A N Z N AT I O N A L B A N K L I M I T E D G R O U P

GENER A L SHORT FOR M
DISCLOSURE STATEME NT

For the three months ended 31 December 2007
Number 48 Issued February 2008

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

GENERAL SHORT FORMDISCLOSURE STATEMENTFOR THE THREE MONTHSENDED 31 DECEMBER 2007

CONTENTS
General Disclosures

2

Short Form Financial Statements

3 - 30Conditions of Registration

31 - 32

Credit Rating Information

33 - 34

Directors’ Statement

35

Independent Review Report

36

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

GENERAL DISCLOSURESThis Short Form Disclosure Statement has been issued inaccordance with the Registered Bank Disclosure Statement(Off-Quarter - New Zealand Incorporated Registered Banks)
Order 2007 (‘the Order’).

•the Ultimate Parent Bank should not hold unlimited exposures(should be limited as to specified time and amount) in the
Bank (e.g. not provide a general guarantee covering any of theBank’s obligations);

In this Short Form Disclosure Statement unless the context
otherwise requires:•the Ultimate Parent Bank should not enter into cross default
clauses whereby a default by the Bank on an obligation(whether financial or otherwise) is deemed to trigger a defaultof the Ultimate Parent Bank in its obligations;•

the Board of the Ultimate Parent Bank in determining limitson acceptable levels of exposure to the Bank should haveregard to:a) “Banking Group” means ANZ National Bank Limited and all its
subsidiaries; andb) any term or expression which is defined in, or in the mannerprescribed by, the Registered Bank Disclosure Statement (OffQuarter - New Zealand Incorporated Registered Banks) Order2007 shall have the meaning given in or prescribed by that
Order.

•

the level of exposure that would be approved to third
parties of broadly equivalent credit status. In this regard,
prior consultation (and in some cases approval) is required
before entering exceptionally large exposures; and•the impact on the Ultimate Parent Bank’s capital andliquidity position and its ability to continue operating in
the event of a failure by the Bank.

G eneral M atters

The full name of the registered bank is ANZ National
Bank Limited (‘the Bank’) and its address for service isLevel 14, ANZ Tower, 215-229 Lambton Quay, Wellington,
New Zealand.
The Bank was incorporated under the Companies Act 1955 byvirtue of the ANZ Banking Group (New Zealand) Act 1979 on
23 October 1979, and was reregistered under the Companies
Act 1993 on 13 June 1997.
The immediate parent company of the Bank is ANZ Holdings(New Zealand) Limited (incorporated in New Zealand).
The immediate parent company is owned by ANZ Funds
Pty Limited (incorporated in Australia) and Australia and
New Zealand Banking Group Limited (Hong Kong Branch).
The Ultimate Parent Bank is Australia and New Zealand Banking
Group Limited, which is incorporated in Australia, and its addressfor service is 100 Queen Street, Melbourne, Australia.
The Bank is wholly owned by its immediate parent company
and ultimately the Ultimate Parent Bank. The immediate parent
company has the power under the Bank’s Constitution toappoint any person as a Director of the Bank either to fill acasual vacancy or as an additional Director or to remove any
person from the office of Director, from time to time by giving
written notice to the Bank. No appointment of a new Director
may occur unless the Reserve Bank of New Zealand confirmsthat it does not object to the appointment.
M aterial F inancial S upport

In accordance with the requirements issued by the Australian
Prudential Regulatory Authority pursuant to the Prudential
Standards, Australia and New Zealand Banking Group Limited,as the Ultimate Parent Bank, may not provide material financial
support to the Bank contrary to the following:•

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the Ultimate Parent Bank should not undertake any third
party dealings with the prime purpose of supporting thebusiness of the Bank;•

the level of exposure to the Bank not exceeding:•

50% on an individual exposure basis; and•150% in aggregate (being exposures to all similar regulated
entities related to the Ultimate Parent Bank)

		of the Ultimate Parent Bank’s capital base.
Additionally, the Ultimate Parent Bank may not provide material
financial support in breach of the Australian Banking Act (1959).
This requires the Australian Prudential Regulatory Authority to
exercise its powers and functions for the protection of a bank’s
depositors and in the event of a bank becoming unable to meetits obligations or suspending payment the assets of the bank inAustralia shall be available to meet that bank’s deposit liabilities
in Australia in priority to all other liabilities of the bank.
The Ultimate Parent Bank has not provided material
financial support to the Bank contrary to any of the above
requirements.
G uarantors

The material obligations of the Bank are not guaranteed.
D irectorate

There have been no changes to the Bank’s Board of Directors
since the authorisation date of the previous DisclosureStatement on 5 November 2007.
G K Hodges has been authorised in writing in accordance withsection 82 of the Reserve Bank Act of New Zealand 1989 tosign this General Short Form Disclosure Statement on behalf of
M R P Smith, OBE, as a responsible person under the Order.

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

INCOME STATEMENT for the three months
ended 31 December 2007

Consolidated
Unaudited
3 months to
31/12/2007$m

Unaudited
3 months to
31/12/2006$m

AuditedYear to30/09/2007$mInterest income

2,365

1,961

8,309

Interest expense

1,795

1,394

6,059

Note
C ontinuing operations

Net interest income

570

567

2,250

Net trading gains

62

40

204

Other operating income

198

151

633

6

5

24

Net operating income

836

763

3,111

Operating expenses

350

335

1,331

Share of profit of equity accounted
associates and jointly controlled entities

Profit before provision for credit impairment and income tax
Provision for credit impairment

486

428

1,780

11

32

25

74

454

403

1,706

3

144

132

614

310

271

1,092

-

79

76

310

350

1,168

Profit before income tax
Income tax expense
Profit after income tax from continuing operations
D iscontinued operation

Profit from discontinued operations (net of income tax)

7

Profit after income tax
				The notes on pages 7 to 30 form part of and should be read in conjunction with these financial statements.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SSTATEMENT OF RECOGNISED INCOME AND E XPENSES for
the three months ended 31 December 2007

Consolidated
Unaudited
3 months to
31/12/2007$m

Unaudited
3 months to
31/12/2006$m

AuditedYear to30/09/2007
$m

1

-

(1)

-

-

(3)

12
(5)

17
(6)

67
(24)

Actuarial gain on defined benefit schemes

-

-

3

Income tax on items recognised directly in equity

(2)

(4)

(12)

Note
Available - for - sale re valuation reserv e :Valuation gain (loss) taken to equity
Cumulative gain transferred to the income
statement on sale of financial assets
C as h flow h edging R E S E RV E :Valuation gain taken to equity
Transferred to income statement

6

7

30

Profit after income tax

310

350

1,168

Total recognised income and expenses for the period

316

357

1,198

Net income recognised directly in equity

17

The notes on pages 7 to 30 form part of and should be read in conjunction with these financial statements.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

BALANCE SHEET as at 31 December 2007

Consolidated

Note

Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007
$m

4,059
4,150
2,180
4,351
67
89,884
216
1,000
27
237
3,297

6,538
4,992
1,759
2,795
123
79,652
183
680
136
230
3,292

4,807
3,563
1,877
4,711
48
87,878
206
112
1,045
11
232
3,297

109,468

100,380

107,787

3,765
71,601
4,678
1,632
31
161
14,146
2,396
2,039

5,505
64,243
2,830
1,164
4
177
13,321
2,763
1,783

3,170
70,030
4,924
1,351
165
14,6072,775
2,062

100,449

91,79099,084

9,019

8,590

8,703

5,943
89
2,987

5,943
62
2,585

5,943
83
2,677

9,019

8,590

8,703

A ssets

Liquid assets
Due from other financial institutions
Trading securities
Derivative financial instruments
Available-for-sale assets
Net loans and advances
Shares in associates and jointly controlled entities
Current tax assets
Other assets
Deferred tax assets
Premises and equipment
Goodwill and other intangible assets

45
6
8
9, 10, 11

Total assets
L iabilities

Due to other financial institutions
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Current tax liabilities
Provisions
Bonds and notes
Related party funding
Loan capital

12
13

14
15

Total liabilities
Net assets
EquityOrdinary share capital
Reserves
Retained profits

16
17
17

Total equity

The notes on pages 7 to 30 form part of and should be read in conjunction with these financial statements.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

cash flow statement for the three months
ended 31 december 2007 1

Consolidated
Unaudited
3 months to
31/12/2007$m

Unaudited
3 months to
31/12/2006$m

AuditedYear to30/09/2007
$m

2,305
268
(1,662)
(335)
(20)

1,865
220
(1,234)
(339)
(32)

7,892
3
926
(5,486)(1,254)
(513)

556

480

1,568

(873)
(272)
(204)
(19)
(2,134)
18
(359)
1,627
234

552
(117)
(599)
239
(1,660)
222
329
979
(110)

