Australia and New Zealand Banking Group Limited- New Zealand Branch
Registered Bank Disclosure Statement
FOR THE NINE MONTHS ENDED 30 JUNE 2014 | NUMBER 23 ISSUED AUGUST 2014

Australia and New Zealand Banking Group Limited - New Zealand Branch

Registered Bank Disclosure Statement
For the nine months ended 30 June 2014

Contents
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3Statement of Changes in Equity

4

Balance Sheet

5

Condensed Cash Flow Statement

6

Notes to the Financial Statements

7

Directors' and New Zealand Chief Executive Officer's
Statement

16

Glossary of Terms
In this Registered Bank Disclosure Statement (DisclosureStatement) unless the context otherwise requires:(a) Bank means ANZ Bank New Zealand Limited;(b) Banking Group means the Bank and all its controlled
entities;(c) Immediate Parent Company means ANZ Funds Pty
Limited, which is the immediate parent company of ANZ
Holdings (New Zealand) Limited;(d) Ultimate Parent Bank means Australia and New Zealand
Banking Group Limited;(e) Overseas Banking Group means the worldwide
operations of Australia and New Zealand Banking Group
Limited including its controlled entities;(f) New Zealand business means all business, operations, orundertakings conducted in or from New Zealandidentified and treated as if it were conducted by acompany formed and registered in New Zealand;(g) NZ Branch means the New Zealand business of the
Ultimate Parent Bank;(h) ANZ New Zealand means the New Zealand business of
the Overseas Banking Group;(i) Registered Office is Level 8, 1 Victoria Street, Wellington,
New Zealand, which is also ANZ New Zealand’s addressfor service;(j) RBNZ means the Reserve Bank of New Zealand;(k) APRA means the Australian Prudential Regulation
Authority;(l) the Order means the Registered Bank DisclosureStatements (Overseas Incorporated Registered Banks)
Order 2014; and(m) Any term or expression which is defined in, or in themanner prescribed by, the Order shall have the meaning
given in or prescribed by the Order.

Australia and New Zealand Banking Group Limited - New Zealand Branch

2

General Disclosures
This Disclosure Statement has been issued in accordancewith the Order.

Financial Statements of the Ultimate Parent Bankand Overseas Banking Group

Credit Rating Information

Copies of the most recent publicly available financial
statements of the Ultimate Parent Bank and Overseas
Banking Group will be provided immediately, free of charge,
to any person requesting a copy where the request is madeat the Registered Office. The most recent publicly available
financial statements for the Ultimate Parent Bank andOverseas Banking Group can also be accessed at the internet
address anz.com.

The Ultimate Parent Bank has three credit ratings, which areapplicable to its long-term senior unsecured obligations. The
Ultimate Parent Bank’s credit ratings are:
Current Credit
RatingAA-

Qualification
Outlook Stable

Moody’s Investors Service

Aa2

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Directorate

Guarantors

Dr Gregory Clark and David Meiklejohn retired on 18
December 2013.

No obligations of the NZ Branch are guaranteed as at 14
August 2014.

David Gonski became a Director on 27 February 2014 andChairman on 1 May 2014.

ANZNZ Covered Bond Trust

Peter Hay, John Morschel and Alison Watkins retired on 30
April 2014.

Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 30 June 2014 of$3,757 million, pursuant to a guarantee which is secured overa pool of assets. The Covered Bond Guarantor’s address forservice is Level 35, 48 Shortland Street, Auckland, New
Zealand. The Covered Bond Guarantor is not a member ofthe Banking Group and has no credit ratings applicable to its
long term senior unsecured obligations payable in New
Zealand dollars. The Covered Bonds have been assigned along term rating of Aaa and AAA by Moody’s InvestorsService and Fitch Ratings respectively. Details of the pool ofassets that secure this guarantee are provided in Note 7.

John Macfarlane became a Director on 22 May 2014.

Auditor
ANZ New Zealand’s auditor is KPMG, Chartered Accountants,
Level 9, 10 Customhouse Quay, Wellington, New Zealand.

