ANZ National Bank Limited
General Short Form Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2010 | NUMBER 60 ISSUED FEBRUARY 2011

ANZ National Bank Limited

Glossary of Terms
This General Short Form Disclosure Statement has been
issued in accordance with the Registered Bank DisclosureStatement (Off-Quarter – New Zealand Incorporated
Registered Banks) Order 2008 (“the Order”).

For the three months ended 31 December 2010

Contents
General Disclosures
Income Statement and Statementof Comprehensive Income
Statement of Changes in Equity
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
Conditions of Registration
Directors’ Statement
Auditors’ Report

2
5
6
7
8
9
29
32
33

In this General Short Form Disclosure Statement unless thecontext otherwise requires:a) “Bank” means ANZ National Bank Limited;b) “Banking Group” means ANZ National Bank and all its
controlled entities;c) “Immediate Parent Company” means ANZ Holdings(New Zealand) Limited;d) “NZ Branch” means the New Zealand branch office ofAustralia and New Zealand Banking Group Limited;e) “ANZ New Zealand” means the combined New Zealandoperations of Australia and New Zealand Banking Group
Limited;f ) “Ultimate Parent Bank” means Australia and New
Zealand Banking Group Limited;g) “Overseas Banking Group” means the worldwide
operations of Australia and New Zealand Banking Group
Limited including its controlled entities;h) “RBNZ” means the Reserve Bank of New Zealand;i) “APRA” means the Australian Prudential Regulation
Authority; andj) Any term or expression which is defined in, or in themanner prescribed by, the Order shall have the meaning
given in or prescribed by the Order.

1

General Short Form
Disclosure Statement

ANZ National Bank Limited

General Disclosures

Material Financial Support

General Matters

In accordance with the requirements issued by APRA
pursuant to its Prudential Standards, the Ultimate Parent
Bank may not provide material financial support to the Bank
contrary to the following:

The address for service for the Bank is Level 6, 1 Victoria
Street, Wellington, New Zealand. The Bank was incorporated
under the Companies Act 1955 by virtue of the ANZ Banking
Group (New Zealand) Act 1979 on 23 October 1979, and was
reregistered under the Companies Act 1993 on 13 June 1997.
The Bank is wholly owned by its immediate parent company
and ultimately by the Ultimate Parent Bank. The Immediate
Parent Company of the Bank is incorporated in New Zealandand owned by ANZ Funds Pty Limited and the Ultimate
Parent Bank (both incorporated in Australia). The address forservice for the Ultimate Parent Bank is ANZ Centre
Melbourne, Level 9, 833 Collins Street, Docklands, Victoria
3008, Australia.
The Immediate Parent Company has the power under the
Bank’s Constitution to appoint any person as a Director of
the Bank either to fill a casual vacancy or as an additional
Director or to remove any person from the office of Director,
from time to time by giving written notice to the Bank. No
appointment of a new Director may occur unless the RBNZ
confirms that it does not object to the appointment.
On 30 November 2009, the Banking Group purchased
ING Groep’s 51% interest in ING (NZ) Holdings Limited(“ING NZ”), which was the holding company for the
ANZ-ING wealth management and life insurance joint
venture in New Zealand. As a result of the change inownership, the name of these businesses was changed to
OnePath in November 2010.

Nature of Business
The Banking Group provides a broad range of banking andfinancial products and services to retail, small business,rural, commercial and institutional clients.

•

•

•

•

•

the Ultimate Parent Bank should not undertake any
third party dealings with the prime purpose of
supporting the business of the Bank;
the Ultimate Parent Bank should not hold unlimited
exposures (should be limited as to specified time andamount) in the Bank (e.g. not provide a generalguarantee covering any of the Bank’s obligations);
the Ultimate Parent Bank should not enter into crossdefault clauses whereby a default by the Bank on an
obligation (whether financial or otherwise) is deemed
to trigger a default of the Ultimate Parent Bank in
its obligations;
the Board of the Ultimate Parent Bank in determining
limits on acceptable levels of exposure to the Bank
should have regard to:• the level of exposure that would be approved tothird parties of broadly equivalent credit status. In
this regard, prior consultation (and in some cases
approval) is required before entering exceptionallylarge exposures;• the impact on the Ultimate Parent Bank’s capital andliquidity position and its ability to continue
operating in the event of a failure by the Bank; andthe level of exposure to the Bank not exceeding:• 50% on an individual exposure basis; and• 150% in aggregate (being exposures to all similar
regulated entities related to the Ultimate Parent Bank)of the Ultimate Parent Bank’s capital base.

Additionally, the Ultimate Parent Bank may not provide
material financial support in breach of the Australian
Banking Act (1959). This requires APRA to exercise its powers
and functions for the protection of a bank’s depositors andin the event of a bank becoming unable to meet its
obligations or suspending payment, the assets of the bankin Australia shall be available to meet that bank’s deposit
liabilities in Australia in priority to all other liabilities ofthe bank.
The Ultimate Parent Bank has not provided material
financial support to the Bank contrary to any of the above
requirements.

ANZ National Bank Limited

Other than disclosed in the General Short Form DisclosureStatement, there are no pending proceedings or arbitration
concerning any member of the Banking Group that
may have a material adverse effect on the Bank or the
Banking Group as at the date of the General Short Form
Disclosure Statement.

The following table describes the credit rating grades available:
Standard& Poor's

Moody's
Investors
Service

Fitch
Ratings

The following grades display investment grade characteristics:
AAA

Aaa

AAA

Further details on pending proceedings or arbitration are
set out in Note 21.

Ability to repay principal
and interest is extremely
strong. This is the highest
investment category.

Other Material Matters

Very strong ability to repay
principal and interest.

AA

Aa

AA

There are no matters relating to the business or affairs of the
Bank and the Banking Group which are not contained
elsewhere in the General Short Form Disclosure Statement
which would, if disclosed, materially adversely affect thedecision of a person to subscribe for debt securities of which
the Bank or any member of the Banking Group is the issuer.

Strong ability to repay
principal and interest
although somewhat
susceptible to adversechanges in economic,
business or financial
conditions.

A

A

A

Credit Rating Information

Adequate ability to repay
principal and interest.
More vulnerable toadverse changes.

BBB

Baa

BBB

Credit ratings are assigned to sovereigns and businesses by
the international credit rating agencies. Credit ratings
provide investors with an indication of the credit-worthinessof an entity in which they are considering investing. There
are three major internationally recognised credit rating
agencies: Standard & Poor’s, Moody’s Investors Service andFitch Ratings.
As at 18 February 2011 the Bank has three credit ratings,
which are applicable to its long-term senior unsecured
obligations which are payable in New Zealand in
New Zealand dollars. On 16 February 2011 Moody’s placed
the Bank’s Aa2 long-term debt and deposit ratings onreview for possible downgrade. This followed a similaraction on the Ultimate Parent Bank and the other major
Australian Banks. On 20 May 2010 Fitch changed the outlook
on the Bank from Stable to Positive. During the two years
ended 31 December 2010 there were no other changes tothe Bank’s credit ratings or qualifications.
The Bank’s Credit Ratings are:Rating Agency

Current
Credit Rating

Qualification

Standard & Poor’s

AA

Outlook Stable

Moody’s
Investors Service

Aa2

Review for Possible
Downgrade

Fitch Ratings

AA-

Outlook Positive

The following grades have predominantly speculative
characteristics:
Significant uncertainties
exist which could affect thepayment of principal andinterest on a timely basis.

BB

Ba

BB

Greater vulnerability andtherefore greater likelihoodof default.

B

B

B

Likelihood of default now
considered high. Timely
repayment of principal
and interest is dependent
on favourable financial
conditions.

CCC

Caa

CCC

Highest risk of default.

CC to CCa to CCC to C

Obligations currently
in default.

D-

RD & D

Credit ratings from Standard & Poor’s and 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 the rating category.

2–3

Pending Proceedings or Arbitration

ANZ National Bank Limited

Guarantors
As at the date of this General Short Form DisclosureStatement the only material obligations of the Bank that are
guaranteed are debt securities for which the Crown has
issued a Guarantee Eligibility Certificate under the
New Zealand Wholesale Funding Guarantee Facility(“Crown Wholesale Guarantee”), copies of which areavailable on the Treasury website treasury.govt.nz.

Crown Wholesale Guarantee
The Crown Wholesale Guarantee was provided under the
Crown Wholesale Funding Guarantee Deed entered into by
the Crown and the Bank on 23 December 2008 andsupplemented on 19 February 2009 (“Wholesale Deed”).
The Government closed the Crown Wholesale Guarantee to
new debt securities on 30 April 2010. The closure did notaffect debt securities previously issued with the benefit of
the Crown Wholesale Guarantee.
If a Guarantee Eligibility Certificate was issued in respect ofdebt securities, the Crown (subject to any special conditions
specified in a Guarantee Eligibility Certificate and provided
the debt securities are not varied, amended, waived,
released, novated, supplemented, extended or restated inany respect without the prior written consent of the Crown)
has irrevocably:a) guaranteed the payment by the Bank of any liability of
the Bank to pay principal and interest (excluding any
penalty interest or other amount only payable following
a default) in respect of the debt securities; andb) undertaken that if the Bank does not pay any suchliability on the date on which it becomes due andpayable, the Crown shall, within five Business Days of ademand being made in accordance with the Wholesale
Deed and following the expiry of any applicable grace
period, pay such liability.
The Crown Wholesale Guarantee does not extend to debt
securities held by a Related Party (as defined in the
Wholesale Deed) of the Bank.
In the event of a claim made on the Crown, the Crown will
only pay the interest and principal due to the holders ofdebt securities on the originally scheduled dates forpayment of interest and principal.
The Crown’s obligations in respect of any debt security
terminate on the date falling 30 days after the earlier of:a) the scheduled maturity date for the debt security underwhich the guaranteed liability arises; andb) the date falling five years after the date of issue of thedebt security under which the guaranteed liability
arises,unless valid demand has been made on the Crown prior tothat time.
Any demand on the Crown in respect of debt securities forwhich the Crown has issued a Guarantee Eligibility
Certificate must be made in the prescribed form anddelivered by hand to the Minister of Finance, Parliament
Buildings, Wellington, New Zealand or to one of the otheraddresses specified in the Wholesale Deed.

