Australia and New Zealand Banking Group Annual Report 2004

FY2004 Annual Report · Australia and New Zealand Banking Group

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2004 INVESTOR SNAPSHOT
THE YEAR AT A GLANCE

Our goal is to become Australasia's leading, most respected and fastest
growing major bank. We came a long way in 2004 while at the same time
delivering another good financial performance. Importantly we have rewarded
our shareholders and shared the benefits with customers, our people and
the community.

2004 HIGHLIGHTS

> Completed the $4.9 billion acquisition of The National
Bank of New Zealand and made good progress with
the integration of our New Zealand business.

> Undertook a successful $3.6 billion Rights Issue.

> Created strong momentum in the Personal and Corporate

divisions, which performed well delivering improved
service for customers and growing market share.

> Established a sustainable foundation for the

Institutional division through more efficient use of
capital and lower risk.

> Produced solid performances in New Zealand, Asia

Pacific, Esanda and ING Australia.

> Took further steps in a multi-year program of

structural de-risking which is now largely complete
with ANZ’s risk profile now comparable with other
major Australian banks.

> Continued to create an environment of opportunity,

challenge and development for our people.
Staff satisfaction now stands at 85%.

> Developed innovative programs to strengthen our

connection with the community including responses
to major social issues that involve the financial services
industry such as financial literacy and savings.

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STRONG PROFIT GROWTH
year on year net profit

Our profit in 2004 of $2,815 million represents
an increase of 20% over the previous year.
This was driven by the acquisition of The
National Bank of New Zealand during the year,
combined with solid underlying growth in
most parts of the Group. The Institutional result
was flat, as we continued to reduce risk.
Costs increased slightly.
significant items (A)

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'01'02'03 '04

MARKET CAPITALISATION DOUBLED
IN 5 YEARS
market capitalisation at
30 september

Over the past five years ANZ’s market
capital value has more than doubled,
driven mainly by strong growth in
underlying earnings.

STRATEGIC PRIORITIES

SUSTAINABLE
SHAREHOLDER
VALUE

MARKET
LEADERSHIP
& SUPERIOR
MARKET
GROWTH

LOW
COST
& LOW
RISK

DISTINCTIVE
CUSTOMER
SERVICE

EARNING
COMMUNITY
TRUST

CREDIT RATING

Maintained AA- Credit Rating
KEY TO GRAPHS

(B) COST TO INCOME RATIO Excludes the effect of significant items and
goodwill amortisation.

(A) SIGNIFICANT ITEMS In the year ended 30 September 2004 there were significant
items of $84 million, including gain related to the buy-back of TrUEPrS preference
shares ($84 million after tax), gain on finalising ING Australia completion accounts
($14 million after tax), and incremental costs associated with the NBNZ integration
($14 million after tax). There were significant items totalling $154 million after tax
in 2002 and $44 million in 2000.

FINANCIAL TERMS AND KEY DEFINITIONS

Can be found in the Glossary of Financial Terms.

FURTHER EXPLANATION OF KEY MEASURES

Can be found in the Chief Financial Officer’s Review.

60%

50%

40%

30%

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year

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'04

WORLD-LEADING PRODUCTIVITY
cost to income ratio (b)

anz

target
range

During 2004 our cost to income ratio remained broadly
stable at 45.3%, staying within our target range. ANZ
remains one of the most efficient major banks in the world.
We continued to increase the rate of organic investment
in the Australian franchise to increase market share,
particularly in Personal and Corporate.

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HEALTHY SHAREHOLDER RETURNS
value of $100 investment in anz shares over 5 years

Share price re-based for rights issue. Assumes re-investing
of dividends. Total shareholder return (TSR) in 2004 was 17%.
The TSR annualised for the last five years, assuming full
reinvestment of dividends, was 20%. This was driven by steadily
increasing dividends and strong growth in the share price.

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'01'02'03 '04

STRONG DIVIDEND GROWTH
dividends per share

The 2004 dividend was a record
with a 47cents interim dividend
and a 54 cents final dividend, both
100% franked. Adjusting for the
bonus element of the Rights Issue,
dividends grew by 10.8% broadly
in line with the growth in earnings
per share excluding significant items
and goodwill amortisation.

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INCREASED SHAREHOLDER VALUE AS
MEASURED BY EVA™
eva™

Economic value added (EVA™) grew by
11% in 2004, driven by sound underlying
performance and continued success in
reducing risk across the Group,
particularly in our Institutional division.

anz's goal is to become
australasia's leading, most respected
and fastest growing major bank.

CHAIRMAN’S
REPORT

10
A MESSAGE FROM
JOHN MCFARLANE

12
CHIEF FINANCIAL
OFFICER’S REVIEW

20
SENIOR
MANAGEMENT

Charles Goode comments
on ANZ’s performance,
key issues for the Board
and the outlook for 2005.

John McFarlane discusses
ANZ’s business strategy,
progress made in 2004
and future priorities.

A review of the Group’s
financial performance.

ANZ’s senior management
team and their approach
to leadership, people and
culture.

22
BUSINESS
DIVISIONS

34
BUSINESS
PERFORMANCE

38
THE
COMMUNITY

THE
ENVIRONMENT

The leaders of ANZ’s
customer divisions
each discuss their
division’s performance
and priorities.

Details of the contribution
made by each business to
ANZ’s 2004 performance.

Outlines ANZ’s
approach to building
community trust.

ANZ’s approach to
environmental improvement,
achievements in 2004
and future priorities.

42
BOARD OF
DIRECTORS

CORPORATE
GOVERNANCE

REMUNERATION
REPORT

72
GUIDE TO CONCISE
FINANCIAL REPORT

Biographies of ANZ’s
Board of Directors.

Details of ANZ’s
approach to
corporate governance.

Details of remuneration
policy and practices,
including remuneration
tables for Directors and
Executives.

This guide assists
readers’ understanding
of each section of the
Concise Financial Report.

DIRECTORS’
REPORT

79
CONCISE
FINANCIAL REPORT

DIRECTORS’
DECLARATION

88
AUDITORS’
REPORT

Directors’ overview of
the Group for 2004.

Financial information
including the Consolidated
Statements of Financial
Performance, Financial
Position and Cash Flows.

The Directors’
declaration on the
Concise Financial
Report.

The independent audit
report on the Concise
Financial Report.

SHAREHOLDER
INFORMATION

GLOSSARY OF
FINANCIAL TERMS

Key financial information,
stock exchange
information and
shareholder dates.

Definitions of financial
terms used in this
report are provided.

EMMA EVANS
EMMA EVANS
SENIOR SALES CONSULTANT
SENIOR SALES CONSULTANT
PERSONAL BANKING AND WEALTH MANAGEMENT
PERSONAL BANKING AND WEALTH MANAGEMENT
SURFERS PARADISE
SURFERS PARADISE

I was helping a customer who came in to look at our products
because she was unhappy with her bank. I ended up
transferring her home loan, absolutely everything to ANZ.
After, she sent three other people to me for home loans.
Sometimes it’s that simple. If you deliver great service, the
customer goes away smiling and refers people to you.

BARRY BAILEY (AND OSLO)
BARRY BAILEY (AND OSLO)
CUSTOMER SERVICE CONSULTANT
CUSTOMER SERVICE CONSULTANT
ANZ INTERNET BANKING
ANZ INTERNET BANKING
VICTORIA
VICTORIA

I originally trained for a role in Cards but now I'm on the
Internet Banking Help Desk. A lot of clients I deal with are
elderly and not used to computers. So I talk to them on
the phone and they're pretty happy when I get them up and
running with internet banking.

EVA LIU BOYD
CUSTOMER SERVICE OFFICER
MANNERS STREET BRANCH
THE NATIONAL BANK OF NEW ZEALAND

Service is not just greeting your customer or asking
how their day is but actually putting yourself in their
position so you understand more and can help that little
bit more. Sometimes you get a great reaction and its like
'wow, I did that'. If you are always putting customers first
then they will come back for that service.

FRANK HAGEALI
BUSINESS DEVELOPMENT MANAGER
CORPORATE BANKING
SYDNEY

The reason I enjoy working at ANZ is the opportunity
to run your own business, to do it your way. You can look
outside the square and come up with different solutions
for clients. I'm always looking for clients who have that
requirement, where I can do something special.

JASON BATSON
JASON BATSON
BRANCH MANAGER WARRAGUL & TRAFALGAR
BRANCH MANAGER WARRAGUL & TRAFALGAR
ANZ RURAL BANKING
ANZ RURAL BANKING
VICTORIA
VICTORIA

The big change for us has been the feeling that everytime
you walk in the door to work it’s your business. It means we
can make local decisions, which are right for our branch and
our community. You really run your own race and we have
a happier team and happier customers as a result.

8 I chairman’s report

DELIVERING PERFORMANCE AND GROWTH
CHAIRMAN’S REPORT

2004 was a good year for ANZ. The Group delivered on its commitments to shareholders, producing a record profit, higher
dividends and a strong capital position. Importantly, this was achieved with a prudent approach to risk. Total shareholder
return for 2004 was 17%.

Performance
In the year ended 30 September 2004, profit after tax was up
20% to a new record of $2,815 million. This includes ten months’
contribution from The National Bank of New Zealand. Excluding
The National Bank of New Zealand and significant items, profit
after tax was $2,536 million, up 8%.

The Directors were pleased to increase the dividend to $1.01 per
share fully franked, an increase of 10.8% taking into account the
effect of the Rights Issue. This is the 13th consecutive increase
in annual dividends and a further increase in our dividend payout
ratio, as ANZ’s cash earnings per share have grown.

A strong performance in our Personal Division drove much of
our growth. This is an area we have focussed on as part of our
specialisation strategy and we are now seeing the benefits.

Understanding shareholders value sustainable growth, we have
also continued to focus on the prudent management of margins,
risks and capital as well as investing for the future.

The return on ordinary shareholders’ equity was down to 18.1%
in 2004 from 20.6% in 2003. This reduction is primarily associated
with the impact of our New Zealand acquisition. Our cost to income
ratio of 45.3% continues to be the lowest of the major Australian
banks and reflects our position as one of the most efficient banks in
the world. Risks continue to be well managed. Specific provisions
were down by 16% to $443 million.

Our capital position is strong, with the Group’s adjusted common
equity ratio at 5.1%. This is above our target range. We
announced plans for an on-market share buy-back to enhance
ANZ’s capital management.

Expansion and Growth
Our acquisition of The National Bank of New Zealand has provided
ANZ with a stronger, more sustainable and diversified domestic
business base. We have already made good progress with
integration of our New Zealand businesses. Our approach has
been low risk, emphasising the priority we have given to retaining
customers and protecting our franchise. Legal amalgamation was
achieved in June with the creation of ANZ National Bank Limited.

In other areas, we have maintained momentum in our specialist
businesses. Our Personal and Corporate Divisions performed
well. The Institutional Division was subdued, reflecting in part
a strategic decision to reduce risk with consequent earnings
sacrifice.

Our specialisation strategy has provided ANZ with focus and
vitality. In May 2004 we reorganised our specialist businesses
into five customer service divisions: Personal, Institutional,
Corporate, New Zealand and Asia Pacific. The change is designed
to accelerate growth and build market share by harnessing
synergies between the businesses.

Customers and the Community
I have often emphasised our commitment to improving
customer service and our position in the communities we serve.

During 2004, on all measures, customer service improved.
We have invested in modernising our branches, improving our
focus on health and safety and developing innovative new
products. As a result, in the Personal Division, not only do our
customers say we are doing a better job, our staff are more
satisfied and we are gaining market share.

As importantly, we have taken a broader role in the community.
While you can read about this in more detail later in this report,
I would like to acknowledge the work of thousands of ANZ staff
who volunteered their time to help local schools, rebuild community
facilities and support the needs of people in financial difficulty.

Governance and Regulation
Regulatory focus continued to increase during the year. New
measures included the governance standards associated with
CLERP 9 in Australia, the US Sarbanes Oxley Act and
International Financial Reporting Standards.

A strong focus on corporate governance and transparency is not
only an ethical and stewardship responsibility, it can give ANZ
a strong advantage.

Nevertheless the trend toward greater regulation means the
cost involved in complying with these regulations is now
quite a significant item. We estimate this additional cost has
reduced earnings in 2004 by between half and one percent.
There is a danger of further regulation diminishing returns for
both shareholders and the community.

The Board’s Focus in 2004
ANZ’s Board met 8 times in 2004 with many specific activities
being carried out by the Board’s committees. Some of the key
issues for the Board were oversight of integration issues related
to the acquisition of The National Bank of New Zealand, the long-
term strategy for technology and a continuing focus on risk
management.

During the year the Board placed more emphasis on developing a
long-term growth strategy including our strategy for East Asia. The
Board recognises that opportunities to improve our efficiency by
cost reduction alone are becoming more limited. While we will
ensure ANZ continues to be an efficient bank, we will place increasing
emphasis on growth as a means of delivering superior value to
shareholders over the coming years.

chairman’s report I 9

ANZ has continued to deliver on its promises to shareholders in 2004.We acquired
The National Bank of New Zealand making us the leading bank in New Zealand.
There was a successful $3.6 billion Rights Issue associated with the acquisition
making us the number three bank in Australia based on market capitalisation.
And we produced another good financial performance.

New Directors
During 2004, the Board appointed three new directors. These
appointments have added to the Board’s experience and expertise
and allowed careful management of a transition with the planned
retirement of John Dahlsen and Brian Scott in 2005.

On 1 February 2004, Dr Greg Clark joined the ANZ Board. Dr Clark
has international experience and a distinguished career in
technology including leading roles at News Corporation, IBM
and presently at Clark Capital Partners. He is also a Director
of James Hardie Industries. Dr Clark will especially assist the
Board in its deliberations in the area of technology, which is a
complex area and one of the major opportunities and challenges
facing banking in the 21st Century.

Mr John Morschel and Mr David Meiklejohn joined the Board
on 1 October 2004.

Mr Morschel was a Director of Westpac Banking Corporation,
including two years as Executive Director. He is currently
Chairman of Rinker Group Limited and is a Director of Rio
Tinto plc, Singapore Telecommunications Limited and Tenix
Pty Limited. He brings with him extensive experience in banking
and financial services.

Mr Meiklejohn is currently Chairman of PaperlinX Limited and SPC
Ardmona Limited and a director of One Steel Limited and WMC
Resources Limited. Mr Meiklejohn has a strong background in
finance and accounting including at Amcor Limited where he was
Chief Financial Officer and later Executive Director.

Outlook
In 2004, the Australian and New Zealand economies performed
well. We benefited from a buoyant property market and low
levels of unemployment. Both economies are enjoying one
of the best periods of sustained economic growth that we
have experienced.

Looking ahead, we expect the economies in Australia and New
Zealand to continue to perform relatively well, although there is
likely to be some softening in overall credit growth associated with
an easing in the housing boom and the modest rises we have seen
in interest rates. Overseas markets are expected to continue
to strengthen although there are challenges posed by rising oil
prices, the twin deficits in the United States and the global
security environment.

ANZ has established a reputation for delivering to our
shareholders. We have a strong financial foundation and we
are making tangible progress in advancing our strategic position.
The momentum we have established and our emphasis on
growth should enable us to continue to deliver value for our
shareholders, our people and the community.

That momentum has come from the talent and hard work of
ANZ’s people. On behalf of the Board and all shareholders,
I thank them for their contribution to ANZ and to their own
communities.

Charles Goode
chairman

10 I chief executive officer’s report

LEADERSHIP AND GROWTH
A MESSAGE FROM JOHN McFARLANE

We have produced good financial
performance. Total return to
shareholders was a strong 17%.

Delivering sustainable value to shareholders over the longer term involves more
than producing superior financial results. It’s also about ensuring our customers
want to do business with us, our staff want to invest their careers with us and that
we have earned the trust of the community.

ANZ has come a long way in 2004 while at the same time
delivering another good financial performance. Importantly
we have rewarded our shareholders and shared the benefits
with our customers, our people and the community.

> We completed the $4.9 billion acquisition of The National
Bank of New Zealand and have made good progress with the
integration of our New Zealand businesses. The acquisition has
been immediately accretive to cash earnings per share.

> There was a $3.6 billion Rights Issue to fund the acquisition.
The Rights Issue was over subscribed and rewarded shareholders
who participated.

> Our Personal and Corporate divisions performed well
following several years of hard work. They have good momentum,
delivering improved service for customers and growing market
share.

> Institutional Division was subdued but we have now
established a more sustainable foundation for the Division
having increased economic value added through more efficient
use of capital and lower risk.

> Our New Zealand business performed reasonably in the face of
significant competition and the normal uncertainties associated
with a major acquisition. Our Pacific business performed well,
but Asia was subdued. Esanda, our asset finance business, also
performed well, and ING Australia continued to show improvement.

> We have largely completed a seven-year program of structural
de-risking. As a result ANZ’s risk profile has been substantially
reduced and is now comparable with other major Australian
banks.

> We have continued to develop our culture, which we now
consider a competitive advantage. We have created a new
structure for our specialist businesses, led by an experienced
team with a strong track record, to help accelerate growth
and build market share.

> We have developed innovative programs to strengthen our
connection with the community. This includes responses to
some of the major social issues involving the financial services
industry such as financial literacy and savings, and programs
which help our people engage with the community.

The acquisition of The National Bank of New Zealand has
made us the leading bank in New Zealand and the clear
number three Australian bank based on market capitalisation.
Our market capitalisation has increased from $27.3 billion
in 2003 to $34.6 billion. We have done this while delivering a
strong 17% total shareholder return during the year, well above
the sector average.

Outcomes like these don’t just happen. They come about
through the hard work and enthusiasm of our people. Similarly,
our future aspirations are only good intentions unless they
are accompanied by a focussed and disciplined strategy, hard
work and genuine sense of excitement about the future.

Sustainable Performance and Value

We have now established the foundation to lift our sights and
be clear that ANZ's aspiration is to become Australasia's leading,
most respected and fastest growing major bank.

This reflects my strong belief that delivering value to
shareholders is not just about building the capacity of the
organisation to perform and grow consistently in the short
term but ensuring ANZ can stand the test of time and deliver
sustainable performance and value over the long term.

The aspiration also reflects my views about what makes
successful companies and translates into a clear set of priorities
for ANZ.

> Companies who combine superior revenue growth with
superior efficiency generally produce the highest earnings growth
and share price multiples.

chief executive officer’s report I 11

The acquisition of The National Bank of New
Zealand has made us the leading bank in New
Zealand. We are now focused on organic expansion
in Australia, selective investments in Asia Pacific,
and consolidating our position in New Zealand.

We will have a greater emphasis on superior
revenue growth and on increased investment
to achieve this.

Our approach in recent years has involved moderate revenue
growth and significant efficiency gains. ANZ is now very efficient,
among the most efficient banks globally, and so our priority has
to be to generate superior revenue growth.

It’s about sharing the benefits of our success with customers,
staff and the community. It recognises companies do not serve
shareholders exclusively, but others as well. We are making
progress here too.

> Companies with market leadership generally produce the
highest long-term shareholder returns. We are now the leading
bank in New Zealand and have a number of other leading
positions in Australia and the Pacific. We now need to increase
market share in each of our core businesses, particularly in
those lower risk, more sustainable businesses where we are
underweight such as Australian personal banking and small
business banking.

> Companies with distinctive relationships and service generally
increase market share and produce the highest sustainable
revenue growth. Specialisation has helped us make real progress
in this area. It has provided our businesses with focus and vitality
and we have great products for our customers. This year, we
reorganised to harness synergies between the specialist
businesses and to broaden and deepen their offering to customers.
It is good progress but we need to do more to develop tangible
reasons for customers to choose ANZ over our competitors.

> Companies that manage costs effectively are able to improve
earnings, offer lower prices and free up resources for investment
in future revenue growth. We are going to support growth with
increased investment funded by reallocating resources to
growth businesses, re-investing funds generated by growth
and continuing to run our business in a lean, agile way.

> Companies that engage in non-core or risky activities
generally produce sub-standard and volatile shareholder returns
and divert management attention from what is important.
We have had a consistent strategy of ceasing high-risk activities
and narrowing our focus to core businesses where we have
realistic leadership prospects.

Value for all Stakeholders

I want to emphasise, however, that our aspiration recognises that
delivering sustainable value to shareholders in the long-term
involves more that just a focus on growth, costs and managing risk.

We established a program of cultural change in 1999 and it
continues today. This program has been designed to transform
ANZ’s culture from the traditional, bureaucratic banking culture
into a modern, vibrant organisation.

Over 18,000 people within ANZ have been through this program
in its various phases, with each phase tackling a different priority
or issue. Initially, much of the program was aimed at increasing
accountability, freedom and openness and developing a common
set of values. We are currently working at getting the whole
organisation aligned to the customer and to superior revenue
growth.

The program reflects our people are an investment rather
than a resource. As a result, we have seen a radical rise in staff
satisfaction, which now stands at 85%.

In the 1990s, there was much resentment of banks in the
community. Now, with the community programs we have put
in place, and by running the bank in a way we can be proud of,
I believe community sentiment has improved.

We announced a moratorium on rural branch closures in 1999
and we have stuck to it. We have assisted our staff to connect
with their local communities through paid volunteer leave and the
establishment of the ANZ Community Fund. We have also set out
an ambitious agenda on issues like financial literacy and savings
through business-community partnerships.

We have created a very different bank at ANZ. A bank that has a
sustainable foundation, that is positioned for growth and one
that I believe will continue to deliver value for shareholders over
the short and the longer term.

John McFarlane
chief executive officer

12 I chief financial officer’s review

7 GOOD REASONS
FOR INVESTING IN ANZ

PROFIT GROWTH
AND EARNINGS PER SHARE

> Accretion from the NBNZ purchase, and its capital
funding (+2.3 cents).

> The issuance of shares under the dividend reinvestment
and bonus option plans and employee share option schemes
(-1.8 cents).

PROFIT GROWTH

The Group recorded a profit after tax of $2,815 million for the
year ended 30 September 2004, an increase of 20% over the
year ended 30 September 2003.

Profit excluding significant items and the 10 months’
contribution from NBNZ increased by 8% to $2,536 million with:

> Net interest income increasing by 5% driven by solid lending
growth particularly in Mortgages and deposit growth in Personal
and Corporate, partly offset by lower net interest margins.

> Other income increasing 7% driven by growth in non-lending
fees based on higher business volumes, the under-accrual of
card loyalty points in 2003 and an increased contribution from
ING Australia, offset by reduced income from the TrUEPrS swap
which contributed $35 million to profit after tax in 2003.

> Operating expenses increasing 6%, largely driven by an
increase in staff numbers as our focus turns to growth.

> Asset quality continuing to improve with the economic
loss provision rate down 6 basis points. This reflected a
reduction in the additional charge taken in the Corporate Centre
for unexpected offshore losses and the increased proportion
of lower risk domestic assets. Net specific provisions reduced
19% to $429 million with the reduction assisted by the
de-risking of the offshore book.

PICTURED ABOVE - Anna McGill (centre), Ben Hall (left) and Bianca Snee (right)
ANZ Courtenay Place Branch - Wellington, New Zealand

Earnings per share, or EPS, and core profit growth are two of
the key measures used to understand ANZ’s performance,

EPS represents the earnings of the company divided by the
weighted average number of shares on issue. Excluding
significant items and goodwill amortisation from EPS provides
a measure of performance sometimes referred to as Cash EPS,
which we consider provides a clearer picture of the core
performance of the group.

During the year, ANZ completed the purchase of The National
Bank of New Zealand (NBNZ). In addition, our profit was affected
by a number of significant items including a net gain of $84 million
after tax from release of deferred swap income associated with
the TrUEPrS hybrid instrument. This gain is not expected to recur.
The final coupon paid to holders of TrUEPrS ($36 million) is also
classified as a significant item.

EARNINGS PER SHARE

Earnings per share increased 7.5% to 153.1 cents. Cash EPS
increased 10.1% to 161.1 cents affected by:

> Growth in existing ANZ businesses (+14.3 cents).

cents

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CASH EARNINGS
PER SHARE

2004 maintains
the upward trend
in cash earnings
per share growth.

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NET PROFIT
AFTER TAX

2004 profit boosted
by NBNZ acquisition
and continued core
earnings growth.

significant items

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PROFIT GROWTH
EXCLUDING NBNZ AND
SIGNIFICANT ITEMS

Excluding the positive
impacts of the NBNZ
acquistion, ANZ’s core
earnings demonstrated
continued growth.

chief financial officer’s review I 13

1 2 3

DIVIDENDS AND
TOTAL SHAREHOLDER RETURNS

The total return to an investor over a given period comprises the
combination of dividends paid and the movement in the market
value of their shares over that period. This combination is
commonly referred to as the Total Shareholder Return (TSR).

TSR not only reflects the immediate return to shareholders
by way of the dividend, but also any change in the market’s
assessment of the long term value which the company is
building, which will be seen as a change in the share price.

In order to maintain a balance between dividends and
reinvestment in the business, ANZ’s practice in recent years has
been to increase dividends at approximately the same rate as
the growth in earnings per share excluding significant items and

goodwill amortisation (Cash EPS). In the year ended 30
September 2004, Cash EPS grew by 10.1% to 161.1 cents.
The fully franked dividend for the year grew by 10.8% after
adjusting for the bonus element of the Rights Issue, with an
annual dividend of $1.01. The interim dividend of 47 cents
and the final dividend of 54 cents were both records for ANZ,
reflecting our continuing growth. The Group expects that it will
be able to maintain full franking for the foreseeable future.

TSR in the year to 30 September 2004 was 17%. Over the past
five years, the TSR for an investor in ANZ who fully reinvested all
dividends, was 20% compound, reflecting our continuing
delivery of growth and value to our shareholders.

PICTURED ABOVE - Tomoko Sakai, ANZ Surfers Paradise.
RIGHT - Tracy Waters and Michael Turner, ANZ Warragul Branch

250

200

150

100

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'99

'00

'01 '02'03 '04

SHAREHOLDER
RETURNS
value of $100
investment in anz
shares over 5 years

Share price re-based
for Rights Issue.
Assumes re-investing
of dividends.

cents

120

100

1
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5

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6

'99

'00

'01'02'03 '04

DIVIDEND GROWTH
dividends per share

The 2004 dividend was a
record with a 47cents
interim dividend and a 54
cents final dividend, both
100% franked. Adjusting
for the bonus element of
the Rights Issue, dividends
grew by 10.8% broadly in
line with the growth in
earnings per share
excluding significant items
and goodwill amortisation.

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'00 '01 '02 '03 '04

RETURN ON EQUITY

Return on equity was
dampened by the
effects of accounting
for goodwill following
the NBNZ acquisition.

14 I chief financial officer’s review

1 2 3 4

REVENUE AND
BALANCE SHEET GROWTH

Revenue growth is one of the most important measures of our
performance, reflecting our success in gaining new customers
and winning more business from our existing customers.
Revenue growth is the essential foundation for sustainable
growth in profits and shareholder value.

ANZ’s revenue comprises net interest income and other
operating income.

NET INTEREST INCOME at $5,254 million increased by $943 million
(22%), driven by:

Volume
Average net loans and advances grew by $44.8 billion (32%)
overall with growth mainly attributable to the acquisition of NBNZ
($26.4 billion), Mortgages Australia ($13.0 billion), Corporate
($2.3 billion) and Institutional Australia ($1.8 billion). Average
net loans and advances reduced by $2.4 billion (20%) in
overseas markets as a result of our risk reduction strategy and
exchange rate movements.

Average deposits and other borrowings grew $37.2 billion
(31%), largely driven by growth from the NBNZ acquisition
($25.3 billion), Treasury ($3.4 billion), Personal ($3.4 billion),
and Corporate ($1.7 billion).

Margin
Net Interest Margin contracted by 18 basis points owing to:

> Changes in the mix of assets and liabilities that negatively
affected the net interest margin by 6 basis points.

> Competitive pressures reduced margins by 3 basis points,

mainly arising in the Institutional and Mortgages businesses.

> Wholesale rate movements had a significant impact, reducing
the net interest margin by 6 basis points.

> Margins were also reduced by 2 basis points by increases in
retail broker payments.

> Funding costs associated with the acquisition of NBNZ resulted
in a 3 basis point decline in the Group’s interest margin.

> Funding costs associated with unrealised trading gains reduced
margins by 4 basis points, directly offset by equivalent gains in
trading income.

> A number of other factors, including foreign exchange revenue
hedging income, credit card volumes carrying interest and the
substitution of USD TrUEPrS hybrid with AUD StEPS, combined
to contribute a 6 basis point increase in net interest margins.

OTHER OPERATING INCOME at $3,391 million increased $583
million (21%). Excluding significant items, other operating income
increased $459 million (16%) due largely to the $259 million
contribution from NBNZ.

Lending fees increased by $18 million, driven by lending growth in
Corporate, Personal and Esanda offset by a $16 million reduction
in Institutional reflecting our offshore risk reduction strategy.

Non-lending fee income increased by $165 million, driven mainly
by growth in Personal ($112 million), Institutional ($39 million)
and Esanda ($9 million).

Foreign exchange earnings increased $16 million with increased
commodity and structured product sales in Institutional.

Profit on trading instruments increased $31 million, with a
lower proportion of revenue booked as interest due to funding
of cashflows.

Other operating income reduced $30 million with a reduction in
income received on the TrUEPrS swap partly offset by increased
equity accounted income from ING Australia.

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'00 '01 '02 '03 '04

3.0

2.5

2.0

1.5

1.0

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0.0

2
.
8
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.
7
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7 2
.
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'00 '01 '02 '03 '04

REVENUE

NET LENDING ASSET GROWTH

DEPOSIT AND BORROWINGS GROWTH

NET INTEREST MARGIN

Continued revenue
momentum was a feature
of the 2004 result.
significant item

nbnz

Profit growth was volume
driven, more than offsetting
lower margins.

nbnz

Deposits continued to grow, although
stronger lending growth required more
wholesale funding.

nbnz

Net interest average
margins have decreased
this year in line with long
term trends for the industry.

chief financial officer’s review I 15

2 3 4 5

COST
PERFORMANCE

Controlling costs and ensuring that we operate
efficiently is one of the ways we maximise returns
to our shareholders. The cost to income ratio
expresses the Group’s expenses as a percentage of
revenue and is one of the clearest and most widely
used measures of efficiency in the banking industry.

During the year ended 30 September 2004 the cost
to income ratio remained broadly stable at 45.3%,
staying within our target range (see chart below). We
continued to increase investment in organic growth
opportunities in the Australian franchise aimed
at improving our market share. Operating expenses
increased by $798 million, of which $572
million occurred because of the acquisition of NBNZ
with a further $21 million in NBNZ incremental
integration costs. Excluding these factors
operating costs increased by $205 million (6%)
driven by:

> Personnel expenses increased $110 million as a result
of annual salary increases together with an increase in staff
numbers of 775, mainly in:

– customer facing positions (600 staff) in New Zealand,
Foreign Exchange, Capital Markets, Trade Finance and
Personal; and

– central functions (155 staff) driven mainly by an

escalating compliance focus and project related activity.

> Technology costs increased by $44 million largely due to
costs associated with the rollout of the new telling platform
and increased depreciation associated with investments in
technology.

> Premises costs increased $17 million, with increased
investment in the branch network and changes in
accounting methodology for rental costs.

> The appreciation of the Australian dollar suppressed cost
growth by $39 million.

PICTURED BELOW
LEFT Sonya Witton
and Peter Kotanidis
ANZ Dorcas Street,
Melbourne. BELOW
RIGHT Meg Llewellyn
and David Young,
ANZ Dorcas Street
Melbourne.

.....................................................

'99

'00

'01

'02

'03

'04

COST TO INCOME RATIO

ANZ remains an efficient bank
with a cost to income ratio within our
target range.

anz target range

3
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n
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z

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g
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r
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i
o
n

03
sep

04 sep
excl. nbnz and
significant items

04
sep

ANALYSIS OF EXPENSE GROWTH

Cost growth was mainly driven by the
acquisition of NBNZ and our investment
in sustainable growth areas of the Group.

16 I chief financial officer’s review

2 3 4 5

LOW RISK

The economic environment in Australia and New Zealand
remained positive throughout the year, with robust economic
growth, unemployment at low levels and low interest rates. This
was complemented by strong global economic growth, creating
a relatively benign credit environment.

Arrears and loss rates in the consumer portfolio, including
residential property, continued to track at or near record lows.
ANZ nonetheless continues to adhere to conservative lending
criteria, for example, assessing borrowers’ capacity to absorb
an increase in interest rates in the loan approval process for
residential property.

Integration of NBNZ into ANZ’s global risk framework is
progressing well.

We continued to apply our conservative approach to market risk.
One indicator which reflects this approach is our low level of
Value at Risk, covering both physical and derivative trading
positions, relative both to our peers and historic levels.

ANZ continued to pursue its risk reduction strategy, with continued
rebalancing of the Group’s lending portfolio towards core customers,
domestic markets and consumer businesses. The combination of the
economic environment and consistent application of our risk
reduction strategy was reflected in the 2004 results.

ECONOMIC LOSS PROVISION

The Group economic loss provision (ELP) charge was $632
million compared with $614 million in the year to September
2003. The increase was driven by volume growth and $62 million
arising from the acquisition of NBNZ offset by lower risk in our
existing businesses.

1000

800

600

400

200

8
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'00 '01 '02 '03 '04

800

700

600

500

400

300

200

100

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2
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'00 '01 '02 '03 '04

PICTURED
Robin Sloan
ANZ Dorcas Street
Melbourne

100

4
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3
8

3
7

6
2

6
3

5
9

5
5

'00 '01 '02 '03 '04

ECONOMIC LOSS PROVISION (ELP)

NET SPECIFIC PROVISIONS (NSP)

Lower risk is reflected in both ELP rate and NSP reductions.

offshore (in%) new zealand (in%)

australia (in%)

LENDING ASSET BUSINESS MIX

Lending portfolio mix is now lower
risk and more sustainable.

commercial

consumer

chief financial officer’s review I 17

PICTURED RIGHT: Jane Pettit, ANZ Surfers Paradise
(background, Heather Hastings, ANZ Surfers Paradise)

maximum over year
minimum over year
average for year
as at end of year

'00

'01

'02

'03

'04

ANZ VALUE AT RISK
97.5% confidence level

A low level of Value at Risk reflects our conservative approach.

The ELP rate decreased 8 basis points over the year in line with
the Group’s improving risk profile. This was a result of sound
growth in lower risk domestic assets (principally mortgages),
the acquisition of the relatively low risk NBNZ franchise, the
continued de-risking of the offshore portfolio and a lower central
charge for unexpected offshore losses.
NET SPECIFIC PROVISIONS

Net specific provisions (NSP) were $443 million, down $84
million from the year to September 2003. The reduction in losses
was principally in the international operations of Institutional,
which reduced $121 million over the year. NSP in the
Australian and New Zealand portfolios increased over the year
by 11% and 56% respectively. The increase in Australia was
primarily due to one account in the telecommunications industry
($87 million) whilst in New Zealand the acquisition of NBNZ
added an additional $14 million over the year. As a percentage of
net lending assets, NSP reduced to 22 basis points, down from
34 basis points in September 2003.
GROSS NON-ACCRUAL LOANS

Gross non-accrual loans decreased to $829 million, down from
$1,007 million as at September 2003. This improvement was
achieved notwithstanding the inclusion of $81 million of NBNZ non-
accruals loans in the portfolio this year. The overall reduction in non-
accruals was primarily the result of realisations, upgrades and write-
offs of a number of large balances in the Institutional portfolios. The
default rate (new non accruals/average gross lending assets) has
decreased since September 2003 by 10 basis points, from 63 basis
points to 53 basis points in the year to September 2004.
GENERAL PROVISION BALANCE

The general provision balance at 30 September 2004 remained
strong at $1,992 million (1.01% of risk weighted assets), compared
with $1,534 million (1.01% of risk weighted assets) as at 30
September 2003. The general provision balance increased $458
million during the year, due to the ELP rate being higher than the
actual loss rate, plus the general provision of $282 million included
as part of the acquisition of NBNZ. This represents a surplus of
$532 million over the Australian Prudential Regulatory Authority
(APRA) minimum guideline.

100

. . . . . . . . . . . . . . . . . . . . . . . . . .

1
5

7
0

2
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6
7

uk , europe, other

pacific

americas

asia

offshore

new zealand

'96

'04

australia

LOCATION OF LENDING

Lending assets are increasingly located in core domestic
markets with a consequent reduction in risk profile.

18 I chief financial officer’s review

4 5 6 7

CAPITAL
EFFICIENCY

PICTURED:
Cheryll Christensen
ANZ Surfers Paradise Branch.

Adjusted common equity (ACE) reduced from 5.7% to 5.1% to be
slightly above our target range of 4.5% to 5.0%. This has provided
us with the capacity to pursue capital management initiatives.

The ACE target range was reduced by 25 basis points at the time of
the NBNZ acquisition, reflecting the progress made in re-balancing
the portfolio. More recently the target range was reduced by a
further 25 basis points, in recognition of the fact that APRA’s
requirement to take a deduction for capitalised expenses did not
change the underlying economic risk of the business.

In addition to growth in retained earnings, some of the significant
events affecting the capital ratios during the year were:

We regard shareholders’ capital as a scarce resource, to be
managed carefully and efficiently.