Australia and New Zealand Banking Group Limited - New Zealand Branch

3

Income Statement
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013 1

30/09/2013 1

Interest income

4,975

4,848

6,461

Interest expense

2,919

2,890

3,820

Net interest income

2,056

1,958

2,641

Net trading gains

145

140

163

232

176

234

350

323

391

3

6

7

Operating income

2,786

2,603

3,436

Operating expenses

1,096

1,155

1,513

1,690

1,448

1,923

(20)

49

66

1,710

1,399

1,857

$ millions

Note

Net funds management and insurance income
Other operating income2

Share of associates' profit

Profit before credit impairment and income tax
Credit impairment charge / (release)5

Profit before income tax

AuditedIncome tax expense

467

370

488

Profit after income tax

1,243

1,029

1,369

AuditedStatement of Comprehensive Income$ millions

Profit after income tax

Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013 1

30/09/2013 1

1,243

1,029

1,369

25

20

71

Items that will not be reclassified to profit or loss
Actuarial gain on defined benefit schemes
Income tax expense relating to items that will not be reclassified

(7)

(6)

(20)

Total items that will not be reclassified to profit or loss

18

14

51

Unrealised losses recognised directly in equity

(7)

(98)

(138)

Realised gains transferred to income statement

(33)

(21)

(21)

Items that may be reclassified subsequently to profit or loss

Income tax credit relating to items that may be reclassified

11

33

45

Total items that may be reclassified subsequently to profit or loss

(29)

(86)

(114)

1,232

957

1,306

Total comprehensive income for the period

1Comparative amounts have changed. Refer to notes 1 and 18 for details.

The notes to the financial statements form part of and should be read in conjunction with these financial statements

Australia and New Zealand Banking Group Limited - New Zealand Branch

4

Statement of Changes in Equity$ millions

Note

As at 1 October 2012 (Audited)
Restatement1

As at 1 October 2012 (Restated, audited)Sharecapital andhead officeaccount

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total
equity

6,424

(3)

141

2,615

9,177

-

-

-

(21)

(21)

6,424

(3)

141

2,594

9,156

Profit after income tax

-

-

-

1,029

1,029

Unrealised losses recognised directly in equity

-

(1)

(97)

-

(98)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes

-

-

-

20

20

Income tax credit / (expense) on items recognised directly in equity

-

-

33

(6)

27

Total comprehensive income for the period

-

(1)

(85)

1,043

957

Ordinary dividend paid

-

-

-

(360)

(360)

6,424

(4)

56

3,277

9,753

6,424

(3)

141

2,615

9,177

-

-

-

(21)

(21)

As at 30 June 2013 (Restated, unaudited)
As at 1 October 2012 (Audited)
Restatement1

As at 1 October 2012 (Restated, audited)

6,424

(3)

141

2,594

9,156

Profit after income tax

-

-

-

1,369

1,369

Unrealised gains / (losses) recognised directly in equity

-

1

(139)

-

(138)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes

-

-

-

71

71

Income tax credit / (expense) on items recognised directly in equity

-

-

45

(20)

25

Total comprehensive income for the period

-

1

(115)

1,420

1,306

Ordinary dividend paid

-

-

-

(720)

(720)

6,424

(2)

26

3,294

9,742
1,243

As at 30 September 2013 (Restated, audited)
Profit after income tax

-

-

-

1,243

Unrealised gains / (losses) recognised directly in equity

-

3

(10)

-

(7)

Realised gains transferred to the income statement

-

-

(33)

-

(33)

Actuarial gain on defined benefit schemes

-

-

-

25

25

Income tax credit / (expense) on items recognised directly in equity

-

(1)

12

(7)

4

Total comprehensive income for the period

-

2

(31)

1,261

1,232

969

-

-

-

969

-

-

-

(1,505)(1,505)

7,393

-

(5)

3,050

10,438

Redeemable preference shares issued
Ordinary dividend paid
As at 30 June 2014 (Unaudited)

11

The notes to the financial statements form part of and should be read in conjunction with these financial statements

Australia and New Zealand Banking Group Limited - New Zealand Branch

5

Balance Sheet
Unaudited

Unaudited

Audited30/06/2014

30/06/2013 1

30/09/2013 1

3,320

5,027

2,347

882

206

515

Collateral paid

1,304

615

1,002

Trading securities

12,492

10,128

10,320$ millions

Note

AssetsCash
Settlement balances receivable

Investments backing insurance contract liabilities
Derivative financial instruments
Current tax assets
Available-for-sale assets

