FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

 

For the month of       October      , 2002     

 

 

Australia and New Zealand Banking Group Limited

(Translation of registrant’s name into English)

 

Level 6, 100 Queen Street Melbourne Victoria Australia

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F   ý             Form 40-F   o

 

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes   o      No   ý

 

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-             

 



 

Media Release

 

Corporate Affairs

Level 20, 100 Queen Street

Melbourne Vic 3000

Facsimile 03 9273 4899

www.anz.com

 

For Release: 18 October 2002

 

Greg Camm becomes ANZ New Zealand Managing Director

 

ANZ today announced the appointment of Mr Greg Camm as Managing Director, New Zealand.

 

Mr Camm’s appointment follows Dr Murray Horn accepting a new senior role within the ANZ Group as Managing Director, Global Institutional Banking, based in Sydney.

 

ANZ Chief Executive Officer Mr John McFarlane said:  “Dr Horn has earned this exciting development opportunity having advanced ANZ’s business in New Zealand over the last four years.”

 

“We have made particularly strong improvements in our financial performance and in staff satisfaction, and have laid the foundation for restoring our personal customers’ faith in ANZ.  Through Murray’s leadership we have also been able to play a particularly important role in the community including his Chairmanship of the Business Round Table.

 

“As we move into the next phase of ANZ’s development, our challenge is to take this to the next level by providing greater management autonomy to our business in New Zealand,” Mr McFarlane said.

 

Mr Camm moves to New Zealand from his role as Managing Director, Mortgages, in the ANZ Group where he is also a member of ANZ’s Management Board.  Previously Greg was General Manager Retail Banking in New Zealand between 1993 and 1996.

 

Dr Horn’s new role involves responsibility for ANZ’s major corporate and institutional customers globally.

 

Commenting on the changes, Dr Horn said:  “My new role is a further development opportunity for me within the Group, however it is with some mixed feelings that I leave New Zealand.

 

“We have achieved strong results through the hard work and dedication of all the people at ANZ in New Zealand.  It’s been an honour to work with such a fantastic group of people and I am sad to be leaving them,” Dr Horn said.

 

“Greg is well regarded in the banking industry in Australasia.  He is also remembered very warmly by ANZ people and customers in New Zealand from his former assignment in New Zealand” he said.

 

The change is effective 1 December 2002.

 

For media enquiries contact:

 

Steve Fisher

Public Relations Manager

Tel: 09-374 4123

Email: fisherS1@anz.com

 



 

 

Media Release

 

Corporate Affairs

Level 20, 100 Queen Street

Melbourne Vic 3000

Facsimile 03 9273 4899

www.anz.com

 

For Release: 18 October 2002

 

ANZ structures specialised business oversight around customers

 

ANZ today announced changes in the senior management oversight of its specialist businesses to sharpen its focus on customers and around the priorities for ANZ’s future development.

 

                  Elmer Funke Kupper, Managing Director, Personal Banking and Wealth Management Australia, will focus exclusively on Australia including all channels for personal customers and the ING Australia funds management joint venture.

 

                   Greg Camm will move from Mortgages to become Managing Director, New Zealand, responsible for ANZ’s businesses in New Zealand.

 

                   Bob Edgar will become Managing Director, Global Institutional and Investment Banking.  Dr Edgar will oversee all businesses dealing with large corporate and institutional customers including Global Institutional Banking, Global Transaction Services, ANZ Investment Banking businesses, and Asia Corporate.   Reporting to Dr Edgar, Murray Horn will become Managing Director, Global Institutional Banking based in Sydney; Mark Paton will become Managing Director, Global Transaction Services.  Mark is currently Head of Food, Beverage and Agri-business in Corporate & Institutional Banking.

 

                   Graham Hodges will become Managing Director, Corporate and Small to Medium Business Australia, bringing together corporate and small business banking into a single business to harness synergies between these segments.

 

                  Chris Cooper will move from Global Foreign Exchange to become Managing Director, Mortgages.  Rick Sawers, currently Group Treasurer, will become Managing Director, Global Foreign Exchange reporting to Dr Edgar.  Mr. Sawers’ replacement will be announced in due course.

 

                  Grahame Miller will move from Investment Banking to Managing Director, Major Investment Programs.  Mr. Miller will be responsible for major process development projects, strategic cost programs and the project related to Basel II - the new global regulatory capital standard.

 

ANZ Chief Executive Officer Mr. John McFarlane said:  “Our unique specialisation strategy and our focus on executing strategy well, are making ANZ a very different bank.”

 

“These changes leave our specialised business structure intact, and enhance synergies between our businesses by emphasising a total customer relationship approach.  The changes will give new development opportunities for senior colleagues, introducing movement between the corporate and personal sides of the Group,” he said.

 

The new Group structure will be effective December 1st 2002.

 

For media enquiries contact:

 

Paul Edwards, Head of Media Relations

Tel: 03-9273 6955 or 0409-655 550, Email: edwardp12@anz.com

 



 

Attachments: ANZ Senior Management and Organisation Chart

 

ANZ Management Board

 

 

 

John McFarlane

 

David Boyles

Brian Hartzer

Greg Camm

Peter Hawkins

Roger Davis

Graham Hodges (New)

Chris Cooper (New)

Mark Lawrence

Bob Edgar

Peter Marriott

Shane Freeman

Grahame Miller

Elmer Funke Kupper

Elizabeth Proust

 

 

Specialised Business Heads

 

 

 

Personal Banking Australia

Elmer Funke Kupper

Wealth Management Australia

Craig Coleman

ING Australia

John Wylie

Corporate Banking Australia

Graham Hodges*

Small to Medium Business Australia

Graham Hodges

New Zealand Customers

Greg Camm*

Consumer Finance

Brian Hartzer

Mortgages

Chris Cooper*

Asset Finance

Elizabeth Proust

Global Institutional Banking

Murray Horn*

Global Transaction Services

Mark Paton*

Global Foreign Exchange

Rick Sawers*

Global Capital Markets

David Hornery

Global Structured Finance

Gordon Branston

Corporate Finance and Advisory

Peter Hodgson

Asia Corporate

John Winders

Asia-Pacific Consumer

Bob Lyon

Group Treasury

TBA*

 


* New to Role

 



 

 



 

 

Company Secretary’s Office

Level 6, 100 Queen Street

Melbourne VIC 3000

Phone 03 9273 6141

Fax 03 9273 6142

www.anz.com

 

4 October 2002

 

Company Announcements

Australian Stock Exchange

Level 10

20 Bond Street

Sydney NSW 2000

 

Australia and New Zealand Banking Group Limited

 

This is to provide formal advise to the Australian Stock Exchange that Ms Jane Slatter has resigned as a Secretary of the Company effective 4 October 2002 following her decision to relocate overseas with her family.

 

The formal position of Secretary of the Company continues to be held by Mr Peter Marriott, Mr Tim Paine and Mrs Karen Phillips.

