Australia and New Zealand Banking Group Limited- New Zealand Branch
Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2013 | NUMBER 21 ISSUED FEBRUARY 2014

Australia and New Zealand Banking Group Limited - New Zealand Branch

Disclosure Statement
For the three months ended 31 December 2013

Contents
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3Statement of Changes in Equity

4

Balance Sheet

5

Condensed Cash Flow Statement

6

Notes to the Financial Statements

7

Directors' and New Zealand Chief Executive Officer's
Statement

15

Glossary of Terms
In this Disclosure Statement unless the context
otherwise requires:(a) “Bank” means ANZ Bank New Zealand Limited;(b) “Banking Group” means the Bank and all its
controlled entities;(c) “Immediate Parent Company” means ANZ Funds Pty
Limited, which is the immediate parent company of
ANZ Holdings (New Zealand) Limited;(d) “Ultimate Parent Bank” means Australia and New
Zealand Banking Group Limited;(e) “Overseas Banking Group” means the worldwide
operations of Australia and New Zealand Banking
Group Limited including its controlled entities;(f) “New Zealand business” means all business,
operations, or undertakings conducted in or fromNew Zealand identified and treated as if it wereconducted by a company formed and registered in
New Zealand;(g) “NZ Branch” means the New Zealand business of
the Ultimate Parent Bank;(h) “ANZ New Zealand” means the New Zealandbusiness of the Overseas Banking Group;(i) “Registered Office” is Level 8, 1 Victoria Street,
Wellington, New Zealand, which is also ANZ New
Zealand’s address for service;(j) “RBNZ” means the Reserve Bank of New Zealand;(k) “APRA” means the Australian Prudential Regulation
Authority;(l) “the Order” means the Registered Bank DisclosureStatements (Overseas Incorporated Registered
Banks) Order (No 2) 2013; and(m) Any term or expression which is defined in, or in themanner prescribed by, the Order shall have themeaning given in or prescribed by the Order.

Australia and New Zealand Banking Group Limited - New Zealand Branch

2

General Disclosures
This Disclosure Statement
accordance with the Order.

has

been

issuedin

Financial Statements of the Ultimate
Parent Bank and Overseas Banking
Group

The Ultimate Parent Bank has three credit ratings, which
are applicable to its long-term senior unsecured
obligations.

Copies of the most recent publicly available financial
statements of the Ultimate Parent Bank and Overseas
Banking Group will be provided immediately, free ofcharge, to any person requesting a copy where therequest is made at the Registered Office. The mostrecent publicly available financial statements for the
Ultimate Parent Bank and Overseas Banking Group canalso be accessed at the internet address anz.com.

Credit Rating Information

The Ultimate Parent Bank’s credit ratings are:Rating Agency
Standard & Poor’s

Current Credit
Rating
Qualification
AAOutlook Stable

Moody’s Investors Service

Aa2

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Directorate

Guarantors

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

No obligations of the NZ Branch are guaranteed as at 27
February 2014.

David Gonski became a Director of the Ultimate Parent
Bank on 27 February 2014.

ANZNZ Covered Bond Trust

Auditor

Certain debt securities (“Covered Bonds”) issued by the
Bank’s wholly owned subsidiary, ANZ New Zealand(Int’l) Limited, are guaranteed by ANZNZ Covered Bond
Trust Limited (the “Covered Bond Guarantor”), solely in
its capacity as trustee of ANZNZ Covered Bond Trust.
The Covered Bond Guarantor has guaranteed thepayment of interest and principal of Covered Bonds witha carrying value as at 31 December 2013 of $4,041
million, pursuant to a guarantee which is secured over apool of assets. The Covered Bond Guarantor’s addressfor service is Level 35, 48 Shortland Street, Auckland,
New Zealand. The Covered Bond Guarantor is not amember of the Banking Group and has no credit ratings
applicable to its long term senior unsecured obligations
payable in New Zealand dollars. The Covered Bonds
have been assigned a long term rating of Aaa and AAA
by Moody’s Investors Service and Fitch Ratings
respectively. Details of the pool of assets that secure
this guarantee are provided in Note 7.

