AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED- ANZ NEW ZEALAND
REGISTERED BANK DISCLOSURE STATEMENTFOR THE NINE MONTHS ENDED 30 JUNE 2016
NUMBER 31 | ISSUED AUGUST 2016

Australia and New Zealand Banking Group Limited - ANZ New Zealand

REGISTERED BANK DISCLOSURE STATEMENTFOR THE NINE MONTHS ENDED 30 JUNE 2016

CONTENTS
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3

Balance Sheet

4

Condensed Cash Flow Statement

5

Statement of Changes in Equity

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 10, 171 Featherston Street,
Wellington, New Zealand, which is also ANZ New
Zealand’s address for 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 themeaning given in or prescribed by the Order.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

2

GENERAL DISCLOSURESThis Disclosure Statement has been issued in accordancewith the Order.

Credit Rating Information
The Ultimate Parent Bank has three credit ratings, which areapplicable to its long-term senior unsecured obligations. On
7 July 2016, Standard & Poor’s changed the outlook on the
Ultimate Parent Bank from Stable to Negative.
The Ultimate Parent Bank’s credit ratings are:Rating Agency
Standard & Poor’s

Current Credit
Rating
Qualification
AAOutlook Negative

Moody’s Investors Service

Aa2

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Guarantors
No obligations of the NZ Branch are guaranteed as at 15
August 2016.

ANZNZ Covered Bond Trust
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 2016 of
NZ$4,739 million, pursuant to a guarantee which is secured
over a pool of assets. The Covered Bond Guarantor’s addressfor service is Level 9, 34 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.

Financial Statements of the Ultimate Parent Bankand Overseas Banking Group
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.

Other Matters
APRA has reviewed the level of exposures that can beprovided to the respective New Zealand banking subsidiaries
and branches (New Zealand operations) of the four
Australian parent banks, including the Ultimate Parent Bank.
APRA has confirmed that by 1 January 2021 no more than
5% of the Ultimate Parent Bank’s Level 1 Tier 1 capital cancomprise non-equity exposures to its New Zealandoperations during ordinary times. Exposures in excess of thislimit must be reduced in equal percentages over the five
year transition period and may not increase above theexposures as at 30 June 2015. This limit does not include
holdings of capital instruments or eligible secured
contingent funding support provided to the Bank during
times of financial stress.
The Ultimate Parent Bank established a New Zealand branchwhich was registered on 5 January 2009. The Bank sells, fromtime-to-time, residential loans and mortgages into the NZ
Branch to provide funding for the Bank’s business. As at 30
June 2016, the NZ Branch held approximately NZ$6.6 billionof residential loans. To satisfy APRA’s requirements describedabove, the Bank intends to repay this funding at
approximately NZ$1.6 billion per annum over the five year
transition period ending 31 December 2020.
APRA has also clarified that contingent funding support by
the Ultimate Parent Bank to the Bank during times offinancial stress must be provided on terms that are
acceptable to APRA and, in aggregate with all otherexposures to its New Zealand operations, must not exceed
50% of the Ultimate Parent Bank’s Level 1 Tier 1 capital. At
present, only covered bonds meet APRA’s criteria forcontingent funding. On this basis, we believe that the
Ultimate Parent Bank will continue to be able to provide
financial support to the Bank.

Directorate
Michael Smith retired as Chief Executive Officer and an
Executive Director on 31 December 2015.
Shayne Elliott became Chief Executive Officer and an
Executive Director on 1 January 2016.

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 - ANZ New Zealand

3

INCOME STATEMENT
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2016

30/06/2015

30/09/2015

Note

Audited

NZ$m

NZ$m

NZ$m

Interest income

5,109

5,576

7,417

Interest expense

2,842

3,436

4,537

Net interest income

2,267

2,140

2,880

Net trading gains

44

218

262

Net funds management and insurance income

325

280

385

309

352

505

2

4

5

2,947

2,994

4,037

1,198

1,134

1,513

1,749

1,860

2,524

104

58

76

Profit before income tax

1,645

1,802

2,448

Income tax expense

452

498

677

Profit after income tax

1,193

1,304

1,771

Audited

Other operating income2

Share of associates' profit
Operating income
Operating expenses

2

Profit before credit impairment and income tax
Credit impairment charge

5

STATEMENT OF COMPREHENSIVE INCOME
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2016
NZ$m

