AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED- ANZBGL NEW ZEALAND
REGISTERED BANK DISCLOSURE STATEMENTFOR THE YEAR ENDED 30 SEPTEMBER 2023

CONTENTS
Glossary of terms

2

DISCLOSURE STATEMENT
Financial Statements
Consolidated financial statements
Notes to the financial statements

3

Assurance Report on the Financial Statements

4
8
68

Registered Bank Disclosures
Directors’ and New Zealand Chief Executive Officer’s Statement

74
93

Assurance Reports on the Registered Bank Disclosures

94

GLOSSARY OF TERMS
In this Registered Bank Disclosure Statement (Disclosure Statement) unless the context otherwise requires:
Bank means ANZ Bank New Zealand Limited.
Banking Group means the Bank and all its controlled entities.
Immediate Parent Company means ANZ Funds Pty Limited, which is the immediate parent company of ANZ Holdings (New Zealand)
Limited.
Ultimate Non-Bank Holding Company, ANZGHL means ANZ Group Holdings Limited.
ANZ Group means the worldwide operations of ANZGHL, including its controlled entities.
Ultimate Parent Bank means Australia and New Zealand Banking Group Limited.
Overseas Banking Group means the worldwide operations of the Ultimate Parent Bank including its controlled entities.
New Zealand business means all business, operations, or undertakings conducted in or from New Zealand identified and treated as if itwere conducted by a company formed and registered in New Zealand.
NZ Branch means the New Zealand business of the Ultimate Parent Bank.
ANZBGL New Zealand, We or Our means the New Zealand business of the Overseas Banking Group.
ANZ New Zealand means the New Zealand business of ANZ Group.
Registered Office is Level 10, 171 Featherston Street, Wellington, New Zealand, which is also ANZBGL New Zealand’s address for service.
RBNZ means the Reserve Bank of New Zealand.
APRA means the Australian Prudential Regulation Authority.
the Order means the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014.
Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by
the Order.
2

FINANCIAL
STATEMENTS
Financial statements
Income statement

4Statement of comprehensive income

4

Balance sheet

5

Cash flow statement

6

Statement of changes in equity

7

Notes to the financial statements
Basis of preparation
1. About our financial statements

Non-financial assets
8

Financial performance

19. Goodwill and other intangible assets

53

Non-financial liabilities

2. Operating income

11

3. Operating expenses

13

4. Income tax

14

Equity5. Dividends

15

21. Shareholders' equity

57

6. Segment reporting16

22. Capital management

59

Financial assets

20. Other provisions

56

Consolidation and presentation

7. Cash and cash equivalents

18

23. Controlled entities

60

8. Trading securities

19

24. Structured entities

61

9. Derivative financial instruments

20

25. Transfers of financial assets

63

10. Investment securities

25

11. Net loans and advances

26

Other disclosures

12. Allowance for expected credit losses

27

26. Related party disclosures

63

27. Commitments and contingent liabilities

65

28. Auditor fees

67

Financial liabilities
13. Deposits and other borrowings

33

14. Debt issuances

34

Financial instrument disclosures
15. Financial risk management35

16. Fair value of financial assets and financial liabilities

48

17. Assets charged as security for liabilities

51

and collateral accepted as security for assets
18. Offsetting

52

3

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTFINANCIAL STATEMENTS
INCOME STATEMENT
2023
NZ$m

2022
NZ$m

10,226(5,987)

5,824(2,062)

2

4,239

3,762

Other operating income

2

610

1,118

Share of associates' loss

2

-

(1)

4,849

4,879

(1,663)(1,654)

3,186

3,225

For the year ended 30 September

NoteInterest income
Interest expense
Net interest income

Operating income
Operating expenses

3

Profit before credit impairment and income tax
Credit impairment charge

12

Profit before income tax

(183)

(39)

3,003

3,186

(832)

(887)

2,171

2,299

2,144

2,299

27

-

For the year ended 30 September

2023
NZ$m

2022
NZ$m

Profit after tax

2,171

2,299

7

10

Unrealised losses recognised directly in equity

(181)

(3)

Realised gains transferred to the income statement

(16)

(28)

Income tax attributable to the above items

54

6

Income tax expense
Profit for the year

4Comprising:
Profit attributable to the shareholders of the Ultimate Parent Bank
Profit attributable to non-controlling interests

STATEMENT OF COMPREHENSIVE INCOME

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Actuarial gain on defined benefit schemes
Items that may be reclassified subsequently to profit or loss
Reserve movements:

Other comprehensive income after tax

(136)

(15)

Total comprehensive income for the year

2,035

2,284

2,008

2,284

27

-

Comprising total comprehensive income attributable to:
The shareholders of the Ultimate Parent Bank
Non-controlling interests

The notes appearing on pages 8 to 67 form an integral part of these financial statements

4

FINANCIAL STATEMENTS

BALANCE SHEETAs at 30 September
AssetsCash and cash equivalents

Note

2023
NZ$m

2022
NZ$m

7

13,094

12,575

Settlement balances receivable

401

785

Collateral paid

801

1,672

Trading securities

8

5,921

7,228

Derivative financial instruments

9

8,747

15,478Investment securities

10

10,958

11,357Net loans and advances

11

149,627

147,373

Investments in associates

23

-

4

Deferred tax assets

4

396

363

Goodwill and other intangible assets

19

3,119

3,099

371

450

Other assets

1,154

1,055

Total assets

194,589

201,439

2,886

4,887

Premises and equipment

Liabilities
Settlement balances payable
Collateral received

1,500

1,962

Deposits and other borrowings

13

144,393

142,482

Derivative financial instruments

9

8,287

13,571

59

315

1,954

1,367

122

128

209

222

Current tax liabilities
Payables and other liabilities
Employee entitlements
Other provisions

20

Debt issuances

14

18,494

20,483

Total liabilities

177,904

185,417

Net assets

16,68516,022

Shareholders' equity
Share capital

21

11,055

11,055Reserves

21

(93)

48

Retained earnings

21

5,173

4,369

Equity attributable to the shareholders of the Ultimate Parent Bank

21

16,135

15,472

Non-controlling interests

21

550

550

Total shareholders' equity

21

16,68516,022The notes appearing on pages 8 to 67 form an integral part of these financial statements

5

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTFINANCIAL STATEMENTS
CASH FLOW STATEMENT
For the year ended 30 September

2023
NZ$m

2022
NZ$m

Profit after income tax

2,171

2,299

Depreciation and amortisation

114

125

Loss/(gain) on sale and impairment of premises and equipment(7)

4

Net derivatives/foreign exchange adjustment

593

626

Other non-cash movements

(144)

(38)

Collateral paid

871

(1,135)

Trading securities

1,307

2,357

Net loans and advances(2,254)(6,299)

252

(985)

Adjustments to reconcile to net cash provided by/(used in) operating activities:

Net (increase)/decrease in operating assets:

Other assets

Net increase/(decrease) in operating liabilities:
Deposits and other borrowings (excluding items included in financing activities)

973

4,966

(2,001)

2,224

Collateral received

(462)

1,224

Other liabilities

338

(12)

(420)

3,057

1,751

5,356

Purchases(4,768)(3,898)Proceeds from sale or maturity

5,414

3,839

4

-

Other assets

(28)

(65)

Net cash provided by/(used in) investing activities

622

(124)

1,000

1,500

Settlement balances payable

Total adjustments
Net cash provided by operating activities

1

Cash flows from investing activities
Investment securities:

Proceeds from sale of investment in associate

Cash flows from financing activities
Deposits and other borrowings2
Debt issuances:3
Issue proceeds

3,020

3,452

Redemptions(4,444)(4,028)--Change in short term borrowings

(12)

(41)

Proceeds from issue of preference shares-

542

Borrowings from Immediate Parent and Ultimate Parent Bank:4

(46)

(46)

Dividends paid

(1,372)(1,880)Net cash used in financing activities(1,854)(501)

Net change in cash and cash equivalents

519

4,731

Repayment of lease liabilities

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
1
2
3
4

7,844

13,094

12,575

Net cash provided by operating activities includes income taxes paid of NZ$1,067 million (2022: NZ$700 million).
Movement in deposits and other borrowings includes repurchase transactions entered into with RBNZ under the Funding for Lending Programme of NZ$1,000 million (2022: NZ$1,500
million).
Movement in debt issuances (Note 14 Debt issuances) also includes an NZ$651 million decrease (2022: NZ$1,739 million increase) from the effect of foreign exchange rates, an NZ$82
million increase (2022: NZ$1,550 million decrease) from changes in fair value hedging instruments and an NZ$4 million increase (2022: NZ$18 million increase) from other changes.
Movement in borrowings from Immediate Parent and Ultimate Parent Bank (Note 13 Deposit and other borrowings) also includes an NZ$57 million decrease (2022: NZ$194 million
increase) from the effect of foreign exchange rates, an NZ$6 million increase (2022: NZ$124 million decrease) from changes in fair value hedging instruments and an NZ$1 million increase(2022: NZ$1 million increase) of other changes.

The notes appearing on pages 8 to 67 form an integral part of these financial statements

6

12,575

FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITY

Reserves
NZ$m

Retainedearnings
NZ$m

Equityattributable toshareholdersof theUltimate
Parent Bank
NZ$m

Noncontrollinginterests
NZ$m

Total
shareholders'equityNZ$m11,055
-

70
-

3,951
2,299

15,076
2,299-

15,076
2,299

Other comprehensive income for the year

-

(22)

7

(15)

-

(15)

Total comprehensive income for the year
Transactions with equity holders in theircapacity as equity owners:
Ordinary dividends paid

-

(22)

2,306

2,284

-

2,284

-

-

(1,880)(1,880)-(1,880)As at 1 October 2021
Profit for the year

Share
capital andinitial head
officeaccount
NZ$m

Preference shares issued (net of issue costs)

-

-

(8)

(8)

550

542

11,05548

4,369

15,472550

16,022

Profit for the year

-

-

2,144

2,144

27

2,171

Other comprehensive income for the year

-

(141)

5

(136)

-

(136)

Total comprehensive income for the year
Transactions with equity holders in theircapacity as equity owners:
Ordinary dividends paid

-

(141)

2,149

2,008

27

2,035

-

-

(1,345)(1,345)-(1,345)As at 30 September 2022

Preference dividends paid

-

-

-

-

(27)

(27)

As at 30 September 2023

11,055

(93)

5,173

16,135550

16,685The notes appearing on pages 8 to 67 form an integral part of these financial statements

7

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
1.

ABOUT OUR FINANCIAL STATEMENTS

NEW ULTIMATE NON-BANK HOLDING COMPANY
On 3 January 2023, the Ultimate Parent Bank established by a scheme of arrangement, a non-operating holding company, ANZ Group Holdings
Limited, as the new listed parent holding company of the ANZ Group and implemented a restructure to separate the Overseas Banking Group’sbanking and certain non-banking businesses into the ANZ bank group and ANZ non-bank group. The ANZ bank group comprises the majority of thebusinesses and subsidiaries that were held in the Overseas Banking Group prior to the restructure. The ANZ non-bank group comprises bankingadjacent businesses developed or acquired by the ANZ Group to focus on bringing new technology and banking-adjacent services to its customers,
and a separate service company. The Ultimate Parent Bank is unchanged.
The restructure had no material effect on these financial statements.

GENERAL INFORMATION
These are the financial statements for ANZBGL New Zealand for the year ended 30 September 2023. The Ultimate Parent Bank is incorporated inAustralia and is also registered in New Zealand (NZ Branch). The NZ Branch is domiciled in New Zealand, and the address of the NZ Branch's registeredoffice and its principal place of business is Level 10, 171 Featherston Street, Wellington, New Zealand.
On 10 November 2023, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:• the amount is significant in size (quantitative factor);• the information is significant by nature (qualitative factor);• the user cannot understand ANZBGL New Zealand’s results without the specific disclosure (qualitative factor);• the information is critical to a user’s understanding of the impact of significant changes in ANZBGL New Zealand’s business during the period –for example, business acquisitions or disposals (qualitative factor);• the information relates to an aspect of ANZBGL New Zealand’s operations that is important to its future performance (qualitative factor); and• the information is required under legislative or other regulatory requirements.
This section of the financial statements:• outlines the basis upon which ANZBGL New Zealand’s financial statements have been prepared; and• discusses any new accounting standards or regulations that directly impact the financial statements.

BASIS OF PREPARATION
These financial statements are general purpose (Tier 1) financial statements prepared by a ‘for profit’ entity, in accordance with the requirements of
the Financial Markets Conduct Act 2013. These financial statements comply with:• New Zealand Generally Accepted Accounting Practice (NZ GAAP), as defined in the Financial Reporting Act 2013;• New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as
appropriate for publicly accountable for-profit entities; and• International Financial Reporting Standards (IFRS).
We present the financial statements of ANZBGL New Zealand in New Zealand dollars, which is ANZBGL New Zealand’s functional and presentation
currency. We have rounded values to the nearest million dollars (NZ$m), unless otherwise stated.

BASIS OF MEASUREMENT
We have prepared the financial information in accordance with the historical cost basis - except for the following assets and liabilities which we havestated at their fair value:• derivative financial instruments;• financial instruments held for trading;• financial assets and financial liabilities designated at fair value through profit or loss (FVTPL); and• financial assets at fair value through other comprehensive income (FVOCI).

BASIS OF CONSOLIDATIONThe consolidated financial statements of ANZBGL New Zealand comprise the financial statements of the NZ Branch and all of the New Zealandbusinesses of all the subsidiaries of the Ultimate Parent Bank. An entity, including a structured entity, is considered a subsidiary of ANZBGL New
Zealand when we determine that ANZBGL New Zealand has control over the entity. Control exists when ANZBGL New Zealand is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. We assess
power by examining existing rights that give ANZBGL New Zealand the current ability to direct the relevant activities of the entity. We haveeliminated, on consolidation, the effect of all transactions between entities in ANZBGL New Zealand.

FOREIGN CURRENCY TRANSLATION
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At thereporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.
We measure translation differences on non-monetary items classified as FVTPL and report them as part of the fair value gain or loss on these items. For
non-monetary items classified as investment securities measured at FVOCI, translation differences are included in other comprehensive income.

8

NOTES TO THE FINANCIAL STATEMENTS

1.

ABOUT OUR FINANCIAL STATEMENTS (continued)

FIDUCIARY ACTIVITIESThe Banking Group provides fiduciary services to third parties including custody, nominee and trustee services. This involves the Banking Groupholding assets on behalf of third parties and making decisions regarding the purchase and sale of financial instruments. If the Banking Group is not thebeneficial owner or does not control the assets, then we do not recognise these transactions in these financial statements, except when required byaccounting standards or another legislative requirement.

KEY JUDGEMENTS AND ESTIMATES
In the process of applying ANZBGL New Zealand’s accounting policies, management has made a number of judgements and applied
estimates and assumptions about past and future events. Further information on the key judgements and estimates that we consider
material to the financial statements are contained within each relevant note to the financial statements.
The global economy is facing challenges associated with high inflation and interest rates, labour market constraints, continuing geopoliticaltensions, and impacts from climate change, which contribute to an elevated level of estimation uncertainty involved in the preparation ofthese financial statements.
ANZBGL New Zealand has made various accounting estimates in these financial statements based on forecasts of economic conditions
which reflect expectations and assumptions at 30 September 2023 about future events considered reasonable in the circumstances. Thus
there is a considerable degree of judgement involved in preparing these estimates. Actual economic conditions are likely to be different fromthose forecast since anticipated events frequently do not occur as expected, and the effect of these differences may significantly impact
accounting estimates included in these financial statements. The significant accounting estimates impacted by these forecasts andassociated uncertainties are predominantly related to expected credit losses and recoverable amounts of non-financial assets.
The impact of these uncertainties on each of these accounting estimates is discussed further in the relevant notes of these financial
statements. Readers should consider these disclosures in light of the inherent uncertainties described above.

INTEREST RATE BENCHMARK REFORM
Interbank offered rates (IBORs) reform is the global transition away from IBORs and their replacement by risk-free rates (RFRs). IBOR reforms have had awide-ranging impact for ANZBGL New Zealand and our customers given the fundamental differences between IBORs and RFRs. Accordingly, ANZBGLNew Zealand established a Benchmark Transition Programme (the programme) to manage the operational, market, legal, conduct and financial
reporting risks associated with IBOR transition.
As at 30 September 2023 ANZBGL New Zealand’s programme is largely complete, and included the implementation of the required processes,
technology and product capabilities that ensured the transitions were successfully undertaken. In line with regulatory announcements made in early
2021, IBOR rates including Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF) and Japanese Yen (JPY), and the 1-week and 2-month US Dollar (USD)
London Interbank Offered Rate (LIBOR) rate settings ceased on 31 December 2021 and were replaced by alternative RFRs. ANZBGL New Zealandexposure to IBOR reform was primarily concentrated in other USD LIBOR settings which ceased on 30 June 2023. No material changes were made to
ANZBGL New Zealand’s risk management strategy because of IBOR reform and the use of IBOR rates in new products was phased out in accordancewith industry and supervisory guidance. The transition activities had an immaterial impact to ANZBGL New Zealand’s profit and loss.
To support any legacy contracts referencing these benchmarks across the industry, the 1-month, 3-month and 6-month USD settings will continue tobe published using an alternative ‘synthetic’ methodology.

9

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
1.

ABOUT OUR FINANCIAL STATEMENTS (continued)

ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
Accounting policies have been consistently applied, unless otherwise noted.

ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2023 and have not been applied by ANZBGL New Zealand in preparing these financial statements. Further details ofthese are set out below.
GENERAL HEDGE ACCOUNTINGNZ IFRS 9 Financial Instruments (NZ IFRS 9) introduced new hedge accounting requirements which more closely align accounting with risk
management activities undertaken when hedging both financial and non-financial risks. NZ IFRS 9 provided ANZBGL New Zealand with an accounting
policy choice to continue to apply the NZ IAS 39 Financial Instruments: Recognition and Measurement (NZ IAS 39) hedge accounting requirements
until the International Accounting Standards Board’s ongoing project on Dynamic Risk Management (macro hedge accounting) is completed.
ANZBGL New Zealand continues to apply the hedge accounting requirements of NZ IAS 39.
DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTION

Amendments to New Zealand Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction amends NZ IAS
12 Income Taxes. It clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and a liability and thatgive rise to equal taxable and deductible temporary differences which may apply to leases and decommissioning or restoration obligations. This
amendment is effective for ANZBGL New Zealand from 1 October 2023 and will not have a material impact on ANZBGL New Zealand.
LEASE LIABILITY IN A SALE AND LEASEBACK

Amendments to New Zealand Accounting Standards – Lease Liability in a Sale and Leaseback amends NZ IFRS 16 Leases and specifies the accounting
for variable lease payments by seller-lessees in sale and leaseback transactions. The amendment is effective from 1 January 2024 and will not have amaterial impact on ANZBGL New Zealand.

AMENDMENTS TO NEW ZEALAND ACCOUNTING STANDARDS - INTERNATIONAL TAX REFORM – PILLAR TWO MODEL RULESNew Zealand is expected to implement Pillar Two of the OECD/G20 Two-Pillar Solution to address the tax challenges arising from the digitalisation of
the economy. Pillar Two is not yet law in New Zealand. Other jurisdictions in which the ANZ Group operates are also considering implementation of
the regime. ANZBGL New Zealand is expected to be within the scope of associated legislation for Pillar Two. In anticipation of legislation being
enacted, the XRB issued Amendments to New Zealand Accounting Standards – International Tax Reform – Pillar Two Model Rules in June 2023.
ANZBGL New Zealand has applied the exemption included para 4A of this standard and will apply the whole amending standard from 1 October
2023. This amending standard stipulates a mandatory temporary exemption from recognising deferred tax assets and liabilities related to Pillar Two
income taxes. ANZBGL New Zealand is monitoring progress of associated legislation. The amending standard is not expected to have a material
impact on the financial statements.

10

NOTES TO THE FINANCIAL STATEMENTS

2.

OPERATING INCOME

Net interest income
Interest income by type of financial asset
Financial assets at amortised cost
Trading securities
Investment securities
Financial assets at FVTPL
Interest income
Interest expense by type of financial liability
Financial liabilities at amortised cost
Financial liabilities designated at FVTPL
Interest expense
Net interest income
Other operating income
Fee and commission income
Lending fees
Non-lending fees
Commissions
Funds management income
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
Net foreign exchange earnings and other financial instruments income1
Adjustment to gain on sale of UDC Finance Ltd
Adjustment to gain on sale of Paymark Ltd
Gain on sale of premises and equipment
Other
Other income
Other operating income
Share of associates' loss
Operating income
1

2023
NZ$m

2022
NZ$m

9,656
246
304
20
10,226

5,502
149
173
5,824

(5,776)(211)(5,987)
4,239(1,954)(108)(2,062)
3,762

28
729
33
244
1,034
(530)
504

25
731
32
253
1,041
(502)
539

60
25
10
11
106
610

555
12
2
10
579
1,118

4,849

(1)
4,879

Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchangerisk, ineffective portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at FVTPL.

11

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
2.

OPERATING INCOME (continued)
RECOGNITION AND MEASUREMENTNET INTEREST INCOME
Interest income and expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for trading,assets measured at FVOCI, and assets and liabilities designated at FVTPL. We use the effective interest rate method to calculate the amortised costof assets held at amortised cost and to recognise interest income on financial assets measured at amortised cost and FVOCI. The effective interest rateis the rate that discounts the stream of estimated future cash receipts or payments over the expected life of the financial instrument or, whenappropriate, a shorter period, to the net carrying amount of the financial asset or liability. For assets subject to prepayment, we determine their
expected life on the basis of historical behaviour of the particular asset portfolio - taking into account contractual obligations and prepayment
experience.
We recognise fees and costs, which form an integral part of the financial instrument (for example loan origination fees and costs), using theeffective interest rate method. These are presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
OTHER OPERATING INCOME
Fee and commission income
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation is satisfied acrossmore than one reporting period or (b) at a point in time when the performance obligation is satisfied immediately or is satisfied within one reporting
period.
• lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee andcommitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct goodor service that are recognised separately from the underlying lending product.
• non-lending fees include fees associated with deposit and credit card accounts, interchange fees and fees charged for specific customertransactions such as international transaction fees. Where ANZBGL New Zealand provides multiple goods or services to a customer under thesame contract, ANZBGL New Zealand allocates the transaction price of the contract to distinct performance obligations based on the relative
stand-alone selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.
• commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to provide
goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service to thecustomer. If ANZBGL New Zealand collects funds on behalf of a third party when acting as an agent, we only recognise the net commission
retained as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
• funds management income represents fees earned from customers for providing financial advice and fees for asset management services.
Revenue is recognised either at the point the financial advice is provided or over the period in which the asset management services aredelivered.
Net foreign exchange earnings and other financial instruments income
We recognise the following as net foreign exchange earnings and other financial instruments income:• exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised;• fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges that we use to manageinterest rate and foreign exchange risk on funding instruments;• the ineffective portions of fair value hedges and cash flow hedges;• immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments to items designated as fair value hedges andamounts accumulated in equity related to designated cash flow hedges;• fair value movements on financial assets and financial liabilities designated at FVTPL or held for trading;• amounts released from the FVOCI reserve when a debt instrument classified as FVOCI is sold; and• the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
SHARE OF ASSOCIATES’ PROFIT / (LOSS)The equity method is applied to accounting for associates. Under the equity method, ANZBGL New Zealand’s share of the after tax results ofassociates is included in the income statement and the statement of comprehensive income.

12

NOTES TO THE FINANCIAL STATEMENTS

3.

OPERATING EXPENSES

Personnel
Salaries and related costs
Superannuation costs
Other
Personnel
PremisesRent
Depreciation
Other
Premises
Technology
Depreciation and amortisation
Subscription licences and outsourced services
Other
Technology
Other
Advertising and public relations
Professional fees
Freight, stationery, postage and communication
Charges from ANZ Group
Other
Other
Operating expenses

2023
NZ$m

2022
NZ$m

974
29
19
1,022

947
30
19
996

17
78
37
132

16
81
38
135

36
186
22
244

44
157
27
228

38
80
46
63
38
265
1,663

37
64
41
107
46
295
1,654

RECOGNITION AND MEASUREMENTOPERATING EXPENSES
Operating expenses are recognised as services are provided to ANZBGL New Zealand, over the period in which an asset is consumed, or once a
liability is created.
SALARIES AND RELATED COSTS – ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS
Wages and salaries, annual leave, and other employee entitlements expected to be paid or settled within twelve months of employees rendering
service are measured at their nominal amounts using remuneration rates that ANZBGL New Zealand expects to pay when the liabilities are settled.
We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff departures,leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market yields are determinedfrom a blended rate of government bonds with terms to maturity that closely match the estimated future cash outflows.
If we expect to pay short term cash bonuses, then a liability is recognised when ANZBGL New Zealand has a present legal or constructive obligation
to pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.

13

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
4. INCOME TAX
INCOME TAX EXPENSE
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:

Profit before income tax
Prima facie income tax expense at 28%
Tax effect of permanent differences:
Tax provisions no longer required
Non-assessable income and non-deductible expenditure
Income tax expense
Current tax expense
Adjustments recognised in the current year in relation to the current tax of prior years
Deferred tax expense/(income) relating to the origination and reversal of temporary differences
Income tax expense
Effective tax rate

2023
NZ$m
3,003
841

2022
NZ$m
3,186
892

(3)
(6)
832
837
(3)
(2)
832
27.7%

(3)
(2)
887
930
(63)
20
887
27.8%

2023
NZ$m

2022
NZ$m

222
18
52
24
146
27
489

187
23
51
37
182
19
499

21
21
510
(114)
396

499
(136)
363

2023
NZ$m

2022
NZ$m

83
3
28
114

86
4
36
126

114
(114)
-

10
10
136
(136)
-

DEFERRED TAX ASSETS AND LIABILITIESDeferred tax assets balances comprise temporary differences attributable to:Amounts recognised in the income statement:Collectively assessed allowances for expected credit losses
Individually assessed allowances for expected credit losses
Provision for employee entitlements
Other provisions
Software
Other
Total
Amounts recognised directly in other comprehensive income:Cash flow hedge reserve
Total
Total deferred tax assets (before set-off)
Set-off of deferred tax balances pursuant to set-off provisions
Net deferred tax assets

Deferred tax liabilities balances comprise temporary differences attributable to:Amounts recognised in the income statement:
Finance leases
Fixed assets
Other
Total
Amounts recognised directly in other comprehensive income:Cash flow hedge reserve
Total
Total deferred tax liabilities (before set-off)
Set-off of deferred tax balances pursuant to set-off provisions
Net deferred tax liabilities

14

NOTES TO THE FINANCIAL STATEMENTS

4.

INCOME TAX (continued)
RECOGNITION AND MEASUREMENT
INCOME TAX EXPENSE
Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in the accounting andtax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when the tax relates to items
recognised directly in equity and other comprehensive income, in which case we recognise the tax directly in equity or other comprehensive
income respectively.
CURRENT TAX EXPENSE
Current tax expense is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting
date. We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX ASSETS AND LIABILITIESWe account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as thetaxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax asset, or liability,
on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset is realised, or the liability
settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
We offset current and deferred tax assets and liabilities only to the extent that:• they relate to income taxes imposed by the same taxation authority;• there is a legal right and intention to settle on a net basis; and• it is allowed under the tax law of the relevant jurisdiction.

5.

DIVIDENDS

ORDINARY SHARE DIVIDENDS
Amountper share

Dividends
Financial Year 2022
Dividend paid in March 2022
Dividend paid in September 2022
Dividends paid during the year ended 30 September 2022
Financial Year 2023
Dividend paid in March 2023
Dividend paid in September 2023
Dividends paid during the year ended 30 September 2023

Total
dividend
NZ$m

232.7 cents
264.4 cents

880
1,000
1,880

230.1 cents
125.6 cents

870
475
1,345

IMPUTATION CREDIT ACCOUNT

Imputation credits available as at 30 September

ANZBGL New Zealand1
2023
2022
NZ$m
NZ$m
5,439
5,728

Bank2,3
2023
NZ$m
1,396

2022
NZ$m
1,135

1 The comparative amount for ANZBGL New Zealand has been updated to include the imputation credit balance of the Trans-Tasman imputation group, instead of the New Zealand resident
imputation group, to reflect the imputation credits available to ANZBGL New Zealand following changes to ANZBGL New Zealand's imputation groups that came into effect on 1 October
2022.
2 Imputation credits available to the Bank are shown separately as this is relevant for holders of perpetual preference shares (PPS, refer to Note 21 Shareholders’ equity) issued by the Bank.
3 The comparative amount for the Bank has been updated to reflect the impact of a legislative change that requires the Bank consolidated imputation group to recognise imputation credits fortax paid but not utilised prior to 1 October 2022. This was previously recognised by the New Zealand resident imputation group.

