Australia and New Zealand Banking Group Ltd.

Strong market position in the Australian and New Zealand retail and commercial banking sectors Conservative risk appetite, backed by a sound risk-management framework Highly likely to receive timely financial support from the Australian government, if needed Material dependence on domestic and offshore wholesale borrowing Exposed to risks from elevated house prices and private sector debt S&P Global Ratings' outlook on Australia and New Zealand Banking Group Ltd. (ANZ) is stable, reflecting our expectation that the bank will maintain solid operating performance, low credit losses, and adequate capital levels in the next two years. Despite an ongoing orderly unwinding of imbalances in the housing markets, we consider that ANZ, along with the other Australian banks, remains exposed to risk emanating from

...Outlook: Stable S&P Global Ratings' outlook on Australia and New Zealand Banking Group Ltd. (ANZ) is stable, reflecting our expectation that the bank will maintain solid operating performance, low credit losses, and adequate capital levels in the next two years. Despite an ongoing orderly unwinding of imbalances in the housing markets, we consider that ANZ, along with the other Australian banks, remains exposed to risk emanating from a rapid growth in house prices and private sector debt for several years, in combination with Australia's external weaknesses--in particular its persistent current account deficits and high level of external debt. We consider that these imbalances expose the banks in Australia to a scenario of a sharp correction in property prices, and its severe consequences. Nevertheless, we consider that the probability of such a scenario remains relatively remote and loan losses in the next two years are likely to remain very low by historical and international standards....

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