> Risk weighted assets increased by $45 billion during the year
including $28 billion associated with the purchase of NBNZ.

In recent years, ANZ has been progressively re-balancing its lending
portfolio, with a higher proportion of assets now in lower risk asset
classes. For example, we have reduced the proportion of assets
outside our domestic markets so that by 30 September 2004, 95%
of our lending assets were located in Australia and New Zealand.
Similarly we have re-weighted the portfolio more heavily towards
consumer lending, which is generally less capital intensive than
corporate lending. This re-balancing has allowed us to reduce the
amount of capital we are required to hold as a proportion of risk-
weighted assets.

The Group’s capital ratios declined during the year, principally
because of the acquisition of NBNZ and the redemption of the
TrUEPrS preference shares. ANZ’s total capital adequacy ratio (as a
proportion of risk-weighted assets) decreased from 11.1% to
10.4% over the year to September 2004, with the Tier 1 ratio also
decreasing from 7.7% to 6.9%.

> ANZ issued ordinary shares by way of a two for eleven rights
issue at $13 per ordinary share, raising capital of $3,562 million to
fund the NBNZ acquisition.

> The dividend reinvestment plan resulted in a $135 million
increase in share capital.

> ANZ raised USD1.1 billion via the issue of stapled securities. This
hybrid loan capital, classified as debt on ANZ’s balance sheet,
qualifies as Tier 1 capital for capital adequacy reporting.

> In December 2003, ANZ bought back its TrUEPrS preference
shares, issued for USD775 million in 1998.

> Purchased goodwill on the acquisition of NBNZ of $3.1 billion
was deducted from Tier 1 capital.

please refer to pages 92 - 93 for a complete glossary

5
.
7

1
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9

(
1
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)

e
a
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03
sep

04
sep

ACE RATIO DRIVERS
Exceeding our ACE
target range of 4.5%
to 5.0% provides
the capacity to pursue
capital management
initiatives.

3
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'99

'00

'01'02'03 '04

ANZ MARKET
CAPITALISATION

ANZ’s market
capitalisation has
more than doubled
over the past five years.

chief financial officer’s review I 19

One way of measuring shareholder value is Economic Value
Added (EVA™) growth relative to prior periods. EVA™ for the year
ended 30 September 2004 was $1,750 million up 11% from
$1,572 million in the prior year.

We consider EVA™ to be one of the most effective ways of
determining how much shareholder value we are creating and we
have embedded EVA™ methodology into all important decision-
making processes throughout the Group. We use EVA™ as a key
measure for evaluating business unit performance and
correspondingly it is a key factor in determining the variable
component of remuneration packages.

EVA™ adjusts our profit for the cost of capital involved in generating
that profit. It is based on operating profit after tax available to
ordinary shareholders, adjusted for significant items, the cost of
capital, and imputation credits (measured at 70% of Australian tax).
Of these, the major component is the cost of capital, which at ANZ
is calculated on ordinary capital at a rate of 11%.

We allocate economic capital to each business unit based on
the 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. This method is designed to help drive appropriate risk
management and business strategies throughout the
organisation.

One of the key drivers of our efforts to reduce risk in our balance
sheet has been EVA™. In our Institutional business, for example,
whilst risk reduction has contributed to flatter profits in the
immediate term, using EVA™ it becomes clear that our strategy
is in the best interests of our shareholders. Institutional has
continued to generate positive EVA™ in spite of the short term
flattening of traditionally measured profit.

The importance of EVA™ for investors is that it allows them to
determine how much value management has created. Using this
methodology, the market value of a company is the combination
of its capital plus the present value of expected future EVA™, or
in other words, capital plus the present value of expected future
excess returns over the cost of that capital.

$19.02

$11.51 Intangible net
assets per share
> Unique stategy
> Strong brand
> Sustainable leadership
> Talented people
> Growth opportunities
> Vibrant culture

Compound growth 20% p.a

$7.51 Net tangible
assets per share
Compound growth 8% p.a

$8.62*

$3.84* Intangible net
assets per share

$4.78* Net tangible
assets per share

30 SEP 1998

30 SEP 2004

ANZ’S VALUE IS LARGELY REPRESENTED BY INTANGIBLE ASSETS

Market expectations of future performance determine our current share price.
* adjusted for 2003 Rights Issue

5 6 7

SHAREHOLDER
VALUE

PICTURED: Sandra Kay Ross, ANZ Warragul Branch.

2000

1500

1000

500

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'00 '01'02'03 '04

EVATM

Continued profit growth
combined with a reduction
in risk have resulted in
EVATM growth improving value
for shareholders.

20 I senior management

SENIOR MANAGEMENT
LEADERSHIP AND SUSTAINABLE PERFORMANCE

Our challenge is not only building the capacity of an organisation to perform
and grow in the near term, but also ensuring ANZ delivers sustainable value
over the long term. It leads to the concept of self-renewal, which needs to be
directed. This is the role of leadership – to create a self-renewing organisation.

peter marriott

mike grime

steve targett

brian hartzer

sir john anderson

john mcfarlane

chief
financial
officer

managing director
operations, technology
and shared services

group managing
director
institutional
(seated)

group managing
director
personal division

chief executive
anz national bank
limited

chief
executive
officer

senior management I 21

Of the top 20 companies in Australia by market capitalisation in
1980, only five remained in the top 20 in 2004. ANZ is one of
those that has survived and thrived.

This statistic however highlights that companies, in and of
themselves, are not always sustainable entities. Many deliver
shareholder value for a period and then tend to atrophy unless
long-term sustainability is made a real priority.

Developing sustainable performance and value at ANZ has meant
the traditional concept of the leader at the top, which others
follow, has had to disappear. These days every person has to be
a leader whether they are at the moment of contact with a
customer or at the moment of a decision in their day-to-day role.

It is people who serve customers, create new ideas and make
companies great. So it is easy to understand why ANZ has placed
so much emphasis on creating an environment which can engage
and involve everyone in the organisation and where leadership is
fostered at all levels.

We have been transforming ANZ from a traditional banking-type
culture into a modern, vibrant organisation through a program
called Breakout. It is a program which emphasises leadership,
diversity, coaching and development and creates a shared vision
of an exciting organisation.

How people feel about working in the organisation and how
passionate and engaged they are in its agenda, is what makes
the difference between a good and a great company.

As leaders, one of our main responsibilities therefore is to create
an environment of opportunity, challenge and development for
our people. That involves enhancing their capacity to produce
and create, and to stimulate, release and focus the energy that
without effective leadership would remain latent.

Details of Senior Management qualifications and experience
can be found on www.anz.com/corporateinformation/
anzmanagement

bob edgar

elizabeth proust

graham hodges

mark lawrence

shane freeman

elmer funke kupper

peter hawkins

chief
operating
officer

managing
director
esanda
(seated)

group managing
director
corporate

chief risk
officer
(seated)

group general
manager
people capital
and breakout

group managing
director
asia pacific

group managing
director
group strategic
development

22 I business divisions

PERSONAL DIVISION
MAKING A PERSONAL CONNECTION WITH CUSTOMERS
A CONVERSATION WITH BRIAN HARTZER

ANZ’s Personal Division is made up of its specialist retail businesses in Australia – Personal and Wealth Distribution,
Mortgages, Credit Cards, Merchant Services and Deposit Products. It involves over 10,000 people working to provide personal
financial services to the 3.25 million Australian customers who use ANZ’s network of 742 branches, 1,228 ATMs,
70,000 EFTPOS devices and internet banking. Brian Hartzer is the Group Managing Director of the Personal Division.

Retail is detail

BH: We have real momentum in our personal banking business
around strong day-in, day-out management of customer
satisfaction, costs and sales growth. It shows in our results
this year where we have seen an improvement in all the right
measures. Whether it is customer satisfaction, sales volumes,
revenue growth, profit growth, staff satisfaction – they are all
going in the right direction.

We’ve made good progress with the initiatives we put in place
to revitalise our branch banking business. We have great
information systems for our managers and a very different local
management model where we have given our people a sense
of ownership about their branch. Now in every market, in every
branch, in every role in those branches, we have people who
have the right attitude, who are well-trained, who are proud
of what they’re doing and want to connect with customers.
This has unleashed incredible energy and given us the
right foundation.

Servicing is not the same as service

BH: It’s timely to be thinking harder about service. What we
have done as an industry in the past 10 to 15 years is focus
on servicing, which I would define as processing hundreds of
thousands of interactions per day, in an efficient way. This
is different to service, which is about personal connection,
listening, exploring needs, and then executing.

I think most of our energy up until a couple of years ago was
really spent on servicing, not service. What we’ve gradually
started to do is recognise the importance of service in the way
that I define it. It’s refocusing on what service is really about
which, when you look at the customer satisfaction scores, that
has begun to differentiate us from the other major banks.

That isn’t to say we couldn’t do a lot better, we can, but we do
have real momentum.

Listening for subtle clues

BH: One of the things everyone talks about is the need to focus
on the customer. To me the issue is about how we design the
propositions and the service experience that we put out there
from the way a customer sees it, or the way a customer would
think it was of value.

What I want us to do is to really listen to the customer for
those subtle clues about what actually matters. What does this
particular service mean for that person in their life at that
point in time? How do they think about it? What’s important
to them about it?

So part of being customer-focused is about understanding
what is going on in the customer’s mind and in their life.
It’s about trying to deliver to fit in with that, rather than make
them fit in with us.

Sometimes that might lead to how you design your product,
sometimes it might lead to how you bundle your product,
sometimes it might lead you to recreate the process of
acquiring that product or the process of how you service it
after the sale is made. But it’s about looking at the particular
opportunity through the eyes of the customer, through the lens
they are applying.

Branches are important

BH: In the mid-90s there were lots of people running around
talking about the death of the branch and that everything was
going electronic. There’s no question there has been a massive
shift in people’s behaviour. But that doesn’t translate into ‘by
the way you don’t need branches anymore’!

In fact branches play an important role for pretty much all
customers, even if they don’t go into them. It’s because part of
our proposition is the ability for customers to go to see someone
and talk about their financial affairs. Frankly, there are certain
types of conversations that you don’t want to have over a
telephone.

So we have recognised this but we need to really firm this up.
We need to make sure our branch network is well located and
well signed and staffed to support those kinds of personal
interactions with customers. In fact we are opening branches
in more areas, including some of the higher growth areas.
My aim is to open up to 80 branches over the next three years.
It’s about recognising the importance of the branch network in
a multi-channel world.

Big opportunities

BH: One of the big opportunities that has really struck me in my
visits around the network is the burden that we’ve put on the
people in the network in terms of day-to-day administration.
So one of things we need to do is have a fresh look at all that
stuff and say: how do we trim it down to free up time, so our
people can spend less time looking toward head office and more
time looking out toward customers.

We are also making great progress on training. We’ve opened
training facilities in Sydney and Melbourne, there’s one about to
open in Brisbane, and eventually we’ll have one in every capital
city. It will ensure we have more consistent training for new staff
and greater ability to keep our people up-to-date with training on
a regular basis.

It’s not a wholesale change in our business; it is about tweaking
just to make sure all of the little elements that make up our
business system are aligned to generating customer value, over
a long period of time.

CUSTOMER SATISFACTION WITH MAIN FINANCIAL INSTITUTION

Source: Roy Morgan Research – Main Financial Institution Satisfaction,
% satisfied (very or fairly satisfied), 6 monthly moving average

PERSONAL DIVISION
EARNINGS BY BUSINESS

100

.................................................................

.................................................................
june
june
june
04
00
96

june
97

june
98

june
99

june
01

june
03

june
02

business divisions I 23

26% personal distribution * $211m

28% mortgages $224m

24% cards and merchant services $193m

22% banking products $174m

* includes private and rural banking

peer banks

anz

regional banks

‘Retail is detail’, but it's also about personal connections. That means you
need energised people who feel good about what they’re doing, who see how
they contribute, and who want to engage customers in a real discussion about
their needs.

Energy

Efficient

Momentum

People

Service

Community

24 I business divisions

INSTITUTIONAL DIVISION
AIMING TO STAY A MARKET LEADER
A CONVERSATION WITH STEVE TARGETT

Relationship

Growth

Balance

Leadership

Customer

Discipline

The Institutional Division provides financial services to
large corporations, institutions and governments. It brings
together customer relationship management with ANZ’s
specialist investment banking businesses of financial
markets, corporate advisory services and trade and
transaction services. Steve Targett, who joined ANZ this
year from Lloyds TSB in the United Kingdom, is the
Group Managing Director of the Institutional Division.

Staying a market leader

ST: It’s been a tough landscape out there for us this year.
There has been intense competition, asset spreads have
been contracting and there’s been a lack of volatility in financial
markets.

We have a great franchise and a good overall business model.
Our industry segmentation model is a key strength for us and it’s
been a way of differentiating ourselves with clients.

We’re now pushing that even further and looking at how we
can be effective in a range of more specialist industry sectors.

We have also made good progress working with our colleagues
in corporate banking on an initiative called Wall Street to Main
Street – in other words taking investment banking capabilities
into our core franchise in the corporate bank.

Being relevant to our customers

ST: The next thing for us, which is really critical, is building on
our strengths in presenting ourselves to clients and making it
seamless.

The biggest competitive issue we have is just continuing to out-
execute our competitors in the view of our clients. We’ve got to
stay relevant in terms of understanding their needs and giving
them the right solutions. That sounds motherhood and apple pie
but that’s what works – getting the right people in the right jobs
in front of clients.

business divisions I 25

The growth challenge

Balancing the international portfolio

ST: The other part of our challenge is to look at the areas where
we can grow. Our best performing business this year was Trade
and Transaction Services and there’s scope to go out and really
build that business in areas like custody.

We also see growth opportunities right across Institutional
building products to sell into other segments of the market that
we haven’t sold into before, such as private banking and doing
more in Asia.

ST: We’ve done a great job in taking the risk out of our offshore balance
sheet so it’s now only 3% of ANZ’s assets. That’s the result of a
deliberate strategy to de-risk and improve the quality of the portfolio.

We’ve also announced we’ll exit the majority of our London and New
York based project finance activities through the sale of our
international project finance business. As a result we’ve largely
completed a structural de-risking program that has been underway
for a number of years.

We’re also having a fresh look at our distribution and our sales
team. If I look at the way we’ve built the business over recent
years, we’ve put a lot of emphasis on originating business but
now we need more on distribution – in Australia, in New Zealand
and in our international business.

At the same time we’re starting to see success offshore by
supporting Australian and New Zealand linked customers in their
global banking needs. Here again, our industry specialisation
model is key, like Natural Resources, Utilities and Food, Beverages
and Agribusiness.

And as I said, our industry segmentation model is a real strength
and we can grow the business by specialising further – for
example within Healthcare, taking market leadership into a
segment like aged care.

It’s about people

ST: We have to remember this business is about people. We have
a real depth in people and I believe we are getting the right
people in the right jobs.

Having such a depth of good people means two things for us.
One, our people continue to strive to meet the competition and
meet the strategic challenges that face us. They also challenge
the status quo and we’ll always need that.

The other thing good people do is continue to operate in a very
disciplined way and that’s critical as they bring discipline in
terms of the deals you originate and the sort of structures you
use. That helps ensure we avoid credit and structural problems
emerging. It’s why the people agenda is critical in this business.

We are developing our business in Asia too, and it’s not just about
lending. We can use our balance sheet to some extent but the
opportunities are more around securitisation, developing products
for private bank clients, seeing more of the investment flows and
getting our foreign exchange business performing strongly. Trade
finance is definitely a big opportunity in the region, although
we’re selective about identifying customers, commodities and the
sort of markets that we want to play in.

We have a new head for our institutional business in Asia and we
have identified some exciting opportunities so I’m confident we
can grow successfully in Asia.

Being spot on with risk

ST: When I think about growing, I think of first making sure that
we’ve got the right portfolio balance in terms of risk, that we’ve
got credit risk nailed and we’ve got structural risk nailed. So that’s
an area where we have to be absolutely spot-on.

I think this is a quality business with real potential to grow, and
if we manage risk sensibly, that growth will be sustainable.

We’re a market leader and we aim to stay a market leader. To do that, we’ve
got to keep doing the things that show our people and our clients that we really
mean business and that we can get things to market quickly.

c
o
r
p
o
r
a
t
e
&

s
t
r
u
c
t
u
r
e
d

f
i
n
a
n
c
i
n
g

%
12

-3

-6

-9

-14%

-12

-15

n
s
t
i
t
u
t
i
o
n
a
l

m
a
r
k
e
t
s

b
a
n
k
i
n
g
-2% -2%

10%

-3

s
e
r
v
i
c
e
s

t
r
a
n
s
a
c
t
i
o
n

GROWTH IN NPAT IMPACTED
BY DE-RISKING

2004 v 2003

INSTITUTIONAL DIVISION
EARNINGS BY BUSINESS

de-risking low
impact business

de-risking high
impact business

24% markets $185m

16% corporate & structured financing $126m

23% transaction services $181m

37% institutional banking $296m

26 I business divisions

CORPORATE DIVISION
BUILDING STRONGER CLIENT PROPOSITIONS, INVESTING IN GROWTH
A CONVERSATION WITH GRAHAM HODGES

Quality

Service

Freedom

Experience

Success

Innovation

We’ve given our people more ability to manage their own businesses and we have
recognised them for their performance. They feel successful and their success
has allowed us to invest more in growing the business.

19% LENDING GROWTH
(net lending asset
funds under management)

1
8
.
9

1
5
.
9

'03

'04

CORPORATE DIVISION
EARNINGS BY BUSINESS

14% small business banking $49m

34% corporate banking $118m

52% business banking $177m

business divisions I 27

The Corporate Division is ANZ’s specialist business banking division in Australia, serving businesses from sole traders
to corporations with up to several hundred million dollars in turnover. Graham Hodges is the Group Managing Director
of the Corporate Division.

Building powerful client propositions

GH: We’ve delivered a strong financial performance this year
but that’s an outcome from a number of years of hard work in
building a better service proposition for our clients.

It’s what we’ve been aiming to do across each of the businesses.
By having better people and more of them in the marketplace,
developing more niche business segments where we can provide
specialist services, and by engaging with the broker market we
have been able to grow market share.

Virtuous circle of growth

GH: We have a strategy in the business called ‘earning the
right to grow’. It’s about creating that virtuous circle of growing
revenue and investing some of the revenue growth in the
business for a stronger performance in the next year.

It’s something we’ve tried to follow for four years now and it’s
worked well for us, but it does require quite a lot of discipline
about the way you invest, where you invest and the paybacks
you get for those investments. Some of the really good options
we’ve found right under our feet. For example, we’re underweight
in New South Wales and Queensland so we’ve invested strongly
in putting more people in those markets.

Finding jewels in the business

GH: Growth is also about finding the jewels within the business
where we have a high probability of success rather than going
for long-shot opportunities. For example, we’ve developed niche
markets where we have specialised in building strong customer
propositions. These include a couple of areas such as pharmacies,
aged care and franchising. This idea is really at the heart of our
specialisation strategy because, in fact, business banking is
made up of a whole lot of specialty sectors.

We have also invested just as much on the risk management
side as we have on the business development side: investing
in quality assurance managers and making sure we have the
right management information systems keeping everyone alert
to the risk issues.

Linking our businesses

GH: We run corporate banking and business banking as
separate businesses because they have different customer
bases and there are different strategies for each business.
However we’ve created a lot more synergy between the businesses.
I mean, we’re working together to look for business opportunities.
We’re holding customer functions together, we’re referring clients
to each other and we’ve created opportunities for people to
move across from one business to the other to expand their
career paths.

We’re now taking the same approach with small business – the
sole traders and very small businesses with just a few employees.
It will be a strategy that links our business banking capability
with our branch banking capability and delivers a really strong
client proposition. That will take a bit of time but, if we do it well,
we should be able to attract a lot more business customers.

Wall Street to Main Street

GH: Another area we’ve had terrific success in this year is our
Wall Street to Main Street strategy. Essentially it’s bringing
investment banking solutions used by large corporations to
mid-sized businesses. So, for example, if you’re a family business
facing generational change or you’re trying to grow rapidly and
you don’t have sufficient capital to do it but there’s a terrific
opportunity to expand your business, ANZ can sit behind you
as either an equity partner, providing leverage finance or
providing corporate finance advice.

It’s a strategy that we’ve been building now for almost five years
but in the past 12 months we have made real progress. And of
course it opens a whole wealth of opportunities in terms of what
we can do with our clients and allows us to move them from
being satisfied to genuinely delighted.

We’ve now offered, for the first time, a product called
Development Capital. This allows fast-growing small businesses
that are performing well, but don’t have sufficient equity and
capital behind them, to take that next step by providing capital
support for them. To see that success happen has been terrific.

Cocktails and gold watches

GH: The other thing, which has been really interesting, is the
recognition we have given to people with 30 or more years
service. We have regular functions to recognise people who
perform well and who have done special things in the business.
What’s interesting is that many people who are getting gold
watches for long service are also the ones who have the
best performance.

We’ve got a group of quite experienced bankers who are
contributing significantly. They’ve probably surprised
themselves to some extent at how much more they can do and
how much more energised they can be when they’re given the
opportunity and the freedom to get out there and drive things.

These people are actually the mainstay of the business in terms
of getting things done and providing that experience to people
who perhaps are still learning how to be effective in the marketplace.
For example, we took on some 60 graduates this year and to see
the cocktail of the really experienced people who’ve been with
ANZ for 20 or 30 years and the energy of the new graduates
coming in, is really quite exciting.

28 I business divisions

NEW ZEALAND
LEADING POSITIONS, QUALITY EARNINGS, CONTINUED GROWTH
A CONVERSATION WITH SIR JOHN ANDERSON

Leadership

Growth

Excitement

Brands

Community

Customers

The New Zealand Division, known formally as ANZ National Bank Limited, was created following ANZ’s $4.9 billion
acquisition of The National Bank of New Zealand from Lloyds TSB in December 2003. It is New Zealand’s largest bank
employing 8,500 people with leading positions in all market segments. It operates under two brands, ANZ and
The National Bank of New Zealand. Sir John Anderson is the Chief Executive of ANZ National Bank Limited.

An unusual merger

Getting to know each other

JA: This has been quite an unusual merger. Normally one brand
consumes the other’s name and operations but ANZ and The
National Bank have such a large market share we’ve gone down
a two-brand strategy path. In fact, since the merger, the further
we’ve gone the better it is working.

JA: In late 2003, after we announced the merger, many of us
in the bank received feedback from customers saying: ‘look,
we’re just going to wait and see; we’re not quite sure what
all of this means to us’. We don’t get that feedback now.
Customer feedback and customer growth have been positive.

The approach we followed was to take six months working out
exactly what to do, then rapidly driving integration. There’s a real
logic in this. You really have to know where you’re going so you
can head in the right direction.

In the first six months, everyone got to know each other.
ANZ and The National Bank staff have very similar values
which have seen both brands and the teams working extremely
well together. We have very skilled and competent people in our
business in both brands.

business divisions I 29

We have also spent time setting up good governance structures.
So, you might say we’ve spent time getting all the building blocks
in place to go forward. While we’ve been doing that, we’ve still
been able to do business as usual very well.

Enhancing our ability to grow

JA: By and large we’ve already finished non-technology
integration. That means 95% of our people are now focused
on the business rather than being distracted by integration.

There’s been a lot of time spent on reviewing the way forward for
systems because it’s not only a New Zealand solution that we’re
looking at, it’s also a Group solution. We’ve reached the right
outcome, which for retail involves maintaining separate systems
to reduce the risk and complexity of integration and place greater
emphasis on maintaining market share and future growth. We
plan to integrate all our other systems by the end of 2005.

That’s the battleground

JA: Our three competitive levers are price, speed to market and
customer service. That’s the battleground.

The National Bank has had a huge advantage in having a single
customer view. That’s a key driver of our high levels of service,
satisfaction and growth in the personal businesses. We are
aiming to have that capability in both brands.

The other lynchpin to customer relationships is the business
being part of the community. Both ANZ and The National Bank
are recognised for their community involvement and this will
continue in the future.

Excitement and urgency

JA: For both ANZ and The National Bank it has been exciting
for the two companies to come together under one group.
ANZ had started on a very positive path of reviving the ANZ
brand in retail markets in 2003. It has done very well in other
markets, like institutional banking.

On The National Bank side, the retail businesses are still
growing well, while the integration with ANZ businesses have
strengthened the business market and operational areas.

We’ve got a plan, a commitment, and a way forward which has
been communicated to all our people. There’s a sense of
excitement and urgency in the business now many of the
distractions of integration are out of the way.

Continued growth

JA: We’ve got great businesses now the infrastructure is
set up. We’re now there in every market and we’re making
sure we have the leading edge and are getting it right in servicing
the customer.

We have also expressed the intention that we would look at
floating some of the ANZ National shares in New Zealand. We
can't do that until integration has finished, of course, because
you have got to have stable, quality earnings to go forward on
and there are many other complex issues to be considered. But it
would give a whole new emphasis and impetus to staff and to
customers because then they feel even greater ownership of the
organisation. So it's quite an interesting time ahead.

We’re planning on continued growth and delivering quality earnings.
Quality earnings underpin the business strategy and provide the platform
for growth in market share in the future.

0
sept
01

......................................................................

.................................................................

sept
02

sept
03

sept
04

8
5

nbnz

anz

8
6

7
8

100

STAFF
SATISFACTION
Based on ANZ
Snapshot Survey
and NBNZ
Viewpoint Survey

100

ANZ AND NBNZ SHARE OF
PERSONAL CUSTOMERS
(MAIN BANK) IS STABLE

Source - ACNielsen Consumer
Finance Monitor

westpac

anz

nbnz

asb

bnz

kiwibank

feb
03

feb
04

oct
02

feb
04

30 I business divisions

ASIA PACIFIC
CREATING A NEW PLATFORM FOR GROWTH
A CONVERSATION WITH ELMER FUNKE KUPPER

ANZ’s Asia Pacific Division covers 10 countries in the Pacific where it provides a full range of retail and commercial banking
services and 11 countries in Asia where it primarily serves Australian, New Zealand and Asian corporations doing business
across the region. The Division also has a local retail partnership with Panin Bank in Indonesia and a credit card joint-
venture with Metrobank in the Philippines. Elmer Funke Kupper is the Group Managing Director of the Asia Pacific Division.

Extending leadership in the Pacific

EFK: In Asia Pacific we have three big growth agendas. The first of
these is in the Pacific where we’re already the leading financial
institution. It’s really one of our core ‘domestic’ businesses,
like Australia and New Zealand.

Growth in the Pacific can come from three areas: growth in the
number of customers, growth in the business we do with each
customer and growth in the number of markets we serve.

Given our size in the region, organic growth may look harder for
us. However, there are still opportunities based on improvements
in our products, our sales approach and customer service. For
example, our investments in electronic banking and insurance
have given us new revenue streams, and by offering specialist
advice in areas such as tourism, we can give customers more
complete solutions.

Finally, we can grow by entering countries that we are not in
today. We’ve proven with a number of smaller acquisitions in
recent years that we can add real value, not just to the banks
we acquire, but also to customers by offering new products and
services.

Building relationships

EFK: Our aim in the Pacific is to be the number one financial
institution and most respected company in the region. Part of
our success though, will have to come from building stronger
relationships with local communities and supporting the
economic growth in the region. A good example of this is in Fiji,
where we are working with the United Nations Development
Program to bring basic banking services to 400,000 people in
remote rural communities.

There’s also a great pool of talented people in the region and
increasingly we’re relying on our local staff to run the business.
It’s been a great journey for us all in the Pacific over the better
part of a decade and very successful for ANZ.

Growing the Asian network

EFK: The second part of the growth agenda is our ANZ network
in Asia. We can’t underestimate the importance of Asia to
Australia’s future. The flow of trade, investment and people will
continue to grow. For example, China is undergoing the greatest
economic expansion ever witnessed anywhere in the world.

ANZ is in a unique position to grow with the region. There are
very few banks that have positions in 11 Asian countries, and
combining this with our traditional strength in corporate banking
really gives us something to build on. We’ve shown a commitment
to the region by supporting our customers through the financial
difficulties Asia faced in the late 90s. We’re now adding more

expertise and people in trade finance, capital markets and
foreign exchange to deliver the right solutions to our customers.

This expansion follows several years of ‘de-risking’ the business
and putting tighter asset writing policies in place to establish a
foundation for growth. The result has been several years of low
credit losses and non-accrual loans are down to very modest levels.

Partnerships in Asia

EFK: The third growth agenda is our consumer business in Asia,
where economic growth is fuelling tremendous growth in retail
banking.

Increasing wealth is leading to higher levels of savings - we
estimate US$1.7 trillion of new retail savings will be generated
in Asia in the next five years. Growth in savings is going to be
rapidly followed by higher spending and increased borrowing.
The growth rates in financial services which result from this are
likely to dwarf what we will see in well developed markets.

We believe we can participate in this growth by developing
partnerships with local banks. In most markets, local banks tend
to dominate in retail banking and Asia will be no different. So
joining forces with a local bank that can benefit from ANZ’s
experience in retail banking makes a lot of sense.

The idea isn’t new for us and we already have experience in
making it work. For example, with Panin Bank in Indonesia and
with Metrobank in the Philippines. In each case, we have a
minority shareholding and we add value through our experience
in credit cards, mortgages, car finance and retail distribution.
Both those businesses are doing well.

Over the next five years we’ll build more partnerships with a
focus on retail banking. We’ve recently signed a Memorandum
of Understanding with a Shanghai-based credit cooperative and
are now working with them to improve their risk management
processes ahead of them becoming a commercial bank.

This strategy isn’t risk free and we’re careful in selecting our
partners. We’re focusing on consumer banking, which is
fundamentally lower risk than corporate banking, we’re making
modest investments and we’re contributing ANZ’s expertise in
risk management and personal banking. This approach gives us
a really good chance of success.

The upside of this strategy could be material over the longer
term. Asia has been on the recovery path from the economic
issues of the late 1990s. Wealth is growing very rapidly and
financial institutions are moving to take advantage of this.
Our strategy is to give ANZ a new growth platform by participating
in Asia’s economic expansion.

business divisions I 31

Asia Pacific is an important part of our long-term future and it’s a new
platform for ANZ’s growth. We already have great existing businesses in the
region and what we’re building now is a number of new options that can
give us growth five years out or more.

Partner

Growth

Low-Risk

Opportunity

Focus

Local

PACIFIC MARKET SHARE

100

k
i
r
i
b
a
t
i

s
a
m
o
a

v
a
n
u
a
t
u

a
m
.
s
a
m
o
a

f
i
j
i

t
o
n
g
a

p
n
g

t
i
m
o
r
l
e
s
t
e

c
o
o
k
i
s
l
a
n
d
s

s
o
l
o
m
o
n

i
s
.

100 63 61 58

45 40

600

500

400

300

200

100

2
4
3

2
3
2

2
9
8

2
3
7

2
4
0

1
9
5

1
4
7

9
4
'01 '02 '03 '04

STRONG GROWTH IN CARDS
ON ISSUE IN ASIA

Metrobank JV formed in October 2003

metrobank jv

indonesia

32 I business divisions

ESANDA
THINKING OUTSIDE THE SQUARE
A CONVERSATION WITH ELIZABETH PROUST

Specialist

Culture

The market has been a little tougher this year, but we’re demonstrating we can
turn around a mature business and create growth by thinking outside the square
and creating a more entrepreneurial culture.

recruitment firms to find new people, they need to think outside
the square and find a wide range of people who can do the job.

It’s not just ensuring women get into leadership roles, for
example. It’s also helping get them into line management
so they are seen as being able to manage people, be responsible
for large budgets and for running a business. We need more of
that in Esanda and UDC, and more broadly within ANZ.

Simplicity, savvy, focus

EP: The other part of being successful and growing is really
understanding customers. Our customers aren’t buying our
products; they’re buying a car or a truck and our products
are a means to an end. So what they want from us is simplicity:
that we’re easy to do business with and we will get it right the
first time.

That’s why we have worked to reengineer our processes to make
Esanda easier to do business with and to redevelop the Esanda
brand. The challenge for finance companies is that products are
increasingly commoditised and we want to stand for something
a little different. For us, it’s simplicity, savvy, focus, independence.

We have had a very positive response to our new positioning.
Our staff like it, our customers like it and, this will sound like
a small thing, our customers are now for the first time getting
statements in a user-friendly format. I see that as a real sign
that we are changing.

Esanda is ANZ’s specialist asset finance business in
Australia, operating as UDC in New Zealand. It is Australia’s
largest asset-based finance company and a leading provider
of vehicle and equipment finance solutions and fixed interest
investments. Elizabeth Proust is Esanda’s Managing Director.

The growth challenge

EP: We had a solid result this year, having delivered 11%
earnings growth. Some of our traditional business however is
mature – relatively low growth, low return. So, the challenge
for us is to see how we can turn some or all of our businesses
into growth businesses.

Our focus has increasingly been to emphasise the parts
of the business which are growing faster and to invest in new
opportunities. For example, car dealerships are an important
source of business to us but it’s a very competitive area and we
have had great success in providing more finance for cars directly
to end-customers though channels like the internet.

What we are trying to do is to strip away some of the bureaucratic
constraints and make our people more entrepreneurial. It
gives them the opportunity to show that we can grow within
our traditional business and by creating new businesses.

Creating a successful culture

EP: We have also focused on creating a successful culture. We have
had a series of programs with our people that have played an
important role in making the business more vibrant and a great
place to work.

I’m also passionate about diversity and its role in the businesses
success. It’s both an economic and equity issue. Our people should
reflect our customer base and the broader community. That includes
ethnic, gender and age diversity. So when I am hiring managers I
make sure there is a woman on every selection panel and that there
is someone from another part of our business. And when I use

business divisions I 33

ING AUSTRALIA
GETTING BACK TO GROWTH
A CONVERSATION WITH PAUL BEDBROOK

Growth

Efficient

Compulsory superannuation is a growth engine and that will continue into the
foreseeable future. Greater complexity in tax and retirement income policies
has seen the need for advice increase, with a huge increase in the financial
advice and planning industry.

ING Australia is a joint venture between ANZ and leading
global financial institution, ING Group. ING Australia is
one of Australia’s leading fund managers and life insurers
with over $30 billion in assets under management. Paul
Bedbrook is Chief Executive Officer of ING Australia.

Growth and efficiency

PB: It’s been a good year for us, for the joint venture. We have
come through a tougher period, with the bear market in 2001-
2002 and part of 2003, and now business performance is
continuing to improve.

After a period of industry consolidation the major players now
have a much bigger market share. The industry is maturing and is
now in what I would call the efficiency phase. It means managing
performance is about operating efficiently on low margins and
high volume, whereas previously, in the mid and late 90s, it was
all about growth with minimal finesse.

Providing solutions

PB: Around 95% of our business is through intermediaries, such
as adviser groups. So a big part of our philosophy is to service
advisers well and to provide solutions to facilitate what they’re
trying to do with their client base.

Having said that, we certainly have a consumer brand which is
very well thought of. Our advertising campaign featuring Billy
Connolly communicates that ‘we speak your language’, and ‘we
identify with you as consumers’. So a lot of what we do is
ensuring the business lives up to the brand. We’ve made good
progress but there’s still a way to go.

Long term business

PB: Managed funds and life insurance are long-term businesses.
They’re about building funds under management and life
insurance premiums – you have to have business on the books
for a period of time to get the returns coming through.

One of the challenges is how you grow your financial planning
network when for the first year or so they don’t make you money,
but they will in the long run.

To be more successful in terms of growth we need more planners
over time. For ANZ it probably means a range of planners: some
that work at the medium end of the market - the average
customer; others that move more upmarket and perhaps 20% of
planners that can deal with the private bank clients and can have
much more sophisticated strategies that suit our clients.

People are paramount
PB: This is actually a people/relationship business – they’re
absolutely paramount. We have a range of programs around the
development of all our staff. For example, we’ll get a business
school to run courses for first-time supervisors. We have a
program at the moment with Macquarie University, which is
focused on developing our middle to senior managers. In
addition, the ING Business School, based in Amsterdam, runs
programs in Europe and locally for senior executives.

Looking ahead
PB: We need to get strong growth going again on the funds
management side, instead of relying on recent gains through
efficiencies. We need to grow inflows and our life insurance
business, which does well, but which we think we can accelerate
compared to where it is at the moment – that’s exciting for us.

Part of this involves growing our distribution network. We can
increase planner numbers organically but there may also be
opportunities, where advisers are reviewing where they’re going
to be positioned longer-term, for acquisition opportunities.
And of course, we’ll be pushing very hard with ANZ financial
planning to help that network grow.

There are really four priorities for ING Australia now – we’ve got to
grow funds under management, accelerate the insurance growth,
grow distribution numbers and continue the efficiency program.

