Australia and New Zealand Banking Group Limited
ABN 11 005 357 522

Half Year
31 March 2023

Consolidated Financial Report

CONDENSED CONSOLIDATED FINANCIAL STATEMENTSCONTENTS

Page

Directors’ Report3

Condensed Consolidated Income Statement8

Condensed Consolidated Statement of Comprehensive Income

9

Condensed Consolidated Balance Sheet

10

Condensed Consolidated Cash Flow Statement

11

Condensed Consolidated Statement of Changes in Equity

12

Notes to Condensed Consolidated Financial Statements

13

Directors’ Declaration

48

Auditor’s Review Report and Independence Declaration

49

This Consolidated Financial Report has been prepared for Australia and New Zealand Banking Group Limited (ANZBGL, Company, us, we, or our) andits subsidiaries (Group).
All amounts are in Australian dollars unless otherwise stated. The Group has a formally constituted Audit Committee of the Board of Directors. The
Condensed Consolidated Financial Statements were approved by resolution of the Board of Directors on 4 May 2023.
DISCLAIMER & IMPORTANT NOTICE:
The material in this Consolidated Financial Report contains general background information about the Group’s activities current as at 4 May 2023. It is
information given in summary form and does not purport to be complete. It is not intended to be and should not be relied upon as advice to investors or
potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should beconsidered, with or without professional advice, when deciding if an investment is appropriate.
This Consolidated Financial Report may contain forward-looking statements or opinions including statements regarding our intent, belief or current
expectations with respect to the Group’s business operations, market conditions, results of operations and financial condition, capital adequacy, specificprovisions and risk management practices. When used in the Consolidated Financial Report, the words ‘forecast’, ‘estimate’, ‘project’, ‘intend’,‘anticipate’, ‘believe’, ‘expect’, ‘may’, ‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’, ‘could’, ‘should’ and similar expressions, as they relate to the Group and its
management, are intended to identify forward-looking statements or opinions. Those statements are usually predictive in character; or may be affected byinaccurate assumptions or unknown risks and uncertainties or may differ materially from results ultimately achieved. As such, these statements should
not be relied upon when making investment decisions. These statements only speak as at the date of publication and no representation is made as totheir correctness on or after this date. Forward-looking statements constitute ‘forward-looking statements’ for the purposes of the United States Private
Securities Litigation Reform Act of 1995. The Group does not undertake any obligation to publicly release the result of any revisions to these forwardlooking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.

2

DIRECTORS’ REPORTThe Directors present their report on the Condensed Consolidated Financial Statements for Australia and New Zealand Banking Group Limited(the Company) for the half year ended 31 March 2023.
Directors
The names of the Directors of the Company who held office during and since the end of the half year are:
Mr PD O’Sullivan

Chairman

Mr SC Elliott

Director and Chief Executive Officer

Ms IR Atlas, AO

Director

Ms SJ Halton, AO PSM

Director

Mr GR Liebelt

Director, retired 15 December 2022

Rt Hon Sir JP Key, GNZM AC

Director

Mr JT Macfarlane

Director

Ms CE O’Reilly

Director

Mr JP Smith

Director

Mr GK Hodges

Director, appointed 8 February 2023

Establishment of a New Group Organisational Structure
On 3 January 2023, Australia and New Zealand Banking Group Limited (ANZBGL) established by a scheme of arrangement, a non-operating holding
company, ANZ Group Holdings Limited (ANZGHL), as the new listed parent holding company of the ANZ Group and implemented a restructure to
separate ANZ’s banking and certain non-banking businesses into the ANZ bank group and ANZ non-bank group (Restructure). The ANZ bank group
comprises the majority of the businesses and subsidiaries that were held in ANZBGL prior to the Restructure. The ANZ non-bank group comprisesbanking-adjacent businesses developed or acquired by the ANZ Group to focus on bringing new technology and banking-adjacent services to the ANZGroup’s customers, and a separate service company.
The key steps undertaken in the Restructure were:•

New legal entities ANZGHL, ANZ BH Pty Ltd, ANZ NBH Pty Ltd and ANZ Group Services Pty Ltd were created;•each ANZ shareholder received one ANZGHL ordinary share for each ANZ ordinary share that they held prior to the implementation of the
Restructure;•

ANZBGL transferred its beneficial interests in banking-adjacent businesses to ANZ NBH Pty Ltd;•ANZBGL transferred its interest in several properties to ANZ Group Services Pty Ltd;•ANZBGL transferred all shares in ANZ BH Pty Ltd, ANZ NBH Pty Ltd and ANZ Group Services Pty Ltd to ANZGHL; and•ANZGHL transferred all shares in ANZBGL to ANZ BH Pty Ltd.

As a result of the Restructure, the consolidated results of ANZBGL and its subsidiaries (Group) for the March 2023 half consist of:•

the results of the former ANZ Group for the period 1 October 2022 to 2 January 2023;•

the result of ANZBGL and its subsidiaries for the period 3 January to 31 March 2023.

ANZGHL Financial Information
As a result of the Restructure, the ultimate holding company of ANZBGL is ANZGHL. A copy of the ANZGHL Consolidated Financial Report, Dividend
Announcement and Appendix 4D for the March 2023 half year can be accessed via the ANZ Shareholder Centre on the Group website
https://www.anz.com/shareholder/centre/reporting/results-announcement/.

3

DIRECTORS’ REPORT
Performance overview
Consolidated Income Statement
Half Year
Mar 23$M
8,500

Net interest income

Movement

Sep 22$M
7,774

Mar 22$M
7,100

Mar 23v. Sep 22
9%

Mar 23v. Mar 22
20%

Other operating income

1,647

2,110

2,442

-22%

-33%

Operating income

10,147

9,884

9,542

3%

6%

Operating expenses(4,986)(4,788)(4,791)

4%

4%

Profit before credit impairment and income tax

5,161

5,096

4,751

1%

9%

Credit impairment (charge)/release

(133)

(52)

284

large

large

Profit before income tax

5,028

5,044

5,035

0%

0%

Income tax expense and non-controlling interests(1,460)(1,441)(1,500)

1%-3%Profit after tax from continuing operations

3,568

3,603

3,535

-1%

1%

-

(14)

(5)

large

large

3,568

3,589

3,530

-1%

1%

Profit/(Loss) after tax from discontinued operations
Profit for the period

March 2023 v March 2022•

Net interest income increased $1,400 million (20%) driven by a $73.5 billion (8%) increase in average interest earning assets and a 17 bps increasein net interest margin. The increase in average interest earning assets was driven by higher average net loans and advances, cash and other liquid
assets, and trading assets and investment securities. The net interest margin increased from 158 bps to 175 bps driven by favourable deposit
margins from a rising interest rate environment, and higher earnings on capital and replicating deposits. This was partially offset by home loan pricing
competition in the Australia Retail and New Zealand divisions, unfavourable asset and funding mix, growth in lower yielding liquid assets, anddecrease in Markets net interest income driven by higher funding costs, primarily on commodity and fixed income assets, where the related revenues
are recognised as Other operating income.

•

Other operating income decreased $795 million (33%) primarily driven by lower net foreign exchange earnings and other financial instruments
income ($533 million), a gain on completion of ANZ Worldline partnership ($307 million) in the March 2022 half, lower fees and commission income($46 million), and a loss on reclassification of data centres in Australia to held for sale ($43 million). This was partially offset by recycling of foreign
currency translation reserve losses to Other operating income following the dissolution of several entities ($65 million) and a loss on disposal of
financial planning and advice business ($62 million), both in the March 2022 half.

•

Operating expenses increased $195 million (4%) driven by higher personnel expenses ($232 million) mainly due to inflationary impacts on wages,
partially offset by lower professional fees ($58 million) from reduced spend on regulatory and compliance initiatives.

•

Credit impairment charge increased $417 million driven by an increase in the collectively assessed credit impairment charge, partially offset by adecrease in the individually assessed credit impairment charge.

March 2023 v September 2022•

Net interest income increased $726 million (9%) driven by a $52.9 billion (6%) increase in average interest earning assets and a 7 bps increase in
net interest margin. The increase in average interest earning assets was driven by higher average net loans and advances, cash and other liquid
assets, and trading assets and investment securities. The net interest margin increased from 168 bps to 175 bps driven by favourable deposit
margins from a rising interest rate environment, and higher earnings on capital and replicating deposits. This was partially offset by home loan pricing
competition in the Australia Retail and New Zealand divisions, growth in lower yielding liquid assets, unfavourable asset and funding mix, anddecrease in Markets net interest income driven by higher funding costs, primarily on commodity and fixed income assets, where the related revenues
are recognised as Other operating income.

•

Other operating income decreased $463 million (22%) primarily driven by lower net foreign exchange earnings and other financial instruments
income ($280 million), lower net fee and commission income ($52 million), lower net income from insurance business ($45 million) and a loss on
reclassification of data centres in Australia to held for sale ($43 million).

•

Operating expenses increased $198 million (4%) driven by higher personnel expenses ($244 million) mainly due to inflationary impacts on wages,
partially offset by lower professional fees ($65 million) from reduced spend on regulatory and compliance initiatives, and lower premises expenses($37 million) driven by the modification of a significant lease arrangement in the September 2022 half.

•

Credit impairment charge increased $81 million driven by an increase in the collectively assessed credit impairment charge, partially offset byhigher individually assessed credit impairment releases.

4

DIRECTORS’ REPORT
Consolidated Balance Sheet
As at

Movement

AssetsCash / Settlement balances owed to ANZ / Collateral paid

Mar 23$B
225.1

Sep 22$B
185.6

Mar 22$B
186.0

Trading assets and investment securities

133.1

121.4

Derivative financial instruments

45.6

90.2

Net loans and advances

690.7

672.4

651.4

3%

6%

Other

17.1

16.0

15.6

7%

10%

1,111.6

1,085.6

1,017.4

2%

9%Total assets

Mar 23v. Sep 22
21%

Mar 23v. Mar 22
21%

119.2

10%

12%

45.2

-49%

1%

Liabilities
Settlement balances owed by ANZ / Collateral received

31.0

30.0

26.5

3%

17%

Deposits and other borrowings

843.1

797.3

780.3

6%

8%

Derivative financial instruments

46.2

85.1

47.8

-46%

-3%

Debt issuances

106.2

93.7

87.2

13%

22%

Other

16.5

13.2

13.8

25%

20%

Total liabilities

1,043.0

1,019.3

955.6

2%

9%

Total equity

68.6

66.4

61.8

3%

11%

March 2023 v March 2022•

Cash / Settlement balances owed to ANZ / Collateral paid increased $39.1 billion (21%) driven by increases in balances with central banks,
reverse repurchase agreements, and the impact of foreign currency translation movements, partially offset by a decrease in collateral paid.

•

Trading assets and investment securities increased $13.9 billion (12%) driven by an increase in semi-government bonds as part of portfolio
rebalancing, and the impact of foreign currency translation movements.

•

Net loans and advances increased $39.3 billion (6%) driven by driven by home loan growth, higher business lending, and the impact of foreign
currency translation movements.

•

Settlement balances owed by ANZ / Collateral received increased $4.5 billion (17%) driven by higher cash clearing account balances and higher
collateral received.

•

Deposits and other borrowings increased $62.8 billion (8%) driven by increases in customer deposits, certificates of deposit, commercial paper,
deposits from banks, repurchase agreements, and the impact of foreign currency translation movements.

•

Debt issuances increased $19.0 billion (22%) driven by issue of new senior and subordinated debt, including ANZ Capital Notes 8, and the impactof foreign currency translation movements.

March 2023 v September 2022•

Cash / Settlement balances owed to ANZ / Collateral paid increased $39.5 billion (21%) driven by increases in balances with central banks,
settlement balances owed to ANZ, and reverse repurchase agreements, partially offset by a decrease in collateral paid.

•

Trading assets and investment securities increased $11.7 billion (10%) primarily driven by an increase in semi-government bonds as part of
portfolio rebalancing.

•

Derivative financial assets and liabilities decreased $44.6 billion (49%) and $38.9 billion (46%) respectively driven by the maturity and/or unwindof positions held in the prior period that were impacted by market rate movements, primarily the significant strengthening of the USD.

•

Net loans and advances increased $18.3 billion (3%) driven by home loan growth, higher business lending, and the impact of foreign currencytranslation movements.

•

Deposits and other borrowings increased $45.8 billion (6%) driven by increases in customer deposits, certificates of deposit, deposits from banks,
repurchase agreements, and the impact of foreign currency translation movements.

•

Debt issuances increased $12.5 billion (13%) driven by the issue of new senior and subordinated debt, including ANZ Capital Notes 8, and theimpact of foreign currency translation movements.

5

DIRECTORS’ REPORT
Movement

Half Year Average

Liquidity

Total liquid assets ($B)

Mar 23265.9

Sep 22242.1

Mar 22
241.1

Mar 23v. Sep 22
10%

Mar 23v. Mar 22
10%

Liquidity Coverage Ratio (%)

128%

129%

132%

-1%

-4%

The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent with
Basel 3 Liquidity Coverage Ratio (LCR):•

Highest-quality liquid assets: cash, highest credit quality government, central bank or public sector securities eligible for repurchase with central
banks to provide same-day liquidity.

•

High-quality liquid assets: high credit quality government, central bank or public sector securities, high quality corporate debt securities and highquality covered bonds eligible for repurchase with central banks to provide same-day liquidity.

•

Alternative liquid assets: assets qualifying as collateral for the Committed Liquidity Facility (CLF) and other eligible securities listed by the Reserve
Bank of New Zealand (RBNZ).

The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory requirements and therisk appetite set by the Board. The LCR remained above the regulatory minimum thresholds throughout this period.
Consistent with APRA’s requirement, ANZ’s CLF was nil at 31 March 2023 (Sep 22: $2.7 billion; Mar 22: $8.0 billion).

