2024 Half Year Results Documents
ANZ Group Holdings Limited
ABN 16 659 510 791
Half Year
31 March 2024
Consolidated Financial Report
Dividend Announcement
and Appendix 4D
The Consolidated Financial Report and Dividend Announcement contains information required by Appendix 4D of the Australian Securities
Exchange (ASX) Listing Rules. It should be read in conjunction with the 2023 ANZ Group Holdings Limited Annual Report, and is lodged with
the ASX under listing rule 4.2A.
RESULTS FOR ANNOUNCEMENT TO THE MARKET APPENDIX 4D
2
Name of Company: ANZ Group Holdings Limited
ABN 16 659 510 791
Report for the half year ended 31 March 2024
Operating Results
1
AUD million
Statutory operating income
0% to 10,145
Statutory profit attributable to shareholders of the Company
-4% to 3,407
Cash profit
2
-7% to 3,552
Dividends
3
Cents
Franked
per
amount
share
per share
Proposed interim dividend
4
83
65%
Record date for determining entitlements to the proposed 2024 interim dividend 14 May 2024
Payment date for the proposed 2024 interim dividend 1 July 2024
Dividend Reinvestment Plan and Bonus Option Plan
ANZ Group Holdings Limited has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2024
interim dividend. For the 2024 interim 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 Cboe Australia during a pricing period commencing on 17 May 2024, and then rounded to the nearest whole cent. The Pricing
Period will be 10 trading days or such longer period advised by ANZ before the open of trading on the day the Pricing Period begins. 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 2024 interim dividend must be received by ANZ's Share Registrar by 5.00pm
(Australian Eastern Standard Time) on 15 May 2024. 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 17 May 2024.
1.
Unless otherwise noted, all comparisons are to the consolidated financial information for the half year ended 31 March 2023.
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 loss adjusted from statutory profit to arrive at cash profit was $145 million. Refer to pages 65 to
67 for further details.
3.
The unfranked portion of the dividend will be sourced from ANZ’s conduit foreign income account.
4.
It is proposed that the interim dividend of 83 cents will be partially franked at 65% for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 12 cents per
ordinary share.
ANZ GROUP HOLDINGS LIMITED ABN 16 659 510 791
3
CONSOLIDATED FINANCIAL REPORT, DIVIDEND ANNOUNCEMENT AND APPENDIX 4D
Half year ended 31 March 2024
CONTENTS PAGE
Disclosure Summary 5
Summary 7
Group Results 13
Divisional Results 43
Profit Reconciliation 65
Condensed Consolidated Financial Statements 69
Supplementary Information 113
Definitions 123
ASX Appendix 4D - Cross Reference Index 126
This Consolidated Financial Report, Dividend Announcement and Appendix 4D (Results Announcement) has been prepared for ANZ Group Holdings
Limited (ANZGHL, Company, parent entity) and its subsidiaries (ANZ Group, ANZ, Group, the consolidated entity, us, we, or our).
All amounts are in Australian dollars unless otherwise stated. The ANZ Group has a formally constituted Audit Committee of the Board of Directors. The
Condensed Consolidated Financial Statements were approved by resolution of the Board of Directors on 6 May 2024.
DISCLAIMER & IMPORTANT NOTICE:
The material in the Results Announcement contains general background information about the ANZ Group’s activities current as at 6 May 2024. 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 Group’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 Group 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 Group 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.
ANZ GROUP HOLDINGS LIMITED ABN 16 659 510 791
4
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DISCLOSURE SUMMARY
5
SUMMARY OF 2024 HALF 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/results-announcement/.
ANZ Group Holdings Limited
• 2024 Half Year Consolidated Financial Report, Dividend Announcement and Appendix 4D
• 2024 Half Year Results Investor Discussion Pack
• News Release
• Key Financial Data (available on ANZ Shareholder website only)
Australia and New Zealand Banking Group Limited
• 2024 Half Year Consolidated Financial Report
• 2024 March Pillar 3 Disclosure
• United Kingdom Disclosure and Transparency Rules Submission
DISCLOSURE SUMMARY
6
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SUMMARY
7
CONTENTS Page
Guide to Half Year Results 8
Statutory Profit Results 9
Cash Profit Results 10
Key Balance Sheet Metrics 11
Full Time Equivalent Staff 12
Other Non-Financial Information 12
SUMMARY
8
Guide to Half Year Results
DISCONTINUED/CONTINUING OPERATIONS
During the 2022 full year, all activities relating to the legacy sale of ANZ’s wealth businesses ceased. Accordingly, the Group no longer presents financial
results on a discontinued/continuing basis.
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 Results 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 the Group’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 123 to 125 for further details). The adjustments made in arriving at cash profit are included in statutory
profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not
subject to review 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.
To simplify disclosures, the Group will no longer present cash profit excluding large/notable items. However, to support understanding of the results, a
range of items impacting the results will continue to be referred to in commentary.
RESTATEMENT OF PRIOR PERIOD COMPARATIVE INFORMATION
Accounting standards adoption
The Group adopted AASB 17 Insurance Contracts (AASB 17) on 1 October 2023. Although the overall profit recognised in respect of insurance contracts
will not change over the life of contracts, the timing of revenue recognition will change. The Group applied AASB 17 effective from 1 October 2022 and
restated prior period comparative information. This resulted in a decrease in opening retained earnings of $37 million on 1 October 2022, an increase in
profit after tax (Sep 23 half: nil; Mar 23 half: $8 million), an increase in total assets (Sep 23: $22 million; Mar 23: $36 million), and an increase in total
liabilities (Sep 23: $51 million; Mar 23: $65 million) in the Australia Retail division.
Divisional results presentation
Divisional prior period comparative information was restated to reflect a number of cost reallocations across and within the divisions during the period,
with no impact to Group results.
PENDING ORGANISATIONAL CHANGES IMPACTING FUTURE REPORTING PERIODS
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding company
of Suncorp Bank. On 20 February 2024, the Australian Competition Tribunal announced it had authorised the proposed acquisition following the decision
in August 2023 by the Australian Competition and Consumer Commission to not authorise the acquisition. The acquisition remains subject to satisfaction
of certain conditions, including Federal Treasurer approval and certain amendments to the State Financial Institutions and Metway Merger Act 1996
(QLD). Australia and New Zealand Banking Group Limited (ANZBGL) will also have a termination right under the Suncorp Bank Sale Agreement if APRA
issues a written communication to ANZBGL under or in connection with APS 222 Associations with Related Entities to the effect that ANZBGL must not
proceed with completion of the acquisition. Assuming these conditions are satisfied, the acquisition is expected to occur in mid-calendar year 2024.
SUMMARY
9
Statutory Profit Results
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income
7,899 8,074 8,500
-2% -7%
Other operating income
2,246 2,246 1,651
0% 36%
Operating income
10,145 10,320 10,151
-2% 0%
Operating expenses
(5,215) (5,142) (4,997)
1% 4%
Profit before credit impairment and income tax
4,930 5,178 5,154
-5% -4%
Credit impairment (charge)/release
(70) (112) (133)
-38% -47%
Profit before income tax
4,860 5,066 5,021
-4% -3%
Income tax expense
(1,439) (1,501) (1,452)
-4% -1%
Non-controlling interests
(14) (14) (14)
0% 0%
Profit attributable to shareholders of the Company
3,407 3,551 3,555
-4% -4%
Earnings Per Ordinary Share (cents)
Half Year
Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Basic
113.5 118.4 118.7
-4% -4%
Diluted
111.5 113.8 113.0 -2% -1%
Half Year
Reference
Page
Mar 24 Sep 23 Mar 23
Ordinary Share Dividends (cents)
1,2
Interim
- fully franked - - 81
- partially franked
83 - -
Final
- partially franked (comprising 81 cents and an additional dividend of 13 cents) - 94 -
Total 84
83 94 81
Ordinary share dividend payout ratio
3
84 73.3% 79.6% 68.4%
Profitability Ratios
Return on average ordinary shareholders' equity
4
9.7% 10.4% 10.6%
Return on average assets
0.59% 0.64% 0.64%
Net interest margin
1.56% 1.65% 1.75%
Net interest margin (excluding Markets business unit)
2.33% 2.35% 2.43%
Net interest income to average credit RWA
4.55% 4.69% 4.77%
Net interest income to average credit RWA (excluding Markets business unit)
5.10% 5.19% 5.19%
Efficiency Ratios
Operating expenses to operating income 51.4% 49.8% 49.2%
Operating expenses to average assets
0.90% 0.92% 0.90%
Credit Impairment Charge/(Release)
Individually assessed credit impairment charge/(release) ($M) 38 123 (30)
Collectively assessed credit impairment charge/(release) ($M)
32 (11) 163
Total credit impairment charge/(release) ($M)
70 112 133
Individually assessed credit impairment charge/(release) as a % of average gross loans and advances
5
0.01% 0.04% (0.01%)
Total credit impairment charge/(release) as a % of average gross loans and advances
5
0.02% 0.03% 0.04%
1.
Partially franked at 65% for Australian tax purposes (30% tax rate) for the proposed 2024 interim dividend (2023 final dividend: partially franked at 56%; 2023 interim dividend: fully franked).
2.
Carry New Zealand imputation credits of NZD 12 cents for the proposed 2024 interim dividend (2023 final dividend: NZD 11 cents; 2023 interim dividend: NZD 9 cents).
3.
Dividend payout ratio for the March 2024 half is calculated using the proposed 2024 interim dividend of $2,496 million, based on the forecast number of ordinary shares on issue at the
dividend record date. Dividend payout ratios for the September 2023 half and March 2023 half were calculated using actual dividends of $2,825 million and $2,433 million respectively.
4.
Average ordinary shareholders’ equity excludes non-controlling interests.
5.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
SUMMARY
10
Cash Profit Results
1
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income
7,899 8,074 8,500
-2% -7%
Other operating income
2,448 2,291 2,040
7% 20%
Operating income
10,347 10,365 10,540
0% -2%
Operating expenses
(5,215) (5,142) (4,997)
1% 4%
Cash profit before credit impairment and income tax
5,132 5,223 5,543
-2% -7%
Credit impairment (charge)/release
(70) (112) (133)
-38% -47%
Cash profit before income tax
5,062 5,111 5,410
-1% -6%
Income tax expense
(1,496) (1,513) (1,567)
-1% -5%
Non-controlling interests
(14) (14) (14)
0% 0%
Cash profit
3,552 3,584 3,829
-1% -7%
Earnings Per Ordinary Share (cents) Half Year
Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Basic 118.3 119.5 127.9 -1% -8%
Diluted
116.0 114.8 121.4 1% -4%
Half Year
Reference
Page
Mar 24 Sep 23 Mar 23
Ordinary Share Dividends
Ordinary share dividend payout ratio
2
70.3% 78.8% 63.5%
Profitability Ratios
Return on average ordinary shareholders' equity
3
10.1% 10.5% 11.4%
Return on average assets
0.61% 0.64% 0.69%
Return on average RWA
1.65% 1.65% 1.70%
Net interest margin
1.56% 1.65% 1.75%
Net interest margin (excluding Markets business unit)
2.33% 2.35% 2.43%
Net interest income to average credit RWA
4.55% 4.69% 4.77%
Net interest income to average credit RWA (excluding Markets business unit)
5.10% 5.19% 5.19%
Efficiency Ratios
Operating expenses to operating income
50.4% 49.6% 47.4%
Operating expenses to average assets
0.90% 0.92% 0.90%
Credit Impairment Charge/(Release)
Individually assessed credit impairment charge/(release) ($M)
38 123 (30)
Collectively assessed credit impairment charge/(release) ($M)
32 (11) 163
Total credit impairment charge/(release) ($M)
23 70 112 133
Individually assessed credit impairment charge/(release) as a % of average gross loans and advances
4
0.01% 0.04% (0.01%)
Total credit impairment charge/(release) as a % of average gross loans and advances
4
0.02% 0.03% 0.04%
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 65 to
67 for the reconciliation between statutory and cash profit.
2.
Dividend payout ratio for the March 2024 half is calculated using the proposed 2024 interim dividend of $2,496 million, based on the forecast number of ordinary shares on issue at the
dividend record date. Dividend payout ratios for the September 2023 half and March 2023 half were calculated using actual dividends of $2,825 million and $2,433 million respectively.
3.
Average ordinary shareholders’ equity excludes non-controlling interests.
4.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
SUMMARY
11
Key Balance Sheet Metrics
As at Movement
Reference
Page
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Capital Management (Level 2)
Common Equity Tier 1
- APRA 38
13.5% 13.3% 13.2%
- Internationally Comparable
1
38 19.7% 19.7% 19.4%
Credit risk weighted assets ($B) 39
348.4 349.0 345.3 0% 1%
Total risk weighted assets ($B) 39
432.8 433.3 435.5 0% -1%
APRA Leverage Ratio 41
5.4% 5.4% 5.3%
Balance Sheet: Key Items
Gross loans and advances ($B) 718.7 710.6 693.7 1% 4%
Net loans and advances ($B)
715.2 707.0 690.1 1% 4%
Total assets ($B)
1,089.7 1,105.6 1,111.2 -1% -2%
Customer deposits ($B)
641.1 647.1 648.6 -1% -1%
Total shareholders' equity ($B)
71.1 70.0 69.6 2% 2%
Half Year Movement
Balance Sheet: Average Balances
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Average gross loans and advances 714.0 697.1 693.5 2% 3%
Average customer deposits
663.6 642.0 637.8 3% 4%
Average assets
1,163.0 1,115.3 1,112.3 4% 5%
Average ordinary shareholders' equity
2
70.3 68.2 67.1 3% 5%
Average RWA
430.8 433.4 451.9 -1% -5%
Average credit RWA
347.3 343.6 357.3 1% -3%
Average interest earning assets
1,015.6 977.2 973.0 4% 4%
Average deposits and other borrowings
859.8 823.5 826.2 4% 4%
As at Movement
Liquidity and Funding
Reference
Page
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Liquidity Coverage Ratio
3
35 134% 132% 128% 2% 6%
Net Stable Funding Ratio 36
118% 116% 119% 2% -1%
As at Movement
Impaired Assets
Reference
Page
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Gross impaired assets ($M) 27 1,518 1,521 1,210 0% 25%
Gross impaired assets as a % of gross loans and advances
0.21% 0.21% 0.17%
Net impaired assets ($M) 27
1,193 1,145 789 4% 51%
Net impaired assets as a % of shareholders' equity
1.68% 1.64% 1.13%
Individually assessed provision ($M) 25 325 376 421 -14% -23%
Individually assessed provision as a % of gross impaired assets
21.4% 24.7% 34.8%
Collectively assessed provision ($M) 25
4,046 4,032 4,040 0% 0%
Collectively assessed provision as a % of credit risk weighted assets
1.16% 1.16% 1.17%
Net Tangible Assets
Net tangible assets attributable to ordinary shareholders ($B)
4
66.3 65.4 65.0 1% 2%
Net tangible assets per ordinary share ($)
22.05 21.77 21.65 1% 2%
1.
Refer to page 40 for further details regarding the differences between APRA and Internationally Comparable standards.
2.
Average ordinary shareholders’ equity excludes non-controlling interests.
3.
Liquidity Coverage Ratio is calculated on a half year average basis.
4.
Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets.
SUMMARY
12
Full Time Equivalent Staff
As at 31 March 2024, the Group employed 40,262 staff (Sep 23: 40,342; Mar 23: 39,802) on a full time equivalent (FTE) basis.
Division
As at
Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail 11,383 11,313 11,199 1% 2%
Australia Commercial
3,442 3,514 3,607 -2% -5%
Institutional
6,310 6,366 6,314 -1% 0%
New Zealand
6,754 6,766 6,785 0% 0%
Pacific
972 1,013 1,037 -4% -6%
Group Centre
11,401 11,370 10,860 0% 5%
Total FTE
40,262 40,342 39,802 0% 1%
Average FTE 40,392 40,125 39,589 1% 2%
Geography
As at
Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia 19,335 19,626 19,575 -1% -1%
New Zealand
7,185 7,244 7,252 -1% -1%
Rest of World
13,742 13,472 12,975 2% 6%
Total FTE
40,262 40,342 39,802 0% 1%
Other Non-Financial Information
Half Year
Movement
Shareholder value - ordinary shares
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Share price ($)
- high
29.90 25.93 26.08 15% 15%
- low
23.90 22.58 22.39 6% 7%
- closing
29.40 25.66 22.93 15% 28%
Closing market capitalisation of ordinary shares ($B)
88.4 77.1 68.9 15% 28%
Total shareholder returns
19.0% 15.8% 3.6% large large
As at Mar 24
ANZBGL credit ratings
Short-
Term
Long-
Term Outlook
Moody's Investors Service P-1 Aa2 Stable
S&P Global Ratings A-1+ AA- Stable
Fitch Ratings F1 A+ Stable
GROUP RESULTS
13
CONTENTS Page
Cash Profit 14
Cash Net Interest Income 15
Cash Other Operating Income 17
Cash Operating Expenses 20
Software Capitalisation 22
Credit Risk 23
Cash Income Tax Expense 29
Impact of Foreign Currency Translation 30
Earnings Related Hedges 32
Cash Earnings Per Share 32
Dividends 33
Economic Profit 33
Condensed Balance Sheet 34
Liquidity Risk 35
Funding 36
Capital Management 37
Leverage Ratio 41
Capital Management - Other Developments 42
GROUP RESULTS
14
Non-IFRS Information
Statutory profit is prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards, which comply with
IFRS. The Group provides additional measures of performance in the Results Announcement which are prepared on a basis other than in accordance
with accounting standards. The guidance provided in ASIC Regulatory Guide 230 has been followed when presenting this information.
Cash Profit
Cash profit, a non-IFRS measure, represents the Group’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 123 to 125 for further details). The adjustments made in arriving at cash profit are included in statutory
profit which is subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not
subject to review 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 unless otherwise stated.
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Statutory profit attributable to shareholders of the Company
3,407 3,551 3,555 -4% -4%
Adjustments between statutory profit and cash profit
1
Economic hedges
197 27 190 large 4%
Revenue and expense hedges
(52) 6 84 large large
Total adjustments between statutory profit and cash profit
145 33 274 large -47%
Cash profit 3,552 3,584 3,829 -1% -7%
1.
Refer to pages 65 to 67 for analysis of the adjustments between statutory profit and cash profit.
Group performance - cash profit
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 7,899 8,074 8,500 -2% -7%
Other operating income
2,448 2,291 2,040 7% 20%
Operating income
10,347 10,365 10,540 0% -2%
Operating expenses (5,215) (5,142) (4,997) 1% 4%
Cash profit before credit impairment and income tax
5,132 5,223 5,543 -2% -7%
Credit impairment (charge)/release (70) (112) (133) -38% -47%
Cash profit before income tax
5,062 5,111 5,410 -1% -6%
Income tax expense (1,496) (1,513) (1,567) -1% -5%
Non-controlling interests
(14) (14) (14) 0% 0%
Cash profit
3,552 3,584 3,829 -1% -7%
Half Year Movement
Cash Profit/(Loss) by division
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail
794 874 1,064
-9% -25%
Australia Commercial
665 701 739
-5% -10%
Institutional
1,522 1,360 1,589 12% -4%
New Zealand
791 775 771 2% 3%
Pacific
31 37 34 -16% -9%
Group Centre
(251) (163) (368) 54% -32%
Cash profit
3,552 3,584 3,829 -1% -7%
GROUP RESULTS
15
Cash Net Interest Income
Half Year
Movement
Group
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income
1
7,899 8,074 8,500 -2% -7%
Average interest earning assets
1,015,621 977,175 972,972 4% 4%
Average deposits and other borrowings
859,764 823,466 826,160 4% 4%
Net interest margin (%)
1.56 1.65 1.75 -9 bps -19 bps
Group (excluding Markets business unit)
Net interest income 7,963 8,054 8,336 -1% -4%
Average interest earning assets
684,626 683,888 687,563 0% 0%
Average deposits and other borrowings
650,098 627,170 628,973 4% 3%
Net interest margin (%)
2.33 2.35 2.43 -2 bps -10 bps
Half Year
Movement
Net interest margin by major division
1
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail
Net interest margin (%) - cash
1.94 2.06 2.38
-12 bps -44 bps
Average interest earning assets
269,406 260,946 253,743
3% 6%
Average deposits and other borrowings
168,912 159,786 152,392
6% 11%
Australia Commercial
2
Net interest margin (%) - cash
2.60 2.67 2.72
-7 bps -12 bps
Average interest earning assets
63,623 61,398 60,860
4% 5%
Average deposits and other borrowings
115,357 112,368 113,276
3% 2%
Institutional (excluding Markets business unit)
Net interest margin (%) - cash
3
2.39 2.36 2.26
3 bps 13 bps
Average interest earning assets
162,856 164,845 168,925
-1% -4%
Average deposits and other borrowings
159,851 159,295 158,718
0% 1%
New Zealand
Net interest margin (%) - cash
2.56 2.60 2.67
-4 bps -11 bps
Average interest earning assets
122,613 120,377 118,639
2% 3%
Average deposits and other borrowings
106,417 102,479 102,113 4% 4%
1.
Includes the major bank levy of -$192 million for the March 2024 half (Sep 23 half: -$178 million; Mar 23 half: -$175 million).
2.
Australia Commercial division generates positive net interest income from surplus deposits held. Accordingly, $58.1 billion of average deposits for the March 2024 half
(Sep 23 half: $57.6 billion; Mar 23 half: $59.3 billion) have been included within average net interest earning assets for the net interest margin calculation to align with the internal
management reporting view.
3.
Net interest margin for the Institutional division including Markets business unit was 0.76% for the March 2024 half (Sep 23 half: 0.86%; Mar 23 half: 0.91%).
Group net interest margin - March 2024 Half Year v March 2023 Half Year
• March 2024 v March 2023
Net interest margin (-19 bps)
• Assets pricing (-11 bps): driven by pricing competition in the Australia Retail, Australia Commercial and New Zealand divisions.
• Deposits pricing (+1 bps): driven by favourable deposit margins, partially offset by lower margin on term deposits.
GROUP RESULTS
16
• Assets and funding mix (-2 bps): driven by unfavourable deposit mix with a shift towards lower margin term deposits, and increased term
wholesale funding relative to customer deposits. This was partially offset by favourable asset mix in the Australia Retail division, and favourable
divisional mix primarily driven by higher contribution by the Australia Commercial division.
• Capital and replicating portfolio (+6 bps): driven by higher interest rates, partially offset by lower volumes.
• Wholesale funding (-2 bps): driven by higher wholesale funding rates including the impact of partial maturity of the Term Funding Facility (TFF).
• Markets activities (-11 bps): lower net interest income was driven by higher funding costs, primarily on commodity assets where the related
revenues are recognised as Other operating income, and higher liquid assets held in Markets.
Average interest earning assets
Average interest earning assets increased $42.6 billion (4%) driven by:
• Average trading assets and investment securities increased $26.6 billion (21%) driven by higher liquid assets and the impact of foreign currency
translation.
• Average net loans and advances increased $14.7 billion (2%) driven by lending growth across the Australia Retail, Australia Commercial, and
New Zealand divisions and the impact of foreign currency translation. This was partially offset by a decrease in the Institutional division.
• Average cash and other liquid assets increased $1.3 billion (1%) driven by higher reverse repurchase agreements and higher settlement
balances owed to ANZ, partially offset by lower central bank balances.
Average deposits and other borrowings
• Average deposits and other borrowings increased $33.6 billion (4%) driven by higher term deposits, certificates of deposit, commercial paper,
and the impact of foreign currency translation. This was partially offset by lower at-call deposits.
Group net interest margin - March 2024 Half Year v September 2023 Half Year
• March 2024 v September 2023
Net interest margin (-9 bps)
• Assets pricing (-4 bps): driven by pricing competition in the Australia Retail and Australia Commercial divisions.
• Deposits pricing (0 bps): driven by favourable at-call deposit margins, offset by lower margin on term deposits.
• Assets and funding mix (0 bps): driven by unfavourable deposit mix with a shift towards lower margin term deposits, offset by favourable asset
mix in the Australia Retail division, and favourable divisional mix primarily driven by higher contribution by the Australia Commercial division.
• Capital and replicating portfolio (+3 bps): driven by higher interest rates, partially offset by lower volumes.
• Wholesale funding (-1 bps): driven by higher wholesale funding rates including the impact of partial maturity of the TFF.
• Markets activities (-7 bps): lower net interest income was driven by higher funding costs, primarily on commodity assets where the related
revenues are recognised as Other operating income, and higher liquid assets held in Markets.
Average interest earning assets
Average interest earning assets increased $38.4 billion (4%) driven by:
• Average trading assets and investment securities increased $25.6 billion (20%) driven by higher Markets activities and the impact of foreign
currency translation.
• Average net loans and advances increased $13.8 billion (2%) driven by lending growth across the Australia Retail, Australia Commercial, and
New Zealand divisions and the impact of foreign currency translation.
• Average cash and other liquid assets decreased $0.9 billion driven by lower central bank balances, partially offset by higher reverse repurchase
agreements, and higher settlement balances owed to ANZ.
Average deposits and other borrowings
• Average deposits and other borrowings increased $36.3 billion (4%) driven by growth in term deposits, at-call deposits, commercial paper, and
the impact of foreign currency translation.
GROUP RESULTS
17
Cash Other Operating Income
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net fee and commission income
1
919 972 890 -5% 3%
Markets other operating income
1,276 938 985 36% 30%
Share of associates' profit/(loss)
84 120 101 -30% -17%
Other
1
169 261 64 -35% large
Total
2,448 2,291 2,040 7% 20%
Half Year Movement
Other operating income by division
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail
301 374 296 -20% 2%
Australia Commercial
169 190 175 -11% -3%
Institutional
1,687 1,321 1,373 28% 23%
New Zealand
208 210 199 -1% 5%
Pacific
44 45 40 -2% 10%
Group Centre
39 151 (43) -74% large
Total
2,448 2,291 2,040 7% 20%
Half Year Movement
Markets income
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income
2
(64) 20 164 large large
Other operating income
2
1,276 938 985 36% 30%
Total
1,212 958 1,149 27% 5%
1.
Excluding the Markets business unit.
2.
Net interest income included funding costs in the Franchise trading book, primarily on commodity assets, where the related revenue is recognised as Other operating income.
GROUP RESULTS
18
Other operating income - March 2024 Half Year v March 2023 Half Year
• March 2024 v March 2023
Other operating income increased $408 million (20%).
Net fee and commission income
Net fee and commission income increased $29 million (3%) driven by:
• $16 million increase in the Institutional division (excluding Markets) driven by higher transaction activity in Corporate Finance.
• $12 million increase in the Australia Retail division driven by higher cards revenue.
• $10 million increase in the Group Centre division driven by higher Cashrewards revenue.
• $16 million decrease in the Australia Commercial division driven by a decrease in non-lending fees.
Markets income
Markets income increased $63 million (5%) with a $291 million increase in Other operating income, partially offset by a $228 million decrease in Net
interest income. The decrease in Net interest income was driven by higher funding costs in the Franchise trading book, primarily on commodity
assets, where the related customer revenues are recognised as Other operating income. The net $63 million increase was attributable to the
following business activities:
• $112 million increase in Franchise Revenue was driven by Rates, Commodities, and Credit and Capital Markets, partially offset by Foreign
Exchange. Rates revenue increased due to higher customer demand for hedging and financing solutions, and trading gains amid lower interest
rate volatility. Commodities revenue increased due to more favourable trading conditions and sustained customer demand for hedging solutions,
notably precious metals. Credit and Capital Markets revenue increased due to increased customer issuance activity in a more stable
environment, and credit spreads generally tightened resulting in trading gains. This was partially offset by a decrease in Foreign Exchange
revenue as moderating volatility and less directional trends in key currency pairs than the March 2023 half resulted in reduced customer demand
and lower trading gains.
• $23 million increase in Derivative Valuation Adjustments from gains (net of hedges) from tightening credit and funding spreads, and lower
currency and interest rate volatility.
• $72 million decrease in Balance Sheet arising from lower net interest income from fewer short-term interest rate increases than the March 2023
half.
Share of associates’ profit/(loss)
• Share of associates’ profit/(loss) decreased $17 million (17%) driven by a decrease in P.T. Bank Pan Indonesia (PT Panin) ($25 million), partially
offset by increases in Worldline Australia Pty Ltd (Worldline) and AMMB Holdings Berhad (AmBank).
Other
Oher income increased $105 million driven by:
• $89 million increase in the Group Centre division driven by:
- $49 million increase from unfavourable valuation adjustments in the March 2023 half from investments measured at fair value through profit or
loss,
- $43 million increase from a loss on disposal of data centres in Australia in the March 2023 half,
- $20 million increase from a gain on recycling of foreign currency translation reserves (FCTR) from other comprehensive income to profit or
loss on dissolution of a number of international entities, and
- $21 million decrease from a loss on partial disposal of investment in AmBank ($21 million).
• $10 million increase in the Australia Commercial division driven by higher income for services provided to Worldline.
GROUP RESULTS
19
• March 2024 v September 2023
Other operating income increased $157 million (7%).
Net fee and commission income
Net fee and commission income decreased $53 million (5%) driven by:
• $64 million decrease in the Australia Retail division driven by lower cards revenue due to timing of recognition of cards incentives and seasonality
of fees.
• $14 million decrease in the Australia Commercial division driven by a decrease in non-lending fees.
• $18 million increase in the Institutional division (excluding Markets) driven by higher transaction activity in Corporate Finance.
Markets income
Markets income increased $254 million (27%) with a $338 million increase in Other operating income, partially offset by an $84 million decrease in
Net interest income. The decrease in Net interest income was driven by higher funding costs in the Franchise trading book, primarily on commodity
assets, where the related customer revenues are recognised as Other operating income. The net $254 million increase was attributable to the
following business activities:
• $199 million increase in Franchise Revenue across all business lines. Commodities revenue increased due to more favourable trading conditions
and increased customer demand for hedging solutions, notably in precious metals. Credit and Capital Markets revenue increased due to higher
customer issuance activity in a more stable environment, and credit spreads tightening over the half resulted in trading gains. Rates revenue
increased due to higher customer demand for both hedging and financing solutions, and trading gains amid lower rates volatility. Foreign
Exchange revenues increased amid favourable trading conditions, though moderating volatility and less directional trends in key currency pairs
resulted in lower customer demand for hedging in certain geographies.
• $41 million increase in Derivative Valuation Adjustments from gains (net of hedges) from tightening credit and funding spreads, and lower
currency and interest rate volatility.
• $14 million increase in Balance Sheet primarily driven by higher investment securities volumes.
Share of associates’ profit/(loss)
• Share of associates’ profit/(loss) decreased $36 million (30%) driven by decreases in PT Panin ($36 million) and Worldline, partially offset by an
increase in AmBank.
Other
Other income decreased $92 million (35%) driven by:
• $76 million decrease in the Group Centre division driven by:
- $23 million decrease from a favourable adjustment to the gain on sale relating to the completed UDC Finance divestment in the September
2023 half,
- $23 million decrease from the lower gain from recycling of FCTR from other comprehensive income to profit or loss on dissolution of a number
of international entities, and
- $21 million decrease from a loss on partial disposal of investment in AmBank.
• $7 million decrease in Australia Commercial division driven by a gain on sale of Investment Lending business in the September 2023 half.
GROUP RESULTS
20
Cash Operating Expenses
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Personnel 3,062 2,869 2,893 7% 6%
Premises
321 324 334 -1% -4%
Technology
898 864 836 4% 7%
Restructuring
141 115 54 23% large
Other
793 970 880 -18% -10%
Total
5,215 5,142 4,997 1% 4%
Half Year
Movement
Operating expenses by division
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail
1,735 1,758 1,703
-1% 2%
Australia Commercial
763 738 685
3% 11%
Institutional
1,444 1,388 1,340
4% 8%
New Zealand
677 665 634
2% 7%
Pacific
70 71 74
-1% -5%
Group Centre
526 522 561
1% -6%
Total
5,215 5,142 4,997 1% 4%
Half Year
Movement
FTE by division
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail
11,383 11,313 11,199
1% 2%
Australia Commercial
3,442 3,514 3,607
-2% -5%
Institutional
6,310 6,366 6,314
-1% 0%
New Zealand
6,754 6,766 6,785
0% 0%
Pacific
972 1,013 1,037
-4% -6%
Group Centre
11,401 11,370 10,860
0% 5%
Total FTE
40,262 40,342 39,802 0% 1%
Average FTE 40,392 40,125 39,589 1% 2%
GROUP RESULTS
21
Operating expenses - March 2024 Half Year v March 2023 Half Year
• March 2024 v March 2023
Operating expenses increased $218 million (4%).
• Personnel expenses increased $169 million (6%) driven by inflationary impacts on wages and higher resourcing associated with strategic
initiatives. This was partially offset by productivity and a decrease in employee leave provisions.
• Technology expenses increased $62 million (7%) driven by higher software licence costs, and inflationary impacts on vendor costs, partially
offset by benefits from technology simplification.
• Restructuring expenses increased $87 million driven by operational changes across all divisions.
• Other expenses decreased $87 million (10%) driven by benefits from productivity initiatives.
• March 2024 v September 2023
Operating expenses increased $73 million (1%).
• Personnel expenses increased $193 million (7%) driven by inflationary impacts on wages including an increase in employee leave provisions,
partially offset by productivity initiatives.
• Technology expenses increased $34 million (4%) driven by higher software licence costs, and inflationary impacts on vendor costs, partially
offset by benefits from technology simplification.
• Restructuring expenses increased $26 million (23%) driven by operational changes across all divisions.
• Other expenses decreased $177 million (18%) driven by benefits from productivity initiatives, Compensation Scheme of Last Resort levy incurred
in the September 2023 half and seasonal factors.
GROUP RESULTS
22
Software Capitalisation
Capitalised software comprises both costs incurred to develop software and costs to acquire software. These costs are capitalised as intangible assets
and amortised over the expected useful lives. Details are presented in the table below:
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Balance at start of period 919 877 896 5% 3%
Software capitalised during the period
146 199 143 -27% 2%
Amortisation during the period
(151) (157) (163) -4% -7%
Software impaired/written-off
(9) - - n/a n/a
Foreign currency translation
- - 1 n/a large
Total capitalised software
905 919 877 -2% 3%
Capitalised software by division As at
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail 117 125 132 -6% -11%
Australia Commercial
113 104 86 9% 31%
Institutional
453 433 415 5% 9%
New Zealand
13 35 14 -63% -7%
Group Centre
209 222 230 -6% -9%
Total capitalised software
905 919 877 -2% 3%
GROUP RESULTS
23
Credit Risk
The Group’s assessment of expected credit losses (ECL) from its credit portfolio is subject to judgements and estimates made by management based on
a variety of internal and external information, as well as the Group’s experience of the performance of the portfolio under a variety of conditions. Refer to
Note 1 of the Condensed Consolidated Financial Statements for further information.
Credit impairment charge/(release)
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Collectively assessed credit impairment charge/(release) 32 (11) 163 large -80%
Individually assessed credit impairment charge/(release)
38 123 (30) -69% large
Total credit impairment charge/(release)
70 112 133 -38% -47%
Credit impairment charge/(release) analysis
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
New and increased provisions (net of releases)
- Collectively assessed 32 (11) 163 large -80%
- Individually assessed
201 239 237 -16% -15%
Write-backs
(85) (50) (166) 70% -49%
Recoveries of amounts previously written-off
(78) (66) (101) 18% -23%
Total credit impairment charge/(release)
70 112 133 -38% -47%
Credit impairment char
ge/(release) by division
Half Year Movement
Collectively assessed
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail (6) 5 50 large large
Australia Commercial
9 8 57 13% -84%
Institutional
43 (36) 5 large large
New Zealand
(10) 20 66 large large
Pacific
(4) (7) (15) -43% -73%
Group Centre
- (1) - large n/a
Total collectively assessed 32 (11) 163 large -80%
Individually assessed
Australia Retail 49 48 32 2% 53%
Australia Commercial
26 33 9 -21% large
Institutional
(49) 30 (79) large -38%
New Zealand
14 17 9 -18% 56%
Pacific
(2) (5) (1) -60% large
Total individually assessed 38 123 (30) -69% large
Total credit impairment charge/(release)
Australia Retail 43 53 82 -19% -48%
Australia Commercial
35 41 66 -15% -47%
Institutional
(6) (6) (74) 0% -92%
New Zealand
4 37 75 -89% -95%
Pacific
(6) (12) (16) -50% -63%
Group Centre
- (1) - large n/a
Total credit impairment charge/(release) 70 112 133 -38% -47%
GROUP RESULTS
24
Credit impairment charge/(release) by division, 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
March 2024 Half Year $M $M $M $M $M $M $M $M
Australia Retail
13 (42) 23 (6) 91 (42) 49 43
Australia Commercial
10 (9) 8 9 58 (32) 26 35
Institutional
- 9 34 43 21 (70) (49) (6)
New Zealand
11 (30) 9 (10) 30 (16) 14 4
Pacific
2 (2) (4) (4) 1 (3) (2) (6)
Group Centre
- - - - - - - -
Total
36 (74) 70 32 201 (163) 38 70
September 2023 Half Year
Australia Retail 12 13 (20) 5 98 (50) 48 53
Australia Commercial 59 (54) 3 8 65 (32) 33 41
Institutional 36 (63) (9) (36) 42 (12) 30 (6)
New Zealand (1) 18 3 20 32 (15) 17 37
Pacific 5 (5) (7) (7) 2 (7) (5) (12)
Group Centre (1) - - (1) - - - (1)
Total 110 (91) (30) (11) 239 (116) 123 112
March 2023 Half Year
Australia Retail (39) 78 11 50 94 (62) 32 82
Australia Commercial (2) 75 (16) 57 62 (53) 9 66
Institutional 43 (31) (7) 5 57 (136) (79) (74)
New Zealand (2) 58 10 66 21 (12) 9 75
Pacific (1) (8) (6) (15) 3 (4) (1) (16)
Group Centre - - - - - - - -
Total (1) 172 (8) 163 237 (267) (30) 133
Collectively assessed credit impairment charge/(release)
• March 2024 v March 2023
The collectively assessed impairment charge of $32 million for the March 2024 half was driven by deterioration in the credit risk profile across all
divisions, deterioration in economic outlook and portfolio growth, partially offset by reduction in management temporary adjustments as anticipated
risks are now represented in portfolio credit profiles.
The collectively assessed impairment charge of $163 million for the March 2023 half was driven by deterioration in economic outlook, a net increase
in management temporary adjustments, and deterioration in credit risk. This was partially offset by an improvement in portfolio composition,
particularly in the Institutional division.
• March 2024 v September 2023
The collectively assessed impairment charge of $32 million for the March 2024 half was driven by deterioration in the credit risk profile across all
divisions, deterioration in economic outlook and portfolio growth, partially offset by reduction in management temporary adjustments as anticipated
risks are now represented in portfolio credit profiles.
The collectively assessed impairment release of $11 million for the September 2023 half was driven by a net reduction in management temporary
adjustments, and an improvement in portfolio composition, particularly in the Institutional division. This was partially offset by deterioration in
economic outlook, and deterioration in credit risk.
Individually assessed credit impairment charge/(release)
• March 2024 v March 2023
The individually assessed credit impairment charge increased $68 million driven by increases in the Institutional division due to a large number of
write-backs in the March 2023 half partially offset by lower impairments ($30 million), the Australia Retail division due to lower write-backs in the
home loan portfolio and lower recoveries in the unsecured portfolios ($17 million), and the Australia Commercial division due to lower write-backs in
the SME Banking portfolio ($17 million).
• March 2024 v September 2023
The individually assessed credit impairment charge decreased $85 million (69%) driven by the Institutional division due to lower impairments and
higher write-backs and recoveries ($79 million), and the Australia Commercial and New Zealand divisions due to lower impairments ($10 million).
GROUP RESULTS
25
Allowance for expected credit losses
1
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Collectively assessed allowance for ECL 4,046 4,032 4,040 0% 0%
Individually assessed allowance for ECL
325 376 421 -14% -23%
Total allowance for ECL
4,371 4,408 4,461 -1% -2%
Net loans and advances at amortised cost 3,489 3,546 3,658 -2% -5%
Off-balance sheet commitments - undrawn and contingent 849 827 774 3% 10%
Investment securities - debt securities at amortised cost
33 35 29 -6% 14%
Total allowance for ECL
4,371 4,408 4,461 -1% -2%
Allowance for expected credit losses by division
1
As at Movement
Collectively assessed
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail 948 954 949 -1% 0%
Australia Commercial
1,050 1,041 1,033 1% 2%
Institutional
1,458 1,425 1,451 2% 0%
New Zealand
542 560 543 -3% 0%
Pacific
48 52 63 -8% -24%
Group Centre
- - 1 n/a large
Total collectively assessed 4,046 4,032 4,040 0% 0%
Individually assessed
Australia Retail 61 63 68 -3% -10%
Australia Commercial
121 127 149 -5% -19%
Institutional
88 126 129 -30% -32%
New Zealand
38 40 47 -5% -19%
Pacific
17 20 28 -15% -39%
Group Centre
- - - n/a n/a
Total individually assessed 325 376 421 -14% -23%
Allowance for ECL
Australia Retail 1,009 1,017 1,017 -1% -1%
Australia Commercial
1,171 1,168 1,182 0% -1%
Institutional
1,546 1,551 1,580 0% -2%
New Zealand
580 600 590 -3% -2%
Pacific
65 72 91 -10% -29%
Group Centre
- - 1 n/a large
Total allowance for ECL 4,371 4,408 4,461 -1% -2%
1.
Includes allowance for ECL for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments - undrawn and
contingent facilities. For Investment securities - debt securities at FVOCI, the allowance for ECL is recognised in Other comprehensive income with a corresponding charge to profit or loss.
GROUP RESULTS
26
Allowance for expected credit losses by division, cont'd
1
Collectively assessed
Individually
assessed
As at March 2024
Stage 1
$M
Stage 2
$M
Stage 3
$M
Total
$M
Stage 3
$M
Total
$M
Australia Retail 131 631 186 948 61 1,009
Australia Commercial
420 522 108 1,050 121 1,171
Institutional
1,197 218 43 1,458 88 1,546
New Zealand
148 315 79 542 38 580
Pacific
22 19 7 48 17 65
Group Centre
- - - - - -
Total
1,918 1,705 423 4,046 325 4,371
As at September 2023
Australia Retail 118 674 162 954 63 1,017
Australia Commercial 410 531 100 1,041 127 1,168
Institutional 1,205 210 10 1,425 126 1,551
New Zealand 139 351 70 560 40 600
Pacific 20 20 12 52 20 72
Group Centre - - - - - -
Total 1,892 1,786 354 4,032 376 4,408
As at March 2023
Australia Retail 107 660 182 949 68 1,017
Australia Commercial 350 586 97 1,033 149 1,182
Institutional 1,159 274 18 1,451 129 1,580
New Zealand 141 333 69 543 47 590
Pacific 16 28 19 63 28 91
Group Centre 1 - - 1 - 1
Total 1,774 1,881 385 4,040 421 4,461
1.
Includes allowance for ECL for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments - undrawn and
contingent facilities. For Investment securities – debt securities at FVOCI, the allowance for ECL is recognised in Other comprehensive income with a corresponding charge to profit or loss.
Allowance for expected credit losses
• March 2024 v March 2023
Total allowance for ECL decreased $90 million (2%) driven by a $96 million decrease in the individually assessed allowance for ECL, partially offset
by a $6 million increase in the collectively assessed allowance for ECL. The decrease in individually assessed allowance for ECL was driven by
decreases across all divisions as new provisions remained low, and continued write-back and recovery activity. The increase in collectively assessed
allowance for ECL was driven by $199 million from deterioration in credit risk profile across all divisions, $76 million from deterioration in economic
outlook particularly in the September 2023 half, and $35 million from portfolio growth. This was partially offset by a $289 million reduction in
management temporary adjustments, as anticipated risks are now represented in portfolio credit profiles, and $15 million reduction from foreign
currency translation and other impacts.
• March 2024 v September 2023
Total allowance for ECL decreased $37 million (1%) driven by a $51 million decrease in the individually assessed allowance for ECL, partially offset
by a $14 million increase in the collectively assessed allowance for ECL. The decrease in individually assessed allowance for ECL was
predominantly driven by the Institutional division as new provisions remained low, and continued write-back and recovery activity. The increase in
collectively assessed allowance for ECL was driven by $169 million from deterioration in credit risk, $63 million from portfolio growth, and $5 million
from deterioration in economic outlook. This was partially offset by a $205 million reduction in management temporary adjustments, as anticipated
risks are now represented in portfolio credit profiles, and $18 million from foreign currency translation and other impacts.
GROUP RESULTS
27
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 by removing 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.
As at
Long-run loss as a % of gross lending assets by division
Mar 24Sep 23Mar 23
Australia Retail 0.09%0.10%0.11%
Australia Commercial 0.53%0.52%0.53%
New Zealand
0.13%0.12%0.10%
Institutional
0.21%0.19%0.19%
Total Group
0.18%0.17%0.17%
Non-Performing Credit Exposures
As at
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Impaired loans
1
880 1,037 804 -15% 9%
Restructured items
2
589 437 382 35% 54%
Non-performing commitments, contingencies and derivatives
1
49 47 24 4% large
Gross impaired assets
1,518 1,521 1,210 0% 25%
Non-performing credit exposures not impaired
1
4,495 3,500 3,089 28% 46%
Total non-performing credit exposures
3
6,013 5,021 4,299 20% 40%
Gross impaired assets by division
Australia Retail 669 520 415 29% 61%
Australia Commercial
261 248 288 5% -9%
Institutional
437 562 302 -22% 45%
New Zealand
119 122 100 -2% 19%
Pacific
32 69 105 -54% -70%
Gross impaired assets
1,518 1,521 1,210 0% 25%
Gross impaired assets by size of exposure
Less than $10 million 1,095 999 956 10% 15%
$10 million to $100 million
262 113 123 large large
Greater than $100 million
161 409 131 -61% 23%
Gross impaired assets
1,518 1,521 1,210 0% 25%
Individually assessed provisions
Impaired loans
(320) (366) (414) -13% -23%
Non-performing commitments, contingencies and derivatives
(5) (10) (7) -50% -29%
Net impaired assets
1,193 1,145 789 4% 51%
1.
Impaired loans and non-performing commitments, contingencies and derivatives 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 wholesale and retail exposures. These collectively assessed exposures are included in Non-performing credit exposures not
impaired.
2.
Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer and are collectively assessed for
Stage 3 ECL. 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.
3.
Non-performing credit exposures are aligned with the definition in APS220 Credit Risk Management.
• March 2024 v March 2023
Gross impaired assets increased $308 million (25%) driven by increases in the Australia Retail division due to increase in restructured home loan
facilities ($254 million), and the Institutional division due to the downgrade of several single name collateralised exposures in the September 2023
half ($135 million). This was partially offset by decreases in the Pacific division due to upgrade of restructured exposures ($73 million), and the
Australia Commercial division due to low impairments in the current period ($27 million).
Non-performing credit exposures not impaired increased $1,406 million (46%) driven by defaults on well secured mortgages in the Australia Retail
and New Zealand divisions where 90+ days past due delinquency rates have increased, and several large fully secured exposures in the Institutional
division downgraded to defaulted.
GROUP RESULTS
28
• March 2024 v September 2023
Gross impaired assets decreased $3 million driven by decreases in the Institutional division due to a customer upgrade and limit reduction on several
customers ($125 million), and the Pacific division due to upgrade of restructured exposures ($37 million). This was offset by increases in the
Australia Retail division due to increase in restructured home loan facilities ($149 million), and the Australia Commercial division due to downgrades
in the SME Banking portfolio ($13 million).
Non-performing credit exposures not impaired increased $995 million (28%) driven by defaults on well secured mortgages in the Australia Retail and
New Zealand divisions where 90+ days past due delinquency rates have increased, and several large fully secured exposures in the Institutional
division downgraded to defaulted.
The Group’s individually assessed provision coverage ratio on impaired assets was 21.4% at 31 March 2024 (Sep 23: 24.7%; Mar 23: 34.8%).
New Impaired Assets
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Impaired loans
1
359 627 405
-43% -11%
Restructured items
2
269 162 122
66% large
Non-performing commitments and contingencies
1
2 40 11 -95% -82%
Total new impaired assets
630 829 538 -24% 17%
New impaired assets by division
Australia Retail 323 276 221 17% 46%
Australia Commercial
122 93 93 31% 31%
Institutional
98 369 156 -73% -37%
New Zealand
84 85 63 -1% 33%
Pacific
3 6 5 -50% -40%
Total new impaired assets
630 829 538 -24% 17%
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 and are collectively assessed for
Stage 3 ECL. 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.
• March 2024 v March 2023
New impaired assets increased $92 million (17%) driven by increases in the Australia Retail division due to increase in restructured home loan
facilities ($102 million), the Australia Commercial division due to increase in the SME Banking portfolio and well collateralised Agri exposures
($29 million), and the New Zealand division due to increases across all portfolios ($21 million). This was partially offset by the Institutional division
with a lower number of downgrades occurring in the current period ($58 million).
• March 2024 v September 2023
New impaired assets decreased $198 million (24%) driven by decreases in the Institutional division due to the downgrade of several single name
collateralised exposures in the September 2023 half ($271 million). This was partially offset by increases in the Australia Retail division due to
increase in restructured home loan facilities ($47 million), and the Australia Commercial division due to increase in the SME Banking portfolio and
well collateralised Agri exposures ($29 million).
Ageing analysis of net loans and advances that are past due but not impaired
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
1-29 days 6,927 7,223 6,213 -4% 11%
30-59 days
2,337 1,809 1,965 29% 19%
60-89 days
1,234 1,146 759 8% 63%
90+ days
3,490 2,841 2,502 23% 39%
Total
13,988 13,019 11,439 7% 22%
• March 2024 v March 2023
Net loans and advances past due but not impaired increased $2,549 million (22%) with increases across all ageing categories driven by home loan
portfolios in the Australia Retail and New Zealand divisions.
• March 2024 v September 2023
Net loans and advances past due but not impaired increased $969 million (7%) with increases across the 30+ days ageing categories driven by
home loan portfolios in the Australia Retail and New Zealand divisions.
GROUP RESULTS
29
Cash Income Tax Expense
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Income tax expense from cash profit
1,496 1,513 1,567 -1% -5%
Effective tax rate
29.6% 29.6% 29.0%
• March 2024 v March 2023
The effective tax rate increased from 29.0% to 29.6%. The increase of 60 bps was driven by higher non-deductible interest on convertible
instruments (56 bps), higher prior period adjustments (20 bps), lower equity accounted earnings (8 bps), and higher withholding tax expense on
foreign dividends (8 bps). This was partially offset by various other small items (32 bps).
• March 2024 v September 2023
The effective tax rate remained flat at 29.6%. The increase from higher non-deductible interest on convertible instruments (21 bps), lower equity
accounted earnings (19 bps), and higher prior period adjustments (16 bps), was offset by higher offshore earnings that attract a lower rate of tax
(41 bps), and various other small items (15 bps).
GROUP RESULTS
30
Impact of Foreign Currency Translation
The following tables present the Group’s comparative cash profit results, net loans and advances and customer deposits neutralised for the impact of
foreign currency translation. 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.