30/06/2015
NZ$m

30/09/2015
NZ$m

1,193

1,304

1,771

Actuarial loss on defined benefit schemes

(6)

(26)

(33)

Income tax credit relating to items that will not be reclassified

2

7

9

Total items that will not be reclassified to profit or loss

(4)

(19)

(24)

Profit after income tax
Items that will not be reclassified to profit or loss

Items that may be reclassified subsequently to profit or loss
Unrealised gains recognised directly in equity

78

2

12

Realised losses / (gains) transferred to income statement

4

(16)

(16)

Income tax credit / (expense) relating to items that may be reclassified

(23)

4

1

Total items that may be reclassified subsequently to profit or loss

59

(10)

(3)

1,248

1,275

1,744

Total comprehensive income for the period

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 - ANZ New Zealand

4

BALANCE SHEET
Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Cash

1,951

3,643

2,435

Settlement balances receivable

550

346

309

Collateral paid

2,326

2,219

1,929

Trading securities

12,746

12,257

12,139

120

141

151
17,587

Note

AssetsInvestments backing insurance contract liabilities
Derivative financial instruments

21,376

16,486

Current tax assets

136

77

-

Available-for-sale assets

2,831

782

1,428

Net loans and advances

119,744

112,991

114,376

Other assets

4

723

717

740

Life insurance contract assets

552

633

541

Investments in associates

4

90

4

Premises and equipment

398

374

388

Goodwill and other intangible assets

3,418

3,471

3,492

Total assets

166,956

154,135

155,530

Interest earning and discount bearing assets

140,069

132,423

132,869

1,502

1,315

1,469

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

Derivative financial instruments

761

1,278

1,687

108,413

100,736

99,736
17,76923,29016,360Current tax liabilities

-

-

81

Deferred tax liabilities

156

98

124

Payables and other liabilities

1,595

1,720

1,527

Provisions

190

195

191

17,10819,313

19,403

Debt issuances

9

Subordinated debt

10

2,623

2,719

2,683

Total liabilities (excluding head office account)

155,638

143,734

144,670

Net assets (excluding head office account)

11,318

10,401

10,860

8,058

7,393

8,058

49

(17)

(10)

3,211

3,025

2,812

EquityShare capital and head office accountReserves
Retained earnings
Total equity and head office account

11,318

10,401

10,860Interest and discount bearing liabilities

122,345

118,901

118,026

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 - ANZ New Zealand

5

CONDENSED CASH FLOW STATEMENT
Unaudited

Unaudited

9 months to

9 months to

AuditedYear to30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Cash flows from operating activities
Interest received

5,114

5,514

7,357

Interest paid

(2,835)(3,362)(4,482)Other cash inflows provided by operating activities

718

655

958

Other cash outflows used in operating activities(1,713)(1,674)(1,979)Cash flows from operating profits before changes in operating assets and liabilities

1,284

1,133

1,854

Net changes in operating assets and liabilities

(622)

(860)

(1,876)

Net cash flows provided by / (used in) operating activities

662

273

(22)

Cash inflows provided by investing activities

38

-

-

Cash outflows used in investing activities

(69)

(77)

(132)

Net cash flows used in investing activities

(31)

(77)

(132)

Cash flows from investing activities

Cash flows from financing activities
Cash inflows provided by financing activities

3,907

4,281

6,369

Cash outflows used in financing activities(5,070)(3,022)(5,945)

Net cash flows provided by / (used in) financing activities(1,163)

1,259

424

Net increase / (decrease) in cash and cash equivalents

(532)

1,455

270

Cash and cash equivalents at beginning of the period

2,526

2,256

2,256

Cash and cash equivalents at end of the period

1,994

3,711

2,526

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 - ANZ New Zealand

6

STATEMENT OF CHANGES IN EQUITY

As at 1 October 2014 (Audited)

Share capitaland head
office account

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

7,393

-

(7)