34 I business performance

OUR
BUSINESS PERFORMANCE

PERSONAL

Personal Banking Distribution (including Rural and Private Banking),
Banking Products, Cards and Merchant Banking Services, Mortgages

PERFORMANCE
> Profit – Profit after tax increased by 16% with profit growth of 58%
in Cards and Merchant Services, 22% in Banking Products and 6% in
Personal Banking Distribution offsetting a 2% reduction in Mortgages.
> Cost to Income Ratio – Decreased by 53.9%. Income growth of 11%
outpaced expense growth of 8%. Income growth driven by lending
volume growth of 18%.
> Risk Management – Provision for doubtful debts increased 8%, driven
by lending volume growth. Non-accrual loans and net specific provisions
remained low reflecting sound credit quality.
> Staff – 3% increase in staff in Mortgages to service continued high
levels of customer activity, a temporary increase in Card and Merchant
Services staff in the first quarter to handle the higher level of calls
associated with changes associated with the Reserve Bank of Australia
interchange reforms, an increased number of financial planners in
Personal Banking Distribution and increased staffing in Rural Banking.

2004

2003

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2,879
(1,551)
(183)
1,145
(343)
802
53.9%
8,934

2,593
(1,439)
(169)
985
(292)
693
55.5%
8,795

11%
8%
8%
16%
17%
16%
– 3%
2%

ACHIEVEMENTS
> Maintained product leadership - our leadership has been recognised
through Personal Investor Bank of the Year 2004, Home Lender of the
Year 2004 and Best Transaction Accounts 2004 (Money Magazine).
> Improved service delivery - customer satisfaction at 73.6% (Roy Morgan
August 2004) up 7.2 points in the past 12 months and compares to the
peer average 66%.
> Improved sales productivity and cross-sell - both sales productivity and
cross sales are up, benefiting from our investment in customer
relationship management.

GOALS
> Accelerate the momentum in our specialist businesses
> Grow deposit share.
> Deepen relationships with our customers.
> Move costs from "back" to "front" (ie enhance our branch network
and streamline process costs).
> Further strengthen our people and culture initiatives.

INSTITUTIONAL

Institutional Banking, Markets (formerly Foreign Exchange and
Capital Markets), Trade and Transaction Services , Corporate
and Structured Financing

PERFORMANCE
> Profit – After adjusting for the impact of the appreciating Australian
Dollar on translation of offshore earnings, profit after tax was flat. This
result was also affected by the substantial progress made in refocusing
the business to lower risk sectors.

> Cost to Income Ratio – Increased 4% due to flat revenue growth, and
4% increase in expenses due to pension funding costs in the United
Kingdom ($8 million), the impact of the consolidation of TradeCentrix
processing hub, increased technology investments in Markets and
Transaction Services, and higher staff costs.
> Risk Management – Provision for doubtful debts was 4% lower
reflecting lower offshore exposures and modest asset growth in Australia.
> Staff – Further investment in Markets capability in London and Asia,
growth in Custody, Commodity Trade Finance in Asia, and International
Payments.

ACHIEVEMENTS
> Deepened domestic position - Underpinned by increasing the range of
products and services offered to our institutional clients.

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2004

1,927
(701)
(159)
1,067
(279)
788
36.4%
2,926

2003

1,922
(675)
(165)
1,082
(280)
802
35.1%
2,795

0%
4%
– 4%
– 1%
0%
– 2%
4%
5%

> Developed new revenue streams - Through broadening ANZ's
distribution capability in domestic and offshore markets.
> Built visible offshore franchise - Leveraging the strengths of our
domestic business and repositioning relationship management of global
corporate clients, particularly in the Northern Hemisphere. In Asia,
continued focus on capability development.
> Maintained excellence in risk management - Established central
Institutional Risk and Compliance function to manage operating risk and
compliance obligations for all divisions (domestic and overseas).

GOALS
> Increase revenue and cost efficiency by combining our Markets businesses
and providing a sharper customer focus.
> Continue to maintain excellence in risk management through low offshore
exposure and further investment in our compliance and risk infrastructure.
> Revise the Institutional business model to increase customer focus, leading
to deeper product penetration and greater non-lending income.

business performance I 35

CORPORATE

Corporate Banking Australia, Business Banking Australia
Small Business Banking

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2004

810
(259)
(59)
492
(148)
344
32.0%
1,671

2003

733
(234)
(55)
444
(133)
311
31.9%
1,596

11%
11%
7%
11%
11%
11%
0%
5%

PERFORMANCE
> Profit – Increased by 11% with net interest income growth of 11% due
to strong volumes in average lending and average deposits. Business
growth from increased activity with existing customers and new customer
acquisition through a competitive customer service proposition.
> Cost to Income Ratio – Remains well controlled at 32.0%
> Risk Management – Provision for doubtful debts increased $4 million
(7%), driven by growth in business volumes partly offset by changes in
the portfolio risk profile. Credit quality in the Business Banking sector
remains sound with the portfolio quality reviewed every quarter to detect
any early adverse trends.
> Staff – Continued investment in people with capability training and a
5% increase in front line and specialist staff.

ACHIEVEMENTS
> Maintained strong business growth - Continued to expand the business
in under-represented geographies; developed our broker origination
channel; grew specialist business propositions (eg. franchising and
invoice finance); and increased momentum in delivery of ‘Wall Street
to Main Street’ solutions to Corporate Banking customers.

> Improved customer services and turn around times due to
improvements in straight through processing for loans and customer
documentation and automated credit scoring technologies; re-engineered
frontline processes.
> Expanded specialist business offerings - Launched and developed new
specialist business offerings, including pharmacy and aged care.
> Enhanced staff and management capabilities - Developed capability
based people learning and development curriculum for all frontline roles;
focused on re-alignment of leadership of the business and targeted
development of talented staff.

GOALS
> Maintain strong business growth, including further development of
specialist businesses and customer propositions.
> Establish sustainable business model for new Small Business Banking
segment.
> Further invest in platform and process efficiencies - “Easy to do
business with”.
> Foster specialist and leadership capabilities.

NEW ZEALAND

ANZ New Zealand Banking, ANZ New Zealand Mortgages,
The National Bank of New Zealand, ANZ New Zealand
Consumer Finance

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2004

1,817
(866)
(99)
852
(268)
584
47.7%
7,988

2003

756
(402)
(37)
317
(106)
211
53.2%
2,939

large
large
large
large
large
large
– 10%
large

PERFORMANCE
> Profit – Profit after tax increased $373 million, with the National Bank
of New Zealand (NBNZ) contributing $375 million (excluding integration
costs of $11 million) since acquisition on 1 December 2003.
> Profit after tax in ANZ New Zealand businesses increased $9 million,
despite a $3 million reduction resulting from the depreciation in the NZD
over the year, of which Cards increased $9 million, ANZ New Zealand
Banking increased $3 million, whilst Mortgages reduced $4 million.
Integration costs incurred in the year totalled $28 million after tax.
> Cost to Income Ratio – Improved to 47.7% inclusion of NBNZ which has
a lower Cost to Income Ratio than ANZ New Zealand Business (NBNZ
42.1% for 2004).
> Risk management – Credit quality remains sound with the increase in
the provision for doubtful debts charge being driven by the NBNZ
acquisition. Economic loss provisioning methodologies have been
implemented in NBNZ and a $62 million charge recognised in the ten
months to September 2004. The NBNZ businesses added $81 million to
gross non-accrual loan volumes with non-accruals in the ANZ New
Zealand businesses reducing.
> Staff – Aside from the additional staff from NBNZ, we added staff in
ANZ New Zealand Banking (frontline) and Mortgages (support) to cope
with increased business volumes.

ACHIEVEMENTS
Integration of the two New Zealand registered banks has successfully
progressed through a number of key milestones. The most important
of these was completion of legal amalgamation on 26 June 2004.
On 28 June 2004, the amalgamated registered bank in New Zealand
changed its name from ANZ Banking Group (New Zealand) Limited to
ANZ National Bank Limited.
To date, the integration program has delivered:
> The completion of merged organisation structures for all the business
segments.
> Alignment of People Capital policy and processes.
> Implementation of the Rural Integration Plan.
> Integration programs completed for most central support areas.
> The merging of Institutional Markets operations, including the
restructuring of dealing rooms.

GOALS
> Manage a successful integration.
> Leverage the complimentary strengths of both banks to build a better bank.
> Accelerate the turnaround of slow growth businesses.

36 I business performance

ASIA PACIFIC

Provides primarily retail banking services in the Pacific Region
and Asia, including ANZ’s share of PT Panin Bank in Indonesia

PERFORMANCE
> Profit – Increased by 11%. Excluding exchange rate movements net
interest income grew by 16% as external assets increased 18%, and other
operating income grew 3% with fee income increasing 20% driven by a
16% increase in loan volumes and higher transaction volumes in the
Indonesian Cards business.
> Cost to Income Ratio – Improved to 46.8% due to centralisation of
services to Quest, our Fiji shared services centre.
> Risk Management – Credit quality remains sound with the provision for
doubtful debts increasing due to growth in credit card volumes in
Indonesia. The increase in net specific provision results from a number of
recoveries/provision reassessments in 2003.
> Staff – Increased capability development and training in Quest to meet
increased demand in the Pacific operations.

ACHIEVEMENTS
> Best Practice Business Operating Model - Successful implementation of
standardised sales and service operating practices in all Pacific countries.
> Leveraged the strengths of the domestic businesses into Asia –
Established two ‘hubs’ in Hong Kong and Singapore and increased
presence of new product/industry experts.

ESANDA AND UDC

Provides vehicle and equipment finance and rental services.
Operates in Australia as Esanda and Esanda Fleetpartners and
in New Zealand as UDC and Esanda Fleetpartners

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

2004

295
(138)
(23)
134
(23)
111
46.8%
1,711

2003

289
(142)
(19)
128
(28)
100
49.1%
1,624

2%
– 3%
21%
5%
– 18%
11%
– 5%
5%

> Improved decision-making around asset and liability management and
pricing practices - Increased rigour in capital and liquidity management
has resulted in improved funding positions across the Pacific.
> Continued centralisation into Quest - Additional back office functions
relocated from a number of Pacific countries.
> Further expanded sales model focusing on customer relationships –
Customer advocacy and complaints frameworks being rolled out
progressively across all Asia Pacific countries.

GOALS
> Continue to build a viable offshore franchise which adds value to our
global customers.
> Maintain our leadership position in the Pacific though improved
processing efficiency and service delivery, enhanced sales productivity
and deeper customer relationships.
> Participate in consumer banking growth in Asia by building on existing
partnerships and developing new opportunities.

2004

2003

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Cost to income ratio (CTI)
Staff (FTE)

455
(186)
(67)
202
(59)
143
40.9%
1,292

428
(179)
(63)
186
(57)
129
41.8%
1,311

6%
4%
6%
9%
4%
11%
– 2%
– 1%

PERFORMANCE

> Profit – Increased by 11% with 3% growth in net interest income
resulting from continued strong new business writings. This was partly
offset by the run-off of higher yielding loans and increasing new business
from better quality, high growth segments that are lower margin. Other
operating income increased by 21% due primarily to changes in the fee
structure for business lending, fees on higher new business writings and
increased fees from value-added fleet management services.
> Cost to Income Ratio – Improved to 40.9% due to continued control of
expenses and growth in income.
> Risk Management – Provision for doubtful debts increased by 6%
driven by increase in lending volumes. Net specific provisions were $25
million lower than last year, reflecting the $20 million write-down
associated with residual value losses on aircraft in the 2003 year and
continued improvement in the underlying credit quality of the loan book.
> Staff – Continued focus on capability development and ‘back office’ efficiency.

ACHIEVEMENTS
> Grew usage segment and lifted returns on the traditional asset finance
business - Delivered substantial growth in the volume of funded vehicles
and equipment finance; launched vehicle usage product into SMB

segment; traditional finance business continued to improve.
> Redeveloped and revitalised our brand - Successful launch of the Esanda brand
with new advertising improved customer awareness and willingness to trial.
> Improve sales capability through improved training and new incentive
scheme – Focused on technical and behavioural skill building, regular sales
conferences to enhance learning across the teams; introduced new
incentive scheme to encourage revenue growth performance.
> Progressed implementation of operations platform and expand to New
Zealand and Esanda FleetPartners – Completed process re-engineering
programme and significantly improved productivity during a time of
booming new car sales.

GOALS
> Grow the Fleet and asset usage businesses across all customer segments
in Australia and New Zealand.
> Build the Consumer Finance business through new product development.
> Grow Commercial Finance through existing ANZ relationships and vendor
relationship development.
> Continue to improve the cost efficiency while investing in future growth.

business performance I 37

ING AUSTRALIA

A joint venture between ANZ and ING Group, provides integrated
manufacture and distribution of wealth creation, management
and protection products and services aligned to ANZ distribution
and the open market

2004

2003

ANZ share of INGA earnings
ANZ Capital hedges
Net Funding Cost
Net return to ANZ

138
(13)
(17)
108

99
(6)
(11)
82

39%
large
55%
32%

GOALS
> Grow our business – in both funds management and life risk.
> Be efficient and cost effective – implement projects to simplify product
systems and improve processes.
> Be easy to do business with – deliver e-business and workflow
initiatives and target straight through processing.
> Improve accountability and focus – realign organisation structure along
key product lines.

PERFORMANCE
> Profit – Profit increased 32% driven by increased funds management
and capital investment earnings with strong investment markets in 2004
and global uncertainty impacting equity market returns in 2003. Risk
income increased with higher sales of insurance products through the
ANZ network and a favourable claims experience.
> Risk Management – Successfully managed transition to new regulatory
environment under Financial Services Reform Act. Significant additional
staff training and process redesign completed.

ACHIEVEMENTS
> Improved cross-sell to bank customers – Alignment of sales and
organisational structures continues to improve cross-sell particularly in
insurance.
> Strengthened Life Risk business – Increased market share, income and
won an award from Personal Investor magazine for the income protection
product.
> Enhanced product range – Re-launched range of investment platforms –
OneAnswer – a simple flexible retail offering; Optimix – a specialist multi-
manager solution; and PortfolioOne – a premium wrap account service.
Launched a new Term allocated pension.

GROUP CENTRE

Operations, Technology, Shared Services, Group People Capital,
Group Risk Management, Group Strategic Development, Group
Financial Management including Treasury and significant items

Operating Income
Operating expenses
Provisions
Profit before tax
Income tax expense
Net profit
Staff (FTE)

2004

369
(325)
(42)
2
(67)
(65)
4,232

2003

324
(157)
(106)
61
(41)
20
4,077

14%
large
– 60%
large
63%
large
4%

PERFORMANCE
> Profit – The $65 million loss in 2004 was due to an additional $128
million goodwill amortisation largely associated with the NBNZ acquisition
that is booked in the Group Centre. Mismatch profit in Treasury reduced by
$31 million after tax and the replacement of TrUEPrS with StEPS reduced
profit by a further $35 million after tax.
These were partly offset by a reduction in the doubtful debt charge for
unexpected offshore losses ($45 million after tax) and $84 million profit
after tax on significant items including the gain related to buying back the
TrUEPrS securities ($84 million), the gain on finalising the ING Australia
completion accounts ($14 million) and incremental NBNZ integration costs
($14 million).

ACHIEVEMENTS
> Extended customer access via web for “self service” enquiries - system
built to enable corporate customers ready access to voucher images via
internet channels.
> Replaced New Zealand payroll system - project successfully completed.

> Rolled-out telling platform in branch network - project successfully
completed and rolled out across branch network in Australia. The new
telling system is an innovative, flexible, and easy-to-use telling system
that will serve ANZ well for many years.
> Implemented managed vendor project for learning delivery - managed
vendor system was integrated with ANZ's on-line training system to
enable ANZ staff to select from 130 contracted external providers and co-
ordinate training requirements.
> Expanded wholesale funding base - Issued ANZ StEPS and US Stapled
Trust Security together with diversified currency issuances.

GOALS
> Implement NZ systems and infrastructure integration.
> Relocate the disaster recovery and development data centre to new facility.
> Develop long-term strategy and options for streamlining the core
banking systems and enhancing single-view-of-the-customer capability.
> Pilot workflow automation initiative in the Operations environment and
develop opportunities for further application.

38 I the community

BUILDING
COMMUNITY TRUST

ANZ’s aim to deliver sustainable value recognises that companies do not serve
shareholders exclusively, but others as well. Part of delivering on our aspiration
involves engaging and contributing to the community.

ANZ’s approach to building community trust has increasingly been
to address those issues which directly relate to the relationship
between financial services organisations and the community.

Our work has been guided by Australia’s first national survey of
adult financial literacy conducted in 2003. It identified a strong
association between socio-economic status and financial literacy.
The research indicated the 20% of people with the lowest financial
literacy were over-represented by those with lower education
levels, those not employed, people with lower incomes, low year
savings and people at both extremes of the age profile – 18 to 24
year olds and those aged 70 years and over.

ANZ’s focus recognises that issues around the effective use and
management of money, and access to financial products and
services can have a profound effect on people in the most
vulnerable sections of the community. For many others in the
community, who understand the fundamentals of money
management, empowering them with stronger financial skills,
knowledge and information means they are better placed to make
informed decisions about their money and avoid being misled on
financial matters.

Making a Difference

By taking targeted steps to improve levels of financial literacy,
encourage savings and develop more accessible products and
services, ANZ believes it can make a long-term difference to the
circumstances of people facing disadvantage.

ANZ has also sought to differentiate itself by the scope and nature
of its approach. This has involved:

> showing community leadership on financial literacy

> funding research and knowledge-building activities which assist
policy makers, community organisations and the financial services
industry

> addressing the needs of ANZ’s own customers through better
communication, simpler products, and aware and informed staff

> creating genuine business-community partnerships to deliver
innovative programs.

Saver Plus

During 2004, ANZ conducted a pilot matched savings program,
Australia’s first. Called Saver Plus, it has involved establishing
partnerships with The Brotherhood of St Laurence in Melbourne
Berry Street Victoria in Shepparton, Victoria and The Benevolent
Society in Sydney to assist 270 families on low incomes to save
for costs associated with their children’s secondary education.
ANZ matches every dollar saved with two additional dollars and
program participants have also been provided with financial skills
training and personal coaching.

Research from the pilot indicates matched savings programs can
make a real difference by helping people develop financial skills,
change their saving and spending behaviours and create assets for
their families, which can improve their circumstances. As a result,
ANZ has announced it will contribute a further $1 million to expand
the program with its existing partners and through a new
partnership with The Smith Family in Queensland.

ANZ was recognised for Saver Plus in the Prime Minister’s 2004
Awards for Excellence in Community Business Partnerships in the
Victorian Large Business category.

MoneyMinded

ANZ has worked with the Australian Financial Counselling and Credit
Reform Association and the Australian Securities and Investments
Commission to develop MoneyMinded, Australia’s first
comprehensive adult financial education program.

MoneyMinded is not ANZ-branded and has been developed
specifically for use by financial counsellors and community
educators, recognising they play a critical role in reaching adults
who can benefit most from financial education. ANZ will partner
with 100 community organisations during the next five years to
deliver the MoneyMinded program to 100,000 people nationally.

The Brotherhood of St Laurence will be the first organisation to use
the program. It will use MoneyMinded in its work with people on low
incomes and will facilitate training of other community organisations
interested in using the program.

Community Development Finance

ANZ has also conducted a community consultation and research
program to examine how community development finance can bring
about greater levels of financial inclusion in Australia. Community
development finance is an umbrella term which encompasses
programs such as small loans, loans for enterprise development,
matched savings schemes, financial counselling and advice and
financial literacy training.

As a result we will develop new products during 2005 to reduce the
exclusion of low-income earners from mainstream financial services
and provide alternatives to ‘pay day’ lenders and ‘loan-sharks’. We
will also facilitate opportunities for indigenous Australians to access
micro-credit and to encourage savings.

Financially Fit Workforce

We also believe it is difficult for us as a bank to build trust in the
community if people are confused because our products and fee
structures are complex, they do not understand their financial
position or cannot access mainstream financial services. These issues
are fundamental to our customers’ relationship with ANZ and relate
directly to our responsibilities as a provider of financial services.

the community I 39

This is why we have taken steps to create simpler products, sought
to communicate with customers in Plain English and invested in
additional training for our staff to help identify and assign people
struggling with financial literacy or facing financial difficulty. We
have also created a range of materials to help people who want to
use and manage their money effectively.

We have made good progress in building the community’s trust
but we know there is still much to do. We believe we can take our
relationship with the community to a new level by focusing on
those areas that directly relate to our responsibilities as a financial
services company and delivering innovative responses that make a
genuine difference to our customers and the community.

PICTURED: Michelle Wakeford and Sonia McCann, Brotherhood of St Laurence, Frankston

SAVER PLUS PARTICIPANT

STAFF INVOLVEMENT

"Saver Plus has meant an amazing change in my life.
It’s taught me to save from a background of nothing."

“It’s been a learning curve for me but also for the rest of
the branch, about the things that we take for granted.”

Julie, a young mother in Shepparton, Victoria is participating in
ANZ’s Saver Plus program with our partners at Berry Street Victora.

“The kids can ask me for something now and I can say I’m capable
of saving for that. I’ve never felt so proud of anything in my life.”

“It’s not just something that’s taught to me and then goes away.
It’s a long-term tool that I can also share with my children.”

Her immediate target is to have enough money to buy a computer
and printer for her son who is entering Year 8 in 2005.

Julie says her newfound budgeting skills will also enable her to
pay for uniforms, school fees and school camps each year.

Dianne Mills is ANZ’s Karingal Branch Manager in Victoria.
Participants in Frankston Saver Plus program have accounts at her
branch and Dianne has been assisting in financial literacy sessions.

“The biggest learning for me is knowing the challenges that people
in difficulty face. It was a big shock when I went to the introduction
sessions and there were families with children who had never been
on a school camp or didn’t have the right uniform. That hit hard.”

“It’s just been a fantastic opportunity for everyone. First for ANZ
to get out there in the community and give something back.
And for the people involved it’s an opportunity for them to save,
be rewarded and to get a feeling of empowerment about their
finances.”

40 I the environment

SUSTAINABLE GROWTH AND
THE ENVIRONMENT

PICTURED FROM LEFT: Richard Gates, John Clarke and Mike Grime

ANZ recognises it has an opportunity to reduce its environmental
impact and improve the natural environment. This includes
managing the impacts from our day-to-day activities and the
companies we lend to by financing projects of environmental
benefit, and contributing to change by working with others.

We are committed to understanding the full impact of our
operations on the environment and to develop innovative
solutions that will help us to meet our objectives and the
interests of the community. This includes:

> reducing our environmental ‘footprint’ and managing issues in
our supply chain

> balancing business and environmental risk in Corporate and
Institutional lending decisions

> investing in the environmental sector and providing specialist
solutions to deliver sustainable benefits

> engaging with community groups and stakeholders

> measuring, reporting and improving our performance.

2004 Achievements

Our progress can be gauged by the work we have completed in
2004. This includes:

> completing a detailed review of our Corporate and Institutional
lending policies and procedures in relation to social and
environmental impacts of our customers. Areas of focus include
climate change, water management, land clearing, salinity, air
quality, safety, community well-being and human rights

> establishing an environmental management system based on
the International Standard ISO400 which has formed the basis
for improved environmental reporting and driving further
reductions in our direct environmental impacts

> conducting a review of our supply chain for opportunities
to incorporate greater environmental consideration in the
procurement of goods and services

> partnering with Pratt Water to assist in the provision of a total
funding package for primary producers to promote the use of
water saving irrigation systems

> strengthening the position of ANZ’s specialist infrastructure
services business as a leader in financing of renewable energy
and water infrastructure projects

> improving our environmental rating in the Dow Jones
Sustainability World Index and maintaining membership of the
Financial Times FTSE4Good Index based on meeting heightened
environmental criteria.

Future Priorities

The progress we have made has formed the foundation for a new
set of priorities, which include:

> addressing the findings of our review of lending practices to
ensure lending policies and procedures adequately address
emerging environmental and social issues and risks

> further reducing our direct environmental impacts through
targeted action plans for greater resource efficiency and waste
recycling

> enhancing our existing procurement protocols to address
environmental risks and opportunities in our supply chain

> implement programs and initiatives developed in partnership
with Greening Australia to deliver targeted social, environmental
and business outcomes

> enhancing our data collection capabilities and public reporting
of environmental performance including third party verification
of data

> finalise and publicly release ANZ’s policies relating to key
environmental issues.

ANZ has also increased its public reporting of its approach,
initiatives, performance and commitments for environmental
improvement. This can be found on ANZ’s web site at
www.anz.com/australia/aboutanz

the environment I 41

ANZ’s approach to the environment reflects a view that value can be created for
shareholders through strong financial growth based on environmentally sound
business practice. Our aim is to ensure long-term business success and make a
sustainable contribution to society.

Leading environmental change

Investing in change

A conversation with senior management

During 2004, three members of ANZ’s senior management team
with specific responsibilities and interests in our environment
program, sat down to talk about the issues and the opportunities
to create value through environmentally sound business practice.

Mike Grime is Managing Director, Operations, Technology and
Shared Services with responsibilities including property and
supply chain management. John Clarke is Managing Director, ANZ
Infrastructure Services. This business specialises in advisory and
private equity investments in the utilities and infrastructure
sectors including specialist capabilities in renewable energy
assets. Richard Gates, Head of Business Services, Healthcare and
Education in Institutional Banking, has given leadership to ANZ’s
environmental and social risk in lending project.

Managing impacts and risks

MG: We’re a services organisation but with over 30,000 staff and
1,000 properties, the amount of energy, paper and water we use
is really quite significant. It creates a direct impact on the
environment but of course there are also the impacts associated
with all the suppliers we have of goods and services.

RG: The environment’s also an issue in our day-to-day business
with clients. We’ve made headway in managing our direct
impacts but, really, we have to think about the indirect impacts,
particularly the social and environmental impacts of customers
we finance. The majority of our corporate customers, and the
broader community, expect this. A priority for us is to build the
environmental and social risk assessment capabilities of
relationship and credit managers and give them rating tools and
procedures they need to back this up.

MG: I agree. The challenge is providing service in a social and
environmentally sound way. But if we can build that into the way
the organisation thinks, my view is we can find the right balance
to improve the business, reduce costs and risk, and reduce our
impact on the environment.

Paper usage is a good example. By targeting areas that
consume large amounts of paper as an environmental initiative
we can also identify process efficiency opportunities, and reduce
costs. There are other opportunities in setting targets to reduce
greenhouse gas emissions, improving office fit out standards and
working with our suppliers to think and act greener.

JC: That’s also creating opportunities for us in areas like
environmental technologies, where we can provide private equity
for investment in infrastructure and utilities. We’ve been
concentrating more and more on energy because it offers fair
rates of return and we also have strong capabilities.

We’ve spent a lot of time looking at these emerging technologies
- solar, biomass, wind-power and bio-diesel. The key thing here
is not to take a major technology risk - you must have good
technology so wind power becomes a focus, as does bio-diesel.
We’ve supported a number of projects as a result, and these form
an important renewable segment within our diversified energy
vehicle, the Energy Infrastructure Trust. Investment in sustainable
water processing and delivery systems is also important given
the water scarcity issues facing Australia.

Policy, culture, capabilities

RG: Part of what is required to lift our game in this area is strong
leadership to counter inertia and to empower and educate our
staff to see and manage risks and opportunities, and then to
engage our customer base. This needs to extend right accoss the
bank, not just in the Corporate and Institutional businesses. For
example, Credit Cards have been doing some interesting work
which fits into the social risk area by helping customers
understand the financial implications of lending products.

MG: We have come quite a way with this in our Property and
Strategic Sourcing functions. Revising our procurement policy
and contract conditions is one thing, which is very important,
however the other element is working with our businesses
to adopt alternative goods and services that have better
environmental outcomes. That’s where having group policy and
the right culture helps.

JC: Yes and we get comments back from a number of people
saying what we are doing on the renewable energy side is
innovative. Really though, I see it as part of our core business in
bringing our skills in providing equity, contract negotiations and
in structuring contracts to complete these projects. It gives you
a great deal of satisfaction.

RG: What you’re also highlighting is why our approach has to be
collaborative. That’s not only working together in the business
but I think it also involves listening and working with our
customers and the community.

42 I board of directors

THE BOARD OF DIRECTORS

Working
together to

achieve

performance,
growth and
sustainability.

MR C B GOODE, AC
b com (hons) (melb), mba
(columbia university, new
york), hon lld (melb), hon
lld (monash)

Chairman

Independent Non-Executive
Director

Age 66

Non-executive director since
July 1991. Mr Goode was
appointed Chairman in
August 1995 and is Ex-officio
member of all Board
Committees.

Experience and expertise
Mr Goode has 29 years of
experience in the finance
industry and has been a
professional non-executive
director since 1989. Mr
Goode brings relevant skills
and significant experience in
the finance industry to his
role as Chairman of the
Board.

Current Directorships
Chairman: Woodside
Petroleum Ltd (Director from
1988), Australian United
Investment Company Ltd
(Director from 1990),
Diversified United Investment
Ltd (Director from 1991) and
The Ian Potter Foundation
(Director from 1997).

Director: Singapore Airlines
Limited (from 1999) and the
Howard Florey Institute of
Experimental Physiology and
Medicine (from 1987).

Residence Melbourne.

MR J MCFARLANE, OBE
ma, mba

Chief Executive Officer

Age 57

Chief Executive Officer since
October 1997. Mr McFarlane
is also a Director of ANZ
National Bank Limited.

Experience and expertise
Mr McFarlane brings broad
skills and extensive
experience in banking of over
30 years. Mr McFarlane is a
former Group Executive
Director, Standard Chartered
Plc, Head of Citibank, United
Kingdom and Managing
Director, Citicorp Investment
Bank Ltd.

Current Directorships
Chairman: The Australian
Bankers Association (from
October 1997).

Director: The Financial
Markets Foundation for
Children (from 1999).

President: The International
Monetary Conference (June
2004).

Member: The Australian
Business Arts Foundation
(from 2000) and Asia
Business Council (from 2004).

Former Directorships
Former Director: Business
Council of Australia (1999 -
October 2003) and Australian
Graduate School of
Management Ltd (1999 -
December 2003).

Former Non-Executive Director
of the London Stock Exchange
(1989 - 1991), The Auditing
Practices Board (1991-1997),
The Securities Association
(1989 – 1990), Capital Radio
Plc (1995 – 1998) and the
Cranfield School of
Management (1992 – 1996).

Residence Melbourne.

DR G J CLARK
phd, bsc (hons)

Independent Non-Executive
Director

Age 61

Non-executive director since
February 2004.

Experience and expertise
Dr Clark is Principal of Clark
Capital Partners, a US based
firm that advises
internationally on technology
and the technology market
place. Previously he held
senior executive positions in
IBM, News Corporation and
Loral Space and
Communications. He brings
to the Board international
business experience and a
distinguished career in micro-
electronics, computing and
communications.

Current Directorships
Director: James Hardie
Industries NV (from 2002).

Former Directorships
Former Director: Digex
(2000 -2002).

Residence Based in New
York, United States of
America but also resides
in Sydney.

MR J C DAHLSEN
llb, mba

Independent Non-Executive
Director

Chairman of the Audit
Committee

Age 69

Non-executive director since
May 1985. Mr Dahlsen is a
member of the Nominations
& Corporate Governance
Committee.

Experience and expertise
The skills and expertise that
Mr Dahlsen has developed in
his legal career together with
his experience in the media,
not-for-profit, business
education, banking, retail and
small business sectors ensure
that he brings an
understanding of the law and
business to his role as a non-
executive director.

Current Directorships
Chairman: Southern Cross
Broadcasting (Australia) Ltd
(Director from 1985).

Director: The Smith Family
(from 1995), J C Dahlsen Pty
Ltd Group (from 1973) and
the Warehouse Group Ltd of
New Zealand (from 2001).

Former Directorships
Former Chairman: Woolworths
Ltd (1992 – 2001).

Former Partner: Corrs
Chambers Westgarth (1963 –
1987 and 1989 – 1993).

Former Consultant: Corrs
Chambers Westgarth (1987 –
1989 and 1993 - 2002).

Former Director: Melbourne
Business School Ltd (1989 -
2000) and MPI Mines Ltd
(1992 – 2002).

Residence Melbourne.

board of directors I 43

DR R S DEANE
phd, b com (hons), fca, fcis,
fnzim

Independent Non-Executive
Director

Chairman of ANZ National
Bank Limited

MR J K ELLIS
ma (oxon), faicd, hon fie
aust, fausimm, ftse, hon dr
eng (cqu)

Independent Non-Executive
Director

Chairman of the Risk
Management Committee

Age 63

Age 67

Non-executive director since
September 1994. Dr Deane is
a member of the Risk
Management and
Compensation Committees.

Experience and expertise
Dr Deane has skills and
experience in a variety of
sectors including the
government, banking and
finance, economics,
telecommunications, and
with charitable and cultural
organisations.

Current Directorships
Chairman: Telecom
Corporation of New Zealand
Limited (Director from 1992,
CEO 1992 to 1999), Fletcher
Building Limited (from
2001), Te Papa Tongarewa
(Museum of New Zealand)
(from 2000), and New Zealand
Seed Fund (from 2000).

Director: Woolworths Limited
(from 2000),

Former Directorships
Former Director: TransAlta
Corporation (Canada) (2000 –
2003) and Fletcher Challenge
Limited (1994 –2001).
Deputy Governor: Reserve
Bank of New Zealand (1982 –
1986).

Former Alternate Executive
Director: International
Monetary Fund (1974 – 1976).

Residence Wellington,
New Zealand.

Non-executive director since
October 1995. Mr Ellis is a
member of the Audit
Committee.

Experience and expertise
A trained engineer, Mr Ellis
brings to the Board his
analytical skills together with
his practical understanding of
operational issues,
investments and acquisitions
across a range of sectors
including natural resources,
manufacturing, biotechnology
and education.

Current Directorships
Chairman: Pacifica Group Ltd
(Director from 1999), National
Occupational Health and
Safety Commission (Director
from 2003) and Australia-
Japan Foundation (from
1999).

Chancellor: Monash
University (from 1999).

Director: GroPep Ltd (from
1999).

Former Directorships
Former Chairman: BHP Ltd
(1997 - 1999), Black Range
Minerals Ltd (Director 2000 –
January 2004) and Sandvik
Australia Pty Ltd (1994 –
2002).

Former Director: Aurora Gold
Ltd (1999 – 2001).

Residence Melbourne.

MR D M GONSKI, AO
b com, llb, s.i.a. (aff),
faicd, fcpa

MS M A JACKSON, AC
b ec, mba, hon lld,
faicd, fca

Independent Non-Executive
Director

Age 51

Non-executive director since
February 2002. Mr Gonski
is a member of the Risk
Management Committee
and the Nominations &
Corporate Governance
Committee. He represents
the Group as a Director of
ING Australia Limited.

Experience and expertise
Mr Gonski, a lawyer, has a
wide experience in business,
the law and investment
banking. He also brings to
his role on the Board an
appreciation for the
community through his work
in the arts and the not-for-
profit sector.

Current Directorships
Chairman: Coca Cola Amatil
Limited (Director from
1999), and the Investec
Group in Australia (including
Investec Wentworth Pty
Limited) (Director from
2001).

Director: The Westfield
Group Ltd (Director of
Westfield Holdings Limited
from 1985) and John Fairfax
Holdings Limited (from
1993).

Former Directorships
Former Chairman: Morgan
Stanley Australia Limited
(1999-2002) and Hoyts
Cinemas Limited (1995-
1999).

Former Partner: Freehill
Hollingdale & Page (1979-
1986)

Residence Sydney.

Chairman of the
Compensation Committee

DR B W SCOTT AO
b ec, mba, dba

Age 51

Non-executive director since
March 1994. Ms Jackson is a
member of the Audit
Committee.

Experience and expertise
A Chartered Accountant, with
significant financial
expertise, Ms Jackson has
broad industrial experience
including her involvement in
transportation, mining, the
media, manufacturing and
insurance. This expertise
coupled with her work in
health and education
contribute to her role on the
Board.

Current Directorships
Chairman: Qantas Airways
Limited (Director from 1992).

Deputy Chairman: Southcorp
Limited (August 2004).

Director: Billabong
International Limited
(from 2000).

Former Directorships
Former Partner: Consulting
Division of KPMG Peat
Marwick (5 March 1991 –
30 June 1992).

Former Director: BHP Ltd
(1994 – 2000), Pacific
Dunlop (1992 – 2000) and
John Fairfax Holdings Limited
(2003 - August 2004).

Residence Melbourne.

Independent Non-Executive
Director

Chairman of the Nominations
& Corporate Governance
Committee

Age 69

Non-executive director since
August 1985. Dr Scott is also
a member of the
Compensation Committee
and represents the Group as
a Director of Metrobank Card
Corporation Inc.

Experience and expertise
A management consultant
and company director, Dr
Scott’s extensive skills and
experience in a range of
business sectors and
community organisations
contribute to his role as a
non-executive director.

Current Directorships
Chairman: Management
Frontiers Pty Ltd (Director
from 1985), The Foundation
for Development Co-
operation Ltd (Director from
1990) and The James N.
Kirby Foundation Ltd
(Director from 1981).

Director: Air Liquide Australia
Ltd (from 1985).

Australian member: The
Board of Governors of the
Asian Institute of
Management (from 1990).

Residence Sydney.

44 I corporate governance

A STRONG ADVANTAGE FOR ANZ
GOOD CORPORATE GOVERNANCE

ANZ believes that good corporate governance and quality disclosure are
fundamental to achieving the Company’s vision - to be Australasia’s leading,
most respected and fastest growing major bank.

