / Gross Impaired Assets43%41%43%48%50%43%42%40%42%36%33%35%
RISK MANAGEMENT
CP CHARGE
MOVEMENT IN CP BALANCE –BY DIVISION
CP BALANCE BY CATEGORY
$m
$m
COLLECTIVE PROVISION (CP) BALANCE & CHARGE
91
$m1H192H191H202H201H212H21
CP charge
1341,048669-678-145
Volume/Mix-28-51046-199-83
Change in Risk-40191744-112-41
Economicforecast & scenario weights99311,124-106-417-31
Additional overlays-185-936855010
5,008
4,195
18
OtherSep-20InstitutionalAustralia R&CFXNew ZealandSep-21
-621
-61
10
-159
Collective Provision Charge: -823
3,378
3,272
4,490
4,312
3,539
3,435
696
746
760
0.98%
0.94%
1.17%
1.39%
1.25%
1.22%
Mar-19
0
104
Mar-21Sep-19Sep-20
11
Mar-20Sep-21
3,378
3,376
4,501
5,008
4,285
4,195
Modelled ECLAdditional overlaysCP Coverage
1
1.CP as a % of Credit Risk Weighted Assets (CRWA)
RISK MANAGEMENT
CP BALANCE BY DIVISIONCP BALANCE BY PORTFOLIO
PROVISION BALANCE BY STAGE
$b
COLLECTIVE PROVISION (CP) BALANCE
92
30 Sep 2031 Mar 21
2.0
3.0
0.0
0.5
1.0
1.5
2.5
1.38
Stage 1
1.82
Stage 2Stage 3Stage 3
(IP/CP)
1.38
2.70
$bMar-19Sep-19Mar-20Sep-20Mar-21Sep-21
Australia R&C1.831.802.322.852.332.23
Institutional
1.131.171.591.511.361.35
New Zealand
0.370.370.540.570.510.53
Pacific
0.040.040.050.080.080.10
$bMar-19Sep-19Mar-20Sep-20Mar-21Sep-21
Corporate
1.591.622.222.302.132.09
Specialised
0.180.190.290.320.280.27
ResidentialMortgage
0.490.520.811.060.780.79
Retail (ex Mortgages)
1.050.971.101.251.040.96
Sovereign / Banks
0.070.080.080.080.06
0.09
Pacific / OtherIPAustralia R&CNew ZealandInstitutionalCP
2.0
0.0
1.0
0.5
1.5
2.5
3.0
Stage 2
1.24
Stage 1Stage 3Stage 3
(IP/CP)
1.56
2.29
1.24
%of Total31%46%23%%of Total31%45%24%
30 Sep 21
2.5
0.5
3.0
0.0
1.0
1.5
2.0
Stage 1Stage 2Stage 3Stage 3
(IP/CP)
1.55
2.21
1.121.12
%of Total32%45%23%
RISK MANAGEMENT
Gross loans and advancesCredit RWA
Exposure at Default
1
(ex Sovereign & Bank)
93
PORTFOLIO COMPOSITION AND COVERAGE RATIOS
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis,net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2.Individual Provision balance and Collective Provision balance
Coverage ratios%%%%
CP coverage0.661.220.390.52
Totalcoverage
2
0.771.430.450.61
$634b
4%
2%
2%
Sep-21
32%
58%
1%
3%
3%
7%
32%
53%
3%
Sep-21
$342b
$1,080b
31%
1%
23%
3%
38%
Sep-21
4%
43%
52%
6%
Sep-21
$794b
PORTFOLIO COMPOSITION
Expected credit loss
(Collective Provision balance)
Sep-21
1%
1%
19%
1%
23%
55%
$4b
Exposure at Default
1
SovereignBankResi. MortgageCorporateRetail (ex Mortgages)Other
EXPECTED CREDIT LOSS
94
ECONOMIC SCENARIOS –MODELLED OUTCOMES (COLLECTIVE PROVISION BALANCE SCENARIOS)
1
1.Illustration of the impact on ANZ’s modelled ECL. The Upside, Downside and Severe Scenarios are fixed economic scenarios which do not move with changes to the Base Case forecast
2.Subset of a range of economic indicators shown. Economic forecasts also undertaken for international markets
3.CY2020A, CY2021 & CY2022: 12 months to December Year on Year change
4.Annual average: 12 months to December
1,774
2,337
4,337
5,358
100% severe100% downside100% upside100% base case
3,435
760
4,195
Modelled
ECL
CP balance (ECL)
Additional
overlays
Weightings to scenarios to determine CP balance
5.2%41.3%47.7%5.8%
ECONOMIC SCENARIOSBASE CASE
2
30 September 2021CY2020ACY2021CY2022
AUSTRALIA
GDP change
3
-2.4%3.4%3.8%
Unemployment rate
4
6.5%5.3%4.3%
Resi. property pricechange
3
1.9%20.5%6.7%
NEW ZEALAND
GDP change
3
-3.0%4.3%4.3%
Unemployment rate
4
4.6%4.1%3.9%
Resi. property pricechange
3
15.6%22.4%0.4%
SEPTEMBER 2021
$m
RISK MANAGEMENT
CONTROL LISTNEW IMPAIRED ASSETS BY DIVISION
GROSS IMPAIRED ASSETS BY DIVISIONGROSS IMPAIRED ASSETS BY EXPOSURE SIZE
Index Sep-16 = 100
$m
$m
$m
IMPAIRED ASSETS
95
0
50
100
150
Sep-
17
Sep-
21
Sep-
16
Sep-
20
Sep-
18
Sep-
19
Control List by LimitsControl List by No. of Groups
0.51%
0.55%
0.51%
0.41%
0.34%
0.35%0.35%
0.33%
0.39%
0.40%0.40%
0.31%
0
1,000
2,000
3,000
4,000
Mar-17Mar-16Sep-17
1,965
2,940
Sep-16Sep-19Mar-18Sep-18Mar-19Mar-20Sep-20Mar-21Sep-21
2,139
2,883
3,173
2,459
2,384
2,034
2,128
2,029
2,599
2,473
Australia R&C% of GLANew ZealandPacific / OtherInstitutional
0
1,000
2,000
3,000
4,000
Sep-18
3,173
Mar-16Sep-17Mar-17Mar-20Sep-16Mar-18Mar-19Sep-19Sep-20Mar-21Sep-21
2,459
2,883
2,940
2,384
2,139
2,034
2,128
2,029
2,599
2,473
1,965
< 10m10m to 100m> 100m
0
500
1,000
1,500
2,000
1H182H172H161H161H172H18
1,570
890
1H192H191H202H201H212H21
1,784
1,844
1,787
1,425
963
1,145
1,117
1,219
1,121
611
Australia R&CNew ZealandInstitutionalPacific / Other
360.0
342.5
0.9
3.2
Sep-20CVA (incl.
Hedges)
FXRiskVolume
/ Mix
Model /
Method.
-6.6
Sep-21
-10.7
-4.3
RISK MANAGEMENT
TOTAL RISK WEIGHTED ASSETSCREDIT RWA DRIVERS
EADBY DIVISION
1
$b
$b
$b
RISK WEIGHTED ASSET AND EXPOSURE AT DEFAULT –DIVISIONAL VIEW
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis,net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2.Driven by increased exposure to the RBA via higher ESA (exchange settlement account) balance
96
387
380
380
392
399
396
423
447
529
455
449
456
141
137
148
137
140
149
79
27
1,075
18
Mar-20
1,080
Mar-19Sep-19
16
13
Sep-20
58
Mar-21Sep-21
968
977
1,010
1,045
New ZealandAustralia R&COther
2
Institutional
141
138
138
139
136
133
53
57
62
56
57
59
144
156
178
157
142
144
13
12
15
22
19
25
38
47
48
48
47
48
Mar-19
8
7
Sep-19
8
8
Sep-21Mar-20Sep-20
7
7
Mar-21
396
417
449
429
408
416
Aus. R&C CRWA
NZ CRWA
Other CRWA
Instit. CRWA
Mkt. & IRRBB RWA
Op-RWA
RISK WEIGHTED ASSETS & EXPOSURE AT DEFAULT
EAD COMPOSITIONEAD & CRWA MOVEMENT
CREDIT RWA / EAD BY PORTFOLIO
2
$b
$b (Sep-21 movement vs Mar-21) FX adjusted
%
EAD COMPOSITION
1
1.EAD excludes Securitisationand Other assets, whereas CRWA is inclusive of these asset classes, as per APS 330. EAD data provided is on a Post CRM basis,net of credit risk mitigation such as guarantees, credit derivatives,
netting and financial collateral
2.Total Group ratio for Sept 21 is inclusive of increased exposure to the RBA via higher exchange settlement account balances
97
6%
28%
23%
28%
Sep-21
39%
38%
1%
Sep-20
1%
4%
21%
Mar-19
5%
21%
4%
30%
4%
5%
Mar-21
1%
Sep-19
35%
24%
30%
5%
5%
1%
Mar-20
25%
39%
968
5%
1%
39%
27%
4%
38%
26%
27%
4%
4%
1,080
1%
977
1,075
1,010
1,045
Residential MortgageCorporate
Specialised LendingSovereign & Bank
Retail (ex Mortgages)
Other
-0.8
-1.0
2.3
-0.4
0.2
-2.8
-0.4
3.5
-6.0
21.9
Aus. R&C HLNZAus. R&C Non HLInstitutionalOther
CRWA Volume / MixEAD growth
36
37
36
36
33
32
56
56
55
57
56
53
60
60
59
53
27
2828
28
27
27
1111
10
9
7
7
Mar-19Sep-19
56
Sep-21Mar-20
54
Sep-20Mar-21
Residential Mortgage
Total GroupRetail (ex Mortgages)
Corporate & Specialised
Sovereigns & Banks
Increased exposure to the RBA
via higher ESA (exchange
settlement account) balance
Category% of Group EAD
% of Impaired Assets to
EAD
ImpairedAssets
Balance
3
Sep-20
2
Mar-21Sep-21Sep-20
2
Mar-21Sep-21Sep-21
Consumer Lending
41.3%41.1%
40.1%
0.2%0.1%
0.1%
$447m
Finance, Investment & Insurance
20.2%23.1%
25.3%
0.0%0.0%
0.0%
$55m
Property Services
6.6%6.2%
6.2%
0.2%0.2%
0.1%
$97m
Manufacturing
4.6%3.9%
4.0%
0.2%0.2%
0.1%
$45m
Agriculture, Forestry, Fishing
3.3%3.2%
3.1%
1.7%1.0%
0.6%
$198m
Government & Official Institutions
8.2%8.2%
7.3%
0.0%0.0%
0.0%
$0m
Wholesale trade
2.3%2.1%
2.1%
0.3%1.5%
1.3%
$293m
Retail Trade
1.7%1.5%
1.5%
1.8%1.7%
0.7%
$109m
Transport & Storage
2.1%1.9%
1.8%
0.5%1.8%
1.9%
$361m
Business Services
1.3%1.2%
1.2%
0.8%0.8%
0.4%
$59m
Resources (Mining)
1.7%1.3%
1.2%
0.1%0.2%
0.1%
$17m
Electricity, Gas & Water Supply
1.4%1.4%
1.3%
0.1%0.1%
0.1%
$9m
Construction
0.9%0.9%
0.8%
1.0%0.9%
0.9%
$77m
Other
4.4%4.1%
4.0%
0.4%0.4%
0.5%
$198m
Total100%100%100%$1,965m
Total Group EAD
1
$1,010b$1,045b$1,080b
EXPOSURE AT DEFAULT (EAD) DISTRIBUTION
TOTAL PORTFOLIO COMPOSITION
98
40.1%
25.3%
6.2%
4.0%
3.1%
7.3%
4.0%
0.8%
2.1%
1.3%
1.5%
1.8%
1.2%
1.2%
TOTAL GROUP EAD (Sep-21)
= $1,080b
1
RISK MANAGEMENT
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2.The industry split has been revised for September 2020 comparatives to align to APS330 Pillar 3 disclosure
3.Excludes unsecured retail products which are 90+ days past due and treated as Impaired for APS330 reporting
RISK MANAGEMENT
COMMERCIAL PROPERTY OUTSTANDINGS BY REGIONCOMMERCIAL PROPERTY OUTSTANDINGS BY SECTOR
$b%
SEGMENTS OF INTEREST
99
28.9
29.6
32.7
34.1
32.7
33.7
10.7
10.5
11.4
10.9
10.4
10.9
2.8
Mar-19
7.0%
Sep-19
6.9%
2.1
6.9%
2.8
2.4
Mar-21
2.1
Mar-20
7.6%
Sep-20
7.3%
7.4%
2.2
46.5
Sep-21
42.4
42.9
47.1
45.2
46.8
7%
27%
28%
14%
21%
17%
3%
19%
Mar-21
6%
Sep-21
18%
Mar-19
27%
26%
15%
29%
21%
4%
26%
6%
Sep-19
18%
16%
18%
27%
25%
20%
7%
2%
9%
Mar-20
27%
2%
8%
Sep-20
27%
18%
28%
2%
29%
2%
ResidentialRetailIndustrialOfficesTourismOther
•Growth in commercial lending activity was in line with the overall ANZ
book with Property continuing to account for 7.3% of the Group’s
GLA. The increase in Australian volumes was driven by higher lending
to the Industrial (driven by strong M&A activity) and Office (Premium
/ A-grade assets with strong lease covenants) sectors
•Increase in NZ outstandingswas a result of exchange rate
movements
•The APEA portfolio continued to remain stable with exposure
predominantly to large, well rated names in Singapore and HK
•Composition of the Commercial Property book remained relatively stable
with an increase in Industrial and Office volumes offsetting a decline in the
Retail sector which is still recovering from the effects of COVID-19
% of Group GLA (RHS)InternationalNew ZealandAustralia
RISK MANAGEMENT
100
EXPOSURE TO SOMEINDUSTRIES MORE IMPACTED BY DOWNGRADES DURING THE COVID-19 PANDEMIC
1,2
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2.Exposure represents a subset of sectors within the respective ANZSIC industry group
RETAIL TRADE
ACCOMMODATION, CAFES & RESTAURANTS
TRANSPORT & STORAGE
EDUCATION, CULTURAL & RECREATION
1,04337
TOTAL GROUP EAD
$1,080b(Sep-21)
High risk industries
Balance of total ANZ portfolio
8.1
53%
47%
Sep-20
8.2
50%
47%
50%
53%
Mar-20Mar-21
46%
54%
Sep-21
10.2
9.0
Personal & Household Goods Retailing
Motor Vehicle Retailing & Services
All exposures on an EAD basis in $b
49%49%
29%
16%
31%
35%
17%
Mar-20Mar-21
4%
5%
Sep-20
47%
32%
15%
5%
14%
45%
6%
Sep-21
12.7
12.7
12.5
12.8
Clubs (Hospitality)Pubs, Taverns & Bars
Cafes & RestaurantsAccommodation
6%
32%
35%
9.4
29%
18%
40%
10.1
Mar-20
33%
32%
6%
Sep-20
29%
32%
7%
Mar-21
31%
28%
34%
7%
Sep-21
13.0
11.3
Other Services to Transport
Water transport & Services
Services to Air Transport
Air and Space Transport
19%
19%
7.4
37%
41%
36%
22%
Mar-20
40%
Sep-20
44%
37%
44%
6.3
Mar-21
39%
21%
Sep-21
6.6
6.6
OtherSport & RecreationEducation
$b
$b
$b
$b
RISK MANAGEMENT
INSTITUTIONAL PORTFOLIO SIZE & TENOR BY MARKET
OF INCORPORATION (EAD SEP-21
1
)
ANZ INSTITUTIONAL INDUSTRY COMPOSITION
ANZ INSTITUTIONAL PRODUCT COMPOSITION
$b
EAD (Sep-21): A$456b
1
EAD (Sep-21): A$456b
1
ANZ INSTITUTIONAL PORTFOLIO
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
2.International includes Asia Pacific, Europe and America
101
0
50
100
150
200
250
300
350
400
450
50%
50%
International
2
36%
Total Institutional
64%
74%
26%
Asia
79%
21%
China
29%
17%
11%
11%
8%
4%
15%
3%
3%
31%
23%
17%
14%
9%
5%
0%
Net Loans, Advances & Acceptances
Contingents liabilities, commitments, and
other off-balance sheet exposures
Investment Securities
Derivatives
Cash
Trading Securities
Other
Tenor <= 1 YrTenor 1 Yr+
Finance
Government Administration & Defence
Other
Services To Finance & Insurance
Property & Business Services
Manufacturing
Wholesale Trade
Transport & Storage
Electricity Gas & Water Supply
RISK MANAGEMENT
MARKET OF INCORPORATIONANZ ASIA INDUSTRY COMPOSITION
EAD (Sep-21): A$102b
1
EAD (Sep-21): A$102b
1
ANZ ASIA PRODUCT COMPOSITION
EAD (Sep-21): A$102b
1
ANZ ASIAN INSTITUTIONAL PORTFOLIO (MARKET OF INCORPORATION)
102
1.EAD excludes amounts for ‘Securitisation’ and ‘Other Assets’ Basel classes, as per APS330. Data provided is on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral
18%
26%
21%
12%
7%
6%
4%
3%
4%
ChinaSouth Korea
Japan
Taiwan
Indonesia
India
Singapore
Hong Kong (SAR)Other
56%
12%
7%
6%
7%
4%
2%
3%
3%
39%
22%
14%
13%
11%
1%
Net Loans, Advances & Acceptances
Cash
Derivatives
Contingents liabilities, commitments, and
other off-balance sheet exposures
Investment Securities
Other assets
ANZ CHINA COMPOSITION
EAD (Sep-21): A$19b
1
47%
18%
15%
12%
2%
2%
2%
2%
Transport & Storage
Finance
Services to Finance and Insurance
Manufacturing
Wholesale Trade
Property & Business Services
Electricity, Gas & Water Supply
Other
Finance
Wholesale Trade
Manufacturing
Services To Finance & Insurance
Property & Business Services
Transport & Storage
Communication Services
Government Administration & Defence
Other
FULL YEAR RESULTS
2021
INVESTOR DISCUSSION PACK
HOUSING PORTFOLIO
AUSTRALIA HOME LOANS
PORTFOLIO OVERVIEW (UNLESS OTHERWISE STATED METRICS ARE BASED ON BALANCES)
104
Portfolio
1
Flow
2
FY19FY20FY21FY20FY21
Number of Home Loan
accounts
983k1,008k1,002k170k
3
179k
3
Total FUM$265b$275b$278b$61b$68b
Average Loan Size
4
$270k$273k$277k$391k$412k
% Owner Occupied
5
67%68%68%70%68%
% Investor
5
30%30%30%29%31%
% Equity Line of Credit
6
3%2%2%1%1%
% Paying Variable Rate Loan
7
84%78%67%70%55%
% Paying Fixed Rate Loan
7
16%22%33%30%45%
%Paying Interest Only
8
15%11%9%14%14%
% Broker originated52%53%53%57%56%
Portfolio
1
FY19FY20FY21
Average LVRat Origination
9,10,11
67%69%71%
Average DynamicLVR (excl. offset)
10,11,12
57%56%51%
Average DynamicLVR (incl. offset)
10,11,12
52%50%45%
Market share (MADIS publication)
13
14.3%14.5%13.9%
% Ahead of Repayments
14
76%72%70%
Offset Balances
15
$27b$33b$39b
% FirstHome Buyer8%8%8%
%Low Doc
16
4%3%2%
Loss Rate
17
0.04%0.03%0.03%
% of Australia Geography Lending
18,19
61%62%64%
% of Group Lending
18
43%44%44%
1.HomeLoansportfolio(includesNonPerformingLoans,excludesOffsetbalances)2.YTDunlessnoted3.Newaccountsincludesincreasestoexistingaccountsandsplitloans(fixedandvariablecomponentsofthesameloan)4.