ANZ New Zealand’s auditor
Accountants,
Level 9,10
Wellington, New Zealand.

is KPMG, Chartered
Customhouse Quay,

3

Australia and New Zealand Banking Group Limited - New Zealand Branch

Income Statement
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

Interest income

1,630

1,639

6,461

Interest expense

942

984

3,820

Net interest income

688

655

2,641

Net trading gains

64

38

163

Net funds management and insurance income

68

66

234

75

85

391

1

3

7

Operating income

896

847

3,436

Operating expenses

372

398

1,513

$ millions

Note

Other operating income2

Share of associates' profit

Profit before provision for credit impairment and income tax

Audited

524

449

1,923

(19)

44

66

Profit before income tax

543

405

1,857

Income tax expense

150

109

488

Profit after income tax

393

296

1,369

AuditedProvision for credit impairment

5

Statement of Comprehensive Income
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

393

296

1,369

Actuarial gain on defined benefit schemes

-

-

71

Income tax credit / (expense) relating to items not reclassified

-

-

(20)

Total items that will not be reclassified to profit or loss

-

-

51

Unrealised losses recognised directly in equity

(19)

(11)

(138)

Realised gains transferred to income statement

(11)

(6)

(21)

8

5

45

Total items that may be reclassified subsequently to profit or loss

(22)

(12)

(114)

Total comprehensive income for the period

371

284

1,306

$ millions

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

Items that may be reclassified subsequently to profit or loss

Income tax credit relating to items that may be reclassified

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

4Australia and New Zealand Banking Group Limited - New Zealand BranchStatement of Changes in Equity$ millions

As at 1 October 2012 (Audited)
Restatement (Note 1)
As at 1 October 2012 (Restated)

Sharecapital andhead officeaccount

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

6,424

(3)

141

2,615

9,177

-

-

-

(21)

(21)

6,424

(3)

141

2,594

9,156

Profit after income tax

-

-

-

296

296

Unrealised gains / (losses) recognised directly in equity

-

1

(12)

-

(11)

Realised gains transferred to the income statement

-

-

(6)

-

(6)

Income tax credit on items recognised directly in equity

-

-

5

-

5

Total comprehensive income for the period

-

1

(13)

296

284

As at 31 December 2012 (Unaudited)

6,424

(2)

128

2,890

9,440

As at 1 October 2012 (Audited)

6,424

(3)

141

2,615

9,177

-

-

-

(21)

(21)

6,424

(3)

141

2,594

9,156

Restatement (Note 1)
As at 1 October 2012 (Restated)
Profit after income tax

-

-

-

1,369

1,369

Unrealised gains / (losses) recognised directly in equity

-

1

(139)

-

(138)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes
Income tax credit / (expense) on items recognised directlyin equity

-

-

-

71

71

-

-

45

(20)

25

Total comprehensive income for the period

-

1

(115)

1,420

1,306

Ordinary dividend paid

-

-

-

(720)

(720)

6,424

(2)

26

3,294

9,742

As at 30 September 2013 (Audited)
Profit after income tax

-

-

-

393

393

Unrealised gains / (losses) recognised directly in equity

-

3

(22)

-

(19)

Realised gains transferred to the income statement
Income tax credit / (expense) on items recognised directlyin equity

-

-

(11)

-

(11)

-

(1)

9

-

8

Total comprehensive income for the period

-

2

(24)

393

371

As at 31 December 2013 (Unaudited)

6,424

-

2

3,687

10,113The notes to the financial statements form part of and should be read in conjunction with these financial statements

5Australia and New Zealand Banking Group Limited - New Zealand Branch

Balance Sheet
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

AssetsLiquid assets

3,249

3,148

2,496

Due from other financial institutions

1,699

3,230

1,711

11,498

11,638

10,3207,670

10,764

9,508

-

7

1

1,115

47

782

$ millions

Note

Trading securities
Derivative financial instruments
Current tax assets
Available-for-sale assets
Net loans and advances

