ANZ Banking Group's chief executive, Mike Smith, was keen to proclaim early on, in delivering his bank's results presentation, that ANZ was "one of the world's strongest, best capitalised banks". "In terms of capital [adequacy] requirements, the discussion going on in Europe and the US would show that this has not gone away," Smith said.With its 'AA band' credit rating, and with 62 per cent of its capital requirements being customer funded, the group has laid claim to having the lowest structural funding gap among its domestic peers (two of which are due to report their annual results over the coming week). Chief financial officer Shayne Elliott added that the bank had achieved at least half of its cost savings from "hundreds of small continuous improvements", along with developing a less capital intensive, so lower risk, book. He added that ANZ had moved towards taking a more proactive stance on capital management - "in reality, that means a more disciplined approach… [regarding] which businesses can have capital and under what conditions."ANZ raised a total of A$24 billion in term wholesale funding in global capital markets in the 2012/2013 financial year. Debt was issued across a well-diversified range of domestic and international investors.In addition, ANZ said it had generated $4.5 billion in net organic capital, allowing its common equity tier-one ratio (based on the less forgiving APRA formula) to increase 47 basis points, to 8.5 per cent. ANZ's tier-one ratio sits at 10.8 per cent on an internationally harmonised Basel III basis - an increase of 76 bps.Credit quality continued to improve. Gross impaired assets reduced by 18 per cent, with reductions across all divisions. They have now reduced at an average of $383 million each half since the second half of 2009/2010. New impaired assets were also down by 22 per cent.The group's provision charge decreased by five per cent, to $1.197 billion. Its collective provision ratio, shown as one per cent, provides conservative coverage given the ongoing improvement in credit quality. (The ratio, calculated under APRA's Basel III approach, is the collective provision balance as a proportion of credit risk weighted assets).This trend is particularly important for ANZ's institutional banking division, where credit exposure to investment grade clients now comprises 78 per cent of the book, compared to 60 per cent in the second half of 2007/2008.In response to a question from an analyst about how ANZ was planning to revamp its technology, given it was running three disparate core banking systems, Smith outlined a strategy that relies on future technological breakthroughs to achieve major cost savings."The system in New Zealand can be fixed, as it's still being serviced, so it's really the core system in Australia [that is the potential problem]. Is there a need to replace it right now? No, there isn't. The reason being that our business mix is not like [that of] our competitors," said Smith."We are putting our investment in the customer front-end, and are hollowing out the core banking system, so the need