AverageloansizeforFlowexcludesincreasestoexistingaccounts5.ThecurrentclassificationofInvestorvsOwnerOccupiedisbasedonANZ’sproductcategory,determinedatoriginationasadvisedbythecustomerandtheongoing
precisionreliesprimarilyonthecustomer’sobligationtoadviseANZofanychangeincircumstances.6.ANZEquityManagerproductnolongerofferedforsaleasof31July20217.ExcludesEquityManagerAccounts8.Basedon
customersthatrequestaspecificinterestonlyperiodanddoesnotincludeloansbeingprogressivelydrawne.g.construction9.Originatedintherespectiveyear10.Unweightedbasedon#accounts11.IncludescapitalisedLMI
premiums12.ValuationsupdatedtoAug21whereavailable.IncludesNonPerformingLoansandexcludesaccountswithasecurityguaranteeandunknownDLVR13.Source:APRAMonthlyAuthorisedDeposit-TakingInstitutions
Statistics(MADIS)toAug2114.%ofOwnerOccupiedandInvestorLoansthathaveanyamountaheadofrepaymentsbasedonavailableRedrawandOffset15.BalancesofOffsetaccountsconnectedtoexistingInstalmentLoans16.
LowDociscomprisedoflessthanorequalto60%LVRmortgagesprimarilyforself-employedwithoutscheduledPAYGincome.However,italsohas<0.1%oflessthanorequalto80%LVRmortgages,primarilybookedpre-2008
NoteLowDoclendingatANZisnolongeroffered.17.Annualisedwrite-offnetofrecoveries18.BasedonGrossLoans&Advances19.AustraliaGeographyincludesAustraliaR&CandInstitutionalAustralia
AUSTRALIA HOME LOANS
HOME LOAN FUM COMPOSITION
1,2,3,4
LOAN BALANCE & LENDING FLOWS
1
$b
$b
MARKET SHARE
5
%
PORTFOLIO GROWTH
105
1.Based on Gross Loans and Advances. Includes Non Performing Loans
2.The current classification of Investor vs Owner Occupied is based on ANZ’s product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer’s obligation to
advise ANZ of any change in circumstances
3.Interest Only (I/O) is based on customers that request a specific interest only period and does not include loans being progressively drawn e.g. construction
4.ANZ Equity Manager product no longer offered for sale as of 31 July 2021
5.Source: APRA Monthly Authorised Deposit-Taking Institutions Statistics (MADIS) to Aug 21
275
278
48
4
14
Repay / OtherSep-20Sep-21New Sales
excl. Refi-In
Net OFI RefiRedraw &
Interest
-63
14.7%
13.4%
14.3%
15.1%
13.4%
14.5%
13.9%
Owner Occupied
14.1%
InvestorTotal
13.4%
Sep-19Sep-20Aug-21
161
164
168
180
186
185
52
54
57
60
62
62
17
14
10
8
31
26
22
21
22
21
8
Mar-19
6
Sep-19
7
7
Mar-20Sep-20
6
278
5
Mar-21
5
5
Sep-21
269
265
264
275
281
OO P&IInv P&IOO I/OEquity ManagerInv I/O
AUSTRALIA HOME LOANS
BY PURPOSEBY ORIGINATION LVR
4,5,6
BY LOCATIONBY CHANNEL
PORTFOLIO
1,2
& FLOW
3,4
COMPOSITION (% of TOTAL BALANCES)
1.Includes Non Performing Loans
2.The current classification of Investor vs Owner Occupied is based on ANZ’s product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer’s obligation to advise
ANZ of any change in circumstances
3.YTD unless noted
4.Based on drawn month
5.Includes capitalised LMI premiums
6.Historical FY19 and FY20 figures have been restated based on drawn month (previously reported based on application month)
7.ANZ Equity Manager product no longer offered for sale as of 31 July 2021
106
Portfolio
Flow
Flow
67%
68%68%68%
30%
30%30%
31%
Sep-19
3%
FY21
2%2%
Sep-20Sep-21
1%
Owner OccupiedEquity Manager
7
Investor
65%
63%
57%
17%
20%
21%
18%
17%
22%
FY20FY19FY21
<80% LVR>80% LVR80% LVR
FlowPortfolio
PortfolioFlow
33%
34%
35%
37%
32%
33%
33%
35%
16%
15%
15%
14%
13%
12%
11%
6%6%
Sep-19
6%
FY21Sep-20Sep-21
6%
8%
VIC/TASSA/NTQLDNSW/ACTWA
Sep-19
48%
$278b
47%
52%
53%
53%
47%
Sep-20Sep-21
$265b
$275b
BrokerProprietary
57%
FY21
47%
53%
FY19
43%
FY20
$40b
$61b
56%
44%
$68b
AUSTRALIA HOME LOANS
HOME LOANS REPAYMENT PROFILE
1,2
HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE
2
DYNAMIC LOAN TO VALUE RATIO BASED ON
PORTFOLIO BALANCES
5,6,7,8
DYNAMIC LOAN TO VALUE RATIO BASED ON TOTAL
PORTFOLIO ACCOUNTS
5,6,7,8,9
70% of accounts ahead of repayments
% composition of accounts (Sep-21)
% of total Portfolio Balances
% of total Portfolio Accounts
PORTFOLIO DYNAMICS
1. Includes Non Performing Loans 2. % of Owner Occupied and Investment Loans that have any amount ahead of repayments. Excess repayments based on available Redraw and Offset. Excludes Equity Manager Accounts3. For
Sep-21 column, this only captures 2021 COVID deferrals as at 10 Sep 2021 4. The current classification of Investor vs Owner Occupied, is based on ANZ’s product category, determined at origination as advised by the customer and
the ongoing precision relies primarily on the customer’s obligation to advise ANZ of any change in circumstances 5. Includes capitalisedLMI premiums 6. Valuations updated to Aug 21 where available 7. Includes Non Performing
Loans and excludes accounts with a security guarantee and unknown DLVR 8. DLVR does not incorporate offset balances 9. Aligning with calculations that produce a portfolio average DLVR unweighted based on # accounts of 51%
107
2%
28%
12%
8%
6%
6%
6%
32%
1-2 years
ahead
Overdue3-6 months
ahead
On Time<1 month
ahead
1-3 months
ahead
6-12
months
ahead
>2 years
ahead
Sep-19Sep-21Sep-20
38
23
24
22
15
14
26
19
36
14
30
26
13
Sep-21Sep-19
0
Sep-20
0
Active COVID-19 deferrals
3
Structural: Loans that restrict payments in advance e.g. fixed rate loans
Investment: Interest payments may receive negative gearing/tax benefits
4
New Accounts: Less than 6 months old
Residual: Less than 1 month repayment buffer
60
40
10
0
20
30
50
100%+61-75%0-60%76-80%81-90%91-95%96-
100%
Sep-20Sep-19Sep-21
NEGATIVE EQUITY
Net of offset balances
•1.2% of portfolio
•
46% ahead of repayments
2
•
37% with LMI
>90%
Net of offset balances
•4.0% of portfolio
•
42% ahead of repayments
2
•
44% with LMI
30
0
10
40
20
50
60
76-80%0-60%61-75%100%+81-90%91-95%96-
100%
Sep-19Sep-20Sep-21
NEGATIVE EQUITY
Net of offset balances
•0.9% of portfolio
•
52% ahead of repayments
2
•
42% with LMI
>90%
Net of offset balances
•2.9% of portfolio
•
48% ahead of repayments
2
•
50% with LMI
AUSTRALIA HOME LOANS
HOME LOANS 90+ DPD BY STATE
1,2
HOME LOAN DELINQUENCIES
1,2,3,4
HOME LOANS 90+ DPD (BY VINTAGE)
5
% of Portfolio Segment Balances
% of Portfolio Segment Balances
%
PORTFOLIO PERFORMANCE
1. Includes Non Performing Loans 2. ANZ delinquencies are calculated on a missed payment basis for amortisingand Interest Only loans 3. The current classification of Investor vs Owner Occupied, is based on ANZ’s product
category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer’s obligation to advise ANZ of any change in circumstances 4. 30+ and 90+ between Mar 20 and Jun 20
excludes eligible Home Loans accounts that had requested COVID-19 assistance but due to delays in processing had not had the loan repayment deferral applied to the account 5. Home loans 90+ DPD vintages represent % ratio of
over 90+ delinquent (measured by # accounts), contains at least 6 application months of that fiscal year contributing to eachdata point
108
0.0
0.5
1.0
1.5
2.0
2.5
Mar-
19
Sep-
18
Mar-
18
Sep-
20
Sep-
19
Mar-
20
Mar-
21
Sep-
21
30+ DPD %90+ Owner Occupied90+ Investor
Month on book
2.0
0.0
1.5
0.5
1.0
2.5
WAVIC & TASNSW & ACTQLDSA & NTPortfolio
Mar-18Sep-18Mar-19Sep-19Mar-20Sep-20Sep-21Mar-21
681012141618202224262830323436
2.0
0.5
0.0
1.0
1.5
2.5
FY16FY18FY19FY15FY17FY20FY21
LVR > 80%
Aggregate Stop Loss
2
Arrangement on
Net Risk Retained (net of
Quota Share recoveries
LENDERS MORTGAGE INSURANCE
LMI & REINSURANCE STRUCTURE
ANZLMI LOSS RATIOS REMAINED COMPARABLE TO PEERS
1
Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 21
(% New Business FUM Oct 20 to Sep 21)
%
109
1.Negative Loss ratios are the result of reductions in outstanding claims provisions. Source: APRA general insurance statistics(loss ratio net of reinsurance)
2.Aggregate Stop Loss arrangement –reinsurer indemnifies ANZLMI for an aggregate (or cumulative) amount of losses in excess of a specified aggregate amount. When the sum of the losses exceeds the pre-agreed amount, the
reinsurer will be liable to pay the excess up to a pre-agreed upper limit
3.Quota Share arrangement -reinsurer assumes an agreed reinsured % whereby reinsurer shares all premiums and losses accordingly with ANZLMI
-20
0
20
40
60
80
100
120
140
160
FY11FY06FY13FY07FY08FY09FY12FY10FY14FY15FY16FY17FY18FY19FY20
IndustryInsurer 3ANZ LMIInsurer 1Insurer 2
ANZLMI uses a diversified panel of reinsurers(10+) comprising a mix of
APRA authorised reinsurers and reinsurers with highly rated security.
Reinsurance is comprised of a Quota Share arrangement
3
with reinsurers
for mortgages 90% LVR and above and in addition an Aggregate Stop
Loss arrangement
2
for policies over 80% LVR.
2021 Reinsurance Arrangement
4%
Non LMI
Insured
85
80-90%
LVR
9
90%+ LVR
6
LMI
Insured
15
LVR > 90%
Quota Share
3
Arrangement
SEPTEMBER FULL YEAR 2021 RESULTS
GrossWritten Premium ($m)
$124.0m
Net Claims Paid ($m)
$19.0m
Loss Rate
*
(of Exposure -annualised)
-2.5bps
*Negative Loss Rate driven by the release of provisions recorded in 2020 as
coverage for anticipated future claims as a result of the COVID-19 situation
NEW ZEALAND HOME LOANS
PORTFOLIO OVERVIEW
110
1.Average data as of August 2021
2.Source: RBNZ, FY21 share of all banks as at August 2021
3.Low documentation (Low Doc) lending allowed customers who met certain criteria to apply for a mortgage with reduced income confirmation requirements. New Low Doc lending ceased in 2007
PortfolioFlow
FY19FY20FY21FY20FY21
Number of Home Loan Accounts527k529k535k68k82k
Total FUM NZD85bNZD90bNZD99bNZD20bNZD29b
Average Loan SizeNZD161kNZD169kNZD185kNZD287kNZD352k
% Owner Occupied75%75%75%75%74%
% Investor25%25%25%25%26%
% Paying Variable Rate Loan15%13%10%14%14%
% Paying Fixed Rate Loan85%87%90%86%86%
%Paying Interest Only19%21%15%19%18%
%Paying Principal & Interest81%79%85%81%82%
% Broker Originated38%40%43%42%46%
Portfolio
FY19FY20FY21
Average LVRat Origination
1
56%58%57%
Average DynamicLVR
1
42%40%35%
Market Share
2
30.7%30.6%30.4%
%Low Doc
3
0.34%0.30%0.26%
Home Loan Loss Rates0.00%0.00%0.00%
% of NZGeography Lending63%67%70%
NEW ZEALAND HOME LOANS
ANZ HOME LOAN LVR PROFILE
1
HOUSING PORTFOLIO
HOUSING PORTFOLIO BY REGION
2
MARKET SHARE
3
HOME LENDING & ARREARS TRENDS
1.Dynamic basis
2.Prior periods have been restated to reflect loans previously included in “Other” have now been allocated across regions
3.Source: RBNZ, 2H21as at August 2021
111
60%
58%
54%
40%
42%
46%
FY19FY20FY21
ProprietaryBroker
85%
87%
90%
15%
13%
Sep-19Sep-21
10%
Sep-20
VariableFixed
30.7%
30.5%
30.4%
2H20
2.4%
3.3%
3.1%
2H19
2.4%
3.9%
3.1%
2H21
ANZ market shareANZ growth
System growth
46%
46%
46%
11%
11%
11%
7%
11%
12%
11%
24%
24%
25%
1%1%
1%
6%
Sep-19Sep-20
6%
Sep-21
Other Nth Is.AucklandChristchurch
WellingtonOther Sth Is.Other
60%
63%
80%
19%
19%
12%
15%
13%
6%
4%
3%
2%
Sep-19
1%
2%
Sep-20
1%
Sep-21
0-60%81-90%61-70%71-80%90%+
HOUSING FLOWS
NEW ZEALAND HOME LOANS
SUMMARY OF MACRO PRUDENTIAL CHANGES
1
HOUSE PRICE CHANGES BY LOCATION
3
Annual % change (3-mth average)
112
1.Source: RBNZ; 2. Source: IRD; 3. Source: ANZ, REINZ
Restrictions on loan-to-value ratios (LVRs) are limits on banks to reduce the amount of low deposit mortgage
lending. Below are the changes to the LVR restrictions during the year, excludes exemptions for new builds,
remediation, Kainga Ora, bridging loans and refinancing.
1.LVR restrictions
From 1 March 2021
oLVR restrictions for owner-occupiers reinstated to a maximum of 20% of new lending at LVRs above 80%
oLVR restrictions for investors reinstated to a maximum of 5% of new lending at LVRs above 70%
From 1 May 2021
oLVR restrictions for investors further raised to a maximum of 5% of new lending at LVRs above 60%
From 1 November 2021
oLVR restrictions for owner-occupiers revised to a maximum of 10% of new lending at LVRs above 80%
2.Regulators are also proposing further changes to home lending which may include introducing debt to
income thresholds, or another serviceability tool.