469
(73)
(1,136)
312(10,149)
(69)
1,141
6,857
(125)

25

(1,426)315(1,205)

Proceeds from sale of shares in associates and jointly controlled entities
Proceeds from sale of subsidiary companies 2
7
Proceeds from sale of premises and equipment
Purchase of shares in associates and jointly controlled entities
Purchase of intangible assets
Purchase of premises and equipment

(4)
(2)
(14)

595
9
(6)
(13)

5
585
17
(8)
(17)
(51)

Net cash flows (used in) provided by investing activities

(20)

585

531

Proceeds from bonds and notes
Redemptions of bonds and notes
Proceeds from loan capital
Redemptions of loan capital(Decrease) increase in related party funding
Dividends paid

547
(761)
(379)
-

1,725
(108)
(5)
43
-

4,173
(684)
800
(550)
55
(728)

Net cash flows (used in) provided by financing activities

(593)

1,655

3,066

Net cash flows (used in) provided by operating activities
Net cash flows (used in) provided by investing activities
Net cash flows (used in) provided by financing activities(1,426)
(20)
(593)

315
585
1,655

(1,205)531
3,066

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period(2,039)
5,120

2,555
2,728

2,392
2,728

Cash and cash equivalents at end of the period

3,081

5,283

5,120

Liquid assets
Due from other financial institutions - less than 90 days
Due to other financial institutions - less than 90 days

4,059
1,986
(2,964)

6,538
3,902
(5,157)

4,807
2,323
(2,010)Total cash and cash equivalents 3

3,081

5,283

5,120

Note
C as h flow s from operating acti v ities

Interest received
Dividends received
Fees and other income received
Interest paid
Operating expenses paid
Income taxes paid
Cash flows from operating profits before changes in operating assets & liabilities
Net changes in operating assets and liabilities:(Increase) decrease in due from other financial institutions - term
Increase in trading securities
Increase in derivative financial instruments(Increase) decrease in available-for-sale assets
Increase in loans and advances
Decrease (increase) in other assets(Decrease) increase in due to other financial institutions - term
Increase in deposits and other borrowings
Increase (decrease) in payables and other liabilities
Net cash flows (used in) provided by operating activities
C as h flow s from in v esting acti v ities

C as h flow s from financing acti v ities

Reconciliation of cash and cash equivalents
to the balance sheet

The notes on pages 7 to 30 form part of and should be read in conjunction with these financial statements.
1. The comparative cash flow statements have not been restated for the classification of Truck Leasing Limited (‘TLL’) as a discontinued operation. Disclosure of the net cash flows
attributable to the operating, investing and financing activities of the discontinued operations are presented in Note 7 Discontinued Operations.
2. The cash proceeds from the sale of controlled entities includes $438 million relating to the repayment of TLL’s unsecured bank borrowings with UDC Finance Limited by the acquiree.
3. On 17 January 2008, the Banking Group issued extendable floating rates notes of USD 2 billion which increased cash and cash equivalents available to the Banking Group.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS

1.

ACCOUNTING POLICIES(i) Basis of preparation
These financial statements have been prepared in accordance with NZ IAS 34 Interim Financial Reporting and the Registered Bank
Disclosure Statement (Off-Quarter - New Zealand Incorporated Registered Banks) Order 2007. These financial statements should
be read in conjunction with the consolidated financial statements for the year ended 30 September 2007.
(ii) Measurement base
These financial statements have been prepared on a going concern basis in accordance with historical cost concepts except thatthe following assets and liabilities are stated at their fair value: derivative financial instruments, securities treated as available-forsale, financial instruments available for trading, certain financial liabilities designated at fair value through profit and loss, certain
assets and liabilities designated as part of fair value hedging arrangements and defined benefit scheme assets and liabilities.
(iii) Changes in accounting policies
There have been no changes in accounting policies or methods of computation since the authorisation date of the previous
Disclosure Statement on 5 November 2007.
(iv) Presentation currency and rounding
The amounts contained in the financial statements are presented in millions of New Zealand dollars, unless otherwise stated.
(v) Consolidation
These financial statements consolidate the financial statements of ANZ National Bank Limited (the ‘Bank’) and its subsidiaries (the‘Banking Group’).
(vi) Comparatives
To ensure consistency with the current period, comparative figures have been restated where appropriate.

2.

RISK MANAGEMENT POLICIESThere has been no material change in the Banking Group’s policies for managing risk, or material exposures to any new types of risk since
the authorisation date of the previous Disclosure Statement on 5 November 2007.

3.

I ncome Ta x E x pense

Consolidated

Income tax expense on profit from continuing operations
Effective tax rate (%)

Unaudited
3 months to
31/12/2007$m

Unaudited
3 months to
31/12/2006$m

AuditedYear to30/09/2007
$m

144

132

614

31.7%

32.8%

36.0%

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

4.

L i q uid A ssets

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

Cash and balances with central banks
Securities purchased under agreement to resell
Money at callBills receivable and remittances in transit

2,146
180
1,652
81

4,728
1,545
265

3,010
197
1,467
133

Total liquid assets

4,059

6,538

4,807

Included within liquid assets is the following balance:
Overnight balances with central banks

1,816

4,384

2,809

Able to be withdrawn without prior notice
Securities purchased under agreements to resell
Term loans and advances

1,389
304
2,457

840
785
3,367

952
512
2,099

Total due from other financial institutions

4,150

4,992

3,563

-

138
575

-

46

-

-

171
723
361
727
198

182
1,244
312
1
20

144
866
177
558
132

2,180

1,759

1,877

418

182

300

5.

D ue from ot h er F inancial I nstitutions

Included within due from other financial institutions are
the following balances:
Assets used to secure deposit obligations
Assets encumbered through repurchase agreements
Included within due from other financial institutions is
the following related party balance:
Australia and New Zealand Banking Group Limited(Ultimate Parent Company)

6.

T rading S ecurities

Government, Local Body stock and bonds
Certificates of deposit
Promissory notes
Other bank bonds
Other
Total trading securities
Included within trading securities is the following balance:
Assets encumbered through repurchase agreements

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

7 . D iscontinued O perations

On 31 October 2006, UDC Finance Limited (‘UDC’) sold Truck Leasing Limited (‘TLL’) to Nikko Principal Investments Australia Limited, aprivate equity business of Nikko Cordial Corporation, for consideration of $147 million. A gain of $76 million was realised.
TLL’s unsecured bank borrowings with UDC were repaid on the sale date and were excluded from TLL’s liabilities classified as held forsale. As at 31 October 2006 this balance was $438 million.
The comparative income statements have been restated to show the discontinued operation separately from continuing operations.
The profit from discontinued operations shown in the income statement comprised:
Truck Leasing Limited
Unaudited
1 month to
31/10/2006$m
R e s ult o f d i s c o nt i nue d o per at i o n s

Interest expense
Other operating income

2
3

Net operating income
Operating expenses

1
1

Income tax expense-

Operating profit after income tax – discontinued operations-

Gain on sale of discontinued operations176

Net profit from discontinued operations

76

C as h flow s from discontinued operations

Net cash flows provided by operating activities
Net cash flows used in investing activities

15(3)

Net cash flows from discontinued operations

12

The sale resulted in the following impact on the consolidated financial statements:
Consolidated
Unaudited
31/10/2006$m
Cash proceeds from sale147

Impact on net assets
Cash and cash equivalents
Assets classified as held for sale
Liabilities classified as held for sale

438
(543)
34

Impact on net assets(71)

Gain on sale1

76

Cash flow statement
Cash proceeds from sale
Repayment of related party loans and advances

147
438

Proceeds related to sale of controlled entities

585

1. Profit from discontinued operations was $76 million for the year ended 30 September 2007, reduced from $79 million for the three months to 31 December 2006 due to closing accountadjustments.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

8 . AVA I L A B L E - F O R - S A L E A S S E T S

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

Government, Local Body stock and bonds
Floating rate notes
Other

3
63
1

78
41
4

4
43
1

Total available-for-sale assets

67

123

48

Included within available-for-sale assets
is the following balance:
Assets used to secure deposit obligations

-

75

-

Overdrafts
Credit card outstandings
Term loans - housing
Term loans - non-housing
Finance lease receivables

2,038
1,432
51,35735,560
775

1,726
1,320
44,906
31,848
772

2,012
1,338
49,75135,156752

Gross loans and advances
Provision for credit impairment (Note 11)
Unearned finance income
Fair value hedge adjustment
Deferred fee revenue and expenses
Capitalised brokerage/mortgage origination fees

91,162
(478)
(325)
(541)
(57)
123

80,572
(471)
(256)
(243)
(52)
102

89,009
(466)
(290)
(442)
(53)
120

Total net loans and advances

89,88479,652

87,878

-

139

89

9.

