Delivering for Shareholders Australia and New Zealand Banking

Delivering for Shareholders Australia and New Zealand Banking Group Limited Peter Marriott Chief Financial Offic February 2000

Briefing Outline m Review of ANZ’s 1999 Results - Financial Perspective - Business Perspective m Outline Group Strategy with particular focus on Personal Financial Services strategy.

1999 - A Good Year for ANZ m EPS 90. 6 c up 17%. TSR up 19. 6% m NPAT $1, 480 million up underlying 18% m Return on Equity up to 17. 2% (15. 5%). ROA 1. 0% (0. 8%) m Costs down 4%. Cost income ratio down to 55. 0% (60. 9%) m Risks reduced. Gross non-accruals down 7%, net down 27% m $500 million share buyback m No abnormals. No Surprises.

Significant Improvement Achieved Cost Income Ratio % ROE % ROA % Gross and Net Non. Accruals 1, 662 $m 1, 543 1, 225 872

Good Progress Across the Board $m Software Capitalisation Increased Tax 61 (136) 1700 1600 Growth in Other Income 42 Lending Lower Fee Costs Growth 83 87 Other Fee Growth 93 1500 1400 1300 1200 1100 1000 1, 106 Abnor mal Items 1, 175 69 Higher Provisions (23) 1, 480 Net Interest Income Growth 98 900 Post Pre Abnormal s s 1998 1999

Drivers of Performance ROA Net Interest Assets NII/Interest Earning Assets ROE Other Income Assets Cost/Income Cost Assets Leverage Risk Provisions/NLA Provisions Assets Business

Delivering on Cost Reduction Cost Income Ratios % WBC CBA ANZ NAB

Reducing Risk US$b 11. 5 Asian Exposure 6. 1 A$m Market Risk 23 23 Ave) % 5. 6 (Va. R - Australian Lending Asset Profile $65 b $90 b AAABBB+ BBB Equities BB Interest 7 FX BB<B+

Non-Accrual Loans $m Gross Non-Accrual Loans Net Non-Accrual Loans As at 30 September $m Gross Australia 44% New Zealand 50 International 870 Net 623 Cover 345 30 282 40% 65%

Provisioning: ELP > SP at Group Level $m 2100 510 1800 482 FX Impact 1500 1401 1200 ELP Net SP Charge. Transfer 900 1395 967 600 300 0 Sep 98 Sep 99 APRA Guideline ELP - Economic Loss Provision SP - Specific Provision Surplus over APRA Guideline

Capital Strategy % Capital Adequacy Ratio 12 10. 7 10 m 8 7. 9 m 6 4 m 2 m 0 1996 1997 1998 1999 Hybrid Inner Tier 1 m Active capital management Maintain AA status and peer ratings ã Tier 1 (6. 5 - 7. 0%) ã Inner Tier 1 (6. 0% - 6. 5%) $500 million on-market buyback Major international acquisitions unlikely NZ Tracking Stock Issue in May

Economic Value Added (EVA) $ million Net Income 5, 966 Operating Expenses (3, 294) ELP Charge (510) Tax (676) Franking & Other Adjustments 352 Adjust Profit 1, 838 Cost of Capital* @ 11% EVA (1, 004) 834 * Hurdle of 15% used in internal models

Business on Track m Strategic re-positioning on track in all segments m Good earnings growth in Australia and New Zealand m Business mix substantially improved. High risk businesses exited m Domestic market share up notwithstanding cost focus m 140, 000 Internet banking customers (8000). ANZ E*Trade launched m Major technology projects completed on time, on budget

Business Mix Improved Business Segment Profit After Tax $m Other Down 20% International Business Segment Proportion Other International Up 17% Up 33% Corporate Personal

Gains in Australian Market Share of Housing Total Market Share % % NAB CBA WBC ANZ 1988 % 1993 Lending 1998 Nov-99 %Share of Business Lending Nov-99 of Credit Cards Nov-99

Overall Strategic Direction in Place m Balance business mix towards consumer and low risk ã ã m Personal offers greatest growth and earnings potential Leading position in corporate to be leveraged International to be simplified and focused A leading presence in e-Commerce to be established Transform management process to deliver EVA ã ã ã Withdraw from high-risk and non core segments Improve performance in suboptimal businesses Invest in high growth revenue streams Hold costs flat Optimise capital efficiency

Strategy for Personal m Aggressively build market position in all consumer segments m An intergrated financial services approach m Special focus on insurance and retail funds management m Differentiated service propositions by customer segment m Build strong product businesses m Continue intense focus on cost management m Build a leading consumer e-Commerce capability

Integrated Personal Financial Services Estimated Value of An Australian Retail Customer (A$ Present Value) $6000 - 7000 General Insurance & Traditional Life Risk/Wealth Protection Investment Traditional Banking Household Financial Assets $b 3000 Manage d Funds 2000 1000 Banks/NFI 1989 1997 2005