2,695

10,081
1,304

Retainedearnings

Total
equityProfit after income tax

-

-

-

1,304

Unrealised gains recognised directly in equity

-

1

1

-

2

Realised gains transferred to the income statement

-

-

(16)

-

(16)

Actuarial loss on defined benefit schemes

-

-

-

(26)

(26)

Income tax credit on items recognised directly in equity

-

-

4

7

11

Total comprehensive income for the period

-

1

(11)

1,285

1,275

Ordinary dividend paid

-

-

-

(955)

(955)

As at 30 June 2015 (Unaudited)

7,393

1

(18)

3,025

10,401As at 1 October 2014 (Audited)

7,393

-

(7)

2,695

10,081

Profit after income tax

-

-

-

1,771

1,771

Unrealised gains recognised directly in equity

-

-

12

-

12

Realised gains transferred to the income statement

-

-

(16)

-

(16)

Actuarial loss on defined benefit schemes

-

-

-

(33)

(33)

Income tax credit on items recognised directly in equity

-

-

1

9

10

Total comprehensive income for the period

-

-

(3)

1,747

1,744

Preference shares issued

675

-

-

-

675

Preference shares redeemed

(10)

-

-

-

(10)

-

-

-

(1,630)(1,630)Ordinary dividend paid
As at 30 September 2015 (Audited)

8,058

-

(10)

2,812

10,860

Profit after income tax

-

-

-

1,193

1,193

Unrealised gains recognised directly in equity

-

-

78

-

78

Realised losses transferred to the income statement

-

-

4

-

4

Actuarial loss on defined benefit schemes

-

-

-

(6)

(6)

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

-

-

(23)

2

(21)

Total comprehensive income for the period

-

-

59

1,189

1,248

-

-

-

(790)

(790)

8,058

-

49

3,211

11,318

Ordinary dividend paid
As at 30 June 2016 (Unaudited)

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 - ANZ New Zealand

7

NOTES TO THE FINANCIAL STATEMENTS
1.

SIGNIFICANT ACCOUNTING POLICIES(i)

Reporting entity and statement of compliance
These interim financial statements are for ANZ New Zealandfor the nine months ended 30 June 2016. 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 theOrder, and should be read in conjunction with ANZ New
Zealand’s financial statements for the year ended 30
September 2015.

(ii)

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:
•
•
•
•

2.

derivative financial instruments, including in the caseof 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 throughprofit and loss.

(iii) Changes in accounting policies
With the exception of software changes in note 2, theaccounting policies adopted by ANZ New Zealand areconsistent with those adopted and disclosed in the previous
full year Disclosure Statement.
(iv) Presentation currency and rounding
The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)

Comparatives
Certain amounts in the comparative information have been
reclassified to ensure consistency with the current period’s
presentation.

(vi) Principles of consolidation
The consolidated financial statements of ANZ New Zealandcomprise the financial statements of the NZ Branch and all
the New Zealand businesses of all the subsidiaries of the
Ultimate Parent Bank (those entities where it is determinedthat the Ultimate Parent Bank has capacity to control).

OTHER OPERATING INCOME AND EXPENSES

Other operating income
Unaudited

Unaudited

9 months to

9 months to

AuditedYear to30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Net fee income

301

286

381

Fair value gain / (loss) on hedging activities and financial liabilities designated at fair value

(21)

26

70

Other income

29

40

54

Total other operating income

309

352

505

Operating expenses
During the nine months ended 30 June 2016, ANZ New Zealand changed the application of its accounting policy for the capitalisation of
expenditure on internally generated software assets effective from 1 October 2015. The change aligns the accounting policy for software
assets with the rapidly changing technology landscape and ANZ New Zealand’s evolving digital strategy by increasing the threshold forcapitalisation of software development costs and directly expensing more project related costs. The change does not affect ANZ New
Zealand’s total investment in technology but does affect the timing of recognition of costs in the profit and loss account. The impact of
the change on the results for the nine months ended 30 June 2016 was:•Higher amortisation of NZ$65 million relating to the accelerated amortisation of software assets where the original cost was below
the revised threshold at 1 October 2015. This brings forward amortisation which otherwise would have been recognised in future
periods.
•
Higher operating expenses of NZ$31 million relating to software development costs which otherwise would have been capitalised
and amortised in future periods.
The change in capitalised software treatment has no impact on regulatory capital ratios.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

8

NOTES TO THE FINANCIAL STATEMENTS
3.