The imputation credit balance for ANZBGL New Zealand includes the imputation credit balance in relation to the Trans-Tasman imputation group, theBank consolidated imputation group and other companies in ANZBGL New Zealand that are not in either of these imputation groups. The imputationcredit balance available to ANZBGL New Zealand includes imputation credits that will arise from the payment of the amount of provision for income
tax as at the reporting date.
The imputation credit balance for the Bank reflects the imputation credit balance of the Bank consolidated imputation group. The imputation credit
balance available to the Bank includes imputation credits that will arise from the payment of the amount of provision for income tax as at thereporting date.

15

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
6. SEGMENT REPORTINGDESCRIPTION OF SEGMENTSANZBGL New Zealand is organised into three major business segments for segment reporting purposes - Personal, Business & Agri and Institutional.
Centralised back office and corporate functions support these segments. These segments are consistent with internal reporting provided to the chief
operating decision maker, being the Bank’s Chief Executive Officer.
Segment reporting has been updated to reflect the transfer of certain larger business and property finance customers from Business & Agri to
Institutional, and other minor segmentation changes. The transfer aligns the customer needs with the right support and expertise delivering a better
customer experience. Comparative amounts have been adjusted to be consistent with the current period’s segment definitions. The change resulted
in the movement of NZ$11.9 billion of net loans and advances, NZ$3.5 billion of customer deposits and NZ$200 million of goodwill as at 30
September 2022.
Personal
Personal provides a full range of banking and wealth management services to consumer and private banking customers. We deliver our services via
our internet and app-based digital solutions and a network of branches, mortgage specialists, relationship managers and contact centres.
Business & Agri (previously Business)
Business & Agri provides a full range of banking services through our digital, branch and contact centre channels, and traditional relationship banking
and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium and large enterprises, the agriculturalbusiness segment, government and government related entities.
Institutional
The Institutional division services governments, global institutional and corporate customers via the following business units:• Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing,commodity financing as well as cash management solutions, deposits, payments and clearing.
• Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance and corporate advisory services.
• Markets provides customers with risk management services in foreign exchange, interest rates, credit, commodities and debt capital markets inaddition to managing ANZBGL New Zealand’s interest rate exposure and high quality liquid asset portfolio.
Other
Other includes treasury and back office support functions, none of which constitutes a separately reportable segment.

16

NOTES TO THE FINANCIAL STATEMENTS

6.

SEGMENT REPORTING (continued)

OPERATING SEGMENTS
Personal

Business & Agri

Institutional

Other

Total

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Year ended 30 September

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Net interest income

2,385

2,216

1,014

889

706

629

134

28

4,239

3,762

7

7

1

1

20

17

-

-

28

25

- Non-lending fees

437

426

243

247

51

58

(2)

-

729

731

- Commissions

32

31

-

-

1

1

-

-

33

32

Net fee and commission income- Lending fees

- Funds management income

244

253

-

-

-

-

-

-

244

253

- Fee and commission expense

(341)

(306)

(189)

(196)

-

-

-

-

(530)

(502)

Net fee and commission income

379

411

55

52

72

76

(2)

-

504

539

Other income

2

3

-

-

271

184

(167)

392

106

579

Share of associates' loss

-

-

-

-

-

-

-

(1)

-

(1)

Other operating income

381

414

55

52

343

260

(169)

391

610

1,117

Operating income

2,766

2,630

1,069

941

1,049

889

(35)

419

4,849

4,879

Operating expenses(1,160)(1,165)

(221)

(208)

(236)

(248)

(46)

(33)

(1,663)(1,654)

Profit before credit impairment
and income tax

1,606

1,465

848

733

813

641

(81)

386

3,186

3,225

Credit impairment release /(charge)

(49)

(74)

(73)

25

(61)

10

-

-

(183)

(39)

Profit before income tax

1,557

1,391

775

758

752

651

(81)

386

3,003

3,186

Income tax expense

(436)

(390)

(217)

(213)

(211)

(182)

32

(102)

(832)

(887)

Non-controlling interests

-

-

-

-

-

-

(27)

-

(27)

-

Profit / (loss) after income tax1

1,121

1,001

558

545

541

469

(76)

284

2,144

2,299

Financial position
Goodwill

1,042

1,042

695

695

1,269

1,269

-

-

3,006

3,006

Net loans and advances

106,444

103,015

24,42425,55918,75918,799--149,627

147,373

Customer deposits

88,08585,043

18,345

19,40726,09825,880--132,528

130,330

1

Attributable to the shareholders of the Ultimate Parent Bank.

OTHER SEGMENTThe Other segment profit after income tax comprises:
For the year ended 30 September
Personal and Business & Agri central functions
Group Centre
Economic hedges
Total

2023
NZ$m

2022
NZ$m

3
48
(127)
(76)

22
27
235
284

17

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
FINANCIAL ASSETS
Outlined below is a description of how we classify and measure financial assets as they apply to the note disclosures that follow.

CLASSIFICATION AND MEASUREMENT
Financial assets - general
There are three measurement classifications for financial assets under NZ IFRS 9: amortised cost, FVTPL and FVOCI. Financial assets are classified into
these measurement classifications on the basis of two criteria:• the business model within which the financial asset is managed; and• the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments ofprincipal and interest).
The resultant financial asset classifications are as follows:• Amortised cost: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in abusiness model whose objective is to collect their cash flows;• FVOCI: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in a businessmodel whose objective is to collect their cash flows or to sell the assets; and• FVTPL: Any other financial assets not falling into the categories above are measured at FVTPL.
Fair value option for financial assets
A financial asset may be irrevocably designated on initial recognition:• at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or• at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognised by an
acquirer in a business combination.

7.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and other balances, as outlined below, that are convertible into cash with an insignificant risk ofchanges in value and with remaining maturities of three months or less, including reverse repurchase agreements.

Coins, notes and cash at bankSecurities purchased under agreements to resell in less than 3 months
Balances with central banks
Settlement balances receivable within 3 months
Cash and cash equivalents

18

2023
NZ$m

2022
NZ$m

155
668
12,139132
13,094

154
1,248
9,980
1,193
12,575NOTES TO THE FINANCIAL STATEMENTS

8.

TRADING SECURITIES

Government securities
Corporate and financial institution securities
Trading securities

2023
NZ$m
5,249
672
5,921

2022
NZ$m
6,051
1,177
7,228

RECOGNITION AND MEASUREMENT
Trading securities are financial instruments we either:• acquire principally for the purpose of selling in the short-term; or• hold as part of a portfolio we manage for short-term profit making.
We recognise purchases and sales of trading securities on trade date:• initially, we measure them at fair value; and• subsequently, we measure them in the balance sheet at their fair value with any change in fair value recognised in profit or loss.
Assets disclosed as trading securities are subject to the general classification and measurement policy for financial assets outlined on page 18.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when applying the valuation techniques used to determine the fair value of trading securities not valued using
quoted market prices. Refer to Note 16 Fair value of financial assets and financial liabilities for further details.

19

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
9. DERIVATIVE FINANCIAL INSTRUMENTS
Fair value
Derivative financial instruments - held for trading
Derivative financial instruments - designated in hedging relationships
Derivative financial instruments

Assets
2023
NZ$m
7,522
1,225
8,747

Liabilities
2023
NZ$m
(6,517)(1,770)(8,287)

Assets2022
NZ$m
14,114
1,364
15,478

Liabilities
2022
NZ$m
(11,654)(1,917)(13,571)

FEATURES
Derivative financial instruments are contracts:• whose value is derived from an underlying price index (or other variable) defined in the contract – sometimes the value is derived from morethan one variable;• that require little or no initial net investment; and• that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.

PURPOSEANZBGL New Zealand’s derivative financial instruments have been categorised as follows:
Trading

Derivatives held in order to:• meet customer needs for managing their own risks.
• manage risks in ANZBGL New Zealand that are not in a designated hedge accounting relationship (someelements of balance sheet management).
• undertake market making and positioning activities to generate profits from short-term fluctuations in prices or
margins.

Designated in hedging
relationships

Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
movements in underlying positions relating to:• hedges of ANZBGL New Zealand’s exposures to interest rate risk and currency risk.
• hedges of other exposures relating to non-trading positions.

TYPES
ANZBGL New Zealand offers or uses four different types of derivative financial instruments:
Forwards

A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.

Futures

An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on thetransaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.

Swaps

A contract in which two parties exchange one series of cash flows for another.

Options

A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has thecorresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises theoption.

RISKS MANAGEDANZBGL New Zealand offers and uses the instruments described above to manage fluctuations in the following market factors:
Foreign exchange

Currencies at current or determined rates of exchange.

Interest rate

Fixed or variable interest rates applying to money lent, deposited or borrowed.

Commodity

Soft commodities (that is, agricultural products such as wheat, coffee, cocoa, and sugar) and hard commodities (thatis, mined products such as gold, oil and gas).

CreditRisk of default by customers or third parties.

20

NOTES TO THE FINANCIAL STATEMENTS

9.

DERIVATIVE FINANCIAL INSTRUMENTS (continued)

ANZBGL New Zealand uses central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting ofcollateral exist with these exchanges:••

some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.
other transactions are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative
instruments by the amount paid or received.

DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADINGThe majority of ANZBGL New Zealand’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for
trading are:AssetsLiabilities
AssetsLiabilities
2023
2023
2022
2022
Fair value
NZ$m
NZ$m
NZ$m
NZ$m
Interest rate contracts
Forward rate agreements
6
(2)
1
(2)
109
(8)
Futures contracts
38
(2)
1,174
(1,004)
Swap agreements
1,521(1,638)(12)
Options
(10)
Total
1,560
(1,652)
1,289(1,026)
Foreign exchange contracts
Spot and forward contracts
5,829(4,027)
1,855(1,739)6,825(6,442)
Swap agreements
4,046(3,070)136(125)
Options
29(27)
12,790(10,594)
Total
5,930
(4,836)35(34)
Commodity contracts and credit default swaps
32(29)
14,114(11,654)
Derivative financial instruments - held for trading
7,522(6,517)

DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPSAs set out in Note 1, under the accounting policy choice provided by NZ IFRS 9, ANZBGL New Zealand has continued to apply the hedge accounting
requirements of NZ IAS 39.
ANZBGL New Zealand uses two types of hedge accounting relationships:
Fair value hedge

Cash flow hedge

Objective of thishedgingarrangement

To hedge our exposure to changes to the fair value of arecognised asset or liability or unrecognised firm
commitment caused by interest rate or foreign currency
movements.

To hedge our exposure to variability in cash flows of arecognised asset or liability, a firm commitment or ahighly probable forecast transaction caused by interest
rate, foreign currency and other price movements.

Recognition ofeffective hedge
portionThe following are recognised in profit or loss at the sametime:
• all changes in the fair value of the underlying item
relating to the hedged risk; and• the change in the fair value of the derivatives.

We recognise the effective portion of changes in the fairvalue of derivatives designated as a cash flow hedge inthe cash flow hedge reserve.

Recognition of ineffective
hedge portion

Recognised immediately in other operating income.

If a hedging instrument
expires, or is sold,terminated, or exercised;or no longer qualifies forhedge accounting

When we recognise the hedged item in profit or loss, werecognise the related unamortised fair value adjustmentin profit or loss. This may occur over time if the hedged
item is amortised to profit or loss as part of the effective
yield over the period to maturity.

Only when we recognise the hedged item in profit orloss is the amount previously deferred in the cash flow
hedge reserve transferred to profit or loss.

Hedged item sold or
repaidWe recognise the unamortised fair value adjustment
immediately in profit or loss.

Amounts accumulated in equity are transferred
immediately to profit or loss.

21

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
9.

DERIVATIVE FINANCIAL INSTRUMENTS (continued)

The fair value of derivative financial instruments designated in hedging relationships are:
2023

2022
Liabilities
NZ$m

NominalamountNZ$mAssets
NZ$m

Liabilities
NZ$m

988

(1,361)30,861920(1,461)

36,022

237(409)

34,202444(456)

64,4301,225(1,770)65,063

1,364(1,917)

Averageinterest
rate

Less than 3months
NZ$m

3 to 12months
NZ$m

1 to 5years
NZ$m

After 5
years
NZ$m

Total
NZ$m

1.95%

434

2,695

15,341

9,938

28,408

3.59%

4,747

9,389

19,462

2,424

36,022

1.65%

-

2,600

15,451

12,81030,861

2.26%

1,826

7,454

24,079843

34,202

Fair value hedges
Interest rate swap agreements
Cash flow hedges
Interest rate swap agreements
Derivative financial instruments - designated in
hedging relationships

NominalamountNZ$mAssetsNZ$m

28,408The maturity profile of the nominal amounts of our hedging instruments held is:Nominal amountAs at 30 September 2023
Fair value hedges
Interest rate
Cash flow hedges
Interest rate
As at 30 September 2022
Fair value hedges
Interest rate
Cash flow hedges
Interest rate

The impacts of ineffectiveness from our designated hedge relationships by type of hedge relationship and type of risk being hedged are:IneffectivenessChange in valueof hedging
instrument2
2023
2022
NZ$m
NZ$m
Fair value hedges1
Interest rate
Cash flow hedges1
Interest rate
1
2
3
4

22

Change in valueof hedged item
2023
2022
NZ$m
NZ$m

Hedge ineffectivenessrecognised in profit
or loss3
2023
2022
NZ$m
NZ$m

Amount reclassified
from the cash flow
hedge reserve
to profit or loss4
2023
2022
NZ$m
NZ$m

(48)

(1,048)

71

1,053

23

5

-

(114)

22

113

(23)

(1)

(1)

1

.

All hedging instruments are classified as derivative financial instruments.
Changes in value of hedging instruments is before any adjustments for Settle to Market clearing arrangements.
Recognised in other operating income.
Recognised in net interest income and other operating income.

3

NOTES TO THE FINANCIAL STATEMENTS

9.

DERIVATIVE FINANCIAL INSTRUMENTS (continued)

The hedged items in relation to ANZBGL New Zealand’s fair value hedges are:Carrying amount
AssetsLiabilities
NZ$m
NZ$m

Accumulated fair value
hedge adjustments on
the hedged item
AssetsLiabilities
NZ$m
NZ$m

Balance sheet
presentation

Hedged risk

As at 30 September 2023
Fixed rate debt issuance
Fixed rate investment securities at FVOCI1
Total

Debt issuances
Investment securities

Interest rate
Interest rate

9,395
9,395

(18,728)(18,728)

(837)
(837)

1,315
1,315

As at 30 September 2022
Fixed rate debt issuance
Fixed rate investment securities at FVOCI1
Total

Debt issuances
Investment securities

Interest rate
Interest rate

11,506
11,506(19,497)(19,497)

(976)
(976)

1,403
1,403

1

The carrying amount of debt instruments at FVOCI does not include the fair value hedge adjustment. The fair value hedge adjustment is included in other comprehensive income.

There is no cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the balance sheet as at 30
September 2023 (2022: nil).
The hedged items in relation to ANZBGL New Zealand’s cash flow hedges are:Floating rate loans and advances
Floating rate customer deposits

Hedged risk
Interest rate
Interest rate

Continuing
hedges
2023
2022
NZ$m
NZ$m
(437)
(358)
475
283

Discontinued
hedges
2023
2022
NZ$m
NZ$m
1
(1)

All cash flow hedges relate to hedges of interest rate risk and the movements in the cash flow hedge reserve are shown in the statement of changes
in equity on page 7.

23

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
9.

DERIVATIVE FINANCIAL INSTRUMENTS (continued)
RECOGNITION AND MEASUREMENT
Recognition

Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a derivative ispositive, then we carry it as an asset, but if its value is negative, then we carry it as a liability.
Valuation adjustments are integral in determining the fair value of derivatives. This includes:• a credit valuation adjustment (CVA) to reflect the counterparty risk and/or event of default; and• a funding valuation adjustment (FVA) to account for funding costs and benefits in the derivatives portfolio.

Derecognition ofassets and liabilities

We remove derivative assets from our balance sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our balance sheet
when ANZBGL New Zealand’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative assets or
liabilities may be derecognised in accordance with the principle above when collateral is settled, depending on
the legal arrangements in place for each instrument.

Impact on theincome statement

The recognition of gains or losses on derivative financial instruments depends on whether the derivative is held
for trading or is designated into a hedge accounting relationship. For derivative financial instruments held for
trading, gains or losses from changes in the fair value are recognised in profit or loss.
For an instrument designated in a hedge accounting relationship, the recognition of gains or losses depends
on the nature of the item being hedged. Refer to the table on page 21 for details of the recognition approach
applied for each type of hedge accounting relationship.
Sources of hedge accounting ineffectiveness may arise from differences in the interest rate reference rate,
margins, or rate set differences and differences in discounting between the hedged items and the hedging
instruments.

Hedge effectivenessTo qualify for hedge accounting under NZ IAS 39, a hedge relationship is expected to be highly effective. A
hedge relationship is highly effective only if the following conditions are met:
• the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows
attributable to the hedged risk during the period for which the hedge is designated (prospective
effectiveness); and• the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
ANZBGL New Zealand monitors hedge effectiveness on a regular basis but at a minimum at each reportingdate.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select the valuation techniques used to determine the fair value of derivatives, particularly the selectionof valuation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 16
Fair value of financial assets and financial liabilities for further details.

24

NOTES TO THE FINANCIAL STATEMENTS

10. INVESTMENT SECURITIESInvestment securities measured at FVOCI
Debt securities
Equity securities
Total

2023
NZ$m

2022
NZ$m

10,9571
10,958

11,356
1
11,357The maturity profile of investment securities is as follows:

As at 30 September 2023
Government securities
Corporate and financial institution securities
Equity securities
Total

Less than 3months
NZ$m
492
29
521

3 to 12months
NZ$m
512
512

1 to 5 years
NZ$m
6,423
386
6,809

After
5 years
NZ$m
3,115
3,115

No
maturity
NZ$m
1
1

Total
NZ$m
10,542415
110,958As at 30 September 2022
Government securities
Corporate and financial institution securities
Equity securities
Total

115
3
118

1,430
69
1,499

7,103
362
7,465

2,274
2,274

1
1

10,922434
111,357

RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate ANZBGL New Zealand’s
customer lending activities are classified as loans and advances (rather than investment securities) to better reflect the substance of thearrangement.
Equity investments not held for trading purposes may be designated at FVOCI on an instrument by instrument basis. If this election is made, gains orlosses are not reclassified from other comprehensive income to profit or loss on disposal of the investment. However, gains or losses may bereclassified within equity.
Assets disclosed as investment securities are subject to the general classification and measurement policy for financial assets outlined on page 18.
Additionally, expected credit losses associated with ‘Investment securities - debt securities at FVOCI’ are recognised and measured in accordancewith the accounting policy outlined in Note 12 Allowance for expected credit losses, and the allowance for expected credit loss is recognised in the
FVOCI reserve in equity with a corresponding charge to profit or loss.

KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select valuation techniques used to determine the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 16 Fair value of financial assets andfinancial liabilities for further details.

25

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
11. NET LOANS AND ADVANCES
The following table provides details of net loans and advances for ANZBGL New Zealand:
Note
Overdrafts
Credit cards
Term loans - housing
Term loans - non-housing
Subtotal
Unearned income
Capitalised brokerage and other origination costs
Gross loans and advances
Allowance for expected credit losses
Net loans and advances

12

2023
NZ$m
973
1,262
107,346
40,345
149,926(28)
459
150,357(730)
149,627

2022
NZ$m
968
1,238
104,178
41,234
147,618(32)
433
148,019(646)
147,373

27,937
121,690
149,627

31,962
115,411
147,373

Residual contractual maturity:
Within one year
More than one year
Net loans and advances

RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are facilities
ANZBGL New Zealand provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance, which areprimarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we then measure loans andadvances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses.
ANZBGL New Zealand enters into transactions in which it transfers financial assets that are recognised on its balance sheet. When ANZBGL New
Zealand retains substantially all of the risks and rewards of the transferred assets, the transferred assets remain on ANZBGL New Zealand’s balance
sheet, however if substantially all the risks and rewards are transferred, ANZBGL New Zealand derecognises the asset. If the risks and rewards are
partially retained and control over the asset is lost, then ANZBGL New Zealand derecognises the asset. If control over the asset is not lost, then
ANZBGL New Zealand continues to recognise the asset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer of assets as appropriate.
Assets disclosed as net loans and advances are subject to the general classification and measurement policy for financial assets outlined on page 18.
Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured in accordance with theaccounting policy outlined in Note 12 Allowance for expected credit losses.

26

NOTES TO THE FINANCIAL STATEMENTS

12. ALLOWANCE FOR EXPECTED CREDIT LOSSES
2023

Net loans and advances at amortised cost
Off-balance sheet commitments
Total

Collectively Individuallyassessedassessed
NZ$m
NZ$m
670
60
122
5
792
65

2022
Collectively Individuallyassessedassessed
NZ$m
NZ$m
569
77
100
5
669
82

Total
NZ$m
646
105
751

Stage 3
Collectively IndividuallyStage 2
assessedassessed
314
56
60
(10)
(3)
(5)
7
6
87
(33)
(37)
5
311
59
77
(19)
106
20
94
(22)
(86)
(3)
398
79
60

Total
585
126
(33)
(37)
5
646
195
(22)
(86)
(3)
730

Total
NZ$m
730
127
857

The following tables present the movement in the allowance for expected credit losses (ECL) for the year.
Net loans and advances
Allowance for ECL is included in net loans and advances.

As at 1 October 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written-off (excluding recoveries)
Discount unwind reversal
As at 30 September 2022
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written-off (excluding recoveries)
Discount unwind reversal
As at 30 September 2023

Stage 1
155
18
26
199
19
(25)
193

Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in other provisions.
As at 1 October 2021
Transfer between stages
New and increased provisions (net of releases)
As at 30 September 2022

64
7
(5)
66

39
(6)
(2)
31

4
(1)
3

15
(10)
5

122
(17)
105

Transfer between stages
New and increased provisions (net of releases)
As at 30 September 2023

2
12
80

(2)
10
39

3

5

22
127

The collectively assessed allowance for ECL increased by NZ$123 million attributable to: increases of NZ$62 million for downside risks associated withthe economic outlook, NZ$37 million due to portfolio credit risk profile changes reflecting the revised economic scenario weightings and enhanced
model methodology, NZ$7 million management temporary adjustments and NZ$17 million in large exposure, model risk and other adjustment
allowances.

CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT

New and increased provisions- Collectively assessed- Individually assessed
Write-backs
Recoveries of amounts previously written-off
Total credit impairment charge

2023
NZ$m

2022
NZ$m

123
94
(22)
(12)
183

37
72
(33)
(37)
39

27

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENTEXPECTED CREDIT LOSS MODEL
The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios andtakes into account the time value of money, past events, current conditions and forecasts of future economic conditions.
Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit deterioration
since origination, according to the following three-stage approach:•••Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,an allowance for ECL is recognised reflecting the expected credit losses resulting from default events that are possible within the next
12 months from the reporting date. For instruments with a remaining maturity of less than 12 months, expected credit losses are
estimated based on default events that are possible over the remaining time to maturity.
Stage 2: Where there has been a SICR since origination, an allowance for ECL is recognised reflecting expected credit losses resulting
from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a subsequent period
such that the increase in credit risk since origination is no longer considered significant, the exposure returns to a Stage 1 classification
with ECL measured accordingly.
Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.

Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSSECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:•••

Probability of default (PD) – the estimate of the likelihood that a borrower will default over a given period;
Exposure at default (EAD) – the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; andLoss given default (LGD) – the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility’s EAD,
taking into account direct and indirect recovery costs.

These credit risk factors are adjusted for current and forward-looking information through the use of macroeconomic variables.
EXPECTED LIFE
When estimating ECL for exposures in Stage 2 and 3, ANZBGL New Zealand considers the expected lifetime over which it is exposed to creditrisk.
For non-retail portfolios, ANZBGL New Zealand uses the maximum contractual period as the expected lifetime for non-revolving credit
facilities. For non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects ANZBGL New Zealand’s contractual
right to withdraw a facility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For retail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviour andevents that give rise to substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring ECL is aligned to the definition used for internal credit risk management purposes across all
portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicators that a debtor isunlikely to fully satisfy contractual credit obligations to ANZBGL New Zealand, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of ANZBGLNew Zealand’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries ofamounts previously written-off are recorded as a release to the credit impairment charge in the income statement.
MODIFIED FINANCIAL ASSETS
If the contractual terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit or commercial
reasons, an assessment is made to determine if the changes to the terms of the existing financial asset are considered substantial. This
assessment considers both changes in cash flows arising from the modified terms as well as changes in the overall instrument risk profile; forexample, changes in the principal (credit limit), term, or type of underlying collateral. Where a modification is considered non-substantial, theexisting financial asset is not derecognised and its date of origination continues to be used to determine SICR. Where a modification isconsidered substantial, the existing financial asset is derecognised and a new financial asset is recognised at its fair value on the modification
date, which also becomes the date of origination used to determine SICR for this new asset.

28

NOTES TO THE FINANCIAL STATEMENTS

12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENTSIGNIFICANT INCREASE IN CREDIT RISK (SICR)
Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, ANZBGL New Zealandconsiders both qualitative and quantitative information:i.

Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.
For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting date to
the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the PD of the borrower and incorporates bothborrower and non-borrower specific information, including forward-looking information. CCRs are subject to review at least annually or
more frequently when an event occurs which could affect the credit risk of the customer.
For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime PD at thereporting date to that at origination, or by reference to customer behavioural score thresholds. The scenario weighted lifetime
probability of default may increase significantly if:
•
•

ii.

there has been a deterioration in the economic outlook, or an increase in economic uncertainty; orthere has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.

Backstop criteria
ANZBGL New Zealand uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios
only, facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.

FORWARD-LOOKING INFORMATION
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since originationand in our estimate of ECL. In applying forward-looking information for estimating ECL, ANZBGL New Zealand considers four probabilityweighted forecast economic scenarios as follows:i.

Base case scenario
The base case scenario is our view of future macroeconomic conditions. It reflects management’s assumptions used for strategicplanning and budgeting, and also informs the Banking Group’s Internal Capital Adequacy Assessment Process (ICAAP) which is theprocess ANZBGL New Zealand applies in strategic and capital planning over a 3-year time horizon;

ii.

Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on theeconomic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) andpessimistic (in the case of the downside) economic events and uncertainty over long term horizons; andiv. Severe downside scenario
To better reflect the current economic conditions and geopolitical environment, ANZBGL New Zealand altered the severe downside
scenario in 2022 from a scenario fixed by reference to average economic cycle conditions to one which aligns with the scenario used forstress testing.
The four scenarios are described in terms of macroeconomic variables used in the PD, LGD and EAD models (collectively the ECL models)depending on the lending portfolio and country of the borrower. Examples of the macroeconomic variables include unemployment rates,
Growth Domestic Product (GDP) growth rates, residential property price indices, commercial property price indices and consumer priceindices.
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario, as well as specific portfolio considerations where required.
Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not been adequately
addressed in the modelling process.