Further information
Further information about the Crown Wholesale Guarantee,
including a copy of the Wholesale Deed, and any
Guarantee Eligibility Certificate issued by the Crown inrespect of the Bank, is available on The Treasury website
at treasury.govt.nz.
Further information about the Crown, including a copy of its
most recent audited financial statements can be obtainedat treasury.govt.nz.
The Crown’s credit ratings are available on the New Zealand
Debt Management Office website nzdmo.govt.nz. On 22
November 2010 Standard & Poor’s revised the outlook on
the Crown’s long-term foreign currency credit rating from
Stable to Negative. There have been no other changes to
the Crown’s long-term foreign-currency and domestic debt
credit ratings in the two years immediately before the dateof this General Short Form Disclosure Statement.
The Crown’s foreign currency credit ratings are:Rating Agency

Current
Credit Rating

Qualification

Standard & Poor’s

AA+

Outlook Negative

Moody’s
Investors Service

Aaa

Outlook Stable

Fitch Ratings

AA+

Outlook Negative

The Crown’s domestic currency credit ratings are:Rating Agency

Current
Credit Rating

Qualification

Standard & Poor’s

AAA

Outlook Stable

Moody’s
Investors Service

Aaa

Outlook Stable

Fitch RatingsAAA

Outlook Negative

Supplemental Disclosure Statement
The most recent Supplemental Disclosure Statement for
the three months ended 31 December 2010 is available atno charge:a) on the Bank’s websites anz.co.nz and nationalbank.co.nz;b) immediately if request is made at the Bank’s registeredoffice, located at Level 6, 1 Victoria Street, Wellington,
New Zealand; andc) within five working days of a request, if a request is
made at any branch of ANZ or The National Bank of
New Zealand.
The Bank’s most recent Supplemental Disclosure Statement
contains a copy of the bilateral netting agreementwith the Ultimate Parent Bank and a copy of the Crown
Wholesale Guarantee.

Directorate
There have been no changes to directors since theauthorisation date of the previous General DisclosureStatement on 22 November 2010.

ANZ National Bank Limited
4–5

Income Statement
Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

Interest income

1,618

1,411

5,876

Interest expense

982

836

3,457

Net interest income

636

575

2,419

Net trading gains

40

19

39

Funds management and insurance income

56

36

218

Other operating income

83

156

445

$ millions

Note

-

36

42

Operating income

815

822

3,163

Operating expenses

418

374

1,565

397

448

1,598

29

145

436

368

303

1,162

Share of profit of equity accounted associates and jointly controlled entities

Profit before provision for credit impairment
Provision for credit impairment

11

Profit before income tax

110

60

335

258

243

827

Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

258

243

827

Valuation gain / (loss) before tax

(6)

22

53

Cumulative loss / (gain) transferred to the income statement on sale of financial assets

12

-

(12)

Valuation gain / (loss) before tax

(39)

4

89

Transferred to income statement

2

13

21

Actuarial gain on defined benefit schemes

-

-

27

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

7

(5)

(48)

Income tax expense

3

Profit after income tax

Statement of Comprehensive Income$ millions

Profit after income tax
Available-for-sale revaluation reserve:

Cash flow hedging reserve

Other items recognised directly in equity

Net income / (expense) recognised directly in equity

(24)

34

130

Total comprehensive income for the period

234

277

957

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

ANZ National Bank Limited

Statement of Changes in Equity$ millions

Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

6,943

6,943

6,943

Ordinary share capital
Balance at beginning and end of period
Available-for-sale revaluation reserve
Balance at beginning of the period

58

25

25

Valuation gain / (loss) recognised after tax

(6)

22

42

Transferred to income statement after tax

8

-

(9)

Balance at end of the period

60

47

58

Balance at beginning of the period

102

23

23
64

Cash flow hedging reserve
Valuation gain / (loss) recognised after tax

(27)

3

Transferred to income statement after tax

1

9

15

Balance at end of the period

76

35

102

Total reserves

136

82

160

3,342

3,097

3,097

258

243

827

3,600

3,340

3,924

Actuarial gain on defined benefit schemes after tax

-

-

18

Dividend paid

-

-

(600)

3,600

3,340

3,342

1

-

-

Acquired in a business combination

-

1

1

Balance at end of the period

1

1

1

10,446

10,08810,088

234

277

957

-

-

(600)

Retained earnings
Balance at beginning of the period
Profit after income tax attributable to parent
Total available for appropriation

Balance at end of the period
Non-controlling interests
Balance at beginning of the period

Total equity
Balance at beginning of the period
Total comprehensive income for the period
Transactions with shareholders
Non-controlling interests
Balance at end of the period

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

-

1

1

10,68010,366

10,446

ANZ National Bank Limited
6–7

Balance Sheet$ millions

Note

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

AssetsLiquid assets

5

2,168

2,869

2,238

Due from other financial institutions

6

2,722

4,562

3,496

Trading securities

7

Derivative financial instruments

7,395

5,910

6,757

8,939

7,891

10,367Available-for-sale assets

8

1,773

2,458

2,210

Net loans and advances

985,91385,29885,978Investments relating to insurance business

24

40

28

Insurance policy assets

149

81

138

Due from Immediate Parent Company

121

-

6

Shares in associates and jointly controlled entities

144

148

144

Current tax assets

53

-

25

Other assets

949

895

965

Deferred tax assets

220

427

312

Premises and equipment
Goodwill and other intangible assets
Total assets

316

298

311

3,532

3,546

3,548

113,803

115,103

116,458

Liabilities
Due to other financial institutions

12

1,246

1,678

1,819

Deposits and other borrowings

13

69,95972,97070,295-388-

Derivative financial instruments

9,624

8,787

10,715

Payables and other liabilities

1,682

1,844

1,700

-

17

-

266

375

315

Bonds and notes

17,951

16,07318,761

Loan capital

2,395

2,605

2,407

Total liabilities

103,123

104,737

106,012

Net assets

10,68010,366

10,446

6,943

6,943

6,943

Due to Immediate Parent Company

Current tax liabilities
Provisions

EquityOrdinary share capital

136

82

160

Retained earnings

3,600

3,340

3,342

Parent shareholder's equity

10,67910,365

10,4451

1

1

10,68010,366

10,446

Reserves

Non-controlling interest
Total equity

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

ANZ National Bank Limited

Cash Flow Statement$ millions

Note

Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

1,576

1,361

5,636

-

-

2

Cash flows from operating activities
Interest received
Dividends received
Net funds management & insurance income

35

36

137

Fees and other income received

189

276

771

Interest paid

(869)

(857)

(3,412)

Operating expenses paid

(482)

(375)

(1,476)

Income taxes paid

(31)

(368)

(629)

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

418

73

1,029

Net changes in operating assets and liabilities:
Change in due from other financial institutions – term

210

1,795

1,967

Change in trading securities(652)(1,746)(2,613)

Change in derivative financial instruments

(287)

1,717

1,571

Change in available-for-sale assets

457

(738)

(435)

14

-

22

Change in loans and advances

(377)

243

(1,950)

Proceeds from sale of loans and advances to NZ Branch

833

1,740

3,494

Change in insurance investment assets

3

276

145

Change in due to other financial institutions(584)(2,120)(1,963)

Change in deposits

1,148

(455)

(1,493)

Change in other borrowings(1,590)

1,350

(417)

(43)

49

(103)

(450)

2,184

(746)

Proceeds from sale of shares in associates and jointly controlled entities

-

1

7

Proceeds from sale of premises and equipment

-

1

1

Purchase of shares in subsidiary entities

-

(247)

(247)

Purchase of intangible assets

(19)

(2)

(43)

Purchase of premises and equipment

(20)

(32)

(80)

Net cash flows used in investing activities

(39)

(279)

(362)

Change in other assets

Change in payables and other liabilities
Net cash flows provided by / (used in) operating activities

19

Cash flows from investing activities

Cash flows from financing activities
Proceeds from bonds and notes

2,782

2,121

5,481

Redemptions of bonds and notes(1,392)(1,692)(3,825)

(1)

-

(200)

(115)

(542)

(936)

Redemptions of loan capital
Change in funding to / from Immediate Parent Company

-

-

(600)

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

1,274

(113)

(80)

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

(450)

2,184

(746)
(362)

Dividends paid

Net cash flows used in investing activities
Net cash flows provided by / (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period

19

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

(39)

(279)

1,274

(113)

(80)

785

1,792

(1,188)

3,577

4,765

4,765

4,362

6,557

3,577

ANZ National Bank Limited
8–9

Notes to the Financial Statements
1. Significant Accounting Policies
i)Statement of compliance

These financial statements have been prepared inaccordance with the requirements of NZ IAS 34 Interim
Financial Reporting and the Order. These financial
statements should be read in conjunction with the
Banking Group’s financial statements for the year ended
30 September 2010.
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 and liabilities
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;• assets recognised as available-for-sale;• financial instruments designated at fair value
through profit and loss; and• defined benefit scheme asset or liability.
iii) Changes in accounting policies and application of new
accounting statements

The accounting policies adopted by the Banking Groupare consistent with those adopted and disclosed in theprior period.
iv) Presentation currency and rounding

The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.

v)

Comparatives

Prior to 30 September 2010 some fee income integral tothe effective interest rate of financial assets waspresented in other operating income. Since this date
this income has been classified to interest income, tomore accurately reflect the nature of the income.
Comparative data has been restated accordingly. For
the period ended 31 December 2009 this reclassification
has for the Banking Group, increased interest income by$30 million and reduced other operating income by acorresponding amount. There was no impact on total
operating income or profit after income tax.
Certain other amounts in the comparative information
have been reclassified to ensure consistency with thecurrent period’s presentation.
vi) Principles of consolidation

The financial statements consolidate the financial
statements of the Bank and its controlled entities.

