International – Move to Growth Phase Elmer Funke Kupper Head

International - Move to Growth Phase Elmer Funke Kupper Head of International Division 18 July 2000

International - Move to growth phase Last year, we presented a three year agenda to “Simplify and Focus” International. The first phase is nearing completion: With the focus shifting to growth, new positions will be built in the Pacific and Asia: Implemented risk reduction program Simplified positions and extracted value in one move Freed up capital and management for growth agenda In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce Implementation of the growth agenda will take two years, and a deal pipeline has been established

Risk reduction program largely completed Impact Grindlays Sale on Risk Profile Specific Provisions International One Name Assets in countries rated below ‘Single A’ 82% 299m 247m 48% 75m Grindlays * H2000 ANZ Post Completion 1998 1999 1H2000 ELP (%) 1.58 1.38 1.13

Simplification completed in one move M M M P M Grindlays transaction: 10.2b assets, 79m 1H earnings Simplifies network in one move Extracts immediate value at 2.3 times NAV and 14.6 times earnings Completion on track for 3rd quarter 2000 N N N D D R D D N D D D D M R D N Asia - Selective Investment Japan, Korea Trade, money centre Three Chinas 4 branches South East Asia Singapore, Indonesia, Philippines, Vietnam, Malaysia, Thailand N R M D N D D D Pacific – Extend leading position South Pacific well covered 41 branches 20-60%share D D D D D

International - Move to growth phase Last year, we presented a three year agenda to “Simplify and Focus” International. The first phase is nearing completion: With the focus shifting to growth, new positions will be built in the Pacific and Asia: Implemented risk reduction program Simplified positions and extracted value in one move Freed up capital and management for growth agenda In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce Implementation of the growth agenda will take two years, and a deal pipeline has been established

Two growth agendas Starting Position Pacific Asia Markets Large in number, individually small Modest growth Highly concentrated – few players Similar market/management models ANZ Leading position in eight markets Strong track record NPAT 1H2000: 22m Markets Individually large, more fragmented Recovery under way Emerging “mass affluent” Rapid growth in online economy ANZ Network positions in 11 countries Early investment in Panin Bank NPAT 1H2000: 15m Strategic Response Replicate leading market positions - Organic growth or acquisition in new geographies - Rapid deployment of successful management model Continue to drive operational improvement Build existing positions - Re-energise network points - Build Panin into top 5 retail bank Invest in new growth - Target mass affluent as they get online - Partner to complement ANZ’s strengths in e-commerce and monoline businesses (eg cards)

Pacific: Consolidate existing leadership Leadership Positions Continuous Improvement Customer segmentation Prime Banking in Fiji, PNG Products - funds mgmt, insurance, asset finance Electronic channels: ATMs, EFTPOS Fee income automation Fiji 1 Vanuatu 1 Samoa 1 Solomon Islands 2 American Samoa 2 Tonga 2 Cook Islands 1 Going forward Continue to invest in new channels and products Review opportunities to regionalise operations PNG 3 * First half annualised Results (NPAT) 44m 37m 1999 % Consumer Assets Liabilities NPAT 2000* 81% 80% 85%

Impact of recent events in pacific Real GDP Growth NPAT contribution 10 100% 766m Solomons 5 46 22m 68 Other Islands 32 Fiji/ Solomon 0 54 -5 Fiji -10 '90 '92 '94 '96 '98 f00 Lending Assets 2000 Profit After Tax H2000

Extending leadership to new markets

Size of the pacific opportunity Pacific Population and Wealth, Bubble Size proportional to GDP US Territories, 24% GDP 25 French Territories, 36% GDP Guam South Pacific, 40% GDP GDP/Capita (USD 000's) 20 French Polynesia New Caledonia 15 10 Northern Marianas Palau 5 American Samoa Cooks Marshalls 10k Fiji PNG Micronesia Vanuatu Solomons Samoa 100k 1m Population 10m

Asia: Dealt with the credit crisis as predicted New Non Accrual Loans 277m Net Specific Provisions One name 270m 228m 118m 101m 51m 1998 1999 H2000 Coverage (%) 1998 1999 H2000 86.0 67.2 70.0

Re-energise Asia Economic Recovery in Region Grow the Business in Selected Areas Build Strategic Assets Trade finance Network customers Relationship banks Key project sectors Maintain Policy on Non-Strategic Assets ANZ represented in: Japan South Korea China Hong Kong Taiwan Singapore Indonesia Philippines Thailand Malaysia Vietnam USD wholesale banking Interbank lending Participations

Indonesia: Patience in building position annual % change 140 120 100 80 60 40 20 0 -20 Panin Bank Profile Food Consumer Prices All Items Jan-97 Rupiah Inflation Improved Jan-98 Jan-99 Rupiah per USD Inserted Scale (LHS) 1997 1998 1999 Index 800 700 600 500 400 300 200 100 0 Jakarta SE Composite Price Increase (RHS) 1996 Assets 2.6bn (Dec 1999 full year) Pre provisions NPAT 107m 29% shareholding by ANZ Currently number 8 Non-State Bank - 106 branches mainly in Jakarta/Java Jan-00 Currency/Stock Market Remains Weak 200 2200 4200 6200 8200 10200 12200 14200 16200 2000 Going forward AUD20m investment in retail banking New ATMs Phone banking/National Call Centre Refurbish branches New branches in Jakarta

