Quarter at a Glance

Profits

• Operating profit after tax increased 4% from the December quarter of $771 million to $802 million and is 20.4% higher than the March 1999 quarter of $666 million.
• Operating profit attributable to ordinary shareholders was up 3.9% from the December 1999 quarter to $754 million and 15.6% higher than the March 1999 quarter.
• International franchises contributed 49.3% of the Group's March 2000 quarter earnings.
• Underlying profit increased 1% to $1,335 million and was 12.3% higher than the March 1999 quarter.

Revenue

• Total revenue increased 0.6% to $2,808 million.
• Net interest income decreased 0.7% to $1,556 million. Favourable exchange rate movements and product mix were partly offset by one day's less interest in the March quarter compared with the December 1999 quarter.
• Loans and advances grew 6.2% (3.1% in local currency terms) during the March 2000 quarter.
• Overall, margins improved from 2.92% to 2.95%.
• Other operating income grew by 2.4% to $1,252 million.
• Other operating income represents 44.6% of total income compared with 43.8% for the previous quarter and 41.7% for the March 1999 quarter.

Productivity

• Return on Assets was 1.09% compared with 1.06% for the previous quarter and 1.04% for the March 1999 quarter.
• Employee numbers, measured on a full time equivalent (FTE) basis, decreased 0.4% during the March 2000 quarter and were 4% lower than a year earlier.
• Underlying profit per FTE employee for the March 2000 quarter is 1.3% higher than the December 1999 quarter and 16.9% higher than the March 1999 quarter.

Costs

• Cost to income ratio for the March 2000 quarter reduced to 50.7%. Excluding the impact of the new life insurance accounting standard, and interest income attributable to the issue of National Income Securities and Preference Shares from all periods, the cost to income ratio for the March 2000 quarter was 52% compared with the December 1999 quarter of 52.3% and the March 1999 quarter of 52.7%.
• Costs to total assets reduced from 2.08% for the December 1999 quarter to 1.99%.
• Personnel costs increased by 1.2% and occupancy costs and general expenses were steady compared with the December 1999 quarter.

Shareholder Value

Economic Profit
Economic profit for the March 2000 quarter was $404 million, based on a cost of capital of 11.5% (previously 10.5%) and franking credit imputation based on a tax rate of 34% (previously 36%).

The March 2000 quarter is 3.1% higher than the December 1999 quarter of $392 million, based on the current cost of capital and franking imputation.

Economic profit represents the excess of cash earnings over the cost of capital employed in the business plus the value to shareholders of franking credits generated.

Earnings per Share
Basic earnings per share (attributable to ordinary shareholders) were 50.5 cents, 3.5% higher than the previous quarter of 48.8 cents and 14% higher than the March 1999 quarter of 44.3 cents.

Cash earnings per share (earnings attributable to ordinary shareholders before goodwill amortisation) rose by 3.3% from 52.1 cents in the December 1999 quarter to 53.8 cents and are 12.6% higher than the March 1999 quarter of 47.8 cents.

Capital Structure
Tier 1 ratio of 7.72% was marginally lower than December 1999 of 7.79% and has increased from 6.51% a year earlier. The increase was due to the issue of National Income Securities in June 1999, retained earnings and dividend reinvestment.

Core Tier 1 (excluding the impact of preference shares and National Income Securities) was 6.49% compared with 6.46% for the previous quarter and 6.14% for March 1999.

The total capital ratio at March 2000 was 9.98% compared with 10.24% at December 1999 and 9.23% at March 1999. The reduction in the March 2000 quarter is largely attributable to higher risk weighted assets.

Return on Equity
The Group's return on average ordinary shareholders' funds for the March 2000 quarter was 17.03% compared with 17.84% in the December 1999 quarter and 16.78% a year earlier.

The current return was achieved on an increase in average ordinary shareholders' funds of 8.5% from $16.3 billion at December 1999 to $17.7 billion.