SUMMARY OF MACRO PRUDENTIAL CHANGES
2
Bright-line changes
•The Government extended the bright-line property rule from 5 to 10 years for residential property acquired
on or after 27 March 2021. This bright-line rule has gradually extended over time from initially 2 years from
1 October 2015, then 5 years from 29 March 2018 and now 10 years from 27 March 2021. Under the
extended bright-line rule, if residential property is sold within 10 years of acquisition, income tax may be
payable on any gain
•Exemptions from the 10 year bright-line test include new builds (albeit still subject to the previous 5 year
bright-line test), inherited properties and the owner’s main home
Interest deductibility
•Interest deductibility for tax purposes on a mortgage on a residential investment property (acquiredbefore
27 March 2021) will be gradually phased out between 1 October 2021 and 31 March 2025. For residential
investment properties purchased after 27 March 2021, interest would immediately cease to be deductible
from 1 October 2021
•Exemptions for property developers and for owners of new builds exist, allowing full deduction of interest
-5
0
5
10
15
20
25
30
35
40
45
Mar-
17
Sep-
17
Mar-
20
Mar-
18
Sep-
18
Mar-
19
Sep-
19
Sep-
20
Mar-
21
Sep-
21
AucklandNZCanterburyWellington
FURTHER INFORMATION
113
EquityInvestorsRetail InvestorsDebt Investors
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
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
https://www.anz.com/shareholder/centre/
=== IR PAGE TRANSCRIPT: Transcript of Investor Briefing ===
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 1 of 45
Start of Transcript
Jill Campbell: Good morning everyone, I'm Jill Campbell, ANZ's Head of Investor Relations.
Thank you for joining us for the presentation of our 2021 Full Year Results. I'm welcoming
you from ANZ's Head Office on the banks of the Birrarung in Docklands, which is on
Wurundjeri country. I pay my respects to Elders past, present and emerging, and I also
extend my respects to any Aboriginal and Torres Strait Islander people who are joining us
for today's presentation.
Our results presentation and the other materials was lodged with the ASX earlier this
morning. All of those lodgements are available also on the ANZ website in the Shareholder
Centre. A replay of this session, including the Q&A, will be available on our website as well
from about mid-afternoon.
The presentation materials and the presentation being broadcast today may contain
forward-looking statements or opinions. In that regard I draw your attention to the
disclaimer on page 1 of the slide deck. I'll talk more about Q&A procedure when we get to
that point. But just a reminder that if you do want to ask a question you need to do that
via the telephone.
Our Chief Executive Officer, Shayne Elliott, is presenting from Melbourne, and our Chief
Financial Officer, Farhan Faruqui, is presenting from Hong Kong, which I think is really
taking COVID-19 social distancing a little bit too far, but there you have it. They will
present for around 35 minutes or so, and then I'll go to Q&A and I'll remind you of the
procedure at that point. With that, Shayne.
Shayne Elliott: Hey, thanks Jill, and thank you all for attending this morning. As Jill
mentioned, I am joined here today by Farhan, who started as our new Chief Financial
Officer just earlier this month. He is of course no stranger, having joined ANZ in 2014, and
being a member of my Executive Team for more than five years. Now along with Mark
Whelan, Farhan has played an important in the turnaround of our institutional business. I
will be looking to him to have the same impact in the new phase of our Group
transformation.
Now a few comments about the environment before I turn to the result. Now frankly in
terms of tone, this has been one of the more difficult results speeches to write. On one
hand we share the optimism as lockdowns end. But on the other hand we accept that there
is still many uncertainties. In the short-term we are benefiting from the economic rebound
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and government support for customers. But in the longer-term we still face significant
disruption as an industry.
The challenges of the transition to a digital and low carbon future are reshaping our own
industry, our customers, and they present both a risk and an opportunity. But in summary,
I believe ANZ is better positioned than ever. We are well-capitalised and provisioned to
handle any risks, and we are well-prepared to take advantage of opportunity.
But let me walk through that in a bit more detail. First, regarding the impact of COVID-19,
there are good reasons to be optimistic. Vaccination rates in Australia and New Zealand
are approaching global highs. History suggests that the economy will bounce back quickly
from lockdown. Combined with the normal summer trading spike, we are likely to see a
substantial economic bounce in the coming months.
But while the initial damage of COVID-19 is receding, a range of challenges remain.
COVID-19 is still mutating, governments are grappling to get the balance right between
safety and freedom. Inflation is increasing. The transition to a low carbon future is
gathering pace. The impact of technology disruption, labour shortages and supply chain
bottlenecks impact our businesses and our customers every day.
Now as we know, when confronted with rapid change many customers will adapt and
thrive. But some will struggle. We stand ready to support customers in need. But
thankfully we are also increasingly being asked to help customers position for opportunity,
and we are well-positioned to do so with ample capital and liquidity.
Our own portfolio is also well-positioned. We are well-diversified, with the Markets
business positively correlated to volatility and higher interest rates, and a strong position
in sustainable finance. Our costs are well-managed, providing the capacity for us to
accelerate investment at a time of opportunity. We have strong relationships with many of
the global firms leading digital and low carbon transitions.
Now let's move to the result. This is a good outcome, with all parts of our diversified
portfolio contributing. Statutory profit increased 72%, return on equity came in just shy of
10% despite elevated capital levels, earnings per share up 65%, and net tangible assets
up 5% per share. Now given our strength and readiness for the future, the Board declared
a final dividend of 72 cents per share, taking the total to $1.42 for the year.
Now Farhan will take you through divisional performance, but let me just share a few
observations. In Australia Retail and Commercial delivered a good margin performance and
grew pre-provisioned and after-tax profit. Home loan revenue grew more than 10%,
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however the total home loan book fell a little in the second half, with customers paying
down loans faster, and our own issues processing increasing numbers of applications.
Now there's no excuse for the processing issues, and you'll want to know what we've done
about it. Over several months we have materially increased assessment capacity by hiring
more assessors and simplifying our processes. Now there's a time lag between applications
and asset growth, but we are already seeing improvement.
Australian home loan assets fell $1.1 billion in July, but momentum has improved each
consecutive month. For October assets are only marginally down. Our expectation is that
the improving trend will continue, and all else being equal, we forecast home loan assets
to grow during the first half. At some point in the second half we should be growing in line
with our major bank peers.
But we continue to act, and this week we announced that my ex-co-colleague, Emma
Gray, will temporarily lead the Australian Operations team. Her experience in automation
is ideal. She will work with Mark Hand on further improvement.
Now while restoring momentum remains a top priority, we are also focused on the rebuild
of our proposition, including home loans, which will reposition us for long-term growth. I
am going to share some of that later.
But staying in Australia, a quick update on the SME lending platform GoBiz. Launched
recently this allows customers, including those not yet with ANZ, to receive real-time
conditional approvals for unsecured loans by providing direct access to their accounting
package. Now it's still in soft launch, but it's generating an average of 2900 applications
every month. It's timed perfectly for the emerging rebound in the small business segment.
Turning to New Zealand. We have had one of our strongest performances ever. Revenue is
up 8% and cash profit up 41%. In our New Zealand Funds business, the total funds under
management, including KiwiSaver, grew 11% to NZ$39 billion. Now the investment to
comply with the Reserve Bank of New Zealand's BS11 regulation will finish this year well
ahead of schedule. The Bank is already positioned to absorb the capital changes which
take effect through to 2028.
Now this leads me to institutional. We have built a high performing business delivering well
above the Group cost of capital, and are well-positioned to capitalise on the structural tail
winds arising for the sector. For example, right across our network institutional's
customers are rapidly increasing activity, M&A, digitisation, restructuring supply chains.
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Trade and capital flows are growing, interest rates are rising, and yield curves steepening.
Some of our major competitors are reducing their presence in the market.
We also expect APRA's proposed capital reforms, which take hold in 2023, to be a net
positive for institutional. We just have access to institutional growth opportunities that
aren’t available to others. For example, Platforms, where we provide core banking services
to other banks. This is a significant strength of ours, and we are the market leader by
some margin.
Underlying volume growth was strong, and we are gaining market share. Now at the
revenue line this has been offset a little by falling interest rates. But positive operating
leverage, low capital intensity and ongoing growth will see this emerge strongly and
contribute to better returns.
One of the best examples is the new Payments platform, or NPP. Where we have
dominated mandates to service other banks. It's fee driven, the platform is already in
place, and scalable, so the marginal cost of transactions is almost zero. Now growth has
been exceptional, with transactions more than doubling this year, and we are only at the
early stages of adoption.
Now we are also well-positioned for the rapid transformation of how the world produces,
distributes and consumes energy, which will drive trillions of dollars in global investment.
Now thinking about the capabilities required to participate in this flow, many of them are in
our toolkit.
We are the largest institutional bank at home, and Australia's most international bank. We
are a leader in banking resource extraction, arranging finance for large-scale
infrastructure, connecting buyers and sellers across Asia, distributing debt, and hedging
market risk. Based on Bloomberg's data, we estimate we participated in around 5% of
global sustainable finance flow in 2021. Which increased our sustainable finance revenues
more than 60%.
Now it's just the beginning. Opportunities include the electrification of transport, the
commercialisation of hydrogen, and financing energy efficient buildings. No other
Australian commercial bank has the skillset, customer relationships or the track record to
participate as seriously in this global super cycle.
Now as mentioned, I wanted to share our progress in building a better Retail and
Commercial bank here in Australia. Longer-term forces shaping the industry are leading to
structurally lower returns, lower growth, and driving an unbundling of traditional banking.
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Now to remain relevant and to succeed, we are building a more agile, open and more
focused business centred around financial wellbeing to deliver higher lifetime value per
customer.
It's an exciting opportunity to reposition ANZ for the long-term. But our technology was a
major inhibitor. Its complexity and its age make it hard to change, prone to error, and less
resilient than required. Now patching it up made no sense. Moving to a greenfield stack
wasn’t practical given our scale and breadth.
So we looked at a range of alternatives, but based on our starting point and the experience
of European banks in particular, the best path for ANZ was to progressively rebuild our
technology starting with Sales and Service. So under Maile's leadership and the ANZx
banner, we have built a team of over 800 people. More than half are engineers, and many
joining from leading technology companies like Apple, Amazon and Square.
We are using this talent to completely rebuilt our capability and integrate a raft of
contemporary technology.
Now, the work is challenging and it's mostly unseen, but this year we made significant
progress building a platform for low-cost scalable resilient growth. The first task was to
introduce a range of new platforms and we have already integrated 11, including
Salesforce for CRM, ForgeRock for identity and access management, Zafin to manage
products and Twilio for contact centres.
We have also built nine major assets from scratch, but it's a bit like building a skyscraper,
all the hard work is beneath the ground, but once it emerges, if it is well engineered, it
does grow quickly. With the foundations complete we are now building a range of new
customer propositions based around our nine principles of financial wellbeing. We are
currently testing our first proposition with staff and will be ready to launch with new
customers early in 2022 under a new brand ANZ Plus.
This will become the cornerstone of how our retail and small business customers bank with
us in the future. It will allow us to deliver non-bank services and deepen engagement with
our customers. Much of this will be delivered by the strategic partnerships we are building
through our ventures and incubator business, 1835i. Through 1835i we only invest where
we see a path to acquire more customers, deepen relationships or co-develop new
propositions that we couldn't develop on our own.
For example, last week we announced that we entered into a deed to take over Cash
Rewards, Australia's leader in the buy now save now sector. It's a great fit with our
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customer proposition of financial wellbeing and it brings over a million customers into the
ANZ family while driving additional value to our retail and hospitality customers. In
addition, we have invested in eight fintechs like Lendi and Airwallex and launched three
start-ups, each intended to drive customer acquisition and deepen engagement.
Now, to date we have been pretty quiet about ANZx but you will be hearing a lot more
about this, particularly as we launch ANZ Plus and prepare to test digitised home lending.
This is an important investment in our future but we have largely funded it within our
existing expense envelope and capitalised only 5% of the investment. We wouldn't have
had that capacity without the ongoing success of simplifying the Bank.
We always knew that a simpler more focused bank would be lower risk and lower cost and
our work indicated that we can run the Bank well and continue to invest appropriately for
around $8 billion and we retain that view. At the half I clarified the expected shape of the
$8 billion, specifically differentiating between the cost of running the Bank, which we
target at $7 billion and around $1 billion for ongoing investment. This year, we reduced the
cost of running the bank a further 3% on a constant currency basis to $7.4 billion, so we
are well on the way to exit 2023 at our $7 billion ambition.
With respect to the $1 billion in operating expense for that annual investment, with some
assumptions on capitalisation levels, that should allow a cash investment per annum of
around $1.4 billion. To give that context, it's about the same as today if we exclude the
remediation work which is coming to an end and the one off BS11 investment in New
Zealand which is also coming to an end. We will not underinvest in the business to meet
the target, but with the current outlook, the peak and regulatory and remediation spend,
we are confident in our $8 billion aspiration.
In summary, look, 2021 was challenging and we didn't get everything right, but we stood
by our people, we supported customers as best we could, we managed our balance sheet
prudently and we increased investment to drive long term value while delivering strong
returns to shareholders. With that, I will now pass to Farhan to run through the result in a
bit more detail.
Farhan Faruqui: Thank you Shayne and hello everyone. I am new to the CFO role but not
to ANZ and many of you I already know well and I am looking forward to seeing all of you
once I am in Melbourne. My three decades in banking span a wide variety of roles and
geographics and it is that commercial lens I am bringing to this role. In partnership with
our business heads, my focus is squarely on the base and quality of the delivery of the
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next phase of our strategy execution, with the view to ensuring that our capital and
resource allocation is delivering value for our stakeholders.
There is no question banking is changing dramatically and while there are challenges
ahead, we see opportunities in the change as well and I am confident we have the team,
the culture, the corporate foundations and the diversity of businesses to capitalise on those
opportunities. Yes, sustainable and profitable growth requires disciplined execution. At ANZ
we have successfully demonstrated that skillset including in the institutional business
where I was fortunate enough to be part of a successful transformation.
Our financial year 2021 results highlight the benefit of our diverse portfolio of businesses
and geographies. New Zealand capitalised on its scale and a rebalanced business to
produce very strong results. Institutional continued to dominate in Australia and New
Zealand and efficiently navigated COVID related challenges in the international business to
grow in non-market banking.
Our market business delivered a solid revenue outcome despite a less conducive macro
environment. Australia retail and commercial delivered income growth year on year and
half on half, notwithstanding the challenges in home lending which Shayne referred to and
I will discuss more later.
Our cash profit, EPS and ROE outcomes for the full year again reflect our diversification
and continued focus on building a more efficient more resilient business. Looking forward I
feel we are well positioned given capital liquidity and funding are robust, the credit quality
of our portfolio is strong and importantly, we are delivering for our shareholders with
stronger dividends year on year, a share buyback and a TSR performance of 70% for the
year.
To my agenda. Today I will focus on our strong corporate foundations, then turn to our
financial performance and finally to our investment agenda, before concluding with my
focus areas as we move into financial year 2022. On the topic of corporate strength, I will
begin with capital.
Our CET1 ratio at 12.3% sits approximately $6 billion above APRA's unquestionably strong
benchmark. It reflects strong organic capital generation along with ongoing capital
allocation discipline. We have supported our customers profitably and increased our
dividend year on year with the final dividend of 72 cents per share within the target range
of 60% to 65% of cash profit, excluding large notable items.
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As you know, we did not need to dilute shareholders with equity raisings during the
pandemic. We are almost half way through our $1.5 billion share buyback and we will
continue to consider the best use of any surplus capital. By the end of the current
buyback, we will have reduced our share count by 5% over a five year period. In terms of
liquidity and funding, our key ratios are all well in excess of regulatory minimums as well
as management targets.
Turning now to our portfolio credit quality which reflects five years of management action
to reshape the portfolio, coupled with ongoing customer selection discipline, this provides
greater predictability and stability in our earnings profile. Generally, customers have
managed well through the pandemic. Our gross impaired assets are at historic lows and
the long run into internal loss rate sits at 22 basis points.
Now, moving onto our financial performance. Cash profit was up 65% for the year. It's a
solid result against a challenging backdrop. This outcome required well executed
management action to offset margin headwinds, heightened competitive intensity, a
challenged environment for our markets business and housing lending growth challenges
for our Australian business. Lower credit provisions provided a tailwind and disciplined run
the Bank cost management ensured that we created investment capacity.
We released information regarding two second half large notable items last week. I would
note these had a limited impact in the half and as is customary, from this point forward my
references will be to cash profit excluding large notable items. In my opinion the key
factors which drove the result were (1) core banking income increased 1% benefiting from
disciplined margin management, (2) markets income at $1.94 billion while strong was
lower following our performance last year and (3) costs were up 1.9% FX adjusted for the
year in line with the guidance we provided at the half.
However, our run the Bank costs decreased 3% off the back of over $300 million of
productivity savings this year. This enabled a record level of investment, the details of
which I will speak to a little later. Finally, a significant decrease in credit provisions
reflecting an improved economic outlook.