Funding

As at

Movement

Total customer liabilities (funding)

Mar 23$B
661.1

Sep 22$B
628.4

Mar 22$B
620.7

Mar 23v. Sep 22
5%

Mar 23v. Mar 22
7%

Wholesale funding

335.6

300.3

289.1

12%

16%

Shareholders' equity

68.6

66.4

61.8

3%

11%

7%

10%

Total funding
Net Stable Funding Ratio (%)

1,065.3

995.1

971.6

119%

119%

123%

The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.
During the March 2023 half, the Group issued $23.9 billion of term wholesale funding (excluding Additional Tier 1 Capital) with a remaining term greaterthan one year as at 31 March 2023, and $1.5 billion of Additional Tier 1 Capital.
Net Stable Funding Ratio remained above the regulatory minimum of 100% throughout this period.
Capital Management (Level 2)1

As at

Movement
Mar 23v. Sep 22

Mar 23v. Mar 22

348.8

-4%

-1%

437.9

-4%

-1%

Mar 23

Sep 22

Mar 22- APRA

13.2%

12.3%

11.5%

- International Comparable

18.9%

19.2%

18.0%

Credit risk weighted assets ($B)

345.3

359.4

Total risk weighted assets ($B)

435.5

454.7

APRA Leverage Ratio

5.3%

5.4%

5.2%

Common Equity Tier 1 (CET1)

1.

March 2023 includes impacts on risk weighted assets from APRA Capital Reform.

APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable as regulatory capitaland provides methods of measuring the risks incurred by the Bank.
APRA Capital Reform
APRA has released new bank capital adequacy requirements applying to Australian incorporated registered banks, which are set out in APRA’s Banking
Prudential Standard documents. ANZ has implemented these new requirements from 1 January 2023.
The new capital adequacy key requirements include changes to APS 110 Capital Adequacy (APS 110), APS 112 Capital Adequacy: Standardised
Approach to Credit Risk (APS 112) and APS 113 Capital Adequacy: Internal Ratings-based Approach to Credit Risk (APS 113) with key features of thereforms including:•

improving the flexibility of the capital framework, through larger capital buffers that can be used by banks to support lending during periods of stress;•changes to risk weighted assets (RWA) through more risk-sensitive risk weights increasing capital requirements for higher risk lending anddecreasing it for lower risks;•changes to loss given default rates (LGD) including approved use of an internal ratings-based (IRB) approved LGD model for mortgage portfolios;•

an increase in the IRB scaling factor (from 1.06x to 1.1x);

6DIRECTORS’ REPORT•

requirement that IRB authorised deposit-taking institutions (ADIs) calculate and disclose RWA under the standardised approach and the introductionof a capital floor at 72.5% of standardised RWA; and•use of prescribed New Zealand authority’s equivalent prudential rules for the purpose of calculating the Level 2 regulatory capital requirement.

In addition, operational RWA is now calculated under APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk (APS 115)
which replaced the previous advanced methodology from December 2022.
The application of APRA Capital Reform reduced RWA by $34.5 billion, equivalent to a 100 bps CET1 ratio benefit. This was partially offset by APRA’s
expectations that ADIs operate a higher capital ratio to maintain an unquestionably strong level.
The Group’s APRA Common Equity Tier 1 ratio was 13.2% at 31 March 2023, exceeding APRA’s minimum requirements. The increase of 89 bps during
the March 2023 half was primarily driven by APRA Capital Reform impacts, current period earnings and lower underlying non-credit risk weighted assets
usage. This was partially offset by the impact of dividends paid during the period and higher underlying credit risk weighted assets usage.
At 31 March 2023, the Group’s APRA Leverage Ratio was 5.3% which is above the 3.5% proposed minimum for IRB ADI, which includes ANZ.
Dividend
As part of the Restructure, ANZBGL paid $1,000 million special dividend to its intermediate holding company, ANZ BH Pty Ltd, a wholly owned subsidiaryof ANZGHL, during the March 2023 half.
On 4 May 2023, the Directors propose an interim dividend of $2,433 million be paid on 3 July 2023, to ANZ BH Pty Ltd.
Lead auditor’s independence declaration
The lead auditor’s independence declaration given under section 307C of the Corporations Act 2001 (as amended) is set out on page 50 which forms
part of this report.
Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by ASIC Corporations Instrument 2016/191.
Significant events since balance date
There have been no significant events from 31 March 2023 to the date of signing this report that have not been adjusted or disclosed.
Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
ChairmanShayne C ElliottManaging Director

4 May 2023

7

CONDENSED CONSOLIDATED INCOME STATEMENT

Australia and New Zealand Banking Group Limited
Half Year
Note
Interest income
Interest expense

Movement

Mar 23$M
22,838

Sep 22$M
13,902

Mar 22$M
9,707

Mar 23v. Sep 22
64%

Mar 23v. Mar 22
large
large

(14,338)(6,128)(2,607)large

Net interest income

2

8,500

7,774

7,100

9%

20%

Other operating income

2

1,507

1,922

2,313

-22%

-35%

Net income from insurance business
Share of associates' profit/(loss)

2

40

85

55

-53%

-27%

2, 15

100

103

74

-3%

35%

Operating income
Operating expenses

3

Profit before credit impairment and income tax
Credit impairment (charge)/release

8

Profit before income tax
Income tax expense

4

Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the period

10,147

9,884

9,542

3%

6%

(4,986)(4,788)(4,791)

4%

4%

5,161

5,096

4,751

1%

9%

(133)

(52)

284

large

large

5,028

5,044

5,035

0%

0%

(1,446)(1,440)(1,500)

0%

-4%

3,582

3,604

3,535

-1%

1%

-

(14)

(5)

large

large

3,582

3,590

3,530

0%

1%

3,568

3,589

3,530

-1%

1%

14

1

-

large

n/a

Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests

13

The notes appearing on pages 13 to 47 form an integral part of the Condensed Consolidated Financial Statements.

8

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Australia and New Zealand Banking Group Limited
Half Year

Movement

3,582

Sep 22$M
3,604

Mar 22$M
3,535

Mar 23v. Sep 22-1%

Investment securities - equity securities at FVOCI

50

(66)

11

large

large

Other reserve movements

(32)

28

99

large

large

Mar 23$M
Profit for the period from continuing operations

Mar 23v. Mar 22
1%

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve

792

16

(775)

large

large

Other reserve movements

1,073(1,549)(2,631)

large

large

Income tax attributable to the above items

(301)

429

743

large

large

8

(50)

10

large

-20%

1,590

(1,192)(2,543)

large

large

-

(14)

(5)

large

large

5,172

2,398

987

large

large

5,128

2,412

987

large

large

44

(14)

-

large

n/a

Share of associates' other comprehensive income1
Other comprehensive income after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Total comprehensive income for the period
Comprising total comprehensive income attributable to:Shareholders of the Company
Non-controlling interests
1.

Share of associates’ other comprehensive income includes:
Mar 23 half$M

Sep 22 half$M

Mar 22 half
$M

FVOCI reserve gain/(loss)

2

(51)

(5)

Defined benefits gain/(loss)

6

-

15

Foreign currency translation reserve gain/(loss)

-

1

-

Total

8

(50)

10

The notes appearing on pages 13 to 47 form an integral part of the Condensed Consolidated Financial Statements.

9CONDENSED CONSOLIDATED BALANCE SHEET

Australia and New Zealand Banking Group Limited
As at
AssetsCash and cash equivalents1

Note

Mar 23$M
208,800

Sep 22$M
168,132

Movement
Mar 22$M
168,054

Mar 23v. Sep 22
24%

Mar 23v. Mar 22
24%

Settlement balances owed to ANZ

7,020

4,762

7,141

47%

-2%

Collateral paid

9,245

12,70010,764-27%-14%

Trading assets

39,611

35,23739,43312%0%Derivative financial instruments

45,61490,17445,238-49%

1%Investment securities

93,505

86,15379,7579%

17%690,737

672,407651,436

3%

6%

646

632

661

2%

-2%

Net loans and advances

7

Regulatory deposits

2,214

2,181

2,018

2%

10%

Current tax assets

49

46

227

7%

-78%

Deferred tax assets

3,014

3,384

2,903

-11%

4%

Goodwill and other intangible assets

3,933

3,877

4,068

1%

-3%

Premises and equipment

2,613

2,431

2,702

7%

-3%

Other assets

4,604

3,613

2,959

27%

56%

Total assets

1,111,605

1,085,729

1,017,361

2%

9%Settlement balances owed by ANZ

23,01013,766

19,752

67%

16%

Collateral received

8,002

16,230

6,716

-51%

19%

843,098

797,281780,2886%

8%

46,15485,14947,795

-46%

-3%

342

829

320

-59%

7%

Investments in associates

Liabilities

Deposits and other borrowings

9

Derivative financial instruments
Current tax liabilities

58

83

82

-30%

-29%

13,875

9,835

10,579

41%

31%

592

549

585

8%

1%

1,692

1,872

2,262

-10%

-25%

106,157

93,73487,22613%

22%

1,042,980

1,019,328

955,6052%

9%68,62566,401

61,756

3%

11%

Deferred tax liabilities
Payables and other liabilities
Employee entitlements
Other provisions
Debt issuances10

Total liabilities
Net assets
Shareholders' equity
Ordinary share capital

13

29,054

28,79725,091

1%

16%

Reserves

13(1,065)(2,606)(1,422)

-59%

-25%

Retained earnings

13

40,111

39,71638,0781%

5%

68,10065,907

61,747

3%

10%

Share capital and reserves attributable to shareholders of the Company
Non-controlling interests

13

Total shareholders' equity
1.

525

494

9

6%

large

68,62566,401

61,756

3%

11%

Includes settlement balances owed to ANZ that meet the definition of Cash and cash equivalents.

The notes appearing on pages 13 to 47 form an integral part of the Condensed Consolidated Financial Statements.

10CONDENSED CONSOLIDATED CASH FLOW STATEMENT

Australia and New Zealand Banking Group Limited
Half Year
Mar 23$M
3,582

Sep 22$M
3,590

Mar 22$M
3,530

Credit impairment charge/(release)
Depreciation and amortisation

133
478

52
499

(284)
509

Loss on reclassification of data centres to held for sale

43

-

--

Profit after income tax
Adjustments to reconcile to net cash flow from operating activities:(Profit)/loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment(Gain)/loss on sale from divestments
Other non-cash movements

-

(8)

-

5,417

(4,055)

(379)

-

7

(259)

(763)

(734)

(175)
(1,934)

Net (increase)/decrease in operating assets:
Collateral paid

3,185

(704)

Trading assets(2,273)

4,557

3,463

Loans and advances(11,877)(18,073)(28,305)

(587)

574

111
48,911Other assets
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings

41,699(32)

Settlement balances owed by ANZ

9,053(6,011)

2,525

Collateral received(7,892)

8,205

1,263

Other liabilities(1,067)

(332)

3,665

Total adjustments

35,549(16,055)

29,111

Net cash (used in)/provided by operating activities1

39,131(12,465)

32,641(13,494)(17,083)(17,209)

5,432

14,305

18,492

Cash flows from investing activities
Investment securities:
Purchases
Proceeds from sale or maturity
Controlled entities and associates:
Purchased, net of cash acquired
Proceeds from divestments, net of cash disposed

-

-

(65)

577

-

394

(350)

(132)

(519)

(7,835)(2,910)

1,093

937

794

432

Issue proceeds

25,041

15,955

7,467

Redemptions(14,689)(9,141)(16,876)

Dividends paid3,4(1,994)

Net investments in other assets
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Deposits and other borrowings drawn down
Debt issuances:2(2,299)(1,790)On market purchase of treasury shares

(19)

-

(117)

Repayment of lease liabilities

(156)

(60)

(158)
(846)

Share buy-back--

ANZ Bank New Zealand Perpetual Preference Shares

-

492

-

Share entitlement issue

-

3,497

(12,092)

Net cash (used in)/provided by financing activities

8,815

9,747

Net increase/(decrease) in cash and cash equivalents

40,111(5,628)21,642

Cash and cash equivalents at beginning of period

168,132

168,054

151,260

557

5,706

(4,848)208,800

168,132

168,054

Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period1.

Net cash (used in)/provided by operating activities includes interest received of $22,084 million (Sep 22 half: $13,129 million; Mar 22 half: $9,619 million), interest paid of $12,720 million(Sep 22 half: $5,223 million; Mar 22 half: $2,634 million) and income taxes paid of $1,827 million (Sep 22 half: $749 million; Mar 22 half: $1,422 million).
2. Non-cash changes in debt issuances include a loss of $2,072 million (Sep 22 half: $831 million gain; Mar 22 half: $3,894 million gain) from unrealised movements primarily due to fair value
hedge adjustments and foreign exchange differences.
3. Cash outflow for shares purchased to satisfy the Dividend Reinvestment Plan (DRP) are classified in dividends paid.
4. Includes $320 million cash outflow as part of the special dividend to the Group’s parent entity, ANZ BH Pty Ltd, during the March 2023 half.
The notes appearing on pages 13 to 47 form an integral part of the Condensed Consolidated Financial Statements.

11

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Australia and New Zealand Banking Group Limited

As at 1 October 2021

Ordinary
share
capital$M

Reserves$M

Retainedearnings$M

Share capitaland reserves
attributable toshareholders of
the Company$M

Noncontrollinginterests$M

Total
shareholders'equity$M

25,984

1,228

36,453

63,665

11

63,676

Profit/(Loss) from continuing operations

-

-

3,535

3,535

-

3,535

Profit/(Loss) from discontinued operations

-

-

(5)

(5)

-

(5)

Other comprehensive income for the period from continuing operations-(2,628)85(2,543)-(2,543)-(2,628)

3,615

987

-

987

-

-

(1,992)(1,992)(2)(1,994)

(846)

-

-

(846)

-

(846)

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid
Group share buy-back1
Other equity movements:
Employee share and option plans
Other items
As at 31 March 2022

(47)

-

-

(47)

-

(47)

-

(22)

2

(20)

-

(20)

25,091(1,422)

38,07861,747

961,756

Profit/(Loss) from continuing operations

-

-

3,603

3,603

1

3,604

Profit/(Loss) from discontinued operations

-

-

(14)

(14)

-

(14)

Other comprehensive income for the period from continuing operations-(1,207)30(1,177)(15)(1,192)-(1,207)

3,619

2,412

(14)

2,398
(1,973)

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid--

(1,973)(1,973)

-

183

-

-

183

-

183

3,497

-

-

3,497

-

3,497

26

-

-

26

-

26
492

Dividend Reinvestment Plan2
Share entitlement issue3
Other equity movements:
Employee share and option plans
4

ANZ Bank New Zealand Perpetual Preference Shares issued

-

-

(7)

(7)

499

Other items

-

23

(1)

22

-

22

28,797(2,606)

39,71665,907494

66,401As at 30 September 2022
Profit/(Loss) from continuing operations

-

-

3,568

3,568

14

3,582

Other comprehensive income for the period from continuing operations

-

1,600

(40)

1,560

30

1,590

-

1,600

3,528

5,128

44

5,172

-

-

(3,172)(3,172)(13)(3,185)

206

-

-

206

-

206

53

Total comprehensive income for the period
Transactions with equity holders in their capacity as equity holders:
Dividends paid5
Dividend Reinvestment Plan2
Other equity movements:
Employee share and option plans

53

-

-

53

-

Net transfers following Restructure

-

(39)

39

-

-

-

Other items

(2)

(20)

-

(22)

-

(22)

29,054(1,065)

40,111

68,100525

68,625As at 31 March 2023
1.

