1. Specialisation, eTransformation and Growth John McFarlane Chief Executive Officer 18 July 2000

2. ANZ has now built a solid foundation Higher risk – significant presence in developing countries – larger corporate book – higher trading activity – surprises Lower efficiency Ability to deliver doubted Higher risk – significant presence in developing countries – larger corporate book – higher trading activity – surprises Lower efficiency Ability to deliver doubted Historic view of ANZ Current position Competitive cost structure – cost to income ratio at low 50s Demonstrated ability to make bold portfolio moves (Grindlays sold, ANZIB reconfigured, retail stockbroking sold) Demonstrated ability to execute fast against important imperatives (cost & risk positions transformed over 2 years) Most businesses displaying strong underlying momentum High calibre, committed, dynamic management team Current position Competitive cost structure – cost to income ratio at low 50s Demonstrated ability to make bold portfolio moves (Grindlays sold, ANZIB reconfigured, retail stockbroking sold) Demonstrated ability to execute fast against important imperatives (cost & risk positions transformed over 2 years) Most businesses displaying strong underlying momentum High calibre, committed, dynamic management team

3. Group strategic direction built on specialisation, eTransformation and growth Proposition 1 Integrated financial services firms will lose to specialists over time 2 The rise of specialists and new technologies will deliver superior customer value and erode margins 3 For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy 1 Reconceive and develop ANZ as a portfolio of specialist businesses 2 Become an “eBank with a human face” 3 Create a portfolio of high growth businesses which leverage capabilities and brands Growth eTransformation Specialisation

4. Globalisation Internet Old economy Global new economy We are experiencing very profound change

5. Technology is driving costs down 0.001 0.01 0.1 1 10 100 1971758085901995 Moore’s Law DRAM memory CAGR = 39% Intel microprocessors CAGR = 38% As the capacity of chips rises… Millions of transistors/chips Elapsed time for 100kb transfer Index, 1980=100 0.1 1 10 100 198019851990199520002005 Cost of a 3-minute telephone call from New York to London 1996, $ 50% 1995 2005 Interaction costs

6. Incumbents’ historic advantages Privileged access to customers, technology, labour, and capital – hard for others to compete Familiarity with local ways of doing business needed Vertical integration the best model Protection from capital market pressure... Neutralised in some/most cases Access available to everyone – easier for new competitors to enter and for customers to compare and switch Regional/global standards and protocols become common – local familiarity becoming less important No real need for integration within the company – can be accomplished with external parties Capital market rewards the strong and punishes the weak The basis of success is changing

7. A disaggregated approach is required House Purchase Product Manufacturing Sales & Marketing Credit Card Wealth Mgmt Cash Deposit Yodlee Quicken EDS IBM Distribution Channels & Processing Customer Need Fidelity Schwab Countrywide AHL MBNA NextCard Egg ING

8. Proposition 1: Specialists will win in the future Globalisation and the impact of the internet will give rise to specialist players who are very customer focused Global niche players will increase their penetration of the domestic markets through time Over time, this will lead to the disaggregation of traditional integrated financial services players To succeed in this environment, winners must specialise in the businesses where they have real capability and can compete long term

9. Strategy 1: Reconceive ANZ as portfolio of specialist businesses Make each of our 21 businesses a specialist in its own right Establish three new stand alone customer businesses - Wealth Management, Small Business and General Banking Accelerate the growth of our strong product monoline businesses Move towards open architecture, selectively over time Manage the portfolio and brands actively from the centre

10. Our portfolio comprises 21 distinct businesses Mortgages Credit cards Personal Wealth Management Small Business General Banking Corporate Foreign Exchange Capital Markets GSF Institutional Corporate Asset Finance GTS B2B eCommerce Customer SegmentsProducts International/ eCommerce Asia Pacific ePortfolio Asia Australia/NZ ANZFM B2C eCommerce Internal Utility Payments Technology

11. Personal Corporate International/ eCommerce Leader Competitive Weaker Cards Corporate Structured Finance Foreign Exchange Asset Finance B2B eCommerce B2C eCommerce Wealth Management Mortgages General Banking Small Business Capital Markets Institutional Transaction Services Pacific Asia Funds Management We have mostly leading or competitive market positions