2. Risk Management Policies
There has been no material change to the Banking Group’s
policies for managing risk, or material exposures to new
types of risk since the authorisation of the previous General
Disclosure Statement on 22 November 2010.

ANZ National Bank Limited

Notes to the Financial Statements
3. Income Tax Expense$ millions

Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

109

108

344

Changes in tax provisions

-

(48)

(54)

Effect of changes in tax legislation

1

-

45

Income tax expense before change in tax provisions and the effect of changes in tax legislation

110

60

335

Effective tax rate (%) before change in tax provisions and the effect of changes in tax legislation

29.6%

35.6%

29.6%

Effective tax rate (%)

29.9%

19.8%

28.8%

Income tax expense

4. Segmental Analysis
For segment reporting purposes, the Banking Group is organised into three major business segments – Retail, Commercial andInstitutional. Centralised back office and corporate functions support these segments. These segments are consistent withinternal reporting provided to the chief operating decision maker, being the Bank’s Chief Executive Officer.
During the three months ended 31 December 2010 a specialist standalone business banking unit was created within theCommercial segment, resulting in changes to internal financial reporting. Segmental information in this note has been updated
to reflect the new structure. Comparative data has been adjusted to be consistent with the current period’s segment definitions.
RetailRetail provides banking products and services to individuals through separate ANZ and The National Bank of New Zealand
branded distribution channels. Personal banking customers have access to a wide range of financial services and products. The
Banking Group’s wealth businesses include private banking and investment services provided to high net worth individuals,
the OnePath wealth management and insurance businesses, and other investment products. This segment also includes otherprofit centres supporting the Retail Banking segment.
Commercial
Commercial provides services to Business Banking, Rural, Commercial and UDC customers. Business banking services areoffered to small enterprises (typically with annual revenues of less than $5 million). Commercial customers consist of primarily
privately owned medium to large enterprises. The Banking Group’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 with revenue sourced from a wider range of products. UDC is principally involved in the financing and leasingof plant, vehicles and equipment, mainly for small and medium sized businesses, as well as investment products.
Institutional
Institutional provides financial services to large multi-banked corporations, often global, who require sophisticated productand structuring solutions. The Institutional business unit includes the following specialised units:•••

Markets – provides foreign exchange, interest rate and commodity trading and sales-related services, origination,
underwriting, structuring, risk management and sale of credit and derivative products globally;
Transaction Banking – provides cash management, trade finance and international payments;
Specialised Lending – provides origination, credit analysis, structuring and execution of specific customer transactions.

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

ANZ National Bank Limited
10 – 11

Notes to the Financial Statements
Business Segment Analysis1$ millions

Retail2

Commercial

Institutional3

Other3

Total

Unaudited 3 months to 31/12/2010
External revenues

299

765

120

(369)

815

Intersegment revenues

13

(406)

30

363

-

Total revenues

312

359

150

(6)

815

Profit before income tax

86

204

114

(36)

368
822

Unaudited 3 months to 31/12/2009
External revenues

311

759

(24)

(224)

Intersegment revenues

(98)

(436)

195

339

-

Total revenues

213

323

171

115

822

Profit before income tax

(40)

87

141

115

303
3,163

Audited year to 30/09/2010
External revenues

1,311

2,976

109

(1,233)

Intersegment revenues(212)(1,629)

491

1,350

-

Total revenues

1,099

1,347

600

117

3,163

86

510

495

71

1,162

Profit before income tax
1

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

2

The comparative periods results include a loss on acquisition of ING NZ of $82 million.

3

This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

5. Liquid Assets
Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Cash and balances with central banks

1,747

2,424

1,829

Money at call

324

363

328

Bills receivable and remittances in transit

97

82

81

2,168

2,869

2,238

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

73

164

457
346

$ millions

Total liquid assets

6. Due from Other Financial Institutions$ millions

Able to be withdrawn without prior notice

1,461

339

Securities purchased under agreement to resell with central banks

229

-

-

Security settlements

22

128

1,535

Certificates of deposit

707

Securities purchased under agreement to resell

937

1,022

Reserve bank bills

-

100

-

Term loans and advances

-

2,809

451

2,722

4,562

3,496

Total due from other financial institutions

ANZ National Bank Limited

Notes to the Financial Statements
7. Trading Securities$ millions

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

3,917

4,314

2,599

Certificates of deposit

58

587

32

Promissory notes

73

56

64

Other bank bonds

2,869

2,592

2,655

81

76

89

7,395

5,910

6,757

99

101

222

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

1,500

2,159

1,939

Other debt securities

202

213

193

Equity securities

71

86

78

1,773

2,458

2,210

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

1,756

1,954

2,131

Government, local body stock and bonds

Other
Total trading securities
Assets encumbered through repurchase agreements included in trading securities

8. Available-for-Sale Assets$ millions

Government, local body stock and bonds

Total available-for-sale assets

9. Net Loans and Advances$ millions

Overdrafts
Credit card outstandings

1,435

1,457

1,388

Term loans – housing

43,58043,96543,887

Term loans – non-housing

39,22439,07039,179Finance lease receivables

746

690

726

Gross loans and advances

86,74187,13687,311

Provision for credit impairment (Note 11)(1,326)(1,356)(1,398)

Unearned finance income

(272)

(258)

(273)

Fair value hedge adjustment

173

453

279

Deferred fee revenue and expenses

(54)

(54)

(49)

Capitalised brokerage/mortgage origination fees

36

57

43

85,29885,97885,913

Total net loans and advances

In 2009 the Bank sold $9,683 million of residential mortgages to the NZ Branch in two tranches. These existing tranches are
regularly topped up with additional mortgages. Sales, repurchases and repayments have resulted in the NZ Branch holding
mortgages with a carrying value of $10,336 million as at 31 December 2010 (31/12/2009 $9,586 million, 30/09/2010 $10,029
million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in the transferred assets.
Net loans and advances have decreased as a result of selling these assets.

ANZ National Bank Limited
12 – 13

Notes to the Financial Statements
10. Impaired Assets, Past Due Assets and Other Assets Under Administration
Retailmortgages

Other retail
exposures

Corporate
exposures

Total

Individually impaired assets

498

74

1,423

1,995

Restructured items and other individually impaired assets

11

-

-

11

Past due assets (90 days past due assets)319$ millions

Unaudited 31/12/2010

160

43

116

Other assets under administration

-

-

11

11

Undrawn facilities with impaired customers

-

-

31

31

413

73

829

1,315

1

Unaudited 31/12/2009
Individually impaired assets
Restructured items

7

-

-

7

215

57

106

378

Other assets under administration

1

-

8

9

Undrawn facilities with impaired customers

-

-

49

49

511

81

1,403

1,995

9

-

-

9
292

Past due assets (90 days past due assets)

Audited 30/09/2010
Individually impaired assets
Restructured items
Past due assets (90 days past due assets)

1

132

33

127

Other assets under administration

-

-

4

4

Undrawn facilities with impaired customers

-

-

32

32

90 day past due assets not classified as impaired assets are either 90 days or more past due and well secured, or are portfolio managed facilities that can be held
for up to 180 days past due.

Restructured assets
A restructured asset is an impaired asset for which the terms have been changed to grant the counterparty a concession thatwould not otherwise have been available, due to the counterparty’s difficulty in complying with the original terms, and where
the yield on the asset following restructuring is still above the Banking Group’s cost of funds. An asset is classified as an otherindividually impaired asset if, following the restructure, the yield on the asset is below the Banking Group’s cost of funds.

Assets acquired through enforcement of security
Assets acquired through enforcement of security are those assets which are legally owned by the Banking Group as a result of
enforcing security, other than any buildings occupied by the Banking Group. The Banking Group held no material assets
acquired through enforcement of security (31/12/2009 $nil; 30/09/2010 $nil).

Past due assets
A past due asset is any loan where the counterparty has failed to make a payment when contractually due, and which is not
an impaired asset. A 90 days past due asset is any past due asset which has not been operated by the counterparty within its
key terms for at least 90 days.

Other assets under administration
Other assets under administration are any loans, not being impaired or 90 days past due, where the customer is in any formof voluntary or involuntary administration, including receivership, liquidation, bankruptcy or statutory management.