ANZ Has a High Quality Personal Customer Base Wealth Bands $(000) 20 60 100 200 70 80 500 1000 ANZ Other Industry Ave 0 10 20 30 40 50 60 90 100 Total Relationships (%) Source: Roy Morgan Research 1998

The Opportunity with Australian Consumers Customer Base 2. 7 m All ANZ Custome rs High Value to ANZ High True Value to Retail Industry Market but limited ANZ business. Source: Roy Morgan Research 1998

A New Dedicated Business for Premier Customers m m Premier Financial Package Dedicated Managers Premier Suites Dedicated Service Officers

Segmented Customer Service Propositions will now Drive Delivery Segmented Customer Service Approach Customer Revenue curve New Segmented approach Traditional uniform cost to serve High Value Customers Low Value Customers A fundamental shift to a customer-centric strategy

Leveraging Technology: anz. com Market share Customer takeup rate * % of Australian internet banking users) (% of customer base) * Number of internet banking users (Ord Minnett 12/99) / number of main banking relationships

International - Simplify and Focus Continue to Reduce Risk Re-balance business mix towards consumer m Reduce cross border risk m Target Top 2 -3 foreign or Top 5 local position m Leverage strong positions/ global capabilities m Deal with minor positions New Lending Policies m Target Fewer, Deeper Positions Develop Asia-Pacific, e. g. Indonesia m Pursue acquisitions only where it creates a desired position likelihood of our making a major international acquisition this year is low Latin American Offices Closed m Create Future Growth Platforms 25% Interest in Panin, Cards acquisition

Continue to Deliver in 2000 m m m m Increase ROE towards 20% target Target flat costs. Achieve 53% cost income ratio Improve asset quality, particularly International Progress towards target capital range Set stretch performance targets and linked incentives Target highest increase in e-Commerce customers No surprises

Outlook m Positive view on world economy m Australian economy strong but slowing slightly m Business tracking close to our expectations, comfortable with “Street” expectations m Abnormal writedown of FITB of $60 m from tax changes – will be partially offset by abnormal gains

The material in this presentation is general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. For further information visit www. anz. com or contact David Ward General Manager Office of the Chief Executive ph (613) 9273 4185 fax (613)9273 4091 email david. ward@anz. com

Profit & Loss A$M Sep-97 Net Interest Income Fees FX Trading Securities Other Non Interest Income Net Income Personnel Expenses Premises Computer Other Restructuring Costs Total Expenses Profit Before Provisions Doubtful Debts Tax NPAT Before Abnormal Items NPAT and Abnormal Items 3, 437 1, 459 237 182 232 2, 110 5, 547 1, 949 362 330 771 90 3, 502 2, 045 400 466 1, 171 <147> 1, 024 Sep-98 3, 547 1, 574 373 <83> 235 2, 099 5, 646 1, 854 347 341 776 120 3, 438 2, 208 487 537 1, 175 <69> 1, 106 Sep-99 3, 645 1, 754 340 89 138 2, 321 5, 966 1, 732 314 344 813 91 3, 294 2, 672 510 676 1, 480

Profit & Loss A$M Net Interest Income Fees FX Trading Securities Other Non Interest Income Net Income Personnel Expenses Premises Computer Other Sub Total Restructuring Costs Total Expenses Profit Before Provisions Doubtful Debts Tax NPAT Before Abnormal Items NPAT and Abnormal Items Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 1, 718 693 111 80 116 1, 000 2, 718 954 184 173 383 1, 694 1, 024 197 243 580 <31> 549 1, 719 766 126 102 116 1, 110 2, 829 995 178 157 388 1, 718 90 1, 808 1, 021 203 223 591 <116> 475 1, 773 774 196 62 96 1, 128 2, 901 972 168 385 1, 697 40 1, 737 1, 164 237 298 625 1, 774 800 177 <145> 139 971 2, 745 882 175 173 391 1, 621 80 1, 701 1, 044 250 239 550 <69> 481 1, 811 850 180 44 60 1, 134 2, 945 860 157 186 391 1, 594 49 1, 643 1, 302 258 324 716 Sep-99 1, 834 904 160 45 78 1, 187 3, 021 872 157 158 422 1, 609 42 1, 651 1, 370 252 352 764

Management Team m m m John Mc. Farlane Chartered David Boyles Roger Davis Peter Hawkins Peter Marriott Greg Camm Larry Crawford Wells Fargo Bob Edgar Kathryn Fagg Brian Hartzer Elmer Funke Kupper Mark Lawrence Peter Mc. Mahon Grahame Miller Elizabeth Proust Service CEO Citibank, Standard CIO AMEX, BOA Corporate Citibank Personal ANZ CFO ANZ, KPMG Mortgages ANZ Distribution First Bank Systems, Business Bank ANZ Banking Products Mc. Kinsey & Co Cards First Manhattan International Mc. Kinsey & Co Risk Soc Gen New York Asset Finance ANZ, Costain ANZIB ANZ People Victoria Public