29

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES
Collectively assessed allowance for expected credit losses
In estimating collectively assessed ECL, ANZBGL New Zealand makes judgements and assumptions in relation to:• the selection of an estimation technique or modelling methodology; and• the selection of inputs for those models, and the interdependencies between those inputs.
The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between
those inputs, and highlights significant changes during the current period.
The judgements and associated assumptions have been made within the context of the uncertainty as to how various factors might impact
the global economy and reflect historical experience and other factors that are considered to be relevant, including expectations of future
events that are believed to be reasonable under the circumstances. ANZBGL New Zealand’s ECL estimates are inherently uncertain and, as aresult, actual results may differ from these estimates.
Judgement /assumption

Description

Considerations for the year ended
30 September 2023

Determining
when a SICR
has occurred orreversedIn the measurement of ECL, judgement is involved indetermining whether there has been a SICR sinceinitial recognition of a loan, which would result in it
moving from Stage 1 to Stage 2. This is a key area ofjudgement since transition from Stage 1 to Stage 2
increases the ECL from an allowance based on the PD
in the next 12 months, to an allowance for lifetime
expected credit losses. Subsequent decreases incredit risk resulting in transition from Stage 2 to Stage
1 may similarly result in significant changes in the ECL
allowance.
The setting of precise SICR trigger points requires
judgement which may have a material impact upon
the size of the ECL allowance. ANZBGL New Zealandmonitors the effectiveness of SICR criteria on an
ongoing basis.

The determination of SICR has been appliedconsistent with prior periods.

Measuringboth 12-monthand lifetime
credit losses

The PD, LGD and EAD factors used in determining ECL
are point-in-time measures reflecting the relevant
forward-looking information determined bymanagement. Judgement is involved in determining
which forward-looking information is relevant forparticular lending portfolios and for determining eachportfolio’s point-in-time sensitivity.

The PD, LGD and EAD models are subject to ANZBGLNew Zealand’s model risk policy that stipulates
periodic model monitoring and re-validation, anddefines approval procedures and authorities
according to model materiality.
There were no material changes to the policy.

In addition, judgement is required where behaviouralcharacteristics are applied in estimating the lifetime ofa facility which is used in measuring ECL.
Base caseeconomic
forecast

30

ANZBGL New Zealand derives a forward-looking ‘basecase’ economic scenario which reflects our view of
future macroeconomic conditions.

There have been no changes to the types of forwardlooking variables (key economic drivers) used asmodel inputs.
As at 30 September 2023, the base case assumptions
have been updated to reflect a slowing economy andreduced levels of household consumption associatedwith continuing high interest rates and elevated levels
of inflation.
The expected outcomes of key economic drivers forthe base case scenario at 30 September 2023 aredescribed below under the heading ‘Base caseeconomic forecast assumptions’.

NOTES TO THE FINANCIAL STATEMENTS

12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES
Judgement /assumption

1

Description

Considerations for the year ended
30 September 2023

Probability
weighting ofeach economic
scenario (basecase, upside,
downside andseveredownsidescenarios)1

Probability weighting of each economic scenario is
determined by management considering the risks
and uncertainties surrounding the base caseeconomic scenario at each measurement date.
The assigned probability weightings are subject to ahigh degree of inherent uncertainty and therefore theactual outcomes may be significantly different tothose projected.

Probability weightings in the current period havebeen adjusted to reflect our assessment of thedownside risks from the impact of continued highinterest rates and inflation.
Weightings for current and prior periods are as
detailed in the section below under the heading on‘Probability weightings’.

Management
temporaryadjustments

Management temporary adjustments to the ECL
allowance are used in circumstances where it isjudged that our existing inputs, assumptions andmodel techniques do not capture all the risk factors
relevant to our lending portfolios. Emerging local or
global macroeconomic, microeconomic or politicalevents, natural disasters, and natural hazards that are
not incorporated into our current parameters, risk
ratings, or forward-looking information are examples
of such circumstances.

Management have continued to apply adjustments toaccommodate uncertainty associated with higher
inflation and interest rates.
In addition, management overlays have been madefor risks particular to mortgages, commercial property
and agri.
Management temporary adjustments total NZ$176
million (September 2022: NZ$169 million).
Management has considered and concluded no
temporary adjustment is required at 30 September
2023 to the ECL allowance in relation to climate- or
weather-related events during the year.

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

Base case economic forecast assumptions
Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of the
ECL balance.
The economic drivers of the base case economic forecasts, reflective of our view of future macroeconomic conditions, used at 30 September
2023 are set out below. For the years following the near term forecasts below, the ECL models apply simplified assumptions for the economic
conditions to calculate lifetime loss.
New Zealand

2023

Forecast calendar year
2024

2025

GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (CPI) (annual % change)

0.7%
3.8%
-0.6%
6.0%

0.3%
4.8%
2.3%
3.8%

1.5%
5.1%
3.2%
2.2%

The base case economic forecasts are for a continuing slowdown in economic activity. Continued high inflation is expected to keep interest
rates high and dampen growth over the forecast period.

31

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario including the uncertainties described above.
The base case weighting has increased to 50.0% (2022: 45.0%) as the downside and severe downside scenario weightings have been revised.
The downside case weighting has decreased to 37.5% (2022: 40.0%), and the severe downside case weighting has decreased to 12.5% (2022:
15.0%).
The assigned probability weightings are subject to a high degree of inherent uncertainty and therefore the actual outcomes may besignificantly different to those projected. ANZBGL New Zealand considers these weightings to provide estimates of the possible loss outcomes
and taking into account short and long term inter-relationships within ANZBGL New Zealand’s credit portfolios. The weightings applied are set
out below:

Base
UpsideDownside
Severe downside

2023

2022

50.0%
0.0%
37.5%
12.5%

45.0%
0.0%
40.0%
15.0%

ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future
periods, expected credit losses reported by ANZBGL New Zealand should be considered as a best estimate within a range of possible
estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2023:
ECL
NZ$m

Impact on ECL
NZ$m

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

802
791

10
(1)

100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario

192
341
598
1,770

(600)
(451)
(194)
978

Individually assessed allowance for expected credit losses
In estimating individually assessed ECL, ANZBGL New Zealand makes judgements and assumptions in relation to expected repayments, therealisable value of collateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process.
Judgements and assumptions in respect of these matters have been updated to reflect amongst other things, the uncertainties describedabove and in Note 1 About our financial statements.

32

NOTES TO THE FINANCIAL STATEMENTS

FINANCIAL LIABILITIESOutlined below is a description of how we classify and measure financial liabilities relevant to the note disclosures that follow.

CLASSIFICATION AND MEASUREMENT
Financial liabilities
Financial liabilities are measured at amortised cost, or FVTPL when they are held for trading. Additionally, financial liabilities can be designated at FVTPL
where:• the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;• a group of financial liabilities are managed and their performance are evaluated on a fair value basis, in accordance with a documented risk
management strategy; or• the financial liability contains one or more embedded derivatives unless:a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; orb) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk are included inother comprehensive income, except where doing so would create or enlarge an accounting mismatch in profit or loss.

13. DEPOSITS AND OTHER BORROWINGS
Note
Term deposits
On demand and short term deposits
Deposits not bearing interest
Total customer deposits
Certificates of deposit
Commercial paper
Securities sold under repurchase agreements
Borrowings from Ultimate Parent Bank and Immediate Parent Company
Deposits and other borrowings

26

2023
NZ$m
54,19860,673
17,658132,529
2,328
2,253
4,429
2,854
144,3932022
NZ$m
46,746
62,203
21,381
130,330
1,639
2,955
4,642
2,916
142,482

135,961
8,432
144,393

134,486
7,996
142,482

141,5112,882
144,393

139,527
2,955
142,482

Residual contractual maturity:
Within one year
More than one year
Deposits and other borrowings

Carried on balance sheet at:
Amortised cost
Fair value through profit or loss (designated on initial recognition)
Deposits and other borrowings

RECOGNITION AND MEASUREMENT
For deposits and other borrowings that:• are not designated at FVTPL on initial recognition, we measure them at amortised cost and recognise their interest expense using the effective
interest rate method; and• are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate them asmeasured at FVTPL.
Refer to Note 16 Fair value of financial assets and financial liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in ANZBGLNew Zealand’s own credit risk in other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss we recognise
directly in profit or loss. Once we have recognised an amount in other comprehensive income, we do not later reclassify it to profit or loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since the risks
and rewards of ownership remain with ANZBGL New Zealand. Over the life of the repurchase agreement, we recognise the difference between thesale price and the repurchase price and charge it to interest expense in profit or loss.
33

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
14. DEBT ISSUANCESANZBGL New Zealand uses a variety of funding programmes to issue unsubordinated debt (including senior debt and covered bonds) andsubordinated debt. The difference between unsubordinated debt and subordinated debt is that holders of unsubordinated debt take priority overholders of subordinated debt owed by the relevant issuer and subordinated debt will be repaid by the relevant issuer only after the repayment ofclaims of depositors, other creditors and the unsubordinated debt holders.
2023
2022
NZ$m
NZ$m
Senior debt
13,577
13,466
Covered bonds
4,082
3,373
17,659Total unsubordinated debt
16,839Subordinated debt
- ANZ Capital Notes
1,100- Other subordinated debt
1,655
1,724
Total subordinated debt
1,655
2,824
Total debt issued
18,494
20,483

Residual contractual maturity:
Within one year
More than one year
Total debt issued

3,773
14,721
18,494

4,862
15,621
20,483TOTAL DEBT ISSUED BY CURRENCY
The table below shows ANZBGL New Zealand’s issued debt by currency of issue, which broadly represents the debt holders’ base location.

AUD Australian dollars
EUR Euro
NZD New Zealand dollars
CHF Swiss Francs
USD United States dollars
Total debt issued

2023
NZ$m
327
6,053
1,646
1,117
9,351
18,494

2022
NZ$m
1,445
6,668
1,794
1,083
9,493
20,483Covered bonds are guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of ANZNZ
Covered Bond Trust (the Covered Bond Trust). The Covered Bond Trust is a member of ANZBGL New Zealand, whereas the Covered Bond Guarantor is
not a member of ANZBGL New Zealand.
ANZ CAPITAL NOTES
AU$970 million of ANZ Capital Notes (ANZ CN3) were redeemed on 24 March 2023.

RECOGNITION AND MEASUREMENT
Debt issuances are initially recognised at fair value and are subsequently measured at amortised cost, except where designated at FVTPL. Interest
expense on debt issuances is recognised using the effective interest rate method. Where ANZBGL New Zealand enters into a fair value hedge
accounting relationship, the fair value attributable to the hedged risk is reflected in adjustments to the carrying value of the debt.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Events or Non-Viability Trigger Events) are considered
to contain embedded derivatives that we account for separately at FVTPL. The embedded derivatives arise because the amount of shares issued onconversion following any of those trigger events is subject to the maximum conversion number, however they have no significant value as of thereporting date given the remote nature of those trigger events.

34

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENTRISK MANAGEMENT FRAMEWORK AND MODELINTRODUCTION
The use of financial instruments is fundamental to ANZBGL New Zealand’s businesses of providing banking and other financial services to ourcustomers. The associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of ANZBGL New Zealand’s key material
risks.
This note details ANZBGL New Zealand’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks:
Key material financial risks

Key sections applicable to this risk

Credit risk
The risk of financial loss resulting from:• a counterparty failing to fulfil its obligations; or• a decrease in credit quality of a counterparty resulting in a financial loss.

•
•
•
•
•

Credit risk overview, management and control responsibilities
Maximum exposure to credit risk
Credit quality
Concentrations of credit risk
Collateral management

Market risk
The risk to ANZBGL New Zealand’s earnings arising from:• changes in interest rates, foreign exchange rates, credit spreads, volatility
and correlations; or• fluctuations in bond, commodity or equity prices.

•
•
•
•

Market risk overview, management and control responsibilities
Measurement of market risk
Traded and non-traded market risk
Foreign currency risk – structural exposure

Liquidity and funding risk
The risk that ANZBGL New Zealand is unable to meet its payment
obligations as they fall due, including:• repaying depositors or maturing wholesale debt; or• ANZBGL New Zealand having insufficient capacity to fund increases in
assets.

•••••Liquidity risk overview, management and control responsibilities
Key areas of measurement for liquidity risk
Liquidity portfolio management
Funding position
Residual contractual maturity analysis of ANZBGL New Zealand’s
liabilities

Credit risk incorporates the risks associated with us lending to customers
who could be impacted by climate change, changes to laws, regulations, orother policies adopted by governments or regulatory authorities. Climatechange impacts include both physical risks (climate- or weather-related
events) and transition risks resulting from the adjustment to a low emissions
economy. Transition risks include resultant changes to laws, regulations andpolicies noted above.

OVERVIEWAN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORKThis overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under NZ IFRS
7 Financial Instruments: Disclosures.
The Board is responsible for establishing and overseeing ANZBGL New Zealand’s Risk Management Framework (RMF). The Board has delegatedauthority to the Bank’s Board Risk Committee (BRC) to develop and monitor compliance with ANZBGL New Zealand’s risk management policies. The
BRC reports regularly to the Board on its activities.
The Board approves the strategic objectives of ANZBGL New Zealand including:• the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZBGL New Zealand is preparedto accept in pursuit of its strategic objectives and business plan; and• the Risk Management Strategy (RMS), which describes ANZBGL New Zealand’s strategy for managing risks and the key elements of the RMF thatgive effect to this strategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference
to the relevant policies, standards and procedures. It also includes information on how ANZBGL New Zealand identifies, measures, evaluates,
monitors, reports and controls or mitigates material risks.
ANZBGL New Zealand, through its training and management standards and procedures, aims to maintain a disciplined and robust control
environment in which all employees understand their roles and obligations. At ANZBGL New Zealand, risk is everyone’s responsibility.
ANZBGL New Zealand has an independent risk management function, headed by the Chief Risk Officer who:
• is responsible for overseeing the risk profile and the risk management framework;• can effectively challenge activities and decisions that materially affect ANZBGL New Zealand’s risk profile; and• has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.

35

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
Internal Audit Function
Internal Audit is a function independent of management whose role is to provide the Board and management with an effective and independent
appraisal of the internal controls established by management. Operating under a Board approved Charter, the reporting line for the outcomes of work
conducted by Internal Audit is direct to the Chair of the Audit Committee, with a direct communication line to the Chief Executive Officer and theexternal auditor. The Internal Audit Plan is developed using a risk based approach and is reviewed quarterly. The Audit Committee approves the plan.
All audit activities are conducted in accordance with international internal auditing standards, and the results of the activities are reported to the Audit
Committee and management. These results influence the performance assessment of business heads. Furthermore, Internal Audit monitors theremediation of audit issues and reports the current status of any outstanding audits.

CREDIT RISKCREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of ANZBGL New Zealand’s major sources of income. As this activity is also a key material risk, ANZBGL New
Zealand dedicates considerable resources to its management. ANZBGL New Zealand assumes credit risk in a wide range of lending and other activities
in diverse markets and in many jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade financeand capital markets activities.
Our credit risk management framework ensures we apply a consistent approach across ANZBGL New Zealand when we measure, monitor andmanage the credit risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC:
• approves the credit risk appetite and credit strategies; and• approves policies and control frameworks for the management of ANZBGL New Zealand’s credit risk.
The BRC delegates responsibility for day-to-day management of credit risk and compliance with credit risk policies to the Bank’s Credit Risk
Management Committee (CRMC).
We quantify credit risk through an internal credit rating system (Master Scale) to ensure consistency across exposure types and to provide a consistentframework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
Probability of Default (PD)Expressed by a Customer Credit Rating (CCR), reflecting ANZBGL New Zealand’s assessment of acustomer’s ability to service and repay debt.

Exposure at Default (EAD)

The expected balance sheet exposure at default taking into account repayments of principal andinterest, expected additional drawdowns and accrued interest at the time of default.

Loss Given Default (LGD)

Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to thepercentage of loan covered by security which ANZBGL New Zealand can realise if a customer defaults.
The A-G scale is supplemented by a range of other SIs which cover such factors as cash cover andsovereign backing. For retail and some small business lending, we group exposures into large
homogeneous pools, and the LGD is assigned at the pool level.

Our specialist credit risk teams develop and validate ANZBGL New Zealand’s PD and LGD rating models. The outputs from these models drive our dayto-day credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, internal capital allocation, andcredit provisioning.
All customers with whom ANZBGL New Zealand has a credit relationship are assigned a CCR at origination via either of the following assessment
approaches:
Large and more complex lending

Retail and some small business lending

Rating models provide a consistent and structured assessment, withjudgement required around the use of out-of-model factors. We
handle credit approval on a dual approval basis, jointly with thebusiness writer and an independent credit officer.

Automated assessment of credit applications using a combination ofscoring (application and behavioural), policy rules and external credit
reporting information. If the application does not meet the automatedassessment criteria, then it is subject to manual assessment.

We use ANZBGL New Zealand’s internal CCR to manage the credit quality of financial assets. To enable wider comparisons, ANZBGL New Zealand’s
CCRs are mapped to external rating agency scales as follows:
Credit quality
description

Internal CCR

ANZBGL New Zealand customer requirements

Moody’s
RatingS&P Global
Ratings

Strong

CCR 0+ to 4-

Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity is
not significantly vulnerable to foreseeable events.

Aaa – Baa3

AAA – BBB-

Satisfactory

CCR 5+ to 6-

Demonstrated sound operational and financial stability over the
medium to long-term even though some may be susceptible tocyclical trends or variability in earnings.

Ba1 – B1

BB+ – B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, withvariability and uncertainty in profitability and liquidity projected tocontinue over the short and possibly medium term.

B2 – Caa

B - CCC

Defaulted

CCR 8- to 10

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

n/a

n/a

36

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
MAXIMUM EXPOSURE TO CREDIT RISKFor financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, thesedifferences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject tomarket risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount ANZBGL New Zealand would have to pay if the instrument is called upon.
The table below shows our maximum exposure to credit risk of on-balance sheet and off-balance sheet positions before taking account of any
collateral held or other credit enhancements.
Maximum exposure
Reported
Excluded1
to credit risk
2023
2022
2023
2022
2023
2022
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
On-balance sheet positions
Net loans and advances
147,373
147,373
149,627
149,627
Other financial assets:
12,575154
12,421
Cash and cash equivalents
13,094155
12,939Settlement balances receivable
785
785
401
401
Collateral paid
801
1,672
801
1,672
5,921
7,228
5,921
7,228
Trading securities
15,47815,478Derivative financial instruments
8,747
8,747
11,357
11,357
Investment securities
10,958
10,958Other financial assets2
952
952
996
996
50,047
154
49,893
Total other financial assets
40,918155
40,763
197,420
154
197,266
Subtotal
190,545155
190,390
Off-balance sheet positions
Undrawn and contingent facilities3
28,47729,87928,47729,879Total
219,022
227,299
155
154
218,867
227,145
1
2
3

Coins, notes and cash at bank within cash and cash equivalents were excluded as they do not have credit risk exposure.
Other financial assets mainly comprise accrued interest and acceptances.
Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expectedcredit losses.

37

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
CREDIT QUALITY
An analysis of ANZBGL New Zealand’s credit risk exposure is presented in the following tables based on ANZBGL New Zealand’s internal credit quality
rating by stage without taking account of the effects of any collateral or other credit enhancements.
Net loans and advances

As at 30 September 2023
StrongSatisfactory
Weak
Defaulted
Subtotal
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Unearned income
Capitalised brokerage and other origination costs
Net carrying amountAs at 30 September 2022
StrongSatisfactory
Weak
Defaulted
Subtotal
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Unearned income
Capitalised brokerage and other origination costs
Net carrying amountStage 3
Collectively Individuallyassessedassessed
NZ$m
NZ$m

Stage 1
NZ$m

Stage 2
NZ$m

Total
NZ$m

117,117
20,004505
137,626(193)
137,433
0.14%

3,656
5,032
2,432
11,120(398)
10,722
3.58%

893
893
(79)
814
8.85%

287
287
(60)
227
20.91%

120,773
25,036
2,937
1,180
149,926(730)
149,196
0.49%
(28)
459
149,627

123,382
16,333257
139,972(199)
139,773
0.14%

2,686
3,019
1,205
6,910
(311)
6,599
4.50%

590
590
(59)
531
10.00%

146
146
(77)
69
52.74%

126,068
19,352
1,462
736
147,618(646)
146,972
0.44%
(32)
433
147,3732023
NZ$m
40,59352
118
40,7632022
NZ$m
49,82762
449,893

Other financial assets

StrongSatisfactory
Weak
Defaulted
Total carrying amount38

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
Off-balance sheet commitments - undrawn and contingent facilities

As at 30 September 2023
StrongSatisfactory
Weak
Defaulted
Gross undrawn and contingent facilities
Allowance for ECL included in other provisions (refer to Note 20)
Net undrawn and contingent facilities
Coverage ratio

Stage 1
NZ$m
24,0883,343
827,439(80)
27,3590.29%

As at 30 September 2022
StrongSatisfactory
Weak
Defaulted
Gross undrawn and contingent facilities
Allowance for ECL included in other provisions (refer to Note 20)
Net undrawn and contingent facilities
Coverage ratio

25,5933,368
828,969(66)
28,903
0.23%

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
202
701
234
15
13
1,137
15
13
(39)
(3)
(5)
1,098
12
8
3.43%
20.00%
38.46%

224
682
89
995
(31)
964
3.12%

14
14
(3)
11
21.43%

6
6(5)
1
83.33%

Total
NZ$m
24,2904,044
242
28
28,604(127)
28,4770.44%

25,8174,050
97
20
29,984(105)
29,8790.35%

39

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. ANZBGL New
Zealand monitors its credit portfolio to manage risk concentration and rebalance the portfolio. ANZBGL New Zealand also applies single customer
counterparty limits to protect against unacceptably large exposures to one single customer.
Analysis of financial assets by industry sector is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. The significant
categories shown are the level one New Zealand Standard Industry Output Categories (NZSIOC), except that Agriculture is shown separately.
Composition of financial instruments that give rise to credit risk by industry group are presented below:
OtherfinancialassetsLoans andadvances

Off-balance
sheet credit
related commitments

Total

2023
NZ$m

2022
NZ$m

2023
NZ$m

2022
NZ$m

2023
NZ$m

2022
NZ$m

2023
NZ$m

2022
NZ$m

15,400
549
181
2,486
659
904
1,572
2,944
1,156
972
37,737

15,616
624
123
2,591
810
1,235
1,542
2,713
994
972
38,859

73
6
12
185
274
4
50
18
77
15,471
2,024

55
16
20
849
267
4
128
12
40
17,079
1,915

926
100
250
1,943
1,335
951
1,580
606
591
1,730
1,879

831
113
350
1,876
1,508
959
2,132
735
860
1,647
2,610

16,399
655
443
4,614
2,268
1,859
3,202
3,568
1,824
18,17341,64016,502
753
493
5,316
2,585
2,198
3,802
3,460
1,894
19,69843,384

981

880

9

12

422

397

1,412

1,289

201
1,117
79,581
1,335

199
950
76,182
1,097

8,910
26
370
112

9,924
24
250
133

776
270
13,814
1,362

855
474
13,426
1,122

9,887
1,413
93,7652,809

10,9781,448
89,8582,352

Subtotal
Overseas
Finance and insurance services
Households
All other non-residents

147,775

145,387

27,62130,72828,53529,895203,931206,010

76
1,489
586

103
1,407
721

13,092743

19,048
5
112

69
-

89
-

13,237
1,496
629

19,240
1,412
833

Subtotal
Gross subtotal
Allowance for ECL
Subtotal
Unearned income
Capitalised brokerage and other origination
costs
Maximum exposure to credit risk

2,151
149,926(730)
149,196(28)

2,231
147,618(646)
146,972(32)

13,142
40,76340,763-

19,16549,89349,893-69
28,604(127)
28,477-89
29,984(105)
29,879-15,362219,293(857)
218,436(28)

21,485
227,495(751)
226,744
(32)

459

433

-

-

-

-

459

433

149,627

147,373

40,76349,89328,47729,879218,867

227,145

New Zealand residents
Agriculture
Forestry and fishing, agriculture services
MiningManufacturing
Electricity, gas, water and waste services
Construction
Wholesale trade
Retail trade and accommodation
Transport, postal and warehousing
Finance and insurance services
Rental, hiring & real estate services
Professional, scientific, technical,
administrative and support services
Public administration and safety
Health care and social assistance
Households
Other1

1

40

Other includes exposures to information media and telecommunications; education and training; arts and recreation services; and other services.

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
COLLATERAL MANAGEMENT
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there issufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products, such as margin loans and reverse
repurchase agreements that are secured by the securities purchased using the lending. For some products, the collateral provided by customers isfundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables istypically repaid by the collection of those receivables. During the period there was no change in our collateral policies.
The nature of collateral or security held for the relevant classes of financial assets is as follows:
Net loans and advances
Loans – housing and personal

Housing loans are secured by mortgage(s) over property and additional security may take the form ofguarantees and deposits.
Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we takesecurity, then it is restricted to eligible vehicles, motor homes and other assets.

Loans – businessBusiness loans may be secured, partially secured or unsecured. Typically, we take security by way of amortgage over property and/or a charge over the business or other assets.
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby lettersof credit or derivative protection.

Other financial assets
Trading securities, investment
securities, derivatives and otherfinancial assets

For trading securities, we do not seek collateral directly from the issuer or counterparty. However, thecollateral may be implicit in the terms of the instrument (for example, with an asset-backed security).
The terms of debt securities may include collateralisation.
For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis atmarket levels current at the time of a counterparty default under International Swaps and Derivatives
Association (ISDA) Master Agreements.
Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative
positions with the counterparty are aggregated and cash collateral (or other forms of eligible collateral)is exchanged daily. The collateral is provided by the counterparty when their position is out of themoney (or provided to the counterparty by ANZBGL New Zealand when our position is out of themoney).

Off-balance sheet positions
Undrawn and contingent facilities

Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
performance bonds or guarantees. Undrawn facilities that are secured include housing loans securedby mortgages over residential property and business lending secured by commercial real estate and/or
charges over business assets.

The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:
Maximum exposure
to credit risk

Total value of collateral

Unsecured portion of
credit exposure

2023
NZ$m

2022
NZ$m

2023
NZ$m

2022
NZ$m

2023
NZ$m

2022
NZ$m

Net loans and advances
Other financial assets

149,627
40,763

147,373
49,893

142,180
3,232

139,455
4,453

7,447
37,531

7,918
45,440Off-balance sheet positions

28,47729,87915,542

15,75812,935

14,121

Total

218,867

227,145

160,954

159,666

57,91367,47941

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISKMARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIESMarket risk stems from ANZBGL New Zealand’s trading and balance sheet management activities and the impact of changes and correlations
between interest rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
The BRC delegates responsibility for day-to-day management of both market risk and compliance with market risk policies to the Bank’s Asset &Liability Management Committee (ALCO).
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the ANZBGL New Zealand level. The Market & Treasury Risk team (a specialist risk management unit independent of the business) allocatesmarket risk limits at various levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control
exposures using risk factors and profit and loss limits.
Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded market risk

Non-traded market risk

Risk of loss from changes in the value of financial instruments due
to movements in price factors for both physical and derivative
trading positions. Principal risk categories monitored are:• Currency risk – potential loss arising from changes in foreignexchange rates or their implied volatilities.
• Interest rate risk – potential loss from changes in market
interest rates or their implied volatilities.
• Credit spread risk – potential loss arising from a movement
in margin or spread relative to a benchmark.
• Commodity risk – potential loss arising from changes incommodity prices or their implied volatilities.
• Equity risk – potential loss arising from changes in equity
prices.

Risk of loss associated with the management of non-traded interest rate risk,
liquidity risk and foreign exchange exposures. This includes interest rate riskin the banking book. This risk of loss arises from adverse changes in theoverall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bankproducts.

MEASUREMENT OF MARKET RISKWe primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.
VaR measures ANZBGL New Zealand’s possible daily loss based on historical market movements.
ANZBGL New Zealand’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices andvolatilities over:• the previous 500 business days, to calculate standard VaR; and• a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using a one-day holding period. For stressed VaR we use a ten-day period. Back testing is used to ensure ourVaR models remain accurate.
ANZBGL New Zealand measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the
relevant holding period.