The Group completed its $1.5 billion on-market share buy-back of ANZ ordinary shares resulting in 31 million shares being cancelled in the March 2022 half.
8.4 million shares were issued under the DRP for the 2022 final dividend (2022 interim dividend: 7.2 million; 2021 final dividend: nil). On-market share purchases for the DRP were$204 million in the March 2022 half.
3. The Group issued 187.1 million new ordinary shares under the share entitlement offer in the September 2022 half.
4. ANZ Bank New Zealand, a wholly owned subsidiary of ANZBGL, issued Perpetual Preference Shares in the September 2022 half which are considered non-controlling interests to theGroup. Refer to Note 13 Shareholders’ equity for further details.
5. Includes $1,000 million special dividend paid to the Group’s parent entity, ANZ BH Pty Ltd, during the March 2023 half.
2.

The notes appearing on pages 13 to 47 form an integral part of the Condensed Consolidated Financial Statements.

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation

Organisational Restructure
On 3 January 2023, Australia and New Zealand Banking Group Limited (ANZBGL) established, by a scheme of arrangement, a non-operating holding
company, ANZ Group Holdings Limited (ANZGHL), as the new listed parent holding company of the ANZ Group and implemented a restructure to
separate ANZ’s banking and certain non-banking businesses into the ANZ bank group and ANZ non-bank group (Restructure). The ANZ bank group
comprises the majority of the businesses and subsidiaries that were held in ANZBGL prior to the Restructure. The ANZ non-bank group comprisesbanking-adjacent businesses developed or acquired by the ANZ Group to focus on bringing new technology and banking-adjacent services to the ANZGroup’s customers, and a separate service company.
On Restructure, each ANZ shareholder received one ANZGHL ordinary share for each ANZ ordinary share that they held prior to the implementation of
the Restructure. The Restructure was accounted for as a reverse acquisition in the ANZGHL consolidated financial statements as at 31 March 2023, withANZBGL identified as the acquirer in accordance with AASB 3 Business Combinations.
As a result of the Restructure, the ANZBGL consolidated results for the March 2023 half consist of:•

the results of the former ANZ Group for the period 1 October 2022 to 2 January 2023;•

the result of ANZBGL and its subsidiaries (Group) for the period 3 January to 31 March 2023.

Refer to iv) Accounting policies section below for details on accounting policy applicable to the Restructure.
These Condensed Consolidated Financial Statements have been prepared for the Australia New Zealand Banking Group Limited consolidated group.
Basis of Preparation
These Condensed Consolidated Financial Statements:•

have been prepared in accordance with the recognition and measurement requirements of Australian Accounting Standards (AASs);•

should be read in conjunction with ANZ’s Annual Financial Report for the year ended 30 September 2022 and any public announcements made by
the ANZGHL and its controlled entities for the half year ended 31 March 2023 in accordance with the continuous disclosure obligations under the
Corporations Act 2001 and the ASX Listing Rules;•

do not include all notes of the type normally included in the 2022 ANZ Annual Report;•

are presented in Australian dollars unless otherwise stated; and•were approved by the Board of Directors on 4 May 2023.

i)Statement of Compliance

These Condensed Consolidated Financial Statements have been prepared in accordance with the Corporations Act 2001 and AASB 134 Interim
Financial Reporting which ensures compliance with IAS 34 Interim Financial Reporting.
ii) Rounding of amounts
The amounts contained in these Condensed Consolidated Financial Statements have been rounded to the nearest million dollars, except whereotherwise indicated, as permitted by Australian Securities and Investments Commission Corporations Instrument 2016/191.
iii) Basis of measurement and presentation
The financial information has been prepared in accordance with the historical cost basis except the following assets and liabilities that are stated at theirfair values:•

derivative financial instruments as well as, in the case of fair value hedges, the fair value adjustment on the underlying hedged exposure;•financial assets and liabilities held for trading;•financial assets and liabilities designated at fair value through profit and loss (FVTPL);•

financial assets at fair value through other comprehensive income (FVOCI); and•assets and liabilities held for sale (except those required to be at carrying value).

In accordance with AASB 119 Employee Benefits, defined benefit obligations are measured using the Projected Unit Credit method.
There were no discontinued operations in the current period. For the purpose of comparative information, discontinued operations in the prior periods
were separately presented from the results of the continuing operations as a single line item ‘Profit/(Loss) after tax from discontinued operations’ in theCondensed Consolidated Income Statement.
iv) Accounting policies
These Condensed Consolidated Financial Statements have been prepared on the basis of accounting policies and using methods of computationconsistent with those applied in the 2022 ANZ Annual Report.
Accounting policies applicable to the Restructure
The implementation of the non-operating holding company involved the transfer of assets and entities between companies within the wider ANZGHLGroup. This had implications for the ANZBGL Consolidated financial statements due to the transfers extending outside of the ANZBGL group. From an
accounting perspective, since the transfers were between wholly owned entities, these are considered common control transactions. As there is no
specific accounting standard for such transfers, the Group is required to make an accounting policy choice.
The Group’s accounting policy for the transfer of the assets and entities between companies under common control is to apply book value accounting.
Under this approach, any differences between book value and the transfer price are recorded in equity. The accounting policy choice did not have amaterial impact on profit and loss or equity when the assets were transferred as part of the Restructure.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’dv) Use of estimates, assumptions and judgements
The preparation of these Condensed Consolidated Financial Statements requires the use of management judgement, estimates and assumptions
impacting the application of accounting policies and financial outcomes. Discussion of the critical accounting estimates and judgements, which include
complex or subjective decisions or assessments are provided in the 2022 ANZ Annual Report. Such estimates and judgements are reviewed on an
ongoing basis.
The global economy is facing challenges associated with high inflation, increasing interest rates, labour market constraints, and continuing geopoliticaltensions which contributes to an elevated level of estimation uncertainty involved in the preparation of these financial statements.
The Group has made various accounting estimates in these Condensed Consolidated Financial Statements based on forecasts of economic conditions
which reflect expectations and assumptions at 31 March 2023 about future events considered reasonable in the circumstances. Thus there is aconsiderable degree of judgement involved in preparing these estimates. Actual economic conditions are likely to be different from those forecast since
anticipated events frequently do not occur as expected, and the effect of these differences may significantly impact accounting estimates included inthese financial statements. The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to
expected credit losses and recoverable amounts of non-financial assets.
The impact of these uncertainties on each of these accounting estimates is discussed further below, along with assumptions and judgements made in
relation to other key estimates. Readers should consider these disclosures in light of the inherent uncertainties described above.
Allowance for expected credit losses
The Group measures the allowance for expected credit losses (ECL) using an expected credit loss impairment model as required by AASB 9 Financial
Instruments.
The Group’s allowance for expected credit losses is included in the table below (refer to Note 8 for further information).
As at
Mar 23$M

Sep 22$M

Mar 22$M

Collectively assessed

4,040

3,853

3,757

Individually assessed

421

542

636

4,461

4,395

4,393

1

Total
1.

Includes allowance for expected credit losses for Net loans and advances - at amortised cost, Investment securities - debt securities at amortised cost and Off-balance sheet commitments undrawn and contingent facilities.

Individually assessed allowance for expected credit losses
During the March 2023 half, the individually assessed allowance for expected credit losses decreased $121 million.
In estimating individually assessed ECL, the Group makes judgements and assumptions in relation to expected repayments, the realisable value ofcollateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process. Judgements and assumptions
in respect of these matters have been updated to reflect amongst other things, the continuing uncertainties described above.
Collectively assessed allowance for expected credit losses
During the March 2023 half, the collectively assessed allowance for expected credit losses increased $187 million, attributable to $100 million fromdeterioration in economic outlook, $80 million from a net increase in management temporary adjustments, $24 million from deterioration in credit risk, and$24 million from foreign currency translation and other impacts. This was partially offset by $41 million from an improvement in portfolio composition.
In estimating collectively assessed ECL, the Group makes judgements and assumptions in relation to:•

the selection of an estimation technique or modelling methodology; and•the selection of inputs for those models, and the interdependencies between those inputs.

The judgements and associated assumptions have been made within the context of the uncertainty of how various factors might impact the global
economy, and reflect historical experience and other factors that are considered relevant, including expectations of future events that are believed to bereasonable under the circumstances. The Group’s ECL estimates are inherently uncertain and, as a result, actual results may differ from these estimates.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between those inputs,
and highlights significant changes during the current period.
Judgement/Assumption

Description

Considerations for the half year ended 31 March 2023

Determining when a

In the measurement of ECL, judgement is involved in

The Group has continued to adjust ECL this period to accountsignificant increase indetermining whether there has been a SICR since initialfor expected deterioration in credit-worthiness of certain

credit risk (SICR) has

recognition of a loan, which would result in the financial asset

customer segments which are considered particularly

occurred or reversed

moving from Stage 1 to Stage 2. This is a key area ofvulnerable to economic pressures such as higher interest

judgement since transition from Stage 1 to Stage 2 increases

rates, elevated inflation and labour market pressures.

the ECL from an allowance based on the probability of default(PD) in the next 12 months, to an allowance for lifetime
expected credit losses. Subsequent decreases in credit risk
resulting in transition from Stage 2 to Stage 1 may similarly
result in significant changes in the ECL allowance.
The setting of precise SICR trigger points requires judgement
which may have a material impact upon the size of the ECL
allowance. The Group monitors the effectiveness of SICR
criteria on an ongoing basis.
Measuring both 12-month

The probability of default, loss given default (LGD) and

The PD, LGD and EAD models are subject to the Group’s

and lifetime credit losses

exposure at default (EAD) factors used in determining ECL

model risk policy that stipulates periodic model monitoring andare point-in-time measures reflecting the relevant forward-

re-validation, and defines approval procedures and authorities

looking information determined by management. Judgement

according to model materiality.

is involved in determining which forward-looking informationis relevant for particular lending portfolios and for determining

There were no material changes to the policies.

each portfolio’s point-in-time sensitivity.
In addition, judgement is required where behaviouralcharacteristics are applied in estimating the lifetime of a
facility which is used in measuring ECL.
Base case economic

The Group derives a forward-looking ‘base case’ economic

There have been no changes to the types of forward-looking

forecast

scenario which reflects ANZ Research - Economics’ (ANZ

variables (key economic drivers) used as model inputs.

Economics) view of future macroeconomic conditions.

As at 31 March 2023, the base case assumptions have been
updated to reflect elevated inflation, continuing high interest
rates, continued cost of living pressures and tightness in thelabour market.
The expected outcomes of key economic drivers for the basecase scenario at 31 March 2023 are described below under theheading ‘Base case economic forecast assumptions’.

Probability weighting of

Probability weighting of each economic scenario is

The probability weightings for each scenario remained

each economic scenario

determined by management considering the risks andunchanged from 30 September 2022.

(base case, upside,

uncertainties surrounding the base case economic scenario

downside and severeat each measurement date.

downside scenarios)1

Weightings for current and prior periods are as detailed in thesection below under the heading on ‘Probability weightings’.

The assigned probability weightings in Australia, New
Zealand and Rest of World are subject to a high degree of
inherent uncertainty and therefore the actual outcomes may
be significantly different to those projected.

Management temporary

Management temporary adjustments to the ECL allowance

Management have continued to apply adjustments toadjustments

are used in circumstances where it is judged that our existingaccommodate uncertainty associated with higher inflation andinputs, assumptions and model techniques do not capture allinterest rates.

the risk factors relevant to our lending portfolios. Emerging
local or global macroeconomic, microeconomic or politicalevents, and natural disasters that are not incorporated into
our current parameters, risk ratings, or forward-looking
information are examples of such circumstances.
1.

Management overlays have been made for risks particular toretail, including home loans, credit cards and small business inAustralia, business banking in New Zealand, and for personal
and tourism in Pacific.