ANZ National Bank Limited

Notes to the Financial Statements
11. Provision for Credit Impairment$ millions

Retailmortgages

Other retail
exposures

Corporate
exposures

Total

111

149

533

793

Unaudited 31/12/2010
Collective provision
Balance at beginning of the period
Charge / (credit) to income statement
Balance at end of the period

(8)

(5)

(42)

(55)

103

144

491

738

207

51

347

605

3

22

59

84

Individual provision (individually impaired assets)
Balance at beginning of the period
Charge to income statement
Recoveries of amounts previously written off
Bad debts written off

-

4

1

5

(18)

(27)

(42)

(87)

(5)

-

(14)

(19)

Balance at end of the period

187

50

351

588

Total provision for credit impairment

290

194

842

1,326

Balance at beginning of the period

121

159

518

798

Charge to income statement

(7)

(1)

4

(4)

Balance at end of the period

114

158

522

794

Balance at beginning of the period

153

40

281

474

Charge to income statement

56

28

65

149

Recoveries of amounts previously written off

1

4

-

5
(56)

Discount unwind1

Unaudited 31/12/2009
Collective provision

Individual provision (individually impaired assets)

Bad debts written off

(14)

(31)

(11)

Discount unwind1

(3)

(1)

(6)

(10)

Balance at end of the period

193

40

329

562

Total provision for credit impairment

307

198

851

1,356

121

159

518

798

Audited 30/09/2010
Collective provision
Balance at beginning of the year
Charge to income statement

(10)

(10)

15

(5)

Balance at end of the year

111

149

533

793

Individual provision (individually impaired assets)
Balance at beginning of the year

153

40

281

474

Charge to income statement

125

120

196

441

Recoveries of amounts previously written off
Bad debts written off

1

2

17

2

21

(57)

(123)

(92)

(272)

Discount unwind1

(16)

(3)

(40)

(59)

Balance at end of the year

207

51

347

605

Total provision for credit impairment

318

200

880

1,398

The impairment loss on an impaired asset is calculated as the difference between the asset’s carrying amount and the estimated future cash flows discounted
to its present value using the original effective interest rate for the asset. This discount unwinds as interest income over the period the asset is held.

ANZ National Bank Limited
14 – 15

Notes to the Financial Statements
Provision movement analysis

Retailmortgages

Other retail
exposures

New and increased provisions

40

Provision releases(37)$ millions

Corporate
exposures

Total

31

85

156

(5)

(25)

(67)
89

Unaudited 31/12/2010

3

26

60

Recoveries of amounts previously written off

-

(4)

(1)

(5)

Individual provision charge

3

22

59

84

Collective provision charge / (credit)

(8)

(5)

(42)

(55)

Total charge to income statement

(5)

17

17

29

63

32

93

188

Unaudited 31/12/2009
New and increased provisions
Provision releases

(6)

-

(28)

(34)

57

32

65

154

Recoveries of amounts previously written off

(1)

(4)

-

(5)

Individual provision charge

56

28

65

149

Collective provision charge

(7)

(1)

4

(4)

Total charge to income statement

49

27

69

145

187

160

337

684

(60)

(23)

(139)

(222)

127

137

198

462

Audited 30/09/2010
New and increased provisions
Provision releases
Recoveries of amounts previously written off

(2)

(17)

(2)

(21)

Individual provision charge

125

120

196

441

Collective provision charge

(10)

(10)

15

(5)

Total charge to income statement

115

110

211

436

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

1,147

1,377

1,597

99

101

222

12. Due to Other Financial Institutions$ millions

Due to other financial institutions
Securities sold under agreements to repurchase from other financial institutions
Securities sold under agreements to repurchase from central banks

1

Total due to other financial institutions
1

-

200

-

1,246

1,678

1,819

As at 31 December 2010 the Banking Group had entered into no repurchase agreements for residential mortgage-backed securities with the RBNZ (31/12/2009$200 million; 30/09/2010 $nil). Therefore no underlying collateral had been accepted by the RBNZ in relation to repurchase agreements (31/12/2009 residential
mortgages to the value of $246 million were held by RBNZ as collateral; 30/09/2010 $nil).

ANZ National Bank Limited

Notes to the Financial Statements
13. Deposits and Other Borrowings$ millions

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Amortised cost
Certificates of deposit

1,843

3,028

3,245

Term deposits

36,147

34,232

34,687

Demand deposits bearing interest

19,031

20,482

18,714

Deposits not bearing interest

5,539

4,821

4,964

Secured debenture stock

1,602

1,383

1,378

Total deposits and other borrowings recognised at amortised cost

64,162

63,946

62,988

5,797

9,024

7,307

Fair value through profit or loss
Commercial paper
Total deposits and other borrowings recognised at fair value

5,797

9,024

7,307

Total deposits and other borrowings

69,95972,97070,295

2,162

1,912

2,111

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

640

3,150

1,507

2,063

1,459

2,060

Due from associates

145

161

151

Due from joint ventures

30

37

36

Secured debenture stock is secured over:Carrying value of total tangible assets of UDC Finance Limited

14. Related Party Transactions$ millions

Balances with related parties
Due from other financial institutions
Due from Ultimate Parent Bank and subsidiaries not part of ANZ New ZealandDerivative financial assets
Due from related entities
Net loans and advances

Due from Immediate Parent Company

121

-

6

Shares in controlled entities, associates and joint ventures

144

148

144

Due from Ultimate Parent Bank

55

32

37

Total due from related parties

3,198

4,987

3,941

19

492

8

85

85

85

-

388

-

2,657

2,043

2,646

Due to NZ Branch

351

356

302

Due to Ultimate Parent Bank

55

29

38

2,260

2,221

3,605

Other assets

Due to other financial institutions
Due to Ultimate Parent Bank
Deposits and other borrowings
Due to associates
Due to Immediate Parent Company
Derivative financial liabilities
Due to related entities
Payables and other liabilities

Bonds and notes
Due to subsidiaries of the Ultimate Parent Bank not part of ANZ New Zealand
Loan capitalDue to Ultimate Parent Bank

619

821

630

Total due to related parties

6,046

6,435

7,314

Balances due from / to related parties are unsecured other than that the Banking Group and the Bank have provided guarantees
and commitments to related parties as follows:$ millions

Financial guarantees provided to the Ultimate Parent Bank

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

1,361

1,694

1,660

ANZ National Bank Limited
16 – 17

Notes to the Financial Statements
15. Interest Earning and Discount Bearing Assets and Liabilities
Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Interest earning and discount bearing assets

98,435101,038

98,250Interest and discount bearing liabilities

86,027

88,832

86,956

31/12/2010

31/12/2009

30/09/2010

10.05%

9.62%

9.68%

$ millions

16. Capital Adequacy
Capital ratios of the Banking Group under the Basel II internal models based approach (Unaudited)
Tier One Capital
RBNZ minimum Tier One Capital ratio

4.00%

4.00%

4.00%

Total Capital

13.43%

13.31%

13.11%

RBNZ minimum Total Capital ratio

8.00%

8.00%

8.00%

Capital as at 31 December 2010 (Unaudited)$mTier One Capital
Ordinary share capital

6,943

Revenue and similar reserves

3,478

Current year's profit after tax

258
1

Non-controlling interests
Less deductions from Tier One Capital

3,265

Goodwill
Software and other intangible assets

267

Future income tax benefits

65

Cash flow hedging reserve

76
56

50% of expected loss to the extent higher than total eligible allowances for impairment

6,951

Total Tier One Capital
Tier Two Capital – Upper Level

1,173

Perpetual subordinated debt
Tier Two Capital – Lower Level

1,222

Term subordinated debt
Less deductions from Tier Two Capital

56

50% of expected loss to the extent higher than total eligible allowances for impairment
Total Tier Two Capital

2,339

Total Capital

9,290

Total required capital as at 31 December 2010 (Unaudited)$ millions

Risk weighted
exposure or implied
Exposure at default risk weighted exposure2

Total capitalrequirement

118,683

49,171

3,935

Specialised lending exposures subject to slotting approach

7,410

7,067

566

Exposures subject to standardised approach

333

319

25

Equity exposures

218

924

74

Other exposures

2,486

784

63

Total credit risk

129,130

58,265

4,663

Operational risk

n/a

5,178

414

Market risk

n/a

4,161

333

Exposures subject to internal ratings based approach

Supervisory adjustment1
Total capital requirement

n/a

1,594

128

129,130

69,1985,538

1

The supervisory adjustment includes an adjustment of 15% of risk-weighted retail mortgages and an adjustment, if required, in order to maintain the Basel II minimum
capital requirement at no less than 90% of the Basel I minimum capital requirement, in accordance with the Bank’s Conditions of Registration. No adjustment was
required to maintain the Basel II minimum capital requirement at no less than 90% of the Basel I minimum capital requirement as at 31 December 2010.

2

Total credit risk-weighted exposures include a scalar of 1.06 in accordance with the Bank’s Conditions of Registration.

ANZ National Bank Limited

Notes to the Financial Statements
Capital adequacy ratios under the Basel I approach (Unaudited)
Banking Group

Bank

31/12/2010

31/12/2009

30/09/2010

31/12/2010

31/12/2009

30/09/2010

Tier One Capital

9.42%

9.06%

9.01%

9.65%

8.96%

9.20%

Total Capital

12.64%

12.55%

12.24%

12.00%

12.37%

11.46%

Total risk-weighted exposures ($million)

74,391

74,62774,45572,22473,021

72,487RBNZ minimum ratios:Tier One Capital

4.00%

4.00%

4.00%

4.00%

4.00%

4.00%

Total Capital

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

Basel I capital adequacy in respect of the Banking Group has been derived in accordance with the RBNZ document entitled‘Capital Adequacy Framework (Basel I Approach)’ (“BS2”), dated October 2010.

