#1ANZ Smart ATM Withdraw & deposit ANZ 06 07 Service 2019 FULL YEAR RESULTS DEBT INVESTOR UPDATE ANZ AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522#2CONTENTS 2019 FULL YEAR RESULTS ANZ Tier 2 Sustainable Development Goals (SDG) Bond Presentation CEO and CFO Results Presentations CEO Presentation CFO Presentation Group & Divisional Financial Performance Group including impact of large / notable items Australia Retail & Commercial Institutional New Zealand Division Treasury Risk Management Housing Portfolio Royal Commission Update & Regulatory Reforms Corporate Overview and Sustainability Economics Update 3 33 34 41 54 55 59 61 62 69 63 71 84 99 102 110 All figures within this investor discussion pack are presented on Cash Profit (Continuing operations) basis in Australian Dollars unless otherwise noted. In arriving at Cash Profit, Statutory Profit has been adjusted to exclude non-core items, further information is set out on page 77-81 of the 2019 Full Year Consolidated Financial Report. ANZ 2#3ANZ ANZ TIER 2 SUSTAINABLE DEVELOPMENT GOALS (SDG) BOND INVESTOR PRESENTATION AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522#4DISCLAIMER This document has been prepared by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (the "Bank") for the information of intended recipients only (being persons who meet the requirements described in the following paragraphs). This document is intended to be general background information on the Bank's and its affiliates' business current at the date of this presentation. This document is highly confidential and being given solely for the information of such recipients and may not be shared, copied, reproduced or redistributed to any other person in any manner. This document (and its presentation) does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire any notes, securities or other financial products ("Securities") of the Bank or any other person in any jurisdiction or an inducement to enter into investment activity or to effect any transaction or to conclude any legal act of any kind. The distribution of this document in certain jurisdictions may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to in it comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Without limiting the preceding paragraphs, this document and the information contained in it are not an offer of Securities for sale in the United States and are not for publication or distribution to persons in the United States. This document is being given to you on the basis that you have confirmed your representation that you are not located or resident in the United States and, to the extent you purchase any Securities mentioned in it you will be doing so pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"). NO SECURITIES HAVE BEEN, NOR WILL BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. ANY INVESTMENT DECISION TO PURCHASE ANY SECURITIES IN THE CONTEXT OF A PROPOSED OFFERING, IF ANY, SHOULD BE MADE ON THE BASIS OF ANY APPLICABLE FINAL, THE TERMS AND CONDITIONS OF THE SECURITIES AND THE INFORMATION CONTAINED IN THE APPLICABLE OFFERING CIRCULAR PUBLISHED IN RELATION TO ANY OFFERING AND NOT ON THE BASIS OF THIS DOCUMENT, WHICH DOES NOT CONSTITUTE OR FORM PART OF AN OFFER OR SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES IN THE UNITED STATES OR ANYWHERE ELSE. Without limitation to the foregoing: • In the United Kingdom The content of this document has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (as amended, the "FSMA"). Reliance on this document for the purpose of engaging in any investment activity may expose the individual to a significant risk of losing all of the property or other assets invested. This document may not be distributed to any persons in contravention of section 21 of the FSMA. Accordingly, the information contained in this communication is made to or directed at solely the following categories of persons within the United Kingdom: (a) those persons falling within the definition of Investment Professionals (contained in article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005) ("FPO"); or (b) any other persons to whom it can lawfully be communicated in accordance with the FPO, (together, "relevant persons"). This document and the investments to which this communication relates will only be available to relevant persons in the United Kingdom described above and no one falling outside such categories is entitled to rely on, and they must not act on, any information in this document. The information contained in this document is provided for information and discussion purposes only and is not, and may not be relied on in any manner as, legal, tax or investment advice. This document, as well as any subsequent solicitation related to any investment opportunity, does not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not authorised or in which the person making such an offer or solicitation is not qualified to do so or with respect to any person to whom it is unlawful to make an offer or solicitation. It is the responsibility of each investor (including an investor outside of the United Kingdom) to satisfy itself as to full compliance with the laws and regulations of the relevant jurisdiction and where in any doubt to seek appropriate legal advice. ANZ 4#5DISCLAIMER (CONT.) The Bank provides no guarantees, representations or warranties regarding the accuracy of this information. No third party liability is accepted by the Bank, its directors and employees in respect of errors and omissions other than under the duties and liabilities of the FSMA. . In the European Economic Area: This document is not directed at, and no Securities should be offered, sold or otherwise made available to, retail investors in the European Economic Area (the "EEA"). For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended ("MiFID II"); (ii) a customer within the meaning of Directive 2002/92/EC, as amended or superseded ("Insurance Mediation Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a "qualified investor" as defined under the Directive 2003/71/EC, as amended or superseded (the "Prospectus Directive"). No key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPS Regulation") for offering or selling any Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling any Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. If you are a retail investor, you should not access this document nor act upon the material contained in this document. Each person who reviews this document is taken to represent for the benefit of the Bank and its affiliates that it is a person to whom this document may be lawfully distributed in accordance with the laws applicable to that person. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained in it. The Bank or any of its affiliates, advisors or representatives shall not have any liability whatsoever (in negligence or otherwise) for any loss, damage, claim, liability, proceeding, cost or expense ("Liability") howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Bank's control that could cause the actual results, performance or achievements of the Bank or any other person to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. The information in this document is supplied in summary form and is therefore not necessarily complete. Neither the Bank, nor any of its affiliates, agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. Further, indications of past performance will not necessarily be repeated in the future and should be treated with appropriate caution. The information contained in this document has been prepared without taking into account the objectives, financial situation or needs of any person and any Securities or strategies mentioned in it may not be suitable for all investors. Investors and prospective investors in any Securities are required to make their own independent investigation and appraisal of the business and financial condition of the Bank, the nature of the Securities and any tax, legal, accounting and economic considerations relevant to the purchase of the Securities. All investments entail risk and may result in both profits and losses. Foreign currency rates of exchange may adversely affect the value, price or income of any Securities mentioned in it. Neither the Bank nor any of its affiliates, advisors or representatives warrant guarantee or stand behind the performance of any such Securities. This document contains data sourced from and the views of independent third parties such as the Australian Prudential Regulation Authority, the Reserve Bank of Australia and the Reserve Bank of New Zealand. In replicating such data in this document, the Bank makes no representation, whether express or implied, as to the accuracy of such data. The replication of any views in this document should be not treated as an indication that the Bank agrees with or concurs with such views. If this document has been distributed by electronic transmission, such as email, then such transmission cannot be guaranteed to be secure or error free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The Bank and its affiliates do not accept any Liability as a result of electronic transmission of this document. Investors should not subscribe for or purchase any Securities referred to in this presentation except on the basis of the information in the information memorandum dated 21 May 2019, as supplemented by supplements dated 10 July 2019, 11 July 2019, 18 July 2019, 1 August 2019, 19 August 2019, 20 August 2019 and 5 November 2019. ANZ 5#6ANZ TLAC & TIER 2 CAPITAL UPDATE 16#7ANZ'S INTERNATIONALLY COMPARABLE¹ REGULATORY CAPITAL POSITION APRA Level 2 CET1 Corporate undrawn EAD and unsecured LGD adjustments 1 30 September 2019 11.4% Australian ADI unsecured corporate lending LGDs and undrawn CCFs exceed those applied in many jurisdictions 1.6% Equity Investments & DTA APRA requires 100% deduction from CET1 vs. Basel framework which allows concessional threshold prior to deduction 0.9% Mortgages APRA requires use of 20% mortgage LGD floor vs. 10% under Basel framework. Additionally, APRA also requires a higher correlation factor vs. 15% under Basel framework. 1.2% Specialised Lending APRA requires supervisory slotting approach which results in more conservative risk weights than under Basel framework 0.7% IRRBB RWA Other APRA includes in Pillar 1 RWA. This is not required under the Basel framework 0.2% Includes impact of deductions from CET1 for capitalised expenses and deferred fee income required by APRA, currency conversion threshold and other retail standardised exposures 0.4% Basel III Internationally Comparable CET1 Basel III Internationally Comparable Tier 1 Ratio Basel III Internationally Comparable Total Capital Ratio 16.4% 18.8% 21.4% 1. Internationally Comparable methodology aligns with APRA's information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor ANZ 7#8CET1 AND LEVERAGE IN A GLOBAL CONTEXT ABN Amro Svenska Handelsbanken SEB Swedbank Morgan Stanley Danske Bank ANZ RBS Rabobank Groupe BPCE Credit Agricole Group Nordea ING Group OCBC HSBC UOB Raiffeisen Bank International (RBI) Standard Chartered DBS Goldman Sachs Erste Bank Deutsche Bank Barclays UBS JP Morgan Intesa Sanpaolo Commerzbank Wells Fargo Credit Suisse Citibank State Street BNP Paribas UniCredit Societe Generale Bank of America TD RBC BBVA Santander BMO Scotia 5% CET1 RATIOS¹ 10% 15% 20% 2% OCBC UOB DBS BBVA Erste Bank Raiffeisen Bank International (RBI) Intesa Sanpaolo ANZ HSBC Rabobank Credit Agricole Group Standard Chartered UBS Credit Suisse RBS Groupe BPCE Nordea Barclays Santander UniCredit Swedbank ABN Amro SEB Svenska Handelsbanken Commerzbank Danske Bank ING Group RBC Societe Generale BMO Scotia BNP Paribas Deutsche Bank TD LEVERAGE RATIOS1,2 4% 6% 8% Leverage ANZ compares equally well on leverage, however international comparisons are more difficult to make given the favourable treatment of derivatives under US GAAP 1. CET1 and leverage ratios are based on ANZ estimated adjustment for accrued expected future dividends where applicable. ANZ ratios are on an Internationally Comparable basis. All data sourced from company reports and ANZ estimates based on last reported half/full year results assuming Basel III capital reforms fully implemented 2. Includes adjustments for transitional AT1 where applicable. Exclude US banks as leverage ratio exposures are based on US GAAP accounting and therefore incomparable with other jurisdictions which are based on IFRS. ANZ 8#9AUSTRALIA'S TLAC REGIME APRA'S TLAC REQUIREMENTS APRA has announced that it will require Australian D-SIB's to meet TLAC requirements by an increase in Total Capital of 3% of RWA by Jan 2024 Its overall targeted calibration of an additional 4%-5% of RWA to meet TLAC remains unchanged, so over the next four years they will consider "feasible alternative methods" for raising an additional 1% to 2% of RWA Regulatory Minimum Including Buffers 17% Additional 3% (~AUD12b) of Tier 2 capital by 1 Jan 2024 14.0% T2 12.0% AT1 10.5% CET1 Buffer 8.0% CCB1 4.5% CET1 Minimum ANZ'S TOTAL REGULATORY CAPITAL 2.1% Based on ANZ's RWA of AUD417b as at 30 September 2019, the additional 3% equates to an incremental increase of approximately ~AUD12b of Tier 2 capital 1.9% T2 (~AUD8.5b) AT1 (~AUD7.9b) This will result in an estimated Total Capital ratio, on an internationally harmonised basis of ~25% well in excess of the FSB TLAC minimum of 21.5% (18% plus Capital Conservation Buffer (CCB) of 3.5%) 11.4% CET1 (~AUD47.4b) Tier 2 capital outstanding as at 30 September 2019 is ~AUD8.5b (2.1% of Level 2 RWA) Total Tier 2 requirement (including refinancing) by January 2024 is AUD21b (5.0% of Level 2 RWA) Current Regulatory Total Capital Minimum 14% includes "Unquestionably Strong" CET1 of 10.5% 5.0% (~AUD21b) AUD12b increase (3% of RWA) 30 September 2019 1 January 2024 1. APRA may set higher minimum capital requirements for individual ADIs. A counter-cyclical buffer of up to 2.5% may also be required, which APRA has currently set for Australia at 0%. ANZ 9#101. CET1 VOLUME IN EXCESS AT UNQUESTIONABLY STRONG, MANAGEMENT ACTIONS AND PROFITABILITY PROTECT TIER 2 INVESTORS BUFFERS AND PROTECTIONS FOR TIER 2 INVESTORS Management • Actions • Possible actions that may be considered to strengthen capital include: • • Reducing dividend payout DRP discount and underwrite New share issuance Expense management Restricting RWA growth CCB Restrictions Regulatory restrictions on ordinary share dividends, discretionary bonuses and AT1 distribution payments if CCB buffer is breached Hierarchy Respected Mandatory conversion to equity or write- off of AT1 securities if CET1 ratio falls to 5.125% of RWA or at the point of non- viability (determined by APRA) ANZ'S BALANCE SHEET AND EARNINGS BUFFERS Potential loss absorption Future Earnings¹ AUD65b CET1 AUD55b AT1 T2 30 September 2019 Future earnings are not forecast. Cash Profit before provisions and tax for the 12 months to 30 September 2019 was AUD10.0b. Represents an additional potential amount available for loss absorption. ANZ 10#11ANZ'S TIER 2 CAPITAL PROFILE¹ ANZ'S TIER 2 CAPITAL REQUIREMENT TO PROGRESSIVELY INCREASE POST TLAC ANNOUNCEMENT • Issued AUD1.75b in July 2019 • Current portfolio includes 38% in AUD (32% domestic AUD) - strong capacity remaining in AUD TIER 2 CAPITAL Notional amount By Format Required portfolio increase from AUD7.6b to ~AUD21b by January 2024 • Annual total T2 issuance expected to be ~AUD4bn • • Potential issuance in multiple currencies in both callable and bullet format • Capacity in EUR T2 with no current outstandings following recent Sep-19 maturity No AUD retail T2 outstanding Extensive global USD T2 investor base ANZ has historically had strong support from Asian local currency markets, both in benchmark and Private Placement format Increased T2 issuance expected to be offset by reduction in other senior unsecured funding • Well managed amortisation profile provides flexibility regarding issuance tenor FUNDING PROFILE Notional amount, AUDm 1. 2. By Currency 6% 6% 7% Bullet 6% 46% Callable 54% 32% CAPITAL AMORTISATION PROFILE² AUDM USD AUD Domestic 43% AUD Offshore JPY SGD CNY 2,937 2,282 1,368 1,068 824 2,444 LL...... 831 735 674 498 131 225 0 FY21 FY22 FY23 FY24 FY25 FY26 FY27 456 456 225 FY20 Scheduled Bullet and Call Date Profile FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 Callable Bullet Amortisation Profile is AUD equivalent based on historical FX, excluding Perpetual Floating rate notes issued 30 October 1986 (which loses Basel III transitional relief in 2021). Any call is subject to APRA's prior written approval and note holders should not expect approval to be given. Amortisation profile is modelled based on scheduled first call date for callable structures and in line with APRA's amortisation requirements for bullet structures. ANZ 11#12AUSTRALIAN TIER 2 IN A TLAC/MREL CONTEXT APRA'S CONSERVATIVE RISK WEIGHTS COMBINED WITH "UNQUESTIONABLY STRONG" CET1 REQUIREMENTS PROVIDE STRONG PROTECTIONS FOR TIER 2 INVESTORS. AN ILLUSTRATIVE LOSS OF 5% OF ASSETS IS PRESENTED BELOW Illustrative Loss Absorption 5.0% of Assets % over Assets 2.1 T2 AT1 CET1 MREL 0.6 0.7 0.8 0.8 0.5 0.5 0.6 0.6 0.6 0.5 0.4 0.4 0.4 4.5 3.0 3.1 2.8 2.6 0.5 0.4 0.5 0.4 4.0 3.4 3.2 2.6 ANZ UK Peer 1 UK Peer 2 French Peer 1 French Peer 2 Dutch Peer 1 Dutch Peer 2 Nordic Peer 1 Nordic Peer 2 Average RWA Density¹ 43% 26% 25% 28% 26% 27% 34% 20% 27% KEY METRICS ROE² (%) 10.9 9.3% 11.5% Cost/Income (%) 49.5 64.0% 45.9% 9.6% 64.5% 5.5% 13.6% 5.9% 9.0% 7.2% 54.0% 56.4% 64.4% 57.4% 60.0% NIM (%) 1.76 3.4% 2.9% 1.1% 1.7% 1.7% 1.4% 0.8% 0.9% NPL (%) 0.33 2.4% 1.9% 2.5% 3.4% 2.3% 3.2% 1.3% 1.9% Source: Company disclosures and Moody's Ratings. Latest available data as of 4 November 2019 (as at 30 September 2019 for ANZ) Over total assets. 1. 