101,192

96,82099,765Investments backing insurance policy liabilities

180

154

172

Insurance policy assets

408

416

399

Investments in associates

89

98

98

614

598

735

4

Other assets
Deferred tax assets

20

92

42

377

331

376

3,446

3,503

3,448

Total assets

131,557

130,846

129,853

Interest earning and discount bearing assets

118,673

114,342

115,297

11,041

11,0209,871

81,07377,08077,696Premises and equipment
Goodwill and other intangible assets

Liabilities
Due to other financial institutions
Deposits and other borrowings

8

Due to Immediate Parent Company

1,766

1,766

1,766

Derivative financial instruments

9,017

11,649

11,208

Payables and other liabilities

1,498

1,531

1,492

28

-

-

218

308

229

15,381

16,882

16,407

1,422

1,170

1,442

121,444

121,406

120,111

10,113

9,440

9,742

6,424

6,424

6,424

2

126

24

3,687

2,890

3,294

Total equity and head office account

10,113

9,440

9,742

Interest and discount bearing liabilities

104,518

102,035

101,470

Current tax liabilities
Provisions
Bonds and notes
Loan capital
Total liabilities (excluding head office account)
Net assets (excluding head office account)Represented by:
Share capital and head office accountReserves
Retained earnings

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

6Australia and New Zealand Banking Group Limited - New Zealand Branch

Condensed Cash Flow Statement
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

Interest received

1,601

1,621

6,432

Interest paid

(959)

(993)

(3,859)$ millions

AuditedCash flows from operating activities

Other cash inflows provided by operating activities
Other cash outflows used in operating activities
Cash flows from operating profits before changes in operating assets and liabilities

225

231

852

(519)

(556)

(1,932)

348

303

1,493

Net changes in operating assets and liabilities

2,104

3,311

1,141

Net cash flows provided by operating activities

2,452

3,614

2,634

Cash flows from investing activities
Cash inflows provided by investing activities

10

1

69

Cash outflows used in investing activities

(21)

(30)

(142)

Net cash flows used in investing activities

(11)

(29)

(73)

Cash flows from financing activities
Cash inflows provided by financing activities

1,179

-

2,479

Cash outflows used in financing activities(2,582)(1,847)(5,331)

Net cash flows used in financing activities(1,403)(1,847)(2,852)

Net increase / (decrease) in cash and cash equivalents

1,038

1,738

(291)

Cash and cash equivalents at beginning of the period

3,002

3,293

3,293

Cash and cash equivalents at end of the period

4,040

5,031

3,002

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for ANZ New
Zealand for the three months ended 31 December
2013. They have been prepared in accordance withNew Zealand Generally Accepted Accounting Practice
as appropriate for profit oriented entities, therequirements of NZ IAS 34 Interim Financial
Reporting, IAS 34 Interim Financial Reporting and theOrder, and should be read in conjunction with ANZ
New Zealand’s financial statements for the year
ended 30 September 2013.

NZ IAS 19 has been applied retrospectively, in
accordance with transitional provisions, with the net
impact of initial application recognised in retained
earnings as at 30 September 2012 and shown in thestatement of changes in equity. The balances of
payables and other liabilities and the associateddeferred tax asset have been restated for subsequent
periods.
Amendments to NZ IAS 34 require certain fair value
disclosures which have been included in Note 13,
however comparative information is not required in
the first year of application.
(iv) Presentation currency and rounding(ii) Basis of measurement
These financial statements have been prepared on agoing concern basis in accordance with historical cost
concepts except that the following assets andliabilities are stated at their fair value:
•

•
•
•

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

The amounts contained in the financial statements
are presented in millions of New Zealand dollars,
unless otherwise stated.
(v) Comparatives
In addition to restatements resulting from the initial
application of NZ IAS 19, certain amounts in thecomparative information have been reclassified toensureconsistency
withthecurrent
year’spresentation.
(vi) Principles of consolidation
The consolidated financial statements of ANZ New
Zealand comprise the financial statements of the NZ
Branch and all the New Zealand businesses of all thesubsidiaries of the Ultimate Parent Bank (thoseentities where it is determined that the Ultimate
Parent Bank has capacity to control).

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

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

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

2.