SEGMENT ANALYSISANZ New Zealand is organised into three major businesssegments for segment reporting purposes - Retail,Commercial and Institutional. Centralised back office andcorporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
During the nine months ended 30 June 2016, Wealth was
integrated with Retail, having been disclosed separately
previously. During the year ended 30 September 2015,
Business Banking was integrated with Retail, having been
included in Commercial previously. Segment reporting has
been updated to reflect these changes and other 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 Retail, Private
Banking, and Business Banking customers via the branch
network, mortgage specialists, relationship managers, thecontact centre and a variety of self service channels (internet
banking, phone banking, ATMs, website and mobile phonebanking). Retail and Private Banking customers have personalbanking requirements and Business Banking customers
consist primarily of small enterprises with annual revenues ofless than NZ$5 million. Core products and services include
current and savings accounts, unsecured lending (credit
cards, personal loans and overdrafts), home loans secured by
mortgages over property, investment products,
superannuation and insurance services.

Commercial
Commercial provides services to Commercial & Agri(CommAgri) and UDC customers. CommAgri customers
consist of primarily privately owned medium to large
enterprises. Commercial's relationship with these businesses
ranges from simple banking requirements with revenue from
deposit and transactional facilities, and cash flow lending, tomore complex funding arrangements with revenue sourced
from a wider range of products. UDC is principally involved in
the financing and leasing of plant, vehicles and equipment,
mainly for small and medium sized businesses, as well as
investment products.
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.
Other
Other includes treasury and back office support functions,none of which constitutes a separately reportable segment.

Business segment analysis1
RetailCommercial

Institutional

Other2

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

External revenues

2,155

1,423

346

(977)

2,947

Intersegment revenues

(371)

(743)

45

1,069

-

Total revenues

1,784

680

391

92

2,947

Profit / (loss) after income tax

710

324

164

(5)

1,193

External revenues

2,001

1,560

670

(1,237)2,994Intersegment revenues

(300)

(869)

(167)

1,336

-

Total revenues

1,701

691

503

99

2,994

Profit after income tax

644

360

255

45

1,304

Unaudited 9 months to 30/06/2016

Unaudited 9 months to 30/06/2015

Audited year to 30/09/2015

External revenues

2,700

2,070

851

(1,584)

4,037Intersegment revenues(419)(1,149)

(184)

1,752

-

Total revenues

2,281

921

667

168

4,037

Profit after income tax

872

478

333

88

1,771

1
2

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
This segment has negative external revenues as this segment incurs funding costs on behalf of ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

9

NOTES TO THE FINANCIAL STATEMENTS
4.

NET LOANS AND ADVANCES
Note

Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

1,091

1,159

1,162

1,674

1,676

1,688

72,286

66,37767,932

43,87243,02742,880

Lease receivables

227

243

236

Hire purchase

1,037

911

946

-

125

-

120,187

113,518

114,844

(631)

(657)

(629)

Less: Unearned income

(213)

(215)

(214)

Add: Capitalised brokerage/mortgage origination fees

362

294

323

Add: Customer liability for acceptances

39

51

52

119,744

112,991

114,376

Overdrafts1
Credit card outstandings
Term loans - housing

1

Term loans - non-housing

Other
Total gross loans and advances
Less: Provision for credit impairment

5

Total net loans and advances
1

Comparative amounts have been changed to reclassify revolving credit facilities secured by residential property provided to corporate customers from Overdrafts to Termloans – housing (30/06/2015 NZ$498 million, 30/09/2015 NZ$476 million).

5.