 

Yours faithfully

 

 

Peter Marriott

Company Secretary

 



 

 

Australia and New Zealand

Banking Group Limited

ABN 11 005 357 522

 

Consolidated Financial Report

Dividend Announcement

and Appendix 4B

 

Full year

30 September 2002

 



 

FOR PRIORITY TRANSMISSION

 

Name of Company:

Australia and New Zealand Banking Group Limited

 

ABN 11 005 357 522

 

Report for the year ended 30 September 2002

 

 

 

A$ million

 

 

 

 

 

Group operating revenue

 

6,988

 

 

 

 

 

Operating profit after tax and outside equity interests

 

2,322

 

 

 

 

 

Final dividend per ordinary share, fully franked at 30% tax rate

 

46 cents

 

 

 

 

 

Record date for the final dividend

 

7 November 2002

 

 

 

 

 

Payment date for the final dividend

 

13 December 2002

 

 

The final dividend will be payable to shareholders registered in the books of the Company at close of business on 7 November 2002.  Transfers must be lodged before 5:00 pm on that day to participate.

 



 

ANNOUNCEMENT TO THE MARKET

 

Name of Company:

Australia and New Zealand Banking Group Limited

 

ABN 11 005 357 522

 

Report for the year ended 30 September 2002

 

 

 

 

 

 

 

 

 

A$ million

 

 

 

 

 

 

 

 

 

 

 

Group operating revenue

 

up

 

9

%

to

 

6,988

 

 

 

 

 

 

 

 

 

 

 

Operating profit after tax attributable to members

 

up

 

24

%

to

 

2,322

 

 

 

 

 

 

 

 

 

 

 

Extraordinary items after tax attributable to members

 

 

 

Nil

 

 

 

Nil

 

 

 

 

 

 

 

 

 

 

 

Operating profit and extraordinary items after tax
Attributable to members

 

up

 

24

%

to

 

2,322

 

 

 

 

 

 

 

 

 

 

 

Final dividend per ordinary share, fully franked at 30% tax rate
(previous corresponding period: 40 cents, fully franked at 34% tax rate)

 

 

 

 

 

 

 

46 cents

 

 

 

 

 

 

 

 

 

 

 

Record date for the final dividend

 

 

 

 

 

7 November 2002

 

 



 

 

Media Release

 

Corporate Affairs

Level 20, 100 Queen Street

Melbourne Vic 3000

Telephone 03 9273 6190

Facsimile 03 9273 4899

www.anz.com

 

For Release:  24 October 2002

 

ANZ delivers consistent earnings growth

 

Australia and New Zealand Banking Group Limited (ANZ) today announced a record operating profit after tax and excluding significant transactions of $2,168 million for the year ended September 2002, up 16% on 2001 (FY2001 $1,870 million).

 

Results Summary (excluding significant transactions)

 

             2002 Full year operating profit after tax of $2,168 million, up 16%

 

             Earnings per ordinary share up 17% to $1.37 per share

 

             Return on ordinary shareholders’ equity of 21.6% up from 20.2%

 

             Final dividend 46 cents.  Full year dividend 85 cents, up 16%

 

             Cost income ratio 46% down from 48%

 

All comparisons with Full Year 2001.

 

Earnings including significant transactions were $2,322 million up 24%. Significant transactions after tax involved: profit of $170 million on sale of businesses to ING Australia JV; recovery of $159 million on settlement of National Housing Bank litigation; and special provision of $175 million to increase the general provision for doubtful debts.

 

ANZ Chairman, Mr Charles Goode said: “This is a strong result that highlights the consistency of ANZ’s earnings growth, achieved at the same time as lowering our risk profile.  Management and staff are to be congratulated.”

 

“During the year we took steps to further strengthen corporate governance.  This included a new policy in respect to the relationship with our auditor and having ANZ’s internal audit function report to the Chairman of the Board Audit Committee.

 

“We have better aligned the use of executive options with shareholders’ interests by linking the exercise price to movements in the S&P/ASX 200 Banks Accumulation Index (excluding ANZ).  This ensures executives are rewarded only when ANZ out-performs its peers and the reward is only the value of the out-performance.

 

“We have also shown the impact of expensing options issued to employees and expect to formally change our accounting to reflect this following necessary changes to accounting standards and taxation laws,” Mr Goode said.

 

Chief Executive Officer, Mr John McFarlane said: “Our specialisation strategy and the consistency of our performance is creating a very different bank.  We have delivered on our promises.”

 

“ANZ’s specialised businesses continue to produce good results with 14 out of 16 increasing their profits during the year, the majority with double-digit earnings growth.

 



 

“For five years we have been working towards creating a high-performance organisation with sustainable growth at low risk.

 

“The challenge ahead is to build on our foundation of consistent performance to take ANZ to a new level for shareholders, staff, customers and the community.  We will do this by reinventing the business and creating an organization based to a far greater extent on growing our revenue and customer base, at low-risk.

 

“This will require us to continue to improve productivity to allow us to invest in future growth, while maintaining good earnings performance.

 

“Our 2003 financial targets are unchanged.  Looking further ahead however the environment is likely to be more challenging with fewer opportunities to achieve double-digit earnings growth in our specialist businesses.  However, by creating a very different bank we have substantially improved our capacity to succeed and deliver against market expectations over the next three years,” Mr McFarlane said.

 

For media enquiries, contact:

 

For analyst enquiries, contact:

Paul Edwards

 

Philip Gentry

Head of Group Media Relations

 

Head of Investor Relations

Tel:  03-9273 6955 or 0409-655 550

 

Tel:  03-9273 4185 or 0411-125 474

Email: edwardp12@anz.com

 

Email: gentryp@anz.com

 

ANZ’s 2002 Annual Results are available on www.anz.com

 



 

1

 

Chief Executive Officer’s Review

2002 Annual Results

 

We have again delivered on our commitments to shareholders

 

I am pleased to report that ANZ has produced another consistent result in what has been a very difficult year for banks around the world.

 

This year we exceeded all of our financial targets.  Once again we reported a record profit, up 16% on 2001.  When we include one-off significant transactions, profit was up 24%.  Earnings per share rose by 17%, and by 25% after significant transactions.

 

Return on equity rose to 21.6% (23.2% including significant transactions) from 20.2%, and our cost-income ratio improved to 46% from 48%.

 

The second half performance was roughly equivalent to the first half, after adjusting for the tax rate change and the increase in goodwill amortisation arising from the new wealth management and insurance joint venture with ING.

 

In the 2002 result, significant transactions added a net $154 million after tax.  In the second half we made a $170 million gain on the creation of the joint venture with the ING Group.

 

We also ended the year with strong capital and general reserves, and maintained our strong credit rating.

 

ANZ – a different bank

 

Our specialisation strategy is distinctive.  This year’s performance reinforces the benefits of our distinctive strategy and our increasing reputation for execution.

 

This capacity reflects the changes we have made in recent years to reduce risk, to achieve global industry-leading productivity, to build a balanced and sustainable business mix and to evolve a high performance culture.

 

Our specialised businesses continue to produce good results with 14 out of 16 increasing their profits during the year.  While the new joint venture with ING has been impacted by the difficult market conditions that exist in this segment, it is performing respectably.  Integration is on track.

 

During the year, many banks around the world suffered as a result of corporate failures.  ANZ was impacted by losses from Enron and Marconi, which were disappointing, but we were able to absorb them.  We have reduced the likelihood of similar losses reoccurring, by reducing the scope of our international corporate and investment banking activities and cutting individual customer concentration limits.

 



 

2

 

Moving from “perform” to “perform and grow”

 

Our vision is to generate sustainable returns and growth at low risk.  Over the last five years we have made considerable progress in reshaping the organisation to this end.