Our margin outcome was a highlight. The headline margin improved two basis points in the
half, while underlying margins were down two basis points. Disciplined margin
management largely offset the impact of industry headwinds. Now, there are a number of
structural trends impacting sector margins in both Australia and in New Zealand. Ongoing
customer preference for fixed rate home loans in the lower interest rate environment
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drove a significant mix shift in our mortgage flows with fixed rate volumes up $22 billion
and standard variable loans down $16 billion.
House price growth saw increased sector home lending activity, higher refinancing levels
and intense price competition. For example, about 30% of our home loan portfolios reset
this half. System liquidity continues to expand with average customer deposits increasing
$17 billion in the half, out pacing growth in customer lending. This coupled with our
transition off the RBA's committed liquidity facility increased liquid assets, which was
negative for margins, but positive for returns.
Collectively these structural headwinds compressed group NIM by eight basis points.
Partially offsetting this was a net $40 billion shift in term versus at call deposits as
customers favoured flexibility in a low-rate environment. In addition to a shift in deposit
mix, more expensive term wholesale debt matured and our teams actively managed the
pricing of our deposits. Overall, macro factors along with management actions resulted in a
six basis point benefit to margin this half.
Now, turning to the outlook and consistent with long run sector trends, there is downside
risk to margins in financial year 2022. The negative impact of higher liquids, along with
asset price competition and customer preference for fixed rate home loans, is expected to
persist. However, you should expect that as in financial year 2021, we will undertake
management actions to mitigate market conditions wherever possible. We will continue to
optimise funding costs, albeit the opportunity for further repricing is becoming limited.
However, rate rises and further steepening in yield curves will provide a tailwind, but it will
depend on global macroeconomic settings and the inflation outlook in the markets in which
we operate.
Now let me turn to our divisional performance. Firstly, to our Australian retail and
commercial division, which recorded a solid result year on year with higher revenues, flat
expenses and lower provisions. However, our balance sheet performance in the second half
was more challenging, with home loan volumes declining $3 billion half on half.
Against this backdrop, margins have performed well, with NIM higher half on half and risk
adjusted NIM improving 15 basis points, the highest it has been since first half 2018. This,
in turn, allowed for revenue to be higher half on half. The commercial bank grew revenue
during the half despite commercial lending continuing to be impacted by weaker demand
as a result of economic uncertainty. Unsecured lending volumes were adversely affected by
ongoing lockdowns and travel restrictions.
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Now turning to the topic of momentum in the Australian housing portfolio that I mentioned
earlier. On a spot basis, the home loan book grew $3 billion for the year, with growth in
the first half followed by a decline in the second half. Available operational processing
capacity in financial year 2021, while 30% higher than that of three years ago, was simply
not sufficient to match system growth. In fact, simply put, the strength of the Australian
property market well exceeded our expectations, with sector activity both from new
lending and refinancing elevated.
Now growth for growth sake is of course not our focus. Improving the performance of our
Australian home loan portfolio in a sustainable and profitable way is our highest priority.
Our efforts have been focused on creating additional sustainable processing capacity and
improving assessment turnaround times. While there has been a circa 40% improvement
in processing times across the entire portfolio in the last six months, we are clearly not
back to where we want to be.
But good progress is being made on this front. We have a firm handle on the issues that
we need to address and over a number of months we have been working on operational
and process enhancements, including increasing operations resources to support
assessment activity, streamlining our origination processes and progressing work on
digitisation and automation to create capacity. As a result, as Shayne mentioned, our
balance sheet momentum has shifted and we expect to continue to see improvements as
we move through financial year 2022.
Moving to institutional, which today is a simpler, more resilient and well diversified
business which again delivered returns well above our cost of capital. Revenue, excluding
markets, was up 2% in the second half as economic conditions continued to improve.
Pleasingly, risk adjusted margin increased six basis points, reflecting appropriate pricing
for risk and strong capital discipline in the business. Corporate finance revenue increased
3%, driven by a strong margin outcome and better momentum in customer activity,
particularly in our FIG business.
Cash management revenue was flat, despite ongoing impacts from the low-rate
environment. We’ve had strong market share growth and are well positioned to benefit
from improving market conditions. Markets revenues at $1.94 billion normalised closer to
our long-run average after the exceptional volatility seen in 2020 and with returns well
above the Group cost of capital. Importantly, this half marked the 11
th
consecutive half of
absolute cost reduction in our institutional business.
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We see structural tailwinds for this business over time, arising from future rate rises, the
significant potential in sustainability financing and the growing momentum of the platform
businesses that Shayne talked to earlier. Also, upcoming capital reforms, while expected to
be neutral at a system level, may favour institutional businesses like ours, that further
improves the attractiveness of our portfolio.
Now to the New Zealand result, which is a testament to efficiently leveraging the benefits
of scale. In financial year 2021, the division delivered one of its strongest performances for
many years, with revenues up 8% year on year and 5% up half on half, resulting in cash
profit increasing 41% despite a high level of regulatory investment required for BS11.
We’re on track to deliver BS11, well ahead of the required RBNZ deadline and we’re
through the majority of spend on this project.
Home loan volumes grew 11% year on year, risk adjusted margins further improved in the
second half and were up 15 basis points as we continued our focus on improving returns in
our business division to reflect the changing capital environment.
Now turning to provisions, credit conditions remained benign in the second half. Individual
divisions were at historic lows and delinquency rates trended downwards. The modest
$145 million release from the collective provision was largely driven by volume reductions
and an improved portfolio risk profile. But while increasing vaccination rates is a positive
for the economic outlook, we will maintain a cautious approach to provisioning given the
uncertainty of the implications arising from extended lockdowns in a number of our major
cities. We believe our collective provision balance and coverage ratio of 122 basis points
remains appropriate at this time.
Now let’s consider expenses. We do have a strong track record of disciplined expense
management since 2016 and that has continued this year. Adjusted for FX, our run-the-
bank costs decreased 3%, with productivity initiatives offsetting inflationary impacts and
that allowed us to continue to invest in the business at record levels. Our accelerated
strategy initiatives contributed $308 million of run-the-bank benefits this year.
Savings came from across the entire business, including, one, greater use of digital
technologies and customer self-service, for example, digital sales as a percentage of total
sales rose to 41% in New Zealand and to 49% in Australia, up from 26% and 30%
respectively only two years ago. Secondly, creating efficiencies via process automation and
simplification in our contact centres and our back office.
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Thirdly, the rationalisation of our property footprint and lower operating costs. And finally,
network and vendor contract optimisation. We expect to continue to see run-the-bank
costs reduce over time, with productivity benefits offsetting inflationary uplifts and higher
technology costs as we digitise the business. The trend, however, may not be linear in
each half.
Our investment spend, we are investing more than ever before to build a simpler, more
resilient business and in a variety of platforms for future growth. Our investment spend
has increased by $600 million over the past two years and was up 23% to $1.8 billion this
year. We continued our discipline on capitalisation with the investment expense rate
increasing to 79% and our capitalised software balance falling to below $1 billion.
Almost half of our investment spend this year was on growth and simplification initiatives,
including key strategic initiatives like ANZx, GoBiz and sustainability finance, along with
our transition to cloud-based technology. In financial year 2021, we reached the peak of
our spend on the current regulatory projects which, when complete, will deliver a greater
level of operational resilience and a stronger base for future growth.
We remain committed to investing to grow and to simplifying the business with investment
spend in financial year 2022 expected to be slightly higher than this year, with a higher
investment expense rate. Year on year total expenses are expected to increase slightly
from the financial year 2021 base of $8.67 billion and that will be an outcome of lower run-
the-bank expenses and higher investment spend.
So to conclude, a few words on my key areas of focus. One, we must rebuild our home
loan momentum. Mark Hand and his team, along with the entire executive committee, is
sharply focused on this. Two, our simplification agenda remains central to our cost targets.
We must fund essential growth and we can only do that effectively by managing
productivity and efficiency and my team and I will relentlessly pursue that objective. We
have done this the last five years and I’m confident we can continue to do it consistently.
Three, we have to maintain our resource management and allocation discipline, which is a
key agenda for me. Our investment governance framework is aligned with our strategic
priorities to ensure that investment is well managed and rewards strong execution which
produces the promised cost and revenue benefits.
Four, the growth initiatives, some of which were outlined by Shayne, are important
priorities and will also operate under the governance framework I just mentioned. And
finally, all of this will require strong execution and a critical focus on returns. We have a
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proven track record and an embedded culture that is clear about return expectations. We
will continue to build on that culture.
I thank you very much for your attention and I certainly look forward to meeting all of you
in person soon. In the meantime, I am contending with the very important task of picking
a footy team. Unsurprisingly, Jill is pressuring me to pick Richmond. With that, I’ll hand
back to Shayne.
Shayne Elliott: Okay, thanks Farhan. As I said, it wasn’t an easy year, but it was a good
result overall. We could have been quicker to address challenges processing Australian
home loans, but I’m confident we have that under control.
Looking ahead, the immediate impact of COVID is receding but there will continue to be
challenges, including long-term industry disruption. Given the repositioning of ANZ, our
strong balance sheet, the investments made and benefits of simplification, we are well
capitalised and well provisioned should things deteriorate and we are well positioned as
growth emerges. Put simply, the headwinds will persist, but structural tailwinds are
emerging for us.
Now Farhan shared his priorities and I’m very clear on what’s important at a Group level.
First, restoring momentum in Australian home loans. Second, launching ANZ Plus
successfully. Third, seed profitable, high-return growth in institutional with a focus on the
platforms and sustainability areas. Fourth, in New Zealand, finish BS11 and continue to
recycle capital to improve returns. Lastly, across the Group, continue our work on
simplification, capitalising on the investments made in automation, cloud migration and
digitisation to enable low-cost, high-resilient customer growth.
But whatever eventuates, we’ll continue to be prudent and methodical. We will be guided
by our purpose and balance the need of all stakeholders and we’ll do what’s right. This is
going to be another big year of change and transformation and I’m confident that we have
the team to deliver. I’d like to acknowledge our 40,000 people who have been unwavering
in their support of customers, colleagues and their community in a challenging and at
times emotional environment. They continue to be true to our purpose and they embody
the best of our culture and I thank them for their ongoing commitment.
Now finally, it would be remiss of me not to mention that 70 years ago this month the
modern ANZ was born, with the merger of the Bank of Australasia and the Union Bank of
Australia. It also launched a new motto, tenacious of purpose, which resonates as strongly
today as it did in 1951. Our purpose, to shape a world where people and communities
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thrive has guided us through recent challenges and we will continue to pursue it with the
tenacity it deserves.
With that, we'll open for questions.
Jill Campbell: Thanks, Shayne. I know that you've all done this a million times but just in
case, we want to get through as many questions as we can, so if you could keep it to no
more than two questions each and try to resist the urge to have 27 sub-questions, that
would be great. If you can work the words Go Tiges or Dustin Martin into any of the
questions we might let you go longer.
With that, operator, if you can open up the lines I believe the first question is from Andrew
Triggs from JPMorgan. Thanks.
Andrew Triggs: (JP Morgan, Analyst) Thanks, Jill. Can you hear me?
Jill Campbell: Yes.
Andrew Triggs: (JP Morgan, Analyst) Excellent. Thanks, Shayne. Just a few related
questions on cost, please. In terms of the explicit reiteration of the $8 billion cost
aspiration, can you, Shayne, just clarify that excludes restructuring costs? That's been a -
it's listed as a notable item but it's been an ongoing trend of relatively high restructuring
costs, and it was $127 million this year.
A couple of other questions, just sticking on costs. FTEs are up 5% in the second half and
all divisions saw growth, so I'm just interested in any explanations on this given the
productivity savings that we saw outlined on slide 23.
Just a final one, if I could push my luck. Sticking with slide 23, that cost inflation bar looks
relatively low at about - at $53 million or about 0.6% of the starting cost base. I'm just
interested, I would have thought it would be a lot higher than that given a lot your people
sitting in offshore markets.
Shayne Elliott: Sure. No, they're very reasonable questions, and I'll get Farhan to go
through the detail. Just a highlight from me, though. Restructuring, the $8 billion I think
it's fair to say there's normal restructuring that will be part of the $8 billion and what we're
going through at the moment in terms of transition is some higher levels of restructuring
required in terms of that productivity outcome, but Farhan can comment a little bit on
that.
On the FTE, before I hand to Farhan, because he'll have a bit more of the detail, I think it's
important, Andrew, to stand back and think about over the year - and I know your
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question was on the half, but over the year the FTE is up about 2000. About half of that is
explained by some transitory things.
For example, we are moving a significant amount of work from our base, our operational
centre in Chengdu. We're migrating that to Bangalore, but as we do that we end up with a
bit of a double-count. We've got about 400 roles moving as we speak, so we hire 400
people in Bangalore ready to take the work but we still have 400 people in China, and so
that's a big part of that.
Then for example, we're closing a product in New Zealand, a product called Bonus Bonds,
which we can go into what it is, it's an old product we inherited from when we bought
PostBank. There's about 150 people sitting just contracting in to manage through that
transition. There's some unusual things in the FTE, which we're confident are transitory.
Farhan, you'll have some more comments to make on those questions.
Farhan Faruqui: Yes. Thank you, Shayne. I think there are two drivers of the exit rate. One
of course is there is a small increase in our BAU FTE, but as Shayne said, a large part of it
is transitory, things like Bonus Bonds, the Chengdu service centre exit, which will slowly
reduce over the course of next year. Investment in ANZx, in cloud, in things like GoBiz,
was obviously part of the reason why the FTE was higher. Inflation we expect next year
will be slightly higher than financial year '21. We've also, as we've said, delivered $308
million of productivity saves, and there are many more initiatives in flight which will
continue to reduce our BAU or run-the-bank costs.
Overall, our view is that Bank BAU will trend lower over the year; investment will be up, as
I said earlier; but we will fall in financial year '23 as we complete major programs like
BS11 and some remediation. That impact was about $300 million alone in financial year
'21 but will start to come off in '23. That's our view on FTE. We'll see some transitory rise,
which we have seen, we see that reducing as some of the regulatory projects complete,
we'll see the impact of that coming off, and we'll continue to invest in the key initiatives
that Shayne talked to earlier.
Andrew Triggs: (JPMorgan, Analyst) Thanks, Farhan. What should we assume is a normal
restructuring cost line ex this period of extreme productivity focus?
Shayne Elliott: That's a good question.
Farhan Faruqui: Well, I think...
Shayne Elliott: No, go on Farhan.
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Farhan Faruqui: Go ahead, Shayne.
Shayne Elliott: No, you go ahead.
Farhan Faruqui: No, I think it is a good question. We have factored in some numbers in
anticipation of that restructuring. I can't share the details with you just yet but I would be
happy to discuss those with you later.
Female: Andrew Lyons. Operator, we can move to the next question, thank you, which is I
think Andrew Lyons.
Andrew Lyons: (Goldman Sachs, Analyst) Thanks, and good morning. I just wanted to ask
a question, Shayne, just about the expense part of it. You've spoken to an exit rate in
FY23 of $8 billion and yet costs are going to grow again incrementally in FY22. Just in light
of that, I'm wondering if maybe you can help us with a bit more detail around exactly what
an FY23 exit rate on costs of $8 billion actually means the reported number will look like? I
think particularly given you're going to grow costs in '22, I think the market would really
appreciate any guidance as to what that exit rate of $8 billion actually means for the
reported number in FY23.
Then just a second question on markets income. You've just delivered about $2 billion of
market revenue which is about in line with what you've previously spoken to as being
normal. Against this, all your major bank peers are talking to this line item as being under
significant pressure, so much so that we've actually seen one of your peers write down
assets within the institutional business, somewhat related to this. Can you perhaps talk to
maybe why you are seeing some divergence against the major bank peers on this line?
Thanks.
Shayne Elliott: I'll start with that. I guess the glib answer is we're better at it than our
peers, but the reality is, as you know, Andrew, our business is just more diversified than
our peers. I think it's really important to note the diversity of our markets business in two
factors. One is the geographic diversification. More than half of our business sits outside
Australia and that's really the big difference when you compare us to certainly our
domestic peers. We have a great franchise across Asia, et cetera, and so that geographic
diversity really comes through at a time like this.
I think the other point that we've done within that business also the diversification. When
you think about - and there's some detail in there about just how we generate value in
that business in terms of our customer base. So, we have a much bigger institutional
business to begin with than our peer group, and remember again, institutional for us,
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where we really dominate and do extraordinarily well, is with the multinationals segment.
That multinational segment - and yes, many of them operate here in Australia, and that's
the core to our relationship, but it means we're servicing them in multiple markets around
the world.
So, we just have a broader customer diversification in terms of flow and opportunity and
we have that geographic diversification. I think that's why our business, we feel pretty
good about that result. I take your point, I think it is better than what we're certainly
hearing from many of our peers. That's why we're confident in that.
In terms of the expense target, we don't give guidance for FY23. I understand the nature
of your question and I understand sitting here today it looks like a big move from $8.6
billion, $8.7 billion-ish down to $8 billion and it's clearly not going to be a straight line, but
as I mentioned, I think we've given pretty decent guidance around that exit. What it
essentially means is we exit the fourth quarter of '23 at about $2 billion in total, and I've
talked to the $7.1 billion plus $1 billion and how we get there. What's difficult about
answering your question, to be perfectly frank, is there's a lot of moving parts in there.