PROVISION FOR CREDIT IMPAIRMENT
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Collective provision

87

131

261

479

Individual provision

44

6

102

152

Total provision for credit impairment

131

137

363

631

Collective credit impairment charge

-

4

8

12

Individual credit impairment charge / (release)

(10)

53

49

92

Credit impairment charge / (release)

(10)

57

57

104

Collective provision

95

123

259

477

Individual provision

69

8

103

180

Total provision for credit impairment

164

131

362

657

Unaudited 30/06/2016

Unaudited 30/06/2015

Collective credit impairment charge

4

5

4

13

Individual credit impairment charge / (release)

(1)

47

(1)

45

Credit impairment charge

3

52

3

58

Collective provision

87

127

253

467

Individual provision

62

9

91

162

Total provision for credit impairment

149

136

344

629

Audited 30/09/2015

Collective credit impairment charge / (release)

(4)

9

(2)

3

Individual credit impairment charge / (release)

(4)

68

9

73

Credit impairment charge / (release)

(8)

77

7

76

Australia and New Zealand Banking Group Limited - ANZ New Zealand

10

NOTES TO THE FINANCIAL STATEMENTS
6.

IMPAIRED ASSETS AND PAST DUE ASSETS
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Total impaired assets

75

30

264

369

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

124

31

49

204

Total impaired assets

140

31

269

440

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

141

36

59

236

Total impaired assets

119

32

253

404

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

128

32

62

222

Unaudited 30/06/2016

Unaudited 30/06/2015

Audited 30/09/2015

7.

ASSETS PLEDGED AS COLLATERAL FOR LIABILITIES
Carrying Amount

Cash collateral given on derivative financial instruments
Securities sold under agreements to repurchase
Residential mortgages pledged as security for covered bonds

Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

2,326

2,219

1,929

861

826

47

11,317

7,020

7,547

Assets pledged as collateral for UDC secured investments

2,619

2,458

2,441

Total financial assets pledged as collateral

17,123

12,523

11,964ANZNZ 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 coveredbonds 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 theresidual 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

Note

Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Term deposits

38,121

34,401

34,982On demand and short term deposits

43,67439,32641,436

Deposits not bearing interest

7,548

6,366

6,716

1,677

1,654

1,736

Total customer deposits

91,02081,74784,870

Certificates of deposit

1,502

2,257

745

Commercial paper

6,541

6,877

4,964

Deposits from banks

861

1,002

47

Borrowings from Ultimate Parent Bank and Immediate Parent Company

8,489

8,853

9,110

108,413

100,736

99,736

UDC secured investments

Total deposits and other borrowings

7

Australia and New Zealand Banking Group Limited - ANZ New Zealand

11

NOTES TO THE FINANCIAL STATEMENTS
9.

DEBT ISSUANCES
Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Domestic bonds

3,575

3,650

3,525

U.S. medium term notes1

5,646

6,748

6,831

Euro medium term notes1

2,898

3,835

3,598

Covered bonds1

4,739

4,983

5,335

Index linked notes

36

36

35

16,894

19,252

19,324

Fair value hedge adjustment

233

119

175

Less debt issuances held by the Bank

(19)

(58)

(96)

17,10819,313

19,403

Total debt issuances

Total debt issuances
1

These debt issuances are issued by ANZ New Zealand (Int’l) Limited and are guaranteed by the Bank.

Debt issuances, other than covered bonds, are unsecured and rank equally with other unsecured liabilities of ANZ New Zealand.

10. SUBORDINATED DEBT
Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

1,004

1,080

1,052

495

494

494

NZD 835m perpetual subordinated bond3

835

835

835

AUD 10m perpetual subordinated floating rate loan

11

11

11

ANZ Capital Notes1
AUD 970m ANZ Capital Notes 3 (ANZ CN3)2
NZD 500m ANZ New Zealand Capital Notes (ANZ NZ CN)

3

Perpetual subordinated debt

Dated subordinated debt
AUD 265m subordinated floating rate loan

278

299

291

Total subordinated debt

2,623

2,719

2,683

1
2
3

These instruments qualify as additional tier 1 capital of the Overseas Banking Group.
These instruments are listed on the Australian Stock Exchange.
These instruments are listed on the New Zealand Debt Market (NZDX). The Market Surveillance Panel of the NZX granted the Bank a waiver from the requirements of Listing
Rules 10.3 (relating to the provision of preliminary announcements of half yearly and annual results to the NZX) and 10.4 (relating to preparing and providing a copy of half
yearly and annual reports to the NZX).