March 2024 Half Year v March 2023 Half Year
Half Year Movement
Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted
Mar 24
$M
Mar 23
$M
Mar 23
$M
Mar 23
$M
Mar 24
v. Mar 23
Mar 24
v. Mar 23
Net interest income 7,899 8,500 37 8,537 -7% -7%
Other operating income
2,448 2,040 (36) 2,004 20% 22%
Operating income
10,347 10,540 1 10,541 -2% -2%
Operating expenses (5,215) (4,997) (19) (5,016) 4% 4%
Cash profit before credit impairment and income tax
5,132 5,543 (18) 5,525 -7% -7%
Credit impairment (charge)/release (70) (133) (3) (136) -47% -49%
Cash profit before income tax
5,062 5,410 (21) 5,389 -6% -6%
Income tax expense (1,496) (1,567) 7 (1,560) -5% -4%
Non-controlling interests
(14) (14) - (14) 0% 0%
Cash profit
3,552 3,829 (14) 3,815 -7% -7%
Cash profit/(loss) by division
Australia Retail
794 1,064 - 1,064
-25% -25%
Australia Commercial
665 739 - 739
-10% -10%
Institutional
1,522 1,589 8 1,597
-4% -5%
New Zealand
791 771 9 780
3% 1%
Pacific
31 34 - 34
-9% -9%
Group Centre
(251) (368) (31) (399) -32% -37%
Cash profit
3,552 3,829 (14) 3,815 -7% -7%
Net loans and advances by division
Australia Retail
322,364 300,581 - 300,581
7% 7%
Australia Commercial
63,874 59,911 - 59,911
7% 7%
Institutional
206,268 208,265 1,202 209,467
-1% -2%
New Zealand
121,625 120,262 (2,466) 117,796
1% 3%
Pacific
1,678 1,661 16 1,677
1% 0%
Group Centre
(638) (593) - (593) 8% 8%
Net loans and advances
715,171 690,087 (1,248) 688,839 4% 4%
Customer deposits by division
Australia Retail
172,312 156,374 - 156,374
10% 10%
Australia Commercial
116,463 113,011 - 113,011
3% 3%
Institutional
249,169 278,089 2,777 280,866
-10% -11%
New Zealand
99,779 97,958 (2,009) 95,949
2% 4%
Pacific
3,657 3,562 36 3,598
3% 2%
Group Centre
(290) (367) - (367) -21% -21%
Customer deposits
641,090 648,627 804 649,431 -1% -1%
GROUP RESULTS
31
March 2024 Half Year v September 2023 Half Year
Half Year Movement
Actual
FX
unadjusted
FX
impact
FX
adjusted
FX
unadjusted
FX
adjusted
Mar 24
$M
Sep 23
$M
Sep 23
$M
Sep 23
$M
Mar 24
v. Sep 23
Mar 24
v. Sep 23
Net interest income 7,899 8,074 14 8,088 -2% -2%
Other operating income
2,448 2,291 (26) 2,265 7% 8%
Operating income
10,347 10,365 (12) 10,353 0% 0%
Operating expenses (5,215) (5,142) (7) (5,149) 1% 1%
Cash profit before credit impairment and income tax
5,132 5,223 (19) 5,204 -2% -1%
Credit impairment (charge)/release (70) (112) 1 (111) -38% -37%
Cash profit before income tax
5,062 5,111 (18) 5,093 -1% -1%
Income tax expense (1,496) (1,513) 5 (1,508) -1% -1%
Non-controlling interests
(14) (14) - (14) 0% 0%
Cash profit
3,552 3,584 (13) 3,571 -1% -1%
Cash profit/(loss) by division
Australia Retail
794 874 - 874
-9% -9%
Australia Commercial
665 701 - 701
-5% -5%
Institutional
1,522 1,360 3 1,363
12% 12%
New Zealand
791 775 4 779
2% 2%
Pacific
31 37 - 37
-16% -16%
Group Centre
(251) (163) (20) (183) 54% 37%
Cash profit
3,552 3,584 (13) 3,571 -1% -1%
Net loans and advances by division
Australia Retail
322,364 312,249 - 312,249
3% 3%
Australia Commercial
63,874 61,557 - 61,557
4% 4%
Institutional
206,268 210,234 (708) 209,526
-2% -2%
New Zealand
121,625 121,824 (1,795) 120,029
0% 1%
Pacific
1,678 1,684 - 1,684
0% 0%
Group Centre
(638) (504) - (504) 27% 27%
Net loans and advances
715,171 707,044 (2,503) 704,541 1% 2%
Customer deposits by division
Australia Retail
172,312 164,786 - 164,786
5% 5%
Australia Commercial
116,463 113,408 - 113,408
3% 3%
Institutional
249,169 266,462 (1,377) 265,085
-6% -6%
New Zealand
99,779 99,076 (1,460) 97,616
1% 2%
Pacific
3,657 3,719 (3) 3,716
-2% -2%
Group Centre
(290) (332) - (332) -13% -13%
Customer deposits
641,090 647,119 (2,840) 644,279 -1% 0%
GROUP RESULTS
32
Earnings Related Hedges
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 Rest of World
geography. Details of these hedges are set out below.
Half Year
NZD Economic hedges
Mar 24
$M
Sep 23
$M
Mar 23
$M
Net open NZD position (notional principal)
1,2
3,071 3,050 3,011
Amount taken to income (pre-tax statutory basis)
3
23 (7) (148)
Amount taken to income (pre-tax cash basis)
4
(34) (13) 16
USD Economic hedges
Net open USD position (notional principal)
1,2
967 906 750
Amount taken to income (pre-tax statutory basis)
3
6 (29) 28
Amount taken to income (pre-tax cash basis)
4
(12) (11) (20)
1.
Value in AUD at contracted rate.
2.
The following hedges were in place to partially hedge future earnings against adverse movements in exchange rates, at a NZD forward rate of NZD 1.09/AUD as at 31 March 2024
(Sep 23: NZD 1.10/AUD; Mar 23: NZD1.10/AUD), and a USD forward rate of USD 0.67/AUD as at 31 March 2024 (Sep 23: USD 0.68/AUD; Mar 23: USD 0.69/AUD).
Half Year
Mar 24 Sep 23 Mar 23
NZD Economic Hedges
At period end (NZD billion)
3.4 3.4 3.3
Matured during the period (NZD billion)
1.4 1.4 1.3
USD Economic Hedges
At period end (USD billion)
0.6 0.6 0.5
Matured during the period (USD billion)
0.2 0.2 0.1
3.
Unrealised valuation movement plus realised revenue from matured or closed out hedges.
4.
Realised revenue from closed out hedges.
An unrealised gain on the outstanding NZD and USD economic hedges of $75 million for the March 2024 half (Sep 23 half: $12 million loss;
Mar 23 half: $116 million loss) was recorded in statutory profit. This unrealised gain is treated as an adjustment to statutory profit in determining cash
profit (included within revenue and expense hedge adjustments) as these are hedges of future NZD and USD revenues.
Cash Earnings Per Share
Half Year
Movement
Mar 24Sep 23Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Cash earnings per share (cents)
Basic
118.3 119.5 127.9 -1%-8%
Diluted
116.0 114.8 121.4 1%-4%
Cash weighted average number of ordinary shares (M)
Basic
3,001.3 3,000.2 2,994.1 0%0%
Diluted
3,249.4 3,281.6 3,278.3 -1%-1%
Cash profit ($M)
3,552 3,584 3,829 -1%-7%
Cash profit used in calculating diluted cash earnings per share ($M)
3,769 3,766 3,979 0%-5%
GROUP RESULTS
33
Dividends
Half Year
Movement
Dividend per ordinary share (cents)
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Interim
- fully franked
1
- - 81
- partially franked
2
83 - -
Final
- partially franked (comprising 81 cents and an additional dividend of 13 cents)
3
- 94 -
Total
83 94 81 -12% 2%
Ordinary share dividends used in payout ratio ($M)
4,5
2,496 2,825 2,433
Cash profit ($M)
3,552 3,584 3,829 -1% -7%
Ordinary share dividend payout ratio (cash profit basis)
5
70.3% 78.8% 63.5%
1.
2023 interim dividend was fully franked for Australian tax purposes (30% tax rate) and carried New Zealand imputation credits of NZD 9 cents.
2.
2024 proposed interim dividend will be partially franked at 65% for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 12 cents.
3.
2023 final dividend was partially franked at 56% for Australian tax purposes (30% tax rate) and carried New Zealand imputation credits of NZD 11 cents.
4.
Dividend paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries to the Group’s non-controlling equity holders of $13 million (Sep 23 half: $14 million;
Mar 23 half: $13 million).
5.
Dividend payout ratio is calculated using the proposed 2024 interim dividend of $2,496 million, based on the forecast number of ordinary shares on issue at the dividend record date.
Dividend payout ratios for the September 2023 half and March 2023 half were calculated using actual dividends.
The Directors proposed an interim dividend of 83 cents be paid on each eligible fully paid ANZ ordinary share, partially franked at 65% for Australian
taxation purposes. The interim dividend will be paid on 1 July 2024 to owners of ordinary shares at the close of business on 14 May 2024 (record date),
and carry New Zealand imputation credits of NZD 12 cents per ordinary share.
Economic Profit
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Statutory profit attributable to shareholders of the Company
3,407 3,551 3,555
-4% -4%
Adjustments between statutory profit and cash profit
145 33 274 large -47%
Cash profit
3,552 3,584 3,829 -1% -7%
Economic credit cost adjustment (377) (362) (333) 4% 13%
Imputation credits
588 553 628 6% -6%
Economic return
3,763 3,775 4,124 0% -9%
Cost of capital (3,433) (3,325) (3,267) 3% 5%
Economic profit
330 450 857 -27% -61%
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 such that 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 expected 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, estimated based on 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 (currently at 9.75% with comparative periods restated accordingly).
Economic profit decreased by $527 million against the March 2023 half, driven by lower cash profit, higher levels of capital (with the cost of capital rate
unchanged), unfavourable economic credit cost adjustment and lower imputation credits.
Economic profit decreased by $120 million against the September 2023 half, driven by lower cash profit, higher levels of capital (with the cost of capital
rate unchanged), and unfavourable economic credit cost adjustment, partially offset by higher imputation credits.
GROUP RESULTS
34
Condensed Balance Sheet
As at
Movement
Assets
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Cash / Settlement balances owed to ANZ / Collateral paid 149.7 186.1 225.1 -20% -33%
Trading assets and investment securities
160.5 134.4 133.6 19% 20%
Derivative financial instruments
47.5 60.4 45.6 -21% 4%
Net loans and advances
715.2 707.0 690.1 1% 4%
Other
16.8 17.7 16.8 -5% 0%
Total assets
1,089.7 1,105.6 1,111.2 -1% -2%
Liabilities
Settlement balances owed by ANZ / Collateral received 22.4 29.7 31.0 -25% -28%
Deposits and other borrowings
806.7 814.7 842.6 -1% -4%
Derivative financial instruments
42.7 57.5 46.2 -26% -8%
Debt issuances
127.1 116.0 106.2 10% 20%
Other
19.7 17.7 15.6 11% 26%
Total liabilities
1,018.6 1,035.6 1,041.6 -2% -2%
Total shareholders' equity 71.1 70.0 69.6 2% 2%
• March 2024 v March 2023
• Cash / Settlement balances owed to ANZ / Collateral paid decreased $75.4 billion (33%) driven by decreases in balances with central banks
($60.9 billion), overnight interbank deposits ($10.6 billion), and settlement balances owed to ANZ ($3.2 billion).
• Trading assets and investment securities increased $26.9 billion (20%) driven by increases in short term and semi-government bonds.
• Net loans and advances increased $25.1 billion (4%) driven by increases in the Australia Retail ($21.8 billion) and New Zealand ($3.8 billion)
divisions due to home loan growth, and the Australia Commercial division ($4.0 billion) due to higher lending volumes. This was partially offset by
lower lending volumes in the Institutional division ($3.2 billion) and the impact of foreign currency translation.
• Settlement balances owed by ANZ / Collateral received decreased $8.6 billion (28%) primarily driven by a decrease in cash clearing accounts
($7.9 billion).
• Deposits and other borrowings decreased $35.9 billion (4%) driven by decreases in customer deposits in the Institutional division ($31.7 billion),
deposits from banks and repurchase agreements ($29.6 billion), and certificates of deposit ($5.6 billion). This was partially offset by higher
customer deposits in the Australia Retail ($15.9 billion), New Zealand ($3.8 billion) and Australia Commercial ($3.5 billion) divisions, an increase
in commercial paper and other borrowings ($6.4 billion) and the impact of foreign currency translation.
• Debt issuances increased $20.9 billion (20%) driven by the issue of new senior and subordinated debt, including ANZ Capital Notes 9 partially
offset by the redemption of ANZ Capital Notes 4.
• March 2024 v September 2023
• Cash / Settlement balances owed to ANZ / Collateral paid decreased $36.4 billion (20%) driven by decreases in balances with central banks
($20.1 billion), settlement balances owed to ANZ ($5.5 billion), overnight interbank deposits ($5.2 billion), reverse repurchase agreements
($4.4 billion) and the impact of foreign currency translation.
• Trading assets and investment securities increased $26.1 billion (19%) driven by increases in short term and semi-government bonds.
• Derivative financial assets and liabilities decreased $12.9 billion (21%) and $14.8 billion (26%) respectively driven by market rate movements,
primarily decreases in USD swap rates and the depreciation of certain major currencies against the USD.
• Net loans and advances increased $8.2 billion (1%) driven by increases in the Australia Retail ($10.1 billion) and New Zealand ($1.6 billion)
divisions due to home loan growth, and the Australia Commercial division ($2.3 billion) due to higher lending volumes. This was partially offset by
lower lending volumes in the Institutional division ($3.3 billion) and the impact of foreign currency translation.
• Settlement balances owed by ANZ / Collateral received decreased $7.3 billion (25%) primarily driven by decreases in cash clearing accounts
($4.2 billion) and lower collateral received ($2.9 billion).
• Deposits and other borrowings decreased $8.0 billion (1%) driven by decreases in customer deposits in the Institutional division ($15.9 billion),
deposits from banks and repurchase agreements ($10.8 billion), certificates of deposit ($2.8 billion) and the impact of foreign currency
translation. This was partially offset by increases in commercial paper and other borrowings ($12.1 billion), and customer deposits in the
Australia Retail ($7.5 billion), Australia Commercial ($3.1 billion) and New Zealand ($2.2 billion) divisions.
• Debt issuances increased $11.1 billion (10%) driven by the issue of new senior debt and subordinated debt, including ANZ Capital Notes 9
partially offset by the redemption of ANZ Capital Notes 4.
GROUP RESULTS
35
Liquidity Risk
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 relevant Boards.
The Group operates under a non-operating holding company structure whereby:
• ANZBGL’s liquidity risk management framework remains unchanged and continues to operate its own liquidity and funding program, governance
frameworks and reporting regime reflecting its Authorised Deposit-taking Institution (ADI) operations;
• ANZGHL (parent entity) has no material liquidity risk given the structure and nature of the balance sheet; and
• ANZ Non-Bank Group is not expected to have separate funding arrangements and will rely on ANZGHL for funding.
Furthermore, a separate liquidity policy has been established for ANZGHL and ANZ Bank Group to reflect the differing nature of liquidity risk inherent in
each business model. The Group will ensure that ANZGHL and ANZ Non-Bank Group holds sufficient cash reserves to meet operating and financing
requirements.
ANZ Bank Group’s approach to liquidity risk management incorporates two key components:
• Scenario modelling of funding sources
ANZBGL Group’s liquidity risk appetite is defined by the ability to meet a range of regulatory requirements and internal liquidity metrics mandated by
the ANZBGL 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.
Key components of this framework are the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario, and the Net Stable
Funding Ratio (NSFR), a longer term structural liquidity measure, both of which are mandated by banking regulators including APRA.
• Liquid assets
ANZBGL Group holds a portfolio of high quality unencumbered liquid assets in order to protect ANZBGL 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): Eligible securities listed by the RBNZ.
ANZBGL 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 ANZBGL Board.
Half Year Average
1
Movement
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Market Values Post Discount
HQLA1 268.2 258.6 253.5
4% 6%
HQLA2
11.6 9.8 9.7
18% 20%
Alternative liquid assets
2
1.9 2.4 2.7
-21%-30%
Total liquid assets
281.7 270.8 265.9 4% 6%
Cash flows modelled under stress scenario
Cash outflows 262.8 256.1 268.8 3% -2%
Cash inflows
51.9 51.4 60.5 1% -14%
Net cash outflows
210.9 204.7 208.3 3% 1%
Liquidity Coverage Ratio
3,4
134%132%128%2% 6%
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 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.
4.
LCR remained above the regulatory minimum thresholds throughout the periods.
GROUP RESULTS
36
Funding
The ANZBGL Group targets a diversified funding base, avoiding undue concentrations by investor type, maturity, market source and currency.
During the March 2024 half, the ANZBGL Group issued $21.2 billion of term wholesale funding
1
, $1.7 billion of APRA compliant Additional Tier 1 Capital
and $0.3 billion of RBNZ compliant Additional Tier 1 Capital.
The following table shows the ANZBGL Group’s total funding composition:
As at Movement
ANZ Bank Group
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Customer deposits and other liabilities
Australia Retail 172.3 164.8 156.4 5%10%
Australia Commercial 116.5 113.4 113.0 3%3%
Institutional
249.2 266.5 278.1 -6%-10%
New Zealand
99.8 99.1 98.0 1%2%
Pacific
3.7 3.7 3.6 0%3%
Group Centre
(0.2)(0.1)(0.2)large0%
Customer deposits
641.3 647.4 648.9 -1%-1%
Other funding liabilities
2
10.8 11.7 12.4 -8%-13%
Total customer liabilities (funding)
652.1 659.1 661.3 -1%-1%
Wholesale funding
Unsubordinated debt and central bank term funding
3
102.3 94.0 97.1 9%5%
Subordinated debt
4
36.3 33.7 32.7 8%11%
Certificates of deposit
39.1 41.9 44.5 -7%-12%
Commercial paper
45.2 33.3 38.8 36%16%
Other wholesale borrowings
5
96.8 113.9 122.5 -15%-21%
Total wholesale funding
319.7 316.8 335.6 1%-5%
Shareholders' equity 70.2 69.1 68.6 2%2%
Total funding 1,042.0 1,045.0 1,065.5 0%-2%
1.
Excludes unsubordinated debt with shorter tenors (such as 12 to 18 months).
2.
Includes interest accruals, payables and other liabilities, provisions and net tax provisions, and excludes liability for acceptances as they do not provide net funding.
3.
Includes RBA TFF of $8.1 billion (Sep 23: $8.1 billion; Mar 23: $20.1 billion), RBNZ FLP of $3.2 billion (Sep 23: $3.2 billion; Mar 23: $3.2 billion) and TLF of $0.3 billion
(Sep 23: $0.3 billion; Mar 23: $0.3 billion).
4.
Includes subordinated debt issued by ANZ Bank New Zealand Limited which constitutes Tier 2 capital under RBNZ requirements but does not meet the APRA Tier 2 requirements, and
USD 300 million perpetual subordinated notes which ceased to be treated as Basel 3 transitional Tier 2 capital under APRA’s capital framework from 1 January 2022. The USD 300 million
perpetual subordinated notes were redeemed on 31 October 2023.
5.
Includes borrowings from banks, securities sold under repurchase agreements, net derivative balances, special purpose vehicles and other borrowings.
Net Stable Funding Ratio
The following table shows the Level 2 NSFR composition:
As at Movement
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Required Stable Funding (RSF)
1
Retail & small and medium enterprises, corporate loans with 65% RSF factor
2
218.3 213.6 200.5 2%9%
Retail & small and medium enterprises, corporate loans with 85% RSF factors
2
206.1 208.5 221.3 -1%-7%
Other lending
3
56.2 54.9 37.2 2%51%
Liquid assets
15.1 13.8 13.1 9%15%
Other assets
4
46.8 46.8 45.2 0%4%
Total Required Stable Funding
542.5 537.6 517.3 1%5%
Available Stable Funding
1
Retail & small and medium enterprise customer deposits 308.9 301.3 292.9 3%5%
Corporate, public sector entities & operational deposits
128.5 130.8 136.9 -2%-6%
Central bank & other financial institution deposits
6.4 7.2 4.7 -11%36%
Term funding
5
81.5 76.0 71.3 7%14%
Short term funding & other liabilities
12.4 10.3 8.5 20%46%
Capital
102.7 99.6 99.4 3%3%
Total Available Stable Funding
640.4 625.2 613.7 2%4%
Net Stable Funding Ratio
6
118%116%119%2%-1%
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 loans to financial institutions and central banks, and non-performing loans.
4.
Includes off-balance sheet items, net derivatives and other assets.
5.
Includes balances from the drawdown of the RBA and RBNZ Funding Facilities (TFF, FLP and TLF).
6.
The regulatory minimum NSFR is 100%.
GROUP RESULTS
37
Capital Management
The Group’s capital management framework includes managing capital at Level 1, Level 2 and ANZGHL Group.
The Group’s framework includes managing to Board approved risk appetite settings and maintaining all regulatory requirements. APRA requirements at
Level 1 and Level 2 include ANZ operating at or above APRA’s expectation for Domestic Systematically Important Banks (D-SIBs).
APRA’s authority for ANZGHL to be a non-operating holding company (NOHC) of an ADI includes five conditions for ANZ’s capital management
framework. Two of these are quantitative requirements being:
• ANZGHL must always ensure that the quality and quantity of the total capital of the Level 3 group is equivalent to, or greater than, the quality and
quantity of the sum of the total capital of the consolidated ANZ Bank Group and the consolidated ANZ Non-Bank Group.
• ANZGHL must calculate and manage capital for the ANZ Non-Bank Group in accordance with an Economic Capital Model (ECM), which requires the
amount of capital held, in the form of Common Equity Tier 1 (CET1), to be equal to or greater than the capital requirement as calculated under the
ECM.
The Group has implemented an ECM to calculate the capital to support the ANZ Non-Bank Group operations. The material risks included in the Non-
Bank Group currently are investment risk and fixed asset risk.
The Group’s compliance with these two conditions is presented in the following tables:
ANZ Bank
Group
2
$M
ANZ Non-Bank
Group
$M
ANZGHL
$M
ANZ Group
$M
As at March 2024
Allocated equity
1
70,202 716 156 71,074
Prudential adjustments to allocated equity
(648) - - (648)
Gross Common Equity Tier 1 capital
69,554 716 156 70,426
Deductions (11,142) - - (11,142)
Common Equity Tier 1 capital
58,412 716 156 59,284
Tier 1 capital 66,709 716 156 67,581
Tier 2 capital 28,223 - - 28,223
Total qualifying capital
94,932 716 156 95,804
As at September 2023
Allocated equity
1
69,085 749 183 70,017
Prudential adjustments to shareholders' equity (396) - - (396)
Gross Common Equity Tier 1 capital 68,689 749 183 69,621
Deductions (10,895) - - (10,895)
Common Equity Tier 1 capital 57,794 749 183 58,726
Tier 1 capital 66,026 749 183 66,958
Tier 2 capital 24,959 - - 24,959
Total qualifying capital 90,985 749 183 91,917
As at March 2023
Allocated equity
1
68,596 739 245 69,580
Prudential adjustments to shareholders' equity (329) - - (329)
Gross Common Equity Tier 1 capital 68,267 739 245 69,251
Deductions (10,887) - - (10,887)
Common Equity Tier 1 capital 57,380 739 245 58,364
Tier 1 capital 65,564 739 245 66,548
Tier 2 capital 24,068 - - 24,068
Total qualifying capital 89,632 739 245 90,616
1.
Allocated in accordance with prudential capital management view.
2.
ANZ Bank Group allocated equity is adjusted for capital deductions, including deconsolidated entity adjustments, to calculate ANZ Level 2 CET1, Tier 1, Tier 2 and total qualifying capital.
ANZ Non-Bank Group
As at
Mar 24
$M
Sep 23
$M
Mar 23
$M
Economic Capital Required 571 563 674
Actual Capital
1
740 744 772
Actual vs Economic Capital
169 181 98
1.
This represents the aggregation of ANZ NBH Pty Ltd and ANZ Group Services Pty Ltd’s shareholders’ equity.
GROUP RESULTS
38
ANZ Bank Group
As at
APRA Capital Ratios Internationally Comparable Capital Ratios
1
Mar 24Sep 23Mar 23Mar 24Sep 23Mar 23
Capital Ratios (Level 2)
Common Equity Tier 1 13.5%13.3%13.2%19.7%19.7%19.4%
Tier 1
15.4%15.2%15.1%22.2%22.2%21.8%
Total capital
21.9%21.0%20.6%30.7%29.8%29.1%
Risk weighted assets ($B)
432.8 433.3 435.5 334.1 331.5 334.4
1.
Internationally Comparable methodology align with the Australia Banking Association Basel 3.1 Capital Comparison Study (March 2023).
APRA Common Equity Tier 1 - March 2024 v September 2023
• March 2024 v September 2023
CET1 ratio increased +16 bps to 13.50% during the March 2024 half. Key drivers of the movement in the CET1 ratio were:
• Cash profit (Level 2) increased the CET1 ratio by +83 bps.
• Higher underlying RWA usage (excluding impact of foreign currency translation, regulatory changes and other one-offs) decreased the CET1
ratio by -12 bps primarily driven by higher credit RWA, market risk RWA and operational RWA, partially offset by lower IRRBB RWA.
• Payment of the 2023 final dividend (net of BOP) reduced the CET1 ratio by -64 bps.
• Proceeds from partial disposal of investment in AmBank increased the CET1 ratio by +15 bps.
• Capital deduction and others impact totalling -6 bps reflecting net movements in IRB floor increase, capital deductions, net imposts, non-cash
profit adjustments and net other items, partially offset by benefits from credit RWA methodology refinements.
March 2024 pro-forma CET1 capital ratio of 11.85% includes pro-forma adjustments for:
• Suncorp Bank acquisition of -123 bps,
• The announced $2 billion on-market share buyback of -46 bps, and
• NOHC surplus capital of +4 bps.
GROUP RESULTS
39
Total Risk Weighted Assets
As at Movement
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Credit RWA 348.4 349.0 345.3 0% 1%
Market risk and IRRBB RWA
38.1 42.0 43.6 -9% -13%
Operational RWA
43.3 42.3 42.3 2% 2%
Total
429.8 433.3 431.2 -1% 0%
IRB floor adjustment 3.0 - 4.3 n/a -30%
Total RWA
432.8 433.3 435.5 0% -1%
Total Risk Weighted Assets - March 2024 v September 2023
1.
The attribution of credit RWA movements requires assumptions and judgement, with different assumptions leading to different attributions.
• March 2024 v September 2023
Total RWA decreased $0.5 billion driven by:
• $0.6 billion decrease in total credit RWA primarily driven by benefits from credit RWA methodology refinements and the impact of foreign
currency translation, partially offset by volume growth in the Institutional, Australia Retail and Australia Commercial divisions.
• Credit RWA methodology refinements includes benefits from continued refinement in process, data and associated methodology treatments post
implementation of revised capital reform rules, implementation of a new model relating to New Zealand rural exposures, and removal of
associated RBNZ supervisory adjustment for corporate exposures.
• $2.9 billion decrease in underlying non-credit RWA (operational RWA, and market risk and IRRBB RWA) mainly from a reduction in IRRBB RWA
partially offset by increases in market risk RWA and operational RWA.
• IRB floor adjustment increased from nil to $3.0 billion.
GROUP RESULTS
40
APRA Capital Reform to Internationally Comparable
1
CET1 as at 31 March 2024
1.
The Group’s interpretation of the Basel Calculation of RWA for credit risk regulations (effective 1 Jan 2023) documented in The Basel Framework and The Australian Banking Association,
Basel 3.1 Capital Comparison Study, March 2023.
The above graph provides a reconciliation of the CET1 ratio under APRA’s prudential capital standards to Internationally Comparable Basel 3.1
standards. One of the objectives, although not the primary objective, of the revisions APRA has made is to ‘improve transparency, by increasing the
alignment of APRA’s standards with the international Basel framework’ (APRA Information Paper – An Unquestionably Strong Framework for Bank
Capital, November 2021). Despite this, material differences in the way credit risks are measured remain between the approaches allowed by APRA and
those proposed by Basel. As a result, Australian banks’ APRA reported capital ratios will not be directly comparable with the Basel 3.1 capital ratios or
directly comparable with many international jurisdictions which are yet to transition to the revised Basel 3.1 Capital Framework.
The material differences between APRA and Internationally Comparable capital 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 deferred tax assets relating to temporary differences. On an Internationally
Comparable basis, this is subject to a concessional threshold before the deduction is required.
Risk Weighted Assets
• Mortgages RWA
• Standard residential mortgages - APRA imposes risk weight multipliers of 1.4x against owner occupied, principal and interest mortgages and 1.7x
against all other mortgage types as well as a 5% risk weight floor across the total mortgage portfolio. Basel regulations impose no risk weight
floors or multipliers.
• Non-standard residential mortgages - APRA excludes all non-standard residential mortgages from using the IRB approach unlike Basel.
• Borrowers with multiple mortgaged investment properties – APRA treats these as retail exposures, with a 2.5x multiplier applied if the number of
investment properties exceeds 5. Basel allows these exposures to be treated as corporate exposures.
• 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.
• Non-retail LGDs - APRA allows lower LGDs for sovereign (Foundation IRB treatment only) and critical infrastructure operator exposures than Basel
but requires higher LGDs for general corporate exposures.
• New Zealand subsidiary lending - APRA requires the credit RWA amounts for all credit exposures originated by a New Zealand subsidiary to be
calculated using the Reserve Bank of New Zealand (RBNZ) capital rules, except for APRA’s overall IRB scalar, which must replace the RBNZ scalar.
In comparison with Basel, the RBNZ uses a different supervisory slotting approach for specified asset classes, different LGD floors for farm lending,
different LGD floors and correlation factors for residential mortgages, and different LGD and EAD factors for undrawn non-retail exposures.
• Other RWA impacts - 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 IRB approach to be used when calculating RWA for these exposures. APRA has now
allowed the advanced IRB approach for income producing real estate exposures, which were previously required to use slotting.
• Scaling factor on all IRB exposures of 1.1x is applied.
GROUP RESULTS
41
Leverage Ratio
At 31 March 2024, the ANZ Bank Group’s APRA Leverage Ratio was 5.4% which is above the 3.5% APRA minimum for IRB ADIs which includes ANZ.
The following table summarises the ANZ Bank Group’s Leverage Ratio calculation:
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Tier 1 Capital (net of capital deductions) 66,709 66,026 65,564 1% 2%
On-balance sheet exposures (excluding derivatives and securities financing transaction
exposures)
984,875 984,663 1,013,515 0% -3%
Derivative exposures
59,357 51,008 44,612 16% 33%
Securities financing transaction exposures
58,995 50,747 43,756 16% 35%
Other off-balance sheet exposures
124,894 138,301 140,999 -10% -11%
Total exposure measure
1,228,121 1,224,719 1,242,882 0% -1%
APRA Leverage Ratio 5.4% 5.4% 5.3%
Internationally Comparable Leverage Ratio 6.0% 6.0% 5.9%
• March 2024 v September 2023
APRA leverage ratio increased +4 bps during the March 2024 half. Key drivers of the movement were:
• Net organic capital generation (largely from cash profit and movements in capital deductions), less dividends paid increased the leverage ratio by
+5 bps,
• Additional Tier 1 capital impact (ANZ Capital Notes 9 issuance net of ANZ Capital Notes 4 redemption) increased the leverage ratio by +1 bps,
• On-balance sheet exposures growth decreased the leverage ratio by -2 bps. On-balance sheet exposures growth was driven by lending growth
in the Australia Retail, Australia Commercial and New Zealand divisions, and growth in Trading assets and Investment securities, partially offset
by reduction in lending volume in the Institutional division and reduction in Cash and cash equivalents.
• Net movements in derivative, securities financing transactions and other off-balance sheet exposures decreased the leverage ratio by -2 bps,
and
• Net other impacts increased the leverage ratio by +2 bps.
GROUP RESULTS
42
Capital Management - Other Developments
• Capital Requirements
APRA implemented its updated requirements in relation to capital adequacy and credit risk requirements for ADIs on 1 January 2023. In December
2023, APRA released for consultation proposed minor amendments to the capital framework for ADIs. One update is related to Prudential Standard
APS 112 Capital Adequacy: Standardised Approach to Credit Risk, which could potentially reduce standardised RWA. ADIs now calculate RWA
under both the IRB RWA approach and the standardised RWA approach. When the standardised RWA multiplied by 72.5% is greater than the IRB
RWA, the difference is added as an adjustment to the total IRB RWA. Therefore, any reduction in the standardised RWA may reduce (or eliminate)
the quantum of the IRB capital floor adjustment. The Group responded to APRA’s consultation in March 2024 and APRA is conducting a quantitative
impact study with selected ADIs.
In addition, APRA continues to consult and finalise revisions to a number of remaining prudential standards, being IRRBB, market risk and
counterparty credit risk. Given the number of items that are yet to be finalised by APRA, the aggregate final outcome from all changes to APRA's
prudential standards relating to their review of ADIs ‘unquestionably strong’ capital framework remains uncertain.
• APRA Total Loss Absorbing Capacity Requirements
On 2 December 2021, APRA finalised its loss-absorbing capacity requirements for Australian D-SIBs, including ANZBGL, requiring an increase to
their minimum total capital requirement by 4.5% of RWA by January 2026. APRA expects the requirement to be satisfied predominantly with
additional Tier 2 capital with an equivalent decrease in other senior funding. The amount of the additional total capital requirement will be based on
the Group’s actual RWA as at January 2026.
• APRA Discussion Paper on Additional Tier 1 Capital in Australia
In September 2023, APRA released a discussion paper entitled “Enhancing bank resilience: Additional Tier 1 Capital in Australia” (APRA Discussion
Paper) which explores options for, and seeks feedback from stakeholders on, the effectiveness of Additional Tier 1 (AT1) Capital in Australia.
Potential options raised by APRA include:
• Improving the key design features of Additional Tier 1 Capital (including potentially increasing capital trigger event threshold requirements from
the current 5.125% to a higher level) so it more effectively absorbs losses;
• Changing the required level or mix of regulatory capital requirements to reduce reliance on Additional Tier 1 Capital; and
• Changes to diversify the investor base for Additional Tier 1 Capital instruments away from domestic retail investors.
The Group has engaged with APRA in a bilateral discussion on the APRA Discussion Paper and provided a submission in response to APRA’s
Additional Tier 1 Consultation on 15 November 2023. APRA has indicated that it intends to formally consult in 2024 on any proposed amendments to
the relevant prudential standards and in implementing any options, there would be a transition time to enable issuers to adjust to new requirements.
At this stage, it is not possible to confirm what impact (if any) the options proposed by APRA may have on the Group.
• The Reserve Bank of New Zealand review of capital requirements
The RBNZ’s revised capital adequacy requirements for New Zealand banks, which are set out in the Banking Prudential Requirements documents
are being implemented in stages during a transition period from October 2021 to July 2028. The key requirements for ANZ Bank New Zealand
Limited (ANZ Bank New Zealand) still being implemented are as follows:
• ANZ Bank New Zealand’s Tier 1 capital requirement will increase to 16% of RWA, of which up to 2.5% can be in the form of AT1 Capital. ANZ
Bank New Zealand’s Total Capital requirement will increase to 18% of RWA, of which up to 2% can be Tier 2 Capital. The increased capital ratio
requirements are being implemented progressively from 1 July 2022 to 1 July 2028.
• AT1 capital must consist of perpetual preference shares, which may be redeemable. Tier 2 capital must consist of long-term subordinated debt.
The net impact on the Group’s Level 1 CET1 capital, by the end of the transition period in 2028, is dependent on the additional capital required by
ANZ Bank New Zealand to comply with the increased capital requirements. Whether the additional capital requirement for ANZ Bank New Zealand
results in financial implications for ANZ will also depend on whether ANZ’s Level 1 CET1 ratio is lower than ANZ’s Level 2 CET1 ratio in 2028. Given
the level of uncertainty of these outcomes, the future financial impact of the RBNZ’s revised capital adequacy requirements is not able to be
quantified currently.
• Group regulation - roadmap for review
In October 2022, APRA released a roadmap for review of the prudential framework for groups. The review will focus on rationalising requirements,
promoting consistency, and providing clarity across different standards that apply to groups. As part of the review, guidelines for licensing new NOHC
authorities will be updated. For existing APRA authorised NOHCs, there will be no immediate changes, although APRA will seek to ensure new or
adjusted NOHC license conditions are applied in a consistent manner. The review will be multi-year, finishing in 2025.
DIVISIONAL RESULTS
43
CONTENTS Page
Divisional Performance 44
Australia Retail 48
Australia Commercial 50
Institutional 52
New Zealand 59
Pacific 64
Group Centre 64
DIVISIONAL RESULTS
Divisional Performance
44
During the March 2024 half, the Group operated on a divisional structure with six divisions: Australia Retail, Australia Commercial, Institutional, New
Zealand, Pacific, and Group Centre. For further information on the composition of divisions, refer to the Definitions on page 125.
Restatement of prior period comparative information
• Accounting standards adoption - the Group adopted AASB 17 Insurance Contracts (AASB 17) on 1 October 2023. Although the overall profit
recognised in respect of insurance contracts will not change over the life of contracts, the timing of revenue recognition will change. The Group
applied AASB 17 effective from 1 October 2022 and restated prior period comparative information. This resulted in a decrease in opening retained
earnings of $37 million on 1 October 2022, an increase in profit after tax (Sep 23 half: nil; Mar 23 half: $8 million), an increase in total assets (Sep 23:
$22 million; Mar 23: $36 million), and an increase in total liabilities (Sep 23: $51 million; Mar 23: $65 million) in the Australia Retail division.
• Divisional results presentation – divisional prior period comparative information was restated to reflect a number of cost reallocations across and
within the divisions during the period, with no impact to Group results.
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.
DIVISIONAL RESULTS
Divisional Performance
45
Cash profit by division - March 2024 Half Year v March 2023 Half Year
March 2024 Half Year
Australia
Retail
$M
Australia
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
Group
Centre
$M
Group
$M
Net interest income
2,608 1,580 1,882 1,572 63 194 7,899
Other operating income
301 169 1,687 208 44 39 2,448
Operating income
2,909 1,749 3,569 1,780 107 233 10,347
Operating expenses (1,735) (763) (1,444) (677) (70) (526) (5,215)
Cash profit/(loss) before credit impairment and
income tax
1,174 986 2,125 1,103 37 (293) 5,132
Credit impairment (charge)/release (43) (35) 6 (4) 6 - (70)
Cash profit/(loss) before income tax
1,131 951 2,131 1,099 43 (293) 5,062
Income tax expense (337) (286) (609) (308) (11) 55 (1,496)
Non-controlling interests
- - - - (1) (13) (14)
Cash profit/(loss)
794 665 1,522 791 31 (251) 3,552
March 2023 Half Year
Australia
Retail
$M
Australia
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
Group
Centre
$M
Group
$M
Net interest income 3,015 1,632 2,071 1,582 62 138 8,500
Other operating income 296 175 1,373 199 40 (43) 2,040
Operating income 3,311 1,807 3,444 1,781 102 95 10,540
Operating expenses (1,703) (685) (1,340) (634) (74) (561) (4,997)
Cash profit/(loss) before credit impairment and
income tax
1,608 1,122 2,104 1,147 28 (466) 5,543
Credit impairment (charge)/release (82) (66) 74 (75) 16 - (133)
Cash profit/(loss) before income tax 1,526 1,056 2,178 1,072 44 (466) 5,410
Income tax expense (462) (317) (589) (301) (10) 112 (1,567)
Non-controlling interests - - - - - (14) (14)
Cash profit/(loss) 1,064 739 1,589 771 34 (368) 3,829
March 2024 Half Year v March 2023 Half Year
Australia
Retail
Australia
Commercial Institutional New Zealand Pacific
Group
Centre Group
Net interest income -13% -3% -9% -1% 2% 41% -7%
Other operating income 2% -3% 23% 5% 10% large 20%
Operating income -12% -3% 4% 0% 5% large -2%
Operating expenses 2% 11% 8% 7% -5% -6% 4%
Cash profit/(loss) before credit impairment and
income tax
-27% -12% 1% -4% 32% -37% -7%
Credit impairment (charge)/release -48% -47% -92% -95% -63% n/a -47%
Cash profit/(loss) before income tax -26% -10% -2% 3% -2% -37% -6%
Income tax expense -27% -10% 3% 2% 10% -51% -5%
Non-controlling interests n/a n/a n/a n/a n/a -7% 0%
Cash profit/(loss) -25% -10% -4% 3% -9% -32% -7%
DIVISIONAL RESULTS
Divisional Performance
46
Cash profit by division - March 2024 Half Year v September 2023 Half Year
March 2024 Half Year
Australia
Retail
$M
Australia
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
Group
Centre
$M
Group
$M
Net interest income
2,608 1,580 1,882 1,572 63 194 7,899
Other operating income
301 169 1,687 208 44 39 2,448
Operating income
2,909 1,749 3,569 1,780 107 233 10,347
Operating expenses (1,735) (763) (1,444) (677) (70) (526) (5,215)
Cash profit/(loss) before credit impairment and
income tax
1,174 986 2,125 1,103 37 (293) 5,132
Credit impairment (charge)/release (43) (35) 6 (4) 6 - (70)
Cash profit/(loss) before income tax
1,131 951 2,131 1,099 43 (293) 5,062
Income tax expense (337) (286) (609) (308) (11) 55 (1,496)
Non-controlling interests
- - - - (1) (13) (14)
Cash profit/(loss)
794 665 1,522 791 31 (251) 3,552
September 2023 Half Year
Australia
Retail
$M
Australia
Commercial
$M
Institutional
$M
New Zealand
$M
Pacific
$M
Group
Centre
$M
Group
$M
Net interest income 2,694 1,592 1,969 1,567 61 191 8,074
Other operating income 374 190 1,321 210 45 151 2,291
Operating income 3,068 1,782 3,290 1,777 106 342 10,365
Operating expenses (1,758) (738) (1,388) (665) (71) (522) (5,142)
Cash profit/(loss) before credit impairment and
income tax
1,310 1,044 1,902 1,112 35 (180) 5,223
Credit impairment (charge)/release (53) (41) 6 (37) 12 1 (112)
Cash profit/(loss) before income tax 1,257 1,003 1,908 1,075 47 (179) 5,111
Income tax expense (383) (302) (548) (300) (8) 28 (1,513)
Non-controlling interests - - - - (2) (12) (14)
Cash profit/(loss) 874 701 1,360 775 37 (163) 3,584
March 2024 Half Year v September 2023 Half Year
Australia
Retail
Australia
Commercial Institutional New Zealand Pacific
Group
Centre Group
Net interest income -3% -1% -4% 0% 3% 2% -2%
Other operating income -20% -11% 28% -1% -2% -74% 7%
Operating income -5% -2% 8% 0% 1% -32% 0%
Operating expenses -1% 3% 4% 2% -1% 1% 1%
Cash profit/(loss) before credit impairment and
income tax
-10% -6% 12% -1% 6% 63% -2%
Credit impairment (charge)/release -19% -15% 0% -89% -50% large -38%
Cash profit/(loss) before income tax -10% -5% 12% 2% -9% 64% -1%
Income tax expense -12% -5% 11% 3% 38% 96% -1%
Non-controlling interests n/a n/a n/a n/a -50% 8% 0%
Cash profit/(loss) -9% -5% 12% 2% -16% 54% -1%
DIVISIONAL RESULTS
Divisional Performance
47
Key Balance Sheet Metrics by division
As at Movement
Net Loans and Advances
Mar 24
$B
Sep 23
$B
Mar 23
$B
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia Retail 322.4 312.2 300.6 3% 7%
Australia Commercial
63.9 61.6 59.9 4% 7%
Institutional
1
206.3 210.2 208.3 -2% -1%
New Zealand
1
121.6 121.8 120.3 0% 1%
Pacific
1
1.7 1.7 1.7 0% 0%
Group Centre
(0.7) (0.5) (0.7) 40% 0%
Total
715.2 707.0 690.1 1% 4%
Customer Deposits
Australia Retail 172.3 164.8 156.4 5% 10%
Australia Commercial
116.5 113.4 113.0 3% 3%
Institutional
1
249.2 266.5 278.1 -6% -10%
New Zealand
1
99.8 99.1 98.0 1% 2%
Pacific
1
3.7 3.7 3.6 0% 3%
Group Centre
(0.4) (0.3) (0.5) 33% -20%
Total
641.1 647.1 648.6 -1% -1%
Risk Weighted Assets
Australia Retail 130.2 127.7 117.8 2% 11%
Australia Commercial
46.6 47.5 47.4 -2% -2%
Institutional
171.4 175.2 183.1 -2% -6%
New Zealand
66.8 70.9 71.7 -6% -7%
Pacific
3.6 3.8 4.1 -5% -12%
Group Centre
14.2 8.2 11.3 73% 26%
Total
432.8 433.3 435.5 0% -1%
Half Year
Return on Average Risk Weighted Assets
Mar 24Sep 23Mar 23
Australia Retail
1.22%1.43%1.73%
Australia Commercial
2.83%2.93%2.83%
Institutional
1.77%1.51%1.58%
New Zealand
2.31%2.18%2.41%
Pacific
1.67%1.85%1.76%
Group Centre
(5.01%)(3.42%)(10.77%)
Total
1.65%1.65%1.70%
1.
Refer to pages 30 and 31 for Net loans and advances and customer deposits movements excluding the impact of foreign currency translation.
DIVISIONAL RESULTS
Australia Retail
Maile Carnegie
48
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 2,608 2,694 3,015
-3% -13%
Other operating income
301 374 296
-20% 2%
Operating income
2,909 3,068 3,311
-5% -12%
Operating expenses (1,735) (1,758) (1,703)
-1% 2%
Cash profit before credit impairment and income tax
1,174 1,310 1,608
-10% -27%
Credit impairment (charge)/release (43) (53) (82)
-19% -48%
Cash profit before income tax
1,131 1,257 1,526
-10% -26%
Income tax expense (337) (383) (462)
-12% -27%
Cash profit
794 874 1,064
-9% -25%
Balance Sheet
Net loans and advances 322,364 312,249 300,581
3% 7%
Other external assets
3,411 2,958 3,239
15% 5%
External assets
325,775 315,207 303,820
3% 7%
Customer deposits 172,312 164,786 156,374
5% 10%
Other external liabilities 4,172 4,140 3,923
1% 6%
External liabilities
176,484 168,926 160,297
4% 10%
Risk weighted assets 130,184 127,673 117,844
2% 10%
Average gross loans and advances 318,649 307,124 297,255
4% 7%
Average deposits and other borrowings
168,912 159,786 152,392
6% 11%
Ratios
Return on average assets 0.50% 0.56% 0.71%
Net interest margin 1.94% 2.06% 2.38%
Operating expenses to operating income 59.6% 57.3% 51.4%
Operating expenses to average assets 1.08% 1.13% 1.14%
Individually assessed credit impairment charge/(release) 49 48 32
2% 53%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
0.03% 0.03% 0.02%
Collectively assessed credit impairment charge/(release) (6) 5 50
large large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.00%) 0.00% 0.03%
Gross impaired assets 669 520 415
29% 61%
Gross impaired assets as a % of GLA
0.21% 0.17% 0.14%
Total FTE 11,383 11,313 11,199
1% 2%
1.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Performance March 2024 v March 2023
Lending volumes increased driven by home loan growth.
• Net interest margin decreased driven by asset margin contraction from
home loan pricing competition, unfavourable deposit mix with a shift
towards lower margin term deposits, and higher net funding costs. This
was partially offset by higher earnings on capital and replicating portfolio
and favourable lending mix with a shift towards higher margin variable
home loans.
• Operating expenses increased driven by inflationary impacts and
incremental costs associated with strategic initiatives including ANZ Plus,
partially offset by productivity initiatives.
• Credit impairment charge decreased driven by lower collectively
assessed credit impairment, partially offset by higher individually
assessed credit impairment due to lower write-backs in the home loan
portfolio and lower recoveries in the unsecured portfolios.
Performance March 2024 v September 2023
Lending volumes increased driven by home loan growth.
• Net interest margin decreased driven by asset margin contraction from
home loan pricing competition, unfavourable deposit mix with a shift
towards lower margin term deposits and higher net funding costs. This
was partially offset by favourable deposit margins, and higher earnings
on capital and replicating portfolio.
• Other operating income decreased driven by timing of recognition of
cards incentives, and seasonality of fees.
• Operating expenses decreased driven by lower restructuring expense,
productivity initiatives and seasonal factors. This was partially offset by
inflationary impacts and incremental costs associated with strategic
initiatives including ANZ Plus.
• Credit impairment charge decreased driven by lower collectively
assessed credit impairment.
DIVISIONAL RESULTS
Australia Retail
Maile Carnegie
49
Individually assessed credit impairment charge/(release) Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Home Loans 6 10 - -40% n/a
Cards and Personal Loans
42 37 31 14% 35%
Deposits and Payments
1
1 1 1 0% 0%
Individually assessed credit impairment charge/(release)
49 48 32 2% 53%
Collectively assessed credit impairment charge/(release) Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Home Loans 2 12 30 -83% -93%
Cards and Personal Loans
(11) (8) 19 38% large
Deposits and Payments
1
3 1 1 large large
Collectively assessed credit impairment charge/(release)
(6) 5 50 large large
Net loans and advances As at
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Home Loans 316,517 306,445 294,681 3% 7%
Cards and Personal Loans
5,817 5,772 5,865 1% -1%
Deposits and Payments
1
30 32 35 -6% -14%
Net loans and advances
322,364 312,249 300,581 3% 7%
Customer deposits As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Home Loans
2
47,692 45,006 43,771 6% 9%
Cards and Personal Loans
179 219 206 -18% -13%
Deposits and Payments
124,441 119,561 112,397 4% 11%
Customer deposits
172,312 164,786 156,374 5% 10%
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 Commercial
Clare Morgan
50
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 1,580 1,592 1,632
-1% -3%
Other operating income
169 190 175
-11% -3%
Operating income
1,749 1,782 1,807
-2% -3%
Operating expenses (763) (738) (685)
3% 11%
Cash profit before credit impairment and income tax
986 1,044 1,122
-6% -12%
Credit impairment (charge)/release (35) (41) (66)
-15% -47%
Cash profit before income tax
951 1,003 1,056
-5% -10%
Income tax expense (286) (302) (317)
-5% -10%
Cash profit
665 701 739
-5% -10%
Balance Sheet
Net loans and advances 63,874 61,557 59,911
4% 7%
Other external assets
405 359 316
13% 28%
External assets
64,279 61,916 60,227
4% 7%
Customer deposits 116,463 113,408 113,011
3% 3%
Other external liabilities 5,923 5,933 6,031
0% -2%
External liabilities
122,386 119,341 119,042
3% 3%
Risk weighted assets 46,601 47,497 47,359
-2% -2%
Average gross loans and advances 63,880 61,535 61,030
4% 5%
Average deposits and other borrowings
115,357 112,368 113,276
3% 2%
Ratios
Return on average assets 1.09% 1.18% 1.24%
Net interest margin
1
2.60% 2.67% 2.72%
Operating expenses to operating income 43.6% 41.4% 37.9%
Operating expenses to average assets 1.25% 1.24% 1.15%
Individually assessed credit impairment charge/(release) 26 33 9
-21% large
Individually assessed credit impairment charge/(release) as a % of average GLA
2
0.08% 0.11% 0.03%
Collectively assessed credit impairment charge/(release) 9 8 57
13% -84%
Collectively assessed credit impairment charge/(release) as a % of average GLA
2
0.03% 0.03% 0.19%
Gross impaired assets 261 248 288
5% -9%
Gross impaired assets as a % of GLA
0.40% 0.40% 0.47%
Total FTE 3,442 3,514 3,607
-2% -5%
1.
Australia Commercial division generates positive net interest income from surplus deposits held. Accordingly, $58.1 billion of average deposits for the March 2024 half (Sep 23 half:
$57.6 billion; Mar 23 half: $59.3 billion) have been included within average net interest earning assets for the net interest margin calculation to align with internal management reporting view.
2.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Performance March 2024 v March 2023
Lending volumes increased driven by SME Banking and Specialist Business
lending growth, partially offset by lower lending in Central Functions driven by
the sale of Investment Lending business.
• Net interest margin decreased driven by unfavourable deposit mix with a
shift towards lower margin term deposits, higher net funding costs, and
asset margin contraction from competitive pressure. This was partially
offset by favourable deposit margins and higher earnings on capital and
replicating portfolio.
• Operating expenses increased driven by higher restructuring expense
and inflationary impacts, partially offset by productivity initiatives.
• Credit impairment charge decreased driven by lower collectively
assessed credit impairment, partially offset by higher individually
assessed credit impairment charge due to lower write-backs in the SME
Banking portfolio.
Performance March 2024 v September 2023
Lending volumes increased driven by SME Banking and Specialist Business
lending growth.
• Net interest margin decreased driven by unfavourable deposit mix with a
shift towards lower margin term deposits, higher net funding costs, and
asset margin contraction from competitive pressure. This was partially
offset by higher earnings on capital and replicating portfolio.
• Other operating income decreased driven by the gain on sale of
Investment Lending business in the September 2023 half and
seasonality of fees.
• Operating expenses increased driven by higher restructuring expense
and inflationary impacts, partially offset by productivity initiatives and
seasonal factors.
• Credit impairment charge decreased driven by lower individually
assessed credit impairment charge due to lower impairments.
DIVISIONAL RESULTS
Australia Commercial
Clare Morgan
51
Individually assessed credit impairment charge/(release) Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
SME Banking 28 32 10 -13% large
Specialist Business
(2) 1 (1) large large
Individually assessed credit impairment charge/(release)
26 33 9 -21% large
Collectively assessed credit impairment charge/(release) Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
SME Banking 4 (18) 50 large -92%
Specialist Business
5 26 7 -81% -29%
Collectively assessed credit impairment charge/(release)
9 8 57 13% -84%
Net loans and advances As at
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
SME Banking
41,484 40,023 38,602 4% 7%
Specialist Business
22,052 21,059 20,082 5% 10%
Central Functions
338 475 1,227 -29% -72%
Net loans and advances
63,874 61,557 59,911 4% 7%
Customer deposits As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
SME Banking
79,726 77,549 76,994 3% 4%
Specialist Business
36,737 35,859 36,006 2% 2%
Central Functions
- - 11 n/a large
Customer deposits
116,463 113,408 113,011 3% 3%
DIVISIONAL RESULTS
Institutional
Mark Whelan
52
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 1,882 1,969 2,071
-4% -9%
Other operating income
1,687 1,321 1,373
28% 23%
Operating income
3,569 3,290 3,444
8% 4%
Operating expenses (1,444) (1,388) (1,340)
4% 8%
Cash profit before credit impairment and income tax
2,125 1,902 2,104
12% 1%
Credit impairment (charge)/release 6 6 74
0% -92%
Cash profit before income tax
2,131 1,908 2,178
12% -2%
Income tax expense (609) (548) (589)
11% 3%
Cash profit
1,522 1,360 1,589
12% -4%
Balance Sheet
Net loans and advances 206,268 210,234 208,265
-2% -1%
Other external assets
306,758 328,591 317,480
-7% -3%
External assets
513,026 538,825 525,745
-5% -2%
Customer deposits 249,169 266,462 278,089
-6% -10%
Other deposits and borrowings 70,255 85,374 89,429
-18% -21%
Deposits and other borrowings
319,424 351,836 367,518
-9% -13%
Other external liabilities 88,020 100,941 83,246
-13% 6%
External liabilities
407,444 452,777 450,764
-10% -10%
Risk weighted assets 171,437 175,245 183,121
-2% -6%
Average gross loans and advances 207,308 206,939 214,883
0% -4%
Average deposits and other borrowings
369,517 355,591 355,905
4% 4%
Ratios
Return on average assets 0.52% 0.50% 0.59%
Net interest margin 0.76% 0.86% 0.91%
Net interest margin (excluding Markets business unit) 2.39% 2.36% 2.26%
Operating expenses to operating income 40.5% 42.2% 38.9%
Operating expenses to average assets 0.49% 0.51% 0.49%
Individually assessed credit impairment charge/(release) (49) 30 (79)
large -38%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
(0.05%) 0.03% (0.07%)
Collectively assessed credit impairment charge/(release) 43 (36) 5
large large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
0.04% (0.03%) 0.00%
Gross impaired assets 437 562 302
-22% 45%
Gross impaired assets as a % of GLA
0.21% 0.27% 0.14%
Total FTE 6,310 6,366 6,314
-1% 0%
1.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Performance March 2024 v March 2023
Lending volumes decreased driven by lower core lending in Corporate
Finance and Transaction Banking, partially offset by higher Markets
balances.