The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’dBase case economic forecast assumptions
Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of the ECL balance.
The economic drivers of the base case economic forecasts, reflective of ANZ Economics’ view of future macro-economic conditions, used at 31 March2023 are set out below. For years beyond the near-term forecasts below, the ECL models apply simplified assumptions for the economy to calculate
lifetime loss.
Actual calendar year2022

Forecast calendar year
2023

2024

Australia
GDP (annual % change)

3.6%

2.0%

1.2%

Unemployment rate

3.7%

3.7%

4.2%

Residential property prices (annual % change)

-6.9%

-9.2%

4.2%

Consumer price index (annual % change)

6.6%

5.3%

3.3%

GDP (annual % change)

2.8%

1.4%

-0.1%

Unemployment rate

3.3%

3.9%

5.2%

Residential property prices (annual % change)-13.0%

-9.7%

2.2%

Consumer price index (annual % change)

7.2%

6.1%

2.9%

GDP (annual % change)

2.1%

1.4%

0.4%

Consumer price index (annual % change)

8.0%

4.1%

2.7%

New ZealandRest of WorldThe base case economic forecasts for Australia, New Zealand and Rest of World are for continuing slowdowns in economic activity. Continued highinflation and tight labour markets are expected to keep interest rates high and dampen growth over the forecast period.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base case economic
scenario including the uncertainties described above.
Scenario weightings remain the same as those applied in September 2022 as noted in the table below.
The assigned probability weightings in Australia, New Zealand and Rest of World are subject to a high degree of inherent uncertainty and therefore theactual outcomes may be significantly different to those projected. The Group considers these weightings in each geography to provide estimates of thepossible loss outcomes and taking into account short and long term inter-relationships within the Group’s credit portfolios. The average weightings
applied across the Group are set out below:
Mar 23

Sep 22

Mar 22

Base

45.0%

45.0%

40.0%

Upside

0.0%

0.0%

5.0%

Downside

40.0%

40.0%

45.0%

Severe downside

15.0%

15.0%

10.0%

Group

ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future periods,
expected credit losses reported by the Group should be considered as a best estimate within a range of possible estimates. The table below illustrates
the sensitivity of the Group’s allowance for collectively assessed ECL to key factors used in determining it at 31 March 2023:
Balance
Sheet$M(Profit) and Loss
Impact$M

If 1% of stage 1 facilities were included in stage 2

4,121

81

If 1% of stage 2 facilities were included in stage 1

4,035

(5)

100% upside scenario

1,315(2,725)

100% base scenario

1,816(2,224)

100% downside scenario

3,272

(768)

100% severe downside scenario

7,314

3,274

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’d

Fair value measurement of financial instruments
The majority of valuation models the Group used to value financial instruments employ observable market data as inputs. For certain financial instruments,
the Group may use data that is not readily observable in current markets requiring management to exercise judgement in determining fair value dependingon the significance of the unobservable input to the overall valuation. Generally, the Group derives unobservable inputs from other relevant market dataand compare them to observed transaction prices where available.
At 31 March 2023, the Group had $1,401 million of assets and $26 million of liabilities where the valuation was primarily derived using unobservable
inputs (Sep 22: $1,833 million assets and $31 million liabilities; Mar 22: $1,580 million assets and $23 million liabilities). The financial instruments which
are valued using unobservable inputs are predominantly equity securities and syndicated loans where quoted prices in active markets are not available.
Equity securities
The Group holds an equity investment in the Bank of Tianjin (BoT), which at 31 March 2023 has a carrying value of $900 million (Sep 22: $854 million;
Mar 22: $956 million). The shares in BoT are listed, but the shares are illiquid, and consequently the fair value is based upon a valuation model using
comparator group pricing multiples.
The Group holds equity investments in unlisted equities, which at 31 March 2023 have a carrying value of $89 million (Sep 22: $491 million; Mar 22:$426 million). The fair values of these investments are based on valuation techniques relevant to the investments, including use of discounted cash flow
approaches, prices from recent arm’s length transactions where available, and comparator group pricing multiples, such as price to book ratios.
For equity instruments valued using valuation techniques, judgement is required in both the selection of the model and inputs used. When the Group
adopts comparator group pricing multiples, judgement is required to determine an appropriate comparator group for the purposes of the specificvaluation.
Syndicated loans
The Group holds $380 million (Sep 22: $403 million; Mar 22: $113 million) of syndicated loans which are measured at fair value when there is no market
data available for the valuation. A fair value is derived using discounted cash flow techniques with discount factors sourced from credit default swaps as aproxy.
Investments in associates
The Group assesses the carrying value of its investments in associates for impairment indicators semi-annually. In addition, the recoverable amount of
the investments is assessed to determine whether it is appropriate to reverse any prior period impairment losses recorded in respect of thoseinvestments.
Investments may be subjected to impairment depending on whether indicators of impairment exist, and then where a value-in-use (VIU) or fair value lesscost of disposal (FVLCOD) recoverable value assessment indicate that impairment is warranted.
Investments are also assessed for reversals of any prior period impairments by comparing their carrying values to higher of value-in-use and FVLCOD
and determining whether the service potential of the investment has increased since it was last impaired.
Both VIU and FVLCOD are subject to management judgement including the inputs used in the VIU measurement. Depending on the judgements applied,decisions on the amount of impairment, reversals of prior-period impairments, or decisions on whether or not to adjust carrying values, may differ.
Customer remediation provisions
At 31 March 2023, the Group has recognised customer remediation provisions of $549 million (Sep 22: $662 million; Mar 22: $853 million) which includes
provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims, penalties and litigation costs andoutcomes.
Determining the amount of the provisions, which represent management’s best estimate of the cost of settling the identified matters, requires the exerciseof significant judgement. It will often be necessary to form a view on a number of different assumptions, including the number of impacted customers, theaverage refund per customer, associated remediation project costs, and the implications of regulatory exposures and customer claims having regard totheir specific facts and circumstances.
Consequently, the appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence,
including expert legal advice, and adjustments are made to the provisions where appropriate.
Other provisions
The Group holds provisions for various obligations including restructuring costs, non-lending losses, fraud and forgeries and litigation related claims.
These provisions involve judgements regarding the timing and outcome of future events, including estimates of expenditure required to satisfy suchobligations. The appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence,
including expert legal advice, and adjustments are made to the provisions where appropriate.

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.

Basis of preparation, cont’dvi) Interest rate benchmark reform
Interbank offered rates (IBORs), such as the London Interbank Offered Rate (LIBOR), continue to play a critical role in global financial markets, serving
as reference rates for certain derivatives, loans and securities, and in the valuation of financial instruments. The IBOR reforms have a wide-ranging
impact for the Group and our customers given the fundamental differences between IBORs and risk-free rates (RFRs). RFRs are available both as
backward-looking in arrears rates and, for some currencies, as forward-looking term rates. The key difference between IBORs and RFRs is that IBOR
rates include a term and bank credit risk premium, whereas RFRs do not. As a result of these differences, adjustments are required to an RFR to ensure
contracts referencing an IBOR rate transition on an economically comparable basis.
Update on the Group’s approach to interest rate benchmark reform
In line with the regulatory announcements made in 2021, the majority of IBOR rates, including Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF)
and Japanese Yen (JPY), and the US Dollar (USD) 1-week and 2-month LIBOR rate settings ceased on 31 December 2021 and have been replaced byalternative RFRs. This transition had an immaterial impact to the Group’s profit and loss. Through its loan and derivative transactions with customers,
issuance of debt and its asset and liability management activities the Group continues to have exposure to the remaining USD LIBOR settings and other
IBOR-related benchmarks that are due to cease primarily by 30 June 2023.
The Group continues to manage the transition from the remaining USD LIBOR tenors and other IBOR settings to RFR’s through its enterprise-wide
Benchmark Transition Program (the Program). The program is responsible for managing the risks associated with the transition including operational,
market, legal, conduct and financial reporting risks that may arise.
Exposures subject to benchmark reform as at 31 March 2023
The table below presents the Group’s exposure to interest rate benchmarks still subject to IBOR reform. These are financial instruments that contractuallyreference an IBOR benchmark planned to transition to an RFR and have a contractual maturity date beyond the planned IBOR cessation date.

As at 31 March 2023
Gross loans and advances1
1

USD Libor

Others

$M

$M

7,735

48

Other non-derivative financial assets

149-

Non-derivative financial liabilities2

650

32

Derivative assets (notional value)3

597,784

11,064

Derivative liabilities (notional value)3

578,589

9,599

6,914

-

Loan commitments1,4
1.

Excludes Expected Credit Losses (ECL).
Comprises floating rate debt issuances by the Group.
For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, the Group discloses the Australian dollar-equivalent notional amounts for both. Where
one leg of a swap is subject to reform, the Group discloses the notional amount of the receive leg.
4.
For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the pricing currency of the facility. In the event there are multiple pricing currencies that are
impacted by cessation, the allocation is based on most likely currency of drawdown.
2.
3.

Hedge accounting exposures subject to IBOR reform
The Group has hedge-accounted relationships referencing USD LIBOR, primarily due to fixed rate investment securities and the Group’s fixed rate debt
issuances denominated in USD that are designated in fair value hedge accounting relationships. The table below details the carrying values of the
exposures designated in hedge accounting relationships referencing LIBOR that will be impacted by IBOR reform. The nominal value of the associatedhedging instruments is also presented:
As at 31 March 2023
$M

Hedged items
Investment securities at FVOCI

7,410

Net loans and advances

201

Deposits and other borrowings

157

Debt issuances

15,387
Notional designated up to
30 June 2023

Notional designatedbeyond 30 June 2023

$M

$M

$M

Fair value hedges

3,278

19,09822,376

Cash flow hedges

-

277

277

Hedging instruments

18

Total notional amountNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2.

IncomeHalf Year

Movement

Interest income

Mar 23$M
22,838

Sep 22$M
13,902

Mar 22$M
9,707

Mar 23v. Sep 22
64%

Mar 23v. Mar 22
largeInterest expense(14,163)(5,953)(2,442)

large

large

Major bank levy

(175)

(175)

(165)

0%

6%

Net interest income

8,500

7,774

7,100

9%

20%

Other operating incomei) Fee and commission income
Lending fees1
Non-lending fees

199

186

188

7%

6%

1,119

1,120

1,274

0%

-12%

Commissions

40

53

50

-25%

-20%

Funds management income

122

124

137

-2%

-11%

Fee and commission income

1,480

1,483

1,649

0%

-10%

Fee and commission expense

(543)

(494)

(666)

10%

-18%

Net fee and commission income

937

989

983

-5%

-5%

-47%

ii) Other income
Net foreign exchange earnings and other financial instruments income2

590

870

1,123

-32%

Gain on completion of ANZ Worldline partnership

-

-

307

n/a

large

Release of foreign currency translation reserve

-

-

(65)

n/a

large

-

-

(62)

n/a

large

(43)

-

-

n/a

n/a

Loss on disposal of financial planning and advice business
Loss on reclassification of data centres to held for sale
Other

23

63

27

-63%

-15%

Other income

570

933

1,330

-39%

-57%

1,507

1,922

2,313

-22%

-35%

40

85

55

-53%

-27%

Other operating income
Net income from insurance business
Share of associates' profit/(loss)
Operating income
1.

100

103

74

-3%

35%

10,147

9,884

9,542

3%

6%

Lending fees exclude fees treated as part of the effective yield calculation in interest income.
2. Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk,
ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities measured and/or designated at fair value through profit or loss.

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3.

Operating expenses
Half Yeari) Personnel
Salaries and related costs

Movement

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23v. Sep 22

Mar 23v. Mar 22

2,602

2,376

2,378

10%

9%

Superannuation costs

194

187

188

4%

3%

Other

90

79

88

14%

2%

2,886

2,642

2,654

9%

9%

Personnelii) Premises
Rent

34

48

40

-29%

-15%

Depreciation

219

207

212

6%

3%

Other

90

125

89

-28%

1%

Premises

343

380

341

-10%

1%

-13%

iii) Technology
Depreciation and amortisation

256

285

293

-10%

Subscription licences and outsourced services

484

455

444

6%

9%

Other

91

66

78

38%

17%

Technology

831

806

815

3%

2%

iv) Restructuring

54

52

49

4%

10%

v) OtherAdvertising and public relations

90

88

77

2%

17%

Professional fees

406

471

464

-14%

-13%
-1%

Freight, stationery, postage and communication

86

85

87

1%

Other

290

264

304

10%

-5%

Other

872

908

932

-4%

-6%

4,986

4,788

4,791

4%

4%

Operating expenses

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4.

Income tax expense

Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in the profit and loss.
Half Year

Movement

Profit before income tax from continuing operations

Mar 23$M
5,028

Sep 22$M
5,044

Mar 22$M
5,035

Mar 23v. Sep 22
0%

Mar 23v. Mar 22
0%

Prima facie income tax expense at 30%

1,508

1,513

1,511

0%

0%

Tax effect of permanent differences:
Net gain from divestments/closures
Share of associates' (profit)/loss

-

4

(87)

large

large

(31)

(31)

(22)

0%

41%
81%

Interest on convertible instruments

38

28

21

36%

Overseas tax rate differential

(94)

(67)

(61)

40%

54%

Provision for foreign tax on dividend repatriation1

18

16

139

13%

-87%

Other

8

(7)

11

large

-27%

Subtotal

1,447

1,456

1,512

-1%

-4%
-92%

Income tax (over)/under provided in previous years

(1)

(16)

(12)

-94%

1,446

1,440

1,500

0%

-4%

Australia

847

884

960

-4%

-12%

Overseas

599

556

540

8%

11%

0%

-4%

Income tax expense

Income tax expense

1,446

1,440

1,500

Effective tax rate

28.8%

28.5%

29.8%

1.

Includes the $126 million withholding tax paid in the March 2022 half on the dividend payment made by ANZ Papua New Guinea to ANZBGL.

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5.

Dividends
Half Year

Ordinary share dividend ($M)1
Interim dividend
Final dividend

Mar 23

Sep 22

Movement
Mar 22

-

2,012

-

2,213

-

2,030
(38)

(41)

(39)

Special dividend to ANZ BH Pty Ltd

1,000

-

-

Total

3,172

1,973

1,992

Bonus option plan adjustment

1.

Mar 23v. Sep 22

Mar 23v. Mar 22

61%

59%

Excludes dividends paid by subsidiaries of the Group to non-controlling equity holders of $13 million (Sep 22 half: nil; Mar 22 half: $2 million).

Ordinary Shares
ANZBGL’s Dividend Reinvestment Plan (“DRP”) and Bonus Option Plan (“BOP”) ceased to operate following implementation of the Restructure on 3
January 2023.
The Directors propose an interim dividend of $2,433 million be paid on 3 July 2023 to its intermediate holding company, ANZ BH Pty Ltd, a wholly owned
subsidiary of ANZGHL.

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.

Segment reportingi) Description of segments
During the March 2023 half, the Group operated on a divisional structure with six divisions: Australia Retail, Australia Commercial, Institutional, New
Zealand, Pacific, and Group Centre.
Australia Retail
The Australia Retail division provides a full range of banking services to Australian consumers. This includes Home Loans, Deposits, Credit Cards andPersonal Loans. Products and services are provided via the branch network, home loan specialists, contact centres, a variety of self-service channels(digital and internet banking, website, ATMs and phone banking) and third-party brokers. It also includes the costs related to the development andoperation of the ANZ Plus proposition for retail customers.
Australia Commercial
The Australia Commercial division provides a full range of banking products and financial services, including asset financing, across the following
customer segments: small business owners and medium commercial customers (SME Banking) and large commercial customers, high net worth
individuals and family groups (Specialist Business).
Institutional
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International (including
PNG) via the following business units:•

Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing, commodity
financing as well as cash management solutions, deposits, payments and clearing.

•

Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export finance,
debt structuring and acquisition finance and corporate advisory services.

•

Markets provides customers with risk management services in foreign exchange, interest rates, credit, commodities and debt capital markets inaddition to managing the Group's interest rate exposure and liquidity position.

New Zealand
The New Zealand division comprises the following business units:•

Personal provides a full range of banking and wealth management services to consumer and private banking customers. We deliver our services via
our internet and app-based digital solutions and a network of branches, mortgage specialists, relationship managers and contact centres.