169

172

10,880

9,508

96

107

1

1,056

1,854

942

103,938

98,793

100,113

Other assets

616

583

570

Insurance contract assets

454

401

399

Investment in associates

90

98

98

-

76

42

376

342

376

3,452

3,469

3,448

Total assets

135,874

132,748

129,853

Interest earning and discount bearing assets

122,779

116,470

115,297

1,173

1,265

1,114

Net loans and advances

4

174
7,624

Deferred tax assets
Premises and equipment
Goodwill and other intangible assets

Liabilities
Settlement balances payable

553

1,526

438

95,92688,02488,0139,215

10,938

11,208

47

-

-

1,327

1,315

1,260

205

271

229

Bonds and notes

15,573

18,494

16,407

Subordinated debt

1,417

1,162

1,442

Total liabilities (excluding head office account)

125,436

122,995

120,111

Net assets (excluding head office account)

10,438

9,753

9,742

7,393

6,424

6,424

(5)

52

24

3,050

3,277

3,294

Collateral received
Deposits and other borrowings

8

Derivative financial instruments
Deferred tax liabilities
Payables and other liabilities
Provisions

EquityShare capital and head office accountReserves
Retained earnings
Total equity and head office account10,438

9,753

9,742

Interest and discount bearing liabilities

108,240

100,960

101,4701Comparative amounts have changed. Refer to notes 1 and 18 for details.

The notes to the financial statements form part of and should be read in conjunction with these financial statements

Australia and New Zealand Banking Group Limited - New Zealand Branch

6

Condensed Cash Flow Statement$ millions

Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013

30/09/2013

AuditedCash flows from operating activities
Interest received

4,927

4,827

6,432

Interest paid

(2,864)(2,874)(3,859)Other cash inflows provided by operating activities

712

640

852

Other cash outflows used in operating activities(1,505)(1,615)(1,932)

Cash flows from operating profits before changes in operating assets and liabilities

1,270

978

1,493

Net changes in operating assets and liabilities

856

2,910

1,141

Net cash flows provided by operating activities

2,126

3,888

2,634

Cash flows from investing activities
Cash inflows provided by investing activities

13

69

69

Cash outflows used in investing activities

(84)

(89)

(142)

Net cash flows used in investing activities

(71)

(20)

(73)

Cash flows from financing activities
Cash inflows provided by financing activities

4,685

1,105

2,479

Cash outflows used in financing activities(5,857)(2,307)(5,331)

Net cash flows used in financing activities(1,172)(1,202)(2,852)

Net increase / (decrease) in cash and cash equivalents

883

2,666

(291)

Cash and cash equivalents at beginning of the period

3,002

3,293

3,293

Cash and cash equivalents at end of the period

3,885

5,959

3,002

The notes to the financial statements form part of and should be read in conjunction with these financial statements

Australia and New Zealand Banking Group Limited - New Zealand Branch

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance

Adoption of these standards has not resulted in any
material change to ANZ New Zealand’s reported result or
financial position.

These interim financial statements are for ANZ New
Zealand for the nine months ended 30 June 2014. They
have been prepared in accordance with New Zealand
Generally Accepted Accounting Practice as appropriate for
profit oriented entities, the requirements of NZ IAS 34
Interim Financial Reporting, IAS 34 Interim Financial
Reporting and the Order, and should be read in
conjunction with ANZ New Zealand’s financial statements
for the year ended 30 September 2013.
(ii)

NZ IAS 19 has been applied retrospectively, in accordancewith transitional provisions, with the net impact of initial
application recognised in retained earnings as at 30
September 2012 and shown in the statement of changes
in equity. The balances of payables and other liabilities
and the associated deferred tax asset have been restatedfor subsequent periods.
Amendments to NZ IAS 34 require certain fair value
disclosures which have been included in Note 13, howevercomparative information is not required in the first year of
application.

Basis of measurement
These financial statements have been prepared on a going
concern basis in accordance with historical cost concepts
except that the following assets and liabilities are stated attheir fair value:
•

•
•
•

derivative financial instruments, including in thecase of fair value hedging, the fair value of any
applicable underlying exposure;financial instruments held for trading;financial assets treated as available-for-sale; andfinancial instruments designated at fair value
through profit and loss.

