ANZ - 2021 Annual Report

Performance overview OUR PERFORMANCE (continued) GROUP PERFORMANCE The results of the Group’s operations and financial position are set out on pages 56-71. Page 11 outlines the Group’s strategy and pages 10-28 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach to risk management, including a summary of our key material risks, is outlined on pages 51-55. CORONAVIRUS (COVID-19) The COVID-19 pandemic continues to cause major disruptions to community health and economic activities with wide-ranging impacts across many business sectors in Australia, New Zealand and globally. During the 2021 financial year, the spread of the Delta variant resulted in new and extended lockdowns in Sydney, Melbourne and Auckland. The Group continues to offer support to our customers to counteract the impact of COVID-19, however loan deferrals at 30 September 2021 were less significant than the previous financial year. Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan population and are managed accordingly. The ramifications of COVID-19 remain uncertain and it is difficult to predict the ongoing impact or duration of the pandemic and relaxation of restrictions. In preparing the financial statements, we made various accounting estimates for future events based on forecasts of economic conditions which reflect expectations and assumptions as at 30 September 2021 that we believe are reasonable under the circumstances. While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses (ECL) where we recognised a credit impairment release of $567 million pre-tax in the 2021 financial year (2020: $2,738 million charge). The credit impairment release in the current period was primarily driven by the release of allowance for collectively assessed ECL largely reflecting the impact of an improved economic outlook relative to the outlook at 30 September 2020, together with improvements in portfolio mix. GROUP PROFIT RESULTS 2021 2020 Statutory Cash Statutory Cash Income Statement $m $m $m $m Net interest income 14,161 14,161 14,049 14,049 Other operating income 3,259 3,286 3,588 3,703 Operating income 17,420 17,447 17,637 17,752 Operating expenses (9,051) (9,051) (9,383) (9,383) Profit before credit impairment and income tax 8,369 8,396 8,254 8,369 Credit impairment (charge)/release 567 567 (2,738) (2,738) Profit before income tax 8,936 8,963 5,516 5,631 Income tax expense (2,756) (2,764) (1,840) (1,872) Non-controlling interests (1) (1) (1) (1) Profit after tax from continuing operations 6,179 6,198 3,675 3,758 Profit/(Loss) after tax from discontinued operations (17) (17) (98) (98) Profit for the year 6,162 6,181 3,577 3,660 Statutory profit after tax for the year ended 30 September 2021 increased 72% on the prior year to $6,162 million. Statutory return on equity is 9.9% and statutory earnings per share is 217.1 cents, an increase of 72% on prior year. The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and leaders through our remuneration plans. Refer to page 57 for adjustments between statutory and cash profit. The adjustments made in arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2021 Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented. DISCONTINUED OPERATIONS We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited, and our life insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. The financial results of these businesses are treated as discontinued operations from a financial reporting perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and part recovery based on the respective Transition Service Agreements. There were no material financial impacts from the discontinued operations in the 2021 or 2020 financial years. OUR PERFORMANCE (continued) GROUP PERFORMANCE The results of the Group’s operations and financial position are set out on pages 56-71. Page 11 outlines the Group’s strategy and pages 10-28 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach to risk management, including a summary of our key material risks, is outlined on pages 51-55. CORONAVIRUS (COVID-19) The COVID-19 pandemic continues to cause major disruptions to community health and economic activities with wide-ranging impacts across many business sectors in Australia, New Zealand and globally. During the 2021 financial year, the spread of the Delta variant resulted in new and extended lockdowns in Sydney, Melbourne and Auckland. The Group continues to offer support to our customers to counteract the impact of COVID-19, however loan deferrals at 30 September 2021 were less significant than the previous financial year. Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan population and are managed accordingly. The ramifications of COVID-19 remain uncertain and it is difficult to predict the ongoing impact or duration of the pandemic and relaxation of restrictions. In preparing the financial statements, we made various accounting estimates for future events based on forecasts of economic conditions which reflect expectations and assumptions as at 30 September 2021 that we believe are reasonable under the circumstances. While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses (ECL) where we recognised a credit impairment release of $567 million pre-tax in the 2021 financial year (2020: $2,738 million charge). The credit impairment release in the current period was primarily driven by the release of allowance for collectively assessed ECL largely reflecting the impact of an improved economic outlook relative to the outlook at 30 September 2020, together with improvements in portfolio mix. GROUP PROFIT RESULTS 2021 2020 Statutory Cash Statutory Cash Income Statement $m $m $m $m Net interest income 14,161 14,161 14,049 14,049 Other operating income 3,259 3,286 3,588 3,703 Operating income 17,420 17,447 17,637 17,752 Operating expenses (9,051) (9,051) (9,383) (9,383) Profit before credit impairment and income tax 8,369 8,396 8,254 8,369 Credit impairment (charge)/release 567 567 (2,738) (2,738) Profit before income tax 8,936 8,963 5,516 5,631 Income tax expense (2,756) (2,764) (1,840) (1,872) Non-controlling interests (1) (1) (1) (1) Profit after tax from continuing operations 6,179 6,198 3,675 3,758 Profit/(Loss) after tax from discontinued operations (17) (17) (98) (98) Profit for the year 6,162 6,181 3,577 3,660 Statutory profit after tax for the year ended 30 September 2021 increased 72% on the prior year to $6,162 million. Statutory return on equity is 9.9% and statutory earnings per share is 217.1 cents, an increase of 72% on prior year. The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and leaders through our remuneration plans. Refer to page 57 for adjustments between statutory and cash profit. The adjustments made in arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2021 Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented. DISCONTINUED OPERATIONS We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited, and our life insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. The financial results of these businesses are treated as discontinued operations from a financial reporting perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and part recovery based on the respective Transition Service Agreements. There were no material financial impacts from the discontinued operations in the 2021 or 2020 financial years. UR PERF R ANCE (continued) GROUP PERFORMANCE The results of the Group’s operations and financial position are set out on pages 56-71. Page 11 outlines the Group’s strategy and pages 10-28 describe in further detail the Group’s prospects in terms of fut re financial position and performance. Discussion of our approach to risk management, including a summary of ur key material risks, is outlined on pages 51-55. CORONAVIRUS (COVID-19) The COVID-19 pandemic continues to cause major disruptions to community health and economic activities with wide-ranging impacts across many business sect rs i Australia, New Zealand and globally. During the 2021 financial year, the spread of the Delta variant resulted in new and extended lockdowns in Sydney, Melbourne and Auckland. The Group continues to offer support to our customers to counteract the imp ct of COVID-19, however loan deferrals at 30 September 2021 were less significant than the previous financial year. Facilities which transitioned to interest-only or took up term extensions offered as a result of COVID-19, are now subsumed within the normal loan population and are managed accordingly. The ramifications of COVID-19 remain uncertain and it is difficult to predict the ongoing impact or duration of the pandemic and relaxation of restrictions. In preparing the financial statements, we made various accoun ing estimates for future events based on forecasts of economic conditi s which reflect expectations and assumptions as at 30 September 2021 that we believe ar r asonable under the circumstances. While pervasive across the financial statements, the estimation uncertainty is predominantly related to expected credit losses (ECL) where we recognised a credit impairment release of $567 million pre-tax in the 2021 financial year (2020: $2,738 million charge). The credit impairment lease in the current period was primarily driven by the lease of allowance for coll ctively assessed ECL largely reflecting the impact of an improved economic outlook relative to the outlook at 30 S pt mber 2020, together with improvements in portfolio mix. GROUP PROFIT RESULTS 2021 2020 Statutory Cash Statutory Cash Income Statement $m $m $m $m Net interest income 14,161 14,161 14,049 14,049 Other operating income 3 259 3,286 3,588 3,703 perating income 17,420 17,447 17,637 17, 52 expenses (9,051) (9,051) (9,383) (9 383) Profit before credit impairment and income tax 8,369 8,396 8,254 8,369 Credit impairmen (charge)/release 5 7 567 (2 738) (2,738) Profit before income tax 8,936 8,963 5,516 5,631 Income tax expens (2 75 ) (2,7 