McFarlane rewarded for record ANZ profit

remuneration ANZ cent chief executive

25 October 2004
| By Craig Phillips |

ANZ reported a record rise in post tax operating profit today, announcing a 20 per cent jump to $2.8 billion for the year ending September 2004.

The performance coincides with ANZ chief executive John McFarlane having his contract - worth a base of $2 million and a further $2 million in variable remuneration linked to annual performance - extended 12 months until the end of September 2007.

According to McFarlane the strong performance was helped by favourable economic conditions in Australia and New Zealand, along with the group also generating momentum in its personal and corporate divisions in Australia through increased investment and management focus.

The 19.9 per cent rise in operating profits compared to last year was in line with market expectations. It resulted in a 10 per cent rise in cash earnings per share - excluding significant items - and has seen the group’s share price outperform all the other major bank’s with a 17 per cent appreciation over the year.

The year’s earnings include 10 months’ contribution from the acquisition of the National Bank of New Zealand (NBNZ), which added 2.3 cents to cash earnings per share over the year.

“Financial performance in the New Zealand business was acceptable in the face of significant competitive attack and the uncertainties associated with a major acquisition [NBNZ],” McFarlane said.

Meanwhile also revealed the bank had signed a memorandum of understanding with UK-based Standard Chartered Bank in relation to the transfer of the majority of its London-based Project Finance business unit.

“The sale of our international Project Finance business largely completes the withdrawal from non-core activities that previously included the sale of Grindlays and the refocusing of our Asian business around our core strengths,” McFarlane said.

ANZ has also announced a planned on-market share buyback of at least $350 million.

“For 2005, we believe the external environment will remain favourable and expect continued good underlying business performance... A number of one-off factors in the year will however impact earnings, which on balance will have a negative impact,” McFarlane concluded.

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