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CHAIRMAN'S REPORT »

A Message From
John Morschel

A Message From John Morschel

ANZ delivered increased profit in 2011 while continuing to invest in the development of its super regional strategy to deliver value for shareholders, customers and the community.

I am pleased to report that ANZ's statutory profit after tax for the year ended 30 September 2011 was $5.4b up 19% reflecting a solid performance across the bank and continued improvement in the credit environment. The final dividend of 76 cents per share brings the total dividend for the year to 140 cents per share fully franked, an increase of 11%.

ANZ's underlying profit for 2011, which takes into account various one-off items which occurred during the year, was $5.6b, up 12%.

ANZ remains strongly capitalised with a Tier 1 ratio as at 30 September 2011 of 10.9% and a Common Equity Tier 1 ratio of 8.5%, 0.8% and 0.5% respectively above 2010 levels. The Group is well placed to meet new capital standards. ANZ is one of only a handful of banks globally which retain a AA rating from all 3 credit ratings agencies.

EXPANSION AND GROWTH

In 2011, we continued to advance our super regional strategy through growth in Asia by increasing connectivity between Asia and our key domestic franchises in Australia, New Zealand and the Pacific.

We were delighted to achieve a key milestone in our regional expansion plans, most notably with the re-establishment of our presence in India with the opening of our Mumbai branch in June 2011.

This strategy is helping ANZ deliver more diversified earnings by product, customer and geography together with growth in our customer base. This year we set a new long-term aspiration for revenues sourced from Asia Pacific, Europe and America to drive 25–30% of Group profit by 2017.

CUSTOMERS AND THE COMMUNITY

In 2011, ANZ maintained its momentum in delivering value for its customers and for the community. In Australia, we continue to have the highest level of retail customer satisfaction and further improved customer satisfaction in New Zealand.

A number of the communities in which ANZ operates experienced disasters during 2011. These included earthquakes in the Canterbury region of New Zealand; the floods in Queensland and throughout eastern Australia; and the tsunami and nuclear emergency in Japan. ANZ contributed to the relief efforts through donations, direct grants and the efforts of many ANZ staff.

Our Corporate Responsibility framework continues to help guide our decision making. New responsible lending policies will govern our business lending to sensitive social and environmental sectors. Australian Government support helped expand our work to assist low income communities build their savings.

During 2011, ANZ was named as one of the most sustainable banks globally in the Dow Jones Sustainability Index.

Our combined Annual Shareholder and Corporate Responsibility Review provides an integrated view of how ANZ is managing financial and non-financial issues and is designed to represent ANZ's performance across all aspects
of our business.

OUTLOOK

We expect the global economic uncertainty will continue well into 2012, however growth in Asia (excluding Japan) is forecast to continue at an annual rate exceeding 7% while growth in Europe and the United States is expected to remain subdued. The Australian and New Zealand economies are expected grow at over 3% and 2.5% respectively.

As the uncertainties around sovereign debt in Europe continue to play out, we expect continued volatility in world markets. This is flowing through to higher funding costs and at the same time regulators around the world are pushing ahead with new capital and liquidity requirements for banks. These changes will increase capital costs, ultimately placing further pressure on the fragile global economy.

Our unique super regional strategy positions us to take advantage of the significant opportunities we expect to arise in Asia Pacific.

These will come from our exposure to growth markets, our strong capital position and the experience of our international management team. With the difficult global economic situation, however, it will also be prudent to manage our business tightly.

ANZ has a clear direction and our results in 2011 demonstrate the progress we are making in delivering value and performance for our shareholders, our customers and the community.

These results also reflect the ongoing commitment and dedication of our management team and the entire staff of ANZ and I would like to take this opportunity to thank them for their efforts during the year. My thanks also go to my fellow Directors for their commitment and support
during 2011.

John Morschel

John Morschel
Chairman