N et L oans and A d vances

Included within net loans and advances is thefollowing related party balance:
ANZ Holdings (New Zealand) Limited (Parent Company)

The balance owed by the Parent Company is due within the next twelve months. Interest is received at variable bank rates.

1 0 . I mpaired assets , past due assets and ot h er assets under administration

On-balance sheet impaired assets, past due assets
and other assets under administrationP A G E

1 0

Impaired assets
Past due assets (90 days past due assets)
Other assets under administration

124
153
-

120
94
-

115
102
-

Total on-balance sheet impaired assets, past due assets
and other assets under administration

277

214

217

Off-balance sheet impaired assets

15

9

6

Total impaired assets, past due assets and other assets
under administration

292

223

223

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

1 1 . P rov ision for credit impairment

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

Collective provision
Balance at beginning of the period
Charge to income statement

422
14

402
14

402
20

Balance at end of the period

436

416

422

Individual provision (impaired assets)
Balance at beginning of the period
Charge to income statement
Recoveries of amounts previously written off
Bad debts written off
Discount unwind

44
18
4
(23)
(1)

58
11
4
(17)
(1)

58
54
20
(84)
(4)

Balance at end of the period

42

55

44

Total provision for credit impairment

478

471

466

Provision movement analysis
New and increased provisions
Provision releases

25
(3)

21
(6)

92
(18)

Recoveries of amounts previously written off

22
(4)

15
(4)

74
(20)

Individual provision charge
Collective provision charge

18
14

11
14

54
20

Charge to income statement

32

25

74

Total provision for credit impairment has been deducted from gross loans and advances.

1 2 .	due to ot h er financial institutions

Australia and New Zealand Banking Group Limited(Ultimate Parent Company)
Securities sold under agreements to repurchase fromother financial institutions
Other financial institutions

956

1,780

1,140

418
2,391

757
2,968

300
1,730

Total due to other financial institutions

3,765

5,505

3,170

956

1,780

1,140

Included within due to other financial institutions
is the following balance:
Balances owing to the Ultimate Parent Company by
ANZ National (Int’l) Limited guaranteed by the Bank

Balances owing to the Ultimate Parent Company are due within twelve months. Interest is paid at variable bank rates.

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1 3 . D eposits and ot h er borrow ings

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

Amortised cost
Certificates of deposit
Term deposits
Demand deposits bearing interest
Deposits not bearing interest
Secured debenture stock
Secured deposits

3,949
29,88020,534
4,664
1,755
-

4,058
26,197
20,641
4,526
2,039
200

4,447
28,99821,128
4,354
1,786
-

Deposits and other borrowings - recognised at amortised cost

60,782

57,66160,713

Fair value through the profit or loss
Commercial paper

10,819

6,582

9,317

Deposits and other borrowings - recognised at fair value

10,819

6,582

9,317

Total deposits and other borrowings

71,60164,24370,030Included within deposits and other borrowings is thefollowing balance:
Commercial paper issued by ANZ National (Int’l) Limited
guaranteed by the Bank

10,815

6,586

9,319

2,048

2,315

2,065

The balance owing to the Parent Company is due within thenext twelve months. Interest is paid at variable bank rates.
UDC Finance Limited secured debentures
Carrying value of total tangible assets

Registered secured debenture stock is constituted and secured by trust deeds between certain companies within the UDC Group (the“Charging Group”) and independent trustees. The trust deeds create floating charges over all the assets, primarily loans and advances,of those companies. As at the date of these financial statements, UDC Finance Limited is the only member of the Charging Group.

1 4 . B onds and notes

Consolidated

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1 2

Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

Australia and New Zealand Banking Group Limited(Ultimate Parent Company)
Other bonds and notes issued

1,160
12,986695
12,626

1,871
12,736

Total bonds and notes

14,146

13,321

14,607

Included within bonds and notes is the following balance:
Bonds and notes issued by ANZ National (Int’l) Limited
guaranteed by the Bank

13,022

12,34013,566

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

1 5 . L oan C apital

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$m

AUD 207,450,000 term subordinated floating rate loan
AUD 265,740,000 perpetual subordinated floating rate loan
AUD 186,100,000 term subordinated floating rate loan
AUD 43,767,507 term subordinated floating rate loan
AUD 169,520,000 term subordinated floating rate loan
NZD term subordinated fixed rate bonds

235
302
211
50
193
1,048

233
298
208
49
995

242
309
217
51
197
1,046

Total loan capital

2,039

1,783

2,062

991

788

1,016

Included within loan capital is the following
related party balance:
Australia and New Zealand Banking Group Limited(Ultimate Parent Company)

AUD 207,450,000 loan
This loan was drawn down on 31 August 2004 and has an ultimate maturity date of 31 August 2014. The Bank may elect to repay
the loan on 31 August each year commencing from 2009 through to 2013. All interest is payable half yearly in arrears, with interest
payments due 28 February and 31 August. Interest is based on BBSW + 0.40% p.a. up until, and including, 31 August 2009 and increases
to BBSW + 0.90% p.a. thereafter.
AUD 265,740,000 loan
This loan was drawn down on 27 September 1996 and has no fixed maturity. Interest is payable half yearly in arrears based on BBSW +0.95% p.a., with interest payments due 15 March and 15 September.
AUD 186,100,000 loan
This loan was drawn down on 19 April 2005 with an ultimate maturity date of 20 April 2015. The Bank may elect to repay the loan on
19 April each year commencing from 2010 through to 2014. All interest is payable half yearly in arrears, with interest payments due 19
April and 19 October. Interest is based on BBSW + 0.32% p.a. to 19 April 2010 and increases to BBSW + 0.82% p.a. thereafter.
AUD 43,767,507 loan
This loan was drawn down on 15 September 2006 with an ultimate maturity date of 15 September 2016. The Bank may elect to repay
the loan on 15 September each year commencing from 2011 through to 2015. All interest is payable half yearly in arrears, with interest
payments due 15 March and 15 September. Interest is based on BBSW + 0.29% p.a. to 15 September 2011 and increases to BBSW +0.79% p.a. thereafter.
AUD 169,520,000 loan
This loan was drawn down on 17 September 2007 with an ultimate maturity date of 17 September 2017. The Bank may elect to repay
the loan on 17 September each year commencing from 2012 through to 2016. All interest is payable half yearly in arrears, with interest
payments due 17 March and 17 September. Interest is based on BBSW + 0.68% p.a. to 17 September 2012 and increases to BBSW +1.18% p.a. thereafter.

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1 5 . L oan C apital ( C ontinued )NZD term subordinated fixed rate bonds
The terms and conditions of these fixed rate and fixed term bonds are as follows:
New Zealand Exchange listed bonds
Issue date
15 September 2006
2 March 2007
23 July 2007

Amount $m

Coupon rate

Call date

Maturity date

350
250
350

7.16%
7.60%
8.23%

15 September 2011
2 March 201223 July 201215 September 2016
2 March 201723 July 2017

The Bank may elect to redeem the bonds on their call date. If the bonds are not called they will continue to pay interest to maturity at
the five year interest rate swap rate plus the following margins, 0.75% p.a, 0.76% p.a, and 0.62% p.a. on the 15/09/2006, 02/03/2007 and23/07/2007 bonds respectively. Interest is payable half yearly in arrears based on the fixed coupon rate.
The bonds are listed on the NZX. The Market Surveillance Panel of the NZX has granted the Bank a waiver from the requirementsof Listing Rules 10.4 and 10.5. Rule 10.4 relates to the provision of preliminary announcements of half yearly and annual results
to the NZX. Rule 10.5 relates to preparing and providing a copy of half yearly and annual reports to the NZX. The Bank has been
granted a waiver from these rules on the conditions that the Bank’s quarterly General Disclosure Statement (‘GDS’) is available on
the Bank’s website, at any branch and at the NZX; that bondholders are advised by letter that copies of the GDS are available at theabove locations; that all bondholders are notified on an ongoing basis, by way of a sentence included on the notification of interest
payments, that the latest GDS is available for review at the above locations; and that a copy of the GDS is sent to the NZX on an
ongoing basis.
As at 31 December 2007 these bonds carried an AA- rating by Standard & Poor’s.
Non listed bondIssue dateAmount $m

Coupon rate

Call date

Maturity date

20 February 2003

100

6.46%

20 August 2008

20 August 2013

The Bank may elect to redeem the bond on its call date. If not called, the Bank will continue to pay interest to maturity at the five
year interest rate swap rate plus 0.97% p.a. Interest is payable half yearly in arrears based on the fixed coupon rate.
As at 31 December 2007 this bond carried an AA- rating by Standard & Poor’s.
Loan capital is subordinated in right of payment to the claims of depositors and all creditors of the Bank.