 

In the years ahead, our challenge is to maintain good financial performance at low-risk, and to grow our revenue and customer base.  To achieve this we need to establish stronger relative positions in our core businesses in Australia and New Zealand, and selectively overseas.  We are currently well positioned in our Corporate, Institutional and Investment Banking businesses, and in Credit Cards and Asset Finance.  Going forward we need to develop similar relative strengths in Personal Banking, Mortgages, Small to Medium Business, and in Wealth Management.

 

Internationally we will continue to seek opportunities to expand our franchise in the Pacific.  In Asia we will consider opportunities to establish more modest, lower risk growth options, principally in consumer banking for longer-term growth.

 

These initiatives will require us to continue to grow our expenses and invest in future growth, while maintaining acceptable earnings performance.

 

Staff satisfaction and culture have improved dramatically

 

The investment we have made in our people and culture has resulted in staff satisfaction rising by 16% in 2002, the largest annual increase we have experienced.  78% of staff are now satisfied with ANZ, compared with around 50% five years ago.  Over 80% of staff completed the survey, again the highest ever.  During the year, 4,200 of our people participated in  “Breakout”, our cultural transformation program, and we expect 6,000 will participate in 2003.

 

We are also experiencing a dramatic improvement in new people looking for a career with ANZ.  Last year, we had around 3,000 applicants for our graduate recruitment program.  This year it was around 11,000.

 

Earning the trust of our customers and the community

 

The strength of our relationships with corporations is generally recognised, but it is very clear that we need to do more to improve relationships with personal customers,  small to medium businesses, and with the wider community.

 

In 2002 we launched “Restoring Customer Faith” in Victoria and New Zealand.  This program decentralises our consumer banking business into small, community-based businesses, each with a local CEO.  We launched simpler, lower-cost transaction accounts for our personal customers.  Initial results are very encouraging and we have seen a rise in new customers and a fall in customer turnover.  Customer satisfaction and retention in the pilot programs rose, as did staff satisfaction, and there are early signs of significant improvement in financial performance in the pilot areas.

 

We have also appointed a senior Customer Advocate as part of the Office of the Chief Executive.  We updated our Customer Charter, with ten charter promises for our customers, and we are publishing our performance in our annual report.  For the second year we will also publish the customer satisfaction ratings for our businesses.

 



 

3

 

Increasingly, our people are engaged through volunteering leave and support from the ANZ Community Fund.  These actions that we are taking in the communities in which we operate are gradually improving the image of ANZ in the wider community.

 

We have maintained high governance standards

 

2002 has been a year of increased focus on the integrity and governance of corporations.  During the year, the Board undertook a review of governance procedures and strengthened ANZ’s governance process, disclosure levels and transparency.  These included a new policy covering ANZ’s relationship with its auditor and new reporting arrangements for the company’s internal audit function that sees it report directly to the Board Audit Committee.

 

This year has also seen a desire that options should be expensed.  For the first time, we have included a schedule showing the impact that this would have on our 2002 results.   It is our aim to treat options as a full expense in the year they are granted, once we have an approved accounting standard together with government clarification that the taxation treatment will be neutral.

 

We are equally conscious of the debate on the use of options as part of senior executive remuneration.  We have decided that options have a legitimate place in executive compensation, provided the value allocated is reasonable, the value is disclosed, and their nature is aligned with the interests of shareholders.

 

In the second half, we restructured the long-term incentive scheme for senior executives to be more in line with shareholder sentiment and interests.  We reduced the value of options granted and increased the use of deferred stock.  The use of traditional options where senior executives could benefit from a general rise in bank stock prices was disbanded.  In its place we will use a new type of option which links the exercise price to movements in the S&P/ASX 200 Banks Accumulation Index excluding ANZ.  This ensures executives are only rewarded when ANZ out-performs its peers and the reward is only the value of the out-performance.

 

We are leaving our 2003 targets unchanged

 

Global economic prospects for the year ahead are likely to remain subdued.  Closer to home however, we expect the Australian and New Zealand economies to continue to perform steadily.

 

The housing market is overheating and is prone to decline.  There is also a reasonable expectation of an upswing in business credit to offset this, although, the pacing of these may not be perfectly aligned.  Domestic interest rates are likely to pursue a neutral to upwards bias.  Taken together, we expect to see an increase in domestic consumer default, but not sufficient to create severe credit difficulties in either the corporate or consumer sectors.  Further, we expect any such impact to be lagged, impacting 2004 and beyond rather than 2003.  Also for 2004, as we separately announced, we expect a $40m after tax profit decline from the recently announced changes in credit card interchange and increase in the costs of loyalty programs.  In 2003, credit losses from the international corporate sector, while cyclically high, are likely to be below 2002 levels.

 



 

4

 

Over the past few years, ANZ has been through one of its most successful periods in its history.  We have also been through one of our most challenging periods in the context of external risks.  All of this has helped to strengthen our capacity to be successful in different environments.

 

Looking ahead, the coming years are likely to become more challenging, but we remain confident of our ability to perform relatively well.

 

For 2003 our initial internal forecasts lie marginally below our 10%+ earnings per share target, however this is not unusual at this early stage in the year and is consistent with our philosophy of managerial stretch.  Accordingly our target earnings per share growth for 2003 remains unchanged.

 



 

5

 

ANZ Group Management Structure

 

GROUP LEADERSHIP

 

Chief Executive Officer

John McFarlane

 

Group

Group Strategic

Group

 

Group People

Major Investment

Operations, Technology

 

Finance

Development

Customers

Group Risk

Capital

Programs

& Shared Services

 

Peter Marriott

Peter Hawkins

Roger Davis

Mark Lawrence

Shane Freeman

Grahame Miller

David Boyles

 

 

Group Treasury

Asia Pacific Personal

 

 

 

 

 

 

 

SEGMENT LEADERSHIP

 

 

ANZ New Zealand
Greg Camm

 

 

Consumer Finance
Brian Hartzer

 

 

 

 

 

 

 

 

Mortgages
Chris Cooper

 

 

Corporate and Small-Medium Business
Graham Hodges

 

 

 

 

 

 

 

 

Global Institutional and Investment Banking
Bob Edgar

Global Institutional Banking
Global Transaction Services
Global Foreign Exchange
Global Capital Markets
Corporate Financing and Advisory
Global Structured Finance

 

 

Asset Finance
Elizabeth Proust

 

 

Asia Corporate

 

 

 

 

 

 

 

 

 

 

 

 

Personal Banking and
Wealth Management Australia
Elmer Funka Kupper

Personal Banking Australia
Wealth Management
ING Joint Venture

 

 

 

 

 



 

Australia and New Zealand Banking Group Limited

ABN 11 005 357 522

 

CONSOLIDATED FINANCIAL REPORT AND DIVIDEND ANNOUNCEMENT

Year ended 30 September 2002

 

CONTENTS

 

HIGHLIGHTS

 

FINANCIAL HIGHLIGHTS

 

Net Profit

 

Net Profit Reconciliation

 

Profit excluding profit on sale of businesses to joint venture, NHB recovery and special general provision for doubtful debts

 

Performance Measurements

 

Statement of Financial Position

 

Assets and Capital

 

 

CHIEF FINANCIAL OFFICER’S REVIEW

 

Overview

 

Business Segment Performance

 

Geographic Segment Performance

 

 

RISK MANAGEMENT

 

COUNTRY EXPOSURES

 

FIVE YEAR SUMMARY

 

CONSOLIDATED FINANCIAL STATEMENTS – TABLE OF CONTENTS

 

DEFINITIONS

 

ALPHABETICAL INDEX

 

All amounts are in Australian dollars unless otherwise stated. The information on which this announcement is based has been reviewed by the Group’s auditors, KPMG. The Company has a formally constituted Audit Committee of the Board of Directors. This report was approved by resolution of a Committee of the Board of Directors on 24 October 2002.