Other Operating Income
Other operating income includes a fair value loss of$28 million (31/12/2012 $23 million; 30/09/2013 $55
million) on hedging activities and the revaluation offinancial liabilities designated at fair value. Other
operating income excluding these fair value
adjustments is $103 million (31/12/2012 $108
million; 30/09/2013 $446 million).

8Australia and New Zealand Banking Group Limited - New Zealand Branch

Notes to the Financial Statements
3.

(typically with annual revenues of less than $5 million).
Commercial & Agri customers consist of primarily
privately owned medium to large enterprises. ANZ New
Zealand's relationship with these businesses ranges
from simple banking requirements with revenue from
deposit and transactional facilities, and cash flow
lending, to more complex funding arrangements withrevenue sourced from a wider range of products. UDC isprincipally involved in the financing and leasing of plant,
vehicles and equipment, mainly for small and medium
sized businesses, as well as investment products.

Segmental Analysis

For segment reporting purposes, ANZ New Zealand isorganised into four major business segments - Retail,Commercial, Wealth and Institutional. Centralised backoffice 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.
Segmental reporting has been updated to reflect minorchanges to ANZ New Zealand’s structure. Comparative
data has been adjusted to be consistent with the current
period’s segment definitions.

WealthWealth includes private banking and investment services
provided to high net worth individuals, the ANZ wealthmanagement and OnePath insurance businesses, andother investment products.

RetailRetail provides products and services to personalcustomers via the branch network, mortgage specialists,
the contact centre and a variety of self service channels(internet banking, phone banking, ATMs, website andmobile phone banking). Core products include current
and savings accounts, unsecured lending (credit cards,
personal loans and overdrafts) and home loans securedby mortgages over property.
Retail distributes
insurance and investment products on behalf of the
Wealth segment.

Institutional
Institutional provides financial services through anumber of specialised units to large multi-banked
corporations, often global, who require sophisticatedproduct and risk management solutions. Those financial
services include loan structuring, foreign exchange,wholesale money market services and transaction
banking.

Commercial

Other

Commercial provides services to Business Banking,Commercial & Agri, and UDC customers.
Business
Banking services are offered to small enterprises

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

Business segment analysis1$ millions

RetailCommercial

WealthInstitutional

Other 2

Total

Unaudited 3 months to 31/12/2013

External operating income

363

709

23

211

(410)

896

Intersegment operating income

(38)

(343)

38

(36)

379

-

Total operating income

325

366

61

175

(31)

896

Profit before income tax

162

256

27

134

(36)

543

Unaudited 3 months to 31/12/2012

External operating income

353

686

17

218

(427)

847

Intersegment operating income

(56)

(328)

37

(62)

409

-

Total operating income

297

358

54

156

(18)

847

Profit before income tax

119

206

20

98

(38)

405

Audited year to 30/09/2013

External operating income

1,412

2,757

45

802

(1,580)3,436Intersegment operating income(175)(1,313)

148

(194)

1,534

-

Total operating income

1,237

1,444

193

608

(46)

3,436

Profit before income tax

528

968

59

389

(87)

1,857

1
2

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

9Australia and New Zealand Banking Group Limited - New Zealand Branch

Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Overdrafts

1,496

1,789

1,841

Credit card outstandings

1,541

1,455

1,458

Term loans - housing

59,82656,191

58,849Term loans - non-housing

38,51937,83537,832Finance lease receivables

868

816

849

102,250

98,086

100,829(798)(1,082)

(849)

(287)

(263)

(278)

Fair value hedge adjustment

(81)

19

(35)

Deferred fee revenue and expenses

(67)

(62)

(64)

Capitalised brokerage/mortgage origination fees

175

122

162

101,192

96,82099,765Retailmortgages

Other retail
exposures

Non retail
exposures

Total

Collective provision

113

110

306

529

Individual provision

75

22

172

269

Total provision for credit impairment

188

132

478

798

Collective provision credit

(2)

(7)

(18)

(27)

Individual provision charge / (credit)

(6)

24

(10)

8

Total charge / (credit) in income statement

(8)

17

(28)

(19)

Collective provision

128

118

375

621

Individual provision

114

31

316

461

Total provision for credit impairment

242

149

691

1,082

Collective provision charge / (credit)

8

(7)

-

1

Individual provision charge

5

11

27

43

Total charge in income statement

13

4

27

44

Collective provision

115

117

324

556

Individual provision

83

22

188

293

Total provision for credit impairment

198

139

512

849

$ millions

Note

Gross loans and advances
Provision for credit impairment

5

Unearned finance income

Total net loans and advances

5.