(iv) Presentation currency and rounding
The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)

In addition to restatements resulting from the initial
application of NZ IAS 19, certain amounts in thecomparative information have been reclassified to ensure
consistency with the current year’s presentation. Further
information on changes to comparative information is
included in note 18.

(iii) Changes in accounting policies
ANZ New Zealand has applied the following new
accounting standards and amendments in the preparationof these financial statements:
•
•
•
•
•

2.

Comparatives(vi) Principles of consolidation

NZ IFRS 10 Consolidated Financial Statements;
NZ IFRS 13 Fair Value Measurement;
NZ IAS 19 Employee Benefits (amended 2011);
NZ IAS 28 Investments in Associates and Joint Ventures(amended 2011); andNZ IAS 34 Interim Financial Reporting (consequential
amendments).

The consolidated financial statements of ANZ New
Zealand comprise the financial statements of the NZ
Branch and all the New Zealand businesses of all thesubsidiaries of the Ultimate Parent Bank (those entities
where it is determined that the Ultimate Parent Bank has
capacity to control).

Other Operating Income
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013

30/09/2013

Net fee income

287

305

398

Fair value loss on hedging activities and financial liabilities designated at fair value

(41)

(20)

(55)

Insurance settlement relating to ING Diversified Yield Fund and ING Regular Income Fund

91

-

16

$millionsAudited-16

Other income

13

22

32

Total other operating income

350

323

391

Gain on sale of subsidiary and associateAustralia and New Zealand Banking Group Limited - New Zealand Branch

8

Notes to the Financial Statements
3.

Segmental Analysis

ANZ New Zealand is organised into four major businesssegments for segment reporting purposes - Retail,Commercial, Wealth and Institutional. Centralised back officeand corporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
Segmental reporting has been updated to reflect minorchanges to ANZ New Zealand’s structure. Comparative data
has been adjusted to be consistent with the current period’s
segment definitions.
RetailRetail provides products and services to personal customers
via the branch network, mortgage specialists, the contact
centre and a variety of self service channels (internet
banking, phone banking, ATMs, website and mobile phonebanking). Core products include current and savings
accounts, unsecured lending (credit cards, personal loans
and overdrafts) and home loans secured by mortgages overproperty. Retail distributes insurance and investment
products on behalf of the Wealth segment.

services are offered to small enterprises (typically with annual
revenues of less than $5 million). Commercial & Agricustomers consist of primarily privately owned medium tolarge enterprises. ANZ New Zealand's relationship with thesebusinesses ranges from simple banking requirements withrevenue from deposit and transactional facilities, and cash
flow lending, to more complex funding arrangements withrevenue sourced from a wider range of products. UDC isprincipally involved in the financing and leasing of plant,
vehicles and equipment, mainly for small and medium sizedbusinesses, as well as investment products.
WealthWealth comprises the Private Wealth, Funds Management
and Insurance businesses, which provide private banking,investment, superannuation and insurance products andservices.
Institutional
Institutional provides financial services through a number of
specialised units to large multi-banked corporations, often
global, which require sophisticated product and risk
management solutions. Those financial services include loan
structuring, foreign exchange, wholesale money market
services and transaction banking.

Commercial

Other

Commercial provides services to Business Banking,Commercial & Agri, and UDC customers. Business Banking

Other includes treasury and back office support functions,none of which constitutes a separately reportable segment.

Business segment analysis1$ millions

RetailCommercial

Wealth 2

Institutional

Other 3

Total

2,786

Unaudited 9 months to 30/06/2014

External revenues

1,063

2,153

179

581

(1,190)Intersegment revenues(114)(1,064)

121

(119)

1,176

-

Total revenues

949

1,089

300

462

(14)

2,786

Profit / (loss) after income tax

327

549

148

237

(18)

1,243

External revenues

1,046

2,062

57

640

(1,202)

2,603

Intersegment revenues

(141)

(976)

111

(164)

1,170

-

Total revenues

905

1,086

168

476

(32)

2,603

Profit / (loss) after income tax

268

525

55

235

(54)

1,029
3,436

Unaudited 9 months to 30/06/2013

Audited year to 30/09/2013

External revenues

1,398

2,757

83

800

(1,602)

Intersegment revenues(175)(1,315)

149

(191)

1,532

-

Total revenues

1,223

1,442

232

609

(70)

3,436

379

699

80

286

(75)