Key to new Asia growth are mass affluent There is a largely untapped opportunity to provide financial services to the emerging mass affluent consumers eCommerce provides a more cost efficient and low risk way of targeting this potential – ANZ is a leader in eCommerce The need for speed, access to markets and risk sharing means that we need to combine the strengths of ANZ with those of others in the region We have joined forces with OCBC from Singapore to develop the regional business, which we expect to launch early 2001 The business model recognises the weaknesses of existing pure online propositions and includes specific responses to these

Japan Mass affluent market is emerging 14 Korea 3.23 China 3 0.39 1.5 Hong Kong 0.12 Wired Emerging Affluent Adults in urban areas: Annual income over approx. US 10,000 Connected to the Internet 2000 24.24 2005 2000 2005 3.5 1.3 Taiwan 2.98 1.24 Thailand 1.11 0.45 Philippines Malaysia 2000 2005 0.89 Singapore 2.61 Indonesia 1.34 0.5 0.26 0.1 2000 2005 2000 2005 2000 2005 0.1 0.23 2000 2005

Online use is taking off Internet Penetration of Households (%) 25 Internet Take-up Zone Australia Singapore 20 15 Hong Kong Korea Taiwan Malaysia Based on US experience, B2C financial services takes off when internet penetration hits 10-20% Japan Broking and Net Banking are the early ‘Killer Apps‘ 10 Indonesia Thailand 5 Philippines China Vietnam 0 0 10 20 30 Implication: e-Commerce opportunities are starting to emerge in each country 40 GDP / Capita (USD '000)

Online customers are attractive Online customer more attractive Offline ( 100) Online 259 500 169 100 Online customers cheaper to acquire (index) 185 116 100 Average Deposit Balance Average Loan Balance Source: ANZ customer base Number of products Average Profitability Offline Online

Pipeline under development Leading Financial Portal Online Stockbroking Internet Service Provider Regional e-based financial institution B2B and B2C Enabling Retail Alliances Banking front end

OCBC/ANZ partnership makes sense Country OCBC ANZ China 5 2 Hong Kong 3 1 Indonesia JV Panin Market Capitalisation Japan 1 2 Market Share (Spore) Korea 1 1 25 1 Rep. Office 1 Malaysia Philippines Singapore 1 44 Taiwan 1 Thailand 1 1 Rep. Office Vietnam 1 1 1 Rep. Office 2 OCBC Profile June 2000 USDm Total Assets 33,562 NPAT, Dec 1999 full year Partnership Benefits Complementary licences, strategic fit Both banks embrace the e-space at home Shared vision of opportunity across Asia 7,751 415 17.9%

Leveraging ANZ’s strengths Credit Cards Consumer eCommerce Corporate eCommerce No. 1 in Australia Domestic partnership through Qantas Telstra Visa Card International partnership with Star TV Highest penetration of customers banking with anz.com Continuously expanding product suite, eg. eauto, pay anyone, my ANZ Key alliances - E*Trade, Freenet, MultiEmedia, Medweb Leader in electronic banking to corporates, ANZ Online, FX Online B2B solutions - eGate, eProcurement with MRO.com, corProcure Development of FX Online web based platform

International - Move to growth phase Last year, we presented a three year agenda to “Simplify and Focus” International. The first phase is nearing completion: – – – Implemented risk reduction program Simplified positions and extracted value in one move Freed up capital and management for growth agenda With the focus shifting to growth, new positions will be built in the Pacific and Asia: – – In the Pacific, we will extend our leadership position to new geographies and continue to drive operational improvement In Asia, following the crisis, we have small and lower risk positions. We will re-energise these positions and direct new investment towards eCommerce Implementation of the growth agenda will take two years, and a deal pipeline has been established

International program phasing Complete “Simplify and Focus” Strategic Review Completed/ Elmer Funke Appointed new markets Grindlays Transaction Announced Indian Mgmt Strengthened Profit Decline Halted – Growth Visible Completion Grindlays Transaction 9/99 3/00 9/00 6/99 Drive Growth Agenda: Target Profit Improvement Program Launched Panin Bank Rights Issue eAsia Team Established Pacific Asia eGrowth Acquisition Amerika Samoa Bank Announced BOOM.COM Investment 1/01 Launch Internet Banking Indonesia eCommerce Joint Venture with OCBC Announced Customer Launch OCBC Joint Venture JV Alliances Pacific new markets strategy

Summary Complete ‘Simplify and Focus’ Implemented risk reduction program Simplified International positions in one move with Grindlays sale – completion on track Freed up capital and management Extend Pacific Leadership Replicate leading market positions Organic or acquisition Deploy successful management model Continue to drive operational improvement Agenda defined and under way Invest in Asian eGrowth Re-energise existing positions Network points Panin Bank Invest in eGrowth Target mass affluent Partner to complement strengths Joint Venture announced