• Net interest margin ex-Markets increased driven by favourable deposit
margins and higher earnings on capital.
• Other operating income increased driven by higher Markets revenues
from more favourable trading conditions and increased customer
activities.
• Operating expenses increased driven by inflationary impacts and higher
restructuring expense, partially offset by productivity initiatives.
• Credit impairment release decreased driven by higher collectively
assessed credit impairment, and lower individually assessed credit
impairment release due to a large number of write-backs in the
March 2023 half.
Performance March 2024 v September 2023
Lending volumes decreased driven by lower core lending in Corporate
Finance and Transaction Banking.
• Net interest margin ex-Markets increased driven by higher earnings on
capital.
• Other operating income increased driven by higher Markets revenues
from more favourable trading conditions and increased customer
activities.
• Operating expenses increased driven by inflationary impacts and higher
restructuring expense, partially offset by productivity initiatives.
• Credit impairment release was flat as higher collectively assessed credit
impairment was offset by lower individually assessed credit impairment
due to lower impairments and higher write-backs.
DIVISIONAL RESULTS
Institutional
Mark Whelan
53
Institutional by Geography
Half Year
Movement
Australia
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 778 824 844
-6% -8%
Other operating income
807 695 647
16% 25%
Operating income
1,585 1,519 1,491
4% 6%
Operating expenses (683) (682) (651)
0% 5%
Cash profit before credit impairment and income tax
902 837 840
8% 7%
Credit impairment (charge)/release (4) (17) 129
-76% large
Cash profit before income tax
898 820 969
10% -7%
Income tax expense (269) (246) (290)
9% -7%
Cash profit
629 574 679
10% -7%
Individually assessed credit impairment charge/(release) (26) 16 (86)
large -70%
Collectively assessed credit impairment charge/(release) 30 1 (43)
large large
Net loans and advances
117,157 115,569 113,981
1% 3%
Customer deposits
101,486 100,526 100,559
1% 1%
Risk weighted assets
84,977 85,170 86,455
0% -2%
International and PNG
Net interest income 753 814 908
-7% -17%
Other operating income
730 476 560
53% 30%
Operating income
1,483 1,290 1,468
15% 1%
Operating expenses (648) (593) (585)
9% 11%
Cash profit before credit impairment and income tax
835 697 883
20% -5%
Credit impairment (charge)/release 37 43 (19)
-14% large
Cash profit before income tax
872 740 864
18% 1%
Income tax expense (238) (205) (202)
16% 18%
Cash profit
634 535 662
19% -4%
Individually assessed credit impairment charge/(release) (13) (3) (5)
large large
Collectively assessed credit impairment charge/(release) (24) (40) 24
-40% large
Net loans and advances
72,089 77,202 76,502
-7% -6%
Customer deposits
123,306 141,642 153,480
-13% -20%
Risk weighted assets
65,148 66,568 72,458
-2% -10%
New Zealand
Net interest income 351 331 319
6% 10%
Other operating income
150 150 166
0% -10%
Operating income
501 481 485
4% 3%
Operating expenses (113) (113) (104)
0% 9%
Cash profit before credit impairment and income tax
388 368 381
5% 2%
Credit impairment (charge)/release (27) (20) (36)
35% -25%
Cash profit before income tax
361 348 345
4% 5%
Income tax expense (102) (97) (97)
5% 5%
Cash profit
259 251 248
3% 4%
Individually assessed credit impairment charge/(release) (10) 17 12
large large
Collectively assessed credit impairment charge/(release) 37 3 24
large 54%
Net loans and advances
17,022 17,463 17,782
-3% -4%
Customer deposits
24,377 24,294 24,050
0% 1%
Risk weighted assets
21,312 23,507 24,208
-9% -12%
DIVISIONAL RESULTS
Institutional
Mark Whelan
54
Individually assessed credit impairment charge/(release)
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Transaction Banking
(10) 1 (2)
large large
Corporate Finance
(39) 29 (77)
large -49%
Markets
- - -
n/a n/a
Individually assessed credit impairment charge/(release)
(49) 30 (79)
large -38%
Collectively assessed credit impairment charge/(release)
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Transaction Banking
9 (2) 1
large large
Corporate Finance
32 (46) 2
large large
Markets
2 12 2
-83% 0%
Collectively assessed credit impairment charge/(release)
43 (36) 5
large large
Net loans and advances
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Transaction Banking 17,666 19,597 18,732
-10% -6%
Corporate Finance
143,440 145,472 148,520
-1% -3%
Markets
45,150 45,134 40,950
0% 10%
Central Functions
12 31 63
-61% -81%
Net loans and advances
206,268 210,234 208,265
-2% -1%
Customer deposits
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Transaction Banking 149,691 152,722 148,314
-2% 1%
Corporate Finance
1,166 1,110 1,065
5% 9%
Markets
98,202 112,566 128,414
-13% -24%
Central Functions
110 64 296
72% -63%
Customer deposits
249,169 266,462 278,089
-6% -10%
DIVISIONAL RESULTS
Institutional
Mark Whelan
55
March 2024 Half Year
Transaction
Banking
$M
Corporate
Finance
$M
Markets
$M
Central
Functions
$M
Total
$M
Net interest income
796 1,137 (64) 13 1,882
Other operating income
362 53 1,276 (4) 1,687
Operating income
1,158 1,190 1,212 9 3,569
Operating expenses (396) (383) (597) (68) (1,444)
Cash profit/(loss) before credit impairment and income tax
762 807 615 (59) 2,125
Credit impairment (charge)/release 1 7 (2) - 6
Cash profit/(loss) before income tax
763 814 613 (59) 2,131
Income tax expense (207) (224) (171) (7) (609)
Cash profit/(loss)
556 590 442 (66) 1,522
Individually assessed credit impairment charge/(release) (10) (39) - - (49)
Collectively assessed credit impairment charge/(release)
9 32 2 - 43
Net loans and advances
17,666 143,440 45,150 12 206,268
Customer deposits
149,691 1,166 98,202 110 249,169
Risk weighted assets
24,848 88,955 56,326 1,308 171,437
March 2023 Half Year
Net interest income 753 1,153 164 1 2,071
Other operating income 352 43 985 (7) 1,373
Operating income 1,105 1,196 1,149 (6) 3,444
Operating expenses (385) (348) (582) (25) (1,340)
Cash profit/(loss) before credit impairment and income tax 720 848 567 (31) 2,104
Credit impairment (charge)/release 1 75 (2) - 74
Cash profit/(loss) before income tax 721 923 565 (31) 2,178
Income tax expense (190) (259) (154) 14 (589)
Cash profit/(loss) 531 664 411 (17) 1,589
Individually assessed credit impairment charge/(release) (2) (77) - - (79)
Collectively assessed credit impairment charge/(release) 1 2 2 - 5
Net loans and advances 18,732 148,520 40,950 63 208,265
Customer deposits 148,314 1,065 128,414 296 278,089
Risk weighted assets 27,719 99,271 54,954 1,177 183,121
March 2024 Half Year v March 2023 Half Year
Net interest income 6% -1% large large -9%
Other operating income 3% 23% 30% -43% 23%
Operating income 5% -1% 5% large 4%
Operating expenses 3% 10% 3% large 8%
Cash profit/(loss) before credit impairment and income tax 6% -5% 8% 90% 1%
Credit impairment (charge)/release 0% -91% 0% n/a -92%
Cash profit/(loss) before income tax 6% -12% 8% 90% -2%
Income tax expense 9% -14% 11% large 3%
Cash profit/(loss) 5% -11% 8% large -4%
Individually assessed credit impairment charge/(release) large -49% n/a n/a -38%
Collectively assessed credit impairment charge/(release) large large 0% n/a large
Net loans and advances -6% -3% 10% -81% -1%
Customer deposits 1% 9% -24% -63% -10%
Risk weighted assets -10% -10% 2% 11% -6%
DIVISIONAL RESULTS
Institutional
Mark Whelan
56
March 2024 Half Year
Transaction
Banking
$M
Corporate
Finance
$M
Markets
$M
Central
Functions
$M
Total
$M
Net interest income
796 1,137 (64) 13 1,882
Other operating income
362 53 1,276 (4) 1,687
Operating income
1,158 1,190 1,212 9 3,569
Operating expenses (396) (383) (597) (68) (1,444)
Cash profit/(loss) before credit impairment and income tax
762 807 615 (59) 2,125
Credit impairment (charge)/release 1 7 (2) - 6
Cash profit/(loss) before income tax
763 814 613 (59) 2,131
Income tax expense (207) (224) (171) (7) (609)
Cash profit/(loss)
556 590 442 (66) 1,522
Individually assessed credit impairment charge/(release) (10) (39) - - (49)
Collectively assessed credit impairment charge/(release)
9 32 2 - 43
Net loans and advances
17,666 143,440 45,150 12 206,268
Customer deposits
149,691 1,166 98,202 110 249,169
Risk weighted assets
24,848 88,955 56,326 1,308 171,437
September 2023 Half Year
Net interest income 804 1,144 20 1 1,969
Other operating income 356 36 938 (9) 1,321
Operating income 1,160 1,180 958 (8) 3,290
Operating expenses (373) (356) (585) (74) (1,388)
Cash profit/(loss) before credit impairment and income tax 787 824 373 (82) 1,902
Credit impairment (charge)/release 1 17 (12) - 6
Cash profit/(loss) before income tax 788 841 361 (82) 1,908
Income tax expense (210) (230) (109) 1 (548)
Cash profit/(loss) 578 611 252 (81) 1,360
Individually assessed credit impairment charge/(release) 1 29 - - 30
Collectively assessed credit impairment charge/(release) (2) (46) 12 - (36)
Net loans and advances 19,597 145,472 45,134 31 210,234
Customer deposits 152,722 1,110 112,566 64 266,462
Risk weighted assets 26,247 94,313 53,520 1,165 175,245
March 2024 Half Year v September 2023 Half Year
Net interest income -1% -1% large large -4%
Other operating income 2% 47% 36% -56% 28%
Operating income 0% 1% 27% large 8%
Operating expenses 6% 8% 2% -8% 4%
Cash profit/(loss) before credit impairment and income tax -3% -2% 65% -28% 12%
Credit impairment (charge)/release 0% -59% -83% n/a 0%
Cash profit/(loss) before income tax -3% -3% 70% -28% 12%
Income tax expense -1% -3% 57% large 11%
Cash profit/(loss) -4% -3% 75% -19% 12%
Individually assessed credit impairment charge/(release) large large n/a n/a large
Collectively assessed credit impairment charge/(release) large large -83% n/a large
Net loans and advances -10% -1% 0% -61% -2%
Customer deposits -2% 5% -13% 72% -6%
Risk weighted assets -5% -6% 5% 12% -2%
DIVISIONAL RESULTS
Institutional
Mark Whelan
57
Analysis of Markets operating income
1
Half Year Movement
Composition of Markets operating income by product
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Foreign Exchange 394 370 407
6% -3%
Rates
232 189 158
23% 47%
Credit and Capital Markets
125 76 112
64% 12%
Commodities
118 35 80
large 48%
Franchise Revenue
869 670 757
30% 15%
Balance Sheet
2
284 270 356 5% -20%
Derivative valuation adjustments
3
59 18 36 large 64%
Markets operating income
1,212 958 1,149
27% 5%
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 net of associated hedges.
Half Year
Movement
Composition of Markets operating income by geography
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia 368 319 310
15% 19%
International and PNG
1
713 523 705
36% 1%
New Zealand
131 116 134
13% -2%
Markets operating income
1,212 958 1,149
27% 5%
1.
Comprises the countries outside of Australia and New Zealand that form part of the Institutional division. This includes Asia, Papua New Guinea, Europe & America.
DIVISIONAL RESULTS
Institutional
Mark Whelan
58
Market risk
Market risk stems from the Group’s trading and balance sheet management activities and the impact of changes and correlations between interest rates,
foreign exchange rates, credit spreads, commodities, equities and the volatility within these asset classes.
The Group manages and controls market risk using Value at Risk (VaR), sensitivity analysis and stress testing. VaR measures the Group’s possible daily
loss based on historical market movements.
The Group’s VaR approach for both traded and non-traded risk is historical simulation using changes in market rates, prices and volatilities over the
previous 500 business days to calculate standard VaR and a 1-year stressed period to calculate stressed VaR.
VaR is measured at 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for relevant holding period.
Traded market risk
Below are aggregate VaR exposures at a 99% confidence level covering both physical and derivative trading positions for the Group’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 half year half year half year
As at year year year
Mar 24
$M
Mar 24
$M
Mar 24
$M
Mar 24
$M
Sep 23
$M
Sep 23
$M
Sep 23
$M
Sep 23
$M
Value at Risk at 99% confidence
Foreign exchange
4.2 8.2 2.2 4.4 2.8 6.2 1.6 3.0
Interest rate
14.4 19.2 5.1 9.6 6.7 18.3 5.1 8.5
Credit
7.7 8.1 4.2 6.7 5.9 7.7 2.5 4.5
Commodities
3.0 5.0 2.3 3.2 4.0 6.6 1.8 3.0
Equity
- - - - - - - -
Diversification benefit
1
(7.2) n/a n/a (10.5) (9.7) n/a n/a (8.1)
Total VaR
22.1 22.5 8.8 13.4 9.7 18.2 7.2 10.9
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 and current valuation of the banking book. Interest rate risk is reported using various techniques including VaR and scenario
analysis based on a 1% rate shock.
99% confidence level (1 day holding period)
High for Low for Avg for
High for Low for Avg for
As at half year half year half year As at year year year
Mar 24
$M
Mar 24
$M
Mar 24
$M
Mar 24
$M
Sep 23
$M
Sep 23
$M
Sep 23
$M
Sep 23
$M
Value at Risk at 99% confidence
Australia
78.9 79.5 72.5 76.1 81.2 93.2 72.0 82.2
New Zealand
24.7 26.4 24.7 25.8 35.3 35.3 26.1 31.1
Rest of World
35.3 38.1 29.0 34.7 32.2 32.8 23.2 27.9
Diversification benefit
1
(39.4) n/a n/a (41.8) (52.6) n/a n/a (45.6)
Total VaR
99.5 99.5 88.1 94.8 96.1 101.5 86.4 95.6
Impact of 1% rate shock on the next 12 months’ net interest income
2
As at
Mar 24 Sep 23
As at period end 1.20% 0.96%
Maximum exposure
1.20% 1.17%
Minimum exposure
0.49% 0.38%
Average exposure (in absolute terms)
0.80% 0.80%
1.
The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low
VaR reported for the Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.
2.
Modelled 1% overnight parallel positive shift in the yield curve to determine the potential impact on Net interest income over the next 12 months. This is a standard risk measure which
assumes the parallel shift is reflected in all wholesale and customer rates.
DIVISIONAL RESULTS
New Zealand
Antonia Watson
59
Table reflects NZD for New Zealand (AUD results shown on page 63)
Half Year Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 1,692 1,694 1,721
0% -2%
Other operating income
224 227 216
-1% 4%
Operating income
1,916 1,921 1,937
0% -1%
Operating expenses (729) (719) (689)
1% 6%
Cash profit before credit impairment and income tax
1,187 1,202 1,248
-1% -5%
Credit impairment (charge)/release (4) (40) (82)
-90% -95%
Cash profit before income tax
1,183 1,162 1,166
2% 1%
Income tax expense (331) (325) (327)
2% 1%
Cash profit
852 837 839
2% 2%
Balance Sheet
Net loans and advances 132,608 130,868 128,433
1% 3%
Other external assets
3,664 3,603 3,527
2% 4%
External assets
136,272 134,471 131,960
1% 3%
Customer deposits 108,789 106,431 104,614
2% 4%
Other deposits and borrowings 7,208 6,054 6,571
19% 10%
Deposits and other borrowings
115,997 112,485 111,185
3% 4%
Other external liabilities 17,358 19,565 18,655
-11% -7%
External liabilities
133,355 132,050 129,840
1% 3%
Risk weighted assets 72,778 76,196 76,609
-4% -5%
Average gross loans and advances 132,438 130,221 129,088
2% 3%
Average deposits and other borrowings
114,514 110,816 111,064
3% 3%
Net funds management income
99 98 96
1% 3%
Funds under management 40,514 37,108 36,928
9% 10%
Average funds under management
38,745 37,530 35,867
3% 8%
Ratios
Return on average assets 1.26% 1.25% 1.27%
Net interest margin 2.56% 2.60% 2.67%
Operating expenses to operating income 38.0% 37.4% 35.6%
Operating expenses to average assets 1.08% 1.08% 1.05%
Individually assessed credit impairment charge/(release) 14 19 10
-26% 40%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
0.02% 0.03% 0.02%
Collectively assessed credit impairment charge/(release) (10) 21 72
large large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.02%) 0.03% 0.11%
Gross impaired assets 130 131 107
-1% 21%
Gross impaired assets as a % of GLA
0.10% 0.10% 0.08%
Total FTE 6,754 6,766 6,785
0% 0%
1.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
Performance March 2024 v March 2023
Lending volumes increased driven by home loan growth, partially offset by
contraction in business lending.
• Net interest margin decreased driven by asset margin contraction from
home loan pricing competition, and unfavourable deposit mix with a shift
towards lower margin term deposits. This was partially offset by higher
earnings on capital and favourable deposit margins.
• Operating expenses increased driven by inflationary pressure.
• Credit impairment charge decreased driven by lower collectively
assessed credit impairment.
Performance March 2024 v September 2023
Lending volumes increased driven by home loan growth, partially offset by
contraction in business lending.
• Net interest margin decreased driven by unfavourable deposit margins
and deposit mix with a shift towards lower margin term deposits. This
was partially offset by favourable home loan lending margins.
• Credit impairment charge decreased driven by lower collectively
assessed credit impairment.
DIVISIONAL RESULTS
New Zealand
Antonia Watson
60
Individually assessed credit impairment charge/(release) Half Year
Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Personal 9 11 7
-18% 29%
Home Loans
- 3 2
large large
Other
9 8 5
13% 80%
Business & Agri
5 8 3 -38% 67%
Individually assessed credit impairment charge/(release)
14 19 10 -26% 40%
Collectively assessed credit impairment charge/(release) Half Year Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Personal 13 (12) 43
large -70%
Home Loans
18 (17) 52
large -65%
Other
(5) 5 (9)
large -44%
Business & Agri
(23) 33 29 large large
Collectively assessed credit impairment charge/(release)
(10) 21 72 large large
Net loans and advances As at Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Personal 108,721 106,444 103,509
2% 5%
Home Loans
107,111 104,867 101,946
2% 5%
Other
1,610 1,577 1,563
2% 3%
Business & Agri
23,887 24,424 24,924 -2% -4%
Net loans and advances
132,608 130,868 128,433
1% 3%
Customer deposits As at Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Personal 90,493 88,086 85,747
3% 6%
Business & Agri
18,296 18,345 18,867 0% -3%
Customer deposits
108,789 106,431 104,614
2% 4%
DIVISIONAL RESULTS
New Zealand
Antonia Watson
61
March 2024 Half Year
Personal
NZD M
Business
& Agri
NZD M
Central
Functions
NZD M
Total
NZD M
Net interest income
1,170 515 7 1,692
Other operating income
200 25 (1) 224
Operating income
1,370 540 6 1,916
Operating expenses (590) (134) (5) (729)
Cash profit before credit impairment and income tax
780 406 1 1,187
Credit impairment (charge)/release (22) 18 - (4)
Cash profit before income tax
758 424 1 1,183
Income tax expense (213) (119) 1 (331)
Cash profit
545 305 2 852
Individually assessed credit impairment charge/(release) 9 5 - 14
Collectively assessed credit impairment charge/(release)
13 (23) - (10)
Net loans and advances
108,721 23,887 - 132,608
Customer deposits
90,493 18,296 - 108,789
Risk weighted assets
49,093 21,421 2,264 72,778
March 2023 Half Year
Net interest income 1,215 499 7 1,721
Other operating income 192 26 (2) 216
Operating income 1,407 525 5 1,937
Operating expenses (568) (119) (2) (689)
Cash profit before credit impairment and income tax 839 406 3 1,248
Credit impairment (charge)/release (50) (32) - (82)
Cash profit before income tax 789 374 3 1,166
Income tax expense (221) (105) (1) (327)
Cash profit 568 269 2 839
Individually assessed credit impairment charge/(release) 7 3 - 10
Collectively assessed credit impairment charge/(release) 43 29 - 72
Net loans and advances 103,509 24,924 - 128,433
Customer deposits 85,747 18,867 - 104,614
Risk weighted assets 48,199 26,251 2,159 76,609
March 2024 Half Year v March 2023 Half Year
Net interest income -4% 3% 0% -2%
Other operating income 4% -4% -50% 4%
Operating income -3% 3% 20% -1%
Operating expenses 4% 13% large 6%
Cash profit before credit impairment and income tax -7% 0% -67% -5%
Credit impairment (charge)/release -56% large n/a -95%
Cash profit before income tax -4% 13% -67% 1%
Income tax expense -4% 13% large 1%
Cash profit -4% 13% 0% 2%
Individually assessed credit impairment charge/(release) 29% 67% n/a 40%
Collectively assessed credit impairment charge/(release) -70% large n/a large
Net loans and advances 5% -4% n/a 3%
Customer deposits 6% -3% n/a 4%
Risk weighted assets 2% -18% 5% -5%
DIVISIONAL RESULTS
New Zealand
Antonia Watson
62
March 2024 Half Year
Personal
NZD M
Business
& Agri
NZD M
Central
Functions
NZD M
Total
NZD M
Net interest income
1,170 515 7 1,692
Other operating income
200 25 (1) 224
Operating income
1,370 540 6 1,916
Operating expenses (590) (134) (5) (729)
Cash profit before credit impairment and income tax
780 406 1 1,187
Credit impairment (charge)/release (22) 18 - (4)
Cash profit before income tax
758 424 1 1,183
Income tax expense (213) (119) 1 (331)
Cash profit
545 305 2 852
Individually assessed credit impairment charge/(release) 9 5 - 14
Collectively assessed credit impairment charge/(release)
13 (23) - (10)
Net loans and advances
108,721 23,887 - 132,608
Customer deposits
90,493 18,296 - 108,789
Risk weighted assets
49,093 21,421 2,264 72,778
September 2023 Half Year
Net interest income 1,170 515 9 1,694
Other operating income 189 29 9 227
Operating income 1,359 544 18 1,921
Operating expenses (580) (123) (16) (719)
Cash profit before credit impairment and income tax 779 421 2 1,202
Credit impairment (charge)/release 1 (41) - (40)
Cash profit before income tax 780 380 2 1,162
Income tax expense (219) (105) (1) (325)
Cash profit 561 275 1 837
Individually assessed credit impairment charge/(release) 11 8 - 19
Collectively assessed credit impairment charge/(release) (12) 33 - 21
Net loans and advances 106,444 24,424 - 130,868
Customer deposits 88,086 18,345 - 106,431
Risk weighted assets 48,540 25,518 2,138 76,196
March 2024 Half Year v September 2023 Half Year
Net interest income 0% 0% -22% 0%
Other operating income 6% -14% large -1%
Operating income 1% -1% -67% 0%
Operating expenses 2% 9% -69% 1%
Cash profit before credit impairment and income tax 0% -4% -50% -1%
Credit impairment (charge)/release large large n/a -90%
Cash profit before income tax -3% 12% -50% 2%
Income tax expense -3% 13% large 2%
Cash profit -3% 11% large 2%
Individually assessed credit impairment charge/(release) -18% -38% n/a -26%
Collectively assessed credit impairment charge/(release) large large n/a large
Net loans and advances 2% -2% n/a 1%
Customer deposits 3% 0% n/a 2%
Risk weighted assets 1% -16% 6% -4%
DIVISIONAL RESULTS
New Zealand
Antonia Watson
63
Table reflects AUD for New Zealand
NZD results shown on page 59
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income
1,572 1,567 1,582
0% -1%
Other operating income
208 210 199
-1% 5%
Operating income
1,780 1,777 1,781
0% 0%
Operating expenses (677) (665) (634)
2% 7%
Cash profit before credit impairment and income tax
1,103 1,112 1,147
-1% -4%
Credit impairment (charge)/release (4) (37) (75)
-89% -95%
Cash profit before income tax
1,099 1,075 1,072
2% 3%
Income tax expense (308) (300) (301)
3% 2%
Cash profit
791 775 771
2% 3%
Consisting of:
Personal 507 519 522
-2% -3%
Business & Agri
283 254 247
11% 15%
Central Functions
1 2 2
-50% -50%
Cash profit
791 775 771
2% 3%
Balance Sheet
Net loans and advances 121,625 121,824 120,262
0% 1%
Other external assets
3,361 3,354 3,303
0% 2%
External assets
124,986 125,178 123,565
0% 1%
Customer deposits 99,779 99,076 97,958
1% 2%
Other deposits and borrowings 6,611 5,635 6,153
17% 7%
Deposits and other borrowings
106,390 104,711 104,111
2% 2%
Other external liabilities 15,920 18,213 17,469
-13% -9%
External liabilities
122,310 122,924 121,580
0% 1%
Risk weighted assets 66,750 70,930 71,735
-6% -7%
Average gross loans and advances 123,073 120,420 118,683
2% 4%
Average deposits and other borrowings
106,417 102,479 102,113
4% 4%
Net funds management income
92 91 88
1% 5%
Funds under management 37,159 34,545 34,580
8% 7%
Average funds under management
36,005 34,705 32,975
4% 9%
Ratios
Return on average assets
1.26% 1.25% 1.27%
Net interest margin
2.56% 2.60% 2.67%
Operating expenses to operating income
38.0% 37.4% 35.6%
Operating expenses to average assets
1.08% 1.08% 1.05%
Individually assessed credit impairment charge/(release)
14 17 9
-18% 56%
Individually assessed credit impairment charge/(release) as a % of average GLA
1
0.02% 0.03% 0.02%
Collectively assessed credit impairment charge/(release)
(10) 20 66
large large
Collectively assessed credit impairment charge/(release) as a % of average GLA
1
(0.02%) 0.03% 0.11%
Gross impaired assets
119 122 100
-2% 19%
Gross impaired assets as a % of GLA
0.10% 0.10% 0.08%
Total FTE
6,754 6,766 6,785
0% 0%
1.
Credit impairment charge/(release) used in the ratio relates to gross loans and advances and off-balance sheet commitments - undrawn and contingent liabilities.
DIVISIONAL RESULTS
Pacific
Antonia Watson
64
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 63 61 62
3% 2%
Other operating income
44 45 40 -2% 10%
Operating income
107 106 102 1% 5%
Operating expenses (70) (71) (74) -1% -5%
Cash profit/(loss) before credit impairment and income tax
37 35 28 6% 32%
Credit impairment (charge)/release 6 12 16 -50% -63%
Cash profit/(loss) before income tax
43 47 44 -9% -2%
Income tax expense (11) (8) (10) 38% 10%
Non-controlling interests
(1) (2) - -50% n/a
Cash profit/(loss)
31 37 34 -16% -9%
Balance Sheet
Net loans and advances 1,678 1,684 1,661 0% 1%
Customer deposits
3,657 3,719 3,562 -2% 3%
Risk weighted assets
3,620 3,772 4,131 -4% -12%
Total FTE
972 1,013 1,037 -4% -6%
Group Centre
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Share of associates' profit/(loss)
84 120 101 -30% -17%
Operating income (other)
149 222 (6) -33% large
Operating income
1
233 342 95 -32% large
Operating expenses
(526) (522) (561) 1% -6%
Cash profit/(loss) before credit impairment and income tax
(293) (180) (466) 63% -37%
Credit impairment (charge)/release - 1 - large n/a
Cash profit/(loss) before income tax
(293) (179) (466) 64% -37%
Income tax benefit 55 28 112 96% -51%
Non-controlling interests
(13) (12) (14) 8% -7%
Cash profit/(loss)
(251) (163) (368) 54% -32%
Risk weighted assets 14,187 8,210 11,324 73% 25%
Total FTE
11,401 11,370 10,860 0% 5%
1.
The March 2024 half includes the loss on partial disposal of investment in AmBank of $21 million.
PROFIT RECONCILIATION
65
CONTENTS Page
Adjustments between statutory profit and cash profit 66
Explanation of adjustments between statutory profit and cash profit 66
Reconciliation of statutory profit to cash profit 67
PROFIT RECONCILIATION
66
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 Results Announcement which are
prepared on a basis other than in accordance with accounting standards. The guidance provided in ASIC Regulatory Guide 230 has been followed when
presenting this information.
Adjustments between statutory profit and cash profit
Cash profit represents the Group’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 123 to 125 for further details). The adjustments made in arriving at cash profit are included in statutory profit which is
subject to review within the context of the external auditor’s review of the Condensed Consolidated Financial Statements. Cash profit is not subject to
review 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
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Statutory profit attributable to shareholders of the Company
3,407 3,551 3,555 -4% -4%
Adjustments between statutory profit and cash profit
Economic hedges
197 27 190 large 4%
Revenue and expense hedges
(52) 6 84 large large
Total adjustments between statutory profit and cash profit
145 33 274 large -47%
Cash profit 3,552 3,584 3,829 -1% -7%
Explanation of adjustments between statutory profit and cash profit
• 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 in 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:
• Derivatives (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 differences in certain factors between the hedged items and the hedging instruments.
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 March 2024 half, losses on economic hedges relate to funding-related swaps, principally from narrowing USD/EUR currency basis spreads.
Further losses were driven by the yield curve movement impact on net pay fixed economic hedge positions.
• Revenue and expense hedges
The Group enters into economic hedges to manage exposures from larger foreign exchange denominated revenue and expense streams, primarily
NZD and USD (and USD correlated). The gain on revenue and expense hedges in the March 2024 half was mainly due to the appreciation of AUD
against the NZD.
PROFIT RECONCILIATION
67
Reconciliation of statutory profit to cash profit
Adjustments to statutory profit
Statutory profit
Economic
hedges
Revenue and
expense
hedges
Total
adjustments to
statutory profit Cash profit
$M $M $M $M $M
March 2024 Half Yea
r
Net interest income 7,899 - - - 7,899
Other operating income
2,246 277 (75) 202 2,448
Operating income
10,145 277 (75) 202 10,347
Operating expenses (5,215) - - - (5,215)
Profit before credit impairment and tax
4,930 277 (75) 202 5,132
Credit impairment (charge)/release (70) - - - (70)
Profit before income tax
4,860 277 (75) 202 5,062
Income tax expense (1,439) (80) 23 (57) (1,496)
Non-controlling interests
(14) - - - (14)
Profit
3,407 197 (52) 145 3,552
September 2023 Half Year
Net interest income 8,074 - - - 8,074
Other operating income 2,246 36 9 45 2,291
Operating income 10,320 36 9 45 10,365
Operating expenses (5,142) - - - (5,142)
Profit before credit impairment and tax 5,178 36 9 45 5,223
Credit impairment (charge)/release (112) - - - (112)
Profit before income tax 5,066 36 9 45 5,111
Income tax expense (1,501) (9) (3) (12) (1,513)
Non-controlling interests (14) - - - (14)
Profit 3,551 27 6 33 3,584
March 2023 Half Year
Net interest income 8,500 - - - 8,500
Other operating income 1,651 269 120 389 2,040
Operating income 10,151 269 120 389 10,540
Operating expenses (4,997) - - - (4,997)
Profit before credit impairment and tax 5,154 269 120 389 5,543
Credit impairment (charge)/release (133) - - - (133)
Profit before income tax 5,021 269 120 389 5,410
Income tax expense (1,452) (79) (36) (115) (1,567)
Non-controlling interests (14) - - - (14)
Profit 3,555 190 84 274 3,829
PROFIT RECONCILIATION
68
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
69
CONTENTS Page
Directors’ Report 70
Condensed Consolidated Income Statement 71
Condensed Consolidated Statement of Comprehensive Income 72
Condensed Consolidated Balance Sheet 73
Condensed Consolidated Cash Flow Statement 74
Condensed Consolidated Statement of Changes in Equity 75
Notes to Condensed Consolidated Financial Statements 76
Directors’ Declaration 110
Auditor’s Review Report and Independence Declaration 111
DIRECTORS’ REPORT
70
The Directors present their report for ANZ Group Holdings Limited (the Company) for the half year ended 31 March 2024, together with the Condensed
Consolidated Financial Statements of the Group.
Directors
The names of the Directors of the Company who held office during and since the end of the half year are:
Mr PD O’Sullivan Chairman
Mr SC Elliott Director and Chief Executive Officer
Ms IR Atlas, AO Director, ceased 21 December 2023
Mr RBM Gibb Director, appointed 15 February 2024
Ms SJ Halton, AO PSM Director
Rt Hon Sir JP Key, GNZM AC Director, ceased 14 March 2024
Ms HS Kramer Director
Mr JT Macfarlane Director, ceased 21 December 2023
Ms CE O’Reilly Director
Mr JP Smith Director
Mr SA St John Director, appointed 25 March 2024
Result
The consolidated profit attributable to shareholders of the Company was $3,407 million. Further details are contained in Group Results on pages 13 to 42
which forms part of this report, and in the Condensed Consolidated Financial Statements.
Review of operations
A review of the operations of the Group during the half year and the results of those operations are contained in the Group Results on pages 13 to 42
which forms part of this report.
Lead auditor’s independence declaration
The lead auditor’s independence declaration given under section 307C of the Corporations Act 2001 (as amended) is set out on page 112 which forms
part of this report.
Rounding of amounts
The amounts contained in this Directors’ Report and the accompanying Condensed Consolidated Financial Statements have been rounded to the nearest
million dollars, except where otherwise indicated, as permitted by ASIC Corporations Instrument 2016/191.
Significant events since balance date
There have been no significant events from 31 March 2024 to the date of signing this report.
Signed in accordance with a resolution of the Directors.
Paul D O’Sullivan Shayne C Elliott
Chairman Managing Director
6 May 2024
CONDENSED CONSOLIDATED INCOME STATEMENT
ANZ Group Holdings Limited
71
Half Year
Movement
Note
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Interest income
29,811 27,072 22,832
10% 31%
Interest expense
(21,912) (18,998) (14,332)
15% 53%
Net interest income
2 7,899 8,074 8,500
-2% -7%
Other operating income
2 2,114 2,073 1,495
2% 41%
Net income from insurance business
2 48 53 55
-9% -13%
Share of associates' profit/(loss) 2, 16
84 120 101
-30% -17%
Operating income
10,145 10,320 10,151
-2% 0%
Operating expenses 3 (5,215) (5,142) (4,997)
1% 4%
Profit before credit impairment and income tax
4,930 5,178 5,154
-5% -4%
Credit impairment (charge)/release 9 (70) (112) (133)
-38% -47%
Profit before income tax
4,860 5,066 5,021
-4% -3%
Income tax expense 4 (1,439) (1,501) (1,452)
-4% -1%
Profit for the period
3,421 3,565 3,569
-4% -4%
Comprising:
Profit attributable to shareholders of the Company 3,407 3,551 3,555
-4% -4%
Profit attributable to non-controlling interests 14
14 14 14
0% 0%
Earnings per ordinary share (cents)
Basic
6 113.5 118.4 118.7
-4% -4%
Diluted
6 111.5 113.8 113.0
-2% -1%
Dividend per ordinary share (cents) 5
83 94 81
-12% 2%
The notes appearing on pages 76 to 109 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
ANZ Group Holdings Limited
72
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Profit for the period 3,421 3,565 3,569 -4% -4%
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Investment securities - equity securities at FVOCI (3) (89) 62 -97% large
Other reserve movements
1
(59) (46) (34) 28% 74%
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve (378) (74) 792 large large
Cash flow hedge reserve
1,075 (832) 1,067 large 1%
Other reserve movements
(128) (42) 6 large large
Income tax attributable to the above items (268) 283 (306) large -12%
Share of associates' other comprehensive income
2
(17) 23 8 large large
Total comprehensive income for the period
3,643 2,788 5,164 31% -29%
Comprising total comprehensive income attributable to:
Shareholders of the Company 3,640 2,777 5,120 31% -29%
Non-controlling interests
1
3 11 44 -73% -93%
1.
Includes foreign currency translation differences attributable to non-controlling interest of -$11 million (Sep 23 half: -$3 million; Mar 23 half: $30 million).
2.
Share of associates’ other comprehensive income includes:
Mar 24 half
$M
Sep 23 half
$M
Mar 23 half
$M
FVOCI reserve gain/(loss) (4) 23 2
Defined benefits gain/(loss) (13) - 6
Total (17) 23 8
The notes appearing on pages 76 to 109 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEET
ANZ Group Holdings Limited
73
As at Movement
Assets Note
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Cash and cash equivalents
1
137,699 168,154 208,800 -18% -34%
Settlement balances owed to ANZ
3,809 9,349 7,020 -59% -46%
Collateral paid
8,241 8,558 9,245 -4% -11%
Trading assets
42,442 37,004 39,611 15% 7%
Derivative financial instruments
47,481 60,406 45,614 -21% 4%
Investment securities
118,055 97,429 93,972 21% 26%
Net loans and advances 8
715,171 707,044 690,087 1% 4%
Regulatory deposits
696 646 646 8% 8%
Investments in associates
1,419 2,349 2,253 -40% -37%
Current tax assets
294 114 49 large large
Deferred tax assets
3,149 3,348 2,974 -6% 6%
Goodwill and other intangible assets
3,998 4,058 4,037 -1% -1%
Premises and equipment
2,005 2,053 2,289 -2% -12%
Other assets
5,240 5,131 4,640 2% 13%
Total assets
1,089,699 1,105,643 1,111,237 -1% -2%
Liabilities
Settlement balances owed by ANZ 15,026 19,267 23,010 -22% -35%
Collateral received
7,409 10,382 8,002 -29% -7%
Deposits and other borrowings 10
806,737 814,711 842,564 -1% -4%
Derivative financial instruments
42,728 57,482 46,154 -26% -7%
Current tax liabilities
201 305 347 -34% -42%
Deferred tax liabilities
78 82 79 -5% -1%
Payables and other liabilities
17,094 15,097 13,057 13% 31%
Employee entitlements
580 569 593 2% -2%
Other provisions
1,663 1,717 1,694 -3% -2%
Debt issuances 11
127,109 116,014 106,157 10% 20%
Total liabilities
1,018,625 1,035,626 1,041,657 -2% -2%
Net assets 71,074 70,017 69,580 2% 2%
Shareholders' equity
Ordinary share capital 14 29,033 29,082 29,054 0% 0%
Reserves 14
(1,466) (1,735) (1,019) -16% 44%
Retained earnings 14
42,739 42,148 41,020 1% 4%
Share capital and reserves attributable to shareholders of the Company
70,306 69,495 69,055 1% 2%
Non-controlling interests 14 768 522 525 47% 46%
Total shareholders' equity
71,074 70,017 69,580 2% 2%
1.
Includes Settlement balances owed to ANZ that meet the definition of Cash and cash equivalents.
The notes appearing on pages 76 to 109 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
ANZ Group Holdings Limited
74
Half Year
Mar 24
$M
Sep 23
$M
Mar 23
$M
Profit after income tax 3,421 3,565 3,569
Adjustments to reconcile to net cash flow from operating activities:
Allowance for expected credit losses
70 112 133
Depreciation and amortisation
445 452 471
Loss on reclassification of data centres to held for sale
- - 43
Net derivatives/foreign exchange adjustment
858 (1,912) 5,417
(Gain)/loss on sale from divestments
21 (29) -
Other non-cash movements
1
(10) (71) (3)
Net (increase)/decrease in operating assets:
Collateral paid 262 958 3,185
Trading assets
2
(20) 384 (6,272)
Net loans and advances
1
(10,665) (16,300) (11,339)
Other assets
1
(587) (480) (1,226)
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings (4,492) (19,790) 41,391
Settlement balances owed by ANZ
(4,178) (3,775) 9,053
Collateral received
(2,897) 2,044 (7,892)
Other liabilities
2
2,175 1,873 2,927
Total adjustments
(19,018) (36,534) 35,888
Net cash (used in)/provided by operating activities
3
(15,597) (32,969) 39,457
Cash flows from investing activities
Investment securities assets:
Purchases (43,900) (38,477) (13,553)
Proceeds from sale or maturity
22,996 35,969 5,432
Proceeds from divestments, net of cash disposed
668 558 -
Net movement in shares in controlled entities
- - (10)
Net investments in other assets
(451) (255) (350)
Net cash (used in)/provided by investing activities
(20,687) (2,205) (8,481)
Cash flows from financing activities
Deposits and other borrowings (repaid) / drawn down (27) (12,042) 937
Debt issuances:
4
Issue proceeds 26,240 19,141 25,041
Redemptions
(16,639) (9,296) (14,689)
Dividends paid
5
(2,784) (2,401) (1,979)
On market purchase of treasury shares
(126) (2) (19)
Repayment of lease liabilities
(142) (150) (156)
ANZ Bank New Zealand Perpetual Preference Shares
252 - -
Net cash (used in)/provided by financing activities
6,774 (4,750) 9,135
Net increase/(decrease) in cash and cash equivalents (29,510) (39,924) 40,111
Cash and cash equivalents at beginning of period 168,154 208,800 168,132
Effects of exchange rate changes on cash and cash equivalents
(945) (722) 557
Cash and cash equivalents at end of period
137,699 168,154 208,800
1.
Certain items were reclassified from Other non-cash movements to Net loans and advances and Other assets in the September 2023 half to better reflect the net movement in operating
assets. Comparatives have been restated (Mar 23 half: reduction to Other non-cash movements of $751 million, an increase in Net loans and advances of $112 million, and an increase in
Other assets of $639 million).
2.
Certain items were reclassified from Other liabilities to Trading assets in the March 2024 half to better reflect the movement in operating assets and operating liabilities. Comparatives have
been restated (Sep 23 half: reduction to Trading assets and an increase in Other liabilities of $1,866 million; Mar 23 half: reduction to Trading assets and an increase to Other liabilities of
$3,999 million).
3.
Net cash (used in)/provided by operating activities includes interest received of $29,336 million (Sep 23 half: $26,266 million; Mar 23 half: $22,079 million), interest paid of $21,272 million
(Sep 23 half: $17,990 million; Mar 23 half: $12,717 million) and income taxes paid of $1,779 million (Sep 23 half: $1,674 million; Mar 23 half: $1,827 million).
4.
Non-cash changes in debt issuances include a loss of $1,494 million (Sep 23 half: $12 million loss; Mar 23 half: $2,072 million loss) from unrealised movements primarily due to fair value
hedge adjustments and foreign exchange differences.
5.
Cash outflow for shares purchased to satisfy the dividend reinvestment plan (DRP) are classified in dividends paid.
The notes appearing on pages 76 to 109 form an integral part of the Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
ANZ Group Holdings Limited
75
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 2022 28,797 (2,606) 39,716 65,907 494 66,401
Impact on transition to AASB 17 - - (37) (37) - (37)
Profit/(Loss) for the period - - 3,555 3,555 14 3,569
Other comprehensive income for the period - 1,607 (42) 1,565 30 1,595
Total comprehensive income for the period - 1,607 3,513 5,120 44 5,164
Transactions with equity holders in their capacity as equity holders:
Dividends paid - - (2,172) (2,172) (13) (2,185)
Dividend reinvestment plan
1
206 - - 206 - 206
Other equity movements:
Employee share and option plans 53 - - 53 - 53
Other items (2) (20) - (22) - (22)
As at 31 March 2023 29,054 (1,019) 41,020 69,055 525 69,580
Profit/(Loss) for the period - - 3,551 3,551 14 3,565
Other comprehensive income for the period - (742) (32) (774) (3) (777)
Total comprehensive income for the period - (742) 3,519 2,777 11 2,788
Transactions with equity holders in their capacity as equity holders:
Dividends paid - - (2,387) (2,387) (14) (2,401)
Dividend reinvestment plan
1
- - - - - -
Other equity movements:
Employee share and option plans 26 - - 26 - 26
Other items 2 26 (4) 24 - 24
As at 30 September 2023 29,082 (1,735) 42,148 69,495 522 70,017
Profit/(Loss) for the period - - 3,407 3,407 14 3,421
Other comprehensive income for the period - 281 (48) 233 (11) 222
Total comprehensive income for the period - 281 3,359 3,640 3 3,643
Transactions with equity holders in their capacity as equity holders:
Dividends paid - - (2,771) (2,771) (13) (2,784)
Dividend reinvestment plan
1
- - - - - -
Other equity movements:
Employee share and option plans (49) - - (49) - (49)
ANZ Bank New Zealand Perpetual Preference Shares
2
- - (4) (4) 256 252
Other items - (12) 7 (5) - (5)
As at 31 March 2024 29,033 (1,466) 42,739 70,306 768 71,074
1.
No shares were issued under the dividend reinvestment plan for the 2023 final and interim dividend (2022 final dividend: 8.4 million). On-market share purchases for the DRP were
$211 million in the March 2024 half (Sep 23 half: $326 million; Mar 23 half: nil).
2.
Perpetual preference shares issued by ANZ Bank New Zealand Limited, a member of the Group, are considered non-controlling interest to the Group. Refer to Note 14 Shareholders’ equity
for further details.
The notes appearing on pages 76 to 109 form an integral part of the Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
76
1. Basis of preparation
These Condensed Consolidated Financial Statements:
• have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards;
• should be read in conjunction with ANZGHL’s Annual Financial Report for the year ended 30 September 2023 and any public announcements made
by ANZGHL and its controlled entities (the Group) for the half year ended 31 March 2024 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 2023 ANZGHL Annual Report;
• are presented in Australian dollars unless otherwise stated; and
• were approved by the Board of Directors on 6 May 2024.
i) Statement of Compliance
These Condensed Consolidated Financial Statements have been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim
Financial Reporting which ensured compliance with IAS 34 Interim Financial Reporting.
ii) Rounding of amounts
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.
iii) Basis of measurement and presentation
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 values:
• derivative financial instruments and in the case of fair value hedging, a fair value adjustment made to the underlying hedged item;
• financial instruments held for trading;
• financial instruments designated at fair value through profit and loss (FVTPL);
• financial assets at fair value through other comprehensive income (FVOCI).
In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.
iv) 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 2023 ANZGHL Annual Report, except as outlined below.
Accounting standards adopted during the period
AASB 17 Insurance Contracts
On 1 October 2023, the Group adopted AASB 17 Insurance Contracts (AASB 17) which established principles for the recognition, measurement,
presentation, and disclosure of insurance contracts, and replaced AASB 4 Insurance Contracts and AASB 1023 General Insurance Contracts. Although
the overall profit recognised in respect of insurance contracts will not change over the life of contracts, the timing of revenue recognition will change.
The Group applied AASB 17 effective from 1 October 2022 and restated prior period comparative information. This resulted in a decrease in opening
retained earnings of $37 million on 1 October 2022, an increase in profit after tax (Sep 23 half: nil; Mar 23 half: $8 million), an increase in total assets
(Sep 23: $22 million; Mar 23: $36 million), and an increase in total liabilities (Sep 23: $51 million; Mar 23: $65 million) in the Australia Retail division. The
impact on earnings per share was not material. These adjustments were primarily driven by the impact of changes in the pattern of recognition of revenue
on insurance contracts issued, changes in the pattern of recognition of the net cost of reinsurance and the valuation of profit commissions on reinsurance
contracts held.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
77
1. Basis of preparation, cont’d
v) Use of estimates, assumptions and judgements
The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions
impacting the application of accounting policies and financial outcomes. Discussion of the critical accounting estimates and judgements, which include
complex or subjective decisions or assessments are provided in the 2023 ANZGHL Annual Report. Such estimates and judgements are reviewed on an
ongoing basis.
The global economy continues to face challenges associated with inflation and interest rate uncertainties, labour market constraints, continuing
geopolitical tensions, and impacts from climate change, which contributes to an elevated level of estimation uncertainty involved in the preparation of
these financial statements.
The Group made various accounting estimates in these Condensed Consolidated Financial Statements based on forecasts of economic conditions which
reflect expectations and assumptions at 31 March 2024 about future events considered reasonable in the circumstances. Thus there is a considerable
degree of judgement involved in preparing these estimates. 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 these uncertainties on each of these accounting estimates is discussed further below, along with assumptions and judgements made in
relation to other key estimates. Readers should consider these disclosures in light of the inherent uncertainties described above.
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 Group’s allowance for ECL is included in the table below (refer to Note 9 for further information).
As at
Mar 24
$M
Sep 23
$M
Mar 23
$M
Collectively assessed 4,046 4,032 4,040
Individually assessed
325 376 421
Total
1
4,371 4,408 4,461
1.
Includes allowance for ECL 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 ECL
During the March 2024 half, the individually assessed allowance for ECL decreased $51 million.
In estimating individually assessed ECL, 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.
Collectively assessed allowance for ECL
During the March 2024 half, the collectively assessed allowance for ECL increased $14 million, attributable to $169 million from deterioration in credit risk
profile across all divisions, $63 million from portfolio growth, and $5 million from deterioration in economic outlook. This was partially offset by
a $205 million reduction in management temporary adjustments, as anticipated risks are now represented in portfolio credit profiles, and $18 million from
foreign currency translation and other impacts.
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 judgements and associated assumptions have been made within the context of the uncertainty of how various factors might impact the global
economy, and reflect historical experience and other factors that are considered 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
78
1. Basis of preparation, cont’d
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.
Judgement/Assumption Description Considerations for the half year ended 31 March 2024
Determining when a
significant increase in
credit risk (SICR) has
occurred or reversed
In the measurement of ECL, judgement is involved in
determining whether there has been a SICR since initial
recognition of a loan, which would result in it 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 PD in the next 12 months, to
an allowance for lifetime ECL. 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 SICR 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 determination of SICR was consistent with prior
periods.
Measuring both 12-
month and lifetime ECL
The PD, LGD and EAD factors 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 is relevant for particular lending
portfolios and for determining each portfolio’s point-in-time
sensitivity. In addition, judgement is required where
behavioural characteristics are applied in estimating the
lifetime of a facility which is used in measuring ECL.
The PD, LGD and EAD models are subject to the Group’s
model risk policy that stipulates periodic model monitoring
and re-validation, and defines approval procedures and
authorities according to model materiality.
There were no material changes to the policy.
A new PD model was implemented for the New Zealand
agri portfolio during the period replacing the prior model,
with impacts largely offset by the release of a model
overlay held in anticipation of model implementation.
Base case economic
forecast
The Group derives a forward-looking ‘base case’
economic scenario which reflects ANZ Economics view of
future macroeconomic conditions.
There have been no changes to the types of forward-
looking variables (key economic drivers) used as model
inputs.
As at 31 March 2024, the base case assumptions have
been updated to reflect a moderation in inflation and
slowing employment growth in both Australia and New
Zealand. Both economies are forecast to continue to grow
below trend. Despite increased household disposable
incomes, limited flow-through to household consumption is
forecast.
The expected outcomes of key economic drivers for the
base case scenario at 31 March 2024 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
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 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.
Probability weightings in the current period remain
unchanged in each geography from the prior period,
reflecting our assessment of the continuing downside risks
from the impact of high interest rates and inflation in the
economies in which the Group operates.
Weightings for current and prior periods are as detailed in
the section below under the heading on ‘Probability
weightings’.
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.
Management have continued to apply adjustments to
accommodate uncertainty associated with higher inflation
and interest rates. Management overlays have been made
for risks particular to home loans, credit cards and
commercial lending in Australia, and for mortgages and
commercial lending in New Zealand. The total amount of
adjustments has reduced from the prior period.
Management has considered and concluded no temporary
adjustment is required at 31 March 2024 to the ECL in
relation to climate- or weather-related events during the
period.
1.
The upside and downside scenarios are fixed by reference to average economic cycle conditions instead of 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
79
1. Basis of preparation, cont’d
Base case economic forecast assumptions
The economic drivers of the base case economic forecasts, reflective of ANZ Economics’ view of future macro-economic conditions, used at 31 March
2024 are set out below. For years beyond the near-term forecasts below, the ECL models apply simplified assumptions for the economic conditions to
calculate lifetime loss. There is a high level of estimation uncertainties when forming these forecasts.
The base case economic forecasts for Australia, New Zealand and Rest of World are for continuing slowdowns in economic activity. Continued high
inflation in Australia and New Zealand is expected to keep interest rates high for longer and dampen growth over the forecast period.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base case economic
scenario including the uncertainties described above.
Scenario weightings remain the same as those applied in September 2023 as noted in the table below.