Provision for Credit Impairment$ millions
Unaudited 31/12/2013

Unaudited 31/12/2012

Audited 30/09/2013

Collective provision credit

(5)

(8)

(51)

(64)

Individual provision charge

15

67

48

130

Total charge / (credit) in income statement

10

59

(3)

66

10

Australia and New Zealand Banking Group Limited - New Zealand Branch

Notes to the Financial Statements
6.

Impaired and Past Due Assets
Retailmortgages

Other retail
exposures

Non retail
exposures

Total

Total impaired assets

195

49

599

843

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

108

37

65

210

Total impaired assets

336

48

923

1,307

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

125

38

64

227

Total impaired assets

214

49

666

929

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

108

40

76

224

$ millions
Unaudited 31/12/2013

Unaudited 31/12/2012

Audited 30/09/2013

7. Financial Assets Pledged as Collateral
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Cash collateral given on derivative financial instruments

623

1,076

1,002

Trading securities encumbered through repurchase agreements

748

787

108

Residential mortgages pledged as security for covered bonds

6,364

4,896

5,857

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

2,266

2,139

2,162

10,001

8,898

9,129

$ millions

Total financial assets pledged as collateral

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

8.

Deposits and Other Borrowings$ millions

Note

Certificates of deposit

Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

1,594

2,369

2,364

Term deposits

34,25433,54533,862

Demand deposits bearing interest

30,94827,62929,687

6,135

5,737

5,526

1,575

1,457

1,492

6,567

6,343

4,765

81,07377,08077,696

Deposits not bearing interest
Secured debenture stock
Commercial paper
Total deposits and other borrowings

9.

7

Related Party Transactions$ millions

Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Total due from related parties

1,647

2,480

2,325

Total due to related parties

16,22916,281

16,247

11

Australia and New Zealand Banking Group Limited - New Zealand Branch

Notes to the Financial Statements
10. Capital Adequacy
Adoption of Basel III capital framework
Effective 1 January 2013, APRA has adopted the majority of Basel III capital reforms in Australia. The Basel III reforms
include: increased capital deductions from common equity tier one capital, an increase in capitalisation rates (including
prescribed minimum capital buffers, fully effective 1 January 2016), tighter requirements around new tier one and tier two
securities and transitional arrangements for existing tier one and tier two securities that do not conform to the new
regulations. Other changes include capital requirements for counterparty credit risk and an increase in the asset value
correlation with respect to exposures to large and unregulated financial institutions.
Ultimate Parent Bank
(Extended Licensed Entity)

Overseas Banking Group
31/12/2013

31/12/2012

30/09/2013

30/09/2013

30/09/2012

Basel III

Basel II

Basel III

Basel III

Basel II

Common equity tier one capital

7.9%

n/a

8.5%

8.5%

n/a

Tier one capital

9.6%

10.9%

10.4%

10.6%

11.4%

11.2%

12.1%

12.2%

12.5%

12.7%

Total capital

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel Accord, APRA has
accredited the Overseas Banking Group to use the Advanced Internal Ratings Based methodology for calculation of credit
risk weighted assets and the Advanced Measurement Approach for the operational risk weighted asset equivalent.
Under prudential regulations, the Overseas Banking Group is required to maintain Prudential Capital Requirements("PCRs"), which are at least equal to that specified under Basel III (previously Basel II), as determined by APRA. The
Overseas Banking Group exceeded the PCRs set by APRA as at 31 December 2013 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 December 2013. The
Overseas Banking Group’s Pillar 3 disclosure document for the quarter ended 31 December 2013, in accordance with APS
330: Public Disclosure of Prudential Information, discloses capital adequacy ratios and other prudential information. This
document can be accessed at the website anz.com.
Market risk
ANZ New Zealand’s aggregate market risk exposures below have been calculated in accordance with the RBNZ document
BS2B.
Unaudited 31/12/2013$ millions

