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

General Short Form
Disclosure Statement
for the nine months ended 30 June 2007

Number 46 Issued August 2007

ANZ National Bank Limited

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIESGENERAL SHORT FORM DISCLOSURE STATEMENT for the nine months ended 30 June 2007

Contents

General Disclosures

2

Short Form Financial Statements

3–30

Conditions of Registration

31–32

Credit Rating Information

33–34

Directors’ Statement

35

Independent Review Report36

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	GENERAL DISCLOSURESThis Short Form Disclosure Statement has been issued in accordance with
the Registered Bank Disclosure Statement (Off-Quarter – New Zealand
Incorporated Registered Banks) Order 2007 (‘the Order’).

•the Board of the Ultimate Parent Bank in determining limits on
acceptable levels of exposure to the Bank should have regard to:•

the level of exposure that would be approved to third parties ofbroadly 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 and liquidity
position and its ability to continue operating in the event of a
failure by the Bank.

In this Short Form Disclosure Statement unless the context otherwise
requires:a) “Banking Group” means ANZ National Bank Limited and all its
subsidiaries; andb) any term or expression which is defined in, or in the manner prescribedby, the Registered Bank Disclosure Statement (Off-Quarter – New
Zealand Incorporated Registered Banks) Order 2007 shall have themeaning given in or prescribed by that Order.

•

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)

General Matters
The full name of the registered bank is ANZ National Bank Limited(‘the Bank’) and its address for service is Level 14, ANZ Tower, 215-229
Lambton Quay, Wellington, New Zealand.
The Bank was incorporated under the Companies Act 1955 by virtue ofthe 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 inAustralia).
The Ultimate Parent Bank is Australia and New Zealand Banking Group
Limited, which is incorporated in Australia, and its address for service is
100 Queen Street, Melbourne, Australia.
The Bank is wholly owned by its immediate parent company andultimately the Ultimate Parent Bank. The immediate parent company
has the power under the Bank’s Constitution to appoint any person as a
Director of the Bank either to fill a casual 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.

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 theAustralian Prudential Regulatory Authority to exercise its powers andfunctions for the protection of a bank’s depositors and in the event of abank becoming unable to meet its obligations or suspending payment theassets of the bank in Australia 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.
Guarantors
The material obligations of the Bank are not guaranteed.
Directorate
There have been changes to the Bank’s Board of Directors since theauthorisation date of the previous Disclosure Statement on 1 May 2007.
Dr D T Brash was appointed as a director of ANZ National Bank Limitedon 1 June 2007 replacing Mr R A McLeod who retired from the Board on
20 June 2007.

Material Financial Support
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 thefollowing:•

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

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

the Ultimate Parent Bank should not enter into cross default clauses
whereby a default by the Bank on an obligation (whether financial orotherwise) is deemed to trigger a default of the Ultimate Parent Bankin its obligations;

On 20 June 2007, Mr N M T Geary resigned as Risk Committee Chairman
and was appointed Audit Committee Chairman. Also on 20 June 2007, Dr
D T Brash was appointed Risk Committee Chairman.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	INCOME STATEMENT for the nine months ended 30 June 2007

Unaudited
9 months to
30/06/2007$mConsolidated
Unaudited
9 months to
30/06/2006$m

AuditedYear to30/09/2006$mInterest income

5,988

5,500

7,206

Interest expense

4,344

3,926

5,077

Net interest income

	1,644

1,574

2,129

Net trading gains
Other operating income
Share of profit of equity accounted associates and jointly controlled entities

	134
482
	17

143
454
18

159
621
22

Net operating income

2,277

2,189

2,931

Operating expenses

992

1,005

1,323

Profit before provision for credit impairment and income tax

	1,285

1,184

1,608

Provision for credit impairment

11	

56

5

18

Profit before income tax		1,229

1,179

1,590

Note
Continuing operations

3

457

380

523

Profit after income tax from continuing operations		

772

799

1,067

Discontinued operation
Profit from discontinued operations (net of income tax)

76

4

5

848

803

1,072

Income tax expense

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.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	STATEMENT OF RECOGNISED INCOME AND EXPENSES for the nine months ended 30 June 2007

Unaudited
9 months to
30/06/2007$mConsolidated
Unaudited
9 months to
30/06/2006$m

AuditedYear to30/09/2006$m

Available-for-sale revaluation reserve:
Valuation gain taken to equity
Cumulative gain transferred to the income statement on sale of financial assets

–
(3)

–
–

3
–

Cash flow hedges:
Valuation gain (loss) taken to equity

60

(6)

18

Actuarial gain (loss) on defined benefit schemes

9

(1)

(2)

Income tax on items recognised directly in equity

(20)

2

(5)

Net income (expense) recognised directly in equity	17

46

(5)

14

Profit after income tax		

848

803

1,072

Total recognised income and expenses for the period		

894

798

1,086

Note

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	BALANCE SHEET as at 30 June 2007

Unaudited
30/06/2007$mConsolidated
Unaudited
30/06/2006$m

Audited30/09/2006
$m

4
5
6
7

3,027
3,122
3,613
–
4,384
8
46
9, 10, 11	
85,128
	196
–
722
332
226
3,291	

2,306
5,923
2,242
–
2,320
248
76,453
180
43
683
349
713
3,287

2,698
5,617
1,596
538
2,020
359
78,155
177
114
890
332
240
3,288

	104,087

94,74796,024

12
13

3,734
63,266
2,298
1,330
–
–
197
159
11,221
2,643
1,454

3,987
63,176
1,997
1,216
53
–
210
159
12,468
2,720
1,805

Note
AssetsLiquid assets
Due from other financial institutions
Trading securities
Held for sale assets
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
Total assets
Liabilities
Due to other financial institutions
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Held for sale liabilities
Current tax liabilities
Deferred tax liabilities
Provisions
Bonds and notes
Related party funding
Loan capital

4,219
66,1354,800
	1,423
7
–
61	
296
	153
14	13,575
2,764
15	1,894

Total liabilities		

95,32086,302

87,791

Net assets		

8,767

8,445

8,233

EquityOrdinary share capital
Reserves
Retained profits

16
17
17

5,943
95
2,729

5,943
36
2,466

5,943
55
2,235

Total equity		

8,767

8,445

8,233

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	CASH FLOW STATEMENT for the nine months ended 30 June 2007