We've got really strong momentum on BAU but the real difficulty is really on the project
side. I think I'm more confident in the - it won't be a straight line but I'm more confident
in the BAU trajectory and timing; it's a little bit harder on the project side to know exactly,
for example, when something, or the equivalent of a BS11 or the cloud migration or some
of the remediation work, in which quarter that will actually finish, whether it's the first
quarter of '23, fourth quarter of '22, fourth quarter of '23. That's why I'm a bit reluctant to
go into that. Farhan, I don't know if you wanted to add anything on those questions.
Farhan Faruqui: No, I think you've covered it, Shayne. As Shayne said, I think on the BAU
expenses I think we have a much greater degree of confidence in terms of the run into
FY23 exit. As Shayne said, we have a very clear strategy around our productivity
initiatives, which will offset inflation and will deliver to the $7 billion target that we are
hoping to achieve by then.
On the investment, I think the only thing I would say at this point is that, as Shayne said,
and as I mentioned earlier, there's $300 million simply from BS11 and remediation, which
will be elevated this year but will slowly reduce in FY23. Therefore, if you think about our
slate, which is about $1.8b now, it drops to $1.5b just on the basis of those two projects,
and then of course we'll have to decide on the pacing and the timing exactly of when they
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come on and come off. I think we have a plan, but the timing remains a little bit uncertain,
as Shayne said.
Andrew Lyons: (Goldman Sachs, Analyst) Just on the BAU, $7.4 billion down to $7 billion,
would you expect that should be more linear - and go Cats to get that question in.
Shayne Elliott: It will be more linear. It won't be perfectly linear but you would expect so.
There will be a little bit of a tail-end impact there; you would expect the savings to
accelerate at the end. I'll give you an example and reason why. If we think about some of
the - that BAU is not easy and it comes out of investments we're making. If I think of
something like the cloud migration - and again, I know you guys know this, but you have
to invest a lot, you build capability to migrate to the cloud, you've still got to run your
datacentres and run your new services in the cloud.
It's again a bit like the example I gave with Chengdu and Bengaluru, there's a little bit of a
double-up and then it's only towards the end of the program and the migration that you
can start to release the cost of your own datacentres. That release would come through in
the BAU costs. So, it will be straighter and more linear but not perfectly so. There'll still be
a bit of a tail-end impact.
Andrew Lyons: (Goldman Sachs, Analyst) Thanks so much.
Shayne Elliott: Thanks. I would say - sorry, just one thing on that. I think it's worth - if
you go back and look at the productivity that we've got, and Farhan mentioned the $308
million, what's really interesting about that - and I know when we first started and had the
ambition around the $8 billion there was a lot of scepticism and I understand that. We
talked about when we first started delivering into that there was a sense, hey, you're doing
the easier stuff first and it's going to get harder, and there's an element of truth to that,
but we're also getting better, and I think that's important.
That $308 million actually is higher than it has been historically, so actually we are
generating more productivity saves as we go through the program. It's not slowing, it's
actually accelerating, because if you look back over the three-year prior, the three-year
average prior to that I think was about $260 million per annum. So, we're getting better,
surprisingly, in terms of our execution on productivity benefits.
Operator: Thank you. Next question is from Ed Henning with CLSA.
Ed Henning: (CLSA, Analyst) Thanks for taking my questions. You've talked about
improved mortgage outlook, a firm handle on the issues. Speaking to a number of brokers,
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you're still around six weeks to pick up a self-employed deal, three to four weeks for PAYG
which is still well out of market and has recently got worse. Firstly, can you just run
through in a little bit more detail why it's taking so long to fix the issues and why that
won't happen again?
Secondly, given your improving outlook for credit growth expectations, do you need to pull
the price lever? With that, do you see increasing front-book pressure and also fixed-rate
migration coming through in your '22 NIM?
Shayne Elliott: Yes, fair questions. I'll get Mark Hand here, who runs Australia business, to
make some comments on that in terms of the turnaround times [unclear]. So why it takes
time, because at the - so let's understand what the issue is. We do not have an issue
today of people wanting to choose ANZ for a home loan solution. We in fact, in a funny
way, that’s part of the problem, we've got lots. Actually the application volumes we are
experiencing today are extremely elevated relative to history.
So we don’t have a problem at the front end. Where we have had the problem is in
processing. If you go to - and Mark will talk about it more articulately than me - but in
terms of our Branch network we don’t have a problem at all, in terms of turnaround times.
People going into Branch get a turnaround really quickly and very competitively.
It has been in the broker space. For without going into all the sort of detail, some years
ago we made a risk-based decision that we would manually assess all broker applications.
That was a reasonable thing at the time. So basically we have a very, extremely manual
process sitting in behind broker applications.
So the reason it takes time to ramp-up, it is difficult to hire and train people, and get them
to be really productive in terms of home loan assessment. That was particularly true
during COVID-19 where we were more restricted in terms of being able to get people into
a building to train them, et cetera, and get them on the tools quickly. But Mark can talk
more sort of with up-to-date data in terms of turnaround times. Mark?
Mark Hand: Yes, so firstly, I'm the first to admit that I didn’t pick the boom that we saw
coming in home loans this year. So in terms of our preparedness for that, we weren't
ready. But what we have done is constantly improve the business. So our ability to write
home loans today is more than double what it was 18 months ago.
We are in the process of doubling that again. But that takes time. To automate processes
you need to change systems, you need to retrain staff, and you do need to put new staff
on. So we have redeployed a lot of staff from other parts of the Bank to help with this
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problem. But the technology solutions, the automation solutions, that we need to put in
place just simply take time.
Now the turnaround times, we do have a little bit of a bias. So we have a mobile network
which accounts for about 15% to 20% of our volumes. They are treated similarly to the
way we treat our brokers. So we do a full check of those deals the same as we do for
broker deals. So we have a bigger piece of our pie that goes through I guess the slower
process. Compared to the Branch deals where 60% of customers will walk out the door
with a decision within about one hour of entering the Branch.
So we do have a lot of work to improve that process. We have got a lot of work underway.
But we also have a bias towards, because we have the best offer in market for self-
employed. So we bat very strongly in that part of the market, and those deals do take
longer. So you won't get an approval in 24 hours for a self-employed customer from any
bank. It does take longer, there is much more intensive checks to be done. The fact that a
lot of those come through a broker add to those.
So our bias plays towards a little bit of a longer turnaround time. But if you look at our
turnaround time for a straightforward deal, that is comparable to the deals that a
Macquarie, for instance, might be writing, and we're still slower. But the difference is in a
few days, not in weeks.
Shayne Elliott: In terms of your question, Ed on, you asked a question about margin,
you're right, there's been a big mix shift across the market, and certainly for us in terms of
customers choosing fixed rate over variable. Of course that does have an impact on
margin. That’s already sitting in our book today, and it's already, if you will, within the exit
rate.
I don’t know, Farhan, if you wanted to comment a little bit more just broadly about the
margin trends?
Farhan Faruqui: Yes, look, I think have - and I tried to cover that in the speech earlier,
that obviously we have a combination of head winds and tail winds coming into FY22. I
think the head winds are likely to persist around competition, the continued shift from
variable to fixed, and sort of other back book related margin pressures, et cetera, in the
mix.
But we do have tail winds. We have the ability to reprice. We still think we have some
ability to reprice deposits. We are waiting to see how rates perform in the course of the
next few months. Hopefully that’s going to give us some tail wind as well. The deposit mix
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is something that continues to change and provides, and our teams are working hard out
to make sure that we get some tail winds as a result of those.
Of course the wholesale funding costs are relatively lower in the debt markets. Of course
as those roll off we will be able to refinance cheaper through the deposit liquidity that we
have. So to some extent we have several tail winds. Net net we think there are obviously
net head winds. But again, depending on what happens with rates, and depending on how
we are able to take appropriate management actions to offset some of those head winds.
But I think it's fair to assume that in general there is a head wind pressure going into next
- going into this year.
Ed Henning: (CLSA, Analyst) Just if you think about your credit growth expectations, do
you need to pull the price...
Shayne Elliott: Oh yes, good - yes.
Ed Henning: (CLSA, Analyst) ... to accelerate those head winds?
Shayne Elliott: Look, I don’t know what the market is going to look like, I don’t know
what's going to happen with rates or in terms of competition. But I think again when you
stand back and at it from a simple level, as I said, the issue today, we have today is not
that people do not want to choose ANZ. That we don’t have a compelling competitive
position in the marketplace.
It's really just our ability to sort of churn through the volume. So our view is just, where
we are putting our resources is really to build the capacity. Mark talked about the doubling
we have already seen, and the expected doubling we are going to get. That’s our focus.
We know actually from history that what's really important in terms of growing volume is
just being competitive in terms of turnaround times.
That is our strategy, to be in the mix, to be highly competitive through this in terms of the
broker channel. As Mark said, on the Branch channel, we are already very effective there.
Ed Henning: (CLSA, Analyst) Sorry, just one other follow-up.
Shayne Elliott: Yes.
Ed Henning: (CLSA, Analyst) Just on the broker, you fully reassess the loans. Do peers do
that? So if you do see another spike in volume you will get the same issue again for ANZ?
Shayne Elliott: I can't speak for peers, that’s for them. We, today we manually assess -
what's part of the changes we are making is to reduce our reliance on total 100% manual
assessment through the broker channel. So there is part of the work, and what Emma will
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lead and is already underway, is how can we automate, streamline some parts of that
process. So that’s already underway and we are confident we can do that.
But I think the point here, and Mark I think spoke clearly about this, we are aiming, we
have already doubled our capacity. If you look in the data, it's not that we're processing
less home loans than we used to. We're actually processing more, it's just not enough. We
are building that capacity to double again.
Now who can say what the volume outlook will look over the next year. But that should be
more than sufficient for us to meet the objectives we talked about. Getting asset growth
back into the home loan book in the first half, and being back towards the average of our
major peers at some point in the second half.
Ed Henning: (CLSA, Analyst) Right, thank you very much.
Shayne Elliott: Thank you.
Operator: Your next question comes from Matthew Wilson with E&P. Please go ahead.
Matthew Wilson: (E&P, Analyst) Yes, good morning team, I presume you can hear me
okay?
Shayne Elliott: Yes, good to hear from you Matt.
Matthew Wilson: (E&P, Analyst) Thanks Shayne. You mentioned in the opening remarks,
and I think it's a good point, your institutional franchise [isn't] well-appreciated. You can
tell that by the questions today, everyone's focusing on home loans. We'd think we'd be
talking to a building society.
But there is $150 trillion that needs to be invested in net zero emissions over the next 30
years. Perhaps this is a question for Mark Whelan, but can he sort of provide more colour
how your franchise is front and centre well-placed to deal with the opportunities that will...
Shayne Elliott: Yes.
Matthew Wilson: (E&P, Analyst) ...arise across the capital stack, across the assets that
need to be created, financed and managed long-term?
Shayne Elliott: Yes, and I'm glad you raise it, because I totally agree with you. That was
part of the - and so I'll get Mark to come up in a sec. While he's getting ready, this is
massive opportunity. There is no doubt, we're talking enormous amounts of money. As I
sort of tried to cover, and Mark will give you a bit more detail about the work we're doing
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here. You stand back and think about that transition and what would you need to do to be
part of it? A lot of those things, if not all of them, we're really good at.
For example, just good old-fashioned resource extraction and banking that. Yes, okay, the
underlying shift, and it won't be coal, it will be lithium or something else. But the fact is -
or hydrogen and all those. It's still got to be around, we're good at that. We’re number 1
at that, and we've been good at that for a long time.
We're really good at banking large scale industrial projects in terms of the conversion of
things. We're really good at moving and financing the movement of goods. Whether that
today might be gas or iron ore, and in the future might be hydrogen or something else.
We're good at knowing how to do those things, and we have the customer base that
actually will drive a lot of that.
I mean the reality is that transition is going to be driven by large multinational
organisations, many of which, if not most of whom, are core clients of ours today. Not
fringe clients, like core. We had this discussion yesterday with our Board. Going through, if
you go through and think through who is going to drive that transition, I am talking about
the names. These are people we know and have banked for a long time and are very
closely working with. So I think there's a lot.
But we are excited about the opportunity. It's really early days. But Mark can talk a little
bit more about the various ways we can participate in it. Because it's not just going to be
lending, far from it.
Matthew Wilson: (E&P, Analyst) Correct, yes.
Shayne Elliott: Mark?
Mark Whelan: Yes, thanks Shayne, and thanks, Matt, for the question. We have spent the
last probably six months doing a real deep dive into what we're seeing in the sustainability
area globally. Some strategic work with around 75 of our people working with McKinsey.
We've got a pretty good picture on where we see the opportunities.
But it effectively starts with what Shayne talked about. I mean the quality of our customer
base, both domestically and internationally, they're the customers that are going to drive
this transition to net zero by 2050. Many of them are already well progressed on their own
plans. So our intention is to follow them, and to work with them on their own transition.
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So that customer base, plus our geographic footprint, really puts us in a strong position to
be at the forefront of this, based on what our customers are telling us and what they want
to do, and where we think this will move.
The second point I'd make is, don’t forget our Financial Institutions business. A lot of
where you're seeing drive and pressure and move to net zero is coming through from our
fund managers and our investors who take both our equity and our debt. But also they do
that with many of these companies that are obviously looking to transition.
We have an exceptionally strong FI business, a very deep business across multiple parts of
our product offering. We're working with a number of them now around what we can do to
improve our product capability. So when you roll all that together, there's areas we'll need
to develop. We do a little bit in advisory today. We're thinking about what we need to do
there.
We're looking at the product range we offer. Green bonds, green loans, it's going to be
much broader than that. Supply chains are going to shift on the back of this. We have got
very good trade businesses with these multinationals. We are actually reshaping them
today to focus on where these opportunities will be. There's obviously with the fund
managers and the FI business that we have, we're talking to many of them around how we
participate in other parts of the business. Whether it be in equity, and how we structure
that up.
So it's multi-faceted. I think we're pretty well prepared. We've got a very strong starting
position and a very strong reputation in the marketplace. Very well co-ordinated across the
Bank as well, which is quite important in this area. Because it's going to touch many
industries.
Matthew Wilson: (E&P, Analyst) Thanks guys, that’s helpful.
Farhan Faruqui: Just to add quickly, Shayne if I could, and Mark too, what Mark said, Matt,
that we have the relationships in our international business alongside our relationships in
Australia that we will leverage together to deliver the outcomes on sustainability, as Mark
said.
But I think it's worth pointing out that we have market leading businesses in this region in
terms of debt capital markets, syndicated loans, project financing, export credit. Many of
those are going to be critical in terms of the financial engineering that will be required as
many of these projects are taken on.
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So we have the network, we have the relationships, and we have the product capability to
actually bring this to realisation. Which I think sets us apart a little bit from some of our
competitors.
Shayne Elliott: Again, without over speaking, because you can probably tell, we are excited
about this opportunity. The reality is, because of that customer base and because of that
capability, this is going to happen naturally anyway. We are going to, our business is going
to shift because our customers are going to take us there. What we're talking about is
doing more than that. Not just being, moving because our customers are shifting. But
actually how do we position to have even a greater participation in this and that's going to
require investment.
Now, the good news from a shareholder's point of view, that investment we're talking
about is largely a people and capability. It’s not about - we don't need new big systems or
technology or big dollar investments. It's really about the intellectual investment around
people and under Mark's leadership we've already hired in some really thoughtful people
from the whole sustainability spectrum to augment that team, because we need to be at
the forefront of the thinking as much as just in terms of delivery. So it is an exciting area.
Matthew Wilson: (E&P, Analyst) Thanks, guys. Farhan, you are well advised with respect to
a recommendation for a football team. Thank you.
Farhan Faruqui: Thanks, Matt.
Operator: Your next question comes from Jonathan Mott with Barrenjoey, please go ahead.
Jonathan Mott: (Barrenjoey, Analyst) Yes. Thank you. Probably staying a bit more in that
institutional side, you talk a lot about the benefits from the steepening yield curve and
potentially rate raises. So could you just elaborate on that, just the leverage that you get
across the Institutional space in the markets if we have the volatility that's been going on
in recent times. Shouldn't we expect a pretty good environment for markets for the next
little while? Also, for the rate rises, do we actually need to see effectively the RBA rate
rise kick in before you really start to get the leverage through widening spreads as well?
Shayne Elliott: Okay.
Jonathan Mott: (Barrenjoey, Analyst) So could you talk about that leverage to rates?
Shayne Elliott: Yes, yes. Good. I'll get Mark Whelan to talk a little bit about - because
you're specifically talking about markets in particular there. But I think if we just stand
back a little bit and, again, I don't want to sound preachy, because you guys will know
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this, but as we know, higher rates and steeper curves are generally a good thing for banks
overall.
The old borrow shortly and long argument, and that is undoubtedly true. What we're
suggesting here is not only does ANZ benefit from that like others, because of the shape of
our business and, in particular, our strength in institutional, we think - we see that as a
more of a tailwind for us, yes? So - and Mark can talk that through. The other point there
I think is in terms of volatility in general, as rates rise, it tends to come with a little bit
more market volatility.