42

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:

As at
NZ$m
Traded value at risk 99% confidence
Foreign exchangeInterest rate
CreditDiversification benefit1
Total VaR
1

0.8
1.7
1.0
(1.8)
1.7

2023
High forLow for
year
year
NZ$m
NZ$m
1.6
6.2
1.1
n/a
6.7

0.5
1.1
0.4
n/a
1.2

Averagefor year
NZ$m

As at
NZ$m

0.9
2.0
0.7
(1.3)
2.3

1.0
3.1
0.9
(1.3)
3.7

2022
High forLow for
year
year
NZ$m
NZ$m
1.5
4.8
1.1
n/a
5.9

Averagefor year
NZ$m

0.2
1.2
0.4
n/a
1.3

0.7
2.5
0.7
(1.3)
2.6

The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for
ANZBGL New Zealand as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

Non-traded market risk
Balance sheet risk management
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of ANZBGL New Zealand’s banking book, while ensuring ANZBGL New
Zealand maintains sufficient liquidity to meet its obligations as they fall due.
Interest rate risk management
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on ANZBGL New Zealand’s future net interest
income. This risk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and theinvestment of capital and other non-interest bearing liabilities and assets. Interest rate risk is reported using VaR and scenario analysis (based on theimpact of a 1% rate shock). The table below shows VaR figures for non-traded interest rate risk for ANZBGL New Zealand.
2023

Non-traded value at risk 99% confidence
Total VaR

2022

As at
NZ$m

High foryear
NZ$m

Low foryear
NZ$m

Averagefor year
NZ$m

As at
NZ$m

High foryear
NZ$m

Low foryear
NZ$m

Averagefor year
NZ$m

31.2

35.3

24.2

30.7

30.1

30.9

21.0

26.0

We undertake scenario analysis to stress test the impact of extreme events on ANZBGL New Zealand’s market risk exposures. We model a 1%
overnight parallel positive shift in the yield curve to determine the potential impact on our net interest income over the next 12 months. This is astandard risk measure which assumes the parallel shift is reflected in all wholesale and customer rates.
The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported net
interest income.
Impact of 1% rate shock on the next 12 months' net interest income
As at period end

2023

2022

0.1%

-0.5%

Maximum exposure

1.4%

0.5%

Minimum exposure

-0.7%

-2.2%

Average exposure (in absolute terms)

0.2%

-0.7%

FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Where it is considered appropriate, ANZBGL New Zealand takes out economic hedges against larger foreign exchange denominated expenditurestreams (primarily Australian Dollar, US Dollar and US Dollar correlated). The primary objective of hedging these streams is to protect against asignificant decrease in shareholder value due to negative impacts of foreign exchange rate movements.

43

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISKLIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that ANZBGL New Zealand:• is unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; or• does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.
Management of liquidity and funding is overseen by ALCO following delegation from the BRC. Within an overall framework established by the BRC,
Treasury and Market & Treasury Risk have responsibility for the control of funding and liquidity risk at ANZBGL New Zealand level. Liquidity andfunding risks are governed by a set of principles approved by the Risk Committees of the Bank’s and Ultimate Parent Bank’s Boards and include:• maintaining the ability to meet all payment obligations in the immediate term;• ensuring that ANZBGL New Zealand has the ability to meet ‘survival horizons’ under ANZBGL New Zealand specific and general market liquidity
stress scenarios to meet cash flow obligations over the short to medium term;• maintaining strength in ANZBGL New Zealand’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile;• ensuring the liquidity management framework is compatible with local regulatory requirements;• preparing daily liquidity reports and scenario analysis to quantify ANZBGL New Zealand’s positions;• targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency;• holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and• establishing a detailed contingency plan to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY AND FUNDING RISKSupervision and regulation
RBNZ requires the Bank to have a comprehensive Board approved liquidity strategy defining: policy, systems and procedures for measuring, assessing,reporting and managing liquidity. This also includes a formal contingency plan for dealing with a liquidity crisis. The Banking Group is required to meet
one week and one month liquidity mismatch ratios and a one year core funding ratio each day.
Scenario modelling
A key component of ANZBGL New Zealand’s liquidity management framework is scenario modelling of a range of regulatory and internal liquidity
metrics.
Potential severe liquidity crisis scenarios that model the behaviour of cash flows where there is a problem (real or perceived) may include, but are notlimited to, operational issues, doubts about the solvency of ANZBGL New Zealand, or adverse credit rating changes. Under these scenarios ANZBGLNew Zealand may have significant difficulty rolling over or replacing funding. ANZBGL New Zealand’s liquidity policy requires sufficient high quality
liquid assets to be held to meet its liquidity needs for the following one month under the modelled scenarios.
As of 30 September 2023 ANZBGL New Zealand was operating above the required minimums with the above scenarios.
Structural balance sheet metrics
The Banking Group’s liquidity management framework also encompasses structural balance sheet metrics such as the RBNZ’s core funding ratio. The
core funding ratio is designed to limit the amount of wholesale funding required to be rolled over within a one year timeframe and so interacts withthe modelled liquidity scenarios to maintain the Banking Group‘s liquidity position.
Wholesale funding
ANZBGL New Zealand’s wholesale funding strategy is designed to deliver a sustainable portfolio of wholesale funds that balances cost efficiency withtargeting diversification by markets, investors, currencies, maturities and funding structures. Short-term and long-term wholesale funding is managed
and executed by Treasury.
ANZBGL New Zealand also uses maturity concentration limits under the wholesale funding and liquidity management framework. Maturity
concentration limits ensure that ANZBGL New Zealand is not required to issue large volumes of new wholesale funding within a short time period toreplace maturing wholesale funding. Funding instruments used to meet the wholesale borrowing requirement must be on a pre-established list of
approved products.
Funding capacity and debt issuance planning
ANZBGL New Zealand adopts a conservative approach to determine its funding capacity. Annually, a funding plan is approved by the Bank’s Board.
The plan is supplemented by regular updates and is linked to ANZBGL New Zealand’s three-year strategic planning cycle.

44

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY PORTFOLIO MANAGEMENTANZBGL New Zealand holds a diversified portfolio of cash and high quality liquid securities primarily to support liquidity risk management. The size of
ANZBGL New Zealand’s liquidity portfolio is determined with consideration of the amount required to meet the requirements of its internal andregulatory liquidity scenario metrics.
2023
NZ$m
6,739
1,190
318
8,193
16,44012,36228,802Central and local government bonds
Government treasury bills
Certificates of deposit
Other bonds
Securities eligible to be accepted as collateral in repurchase transactions
Cash and balances with central banks
Total liquidity portfolio

2022
NZ$m
8,316
829
656
8,372
18,173
10,26728,440Assets held in ANZBGL New Zealand’s liquidity portfolio are all denominated in New Zealand dollars and include balances held with RBNZ andsecurities issued by the New Zealand Government, supranational agencies, highly rated banks, state owned enterprises, local authorities (including
through a funding authority) and highly rated corporates.
The Bank also held unencumbered internal residential mortgage backed securities (RMBS) which would be accepted as collateral by RBNZ in
repurchase transactions. These holdings would entitle the Bank to enter into repurchase transactions with RBNZ with a value of NZ$10,776 million at
30 September 2023 (2022: NZ$10,800 million).
RBNZ Term Lending Facility (TLF) and Funding for Lending Programme (FLP)• Between May 2020 and July 2021, RBNZ made funds available under the TLF to promote lending to businesses. The TLF is a five-year secured
funding facility for New Zealand banks at a fixed rate of 0.25%.
•

Between November 2020 and December 2022, RBNZ made funds available under the FLP to lower the cost of borrowing for New Zealandbusinesses and households. The FLP is a three-year secured funding facility for New Zealand banks at a floating rate of the New Zealand Official
Cash Rate (OCR).

As at 30 September 2023, the Bank had drawn NZ$300 million (2022: NZ$300 million) under the TLF and NZ$3,500 million (2022: NZ$2,500 million)
under the FLP. These amounts are included in securities sold under repurchase agreements in Note 13 Deposits and other borrowings.
Liquidity crisis contingency planning
ANZBGL New Zealand maintains a liquidity crisis contingency plan to define an approach for analysing and responding to a liquidity-threatening
event. The framework includes:• the establishment of crisis severity/stress levels;• clearly assigned crisis roles and responsibilities;• early warning signals indicative of an approaching crisis, and mechanisms to monitor and report these signals;• action plans, and courses of action for altering asset and liability behaviour;• procedures for crisis management reporting, and covering cash-flow shortfalls; and• assigned responsibilities for internal and external communications.
FUNDING POSITIONANZBGL New Zealand actively uses balance sheet disciplines to prudently manage the funding mix. ANZBGL New Zealand employs funding metrics
to ensure that an appropriate proportion of its assets are funded from stable sources, including customer liabilities, longer-dated wholesale debt (withremaining term exceeding one year) and equity.
Note

2023
NZ$m

2022
NZ$m

13

132,529

130,330

Debt issuances

18,494

20,483

Certificates of deposit and commercial paper

4,581

4,594

Other borrowings

7,283

7,558

Funding composition
Customer deposits

Wholesale funding

Total wholesale funding

30,35832,635

Total deposits and wholesale funding

162,887

162,96545

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
15. FINANCIAL RISK MANAGEMENT (continued)
Analysis of funding liabilities by industry is based on ANZSIC codes. The significant categories shown are the level one NZSIOC.

Customer deposits by industry - New Zealand residents
Agriculture, forestry and fishing

2023
NZ$m

2022
NZ$m

4,535

4,843

204

257

Manufacturing

2,809

2,808

Construction

2,926

2,800

Wholesale trade

2,361

2,808

Retail trade and accommodation

2,124

2,197

MiningTransport, postal and warehousing

1,572

1,347

Financial and insurance services

13,89913,516

Rental, hiring and real estate services

3,498

3,851

Professional, scientific, technical, administrative and support services

6,377

6,741

Public administration and safety

1,515

1,258

Health care and social assistance

1,375

1,397

Arts, recreation and other services

2,502

2,120

Households

74,511

71,752All other New Zealand residents1

2,719

2,783

122,927

120,478

8,807

8,852

795

1,000

9,602

9,852

132,529

130,330

Subtotal
Customer deposits by industry - overseas
Households
All other non-NZ residents
Subtotal
Total customer deposits
Wholesale funding (financial and insurance services industry)
New Zealand

8,172

6,234

Overseas

22,186

26,401

Total wholesale funding

30,35832,635

Total deposits and wholesale funding

162,887

162,965

131,099

126,712Australia

3,374

4,845

United States

12,234

12,986

Europe9,363

11,424

Concentrations of funding by geography
New Zealand

Other countries
Total deposits and wholesale funding
1

46

Other includes electricity, gas, water and waste services; information media and telecommunications; and education and training.

6,817

6,998

162,887

162,965

NOTES TO THE FINANCIAL STATEMENTS

15. FINANCIAL RISK MANAGEMENT (continued)
RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF ANZBGL NEW ZEALAND’S FINANCIAL LIABILITIESThe tables below provide residual contractual maturity analysis of financial liabilities at 30 September 2023 and 30 September 2022 within relevant
maturity groupings. All outstanding debt issuances are profiled on the earliest date on which ANZBGL New Zealand may be required to pay. The
amounts represent principal and interest cash flows – so they may differ from equivalent amounts reported on the balance sheet.
It should be noted that this is not how ANZBGL New Zealand manages its liquidity risk. The management of this risk is detailed on page 44.

2023
Settlement balances payableOndemandNZ$mLess than
3 months
NZ$m

3 to 12months
NZ$m

1 to 5
years
NZ$m

After
5 years
NZ$m

Total
NZ$m

2,425

488

-

-

-

2,913

-

1,500

-

-

-

1,500

78,33625,83033,753

9,513-

147,432

Derivative financial liabilities (trading)

-

8,179

-

-

-

8,179

Debt issuances1

-

500

3,572

15,075

2,261

21,408

Lease liabilities

-

14

40

149

17

220

Other financial liabilities

-

260

7

236

253

756

- gross inflows

-

2,450

4,493

8,487

935

16,365- gross outflows-(2,366)(4,455)(8,941)(942)(16,704)

Collateral received
Deposits and other borrowings

Derivative financial instruments(balance sheet management)

2022
Settlement balances payable
Collateral received

4,677
-

253
1,962

-

-

-

4,930
1,962

Deposits and other borrowings

83,58724,31527,546

8,649-

144,097

Derivative financial liabilities (trading)-

13,204---

13,204

Debt issuances1

-

275

5,204

14,463

3,243

23,185

Lease liabilities

-

13

39

155

42

249

Other financial liabilities

-

154

8

273

215

650

- gross inflows

-

1,241

4,444

6,595

458

12,738- gross outflows-(1,251)(4,754)(6,736)(482)(13,223)

Derivative financial instruments(balance sheet management)

1

Any callable wholesale debt instruments have been included at their next call date. Refer to Note 14 Debt issuances for subordinated debt call dates.

At 30 September 2023, NZ$28,604 million (2022: NZ$29,984 million) of its credit related commitments and contingent liabilities mature in less than 1
year, based on the earliest date on which ANZBGL New Zealand may be required to pay.

47

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESCLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESANZBGL New Zealand recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial
instruments on the balance sheet at fair value.
Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date.
The following tables set out the classification of financial assets and liabilities according to their measurement bases together with their carrying
amounts as recognised on the balance sheet.
2023
2022
At
At
amortised
At fair
amortised
At fair
cost
value
Total
cost
value
Total
Note
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
Financial assets
Cash and cash equivalents1
7
12,426668
13,094
12,575
12,575
401
401
785
785
Settlement balances receivable
1,672
1,672
Collateral paid801
801
Trading securities
8
7,228
7,228
5,921
5,921
Derivative financial instruments
915,47815,478
8,747
8,747
11,357
11,357
Investment securities
10
10,958
10,958147,373
147,373
Net loans and advances
11
149,627
149,627
Other financial assets
996
996
952
952
Total
164,251
26,294
190,545
163,357
34,063
197,420
Financial liabilities
Settlement balances payable
4,887
4,887
2,886
2,886
Collateral received
1,962
1,962
1,500
1,500
Deposits and other borrowings1
13
139,527
2,955
142,482
141,5112,882
144,393
13,571
13,571
Derivative financial instruments
9
8,287
8,287
20,483
20,483
Debt issuances
14
18,494
18,494
Other financial liabilities
1,265
371
1,636
763
364
1,127
Total
165,656
11,540177,196
167,622
16,890184,5121

During 2023, ANZBGL New Zealand commenced the management of repurchase agreements and reverse repurchase agreements on a fair value basis within the trading book in its Markets
business. This resulted in the associated reverse repurchase and reverse repurchase agreements being recognised and measured at FVTPL.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
The fair valuation of financial assets and financial liabilities is generally determined at the individual instrument level.
If ANZBGL New Zealand holds offsetting risk positions, then we use the portfolio exception in NZ IFRS 13 Fair Value Measurement (NZ IFRS 13) tomeasure the fair value of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received tosell a net long position (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
Fair value designation
We designate commercial paper (included in deposits and other borrowings) at FVTPL where they are managed on a fair value basis to align themeasurement with how the instruments are managed.
FAIR VALUE APPROACH AND VALUATION TECHNIQUESWe use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
Asset or liability

Fair value approach

Financial instruments classified as:- Derivative financial assets and financial liabilities(including trading and non-trading)- Reverse repurchase agreements < 90 days
- Net loans and advances- Deposits and other borrowings- Debt issuances

Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using wholesale market interest rates, or market borrowing rates
for debt or loans with similar maturities or yield curve appropriate for the remaining term tomaturity.

Financial instruments classified as:- Trading securities- Investment securities

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

48

NOTES TO THE FINANCIAL STATEMENTS

16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE HIERARCHYANZBGL New Zealand categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with NZ IFRS 13 based on theobservability of inputs used to measure the fair value:• Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;• Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly
or indirectly; and• Level 3 – valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:
Fair value measurements
Quoted price in
active markets(Level 1)
2023
2022
NZ$m
NZ$m
AssetsCash and cash equivalents1
Trading securities2
Derivative financial instruments
Investment securities2
Total
Liabilities
Deposits and other borrowings1
Derivative financial instruments
Other financial liabilities
Total
1
2

Using observable inputs(Level 2)
2023
2022
NZ$m
NZ$m

Using unobservable
inputs (Level 3)
2023
2022
NZ$m
NZ$m

Total
2023
NZ$m

2022
NZ$m

3,989
38
7,796
11,823

5,565
109
10,895
16,569

668
1,932
8,709
3,161
14,4701,663
15,369461
17,493

1
1

1
1

668
5,921
8,747
10,95826,294

7,228
15,478
11,35734,063

2
367
369

8
364
372

2,882
8,275
4
11,161

2,955
13,551
16,506

10
10

12
12

2,882
8,287
371
11,5402,955
13,571364
16,890During 2023, ANZBGL New Zealand commenced the management of repurchase agreements and reverse repurchase agreements on a fair value basis within the trading book in its Markets
business. This resulted in the associated reverse repurchase and reverse repurchase agreements being recognised and measured at FVTPL.
During 2023, NZ$1,685 million of assets were transferred from Level 1 to Level 2 and $338 million of assets were transferred from Level 2 to Level 1 for ANZBGL New Zealand due to achange of the observability of valuation inputs. There were no other material transfers between Level 1 and Level 2 during the year. Transfers into and out of levels are measured at the
beginning of the reporting period in which the transfer occurred.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
The financial assets and financial liabilities listed below are carried at amortised cost on ANZBGL New Zealand’s balance sheet. While this is the value atwhich we expect the assets will be realised and the liabilities settled, ANZBGL New Zealand provides an estimate of the fair value of the financial assets
and financial liabilities at balance date in the table below.
Fair values of financial assets and liabilities carried at amortised cost not included in the table below approximate their carrying values. These financial
assets and liabilities are either short term in nature or are floating rate instruments that are re-priced to market interest rates on or near the end of thereporting period.

At amortised cost
2023
2022
NZ$m
NZ$m
Financial assets
Net loans and advances
Total
Financial liabilities
Deposits and otherborrowings
Debt issuances
Total

Categorised into fair value hierarchy
Quoted price in active Using observable
With significant nonmarkets
inputsobservable inputs(Level 1)(Level 2)(Level 3)
2023
2022
2023
2022
2023
2022
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m

Total fair value
2023
2022
NZ$m
NZ$m

149,627
149,627

147,373
147,373

-

-

95
95

136
136

148,469
148,469

145,623
145,623

148,564
148,564

145,759
145,759

141,511

139,527--

141,424

139,316--

141,424

139,316

18,494160,005

20,483160,010

2,367
2,367

3,677
3,677

16,101
157,525

16,679155,995--

18,468
159,892

20,356
159,672

49

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
The following table sets out ANZBGL New Zealand’s basis of estimating the fair values of financial assets and liabilities carried at amortised cost where
the carrying value is not typically a reasonable approximation of fair value.
Financial asset and liability

Fair value approach

Net loans and advances to banks

Discounted cash flows using prevailing market rates for loans with similar credit quality.

Net loans and advances to customers

Present value of future cash flows, discounted using a curve that incorporates changes inwholesale market rates, ANZBGL New Zealand’s cost of wholesale funding and the customer
margin, as appropriate.

Deposit liability without a specified maturity or
at call

The amount payable on demand at the reporting date. We do not adjust the fair value for any
value we expect ANZBGL New Zealand to derive from retaining the deposit for a future period.

Interest bearing fixed maturity deposits andother borrowings and acceptances withquoted market rates

Market borrowing rates of interest for debt with a similar maturity are used to discount contractual
cash flows to derive the fair value.

Debt issuances

Calculated based on quoted market prices or observable inputs as applicable. If quoted market
prices are not available, we use a discounted cash flow model using a yield curve appropriate forthe remaining term to maturity of the debt instrument. The fair value reflects adjustments to credit
spreads applicable to ANZBGL New Zealand for that instrument.

KEY JUDGEMENTS AND ESTIMATES
A significant portion of financial instruments are carried on ANZBGL New Zealand’s balance sheet at fair value. ANZBGL New Zealand therefore
regularly evaluates the key valuation assumptions used in the determination of the fair valuation of financial instruments incorporated within
the financial statements, as this can involve a high degree of judgement and estimation in determining the carrying values at the balance
sheet date.
In determining the fair valuation of financial instruments, ANZBGL New Zealand has considered the impact of related economic and market
conditions on fair value measurement assumptions and the appropriateness of valuation inputs in these estimates, notably valuation adjustments, aswell as the impact of these matters on the classification of financial instruments in the fair value hierarchy.
Most of the valuation models ANZBGL New Zealand uses employ only observable market data as inputs. For certain financial instruments, we
may use data that is not readily observable in current markets. If we use unobservable market data, then we need to exercise more judgement
to determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available. When establishing the fair value ofa financial instrument using a valuation technique, ANZBGL New Zealand also considers any required valuation adjustments in determining
the fair value. We may apply adjustments (such as credit valuation adjustments and funding valuation adjustments – refer Note 9 Derivative
financial instruments) to reflect ANZBGL New Zealand’s assessment of factors that market participants would consider in determining fairvalue of a particular financial instrument.

50

NOTES TO THE FINANCIAL STATEMENTS

17. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
SECURITY FOR ASSETS
The following disclosure excludes the amounts presented as collateral paid and received in the balance sheet that relate to derivative liabilities andderivative assets respectively. The terms and conditions of those collateral agreements are included in the standard CSA that forms part of the ISDA
Master Agreement under which most of our derivatives are executed.
ASSETS CHARGED AS SECURITY FOR LIABILITIESAssets charged as security for liabilities include the following types of instruments:• securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;• specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZBGL New Zealand’s covered bondprogrammes;• collateral provided to RBNZ under the TLF and FLP; and• collateral provided to a clearing house.
The carrying amounts of assets pledged as security are as follows:

Securities sold under arrangements to repurchase1
Residential mortgages provided as security for repurchase agreements with RBNZ
Total assets of the ANZNZ Covered Bond Trust pledged as security for covered bonds
Other2
1

2

2023
NZ$m
626
4,844
10,926
300

2022
NZ$m
1,833
3,494
10,921
323

The amounts disclosed as securities sold under arrangements to repurchase include both:•
assets pledged as security which continue to be recognised on ANZBGL New Zealand’s balance sheet; and•assets repledged, which are included in the disclosure below.
Comparative amounts have been adjusted to be consistent with the current period’s collateral securities.

COLLATERAL ACCEPTED AS SECURITY FOR ASSETSANZBGL New Zealand has received collateral associated with various financial transactions. Under certain arrangements ANZBGL New Zealand has theright to sell, or to repledge, the collateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that which we have sold or repledged is as follows:

Fair value of assets which can be sold or repledged
Fair value of assets sold or repledged

2023
NZ$m
667
432

2022
NZ$m
1,233
959

51

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
18. OFFSETTING
We offset financial assets and financial liabilities in the balance sheet (in accordance with NZ IAS 32 Financial Instruments: Presentation) when there is:• a current legally enforceable right to set off the recognised amounts in all circumstances; and• an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.
The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master netting
agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of overcollateralisation.
Amount subject to master netting agreement or similar
Total Amounts notamountssubject toFinancialrecognised master netting
collateralin the agreement or
Financial(received)/balance sheet
similar
Total
instruments
pledgedNet amount
2023
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
Derivative financial assets
8,747(1,529)7,218(5,588)(538)
1,092
Reverse repurchase agreements1
668
668
(668)
Total financial assets
9,415(1,529)7,886(5,588)(1,206)
1,092
Derivative financial liabilities(8,287)
1,670(6,617)
5,588
222
(807)
Repurchase agreements2(4,429)(4,429)4,429
Total financial liabilities(12,716)
1,670(11,046)
5,588
4,651
(807)
2022
Derivative financial assets
Reverse repurchase agreements1
Total financial assets
Derivative financial liabilities
Repurchase agreements2
Total financial liabilities1
2

52

15,478
1,248
16,726(13,571)(4,642)(18,213)(4,180)(4,180)
2,669
2,669

Reverse repurchase agreements are presented in the balance sheet within cash and cash equivalents.
Repurchase agreements are presented in the balance sheet within deposits and other borrowings.

11,298
1,248
12,546(10,902)(4,642)(15,544)(9,814)(9,814)
9,814
9,814

(1,128)(1,248)(2,376)
334
4,642
4,976

356
356
(754)
(754)

NOTES TO THE FINANCIAL STATEMENTS

19. GOODWILL AND OTHER INTANGIBLE ASSETS
2023
NZ$m
3,006
37
76
3,119

Goodwill
SoftwareManagement rights
Goodwill and other intangible assets

2022
NZ$m
3,006
17
76
3,099

GOODWILL AND OTHER INTANGIBLE ASSETS ALLOCATED TO CASH-GENERATING UNITS (CGUs)
Goodwill arose on the acquisition of the NBNZ Holdings Limited group on 1 December 2003, and the carrying amount reflects amortisation
recognised before the application of NZ IFRS from 1 October 2004 and subsequent business disposals. Funds management rights, assessed as having
indefinite useful lives, arose on the acquisition of the ING Holdings (NZ) Limited (now ANZ New Zealand Investments Holdings Limited) group on 30
November 2009.
Goodwill and funds management rights are allocated to CGUs as follows. Comparative amounts for Business & Agri (previously Business) andInstitutional have been updated for the segment changes described in Note 6 Segment reporting.

Cash generating unit
Personal
Funds Management
Personal segment
Business & Agri (previously Business)
Institutional
Total

Goodwill
2023
2022
NZ$m
NZ$m
980
980
62
62
1,042
1,042
695
695
1,269
1,269
3,006
3,006

Management rights
2023
2022
NZ$m
NZ$m
76
76
76
76
76
76

Goodwill was assessed for indicators of impairment as at 30 September 2023, taking into account the results of the February 2023 impairment test andassociated sensitivity and scenario analysis performed and the forecast impact of recent economic events. There were no indicators of impairment
therefore, in accordance with NZ IAS 36 Impairment of Assets, no further impairment test was required.
The following information is for the annual goodwill impairment test, and reflects the CGUs and goodwill allocations as at 28 February 2023.
Annual goodwill impairment test
The annual impairment test is performed as at the end of February each year. Goodwill is considered to be impaired if the carrying amount of therelevant CGU exceeds its recoverable amount. The recoverable amount of a CGU is the higher of its fair value less costs of disposal (FVLCOD) and its
value-in use (VIU). We use a value-in-use approach to estimate the recoverable amount of the CGU to which each goodwill component is allocated.
Based on this assessment no impairment was identified for any CGU, and therefore a FVLCOD calculation was not required.

53

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
19. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
VALUE-IN-USE
These calculations use cash flow projections based on a number of financial budgets within each CGU covering an initial forecast period. These
projections also incorporate economic assumptions including GDP, inflation, unemployment, residential and commercial property prices, and theimplementation of RBNZ’s increased capital requirements. Cash flows beyond the forecast period are extrapolated using the terminal growth rate.
These cash flow projections are discounted using a discount rate derived using a capital asset pricing model.
Future changes in the assumptions upon which the calculation is based may materially impact this assessment, resulting in the potential impairmentof part or all of the goodwill balances.
Input / assumption

Values applied in 28 February 2023 impairment test

Forecast period and projections

To 30 September 2028 - an extended forecast period was used to cover the implementation of RBNZ’s
increased capital requirements over the transition period ending on 1 July 2028.

Revenue growth over forecast
periodComprises impacts of net interest margin and volume growth, arising from planned responses to known
regulatory and economic forecasts. Average annual forecast revenue growth rates are shown below.

Credit impairment over forecast
periodVaries by CGU, based on ECL modelling for 2023 and 2024, before returning to long run experience levels
for 2025 to 2028. Long run experience levels are based on ANZBGL New Zealand’s bad debts written off,
net of recoveries, since 2004 of 0.14% of gross loans and advances. Credit impairment for each CGU as apercentage of forecast gross loans and advances for 2025 to 2028 is shown below.

Terminal growth rate

2.0% - based on 2026 forecast inflation from RBNZ’s February 2023 Monetary Policy Statement.

Discount rate

Post tax: 11.9% (February 2022: 10.7%).
The main variables in the calculation of the discount rate used are the risk free rate, beta and the market risk
premium. The risk-free rate was the traded 10-year New Zealand government bond yield as at 28 February
2023 of 4.6%. The market risk premium was estimated using observed historic rates of return for the New
Zealand stock exchange and 10-year government bonds. Beta was consistent with observable measuresapplied in the regional banking sector.