Australia and New Zealand Banking Group Limited - ANZ New Zealand

12

NOTES TO THE FINANCIAL STATEMENTS
11.

RELATED PARTY BALANCES
Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Total due from related parties

5,187

4,348

4,179

Total due to related parties

14,404

14,567

14,093

12. CAPITAL ADEQUACY
Basel III capital ratios

Ultimate Parent Bank
(Extended Licensed Entity)

Overseas Banking Group
Unaudited

30/06/2016

30/06/2015

30/09/2015

31/03/2016

31/03/2015

Common equity tier 1 capital

9.7%

8.6%

9.6%

10.2%

8.8%

30/09/2015

9.6%

Tier 1 capital

11.8%

10.5%

11.3%

12.2%

10.9%

11.6%

Total capital

14.4%

12.5%

13.3%

14.4%

13.1%

13.7%

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 andthe 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 2016 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 30 June 2016. The Overseas Banking Group’s
Pillar 3 disclosure document for the quarter ended 30 June 2016, 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.
Implied risk
weighted
exposure

Notional
capital charge

NZ$m

NZ$m

Unaudited 30/06/2016

Interest rate risk

6,892

551

Foreign currency risk

37

3

Equity risk

2

-

6,931

554

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'svaluation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partially 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.
30/06/2016
On-balancesheet

Off-balance
sheet

Total

NZ$m

NZ$m

NZ$m

Does not exceed 60%

27,5304,603

32,133

Exceeds 60% and not 70%

14,738

1,531

16,269Exceeds 70% and not 80%

19,9591,792

21,751

Does not exceed 80%

62,227

7,926

70,153

Exceeds 80% and not 90%

5,099

231

5,330

Exceeds 90%

2,268

231

2,499

Total

69,594

8,388

77,982

Unaudited

LVR range

Australia and New Zealand Banking Group Limited - ANZ New Zealand

13

NOTES TO THE FINANCIAL STATEMENTS
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
30/06/2016
NZ$m

Cash and balances with central banks

1,330

Certificates of deposit

1,126

Government, local body stock and bonds

5,486

Government treasury bills

938

Reserve Bank bills

277

Other bonds

6,610

Total liquidity portfolio

15,767The Bank also held unencumbered internal residential mortgage backed securities which would entitle the Banking Group to enter into
repurchase transactions with a value of NZ$6,990 million at 30 June 2016.

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 values of financial asset and liability categories
other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.
The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument
are discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or ayield curve appropriate for the remaining term to maturity.
Unaudited

Unaudited

30/06/2016
Carrying
amountFair value

Audited30/06/2015
Carrying
amountFair value

30/09/2015
Carrying
amountFair value

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

119,744

120,094

112,991

113,504

114,376

114,899

Deposits and other borrowings2

108,413

108,574

100,736

100,958

99,73699,947

Debt issuances1

17,10817,233

19,313

19,45819,403

19,516

Subordinated debt

2,623

2,563

2,719

2,730

2,683

2,640

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 (note 8) designated at fair value through profit or loss.

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 heldat fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a non-recurring
basis.
•

Level 1 – Financial instruments that have been valued by reference to unadjusted quoted prices in active markets for identicalfinancial instruments. This category includes financial instruments valued using quoted yields where available for specific debt
securities.

•

Level 2 – Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices
within Level 1 that are observable for a similar financial asset or liability, either directly or indirectly.

•

Level 3 – Financial instruments that have been valued using valuation techniques which incorporate significant inputs that are notbased on observable market data (unobservable inputs).

There have been no substantial changes in the valuation techniques applied to different classes of financial instruments during the period.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

14

NOTES TO THE FINANCIAL STATEMENTS
Valuation hierarchy
Unaudited

Unaudited

30/06/2016
Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m

Audited30/06/2015
Total Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m NZ$m