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:
Mar 24 Sep 23 Mar 23
Group
Base 46%
46%
45%
Upside
0%
0%
0%
Downside
41%
41%
40%
Severe downside
13% 13% 15%
ECL -
Sensitivity analysis
Given inherent economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future periods, ECL
reported by the Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of the Group’s allowance for collectively assessed ECL to key factors used in determining it at 31 March 2024:
Balance
Sheet
$M
(Profit) and Loss
Impact
$M
If 1% of stage 1 facilities were included in stage 2 4,128
82
If 1% of stage 2 facilities were included in stage 1 4,040
(6)
100% upside scenario 1,354
(2,692)
100% base scenario 1,929 (2,117)
100% downside scenario 3,280 (766)
100% severe downside scenario 10,003 5,957
Actual calendar year Forecast calendar year
2023 2024 2025
Australia
GDP (annual % change) 2.0 1.3 2.0
Unemployment rate (annual average) 3.7 4.1 4.3
Residential property prices (annual % change) 9.1 5.7 5.0
Consumer price index (annual % change) 5.6 3.2 2.8
New Zealand
GDP (annual % change) 0.8 0.9 1.3
Unemployment rate (annual average) 3.7 4.5 5.3
Residential property prices (annual % change) (0.7) 3.0 5.0
Consumer price index (annual % change) 5.7 3.1 2.2
Rest of World
GDP (annual % change) 2.5 1.4 1.8
Consumer price index (annual % change) 4.1 2.7 2.2
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
80
1. Basis of preparation, cont’d
Investments in associates
The Group assesses the carrying value of its investments in associates for impairment indicators semi-annually. Investments may be subjected to
impairment depending on whether indicators of impairment exist, and then where a value-in-use (VIU) or fair value less cost of disposal recoverable
value assessment indicate that impairment is warranted.
As at 31 March 2024, the impairment assessment indicated that one of the Group’s associate investments, PT Panin, had indicators of impairment.
Although its market value (based on share price) was below its carrying value, no impairment was recognised as the carrying value was supported by its
VIU.
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 post-tax discount rate.
The key assumptions used in the VIU calculations are outlined below:
Post-tax discount rate 12.4%
Terminal growth rate 5.0%
Expected earnings growth (compound annual growth rate – 5 years) 7.5%
Risk weighted asset growth (compound annual growth rate – 5 years) 4.75%
Common Equity Tier 1 23.5%
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 post-tax discount rate by +/- 50 bps would impact the VIU outcome by ($88 million)/$100 million.
• A change in the terminal growth rate by +/- 50 bps would impact the VIU outcome by $74 million/($64 million).
• A change in the earnings growth by +/- 75 bps would impact the VIU outcome by $69 million/($64 million).
Considering the interrelationship of the key inputs to the VIU model as outlined above, the Group estimates that the reasonably possible range of VIU is
$1,561 million to $1,238 million compared to the carrying value of $1,405 million. The possible range of VIU is based on impacts set out in the
sensitivities above arising from the changes in the earnings growth forecasts over the forecast period, the long-term growth rate and the discount rate.
Provisions
The Group holds provisions for various obligations including restructuring costs, customer remediation, 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 for provisions 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
81
2. Income
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Interest income 29,811 27,072 22,832 10% 31%
Interest expense
(21,720) (18,820) (14,157) 15% 53%
Major bank levy
(192) (178) (175) 8% 10%
Net interest income
7,899 8,074 8,500 -2% -7%
Other operating income
i) Fee and commission income
Lending fees
1
207 198 199 5% 4%
Non-lending fees
1,169 1,183 1,129 -1% 4%
Commissions
37 45 40 -18% -8%
Funds management income
125 124 122 1% 2%
Fee and commission income
1,538 1,550 1,490 -1% 3%
Fee and commission expense (566) (535) (552) 6% 3%
Net fee and commission income
972 1,015 938 -4% 4%
ii) Other income
Net foreign exchange earnings and other financial instruments income
2
1,112 946 590 18% 88%
Release of foreign currency translation reserve
20 43 - -53% n/a
Loss on reclassification of data centres to held for sale
- - (43) n/a large
Loss on partial disposal of investment in AmBank
(21) - - n/a n/a
Other
31 69 10 -55% large
Other income
1,142 1,058 557 8% large
Other operating income 2,114 2,073 1,495 2% 41%
Net income from insurance business 48 53 55 -9% -13%
Share of associates' profit/(loss) 84 120 101 -30% -17%
Operating income
10,145 10,320 10,151 -2% 0%
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,
ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities measured and/or designated at fair value through profit or loss.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
82
3. Operating expenses
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
i) Personnel
Salaries and related costs
2,744 2,572 2,608 7% 5%
Superannuation costs
219 201 195 9% 12%
Other
99 96 90 3% 10%
Personnel
3,062 2,869 2,893 7% 6%
ii) Premises
Rent
37 37 34 0% 9%
Depreciation
200 200 210 0% -5%
Other
84 87 90 -3% -7%
Premises
321 324 334 -1% -4%
iii) Technology
Depreciation and amortisation
241 248 257 -3% -6%
Subscription licences and outsourced services
549 523 484 5% 13%
Other
108 93 95 16% 14%
Technology
898 864 836 4% 7%
iv) Restructuring 141 115 54 23% large
v) Other
Advertising and public relations
93 98 93 -5% 0%
Professional fees
337 454 407 -26% -17%
Freight, stationery, postage and communication
78 89 86 -12% -9%
Other
285 329 294 -13% -3%
Other
793 970 880 -18% -10%
Operating expenses 5,215 5,142 4,997 1% 4%
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
83
4. Income tax expense
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
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Profit before income tax 4,860 5,066 5,021
-4% -3%
Prima facie income tax expense at 30%
1,458 1,520 1,507
-4% -3%
Tax effect of permanent differences:
Share of associates' (profit)/loss
(25) (35) (31)
-29% -19%
Interest on convertible instruments
64 54 38
19% 68%
Overseas tax rate differential
(86) (69) (94)
25% -9%
Provision for foreign tax on dividend repatriation
21 23 18
-9% 17%
Other
(2) 7 15 large large
Subtotal
1,430 1,500 1,453 -5% -2%
Income tax (over)/under provided in previous years 9 1 (1) large large
Income tax expense
1,439 1,501 1,452 -4% -1%
Australia 757 793 853 -5% -11%
Overseas 682 708 599 -4% 14%
Income tax expense
1,439 1,501 1,452 -4% -1%
Effective tax rate 29.6% 29.6% 28.9%
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
84
5. Dividends
Dividend per ordinary share (cents)
Half Year Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Interim
- fully franked
1
- - 81
- partially franked
2
83 - -
Final
- partially franked (comprising 81 cents and an additional dividend of 13 cents)
3
- 94 -
Total
83 94 81 -12% 2%
Ordinary share dividend ($M)
4
Interim dividend
- 2,433 -
Final dividend
2,825 - 2,213
Bonus option plan adjustment
(54) (46) (41) 17% 32%
Total
2,771 2,387 2,172 16% 28%
Ordinary share dividend payout ratio
(%)
5
73.3% 79.6% 68.4%
1.
2023 interim dividend was fully franked for Australian tax purposes (30% tax rate) and carried New Zealand imputation credits of NZD 9 cents.
2.
2024 proposed interim dividend will be partially franked at 65% for Australian tax purposes (30% tax rate) and carry New Zealand imputation credits of NZD 12 cents.
3.
2023 final dividend was partially franked at 56% for Australian tax purposes (30% tax rate) and carried New Zealand imputation credits of NZD 11 cents.
4.
Dividend paid to ordinary equity holders of the Company. Excludes dividends paid by subsidiaries to the Group’s non-controlling equity holders of $13 million (Sep 23 half: $14 million;
Mar 23 half: $13 million).
5.
Dividend payout ratio is calculated using the proposed 2024 interim dividend of $2,496 million, based on the forecast number of ordinary shares on issue at the dividend record date.
Dividend payout ratios for the September 2023 half and March 2023 half were calculated using actual dividends.
Ordinary Shares
The Directors proposed an interim dividend of 83 cents be paid on each eligible fully paid ANZ ordinary share, partially franked at 65% for Australian
taxation purposes. The interim dividend will be paid on 1 July 2024 to owners of ordinary shares at the close of business on 14 May 2024 (record date),
and carry New Zealand imputation credits of NZD 12 cents per ordinary share.
ANZ has a dividend reinvestment plan and a bonus option plan that will operate in respect of the proposed 2024 interim dividend.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
85
6. Earnings per share
Half Year Movement
Mar 24 Sep 23 Mar 23
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Earnings per share
Basic earnings per share (cents)
113.5 118.4 118.7 -4% -4%
Diluted earnings per share (cents)
111.5 113.8 113.0 -2% -1%
Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the period ($M)
3,421 3,565 3,569 -4% -4%
Less: Profit attributable to non-controlling interests ($M)
14 14 14 0% 0%
Earnings used in calculating basic earnings per share ($M)
3,407 3,551 3,555 -4% -4%
Diluted:
Earnings used in calculating basic earnings per share ($M)
3,407 3,551 3,555 -4% -4%
Add: Interest on convertible subordinated debt ($M)
217 182 150 19% 45%
Earnings used in calculating diluted earnings per share ($M)
3,624 3,733 3,705 -3% -2%
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)
3,001.3 3,000.2 2,994.1 0% 0%
Add: Weighted average dilutive potential ordinary shares (M)
Convertible subordinated debt (M)
239.6 273.9 277.3 -13% -14%
Share based payments (options, rights and deferred shares) (M)
8.5 7.5 6.9 13% 23%
WANOS used in calculating diluted earnings per share (M)
3,249.4 3,281.6 3,278.3 -1% -1%
1.
WANOS excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 5.3 million in the March 2024 half (Sep 23 half: 4.1 million; Mar 23 half: 4.2 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
86
7. Segment reporting
i) Description of segments
The Group operates on a divisional structure with six divisions: Australia Retail, Australia Commercial, Institutional, New Zealand, Pacific, and Group
Centre. For further information on the composition of divisions refer to the Definitions on page 125.
The presentation of divisional results has been impacted by a number of cost reallocations across and within the divisions during the period. Prior period
comparatives have been restated.
Operating segments presented below are consistent with internal divisional reporting provided to the chief operating decision maker, being the Chief
Executive Officer.
ii) Operating segments
The Group measures the performance of operating segments on a cash profit basis. To calculate cash profit, the Group excludes items from profit after
tax attributable to shareholders. For the current and prior periods, the adjustments relate to impacts of economic hedges, and revenue and expense
hedges, which represent timing differences that will reverse through earnings in the future.
Transactions between divisions across segments within the Group are conducted on an arm’s length basis and where relevant disclosed as part of the
income and expenses of these segments.
Australia
Retail
Australia
Commercial Institutional
New
Zealand Pacific
Group
Centre
Group
Total
March 2024 Half Year $M $M $M $M $M $M $M
Net interest income
2,608 1,580 1,882 1,572 63 194 7,899
Net fee and commission income
247 146 368 207 8 (4) 972
Net income from insurance business
48 - - - - - 48
Other income
1,2
6 23 1,319 1 36 (41) 1,344
Share of associates’ profit/(loss)
- - - - - 84 84
Operating income
1,2
2,909 1,749 3,569 1,780 107 233 10,347
Operating expenses (1,735) (763) (1,444) (677) (70) (526) (5,215)
Cash profit before credit impairment and income tax
1,174 986 2,125 1,103 37 (293) 5,132
Credit impairment (charge)/release (43) (35) 6 (4) 6 - (70)
Cash profit before income tax
1,131 951 2,131 1,099 43 (293) 5,062
Income tax expense
1,2
(337) (286) (609) (308) (11) 55 (1,496)
Non-controlling interests
- - - - (1) (13) (14)
Cash profit/(loss)
794 665 1,522 791 31 (251) 3,552
Economic hedges
1
(197)
Revenue and expense hedges
2
52
Profit after tax attributable to shareholders
3,407
Financial Position
Total external assets 325,775 64,279 513,026 124,986 3,195 58,438 1,089,699
Total external liabilities
176,484 122,386 407,444 122,310 3,791 186,210 1,018,625
1.
The economic hedges cash profit adjustment relates to the Institutional, New Zealand and Group Centre divisions. In the condensed consolidated income statement, these amounts are
recognised in Other operating income (Mar 24 half: $277 million loss; Sep 23 half: $36 million loss; Mar 23 half: $269 million loss) and Income tax expense (Mar 24 half: $80 million benefit;
Sep 23 half: $9 million benefit; Mar 23 half: $79 million benefit).
2.
The revenue and expense hedges cash profit adjustment relates to the Group Centre division. In the condensed consolidated income statement, these amounts are recognised in Other
operating income (Mar 24 half: $75 million gain; Sep 23 half: $9 million loss; Mar 23 half: $120 million loss) and Income tax expense (Mar 24 half: $23 million loss; Sep 23 half: $3 million
benefit; Mar 23 half: $36 million benefit).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
87
7. Segment reporting, cont’d
Australia
Retail
Australia
Commercial Institutional
New
Zealand Pacific
Group
Centre
Group
Total
September 2023 Half Year $M $M $M $M $M $M $M
Net interest income 2,694 1,592 1,969 1,567 61 191 8,074
Net fee and commission income 311 160 339 199 9 (3) 1,015
Net income from insurance business 53 - - - - - 53
Other income
1,2
10 30 982 11 36 34 1,103
Share of associates’ profit/(loss) - - - - - 120 120
Operating income
1,2
3,068 1,782 3,290 1,777 106 342 10,365
Operating expenses (1,758) (738) (1,388) (665) (71) (522) (5,142)
Cash profit before credit impairment and income tax 1,310 1,044 1,902 1,112 35 (180) 5,223
Credit impairment (charge)/release (53) (41) 6 (37) 12 1 (112)
Cash profit before income tax 1,257 1,003 1,908 1,075 47 (179) 5,111
Income tax expense
1,2
(383) (302) (548) (300) (8) 28 (1,513)
Non-controlling interests - - - - (2) (12) (14)
Cash profit/(loss) 874 701 1,360 775 37 (163) 3,584
Economic hedges
1
(27)
Revenue and expense hedges
2
(6)
Profit after tax attributable to shareholders 3,551
Financial Position
Total external assets 315,207 61,916 538,825 125,178 3,391 61,126 1,105,643
Total external liabilities 168,926 119,341 452,777 122,924 3,862 167,796 1,035,626
March 2023 Half Year
Net interest income 3,015 1,632 2,071 1,582 62 138 8,500
Net fee and commission income 235 162 346 199 10 (14) 938
Net income from insurance business 55 - - - - - 55
Other income
1,2
6 13 1,027 - 30 (130) 946
Share of associates’ profit/(loss) - - - - - 101 101
Operating income
1,2
3,311 1,807 3,444 1,781 102 95 10,540
Operating expenses (1,703) (685) (1,340) (634) (74) (561) (4,997)
Cash profit before credit impairment and income tax 1,608 1,122 2,104 1,147 28 (466) 5,543
Credit impairment (charge)/release (82) (66) 74 (75) 16 - (133)
Cash profit before income tax 1,526 1,056 2,178 1,072 44 (466) 5,410
Income tax expense
1,2
(462) (317) (589) (301) (10) 112 (1,567)
Non-controlling interests - - - - - (14) (14)
Cash profit/(loss) 1,064 739 1,589 771 34 (368) 3,829
Economic hedges
1
(190)
Revenue and expense hedges
2
(84)
Profit after tax attributable to shareholders 3,555
Financial Position
Total external assets 303,820 60,227 525,745 123,565 3,489 94,391 1,111,237
Total external liabilities 160,297 119,042 450,764 121,580 3,834 186,140 1,041,657
1.
The economic hedges cash profit adjustment relates to the Institutional, New Zealand and Group Centre divisions. In the condensed consolidated income statement, these amounts are
recognised in Other operating income (Mar 24 half: $277 million loss; Sep 23 half: $36 million loss; Mar 23 half: $269 million loss) and Income tax expense (Mar 24 half: $80 million benefit;
Sep 23 half: $9 million benefit; Mar 23 half: $79 million benefit).
2.
The revenue and expense hedges cash profit adjustment relates to the Group Centre division. In the condensed consolidated income statement, these amounts are recognised in Other
operating income (Mar 24 half: $75 million gain; Sep 23 half: $9 million loss; Mar 23 half: $120 million loss) and Income tax expense (Mar 24 half: $23 million loss; Sep 23 half: $3 million
benefit; Mar 23 half: $36 million benefit).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
88
8. Net loans and advances
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia
Overdrafts 4,031 4,190 3,834 -4% 5%
Credit cards outstanding
5,607 5,625 5,670 0% -1%
Commercial bills outstanding
4,557 4,682 4,898 -3% -7%
Term loans - housing
314,103 304,133 292,597 3% 7%
Term loans - non-housing
173,114 169,046 166,051 2% 4%
Other
927 961 916 -4% 1%
Total Australia
502,339 488,637 473,966 3% 6%
New Zealand
Overdrafts 850 906 879 -6% -3%
Credit cards outstanding
1,163 1,174 1,184 -1% -2%
Term loans - housing
100,407 99,928 97,939 0% 3%
Term loans - non-housing
36,487 37,557 38,381 -3% -5%
Total New Zealand
138,907 139,565 138,383 0% 0%
Rest of World
Overdrafts 530 456 568 16% -7%
Credit cards outstanding
6 6 6 0% 0%
Term loans - housing
431 430 475 0% -9%
Term loans - non-housing
73,184 78,205 77,095 -6% -5%
Other
115 331 613 -65% -81%
Total Rest of World
74,266 79,428 78,757 -6% -6%
Subtotal 715,512 707,630 691,106 1% 4%
Unearned income
1
(494) (515) (526)
-4% -6%
Capitalised brokerage and other origination costs
1
3,642 3,475 3,165 5% 15%
Gross loans and advances
718,660 710,590 693,745 1% 4%
Allowance for ECL (refer to Note 9) (3,489) (3,546) (3,658) -2% -5%
Net loans and advances
715,171 707,044 690,087 1% 4%
1.
Amortised over the expected life of the loan.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
89
9. Allowance for expected credit losses
As at
Mar 24 Sep 23 Mar 23
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
3,169 320 3,489 3,180 366 3,546 3,244 414 3,658
Off-balance sheet commitments -
undrawn and contingent facilities
844 5 849 817 10 827 767 7 774
Investment securities - debt securities
at amortised cost
33 - 33 35 - 35 29 - 29
Total
4,046 325 4,371 4,032 376 4,408 4,040 421 4,461
Other Comprehensive Income
Investment securities - debt securities
at FVOCI
1
17 - 17 15 - 15 13 - 13
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 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 2022 1,141 1,548 360 533 3,582
Transfer between stages 114 (100) (63) 49 -
New and increased provisions (net of releases) (103) 264 56 188 405
Write-backs - - - (164) (164)
Bad debts written-off (excluding recoveries) - - - (185) (185)
Foreign currency translation and other movements
1
7 17 3 (7) 20
As at 31 March 2023 1,159 1,729 356 414 3,658
Transfer between stages 148 (159) (65) 76 -
New and increased provisions (net of releases) (84) 59 39 159 173
Write-backs - - - (48) (48)
Bad debts written-off (excluding recoveries) - - - (224) (224)
Foreign currency translation and other movements
1
4 (5) (1) (11) (13)
As at 30 September 2023 1,227 1,624 329 366 3,546
Transfer between stages 129 (144) (49) 64 -
New and increased provisions (net of releases) (119) 64 120 137 202
Write-backs
- - - (80) (80)
Bad debts written-off (excluding recoveries)
- - - (146) (146)
Foreign currency translation and other movements
1
(5) (6) (1) (21) (33)
As at 31 March 2024
1,232 1,538 399 320 3,489
1.
Other movements include the impact of discounting on expected cash flows for individually assessed allowances for ECL and the impact of divestments completed during the period.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
90
9. 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 2022 593 144 29 9 775
Transfer between stages 24 (22) (2) - -
New and increased provisions (net of releases) (30) 30 1 - 1
Write-backs - - - (2) (2)
Foreign currency translation (1) - 1 - -
As at 31 March 2023 586 152 29 7 774
Transfer between stages 14 (13) (3) 2 -
New and increased provisions (net of releases) 23 22 (1) 2 46
Write-backs - - - (2) (2)
Foreign currency translation and other movements
1
7 1 - 1 9
As at 30 September 2023 630 162 25 10 827
Transfer between stages 18 (16) (2) - -
New and increased provisions (net of releases) 7 22 1 - 30
Write-backs
- - - (5) (5)
Foreign currency translation
(2) (1) - - (3)
As at 31 March 2024
653 167 24 5 849
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 31 March 2023 29 - - - 29
As at 30 September 2023 35 - - - 35
As at 31 March 2024
33 - - - 33
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 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 31 March 2023 13 - - - 13
As at 30 September 2023 15 - - - 15
As at 31 March 2024
17 - - - 17
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
91
9. Allowance for expected credit losses, cont’d
Credit impairment charge/(release) analysis
Half Year Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
New and increased provisions (net of releases)
1,2
- Collectively assessed 32 (11) 163 large -80%
- Individually assessed
201 239 237 -16% -15%
Write-backs
3
(85) (50) (166) 70% -49%
Recoveries of amounts previously written-off
(78) (66) (101) 18% -23%
Total credit impairment charge/(release)
70 112 133 -38% -47%
1.
Includes the impact of transfers between collectively assessed and individually assessed.
2.
New and increased provisions (net of releases) includes:
Mar 24 half Sep 23 half Mar 23 half
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 1 201 (62) 235 168 237
Off-balance sheet commitments – undrawn and
contingent facilities
30 -
42 4
1 -
Investment securities - debt securities at
amortised cost
(1) - 7
-
(8) -
Investment securities - debt securities at FVOCI 2 - 2 - 2 -
Total 32 201 (11) 239 163 237
3.
Consists of write-backs in Net loans and advances at amortised cost of $80 million for the March 2024 half (Sep 23 half: $48 million; Mar 23 half: $164 million), and Off-balance sheet
commitment of $5 million for the March 2024 half (Sep 23 half: $2 million; Mar 23 half: $2 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
92
10. Deposits and other borrowings
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Australia
Certificates of deposit 30,572 33,613 37,920 -9% -19%
Term deposits
86,857 79,518 76,341 9% 14%
On demand and short term deposits
283,155 278,014 270,418 2% 5%
Deposits not bearing interest
19,955 20,856 22,815 -4% -13%
Deposits from banks and securities sold under repurchase agreements
38,425 42,493 53,990 -10% -29%
Commercial paper and other borrowings
42,060 31,013 36,248 36% 16%
Total Australia
501,024 485,507 497,732 3% 1%
New Zealand
Certificates of deposit 1,800 2,167 1,392 -17% 29%
Term deposits
52,762 50,451 47,598 5% 11%
On demand and short term deposits
55,569 56,479 56,307 -2% -1%
Deposits not bearing interest
15,825 16,438 18,103 -4% -13%
Deposits from banks and securities sold under repurchase agreements
3,912 4,123 4,398 -5% -11%
Commercial paper and other borrowings
3,152 2,098 2,596 50% 21%
Total New Zealand
133,020 131,756 130,394 1% 2%
Rest of World
Certificates of deposit 6,723 6,139 5,233 10% 28%
Term deposits
100,919 117,924 127,467 -14% -21%
On demand and short term deposits
20,569 21,827 24,125 -6% -15%
Deposits not bearing interest
5,479 5,612 5,453 -2% 0%
Deposits from banks and securities sold under repurchase agreements
39,003 45,946 52,160 -15% -25%
Total Rest of World
172,693 197,448 214,438 -13% -19%
Deposits and other borrowings
1
806,737 814,711 842,564 -1% -4%
1.
Customer deposits balance of $641,090 million (Sep 23: $647,119 million; Mar 23: $648,627 million) includes Term deposits, On demand and short term deposits and Deposits not bearing
interest.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
93
11. Debt issuances
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Total unsubordinated debt 90,763 82,336 73,443 10% 24%
Additional Tier 1 Capital (perpetual subordinated securities)
1
ANZ Capital Notes (ANZ CN)
2
ANZ CN4
3
- 1,621 1,620 large large
ANZ CN5
930 929 929 0% 0%
ANZ CN6
1,490 1,489 1,488 0% 0%
ANZ CN7
1,299 1,298 1,297 0% 0%
ANZ CN8
1,484 1,483 1,482 0% 0%
ANZ CN9
3
1,678 - - n/a n/a
ANZ Capital Securities
4
1,434 1,412 1,380 2% 4%
Tier 2 Capital - Term Subordinated Notes
5
26,754 23,707 22,797 13% 17%
Other subordinated debt securities
6
1,277 1,739 1,721 -27% -26%
Total subordinated debt
36,346 33,678 32,714 8% 11%
Total debt issuances 127,109 116,014 106,157 10% 20%
1.
ANZ Capital Notes and ANZ Capital Securities are Basel 3 compliant instruments.
2.
Each of the ANZ Capital Notes will convert into a variable number of ordinary shares of ANZGHL on a specified mandatory conversion date at a 1% discount (subject to certain conditions
being satisfied). If ANZBGL’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZBGL receives a notice of non-viability from APRA, then the notes will immediately
convert into a variable number of ordinary shares of ANZGHL at a 1% discount subject to a maximum conversion number. Subject to certain conditions, the notes are redeemable or
convertible into ordinary shares of ANZGHL (on similar terms to mandatory conversion) by ANZBGL at its discretion on an early redemption or conversion date.
Issuer Issue date Issue amount
$M
Early redemption or
conversion date
Mandatory
conversion date
CN4 ANZBGL 27 Sep 2016 1,622 20 Mar 2024 20 Mar 2026
CN5 ANZBGL 28 Sep 2017 931 20 Mar 2025 20 Mar 2027
CN6 ANZBGL 8 Jul 2021 1,500 20 Mar 2028 20 Sep 2030
CN7 ANZBGL 24 Mar 2022 1,310 20 Mar 2029 20 Sep 2031
CN8 ANZBGL 24 Mar 2023 1,500 20 Mar 2030 20 Sep 2032
CN9 ANZBGL 20 Mar 2024 1,700 20 Mar 2031 20 Sep 2033
3.
ANZBGL fully redeemed ANZ CN4 on 20 March 2024. Approximately $905 million of the proceeds from ANZ CN4 were reinvested into ANZ CN9, which was issued by ANZBGL on the
same date.
4.
On 15 June 2016, ANZBGL, acting through its London branch, issued USD 1 billion fully-paid perpetual subordinated contingent convertible securities (ANZ Capital Securities). If ANZBGL’s
Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZBGL receives a notice of non-viability from APRA, then the securities will immediately convert into a variable
number of ANZGHL ordinary shares at a 1% discount subject to a maximum conversion number. Subject to certain conditions, on the First Reset Date (15 June 2026) and on each 5-year
anniversary, ANZ has the right to redeem all of the securities at its discretion.
5.
All the term subordinated notes are convertible and are Basel 3 compliant instruments. If ANZBGL receives a notice of non-viability from APRA, then the convertible subordinated notes will
immediately convert into a variable number of ordinary shares of ANZGHL at a 1% discount subject to a maximum conversion number.
6.
ANZ Bank New Zealand Limited, a wholly owned subsidiary of ANZGHL, issued NZD 600 million and USD 500 million of unsecured subordinated notes in September 2021 and August
2022 respectively. Whilst these notes constitute Tier 2 capital under RBNZ requirements, the notes do not contain a Non-Viability Trigger Event and therefore do not meet APRA's
requirements for Tier 2 capital instruments to qualify as regulatory capital for the Group. The USD 300 million perpetual subordinated notes issued by ANZBGL, which were contained in
other subordinated debt, were redeemed on 31 October 2023.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
94
12. Credit risk
Maximum exposure to credit risk
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may be
differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these differences
arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to market risk, or
bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the Group would have to pay if the instrument is called upon.
The table below shows the maximum exposure to credit risk of on-balance sheet, and off-balance sheet positions before taking account of any collateral
held or other credit enhancements:
Reported
Excluded
1
Maximum Exposure to Credit Risk
As at
As at
As at
On
-balance sheet positions
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
$M
Sep 23
$M
Mar 23
$M
Net loans and advances 715,171 707,044 690,087
- - -
715,171 707,044 690,087
Investment securities
- debt securities at amortised cost 7,900 7,752 7,912
- - -
7,900 7,752 7,912
- debt securities at FVOCI
108,530 88,271 84,589
- - -
108,530 88,271 84,589
- equity securities at FVOCI
1,611 1,393 1,453
1,611 1,393 1,453
- - -
- debt securities at FVTPL
14 13 18
- - -
14 13 18
Other financial assets
244,684 288,456 314,694
8,643 15,300 8,521
236,041 273,156 306,173
Total on-balance sheet positions
1,077,910 1,092,929 1,098,753
10,254 16,693 9,974
1,067,656 1,076,236 1,088,779
Off-balance sheet commitments
Undrawn and contingent facilities
2
289,371 290,055 292,550
- - -
289,371 290,055 292,550
Total 1,367,281 1,382,984 1,391,303
10,254 16,693 9,974
1,357,027 1,366,291 1,381,329
1.
Excluded comprises bank notes and coins and cash at bank within Other financial assets, and investment securities - equity securities at FVOCI as they do not have credit exposure.
2.
Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed allowance for expected credit losses.
Credit Quality
The Group’s internal Customer Credit Rating (CCR) is used to manage the credit quality of financial assets. To enable wider comparisons, the Group’s
CCRs are mapped to external rating agency scales as follows:
Credit Quality
Description Internal CCR ANZ Customer Requirement
Moody's
Rating
Standard &
Poor's
Rating
Strong CCR 0+ to 4-
Demonstrated superior stability in their operating and financial performance over the long-
term, and whose earnings capacity is not significantly vulnerable to foreseeable events.
Aaa - Baa3 AAA - BBB-
Satisfactory CCR 5+ to 6-
Demonstrated sound operational and financial stability over the medium to long term even
though some may be susceptible to cyclical trends or variability in earnings.
Ba1 - B1 BB+ - B+
Weak CCR 7+ to 8=
Demonstrated some operational and financial instability, with variability and uncertainty in
profitability and liquidity projected to continue over the short and possibly medium term.
B2 - Caa B - CCC
Defaulted CCR 8- to 10
When doubt arises as to the collectability of a credit facility, the financial instrument (or
‘the facility’) is classified as defaulted.
N/A N/A
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
95
12. Credit risk, cont’d
Net loans and advances
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at March 2024
Strong
404,954 16,931 - - 421,885
Satisfactory 199,316 39,766 - - 239,082
Weak
12,541 12,086 - - 24,627
Defaulted
- - 5,011 880 5,891
Gross loans and advances at amortised cost
616,811 68,783 5,011 880 691,485
Allowance for ECL (1,232) (1,538) (399) (320) (3,489)
Net loans and advances at amortised cost
615,579 67,245 4,612 560 687,996
Coverage ratio 0.20% 2.24% 7.96% 36.36% 0.50%
Loans and advances at fair value through profit or loss 24,027
Unearned income (494)
Capitalised brokerage and other origination costs
3,642
Net carrying amount
715,171
As at September 2023
Strong 410,933 17,063 - - 427,996
Satisfactory 193,170 37,977 - - 231,147
Weak 11,306 10,398 - - 21,704
Defaulted - - 3,858 1,037 4,895
Gross loans and advances at amortised cost 615,409 65,438 3,858 1,037 685,742
Allowance for ECL (1,227) (1,624) (329) (366) (3,546)
Net loans and advances at amortised cost 614,182 63,814 3,529 671 682,196
Coverage ratio 0.20% 2.48% 8.53% 35.29% 0.52%
Loans and advances at fair value through profit or loss 21,888
Unearned income (515)
Capitalised brokerage and other origination costs 3,475
Net carrying amount 707,044
As at March 2023
Strong 416,053 14,678 - - 430,731
Satisfactory 176,054 40,305 - - 216,359
Weak 10,072 10,293 - - 20,365
Defaulted - - 3,378 804 4,182
Gross loans and advances at amortised cost 602,179 65,276 3,378 804 671,637
Allowance for ECL (1,159) (1,729) (356) (414) (3,658)
Net loans and advances at amortised cost 601,020 63,547 3,022 390 667,979
Coverage ratio 0.19% 2.65% 10.54% 51.49% 0.54%
Loans and advances at fair value through profit or loss 19,469
Unearned income (526)
Capitalised brokerage and other origination costs 3,165
Net carrying amount 690,087
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
96
12. Credit risk, cont’d
Off-balance sheet commitments - undrawn and contingent facilities
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at March 2024
Strong
193,490 1,204 - - 194,694
Satisfactory 23,826 3,648 - - 27,474
Weak
984 719 - - 1,703
Defaulted
- - 73 49 122
Gross undrawn and contingent facilities subject to ECL
218,300 5,571 73 49 223,993
Allowance for ECL included in Other provisions (653) (167) (24) (5) (849)
Net undrawn and contingent facilities subject to ECL
217,647 5,404 49 44 223,144
Coverage ratio 0.30% 3.00% 32.88% 10.20% 0.38%
Undrawn and contingent facilities not subject to ECL
1
66,227
Net undrawn and contingent facilities 289,371
As at September 2023
Strong 189,980 1,234 - - 191,214
Satisfactory 30,007 4,276 - - 34,283
Weak 975 746 - - 1,721
Defaulted - - 79 47 126
Gross undrawn and contingent facilities subject to ECL 220,962 6,256 79 47 227,344
Allowance for ECL included in Other provisions (630) (162) (25) (10) (827)
Net undrawn and contingent facilities subject to ECL 220,332 6,094 54 37 226,517
Coverage ratio 0.29% 2.59% 31.65% 21.28% 0.36%
Undrawn and contingent facilities not subject to ECL
1
63,538
Net undrawn and contingent facilities 290,055
As at March 2023
Strong 200,066 1,439 - - 201,505
Satisfactory 18,769 2,742 - - 21,511
Weak 904 782 - - 1,686
Defaulted - - 89 24 113
Gross undrawn and contingent facilities subject to ECL 219,739 4,963 89 24 224,815
Allowance for ECL included in Other provisions (586) (152) (29) (7) (774)
Net undrawn and contingent facilities subject to ECL 219,153 4,811 60 17 224,041
Coverage ratio 0.27% 3.06% 32.58% 29.17% 0.34%
Undrawn and contingent facilities not subject to ECL
1
68,509
Net undrawn and contingent facilities 292,550
1.
Commitments that can be unconditionally cancelled at any time without notice.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
97
12. Credit risk, cont’d
Investment securities - debt securities at amortised cost
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at March 2024
Strong
6,018 - - - 6,018
Satisfactory 137 - - - 137
Weak
1,778 - - - 1,778
Gross investment securities - debt securities at amortised cost
7,933 - - - 7,933
Allowance for ECL (33) - - - (33)
Net investment securities - debt securities at amortised cost
7,900 - - - 7,900
Coverage ratio 0.42% - - - 0.42%
As at September 2023
Strong 6,117 - - - 6,117
Satisfactory 112 - - - 112
Weak 1,558 - - - 1,558
Gross investment securities - debt securities at amortised cost 7,787 - - - 7,787
Allowance for ECL (35) - - - (35)
Net investment securities - debt securities at amortised cost 7,752 - - - 7,752
Coverage ratio 0.45% - - - 0.45%
As at March 2023
Strong 6,191 - - - 6,191
Satisfactory 82 - - - 82
Weak 1,668 - - - 1,668
Gross investment securities - debt securities at amortised cost 7,941 - - - 7,941
Allowance for ECL (29) - - - (29)
Net investment securities - debt securities at amortised cost 7,912 - - - 7,912
Coverage ratio 0.37% - - - 0.37%
Investment securities - debt securities at FVOCI
Stage 3
Stage 1
$M
Stage 2
$M
Collectively
assessed
$M
Individually
assessed
$M
Total
$M
As at March 2024
Strong
108,530 - - - 108,530
Investment securities - debt securities at FVOCI 108,530 - - - 108,530
Allowance for ECL recognised in Other comprehensive income (17) - - - (17)
Coverage ratio
0.02% - - - 0.02%
As at September 2023
Strong 88,271 - - - 88,271
Investment securities - debt securities at FVOCI 88,271 - - - 88,271
Allowance for ECL recognised in Other comprehensive income (15) - - - (15)
Coverage ratio 0.02% - - - 0.02%
As at March 2023
Strong 84,589 - - - 84,589
Investment securities - debt securities at FVOCI 84,589 - - - 84,589
Allowance for ECL recognised in Other comprehensive income (13) - - - (13)
Coverage ratio 0.02% - - - 0.02%
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
98
12. Credit risk, cont’d
Other financial assets
As at
Mar 24
$M
Sep 23
$M
Mar 23
$M
Strong 230,668 269,934 302,785
Satisfactory
1
4,547 2,631 2,333
Weak
840 604 1,069
Defaulted
- - 4
Other financial assets
1
236,055 273,169 306,191
1.
Includes Investment securities - debt securities at FVTPL of $14 million (Sep 23: $13 million; Mar 23: $18 million).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
99
13. Fair value of financial assets and financial liabilities
Classification of Financial Assets and Financial Liabilities
The Group recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial instruments on the
balance sheet at fair value.
Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market
participants at the measurement date.
The following tables set out the classification of financial assets and liabilities according to their measurement bases with their carrying amounts as
recognised on the balance sheet.
As at March 2024
At amortised cost
$M
At fair value
$M
Total
$M
Financial assets
Cash and cash equivalents 114,635 23,064 137,699
Settlement balances owed to ANZ
3,809 - 3,809
Collateral paid
8,241 - 8,241
Trading assets
- 42,442 42,442
Derivative financial instruments
- 47,481 47,481
Investment securities
7,900 110,155 118,055
Net loans and advances
691,144 24,027 715,171
Regulatory deposits
696 - 696
Other financial assets
4,316 - 4,316
Total
830,741 247,169 1,077,910
Financial liabilities
Settlement balances owed by ANZ 15,026 - 15,026
Collateral received
7,409 - 7,409
Deposits and other borrowings
776,650 30,087 806,737
Derivative financial instruments
- 42,728 42,728
Payables and other liabilities
10,151 6,943 17,094
Debt issuances
125,362 1,747 127,109
Total
934,598 81,505 1,016,103
As at September 2023
Financial assets
Cash and cash equivalents 140,588 27,566 168,154
Settlement balances owed to ANZ 9,349 - 9,349
Collateral paid 8,558 - 8,558
Trading assets - 37,004 37,004
Derivative financial instruments - 60,406 60,406
Investment securities 7,752 89,677 97,429
Net loans and advances 685,156 21,888 707,044
Regulatory deposits 646 - 646
Other financial assets 4,339 - 4,339
Total 856,388 236,541 1,092,929
Financial liabilities
Settlement balances owed by ANZ 19,267 - 19,267
Collateral received 10,382 - 10,382
Deposits and other borrowings 780,822 33,889 814,711
Derivative financial instruments - 57,482 57,482
Payables and other liabilities 9,830 5,267 15,097
Debt issuances 114,678 1,336 116,014
Total 934,979 97,974 1,032,953
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
100
13. Fair value of financial assets and financial liabilities, cont’d
As at March 2023
At amortised cost
$M
At fair value
$M
Total
$M
Financial assets
Cash and cash equivalents 184,092 24,708 208,800
Settlement balances owed to ANZ 7,020 - 7,020
Collateral paid 9,245 - 9,245
Trading assets - 39,611 39,611
Derivative financial instruments - 45,614 45,614
Investment securities 7,912 86,060 93,972
Net loans and advances 670,618 19,469 690,087
Regulatory deposits 646 - 646
Other financial assets 3,758 - 3,758
Total 883,291 215,462 1,098,753
Financial liabilities
Settlement balances owed by ANZ 23,010 - 23,010
Collateral received 8,002 - 8,002
Deposits and other borrowings 811,236 31,328 842,564
Derivative financial instruments - 46,154 46,154
Payables and other liabilities 8,324 4,733 13,057
Debt issuances 104,626 1,531 106,157
Total 955,198 83,746 1,038,944
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
101
13. Fair value of financial assets and financial liabilities, cont’d
Financial Assets and Financial Liabilities Measured at Fair Value
The fair values of financial assets and financial liabilities are generally determined at the individual instrument level. If the Group holds offsetting risk
positions, then the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) is used to measure the fair value of such groups of financial
assets and financial liabilities. The Group measures the portfolio based on the price that would be received to sell a net long position (an asset) for a
particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
a) Fair value designation
The Group designates certain loans and advances, deposits and other borrowings and debt issuances as fair value through profit or loss:
• where they contain separable embedded derivatives and are managed on a fair value basis, the total fair value movements are recognised in profit or
loss in the same period as the movement on any associated hedging instruments; or
• in order to eliminate an accounting mismatch which would arise if the assets or liabilities were otherwise carried at amortised cost. This mismatch
arises due to measuring the derivative financial instruments (used to mitigate interest rate risk of these assets or liabilities) at fair value through profit
or loss.
The Group’s approach ensures that it recognises the fair value movements on the assets or liabilities in profit or loss in the same period as the movement
on the associated derivatives.
The Group may also designate certain loans and advances, deposits and other borrowings and debt issuances as fair value through profit or loss where
they are managed on a fair value basis to align the measurement with how the financial instruments are managed.
b) Fair value approach and valuation techniques
The Group uses valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no
quoted price in an active market for that asset or liability exists. This includes the following:
Asset or Liability Fair Value Approach
Financial instruments classified as:
• Derivative financial assets and financial liabilities
(including trading and non-trading)
• Repurchase agreements < 90 days
• Net loans and advances
• Deposits and other borrowings
• Debt issuances
Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using wholesale market interest rates, or market borrowing
rates for debt or loans with similar maturities or yield curves appropriate for the remaining
term to maturity.
Other financial instruments held for trading:
• Securities sold short
• Debt and equity securities
Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics.
Equity securities where an active market does not exist are measured using comparable
company valuation multiples (such as price-to-book ratios).
Financial instruments classified as:
• Investment securities – debt or equity
Valuation techniques use comparable multiples (such as price-to-book ratios) or
discounted cashflow (DCF) techniques incorporating, to the extent possible, observable
inputs from instruments with similar characteristics.
There were no significant changes to valuation approaches during the current or prior periods.
c) Fair value hierarchy
The Group categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with AASB 13 based on the observability of
inputs used to measure the fair value:
• Level 1 - valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 - valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or
indirectly; and
• Level 3 - valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
There were no significant changes to levelling approaches during the current or prior periods.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
102
13. Fair value of financial assets and financial liabilities, cont’d
The following table presents financial assets and financial liabilities carried at fair value in accordance with the fair value hierarchy:
Fair value measurements
As at March 2024
Level 1
$M
Level 2
$M
Level 3
$M
Total
$M
Assets
Cash and cash equivalents (measured at fair value) - 23,064 - 23,064
Trading assets
1
29,315 13,126 1 42,442
Derivative financial instruments
228 47,226 27 47,481
Investment securities
1
87,121 21,651 1,383 110,155
Net loans and advances (measured at fair value)
- 23,428 599 24,027
Total
116,664 128,495 2,010 247,169
Liabilities
Deposits and other borrowings (designated at fair value) - 30,087 - 30,087
Derivative financial instruments
192 42,521 15 42,728
Payables and other liabilities
6,659 284 - 6,943
Debt issuances (designated at fair value)
- 1,747 - 1,747
Total
6,851 74,639 15 81,505
As at September 2023
Assets
Cash and cash equivalents (measured at fair value) - 27,566 - 27,566
Trading assets
1
26,388 10,614 2 37,004
Derivative financial instruments 935 59,448 23 60,406
Investment securities
1
71,356 16,924 1,397 89,677
Net loans and advances (measured at fair value) - 21,159 729 21,888
Total 98,679 135,711 2,151 236,541
Liabilities
Deposits and other borrowings (designated at fair value) - 33,889 - 33,889
Derivative financial instruments 218 57,241 23 57,482
Payables and other liabilities 4,841 426 - 5,267
Debt issuances (designated at fair value) - 1,336 - 1,336
Total 5,059 92,892 23 97,974
As at March 2023
Assets
Cash and cash equivalents (measured at fair value) - 24,708 - 24,708
Trading assets
1
26,593 13,017 1 39,611
Derivative financial instruments 315 45,275 24 45,614
Investment securities
1
68,176 16,421 1,463 86,060
Net loans and advances (measured at fair value) - 19,089 380 19,469
Total 95,084 118,510 1,868 215,462
Liabilities
Deposits and other borrowings (designated at fair value) - 31,328 - 31,328
Derivative financial instruments 765 45,363 26 46,154
Payables and other liabilities 3,572 1,161 - 4,733
Debt issuances (designated at fair value) - 1,531 - 1,531
Total 4,337 79,383 26 83,746
1.
During the March 2024 half, $2,435 million of assets were transferred from Level 1 to Level 2, (Sep 23: $3,624 million; Mar 23: $7,246 million), and $4,082 million of assets were transferred
from Level 2 to Level 1 (Sep 23: $1,452 million; Mar 23: $1,181 million) due to a change of the observability of bond valuation inputs. There were no other material transfers during the
period. Transfers into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
103
13. Fair value of financial assets and financial liabilities, cont’d
Fair Value Measurements Incorporating Unobservable Market Data
a) Level 3 fair value measurements
Level 3 financial instruments are a net asset of $1,995 million (Sep 23: $2,128 million; Mar 23: $1,842 million). The assets and liabilities which incorporate
significant unobservable inputs are:
• equity and debt securities for which there is no active market or traded prices cannot be observed;
• loans and advances measured at fair value for which there is no observable market data; and
• derivatives referencing market rates that cannot be observed primarily due to lack of market activity.
Level 3 Transfers
There were no transfers into or out of Level 3 during the period.
The material Level 3 financial instruments as at 31 March 2024 are summarised below:
i) Investment Securities - equity holdings classified as FVOCI
Bank of Tianjin (BoT)
The Group holds an investment in the Bank of Tianjin. The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is the
ratio of the market value of equity to the book value of equity). The extent of judgement applied in determining the appropriate multiple and comparator
group from which the multiple is derived resulted in the Level 3 classification. As at March 2024, the BoT equity holding balance was $848 million
(Sep 23: $849 million, Mar 23: $900 million).
Other equity investments
The Group holds $521 million (Sep 23: $535 million; Mar 23: $545 million) of unlisted equities classified as FVOCI, for which there are no active markets
or traded prices available, resulting in a Level 3 classification. The decrease in unlisted equity holdings balance was mainly due to downward revaluation
of the equity instruments during the March 2024 half.
ii) Net loans and advances - classified as FVTPL
Syndicated loans
The Group holds $599 million (Sep 23: $729 million; Mar 23: $380 million) of syndicated loans for sale which are measured at FVTPL for which there is
no observable market data available. The decrease in the Level 3 loan balances for the March 2024 half was mainly due to foreign currency translation
impacts as well as scheduled repayments.
b) Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs to a valuation not being directly observable (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameters used to derive the fair valuation.
Investment securities - equity holdings
The valuations of the equity investments are sensitive to variations in selected unobservable inputs, with valuation techniques used including P/B
multiples and discounted cashflow techniques. If for example, a 10% increase or decrease to the primary input into the valuations were to occur (such as
the P/B multiple), it would result in a $137 million increase or decrease in the fair value of the portfolio, which would be recognised in shareholders’ equity
in the Group, with no impact to net profit or loss.
Net loans and advances
Syndicated loan valuations are sensitive to credit spreads in determining their fair valuation. For the syndicated loans which are primarily investment-
grade loans, an increase or decrease in credit spreads would have an immaterial impact on net profit or net assets of the Group. For the remaining
syndicated loans, the Group may, where deemed necessary, utilise Credit Risk Insurance to mitigate the credit risks associated with those loans. The
effect of this would also result in an immaterial impact to the net profit or net assets of the Group.
Other
The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.
c) Deferred fair value gains and losses
Where fair value is determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately recognise
the difference between the transaction price and the amount determined based on the valuation technique (day one gain or loss) in profit or loss. After
initial recognition, the Group recognises the deferred amount in profit or loss on a straight-line basis over the life of the transaction or until all inputs
become observable. Day one gains and losses which have been deferred are not material.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
104
13. Fair value of financial assets and financial liabilities, cont’d
Financial Assets and Liabilities Not Measured at Fair Value
The financial assets and financial liabilities listed below are measured at amortised cost on the Group’s balance sheet. While this is the value at which we
expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of the financial assets and financial liabilities
at balance date in the table below.
Fair values of financial assets and liabilities carried at amortised cost not included in the table below approximate their carrying values. These financial
assets and liabilities are either short term in nature or are floating rate instruments that are re-priced to market interest rates on or near the end of the
reporting period.
Carrying amount in the balance sheet Fair value
As at March 2024
At amortised
cost
$M
At fair
value
$M
Total
$M
$M
Financial assets
Investment securities
1
7,900 110,155 118,055 118,053
Net loans and advances
691,144 24,027 715,171 714,284
Total
699,044 134,182 833,226 832,337
Financial liabilities
Deposits and other borrowings 776,650 30,087 806,737 806,542
Debt issuances
125,362 1,747 127,109 127,921
Total
902,012 31,834 933,846 934,463
As at September 2023
Financial assets
Investment securities
1
7,752 89,677 97,429 97,389
Net loans and advances 685,156 21,888 707,044 704,977
Total 692,908 111,565 804,473 802,366
Financial liabilities
Deposits and other borrowings 780,822 33,889 814,711 814,503
Debt issuances 114,678 1,336 116,014 115,989
Total 895,500 35,225 930,725 930,492
As at March 2023
Financial assets
Investment securities
1
7,912 86,060 93,972 93,958
Net loans and advances 670,618 19,469 690,087 687,457
Total 678,530 105,529 784,059 781,415
Financial liabilities
Deposits and other borrowings 811,236 31,328 842,564 842,215
Debt issuances 104,626 1,531 106,157 105,800
Total 915,862 32,859 948,721 948,015
1.
Investment securities at amortised cost includes $5,262 million of assets that are part of the Group’s liquidity portfolio (Sep 23: $4,558 million; Mar 23: $4,260 million). These are all short
tenor (<1 year) instruments primarily in the Group’s Rest of World geography and represent <2% of the Group’s total liquid asset securities at 31 March 2024.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
105
14. Shareholders’ equity
Shareholders' Equity
As at Movement
Shareholders' equity
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Ordinary share capital
29,033 29,082 29,054 0% 0%
Reserves
Foreign currency translation reserve
1
192 570 644 -66% -70%
Share option reserve
74 83 58 -11% 28%
FVOCI reserve
(590) (494) (412) 19% 43%
Cash flow hedge reserve
(1,120) (1,872) (1,287) -40% -13%
Transactions with non-controlling interests reserve
(22) (22) (22)
0% 0%
Total reserves
(1,466) (1,735) (1,019) -16% 44%
Retained earnings
42,739 42,148 41,020
1% 4%
Share capital and reserves attributable to shareholders of the Company
70,306 69,495 69,055 1% 2%
Non-controlling interests
768 522 525 47% 46%
Total shareholders' equity
71,074 70,017 69,580
2% 2%
1.
As a result of the closure of a number of international entities, the associated foreign currency translation reserve was recycled from Other comprehensive income to profit or loss, resulting
in a $20 million gain recognised in Other operating income in the March 2024 half (Sep 23 half: $43 million gain; Mar 23 half: nil).
Ordinary Share Capital
As at
Ordinary shares
Mar 24
No.
Sep 23
No.
Mar 23
No.
Opening balance
3,005,286,886 3,003,366,782 2,989,923,751
Bonus option plan
2,223,792 1,920,104 1,657,422
Dividend reinvestment plan issuances
- - 8,406,978
Employee share and option plans
- - 3,378,631
Closing balance
3,007,510,678 3,005,286,886 3,003,366,782
Less: Treasury shares
(5,572,694) (4,044,925) (4,099,015)
Closing balance
3,001,937,984 3,001,241,961 2,999,267,767
Non-Controlling Interests
Profit attributable to
non-controlling interests
Equity attributable to
non-controlling interests
Dividend paid to
non-controlling interests
Half Year As at Half Year
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
$M
Sep 23
$M
Mar 23
$M
ANZ Bank New Zealand PPS
1
13 13 13 757 512 515 13 13 13
Other non-controlling interests
1 1 1 11 10 10 - 1 -
Total
14 14 14 768 522 525 13 14 13
1.
On 19 March 2024, ANZ Bank New Zealand Limited issued $256 million (NZD 275 million) of PPS.
ANZ Bank New Zealand Perpetual Preference Shares
Perpetual Preference Shares (PPS) issued by ANZ Bank New Zealand Limited (ANZ Bank New Zealand), a member of the Group, are considered non-
controlling interests of the Group.
The key terms of the PPS are as follows:
PPS dividends
Holders of PPS are entitled to receive dividends that are discretionary, non-cumulative and subject to conditions. If a PPS dividend is not paid, there are
certain restrictions on the ability of the Bank to pay a dividend on its ordinary shares. Holders of the PPS have no other rights to participate in the profits
or property of ANZ Bank New Zealand.
Redemption features
Holders of PPS have no right to require that the PPS be redeemed. ANZ Bank New Zealand may, at its option, redeem PPS on an optional redemption
date (being each scheduled quarterly dividend payment date from the first optional redemption date), or at any time following the occurrence of a tax
event or regulatory event, subject to prior written approval of RBNZ and certain other conditions being met.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
106
15. Changes in composition of the Group
There were no acquisitions or disposals of material controlled entities for the half year ended 31 March 2024.
16. Investments in associates
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Share of associates' profit/(loss) 84 120 101 -30% -17%
Contributions to profit
Contribution to
Group profit after tax
Ownership interest
held by Group
Associates
Half Year As at
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
%
Sep 23
%
Mar 23
%
P.T. Bank Pan Indonesia (PT Panin)
31 67 56 39 39 39
AMMB Holdings Berhad (AmBank)
1
65 58 63 5 22 22
Worldline Australia Pty Ltd
(12) (4) (17) 49 49 49
Other associates
- (1) (1) n/a n/a n/a
Share of associates' profit/(loss)
84 120 101
1.