2. ROTE are shown for the UK banks as ROE is not available. ANZ 12#13PROPOSED TRANSACTION OVERVIEW ANZ IS CONSIDERING AN INAUGURAL SDG TIER 2 TLAC ELIGIBLE BOND ISSUE • • On January 1 2016, the SDGs came into effect. The 17 goals and 169 targets are aimed at solving the world's most pressing sustainable development challenges - ending global poverty, protecting our planet and ensuring human rights - by 2030. In September 2016 our CEO Shayne Elliott joined over 30 leaders from the Australian business community to sign a public CEO Statement of Support for the Goals. In September 2019 ANZ became a founding signatory to the UN Principles for Responsible Banking, a key aim of which is to accelerate the banking industry's contribution to the achievement of society's goals as expressed in the SDGs and the Paris Climate Agreement. On 4 November 2019 our CEO announced ANZ's new 2025 sustainable financing target of AUD50bn. This is targeted towards initiatives that help improve environmental sustainability, increase access to affordable housing and promote financial wellbeing and is directly mapped to 6 of the SDGs. ANZ issued an inaugural EUR750m 5 year fixed rate SDG senior bond transaction in February 2018. ANZ's proposed transaction would be one of the first "follow on" SDG transactions from an issuer. It would also be the first SDG bank capital transaction from an Australian Bank. ANZ's proposed SDG Tier 2 bond will rank pari passu with all other ANZ outstanding Tier 2 debt instruments. Proceeds of this bond and ANZ's first SDG bond will be used to partially finance or refinance an AUD3,394m / EUR2,096m* pool of ANZ loans and expenditures that directly promote the SDGs ("Eligible Assets") as identified in the ANZ SDG Bond Framework. Payment of interest or principal is not linked to the credit or sustainability performance of the Eligible Assets. ANZ continues to observe and support the development of "sustainable" capital markets. A Tier 2 SDG bond would be a natural evolution for ANZ following the successful issuance of our inaugural EUR750m SDG senior bond in February 2018. *Eligible Asset volumes are as at 30 September 2019. AUD total figure is equivalent to EUR 2,096m using AUD/EUR exchange rate as at 30 September 2019. Please note that the Issuer has issued, and may, from time to time, issue Other SDG Securities and use their proceeds of issue to finance or refinance Eligible Assets. The Issuer may, from time to time, re-allocate or apportion at its discretion Eligible Assets among the Notes and other SDG Securities. The Eligible Assets currently support an existing EUR750m Senior Unsecured 0.625 percent Notes due 21 February 2023 (XS1774629346) and proposed transaction. ANZ 13#14ANZ EMTN EUR TIER 2 SUBORDINATED SDG NOTES KEY TERMS Issuer Issuer Senior Ratings Expected Issue Rating² Programme / Documents Status Ranking Format Early Optional Redemption Date Clearing Min Denom Other Governing Law Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) ("ANZ") Aa3 (Stable) | AA- (Stable) | AA- (Negative) (Moody's/S&P/Fitch) Baa1 | BBB +| A+ (Moody's/S&P/Fitch) Information Memorandum for ANZ's Euro Medium Term Note Programme dated 21 May 2019 ("Information Memorandum") as supplemented¹ Subordinated Notes. The Subordinated Notes will be direct, unsecured and subordinated obligations of ANZ and are expected to constitute Tier 2 capital of ANZ The Subordinated Notes will rank equally among themselves and with Equal Ranking Securities, behind Senior Creditors and ahead of Junior Ranking Securities as described in the Information Memorandum Fixed Rate Sustainable Development Goals (SDG) Subordinated Notes; Registered Form; EUR denominated Issuer may redeem the Notes in whole (but not in part) at its discretion on: (i) the specified date if there is an Issuer Call Option; (ii) certain tax events; or (iii) certain regulatory events. - Redemption at prevailing principal amount plus accrued but unpaid interest. Early redemption of the Subordinated Notes is subject to APRA's prior written approval Euroclear, Clearstream EUR100k with integral multiples of EUR1k ASX wholesale debt listing (securities are not quoted for trading on ASX); IWT exempt (except as specified in the Information Memorandum); No set-off or cross-default English law, except for conversion, write-off and subordination provisions which are governed by Victorian and Australian law 1. Defined terms have the meaning contained in the Information Memorandum. 2. Ratings may be changed, suspended or withdrawn at any time and are not a recommendation to buy, hold or sell any security. ANZ 14#15Non-Viability Trigger Event Loss Absorption Mechanism Conversion Price Use of Proceeds Selling Restrictions A Non-Viability Trigger Event occurs when APRA has provided a written determination to ANZBGL that the conversion or write- off of certain securities of ANZBGL is necessary because without either such Conversion or Write-Off or a public sector injection of capital, ANZBGL would become non-viable - - If a Non-Viability Trigger Event occurs, ANZ will be required to immediately convert some or all of the principal amount of the Subordinated Notes into ANZ ordinary shares¹ Subordinated Notes only absorb loss after all Additional Tier 1 Securities are written off or converted to ordinary shares (in full) A mechanism to sell any shares issued as a result of conversion and deliver cash to investors is included in the programme if the noteholder (1) notifies the Issuer prior to the Non-Viability Trigger Event that it does not wish to receive shares; (2) is a foreign holder; or (3) in certain other instances specified in the Information Memorandum If conversion does not occur within 5 Business Days of a Trigger Event Date, the Notes will be written off (with effect from the Non-Viability Trigger Event) Variable with 1% discount to the 5 Business Day VWAP prior to the Non-Viability Trigger Event (subject to a floor set at 20% of the VWAP over the 20 Business Days prior to the Issue Date) VWAP is calculated as the equivalent in the specific currency (if the Notes are not denominated in AUD) ANZ intends to use an amount equal to the net proceeds of the issue of the Notes to finance or refinance Eligible Assets which satisfy ANZ's SDG Bond Framework A failure by ANZ to: (i) allocate and use the proceeds as described in the Framework; (ii) comply with the framework or prepare reports; or (iii) the failure of any third-party opinions will not be an Event of Default and holders will have no recourse to ANZ No security interest in the Eligible Assets is created As set out in the section headed "Subscription and Sale" in the Information Memorandum If Call Option: 1. Issuer Call Option In whole (but not in part) at the Issuer's discretion on the Interest Payment Date scheduled to fall on [] at the prevailing principal amount plus any accrued but unpaid interest Early redemption of the Subordinated Notes is subject to the prior written approval of APRA All Notes must convert into ANZ ordinary shares or are written off in the event that APRA has notified ANZ in writing that without a public sector injection of capital, or equivalent support, ANZ would become non-viable. ANZ 15#16ANZ SUSTAINABILITY AT ANZ 16#17ANZ AND THE SDGs ANZ IS A SIGNATORY TO THE CEO STATEMENT OF SUPPORT ISSUED BY THE UN GLOBAL COMPACT NETWORK OF AUSTRALIA IN SEPTEMBER 2016 In November 2019, we announced our commitment to a new AUD50b 2025 Sustainability Target aligned to the SDGs SUSTAINABLE GALS DEVELOPMENT NO 1 POVERTY 2 ZERO HUNGER 3 AND WELL-BEING GOOD HEALTH 4 EDUCATION QUALITY 5 GENDER EQUALITY 6 CLEAN WATER AND SANITATION SSS 7 AFFORDABLE AND CLEAN ENERGY DECENT WORK AND ECONOMIC GROWTH M W 9 AND INFRASTRUCTURE AND INFRASTRUCTURE 10 REDUCED INEQUALITIES 11 SUSTAINABLE CITIES AND COMMUNITIES 12 RESPONSIBLE CONSUMPTION AND PRODUCTION 13 CLIMATE ACTION 14 LIFE BELOW WATER 15 LIFE ON LAND 16 PEACE JUSTICE AND STRONG INSTITUTIONS 17 FOR THE GOALS PARTNERSHIPS SUSTAINABLE DEVELOPMENT GOALS On January 1 2016, the United Nations SDGs came into effect. The 17 goals and 169 targets are aimed at solving the world's most pressing sustainable development challenges - ending global poverty, protecting our planet and ensuring human rights - by 2030. ANZ recognises the important role businesses will play in achieving the SDGs and believes them to represent an opportunity for business-led solutions and technologies to be developed and implemented ANZ 17#18ANZ HAS AN INTEGRATED APPROACH TO SUSTAINABILITY PURPOSE ANZ's purpose is to shape a world where people and communities thrive ANZ's Board has the highest level of oversight for sustainability We were the first bank globally to report using the recommendations of the TCFD Chaired by ANZ's CEO, the Ethics and Responsible Business Committee is accountable for advancing ANZ's purpose ANZ's Sustainability Framework ата FAIR AND RESPONSIBLE BANKING SHAPE A WORLD WHERE PEOPLE AND COMMUNITIES THRIVE ESG TARGETS We exceeded our 2015 commitment to fund and facilitate at least AUD15bn in environmentally sustainable solutions by October 2020 We recently announced a new commitment to fund and facilitate AUD50bn by 2025 towards sustainable solutions In 2018 we renewed our support for Paris and issued a revised Climate Change Statement committing us to encourage and support 100 of our largest emitting customers transition to a low carbon economy ANZ has introduced a new target to procure 100% renewable electricity for our global operations by 2025 ANZ's business operations have been carbon neutral since 2010 ANZ has committed to enable social and economic participation of 1 million people by 2020 through our initiatives to support financial wellbeing Through the Healthy Homes initiative, we have committed to provide NZD100m of interest free loans to insulate homes for ANZ mortgage holders in New Zealand TEAM ANZ Group Treasury has implemented Green and Sustainability Bond programs with ~AUD1.8bn on issue currently, and intends to target annual issuance with their programs. ANZ has a dedicated Sustainable Finance team that actively works with institutional customers to fund requirements for a transition towards a low carbon, more sustainable economy ANZ was awarded the Best Sustainable Finance House 2018 award by FinanceAsia Contributed to market development across Asia Pacific through the following industry group memberships: • ICMA Green Bond Principles • Climate Bonds Initiative (CBI) partner • LMA/APLMA Green Loans Committees SteerCo & Technical Working Group Members/Leads - Australian Sustainable Finance Initiative and NZ Sustainable Finance Forum ⚫ UN Global Compact's Action Platform for Financial Innovation of the SDGS A ENVIRONMENTAL SUSTAINABILITY HOUSING FINANCIAL WELLBEING "Each year, ANZ sets public targets which reflect our strategic priorities and respond to our most material environmental, social and governance issues (ESG)." -news.anz.com 4 November 2019 "ESG used to be something you did as an add-on. Now it's an integral part of how we run the bank - it's part of everything we do." Shayne Elliott, CEO ANZ 18#19FY19 ESG TARGET PERFORMANCE SCORECARD SNAPSHOT We are committed to the United Nations Sustainable Development Goals (SDGs). Our ESG targets support 10 of the 17 SDGs. ESG target FAIR AND RESPONSIBLE BANKING Implement new Dispute Resolution Principles in Australia Communicate with >700,000 of our retail and commercial customers by 2019 to help them get more value from our products and services and establish positive financial behaviours ENVIRONMENTAL SUSTAINABILITY Fund and facilitate at least AUD15 billion by 2020 towards environmentally sustainable solutions for our customers including initiatives that help lower carbon emissions, improve water stewardship and minimise waste¹ Reduce the direct impact of our business activities on the environment by reducing scope 1 & 2 emissions by 24% by 2025 and 35% by 2030 (against a 2015 baseline) FINANCIAL WELLBEING Help enable social and economic participation of 1 million people by 20202 Increasing women in leadership to 33.1% by 2019 (34.1% by 2020)³ Recruiting >1,000 people from under-represented groups by 2020 HOUSING Provide NZD100 million of interest free loans to insulate homes for ANZ mortgage holders (New Zealand) Offer all ANZ first home buyers access to financial coaching support In progress X Not achieved Outcome Relevant SDGs Progress Achieved Implemented > 1 million AUD19.1 billion -25% >998k 32.5% × 734 NZD6.3 million >3.3k coaches trained AFFORDABLE AND CLEAN ENERGY INDUSTRY INNOVATION AND INFRASTRUCTURE RESPONSIBLE 12TION AND PRODUCTION Q CLIMATE ACTION SUSTAINABLE CITIES AND COMMUNITIES POVERTY 5 GENDER EQUALITY DECENT WORK AND ECONOMIC GROWTH M 10 REDUCED INEQUALITIES PARTNERSHIPS FOR THE GOALS INDUSTRY INNOVATION AND INFRASTRUCTURE REDUCED 10LITIES SUSTAINABLE CITIES 11 AND COMMUNITIES For detailed performance information refer to the 2019 ESG Supplement available in December 2019 anz.com/cs. 1. Including renewable energy generation, green buildings and less emissions intensive manufacturing and transport 2. Through our initiatives to support financial wellbeing including financial inclusion, employment and community programs, and targeted banking products and services for small businesses and retail customers 3. FY18-FY20 target is defined as Women in Leadership which measures representation at the Senior Manager, Executive and Senior Executive levels. ANZ 19#20ESG PERFORMANCE TRENDS COMMUNITY INVESTMENT¹ Total community investment (AUDm) 131 90 75 137 MONEYMINDED & SAVER PLUS Estimated # of people reached 142 88,308 90,724 80,074 69,826 65,549 ENVIRONMENTAL FINANCING $15B TARGET Funded and facilitated (AUDb) 19.1 11.5 6.9 2.5 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2016 2017 2018 2019 EMPLOYEE ENGAGEMENT² Employee engagement score (%) 77 76 74 72 73 2015 2016 2017 2018 2019 ENVIRONMENTAL FOOTPRINT TARGET Scope 1 & 2 greenhouse gas emissions (k tonnes CO2-e) WOMEN IN LEADERSHIP³ Representation (%) 32.5 210 32.0 194 31.1 181 29.5 29.9 171 157 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 1. Figure includes forgone revenue (2019 = $109m), being the cost of providing low or fee-free accounts to a range of customers such as government benefit recipients, not-for-profit organisations and students 2. The 2017 engagement survey was run as a pulse survey sent to 10% of the bank's employees with a 57% response rate. For all other years the employee engagement survey was sent to all staff 3. Measures representation at the Senior Manager, Executive and Senior Executive Levels. Includes all employees regardless of leave status but not contractors (which are included in FTE). ANZ 20#21ANZ'S ESG RATING SCORECARD TRACKING OF EXTERNAL ESG RATING PERFORMANCE Context: Our reputation indicators identify our key weakness, scrutinised in the Royal Commission, as our failure to always responsibly deliver products and services, e.g. fees for no service. DJSI¹ 0 MSCI² CCC Sustainalytics³ Severe ISS-oekom4 D- Bank industry median, 46 82 86, Highest bank 100 ANZ A AAA Medium risk, top 19th percentile C+, Best banking peer Negligible A+ Outcome: Reputation indicators for ANZ and other major banks show long-term, mid-range rank among major corporates, followed by 12 months of decline throughout the Royal Commission. All indicators are consistent. Relevant ESG target: Group scorecard, maintain strong performance on Dow Jones Sustainability Index. 1: 2019, Dow Jones Sustainability Index; 2: ESG Rating, October 2019, MSCI ESG Research; 3: ESG Risk Rating Report, April 2019; 4: Corporate Rating, April 2019, Institutional Shareholder Services oekom. ANZ 21#22ANZ SDG BOND FRAMEWORK & ELIGIBLE ASSETS 22#23ANZ SDG BOND PROGRAMME OVERVIEW ANZ SDG Bond Framework Aligned to the UN SDGs and updated to align to the 2018 ICMA Principles and Guidelines Obtained a second party opinion from Sustainalytics¹ to confirm alignment of the ANZ SDG Bond Framework with the 2018 ICMA Principles and Guidelines (this opinion is available on the ANZ Debt Investor website) Obtained pre-issuance assurance from Ernst & Young (EY)2 to confirm that the allocation of proceeds to eligible assets has been done in accordance with the ANZ SDG Bond Framework. ANZ will continue to obtain assurance on an annual basis (these assurance statements are available on the ANZ Debt Investor website) Governance ANZ's SDG Programme adheres to the four pillars: 1. Use of Proceeds - 。 Project Finance loans, Corporate loans and ANZ expenditures aligned to the Eligible Categories o Corporate loans must have a definable purpose that derive at least 90% of their revenue from activities in the Eligible Categories 2. Process for Evaluation & Selection - o 9 of the 17 SDGs were selected based on ANZ's business activities and operations 3. Management & Tracking of Proceeds 。 Green Bond Working Group ensures proceeds remain allocated 。 Monthly monitoring of the eligible asset register/pool 。 Unallocated proceeds: to be invested in cash or Government/Semi-Government securities only 4. Reporting & Disclosures 。 Semi-annual Use of Proceeds reports 。 Annual Impact reports 。 Assurance statements, second party opinions and the SDG Bond Framework on the Debt Investor website Progress Issued first SDG Bond in February 2018 Reported/reporting Use of Proceeds reports semi-annually (on the ANZ Debt Investor website) Published Inaugural Impact report in July 2019 (on the ANZ Debt Investor website) Evolved the Eligible Asset pool from EUR925m at issuance to EUR2,096m as at 30 September 2019 (this is an increase of EUR1,171m) 1. Currently, the provider of the Sustainalytics opinion is not subject to specific regulatory or other regime or oversight and that opinion is provided for information purposes only and on a no liability basis. 2. The Ernst & Young Assurance is subject to the specific scope, limitations, assumptions and qualifications set out in it, including that Ernst & Young does not accept or assume any responsibility to any third parties ANZ 23#24ANZ IS A LEAD ISSUER IN SUSTAINABILITY BONDS ANZ'S INAUGURAL SDG BOND WAS ISSUED IN FEBRUARY 2018 . • . • The ANZ SDG Bond Framework was developed in line with the International Capital Market Association ("ICMA") Green Bond Principles ("GBP"), Social Bond Principles ("SBP") 2017, and related Sustainability Bond Guidelines 2017 ("SBG") ANZ's successful inaugural SDG Bond issued in February 2018 was a EUR750m 5 year senior unsecured, paying fixed rate annual coupons, ranking pari passu with all other ANZ senior unsecured debt instruments Proceeds were used to finance or refinance an AUD1,450 / EUR9251 pool of ANZ loans and expenditures that directly promote the SDGS ("Eligible Assets") as identified in the ANZ SDG Bond Framework The inaugural SDG Bond Impact Report was published in July 2019 and Use of Proceeds reports have been published semi annually • Payment of interest or principal is not linked to the credit or sustainability performance of the Eligible Assets OUTSTANDING BOND AND ELIGIBLE ASSET REPORTING² ALLOCATION OF PROCEEDS BY SDGS³ Bond Features Eligible Assets (EUR million) Unallocated 9.9% Proceeds 8.3% Issuer ANZ 21 February '18 925 0 38.4% Issue date 21 February 2018 31 March '18 913.8 0 Currency EUR 30 September '18 928.9 0 Tenor Issued amount 5 years 750 million 31 January '19 879.6 0 27.5% ISIN: XS1774629346 31 March '19 30 September '19 977.4 0 939.2 0 0.5% 15.5% SDG 3.8 Achieve universal health covereage SDG 11.2 Provide access to safe, affordable, sustainable transport SDG 10.2 Promote social, economic and political inclusion SDG 9.4 Upgrage infrastructure and make industries sustainable SDG 7.2 increase % of renewables inglobal energy miv SDG 4.3 Ensure equal access for men and women to affordable education 1. Eligible Asset volume as at 31 January 2018 and AUD/EUR as at 12 February 2018. 