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1 6 . O rdinary s h are capital

Consolidated

Ordinary share capital
Ordinary share capital at beginning and end of the period

Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007
$m

5,943

5,943

5,943

Voting rights
At a meeting: on a show of hands or vote by voice every member who is present in person or by proxy or by representative shall have one vote.
On a poll: every member who is present in person or by proxy or by representative shall have one vote for every share of which such member
is the holder.

1 7 . R eserv e S and retained profits

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007
$m

(1)
1

3
-

3
(1)

-

-

(3)

Balance at end of the period

-

3

(1)

Cash flow hedging reserve
Balance at beginning of the period
Valuation gain recognised after tax
Transferred to income statement

84
9
(4)

52
11
(4)

52
48
(16)

Balance at end of the period

89

59

84

Total reserves

89

62

83

2,677

2,235

2,235

310

350

1,168

Total available for appropriation
Actuarial gain on defined benefit schemes after tax
Interim ordinary dividends paid

2,987
-

2,585
-

3,403
2
(728)

Balance at end of the period

2,987

2,585

2,677

Available-for-sale revaluation reserve
Balance at beginning of the period
Valuation gain (loss) recognised after tax
Cumulative gain transferred to income statement on saleof financial assets

Retained profits
Balance at beginning of the period
Profit after income tax

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1 8 . I nterest earning and discount bearing assets and liabilities

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$mInterest earning and discount bearing assets

100,289

92,702

98,298Interest and discount bearing liabilities

89,268

83,154

88,405Premises and equipment
Not later than 1 year

20

19

15

Total capital expenditure commitments

20

19

15

Premises and equipment
No later than one year
Later than 1 year but not later than 5 years
Later than five years

81
160
31

81
164
36

85
163
32

Total lease rental commitments

272

281

280

Total commitments

292

300

295

1 9 . C ommitments

Capital expenditure
Contracts for outstanding capital expenditure:

Lease rentals
Future minimum lease payments under non-cancellable
operating leases:

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2 0 . S egmental analysis

For segment reporting purposes, the Banking Group is organised into three major business segments – Retail Banking, RelationshipBanking and Institutional. Centralised back office and corporate functions support these segments.
A summarised description of each business segment is shown below:
Retail Banking 	Provides banking products and services to individuals and small businesses through separate ANZ and The
National Bank branded distribution channels and UDC. Personal banking customers have access to a wide
range of financial services and products. Small business banking services are offered to enterprises with annual
revenues of less than $5 million. Included in this segment is Private Banking, a stand-alone business unit,
which offers a fully inclusive banking and investment service to high net worth individuals. Includes profit
centres supporting the Retail Banking segment (e.g. Direct Banking and the ING NZ joint venture). UDC isprimarily involved in the financing and leasing of equipment, plant and machinery for small and medium sizedbusinesses.
Relationship Banking	This segment provides services to rural, commercial and corporate customers. A full range of banking products
and services are provided to Rural customers. Corporate and Commercial customers consist of medium tolarge businesses with annual revenues from $2 million to $150 million. The Banking Group’s relationship withthese businesses ranges from simple banking requirements with revenue from traditional lending and deposit
products, to more complex arrangements with revenue sourced from a wider range of products.
Institutional 	Comprises businesses that provide a full range of financial services to the Banking Group’s client base. The
Institutional business unit is made up of the following specialised units:-- Institutional Banking – manages customer relationships along industry segment lines, typically with wholesaleclients with turnover greater than $100 million.
-- Corporate Finance – provides specialist lending, underwriting, capital structuring and solutions to corporates,
institutions and governments.
-- Markets – provides securities, derivatives and foreign exchange products and services to the Banking Group’s
client base.
-- Working Capital – provides trade finance, cash management, international payments, clearing and custodian
services to the Banking Group’s client base.
Other 	Includes Treasury and back office support functions, none of which constitutes a separately reportable segment.
Truck Leasing Limited (trading as Esanda FleetPartners) is classified as a discontinued operation, and is includedin the “Other” segment.
 s the composition of segments has changed over time, prior period comparatives have been adjusted to be consistent with the 2008
A
segment definitions.

B usiness segment analysis – continuing operations 1 , 2Consolidated
RetailBanking$m

RelationshipBanking$m

Institutional
$m

Other
$m

Total
$m

Unaudited 3 months to 31/12/2007
Net operating income
Profit before income tax

467
188

173
113

128
90

68
63

836
454

Unaudited 3 months to 31/12/2006
Net operating income
Profit before income tax

434
172

157
90

120
90

52
51

763
403

Audited year to 30/09/2007
Net operating income
Profit before income tax

1,801
773

648
409

435
307

227
217

3,111
1,706

1. Results are equity standardised
2. Intersegment transfers are accounted for and determined on an arm’s length or cost recovery basis.

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21.	Contingent liabilities, contingent assets, credit related commitments and market related contracts

Consolidated
Unaudited
31/12/2007$m

Unaudited
31/12/2006$m

Audited30/09/2007$mContingent liabilities
Financial guarantees
Standby letters of credit
Transaction related contingent items
Trade related contingent liabilities

1,948
568
439
105

1,781
332
372
134

1,933
528
398
123

Total contingent liabilities

3,060

2,619

2,982

Credit related commitments
Commitments with certain drawdown due within one year
Commitments to provide financial services

1,018
24,161

1,327
19,614

1,074
20,751

Total credit related commitments

25,17920,941

21,825

Foreign exchange, interest rate and equity contracts
Exchange rate contracts
Interest rate contracts
Equity contracts

89,819473,42120

69,610296,255
20

94,287462,79120

Total foreign exchange, interest rate and equity contracts

563,260

365,885

557,098

The estimated face or contract values are as follows:

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2 1 .	C ontingent liabilities , contingent assets , credit related commitments and market related
contracts ( continued )The detailed and estimated maximum amount of contingent liabilities that may become payable are set out below.
Contingent tax liability
As previously disclosed, the New Zealand Inland Revenue Department (‘IRD’) is reviewing a number of structured finance transactions
as part of an audit of the 2000 to 2005 tax years. This is part of an industry-wide review by the IRD of these transactions undertaken
in New Zealand.
The Bank has received Notices of Proposed Adjustment (the ‘Notices’) in respect of some of these transactions. The Notices are formal advice
that the IRD is proposing to amend tax assessments. The Notices are not tax assessments and do not establish a tax liability but are the firststep in a formal disputes process.
As expected in March 2007 the IRD issued amended tax assessments as a follow up to the Notices in respect of five of these transactions
for the 2002 tax year (prior to that tax year becoming statute-barred). The IRD has previously issued tax assessments as a follow up to
the Notices in respect of two transactions for the 2000 tax year and in respect of four transactions for the 2001 tax year (in each caseprior to that tax year becoming statute-barred). Proceedings disputing the amended tax assessments with respect to the 2000, 2001
and 2002 tax years have been commenced.
Based on the independent tax and legal advice obtained, the Bank is confident that the tax treatment it has adopted for thesetransactions and all similar transactions is correct.
The tax adjustments proposed so far by the IRD cover the 2000 to 2005 tax years and imply a maximum potential liability of $224
million ($327 million with interest tax effected).
The IRD is also investigating other transactions undertaken by the Banking Group, which have been subject to the same tax treatment.
Should the same position be taken by the IRD for all years on all these transactions, including those that the Notices cover, themaximum potential liability would be approximately $365 million ($514 million with interest tax effected) as at 31 December 2007.
Of the maximum potential tax liability in dispute, it has been estimated that approximately $99 million ($145 million with interest tax
effected) is subject to indemnities given by Lloyds TSB Bank plc under the agreement by which the Bank acquired the NBNZ Holdings
Limited Group, and which relate to transactions undertaken by NBNZ Group before December 2003.
This leaves a net potential tax liability as at 31 December 2007 of $266 million ($370 million with interest tax effected).
All of these transactions have now either matured or been terminated.
Other contingent liabilities
In November 2006, the Commerce Commission brought proceedings under the Commerce Act 1986 against Visa, MasterCard and all
New Zealand issuers of Visa and MasterCard credit cards, including ANZ National Bank Limited. The Commission alleges price fixing
and substantially lessening competition in relation to the setting of credit card interchange fees and is seeking penalties and orders
under the Commerce Act.
Subsequently, several major New Zealand retailers have issued proceedings against ANZ National Bank Limited and the otherabovementioned defendants seeking unquantified damages, based on allegations similar to those contained in the CommerceCommission proceedings.
ANZ National Bank Limited is defending the proceedings. At this stage, the risks and any potential liabilities cannot be assessed. A trial
is not expected to take place until 2009.
Contingent assets
Visa has released their prospectus as at September 2007 and as part of this prospectus ANZ National Bank Limited will be entitled to
an initial allocation of shares determined under a methodology that was agreed on among the Visa participating regions. This will resultin the inflow of economic benefits, the amount and timing of which are uncertain.
As at December 2007, there were no other contingent assets or liabilities required to be disclosed (31/12/2006 nil; 30/09/2007 nil).

