Our Performance
ANZ’s profit after tax for the year ended 30 September 2008 was $3,319 million, down 21% and cash profit* was $3,029 million, down 23%. Both reflect credit related losses.
Importantly, our business remains strong and we maintained the dividend at 136 cents per share fully franked.
The global economic environment softened and financial markets were in turmoil as a result of the US sub-prime crisis. In this environment ANZ experienced a significant increase in provisions for credit impairment following the cyclical lows in 2007. We kept shareholders informed as these issues emerged through trading updates during the year.
A number of deficiencies in our Institutional Division in risk management and operational controls were identified and remedial action is being taken. We are addressing a backlog of expenditure in our technology and systems.
Our results were a solid achievement in a time when many other banks in the world faced considerable difficulty. I thank management and staff for their contribution.
Expansion and growth
ANZ has an aspiration to become a super regional bank through expanding in Asia. Our underlying performance and progress across the Group in 2008 reinforces that ANZ has a good foundation on which to build and achieve this aspiration.
We have made a number of senior management appointments to strengthen and expand ANZ. Susie Babani joined from HSBC and was appointed Group Managing Director Human Resources. Christopher Page, also from HSBC, initially joined ANZ as Head of Risk for Asia Pacific and was subsequently appointed Chief Risk Officer. Margaret Payn was appointed to lead Strategy and Marketing and focus on strategic productivity improvements across the Bank.
We are in a strong liquidity position and well capitalised consistent with our AA credit rating. We took the opportunity with the Interim and Final Dividend to improve our capital position by offering a discount of 1.5% under our Dividend Reinvestment Plan and having it underwritten.
ANZ’s Tier 1 capital ratio of 7.7% compares well globally and against domestic peers.
Board
Four new Directors will be appointed to the Board over the next twelve months to add further experience and expertise and to facilitate a transition with the planned retirements of some directors.
Margaret Jackson and Jerry Ellis will retire during 2009. Both have made a very considerable contribution to the Board. We appointed Peter Hay, a leading Australian corporate lawyer with experience in investment banking, and Alison Watkins, who has experience in small business, retailing and financial services, to our Board in November.
Sir Rod Eddington, one of Australia’s most respected business leaders with extensive international business experience, has agreed to join the Board and succeed me as Chairman. He will join the Board in the third quarter of 2009 when he has relinquished some of his current commitments and will assume the Chair after a transition period at which time I will retire from the Board.
We aim to be a super regional bank and this involves further expansion into Asia. We are very pleased that Lee Hsien Yang, an experienced Asian business leader who lives in Singapore and has considerable knowledge of the region, has also agreed to join our Board from 1 February 2009.
Outlook
Looking ahead, although coordinated action by governments and regulators has helped to provide stability to the global financial system, economic growth will be much softer in 2009. The underlying performance of our business and our strategic focus on Asia however provide the foundation for us to manage through these uncertain times and deliver acceptable returns for shareholders over the longer term.
Charles Goode
Chairman