Interest rate risk
Foreign currency risk
Equity risk

Implied risk
weighted
exposure

Notional
capital charge

5,243

419

11

1

2

-

5,256

420

Residential mortgages by loan-to-valuation ratio (“LVR”)
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by ANZ
New Zealand's valuation of the security property at origination of the exposure. Off balance sheet exposures include
undrawn and partially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal
offers for housing lending which have been accepted by the customer.
Unaudited 31/12/2013

On-balancesheet

Off-balance
sheet

Total

0% - 59%

20,126

3,202

23,32860% - 69%

9,680

830

10,51070% - 79%

15,005

1,067

16,072Less than 80%$ millions

LVR range

44,811

5,099

49,91080% - 89%

8,530

453

8,983

Over 90%

4,536

308

4,844

57,877

5,860

63,737Total

12Australia and New Zealand Banking Group Limited - New Zealand Branch

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

31/12/2013

Balances with central banks

1,703

Securities purchased under agreement to resell

236

Certificates of deposit

180

Government, local body stock and bonds

7,076

Government treasury bills

373

Other bonds

5,091

Total liquidity portfolio

14,65912. Concentrations of Credit Risk to Individual Counterparties
ANZ New Zealand measures its concentration of credit risk in respect to bank counterparties on the basis of approved
exposures and in respect to non-bank counterparties on the basis of limits.
For the three months ended 31 December 2013 there were no individual counterparties (excluding connected parties,
governments and banks with long term credit ratings of A- or above) where ANZ New Zealand’s period end or peak endof-day credit exposure equalled or exceeded 10% of the Overseas Banking Group’s equity (as at the end of the period).
This credit exposure information does not include exposures to counterparties if they are booked outside New Zealand.

13. Fair Value of Financial Assets and Financial Liabilities
Comparison of fair values and carrying amounts
The following table shows the fair values and carrying amounts for financial assets and financial liabilities that are notcarried at fair value and the carrying amount is not a reasonable approximation of fair value.

Unaudited$ millions

31/12/2013
Carrying amount

Fair value

101,192

101,220

Due to other financial institutions

11,041

11,159Deposits and other borrowings

81,07381,082

Bonds and notes

15,381

15,584

1,422

1,341

AssetsNet loans and advances
Liabilities

Loan capital

Valuation hierarchy for financial instruments held at fair value
ANZ New Zealand uses a valuation method within the following hierarchy to determine the carrying amount of assets andliabilities held at fair value, all of which are recurring fair value measurements:“Level 1” - Quoted market price
Where an active market exists fair value is based on quoted market prices for identical financial instruments. The quoted
market price is not adjusted for any potential impact that may be attributed to a large holding of the financial instrument.
“Level 2” - Valuation technique using observable inputs
In the event that there is no quoted market price for the instruments, fair values are based on present value estimates orother market accepted valuation techniques which include data, including interest and exchange rates, from observable
markets wherever possible.
“Level 3” - Valuation technique with significant non observable inputs
ANZ New Zealand holds units in an unlisted fund which does not trade in an active market. The fair value of these units isbased on the estimated cashflows from the realisation of the underlying assets.

13

Australia and New Zealand Banking Group Limited - New Zealand Branch

Notes to the Financial Statements
Valuation hierarchy$millionsLevel 1

Level 2

Level 3

Total

11,386

112-

11,498

12

7,658

-

7,670

1,113

-

2

1,115

125

55

-

180

12,6367,825

220,463

Unaudited 31/12/2013

Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing insurance policy liabilities
Total financial assets held at fair value
Due to other financial institutions

41

-

-

41

Deposits and other borrowings

-

6,567

-

6,567

Derivative financial instruments

4

9,013

-

9,017

Payables and other liabilities

160

-

-

160

Total financial liabilities held at fair value

205

15,580-15,785

14. Insurance business
ANZ New Zealand conducts insurance business through its subsidiaries OnePath Life (NZ) Limited and OnePath Insurance
Services (NZ) Limited. The aggregate amount of insurance business in this group comprises assets totalling $796 million(31/12/2012: $785 million; 30/09/2013 $779 million), which is 0.6% (31/12/2012: 0.6%; 30/09/2013 0.6%) of the total
consolidated assets of ANZ New Zealand.