On 6 March 2024, the Group partially disposed of its interest in AmBank, reducing its investment by $668 million and its ordinary share interest from 22% to 5%. Following the decrease in
ownership, the Group ceased equity accounting for AmBank and reclassified the investment of $221 million as Investment securities at fair value through other comprehensive income.
17. Related party disclosure
There have been no transactions with related parties that are significant to understanding the changes in financial position and performance of the Group
since 30 September 2023.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
107
18. Commitments, contingent liabilities and contingent assets
Credit Related Commitments and Contingencies
Half Year
Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Contract amount of:
Undrawn facilities
239,898 240,711 243,975 0% -2%
Guarantees and letters of credit
23,390 23,556 23,090 -1% 1%
Performance related contingencies
26,932 26,615 26,259 1% 3%
Total
290,220 290,882 293,324 0% -1%
Other 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.
Refer to Note 34 of the 2023 ANZGHL Annual Financial Report for a description of commitments, contingent liabilities and contingent assets as at
30 September 2023. A description of the contingent liabilities and contingent assets as at 31 March 2024 is set out below.
Other Contingent Liabilities
• Regulatory and customer exposures
The Group regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities 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 in recent years 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, privacy obligations and information security, business continuity management, 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.
• South African rate action
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including ANZBGL
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.
• Capital raising action
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against ANZBGL alleging
failure to comply with continuous disclosure obligations in connection with ANZBGL’s August 2015 underwritten institutional share placement. In
October 2023, the Federal Court of Australia found that ANZBGL should have notified the ASX of the joint lead managers’ take-up of placement
shares. A civil penalty of $0.9 million was imposed on ANZBGL. In December 2023, ANZBGL lodged a Notice of Appeal from the decision of the
Federal Court of Australia.
• Esanda dealer car loan litigation
In August 2020, a class action was brought against ANZBGL alleging unfair conduct, misleading or deceptive conduct and equitable mistake in
relation to the use of flex commissions in dealer arranged Esanda car loans. ANZBGL is defending the allegations.
• OnePath superannuation litigation
In December 2020, a class action was brought against OnePath Custodians, OnePath Life and ANZBGL 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 ANZBGL was involved in some of OnePath Custodians’ investment breaches. ANZBGL 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.
• Credit cards litigation
In November 2021, a class action was brought against ANZBGL alleging that certain interest terms in credit card contracts were unfair contract terms
and that it was unconscionable for ANZBGL to rely on them. An agreement to settle the claim was reached in March 2024. ANZBGL will pay
$57.5 million in the settlement, which is covered by an existing provision. The settlement is without admission of liability and remains subject to court
approval.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
108
18. Commitments, contingent liabilities and contingent assets, cont’d
• 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, indemnities and performance management fees
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, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.
The Group has entered an arrangement to pay performance management fees to external fund managers in the event predetermined performance
criteria are satisfied in relation to certain Group investments. The satisfaction of the performance criteria and associated performance management
fee remains uncertain.
• 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
Certain group companies have issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under
these letters and guarantees, the issuing entity undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to
certain conditions including that the subsidiary remains a controlled entity.
• Sale of Grindlays business
On 31 July 2000, ANZBGL completed the sale to Standard Chartered Bank of ANZ Grindlays Bank Limited (Grindlays) and certain other businesses.
ANZBGL provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings 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.
Contingent Assets
• National Housing Bank
ANZBGL 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 ANZBGL and NHB.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
109
19. Pending organisational changes impacting future reporting periods
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding company
of Suncorp Bank. On 20 February 2024, the Australian Competition Tribunal announced it had authorised the proposed acquisition following the decision
in August 2023 by the Australian Competition and Consumer Commission to not authorise the acquisition. The acquisition remains subject to satisfaction
of certain conditions, including Federal Treasurer approval and certain amendments to the State Financial Institutions and Metway Merger Act 1996
(QLD). ANZBGL will also have a termination right under the Suncorp Bank Sale Agreement if APRA issues a written communication to ANZBGL under or
in connection with APS 222 Associations with Related Entities to the effect that ANZBGL must not proceed with completion of the acquisition. Assuming
these conditions are satisfied, the acquisition is expected to occur in mid-calendar year 2024.
20. Significant events since balance date
There have been no significant events from 31 March 2024 to the date of signing this report.
DIRECTORS’ DECLARATION
110
Directors’ Declaration
The Directors of ANZ Group Holdings Limited declare that:
1. in the Directors’ opinion the Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements are in
accordance with the Corporations Act 2001, including:
• section 304, that they comply with the Australian Accounting Standards and any further requirements in the Corporations Regulations 2001;
and
• section 305, that they give a true and fair view of the financial position of the Group as at 31 March 2024 and of its performance for the half
year ended on that date; and
2. in the Directors’ opinion as at the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
Signed in accordance with a resolution of the Directors.
Paul D O’Sullivan Shayne C Elliott
Chairman Managing Director
6 May 2024
AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION
111
Independent Auditor’s Review Report to the shareholders of ANZ Group Holdings Limited
Conclusion
We have reviewed the accompanying Condensed Consolidated Financial Statements of ANZ Group Holdings Limited (the Group).
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Condensed Consolidated Financial
Statements of ANZ Group Holdings Limited do not comply with the Corporations Act 2001, including:
• giving a true and fair view of the Group’s financial position as at 31 March 2024 and of its performance for the half year ended on that date; and
• complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
The Condensed Consolidated Financial Statements comprise:
• The condensed consolidated balance sheet as at 31 March 2024;
• The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statement
of changes in equity, and condensed consolidated cash flow statement for the half year ended on that date;
• Notes 1 to 20 including selected explanatory notes; and
• The Directors’ Declaration.
The Group comprises ANZ Group Holdings Limited (the Company) and the entities it controlled at the half year’s end or from time to time during the half
year.
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity and ISRE
2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the
Auditor’s Responsibilities for the Review of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements
of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the annual report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with these requirements.
Responsibilities of the Directors for the Condensed Consolidated Financial Statements
The Directors of the Company are responsible for:
• the preparation of the Condensed Consolidated Financial Statements that give a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001; and
• such internal control as the Directors determine is necessary to enable the preparation of the Condensed Consolidated Financial Statements that
give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility for the review of the Condensed Consolidated Financial Statements
Our responsibility is to express a conclusion on the Condensed Consolidated Financial Statements based on our review. ASRE 2410 and ISRE 2410
require us to conclude whether we have become aware of any matter that makes us believe that the Condensed Consolidated Financial Statements do
not comply with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 March 2024 and its performance
for the half year ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.
A review of Condensed Consolidated Financial Statements consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
KPMG
Maria Trinci
Partner
Melbourne
6 May 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All right reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION
112
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of ANZ Group Holdings Limited
I declare that, to the best of my knowledge and belief, in relation to the review of ANZ Group Holdings Limited for the half year ended 31 March 2024,
there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and
(ii) no contraventions of any applicable code of professional conduct in relation to the review.
KPMG
Maria Trinci
Partner
Melbourne
6 Ma
y 2024
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All right reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a
scheme approved under Professional Standards Legislation.
SUPPLEMENTARY INFORMATION
113
CONTENTS Page
Capital management 114
Average balance sheet and related interest 118
Select geographical disclosures 121
Exchange rates 122
SUPPLEMENTARY INFORMATION
114
Capital management
ANZ provides information as required under APRA’s prudential standard APS 330: Public Disclosure. This information is located in the Regulatory
Disclosures section of ANZ’s website: https://www.anz.com/shareholder/centre/reporting/regulatory-disclosure/.
The disclosures below represent the position for ANZ BH Pty Ltd as the head of ANZ’s Level 2 banking group. The capital position for ANZGHL, the head
of the Level 3 conglomerate group, is outlined on page 37.
As at
Movement
Qualifying Capital
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Tier 1
Shareholders' equity and non-controlling interests
70,202 69,085 68,596 2% 2%
Prudential adjustments to shareholders' equity Table 1
(648) (396) (329) 64% 97%
Gross Common Equity Tier 1 capital
69,554 68,689 68,267 1% 2%
Deductions Table 2 (11,142) (10,895) (10,887) 2% 2%
Common Equity Tier 1 capital
58,412 57,794 57,380 1% 2%
Additional Tier 1 capital Table 3 8,297 8,232 8,184 1% 1%
Tier 1 capital
66,709 66,026 65,564 1% 2%
Tier 2 capital Table 4 28,223 24,959 24,068 13% 17%
Total qualifying capital
94,932 90,985 89,632 4% 6%
Capital adequacy ratios (Level 2)
Common Equity Tier 1 13.5% 13.3% 13.2%
Tier 1
15.4% 15.2% 15.1%
Tier 2
6.5% 5.8% 5.5%
Total capital ratio
21.9% 21.0% 20.6%
Risk weighted assets Table 5
432,779 433,327 435,514 0% -1%
SUPPLEMENTARY INFORMATION
115
Capital management, cont’d
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Table 1: Prudential adjustments to shareholders' equity
Shareholders' equity attributable to deconsolidated entities
(225) (253) (233) -11% -3%
Deferred fee revenue including fees deferred as part of loan yields
409 430 453 -5% -10%
Non-controlling interests and other deductions
(832) (573) (549) 45% 52%
Total
(648) (396) (329) 64% 97%
Table 2: Deductions from Common Equity Tier 1 capital
Unamortised goodwill & other intangibles (excluding ANZ New Zealand
Investments Holdings Ltd)
(2,936) (2,977) (2,994) -1% -2%
Intangible component of investments in ANZ New Zealand Investments
Holdings Ltd
(69) (71) (71) -3% -3%
Capitalised software
(902) (913) (868) -1% 4%
Capitalised expenses (including loan and lease origination fees)
(2,240) (2,099) (1,874) 7% 20%
Applicable deferred net tax assets
(2,716) (2,579) (2,461) 5% 10%
Expected losses in excess of eligible provisions Table 8
(282) (272) (39) 4% large
Investment in other insurance subsidiaries
(225) (225) (284) 0% -21%
Investment in ANZ New Zealand Investments Holdings Ltd
(45) (46) (45) -1% 0%
Investment in associates
(1,405) (2,321) (2,214) -39% -37%
Other equity investments
(1,168) (925) (973) 26% 20%
Cash flow hedge reserve and other deductions
846 1,533 936 -45% -10%
Total
(11,142) (10,895) (10,887) 2% 2%
Table 3: Additional Tier 1 capital
ANZ Capital Notes 4
- 1,621 1,620 large large
ANZ Capital Notes 5
930 929 929 0% 0%
ANZ Capital Notes 6
1,490 1,489 1,488 0% 0%
ANZ Capital Notes 7
1,299 1,298 1,297 0% 0%
ANZ Capital Notes 8
1,484 1,483 1,482 0% 0%
ANZ Capital Notes 9
1,678 - - n/a n/a
ANZ Capital Securities
1,434 1,412 1,380 2% 4%
Regulatory adjustments and deductions
(18) - (12) n/a 50%
Total
8,297 8,232 8,184 1% 1%
`
Table 4: Tier 2 capital
General reserve for impairment of financial assets
1,609 1,776 1,781 -9% -10%
Term subordinated debt notes
26,754 23,707 22,797 13% 17%
Regulatory adjustments and deductions
(140) (524) (510) -73% -73%
Total
28,223 24,959 24,068 13% 17%
SUPPLEMENTARY INFORMATION
116
Capital management, cont’d
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Table 5: Risk weighted assets
On balance sheet
277,535 272,493 269,191 2% 3%
Commitments
41,424 47,701 45,944 -13% -10%
Contingents
11,800 12,260 14,227 -4% -17%
Derivatives
17,688 16,587 15,932 7% 11%
Total credit risk weighted assets Table 6
348,447 349,041 345,294 0% 1%
Market risk - Traded 11,863 10,264 11,737 16% 1%
Market risk - IRRBB
26,200 31,703 31,887 -17% -18%
Operational risk
43,274 42,319 42,319 2% 2%
Total risk weighted assets
429,784 433,327 431,237 -1% 0%
RWA adjustment for the IRB capital floor 2,995 - 4,277 n/a -30%
Total risk weighted assets including floor adjustment 432,779 433,327 435,514 0% -1%
As at Movement
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Table 6: Credit risk weighted assets by Basel asset class
Subject to Advanced IRB approach
Corporate
60,362 62,668 62,680
-4% -4%
Residential mortgage
101,338 96,290 86,726
5% 17%
Retail SME
9,538 9,684 10,065
-2% -5%
Qualifying revolving retail
3,344 3,243 3,325
3% 1%
Other retail
1,664 1,644 1,709
1% -3%
Credit risk weighted assets subject to Advanced IRB approach
176,246 173,529 164,505
2% 7%
Credit risk weighted assets subject to supervisory slotting approach
3,579 3,369 3,577
6% 0%
Subject to Foundation IRB approach
Corporate
35,665 34,819 38,808
2% -8%
Sovereign
10,856 10,252 11,199
6% -3%
Financial institution
30,122 30,875 32,832
-2% -8%
Credit risk weighted assets subject to Foundational IRB approach
76,643 75,946 82,839
1% -7%
Subject to Standardised approach
Corporate
5,102 5,611 4,911
-9% 4%
Sovereign
171 165 88
4% 94%
Residential mortgage
1,853 2,065 1,809
-10% 2%
Other retail
92 44 32
large large
Other assets
3,790 3,255 4,138
16% -8%
Credit risk weighted assets subject to Standardised approach
11,008 11,140 10,978
-1% 0%
Credit Valuation Adjustment and Qualifying Central Counterparties
5,304 4,000 3,449
33% 54%
Exposures of New Zealand banking subsidiaries
73,186 78,662 77,717
-7% -6%
Credit risk weighted assets relating to securitisation exposures
2,481 2,395 2,229
4% 11%
Total credit risk weighted assets
348,447 349,041 345,294
0% 1%
SUPPLEMENTARY INFORMATION
117
Capital management, cont’d
Collectively and Individually
Assessed Provision
Basel Expected Loss
1
Table 7: Total provision for credit impairment and Basel expected loss
by division
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
$M
Sep 23
$M
Mar 23
$M
Australia Retail 1,009 1,017 1,017
939 855 824
Australia Commercial
1,171 1,168 1,182
651 631 657
Institutional
1,546 1,551 1,580
960 957 814
New Zealand
580 600 590
622 579 515
Pacific
65 72 91
15 16 17
Group Centre
- - 1
1 1 2
Total provision for credit impairment and expected loss
4,371 4,408 4,461
3,188 3,039 2,829
1.
Only applicable to IRB portfolios.
As at Movement
Table 8: APRA Expected loss in excess of eligible provisions
Mar 24
$M
Sep 23
$M
Mar 23
$M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
APRA Basel 3 expected loss: non-defaulted 2,014 1,902 1,875 6% 7%
Less: Qualifying collectively assessed provision
Collectively assessed provision (4,046) (4,032) (4,040) 0% 0%
Non-qualifying collectively assessed provision
423 354 384 19% 10%
Standardised collectively assessed provision
137 131 141 5% -3%
Non-defaulted excess included in deduction
- - - n/a n/a
APRA Basel 3 expected loss: defaulted 1,174 1,137 954 3% 23%
Less: Qualifying individually assessed provision
Individually assessed provision (325) (376) (421) -14% -23%
Additional individually assessed provision for partial write offs
(186) (181) (181) 3% 3%
Standardised individually assessed provision
31 31 44 0% -30%
Collectively assessed provision on IRB defaulted
(412) (339) (357) 22% 15%
282 272 39 4% large
Shortfall in expected loss not included in deduction - - - n/a n/a
Defaulted excess included in deduction
282 272 39 4% large
Gross deduction 282 272 39 4% large
SUPPLEMENTARY INFORMATION
118
Average balance sheet and related interest
1
Mar 24 Half Year Sep 23 Half Year Mar 23 Half Year
Avg bal Int Rate Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M % $M $M %
Loans and advances
Home loans
2
364,372 12,117 6.7% 353,166 10,599 6.0% 344,016 8,730 5.1%
Consumer finance
3
12,718 539 8.5% 12,309 516 8.4% 12,320 493 8.0%
Business lending
4,5
287,245 9,354 6.5% 285,084 9,360 6.5% 293,374 8,500 5.8%
Individual provisions for credit impairment
(353) - n/a (390) - n/a (457) - n/a
Total
5
663,982 22,010 6.6% 650,169 20,475 6.3% 649,253 17,723 5.5%
Non-lending interest earning assets
Cash and other liquid assets 198,112 4,072 4.1% 199,013 3,720 3.7% 196,798 2,712 2.8%
Trading and investment securities
5
152,962 3,724 4.9% 127,409 2,875 4.5% 126,358 2,393 3.8%
Other assets
565 5 n/a 584 2 n/a 563 4 n/a
Total
5
351,639 7,801 4.4% 327,006 6,597 4.0% 323,719 5,109 3.2%
Total interest earning assets
6
1,015,621 29,811 5.9% 977,175 27,072 5.5% 972,972 22,832 4.7%
Non-interest earning assets
2
147,375 138,155 139,344
Total average assets 1,162,996 1,115,330 1,112,316
Interest bearing deposits and other borrowings
Certificates of deposit
45,046 1,064 4.7% 44,616 935 4.2% 41,710 674 3.2%
Term deposits
263,285 6,595 5.0% 245,976 5,712 4.6% 226,515 3,998 3.5%
On demand and short term deposits
7
311,662 6,536 4.2% 307,908 5,700 3.7% 317,740 4,268 2.7%
Deposits from banks and securities sold under agreement to
repurchase
103,459 2,323 4.5% 102,873 2,107 4.1% 103,137 1,677 3.3%
Commercial paper and other borrowings
47,677 1,310 5.5% 33,938 958 5.6% 43,553 883 4.1%
Total
771,129 17,828 4.6% 735,311 15,412 4.2% 732,655 11,500 3.1%
Non-deposit interest bearing liabilities
Collateral received and settlement balances owed by ANZ 22,486 324 2.9% 18,093 317 3.5% 22,349 271 2.4%
Debt issuances & subordinated debt
115,969 3,202 5.5% 107,461 2,750 5.1% 96,609 2,082 4.3%
Other liabilities
13,220 558 n/a 10,509 519 n/a 9,293 479 n/a
Total
151,675 4,084 5.4% 136,063 3,586 5.3% 128,251 2,832 4.4%
Total interest bearing liabilities
6
922,804 21,912 4.7% 871,374 18,998 4.3% 860,906 14,332 3.3%
Non-interest bearing liabilities
7
169,309 175,260 183,799
Total average liabilities 1,092,113 1,046,634 1,044,705
Total average shareholders' equity 70,883 68,696 67,611
1.
Averages used are predominantly daily averages.
2.
Home loans are reported net of average mortgage offset balances of $46,560 million (Sep 23: $43,923 million; Mar 23: $43,799 million), which are included in non-interest earning assets.
While these balances are required to be grossed up under accounting standards, they are netted down for the calculation of customer interest payments and the calculation of the Group’s
net interest margin.
3.
Consumer finance includes retail products such as credit cards and personal loans, mainly held in the Australia Retail division.
4.
Business lending includes commercial loans to small and mid-sized enterprises, in the Australia Commercial and New Zealand divisions, as well as larger corporate customers in the
Institutional division.
5.
During the current period, a component of interest previously included in Business lending was reallocated to Trading and investment securities to better align with the average balance
allocation. Comparative information has been restated to conform to presentation in the current period reducing interest in Business lending by $451 million in the September 2023 half and
$353 million in the March 2023 half with a corresponding increase in interest in Trading and investment securities.
6.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
7.
On demand and short-term deposits exclude average mortgage offset balances of $46,560 million (Sep 23: $43,923 million; Mar 23: $43,799 million), which are included in non-interest
bearing liabilities.
SUPPLEMENTARY INFORMATION
119
Average balance sheet and related interest
1
, cont’d
Mar 24 Half Year Sep 23 Half Year Mar 23 Half Year
Avg bal Int Rate Avg bal Int Rate Avg bal Int Rate
$M $M % $M $M % $M $M %
Loans and advances
2
Australia
449,835 14,793 6.6% 434,528 13,469 6.2% 432,682 11,721 5.4%
New Zealand
3
139,952 4,664 6.7% 138,008 4,336 6.3% 136,061 3,651 5.4%
Rest of World
4
74,195 2,553 6.9% 77,633 2,670 6.9% 80,510 2,351 5.9%
Total
663,982 22,010 6.6% 650,169 20,475 6.3% 649,253 17,723 5.5%
Trading assets and investment securities
Australia 78,777 1,858 4.7% 61,789 1,352 4.4% 62,933 1,151 3.7%
New Zealand
3
16,727 444 5.3% 17,041 427 5.0% 16,606 344 4.2%
Rest of World
4
57,458 1,422 4.9% 48,579 1,096 4.5% 46,819 898 3.8%
Total
152,962 3,724 4.9% 127,409 2,875 4.5% 126,358 2,393 3.8%
Total interest earning assets
5
Australia 628,133 19,021 6.1% 596,787 16,962 5.7% 595,274 14,358 4.8%
New Zealand
170,005 5,494 6.5% 167,445 5,129 6.1% 166,510 4,290 5.2%
Rest of World
217,483 5,296 4.9% 212,943 4,981 4.7% 211,188 4,184 4.0%
Total
1,015,621 29,811 5.9% 977,175 27,072 5.5% 972,972 22,832 4.7%
Total average assets
Australia
716,218 674,203 664,826
New Zealand
182,716 180,746 181,272
Rest of World
264,062 260,381 266,218
Total average assets
1,162,996 1,115,330 1,112,316
Interest bearing deposits and other borrowings
6
Australia
450,686 10,220 4.5% 421,540 8,538 4.0% 415,469 6,202 3.0%
New Zealand
117,591 2,794 4.8% 113,210 2,440 4.3% 111,000 1,708 3.1%
Rest of World
202,852 4,815 4.7% 200,561 4,434 4.4% 206,186 3,590 3.5%
Total
771,129 17,829 4.6% 735,311 15,412 4.2% 732,655 11,500 3.1%
Total interest bearing liabilities
5
Australia 562,945 13,275 4.7% 519,192 11,115 4.3% 504,444 8,137 3.2%
New Zealand
137,306 3,403 5.0% 134,551 3,075 4.6% 132,847 2,268 3.4%
Rest of World
222,553 5,234 4.7% 217,631 4,808 4.4% 223,615 3,927 3.5%
Total
922,804 21,912 4.7% 871,374 18,998 4.3% 860,906 14,332 3.3%
Total average liabilities
Australia
656,885 617,283 599,344
New Zealand
163,322 161,797 163,248
Rest of World
271,906 267,554 282,113
Total average liabilities
1,092,113 1,046,634 1,044,705
Total average shareholders' equity
Ordinary share capital, reserves, retained earnings and non-
controlling interests
70,883 68,696 67,611
Total average shareholders' equity
70,883 68,696 67,611
Total average liabilities and shareholders' equity 1,162,996 1,115,330 1,112,316
1.
Averages used are predominantly daily averages.
2.
Home loans are reported net of average mortgage offset balances of $46,560 million (Sep 23: $43,923 million; Mar 23: $43,799 million), which are included in non-interest earning assets.
While these balances are required to be grossed up under accounting standards, they are netted down for the calculation of customer interest payments and the calculation of the Group’s
net interest margin.
3.
During the current period, a component of interest in New Zealand previously included in Loans and advances was reallocated to Trading and investment securities to better align with the
average balance allocation. Comparative information has been restated to conform to presentation in the current period reducing interest in Loans and advances by $148 million in the
September 2023 half and $116 million in the March 2023 half with a corresponding increase in interest in Trading and investment securities.
4.
During the current period, a component of interest in Rest of World previously included in Loans and advances was reallocated to Trading and investment securities to better align with the
average balance allocation. Comparative information has been restated to conform to presentation in the current period reducing interest in Loans and advances by $303 million in the
September 2023 half and $237 million in the March 2023 half with a corresponding increase in interest in Trading and investment securities.
5.
Intra-group interest earning assets and interest income and Intra-group interest earning liabilities and interest expense have been eliminated.
6.
On demand and short-term deposits exclude average mortgage offset balances of $46,560 million (Sep 23: $43,923 million; Mar 23: $43,799 million), which are included in non-interest
bearing liabilities.
SUPPLEMENTARY INFORMATION
120
Average balance sheet and related interest, cont’d
Half Year
Gross earnings rate
1
Mar 24
%
Sep 23
%
Mar 23
%
Australia
6.20 5.79 5.03
New Zealand
6.46 6.11 5.17
Rest of World
5.23 5.03 4.20
Group
5.87 5.53 4.71
Net interest spread and net interest margin analysis as follows:
Half Year
Australia
1
Mar 24
%
Sep 23
%
Mar 23
%
Net interest spread
1.21 1.26 1.51
Interest attributable to net non-interest bearing items
0.42 0.51 0.42
Net interest margin - Australia
1.63 1.77 1.93
New Zealand
1
Net interest spread
1.48 1.52 1.71
Interest attributable to net non-interest bearing items
0.86 0.81 0.65
Net interest margin - New Zealand
2.34 2.33 2.36
Rest of World
1
Net interest spread
0.52 0.62 0.68
Interest attributable to net non-interest bearing items
0.26 0.21 0.19
Net interest margin - Rest of World
0.78 0.83 0.87
Group
Net interest spread
1.12 1.18 1.37
Interest attributable to net non-interest bearing items
0.44 0.47 0.38
Net interest margin
1.56 1.65 1.75
Net interest margin (excluding Markets) 2.33 2.35 2.43
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
121
Select geographical disclosures
The following divisions operate across the geographic locations illustrated below:
• Australia Retail division - Australia
• Australia Commercial division - Australia
• Institutional division - Australia, New Zealand and Rest of World
• Pacific division – Rest of World
• New Zealand division - New Zealand
• Group Centre division - Australia, New Zealand and Rest of World
The Rest of World geography includes all geographies in which the Group operates outside of Australia and New Zealand. This includes Asia, Pacific,
Europe & America.
Australia
$M
New Zealand
$M
Rest of World
$M
Total
$M
March 2024 Half Year
Statutory profit/(loss) attributable to shareholders of the Company 1,819 964 624 3,407
Cash profit/(loss)
1,871 1,073 608 3,552
Net loans and advances
502,745 138,647 73,779 715,171
Customer deposits
389,967 124,156 126,967 641,090
Risk weighted assets
275,841 88,058 68,880 432,779
September 2023 Half Year
Statutory profit/(loss) attributable to shareholders of the Company 1,989 1,047 515 3,551
Cash profit/(loss) 2,013 1,068 503 3,584
Net loans and advances 488,859 139,286 78,899 707,044
Customer deposits 378,388 123,368 145,363 647,119
Risk weighted assets 268,405 94,446 70,476 433,327
March 2023 Half Year
Statutory profit/(loss) attributable to shareholders of the Company 1,862 922 771 3,555
Cash profit/(loss) 2,059 1,018 752 3,829
Net loans and advances 473,874 138,044 78,169 690,087
Customer deposits 369,574 122,008 157,045 648,627
Risk weighted assets 262,828 95,936 76,750 435,514
New Zealand geography (in NZD)
Half Year
Movement
Mar 24
NZD M
Sep 23
NZD M
Mar 23
NZD M
Mar 24
v. Sep 23
Mar 24
v. Mar 23
Net interest income 2,142 2,112 2,127
1% 1%
Other operating income
382 411 363
-7% 5%
Operating income
2,524 2,523 2,490
0% 1%
Operating expenses (859) (850) (809)
1% 6%
Cash profit before credit impairment and income tax
1,665 1,673 1,681
0% -1%
Credit impairment (charge)/release (33) (62) (121)
-47% -73%
Cash profit before income tax
1,632 1,611 1,560
1% 5%
Income tax expense and non-controlling interests (477) (456) (453)
5% 5%
Cash profit
1,155 1,155 1,107
0% 4%
Adjustments between statutory profit and cash profit (117) (22) (105)
large 11%
Statutory profit
1,038 1,133 1,002
-8% 4%
Individually assessed credit impairment charge/(release) 3 37 23
-92% -87%
Collectively assessed credit impairment charge/(release)
30 25 98
20% -69%
Net loans and advances
151,167 149,627 147,423
1% 3%
Customer deposits
135,367 132,528 130,297
2% 4%
Risk weighted assets
96,005 101,458 102,449
-5% -6%
Total FTE
7,185 7,244 7,252
-1% -1%
SUPPLEMENTARY INFORMATION
122
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
Mar 24 Sep 23 Mar 23 Mar 24 Sep 23 Mar 23
Chinese Renminbi 4.7035 4.7265 4.6079 4.7167 4.7137 4.6763
Euro
0.6040 0.6112 0.6158 0.6054 0.6076 0.6409
Pound Sterling
0.5157 0.5286 0.5419 0.5216 0.5255 0.5618
Indian Rupee
54.256 53.723 55.188 54.403 54.530 55.069
Indonesian Rupiah
10,331 10,017 10,051 10,235 9,952 10,315
Japanese Yen
98.515 96.409 89.280 96.880 93.079 91.664
Malaysian Ringgit
3.0773 3.0319 2.9598 3.0822 3.0262 3.0018
New Taiwan Dollar
20.829 20.876 20.425 20.702 20.632 20.696
New Zealand Dollar
1.0903 1.0742 1.0679 1.0761 1.0814 1.0877
Papua New Guinean Kina
2.4549 2.3692 2.3634 2.4413 2.3598 2.3589
United States Dollar
0.6508 0.6468 0.6712 0.6543 0.6615 0.6699
DEFINITIONS
123
AASB means Australian Accounting Standards Board. The term ‘AASB’ is commonly used when identifying Australian Accounting Standards issued by
the AASB.
ADI means Authorised Deposit-taking Institution as defined by APRA.
ANZ Bank Group means ANZ BH Pty Ltd and each of its subsidiaries, including ANZBGL and ANZ Bank New Zealand.
ANZBGL means Australia and New Zealand Banking Group Limited.
ANZBGL Group means ANZBGL and each of its subsidiaries.
ANZ Bank New Zealand means ANZ Bank New Zealand Limited.
ANZ Economics means 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.
ANZGHL means ANZ Group Holdings Limited.
ANZGHL Group means ANZGHL and each of its subsidiaries, including ANZ BH Pty Ltd, ANZBGL, ANZ Group Services Pty Ltd and ANZ NBH Pty Ltd.
ANZ Non-Bank Group means ANZ NBH Pty Ltd and each of its subsidiaries, including ANZ’s beneficial interests in the 1835i trusts and non-controlling
interests in the Worldline merchant acquiring joint venture, and ANZ Group Services Pty Ltd.
APRA means Australian Prudential Regulation Authority.
APS means ADI Prudential Standard.
ASX means Australian Securities Exchange.
AT1 means Additional Tier 1 capital.
Board means ANZGHL Board of Directors.
BOP means Bonus Option Plan.
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, which incorporates forward-looking information and
does not require an actual loss event to have occurred for a credit loss provision to be recognised.
Company means ANZGHL.
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 (credit RWA) 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.
Dividend payout ratio is the total ordinary dividend payment divided by profit attributable to shareholders of the Company.
DRP means dividend reinvestment plan.
Embedded losses - In relation to interest rate risk in the banking book, APRA requires ADIs to give consideration to embedded gains or losses in
banking book items that are not accounted for on a marked-to-market basis when determining regulatory capital. The embedded loss or gain measures
the difference between the book value and the economic value of banking book activities at a point in time.
Expected credit losses (ECL) – The determination of the ECL is dependent on credit deterioration since origination, according to the following three-
stage approach:
- Stage 1: At the origination of a financial asset, and subsequently where there has not been a Significant Increase in Credit Risk (SICR) since
origination, an allowance for ECL is recognised reflecting the expected credit losses resulting from default events that are possible within the next 12
months from the reporting date. For instruments with a remaining maturity of less than 12 months, expected credit losses are estimated based on
default events that are possible over the remaining time to maturity.
- Stage 2: Where there has been a SICR since origination, an allowance for ECL is recognised reflecting expected credit losses resulting from all
possible default events over the expected life of a financial instrument. If credit risk were to improve in a subsequent period such that the increase in
credit risk since origination is no longer considered significant, the exposure returns to a Stage 1 classification with ECL measured accordingly.
- Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Exposure at default (EAD) means the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest.
DEFINITIONS
124
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.
GDP means gross domestic product.
Group means ANZGHL and each of its subsidiaries, including ANZ BH Pty Ltd, ANZBGL, ANZ Group Services Pty Ltd and ANZ NBH Pty Ltd.
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.
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.
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 Basel Calculation of RWA for credit risk regulations (effective 1 Jan 2023) documented in
the Basel Framework and the ‘Australian Banking Association Basel 3.1 Capital Comparison Study’ (Mar 2023). This definition is for measures from
March 2023 onwards.
IRB means internal ratings-based.
Probability of default (PD) means the estimate of the likelihood that a borrower will default over a given period.
Level 1 in the context of APRA supervision, means ANZBGL consolidated with certain approved subsidiaries.
Level 2 in the context of APRA supervision, means consolidated ANZ Bank Group, excluding insurance and funds management entities, commercial
non-financial entities and certain securitisation vehicles.
Level 3 in the context of APRA supervision, means ANZ Group, the conglomerate group at the widest level.
Loss given default (LGD) means the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility's EAD,
taking into account direct and indirect recovery costs.
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).
NZX means New Zealand’s Exchange.
RBA means Reserve Bank of Australia, Australia’s central bank.
RBNZ means 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.
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 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
125
Description of divisions
The Group operates on a divisional structure with six divisions: Australia Retail, Australia Commercial, Institutional, New Zealand, Pacific, and Group
Centre.
Australia Retail
The Australia Retail division provides a full range of banking services to Australian consumers. This includes Home Loans, Deposits, Credit Cards and
Personal Loans. Products and services are provided via the branch network, home loan specialists, contact centres, a variety of self-service channels
(digital and internet banking, website, ATMs and phone banking) and third-party brokers. It also includes the costs related to the development and
operation of the ANZ Plus proposition for retail customers.
Australia Commercial
The Australia Commercial division provides a full range of banking products and financial services, including asset financing, across the following
customer segments: SME Banking (small business owners and medium commercial customers), and Specialist Business (large commercial customers,
and high net worth individuals and family groups). It also includes run-off and divested businesses (Central Functions).
Institutional
The Institutional division services institutional and corporate customers, and governments across Australia, New Zealand and International (including
PNG) 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.
• 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.
• Central Functions consists of enablement functions that help deliver payments services, operational support and digital capability across both the
Institutional division and the wider enterprise.
New Zealand
The New Zealand division comprises the following business units:
• Personal 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 & Agri provides a full range of banking services 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.
• Central Functions includes Treasury and back-office support functions.
Pacific
The Pacific division provides products and services to retail and commercial customers (including multi-nationals) and to governments located in the
Pacific region excluding PNG which forms part of the Institutional division.
Group Centre
Group Centre division provides support to the operating divisions, including technology, property, risk management, financial management, treasury,
strategy, marketing, human resources, corporate affairs, and shareholder functions. It also includes minority investments in Asia and interests in the ANZ
Non-Bank Group.
ASX APPENDIX 4D - CROSS REFERENCE INDEX
126
Page
Details of the reporting period (4D Item 1) ............................................................................................................................................................................. 2
Results for Announcement to the Market (4D Item 2) ............................................................................................................................................................ 2
Net Tangible Assets per security (4D Item 3) ....................................................................................................................................................................... 11
Details of entities over which control has been gained or lost (4D Item 4) ......................................................................................................................... 106
Dividends and dividend dates (4D Item 5) ............................................................................................................................................................................. 2
Dividend Reinvestment Plan (4D Item 6) ............................................................................................................................................................................... 2
Details of associates and joint venture entities (4D Item 7) ................................................................................................................................................ 106
---
News Release
For Release: 7 May 2024
2024 Half Year Result & Proposed Dividend
$3,407m
Statutory Profit
after tax
-4% vs 2H23
10.1%
Cash RoE
-42bps vs 2H23
83c
Total dividend
per share
+2% vs 2H23
1
$3,552m
Cash
2
Profit
-1% vs 2H23
118.3c
Cash EPS
-1% vs 2H23
• ANZ today announced a Statutory Profit after tax for the half year ended 31 March 2024
of $3,407 million. Cash Profit was $3,552 million, down 1% on the previous half.
• ANZ’s Common Equity Tier 1 Ratio increased to 13.5% and Cash Return on Equity
excluding capital retained to purchase Suncorp Bank was 10.7%.
3
• The proposed Interim Dividend is 83 cents per share (cps), partially franked at 65%.
• ANZ intends to buy-back up to $2 billion of shares on-market as part of its capital
management plan.
CEO COMMENTARY
4
ANZ Chief Executive Officer Shayne Elliott said: “This half’s strong performance is a direct
consequence of peer-leading diversification as well as our disciplined focus on productivity and
delivery.
“Coming off a record 2023, each division delivered for the Group and we’ve made good progress
on the things we said we would: preparing for the integration of Suncorp Bank, growing ANZ
Plus, leveraging our Institutional processing platforms, and further driving productivity.
“Our preparations to integrate Suncorp Bank are well advanced. While the time taken to progress
the necessary approvals has taken longer than anticipated, we have used that time productively
and we are more confident than ever about the benefits that will follow.
“Our flagship digital offering, ANZ Plus, has grown to almost 690,000 customers and approaching
$14 billion in deposits at the end of April – and we have just introduced the ability to create joint
accounts. Net promoter scores are consistently higher than our peers, while attracting on
average 35,000 customers every month, around half of which are new to the bank.
“ANZ Plus is already having an impact on the financial wellbeing of customers, with around 47%
using at least one of our financial wellbeing features and the introduction of controls to better
protect customers from scams.
1
Excludes the additional dividend of 13 cents per share at 2H23
2
Cash Profit excludes non-core items included in Statutory Profit with the net after tax adjustment an increase to Statutory Profit of $145 million
3
Pro forma adjusting for Suncorp Bank acquisition capital
4
All commentary is presented on a Cash Profit basis with growth rates compared with the 2H23 unless otherwise stated
2
“Our Institutional payment platforms business is a clear differentiator with the facilitation of
around $164 trillion in payments each year. As a result, payments revenue for the half was up
4%, while international payments grew 8.5% year on year. We further extended our leadership
in this space, becoming the first major bank to go live with a natively built, API-enabled, PayTo
service for billers in Australia.
“Our diversification continues to serve us well. In a world where retail banking in Australia and
New Zealand is more competitive than ever, our International business performed strongly, with
revenue up 16% for the half. We also continued to further simplify the bank, including completing
the partial sale of our stake in Malaysia’s AmBank, releasing $668 million in capital, which will
be returned to shareholders via our $2 billion on market share buy-back.
“Across the Group, we continued to invest in the franchise while maintaining a disciplined
approach to costs, unlocking $200 million of savings through productivity measures during the
half. These initiatives delivered simpler, more robust processes that will have enduring benefits
for the bank. This included further automation across home loan application processing and
simplifying our technology.
“Finally, this strong financial performance means we have never been better placed to support
customers doing it tough. While generally they have remained resilient, we know there are many
who are challenged by rising cost-of-living and my message to them is that we are here ready
and willing to help them navigate through this challenging period,” Mr Elliott said.
DIVISIONAL PERFORMANCE
5
Division Cash Profit RoE
6
Drivers and Commentary
Australia
Retail
$794 million
-9%
11% • Above system home loan growth with pricing above
cost of capital.
• Customer deposits up 5%. ANZ Plus deposits, now
representing 8% of total retail deposits, up 39%.
• Low credit impairments reflect resilience of customer
franchise.
Australia
Commercial
$665 million
-5%
25% • Strong balance sheet growth with lending up 4% and
deposits up 3%.
• Australia Commercial contributing 24% of total group
when including commercial customer revenue
booked in other divisions.
Institutional $1,522 million
+12%
15% • 27% increase in Markets income driven by higher
customer activity and favourable trading conditions.
Strongest first half performance since FY17.
• International profit up 19% demonstrating benefit of
globally diversified business.
New Zealand NZ$852 million
+2%
16% • Moderate balance sheet growth with lending up 1%
and deposits up 2%, despite challenging economic
conditions.
• 90 day arrears up 18% across the half with
individual loss rate remaining low at 2bps.
5
Half on half comparison
6
Australia Retail, Australia Commercial, Institutional & New Zealand represent 75% of Group capital with the balance of capital held in Pacific and Group
Centre (including Asia Partnerships, Suncorp Bank acquisition and Non Bank Group). Australia Retail RoE excludes ANZ Plus investment spend. NZ RoE based
on NZD.
3
CREDIT QUALITY
The total credit impairment charge for the first half was $70 million, comprising:
• a collectively assessed provision (CP) charge of $32 million.
• an individually assessed provision (IP) charge of $38 million.
The CP charge takes our total CP balance at 31 March 2024 to $4,046 million.
DIVIDEND & CAPITAL
ANZ Banking Group’s capital position remains strong, with a Common Equity Tier 1 (CET1) Ratio
of 13.5%, an increase of 16 basis points since September 2023. This includes capital being held
for the proposed acquisition of Suncorp Bank.
The Board has proposed an Interim Dividend of 83 cps, partially franked at 65%.
ANZ intends to buy back up to $2 billion of shares on-market as part of its capital management
plan, reflecting our strong capital position and the benefits of the partial sale of our share in
AmBank. The on-market buy-back is expected to reduce ANZ’s CET1 Ratio by approximately 46
basis points.
SUNCORP BANK
In July 2022, ANZ announced an agreement to acquire Suncorp Bank to accelerate the growth
of our Australia Retail and Commercial businesses and improve our geographic balance. In
February this year the Australian Competition Tribunal authorised the proposed acquisition.
Completion remains subject to approval from the Federal Treasurer and the amendment of the
Metway Merger Act. Preparations to integrate Suncorp Bank into ANZ Group are well-advanced,
subject to these conditions being met.
FURTHER COMMENTS
Mr Elliott said: “Both the domestic and international environments are expected to remain
challenging across the remainder of the year. The Australian and New Zealand economies are
likely to remain subdued, while geopolitical tensions, electoral uncertainty and the introduction
of interventionist trade and industry policies will continue internationally.
“Despite these conditions, we are well positioned with the diversity of our businesses, prudent
management, and the strength of our customers holding us in good stead. In fact, our work to
build a well-managed, de-risked and diversified bank, coupled with our unique international
presence, means we are well placed to succeed in this environment.
“Our priorities for the remainder of the year are clear. We’ll continue to run the Group prudently
and drive productivity; grow customers on ANZ Plus and deepen their engagement; complete
the acquisition of Suncorp Bank; extend our leadership in Institutional processing platforms; and
invest more in Commercial,” Mr Elliott said.
4
GROUP FINANCIAL INFORMATION
Earnings ($m) 1H24 2H23 Movement
Statutory Profit After Tax 3,407 3,551 -4%
Cash Profit 3,552 3,584 -1%
Profit before Credit Impairment & Tax 5,132 5,223 -2%
Earnings Per Share (cents) 118.3 119.5 -1%
Return on Equity 10.1% 10.5% -42bps
Return on Average Assets 0.61% 0.64% -3bps
Net Tangible Assets per ordinary share ($) 22.05 21.77 28 cents
Dividend per share (cents) 83 81
7
+2%
Credit Provision Charge ($m) 1H24 2H23 Movement
Total Provision Charge / (release) 70 112 -38%
Individual Provision Charge / (release) 38 123 -69%
Collective Provision Charge / (release) 32 (11) large
Balance Sheet ($b) Mar-24 Sep-23 Movement
Gross Loans and Advances (GLAs) 718.7 710.6 +1%
Total Risk Weighted Assets (RWAs) 432.8 433.3 0%
Customer Deposits 641.1 647.1 -1%
Common Equity Tier 1 Ratio (CET1) 13.5% 13.3% +16bps
Other Mar-24 Sep-23 Movement
Full Time Equivalent staff 40,262 40,342 0%
Interviews with relevant executives, including Shayne Elliott, can be found at
bluenotes.anz.com.
For media enquiries contact:
Lachlan McNaughton
Head of Media Relations
Tel: +61 457 494 414
Amanda Schultz
Media & Public Relations Manager
Tel: +61 401 532 325
For analyst enquiries contact:
Jill Campbell
Group General Manager, Investor Relations
Tel: +61 412 047 448
Cameron Davis
Executive Manager, Investor Relations
Tel: +61 421 613 819
Approved for distribution by ANZ’s Continuous Disclosure Committee
ANZ Group Holdings Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 16 659 510 791
7
Excludes the additional dividend of 13 cents per share at 2H23
---
2024 HALF YEAR
HALF YEAR ENDED 31 MARCH 2024
RESULTS PRESENTATION AND INVESTOR DISCUSSION PACK
RESULTS
7 M AY 2 0 24
Approved for distribution by ANZ’s Continuous Disclosure Committee
ANZ Group Holdings Limited ABN 16 659 510 791
9/833 Collins Street Docklands Victoria 3008 Australia
ANZ 2024 Half Year Results
1
CONTENTS
Results Presentations 3
Chief Executive Officer (CEO)3
Chief Financial Officer (CFO)
17
Investor Discussion Pack31
Group Performance
31
Divisional Performance
43
Treasur y
71
Risk Management
83
Housing Portfolio
101
Corporate Profile
112
Environment, Social & Governance – Climate
123
Environment, Social & Governance –Targets, Housing and Financial Wellbeing
135
Shareholder Centre & Investor Relations Contacts141
ANZ 2024 Half Year Results
2
IMPORTANT INFORMATION – FORWARD-LOOKING STATEMENTS
The material in this presentation contains general background information about the Group’s activities current as at 6 May 2024. 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.
This presentation may contain forward-looking statements or opinions including statements regarding our intent, belief or current expectations with respect to
the Group’s business operations, market conditions, results of operations and financial condition, capital adequacy, sustainability objectives or targets, specific
provisions and risk management practices. When used in the presentation, the words ‘forecast’, ‘estimate’, 'goal', 'target', 'indicator', 'plan', 'pathway', ‘ambition’,
‘modelling’, ‘project’, ‘intend’, ‘anticipate’, ‘believe’, ‘expect’, ‘may’, ‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’, ‘could’, ‘should’ and similar expressions, as they relate to the
Group 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 Actof 1995. The Group 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.
It also contains climate-related statements. Those statements should be read with the important notices in relation to the uncertainties, challenges and risks
associated with climate-related information included at the end of this presentation pack
.
2024 HALF YEAR
RESULTS
SHAYNE ELLIOTT
CHIEF EXECUTIVE OFFICER
ANZ 2024 Half Year Results
4
Our purpose
is to shape a world where
people and communities
thrive
ANZ 2024 Half Year Results
5
1.Pro forma adjusting for Suncorp Bank acquisition capital
2.Australia & New Zealand Banking Group Limited
3.Pro forma adjusting for Suncorp Bank acquisition, $2b share buyback and surplus NOHC capital
FINANCIAL PERFORMANCE
Revenue
$b
Net Tangible Assets
NTA / Share, $
Returns
Cash Return on Equity, %
Capital Strength
APRA Level 2 CET1 Ratio
2
, %
20.57
20.64
21.65
22.05
Mar 21Mar 22Mar 23Mar 24
Strong
first half results
Consolidation and delivery
Diversification
served us well
Momentum across
all 4 divisions
Progressed where we
said we would
Suncorp Bank, ANZ Plus,
Platforms, Productivity
Delivered
productivity gains
Funding a record proportion of
growth-oriented investment
Focused on
supporting customers
Fortress balance sheet, diverse
portfolio, proven team
12.4
11.5
13.2
13.5
Mar 21Mar 22Mar 23Mar 24
Mar 24 pro forma
3
11.8
9.7
10.0
1H211H22
12.2
1H23
10.7
1H24
11.4
10.1
8.42
8.95
10.54
10.35
1H211H221H231H24
Ex Suncorp Bank capital
1
11.4
10.1
ANZ 2024 Half Year Results
6
1.12-month period to March 24
SUPPORTING OUR CUSTOMERS
Investing in new security measures and capabilitiesProtecting our systems, services and customer data
Education
Delivered new personalised
education resources for
customers
Prevention
Prevented the loss of
>$100m to cyber criminals
1
Analysis
>10b data events analysed
daily through our Security
Operations Centre
Blocking
>12.5m attacks blocked each
month against our customer
facing services
Helping protect customers & community from threat of scams &
financial crime
Resilient customer services with layers of defenceto protect our systems,
services & data
ANZ Falcon®ANZ’s trusted fraud detection and prevention technology
Real-time monitoringBehavioural analysisMulti-layered fraud
prevention
Continuously evolving
detection
ANZ 2024 Half Year Results
7
1.Franked at 65%
2.Excludes the additional dividend of 13 cents per share at 2H23
1H24 FINANCIAL RESULTS
1H24vs 1H23 (PCP)vs 2H23 (HoH)
Statutory profit, $m3,407-4%-4%
Cash Profit basis, $m
Revenue10,347-2%Flat
Expenses5,2154%1%
Cash Profit3,552-7%-1%
Return on equity, %10.1%-133bps-42bps
Earnings per share - basic, cents118.3-8%-1%
Dividend per share
1
, cents83+2 cents+2 cents
2
NTA per share, $22.05+40 cents+28 cents
APRA Level 2 CET1 ratio, %13.5+32bps+16bps
Collective Provision balance, $m4,046+$6m+$14m
ANZ 2024 Half Year Results
8
1.Australia Retail, Australia Commercial, Institutional & New Zealand represent 75% of Group capital with the balance of capital held in Pacific and Group Centre (including Asia Partnerships, Suncorp Bank acquisition and Non Bank Group). Australia
Retail ROE excludes ANZ Plus investment spend. NZ ROE based on NZD
PORTFOLIO DIVERSIFICATION
1.3
1.5
2.7
2.9
1H21
1.6
1.6
2.6
3.0
1H22
1.8
1.8
3.4
3.3
1H23
1.7
1.8
3.6
2.9
1H24
8.4
8.8
10.3
10.0
Revenue contribution –4 major divisions, $b
Revenue
change
(1H24 vs 1H21)
ROE
1
(1H24)
Australia Commercial+32%~25%
New Zealand+19%~16%
Institutional+34%~15%
Australia Retail-1%~11%
2.4 incl. Commercial
customer revenue booked
in other divisions
ANZ 2024 Half Year Results
9
FY24 PRIORITIES
Grow ANZ Plus
customers, deepen
engagement
Continue to run the
Group prudently
Invest more in
Commercial strategy
Complete the acquisition
of Suncorp Bank
Further improve
productivity
Invest to build and sustain
contemporary digital
capabilities
ANZ 2024 Half Year Results
10
GROWING ANZ PLUS CUSTOMERS, DEEPENING ENGAGEMENT
ANZ Plus customers and deposits, cumulative
0
100
200
300
400
500
600
700
0
2
4
6
8
10
12
14
Sep 22Dec 22Mar 23Jun 23Sep 23Dec 23Mar 24
Total depositsCustomers
Customers, ‘000s
Deposits, $b
A diverse customer base
Up to
age 24
20%
25-34
24%
35-49
26%
50+
30%
Total customers by age group, Mar 24
ANZ 2024 Half Year Results
11
1.% of New to Bank Customers (Monthly) as a % of total customers joining in the month
2.Number of customers and % of total customers that have used a FWB feature –goals, card controls, roundups, etc
3.ANZ Plus deposit costs only. Cost to serve based on variable costs including distribution, operations and product costs
GROWING ANZ PLUS CUSTOMERS, DEEPENING ENGAGEMENT
Mar 23Sep 23Mar 24
35%
45%
51%
More attractive
New to bank customers
1
Customers engaged with a financial wellbeing (FWB) feature
2
More efficient
More engaging
More secure
55k
57k
83k
Mar 23Sep 23Mar 24
PayIDregistrations
Cost to acquire
3
Cost to serve
3
83k
211k
308k
Mar 23Sep 23Mar 24
-3%
45% lower
than ANZ
37%
46%
47%
30% lower
than ANZ
-16%
Sep 23Mar 24Sep 23Mar 24
ANZ 2024 Half Year Results
12
Payments
1
1.Number of payments
2.Subset of total payments
3.Total deposit balances in Australian virtual clientmonies accounts
FURTHER ENHANCING PLATFORMS
Client monies
3
,
171
295
320
341
1H211H221H231H24
+7%
Direct Integration Payments
1,2
Mar 21Mar 22Mar 23Mar 24
2.49
3.67
3.88
3.96
+2%
8
15
20
24
1H211H221H231H24
+20%
Real Time Payments
1,2
64
99
124
138
1H211H221H231H24
+11%
mm
NPP Agency, m
Platform Cash Mgt, $b
ANZ 2024 Half Year Results
13
1.1H24 vs FY23
INVESTING IN TECHNOLOGIES DRIVING PRODUCTIVITY IMPROVEMENTS
Applications hosted on Cloud
Productivity gains are funding a record proportion of growth-oriented investment, allocationof total Group investment spend
Mar 22Mar 23Mar 24
24%
37%
48%
% of total production apps
Improved outcomes for Home Loan customers
Rework per new application, Indexed data
100
79
76
FY22FY231H24
-24%
Pre-assessment (document handling)
processing time
10%
32%
58%
Asset Lifecycle Management
Regulatory, Compliance & Risk
Growth, Productivity & Simplification
13%
32%
55%
6%
47%
47%
1H20
1H221H24
15x faster
1
at 99%
accuracy
ANZ 2024 Half Year Results
14
Structurally well positionedDiversified portfolio, unique global network
Purpose led culture & peopleHighly engaged workforce
Appropriate customer portfolioCareful customer selection
Robust balance sheet
Strong capital, provisions & funding
Highly liquid balance sheet
De-risked portfolioRe-shaped through exits & other decisions
WELL POSITIONED FOR THE ENVIRONMENT
29%
25%
7%
40%
40%
9%
10%
14%
21%
Sep 16
3%
Mar 24
Other
Sovereigns
Banks & FIs
Housing
Retail
Corporate
Change in portfolio composition
EAD $b
ANZ 2024 Half Year Results
15
1.$500m+ projects
MAJOR PROJECT PIPELINE ESTIMATED TO EXCEED $100B BY 2026
Australian major
1
project pipeline by sector, $b
0
20
40
60
80
100
120
20-2121-2222-2323-24f24-25f25-26f
Source: Federal, state and territory budgets; Department of Industry, Science, Energy and Resources; Bloomberg New Energy Finance; Deloitte Access Economics; ANZ Research
Oil and gasHospitalsOtherRoadsCommunicationsMiningElectricityRail
ANZ 2024 Half Year Results
16
FY24 PRIORITIES
Grow ANZ Plus
customers, deepen
engagement
Continue to run the
Group prudently
Invest more in
Commercial strategy
Complete the acquisition
of Suncorp Bank
Further improve
productivity
Invest to build and sustain
contemporary digital
capabilities
2024 HALF YEAR
RESULTS
FARHAN FARUQUI
CHIEF FINANCIAL OFFICER
ANZ 2024 Half Year Results
18
Financial performance
1H24vs 2H23
Cash EPS, cents
118-1 cent
Cash ROE, %
1
10.1-42bps
Cash ROTE, %
1
10.7-46bps
Customer Deposits (Avg), $b
664+3%
Gross Loans & Adv. (Avg), $b
714+2%
Balance Sheet strength
1H24vs 2H23
Collective Provision, $b
4.0Stable
CET1 Capital Ratio
2
, %13.5+16bps
Term Wholesale Funding issuance
3
, $b21-
NSFR, %
118+2%
LCR (avg), %
134+2%
1.Cash ROE pro forma adjusting for Suncorp Bank acquisition capital was 10.7%; Cash ROTE pro forma adjusting for Suncorp Bank acquisition capital was 11.4%
2.Australia & New Zealand Banking Group Ltd
3.Additional $3b of FY24 pre-funding undertaken in FY23
FINANCIAL PERFORMANCE SUMMARY
Financial Performance, $m
3,113
3,402
3,829
3,584
3,552
4,157
4,811
5,543
5,223
5,132
1H222H221H232H231H24
Profit Before ProvisionsCash profit
ANZ 2024 Half Year Results
19
-0.2%
+0.5%
10,365
10,422
10,347
254
2H23Net Interest
Income
1
Divisional
Other Op.