The values of the average revenue growth, credit impairment as a percentage of forecast gross loans and advances, and pre-tax discount rates
assumptions by CGU are shown in the table below. The implied pre-tax discount rates are significantly higher than the post-tax discount rate above
because regulatory capital retention over the forecast period is not tax effected. Comparative amounts for Business & Agri and Institutional have been
updated for the segment changes described in Note 6 Segment reporting.
Cash generating unit
Personal
Funds Management
Business & Agri
Institutional

Revenue growth
28 Feb 23 28 Feb 22
2.2%
5.6%
2.8%
1.8%

5.1%
6.4%
5.8%
3.8%

Credit impairment
28 Feb 23 28 Feb 22
0.07%
n/a
0.15%
0.17%

0.12%
n/a
0.22%
0.20%

Pre-tax discount rate
28 Feb 23 28 Feb 22
24.1%
21.5%
23.5%
23.3%

20.8%
18.6%
20.6%
20.9%

We performed stress tests for key sensitivities in each CGU. A change, considered to be reasonably possible by management, in key assumptions
would not cause the carrying amount of any CGU to exceed its recoverable amount.

54

NOTES TO THE FINANCIAL STATEMENTS

19. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
RECOGNITION AND MEASUREMENT
The table below details how we recognise and measure different intangible assets:

Definition

Goodwill

Software

Other intangibles

Excess amount ANZBGL New
Zealand has paid in acquiring abusiness over the fair value ofthe identifiable assets andliabilities acquired.

Purchased software owned by
ANZBGL New Zealand iscapitalised.

Management fee rights arising fromacquisition of funds managementbusiness.

Internal and external costs incurredin building software and computer
systems costing greater than
NZ$20 million are capitalised asassets. Those less than NZ$20
million are expensed in the year inwhich the costs are incurred.
Costs incurred in planning or
evaluating software proposals or inmaintaining systems after
implementation are not capitalised.

Carrying value

Cost less any accumulated
impairment losses.
Allocated to the CGU to which
the acquisition relates.

Useful life

Indefinite.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.

Initially, measured at cost.
Subsequently, carried at cost lessaccumulated amortisation andimpairment losses.
Except for major core
infrastructure, amortised overperiods between 2-5 years;
however major core infrastructure
may be amortised over 7 years
subject to approval by the Audit
Committee.

Initially, measured at fair value atacquisition.
Subsequently, carried at cost lessaccumulated impairment losses.
Management fee rights with anindefinite life are reviewed for
impairment at least annually or
when there is an indication of
impairment.

Purchased software is amortisedover 2 years unless it is considered
integral to other assets with alonger useful life.
Amortisation
methodNot applicable.

Straight-line method.

Not applicable.

KEY JUDGEMENTS AND ESTIMATESManagement judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life ofan asset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including:• the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are ANZBGL New
Zealand’s revenue generating segments that benefit from relevant historical business combinations generating goodwill.
• determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
• assessment of the recoverable amount of each CGU used to determine whether the carrying amount of goodwill is supported isbased on judgements including the selection of the model and key assumptions used to calculate the recoverable amount.
The assessment of the recoverable amount of each CGU has been made within the context of the inherent uncertainty described in the
key judgements and estimates section on page 9.

55

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
20. OTHER PROVISIONSECL allowance on undrawn and contingent facilities
Customer remediation
Restructuring costs
Leasehold make good
Other
Total other provisions

2023
NZ$m
127
36
10
21
15
209

2022
NZ$m
105
70
11
22
14
222

Customer Restructuring
Leaseholdremediation
costs make good
NZ$m
NZ$m
NZ$m
70
11
22
1
5
(29)
(5)
(1)
(6)
(1)
36
10
21

Other
NZ$m
14
1
15

Note
12

Movements in other provisions

Balance at 1 October 2022
New and increased provisions made during the year
Provisions used during the year
Unused amounts reversed during the year
Balance at 30 September 2023

Customer remediation
Customer remediation includes provisions for expected refunds to customers and other counterparties, remediation project costs and related
customer, counterparty and regulatory claims, penalties and litigation costs and outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by ANZBGL New Zealand or themanner in which that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for andare expensed as incurred.
Leasehold make good
Provisions associated with leased premises where, at the end of a lease, ANZBGL New Zealand is required to remove any fixtures and fittings installedin the leased property. This obligation arises immediately upon installation. Estimated make good costs are added to the right of use asset (withinpremises and equipment) upon installation and amortised over the lease term.
Other
Other provisions comprise various other provisions including losses arising from other legal action, operational issues, and warranties and indemnities
provided in connection with various disposals of businesses and assets.

RECOGNITION AND MEASUREMENTANZBGL New Zealand recognises provisions when there is a present obligation arising from a past event, an outflow of economic resources isprobable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using the estimated cash
flows required to settle the present obligation, its carrying amount is the present value of those cash flows.

KEY JUDGEMENTS AND ESTIMATESANZBGL New Zealand holds provisions for various obligations including customer remediation, restructuring costs, leasehold make goodand litigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including estimatesof expenditure required to satisfy such obligations. Where relevant, expert legal advice has been obtained and, in light of such advice,provisions and/or disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the costof settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number ofdifferent assumptions, including the number of impacted customers, the average refund per customer, the associated remediation project
costs, and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances. There is aheightened level of estimation uncertainty where the customer remediation provision relates to a legal proceeding or matter. The
appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence
including expert legal advice and adjustments are made to the provisions where appropriate.

56

NOTES TO THE FINANCIAL STATEMENTS

21. SHAREHOLDERS' EQUITYSHAREHOLDERS’ EQUITY

Share capital and initial head office accountReserves
FVOCI reserve
Cash flow hedge reserve
Total reserves
Retained earnings
Equity attributable to shareholders of the Ultimate Parent Bank
Non-controlling interests
Total shareholders' equity

2023
NZ$m
11,0552022
NZ$m
11,055

(39)
(54)
(93)
5,173
16,135550
16,685

22
26
48
4,369
15,472550
16,022SHARE CAPITAL
The table below details the movement in issued shares and share capital for the period.

Ordinary shares
Redeemable preference shares1
Total share capital
NZ Branch initial head office accountTotal share capital & initial head office account1

Number of issued shares
2023
2022
378,155,112
378,155,112
8,354,563,940
8,354,563,940
8,732,719,052
8,732,719,052
8,732,719,052
8,732,719,052

NZ$ millions
2023
2022
1,450
1,450
9,594
9,594
11,044
11,04411
11
11,055
11,055

Includes 44,990 (2022: 44,990) uncalled NZ$1.00 shares.

Redeemable preference shares
All redeemable preference shares (RPS) were issued by ANZ Holdings (New Zealand) Limited to the Immediate Parent Company. RPS are redeemable
by ANZ Holdings (New Zealand) Limited providing notice in writing to holders of the redeemable preference shares. Dividends are payable at thediscretion of the Directors of ANZ Holdings (New Zealand) Limited and are non-cumulative.
There are eight classes of RPS, relating to issues in 1988, 2005, 2007, 2008, 2009, 2014, 2015 and 2018. ANZ Holdings (New Zealand) Limited did not
pay any dividends on RPS during the years ended 30 September 2023 and 30 September 2022.

NON-CONTROLLING INTERESTSANZBGL New Zealand has issued perpetual preference shares (PPS). The PPS are considered non-controlling interests to ANZBGL New Zealand.

Perpetual preference shares
Total

Profit attributable to non- Equity attributable to noncontrolling interest
controlling interest
2023
2022
2023
2022
550
27
550
550
27
550

Dividend paid to noncontrolling interests
2023
2022
27
27

The key terms of the PPS are as follows:

PPS dividends
PPS dividends are payable at the discretion of the Directors of the Bank and are non-cumulative. The Bank must not resolve to pay any dividend or
make any other distribution on its ordinary shares until the next PPS dividend payment date if a PPS dividend is not paid.
Should the Bank elect to pay a PPS dividend, the PPS dividend is 6.95% per annum up until 18 July 2028 and thereafter a floating rate equal to theaggregate of the New Zealand 3 month bank bill rate plus 3.25%, multiplied by one minus the New Zealand company tax rate (where the PPS
dividend is fully imputed), with PPS dividend payments due on 18 January, 18 April, 18 July and 18 October each year.

Redemption features
Holders of PPS have no right to require that the PPS be redeemed. The Bank may at its option redeem all of the PPS on an optional redemption date(each PPS dividend date from 18 July 2028); or at any time following the occurrence of a tax event or regulatory event, subject to prior written
approval of RBNZ and meeting of other conditions.

57

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
21. SHAREHOLDERS' EQUITY (continued)
RECOGNITION AND MEASUREMENT
Ordinary shares

Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds available on winding
up of ANZ Holdings (New Zealand) Limited, in proportion to the number of fully paid ordinary shares held.
They are recognised at the amount paid per ordinary share net of directly attributable costs. Every holder offully paid ordinary shares present at a meeting in person, or by proxy, is entitled to:• on a show of hands, one vote; and• on a poll, one vote, for each share held.

Redeemablepreference shares

Redeemable preference shares do not carry any voting rights. They are wholly classified as equity instruments
as there is no contractual obligation for the Bank to either deliver cash or another financial instrument or toexchange financial instruments on a potentially unfavourable basis.
In the event of liquidation, holders of redeemable preference shares are entitled to available subscribed capitalper share, pari passu with all holders of existing redeemable preference shares but in priority to all holders ofordinary shares. They have no entitlement to participate in further distribution of profits or assets.

Reserves:

Cash flow hedge
reserve

Includes fair value gains and losses associated with the effective portion of designated cash flow hedging
instruments together with any tax effect.

FVOCI reserve

Includes the changes in fair value of investment securities together with any tax effect.
In respect of debt securities classified as measured at FVOCI, the FVOCI reserve records accumulated changes
in fair value arising subsequent to initial recognition, except for those relating to allowance for ECL, interest
income and foreign currency exchange gains and losses which are recognised in profit or loss. As debt
securities at FVOCI are recorded at fair value, the balance of the FVOCI reserve is net of the ECL allowanceassociated with such assets. When a debt security measured at FVOCI is derecognised, the cumulative gain orloss recognised in the FVOCI reserve in respect of that security is reclassified to profit or loss and presented inother operating income.
In respect of the equity securities classified as measured at FVOCI, the FVOCI reserve records accumulatedchanges in fair value arising subsequent to initial recognition (including any related foreign exchange gains orlosses). When an equity security measured at FVOCI is derecognised, the cumulative gain or loss recognised in
the FVOCI reserve in respect of that security is not recycled to profit or loss.

Non-controllinginterests:

Share in the net assets of controlled entities attributable to equity interests which ANZ New Zealand does not
own directly or indirectly. The equity interest comprises PPS issued by the Bank.
PPS do not carry any voting rights. They are wholly classified as equity instruments as there is no contractual
obligation for the Bank to either deliver cash or another financial instrument or to exchange financial
instruments on a potentially unfavourable basis.
In the event of liquidation, holders of PPS are entitled to available subscribed capital per share, pari passu withall holders of existing preference shares and other equally ranking subordinated debt issued by the Bank but inpriority to all holders of ordinary shares issued by the Bank. They have no entitlement to participate in further
distribution of profits or assets.

58

NOTES TO THE FINANCIAL STATEMENTS

22. CAPITAL MANAGEMENTCAPITAL MANAGEMENT STRATEGYANZBGL New Zealand’s core capital objectives are to:• protect the interests of depositors, creditors and shareholders;• ensure the safety and soundness of ANZBGL New Zealand’s capital position; and• ensure that the capital base supports ANZBGL New Zealand’s risk appetite, and strategic business objectives, in an efficient and effective
manner.
Most of ANZBGL New Zealand’s capital is held in, and managed by, the Banking Group. The Bank’s Board holds ultimate responsibility for ensuring that
capital adequacy of the Banking Group is maintained. This includes: setting, monitoring and obtaining assurance for the Banking Group’s Internal
Capital Adequacy Assessment Process (ICAAP) policy and framework; standardised risk definitions for all material risks; materiality thresholds; capital
adequacy targets; internal risk capital principles; and risk appetite.
The Banking Group has minimum and trigger levels for capital that ensure sufficient capital is maintained to:• meet minimum prudential requirements imposed by the Bank’s regulators;• ensure consistency with the Banking Group’s overall risk profile and financial positions, taking into account its strategic focus and business plan;and• support the internal risk capital requirements of the business.
ALCO is responsible for developing, implementing and maintaining the Banking Group's ICAAP framework, including ongoing monitoring, reportingand compliance. The Banking Group’s ICAAP is subject to independent and periodic review.

REGULATORY ENVIRONMENTThe Ultimate Parent Bank is a registered bank in New Zealand, and conducts business in New Zealand through the NZ Branch. While RBNZ requires
the Ultimate Parent Bank to comply with the minimum capital adequacy requirements as administered by APRA, there are no regulatory capitalrequirements that apply specifically to the NZ Branch or ANZ New Zealand.

MANAGED CAPITALThe Banking Group is subject to its own regulatory capital requirements as administered by RBNZ. The following table provides details of the capital of
ANZ New Zealand which is managed outside the Banking Group.

ANZBGL New Zealand shareholders' equity
Subordinated loan from the Ultimate Parent Bank used to purchase preference shares issued by the Bank
Borrowings from the Immediate Parent Company used to purchase ordinary shares issued by the Bank
less: Banking Group shareholders' equity
Capital of ANZBGL New Zealand managed outside the Banking Group
Total assets of ANZBGL New Zealand held outside the Banking Group
Ratio

2023
NZ$m
16,685285
1,766(18,421)315307102.6%

2022
NZ$m
16,022
301
1,766(17,784)
305
308
99.0%

59

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
23. CONTROLLED ENTITIESThe following table lists the subsidiaries of ANZBGL New Zealand. All subsidiaries are 100% owned and incorporated in New Zealand unless statedotherwise.
Nature of business
Australia and New Zealand Banking Group Limited (New Zealand Branch)2,3
Registered bank3
ANZ Holdings (New Zealand) Limited
Holding company
ANZ Bank New Zealand Limited
Registered bank
ANZ Custodial Services New Zealand Limited
Custodian and nominee
ANZ Investment Services (New Zealand) Limited
Funds management
ANZ National Staff Superannuation Limited
Staff superannuation scheme trustee
ANZ New Zealand (Int'l) Limited
Finance
ANZ New Zealand Investments Holdings Limited
Holding company
ANZ New Zealand Investments Limited
Funds management
ANZ New Zealand Investments Nominees Limited
Custodian and nominee
OneAnswer Nominees Limited
Wrap services provider
ANZNZ Covered Bond Trust1
Securitisation entity
Arawata Assets Limited
Property
Endeavour Finance Limited
Investment
Kingfisher NZ Trust 2008-11
Securitisation entity
ANZ Nominees Pty Limited (New Zealand Branch)2,3Nominee
Institutional Securitisation Services Limited (New Zealand Branch)2,3
Securitisation services
1
2
3

ANZBGL New Zealand does not own ANZNZ Covered Bond Trust and Kingfisher NZ Trust 2008-1. Control exists as ANZBGL New Zealand retains substantially all the risks and rewards of theoperations. Details of ANZBGL New Zealand’s interest in consolidated structured entities is included in Note 24 Structured entities.
Incorporated in Australia and registered in New Zealand as an Overseas ASIC Company.
These companies are included in the Relevant Members of ANZBGL New Zealand referred to in the Directors’ and New Zealand Chief Executive Officer’s Statement on page 93.

RECOGNITION AND MEASUREMENTANZBGL New Zealand subsidiaries are those entities it controls through:• being exposed to, or having rights to, variable returns from the entity; and• being able to affect those returns through its power over the entity.
ANZBGL New Zealand assesses whether it has power over those entities by examining ANZBGL New Zealand’s existing rights to direct the relevant
activities of the entity.

60

NOTES TO THE FINANCIAL STATEMENTS

24. STRUCTURED ENTITIESA Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in determining who controls
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.
SEs are classified as subsidiaries and consolidated when control exists. If ANZBGL New Zealand does not control a SE, then it is not consolidated. This
note provides information on both consolidated and unconsolidated SEs.
ANZBGL New Zealand’s involvement with SEs is as follows:Type

Details

Securitisation

ANZBGL New Zealand uses the Kingfisher NZ Trust 2008-1 (the Kingfisher Trust) to securitise residential mortgages
that it has originated, in order to diversify sources of funding for liquidity management. The Kingfisher Trust is aninternal securitisation (bankruptcy remote) vehicle created for the purpose of structuring assets that are eligible for
repurchase under agreements with RBNZ (these are known as ‘Repo eligible’).
ANZBGL New Zealand is exposed to variable returns from its involvement with the Kingfisher Trust and has theability to affect those returns through its power over the Kingfisher Trust’s activities. The Kingfisher Trust istherefore consolidated.
As at 30 September 2023 and 30 September 2022, ANZBGL New Zealand had entered into repurchase agreementswith RBNZ in relation to the TLF and FLP.
Additionally, ANZBGL New Zealand may acquire interests in securitisation vehicles set up by third parties throughproviding lending facilities to, or holding securities issued by, such entities.

ANZNZ Covered Bond Trust(the Covered Bond Trust)

Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related
securities originated by the Bank which are security for the guarantee by ANZNZ Covered Bond Trust Limited astrustee of the Covered Bond Trust of issuances of covered bonds by the Bank, or its wholly owned subsidiary ANZ
New Zealand (Int’l) Limited, from time to time. The assets of the Covered Bond Trust are not available to creditorsof the Bank, although the Bank (or its liquidator or statutory manager) may have a claim against the residual assetsof the Covered Bond Trust (if any) after all priority ranking creditors of the Covered Bond Trust have been satisfied.
ANZBGL New Zealand is exposed to variable returns from its involvement with the Covered Bond Trust and has
the ability to affect those returns through its power over the Covered Bond Trust’s activities. The Covered Bond
Trust is therefore consolidated.

Structured financearrangements

ANZBGL New Zealand is involved with SEs established:• in connection with structured lending transactions to facilitate debt syndication and/or to ring-fencecollateral; and• to own assets that are leased to customers in structured leasing transactions.
ANZBGL New Zealand may provide risk management products (derivatives) to the SE.
In all instances, ANZBGL New Zealand does not control these SEs. Further, ANZBGL New Zealand’s involvement
does not establish more than a passive interest in decisions about the relevant activities of the SE, and accordingly
we do not consider that interest disclosable.

Funds management activities ANZBGL New Zealand is the scheme manager for a number of Managed Investment Schemes (MIS). These MIS
include the ANZ and OneAnswer branded KiwiSaver, retail and wholesale schemes and the Bonus Bonds Scheme.
These MIS are financed through the issue of units to investors and ANZBGL New Zealand considers them to be SEs.
ANZBGL New Zealand’s interests in these MIS are limited to receiving fees for services or providing risk
management products (derivatives). These interests do not create significant exposures to the MIS that would
allow ANZBGL New Zealand to control the funds. Therefore, these MIS are not consolidated.

61

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
24. STRUCTURED ENTITIES (continued)
CONSOLIDATED STRUCTURED ENTITIESFinancial or other support provided to consolidated SEs
The Bank provides lending facilities, derivatives and commitments to the Kingfisher Trust and the Covered Bond Trust and/or holds debt instrumentsthat they have issued. The Bank did not provide any non-contractual support to consolidated SEs during the year (2022: nil).
UNCONSOLIDATED STRUCTURED ENTITIESANZBGL New Zealand’s interest in unconsolidated SEs
An ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes ANZBGL New Zealand tovariability of returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives
that pass on risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
• no disclosure is made if ANZBGL New Zealand’s involvement is not more than a passive interest - for example: when ANZBGL New Zealand’s
involvement constitutes a typical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading
and investing activities are not considered disclosable interests - unless the design of the structured entity allows ANZBGL New Zealand toparticipate in decisions about the relevant activities (being those that significantly affect the entity’s returns).
• ‘interests’ do not include derivatives intended to expose ANZBGL New Zealand to market risk (rather than performance risk specific to the SE) or
derivatives through which ANZBGL New Zealand creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit
protection under a credit default swap).
ANZBGL New Zealand earned funds management fees from its MIS of NZ$192 million (2022: NZ$196 million) during the year. As at 30 September
2023, ANZBGL New Zealand had total funds under management of NZ$37.1 billion (2022: NZ$34.3 billion) of which NZ$26.1 billion (2022: NZ$24.6
billion) related to its MIS, with the largest individual fund being approximately NZ$4.4 billion (2022: NZ$3.8 billion).
ANZBGL New Zealand did not provide any non-contractual support to unconsolidated SEs during the year (2022: nil): nor does it have any current
intention to provide financial or other support to unconsolidated SEs.
SPONSORED UNCONSOLIDATED STRUCTURED ENTITIESANZBGL New Zealand may also sponsor unconsolidated SEs in which it has no disclosable interest.
For the purposes of this disclosure, ANZBGL New Zealand considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in thedesign and establishment of that SE and:• ANZBGL New Zealand is the major user of that SE; or• ANZBGL New Zealand’s name appears in the name of that SE, or on its products; or• ANZBGL New Zealand provides implicit or explicit guarantees of that SE’s performance.
The Bank has sponsored the ANZ PIE Fund, which invests only in deposits with the Bank. ANZBGL New Zealand does not provide any implicit or
explicit guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received from, nor assets transferred
to, this entity during the year.

KEY JUDGEMENTS AND ESTIMATES
Significant judgement is required in assessing whether ANZBGL New Zealand has control over SEs. Judgement is required to determine
the existence of:• power over the relevant activities (being those that significantly affect the entity’s returns); and• exposure to variable returns of the entity.

62

NOTES TO THE FINANCIAL STATEMENTS

25. TRANSFERS OF FINANCIAL ASSETSIn the normal course of business ANZBGL New Zealand enters into transactions where it transfers financial assets directly to third parties. Thesetransfers may give rise to ANZBGL New Zealand fully, or partially, derecognising those financial assets - depending on ANZBGL New Zealand’s
exposure to the risks and rewards or control over the transferred assets. If ANZBGL New Zealand retains substantially all of the risk and rewards of atransferred asset, the transfer does not qualify for derecognition and the asset remains on ANZBGL New Zealand’s balance sheet in its entirety.
Covered bonds
ANZBGL New Zealand operates a covered bond programme to raise funding. Refer to Note 24 Structured entities for further details. The coveredbonds issued externally are included within debt issuances.
Repurchase agreements
When ANZBGL New Zealand sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards ofownership, then those assets do not qualify for derecognition. An associated liability is recognised for the consideration received from thecounterparty.
The table below sets out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities:
Covered bonds
2023
2022
NZ$m
NZ$m
Current carrying amount of assets transferred
Carrying amount of associated liabilities

10,926
3,373

10,921
4,082

Repurchase agreements
2023
2022
NZ$m
NZ$m
5,470
4,429

5,327
4,642

26. RELATED PARTY DISCLOSURES
Key management personnel and their related parties
Key management personnel (KMP) are defined as directors and those executives having authority and responsibility for planning, directing andcontrolling the activities of ANZBGL New Zealand. Executive roles included in KMP are the Bank’s Chief Executive Officer (CEO), all executives reporting
directly to the Bank’s CEO, and the CEO – NZ Branch.
2023
2022
Key management personnel compensation1
NZ$000
NZ$000
Salaries and short-term employee benefits
12,077
12,139Post-employment benefits
365
351
93
Other long-term benefits2
78
Termination benefits3
68
Share-based payments
2,887
3,589
15,490Total
16,1571
2
3Includes former disclosed KMPs until the end of their employment, and close family members of KMP employed by the Banking Group.
Comprises long service leave accrued during the year.
Includes payments for accrued annual leave, long service leave and pay in lieu of notice in accordance with contract, payable on cessation.

Transactions and balances with key management personnel and their related parties1
Secured loans and advances
Credit related commitments (undrawn loan facilities)
Interest income
Customer deposits
Payables and other liabilities (share-based payments liability)
1

2023
NZ$m
24
3
1
22
3

2022
NZ$m
28
3
1
17
3

Includes KMP, close family members of KMP and entities that are controlled or jointly controlled by KMP or their close family members, of ANZBGL New Zealand and its parent companies.

Loans made to KMP and their related parties are made in the ordinary course of business on normal commercial terms and conditions no morefavourable than those given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts
have been written off or forgiven, or individually assessed allowances for expected credit losses raised in respect of these balances (2022: nil).
All other transactions with KMP and their related parties are made on terms and conditions no more favourable than those given to other employees
or customers. These transactions generally involve the provision of financial and investment services. In addition to the amounts above:• Aggregate amounts for each of unsecured loans and advances, interest expense, fee income, debt issuances and collectively assessed credit
impairment charge and allowance for expected credit losses were less than NZ$1 million for both years presented.
• KMP and their related parties also hold units in MIS managed by ANZBGL New Zealand. Transactions and balances in respect of these MIS
holdings are not disclosed because those MIS are unconsolidated structured entities and not included in the financial statements of ANZBGLNew Zealand.
• Some KMP pay ANZBGL New Zealand for the use of carparks in premises owned or leased by ANZBGL New Zealand. These amounts were lessthan NZ$0.1 million (2022: less than NZ$0.1 million).

63

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
26. RELATED PARTY DISCLOSURES (continued)
Transactions with other members of the ANZ Group and associates
ANZBGL New Zealand undertakes transactions with the Immediate Parent Company, the Ultimate Parent Bank, other members of the ANZ Group andassociates.
These transactions principally consist of funding and hedging transactions, the provision of other financial and investment services, technology andprocess support, and compensation for share based payments made to ANZBGL New Zealand employees. These transactions are conducted on anarm’s length basis and on normal commercial terms.
2023
2022
Transactions
NZ$m
NZ$m
Immediate Parent Company
Interest expense
34
51
Dividends paid
1,345
1,880
Ultimate Parent Bank and other ANZ Group subsidiaries
Interest income
12
5
145
73
Interest expense
Other operating income
811Operating expenses
107
63
Associates
Operating expenses
33
Other operating income2
Share of associates' loss
1
Outstanding balances
Ultimate Parent Bank and other ANZ Group subsidiaries
Cash and cash equivalents
Collateral paid
Derivative financial instruments
Other assets
Investments in associates
Total due from related parties
Immediate Parent Company
Deposits and other borrowings
Payables and other liabilities
Ultimate Parent Bank and other ANZ Group subsidiaries
Settlement balances payable
Collateral received
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Debt issuances
Associates
Deposits and other borrowings
Total due to related parties

2023
NZ$m

2022
NZ$m

177
5,506
50
5,733

36
268
8,553
76
5
8,938

1,766
27

1,766
18

7
547
1,089
4,955
33
286

887
1,150
8,723
42
303

1
8,711

1
12,890

Balances due from / to other members of the ANZ Group and associates are unsecured. The Bank has provided guarantees and commitments to, andreceived guarantees from, these entities as follows:
2023
2022
NZ$m
NZ$m
Financial guarantees provided by the Ultimate Parent Bank and other ANZ Group subsidiaries
227
262
Financial guarantees provided to the Ultimate Parent Bank and other ANZ Group subsidiaries
69
89
Undrawn facilities provided to associates
1
1

64

NOTES TO THE FINANCIAL STATEMENTS

27. COMMITMENTS AND CONTINGENT LIABILITIESCREDIT RELATED COMMITMENTS AND CONTINGENCIES

Contract amount of:
Undrawn facilities
Guarantees and letters of credit
Performance related contingencies
Total

2023
NZ$m

2022
NZ$m

26,055
1,029
1,520
28,60427,0601,225
1,699
29,984

UNDRAWN FACILITIESThe majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which ANZBGL New Zealand may be required to pay,the full amount of undrawn facilities mature within 12 months.
GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that ANZBGL New Zealand has entered into as principal –including: guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve ANZBGL New Zealand issuing letters of credit guaranteeing payment in favour of an exporter. They are secured
against an underlying shipment of goods or backed by a confirmatory letter of credit from another bank.
Performance related contingencies are liabilities that oblige ANZBGL New Zealand to make payments to a third party if the customer fails to fulfil its
non-monetary obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that weapply to loans. The contract amount represents the maximum potential amount that we could lose if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements. Basedon the earliest date on which ANZBGL New Zealand may be required to pay, the full amount of guarantees and letters of credit and performance
related contingencies mature within 12 months.