1,369

Profit / (loss) after income tax
1
2

3

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
Wealth external revenue for the nine months to 30 June 2014 includes the $91 million insurance settlement relating to the Bank’s former involvement in the ING
Diversified Yield Fund and the ING Regular Income Fund.
This segment has negative external revenue as this segment incurs funding costs on behalf of ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - New Zealand Branch

9

Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Overdrafts

1,689

1,741

1,841

Credit card outstandings

1,546

1,442

1,458

Term loans - housing

61,29557,78558,814

Term loans - non-housing$ millions

Note

39,24037,93338,024

Lease receivables

103

135

128

Hire purchase

791

683

721

Other

124

135

125

104,788

99,854

101,111

Total gross loans and advances
5

(714)

(913)

(849)

Less: Unearned income

(362)

(334)

(342)

Add: Capitalised brokerage/mortgage origination fees

197

148

162

Add: Customer liability for acceptances

29

38

31

103,938

98,793

100,113Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Collective provision

100

112

282

494

Individual provision

61

22

137

220

Total provision for credit impairment

161

134

419

714

Collective credit impairment release

(15)

(5)

(42)

(62)

2

63

(23)

42

(13)

58

(65)

(20)

Collective provision

116

115

354

585

Individual provision

105

15

208

328

Total provision for credit impairment

221

130

562

913

Collective credit impairment release

(4)

(10)

(21)

(35)

Individual credit impairment charge

17

47

20

84

Credit impairment charge / (release)

13

37

(1)

49

Collective provision

115

117

324

556

Individual provision

83

22

188

293

Total provision for credit impairment

198

139

512

849

Less: Provision for credit impairment

Total net loans and advances

5.

Provision for Credit Impairment$ millions
Unaudited 30/06/2014

Individual credit impairment charge / (release)
Credit impairment charge / (release)
Unaudited 30/06/2013

Audited 30/09/2013

Collective credit impairment release

(5)

(8)

(51)

(64)

Individual credit impairment charge

15

67

48

130

Credit impairment charge / (release)

10

59

(3)

66

Australia and New Zealand Banking Group Limited - New Zealand Branch

10

Notes to the Financial Statements
6.

Impaired Assets and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Total impaired assets

204

39

423

666

Loans that are at least 90 days past due but not impaired

123

36

77

236

Total impaired assets

278

40

745

1,063

Loans that are at least 90 days past due but not impaired

115

51

95

261

Total impaired assets

214

49

666

929

Loans that are at least 90 days past due but not impaired

108

40

76

224

$ millions
Unaudited 30/06/2014

Unaudited 30/06/2013

Audited 30/09/2013

7.

Financial Assets Pledged as Collateral
Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Cash collateral given on derivative financial instruments

1,304

615

1,002

Trading securities encumbered through repurchase agreements

1,350

1,152

108

Residential mortgages pledged as security for covered bonds

6,858

5,529

5,857

Total assets of UDC Finance Limited pledged as collateral for UDC secured investments

2,310

2,129

2,162

Total financial assets pledged as collateral

11,822

9,425

9,129

$ millions

ANZNZ Covered Bond Trust (the Covered Bond Trust)
Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related securities originated by
the Bank which are security for the guarantee by ANZNZ Covered Bond Trust Limited as trustee of the Covered Bond Trust of
issuances of covered bonds by the Bank, or its wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The
assets of the Covered Bond Trust are not available to creditors of the Bank, although the Bank (or its liquidator or statutory manager)
may have a claim against the residual assets of the Covered Bond Trust (if any) after all prior ranking creditors of the Covered Bond
Trust have been satisfied.
ANZ New Zealand continues to recognise the assets of the Covered Bond Trust on its balance sheet as, although they are pledged as
security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

Deposits and Other Borrowings$ millions

Note

Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Certificates of deposit

2,236

1,866

2,364

Term deposits

33,916

33,64133,862Other deposits bearing interest and other borrowings

33,31429,04829,687

Deposits not bearing interest

5,812

5,562

5,526

Deposits from banks

1,575

864

180

Commercial paper

6,951

4,416

4,765

1,519

1,492

1,492

Borrowings from Ultimate Parent Bank and Immediate Parent Company

10,603

11,135

10,137

Total deposits and other borrowings

95,92688,02488,013

UDC secured investments

9.