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2 2 . C oncentrations of credit risk

Concentrations of credit risk to individual counterparties
The number of individual counterparties other than banks or groups of closely related counterparties of which a bank is a parent(excluding OECD Governments and connected persons), where the quarter end and peak end-of-day credit exposures equals or exceeds
10% of equity (as at the end of the quarter) in ranges of 10% of equity, on the basis of limits: 		Consolidated
Unaudited 31/12/2007
Number of Counterparties

10% to 20% of equity

Unaudited 31/12/2006
Number of Counterparties

Audited 30/09/2007
Number of Counterparties

As at

Peak forthe quarter

As at

Peak forthe quarter

As at

Peak forthe quarter

1

2

2

2

2

2

As noted above, the number of individual counterparties disclosed within the various equity ranges is based on counterparty limits rather
than actual exposures outstanding. No account is taken of security and/or guarantees which the Banking Group may hold in respect of thevarious counterparty limits.
The amount and percentage of quarter end and peak end-of-day credit exposures to individual counterparties other than banks orgroups of closely related counterparties of which a bank is a parent (excluding OECD Governments and connected persons), where thequarter end and peak end-of-day credit exposures equals or exceeds 10% of equity (as at the end of the quarter), by credit rating:Consolidated
Unaudited 31/12/2007

Unaudited 31/12/2006

Audited 30/09/2007

Amount$m% of Total
CreditExposureAmount$m% of Total
CreditExposureAmount$m% of Total
CreditExposure

As at
Investment grade credit rating (Note 1)

1,621

100.0%

2,225

100.0%

2,509

100.0%

Peak for the quarter
Investment grade credit rating (Note 1)

2,808

100.0%

2,281

100.0%

2,509

100.0%

Concentrations of credit risk to bank counterparties
The number of bank counterparties or groups of closely related counterparties of which a bank is the parent (excluding OECD
Governments and connected persons), where the quarter end and peak end-of-day credit exposures equals or exceeds 10% of equity(as at the end of the quarter) in ranges of 10% of equity, on the basis of actual exposures:Consolidated
Unaudited 31/12/2007
Number of Counterparties

10% to 20% of equity

Unaudited 31/12/2006
Number of Counterparties

Audited 30/09/2007
Number of Counterparties

As at

Peak forthe quarter

As at

Peak forthe quarter

As at

Peak forthe quarter

2

2

2

4

1

3

The amount and percentage of quarter end and peak end-of-day credit exposures to bank counterparties or groups of closely related
counterparties of which a bank is a parent (excluding OECD Governments and connected persons), where the quarter end and peak
end-of-day credit exposures equals or exceeds 10% of equity (as at the end of the quarter), by credit rating:Consolidated
Unaudited 31/12/2007

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Unaudited 31/12/2006

Audited 30/09/2007

Amount$m% of Total
CreditExposureAmount$m% of Total
CreditExposureAmount$m% of Total
CreditExposure

As at
Investment grade credit rating (Note 1)

2,285

100.0%

1,901

100.0%

1,193

100.0%

Peak for the quarter
Investment grade credit rating (Note 1)

2,505

100.0%

3,851

100.0%

3,923

100.0%

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2 2 . C oncentrations of credit risk ( C ontinued )Consolidated
Unaudited 31/12/2007

Unaudited 31/12/2006

Audited 30/09/2007

Amount$m% of Group
Tier 1
CapitalAmount$m% of Group
Tier 1
CapitalAmount$m% of Group
Tier 1
Capital

1,447
-

26.6%
0.0%

1,274
-

25.1%
0.0%

1,952
-

38.1%
0.0%

2,501
-

46.0%
0.0%

1,327
-

26.2%
0.0%

2,299
-

44.9%
0.0%

n/a
n/a

75.0%
15.0%

n/a
n/a

70.0%
15.0%

n/a
n/a

75.0%
15.0%

Concentrations of credit risk to connected
persons
Aggregate at end of period
Connected persons (Note 2)
Non-bank connected persons (Note 3)
Peak end-of-day for the quarter (Note 4)
Connected persons
Non-bank connected persons (Note 3)
Rating-contingent limit (Note 5)
Connected persons
Non-bank connected persons

The credit exposure concentrations disclosed for connected persons are on the basis of actual gross exposures and exclusive of exposuresof a capital nature. The peak end-of-day credit exposures for the quarter to connected persons are measured over Tier 1 Capital as at
the end of the quarter. There are no individual provisions provided against credit exposures to connected persons as at 31 December
2007 (31/12/2006 $nil; 30/09/2007 $nil). The Banking Group had no contingent exposures arising from risk lay-off arrangements toconnected persons as at 31 December 2007 (31/12/2006 $nil; 30/09/2007 $nil).
Note 1
All of the individual and bank counterparties included in the above tables have an investment grade rating. An investment
grade credit rating means a credit rating of BBB- or Baa3 or above, or its equivalent. In the case of a group of closely related
counterparties, the credit rating applicable is that of the entity heading the group of closely related counterparties. The credit
rating is applicable to an entity’s long term senior unsecured obligations payable in New Zealand, in New Zealand dollars, orto an entity’s long term senior unsecured foreign currency obligations.
Note 2The Banking Group has amounts due from its Parent Company and Ultimate Parent Company and other entities within the Ultimate
Parent Group arising from the ordinary course of its business. These balances arise primarily from unrealised gains on trading andhedging derivative financial instruments with the Ultimate Parent Bank.
Note 3
Non-bank connected persons exposures consist of loans to directors of the Bank. Any loans are made in the ordinary courseof business of the Bank, on an arm’s length basis and on normal commercial terms and conditions.
Note 4The method of calculating the peak end-of-day disclosure above differs from that applied in determining the connected persons’ limit
under the Bank’s Conditions of Registration. The peak end-of-day disclosure is measured against Tier 1 Capital at quarter end whereas
the connected persons’ exposure under the Conditions of Registration is measured against Tier 1 Capital on a continuous basis. The
Banking Group has complied with the limits on aggregate credit exposures (of a non-capital nature and net of individual provisions) toconnected persons and non-bank connected persons, as set out in the Conditions of Registration, at all times during the quarter.
Note 5
Represents the maximum peak end-of-day aggregate credit exposures limit (exclusive of exposures of a capital nature and net ofindividual provisions) to all connected persons. This is based on the rating applicable to the Bank’s long term senior unsecured NZD
obligations payable in New Zealand, in New Zealand dollars (refer page 33 for the credit rating). Within the overall limit a sub-limit of
15% of Tier 1 Capital applies to aggregate credit exposures (exclusive of exposures of a capital nature and net of individual provisions)
to non-bank connected persons. During the June 2007 quarter, the connected persons’ limit increased from 70% to 75% as a result of
an improvement in the Bank’s credit rating.

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2 3 . M arket risk

Market risk is the risk to earnings arising from changes in interest rates, currency exchange rates, or from fluctuations in bond, commodity
or equity prices.
RBNZ Market Risk Disclosure
Aggregate market risk exposures have been calculated in accordance with clause 1 (1) (a) of Schedule 8 of the Order. Aggregate foreign
currency risk exposures have been calculated in accordance with clause 8 (a) of Schedule 9 of the Order. Aggregate interest risk exposures
have been calculated in accordance with clause 1 (b) of Schedule 9 of the Order. Aggregate equity risk exposures have been calculated inaccordance with clause 11 (a) of Schedule 9 of the Order. The peak end-of-day market risk exposures for the quarter are measured over equity
as at the end of the quarter.
Consolidated
Unaudited 31/12/2007

Exposures to market risk
Aggregate foreign currency exposures ($ million)

Unaudited 31/12/2006

Audited 30/09/2007

As at

Peak forthe quarter

As at

Peak forthe quarter

As at

Peak forthe quarter

2.8

5.9

5.9

14.1

1.3

6.5

Aggregate foreign currency exposures as apercentage of equity

0.0%

0.1%

0.1%

0.2%

0.0%

0.1%

Aggregate interest rate exposures ($ million)

284.4

291.7

298.4

309.7

302.2

373.4

Aggregate interest rate exposures as apercentage of equity

3.2%

3.2%

3.5%

3.6%

3.5%

4.3%

Aggregate equity exposures ($ million)