12. Contribution balanced between personal and corporate, and product and customer International Personal Corporate Other Cards Wealth Mgmt Mortgages Funds Mgmt General Banking Small Business Corporate Foreign Exchange Asset Finance Capital Markets Institutional Structured Finance Transaction Services Asia Pacific % % * Excluding Grindlays 738m* 37m* 368m 311m International Customer Businesses

13. A balanced portfolio of higher & lower capital businesses Profit Contribution Percentage of Group Economic Capital = Proportion of Group Economic Capital Contribution to Group Profit Corporate Institutional Pacific Asia GSF Wealth Mortgages General Banking Cards Small Bus GCM GTS GFX Funds Management Asset Finance

14. A bias towards high return, low risk Asset Finance Asia GSF Mortgage Wealth General Banking RAROC Economic Capital Cards Small Bus. Global FX Global Trans GCM Lower Higher Pacific Institutional Corporate Funds Manag Fin. Products

15. Strategy 1: Reconceive ANZ as portfolio of specialist businesses Make each of our 21 businesses a specialist in its own right Establish three new stand alone customer businesses - Wealth Management, Small Business and General Banking Accelerate the growth of our strong product monoline businesses Move towards open architecture, selectively over time Manage the portfolio and brands actively from the centre

16. Group strategic direction built on specialisation, eTransformation and growth Proposition 1 Integrated financial services firms will lose to specialists over time 2 The rise of specialists and new technologies will offer superior customer value and will erode margins 3 For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy 1 Reconceive and develop ANZ as a portfolio of specialist businesses 2 Become an “eBank with a human face” 3 Create a portfolio of high growth business which leverage capabilities and brands

17. UK Interest Margins Ratio Schwab to ANZ Retail We have no choice but to transform our economics Operating Costs Retail Branch Operating Costs Other Salaries Other 1.8 0.6 1.2 %FUM Net interest margin Headline Net Interest Margin Egg Launched Halifax Lloyds/TSB Supermarkets Egg 9596979899 %NIM Example: Entry of US Monolines into UK Credit Card Market 5 0 10 15 20 9193959799 MBNA, Capital One ~30% margin compression %NIM

18. -60% -90% Time required to find a high rate certificate of deposit Minutes Telephone WWW WWW + agent 1 10 25 Technology transforms what customers expect

19. Schwab demonstrates the power of “Clicks and Mortar” “I see the Internet as the single most empowering force for the individual investor. It allows people complete access to the world of information, giving them the ability to analyse their choices, make decisions and transact business” Charles Schwab Chairman and Co-CEO Source: www.schwab.com “At the same time, we’re in the business of building trust. Because we’re dealing with people’s money, we need to make sure that they feel secure. The human contact that our customers get in the branches and on the phone is all about building trust. So it’s that marriage of technology and people that we think is so important. The Internet is at the heart of our strategy, but it’s a partnership with people that makes that strategy successful” David Pottruck President and Co-CEO

20. Proposition 2: Winners will offer value at lower cost The rise of specialists and the internet puts power into the hands of the customer Greater choice will enable customers to select the highest value service from each provider Rising customer expectations will demand greater personalisation Specialists and the internet will drive out cross subsidisation and reduce costs Customers will require multi-channel interaction, including face to face contact and will expect low cost

21. Strategy 2: Become an “eBank with a human face” Provide our customers with a multichannel, personalised experience through seamless channel integration, web enablement and CRM technology Create robust and flexible infrastructure by rationalising core systems and platforms, standardising desktops and servers and creating a single IP network across ANZ Build strong eCommerce capabilities through our eCommerce centre of excellence, ANZ Ventures disciplines and changing the way business and IT work together Continue aggressive cost reduction through using technology to improve productivity and eliminate activity in payments, processing and internal administration Differentiate by out-innovating and out-executing the competition

22. Proposition 1 Integrated financial services firms will lose to specialists over time 2 The rise of specialists and new technologies will offer superior customer value and will erode margins 3 For ANZ more value will be created through focus and leverage of intangible assets than traditional concentration plays Strategy 1 Reconceive and develop ANZ as a portfolio of specialist businesses 2 Become an “eBank with a human face” 3 Create a portfolio of high growth business which leverage capabilities and brands Group strategic direction built on specialisation, eTransformation and growth