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

Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Credit related commitments
Commitments with certain drawdown due within one year

724

856

817

Commitments to provide financial services

25,064

24,837

24,250Total credit related commitments

25,78825,69325,067

982

696

997

40

50

32

1,179

888

1,059

97

136

113

2,298

1,770

2,201

Guarantees and contingent liabilities
Financial guarantees
Standby letters of credit
Transaction related contingent items
Trade related contingent liabilities
Total guarantees and contingent liabilities

ANZ New Zealand guarantees the performance of customers by issuing standby letters of credit and guarantees to third
parties, including its Ultimate Parent Bank. To reflect the risk associated with these transactions, they are subjected tothe same credit origination, portfolio management and collateral requirements as for customers that apply for loans. The
contract amount represents the maximum potential amount that could be lost 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.
Other contingent liabilities
In December 2013, the Commerce Commission advised the Bank that it intends to issue proceedings against the Bank
(and two other banks) under the Fair Trading Act 1986 in relation to the marketing and sale of interest rate swaps to rural
customers. The Commission has said that it aims to file proceedings in March 2014. The potential outcome of any
proceedings which may be issued cannot be determined with any certainty at this stage.
In March 2013, litigation funder Litigation Lending Services (NZ) Limited announced plans for a representative action
against banks in New Zealand for certain fees charged to New Zealand customers over the past six years. Proceedings
were filed against the Bank in June 2013. The potential outcome of this litigation cannot be determined with any certainty
at this stage.
ANZ New Zealand has other contingent liabilities in respect of actual and possible claims and court proceedings. An
assessment of ANZ New Zealand’s likely loss in respect of these matters has been made on a case-by-case basis andprovision made where deemed necessary.
Contingent asset
In December 2013, the Bank reached a conditional agreement with insurers to settle its claim in relation to the Bank’s
former involvement in the ING Diversified Yield Fund and the ING Regular Income Fund for payment of AUD85 million,
which would be subject to taxation.

Australia and New Zealand Banking Group Limited - New Zealand Branch

14

Notes to the Financial Statements
16. Additional Disclosures
NZ Branch Funding$ millions

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

Overseas Banking Group Profitability and Size
AUD millions

Unaudited

31/12/2013

26
Audited30/09/2013

Net profit after tax for the year1

6,282

Net profit after tax for the year as a percentage of average total assets

0.93%

Total assets
Percentage change in total assets over the preceding year
1702,991
9.5%

Net profit after tax for the year includes $10 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality
AUD millions

Audited30/09/2013

Gross impaired assets

4,264

Gross impaired assets as a percentage of total assets

0.61%

Total individually assessed provisions for impairment

1,467

Individually assessed provisions for impairment as a percentage of gross impaired assets

34.4%

Collective provision for credit impairment

2,887

Australia and New Zealand Banking Group Limited - New Zealand Branch

15

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 Bankand the Chief Executive Officer – NZ Branch believes that:(i)

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements(Overseas Incorporated Registered Banks) Order (No 2) 2013; and(ii)

The Disclosure Statement is not false or misleading.

Over the three months ended 31 December 2013, after due enquiry, each Director of the Ultimate Parent Bank and theChief Executive Officer – NZ Branch believes that:(i)

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

The NZ Branch 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 that those systems were being properly applied.

This Disclosure Statement is dated 27 February 2014, and has been signed by the Chairman of the Ultimate
Parent Bank, on behalf of all Directors, and by the Chief Executive Officer – NZ Branch.

John MorschelChairman,on behalf of the Directors:
Paula Dwyer
David Gonski, AC
Peter Hay
Lee Hsien Yang
Graeme Liebelt
Ian Macfarlane, AC
Michael Smith, OBE
Alison Watkins

Anthony Bradshaw
Chief Executive Officer – NZ Branch