2. Use of Proceeds Reports available at https://www.anz.com/debtinvestors/centre/green-sustainability- bonds. 3. Allocation of proceeds as at 30 September 2019. ANZ 24#25ANZ'S INAUGURAL SDG BOND IMPACT REPORT WAS PUBLISHED IN JULY 2019 INAUGURAL REPORTED IMPACTS¹ AS AT 31 MARCH 2019 SDGs GOOD HEALTH AND WELL-BEING QUALITY EDUCATION • • • 7 AFFORDABLE AND CLEAN ENERGY INDUSTRY INNOVATION AND INFRASTRUCTURE 10 REDUCED INEQUALITIES 11 SUSTAINABLE CITIES AND COMMUNITIES . Hospitals: ~4,180 beds in total Aged Care: 149 homes and ~12,700 beds Impact (at project/asset level)² Operation of existing 3,700 student beds across 9 sites Construction of new 500-bed student residence Access to affordable housing that does not exceed 75% of market rental rates Wind and solar energy generation: о wind farm (2) о solar farm (1) о total installed capacity of 460MW Total of ~27,000 tCO2 of avoided emissions Construction of 6 green buildings to either Green Star Design or NABERS standards Money-Minded: as of November 2018, has reached 580,000 participants across 25 countries in the Asia Pacific region Saver Plus program: assisted over 36,000 people with financial wellbeing 1 existing train network upgrade: 500k more passenger movements during week day peak periods • 1 new light rail network construction to be powered entirely by renewable energy, creating a 33% reduction in emissions 1. 2. SDG Bond Impact Report available at https://www.anz.com/debtinvestors/centre/green-sustainability-bonds ANZ wishes to highlight and draw investors' attention to the fact that the impact figures above, other than in respect of SDG 10, have been presented, analysed and recorded at the project level and have not been apportioned in accordance with the volume of ANZ's lending to each project. Although ANZ is a co-financier, impact figures have not been presented on the basis of the volume of ANZ's lending to each project at this stage. In instances where ANZ's lending to a project is nil at 31 March 2019 (i.e. a loan facility continues to exist, however the lending is undrawn at that time), the impact figures for the individual projects remain incorporated in the aggregated impact data. This treatment has been applied in order to protect the confidentiality of ANZ's customers. ANZ 25#26EVOLUTION OF ELIGIBLE ASSET POOL FEBRUARY 2018 Pool Size: EUR925m By SDGs By Loan Туре By Asset Туре 0.5% 7.9% 21.2% 5.4% 9.8% 32.8% 65.4% 0.5% 55.2% SEPTEMBER 2019 Pool Size: EUR2,096m 15.7% 0.2% 31.3% SDG 3 13.2% SDG 4 SDG 6 SDG 7 SDG 9 SDG 10 SDG 11 11.3% 20.0% 8.4% 60.2% 66.7% 0.2% 39.6% Allocated to Corporate Transactions Allocated to Project Finance Transactions Allocated to ANZ Expenditures 34.6% 42.8% Green Asstes Social Assets 57.2% ANZ 26#27ELIGIBLE ASSETS¹ SDGs 3 GOOD HEALTH AND WELL-BEING W❤ QUALITY EDUCATION 6 CLEAN WATER AND SANITATION GBP/SBP Category² Access to essential services; Socioeconomic advancement and empowerment; Affordable basic infrastructure Access to essential services; Socioeconomic advancement and empowerment Affordable basic infrastructure, sustainable water and wastewater management, socioeconomic advancement and empowerment 7 AFFORDABLE AND CLEAN ENERGY Renewable energy 9 INDUSTRY, INNOVATION AND INFRASTRUCTURE Green buildings 10 REDUCED INEQUALITIES 11 SUSTAINABLE CITIES AND COMMUNITIES Socioeconomic advancement and empowerment Clean transportation; Affordable basic infrastructure; Access to essential services Unallocated Proceeds Total Asset / Type Location Total by SDGs (AUD) Total by SDGs (EUR) % Aged Care & Hospital / Corporate & Project Finance Australia, VIC, QLD, NSW, SA 1,062m 656m 31.3% University & Student housing / Corporate & Project Finance Australia, VIC, NSW, ACT, TAS 382m 236m 11.3% Desalination / Project finance VIC, NSW 284m 175m 8.4% Renewable - Solar, Wind, Hydro / Project Finance VIC, NSW, QLD, TAS, Taiwan 678m 418m 19.9% Commercial Office / Corporate & ANZ Expenditure VIC, NSW, QLD, WA, NT, Australia 448m 276m 13.2% ANZ Money Minded and Saver Plus/ ANZ expenditure Global 7m 4m 0.2% Clean Transport / Project Finance Australia, NSW, QLD 534m 329m 15.7% Om AUD 3,394m³ Om 0% EUR 2,0963 100% 1. These calculations are of available Eligible Assets as at the date of this presentation that may be financed or refinanced in part or in whole by the net proceeds of the existing SDG Bond and the proposed SDG Bond, if issued. This information is indicative only and subject to change without notice. 2. GBP refers to Green Bond Principles and SBP refers to Social Bond Principles. 3. Eligible Asset volumes are as at 30 September 2019. AUD total figure is equivalent to EUR 2,096m using AUD/EUR exchange rate as at 30 September 2019. Please note that the Issuer has issued, and may, from time to time, issue Other SDG Securities and use their proceeds of issue to finance or refinance Eligible Assets. The Issuer may, from time to time, re-allocate or apportion at its discretion Eligible Assets among the Notes and other SDG Securities. The Eligible Assets currently support an existing EUR750m Senior Unsecured 0.625 percent Notes due 21 February 2023 (XS1774629346) and proposed transaction. ANZ 27#28INDEPENDENT REVIEW SUSTAINALYTICS OPINION AND ERNST & YOUNG ASSURANCE ANZ retains a second party opinion from Sustainalytics¹ to confirm the alignment of the ANZ SDG Bond Framework with the GBPS, SBPS and relevant SDGs. "Overall, Sustainalytics is of the opinion that the ANZ SDG Bond Framework is credible and transparent as: (i) it aligns with the Sustainability Bond Guidelines 2018, (ii) it transparently links example projects and eligibility criteria, as well as assets to the SDGs, and (iii) ANZ commits to report transparently on social and environmental impact, and progress towards the SDGs annually throughout the term of the bond" Sustainalytics - This opinion is available on the ANZ Debt Investor Website ANZ has also obtained pre-issuance assurance from Ernst & Young ("EY") 2 to confirm that the proposed allocation of proceeds to Eligible Assets has been done in accordance with the ANZ SDG Bond Framework. ANZ will continue to obtain assurance on an annual basis. "Based on our reasonable assurance procedures, as described in this statement as of 01 November 2019, in our opinion ANZ's bond issuance process in relation to its Sustainable Development Goals (SDG) Bond meets the requirements of the Sustainability Bond Guidelines 2018 and associated Social Bond Principles 2018 and Green Bond Principles 2018, in all material respects" - EY These assurance statements are available on the ANZ Debt Investor Website 1. Currently, the provider of the Sustainalytics opinion is not subject to any specific regulatory or other regime or oversight and that opinion is provided for information purposes only and on a no liability basis. 2. The Ernst & Young Assurance is subject to the specific scope, limitations, assumptions and qualifications set out in it, including that Ernst & Young does not accept or assume any responsibility to any third parties ANZ 28#29ANZ CONTACTS & APPENDICES 29#30FURTHER INFORMATION Personal Business Corporate Search Debt Investors Debt Strategy Covered Bonds Green and Sustainability Bonds Securitisation Credit Ratings Programmes Debt Investor Centre Everything you need to manage your ANZ debt investments FOLLE Debt Investor Presentations Debt Programmes Covered Bonds K Green & Sustainability Bonds Securitisation Credit Ratings Find ANZ a Contact Key contacts Adrian Went Group Treasurer +61 3 8654 5532 +61 412 027 151 [email protected] Scott Gifford Head of Debt Investor Relations +61 3 8655 5683 +61 434 076 876 [email protected] Mary Makridis Associate Director Investor Relations +61 3 8655 4318 [email protected] Mostyn Kau Head of Group Funding +61 8655 3860 +61 478 406 607 [email protected] Katharine Tapley Head of Sustainable Finance +61 2 8937 6092 [email protected] Simon Reid Director of Group Funding +61 2 8655 0287 +61 481 013 637 [email protected] Tessa Dann Associate Director Sustainable Finance +61 2 8037 0602 [email protected] John Needham Head of Capital and Secured Funding +61 2 8037 0670 +61 411 149 158 [email protected] General Mailbox Debt Investor Relations [email protected] For further information visit ANZ Debt Investor Centre https://www.anz.com/debtinvestors/centre/ ANZ ESG Supplement anz.com/cs Corporate Governance Statement anz.com/corporate governance ANZ 30#31APPENDIX 1: ELIGIBLE ASSET CATEGORIES 3 GOOD HEALTH AND WELL-BEING 4 QUALITY EDUCATION 6 CLEAN WATER AND SANITATION 7 AFFORDABLE AND CLEAN ENERGY Eligibility Criteria: Activities that provide access to essential health-care services, promote metal health and wellbeing and achieve universal health coverage Examples: Public hospitals, private hospitals that are non-for-profit or provide social benefit programs to disadvantaged communities, aged care services Eligibility Criteria: Activities that promote equal access for all men and women to affordable and quality education Examples: Technical, vocational and tertiary education providers, construction of facilities such as tertiary campuses, universities, student housing or training infrastructure Eligibility Criteria: Activities that provide access to safe and affordable drinking water, improve water quality and/or increase water use efficiency Examples: Water treatment facilities, water supply and distribution, water recycling facilities Eligibility Criteria: Activities that increase the share of renewable energy in the global mix, and expand infrastructure and upgrade technology for supplying modern, reliable and sustainable energy services for all Examples: Wind, solar, hydro power, biomass, or geothermal generation, as well as energy efficient technologies in new and refurbished buildings, energy storage, district heating or smart grids ANZ 31#32APPENDIX 1: CONTINUED INDUSTRY, INNOVATION 9 AND INFRASTRUCTURE 10 REDUCED INEQUALITIES Eligibility Criteria: Activities that upgrade infrastructure and retrofit industries and make them sustainable, with increased resource use efficiency and greater adoption of clean and environmentally sound technologies Examples: Construction, renovation or operation of sustainable buildings with minimum GREEN STAR 5, NABERS 5, BREAM Excellent, NABERNZ excellent energy ratings, or equivalent Eligibility Criteria: Activities aimed at supporting people from marginalised / underrepresented groups to advance their socio- economic position Examples: Financial education programs, training programs and services for individuals to access employment, access to affordable housing with high employment availability to low socio-economic groups SUSTAINABLE CITIES 11 AND COMMUNITIES Eligibility Criteria: Activities that contribute to the construction or investment of registered affordable housing, or construction or operation of clean transportation facilities or associated infrastructure Examples: Light passenger rail, new rail facilities for public use, electric vehicles, cycle ways and other forms of bicycle infrastructure 12 RESPONSIBLE CONSUMPTION AND PRODUCTION QO 13 CLIMATE ACTION Eligibility Criteria: Activities that improve waste management by reducing waste from the source, recycling or composting or diverting waste from landfill Examples: Waste management facilities, Waste to energy facilities, facilities that encourage sustainable farming practices that includes organic farming and water efficiency initiatives Eligibility Criteria: Activities that demonstrably contribute to reducing vulnerability to climate and do not increase carbon emissions, or improve education or effective planning and management of climate change Examples: Natural disaster prevention infrastructure, education programmes to increase awareness and knowledge on climate related issues ANZ 32#33ANZ 2019 FULL YEAR RESULTS SHAYNE ELLIOTT CHIEF EXECUTIVE OFFICER 33#34FINANCIAL SNAPSHOT FY19 FY19 v FY18 Statutory Profit ($m) 5,953 -7% Cash Profit (continuing operations) ¹ ($m) 6,470 0% Return on Equity 10.9% -10bps Earnings Per Share (cents) 228 +2% Dividend Per Share (cents) 160 flat Franking (FY19 avg) CET1 Ratio (APRA) Total Capital (CET1) ($m) 85% -15% 11.4% stable 47,355 +6% Net Tangible Assets Per Share ($) 19.59 +6% Shares on issue (end of period #m) Risk Weighted Assets ($b) 2,835 417 -1% +7% Solid result in a challenging environment Disciplined approach to balance sheet growth Capital management driving real benefits to shareholders 1. Includes the impact of large / notable items ANZ 34#356 POINT PLAN FOCUSING RESOURCES TO DELIVER FOR CUSTOMERS, SHAREHOLDERS & THE COMMUNITY 1 Running the business well (2) Maintaining discipline within Institutional (3 Resolving our challenges in NZ 4 Investing to prepare Australia for growth 5 Driving further simplification 6 Building the team's resilience and capability ANZ 35#36RUN THE BUSINESS WELL AUSTRALIA RETAIL AND COMMERCIAL □ Changed our management structure & team □ Continuing to invest in process redesign □ Refining credit policies within a prudent risk appetite □ Delegating more decisions to front line LAUNCHED A MAJOR HOUSING MARKETING CAMPAIGN 300,000 QANTAS POINTS FREQUENT FLYER + WIN UP TO APPLY BY 31 AUGUST SETTLE BY 31 JANUARY 2020 $500K OFF YOUR HOME LOAN WITH AN ELIGIBLE ANZ HOME LOAN OVER $300K* A HOME LOAN OFFER SO GOOD YOU DON'T NEED A CELEBRITY □ Monitoring key operational metrics. OANZ Home Loans □ Focusing on improving operational capacity and approval turnaround time ANZ ANZ 36#37RUN THE BUSINESS WELL CUSTOMER REMEDIATION CUMULATIVE CUSTOMER REMEDIATION CHARGE Pre tax $m 51 220 153 Mar-17 Sep-17 Continuing operations 928 753 1,579 Mar-18 Sep-18 Mar-19 Sep-19 Discontinued (Wealth businesses) >1,000 people progressing remediation activities. ANZ 37#38RUN THE BUSINESS WELL NEW ZEALAND BS11 (Outsourcing Policy) Requires all large banks in New Zealand to have compliant outsourcing arrangements by 2022 To ensure banks can continue to run, manage, and provide banking services to NZ customers on a standalone basis if required RBNZ Capital Review Paper 4 Expected to be finalised in Dec 2019 Relates to the amount of regulatory capital required of locally incorporated banks Impacts Group capital requirements as New Zealand is required to retain earnings & reduce dividends paid to ANZ parent entity to meet higher capital requirements ANZ 38#39INVESTING FOR GROWTH GROUP INVESTMENT SPEND¹ $m 1,234 1,218 1,153 1,179 430 491 410 473 1,403 564 PREPARING FOR CHANGE LAST DECADE Universal services Mass share One price for all Transactions Value from branches High system growth Bank competition Hardware Waterfall More capital Enforceable undertakings Falling credit costs Globalisation Financial risk NEXT DECADE? Specialisation Targeted share Risk based pricing Discussions Value from data Low system growth Experience competition Software Agile More compliance Court action Rising credit costs Protectionism Non-financial risk 804 839 743 706 727 FY15 FY16 FY17 FY18 FY19 1. Rest of Group Australia Retail & Commercial Prior periods restated from previously reported information to include technology infrastructure spend, property projects and scaled agile delivery ANZ 39#40CAPITALISED SOFTWARE BALANCE1 $b 3 2 1 0 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16 Sep-18 Sep-19 ANZ Peer 3 Peer 2 Peer 1 1. Source: Capitalised software balances sourced from publicly available company financials; 2019 numbers are based on the most recently disclosure financial statements ANZ 40#41ANZ 2019 FULL YEAR RESULTS MICHELLE JABLKO CHIEF FINANCIAL OFFICER 41#42OVERVIEW CASH PROFIT 1,2 $m CASH EPS1,2 ROE1,2 cents % CET1 RATIO (LEVEL 2) % 6,809 6,487 6,470 233 11.7 11.4 223 228 11.4 11.0 10.9 10.6 FY17 FY18 FY19 1. Cash Profit from continuing operations 2. FY17 has not been restated for AASB15 impacts FY17 FY18 FY19 FY17 FY18 FY19 Sep-17 Sep-18 Sep-19 ANZ 42#43REGULATORY DEVELOPMENTS IN CONSULTATION STAGE APRA - Investments in subsidiaries (APS111) RBNZ Capital proposals - □ APRA - Ongoing APRA regulatory reviews¹ RECENTLY FINALISED (IMPLEMENTING) APRA LEVEL 1 & LEVEL 2 FY19 NET ORGANIC CAPITAL GENERATION bps SEP-19 CET1 RATIOS 165 11.4% 11.4% ~136 □ APRA - Limits on related party exposures (APS222) APRA Level 2 APRA Level 1 APRA Level 2 APRA Level 1 APRA - Loss absorbing capacity (TLAC) 1. Level 1 lower than Level 2 due to ~$1.5b lower NZ dividends in 2019 Other ongoing APRA regulatory reviews potentially impacting the future capital position include: Revisions to capital framework (RWA) and Unquestionably Strong capital calibration, Transparency, Comparability and Flexibility proposals, revisions to Interest Rate Risk to the Banking Book and Market Risk. ANZ 43#44FINANCIAL PERFORMANCE CASH PROFIT CONTINUING OPERATIONS CASH PROFIT DRIVERS $m 6,487 79 -21% FY18 Large / Notable items after tax¹ 1 -94 -134 0% 0% 20% 131 6,470 -5% Revenue Expenses Provisions Tax & NCI FY19 CASH PROFIT DIVISIONAL PERFORMANCE $m 79 6,487 Australia Retail & FY19 V FY18 Institutional 151 6,470 NZ (NZD) Commercial 172 14 Income -6% 5% 2% -22 -411 Expenses 0% -3% 5% Includes $79m from share of associates profit Cash Profit -10% 11% -4% FY18 Large Notable items after tax¹ Australia Retail & Comm. Institut. (ex. Markets) Markets NZ Other FY19 1. Details of large / notable items provided in the investor discussion pack - additional financials section ANZ 44#45AUSTRALIA RETAIL & COMMERCIAL INCOME EXCLUDING LARGE / NOTABLE ITEMS AND HOUSING PORTFOLIO INCOME COMPOSITION HOUSING PORTFOLIO1,2 $m 10,165 9,575 $b 264 272 265 9 8 7 26 49 49 37 14 3,238 3,114 22 33 44 54 49 39 4,807 4,768 1,590 1,524 6,927 6,461 FY18 164 156 134 3,217 3,244 FY19 1H19 2H19 Retail Commercial 1. Includes Non Performing Loans 2. Sep-17 Sep-18 OO P&I Inv P&I OO I/O Inv I/O Sep-19 Equity Manager The current classification of Investor vs Owner Occupier is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances ANZ 45#46AUSTRALIA RETAIL & COMMERCIAL IMPROVING MOMENTUM □ Clarity and consistency on policy and risk settings Approval turnaround times □ Industry conditions OUTLOOK - HOUSING MOMENTUM HOME LOAN APPLICATION TREND 3 month rolling average (Index Sep 2017 = 100) 110 100 90 80 70 60 "Offer So Good" campaign July 2 to August 31 - 50 50 Pick up in application volumes in 4Q19 Improved momentum into 1Q20 40 30 20 10 □ Faster loan amortisation in a low rate environment 0 Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun- Sep- 17 17 18 18 18 18 19 19 19 ANZ 46#47INSTITUTIONAL INCOME CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS INSTITUTIONAL INCOME COMPOSITION¹ $m 4,970 48 +5% 5,198 42 1,766 1,780 MARKETS INCOME COMPOSITION $m -1% 1,780 63 1,766 38 446 566 -4% -12% 2,657 940 2,541 23 361 470 19 826 271 448 256 48 940 826 190 1,296 1,173 235 236 234 126 644 652 880 921 459 463 1,521 1,625 815 810 -10 FY18 FY19 1H19 2H19 FY18 FY19 1H19 2H19 L&SF PCM Trade Markets Other Franchise Sales Franchise Trading Balance Sheet DVA² 1. 