Unaudited
9 months to
30/06/2007$mConsolidated
Unaudited
9 months to
30/06/2006$m

AuditedYear to30/09/2006
$m

5,707
2
676
(3,966)
(967)
(216)

5,111
–
752
(3,562)
(943)
(292)

6,738
1
979
(4,669)(1,276)(466)

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

	1,236

1,066

1,307

Net changes in operating assets and liabilities:
Decrease (increase) in due from other financial institutions – term
Increase in trading securities(Increase) decrease in derivative financial instruments
Decrease in available-for-sale assets
Increase in loans and advances
Decrease in other assets
Increase (decrease) in due to other financial institutions – term
Increase in deposits and other borrowings
Increase (decrease) in payables and other liabilities

43(1,859)(1,847)314(7,437)243
	1,142
3,682
64

437
(1,230)1,032
1,285(6,848)370(1,133)
3,056
(343)

(128)
(576)
330
957
(8,607)
117
(386)
2,883
(375)

Net cash flows used in operating activities

25(4,419)(2,308)(4,478)Cash flows from investing activities
Proceeds from sale of shares in associates and jointly controlled entities
Proceeds related to sale of controlled entities
Proceeds from sale of premises and equipment
Purchase of shares in subsidiary companies
Purchase of shares in associates and jointly controlled entities
Purchase of intangible assets
Purchase of premises and equipment

–
7
585
	18
–
(2)
(8)
(37)

–
–
43
(5)
(4)
(6)
(138)

12
–
87
(5)
(7)
(10)
(228)

556

(110)

(151)

Cash flows from financing activities
Proceeds from bonds and notes
Redemptions of bonds and notes
Proceeds from loan capital
Redemptions of loan capital
Increase (decrease) in related party funding
Dividends paid

3,416
(635)
250
(125)
44
(360)

4,233
(636)
–
(100)
(7)
(400)

6,337
(663)
400
(100)
70
(900)

Net cash flows provided by financing activities		

2,590

3,090

5,144

Net cash flows used in operating activities
Net cash flows provided by (used in) investing activities
Net cash flows provided by financing activities(4,419)556
2,590(2,308)
(110)
3,090

(4,478)
(151)
5,144

Net (decrease) increase in cash and cash equivalents		
Cash and cash equivalents at beginning of the period(1,273)
2,728

672
2,213

515
2,213

Cash and cash equivalents at end of the period

	1,455

2,885

2,728

Reconciliation of cash and cash equivalents to the balance sheet
Liquid assets
Due from other financial institutions – less than 90 days
Due to other financial institutions – less than 90 days

3,026
	1,487(3,058)

2,306
4,213
(3,634)

2,698
3,998
(3,968)

Total cash and cash equivalents

	1,455

2,885

2,728

Note
Cash flows from operating activities
Interest received
Dividends received
Fees and other income received
Interest paid
Operating expenses paid
Income taxes paid

Net cash flows provided by (used in) investing activities		

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	NOTES TO THE FINANCIAL STATEMENTS
1.

ACCOUNTING POLICIES(i)

Basis of preparation
These financial statements have been prepared in accordance with the NZ IAS 34 Interim Financial Reporting and the Registered Bank DisclosureStatement (Off-Quarter – New Zealand Incorporated Registered Banks) Order 2007. These financial statements should be read in conjunction withthe consolidated financial statements for the year ended 30 September 2006.

(ii)

Measurement base
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 at their fair value: derivative financial instruments, securities treated as available-for-sale, 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 Statementon 1 May 2007.
(iv) Presentation currency and roundings
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 theauthorisation date of the previous Disclosure Statement on 1 May 2007.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	NOTES TO THE FINANCIAL STATEMENTS (continued)
3.

INCOME TAX EXPENSE
Unaudited
9 months to
30/06/2007$m
Income tax expense on profit from continuing operations
Effective tax rate (%)

4.

457

380

523

37.2%

32.2%

32.9%

LIQUID ASSETS
Unaudited
30/06/2007$m

5.

Consolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

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

1,263
353
1,331	
80

801
–
1,343
162

1,046
–
1,493
159

Total liquid assets

3,027

2,306

2,698

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

1,073

570

806

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

383
552
2,187

743
2,466
2,714

1,019
657
3,941

Total due from other financial institutions

3,122

5,923

5,617

200
–

204
1,035

–
1,164

4

204

51

Government, Local Body stock and bonds
Certificates of deposit
Promissory notes
Other

475
2,582
399
157

194
1,604
353
91

198
1,112
212
74

Total trading securities

3,613

2,242

1,596

376

194

198

DUE FROM OTHER FINANCIAL INSTITUTIONS

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.

Consolidated
Unaudited
Audited9 months toYear to30/06/2006
30/09/2006$m$m

TRADING SECURITIES

Included within trading securities is the following balance:
Assets encumbered through repurchase agreements

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	NOTES TO THE FINANCIAL STATEMENTS (continued)
7.

DISCONTINUED OPERATIONS
On 1 September 2006, UDC Finance Limited (‘UDC’) agreed to sell Truck Leasing Limited (‘TLL’) to Nikko Principal Investments Australia
Limited, a private equity business of Nikko Cordial Corporation. The sale was completed on 31 October 2006 for consideration of $147 million.
As the sale agreement was signed on 1 September 2006, in accordance with accounting requirements the assets and liabilities of TLL were classified
as held for sale as at 30 September 2006 and TLL treated as a discontinued operation.
TLL’s unsecured bank borrowings with UDC were repaid on the sale date and have been excluded from TLL’s liabilities classified as held for sale.
As at 31 October 2006 this balance was $438 million (30/09/2006 $423 million).
The 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:

Result of discontinued operations

Unaudited
1 month to
31/10/2006$m

Truck Leasing Limited
Unaudited
Audited9 months toYear to30/06/2006
30/09/2006$m$m

Interest income
Interest expense

–
2

–
20

1
28

Net interest expense

(2)

(20)

(27)

Other operating income1

3

34

45

Net operating income
Operating expenses

1	
1	

14
7

18
9

Operating profit before provision for credit impairment and income tax
Provision for credit impairment

–
–

7
1

9
1

Operating profit before income tax
Income tax expense

–
–

6
2

8
3

Operating profit after income tax – discontinued operations
Gain on sale of discontinued operations

–
76

4
–

5
–

Net profit from discontinued operations

76

4

5

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

15
(3)

86
(85)

114
(116)

Net cash flows from discontinued operations

12

1

(2)

14

121

162

8
3

68
19

90
28

3

34

44

Cash flows from discontinued operations

Other operating income includes:
Gross operating lease income
Less direct income related expenses– Operating lease depreciation– Other direct income related expenses
1

Net operating lease income

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	10NOTES TO THE FINANCIAL STATEMENTS (continued)
7.