65

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTNOTES TO THE FINANCIAL STATEMENTS
27. COMMITMENTS AND CONTINGENT LIABILITIES (continued)
OTHER CONTINGENT LIABILITIESThere are outstanding court proceedings, claims and possible claims for and against ANZBGL New Zealand. Where relevant, expert legal advice has
been obtained and, in the light of such advice, provisions (refer to Note 20 Other provisions) and/or disclosures as deemed appropriate have beenmade. In some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or
because such disclosure may prejudice seriously the interests of ANZBGL New Zealand.
REGULATORY AND CUSTOMER EXPOSURESANZBGL New Zealand regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities both in New Zealandand globally. ANZBGL New Zealand has received various notices and requests for information from its regulators as part of both industry-wide and
ANZBGL New Zealand-specific reviews, and has also made disclosures to its regulators at its own instigation. The nature of these interactions can bewide ranging and, for example, may include a range of matters including responsible lending practices, regulated lending requirements, productsuitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice, insurance distribution, pricing,competition, conduct in financial markets and financial transactions, capital market transactions, anti-money laundering and counter-terrorism
financing obligations, privacy obligations and information security, business continuity management, reporting and disclosure obligations andproduct disclosure documentation. There may be exposures to customers which are additional to any regulatory exposures. These could include classactions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such reviews andpossible exposures remain uncertain.
LOAN INFORMATION LITIGATIONIn September 2021, a representative proceeding was brought against the Bank, alleging breaches of disclosure requirements under consumer credit
legislation in respect of variation letters sent to certain loan customers. The Bank is defending the allegations. The proceeding is still at an early stage.
The High Court has ruled that the plaintiffs may bring the proceeding as an opt-out representative action on behalf of a class, being customers whoentered into a home loan or personal loan with the Bank between 6 June 2015 and 28 May 2016 and requested a variation to that loan during that
period. Aspects of the decision are being appealed by both parties.
WARRANTIES AND INDEMNITIESANZBGL New Zealand has provided warranties, indemnities and other commitments in favour of the purchaser in connection with various disposals of
businesses and assets and other transactions, covering a range of matters and risks. It is exposed to potential claims under those warranties,
indemnities and commitments, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.

66

NOTES TO THE FINANCIAL STATEMENTS

28. AUDITOR FEESKPMG New ZealandAudit or review of financial statements1
Audit related services:
Prudential and regulatory services2
Offer documents assurance or review
Other assurance services3
Total audit related services
Total KPMG New Zealand fees relating to ANZBGL New ZealandFees related to certain managed funds not recharged4
Total KPMG New Zealand fees
KPMG Australia
Other assurance services - operational greenhouse gas emissions
Total auditor fees
1
2
3
4

2023
NZ$0002022
NZ$000

2,204

2,130

295
141
399
835
3,039

196
130
40
366
2,496

280
3,319

262
2,758

53
3,372

2,758

Includes fees for both the audit of annual financial statements and reviews of interim financial statements.
Includes fees for reviews and controls reports required by regulations.
Includes fees for other reviews and agreed upon procedures engagements.
Amounts relate to the ANZ PIE Fund, ANZ Investments Private Scheme and SIL Mutual Funds, and include fees for audits of annual financial statements, registry audits, supervisor reportingand other agreed upon procedures engagements.

ANZBGL New Zealand’s Policy allows KPMG New Zealand or any of its related practices to provide assurance and other audit related services that,while outside the scope of the statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews
requested by regulators such as RBNZ. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain
non-audit services to be provided where the service would not contravene auditor independence requirements. KPMG New Zealand or any of its
related practices may not provide services that are perceived to be in conflict with the role of the external auditor or breach auditor independence.
These include consulting advice and subcontracting of operational activities normally undertaken by management, and engagements where theexternal auditor may ultimately be required to express an opinion on its own work.

67

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTASSURANCE REPORTINDEPENDENT AUDITOR’S REPORTTO THE DIRECTORS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
AUDIT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
OPINION
We have audited the accompanying consolidated financial statements of the New Zealand business of Australia and New Zealand Banking Group
Limited (ANZBGL) and its subsidiaries (ANZBGL New Zealand) on pages 4 to 67 which comprise:•••the consolidated balance sheet as at 30 September 2023;
the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended; andnotes, including a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements:••

present fairly in all material respects ANZBGL New Zealand’s financial position as at 30 September 2023 and its financial performance andcash flows for the year ended on that date; andcomply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International Financial ReportingStandards.

BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of ANZBGL New Zealand in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Boardand the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code.

Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated financial statements sectionof our report.
Our firm has also provided other services to ANZBGL New Zealand in relation to review of regulatory returns, internal controls reports, prospectus
assurance or reviews, agreed upon procedures engagements and climate related assurance engagements. Subject to certain restrictions, partners andemployees of our firm may also deal with ANZBGL New Zealand on normal terms within the ordinary course of trading activities of the business of
ANZBGL New Zealand. These matters have not impaired our independence as auditor of ANZBGL New Zealand. The firm has no other relationshipwith, or interest in, ANZBGL New Zealand.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements in the current period. We summarise below those matters and our key audit procedures to address those matters in order that thedirectors as a body may better understand the process by which we arrived at our audit opinion. Our procedures were undertaken in the context ofand solely for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express discrete opinions
on separate elements of the consolidated financial statements.
ALLOWANCE FOR EXPECTED CREDIT LOSSES ($857 MILLION)

Refer to the critical accounting estimates, judgements and disclosures in relation to the allowance for expected credit losses in Note 12 to theConsolidated Financial Statements.
The key audit matter
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balance to the consolidated financial
statements and the inherent complexity of ANZBGL New Zealand’s Expected Credit Loss (ECL) models used to measure ECL allowances. These models
are reliant on data and a number of estimates including impacts of multiple economic scenarios, and other assumptions such as defining a Significant
Increase in Credit Risk (SICR).
NZ IFRS 9 requires ANZBGL New Zealand to measure ECL on a forward-looking basis reflecting a range of future economic conditions, of which GDP
and unemployment levels are considered key assumptions. Post-model adjustments to the ECL results are also made by ANZBGL New Zealand toaddress known ECL model limitations or emerging trends in the loan portfolios. We exercise significant judgement in challenging both the economic
scenarios used and the judgemental post-model adjustments that ANZBGL New Zealand applies to the ECL results.
There is additional subjectivity and judgement in ANZBGL New Zealand’s measurement of ECL due to the heightened uncertainty associated with theimpact of the economic outlook on ANZBGL New Zealand’s customers, increasing our audit effort thereon.

68

ASSURANCE REPORTANZBGL New Zealand’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within
ANZBGL New Zealand’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
Additionally, the determination of an allowance for individually assessed impairment on Business and Institutional (wholesale) loans requires
significant judgement in estimating the expected future cash repayments and proceeds from the value of the collateral held in respect of the loans.
How the matter was addressed in our audit
Our audit procedures for the allowance for ECL and disclosures included assessing ANZBGL New Zealand’s significant accounting policies against therequirements of the accounting standard. KPMG Financial Risk Management and Economic specialists were used in ECL audit procedures as a core
part of our audit team.
We tested key controls in relation to:• ANZBGL New Zealand’s ECL model governance and validation processes which involved assessment of model performance;• ANZBGL New Zealand’s assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings throughchallenge applied by ANZBGL New Zealand’s internal governance processes;• Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;• Counterparty risk grading for wholesale loans (larger customer exposures are monitored individually). We tested the approval of new lending
facilities against ANZBGL New Zealand’s lending policies, and controls over the monitoring of counterparty credit quality; and• IT system controls which record retail loans lending arrears, group exposures into delinquency buckets and recalculate individual allowances.
We tested automated calculation and change management controls and evaluated the oversight of the portfolios, with a focus on controls overdelinquency monitoring.
We tested relevant General Information Technology Controls over the key IT applications used by ANZBGL New Zealand in measuring ECL allowances,as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:• Re-performing credit assessments for a sample of wholesale loans controlled by ANZBGL New Zealand’s specialist workout and recovery team,
who assessed these as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by ANZBGL New Zealand as
showing signs of deterioration, or in areas of emerging risk (assessed against external market).
• For each loan sampled, we challenged ANZBGL New Zealand’s CCR and Security Indicator, assessment of loan recoverability, valuation of
security and the impact on the credit allowance. To do this, we reviewed the information on ANZBGL New Zealand’s loan file, understood thefacts and circumstances of the case with the relationship manager, and performed our own assessment of recoverability.
• Exercising our judgement, our procedures included using our understanding of relevant industries and the macroeconomic environment, andcomparing data and assumptions used by ANZBGL New Zealand in recoverability assessments to externally sourced evidence, such ascommodity prices and external property sale information. Where relevant, we assessed the forecast timing of future cash flows in the context ofunderlying valuations and approved business plans and challenged key assumptions in the valuations;• Obtaining an understanding of ANZBGL New Zealand’s processes to determine ECL allowances, evaluating ANZBGL New Zealand’s ECL model
methodologies against established market practices and criteria in the accounting standards;• Working with our KPMG Financial Risk Management specialists, we assessed the accuracy of ANZBGL New Zealand’s ECL model estimates by reperforming, for a sample of loans, the ECL allowance using our independently driven calculation tools and comparing this to the amountrecorded by ANZBGL New Zealand;• Working with our KPMG Economic specialists, we challenged ANZBGL New Zealand’s forward-looking macroeconomic assumptions andscenarios incorporated in ANZBGL New Zealand’s ECL models. We compared ANZBGL New Zealand’s forecast GDP and unemployment rates, torelevant publicly available macro-economic information, and considered other known variables and information obtained through our otheraudit procedures to identify contradictory indicators;• Testing the implementation of ANZBGL New Zealand’s SICR methodology by re-performing the staging calculation for a sample of loans taking
into consideration movements in the CCR from loan origination and comparing our expectation to actual staging applied on an individual
account level in ANZBGL New Zealand’s ECL model; and• Assessing the accuracy of the data used in the ECL models by confirming a sample of data fields such as account balance and CCR to relevant
source systems.
We also challenged key assumptions in the components of ANZBGL New Zealand’s post-model adjustments. This included:• Assessing the requirement for post-model adjustments considering ANZBGL New Zealand’s ECL model and data deficiencies identified by
ANZBGL New Zealand’s ECL model validation processes, particularly in light of the extreme volatility in economic scenarios;• Comparing underlying data used in concentration risk and economic cycle allowances to underlying loan portfolio characteristics of recent loss
experience, current market conditions and specific risks inherent in ANZBGL New Zealand’s loan portfolios;• Assessing certain post-model adjustments identified against internal and external information; and• Assessing the completeness of post-model adjustments by checking the consistency of risks we identified in the portfolios against ANZBGL New
Zealand’s assessment.
We assessed the appropriateness of ANZBGL New Zealand’s disclosures in the consolidated financial statements using our understanding obtained
from our testing and against the requirements of NZ IFRS.

69

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTASSURANCE REPORTVALUATION OF FINANCIAL INSTRUMENTS
Fair value of Level 2 financial instruments in asset positions $14,470 million
Fair value of Level 2 financial instruments in liability positions $11,161 million

Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 16 to the Consolidated Financial Statements.
The key audit matter
The fair value of ANZBGL New Zealand’s Level 2 financial instruments is determined by ANZBGL New Zealand through the application of valuation
techniques which often involve the exercise of judgement and the use of assumption and estimates.
The valuation of Level 2 financial instruments held at fair value is a key audit matter due to the complexity associated with the valuation methodology
and models of certain more complex Level 2 financial instruments including fair value adjustments (FVAs) leading to an increase in subjectivity andestimation uncertainty. Level 2 financial instruments represent 55% of ANZBGL New Zealand’s financial assets carried at fair value and 97% of ANZBGLNew Zealand’s financial liabilities carried at fair value.
How the matter was addressed in our audit
Our audit procedures for the valuation of financial instruments held at fair value included:
Performing an assessment of the population of financial instruments held at fair value to identify portfolios that have a higher risk of misstatement
arising from significant judgment over valuation either due to unobservable inputs or complex models.
We tested the design and operating effectiveness of key controls relating specifically to these financial instruments, including:• Independent Price Verification (IPV), including completeness of portfolios and valuation inputs subject to IPV;• model validation at inception and periodically, including assessment of model limitation and assumptions;• review and challenge of daily profit and loss by a control function;• collateral management process, including review of margin reconciliations with clearing houses; and• review and approval of FVAs, including exit price and portfolio level adjustments.
In relation to the valuation of Level 2 financial instruments, with the assistance of KPMG valuation specialists:• Assessing the reasonableness of key inputs and assumptions using comparable data in the market and available alternatives;• Comparing ANZBGL New Zealand’s valuation methodology to industry practice and the criteria in the accounting standards; and• Independently revaluing a selection of financial instruments and FVAs. This involved sourcing independent inputs from comparable data in themarket and available alternatives. We challenged and assessed any differences.
We assessed ANZBGL New Zealand’s consolidated financial statement disclosures, including key judgements and assumptions using ourunderstanding obtained from our testing and against NZ IFRS.
IT SYSTEMS AND CONTROLSThe key audit matter
As a major New Zealand bank, ANZBGL New Zealand’s businesses utilise a large number of complex, interdependent Information Technology (IT)systems to process and record a high volume of transactions. Controls over access and changes to IT systems are critical to the recording of financial
information and the preparation of a financial report which provides a true and fair view of ANZBGL New Zealand’s financial position andperformance. The IT systems and controls, as they impact the financial recording and reporting of transactions, is a key audit matter and our audit
approach could significantly differ depending on the effective operation of ANZBGL New Zealand’s IT controls.
How the matter was addressed in our audit
We tested the control environment for key IT applications used in processing significant transactions and recording balances in the general ledger. We
also tested automated controls embedded within these systems which support the effective operation of technology-enabled business processes.
KPMG IT specialists were used throughout the engagement as a core part of our audit team.
Our audit procedures included:• Assessing the governance and higher-level controls in place across the IT environment, including the approach to ANZBGL New Zealand policy
design, review and awareness;• Design and operating effectiveness testing of controls across the User Access Management Lifecycle, including how users are on-boarded,
reviewed, and removed on a timely basis from critical IT applications and supporting infrastructure. We also examined how privileged roles andfunctions are managed across each IT application and the supporting infrastructure;• Design and operating effectiveness testing of controls in place over change management, including how changes are initiated, documented,
approved, tested and authorised prior to migration into the production environment of critical IT applications. We also assessed theappropriateness of users with access to make changes to IT applications across ANZBGL New Zealand;• Design and operating effectiveness testing of controls used by ANZBGL New Zealand’s technology teams to schedule system jobs and monitor
system integrity;• Design and operating effectiveness testing of controls related to significant IT application programs per the ANZ Delivery Framework; and• Design and operating effectiveness testing of automated business process controls including those that enforce segregation of duties between
conflicting roles within IT applications, configurations in place to perform calculations, mappings, and flagging of financial transactions,
automated reconciliation controls (both between systems, and intra-system) and data integrity of critical system reporting used by us in our
audit to select samples and analysis data used by management to generate financial reporting.

70

ASSURANCE REPORTCARRYING VALUE OF GOODWILL ($3,006 MILLION)

Refer to the critical accounting estimates, judgements and disclosures in Note 19 to the Consolidated Financial Statements.
The key audit matter
Carrying value of goodwill is a key audit matter where there are a number of judgements required in the determination of the recoverable amount of
goodwill, and where the carrying value of goodwill is financially significant at the reporting date.
ANZBGL New Zealand uses a value-in-use (VIU) approach to estimate the recoverable amount of each Cash Generating Unit (CGU) to which goodwill
is allocated. The reasonableness of the recoverable amounts was assessed using an implied market-multiples approach.
The ongoing effects and uncertainties associated with the environment continue to increase the potential for impairment and our audit effort in thisarea remains elevated. There is increased judgement in forecasting cash flows and assumptions used in the discounted cash flow models and marketmultiples used in the reasonableness assessment.
We focused on the significant forward-looking assumptions ANZBGL New Zealand applied as part of its annual impairment test as at 28 February
2023, including:• Revenue growth rates, and terminal growth rates in the VIU model. Available headroom for some CGUs is sensitive to small changes in theseassumptions, reducing available headroom or indicating possible impairment. This drives additional audit effort specific to their feasibility andconsistency of application to ANZBGL New Zealand’s strategy; and• Discount rates in the VIU model and the control premium in the market-multiples reasonableness assessment. These are complicated in natureand vary according to the conditions and environment the specific CGU is subject to from time to time.
How the matter was addressed in our audit
We involved valuation specialists to supplement our senior team members in assessing this key audit matter.
Working with our valuation specialists, our procedures included:• In accordance with accounting standards, assessing the reasonableness of the amounts allocated to the CGUs to which ANZBGL New Zealand
allocated goodwill;• Considering the appropriateness of the valuation method applied by ANZBGL New Zealand to perform their annual test for impairment against
the requirements of the accounting standards;• Assessing the integrity of the VIU model used by ANZBGL New Zealand, including the accuracy of the underlying calculation formulae;• Assessing the accuracy of previous Banking Group forecasts to inform our evaluation of forecasts incorporated in the VIU model;• For each CGU, assessing ANZBGL New Zealand’s key assumptions used in the VIU model, including discount rates, revenue growth rates, andterminal growth rates by comparing to external observable metrics, historical experience, our knowledge of the markets and current market
practice;• Stress testing key VIU assumptions to consider reasonably possible alternatives;• Comparing the forecast cash flows contained in the model to the revised Operational forecast, reflecting higher interest rate environment andthe increased regulatory minimum capital requirements;• Assessing key assumptions used in the market-multiples reasonableness assessment, which we assessed as being equivalent to a fair value lesscosts of disposal approach. These assumptions included future maintainable earnings, the control premium comparing the implied multiples
from comparable market transactions to the implied multiples used in the VIU model;• Determining whether there is sufficient appropriate evidence to support ANZBGL New Zealand’s conclusion that there is no impairment ingoodwill associated with any CGU;
• Assessing the reasonableness of ANZBGL New Zealand’s review for potential internal and external indicators of impairment. This review
considered the period from the annual impairment test as at 28 February 2023 up to financial year end; and• Assessing the disclosures in the financial statements against the requirements of the accounting standards.
OTHER INFORMATIONThe Directors, on behalf of ANZBGL New Zealand, are responsible for ANZBGL New Zealand’s general disclosures in section B1 (the Other Information)required to be included in ANZBGL New Zealand’s Disclosure Statement in accordance with schedule 2 of the Registered Bank Disclosure Statements(Overseas Incorporated Registered Banks) Order 2014.
Our opinion on the consolidated financial statements does not cover the Other Information, and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the Other Information and, in doing so, consider
whether the Other Information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit orotherwise appears materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this otherinformation, we are required to report that fact. We have nothing to report in this regard.
USE OF THIS INDEPENDENT AUDITOR’S REPORTThis independent auditor’s report is made solely to the directors of ANZBGL. Our work has been undertaken so that we might state to the directors
those matters we are required to state to them in the independent auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the directors for our work, this independent auditor’s report, or any of the opinions or
conclusions we have formed.

71

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTASSURANCE REPORTRESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS
The Directors, on behalf of ANZBGL New Zealand, are responsible for:• the preparation and fair presentation of the consolidated financial statements in accordance NZ IFRS and International Financial ReportingStandards;• implementing necessary internal control to enable the preparation of consolidated financial statements that are fairly presented and free frommaterial misstatement, whether due to fraud or error; and• assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless they either intend to liquidate or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Our objective is:• to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether
due to fraud or error; and• to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect amaterial misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at the External Reporting Board (the XRB)
website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Jamie Munro.
For and on behalf of

KPMG
Auckland10 November 2023

72

This page has been left blank intentionally73

REGISTERED BANKDISCLOSURESThis section contains the additional disclosures required by the Registered Bank Disclosure Statements(Overseas Incorporated Registered Banks) Order 2014.

74

Section

Order reference

Page

B1.

General disclosures

Schedule 2

75

B2.

Additional financial disclosures

Schedule 4

82

B3.

Asset quality

Schedule 7

83

B4.

Credit and market risk exposures and capital adequacy

Schedule 9

86

B5.

Insurance business, securitisation, funds management, other fiduciary activities,
and marketing and distribution of insurance products

Schedule 11

87

B6.

Risk management policies

Schedule 13

89

REGISTERED BANK DISCLOSURES

B1. GENERAL DISCLOSURES (UNAUDITED)
Details of ultimate parent bank and ultimate non-bank holding company
The registered bank, which is also the ultimate parent bank, is Australia and New Zealand Banking Group Limited (Ultimate Parent Bank). The principal
office and place of business outside New Zealand, and address for service of the Ultimate Parent Bank, is ANZ Centre, Melbourne, Level 9, 833 Collins
Street, Docklands, Victoria 3008, Australia.
The ultimate non-bank holding company is ANZ Group Holdings Limited. The address for service is ANZ Centre, Melbourne, Level 9, 833 Collins Street,
Docklands, Victoria 3008, Australia.
Subordination of claims of creditors
Certain creditors of the Ultimate Parent Bank are given a statutory priority under Australian law. Unsecured creditors of the NZ Branch could be
expected to rank behind such claims.
Specifically, pursuant to subsection 13A(3) of the Banking Act 1959 of the Commonwealth of Australia (the Banking Act), if an Authorised DepositTaking Institution (ADI) (which includes the Ultimate Parent Bank) becomes unable to meet its obligations or suspends payment, the assets of the ADI
in Australia are to be available to meet the ADI's liabilities in the following order:(a) first, the ADI's liabilities (if any) to APRA because of the rights APRA has against the ADI because of section 16AI or 16AIC of the Banking Act;(b) second, the ADI's debts (if any) to APRA under section 16AO of the Banking Act;(c) third, the ADI's liabilities (if any) in Australia in relation to protected accounts that account-holders keep with the ADI. (Broadly, this means
accounts (including deposit accounts) kept with the Ultimate Parent Bank that are situated in Australia and recorded in Australian dollars);(d) fourth, the ADI’s debts (if any) to the Reserve Bank of Australia;(e) fifth, the ADI’s liabilities (if any) under an industry support contract that is certified by APRA under section 11CB of the Banking Act; and(f) sixth, the ADI's other liabilities in the order of their priority (apart from subsection 13A(3)).
Unsecured creditors of the NZ Branch could be expected to rank as a creditor pursuant to the sixth paragraph, together with other unsecured
creditors of the Ultimate Parent Bank that do not otherwise have a priority claim under preceding paragraphs.
Subsections 16(1) and (2) of the Banking Act provide that, despite anything contained in any law relating to the winding-up of companies, but subject
to subsection 13A(3) of the Banking Act, the debts of an ADI to APRA in respect of APRA's costs (including costs in the nature of remuneration and
expenses) of being in control of the ADI's business, or of having an administrator in control of the ADI's business, are a debt due to APRA and havepriority in a winding-up of the ADI over all other unsecured debts.
Section 86 of the Reserve Bank Act 1959 of the Commonwealth of Australia provides that notwithstanding anything contained in any law relating to
the winding-up of companies, but subject to subsection 13A(3) of the Banking Act, debts due to the Reserve Bank of Australia by any ADI shall, in awinding-up, have priority over all other debts.
This description of the liabilities which are mandatorily preferred by law is not exhaustive.
These provisions affect all of the unsecured liabilities of the NZ Branch, which as at 30 September 2023, amounted to NZ$1m (2022: NZ$1,135m).
Requirement to maintain sufficient assets to cover ongoing obligation to pay deposit liabilities
Subsection 13A(4) of the Banking Act states that it is an offence if an ADI does not hold assets (excluding goodwill and any assets or other amountexcluded by the prudential standards for the purposes of that subsection) in Australia of a value that is equal to or greater than the total amount of its
deposit liabilities in Australia, and APRA has not authorised the ADI to hold assets of a lesser value. This requirement has the potential to impact on the
management of the liquidity of the NZ Branch.
APRA’s powers
The Ultimate Parent Bank is subject to extensive prudential regulation by APRA.
The Banking Act requires APRA to exercise its powers and functions for the protection of the depositors of Australian ADIs and for the promotion offinancial system stability in Australia.
Where APRA considers that an ADI may become unable to meet its obligations or suspends payment (among other circumstances), APRA can takecontrol of the ADI's business (including by appointment of an ADI statutory manager). APRA also has power to direct the ADI not to make payments in
respect of its indebtedness and to compulsorily transfer some or all of the ADI’s assets and liabilities to another ADI in certain circumstances and toincrease its capital in specified circumstances. A counterparty to a contract with an ADI cannot rely solely on the fact that an ADI statutory manager isin control of the ADI's business or on the making of a direction or compulsory transfer order as a basis for denying any obligations to the ADI or for
accelerating any debt under that contract or closing out any transaction relating to that contract.
The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 (the Crisis Management Act) amended the
Banking Act (among other statutes applicable to financial institutions in Australia) and was intended to enhance APRA’s powers. Specifically, the Crisis
Management Act enhanced APRA’s powers to facilitate resolution of the entities it regulates (and their subsidiaries) in times of distress. Additional
powers which could impact the Overseas Banking Group include greater oversight, management and directions powers in relation to the Ultimate
Parent Bank and other Overseas Banking Group entities which were previously not regulated by APRA, increased statutory management powers overregulated entities within the Overseas Banking Group and changes which are designed to give statutory recognition to the conversion or write-off ofregulatory capital instruments.
The requirements of the Banking Act and the exercise by APRA of its powers have the potential to impact the management of the liquidity of ANZ
New Zealand.

75

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Restrictions on the Ultimate Parent Bank’s ability to provide financial support
Effect of APRA’s Prudential Standards
APRA Prudential Standard APS 222 Associations with Related Entities (APS222) sets minimum requirements for ADIs in Australia, including the Ultimate
Parent Bank, in relation to the monitoring, management and control of risks which arise from associations with related entities and also includes
maximum limits on intra-group financial exposures.

Under APS222, the Ultimate Parent Bank’s ability to provide financial support to the Bank is subject to the following restrictions:• the Ultimate Parent Bank should not undertake any third party dealings for the purpose of supporting the business of the Bank;• the Ultimate Parent Bank must not hold unlimited exposures (i.e. should be limited as to specified time or amount) in the Bank (e.g. not provide
a general guarantee covering any of the Bank’s obligations);• the Ultimate Parent Bank must not agree to cross-default clauses whereby a default by the Bank on an obligation (whether financial orotherwise) triggers or is deemed to trigger a default by the Ultimate Parent Bank on its obligations; and• the level of exposure, net of exposures deducted from capital, of the Ultimate Parent Bank’s Level 1 Tier 1 capital base to the Bank should notexceed: (A) 25% on an individual exposure basis; or (B) 75% in aggregate (being exposures to all similar regulated ADI equivalent entities related
to the Ultimate Parent Bank).
In addition, since 1 January 2021, no more than 5% of the Ultimate Parent Bank’s Level 1 Tier 1 capital base can comprise non-equity exposures to its
New Zealand operations (including its subsidiaries incorporated in New Zealand, such as the Banking Group, and the New Zealand Branch) duringordinary times. This limit does not include holdings of capital instruments or eligible secured contingent funding support provided to the Bank during
times of financial stress.
APRA has also confirmed that contingent funding support by the Ultimate Parent Bank to the Bank during times of financial stress must be provided
on terms that are acceptable to APRA. At present, only covered bonds meet APRA’s criteria for contingent funding.

Effect of the Level 3 framework

In addition, certain requirements of APRA’s Level 3 framework relating to, among other things, group governance and risk exposures became effective
on 1 July 2017. This framework also requires that the Ultimate Parent Bank must limit its financial and operational exposures to subsidiaries (including
the Bank).
In determining the acceptable level of exposure to a subsidiary, the Board of the Ultimate Parent Bank should have regard to:• the exposures that would be approved for third parties of broadly equivalent credit status;• the potential impact on the Ultimate Parent Bank’s capital and liquidity positions; and• the Ultimate Parent Bank’s ability to continue operating in the event of a failure by the Bank.
These requirements are not expected to place additional restrictions on the Ultimate Parent Bank’s ability to provide financial or operational support
to the Bank.

