Chairman: It is very important to us that the auditors in undertaking other work do not compromise their position with respect to their judgment as to the truth and the fairness of our accounts. There is a process in place to ensure this does not happen.

First, the auditing firm itself has to determine whether taking on the job would impair their independence in relation to the auditing work. Any work they take on has to go to the senior partner covering the audit of the ANZ, Peter Nash at KPMG for his approval.

Then if they get the work, any job over $25,000 has to go to the Chief Financial Officer, Peter Marriott, for his judgment that it is in order and doesn't compromise them in the performance of their duties.

There is an item under auditing and related costs called taxation for which we paid $4.9m. This was advice from our auditors in relation to the introduction of the GST. We had three or four firms tendering for this and the successful firm was our auditing firm.

Of the $12m in consulting fees, the largest job was implementation of a risk-management system for $1.4m, and it was subject to tendering. It would be unfair on our auditors and it would be unfair on our bank if we didn't use them if we judged them to be the best and most competitive firm to undertake the work. Most of that work is subject to tender.

There are also several Securities and Exchange Commission (SEC) requirements, and as we are a SEC registrant we follow those requirements very closely. We are well aware of the matter and it is well supervised.

Chairman: I'll refer your question to our donations committee, but in that committee we're conscious of giving to the communities in which we operate, as we did in India when we were in India through Grindlays. We are not in Africa.

We also try to make a difference. As I mentioned in my address, we're trying to give larger amounts to major initiatives, such as the $100,000 donated recently to the flood disaster in New South Wales, water safety, and intensive care research which hasn't got much attention in Australia. We are also giving Foodbank $1m over five years, and our staff get involved and go out there and help them sort the food and keep records.

We're trying to become more involved in the communities in which we operate in a very meaningful way, and we're hoping that this will be part of our social presence as a company, and our staff will be part of that.

Chairman: We purchased Grindlays in 1984. Looking back, we didn’t really get a strong return over 16 years. It produced less than 10 per cent of our profits, it took a lot of management time, and there aren't great trade flows between Australia, India, Pakistan, Bangladesh, Sri Lanka, nor the Middle East.

It also gave us surprises. We'd have a civil war in Sri Lanka, problems between Pakistan and India on nuclear testing, we had some bad debt experience in the Middle East, we had the Indian scam. These surprises tended to reflect poorly on the company as a whole.

Whilst we agree that India has got a great future, we were able to sell Grindlays to a bank that specialised in emerging markets, and we received a very good price for it.

The market received it well, with ANZ being favourably re-rated following the sale.

Chairman: We reported a provision for bad & doubtful debts expense of $502m. That's our economic loss provisioning which is a calculation on the total loan book of what would be a fair provision over the economic cycle. This is coming down as the risk profile is reduced, and compares to $510m last year.

This economic loss provision was higher than our specific provision charge of $383m.

This is still higher than we would like, mainly because we still had some Asian loans of yesteryear coming through into bad debts, and secondly, we had an increase in bad debts on personal loans.

The personal loans problem arose from a period during the year when, for a short period, we lowered the credit points you needed to get personal loans. In other words, we went down-market for a short period lending on less secure small loans, and we found the bad debt experience was very poor.

We quickly stopped that and went back to our previous standards. We did an experiment that was costly in retrospect but we now know our lesson.

Chairman: ANZ made a provision of $575 million in the accounts out of the Grindlays profits to cover all estimated liabilities under the indemnities and warranties that were given, along with other costs. This includes our estimate of what we need to provide for the National Housing Bank matter to put that behind us. We are trying very hard to get this through the courts and get a decision on it, and we have had the hearing expedited to April 2001.

We think financially it's behind us, and we are pursuing the case to get a resolution in the interests of our shareholders.

Chairman: Naturally there would be huge savings. We have over 800 branches, another bank has 800 branches, they are in the same towns, so you would close branches, and you would reduce the number of employees.

At the same time, if any two of the four major Australian banks got together they would have 40 per cent market share in home mortgages, and the other two would get together and they would have 40 per cent. The efficiency argument needs to be balanced by competition concerns of the ACCC and the Australian public.

This issue is not unique to Australia. Our share of bank deposits may be 13 per cent, other banks might have 16 per cent - between the major banks you're talking a greater than 60 per cent share of deposits. In America no bank is allowed to have more than 10 per cent of American bank deposits. The largest bank has eight and a half per cent.

All countries have their own controls on reduction of competition, they need a certain number of banks for customer choice, and there are prudential considerations.

This doesn't stop companies in Australia going out to the world and getting bigger. You only have to think of News Corporation and what they've achieved.

Chairman: This year we've fully franked the dividend. Franking depends on the tax that we pay in Australia, which gives rise to the franking. We expect to fully frank the dividend next year too. To the extent that we've sold overseas operations in Grindlays, and to the extent that the proceeds are profitably reinvested in Australia - that assists in the franking capacity of the bank.