DISCONTINUED OPERATIONS (continued)
The assets and liabilities classified as held for sale as at 30 September 2006 comprised:			 Consolidated
			
Audited			
30/09/2006
			$mAssets classified as held for sale
Net loans and advances			3
Current tax assets			
2
Other assets			
40
Deferred tax assets			
6
Premises and equipment (including operating lease assets)			
486
Goodwill			
1
Total assets

538

Liabilities classified as held for sale
Payables and other liabilities			Provisions			
Deferred tax liabilities			

23
1
29

Total liabilities			

53

The sale resulted in the following impact on the consolidated financial statements:
			 Consolidated
			
Unaudited			
31/10/2006
			$mCash 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 sale76

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

147
438

Proceeds related to sale of controlled entities

585

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	11
NOTES TO THE FINANCIAL STATEMENTS (continued)
8.

AVAILABLE-FOR-SALE ASSETS
Unaudited
30/06/2007$m

9.

Consolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

Government, Local Body stock and bonds
Floating rate notes
Other

3
43
–

210
38
–

316
39
4

Total available-for-sale assets

46

248

359

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

–

21

221

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

1,997
1,322
48,36333,906
745

2,035
1,218
42,40530,763
797

1,907
1,238
43,472
31,547776

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

86,333
(466)
(275)
(529)
(52)
117

77,218
(472)
(244)
(84)
(52)
87

78,940
(460)
(248)
(119)
(50)
92

Total net loans and advances

85,12876,45378,155–80

58

NET LOANS AND ADVANCES

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

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	12NOTES TO THE FINANCIAL STATEMENTS (continued)
10. IMPAIRED ASSETS, PAST DUE ASSETS AND OTHER ASSETS UNDER ADMINISTRATION
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

On-balance sheet impaired assets, past due assets and other assets under administration
Impaired assets
Past due assets (90 days past due assets)
Other assets under administration

113
100
–

180
89
–

151
86
–

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

213

269

237

Off-balance sheet impaired assets

12

22

8

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

225

291

245

Collective provision
Balance at beginning of the period
Adjustment on adoption of NZ IAS 39 on 1 October 2005
Transfer to held for sale assets
Charge (credit) to income statement

402
–
–
17

568
(154)
–
(23)

568
(154)
(2)
(10)

Balance at end of the period

419

391

402

Individual provision (impaired assets)
Balance at beginning of the period
Adjustment on adoption of NZ IAS 39 on 1 October 2005
Transfer to held for sale assets
Charge to income statement – continuing operations
Charge to income statement – discontinuing operations
Recoveries
Bad debts written off
Discount unwind

58
–
–
39
–
15
(62)
(3)

98
(6)
–
28
1
17
(53)
(4)

98
(6)
(1)
28
1
22
(77)
(7)

Balance at end of the period

47

81

58

Total provision for credit impairment

466

472

460

Provision movement analysis
New and increased provisions
Provision releases

67
(13)

60
(15)

91
(41)

Recoveries

54
(15)

45
(17)

50
(22)

Individual provision charge
Collective provision charge (credit)

39
17

28
(23)

28
(10)

Provision for credit impairment – continuing operations
Provision for credit impairment – discontinuing operations

56
–

5
1

18
1

Provision for credit impairment

56

6

19

11. PROVISION FOR CREDIT IMPAIRMENT

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	13
NOTES TO THE FINANCIAL STATEMENTS (continued)
12. DUE TO OTHER FINANCIAL INSTITUTIONS
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

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

803
376
3,040

1,894
1,229
611

1,082
1,362
1,543

Total due to other financial institutions

4,219

3,734

3,987

803

1,894

1,082

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

3,183
27,56021,839
3,993
1,900
200

4,930
26,042
18,726
4,248
2,125
200

3,941
26,293
19,856
3,919
2,077
200

Deposits and other borrowings – recognised at amortised cost

58,67556,271

56,286

Fair value through the profit or loss
Commercial paper

7,460

6,995

6,890

Deposits and other borrowings – recognised at fair value

7,460

6,995

6,890

Total deposits and other borrowings

66,13563,266

63,176

Included within deposits and other borrowings is the following balance:
Commercial paper issued by ANZ National (Int’l) Limited guaranteed by the Bank

7,467

6,997

6,894

82

–

–

2,196

2,461

2,383

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

1,822
11,753755
10,466719
11,749Total bonds and notes

13,575

11,221

12,468

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

12,588

10,274

11,513

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.