7

Related Party Transactions$ millions

Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Total due from related parties

3,183

3,264

2,325

Total due to related parties

15,27017,262

16,247

Australia and New Zealand Banking Group Limited - New Zealand Branch

11

Notes to the Financial Statements
10. Capital Adequacy
Basel III capital ratios

Ultimate Parent Bank
(Extended Licensed Entity)

Overseas Banking Group
30/06/2014

30/06/2013

Common equity tier 1 capital

8.3%

8.0%

8.5%

8.3%

8.4%

8.5%

Tier 1 capital

10.2%

9.5%

10.4%

10.6%

10.3%

10.6%

Total capital

12.1%

11.4%

12.2%

12.5%

12.2%

12.5%

30/09/2013

31/03/2014

31/03/2013

30/09/2013

Unaudited

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel Accord, APRA has accredited theOverseas Banking Group to use the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted
assets and the Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.
Under prudential regulations, the Overseas Banking Group is required to maintain a Prudential Capital Ratio (PCR) as determined by
APRA. The Overseas Banking Group exceeded the PCR set by APRA as at 30 June 2014 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 30 June 2014. The Overseas Banking
Group’s Pillar 3 disclosure document for the quarter ended 30 June 2014, in accordance with APS 330: Public Disclosure of Prudential
Information, discloses capital adequacy ratios and other prudential information. This document can be accessed at the website
anz.com.
Market risk
ANZ New Zealand’s aggregate market risk exposures below have been calculated in accordance with the RBNZ document BS2B.

$ millions

Implied risk
weighted
exposure

Notional
capitalcharge

4,742

379

113

9

2

-

4,857

388

Unaudited 30/06/2014

Interest rate risk
Foreign currency risk
Equity risk

Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by ANZ New
Zealand's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn andpartially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing
lending which have been accepted by the customer.
30/06/2014
UnauditedOn-balancesheet

Off-balance
sheet

Total

Does not exceed 60%

21,2503,410

24,660Exceeds 60% and not 70%

10,546938

11,484

Exceeds 70% and not 80%

16,9791,449

18,428Does not exceed 80%

48,775

5,797

54,572

Exceeds 80% and not 90%

6,521

225

6,746

$ millions

LVR range

Exceeds 90%

3,916

278

4,194

Total

59,2126,300

65,512

11. Redeemable Preference Shares Issued
ANZ Holdings (New Zealand) Limited (ANZH) issued AUD 898 million of redeemable preference shares (RPS) to the Immediate Parent
Company on 25 June 2014. The RPS were issued at the same time as payment of a dividend of NZD 970 million from ANZH to the
Immediate Parent Company.
RPS carry no voting rights and are redeemable by ANZH providing notice in writing to holders of the RPS. Dividends are payable atthe discretion of the directors of ANZH and are non-cumulative. In a liquidation, holders of RPS are entitled to available subscribed
capital per share, pari passu with all holders of existing RPS but in priority to all holders of ordinary shares. They have no entitlement
to participate in further distribution of profits or assets.

Australia and New Zealand Banking Group Limited - New Zealand Branch

12

Notes to the Financial Statements
12. Liquidity Portfolio
ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The
size of ANZ New Zealand’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items
classified as cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 30/06/2014$ millions

Cash

Trading
Securities

Available-forsale securities

Total

2,000

2,000

-

-

Certificates of deposit

-

-

477

477

Government, local body stock and bonds

-

5,771

518

6,289

Government treasury bills

-

107

21

128

Other bonds

-

5,397

-

5,397

2,000

11,275

1,016

14,291

Balances with central banks

Total liquidity portfolio

The Bank also held unencumbered internal residential mortgage backed securities which would entitle ANZ New Zealand to enter
into repurchase transactions with a value of $5,445 million at 30 June 2014.

13. Fair Value Measurements
Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair value of financial asset and liability
categories other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fairvalue:

Unaudited$ millions

30/06/2014
Carrying amount

Fair value

103,938

103,974

Deposits and other borrowings2

95,92696,028

Bonds and notes1

15,573

15,742

Subordinated debt

1,417

1,406

AssetsNet loans and advances1
Liabilities

1

2

Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from theamortised cost.
Includes commercial paper designated at fair value through profit or loss of $6,951million.

