Australia and New Zealand Banking Group Limited

Background Briefing on New Zealand Tracking Stock

David WardGeneral Manager

Office of the Chief Executive Officer

Presentation

Strategic Direction Business Strategies Current Performance Proposed Tracking Stock Issue

ANZ: Financial Parameters

Assets A$149 billion Shareholder Equity A$9.2 billion Return on Equity 17.3% 30,000 staff Return on Risk Weighted Assets 1.2% Top 100 bank globally on Assets, profits and capital Market Capitalisation of A$16 billion (Eighth largest

company in Australia)

ANZ Profile

$100B assets Full service 14% market share 4th largest bank 3 m customers Leader in Business Banking, Asset Finance,

Credit Cards Bank of the Year - 1997 and 1998

$20B assets Full service 18% market share 4th largest bank 1 m customers Leader in Business Banking, Asset Finance

$30B assets Niche commercial banking Widest Represented Australian Bank Leading foreign Bank in South Asia/Middle East

(Grindlays)

Australia

New Zealand

International

Span of International Operations

Australia • Since 1835

• 67% of profit

UK & Europe• 3% of profit

Asia Pacific• Pacific Since 1880

• Asia Since 1970• 5% of profit

New Zealand• Since 1840

• 14% of profit

South Asia/Middle East

ANZ Grindlays• Since 1854• 7% of profit

Americas• 4% of profit

Business Unit Parameters

Profit Assets $m $b

Personal* 288 60

Corporate* 244 64

International 115 19

Centre 69 6___ ___

Total 716 148

* Retail Asset Finance in Personal March 1999

Strategic Direction

Rebalance business mix largely organically

Focus on four strategic businesses accelerate growth in personal build on strong position in corporate simplify and focus International build leading presence in e-Commerce

Transform management process to ensure execution and delivery

Optimising the Business MixReturn

Risk

FX

Retail FM

Personal Banking

Major Corporate

Capital Markets

Proprietary Trading

Trade

Institutional Stockbroking

International Corporate

Target

Target

Business BankingAsset Finance

International Consumer

Structured Finance

Business Strategies

Accelerate growth in personal financial services particularly in funds management by harnessing our distribution power

Build on our strength in the corporate sector, by growing services business, whilst reducing risk and improving return on assets

Simplify our international network to improve return, by focusing on Asia and the Pacific, by reducing risk and by investing in growth franchises

Swiftly build a leading e-Commerce presence, creating the banking platform of the future using internet technology

Total Market Share

Gains in Market Share

Share of Credit Cards

10

12

14

16

18

20 %

ANZ

NABCBA

WBC

10

11

12

13

14

Jun-94 Feb-96 Oct-97 Jun-99

Share of Housing Lending%

10

12

14

16

18

20

Jun-94 Feb-96 Oct-97 Jun-99

% Share of Business Lending %

19931988 1998

15

20

25

30

Jun-94 Feb-96 Oct-97 Jun-99

ANZ Has a High Quality Personal Customer Base

0 10 20 30 40 50 60 70 80 90 100

Industry Ave

ANZ

20 100 200 500 100060

Total Relationships (%)

Wealth Bands

Source: Roy Morgan 1998

Other

$(000)

The Opportunity with Australian Customers

Source: Roy Morgan 98

All ANZ Customers

High Value to ANZ

High Value to Industry

but limited ANZ business

True Retail Market

CustomerBase 2.7m

Banking Makes up Roughly Half of Financial Services

Estimated Value of An Australian Retail Customer (A$ Present Value)

Risk/Wealth Protection

Traditional Banking

$6000 - 7000

Investment

General Insurance & Traditional Life

Non-traditional products

A New Dedicated Business for Premier Customers

Premier Financial Package Dedicated Managers Premier Suites Dedicated Service Officers

Build on Leading Corporate Position to Improve Returns

Market Leader in Business Banking Auto Finance Foreign Exchange

Investment Banking restructured Need to

Diversify Revenue Sources Reduce Risk Improve EVA Improve ROA

Business Banking Australia: Risks reduced Shareholder Value Increased

Risk Profile(% of Lending Assets)

Risk Level

1996 1999 1H

High

Low

EVA by customer decile

1997 1999

Cus

tom

er D

ecile

s

0 100-50 50

Investment Banking Activities Restructured

FX Money Trading Revenues( $m)

Only 1 negative week

050

100150200250300350

1-Apr-97 1-Aug-97 1-Dec-97 1-Apr-98 1-Aug-98 1-Dec-98 1-Apr-99

Cum

ulat

ive

No1 in FX in Australia (2nd year, BRW)Top 5 Asian FX house (Asia Money)

Restructured to focus on domestic markets and core productsWithdrawn from non core activities such as London Capital MarketsReduction in risk levels and costs

Simplify and Focus International

Grindlays Leading foreign bank

• 114 branches• 1-10% market share Asia

•11 “footprint” branches•Trade and corporate

•negligible market share

Pacific Islands Leading bank• 36 branches• 20-60%share

Latin AmericaRepresntativeOffices Closed

New YorkMoney Centre

UK EuropeMoney Centre & Private Banking

Simplify and Focus International

Re-balance business mix towards consumerMaintain strong lending policies

Target Top 2-3 foreign or Top 5 local positionLeverage strong positions and global

capabilitiesDeal with minor positions

Develop Asia-Pacific, e.g. IndonesiaPursue acquisitions only where it creates a

desired position, and can be managed

Continue to Reduce Risk

Target Fewer, Deeper

Positions

Create Future Growth

Platforms

Imperatives for International

Strategies To build a strong e-financial

services capability with rapid growth in registered users, on-line sales and site traffic