13. DEPOSITS AND OTHER BORROWINGS

Included within deposits and other borrowings is the following related
party balance:
ANZ Holdings (New Zealand) Limited (Parent Company)
The balance owing to the Parent Company is due within the next twelve months.
Interest is paid at variable bank rates.
UDC Finance Limited secured debentures
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.
Carrying value of total tangible assets

14. BONDS AND NOTESANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	14
NOTES TO THE FINANCIAL STATEMENTS (continued)
15. LOAN CAPITAL
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$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
NZD term subordinated fixed rate bonds

228
292
205
48
1,121	

253
324
227
–
650

238
304
213
50
1,000

Total loan capital

1,894

1,454

1,805

773

804

805

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 2014. 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 eachyear commencing from 2010 through to 2015. 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 2016. All interest is payable half yearly in arrears, with interest payments due 15 Marchand 15 September. Interest is based on BBSW + 0.29% p.a. to 15 September 2011 and increases to BBSW + 0.79% p.a. thereafter.
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 date23 July 2002
15 September 2006
2 March 2007

Amount $m Coupon rate
300
7.04%
350
7.16%
250
7.60%

Call date23 July 2007
15 September 2011
2 March 2012

Maturity date23 July 201215 September 2016
2 March 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 0.80% p.a. Interest is payable half yearly in arrears based on the fixed coupon rate. On 23 July 2007, the Bank
elected to redeem the issue of $300 million bonds on their call date.
The bonds are listed on the NZX. On 10 October 2002 the Market Surveillance Panel of the NZX 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 theserules 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 the above 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 30 June 2007 these bonds carried an AA- rating by Standard & Poor’s.
On 23 July 2007, the Bank issued a further $350 million of subordinated fixed rate bonds. These bonds have a maturity date of 23 July 2017,with the ability for the Bank to elect to call the bonds on 23 July 2012. The bonds pay a coupon rate of 8.23%, with the rate resetting to the five
year interest rate swap rate plus 0.74% if they are not called. Interest is payable half yearly in arrears.
Non listed bonds
Issue date
15 July 2002
20 February 2003

Amount $m Coupon rate
125
7.40%
100
6.46%

Call date17 September 2007
20 August 2008

Maturity date17 September 2012
20 August 2013

The Bank may elect to redeem the bonds on their call date. If not called, the 17 September 2012 bonds will continue to pay interest to maturity
at the five year interest rate swap rate plus 1.00% p.a., while the 20 August 2013 bonds 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 30 June 2007 these bonds 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.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	15
NOTES TO THE FINANCIAL STATEMENTS (continued)
16. ORDINARY SHARE CAPITAL
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

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

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 shallhave 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 whichsuch member is the holder.

17. RESERVES AND RETAINED PROFITS
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

Available-for-sale revaluation reserve
Balance at beginning of the period
Adjustment on adoption of NZ IAS 39 on 1 October 2005
Valuation gain recognised after tax
Cumulative gain transferred to income statement on sale of financial assets

3
–
–
(3)

n/a
–
–
–

n/a
–
3
–

Balance at end of the period

–

–

3

Cash flow hedging reserve
Balance at beginning of the period
Adjustment on adoption of NZ IAS 39 on 1 October 2005
Valuation gain (loss) recognised after tax

52
–
43

n/a
40
(4)

n/a
40
12

Balance at end of the period

95

36

52

Total reserves

95

36

55

Retained profits
Balance at beginning of the period
Adjustment on transition to NZ IFRS at 1 October 2005
Profit after income tax

2,235
–
848

2,003
61
803

2,003
61
1,072

Total available for appropriation
Actuarial gain (loss) on defined benefit schemes after tax
Interim ordinary dividend paid

3,083
6
(360)

2,867
(1)
(400)

3,136
(1)
(900)

Balance at end of the period

2,729

2,466

2,235

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	16
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. INTEREST EARNING AND DISCOUNT BEARING ASSETS AND LIABILITIES
Unaudited
30/06/2007$mConsolidated
Unaudited
Audited30/06/2006
30/09/2006$m$m

Interest earning and discount bearing assets

94,77387,12788,398Interest and discount bearing liabilities

84,25678,01080,293

Premises and equipment
Not later than 1 year

15

39

38

Total capital expenditure commitments

15

39

38

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

84
157
28

84
178
39

79
172
39

Total lease rental commitments

269

301

290

Total commitments

284

340

328

19. COMMITMENTS
Capital expenditure
Contracts for outstanding capital expenditure:

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	17
NOTES TO THE FINANCIAL STATEMENTS (continued)
20. SEGMENTAL ANALYSIS
For segment reporting purposes, the Banking Group is organised into four major business segments – Retail Banking, Relationship Banking,Institutional and UDC. 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 the personal banking segment and the small business segment throughseparate ANZ and The National Bank branded distribution channels. Personal banking customers have access to awide 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 offersa 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 joint venture).
Relationship Banking

This segment provides services to rural, commercial and corporate customers. A full range of banking products andservices are provided to Rural customers. Corporate and Commercial customers consist of medium to large businesses
with annual revenues from $5 million to $150 million. The Banking Group’s relationship with these 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 largest corporate andinstitutional customers. The Institutional business unit is made up of the following specialised units:– Debt Product Group – manages customer relationships along industry segment lines, typically with wholesale clientswith turnover greater then $100 million.
– Corporate and Structured Finance – provides specialist lending, underwriting and capital structuring and solutions tocorporates, institutions and governments.
– Markets – provides securities, derivatives and foreign exchange products and services to the Banking Group’s clientbase.
– Working Capital – provides trade finance, cash management, international payments, clearing and custodian services
to the Banking Group’s client base.

UDC

UDC is primarily involved in the financing and leasing of equipment, plant and machinery for small and medium sizedbusinesses.

Other

Includes Treasury and back office support functions, none of which constitutes a separately reportable segment.

As the composition of segments has changed over time, prior period comparatives have been adjusted to be consistent with the 2007 segment
definitions.
Business segment analysis – continuing operations1,2
RetailBanking$m

Relationship				Consolidated
Banking Institutional
UDC
Other
Total
$m
$m
$m
$m
$m

Unaudited 9 months to 30/06/2007
Net operating income
Profit before income tax

1,282
541	

483
306

326
228

55	131	
2,277
34	120	1,229

Unaudited 9 months to 30/06/2006
Net operating income
Profit before income tax

1,188
522

434
292

367
269

52
25

148
71

2,189
1,179

Audited year to 30/09/2006
Net operating income
Profit before income tax

1,608
704

590
398

471
331

70
33

192
124

2,931
1,590

1
2

Results are equity standardisedIntersegment transfers are accounted for and determined on an arm’s length or cost recovery basis.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	18
NOTES TO THE FINANCIAL STATEMENTS (continued)
21. CONTINGENT LIABILITIES, CREDIT RELATED COMMITMENTS AND MARKET RELATED CONTRACTS
Consolidated
Unaudited
Unaudited
Audited30/06/2007
30/06/2006
30/09/2006$m$m$m
The estimated face or contract values are as follows:
Contingent liabilities
Financial guarantees1
Standby letters of credit
Transaction related contingent items
Trade related contingent liabilities