0.2

0.2

0.5

0.5

0.2

0.2

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Aggregate equity exposures as a percentage of equity

2 4 .	S ecuritisation , funds management, ot h er fiduciary acti v ities , marketing and distribution of
insurance products

Securitisation
The Banking Group has not securitised any of its own assets. The Banking Group is involved in providing banking services to customers
who securitise assets.
Funds management
Certain subsidiaries of the Bank act as trustee and/or manager for a number of unit trusts and superannuation funds. The Bank provides
private banking services to a number of clients, including investment advice and portfolio management. The Banking Group is not
responsible for any decline in performance of the underlying assets of the investors due to market forces.
As funds under management are not controlled by the Banking Group, they are not included in these financial statements. The Banking
Group derives fee income from the sale and management of superannuation bonds and superannuation schemes, unit trusts and theprovision of private banking services to a number of clients. The Banking Group derives commission income from the sale of third party
funds management products.
Custodial services
The Banking Group provides custodial services to customers in respect of assets that are beneficially owned by those customers.
Marketing and distribution of insurance products
The Bank markets and distributes a range of insurance products which are underwritten by several insurance companies. These activities
are managed in association with the ING New Zealand joint venture.
The Banking Group mitigates its exposure to implicit risk by meeting the RBNZ minimum separation requirements. In particular, the Banking
Group discloses as required that it does not guarantee any issuer of insurance products nor the products issued, that the insurance policies
do not represent deposits or other liabilities of the Banking Group, that the insurance policies are subject to investment risk, including
possible loss of income and principal and that the Banking Group does not guarantee the capital value or performance of the policies.
Any financial services (including funding and liquidity support) provided by the Banking Group to securitisation, funds management andcustodial services entities, discretionary private banking activities or issuers of marketed and distributed insurance products are made on
an arm’s length basis and at fair value. Any securities or assets purchased from such entities have been purchased on an arm’s length basis
and at fair value.
Insurance business
The Banking Group does not conduct any insurance business directly, although the Banking Group holds a 49% share in the ING NZ joint
venture which does conduct insurance business.

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2 5 . N otes to t h e cas h flow statement

Consolidated
Unaudited
3 months to
31/12/2007$m

Unaudited
3 months to
31/12/2006$m

AuditedYear to30/09/2007$mProfit after income tax

310

350

1,168

Non-cash items:
Depreciation and amortisation
Provision for credit impairment
Capitalised brokerage/mortgage origination fees
Deferred fee revenue and expenses
Share-based payments expense

11
32
14
4
4

21
25
10
2
3

55
74
45
3
12

(1,983)
25
29
(1)
5
(4)
10
93
31

(165)
(16)
72
(9)
(10)
16
100
-

(2,773)
(94)
242
(1)
28
(9)
46
113
(12)

(6)
-

(5)
(79)
-

(24)
(76)
(2)

(1,426)315(1,205)Reconciliation of profit after income tax to net cash flows
used in operating activities

Deferrals or accruals of past or future
operating cash receipts or payments:
Increase in operating assets and liabilities(Decrease) increase in interest receivable
Increase in interest payable
Increase in accrued income
Increase (decrease) in accrued expenses
Decrease in provisions
Amortisation of premiums and discounts
Decrease in income tax assets
Increase (decrease) in income tax liabilities
Items classified as investing/financing:
Share of profit of equity accounted associates and jointly
controlled entities
Gain on disposal of controlled entities
Gain on disposal of associates and jointly controlled entities
Net cash flows used in operating activities

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy

Consolidated

Registered Bank

Unaudited
Unaudited
Audited Unaudited
Unaudited
Audited31/12/2007 31/12/2006 30/09/2007 31/12/2007 31/12/2006 30/09/2007
Capital Adequacy Ratios
Tier 1 Capital
Total Capital

7.37%
10.14%

7.87%
10.64%

7.19%
10.08%

7.14%
9.09%

7.58%
9.40%

6.98%
9.02%

4.00%
8.00%

4.00%
8.00%

4.00%
8.00%

4.00%
8.00%

4.00%
8.00%

4.00%
8.00%

Reserve Bank of New Zealand minimum ratios:Tier 1 Capital
Total Capital

The information contained in the table below has been derived in accordance with the Conditions of Registration imposed pursuant tosection 74 (4) (b) of the Reserve Bank of New Zealand Act 1989 and the capital adequacy framework issued by the Reserve Bank of
New Zealand (‘RBNZ’).
The capital adequacy ratios have been calculated based upon the framework developed by the Basel Committee on Banking (‘Basel I’),as implemented by the RBNZ. On 10 December 2007 the Bank received accreditation from the RBNZ to adopt the internal models
approach under the Basel II banking supervisory regime for the first quarter of 2008.
For the purposes of calculating the capital adequacy ratios for the Registered Bank (“solo basis”), wholly owned and wholly fundedsubsidiaries of ANZ National Bank Limited are consolidated with the Bank. In this context, wholly funded by the Bank means that there
are no liabilities (including off-balance sheet obligations) to anyone other than the Bank, the Department of Inland Revenue and tradecreditors, where aggregate exposure to trade creditors does not exceed 5% of the subsidiary’s shareholders’ equity. Wholly owned by
the Bank means that all equity issued by the subsidiary is held by the Bank.
Consolidated

Registered Bank

Unaudited
Unaudited
Audited Unaudited
Unaudited
Audited31/12/2007 31/12/2006 30/09/2007 31/12/2007 31/12/2006 30/09/2007
Tier 1 Capital
Ordinary share capital
Revenue and similar reserves
Current period’s profit after tax

5,943
2,766
310

5,943
2,297
350

5,943
1,592
1,168

5,943
2,484
289

5,943
1,986
350

5,943
1,280
1,195

Less deductions from Tier 1 Capital- Goodwill- Other intangible assets- Defined benefit schemes surplus (net of tax)
- Equity investment in ING (NZ) Holdings Limited- Cash flow hedging reserve

3,265
32
5
195
89

3,265
27
172
59

3,265
32
5
189
84

3,262
30
5
195
89

3,262
25
172
59

3,262
30
5
189
84

Total Tier 1 Capital

5,433

5,067

5,128

5,135

4,761

4,848

Tier 2 Capital - Upper Level Tier 2 Capital
Perpetual subordinated debt

302

298

309

302

298

309

Tier 2 Capital - Lower Level Tier 2 Capital
Term subordinated debt

1,737

1,485

1,753

1,737

1,485

1,753

Total Tier 2 Capital

2,039

1,783

2,062

2,039

1,783

2,062

Total Tier 1 Capital Plus Tier 2 Capital

7,472

6,850

7,190

7,174

6,544

6,910

-

-

-

642

642

642

Capital

7,472

6,850

7,190

6,532

5,902

6,268

Total risk weighted exposures
On-balance sheet exposures
Off-balance sheet exposures

68,2685,437

60,2994,079

66,1595,152

66,475
5,416

58,7694,043

64,372
5,117

73,70564,37871,311

71,891

62,812

69,489Less deductions from Total Capital- Equity investments in subsidiaries

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Banking Group as at 31 December 2007 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

2,491
400
5,840
400
51,022
41,469
7,846

0
10
20
20
50
100
n/a

40
1,168
80
25,511
41,469-Total on-balance sheet exposures

109,468

68,268

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,516
1,038
439
105

100
100
50
20

2,516
1,038
219
21

49
64
100
63

1,228
663
219
13

2,771

50

1,385

100

1,385

21,390

0

-

100

-

25
21
20

959
966
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

89,819473,421
20

3,771
4,525
21

Total off-balance sheet exposures

591,519

13,496

5,437

1. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Banking Group as at 31 December 2006 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

5,706
776
6,018
405
44,85936,506
6,110

0
10
20
20
50
100
n/a

78
1,204
81
22,43036,506-

Total on-balance sheet exposures

100,380

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,113
1,346
372
134

100
100
50
20

2,113
1,346
186
27

45
59
100
77

955
790
186
21

1,527

50

763

100

763

18,087

0

-

100

-

27
22
20

877
483
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

69,610296,255
20

3,197
2,203
21

Total off-balance sheet exposures

389,464

9,856

1. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

P A G E

2 6

60,2994,079

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Banking Group as at 30 September 2007 (Audited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

3,792
492
5,160
390
49,51040,245
8,198

0
10
20
20
50
100
n/a

49
1,032
78
24,75540,245-

Total on-balance sheet exposures

107,787

66,159

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,461
1,089
398
123

100
100
50
20

2,461
1,089
199
25

49
63
100
60

1,210
683
199
15

1,996

50

998

100

998

18,755

0

-

100

-

25
21
20

1,191
852
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

94,287462,791
20

4,712
3,976
21

Total off-balance sheet exposures

581,920

13,4815,152

1. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Registered Bank as at 31 December 2007 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