To create a powerful set of new customer acquisition channels

To develop new e-Commerce businesses, such as the E*Trade alliance, Auto Group

Building a Leading e-Commerce Position

Internet Banking Registrations

0

10000

20000

30000

40000

Oct Nov Dec Jan Feb Mar Apr May Jun Jul

50000

60000

Aug

70000

1998 1999

Transform to new business• Personalised• Holistic• Lifestyle aggregated

Customer Value

Visitor

“Sticky” Customer

Entry Level AdvancedFunctional Richness

Transact• Account Transfer• Applications• Transactions

Interact•Interactivity•EnquiryInform

• Basic presence• Brochureware

Building a Leading e-Commerce Position

ANZ

Execution is the Key

Difficult to differentiate strategically Aggressive targets to stimulate innovation Organic emphasis for the next 2/3 years New performance management discipline Real differentiation is through execution

Shareholder Performance Customer Experience Building Talent

Out-delivering the competition is fundamental to

success

Organising to Deliver

Group Functions

Finance Peter

Marriott

StrategyAlison

Watkins

PeopleElizabeth

Proust

Business Groups

PersonalPeter Hawkins

CorporateRoger Davis

InternationalElmer Funke

Kupper

TechnologyDavid Boyles

CEOJohn McFarlane

GovernanceActivities

Presentation

Strategic Direction Business Strategies Current Performance Proposed Tracking Stock Issue

Momentum Evident in First Half

625550

716

Australia

New Zealand

International

$M

373446 480

70

97102182

134

0

100

200

300

400

500

600

700

800

Mar-98 Sep-98 Mar-99

Profit after Tax

Cost Income Ratio

50

55

60

65

70

75

90 93 96 1H99

%

11.5

6.15.8

Mar-99Sept-98Sep-97

US$b

FX

Interest

Equities

A$m

Mar-99Sept-98Mar-98

Risk and Costs ReducedUS$b

Asian Exposure

Market Risk (Var)

A$m

6

10

26

Relative Share Price Performance

60708090

100110120130140150160

01-Oct-98 22-Dec-98 18-Mar-99 10-Jun-99

ANZ

NAB

WBC

CBA

Index 100 - 1 October 1998

31-Aug-99

Second Half 1999

Second half broadly in line with market expectations Income up

flat net interest income growth in non-interest income

Costs stable Provisioning stable Cost income ratio down

Analyst’s Comments Alastair Hunter, J B Were

Post FY98 ResultGlobal concerns overshadow a strong domestic performance... The reduction in the risk profile will add value to the shareholders...

Post HY99 ResultFor further share price appreciation we will need to see:continued improvement in sentiment towards Asia, positive revisions to earnings forecasts, implementation of the strategic plan, improved confidence in management and a regeared balance sheet.

Post Strategy SeminarANZ has a clear vision and strategy in place. The key issue for investors now becomes confidence in management to execute the strategy. We are warming to the execution capability of ANZ….

Analyst’s CommentsMike Macrow, Merrill Lynch

Post FY98 ResultOur reduction in opinion reflects the higher asset quality risk inherent in a morecommercially oriented bank

Post HY99 ResultThe underlying result of $1.3b achieved our expectations. While ANZ has partially recovered from a chronic oversold position, some work is required to take the next step upwards.

Post Strategy SeminarANZ share price has underperformed CBA share price 30% and NAB by 15%since December 1996. Cost cutting and rationalisation of below hurdle activitiessuggest a price catch up is likely.

ANZ Vision

ANZ is a vibrant financial services company that delivers:

Superior performance and value for our shareholders

An experience which delights our customers

An environment where our people excel

Presentation

Strategic Direction Business Strategies Current Performance Proposed Tracking Stock Issue

ANZ Capital Management Principles

Rating Agenciesie, AA Status

Reduce Cost of Capital

Manage ThroughThe Cycle

Economic CapitalInner Tier 1

Equals Economic Capital

Risk Adjusted Tier 1 RatioComparable to PeersCapital

Structure

Peers

CycleShareholders

Align shareholder base with location of assets/profits Increase ANZ Brand awareness Cost Efficient form of high “Equity Credit” Capital Diversify Shareholder Base/Reduce Cost of Capital Opportunity for Customers and Staff to own their Bank Increases ANZ weighting in the NZSE 40

Rationale for Tracking Stock

ANZ New Zealand Tracking Stock

An Investment in ANZ Group• Denominated in NZ$• Dividends in NZ$ equal to

ANZ’s dividend• Imputation Credits

Attached

• Ability to exchange to ANZ Shares

• Mandatory Exchange after 30 years

• Non Voting

Main Features

Exchange Mechanism

Both parties have the ability to trigger exchange at any time after initial period

Slight discount applies if initiated by investor Investors can buy or sell the securities at any stage on the NZSE

An Investment in ANZ Group Key Differences Between This Security and ANZ Ordinary

Shares Is a Hybrid Security Expect New Zealand Investors to Receive Imputation Credits

The Exchange Mechanism plus same Dividend Yield ensures price will track ANZ head shares

Increases ANZ weighting in NZSE 40

ANZ New Zealand Tracking Stock

New Zealand Tracking Stock

Timing : Q1 2000, subject to regulatory approvals

Access : Via Lead Managers, Usual Broker or ANZ Network

Size : Sufficient to ensure liquidity

Regulatory Approvals: Proceeding well

Questions