•

Business provides a full range of banking services including small business banking, through our digital, branch and contact centre channels, andtraditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium andlarge enterprises, the agricultural business segment, government and government-related entities.

Pacific
The Pacific division provides products and services to retail and commercial customers (including multi-nationals) and to governments located in the
Pacific region excluding PNG which forms part of the Institutional division.
Group Centre
Group Centre division provides support to the operating divisions, including technology, property, risk management, financial management, strategy,
marketing, human resources and corporate affairs. It also includes Group Treasury, Shareholder Functions, and minority investments in Asia.
ii) Segment Restatements
Prior period comparatives have been restated for the following:•Non-banking businesses - transfer of non-banking businesses held in the Australia Commercial and Institutional divisions to the Group Centre
division which were then disposed as part of the Restructure.

•

Corporate customer re-segmentation - certain business and property finance customers were transferred from the New Zealand division to theInstitutional division to better align customer needs with the right support and expertise delivery.

•

Cost reallocations - certain costs were reallocated across the Australia Retail, Australia Commercial, Institutional and Group Centre divisions.

Operating segments presented below are consistent with internal divisional reporting provided to the chief operating decision maker, being the Chief
Executive Officer.

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.

Segment reporting, cont’diii) Operating segments
ANZ measures the performance of operating segments on a cash profit basis. To calculate cash profit, the Group excludes items from profit after tax
attributable to shareholders. For the current and prior periods, the adjustments relate to impacts of economic hedges and revenue and expense hedges
which represent timing differences that will reverse through earnings in the future.
Transactions between divisions across segments within ANZ are conducted on an arm’s-length basis and disclosed as part of the income and expensesof these segments.

March 2023 Half YearNet interest income

Australia
Australia
Retail Commercial Institutional
$M
$M
$M

New
Zealand$M

Pacific$M

Group
Centre
$M

Group
Total
$M

3,018

1,632

2,071

1,582

62

135

8,500

Net fee and commission income

235

162

346

199

10

(15)

937

Net income from insurance business

40

-

-

-

-

-

40

Other income1,2

6

13

1,027

-

30

(117)

959

-

-

-

100

100

-

-

1,2

Operating income

3,299

1,807

3,444

1,781

102

103

10,536

Operating expenses(1,745)(685)(1,328)

(630)

(74)

(524)

(4,986)

Cash profit before credit impairment and income tax

1,554

1,122

2,116

1,151

28

(421)

5,550

(82)

(66)

74

(75)

16

-

(133)

Share of associates’ profit/(loss)

Credit impairment (charge)/releaseCash profit before income tax

1,472

1,056

2,190

1,076

44

(421)

5,417

Income tax expense and non-controlling interests1,2

(446)

(317)

(593)

(302)

(10)

93

(1,575)

Cash profit/(loss) from continuing operations

1,026

739

1,597

774

34

(328)

3,842

1,026

739

1,597

774

34

(328)

3,842

Cash profit/(loss) from discontinued operations
Cash profit/(loss)-

Economic hedges1(190)

Revenue and expense hedges2

(84)
3,568

Profit after tax attributable to shareholders
Financial Position
Total external assets

303,783

60,227525,748

123,565

3,489

94,793

1,111,605

Total external liabilities

160,228

119,042

450,764

121,580

3,834

187,532

1,042,980

1.

The cash profit adjustment relates to the Institutional, New Zealand and Group Centre divisions. In the consolidated income statement, these amounts are recognised in Other operating
income (Mar 23 half: $269 million loss; Sep 22 half: $278 million gain; Mar 22 half: $524 million gain) and Income tax expense (Mar 23 half: $79 million benefit; Sep 22 half: $82 million
expense; Mar 22 half: $151 million expense).
2. The cash profit adjustment relates to the Group Centre division. In the consolidated income statement, these amounts are recognised in Other operating income (Mar 23 half: $120 million
loss; Sep 22 half: $7 million gain; Mar 22 half: $70 million gain) and Income tax expense (Mar 23 half: $36 million benefit; Sep 22 half: $2 million expense; Mar 22 half: $21 million expense).

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6.

Segment reporting, cont’d

September 2022 Half YearNet interest income

Australia
Australia
Retail Commercial Institutional
$M
$M
$M

New
Zealand$M

Pacific$M

Group
Centre
$M

Group
Total
$M

2,821

1,410

1,925

1,517

50

51

7,774

Net fee and commission income

262

170

339

215

14

(11)

989

Net income from insurance business

85

-

-

-

-

-

85

Other income1,2

6

15

529

1

20

77

648

Share of associates’ profit/(loss)

-

-

-

-

-

103

103

Operating income1,2

3,174

1,595

2,793

1,733

84

220

9,599

Operating expenses(1,656)(652)(1,293)

(622)

(73)

(492)

(4,788)Cash profit before credit impairment and income tax

1,518

943

1,500

1,111

11

(272)

4,811

16

11

2

(76)

9

(14)

(52)

Cash profit before income tax

1,534

954

1,502

1,035

20

(286)

4,759

Income tax expense and non-controlling interests1,2

(462)

(286)

(374)

(290)

(5)

60

(1,357)

Cash profit/(loss) from continuing operations

1,072

668

1,128

745

15

(226)

3,402

Credit impairment (charge)/releaseCash profit/(loss) from discontinued operations(14)

Cash profit/(loss)

3,388

Economic hedges1

196

Revenue and expense hedges2

5Profit after tax attributable to shareholders

3,589

Financial Position
Total external assets

292,876

59,983544,066

116,218

3,707

68,8791,085,729

Total external liabilities

153,494

118,355

473,114

115,263

4,065

155,037

1,019,328

March 2022 Half YearNet interest income

2,706

1,158

1,772

1,354

46

64

7,100

Net fee and commission income

214

233

312

213

12

(1)

983

Net income from insurance business

55

-

-

-

-

-

55

-

244

471

31

22

(32)

736

Other income1,2
Share of associates’ profit/(loss)

-

-

-

-

-

74

74

Operating income1,2

2,975

1,635

2,555

1,598

80

105

8,948

Operating expenses(1,741)(649)(1,273)

(651)

(80)

(397)

(4,791)

Cash profit before credit impairment and income tax

1,234

986

1,282

947

-

(292)

4,157

113

122

25

31

(3)

(4)

284

Cash profit before income tax

1,347

1,108

1,307

978

(3)

(296)

4,441

Income tax expense and non-controlling interests1,2

(410)

(225)

(498)

(274)

(3)

82

(1,328)Cash profit/(loss) from continuing operations

937

883

809

704

(6)

(214)

3,113

Credit impairment (charge)/releaseCash profit/(loss) from discontinued operations(5)

Cash profit/(loss)

3,108

Economic hedges1

373

Revenue and expense hedges2

49

Profit after tax attributable to shareholders

3,530

Financial Position
Total external assets

287,304

57,822

469,683

119,667

3,796

79,089

1,017,361

Total external liabilities

150,732

122,812420,226

119,683

3,986

138,166

955,605

1.

The cash profit adjustment relates to the Institutional, New Zealand and Group Centre divisions. In the consolidated income statement, these amounts are recognised in Other operating
income (Mar 23 half: $269 million loss; Sep 22 half: $278 million gain; Mar 22 half: $524 million gain) and Income tax expense (Mar 23 half: $79 million benefit; Sep 22 half: $82 million
expense; Mar 22 half: $151 million expense).
2. The cash profit adjustment relates to the Group Centre division. In the consolidated income statement, these amounts are recognised in Other operating income (Mar 23 half: $120 million
loss; Sep 22 half: $7 million gain; Mar 22 half: $70 million gain) and Income tax expense (Mar 23 half: $36 million benefit; Sep 22 half: $2 million expense; Mar 22 half: $21 million expense).

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.

Net loans and advances
As at

Movement

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23v. Sep 22

Mar 23v. Mar 22
10%

Australia
Overdrafts

3,834

3,852

3,491

0%

Credit cards outstanding

5,670

5,658

5,707

0%

-1%

Commercial bills outstanding

4,898

5,214

5,632

-6%

-13%

Term loans - housing

292,597282,343

277,894

4%

5%

Term loans - non-housing

166,701

163,520

151,718

2%

10%

Other
Total Australia

916

1,019

1,113

-10%

-18%

474,616

461,606

445,555

3%

7%

568

561

668

1%

-15%

6

6

6

0%

0%

475

490

464

-3%

2%

77,09579,87869,731

-3%

11%

613

1,016

1,332

-40%

-54%

78,757

81,951

72,201-4%

9%Rest of World
Overdrafts
Credit cards outstanding
Term loans - housing
Term loans - non-housing
Other
Total Rest of WorldNew Zealand
Overdrafts

879

853

824

3%

7%

Credit cards outstanding

1,184

1,091

1,087

9%

9%

Term loans - housing

97,93991,792

95,794

7%

2%

Term loans - non-housing

38,38136,33238,512

6%0%

Total New Zealand

138,383

130,068

136,2176%

2%

Subtotal

691,756

673,625

653,973

3%

6%

(526)

(518)

(460)

2%

14%

Unearned income1
1

Capitalised brokerage and other origination costs
Gross loans and advances

Allowance for expected credit losses (refer to Note 8)2

Net loans and advances
1.
2.

3,165

2,882

1,482

10%

large

694,395

675,989

654,995

3%

6%(3,658)(3,582)(3,559)2%

3%690,737

672,407651,436

3%

6%

Amortised over the expected life of the loan.
Net loans and advances include a balance of $558 million (Sep 22: $667 million; Mar 22: $724 million) relating to the ANZ Share Investing lending portfolio which was sold in April 2023.

26

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.

Allowance for expected credit losses
As at
Collectively
assessed$M

Mar 23
Individuallyassessed$M

3,244

Net loans and advances atamortised cost
Off-balance sheet commitments
Investment securities - debt securities
at amortised cost
Total

Total
$M

Collectively
assessed$M

Sep 22
Individuallyassessed
$M

414

3,658

3,049

767

7

774

29

-

29

4,040

421

13

-

Other Comprehensive Income
Investment securities - debt securities
at FVOCI1
1.

Total
$M

Collectively
assessed$M

Mar 22
Individuallyassessed
$M

Total
$M

533

3,582

2,940

619

3,559

766

9

775

788

17

805

38

-

38

29

-

29

4,461

3,853

542

4,395

3,757

636

4,393

13

10

-

10

10

-

10

For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other comprehensive income with acorresponding charge to profit or loss.

The following tables present the movement in the allowance for ECL.
Net loans and advances at amortised cost
Allowance for ECL is included in Net loans and advances.

Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

As at 1 October 2021

968

1,994

417

666

4,045

Transfer between stages

130

(152)

(58)

80

-

New and increased provisions (net of releases)

(73)

(301)

46

221

(107)

Write-backs

-

-

-

(111)

(111)

Bad debts written off (excluding recoveries)

-

-

-

(222)

(222)

Foreign currency translation and other movements1

(14)

(14)

(3)

(15)

(46)

1,011

1,527

402

619

3,559

Transfer between stages

155

(131)

(87)

63

-

New and increased provisions (net of releases)

(41)

158

46

156

319

As at 31 March 2022

Write-backs

-

-

-

(111)

(111)

Bad debts written off (excluding recoveries)

-

-

-

(206)

(206)

Foreign currency translation and other movements1

16

(6)

(1)

12

21

1,141

1,548

360

533

3,582

Transfer between stages

114

(100)

(63)

49

-

New and increased provisions (net of releases)

(103)

264

56

188

405

Write-backs

-

-

-

(164)

(164)

Bad debts written off (excluding recoveries)

-

-

-

(185)

(185)

As at 30 September 2022

1

Foreign currency translation and other movements
As at 31 March 2023
1.

7

17

3

(7)

20

1,159

1,729

356

414

3,658

Other movements include the impact of discounting on expected cash flows for individually assessed allowances for ECL during the period.

27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.

Allowance for expected credit losses, cont’d

Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

As at 1 October 2021

555

211

19

21

806

Transfer between stages

28

(27)

(2)

1

-

New and increased provisions (net of releases)

24

(5)

21

(1)

39

Write-backs

-

-

-

(4)

(4)

Foreign currency translation and other movements1

(30)

(6)

-

-

(36)

As at 31 March 2022

577

173

38

17

805

Transfer between stages

24

(18)

(7)

1

-

New and increased provisions (net of releases)

(29)

(12)

(2)

(1)

(44)

Write-backs

-

-

-

(7)

(7)

Foreign currency translation

21

1

-

(1)

21

As at 30 September 2022

593

144

29

9

775

Transfer between stages

24

(22)

(2)

-

-

New and increased provisions (net of releases)

(30)

30

1

-

1

Write-backs

-

-

-

(2)

(2)

Foreign currency translation

(1)

-

1

-

-

586

152

29

7

774

As at 31 March 2023
1.

Other movements include the impact of divestments completed during the period.

Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.

Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

As at 31 March 2022

29

-

-

-

29

As at 30 September 2022

38

-

-

-

38

As at 31 March 2023

29

-

-

-

29

Investment securities - debt securities at FVOCIFor FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in
Other comprehensive income with a corresponding charge to profit or loss.
Stage 3
Stage 1
$M

Stage 2
$M

Collectively
assessed$M

Individuallyassessed
$M

Total
$M

As at 31 March 2022

10

-

-

-

10

As at 30 September 2022

10

-

-

-

10

As at 31 March 2023

13

-

-

-

13

28

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
8.

Allowance for expected credit losses, cont’dCredit impairment charge/(release) analysis
Half Year

Movement

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23v. Sep 22

Mar 23v. Mar 22

163

60

(371)

large

large

New and increased provisions (net of releases)1,2- Collectively assessed- Individually assessed

237

219

301

8%

-21%

Write-backs3

(166)

(118)

(115)

41%

44%

Recoveries of amounts previously written off

(101)

(109)

(99)

-7%

2%

Total credit impairment charge/(release)

133

52

(284)

large

large

1.
2.

Includes the impact of transfers between collectively assessed and individually assessed.
New and increased provisions (net of releases) includes:
Mar 23 half3.