Financial assets and financial liabilities measured at fair value in the balance sheet
ANZ New Zealand uses a valuation method within the following hierarchy to determine the carrying amount of assets and liabilities
held at fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a nonrecurring basis.
Level 1 - Quoted market price
Where an active market exists fair value is based on quoted market prices for identical financial instruments. The quoted market
price is not adjusted for any potential impact that may be attributed to a large holding of the financial instrument.
Level 2 - Valuation technique using observable inputs
In the event that there is no quoted market price for the instruments, fair values are based on present value estimates or othermarket accepted valuation techniques which include data, including interest and exchange rates, from observable markets wherever
possible.
Level 3 - Valuation technique with significant non observable inputs
ANZ New Zealand holds units in an unlisted fund which does not trade in an active market. The fair value of these units is based on
the estimated cashflows from the realisation of the underlying assets.
ANZ New Zealand recognises transfers between Level 1, Level 2 and Level 3 as of the beginning of the reporting period during which
the transfer has occurred. There have been no transfers between levels during the period.

Australia and New Zealand Banking Group Limited - New Zealand Branch

13

Notes to the Financial Statements
Valuation hierarchy
Unaudited 30/06/2014$ millions

Level 1

Level 2

Level 3

Total

12,487

5-

12,492

4

7,620

-

7,624

1,054

-

2

1,056

119

55

-

174

13,6647,680

221,346

Deposits and other borrowings

-

6,951

-

6,951

Derivative financial instruments

5

9,210

-

9,215

Payables and other liabilities

194

-

-

194

Total financial liabilities held at fair value

199

16,161-

16,360Financial assets
Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing insurance policy liabilities
Total financial assets held at fair value
Financial liabilities

14. Concentrations of Credit Risk to Individual Counterparties
ANZ New Zealand measures its concentration of credit risk in respect of bank counterparties on the basis of approved exposures andin respect of non-bank counterparties on the basis of limits.
For the three months ended 30 June 2014 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where ANZ New Zealand’s period end or peak end-of-day credit exposure
equalled or exceeded 10% of the Overseas Banking Group’s equity as at the end of the period.
This credit exposure information does not include exposures to counterparties if they are booked outside New Zealand.

15. Insurance business
ANZ New Zealand conducts insurance business through its subsidiaries OnePath Life (NZ) Limited and OnePath Insurance Services(NZ) Limited. The aggregate amount of insurance business in this group comprises assets totalling $827 million (30/06/2013: $774
million; 30/09/2013 $779 million), which is 0.6% (30/06/2013: 0.6%; 30/09/2013 0.6%) of the total consolidated assets of ANZ New
Zealand.

16. Credit Related Commitments, Guarantees and Contingent Liabilities
Face or contract value$ millions

Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Credit related commitments
990

950

817

Commitments to provide financial services

26,40924,02424,250Total credit related commitments

27,39924,97425,067

Financial guarantees

841

885

997

Standby letters of credit

61

46

32

Transaction related contingent items

1,199

1,054

1,059

Trade related contingent liabilities

91

81

113

2,192

2,066

2,201

Commitments with certain drawdown due within one year

Guarantees and contingent liabilities

Total guarantees and contingent liabilities

ANZ New Zealand guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties,
including its Ultimate Parent Bank. To reflect the risk associated with these transactions, they are subjected to the same credit
origination, portfolio management and collateral requirements as for customers that apply for loans. The contract amountrepresents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As thefacilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.

Australia and New Zealand Banking Group Limited - New Zealand Branch

14

Notes to the Financial Statements
Other contingent liabilities
In December 2013, the Commerce Commission announced that it intended to file proceedings against the Bank (and two otherbanks) under the Fair Trading Act 1986 in relation to the sale of interest rate swaps to rural customers. On 2 April 2014, theCommission stated that it anticipates making a further announcement after it has progressed discussions with each bank. The
Financial Markets Authority has also commenced an investigation into this matter. The potential outcome of the investigations or
any proceedings which may be issued cannot be determined with any certainty at this stage.
In June 2013, litigation funder Litigation Lending Services (NZ) Limited filed a representative action against the Bank regarding
certain fees charged to New Zealand customers. The potential outcome of this litigation cannot be determined with any certainty at
this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings. An assessment of
the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision made where
deemed necessary.