23. Many Australian institutions focused on consolidation stage USA EUROPE AUSTRALIA ASIA leading to globalisation consolidationFragmentation... to... and specialisation Leading to globalisation

24. Market/Book Ratio Book Equity 1 4 20 50 Specialists Global Mega Players Geographic integrators Geographic incumbents Given our position, our growth will come through leveraging capabilities rather than consolidation

25. Market/Book Ratio Book Equity 1 4 20 50 Schwab Citigroup Bank of America Specialists Global Mega Players Geographic integrators Geographic incumbents MBNA Santander Amex Lloyds TSB Given our position, our growth will come through leveraging capabilities rather than consolidation

26. Market/Book Ratio Book Equity 1 4 20 50 ANZ Schwab NAB CBA Citigroup Bank of America Specialists Global Mega Players Geographic integrators Geographic incumbents MBNA Santander Amex Lloyds TSB Macquarie WBC StGeorge Given our position, our growth will come through leveraging capabilities rather than consolidation

27. ANZ has strong growth prospects across time Earnings Timeframe Mortgages General Banking Small Business Asset Finance GSF Foreign Exchange Institutional Corporate Pacific Wealth Management Cards Funds Management GTS Capital Markets Asia Authentication B2B payments eProcurement eAuto eAsia Corporate E-trade ANZ Bizsite E wealth Personal International Extend & defend core businesses Create viable growth options Build emerging businesses

28. Proposition 3: High growth companies with global capabilities will differentiate themselves Market premium will increasingly be a function of higher than system growth Growth companies are more likely to be specialists focused on fast growing segments than geographic integrators Winners will be high growth companies which leverage intangible assets such as capabilities and brands Australian financial institutions will need to develop leading positions internationally to grow

29. Strategy 3: Create growth businesses Build from our strong corporate franchise by creating new businesses in corporate ePayments and eProcurement Strengthen our consumer proposition through building on our early eCommerce momentum, creating strong core offers and new businesses Extend our leadership in the Pacific by replicating our model in new countries Leverage our consumer and corporate eCommerce and Cards capabilities by partnering to build new businesses in Asia Build a small number of regional and/or global niches which leverage our capabilities Be very selective about acquisitions, considering only those which add strategically to individual businesses or enhance capabilities and create value

30. Proposition 1 Integrated financial services firms will lose to specialists over time 2 The rise of specialists and new technologies will offer superior customer value and will erode margins 3 Winners will be high growth specialists that successfully leverage their real capabilities Strategy 1 Reconceive and develop ANZ as a portfolio of specialist businesses 2 Become an “eBank with a human face” 3 Create a portfolio of new high growth businesses which leverage capabilities and brands Group strategic direction built on specialisation, eTransformation and growth

31. Management changes In Personal, create 3 new customer businesses which integrate Banking Products: – General BankingLarry Crawford – Small BusinessGraham Hodges – Wealth ManagementTBA New Growth Portfolio to be overseen by Elmer Funke Kupper in addition to his existing International responsibility Global Transaction Services will be headed by Kathryn Fagg

32. Group executive Peter Marriott CFO Peter Hawkins Personal Roger Davis Corporate David Boyles CIO John McFarlane CEO Larry Crawford General Banking Satyendra Chelvendra Personal eCommerce Brian Hartzer Cards Greg Camm Mortgages Bob Edgar Corporate & Institutional Banking Grahame Miller Investment Banking Peter McMahon Asset Finance Elizabeth Proust Corporate Affairs & Human Resources Alison Watkins Strategy & Brand Management Mark Lawrence Risk Management Executive Committee Personal Corporate Group Elmer Funke Kupper International/Growth James MacKenzie Funds Management Graham Hodges Small Business Murray Horn New Zealand Kathryn Fagg Global Transaction Services TBA Wealth Mgmt

33. ANZ in the mid game (3-5 years) Leading positions in a number of specialist businesses in Australia, New Zealand and Asia Portfolio of businesses likely to be narrower and more focused A performance orientated driver of individual businesses Portfolio actively re-shaped by the corporate centre Multiple strategic alliances A range of growth businesses and options A leader in eCommerce Higher market to book ratio