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ANZ widens bad debt provision -

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LISA MILLAR: Just when investors thought the recent sharemarket turmoil was almost over,
Australia's third biggest bank has revealed more fallout from the global credit crisis.

In a special update this morning, the ANZ Bank dramatically widened its provisions for bad debt to
almost a billion dollars. That's up more than 70 per cent from this time last year.

And the ANZ's chief executive, Mike Smith, has warned there are more risks on global markets that
are "yet to crystallise".

Business editor Peter Ryan has this report.

PETER RYAN: Almost two months ago, the ANZ's chief executive Mike Smith said the world was
witnessing a financial services bloodbath.

Today, as he widened the bank's bad debt provisions to almost a billion dollars, his message was
equally cautious about the global outlook.

MIKE SMITH: The US economy is slowing and if it's not in recession then it certainly isn't
something that looks like it. World growth will be off more than one per cent, with weakness in the
US and Europe. That will be partially off-set by growth in Asia and here in Australia, the economy
is well placed but tighter monetary policy and credit conditions, mean the economy will begin to
slow and there is certainly some evidence already emerging of that.

PETER RYAN: Concerns about more ripples, or even tremors, on global markets means the ANZ's
provision for bad debt is up almost 71 per cent from a year ago, reflecting difficult credit
conditions for corporate Australia.

While Mike Smith says the losses are yet to materialise, he stressed that in addition to being
vigilant, the ANZ was being conservative and pre-emptive given the uncertain times.

MIKE SMITH: We want to ensure that the ripple effects of the global turmoil are appropriately
recognised so that we are also taking an additional amount to our corrective provisions to reflect
the secondary impacts of the market turmoil generally.

PETER RYAN: Mike Smith says the ANZ was performing well, despite a steep fall in its share price so
far this year. Even so, he believes it's too early to predict an end to the volatility and that the
recent optimism regarding the health of US banks was perhaps premature.

MIKE SMITH: I've heard some people calling the bottom, after the Lehman and UBS recapitalisations,
but I think it's too early. And I think it's going to take, as I said before, two quarters of clear
results without adverse news from the major US banks before we can say we're through this.

PETER RYAN: Mr Smith also spoke for the first time about the collapse of the Melbourne stockbroking
firm Opes Prime.

As the group's key lender, the ANZ is the first in line creditor and has been selling shares held
by Opes Prime to recover the $650-million it's owed.

MIKE SMITH: We all need to remember that ANZ would still be supporting this business if
irregularities had not been discovered inside the company.

PETER RYAN: ANZ's share sell-off comes more than a thousand regular clients of Opes Prime have been
told their investments are uncertain, with some likely to lose their life savings.

But Mike Smith is making no excuses.

MIKE SMITH: We have to protect our commercial position and our shareholders interest. And we're
doing that in a measured and in a careful way, which includes working very closely with regulators
to resolve some of the very complex issues which have emerged in the last few days. But it's tough
for everybody and I know that. When irregularities of this nature occur within a company there are
no winners.

LISA MILLAR: The ANZ's chief executive, Mike Smith, ending that report from business editor Peter
Ryan.