17. Additional Disclosures
NZ Branch Funding

Unaudited$ millions

30/06/2014

Total liabilities of the NZ Branch less amounts due to related parties

38

Overseas Banking Group Profitability and Size

Unaudited

AUD millions

31/03/2014

Profit for the six months ended 31/03/20141

3,387

Net profit after tax for the 12 months to 31/03/2014 as a percentage of average total assets

0.94%

Total assets
Percentage change in total assets in the 12 months to 31/03/2014
1

737,815
9.69%

Net profit after tax for the period includes $6 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality

Unaudited

AUD millions

31/03/2014

Gross impaired assets

3,620

Gross impaired assets as a percentage of total assets

0.5%

Individual provision

1,470

Individual provision as a percentage of gross impaired assets

40.6%

Collective provision

2,843

Australia and New Zealand Banking Group Limited - New Zealand Branch

15

Notes to the Financial Statements
18. Changes to Comparatives
Certain amounts in the comparative information have been reclassified to conform with current period financial statement
presentations.
During the period, the classification of the balance sheet has been changed to reflect the nature of the financial assets and liabilities
reported. Prior to the reclassification, the balance sheet was classified according to counterparty. This has resulted in the followingchanges to previously reported balance sheet classifications. Minor changes in the overall total assets and total liabilities have also
occurred due to the adoption of IAS19 Employee Benefits and to gross up net insurance assets for the present value of reinsurance
premiums payable.
Associated amounts in the income statement, statement of comprehensive income and cash flow statement have been restatedaccordingly, and the impact of the changes to these statements is not material.
30/06/2013
Unaudited$ millions

Previously
reported

Liquid assets
Due from other financial institutions

30/09/2013

ChangeCurrently
reported

Previously
reported

ChangeCurrently
reported

3,004(3,004)-2,496(2,496)-

3,601(3,601)-

1,711(1,711)

-

Cash

-

5,027

5,027

-

2,347

2,347

Settlement balances receivable

-

206

206

-

515

515

Collateral paid

-

615

615

-

1,002

1,002

Available-for-sale assets

1,235

619

1,854

782

160

942

Net loans and advances

98,567

226

98,793

99,765348

100,113

Insurance policy assets

299

102

401

399

-

399

Other assets

671

(88)

583

735

(165)

570

Deferred tax assets

68

8

76

36

6

42

All other assets

25,193-25,19323,923-23,923

Total assets

132,638

110

132,748

129,8476

129,853

12,862(12,862)-

9,871(9,871)-

Settlement balances payable

-

1,265

1,265

-

1,114

1,114

Collateral received

-

1,526

1,526

-

438

438

76,026

11,99888,024

77,696

10,31788,013

AssetsLiabilities
Due to other financial institutions

Deposits and other borrowings
Due to immediate parent company

-

-

-

1,766

(1,766)

-

1,346

(31)

1,315

1,473

(213)

1,260

Term funding

1,766(1,766)

-

-

-

-

All other liabilities

30,865-30,86529,286-29,286

Total liabilities

122,865130

122,995

120,092

19

120,111

9,773

(20)

9,753

9,755

(13)

9,742

Payables and other liabilities

EquityAustralia and New Zealand Banking Group Limited - New Zealand Branch

16

Directors’ and New Zealand Chief Executive Officer’s Statement
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and theChief Executive Officer – NZ Branch believes that:(i)

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas
Incorporated Registered Banks) Order 2014; and(ii)

The Disclosure Statement is not false or misleading.

Over the nine months ended 30 June 2014, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive
Officer – NZ Branch believes that:(i)

The Ultimate Parent Bank has complied with all Conditions of Registration that applied during that period;(ii)

The NZ Branch and the Bank had systems in place to monitor and control adequately the material risks of Relevant Members of
ANZ New Zealand including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk andother business risks, and that those systems were being properly applied.

This Disclosure Statement is dated 14 August 2014, and has been signed by the Chairman of the Ultimate Parent Bank, onbehalf of all Directors, and by the Chief Executive Officer – NZ Branch.

David Gonski, AC
Chairman,on behalf of the Directors:
Paula Dwyer
Lee Hsien Yang
Graeme Liebelt
Ian Macfarlane, ACJohn Macfarlane
Michael Smith, OBE

Anthony Bradshaw
Chief Executive Officer – NZ Branch