 

Additional voluntary disclosures

•    Additional disclosures on business units

•    Impact of expensing employee options

•    Critical accounting policies

•    Deferred acquisition costs and capitalised software

•    Power and Telecommunications exposures

 



 

HIGHLIGHTS

 

CHIEF EXECUTIVE OFFICER
John McFarlane

 

Annual Results

 

Comparative
Sep ’01

 

Change

 

•  Net profit after tax $2,322 million

 

$

1,870m

 

24% increase

 

•  Earnings per ordinary share 147.3 cents

 

117.4 cents

 

25% increase

 

•  Return on ordinary shareholders’ equity 23.2%

 

20.2

%

up 3.0

%

•  Final dividend 46 cents, interim 39 cents

 

40 cents

 

6 cents increase

 

•  EVA $1,475 million

 

$

1,275m

 

16% increase

 

 

Significant transactions

 

                   Profit after tax of $170 million on sale of businesses to joint venture with ING Group (2nd half)

 

                   Litigation with India’s National Housing Bank (NHB) settled, with recovery of $248 million before tax ($159 million after tax) (1st half)

 

                   Special provision of $250 million to increase general provision for doubtful debts ($175 million after tax) (1st half)

 

Proforma annual results
(adjusted for significant transactions)

 

Comparative
Sep ’01

 

Change

 

  Net profit after tax $2,168 million

 

$

1,870m

 

16% increase

 

  Earnings per ordinary share 137.0 cents

 

117.4 cents

 

17% increase

 

  Return on ordinary shareholders’ equity 21.6%

 

20.2

%

up 1.4

%

  Non Interest income $2,796 million

 

$

2,573

 

9% increase

 

  Cost to income 46.0%

 

48.0

%

down 2.0

 

  Provisioning levels increased, mainly from Marconi and Enron defaults

 

 

 

 

 

•  Net specific provisions $728 million

 

$

520m

 

40% increase

 

   Economic loss provision $610 million

 

$

531m

 

15% increase

 

 

Impact of expensing options and shares issued under $1,000 employee share plan

 

 

 

Sep 02

 

 

 

$ million

 

Net profit after tax

 

2,322

 

Expense attributable to:

 

 

 

Options issued to Management Board

 

(7

)

Options issued to general management

 

(19

)

Shares issued under $1,000 employee share plan

 

(18

)

 

 

(44

)

Revised profit after tax

 

2,278

 

Revised EPS

 

144.4 cents

 

 

1



 

Half year results

 

Comparative
Mar ‘02

 

Change

 

  Net profit after tax $1,272 million

 

$

1,050m

 

21 increase

%

  Net profit excluding significant transactions $1,102 million

 

$

1,066m

 

3 increase

%

  Net profit excluding significant transactions and goodwill amortisation $1,130 million

 

$

1,076

 

5 increase

%

  Earnings per ordinary share 81.0 cents

 

66.3 cents

 

22 increase

%

  Return on ordinary shareholders’ equity 24.8%

 

21.6

%

up 3.2

%

  Cost to income ratio (excluding significant transactions) 45.5%

 

46.5

%

down 1

%

  Net specific provisions $362 million

 

$

366m

 

1 decrease

%

 

2



 

FINANCIAL HIGHLIGHTS

 

Net Profit

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$ M

 

$ M

 

%

 

$ M

 

$ M

 

%

 

Net interest income

 

2,053

 

1,965

 

4

%

4,018

 

3,833

 

5

%

Other operating income

 

1,561

 

1,409

 

11

%

2,970

 

2,573

 

15

%

Operating income

 

3,614

 

3,374

 

7

%

6,988

 

6,406

 

9

%

Operating expenses

 

(1,575

)

(1,330

)

18

%

(2,905

)

(3,092

)

-6

%

Profit before debt provision

 

2,039

 

2,044

 

 

4,083

 

3,314

 

23

%

Provision for doubtful debts

 

(309

)

(551

)

-44

%

(860

)

(531

)

62

%

Profit before income tax

 

1,730

 

1,493

 

16

%

3,223

 

2,783

 

16

%

Income tax expense

 

(457

)

(441

)

4

%

(898

)

(911

)

-1

%

Outside equity interests

 

(1

)

(2

)

-50

%

(3

)

(2

)

50

%

Net profit attributable to members of the Company

 

1,272

 

1,050

 

21

%

2,322

 

1,870

 

24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Profit Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit excluding profit after tax from sale of businesses to joint venture NHB recovery and special general provision for doubtful debts

 

1,102

 

1,066

 

3

%

2,168

 

1,870

 

16

%

Special general provision for doubtful debts after tax

 

 

(175

)

-100

%

(175

)

 

n/a

 

Recovery from NHB litigation after tax

 

 

159

 

-100

%

159

 

 

n/a

 

Profit on sale of businesses to ING joint venture after tax

 

170

 

 

n/a

 

170

 

 

n/a

 

Net profit attributable to members of the Company

 

1,272

 

1,050

 

21

%

2,322

 

1,870

 

24

%

 

Profit excluding profit on sale of businesses to joint venture, NHB recovery and special general provision for doubtful debts

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$ M

 

$ M

 

%

 

$ M

 

$ M

 

%

 

Net interest income

 

2,053

 

1,965

 

4

%

4,018

 

3,833

 

5

%

Other operating income

 

1,387

 

1,409

 

-2

%

2,796

 

2,573

 

9

%

Operating income

 

3,440

 

3,374

 

2

%

6,814

 

6,406

 

6

%

Operating expenses

 

(1,575

)

(1,578

)

 

(3,153

)

(3,092

)

2

%

Profit before debt provision

 

1,865

 

1,796

 

4

%

3,661

 

3,314

 

10

%

Provision for doubtful debts

 

(309

)

(301

)

3

%

(610

)

(531

)

15

%

Profit before income tax

 

1,556

 

1,495

 

4

%

3,051

 

2,783

 

10

%

Income tax expense

 

(453

)

(427

)

6

%

(880

)

(911

)

-3

%

Outside equity interests

 

(1

)

(2

)

-50

%

(3

)

(2

)

50

%

Net profit adjusted for significant transactions

 

1,102

 

1,066

 

3

%

2,168

 

1,870

 

16

%

 

3



 

Performance Measurements

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

 

 

$ M

 

$ M

 

$ M

 

$ M

 

Profitability ratios

 

 

 

 

 

 

 

 

 

Return on:

 

 

 

 

 

 

 

 

 

Average ordinary shareholders’ equity(1)

 

24.8

%

21.6

%

23.2

%

20.2

%

Average ordinary shareholders’ equity(1) excluding significant transactions(3)

 

21.3

%

22.0

%

21.6

%

20.2

%

Average assets

 

1.43

%

1.18

%

1.30

%

1.07

%

Average risk weighted assets

 

1.83

%

1.53

%

1.68

%

1.39

%

Total income

 

19.6

%

17.1

%

18.4

%

13.7

%

Net interest average margin

 

2.79

%

2.75

%

2.77

%

2.77

%

Profit per average FTE ($)