2. L&SF: Loans & Specialised Finance; PCM: Payments & Cash Management; Trade: Trade & Supply Chain Derivative valuation adjustments ANZ 47#48NET INTEREST MARGIN CONTINUING OPERATIONS GROUP NET INTEREST MARGIN (NIM) bps 180 -2 -2 -6bps impact of lower rates -5bps 1 175 2 -1 172 -2 -8bps 1H19 Asset & Funding Mix Treasury Deposits Wholesale Funding Cost Assets 2H19 Underlying¹ Markets Large / Balance Sheet Notable Items Activities² 2H19 1. Excluding large / notable items and Markets Balance Sheet activities 2. Includes the impact of growth in discretionary liquid assets and other balance sheet activities ANZ 48#49MARGIN ENVIRONMENT LOW RATE ENVIRONMENT SWITCHING FROM INTEREST ONLY TO PRINCIPAL & INTEREST Sep-19 $b Sensitivity to a 25bps drop in AUD, NZD and USD interest rates Deposits & earnings on capital 23 24 20 ~3 bps 8 10 16 6 11 $b 7 ~110 13 16 6 14 FY17 FY18 FY19 FY20 FY21 FY22 FY23+ Early conversions Contractual conversions Contractual (still to convert) BILLS/OIS SPREAD 1H19 average 48 bps ~53 % 2H19 average 27 bps 10 bps mvmt. in BBSW/OIS 1 bp NIM 75 60 45 30 15 X 0 Low rate deposits <25bps Capital (excluding intangibles) and other non interest bearing liabilities Oct- 17 Jan- Apr- 18 18 Jul- 18 Oct- 18 Jan- 19 Apr- 19 Jan- Sep- 19 19 Spot 3mth Bills/OIS Spread Rolling 90 days ANZ 49#50EXPENSES CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS FY19 EXPENSE DRIVERS $m 8,563 136 -259 Includes Personnel & Property productivity (net of $160m inflation) -48 -1.6% 0% 170 8,562 Includes Regulatory & Compliance $125m FY18 FX BAU D&A Investment FY19 ANZ 50#51INVESTMENT SPEND CONTINUING OPERATIONS TOTAL INVESTMENT SPEND BY DIVISION1 Capex and Opex $m 1,403 113 1,234 1,218 1,179 85 1,153 61 204 66 75 127 150 137 129 160 169 252 164 175 197 204 204 164 187 164 144 135 176 177 430 FY15 Australia Retail & Commercial 410 FY16 Property & Enablement 473 FY17 Technology Infrastructure 491 564 FY18 Institutional Digital, Data & Payments FY19 New Zealand 1. Prior periods restated from previously reported information to include technology infrastructure spend, property projects and scaled agile delivery ANZ 51#52CUSTOMER REMEDIATION TOTAL REMEDIATION - POST TAX IMPACT $m 377 127 559 Financial impact 154 405 123 72 250 40 45 53 70 1H17 2H17 1H18 2H18 1H19 2H19 Discontinued Continuing TOTAL REMEDIATION - P&L IMPACT 16% 13% 28% 18% 21% 19% 41% 55% 61% 52% 43% 32% 1H18 2H18 1H19 2H19 Net interest income Other operating income Expenses $826m ($682m post tax) charge in FY19 $1,579m ($1,216m post tax) charges since 1H17 $1,139m provisions on balance sheet at 30 Sep 2019 Progress to date¹ Banking product & service review well progressed Remediation of advice & other wealth products continue Over 1,000 staff progressing remediation activities 1. Salaried Financial Planner fee for no service addressed in prior years (>$150m cumulative pre-tax charges). ANZ 52#53DIVIDEND GEOGRAPHIC EARNINGS AUSTRALIA GEOGRAPHY EARNINGS & DPOR¹ 69% 82% 76% 73% 72% 64% 64% 62% 61% 55% GEOGRAPHIC EARNINGS¹ % of total Group Statutory Profit 11% 10% 11% 16% 16% 25% 26% 28% 22% 29% 62% 64% 64% 61% 55% FY15 FY16 FY17 FY18 FY19 DPOR Australia Geography earnings (% of total statutory earnings) FY15 Australia FY16 FY17 FY18 FY19 New Zealand International 1. Statutory Profit basis 2. DPOR: Dividend payout ratio ANZ 53#542019 FULL YEAR RESULTS ANZ INVESTOR DISCUSSION PACK GROUP & DIVISIONAL PERFORMANCE#55FINANCIAL PERFORMANCE - STATUTORY TO CASH PROFIT STATUTORY PROFIT $m -7% 6,406 6,400 5,953 5,709 FY161 FY171 FY18 FY19 CASH PROFIT REPORTED $m +6% 6,938 6,161 5,889 5,805 FY161 FY171 FY18 FY19 CASH PROFIT CONTINUING OPERATIONS $m 0% 6,809 6,487 6,470 5,889 FY161,2 FY171 FY18 FY19 STATUTORY TO CASH ADJUSTMENTS Cash profit represents ANZ's preferred measure of the result of the ongoing business activities of the Group, enabling readers to assess Group and Divisional performance against prior periods and against peer institutions. To calculate cash profit, the Group excludes non-core items from statutory profit. Cash Profit continuing operations excludes the financial results of the Wealth Australia businesses being divested and associated Group reclassification and consolidation impacts treated as discontinued operations from a financial reporting perspective. 1. FY16 and FY17 have not been restated for AASB15 impacts 2. FY16 has not been restated to reflect discontinued operations ANZ 55#56LARGE / NOTABLE (L/N) ITEMS¹ 1H17 2H17 1H18 2H18 1H19 2H19 Cash Profit Continuing Operations ($m) 3,355 3,454 3,493 2,994 3,564 2,906 Gain (Loss) on sale from divestments -284 14 138 53 187 18 Divested business results Customer remediation Restructuring 274 187 70 56 25 7 -40 -72 -45 -250 -70 -405 -25 -18 -55 -104 -36 -18 Royal Commission legal costs 0 0 -11 -27 -9 -1 Gain on sale of 100 Queen St. Melbourne 112 0 0 0 0 0 Accelerated software amortisation 0 0 0 -206 0 0 Total L/N within Cash Continuing Profit 37 111 97 -478 97 -399 Cash Profit ex L/N 3,318 3,343 3,396 3,472 3,467 3,305 Cash Profit ex L/N Growth HOH 0.75% 1.59% 2.24% -0.14% -4.67% Cash Profit ex L/N Growth PCP 2.35% 3.86% 2.09% -4.81% 1H17 2H17 1H18 2H18 1H19 2H19 Gain / (Loss) on Sale from divestments ($m) Asia Retail MCC SRCB UDC Cambodia JV OPL NZ PNG Retail, Com, SME Paymark ✓ ✓ ✓ Divested Business Results ($m) SRCB Asia Retail MCC ✓ ✓ ✓ OPL NZ ✓ ✓ ✓ Paymark ✓ ✓ ✓ Cambodia JV PNG Retail, Com, SME ✓ ✓ ✓ ✓ ✓ ✓ 1. Large / notable items exclude the gain / (loss) on sale and divested business results of OnePath Life and One Path P&I, both accounted for as discontinued businesses. ANZ 56#57BALANCE SHEET COMPOSITION BY SEGMENT NET LOANS & ADVANCES $b CUSTOMER DEPOSITS $b 606 615 580 7 150 165 132 512 487 468 2 217 206 189 97 96 14 14 133 97 331 341 339 95 98 102 182 184 189 Sep-17 Housing (Aus & NZ) Sep-18 Sep-19 Sep-17 ■-1 Sep-18 Sep-19 Other Retail (Aus & NZ) Commercial (Aus & NZ) Institutional Other Retail (Aus & NZ) Institutional Commercial (Aus & NZ) Other ANZ 57#58EXPENSE MANAGEMENT CONTINUING OPERATIONS TOTAL EXPENSES CONTINUING OPERATIONS $b 1. FULL TIME EQUIVALENT STAFF EX LARGE / NOTABLE ITEMS $b #'000s CONTINUING OPERATIONS #'000s -4% 9.4 0% 9.0 9.1 8.5 8.6 8.6 50.2 1.7 37.9 3% 37.6 3% 46.6 1.5 1.9 44.9 1.4 1.5 1.5 0.2 0.1 39.9 0.1 39.1 28% 29% 1.6 1.9 1.5 1.6 1.6 1.5 0.9 0.8 0.8 0.9 0.8 0.8 16% 16% 4.9 4.8 4.8 4.7 4.6 4.7 42.9 16% 15% 37.9 37.6 37% 37% FY171 FY18 FY19 FY171 FY18 FY19 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-18 Sep-19 Personnel Premises Technology Restructuring Other Discontinued Business Continuing Business Australia R&C Institutional TSO & Group Centre Pacific NZ FY17 has not been restated for AASB15 impacts ANZ 58#59AUSTRALIA RETAIL & COMMERCIAL BALANCE SHEET NET LOANS & ADVANCES¹ $b Commercial Subdued system growth & increased competition offset by specialist segment growth Retail - Housing Refer Housing section' for further detail CUSTOMER DEPOSITS $b Customer preferences favouring saving products in low rate environment and transactional digital payments offering 208 340 341 335 337 204 332 201 203 203 58 58 58 57 26 27 30 28 28 57 12 11 13 11 10 27 27 28 27 27 27 87 87 98 86 83 80 60 177 183 186 185 185 Sep-17 Mar-18 Comm Other Retail Sep-18 Housing - Inv Mar-19 Sep-19 Housing - 00 1. Housing O0 includes Equity Manager; Other retail includes Australia Wealth retained - 56 99 92 22 Sep-17 Transact 58 58 92 92 89 19 58 61 88 93 87 Mar-18 Offset Sep-18 Term Deposit Mar-19 Sep-19 Savings ANZ 59#60AUSTRALIA RETAIL & COMMERCIAL FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Income ($m) Slower credit demand, tighter home loan origination risk settings, increased competition, deposit margin impacts Productivity initiatives including workforce and branch optimisation have offset increased compliance costs and technology infrastructure spend Expenses ($m) Lower collective provision charge reflects reduced FUM. Credit provisions remain below long-run averages Profit and Returns Total Provisions ($m) Cash Profit ($m) 5,137 5,028 4,807 1,898 4,768 1,858 1,858 1,885 386 396 2,046 312 316 1,946 1,786 1,795 375 350 338 355 -25, 11. 46 1H18 2H18 1H19 2H19 1H18 2H18 1H19 2H19 1H18 2H18 1H19 -39 2H19 1H18 2H18 1H19 2H19 IP CP NLAs ($b) & NIM FTE Risk Weighted Assets ($b) Return 340 341 337 332 14,673 13,731 13,660 13,903 6.36% 6.25% 6.04% 6.02% 161 159 159 162 2.79% 2.65% 2.63% 2.62% 2.53% 2.42% 2.24% 2.26% 1H18 2H18 1H19 2H19 Mar-18 Sep-18 Mar-19 Sep-19 1H18 2H18 1H19 2H19 1H18 2H18 1H19 2H19 NLA NIM% Revenue / Avg RWA Return on Avg RWA ANZ 60#61INSTITUTIONAL FY19 FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS Continued momentum and customer revenue growth 5,501 Income ($m) 4,970 Productivity focus maintained, absolute cost reduction Credit charges remained below long run trend Targeted profitable growth and improved returns 5,198 2,772 Expenses ($m) 2,661 Total Provisions ($m) Cash Profit ($m) 89 1,877 1,852 2,575 1,666 4,061 4,057 4,341 50% 54% 50% FY173 FY18 FY19 Revenue Customer Revenue FY173 Expenses FY18 FY19 Cost-to-income ratio FY17 -46 FY18 FY173 FY18 FY19 FY19 Risk Adjusted Margin 2.20% 2.04% FTE Avg. Risk Weighted Assets ($b) Return 2.28% 6,135 3.24% 5,566 5,458 170 168 3.07% 3.09% 162 FY17 FY18 FY19 Sep-17 Sep-18 Sep-19 FY17 FY18 FY19 1.1% FY173 1.0% FY18 1.1% FY19 Risk adjusted NIM¹ Revenue / Avg RWA Return on Avg RWA² 1. 2. Cash profit divided by average risk weighted assets 3. FY17 has not been restated for AASB15 impacts Institutional ex-Markets net interest income divided by average credit risk weighted assets ANZ 61#62NEW ZEALAND DIVISION FINANCIAL PERFORMANCE: CONTINUING OPERATIONS EXCLUDING LARGE / NOTABLE ITEMS 1. Solid home lending growth within a competitive environment Increased regulatory compliance requirements Provisions returning to more normalised levels Margin compression, compliance costs and provisions impacting returns Income (NZDm) Expenses (NZDm) Total Provisions (NZDm) Cash Profit (NZDm) 1,731 1,752 1,756 1,782 688 61 817 780 782 625 632 638 744 22 31 42 36 37 16 19 -14 -6 -32 -16 1H18 2H18 1H19 2H19 1H18 2H18 1H19 2H19 1H18 1H18 2H18 1H19 2H19 2H18 1H19 2H19 IP CP NLAS (NZDb) & NIM FTE¹ Risk Weighted Assets (NZDb) Return 119 122 124 126 6,319 6,165 6,003 6,121 71 5.67% 5.72% 5.71% 5.75% 61 62 62 2.42% 2.41% 2.38% 2.35% 2.55% 2.67% 2.54% 2.40% 1H18 2H18 1H19 2H19 Mar-18 Sep-18 Mar-19 Sep-19 Mar-18 Sep-18 Mar-19 Sep-19 1H18 NLAS NIM On a Continuing Operations basis 2H18 1H19 2H19 Revenue Avg RWA Return on Avg RWA ANZ 62#63ANZ 2019 FULL YEAR RESULTS INVESTOR DISCUSSION PACK TREASURY#64REGULATORY CAPITAL CAPITAL UPDATE APRA Level 2 CET1 ratio of 11.4% (16.4% on an Internationally Comparable basis¹), which is in excess of APRA's 'unquestionably strong' benchmark². APRA Level 1 CET1 ratio of 11.4%. Level 1 consolidation primarily comprises ANZ BGL (the Parent including offshore branches) but excludes offshore banking subsidiaries³. APRA Leverage ratio of 5.6% (or 6.2% on an Internationally Comparable basis). Asset divestments contributed ~$2b in 2H19 (mainly divestment of OPL Australia) Pro-forma adjusted CET1 ratio of ~11.5%, including benefits from P&I divestment (~20bps), partially offset by IFRS16 impacts (~-7bps) Organic Capital Generation Net organic capital generation of 75bps for 2H19 - in line with historical averages of ~80bps (excluding Institutional rebalancing) Capital Outlook - Regulatory Development " APRA LEVEL 2 COMMON EQUITY TIER 1 (CET1) % Net Organic Capital Generation +75bps 0.83 0.02 0.52 11.44 11.49 11.36 -0.10 -0.56 -0.51 -0.13 -0.20 Sep-18 Mar-19 Cash NPAT Business Deduc- growth tions5 RWA Capital Dividends Asset Net Reme- Other Sep-19 Divest Imposts diation ments RBNZ capital proposal - Potential impact of NZ$6b to NZ$8b for ANZ NZ (from Sep-18). Final impact depends on the outcome of the RBNZ consultation. LEVEL 2 BASEL III CET1 APRA loss absorbing capacity (TLAC) - Total Capital requirements increased by 3% of RWA (~$12b in Tier 2 based on Sep-19 position) by January 2024. % 16.8 Revisions to treatment of equity investments in subsidiaries - in the absence of any offsetting management actions, this implies a reduction in ANZ's Level 1 CET1 capital ratio of up to approximately $2.5b (75bps). However, ANZ believes that this outcome is unlikely and, post implementation of management actions, the net capital impact could be minimal. Other ongoing APRA regulatory reviews potentially impacting the future capital position include: Revisions to capital framework (RWA), Unquestionably Strong capital calibration, and the Transparency, Comparability and Flexibility proposals. 11.4 11.5 Sep-18 Mar-19 APRA Internationally Comparable¹ 16.9 11.4 Sep-19 16.4 1. Internationally Comparable methodology aligns with APRA's information paper entitled International Capital Comparison Study (13 July 2015). Basel III Internationally Comparable ratios do not include an estimate of the Basel I capital floor 2. Based on APRA information paper "Strengthening banking system resilience - establishing unquestionably strong capital ratios" released in July 2017 3. Refer to ANZ Basel III APS330 Pillar 3 disclosures 4. Cash NPAT excludes 'Large/notable' items' and one-off items 5. Mainly comprises the movement in retained earnings in deconsolidated entities and capitalised software 6. Includes SA-CCR (-18bps); APRA Operational Risk overlay (-18bps); and RWA floors for NZ housing/farm exposures (-18bps) 7. Other impacts include movements in non-cash earnings and net foreign currency translation ANZ 64#65REGULATORY CAPITAL GENERATION COMMON EQUITY TIER 1 GENERATION (bps) Cash NPAT¹ RWA movement Capital Deductions² Net capital generation Gross dividend Dividend Reinvestment Plan³ 2H averages Full Year average 2H19 FY19 2H12-2H18 FY12-FY18 95 83 189 172 1 (10) (13) (7) (6) 2 (18) 90 75 158 165 (61) (57) (128) (117) 10 1 19 2 Core change in CET1 capital ratio 39 19 49 50 Other non-core and non-recurring items (2) (32) 7 (58) Net change in CET1 capital ratio 37 (13) 56 (8) HISTORICAL NET ORGANIC CAPITAL GENERATION bps Avg +141bps (ex. Institutional portfolio rebalancing FY16 & FY17) Organic Capital Generation ☐ Net organic capital generation of +165bps for FY19 and +75bps for 2H19 Excluding Institutional portfolio rebalancing period, FY19 net organic capital generation is stronger by +24bps Avg +204bps Institutional portfolio rebalancing 229 182 165 179 144 119 128 130 bps FY12 FY13 FY14 FY15 FY16 FY17 FY18 1. Cash NPAT excludes 'large/notable items' & one off items (which are included as "other non-core and non-recurring items") 2. Represents movement in retained earnings in deconsolidated entities, capitalised software, expected losses in excess of eligible provisions shortfall and other intangibles 3. Includes Bonus Option Plan FY19 ANZ 65#66BALANCE SHEET STRUCTURE1 BALANCE SHEET COMPOSITION Liquid and Other Assets 29% Short Term Wholesale Debt & Other Funding² 25% FI Lending 6% Non-FI Lending 25% Corporate, PSE & Operational Deposits 21% NSFR COMPOSITION Sep 2019 $515b Wholesale Funding & Other³ Non Financial Corporates $443b Liquids and Other Assets4 Other Loans 5 Retail/SME Capital Available Stable Funding NSFR MOVEMENT Sep 2018 v Sep 2019 Retail & SME Deposits 31% Residential Mortgages 6,7 <35% Required Stable Funding ~115% adjusted for CLF reduction from 1 Jan 2020 0.8% 2.6% 0.2% 116.4% -0.2% -0.6% 114.6% -1.0% Mortgages 40% Long Term Wholesale Debt 14% Capital Incl. Hybrids & T2 Assets 9% Funding Sep-18 Retail/Corp/ Loans Operational Deposits Wholesale Debt, SHE & Hybrids Liquid Assets Bank Deposits Other8 Sep-19 & Repo Funding 1. NSFR Required Stable Funding (RSF) and Available Stable Funding (ASF) categories and all figures shown are on a Level 2 basis per APRA prudential standard APS210 2. Includes FI/Bank deposits, Repo funding and other short dated liabilities 3. 'Other' includes Sovereign, and non-operational FI Deposits 4. 'Other Assets' include Off Balance Sheet, Derivatives, Fixed Assets and Other Assets 5. All lending >35% Risk weight 6. Includes NSFR impact of self-securitised assets backing the Committed Liquidity Facility (CLF) 7. <35% Risk weighting as per APS 112 Capital Adequacy: Standardised Approach to Credit Risk 8. Net of other ASF and other RSF ANZ 66#67LIQUIDITY COVERAGE RATIO (LCR) SUMMARY1 LCR COMPOSITION (AVERAGE) FY19 $188b Internal RMBS Other ALA² HQLA2 $134b Wholesale funding HQLA1 Customer deposits Liquid Assets & other³ Net Cash Outflow MOVEMENT IN AVERAGE LCR SURPLUS ($b) FY18 v FY19 | FY18 | LCR 138% 2 53 -4 1 0 -4 FY19 LCR 140% 6 54 FY18 CLF4 Liquid Assets LCR Surplus Retail/SME Corp/FI/ Wholesale PSE Funding Other5 FY19 LCR Surplus 1. All figures shown on a Level 2 basis as per APRA Prudential Standard APS210 2. Comprised of assets qualifying as collateral for the Committed Liquidity Facility (CLF), excluding internal RMBS, up to approved facility limit; and any assets contained in the RBNZ's liquidity Policy - Annex: Liquidity Assets - Prudential Supervision Department Document BS13A 3. 'Other' includes off-balance sheet and cash inflows 4. RBA CLF increased by $1.1b from 1 January 2019 to $48.0b (2018: $46.9b, 2017: $43.8b) 5. 