Income
1,2
Other
1,3
Markets
Income
1H24
(ex
divestments/
business
closures)
Impact of
divestments/
business
closures
4
1H24
-91
-61
-45
-75
1.Excludes Markets income (Markets Business Unit)
2.Excludes impacts of divestments / business closures
3.Includes lower equity accounted earnings
4.Captures impacts of transactions in 1H24 including the wind down of American Territories and sale of AmBank (-$21m) and transactions in 2H23 including UDC gain and other business closures
GROUP OPERATING INCOME
Total Operating Income drivers, $mTotal Operating Income, $m
7,483
8,336
8,054
7,963
1,361
1,055
1,353
1,172
755
1,149
958
1,212
2H221H232H231H24
9,599
10,540
10,365
10,347
Markets income
Other Operating Income
1
Net Interest Income
1
Includes loss
on sale of
AmBank -21
ANZ 2024 Half Year Results
20
Sep 23Australia RetailAustralia CommercialInstitutionalNew ZealandMar 24
704.5
10.1
2.3
-3.3
1.6715.2
LOANS AND DEPOSITS
Net Loans and Advances, $b FX Adj
Sep 23Australia RetailAustralia CommercialInstitutional (ex Markets)New ZealandMar 24
644.3
7.5
3.1
-2.1
2.2655.0
+3%+4%-2%
+1%
NZD
+5%+3%-1%
+2%
NZD
Customer Deposits ex Markets, $b FX Adj
Comprising of 1% growth in At Call Deposits
and 8% decline in Term Deposits
ANZ 2024 Half Year Results
21
3,370
3,314
3,508
3,975
4,277
4,060
4,026
4,029
4,026
3,938
2.09%
2.07%
2.15%
2.38%
2.47%
2.39%
2.36%
2.34%
2.33%
2.32%
1Q222Q223Q224Q221Q232Q233Q234Q231Q242Q24
1.Excluding Markets Business Unit
GROUP NET INTEREST INCOME
Net Interest Income (NII) excluding Markets
1
, $m
Net Interest Income ex MarketsNIM ex Markets
Days
92909192929091929291
ANZ 2024 Half Year Results
22
GROUP NET INTEREST MARGIN (NIM)
Group NIM movements (prior to Markets activities impact), bps
165
163
3
-4
00
-1
2H23Assets pricingDeposits pricingAssets and
funding mix
Capital and
replicating portfolio
Wholesale funding1H24 ex Markets
activities impact
Incl -3 Housing
(Aus/ NZ)
Increased rate
partially offset
by reduced
volume
Prior period
(2H23 vs 1H23)
-7+1-2+3-1-6
-2bps
ANZ 2024 Half Year Results
23
MARKETS INCOME
381
407
370
394
111
158
189
232
80
118
112
76
125
30
53
2H221H23
35
2H231H24
575
757
670
869
+30%
Foreign Exchange
Rates
Commodities
Credit and Capital Markets
617
478
590
575
757
670
869
1H212H211H222H221H232H231H24
1,040
931
812
755
1,149
958
1,212
+27%
Customer Franchise Income,$m
Customer FranchiseBalance Sheet and Derivative Val/n Adj.
Total Markets Income,$m
+5%
+15%
ANZ 2024 Half Year Results
24
165
163
156
2H23Underlying
movement
1H24 ex
Markets
activities
impact
Markets
activities
1H24
-2
-7
1.No significant increase in Markets average RWA in 1H24 notwithstanding increase in Markets AIEA
GROUP NET INTEREST MARGIN - ACCOUNTING FOR MARKETS INCOME
Group NIM, bps
Markets Avg. Interest Earning Assets (AIEA)
1
, % of Group AIEA
2H221H232H231H24
28.4%
29.3%
30.0%
32.6%
291
1,276
464
985
938
2H22
164
1H23
20
2H23
-64
1H24
755
1,149
958
1,212
Net Interest IncomeOther Operating Income
Markets Income composition, $m
Rate impact (-2bps):
primarilyCustomer
Franchise, funding costs
recognisedin NII
associated revenue in OOI
Mix impact (-5bps):
growth in Markets AIEA
1
relative to total Group AIEA,
ANZ 2024 Half Year Results
25
5,149
5,215
252
96
2H23 FX Adj.Wage & vendor
inflation
1
Strategic initiativesOtherProductivityInitial
CSLR Levy
1H24
-41
-201
-40
1.Includes increase in employee leave provisions
OPERATING EXPENSES
Total Operating Expenses, $m
Incl. Cloud
and ANZ
Plus run
costs
Incl.
seasonal
factors
+1%
ANZ 2024 Half Year Results
26
0
200
400
600
800
1,000
1,200
1,400
1,600
FY19FY20FY21FY22FY231H24
PRODUCTIVITY
Cumulative productivity savings, $m
1H24 sustainable productivity savings by category
Technology services$62m
Technology estate simplification through ongoing migration of applications to the Cloud,
software vendor consolidation, automation of engineering processes, lower network costs
Enablement, Other$59m
Head office optimisation across enablement functions
Customer service & distribution $36m
Digitisation enabling self-service adoption, automation of messaging interactions,
distribution network optimisation, streamlining credit processes
Product management$29m
Middle office workforce optimisation, increasing use of Group Capability Centres,
increasing online communications
Banking services / Transaction processing$15m
Automation of customer onboarding, home loan process automation, improving
workflow and decision making, system rationalisation
Largest impact from
productivity in a half
ANZ 2024 Half Year Results
27
1.Source: Loss rate data sourced from publicly available company financials. Peer bank categorisationof losses between IP and CP has been aligned to ANZ’s approach to aid comparability
2.EAD excludes amounts for the ‘Securitisation’ Basel class, as per APS330. Data provided is on a Post CRM basis, net of creditrisk mitigation such as guarantees, credit derivatives, netting and financial collateral
CREDIT QUALITY
Individual Provision Loss Rate
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
FY16FY17FY18FY19FY20FY21FY22FY231H24
ANZPeer 1Peer 2Peer 3
Individual Provision Charge (IP) / Average Gross Loans & Advances
1
, %
894
903
944
977
1,010
1,080
1,152
1,163
1,151
39
37
36
37
36
32
31
3030
Sep 16Sep 17Sep 18Sep 19Sep 20Sep 21Sep 22Sep 23Mar 24
Risk intensity (CRWA / EAD), %Exposure at Default, $b
10
15
20
25
30
35
Sep 16Sep 17Sep 18Sep 19Sep 20Sep 21Sep 22Sep 23Mar 24
Internal Expected Loss, bps
Total Exposures and Risk intensity
2
ANZ 2024 Half Year Results
28
1.Subset of a range of economic indicators shown. Economic forecasts also undertaken for international markets
2.12 months to December Year on Year change
3.Annual average: 12 months to December
4.The Downside Scenario is specified in terms of an index of economic stress. The economic variables shown represent a characterisationof the scenario to facilitate comparison
5.Residential property prices
CREDIT QUALITY
Collective Provision Balance, $b
100%
upside
100%
base case
100%
downside
100%
severe
1.35
1.93
3.28
10.00
1.79
1.51
0.73
Sep 23
1.93
1.59
0.53
Mar 24
4.03
4.05
100% Base caseScenario & weightsAdditional overlays
Scenario weightingsBase caseDownsideSevere
Mar 24
46%41%13%
Sep 23
46%41%13%
Impacts of economic scenarios
4
AustraliaNew Zealand
DownsideSevereDownsideSevere
GDPLowest over 3 years-1.1%-2.8%-1.3%-2.8%
UnemploymentPeak next 2 years6.8%10.5%6.8%8.7%
Property prices
5
Peak to trough drop-14%-48%-23%-52%
Base case forecasts
1
AustraliaNew Zealand
CY2024CY2025CY2024CY2025
Australia
GDP change
2
1.3%2.0%0.9%1.3%
Unemployment rate
3
4.1%4.3%4.5%5.3%
Residential property pricechange
2
5.7%5.0%3.0%5.0%
ANZ 2024 Half Year Results
29
13.34
13.50
11.85
0.83
0.15
0.04
Sep 23Cash
Profit
Underlying
R WA
(ex FX)
Net
dividend
Partial
sale of
AmBank
Capital
deduct.
& Others
Mar 24Suncorp
Bank
acquisition
Share
Buyback
Surplus
NOHC
Capital
Mar
24 pro
forma
-0.12
-0.64
-0.06
-1.23
-0.46
1.Additional $3b of FY24 pre-funding undertaken in FY23
CAPITAL, FUNDING & LIQUIDITY
APRA Level 2 Common Equity Tier 1 (CET1) Ratio, %
118
134
NSFR (Mar 24)LCR (1H24 avg)
100%
15
2
4
Senior Unsec.
Covered Bonds
Tier 2
NSFR & LCR Ratios, %
Wholesale funding, 1H24 issuance
1
ANZ 2024 Half Year Results
30
1.Excluding AmBank $21m loss on sale
2.1H24 ROE. Australia Retail, Australia Commercial, Institutional & New Zealand represent 75% of Group capital with the balanceofcapital held in Pacific and Group Centre (including Asia Partnerships, Suncorp Bank acquisition and Non Bank Group).
Australia Retail ROE excludes ANZ Plus investment spend. NZ ROE based on NZD
KEY MESSAGES
Strong
1H24 results
Consolidation and delivery
Diversification
served us well
Momentum across all 4 divisions
Progressed where we
said we would
Suncorp Bank, ANZ Plus,
Platforms, Productivity
Delivered
productivity gains
Funding a record proportion of
growth-oriented investment
Focused on
supporting customers
Fortress balance sheet, diverse
portfolio, proven team
118%
134%
NSFRLCR
(1H24 avg)
13.5%
CET1
CP
Balance
$4b
Financial performance
$m
Revenue contribution
4 major divisions, $b
Productivity savings
Cumulative from FY19, $b
Balance Sheet strength
Mar 24
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
FY19FY22FY231H24
1.8
1.8
3.3
3.1
2H23
1.7
1.8
3.6
2.9
1H24
10.0
10.0
3,584
3,573
3,552
5,223
5,153
5,132
2H231H24
(Ex AmBank)
1
1H24
Profit Before Provisions
Cash profit
Aus. Retail
Instit.
NZ
Aus. Comm.
0
100
200
300
400
500
600
700
0
2
4
6
8
10
12
14
Sep 22Mar 23Sep 23Mar 24
Customers (# ’000 LHS)
Total deposits ($b RHS)
ANZ Plus progress
Cumulative
ROE
2
25%
16%
15%
11%
2024 HALF YEAR
RESULTS
INVESTOR DISCUSSION PACK
GROUP PERFORMANCE
ANZ 2024 Half Year Results
32
SHAREHOLDER RETURNS
Dividend Per Share (DPS),centsCash Dividend Payout Ratio (DPOR), %Earnings Per Share (EPS),cents
70
72
81
83
72
74
94
FY21FY22FY23FY24
142
146
175
Final DPSInterim DPS
105
110
128
118
113
119
120
FY21FY22FY23FY24
218
229
247
Final EPSInterim EPS
67
65
64
70
63
65
79
FY21FY22FY23FY24
65%
65%
71%
DPORFinal DPORInterim DPOR
ANZ 2024 Half Year Results
33
1.Gross interest income and other operating income, net of credit impairment charges and non-controlling interests
SUPPORTING OUR STAKEHOLDERS
68%
6%
5%
11%
9%
1%
Our customers &
fixed income investors
Paying interest to our customers and
domestic and offshore debt investors,
enabling us to provide lending and
related services to our customers
Our people
Employing over 40,000 staff, paying salaries and
investing in their skills
Our shareholders
Paying dividends to superannuation funds and
other equity investors and increasing equity to
reinvest in the company’s future
Our suppliers and other partners
Technology, property and other products and
services to help support our customers
Government
Payingtaxes and Major Bank Levy,
supporting our broader community
Our customers & debt investorsOur peopleOur suppliers and other partnersIncome taxMajor bank levyShareholders
Distribution
of 1H24
Revenue
1
ANZ 2024 Half Year Results
34
1.EAD excludes amounts for ‘Securitisation’, and for ‘Other assets’ prior to March 2023 (included from March 2023 due to the implementation of APRA’s new capital framework). EAD data provided is on a Post CRM basis, net of credit risk mitigation
such as guarantees, credit derivatives, netting and financial collateral”
BALANCE SHEET COMPOSITION
Risk Weighted Assets, EOP $bExposure At Default
1
, EOP $bCustomer Deposits, EOP $bNet Loans & Advances, EOP $b
2%
13%
46%
12%
28%
Sep 22
4%
16%
42%
11%
27%
Mar 23
3%
16%
40%
11%
30%
Sep 23
4%
15%
40%
11%
30%
Mar 24
455
436
433
433
1%
15%
42%
18%
24%
Sep 22
1%
15%
43%
17%
24%
Mar 23
1%
15%
41%
18%
25%
Sep 23
0%
16%
39%
18%
27%
Mar 24
620
649
647
641
7%
12%
45%
6%
29%
Sep 22
8%
12%
45%
6%
29%
Mar 23
6%
12%
46%
6%
30%
Sep 23
6%
12%
44%
6%
32%
Mar 24
1,152
1,193
1,163
1,151
Australia RetailAustralia CommercialInstitutionalNew ZealandOther
0%
17%
31%
9%
43%
Sep 22
0%
17%
30%
9%
44%
Mar 23
0%
17%
30%
9%
44%
Sep 23
0%
17%
29%
9%
45%
Mar 24
672
690
707
715
ANZ 2024 Half Year Results
35
NET LOANS AND ADVANCES
Australia Commercial, $bAustralia Retail, $bInstitutional, $bNew Zealand, NZDb
6
284
Sep 22
6
295
Mar 23
6
306
Sep 23
6
316
Mar 24
290
301
312
322
+3%
2
20
38
Sep 22
1
20
39
Mar 23
1
21
40
Sep 23
0
22
42
Mar 24
60
60
62
64
+4%
26
2
101
Sep 22
25
1
102
Mar 23
25
1
105
Sep 23
24
2
107
Mar 24
129
128
131
133
+1%
145
41
21
Sep 22
148
41
19
Mar 23
145
45
20
Sep 23
143
45
18
Mar 24
207
208
210
206
-2%
Home Loans
Cards, Personal Loans & Other
SME Banking
Specialist Business
Central Functions
Home Loans
Other Personal
Business
Corporate Finance
Markets
Transaction Banking
ANZ 2024 Half Year Results
36
1.Excluding Markets Business Unit
CUSTOMER DEPOSITS
Australia Commercial, $bAustralia Retail, $bInstitutional, $bNew Zealand, NZDb
26
23
22
21
65
62
65
67
16
27
33
37
43
44
45
47
Sep 22Mar 23Sep 23Mar 24
150
156
165
172
+5%
30
29
26
26
61
57
57
57
21
2733
Sep 22Mar 23
30
Sep 23Mar 24
112
113
113
116
+2%
44
41
39
22
22
21
38
42
46
49
Sep 22Mar 23Sep 23
21
39
Mar 24
104
105
106
109
+3%
117
103
106
107
38
46
46
43
106
128
113
98
2
Sep 22
1
Mar 23
1
Sep 23
1
Mar 24
263
278
266
249
-6%
Transact
Savings
Term Deposits
Offset
Transact
Savings
Term DepositsTransact
Savings
Term DepositsPayments & Cash Mgmt
Term Deposits
1
Markets
Other
ANZ 2024 Half Year Results
37
TOTAL OPERATING INCOME
Total Income,$bOther Operating Income, $bNet Interest Income,$b
0.2
1.8
3.4
1.8
3.3
1H23
0.4
1.8
3.3
1.8
3.1
2H23
0.3
1.8
3.6
1.7
2.9
1H24
10.5
10.410.3
Australia Retail
Australia Commercial
Institutional
New Zealand
Other
0.2
1.6
2.1
1.6
3.0
1H23
0.2
1.6
2.0
1.6
2.7
2H23
0.2
1.6
1.9
1.6
2.6
1H24
8.5
8.1
7.9
Australia Retail
Australia Commercial
Institutional
New Zealand
Other
1.0
0.9
1.3
0.9
1.0
0.9
0.3
0.2
0.1
0.0
1H23
0.1
2H23
0.1
1H24
2.0
2.3
2.5
Markets
Fee & comm.
Other
Share of associates’ profit / (loss)
ANZ 2024 Half Year Results
38
1.Group Net Interest Margin for each Half Year as reported in the original Results Announcement for each financial period
REPORTED GROUP EX MARKETS RISK ADJUSTED NET INTEREST MARGIN
TREND
1
Group ex Markets NIM, bps
Flat or declining AUD Official Cash Rate throughout this time period
200
500
150
250
300
350
450
550
400
100
1H122H121H132H131H142H141H152H151H162H161H172H171H182H181H192H231H241H202H201H212H211H222H221H232H19
Risk Adjusted NIM ex MarketsGroup NIM ex Markets
ANZ 2024 Half Year Results
39
1.Excluding Markets Business Unit
RISK ADJUSTED MARGIN
Group
1
Australia CommercialAustralia RetailNew Zealand, NZDInstitutional
1
Net Interest Income / Avg Credit Risk Weighted Assets (CRWA), %
Avg Credit Risk Weighted Assets (CRWA),$b
5.195.19
5.10
1H232H231H24
6.42
5.50
4.92
1H232H231H24
2.94
3.51
3.67
1H232H231H24
6.16
5.42
5.57
1H232H231H24
8.37
8.84
8.70
1H232H231H24
1H232H231H24
322
310
312
1H232H231H24
94
98
106
1H232H231H24
130
111
106
1H232H231H24
56
62
61
1H232H231H24
39
36
36
ANZ 2024 Half Year Results
40
RISK ADJUSTED RETURN
GroupAustralia CommercialAustralia RetailNew Zealand, NZDInstitutional
Profit Before Provisions / Avg Total Risk Weighted Assets (RWA), %
Avg Total Risk Weighted Assets (RWA),$b
2.46
2.40
2.38
1H232H231H24
2.62
2.14
1.81
1H232H231H24
2.09
2.12
2.47
1H232H231H24
3.58
3.13
3.23
1H232H231H24
4.30
4.37
4.20
1H232H231H24
1H232H231H24
452
433
431
1H232H231H24
123
122
130
1H232H231H24
201
179
172
1H232H231H24
70
77
74
1H232H231H24
52
48
47
ANZ 2024 Half Year Results
41
1.Prior periods have been restated to reflect the latest business structure
2.Capitalised software balances sourced from publicly available company financials. Peer numbers are based on the most recentlydisclosed financial disclosures
OPERATING EXPENSES
Total expenses
1
, $bFTE by geography, ‘000
0.6
0.6
1.3
0.7
1.7
1H23
0.6
0.7
1.4
0.7
1.8
2H23
0.6
0.7
1.4
0.8
1.7
1H24
5.0
5.1
5.2
Australia Retail
Australia Commercial
Institutional
New Zealand
Other
ANZ 2024 Half Year Results
Capitalised Software Balance
2
, $b
0.5
1.0
1.5
2.0
2.5
3.0
FY
15
FY
17
FY
19
FY
21
FY
23
1H
24
ANZPeer 1Peer 2Peer 3
1H24 ANZ Opex
rate 82%
19.6
7.3
13.0
Mar 23
19.6
7.2
13.5
Sep 23
19.3
7.2
13.7
Mar 24
39.8
40.3
40.3
AustraliaNew ZealandRest of the World
ANZ 2024 Half Year Results
42
1H24 quarterly
trends
1H24 quarterly
trends
NET INTEREST MARGINS (NIM) – HALF YEARLY TRENDS
1
NIM –Regional View, bpsNIM –Divisional View, bps
1H222H221H232H231Q242Q24
Avg 1H24 AIEA
2
, $b
Rest of World $63b
Australia $418b
New Zealand $140b
Avg 1H24 AIEA
2
, $b
Aus Retail $269b
NZ Division $123b
Aus Comm.
3
$64b
Institutional ex-
Markets $163b
1H222H221H232H231Q242Q24
Rest of worldAustraliaNew ZealandAus RetailAus Comm.Institutional ex-MarketsNZ Division
1.Group excluding Markets and Treasury
2.AIEA: Average interest earning assets
3.Australia Commercial division generates positive net interest income from surplus deposits held. Accordingly, $58.6b of average deposits for the March 2024 quarter (Dec 23 quarter: $57.6b; Sep 23 quarter: $57.3b; Jun 23 quarter: $57.9b) have
been included within average net interest earning assets for the net interest margin calculation to align with internal management reporting view. AIEA of $64b presented above represents lending assets only
2024 HALF YEAR
RESULTS
INVESTOR DISCUSSION PACK
DIVISIONAL PERFORMANCE
ANZ 2024 Half Year Results
44
1.Refers to simple deals via broker and mobile lender channels
2.% of customers (in-use transaction or savings accounts that are eligible for digital access) who have logged on to ANZ App or ANZ Internet Banking in the last 30 days
3.Part of ANZ Non-Bank Group
4.Everyday Banking, Wealth & Business accounts sold through Retail channels (excludes Home Loans)
AUSTRALIA RETAIL
Growing digital engagement
% of accounts opened through Retail digital
channels
4
Home loan
capability
Customer
engagement
Innovation &
partnerships
•Maintained time to first decision
1
within 2 days
•Broker NPS improved 16 points to highest ever level
•Enabled lending growth 1.5x system (Investor: 2.1x)
•4.1 million digitally active users
•83% customers regularly engage digitally
2
•Growing MFI customer base - >100k larger vs 1H23
•Behavioural Biometrics drove 33% reduction in
customer scam losses vs 2H23
•45% increase in AI closed customer conversations in
our Contact Centre, reducing banker intervention
•Cashrewards
3
members grew 22% to 2.3 million
FY21FY22FY231H24
56%
60%
69%
70%
Growth Rates 1H24 vs 1H23 / Mar 24 vs Mar 23 unless stated otherwise
ANZ 2024 Half Year Results
45
Continuing Operations including Large / Notable items
1.Net interest income divided by average Credit Risk Weighted Assets (CRWA)
2.Cash profit divided by average Risk Weighted Assets
AUSTRALIA RETAIL –FINANCIAL PERFORMANCE
IncomeReturns Expenses
Total expenses, $mIncome composition, $mCash Profit, $m
Full time equivalent staff (FTE)Net interest margin (NIM)Risk adjusted returns
3,015
2,694
2,608
296
1H23
374
2H23
301
1H24
3,311
3,068
2,909
1,703
1,758
1,735
1H232H231H24
1,064
874
794
1H232H231H24
Net Interest IncomeOther Operating Income
11,199
11,313
11,383
Mar 23Sep 23Mar 24
1.73%
1.43%
1.22%
5.40%
5.01%
4.49%
1H232H231H24
Return / Avg RWA
2
Revenue / Avg RWA
2.38%
2.06%
1.94%
6.42%
5.50%
4.92%
1H232H231H24
NIMRisk Adj. NIM
1
ANZ 2024 Half Year Results
46
62
65
67
27
33
37
44
45
47
23
22
21
Mar 23Sep 23Mar 24
156
165
172
295
306
316
6
Mar 23
6
Sep 23
6
Mar 24
301
312
322
AUSTRALIA RETAIL –FINANCIAL STRENGTH
Balance sheetCredit quality Exposures
Exposure at Default & Risk Weighted Assets, $bNet Loans and Advances (NLA), $bTotal Provision Charge/(Release), $m
Credit Risk Weighted Assets (CRWA) EOP &
intensity, $b
Customer Deposits, $bCollective Provision Balance, $m
341
354
362
118
128
130
Mar 23Sep 23Mar 24
EADR WA
27.5%
29.3%
29.9%
94
Mar 23
104
Sep 23
108
Mar 24
50
49
32
48
1H23
5
2H23
-6
1H24
82
53
43
Individual ProvisionCollective Provision
949
954
948
1.01%
0.92%
0.87%
Mar 23Sep 23Mar 24
Collective Provision balanceCP coverage
1
1.CP as a % of Credit Risk Weighted Assets (CRWA)
SavingsTerm DepositsOffsetTransact
Home LoansCards, Personal Loans & Other
CR WATotal CRWA/EAD
ANZ 2024 Half Year Results
47
6
6
6
4
6
8
10
12
14
16
Cards, Personal Loans & Other
20
40
120
140
160
180
Sep
19
Mar
20
Sep
20
Mar
21
Sep
21
Mar
22
Sep
22
Mar
23
Sep
23
Mar
24
AUSTRALIA RETAIL –CONTRIBUTION
Group & Retail contribution, 1H24
Net Loans and Advances (NLA)
45%55%
28%
72%
22%
78%
27%
73%
Australia Retail
Rest of Group
Customer DepositsCash Profit After Tax
Income
Total RetailOffset balances
Home Loans
295
306
316
Mar 23Sep 23Mar 24
$b
$b
ANZ 2024 Half Year Results
48
1.Including Commercial customer revenue in Institutional and Retail
2.Refers to Small Business Banking
3.ANZ and Worldline hold 49% and 51% interest respectively
AUSTRALIA COMMERCIAL
Momentum in Digital Solution
Commercial
customer
contribution
Commercial
innovation
Commercial
strength
•~24% of total group revenue
1
•~64% of customers have at least one Retail product
•~70% of Transactive Global users are Commercial
customers
•~$1.80 in deposits for every $1.00 in loans
•~82% of exposures fully are secured
•Revenue on RWA 7.45%, up 53bps vs PCP
•~10% reduction in Time to Yes & Time to Money
2
•~35% increase in digital transaction account
openings
•ANZ Worldline
3
Tap to Pay added for Android
0
100
200
300
400
500
600
700
Jan
23
Mar
23
May
23
Jul
23
Sep
23
Nov
23
Jan
24
Mar
24
Sep
22
Nov
22
Drawn FUM $mApplications #
GoBizApplications & Drawn FUM, Index Sep 22 = 100
Growth Rates 1H24 vs 1H23 / Mar 24 vs Mar 23
ANZ 2024 Half Year Results
49
1.Net interest income / average Credit Risk Weighted Assets (CRWA)
2.Cash profit divided by average Risk Weighted Assets
AUSTRALIA COMMERCIAL – FINANCIAL PERFORMANCE
IncomeReturns Expenses
Total expenses, $mIncome composition, $mCash Profit, $m
Full time equivalent staff (FTE)Net interest margin (NIM)Risk adjusted returns
1,632
1,592
1,580
175
1H23
190
2H23
169
1H24
1,807
1,782
1,749
685
738
763
1H232H231H24
739
701
665
1H232H231H24
Net Interest IncomeOther Operating Income
3,607
3,514
3,442
Mar 23Sep 23Mar 24
2.83%
2.93%
2.83%
6.92%
7.45%
7.45%
1H232H231H24
Return / Avg RWA
2
Revenue / Avg RWA
2.72%
2.67%
2.60%
8.37%
8.84%
8.70%
1H232H231H24
NIMRisk Adj. NIM
1
ANZ 2024 Half Year Results
50
57
57
57
27
30
33
29
26
26
Mar 23Sep 23Mar 24
113
113
116
1.Asset Finance run-off businesses and April 23 divested Investment Lending business have been excluded from NLAs and Customer Deposits
2.CP as a % of Credit Risk Weighted Assets (CRWA)
AUSTRALIA COMMERCIAL – FINANCIAL STRENGTH
Balance sheetCredit quality Exposures
Exposure at Default & Risk Weighted Assets, $bNet Loans and Advances
1
(NLA), $bTotal Provision Charge, $m
Credit Risk Weighted Assets (CRWA) EOP &
intensity, $b
Customer Deposits
1
, $bCollective Provision Balance, $m
59
61
64
Mar 23Sep 23Mar 24
71
73
75
47
47
47
Mar 23Sep 23Mar 24
EADR WA
50.2%
49.2%
49.1%
36
Mar 23
36
Sep 23
37
Mar 24
CR WATotal CRWA/EAD
57
33
26
9
1H23
8
2H23
9
1H24
66
41
35
Individual ProvisionCollective Provision
1,033
1,041
1,050
2.90%
2.90%
2.86%
1H232H231H24
Collective Provision balanceCP coverage
2
TransactTerm DepositsSavings
ANZ 2024 Half Year Results
51
AUSTRALIA COMMERCIAL – CONTRIBUTION
Group & Commercial contribution, 1H24
Net Loans and Advances (NLA)
9%
91%
17%
83%
19%
81%
18%
82%
Australia Commercial
Rest of Group
Customer Deposits
Cash Profit After Tax
Income
38
39
40
42
20
20
21
22
2
Sep 22
1
Mar 23
1
Sep 23
0
Mar 24
60
60
62
64
SME BankingSpecialist BusinessCentral Functions
77
77
77
79
35
36
36
37
0
Sep 22
0
Mar 23Sep 23Mar 24
112
113
113116
SME BankingSpecialist BusinessCentral Functions
$b
$b
ANZ 2024 Half Year Results
52
1.State and territories based on primary postcode. ‘Other’ refers to exposures not reported against a specific state. Some postcodes occur across two states
2.Fully Secured on a market value basis. Other includes loans secured by cash or via sovereign backing
Diversified portfolio –Geographical viewSecurity profile
Diversified portfolio –Industry view
% of Exposure at Default (EAD)
2
Mar24 % of Exposure at Default (EAD)
1
Mar24 % of Exposure at Default (EAD)
32%
28%
16%
11%
8%
5%
V I C / TA S
NSW/ACT
QLD
WA
SA/NT
Other
25%
21%
8%
8%
6%
6%
5%
16%
5%
Comm. Property & Construction
Agri., Forestry & Fishing
Retail Trade
Other Property & Bus. Services
Manufacturing
Health & Community Services
Accom. Cafes & Restaurants
Wholesale Trade
Other Industries
81%81%
82%
11%11%
10%
5%5%5%
3%
Mar 23
3%
Sep 23
3%
Mar 24
Fully SecuredPartially SecuredUnsecuredOther
AUSTRALIA COMMERCIAL – COMPOSITION & RISK WEIGHT INTENSITY
ANZ 2024 Half Year Results
53
NEW ZEALAND
Long term improvement in efficiency
Cost to income ratio %
Market
strength
Digital
engagement
Well managed
portfolio
•#1 market position in New Zealand, incl. Home
Loans, Agri and KiwiSaver
•#1 Brand Consideration among banks in NZ
•~1.8m digitally active customers
•~1.2m customers are registered for Voice ID, up
5% on Sep 23
•FastPay Tap, streamlined mobile payments
acceptance
•Return on RWA 2.31%, up 13 bps on 2H23
•~$0.82 in deposits for every $1.00 in loans
•~0 bps average loss rate in 1H24
45
40
39
36
38
FY11FY15FY19FY231H24
ANZ 2024 Half Year Results
54
NEW ZEALAND DIVISION – FINANCIAL PERFORMANCE
IncomeReturns Expenses
Total expenses, NZDmIncome composition, NZDmCash Profit, NZDm
Full time equivalent staff (FTE)Risk adjusted returns
2,4
1,721
1,694
1,692
216
1H23
227
2H23
224
1H24
1,937
1,921
1,916
689
719
729
1H232H231H24
839
837
852
1H232H231H24
Net Interest IncomeOther Operating Income
6,785
6,766
6,754
Mar 23Sep 23Mar 24
1.Net interest income divided by average Credit Risk Weighted Assets (CRWA)
2.Metrics impacted by increase in Risk Weighted Assets with the implementation of APRA Capital Review in FY23
3.Cash profit divided by average Risk Weighted Assets
4.1H24 Credit Risk Weighted Assetsimpacted by the implementation of the new NZ Agri credit model ~$3.5b, with the Agri overlay removed
2.41%
2.18%
2.31%
5.56%
5.00%
5.21%
1H232H231H24
Return / Avg RWA
3
Revenue / Avg RWA
Net interest margin (NIM)
2.67%
2.60%
2.56%
6.16%
5.42%
5.57%
1H232H231H24
NIMRisk Adj. NIM
1,2
ANZ 2024 Half Year Results
55
1.Metrics impacted by increase in Risk Weighted Assets with the implementation of APRA Capital Review in FY23
2.CP as a % of Credit Risk Weighted Assets (CRWA)
3.1H24 Credit Risk Weighted Assetsimpacted by the implementation of the new NZ Agri credit model ~ $3.5b, with the Agri overlay removed
NEW ZEALAND DIVISION – FINANCIAL STRENGTH
Balance sheetCredit quality Exposures
1,3
Exposure at Default & Risk Weighted Assets,
NZDb
Net Loans and Advances (NLA), NZDbTotal Provision Charge, NZDm
Credit Risk Weighted Assets (CRWA) & Intensity,
NZDb
Customer Deposits, NZDb
Collective Provision Balance, NZDm
149
151
153
77
76
73
Mar 23Sep 23Mar 24
EADR WA
62
63
60
41.7%
41.9%
39.3%
Mar 23Sep 23Mar 24
CR WATotal CRWA/EAD
72
21
10
1H23
19
2H23
14
-10
1H24
82
40
4
Individual ProvisionCollective Provision
580
601
591
0.93%
Mar 23
0.95%
Sep 23
0.99%
Mar 24
Collective Provision balanceCP coverage
2,3
128
131
133
Mar 23Sep 23Mar 24
22
2121
42
46
49
41
39
39
Mar 23Sep 23Mar 24
105
106
109
SavingsTerm DepositTransact
ANZ 2024 Half Year Results
56
NEW ZEALAND DIVISION – CONTRIBUTION
Group & New Zealand Division contribution, 1H24 (AUD)
Net Loans and Advances (NLA)
17%
83%
17%
83%
22%
78%
16%
84%
New Zealand ContributionRest of Group
Customer Deposits
Cash Profit After Tax
Income
103
106
109
25
25
24
Mar 23Sep 23Mar 24
128
131
133
PersonalBusiness & Agri
86
88
91
19
18
18
Mar 23Sep 23Mar 24
105
106
109
PersonalBusiness & Agri
NZDb
NZDb
ANZ 2024 Half Year Results
57
1.Housing includes business loans secured by residential properties
2.Business excludes business loans secured by residential properties
3.Source: RBNZ, market share at NZ Geography level
4.1H24 had seen a shift of ~$1.2b of housing loans from the banking sector to the non-bank lending sector. The market share as at 1H24 after normalising this impact is 30.4%
NEW ZEALAND DIVISION – BALANCE SHEET
Housing
1
AgriBusiness
2
ANZ Performance, NZDb
ANZ Performance, NZDb
ANZ Performance, NZDb
Relative to system growth
3,4
Relativeto system growth
3
Relative to system growth
3
0
50
100
150
Mar 23Sep 23Mar 24
104.6
107.3
109.5
Owner OccupiedResidential Investment Loan
0
5
10
Mar 23Sep 23Mar 24
7.3
6.9
6.6
Other lendingCommercial Property
0
10
20
Mar 23Sep 23Mar 24
15.115.1
15.0
DairySheep, cattle and grainOther
30.1%
1H23
30.4%
2H23
30.5%
1H24
1.6%
0.4%
1.7%
2.6%
1.5%
1.9%
System growthANZ growthMarket share
21.8%
1H23
21.3%
2H23
20.5%
1H24
0.4%
-0.3%
0.0%
-2.0%
1.8%
-2.1%
24.8%
1H23
24.6%
2H23
24.6%
1H24
0.4%
-1.2%
0.8%
-0.2%
0.0%
0.1%
ANZ 2024 Half Year Results
58
Financial
Wellbeing
•Proactively contacted over 200k homeowner customers to offer extra support
•More than 8.5k customers completed a Home Loan Check In
•Over 90k interactions with our Financial Wellbeing Hub in the last six months
Fraud/Scams
•Expanded scam awareness via social media, featuring engaging content on avoiding scams
•ANZ Fraud Check, has seen more than 600k texts sent in the last 12 months checking whether a transaction is authentic
•Over 86k customers have taken advantage of new in-app controls designed to give further protection, alongside Card Tracker
functionality released in FY23
Home
Lending
•Blueprint to Build, helped ~13k customers build a new home with ~$8b of discounted lending through the scheme to date
•Good Energy Home Loan, making your home and transport more energy efficient, to date total lending of ~$0.5b
Business
•Launched HOWTWO Small Business Support Programme, assisting business through the crucial first two years
•Continued support for regional businesses seeking to reinvest after devastating extreme weather events, through Business Regrowth
Loans and North Island Weather Events Loan Guarantee Scheme
KiwiSaver
•To date, supported over 100k Kiwis realise home ownership ambitions with KiwiSaver first home withdrawals
•Introduced the new high growth fund that supports customers with their long-term investing goals
•Accredited by the Responsible Investment Association Australasia (RIAA) as a Leader in responsible investing
CUSTOMER ENGAGEMENT
ANZ 2024 Half Year Results
59
1.Includes Gross Impaired Assets and Hardship accounts. ANZ delinquencies are calculated on a missed payment basis for amortisingand Interest Only loans. 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
AUSTRALIA & NEW ZEALAND 90+ DAYS PAST DUE (DPD)
Consumer portfolio
1
90+ DPD as a % of total portfolio balances
0.25
0.50
0.75
1.00
1.25
1.50
0.00
Sep
18
Dec
18
Mar
19
Jun
19
Sep
19
Mar
20
Jun
20
Sep
20
Dec
20
Mar
21
Jun
21
Sep
21
Dec
21
Mar
22
Jun
22
Sep
22
Dec
22
Mar
23
Jun
23
Sep
23
Dec
23
Mar
24
Dec
19
Australia Home LoansAustralia Consumer CardsNew Zealand Home Loans
ANZ 2024 Half Year Results
60
1.Excludes: Balance Sheet Trading and Derivative Valuation Adjustments
2.Institutional ex Markets Net Interest Income divided by average Credit Risk Weighted Assets
3.Lending NIM represents Corporate Finance and Trade & Supply Chain
4.Return: Cash profit divided by average Risk Weighted Assets
INSTITUTIONAL – SUMMARY
1,118
1,439
1,418
1,432
1,282
1,613
1,584
1,794
2H191H232H231H24
2,400
3,052
3,003
3,226
225
294
351
367
152
194
227
236
2H191H232H231H24
Risk Adjusted MarginRisk Adjusted Lending Margin
72%
28%
Sep 19
78%
22%
Mar 23
78%
22%
Sep 23
78%
22%
Mar 24
235
276
271
260
Investment Grade (EAD)
Non Investment Grade (EAD)
52.2%
163
Sep 19
41.8%
150
Mar 23
40.3%
144
Sep 23
40.4%
141
Mar 24
CRWACredit RWA/EAD (ex Markets)
1.2%
1.7%
0.4%
2H19
1.4%
2.0%
1.7%
1H23
1.4%
2.1%
1.5%
1.5%
2.3%
2.0%
1H242H23
Aus. & PNGNew Zealand International
Sep 19Mar 24
71
107
2H191H24
158
341
LendingNon Lending
79
87
2H191H24
Operational / At-call
Deposits ($b)
# of Digital
Payments Processed (m)
Deposit NIM
(bps)
Returns
4
,%
Customer Franchise Revenue
1
, $m
Risk Adjusted NIM
2,3
, bpsTransactional Deposits & Payments
Credit Risk Weighted Assets (CRWA) & intensity,
$b
$b
Investment Grade (ex Markets), $b
ANZ 2024 Half Year Results
61
1.Net Interest Income divided by Average Interest Earning Assets
2.Net interest income divided by average Credit Risk Weighted Assets (CRWA)
3.Cash profit divided by average Risk Weighted Assets
INSTITUTIONAL – FINANCIAL PERFORMANCE
IncomeReturns Expenses
Total expenses, $mIncome composition, $mCash Profit, $m
Full time equivalent staff (FTE)Risk adjusted returns, %
1,340
1,388
1,444
1H232H231H24
6,314
6,366
6,310
Mar 23Sep 23Mar 24
1.58%
1.51%
1.77%
3.43%
3.66%
4.15%
1H232H231H24
Return / Avg RWA³Revenue / Avg RWA
723
609
665
248
251
259
618
500
598
1H232H231H24
1,589
1,360
1,522
Aus. & PNGNZInternational
Net interest margin (NIM), %
2.26%
2.36%
2.39%
2.94%
3.51%
3.67%
1H232H231H24
NIM ex Markets
1
Risk Adj. NIMex Markets
2
2,071
1,969
1,882
1,373
1,321
1,687
1H232H231H24
3,444
3,290
3,569
Net Interest IncomeOther Operating Income
ANZ 2024 Half Year Results
62
1.EAD excludes amounts for ‘Securitisation’, and for ‘Other Assets’ prior to March 2023 (included from March 2023 due to the implementation of APRA’s new capital framework), 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.Deposits balances reduced driven by a lower short tenor Markets term deposits (as a result of lower asset funding requirements)
3.CP as a % of Credit Risk Weighted Assets (CRWA)
INSTITUTIONAL – FINANCIAL STRENGTH
Balance sheetCredit quality Exposures
Mar 23Sep 23Mar 24
541
183
529
175
508
171
EADR WA
41.8%
40.3%
40.4%
150
Mar 23
144
Sep 23
141
Mar 24
30
43
-79
-36
-49
5
1H232H231H24
-74
-6
-6
IPCP
Mar 23Sep 23Mar 24
208
210
206
102
102
103
152
140
24
Mar 23
24
Sep 23
24
122
Mar 24
2
278
266
249
Aus. & PNGNZInternational
1,451
1,425
1,458
0.97%
Mar 23
0.99%
Sep 23
1.04%
Mar 24
CP BalanceCP Coverage
3
Credit RWA/EAD (ex Markets)CR WA
Exposure at Default
1
& Risk Weighted Assets, $b
Net Loans and Advances (NLA), $bTotal Provision Charge, $m
Credit Risk Weighted Assets (CRWA) & intensity, $bCustomer Deposits, $bCollective Provision Balance (CP), $m
ANZ 2024 Half Year Results
63
INSTITUTIONAL – CONTRIBUTION
29%
71%
34%
66%
43%
57%
39%
61%
Institutional ContributionRest of Group
148
145
143
41
45
45
Mar 23
20
Sep 23
18
Mar 24
208
210
206
19
Corporate FinanceTransaction BankingMarkets
103
106
107
46
46
43
128
113
98
1
Mar 23
1
Sep 23
1
Mar 24
278
266
249
Payments & Cash Mgmt
1
Term Deposits
2
MarketsOther
1.Payments & Cash Management excluding Term Deposits
2.Excluding Markets Business Unit
Group & Institutional contribution, 1H24
$b
$b
Net Loans and Advances (NLA)
Customer Deposits
Cash Profit After Tax
Income
ANZ 2024 Half Year Results
64
1.Trade: Trade and Supply Chain; PCM: Payments and Cash Management
INSTITUTIONAL – INCOME
Income composition by product
1
, $mIncome composition by region, $m
1,196
1,180
1,190
243
238
242
862
922
916
1,149
958
1,212
-6
1H23
-8
2H23
9
1H24
3,444
3,290
3,569
Corporate FinanceTradePCMOtherMarkets
1,569
485
1,390
1H23
1,608
481
1,201
2H23
1,673
501
1,395
1H24
3,444
3,290
3,569
Aus. & PNGNew Zealand
International
ANZ 2024 Half Year Results
65
INSTITUTIONAL MARGINS
1
Risk Adjusted NIM drivers, bps
151
148
145
161
168
173
171
194
227
236
132
127
131
148
149
147
143
148
150
151
85
79
67
46
41
39
34
60
82
8787
0
50
100
150
200
250
1H192H191H202H201H212H211H222H221H232H231H24
Lending Risk Adjusted Margin
2,3
Lending NIM
2,4
Deposit NIM
5
Risk Adjusted NIM –by geography, bps
InstitutionalAustralia & PNG
New ZealandInternational
Lending & Deposit NIM, bps
1
15
2H23MixDeposit
Margins
Asset
Margins
Model /
Methodology
1H24
351
00
367
202
208
208
240
1H212H211H222H221H232H231H24
294
351
367
222
230
222
253
1H212H211H222H221H232H231H24
292
360
373
149
147
156
188
1H212H211H222H221H232H231H24
274
341
355
243
263
287
332
1H212H211H222H221H232H231H24
355
347
371
1.Institutional ex Markets Net Interest Income divided by average Credit Risk Weighted Assets
2.Lending NIM represents Corporate Finance and Trade & Supply Chain
3.RiskAdjusted Lending Margin iscalculated as NetInterest Income divided by average Credit Risk Weighted Assets for Corporate Finance andTrade & Supply Chain
4.Net Interest Income divided by Average Interest Earning Assets for Corporate Finance and Trade & Supply Chain
5.Deposit NIM represents Net Interest Income divided by Net Internal Assets for Payments & Cash Management
ANZ 2024 Half Year Results
66
1.Trade: Trade & Supply Chain, PCM: Payments and Cash Management
2.EAD excludes amounts for ‘Securitisation’, and for ‘Other Assets’ prior to March 2023 (included from March 2023 due to the implementation of APRA’s new capital framework), 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
INSTITUTIONAL – CREDIT RISK WEIGHTED ASSETS (CRWA)
CRWA average by product
1
, $b
CRWA movement HoH, EOP $b
CRWA average by region, $b
Exposure at default
1,2
, $b
108
88
85
35
34
35
19
3
1H23
19
3
2H23
18
3
1H24
165
145
141
Corporate FinanceTradeMarketsOther
3
1
Sep 23FXModel /
Methodology
VolumeRisk
Migration
DerivativesMar 24
144
-1
-6
0
141
211
205
198
60
62
57
265
258
248
5
Mar 23
4
Sep 23
5
Mar 24
541
529
508
Corporate FinanceTradePCMMarkets
86
19
60
1H23
71
20
54
2H23
72
20
49
1H24
165
145
141
Aus. & PNGNZInternational
ANZ 2024 Half Year Results
67
INSTITUTIONAL – MARKETS INCOME COMPOSITION
Markets Income composition, $m
Markets avg. Value at Risk (99% VaR), $m
31
67
88
82
75
36
50
70
83
8
19
21
18
17
8
11
11
13
20
40
60
80
100
10
20
30
40
1H202H201H212H211H222H221H232H231H24
Non-traded (LHS)Traded (RHS)
•Traded VaR increased slightly due to a modest increase in risk
positioning.
•Non-TradedVaRincreasedasthevolumeandtenorinLiquidity
portfoliobondholdingsgrew(particularlyinsemi-government
bonds).
437
253
307
263
324
381
407
370
394
290
338
128
124
181
111
158
189
232
72
52
53
80
118
103
248
139
60
53
112
76
125
238
468
402
445223
206
356
270
284
131
59
24
1H202H20
43
21
1H21
32
7
2H21
32
-1
1H22
30
-26
2H22
36
1H23
35
18
2H231H24
1,164
1,490
1,040
931
812
755
1,149
958
1,212
Foreign Exchange
Rates
Commodities
Credit and Capital Markets
Balance Sheet
Derivative val/n adj.
ANZ 2024 Half Year Results
68
1.A risk-off environment is broadly defined as one where credit spreads widen, risk-free bond yields fall, equities sell off, volatility increases, and USD strengthens
CONSISTENCY OF MARKETS INCOME
Markets historical monthly income, $mCharacteristics of monthly income distribution
Historical monthly revenue distribution (FY15-1H24)
•1H24 revenue of $1,212m exceeded the long run through-the-cycle performance of the
Markets business.
•Over the last 9 years, monthly revenue has followed close to a normal distribution, with
average monthly income ~$170m with a standard deviation of ~$48m. This stability is
driven by a set of "core" customers who deal with ANZ Markets on a regular basis and
across multiple geographies and products. This provides important diversification
benefits to Group revenues.
•Franchise Income tends to be higher during periods that exhibit moderate levels of
market volatility, and where market risks broadly follow directional trends. Moderate
volatility encourages customer activity, while directional trends provide opportunities
from more consistent trading revenues. Such conditions typically arise in traditionally
"risk off
1
" environments but can also arise in the context of positive market sentiment.
This was generally observed in 1H24 as it appeared that major economies would achieve
a ‘soft’ landing as inflation slows without material downside impacts on labour markets
and economic growth.
14%
75%
11%
202 (1H24 Average)
176 (FY23 Average)
170 (9Y Historical Average)
ANZ 2024 Half Year Results
69
1.Deposit NIM represents Net Interest Income divided by Net Internal Assets for Payments & Cash Management
2.Revenue includes Other Operating Income, representing fees and commission income that does not necessarily increase in proportion to deposit volumes
PAYMENTS & CASH MANAGEMENT
PCM Deposit Volumes & Margins
1
71
116
103
106
107
31
37
46
46
43
Sep 19Sep 22Mar 23Sep 23Mar 24
102
153
149
152
150
Term DepositsOperational / At-call
PCM Deposit Volumes & Rate Sensitivity,$b
PCM Revenue by Geography, $m
142
159
174
180
134
138
253
261
235
435
392
450
488
501
2H192H221H232H231H24
652
672
862
922
916
83
Aus. & PNGInternationalNZ
1.71% ($107b) of deposits are Operational / At-call deposits, of which:
o~90% are contractually linked to central bank rates (more common in
AU/NZ) or negotiated rates that typically reprice with central bank cash
rate movements (negotiated rates are more common in International)
o~10% representing zero/low-rate deposits
$150b
Change vs
pre-pandemic
1H24 vs 2H19
Volumes
+$48b, +47%
2H192H221H232H231H24
0.79%0.60%0.82%0.87%0.87%
Deposit Margin %
Margins
+8bps
Revenue
2
+$264m, +40%
29%
49%
11%
11%
Term Deposits
Operational / At-call (AUPNG)
Operational / At-call (INTL)
Operational / At-call (NZL)
Rate Insensitive deposits: ~10% of Operational / At-call deposits
•The relationship between cash rates and deposit margins is not linear and can be
impacted by changes in mix and customer preferences
•Excluding periods of “zero interest rate policy” margins have ranged from ~0.75% to
~0.90%
Balance, $b
ANZ 2024 Half Year Results
70
76231312411400
Digital self serviceData insightsAPI integrationIncidents per million payments
1.Number of payments
2.Subset of total payments
3.Platform Cash Mgt. Accounts- Note: Reduction between March 2023 and March 2024 includes one-off bulk closure of ~45k inactive accounts in 1H24
4.Total deposit balances in Australia virtual client monies accounts
DIGITAL PLATFORMS – SCALABLE OPERATING LEVERAGE, CAPITAL LIGHT
•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.
•Automated payments initiated via direct
integration between the banks and our
customers’ systems.
•Enables a high degree of automation and
control for customers, replacing manual
processes with a scalable alternative that
removes the need for human intervention.
•A service whereby ANZ clears & 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.
Platform initiatives are enabling additional revenue opportunities within ANZ Payments & Cash Management
Payments
1
Direct Integration Payments
1,2
Real Time Payments
1,2
Deposit Balance
4
, $b
161
171
295
320
341
1H201H211H221H231H24
+7%
58
64
99
124
138
1H201H211H221H231H24
+11%
4
8
15
20
24
1H201H211H221H231H24
+20%
Mar 20Mar 21Mar 22Mar 23Mar 24
2.58
2.49
3.67
3.88
3.96
+2%
•Activated for ~95% of eligible Insto and
Corporate customers (>1600 customers).