 

56,011

 

46,464

 

102,246

 

82,667

 

Efficiency ratios(2)

 

 

 

 

 

 

 

 

 

Operating expenses to operating income (excluding significant transactions(3))

 

45.5

%

46.5

%

46.0

%

48.0

%

Operating expenses to operating income

 

43.3

%

39.1

%

41.3

%

48.0

%

Operating expenses (excluding significant transactions)(3) to average assets

 

1.8

%

1.8

%

1.8

%

1.8

%

Operating expenses to average assets

 

1.8

%

1.5

%

1.6

%

1.8

%

Debt provisioning

 

 

 

 

 

 

 

 

 

Economic loss provisioning ($M)

 

309

 

301

 

610

 

531

 

Special general provision charge ($M)

 

 

250

 

250

 

 

Net specific provisions ($M)

 

362

 

366

 

728

 

520

 

Earnings per ordinary share (cents)

 

 

 

 

 

 

 

 

 

Earnings per ordinary share (basic)

 

81.0

 

66.3

 

147.3

 

117.4

 

Earnings per ordinary share (diluted)

 

80.6

 

66.0

 

146.6

 

117.0

 

Earnings per ordinary share (basic) excluding significant transactions(3)

 

69.6

 

67.4

 

137.0

 

117.4

 

Earnings per ordinary share (basic) excluding significant transactions(3) and goodwill amortisation

 

71.5

 

68.1

 

139.6

 

118.5

 

Ordinary share dividends (cents)

 

 

 

 

 

 

 

 

 

Interim - 100% franked (Mar 02: 100% franked)

 

n/a

 

39

 

39

 

33

 

Final - 100% franked (Sep 01: 100% franked)

 

46

 

n/a

 

46

 

40

 

Dividend payout ratio

 

57.0

%

58.9

%

57.8

%

62.0

%

Preference share dividend

 

 

 

 

 

 

 

 

 

Dividend paid ($M)

 

57

 

60

 

117

 

119

 

 

 

 

 

 

 

 

 

 

 

EVA

 

 

 

 

 

 

 

 

 

Profit (excluding ING notional goodwill) after tax excluding significant transactions(3)

 

1,120

 

1,066

 

2,186

 

1,870

 

Imputation credits

 

232

 

217

 

449

 

477

 

Risk adjusted profit

 

1,352

 

1,283

 

2,635

 

2,347

 

Cost of capital

 

(538

)

(505

)

(1,043

)

(953

)

Cost of preference share capital

 

(57

)

(60

)

(117

)

(119

)

EVA

 

757

 

718

 

1,475

 

1,275

 

 


(1).    Ordinary shareholders’ equity excluding outside equity interests

(2).    Excluding goodwill amortisation

(3).    Significant transaction during the half year ended 30 September, 2002 was sale of businesses to INGA joint venture; during half year ended 31 March, 2002 were NHB recovery and special general provision for doubtful debts

 

4



 

Statement of Financial Position

 

 

 

As at
Sep 02

 

As at
Mar 02

 

As at
Sep 01

 

Movt
Sep 02
v. Sep 01

 

Movt
Sep 02
v. Mar 02

 

 

 

$M

 

$M

 

$M

 

%

 

%

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Liquid assets

 

7,410

 

6,752

 

7,794

 

-5

%

10

%

Due from other financial institutions

 

3,815

 

3,468

 

4,829

 

-21

%

10

%

Trading and investment securities

 

9,482

 

7,905

 

8,314

 

14

%

20

%

Net loans and advances including acceptances

 

145,856

 

139,779

 

137,981

 

6

%

4

%

Other

 

16,542

 

18,685

 

26,575

 

-38

%

-11

%

Total assets

 

183,105

 

176,589

 

185,493

 

-1

%

4

%

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Due to other financial institutions

 

10,860

 

8,215

 

12,690

 

-14

%

32

%

Deposits and other borrowings

 

113,297

 

105,616

 

104,874

 

8

%

7

%

Liability for acceptances

 

13,796

 

14,512

 

14,324

 

-4

%

-5

%

Bonds and notes

 

14,708

 

14,437

 

15,340

 

-4

%

2

%

Other

 

18,979

 

23,006

 

27,714

 

-32

%

-18

%

Total liabilities

 

171,640

 

165,786

 

174,942

 

-2

%

4

%

Total shareholders’ equity

 

11,465

 

10,803

 

10,551

 

9

%

6

%

 

5



 

Assets and Capital

 

 

 

As at
Sep 02

 

As at
Mar 02

 

As at
Sep 01

 

Movt
Sep 02
v. Sep 01

 

Movt
Sep 02
v. Mar 02

 

 

 

 

 

 

 

 

 

%

 

%

 

Total assets ($M)

 

183,105

 

176,589

 

185,493

 

-1

%

4

%

 

 

 

 

 

 

 

 

 

 

 

 

Risk weighted assets ($M)

 

141,390

 

135,418

 

139,129

 

2

%

4

%

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity(1) (2) ($M)

 

11,448

 

10,789

 

10,538

 

9

%

6

%

Total advances ($M)

 

149,390

 

142,934

 

141,800

 

5

%

5

%

Specific provisions ($M)

 

(585

)

(589

)

(500

)

17

%

-1

%

Net advances ($M)

 

148,805

 

142,345

 

141,300

 

5

%

5

%

Net tangible assets per ordinary share ($)

 

6.58

 

6.14

 

5.96

 

10

%

7

%

Net tangible assets attributable to ordinary shareholders ($M)

 

9,893

 

9,191

 

8,875

 

11

%

8

%

Total number of ordinary shares (M)

 

1,503.9

 

1,495.7

 

1,488.3

 

1

%

1

%

 

 

 

 

 

 

 

 

 

 

 

 

Capital adequacy ratio (%)

 

 

 

 

 

 

 

 

 

 

 

Inner Tier 1

 

6.9

%

6.8

%

6.4

%

9

%

3

%

Tier 1

 

7.9

%

7.8

%

7.5

%

6

%

1

%

Tier 2

 

2.8

%

3.1

%

3.3

%

-15

%

-9

%

Total

 

9.5

%

10.4

%

10.3

%

-8

%

-9

%

Adjusted common equity ($M)

 

8,123

 

8,522

 

8,257

 

-2

%

-5

%

% of risk weighted assets (%)

 

5.7

%

6.3

%

5.9

%

-3

%

-9

%

 

 

 

 

 

 

 

 

 

 

 

 

General provision ($M)

 

1,496

 

1,546

 

1,386

 

8

%

-3

%

General provision as a % of risk weighted assets

 

1.06

%

1.14

%

1.00

%

6

%

-7

%

Non-accrual loans ($M)

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans

 

1,203

 

1,357

 

1,260

 

-5

%

-11

%

Specific provisions

 

(575

)

(524

)

(490

)

17

%

10

%

Net non-accrual loans

 

628

 

833

 

770

 

-18

%

-25

%

Specific provision as a % of total non-accrual loans

 

47.8

%

38.6

%

38.9

%

23

%

24

%

Total provisions(3) as a % of non-accrual loans

 

172.2

%

152.5

%

148.9

%

16

%

13

%

Net non-accrual loans as a % of net advances

 

0.4

%

0.6

%

0.5

%

-23

%

-28

%

Net non-accrual loans as a % of shareholders’ equity(4)

 