Implementation of the advanced internal ratings based approach to credit risk measurement
The Banking Group adheres to the standards of risk grading and risk quantification as set out for Internal Ratings Based (“IRB”)
banks in the RBNZ document BS2B.
Under this IRB Framework banks use their own measures for calculating the level of credit risk associated with customers andexposures, by way of the primary components of:
Probability of Default (“PD”) – an estimate of the level of risk of borrower default graded by way of rating models used both atloan origination and for ongoing monitoring. For retail mortgage exposures the Banking Group is required to use the RBNZ
prescribed exposure weighted minimum PD of 1.25%;
Exposure at Default (“EAD”) – the expected facility exposure at default. Total credit risk-weighted exposures include a scalar of
1.06 in accordance with the Bank’s Conditions of Registration; andLoss Given Default (“LGD”) – an estimate of the potential economic loss on a credit exposure, incurred as a consequence ofobligor default and expressed as a percentage of the facility’s EAD. For retail mortgage exposures the Bank is required to apply
the downturn LGDs according to loan to value (“LVR”) bands as set out in BS2B. For rural banking exposures the Banking Groupis required to adopt RBNZ prescribed downturn LGDs which are more conservative than internal estimates.
For exposures classified under Specialised Lending, the Banking Group uses slotting tables supplied by the RBNZ rather thaninternal estimates.
The exceptions to IRB treatment are five minor portfolios where, due to systems constraints or other reasons, determining
these IRB risk estimates is not currently feasible or appropriate. Risk weights for these exposures are calculated under a separate
treatment as set out in the RBNZ document entitled ‘Capital Adequacy Framework (Standardised Approach)’ (“BS2A”), dated
October 2010.

ANZ National Bank Limited
18 – 19

Notes to the Financial Statements
Capital requirements by asset class under the IRB approach

As at 31/12/2010 (Unaudited)

Total
exposureor principal
amount$m

Exposureweighted LGD
used for the
Exposure at
capitaldefault
calculation$m%

Exposureweighted
risk
weight%Riskweighted
exposure$m

Total capitalrequirement$mOn-balance sheet exposures
Corporate

34,87134,36236

65

23,824

1,906

Sovereign

8,093

7,874

5

1

68

6

Bank

4,069

3,213

57

15

511

41

Retail mortgages

40,75240,75221

24

10,205816

Other retail

4,482

4,482

60

79

3,738

299

Total on-balance sheet exposures

92,267

90,68328

40

38,346

3,068

Corporate

13,003

10,155

47

48

5,122

410

Sovereign

57

57

5

-

-

-

Off-balance sheet exposures

997

859

40

13

119

9

Retail mortgages

5,332

4,992

18

20

1,057

86

Other retail

4,565

4,603

75

50

2,460

197

Total off-balance sheet exposures

23,954

20,666

46

40

8,758

702

78

Bank

Market related contracts
Corporate

60,750

1,835

57

50

977

Sovereign

11,061

462

5

1

5

-

Bank

582,553

5,037

65

20

1,085

87

Total market related contracts

654,364

7,334

59

27

2,067

165

Total credit risk exposures subject to the IRB approach

770,585

118,68333

39

49,171

3,935

ANZ National Bank Limited

Notes to the Financial Statements
IRB exposures by customer credit rating

As at 31/12/2010 (Unaudited)

Probabilityof default%

Exposureweighted LGD
used for the
Exposure at
capitaldefault
calculation$m%

Exposureweighted
risk
weight%Riskweighted
exposure2$m

Total capitalrequirement$m

Corporate
0-2

0.05%

5,268

61

24

1,337

107

3-4

0.35%

18,586

36

34

6,716

537

5

1.00%

10,303

36

59

6,400

512

6

2.29%

5,988

37

79

5,022

402

7-8

7.16%

4,763

40

117

5,903

472

Default

100.00%

1,444

47

297

4,545

364

4.52%

46,35240

61

29,923

2,394

0

0.01%

8,393

5

1

73

6

Total sovereign exposures

0.01%

8,393

5

1

73

6

Total corporate exposures
Sovereign

Bank
0

0.01%

5,676

65

18

1,054

84

1

0.02%

2,977

49

16

501

40

2-4

0.09%

432

58

30

139

11

5-6

1.10%

18

65

109

20

2

7-8

6.54%

1

65

216

1

-

Default

100.00%

5

65

-

-

-

0.07%

9,109

59

18

1,715

137

0-3

0.19%

17,932

20

8

1,451

116

4

0.45%

9,009

20

14

1,358

109

Total bank exposures
Retail mortgages

5

0.95%

12,336

21

25

3,320

266

6

2.38%

3,176

22

47

1,594

128

7-8

11.98%

2,454

23

105

2,739

219

Default

100.00%

837

32

90

800

64

3.06%

45,74421

23

11,262902

Total residential mortgages exposures
Other retail
0-2

0.09%

21

76

18

4

-

3-4

0.30%

4,216

72

36

1,587

127

5

1.11%

1,946

66

68

1,411

113

6

2.63%

1,607

59

80

1,358

109

7-8

11.27%

1,126

68

118

1,413

113

Default

100.00%

169

62

237

425

34

4.10%

9,085

68

64

6,198

496

Total other retail exposures

Credit risk exposures subject to the IRB approach have been derived in accordance with BS2B and other relevant correspondencewith RBNZ setting out prescribed credit risk estimates.

ANZ National Bank Limited
20 – 21

Notes to the Financial Statements
Specialised lending subject to the slotting approach
Exposureamount$m

As at 31/12/2010 (Unaudited)

Risk Risk weighted
weightexposure%$m

Total capitalrequirement$mOn-balance sheet exposures
Strong

1,861

GoodSatisfactory
Weak
Default
Total on-balance sheet exposures

70

1,381

110

3,180

90

3,034

243

1,154

115

1,407

113

265

250

703

56

375

-

-

-

6,835

90

6,525

522

Average risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Exposureamount$m

Exposure atdefault$m

Off-balance sheet exposures
572

488

89

459

Market related contracts

1,876

87

90

83

7

Total off-balance sheet exposures

2,448

575

89

542

44

Undrawn commitments and other off balance sheet exposures

37

Specialised lending exposures subject to the slotting approach have been calculated in accordance with BS2B.
The supervisory categories of specialised lending above are associated with specific risk-weight. These categories broadly
correspond to the following external credit assessments using Standard & Poor’s rating scale, Strong: BBB- or better, Good: BB+
or BB, Satisfactory: BB- or B+ and Weak: B to C-.
Credit risk exposures subject to the standardised approach
Exposureamount$m

As at 31/12/2010 (Unaudited)

Risk Risk weighted
weightexposure%$m

Total capitalrequirement$mOn-balance sheet exposures
154

100

163

13

Banks

4

20

1

-

Residential mortgages

2

36

1

-

Other retail

1

100

1

-

Default

2

150

3

-

163

98

169

13

Average risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Corporates

Total on-balance sheet exposures

Off-balance sheet exposures

Undrawn commitments and other offbalance sheet exposures

Exposureamount$m

Average credit
conversion
factor%Creditequivalentamount
$m

450

38

170

83

150

12

Risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Credit exposures subject to the Standardised Approach have been calculated in accordance with BS2A.
Equity Exposures
As at 31/12/2010 (Unaudited)
All other equity holdings not deducted from capital

Equity exposures have been calculated in accordance with BS2B.

Exposureamount
$m

218

400

924

74

ANZ National Bank Limited

Notes to the Financial Statements
Other exposures
Exposureamount$m

As at 31/12/2010 (Unaudited)

Cash and gold bullion
New Zealand dollar denominated claims on the Crown and the RBNZ
Other assets
Total other IRB credit risk exposures

Risk Risk weighted
weightexposure%$m

Total capitalrequirement
$m

282

-

-

1,465

-

-

-

739

100

784

63

2,486

30

784

63

Other exposures have been calculated in accordance with BS2B.
A risk weight of 100% applies to premises and equipment and all other exposures not otherwise defined in BS2B, except for
cash, gold, New Zealand dollar denominated claims on the Crown and the RBNZ, which receive a 0% risk weight.
Operational Risk
As at 31 December 2010 the Banking Group had an implied risk weighted exposure of $5,178 million for operational risk and an
operational risk capital requirement of $414 million. The Banking Group uses the Advanced Measurement Approach for
determining its regulatory capital requirement for operational risk calculated in accordance with BS2B.
Market Risk
The aggregate market risk exposures below have been calculated in accordance with BS2B.
The peak end-of-day market risk exposures for the quarter are measured over equity at the end of the quarter and are calculated
separately for each category of exposure. The peak for all categories of exposure may not have occurred at the same time.