•Usage doubled since 2H FY23 (~2500 items
per month).
•20% of total volumes are processed in real
time, saving customers >100 hours and
bankers ~300 hours effort monthly.
•Launched Customer Analysis, to support
Institutional Customers in understanding
consumer spending habits in relation to
their organisation.
•Completed proof of concept for presenting
data insights using GenAI.
•First major bank to offer PayTo (modern
direct debits) via APIs to corporate
customers.
•Infrastructure improvements to increase
performance of real time payments.
•0.01 incidents per million payments for
1H FY24, delivering quality and resilient
payment platforms for customers despite
growing volumes.
NPP Agency, m
Client Monies
mm
Platform Cash Mgt. Accounts
3
, k
2024 HALF YEAR
RESULTS
INVESTOR DISCUSSION PACK
TREASURY
ANZ 2024 Half Year Results
72
ANZ GROUP CAPITAL
ANZ Group Capital Composition, $b
ANZ Bank Group Key Capital Ratios (%)Mar 23Sep 23Mar 24
Level 2 CET1 capital ratio
13.213.313.5
Level 2 CET1 HoHmvmt
+89 bps+16 bps
+16 bps
Level 2 CET1 capital ratio
(pro forma for Suncorp and share buyback
1
)
~12.0~12.1
~11.8
Additional Tier 1 capital ratio
1.91.9
1.9
Tier 1 capital ratio
15.115.2
15.4
Tier 2 capital ratio
5.55.8
6.5
Total regulatory capital ratio
20.621.0
21.9
Leverage ratio
5.35.4
5.4
Risk weighted assets
$436b$433b
$433b
Level 1 CET1 capital ratio
12.913.213.4
Level 1 CET1 HoHmvmt
+90 bps+28 bps
+18 bps
Level 2 vs Level 1 mvmt
-1 bps-12 bps
-2 bps
Level 1 risk weighted assets
$370b$367b
$369b
Internationally comparable ratios (%)
Leverage ratio
5.96.0
6.0
Level 2 CET1 capital ratio
19.419.7
19.7
19.3
24.1
25.0
28.2
7.7
8.2
8.2
8.3
55.9
58.4
58.7
59.3
Sep 22Mar 23Sep 23Mar 24
82.8
90.6
91.9
95.8
●Majority of Group capital continues to remain in ANZ Bank Group under the NOHC
structure. The ANZ Bank Group‘s capital requirements are determined by existing APRA
requirements applied to ADIs
●ANZ Non-Bank Group capital is assessed by using an economic capital model (ECM).
The Non-Bank Group is meeting APRA requirements of holding capital equivalent to or
great than the economic requirements
58.4
0.7
0.2
Non-Bank Group
NOHC (surplus)
CET1 Composition
CET1AT 1Tier 2
1.The pro forma adjustment for the share buyback announced in May 2024 ( -0.46%) only applies to March 2024
ANZ 2024 Half Year Results
73
REGULATORY CAPITAL
ANZ Bank Group Capital
APRA Level 2 Common Equity Tier 1 (CET1) ratio –1H24 Movement, %
●ANZ’s current Tier 2 ratio is 6.5% (i.e. at the final Tier 2 requirement of 6.5% of RWA by January 2026)
●ANZ’s total capital ratio is 21.9% (~19.7% pro forma for Suncorp Bank acquisition and Share buyback)
●On an Internationally Comparable basis, ANZ’s total capital ratio is 30.7%
ANZ Group Dividend
●Dividend of 83 cents per share partially franked at 65%, ~70% DPOR on 1H24 Cash NPAT
Regulatory update
●APRA’s Additional Tier 1 Discussion paper was released in September 2023 and ANZ provided a submission in
response to APRA’s consultation in November 2023. The consultation process is ongoing
●Well-progressed with RBNZ capital reform transition, including issuance of RBNZ compliant capital securities
13.34
13.50
0.83
0.15
0.0
[TRUNCATED]
=== IR PAGE TRANSCRIPT: Transcript of Interview with CEO ===
ANZ Group Holdings Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 16 659 510 791
News Release
For Release: 7 May 2024
Transcript of bluenotes video interview with ANZ Chief
Executive Officer Shayne Elliott
BRETT FOLEY: Morning, Shayne. Thanks for joining bluenotes on the morning of the half year
result. Now you’re coming off a record year in financial 2023, and the numbers are again
strong this year, but you've talked a lot about consolidation and delivery, so can you explain
what you mean by that?
SHAYNE ELLIOTT: First of all, 2023 was a fantastic year and it was a record, not just in
financial terms, but we really achieved a lot strategically in that year and the first half year is
a continuation of that. So what we set about to do in 2024, we use this idea of consolidation
and delivery, to say, hey, there's been a lot of repositioning of the bank over the last seven
to eight years. We’ve sold a lot of businesses, we've restructured the bank, we've got things
going, we've got real momentum. And this was a year to really double down on delivery. And
that's what we're really pleased with in the half. All of our four businesses are performing
really well, contributing positively in terms of returns. But beneath that, or more importantly
from my perspective, making strategic progress in terms of strengthening their businesses
for long term sustainable value creation.
BRETT FOLEY: Another consistent theme is diversification. You’ve spoken about ANZ having
options that some of our peers don't. Can you explain a little bit about what you mean by
that?
SHAYNE ELLIOTT: One of the great strengths of ANZ is this diversification, which we've
worked hard to build. We have four great businesses – our Institutional bank, New Zealand,
the Australian Retail bank, and Australia Commercial. And they each have terrific market
positions. But because we have the four, depending on what's happening in the environment,
either economically or with our customers, we're able to deploy capital differently, move
resources around, invest in a differentiated way. And it's great to have those options and
that's what's really come through in this result. Particularly, you notice this time, the
Institutional bank really outperformed. And again, that's a business that ANZ does better than
most, and a real strength and a point of difference for us. So, it's about how we leverage that
differentiation to drive value for our customers and for our shareholders.
BRETT FOLEY: And can we talk about productivity? There have been gains again this year,
but can you elaborate for us on how, and what you're doing with the proceeds?
SHAYNE ELLIOTT: Our costs are going up and that's just the reality of banking today. So we
have to work really hard to drive productivity, to be more efficient so that we can deliver our
services at competitive prices. It's something that ANZ’s getting better and better at. We’ve
been doing this – it didn’t start this year – we've been doing it for the last seven or eight
years. We've driven a lot of productivity gains and we take those gains by getting more
efficient and some of those go back to our shareholders in the form of dividends and others,
a lot of it, gets reinvested into the business and that's really what we're able to do again this
year. So this year – this half – was a really good, another good result there. And that enabled
us to reinvest that money into growth options for the future.
BRETT FOLEY: Can you give us an example of some of the growth options or where some of
the funds are going?
SHAYNE ELLIOTT: In fact, we're spending more in terms of growth investments than we have
for many, many years. We've got, of course, our sort of flagship programs like ANZ Plus,
which is going extraordinarily well. We've obviously got to invest – we’re already investing –
into the preparation for the acquisition of Suncorp Bank, which again will be a great addition
to the family. And then we're investing in areas like our Commercial bank, which is a great
opportunity where we service about 650,000 small businesses across Australia – but we need
to invest there in terms of technology and people and processes to make sure that we've got
the very, very best propositions out in the market.
BRETT FOLEY: And just staying on ANZ Plus for a minute – how is it progressing? It seems
like it's becoming a much more integrated part of the bank.
SHAYNE ELLIOTT: Yeah, look, I'm really excited about where we are with ANZ Plus. I mean
already today we've got over 650,000 customers, who have chosen to come on to the Plus
platform. It’s got about $13 billion in deposits. That's already more than 8 per cent of all of
our Retail bank deposits sitting on our Plus platform, and that's in a couple of years from
launch as a start-up. So it’s really going well. 47 per cent of our customers in Plus are
engaging with the platform in one of the financial wellbeing features, which really is what
underpins the Plus proposition. So it’s really exciting, it's great to see growth, it's great to see
the customers react so positively to it. Most importantly, we've built it as a platform that
allows us to continually roll out new features and functionality, and it's just great to be able
to start to see those things coming to fruition now and our customers really embracing them
and using them.
BRETT FOLEY: One other major issue for big companies is cybersecurity and scams and fraud.
Can you tell us a little about what ANZ’s doing to help keep customers safe?
SHAYNE ELLIOTT: This year we’re 196 years old as an organisation, and right from day one,
we've been in the security business – that's what banks do. Our prime responsibility is to
secure the money of our customers, whether that's in deposits or whatever. It's what we do
every day when we wake up in the morning – think about how do we keep the bank safe. And
of course, the way we do that has changed a lot. We have to keep it safe from criminals in
terms of cyber hackers and people who try to come in and attack our systems. And we also
now have to help keep our customers’ money safe from scammers, which is a terrible scourge
on the community. And we've all seen the numbers and we all know somebody who's been
scammed. And so we have a responsibility there, so we spend hundreds of millions of dollars
in terms of cybersecurity and making sure that our systems are safe, but we’re also spending
a lot of money in terms of giving tools and education to customers to protect them from scams
and frauds. A lot of that’s been built into areas like ANZ Plus, which we talked a little bit about,
but, also just more broadly. Now the good news is that while the numbers are still way too
high and people are still sadly losing money to these criminal gangs, the numbers are starting
to move in the right direction. And so, we’ve still got a lot more work to do and we will
continue to invest appropriately – with the industry and on our own – to really improve the
situation for our customers.
BRETT FOLEY: Turning to the external environment now, there's still a lot of uncertainty out
there. So how do you see conditions for the rest of the year and how are customers faring
with higher rates and cost of living challenges?
SHAYNE ELLIOTT: So clearly there are very real stresses in the economy. I mean interest
rates have risen a lot relatively quickly. People are paying more tax because of bracket creep,
and of course things like rents, and food and groceries, have been increasing at a pretty rapid
rate. So there's clearly stress, and we can see that, we can see that in the broader data.
Having said that, the reality is that banks – and ANZ – are in a really strong position to help
those customers that do find themselves in a difficult position. And when we look into the
data and say, well, how many of our people – how many of our customers – are calling in and
saying, “Hey, I need help,” those numbers are still remarkably low. Now, that's a dreadful
situation for those people to be in, and we do everything we can to assist them. But when
you stand back and think about the bigger picture, the numbers are still very, very low. And
in fact, they're much lower than they were even before COVID. So you sort of go back to
more recent normal times. You might ask yourself, well, “How can that be? You know, I'm
hearing about all the stress and cost of living — it really is happening and interest rates have
gone up. How can it be?” One of the reasons is that it's actually been really difficult for many
customers to get a home loan in the first place, or to get a credit card, or to run their business.
Now, there's lots of issues with that, I think about for the broader community and access to
credit, which we can talk about another time. But the flip side of that says that banks’ credit
quality has been really, really strong. And so that means that the people who do have home
loans or who are running their businesses are actually pretty resilient. So they're a little bit
better off than you might think. Just to give you a data point — and I think this is quite a
surprising, and not an intuitive number — 79 per cent of ANZ’s home loan customers are
ahead on their repayments, they're paying more than they need to. That's a remarkable
number, and that number’s higher than it was a year ago. So despite all of that, the people
with a home loan out there, which is about a third of all Australians, are actually still, not just
paying their home loans, but getting ahead. So it tells you that despite stress, there's still
resilience, that people are very prudent in the way that they manage their money, and people
are getting through. But as I said, we would expect the number of people under stress to
increase. Those interest rates will — are — continuing to hurt. So you'd expect there to
continue to be a slowdown and there will be, we will see, more customers get into stress. And
that's why having a strong bank like us who's able to lean in, who has the resources to be
able to help where we can, is so important.
BRETT FOLEY: You touched on it earlier, but we can't let you go without asking about Suncorp
Bank — what's the latest there?
SHAYNE ELLIOTT: We're making progress. I mean, these things take time. We're really
pleased we got the Tribunal's approval. There's still a couple more steps to go through. We
need the Queensland Government to pass some legislation, which they're on track to do and
they’ve been nothing but supportive of this transaction and we thank them for that. And then
it has to go to the Federal Treasurer. That'll take place over the coming months. All going
well, we'd be looking at maybe getting to a completion of final approval sometime in the
calendar third quarter. But there's still steps and still a lot of work to go through. Once we
get there, we'll be in a position then to update the market on what our plans will be and how
we bring in the Suncorp Bank 1.2 million customers into the ANZ fold.
BRETT FOLEY: Shayne, thanks very much for your time.
SHAYNE ELLIOTT: Thank you.
For media enquiries contact:
Lachlan McNaughton
Head of Media Relations
Tel: +61 457 494 414
Amanda Schultz
Media & Public Relations Manager
Tel: +61 401 532 325
Approved for distribution by ANZ’s Continuous Disclosure Committee
=== IR PAGE TRANSCRIPT: Transcript of Interview with CFO ===
ANZ Group Holdings Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 16 659 510 791
News Release
For Release: 7 May 2024
Transcript of bluenotes video interview with ANZ Chief
Financial Officer Farhan Faruqui
BRETT FOLEY: Farhan, thanks for joining bluenotes at the half year result. Now ANZ is coming
off a record year in 2023 and the sector's had two years of high inflation and interest rates to
deal with. How are you thinking about this result and what stands out to you?
FARHAN FARUQUI: Well, Brett, we’re quite pleased with our result. Off the back of a strong
year we've actually delivered stable outcomes, both in terms of revenue, as well as Net Profit
After Tax (NPAT). And we've done that with all four of our businesses performing well,
delivering returns above the cost of equity and actually exiting the half with strong
momentum. At the Group level, we've grown both customer lending and customer deposits –
so generally, quite pleasing in terms of the financial outcomes. But I think equally,
strategically, we've made progress. ANZ Plus continues to do well, continues to grow,
attracting new customers to the platform. On Suncorp Bank, while we've been waiting for all
the approvals to come through – and there are still a couple to go – we've been readying
ourselves for the integration and we feel equally confident as before in terms of our ability to
deliver the financial benefits of that particular acquisition. And finally, in the simplification
journey that we've been on for a few years, we've made yet more progress in this half with
the sale of a large part of our AmBank equity position, and that has freed up about $668
million of capital, which in turn has allowed us to announce a $2 billion on-market share buy-
back today. It's basically a story of delivering what we have promised and we continue to be
pleased with that.
BRETT FOLEY: So speaking of capital and the buy-back you announced today, can you talk
us through the decision making behind that process?
FARHAN FARUQUI: Yes Brett, so the Board continues to look at the best and most efficient
use of capital at all times. And in the context of our performance, our strong balance sheet
position today, the Board felt comfortable with announcing a $2 billion on-market share buy-
back. Now obviously that has an enduring benefit to our shareholders, because it reduces the
share count and effectively over time improves our return on equity as well. This is a good
outcome for our shareholders and a good outcome in terms of the best use of capital for us
that was available today. But it's important to note, Brett, that even when you pro forma our
capital position for the share buy-back, as well as the capital that we've set aside for the
completion of the Suncorp Bank acquisition, our CET1 ratio – our capital ratio – is still 11.8%,
which basically places us amongst the best capitalised banks in the world. And that's very
important to us because it allows us to serve our customers. It allows us to access accretive
growth opportunities, across our businesses, and therefore places us in a very strong position
going into an uncertain environment.
BRETT FOLEY: So inflation is proving to be stubbornly high. How are you planning to continue
to manage cost efficiently?
FARHAN FARUQUI: Well, we've actually had one of the strongest track records, I would argue,
of major Australian banks in terms of managing our costs and our cost discipline. If you think
about it, Brett, from 2018, we've actually produced about $1.5 billion of effectively cumulative
per annum benefits from productivity. And the productivity doesn't necessarily come from a
restructuring perspective only, it comes from what work we do around automation, around
improving and streamlining our processes, in terms of digitising our service propositions, et
cetera. So it's actually an enduring amount of productivity and that gives us the confidence
that there's more. And even in this half, we've delivered $200 million of productivity. Our
focus is to continue to make sure that we offset inflationary impacts as much as possible,
thus effectively allowing us to continue to invest in productivity and growth initiatives and
ensuring that our businesses are investing in technology where appropriate. So I feel pretty
confident that we have the tools and the discipline to continue to manage our cost inflationary
impacts. In fact, I would argue that it's sort of not a one-off exercise for us. It's pretty much
how we work and it's part of our DNA and I think you should assume that that will continue.
BRETT FOLEY: So the external outlook remains incredibly uncertain. Where to from here and
how are you thinking about the next 12 months?
FARHAN FARUQUI: Well the good news is that, Brett, in my 30 plus years career in banking,
I don't think I've ever sat in any situation and said, well, everything is so clear and certain
ahead. We're always in an uncertain environment, whether it's from an economic standpoint,
from a competitive standpoint, from a technology standpoint, or from a geopolitical
perspective. So the reality is that as a bank, our job is to deal into, effectively what are
uncertain environments. And our job and our focus, as always, has to be to make sure that
we have a set of diversified businesses, ideally those that are largely uncorrelated, which we
do across our four businesses. And we have to make sure, in order to get the value of
diversification, is to ensure that they are healthy businesses, all four of them. And in our case,
as I mentioned earlier, all four are performing well and delivering above cost of capital return
outcomes. So, we are in a good spot in terms of our diversification to deal into that uncertain
environment. We feel that we have the risk settings, the balance sheet strength and the
strategy to be able to cope with the uncertainty that lies ahead.
BRETT FOLEY: So finally, net interest margin (NIM) is always top of mind for Australian
investors and analysts. As CFO, how are you managing margins?
FARHAN FARUQUI: Well, I think first to start with Brett, we've delivered a NIM outcome this
half which actually underlines the stability in our net interest margins. So our underlying net
interest margin, our business NIM, were down two basis points, half on half. But interestingly
within that, there are some very interesting trends. So, for example, in the Institutional
business, we've actually been able to manage our margins, half on half, to expand three basis
points. And that's not been done by accident, it's very much a planned process in terms of
how we want to look at the discipline around lending, as well as ensuring that we are very
dynamic in terms of how we manage our deposit and deposit mix shifts. So that has been a
great effort and we've ended up with an expansion of margin in the Institutional business.
For Retail, where we have had an extreme competitive environment, we've actually been able
to target profitable segments, continue to have a differentiated broker proposition – a very
strong broker proposition – continue to improve our processes and our service levels, which
has allowed us to effectively exit March – which is the end of the first half – one basis point
higher on NIM, to where we exited in September last year. So it's been a strong period of
management – now half on half, that impact doesn't show up in Australia Retail because there
are impacts from second half that flow through to first half. So we think that we've actually
managed margins very dynamically and it's a grind. We have to make sure that we are
dynamic around how we manage margins. We have to be thoughtful around our customer
selection and segment targeting, et cetera – and we’ve done well. And I think the most
important part of this, which I have said many, many times before, is that while NIM is
important, risk adjusted NIM is even more important. And once again, in this half, we've
continued to expand the premium between risk adjusted NIM and NIM.
BRETT FOLEY: Farhan, thanks so much for your time.
FARHAN FARUQUI: Thank you.
For media enquiries contact:
Lachlan McNaughton
Head of Media Relations
Tel: +61 457 494 414
Amanda Schultz
Media & Public Relations Manager
Tel: +61 401 532 325
Approved for distribution by ANZ’s Continuous Disclosure Committee
=== IR PAGE TRANSCRIPT: 2024 Half Year Results Announcement Transcript ===
ANZ Half Year Results Presentation
7 May 2024
Page 1 of 44
Start of Transcript
Jill Campbell: Good morning, everybody, I'm Jill Campbell, ANZ’s Head of Investor
Relations. Thanks for joining us for the presentation of our First Half Financial Year 2024
Results. We’re presenting them from ANZ’s offices in Melbourne, on the lands of the
Wurundjeri people. On behalf of the ANZ team speaking today, I pay my respects to Elders
past and present, and I extend those respects also to any Aboriginal and Torres Strait
Islander peoples joining us for today’s presentation.
Our results materials were lodged this morning with the ASX, they're also available on the
ANZ website in the shareholder centre. A replay of the results presentation, including the
Q&A, will be available on our website from around mid-afternoon. The results materials
and the presentation being broadcast today may contain forward looking statements or
opinions, and in that regard, I draw your attention to the disclaimer on page 2 of the slide
deck.
Our CEO, Shayne Elliot and CFO, Farhan Faruqui, will present for around 35 minutes, and
after that, I will go over the procedure for Q&A before moving to questions. Ahead of that,
though, a quick reminder that if you do want to ask questions, you can only do that on the
phone, and with that, Shayne, I will hand to you.
Shayne Elliott: Thank you. Welcome, everybody. There are five key messages from the
half. First, this is a result about consolidation and delivery. We delivered what we promised
and coming off a record 2023, these are strong results. Second, diversification served us
well, with momentum across all divisions from targeted investment, efficient capital
allocation, and strong risk management, we have options others don’t and we use them
well.
Third, we made progress where we said we would, preparing for Suncorp, growing ANZ
Plus, leveraging Institutional processing platforms and delivering productivity. Fourth, we
used productivity benefits to fund investment and growth, including ANZ Plus,
Institutional’s digital backbone, upgrading New Zealand’s core banking platform, and
growing our commercial business. We’re not milking the franchise, but investing, intending
to build and sustain the most contemporary digital capability in each business.
Finally, we continued supporting customers through challenging times with a fortress
balance sheet, a diversified portfolio of businesses, and an experienced team, and that
support is needed, as while most remain resilient, higher interest rates, taxes, rent and
household expenses are hurting many. The number of customers in hardship rose this half
ANZ Half Year Results Presentation
7 May 2024
Page 2 of 44
and whilst still lower than it has been in the past, it's extremely distressing for each of
them, and we expect that number to rise further as cost-of-living bites harder and
unemployment likely increases. But I do want to assure those customers that we are here
to support you.
For example, we developed a world first AI transaction scoring capability for Retail and
small business customers which means we can identify customers at risk of distress
around 40 days earlier than usual, so we get customers back on their feet more quickly.
We also support customers by keeping them safe. Now providing a safe place for their
money has been core to our business for 196 years, and always will be, and that’s why
investing in security is our number one priority.
Being a simpler strong bank helps meaning we are ready and able to help those in need
with the right tools at the right time to keep them safe. Safe from criminals, safe from
hackers, safe from scammers, and sadly, people are more susceptible to scams in times of
stress, so we will continue to invest here as well. You may have seen our latest
advertisements with the return of our hugely popular Falcon, but also an antifraud system
flagging suspicious transactions.
Now, the ads are fun, but they carry a serious message about extra layers of security
through ANZ Plus, and the protection Falcon technology provides. In fact, we’re adding
more scam safe controls to ANZ Plus including disabling screen sharing, limiting transfers
to crypto exchanges and better identifying unusual activity from unexpected locations.
These efforts are making an impact, and whilst still too high, it's good to see the amount
that customers are losing to scams is falling.
Now, turning to the financials, this was a strong half. Off the back of a record result in
2023, cash profit was down just 1% on the previous half. We strengthened our balance
sheet, increasing Common Equity Tier 1 ratio to 13.5% and we maintained our collective
provision balance above $4 billion. Still 20% higher than pre-COVID.
Return on equity was 10.1% or 10.7% excluding the capital held to purchase Suncorp
Bank. Revenue was flat half on half, but with the mix shifting toward Institutional
offsetting a more subdued domestic retail market, showing the benefits of diversification.
Expenses were very well managed, growing only 1% despite absorbing annual wage uplifts
and price increases from technology vendors in particular.
Credit costs remain remarkably low. Now, while that’s true across the industry, we are
confident that our transformed and de-risked customer base is delivering sustainably lower
ANZ Half Year Results Presentation
7 May 2024
Page 3 of 44
credit costs. Institutional grew revenue again and posted record return on equity
domestically and internationally. Customer revenues and markets performed particularly
well growing 30% half on half with most of the growth coming from our international
network, again demonstrating the benefit of diversification.
The Institutional pivot from a lending business to one built around digital payment and
currency platforms has transformed underlying performance and positions us beautifully
for better long-term growth with sustainably higher returns. New Zealand delivered
consistently yet again. Australia Retail produced strong growth in home loans without
leading on price and commercial continued to deliver our highest return on equity while
growing loans 7% and deposits 3% versus the prior year.
Finally, we further simplified the Group, selling 16.5% of AmBank. Now, this added to our
already strong capital base, providing the opportunity to return $2 billion to shareholders
via the buyback announced today. Reflecting the overall strength of our result and
confidence in the future, the Board announced a high dividend of $0.83.
Now, as mentioned, we executed key priorities well, Suncorp, Plus, platforms and the
productivity required to fund it all. So, let me talk to each in turn. The Australian
Competition Tribunal authorised our proposed acquisition of Suncorp and legislation has
been introduced in Queensland to allow it to proceed. Now, these are important
milestones, and we commend the Queensland government for recognising the significant
benefits the transaction brings.
That said, we still have conditions to meet including passing that legislation and approval
from the Federal Treasurer. Now, we’re almost two years into the process, and while
taking longer than anticipated, we’re using the time productively, and are more confident
of the substantial benefits that will flow. It's a bit like training for a marathon, race date
got postponed, but we kept training, and now we are fitter and faster.
For example, we’re piloting a generative AI tool to radically reduce the time to compare,
contrast and harmonise thousands of terms, conditions, procedures, policies and contracts
of Suncorp Bank and ANZ which will accelerate and de-risk integration. Now, going well,
we expect to finalise the acquisition in August, and will then provide an update on the
timing and scale of benefits.
The digital transformation of Australian Retail is gathering pace. Two years ago, I shared
our ambition for ANZ Plus to become more attractive, engaging and secure for customers,
and more efficient and resilient for shareholders, and it's clear we’ve made good progress.
ANZ Half Year Results Presentation
7 May 2024
Page 4 of 44
On average, we attract around 35,000 customers every month, around half of which are
new to ANZ. Despite that rapid growth, average deposits have held consistently at about
$20,000.
As of yesterday, we had almost 700,000 customers on Plus, approaching $14 billion in
deposits, which is 8% of our retail deposit base. Net promoter scores are consistently
higher than peers, and customers are highly engaged with 47% using at least one of our
financial wellbeing features. ANZ Plus home loans are in market in limited release and we
recently completed final regulatory steps to allow us to increase volumes.
As we build scale more generally, our cost to acquire and cost to serve on Plus continue to
fall, and are now 45% and 30% below ANZ Classic, with that gap increasing. Now, the
economics are compelling, but the strategic value of Plus is our ability to pivot an
innovative pace, and one of those pivots is preparing for Suncorp where we will build out
propositions on Plus to match and exceed Suncorp services so we can safely move their
customers to ANZ leveraging scale and maximising synergies.
Looking ahead, we’re already exploring and piloting generative AI across ANZ Plus, to
provide better tools to manage money, resolve inquiries, provide property valuations, and
detect fraud.
Now, another key focus is leveraging our Institutional platforms. As you know, ANZ
operates one of the largest payment platforms in the region, processing around 60% of
Australia and New Zealand correspondent clearing payments, providing services to 90% of
the world’s globally systemic banks. We process $164 trillion in payments in, out and
around the markets in which we operate every year, which is more than 60 times the GDP
of Australia.
Now, built for Institutional, these platforms are now used by other divisions and customers
to drive scale and growth by revenue. While Australia and New Zealand remain core, our
international network is critical for growth, and already three of our largest payments
customers are Asia based with international payments growing an impressive 8.5% over
the year.
More broadly, we continue to grow payments market share with digital payments up 7%
versus a year ago, and NPP Agency payments up 20%. Now payments innovation is
essential to sustain success, and we recently extended leadership becoming the first major
bank to go live with a natively built API enabled pay to service for billers in Australia.
ANZ Half Year Results Presentation
7 May 2024
Page 5 of 44
This allows businesses to send a payment request to their customers via secure digital
platforms which customers can then review and accept. It's safer, faster and cheaper, but
to be successful requires the scale of a leading payments platform like ANZ.
Now, the other driver of sustainable success is the volume of payments processed via
customer systems directly integrated into ours. Now once integrated, these channels are
difficult to replicate, and these volumes grew strongly at 11% compared to a year ago, and
39% over two years.
Now, none of this investment and growth is possible without productivity, for example, in
Australian home loans, we’ve leveraged automation to re-engineer processing and in this
half improving productivity by 13%, further improving turnaround times, and partners and
customers notice, with our broker NPS increasing to a record level, and market share
rising. Another good example are the 3,000 engineers using generative AI co-pilot tools to
rewrite bank software, delivering material gains and engineering productivity.
Finally, optimising our workforce across 29 markets is also key to efficiency. We’ve the
largest offshore operations and technology capability of any Australian company with
10,000 colleagues across Bengaluru and Manila who augment our skills in cyber security,
transaction processing, sanctions checking, engineering, judgmental credit, generative AI,
and predictive analytics, and they will have an increasingly important role to play as we
grow.
Overall, ANZ has a good track record on productivity. It's a core capability as opposed to
spotty interventions in response to a crisis. We’re the only major Australian bank to have
held reported costs at or below those of 2016. Now, looking ahead as a well-managed de-
risked and diversified Gr oup, we are well positioned to manage through what remains a
complicated environment.
The global economy has been resilient in the face of major shocks with wars in the Ukraine
and Middle East. This year, 40% of the world votes in elections across countries that
generate around 50% of global GDP. Despite tension, surprises to date have been few, and
credible transitions of power evident. But ongoing conflicts, geopolitical tension and more
active industry and trade policy interventions continue to impact us all.
China’s economy is adjusting to structurally lower growth, but the region is adapting as
capital is redirected elsewhere, and other Asian economies raise their presence in global
supply chains. ANZ is a beneficiary of that shift.
ANZ Half Year Results Presentation
7 May 2024
Page 6 of 44
Now, closer to home the Australian economy is resilient, consumption has slowed, but
investment and government spending are robust, unemployment low and consumer
confidence has improved. Now, while growth is unlikely to pick up this year, strong
household and corporate balance sheets suggest a hard landing is unlikely. In Australia,
liquid household assets exceed total household liabilities by the largest amount in at least
25 years.
Now, clearly these are aggregate numbers and the challenge for the community is around
the disbursement of wealth and debt. Our customers, however, are generally better off
than most and that’s why we don’t see the levels of stress one might expect given headline
economic indicators.
Housing remains challenging, and even with public support it is the weakest stream of
investment activity reducing labour mobility and raising social pressures. Competition for
labour and materials and construction and infrastructure remains vigorous. We estimate
the major project pipeline in Australia will exceed $100 billion by 2026 from around $40
billion pre-pandemic.
Now, around half of that growth is in electricity highlighting the commercial opportunities
presented by climate transition. That’s a huge opportunity for us as Australia’s leading
Institutional bank with our strength intermediating regional capital flow and number one
market positions in project finance, trade, debt capital markets, corporate foreign
exchange and sustainable finance.
Our diversified portfolio, unique global network, engaged workforce and fortress balance
sheet combined with careful customer selection means we are well positioned to deliver
despite uncertain times. S o, looking ahead, our priorities are clear, we will continue to run
the Group prudently using our strength to support customers and leverage opportunities
from our network.
Pending authorisation, we will acquire Suncorp Bank. We will grow ANZ Plus while
deepening customer engagement. We will grow our commercial business, leveraging our
points of difference and extend our Institutional banking lead in sustainability, currency
and payments. We will invest in productivity building capacity for the future.
Finally, we will continue to foster a diverse and supportive culture focused on living our
purpose to shape the world where people and communities thrive. I'm confident we’re in
an excellent position to deliver value for shareholders, customers and our people whatever
may come, and with that, I will hand over to Farhan.
ANZ Half Year Results Presentation
7 May 2024
Page 7 of 44
Farhan Faruqui: Thank you, Shayne, and good morning, everyone. As Shayne said, this
half was characterised by continued strong execution and delivering what we promised.
From my standpoint, there are 3 key highlights. First, financially, off the back of a record
year, we have delivered stable results this half. Revenues are flat, half on half, cost growth
constrained to a 1% uplift, and low credit impairment charges reflect the quality of our
portfolio. All four businesses have performed well and have exited the half with strong
origination momentum. Our balance sheet is also stronger than ever.
Second, strategically we have made strong progress. Shayne touched on ANZ Plus and our
continuing momentum in building and running a digital retail bank. We are also readying
ourselves for the completion of the Suncorp Bank transaction which remains subject to
approvals.
We remain confident that we will deliver on our promise of strong financial and customer
benefits of the acquisition. We continued the simplification of the Bank completing the sale
of a large part of our stake in AmBank freeing up $668m of capital. Finally, we delivered
strong shareholder outcomes with total shareholder returns of 19% in the half.
Our return on equity remains strong at 10.1% or 10.7% when excluding capital for
Suncorp. We have announced today a $2 billion on-market share buyback. This is one of
the largest capital management exercises that we have ever announced.
In addition, the Board declared a dividend of $0.83 per share, partially franked at 65%. All
of this reaffirms our commitment to deliver what we promise. Now, let me turn to the
details of our financial outcome for the half. My references will be to half on half changes
unless I specify otherwise.
Starting with operating income performance. Following a record FY23 performance, we
delivered operating income flat to a strong second half with ANZs business mix allowing us
to deal effectively into the competitive environment. However, operating income was
slightly up, excluding the one-off impacts of M&A such as the AmBank divestment and
business closures.
Our markets business performance was outstanding, with revenues 27% higher and 5%
higher than the very strong first half of last year. Net interest income ex markets reduced
by $91 million, with strong business volume growth partially offsetting margin reductions.
Other operating income was up 7% this half and 20% on a prior comparable period. Now,
as you know, other operating income is impacted by several factors including markets
ANZ Half Year Results Presentation
7 May 2024
Page 8 of 44
business performance and seasonality. Therefore the comparison that best reflects
underlying business momentum is on an ex-markets basis PCP.
On that metric, other operating income ex-markets was 11% higher. This growth was
underpinned by the uplift in international transaction banking and corporate finance fees
and from our cards businesses in Australia and New Zealand. Now I’ll spend some time
talking about net interest income and markets in particular.
Starting with volume. We grew lending and deposit volume across Australia Retail,
commercial, and in New Zealand. Group average customer deposits grew 3% and average
lending grew 2%.
Once again, I'll make three key points here. First, Australia home loan volume grew at 1.5
times system. This is the third consecutive half of above system growth. This growth was
delivered through improved process and propositions rather than leading on price.
Retail deposit mix shifts slowed and total average deposit volumes increased by $9 billion.
While margin pressures from last year flowed through to impact half on half outcomes,
actions taken by the business resulted in a retail exit NIM up one basis point March ’24
versus September ’23.
Secondly, commercial business momentum has been particularly strong with loan growth
of 7% year on year. The last 12 months represent the strongest period of absolute loan
volume growth ever in the commercial business.
This has been driven by continued momentum in our larger segments particularly health
and agri. We also saw a return to growth in the small business segment. We are scaling
digital offerings, harmonising policies, and intensifying our focus on sales and service,
making it easier for our customers to do business with us.
If we exclude the impact of management actions relating to the sale or rundown of some
of our asset finance and investment lending portfolios, underlying loan growth was 8%
year on year. Our pipeline remains very strong and we expect to continue growing above
system.
Thirdly, in Institutional there was a shift from bank debt to bond markets. Despite this shift
which impacted loan volumes, Institutional grew lending revenue while capturing the bond
market shift in our markets business.
ANZ Half Year Results Presentation
7 May 2024
Page 9 of 44
Total Institutional deposits contracted over the half. However, at call operational deposits
grew and lower margin deposits were actively managed down. These outcomes across
lending and deposits resulted in Institutional NIM ex-markets expanding three basis points.
A combination of diversification, active margin management, and volume momentum has
stabilised both underlying NIM and net interest income over the last three quarters as
evident on this slide. Our focus remains to allocate capital to the most return accretive
opportunities across our businesses driving volume growth to optimise net interest income.
Group underlying NIM, as a result of our management actions, was limited to a two basis
points decline. As I just mentioned, pressure on asset pricing reduced, with assets
contributing four basis points to the NIM decline versus seven in second half '23.
Active management of our liability pricing and the asset and funding mix allowed us to
hold NIM flat in both categories. There was a continuing NIM benefit from the capital and
replicating portfolio, which in this half again provided a three basis points uplift.
While the impact of capital and replicating portfolio may vary in each half, we expect it to
be a tailwind at least over the next two to three years, with the net benefit dependent on
volume changes. We are very encouraged as we exit the first half with benefits of
diversification, strong balance sheet, and stabilising NIM all supportive to net interest
income.
The markets business delivered its strongest first half performance since 2017, with total
markets income up 27% and customer franchise income up 30%. The customer franchise
performed well in each product segment and was able to harness higher client demand in
certain rates and commodities offerings.
Also important to note, that our differentiated international footprint accounted for two
thirds of the growth in franchise income on a year on year basis. It's important to note
that while the markets business has been historically characterised by revenue volatility,
the growing strength of our customer franchise has delivered 40% growth over the last
three years and has been consistent in its performance.
This consistency of markets franchise income is underpinned by the reasons our clients
choose us, the suite of capabilities that we have built over several years of investment in
combination with our unique footprint across the region. It's also because of the high
quality of our customer base which represents some of the largest companies in the world.
ANZ Half Year Results Presentation
7 May 2024
Page 10 of 44
I’ll turn now to how markets activities flow through to Group revenue and how this impacts
the Group net interest margin. While markets income increased 27% this half, this
comprised a 36% increase in other operating income, partially offset by a reduction in net
interest income that due to higher funding costs.
Consequently, the impact of markets activities on the Group NIM delta was an adverse
seven basis points. This comprises five basis points from higher growth in markets assets
relative to the Group, and two basis points due to the higher funding costs.
Now, I won’t spend time on the accounting for markets income as we detailed this in the
roundtable session we ran in March and those materials are on our website. But it is
important to reiterate that the markets business is run to optimise return on equity and
total revenue. In fact, the very things that drove total markets revenue and ROE uplifts in
the half also adversely impacted headline Group NIM.
Now moving to costs. Our disciplined approach to cost management constrained expense
growth to 1%. This is despite our largest cost component, our people costs, being
impacted by inflation from 1 October.
While we continued to progress execution of our strategic priorities, we delivered our
highest level of productivity benefits ever in this half. As a result of these actions, our FTE
reduced by 350 across our higher cost locations in the half which reflects ongoing
optimisation of our footprint, technology simplification, and continued investment into
automation and digital channels.
As I’ve mentioned many times, productivity is an ongoing discipline for us, with more than
$1.5 billion of benefits delivered since 2019. Our productivity efforts this half have focused
on continuing to simplify our technology, with almost half of our targeted applications now
hosted on cloud, consolidating and rationalising areas within our head office functions, and
continuing to build out our Group capability centres.
Productivity is improving customers’ experience, allowing them to engage with us via their
channel of choice. For example, in Australia Retail, close to 1 million conversations were
undertaken through our Message Us capability in the half, up 58%. With 40% of those
conversations not requiring banker support.
Meanwhile in commercial, almost half of our small business lending applications were
processed through streamlined processes that translated to a 10% reduction in time to
money year on year.
ANZ Half Year Results Presentation
7 May 2024
Page 11 of 44
Digital origination of transaction accounts increased 35% year on year. It is this continued
focus on productivity that allows us to invest in our strategic initiatives and drives business
growth and momentum.
Moving to individual provisions. The work we have undertaken over a number of years to
reshape our lending book continues to drive strong credit quality outcomes. In line with
the last two years, this half we saw another low IP loss rate outcome of one basis point,
with a charge of $38 million.
We believe the outcomes of our portfolio improvement are long term in nature and have
delivered a structural change in expected loss rates, resulting in our peer leading low
provision charge and IP loss rates in recent years.
Like the rest of the sector, we are starting to see pockets of stress emerge, primarily in
parts of our Australian mortgage and New Zealand portfolios, as our customers deal with
the impact of high interest rates and significant cost of living pressures.
We continue to work with our customers to provide any support required. It is important to
no te, however, that these delinquency increases are off a historically low base and
delinquency levels continue to remain below 2019 levels.
I’ll comment briefly on the collective provision balance which stands at $4.05 billion. Since
the first half of 2020, we’ve witnessed a number of pronounced economic trends. A
pandemic, a massive influx of liquidity, the subsequent rapid rise in cash rates, a dramatic
rise in and stubborn levels of inflation, and a steep rise in home loan interest rates.
Over the past year, these conditions have moderated. As a result, several economic
indicators are beginning to move back into a more normal range. At the same time though,
as I said earlier, there are signs emerging of stress in parts of our New Zealand and
Australian housing portfolios.
Now, post the introduction of AASB 9, banks were required to take more of a forward-
looking view of expected future credit losses. Including management’s forward-looking
views on the range of potential impacts.
As we see less of these extreme events and we return to what we could characterise as
more normal economic conditions, that could provide us with the comfort to reduce the
weightings of both the downside and severe economic model scenarios and consequently
increase the weighting to the base case economic scenario.
ANZ Half Year Results Presentation
7 May 2024
Page 12 of 44
The outcome of such changes would naturally result in a future release to our current
collective provision levels. However, given the level of volatility and uncertainty that still
exists from a cost of living, inflation, direction of interest rates, and the geopolitical
perspective, we believe our provision levels are prudent and appropriate, for now.
We have further strengthened our balance sheet with high levels of capital and liquidity.
Our CET1 ratio at the end of the half was 13.5% including the impact of the partial sale of
our AmBank investment.
Our CET1 ratio proforma for both Suncorp and the $2 billion on-market buyback, remains
very strong at 11.8%. On an internationally harmonised basis, we continue to be one of
the highest capitalised banks in the world.
This capital strength provides capacity to support our customers, and to take advantage of
growth opportunities when they are on strategy and return accretive. We also announced
today $0.83 per share dividend partially franked at 65%.
The franking reflects the geographically diverse nature of our business, including the
strong performance of our non-Australian businesses. We will continue to maximise the
distribution of franking credits to our shareholders as they are more valuable to you than
to us.
I should note that post-completion of Suncorp Bank, our franking generation will improve.
Similarly, our liquidity position continues to strengthen. With an LCR ratio of 134% and a
well-diversified funding base by geography and customer segment. We have also replaced
our TFF maturities and have completed two thirds of our full year term funding needs in
the first half.
Looking forward, my areas of focus support the Group key objectives as outlined by
Shayne. First, our financial performance remained strong with all four businesses
performing well and with management actions producing stable NIM outcomes over the
last three quarters.
Looking forward, we see margin headwinds moderating as deposit mix begins to stabilise
and asset margins become less of a headwind. We are optimistic that the current trends,
our business momentum, and diversification will be supportive to net interest income. The
competitive environment, however, remains unpredictable and we will continue to refine
our settings to optimise our financial outcomes.
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Second, diversification remains a positive differentiator for us particularly because of four
largely uncorrelated businesses. Having a set of healthy businesses is crucial to leveraging
diversification benefits.
In our case, all four divisions and each region are meaningful contributors to the Group
performance, are each profitable with above cost of capital outcomes, and we continue to
target growth across our portfolio.
Third, we are consistently executing our strategic initiatives and will accelerate where we
feel appropriate. For example, in the second half, we will uplift investment in preparing
Suncorp Bank for integration. As well as accelerating the work required to seamlessly
transition our existing customers and Suncorp's customers to the superior ANZ Plus
propositions.
Fourth, we have a longstanding focus on cost management. While fully offsetting very high
levels of inflation remains challenging, you have seen us demonstrate a disciplined and
growth oriented investment approach and a consistent focus on productivity for many
years. You should assume this continues.
Finally, we remain committed to maintaining a strong balance sheet. This is vital for us
because it allows our businesses to deliver our commitment to our customers, provides us
with the capacity to access accretive opportunities.
So with that, thank you very much and I’ll hand back to you, Jill.
Jill Campbell: Thanks, Farhan. A reminder, if you want to ask a question, you need to do
that by the phone. I'll hand to the operator, [Ashley], who will just very quickly walk you
through the procedure which you've heard a million times but we're going to tell you
again, and then we'll hand to Matt Wilson for the first question. T hanks, Ashley.
Operator: Thank you. If you wish to ask a question, please press star one on your
telephone and wait for your name to be announced. If you wish to cancel your request,
please press star two.
If you're on a speakerphone, please pick up the handset to ask your question. I'll now
hand back to Ms Jill Campbell.
Jill Campbell: Thanks, and over to you, Matt.
Matt Wilson: (Jefferies, Analyst) Yes, good morning, team. Matt Wilson, Jefferies. Just a
couple of things on capital. Firstly, you've still got your APRA overlay of $500 million. Is
there any sort of clarity or colour you could provide as to when it can be released?
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Then when we look at the risk intensity of the home loan book, it's sort of moved from
27% to 30% which is well above peers. Is that an opportunity for optimisation going
forward?
Shayne Elliott: Farhan, you want to take it?
Farhan Faruqui: Yes, maybe I'll take the capital question first, Matt. Thank you for that.
Look, I think at this point, our - sorry, I don’t remember the question - what was the first...
Shayne Elliott: The $500 million overlay.
Jill Campbell: Yes, the overlay.
Farhan Faruqui: Yes, the $500 million. So the operation risk overlay is something we are
continuing to work on. We are investing obviously and ensuring that we are meeting the
requirements from an APRA standpoint as well as improving our own operational risk
outcomes.
That work is well progressed. We continue to engage with APRA on that. We will
eventually provide more feedback to you once we have more development on that. But
look, there's no timing at this point that is clear. But I can assure you that our work is
progressing very strongly.
On the second question on the home loan risk-weights, look, they're affected by some
model impacts. We are discussing those with APRA, as well as looking at product mix and
other impacts of things like the Breakfree product expiring.
So we will continue to work with those model changes and continue to engage with APRA
to see if we can get some reduction in our home loan risk-weights. But it's in progress at
this point, Matt.
Matt Wilson: (Jefferies, Analyst) Okay, thank you. Just finally on ANZ P lus slide 10, you
give us a breakdown of age group. Are you surprised that the products resonated more
with particularly people over 50? But if you combine 35 plus, it's a larger percentage of the
customer base.
Shayne Elliott: Yes, I think it's a great...
Matt Wilson: (Jefferies, Analyst) ...product resonates.
Shayne Elliott: It's a great observation. I think the reality is we are surprised. I mean I
don’t think we ever thought it was only for a younger sort of millennial cohort. It wasn't
designed around that. It was designed around people with a saver mindset who wanted to
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improve their financial wellbeing, but I think the reason we put the data in there is
precisely that. I think it's a far more diversified...
Matt Wilson: (Jefferies, Analyst) Yes.
Shayne Elliott: ...proposition than people may have otherwise thought. What's been
interesting to see is despite the growth in the chart there and we continue to grow, those
numbers have remained remarkably stable. It wasn't like there was any - yes, it is
continuing to attract a diverse demographic over time. Look, I don't know Matt and we
should probably do some work on it with Maile and that. For example, I think while it's
digital I think the high levels of security in that may well be attracting older people, oh I'm
putting myself in that category, older people like me may be more attracted to some of
that, but yes, I think it's a really strong outcome actually but we should do some more
work onwhat the drivers are. Thanks Matt.
Matt Wilson: (Jefferies, Analyst) No worries. Thanks team.
Jill Campbell: Next one is Ed Henning from CLSA. Thanks Ed.
Ed Henning: (CLSA, Analyst) Thank you, Jill. Ed Henning from CLSA. A couple of questions
from me. Firstly, one just on the costs outlook. Farhan, you talked about an uplift in the
second half around the Suncorp investment. Can you just give us a little bit more of a feel
on the outlook of costs as a first one, any headwinds or tailwinds coming into the second
half from the first half as a first question please?
Farhan Faruqui: Yes, thanks Ed for that question. As I said, there are going to be uplifts
and particularly around Suncorp integration work that obviously will get more momentum
once we get the full approvals through. Look, at this point as you know there is also
investment seasonality typically pretty much across all banks their first half is lower and
then it picks up in the second half, so I'm just pointing that seasonality element out to you
through that point.
We certainly see from a headwind perspective vendor inflation still continuing. Obviously
fro m a salary and wages perspective most of that impact has already come through in the
first half because it goes up October one so you won't see that being a dramatic shift in
the second half. As I've said, we continue to work through productivity. We said we'd
deliver $200 million of productivity in the first half. Those benefits will continue into the
second half and we continue to have a large pipeline of actions from a productivity
standpoint that will also show up to offset some of these uplifts in the second half.
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So overall, our guidance Ed, is pretty much the same as what we had said at the end of
last year which is that we continue to be confident that we will offset some parts of the
inflationary challenges that we have in front of us.
Ed Henning: (CLSA, Analyst) Okay, that's helpful. Typically, obviously with employees or
wage costs being the biggest part of your component, your costs with the salary increase
going through, is that a bigger headwind traditionally than the second half uplift in
investment spend or they both kind of neutralise each other out?
Farhan Faruqui: Well, I mean so you won't see a further uplift in the salary and wages
because that's already gone through so that is a net zero uplift. I think the real offset in
terms of the impact from higher investment or other vendor inflation type in headwinds is
really more on the productivity rather than on the salary and wages being held equal. So
yes, it's effectively a productivity outcome that we are seeking in terms of offsetting
inflation.
I think it is important also that the salary component that we have shown in our slides
does have a few elements to it. It's obviously salary and salary related, so when we talk
about inflation that number which is on the slide on operating expenses which is slide 25,
the $250 million which is - it includes salary and wages, it includes vendor costs and
vendor inflation and it also includes other salary related items such as long leave
provisions et cetera. So, we don't expect any of those salary items to repeat again in the
second half in terms of additional uplift.
Shayne Elliott: I would just add a couple of things, Ed, on it. I would say so first of all
relative to our peers, I mean we all suffer from the same environment, you could argue
that given our international footprint and remember more than half of our people don't live
in Australia, they live somewhere else and many of those places we operate in actually
suffer from higher wage inflation. We all suffered from the same sort of drivers but ANZ
when you look at the half on half clearly outperformed in terms of managing costs well. I
think that again shows our ongoing commitment around productivity.
Then the second thing I would just comment on is the fact that that is also not coming -
our management of productivity is not coming at the cost of underinvesting. I mean I think
you're all aware that we capitalise very little of our investment. I think Farhan can correct
me if I'm wrong on the latest data but it's around 15% of our investment sla te is
capitalised. The rest is - so we're not getting the benefit of putting stuff on the balance
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sheet and deferring it to later and yet we continue to invest at or above the level of our
peer group because as we want to build a stronger bank for the future.
Farhan Faruqui: Yes, that's correct.
Ed Henning: (CLSA, Analyst) Thank you and just a second question on margin. Overall
running into the second quarter the underlying margin fell by one basis point. In the blue
notes piece, you talk about the Retail margin being up one basis point on the exit. You did
well on the Institutional margin, that was up three basis points in the half. Can you just
give us a little bit more of a feel of what you're seeing going forward on the margin? A
couple of your peers have talked about the mortgage margin getting - the outlook getting
better for that and the headwinds easing, but any more commentary on the margin
outlook would be helpful.
Farhan Faruqui: Yes, Ed, I think you've sort of described it really well. On Retail we are
starting to see some favourable trends in terms of the deposit mix stabilising, the asset
margin headwinds slowing, which is why we were able to exit March one basis point up
from September. Again, in Retail - sorry, in Institutional we have had strong discipline
around margins for assets and deposit margins we have been managing very actively to
ensure that we have an overall margin expansion in the Institutional business half on half.
So again, positive trends going into the second half. We have seen some more pressure
particularly in terms of liabilities in Commercial, but again, those pressures have been
easing as the mix shift has been slowing and the New Zealand housing portfolio has
actually expanded margins half on half. There are lots of favourable factors supporting
margins going into the second half. As I said, the ITOC rate will continue to be beneficial.
We will have a smaller wholesale funding task for the second half relative to the first half
where we have done almost two thirds of our wholesale funding for the year, particularly
as the TFF matures.
I think what I would say overall is that margins are looking stable going into the second
half. Now, of course competitive pressures as well as the rate o utlook because there are
still different views in terms of the direction of rate movements will determine where we
end up. I think overall I would say that margins are looking positive going into the second
half.
Jill Campbell: Thanks Ed. Next question.
Ed Henning: (CLSA, Analyst) That's great. Thank you.
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Jill Campbell: Sorry, Ed. Thank you. The next question is from John Storey from UBS.
John Storey: (UBS, Analyst) Thanks very much. Good morning team. I just have two
que
stions for you. Shayne, I think you called out how the business has transformed over
the last few years and how risk adjusted margins have improved quite substantially. I just
wanted to reconcile that with one of the tables that you've got in your one half results
decks. Just looking at long run loss rates and just noticed that they have increased
particularly in the Institutional business. They have gone from 19 to 21 basis points.
Shayne Elliott: Yes.
John Storey: (UBS, Analyst) Maybe you could just comment on the thinking behind that.
Shayne Elliott: Sure. I'll actually get Farhan to...
Farhan Faruqui: Yes, John, let me just give you a quick answer on that. The fundamental
shift, as you said, has been in Institutional which are up two basis points half on half. Part
of that is a mathematical outcome because we had lower facility utilisation in the half, so if
you like the denominator is smaller which increases the loss rate without any fundamental
shift in terms of risk appetite and the kinds of risk we are taking.
The other part of it is largely driven by the fact that there have been some small business
mix changes which increases the weighted average gap, the credit ratings of the overall
portfolio, so it's really nothing substantial. There has been no change in the view we take
risk in Institutional. There has been no downgrading of risk appetite. It's just partly
mathematical because of lower utilisation and partly because of the mix changes within the
portfolio.
