Australia and New Zealand Banking Group Limited Background Briefing on New Zealand Tracking Stock David Ward General Manager Office of the Chief Executive Officer

Presentation m Strategic Direction m Business Strategies m Current Performance m Proposed Tracking Stock Issue

ANZ: Financial Parameters m Assets A$149 billion m Shareholder Equity A$9.2 billion m Return on Equity 17.3% m 30,000 staff m Return on Risk Weighted Assets 1.2% m Top 100 bank globally on Assets, profits and capital m Market Capitalisation of A$16 billion (Eighth largest company in Australia)

ANZ Profile l $100B assets l Full service l 14% market share l 4th largest bank l 3 m customers l Leader in Business Banking, Asset Finance, Credit Cards l Bank of the Year and 1998 l $20B assets l Full service l 18% market share l 4th largest bank l 1 m customers l Leader in Business Banking, Asset Finance l $30B assets l Niche commercial banking l Widest Represented Australian Bank l Leading foreign Bank in South Asia/Middle East (Grindlays) Australia New Zealand International

Span of International Operations Australia Since % of profit UK & Europe 3% of profit

Business Unit Parameters Profit Assets $m $b Personal* Corporate* International Centre 69 6 ___ Total * Retail Asset Finance in Personal March 1999

Strategic Direction m Rebalance business mix largely organically m Focus on four strategic businesses ã accelerate growth in personal ã build on strong position in corporate ã simplify and focus International ã build leading presence in e-Commerce m Transform management process to ensure execution and delivery

Optimising the Business Mix Return Risk FX Retail FM Personal Banking Major Corporate Capital Markets Proprietary Trading Trade Institutional Stockbroking International Corporate Target Business Banking Asset Finance International Consumer Structured Finance

Business Strategies m Accelerate growth in personal financial services particularly in funds management by harnessing our distribution power m Build on our strength in the corporate sector, by growing services business, whilst reducing risk and improving return on assets m Simplify our international network to improve return, by focusing on Asia and the Pacific, by reducing risk and by investing in growth franchises m 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 % ANZ NAB CBA WBC Share of Housing Lending % % Share of Business Lending %

ANZ Has a High Quality Personal Customer Base Industry Ave ANZ 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 Customer Base 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 $ Investment General Insurance & Traditional Life Non-traditional products

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

Build on Leading Corporate Position to Improve Returns m Market Leader in ã Business Banking ã Auto Finance ã Foreign Exchange m Investment Banking restructured m Need to ã Diversify Revenue Sources ã Reduce Risk ã Improve EVA ã Improve ROA

Business Banking Australia: Risks reduced Shareholder Value Increased Risk Profile (% of Lending Assets) Risk Level H High Low EVA by customer decile Customer Deciles

Investment Banking Activities Restructured FX Money Trading Revenues( $m) Only 1 negative week Apr-971-Aug-971-Dec-971-Apr-981-Aug-981-Dec-981-Apr-99 Cumulative m No1 in FX in Australia (2nd year, BRW) m Top 5 Asian FX house (Asia Money) m Restructured to focus on domestic markets and core products m Withdrawn from non core activities such as London Capital Markets m Reduction 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 America Represntative Offices Closed New York Money Centre UK Europe Money Centre & Private Banking

Simplify and Focus International m Re-balance business mix towards consumer m Maintain strong lending policies m Target Top 2-3 foreign or Top 5 local position m Leverage strong positions and global capabilities m Deal with minor positions m Develop Asia-Pacific, e.g. Indonesia m Pursue 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 m To build a strong e-financial services capability with rapid growth in registered users, on- line sales and site traffic m To create a powerful set of new customer acquisition channels m To develop new e-Commerce businesses, such as the E*Trade alliance, Auto Group Building a Leading e-Commerce Position Internet Banking Registrations OctNovDecJanFebMarAprMayJunJul Aug

Transform to new business Personalised Holistic Lifestyle aggregated Customer Value Visitor “Sticky” Customer Entry LevelAdvanced Functional Richness Transact Account Transfer Applications Transactions Interact Interactivity Enquiry Inform Basic presence Brochureware Building a Leading e-Commerce Position ANZ

Execution is the Key m Difficult to differentiate strategically m Aggressive targets to stimulate innovation m Organic emphasis for the next 2/3 years m New performance management discipline m Real differentiation is through execution ã Shareholder Performance ã Customer Experience ã Building Talent Out-delivering the competition is fundamental to success

Organising to Deliver Group Functions Finance Peter Marriott Strategy Alison Watkins People Elizabeth Proust Business Groups Personal Peter Hawkins Corporate Roger Davis International Elmer Funke Kupper Technology David Boyles CEO John McFarlane Governance Activities

Presentation m Strategic Direction m Business Strategies m Current Performance m Proposed Tracking Stock Issue

Momentum Evident in First Half Australia New Zealand International $M Mar-98Sep-98Mar-99 Profit after Tax

Cost Income Ratio H99 % Mar-99Sept-98Sep-97 US$b FX Interest Equities A$m Mar-99Sept-98Mar-98 Risk and Costs Reduced US$b Asian Exposure Market Risk (Var) A$m

Relative Share Price Performance Index October Aug-99

Second Half 1999 m Second half broadly in line with market expectations m Income up ã flat net interest income ã growth in non-interest income m Costs stable m Provisioning stable m Cost income ratio down

Analyst’s Comments Alastair Hunter, J B Were Post FY98 Result Global concerns overshadow a strong domestic performance... The reduction in the risk profile will add value to the shareholders... Post HY99 Result For 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 Seminar ANZ 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 Comments Mike Macrow, Merrill Lynch Post FY98 Result Our reduction in opinion reflects the higher asset quality risk inherent in a more commercially oriented bank Post HY99 Result The 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 Seminar ANZ share price has underperformed CBA share price 30% and NAB by 15% since December Cost cutting and rationalisation of below hurdle activities suggest a price catch up is likely.

ANZ Vision ANZ is a vibrant financial services company that delivers: m Superior performance and value for our shareholders m An experience which delights our customers m An environment where our people excel

Presentation m Strategic Direction m Business Strategies m Current Performance m Proposed Tracking Stock Issue

ANZ Capital Management Principles Rating Agencies ie, AA Status Reduce Cost of Capital Manage Through The Cycle Economic Capital Inner Tier 1 Equals Economic Capital Risk Adjusted Tier 1 Ratio Comparable to Peers Capital Structure Peers CycleShareholders

m Align shareholder base with location of assets/profits m Increase ANZ Brand awareness m Cost Efficient form of high “Equity Credit” Capital m Diversify Shareholder Base/Reduce Cost of Capital m Opportunity for Customers and Staff to own their Bank m 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 m Both parties have the ability to trigger exchange at any time after initial period m Slight discount applies if initiated by investor m Investors can buy or sell the securities at any stage on the NZSE

An Investment in ANZ Group m Key Differences Between This Security and ANZ Ordinary Shares ã Is a Hybrid Security ã Expect New Zealand Investors to Receive Imputation Credits m The Exchange Mechanism plus same Dividend Yield ensures price will track ANZ head shares m 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

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