ANZ’s shareholders depend on the
Company’s Board for strategic guidance
and oversight of the Company. The Board
recognises its overriding responsibility
to act honestly, fairly, diligently and
progressively, in accordance with the
law, in serving the interests of ANZ’s
shareholders, as well as its employees,
customers, and the community at large.

Corporate governance is an important
focus for the Board. Good corporate
governance meets ethical and stewardship
responsibilities, and gives ANZ a strong
commercial advantage. It is receiving
close scrutiny, and for the past two years,
the Board has had a Nominations and
Corporate Governance Committee to
ensure such issues are fully addressed.

Stock Exchanges. ANZ must comply with a
range of requirements including listing
requirements in Australia and New
Zealand as well as overseas requirements
such as the US Sarbanes-Oxley Act of 2002,
the Securities and Exchange Commission
rules and the New York Stock Exchange
requirements. In addition, ANZ strives
to achieve best practice by taking into
account the principles and guidelines
set out by the ASX Corporate Governance
Council, the New Zealand Securities
Commission and the Combined Code
of the United Kingdom.

In general, the Board resolves:

> To embrace principles considered to be
best practice across the jurisdictions; and

ANZ shares and related securities are
listed on the Australian (ASX), the New
Zealand (NZX) and the New York (NYSE)

> To be an ‘early adopter’ where possible
by complying before a published law or
recommendation takes effect.

Consequently, the Board continually
monitors governance developments
ensuring ANZ’s practices are at best
practice standard.

During the year, the Board worked closely
with management to review and update
ANZ policies and procedures in light of
recent changes to regulations, legislation
and guidelines across relevant
jurisdictions (see below).

KEY CORPORATE GOVERNANCE ISSUES ADDRESSED BY THE BOARD INCLUDE:

INTERNATIONAL
> International Financial Reporting
Standards – (IFRS) – ANZ has a formal
program to ensure that the Company is
prepared to report, in compliance with
Australian equivalents to IFRS as issued
by the International Accounting Standards
Board, when its results for the half-year
ended 31 March 2006 are announced.
The program is on track to achieve this
schedule.

> Basel II – For ANZ, the new Basel Accord
is scheduled to commence in 2006 for two
years of parallel running with the current
capital Accord, prior to full implementation
in January 2008. ANZ has established a
program to ensure the Company achieves
accreditation at the advanced levels for
both credit and operational risk under
Basel II. The program is on schedule
with a number of Basel II requirements
already in place.

AUSTRALIA
> ASX Corporate Governance Council –
Principles of Good Corporate Governance
and Best Practice Recommendations –

ANZ considers these principles important
and has included a table on page 45
outlining its compliance with the
recommendations.

> The Corporations Law Economic Reform
Program (Audit Reform and Corporate
Disclosure) Act 2004 - CLERP 9 Act – The
legislation was passed by Parliament on
25 June 2004. While compliance with the
majority of the changes made by the Act is
not required until ANZ reports for the 2005
financial year, the Company has chosen to
be an ‘early adopter’ of most of the new
requirements.

NEW ZEALAND
> NZX Corporate Governance Rules and
Principles - The NZX has introduced a
Corporate Governance Best Practice Code.
As an overseas listed issuer on the NZX,
ANZ is deemed to comply with the NZX
Listing Rules provided that it remains listed
on the ASX. As required under NZX Listing
Rules, ANZ provide a brief description of
the material differences between the ASX
and NZX governance requirements on
page 94.

OTHER JURISDICTIONS
> United States of America – As a "foreign
private issuer" registered with the U.S.
Securities and Exchange Commission (SEC)
with securities listed on the New York Stock
Exchange (NYSE), ANZ is required to
comply with certain corporate governance
requirements contained in U.S. securities
laws, including the Sarbanes-Oxley Act of
2002 and applicable NYSE Listing
Standards. As permitted under the NYSE
Listing Standards, ANZ will provide a brief
description of the material differences
between its corporate governance practices
and the NYSE corporate governance
requirements for foreign private issuers in
ANZ's U.S. Form 20-F annual report filed
with the SEC and posted on anz.com.

> United Kingdom – ANZ monitors
developments in the UK Combined Code
through changes made by the Higgs Report
and the Smith Report. The Nominations
and Corporate Governance Committee
has considered the changes made to the
Combined Code, and the extent to which
they represent developing trends in
international corporate governance.

corporate governance I 45

CORPORATE GOVERNANCE RECOGNITION

Governance Metrics International (GMI) Global Rating Report –
In August 2004, ANZ participated in a review by GMI of corporate
governance and disclosure practices of the top 2,600 companies
worldwide. ANZ received an overall global rating of 9 out of 10
and was in the top 7% of companies surveyed. In addition, ANZ
received significant recognition for its:

Horwath Corporate Governance Report - The Horwath Report
ranked ANZ equal second for its corporate governance practices
amongst the top 250 Australian companies in September 2004.
ANZ received an overall 5 out of 5 star rating meaning that
the Company’s corporate governance structures met all best
practice standards.

> Board accountability
> Remuneration
> Corporate behaviour

> Shareholder rights
> Market for control and ownership base

ASX CORPORATE GOVERNANCE TABLE

FOCUS & PRINCIPLE

COMPLIANCE ((cid:22))

FOCUS & PRINCIPLE

COMPLIANCE ((cid:22))

1 LAY SOLID FOUNDATION FOR MANAGEMENT AND OVERSIGHT

6 RESPECT THE RIGHTS OF SHAREHOLDERS

1.1 Formalise the functions reserved to the Board and those

delegated to management

2 STRUCTURE THE BOARD TO ADD VALUE

2.1 The majority of the Board should be independent

directors

2.2 The chairperson should be an independent director

2.3 The roles of the Chairperson and Chief Executive

Pg 47 (cid:22)

Pg 48 (cid:22)
Pg 47 (cid:22)

Officer should not be exercised by the same person

Pg 47 (cid:22)
2.4 The Board should establish a nomination committee Pg 50 (cid:22)
(cid:22)

2.5 Provide related disclosures

3 PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

3.1 Establish a code of conduct to guide the directors,

the CEO, the CFO and any other key executives as to:

3.1.1 the practices necessary to maintain

confidence in the company’s integrity

Pgs 46, 53 (cid:22)

3.1.2 the responsibility and accountability of

individuals for reporting and investigating
reports of unethical practices

3.2 Disclose the policy concerning trading in company
securities by directors, officers and employees

3.3 Provide related disclosures

4 SAFEGUARD INTEGRITY OF FINANCIAL REPORTING

4.1 Require the CEO and CFO to state in writing to the

Board that the company’s financial reports present a
true and fair view, in material respects, of the
company’s condition and operational results and are
in accordance with accounting standards

4.2 The board should establish an audit committee

4.3 Structure the audit committee so that it consists of

> only non-executive directors
> a majority of independent directors
> an independent chairperson, who is not chairperson

of the Board

> at least three members

4.4 The audit committee should have a formal charter

4.5 Provide related disclosures

5 MAKING TIMELY AND BALANCED DISCLOSURE

5.1 Establish written policies and procedures designed

Pg 53 (cid:22)

Pg 53 (cid:22)
(cid:22)

Pg 77 (cid:22)
Pg 50 (cid:22)

Pg 50 (cid:22)
Pg 50 (cid:22)
(cid:22)

to ensure compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a senior
management level for that compliance

5.2 Provide related disclosures

Pgs 46, 53 (cid:22)
(cid:22)

6.1 Design and disclose a communications strategy to

promote effective communication with shareholders
and encourage effective participation

Pg 46 (cid:22)

6.2 Request the external auditor to attend the AGM

and be available to answer shareholder questions
about the conduct of the audit and the preparation
and content of the auditor’s report

Pg 46 (cid:22)

7 RECOGNISE & MANAGE RISK

7.1 The Board or appropriate committees should establish

policies on risk oversight and management

Pg 52 (cid:22)

7.2 The CEO and CFO should state to the Board in writing that

7.2.1 the statement given in accordance with best

practice recommendation 4.1 is founded
on a sound system of risk management
and internal compliance and control
which implements the polices adopted
by the Board

7.2.2 the company’s risk management and

internal compliance and control system
is operating effectively and efficiently
in all material respects

7.3 Provide related disclosures

8 ENCOURAGE ENHANCED PERFORMANCE

8.1 Disclose the process for performance evaluation
of the Board, its committees, individual directors
and key executives

9 REMUNERATE FAIRLY AND RESPONSIBLY

Pg 77 (cid:22)

Pg 52 (cid:22)
(cid:22)

Pg 48 (cid:22)

9.1 Provide disclosure in relation to the company’s

remuneration policies to enable investors to
understand the costs and benefits of the policies,
and the link between remuneration paid and
to the directors and key executives and
corporate performance

Pgs 58 to 71 (cid:22)

9.2

The Board should establish a remuneration
committee

Pg 50 (cid:22)

9.3 Clearly distinguish the structure of non-executive

directors remuneration from that of executives Pgs 58 to 71 (cid:22)

9.4 Ensure that payment of equity-based executive
remuneration is made in accordance with
thresholds set in plans approved by
shareholders

9.5 Provide related disclosures

Pgs 58 to 71 (cid:22)
(cid:22)

10 RECOGNISE THE LEGITIMATE INTERESTS OF STAKEHOLDERS

10.1 Establish and disclose a code of conduct to
guide compliance with legal and other
obligations to legitimate stakeholders

Pgs 46, 53 (cid:22)

46 I corporate governance

FOSTERING ETHICAL DECISION MAKING
The Board encourages management to
promote and maintain a culture within ANZ
which draws upon a set of unifying values to
guide the actions and decisions of the
Board and all employees.

More than 18,000 ANZ employees have
participated in the Breakout culture
development program. The program
includes workshops to help staff to apply
values-based decision making, balancing
the competing needs of staff, shareholders,
customers and the community in their roles
and activities.

ANZ has three main codes of conduct which
also guide everyday business practice and
decision making throughout the Group.

> ANZ Directors’ Code of Conduct sets
ethical standards for the directors. They are
expected to pursue the highest standards of
ethical conduct in the interests of
shareholders and all other stakeholders.

> ANZ (Employee) Code of Conduct sets
ethical standards for ANZ staff to embrace
and advocate. It establishes an environment
in which ANZ staff, can excel, regardless of
race, religion, age, ability or gender.

> ANZ Code of Conduct for Financial Officers
(adopted from G100 Code of Conduct for
Chief Financial Officers) provides a practical
guide for the CFO and financial staff in their
everyday dealings as to the standards of
ethical behaviour expected in the
performance of their duties in addition to
the ANZ Employee Code of Conduct.

CREATING A SUSTAINABLE
CONTRIBUTION TO SOCIETY

Through ANZ’s values, the Company
places a high emphasis on creating long-
term business success, while at the same
time, making a sustainable contribution
to the community. Some examples of
these contributions are outlined on pages
40 to 41.

DEMONSTRATING ANZ’S COMMITMENT
TO SHAREHOLDER COMMUNICATION
Shareholders are the owners of ANZ,
and the Company’s stated aim is to
“perform and grow to create value for
our shareholders”.

In order to vote on decisions about
ANZ, and to communicate views to
the Company, shareholders will need
an understanding of the Company’s
business operations and performance.

ANZ encourages shareholders to take an
active interest in the Company. It seeks
to provide shareholders with quality
information in a timely fashion generally
through ANZ’s reporting of results, the
Company’s Annual Report, briefings,
newsletters and via its dedicated
shareholder site on anz.com.

ANZ strives for transparency in all its
business practices. The Company
recognises the impact of quality
disclosure on the trust and confidence
of the shareholder, the wider market
and the community.

CONTINUOUS DISCLOSURE
It has long been ANZ’s practice to release
all price sensitive information as required
under the ASX listing rules in a timely
manner:

> to all relevant stock exchanges on which
ANZ’s securities are listed; and

> to the market and community generally
through ANZ’s media releases, website and
other appropriate channels.

ANZ-related releases are posted on
relevant stock exchange websites and on
ANZ’s website.

Through ANZ’s Market (Continuous)
Disclosure Policy (see page 53), the
Company demonstrates its commitment to
continuous disclosure. The policy reflects
relevant obligations under applicable stock
exchange listing rules and legislation.

ANZ VALUES

> Put our customers first

> Perform and grow to create value

for our shareholders

> Lead and inspire each other

> Earn the trust of the community

> Breakout, be bold and have the

courage to be different

For reporting purposes, price sensitive
information is information that a reasonable
person would expect to have a material
effect on the price or value of ANZ’s
securities.

Designated Disclosure Officers have
responsibility for reviewing proposed
disclosures and making decisions in relation
to what information can be or should be
disclosed to the market. All ANZ staff are
required to inform a Disclosure Officer
regarding any potentially price-sensitive
information concerning ANZ as soon as they
become aware of it.

UPHOLDING SHAREHOLDER RIGHTS
ANZ upholds shareholder rights and
provides shareholders with the opportunity
to be involved in shareholder meetings.

To allow as many shareholders as possible
to have an opportunity to attend a meeting,
ANZ rotates shareholder meetings around
capital cities. Webcast technology has been
introduced which makes it possible to
‘attend’ presentations – to listen to the
speakers and simultaneously view
presentations over the internet.

Prior to the annual general meeting,
shareholders are encouraged to submit any
questions they have for the Chairman or
Chief Executive Officer to enable key
common themes to be considered.

The external auditor is present at ANZ
Annual General Meetings and available to
answer shareholder questions. The auditor
can respond on any business item that
concerns them in their capacity as auditor.

Shareholders have the right to vote on
various resolutions related to company
matters. If shareholders are unable to attend
a meeting they can submit their proxies via
post or electronically through anz.com.
Where votes are taken on a poll, ANZ
appoints an independent party to verify the
results, which are reported to the ASX and
posted on anz.com.

During the year, ANZ presentations included:

> Annual Results and Acquisition of NBNZ
Announcement – 24 October 2003 –
Melbourne, Victoria and Auckland,
New Zealand

> Annual General Meeting – 19 December
2003 – Brisbane, Queensland

> New Zealand Briefing – 11 March 2004 –
Auckland, New Zealand

> Interim Results Announcement – 27 April
2004 – Sydney, New South Wales

> Australian Personal Customer Division
Market Briefing – 8 September 2004 –
Melbourne, Victoria

corporate governance I 47

A BALANCED AND WELL QUALIFIED BOARD - SELECTION OF DIRECTORS

> Review of Board-wide
skills, knowledge, experience
and perspective

> Tracking of best practices
and performance of boards
on a global basis

> Identification of gaps
and additional needs

> Appointment and
election at Annual
General Meeting

> Identification of
suitable candidates

BOARD RESPONSIBILITY
AND DELEGATION OF AUTHORITY

The Board is responsible to shareholders
for the governance of the Group, and
oversees its operations and financial
performance. To this end, it sets the
strategic direction and financial
objectives, and monitors operational
performance. It also monitors compliance
in terms of ethical and efficiency
standards and regulatory requirements.
The Board also appoints the Chief
Executive Officer and regularly reviews
his performance.

The ANZ Board is chaired by a non-
executive independent director. Its
structure provides for a division of
responsibility between the Chairman
and the Chief Executive Officer. This is
supported by the ANZ Board Charter
(anz.com>about ANZ>corporate
information> Board Charter) which
states that the Chairman must be an
independent non-executive director
and that the majority of the Board must
comprise independent non-executive
directors.

The Board Charter clearly sets out the
Board’s purpose, powers, and specific
responsibilities. The business of the
Bank is managed under the direction
of the Board. The Board delegates to
the Chief Executive Officer and through
him, to other senior management, the
authority and responsibility for managing
the everyday affairs of the company.
The Board monitors management
and performance on behalf of
shareholders.

ROLE OF CHAIRMAN
The Chairman plays an important
leadership role with ANZ and is
involved in:

> chairing meetings of shareholders and
Board meetings;

> monitoring the performance of the
Board and the mix of skills and
effectiveness of individual contributions;

> maintaining on-going dialogue with the
Chief Executive Officer and appropriate
mentoring and guidance;

> overseeing Board review processes; and

> on-going mentoring of individual
directors.

ACCESS TO DIRECTORS
Management is able to consult with
directors as required on a regular basis.
Employees and shareholders have access
to the directors either directly or through
the Company Secretary.

BOARD COMPOSITION, SELECTION
AND APPOINTMENT
The Board strives to achieve a balance
of skills, knowledge, experience and
perspective among its directors. To
ensure such a balance, the Board
undertook a review of its nomination and
selection process during the year.
The formal process for review and
selection of directors is set out above.

Once a director is selected, there are
several key elements relating to
formalisation of appointment including:

> Adherence to Directors’ Code of Conduct
– This code sets out that directors will
pursue the highest standards of ethical
conduct.

> Meeting shares qualification – ANZ’s
Constitution provides that each director is
required to hold, within 3 months of
appointment, at least 2,000 fully paid
ordinary shares in the director’s own right
and must continue to hold at least 2,000
shares until the director ceases to hold
office. Director shareholdings are set out
on page 67.

> Signing Director’s Deed – The Deed
covers a number of issues including
indemnity, directors’ and officers’ liability
insurance, the right to obtain independent
advice and the requirements concerning
confidential information.

> Receipt of Director Handbook – Each
director receives a handbook which
outlines the director’s principal obligations,
Company policies, charters and processes
as well as Board-specific procedures. It also
sets out details of scheduled Board and
Committee meetings.

> Undertaking Induction training – New
directors take part in a formal induction
program which ensures that directors
meet with ANZ executives and other key
staff members regarding ANZ’s
governance framework, financial
management and business operations.

> Election at next annual general meeting
The ANZ Constitution and the
Corporations Act 2001 both permit the
Board to appoint a person to be a director
of ANZ at any time, but that person must
seek election by shareholders at the next
Annual General Meeting.

NEW DIRECTOR APPOINTMENTS

During this year, ANZ announced the appointment of three new Directors to the Board.

New Director
Greg Clark PhD, BSc(Hons)

Appointment Date
1 February 2004

Experience and expertise
International experience in
computing and technology

New Director
John Morschel DipQS

Appointment Date
1 October 2004

Experience and expertise
Experience as company director
and strong background in
banking and financial services

New Director
David Meiklejohn BCom, DipEd

Appointment Date
1 October 2004

Experience and expertise
Strong background in finance
and as a company director

48 I corporate governance

TENURE AND RETIREMENT
ANZ’s Constitution provides that at least
one third (or the nearest whole number)
of directors must retire at each annual
general meeting, but are eligible for
re-election at that meeting (see box below).

An appointee who is filling a casual
vacancy has to stand for election at the
first Annual General Meeting after their
appointment. This requirement does not
apply to the Chief Executive Officer, or
any director retiring at that meeting in
any event.

ANZ’s Constitution establishes a director
shall retire at 70 years of age, unless
the Board determines otherwise. Also,
directors appointed since 1993 have
agreed to retire after 15 years service.

PERFORMANCE EVALUATIONS
Performance evaluations are conducted
internally and cover the Board, each non-
executive director and Board Committees.

The framework used to assess the
directors is based on the expectation
they are performing their duties in a
manner which should create and
continue to build sustainable value for
shareholders, and in accordance with the
duties and obligations imposed upon
them by the ANZ Constitution and the law.

The performance criteria takes into
account each director's contribution to:

> the charting of direction, strategy and
financial objectives for ANZ;

> the monitoring of compliance with
regulatory requirements and ethical
standards;

> the monitoring and assessing of
management performance in achieving
strategies and budgets approved by the
Board;

> the setting of criteria for, and
evaluation of, the Chief Executive
Officer's performance; and

> the regular and continuing review of
executive succession planning and
executive development activities.

Board and non-executive performance
evaluations are conducted in two ways:

> Annual review - On an annual basis, or
more frequently if appropriate, the
Chairman has a one-on-one meeting with
each director specifically addressing the
performance criteria. In addition, they
discuss the effectiveness of the Board and
related issues including the Board’s
oversight and contribution to the
Company, Board discussion (including the
performance of the non-executive director
and the Chairman), Board memberships,
Committees, and other relevant issues.
They also discuss the performance of the
Board against its Charter. The Chairman
provides a report to the Board on the
outcome of these meetings.

> Re-election statement - Directors when
nominating for re-election are required to
submit a written or oral statement to the
Board setting out the reasons why they
seek re-election. In the director’s absence,
the Board evaluates this statement (having
regard to the performance criteria) when it
considers whether to endorse the relevant
director’s re-election.

Each Board committee conducts a
self-evaluation at least annually (see
page 50).

INDEPENDENCE AND MATERIALITY
Under its Charter, a majority of non-
executive directors on the ANZ Board
must satisfy the criteria for
independence. The Board Charter sets
out independence parameters in order
to establish whether a non-executive
director may have a relationship with
ANZ which could (or could be perceived
to) impede their decision-making.

Directors are required to seek Board

approval before accepting other Board
appointments or appointments
to charitable or other committees.
In addition, directors are required to
inform the Company of appointments or
retirement from external organisations.

In the 2004 financial year, the Board
reviewed its criteria for independence in
respect of the requirements in the ASX
Corporate Governance Council’s Best
Practice Recommendations, NZX and
NYSE Corporate Governance Standards,
and the Sarbanes-Oxley Act of 2002. The
Board adopted standards for determining
non-executive director independence
both for members of the Board and the
Audit Committee (some jurisdictions
apply different tests for the assessment
of Audit Committee independence).
The criteria are more rigid than those set
in most jurisdictions including criteria
stipulated specifically for audit committees.

As set out in the Board Charter, a
relationship with ANZ is material if a
reasonable person in the position of a
non-executive director of ANZ would
expect there to be a real and sensible
possibility that it would influence a
director’s mind in –

> Making decisions on matters likely to
come regularly before the Board or its
committees;

> Objectively assessing information and
advice given by management;

> Setting policy for general application
across ANZ; and

> Generally, carrying out the performance
of his or her role as director.

At its September 2004 meeting, the
Board considered each director’s
independence and in each case
concluded that the independence criteria
were met by all non-executive directors
as set out on page 49.

DIRECTOR RE-ELECTION PROCEDURES

Where a director is due for retirement by rotation at the next Annual General Meeting, the following process is undertaken at the July
meeting of the Board (or earlier) for determining whether the Board endorses the director’s re-election –

STEP 1 - The director is required to submit a written or oral statement to the Board setting out reasons why he/she seeks re-election

STEP 2 - With the director absent from the room, the Board

> Evaluates the director’s re-election having regard for the statement provided and the performance criteria on page 48
> Passes a resolution stating whether or not the Board supports the director’s re-election having regard to the performance criteria on page 48

STEP 3 – Shareholders receive the Notice of Meeting for the upcoming Annual General Meeting which will

> Provide the director’s experience and related details
> State the Board’s resolution on whether or not the Board supports the director’s re-election (an outcome of Step 2)

corporate governance I 49

INDEPENDENCE CRITERIA

In its determination of director independence, the Board includes a review of relationships that directors and their immediate family
members may have such as:

> A relationship as an acquirer of services / and or products
from ANZ and/ or its subsidiaries of the following kind :

> A relationship as a previous employee or partner of ANZ
and/or its subsidiaries

– Personal banking services or products

– Business banking services or products

– Sponsorship or donor funds

> A relationship as a supplier of services and /or products
to ANZ and / or its subsidiaries of the following kind :

– Strategic services / products provider

– Professional services provided as a partner or executive

– Professional services provided as an employee

– Direct compensation from ANZ (and / or its subsidiaries)
of more than $100,000 (other than as director’s fees)

> A relationship as a previous employee or partner of the
external auditor

> A relationship as an executive officer of another company
where any of ANZ’s present executives serve on that company’s
compensation committee

> A relationship with a substantial shareholder or officer of an
organisation that has a holding with 5% or more of the voting
shares in ANZ

> All other material relationships or circumstances by which a
director could be perceived not to be independent of
management and free from any business or other relationship
that could interfere with their independence.

The Board examined acquirer
relationships associated with each
director in respect of the level of lending
and whether ANZ is the sole lender, the
credit rating and whether the account is
in order. Due to privacy regulations, ANZ
is unable to disclose details of acquirer
relationships associated with each
director. The Board concluded that there
was no such situation which would
impact on a director’s independence.

The Board also examined supplier
relationships associated with each
director in respect of the value of the
relationship to the supplier, the service or
product provided and its value as well as
other relevant information. It particulary
noted several director associations as
follows:

> Roderick Deane is Chairman of Telecom
New Zealand Ltd. ANZ acquires

communication services from Telecom
New Zealand for the Company’s New
Zealand operations.

> David Gonski is a director of Westfield
Holdings Ltd. ANZ leases properties from
Westfield for its branch network in Australia.

> Margaret Jackson is Chairman of Qantas
Airways Limited. ANZ has commercial
relationships with Qantas as a partner in
the co-branded ANZ Frequent Flyer Visa
Cards, as a lessor of airport terminal
properties in Australia and New Zealand
for ANZ automatic teller machines (ATMs),
and as an acquirer of travel services for
ANZ people.

In each case, the Board concluded that
having regard to the nature and value
of the commercial relationship and the
materiality criteria described above, each
of Roderick Deane, David Gonski and
Margaret Jackson is independent.

It is Board policy that directors do not
participate in any decisions regarding
transactions with organisations which
they are associated as acquirer or
supplier. Directors’ biographies on pages
42 to 43 highlight their associations
outside of ANZ.

In terms of length of service, the Board
noted that there are three Board
members with service over ten years.
Notwithstanding Charles Goode’s length
of service, the Board members
considered that his tenure does not
interfere with his independence as a non-
executive director or as Chairman. The
Board concluded that the independence
of John Dahlsen and Brian Scott is not
compromised by their service of greater
than ten years.

DIRECTOR INDEPENDENCE REVIEW PROCESS

The review of non-executive director independence is conducted annually and more frequently where a change in position or
relationship warrants it.

Prior to Board meeting

> Non-executive directors
complete an independence
assessment form using the
criteria above

> Responses are collated by
the Company Secretary

During Board meeting

> Each director’s response is
tabled for full Board deliberation

> To reach a balanced decision,
each non-executive director is asked
to leave the Board room during
discussion of his/her independence

Following Board meeting

> Outcome of all independence
determinations are minuted

> Independence status of each
director communicated in the
Annual Report

50 I corporate governance

CONFLICT OF INTEREST
Over and above the issue of
independence, each director has a
continuing responsibility to determine
whether he or she has a potential or
actual conflict of interest in relation to
any material matter which comes before
the Board. Such a situation may arise
from external associations, interests or
personal relationships which might
affect, or be seen potentially to affect,
the director’s position to act in the best
interest of ANZ.

Under the Director’s Disclosure of Interest
Policy and Policy for Handling Conflicts
of Interest (see page 53), the director may
not exercise any influence over the Board
if a potential conflict of interest exists.
The process set out is such that the
director may not receive relevant Board
papers, may not be present for Board
deliberations on the subject, and may
not vote on any related Board resolutions.
These matters are recorded in the Board
minutes when they occur.

INDEPENDENT ADVICE
In order to assist directors to fulfil their
responsibilities, each director has the
right (with the prior approval of the
Chairman) to seek independent
professional advice regarding their
responsibilities at the expense of the
Group. In addition the Board and each
Committee, at the expense of the Group,
may obtain whatever professional advice
it requires to assist in its work.

CONTINUING EDUCATION
ANZ directors take part in a range of training
and continuing education programs.

In addition to a formal induction program,
directors receive regular business unit
briefings at each Board meeting. These
briefings provide directors with an insight
into each area of the Company, in
particular, performance, key issues and
risks, and strategy for growth. Directors
also participate in business unit site visits
which provide them with the opportunity
to meet with staff and customers.

Continuing education sessions are held
throughout the year focussing on a range
of topics including emerging economic
issues, technical developments, pending
legislation, accounting standards,
taxation, risk management and corporate
governance.

BOARD COMMITTEES
Each of the four main Committees is
comprised solely of independent directors,
has its own Charter and has the power to

initiate any special investigations it deems
necessary. Committee membership is
reviewed annually. Membership criteria are
based on a director’s skills and experience,
as well as his/her ability to add value to
the Committee.

The Chairman is an ex-officio member of
all Committees. The Chief Executive
Officer, John McFarlane, is invited to
attend Committee meetings, as
appropriate. His presence is not
automatic, however, and he does not
attend any meeting where his
remuneration is considered or discussed.
Non-executive directors may attend any
meeting of a Committee on a subject
where they have a special interest.

Committee performance self-evaluations
are conducted annually to review
performance against its Charter and goals
set for the year. The suitability of the
Charter and any areas for improvement
are also assessed. The review and stated
objectives for the new financial year are
submitted to the full Board for discussion
and approval.

A copy of each Committee Charter can be
found on anz.com > about anz > corporate
governance.

The Audit Committee is responsible for
oversight and monitoring of:

> the Company’s financial reporting
policies and controls;

> the work of Group (Internal) Audit;

> the Audit Committees of subsidiary
companies such as ANZ National Bank;

> the integrity of the Company’s financial
statements and prudential returns;

> compliance with regulatory requirements;
and

> the appointment, evaluation and
oversight of the external auditor.

It is Board policy that all members of the
Audit Committee be financially literate
and that at least one member of the
Committee be a “financial expert” as
defined in the Sarbanes-Oxley Act.
Ms Jackson was designated as the
“financial expert” for this purpose for the
2004 financial year.

The Audit Committee meets with the
external auditor without management
being present. The Chairman of the Audit
Committee meets separately and
regularly with the Group General Manager
(Internal) Audit and the external auditor.

Some 2004 financial year activities:

> Monitoring the work of Group (Internal)
Audit – During the year, the Committee

appointed a new Group General Manager,
(Internal) Audit. A revised reporting
system, based on a balanced scorecard,
was put in place on the activities of
Internal Audit including audit activities,
governance, staff, customers, quality and
management.

> Revising external auditor policy – The
Policy on Relationship of the External
Auditor Policy was revised during the year
to ensure ANZ continues to meet best
practice in this area.

> Refining external auditor evaluation –
This year the Committee revised its
process for evaluating the external
auditor. The outcome of the evaluation
was reported to the Board.

> Oversighting The National Bank of New
Zealand (NBNZ) acquisition financial
reporting – The Committee monitored
all the financial reporting including
consolidation accounting related to the
NBNZ acquisition.

The Compensation Committee is
responsible for recommendations to the
Board in respect of the Group’s
compensation program including any
equity-based programs. It also evaluates
the performance of and approves the
compensation for the senior executive
officers and Board appointees (including
the Chief Executive Officer) and approves
compensation levels and policy
guidelines.

Some 2004 financial year activities:

> Revising remuneration principles and
processes – A review of ANZ’s
compensation program was conducted
to ensure alignment with best practice
principles. Related changes were
introduced during the year.

> Reviewing performance of senior
executives – The Committee reviewed the
performance of the CEO and the CEO’s
direct reports against agreed
performance measures. Succession
planning was also undertaken.

> Considering non-executive director
compensation and retirement benefits –
In accordance with regulatory and
corporate governance principles, the
Committee reviewed and recommended
changes to the compensation structure
for non-executive directors.

The Nominations & Corporate
Governance Committee’s responsibility is
to identify and recommend prospective
Board members, to recommend
processes for Board performance review
and to recommend corporate governance
principles, practices and procedures
for ANZ.

DIRECTORS' MEETINGS

The number of Board meetings and meetings of Committees 1 October 2003 to 30 September 2004 the director was eligible to attend,
and the number of meetings attended by each director were:

corporate governance I 51

Board

Audit
Committee

6
6

A
5
8
8
8
8
8
8
8
8

B
5
8
8
8
8
8
8
8
8

G J Clark
J C Dahlsen
R S Deane
J K Ellis
D M Gonski
C B Goode
M A Jackson
J McFarlane
B W Scott

Compensation Nominations
Committee

& Corporate
Governance
Committee
B

5
5

6
6

Risk
Management
Committee

Executive
Committee

Shares
Committee

Committee
of the
Board

5
5
5
5

5
5
4
5

4
4
5
7
8
5
10
5

1
1
6

4
2

1
1
6

4
2

3
1

Column A - Indicates the number of meetings the Director was eligible to attend.
Column B - Indicates the number of meetings attended. The Chairman is an ex-officio member of the Audit, Compensation, Nominations & Corporate Governance, and Risk
Management Committees.

Some 2004 financial year activities:

> Refining director independence criteria
- Procedures for confirmation of
independent director status of non-
executive directors were further refined
(see page 49).

> Reviewing nominations procedures -
Procedures for consideration of Board
director nominations were refined and
used during the year (see page 47).

> Developing principles and procedures –
Additional principles and procedures
were developed during the year for
nominations and corporate governance
to ensure ANZ would continue to meet
best practice in these areas.

The Risk Management Committee is
responsible for the review risk in all
aspects of the business. It is responsible
for overseeing, monitoring and reviewing
the Group’s risk management principles
and policies, strategies, processes and
controls including credit, market, balance
sheet, operational risk and compliance.
It may approve credit transactions and
other matters beyond the approval
discretion of executive management.

> Monitoring risks associated with
integration of NBNZ – The Committee
reviewed regular status reports
highlighting key risks and progress by
integration streams for operational risk,
market risk and credit risk
(see page 52).

> Reviewing the Group’s risk culture – To
ensure the correct balance between risk
and reward. A specific compliance
measure was introduced to each
business unit’s balanced scorecard.

> Ensuring timely and necessary
mitigating actions are taken in response
to emerging risk issues - Continued to
review regular reports on key emerging
risks, and appropriate responses to
be taken.

Additional Committees
In addition to the four main Board
Committees, the Board has constituted
a Shares Committee and an Executive
Committee to assist in carrying out its
functions.

COMMITTEE MEMBERSHIPS 1 OCTOBER 2003 to 30 SEPTEMBER 2004

Audit
Committee

Compensation
Committee

Nominations and Corporate Risk Management
Governance Committee

Committee

John Dahlsen (C)

Margaret Jackson (C)

Brian Scott (C)

Jerry Ellis

Roderick Deane

John Dahlsen

Margaret Jackson (FE)

Brian Scott

David Gonski

Charles Goode
(ex-officio)

C = Chairman

FE = Financial Expert

Jerry Ellis (C)

Roderick Deane

David Gonski

Charles Goode
(ex-officio)

The Executive Committee has the full
power of the Board and is convened as
necessary between regularly scheduled
Board meetings. The Board also forms
and delegates authority to ad hoc
Committees of the Board as and when
needed to carry out its functions.

The Shares Committee has the power to
administer ANZ’s Employee Share Plan
and Employee Share Option Plan.

ROLE OF COMPANY SECRETARY
The Board is responsible for the
appointment of ANZ’s Company
Secretaries. Currently there are three
people appointed as Company Secretary.
For management and corporate
governance purposes the following
structure operates.
> The Group General Counsel and
Company Secretary is normally in
attendance at all Board and Committee
meetings. He prepares drafts of minutes
and provides legal advice to the Board if
and when required. He works closely with
the Chair of the Nominations and
Corporate Governance Committee to
develop and maintain ANZ’s corporate
governance principles. He is responsible
to the Board for the Company Secretary
Office function.
> The Company Secretary is responsible
for day-to-day operations of the Company
Secretary’s Office including ANZ’s
continuous disclosures to relevant stock
exchanges under the Market (continuous)
Disclosure policy, the management of
dividends, and the relationship with the
share registry provider.
> The Chief Financial Officer is also
appointed as Company Secretary.
Profiles of ANZ’s Company Secretaries
can be found in the Directors’ Report
on page 76.

52 I corporate governance

RISK MANAGEMENT AND
COMPLIANCE
ANZ’s business controls are governed by
an ongoing focus on risk and compliance
issues within the framework of the
Company’s overall strategy. ANZ has
established a comprehensive risk and
compliance management framework to
ensure best practice alignment.

In terms of risk management and
compliance, the Board provides
leadership, oversees risk appetite
and strategy, and ensures a robust
risk and compliance culture pervades.

The Risk Management Committee
of the Board oversees the Group’s risk
management policies and controls, may
approve credit transactions and other
matters beyond the approval discretion
of executive management.

The risks may be broadly grouped under
the four categories noted below. On a
day-to-day basis, the various risks inherent
in ANZ’s operations are managed by both
Group Risk Management and each
business unit.

> Credit Risk – From a credit risk
perspective, the risk environment for ANZ
has improved over the year and the focus
has been maintained on areas of concern
in our portfolios. ANZ has remained
vigilant in reducing domestic and offshore
credit risk levels.

> Market Risk – During the year, ANZ
conducted a detailed review of its trading
risks and controls. This review concluded
that ANZ’s market control framework was
appropriate for the scope and volume of
trading activity undertaken. The market
risk control framework has been
strengthened by the implementation of a
single integrated front-office system for the
Capital Markets business.

> Operational Risk – Significant
improvements have been achieved during
the year in the Group's framework for
operational risk measurement and capital
allocation. Additional operational risk
improvements include:

– Technology and Projects - A specialist
Technology Risk function has been
established within Group Risk
Management to enhance the approach
to technology risk management and to
provide additional focus on large risk
technology projects.