5.5

%

7.7

%

7.3

%

-25

%

-29

%

Other information

 

 

 

 

 

 

 

 

 

 

 

Full time equivalent staff (FTE’s)

 

22,482

 

22,737

 

22,501

 

 

-1

%

Assets per FTE ($M)

 

8.1

 

7.8

 

8.2

 

-1

%

4

%

Market capitalisation of ordinary shares ($M)

 

26,544

 

26,579

 

23,783

 

12

%

 

 


(1). Excludes outside equity interests

(2). Includes preference share capital of $1,375 million (Mar 2002: $1,410 million; Sep 2001: $1,526 million)

(3). General provision plus specific provisions on non-accrual loans

(4). Includes outside equity interests

 

6



 

CHIEF FINANCIAL OFFICER’S REVIEW

 

CHIEF FINANCIAL OFFICER
Peter Marriott

 

Overview

 

 

Australia and New Zealand Banking Group Limited (ANZ, or the Group) recorded a profit after tax of $2,322 million for the year ended 30 September 2002, an increase of 24% over the September 2001 year.  Earnings per ordinary share were 25% higher, at 147.3 cents, and return on ordinary shareholders’ equity was up from 20.2% to 23.2%.

 

Net profit after tax was impacted by three significant items:

                  In January 2002, the Group settled its long standing litigation with National Housing Bank in India (NHB).  This resulted in the recovery of $248 million ($159 million after tax), from the net amount of $575 million, which had been provided when the Group sold Grindlays to Standard Chartered Bank.

                  In March 2002, following an assessment of the general provision balance, a special provision for doubtful debts of $250 million ($175 million after tax) was charged in order to restore the provision balance to an appropriate level in the current environment of unexpected investment grade defaults.

                  In April 2002, certain life and general insurance and funds management businesses were sold to a joint venture with ING Group, and a 49% interest in the joint venture was acquired.  A profit after tax of $170 million arose on sale of the businesses.  This is slightly lower than the estimated $180 million advised at the time of sale due to higher exit and clawback provisions.

 

Profit after tax for the year excluding these items was $2,168 million, an increase of 16% over the September 2001 year.  Adjusting for the 4% reduction in the Australian corporate tax rate, profit after tax increased by 11%.  Key influences on the operating result for the year were:

                  Growth of 5% in net interest income.  Changes in the funding mix (deposits grew by $4 billion in the Personal businesses, and by $4 billion in the Corporate businesses) assisted this growth.  Net lending assets grew by $7.5 billion overall, with growth of $8.9 billion in Mortgages offset by a $2.7 billion decline in Corporate and Investment bank lending assets.

                  A 9% increase in other operating income.  Lending fees grew by 11%, principally from an increased range of specialist services in Corporate businesses.  Non-lending fees grew principally from higher transaction volumes in Consumer Finance.

                  Expenses increased by 2% (3% adjusting for sale of businesses to INGA joint venture).  Personnel numbers were held steady.  Increases in computer expenses were primarily driven by increased software amortisation.

                  The provision for doubtful debts increased by 15%.  While the ELP charge to operating segments was relatively stable, central charges were taken in each half as a conservative measure to reflect higher levels of default in our UK and US portfolios.  The recent collapses of previously investment grade corporates, and the uncertain economic outlook, have influenced the level of central provisioning.

 

7



 

Equity instruments issued to employees

 

Under current Australian Accounting Standards, certain equity instruments issued to employees are not required to be expensed.  The Group does not presently expense shares issued to employees under the $1,000 scheme, nor options issued to employees.

 

The absence of accounting guidance in this area, and the current Australian taxation legislation leads to the possibility of share capital becoming tainted, for tax purposes, should these equity instruments be expensed.  Accordingly it has not been possible to change our accounting to expense these items.  It is expected that changes will be made shortly to both accounting standards and taxation laws to overcome these impediments.  The impact of expensing these equity instruments issued to employees is shown below and detailed on page 73:

 

 

 

Actual
2002

 

After expensing
$1,000 share and options
2002

 

NPAT

 

$

2,322m

 

$

2,278m

 

EPS

 

147.3 cents

 

144.4 cents

 

 

Comparison of September 2002 half year with the March 2002 half year

 

 

Profit after tax for the September half year, excluding the profit on sale of businesses to the joint venture, was $1,102 million.  This was 3% higher than the March half year, excluding the NHB recovery and the special provision for doubtful debts.  Excluding amortisation of notional goodwill on the INGA joint venture, “cash earnings” increased 5% demonstrating continued earnings momentum.

 

8



 

Features of the second half

 

Key factors effecting the second half were:

                  Official interest rates in Australia and New Zealand rose by 0.5% and 1% respectively during the half and the financial markets anticipate further rises.  This benefited the net interest margin of our deposit-taking businesses (principally Personal Banking), but reduced the net interest margin in our Mortgages, Consumer Finance and Group Treasury businesses.

                  Overall net interest margin increased by 4 basis points, with improved spread.

                  Lending growth of 4.5% was driven principally by strong home loan growth of 8.3% reflecting the focus of increasing our portfolio towards consumer.

                  Deposit volume growth was again sufficient to fund lending growth without securitising mortgage assets.

                  Non interest income fell by $22 million.  Adjusting for the sale of ANZ Funds Management business, income increased $50 million or 4% (including $18 million of goodwill amortisation).

                  Operating expenses were impacted by increasing software amortisation, initiatives in cards programs, and from the first half, acquisitions in the Pacific.  The sale of the ANZ Funds Management business to the INGA joint venture reduced costs by $31 million meaning that the underlying increase in costs was 1.8%.

 

Our focus going forward remains investment in more attractive sectors to grow income, whilst continuing to maintain a healthy buffer between income growth and cost growth and thus continuing to moderately lower the cost income ratio.

 

Major Projects

 

Major projects being undertaken across the Group are designed to streamline our processes and to improve our interaction with customers.  Our programs leverage the value of technology to create better ways to work and to serve our customers.  During the second half, the Group:

                  Implemented a new general ledger across Australia and New Zealand, as part of the Common Administrative System (CAS).  The final part of CAS, payroll services, will roll out in Australia and New Zealand during the next 6 months.  Accounts payable, procurement, fixed assets management and human resources management are already operating on CAS.

                  Completed the implementation of the new back office processing system for cards, VisionPlus.  This system provides increased flexibility to develop and implement new products.

                  Development of the new technology system for our branch network, including a branch sales platform, continued.  This project will improve our general banking processes, and will better support our front line staff and our Restoring Customer Faith program.

                  The Payments Transformation Project will simplify the payments architecture of the Bank by replacing a range of existing payments processing applications and functions with a single integrated vendor solution.

                  Our Restoring Customer Faith program is an initiative designed to radically transform our approach to the business of branch banking.  The program aims to enable a customer-centric ownership culture that drives the transformation of the branch network.  The model is initially being implemented in Victoria and New Zealand.  The organisational model empowers our frontline staff, cuts bureaucracy and builds customer and staff advocacy.

                  Completed the replacement of merchant EFTPOS terminals for the new smart-chip enabled credit cards.

                  Restructured the Telstra and Qantas Visa card loyalty structure and administration.

                  Progressed the upgrade of all PC hardware to Windows 2000 compatible hardware to enhance security and enable centralised and standardised management.