1,900
528
404
150

1,611
382
377
206

1,688
368
376
89

Total contingent liabilities

2,982

2,576

2,521

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

1,767
20,748

1,386
20,591

1,221
20,338

Total credit related commitments

22,515

21,977

21,559Foreign exchange, interest rate and equity contracts
Exchange rate contracts
Interest rate contracts
Equity contracts

72,397
439,677
20

71,842
233,65930

73,017
253,530
30

Total foreign exchange, interest rate and equity contracts

512,094

305,531

326,577

With effect from 1 October 2006, financial guarantee contracts are recognised initially at fair value. After initial recognition, such contracts aremeasured at the higher of the amount determined in accordance with NZ IAS 37: Provisions, Contingent Liabilities and Contingent Assets, or theamount initially recognised. There was no financial impact on adoption of this amendment to NZ IAS 39: Financial Instruments: Recognition andMeasurement.
1

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES	19
NOTES TO THE FINANCIAL STATEMENTS (continued)
21. CONTINGENT LIABILITIES, 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 ofan audit of the 2000 – 2003 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 first step in aformal 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 case prior to that tax year becoming statutebarred). 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 these transactions and all
similar transactions is correct.
The tax adjustments proposed so far by the IRD cover the 2000 to 2003 tax years and imply a maximum potential liability of $159 million ($232
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 thesame position be taken by the IRD for all years on all these transactions, including those that the Notices cover, the maximum potential liability
would be approximately $365 million ($497 million with interest tax effected) as at 30 June 2007.
Of the maximum potential tax liability in dispute, it has been estimated that approximately $99 million ($139 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, andwhich relate to transactions undertaken by NBNZ Group before December 2003.
This leaves a net potential tax liability as at 30 June 2007 of $266 million ($358 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 Zealandissuers 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 other abovementioned
defendants seeking unquantified damages, based on allegations similar to those contained in the Commerce Commission proceedings.
ANZ National Bank Limited is defending the proceedings. At this stage, the risks and any potential liabilities cannot be assessed.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES20NOTES TO THE FINANCIAL STATEMENTS (continued)
22. CONCENTRATIONS 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 equal or exceed 10% of equity (as at the end of
the quarter) in ranges of 10% of equity, on the basis of limits:		Unaudited 30/06/2007
Number of Counterparties
Peak forAs at
the quarter
10% to 20% of equity

2

2

Consolidated
Unaudited 30/06/2006
Number of Counterparties
Peak forAs at
the quarter
2

2

Audited 30/09/2006
Number of Counterparties
Peak forAs at
the quarter2

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 the various counterparty
limits.
The amount and percentage of quarter end and peak end-of-day credit exposures to 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-ofday credit exposures equal or exceed 10% of equity (as at the end of the quarter), by credit rating:		
Unaudited 30/06/2007% of Total
AmountCredit$m
Exposure
As at
Investment grade credit rating (Note 1)
2,502	100.0%
Peak for the quarter
Investment grade credit rating (Note 1)

2,502	100.0%

Consolidated
Unaudited 30/06/2006% of Total
AmountCredit$m
Exposure

Audited 30/09/2006% of Total
AmountCredit$m
Exposure

2,286

100.0%

2,281

100.0%

2,286

100.0%

2,286

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 andconnected persons), where the quarter end and peak end-of-day credit exposures equal or exceed 10% of equity (as at the end of the quarter) in
ranges of 10% of equity, on the basis of actual exposures:		
Unaudited 30/06/2007
Number of Counterparties
Peak forAs at
the quarter
10% to 20% of equity
20% to 30% of equity

2
–

3
–

Consolidated
Unaudited 30/06/2006
Number of Counterparties
Peak forAs at
the quarter
–
2

1
2

Audited 30/09/2006
Number of Counterparties
Peak forAs at
the quarter
2
–

3
–

The amount and percentage of quarter end and peak end-of-day credit exposures to bank counterparties or groups of closely related counterpartiesof which a bank is a parent (excluding OECD Governments and connected persons), where the quarter end and peak end-of-day credit exposuresequal or exceed 10% of equity (as at the end of the quarter), by credit rating:		Consolidated
Unaudited 30/06/2007
Unaudited 30/06/2006
Audited 30/09/2006% of Total% of Total% of Total
AmountCreditAmountCreditAmountCredit$m
Exposure$m
Exposure$m
Exposure
As at
Investment grade credit rating (Note 1)
2,441	100.0%
3,445
100.0%
1,700
100.0%
Peak for the quarter
Investment grade credit rating (Note 1)

3,333	100.0%

4,499

100.0%

2,546

100.0%

Note 1
All of the individual and bank counterparties included in the above tables have an investment grade rating. An investment grade credit rating meansa 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 thatof 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, or to an entity’s long term senior unsecured foreign currency obligations.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES21

NOTES TO THE FINANCIAL STATEMENTS (continued)
22. CONCENTRATIONS OF CREDIT RISK (continued)
Concentrations of credit risk to connected persons
Consolidated
Unaudited 30/06/2007
Unaudited 30/06/2006
Audited 30/09/2006
		 % of Group		% of Group		% of Group
AmountTier 1	
AmountTier 1
AmountTier 1$m
Capital$m
Capital$m
CapitalAggregate at end of period
1,191
25.2%
Connected persons (Note 2)
1,429
27.5%
1,826
36.8%
Peak end-of-day for the quarter (Note 3)
1,826
38.6%
Connected persons
1,868
36.0%
1,826
36.8%
Rating-contingent limit (Note 4)
Connected persons
n/a
75.0%
n/a
70.0%
n/a
70.0%
Non-bank connected persons
n/a	15.0%
n/a
15.0%
n/a
15.0%
The credit exposure concentrations disclosed for connected persons are on the basis of actual gross exposures and exclusive of exposures of a capitalnature. 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 30 June 2007 (30/06/2006 $nil; 30/09/2006 $nil).
The Banking Group had no contingent exposures arising from risk lay-off arrangements to connected persons as at 30 June 2007 (30/06/2006 $nil;
30/09/2006 $nil).
Note 2The Banking Group has amounts due from its Parent Company and Ultimate Parent Company and other entities within the Ultimate Parent Grouparising from the ordinary course of its business. These balances arise primarily from unrealised gains on trading and hedging derivative financial
instruments with the Ultimate Parent Bank.
Note 3The 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 thelimits on aggregate credit exposures (of a non-capital nature and net of individual provisions) to connected persons and non-bank connected persons,as set out in the Conditions of Registration, at all times during the quarter.
Note 4
Represents the maximum peak end-of-day aggregate credit exposures limit (exclusive of exposures of a capital nature and net of individual
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 toaggregate credit exposures (exclusive of exposures of a capital nature and net of individual provisions) to non-bank connected persons. During thequarter the connected persons’ limit increased from 70% to 75% as a result of an improvement in the Bank’s credit rating.
Note 5
There are no exposures with non-bank connected persons.