What's interesting at the moment is there's this quite significant debate happening, not
just here in Australia, but around the world, about inflation. Is it transitory? Is it
permanent or not? We saw even yesterday with the data some reasonable moves in the
shape of the curve.
That sort of environment, as my view, is there's going to be a lot more of that debate. It's
not going to get settled any time soon and there'll be market flip-flopping around on that
decision and so that's an ideal - and that means our customers are increasing their
activity, more hedging, more positioning, etcetera, and that's generally a good thing for
us. But, Mark, you're in a better position to just talk through about the impact and the
opportunity we see in our markets business.
Mark Whelan: Yes, I think that's a good backdrop to it, Shayne, because we do - the
business is built around the customer flows and so Jonathan, I think the issue for us is
more following what we're seeing with customers. I think in the last few months we've
seen - or the last six to 12 months we saw customer activity actually drop a bit, because
they did a lot of pre-hedging, as you know, last year, when volatility was up, spreads were
wide, yield curves were uncertain, et cetera. Then when all the liquidity came into the
market, what happened is that it really suppressed volatility and you'd already had a lot of
pre-hedging from customers put in place. So it was a tougher year this year. However,
when you look forward - and I don't think it's an issue of if things will get better for that
environment for markets - it's more the question of when.
So we do think that rates will rise. Now, because we've got more - a global business in our
markets business, we've already seen New Zealand rates rise, so we'll benefit from that.
You already - you talk in the US about when the US rates will rise and also it's an issue of
when does Australian rates rise? But we're exposed to all three of those and we can
leverage them at different times.
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Yield curves are already starting to move. Spreads are already starting to move out. It's an
issue of how quickly that will happen and whether it's a continual factor and when it feeds
into volatility, which then attracts back in the customers to take more action around their
positions going forward. So, as I said, I think it's more an issue of when it will hit than if.
At the moment, it's still - volatility is still pretty low, but we're starting to see more activity
and M&A customers starting to borrow more money. That's usually a good precursor to
starting to see some of these market conditions hit, which are really good for our financial
markets business.
Shayne Elliott: Yes. Just to go into your question, Jonathan, about the RBA, look, clearly
with rates so low here in Australia, essentially at zero, any increase, yes, would be of
benefit, but the greater benefit to a business shaped like ours is the steepness of the curve
as opposed to just the position of the cash rate. So in a funny way, the longer the RBA
keeps rates low, the more likely it is that we get a steeper curve as those sort of
expectations of rates rise start to get built in.
So I know there's a lot to unpack in that, but basically what we're saying is our business is
well positioned for higher rates but, more importantly, steeper curves, both from a market
positioning business, just lending - borrowing short, lending long, but actually also in
terms of driving customer activity.
Jonathan Mott: (Barrenjoey, Analyst) Thank you.
Farhan Faruqui: I'll just add, Shayne, to your point that it is absolutely right and,
Jonathan, to your question, away from the market's impact that Mark spoke about - and
Shayne touched on the fact obviously cash rates going up is obviously helpful, but we want
to see the rate structure rise. That would impact not just the market's business, but it
would also impact favourably the ITOC and replicated portfolio as well.
Jonathan Mott: (Barrenjoey, Analyst) Thanks.
Operator: The next question comes from Brian Johnson with Jefferies, please go ahead.
Brian Johnson: (Jefferies, Analyst) Thank you for an opportunity to ask a question. I just
wondering who this Jon Mott character is. Shayne, congratulations on a great result, but
just something I wanted to understand is on slide 10, you actually say consumer lending is
becoming more capital intensive and less profitable, which I would agree with. But when
we go back to what you said in 2016, when you took on the gig, you basically said that
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you'd written down on an environment that basically ANZ is too much in Asia, too much
institutional, more in-housing.
When we actually have a look at the housing market share, over and above what we've
seen just of late, the market share is down in housing from 2016 to basically now. I just
really want to understand is are you saying that institutional is better than SME lending, is
better than housing? I just want to...
Shayne Elliott: Yes.
Brian Johnson: (Jefferies, Analyst) Are you happy with basically the current mix? Because
it's the great unknown. I'd just like to find out...
Shayne Elliott: Yes, it's a great question.
Brian Johnson: (Jefferies, Analyst) ... that one first.
Shayne Elliott: It is a very reasonable question. Thank you, Brian. So I think when we - so,
again, just standing back a little bit. There is no doubt that consumer lending - the returns
are under pressure for all sorts of reasons. We've talked about partly due to its pricing,
partly to do with capital intensity and also partly to do with just an opening up of that
market and an unbundling of it and new competition, right? But it's still very attractive, so
the point there again, it's getting lower, but it's still, when you think about our stack of
alternatives, it's still - and, again, we're using broad terms here - it's still one of the most
attractive.
So if we just stand back today and think about the relative attractiveness of ROE - and
I'm, again, being pretty blunt or think about the economic profit generation of the various
businesses, just as a spot - on a spot basis, parts of SME are the highest. Not all of it. So
part - the parts of SME are the highest. Consumer, including home loans is there.
Institutional is still a lot lower than those two. Now, then you've got to think about, but
what's the change happening, both from an industry perspective in terms of - and as a
result of our own management. What we're suggesting is that retail is getting harder and
so returns are falling structurally. Institutional is actually getting better.
So the gap is closing and so now we've got an institutional business that is comfortably
above our Group cost of capital and we're not done yet. Like, we - partly because of the
tailwinds we've talked about, partly because of the work we're doing to restructure that
business, we think that continues to get better. The APRA, the proposed capital changes
from APRA - and they're not done yet, but as they're proposed at the moment that come in
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in '23, they're a pretty reasonable boost to institutional. It might be neutral overall, but,
again, it'll help start to close the gap.
So that's our view. By the way, just to finish that, SME not really changing too much. A
little bit of pressure there from some of the capital changes. So that's the way we think
about it. Now, we are a diversified business and we want to be great in all three of those.
We think our mix at the moment is about right in terms of about two-thirds, one-third is
sort of our mix. It's about right. I don't want anybody to walk away thinking that we
deliberately - and know you didn't mean that, but we didn't deliberately reduce share in
our retail business in Australia. Far from it.
We do want to increase share. We want to increase the right share at the right price and
that is why we're investing really, really heavily through ANZx, but also just in general in
terms of really trying to craft a position where we've got a compelling proposition that is
sustainable for the long term.
Brian Johnson: (Jefferies, Analyst) So, Shayne, just on that, sorry...
Shayne Elliott: Yes.
Brian Johnson: (Jefferies, Analyst) ...this is part of the first question.
Shayne Elliott: Yes.
Brian Johnson: (Jefferies, Analyst) If we go back to APRA's last announcement on this,
they said that when the amended Basel 3 comes through, basically, it's just a change in
the way you measure something, but housing capital intensity goes up. But they
specifically reference SME falling. Are you saying that's not the way it looks at this
moment?
Shayne Elliott: No, that's - you're right. I'm - again, I think it's taxonomy here about SME.
So when we think about our SME base, SME for us is a pretty broad church of things. So at
the very - so it depends - when we - I'm talking about sort of more of the - some of the
larger parts and more capital intensive parts of SME.
Again, the impacts as we - as articulated by APRA are broadly neutral at a bank or industry
level, but they do level the playing field a little bit between [INSTO], so [INSTO] will get a
benefit and other businesses will have a small reduction in terms of attractiveness for ROE.
So it's a relative - but it's relatively neutral, but, again, within our portfolio, institutional
will look relatively more attractive than it does today.
Brian Johnson: (Jefferies, Analyst) Great.
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Shayne Elliott: Yes.
Farhan Faruqui: I think [unclear] maybe...
Brian Johnson: (Jefferies, Analyst) Shayne, the second one, if I may...
Shayne Elliott: Yes, go ahead.
Brian Johnson: (Jefferies, Analyst): ...is just on the housing pricing going back to Ed's
question. If we go back to basically March 2020 when the RBA cut, ANZ, you cut your front
book/back book housing variable rate far more than your peers and we had an uplift in
your market share. So you basically hurt the back book, but you got a growth in share. If
we go back to November when the RBA cut from [25 to 10], the other banks cut more
aggressively their fixed rates. You guys didn't and basically you basically appeared to have
lost fixed share.
But if we look at it now, your fixed rates look to be pretty punchy relative to your peers,
but we've still got this higher back book variable rate. Does that feel to you like basically
ANZ gets more front book/back book pressure or less going forward than your peers...
Shayne Elliott: It's a big - there's a lot...
Brian Johnson: (Jefferies, Analyst) ...as you go back to market share growth? I apologise.
There's a lot to unpack there.
Shayne Elliott: Yes, I was just about to say there's a lot to think through in that one. I
don't want to give a glib answer. I'd have to think that one through. I'm not debating
anything you've said there, Brian. I think all - your assertion there is probably not
unrealistic, but I'd have to really honestly sit down and work that through. I can't say. I
mean, I think the point here is...
Brian Johnson: (Jefferies, Analyst) Sorry. Can I...
Shayne Elliott: Yes.
Brian Johnson: (Jefferies, Analyst) ...just...
Shayne Elliott: No, go on.
Brian Johnson: (Jefferies, Analyst) Shayne, your fixed rates are low relative to your peers.
Shayne Elliott: No, I understand the question.
Brian Johnson: (Jefferies, Analyst) So that creates more...
Shayne Elliott: Yes.
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Brian Johnson: (Jefferies, Analyst) ...front book/back book pressure, but your benchmark
variable rate is well below your peers, which creates less. How should we add the two
together?
Shayne Elliott: As I said, I need to work that through, because we also need to understand
the relative weight of the business today and the relative flow and clearly the issue is - so
all else being equal, you're correct. That will create more of a headwind for us. But all else
isn't equal and the point being that we - pricing shifts and also importantly, as we've said,
we're not achieving the kind of volumes that we want today. And why we talked about an
aggregate about the fact that we want to get our book back to growth in the first half and
back towards peers at some point in the second half, clearly the mix of that will be very,
very important in terms of where that growth comes from.
So, again, you're right, but I don't know that you can necessarily just extrapolate that too
far given we've got some of our - you know, the processing challenges we have and
making sure we get back into the volume that we need.
I think what's important here is what we are saying is we don't believe - I don't want
people walking away here and saying hey, our plan is we get our [process] in and we’re
going to use price as a lever. We have to be competitive, we understand that, but that's
not the issue today.
That is not our issue about people wanting to choose ANZ. We have got a pretty, you
know, as I said we are in the mix when it comes to pricing. We will be a little bit better
here, a little bit worse there, but we're in the mix. It's really about the processing capacity
that we need to fix.
Brian Johnson: (Jefferies, Analyst) Thanks Shayne and well done on the result.
Shayne Elliott: Thank you Brian.
Operator: The next question comes from Azib Khan with Morgans Financial. Please go
ahead.
Azib Khan: (Morgans Financial, Analyst) Thank you very much Shayne and team. You have
covered pretty well the sensitivity and the leverage of the markets business to the shape
of the yield curve in rising rates. I would like to understand the same sensitivity to another
part of the institutional business being the payments and cash management business.
Shayne Elliott: Yes.
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Azib Khan: (Morgans Financial, Analyst) If we go back to 2018 and 2019 the PCM business
was delivering revenue of somewhere between $1.2 billion and $1.3 billion per annum, but
it has since trended down such that it's now delivering about $900 million per annum.
Firstly, to what extend has that down trend been driven by lower rates globally and
secondly, I now note that that revenue, the PCM revenue, has stayed in large from the
first half to the second half. Do you believe that that down trend has now come to a halt in
this cycle? Mark mentioned earlier that we're already starting to see yield curves move in
many of the geographies that you operate in.
Shayne Elliott: Yes.
Azib Khan: (Morgans Financial, Analyst) Is that starting to bode well for the outlook at PCM
revenue.
Shayne Elliott: Yes, look, it's a great question and don't forget you're talking to an old cash
management person so it's going back a bit. We love this business. You're right, so
actually the decline in revenue is more than explained by lower rates, yes, because
actually what we have seen at that time is actually an increase in the volume and the
increase in the volume comes twofold. We have been increasing shares, we've been
acquiring new customers and mandates and our customers are increasing volumes.
I think so we have this odd sort of, well it's not odd, we have had this situation where
despite the fact we have been winning more business and getting more transactions and
putting more through the pipe if you will, the way that market works in terms of
generating value and revenue for us was heavily skewed towards NIM, i.e. the amount we
made on balances and less reliant on fees, yes. So when a lowering rate environment, yes,
it did and so in some ways we have had to pedal really, really fast to actually reduce the
reduction in total revenue.
What we are signalling and talking about here, well signalling is not the right word, but
what we are talking about in the result is look, for what we see now and remember this
business is not just in Australia and New Zealand, it's an array of currencies across an
array of markets and pretty well diversified, but broadly yes, we think that business has
bottomed in terms of the drag of interest rates.
Actually, as we start to see rising rates and we have started to see them in New Zealand
and other parts of the world and there's more talk of that happening, that will absolutely
be a net positive for that business, yes. We have got higher operating leverage in that
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business today because it's got bigger balances and bigger transaction volumes than it
used to.
The other thing that I referred to in there is, it's small but important, increasingly the
services we provide through that business are more fee driven and so the business model
is shifting a little bit. The best example is NPP. On the NPP services the way we generate
revenue there is a fee per transaction, yes, and so it's not a NIM business at all. As the
business mixes and we become more of the processing shop, processing payments for
people, again, we see a tailwind coming through in that business.
So yes, we see that as an upside. Rates will benefit, steeper yield curves will benefit, but
also the changing nature of the business and the underlying growth that we are seeing
there which is really pretty powerful.
Azib Khan: (Morgans Financial, Analyst) Shayne, putting all of that together, so the
outlook for the PCM business is looking quite rosy. The markets business, we understand
the sensitivity there to rising rates in the shape of the yield curve and on balance that's
looking pretty good for the next couple of years.
Your outlook for corporate finance and trade is looking good in light of what you're looking
to do with the transition to the low carbon economy. Putting all that together, are you
expecting cash earnings for the institutional division to outperform other divisions over the
next two to three years?
Shayne Elliott: I think it's about - so all of the factors you talked about - you should do my
job, come and [sell it]. You did a good job of explaining the positives there. We do see
those things as structurally tailwinds. The question we have here is really about timing. To
your point, over the coming years, yes, absolutely we see those things as positives.
Now, what we have got to do is keep our heads around - and I have, Farhan has, Mark,
we've been in institutional banking and that for a long time, we know what to do here I
think in terms of really strongly managing risk, it's all about getting the risk settings right
and it's also making sure we keep on top of our costs base.
We are in a great position, we have more structural tailwinds than we have had for a long
time that I can certainly remember in terms of institutional banking and we will keep a
very, very disciplined approach around execution, but over the medium to longer term,
yes, there are some real positives there that are exciting. You still have to win the
business with customers and get your stuff together to take advantage of it but we're
feeling a lot more positive about that that is certainly the case.
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Azib Khan: (Morgans Financial, Analyst) Thank you.
Farhan Faruqui: If I can just add a quick point on that Shayne...
Shayne Elliott: Yes.
Farhan Faruqui: ...because I think you have covered it really, really well. Also, I think it's
fair to say you're an institutional business person yourself, but I think while the tailwinds
are absolutely accurate, I think we have got to make sure that we continue to keep our
eye in terms of margin and the competitive intensity that the institutional business,
alongside other businesses, is going to be facing into.
The good news is that Mark has driven incredible discipline in the institutional business in
terms of capital and a return orientation, but we shouldn't be - we are not going to be
looking at institutional for growth for growth's sake, it is going to come on at profitable
level.
Shayne Elliott: Yes, well said.
Operator: Your next question comes from Victor German with Macquarie. Please go ahead.
Victor German: (Macquarie, Analyst) Thank you and thank you for the opportunity.
Shayne, I would be interested just to go back to mortgages and expenses actually. I was a
little bit surprised with comments from Farhan and Mark that you underestimated growth
in the market and it would make sense if it grew by 4% or 5% and the market grew at
8%, but surely when you're not growing, you're going backwards, it's not just
underestimating the growth in the market. So basically, in a little bit more colour in terms
of what is going on and why do you think your mortgage processing is less scalable than
your peers? That's question one.
Then the second question on expenses. I guess, Farhan, if you could perhaps maybe
provide us a little bit more colour. Now, you have mentioned that next year you expect
expenses to be up. If we look at your second half expense rate you are effectively
averaging $8.9 billion based on second half and I appreciate there is high investment
spend in there, but I would just be interested in how we should reach that $8.9 billion
number to $8.6 billion base and where you expect those potential reduction in spending to
come from, particularly in the context presumably you will need to continue to invest to fix
some of the mortgage issues that we spoke about earlier.
Lastly, I will take Jill on her offer of bringing in her favourite club. If we look at the
favourite player, there is some speculation that he might not be coming back and retiring,
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so how committed are you to actually delivering on that $8 billion target in 2023? It's not
that far away. Are you actually thinking about delivering that or are you really putting
together structure in place for someone else to take that and deliver on that number?
Thank you.
