1 Chairman's Report. Charles Goode.

Enclosed with this edition of Shareholder Contact is the advice of your 2008 Interim Dividend of 62 cents per share fully franked, unchanged on the March 2007 half.

Our net profit after tax of $1,963 million for the half year ended 31 March 2008, was down 7%. The cash net profit before provisions was up 11%. However the provisions for credit costs were significant and the cash earnings per share for the half year were down 16%.

This is the first time our profits have fallen in a half since 1998 and your Directors believe the decision not to increase the dividend is prudent in the circumstances.

The global environment is much more uncertain with continuing volatility in credit markets and economic growth slowing significantly in the US and Europe. In Australia and New Zealand we are experiencing an economic slowdown.

However in addition to the change in the credit cycle, we have been impacted by some issues which are specific to ANZ. These include our exposure to a US monoline insurer and the impact on our reputation that has resulted from the collapse of Opes Prime and our involvement in Securities Lending.

While ANZ has made progress in reducing risk it is clear we still have much more work to do. There are small areas of non-core activities over which there needs to be improved controls and accountability.

Your Board and our new Chief Executive Officer, Michael Smith, are committed to taking the necessary action to improve our financial performance, tighten the management of risk, and build our reputation based on the Bank’s core values of integrity, trust, quality and service.

Looking at our divisional performance, there were good results from our Personal Division in Australia with cash net profit after tax growth of 11%.