23. MARKET 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 below 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 rate risk exposures havebeen calculated in accordance with clause 1 (b) of Schedule 9 of the Order. Aggregate equity risk exposures have been calculated in accordancewith clause 11 (a) of Schedule 9 of the Order. The peak end-of-day market risk exposures for the quarter are measured over equity at the end of thequarter.
		Consolidated
Unaudited 30/06/2007
Unaudited 30/06/2006
Audited 30/09/2006
Peak for		
Peak for		
Peak for
Exposures to market risk
As at
the quarter
As at
the quarter
As at
the quarter
Aggregate foreign currency exposures ($ million)

5.9	10.1

1.6

14.3

6.0

19.3

Aggregate foreign currency exposures as apercentage of equity

0.1%

0.1%

0.0%

0.2%

0.1%

0.2%

Aggregate interest rate exposures ($ million)

293.8

293.8

288.6

288.6

250.9

318.9

Aggregate interest rate exposures as a percentageof equity

3.4%

3.4%

3.4%

3.4%

3.1%

3.9%

0.2

0.2

0.2

0.2

0.5

0.5

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Aggregate equity exposures ($ million)
Aggregate equity exposures as a percentageof equity

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES22NOTES TO THE FINANCIAL STATEMENTS (continued)
24. SECURITISATION, FUNDS MANAGEMENT, OTHER FIDUCIARY ACTIVITIES, 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 privatebanking 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.
The ANZ FlexiMortgage Income Trust holds mortgages under an equitable assignment with the Bank. The ANZ FlexiMortgage Income Trust can at
any time require the Bank to repurchase any mortgage. The Bank may also require repurchase in certain circumstances. The mortgages are includedin these financial statements.
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 the provision of privatebanking 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 aremanaged 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 and custodialservices 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.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES23

NOTES TO THE FINANCIAL STATEMENTS (continued)
25. NOTES TO THE CASH FLOW STATEMENT
Unaudited
9 months to
30/06/2007$mConsolidated
Unaudited
Audited9 months toYear to30/06/2006
30/09/2006$m$m

Reconciliation of profit after income tax to net cash flows used in operating activities
Profit after income tax

848

803

1,072

Non-cash items:
Depreciation and amortisation
Provision for credit impairment
Amortisation of premiums and discounts
Capitalised brokerage/loan origination fees
Deferred fee revenue and expenses
Share-based payment expense

43
56
42
50
2
10

105
6
(11)
23
8
9

140
19
12
31
6
10

(5,655)
(76)
133
(1)
2
(21)
127
114

(3,374)
(84)
113
–
13
9
64
26

(5,785)
(88)
74
(1)
(13)
9
(3)
63

(17)
(76)
–

(18)
–
–

(22)
–
(2)

(4,419)(2,308)(4,478)Deferrals or accruals of past or future operating cash receipts or payments:
Increase in operating assets and liabilities
Increase in interest receivable
Increase in interest payable
Increase in accrued income
Increase (decrease) in accrued expenses(Decrease) increase in provisions
Decrease (increase) in income tax assets
Increase in income tax liabilities
Items classified as investing/financing:
Share of profit of equity accounted associates andjointly controlled entities
Gain on disposal of controlled entities
Gain on disposal of associates and jointly controlled entities
Net cash flows used in operating activities

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES24

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY
Capital Adequacy Ratios

Unaudited
30/06/2007

Consolidated
Unaudited
Audited30/06/2006 30/09/2006

Unaudited
30/06/2007

Registered Bank
Unaudited
Audited30/06/2006 30/09/2006

Tier 1 Capital

7.43%

7.85%

7.34%

7.10%

7.63%

7.09%

Total Capital

10.14%

10.15%

10.14%

8.94%

8.95%

8.96%

Tier 1 Capital

4.00%

4.00%

4.00%

4.00%

4.00%

4.00%

Total Capital

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

Reserve Bank of New Zealand minimum ratios:

The information contained in the table below has been derived in accordance with the Conditions of Registration imposed pursuant to section 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.
For the purposes of calculating the capital adequacy ratios for the Registered Bank (“solo basis”), wholly owned and wholly funded subsidiaries 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 trade creditors, 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 subsidiaryis held by the Bank.
Unaudited
30/06/2007

Consolidated
Unaudited
Audited30/06/2006 30/09/2006

Unaudited
30/06/2007

Registered Bank
Unaudited
Audited30/06/2006 30/09/2006

Tier 1 Capital
Ordinary share capital
Revenue and similar reserves
Current period’s profit after tax

5,943
1,976
848

5,943
1,699
803

5,943
1,218
1,072

5,943
1,666
808

5,943
1,459
746

5,943
979
1,001

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

3,265
26
9
183
95

3,265
22
–
162
36

3,266
23
–
167
52

3,262
25
9
183
95

3,262
22
–
162
36

3,262
22
–
167
52

Total Tier 1 Capital

5,189

4,960

4,725

4,843

4,666

4,420

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

292

324

304

292

324

304

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

1,602

1,130

1,501

1,602

1,130

1,501

Total Tier 2 Capital

1,894

1,454

1,805

1,894

1,454

1,805

Total Tier 1 Capital Plus Tier 2 Capital

7,083

6,414

6,530

6,737

6,120

6,225

–

–

–

642

642

642

Capital

7,083

6,414

6,530

6,095

5,478

5,583

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

64,4505,414

58,814
4,398

60,1604,223

62,8155,399

56,803
4,373

58,137
4,185

69,864

63,21264,383

68,214

61,17662,322Less deductions from Total Capital– Equity investments in subsidiaries