Implied risk weighted
exposure

Aggregate
capital charge
as a percentageof the Banking
Group’s Equity

Aggregate
capital charge

As at
$m

Peak
$m

As at
$m

Peak
$m

As at
%

Peak
%

4,078

4,078

326

326

3.1

3.1

Foreign currency risk

12

98

1

8

0.0

0.1

Equity risk

71

78

6

6

0.1

0.1

Unaudited

31/12/2010
Interest rate risk

4,161

333

31/12/2009
Interest rate risk
Foreign currency risk
Equity risk

4,155

4,218

332

337

3.2

3.3

12

89

1

7

0.0

0.1

86

86

7

7

0.1

0.1

4,253

340

30/09/2010
Interest rate risk
Foreign currency risk
Equity risk

3,797

3,797

304

304

2.9

2.9

25

101

2

8

0.0

0.1

78

81

6

6

0.1

0.1

3,900

312

ANZ National Bank Limited
22 – 23

Notes to the Financial Statements
Credit Risk Mitigation
The Banking Group assesses the integrity and ability of counterparties to meet their contractual financial obligations for
repayment. The Banking Group generally takes collateral security in the form of real property or a security interest in personal
property, except for major government, bank and corporate counterparties of strong financial standing. Longer term consumer
finance, in the form of housing loans, is generally secured against real estate while short term revolving consumer credit isgenerally unsecured.
As at 31 December 2010, under the IRB approach, the Banking Group had $1,277 million of Corporate exposures covered byguarantees, where the presence of the guarantees are judged to have reduced the underlying credit risk of the exposures.
Information on the total value of exposures covered by financial guarantees and eligible financial collateral is not disclosed, as
the effect of these guarantees and collateral on the underlying credit risk exposures is not considered to be material.
Retail 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 the Bank’svaluation of the security property at origination of the exposure. The exposure amount used to calculate LVR excludes
commitments to lend.
As at 31/12/2010 (Unaudited)

Exposure amount$m

LVR range
0% - 59%

20,67960% - 69%7,010

70% - 79%

8,369

80% - 89%

4,363

Over 90%

4,219

Total retail mortgage exposures subject to the internal ratings based approach

44,640During the three months ended 31 December 2010 the Bank implemented a number of changes to the way it calculates loan
to valuation ratios. These changes reflect enhancements to the calculation methodology and to improve the robustness ofunderlying source data.
Pillar II capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process (“ICAAP”) which complies with the requirements of
the Bank’s Conditions of Registration.
Under the Banking Group’s ICAAP it identifies and measures all “other material risks”, which are those material risks that are notexplicitly captured in the calculation of the Banking Group’s tier one and total capital ratios. The other material risks identified
by the Banking Group include business risk, pension risk, insurance risk, premises and equipment risk and capitalised
origination fees risk.
The Banking Group’s internal capital allocation for these other material risks is $329 million (31/12/2009: $368 million;
30/09/2010: $401 million).

ANZ National Bank Limited

Notes to the Financial Statements
17. Liquidity Portfolio
Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Cash and balances with central banks

1,058

2,141

1,015

Securities purchased under agreement to resell

1,075

339

266

768

1,430

687

Government, local body stock and bonds

4,825

2,401

3,631

Available-for-sale assets

1,480

2,134

1,915

Other bonds

3,077

2,636

2,698

Total liquidity portfolio

12,283

11,081

10,212$ millions

Certificates of deposit

18. Concentrations of Credit Risk
Concentrations of credit risk to individual counterparties
The number of individual counterparties (excluding OECD Governments and connected persons), where the Banking Group’s
quarter end and peak end-of-day credit exposure over the quarter equals or exceeds 10% of equity (as at the end of thequarter) in ranges of 10% of equity, on the basis of limits for non-banks and exposures for banks, are:Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

As at

Peak forthe quarter

As at

Peak forthe quarter

As at

Peak forthe quarter

10% to 20% of equity

3

3

1

2

2

3

20% to 30% of equity

-

-

-

1

-

-

1

1

1

1

1

1

Number of counterparties

Concentrations of credit risk to bank counterparties

Concentrations of credit risk to non bank counterparties
10% to 20% of equity

The number of individual counterparties disclosed within the various equity ranges and the total exposure as at the end of thequarter are gross exposures. No account is taken of collateral, security and/or netting agreements which the Banking Groupmay hold in respect of the various counterparty exposures.
The peak number is calculated separately for each individual counterparty and the peak for all counterparties may not haveoccurred at the same time.
Total period end exposures to counterparties where the individual counterparty’s exposure is greater than 10% of equity
Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Banks

3,732

1,964

2,603

Non banks

1,236

1,192

1,260

$ millions

Credit ratings of counterparties
All of the counterparties included in the preceding tables have an investment grade credit rating (31/12/2009 100%; 30/09/2010
100%). An investment grade credit rating means a credit rating of BBB or Baa3 or above, or its equivalent. In the case of a groupof closely related counterparties, the credit rating applicable is that of the entity heading the group of closely related
counterparties. The credit rating is applicable to an entity’s long term senior unsecured obligations payable in New Zealand, in
New Zealand dollars, or to an entity’s long term senior unsecured foreign currency obligations.

ANZ National Bank Limited
24 – 25

Notes to the Financial Statements
Concentrations of credit risk to connected persons
Credit exposures to connected persons reported in the table below have been calculated in accordance with the Bank’s
conditions of conditions of registration, partially on a bilateral net basis, and partially on a gross basis. Netting has occurred in
respect of certain transactions which are the subject of a bilateral netting agreement disclosed in the Bank’s most recent
Supplemental Disclosure Statement for the three months ended 31 December 2010.
Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

Amount$m% of Tier
One Capital

Amount$m% of Tier
One Capital

Amount$m% of Tier
One Capital

Other connected persons (on gross basis, before netting)

4,612

66.4%

4,003

59.4%

3,925

58.9%

Less: amount netted off

3,240

46.6%

2,666

39.6%

3,229

48.4%

Other connected persons (on partial bilateral net basis)

1,372

19.7%

1,337

19.8%

696

10.5%

Other connected persons (on gross basis, before netting)

4,785

68.8%

4,923

73.1%

4,981

74.8%

Less: amount netted off

3,361

48.4%

2,787

41.4%

3,126

46.9%

Other connected persons (on partial bilateral net basis)

1,424

20.5%

2,136

31.7%

1,855

27.9%

Other connected persons (on partial bilateral net basis)

n/a

70.0%

n/a

70.0%

n/a

70.0%

Non-bank connected persons

n/a

15.0%

n/a

15.0%

n/a

15.0%

Aggregate at end of period

Peak-end-of-day for the period1

Rating-contingent limit

2

The Banking Group has complied with the limits on aggregate credit exposure (of a non-capital nature and net of individual provisions) to connected persons
and non-bank connected persons, as set out in the Conditions of Registration, at all times during the quarter. The peak end-of-day credit exposures for thequarter to connected persons are measured over Tier One Capital as at the end of the quarter.
2
Represents the maximum peak end-of-day aggregate credit exposures limit (of a non-capital nature and net of individual provisions) to all connected persons.
This limit is based on the ratings applicable to the Bank’s long term senior unsecured obligations payable in New Zealand in New Zealand dollars.
1

A limit of 125% of Banking Group tier one capital applies to the gross amount of aggregate credit exposure to connected
persons that can be netted off in determining the net exposure.
The credit exposure concentrations disclosed for connected persons are on the basis of actual gross exposures and exclusiveof exposures of a capital nature. There were no individual provisions provided against credit exposures to connected persons
as at 31 December 2010 (31/12/2009 $nil; 30/09/2010 $nil). The Banking Group had no contingent exposures arising from risk
lay-off arrangements to connected persons as at 31 December 2010 (31/12/2009 $nil; 30/09/2010 $nil).

ANZ National Bank Limited

Notes to the Financial Statements
19. Notes to the Cash Flow Statement$ millions

Unaudited
3 months to
31/12/2010

Unaudited
3 months to
31/12/2009

AuditedYear to30/09/2010

258

243

827

Reconciliation of profit after income tax to net cash flows provided by/(used in) operating activities
Profit after income tax
Non-cash items:
Depreciation, amortisation and impairment

47

12

71

Provision for credit impairment

29

145

436

Deferred fee revenue and expenses

11

-

(5)

Share-based payments expense

5

5

21

Amortisation of capitalised brokerage/ mortgage origination fees

13

9

35

Deferrals or accruals of past or future operating cash receipts or payments:
(868)

2,111

(1,789)Change in interest receivable

4

(10)

6
(64)

Change in net operating assets less liabilities
Change in interest payable

87

(50)

Change in accrued income

4

(4)

(6)

Change in accrued expenses

(70)

1

51

Change in provisions

(49)

(14)

(63)

Amortisation of premiums and discounts

18

3

39

Change in insurance policy assets

(3)

-

(49)

Change in insurance investment assets

(10)

-

(10)

Change in income tax assets

71

(318)

(302)

Share of profit of equity accounted associates and jointly controlled entities

-

(36)

(42)

Impairment of associates

-

-

7
82

Items classified as investing/financing:

Re-measuring existing equity interest to fair value-

82

Loss on disposal of premises and equipment and intangibles

3

5

9

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

(450)

2,184

(746)

