Business SummaryAustralia and New Zealand Banking Group Limited (ANZ) provides a range ofbanking and financial products and services to retail, small business,corporate and institutional clients. ANZ operates in Australia, New Zealand,Asia Pacific region, the United Kingdom and the United States. ANZ mainbusiness divisions consist of Retail, Corporate and Commercial Banking,Global Wealth and International and Institutional Banking Division.

Latest ResearchKeeping the fingers on the fretboard

ANZ has announced the sale of OnePath Life NZ Limited to CignaCorporation for NZ$700m. This represents a slight premium overembedded value, a good outcome for the bank given recent transactiondiscounts for larger ticket items, and is expected to realise a gain on saleof ~NZ$50m. As a result, the Group’s CET1 ratio is expected to increaseby ~15bp. The transaction includes a 20-year distribution alliance wherebyCigna will provide insurance solutions for ANZ bank customers. However,ANZ will

retain its New Zealand investment management business.

For more information see research 31 May 2018.

GICS - Banks

Australia & New Zealand Banking Group Ltd

ASX Code: ANZ Price: $26.73 12 Mth Target Price: $30.20 Rating: Buy

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

8 June 2018$77,365m2,894.3m$30.80$26.11

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Buy$30.2013.0%8.8%21.8%

Investment FundamentalsFYE 30 Sep 2017A 2018F 2019F 2020F

Profit $m 6,938.0 6,108.4 6,862.3 7,122.1Profit (norm)* $m 6,938.0 6,108.4 6,862.3 7,122.1

EPS* ¢ 237.1 209.2 235.1 242.9EPS Growth % 17.0 -11.8 12.4 3.3P/E* x 11.3 12.8 11.4 11.0P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 160.0 161.0 165.0 171.0Yield % 6.0 6.0 6.2 6.4Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2013A 2014A 2015A 2016A 2017A

Net Interest Income 12,758 13,810 14,616 15,095 14,958Provision for Doubt. Debts -1,188 -986 -1,179 -1,929 -1,198Non Interest Income 5,688 6,244 6,455 5,434 5,315Total Operating Income 17,258 19,068 19,892 18,600 19,075Non Interest Expense -8,159 -8,281 -8,732 -10,355 -9,878Profit Before Tax 9,099 10,787 11,160 8,245 9,197Income Tax -3,043 -3,350 -3,328 -2,400 -3,246Outside Equity Int. -10 -12 -14 -11 -15Profit after Tax 6,046 7,425 7,818 5,834 5,936Significant Items after Tax 226 -154 -325 -125 470Reported Profit after Tax 6,272 7,271 7,493 5,709 6,406Preferred Dividends -6 -6 -1 -- --

Cash Flow ($M)2013A 2014A 2015A 2016A 2017A

Interest Received 28,752 29,327 30,667 29,992 --Interest Paid -16,333 -14,886 -15,458 -15,038 --Net Operating Cashflow 17,606 5,643 21,476 10,841 23,972Capex -356 -370 -321 -337 --Acquisitions & Investments -16,322 -12,652 -24,236 -44,182 -27,220Sale of Invest. & Subsid. 10,305 11,387 15,709 23,745 19,751Net Investing Cashflow -7,607 -1,927 -9,776 -14,410 -12,830Proceeds from Issues 30 4 3,207 -- --Dividends Paid -3,226 -3,827 -3,763 -4,564 -4,210Net Financing Cashflow -4,096 2,795 2,043 1,958 -6,667Net Increase Cash 5,903 6,511 13,743 -1,611 4,475Cash at Beginning 41,450 41,111 48,229 69,278 66,220Exchange Rate Adjust. 1,670 607 7,306 -1,447 -2,647Cash at End 49,023 48,229 69,278 66,220 68,048

Ratios and Substantial Shareholders

Profitability RatiosNet Interest Margin % 2.00 2.05 1.90 1.89 1.87Interest Spread % 1.42 1.39 1.27 1.32 1.62Non-Int Inc/Total Inc % 32.96 32.75 32.45 29.22 27.86Tot Op. Inc/Tot Assets % 2.45 2.47 2.24 2.03 2.13Return on Equity % 13.28 15.09 13.66 10.09 10.07

Efficiency/Safety RatiosCost to Income % 43.69 40.85 41.02 50.04 48.72Capital Adequacy Ratio % 12.20 12.70 13.30 14.30 14.80

Top 5 Substantial ShareholdersBlackRock Group 5.1%The Vanguard Group,Inc 5.0%

Balance Sheet ($M)2013A 2014A 2015A 2016A 2017A

Cash 29,843 22,708 41,850 27,475 46,569Due from Other Banks 22,177 -- -- -- --Trading Securities 115,523 128,621 144,980 171,429 174,680Loans and Advances 469,295 521,752 580,769 597,803 579,835Customer Acceptances -- -- -- -- --Total PP&E 2,164 2,181 2,221 2,205 1,965Other Non Earning Assets 63,989 96,830 120,080 115,957 94,277TOTAL ASSETS 702,991 772,092 889,900 914,869 897,326Deposits 426,072 493,527 546,228 505,418 581,190Due to Other Banks 36,306 -- -- 10,625 9,914Bonds & Notes 90,491 30,159 41,575 104,741 122,394Bank Acceptances -- -- -- -- --Provisions 2,214 1,669 1,590 1,624 1,656Other Liabilities 102,293 197,453 243,154 234,534 123,097Total Liabilities 657,376 722,808 832,547 856,942 838,251Net Assets 45,615 49,284 57,353 57,927 59,075Share Capital 24,512 24,902 28,367 28,765 29,088Reserves -907 -239 1,571 1,078 37Retained Earnings 21,948 24,544 27,309 27,975 29,834Minorities 62 77 106 109 116TOTAL S/H EQUITY 45,615 49,284 57,353 57,927 59,075

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Mr John William PriestleyMr Richard (Bob) Bartholomew SantamariaMr Simon Pordage

Directors

Mr David Michael Gonski(Non-Executive Director,Non-ExecutiveChairman)Ms Ilana Rachel Atlas(Non-Executive Director)Ms Alexis George(Group Executive - Wealth Australia,Deputy ChiefExecutive Officer)Mr Hsien Yang Lee(Non-Executive Director)Mr Graeme Richard Liebelt(Non-Executive Director)Ms Paula Jane Dwyer(Non-Executive Director)Mr John Thomas Macfarlane(Non-Executive Director)Mr Shayne Cary Elliott(Chief Executive Officer,Executive Director)Ms Sarah Jane Halton(Non-Executive Director)Sir John Phillip Key(Non-Executive Director)

To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au

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