Shayne Elliott: Okay. No, look, I'm committed. Let's just remember on the - we will do
them in reverse order, Victor, a little bit. Hey, let's not forget where the $8 billion came
from, right, so I'm not walking away from it. I made comments about the fact that we
needed a simpler bank. That we were way too complicated, we were doing way too many
things and some of them we weren't doing very well and we wanted to de-risk the
business and we wanted to make it a better bank for customers.
Yes, we wanted our processing - and home loans is a great example, it's too manual, it's
too slow and it's too clunky. We wanted to build scalable better compelling propositions
and we wanted our business to be really centred around things that we did well. That was
the objective.
Now, when we sat back and did the work and said, well what will that look like and what
would the organisation - what would the shape of it be, what were the things we would be
doing, where would we be doing them and how would we be doing them, we back solved
that and said actually that comes out about $8 billion.
So, the $8 billion was an outcome as much as it was - it wasn't just a target, it wasn't just
a number we made up. I know it has become a target and I know that target is on my
head, I understand that, but it's important to understand why we have that number. So
yes, I am committed, but I am committed to the simpler better bank proposition and I still
believe and I went through, that $8 billion is about right.
We are not going to do anything stupid to get there and I know I have said this probably
every half recently, actually we can get there now. It's not that difficult. You have seen the
numbers. Our run the bank costs are at $7.4 billion. Right, all I have to do to get there
now is finish BS11, shut down ANZx, I am basically there. Now, there's a bit of noise in
there but that's all I have to do, but that would be the wrong thing to do. Right, we want
to invest for the future.
So yes, I am committed to it. No, I am not setting it up for, well that's up to the Board I
guess, but no I'm not setting it up to hand that task onto somebody else. I think that
simpler better bank that we want at the end of 2023 is absolutely within our grasp and it's
not going to be easy on a few areas but we are committed to doing it.
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In terms of the home loan piece, why did we call it? That's a good question and it's a fair
question. Again, it's really important and there's some charts there to look at the moving
parts, it's not just about system growth. The other thing that we did not see - because
what actually drives the work isn't just system growth, it's the churn, right, and what we
saw is massive levels of churn in terms of refinancing. The level of refinancing activity in
the market has gone to an extraordinary level.
Now, we did not foresee that coming. Even to hold still in volume we would have had to
have significantly higher levels of processing capacity. I think that's a little bit broader than
just saying oh system growth was eight and we thought it was going to be five. It's a little
bit more than that because what drives it is actually the turnover.
Why are we less scalable? We're less scalable because we are more manual. Most of the
banks today, despite what people say, they're largely manual but we are even more
manual than our peer group. In a time when frankly hiring and training people has been
more difficult, that makes it harder for us to scale.
That's why, two things, we're dealing with it in the short term, we've put the resources,
we've repositioned literally hundreds of people in our network. We had people in our
branches who were underutilised who we could put onto this. We have hired people,
literally hundreds of people to come in. They are being trained. Every week more and more
people are getting into actually being and assessor and being able to chip into that.
We are investing in some of the technology solutions that Mark alluded to in terms of
simplifying this, that and the other, for example, the way we ingest applications from
people. We have put Emma in and Emma is an expert and got a lot of skills around data
and automation.
So, we are doing the short to medium term things and I don't want to underestimate
those. Those are having an impact, absolutely having an impact today. Our capacity today
is higher than it was last week and the week before. It's literally going up and we measure
it literally to the deal number and the dollar we know what our capacity is in getting ready
for that.
Then on the other hand, we are also investing for the long term because I don't think that
that is the solution. The solution cannot be that the answer to this is just keep throwing
people at this and tinkering around at the edges. That's why we talked today about the
fundamental rebuild of ANZx.
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I know it's hard to sit and listen and I throw a bunch of names at you and a bunch of
numbers, what the hell does it all mean? What it means is essentially a whole new stack or
a whole bunch of new technology and processes that initially are around helping people
join the Bank and start and have a savings and transaction account with us and that we
will then be able to plug in all the other sort of ancillary services, including home loans at
some point.
So we’ve got the short medium-term strategy, yes, which we’ve talked to death on and
we’ve got the longer-term strategy, which we think means will put us – we’ll have a
proposition that is far more compelling, which will make us far more competitive, we won’t
be talking about just moving our capacity a little bit, but really have a scalable, compelling,
low-cost resilient platform to really grow in the market and that’s why we’re doing the hard
yards on X. So that’s sort of those questions.
Somewhere in there, there was a question for Farhan, which I’ve forgotten. It was about
costs, I think, Farhan.
Victor German: (Macquarie, Analyst) Yes, thank you Shayne. Out of that investment, both
manual and automated stuff, I mean how much of that has already been captured in your
second half cost base versus what’s carrying it through into the next half.
Shayne Elliott: Yes, good question. So in terms of the short and medium, the stuff we’re
doing to fix the now, a big chunk of that cost is in our second half. Now not all of it, so the
exit rate of those expenses will be higher than the average, if you will, because some of
those people only got hired in the last two or three months, so there’s a little bit of that
and we haven’t finished. So there’s a little bit of a headwind from a cost perspective in the
Australia division on home loan processing.
But let’s not get carried away here. We’re not talking hundreds of millions of dollars, we’re
talking relatively modest amounts in terms of the scheme of things, so we’ve got that. In
terms of the longer-term investments and X and the rebrand with Plus and the new
opportunities there, by and large they were in our run rate on the investment slate.
Now there’s going to be an uplift in the investment in X, so the work that Maile’s doing that
I talked about, that will be higher cost in FY22 than it is in FY21, but there are some other
things coming off the slate and that was what Farhan referred to. There’s a mix shift in
there. It is going to be slightly up, the total investment, but a lot of it, there is a mixed
shift in there, so ANZx up a little bit, some other things down to offset some of that.
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Farhan Faruqui: I think, Victor, maybe the best way to think about it is that, as Shayne
said, we have tome BAU uplifts and we have some investment uplifts towards the back half
of the year. As we’ve indicated, investment spent for the full hear next year is likely to be
slightly higher. Now that’s going to take different shapes and forms as investments go in
and other projects roll off and particularly some of the regulatory projects start to reduce,
so we’ll probably see a non-linear sort of event in 2022, uplift in first half with a reduction
in second half.
Also, I should say that the OpEx rate is also up due to the mix of projects. So the way we
are expensing those projects is also going to be a little bit higher next year than this year.
So investment spend will go up overall, but will probably be slightly higher in first half and
then start to trend down in the second half in terms of the pattern it will follow.
BAU cost is, as Shayne said, is exiting because we have hired people in home loan
processing, we have some transitory uplifts due to things like Chengdu and our Bonus
Bonds business, et cetera. We also recognise of course that we’ll have inflation headwinds
in 2022, but the productivity saves that we have in plan for next year will largely offset
that and we will see BAU expenses trend down in 2022. So that’s sort of the mix, Victor, if
that helps to give you a sense of the travel, if you like, in to 2022.
Victor German: (Macquarie, Analyst) So annualising second half of cost base is overly
conservative, it sounds like, if I add up everything you say, annualised cost base of $8.9
billion, it sounds like it’s too high.
Shayne Elliott: So the question Farhan, I’m not sure you could hear. The question was, so
he’s annualised the second half and said $8.9 billion, so he says that sounds like a little
high for FY22. He’s trying to figure out the FY22 number. Now I think that’s up to you,
Victor.
Farhan Faruqui: Totally your call, Victor, how you want to add those numbers up. But I
think what we are indicating is that we expect total expense slightly higher than this year,
higher on investment, lower on BAU and I’ve told you what the travel looks like between
first half and second half next year.
Victor German: (Macquarie, Analyst) Thank you.
Shayne Elliott: Thanks Victor.
Operator: The next question comes from Richard Wiles with Morgan Stanley. Please go
ahead.
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Richard Wiles: (Morgan Stanley, Analyst) Good morning everyone, I have a couple of
questions. The first one relates to funding and the second one relates to some of these
structural tailwinds you’re talking about. On the funding, slide 84 shows that you’ve got
$21 billion of term debt maturities next year, but you're also going to have run down the
CLF and I think this seems to have taken the banks a little bit by surprise, the timing of
that CLF rundown.
So my question on the funding is, how much term debt do you think you’ll need to issue
next year and what are your expectations for the cost of funding? Do you think we’ve seen
the best and the cost of funding is going to go up?
Shayne Elliott: Yes, that’s a fair question and Farhan, I’ll get you to make some comments
on that. I think the first thing just to note is in terms of the CLF, Richard, as you probably
know, we have by far the smallest CLF and that was because we made some decisions
early on and we looked at cost benefit and the structure of our funding which is different to
our peers, partly because of our strong FIG business and institutional, et cetera, we didn’t
have the same need for it. So we have less of a replacement challenge, if you will, on CLF.
But Farhan, do you just want to answer Richard’s question?
Farhan Faruqui: Yes, so look I think from a – so CLF, Shayne has already covered, it’s a
small number, we think it’s very manageable, in fact I think it’s the smallest CLF of our
major bank peers. Now whether we need to issue next year or not in terms of term debt, I
think Richard, is going to be a function of a lot of things, right? It’s going to be a function
of what the system deposit growth looks like, how depositors change their behaviour in a
post-lockdown period in terms of deposit mix and the level of liquidity that we have sitting
with us. That will then drive our decision whether we need to issue.
There is a possibility that we may issue a term debt next year, but we’re not at the point
where we are clear whether that is a requirement because we have to wait and see how
the deposit and liquidity situation plays out over the next few months. I think CLF, as
Shayne said, is not really a challenge. We acted faster on that relative to some of our
competitors, we’re down to about $10 billion or thereabouts of CLF and that will go to
pretty much zero by the end of next calendar year. That, by the way, is a positive for
returns as we save the fee on the CLF.
Shayne Elliott: I think just a broader, I was thinking about it, preparing for this, Richard
and looking at some of the – I mean it’s an extraordinary shift when you look at the loan
to deposit ratios essentially in the banks for something like ANZ. To see the massive shift
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 40 of 45
of that in a relatively short period of time with these extraordinary levels of amounts of
liquidity and a lot of it obviously sitting on our balance sheet, so that has structurally
changed and gives us more options in terms of ways we think about issuance.
I think what the team, under our Treasurer, Adrian’s, leadership has given them more
options and really focusing on getting the best cost and also maximising return, while
maintaining diversity and all those other things that we need in terms of funding. So it’s
given us way more options than we’ve ever had before.
Now you wanted answered questions about structured...
Farhan Faruqui: I just wanted to add to that point around...
Richard Wiles: (Morgan Stanley, Analyst) Yes, I wanted to ask about some of those
structures you were referring to. You’ve mentioned sustainable finance several times in
your initial comments. Shayne, you talked about platforms and I think you mentioned the
New Payments Platform and it seems like you’re dominating in that space. I just want to
get an idea of how material these structural tailwinds and initiatives are for the Group’s
revenue.
You’ve got about $17 billion of revenue. How much are you generating from sustainable
finance at the moment and what fees are you generating from the NPP? Are they
meaningful to the Group?
Shayne Elliott: Yes, good, totally fair question. So remember I’m talking about the longer
term here, so I’m not talking about next year, although they will be there, but you're right
to point out they’re probably not going to be material in the base of a $17 billion, $18
billion kind of revenue base, so I understand that. So sustainable finance is certainly not in
the hundreds of millions of dollars, not yet, but we think that it can be. I think that’s an
important thing and it will grow pretty materially.
NPP I use an example, it is relatively modest in terms of the total fee today, but the
reality, the point is, the growth rate’s high and so I just used that as an example. But if I
think of something like clearing, so Australian dollar clearing and New Zealand dollar
clearing, we have more than 50% market share of those businesses. So that is basically
clearing Aussie and Kiwi payments for international banks, so it’s a great business, we’re
good at it. Those things have actually again got structural tailwinds in terms of we benefit
from higher rates as that comes through and we’re actually also continuing to see strong
volumes in those areas.
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
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So the cash management business, it goes to, I think it was -I can’t remember who it was,
the question before there, Richard, if you think about payments over all of which NPP I
accept is a small part, the tailwinds there are more and more volume, so there is
underlying volume growth and we use some of the data in the pack. Two, more of that
volume benefiting to us is being driven by fees than margin, so the changing shape, which
is positive from a return profile perspective and opportunity there. And the parts that are
related to NIM, a steeper yield curve, higher rates, also benefit. So there’s sort of a
multiplication effect in there.
The cash management business is a billion-dollar business of the $17 billion. That has
more tailwinds. We’ve had, oh gosh I can’t remember, at least five years of tailwinds in
that business with rates falling and now it seems to be bottoming out and we’re going to
start to see some benefit in there. So if you think of that base, the billion, has some real
positives and that’s an important mix issue for the institutional bank overall, because that
really drives a lot of the return benefit into institutional going forward.
Richard Wiles: (Morgan Stanley, Analyst) Thank you, Shayne.
Shayne Elliott: Thanks for the questions, Richard.
Operator: Your last question comes from Brendan Sproules with Citi. Please go ahead.
Shayne Elliott: Hey Brendan.
Brendan Sproules: (Citi, Analyst) Good morning team. Hi, how are you going, Shayne?
Shayne Elliott: Good.
Brendan Sproules: (Citi, Analyst) I’ve got a couple of questions, one of the SME and then
one on the institutional lending book. So just quickly on SME, I noticed you talked earlier
about the attractive returns that you’re getting in SME and also that the capital intensity is
probably coming down. I’ve just noticed on page 61 of your 4E today that the commercial
and private bank was actually the biggest drag on the performance of the Australian
region, bigger drag than retail and we saw similar results last year.
What’s the outlook for this business? A couple of your larger competitors are spending a lot
of money in hiring bankers and trying to win business here. But when you went through
your five priorities, you’re focusing on other parts of the business. How are you seeing this
business, I guess, going forward and maybe how this can turn around?
Shayne Elliott: Yes, good question Brendan and now my team are going to say I told you
so, because they said to me you should put the SME in and make it a sixth priority. But I
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 42 of 45
like the number five more than I like six. But anyway, you’re right. So let me answer your
question.
First of all, there’s a mix issue in that commercial and – actually our private bank is doing
extraordinarily well and the commercial bank is a very broad array of businesses in there.
So our small business banking is doing extremely well, that is that high return, highly
diversified growing business and we love it and it’s great and that’s going to be an
important part of that ANZx proposition, because small businesses want to be able to deal
with banks equally in a digital fashion, et cetera. So that business is really good.
But way at the other end of the spectrum there's a whole bunch of other things in there
including some businesses that are much more heavy in the asset finance area, financing
bulldozers and whatever.
That stuff actually in a funny way looks a lot more like institutional. It's really hard. It's
hard to get the returns right; it's asset and capital heavy, very competitive, broker-driven,
all sorts of things. We had made some decisions to exit parts of that business. Two
reasons: we don't think we can generate competitive returns, so it was a drag, the returns
were well below Group cost of capital; and secondly, the nature of that business was not
relation-driven. These were transactional, they were broker-driven - we finance you a
truck or something. You didn't really care about ANZ, you didn't give us any other
business, and it was just a balance sheet thing.
So, we've exited some parts of that. It's not immaterial in the balance sheet and that
business is essentially rolling off. That's what's driving the outcome here; you're seeing the
roll-off in that business has masked other benefits there. If I stand back and think about
the commercial bank, you're right, others have gone out and said they're going to go and
hire and have people knocking on doors. When we stand back, and we've talked to our
team, we can do that too. When we don't have a constraint and we've asked the team if
we need more people there, we actually don't see that as being what our customers and
what we do well actually want.
We're actually much more interested in building a digital capability, and that's why we've
put our money into and our thinking behind GoBiz, which again I don't want to overstate,
it's a small but important part of our proposition which allows you to go in, you give us
access to MYOB or Xero or Intuit or whatever it might be in terms of your accounting
platform and literally in real time we can approve - and it's completely automated - we can
approve unsecured lending up to $250,000 today, and we can do that now. That was what
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 43 of 45
I mentioned. That's going really well. It's a soft launch; we're getting almost 3000
applications a month and we approve what we can during that channel automated and the
ones that pop out do go to a specialist team to see if they need a bit more work.
We think the future is more digital and that's where we want to put our effort. So, it is a
priority; it just didn't make my five cut, and I think I've explained what's going on in those
numbers. We will expect to see the roll-off starting to - it will pretty much be finished I
would imagine over '22, and so that won't be a drag on the business. In fact, it will be a
positive for returns.
Brendan Sproules: (Citi, Analyst) Thanks for that. Secondly, on the institutional business,
obviously you've had the lending grow again in this half. I think it's up 5% ex-currency,
but noticeably the risk-weighted asset growth is obviously a lot weaker and you've had a
slide showing us how the average risk weight has been coming down.
My question is, what effect is this going to have on the net interest margin ex markets,
which has obviously gone up two halves in a row? Are we now going to see that start to
reverse, and are you going to really get a lot of revenue benefits I guess from these loans
given just where spreads are being priced at the moment?
Shayne Elliott: Yes. That's a good question. I'll get Farhan to comment on that but I'll just
make some broader comments first. Institutional is a - we're in a much better position in
terms of our institutional bank in terms of discipline. That business is completely focused
on risk-adjusted returns. We know it's not that difficult to grow revenue in an institutional
bank; it's difficult though to grow quality revenue above our cost of capital. So, they have
a ruthless focus on returns, but the way they assess customers, the way they assess
transactions, et cetera, is pretty ruthless in terms of making sure we get paid appropriately
for the risk that we are taking. So, I can assure you of that.
