ANZ Delivers Consistent Earnings Growth

Thursday, 24 October 2002, 12:42 am
Press Release: ANZ Bank

For Release: 24 October 2002

ANZ Delivers Consistent Earnings Growth

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

Results Summary (excluding significant transactions)

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

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

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

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

- Cost income ratio 46% down from 48%

All comparisons with Full Year 2001.

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

ANZ Chairman, Mr Charles Goode said: “This is a strong result that highlights the consistency of ANZ’s earnings growth, achieved at the same time as lowering our risk profile. Management and staff are to be congratulated.” “During the year we took steps to further strengthen corporate governance. This included a new policy in respect to the relationship with our auditor and having ANZ’s internal audit function report to the Chairman of the Board Audit Committee.

“We have better aligned the use of executive options with shareholders’ interests by linking the exercise price to movements in the S&P/ASX 200 Banks Accumulation Index (excluding ANZ).

This ensures executives are rewarded only when ANZ out-performs its peers and the reward is only the value of the out-performance.

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

Chief Executive Officer, Mr John McFarlane said: “Our specialisation strategy and the consistency of our performance is creating a very different bank. We have delivered on our promises.” “ANZ’s specialised businesses continue to produce good results with 14 out of 16 increasing their profits during the year, the majority with double-digit earnings growth.

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

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

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

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

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

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