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

2,168

2,869

2,238

Due from other financial institutions – less than 90 days

2,194

3,688

1,339

Total cash and cash equivalents

4,362

6,557

3,577

$ millions

Reconciliation of cash and cash equivalents to the balance sheets
Liquid assets

ANZ National Bank Limited

20. Securitisations, Funds Management, Other Fiduciary Activities and Insurance
Securitisation
In October 2008, the Banking Group established an in-house residential mortgage backed securities facility that could issue
securities meeting the RBNZ criteria for use as collateral in repurchase transactions with the RBNZ. As at 31 December 2010 therights to cash flows associated with residential mortgages with a carrying value of $6,212 million (31/12/2009 $5,417 million;
30/09/2010 $6,531 million) were held in the facility. These assets do not qualify for derecognition as the Bank retains a continuing
involvement in the transferred assets, therefore the Banking Group’s financial statements do not change as a result of establishingthese facilities.
Funds management
Certain subsidiaries of the Bank act as trustee and/or manager for a number of unit trusts and investment and superannuation
funds. The Banking Group provides private banking services to a number of clients, including investment advice and portfolio
management. The Banking Group is not responsible for any decline in performance of the underlying assets of the investors due tomarket forces.
As funds under management are not controlled by the Banking Group, they are not included in these financial statements. The
Banking Group derives fee and commission income from the sale and management of investment funds and superannuation
bonds, unit trusts and the provision of private banking services to a number of clients. The Banking Group derives commission
income from the sale of third party funds management products.
Custodial services
The Banking Group provides custodial services to customers in respect of assets that are beneficially owned by those customers.
Provision of financial services
Financial services provided by the Banking Group to entities which are involved in trust, custodial, funds management and otherfiduciary activities, and to affiliated insurance companies which conduct marketing or distribution of insurance products, or on
whose behalf the marketing or distribution of insurance products are conducted, are provided on arm’s length terms and conditions
and at fair value. Any assets purchased from such entities have been purchased on an arm’s length basis and at fair value.
Except for standard lending facilities provided in the normal course of business on arm’s length terms, the Banking Group has notprovided any funding to entities which conduct any of the following activities: trust, custodial, funds management or other fiduciary
activities established, marketed and/or sponsored by a member of the Banking Group (31/12/2009 $nil; 30/09/2010 $nil).
Insurance business
The Banking Group conducts an insurance business through OnePath Insurance Holdings (NZ) Limited and its subsidiaries(“OnePath Insurance”), the assets, liabilities and operations of which are fully consolidated into the Banking Group. OnePath
Insurance provides risk transfer and investment contract life insurance products. In addition, other entities within the Banking
Group market and distribute a range of insurance products which are underwritten by OnePath Insurance, or by third party
insurance companies.
The aggregate insurance business conducted by OnePath Insurance comprises assets totalling $335 million (31/12/2009:$297 million; 30/09/2010 $337 million), which is 0.3% (31/12/2009: 0.3%; 30/09/2010 0.3%) of the total consolidated assets of the
Banking Group.

26 – 27

Notes to the Financial Statements

ANZ National Bank Limited

Notes to the Financial Statements
21. Credit Related Commitments and Contingent Liabilities
Face or contract value$ millions

Unaudited
31/12/2010

Unaudited
31/12/2009

Audited30/09/2010

503

549

493

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

21,63322,01820,289Total credit related commitments

22,136

22,567

20,782

Contingent liabilities
1,852

1,751

1,686

Standby letters of credit

68

384

60

Transaction related contingent items

841

1,015

898

Trade related contingent liabilities

79

70

97

2,840

3,220

2,741

Financial guarantees

Total contingent liabilities

The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third
parties, including its Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending loan
facilities to customers, therefore these transactions are subjected to the same credit origination, portfolio management andcollateral requirements for customers applying for loans. As the facilities may expire without being drawn upon, the notionalamounts do not necessarily reflect future cash requirements.
Commerce Commission
The Banking Group is aware that the Commerce Commission is looking at credit contract fees under the Credit Contracts andConsumer Finance Act 2003 (“CCCFA”). In its 2010-2013 Statement of Intent the Commission stated that:“In CCCFA enforcement, the Commission will continue to focus on unreasonable credit fees, while still being mindful of
disclosure issues.”
In particular the Banking Group is aware that the Commission is investigating the level of default fees charged on credit cards,
the level of currency conversion charges on overseas transactions using credit cards and informal excess arrangements on
credit cards under the CCCFA. At this stage the possible outcome of these investigations and any liability or impact on feescannot be determined with any certainty.
Other contingent liabilities
The Banking Group has other contingent liabilities in respect of actual and potential claims and proceedings. An assessmentof the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision made whereappropriate. As at 31 December 2010, there were no other contingent assets or liabilities required to be disclosed.

22. Subsequent Events
In November 2010 ANZ New Zealand announced that it will move to a single banking platform during 2011. Further, amanagement restructure was announced on 9 February 2011 to set up a simplified regional reporting structure across thebank. The total cost of these announcements is estimated at around $160 million operating expense and around $60 million
capital expense.
In February 2011 the Banking Group sold certain available for sale assets, resulting in a gain of $42 million after tax being
recognised in the Income Statement, of which $28 million was transferred from the available for sale reserve.
On 11 February 2011 the Bank resolved to pay an ordinary dividend of $430 million no later than 31 March 2011.

ANZ National Bank Limited

Conditions of Registration, applicable as at 18 February 2011. These Conditions of Registration have applied
from 15 October 2010.
There have been no changes in the Bank’s conditions of registration since the issuance of the last General Disclosure Statement
dated 22 November 2010.
The registration of ANZ National Bank Limited (“the Bank”) as a registered bank is subject to the following conditions:1.

That the Banking Group complies with the following requirements:a) the total capital ratio of the Banking Group calculated in accordance with the Reserve Bank of New Zealand document“Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010 is not less than 8%;b) the tier one capital ratio of the Banking Group calculated in accordance with the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010 is not less than4%; andc) the capital of the Banking Group calculated in accordance with the Reserve Bank of New Zealand document “Capital
adequacy framework (internal models based approach)” (BS2B) dated October 2010 is not less than $30 million.

For the purposes of this condition of registration the scalar referred to in the Reserve Bank of New Zealand document “Capital
adequacy framework (internal models based approach)” (BS2B) dated October 2010 is 1.06.
For the purposes of this condition of registration, the supervisory adjustment referred to in the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010 is the sum of:a) 15% of risk-weighted exposures secured by residential mortgages as defined in the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010; andb) 12.5 times the greater of: zero; and 90% of adjusted Basel I capital, less adjusted Basel II capital; wherei) “adjusted Basel I capital” means 8% of total risk-weighted exposures, plus deductions from tier one capital, plus
deductions from total capital, all calculated in accordance with the Reserve Bank of New Zealand document “Capital
adequacy framework (Basel I approach)” (BS2) dated October 2010;ii) “adjusted Basel II capital” means 8% of total Basel II risk-weighted exposures plus deductions from tier one capital,plus deductions from total capital, less any amount included in tier two capital arising from the excess of eligible
allowances for impairment over EL (expected losses), all calculated in accordance with the Reserve Bank of New
Zealand document “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010;
andiii) “total Basel II risk-weighted exposures” means scalar x (risk-weighted on and off balance sheet credit exposures) +12.5 x total capital charge for market risk exposure + 12.5 x total capital requirement for operational risk + 15% ofrisk-weighted exposures secured by residential mortgages as defined in the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010.
1A. Thata) the Bank has an internal capital adequacy assessment process (“ICAAP”); that with effect from 31 August 2008 theBank’s ICAAP accords with the requirements set out in the document “Guidelines on a Bank’s internal capital adequacy
process (“ICAAP”)” (BS12) dated December 2007;b) under its ICAAP the Bank identifies and measures its “other material risks” defined as all material risks of the Banking
Group that are not explicitly captured in the calculation of tier one and total capital ratios under the requirements set
out in the document “Capital adequacy framework (internal models based approach)” (BS2B) dated October 2010; andc) the Bank determines an internal capital allocation for each identified and measured “other material risk”.
1B. That the Banking Group complies with all requirements set out in the Reserve Bank of New Zealand document “Capital
adequacy framework (internal models based approach)” (BS2B) dated October 2010.
1C. That the Bank complies with the following requirements:• The total capital ratio of the Bank is not less than 8%.
• The tier one capital ratio of the Bank is not less than 4%.
For the purposes of this condition of registration:• the total capital ratio is defined as capital as a percentage of risk-weighted exposures where capital and risk-weighted
exposures are as defined in the Reserve Bank of New Zealand document “Capital adequacy framework (Basel I
approach)” (BS2) dated October 2010; and• the tier one capital ratio is defined as tier one capital as a percentage of risk-weighted exposures where tier one capitaland risk-weighted exposures are as defined in the Reserve Bank of New Zealand document “Capital adequacy framework(Basel I approach)” (BS2) dated October 2010.
2.

That the Banking Group does not conduct any non-financial activities that in aggregate are material relative to its total
activities, where the term material is based on generally accepted accounting practice, as defined in the Financial ReportingAct 1993.

28 – 29

Conditions of Registration

ANZ National Bank Limited

Conditions of Registration
3.

That the Banking Group’s insurance business is not greater than 1% of its total consolidated assets. For the purposes of thiscondition:i) Insurance business means any business of the nature referred to in section 4 of the Insurance Companies (Ratings andInspections) Act 1994 (including those to which the Act is disapplied by sections 4(1)(a) and (b) and 9 of that Act), or any
business of the nature referred to in section 3(1) of the Life Insurance Act 1908;ii) In measuring the size of the Banking Group’s insurance business:a) where insurance business is conducted by any entity whose business predominantly consists of insurance business,the size of that insurance business shall be:• The total consolidated assets of the group headed by that entity;• Or if the entity is a subsidiary of another entity whose business predominantly consists of insurance business,
the total consolidated assets of the group headed by the latter entity;b) otherwise, the size of each insurance business conducted by any entity within the Banking Group shall equal the
total liabilities relating to that insurance business, plus the equity retained by the entity to meet the solvency or
financial soundness needs of the insurance business;c) the amounts measured in relation to parts a) and b) shall be summed and compared to the total consolidated
assets of the Banking Group. All amounts in parts a) and b) shall relate to on balance sheet items only, and shall be
determined in accordance with generally accepted accounting practice, as defined in the Financial Reporting Act
1993;d) where products or assets of which an insurance business is comprised also contain a non-insurance component,
the whole of such products or assets shall be considered part of the insurance business.

4.