4) (1,840) (1 872) Non-controlling interests (1) (1) (1 (1 Profit after tax from continuing operations 6,179 6,198 3,675 3,758 Pr fit/(Loss) fter tax from discontinued perations (17) (17) (98) (98) rofit for the y ar 6,162 6,181 3,577 3,660 Statutory profit after tax for the year ended 30 September 2021 increased 72% on the prior year to $6,162 million. Statutory return on equity is 9.9% and statutory earnings per share is 217.1 c nts, an increase of 72% on prior year. The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which enables comparison with our peer group. We calculate cas profit by djusting statutory profit for non-core items. In general, it r presents the financial performance of our core business activities. We use cash profit inter ally to set targets and incentivis our Senior Executives and leaders through our remuneration pla s. Refer to page 57 for djustments between statutory and cash profit. The adjustments made in arriving at cash profit are i cluded in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2021 Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented. DISCONTINUED OPERATIONS We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited, and ur lif insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. The financial results of these businesses are treated as discontinued oper tions from a financi l reporting perspective. The financial results after tr saction completion primarily relate to residual operational costs on separation and part recovery based on the r spective Transition Service Agreements. There were no material financi l impacts from the discontinued operations in the 2021 or 2020 financial years. OUR PERFORMANCE (continued) P r s lts of the Group’s operations and financial position are set out on pages 56-7 . tli s t r ’s strategy and pages - s ri i f rt r t il t r ’s r s ts i t r s f f t r fi i l siti rf r . is ssi n of our approach t risk ement, inclu in s ry f r k y t rial risks, is outlined on pages 51-55. CORONAVIRUS (COVID-19) I -19 pa i ti s t ause major disruptions to community health and e i ti iti s it ide-ranging impacts r ss y si ss s t rs i str li , l and globally. ri t financial year, the spread of the Delta variant resulted in new and extended lockdowns in Sydney, M l r kland. r ti s t ff r s rt t r st rs to counteract the impact of COVID-19, however loan deferrals at 30 Se t r 21 r l ss si ifi t t t r i s fi i l y r. iliti s i tr siti t i t r st- ly r t k t r xt si s ff r s a result of I - 9, r s s ithin the n r l l l ti r r i gly. r ifi ti s f I - r i rt i and it is difficult to predict the ongoing impact or duration of the pandemic and relaxation of r stri ti s. I r ri t financial statements, we made various accounting estimates for future events based on forecasts of economic iti s i refl t x t ti s ss ti s s t 30 Sept er 2 t t li r r s l d r t ir stanc s. il r si r ss t fi i l st t ts, t sti ti rt i ty is r i tly r l t t x t r it l ss s ( CL) where we r is r it i ir t r l s f illi re-t x i t fi i l y r ( : , illi r ). credit impairment rel s i t e current p ri s primarily driven by the release of allowance for collectively assessed ECL largely reflecting the impact of an i r i tl k r l ti t t tl k t t r , t ether with improvements in portfolio mix. I L 2021 2020 t t t r Cas t t t r Cash Income Statement $m $m $m t i t r st i , 1 14,161 14,049 14,049 t r r ti i me 3,259 3,286 3,588 3,703 r ti i , , 7 1 ,637 17,752 r ti x s s ( , ) ( , ) ( , ) ( ,38 ) r fit f r r it i ir t i t x , 9 , 8,254 8,369 r it i irment (charge)/release 567 567 (2,738) ( , 38) fit f r i t x ,936 8,963 5,516 5,631 I t x x s ( , ) ( , ) ( , 40) (1,872) - tr lli g interests (1) (1) (1) (1) r fit after tax from ti i r ti s 6,179 6,19 , ,758 r fit/( ss) ft r t x fr is ti r ti s ( ) ( ) ( ) (98) r fit f r t r 6,162 , , 7 3,660 t t t ry r fit ft r t x f r t y r t r i r s t ri r y r t , illion. Stat t ry r t r n ity is . st t t ry r i s r s r is . c ts, i cr s f 72% on prior year. roup uses cash r fit, -I s r , t ss ss t rf r c f its si ss activities. It is an industry-wide measure which l s c ris it r r r . c lc l t c s r fit y j sti st t t ry rofit for -c r it s. I eral, it r r s ts t fi ancial perfor c f r c re business activities. We use cas r fit i tern lly t s t t r ts i c ti is r enior Ex cuti s l rs t r r r r ti l s. f r t f r j st ts t st tutory a c s r fit. j st ts ade in rri i t c s r fit r i cl i st t t ry r fit ic is s j ct t it it i t c t xt f t xt r l a it r’s it f th 2 Fi ci l rt. s r fit is t s j ct t it y t xt rnal auditor. Our external auditor has informed the Audit mmittee that adjustments between st t t ry c s r fit t r i c sist t sis cr ss c f t ri s r s nted. DISC INUED OPERATI NS l t t s l f r li l r r s si ss r t si s i st t si ss to IOOF Holdings Limited, and our life insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. The finan i l r s lts f t s si ss s r tr t s is nti r ti s fr fi i l r rti rs ti . The financial r s lts ft