Other APRA powers

The Ultimate Parent Bank may not provide financial support in breach of the Banking Act, as described under ‘APRA’s powers’ above.
Guarantees
No material obligations of the NZ Branch are guaranteed as at 10 November 2023.

76

REGISTERED BANK DISCLOSURES

B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Directors, New Zealand Chief Executive Officer and Responsible Person
Any document or communication may be sent to any Director or the Chief Executive Officer – NZ Branch at the Registered Office. The document orcommunication should be marked for the attention of that Director or the Chief Executive Officer – NZ Branch as applicable.

Directors of the Ultimate Parent Bank as at 10 November 2023
Paul O’Sullivan

Shayne Elliott

Ilana Atlas, AO

Position

Chairman and Director

Chief Executive Officer and Director

Director

Occupation

Company Director

ANZ Group Chief Executive Officer

Company Director

Qualifications

BA (Mod) Economics, Advanced
Management Program of Harvard

BCom

BJuris (Hons), LLB (Hons), LLM

Resides

Sydney, Australia

Melbourne, Australia

Sydney, Australia

Executive

No

Yes

No

Independent

Yes

No

Yes

Other company ANZ Group Holdings Ltd, ANZ BH Pty Ltd, ANZ Group Holdings Ltd, ANZ BH Pty Ltd, ANZ Group Holdings Ltd, ANZ BH Pty Ltd,ANZ NBH Pty Ltd, St Vincent’s Health
ANZ NBH Pty Ltd, Elliott No. 3 Pty Ltd,ANZ NBH Pty Ltd, Origin Energy Ltd,
directorships
Australia, Singtel Optus Pty Ltd, Western
Financial Markets Foundation for Children Scentre Group Ltd
Sydney Airport Corporation
Jane Halton, AO PSM

Graham Hodges

Rt Hon Sir John Key, GNZM AC

Position

Director

Director

Director

Occupation

Company Director

Company Director

Company Director

Qualifications

BA (Hons) Psychology, FIPAA,
Hon. FAAHMS, Hon. FACHSE, Hon. DLitt,
FAIM, FAICD, FAIIA

BEc (Hons)

BCom, DCom (Honoris Causa)

Resides

Canberra, Australia

Melbourne, Australia

Auckland, New ZealandExecutive

No

No

No

IndependentYes

Yes (from ANZ non-bank group)

Yes

Other company ANZ Group Holdings Ltd, ANZ BH Pty Ltd, ANZ BH Pty Ltd, Regis Healthcare Ltd,ANZ NBH Pty Ltd, Clayton Utz
Assemble Communities
directorships

ANZ Group Holdings Ltd, ANZ BH Pty Ltd,ANZ NBH Pty Ltd, Kyro Capital Ltd, Oritain
Global Ltd, Palo Alto Networks Inc,
Sashimi Holdings Ltd, Sushi38 Ltd, Thirty
Eight JK Ltd, Thirty Eight JK Aviation Ltd

Holly Kramer

John Macfarlane

Christine O’Reilly

Position

Director

Director

Director

Occupation

Company Director

Company Director

Company Director

Qualifications

BA (Hons), MBA

BCom, MCom (Hons)

BBus

Resides

Sydney, Australia

Melbourne, Australia

Melbourne, Australia

Executive

No

No

No

Independent

Yes

Yes

Yes

Other company ANZ Group Holdings Ltd, ANZ BH Pty Ltd, ANZ Group Holdings Ltd, ANZ BH Pty Ltd, ANZ Group Holdings Ltd, ANZ BH Pty Ltd,ANZ NBH Pty Ltd, Fonterra Co-operative
ANZ NBH Pty Ltd, Colmac Group Pty Ltd, ANZ NBH Pty Ltd, BHP Group Ltd,
directorships
Group Ltd, Woolworths Group Ltd
AGInvest Holdings Ltd (MyFarm),
Stockland Corporation Ltd
Aikenhead Centre for Medical Discovery
Ltd, Collins Farms Ltd, Collins Farms No 2
Ltd, Dumbarton Land Company Ltd,
Melior Venison Ltd, The Boundary Ltd,
Balmoral Pastoral Investments Pty Ltd,
L1 Long Short Fund, The Kohwais Ltd
Jeff Smith
Position

Director

Occupation

Company Director

Qualifications

BAPPSC, MBA

Resides

United States of America

Executive

No

Independent

Yes

Other company ANZ Group Holdings Ltd, ANZ BH Pty Ltd,ANZ NBH Pty Ltd, ANZ Group Services Pty
directorships
Ltd, Pexa Australia Ltd, Sonrai Security Inc
77

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Chief Executive Officer – NZ Branch and Responsible Person as at 10 November 2023
Chris O’Neale

Antonia Watson

Position

Chief Executive Officer – NZ Branch

Responsible Person1

Occupation

Chief Executive Officer, Australia and
New Zealand Banking Group Ltd –New Zealand Branch

Chief Executive Officer –ANZ Bank New Zealand Ltd

Qualifications

BCA

BCom (Hons), GAICD

Resides

Wellington, New Zealand

Auckland, New Zealand

Other company Barraba Ltd
directorships
1

Not applicable

Authorised in writing by the Directors to sign the Disclosure Statement in accordance with section 82 of the Banking (Prudential Supervision) Act 1989.

Transactions with Directors
There are no transactions entered into by any Director, the Chief Executive Officer – NZ Branch, or any immediate relative or close business associateof any Director or the Chief Executive Officer – NZ Branch, with any part of ANZ New Zealand which has been either entered into on terms other thanthose which would in the ordinary course of business be given to any other person of like circumstances or means or which could otherwise bereasonably likely to influence materially the exercise of the Directors' or Chief Executive Officer – NZ Branch duties in respect of the NZ Branch and
ANZ New Zealand.

Board Audit Committee
There is a board Audit Committee which covers audit matters. The Committee has five members. Each member is a non-executive Director.

Policy of the board of directors for avoiding or dealing with conflicts of interest
The Board of the Ultimate Parent Bank has adopted procedures to ensure that conflicts and potential conflicts of interest between a Director’s duties
to the Ultimate Parent Bank and their own interests are avoided or dealt with. Pursuant to these procedures:• each Director should disclose to all Directors any material personal interest they have in any matter which relates to the affairs of the Ultimate
Parent Bank and any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest or theperception of a conflict of interest. This disclosure should be made as soon as practicable after the Director becomes aware of their interest or
the need to make a disclosure.
• any Director who has an interest of the type referred to above in a matter that is to be considered at a Directors' meeting, must not vote on thematter nor be present while the matter is considered at the meeting, unless a majority of Directors who do not have such an interest in thematter agree that the interest should not disqualify such Director from being present while the matter is being considered and from voting on
the matter. The minutes of the meeting should record the decision taken by the Directors who do not have an interest in the matter.
In addition, Standing Notices about Interests are maintained for each Director. If the Director's interests change, the Director shall disclose the change
as soon as practicable and an updated Standing Notice shall be tabled at the next Board meeting and recorded in the minutes of that meeting.
Auditors
KPMG, 18 Viaduct Harbour Avenue, Auckland, New Zealand.

78

REGISTERED BANK DISCLOSURES

B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Conditions of registration
The following conditions of registration were applicable as at 30 September 2023, and have applied from 1 November 2015.
The registration of Australia and New Zealand Banking Group Limited (the registered bank) in New Zealand is subject to the following conditions:1.

That the banking group does not conduct any non-financial activities that in aggregate are material relative to its total activities.
In this condition of registration, the meaning of “material” is based on generally accepted accounting practice.

2.

That the banking group’s insurance business is not greater than 1% of its total consolidated assets.
For the purposes of this condition of registration, the banking group’s insurance business is the sum of the following amounts for entities in the banking group:a)

if the business of an entity predominantly consists of insurance business and the entity is not a subsidiary of another entity in the banking group whosebusiness predominantly consists of insurance business, the amount of the insurance business to sum is the total consolidated assets of the group headed by
the entity; andb)

if the entity conducts insurance business and its business does not predominantly consist of insurance business and the entity is not a subsidiary of anotherentity in the banking group whose business predominantly consists of insurance business, the amount of the insurance business to sum is the total liabilities
relating to the entity’s insurance business plus the equity retained by the entity to meet the solvency or financial soundness needs of its insurance business.

In determining the total amount of the banking group’s insurance business—a)

all amounts must relate to on balance sheet items only, and must comply with generally accepted accounting practice; andb)

if products or assets of which an insurance business is comprised also contain a non-insurance component, the whole of such products or assets must be
considered part of the insurance business.

For the purposes of this condition of registration,—“insurance business” means the undertaking or assumption of liability as an insurer under a contract of insurance:“insurer” and “contract of insurance” have the same meaning as provided in sections 6 and 7 of the Insurance (Prudential Supervision) Act 2010.
3.
4.

That the business of the registered bank in New Zealand does not constitute a predominant proportion of the total business of the registered bank.
That no appointment to the position of the New Zealand chief executive officer of the registered bank shall be made unless:a)the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee; andb)

the Reserve Bank has advised that it has no objection to that appointment.

5.

That Australia and New Zealand Banking Group Limited complies with the requirements imposed on it by the Australian Prudential Regulation Authority.

6.

That Australia and New Zealand Banking Group Limited complies with the following minimum capital adequacy requirements, as administered by the Australian
Prudential Regulation Authority:
a)

7.

b)

Tier 1 capital of Australia and New Zealand Banking Group Limited is not less than 6 percent of risk weighted exposures;c)

Total capital of Australia and New Zealand Banking Group Limited is not less than 8 percent of risk weighted exposures.

That the business of the registered bank in New Zealand is restricted to:
a)

8.
9.

Common Equity Tier 1 capital of Australia and New Zealand Banking Group Limited is not less than 4.5 percent of risk weighted exposures;acquiring for fair value, and holding, mortgages originated by ANZ Bank New Zealand Limited; andb)

any other business for which the prior written approval of the Reserve Bank has been obtained; andc)activities that are necessarily incidental to the business specified in paragraphs (a) and (b).

That the value of the mortgages held by the registered bank in New Zealand must not exceed $15 billion in aggregate.
That the registered bank in New Zealand does not incur any liabilities except:a)to the government of New Zealand in respect of taxation and other charges;b)

to other branches or the head office of the registered bank;c)to trade creditors and staff;d)to ANZ Bank New Zealand Limited in respect of activities, other than borrowing, that are necessarily incidental to the business specified in paragraphs (a) and(b) of condition 7; ande)any other liabilities for which the prior written approval of the Reserve Bank has been obtained.

In these conditions of registration,—“banking group” means the New Zealand business of the registered bank and its subsidiaries as required to be reported in group financial statements for the group’s
New Zealand business under section 461B(2) of the Financial Markets Conduct Act 2013.
“business of the registered bank in New Zealand” means the New Zealand business of the registered bank as defined in the requirement for financial statements for New
Zealand business in section 461B(1) of the Financial Markets Conduct Act 2013.
“generally accepted accounting practice” has the same meaning as in section 8 of the Financial Reporting Act 2013.

79

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Pending proceedings or arbitration
A description of any pending legal proceedings or arbitration concerning any member of ANZBGL New Zealand that may have a material adverse
effect on the Branch or ANZBGL New Zealand is included in Note 27 Commitments and contingent liabilities.
Credit rating
The Ultimate Parent Bank has credit ratings that apply to its long-term senior unsecured obligations payable in New Zealand in New Zealand dollars.
As at 10 November 2023, the Ultimate Parent Bank’s credit ratings are:Rating agency
S&P Global Ratings
Fitch Ratings
Moody’s Investors Service

Credit rating
AAA+
Aa3

Qualification
Outlook Stable
Outlook Stable
Outlook Stable

The following table describes the credit rating grades available. The descriptions are from S&P Global Ratings. Credit ratings from S&P Global Ratingsand Fitch Ratings may be modified by the addition of "+" or "-" to show the relative standing within the “AA” to “B” categories. Moody's InvestorsService applies numerical modifiers 1, 2, and 3 to each of the “Aa” to “Caa” classifications, with 1 indicating the higher end and 3 the lower end of therating category.
S&P Global
Ratings

Moody's
Investors
Service

Fitch
Ratings

Extremely strong capacity to meet financial commitments. Highest rating.

AAA

Aaa

AAA

Very strong capacity to meet financial commitments.

AA

Aa

AA

Strong ability to meet financial commitments, but somewhat susceptible to adverse economic conditions andchanges in circumstances.

A

A

A

Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.

BBB

Baa

BBB

Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic
conditions.

BB

Ba

BB

More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meetfinancial commitments.

B

B

B

Currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial
commitments.

CCC

Caa

CCC

Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty.

CC to CCa

CC to CDC

RD & D

Investment grade:Speculative grade:

Payment default on a financial commitment or breach of an imputed promise; also used when a bankruptcy petition
has been filed or similar action taken.

80

REGISTERED BANK DISCLOSURES

B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Historical summary of financial statements
Income statement
For the year ended 30 September
Interest income
Interest expense
Net interest income
Non-interest income
Operating income
Operating expenses
Credit impairment release / (charge)
Profit before income tax
Income tax expense
Profit after income tax
Comprising:
Profit attributable to the shareholders of the Ultimate Parent Bank
Profit attributable to non-controlling interests

2023
NZ$m
10,226(5,987)
4,239
610
4,849
(1,663)
(183)
3,003
(832)
2,171

2022
NZ$m
5,824
(2,062)
3,762
1,117
4,879
(1,654)
(39)
3,186
(887)
2,299

2021
NZ$m
4,608
(1,203)
3,405
759
4,164
(1,622)
115
2,657
(738)
1,919

2020
NZ$m
5,580
(2,349)
3,231
789
4,020
(1,754)
(401)
1,865
(529)
1,336

2019
NZ$m
6,508
(3,276)
3,232
966
4,198
(1,609)
(99)
2,490
(665)
1,825

2,144
27

2,299
-

1,919
-

1,336
-

1,825
-

2023
NZ$m
194,589287
893
177,904
16,135
550

2022
NZ$m
201,439
146
736
185,417
15,472
550

2021
NZ$m
185,072
155
775
169,996
15,076-2020
NZ$m
180,087363
1,173
166,077
14,010-2019
NZ$m
170,492
287
739
157,893
12,599-(1,372)(1,880)

(845)

-

(375)

Balance sheet
As at 30 September
Total assets
Total individually impaired assets
Total impaired assets (i.e. Stage 3)
Total liabilities
Equity & head office accountNon-controlling interests

Other items included in Equity & head office account
Dividends paid

The amounts included in this summary have been taken from the audited financial statements of ANZBGL New Zealand.
Other material matters

Climate Statements
The Ultimate Parent Bank is a climate reporting entity (CRE) and will be required to produce group climate statements for its New Zealand businessunder New Zealand’s mandatory climate-related disclosure legislation. ANZBGL New Zealand will issue its first mandatory climate statements under
the Financial Markets Conduct Act 2013 (FMCA) and the Aotearoa New Zealand Climate Standards (NZ CS) for the financial year ending 30 September
2024.

Revised RBNZ capital requirements
RBNZ has revised its bank capital adequacy requirements applying to New Zealand locally incorporated registered banks, which are set out in RBNZ’s
Banking Prudential Requirements documents. The new capital adequacy requirements are being implemented in stages during a transition period
from October 2021 to July 2028. The key requirements still being implemented are:
• The Banking Group’s total capital requirement will increase to 18% of RWA, including tier 1 capital of at least 16% of RWA. Up to 2.5% of the tier 1
capital requirement can be made up of additional tier 1 (AT1) capital, with the remainder of the tier 1 requirement made up of common equity
tier 1 (CET1) capital. The increased capital ratio requirements are being progressively implemented until 1 July 2028. AT1 capital must consist of
perpetual preference shares, which may be redeemable. The total capital requirement can also include tier 2 capital of up to 2% of RWA. Tier 2
capital must consist of long-term subordinated debt.
• The tier 1 capital requirement will include a CET1 prudential capital buffer of 9% of RWA. This will include: a 2% domestic systemically importantbank capital buffer; a 1.5% 'early-set' counter-cyclical capital buffer, which can be temporarily reduced to 0% following a financial crisis, or
temporarily increased; and a 5.5% capital conservation buffer.
• Contingent capital instruments will no longer be treated as eligible regulatory capital. As at 30 September 2023, the Bank had NZ$1,238 million
of AT1 instruments that will progressively lose eligible regulatory capital treatment over the transition period to 1 July 2028.
RBNZ’s reforms will result in a material increase in the level of capital that the Banking Group is required to hold. The reforms could have a material
impact on the Banking Group and its business, including on its capital allocation and business planning.
Financial statements of the Ultimate Parent Bank and 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 request is made at the Registered Office. The most recent publicly available
financial statements for the Ultimate Parent Bank and Overseas Banking Group can also be accessed at the website shareholder.anz.com.
81

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B2. ADDITIONAL FINANCIAL DISCLOSURES
Additional information on the balance sheet
2023
NZ$m
180,805
148,8701

Total interest earning and discount bearing assets
Total interest and discount bearing liabilities
Total liabilities of the Branch less amounts due to related entities

2022
NZ$m
180,054
147,987
1,135

Additional information on interest rate sensitivity
The following table represents the interest rate sensitivity of ANZBGL New Zealand's assets, liabilities and off-balance sheet instruments by showing
the periods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability can be changed.

2023
AssetsCash and cash equivalents
Settlement balances receivable
Collateral paid
Trading securities
Derivative financial instruments
Investment securities
Net loans and advances
Other financial assets
Total financial assets
Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings
Derivative financial instruments
Debt issuances
Lease liabilities
Other financial liabilities
Total financial liabilities
Hedging instruments
Interest sensitivity gap
1

Total
NZ$m

Up to
3 months
NZ$m

Over 3 to
6 months
NZ$m

Over 6 to
12 months
NZ$m

Over 1 to
2 years
NZ$m

Over
2 years
NZ$m

Not bearing
interest1
NZ$m

13,094
401
801
5,921
8,747
10,958
149,627996
190,545

12,829801
990
426
63,83078,876173364
15,354
15,891459
150
31,47732,086488
1,099
29,79331,380

3,811
8,918
9,843
22,572

265
401
8,747
1
(670)
996
9,740

2,886
1,500
144,393
8,287
18,494
203
1,433
177,196
13,3491,567
1,500
89,3731,240
13371
94,064
8,602(6,586)15,0263,360
1218,398
10,993
8,486

16,39023
16,413(9,245)
6,428

2,685
2,379
44
5,108
(14,051)
12,221

3,261
11,515111
14,8873,701
11,386

1,319
17,6588,287
1,062
28,326(18,586)

Excludes non-coupon bearing discounted financial assets and financial liabilities which are shown as repricing on their maturity date.

Overseas Banking Group Profitability and Size
2023
7,193
0.64%
1,106,042
1.87%

Net profit for the year ended 30 September 2023 (AUDm)1
Net profit after tax for the year ended 30 September 2023 as a percentage of average total assets
Total assets (AUDm)
Percentage change in total assets in the 12 months to 30 September 2023
1

Net profit after tax for the year includes AUD 28 million of profit attributable to non-controlling interests.

Reconciliation of mortgage related amounts
As at 30 September 2023
Term loans - housing1
Less: housing loans made to corporate customers
On-balance sheet residential mortgage exposures (per LVR analysis)
Add: off-balance sheet residential mortgage exposures (per LVR analysis)
Total residential mortgage exposures (per LVR analysis)
182Term loans – housing includes loans secured over residential property for owner-occupier, residential property investment and business purposes.

Note
11
B4
B4
B4

NZ$m
107,346(1,309)106,037
9,602
115,639REGISTERED BANK DISCLOSURES

B3. ASSET QUALITY
This section should be read in conjunction with the estimates, assumptions and judgements included in Note 1, Note 12 and Note 15 to the financial
statements.
Movements in components of loss allowance – total

Net loans and advances - total
As at 1 October 2022
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 30 September 2023

Stage 1
NZ$m
199
19
(25)
(6)
193

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
311
59
77
(19)
106
20
94
(22)
(12)
87
20
60
(86)
12
(3)
398
79
60

Total
NZ$m
646
195
(22)
(12)
161
(86)
12
(3)
730

Off-balance sheet credit related commitments - total
As at 1 October 2022
Transfer between stages
New and increased provisions (net of collective provision releases)
Credit impairment charge

66
2
12

31
(2)
10

3
-

5
-

105
22

14
80

8
39

3

5

22
127

Gross loans and advances - total
As at 1 October 2022
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 30 September 2023
Loss allowance as at 30 September 2023

139,972
30,07930,079(5,276)(27,149)(32,425)
137,626
193

6,910
4,645
1,126
5,771
(1,561)(1,561)
11,120
398

590
413
79
492
(189)
(189)
893
79

146
218
103
321
(94)
(94)
(86)
287
60

147,618
5,276
31,38736,663(5,276)(28,993)(34,269)(86)
149,926730

Off-balance sheet credit related commitments - total
As at 1 October 2022
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 30 September 2023
Loss allowance as at 30 September 2023

28,969
6,216
6,216
(249)
(7,497)(7,746)27,439
80

995
237
298
535
(393)
(393)
1,137
39

14
8
3
11
(10)
(10)
15
3

6
4
17
21
(14)
(14)
13
5

29,984
249
6,534
6,783
(249)
(7,914)(8,163)28,604127

As at 30 September 2023
Impacts of changes in gross financial assets on loss allowances

Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances are 0.48% of gross balances as at 30 September 2023, up from 0.42% as at 30 September 2022. The NZ$106 million (14.1%)
increase in loss allowances was driven by an increase in the proportion of gross balances in Stage 2, partially offset by changes in the forward-looking
economic scenarios as described in Note 12 Allowance for expected credit losses.

83

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B3. ASSET QUALITY (continued)
Movements in components of loss allowance – total

Net loans and advances - total
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 30 September 2022

Stage 1
NZ$m
155
18
26
44
199

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
314
56
60
(10)
(3)
(5)
7
6
87
(33)
(37)
(3)
3
12
(37)
37
5
311
59
77

Total
NZ$m
585
126
(33)
(37)
56
(37)
37
5
646

Off-balance sheet credit related commitments - total
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)

64
7
(5)

39
(6)
(2)

4
(1)
-

15
(10)

122
(17)

Credit impairment charge / (release)
As at 30 September 2022

2
66

(8)
31

(1)
3

(10)
5

(17)
105

Gross loans and advances - total
As at 1 October 2021
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 30 September 2022
Loss allowance as at 30 September 2022

134,30236,62336,623(1,257)(29,696)(30,953)
139,972
199

6,208
1,160
1,153
2,313
(2)
(1,609)(1,611)
6,910
311

620
114
88
202
(18)
(214)
(232)
590
59

155
5
146
151
(2)
(121)
(123)
(37)
146
77

141,285
1,279
38,01039,289(1,279)(31,640)(32,919)(37)
147,618
646

Off-balance sheet credit related commitments - total
As at 1 October 2021
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 30 September 2022
Loss allowance as at 30 September 2022

28,568
110
6,758
6,868
(23)
(6,444)(6,467)28,969
66

1,279
21
79
100
(123)
(261)
(384)
995
31

32
4
2
6
(24)
(24)
14
3

23
11
(5)
6
(23)
(23)
6
5

29,902
146
6,834
6,980
(146)
(6,752)(6,898)29,984105

Impacts of changes in gross financial assets on loss allowances

Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances are 0.42% of gross balances as at 30 September 2022, up from 0.41% as at 30 September 2021. The NZ$44 million (6.2%)
increase in loss allowances was driven by an increase in the proportion of gross balances in Stage 2, and changes in the forward-looking economic
scenarios.

84

REGISTERED BANK DISCLOSURES

B3. ASSET QUALITY (continued)
Past due assets

Less than 30 days past due
At least 30 days but less than 60 days past due
At least 60 days but less than 90 days past due
At least 90 days past due
Total past due but not individually impaired

2023
NZ$m
1,297
329
445
661
2,732

2022
NZ$m
861
342
142
454
1,799

2023
NZ$m
13
8

2022
NZ$m
6
5

30 Sep 23
1,084
0.1%
376
34.7%
4,032

30 Sep 22
1,062
0.1%
542
51.0%
3,853

Other asset quality information

Undrawn facilities with impaired customers
Other assets under administration
Asset quality for financial assets designated at fair value
ANZBGL New Zealand does not have any loans and advances designated at fair value.
Overseas Banking Group asset quality
As at
Individually impaired assets (AUDm)1
Individually impaired assets as a percentage of total assets
Individual credit impairment allowance (AUDm)
Individual credit impairment allowance as a percentage of individually impaired assets1
Collective credit impairment allowance (AUDm)
1

Comparative amounts have been updated to exclude restructured items of A$376 million and other defaulted financial assets of A$7 million that are not individually assessed for credit
impairment. Restructured items are facilities where the original contractual terms have been modified for reasons related to the financial difficulties of the customer and are collectively
assessed for stage 3 ECL.

85

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B4. CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACY (UNAUDITED)APRA Basel III capital ratios

Common equity tier 1 capital
Tier 1 capital
Total capital

Ultimate Parent Bank
Overseas Banking Group (Extended Licensed Entity)
2023
2022
2023
2022
13.3%
15.2%
21.0%

12.3%
14.0%
18.2%

13.2%
15.5%
22.2%

12.0%
14.0%
18.9%

The Ultimate Parent Bank and the Overseas Banking Group are required to hold minimum capital as determined by APRA’s capital framework, which is
at least equal to that specified under the internationally agreed Basel III framework.
APRA has authorised the Ultimate Parent Bank and the Overseas Banking Group to use:
• the Internal Ratings Based (IRB) methodology for calculation of credit risk weighted assets. Where the Overseas Banking Group is not accredited
to use the IRB methodology the Overseas Banking Group applies the standardised approach.
• the Standardised Measurement Approach (SMA) for the operational risk weighted asset equivalent.
The Overseas Banking Group exceeded the minimum capital requirements set by APRA as at 30 September 2023 and for the comparative priorperiods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 30 September 2023. The Overseas Banking Group’s Pillar
3 disclosure document for the quarter ended 30 September 2023, 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
ANZBGL New Zealand’s aggregate market risk exposures below have been calculated in accordance with BPR140: Market Risk. The peak end-of-day
market risk exposures are for the six months ended 30 September 2023.

As at 30 September 2023
Interest rate risk
Foreign currency risk
Equity risk

Implied risk weighted
exposure
Period end
Peak
NZ$m
NZ$m
5,224
5,928
26
110
1
1

Notional capital charge
Period end
Peak
NZ$m
NZ$m
418
474
2
9
-

Additional mortgage information
As required by RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by ANZBGL New Zealand's valuation of
the security property at origination of the exposure. Off-balance sheet exposures include undrawn and partially drawn residential mortgage loans aswell as commitments to lend. Commitments to lend are formal offers for housing lending which have been accepted by the customer.

As at 30 September 2023
LVR range
Does not exceed 60%
Exceeds 60% and not 70%
Exceeds 70% and not 80%
Does not exceed 80%
Exceeds 80% and not 90%
Exceeds 90%
Total

86

On-balance Off-balance
sheet
sheet
NZ$m
NZ$m
57,63819,82821,614
99,0805,260
1,697
106,037

7,159
1,047
1,078
9,284
126
192
9,602

Total
NZ$m
64,797
20,875
22,692
108,364
5,386
1,889
115,639REGISTERED BANK DISCLOSURES

B5. INSURANCE BUSINESS, SECURITISATION, FUNDS MANAGEMENT, OTHER FIDUCIARY ACTIVITIESAND MARKETING AND DISTRIBUTION OF INSURANCE PRODUCTS
Insurance business
ANZBGL New Zealand does not conduct any insurance business.
Non-consolidated insurance and non-financial activities
The Ultimate Parent Bank does not carry on any insurance business or non-financial activities in New Zealand that are outside ANZ New Zealand.
ANZBGL New Zealand’s involvement in securitisation, funds management, other fiduciary activities, and marketing and distribution of insurance
productsa)

ANZBGL New Zealand’s involvement in the establishment, marketing, or sponsorship of trust, custodial, funds management, and other fiduciary
activities

Activity

Details

Custodial

ANZBGL New Zealand operates two custodians as at 30 September 2023:• ANZ Custodial Services New Zealand Limited, which is the appointed custodian for private banking’s (ANZ Private)
Discretionary Investment Management Service, Wholesale Investment Services and Trading Service; and• ANZ New Zealand Investments Nominees Limited, which is the appointed custodian for direct holdings of securities by
various wholesale customer portfolios managed by ANZ New Zealand Investments Limited (ANZ Investments).