Sep 22 half

Collectively
assessed$M

Individuallyassessed$M

Net loans and advances at amortised cost168

Off-balance sheet commitments

1

Investment securities - debt securities atamortised cost(8)-

Mar 22 half

Collectively
assessed$M

Individuallyassessed$M

Collectively
assessed$M

Individuallyassessed
$M

237

100

219

(408)

301

-

(44)

-

39

-

4

-

(1)

-

Investment securities - debt securities at FVOCI

2

-

-

-

(1)

-

Total

163

237

60

219

(371)

301

Consists of write-backs in Net loans and advances at amortised cost of $164 million for the March 2023 half (Sep 22 half: $111 million; Mar 22 half: $111 million), and Off-balance sheet
commitment of $2 million for the March 2023 half (Sep 22 half: $7 million; Mar 22 half: $4 million).

29

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.

Deposits and other borrowings
As at

Movement

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23v. Sep 22

Mar 23v. Mar 22

Certificates of deposit

37,92029,412

29,91429%

27%

Term deposits

76,341

51,31944,16549%

73%

On demand and short term deposits

270,725

285,677

286,191-5%-5%Deposits not bearing interest

22,815

25,11024,785-9%-8%

Deposits from banks and securities sold under repurchase agreements

53,99047,14750,39815%

7%

Commercial paper and other borrowings

36,47536,61927,3090%34%

Total Australia

498,266

475,284

462,7625%

8%Australia

Rest of World
5,233

3,193

5,013

64%

4%

Term deposits

Certificates of deposit

127,467

107,557

97,52519%

31%

On demand and short term deposits

24,12528,97430,841-17%-22%

Deposits not bearing interest

5,453

6,957

7,314

-22%

-25%

Deposits from banks and securities sold under repurchase agreements

52,16052,34347,9670%

9%Total Rest of World214,438

199,024

188,660

8%

14%

New ZealandCertificates of deposit

1,392

1,444

2,018

-4%

-31%

Term deposits

47,59841,18838,93116%

22%

On demand and short term deposits

56,30754,80959,5903%-6%

Deposits not bearing interest

18,103

18,83921,712-4%-17%

Deposits from banks and securities sold under repurchase agreements

4,398

4,090

2,069

8%

large

2,596

2,603

4,546

0%

-43%

Total New Zealand

130,394

122,973

128,866

6%1%

Deposits and other borrowings

843,098

797,281780,2886%

8%

Commercial paper and other borrowings

30

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10.

Debt issuances
As at
Mar 23$M
73,443

Total unsubordinated debt

Movement

Sep 22$M
66,406

Mar 22$M
64,645

Mar 23v. Sep 22
11%

Mar 23v. Mar 22
14%

Additional Tier 1 Capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)2
ANZ CN3

-

970

969

large

large

ANZ CN4

1,620

1,619

1,618

0%

0%

ANZ CN5

929

928

928

0%

0%

ANZ CN6

1,488

1,487

1,487

0%

0%

ANZ CN7

1,297

1,297

1,298

0%

0%

ANZ CN8

1,482

-

-

n/a

n/a

ANZ Capital Securities3

1,380

1,404

1,282

-2%

8%

Tier 2 Capital - Term Subordinated Notes4

22,797

17,907

14,047

27%

62%

Other subordinated debt securities5

1,721

1,716

952

0%

81%

Total subordinated debt

32,71427,32822,58120%

45%

Total debt issuances

106,157

93,73487,226

13%

22%

1.
2.

ANZ Capital Notes and ANZ Capital Securities are Basel 3 compliant instruments.
Each of the ANZ Capital Notes will convert into a variable number of ordinary shares of ANZGHL on a specified mandatory conversion date at a 1% discount (subject to certain conditions
being satisfied). If ANZ’s Common Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the notes will immediately convert
into a variable number of ordinary shares of ANZGHL at a 1% discount subject to a maximum conversion number. Subject to certain conditions, the notes are redeemable or convertible into
ordinary shares of ANZGHL (on similar terms to mandatory conversion) by ANZ at its discretion on an early redemption or conversion date.
Issuer3.

4.

5.

Issue dateIssue amount$M

Early redemption orconversion date

Mandatory
conversion date

CN3

ANZ, acting through its New Zealand branch

5 Mar 2015

970

n/a

n/a

CN4

ANZ

27 Sep 2016

1,622

20 Mar 2024

20 Mar 2026

CN5

ANZ

28 Sep 2017931

20 Mar 2025

20 Mar 2027

CN6

ANZ

8 Jul 2021

1,500

20 Mar 2028

20 Sep 2030

CN7

ANZ

24 Mar 2022

1,310

20 Mar 2029

20 Sep 2031

CN8

ANZ

24 Mar 2023

1,500

20 Mar 2030

20 Sep 2032

All ANZ Capital Notes 3 were redeemed by ANZ’s New Zealand branch on 24 March 2023 with approximately $502 million of the proceeds from redemption reinvested into ANZ Capital
Notes 8 on the same date.
On 15 June 2016, ANZ acting through its London branch issued US$1 billion fully-paid perpetual subordinated contingent convertible securities (ANZ Capital Securities). If ANZ’s Common
Equity Tier 1 capital ratio is equal to or less than 5.125%, or ANZ receives a notice of non-viability from APRA, then the securities will immediately convert into a variable number of ANZ
ordinary shares at a 1% discount subject to a maximum conversion number. Subject to certain conditions, on the First Reset Date (15 June 2026) and on each 5 year anniversary, ANZ has
the right to redeem all of the securities at its discretion.
All the term subordinated notes are convertible and are Basel 3 compliant instruments. If ANZ receives a notice of non-viability from APRA, then the convertible subordinated notes will
immediately convert into a variable number of ordinary shares of ANZGHL at a 1% discount subject to a maximum conversion number.
ANZ Bank New Zealand Limited, a wholly owned subsidiary of the Group, issued NZ$600 million of unsecured subordinated notes in September 2021. Whilst these notes constitute Tier 2
capital under RBNZ requirements, the notes do not contain a Non-Viability Trigger Event and therefore do not meet APRA's requirements for Tier 2 capital instruments in order to qualify as
regulatory capital for the Group. Other subordinated debt securities also includes ANZ’s USD 300 million perpetual subordinated notes from 1 January 2022. The USD 300 million perpetual
subordinated notes ceased to be treated as Basel 3 transitional Tier 2 capital under APRA’s capital framework from 1 January 2022.

31

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Credit risk

Maximum exposure to credit risk
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may bedifferences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these differences
arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to market risk, orbank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the group would have to pay if the instrument is called upon.
The table below shows the maximum exposure to credit risk of on-balance sheet, and off-balance sheet positions before taking account of any collateral
held or other credit enhancements:

Reported

Excluded1

Maximum Exposure to Credit Risk

As at

As at

As at

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23$M

Sep 22$M

Mar 22$M

Mar 23$M

Sep 22$M

Mar 22$M

690,737

672,407651,436---

690,737

672,407651,436- debt securities at amortised cost

7,912

7,943

8,505

-

-

-

7,912

7,943

8,505
69,824On-balance sheet positions
Net loans and advances
Investment securities- debt securities at FVOCI

84,58976,817

69,824---

84,58976,817- equity securities at FVOCI

997

1,353

1,390

997

1,353

1,390

-

-

-

- debt securities at FVTPL

7

40

38

-

-

7

40

38

Other financial assets
Total on-balance sheet positions

314,637

314,580

273,507

8,521

9,769

13,117306,116

304,811260,390

1,098,879

1,073,140

1,004,700

9,518

11,122

14,5071,089,361

1,062,018

990,193

Off-balance sheet commitments
Undrawn and contingent facilities2
Total
1.
2.

292,550

285,041

264,137---

292,550

285,041

264,137

1,391,429

1,358,181

1,268,837

9,518

11,122

14,507

1,381,911

1,347,059

1,254,330

Excluded comprises bank notes and coins and cash at bank within Other financial assets, and investment securities - equity securities at FVOCI as they do not have credit exposure.
Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed allowance for expected credit losses.

Credit Quality
The Group’s internal Customer Credit Rating (CCR) is used to manage the credit quality of financial assets. To enable wider comparisons, the Group’s
CCRs are mapped to external rating agency scales as follows:
Moody'sRatingStandard &Poor'sRatingDemonstrated superior stability in their operating and financial performance over the
long-term, and whose earnings capacity is not significantly vulnerable to foreseeable
events.

Aaa - Baa3

AAA - BBB-CCR 5+ to 6-

Demonstrated sound operational and financial stability over the medium to long termeven though some may be susceptible to cyclical trends or variability in earnings.

Ba1 - B1

BB+ - B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, with variability anduncertainty in profitability and liquidity projected to continue over the short andpossibly medium term.

B2 - Caa

B - CCC

Defaulted

CCR 8- to 10

When doubt arises as to the collectability of a credit facility, the financial instrument(or ‘the facility’) is classified as defaulted.

N/A

N/A

Credit Quality
Description

Internal CCR

ANZ Customer Requirement

Strong

CCR 0+ to 4-

Satisfactory32

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Credit risk, cont’d

Net loans and advances
Stage 3
Collectively
Individuallyassessedassessed$M$M

As at March 2023

Stage 1
$M

Stage 2
$M

Strong416,703

14,678--431,381

Satisfactory

176,054

40,305--

216,359

Weak

10,072

10,293--

20,365

-

-

3,378

804

4,182

602,829

65,2763,378

804

672,287(1,159)(1,729)

(356)

(414)

(3,658)601,670

63,5473,022

390

668,629

0.19%

2.65%

10.54%

51.49%

Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss

Total
$M

0.54%
19,469Unearned income(526)

Capitalised brokerage and other origination costs

3,165

Net carrying amount

690,737

As at September 2022
Strong443,571

15,880--459,451

Satisfactory

154,823

31,864--

186,687

9,197

9,244

-

-

18,441

-

-

3,328

1,043

4,371
668,950

Weak
Defaulted
Gross loans and advances at amortised cost

607,591

56,988

3,328

1,043

Allowance for ECL(1,141)(1,548)

(360)

(533)

(3,582)Net loans and advances at amortised cost

606,450

55,4402,968

510

665,368

0.19%

2.72%

10.82%

51.10%

0.54%

Coverage ratio
Loans and advances at fair value through profit or loss

4,675

Unearned income(518)

Capitalised brokerage and other origination costs

2,882

Net carrying amount

672,407

As at March 2022
Strong431,582

13,744--445,326

Satisfactory

145,404

30,144--

175,548

Weak

11,70910,721--

22,430

-

-

3,628

1,286

4,914

Gross loans and advances at amortised cost

588,695

54,609

3,628

1,286

648,218

Allowance for ECL(1,011)(1,527)

(402)

(619)

(3,559)Net loans and advances at amortised cost

587,684

53,082

3,226

667

644,659

0.17%

2.80%

11.08%

48.13%

0.55%

Defaulted

Coverage ratio
Loans and advances at fair value through profit or loss

5,755

Unearned income(460)

Capitalised brokerage and other origination costs

1,482

Net carrying amount

651,436

33

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Credit risk, cont’d

Off-balance sheet commitments - undrawn and contingent facilities
Stage 3
Collectively
Individuallyassessedassessed$M$M

As at March 2023

Stage 1
$M

Stage 2
$M

Strong200,066

1,439

-

-

201,505

Satisfactory

18,769

2,742

-

-

21,511

904

782

-

-

1,686

-

-

89

24

113

219,739

4,963

89

24

224,815

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

Total
$M

(586)

(152)

(29)

(7)

(774)

219,153

4,811

60

17

224,041

0.27%

3.06%

32.58%

29.17%

0.34%

Undrawn and contingent facilities not subject to ECL1

68,509Net undrawn and contingent facilities

292,550

As at September 2022
Strong

191,363

1,703

-

-

193,066

Satisfactory

18,583

3,078

-

-

21,661

774

706

-

-

1,480

Weak
Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

-

-

113

19

132

210,720

5,487

113

19

216,339

(593)

(144)

(29)

(9)

(775)

210,127

5,343

84

10

215,564

0.28%

2.62%

25.66%

47.37%

0.36%

Undrawn and contingent facilities not subject to ECL1

69,477Net undrawn and contingent facilities

285,041

As at March 2022
Strong

175,462

1,244

-

-

176,706

Satisfactory

23,219

3,637

-

-

26,856

Weak

1,728

782

-

-

2,510

-

-

112

37

149

200,409

5,663

112

37

206,221

Defaulted
Gross undrawn and contingent facilities subject to ECLAllowance for ECL included in Other provisions
Net undrawn and contingent facilities subject to ECL
Coverage ratio

(577)

(173)

(38)

(17)

(805)

199,832

5,490

74

20

205,416

0.29%

3.05%

33.93%

45.95%

0.39%

Undrawn and contingent facilities not subject to ECL1

58,721

Net undrawn and contingent facilities

264,137

1.

Commitments that can be unconditionally cancelled at any time without notice.

34

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Credit risk, cont’d

Investment securities - debt securities at amortised cost
Stage 3
Collectively
Individuallyassessedassessed$M$M

Stage 1
$M

Stage 2
$M

6,191

-

-

-

6,191

82

-

-

-

82

Weak

1,668

-

-

-

1,668

Gross investment securities - debt securities at amortised cost

7,941

-

-

-

7,941

As at March 2023
StrongSatisfactory

Allowance for ECL

Total
$M

(29)

-

-

-

(29)

Net investment securities - debt securities at amortised cost

7,912

-

-

-

7,912

Coverage ratio

0.37%

-

-

-

0.37%

6,279

-

-

-

6,279

113

-

-

-

113

Weak

1,589

-

-

-

1,589

Gross investment securities - debt securities at amortised cost

7,981

-

-

-

7,981

(38)

-

-

-

(38)

As at September 2022
StrongSatisfactory

Allowance for ECL
Net investment securities - debt securities at amortised cost

7,943

-

-

-

7,943

Coverage ratio

0.48%

-

-

-

0.48%

6,978

-

-

-

6,978

120

-

-

-

120

Weak

1,436

-

-

-

1,436

Gross investment securities - debt securities at amortised cost

8,534

-

-

-

8,534

(29)

-

-

-

(29)

As at March 2022
StrongSatisfactory

Allowance for ECL
Net investment securities - debt securities at amortised cost

8,505

-

-

-

8,505

Coverage ratio

0.34%

-

-

-

0.34%

Stage 3
Collectively
Individuallyassessedassessed
$M
$M

Total
$M

Investment securities - debt securities at FVOCI

As at March 2023

Stage 1
$M

Stage 2
$M

Strong84,589

-

-

-

-

-

-

-

-

84,589---84,589Satisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

84,589

(13)

-

-

-

(13)

0.02%

-

-

-

0.02%

76,668---76,668

149

-

-

-

149

76,817---76,817

(10)

-

-

-

(10)

0.01%

-

-

-

0.01%

69,656---69,656As at September 2022
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

As at March 2022
StrongSatisfactory
Investment securities - debt securities at FVOCIAllowance for ECL recognised in Other comprehensive income
Coverage ratio

35

168

-

-

-

168

69,824---

69,824

(10)

-

-

-

(10)

0.01%

-

-

-

0.01%

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
11.