– Fraud - Fraud prevention and detection
remained a key focus area for risk
management, especially due to the
growing trend in electronic fraud. ANZ uses
technical tools to detect anomalies in
customer transactions to reduce potential

fraudulent activity. Education continues to
be an essential component in fraud
prevention for both staff and customers.

– Business Continuity and Crisis
Management - The continuous monitoring
of country security risk has been
strengthened by the implementation of
a country security risk rating framework
which assists ANZ’s response to changing
risks in the international business
environment and the ongoing safety
of ANZ’s staff and operations.

> Compliance – A dedicated compliance
function within Group Risk Management
is responsible for the Group’s overall
compliance framework, across all
regulatory and internal operating policy
requirements.

For further information on risk
management, please see pages 16 to 17.

FINANCIAL CONTROLS
As previously noted, the Audit Committee
of the Board oversees the Company’s
financial reporting policies and controls,
integrity of the Company’s financial
statements, the work of Group (internal)
Audit, the Audit Committees of the
subsidiary companies, prudential returns
and compliance with related regulatory
requirements.

To further strengthen controls and
procedures, the Committee agreed that
the Company would undertake a Group-
wide program focusing on Section 404
of the Sarbanes-Oxley Act of 2002.

ANZ is in the process of assessing
its readiness to meet Section 404
requirements of the Act. In doing so,
ANZ assesses the appropriateness of
internal controls of financial reporting and
the financial control activity level relative
to key accounts and locations of
operations. The program is being
instituted at both Company and business
unit level and is oversighted by a
program steering committee. ANZ is well
progressed in its assessment program
and expects to be in full compliance with
this section of the Act during the financial
year to 30 September 2005, ANZ’s first
reporting date after the compliance date
of the Act.

AUDIT
Group (Internal) Audit

Group (Internal) Audit provides
independent assurance that the design
and operation of the risk and control
framework across the Group is effective.
The internal audit function operates under
a Charter from the Audit Committee that
gives it unrestricted access to review all
activities of the Group. The Group General

Manager, (Internal) Audit reports to the
Chairman of the Audit Committee.

The Audit Committee monitors the
performance of Group (Internal) Audit
and the Group General Manager,
(Internal) Audit.

A risk-based audit approach is used to
ensure that the higher risk activities in
each business are audited each year. All
audits are conducted in a manner that
conforms to international auditing
standards. Audit results also influence
incentive compensation of business heads.

Group (Internal) Audit plays an active role in
ensuring compliance with the requirements
of supervisory regulatory authorities. Group
(Internal) Audit also works collaboratively
with the external auditor to ensure a
comprehensive audit scope.

The Audit Committee plays an active role
in reviewing significant issues arising from
internal audits conducted by Group
(Internal) Audit. There is a robust process
for ensuring prompt resolution of audit
issues, which includes monthly reviews of
progress by the Chief Executive Officer
and the Chairman of the Audit Committee.
The Audit Committee also receives formal
reports on significant issues until
satisfactory action has been taken.

External Audit
The external auditor’s role is to provide
reasonable assurance that ANZ’s financial
reports are accurate and free from
material misstatement. The external
auditor is to perform independent audits
in accordance with Australian Accounting
Standards. The external auditor provides
reports directly to the Audit Committee.
During the year, the Audit Committee
further strengthened ANZ’s Relationship
with External Auditor policy. Under the
policy, the Audit Committee is responsible
for the appointment (subject to ratification
by shareholders), compensation, retention
and oversight of the external auditor.
The policy also stipulates that the Audit
Committee:
> Pre-approves all audit and non-audit
services;

> Regularly reviews the independence of
the external auditor;

> Evaluates the effectiveness of the
external auditor .

In addition, ANZ requires a two-year period
before any former partner or employee of
the external auditor is appointed as a
director or senior executive of ANZ.

The lead partner position of the external
audit should rotate off the ANZ audit after
five years and cannot return for a further
five years. Other senior audit staff are
required to rotate off after a maximum of
seven years.

corporate governance I 53

Any potential appointments of ex-partners
or ex-employees of the external auditor to
the ANZ finance staff, at senior management
level or higher, must be pre-approved by the
Chairman of the Audit Committee.

Details on non-audit service can be found in
the Directors’ Report on page 76.

In the context of the US auditor
independence rules, the SEC has requested

that ANZ produce information relating to
non-audit services provided by ANZ’s
auditor, KPMG.

ANZ is currently providing information as
requested.

Whilst ANZ cannot predict the outcome of
the inquiry, based on information currently
available, ANZ does not believe it will have
a material adverse effect on the Company.

Should the SEC determine that services
provided by KPMG did not comply with these
rules, the SEC may seek sanctions, the
nature and amount of which are not known.

POLITICAL DONATIONS
In the year to 30 September 2004, ANZ
donated $150,000 to the Liberal Party
and $95,000 to the Labor Party.

Creating sustainable value for shareholders, staff, customers and the community

ANZ’S CODES OF CONDUCT
AND POLICIES
Below is an overview of ANZ’s key codes
and policies which apply to directors and
employees within the Group. Summaries
of these policies can be found on anz.com
> about anz > corporate governance.
> Codes of Conduct for Directors and for
Employees – These policies set out the
ethical standards to which directors and
employees are expected to adhere. The
Codes require that directors and
employees adhere to the law, and that
they disclose any relevant interests, that
they act in the best interests of the Group
and that they act honestly and ethically in
all their dealings. The codes also cover
the confidentiality of information, limits
on acceptance of gifts or entertainment
and on use of ANZ goods, services and
facilities. Key contact – Group General
Counsel and Company Secretary.
> Code of Conduct for Financial Officers –
(adopted from the Group of 100 Code of
Conduct for CFOs and Senior Financial
Officers) The Code requires that Chief
Financial Officers and other finance staff
influencing financial performance adhere
to principles of honesty and integrity,
respect confidentiality of information,
declare conflicts of interest, maintain
transparency in reporting, exercise
diligence and good faith, ensure sound
internal controls and set a standard for
other financial professionals. Key contact
– Chairman of the Audit Committee.
> Critical Accounting Policies – Details of
the critical accounting policies and any
changes in accounting policies made
since the date of the 2003 Annual Report
are set out on page 82 and in the
Financial Report on pages 130 to 134.
> Directors’ Disclosure of Interests Policy
and Policy for Handling Conflicts of
Interests – The Board has adopted a
policy on disclosure of interests requiring
that directors disclose certain interests,
and actual or potential conflicts of
interest are addressed. Details of
directors’ dealings with ANZ are set out in
Note 52 of the Financial Report. Key
contact – Group General Counsel and
Company Secretary.

> Employee Indemnity Policy – This
policy provides that the Group will
indemnify employees against any liability
that they incur in carrying out their role
subject to meeting certain requirements.
Further details on this policy and on
indemnities given to certain employees
can be found on page 77 of this Annual
Report. Key contact – General Manager
Operational and Technology Risk.
> Policy on the Prevention of Money
Laundering, Criminal and Terrorist
Financing – This policy covers Anti-Money
Laundering and Anti-Terrorism laws and
regulations. It sets out principles related
to identification and record keeping
procedures, the need for staff awareness
and related training, and annual
requirements for independent testing and
compliance reporting. The policy is aimed
at ensuring that ANZ is able to protect its
reputation, integrity, assets, liabilities
and shareholder funds. Key contacts –
General Manager Operational and
Technology Risk and General Manager
Group Compliance.
> Market (Continuous) Disclosure Policy
– ANZ is committed to achieving best
practice in the area of continuous
disclosure. The policy is designed to
ensure that there is full and timely
disclosure of ANZ’s activities to
shareholders and the market. The policy
requires that information disclosed to the
relevant stock exchanges is placed on
ANZ’s website. Key contacts – Head of
Investor Relations, Head of Media
Relations, Company Secretary.
> Policy on Relationship with External
Auditor – The Board and the Audit
Committee’s policy on audit and non-
audit services regulates the audit-related
and non-audit services that may be
conducted by ANZ’s external auditor. It
sets in place a formal approval process
regarding the provision of audit and non-
audit services. This approval process is
the responsibility of the Audit Committee.
In addition it sets out the rotation
requirements for the lead partner and
other members of the audit team, and
processes related to the potential
appointment of ex-partners or ex-

employees of the external auditor.
Key contact – Chairman of the Audit
Committee.
> Whistleblower Policy (formerly known
as Serious Complaints Policy) – The
Whistleblower Process is an additional
mechanism by which ANZ staff,
contractors and consultants may voice
any concerns they may have regarding
any malpractice or impropriety that they
find within ANZ. It requires that
protection be given to employees against
dismissal or penalty as a result of
disclosing concerns in good faith. Key
contacts – Group General Manager,
(Internal) Audit and Group General
Counsel and Company Secretary.
> Share Trading Policy – This policy
covers trading in ANZ securities by all
employees, contractors and consultants
engaged by ANZ. The policy prohibits
trading in ANZ securities or the securities
of other entities for all persons aware of
unpublished ANZ price sensitive
information. In addition, it specifically
prohibits trading by certain employees,
contractors and consultants working in
specific areas of ANZ during blackout
periods. A blackout period is the six-
week period leading up to the day after
the announcement of the half yearly and
full year results. The Board has also
resolved to apply the principles of this
policy to directors’ own trading in ANZ
shares. Key contact – Head of Investor
Relations.
> New Zealand Policies – Recognising the
importance of ANZ’s presence in New
Zealand and the requirements of the
Reserve Bank of New Zealand, the ANZ
National Bank Limited Board reviews and
approves all ANZ Group governance and
risk management polices before they are
adopted by ANZ National Bank to ensure
that they meet all New Zealand regulatory
requirements.
> Other Company Policies – Can be
found on anz.com. Operational policies
may not be publically available.

54 I remuneration report

REMUNERATION REPORT

CONTENTS

Section A. Remuneration Tables

Section D. Chief Executive Officer’s Remuneration

Section B. Non-Executive Directors’ Remuneration

Section E. Specified Executives’ Contract Terms

Section C. Remuneration Structure

Section F.

Equity Instruments relating to Directors and Specified Executives

SECTION A. REMUNERATION TABLES
For the year ended 30 September 2004 details of the emoluments of the directors are set out below:

Non-executive Directors1

CB Goode (Appointed director July 1991;
appointed Chairman August 1995)
Independent Non Executive Director, Chairman

G Clark (Appointed February 2004)
Independent Non Executive Director

JC Dahlsen (Appointed May 1985)7
Independent Non Executive Director

RS Deane (Appointed September 1994)
Independent Non Executive Director

JK Ellis (Appointed October 1995)
Independent Non Executive Director

DM Gonski (Appointed February 2002)
Independent Non Executive Director

MA Jackson (Appointed March 1994)
Independent Non Executive Director

BW Scott (Appointed August 1985)7
Independent Non Executive Director

TOTAL OF NON-EXECUTIVE DIRECTORS

Executive Director

J McFarlane (Appointed October 1997)
Chief Executive Officer

TOTAL OF ALL DIRECTORS

Cash
salary/fees

Long service
leave accrued
during
the year
$

PRIMARY3

Value of shares
aquired in
lieu of cash
salary/fees2
$

91,000

76,000

86,667
n/a

130,000
110,000

103,000
110,000

130,000
110,000

130,000
88,000

130,000
110,000

930,667
714,000

n/a

n/a
n/a

338,000

274,000

–
n/a

–
–

27,000
–

–
–

–
22,000

–
–

365,000
296,000

438
702,565

930,710
1,416,565

78,211
23,431

1,882,831
709,685

2,247,831
1,005,685

Associated entity
board fees (cash)

–

–
n/a

–
–

117,9589
100,996

–
–

50,150
42,500

–
–

24,389
–

192,497
143,496

–
–

192,497
143,496

2004

2003

2004
2003

1 DE Meiklejohn and JP Morschel commenced as directors on 1 October 2004

2 Shares acquired through participation in Directors' Share Plan (relates to CEO only in relation to cash bonus, as Non-Executive Directors do not participate in short-term incentive arrangements).

Value reflects the price at which the shares were purchased on market (amortisation not applicable)

3 Non-monetary benefits for all directors are nil

4 Accrual relates to Directors' Retirement Scheme. If each non-executive director had ceased to be a director as at 30 September 2004, the following benefits would have been payable under the
Directors' Retirement Scheme: CB Goode - $1,069,255; G Clark - $33,008; JC Dahlsen - $402,365; RS Deane - $644,116; JK Ellis - $412,058; DM Gonski - $146,725; MA Jackson - $366,690;
BW Scott - $389,125. The Directors' Retirement Scheme is being reviewed and it is currently planned to be discontinued after 30 September 2005

5 Details of options and deferred shares granted appear in the Annual Report of the year in which they are granted. In accordance with the requirements of AASB1046A, the amortisation value includes a
proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet fully vested as at the commencement of the financial year. It is assumed that 100% of the
options will vest at the commencement of their exercise period (ie the shortest possible vesting period is assumed). The fair value is determined at grant date and is allocated on a straight-line basis
over the shortest possible vesting period. The fair value is determined using a binomial option pricing model that is explained in section F8. The amount included as remuneration is not related to nor
indicative of the benefit (if any) that may ultimately be realised should the options become exercisable

remuneration report I 55

Committee
fees
(cash)

Value of shares
aquired in lieu
of cash bonus2

–

10,834
n/a

65,050
25,000

19,500
–

52,250
25,000

16,050
–

42,250
–

30,750
25,000

236,684
75,000

–
–

236,684
75,000

n/a

n/a
n/a

1,850,006
982,121

Primary
total

429,000

350,000

97,501
n/a

195,050
135,000

267,458
210,996

182,250
135,000

196,200
152,500

172,250
110,000

185,139
135,000

1,724,848
1,228,496

3,811,091
2,417,802

5,535,939
3,646,298

POST EMPLOYMENT

EQUITY5

OTHER6

Super
contributions

Retirement
benefit accrued
during the year4

Total
amortisation of
LTI options

11,297

10,520

7,597
n/a

11,296
10,520

10,321
9,900

11,297
10,520

10,899
9,900

11,297
10,520

85,301
72,400

417,00010
87,750

502,301
160,150

99,586

16,996

33,008
n/a

74,356
22,430

70,998
17,151

65,780
23,384

67,227
49,078

56,352
(5,562)11

64,839
15,950

532,146
139,427

–
–

532,146
139,427

n/a

n/a
n/a

–

–
n/a

–
–

Total

539,883

377,516

138,106
n/a

280,702
167,950

348,777
238,047

259,327
168,904

274,724
212,098

239,501
114,338

261,275
161,470

2,342,295
1,440,323

2,584,88012
2,538,759

2,584,880
2,538,759

90,61913
–

90,619
–

6,903,590
5,044,311

9,245,885
6,484,634

Amounts disclosed for remuneration of directors exclude insurance premiums paid by the consolidated entity in respect of directors' and officers' liability insurance contracts which cover current
and former directors and officers, including executive officers of the entity and directors, executive officers and secretaries of the controlled entities. The total premium, which cannot be disclosed
because of confidentiality agreements, has not been allocated to the individuals covered by the insurance policy as, based on all available information, the directors believe that no reasonable
basis for such allocation exists

JC Dahlsen and BW Scott will be retiring as directors on 3 February 2005 and 23 April 2005 respectively

J McFarlane elected to use almost all his cash salary and bonus to purchase on market deferred shares under the Directors' Share Plan.

Amounts paid in NZD are converted to AUD at an average rate for the year of 1.1254 (1.1139 in 2003)

10 Includes $300,000 additional employer contribution, agreed as part of contract extension announced 26 October 2004 (refer to section D2)

11 In accordance with the ANZ Directors' Retirement Scheme (explained in section B2), MA Jackson's Retirement Benefit accrued during the year is shown as negative because the increase in the

balance held in the ANZ Staff Superannuation Scheme (for the year ended 30 September 2003) exceeded the increase in other remuneration for the 3 preceeding years (ie from the 3-year period
ended 30 September 2002 to the 3-year period ended September 2003)

12 Amortisation value of options as a percentage of total remuneration (as shown in the Total column above) was 37% in 2004 (50% in 2003)

13 Relates to reimbursement to J McFarlane for the additional tax liability on his UK Pension Plan holdings, arising as a result of Australian Foreign Investment Fund rules, and J McFarlane’s continuing

Australian residency (in accordance with the contractual agreement detailed in section D2)

56 I remuneration report

For the year ended 30 September 2004 details of the emoluments of the top seven executives (Specified Executives), other than the
Chief Executive Officer, are set out below and include the five most highly remunerated executives in the Company and the Group
(as required under the Corporations Act 2001) and the top executives in the Group by authority (as required by AASB1046):

Specified Executives

Sir J Anderson (appointed 1 December 2003)7

Chief Executive & Director, ANZ National Bank Limited

Dr RJ Edgar

Chief Operating Officer

E Funke Kupper8

Group Managing Director Asia-Pacific

BC Hartzer9

Group Managing Director Personal Banking

PJO Hawkins

Group Managing Director Group Strategic Development

PR Marriott

Chief Financial Officer

S Targett (appointed 5 May 2004)

Group Managing Director Institutional Financial Services

TOTAL

Cash
salary/fees

672,792
n/a

723,651
583,500

654,550
654,850

543,062
454,072

551,625
593,432

728,451
654,850

305,407
n/a

Long service
leave accrued
during
the year
$

–
n/a

56,212
2,399

10,846
10,865

15,694
11,812

11,678
11,646

29,098
10,865

5,101
n/a

PRIMARY

Non monetary
benefits1

–
n/a

31,552
31,144

7,277
6,869

57,091
65,425

7,277
6,869

2,934
n/a

4,179,538
2,940,704

128,629
47,587

113,408
117,176

2004
2003

1 Non monetary benefits provided to Specified Executives consist of salary packaged items such as car parking and novated lease motor vehicles

Total cash bonus relates to the cash component provided as part of ANZ's short-term incentive program in May 2004 (50% cash) and the full bonus amount from
October 2004 (which was 100% cash, except in those instances where the Specified Executive elected to receive shares in lieu, in which case the value of these elective shares are shown above as
though they were cash). Refer to section C5.1 for further details

3 Details of options and deferred shares granted appear in the Annual Report of the year in which they are granted. In accordance with the requirements of AASB1046A, the amortisation value includes
a proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet fully vested as at the commencement of the financial year. It is assumed that 100% of
the options will vest at the commencement of their exercise period (ie the shortest possible vesting period is assumed) and that deferred shares will vest after 3 years. The fair value is determined at
grant date and is allocated on a straight-line basis over the 3-year vesting period. For options, the fair value is determined using a Binomial Option Pricing model that is explained in section F8.
For deferred shares, the fair value is the weighted average price of the Company's shares on the allocation date. The amount included as remuneration is not related to nor indicative of the benefit
(if any) that may ultimately be realised should the options become exercisable

Accrual relates to Retirement Allowance (refer to section E for further details)

remuneration report I 57

EQUITY3

POST EMPLOYMENT

Total cash
bonus2

Total
amortisation
value of STI
shares
$

Total
amortisation
value of LTI
shares
$

Total
amortisation
value of LTI
options
$

Total
amortisation of
other equity
allocations
$

335,881
n/a

393,000
222,004

385,500
210,008

424,000
165,005

325,000
200,016

482,000
239,017

267,000
n/a

–
n/a

197,681
236,895

232,208
315,650

201,364
272,484

214,906
280,451

243,435
295,927

–
n/a

342,662
141,264

232,024
233,812

192,239
141,682

206,975
219,660

276,714
255,135

–
n/a

256,110
201,924

333,500
452,430

298,814
265,593

293,966
347,032

369,376
394,675

–
n/a

2,612,381
1,036,050

1,089,594
1,401,407

1,250,614
991,553

1,551,766
1,661,654

219,168
n/a

–
–

188,08110
n/a

407,249
–

Super
contributions

67,279
n/a

46,752
38,025

40,950
40,950

37,224
32,175

43,875
43,875

45,542
40,950

18,976
n/a

Retirement
benefit
accrued during
year4
$

32,160
n/a

7,163
10,276

–
–

2,947
2,979

–
–

–
n/a

Total5,6

1,327,280
n/a

2,054,783
1,467,431

1,896,855
1,925,434

1,769,488
1,408,248

1,658,249
1,705,960

2,181,893
1,898,288

787,499
n/a

300,598
195,975

42,270
13,255

11,676,047
8,405,361

Amounts disclosed for remuneration of Specified Executives exclude insurance premiums paid by the consolidated entity in respect of directors’ and officers’ liability insurance contracts which cover
current and former directors and officers, including executive officers of the entity and directors, executive officers and secretaries of the controlled entities. The total premium, which cannot be
disclosed because of confidentiality agreements, has not been allocated to the individuals covered by the insurance policy as, based on all available information, the directors believe that no
reasonable basis for such allocation exists.

Amortisation value of options as a percentage of total remuneration (as shown in the Total column above) was as follows: Sir J Anderson - 16% (n/a in 2003); RJ Edgar - 12% (14% in 2003);
E Funke Kupper - 18% (23% in 2003); BC Hartzer - 17% (19% in 2003); PJO Hawkins - 18% (20% in 2003); PR Marriott - 17% (21% in 2003); S Targett - 12% (n/a in 2003)

Amounts paid in NZD are converted to AUD at an average rate for the year of 1.1254. Amortisation of other equity allocations for Sir J Anderson relates to the granting of zero priced options (ZPO)
and shares issued under ANZ's $1,000 Employee Share Acquisition Plan (ESAP). ZPOs are granted under the ANZ Share Option Plan and have a nil exercise price and no time-based vesting criteria.
They were designed to deliver equity to the CEO of National Bank of New Zealand and were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ.
Refer to section C7 for further details pertaining to the $1,000 ESAP

E Funke Kupper was the Managing Director of Personal Banking & Wealth Management Australia prior to 1 May 2004

9 BC Hartzer was the Managing Director of Consumer Finance prior to 1 May 2004

10 Amortisation of other equity allocations for S Targett relates to the grant of deferred shares (four tranches of $700,000 to be issued at 6 month intervals in approximately April and October each year,
subject to Board approval and continued employment) and hurdled options (refer to section C5.2.1 for performance hurdle details) to compensate S Targett for the loss of access to equity as a result
of his resignation from his previous employer

58 I remuneration report

SECTION B. NON-EXECUTIVE
DIRECTORS' REMUNERATION

B1. NON-EXECUTIVE DIRECTORS'
REMUNERATION POLICY

Non-executive directors' fees are reviewed
annually and are determined by the Board
of Directors based on advice from external
advisors and with reference to fees paid to
other non-executive directors of
comparable companies.

Non-executive directors' fees are within
the maximum aggregate limit agreed to
by shareholders at the Annual General
Meeting held on 13 December 2002
($2.5 million, excluding retirement
allowances), and are set at levels that
fairly represent the responsibilities of,
and the time spent by, the non-executive
directors on Group matters.

Directors receive a fee for being a director
of the Board, and also additional fees for
either chairing or being a member of a
committee. Special work on committees
may attract additional fees, of an amount
considered appropriate in the
circumstances. An additional fee is also
paid if a non-executive director serves as
a director of ANZ National Bank Limited,
ING Australia Ltd or Metrobank Card
Corporation.

The fee structure is illustrated in the table
below:

Role

Chairman
Non-executive director
Committee Chair1
Committee Member1

Current Fee

$429,000
$130,000
$32,500
$9,750

1 Except Nominations & Corporate Governance Committee,

where the current Chair and Member Fees
are $21,000 and $6,300 respectively.

Directors may elect to take all or part of
their fees in shares under the Directors'
Share Plan (refer to section B3 for more
details).

For details of emoluments paid to
directors for the year ended
30 September 2004, refer to the
Remuneration tables in section A
of this Remuneration Report.

B2. NON-EXECUTIVE DIRECTORS'
RETIREMENT POLICY

All non-executive directors participate in
the ANZ Directors' Retirement Scheme.
Under this scheme, a lump-sum retirement
benefit is payable to non-executive directors
upon their ceasing to be a director.
The lump-sum retirement benefit payable
where the non-executive director has held
office for 8 years or more is equal to the
total remuneration (excluding retirement
benefit accrual) of the non-executive
director in respect of the 3 years
immediately preceding the non-executive
director ceasing to be a non-executive
director. This benefit is funded in part
by the balance held, if any, on the
non-executive director’s behalf in the
ANZ Staff Superannuation Scheme.
For periods of less than 8 years, a
proportionate part of such emoluments is
payable. The non-executive directors are
not entitled to the statutory entitlements
of long service leave and annual leave.

Consistent with Principle 9.3 of the
Australian Stock Exchange (ASX) Corporate
Governance Rules, which states that
non-executive directors should not be
provided with retirement benefits other
than statutory superannuation, the ANZ
Directors' Retirement Scheme is being
reviewed and it is currently planned to be
discontinued after 30 September 2005.

B3. DIRECTORS’ SHARE PLAN

The Directors' Share Plan is available to
both non-executive and executive
directors. Directors may elect to forgo
remuneration to which they may have
otherwise become entitled and receive
shares to the value of the remuneration
forgone. Participation in the plan is
voluntary and therefore the shares
acquired are not subject to performance
conditions.

Shares acquired under the plan are
purchased on market and are held in trust
for up to 10 years. The director selects a
restriction period of between 1 and 10
years during which the shares cannot be
traded. The shares are subject to
forfeiture for serious misconduct.
All costs associated with the plan are
met by the Company.

remuneration report I 59

C4. FIXED REMUNERATION

For most executives, fixed remuneration
consists of what is referred to as Total
Employment Cost (TEC). TEC comprises a
notional cash salary, a superannuation
contribution (calculated as 9% of the
notional salary except for Sir J Anderson
who receives a superannuation
contribution equal to one eleventh of TEC)
and the remainder as cash or nominated
benefits. The types of benefits that can
be packaged by executives include
novated car leases, additional
superannuation contributions, car
parking, child care and contributions
towards the Employee Share Save Scheme
(see note 50 of the 2004 Financial Report
for details of the Employee Share Save
Scheme).

To ensure fixed remuneration for the
Company's most senior executives
remains competitive, the TEC component
of executive compensation is reviewed
annually based on performance and
market data, with the level targeted to
around the market median being paid in
the finance industry in the relevant global
markets in which ANZ operates.

International remuneration levels are
considered in assessing market
competitiveness where an executive's
primary place of residence is (or has been)
outside of Australia or New Zealand, in
which case the local market is considered.

SECTION C. REMUNERATION
STRUCTURE

C3. REMUNERATION STRUCTURE
OVERVIEW

ANZ's reward structures are designed to
meet the needs of the specialised
business units as well as the markets in
which they operate. As a result, the mix of
remuneration components can vary across
the organisation although, where
practicable, ANZ applies structures and
opportunities on a consistent basis for
similar roles and levels. There is a strong
emphasis on variable pay opportunities
with total employee remuneration
differentiated significantly on the basis
of performance.

The executive remuneration program is
designed to support the reward
philosophies detailed in section C1, and to
underpin the Company’s growth strategy.
This program aims to differentiate
remuneration on the basis of achievement
against both individual, business unit and
group performance targets which are
aligned to sustained growth in
shareholder value.

The program comprises the following
components:

> Fixed remuneration component:
salary, non-monetary benefits and
superannuation contributions.

> Variable or "at risk" component:

- Short-Term Incentive (STI); and

- Long-Term Incentive (LTI), which
consists of options and deferred
shares

The relative weighting of fixed and
variable components, for target
performance, is set according to the size
or market of the executive's role, with the
proportion of remuneration "at risk"
increasing for the most senior or complex
roles, or for those roles where there is
strong market pressure to provide greater
levels of remuneration. Compared to the
market, fixed remuneration levels are
designed to be around median, as are the
variable components - STI and LTI - except
in cases of superior performance where
total remuneration is designed to reflect
the upper range of competitive market
levels. In this way the remuneration
structure is heavily weighted towards
"reward for performance".

C1. EXECUTIVE REMUNERATION
PHILOSOPHY AND OBJECTIVES

ANZ's reward policy guides the
Compensation Committee and
management in shaping remuneration
strategies and initiatives.

The following philosophies underpin ANZ's
reward policy:

1. Focus on creating and enhancing value
for ANZ's shareholders;

2. Differentiation of individual rewards
commensurate with contribution to overall
results and according to individual
accountability, performance and potential;

3. Significant emphasis on "at risk"
components of total rewards linked to the
enhancement of shareholder value through
improvements in Economic Value Added™
(EVA™); and

4. The provision of a competitive reward
proposition to successfully attract, motivate
and retain the high quality workforce
required to deliver ANZ's business and
growth strategies.

During 2004 a comprehensive review of
reward structures has been conducted
against the backdrop of these philosophies
and against the Company's growth strategy
and corporate governance principles.
As a result, a number of changes to reward
structures are planned for the first half of
the 2005 financial year. These changes are
detailed in section C5 of this Remuneration
Report.

C2. COMPENSATION COMMITTEE

The Compensation Committee has a charter
which details the terms of reference under
which the Committee operates. The Charter
can be found on anz.com > about ANZ
(listing at top of screen) > Corporate
Information > ANZ Policies > Corporate
Governance and Policies.

The role of the Compensation Committee is
detailed on page 50 of the Corporate
Governance Report.

On a number of occasions throughout the
year, both the Compensation Committee
and management received external advice
on matters relating to remuneration. The
following advisors were used: Hay Group;
Blake Dawson Waldron; Freehills; Mercer
Human Resource Consulting; and
PricewaterhouseCoopers.

60 I remuneration report

C5. VARIABLE REMUNERATION

Variable remuneration forms a significant
part of executives' potential remuneration,
providing an at-risk component that is
designed to drive performance in both the
short-term (semi annually or annually)
and in the long-term (over 3 years or more).

The opportunities available to executives
under ANZ's variable reward programs are
calibrated to reflect executives' potential
impact on the business; to manage
internal relativities; and to ensure
competitiveness in the relevant markets
in which they operate.

Most executives participate in the
short-term incentive scheme detailed in
section C5.1. All executives participate
in the long-term incentive plan detailed in
section C5.2, subject to individual
performance thresholds. In some instances,
customised short-term incentive plans will
exist that executives may participate in to
ensure more precise alignment with
business objectives and market practice.
No executives however, may participate in
more than one short-term incentive plan.

C5.1 Short-term Incentives
Short-term incentive (STI) payments
encourage executives to support ANZ's
strategic objectives by providing rewards
that are significantly differentiated on the
basis of achievement against performance
targets. Most executives participate in the
scheme explained below. All short-term
incentive schemes are reviewed by the
Compensation Committee.

The size of STI payments are based, firstly,
on overall group and business unit
performance results against a balanced
scorecard and, secondly, on individual
performance against financial and
non-financial measures.

> Group and business unit performance
is assessed against a number of
qualitative and quantitative measures
consistent with the ANZ Balanced
Scorecard Approach. Measures include
but are not limited to:

> Change in Economic Value
Added (EVATM);

> Customer Satisfaction;

> Employee Engagement;

> Risk Management; and

> Compliance.

Performance against these measures
influences the size of the incentive pool
available to individuals within each
business unit.

> For individual performance, executives
are ranked against their peers, with better
relative performance attracting a greater
proportion of the incentive pool.
Individual Key Result Areas (KRAs) are set
annually to support the Company
objectives stated in the Balanced
Scorecard noted above, and performance
against these KRAs is used as an input to
assessing relative ranking.

Up until May 2004, STI payments have
been made each half year and a portion of
them have been paid in shares deferred
for 3 years (STI deferred shares).

STI deferred shares have the following
conditions attached:

> Shares are subject to a time-based
vesting hurdle of 3 years, during which
time they are held in trust;

> During the deferral period, shares
attract dividends that are paid directly to
the employee; and

> Shares issued under this plan may be
held in trust for up to 10 years.

The value used to determine the number
of STI shares to be allocated has been
based on the volume weighted average
price of the Company’s shares traded on
the ASX in the week leading up to and
including the date of issue.

From October 2004, performance will
continue to be measured every 6 months,
but payments will be made annually.
Furthermore, bonuses are to be paid
100% in cash (except where specific
business schemes require otherwise, or
executives elect to receive shares in lieu).
This change, together with the changes
being made to our long-term incentive
program, is designed to increase the
competitiveness and clarity of purpose of
the Company's reward structures.

C5.2 Long-term Incentives
Long-term incentives (LTIs) are used as a
mechanism to link a significant portion of
executives' compensation to the
attainment of sustained growth in
shareholder value. The size of LTI grants is
determined by the Company’s
performance and an individual's level of
responsibility, performance and the
assessed potential of the executive.
Allocations have typically been made in or
around April and October each year,
although after 2004 the grants will be
made annually in or around November.

There are two components to LTI, each
making up approximately half of the
annual LTI grant value:

> Options; and

> Deferred Shares.

Upon exercise, each option entitles the
option holder to one ordinary share.

The conditions under which shares and
options are granted are approved by the
Board in accordance with the rules of both
the ANZ Employee Share Acquisition Plan
and the ANZ Share Option Plan.
Performance conditions are explained in
more detail below, including changes
planned for the coming year.

C5.2.1 Options
Options are designed to reward executives
for share price growth dependent upon
the Company's Total Shareholder Return
outperforming peers. Each option has the
following features:

> An exercise price (or for index-linked
options, the original exercise price) that is
set equal to the weighted average sale
price of all fully paid ordinary shares in
the Company sold on the Australian Stock
Exchange during the 1 week prior to and
including the date of grant1;

> A maximum life of 7 years and an
exercise period that commences after
3 years2, subject to performance hurdles
being cleared. Options are re-tested
monthly (if required) after the
commencement of the exercise period;

> Upon exercise, each option entitles the
option-holder to one ordinary share;

> In case of resignation or termination on
notice or dismissal for misconduct:
options are forfeited;

> In case of redundancy: options are pro
rated and a grace period of 3 months is
provided in which to exercise the
remaining options (with hurdles waived,
if applicable);

> In case of retirement, death or total &
permanent disablement: A grace period of
3 months is provided in which to exercise
all options (with hurdles waived, if
applicable); and

> Performance hurdles, which are
explained below for each type of option.

1 For options granted to the CEO, the exercise price is equal
to the weighted average share price during the 5 trading
days immediately before or after the Company's Annual
General Meeting that immediately precedes the allocation.

2 For options granted to the CEO, the life and exercise period
may differ, as disclosed in the tables of the year in which
they are granted.

remuneration report I 61

Hurdled options (granted from February
2000 until July 2002, and from November
2003 until May 2004)
Until May 2004, hurdled options were
granted with the following performance
hurdles attached:

1. Half the options may only be exercised
once the ANZ Total Shareholder Return
(ANZ TSR) exceeds the percentage change
in the S&P/ASX 200 Banks (Industry
Group) Accumulation Index, measured
over the same period (since issue) and
calculated as at the last trading day of any
month (once the exercise period has
commenced); and

2. The other half of hurdled options may
only be exercised once the ANZ TSR
exceeds the percentage change in the
S&P/ASX 100 Accumulation Index,
measured over the same period (since
issue) and calculated as at the last trading
day of any month (once the exercise
period has commenced).

These hurdles were originally selected to
ensure rewards were aligned with share
price growth in a manner that was easy to
understand and which took into account
performance relative to the market. At the
time of implementation these hurdles
were in line with market practice.

Index-linked options (granted from
October 2002 to May 2003)
Index-linked options have a dynamic
exercise price that acts as a built-in
performance hurdle, ie the exercise price
is adjusted in line with the movement in
the S&P/ASX 200 Banks (Industry Group)
Accumulation Index (excluding ANZ).
As an additional constraint, the adjusted
exercise price can only be set at or above
the original exercise price. Index-linked
options ensure that executives are only
rewarded for the true out-performance of
ANZ's share price over and above the
movement in the related index. They are
exercisable between the 3rd and 7th year
after grant date, subject to the adjusted
exercise price being above the prevailing
share price.

Hurdled options (to be granted from
November 2004)
From November 2004, the hurdles
attached to options will change.
The proportion of options that become
exercisable will depend upon the TSR
achieved by ANZ relative to the companies
in the comparator group shown below.
Performance equal to the median TSR of
the comparator group will result in half the
options becoming exercisable.
Performance above median will result in
further options becoming exercisable,
increasing on a straight-line basis until all
of the options become exercisable where
ANZ TSR is at or above the 75th percentile
in the comparator group. These new
performance hurdles are more consistent
with current market practice in the
financial services industry and are aligned
with the Company’s strategic focus on
growth.

Comparator Group
National Australia Bank St George Bank
Westpac
Commonwealth Bank
AMP
QBE
AXA Asia Pacific
IAG
Macquarie
Suncorp Metway

C5.2.2 Deferred Shares (LTI)
Deferred Shares granted under the long-
term incentive arrangements are designed
to reward executives for superior growth
whilst also encouraging retention and an
increase in the Company’s share price.

> Shares are subject to a time-based
vesting hurdle of 3 years, during which
time they are held in trust;

> During the deferral period, the employee
is entitled to any dividends paid on the
shares;

> Shares issued under this plan may be
held in trust for up to 10 years;

> The value used to determine the number
of LTI deferred shares to be allocated has
been based on the volume weighted
average price of the shares traded on the
ASX in the week leading up to and
including the date of issue;

> In case of resignation or termination on
notice or dismissal for misconduct: LTI
shares are forfeited;

> In case of redundancy: the number of
LTI shares that are released is pro rated
according to the time held as a proportion
of the vesting period; and

> In case of retirement, death or total &
permanent disablement: LTI shares are
released to executives.