r tr s ti l ti n ri rily r l t t r si l r ti l sts s r ti art r ry based on the r s tive Tr siti r i r ts. There r t ri l fi i l i ts fr t is ti r ti s i t r 2020 fi a i l y rs. (c ntinue ) GROU The results of the Group’s operations and financial position are set out on pages 56-71. Page 11 outlines the Gro p’s strategy nd pages 10-28 describ in further detail the Group’s prospects in t r s of future financial position and performance. Discussion of our approach to risk management, including a summary of our key material risks, is outlined on pages 51-55. C R NAVIRUS (C VID-19) The C VID-19 pa de ic continues to c us ajor disruptions to community health and economic activities with wide-ranging impacts across any business sectors in Australia, Ne Zealand and globally. During the 2021 financial y ar, the spread of the Delta variant resulted in new nd extended lockdowns in Sy ney, Melbourn and Auckland. The Group continues to offer supp rt to our custo ers to counteract the i pact of C VID-19, ho ever loan deferrals at 30 Septe ber 2021 ere less significant than the previous financial year. Facilities hich transitioned to interest-o ly or took up term extensions offered as a result of C VID-19, are no subsu ed ithin the nor al loan population and are anaged accordingly. The ra ifications of C VID-19 remain uncertain and it is ifficult to predict he ongoing impact o duration of the pand mic and relaxation of restrictions. In preparing the fin ncial state ents, e ade various accounting esti ates for future events based on forecasts of eco omic conditions which reflect expectations and assu ptions as at 30 Septe ber 2021 that e believe are reasonable under the circumstances. hile pervasive across the financial state ents, the esti ation unc rtainty is predo inantly related to expected credit losses (ECL) where we cognised a redit im air ent release of $567 million p -t x in the 2021 financial y ar (2020: $2,738 million cha ge). The credit impairme t release in the current period as pri arily driven by the release of allo ance for collec ively assessed ECL largely reflecting the impact of an i proved econo ic outlook relative to the outlook at 30 Septe ber 2020, together ith i prove ents in portfolio ix. GROUP PROFIT RES LTS 2021 2020 Statutory Cash Statutory Cash Inco e State ent $ $ $ $ Net interest inco e 14,161 14,161 14,049 14,049 ther operating inco e 3,259 3,286 3,588 3, 03 r ti inco e 17,420 17,447 17,637 17,752 Operating expenses (9,051) (9,051) (9,383) (9, 83) Profit before cr dit impairment nd income tax 8,3 9 8,396 8,254 8,369 Credit i pair ent (charge)/release 567 5 7 (2,738) (2,7 8) Profit before inco e tax 8,936 8,963 5,516 5,631 Inco e tax expe s (2,756) (2,764) (1,840) (1,872) Non-controlling interests (1) (1) (1) (1) Profit after tax fro continuing operations 6,179 6,198 3,675 3,75 Profit/(Loss) after tax from discontinued operations (17) (17) (98) (98) Profit for the year 6,162 6,181 3,577 3,660 Statutory profit after tax for th year nded 30 Septe ber 2021 increased 72% on the prior year to $6,162 million. Statutory return on equity is 9.9 and statutory earnings per share is 217.1 cents, an increase of 72% on prior year. The Group uses cash profit, a non-IFRS easure, to assess the perfor ance of its business act vities. It is an industry- ide easure which e bles comparison ith our pe r group. We calculate ca h profit by adjusti g statutory profit for non-core ite s. In general, it represents the financial perfor ance of our core business activities. e use cash profit internally to set targets and incentivise our Senior Executives a d leaders through our re uneration plans. Refer to page 57 for adjust ents bet ee statutory and cash profit. The adjust ents ad in arriving at cash profit are included in statutory profit hich is subject to audit ithin the context of the external auditor’s audit of the 2021 Financial Report. C sh profit is not subject to audit by the external audit r. ur external auditor has infor ed the Audit Committee that adjustments bet een statutory and cash profit have been deter ined on a consistent basis across each of the periods presented. DISC NTINUED PERATI NS e c mpl ted the sale of our aligned dealer groups business and our OnePath pensions and investment business to I F Holdings Limited, and our life insurance business to Zurich Financial Services Australia across the 2020 and 2019 financial years. Th financial results of these businesses are treated as discontinued operations fro a financi l reporting perspective. The financial esults after transaction co pletion pri arily relate to residual operational costs on separation and part recovery based on the respective Transition Service Agreements. There ere no aterial financial i pacts fro the discontinued operations in the 2021 or 2020 financial years. 56 OVERVIEW HOW WE CREATE VALUE PERFORMANCE OVERVIEW REMUNERATION REPORT DIRECTORS’ REPORT FINANCIAL REPORT SHAREHOLDER INFORMATION

RkJQdWJsaXNoZXIy NDI4MDE=