John Storey: (UBS, Analyst) Okay. Excellent, thank you Farhan. The second question is
just, Shayne, just for you just around Suncorp Bank. I assume you have had a chance now
to see I guess the impact of this mortgage competition on bank's results in this reporting
period. Just wanted to get your sense on how you think about the competitive landscape
and how you think about, strategically, how you think about Suncorp Bank just given the
change in the competitive landscape and the economics? Just more broadly I guess around
Retail banking.
Shayne Elliott: Yes.
John Storey: (UBS, Analyst) Has that fundamentally changed your views there?
Shayne Elliott: Thanks for the question. No, it hasn't fundamentally changed our views
here. I mean I think we need to go back to basics here and remind ourselves why we were
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attracted to Suncorp Bank. What we are acquiring here isn't the home loan book per se, I
mean we get that for free if you will. What we are really acquiring is 1.2 million customers.
What we were after and what we were really attracted to is the deposit base and that
deposit base has significant value.
Again, when we do the maths and if you were to revalue the bank today versus when we
acquired it, there's no doubt there has been a change in where that value is derived from.
One might argue that the home loan book is of lower value today than it was then, but the
deposit book is of higher value and so the fundamentals are still strong. We wanted
Suncorp because we want the customers, we want the deposit base and we want to be
able to bring them over onto ANZ platforms which we will be able to service them at a far
lower cost.
I mean I point you again to those ANZ Plus stats today about the cost of acquiring and
cost to serve being 45% lower and 30% lower than ANZ Classic. Now, we don't have total
insight into the cost to serve and cost to acquire at Suncorp, but one is going to imagine
that again the gap will be very, very significant. So, by moving those customers across we
can significantly generate scale at a much lower cost, but again, I just remind you the
value comes from the deposit base in particular.
John Storey: (UBS, Analyst) Great, thanks so much Shayne.
Shayne Elliott: Thanks, John.
Jill Campbell: Thanks, John. The next question is from Andrew Lyons from Goldman Sachs.
Andrew Lyons: (Goldman Sachs, Analyst) Thanks and good morning. Thanks, Jill. Just a
question on your NIM Farhan. Your disclosures today suggest that your ex-markets activity
NIM was down two bps half over half and yet when we look at your divisional disclosures
your Retail NIM was down 12 bps, your commercial NIM was down 7 bps and New Zealand
down 4 bps. Now, I realise they're not entirely like for like but can you just perhaps help
us to reconcile I guess the top-down view of the Group underlying performance on margin
with the bottom-up d ivisional view? Is it just the ex-markets Insto. NIM was up three basis
points or is there something else going on there?
Farhan Faruqui: No, look, I mean I think largely that was the main driver of keeping some
stability on Insto. ex-markets. Obviously, the replicating portfolio overall was a benefit as
well in terms of a tailwind for the half. We have also had some small benefit in the centre
from, if you like, lower volumes. Look and there's been some benefit of course of some
reduction in the ESA account and shift to semi-govs, et cetera.
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A lot of those things have been helpful in terms of driving the overall margin reduction
underlying to about two basis points. Yes, you're right, I mean look there's Retail half on
half, as I said, was really a flow through of the impacts of second half and Commercial
from a deposit standpoint has actually been - is now, as we exit the half, is actually
holding reasonably stable. The margin trends became increasingly stable as we went
through the quarter. In fact, I would say that the exit rate for March is fairly stable relative
to where the second quarter was.
Andrew Lyons: (Goldman Sachs, Analyst) Yes, that's very helpful thanks Farhan. Then just
a second question for you just on your provisioning balances. You have $1.4 billion of CP
above your base case and mentioned there might be an opportunity to reduce weightings
to the downside over time. Can you perhaps just provide some context as to how close to
your base case CP might you be willing to move? Maybe another way to ask the question is
what weighting could you see the 46% to the base case move to over the cycle?
Farhan Faruqui: Yes, look, I'm happy to start but I think maybe Kevin or Shayne, you
might want to add. Look, I think it's impossible to know today what's going to happen over
the next six months. My comment and remarks were basically around the fact that if the
environment continues to become more normalised as we start to see some of those
environmental factors moderating, then there is absolutely potential to reduce the severe
and downside weightings and move towards base case which of course ends up releasing
collective provisions.
Now, we are in that normalisation process. We have to see how the next six months play
out. As I've said, there are a lot of things that remain open as you would agree, John,
because we have had, you know, we don't know the direction of interest rates. There are
different views in terms of what interest rate directions will take. Inflation continues to be -
it' s too early to call it if you like, so it's hard to say when and how much. All we are saying
is that today's trend would suggest that there is potential for a collective provision release
assuming no other environmental changes.
Shayne Elliott: Before we hand to Kevin, I think math - and you know this but just to state
the obvious - mathematically over the long run you would expect the base case to be more
than 50%. You would expect it to be a bell curve and you would expect it to be equally
distributed between the upside and downside. So, we have ended up, along with the rest
of the industry, in this quite unusual situation where the base cases at less than half and
all of the weighting is to the downside.
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That's an unusual extreme. I think it's - and obviously we think it is entirely appropriate
given where we are as an economy, but you would expect that to normalise in the base
case. It will certainly be above 50%, if not around that two thirds number with a tail on
either side. Kevin, I know you've done some modelling.
Kevin Corbally: Yes. The only thing I would add to what you both said is that the
accounting standards actually require us today to take a forward look into what we believe
future economic environment might be like and the impact on our customer base. S o, i f
today we believe that it was going to be different, we would have actually reflected that in
the numbers. What we are seeing though is there has been a lot of stress over the last
four years, a lot of volatility, to the extent that we're to return to what I'd classify as
something akin to normal conditions, then we would probably look, as you said Shayne, to
allocate more towards the base.
At the moment, just to clarify, we've got $1.9 billion above the base case. What you would
expect if we have more normal conditions is that we would allocate more towards base,
but at the moment we think our levels are prudent and appropriate for what we see in the
environment today.
Andrew Lyons: (Goldman Sachs, Analyst) Thanks for that.
Jill Campbell: Thanks Andrew and we will keep with the Andrews now. Andrew Triggs from
JP Morgan. Thanks Andrew.
Andrew Triggs: (JP Morgan, Analyst) Thank you, Jill. Morning. Could I ask a question
please on slide 30? The ROE, divisional ROE slide, which is helpful, shows the Retail bank
at 11% moving up towards the Commercial bank at 25%. If you showed that to someone
for the first time, they would assume the Group ROE would be much higher than it was,
which was 10.7% when you strip out the Suncorp Group capital.
Can I just be clear, when you I guess judge your divisions including in the Retail Bank
where mortgage growth has actually been quite strong, that you're holding those divisions
to account for a fully allocated ROE which shareholders actually see when you weigh all the
divisions?
Shayne Elliott: Yes, it's a really pertinent question. The answer is yes and no, so to the
extent we do a little bit of both. Yes, so we - these are - so these ROEs are essentially on
the controllables. If I look at - just pick anybody, Maile or Mark or Clare or Antonia, these
are their controllable deliverables, yes, in terms of that's their balance sheet that they
control to a large extent. Some of the costs are allocated et cetera. So yes, this is
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primarily theirs but then we as a team as clearly accountable for the whole and so we as a
team very much are accountable and in terms of our score cards that we're accountable to
our Board as individuals and as divisions, we have both.
Hopefully that makes sense. So, there's certainly, you're quite right, I mean the gap
between the mathematical average of that and the Group is - it's material and that is not
left outside anybody's accountability. I mean clearly Farhan and I spend a lot of time on
that but my Group Executives are jointly accountable for that as well.
Farhan Faruqui: I think the only point I would add to that Shayne because it's an excellent
summary. I think it's really a little bit of making sure that we hold the divisions
accountable for the capital that they control and that they're required to hold from an
APRA standpoint, because that's the best way to judge their underlying performance. That
doesn't mean, as Shayne said, that at a Group level all of us are accountable for the full
capital but it's about making sure that we are actually providing an appropriate apple to
apple, if you like, view of how each division is performing from a return onequity
perspective.
If you were to say allocate all of Suncorp's capital to each of the divisions or all of the
capital associated with our Asian partnerships, we would have done our job in terms of
ticking the box on allocation but I'm not quite sure that either Mark, Maile, Clare or
Antonia can control those outcomes. So, to some extent it's about making sure we are
judging the business on their underlying performance and then holding ourselves all
accountable for the total Group outcome.
Shayne Elliott: One last, sorry, one last clarification Andrew. Every bit that is not in there,
so whether it's the Asia partnerships or anything else that sits at Group, somebody in my
team, it could be me, has primary accountability for that capital line. Yes, so every single
dollar of capital, the whole $70 odd billion, somebody has primary accountability for and
then as I say we then jointly manage the whole. Hopefully that makes sense.
Andrew Triggs: (JP Morgan, Analyst) Yes.
Shayne Elliott: Yes, thanks.
Andrew Triggs: (JP Morgan, Analyst) Yes. I guess...
Shayne Elliott: Yes.
Andrew Triggs: (JP Morgan, Analyst) ...I mean drilling into the Australian Retail component,
so that was 11%. At the full year 2023 it was 14%.
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Shayne Elliott: Yes.
Andrew Triggs: (JP Morgan, Analyst) I don't have the second half number but...
Shayne Elliott: Yes.
Andrew Triggs: (JP Morgan, Analyst) ...it obviously came down a lot and that was the, you
know, you were growing home loan balances quite quickly in the period and that was being
done with cashback both $2,000 in refi., $3,000 i n first home buyer market. Can you just
explain? I mean if you threw Suncorp capital in, I probably would ignore that, but if you
were to put a normal loan loss charge on the Retail division the 11% ROE would be lower
again.
Shayne Elliott: So, great question. That's a really...
Andrew Triggs: (JP Morgan, Analyst) So, just trying to...
Shayne Elliott: Yes, I can clarify that.
Andrew Triggs: (JP Morgan, Analyst) ...reconcile the growth in that division.
Shayne Elliott: Yes, no, that’s a very good question. So you’re right, that these numbers
reflect actual credit losses, but we - and again, I don’t want to sound like it’s overly
complicated, but you know, so we do what we just said and we also look at that on an
expected loss basis, okay? So, to your point, the businesses also have an understanding of
what their expected loss is and that’s when we do our pricing, so the pricing tools use
expected loss, not actual.
Now historically, just out of - I mean the one that’s been the most difference, the division
that’s had the most difference between actual and expected has actually been Institutional
and you know the history there and obviously that’s better, coming into better alignment,
but we do measure on both, expected loss, ROE on expected loss basis and ROE on an
actual loss, but pricing is made on an expected loss basis. So just to give you a number, so
in Australian Retail today, the expected loss rate we use is five basis points, but the actual
is less than one.
Andrew Triggs: (JP Morgan, Analyst) Thanks Shayne. Second question is just on ANZ Plus,
so you’ve provided a bit of an update on the home loan origination piece, interested just
with the - I think if my memory serves, the Suncorp customers will be migrated before
ANZ Classic customers, also interested, I think home loans is a testing bed for the lending
product and credit cards would be put on later. Can you give an update please on the
sequencing and ultimately, I guess what I’m after really is how long will we have the dual
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run costs of the platforms before you get genuine migration of the ANZ Classic customers
across?
Shayne Elliott: So clearly, again it’s a good question. We actually, just out of interest, we
took our Board through the latest update on this just yesterday actually, we spent quite a
bit of time on this. So what we’re doing is we’re building a really contemporary digital
resilient platform in ANZ Plus.
At the moment it essentially has a save and transact capability and an emerging home
loan capability. Clearly the home loan capability we have there today is extremely basic
and we have to build out its functionality to have joint borrowers, offset accounts,
investment properties all that sort of stuff, first home buyer, whatever, yes? So we have a
roadmap of building that out.
In modern tech world, that’s not a waterfall thing where we have a hard coded waterfall
approach to when we do that. It’ll depend on the environment that we’ve got. The plan
that you laid out is correct. The plan is that for Retail customers in Suncorp, whatever the
brand we decide is, whether it’s blue, yellow, whatever, Suncorp, ANZ, doesn’t really
matter, we will move those customers onto the Plus platform to get the benefits of scale.
We continue - we still don’t own Suncorp, we still don’t have perfect insight into their
technology stack and some of the technical details that we need to know in order to make
decisions about the right timing. At the moment the working assumption, given scale and
given what we know, but it will - it is almost certainly going to change, is that we will
migrate the save and transact customers at Suncorp first, at some point and then later we
would follow on with their home loan customers and it’s likely that we would migrate the
bulk of their home loan customers before we migrate the ANZ Classic home loan
customers.
What we’re looking at is opportunities where it’s not a binary choice, if that makes sense,
where we can achieve a lot of the benefits of the better platform earlier than just doing
binary like and what I mean by that, it’s not going to be - we just all go all boots in on
Suncorp and then later do all ANZ Classic, it won’t be; there’ll be a blending point.
The time at which we get to the - the benefits will accrue, we don’t have to wait right to
the end to start getting the productivity benefits, I mean we get those early on and really
where the benefits come is if our front book, if you will, becomes a - the sooner we make
our front book offering on ANZ Plus, the sooner we get those benefits and we’re already
seeing that, I mentioned the cost to serve, cost to acquire.
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We need to get to the same point and that’s not going to be in the next year or two where,
you know, where the vast bulk of our home loan acquisition front book will be on Plus,
that’s still going to be, you know, three, four years away.
Andrew Triggs: (JP Morgan, Analyst) But Shayne, is it fair to say a very large savings will
be when the Classic gets turned off?
Shayne Elliott: When Classic origination gets turned off, because actually maintaining a
home loan sitting on our old, so doesn’t really cost very much, yes, not really. It’s the
acquisition where the cost is and so the sooner we can acquire - and you know, it’s the
same with save and transact, the more we can get customers choosing, you know, onto
the ANZ Plus platform, ah, for acquisition, we get exactly those benefits we’ve just talked
about, the 45% and the 30% benefits and it’ll be - I don’t know what the number will be in
home loans.
I mean the early testing on home loans are that the cost to onboard a customer in home
loans is substantially lower than it is in Classic, but you know, we’re at very, very early
days. But you’re right, once we move the front book primarily, that’s where the benefit is,
not so much the back book. The back book that - because servicing the back book is, it’s
important, we want to do it, because it will actually help, but it’s not really where the main
game of savings will be.
Farhan Faruqui: But I think it’s also fair that as we scale ANZ Plus, then some of the run
costs of Classic will start to reduce as well, so you - so there are benefits that are going to
start flowing through, but ultimately when we actually switch off the systems and
origination in Classic, then of course that’s where the rest of the cost falls out. But it’s not
that we have to wait for that to get any benefits.
Andrew Triggs: (JP Morgan, Analyst) Thank you.
Jill Campbell: Thanks Andrew, we’ll go to Victor German from Macquarie.
Victor German: (Macquarie Group, Analyst) Thank you, Jill. I was hoping to ask a few
questions on your slide 22 and I apologise in advance for the shorter-term nature of my
questions, but I think it’s just important to understand the key margin drivers. So firstly, I
know that your average interest earning assets in the Institutional bank and the corporate
centre declined, which I’m getting must have been driven by a reduction in liquids or
reduction in ESA balances as GLAs increased.
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In the past you have provided margin impact from liquidity, which was generally negative
to margins, but broadly neutral to revenue. It would be good to understand if that was the
driver in this result and where it was captured in first half 2024. I’ll ask my second
question after.
Farhan Faruqui: So, just so I understand your question, Victor, you’re basically asking
what is the impact in the underlying movements on assets and funding that’s driven by
liquids, is that what you’re saying?
Victor German: (Macquarie Group, Analyst) Yes, I mean maybe you can give me a better
explanation, but I’m just looking at your average interest earning assets and they’re kind
of flat.
Farhan Faruqui: Yes.
Victor German: (Macquarie Group, Analyst) And the reason they’re flat is because the
corporate centre is down and Institutional business is down, so I’m assuming, unless you
tell me otherwise, it’s driven by liquids or a reduction in ESA balances. In the past there
was a drag to margins which you generally highlighted, albeit neutral to revenue, I just
want to understand how that plays out in this result.
Farhan Faruqui: Yes, so look I think from an asset and funding mix standpoint, there is a
benefit that comes from the reduction in ESA and move into semi-govs et cetera. That
benefit is roughly about one basis point, that is the shift from liquids in the Group centre.
So that is a positive in the assets and funding mix. The negative is the obvious things like
the mix shift between save and transact to TDs, that is a negative. So overall it balances
out from an asset and mix standpoint.
I think the other thing to note though, Victor, is that overall from a Group standpoint, it’s
actually better to move the liquids into semi-govs out of ESA because you get a margin
uplift. So it’s overall revenue positive, the shift from ESA to semi-g ovs, but overall, as I
said, the shift in deposits offset by a better outcome from a liquid standpoint.
Victor German: (Macquarie Group, Analyst) Okay, no that’s super helpful, so about one
basis point. And actually, interestingly, my second question was actually kind of - you
partly answered it, but I think it would just be good to get a little bit more colour on what’s
sitting behind the deposit pricing piece and the asset and funding mix buckets in the
waterfall, which are showing kind of net balance of zero, despite the fact that we know
that TD pricing is higher and the impact of mix is still negative as we can see on your
balance sheet.
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I know that when you adjust for differences in the way that you disclose your replicating
deposits to your peers, it appears that your headline trends, from kind of both of those,
are materially better than peers and disclose about a five basis point decline in margins as
a result of those issues. So it would be just good to understand why your trends are better
and whether there is any potential timing differences or why is it such a small impact to
margins from deposit pricing and deposit mix?
Farhan Faruqui: So the deposit mix is overall about two basis points adverse half on half.
Asset mix benefits effective count to that from a divisional weightings point of view, so
more commercial growth, lower trade in the mix, et cetera. So that’s sort of the broader
mix factor. From a deposit pricing standpoint, as I said, we’ve got benefits in terms of
Institutional because we had better outcomes from Institutional deposits ex markets
perspective. We had more pressure, if you like, in New Zealand in Commercial, so they
offset each other as well.
So it’s basically a lot of ins and outs, Victor, that effectively negate the pressures that we
had from a TD perspective. So at call, for example, Institution is up, while TDs are down,
so that helps negate some of those deposit pricing pressures.
Shayne Elliott: I mean the simplistic answer is it’s a benefit of the diversified book that we
have.
Farhan Faruqui: That is, yes.
Shayne Elliott: We have to use that diversification actively and use it well, so it’s not an
accident, but that is where that - so you’re right, we have more moving parts here and it
means if we use that smartly, which obviously we think we do, we’re able to offset whether
we see adversity or able to offset that by managing on the other side.
Farhan Faruqui: It’s a bit of a grind, to be honest, Victor, to what Shayne is saying. I mean
it’s not one of those things where you just make broad settings decisions at the beginning
of the half and then run through the whole half. We’re actually doing this on a weekly
basis, we’re looking at where we need to reduce, where we need to increase, how we want
to change price, et cetera. So, it is very much a targeted outcome, it’s not one that just
falls into our laps.
Victor German: (Macquarie Group, Analyst) It sounds from your earlier answers that those
two buckets, the deposit pricing and the mix bucket, you think should be broadly similar in
the second half as you’ve seen in this half?
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Farhan Faruqui: Yes, I mean there’s nothing to suggest at this point, just based on where
the trends are when we exited March, that would suggest otherwise. So we think that is
likely to be stable. But Victor, you know as well as I know that it’s impossible to sit here
and predict six months out. We just have the confidence, to the point that Shayne was
making, that we have a balanced portfolio where we can continue to allocate and make
sure we get the most optimal outcome, but current trends are certainly encouraging.
Thank you, that’s very helpful.
Jill Campbell: Thanks Victor. We’ll go to Richard Wiles from Morgan Stanley.
Richard Wiles: (Morgan Stanley, Analyst) Good morning, I’d like to ask some questions on
ANZ Plus also. Shayne, you’ve been going for about 18 months with the deposits, you’ve
grown $14 billion, which is quite a big number, but it is only 8% of the deposit base. So,
my fist question is how long do you think it will take to migrate all the ANZ deposit
customers to ANZ Plus? Is this a three- or four-year program, is it a seven- or eight-year
program?
Shayne Elliott: Yes.
Richard Wiles: (Morgan Stanley, Analyst) Then my second question relates to pricing. I
think the rate is 4.9% for the savings account at the moment. That’s a pretty high ongoing
rate for a savings account. Westpac eSaver is 1.1%, CBA NetBank Saver is 2.35%, so how
are you going to ensure in the medium term that ANZ doesn’t become a high-cost deposit
franchise once the customers migrate?
Shayne Elliott: Great questions, all right. So let’s talk about, so in terms of migration, so
we’re really pleased with the FUM growth. Remember of that $14 billion, around half of it
is new to Bank, so these are people who are not migrating, these are people who are
choosing to come to ANZ. In terms of how long it will take, remember at this point people
are opting in. We’re not - we haven’t migrated anybody, we put an offer out there and
people are free to choose and pleasingly 35,000 people a month are choosing ANZ Plus
and that number has remained remarkably consistent.
So, in terms of where you start, we hope to do a test migration later in this calendar year,
we will actually take some digital native ANZ Classic save and transact customers, you
know, people who don’t have a credit card and a home loan and all that, so relatively
simple and move people across. We’ll do that as a test, just like we’ve tested everything
else in Plus to make sure it’s a great experience and that it works and customers like it and
that we can do it.
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Then we hope to scale up migrations and we do that in waves. We won’t be - it’s not one
of those things you do over a weekend, et cetera, we will do it in waves depending on
customer behaviour, the usage, the attractiveness of that customer, we’ll move people
over. It’s not a five-year migration.
When you’re talking about savings and transact accounts, it’s a couple of years, it’s not
five and the reason we don’t have - I don’t have a perfect number for that, I mean we
have a plan, Richard, which I’m not going to share, but we’ve got to find out. We’ve got to
go and test and see how this works and what the customer reactions are to it.
You will see today already and hopefully you are an ANZ customer, if you are an ANZ
customer, you will be already receiving some information from ANZ Classic that is
preparing customers for that migration, so we’re simplifying our portfolio, modifying some
of the terms and conditions, et cetera, getting ready for the time, whenever that might be
over the next couple of years, where we will move people across. So that’s sort of the
timetable for that.
Obviously customers who are more complex, like somebody like myself who has a savings
account and a credit card and a home loan, they will be later, but we’ve actually got some
really great ideas that we’re piloting and working on that we can, certainly from an opt-in
point of view, encourage those people to move some of that relationship, like I do today,
where I bank my savings and everyday banking on Plus, but have my home loan sitting in
Classic and a way to make that delightfully easy, is the term we use, but to make that
relatively simple.
So that’s the plan there. So next year will be really to start the heavy lifting on migration
of Classic customers for save and transact and that’s when you’ll start to see those
volumes, hopefully, start to rise in terms of value.
In terms of the point about rate, it’s a fair question. Obviously with a new product, we
want it to be out there, remember it’s new and by any measure you look at it, it’s the most
successful launch of a new banking platform in Australia compared to neos or other bank
sub-brands in terms of the rate of growth and we monitor that pretty closely. What we did
more recently is we have not - we are not - I mean you have chosen a couple of
competing products, we are not the highest rate in the market. We are high, but we’re not
the highest.
In fact at the last RBA rate increase, we did not pass on all of that to our customers and I
would just point out that that rate, while appropriate for most customers, is only on the
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first $250,000, which again is a big number. The plan is we’ve got to get scale and really
then put an indicator on, I mentioned in my talk, was the number of customers that are
engaging with the financial wellbeing feature, which says - and the number who qualify as
a main financial Institution customer is really high.
The people who are getting salary, putting their salaries into the account, enrolling in
PayID and we put some numbers in there. Those are the indicators of the people who are
engaged and using Plus who are not just leaving money there because they’re attracted to
4.9%, yes? So over time, as we build out those services, as we build the confidence in
that, we will obviously have to change our approach to pricing.
The other point at the moment is and again, I don’t want to bang on too much about this,
at the moment it’s a really simple offering. There’s a transaction account, a savings
account, clearly we need to enrich that with term deposits, things equivalent of the bonus
saver kind of things as well, which are appropriate for different parts of the market,
customers are attracted to different pieces, so we’ll broaden out that over the coming 12
to 18 months as well.
But that’s the strategy, if you will, to make it the most engaging platform, the most useful,
the one with the best tools, so that people say, hey we want to pay a decent rate, but
that’s not going to be the, that’s not the hero feature of Plus. But I will say, being lower
cost to run helps.
Richard Wiles: (Morgan Stanley, Analyst) Okay, thank you Shayne.
Farhan Faruqui: Thanks Richard.
Jill Campbell: Thanks Richard. Going to Jonanthan Mott from Barrenjoey. Thanks Motty.
Jonathan Mott: (Barrenjoey, Analyst) Yes, thanks. I’ve got a question about the
Commercial business which has really not been discussed much at all and now makes 85%
as much profit as the Retail bank. So having a look at this business, the last half the
revenue was quite weak, costs were up a bit, which goes against some of the changes
which your peers are seeing. Can you give us a bit more detail on the pressures that
you’re seeing coming through, a bit more margin pressure than the peers and revenue
pressure and a bit more of an update on the Commercial business?
Shayne Elliott: Yes, great, I’m glad to talk about that. I’ll give a broader strategic update
and Farhan can talk a little bit about those drivers you mentioned, Jonathan. I think it’s
important to note that our business looks different than our peers. So our Commercial
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bank supports 650,000 small, medium-s ized businesses across Australia. Of that, about
600,000 are what you would call small, sole trader, three, four, five employees, relatively
simple businesses and about 50,000 mid-size, et cetera.
Unsurprisingly the small typically aren’t borrowing, or if they are, it’s very small, or if they
are borrowing, they do so as a home loan, yes? Just remember the way we report our
numbers, that home loan revenue sits in the Retail bank. Now that’s unlike our peers. I’m
not saying one’s right or wrong, it’s just different. So we are not - the home loan revenue,
if you’re a small business owner and you’ve got a home loan with ANZ and don’t forget,
that’s about 25% to 30% of our flow in home loans, comes from small business owners,
we count that in retail not in small business, unlike our peers.
As a result, that means that our business makes us heavily skewed towards deposits and
we actually like that, we think that’s a great business because again, it plays to our
strengths in payments and deposits and we want to be a digital leader in terms of the way
we service the smaller end of our SME customers.
That’s why we’re building up - that’s why we’ve done the JV with Worldline, that’s why
we’re looking to leverage the payments platforms we have in Institutional and it’s also why
we’ve invested in our GoBiz platform for those who do want to borrow on an unsecured
basis, we have a solution there. We’ve also added corporate cards into GoBiz, so we’re
going to enrichen the GoBiz offering, so it’s much more a digital-led strategy for our
Commercial bank than many of our peers.
That isn’t to say that on the other hand, the 50,000, the other - the bigger end, they do
have borrowing needs, and that’s in agri and health and other industries, and we saw
really strong growth there, 7% borrowing growth in the year. We see bigger opportunities
to do that well.
We brought a new management team; I appointed Clare just over a year ago. We’ve
rebased the strategy there. We now have a roadmap around what is the right technical
build we need to have and what’s the right approach around the way we cover or
relationship manage those customers. That strategy is already being implemented. We
update the Board pretty regularly.
Clearly, it’s the last cab off the rank for us. We have restructured and strengthened
Institutional first, we’ve done a lot of work in New Zealand, and that’s ongoing work, and
we’ve done a lot of work obviously in Retail with Plus and Commercial has been very much
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the heavy focus for us in terms of building out what that strategy is and how we win the
marketplace.
We are only really at the beginning of execution. That’s why I pointed out the fact that
going forward you would expect to see us pivot more of our investment spend into
Commercial. Now, that investment spend is again probably going to be more like you’ve
seen in Retail with technology rather than just feet on the street kind of investment, not to
say there isn’t a place for that.
So, that’s where we are. It’s still early days. It’s a great business but again looks very
different to our peer group, and we like that, by the way, because it means we’re not
taking head-on competition from the others. Do you want to talk about the financial
drivers though?
Farhan Faruqui: Y es. I think I’ll just add. I think you’ve covered a lot of it, actually,
Shayne, but Jon, what I would - the two or three things I would say. Firstly, we have been
investing, to the point that Shayne was making. It is the last cab off the rank but we have
been investing in Commercial and Clare has been reshaping the workforce and the
operating model as well to make sure that we get the best positioning to serve customers
in their choice of channel.
As a result of that, some of the expenses in the Commercial business are actually inflated
because of the restructuring cost as well as costs of the investment that we have been
making. It is not a feet-on-the-street strategy; it is very much focusing on the right
channel in terms of serving customers. So, there is cost inflation because of those two
factors, and that will of course normalise as we go forward.
The other is that because of that investment we have been making, as I pointed out
earlier, the lending growth has actually been very, very strong and that momentum is
strong and that pipeline is very strong looking out into the next half.
Th e third point I would make is that the NIM impact is largely driven more by deposits
rather than assets, and the reason why it’s driven more by deposits is there are - just to
remind you as well, Jon, that it is a balance sheet that is much more weighted to liability
than to asset. When liability mix impacts, which impacted most divisions, impact margins,
they impact commercial a little bit more on the deposit side because of the higher liability
balance and proportion in the balance sheet.
So again, those pressures, as I mentioned earlier, have slowed towards the end of the
half, so we start to see more stability in terms of commercial NIM, but we start to see
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volume growth continuing because of the strong pipeline and the momentum we’ve had in
the last 12 months. So, actually, I think that a large part of that investment, restructuring,
deposit shift factors have already played out in the last 12 months, so we’re actually well
positioned now in terms of the next 6 to 12.
Jonathan Mott: (Barrenjoey, Analyst) Okay, thank you. Can I ask a second question? This
goes back to the discussion around the collective provision. If you sit back and have a
think about it, the CP is about $4 billion but it’s protecting a balance sheet which as $1.15
trillion of exposure as a default. I know we can all build Excel models and we’re all pretty
good at that, which is a kind of estimate of what it is and we know what it is like, that kind
of modelling, but the forest and the trees, it doesn’t seem like it’s a massive amount of
provisioning to protect a major bank.
Then you’re saying that the base case is half of that. So, where’s the upside in having
some kind of review to release the collective provision? Wouldn’t it just be a bit more
prudent to leave it where it is rather than have an academic decision discussion about
which model, the best way, and what the base case and downside is when it’s not a huge
amount of money in the scheme of things?
Shayne Elliott: That’s a philosophical question. We don’t - remember, there are accounting
standards here that we have to apply. We don’t just sit around and make this stuff up. I
think the important is - I take your point, and partly it’s a little bit frustrating when - from
our position it’s a little bit frustrating when we get arguments whether it should be 4 or 3.8
or 4.5. I’d take the same view, in the scheme of things it’s there or thereabouts.
The important thing about our $1.15 trillion in exposure, remember 20% of that is
sovereign and we have the highest weighting to extraordinarily low-risk names, unlike our
peers which are heavily skewed towards housing. So, I take your point, but there is a
process here and to be prudent, we followed prudent standards that are audited by our
auditor et cetera that take us through it.
When I stand back and think about it though, the $4 billion is what it is. I stand back and
think about what’s our ability to absorb pain, and if things go wrong. You’re right, we’ve
got a big balance sheet. So, you work through the stressors, and understand your first
port of call is your profitability.
Let’s not forget, at this run rate we’re generating about a profit of $7 odd billion a year
which is your first call on being able to absorb problems. Because in an extremist you go to
that first, then through there you have the ability to look into your provision balances, of
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which this is one, then ultimately capital which we sit across, which we’ve got
extraordinarily high levels of capital as well relative to our past and to our peers. So, I look
through as a stack of our ability to absorb stress and that’s why we talk about having a
fortress balance sheet.
Again, I’ve talked about the fact that customer selection is so important, and that includes
the fact that we have a bigger weighting of our balance sheet to sovereigns, central banks,
high-quality borrowers. Even within our Institutional bank, a much higher skew towards
investment-grade names. So, I take your point but again, we follow a process. It is what it
is . You have to think about it - and I know you do - we think about it in the whole of the
entire stack we have in our balance sheet.
Jonathan Mott: (Barrenjoey, Analyst) Thank you.
Jill Campbell: Thanks, Mottie. We’ll go to Brian Johnson from MST. Thanks, BJ.
Shayne Elliott: Brian, are you there?
Brian Johnson: (MST, Analyst) Hi, can you hear me now?
Shayne Elliott: Yes, we can. Go ahead.
Brian Johnson: (MST, Analyst) Shayne, just before I ask two questions if I may, can I just
make an observation? Just looking at your share price today, falling away, and then you
say that the margin is up 1 basis point in March. Now, I can’t see anywhere where that is
disclosed in the slide. You speak about the investment but nowhere in the pack can I see
that you - you don’t disclose the investment anymore.
If I actually have a look in page 27 it says 9 basis point loan loss charge in the Australian
Retail business. Today you’ve said 5 basis points. I just want to flag to you just some
residual concerns about basically the disclosure. I think these are some issues that should
be addressed.
Now, just on two questions if I may, and this goes back to Mottie’s question as well. If I
have a look at page 151 in the result, I can see that ANZ is the only major bank where the
regulator actually takes a regulatory capital deduction because the balance sheet
provisioning loss is lower than what the regulator stresses it to, which implies to me that if
you do actually release any of the collective provision, it will probably come straight off
your Core Equity Tier 1 ratio anyway.
If we then have a look at slide 88, we can actually see quite a substantial increase in the
earnings by virtual of writing back the collective provision that was established during
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COVID. If we have a look at the long-run loan loss on page 27 - and I get that it’s just
maths - I can see that that is actually increasing.
If I actually have a look at page 28 I can see that the impaired assets are definitely going
up, but then if I have a look at page 33, I can see a collapse in the economic profit to the
point where the economic profit in this half year is actually below the value of the franking
credits. Could we just understand the merits of basically this idea that you’re clearly
flagging about writing the collective provision back...
Shayne Elliott: We’re not flagging any such thing.
Brian Johnson: (MST, Analyst) ...which doesn’t actually release capital?
Shayne Elliott: We’ve not flagged any such thing. Thanks for the walk-through the pages.
We’re not flagging any such thing. What we said was if - if t he outlook for the economy -
given the fact that the weighting is so heavily skewed towards the downside, the natural
question is how would you see that changing over time.
What we were pointing out is that if the basic economic indicators improve that you would
see a higher weighting to the base case, perhaps even a small weighting to an upside
mathematically that through just the accounting process would, all else being equal, lead
to a release of collective provisions. That is true of any bank anywhere in the world. That is
a statement of fact. That is all we were making the point of, Brian.
Brian Johnson: (MST, Analyst) Would it chew up capital prima facie, Shayne, though? Does
it increase that regulatory expected loss deduction if it was to happen?
Shayne Elliott: Kevin wants to answer this one.
Kevin Corbally: Brian, it’s Kevin. Just to clarify a couple of things, and there was a lot
obviously in what you said, but essentially the way that regulatory loss is calculated is that
APRA split out defaulted and non-defaulted loans and on defaulted loans, that is essentially
the IP that we’ve got, together with the stage 3 expected credit loss balance.
However, for slotted exposures APRA say you have to have 50% loss given default.
Doesn’t matter what our security is, that’s essentially the position we need to take. That’s
the key reason why we have a capital deduction. It’s got nothing to do with the quality of
the book, it’s just the difference in interpretation between the regulator and ourselves. As
Farhan alluded to earlier, in terms of the expected loss, the long-run expected loss, it’s
principally driven by a very small uptick in Institutional. Bear in mind, all of these are at
record low numbers in terms of expected loss, but it’s very small, which is predominantly
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driven by a denominator together with a couple of other factors. I think there are reasons
behind all of them.
Brian Johnson: (MST, Analyst) Does that imply the opposite is that if the slotted exposures
don’t change, that even if you write back the collective provision, there’s no impost on the
Core Equity Tier 1?
Kevin Corbally: Well, pretty much.
Brian Johnson: (MST, Analyst) Okay, great. The second one is just on ANZ Plus. I think
ANZ is to be congratulated on the customers that you’ve acquired. My understanding is
that ANZ Plus at the moment is very much a mobile product, so I can get it on an iPhone, I
can get it on my mobile phone, I can get it on a SIM-enabled iPad, but I can’t actually do
any online banking with it.
Can I confirm that is correct and if so, how does that reconcile with basically migrating
customers onto it who may not be comfortable with it, and then the subset of that, how
much would it cost to - how much does it actually cost to actually get it match ready to the
point where it is ready for pure online banking non-mobile?
Shayne Elliott: We’re already doing that. That’s already in the numbers and there is going
to be an online option, so web-based as opposed to mobile-b ased, absolutely you can
actually go onto the website at the moment and obviously we need to build that out and
promote that. You are quite right, there will be customers that prefer that, although the
data would suggest that those numbers are extraordinarily low.The vast, vast bulk of our -
and again, we’ve done the analysis on our customer cohort and what they already do
today in terms of their usage, and web usage is falling, unsurprisingly as the richness of
mobile improves and increases, particularly from a security point of view. But we will
absolutely have a web platform; that’s being built as we speak; it’ s within the numbers.
I can’ t remember precisely what that costs; it doesn’t cost a whole lot because the core
offering, the way the things all work, is exactly the same. That is the whole point of the
ANZ Plus platform, that it’s identical, it’s not another stack of technology. Yes, it’s got a
different interface, which we’ll build out, but that’s not a material cost factor for us and it
will be built.
Brian Johnson: (MST, Analyst) Thank you. Shayne, can I just reiterate that point on
disclosing the investment. You guys have got a good story to say on this but as I say, I
can’t see that the investment spend is actually disclosed. Thank you.
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Shayne Elliott: Thank you.
Jill Campbell: Thanks. We’ll go to Matt Dunger from Bank of America Merrill Lynch.
Matt Dunger: (Bank of America, Analyst) Yes. Thank you very much, Jill. If I could just ask
a follow-up question on the migration of Suncorp customers onto ANZ Plus. Shayne,
you’ve talked about the value in the deposit base. Are you able to talk to us how you
manage the pricing disparity between Suncorp Growth Saver account at 5.05% versus ANZ
Plus at 4.9% when you’re undertaking the migration?
Shayne Elliott: Yes, sure. That’s a really legitimate question, Matt. Clearly, this is
complicated and we’re not moving - just for the sake of argument, let’s assume
hypothetically we assume ownership on 1 September. We’re not migrating anybody for
quite a period of time, actually. What we’ve said to our customers, and we’ve made a
commitment, hey, same brand, same product, same branches, same people at Suncorp in
Queensland for quite a period of time, a number of years.
What we will do is we will build out on the Plus - migration doesn’t mean we’re going to
move Suncorp customers onto the current ANZ Plus portfolio of products. It will go onto
the platform ANZ Plus but what we need to do is build out appropriate products, services,
pricing, terms and conditions on the Plus platform so that we can move those Suncorp
customers across.
Now, at the moment our product suites are very, very similar. We pretty much have a
whole bunch of things that are more or less the same, and then we have some things that
are different, like the one that you just mentioned. We will make changes to ensure that
we can bring customers across onto products and services they like, but ultimately they
may or may not be differently branded, we have to figure that out, and they may or may
not be priced differently again. What we don’t want to do though is just increase
complexity.
Those are the sorts of things that the team are working through in quite a lot of detail, but
that’s still some period of time away before we’re going to migrate. When we say migrate,
that means like almost force or push a customer from the product you mentioned across
onto ANZ. We’ve still got time; we’ll work all those things out over time. I’m really
confident about that because we’ve built a platform that allows us to differentiate, whether
it’ s the brand differentiation, pricing, terms and conditions, whatever that might be.
We’ve got to have a really appropriate suite of products that not only keeps and retains
and engages the Suncorp customers but also the ANZ Classic, and probably even more
ANZ Half Year Results Presentation
7 May 2024
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importantly, new-to-Bank customers more broadly across the market. Hopefully, that
answered the question. The point is that we will build out a richness in terms of a product
suite for people where we see opportunity.
Matt Dunger: (Bank of America, Analyst) Perfect. Thank you very much. If I could just ask
a follow-up question on New Zealand and demand remaining weak there. Can you talk to
how you’re positioning the book, and noting the lower credit risk-weighted assets in the
half and also the collective provision balance falling in business and agri?
Shayne Elliott: All I would do is say that - and I’m on the Board over there - New Zealand
is a well-run business. We are the largest bank in New Zealand, we have a relationship
with one in two Kiwis, we have 30% odd market share in home loans. We’ve got great
economic insight into what’s happening there. The New Zealand economy is under more
stress than Australia, that’s probably not unsurprising, it’s more exposed if you will, but
then our business is stronger in many ways in terms of years of investment, in terms of
the technology et cetera that we have there.
The reality is when you stand back, the same fundamental drivers of stress, higher interest
rates, starting to creep up in terms of unemployment although still very low, the issues
about cost of living are exactly the same. The difference there is that the book is
positioned differently - to your question. In New Zealand we have a very, very small
Institutional lending business. Our housing book proportionately is larger but as you know,
the housing book in New Zealand is structured very differently.
Don’t forget we’ve been operating for years in New Zealand under essentially
macroprudential guidelines that have limited our ability - all of the banks’ ability to lend in
terms of investor loans or high LVR lending, and one point there was even some regional
geographic limitations. All of those things have actually meant that the banking system is
still remarkably resilience and very, very safe. If you look at things like dynamic loan-to-
value ratios, the interest cover, et cetera, things are still very strong.
However, just like here, stress is starting to increase. Broadly, the numbers are more or
less the same as they are here but the shape of the business more commercial than -
sorry, more housing on average than the Group, means that the impacts on the numbers
are slightly different, but I don’t think there’s too much to read into it. We’ve taken the
same approach about really strong risk management, really strong customer selection, et
cetera, and I think again that’s serving us well.
Matt Dunger: (Bank of America, Analyst) Thank you.
ANZ Half Year Results Presentation
7 May 2024
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Jill Campbell: Thanks Matt. We’ll go to Carlos Cacho from Jarden please.
Carlos Cacho: (Jarden, Analyst) Thanks, Jill. I just first wanted to ask about the sensitivity
of your margin to changes in BBSW OIS basis. We’ve gotten details from some of the
peers around that and they’ve obviously said it’s been very low recently, so wondering if
you could give us any insight into that sensitivity.
Farhan Faruqui: Yes. Carlos, our sensitivity is about $12 million per basis point move, so
call it for every 10 points move in [bills OIS] we get effectively 1 basis point of NIM
impact. It’ s about $120 million per 10 basis point move broadly speaking. Does that solve
your - does that answer your question?
Carlos Cacho: (Jarden, Analyst) Yes. No, that’s great. Thanks, Farhan. Then secondly, I
noticed on slide 105 where you disclose the dynamic LVR of the portfolio for mortgages,
your negative equity does look to be a little bit higher than some of the peers that have
recently disclosed similar numbers. I was just wondering if there might be - and it’s still
lo w, obviously, versus history but I was wondering if there’s a geographical mix behind
there or if there might be a methodological difference or something?
Shayne Elliott: No. We don’t - again, thanks for pointing it out. As you pointed out, it is
extraordinarily low, and I haven’t had the opportunity to compare with peers their
disclosures over the last couple of days, but no, from our point of view, we don’t think
there’s a methodology difference, that would be interesting to find out, but there’s no
geographic skew in there.
Carlos Cacho: (Jarden, Analyst) Okay, so it’s just...
Shayne Elliott: We have - obviously, you know this. Obviously, we have a geographic skew
at ANZ that will be different to other banks. But within our portfolio, we're not seeing any
material differences. But there will be a weighting difference obviously. Given our heavier
weighting to Victoria, for example, may have something to do with that. But not that we're
aware of.
Carlos Cacho: (Jarden, Analyst) Thanks, Shayne.
Shayne Elliott: Thanks.
Jill Campbell: Thanks, Carlos. We'll go to Brendan Sproules from Citi.
Brendan Sproules: (Citi, Analyst) Good morning. Brendan Sproules from Citi. I just wanted
to ask about your markets income on slide 23. You've had three very strong halves,
probably above what you've described as the long-term average in this business.
ANZ Half Year Results Presentation
7 May 2024
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Particularly you notice the balance sheet contribution has increased and within the
customer franchise, the rates tile there has also increased.
I guess given the way the world has evolved and the rate cycle, what are your
expectations for these contributions looking forward on 6, 12 and 18 month basis?
Shayne Elliott: Do you want to answer - look, so I might answer just more generically. So
it's a reasonable observation and clearly some of that, not all of it, some of that is
correlated to the interest rate cycle. Yes? Which is probably not unsurprising.
I mean obviously the way that we think about - well, maybe not obviously. The way that
we think about the business is actually focused on the other part of the business which is
the customer franchise piece. I think it's fair observation to say that the business has
performed strongly over the last three halves.
We've always said that we ran the business to be at about $2 billion. I think it's fair to say
going forward, you might expect to see that slightly higher. We're just going through our
planning processes for the future. But the business has built some really strong
foundational strength there.
So this is not one off driven, you know, et cetera, there's some really strong foundations in
there. In terms of our digital capability, in terms of the breadth of our business. I mean I
know it wasn't your question but if you look at you know, we're getting emerging strength
in our commodities capability, which is relatively narrow in what we do in terms of gold
and other bits and pieces but a really nice point of diversification.
The rates business has been a steady performer. Not just over the last couple of halves
but over time. That's been a deliberate investment in the business. I mean ANZ historically
has always been strong at foreign exchange. That's kind of core to who and what we are.
We were behind on rates and we've built out that capability by investing in technology and
that's starting to come through. Look, I don’t know what the future holds, particularly over
the next six to 12 months. But you say over time, we've got markets in good shape, solid
business, we've reduced the volatility, it's more diversified geographically, and by
underlying, we're feeling pretty positive about the business given the strength of the
customer franchise in there.
Farhan Faruqui: Yes, I think...
[Over speaking]
Shayne Elliott: Yes, go.
ANZ Half Year Results Presentation
7 May 2024
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Farhan Faruqui: I might just - I just might add, Brendan, and you know this obviously with
your own bank in terms of the international network. That it is an important - having the
footprint that we have globally is a huge benefit. Because there is opportunities that are
available to us in our international customer footprint.
When I talk about our international customers, they are pretty much sort of customers
that you would see in your bank, Brendan, which are the large global multinational
customers who operate across the regions, across multiple geographies.
That gives rise to a lot of opportunities around credit and capital markets, around rates,
and around foreign currency, which is why you see that consistency. More and more
customers are now - are coming and doing more business with us which is why you're
seeing that 40% growth in customer franchise income that I mentioned over the last three
years.
I think the other thing is that - other big advantage of having that footprint is that our
local markets business is very strong. That's something that many of our peers in Australia
don't have.
That allows us effectively an opportunity to also capture local opportunities. That's been
one of the drivers as well of our customer franchise income growth. In fact, if you look at
just our international business revenue, on a PCP basis, it's grown 36%. I t's a huge driver
of what we deliver and as I said, it's been about two thirds of the growth as well in this
half.
So, it is becoming a true differentiator for us and the consistency that it's bringing,
because of the quality of clients, because of the offerings that we have, because of the
investments we've made, because of some of the local market licenses that we have, in
some countries, that is creating a lot of stickiness to our markets business. So, it's not the
same volatile business it used to be.
Brendan Sproules: (Citi, Analyst) Thank you. I've just got a second question on your
productivity savings. You talk on slide 26 about the record half that you enjoyed this year.
I just want to contrast between I guess the strategic initiatives that you show on 25,
where you spent $96 million increase in the half on cloud and ANZ run costs.
But then in the productivity, you're actually able to save $62 million. How do we think
about those two categories going forward? Are they going to largely offset, or do you think
that going forward, that you'll always be spending more on technology than you'll finish up
saving?
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Farhan Faruqui: Well, to some extent, Brendan, the benefits that we're seeing in
technology services that you point out on page 26, which are things which relate to
simplification. So effectively, as you migrate apps to cloud, which is what shows up in the
strategic initiatives in the previous slide, you effectively get benefit from a productivity
standpoint because you're able to shutdown systems and applications on PREM.
So there are benefits. Not necessarily 100% correlated. But that's sort of the productivity
benefits as we migrate more to the cloud.
Shayne Elliott: I think it's important though to point out, and I know Farhan - I totally
understand why you would link the two. They're not necessarily correlated. Because
migrating to cloud, for example, just using that example. Yes, we spend the money, we
migrate to cloud, shutdown the old. There's clearly a benefit within technology.
But actually, the biggest benefit goes into the businesses. Which means that as a result of
being in the cloud, they can deliver more quickly, more efficiently, et cetera. So, they're
not totally correlated. Maybe we should think about a better way of disclosing that. But
that's the reality of the matter.
I mean our task and one of the things we talk about at management is making sure that
when you've got those situations, you spend in one area for the benefit elsewhere. We've
got much, much better at ensuring that those benefits are getting delivered.
Brendan Sproules: (Citi, Analyst) Okay, thank you.
Jill Campbell: Thanks, Brendan. Last question is from Azib Khan.
Azib Khan: (E&P Financial, Analyst) Thank you, Jill. Thank you, S hayne and Farhan. Just
coming back to market income, that obviously annualised $2.4 billion in the first half,
Shayne, do you still expect this to be a $2 billion per annum revenue business in a normal
year?
Shayne Elliott: Great question. I think two things I would comment on that is, don’t forget
that there is a seasonality in that business and I think almost every year, the second half
is a little bit weaker than the first half, and that’s due largely to do with the second half is
European summer, which again, our business skews to northern hemisphere surprisingly,
but so there's a little bit of that, so it's likely there will be slow down.
It's a very good question. I would expect it to be slightly higher than the $2 billion. As I
mentioned previously, we’re just working through what that new number might be, and we
will be in a position to share that later in the year, we go through our planning process
ANZ Half Year Results Presentation
7 May 2024
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with the Board, at the full year result we’d certainly, if there is a change, we will update
the market, but you’d expect it given - I think the point here is that we’ve really built some
strong foundations in markets. It's a good business now, well run. It's got really strong
technology, it's got - it knows what it's good at, it's well diversified, so we’ve built
confidence in our ability to grow that prudently and sensibly, and yes, so we should expect
to see it grow from here.
Azib Khan: (E&P Financial, Analyst) Thanks for that Shayne, and just a second question
about the Commercial business. You’ve mentioned, Shayne, in your opening comments
that Commercial is obviously an area where you’re going to look to grow in, as part of a
response to the earlier question, you mentioned you’ve got 650,000 customers of which
600,000 are small, as you grow in that business, is it fair to assume it's that lager segment
that will grow, particularly because there's probably more loan growth on offer than
deposit growth?
Shayne Elliott: Great question. Great question. Not necessarily. So, my colleagues who run
that will probably not like the answer to this, but yes, of course there's growth. There's
growth everywhere in Commercial, actually. There's absolutely growth in the bigger end,
absolutely, and what we’ve been doing is building our strengths for those segments that
we think we can really build out strength whether it's in agri, or health, or other areas, so
absolutely there will be growth there, but the real juice in that business, if we’re being
honest in terms of return does come from the deposits franchise and that comes from
being operating account of businesses.
So, actually if you’re thinking of it from a returns point of view and topline growth, we
think a lot of it will come from expanding that deposit base in the smaller end. So, that’s
where - because remember, we’ve got for every dollar we lend, we’ve got $1.8 in deposits,
and that’s why you get that really high return outcome. So, there's growth right across the
board there.
There’ll be more customers, we’ve definitely got - over time, and not in the next six
months, but over time we absolutely need to grow our operating deposit capability and
that’s no different than Plus, by giving customers the tools they need to do better with
their money, and we are in the early stages of that, we obviously do pretty well today, but
we’re in the early stages of that, and yes, there’ll be some growth in the bigger end of that
sector as well, and that’s why we’re attracted to the business and particularly given our
business does look different to peers. So, we’re not taking it - it's not a head on
competition with some of our larger bank peers.
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Azib Khan: (E&P Financial, Analyst) Do you have a target customer composition in mind
there, Shayne? Or do you think you can sustain more than 90% of the customers being
small.
Shayne Elliott: Look, it's a matter - again, it's a good question. It's a matter of debate. I
personally am very attracted to the smaller end, because I think those the things that
ANZ, we can really give those people tools, right? What's attractive about them? They're
sole banks, they don’t multibank, right? T hey just want simple things done well. Yes, they
want us to help them run their business better.
Give me the data and insight from my payments, from what you’re seeing across the
industry, and help me run my - do better with my money. It's very much aligned to our
strategy around ANZ Plus, with the same idea of financial wellbeing. Give me the tools,
give me the nudges, give me the insights and data.
ANZ, we haven’t talked about today, and we don’t have time, one of our great strengths is
our data set. We have the most diversified data set around the economy. I talked about
the $164 trillion in payments we process every year. Guess what? A big chunk of that is
going into that SME land, and so being able to really extract value from that data, and
offer it in compelling, easy ways, that’s why we’ve done this JV with Worldline, that is
really, really exciting.
We’ve still got a lot of work to do to be able to deliver that, so I actually think, I believe
that even in the next three to five years, there is still going to be a very, very heavy skew
to the small end but it will all grow.
Azib Khan: (E&P Financial, Analyst) Thank you.
Shayne Elliott: Thank you.
Jill Campbell: Thanks, Azib, and with that we’re out, and so if there's anybody that didn’t
get a chance to ask a question, please feel free to ring the Investor Relations team this
afternoon and all of this will be online later today as I mentioned. Thanks very much.
Shayne Elliott: Thank you.
End of Transcript
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