62 I remuneration report

C6. PERFORMANCE OF ANZ

The following table shows how ANZ's Total Shareholder Return (TSR, which includes share price growth, dividends and other capital
adjustments) has performed against two comparator groups, measured from various dates (which approximately coincide with previous
major option allocations) to 30 September 2004. The measure shown ("ANZ out-performance against the index") is intended to demonstrate
the link between company performance and the value delivered to executives as part of the long-term incentive arrangements (ie the
measure reflects the hurdle attached to previously granted hurdled options, as explained under section C5.2.1).

Measurement Period

Number of months

Measured point-to-point

ANZ out-performance against
S&P/ASX 100 Accumulation Index1

ANZ out-performance against
S&P/ASX 200 Banks Accumulation Index1,2

1 Apr 04- 30 Sep 04
1 Oct 03 - 30 Sep 04
1 Apr 03- 30 Sep 04
1 Oct 02 - 30 Sep 04
1 Apr 02- 30 Sep 04
1 Oct 01 - 30 Sep 04
1 Apr 01- 30 Sep 04
1 Oct 00 - 30 Sep 04
1 Apr 00- 30 Sep 04
1 Oct 99 - 30 Sep 04

6
12
18
24
30
36
42
48
54
60

-7%
-3%
-16%
-11%
9%
8%
39%
52%
98%
91%

6%
10%
6%
10%
15%
6%
32%
31%
51%
63%

1 Out-performance is measured in absolute percentage points by which the Company's TSR has exceeded or lagged the relevant accumulation index, over the measurement period,

eg the Company's TSR from 01 Oct 99 to 30 Sep 04 was 146.3%, whilst the S&P/ASX100 Accumulation Index grew by 55.8% in the same period. This represents a 91% out-performance
by the Company

2 The Banking and Finance Accumulation Index is used instead of the S&P/ASX 200 Banks (Industry Group) Accumulation Index for any portion of a performance period extending

before April 2000

C7. OTHER EMPLOYEE SHARE SCHEME

$1,000 Employee Share Acquisition Plan
All permanent employees (other than the most senior executives) who have had continuous service for one year with the Company or any of
its controlled entities may be eligible to participate in a scheme enabling the issue of up to $1,000 of shares to an employee in each
financial year, subject to the approval of the Board. The shares are retained in trust for a three-year vesting period. On expiration of that
period, an employee may generally sell the shares, transfer them into their name, or have them retained in the trust. On termination,
the shares are generally transferred into the employee's name. Forfeiture provisions may apply outside of Australia, depending on the
jurisdiction.

The Company has made six offers under the $1,000 Employee Share Acquisition Plan, with a seventh scheduled for December 2004.
A total of 8,258,575 shares have been granted under the plan as at 30 September 2004.

D2. CEO'S CONTRACT TERMS

On 26 October 2004, the Company
announced an extension to J McFarlane's
contract:

> The term of the contract will be
extended by one year to
30 September 2007;

> In addition to mandatory
superannuation contributions, the
Company will make additional employer
contributions of $300,000 per annum
(effective from 1 October 2003), paid
quarterly to J McFarlane's chosen
superannuation fund; and

> Subject to shareholder approval at the
Annual General Meeting in December 2004,
it is proposed that J McFarlane be offered
175,000 Performance Shares, described
in section D4.

A separate agreement, made on
23 October 2001, provides for
reimbursements to J McFarlane for any
additional tax liabilities that may arise on
his UK Pension Plan holdings as a result of
his continuing Australian residency.
Under this agreement, ANZ reimburses
J McFarlane for any additional tax liability
incurred on his UK Pension Plan during his
employment with ANZ, arising as a
consequence of Australian Foreign
Investment Fund rules. In the event of
decreased Australian tax liabilities due to
a decreased value in J McFarlane's UK
Pension Plan, the reduced liability will be
used to offset potential subsequent
reimbursements.

SECTION D. CHIEF EXECUTIVE
OFFICER'S REMUNERATION

D1. CEO REMUNERATION OVERVIEW

The structure of J McFarlane's
compensation, which is in accordance
with his agreement, is as follows:

> Fixed Compensation: Consists of salary,
benefits and superannuation
contributions. Since October 2003,
J McFarlane has elected to receive almost
all of his Fixed Compensation in the form
of shares purchased under the Directors'
Share Plan.

> Short-Term Incentive: J McFarlane's
Short-Term Incentive is based on the
Group's EPS Growth and EVATM
performance against target and an annual
assessment of J McFarlane's achievement
of specific objectives agreed with the
Board. J McFarlane's Short-Term Incentive
may be paid in cash or in shares
purchased under the Directors' Share
Plan. J McFarlane has typically elected
to receive shares.

> Long-Term Incentive: J McFarlane's
Long-Term Incentive was approved by
shareholders at the Annual General
Meeting in December 2001. Four tranches
of options were approved for granting by
the Board: 500,000 in 2001; 1,000,000 in
2002; 1,000,000 in 2003 and 500,000 in
2004. The exercise of these options is
subject to performance hurdles being
satisfied. J McFarlane's specific
performance hurdles, for options granted
during the year, are indicated in section F3.
Subject to shareholder approval at the
Annual General Meeting in December
2004, it is proposed that J McFarlane be
offered 175,000 Performance Shares as
part of his contract extension.
The conditions attached to these
Performance Shares are explained in
section D4 below.

The compensation of J McFarlane for the
year ended 30 September 2004 is set out
in Section A of this Remuneration Report.

remuneration report I 63

D3. CEO'S RETIREMENT AND
TERMINATION BENEFITS

In accordance with J McFarlane's contract
variation (refer section D2), J McFarlane's
nominated superannuation fund receives
$300,000 per annum (effective from
1 October 2003, paid quarterly) in
addition to mandatory superannuation
contributions.

J McFarlane can terminate his employment
agreement by providing 12 months'
notice. ANZ may terminate the
employment agreement by providing
notice equal to the unexpired term of the
employment agreement (which ends on
1 October 2007). If ANZ terminates the
employment agreement without notice
and thus breaches its obligation to
provide the required notice, ANZ has
agreed with J McFarlane that the damages
payable by ANZ for breach of contract
would be equal to the Total Employment
Cost (TEC) that would otherwise be
received over the remainder of the
contract (TEC comprises salary or fees,
non-monetary benefits and mandatory
superannuation contributions).
In circumstances of serious misconduct,
J McFarlane is only entitled to payment of
TEC up to the date of termination.
Payment of accumulated superannuation
benefits plus statutory entitlements of
long service leave and annual leave
(calculated on the basis of salary or fees)
applies in all events of separation.

In the event of resignation not approved
by the Board or dismissal for serious
misconduct, all unexercised options will
be forfeited. In the event of termination on
notice, all option grants may be exercised.
Upon separation, option entitlements
must be exercised within 6 months of
termination. In the event of serious
misconduct, shares held in the Directors'
Share Plan will be forfeited.
On resignation or termination on notice,
shares will be released.

64 I remuneration report

D4. ALLOCATION OF PERFOMANCE
SHARES (DECEMBER 2004)

D5. CEO'S PARTICIPATION IN EQUITY
PROGRAMS

J McFarlane participates in the Directors'
Share Plan, which is explained in section
B3. Refer to section F for details of grants
and holdings.

J McFarlane also participates in the ANZ
Share Option Plan, which is described in
section C5.

Subject to shareholder approval, 175,000
Performance Shares will be issued to
J McFarlane on 31 December 2004.
No dividends will be payable on the
shares until they vest. Vesting will be
subject to the following time and
performance hurdles being satisfied:

> The performance hurdle will be
measured during the performance period
by comparing ANZ's Total Shareholder
Return (ANZ TSR) with that of a comparator
group of selected major financial services
companies in the S&P/ASX 100 Index,
excluding ANZ. The companies to be used
in the comparator group will be as
approved by the Board.

> The percentage of Performance Shares
that will vest will depend upon the TSR
achieved by ANZ relative to the companies
in the comparator group. Performance
equal to the median TSR of the
comparator group will result in half the
Performance Shares vesting. For each
percentile above the median an additional
2% of Performance Shares will vest,
increasing on a straight-line basis until all
of the Performance Shares vest where
ANZ TSR is at or above the 75th percentile
of TSRs in the comparator group.

> TSR will be measured for ANZ and the
comparator group over the same period
(since grant) and calculated as at the last
trading day of any month, once the
performance period has commenced.
The first opportunity for Performance
Shares to vest will be after the second
anniversary of grant, after which the
Performance Shares will continue to be
tested monthly until they are forfeited
5 years after the grant date, or 100% vest,
whichever is the earlier.

Performance Shares will be forfeited if
they have not vested five years after grant
or if J McFarlane ceases to be an employee
of the Company by reason of serious
misconduct. If J McFarlane resigns
without the prior approval of the Board,
unvested Performance Shares will be
forfeited.

remuneration report I 65

SECTION E. SPECIFIED EXECUTIVES' CONTRACT TERMS
Contractual terms for most executives are similar, but do, on occasions, vary to suit different needs.

Section E1 details the contractual terms for those Specified Executives who are on open-ended contracts. Section E2 details the contractual
terms for Sir J Anderson, who is on a fixed term contract.

E1. OPEN-ENDED CONTRACTS (RJ EDGAR, E FUNKE KUPPER, BC HARTZER, PJO HAWKINS, PR MARRIOTT, S TARGETT)

Length of Contract

Fixed Compensation

STI

LTI

Resignation

Retirement

Termination on Notice by ANZ

Redundancy

Open-ended.

The Total Employment Cost (TEC) package consists of salary, mandatory employer superannuation
contributions and benefits.

Eligible to participate. Target opportunity of 66.67% of Total Employment Cost (refer to section C5.1
for details of short-term incentive arrangements).

Eligible to participate at the Board’s discretion - refer to section C5.2 for long-term incentive
arrangements.

Employment may be terminated by giving 6 months' written notice.
On resignation any options and unvested deferred shares will be forfeited.
As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on resignation for illness, incapacity, or domestic reasons; refer to
Other Aspects (below) for more details.

On retirement, shares and options are generally released in full, although this is only stated in the
contracts of E Funke Kupper (for shares) and PR Marriott (both shares and options). Furthermore,
PR Marriott is entitled to a bonus on retirement, pro-rated for the proportion of the final performance
period that is worked prior to cessation of employment, and subject to adjustment for performance in
accordance with the short-term incentive arrangements in place at the time. As a result of being
employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible to receive a
Retirement Allowance on retirement; refer to Other Aspects (below) for more details.

ANZ may terminate the employment agreement by providing 12 months' written notice or payment in
lieu of the notice period based on TEC.

On termination on notice by ANZ, any options or LTI deferred shares that have vested, or will vest
during the notice period will be released, in accordance with the ANZ Share Option Plan Rules.
LTI shares that have not yet vested will generally be forfeited, although for some executives
(E Funke Kupper, BC Hartzer and PR Marriott) these shares will be released in full. Deferred shares
granted under STI arrangements will vest in full for all executives.

Discretion to pay bonuses on a pro-rata basis (depending on termination date, and subject to
business performance) applies in most cases, but is contracted for BC Hartzer and PR Marriott.

If ANZ terminates employment for reasons of bona fide redundancy, a severance payment will be
made that is equal to 12 months TEC.

All STI deferred shares are released. All options granted since 24 April 2002 are released on a pro-rata
basis - all prior grants may be exercised. All LTI deferred shares granted since 23 October 2002 are
released on a pro-rata basis - all prior grants will vest.

Discretion to pay bonuses on a pro-rata basis (depending on termination date, and subject to
business performance) applies in most cases, but is contracted for BC Hartzer and PR Marriott.

As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on retrenchment; refer to Other Aspects (below) for more details.

Death or Total and
Permanent Disablement

All options and shares released; pro-rata bonus.

Termination for serious misconduct

As a result of being employed by ANZ prior to November 1992, RJ Edgar and PJO Hawkins are eligible
to receive a Retirement Allowance on death; refer to Other Aspects (below) for more details.

ANZ may terminate the employment agreement at any time without notice, and the employee will only
be entitled to payment of TEC up to the date of termination. On termination for serious misconduct,
any options, unvested deferred shares or vested deferred shares still held in trust will be forfeited.

66 I remuneration report

Other Aspects

S Targett: subject to continuing employment and the approval of the Board, four tranches of deferred shares
(sign-on deferred shares), each worth $700,000, are to be granted at six month intervals in or around April
and October each year, and Hurdled Options (sign-on options) worth $750,000 are to be granted within
3 months of commencement of employment, to compensate for the loss of equity from S Targett's previous
employer. On termination on notice, a pro-rata proportion of the sign-on options can be exercised, based
on the period of employment, and sign-on deferred shares will vest in full, including any scheduled to be
granted during the notice period.

PJO Hawkins: for the period ending 31 December 2005, any payments on cessation of employment
(including payout of accrued but untaken Long Service Leave) will be based on a TEC of $750,000.

In instances where a retirement allowance is payable under ANZ policy (ie for RJ Edgar and
PJO Hawkins in instances of retirement, death, retrenchment or resignation for illness, incapacity,
or domestic reasons), the retirement allowance is calculated as follows: 3 months of notional salary
(which is 65% of TEC) plus an additional 3% of notional salary for each year of full time service above
10 years, less the total accrual value of long service leave (including taken and untaken).

remuneration report I 67

E2. FIXED TERM CONTRACT (SIR J ANDERSON)

Length of Contract

Fixed Compensation

STI

LTI

Resignation

Retirement

Termination on Notice by ANZ

Death or Total and
Permanent Disablement

Terminated for serious misconduct

Ends 30 September 2005.

The Total Employment Cost (TEC) package is inclusive of employer contributions to the
superannuation fund.

Short term incentive payments are subject to both business and individual performance.
The target payment is 50% of TEC.

Fixed at NZD500,000 worth of zero-priced options annually, granted in two tranches per annum.
The share options can be exercised at any time during employment and within 6 months of
the termination of employment.

Sir J Anderson may terminate his employment by giving 12 months' written notice. On resignation,
any share options which have not been exercised as at the termination date are forfeited.

A policy for payment of retirement gratuities was in place with NBNZ employees prior to the
acquisition by the Company of NBNZ. This policy has been continued for eligible staff who were
ANZ National Bank Limited employees as at 1 December 2003, including Sir J Anderson. Under this
policy, a payment will be made to Sir J Anderson on his retirement that is equal to the number of full
years' service divided by 35 and multiplied by 85% of finishing salary (where finishing salary is fixed
remuneration less any superannuation contribution). This value is then grossed up for tax (ie divided
by 0.61) and from this value the total accrual value of long service leave taken is deducted.

ANZ National Bank Limited may terminate the employment agreement by providing notice or
payment in lieu of notice equal to the unexpired term of the employment agreement
(which ends on30 September 2005). On termination on notice by ANZ any options may be exercised
in accordance with the ANZ Share Option Plan Rules.

All shares released; pro rata bonus.

ANZ National Bank Limited may terminate the employment agreement at any time without notice,
and Sir J Anderson will only be entitled to payment up to the date of termination. On termination for
serious misconduct any share options which have not been exercised as at the termination date may
not be exercised.

E3. PARTICIPATION IN EQUITY PROGRAMS

A number of shares and options are granted to executives under the remuneration programs detailed in Section C. For specified executives,
details of all grants made during the year are listed in Section F. Aggregate holdings of shares and options are also shown.

The deferred shares component of the STI is administered under the ANZ Employee Share Acquisition Plan. For executives, the shares are
deferred for three years, although some employees may receive shares deferred for one year, depending upon the role or jurisdiction.

The deferred shares component of the LTI is also administered under the ANZ Employee Share Acquisition Plan.
The shares are deferred for three years.

68 I remuneration report

SECTION F. EQUITY INSTRUMENTS RELATING TO DIRECTORS AND SPECIFIED EXECUTIVES

F1. SHAREHOLDINGS OF NON-EXECUTIVE DIRECTORS

Name

CB Goode
G Clark
JC Dahlsen
RS Deane
JK Ellis
DM Gonski
MA Jackson
DE Meiklejohn
JP Morschel
BW Scott

Balance of
shares as
at 1 October
20031

403,334
–
105,243
75,000
65,367
2,099
78,245
n/a
n/a
72,207

Shares
acquired
during the year
in lieu of salary2

Shares acquired
during the year
through the
exercise of rights3

Other shares
acquired
during
the year4

Balance of
shares held
as at 30 Sept
20041,5

14,215
–
–
–
1,097
–
–
n/a
n/a
–

75,922
–
16,609
364
12,996
382
13,861
n/a
n/a
199

8,993
2,000
63
–
5,016
50,131
1,191
n/a
n/a
69

502,464
2,000
121,915
75,364
84,476
52,612
93,297
n/a
n/a
72,475

Balance of
shares held
as at 4 Nov
20041,6

523,933
2,000
121,915
75,364
86,179
54,667
93,297
5,502
4,185
72,475

1 Balance of shares held at 1 October 2003, 30 September 2004 and 4 November 2004, includes directly held shares, nominally held shares and shares held by personally related entities

2 All shares acquired in lieu of salary were done so under the Directors' Share Plan (refer to section B3 of this Remuneration Report for an overview of the Directors' Share Plan)

3 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing

ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities. CB Goode, RS Deane,
JK Ellis and DM Gonski exercised their full allocation of rights (nominally held, directly held and rights held by personally related entities) on 28 November 2003.
The following rights were sold: JC Dahlsen - 2,528; MA Jackson - 364; and BW Scott - 12,933

4 Other shares acquired may include those acquired under the Dividend Reinvestment Plan

5 The following shares were nominally held as at 30 September 2004: CB Goode - 114,349; JC Dahlsen - 39,473; RS Deane - 73,000; JK Ellis - 17,197; DM Gonski - 50,000; MA Jackson - 10,632;

BW Scott - 6,563

6 The directors' relevant interest in shares as required by the Corporations Act 2001 is as follows: CB Goode 521,096; G Clark 2,000; JC Dahlsen 107,064; RS Deane 75,364; JK Ellis 83,484;
DM Gonski 54,667; MA Jackson 91,297; DE Meiklejohn 5,502; JP Morschel 4,185; and BW Scott 71,117. Any differences between the balances in this footnote and the table is due to the
application of AASB 1046

F2. SHAREHOLDINGS OF CEO (INCLUDING MOVEMENTS DURING THE YEAR)

Balance of
shares as at
1 Oct 20031

Shares
acquired
during the year
in lieu of bonus2

Shares
acquired
during the year
in lieu of salary2

Shares acquired
during the year
through the exercise
of options3

Shares acquired
during the year
through the exercise
of rights4

Other shares
acquired during
the year

Total number
of shares
sold during
the year

Balance
of shares
held as at
30 Sep 20041,5

Balance
of shares
held as at
4 Nov 20041,6

1,264,559

42,928

103,633

750,000

225,807

56,580

753,000

1,690,507

1,568,891

1 Balance of shares held at 1 October 2003, 30 September 2004 and 4 November 2004 includes directly held shares, nominally held shares and shares held by personally related entities

2 All shares acquired in lieu of salary or bonus were done so under the Directors' Share Plan (refer to section B3 of this Remuneration Report for an overview of the Directors' Share Plan)

3 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)

4 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing

ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities

5 945,145 shares were held nominally as at 30 September 2004

6 This also represents the Chief Executive Officer’s relevant interest in shares as required by the Corporations Act 2001

F3. OPTIONS GRANTED TO CEO DURING THE YEAR1

Type of
options2

Grant date

Number granted
during the year

Value per option
at grant date3
$

Exercise price4
$

Date
exercisable

Expiry date

Hurdled (CEO)

31 Dec 03

1,000,000

2.11

17.48

31 Dec 05

31 Dec 085

1 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)

2 One half of the options may be exercised only if the ANZ TSR calculated over the period commencing on the grant date and ending on the last day of any month after the second anniversary of their
grant date exceeds the percentage change in the S&P/ASX 200 Banks (Industry Group) Accumulation Index over that same period; and the other half of the options may be exercised only if the
ANZ TSR calculated over the relevant period exceeds the percentage change in the S&P/ASX 100 Accumulation Index over that same period

3 Refer to section F8 for details of the valuation methodology and inputs

4 The exercise price is equal to the weighted average share price during the 5 trading days immediately after the Company's 2003 Annual General Meeting

5 Treatment of options on termination of employment is explained in section D3

F4. OPTION HOLDINGS OF CEO (INCLUDING MOVEMENTS DURING THE YEAR)1,2

Balance as
at 1 Oct 03

Granted during
the year as
remuneration

Exercised
during the year

2,750,000

1,000,000

750,000

Date of
exercise
of options

1 Jul 04
2 Jul 04

Number of
ordinary shares
issued on exercise
of options

Share price on
date of exercise
$

Amount paid
per share
$

Balance
as at
30 Sep 04

Number
vested
during
the year

Vested and
exercisable
as at
30 Sep 04

100,000
650,000

18.17
18.14

14.06
14.06

3,000,000

1,250,000

500,000

1 All options held/exercised by the CEO have been approved by shareholders (December 1999 and December 2001)

2 This table does not include the 225,807 rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase

2 new ordinary shares for every 11 existing shares registered in their name as at 31 October 2003. The CEO chose to exercise all of his rights on 28 November 2003

remuneration report I 69

F5. DEFERRED SHARES GRANTED TO SPECIFIED EXECUTIVES DURING THE YEAR

Name

Type of
deferred
share1

Number of
deferred shares
granted Nov 032

Value of
deferred shares
granted Nov 033
$

Number of
deferred shares
granted May 044

Value of
deferred shares
granted May 043
$

Number of other
deferred shares
granted during
the year

Value of other
deferred shares
granted during
the year
$

Sir J Anderson (app 1 Dec 2003)5

Other

Dr RJ Edgar

E Funke Kupper

BC Hartzer

PJO Hawkins

PR Marriott

STI
LTI

S Targett (app 5 May 2004)6

Other

–

6,781
33,889

7,636
6,838

7,322
7,408

7,123
7,522

7,978
9,573

–

118,982
594,627

133,984
119,982

128,474
129,983

124,982
131,983

139,985
167,971

–

7,683
8,452

7,052
6,256

7,244
7,135

6,860
6,586

9,604
9,275

–

991

140,073
154,093

128,569
114,056

132,069
130,082

125,068
120,073

175,096
169,097

–
–

–

38,419

700,437

1 Deferred shares issued as STI shares are granted under the ANZ Short-Term Incentive program. Deferred shares issued as LTI shares are granted under the ANZ Long-Term Incentive program.

The shares are restricted for 3 years and may be held in trust for up to ten years. Refer to section C5 for more details

2 Shares granted in November 2003 were in relation to incentives earned for the half year ended 30 September 2003

3 The value per share used in this calculation is the volume weighted average price of the Company’s shares traded on the ASX on the day the shares were granted

4 Shares granted in May 2004 were in relation to incentives earned for the half year ended 31 March 2004

5 Other shares issued (3 March 2004) to Sir J Anderson during the year relates to the $1,000 Employee Share Acquisition Plan. Refer to section C7 for further details

6 Other shares issued to S Targett relates to the issue of deferred shares (four tranches of $700,000 to be issued at 6 month intervals in approximately April and October each year, subject to Board

approval and continuing employment) to compensate S Targett for the loss of access to equity as a result of his resignation from his previous employer

F6. AGGREGATE SHAREHOLDINGS OF SPECIFIED EXECUTIVES

Balance
of shares as at
1 Oct 031

Shares
granted
during the year
as remuneration2

Number of shares
acquired during the
year through the
exercise of options

Shares acquired
during the year
through the
exercise of rights3

Other shares
acquired
during
the year4

Total number
of shares sold
during the year

Balance
of shares
held as at
30 Sep 20041,5

Number
vested during
the year

Name

Sir J Anderson

(app 1 Dec 2003)

Dr RJ Edgar
E Funke Kupper6
BC Hartzer
PJO Hawkins
PR Marriott
S Targett (app 5 May 2004)

–
255,114
157,051
75,148
1,149,754
539,989
–

55
50,024
20,146
21,787
20,968
28,452
38,419

11,967
95,000
365,000
60,000
170,000
250,000
–

–
37,295
175
13,665
209,048
460
–

–
6,781
7,636
7,781
7,123
8,966
–

–
60,000
365,000
99,335
170,000
150,000
–

12,022
384,214
185,008
79,046
1,386,893
677,867
38,419

–
25,482
44,979
27,072
41,462
40,381
–

1 Balance of shares held at 1 October 2003 and 30 September 2004, include directly held shares, nominally held shares and shares held by personally related entities

2 STI shares granted on 5 November 2003 have not been included in these figures as they related to the half year ended 30 September 2003. Instead, these shares have been reflected in the

“Other shares acquired during the year” column

3 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ shareholders were eligible to purchase 2 new ordinary shares for every 11 existing

ordinary shares registered in their name as at 31 October 2003. Amounts pertaining to the rights issue include directly held rights, nominally held rights, and rights held by personally related entities

4 Other shares acquired include those acquired through the Dividend Reinvestment Plan and STI shares granted on 5 November 2003 in relation to the half year ended 30 September 2003

5 The following shares were held nominally as at 30 September 2004: Sir J Anderson - 55; RJ Edgar - 180,991; E Funke Kupper - 183,224; BC Hartzer - 69,480; PJO Hawkins - 233,821;

PR Marriott - 230,817; S Targett - 38,419

6 Amounts shown do not include ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS). E Funke Kupper held 500 ANZ StEPS as at 1 October 2003; this holding remained unchanged up to and

including 30 September 2004

70 I remuneration report

F7. OPTIONS GRANTED TO SPECIFIED EXECUTIVES DURING THE YEAR

Type of
options1

Number granted
during the year2

Name

Sir J Anderson (app 1 Dec 2003)

Zero priced5

Dr RJ Edgar

E Funke Kupper

BC Hartzer

PJO Hawkins

PR Marriott

S Targett (app 5 May 2004)

Hurdled
Hurdled

Hurdled

11,967

66,666
63,115

51,282
46,722

55,555
53,279

56,410
49,181

71,794
69,263

Grant date

11 May 04

5 Nov 03
11 May 04

Value per option
at grant date3
$

Exercise price
$

Date
exercisable

18.23

–

11 May 04

2.34
2.44

2.44

17.55
18.22

18.22

5 Nov 06
11 May 07

11 May 07

Expiry date4

10 May 06

4 Nov 10
10 May 11

10 May 11

307,337

11 May 04

1 For Hurdled options, the following performance hurdles apply: one half of the options may be exercised only if the ANZ TSR calculated over the period commencing on the date of grant and ending on
the last day of any month after the Date exercisable exceeds the percentage change in the S&P/ASX 200 Banks (Industry Group) Accumulation Index over that same period; and the other half of the
options may be exercised only if the ANZ TSR calculated over the relevant period exceeds the percentage change in the S&P/ASX 100 Accumulation Index over that same period. Refer to section C5.2.1
for further information

2 No additional options were granted in the period up to and including 4 November 2004

3 Refer to section F8 for details of the valuation methodology and inputs

4 Treatment of options on termination of employment is explained in section E

5 Zero priced options are granted under the ANZ Share Option Plan and have a nil exercise price and no time-based vesting criteria. They are specifically designed to deliver equity to Sir J Anderson,

and were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ

F9. AGGREGATE OPTION HOLDINGS OF SPECIFIED EXECUTIVES (INCLUDING MOVEMENTS DURING THE YEAR)

Name

Sir J Anderson
(appointed 1 Dec 2003)

Dr RJ Edgar

E Funke Kupper

BC Hartzer

PJO Hawkins

PR Marriott

S Targett
(appointed 5 May 2004)

Type

Zero-priced1

Index-Linked
Hurdled

Rights2

Index-Linked
Hurdled

Rights2

Index-Linked
Hurdled
Rights2

Index-Linked
Hurdled
Rights2
Other3

Hurdled

Balance as
at 1 Oct 03

–

272,000
170,000

n/a

250,000
499,000

n/a

222,000
247,000
n/a

183,000
381,000
n/a

311,000
668,000
n/a
11,000

n/a

Granted during
the year as
remuneration

11,967

–
129,781

n/a

–
98,004

n/a

–
108,834
n/a

–
105,591
n/a

–
141,057
n/a
–

307,337

Allocation of
rights arising from
renounceable rights
issue

n/a

46,386

28,557

13,665

209,048

98,185

n/a

1 Zero priced options first granted in May 2004, and specifically designed to deliver equity to Sir J Anderson. These options are granted under the ANZ Share Option Plan and have a nil exercise price

and no time-based vesting criteria. They were issued to meet the particular needs and circumstances at the time of the acquisition of NBNZ

2 Refers to rights arising from the Renounceable Rights Issue that partly funded the acquisition of NBNZ. All ANZ Shareholders were eligible to purchase 2 new ordinary shares for every 11 existing

ordinary shares registered in their name as at 31 October 2003. Amounts shown include directly held rights, nominally held rights and rights held by personally related entities

3 Other refers to share options granted to a personally related entity

remuneration report I 71

F8. OPTIONS VALUATIONS

For options granted in the current year, valuations have been determined in accordance with the fair value measurement provisions of
Accounting Standards AASB 1046 and 1046A. The following table outlines the general assumptions used in the option pricing model.

Option type

Grant date

Hurdled
Hurdled
Hurdled (CEO)
Zero-priced

5 Nov 03
11 May 04
31 Dec 03
11 May 04

Option value1
$

Exercise price
(5 day VWAP)
$

Share price
at grant
$

ANZ expected
volatility2

Option term Vesting period

Expected
life

Expected
dividends3

Risk free
interest rate4

2.34
2.44
2.11
18.23

17.55
18.22
17.48
0

17.13
18.10
17.68
n/a

20.50%
19.00%
20.00%
n/a

7 years
7 years
5 years
2 years

3 years
3 years
2 years
0 years

5 years
5 years
3.5 years
n/a

5.00%
5.40%
5.50%
n/a

5.80%
5.97%
5.56%
n/a

1 The Binomial Option Pricing Model (“the model”) is used to assess the value of ANZ's options (other than zero-priced options, for which the value is the volume weighted average price of the

Company's shares traded on the ASX on the day of the options were granted). The model utilises probability theory to determine the value of an ANZ option based on likely share prices at the expiry
date of the option. In accordance with AASB 1046 and 1046A, the model reflects both the performance hurdles that currently apply to the Hurdled Options and the non-transferability of the options.
Under the terms of the Options, the hurdle conditions (outlined in section C5.2.1) must be met before the options may be exercised during the exercise period

2 Expected volatility represents a measure of the amount by which ANZ's share price is expected to fluctuate over the life of the options. The measure of volatility used in the model is the annualised

standard deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility is
then used to estimate a reasonable expected volatility over the expected life of the options

3 In estimating the fair value of the ANZ option grant, expected dividends were included in the application of the model. The expected dividend yield applied to the model was based on an analysis of

ANZ's historical dividend payments and yields

4 The risk-free interest rate is based on the implied yield currently available on zero-coupon bonds issued by the Australian government, with a remaining term equal to the expected life of ANZ's options

Exercised
during the year

Date of
exercise
of options

Sale of rights
arising from
the renounceable
rights issue

Share price on
date of exercise
of options including
rights $

Amount paid
per share
$

Balance
as at
30 Sep 04

Total
number
vested
during the year

Vested and
exercisable
as at
30 Sep 04

–

11,967

11 May 04

–
60,000
35,000
37,295

–
270,000
95,000
175

–
60,000
13,665

–
170,000
209,048

–
250,000
460
–

–

n/a
7 Jan 04
14 May 04
28 Nov 03

n/a
12 May 04
12 May 04
28 Nov 03

n/a
2 Feb 04
28 Nov 03

n/a
11 Mar 04
28 Nov 03

n/a
12 Feb 04
28 Nov 03
n/a

n/a

18.10

17.86
17.62
16.82

18.29
18.29
16.82

17.56
16.82

19.20
16.82

17.95
16.82

9,091

28,382

–

97,725

0.00

n/a
13.62
12.98
13.00

n/a
13.62
13.00

10.48
13.00
n/a

n/a

–

–
–

–

–
–

–
42,000
–

–
80,000
–

–
275,000
–
11,000

–

95,000
46,386

–

365,000
28,557

–
102,000
13,665

–
250,000
209,048

–
250,000
98,185
6,000

–

272,000

204,781
–

250,000

232,004
–

222,000
295,834
–

183,000
316,591
–

311,000
559,057
–
11,000

307,337

72 I concise financial report

CONCISE
2004 FINANCIAL REPORT

A copy of the Group’s 2004 Financial Report, including the independent Auditors’
Report, is available to all shareholders, and will be sent to shareholders without
charge upon request. The Financial Report can be requested by telephone
(Australia: 1800 11 33 99, Overseas: (+ 61 3) 9615 5989) or by email to
investor.relations@anz.com

72
74
75
79
80
81

CONTENTS
Guide to Concise Financial Report
Ten Year Summary
Directors’ Report
Statement of Financial Performance
Statement of Financial Position
Statement of Cash Flows
Notes to the Concise Financial
Statements
82
Directors’ Declaration
87
88
Auditors’ Report
Financial Highlights in Key Currencies 89
89
Exchange Rates
90
Shareholder Information

This Concise Financial Report cannot be
expected to provide as full an understanding
of the Group’s financial performance,
financial position and financing and
investing activities as the Group’s 2004
Financial Report. Analysis and discussion
of the Concise Financial Report is on the
inside front cover and pages 12 to 19.

GUIDE TO CONCISE FINANCIAL
REPORT

INTRODUCTION

ANZ presents two reports, the ANZ Annual
Report (this document) and the ANZ
Financial Report. Both reports show how
ANZ performed during the year ended
30 September 2004 and the overall
financial position of the Group at the end
of the year. ANZ also publishes an
announcement to the market each half
year. All these documents are on anz.com.

ANZ prepares its financial reports in
accordance with Australian Accounting
Standards. Particular terms required by
the Standards may not be familiar to some
readers. This guide and the Glossary of
Financial Terms (on pages 92 to 93) are
designed to assist readers to understand
the report.

ANNUAL REPORT CONTENTS

The ANZ Annual Report has two main
sections - the 2004 Annual Report and the
Concise Financial Report.

The front section, the Annual Report,
contains information about significant
matters that impacted the management
and performance of ANZ during the year,
including discussion and analysis of the
financial results, updates on the specialist
business units and Group-wide programs
and information on the directors and
senior management.

The Concise Financial Report contains
financial information required by
Australian Accounting Standards including
the Consolidated Statements of Financial
Performance, Financial Position and Cash
Flows. These statements have been
prepared by ANZ's staff, reviewed by
ANZ's Board and Audit Committee, and
audited by our external auditor, KPMG.
The assets, liabilities and results of
controlled companies are included within
the consolidated results of the Group.

TEN YEAR SUMMARY

It includes summarised information on
financial performance, financial position,
shareholder value, share and other
information from 1995 to 2004.

DIRECTORS' REPORT

This report provides the reader with an
overview of the Group for the year ended
30 September 2004 including principal
activities, results, state of affairs,
dividends, review of operations, events
since the end of the financial year, future
developments, environmental regulation,
directors' qualifications and experience,
company secretaries qualifications and
experience, non-audit services and
auditors' independence declaration,
directors and officers who were previously
partners of the auditor, CEO/CFO
declaration, directors' and officers'
indemnity, directors' and executive
officers' remuneration policy, directors'
shareholdings and executive officers'
share options.

concise financial report I 73

CONSOLIDATED STATEMENT OF
FINANCIAL PERFORMANCE

CONSOLIDATED STATEMENT OF CASH
FLOWS

Financial performance refers to ANZ's
profit for the year including:

> the sources of ANZ's income split
between net interest income and other
income;

> the expenses incurred by ANZ during
the year;

> provision for doubtful debts; and

> ANZ's tax expense for the year.

The key figure to look at is "Net profit
attributable to shareholders of the
Company", which is the profit for the year.

CONSOLIDATED STATEMENT OF
FINANCIAL POSITION

This Statement is a summary of the
assets, liabilities and shareholders' equity
as at 30 September 2004. It shows what
ANZ as a Group owns as assets, what it
owes as liabilities and its net assets.
Net assets are equal to total shareholders'
equity. The assets and liabilities are listed
in order of liquidity, with those assets
representing cash shown first and those
hardest to convert to cash, such as fixed
assets, last.

The Consolidated Statement of Cash Flows
summarises the Group's cash payments
and cash receipts for the financial year.
The values may differ from those shown in
the Consolidated Statement of Financial
Performance because the Consolidated
Statement of Financial Performance is
prepared on an accrual accounting basis.

Cash in the Statement refers to cash on
hand, bank deposits and other forms of
highly liquid investments that can readily
be converted to cash.

NOTES TO THE CONCISE FINANCIAL
STATEMENTS

These notes provide details on the basis
of preparation of the Concise Financial
Report, critical accounting policies, major
events this financial year, dividends,
contingent liabilities and contingent
asset, segment analysis, capital
management, equity instruments issued
to employees, and events since the end
of the financial year.