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES25

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Banking Group as at 30 June 2007 (Unaudited):
Principal
Amount$m

On-balance sheet exposures

Risk
Weight%Risk
Weighted$m

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

2,024
0
–
1,405	10	140
5,479
20	1,096437
20
87
48,01450
24,007
39,120	100
39,1207,608
n/a–

Total on-balance sheet exposures

104,087		

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted$m2,428	1002,428
49	1,180
1,782	100	1,782
62	1,113404
50
202	100
202
150
20
30
67
20

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

72,397		
439,677		
20

Total off-balance sheet exposures

537,606		13,202		

1

64,4502,031	

50	1,016	100	1,016

18,717

0

–	100
3,690
4,032
22

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

–

28	1,018
21	
861
20
4
5,414

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES26

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Banking Group as at 30 June 2006 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

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

2,179
1,417
6,307
420
42,40236,126
5,896

0
10
20
20
50
100
n/a

–
142
1,261
84
21,201
36,126–

Total on-balance sheet exposures

94,747		

58,814On-balance sheet exposures

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

1,993
1,425
377
206

100
100
50
20

1,993
1,425
188
41

46
68
100
70

915
974
188
29

2,006

50

1,003

100

1,003

18,585

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

0

–

100

–

71,842		
233,659		
30		

3,680
1,370
19

26
23
21

967
318
4

Total off-balance sheet exposures

330,123		

9,719		

4,398

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

1

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES27

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Banking Group as at 30 September 2006 (Audited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

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

2,328
824
6,481
425
43,52636,934
5,506

0
10
20
20
50
100
n/a

–
82
1,296
85
21,76336,934–

Total on-balance sheet exposures

96,024		

60,160On-balance sheet exposures

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,056
1,259
376
89

100
100
50
20

2,056
1,259
188
18

46
61
100
94

946
771
188
17

2,351

50

1,175

100

1,175

17,987

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

0

–

100

–

73,017		
253,530		
30		

2,840
1,665
22

26
23
20

745
377
4

Total off-balance sheet exposures

350,695		

9,223		

4,223

1

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES28

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Registered Bank as at 30 June 2007 (Unaudited):
Principal
Amount$m

On-balance sheet exposures

Risk
Weight%Risk
Weighted$m

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

1,719
0
–
1,405	10	140
4,985
20
997
437
20
87
48,01450
24,00737,584	100
37,5848,250
n/a–

Total on-balance sheet exposures

102,394

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

62,815
Average
Risk
Weight%2,428	1002,428
49	1,180
1,782	100	1,782
62	1,113404
50
202	100
202
143
20
29
70
20

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

72,397439,252
20

3,690
4,026
22

Total off-balance sheet exposures

536,987

13,183		

1

Risk
Weighted$m

2,008

50	1,004	100	1,004

18,5530–	100

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

–

28	1,018
21	
858
20
4
5,399

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES29

NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Registered Bank as at 30 June 2006 (Unaudited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

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

1,879
1,417
5,762
420
42,37034,240
6,535

0
10
20
20
50
100
n/a

–
142
1,152
84
21,18534,240–Total on-balance sheet exposures

92,623		

56,803On-balance sheet exposures

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

1,993
1,400
377
203

100
100
50
20

1,993
1,400
188
41

46
68
100
71

915
949
188
29

2,006

50

1,003

100

1,003

18,388

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

0

–

100

–

71,840		
233,259		
30		

3,680
1,370
19

26
23
21

967
318
4

Total off-balance sheet exposures329,496		

9,694		

4,373

1

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

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES30NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CAPITAL ADEQUACY (continued)
Total Risk Weighted Exposures of the Registered Bank as at 30 September 2006 (Audited):
Principal
Amount$m

Risk
Weight%Risk
Weighted$m

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

2,028
824
5,950
425
43,52635,017
6,143

0
10
20
20
50
100
n/a

–
82
1,190
85
21,76335,017–

Total on-balance sheet exposures

93,913		

58,137On-balance sheet exposures

Off-balance sheet exposures

Notional
Principal
Amount$m

CreditConversion
Factor%CreditEquivalent
Amount$m

Average
Risk
Weight%Risk
Weighted
$m

2,056
1,221
376
87

100
100
50
20

2,056
1,221
188
17

46
60
100
97

946
733
188
17

2,351

50

1,175

100

1,175

17,805

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

0

–

100

–

73,016		
253,122		
30		

2,840
1,665
22

26
23
20

745
377
4

Total off-balance sheet exposures

350,064		

9,184		

4,185

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

1

27. 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:Unaudited
Unaudited
Audited31/03/2007
31/03/2006
30/09/2006
Tier 1 Capital
Total Capital

6.7%
10.3%

6.8%
10.4%

6.8%
10.6%

The Ultimate Parent Company meets those requirements imposed on it by its home supervisor as at 31 March 2007 whereby banks must maintain aratio 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 various transitionalrules which run through to different dates in 2008 and 2010 to coincide with Basel II implementation.

28. SUBSEQUENT EVENTSThe financial statements were authorised for issue by the Directors on 9 August 2007.
On 9 August 2007, an interim ordinary dividend of $368 million was declared, to be paid to the parent company, ANZ Holdings (New Zealand)
Limited. The dividend per share was $0.53.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES

31

CONDITIONS OF REGISTRATION
Conditions of Registration, applicable as at 9 August 2007. These
Conditions of Registration have applied from 30 June 2007.
The registration of ANZ National Bank Limited (‘the Bank’) as a registeredbank is subject to the following conditions:
1. That the Banking Group complies with the following requirements at all
times:–––

Capital of the Banking Group is not less than 8 percent of risk
weighted exposures.
Tier 1 capital of the Banking Group is not less than 4 percent ofrisk weighted exposures.
Capital of the Banking Group is not less than NZ $15 million.