That the aggregate credit exposures (of a non-capital nature and net of any allowances for impairment) of the Banking
Group to all connected persons do not exceed the rating-contingent limit outlined in the following matrix:
Credit Rating of theregistered bank1

1

Connected exposure limit(% of the Banking Group’s
Tier 1 capital)

AA/Aa2 and above

75

AA-/Aa3

70

A+/A1

60

A/A2

40

A-/A3

30

BBB+/Baa1 and below

15

This table uses the rating scales of Standard & Poor’s, Fitch Ratings and Moody’s Investors Service. (Fitch Ratings’ scale is identical to Standard & Poor’s.)

Within the rating-contingent limit, credit exposures (of a non-capital nature and net of any allowances for impairment) to
non-bank connected persons shall not exceed 15 percent of the Banking Group’s Tier One capital.
For the purposes of this condition of registration, compliance with the rating-contingent connected exposure limit isdetermined in accordance with the Reserve Bank of New Zealand document entitled ‘Connected Exposures Policy’ (BS8)
dated October 2010.
5.

That exposures to connected persons are not on more favourable terms (e.g. as relates to such matters as credit assessment,
tenor, interest rates, amortisation schedules and requirement for collateral) than corresponding exposures to nonconnected persons.

6.

That the board of the Bank contains at least two independent directors and that alternates for those directors, if any, are also
independent. In this context an independent director (or alternate) is a director (or alternate) who is not an employee of theBank, and who is not a director, trustee, or employee of any holding company (as that term is defined in section 5 of theCompanies Act 1993) of the Bank, or any other entity capable of controlling or significantly influencing the Bank.

7.

That the chairperson of the Bank’s board is not an employee of the Bank.

8.

That the Bank’s constitution does not include any provision permitting a director, when exercising powers or performing
duties as a director, to act other than in what he or she believes is the best interests of the company (i.e. the Bank).

9.

That a substantial proportion of the Bank’s business is conducted in and from New Zealand.

10. That no appointment of any director, chief executive officer, or executive who reports or is accountable directly to the chief
executive officer, shall be made in respect of the Bank unless:i) The Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee, andii) The Reserve Bank has advised that it has no objection to that appointment.

ANZ National Bank Limited

11. That the Bank has legal and practical ability to control and execute any business, and any functions relating to any business,of the Bank that are carried on by a person other than the Bank, sufficient to achieve, under normal business conditions andin the event of stress or failure of the Bank or of a service provider to the Bank, the following outcomes:a) that the Bank’s clearing and settlement obligations due on a day can be met on that day;b) that the Bank’s financial risk positions on a day can be identified on that day;c) that the Bank’s financial risk positions can be monitored and managed on the day following any failure and on
subsequent days; andd) that the Bank’s existing customers can be given access to payments facilities on the day following any failure and on
subsequent days.
For the purposes of this condition of registration, the term “legal and practical ability to control and execute” is explained in
the Reserve Bank of New Zealand document entitled ‘Outsourcing Policy’ (BS11) dated January 2006.
12. a) That the business and affairs of the Bank are managed by, or under the direction and supervision of, the board of theBank.
b) That the employment contract of the chief executive officer of the Bank or person in an equivalent position (together“CEO”) is with the Bank, and the terms and conditions of the CEO’s employment agreement are determined by, and any
decision relating to the employment or termination of employment of the CEO are made by, the board of the Bank.
c) That all staff employed by the Bank shall have their remuneration determined by (or under the delegated authority of )the board or the CEO of the Bank and be accountable (directly or indirectly) to the CEO of the Bank.
13. That the Banking Group complies with the following quantitative requirements for liquidity-risk management with effectfrom 1 April 2010:a) the one-week mismatch ratio of the Banking Group is not less than zero percent at the end of each business day;b) the one-month mismatch ratio of the Banking Group is not less than zero percent at the end of each business day; andc) the one-year core funding ratio of the Banking Group is not less than 65 percent at the end of each business day.
For the purposes of this condition of registration, the ratios identified must be calculated in accordance with the Reserve
Bank of New Zealand documents entitled “Liquidity Policy” (BS13) dated March 2010 and “Liquidity Policy Annex: Liquid
Assets” (BS13A) dated March 2010.
14. That, with effect from 1 April 2010, the Registered Bank has an internal framework for liquidity risk management that is
adequate in the Registered Bank’s view for managing the Bank’s liquidity risk at a prudent level, and that, in particular:a) is clearly documented and communicated to all those in the organisation with responsibility for managing liquidity
and liquidity risk;b) identifies responsibility for approval, oversight and implementation of the framework and policies for liquidity risk
management;c) identifies the principal methods that the Bank will use for measuring, monitoring and controlling liquidity risk; andd) considers the material sources of stress that the Bank might face, and prepares the Bank to manage stress througha contingency funding plan.
For the purposes of these conditions of registration, the term “Banking Group” means ANZ National Bank Limited’s financial
reporting group (as defined in section 2(1) of the Financial Reporting Act 1993).

30 – 31

Conditions of Registration

ANZ National Bank Limited

Directors’ Statement
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director believes that:i)

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statement(Off-Quarter – New Zealand Incorporated Registered Banks) Order 2008;ii) The Disclosure Statement is not false or misleading.
Over the three months ended 31 December 2010, after due enquiry, each Director believes that:i)

ANZ National Bank Limited has complied with the Conditions of Registration;ii) Credit exposures to connected persons were not contrary to the interests of the Banking Group;iii) ANZ National Bank Limited had systems in place to monitor and control adequately the Banking Group’s material risks,
including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operationalrisk and other business risks, and that those systems were being properly applied.
This General Short Form Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on
18 February 2011. On that date, the Directors of the Bank were:

Dr D T Brash

S C Elliott

N M T Geary, CBE

D D Hisco

J F Judge

P R Marriott

M R P Smith, OBE

Sir Dryden Spring

ANZ National Bank Limited
32 – 33

Independent Review Report to the Directors of ANZ National Bank
Limited for the three months ended 31 December 2010
Independent Review Report to the Directors of ANZ National Bank Limited
We have reviewed the interim financial statements on pages 5 to 28 prepared and disclosed in accordance with Clause 19 of
the Registered Bank Disclosure Statement (Off-Quarter – New Zealand Incorporated Registered Banks) Order 2008 (the ‘Order’)and the supplementary information prescribed in Schedules 2 to 8. The interim financial statements, and supplementary
information, provide information about the past financial performance and cash flows of ANZ National Bank Limited and its
subsidiary companies (the ‘Banking Group’) and their financial position as at 31 December 2010. This information is stated inaccordance with the accounting policies set out on page 9.

Directors’ responsibilities
The Directors of ANZ National Bank Limited are responsible for the preparation and presentation of interim financial statementsin accordance with Clause 19 of the Order which give a true and fair view of the financial position of the Banking Group as at 31
December 2010 and its financial performance and cash flows for the three months ended on that date.
They are also responsible for the preparation of supplementary information which gives a fair view, in accordance with theOrder, of the matters to which it relates; and complies with Schedules 2 to 8 of the Order.

Reviewers’ responsibilities
We are responsible for reviewing the interim financial statements, including the supplementary information disclosed inaccordance with Schedules 3, 5 to 8, and Clause 13 of Schedule 2 of the Order presented to us by the Directors and reporting
our findings to you.
It is also our responsibility to express a review opinion on the supplementary information as required by Schedule 4B of the Orderin order to state whether, on the basis of the procedures described below, anything has come to our attention that would indicatethat the information disclosed in accordance with Schedule 4B is not in all material respects prepared in accordance with theBank’s Conditions of Registration and with the Bank’s internal models for credit risk and operational risk as accredited by the
Reserve Bank of New Zealand and disclosed in accordance with Schedule 4B and for reporting our findings to you.

Basis of review opinion
We have performed our review in accordance with the review engagement standard RS-1 Statement of Review Engagement
Standards issued by the New Zealand Institute of Chartered Accountants. A review is limited primarily to enquiries of Banking
Group personnel and analytical review procedures applied to the financial data, and thus provides less assurance than an
audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
Our firm has also provided other services to the Banking Group in relation to other audit related services. Partners andemployees of our firm may also deal with the Banking Group on normal terms within the ordinary course of trading activitiesof the business of the Banking Group. There are, however, certain restrictions on borrowings which the partners and employees
of our firm can have with the Banking Group. These matters have not impaired our independence as auditors of the Banking
Group. The firm has no other relationship with, or interest in, the Banking Group.

Review Opinion
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:a.

the interim financial statements (excluding the supplementary information disclosed in Notes 15, 16, 18 and 20) do notpresent a true and fair view of the financial position of the Banking Group as at 31 December 2010 and its financial
performance and cash flows for the three months ended on that date;b. the supplementary information disclosed in Notes 15, 18 and 20 prescribed by Schedules 3, 5 to 8 and Clause 13 of Schedule
2 of the Order is not fairly stated in accordance with those Schedules; andc. the supplementary information relating to Capital Adequacy disclosed in Note 16 of the interim financial statements, as
required by Schedule 4B of the Order, is not in all material respects prepared in accordance with the Bank’s Conditions ofRegistration, with the Reserve Bank of New Zealand document Capital Adequacy Framework (Internal Models BasedApproach) (BS2B), and with the Banking Group’s internal models for credit risk and operational risk as accredited by the
Reserve Bank of New Zealand, and disclosed in accordance with Schedule 4B of the Order.
Our review was completed on 18 February 2011 and our review opinion is expressed as at that date.

Wellington

ANZ National Bank Limited anzacc1931 02/11

anz.co.nz