DIRECTORS' DECLARATION

This declaration contains the directors’
sign-off that the Concise Financial Report
complies with Accounting Standards and
provides a true and fair view of the
performance and financial position
of the Company.

AUDITORS' REPORT

The independent audit report is the
external and independent opinion on the
Concise Financial Report.

FINANCIAL HIGHLIGHTS IN KEY
CURRENCIES AND EXCHANGE RATES

Financial performance and financial
position is provided in other currencies -
USD, GBP, NZD - to allow readers to easily
compare results of ANZ with companies
who report in other currencies. Exchange
rates (average and closing) are also
provided.

SHAREHOLDER INFORMATION

Information is provided on ordinary shares
including the twenty largest shareholders
and the distribution of shareholdings,
and preferences shares - ANZ Stapled
Exchangeable Preferred Securities
(ANZ StEPS). It also includes details on
voting rights for ordinary shares and
ANZ StEPS and employee shareholder
information.

Glossary of Financial Terms - Please see
pages 92 to 93.

The glossary contains details on key
financial terms.

74 I concise financial report

TEN YEAR SUMMARY1,2

2004
$m

2003
$m

2002
$m

2001
$m

2000
$m

1999
$m

1998
$m

1997
$m

1996
$m

1995
$m

Financial Performance

Net interest income
Other operating income
Operating expenses

Profit before tax, debt provision
and prior period abnormals

Provision for doubtful debts1
Income tax expense
Outside equity interests

Net Profit after tax

5,254
3,391
(4,026)

4,619
(632)
(1,168)
(4)

4,311
2,808
(3,228)

4,018
2,970
(2,905)

3,833
2,573
(3,092)

3,801
2,583
(3,314)

3,655
2,377
(3,300)

3,547
2,142
(3,442)

3,437
2,110
(3,502)

3,327
1,839
(3,397)

3,084
1,754
(3,116)

3,891
(614)
(926)
(3)

4,083
(860)
(898)
(3)

3,314
(531)
(911)
(2)

3,070
(502)
(863)
(2)

2,732
(510)
(736)
(6)

2,247
(487)
(576)
(9)

2,045
(400)
(466)
(8)

1,769
(175)
(469)
(9)

1,722
(237)
(442)
(10)

before prior period abnormals

2,815

2,348

2,322

1,870

1,703

1,480

1,175

1,171

1,116

1,033

Net prior period abnormal

profit (loss)

–

(69)

(147)

–

Net profit after tax

2,815

2,348

2,322

1,870

1,747

1,480

1,106

1,024

1,116

1,052

Financial Position

Assets2
259,345
17,925
Net Assets
6.9%
Tier 1 capital ratio
Return on average ordinary equity3,4 17.8%
Return on average assets3
1.1%
Cost to income ratio5
45.3%

195,591
13,787
7.7%
20.6%
1.2%
45.1%

183,105
11,465
7.9%
21.6%
1.3%
46.0%

185,493
10,551
7.5%
20.2%
1.1%
48.0%

172,467
9,807
7.4%
19.3%
1.1%
51.7%

152,801
9,429
7.9%
17.6%
1.0%
54.5%

153,215
8,391
7.2%
15.9%
0.7%
60.9%

138,241
6,993
6.6%
17.2%
0.7%
63.1%

127,604
6,336
6.7%
18.3%
0.9%
65.8%

112,587
5,747
6.6%
17.9%
0.9%
64.4%

Shareholder value – ordinary shares

Total return to shareholders
(share price movement
plus dividends)
Market capitalisation
Dividend
Franked portion

Share price6

–interim
–final
–high
–low
–30 Sep

17.0%

6.7%

15.3%

26.2%

36.3%

19.6%

–15.6%

62.4%

33.9%

52.4%

34,586
101c
100%
100%
$19.44
$15.94
$19.02

27,314
95c
100%
100%
$18.45
$15.01
$17.17

26,544
85c
100%
100%
$19.70
$15.23
$16.88

23,783
73c
100%
100%
$16.71
$12.63
$15.28

20,002
64c
100%
100%
$12.87
$9.18
$12.70

16,045
56c
75%
80%
$12.11
$8.12
$9.80

13,885
52c
60%
60%
$11.52
$7.65
$8.62

17,017
48c
100%
100%
$11.08
$6.79
$10.79

10,687
42c
50%
100%
$6.96
$5.17
$6.91

8,199
33c
0%
33%
$5.50
$3.40
$5.42

Share information

(per fully paid ordinary share)
Earnings per share6 –basic
Dividend payout ratio7
Net tangible assets8
No. of fully paid ordinary

shares issued (millions)

DRP issue price9

–interim
–final

Other information

Points of representation10
No. of employees (full time

equivalents)11
No. of shareholders12

153.1
67.5%
$7.51

1,818.4
$17.84
–

142.4c
64.2%
$7.49

1,521.7
$18.48
$16.61

141.4c
57.8%
$6.58

1,503.9
$19.24
$18.32

112.7c
62.0%
$5.96

1,488.3
$15.05
$18.33

102.5c
59.1%
$5.49

1,506.2
$11.62
$14.45

86.9c
62.1%
$5.21

69.7c
67.8%
$4.98

65.8c
61.6%
$4.59

73.2c
55.5%
$4.24

67.1c
49.1%
$3.94

1,565.4
$10.95
$11.50

1,539.4
$10.64
$10.78

1,508.6
$9.77
$9.92

1,478.1
$5.59
$7.60

1,446.0
$4.40
$6.27

1,190

1,019

1,018

1,056

1,087

1,147

1,205

1,473

1,744

1,881

28,755
252,072

23,137
223,545

22,482
198,716

22,501
181,667

23,134
179,829

30,171
179,945

32,072
151,564

36,830
132,450

39,721
121,847

39,240
114,829

3
4

From 1997, the annual debt provision charge has been calculated based on economic loss provisioning; prior year data has not been restated for this change in measurement approach

1
2 Data for 1998, 1999, 2000 and 2001 includes the consolidation of assets in the statutory funds of ANZ Life as required by an accounting standard applicable from 1 October 1999. Not applicable for
2002 and 2003, due to the sale of ANZ Life to ING Australia Ltd (INGA) on 1 May 2002. As a result of the aquisition of NBNZ in December 2003, the 2004 results include the consolidation of assets in
the statutory funds of NBNZ Life Insurance Limited as required by an accounting standard
Excludes significant items and outside equity interests
For the periods 1997 to 2002 the return on average ordinary equity calculation accrues the dividend over the year. From 2003, dividends may no longer be accrued and as such are not included in
the calculation of return on average ordinary equity
Excludes goodwill amortisation, abnormals and significant items
Prior periods adjusted for the bonus elements of the November 2003 Rights Issue
For 2004 and 2003 the dividend payout ratio includes the final dividend of $983 million and $777 million respectively which is proposed but not provided for in terms of AASB 1044 Provisions,
Contingent Liabilities and Contingent Assets which is effective from the September 2003 financial year
Equals shareholders equity less preference share capital and unamortised goodwill

8
9 DRP represents Dividend Reinvestment Plan
10 Includes branches, offices, representative offices and agencies
11 Prior to 1997, excludes temporary staff
12 From 2000 onwards the number of shareholders does not include the number of employees whose only shares are held by ANZEST Pty Ltd as the trustee for shares issued under the terms

5
6
7

of any ANZ employee incentive plan

directors’ report I 75

Further review of matters affecting the
Group's state of affairs are also contained
in this Annual Report under the
Chairman's Report on pages 8 to 9, the
Chief Executive Officer's Report on pages
10 to 11 and the Chief Financial Officer's
Review on pages 12 to 19.

DIVIDENDS
The directors propose that a final fully
franked dividend of 54 cents per fully
paid ordinary share be declared on
15 November 2004 and be paid on
17 December 2004. The proposed
payment amounts to approximately
$983 million.

During the financial year, the following
fully franked dividends were paid on fully
paid ordinary shares:

Type

Cents per
share

Amount before
bonus options
$m

Date of
payment

Final

2003
Interim
2004

777

850

19 December
2003
1 July 2004

REVIEW OF OPERATIONS
A review of the operations of the Group
during the financial year and the results of
those operations are contained in the
Chairman's Report, the Chief Executive
Officer's Report, and the Chief Financial
Officer's Review and Business
Performance on pages 8 to 9, 10 to 11, 12
to 19 and 34 to 37 respectively of this
Annual Report.

DIRECTORS’ REPORT
The directors present their report together
with the Concise Financial Report of the
consolidated entity (the Group), being
Australia and New Zealand Banking Group
Limited (the Company) and its controlled
entities, for the year ended 30 September
2004 and the Auditors' Report thereon.
The information is provided in conformity
with the Corporations Act 2001.

PRINCIPAL ACTIVITIES
The principal activities of the Group
during the year were general banking,
mortgage lending, leasing, hire purchase
and general finance, international and
investment banking, nominee and
custodian services, executor and trustee
services and through its joint venture ING
Australia Limited (INGA) and ANZ National
Bank Limited, life insurance and wealth
management.

There has been no significant change in
the nature of the principal activities of the
Group during the financial year.

At 30 September 2004, the Group had
1,190 points of representation.

RESULT
> Profit - Consolidated net profit after
income tax attributable to shareholders of
the Company was $2,815 million, an
increase of 20% over the prior year.

> Net loans and advances increased by
37% from $149,465 million to $204,962
million, primarily due to the acquisition of
National Bank of New Zealand (NBNZ) and
growth in mortgage lending and
commercial lending in Australia.

> Deposits and other borrowings
increased by 35% from $124,494 million
to $168,557 million primarily due to the
acquisition of NBNZ and to fund asset
growth.

> The provision for doubtful debts has
been determined using economic loss
provisioning (ELP) and is based on the
Group's risk management models. The ELP
charge increased 3% from $614 million to
$632 million, including $62 million
relating to NBNZ. The current charge
reflects a decrease in the ELP rate over the
year in line with the Group's improving
risk profile. This is as a result of growth in
low risk domestic assets (principally
mortgages), the acquisition of NBNZ, the
continued risk reduction strategy covering
the overseas portfolio and high risk
assets, and a lower Corporate Centre
charge reflecting lower unexpected

offshore losses. ANZ’s ELP models
recognise that the general provision
balance must be regularly reviewed, and
in rare situations, increased to cover
unusual events. The balance is at an
appropriate level.

> Net specific provisions were
$443 million, down $84 million from
the prior year. Gross non-accrual loans
decreased to $829 million, down from
$1,007 million, or 0.4%, down from
0.7%, of net loans and advances.
The reductions reflect the strategy to
reduce risk in overseas portfolios
(not including New Zealand).

Further details are contained in the
Chief Financial Officer’s review on
pages 12 to 19 of this Annual Report.

STATE OF AFFAIRS
In the directors' opinion, there have been
no significant changes in the state of
affairs of the Group during the financial
year, other than:

> Acquisition of the National Bank of New
Zealand (NBNZ) - On 24 October 2003,
the Company announced it had entered
into an agreement to acquire NBNZ and
the acquisition was completed on
1 December 2003. On 26 June 2004,
NBNZ was amalgamated with ANZ Banking
Group (New Zealand) Limited to create
ANZ National Bank Limited.

> Funding of NBNZ acquisition -

> Renounceable Rights Issue - In November/
December 2003, the Company issued
276,847,766 ordinary shares by way of a
2 for 11 "Renounceable Rights Issue" at
$13 per share in the Company, raising
$3,562 million (net of issue costs).

> US Stapled Trust Security Issue -
On 27 November 2003, the Company
raised US$1.1 billion via the issue of
non-cumulative stapled trust securities,
to support the capital and funding base
of the Group.

> Trust Securities Issues (TrUEPrS) -
On 12 December 2003, the Company
bought back its 124,032,000 TrUEPrS that
were issued at US$6.25 per share in
1998. Further details are included on
page 83 of this Annual Report.

> Reduction of Risk - The Company has
been actively reducing the overall risk
profile of the Group. Net specific
provisions of $443 million were down
16% compared to the prior year. This was
below the amount accrued for doubtful
debts in the Statement of Financial
Performance of $632 million.

76 I directors’ report

EVENTS SINCE THE END OF THE
FINANCIAL YEAR
> Merger of ANZ’s trustee business
announced with Equity Trustees Limited
(announced 12 October 2004);

> On-market share buyback of at
least $350 million pending regulatory
approval for a new offshore hybrid
equity transaction (announced
26 October 2004); and

> Sale of London-headquartered
project finance activities (announced
26 October 2004).

Other than the items above (these are
further described in Note 9 of the Concise
Report to this Annual Report on page 86),
no matter or circumstance has arisen
between 30 September 2004 and the date
of this report that has significantly
affected or may significantly affect the
operations of the Group in future financial
years, the results of those operations or
the state of affairs of the Group in future
years.

FUTURE DEVELOPMENTS
Details of likely developments in the
operations of the Group in future financial
years are contained in the Chairman's
Report and the Chief Executive Officer's
Report. In the opinion of the directors,
disclosure of any further information
would be likely to result in unreasonable
prejudice to the Group.

ENVIRONMENTAL REGULATION
The operations of the Group are not
subject to any particular or significant
environmental regulation under a law of
the Commonwealth or of a State or
Territory. However, the operations of the
Group may become subject to
environmental regulation when enforcing
securities over land. ANZ has developed
policies to appropriately manage such
environmental risks. ANZ has not incurred
any environmental liabilities during the
year. Further information on ANZ's
environmental framework and practices
can be found in this Annual Report on
pages 38 to 39 and on anz.com.

DIRECTORS’ QUALIFICATIONS
AND EXPERIENCE
From 1 October 2003 to 31 January 2004,
the Board was comprised of seven non-
executive directors. Three new non-
executive director appointments were
made in 2004: Dr Greg Clark on
1 February 2004; and Mr David Meiklejohn
and Mr John Morschel on 1 October 2004.

These new appointees will be retiring and
seeking election at the 2004 Annual
General Meeting. Information about these
directors is included in the Notice of
Annual General Meeting.

At the date of this report, the Board
comprises ten non-executive directors
who have a diversity of business and
community experience and one executive
director, the chief executive officer, who
has extensive banking experience.
The names of directors and details of their
qualifications and experience is contained
on pages 42 and 43 of this Annual Report
and on anz.com.

Special responsibilities and attendance
at meetings by directors, are shown
on page 51 of this Annual Report.

For those directors in office at
30 September 2004, details of the
directorships of other listed companies
held by each director in the 3 years prior
to the end of the 2004 financial year are
listed in this Annual Report on the
pages 42 and 43.

COMPANY SECRETARIES’
QUALIFICATIONS AND
EXPERIENCE
Currently there are three people appointed
as Company Secretary of the Company.

Details of their roles are contained
on page 51. Their qualifications are
as follows:

> Tim L'Estrange, LLB, BCom, ANZ Group
General Counsel and Company Secretary

Mr L'Estrange has a long-standing legal
career spanning 25 years. He has
significant experience in corporate law.
Mr L'Estrange joined ANZ in 2003.
Prior to ANZ, he worked closely with
Boards and senior management of major
corporations, banks and financial
institutions. Mr L'Estrange was the
National Executive Partner, Litigation and
Dispute Resolution of Allens Arthur
Robinson and a member of the Board of
Management of that firm. He was also
Managing Partner of Allen Allen & Hemsley.

> Peter Marriott, BEc (Hons),
ANZ Chief Financial Officer.

Mr Marriott has been involved in the
finance industry for more than 20 years.
Mr Marriott joined ANZ in 1993. Prior to
his career at ANZ, Mr Marriott was a
Partner in the Melbourne office of the then
KPMG Peat Marwick. He is a Fellow of a
number of professional organisations
including the Institute of Chartered
Accountants in Australia and the
Australian Institute of Banking and

Finance. He is also a Member of the
Australian Institute of Company Directors.

> John Priestley, BEc, LLB, ANZ Deputy
General Counsel and Company Secretary.

Mr Priestley, a qualified lawyer, joined
ANZ in 2004. Prior to ANZ, he had a long
career with the Mayne Group as Company
Secretary and Group General Manager,
Corporate Services responsible for the
legal, company secretarial, compliance
and insurance functions.

NON-AUDIT SERVICES
The Company's Relationship with External
Auditor Policy states that the external
auditor may not provide services that are
perceived to be in conflict with the role of
the auditor. These include consulting
advice and sub-contracting of operational
activities normally undertaken by
management, and engagements where
the auditor may ultimately be required to
express an opinion on its own work.

Specifically the policy:

> Limits the non-audit services that may
be provided;

> Requires that audit and permitted non-
audit services must be pre-approved by
the Audit Committee, or pre-approved by
the Chairman of the Audit Committee and
notified to the Audit Committee; and

> Requires the external auditor to not
commence an audit engagement for the
Group, until the Group has confirmed that
the engagement has been pre-approved.

The Audit Committee has reviewed a
summary of non-audit services provided
by the external auditor for 2004, and has
confirmed that the provision of non-audit
services for 2004 is compatible with the
general standard of independence for
auditors imposed by the Corporations
Act 2001. This has been formally advised
to the Board of Directors.

The external auditor has confirmed to the
Audit Committee that they have complied
with the Company's Relationship with
External Auditor Policy on the provision of
non-audit services by the external auditor
for 2004.

The non-audit services supplied by the
Group's external auditor, KPMG, and
the amount paid or payable by type of
non-audit service during the year to
30 September 2004 are as follows:

Non-audit service

Amount paid/payable
$’000

Co-sourced internal audit services1 1,260
Tax compliance and
related services

Controls and process reviews
Review of the non-cumulative

628
249

US Stapled Trust Securities issue

NBNZ due diligence oversight
Sarbanes-Oxley and International

219
420

Financial Reporting
Standard matters

Accounting advice
Securitisation review
Review of capital raising circulars
Other
Total

335
170
128
73
157
3,639

1 The work performed by KPMG was independent of the

external audit team and management

The directors are satisfied that the
provision of non-audit services by the
external auditor during the year to
30 September 2004 is compatible with
the general standard of independence for
auditors imposed by the Corporations
Act 2001.

AUDITOR’S INDEPENDENCE
DECLARATION
The Company's lead auditor has provided
a written declaration under Section 307C
of the Corporations Act 2001 that to the
best of his knowledge and belief, there
have been no contraventions of:

> the auditor independence requirements
of the Corporations Act 2001 in relation to
the audit; and

> the applicable Australian code of
professional conduct in relation to the
audit.

A copy of this declaration is detailed on
page 88 of this Annual Report.
This declaration is incorporated in and
forms part of the Directors' Report.

directors’ report I 77

The Company has entered into Deeds of
Access, Insurance and Indemnity with
each of its directors and secretaries and
with certain employees and certain other
individuals who act as directors of related
body corporates or of another company.
To the extent permitted by law, the
Company indemnifies the individual for all
liabilities, including costs, damages and
expenses incurred in their capacity as an
officer of the company to which they have
been appointed.

The Company has indemnified the
trustees and former trustees of certain of
the Company's superannuation funds and
directors, former directors, officers and
former officers of trustees of various
Company sponsored superannuation
schemes in Australia. Under the relevant
Deeds of Indemnity, the Company must
indemnify each indemnified person if the
assets of the relevant fund are insufficient
to cover any loss, damage, liability or cost
incurred by the indemnified person in
connection with the fund, being loss,
damage, liability or costs for which the
indemnified person would have been
entitled to be indemnified out of the
assets of the fund in accordance with the
trust deed and the Superannuation
Industry (Supervision) Act 1993.
This indemnity survives the termination
of the fund. Some of the indemnified
persons are or were directors or executive
officers of the Company.

The Company has also indemnified certain
employees of the Company, being trustees
and administrators of a trust which is a
subsidiary entity, from and against any
loss, damage, liability, tax, penalty,
expense or claim of any kind or nature
arising out of or in connection with the
creation, operation or dissolution of the
trust, where they are acting in good faith
and in a manner that they reasonably
believed to be within the scope of the
authority conferred by the trust.

DIRECTORS AND OFFICERS WHO
WERE PREVIOUSLY PARTNERS
OF THE AUDITOR
The following persons are currently
officers of the Group and were partners
of KPMG at a time when KPMG was the
auditor of Australia and New Zealand
Banking Group Limited:

> Ms Margaret Jackson, Non-executive
Director (left KPMG in June 1992);

> Mr Peter Marriott, Chief Financial Officer
(left KPMG in January 1993).

CEO/CFO DECLARATION
The Chief Executive Officer and the Chief
Financial Officer have given a declaration
to the Board concerning the Group's
financial statements under section
295A(2) of the Corporations Act 2001 and
recommendations 4.1 and 7.2 of the ASX
Corporate Governance Council Principles
of Good Corporate Governance and Best
Practice Recommendations.

DIRECTORS’ AND OFFICERS’
INDEMNITY
The Company's Constitution (Rule 11.1)
permits the Company to indemnify each
officer or employee of the Company
against liabilities (so far as may be
permitted under the Corporations Act 2001)
incurred in the execution and discharge of
the officer's or employee's duties.

It is the Company's policy that its
employees should not incur any liability
for acting in the course of their
employment legally, within the policies of
the Company and provided they act in
good faith.

Under the policy, the Company will
indemnify employees against any liability
they incur in carrying out their role. The
indemnity protects employees and former
employees who incur a liability when
acting as an employee, trustee or officer
of the Company, or a subsidiary of the
Company at the request of the Company.

The indemnity is subject to the
Corporations Act 2001 and will not apply
in respect of any liability arising from:

> a claim by the Company;

> a claim by a related body corporate;

> a lack of good faith;

> illegal or dishonest conduct; or

> non compliance with the Company's
policies or discretions.

78 I directors’ report

Except for the above, neither the Company
nor any related body corporate of the
Company has indemnified or made an
agreement to indemnify any person who is
or has been an officer or auditor of the
Company or of a related body corporate.

During the financial year, and again since
the end of the financial year, the Company
has paid a premium for an insurance
policy for the benefit of the directors,
secretaries, and senior managers of the
Company, and directors, secretaries and
senior managers of related bodies
corporate of the Company. In accordance
with common commercial practice, the
insurance policy prohibits disclosure of
the nature of the liability insured against
and the amount of the premium.

DIRECTORS’ AND EXECUTIVE
OFFICERS’ REMUNERATION
POLICY
Details of ANZ's remuneration policy in
respect of the directors and executive
officers is detailed in the Remuneration
Report on pages 54 to 71 of this Annual
Report and pages 6 to 23 of the 2004
Financial Report. Details of the
remuneration paid to each non-executive
director, the Chief Executive Officer and
other specified executives are detailed in
the Remuneration Report. The
Remuneration Report is incorporated in
and forms part of this Directors' Report.

DIRECTORS’ SHAREHOLDINGS
The directors' shareholdings, both
beneficial and non-beneficial, as at the
date of this report in the shares of the
Company are detailed in the
Remuneration Report.

EXECUTIVE OFFICERS’ SHARE
OPTIONS
Details of share options issued over
un-issued shares granted to the Chief
Executive Officer, senior executives and
officers, and on issue as at the date of
this report are detailed in the
Remuneration Report and note 50 of the
2004 Financial Report.

No person entitled to exercise any option
has or had, by virtue of an option, a right
to participate in any share issue of any
other body corporate. The names of all
persons who currently hold options are
entered in the register kept by the
Company pursuant to section 170 of the
Corporations Act 2001. This register may
be inspected free of charge.

ROUNDING OF AMOUNTS
The Company is a company of the kind
referred to in Australian Securities and
Investments Commission class order
98/100 dated 10 July 1998 (as amended)
pursuant to section 341(1) of the
Corporations Act 2001. As a result,
amounts in this report and the
accompanying financial statements have
been rounded to the nearest million
dollars except where otherwise indicated.

Signed in accordance with a resolution of
the directors.

Charles Goode
Director

John McFarlane
Chief Executive Officer

4 November 2004

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 SEPTEMBER 2004

Total income

Interest income
Interest expense

Net interest income

Proceeds, net of costs, on disposal of investments
Carrying amount of assets given up

Profit on disposal of investments
Other operating income
Share of joint venture profit from INGA
Share of associates profit (net of writeoffs)

Operating income
Operating expenses

Profit before debt provision and income tax
Provision for doubtful debts

Profit before income tax

Income tax expense

Profit after income tax
Net profit attributable to outside equity interests

Net profit attributable to shareholders of the Company

Currency translation adjustments, net of hedges after tax

Total adjustments attributable to shareholders of the Company recognised directly in equity

concise financial report I 79

2004
$m
17,508

Consolidated
2003
$m
13,023

14,117
(8,863)

10,215
(5,904)

5,254
–
–

–
3,246
97
48

8,645
(4,026)

4,619
(632)

4,311
–
–

–
2,702
55
51

7,119
(3,228)

3,891
(614)

2002
$m
12,007

9,037
(5,019)

4,018
566
(392)

174
2,765
2
29

6,988
(2,905)

4,083
(860)

3,987

3,277

3,223

(1,168)

(926)

(898)

2,819
(4)

2,351
(3)

2,325
(3)

2,815

2,348

2,322

233

(356)

(98)

Total changes in equity other than those resulting from transactions with shareholders as owners

3,048

1,992

2,224

Earnings per ordinary share (cents)
Basic
Diluted

Dividend per ordinary share (cents)

Net tangible assets per ordinary share ($)

153.1
149.7

101

7.51

142.4
141.7

7.49

141.4
140.4

6.58

The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements

80 I concise financial report

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2004

Assets

Liquid assets
Due from other financial institutions
Trading securities
Investment securities
Net loans and advances
Customers’ liabilities for acceptances
Regulatory deposits
Shares in associates and joint venture entities
Deferred tax assets
Goodwill1
Other assets
Premises and equipment

Total assets

Liabilities

Due to other financial institutions
Deposits and other borrowings
Liability for acceptances
Income tax liabilities
Payables and other liabilities
Provisions
Bonds and notes
Loan capital

Total liabilities

Net assets

Shareholders’ equity

Ordinary share capital
Preference share capital
Reserves
Retained profits

Share capital and reserves attributable to shareholders of the Company
Outside equity interests

Total shareholders’ equity

Contingent liabilities and contingent asset

The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements
1 Excludes notional goodwill of $754 million (September 2003: $821 million) included in the net carrying value of ING Australia Limited

Consolidated

2004
$m

2003
$m

Note

6,363
4,781
5,478
7,746
204,962
12,466
176
1,960
1,454
3,269
9,158
1,532

6,592
2,427
4,213
4,767
149,465
13,178
101
1,814
1,165
160
10,224
1,485

259,345

195,591

7,349
168,557
12,466
1,914
14,212
845
27,602
8,475

6,467
124,494
13,178
1,083
13,611
769
16,572
5,630

241,420

181,804

17,925

13,787

8,005
987
579
8,336

4,175
2,212
180
7,203

17,907
18

13,770
17

17,925

13,787

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AND CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2004

Cash flows from operating activities

Interest received
Dividends received
Fees and other income received
Interest paid
Personnel expenses paid
Premises expenses paid
Other operating expenses paid
Income taxes paid
Goods and services tax (paid) received
Net (increase) decrease in trading securities

Net cash provided by operating activities

Cash flows from investing activities

Net decrease (increase)

Liquid assets – greater than three months
Due from other financial institutions
Regulatory deposits
Loans and advances
Shares in controlled entities and associates

Investment securities

Purchases
Proceeds from sale or maturity

Controlled entities, associates and joint venture entities

Purchased (net of cash acquired)

Premises and equipment

Purchases
Proceeds from sale

Recovery from NHB litigation
Other

Net cash (used in) investing activities

Cash flows from financing activities

Net (decrease) increase

Due to other financial institutions
Deposits and other borrowings
Payables and other liabilities

Bonds and notes
Issue proceeds
Redemptions

Loan capital

Issue proceeds
Redemptions

Decrease (increase) in outside equity interests
Dividends paid
Share capital issues (ordinary capital)
StEPS preference share issue
StEPS issue costs
Preference Share buyback

Net cash provided by financing activities

Net cash provided by operating activities
Net cash (used in) investing activities
Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Foreign currency translation on opening balances

Cash and cash equivalents at end of year

The Notes appearing on pages 82 to 86 and the discussion and analysis appearing on pages 12 to 19 form an integral part of these financial statements

concise financial report I 81

2004
$m

Consolidated
2003
$m

2002
$m

Inflows (Outflows)

14,515
3
3,257
(8,258)
(2,110)
(312)
(2,093)
(247)
(19)
514

10,887
7
3,170
(5,724)
(1,848)
(279)
(1,952)
(1,312)
1
1,669

10,148
3
2,637
(5,367)
(1,900)
(268)
(1,893)
(853)
(28)
(1,030)

5,250

4,619

1,449

(325)
522
(76)
(22,757)
(35)

1,113
(44)
52
(19,944)
(2)

(442)
554
37
(9,441)
(1)

(7,560)
4,850

(3,871)
2,445

(2,851)
2,436

(3,224)

–

(1,050)

(345)
53
–
1,780

(368)
51
–
1,401

(385)
101
248
483

(27,117)

(19,167)

(10,311)

(272)
11,216
(1,061)

(2,946)
13,995
1,000

(1,211)
9,152
362

14,181
(4,100)

8,255
(4,095)

4,537
(3,519)

2,694
(368)
(1)
(1,561)
3,695
–
–
(1,045)

3,380
(437)
(1)
(1,322)
120
1,000
(13)
–

759
(589)
1
(1,178)
112
–
–
–

23,378

18,936

8,426

5,250
(27,117)
23,378

4,619
(19,167)
18,936

1,449
(10,311)
8,426

1,511
7,315
(972)

4,388
7,925
(4,998)

(436)
9,071
(710)

7,854

7,315

7,925

> Trust Securities Issues (ANZ TrUEPrS)
On 12 December 2003, the Company
bought back its 124,032,000 TrUEPrS
preference shares that were issued for
USD775 million in 1998.

Income, expenses and dividends relating
to the ANZ TrUEPrS transaction have been
recorded as significant items.
Profit after tax relating to the ANZ TrUEPrS
transaction of $84 million included
$77 million from the close out of interest
rate swaps. Final cash dividends of
$36 million were paid to holders of
ANZ TrUEPrS in the 2004 financial year.

82 I concise financial report

NOTES TO THE CONCISE
FINANCIAL STATEMENTS

1: BASIS OF PREPARATION OF
CONCISE FINANCIAL REPORT

This Concise Financial Report has been
derived from the Group’s 2004 Financial
Report which complies with the
Corporations Act 2001, Accounting
Standards, Urgent Issues Group
Consensus Views and other authoritative
pronouncements of the Australian
Accounting Standards Board.
A full description of the accounting
policies adopted by the Group is provided
in the 2004 Financial Report. The
accounting policies are consistent with
those of the previous financial year.

2: CRITICAL ACCOUNTING POLICIES

The Group has identified the following
critical accounting policies:

> Economic loss provisioning;

> Specific provisioning;

> Deferred acquisition costs, software
assets and deferred income;

> Derivatives and hedging;

> Special purpose and off-balance sheet
vehicles;

> Valuation of investment in ING Australia
Limited; and

> Valuation of goodwill in ANZ National
Bank Limited.

Details of the critical accounting
policies are contained within the ANZ
results announcement released on
26 October 2004 and in the 2004
Financial Report. The results announcement
can be obtained from www.anz.com.

3: MAJOR EVENTS THIS
FINANCIAL YEAR

> Acquisition of the National Bank of New
Zealand (NBNZ)
The Company acquired NBNZ on
1 December 2003 from Lloyds TSB.

The price paid was $5,112 million
(at 30 September 2004 exchange rates).
This includes acquisition costs,
a $68 million refund received on the price
paid to Lloyds TSB and the impact of the
strengthening of the New Zealand dollar.

The purchase price at the original
exchange rate on the date of acquisition
was $4,842 million. The purchase price
excluded a dividend to Lloyds TSB of NZD
575 million ($498 million) from NBNZ’s
retained earnings and transaction costs of
$25 million.

The acquisition was funded as follows:

> A 2 for 11 “Renounceable Rights Issue”
at $13 per share in the Company raising
$3,562 million; and

> A US Stapled Trust Security Issue,
subordinated debt, and wholesale
funding.

> Legal amalgamation of NBNZ
On 26 June 2004, NBNZ was amalgamated
into ANZ Banking Group (New Zealand)
Limited. ANZ Banking Group (New
Zealand) Limited changed its name to
ANZ National Bank Limited.

> Renounceable Rights Issue
In accordance with the Prospectus lodged
with ASIC on 24 October 2003, the
Company issued 276,847,766 ordinary
shares by way of a 2 for 11 rights issue at
$13 per ordinary share, raising capital of
$3,562 million (net of issue costs). The
rights were closed on 24 November 2003
and the shares allotted on
28 November 2003 and 4 December 2003.

> US Stapled Trust Security Issue
On 27 November 2003, the Company
raised USD1.1 billion via the issue of
1.1 million stapled non-cumulative trust
securities, to support the capital and
funding base of the Group following the
decision to acquire NBNZ. The issue was
structured as a stapled security
comprising an interest paying note issued
by a wholly owned subsidiary of ANZ and
a preference share on which dividends
will not be paid whilst it is stapled to a
note. The notes are due on 15 December
2053 at which date the issue will
mandatorily convert to ordinary shares,
based on the formula in the offering
memorandum, unless redeemed or
bought back prior to that date.

The US Stapled Trust Securities qualify as
Tier 1 capital as defined by the Australian
Prudential Regulation Authority, and the
securities are classified as debt under
Australian and US Accounting Standards,
with distribution on the securities treated
as interest expense.

4: DIVIDENDS

Ordinary Dividends

Interim dividend
Final dividend
Bonus option plan adjustment

Dividends on ordinary shares1

concise financial report I 83

2004
$m

850
7771
(29)

1,598

2003
$m

666
–
(25)

641

2002
$m

583
692
(23)

1,252

1 Change in accounting standard in 2003. Dividends no longer accrued and are recorded when declared. Full year dividend of $983 million not included in above table.

A fully franked final dividend of 54 cents, is proposed to be paid on each fully paid ordinary share on 17 December 2004 (2003: final
dividend of 51 cents, paid 19 December 2003, fully franked: 2002: final dividend of 46 cents, paid 13 December 2002, fully franked).
The 2004 interim dividend of 47 cents, paid 1 July 2004, was fully franked (2003: interim dividend of 44 cents, paid 1 July 2003, fully franked;
2002: interim dividend of 39 cents, paid 1 July 2002, fully franked).

The tax rate applicable to the franking credits attached to the interim dividend and to be attached to the proposed final dividend is 30%
(2003: 30%; 2002: 30%).

Preference Dividends

ANZ TrUEPrS
ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS)

Dividends on preference shares

Trust Securities Issues (ANZ TrUEPrS)

2004
$m

36
62

2003
$m

102
–

102

2002
$m

117
–

117

In 1998 ANZ TrUEPrS issued 124,032,000 preference shares, raising USD 775 million via Trust Securities issues. The Trust Securities carried
an entitlement to a distribution of 8% (on USD 400 million) and 8.08% (on USD 375 million). The amounts were payable quarterly in arrears.
Payment dates were the fifteenth days of January, April, July and October in each year. The preference shares were bought back on
12 December 2003.

ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS)

On 23 September 2003, the Group issued 10 million ANZ Stapled Exchangeable Preferred Securities (ANZ StEPS) at $100 each,
raising $1 billion ($987 million net of issue costs of $13 million). ANZ StEPS comprise 2 fully paid securities - an interest paying
unsecured note stapled to a fully paid preference share.

Distributions on ANZ StEPS are non-cumulative and are payable quarterly in arrears (on 15 March, 15 June, 15 September and 15 December
of each year) based upon a floating distribution rate equal to the 90 day bank bill rate plus a margin. At each payment date the 90 day bank
bill rate is reset for the next quarter. Dividends are not payable on the preference share while it is stapled to the note. If distributions are
not paid on ANZ StEPS, the Company may not pay dividends or return capital on its ordinary shares or any other share capital ranking below
the preference share component.

Dividend Franking Account

The amount of franking credits available to the Company for the subsequent financial year is $111 million (2003 and 2002: nil), after
adjusting for franking credits that will arise from the payment of tax on Australian profits for the 2004 financial year, $421 million franking
credits which will be utilised in franking the proposed final dividend and franking credits that may not be accessible by the Company at present.

The 2004 amount includes franking credits that were transferred from Australian wholly-owned entities to the parent entity at 1 October 2003
when these entities entered the Australian tax consolidated group.

Contingent Asset
On 14 October 2003 ANZ issued
proceedings in the Victorian Supreme
Court against its captive insurance
company ANZcover Insurance Pty Ltd
(ANZcover) regarding its insurance claim
consequent upon settlement of its former
subsidiary ANZ Grindlays Bank Limited’s
1992 dispute with India’s National
Housing Bank (NHB). ANZcover is an
authorised general insurer restricted to
insuring the interests of ANZ and its
subsidiaries. ANZcover in turn purchases
reinsurance from global reinsurers,
primarily in the London reinsurance
market. ANZcover has no retained
exposure to the NHB claim which is fully
re-insured, save for a small exposure
arising from the insolvency of some re-
insurers in the London market.