(c) The amounts measured in relation to parts a) and b) shall besummed and compared to the total consolidated assets of the
Banking Group. All amounts in parts a) and b) shall relate
to on balance sheet items only, and shall be determined inaccordance with generally accepted accounting practice, as
defined in the Financial Reporting Act 1993;(d) Where products or assets of which an insurance business iscomprised also contain a non-insurance component, the wholeof such products or assets shall be considered part of theinsurance business.
4. That aggregate credit exposures (of a non-capital nature and net of
specific provisions) of the Banking Group to all connected persons do
not exceed the rating-contingent limit outlined in the following matrix:

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 capitaland risk weighted exposures shall be calculated in accordance with theReserve Bank of New Zealand document entitled ‘Capital Adequacy
Framework’ (BS2) dated March 2007.
In its disclosure statements under the Registered Bank DisclosureStatement (Off-Quarter – New Zealand Incorporated Registered Banks)
Order 2007, the Bank must include all of the information relating to thecapital position of both the Bank and the Banking Group which would
be required if the second schedule of that Order was replaced by thesecond schedule of the Registered Bank Disclosure Statement (Full andHalf-Year – New Zealand Incorporated Registered Banks) Order 2007
in respect 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 theterm 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 greater than 1% of
its total consolidated assets. For the purposes of this condition:(i) Insurance business means any business of the nature referred to in
section 4 of the Insurance Companies (Ratings and Inspections)
Act 1994 (including those to which the Act is disapplied bysections 4(1)(a) and (b) and 9 of that Act), or any business of thenature referred to in section 3(1) of the Life Insurance Act 1908;(ii) In measuring the size of the Banking Group’s insurance business:(a) Where insurance business is conducted by any entity whosebusiness predominantly consists of insurance business, the sizeof that insurance business shall be:• The total consolidated assets of the group headed by that
entity;• Or if the entity is a subsidiary of another entity whosebusiness predominantly consists of insurance business, thetotal consolidated assets of the group headed by the latterentity;(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 theequity retained by the entity to meet the solvency or financial
soundness needs of the insurance business;

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 a non-capitalnature and net of specific provisions) to non-bank connected persons
shall not exceed 15 percent of the Banking Group’s Tier 1 capital.
For the purposes of this condition of registration, compliance with therating-contingent connected exposure limit is determined in accordancewith the Reserve Bank of New Zealand document entitled ‘Connected
Exposure Policy’ (BS8) dated March 2007.
5. That exposures to connected persons are not on more favourable terms(e.g. as relates to such matters as credit assessment, tenor, interest
rates, amortisation schedules and requirement for collateral) thancorresponding exposures to non-connected persons.
6. That the board of the Bank contains at least two independent directors
and that alternates for those directors, if any, are also independent. In thiscontext an independent director (or alternate) is a director (or alternate)
who is not an employee of the Bank, and who is not a director, trustee,or employee of any holding company (as that term is defined in section
5 of the Companies Act 1993) of the Bank, or any other entity capableof controlling or significantly influencing the Bank.
7. That the chairperson of the Bank’s board is not an employee of theBank.
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 thecompany (i.e. the Bank).
9. That a substantial proportion of the Bank’s business is conducted in andfrom 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, shallbe made in respect of the Bank unless:(i) The Reserve Bank has been supplied with a copy of the curriculum
vitae of the proposed appointee, and(ii) The Reserve Bank has advised that it has no objection to thatappointment.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES32

CONDITIONS OF REGISTRATION (continued)
11. That by 31 December 2007 the Bank will have legal and practicalability to control and execute any business, and any functions relating
to any business, of the Bank that are carried on by a person other thanthe Bank, sufficient to achieve, under normal business conditions andin the event of stress or failure of the Bank or of a service provider tothe Bank, the following outcomes:(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 subsequent days;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 explained in the Reserve
Bank of New Zealand document entitled ‘Outsourcing Policy’ (BS11)
dated January 2006.

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 officer of 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, and any decision relating to theemployment or termination of employment of the CEO are madeby, the board of the Bank.
(c) That all staff employed by the Bank shall have their remuneration
determined by (or under the delegated authority of) 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).

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES33

CREDIT RATING INFORMATIONThe 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 30 June 2007. The rating is not subject to any qualifications.
The Moody’s Investors Service rating was issued on 4 May 2007. On this date Moody’s Investor 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 30 June 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 tothe adverse 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
in higher 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 and economic conditions to meet debt service commitments in a timely manner. In the eventof 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 arebeing continued.

D

D rated entities are in default. This is assigned when interest or principal payments are not made on thedate due 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.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES34

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 are most 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 beof 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 which suggest 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 be lacking or may be characteristically unreliable over any great length of time. Such bonds lackoutstanding 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 theprotection of interest and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position characterises bonds in thisclass.

B

Generally lack characteristics of the desirable investment. Assurance of interest and principal payments
or of maintenance 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 ofdanger with respect to principal or interest.

Ca

Represent obligations which are speculative in a high degree. Such issues are often in default or haveother marked 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 insurance company 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 thatthe 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.

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES35

DIRECTORS’ STATEMENT for the nine months ended 30 June 2007
Directors’ Statement
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 nine months ended 30 June 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 that those 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, 9 August 2007. 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
J McFarlane, OBE
P R Marriott
Sir Dryden Spring

ANZ NATIONAL BANK LIMITED AND SUBSIDIARY COMPANIES36

INDEPENDENT REVIEW REPORT for the nine months ended 30 June 2007

Independent Review Report to the Directors of ANZ National Bank Limited
We have reviewed the interim financial statements, including supplementary information, for the nine months ended 30 June 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 accordance with 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 and fair view of thefinancial position of the Banking Group as at 30 June 2007 and the results of its operations and cash flows for the nine 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 lessassurance 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 9 August 2007 and our statement is made as at that date.

Wellington

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

General Short Form
Disclosure Statement
for the nine months ended 30 June 2007

Number 46 Issued August 2007

ANZ National Bank Limited