 

Restructuring expenditure against the provision raised at September 2000 was $37 million in the half and $105 million for the full year (total spend to date $361 million, ie. fully utilised).  The remaining central restructuring balance of $95 million represents on-going restructuring programs to which we are committed and has been funded from annual profits.

 

Approximately one-third of the original restructuring provision has been used for redundancies and the balance for surplus lease space, EDP hardware write offs (Windows 2000 and EFTPOS terminals), payout costs, write off on fittings on refurbishment and restructuring program costs.  Benefits from these programs are estimated to be two-thirds costs and one-third revenue enhancement and the efficiencies from these programs have contributed to ANZ’s leading cost income ratio.

 

9



 

The Group has capitalised the development of software for major projects.  As at 30 September, 2002, the balance of software capitalised was $419 million ($303 million at September 2001).  Software is amortised over 3 to 5 years, commencing on the date of implementation (the only exception is the branch network platform, which is amortised over 7 years).  During the second half, software amortisation of $27 million was recognised.  The software amortisation charge is expected to approach $90 million for the 2003 full year.  The build up in capitalised projects has been at a time when the Group has had an unusually high number of long term infrastructure projects.

 

Balances of amounts capitalised for major projects include:

 

 

 

$ million

 

Branch Sales and Service Platform and Telling - new technology platform for our branches, including telling

 

91

 

Common Administrative System - web based administration system

 

69

 

VisionPlus - Cards processing platform

 

34

 

Yuetsu - back office processing for Esanda

 

30

 

 

 

 

 

CVM - single view of customer database

 

28

 

Middleware - allows better communication between host systems and applications

 

16

 

Mortgages Origination System - streamline mortgage processing

 

13

 

Payments Transform - simplifying payments architecture

 

13

 

 

 

 

 

Tandem - replacement of current EFTPOS/ATM infrastructure

 

13

 

STP Mortgages - straight through processing for mortgages

 

11

 

Contact Centre - consolidation of call centres

 

10

 

 

Risk

 

The Group economic loss provision (ELP) was $610 million, compared with $531 million in the year to September 2001. A new methodology implemented in the first half of 2002 has enhanced our measurement of corporate credit risk, and allowed more accurate risk assessment in the Consumer Finance portfolios.

 

The ELP charge to operating segments remained stable at $538 million in the year to September 2002. ELP reduced slightly in the Personal portfolios offset by an increase in risk in the offshore investment banking portfolio.

 

In addition to the $250 million special provision taken in March 2002 (refer page 7), a charge of $72 million (5 basis points) was taken centrally. This charge recognises the continued uncertainty in the international economic outlook, and is based on moving the credit profile of our offshore structured finance portfolio down one grade on our internal rating scale (equivalent to increasing the expected default percentages by approximately 150%) to reflect the higher incidence of downgrade and default evident in the portfolio. We do not expect to see a significant decrease in our ELP charge until there is evidence that the level of unexpected losses have reduced. Excluding the $250 million special provision, the ELP rate increased over the year to 43 basis points compared to 38 basis points for the September 2001 year.

 

Net specific provisions were $728 million, up from $520 million in the September 2001 year. A small number of large single name losses in the United Kingdom and Americas portfolios caused the increase with provisions in the Australia and New Zealand portfolios falling by 30% or $153 million over the year. Provisions on formerly investment grade names dominated the total net specific provisions including Marconi and Enron which alone accounted for 43% of the total net specific provisions (64% of Corporate businesses net specific provisions).

 

Net non-accrual loans were $628 million at September 2002 compared with $770 million at September 2001 with new non-accruals principally from former investment grade names in the UK and US. The general provision balance at 30 September 2002 was $1,496 million (1.06% of risk weighted assets), compared with $1,386 million (1.00% of risk weighted assets) at 30 September 2001.

 

10



 

Capital management

 

The Group’s Tier 1 ratio increased in the half to 7.9%.  The total capital adequacy ratio remains strong at 9.5%, with a small reduction in the Tier 2 ratio and an increase in deductions.

 

Following the establishment of the joint venture with ING Group, our principal focus is Adjusted Common Equity, defined as the Tier 1 capital, less preference shares and deductions of investments in funds management subsidiaries from total capital.  Over the September 2002 half, Adjusted Common Equity decreased from 6.3% to 5.7% of risk weighted assets, however remains at the top of our target range of 5.25% to 5.75%.  The investment in the joint venture, which was funded from internal resources, has increased the deductions from capital, as shown in the table below.

 

 

 

Sep 02

 

Mar 02

 

Sep 01

 

Mar 01

 

 

 

$B

 

$B

 

$B

 

$B

 

Tier 1

 

11.2

 

10.6

 

10.4

 

10.0

 

Preference Shares

 

(1.4

)

(1.4

)

(1.5

)

(1.5

)

Deductions

 

(1.7

)

(0.7

)

(0.6

)

(0.3

)

Adjusted Common Equity ($B)

 

8.1

 

8.5

 

8.3

 

8.2

 

% of risk weighted assets

 

5.7

%

6.3

%

5.9

%

6.0

%

 

The Group is managed to maximise value for our shareholders.  One measure of shareholder value is EVATM (Economic Value Added) growth relative to prior periods.  EVATM for the year ended 30 September 2002 was $1,475 million, up from $1,275 million for the year ended 30 September 2001.  EVA™ for the September 2002 half was $757 million, compared with $718 million for the March 2002 half.

 

EVATM is a measure of risk adjusted accounting profit.  It is based on operating profit after tax, adjusted for one-off items, the cost of capital, imputation credits and economic credit costs.  Of these, the major component is the cost of capital, which is calculated on the risk adjusted or economic capital at a rate of 11%.

 

At ANZ, economic capital is the equity allocated according to a business unit’s inherent risk profile.  It is allocated for several risk categories including: credit risk, operating risk, interest rate risk, basis risk, mismatch risk, investment risk, trading risk and other risk.  The methodology used to allocate capital to business units for risk is designed to help drive appropriate risk management and business strategies throughout the Group.

 

EVATM is a key measure for evaluating business unit performance and correspondingly is a key factor in determining the variable component of remuneration packages.  Business unit results are equity standardised, by eliminating the impact of earnings on each business unit’s book capital and attributing earnings on the business unit’s risk adjusted or economic capital.

 

11



 

This page has been left blank intentionally

 

12



 

Business Segment Performance

 

Analysis of the segment and business unit results appears on pages 15 to 55.  The principles used to compile business unit results are explained in the glossary on page 122.

 

Net profit for each business is determined after service transfer pricing and equity standardisation.

 

The Group from time to time modifies the organisation of its businesses to enhance the focus on delivery of specialised products or services to customers.  Prior period numbers are adjusted for such organisational changes to allow comparability.

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$M

 

$M

 

%

 

$M

 

$M

 

%

 

Personal Banking and Wealth Management

 

293

 

280

 

5

%

573

 

526

 

9

%

Corporate Businesses

 

270

 

257

 

5

%

527

 

466

 

13

%

ANZ Investment Bank

 

157

 

154

 

2

%

311

 

288

 

8

%

Small to Medium Business

 

82

 

75

 

9

%

157

 

130

 

21

%

Mortgages

 

123

 

123

 

 

246

 

236

 

4

%

Consumer Finance

 

71

 

78

 

-9

%

149

 

99

 

51

%

Asset Finance

 

54

 

48

 

13

%

102

 

92

 

11

%

Group Treasury

 

61

 

63

 

-3

%

124

 

75

 

65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating segments total

 

1,111

 

1,078

 

3

%

2,189

 

1,912

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Centre

 

(9

)

(12

)

-25

%

(21

)

(42

)

-50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit excluding significant transactions(1)

 

1,102

 

1,066

 

3

%

2,168

 

1,870

 

16

%

 


(1).    Significant transaction during the half year ended 30 September, 2002 was sale of businesses to INGA joint venture; during half year ended 31 March, 2002 were NHB recovery and special provision for doubtful debts.