The January 2002 settlement of the NHB
litigation saw Grindlays recover Rupees
6.20 billion ($248 million at 19 January
2002 rates) of the disputed monies that
Grindlays Bank had lodged with the Court,
which by that time totalled Rupees
16.45 billion ($661 million at 19 January
2002 rates), including interest, with
NHB receiving the balance. ANZ in turn
received a payment of USD 124 million
from Standard Chartered Bank under the
terms of the Indian Indemnity (refer Note
48 in the 2004 Financial Report).
The claim of $130 million plus compound
interest is for the balance of the limit of
indemnity under ANZcover’s reinsurance
arrangements for the 1991-92 policy year.
The proceedings remain on foot.

84 I concise financial report

5: CONTINGENT LIABILITIES AND
CONTINGENT ASSET

Contingent Liabilities
There are outstanding court proceedings,
claims and possible claims against the
Group, the aggregate amount of which
cannot readily be quantified.

The Group in Australia is being audited by
the Australian Taxation Office (ATO) as
part of normal ATO procedures. The Group
has received various assessments that are
being disputed and may receive further
assessments.

At the Company’s request the ATO is
reviewing the taxation treatment of the
sale of Grindlays in 2000.

During the year, the Company and the
ATO settled the dispute over the taxation
treatment of lease assignments
undertaken in 1991 and 1992. The
settlement was within existing provisions.

The Group in New Zealand is being
audited by local revenue authorities as
part of normal revenue authority
procedures, with a particular focus on
certain kinds of structured finance
transactions. On 30 September 2004, the
Group in New Zealand received Notices of
Proposed Adjustment (the 'Notice') in
respect of one of these structured finance
transactions undertaken in the 2000
financial year. The Notice is formal advice
that the New Zealand Inland Revenue
Department (IRD) is proposing to amend
tax assessments. The Notice is not a tax
assessment and does not establish a tax
liability, but it is the first step in a formal
dispute process. Should the same
position be adopted by the IRD on the
remaining transactions of that kind, the
maximum potential tax liability would be
approximately NZD348 million (including
interest tax effected) for the period to
30 September 2004. Of that maximum
potential liability, approximately
NZD116 million is subject to tax
indemnities provided by Lloyds TSB Bank
PLC under the agreement by which ANZ
acquired the National Bank of New
Zealand and which relates to transactions
undertaken by the National Bank of
New Zealand before December 2003.

Based on external advice, the Group has
assessed the likely progress of these and
other issues, and believes that it holds
appropriate provisions.

Further details regarding Group contingent
liabilities are contained in the 2004
Financial Report.

concise financial report I 85

6: SEGMENT ANALYSIS

During the year ended 30 September 2004, the Group managed its activities along the following lines of business:

Personal Banking Australia, Institutional, New Zealand Business, Corporate Australia, Esanda and UDC, Asia Pacific, ING Australia and other.
A description of each of the operating business segments, including the types of products and services the segments provide to customers,
is detailed in the 2004 Financial Report.

As the composition of segments has changed over time, September 2003 comparatives have been adjusted to be consistent with the 2004
segment definitions detailed in the 2004 Financial Report. Comparatives for the year ended 30 September 2002 have not been provided as
data could not reasonably be disaggregated into the changed segments.

BUSINESS SEGMENT ANALYSIS1, 2

Consolidated
30 September 2004

External interest income
External interest expense
Net intersegment interest

Net interest income
Other external operating income
Net intersegment income

Operating income

Other external expenses
Net intersegment expenses

Operating expenses

Profit before debt provision and income tax
Charge for doubtful debts
Income tax and outside equity interests

Personal
Banking
Australia
$m

5,818
(1,313)
(2,590)

1,915
832
132

2,879

(1,263)
(288)

(1,551)

1,328
(183)
(343)

Institutional
$m

2,341
(2,347)
658

652
1,299
(24)

1,927

(578)
(123)

(701)

1,226
(159)
(279)

Net profit after income tax

802

788

New
Zealand
Business
$m

3,312
(1,842)
(176)

1,294
518
5

1,817

(736)
(130)

(866)

951
(99)
(268)

584

Corporate
Australia
$m

903
(513)
248

638
270
(98)

810

(201)
(58)

(259)

551
(59)
(148)

344

Esanda
and UDC
$m

1,060
(592)
(107)

361
104
(10)

455

(158)
(28)

(186)

269
(67)
(59)

143

Asia
Pacific
$m

165
(115)
100

150
145
–

295

(109)
(29)

(138)

157
(23)
(23)

111

ING
Australia
$m

Other3
$m

Consolidated
Total
$m

–
(21)
(2)

(23)
116
–

2
(2)

–

93
–
15

108

518
(2,120)
1,869

267
107
(5)

369

(983)
658

14,117
(8,863)
–

5,254
3,391
–

8,645

(4,026)
–

(325)

(4,026)

44
(42)
(67)

(65)

4,619
(632)
(1,172)

2,815

Total external assets

93,738

55,736

55,870

18,992

14,524

Total external liabilities

40,036

49,060

47,275

21,397

12,261

2,379

4,924

1,777

16,329

259,345

416

66,051

241,420

BUSINESS SEGMENT ANALYSIS1, 2

Consolidated
30 September 2003

External interest income
External interest expense
Net intersegment interest

Net interest income
Other external operating income
Net intersegment income

Operating income

Other external expenses
Net intersegment expenses

Operating expenses

Profit before debt provision and income tax
Doubtful debt provision
Income tax and outside equity interests

Personal
Banking
Australia
$m

4,625
(1,044)
(1,810)

1,771
701
121

2,593

(1,144)
(295)

(1,439)

1,154
(169)
(292)

Institutional
$m

2,170
(2,087)
620

703
1,245
(26)

1,922

(551)
(124)

(675)

1,247
(165)
(280)

Net profit after income tax

693

802

New
Zealand
Business
$m

1,060
(475)
(88)

497
254
5

756

(280)
(122)

(402)

354
(37)
(106)

211

Corporate
Australia
$m

734
(403)
243

574
251
(92)

733

(180)
(54)

(234)

499
(55)
(133)

311

Esanda
and UDC
$m

1,005
(512)
(143)

350
86
(8)

428

(155)
(24)

(179)

249
(63)
(57)

129

Asia
Pacific
$m

167
(123)
96

140
149
–

289

(111)
(31)

(142)

147
(19)
(28)

100

ING
Australia
$m

Other3
$m

Consolidated
Total
$m

–
(16)
–

(16)
90
–

2
(2)

–

74
–
8

454
(1,244)
1,082

10,215
(5,904)
–

292
32
–

324

4,311
2,808
–

7,119

(809)
652

(3,228)
–

(157)

(3,228)

167
(106)
(41)

3,891
(614)
(929)

2,348

Total external assets

79,829

56,977

14,379

15,993

13,460

Total external liabilities

35,660

48,005

12,016

19,508

10,795

2,027

4,524

1,736

11,190

195,591

403

50,893

181,804

1 Results are equity standardised
2 Intersegment transfers are accounted for and determined on an arm’s length or cost recovery basis
3 Includes Treasury, Operations, Technology and Shared Services, Corporate Centre, Risk Management, Group Financial Management and significant items

86 I concise financial report

7: CAPITAL MANAGEMENT

The Group’s total capital adequacy ratio has decreased to 10.4% (2003: 11.1%). The Tier 1 ratio reduced to 6.9% (2003: 7.7%) and the
Tier 2 ratio has remained at 4.0%.

Our principal focus going forward is Adjusted Common Equity, defined as Tier 1 capital, less preference shares at current exchange rates and
deductions from total capital, (including investment in funds management subsidiaries and ING Australia). Adjusted Common Equity reduced
to 5.1% of risk weighted assets (2003: 5.7%) reflecting the lower risk profile of the Group.

8: EQUITY INSTRUMENTS ISSUED TO EMPLOYEES

Under existing Australian Accounting Standards, equity instruments issued to employees are not required to be expensed. The impact of
expensing options1, and shares issued under the $1,000 employee share plan, has been calculated and is disclosed below.

Net profit attributable to shareholders of the Company
Expenses attributable to:

– Options issued to Group Heads1
– Options issued to general management1
– Shares issued under $1,000 employee share plan

Total

2004
$m

Consolidated
2003
$m

2002
$m

2,815

2,348

2,322

(8)
(23)
(22)

(8)
(24)
(18)

(7)
(19)
(18)

2,762

2,298

2,278

1 Based on fair values estimated at grant date determined in accordance with the fair value measurement provisions of AASB 1046. Value of options are amortised on a straight-line basis over the

vesting period

9: EVENTS SINCE THE END OF THE FINANCIAL YEAR

ANZ Trustees merger with Equity Trustees Limited
On 12 October 2004, the Company announced it had signed a heads of agreement with Equity Trustees Limited, to merge the Group's trustee
business with Equity Trustees Limited. The merged business will create Australia's third largest trustee company and the leading manager
of charitable foundations.

In consideration, the Company will become the major shareholder in Equity Trustees Limited with a 37.5% share of the expanded issued
capital, and receive $3 million in cash.

Completion of the merger is expected early in 2005 subject to the outcomes of due diligence, regulatory and government approvals and
approval by Equity Trustees' shareholders. The Company will equity account for its investment in Equity Trustees Limited and recognise
a small profit from the transfer of the Group's trustee business.

The financial effect of this merger has not been recognised in these financial statements.

Share buyback
On 26 October 2004, the Company announced the intention to undertake an on-market share buyback of at least $350 million.
The buyback is contingent on regulatory approval for a new offshore hybrid equity transaction.

The financial effect of this buyback has not been reflected in these financial statements.

Sale of London-headquartered project finance activities
On 26 October 2004, the Company announced entry into a Memorandum of Understanding for the sale, subject to due diligence and other
standard conditions, of the majority of its London-headquartered project finance activities to Standard Chartered Bank. The amount of the
loans and commitments is approximately $2 billion. The premium from the sale above book value is not expected to be significant.

The financial effect of this sale has not been reflected in these financial statements.

directors’ declaration I 87

DIRECTORS’ DECLARATION
The directors of Australia and New Zealand Banking Group Limited declare that in their opinion the accompanying Concise Financial Report
of the Consolidated Group for the year ended 30 September 2004 complies with Accounting Standard AASB 1039 ‘Concise Financial Reports’.

In our report on the Group’s 2004 Financial Report we declared that:

a) the financial statements and notes comply with the Corporations Act 2001, including:

i) complying with applicable Australian Accounting Standards and other mandatory professional reporting requirements;

ii) giving a true and fair view of the financial position of the Company and of the consolidated entity and of their performance as
represented by the results of their operations and their cash flows; and

iii) that the directors have been given the declaration under section 295A of the Corporations Act 2001.

b) in the directors’ opinion 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.

Charles Goode
Director

John McFarlane
Chief Executive Officer

4 November 2004

88 I auditors’ report

INDEPENDENT AUDIT REPORT
ON CONCISE FINANCIAL REPORT
TO THE MEMBERS OF
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED

SCOPE

We have audited the Concise Financial
Report of Australia and New Zealand
Banking Group Limited (“the Company”)
and its controlled entities for the financial
year ended 30 September 2004,
consisting of the statement of financial
performance, statement of financial
position, statement of cash flows,
accompanying notes 1 to 9 as set out on
pages 79 to 86, and the accompanying
discussion and analysis on the statement
of financial performance, statement of
financial position and statement of cash
flows set out on pages 12 to 19 in order to
express an opinion on it to the members
of the Company. The Company’s directors
are responsible for the Concise Financial
Report.

Our audit has been conducted in
accordance with Australian Auditing
Standards to provide reasonable
assurance as to whether the Concise
Financial Report is free of material
misstatement.

We have also performed an independent
audit of the full financial report of
Australia and New Zealand Banking Group
Limited and its controlled entities
included in the annual financial report for
the year ended 30 September 2004.
Our audit report on the full financial report
was signed on 4 November 2004, and was
not subject to any qualification.

Our procedures in respect of the audit of
the Concise Financial Report included
testing that the information in the Concise
Financial Report is consistent with the full
financial report and examination, on a test
basis, of evidence supporting the
amounts, discussion and analysis, and
other disclosures which were not directly
derived from the full financial report.
These procedures have been undertaken
to form an opinion whether, in all material
respects, the Concise Financial Report is
presented fairly in accordance with
Australian Accounting Standard AASB
1039 ‘Concise Financial Reports’.

The audit opinion expressed in this report
has been formed on the above basis.

AUDIT OPINION

In our opinion the Concise Financial
Report of Australia and New Zealand
Banking Group Limited and its controlled
entities for the year ended 30 September
2004 complies with Australian Accounting
Standard AASB 1039 ‘Concise Financial
Reports’.

COPY OF THE AUDITOR’S
INDEPENDENCE DECLARATION

LEAD AUDITOR’S INDEPENDENCE
DECLARATION UNDER SECTION 307C
OF THE CORPORATIONS ACT 2001

I declare that, to the best of my
knowledge and belief, during the financial
year ended 30 September 2004 there
have been:

> no contraventions of the auditor
independence requirements as set out in
the Corporations Act 2001 in relation to
the audit; and

> no contraventions of the applicable
Australian code of professional conduct in
relation to the audit.

Chris Hall
Partner

Melbourne
4 November 2004

KPMG

Chris Hall
Partner

Melbourne
4 November 2004

FINANCIAL HIGHLIGHTS IN KEY CURRENCIES

Millions

Financial Performance

Operating income
Operating expenses

Profit before debt provision and income tax
Provision for doubtful debts

Profit before income tax
Income tax expense
Net profit attributable to outside equity interests

Profit after income tax

Financial Position

Assets
Liabilities
Shareholders’ equity2
Ratios – per ordinary share

Earnings per share – basic
Dividends per share – declared rate
Net tangible assets per share

shareholder information I 89

2004
AUD

2004
USD1

2004
GBP1

2004
NZD1

8,645
(4,026)

4,619
(632)

3,987
(1,168)
(4)

6,279
(2,924)

3,505
(1,632)

3,355
(459)

2,896
(848)
(3)

1,873
(256)

1,617
(474)
(2)

9,729
(4,531)

5,198
(711)

4,487
(1,314)
(5)

2,815

2,045

1,141

3,168

259,345
241,420
17,925

185,821
172,977
12,844

103,297
96,158
7,139

277,499
258,319
19,180

153.1c
101c
$7.51

111.2c
73c
$5.38

62.1p
41p
£2.99

172.3c
114c
$8.04

1 USD, GBP and NZD amounts – items relating to financial performance converted at average rates for financial year 30 September 2004 and items relating to financial position at closing rates

at 30 September 2004

2 Includes outside equity interests

EXCHANGE RATES
The exchange rates used in the translation of the results and the assets and liabilities of major overseas branches and controlled entities
are:

Great British pound
United States dollar
New Zealand dollar

2004

2003

2002

Closing

Average

Closing

Average

Closing

Average

0.3983
0.7165
1.0700

0.4054
0.7263
1.1254

0.4070
0.6795
1.1431

0.3822
0.6124
1.1139

0.3477
0.5441
1.1585

0.3621
0.5323
1.2001

90 I shareholder information

ORDINARY SHARES

At 13 October 2004 the twenty largest holders of ordinary shares held 1,091,080,872 ordinary shares, equal to 60% of the total issued
ordinary capital.

Name

Number of shares

Name

Number of Shares

National Nominees Ltd
Chase Manhattan Nominees Ltd
Westpac Custodian Nominees Ltd
Citicorp Nominees Pty Ltd
RBC Global Services Australia

Nominees Pty Ltd

ANZ Nominees Ltd
Cogent Nominees Pty Ltd
Queensland Investment Corporation
AMP Life Ltd
HKBA Nominees Ltd

241,352,476
241,084,758
230,985,111
90,412,119
58,764,704

50,221,700
40,639,319
28,235,896
23,427,620
19,015,397

13.27
13.26
12.70
4.97
3.23

2.76
2.23
1.55
1.29
1.05

PSS Board
IAG Nominees Pty Ltd
ANZEST Pty Ltd (Deferred Share Plan A/C)
Government Superannuation Office
Victorian Workcover Authority
Australia Foundation Investment

Company Ltd

IOOF Investment Management Ltd
Westpac Financial Services Ltd
ANZEST Pty Ltd (ESAP Share Plan A/C)
Transport Accident Commission

11,223,610
8,702,901
8,662,230
7,912,760
5,641,887

5,470,797
5,406,169
4,806,257
4,760,819
4,354,342

0.62
0.48
0.48
0.44
0.31

0.30
0.30
0.26
0.26
0.24

Total

Distribution of shareholdings
At 13 October 2004
Range

1 to 1,000 shares
1,001 to 5,000 shares
5,001 to 10,000 shares
10,001 to 100,000 shares
Over 100,001 shares

Total

Number of
holders

132,171
94,925
14,952
9,606
418

% of
holders

52.43
37.66
5.93
3.81
0.17

1,091,080,872

60.00

Number of
shares

57,824,343
208,426,821
103,987,888
201,713,846
1,246,461,935

% of
shares

3.18
11.46
5.72
11.09
68.55

252,072

100.00

1,818,414,833

100.00

At 13 October 2004:
> there were no entries in the Register of Substantial Shareholdings;
> the average size of holdings of ordinary shares was 7,214 (2003: 6,713) shares; and
> there were 5,137 holdings (2003: 3,857 holdings) of less than a marketable parcel (less than $500 in value or 26 shares based on a market price of $19.66), which is less than 2.04% of the total

holdings of ordinary shares.

Voting rights of ordinary shares
The Constitution provides for votes to be cast:

i) on show of hands, 1 vote for each shareholder; and

ii) on a poll, 1 vote for each fully paid ordinary share.

shareholder information I 91

PREFERENCE SHARES - ANZ STAPLED EXCHANGEABLE PREFERRED SECURITIES (ANZ STEPS)

At 13 October 2004, the twenty largest holders of ANZ StEPS held 5,011,961 securities, equal to 50.12% of the total issued securities.

Name

Number of shares

Name

Number of Shares

1,010,559
ANZ Nominees Ltd
963,814
Chase Manhattan Nominees Ltd
IOOF Investment Management Ltd
492,000
RBC Global Services Australia Nominees Pty Ltd 402,887
300,470
Potter Warburg Nominees Pty Ltd
269,515
National Nominees Ltd
264,146
Permanent Trustee Australia Ltd
190,010
Citicorp Nominees Pty Ltd
161,918
Westpac Custodian Nominees Ltd
160,000
UBS Nominees Pty Ltd

10.10
9.64
4.92
4.03
3.00
2.70
2.64
1.90
1.62
1.60

UCA Cash Management Fund Ltd
Brispot Nominees Pty Ltd
Austrust Ltd
The Australian National University
ANZ Executors and Trustee Company Ltd
Elise Nominees Pty Ltd
UOB Kay Hian Pte Ltd
Gordon Merchant No2 Pty Ltd
Transport Accident Commission
Questor Financial Services

152,500
98,462
95,318
85,000
75,975
64,744
64,500
59,000
52,263
48,880

1.53
0.98
0.95
0.85
0.76
0.65
0.65
0.59
0.52
0.49

Total

Distribution of ANZ StEPS holdings
At 13 October 2004
Range

1 to 1,000 securities
1,001 to 5,000 securities
5,001 to 10,000 securities
10,001 to 100,000 securities
Over 100,001 securities

Total

Number of
holders

10,264
549
56
49
11

% of
holders

93.92
5.02
0.51
0.45
0.10

5,011,961

50.12

Number of
securities

% of
securities

2,516,362
1,346,145
456,233
1,676,194
4,005,066

25.17
13.46
4.56
16.76
40.05

10,929

100.00

10,000,000

100.00

At 13 October 2004: There are 2 holders of less than a marketable parcel (less than $500 in value or 5 units) (2003: nil)

Voting rights of ANZ StEPS
A preference share does not entitle its holder to vote at any general meeting of ANZ except in the following circumstances:

a) on a proposal:

(i) to reduce the share capital of ANZ;

(ii) that affects rights attached to the preference shares;

(iii) to wind up ANZ; or

(iv) for the disposal of the whole of the property, business and undertaking of ANZ;

b) on a resolution to approve the terms of a buy-back agreement;

c) during a period in which a dividend which has been declared as payable on a dividend payment date has not been paid in full; or

d) during the winding-up of ANZ.

If a poll is conducted on a resolution on which a holder is entitled to vote, the holder has one vote for each preference share held.

EMPLOYEE SHAREHOLDER INFORMATION
At the Annual General Meeting in January 1994, shareholders approved an aggregate limit of 7% of all classes of shares and options,
which remain subject to the rules of a relevant incentive plan, being held by employees and directors.

At 30 September 2004 participants held 2.62% (2003: 2.76%) of the issued shares and options of ANZ under the following incentive plans:

> ANZ Employee Share Acquisition Plan;

> ANZ Employee Share Save Scheme;

> ANZ Share Option Plan; and

> ANZ Directors’ Share Plan.

92 I glossary of financial terms

GLOSSARY OF
FINANCIAL TERMS

adjusted common equity (ace) - Tier
one capital less preference shares at
current rates and deductions from
regulatory capital.
arrears - a contractually due and
payable sum which remains
overdue/unpaid.
assets - resources controlled by the
company. Assets can be in the form of
money, such as cash or amounts owed;
they can be fixed assets such as property
or equipment; or they can be intangibles
such as a company's goodwill,
trademarks and patents. For accounting
purposes, assets are future economic
benefits which are controlled by the
entity and result from past transactions
or events. For banks, loans are assets.
bonds and notes - the Group’s liability
for long-term financing issued in
wholesale markets.
capital adequacy ratio - a measure that
compares our regulatory capital with our
risk-weighted assets.
cash earnings per share - earnings per
share excluding significant items and
goodwill amoritisation.
consolidated statement of financial
position - a financial statement that
reports a company’s assets or resources
and the claims against them - including
liabilities or obligations of a business
and shareholders equity.
cost to income ratio (cti) - a business
efficiency measure. It’s the ratio of our
expenses (excluding goodwill
amortisation) to our income.
credit rating - a measurement of the
credit worthiness of a business. AAA is
the top credit rating accorded by ratings
agencies such as Moody’s Investors
Service and Standard & Poor’s. The
better our credit rating, the cheaper we
can borrow money from capital markets.
ANZ’s long-term credit rating is AA-.
credit risk - the potential for loss arising
from the failure of a customer or counter-
party to meet its contractual obligations.
customer liability for acceptances -
the amounts owed to the Group from
customers for acceptances, a form of
lending.
deferred tax assets - the future tax
savings to the Group as a result of timing
differences that arise due to different
treatment of transactions under
accounting and tax rules.

deposits and other borrowings -
ANZ’s largest liability, this represents
ANZ’s obligations to our depositors.
dividend (interim) - the amount of the
company’s after-tax earnings declared
and paid to shareholders at the half-year
results. It is usually expressed as a
number of cents per share, or as
dividend per share.
dividend per share (dps) - the amount
of the Company's after tax earnings
declared and paid to ordinary
shareholders. It is usually expressed as a
number of cents per share, or as a
dividend per share.
due from other financial
institutions - the monies owed to ANZ
by other banks and financial institutions.
earnings per share (eps) - the amount,
in dollars, of earnings divided by the
number of shares. For example, if the
earnings are $2 million and 1 million
shares are outstanding, the earnings per
share would be $2.00 ($2 million
1 million shares = $2.00). The earnings
figure is based on profit after tax, with
some accounting adjustments.
economic loss provisioning (elp) (or
provision for doubtful debts) - each
month the Group recognises an expense
for credit losses based on the expected
long-term loss ratio for each part of the
loan portfolio. The method used by the
Group for determining this monthly
expense charge is referred to as
‘economic loss provisioning’ (ELP). The
Group uses ELP models to calculate the
expected loss by considering:

> the history of credit loss for each type

and risk grade of lending; and

> the size, composition and risk profile of

the current loan portfolio.
economic value added (eva™) - 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.
equity - the residual interest in the
assets of a company after deducting all
liabilities. As a publicly listed company,
our shareholders own these net assets.
This is called shareholders’ equity.
equity standardisation - EVA™
principles are in use throughout the
Group, whereby risk adjusted capital is
allocated and charged against Business
Units. Equity standardised profit is
determined by eliminating the impact of

earnings on each business unit’s book
capital and attributing earnings on the
business unit’s risk adjusted capital. This
enhances comparability of business unit
performance. Geographic results are not
equity standardised.
franked dividends - dividends paid by
the company out of profits on which the
company has already paid Australian tax.
full time equivalent (fte) - our total
staff numbers based on the working
week. For example, two part-time staff in
Australia each working 20-hours a week
would be defined as one FTE as their
hours add up to 40-hours a week.
goodwill - the remaining amount, after
amortisation, of the historic excess over
net asset value paid by ANZ for the
acquisition of other companies.
impaired assets - loans or other credit
facilities where there is reasonable doubt
about the collectability of interest, fees
(past and future) or principal
outstanding, or where concessional
terms have been provided because of
the financial difficulties of the customer.
income tax liabilities - the amounts
payable in respect of income tax.
interest margin - a measure which tells
us how much interest we have generated
by lending money after accounting for
our costs of borrowing that money, either
from customers or financial markets. The
interest margin is calculated by dividing
net interest by average interest-earning
assets. This is expressed as a percentage.
investment securities - the investments
in securities that ANZ intends to hold to
maturity.
liability - a company’s obligations to a
lender, supplier of goods and services, a
tax authority and others. For accounting
purposes, liabilities are future sacrifices
of economic benefits that an entity is
obliged to make as a result of past
transactions or events. For ANZ, liabilities
are largely money we have borrowed to
fund our lending activities.
liability for acceptances - the amount
owed to customers who have purchased
customer acceptances from the Group.
loan capital - the long-term funding that
would rank behind other creditors, and
ahead of only shareholders in the event
of a winding up.
liquid assets - the cash or cash
equivalents held by ANZ.

glossary of financial terms I 93

service transfer pricing - is used to
allocate services that are provided by
central areas of the company to each of
its business units.
significant items - events which are
“one-off” and not expected to be
repeated. These are described in detail
within the results. Special notations are
made for any calculations which either
include or exclude these transactions.
specific provisioning - the Group
maintains a specific provision for
doubtful debts arising from its exposure
to organisations and credit
counterparties. When it is identified that
full repayment of a loan on our book is
unlikely, we will create a specific
provision for that loan.
tier one capital - the highest quality
capital from a prudential perspective. It
consists of paid-up ordinary shares,
general reserves, retained earnings, and
certain preference shares less specified
deductions.
tier two capital - includes general
provisions for doubtful debts (subject to
a limit), asset revaluation reserves,
mandatory convertible notes and similiar
capital instruments.
trading securities - the securities held
by ANZ that are regularly bought and sold
as part of its normal trading activities.

market capitalisation of ordinary
shares - the stock market’s assessment
of a company’s value, calculated by
multiplying the number of shares on
issue by the current share price.
market risk - the potential loss the
Group may incur from changes to interest
rates, foreign exchange rates or the
prices of equity shares and indices,
commodities, debt securities and other
finacial contracts, including derivatives.
It also includes the risk that the Group
will incur due to increased interest
expenses arising from funding
requirements during periods of poor
market liquidity.
net loans and advances - ANZ’s largest
asset by value, this consists of the loans
ANZ has advanced to individuals and
organisations, less an allowance for
doubtful loan recoveries.
net profit after tax (npat) - a
company’s net profit after all taxes,
expenses and bad debt provisions have
been deducted from the operating
income.
net specific provision - the transfer
from the general provision to the specific
provision (representing new and
increased specific provisions less
specific provision releases) less
recoveries.
non-accrual loans - loans where there
is reasonable doubt about the
collectability of interest, fees (past and
future) or principal outstanding, or where
concessional terms have been provided
because of the financial difficulties of the
customer.
non-interest income - includes fees,
profits on capital markets trading, foreign
exchange earning and any other revenue
that is not interest income.
numbers shown in brackets ( ) - the
brackets are there to indicate a negative
figure, instead of using a minus symbol.
operating revenue - the income ANZ
generates from its activities. This
includes net interest, fee income and
earnings from capital markets and
foreign exchange dealings.
operational risk - the direct or indirect
loss resulting from inadequate or failed
internal processes, systems or from
external events.
ordinary and preference share capital
- the amounts received when shares were
orginally subscribed for.

organic growth - where we have grown
assets or liabilities through growth in our
existing businesses rather than through
acquisition of another company.
other assets - includes assets that do
not fit into the categories listed here
including the increase in market value of
amounts receivable from derivatives
(refer also to ‘Payables and other
liabilities’) and interest accrued and not
yet received.
payables and other liabilities -
includes various operating creditors,
accrued interest payable and market
value of amounts payable on derivatives
held by the Group.
premises and equipment - the value
of all the land, buildings, furniture,
equipment, etc. which are owned by
the Group.
profit per (fte) - this productivity
measure that shows, on average, how
much profit is earned by each staff
member.
provisions - the Group’s accrued
obligations for long service, annual leave
and other obligations, which although
known, are not yet payable.
regulatory deposits - the cash ANZ has
deposited at central banks to meet
regulatory requirements.
reserves - retained profits plus
surpluses or deficits arising from, for
example, revaluations of properties,
foreign exchange gains or losses on
offshore operations.
retained profits - the amount of profits
retained by the Group.
return on equity (roe) - a calculation
which shows the return the company has
made on the money shareholders have
invested in ANZ. It is expressed as a
percentage.
risk-weighted assets - the Group’s
assets adjusted for the risk of the
counterparty. The relative risk weight for
each counterparty is determined by the
Bank for International Settlements. For
example, a mortgage with a LVR (loan to
valuation ratio) below 80 per cent carries
a risk weighting of just 50 per cent.
shares in associates - ANZ’s
investment in companies where the
interest is large enough to provide
influence rather than control over the
company.

94 I

NEW ZEALAND STOCK EXCHANGE
DISCLOSURE

The following statement is included as
required under New Zealand Stock
Exchange (NZX) Listing Rules which
requires ANZ, as an "Overseas Listed
Issuer", to include a statement of the
material differences between Australian
Stock Exchange (ASX) corporate
governance rules and principles and
those applicable under the NZX Corporate
Governance Best Practice Code (NZX
Code). Irrespective of any differences,
ANZ complies with all applicable
governance principles and requirements
both in Australia and New Zealand.

The ASX corporate governance rules and
principles specifically address corporate
governance matters in relation to risk
management, internal controls and
stakeholder interests which are not
specifically addressed in the NZX Code.
The ASX principles and rules also provide
greater emphasis on the need for issuers
to disclose internal corporate governance
policies and procedures to shareholders
(including for example disclosure of
insider trading policies, performance
measurement procedures and
remuneration policies).

The ASX corporate governance principles
and rules require ANZ to comply or
explain any non-compliance, while some
of the NZX governance requirements are
mandatory under the NZX Listing Rules.
For example, the ASX Corporate
Governance Council Principles of Good
Corporate Governance and Best Practice
Recommendations suggest that a
majority of directors be independent. The
NZX Listing Rules require that at least two
directors be independent (or if there are
8 or more directors, at least 3 or one third
be independent).

In New Zealand, governance rules
concerning the independence of auditors
are covered in the NZX Code. In Australia,
they are covered more extensively in the
Corporations Act 2001 and the ASX
Corporate Governance Council Principles
of Good Corporate Governance and Best
Practice Recommendations.

There are also some differences in other
aspects of corporate regulation generally
in Australia and New Zealand. For
example:

> ASX Listing Rules do not require
shareholder approval of major
transactions to the same extent required
by NZX Listing Rules.

> The ASX related party transaction
provisions require shareholder approval
only for related party acquisitions or
dispositions of assets exceeding 5% of
shareholders equity. Whereas the NZX
related party transaction provisions
require shareholder approval for related
party acquisitions, dispositions and other
transactions exceeding 5% of the issuer's
average market capitalisation, and for an
additional category of service
arrangements where the threshold is an
annual gross cost of 0.5% of the issuer's
average market capitalisation.

> Restrictions on buybacks and financial
assistance covered by the NZX Listing
Rules are not addressed in the ASX
Listing Rules, but are covered in
Australia's Corporations Act.

Details on ANZ’s corporate governance
are set out on pages 44-53.

This page has been left blank intentionally.

DIVIDENDS

The final dividend of 54 cents per share,
fully franked, will be paid on 17 December
2004. A Dividend Reinvestment Plan (DRP)
and Bonus Option Plan (BOP) are available
to shareholders. The plans are detailed
in a plan booklet called 'Shareholder
Alternatives', copies of which are available
from the ANZ Share Registry at the addresses
shown in the right hand column under the
Share Registry heading.
ANZ has reviewed the way that it pays
its dividends to reduce costs, minimise the
potential for fraud and enhance convenience
for shareholders. Dividend payments to
all shareholders in Australia, New Zealand
and the UK (other than to those who have
elected to participate fully in either the DRP
or the BOP), are only made by direct credit
to a nominated bank account.

STOCK EXCHANGE LISTINGS

The Group's ordinary shares are listed
on the Australian Stock Exchange and the
New Zealand Stock Exchange.
The Group's other stock exchange
listings include:

> Australian Stock Exchange - ANZ Stapled
Exchangeable Preferred Securities (ANZ
StEPS) [ANZ Holdings (New Zealand) Limited
and Australia and New Zealand Banking
Group Limited]; senior and subordinated
debt [Australia and New Zealand Banking
Group Limited];

> London Stock Exchange - Senior and
subordinated debt securities issued off the
Euro Medium Term Note program [Australia
and New Zealand Banking Group Limited,
ANZ National Bank Limited, and ANZ National
(Int'l) Limited];

> Luxembourg Stock Exchange - Senior debt
[ANZ National Bank Limited], and senior
and subordinated debt [Australia and
New Zealand Banking Group Limited];

> New York Stock Exchange - American
Depository Receipts [Australia and New
Zealand Banking Group Limited];

> New Zealand Stock Exchange - Senior
and subordinated debt [ANZ National
Bank Limited];

> Singapore Stock Exchange - The Euro
Medium Term Note program [ANZ National
Bank Limited and ANZ National (Int'l)
Limited]. The Euro Medium Term Note
program was delisted from the Singapore
Stock Exchange in October 2004; and

> Swiss Stock Exchange - Senior debt
[Australia and New Zealand Banking
Group Limited].

AMERICAN DEPOSITARY RECEIPTS

The Bank of New York sponsors an American
Depositary Receipt (ADR) program in the
United States of America and ADRs are listed
on the New York Stock Exchange. ADR holders
should deal directly with the Bank of New York,
New York, telephone 1-888-269-2377 (toll
free for domestic callers), 1-610-382-7836
(for international callers) or by email to
shareowners@bankofny.com on all matters
relating to their ADR holdings.

2004 FINANCIAL REPORT

A copy of the Group's 2004 Financial Report,
including the independent Auditors' Report,
is available to all shareholders, and will be
sent to shareholders without charge upon
request. The Financial Report can be
requested by telephone (Australia 1800 11
33 99, Overseas +613 9415 4014), by email
at investor.relations@anz.com or viewed
directly on the Internet at www.anz.com

REMOVAL FROM MAILING LIST

Shareholders who do not wish to receive a
copy of the Annual Report must advise the
Share Registry.

ANZ is proud to be a foundation member
of eTree, an incentive scheme to encourage
shareholders of Australian companies to
receive their shareholder communications
electronically. Register your email address
at www.eTree.com.au/anz and in return
ANZ will donate $2 to Landcare Australia to
support reforestation projects in your home
state or territory.

CHANGE OF ADDRESS

Shareholders who have changed their
address will need to advise the Share
Registry in writing, quoting their shareholder
number, registered details, name and
company as applicable. If you have purchased
your shares through a broker you will need
to inform your broker of the change.

CREDIT RATINGS
Short Term

Moody's Investors Service
Standard & Poor's Rating Group

P-1
A1+

Long Term

Moody's Investors Service

Aa3
(outlook stable)

Standard & Poor's Rating Group

AA-
(outlook stable)

HANDY CONTACTS
ANZ
Registered Office
Level 6
100 Queen Street
Melbourne VIC 3000
Australia
Telephone +613 9273 6141
Facsimile +613 9273 6142
Company Secretary: Tim L'Estrange

Investor Relations
Level 22
100 Queen Street
Melbourne VIC 3000
Australia
Telephone +613 9273 6466
Facsimile +613 9273 4899
investor.relations@anz.com

SHARE REGISTRY
Australia
GPO Box 2975
Melbourne VIC 8060
Australia
Telephone 1800 11 33 99 / +613 9415 4010
Facsimile +613 9413 2500
anzshareregistry@computershare.com.au

New Zealand
Private Bag 92119
Auckland 1020
New Zealand
Telephone 0800 174 007
Facsimile +649 488 8787

United Kingdom
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH
Telephone +44 870 702 0000
Facsimile +44 870 703 6101

IMPORTANT DATES FOR SHAREHOLDERS

Date

Event

26 October 2004 Annual Result Announced

17 December 2004 Annual General Meeting

[Melbourne]

17 December 2004 Final Dividend Payment

26 April 2005*

Interim Results Announced

1 July 2005*

Interim Dividend Payment

25 October 2005* Annual Results Announced

16 December 2005*Annual General Meeting

[Adelaide]

16 December 2005*Final Dividend Payment

* tentative dates