30/09/2015
Total Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m NZ$m

Total
NZ$m

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

12,592154

3 21,366- 12,746 12,168

6 16,476- 12,257 11,880

259- 12,139

4 16,486

12 17,569

6 17,587

1,636

1,193

2

2,831

324

456

2

782

900

526

2

1,428

5

115

-

120

2

139

-

141

2

149

-

151

14,236 22,828

7 21,376

89

9 37,073 12,500 17,160

6 29,666 12,794 18,503

8 31,305---

Financial liabilities
Deposits and other borrowings

-

6,541

6,541

Derivative financial instruments

41 23,246

3 23,290

Payables and other liabilities

386-

Total financial liabilities held at fair value427 29,787-

386

3 30,217-

6,877

4 16,354
526-

530 23,231

6,877

-

4,964

2 16,360

18 17,749

-

309

526

2 23,763-

327 22,713

4,964

2 17,769-

309

2 23,042

14. CONCENTRATIONS OF CREDIT RISK TO INDIVIDUAL COUNTERPARTIESANZ New Zealand measures its concentration of credit risk to bank counterparties on the basis of actual exposures, and to non-bankcounterparties on the basis of limits.
For the nine months ended 30 June 2016 there were no individual counterparties, excluding connected parties, governments and bankswith 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 BUSINESSANZ New Zealand conducts insurance business through its subsidiary OnePath Life (NZ) Limited (OnePath Life).
ANZ New Zealand’s aggregate amount of insurance business comprises the total assets of OnePath Life of NZ$921 million (30/06/2015:
NZ$862 million; 30/09/2015 NZ$884 million), which is 0.6% (30/06/2015: 0.6%; 30/09/2015 0.6%) of the total consolidated assets of ANZ
New Zealand.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

15

NOTES TO THE FINANCIAL STATEMENTS
16. CREDIT RELATED COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES
Face or contract value
Unaudited

Unaudited

Audited30/06/2016

30/06/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Credit related commitments
Commitments with certain drawdown due within one year

1,242

1,217

1,130

Commitments to provide financial services

31,942

29,99831,063

Total credit related commitments

33,184

31,21532,193Financial guarantees

825

971

920

Standby letters of credit

104

60

82

Transaction related contingent items

1,436

1,350

1,385

Trade related contingent liabilities

98

90

67

2,463

2,471

2,454

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. The risk involved is essentially the same as the credit risk involved in extending loan facilities to customers,
therefore these transactions are subjected to the same credit origination, portfolio management and collateral requirements forcustomers applying for loans. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect
future cash requirements.
Other contingent liabilities
On 11 March 2013, litigation funder Litigation Lending Services (NZ) Limited announced plans for a representative action against banks in
New Zealand for certain fees charged to New Zealand customers over the past six years. Proceedings were filed against the Bank on 25
June 2013. The potential outcome of this litigation cannot be determined with any certainty at this stage.
ANZ New Zealand has other contingent liabilities in respect of actual and possible claims and court proceedings.
An assessment of ANZ New Zealand’s likely loss in respect of these matters has been made on a case-by-case basis and provision madewhere deemed necessary.

17. ADDITIONAL DISCLOSURESNZ Branch Funding

Unaudited
30/06/2016
NZ$m

Total liabilities of the NZ Branch less amounts due to related parties
Overseas Banking Group Profitability and Size

1,118
Unaudited
31/03/2016
AUDm

Profit for the six months ended 31/03/20161
Net profit after tax for the 12 months to 31/03/2016 as a percentage of average total assets
Total assets
Percentage change in total assets in the 12 months to 31/03/2016
1

2,742
0.76%
895,278
4.09%

Net profit after tax for the period includes AUD 4 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality

Unaudited
31/03/2016
AUDm

Gross impaired assets

2,883

Gross impaired assets as a percentage of total assets

0.3%

Individual provision

1,238

Individual provision as a percentage of gross impaired assets

42.9%

Collective provision

2,862

Australia and New Zealand Banking Group Limited - ANZ New Zealand

16

DIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVEOFFICER'S STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and the Chief
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 2016, 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 and otherbusiness risks, and that those systems were being properly applied.

This Disclosure Statement is dated 15 August 2016, 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:
Ilana Atlas
Paula Dwyer
Shayne ElliottDavid Gonski, AC
Lee Hsien Yang
Graeme Liebelt
Ian Macfarlane, ACJohn Macfarlane

Anthony Bradshaw
Chief Executive Officer – NZ Branch