'Other' includes off-balance sheet and cash inflows ANZ 67#68TERM WHOLESALE FUNDING PORTFOLIO¹ • ANZ's term funding requirements depend on market conditions, balance sheet needs and exchange rates, amongst other factors ANZ estimates an FY20 funding requirement broadly consistent with previous years at ~ $25b ISSUANCE $b 32 $14.5b in AUD and NZD 2 MATURITIES 24 24 19 22 22 22 222 FY13 FY14 FY15 FY16 FY17 PORTFOLIO 16% 7% 2% 75% FY18 Senior Unsecured 27 24 23 21 FY19 FY20 Covered Bonds FY21 Tier 2 18 44 14 11 2 FY22 RMBS FY23 FY24 FY25 FY26+ PORTFOLIO BY CURRENCY 23% Senior Unsecured Covered Bonds Tier 2 RMBS 5% 34% 38% Domestic portfolio up from 33% in FY18 Domestic (AUD, NZD) North America (USD, CAD) UK & Europe (£, €, CHF) Asia (JPY, HKD, SGD, CNY) 1. All figures based on historical FX and exclude AT1. Includes transactions with an original call or maturity date greater than 12 months as at the respective reporting date. Tier 2 maturity profile is based on the next callable date ANZ 68#69IMPACTS OF RATE MOVEMENTS BILLS/OIS SPREAD bps 65 60 55 50 45 40 35 25 20 O5O505 15 10 30 3.0 2.5 CAPITAL & REPLICATING DEPOSITS PORTFOLIO (AUSTRALIA) % CAPITAL² & REPLICATING DEPOSITS PORTFOLIO 2.0- 1.5 1.0 0 0.5 Oct- Jan- Apr- 17 18 18 Jul- Oct- 18 18 Jan- Apr- Jan- 19 19 19 Sep- 19 - 1. 2. Spot 3mth Bills/OIS Spread Rolling 90 days Oct- Jan-Apr- Jul- Oct- Jan- Apr- Jul- Oct- Jan- Apr- Jul-Sep- 16 17 17 17 17 18 18 18 18 19 19 19 19 - 3mth BBSW (Monthly Average) - Portfolio Earnings Rate FY18 Ave¹: 36.3bps FY18 Ave: 2.29% 1H18 Ave: 24.4bps 2H18 Ave: 48.1bps 1H18 Ave: 2.29% 2H18 Ave: 2.28% FY19 Ave¹: 37.5bps FY19 YTD Ave: 2.08% 1H19 Ave: 48.0bps 2H19 Ave: 27.0bps 1H19 Ave: 2.21% 2H19 Ave: 1.95% 90 day rolling average of spot 3mth Bills/OIS spread Includes other Non-Interest Bearing Assets & Liabilities AUST NZ APEA Volume ($A) ~60bn ~20bn ~10bn Target Duration Rolling 3 to 5 years Various Proportion Hedged ~70% ~75% Various ANZ 69#70CAPITAL FRAMEWORK CURRENT REGULATORY PROPOSALS AND RECENT FINALISATION¹ RBNZ capital framework Counterparty Credit Risk³ Leverage ratio Advanced approach to credit risk 1H19 2H19 2020 2021 Consultation Finalise² Implementation Consultation Standardised approach to credit risk Consultation Operational risk Consultation Interest rate risk in the banking book Loss absorbing capacity Consultation Finalise (LAC)4 Related party exposures Consultation Finalise Capital treatment for Investments in subsidiaries (Level 1) Consultation Consultation Finalise Transition 2022 2023 2024 Implementation Implementation Finalise Implementation Finalise Implementation Implementation Implementation Implementation Transition Implementation Consultation Implementation 1. Timeline is based on APRA's 2019 Policy Agenda (published February 2019) 2. RBNZ is expected to finalise reforms towards the end of 2019 calendar year 3. Implementation 1 July 2019 4. Only in relation to the 3% of RWA increase in Total Capital requirements announced in July 2019 ANZ 70#71ANZ 2019 FULL YEAR RESULTS INVESTOR DISCUSSION PACK RISK MANAGEMENT#72KEY RISK METRICS CREDIT IMPAIRMENT CHARGE $m INDIVIDUAL PROVISION (IP) CHARGE $m $m 787 554 430 343 398 COLLECTIVE PROVISION (CP) BALANCE & COVERAGE Sep-19 CP/CRWA impacted -3bps by increase in CRWA's from regulatory & methodology changes (incl. SA-CCR) 3,378 3,376 380 2,785 2,662 2,579 2,523 0.98% 0.94% 0.81% 0.79% 0.75% 0.75% 720 479 408 393 402 0.25% 280 0.16% 0.14% 0.13% 0.13% 1H17 2H17 1H18 0.09% 2H18 1H19 Total Provision Charge 2H19 1H17 2H17 1H18 New Increased 2H18 1H19 Writebacks & Recoveries 2H191 CIC as % Avg. GLA GROSS IMPAIRED ASSETS NEW IMPAIRED ASSETS Mar-17 Sep-17 Mar-18 Sep-18 Mar 19 Sep-19 CP Balance (AASB9) CP Balance CP/CRWA AUSTRALIA MORTGAGES 90DPD (INCL NPL) $m $m $m 2,940 1,787 3,071 2,384 2,034 1,425 2,139 2,128 2,029 1,145 963 1,117 890 2,013 0.79% 2,226 0.84% 2,401 0.89% 2,373 0.86% 2,696 1.00% 1.16% Mar-17 Sep-17 Australia Mar-18 New Zealand Sep-18 Mar-19 Sep-19 1H17 2H17 1H18 2H18 1H19 2H192 Mar-17 Institutional Other Australia New Zealand Institutional Other CREDIT RWA EXPOSURE AT DEFAULT (EAD) Sep-17 Mar-18 Sep-18 90DPD (Incl. NPL) % Total Portfolio INTERNAL EXPECTED LOSS (IEL) Mar-19 Sep-19 $b $b 342 337 343 338 346 358 899 903 930 944 968 977 38.0% 37.3% 36.9% 35.8% 35.7% 36.7% 0.35% $m 1,983 1,870 1,780 1,666 0.32% 0.30% 0.27% 0.27% 0.26% 1,659 1,605 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 1H17 2H17 1H18 2H18 1H19 2H19 CRWA - CRWA/EAD IEL IEL/GLA 1. 2. Increase to New and Increased Individual Provisions and Writebacks & Recoveries compared to prior half is largely related to the home loan portfolio in Australia Retail and Commercial following the implementation of a more market responsive collateral valuation methodology New Impaired Assets in 2H19 includes a $167m uplift on 1H19 in Australia home loans following the implementation of revised provisioning and impairment processes (including a more market responsive collateral valuation methodology) ANZ 72#73RISK MANAGEMENT PROVISIONS CREDIT IMPAIRMENT CHARGE ANZ HISTORICAL LOSS RATES bps $m 1,500 250 1,200 1,038 918 200 900 720 479 150 600 408 280 393 402 100 300 0 680 50 -300 0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 Sep Sep 90 93 Sep 96 Sep 99 Sep 02 Sep Sep Sep Sep 05 08 11 14 Sep 17 Sep Sep 18 19 Consumer Commercial Institutional CP Charge IP Loss Rate = INDIVIDUAL PROVISION CHARGE Median Annual IP Loss Rate (excl. current period) LONG RUN LOSS RATE (INTERNAL EXPECTED LOSS) $m % 1,047 892 787 Division 554 826 Australia 430 343 398 922 380 969 812 612 594 592 532 New Zealand Institutional 495 229 153 136 116 122 93 157 -259 -274 -335 -394 -298 -245 -373 -351 Other Subtotal 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H191 New Increased Asia Retail Total Writebacks & Recoveries Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 0.35 0.33 0.33 0.33 0.31 0.29 0.29 0.29 0.25 0.26 0.26 0.22 0.21 0.19 0.19 0.37 0.36 0.35 0.30 0.32 0.27 1.47 1.79 1.60 1.69 0.34 0.33 0.33 0.30 0.30 1.50 1.51 1.51 2.75 0.37 0.35 0.35 0.32 0.30 0.18 0.27 0.25 1.95 1.78 1.60 1.40 0.27 0.27 0.26 0 0 0 0 0.27 0.27 0.26 IP: Individual Provision charge; CP: Collective Provision charge; CIC: Total Credit Impairment charge 1. Increase to New and Increased Individual Provisions and Writebacks & Recoveries compared to prior half is largely related to the home loan portfolio in Australia Retail and Commercial following the implementation of a more market responsive collateral valuation methodology ANZ 73#74COLLECTIVE PROVISION COLLECTIVE PROVISION BALANCE COLLECTIVE PROVISION CHARGE¹ $m AASB9 813 90 27 23 3,376 $m 1H19 2H19 FY19 CP charge 13 4 17 -79 -21 2,523 Volume/Mix -28 -51 -79 Change in Risk -40 19 -21 Economic outlook CP charge 17 73 17 90 sensitivity Other 8 19 22 27 Sep-18 Transition to AASB 9 Volume/ Mix Change Economic in Risk Outlook Sensitivity Other charge FX/Other B'sheet Sep-19 COLLECTIVE PROVISION BALANCE BY DIVISION ($m) AASB9 3,336 358 48 3,378 369 43 3,376 374 38 1,142 1,132 1,169 PROVISION BALANCE/COVERAGE RATIO BY STAGES ($m) AASB9 31 Mar-19 30 Sep-19 Coverage ratio by stage² Coverage ratio by stage² 1 0.19% 2 3.31% 3 20.76% 1 0.17% 2 2.40% 3 18.03% 1,788 Sep-18 AUS Insto. 1. 2. NZ Other 1,834 Mar-19 1,795 Sep-19 395 434 1,415 1,568 1,412 1,530 891 814 Stage 1 Stage 1 CP Stage 2 Stage 2 CP Stage 3 Stage 1 Stage 2 Stage 3 Stage 3 CP Stage 3 IP Change in methodology introduced in 2H19 to measure components of CP charge Coverage ratio calculated as Provision Balance to Gross Loans & Advances for on-balance sheet exposures. Reduction in 2H19 stage 2 coverage ratio is a result of (a) Denominator effect: increased stage 2 GLA in Australian home loans due to implementation of a revised provisioning model plus higher delinquency levels, and (b) Numerator effect: stable stage 2 ECL with the home loan ECL increase offset by decreases for other Australian portfolios and Institutional ANZ 74#75RISK MANAGEMENT IMPAIRED ASSETS CONTROL LIST GROSS IMPAIRED ASSETS BY DIVISION Index Sep 09 = 100 $m 150 3,173 2,883 2,940 3,000 2,384 100 2,034 2,139 2,128 2,029 2,000 50 1,000 0.51% 0.55% 0.51% 0.41% 0.34% 0.33% 0.33% 0.33% 0 0 Sep 09 Sep Sep 10 Sep Sep Sep Sep Sep Sep Sep Sep Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 11 12 13 14 15 16 17 18 19 Control List by Limits Control List by No. of Groups Australia³ Institutional Group GIA/GLA (EOP) New Zealand Other¹ NEW IMPAIRED ASSETS BY DIVISION $m GROSS IMPAIRED ASSETS BY EXPOSURE SIZE³ $m 2,000 1,784 1,844 1,787 4,000 3,173 1,425 1,500 3,000 2,708 2,719 2,883 2,940 1,145 1,117 2,384 963 2,034 2,139 2,128 2,029 1,000 890 2,000 500 1,000 0 0 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H192 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Australia2 New Zealand Institutional 1. Other includes Retail Asia & Pacific and Australian Wealth 2. 3. Other < 10m 10m to 100m > 100m New Impaired Assets in 2H19 includes a $167m uplift on 1H19 in Australia home loans following the implementation of revised provisioning and impairment processes (including a more market responsive collateral valuation methodology) The increase referred to in footnote 2 has been largely offset in Gross Impaired Assets by the return of previously impaired home loans to a past due but not impaired status ANZ 75#76RISK MANAGEMENT RISK WEIGHTED ASSETS TOTAL RISK WEIGHTED ASSETS $b 2H19 increase includes op. risk modelled increase of +$3b combined with an overlay +$6.25b and +$11.8b of CRWA methodology changes 417 409 397 388 391 396 391 396 39 47 38 38 39 18 17 16 3 L 16 37 37 38 38 358 12 16 13 17 16 352 334 342 337 343 338 346 358 CRWA MOVEMENT $b Increase driven by SA-CCR implementation, a regulatory overlay for Australia Home Loans as well as implementation of APRA Risk Weight floors for New Zealand Home Loan and Farm Lending Portfolios 14.3 4.5 0.4 337.6 1.3 358.1 156 CRWA (Insto) Sep-18 FX Impact Lending Methodology Mvmt. Review Risk Sep-19 GROUP EAD & CRWA GROWTH MOVEMENT¹,2 Sep-19 v Sep-18 $b 202 CRWA (ex. Insto) Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Sep-19 CRWA Mkt. & IRRBB RWA Op-RWA 1. 2. 21.9 5.9 3.3 0.3 0.6 -1.8 -3.4 -2.7 -1.3 -6.5 AUS HL EAD growth AUS Non HL CRWA growth NZ Other Institutional Post CRM EAD, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Excludes amounts for 'Securitisation' and 'Other Assets' Basel asset classes Refers to FX adjusted lending movement, excluding Methodology Review and Risk ANZ 76#77RISK MANAGEMENT PORTFOLIO COMPOSITION EXPOSURE AT DEFAULT (EAD) DISTRIBUTION TOTAL GROUP EAD (Sep-19) = = $977b¹ 1. 3.0% 7.3% 3.6% 5.1% 7.0% 5.8% 20.3% Category Consumer Lending % of Group EAD Sep-18 Mar-19 Sep-19 39.7% 38.8% 37.6% % of Portfolio in Non Performing Sep-18 Mar-19 Sep-19 Portfolio Balance in Non Performing Sep-19 0.2% 0.2% 0.1% $549m Finance, Investment & Insurance Property Services 19.6% 20.2% 20.3% 0.0% 0.1% 0.0% $73m 6.8% 7.0% 7.0% 0.3% 0.3% 0.2% $158m Manufacturing 4.6% 4.7% 5.1% 0.4% 0.3% 0.3% $138m Agriculture, Forestry, Fishing 3.7% 3.7% 3.6% 1.1% 1.1% 1.1% $373m Government & Official Institutions 6.9% 6.8% 7.3% 0.0% 0.0% 0.0% $0m 37.6% Wholesale trade 3.0% 3.0% 3.0% 0.3% 0.3% 0.3% $78m Retail Trade 2.2% 2.2% 2.2% 0.9% 0.7% 0.7% $157m Transport & Storage 2.0% 2.1% 2.2% 0.2% 0.2% 0.3% $75m Business Services 1.6% 1.6% 1.6% 0.9% 1.0% 1.0% $166m Resources (Mining) 1.6% 1.6% 1.8% 0.3% 0.3% 0.2% $40m Electricity, Gas & Water Supply 1.2% 1.2% 1.3% 0.1% 0.1% 0.1% $17m Construction 1.4% 1.3% 1.3% 1.7% 1.8% 1.7% $218m Other 5.7% 5.7% 5.8% 0.4% 0.4% 0.4% $224m Total 100% 100% 100% $2,267m Total Group EAD¹ $944b $968b $977b EAD excludes amounts for 'Securitisation' and 'Other Assets' Basel classes. Data provided is on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral ANZ 77#78RISK MANAGEMENT COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY OUTSTANDINGS BY REGION COMMERCIAL PROPERTY OUSTANDINGS BY SECTOR $b % % 100 42.4 42.9 12 40.2 80 2.8 2.8 38.4 37.9 37.7 37.5 37.6 11 2.9 60 3.9 3.6 2.7 2.4 3.0 10 40 10.7 10.5 20 9.8 9 8.8 9.5 9.7 9.5 9.7 8 Mar-17 Sep-17 Mar-18 Offices Retail Industrial Sep-18 Residential Mar-19 Sep-19 Tourism Other 7 10 5 • 28.9 29.6 4 27.5 25.7 24.8 25.5 25.4 24.9 3 2 1 0 PROPERTY PORTFOLIO MANAGEMENT . • Australian exposure increased by 2% HOH driven by higher lending to Funds and REITS in the Industrial sector partly offset by a decline in Residential lending given the slowdown in the residential property market. Retail exposure declined over the half and the Retail portfolio continues to be closely monitored owing to the weak operating environment Slight decline in New Zealand exposure was driven by exchange rate movements and some significant repayments occurring during 2H FY19 APEA exposure remained stable for 2H19 with the portfolio concentrated on large well rated names in Singapore and Hong Kong. The Hong Kong Property market has seen a 1% index decline given current unrest. Market consensus estimates a decline as high of 10-20% if the protests continue through the year. The Hong Kong property portfolio remains subject to close monitoring of internal and external metrics Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 % of Group GLA (RHS) Australia New Zealand APEA¹ 1. APEA = Asia Pacific, Europe & America ANZ 78#79RESIDENTIAL DEVELOPMENT OVERVIEW PROFILE (SEP-19) Total Residential Limits: $10.6b Average qualifying pre-sales for Inner City Apartment Development loans and corresponding LVRs were 101% and 52%, respectively as at Sep 19 (as compared to presales of 101% and LVR of 49% in Mar 19). These loans remain subject to tight parameters around LVR, presale debt cover and quantum of foreign purchaser presales. Overall appetite for Apartment Development has remained unchanged over the last half. The quality and experience of developers and builders remains a key selection criterion. Outside of Inner City locations, development exposures are predominantly in the suburbs of the capital cities of the above listed states. Residential Development projects continue to be closely monitored with level of oversight driven by progress of the project vs. plan, industry trends and emerging risks. Apartment Development Other Development¹ Residential & Subdivision Investment $0.67b inner city apartment development 31% 20% 40% Apartment Development $4.20b Melb 0.3 Bris NSW and ACT 0.1 2.1 Syd 0.3 Sep-18 ($b) Sep-19 ($b) Total Exposure 10.28 10.60 $3.54b other apartment development Apartments (>3 levels) 3.97 4.20 Inner City 0.56 0.70 0.9 VIC 0.4 0.2 QLD Other 1. Other Development primarily comprises Low Rise & Prestige Residential and Multi Project Development 9% ANZ 79#80RISK MANAGEMENT GROUP AGRICULTURE PORTFOLIO AGRICULTURE EXPOSURE BY SECTOR (% EAD) GROUP AGRICULTURE EAD SPLITS¹ Total EAD (Sep-19) A$35.2b 6.6%- As a % of Group EAD 3.6% 3.3% 6.1% -3.0% 43.5% 15.9% 14.9% 44.9% 10.4% 98.9% 98.9% 74.2% 76.0% 56.2% 54.9% 12.8% 35.0% 0.3% 0.2% Sep-18 Sep-19 1.1% Sep-18 1.1% Sep-19 Sep-18 Sep-19 Australia New Zealand Productive Impaired - <60% Secured 60 <80% Secured 17.7% Intl. Markets 80 <100% Secured Fully Secured 1. 2. 14.4% 9.6% NZD $b NEW ZEALAND² DAIRY CREDIT QUALITY FY19 PD increase driven by customer downgrades, reflecting continued headwinds facing the dairy sector 12.3 11.9 12.5 13.3 Dairy Sheep & Other Livestock Horticulture/Fruit/ Other Crops 13.3 2.21% 12.9 1.95% 12.8 12.8 1.22% 0.90% 0.80% 1.14% 1.51% 1.56% 12.3 1.91% Beef Grain/Wheat Forestry & Fishing/ Agriculture Services Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Mar-19 Sep-19 Wt. Avg. Probability of Default NZ Dairy EAD Security indicator is based on ANZ extended security valuations Dairy exposures for all of ANZ New Zealand (includes Commercial and Agriculture, Institutional and Business Banking portfolios) ANZ 80#81GROUP RESOURCES PORTFOLIO TOTAL ANZ PORTFOLIO RESOURCES PORTFOLIO THERMAL COAL EXPOSURE EAD $b EAD $b 977 898 20 895 16 903 14 944 15 EAD $b 2.0 Resources: 1.8% of ANZS 1.5 20.0 Thermal total portfolio coal 1.0 1.7 mining: <0.1% of 0.6 0.5 17.3 ANZS total 1.3 16.1 0.8 portfolio 0.0 15.3 0.7 1.2 Sep-15 Sep-16 Sep-17 1.0 2.9 554 593 0.4 0.7 14.0 532 516 515 1.1 0.7 1.5 Thermal coal 0.8 Sep-18 Mar-19 Sep-19 Thermal coal (Trendline) 0.9 0.3 1.7 1.0 1.2 4.9 1.4 5.2 • 4.0 4.4 3.5 • 347 363 375 375 8.6 367 7.8 8.2 7.0 7.4 RESOURCES PORTFOLIO MANAGEMENT • Portfolio is skewed towards well capitalised and lower cost resource producers. 32% of the book is less than one year duration. Investment grade exposures represent 79% of the portfolio vs. 68% at Sep 18. Increase in total coal mining exposure in FY19 primarily reflects mergers and acquisitions activity related to existing mines in 1H19, ie predominantly metallurgical coal assets sold by diversified miners to existing customers along with foreign currency exchange movements. Financing is mainly used to support continuing operations, and not mine expansions. Thermal coal exposure is currently $838m. We expect our thermal coal exposure to decline over time, as it has since 2015 (reducing by 50% between FY15-FY19). Decreased exposure in 2H19 compared to 1H19 reflects ongoing portfolio management and application of ANZ policies. Our exposures to thermal coal are primarily concentrated in a small number of Australian-based miners. Exposure to metallurgical coal mining (used for steel making) is currently $686m. Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Consumer Lending Resources Other Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Oil & Gas Extraction Metal Ore Mining Other Mining Services to mining Metallurgical Coal Mining Thermal Coal Mining ANZ 81#82RISK MANAGEMENT ANZ INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION¹) INSTITUTIONAL PORTFOLIO SIZE & TENOR (EAD²) $b 400 350 49% 300 250 200 35% ANZ INSTITUTIONAL INDUSTRY COMPOSITION EAD (Sep-19): A$447b2 26% 30% 2% 3% 3% Finance (Banks and Central Banks) Government Admin. Services to Fin. & Ins. Property Services³ Basic Material Wholesaling Machinery & Equip Mnfg Electricity & Gas Supply 4% 16% 8% Petroleum Coal Chem & Assoc Prod Mnfg Other4 8% ANZ INSTITUTIONAL PRODUCT COMPOSITION EAD (Sep-19) A$447b² 150 51% 22% 100 65% 50 78% 15% 25% 85% 0 Total Institutional International Asia China Tenor < 1 Yr Tenor 1 Yr+ 12% 20% 0% 25% Loans & Advances Traded Securities (e.g. Bonds) 2% Contingent Liabilities & Commitments Trade & Supply Chain 16% Derivatives & Money Market Loans Gold Bullion Other 1. Country is defined by the counterparty's Country of Incorporation 2. Data provided is as at Sep-19 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class 'Securitisation', 'Other Assets', 'Retail' and manual adjustments 3. ~90% of the ANZ Institutional "Property Services" portfolio is to entities incorporated in either Australia or New Zealand 4. Other is comprised of 47 different industries with none comprising more than 2.1% of the Institutional portfolio. ANZ 82#83RISK MANAGEMENT ANZ ASIAN INSTITUTIONAL PORTFOLIO (COUNTRY OF INCORPORATION¹) COUNTRY OF INCORPORATION¹ EAD (Sep-19): A$121b² 6% 8% 5% 3% 3% 5% ANZ ASIA INDUSTRY COMPOSITION EAD (Sep-19): A$121b² 19% 60% Finance (Banks & Central Banks) Basic Material Wholesaling Machinery & Equip Mnfg Petroleum,Coal, Chem & Assoc Prod Mnfg Property Services Communication Services Services To Finance & Insurance Other³ 26% 2% 2% 2% 3% 5% 6% 18% 26% China Japan Singapore Hong Kong Taiwan South Korea India Indonesia Other ANZ ASIA PRODUCT COMPOSITION EAD (Sep-19): A$121b² 12% 20% 0% Loans & Advances Traded Securities (e.g. Bonds) 2% 21% Contingent Liabilities & Commitments Trade & Supply Chain 15% Derivatives & Money Market Loans Gold Bullion Other 30% 1. Country is defined by the counterparty's Country of Incorporation 2. Data provided is as at Sep-19 on a Post CRM basis, net of credit risk mitigation such as guarantees, credit derivatives, netting and financial collateral. Position excludes Basel Asset Class 'Securitisation', 'Other Assets', 'Retail' and manual adjustments 3. "Other" within industry is comprised of 43 different industries with none comprising more than 2.2% of the Asian Institutional portfolio; Other product category is predominantly exposure due from other financial institutions ANZ 83#84ANZ 2019 FULL YEAR RESULTS INVESTOR DISCUSSION PACK HOUSING PORTFOLIO#85AUSTRALIA HOME LOANS PORTFOLIO OVERVIEW Portfolio¹ Flow² Portfolio¹ FY17 FY18 FY19 FY18 FY19 FY17 FY18 FY19 Number of Home Loan accounts¹ 1,009k 1,011k 983k 170k³ 119k³ Average LVR at Origination 7,8,9 69% 67% 67% Total FUM1 $264b $272b $265b $57b $40b Average Dynamic LVR (excl offset) 8,9,10,11,12 55% 55% 57% Average Loan Size4 $262k $269k $270k $382k $378k Average Dynamic LVR (incl offset) 8,9,10,11,12 Market Share (MBS publication) 13 50% 50% 52% 15.7% 15.5% n/a % Owner Occupied 5 63% 65% 67% 70% 73% Market share (MADIS publication) n/a n/a 14.3% % Investor5 33% 32% 30% 29% 26% % Ahead of Repayments 14 71% 72% 76% % Equity Line of Credit 4% 3% 3% 1% 1% Offset Balances 15 $27b $28b $27b % Paying Variable Rate Loan6 83% 84% 84% 84% 78% % First Home Buyer 7% 7% 8% % Low Doc16 4% 4% 4% % Paying Fixed Rate Loan 17% 16% 16% 16% 22% Loss Rate 17 0.02% 0.02% 0.04% % Paying Interest Only 31% 22% 15% 13% 11% % Broker originated 51% 52% 52% 55% 53% % of Australia Geography Lending 18,19 % of Group Lending 18 64% 63% 61% 45% 45% 43% 1. Home Loans portfolio (includes Non Performing Loans, excludes Offset balances) 2. YTD unless noted 3. New accounts includes increases to existing accounts and split loans (fixed and variable components of the same loan) 4. Average loan size for Flow excludes increases to existing accounts (note the average loan size previously reported in 1H18 and prior included increases to existing accounts) 5. The current classification of Investor vs Owner Occupier is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances. 6. Excludes Equity Manager 7. Originated in the respective year 8. Unweighted 9. Includes capitalised LMI premiums 10. Valuations updated to Aug-19 where available 11. Includes Non Performing Loans and excludes accounts with a security guarantee 12. Historical DLVR has been restated as a result of enhancements to methodology 13. APRA Monthly ADI Statistics to Aug-19 - Note APRA changed the underlying market share definition in Jul-19 and historical periods (FY17 & FY18) are not comparable to FY19 14. % of Owner Occupied and Investment Loans that have any amount ahead of repayments. Includes Offset balances. Excludes Equity Manager. Includes Non Performing Loans 15. Balances of Offset accounts connected to existing Instalment Loans 16. Low Doc is comprised of less than or equal to 60% LVR mortgages primarily for self-employed without scheduled PAYG income. However, it also has ~0.1% of less than or equal to 80% LVR mortgages, primarily booked pre-2008 17. Annualised write-off net of recoveries 18. Based on Gross Loans and Advances 19. Australia Geography includes Australia Division, Wealth Australia and Institutional Australia ANZ 85#861. 2. 3. AUSTRALIA HOME LOANS PORTFOLIO GROWTH HOME LOAN COMPOSITION1,2 $b 256 264 271 272 269 265 10 9 9 43 54 49 54 N∞ 8 7 37 31 26 14 17 22 29 33 54 38 88 49 49 52 39 44 44 33 33 156 161 164 134 146 121 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 OO P&I Inv P&I OO I/O Inv I/O Equity Manager Includes Equity Manager LOAN BALANCE & LENDING FLOWS¹ $b 16 29 272 -2 265 -50 Sep-18 New Sales exc Refi-In Net OFI Refi Redraw & Interest Repay / Other Sep-19 ANZ MORTGAGE LENDING PORTFOLIO CHANGE FY19 v FY18 Housing Portfolio Owner Occupied³ -1% Investor -7% FY19 v FY18 Principal & interest³ Interest only Housing Portfolio 6% -33% Includes Non Performing Loans The current classification of Investor vs Owner Occupier is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances ANZ 86#87AUSTRALIA HOME LOANS PORTFOLIO1,2 & FLOW³ COMPOSITION BY PURPOSE BY ORIGINATION LVR4 Portfolio Flow Flow 4% 3% 3% 1% 20% 18% 17% 26% 33% 32% 30% 19% 17% 16% 73% 63% 65% 67% Sep-17 Sep-18 Sep-19 FY19 Owner Occ Investor Equity 61% 65% 67% FY17 FY18 FY19 <80% LVR 80% LVR >80% LVR BY LOCATION BY CHANNEL Portfolio Flow 7% 6% 6% 6% $264b Portfolio $272b Flow $265b $67b 14% 13% 13% 9% $57b 14% 16% 16% 16% 49% 48% 44% 48% 45% $40b 31% 31% 32% 32% 47% 51% 52% 52% 56% 40% 55% 32% 33% 33% 53% Sep-17 Sep-18 Sep-19 FY19 Sep-17 Sep-18 Sep-19 FY17 FY18 FY19 VIC/TAS NSW/ACT QLD WA SA/NT Broker Proprietary 1. Includes Non Performing Loans. 2. The current classification of Investor vs Owner Occupier is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances 3. YTD unless noted 4. Includes capitalised LMI premiums ANZ 87#88AUSTRALIA HOME LOANS PORTFOLIO DYNAMICS HOME LOANS REPAYMENT PROFILE1,2 76% of accounts ahead of repayments 21% 20% 27% HOME LOANS ON TIME & <1 MONTH AHEAD PROFILE 1,2 % composition of accounts (September 19) 38 37 Investment: 5 Interest payments may receive negative gearing/tax benefits New Accounts: Less than 1 year old Structural: Loans that restrict payments in advance. E.g. fixed rate loans Residual: Less than 1 month repayment buffer 21 19 9% 6% 6% 7% 12 14 4% 27 32 Overdue On Time <1 month 1-3 months 3-6 months 6-12 months 1-2 years ahead ahead ahead ahead ahead >2 years ahead Sep-18 Sep-19 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 DYNAMIC LOAN TO VALUE RATIO3,4,6,7 % of portfolio 60 50 40 30 20 10 0 0-60% 61-75% Mar-17 Sep-17 76-80% Mar-18 Sep-18 81-90% Mar-19 NEGATIVE EQUITY Net of offset balances Represents 4.8% of portfolio Skew to mining states - WA, QLD & NT represent 65% of negative equity 59% ahead of repayments 47% with LMI 91%+ DLVR Total Portfolio by State by FUM 6% 6% 13% 30% 16% 16% 32% • 26% 33% 22% 91-95% 96-100% 100%+ Sep-19 Sep-19 Sep-19 VIC/TAS NSW/ACT QLD WA SA/NT 1. Includes Non Performing Loans 2. % of Owner Occupied and Investment Loans that have any amount ahead of repayments. Includes Offset balances. Excludes Equity Manager. Includes Non Performing Loans 3. Includes capitalised LMI premiums 4. Valuations updated to Aug'19 where available 5. The current classification of Investor vs Owner Occupier, is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances 6. Historical DLVR has been restated as a result of enhancements to methodology 7. Includes Non Performing Loans and excludes accounts with a security guarantee ANZ 88#89AUSTRALIA HOME LOANS PORTFOLIO PERFORMANCE PRODUCT 90+ DAY DELINQUENCIES 1,2,3 % 5.0 HOME LOAN DELINQUENCIES 1,2,5 % 2.5 2.0 4.0 1.5 3.0 1.0 2.0 0.5 1.0 0.0 0.0 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep Sep Sep Sep 19 12 13 14 Sep 15 Sep Sep Sep 16 17 18 Sep 19 90+ Investor Home Loans Personal Loans Consumer Cards - Corporate & Commercial4 HOME LOANS 90+ DPD BY STATE 1,2 % 2.5 2.0 1.5 1.0 0.5 0.0 VIC & TAS NSW & ACT QLD Mar-12 Mar-13 Sep-12 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 WA Mar-16 Sep-16 SA & NT Portfolio 30+ DPD % 90+ Owner Occupied HOME LOANS 90+ DPD (BY VINTAGE)6 Note: FY14 vintages and prior were impacted by hardship prior to policy solutions put in place and therefore not comparable to FY15 vintages and onwards % 2.5 2.0 1.5 1.0 0.5 0.0 6 8 - FY15 FY16 - 10 FY17 FY18 12 14 FY19 16 18 20 22 24 Month on book 26 28 30 32 34 36 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 1. Includes Non Performing Loans 2. ANZ delinquencies calculated on a missed payment basis 3. For Personal Loans, a new collections platform was implemented in Aug-18 enabling automated charge-off of late stage accounts. This resulted in a step change to 90+ rates. Following this, compatibility issues between systems resulted in an accumulation of 90+ debt not being charged-off, causing the 90+ rate to increase. This issue has now been resolved and the 90+ rate has returned to expected levels in FY19 4. Retail portfolio (Small Business, Commercial Cards and Asset Finance) 5. The current classification of Investor vs Owner Occupier, is based on ANZ's product category, determined at origination as advised by the customer and the ongoing precision relies primarily on the customer's obligation to advise ANZ of any change in circumstances 6. Home loans 90+ DPD vintages represent % ratio of over 90+ delinquent (measured by # accounts), contains at least 6 application months of that fiscal year contributing to each data point ANZ 89#90AUSTRALIA HOME LOANS WESTERN AUSTRALIA Unemployment rate SFD3 growth Population Growth 2012 2013 2014 2015 2016 2017 2018 2019 3.9% 4.7% 5.0% 6.1% 6.3% 5.6% 6.1% 6.1% 13.8% 1.5% -1.8% -1.3% -7.3% -3.9% 0.3% -0.9% 3.1% 2.2% 1.1% 0.85% 0.63% 0.71% 0.88% Exposure to WA has decreased since Mar-16 driven by the economic environment and credit policy tightening (mining town lending) Currently WA comprises 13% of portfolio FUM (and is decreasing), however it comprises 27% of 90+ delinquencies (and one half of portfolio losses¹) Tailored treatment of collection and account management strategies in place Economic indicators² WA OUTSTANDING BALANCE $b 40 30 30 21 22 221 221 22 22 23 23 23 20 L L T 25 25 26 27 28 28 29 10 11 11 12 12 12 12 11 10 8 6 5 4 0 HOME LOANS AND WA 90+ DELINQUENCIES4,5 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Interest Only P&I Loan Equity Loan HOME LOANS COMPOSITION OF LOSSES¹ % 3.0 2.5 2.0 35% 48% 55% 57% 51% 49% 44% 51% 73% 1.5 65% 1.0 52% 45% 43% 49% 51% 56% 49% 0.5 27% 0.0 Sep 13 Mar Sep 14 14 Mar Sep Mar Sep Mar 15 15 16 16 17 Sep 17 Mar 18 Sep Mar 18 19 Sep 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 19 WA 90+ Rate Portfolio 90+ Rate Portfolio 90+ Rate without WA WA Rest of the portfolio 1. Losses are based on New Individual Provision Charges 2. Unemployment Rate as at September 3. State Final Demand (year on year growth) 4. Includes Non Performing Loans 5. ANZ delinquencies calculated on a missed payment basis ANZ 90#91AUSTRALIA HOME LOANS NEW SOUTH WALES/ACT Portfolio • • NSW/ACT makes up 32% of portfolio FUM and 25% of 90+ days past due. 76% in advance of repayments which is in line with the total portfolio. 18% of the portfolio is Interest Only & reducing. 90+ days past due NSW/ACT at 88bps is similar to VIC/TAS at 86bps & 28bps below national level. Increase in the past 6 months, primarily driven by older vintages Since FY15, credit quality has improved year-on-year, with FY17 & FY18 vintages performing better than FY15 & FY16 vintages. Dynamic LVR 12.2% of NSW/ACT portfolio >90% DLVR HOME LOANS AND NSW/ACT 90+ DELINQUENCIES 1,2 % 1.5 HOUSING PORTFOLIO¹ HOUSING FLOW $b $b 256 264 271 272 269 265 34 34 177 181 184 184 182 179 31 26 21 21 21 21 19 20 17 14 79 83 33 13 87 88 87 86 13 13 11 9 7 6 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Rest of the Country 1H17 2H17 1H18 2H18 1H19 2H19 NSW/ACT NSW/ACT DYNAMIC LVR PROFILE - SEPTEMBER 20191,3,4,5 % 60 50 1.0 40 30 0.5 20 10 0.0 0 Sep 13 Mar Sep Mar Sep 14 14 15 15 Mar Sep Mar 16 16 17 Sep 17 Mar 18 Sep 18 Mar Sep 0-60% 61-75% 76-80% 81-90% 91-95% 96-100% 100%+ 19 19 NSW/ACT 90+ Rate Portfolio 90+ Rate Portfolio 90+ Rate without NSW/ACT Total Portfolio Total Portfolio (ex WA) NSW/ACT 1. Includes Non Performing Loans 2. ANZ delinquencies calculated on a missed payment basis 3. Includes capitalised LMI premiums 4. Valuations updated to Aug-19 where available 5. Includes Non Performing Loans and excludes accounts with a security guarantee ANZ 91#92AUSTRALIA HOME LOANS INTEREST ONLY • Serviceability assessment is based on ability to repay principal & interest repayments calculated over the residual term of loan 86% of Interest Only customers have net income >$100k p.a. (portfolio 66%) Historical policy & pricing changes have led to a reduction in Interest Only lending. ANZ's Interest Only flow composition is 11% for 2H19. Proactive contact strategies are in place to prepare customers for the change in their repayments ahead of Interest Only expiry INTEREST ONLY FLOW COMPOSITION % APRA's 30% limit removed December 2018 42 38 27 14 13 12 11 2H16 1H17 2H17 1H18 2H18 1H19 2H19 SWITCHING INTEREST ONLY TO P&I AND SCHEDULED INTEREST ONLY TERM EXPIRY1,2 $b 8 4 2 7 7 6 6 3 3 00 8 DYNAMIC LVR PROFILE OF 12 MONTH FORWARD CONVERSIONS³ % 27 26 18 12 10 7 6 4 3 1H21 2H21 1H22 2H22 1H23+ 0-60% 61-75% 76-80% 81-90% 91-95% 95%+ 8 8 6 7 1H17 2H17 1H18 Contractual conversions 1H19 2H19 2H18 Early conversions 1H20 2H20 Contractual (still to convert) 1. Total portfolio including new flows 2. As at Sep-19 3. Includes Non Performing Loans and excludes accounts with a security guarantee ANZ 92#93AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES¹ Quality assurance, info verification & policy reviews Multiple checks during origination process • End-to-end home lending responsibility managed within ANZ Effective hardship & collections processes Pre-application² Income & Expenses • Full recourse lending Application Know Your Customer Serviceability Income Verification Income Shading Expense Models Interest Rate Buffer Repayment Sensitisation Collateral / Valuations Credit Assessment Fulfilment • ANZ assessment process across all channels Serviceability Aug'15 Apr'16 Jul'19 Interest rate floor applied to new and existing mortgage lending introduced at 7.25% Introduction of an income adjusted living expense floor (HEM*) Introduction of a 20% haircut for overtime and commission income Increased income discount factor for residential rental income from 20% to 25% Enhanced Responsible Lending processes including additional enquiry and increase in minimum monthly credit card expense Increase of interest rate buffer to 2.50% and reduction of interest rate floor to 5.50% *The HEM benchmark is developed by the Melbourne Institute of Applied Economic and Social Research ('Melbourne Institute'), based on a survey of the spending habits of Australian families. LVR Policy LMI Policy Valuations Policy Nov'18 Credit History Bureau Checks Documentation Security 1. 2015 to 2019 material changes to lending standards and underwriting Customers have the ability to assess their capacity to borrow on ANZ tools 2. ANZ 93#94AUSTRALIA HOME LOANS UNDERWRITING PRACTICES AND POLICY CHANGES¹ - JUNE 2015 TO SEPTEMBER 2019 ANZ LVR Caps • • . • LVR cap reduced to 70% in high risk mining towns in June 2015; reduced to 90% for investment loans (July 2015) Restricted new housing lending (new security to ANZ) to max. 80% LVR for all apartments within 7 inner city Brisbane postcodes (October 2017) Restricted investment lending (new security to ANZ) to max 80% LVR for all apartments within 4 inner city Perth postcodes (October 2017) Increase maximum LVR on interest only investment loans from 80% to 90% in March 2019 (excluding Mining towns and Apartment restrictions) ANZ Assessment • • • • • • • Interest rate floor (new & existing lending) at 7.25% (August 2015) Income adjusted living expense floor (HEM); 20% haircut for overtime & commission; Increased income discount factor for residential rental income from 20% to 25% (April 2016) Limited acceptance of foreign income to demonstrate serviceability and tightened controls on verification (September 2016) Minimum default housing expense (rent/board) applied to all borrowers not living in their own home & seeking RILS² or EMAS³ (July 2017) IO renewals became Credit Critical events (full income verification & serviceability test) including P&I to IO & converting to or extending IO term (March 2018) Enhanced Responsible Lending Requirements including additional enquiry and increase in minimum monthly credit card expense (November 2018) Interest rate floor (new & existing lending) at 5.50% and interest rate buffer of 2.50% (July 2019) ANZ Product and Other Limitations . • • Decreased max. IO term of owner occupied loans to 5 years (January 2017) Withdrew lending to non-residents (September 2016); tightened acceptances for guarantees (December 2016); clarified residential lending to trading companies is not acceptable (December 2017) Increased maximum term of interest only investment loans from 5 to 10 years (from March 2019) ANZ PORTFOLIO BORROWING CAPACITY SUMMARY5 DRIVERS OF REDUCTION IN CUSTOMER BORROWING CAPACITY (v 2015)4 30% reduction in borrowing capacity >20% reduction in borrowing capacity 10% of customers borrowing at their Contribution to reduction in borrowing capacity maximum capacity Sep-18 HEM changes Servicing rate floor or buffer Sep-19 Income haircuts FY16 FY17 Customers with additional borrowing capacity FY18 FY19 Customers borrowing at maximum capacity 1. 2015 to 2019 material changes to lending standards and underwriting 2. Residential Investment Loans 3. Equity Manager Accounts. 4. ANZ modelled outcome of 4 borrowing scenarios indexed to 2015 and using a customer lending rate of 3.90%: i. Couple, no dependents, ii. Single, no dependents, iii. Couple 2 dependents, iv. Couple, no dependents, higher income earners, where application ANZ parameters such as income are held steady while policy components are adjusted based on 2015 and 2019 settings. 