Credit risk, cont’d

Other financial assets
As at

StrongSatisfactory1

Weak
Defaulted
1

Other financial assets
1.

Includes Investment securities - debt securities at FVTPL of $7 million (Sep 22: $40 million; Mar 22: $38 million).

36

Mar 23$M

Sep 22$M

Mar 22$M

302,765

301,735

257,543

2,285

2,164

2,483

1,069

945

391

4

7

11

306,123

304,851

260,428

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities

Classification of Financial Assets and Financial Liabilities
The Group recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial instruments on thebalance sheet at fair value. Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderlytransaction between market participants at the measurement date.
The following tables set out the classification of financial asset and liabilities according to their measurement bases with their carrying amounts asrecognised on the balance sheet.

As at March 2023
Financial assets
Cash and cash equivalents1

At amortised cost$M

At fair value
$M

Total
$M

184,092

24,708208,800

Settlement balances owed to ANZ

7,020

-

7,020

Collateral paid

9,245

-

9,245

Trading assets-

39,611

39,61145,614-45,614

7,912

85,59393,505671,268

19,469690,737

Regulatory deposits

646

-

646

Other financial assets

3,701

-

3,701

883,884

214,995

1,098,879

Settlement balances owed by ANZ

23,010-23,010Collateral received

8,002

-

8,002

811,770

31,328843,098
46,154

Derivative financial instruments
Investment securities
Net loans and advances1

Total
Financial liabilities

Deposits and other borrowings1-

46,154

9,142

4,733

13,875

Debt issuances

104,626

1,531

106,157

Total

956,550

83,746

1,040,296

At amortised cost$M

At fair value
$M

Total
$M
168,132

Derivative financial instruments
Payables and other liabilities

As at September 2022
Financial assets
Cash and cash equivalents

168,132-

Settlement balances owed to ANZ

4,762

-

4,762

Collateral paid

12,700-12,700

Trading assets-

35,23735,237

Derivative financial instruments-

90,17490,174

Investment securities

7,943

78,21086,153Net loans and advances

672,407

667,732

4,675

Regulatory deposits

632

-

632

Other financial assets

2,943

-

2,943

864,844

208,296

1,073,140

Total
Financial liabilities
Settlement balances owed by ANZ

13,766-

13,766

Collateral received

16,230-

16,230

Deposits and other borrowings

794,6212,660

797,281

Derivative financial instruments-

85,14985,149

Payables and other liabilities

6,596

3,239

9,835

Debt issuances

92,623

1,111

93,734

Total

923,836

92,1591,015,995

1.

During the March 2023 half, within the trading book in its Markets business, a component of the Institutional division, the Group commenced the management of repurchase agreements andassociated reverse repurchase agreements on a fair value basis. This resulted in repurchase and associated reverse repurchase agreements being recognised and measured at fair value
through profit and loss.

37

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities, cont’d

As at March 2022

At amortised cost$M

At fair value
$M

Total
$M
168,054

Financial assets
Cash and cash equivalents

168,054-

Settlement balances owed to ANZ

7,141

-

7,141

Collateral paid

10,764-

10,764

Trading assets-

39,43339,433

Derivative financial instruments-

45,23845,238Investment securities

8,505

71,25279,757Net loans and advances

645,6815,755

651,436

Regulatory deposits

661

-

661

Other financial assets

2,216

-

2,216

843,022

161,678

1,004,700
19,752

Total
Financial liabilities
Settlement balances owed by ANZ

19,752-

Collateral received

6,716

-

6,716

775,699

4,589

780,288-

47,79547,795

5,945

4,634

10,579Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Debt issuances

85,362

1,864

87,226

Total

893,474

58,882

952,356

38

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities, cont’di) Assets and liabilities measured at fair value
The fair values of financial assets and financial liabilities are generally determined at the individual instrument level. If the Group holds offsetting risk
positions, then the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) is used to measure the fair value of such groups of financial
assets and financial liabilities. The Group measures the portfolio based on the price that would be received to sell a net long position (an asset) for aparticular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
a)

Fair value designation

The Group designates certain loans and advances and certain deposits and other borrowings and debt issuances as fair value through profit or loss:•

where they contain separable embedded derivatives and are managed on a fair value basis, the total fair value movements are recognised in profit orloss in the same period as the movement on any associated hedging instruments; or•

in order to eliminate an accounting mismatch which would arise if the assets or liabilities were otherwise carried at amortised cost. This mismatcharises due to measuring the derivative financial instruments (used to mitigate interest rate risk of these assets or liabilities) at fair value through profit
or loss.

The Group’s approach ensures that it recognises the fair value movements on the assets or liabilities in profit or loss in the same period as the movementon the associated derivatives.
The Group may also designate certain loans and advances, certain deposits and other borrowings and debt issuances as fair value through profit or loss
where they are managed on a fair value basis to align the measurement with how the instruments are managed.
b)

Fair value approach and valuation techniques

We use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market for that asset or liability exists. This includes the following:
Asset or Liability

Fair Value Approach

Financial instruments held for trading:

Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics.

• Securities sold short• Derivative financial assets and financial liabilities• Debt and equity securities
Financial instruments classified as:• Derivative financial assets and financial liabilities(not held for trading)• Net loans and advances

Equity securities where an active market does not exist are measured using
comparable company valuation multiples (such as price-to-book ratios).
Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using wholesale market interest rates, or market borrowing
rates for debt or loans with similar maturities or yield curve appropriate for theremaining term to maturity.

• Deposits and other borrowings
Financial instruments classified as:• Investment securities – debt or equity

Valuation techniques use comparable multiples (such as price-to-book ratios) or
discounted cashflow (DCF) techniques incorporating, to the extent possible, observable
inputs from instruments with similar characteristics.

There were no significant changes to valuation approaches during the current or prior periods.

c)

Fair value hierarchy

The Group categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with AASB 13 based on the observability of
inputs used to measure the fair value:•

Level 1 - valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;•

Level 2 - valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or
indirectly; and•Level 3 - valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.

There were no significant changes to levelling approaches during the current or prior periods.

39

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities, cont’d

The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:
Fair value measurements
As at March 2023
AssetsCash and cash equivalents (measured at fair value)1
Trading assets2
Derivative financial instruments
Investment securities2,3
Net loans and advances (measured at fair value)

1

Total

Level 1
$M

Level 2
$M

Level 3
$M

Total
$M

-

24,708-24,70826,59313,017

1

39,611

315

45,27524

45,614

68,176

16,421996

85,593-19,089380

19,46995,084

118,510

1,401

214,995

Liabilities
Deposits and other borrowings (designated at fair value)1-

31,328-31,328Derivative financial instruments

765

45,36326

46,154

Payables and other liabilities4

3,572

1,161

-

4,733

Debt issuances (designated at fair value)
Total

-

1,531

-

1,531

4,337

79,38326

83,74628,455

6,782-

35,237As at September 2022
AssetsTrading assets2
Derivative financial instruments

944

89,18545

90,174

68,211

8,614

1,385

78,210

-

4,272

403

4,675

97,610108,853

1,833

208,296

-

2,660

-

2,660

Derivative financial instruments

309

84,80931

85,149

Payables and other liabilities4

2,842

397

-

3,239

-

1,111

-

1,111

3,151

88,97731

92,159Investment securities2,3
Net loans and advances (measured at fair value)
Total
Liabilities
Deposits and other borrowings (designated at fair value)

Debt issuances (designated at fair value)
Total
As at March 2022
AssetsTrading assets2

31,901

7,532-

39,433

Derivative financial instruments

1,302

43,88947

45,238Investment securities2,3

59,312

10,5201,420

71,252

-

5,642

113

5,755

92,51567,583

1,580

161,678

Net loans and advances (measured at fair value)
Total
Liabilities
Deposits and other borrowings (designated at fair value)

-

4,589

-

4,589

Derivative financial instruments

655

47,11723

47,795

Payables and other liabilities4

4,226

408

-

4,634

-

1,864

-

1,864

4,881

53,97823

58,882

Debt issuances (designated at fair value)
Total
1.

2.

3.

4.

During the March 2023 half, within the trading book in its Markets business, a component of the Institutional division, the Group commenced the management of repurchase agreements
and associated reverse repurchase agreements on a fair value basis. This resulted in repurchase and associated reverse repurchase agreements being recognised and measured at fairvalue through profit and loss.
During the March 2023 half, $7,246 million of assets were transferred from Level 1 to Level 2, (Sep 22: $1,043 million; Mar 22: $3,949 million), and $1,181 million of assets were transferredfrom Level 2 to Level 1 (Sep 22: $1,677 million; Mar 22: $1,181 million) due to a change of the observability of bond valuation inputs. There were no other material transfers during the year.
Transfers into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.
During the March 2023 half, ANZBGL sold its equity interests in the 1835i trusts, TIN and Pollination to ANZ NBH Pty Ltd as part of the Restructure. These were classified as Level 3 assets
in the fair value hierarchy in the September 2022 and March 2022 halves, with fair values of $402 million and $346 million respectively.
Payables and other liabilities relate to securities sold short which are classified as held for trading and measured at FVTPL.

40

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities, cont’dii) Details of fair value measurements that incorporate unobservable market dataa) Level 3 fair value measurements
Level 3 financial instruments are a net asset of $1,375 million (Sep 22: $1,802 million; Mar 22: $1,557 million). The assets and liabilities which incorporatesignificant unobservable inputs are:•equity securities for which there is no active market or traded prices cannot be observed;•

loans and advances measured at fair value for which there is no observable market data; and•derivatives referencing market rates that cannot be observed primarily due to lack of market activity.

Level 3 Transfers
During the March 2023 half, the Group transferred $3 million of derivatives measured at fair value from Level 3 to Level 2, as a result of valuation inputs
becoming observable during the period. There were no other transfers into or out of Level 3 during the period.
The material Level 3 financial instruments as at 31 March 2023 are summarised below:i)

Investment Securities - equity holdings classified as FVOCIBank of Tianjin (BoT)The Group holds an investment in the BoT. The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is the ratio of themarket value of equity to the book value of equity). The extent of judgement applied in determining the appropriate multiple and comparator group fromwhich the multiple is derived resulted in the Level 3 classification. As at March 2023, the BoT equity holding balance was $900 million(Sep 22: $854 million, Mar 22: $956 million). An increase in the BoT fair valuation in the March 2023 half was mainly due to the increase of the P/B
multiple used in the valuation over the half.
Other equity investments
The Group holds $89 million (Sep 22: $491 million; Mar 22: $426 million) of unlisted equities classified as FVOCI for which there are no active markets ortraded prices available, resulting in Level 3 classification. The decrease in unlisted equity holdings balance was due to the sale of equity securities fromANZBGL to ANZ Non-bank Group.
ii) Net loans and advances - classified as FVTPL
Syndicated loans
The Group holds $380 million (Sep 22: $403 million; Mar 22: $113 million) of syndicated loans for sale which are measured at FVTPL. These loans areclassified as Level 3 when there is no observable market data available for the valuation. The decrease in the Level 3 loan balances for the March 2023
half was mainly due to FX translation impact as well as scheduled repayments.
b) Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs to a valuation not being directly observable (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameters used to derive the fair valuation.
Investment securities - equity holdings
The valuation of the equity investments is sensitive to variations in select unobservable inputs, with valuation techniques used including P/B multiples anddiscounted cashflow techniques. If for example, a 10% increase or decrease to the primary input into the valuations were to occur (such as the P/B
multiple), it would result in a $99 million increase or decrease in the fair value of the portfolio, which would be recognised in shareholders’ equity in theGroup, with no impact to net profit or loss.
Net loans and advances
Syndicated loan valuations are sensitive to credit spreads and discount curves in determining their fair valuation. However as these are primarily
investment-grade loans, an increase or decrease in credit spreads and / or interest yield would have an immaterial impact on net profit or net assets of
the Group.
Other
The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.

41

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
12.

Fair value of financial assets and financial liabilities, cont’dc) Deferred fair value gains and losses
When fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount determined based on the valuation technique (referred to as the day one gain orloss) in profit or loss. The amount deferred at initial recognition is recognised in profit or loss over the life of the transaction on a straight line basis orwhen all inputs become observable.
The day one gains and losses deferred are immaterial.
iii) Financial assets and liabilities not measured at fair value
The classes of financial assets and liabilities listed in the table below are predominately carried at amortised cost on the Group’s balance sheet. Whilst
this is the value at which we expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of these financial
assets and liabilities at balance date in the table below.

Carrying amount in the balance sheet

Fair value

At amortisedcost$M

At fairvalue$M

Investment securities1

7,912

85,59393,50593,491

Net loans and advances

671,268

19,469690,737

688,107

Total

679,180

105,062784,242

781,598

Deposits and other borrowings

811,770

31,328843,098

842,750

Debt issuances

104,626

1,531

106,157

105,800

Total

916,396

32,859949,255

948,550

As at March 2023
Financial assets

Total
$M

$M

Financial liabilities

As at September 2022
Financial assets
Investment securities1

7,943

78,21086,153

86,128Net loans and advances

667,732

4,675

672,407

668,407

Total

675,675

82,885758,560

754,535

794,6212,660

797,281796,784

Debt issuances

92,623

1,111

93,734

93,121

Total

887,244

3,771

891,015889,905

Investment securities1

8,505

71,25279,757

79,678Net loans and advances

645,6815,755

651,436

649,142

Total

654,186

77,007731,193

728,820

780,104

Financial liabilities
Deposits and other borrowings

As at March 2022
Financial assets

Financial liabilities
Deposits and other borrowings

775,699

4,589

780,288

Debt issuances

85,362

1,864

87,22687,727

Total

861,061

6,453

867,514

867,831

1.