 

13



 

Specialist Business Units

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$M

 

$M

 

%

 

$M

 

$M

 

%

 

Personal Banking Australia

 

132

 

120

 

10

%

252

 

243

 

4

%

Personal Banking New Zealand

 

51

 

44

 

16

%

95

 

102

 

-7

%

Asia Pacific Personal Banking

 

49

 

43

 

14

%

92

 

66

 

39

%

Wealth Management

 

53

 

48

 

10

%

101

 

70

 

44

%

INGA Joint Venture / ANZ Funds Management

 

8

 

25

 

-68

%

33

 

45

 

-27

%

Corporate Banking

 

66

 

68

 

-3

%

134

 

126

 

6

%

Global Institutional Banking

 

128

 

115

 

11

%

243

 

205

 

19

%

Global Transaction Services

 

76

 

74

 

3

%

150

 

135

 

11

%

Global Foreign Exchange

 

43

 

41

 

5

%

84

 

87

 

-3

%

Global Capital Markets

 

33

 

31

 

6

%

64

 

53

 

21

%

Global Structured Finance

 

43

 

41

 

5

%

84

 

76

 

11

%

Corporate Finance & Advisory

 

38

 

41

 

-7

%

79

 

72

 

10

%

Small to Medium Business

 

82

 

75

 

9

%

157

 

130

 

21

%

Mortgages

 

123

 

123

 

 

246

 

236

 

4

%

Consumer Finance

 

71

 

78

 

-9

%

149

 

99

 

51

%

Asset Finance

 

54

 

48

 

13

%

102

 

92

 

11

%

Group Treasury

 

61

 

63

 

-3

%

124

 

75

 

65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating segments total

 

1,111

 

1,078

 

3

%

2,189

 

1,912

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate Centre

 

(9

)

(12

)

-25

%

(21

)

(42

)

-50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit excluding significant transactions(1)

 

1,102

 

1,066

 

3

%

2,168

 

1,870

 

16

%

 


(1).    Significant transaction during the half year ended 30 September, 2002 was sale of businesses to INGA joint venture; during half year ended 31 March, 2002 were NHB recovery and special provision for doubtful debts.

 

14



 

PERSONAL BANKING AND WEALTH MANAGEMENT
Elmer Funke Kupper

Comprises Personal Banking Australia, Personal Banking New Zealand, Asia Pacific Personal Banking, Wealth Management and the INGA joint venture

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$M

 

$M

 

%

 

$M

 

$M

 

%

 

Net interest income

 

553

 

524

 

6

%

1,077

 

1,096

 

-2

%

Other external operating income

 

388

 

433

 

-10

%

821

 

814

 

1

%

Net inter business unit fees

 

156

 

150

 

4

%

306

 

272

 

13

%

Operating income

 

1,097

 

1,107

 

-1

%

2,204

 

2,182

 

1

%

External operating expenses

 

(526

)

(530

)

-1

%

(1,056

)

(1,038

)

2

%

Net inter business unit expenses

 

(140

)

(144

)

-3

%

(284

)

(292

)

-3

%

Operating expenses

 

(666

)

(674

)

-1

%

(1,340

)

(1,330

)

1

%

Profit before debt provision

 

431

 

433

 

0

%

864

 

852

 

1

%

Provision for doubtful debts

 

(19

)

(19

)

0

%

(38

)

(38

)

0

%

Profit before income tax

 

412

 

414

 

0

%

826

 

814

 

1

%

Income tax expense and outside equity interests

 

(119

)

(134

)

-11

%

(253

)

(288

)

-12

%

Net profit attributable to members of the Company

 

293

 

280

 

5

%

573

 

526

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loans & advances including acceptances

 

7,224

 

6,770

 

7

%

7,224

 

6,967

 

4

%

Other external assets

 

3,411

 

7,565

 

-55

%

3,411

 

6,630

 

-49

%

External assets

 

10,635

 

14,335

 

-26

%

10,635

 

13,597

 

-22

%

Deposits and other borrowings

 

37,906

 

36,064

 

5

%

37,906

 

34,082

 

11

%

Other external liabilities

 

1,436

 

6,063

 

-76

%

1,436

 

5,916

 

-76

%

External liabilities

 

39,342

 

42,127

 

-7

%

39,342

 

39,998

 

-2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest average margin

 

3.20

%

3.04

%

5

%

3.12

%

3.37

%

-7

%

Return on assets

 

1.50

%

1.34

%

12

%

1.42

%

1.38

%

3

%

Return on risk weighted assets

 

4.80

%

4.62

%

4

%

4.71

%

4.59

%

3

%

Operating expenses to operating income

 

60.5

%

60.8

%

0

%

60.7

%

61.0

%

0

%

Operating expenses to average assets

 

3.40

%

3.21

%

6

%

3.30

%

3.48

%

-5

%

Net specific provisions

 

15

 

11

 

36

%

26

 

30

 

-13

%

Net specific provision as a% of average net advances

 

0.43

%

0.32

%

32

%

0.38

%

0.44

%

-15

%

Net non-accrual loans

 

22

 

22

 

0

%

22

 

23

 

-4

%

Net non-accrual loans as a% of net advances

 

0.30

%

0.32

%

-6

%

0.30

%

0.33

%

-8

%

Total employees

 

8,917

 

9,308

 

-4

%

8,917

 

9,283

 

-4

%

 

15



 

 

PERSONAL BANKING AUSTRALIA
Elmer Funke Kupper

Provides a full range of banking services for personal customers and rural small business customers in Australia through branches, call centres and on-line banking

 

 

 

Half
year
Sep 02

 

Half
year
Mar 02

 

Movt
Sep 02
v. Mar 02

 

Full
year
Sep 02

 

Full
year
Sep 01

 

Movt
Sep 02
v. Sep 01

 

 

 

$M

 

$M

 

%

 

$M%

 

$M

 

%

 

Net interest income

 

311

 

291

 

7

%

602

 

613

 

-2

%

Other external operating income

 

148

 

140

 

6

%

288

 

270

 

7

%

Net inter business unit fees

 

133

 

133

 

 

266

 

271

 

-2

%

Operating income

 

592

 

564

 

5

%

1,156

 

1,154

 

 

External operating expenses

 

(302

)

(292

)

3

%

(594

)

(581

)

2

%

Net inter business unit expenses

 

(91

)

(90

)

1

%

(181

)

(186

)

-3

%

Operating expenses

 

(393

)

(382

)

3

%

(775

)

(767

)

1

%

Profit before debt provision

 

199

 

182

 

9

%

381

 

387

 

-2

%

Provision for doubtful debts

 

(10

)

(11

)

-9

%

(21

)

(22

)

-5

%

Profit before income tax

 

189

 

171

 

11

%

360

 

365

 

-1

%

Income tax expense and outside equity interests

 

(57

)

(51

)

12

%

(108

)

(122

)

-11

%

Net profit attributable to members of the Company

 

132