2,191
400
5,373
400
51,022
39,769
8,488

0
10
20
20
50
100
n/a

40
1,075
80
25,511
39,769-Total on-balance sheet exposures

107,643

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,516
1,038
439
101

100
100
50
20

2,516
1,038
219
20

49
64
100
66

1,228
663
219
13

2,743

50

1,372

100

1,372

21,202

0

-

100

-

25
21
20

959
958
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

89,819472,936
20

3,771
4,510
21

Total off-balance sheet exposures

590,814

13,467

1. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

P A G E

2 866,4755,416

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Registered Bank as at 31 December 2006 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

5,408
776
5,499
405
44,85935,080
6,757

0
10
20
20
50
100
n/a

78
1,100
81
22,43035,080-Total on-balance sheet exposures

98,78458,769

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,113
1,346
372
133

100
100
50
20

2,113
1,346
186
27

45
59
100
78

955
790
186
21

1,458

50

729

100

729

17,937

0

-

100

-

27
22
20

877
481
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

69,609295,838
20

3,197
2,200
21

Total off-balance sheet exposures

388,826

9,819

4,043

1. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E SNOTES TO THE FINANCIAL STATEMENTS(CONTINUED)

2 6 . C apital A de q uacy ( continued )Total Risk Weighted Exposures of the Registered Bank as at 30 September 2007 (Audited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

On-balance sheet exposures
Cash and short term claims on Government
Long term claims on Government
Claims on banks
Claims on public sector entities
Residential mortgages
Other
Non risk weighted assets

3,492
492
4,677
390
49,51038,555
8,841

0
10
20
20
50
100
n/a

49
935
78
24,75538,555-

Total on-balance sheet exposures

105,957

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,461
1,089
398
119

100
100
50
20

2,461
1,089
199
24

49
63
100
62

1,210
683
199
15

1,934

50

967

100

967

18,549

0

-

100

-

25
21
20

1,191
848
4

Off-balance sheet exposures
Direct credit substitutes
Commitments with certain drawdown
Transaction related contingent liabilities
Short term self liquidating trade related contingencies
Other commitments to provide financial services which have an
original maturity of one year or more
Other commitments with an original maturity less than one year or
which can be unconditionally cancelled at any time
Market related contracts1- Foreign exchange- Interest rate
- Equity

94,287462,357
20

4,712
3,969
21

Total off-balance sheet exposures581,214

13,442

1.

64,372

5,117

The credit equivalent amounts for market related contracts are calculated using the current exposure method.

2 7 . Parent company

The Parent Company is ANZ Holdings (New Zealand) Limited, which is incorporated in New Zealand. The Ultimate Parent Company
is Australia and New Zealand Banking Group Limited, which is incorporated in Australia.
The Ultimate Parent Company is required to hold minimum capital at least equal to that specified under the Basel I framework. The
capital adequacy ratios are:
Australian IFRS
Audited 30/09/2007

Australian IFRS
Audited 30/09/2006

6.7%
10.1%

6.8%
10.6%

Tier 1 Capital
Total Capital

The Ultimate Parent Company meets those requirements imposed on it by the Australian Prudential Regulation Authority as at 30
September 2007 whereby banks must maintain a ratio of qualifying capital to risk weighted assets of at least 8 per cent.
The Australian Prudential Regulatory Authority introduced new prudential capital standards as at 1 July 2006 which contain varioustransitional rules which run through to different dates in 2008 and 2010 to coincide with Basel II implementation.

2 8 . S ubse q uent e v ents

On 17 January 2008, the Banking Group issued extendable floating rate notes of USD 2 billion with an initial maturity of 9 February
2009 and a final maturity of 8 February 2013. The investor may elect the maturity of the notes for a year on a monthly basis.
The financial statements were authorised for issue by the Directors on 14 February 2008.

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

Conditions of registration

Conditions of Registration, applicable as at 14 February
2008. These Conditions of Registration have applied from31 December 2007.

(a) Where insurance business is conducted by any entity
whose business predominantly consists of insurance
business, the size of that insurance business shall be:

The registration of ANZ National Bank Limited (‘the Bank’) as aregistered bank is subject to the following conditions:•

The total consolidated assets of the group headedby that entity;

1. That the Banking Group complies with the following
requirements at all times:•

Or if the entity is a subsidiary of another entity
whose business predominantly consists of insurance
business, the total consolidated assets of the groupheaded by the latter entity;-- Capital of the Banking Group is not less than 8 percent ofrisk weighted exposures.
-- Tier 1 capital of the Banking Group is not less than 4 percent
of risk weighted exposures.
-- Capital of the Banking Group is not less than NZ $15
million.
That the Bank complies with the following requirements at
all times:-- Capital of the Bank is not less than 8 percent of risk
weighted exposures.
-- Tier 1 capital of the Bank is not less than 4 percent of risk
weighted exposures.
-- Capital of the Bank is not less than NZ $15 million.
For the purposes of this condition of registration, capital, Tier
1 capital and risk weighted exposures shall be calculated inaccordance with the Reserve Bank of New Zealand document
entitled ‘Capital Adequacy Framework’ (BS2) dated March
2007.
In its disclosure statements under the Registered Bank
Disclosure Statement (Off-Quarter – New Zealand Incorporated
Registered Banks) Order 2007, the Bank must include all of theinformation relating to the capital position of both the Bankand the Banking Group which would be required if the secondschedule of that Order was replaced by the second schedule of
the Registered Bank Disclosure Statement (Full and Half-Year– New Zealand Incorporated Registered Banks) Order 2007 inrespect of the relevant quarter.
2. That the Banking Group does not conduct any non-financial
activities that in aggregate are material relative to its total
activities, where the term material is based on generally
accepted accounting practice, as defined in the Financial
Reporting Act 1993.
3. That the Banking Group’s insurance business is not greaterthan 1% of its total consolidated assets. For the purposes ofthis condition:(i) Insurance business means any business of the nature referred
to in section 4 of the Insurance Companies (Ratings andInspections) Act 1994 (including those to which the Act isdisapplied by sections 4(1)(a) and (b) and 9 of that Act), or
any business of the nature referred to in section 3(1) of theLife Insurance Act 1908;(b) Otherwise, the size of each insurance business conductedby any entity within the Banking Group shall equal the
total liabilities relating to that insurance business, plus
the equity retained by the entity to meet the solvency
or financial soundness needs of the insurance business;(c) The amounts measured in relation to parts a) and b) shallbe summed and compared to the total consolidated
assets of the Banking Group. All amounts in parts a) andb) shall relate to on balance sheet items only, and shallbe determined in accordance with generally accepted
accounting practice, as defined in the Financial ReportingAct 1993;(d) Where products or assets of which an insurance businessis comprised also contain a non-insurance component,
the whole of such products or assets shall be consideredpart of the insurance business.
4. That aggregate credit exposures (of a non-capital natureand net of specific provisions) of the Banking Group to all
connected persons do not exceed the rating-contingent limit
outlined in the following matrix:

Credit Rating
AA/Aa2 and above
AA-/Aa3
A+/A1
A/A2
A-/A3
BBB+/Baa1 and below

Connected exposure
limit (% of the Banking
Group’s Tier 1 capital)
75
70
60
40
30
15

Within the rating-contingent limit, credit exposures (of anon-capital nature and net of specific provisions) to nonbank connected persons shall not exceed 15 percent of the
Banking Group’s Tier 1 capital.
For the purposes of this condition of registration, compliancewith the rating-contingent connected exposure limit isdetermined in accordance with the Reserve Bank of New
Zealand document entitled ‘Connected Exposure Policy’(BS8) dated March 2007.