5. Based on financial years. 94#95AUSTRALIAN HOME LOANS STRESS TESTING THE AUSTRALIAN MORTGAGE PORTFOLIO Assumptions Base¹ Year 1 Year 2 Year 3 Unemployment 5.1% 5.5% 9.8% 10.5% rate Cash Rate 1.5% 0.25% 0% 0% Real GDP year ended growth 1.9% 0% -4.7% -0.6% • • • • ANZ conducts regular stress tests of its loan portfolios to meet risk management objectives and satisfy regulatory requirements. Stress tests are highly assumption-driven; results will depend on economic assumptions, on modelling assumptions, and on assumptions about actions taken in response to the economic scenario. This illustrative recession scenario assumes significant reductions in consumer spending and business investment, which lead to eight consecutive quarters of negative GDP growth. This results in a significant increase in unemployment and material nationwide falls in property prices. Estimated portfolio losses under these stressed conditions are manageable and within the Group's capital base, with cumulative total losses at $2.7b over three years (net of LMI recoveries). Cumulative reduction in house prices • -32.3% -38.8% -31.7% Portfolio size ($b) 295 294 287 278 Outcomes Year 1 Year 2 Year 3 The results have marginally improved from the stress test six months ago. Key reason for the stressed losses reduction is the improved property price outlook and the impact of the three rate cuts since May 2019, which are reflected in the underlying scenario. Net Losses ($m) 286 1,282 1,141 Net losses (bps) 10 45 41 1. Based on mortgage exposure at default and conditions as at 31 March 2019 ANZ 95#96LENDERS MORTGAGE INSURANCE SEPTEMBER FULL YEAR 2019 RESULTS Gross Written Premium ($m) Net Claims Paid ($m) Loss Rate (of Exposure - annualised) ANZLMI MAINTAINED STABLE LOSS RATIOS¹ % 150 100 $80.7m $31.4m 12.0bps LMI & REINSURANCE STRUCTURE Australian Home Loan portfolio LMI and Reinsurance Structure at 30 Sep 19 (% New Business FUM Oct-18 to Sep-19) LVR<80% Not LMI Insured 86% | 9% 7% LVR 80% to 90% LMI Insured LVR 90% LMI Insured Aggregate Stop Loss² Arrangement on Net Risk Retained Quota Share³ Arrangement 50 0 -50 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Industry - ANZ LMI - Insurer 1 Insurer 2 - Insurer 3 (LVR > 80%) (LVR > 90%) 2019 Reinsurance Arrangement ANZLMI uses a diversified panel of reinsurers (10+) comprising a mix of APRA authorised reinsurers and reinsurers with highly rated security Reinsurance is comprised of a Quota Share arrangement3 with reinsurers for mortgages 90% LVR and above and in addition an Aggregate Stop Loss arrangement2 for policies over 80% LVR 1. Negative Loss ratios are the result of reductions in outstanding claims provisions. Source: APRA general insurance statistics (loss ratio net of reinsurance) 2. Aggregate Stop Loss arrangement - reinsurer indemnifies ANZLMI for an aggregate (or cumulative) amount of losses in excess of a specified aggregate amount. When the sum of the losses exceeds the pre-agreed amount, the reinsurer will be liable to pay the excess up to a pre-agreed upper limit 3. Quota Share arrangement - reinsurer assumes an agreed reinsured % whereby reinsurer shares all premiums and losses ANZ accordingly with ANZLMI 96#97NEW ZEALAND HOME LOANS PORTFOLIO OVERVIEW¹ Portfolio Flow FY17 FY18 FY19 FY19 Portfolio FY17 FY18 FY19 Number of Home Loan Accounts 520k 526k 527k 118k Average LVR at Origination² 59% 58% 56% Total FUM NZD77b NZD81b NZD85b NZD19b Average Dynamic LVR2 43% 41% 42% Average Loan Size2 NZD148k NZD153k NZD161k NZD157k Market Share5 31.1% 30.9% 30.7% % Owner Occupied 73% 74% 75% 77% % Low Doc 0.44% 0.38% 0.34% % Investor 27% 26% 25% 23% Home Loan Loss Rates (0.01%) 0.00% 0.00% % Paying Variable Rate Loan³ 21% 18% 15% 14% % of NZ Geography Lending 61% 62% 63% % Paying Fixed Rate Loan³ 79% 82% 85% 86% % Paying Interest Only 22% 21% 19% 19% % Paying Principal & Interest 78% 79% 81% 81% % Broker Originated4 35% 36% 38% 40% 1. New Zealand Geography 2345 2. Average data as of September 2019 3. Flow excludes revolving credit facilities 4. Flow FY19 11 months to August 2019 5. Source: RBNZ, FY19 share of all banks as at August 2019 6. Low documentation (low doc) lending allowed customers who met certain criteria to apply for a mortgage with reduced income confirmation requirements. New low doc lending ceased in 2007 ANZ 97#98NEW ZEALAND HOME LOANS HOME LENDING & ARREARS TRENDS¹ NZ DIVISION 90+DAYS DELINQUENCIES 1.5 % 1.0 0.5 HOUSING FLOWS² HOUSING PORTFOLIO 21% 18% 15% 34% 39% 40% 79% 82% 85% 66% 61% 60% 0.0 Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- Sep- 08 09 10 11 12 13 14 15 16 17 18 19 FY17 FY18 FY19 Home Loans Commercial Agri Proprietary Broker Sep-17 Fixed Sep-18 Sep-19 Variable MARKET SHARE³ HOUSING PORTFOLIO BY REGION ANZ HOME LOAN LVR PROFILE5 31.1% 31.0% 30.9% 30.9% 30.7% 5% 5% 2% 2% 5% 2% -4% 3% -4% 21% 20% 20% 13% 13% 15% 11% 11% 11% 19% 18% 19% 2.7% 2.8% 2.8% 2.9% 2.9% 3.0% 3.0% 7% 7% -7% 2.8% 2.4% 10% 11% 11% 2.0% 62% 64% 60% 46% 46% 46% 2H17 1H18 2H18 1H19 2H19 ANZ market share System growth ANZ growth 61-70% 71-80% 81-90% 1. New Zealand Geography 2. Flow FY19 11 months to August 2019 3. Source: RBNZ, 2H19 market share as at August 2019 4. Other includes loans booked centrally (Business Direct, Contact Centre, Lending Services, Property Finance) 5. Dynamic basis Sep-17 Auckland Wellington Sep-18 Christchurch Other Sth Is. Sep-19 Sep-17 Other Nth Is. Other4 0-60% Sep-18 Sep-19 90%+ ANZ 98#992019 FULL YEAR RESULTS INVESTOR DISCUSSION PACK ANZ ROYAL COMMISSION UPDATE & REGULATORY REFORMS#100ROYAL COMMISSION OUR APPROACH, OUR RESPONSE WE ARE RESPONDING TO THE 'SPIRIT AND THE LETTER' OF THE ROYAL COMMISSION. Initial response • • • • Committed in February 2019 to sixteen actions that we can take now including: • removing overdrawn and dishonour fees on our Pensioner Advantage account • improving our service to Indigenous customers in remote communities by setting up a dedicated phone service and giving them easier options to prove their identity • publishing principles to help family farming customers in financial distress ⚫ publishing principles on acting as a model litigant in disputes with our customers • implementing pay reforms that replace individual-based bonuses for most of our employees with an incentive based on the overall performance of the Group Reviewed individual cases highlighted at the Commission and taken action where appropriate to resolve the matters Reported to Government that we have made significant progress on the RC recommendations directed at banks, concerning distressed agricultural loans, remuneration of front line staff, the Sedgwick Review and changing culture and governance Lessons from our experience Identified eight lessons from our misconduct and failures to meet community standards and expectations to inform our response to the 'spirit and letter' of the Royal Commission Now identifying measures that will allow us to be confident that these lessons have been acted on Governance - aligned to the APRA self-assessment • Established a Royal Commission and Self-Assessment Oversight Group to oversee an integrated response to the Royal Commission and Self- Assessment. The Oversight Group is chaired by the Deputy Chief Executive Officer and includes the Group Chief Risk Officer Constructive engagement with reform Engaging constructively with Government and its agencies as they implement the recommendations directed at them • Government has indicated that majority of its reforms will be consulted on and introduced into Parliament by the end of 2020 ANZ 100#101STRENGTHENING OUR RISK CULTURE We have strengthened the way we deal with risk events through an enhanced Accountability and Consequence Framework, which is applicable to all of our people. In 2019 across the Group, 151 employees were dismissed for breaches of our Code of Conduct. A further 516 employees received a formal disciplinary outcome, with managers required to apply impacts to their performance and remuneration outcomes as part of the annual review process. At the senior leadership level, 30 current or former senior leaders (senior executives, executives and senior managers) received a consequence in 2019 for Code of Conduct breaches or findings of accountability for a material event, or otherwise left the bank after an investigation had been initiated. The 30 employees represent 2 1% of the senior leader population. The consequences applied included warnings, impacts to performance and/or remuneration outcomes and cessation of employment. SENIOR LEADER CONSEQUENCES IN 2019* Remuneration consequence Warning/advice No longer employed 23 12 7 * Individuals are included under all categories that are relevant, meaning one individual may be reflected in multiple categories. ANZ 101#1022019 FULL YEAR RESULTS ANZ INVESTOR DISCUSSION PACK CORPORATE OVERVIEW & ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)#103ESG - GOVERNANCE OVERVIEW BOARD OF DIRECTORS Chaired by David Gonski, Chairman Audit Committee Risk Committee Ethics, Environment, Social and Governance Committee Digital Business and Technology Committee Human Resources Committee Nomination and Board Operations Committee Chair: Paula Dwyer Chair: Graeme Liebelt Chair: David Gonski Chair: Jane Halton Chair: Ilana Atlas Chair: David Gonski Ethics and Responsible Business Committee (ERBC) Chaired by Shayne Elliott, CEO Customer Fairness Advisor, Australia Reports to Shayne Elliott, CEO Royal Commission & Self- Assessment Oversight Group Chaired by Kevin Corbally, CRO and Alexis George, DCEO Customer Advocate, Australia Reports to Mark Hand, Group Executive, Australia Retail and Commercial Banking ANZ 103#104BOARD AND EXECUTIVE COMMITTEES WORK TOGETHER INDICATIVE RESPONSIBILITIES DEMONSTRATE HOW COMMITTEES MANAGE ESG Ethics, Environment, Social and Governance Board committee Purpose: Establish ethical and ESG guidelines and principles Oversight of measures to advance Purpose and the Ethics and Responsible Business Committee Review and monitor ethical, environmental, social and governance risks and opportunities Ethics and Responsible Business Management committee Purpose: Operationalise Board objectives and make decisions on issues and policies Purpose, reputation and values review Consider and decide on ethical, environmental, social and governance risks and opportunities Code of Conduct review Review of complaints themes and potential systemic issues Examine complaints themes and potential systemic issues Set Social and Environmental Risk policy and monitor implementation Oversight and approval of ESG reporting and targets Oversight and approval of corporate governance policies, principles, regulatory and policy responses Set ESG targets and monitor progress Monitor and determine sensitive customer transactions ANZ 104#105'WHAT WE CARE ABOUT MOST' - A YEAR IN REVIEW Build leadership in key areas Ensure ANZ is living up to its commitments More Australians and New Zealanders have access to affordable, liveable, sustainable housing The food, beverage and agricultural sector is more sustainable and financially resilient Australia's energy supply, transmission and distribution is more efficient, cleaner and affordable Improve our standards and practices Develop products and services • • • • • Joint Lead Manager on $315m National Housing Finance and Investment Corporation bond, and NZD$500m and NZD$600m bonds for Housing New Zealand to provide new and upgraded social housing Provided >1,800 interest-free loans to improve the health of New Zealand households through our New Zealand 'Healthy Homes' initiative Supported the purchase of the Great Cumbung Swamp - Australia's largest purchase of mixed-use conservation and agricultural property by dollar value Advisor and Joint Lead Manager on $400m green bond for Woolworths Group to improve energy efficiency (solar, lighting, refrigeration systems) in its supermarkets Project finance commitment to renewable energy increased ~27% from FY18 $1,076m to FY19 $1,371m (figure quoted is project finance made on a non or limited recourse basis and excludes corporate debt facilities) Established a $100m Housing 'Virtual Fund' to support the financing of more affordable, secure and sustainable homes Committed to 100% renewable electricity across our global premises by 2025 Expanded sustainable finance offering to establish sustainability-linked loans market in Australia and New Zealand Continued expansion of Home Buyers Coach training, currently >3,300 home coaches active in Australia and New Zealand Use insights, advocacy and partnerships • • Delivered new housing market insights with bi-annual ANZ-Core Logic Housing Affordability Report Conducted research to assess the impact of Money Minded on financial wellbeing Continue to improve housing, environment and financial wellbeing outcomes for the community Alleviate homelessness Connect to the environment Facilitate financial inclusion • Supported youth employment through the opening of two social enterprise cafés: Home. Two and STREAT Raised >$150k for the St Vincent de Paul 'CEO Sleepout' - equivalent to providing >5,000 meals for those experiencing homelessness Over 18,000 hours volunteered by employees towards environmental sustainability More than 1,250 employees volunteered with Sustainable Coastlines New Zealand collecting more than 10,000 litres of rubbish Through ANZ Technology 'Return to Work' program we employed 30 women who had been out of the workforce for an extended period Improved the financial literacy of >87,500 people through our Money Minded program ANZ#106CREATING VALUE FOR OUR STAKEHOLDERS iji 08 $ CUSTOMERS 8.7m total retail, commercial and Institutional customers $291b in retail & commercial customer deposits in Australia and New Zealand $339b in home lending in Australia and New Zealand Full mobile wallet offering, including Apple Pay™, Google PayTM, Samsung Pay™ FitBit PayTM and Garmin Pay™ #1 Lead bank for trade services¹ • • EMPLOYEES 39,060 people employed (FTE) 734 people recruited from under-represented groups, including refugees, people with disability and Indigenous Australians since 2016 32.5% of women in leadership, increase from 27.9% in Sep 2014² ~1.5m hours of training undertaken COMMUNITY $142m contributed in community investment³ • 134,930 volunteering hours • • completed by employees $3.2b in taxes incurred; money used by governments to provide public services and amenities4 >998k people reached through our target to help enable social and economic participation5 All financial metrics are as at 30 September 2019 (P&L growth metrics for the full year ended 30 September 2019) unless otherwise stated. • SHAREHOLDERS >500,000 Retail & Institutional shareholders • $6.5b6 cash profit reported 227.6 cents earnings per share • 160 cents per share dividend for FY197 10.9% return on average ordinary shareholders equity 1. Peter Lee Associates Large Corporate and Institutional Transactional Banking Surveys, Australia 2004-2019 and New Zealand 2005-2019 2. Measures representation at the Senior Manager, Executive and Senior Executive Levels. Includes all employees regardless of leave status but not contractors (which are included in FTE) 3. Figure includes foregone revenue of $109 million 4. Total taxes borne by the Group, includes unrecovered GST/VAT, employee related taxes and other taxes. Inclusive of discontinued operations 5. Through our initiatives to support financial wellbeing including financial inclusion, employment and community programs, and targeted banking products and services for small businesses and retail customers 6. On a cash profit continuing operations basis 7. FY19 franking average 85% ANZ 106#1072019 FULL YEAR RESULTS ANZ CLIMATE-RELATED FINANCIAL DISCLOSURES#108CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)¹ Governance Board Risk Committee oversees management of climate-related risks Board Ethics, Environment, Social and Governance Committee oversees and approves climate- related objectives, goals and targets Ethics and Responsible Business Committee (executive management) oversees our approach to sustainability and reviews climate-related risks Strategy Low carbon financial products and services Staff training on transition planning Reducing our own operational footprint Focus on a 'just and orderly' low carbon transition UNEP FI² TCFD group that issued recommendations on portfolio transition and physical risks • Analysis of flood-related risks for home loan portfolio in a major regional location of Australia ⚫ Flood-related analysis and test-pilot of socio-economic indicators for customer financial resilience Risk Management Climate-related risks identified as potential credit risk • Climate change risk added to Group and Institutional Risk Appetite Statements Climate change identified as a Principal Risk and Uncertainty in our UK Disclosure and Transparency Rules Submission Guidelines and training provided to 1,000 of our Institutional bankers on customer transition plans Enhanced analysis and credit terms applied to agricultural purchases in certain regions New agribusiness customers assessed for climate resilience Metrics & targets 29 engagements with large emitting customers to establish transition plans - targeting 100 customers by 2021 $19.1 billion funded and facilitated in environmentally sustainable solutions Declining exposure to the most carbon-intensive energy; thermal coal mining exposures halved since 2015 100% renewable electricity for our operations by 2025, with our emissions targets aligned with Paris Agreement goals 1. A Financial Stability Board Task Force released recommendations on financial disclosures in June 2017 to help investors better understand climate-related risks and opportunities. ANZ supports the TCFD recommendations and is using them to guide its disclosures 2 United Nations Environmental Programme for Financial Institutions ANZ 108#109SUPPORTING OUR CUSTOMERS AND TRAINING OUR STAFF ON THE DEVELOPMENT OF LOW CARBON TRANSITION PLANS CUSTOMER MANAGEMENT AND STAFF TRAINING ANZ customer management informed by climate-related engagement • • We have identified carbon-intensive sectors most likely to be impacted by climate change There are 100 of our largest emitting business customers in those sectors We are supporting these customers to establish, or strengthen their low carbon transition plans We will use the results of this engagement to inform our risk assessment of customers in these sectors Training our staff to engage with customers on climate-risk This year we provided training to over 1,000 bankers in our Institutional and Corporate businesses. The training covered: • • how climate-related risks and opportunities might manifest for our customers what elements we would expect to see in a robust transition plan market and regulatory drivers that are focusing stakeholder attention on our customers whether they have plans in place to manage their climate- related risks and opportunities CUSTOMER EXAMPLE: BHP'S TRANSITION PLANNING BHP has an integrated strategy including: Targets to hold net operational emissions at or below FY2017 levels by FY2022 while continuing to grow their business. Active stewardship role working with customers, suppliers and other value chain participants to influence reductions in scope 3 including: A commitment to spend US$400m to develop technology to reduce emissions. HOW WE SUPPORT OUR CUSTOMERS - INCLUDING INCORPORATION OF CLIMATE-RISK MANAGEMENT BAU cycle Strategic segment management Periodic customer ANZ CUSTOMER MANAGEMENT engagement Ongoing credit review BAU staff training Climate-related cycle Portfolio assessment of carbon-intensive sectors Periodic customer engagement on transition plans Desktop research on customer disclosures and statements Staff training on low-carbon transition discussion 1. 