Investment securities at amortised cost includes $4,260 million of assets that are part of the Group’s liquidity portfolio (Sep 22: $3,976 million; Mar 22: $4,664 million). These are all short tenor(<1 year) instruments primarily in the Group’s Rest of World geography and represent <4% of the Group’s total liquid asset securities at 31 March 2023.

42

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.

Shareholders’ equity
As ati) Issued securities

Sep 22No.
2,794,104,174

Mar 22No.
2,823,563,652--(30,831,227)-

187,105,950-

Bonus Option Plan

1,657,422

1,518,519

1,371,749

Dividend Reinvestment Plan issuances

8,406,9787,195,108-

Employee share and option plans

3,378,631--

3,003,366,782

2,989,923,751

2,794,104,174(4,099,015)(4,209,150)(4,391,572)

2,999,267,767

2,985,714,601

2,789,712,602

13,443,031

195,819,577(29,459,478)

Ordinary shares
Opening balance

Mar 23
No.
2,989,923,751

Share buy-back1
Share entitlement issue2

Closing balanceLess: Treasury Shares
Closing balanceIssued/(Repurchased) during the period
1.

The Group completed its $1.5 billion on-market share buy-back of ANZ ordinary shares in the March 2022 half, purchasing $846 million worth of shares and resulting in 31 million shares
being cancelled in the March 2022 half.
2. On 18 July 2022, the Group announced a fully underwritten pro rata accelerated renounceable entitlement offer of new ANZ ordinary shares to help fund the Group’s anticipated acquisitionof Suncorp Bank. All eligible shareholders were invited to purchase one new ordinary share for every 15 existing ordinary shares held on 21 July 2022 at an issue price of $18.90 per share.
The Group issued a total of 187.1 million ordinary shares under the offer, raising $3,497 million of new share capital (net of issue costs).

As at

Movement

Mar 23$M

Sep 22$M

Mar 22$M

29,054

28,79725,091

Foreign currency translation reserve1

644

(148)

Share option reserve

58

78

(458)

ii) Shareholders' equity
Ordinary share capital
Reserves

FVOCI reserve
Cash flow hedge reserve
Transactions with non-controlling interests reserve

Mar 23v. Sep 22
1%

Mar 23v. Mar 22
16%

(164)

large

large

54

-26%

7%

(478)

(43)

-4%

large

(1,287)(2,036)(1,247)

-37%

3%

(22)

(22)

(22)

0%

0%
-25%

Total reserves(1,065)(2,606)(1,422)-59%

Retained earnings

40,111

39,71638,078

1%

5%

Share capital and reserves attributable to shareholders of the Company

68,10065,907

61,7473%

10%

Non-controlling interests
Total shareholders' equity
1.

525

494

9

6%

large

68,62566,401

61,756

3%

11%

As a result of the dissolution of Minerva Holdings Limited in the United Kingdom and ANZ Asia Limited in Hong Kong, $65 million of the associated foreign currency translation reserve wasrecycled from Other comprehensive income to profit or loss in the March 2022 half.

43

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
13.

Shareholders’ equity, cont’dProfit attributable tonon-controlling interests

Equity attributable tonon-controlling interests

Dividend paid to
non-controlling interests

Half YearAs at

Half Yeariii) Non-controlling interests
Mar 23$M
13

Sep 22$M-

Mar 22$M-

Other non-controlling interests

1

1

-

10

10

Total

14

1

-

525

494

ANZ Bank New Zealand PPS

Mar 23$M
515

Sep 22$M484

Mar 23$M
13

Sep 22$M-

Mar 22
$M
-

9

-

-

2

9

13

-

2

Mar 22$M-

ANZ Bank New Zealand Perpetual Preference Shares
ANZ Bank New Zealand, a wholly owned subsidiary of ANZBGL, issued $484 million (NZD 550 million) of Perpetual Preference Shares (PPS) on 18 July
2022. These are considered non-controlling interests of the Group.
The key terms of the PPS are as follows:
PPS dividends
PPS dividends are payable at the discretion of the Directors of ANZ Bank New Zealand and are non-cumulative. ANZ Bank New Zealand must not
resolve to pay any dividend or make any other distribution on its ordinary shares until the next PPS dividend payment date if a PPS dividend is not paid.
Should ANZ Bank New Zealand elect to pay a PPS dividend, the PPS dividend is 6.95% per annum up until 18 July 2028 and thereafter a floating rateequal to the aggregate of the New Zealand 3 month bank bill rate plus 3.25%, multiplied by one minus the New Zealand company tax rate (where the
PPS dividend is fully imputed), with PPS dividend payments due on 18 January, 18 April, 18 July and 18 October each year.
Redemption features
Holders of PPS have no right to require that the PPS be redeemed. ANZ Bank New Zealand may at its option redeem all of the PPS on an optional
redemption date (each PPS dividend date from 18 July 2028), or at any time following the occurrence of a tax or regulatory event, subject to prior written
approval of RBNZ and meeting other conditions.

14.

Changes in composition of the GroupAs described in Note 1, ANZGHL was established as the listed parent company of the ANZ Group on 3 January 2023. New legal entities ANZ BH Pty Ltd,ANZ NBH Pty Ltd and ANZ Group Services Pty Ltd were created and became wholly owned subsidiaries of ANZGHL.
On 11 January 2023, the following controlled entities were transferred to:•

ANZ NBH Pty Ltd: 1835i Creation Fund I Trust, 1835i Ventures Trust I, 1835i Ventures Trust II, 1835i Ventures Trust III, Journeywise Pty Ltd,CashRewards Pty Limited, Secure Data Consent Pty Limited; and•

ANZ Group Services Pty Ltd: ANZ Centre Pty Ltd, ANZ Centre Trust, ANZ Centre Chattels Trust.

The contribution of these entities was not material to the ANZBGL consolidated results for the March 2023 half and the March 2022 half.
There were no other acquisitions or disposals of material controlled entities for the half year ended 31 March 2023.

15.

Investments in associates
Half Year
Mar 23$M
100

Share of associates' profit/(loss)

Contributions to profit

Sep 22$M
103

Mar 22$M74

Mar 23v. Sep 22-3%

Mar 23v. Mar 22
35%

Contribution toGroup profit after tax

Ownership interest
held by Group

Half Year

As at

Associates
Mar 23$M
56

P.T. Bank Pan Indonesia (PT Panin)

Movement

Sep 22$M
58

Mar 22$M
24

Mar 23%39

Sep 22%
39

Mar 22%
39

AMMB Holdings Berhad (AmBank)

63

57

51

22

22

22

Worldline Australia Pty Ltd1

(18)

(10)

-

-

49

49

Other associates

(1)

(2)

(1)

n/a

n/a

n/a

100

103

74

Share of associates' profit/(loss)
1.

As part of the Restructure, ANZBGL’s investment in Worldline Australia Pty Ltd was transferred to ANZ NBH Pty Ltd.

44

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
16.

Related party disclosure

Other than the transactions below, there have been no transactions with related parties that are significant to understanding the changes in financial
position and performance of the Group since 30 September 2022.
Following the restructure of the Group on 3 January 2023, a number of transactions have occurred between wholly owned entities of ANZ Group
Holdings Limited, including ANZBGL. These transactions include leasing arrangements, funding activities and deposits.
The following balances with related ANZ Group entities were outstanding at March 2023:
Mar 23$M
Amounts due from related entities

658

Amounts due to related entities

310

Deposits from related entities

307

During the March 2023 half, the following transactions occurred with related ANZ Group entities:
Mar 23$M
Dividend paid to controlling entity

1,000Interest paid to related entities

11

Interest received from related entities

8

In addition, ANZBGL has right-of-use assets of $714 million and lease liabilities of $836 million with ANZ Group Services Pty Ltd at 31 March 2023. For
the half year ended 31 March 2023, the associated depreciation on the right-of-use assets was $12 million and interest paid on the lease liabilities was$5 million (the interest paid on lease liabilities have been included in the table above).

45

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17.

Contingent liabilities and contingent assets

There are outstanding court proceedings, claims and possible claims for and against the Group. Where relevant, expert legal advice has been obtained
and, in the light of such advice, provisions and/or disclosures as deemed appropriate have been made. In some instances, we have not disclosed theestimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice the interests of
the Group.
Refer to Note 33 of the 2022 ANZ Annual Financial Report for a description of commitments, contingent liabilities and contingent assets as at
30 September 2022. A description of the contingent liabilities and contingent assets as at 31 March 2023 is set out below.
•

Regulatory and customer exposures
The Group regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities in Australia andglobally. The Group has received various notices and requests for information from its regulators as part of both industry-wide and Group-specificreviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions can be wide ranging and, for example,
include or have included in recent years a range of matters including responsible lending practices, regulated lending requirements, productsuitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice, insurance distribution, pricing,competition, conduct in financial markets and financial transactions, capital market transactions, anti-money laundering and counter-terrorism
financing obligations, privacy obligations and information security, business continuity management, reporting and disclosure obligations and productdisclosure documentation. There may be exposures to customers which are additional to any regulatory exposures. These could include classactions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such reviews andpossible exposures remain uncertain.

•

South African rate action
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.

•

Capital raising action
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company
alleging failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity
placement. ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary
shares of the placement. The Company is defending the allegations.

•

Consumer credit insurance litigation
In February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. An agreement to settle the claim was reached in November 2022. The financial impact is notmaterial. The settlement is without admission of liability and remains subject to court approval.

•

Esanda dealer car loan litigation
In August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake inrelation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.

•

OnePath superannuation litigation
In December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodiansbreached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim
also alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.

•

New Zealand loan information litigation
In September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending theallegations.

•Credit cards litigation
In November 2021, a class action was brought against the Company alleging that certain interest terms in credit card contracts were unfair contract
terms and that it was unconscionable for the Company to rely on them. The Company is defending the allegations.

•

Available funds action
In May 2022, ASIC commenced civil penalty proceedings against the Company in relation to fees charged to customers in some circumstances for
credit card cash advance transactions made using recently deposited unprocessed funds. ASIC alleges that the Company made false or misleading
representations, engaged in misleading or deceptive conduct and breached certain statutory obligations as a credit licensee. The Company isdefending the allegations.

46

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
17.
•

Contingent liabilities and contingent assets, cont’dRoyal Commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated withfurther regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
The outcomes and total costs associated with these possible exposures remain uncertain.

•

Security recovery actions
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will bedefended.

•Warranties, indemnities and performance management fees
The Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.
The Group has entered an arrangement to pay performance management fees to external fund managers in the event predetermined performance
criteria are satisfied in relation to certain Group investments. The satisfaction of the performance criteria and associated performance management
fee remains uncertain.

•

Clearing and settlement obligations
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising fromthese arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear
and RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These
memberships allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common
to all of these memberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by anothermember, the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable inadvance.

•Parent entity guarantees
The Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these lettersand guarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity.

•

Sale of Grindlays businessOn 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain otherbusinesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act,1973. Civil
penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.

Contingent Assets•

National Housing BankThe Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer inthe early 1990s.
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceedsof the cheques were resolved in early 2002.
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to beshared between the Company and NHB.

18.

Significant events since balance date

There have been no significant events from 31 March 2023 to the date of signing this report.

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DIRECTORS’ DECLARATION
Directors’ Declaration
The Directors of Australia and New Zealand Banking Group Limited declare that:1.

2.

in the Directors’ opinion the Condensed Consolidated Financial Statements and Notes to the Condensed Consolidated Financial Statements are inaccordance with the Corporations Act 2001, including:•section 304, that they comply with the Australian Accounting Standards and any further requirements in the Corporations Regulations 2001;
and•section 305, that they give a true and fair view of the financial position of the Group as at 31 March 2023 and of its performance for the halfyear ended on that date; andin the Directors’ opinion as at the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.

Signed in accordance with a resolution of the Directors.

Paul D O’Sullivan
ChairmanShayne C ElliottManaging Director

4 May 2023

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AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION

Independent Auditor’s Review Report to the shareholders of Australia and New Zealand Banking Group Limited
Report on the Condensed Consolidated Financial Statements
Conclusion
We have reviewed the accompanying Condensed Consolidated Financial Statements of Australia and New Zealand Banking Group Limited (the Group).
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the Condensed Consolidated Financial
Statements of Australia and New Zealand Banking Group Limited do not comply with the Corporations Act 2001, including:i)giving a true and fair view of the Group’s financial position as at 31 March 2023 and of its performance for the half year ended on that date; andii)
complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
The Condensed Consolidated Financial Statements comprise:•
The condensed consolidated balance sheet as at 31 March 2023;•
The condensed consolidated income statement, condensed consolidated statement of comprehensive income, condensed consolidated statementof changes in equity, and condensed consolidated cash flow statement for the half year ended on that date;•Notes 1 to 18 comprising a summary of significant accounting policies and other explanatory information; and•The Directors’ Declaration.
The Group comprises Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the half year’s end or from time
to time during the half year.
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our
responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirementsof the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including IndependenceStandards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities inaccordance with these requirements.
Responsibilities of the Directors for the Condensed Consolidated Financial Statements
The Directors of the Company are responsible for:•the preparation of the Condensed Consolidated Financial Statements that give a true and fair view in accordance with Australian AccountingStandards and the Corporations Act 2001; and•such internal control as the Directors determine is necessary to enable the preparation of the Condensed Consolidated Financial Statements thatgive a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility for the review of the Condensed Consolidated Financial Statements
Our responsibility is to express a conclusion on the Condensed Consolidated Financial Statements based on our review. ASRE 2410 requires us toconclude whether we have become aware of any matter that makes us believe that the Condensed Consolidated Financial Statements do not comply
with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 March 2023 and its performance for the halfyear ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations
2001.
A review of Condensed Consolidated Financial Statements consists of making enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.

KPMG

Martin McGrath
Partner

Maria Trinci
Partner

Melbourne
4 May 2023

Melbourne
4 May 2023

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All right reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by ascheme approved under Professional Standards Legislation.

49

AUDITOR’S REVIEW REPORT AND INDEPENDENCE DECLARATION

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Australia and New Zealand Banking Group Limited
I declare that, to the best of my knowledge and belief, in relation to the review of Australia and New Zealand Banking Group Limited for the half year
ended 31 March 2023, there have been:(i)no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and(ii)

no contraventions of any applicable code of professional conduct in relation to the review.

KPMG

Martin McGrath
Partner
Melbourne
4 May 2023

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All right reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by ascheme approved under Professional Standards Legislation.

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