Funds
management

ANZBGL New Zealand provides the following funds management services:• Managed Investment Schemes (MIS): ANZBGL New Zealand’s subsidiaries ANZ Investments and ANZ Investment Services(New Zealand) Limited (ANZIS) act as manager for a number of managed investment schemes. ANZ Investments holds an
MIS Manager licence, with ANZIS being an authorised body under that licence. ANZ Investments is the issuer andmanager of ANZ and OneAnswer-branded KiwiSaver, retail and wholesale schemes. ANZIS is the issuer and manager ofthe Bonus Bonds Scheme and the ANZ PIE Fund. ANZ National Staff Superannuation Limited, also a subsidiary of ANZBGLNew Zealand, is the trustee and manager of the ANZ National Retirement Scheme, which is a restricted workplace savings
scheme.
• Discretionary Investment Management Service (DIMS): The Bank is a licensed DIMS provider. This service is offered to ANZ
Private customers.
• Other investment portfolios: ANZ Investments also manages investment portfolios for a number of schemes where thescheme manager or trustee has outsourced investment management services to ANZ Investments. These schemes are
typically corporate superannuation schemes.

Other fiduciary
activities

ANZ Investments, through its subsidiary OneAnswer Nominees Limited, offers the OneAnswer Portfolio Service. The associatedadministration and custody services are provided by FNZ Limited and FNZ Custodians Limited respectively (together FNZ).
FNZ is not a member or related party of ANZBGL New Zealand.

b)

ANZBGL New Zealand’s involvement in the origination of securitised assets, and the marketing or servicing of securitisation schemes

ANZBGL New Zealand originates securitised assets in the form of residential mortgage backed securities held for potential repurchase transactions
with RBNZ, and covered bonds. Refer to Note 24 Structured entities for further details about these programmes. Other than these activities, ANZBGLNew Zealand is not involved in the marketing or servicing of securitisation schemes.

c)

ANZBGL New Zealand’s involvement in marketing and distribution of insurance products

ANZBGL New Zealand markets and distributes life insurance, other personal and business insurance products provided by or arranged through anumber of insurance partners. None of these insurance partners are affiliated insurance entities or affiliated insurance groups. Our insurance partnersare:• Vero Insurance New Zealand Limited for home, contents, motor vehicle, boat and lifestyle block insurance;• AWP Services New Zealand Limited, trading as Allianz Partners, for premium card travel insurance. Policies are underwritten by The Hollard
Insurance Company Pty Limited (incorporated in Australia);• Chubb Life Insurance New Zealand Limited (formerly known as Cigna Life Insurance New Zealand Limited) for life & living insurance; and• Crombie Lockwood (NZ) Limited is our business insurance broker.
Arrangements to ensure no adverse impacts arising from the above activities
Arrangements have been put in place to ensure that difficulties arising from the activities in a), b) and c) above would not impact adversely on
ANZBGL New Zealand. The policies and procedures in place include comprehensive and prominent disclosure of information regarding products, andformal and regular review of operations and policies by management.

87

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B5. INSURANCE BUSINESS, SECURITISATION, FUNDS MANAGEMENT, OTHER FIDUCIARY ACTIVITIESAND MARKETING AND DISTRIBUTION OF INSURANCE PRODUCTS (continued)
Amounts represented by funds management and securitisation activities

Funds under management:
KiwiSaver1
Bonus Bonds Scheme2,6
Other managed funds1
ANZ PIE Fund2
DIMS3
Other investment portfolios4
Total funds under management
Funds under custodial arrangements
Other funds held or managed subject to fiduciary responsibilities5
Outstanding securitised assets originated by ANZBGL New Zealand - carrying amount of covered bonds
1
2
3
4
5
6

88

2023
NZ$m

2022
NZ$m

18,957
3,286
3,741
7,259
3,865
37,108
7,277
1,820
3,373

17,076
3,353
2,292
7,490
4,102
34,313
7,519
1,710
4,082

Managed by ANZ Investments.
Managed by ANZIS and wholly invested in deposits of the Bank.
Managed by the Bank.
Comprises portfolios managed by ANZ Investments, and the ANZ National Retirement Scheme managed by ANZ National Staff Superannuation Limited.
Not included in funds under management.
Funds under management for the Bonus Bonds Scheme is net of NZ$58 million (2022: NZ$65 million) of distributions payable to bondholders. Further information about the wind-up of theBonus Bonds Scheme is available at the website bonusbonds.co.nz.

REGISTERED BANK DISCLOSURES

B6. RISK MANAGEMENT POLICIESInformation about risk
2023 has seen an elevation of geopolitical tensions and continuing uncertainty in the macroeconomic environment. These continue to posechallenges to operating conditions. We recognise that our customers are similarly affected by these, as well as by additional challenges such as
adverse weather events. Our Risk Management Framework (RMF) and practices have continued to evolve to meet such challenges.
The Board is ultimately responsible for establishing and overseeing ANZBGL New Zealand’s RMF, which is supported by ANZBGL New
Zealand’s underlying systems, structures, policies, procedures, processes and people. The Board has delegated authority to the Bank’s Board
Risk Committee (BRC) to develop and monitor compliance with ANZBGL New Zealand’s risk management policies. The Committee reports
regularly to the Board on its activities. The key pillars of ANZBGL New Zealand’s RMF include:• The Risk Management Strategy (RMS), which describes the approach for managing risks arising from ANZBGL New Zealand’s purpose
and strategy. The RMS includes: how the risk function is structured to support ANZBGL New Zealand’s purpose and strategy; thevalues, attitudes and behaviours required of employees in delivering on strategic priorities; a description of each material risk; and an
overview of how the RMF addresses each material risk, with reference to the relevant policies, standards and procedures. It also
includes information on how ANZBGL New Zealand identifies, measures, evaluates, monitors, reports and then either controls or
mitigates material risks and the oversight mechanism and/or committees in place.
• The Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding - for each material risk - the maximum level ofrisk ANZBGL New Zealand is willing to accept in pursuing its strategic objectives and its operating plans considering its stakeholders’,
depositors’ and customers’ interests.
• Risk Culture is an intrinsic part of ANZBGL New Zealand’s RMF and underpins the values, attitudes and behaviours of our employees which
drive the risk decisions we make.

Key material risks
The key material risks facing ANZBGL New Zealand per our RMS, and how these risks are managed, are summarised below.
Our RMS acknowledges that climate change risk may manifest through our key material risks, most notably through financial risks such as credit risk.
ANZBGL New Zealand’s most material climate change risk results from its lending to business, agri and retail customers, including credit-related
losses incurred through a customer being unable or unwilling to repay debt, or impacts to the value and liquidity of collateral. It may also result in
additional market, operational or other risks. Climate-related impacts are managed in accordance with the risk management strategies associated withthe applicable key material risks. ANZBGL New Zealand is currently reviewing the classification of climate-related risk within our RMS and we expect
to disclose the outcome of this review in 2024.
Each key material risk has an associated RAS component, and where applicable, is measured by appropriate metric(s) and associated tolerance(s)representing the maximum level of risk appropriate to execute ANZBGL New Zealand’s strategic agenda. Metrics are prepared and reviewed at least
monthly. A risk appetite dashboard is prepared and reviewed by senior management monthly, and presented to the BRC at each meeting.
Risk type

Description

Managing the risk

Strategic
risk

Risks that affect or are created by an organisation’s businessstrategy and strategic objectives. A possible source of loss
might arise from the pursuit of an unsuccessful businessplan. For example, Strategic risk might arise from making
poor strategic business decisions, from the sub-standard
execution of decisions, from inadequate resource
allocation, or from a failure to respond well to changes in abusiness environment.

Strategic risks are discussed and managed through our strategicplanning and strategic execution monitoring processes, managed by
the Executive Committee and approved by the Board. Where thestrategy leads to an increase in other Key Material Risks (e.g. Credit
risk, Market risk, Operational risk) the risk management strategies
associated with these risks form the primary controls.

Capitaladequacyrisk

The risk of loss arising from ANZBGL New Zealand failing tomaintain the level of capital required by prudential
regulators and other key stakeholders (shareholders, debt
investors, depositors, rating agencies, etc.) to support
ANZBGL New Zealand’s consolidated operations and risk
appetite.

We pursue an active approach to Capital Management, which isdesigned to protect the interests of depositors, creditors andstakeholders through ongoing review, and Board approval, of thelevel and composition of our capital base against key policy
objectives. The ICAAP also operates as part of the management
framework for this risk.

Credit risk

The risk of financial loss resulting from:• a counterparty failing to fulfil its obligations; or• a decrease in credit quality of a counterparty resulting
in a loss.
Credit risk incorporates the risks associated with ourlending to business, agri and retail customers who could be
impacted by climate change or by changes to laws,
regulations, or other policies adopted by governments or
regulatory authorities, including carbon pricing and climatechange adaptation or mitigation policies.
Includes:• concentrations of credit risk;• intra-day credit risk;• credit risk to bank counterparties; and• related party credit risk.

Our Credit risk framework is top down, being defined by credit
principles and policies. Credit policies, requirements and procedures
cover all aspects of the credit life cycle from initial approval and risk
grading, through ongoing management and problem debt
management.
The effectiveness of the Credit risk framework is assessed throughvarious compliance and monitoring processes. These, together withportfolio selection, define and guide the credit process, organisationand staff.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B6. RISK MANAGEMENT POLICIES (continued)
Risk type

Description

Managing the risk

Liquidity
andfundingrisk

The risk that ANZBGL New Zealand is unable to meet its
payment obligations as they fall due, including:• repaying depositors or maturing wholesale debt; or• ANZBGL New Zealand having insufficient capacity tofund increases in assets.

Key principles in managing our Liquidity and funding risk include:• ANZBGL New Zealand’s short term liquidity scenario modelling
stresses cash flow projections against multiple survival horizons’over which ANZBGL New Zealand is required to remain cash flow
positive; and• longer-term scenarios are in place that measure the structuralliquidity position of the balance sheet.

Operational
Risk

The risk of loss and/or non-compliance with laws resulting
from inadequate or failed internal processes, people and/or
systems, or from external events. This definition includes
legal risk, and the risk of reputation loss or damage arisingfrom inadequate or failed internal processes, people andsystems, but excludes strategic risk.

We manage Compliance and Operational risk in the best interests ofour customers and the community and to meet expectations of theregulators. The Compliance and Operational Risk Principles establish
the fundamental requirements at ANZBGL New Zealand which
inform policies, processes, and procedure development of ANZBGLNew Zealand’s management of Compliance and Operational risk,
through timely and appropriate identification, action andmonitoring. It is part of the ANZBGL New Zealand’s RMF and ANZBGLNew Zealand’s I.AM (Identify, Act, Monitor) Framework. We take arisk-based approach to the management of operational risk andobligations. This enables ANZBGL New Zealand to be consistent inproactively identifying, assessing, managing, reporting andescalating operational risk-related risk exposures.
Day-to-day management of operational risk is the responsibility ofbusiness unit line management and staff. Risk management is
supported by a strong Risk culture, which seeks to ensure all staff
manage risk on a daily basis – “Risk is Everyone’s Responsibility”.

Compliance risk

Key features of how we manage Compliance risk as part of our I.AM
Framework include:• centralised management of key obligations;• an emphasis on identification of changing regulations and thebusiness environment, to enable proactive assessment ofemerging compliance risk; and• recognition of incident management as a separate element toenhance ANZBGL New Zealand’s ability to identify, manage andreport on incidents/breaches in a timely manner.

Conduct risk

Our approach to managing Conduct risk is to seek to ensure thatrisks to customers, community and market integrity are identified,assessed, measured, evaluated, treated, monitored and reported withappropriate governance and oversight.

The risk of failure to act in accordance with laws,
regulations, industry standards and codes, internal policies
and procedures and principles of good governance asapplicable to ANZBGL New Zealand’s businesses.

The risk of loss or damage arising from the failure of
ANZBGL New Zealand, its employees or agents toappropriately consider the interests of customers, theintegrity of the financial markets and the expectations of
the community in conducting its business activities.

Technology risk

The risk of loss and/or non-compliance with laws frominadequate or failed internal processes, people or systems
that deliver technology assets and services to customers
and staff. This risk includes technology assets and services
delivered or managed by third parties, and external events.
The risk specifically includes information security and cybersecurity and how information held by ANZBGL New
Zealand needs to be protected from inappropriate
modification, loss, disclosure and unavailability.

90

The articulation of Conduct risk as a Risk Theme under the NonFinancial Risk (NFR) model will help manage Conduct Risk as a key
material risk for ANZBGL New Zealand. To support the NFR model,
ANZBGL New Zealand developed a Conduct Risk Framework andConduct Risk taxonomy which facilitate a clear and consistent way ofmanaging and monitoring the risk, and the risk is managed inconjunction with the Compliance and Operational risk policy.
Our approach to managing Technology risk is to manage ouroperational risks caused by the use of technology, including risks
associated with cyber security and third party providers, in a mannerthat seeks to ensure customer information is secure and service
disruption is within acceptable levels.

REGISTERED BANK DISCLOSURES

B6. RISK MANAGEMENT POLICIES (continued)
Risk type

Description

Managing the risk

Marketrisk

The risk stems from our trading and balance sheet activities
and is the risk to ANZBGL New Zealand’s earnings arisingfrom:• changes in any interest rates, foreign exchange rates,
credit spreads, volatility, and correlations; orfluctuations in bond, commodity or equity prices.

We have a detailed market risk management and control framework
to support our trading and balance sheet activities, which
incorporates an independent risk measurement approach toquantify the magnitude of market risk within the trading and balance
sheet portfolios. This approach, along with related analysis, identifies
the range of possible outcomes, that can be expected over a given
period of time, and establishes the likelihood of those outcomes andallocates an appropriate amount of capital to support these activities.
ANZBGL New Zealand’s key tools to measure and manage Market
Risk on a daily basis include value at risk, earnings at risk, interest ratesensitivities, market value loss limits and stress testing.

Financial
crime
risk

Financial crime risk covers the following risks at ANZBGLNew Zealand:• Money Laundering (ML) risk – the risk that we may
reasonably face from our products and/or services
being misused to facilitate the processing of theproceeds of crime to conceal their illegal origins andmake them appear legitimate.
• Terrorism Financing (TF) risk – the risk that we may
reasonably face from our products and/or services
being misused to facilitate the provision or collection offunds with the intention or knowledge that they may
be used to carry out acts associated in support ofterrorists or terrorist organisations.
• Sanctions risk – the risk of failing to comply with laws
and regulations relating to sanctions imposed bygovernments and multinational bodies as a result ofour products and services being misused to facilitateprohibited sanctions activities.
• Fraud risk – the risk that we may reasonably face fromour products and/or services being misused to facilitate
intentional acts by one or more individuals, involving
the use of deception to obtain an unjust or illegal
advantage arising from internal or external sources.

Financial crime risk at ANZBGL New Zealand is managed using a riskbased approach in conjunction with the Compliance andOperational Risk Framework (I.AM) and a three lines of defence
model. However, for Sanctions, in addition to a risk-based approach
to risk management, there is a rules-based lens to ensure compliancewith Sanctions legislation. For the Business to identify and manage
Financial crime risk, it must identify its regulatory obligations andimpacted business activities and maintain and monitor key controls.

Refer to Note 15 Financial risk management for the disclosures required under NZ IFRS 7 Financial Instruments: Disclosures.

Other material risks
Other material risks do not require the same degree of active or transactional management as the Key material risks and are managed and monitored
as part of ANZBGL New Zealand’s business, strategic and capital management process. The maximum level of risk is set as part of the Banking Group’s
ICAAP. Refer to Note 22 Capital management for more information about the Banking Group’s ICAAP.
PensionRisk

The risk of the value of investments in a defined benefit pension fund being insufficient to meet liabilities, resulting in additional
funds being required to match pension liabilities.

Strategic
Equity Risk

The risk of financial loss arising from the unexpected reduction in value of ANZBGL New Zealand equity investments not held in
the trading book, including ANZBGL New Zealand’s joint ventures and associates.

Fixed Asset
Risk

The risk of financial loss arising from the negative revaluation of fixed assets owned and leased by ANZBGL New Zealand, causedby adverse changes in business and/or economic conditions. Residual Value Risk is included in the definition of Fixed Assets, whichis the risk that the market value of the underlying assets of operating leases may fall below the anticipated residual value.

Deferred
Acquisition
Costs Risk

The risk of loss arising from the failure of the benefits associated with the acquisition of interest earning assets to arise due toimpairment, transfer, or prepayment.

SoftwareRisk

The risk of financial loss arising from the unexpected accelerated write down of capitalised software expenditure due todiminished future economic benefits caused by adverse business or economic conditions.

Goodwill
Risk

The risk of financial loss caused by the reduction in the net carrying value of acquired business resulting from lower than expected
future economic benefits due to adverse business and economic conditions.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTREGISTERED BANK DISCLOSURES
B6. RISK MANAGEMENT POLICIES (continued)
Reviews of ANZBGL New Zealand’s risk management systems
Refer to Note 15 Financial risk management for details of the Internal Audit Functions reviews of ANZBGL New Zealand’s RMF. These reviews are notconducted by a party external to ANZBGL New Zealand, the Overseas Banking Group, or the Ultimate Parent Bank.
Internal Audit Function of ANZBGL New Zealand
ANZBGL New Zealand has an Internal Audit Function, refer to Note 15 Financial risk management for details.
The nature and scope of the responsibilities of the Bank’s Audit Committee, to which Internal Audit reports, are to assist the Bank’s Board of Directors
by providing oversight and review of:• ANZBGL New Zealand's financial reporting principles and policies, controls, systems and procedures;• the effectiveness of ANZBGL New Zealand’s internal control and risk management framework;• the work and internal audit standards of Internal Audit which reports directly and solely to the Chair of the Bank’s Audit Committee;• the integrity of ANZBGL New Zealand's financial statements and the independent audit thereof, and ANZBGL New Zealand’s compliance withlegal and regulatory requirements in relation thereto;• any due diligence procedures;• prudential supervision procedures and other regulatory requirements to the extent relating to financial reporting; and• any other matters referred to it by the Bank’s Board.
The Bank’s Audit Committee is also responsible for:• the appointment, annual evaluation and oversight of the external auditor;• annual review of the independence, fitness and propriety, and qualifications of the external auditor;• compensation of the external auditor; and• where deemed appropriate, replacement of the external auditor.
In carrying out its responsibilities and duties, the Bank’s Audit Committee will aim to seek fair customer outcomes and financial market integrity in its
deliberations.
Access to parental disclosures
Disclosures made by the Ultimate Parent Bank in relation to capital adequacy requirements and risk management processes implemented by the
Ultimate Parent Bank are included in the Ultimate Parent Bank’s Annual Report and APS 330 Basel III Pillar 3 Capital Disclosures documents which canbe accessed at the website shareholder.anz.com.

92

DIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVE OFFICER'S STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive
Officer – NZ Branch believes that:•

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014; and•The Disclosure Statement is not false or misleading.

Over the year ended 30 September 2023, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branchbelieves that:

1•

The Ultimate Parent Bank has complied in all material respects with each condition of registration that applied during that period1; and•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 other business risks, and thatthose systems were being properly applied.
In accordance with the Order, Australia and New Zealand Banking Group Limited - ANZBGL New Zealand has complied in all material respects with each of its conditions of registration thatapplied during the period if RBNZ has not published any information about a breach on its website, and has not notified Australia and New Zealand Banking Group Limited - ANZBGL New
Zealand of any material breach.

Signed by the Chief Executive Officer – NZ Branch

Chris O‘Neale
Chief Executive Officer – NZ Branch
10 November 2023
Signed on behalf of all the Directors of the Ultimate Parent Bank

Antonia Watson
Responsible Person
10 November 2023
on behalf of the Directors of the Ultimate Parent Bank:
Ilana Atlas, AO
Shayne ElliottJane Halton, AO PSM
Graham Hodges
Rt Hon Sir John Key, GNZM AC
Holly Kramer
John Macfarlane
Christine O’Reilly
Paul O’Sullivan
Jeff Smith

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTASSURANCE REPORTS

INDEPENDENT AUDITOR’S REPORTS ON THE REGISTERED BANK DISCLOSURESTO THE DIRECTORS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
AUDIT REPORT ON THE REGISTERED BANK DISCLOSURES IN SECTIONS B2, B3, B5 AND B6
OPINION
We have audited the accompanying registered bank disclosures of the New Zealand business of Australia and New Zealand Banking Group
Limited (ANZBGL) and its subsidiaries (ANZBGL New Zealand) in sections B2, B3, B5 and B6 on pages 82 to 92. These comprise the information thatis required to be disclosed in accordance with schedules 4, 7, 11 and 13 of the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014 (the Order).
In our opinion, the registered bank disclosures in sections B2, B3, B5 and B6:• present fairly, in all material respects, the matters to which they relate; and• are disclosed, in all material respects, in accordance with schedules 4, 7, 11 and 13 of the Order.

BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of ANZBGL New Zealand in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Boardand the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code.

Our responsibilities under ISA’s (NZ) are further described in the auditor’s responsibilities for the audit of the registered bank disclosures in sections B2,
B3, B5 and B6 section of our report.
Our firm has also provided other services to ANZBGL New Zealand in relation to review of regulatory returns, internal controls reports, prospectus
assurance or reviews and agreed upon procedures engagements. Subject to certain restrictions, partners and employees of our firm may also deal
with ANZBGL New Zealand on normal terms within the ordinary course of trading activities of the business of ANZBGL New Zealand. These mattershave not impaired our independence as auditor of ANZBGL New Zealand. The firm has no other relationship with, or interest in, ANZBGL New Zealand.
OTHER INFORMATIONThe Directors, on behalf of ANZBGL New Zealand, are responsible for ANZBGL New Zealand’s general disclosures in section B1 (the Other Information)required to be included in ANZBGL New Zealand’s Disclosure Statement in accordance with Schedule 2 of the Order.
Our opinion on the registered bank disclosures in sections B2, B3, B5 and B6 does not cover the Other Information, and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the registered bank disclosures in sections B2, B3, B5 and B6 our responsibility is to read the Other Information and, in
doing so, consider whether the Other Information is materially inconsistent with the registered bank disclosures in sections B2, B3, B5 and B6 or our
knowledge obtained in the audit or otherwise appears materially misstated. If, based on the work we have performed, we conclude that there is amaterial misstatement of the Other Information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF THE DIRECTORS FOR THE REGISTERED BANK DISCLOSURES IN SECTIONS B1, B2, B3, B5 AND
B6The Directors, on behalf of ANZBGL New Zealand, are responsible for:• the preparation and fair presentation of the registered bank disclosures in accordance with schedules 2, 4, 7, 11 and 13 of the Order; and• implementing necessary internal control to enable the preparation of registered bank disclosures that are free from material misstatement,
whether due to fraud or error.

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ASSURANCE REPORTS

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE REGISTERED BANK DISCLOSURES IN SECTIONS B2, B3, B5
AND B6
Our objective is:••

to obtain reasonable assurance about whether the registered bank disclosures in sections B2, B3, B5 and B6, prepared in accordance withschedules 4, 7, 11 and 13 of the Order as a whole are free from material misstatement, whether due to fraud or error; andto issue an independent auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect amaterial misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of the registered bank disclosures in sections B2, B3, B5 and B6.
A further description of our responsibilities for the audit of the registered bank disclosures in sections B2, B3, B5 and B6 is located at the External
Reporting Board (the XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.

KPMG
Auckland10 November 2023

LIMITED ASSURANCE REPORT ON THE CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACYDISCLOSURES IN SECTION B4
CONCLUSION
We have reviewed the credit and market risk exposures and capital adequacy disclosures in section B4 on page 86 (the Capital Adequacy
Disclosures), which comprise the information that is required to be disclosed in accordance with schedule 9 of the Order.
Based on our limited assurance conclusion, which is not a reasonable assurance engagement or audit, nothing has come to our attention thatwould lead us to believe that the Capital Adequacy Disclosures are not, in all material respects disclosed in accordance with schedule 9 of the Order.

STANDARDS WE FOLLOWED
We conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements (New Zealand) 3000
(Revised) Assurance Engagements other than audits or reviews of historical financial information and Standard on Assurance Engagements 3100
(Revised) Assurance Engagements on Compliance. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our conclusion. In accordance with those standards we:• used our professional judgement to plan and perform the engagement to obtain limited assurance that the Capital Adequacy Disclosures are freefrom material misstatement and non-compliance, whether due to fraud or error;• considered relevant internal controls when designing our assurance procedures, however we do not express a conclusion on the effectiveness ofthese controls; and• ensured that the engagement team possess the appropriate knowledge, skills and professional competencies.
HOW TO INTERPRET LIMITED ASSURANCE AND MATERIAL MISSTATEMENT AND NON-COMPLIANCE
In a limited assurance engagement, the assurance practitioner performs procedures, primarily consisting of discussion and enquiries ofmanagement and others within the entity, as appropriate, and observation and walk-throughs, and evaluates the evidence obtained. The
procedures selected depend on our judgement, including identifying areas where the risk of material misstatement and non-compliance withschedule 9 of the Order is likely to arise.
The procedures performed in a limited assurance engagement vary in nature and timing from and are less in extent than for a reasonable assurance
engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed.
Misstatements, including omissions, within the Capital Adequacy Disclosures and non-compliance are considered material if, individually or in theaggregate, they could reasonably be expected to influence the relevant decisions of the intended users taken on the basis of the Capital Adequacy
Disclosures.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZBGL NEW ZEALAND 2023 DISCLOSURE STATEMENTASSURANCE REPORTS
INHERENT LIMITATIONS
Because of the inherent limitations of an assurance engagement, together with the internal control structure it is possible that fraud, error or noncompliance with compliance requirements may occur and not be detected.
USE OF THIS INDEPENDENT LIMITED ASSURANCE REPORTThis independent limited assurance report is made solely to ANZBGL’s directors. Our assurance work has been undertaken so that we might state to
the directors those matters we are required to state to them in the assurance report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume any responsibility to anyone other than the directors for our assurance work, for this independent limited assurance
report, and/or for any of the conclusions we have reached.
DIRECTOR’S RESPONSIBILITY FOR THE CAPITAL ADEQUACY DISCLOSURESThe Directors are responsible for the preparation of the Capital Adequacy Disclosures that are required to be disclosed in accordance withschedule 9 of the Order, which the Directors have determined to meet the needs of the recipients. This responsibility includes such internal control
as the Directors determine is necessary to enable the preparation of the Capital Adequacy Disclosures that are free from material misstatement andnon-compliance whether due to fraud or error.
OUR RESPONSIBILITY FOR THE CAPITAL ADEQUACY DISCLOSURESOur responsibility is to express a conclusion on whether anything has come to our attention that the Capital Adequacy Disclosures have not, in allmaterial respects, been disclosed in accordance with schedule 9 of the Order for the six-month period ended 30 September 2023.
OUR INDEPENDENCE AND QUALITY CONTROL
We have complied with the independence and other ethical requirements of Professional and Ethical Standard 1 International Code of Ethics for
Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and AssuranceStandards Board, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality andprofessional behaviour.
The firm applies Professional and Ethical Standard 3 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements and accordingly maintains a comprehensive system of quality control including documented policies
and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Our firm has also provided other services to ANZBGL New Zealand in relation to review of regulatory returns, internal controls reports, prospectus
assurance, agreed upon procedures and other assurance engagements. Subject to certain restrictions, partners and employees of our firm may also
deal with ANZBGL New Zealand on normal terms within the ordinary course of trading activities of the business of ANZBGL New Zealand. These
matters have not impaired our independence as assurance providers of ANZBGL New Zealand for this engagement. The firm has no other relationshipwith, or interest in, ANZBGL New Zealand.

KPMG
Auckland10 November 2023

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