2019 focus on ANZ staff managing specific higher carbon emitting customers 1. 2019 focus on ANZ staff managing specific higher carbon emitting customers ANZ 109#1102019 FULL YEAR RESULTS ANZ DEBT INVESTOR PRESENTATION ECONOMICS#111ECONOMICS AUSTRALIA FORECAST TABLE1 2016 2017 2018 2019F 2020F - Australia annual % growth GDP 2.8 2.4 2.8 1.9 2.8 Domestic final demand (% q/q) 1.8 3.0 2.8 1.0 1.7 Headline CPI (% y/y) 1.3 1.9 1.9 1.4 1.7 Core CPI (%y/y) Employment (%y/y) 1.5 1.8 1.9 1.4 1.7 1.0 3.3 2.3 2.0 1.9 Wage Price Index (%y/y) 2.0 2.0 2.2 2.3 2.3 Unemployment (ann. avg) 5.7 5.5 5.0 5.2 5.0 Current Account (% of GDP) -3.3 -2.6 -2.1 0.6 -0.1 Terms of Trade 0.4 12.1 2.0 5.6 -4.9 RBA cash rate (% year end) 1.50 1.50 1.50 0.75 0.25 3yr bond yield (% year end) 1.83 1.75 2.06 0.75 0.75 10 year bond yield (% year end) 2.31 2.64 2.64 1.00 1.25 AUD/USD (year-end value) 0.74 0.77 0.74 0.65 0.70 1. Based on 24th Sep 2019 forecast ANZ 111#112AUSTRALIAN ECONOMY GDP GROWTH¹ % 2 Year-ended Quarterly -2 1994 1999 2004 2009 1% % 5 2014 -2 2019 CREDIT GROWTH BY SECTOR¹ (year ended) % Housing 20 10 0 10 Business I 2003 Personal 2007 2011 2015 Sources: ABS; APRA; RBA Sources: 1. RBA Chart Pack Oct 2019 T 4 3 2 1 0 CONSUMER PRICE INFLATION¹ 1% Year-ended 40 5 4 3 2 1 J 0 -1 1994 1999 Quarterly (seasonally adjusted) 2004 2009 T 2014 - Excluding interest charges prior to the September quarter 1998 and adjusted for the tax changes of 1999-2000 Sources: ABS; RBA -1 2019 AUSTRALIAN GOVERNMENT BUDGET BALANCE² Per cent of nominal GDP % % 2 1 20 0 -1 10 -2 -3 0 4 2019 -10 % 2 1 0 -1 -2 -3 1 87/88 94/95 01/02 08/09 15/16 -5 22/23 Underlying cash balance; 2019/20 Budget Source: Australian Treasury ANZ112#113% yoy 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Sep-1996 Jul-1997 % yoy 2.5% AUSTRALIAN ECONOMY AND POPULATION POPULATION GROWTH¹ - AUSTRALIA AND G7 2.0% 1.5% 1.0% 0.5% 0.0% 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2008] 2006 POPULATION GROWTH - 2010 2012 2014 2016 MAJOR STATES³ May-1998 Mar-1999 Jan-2000 Nov-2000 Jul-2002 Sep-2001 May-2003 Mar-2004 Jan-2005 Nov-2005 Jul-2007 Sep-2006 May-2008 Mar-2009 Jan-2010 Nov-2010 Jul-2012 Sep-2011 May-2013 Mar-2014 Jan-2015 Nov-2015 Jul-2017 Sep-2016 May-2018 2018 % CONSUMER SPENDING GROWTH4 Australia 10 Other retail spending (LHS) G7 weighted average Sources: 1. ABS, IMF. 2. Chart Pack Oct 2019, 3. ABS. 4. RBA Speech: "What's up (and Down) With Households ", March 2019. Mar-2019 -5 0 Сл 5 Household goods sales (LHS) Car registrations (RHS) 2010 2012 2014 Sources: ABS, FCAI/VFACTS; RBA T STATE SHARE OF OUTPUT² -20 2016 2018 0 20 20 40 % % 35 30 Victoria 25 % New South Wales 35 30 25 VIC 2.4% QLD 1.7% 20 20 Queensland NSW 1.6% 15 15 WA 0.8% Western Australia 10 South Australia 5 10 5 Tasmania 0 92/93 97/98 02/03 07/08 12/13 0 17/18 Source: ABS ANZ 113#114AUSTRALIAN LABOUR MARKET UNEMPLOYMENT AND UNDEREMPLOYMENT¹ % 10 00 8 60 4 2 1994 * 1999 T JOB VACANCIES AND ADVERTISEMENTS¹ % % 10 2.0 Underemployment rate* 8 1.5 2004 Unemployment rate 4 1.0 2009 2014 2 2019 0.5 Full-time workers on reduced hours for economic reasons and part-time workers who would like, and are available, to work more hours Source: ABS 2003 (Per cent of labour force) % Advertisements (ANZ survey) J 2007 2.0 Vacancies* (ABS survey) 1.5 I I 2011 2015 1.0 0.5 2019 This survey was suspended between May 2008 and November 2009 Sources: ABS; ANZ WAGE PRICE INDEX GROWTH² 1% % Private sector Public sector 7 5 01 5 6 4 3 2 - Year-ended* (incl bonuses) 2010 Year-ended (excl bonuses) 2019 2001 Quarterly (excl bonuses) 3 2010 2019 Not seasonally adjusted; bonuses include commissions 2001 * Source: ABS N 1 % change y/y 5 LABOUR COSTS AND INFLATION3 + M 2 1 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 % change y/y O 1.0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 NAB labour costs (LHS) -Wage price index - private sector (RHS) Sources: 1. RBA Chart Pack Oct 2019 2. RBA Speech: "The Labour Market and Spare Capacity", June 2019. 3. ABS, ANZ Research ANZ 114#115COMMODITY PRICES¹ index 135 100 65 RBA INDEX OF COMMODITY PRICES SDR, 2016/17 Average = 100, log scale index index 135 BASE METALS, RURAL, AND OIL PRICES 150 Rural* 100 125 100 65 75 50 Base metals* 25 2009 30 30 1989 1995 2001 2007 2013 2019 Source: RBA BULK COMMODITY PRICES Free on board basis US$/t Iron ore (LHS) Thermal coal (LHS) 165 M 120 75 30 2014 2019 2014 Weekly 2019 2009 US$/b Brent oil 125 My 100 2014 RBA Index of Commodity Prices sub-indices; SDR terms; 2007 average = 100 Sources: Bloomberg; RBA 75 50 25 10 2019 TERMS OF TRADE* 2016/17 average = 100, log scale US$/t index Coking coal (RHS) lindex 120 120 350 100 Average Australian Spot price* export price 2014 2019 2014 80 250 60 150 50 2019 40 Iron ore 62% Fe Fines Index; Newcastle thermal coal and premium hard coking coal Sources: ABS; Bloomberg; IHS Markit; RBA 1. RBA Chart Pack Oct 2019 100 80 60 1959 Annual data are used prior to 1960 1974 1989 2004 2019 Sources: ABS; RBA ANZ115#116AUSTRALIAN ECONOMY - STATE BY STATE CHANGE IN EMPLOYMENT BY STATE¹ Past 3 years -4.0 NSW VIC % yoy 6.0 4.0 2.0 0.0 -2.0 STATE FINAL DEMAND (STATE GDP)¹ gudha NT Tas ACT SA WA TAS SA QLD WA Qld -6.0 -8.0 Vic NSW -10.0 -100 000's 130 80 60 30 30 -20 VIC 2014 2015 2016 2017 2018 2019 0 100 200 300 400 ■'000 change in employment over 3yrs to Sep-19 MAJOR INFRASTRUCTURE PROJECTS² 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 North-South River Torrens to ANZAC Hwy (SA) North-South ANZAC Hwy to Darlington (SA) Melbourne Airport Rail (VIC) Pacific Motorway to Raymond Terrace (NSW) Western Sydney Airport Rail (NSW) Western Harbour Tunnel (NSW) ■New Women's and Children's Hospital (SA) ■F6 Extension Stage 1 (NSW) ■Snowy Hydro Expansion (NSW) North East Link (VIC) ■Sydney Metro West (NSW) ■Cross River Rail (QLD) ■75 by 2025 Level Crossing Removals (VIC) Parramatta Light Rail Stage 1 (NSW) Badgerys Creek Airport (NSW) Melbourne-Brisbane Inland Rail (National) West Gate Tunnel (VIC) ■Metronet Forrestfield Airport Link (WA) ■Melbourne Metro (VIC) ■Sydney Metro City and Southwest (NSW) ■Level Crossing Removals (VIC) ■CBD and South East Light Rail (NSW) North Connex (NSW) ■WestConnex (NSW) ■Pacific Highway - Woolgoolga to Ballina (NSW) ■Sydney Metro Northwest (NSW) NBN (National) ■Completed projects POPULATION GROWTH¹ Sydney (Total: 118,133) Natural Increase: 51,513 NOM: 88,871 % yoy 22 3 20 2.5 18 NIM: -22,251 Melbourne (Total: 117,738) 16 Natural Increase: 35,491 2 NOM: 77,065 14 NIM: 5,182 1.5 AUDbn 12 1 10 0.5 8 0 6 -0.5 4 QLD ACT WA SA TAS NT 2 NSW Natural Increase ('000) Net Interstate Migration ('000) Sources: 1. ABS. 2. ANZ Research Net Overseas Migration ('000) % Increase (RHS) 0 ANZ 116#117AUSTRALIAN ECONOMY - WA GDP HAS IMPROVED 16 14 12 10 M WA AND QLD1 6 MONTHS OF JOB GROWTH IN WA AND QLD 30 NT 26 22 Tas 18 14 10 y/y % change (trend) -6 -4 WA improved -10 -6 -8 -14 -10 -18 04 06 08 10 12 14 16 18 04 06 08 10 12 14 16 18 NSW ―VIC -QLD WA -SA ―TAS NT -ACT WA EMPLOYMENT y/y % change (trend) 6 5 4 M -2 -3 06 07 08 09 Western Australia 10 11 12 13 14 17 ―Australia (excluding Western Australia) 15 16 18 19 1. ANZ Research ACT WA SA Qld NSW Vic -20 ° 20 40 60 80 '000 change in employment over year to Sep-19 WA HOUSE PRICES House prices (y/y % change) 35 30 15 10 52250404 100 120 -5 -10 -15 06 07 08 09 10 11 12 13 14 -Perth 15 16 Western Australia - Rest of state 17 18 19 * Seasonally adjusted by ANZ Research ANZ 117#118AUSTRALIAN ECONOMY - SERVICE EXPORTS AUD bn, 3-month sum 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 SERVICE EXPORTS AND AUD¹ may -1.5 -2.0 95 97 99 01 03 05 07 09 11 40 45 50 6 55 5 60 65 Index 4 70 3 75 2 80 85 1 90 13 15 17 19 Net tourism & education related exports (LHS) Australian dollar TWI, inverted, forward 6 months (RHS) INTERNATIONAL STUDENT VISAS² 450 400 350 300 311 300 250 200 150 100 50 0 2015 2016 INTERNATIONAL TOURIST VISA'S GRANTED² 49% growth 2013 2014 2015 2016 2017 2018 ■June 30 Visa's granted ('Millions) NUMBER OF INTERNATIONAL CITIES WITH CONNECTING FLIGHTS³ 35% growth 70 406 378 60 343 50 40 30 20 10 0 2017 2018 2019 SYD MEL BRIS PERTH CAIRNS GC ADEL ■Jun 30 Visa Granted (millions) Sources: 1. ABS, ANZ Research. 2. Department of Immigration and Border Protection. 3. Department of Infrastructure and Development International Airline Activity Time Series ■Jul-15 Jul-16 ■Jul-17 Jul-18 ■Jul-19 ANZ 118#119% of income AUSTRALIAN HOUSING DYNAMICS: A COOLING MARKET HOUSING PRICE FORECASTS BY STATE³ HOUSE PRICE GROWTH¹ Total housing prices, y/y % change (calendar year) + -8 -12 16 12 00 yoy % 5 yr Cumulative 2013-2018 5 yr Cumulative Sep 14-Sep 19 Sep 2019 All dwellings Houses Units All dwellings Houses Units All dwellings Houses Units Sydney -4.7 -5.0 -4.1 43.4 46.8 35.9 19.6 20.6 16.8 Melbourne -3.9 -5.9 0.5 40.5 50.8 21.4 25.9 30.2 17.3 Brisbane -2.1 -2.3 -1.5 15.5 19.8 -1.4 6.9 10.3 -6.6 Adelaide -1.1 -1.4 0.3 16.8 17.9 10.9 9.9 10.5 7.1 Perth -9.0 -9.0 -9.2 -11.8 -9.8 -19.8 -20.7 -19.3 -26.2 Darwin -9.4 -11.3 -5.6 -22.1 -14.2 -34.0 -30.0 -25.3 -36.9 Hobart Darwin Canberra Canberra 1.3 2.1 -1.5 21.4 27.3 3.3 22.8 28.3 5.2 2020 (forecast) Hobart 2.5 3.4 -0.7 36.2 36.1 36.9 38.5 41.3 27.4 Australia Sydney Melbourne Brisbane Adelaide Perth 2016 2017 *Capital city weighted average 60 GO 55 50 45 40 35 30 25 2018 2019 (forecast) OVERALL AFFORDABILITY2,3 3 10 9 8 Λ Years of income * 20 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Mortgage payment* as a % of income (LHS) Rent payment as a % of income (LHS) -Price in years of income (RHS) Mortgage repayments on 80% LVR of median capital city house price ** At 15% savings rate on average state/territory household disposable income 2 Sources: 1. CoreLogic RP Data values as at September 2019. 2. Residex,, RBA. 3. ANZ Research Number of years to save 20% of capital city dwelling price* 14 12 10 DEPOSIT AFFORDABILITY2,3 96 Sydney Brisbane Perth 98 00 02 04 06 08 10 Melbourne Adelaide Hobart 12 14 16 18 20 Australian capital city weighted average * At 15% savings rate on average state/territory household disposable income ANZ 119#120RENTAL VACANCY RATES REMAIN LOW 26 RENTAL VACANCY RATES¹ Seasonally adjusted* Australia* 4 2 % 9 Brisbane 6 Canberra 3 ° 15 2006 Sydney 2019 1993 % 6 Melbourne 4 личи 2 Perth 0 0) 8 7 Vacancy rates, % 6 S + M 3 2 3 1 ° 2006 2019 0 Capital cities excluding Adelaide, Darwin and Hobart Series break December quarter 2002 1993 * ** 10 y/y % change Sn о -5 -10 RENTS2,3 Perth 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 -Melbourne -Brisbane VACANCY RATES BY STATE 2,3 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 -Australian capital cities -Sydney -Melbourne -Brisbane -Perth 4.5 4.0 3.5 3.0 % of total rental stock 2.5 2.0 1.5 1.0 RENTS & VACANCY RATES2,3 о 1 2 3 4 5 6 y/y % change 8 0.0 9 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 -Rental vacancy rate: capital cities (trend, Ilhs) ―Rent growth: Capital cities (nominal, rhs) 0.5 Sources: 1. RBA Speech: "Housing and the Economy" Oct 2019. 2. CoreLogic RP Data values as at 30 September 2019. 3. Residex, RBA, ANZ Research -Sydney ANZ 120#121AUSTRALIAN HOUSING DYNAMICS PRIVATE RESIDENTIAL BUILDING APPROVALS¹ Monthly 1000 20 16 12 $b 20 00 4 15 HIGH DENSITY APARTMENT COMPLETIONS² 4+ Storey buildings, share of 2016 dwelling stock 7000 % Sydney 1.5 20 1.0 Total 16 0.5 % Brisbane 12 1.5 8 1.0 0.5 4 0.0 % Melboure 1.5 1.0 0.5 % Perth 1.5 1.0 0.5 0.0 2008 2014 2020 10 2009 2014 2019 City and inner suburbs 2008 Middle suburbs 2014 Outer suburbs 2020 Estimated completions Sources: ABS; RBA Detached houses Higher-density housing 0 1994 1999 Source: ABS 10 5 2004 HOUSING LOAN APPROVALS¹ HOUSING STARTS AND COMPLETIONS³ 1$b 1.1 20 1.0 Total 0.9 15 0.8 0.7 Owner-occupier 10 Number 0.6 0.5 0.4 0.3 Investor 0.2 0.1 2019 0.0 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 -Annual dwelling completions per increase in population -1985-2018 average ANZ 121 0 L 2003 + 2007 Seasonally adjusted Sources: ABS, RBA 2011 2015 Sources: 1. RBA Chart Pack Oct 2019, ABS 2. RBA Financial Stability Review, April 2019. 3. ANZ Research#122AUSTRALIAN HOUSING HOUSEHOLD DEBT AND INCOME HOUSEHOLD DEBT AND DEPOSITS¹ % of annual household disposable income 240 200 160 120 80 10 40 ° HOUSEHOLD DEBT-TO-INCOME RATIOS² % Netherlands Household Debt to Income 191.1% 200 Australia 150 Household Net Debt to Income 104.8% Norway 100 Jun-2012 Jun-2014 Jun-2015 Jun-2016 Jun-2013 Household depositsas a % of Income 86.3% Jun-2017 Jun-2018 Jun-2019 Jun-2005 Jun-2006 Jun-2007 Jun-2008 Jun-2009 Jun-2010 Jun-2011 Jun-2002 Jun-2 Jun-2004 Jun-2000 Jun-2001 Jun-1999 Jun-1998 Jun-1995 Jun-1996 Jun-1997 ratio Deposits to Disposable Income HOUSING PRICE-TO-INCOME RATIO³ 6 NSW 5 10 4 Vic 3 3 2 1 1998 * 2008 2018 Qld ratio 6 WA Tas ACT 1998 2008 5 10 寸 SA 3 Average dwelling prices to average annual household disposable income Sources: ABS; CoreLogic; RBA 2018 Sweden 50 NZ % 120 80 40 1997 Canada UK 2017 % 200 150 US 100 Germany 50 Spain 1997 2017 Sources: National sources; OECD; RBA; Thomson Reuters HOUSEHOLD MORTGAGE DEBT INDICATORS² Debt-to-income ratio 2 o 1994 2006 2018 % Payment-to-income ratios** Total payments! 12 Total scheduled payments Interest Scheduled principal Unscheduled principal 1994 2006 2018 Excludes non-housing debt; debt-to-income line nets out amounts in redraw facilities: dotted lines are calculations based on debt balances which also exclude offset accounts; income is household disposable income before housing interest costs 8 4 Rolling four-quarter average; unscheduled principal is the change in aggregate mortgage prepayments Sources: ABS; APRA; RBA ANZ 122 Sources: 1. ABS, RBA. Housing Debt refers to ratio of housing debt to annualised household disposable income. Deposits include transferrable and other deposits. 2. RBA Financial Stability Review, April 2019 3. RBA Speech: "The Housing Market and the Economy", March 2019.#123180 120 60 大 % AUSTRALIAN HOUSING HOUSEHOLD DEBT 1993 1998 HOUSEHOLD DEBT¹ Per cent of household disposable income HOUSEHOLD BALANCE SHEET2 Relative to disposable income 1% % Assets 500 Total** 180 400 Housing & personal 120 300 Housing (owner-occupier) Personal 2003 2008 200 60 Housing (investor) 100 2013 2018 Household disposable income is after tax, before the deduction of interest payments, and includes income of unincorporated enterprises Sources: ABS; APRA; RBA ** Includes debt of unincorporated enterprises and debt owed to non-financial organisations (e.g. HECS-HELP) Sources: 1. RBA Speech: "Property, Debt and Financial Stability", March 2019. 2. RBA. Financial Stability Review, October 2019 Superannuation Other financial assets Durables Housing Housing debt % Liabilities Other liabilities + 1989 1999 2009 2019 Other financial assets include financial assets held outside of superannuation; other liabilities include personal credit, student loans and other household liabilities Sources: ABS; RBA 500 400 300 200 100 ANZ 123#124AUSTRALIAN HOUSING LOW LEVELS OF HIGH LVR LENDING - ISOLATED NEGATIVE EQUITY¹ % ADIS' HIGH LVR LOANS¹ Share of new loan approvals Total Owner-occupier LOANS IN NEGATIVE EQUITY² Share of balances, February 2019 % Investor % % By state (RHS) 30 15 0 % LVR > 90 80 LVR ≤ 90 2012 + 30 3 15 2 1 16 August 2018 12 0 2018 2012 2018 2012 2018 0 AUS SA VIC & NSW & TAS ACT QLD WA & NT Sources: APRA: RBA CURRENT DYNAMIC LVR DISTRIBUTION¹ Share of balances, February 2019 Positive equity 1.5 February 2018 1.0 0.5 25 50 75 LVR 100 % 1.5 1.0 0.5 Negative equity 125 0.0 150 Loan balances adjusted for redraw and offset account balances: property prices estimated using SA3 price indices Sources: ABS: CoreLogic: RBA: Securitisation System Sources: 1. RBA. Financial Stability Review, April 2019. 2. RBA. Financial Stability Review, October 2019 Sources: ABS; CoreLogic; RBA; Securitisation System 8 4 ANZ 124#125AUSTRALIAN MORTGAGE STABILITY OFFSET BALANCES AND SMALL SHADOW BANKING SECTOR HOUSEHOLD MORTAGE BUFFERS¹ NON-BANK HOUSING CREDIT AND RMBS ISSUANCE² • mths Aggregate Distribution of loans** By months of prepayments Investor and/or fixed rate loans*** % % Estimated non-bank share of outstanding housing credit* 1% 10 10 36 36 Number of months (LHS) New loans Other ம் 24 12 Share of gross housing credit (RHS) L L 2009 2014 2019 0 to 1 to 6 to 12 to 24+ <1 <6 <12 <24 Months Available redraw plus offset account balances As a share of the total number of loans as at June 2019 These loans have features that discourage prepayments Sources: APRA; RBA; Securitisation System 5 24 $b Non-bank Australian RMBS issuance** $b 20 20 12 15 15 10 10 5 сл 10 2003 2007 2011 2015 2019 As at year-end 2019 year to date Sources: APRA; RBA Aggregate buffers of 16.5% of outstanding mortgage balance or 2.5 years scheduled payments (at current interest rates) Of those with <1 month buffer, this includes • Investor mortgages who have tax incentives not to repay tax deductible debt early Fixed rate mortgages Sources: 1. RBA. Financial Stability Review, October 2019 2. RBA. Financial Stability Review, April 2019 ANZ 125