Farhan, there are some mix issues happening in terms of the reasons why they've got
asset growth but RWA actually improving that is worth just talking through for Brendan's
sake.
Farhan Faruqui: Yes. I think there are two aspects to that. One is that there have been risk
re-ratings as a result of the improving economic outlook so that has helped in terms of
reducing RWA intensity in the business. I think a fairly large part of the growth that has
occurred in the institutional business on the loan side or on the lending side has actually
come in the financial institutions business that Mark had spoken about earlier.
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 44 of 45
The financial institutions business, as you know, is much lower risk-weight intensity as
well. We've seen loan growth basically outpacing what has been happening on the risk-
weighted asset side, partly because of the risk re-rating and partly because it's low-risk
intensity growth on the loan book.
Shayne Elliott: Yes. The only other thing I would add to that, Brendan, which is really
positive again for institutional, if you look at the equivalent front-book pricing, if you will,
like we might think about in home loans, it's held up a lot better than any of us thought it
might.
Understandably, with all this liquidity in the world where there's a very real prospect of
front-book institutional pricing being under pressure, and while it's not at its peak levels it
certainly has held up a lot better and certainly for our business and our mix of customers,
which again is much more diverse than our peer group, we're actually pretty pleased about
where we sit today in terms of margins.
Brendan: Perfect. Thanks, Shayne. That's really encouraging.
Shayne Elliott: Thank you.
Jill Campbell: Okay. That's it.
Shayne Elliott: I think we're done. Hey, thanks everybody for the questions. I didn't have
any prepared remark but just really quickly, it's great to have Farhan on board and
obviously you'll get to speak to him, hopefully meet him when he moves to Melbourne
early in the new year. So, he's got his place in quarantine all set up. This has been a really
interesting time for us, but we are - and hopefully you get from the tone, we're feeling for
the medium term really positive about the position of ANZ. For the first time in a long
time, institutional is really positioned for tailwinds and to be a net contributor and we are
feeling really positive.
While we've got challenges in Australian home loans, we're feeling positive we've got the
momentum back into that business and that again we will resolve that - we're resolving
that as we speak. So, we've got I think the prospects of having institutional with the
tailwinds, Australia being restored back into momentum, and some really exciting things
with ANZ Plus coming soon, which will fundamentally transform our long-term business
and the New Zealand business doing extremely well. That's a great position to be in as we
enter into '22. Thanks, everybody, for your time.
ANZ Bank Banking Group Limited 2021 Full Year Results
28 October 2021
Page 45 of 45
Jill Campbell: Thanks, everyone, and if you didn't get to ask your question the IR team are
obviously around to help you with that, so give Cameron, myself, or Harsh a call and we'll
take that question from you. Thanks, everyone.
End of Transcript
=== 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: 28 October 2021
Transcript of bluenotes video interview with ANZ Chief
Executive Officer Shayne Elliott
ANDREW CORNELL: Morning Shayne and thanks for joining us again on bluenotes for the full
year result at the end of what’s been another extraordinary year, really. Looking through
the pandemic though, this looks quite a solid result but can you perhaps talk us through
what you see as the underlying business messages from this one?
SHAYNE ELLIOTT: Sure. And I think it’s important, exactly as you said, you need to look
through COVID. And let’s not forget, COVID hasn’t gone so it’s still there and it’s still having
an impact on the economy. But that’s why I think it’s really important to look at some of the
longer-term trends here. And what we saw at ANZ really was the benefit of diversification.
We’ve got three great businesses and they all contributed in a really positive way.
So New Zealand had an outstanding year, actually, and is really firing on all cylinders, if you
will, in that business. And really leaning into the rebuild in New Zealand and some
extraordinary economic activity happening there. Institutional – again, very strong year.
Didn’t quite have the year it had before in our global markets business, which was a record
year, but again a solid performance. And what we’re seeing there is increasing customer
activity. As the world emerges out of COVID or into the newer economy, there’s lots and lots
of activity – M&A activity is up, more trade volume, more capital flow etc. And so we’re well
positioned on that front. And here in Australia, of course, the economy has been bumpy but
overall pretty good. And as we’re coming out of these lockdowns there is increasing activity,
whether it’s in housing or small business and others. And that again drove a pretty decent
outcome in our Australian businesses as well.
ANDREW CORNELL: And is that opportunity that you talk about, is that across those
businesses? Diversification is obviously really good when you’ve got volatile times because it
offsets. As we get through that, are some businesses better placed than others to seize
opportunity?
SHAYNE ELLIOTT: Yes absolutely. I mean we want to have three great businesses and, as I
said, in the last year they all performed very well. But if we look ahead and think about the
world as it is shaping up – and let’s not forget it’s still very uncertain. I mean, COVID ... it’s
great that vaccination rates and other things are rising, but this is a living, mutating
organism so it’s certainly not over. We’ve got that still happening.
We’ve still got some underlying changes happening in the world around digitisation and the
massive technology disruption that we’re seeing – that’s still going on. We’re starting to see
emerging signs of inflation, we’re seeing challenges in supply chains. And then, of course, to
top it all off we’re seeing this massive shift in expectations around climate change, quite
rightly. And so there’s this huge transition happening in the economy where trillions of
dollars need to get spent preparing the world for a low carbon future.
So you wrap all that up – lots going on, lots of challenges but equally lots and lots of
opportunity. So in terms of your question, we see most of our opportunity, actually,
interestingly in our Institutional business, which is really well positioned around the
sustainability transition, but also just the general levels of activity that are going to happen
– or we think are going to happen – in the global economy.
ANDREW CORNELL: And we’ll come back to sustainability because you do call that out as a
big opportunity. But there’s also some weaknesses in this result – around home loan
processing for example. What are you doing on that front?
SHAYNE ELLIOTT: Yes. In Australia we started the year really well in home loans and then,
of course, we saw just unbelievable levels of volume across the economy in terms of
turnover, people buying and selling houses. Now we didn’t prepare well and that’s on me.
So we struggled a little bit in terms of the volume. Overall, the year was pretty good. In
fact, our home loan revenue was up double-digit levels, but it sort of fell off in the second
half, so we’ve got to get back and ready for that and that’s what we’ve been doing for the
last few months. We’ve been hiring more people, putting more people on the tools, getting
ready for the ... what we think will continue to be a pretty active market. And the good news
there is July was the low point in that and every month since then we’ve been getting better
and better and better in terms of our capacity.
ANDREW CORNELL: And capital was a good story, the bank is unquestionably strong and the
dividend is coming back up now after COVID. What can investors look forward to on the
capital management front?
SHAYNE ELLIOTT: Well look, we’re here for the long-term and the most important thing we
can do is protect the bank and make sure that our balance sheet is really robust and strong.
And going back to the uncertainty that I talked about before, while it’s good to be optimistic
– and we are – it’s still uncertain and so you want to have that ballast, you want to have
that strength of a strong balance sheet, lots of capital, lots of credit reserves. And that’s
precisely where we sit today.
And I think it’s really important that ANZ has been very prudent right throughout this. We
didn’t put our hands into shareholders’ pockets during COVID because we had the strength
because of the work we had done over very many years to simplify and strengthen the
bank. And we announced a small share buyback of $A1.5 billion – we were the first major
bank to do so – we’re about halfway through that, still got a little way to go. So that’s
another way to return capital to shareholders. We’ve increased our dividend back to more
normal levels and we’re still sitting on a very, very robust balance sheet.
Now, the best thing we can do with that capital is invest it for the long-term growth. And we
do see opportunity, so we’ll see. The next half is going to be really important just to see
how the world settles down and whether we are going to see increased demand for lending
and put that capital to use to drive long-term value for shareholders.
ANDREW CORNELL: And coming back then to sustainability, it is one of the major shifts that
we’re going to see in our generation’s ... in the global economy. And COP26 is obviously
coming up this weekend in Glasgow. But how does this sustainability factor into your
strategic priorities?
SHAYNE ELLIOTT: Yes, so if we think about – again I’ll just use the Institutional bank as an
example. Our whole strategy there is about facilitating the movement of goods and capital
around the region. Well guess what? A lot of those goods are resources and a lot of the
capital has now got a sustainability lens on it. So, the kinds of resources that are needed for
a low-carbon future are very different to the kinds of resources we’ve had in the past. The
amount of money that is sitting around the world today, the amount of capital that is being
invested with an ESG lens on it has grown exponentially.
So ANZ sits right at the epicentre of that. If you stand back and think about ... if that’s the
megatrend, what would you need to be good at to participate in it? Well many of those
things are in our toolkit. You’d have to be really, really good at banking resource extraction.
Well we’re the leading bank in that in this country. You’d have to be really, really good at
financing and banking large-scale infrastructure projects – plants to develop hydrogen for
example. You’d have to be really good at trade and connecting those goods with the rest of
Asia. And, of course, you’d want to be banking the world’s leading companies who are really
at the forefront of sustainable transition and that’s exactly where ANZ is.
So I think there are lots of positives for us. We’re positioned really well for it and we’re
determined to make the best of that advantage because it’s the right thing to do for the
environment and it’s the right thing to do for the broader community.
ANDREW CORNELL: And the other major project that you’ve called out and drawn attention
to is ANZx, or ANZ Plus as it will become as it rolls out, which has been going a while. But it
seems to be a fundamental rethink of how the bank operates. What’s the essence of ANZx?
SHAYNE ELLIOTT: Some years ago we stood back and you start thinking about retail and
small business banking as it operates today in Australia and New Zealand. And you could
see that there were some real challenges in terms of that business model. Competition was
getting more intense, regulation was allowing more and more disruptive technology to come
in, there’s lots and lots of things happening right across the space whether it’s in the
payments area, which we’re seeing a lot on, whether it’s in home lending etc and new
competitors. So, we sat back and said, ‘hey there are a couple of options here – we can
muddle through, patch up things we’ve got, try to stay ahead of the game. Or we could
really design for the long-term future and, if you will, disrupt ourselves’. And that’s the path
we’ve taken.
So we set up what was a small team, which is now a big team, we’ve got about 800 people
in a different building and we’ve called it ANZx to give them some separation and the ability
to get on with things at-pace. And we’ve really redesigned a new proposition for our retail
and small business bank. I don’t have time to go into it all now, Andrew, but it’s all built
around this idea of financial wellbeing. If we can improve the financial wellbeing of our
customers, we’ll acquire more customers at a lower cost and actually they’ll stay with us
longer. And so a lot of it has to do with technology – that’s probably the piece that costs a
bit of money and that’s the bit that people will look at and see. But it really is a fundamental
rethink about the relationship we have with our customers. So it’s pretty exciting.
As you said, the very first parts of it are going to be visible in the coming months and from
then it will be a rapid expansion not only in scale but also the kinds of offerings we have out
in the market. Think of it as a little bit of a fintech meets big bank approach. It’s fintech in
its capability and the way it works but with the brand of an ANZ behind it and the capability
and the strength of our balance sheet.
ANDREW CORNELL: Well thanks for your time today Shayne. Hopefully we’ll continue to see
the vaccination rates rise and economy recover. You and I are both going to try and do our
bit by having haircuts if we can ever get in. But thanks for your time this morning.
SHAYNE ELLIOTT: Thank you.
For media enquiries contact:
Stephen Ries, +61 409 655 551
Nick Higginbottom, +61 403 936 262
Approved for distribution by ANZ’s Continuous Disclosure Committee
=== IR PAGE TRANSCRIPT: Transcript of Interview with CFO ===
Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
News Release
For Release: 28 October 2021
Transcript of bluenotes video interview with ANZ Chief
Financial Officer Farhan Faruqui
ANDREW CORNELL: Morning Farhan and thanks very much for joining us on bluenotes for
the full year result. Unfortunately, you haven’t been able to make it to Melbourne yet and
you’re still in Hong Kong for this, your first outing as Chief Financial Officer. But you come to
the role from International so where do you see your focus now in this new role?
FARHAN FARUQUI: Thanks for that question Andrew. I did an interview with Shayne just a
few days ago and we talked about the evolving role of the Chief Financial Officer. And I
think for the CFO to be good at reporting and explaining the numbers, the evolving CFO has
to be actually really good at driving the numbers. And that basically means partnering with
our businesses and ensuring that we’re focusing on the right priorities and we’re constantly
allocating resources – whether they be capital or cost or investment – in a fashion that
aligns with our strategic priorities.
The second piece of focus is going to be around our simplification agenda and that’s actually
really, really important because we have to be able to fund the various growth initiatives,
technology investments that we need to make. But we need to fund that by reducing
constantly our run-the-bank costs by continuously improving our productivity and our
efficiency.
The third thing which I think we’ve done really, really well historically and I think it is
probably a hallmark of ANZ over the last five years, is the excellent manner in which we’ve
managed our capital and we have managed our allocation of resources. And I think
continuing that discipline is going to be important and we need to make sure that we are
constantly challenging ourselves. That our investment spend is indeed producing the desired
returns that we need it to produce, whether they come on a cost line as saves or whether
they come on the revenue line as growth initiatives.
ANDREW CORNELL: And when we step back a bit and look at how that can be achieved,
you’ve been – even though you weren’t CFO – you’ve been deeply involved in presenting
these numbers, so you have got that perspective on them. When you look at this result,
where did you see the strengths and perhaps some of the weaknesses?
FARHAN FARUQUI: Actually, this year’s results particularly underline the benefits of
diversification of our businesses in our portfolio at ANZ. I think the fact that all of our
businesses actually performed well and offset the areas of weaknesses that each of them
had. So New Zealand had an excellent performance across revenue, expenses, margins,
returns etc. And I think that’s a function of both scale as well as some of the rebalancing
that Antonia and the team have done in New Zealand.
On the Institutional side, the business performed exceptionally well given the external
environment that they were facing into. Even though the revenue was down year-on-year,
the Markets business, which was primarily the driver of that, actually performed really well
in the absence of volatility and customer activity that we had to face into last year. Relative
to 2020 which had, of course, a lot more volatility and interest rate and FX volatility that led
customers to then hedge their positions. So, in the context of the much-subdued level of
activity, Markets delivered a very strong outcome.
In Australia Retail & Commercial, even though we had some challenges around our home
loan momentum, we still delivered growth, we still delivered improved margins and we still
delivered a very strong expense agenda. So, I think the diversification is probably a very big
strength.
I think the second big strength, Andrew, which we can never say enough about is the strong
foundations we have in terms of our capital, in terms of our funding and, most importantly,
in terms of our credit quality. I think we probably have the best portfolio credit quality today
than we’ve ever had in our history. And we have that together with having the ability to
invest capital. We’ve ended the year at about 12.3 per cent CET1 ratio, which basically
means we have about $A6 billion of capital buffers over and above the “unquestionably
strong” APRA requirements. So, we have the capacity to invest in our business, we have the
capacity to grow and we have the liquidity to support that. We’ve shown incredible expense
discipline, Andrew. And this is important because we do have to invest for the future
whether that’s in our digital journey, whether that’s in our technology journey - particularly
as we transition to Cloud – or whether it’s on meeting our regulatory and compliance
requirements, which allow us to build a much more operationally resilient bank into the
future. But we can only do that if we continue to manage productivity and I think this year
that was one of the highlights of the result – where our saves on productivity almost
effectively funded any growth and investment spend.
In terms of areas of improvement, the home loan momentum – we have to get it back.
That’s an important part of our agenda. It’s probably the number one priority for the entire
Executive Committee including Shayne.
ANDREW CORNELL: It sounds like you’re comfortable with the execution capability of the
bank, the discipline of the bank and obviously the balance sheet strength. How then would
you describe your risk settings at the moment, the risk appetite as we go into the new year?
FARHAN FARUQUI: Obviously, we’ve ended the year with healthy levels of provisions, which
will allow us to manage into the next phase of where COVID is going to take us. Obviously,
when we ended the year, we had major cities in Australia in lockdown, we had parts of the
region which were still suffering from COVID, and I don’t think COVID is even near over as
yet. But as we see that emergence from COVID, as vaccination rates go up etc, we will have
the ability then to understand how we can release some of those provisions into our P&L.
But from a risk setting point of view, we think we’re actually at very strong risk settings.
And I think the risk settings are a function to some extent Andrew – and particularly I would
say this in the context of the Institutional business – are a function of the customer base
you have. And I think we’ve done so much work over the last few years in reshaping that
portfolio, in having what I would call an enviable portfolio of Institutional customers that we
think we have the ability to take risks particularly as the environment continues to improve.
So, I think we are coming out of this strong, Andrew, and I think we have more capacity to
take risk. And our risk settings are constantly and dynamically adjusting as the environment
continues to improve.
ANDREW CORNELL: Well thank you very much for your time this morning Farhan and good
luck with the new role. We look forward to seeing you in Australia when you’re able to come
here.
FARHAN FARUQUI: I’m looking forward to it, Andrew. My biggest challenge right now is
trying to pick a footy team before I land in Australia so wor k underway on that front!
ANDREW CORNELL: Well I can’t recommend Carlton by any means. Thanks again Farhan.
FARHAN FARUQUI: Thank you very much Andrew.
For media enquiries contact:
Stephen Ries, +61 409 655 551
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