(ii) In measuring the size of the Banking Group’s insurance
business:

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A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

Conditions of registration(CONTINUED)

5. That exposures to connected persons are not on morefavourable terms (e.g. as relates to such matters as credit
assessment, tenor, interest rates, amortisation schedules andrequirement for collateral) than corresponding exposures tonon-connected persons.
6. That the board of the Bank contains at least two independent
directors and that alternates for those directors, if any, arealso independent. In this context an independent director (oralternate) is a director (or alternate) who is not an employeeof the Bank, and who is not a director, trustee, or employeeof any holding company (as that term is defined in section 5of the Companies Act 1993) of the Bank, or any other entity
capable of controlling or significantly influencing the Bank.
7. That the chairperson of the Bank’s board is not an employeeof the Bank.
8. That the Bank’s constitution does not include any
provision permitting a director, when exercising powers or
performing duties as a director, to act other than in what
he or she believes is the best interests of the company(i.e. the Bank).
9. That a substantial proportion of the Bank’s business isconducted in and from New Zealand.
10. That no appointment of any director, chief executive officer, or
executive who reports or is accountable directly to the chief
executive officer, shall be made in respect of the Bank unless:(i) The Reserve Bank has been supplied with a copy of thecurriculum vitae of the proposed appointee, and(ii) The Reserve Bank has advised that it has no objection tothat appointment.
11. That the Bank has legal and practical ability to control andexecute any business, and any functions relating to any
business, of the Bank that are carried on by a person otherthan the Bank, sufficient to achieve, under normal businessconditions and in the event of stress or failure of the Bank orof a service provider to the Bank, the following outcomes:

P A G E3 2(a) that the Bank’s clearing and settlement obligations due on a
day can be met on that day;(b) that the Bank’s financial risk positions on a day can be
identified on that day;(c) that the Bank’s financial risk positions can be monitored andmanaged on the day following any failure and on subsequentdays; and(d) that the Bank’s existing customers can be given access to
payments facilities on the day following any failure and on
subsequent days.
For the purposes of the this condition of registration, the term“legal and practical ability to control and execute” is explainedin the Reserve Bank of New Zealand document entitled‘Outsourcing Policy’ (BS11) dated January 2006.
Until 30 June 2008, functions provided to the Bank by Electronic
Transaction Services Limited and Interchange and Settlement
Limited are not covered by this condition.
12. (a) That the business and affairs of the Bank are managed by, or
under the direction and supervision of, the board of the Bank.
(b) That the employment contract of the chief executive officerof the Bank or person in an equivalent position (together“CEO”) is with the Bank, and the terms and conditions of
the CEO’s employment agreement are determined by, andany decision relating to the employment or terminationof employment of the CEO are made by, the board of theBank.
(c) That all staff employed by the Bank shall have theirremuneration determined by (or under the delegated authorityof) the board or the CEO of the Bank and be accountable(directly or indirectly) to the CEO of the Bank.
For the purposes of these conditions of registration, the term
‘Banking Group’ means ANZ National Bank Limited’s financial
reporting group (as defined in section 2(1) of the Financial
Reporting Act 1993).

A N Z N AT I O N A L B A N K L I M I T E D A N D S U B S I D I A RY C O M PA N I E S

Credit rating information

The Bank has two current credit ratings, which are applicable to its long-term senior unsecured obligations which are payable in New
Zealand in New Zealand dollars. The credit ratings are:Standard & Poor’s

AA

Moody’s Investors Service

Aa2

The Standard & Poor’s rating was issued on 22 February 2007. On this date Standard & Poor’s revised the Bank’s rating to AA from AA-.
There have been no other changes in the credit rating issued in the past two years ended 31 December 2007. The rating is not subject
to any qualifications.
The Moody’s Investors Service was issued on 4 May 2007. On this date Moody’s Investors Service revised the Bank’s rating to Aa2 from
Aa3. There have been no other changes in the credit rating issued in the past two years ended 31 December 2007. The rating is not
subject to any qualifications.
The following is a description of the major ratings categories by Ratings Agency:
Standard & Poor’s – Credit rating scale for long-term ratings:
Ratings scale

Description

AAA

Extremely strong capacity to pay interest and repay principal in a timely manner. Highest rating assigned.

AA

Very strong capacity to pay interest and repay principal in a timely manner. This differs from the highest
rating only in a small degree.

A

Strong capacity to pay interest and repay principal in a timely manner, but may be more susceptible to theadverse effects of changes in circumstances and economic conditions than higher rated entities.

BBB

Adequate capacity to pay interest and repay principal in a timely manner, however adverse economic
conditions or changing circumstances are more likely to lead to a weakened capacity to meet debt servicing
commitments than higher rated entities.

BB

A degree of speculation exists with respect to the ability of an entity with this credit rating to pay interest
and repay principal in a timely manner. Adverse business, financial, or economic conditions could impair the
borrower’s capacity to meet debt service commitments in a timely manner.

B

Entities rated B are more vulnerable to adverse business, financial or economic conditions than entities inhigher rating categories. Adverse business, financial or economic conditions will likely impair the borrower’s
capacity or willingness to meet debt service commitments in a timely manner.

CCC

Entities rated CCC are currently vulnerable to default and are dependent on favourable business, financial andeconomic conditions to meet debt service commitments in a timely manner. In the event of adverse business,financial or economic conditions the entity is likely to default.

CC

Entities rated CC are currently highly vulnerable to non-payment of interest and principal.

C

Entities rated C have filed a bankruptcy petition or taken similar action, but payment of obligations are being
continued.

D

D rated entities are in default. This is assigned when interest or principal payments are not made on the datedue or when an insolvency petition or a request to appoint a receiver is filed.

Plus (+) or Minus (-): The ratings from ‘AA’ to ‘CCC’ may be modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

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Credit rating information(CONTINUED)

Moody’s Investors Service – Credit rating scale for long-term ratings:
Ratings scale

Description

Aaa

Judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred
to as ‘gilt edged’. Interest payments are protected by a large or by an exceptionally stable margin and principal
is secure. While the various protective elements are likely to change, such changes as can be visualised aremost unlikely to impair the fundamentally strong position of such issues.

Aa

Judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat larger than the Aaa securities.

A

Possess many favourable investment attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate, but elements may be present whichsuggest a susceptibility to impairment some time in the future.

Baa

Considered as medium-grade obligations (i.e. they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain protective elements may belacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.

Ba

Judged to have speculative elements; their future cannot be considered as well-assured. Often the protectionof interest and principal payments may be very moderate, and thereby not well safeguarded during both goodand bad times over the future. Uncertainty of position characterises bonds in this class.

B

Generally lack characteristics of the desirable investment. Assurance of interest and principal payments or ofmaintenance of other terms of the contract over any long period of time may be small.

Caa

These bonds are of poor standing. Such issues may be in default or there may be present elements of danger
with respect to principal or interest.

Ca

Represent obligations which are speculative in a high degree. Such issues are often in default or have othermarked shortcomings.

C

These are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Moody’s Investors Service bond ratings, where specified, are applied to financial contracts, senior bank obligations and insurancecompany senior policyholder and claims obligations with an original maturity in excess of one year.
Moody’s Investors Service applies numerical modifiers 1, 2 and 3 in each generic rating classification from ‘Aa’ through ‘Caa’. The
modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

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DIRECTORS’ STATEMENT for thethree months ended 31 December 2007

D irectors ’ S tatement

As at the date on which this General Short Form Disclosure Statement is signed, after due enquiry, each Director believes that:•

The Short Form Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statement(Off-Quarter - New Zealand Incorporated Registered Banks) Order 2007;•

The Short Form Disclosure Statement is not false or misleading.

Over the three months ended 31 December 2007, after due enquiry, each Director believes that:•

ANZ National Bank Limited has complied with the Conditions of Registration;•

Credit exposures to connected persons were not contrary to the interests of the Banking Group;•

ANZ National Bank Limited had systems in place to monitor and control adequately the Banking Group’s material risks, including
credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk and other business risks, and thatthose systems were being properly applied.

This General Short Form Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on,
14 February 2008. On that date, the Directors of the Bank were:
Dr D T Brash
Dr R J Edgar
N M T Geary, CBE
G K Hodges
P R Marriott
M R P Smith, OBE
Sir Dryden Spring

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Independent Re vie w Report FOR THE
THREE MONTHS ENDED 31 DECEMBER 2007

Independent Review Report to the Directors of ANZ National Bank Limited
We have reviewed the interim financial statements, including supplementary information, for the three months ended 31 December
2007 set out on pages 3 to 30.
The interim financial statements and supplementary information provide information about the past financial performance and financial
position of ANZ National Bank Limited and its subsidiary companies (the ‘Banking Group’). This information is stated in accordancewith accounting policies set out on page 7.
Directors’ responsibilities
The Directors are responsible for the preparation of interim financial statements and supplementary information which gives a true andfair view of the financial position of the Banking Group as at 31 December 2007 and the results of its operations and cash flows for thethree months ended on that date.
Reviewers’ responsibilities
It is our responsibility to independently review the interim financial statements including supplementary information presented by the
Directors and state whether anything has come to our attention that would cause us to believe that the interim financial statements or
supplementary information do not present a true and fair view of the matters to which they relate.
Basis of statement
Our review has been conducted in accordance with the Review Engagement Standards issued by the New Zealand Institute of Chartered
Accountants. A review is limited primarily to enquiries of Banking Group personnel and analytical review procedures applied to financial data,
and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
Statement
Based on our review nothing has come to our attention that would cause us to believe that the interim financial statements or
supplementary information do not present a true and fair view of the matters to which they relate.
Our review was completed on 14 February 2008 and our statement is made as at that date.

Wellington

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